As filed with the Securities and Exchange Commission on September 28, 2015
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ___ Post-Effective Amendment No. ___
--------------------------------
AB BOND FUND, INC.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(800) 221-5672
--------------------------------
EMILIE D. WRAPP
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Copies of communications to:
Kathleen K. Clarke
Seward & Kissel LLP
901 K Street, NW
Suite 800
Washington, DC 20001
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective on October 28, 2015
pursuant to Rule 488.
Title of Securities Being Registered: Advisor Class shares of beneficial
interest, par value $.001 per share, of the following series of the Registrant:
AB Income Fund.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
ALLIANCEBERNSTEIN INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
November 4, 2015
Dear Shareholders:
The Board of Directors (the "Directors") of AllianceBernstein Income Fund,
Inc. (the "Fund"), a Maryland corporation and a closed-end management investment
company, is asking the shareholders of the Fund to approve the acquisition of
the assets and assumption of the liabilities of the Fund by AB Income Fund (the
"Acquiring Fund"), a series of AB Bond Fund, Inc., a Maryland corporation and an
open-end management investment company, pursuant to an Agreement and Plan of
Acquisition and Dissolution (the "Plan"). For this purpose, the Directors have
approved a Special Meeting of Shareholders of the Fund (the "Meeting") to be
held on February 1, 2016.
The proposed acquisition is described in more detail in the attached Proxy
Statement/Prospectus. You should review the Proxy Statement/Prospectus carefully
and retain it for future reference. If the shareholders of the Fund approve the
Plan providing for the acquisition by the Acquiring Fund at the Meeting, the
acquisition is expected to be completed in the first quarter of 2016.
The Fund has the same investment objective as the Acquiring Fund. Like the
Fund, the Acquiring Fund will normally invest at least 80% of its net assets in
income-producing securities. The most significant difference between the Fund
and the Acquiring Fund is that, while the Fund invests at least 65% of its total
assets in securities issued by the U.S. government and related repurchase
agreements, the Acquiring Fund will invest at least 65% of its total assets in
securities of U.S. and foreign governments and related repurchase agreements.
The Acquiring Fund will have an additional policy to invest at least 65% of its
total assets in securities denominated in U.S. dollars, which will serve to
reduce the currency risks associated with investments in foreign government
securities. The Fund's investment adviser, AllianceBernstein L.P. (the
"Adviser"), is the Adviser of the Acquiring Fund, and the day-to-day management
of, and investment decisions for, the Fund and the Acquiring Fund are made by
the same portfolio managers. The acquisition is expected to be tax-free to the
shareholders of the Fund for federal income tax purposes.
The Acquiring Fund's expenses are expected to be significantly higher than
the Fund's expenses, at least initially, because of substantial redemptions
typically experienced by a closed-end fund after reorganizing into an open-end
fund and the resulting decrease in Fund assets as shareholders take the
opportunity to redeem shares received in the reorganization at their net asset
value ("NAV"). Expenses are also expected to be higher due to the higher costs
of operating an open-end fund (e.g., higher transfer agency and shareholder
servicing costs). To address these higher expenses, the Adviser has agreed to
waive fees and/or reimburse expenses of the Acquiring Fund for a two-year period
beginning with the Fund's commencement of operations so that the expenses of
Advisor Class shares of the Acquiring Fund will be comparable to, but higher
than (by approximately 8 basis points), the Fund's current expenses.
If the acquisition of the Fund by the Acquiring Fund is approved by the
Fund's shareholders at the Meeting, each shareholder will receive Advisor Class
shares of the Acquiring Fund. These shares of the Acquiring Fund will have an
aggregate NAV equal to the aggregate NAV of the shareholder's holding in the
Fund. The Fund would then be de-registered as a registered investment company,
dissolved, and its shares delisted from the New York Stock Exchange.
Shareholders of the Fund will not be assessed any sales charges or other
individual shareholder fees in connection with the acquisition.
The Directors have given careful consideration to the proposed Plan and
the acquisition and have concluded that the acquisition is in the best interests
of the Fund. The Directors unanimously recommend that you vote "for" the
proposed Plan and the acquisition of the Fund by the Acquiring Fund.
We welcome your attendance at the Meeting. If you are unable to attend, we
encourage you to authorize proxies to vote your shares. Computershare Fund
Services, a proxy solicitation firm, has been selected to assist in the proxy
solicitation process. If we have not received your proxy as the date of the
Meeting approaches, you may receive a telephone call from the Proxy Solicitor to
remind you to authorize a proxy to vote your shares. No matter how many shares
you own, your vote is important.
Sincerely,
Robert M. Keith
President
ALLIANCEBERNSTEIN INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 1, 2016
To the Shareholders of AllianceBernstein Income Fund, Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of AllianceBernstein Income Fund, Inc. (the "Acquired Fund"), a
closed-end management investment company organized as a Maryland corporation, is
to be held at 3:00 p.m. Eastern time at the offices of AllianceBernstein L.P.,
1345 Avenue of the Americas, New York, New York l0105, on February 1, 2016.
At the Meeting you will be asked to consider and approve a proposal to
vote upon an Agreement and Plan of Acquisition and Dissolution (the "Plan")
providing for the acquisition of all of the assets of the Acquired Fund in
exchange for shares of common stock of AB Income Fund (the "Acquiring Fund"), a
series of AB Bond Fund, Inc., a Maryland corporation and an open-end management
investment company, the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund and the dissolution of the Acquired Fund.
Record owners of shares of the Acquired Fund as of the close of business
on November 4, 2015, are entitled to vote at the Meeting or any adjournments or
postponements thereof. If you attend the Meeting, you may vote your shares in
person. If you do not attend the Meeting, you may authorize a proxy to vote your
shares by completing, signing and returning the enclosed proxy card by mail in
the envelope provided, or by following the instructions on the proxy card to
authorize a proxy to vote your shares by telephone or the Internet.
Your vote is important. If you have any questions, please contact us
toll-free at (877) 632-0901 for additional information.
By order of the Board of Directors
Sincerely,
-----------------------
Emilie Wrapp
Secretary
November 4, 2015
--------------------------------------------------------------------------------
IMPORTANT -- We urge you to sign and date the enclosed proxy card and return it
in the enclosed addressed envelope, which requires no postage and is intended
for your convenience. You also may vote through the internet, by visiting the
website address on your proxy card, or by telephone, by using the toll-free
number on your proxy card. Your prompt vote may save AllianceBernstein Income
Fund, Inc. the necessity of further solicitations to ensure a quorum at the
Meeting. If you can attend the Meeting and wish to vote your shares in person at
that time, you will be able to do so.
