497K 1 d170074d497k.htm AB BOND FUND, INC. - AB INCOME FUND AB Bond Fund, Inc. - AB Income Fund
LOGO    SUMMARY PROSPECTUS    April 22, 2016

AB Income Fund

Ticker: Class A–AKGAX; Class C–AKGCX; Advisor Class–ACGYX

 

Before you invest, you may want to review the Fund’s Prospectus, which contains more information about the Fund and its risks. The Fund’s Prospectus and Statement of Additional Information (“SAI”), both dated April 22, 2016, are incorporated by reference into this Summary Prospectus. For free paper or electronic copies of the Fund’s Prospectus and other information about the Fund, go to http://www.ABglobal.com/links/mf, email a request to prorequest@ABglobal.com, call (800) 227-4618, or ask any financial advisor, bank, or broker-dealer who offers shares of the Fund.

PRO-0168-IF-0416

 

INVESTMENT OBJECTIVE:

The investment objective of the Fund is to seek high current income consistent with preservation of capital.

FEES AND EXPENSES OF THE FUND:

This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge reductions if you and members of your family invest, or agree to invest in the future, at least $100,000 in AB Mutual Funds. More information about these and other discounts is available from your financial intermediary and in “Investing in the Fund—Sales Charge Reduction Programs for Class A Shares”, page 21 of the Prospectus, and in “Purchase of Shares—Sales Charge Reduction Programs for Class A Shares”, page 75 of the Fund’s SAI.

Shareholder Fees (fees paid directly from your investment)

 

      Class A
Shares
   Class C
Shares
   Advisor Class
Shares

Maximum Sales Charge (Load) Imposed on Purchases

(as a percentage of offering price)

   4.25%    None    None

Maximum Deferred Sales Charge (Load)

(as a percentage of offering price or redemption proceeds, whichever is lower)

   None(a)    1.00%(b)    None
Redemption Fee (as a percentage of amount redeemed or exchanged)    None    None    0.75%(c)
Exchange Fee    None    None    None

Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)

 

      Class A      Class C      Advisor Class  

Management Fees

     .60%         .60%         .60%   
Distribution and/or Service (12b-1) Fees      .25%         1.00%         None   
Other Expenses:         

Transfer Agent

     .10%         .12%         .10%   

Interest Expense

     .14%         .14%         .14%   

Other Expenses

     .12%         .12%         .12%   
  

 

 

    

 

 

    

 

 

 

Total Other Expenses(d)

     .36%         .38%         .36%   
  

 

 

    

 

 

    

 

 

 

Total Annual Fund Operating Expenses

     1.21%         1.98%         .96%   
  

 

 

    

 

 

    

 

 

 

Fee Waiver and/or Expense Reimbursement(e)

     (.19)%         (.21)%         (.19)%   
  

 

 

    

 

 

    

 

 

 

Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement(f)

     1.02%         1.77%         .77%   
  

 

 

    

 

 

    

 

 

 

 

 

 

(a) Purchases of Class A shares in amounts of $1,000,000 or more, or by certain group retirement plans, may be subject to a 1%, 1-year contingent deferred sales charge, or CDSC, which may be subject to waiver in certain circumstances.

 

(b) For Class C shares, the CDSC is 0% after the first year.

 

(c) Advisor Class shares are subject to a 0.75% fee on redemptions and exchanges until July 22, 2016, as discussed below.

 

(d) Total other expenses are based on estimated amounts for the current fiscal year and are based on net assets of the Fund of $907.5 million reflecting an estimate of redemptions after the Reorganization.

 

(e) The Adviser has contractually agreed to waive its management fees and/or to bear expenses of the Fund through April 22, 2018 to the extent necessary to prevent total Fund 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
 

 

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the Fund may invest, interest expense, taxes, extraordinary expenses, and brokerage commissions and other transaction costs), on an annualized basis, from exceeding .88%, 1.63% and .63% of average daily net assets, respectively, for Class A, Class C and Advisor Class shares (“expense reimbursement”). Any fees waived and expenses borne by the Adviser 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 cause the Fund’s Total Annual Fund Operating Expenses to exceed the expense reimbursement.

 

(f) If interest expense were excluded, net expenses would be as follows:

 

Class A     Class C     Advisor Class  
  .88%        1.63%        .63%   

Examples

The Examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, that the Fund’s operating expenses stay the same and that the fee waiver is in effect for only the first two years. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

      Class A      Class C      Advisor Class  

After 1 Year

   $ 525       $ 280    $ 98   
After 3 Years    $ 756       $ 580       $ 267   
After 5 Years    $ 1,026       $ 1,028       $ 493   
After 10 Years    $ 1,795       $ 2,271       $ 1,142   

 

* Assuming no redemption at the end of the period, a 1% CDSC would decrease the expenses by approximately $100.

Portfolio Turnover

The Fund pays transaction costs, such as commissions, when it buys or sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These transaction costs, which are not reflected in the Annual Fund Operating Expenses or in the Examples, affect the Fund’s performance.

PRINCIPAL STRATEGIES:

The Fund pursues its objective by investing, under normal circumstances, at least 80% of its net assets in income-producing securities. The Fund also normally invests at least 65% of its total assets in securities of U.S. and foreign governments, their agencies or instrumentalities and repurchase agreements relating to U.S. Government securities.

The Fund normally invests at least 65% of its total assets in U.S. dollar denominated securities. The Fund may also invest up to 35% of its total assets in non-government fixed-income securities, including corporate debt securities, non-government mortgage-backed and other asset-backed securities, certificates of deposit and commercial paper. The Fund may invest up to 35% of its net assets in below investment grade securities (commonly known as “junk bonds”). The Fund may invest no more than 25% of its total assets in securities of issuers in any one country other than the U.S. The Fund’s investments in foreign securities may include investments in securities of emerging market countries or of issuers in emerging markets.

The Adviser selects securities for purchase or sale based on its assessment of the securities’ risks and return characteristics as well as the securities’ impact on the overall risks and return characteristics of the Fund. In making this assessment, the Adviser takes into account various factors, including the credit quality and sensitivity to interest rates of the securities under consideration and of the Fund’s other holdings. The Fund may invest in fixed-income securities with any maturity or duration.

The Fund expects to utilize derivatives, such as options, futures contracts, forwards and swaps to a significant extent. The Fund may, for example, use credit default, interest rate and total return swaps to establish exposure to the fixed-income markets or particular fixed-income securities. Derivatives may provide a more efficient and economical exposure to market segments than direct investments, and may also be a more efficient way to alter the Fund’s exposure. The Fund may also enter into transactions such as reverse repurchase agreements that are similar to borrowings for investment purposes. The Fund’s use of derivatives and these borrowing transactions may create aggregate exposure that is substantially in excess of its net assets, effectively leveraging the Fund.

PRINCIPAL RISKS:

 

Market Risk: The value of the Fund’s assets will fluctuate as the bond market fluctuates. The value of the Fund’s investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market.

 

 

Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or

 

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guarantor may default, causing a loss of the full principal amount of a security. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security.

 

 

Below Investment Grade Securities Risk: Investments in fixed-income securities with lower ratings (often referred to as “junk bonds”) are subject to higher probability that an issuer will default or fail to meet its payment obligations. These securities may be subject to greater price volatility due to such factors as specific corporate developments, negative perceptions of the junk bond market generally and less secondary market liquidity. These securities are often able to be “called” or repurchased by the issuer prior to their maturity date, forcing the Fund to reinvest the proceeds, possibly at a lower rate of return.

 

 

Interest Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of existing investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Fund may be subject to a heightened risk of rising rates as the current period of historically low interest rates ends. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations.

 

 

Duration Risk: Duration is a measure that relates the expected price volatility of a fixed-income security to changes in interest rates. The duration of a fixed-income security may be shorter than or equal to the full maturity of a fixed-income security. Fixed-income securities with longer durations have more risk and will decrease in price as interest rates rise. For example, a fixed-income security with a duration of three years will decrease in value by approximately 3% if interest rates increase by 1%.

 

 

Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund’s assets can decline, as can the value of the Fund’s distributions. This risk is significantly greater for fixed-income securities with longer maturities.