--------------------------------------------------------------------------------
ALLIANCEBERNSTEIN INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free: (800) 221-5672
QUESTIONS AND ANSWERS
The following questions and answers provide an overview of key features of the
proposed acquisition and of the information contained in the attached Combined
Proxy Statement and Prospectus ("Proxy Statement/ Prospectus"). Please review
the full Proxy Statement/Prospectus before casting your vote or authorizing a
proxy to vote your shares.
1. What is this document and why was it sent to you?
The attached Proxy Statement/Prospectus provides you with information
about the proposed acquisition of the assets of AllianceBernstein Income Fund,
Inc. (the "Acquired Fund"), a closed-end management investment company organized
as a Maryland corporation, by AB Income Fund (the "Acquiring Fund," and,
together with the Acquired Fund, the "Funds"), a series of AB Bond Fund, Inc.
(the "Company"), an open-end management investment company organized as a
Maryland corporation (the "Acquisition"). The purposes of the Proxy
Statement/Prospectus are to (1) solicit votes from shareholders of the Acquired
Fund to approve the proposed Acquisition, as described in the Agreement and Plan
of Acquisition and Dissolution, between the Acquired Fund and the Company, on
behalf of the Acquiring Fund (the "Plan"), and (2) provide information about the
Acquiring Fund.
This Proxy Statement/Prospectus contains information that shareholders of
the Acquired Fund should know before voting on the proposed Acquisition. The
Proxy Statement/Prospectus should be retained for future reference.
2. How is this proxy different from the one I received in March 2015?
The proxy you received in March in connection with the Acquired Fund's
annual meeting of shareholders held on April 16, 2015 (the "Annual Meeting")
requested that, at the annual meeting, you vote to elect three Directors of the
Acquired Fund and vote on a non-binding shareholder proposal (the "Non-Binding
Shareholder Proposal"). The Non-Binding Shareholder Proposal, which requested
that the Board of Directors of the Acquired Fund (the "Board" or the
"Directors") consider authorizing a self-tender offer for all of the Fund's
outstanding common shares and, if more than 50% of such shares are tendered,
take steps to liquidate, merge or convert the Acquired Fund into an open-end
mutual fund, was approved by the Acquired Fund's shareholders at the Annual
Meeting.
3. What is the purpose of the Acquisition?
As noted above, the Acquired Fund's shareholders recently approved the
Non-Binding Shareholder Proposal, which requested, among other things, that the
Directors consider authorizing a significant tender offer for the Acquired
Fund's common shares. The Directors currently believe that authorizing such a
significant tender offer would have adverse consequences for the Acquired Fund
and its shareholders because it would reduce the Acquired Fund's size, force the
Acquired Fund to liquidate a large portion of its portfolio securities to pay
for tendered shares, and lead to a material increase in the Acquired Fund's
expense ratio, while potentially having little or no long-term impact on the
level of the discount. To avoid imposing such adverse consequences on the
Acquired Fund, and recognizing that, based on the results of the Annual Meeting,
there was significant support among shareholders of the Acquired Fund for
merging the Fund with, or converting the Fund into, an open-end fund,
AllianceBernstein L.P. (the "Adviser") recommended and the Board determined that
it was in the best interests of the Acquired Fund to propose to the Acquired
Fund's shareholders that the Fund be reorganized into the Acquiring Fund.
The purpose of the Acquisition is to transfer the assets and liabilities
of the Acquired Fund to the Acquiring Fund, which was formed for purposes of the
Acquisition. As discussed in the Proxy Statement/Prospectus, after carefully
considering the recommendation of the Adviser, the Board approved the submission
of the Plan to shareholders of the Acquired Fund for approval. In reaching this
conclusion, the Directors considered, among other factors:
o that shareholders who receive Advisor Class shares of the Acquiring
Fund in the Acquisition will be able to redeem their shares at their
net asset value ("NAV") (subject to a 0.75% redemption fee during
the three-month period following the closing of the Acquisition);
o that, as an open-end fund, rather than a closed-end fund with a
charter provision requiring submission to shareholders of an
open-ending proposal when certain discount related conditions are
met and shareholders representing at least 10% of the outstanding
shares so request, the Acquiring Fund is not susceptible to the type
of activities currently engaged in by activist shareholders of the
Acquired Fund, which have been, and could continue to be, costly to
the Acquired Fund;
o the continuity of management, as the Acquiring Fund will have the
same Adviser and the same portfolio managers, and will be overseen
by the same Directors and be serviced by some of the same service
providers as the Acquired Fund;
o that the Acquiring Fund will have the same investment objective as
the Acquired Fund, and the Acquiring Fund will normally invest at
least 65% of its total assets in both U.S. and foreign government
securities and related repurchase agreements unlike the Acquired
Fund, which invests 65% of its total assets in U.S. government
securities and related repurchase agreements, exposing the Acquiring
Fund to greater foreign securities risk and emerging and frontier
market risk;
o that the Acquiring Fund will invest at least 65% of its total assets
in securities denominated in U.S. dollars and no more than 25% of
its securities of issuers in any one country other than the U.S.;
o the comparison of fees for the Funds, including that the investment
advisory fees will be structured differently than the current
advisory fee since the investment advisory fee will not be partly
based on the Acquiring Fund's income and will be higher than the fee
rate currently paid by the Acquired Fund in the current low interest
rate environment, although it will be lower than the fee rate paid
by the Acquired Fund in most prior periods, and that the expenses of
the Acquiring Fund will be significantly higher, at least initially,
but will be subject to a fee waiver and/or expense reimbursement by
the Adviser for a two-year period beginning with the Acquiring
Fund's commencement of operations, that will limit the Acquiring
Fund's operating expenses during such period for Advisor Class
shares to an amount that, on an annual basis, is comparable to, but
higher than, the Acquired Fund's current total expense ratio;
o that the Acquiring Fund, as an open-end rather than a closed-end
fund, will be managed utilizing somewhat less leverage and with
higher cash balances than the Acquired Fund;
o the costs of the Acquisition and the allocation thereof; and
o the expectation that the Acquired Fund and its shareholders will not
recognize any gain or loss upon the Acquisition for federal income
tax purposes, but that the Acquiring Fund may recognize gains that,
upon distribution, are taxable to shareholders as a result of sales
of portfolio securities after the Acquisition to satisfy expected
redemption requests.
The Acquisition will not occur unless it is approved by the affirmative
vote of at least 2/3 of the votes entitled to be cast by the shareholders of the
Acquired Fund. The Directors unanimously recommend that you vote "FOR" the
Acquisition.