 

 

Foreign (Non-U.S.) Risk: Investments in securities of non-U.S. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors.

 

 

Emerging Market Risk: Investments in emerging market countries may have more risk because the markets are less developed and less liquid as well as being subject to increased economic, political, regulatory or other uncertainties.

 

 

Leverage Risk: To the extent the Fund uses leveraging techniques, its net asset value, or NAV, may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Fund’s investments.

 

 

Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Fund’s investments or reduce its returns.

 

 

Liquidity Risk: Liquidity risk occurs when certain investments become difficult to purchase or sell. Difficulty in selling less liquid securities may result in sales at disadvantageous prices affecting the value of your investment in the Fund. Causes of liquidity risk may include low trading volumes, large positions and heavy redemptions of Fund shares. Over recent years, liquidity risk has also increased because the capacity of dealers in the secondary market for fixed-income securities to make markets in these securities has decreased, even as the overall bond market has grown significantly, due to, among other things, structural changes, additional regulatory requirements and capital and risk restraints that have led to reduced inventories. Liquidity risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline.

 

 

Mortgage-Backed and/or Other Asset-Backed Securities Risk: Investments in mortgage-backed and other asset-backed securities are subject to certain additional risks. The value of these securities may be particularly sensitive to changes in interest rates. These risks include “extension risk”, which is the risk that, in periods of rising interest rates, issuers may delay the payment of principal, and “prepayment risk”, which is the risk that in periods of falling interest rates, issuers may pay principal sooner than expected, exposing the Fund to a lower rate of return upon reinvestment of principal. Mortgage-backed securities offered by non-governmental issuers and other asset-backed securities may be subject to other risks, such as higher rates of default in the mortgages or assets backing the securities or risks associated with the nature and servicing of mortgages or assets backing the securities.

 

 

Derivatives Risk: Derivatives may be illiquid, difficult to price, and leveraged so that small changes may produce disproportionate losses for the Fund, and may be subject to counterparty risk to a greater degree than more traditional investments.

 

 

Management Risk: The Fund is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results.

As with all investments, you may lose money by investing in the Fund.

 

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BAR CHART AND PERFORMANCE INFORMATION:

The bar chart and performance information provide an indication of the historical risk of an investment in the Fund by showing:

 

 

how the Fund’s performance changed from year to year over ten years; and

 

 

how the Fund’s average annual returns for one, five and ten years compare to those of a broad-based securities market index.

You may obtain updated performance information on the Fund’s website at www.ABglobal.com (click on “Menu—Americas—Individual Investors—US (US Citizens)”, then “Investments—Products and Performance—Mutual Funds”).

The Fund’s past performance before and after taxes, of course, does not necessarily indicate how it will perform in the future.

The Fund is newly organized. The Fund acquired the assets and liabilities of AllianceBernstein Income Fund, Inc., a closed-end fund (the “Predecessor Fund”), on April 22, 2016 (the “Reorganization”). The Adviser was the investment adviser for the Predecessor Fund, and the day-to-day management of, and investment decisions for, the Fund and the Predecessor Fund are made by the same portfolio managers. The Fund has the same investment objective as the Predecessor Fund and similar investment strategies and policies except as noted. Like the Predecessor Fund, the Fund has a principal investment strategy to normally invest at least 80% of its net assets in income-producing securities. The Fund differs from the Predecessor Fund in that the Fund has a non-fundamental policy of normally investing at least 65% of its total assets in securities of U.S. and foreign governments, and repurchase agreements relating to U.S. Government securities, while the Predecessor Fund had a fundamental policy of investing at least 65% of its total assets in securities of the U.S. Government, and repurchase agreements relating thereto. The Fund invests at least 65% of its total assets in securities denominated in U.S. dollars. In addition, the Fund has higher expenses (including transfer agency and shareholder servicing fees), and a different advisory fee arrangement than the Predecessor Fund. The Fund is expected to be managed with somewhat less leverage and somewhat higher cash balances than the Predecessor Fund due to differences between an open-end fund and a closed-end fund.