4. How will the proposed Acquisition work?
Subject to the approval of the shareholders of the Acquired Fund, the Plan
provides for:
o the transfer of all of the assets of the Acquired Fund in exchange
for Advisor Class shares of the Acquiring Fund and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund;
o the distribution of the Advisor Class shares of the Acquiring Fund
received by the Acquired Fund to shareholders of the Acquired Fund;
and
o the complete liquidation and dissolution of the Acquired Fund.
Shareholders of the Acquired Fund at the time of the Acquisition will
become Advisor Class shareholders of the Acquiring Fund. If the Plan is approved
by the Acquired Fund's shareholders at the Special Meeting of Shareholders to be
held on February 1, 2016 (the "Meeting"), the Acquisition is expected to occur
during the first quarter of 2016.
5. Who is eligible to vote on the Acquisition?
Shareholders of record of the Acquired Fund at the close of business on
November 4, 2015 (the "Record Date") are entitled to notice of, and to vote at,
the Meeting or any adjournment or postponement thereof. If you held Acquired
Fund shares on the Record Date, you have the right to vote even if you later
sold your shares. Each share is entitled to one vote. Shares represented by
properly executed proxies, unless the proxies are revoked before or at the
Meeting, will be voted according to shareholders' instructions. If you date,
sign and return a proxy but do not fill in a vote, your shares will be voted
"FOR" the Acquisition. If any other business properly comes before the Meeting,
your shares will be voted at the discretion of the persons named as proxies.
6. How will the Acquisition affect shareholders of the Acquired Fund?
Shareholders of the Acquired Fund, a Maryland corporation and a closed-end
investment company whose shares trade on the New York Stock Exchange (the
"NYSE"), will become Advisor Class shareholders of the Acquiring Fund, a
Maryland corporation and an open-end investment company. The shares of the
Acquiring Fund that an Acquired Fund shareholder receives will have a total NAV
equal to the NAV of shares held by the shareholder in the Acquired Fund as of
the Effective Time of the Acquisition. Shareholders of the Acquiring Fund will
be able to redeem their Acquiring Fund shares at any time for such shares'
then-current NAV after the Acquisition, except that, during the three-month
period following the Acquisition, Advisor Class shares redeemed or exchanged for
the Advisor Class shares of other AB mutual funds will be subject to a
redemption fee of 0.75% to help the Acquiring Fund defray expected transaction
costs incurred in response to redemption requests from former shareholders of
the Acquired Fund. Shares of the Acquired Fund will be delisted from the NYSE
following the Closing Date.
7. Who manages the Acquiring Fund?
The Adviser serves as investment adviser to the Acquiring Fund and the
Acquired Fund. The Adviser manages assets totaling approximately $485 billion as
of June 30, 2015, of which approximately $99 billion represented assets of
registered investment companies sponsored by the Adviser. Currently, the Adviser
advises 33 registered investment companies, comprising 139 separate investment
portfolios.
The management of, and investment decisions for, the Acquiring Fund are
made by Paul J. DeNoon, Gershon M. Distenfeld, Douglas J. Peebles and Matthew S.
Sheridan, the same team responsible for managing the Acquired Fund.
The Acquiring Fund is overseen by the same Board of Directors as the
Acquired Fund.
8. What are the differences between an open-end investment company and a
closed-end investment company?
Closed-end funds, like the Acquired Fund, generally do not redeem their
outstanding shares or engage in the continuous sale of new shares. As a result,
shareholders of a closed-end fund wishing to buy or sell their shares generally
must do so through a broker-dealer in securities markets and pay or receive the
prevailing market price, which may be more (a premium) or less (a discount) than
the NAV of the closed-end fund's shares. In addition, closed-end funds are able
to use leverage to a greater extent than open-end funds. This is because
closed-end funds are permitted by the Investment Company Act of 1940, as
amended, (the "1940 Act") to issue preferred stock and debt securities, and have
a relatively stable asset base, which makes it easier to establish and maintain
leverage in accordance with the requirements of the 1940 Act, as well as other
requirements.
Open-end funds issue, and continuously offer, shares that generally are
sold and can be redeemed or sold back to the fund at the shares' NAV less any
applicable sales charges. Because open-end funds must be able to satisfy
redemption requests from their shareholders on a daily basis, they may not be as
fully invested as closed-end funds, which may affect performance. In addition,
open-end funds are generally unable to use leverage to the same extent as
closed-end funds due to 1940 Act restrictions and a less stable asset base due
to daily purchases and redemption requests. This, in turn, may affect an
open-end fund's ability to generate the same yield as a closed-end fund with the
same investment objective. Shareholders of an open-end fund may benefit from
increases in assets of the fund through economies of scale whenever asset levels
increase, but can be adversely affected from decreases in the assets of the
fund. In addition, open-end funds are required to maintain a higher percentage
of liquid assets than closed-end funds.
9. How will the Acquisition affect the advisory fees and expenses?
The advisory fee of the Acquiring Fund is structured differently than the
current advisory fee of the Acquired Fund, since it is not partly based on the
Acquiring Fund's income, and will be higher than the fee rate currently paid by
the Acquired Fund in the current low interest rate environment, although it will
be lower than the fee rate paid by the Acquired Fund in most prior periods. The
Acquiring Fund's expenses are expected to be significantly higher, at least
initially, than the Acquired Fund's expenses due to the higher costs of
operating as an open-end fund (e.g., higher transfer agency and shareholder
servicing costs) and the expected redemptions that typically occur after a
closed-end fund is reorganized into an open-end fund, resulting in a decrease in
the Acquiring Fund's assets. The Adviser has agreed to waive fees and/or
reimburse the operating expenses of the Acquiring Fund for a two-year period
beginning with the Acquiring Fund's commencement of operations, so that the
operating expenses of the Advisor Class shares of the Acquiring Fund after the
Acquisition will be limited to an amount that, on an annual basis, is comparable
to, but higher (by approximately 8 basis points) than, the current operating
expenses of the Acquired Fund.
10. What happens if shareholders of the Acquired Fund do not approve the Plan?
If shareholders of the Acquired Fund do not approve the Plan, the
Acquisition will not occur, the Acquired Fund will continue to operate as a
closed-end fund and its shares would continue to trade on the NYSE. The
Directors of the Acquired Fund may consider other alternatives for the Fund in
such event.
11. Who is paying the expenses of the Acquisition?
The costs and expenses related to the Acquisition will be paid by the
Acquired Fund, except that any costs and expenses related to the Acquisition
that exceed $540,000 (other than fees and expenses of counsel to the Directors
who are not "interested persons" of the Acquired Fund or the Acquiring Fund)
will be paid by the Adviser.
12. Who do I call if I have questions about the Meeting or the Acquisition?
If you have any questions about the Meeting or the Acquisition, please
call AllianceBernstein Investor Services, Inc. toll-free at (800) 221-5672 from
9:00 a.m. to 5:00 p.m. Eastern time, or Computershare Fund Services, the
Acquired Fund's proxy solicitor, at (877) 632-0901.
13. Where may I find additional information regarding the Acquired Fund and
the Acquiring Fund?
Additional information relating to the Acquired Fund and the Acquiring
Fund has been filed with the Securities and Exchange Commission ("SEC") and can
be found in the following documents, which are incorporated into the Proxy
Statement/Prospectus by reference:
o The Statement of Additional Information dated as of November 4,
2015 that has been filed with the SEC in connection with the Proxy
Statement/Prospectus (the "Acquisition SAI");
o The audited financial statements and related independent registered
public accounting firm's report for the Acquired Fund contained in
its annual report for the fiscal year ended December 31, 2014; and
o The unaudited financial statements for the six-month period ended
June 30, 2015 contained in the Acquired Fund's semi-annual report.
In addition, reports, proxy statements and other information concerning
the Acquired Fund may be inspected at the NYSE.
Because the Acquiring Fund is a recently created fund that has not yet
commenced operations, no shareholder reports for the Acquiring Fund are
available.
Copies of the annual and semi-annual reports to shareholders of the
Acquired Fund, and the Prospectus and Statement of Additional Information of the
Acquiring Fund, are available, along with the Proxy Statement/Prospectus and
Acquisition SAI, upon request, without charge, by writing to the address or
calling the telephone number listed below.
By mail: c/o AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By phone: (800) 221-5672
All of this additional information is also available in documents filed
with the SEC. You may view or obtain these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC
By phone: 1-202-551-8090 (for information on the operations of the
Public Reference Room only)
By mail: Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission,
Washington, DC 20549 (copies may be obtained at prescribed
rates)
On the Internet: www.sec.gov
Other Important Things to Note:
o You may lose money by investing in the Acquired Fund or the
Acquiring Fund.
o The SEC has not approved or disapproved these securities or passed
upon the adequacy of the Proxy Statement/Prospectus. Any
representation to the contrary is a criminal offense.
PROXY STATEMENT/PROSPECTUS
November 4, 2015
FOR THE ACQUISITION OF
AllianceBernstein Income Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
BY
AB Income Fund
a series of AB Bond Fund, Inc.
1345 Avenue of the Americas
New York, New York l0105
(800) 221-5672
This Combined Proxy Statement and Prospectus (the "Proxy
Statement/Prospectus") is being sent to you in connection with the solicitation
of proxies by the Board of Directors of AllianceBernstein Income Fund, Inc., a
Maryland corporation (the "Acquired Fund"), for use at a Special Meeting of
Shareholders (the "Meeting") of the Acquired Fund at 3:00 p.m. Eastern time at
the principal executive offices of AllianceBernstein, L.P., the investment
adviser to the Acquired Fund (the "Adviser"), located at 1345 Avenue of the
Americas, New York, New York l0105, on February 1, 2016.
At the Meeting you will be asked to consider and vote upon the following
proposal:
To approve an Agreement and Plan of Acquisition and
Dissolution (the "Plan") providing for the acquisition of
all of the assets of the Acquired Fund in exchange for
shares of common stock of AB Income Fund (the "Acquiring
Fund"), a series of AB Bond Fund, Inc. (the "Company"), a
Maryland corporation and an open-end investment company,
assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund (the "Acquisition") and the
dissolution of the Acquired Fund.
The Acquired Fund is a closed-end management investment company whose
shares trade on the New York Stock Exchange (the "NYSE"). The Acquiring Fund is
a newly created series of the Company, an open-end management investment
company. Each of the Acquired Fund and the Company is an investment company
registered with the Securities and Exchange Commission (the "SEC") and is
organized as a Maryland corporation.
This Proxy Statement/Prospectus sets forth the basic information you
should know before voting on the proposal to approve the Plan (the "Proposal").
You should read it and keep it for future reference. If the Proposal is
approved, the Acquisition will be accomplished through the transfer of all of
the assets of the Acquired Fund to the Acquiring Fund in exchange for Advisor
Class shares of the Acquiring Fund, which will be distributed to shareholders of
the Acquired Fund, and the assumption by the Acquiring Fund of the Acquired
Fund's liabilities. The shares of the Acquiring Fund that an Acquired Fund
shareholder receives will have a total net asset value ("NAV") equal to the NAV
of shares held by the shareholder in the Acquired Fund as of the time that the
shares of the Acquired Fund and Acquiring Fund (each, a "Fund" and together, the
"Funds") are valued for determining NAV for the Acquisition (4:00 p.m. Eastern
time, on the day before the date of the closing of the Acquisition (the "Closing
Date"), or such other date and time as may be agreed upon by the parties to the
Plan (the "Valuation Time")). Because Acquired Fund shareholders will receive
Acquiring Fund shares, this Prospectus/Proxy Statement also serves as a
prospectus for the offering of Advisor Class shares of the Acquiring Fund in
connection with the Acquisition. The Acquired Fund expects that this Proxy
Statement/Prospectus will be mailed to shareholders on or about November 5,
2015.
Additional information relating to the Funds and this Proxy
Statement/Prospectus is set forth in the Statement of Additional Information to
this Proxy Statement/Prospectus dated November 4, 2015 (the "Acquisition SAI"),
which is incorporated herein by reference. Additional information about the
Funds has been filed with the SEC and is available upon request and without
charge by writing to the applicable Fund or by calling (800) 221-5672. In
addition, shares of the Acquired Fund are listed on the NYSE, and reports, proxy
statements and other information concerning the Acquired Fund may be inspected
at the NYSE.
Important Notice Regarding Availability of Proxy Materials for the Meeting to Be
Held on February 1, 2016. The Proxy Statement is available on the Internet at
www.abglobal.com/abfundsproxy.