The information shown below reflects the historical performance of the Predecessor Fund based on its NAV. The performance information shown below is for the Predecessor Fund and may not be representative of performance of the Fund. The Predecessor Fund’s performance would have been lower than that shown had it operated as an open-end fund under the Fund’s current investment strategies and policies and expense levels.

Bar Chart

The annual returns in the bar chart are for the Predecessor Fund’s shares. Such shares were exchanged for Advisor Class shares of the Fund in the Reorganization. As the Fund’s expense ratio is higher than that of the Predecessor Fund at the time of the Reorganization for each share class, the Fund’s returns would have been lower than those shown here. Through March 31, 2016, the year-to-date unannualized return of the Predecessor Fund was 2.79%.

 

LOGO

Best Quarter was up 8.21%, 3rd quarter, 2009; and Worst Quarter was down -4.31%, 2nd quarter, 2013.

 

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Performance Table

Average Annual Total Returns

(For the periods ended December 31, 2015)

 

           1 Year        5 Years        10 Years  
Class A**   Return Before Taxes      -3.82%           4.39%           6.58%   
Class C**   Return Before Taxes      -1.24%           4.53%           6.26%   
Advisor  Class*, **   Return Before Taxes      0.70%           5.56%           7.32%   
   

 

 
    Return After Taxes on Distributions      -2.11%           2.67%           4.45%   
   

 

 
    Return After Taxes on Distributions and Sale of Fund Shares      0.36%           3.11%           4.54%   

Barclays US Aggregate Bond Index

(reflects no deduction for fees, expenses, or taxes)

     0.55%           3.25%           4.51%   

 

* After-tax returns:

 

  Are shown for Advisor Class shares only and will vary for the other classes of shares because these classes have different expense ratios;

 

  Are an estimate, which is based on the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes; actual after-tax returns depend on an individual investor’s tax situation and are likely to differ from those shown; and

 

  Are not relevant to investors who hold fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

 

** Performance information for Class A and Class C shares is the performance of the Fund’s Advisor Class shares adjusted to reflect the respective expense ratios of these classes of shares.

INVESTMENT ADVISER:

AllianceBernstein L.P. is the investment adviser for the Fund.

PORTFOLIO MANAGERS:

The following table lists the persons responsible for day-to-day management of the Fund’s portfolio:

 

Employee    Length of Service with the Fund    Title
Paul J. DeNoon    Since April 2016    Senior Vice President of the Adviser
     
Gershon M. Distenfeld    Since April 2016    Senior Vice President of the Adviser
     
Douglas J. Peebles    Since April 2016    Senior Vice President of the Adviser
     
Matthew S. Sheridan    Since April 2016    Senior Vice President of the Adviser

PURCHASE AND SALE OF FUND SHARES

Purchase Minimums

 

      Initial    Subsequent
Class A/Class C Shares, including traditional IRAs and Roth IRAs    $2,500    $50
Automatic Investment Program    None   

$50

If initial minimum investment is
less than $2,500, then
$200 monthly until account
balance reaches $2,500

Advisor Class Shares (only available to fee-based programs or through other limited or special arrangements approved by the Adviser, such as purchases by shareholders of the Fund’s Predecessor Fund)    None    None
Class A Shares are available at NAV, without an initial sales charge, to 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.    None    None

You may sell (redeem) your shares each day the New York Stock Exchange is open. You may sell your shares through your financial intermediary or by mail (AllianceBernstein Investor Services, Inc., P.O. Box 786003, San Antonio, TX 78278-6003) or telephone (800-221-5672).

TAX INFORMATION

The Fund may pay income dividends or make capital gains distributions, which may be subject to federal income taxes and taxable as ordinary income or capital gains, and may also be subject to state and local taxes.

 

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PAYMENTS TO BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES

If you purchase shares of the Fund through a broker-dealer or other financial intermediary (such as a bank or a group retirement plan), the Fund and its related companies may pay the intermediary for the sale of Fund shares and related services. These payments may create a conflict of interest by influencing the broker-dealer or other financial intermediary and your salesperson to recommend the Fund over another investment. Ask your salesperson or visit your financial intermediary’s website for more information.

 

PRO-0168-IF-0416     LOGO     

 

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