TABLE OF CONTENTS
Page
PROPOSAL: APPROVAL OF AN AGREEMENT AND PLAN OF ACQUISITION AND DISSOLUTION.....5
SUMMARY .......................................................................6
COMPARISON OF INVESTMENT ADVISORY FEES................................6
COMPARISON OF EXPENSES................................................6
COMPARISON OF INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT
STRATEGIES.......................................................7
PRINCIPAL RISKS.......................................................8
RISKS RELATING TO DIFFERENCES IN PORTFOLIO MANAGEMENT.................9
FEDERAL INCOME TAX CONSEQUENCES.......................................9
COMPARISON OF FUND SHARES.............................................9
COMPARISON OF PURCHASE AND REDEMPTION PROCEDURES.....................10
SERVICE PROVIDERS....................................................10
COMPARISON OF BUSINESS STRUCTURES....................................10
INFORMATION ABOUT THE ACQUISITION.............................................11
INTRODUCTION.........................................................11
DESCRIPTION OF THE PLAN..............................................11
REASONS FOR THE ACQUISITION..........................................12
BOARD CONSIDERATION OF THE PLAN AND ACQUISITION......................12
DESCRIPTION OF THE SECURITIES TO BE ISSUED...........................15
DIVIDENDS AND OTHER DISTRIBUTIONS....................................16
SHARE CERTIFICATES...................................................16
FEDERAL INCOME TAX CONSEQUENCES......................................16
CAPITALIZATION INFORMATION...........................................17
INFORMATION ABOUT THE FUNDS...................................................17
MANAGEMENT OF THE FUNDS..............................................17
ADVISORY AGREEMENTS AND FEES.........................................20
ACQUIRING FUND DISTRIBUTION ARRANGEMENTS.............................21
ADMINISTRATIVE AND TRANSFER AGENCY ARRANGEMENTS......................21
VOTING INFORMATION............................................................21
LEGAL MATTERS.................................................................22
FINANCIAL HIGHLIGHTS..........................................................22
INFORMATION FILED WITH THE SEC................................................23
Appendix A: FORM OF AGREEMENT AND PLAN OF ACQUISITION AND DISSOLUTION........A-1
Appendix B: FUND PERFORMANCE.................................................B-1
Appendix C: FEE INFORMATION..................................................C-1
Appendix D: COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.................D-1
Appendix E: DESCRIPTION OF PRINCIPAL RISKS OF THE FUNDS......................E-1
Appendix F: CERTAIN INFORMATION APPLICABLE TO SHARES OF THE ACQUIRING FUND...F-1
Appendix G: COMPARISON OF BUSINESS STRUCTURE AND ORGANIZATION................G-1
Appendix H: CAPITALIZATION...................................................H-1
Appendix I: SHARE OWNERSHIP INFORMATION......................................I-1
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THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES NOR HAS IT PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROPOSAL
APPROVAL OF AN AGREEMENT AND PLAN OF ACQUISITION AND DISSOLUTION
The Board of Directors (the "Board" or the "Directors") of the Acquired
Fund approved the Plan at a meeting of the Board held on August 4-5, 2015.
Subject to the approval of the shareholders of the Acquired Fund, the Plan
provides for:
o the transfer of all of the assets of the Acquired Fund to the
Acquiring Fund in exchange for Advisor Class shares of the Acquiring
Fund and the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund;
o the distribution of Advisor Class shares of the Acquiring Fund to
the shareholders of the Acquired Fund; and
o the liquidation and dissolution of the Acquired Fund.
Each shareholder of the Acquired Fund will become the owner of the number
of full and fractional Advisor Class shares of the Acquiring Fund having an NAV
equal to the aggregate NAV of the shareholder's Acquired Fund shares as of the
Valuation Time. It is expected that shareholders of the Acquired Fund will
recognize no gain or loss for federal income tax purposes in connection with the
Acquisition. If approved by the shareholders of the Acquired Fund at the
Meeting, the Acquisition is expected to occur in the first quarter of 2016.
The shareholders of the Acquired Fund must approve the Proposal in order
for the Acquisition to occur. Approval of the Proposal requires the affirmative
vote of the holders of two-thirds of the votes entitled to be cast by the
shareholders of the Acquired Fund. The Acquisition does not require approval of
the shareholders of the Acquiring Fund.
A quorum for the transaction of business by shareholders of the Acquired
Fund at the Meeting will consist of the presence in person or by proxy of the
holders of a majority of the total outstanding shares of the Acquired Fund
entitled to vote at the Meeting.
Based on its consideration of, among other factors, the benefits expected
to be received by shareholders of the Acquired Fund in becoming shareholders of
the Acquiring Fund, the Directors of the Acquired Fund concluded that the
Acquisition is in the best interests of the Acquired Fund. In reaching this
conclusion, the Directors considered that: the Acquired Fund's shareholders
recently approved a shareholder proposal indicating significant support for
providing shareholders with liquidity at NAV; the Acquiring Fund, as an open-end
fund rather than a closed-end fund with a charter provision mandating submission
to shareholders of an open-ending proposal when certain conditions are met,
would not be subject to the tactics of activists that have been, and could
continue to be, costly to the Acquired Fund; the investment objective of the
Acquiring Fund is the same as that of the Acquired Fund; the most significant
difference between the Acquired Fund and the Acquiring Fund is that the
Acquiring Fund invests at least 65% of its total assets in U.S. and foreign
government securities and related repurchase agreements whereas the Acquired
Fund invests at least 65% of its total assets in U.S. government securities and
related repurchase agreements; the advisory fee arrangements differ, including
that the advisory fee rate for the Acquired Fund would be higher than the
current fee rate for the Acquired Fund due to the current very low interest rate
environment; for an initial two-year period beginning with the Acquiring Fund's
commencement of operations, the expenses (after fee waiver and/or reimbursement)
of Advisor Class shares of the Acquiring Fund will be comparable to but higher
than those of the Acquired Fund; the similarities and differences between the
investment policies and strategies of the Acquiring Fund and the Acquired Fund,
and related risks; the different advisory fee arrangements of the Acquiring Fund
and the Acquired Fund; and the Adviser and portfolio managers of the Acquired
Fund are the same as those of the Acquiring Fund.
The Directors unanimously recommend that shareholders of the Acquired Fund
vote "FOR" the Plan.
For a more complete discussion of the factors considered by the Directors
in approving the Acquisition, see "Information about the Acquisition - Reasons
for the Acquisition."
SUMMARY
The following summary highlights differences between the Funds. This
summary is not complete and does not contain all of the information that you
should consider before voting on the Plan. This Summary is qualified in its
entirety by reference to the additional information contained elsewhere in this
Proxy Statement/Prospectus and the Plan, a form of which is attached to this
Proxy Statement/Prospectus as Appendix A. Shareholders of the Acquired Fund
should read this entire Proxy Statement/Prospectus carefully. For additional
information about the Acquiring Fund, please read the prospectus of the
Acquiring Fund. This Proxy Statement/Prospectus, the accompanying Notice of the
Special Meeting of Shareholders and the enclosed Proxy Card are being mailed to
shareholders of the Acquired Fund on or about November 5, 2015.
The Acquired Fund, a closed-end management investment company whose shares
trade on the NYSE, is organized as a Maryland corporation. The Acquiring Fund is
a newly created series of the Company, an open-end management investment company
that is organized as a Maryland corporation. The investment objective of each of
the Acquired Fund and the Acquiring Fund is high current income consistent with
preservation of capital. Each of the Acquired Fund and the Acquiring Fund is a
diversified investment company.
The Acquired Fund will be the accounting survivor of the Acquisition and
the Acquiring Fund will carry over the performance record of the Acquired Fund.
Performance information of the Acquired Fund is included in Appendix B.
Comparison of Investment Advisory Fees
The investment advisory fee of the Acquired Fund consists of a base fee of
0.30% of the first $250 million of the Fund's average weekly net assets and
0.25% of average weekly net assets in excess of $250 million plus an income
component of 4.75% of the Fund's daily gross income (i.e., income other than
gains from the sale of securities or gains realized from options, futures and
swaps, less interest on money borrowed by the Fund). The Acquired Fund's
advisory fee may not exceed 0.80% of the Acquired Fund's average weekly net
assets during any month. The current advisory fee, as of August 31, 2015, is
0.49%, which, due to current low interest rates, is lower than the 10-year
average effective rate of 0.58%. Because the Acquiring Fund is an open-end fund,
instituting a similar income-based fee for the Acquiring Fund would present a
marketing impediment for a number of the Adviser's distribution partners. The
Acquiring Fund has instead an asset-based fee, typical for open-end funds, at
the annualized rate of 0.60% of the first $2.5 billion of the Acquiring Fund's
average daily net assets; 0.55% of the excess of $2.5 billion up to $5 billion;
and 0.50% of the excess over $5 billion, which fee will accrue daily and be paid
monthly. The advisory fee rate is higher than the advisory fee rate of the
Acquired Fund due to the current historically low interest rate environment,
although it is lower than the fee rate paid by the Acquired Fund in most prior
periods. The Acquired Fund and the Acquiring Fund reimburse the Adviser for the
costs of providing administrative and accounting services to the Funds.
Comparison of Expenses
The Acquiring Fund is expected to have, at least initially, significantly
higher gross expenses than the Acquired Fund. The Acquiring Fund's gross
expenses for Advisor Class shares are estimated to be 0.76% as compared to
expenses of the Acquired Fund of 0.55% (both excluding interest expense) at
current net asset levels. Gross expenses are estimated at 0.78% with a 25%
reduction in net assets, 0.82% with a 50% reduction in assets; and 0.93% with a
75% reduction in net assets. The Acquisition is likely to result in an increase
in the total net expenses of the Acquired Fund because substantial redemptions
typically accompany the reorganization of a closed-end fund into an open-end
fund with a corresponding decrease in fund assets and increase in expenses, at
least over the short-term. The Adviser expects these redemptions to be partially
offset over the medium- to longer-term by increased sales of Acquiring Fund
shares, although there can be no assurances that the Acquiring Fund will be
successful in making sales sufficient to offset the expected redemptions. Higher
expenses also result from the increased costs of operating an open-end fund. For
example, open-end funds are typically subject to higher transfer agency and
shareholder servicing costs and expenses than closed-end funds, and this would
be the case for the Acquiring Fund. Higher expenses may result in the Acquiring
Fund paying lower dividends than the Acquired Fund currently pays.
To address the anticipated higher expenses of the Acquiring Fund, the
Adviser has agreed to implement fee waivers and/or expense reimbursements for
the Acquiring Fund to the extent necessary to limit total fund operating
expenses of Advisor Class shares, which shareholders of the Acquired Fund will
receive in the Acquisition, to 0.63% of the Acquiring Fund's average daily net
assets. This fee waiver/expense limitation agreement will continue in effect
initially for two years beginning with the Acquiring Fund's commencement of
operations. As a result of this undertaking, the total fund operating expenses
for Advisor Class shares of the Acquiring Fund are expected to be approximately
8 basis points higher than the current total fund operating expenses for shares
of the Acquired Fund, but materially lower than they would be without the
expense limitation. More detailed information about the Funds' fees is included
in Appendix C.
Comparison of Investment Objectives and Principal Investment Strategies
The following table shows the investment objective and principal
investment strategies of each Fund:
AllianceBernstein Income Fund, Inc. AB Income Fund
(Acquired Fund) (Acquiring Fund)
------------------------------------------------------------------------------------------------
Investment The investment objective of the Acquired The investment objective of the
Objective Fund is high current income consistent Acquiring Fund is high current income
with preservation of capital. consistent with preservation of capital.
------------------------------------------------------------------------------------------------
Principal The Acquired Fund normally invests at The Acquiring Fund invests, under normal
Investment least 80% of its net assets in circumstances, at least 80% of its net
Strategies income-producing securities. assets in income-producing securities.
The Acquired Fund normally invests at The Acquiring Fund normally invests at
least 65% of its total assets in least 65% of its total assets in
securities issued or guaranteed by the securities of U.S. and foreign
U.S. government, its agencies or governments, their agencies or
instrumentalities ("U.S. Government instrumentalities and repurchase
Securities") and repurchase agreements agreements relating to U.S. Government
pertaining to U.S. Government Securities.
securities. The Acquired Fund may also
invest in other debt securities, The Acquiring Fund invests at least 65%
including those of foreign governmental of its total assets in U.S. dollar
issuers. The Acquired Fund may invest up denominated securities.
to 35% of its total assets in
obligations issued or guaranteed by a
foreign government or any of its
political subdivisions, authorities,
agencies, or instrumentalities ("Foreign
Government Securities") of issuers
considered stable by the Adviser.
The Fund may also invest up to 35% of The Acquiring Fund may also invest up to
its total assets in other fixed-income 35% of its total assets in
securities, corporate debt securities, non-government fixed-income securities,
certificates of deposit, bankers' including corporate debt securities,
acceptances and interest bearing savings non-government mortgage-backed and other
deposits of banks and commercial paper. asset-backed securities, certificates of
deposit and commercial paper.
The Acquired Fund may invest up to 35% The Acquiring Fund may invest up to 35%
of its net assets in securities rated of its net assets in below investment
below Baa by Moody's Investor Service, grade securities (commonly known as
Inc. ("Moody's") or below BBB by S&P "junk bonds").
Rating Services ("S&P") or, if not
rated, of comparable investment quality
as determined by the Adviser.
The Acquired Fund will not invest 25% or The Acquiring Fund will not invest more
more of its total assets in the Foreign than 25% of its total assets in
Government Securities of any one securities of issuers in any one country
country. outside of the U.S.
The Acquired Fund utilizes certain other In an effort to enhance income and
investment techniques, including reduce market risk, the Acquiring Fund
options, futures, forwards and swaps, expects to invest in derivatives, such
intended to enhance income and reduce as options, futures contracts, forwards
market risk. and swaps. The Acquiring Fund may also
enter into transactions, such as reverse
repurchase agreements, that are similar
to borrowings for investment purposes.
Additional information about the Funds' investment objectives, strategies
and policies is contained in Appendix D.
Fundamental and Non-Fundamental Policies. Fundamental policies are
policies that, under the Investment Company Act of 1940, as amended (the "1940
Act"), may not be changed without a shareholder vote. The Acquired Fund's
investment objective is a fundamental policy that may not be changed without a
shareholder vote, while the Acquiring Fund's investment objective is not a
fundamental policy. The Acquired Fund's policy to invest at least 65% of its
total assets in U.S. Government Securities and repurchase agreements relating to
U.S. Government Securities is a fundamental policy, whereas the Acquiring Fund's
policy to invest at least 65% of its total assets in U.S. or foreign government
securities is not a fundamental policy. Classifying the Acquiring Fund's
investment objective and policy as non-fundamental will give the Directors more
flexibility to respond to changed market conditions or other circumstances in a
timely manner without the delay and expense of obtaining a shareholder vote.
Please refer to Appendix D for additional information about the
fundamental and non-fundamental policies of the Acquired Fund and the Acquiring
Fund.
Principal Risks
The principal risks of the Acquiring Fund are similar to those of the
Acquired Fund. Risks include market risk, credit risk, interest rate risk,
foreign (non-U.S.) risk, derivatives risk, leveraging risk, currency risk,
duration risk, mortgage-backed and/or other asset-backed securities risk, below
investment grade securities risk, liquidity risk and management risk. As noted
above, the Acquired Fund normally invests at least 65% of its total assets in
U.S. Government Securities (and repurchase agreements relating to U.S.
Government Securities), whereas the Acquiring Fund normally invests at least 65%
of its total assets in securities of both U.S. and foreign governments (and
repurchase agreements relating to U.S. Government Securities). To the extent
that the Acquiring Fund invests more of its assets in the securities of foreign
governments, as it is expected to do, it will be subject to, among other risks
associated with such investments, greater foreign (non-U.S.) securities risk and
emerging and frontier market risk than those of securities of developed markets
issuers. Foreign risk is the risk that investments in issuers located in foreign
countries may have greater price volatility and less liquidity. Foreign markets
can be more volatile than the U.S. market due to increased risks of adverse
issuer, political, regulatory, market or economic developments. Emerging and
frontier market risk is the risk that investments in emerging and frontier
markets may be more pronounced than the risks involved in investing in more
developed foreign markets. Risks associated with investing in emerging and
frontier markets include limited information about companies in these countries,
greater political and economic uncertainties compared to developed foreign
markets, underdeveloped securities markets and legal systems, potentially high
inflation rates, and the influence of foreign governments over the private
sector. To limit these risks, the Acquiring Fund will be limited to investing at
least 65% of its total assets in securities denominated in U.S. dollars. Such
securities have historically tended to be of better quality and liquidity than
securities denominated in most non-U.S. currencies. In addition, securities
denominated in U.S. dollars do not have the currency risk associated with
securities denominated in non-U.S. currencies.
Additional information about the Funds' risks is provided in Appendix E.
Risks Relating to Differences in Portfolio Management
As described above, although the Funds' respective investment objectives
are the same, the Acquiring Fund will be managed differently than the Acquired
Fund is currently managed. These differences could have a potentially adverse
impact on the yield and performance of the Acquiring Fund as compared to the
Acquired Fund. For example, the Acquiring Fund will not be able to employ
leverage to the same extent as the Acquired Fund, and the use of leverage has
historically contributed positively to the Acquired Fund's net income per share.
Limitations on the use of leverage could cause the Acquiring Fund's yield to be
lower than the Acquired Fund's current yield. In addition, as an open-end fund,
the Acquiring Fund will normally be required to maintain a larger cash position
than the Acquired Fund currently maintains in order to meet potential
redemptions expected to occur after the Acquisition and on an ongoing basis and,
in the event cash on hand is insufficient to satisfy redemption requests, the
Acquiring Fund may be required to liquidate securities in order to meet such
requests. While the Acquiring Fund's positions in securities of U.S. and foreign
governments will typically be liquid, liquidating certain of its other positions
within a short period of time could pose challenges. Liquidating portfolio
positions, particularly less liquid securities, at inopportune times could have
significant adverse effects, depressing the prices received by the Acquiring
Fund and the value of its remaining positions.
Federal Income Tax Consequences
The Funds expect that the Acquisition will constitute a "reorganization"
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"), with substantially the following results: No gain or loss
will be recognized by the Acquired Fund or its shareholders as a result of the
Acquisition. The aggregate tax basis of the shares of the Acquiring Fund
received by a shareholder of the Acquired Fund (including any fractional shares
to which the shareholder may be entitled) will be the same as the aggregate tax
basis of the shareholder's shares of the Acquired Fund. The holding period of
the shares of the Acquiring Fund received by a shareholder of the Acquired Fund
(including any fractional share to which the shareholder may be entitled) will
include the holding period of the shares of the Acquired Fund held by the
shareholder, provided that such shares are held as capital assets by the
shareholder of the Acquired Fund at the time of the Acquisition. The holding
period and tax basis of each asset of the Acquired Fund in the hands of the
Acquiring Fund as a result of the Acquisition will generally be the same as the
holding period and tax basis of each such asset in the hands of the Acquired
Fund prior to the Acquisition. It is a condition to the closing of the
Acquisition that both the Acquired Fund and Acquiring Fund receive an opinion of
Seward & Kissel LLP confirming these consequences, as further discussed below
under "Information About the Acquisition--Federal Income Tax Consequences." An
opinion of counsel is not binding on the Internal Revenue Service.
Federal income tax law permits a regulated investment company to carry
forward net capital losses that arose in tax years that began on or before
December 22, 2010 ("Pre-2011 Losses") for a period of up to eight taxable years.
Net capital losses that arise in tax years beginning after December 22, 2010
("Post-2010 Losses") may generally be carried forward without limit and such
carryforwards must be fully utilized before the regulated investment company is
permitted to utilize carryforwards of Pre-2011 Losses. The Acquired Fund has no
carryforwards of Pre-2011 Losses, and has $(16,955,334) of net short-term
Post-2010 Loss carryforwards from the Fund's last fiscal year ended December 31,
2014. The Acquisition is not expected to affect the Acquiring Fund's ability to
use capital loss carryforwards. The ability of the Acquiring Fund to use capital
losses to offset gains (even in the absence of the Acquisition) also depends on
factors other than loss limitations, such as the future realization of capital
losses or gains.
Additional tax considerations are discussed under the section on "Federal
Income Tax Consequences" in Information about the Acquisition.
Comparison of Fund Shares
The Acquired Fund offers one class of shares. In contrast, the Acquiring
Fund offers multiple share classes, which, in addition to Advisor Class shares,
currently include Class A, Class C, Class R, Class K, Class I and Class Z shares
(such other classes collectively, the "Additional Share Classes"). Information
regarding the Additional Share Classes, including the expenses of the Additional
Share Classes, is available in the Acquiring Fund's prospectus.
Comparison of Purchase and Redemption Procedures
As a result of the Acquisition, holders of Acquired Fund shares will
receive Advisor Class shares of the Acquiring Fund. Because the Acquired Fund is
a closed-end fund whose shares trade on the NYSE and the Acquiring Fund is an
open-end fund, the distribution and purchase procedures of the Acquired Fund and
the Advisor Class shares of the Acquiring Fund are different.
Buying and Redeeming Shares. The Acquired Fund does not redeem its
outstanding shares or engage in the continuous sale of new securities. Rather,
shares of the Acquired Fund are listed on the NYSE and traded in the secondary
market, and are bought and sold through financial intermediaries at prevailing
market prices, which may be equal to, higher or lower than their NAV. In
contrast, the Acquiring Fund issues and redeems Acquiring Fund shares at prices
based on their NAV (less any contingent deferred sales charge, and a 0.75%
redemption fee on Advisor Class shares for the three-month period following the
Closing Date) on each business day (i.e., any day on which the NYSE is open for
trading), as described in the Acquiring Fund's prospectus. The Acquiring Fund
has no minimum initial investment amount for Advisor Class shares.
Exchanging Shares. Shares of the Acquired Fund do not have any exchange
rights. Acquiring Fund shareholders are entitled to exchange their Advisor Class
shares for Advisor Class shares of other AB mutual funds of equivalent NAV (less
a 0.75% redemption fee on Advisor Class shares of the Acquiring Fund exchanged
during the three-month period following the Closing Date) without sales or
service charges.
Redemption Fee. Closed-end funds that reorganize into open-end funds are
typically subject to substantial redemptions, and temporary redemption fees may
be imposed in such situations. Advisor Class shares redeemed or exchanged for
the Advisor Class shares of other AB mutual funds will be subject to a
redemption fee of 0.75% for the three-month period following the Closing Date.
The imposition of the redemption fee is intended to help the Acquiring Fund
defray the transaction costs it might incur in response to redemption requests.
It is expected that the redemption fee would serve to, among other things,
offset some of the direct and indirect costs associated with the Acquisition,
including any costs of liquidating portfolio positions, and as an anti-dilution
measure to benefit remaining shareholders.
More information on distribution, purchase and redemption procedures of
the Acquiring Fund is provided in Appendix F.
Service Providers
The Funds are serviced by many of the same service providers. The Adviser
is the investment adviser to each Fund, State Street Bank and Trust Company is
the custodian for each Fund and Ernst & Young LLP is the independent registered
public accounting firm for each Fund. However, there are some differences in
service providers, in part due to the fact that the Acquired Fund is a
NYSE-listed closed-end fund and the Acquiring Fund is an open-end fund.
Computershare Trust Company, N.A. ("Computershare") is the dividend paying
agent, transfer agent and registrar for the Acquired Fund, and AllianceBernstein
Investor Services, Inc. ("ABIS"), which is an affiliate of the Adviser, is the
transfer agent for the Acquiring Fund and receives a fee for providing
shareholder services to the Acquiring Fund. ABIS currently provides phone
inquiry services to the Acquired Fund pursuant to a Shareholder Inquiry Agency
Agreement between ABIS and the Acquired Fund. In addition, AllianceBernstein
Investments, Inc. ("ABI" or the "Distributor"), the Company's principal
underwriter, is the distributor of the Acquiring Fund's shares.
Comparison of Business Structures
As described above, the Acquired Fund is a closed-end management
investment company organized as a Maryland corporation governed by its Charter,
Bylaws and Maryland law. The Acquiring Fund is a newly created series of the
Company, an open-end management investment company organized as a Maryland
corporation, which is governed by its Charter, Bylaws and Maryland law. For more
information on the comparison of the business structures of the Funds, see
Appendix G.
INFORMATION ABOUT THE ACQUISITION
Introduction
This Proxy Statement/Prospectus is provided to you to solicit your proxy
for exercise at the Meeting to approve the Acquisition. The Meeting will be held
at 1345 Avenue of the Americas, New York, New York 10105 at 3:00 p.m., Eastern
time, on February 1, 2016. This Proxy Statement/Prospectus, the accompanying
Notice of Special Meeting of Shareholders and the enclosed Proxy Card are being
mailed to shareholders of the Acquired Fund on or about November 5, 2015.
Description of the Plan
As provided in the Plan, the Acquired Fund will transfer all of its assets
to the Acquiring Fund, and in exchange, the Acquiring Fund will assume all the
liabilities of the Acquired Fund and deliver to the Acquired Fund a number of
Advisor Class shares of the Acquiring Fund having an aggregate NAV equal to the
value of the assets of the Acquired Fund, less the value of the liabilities of
the Acquired Fund assumed by the Acquiring Fund. The assets and liabilities of
the Acquired Fund will be valued as of the Valuation Time. The Advisor Class
shares of the Acquiring Fund will be delivered to the Acquired Fund on the next
full business day following the Valuation Time (the "Exchange Date").
Immediately following the delivery of the Advisor Class shares to the Acquired
Fund on the Exchange Date, the Acquired Fund will distribute pro rata to its
shareholders of record as of the Valuation Time the Advisor Class shares
received from the Acquiring Fund. The Advisor Class shares of the Acquiring Fund
that an Acquired Fund shareholder receives will have a total NAV equal to the
NAV of shares held by the shareholder in the Acquired Fund as of the Exchange
Date.
The distribution of Advisor Class shares to Acquired Fund shareholders
will be accomplished by the establishment of accounts on the share records of
the Acquiring Fund in the name of such Acquired Fund shareholders, each account
representing the respective number of Advisor Class shares due the respective
shareholder. Certificates for Advisor Class shares will not be issued.
Following the distribution of Advisor Class shares of the Acquiring Fund
in full liquidation of the Acquired Fund, the Acquired Fund will wind up its
affairs, cease operations and dissolve as soon as is reasonably practicable
after the Acquisition. If the shareholders do not approve the Plan, the
Acquisition will not occur. The Adviser will continue as investment adviser to
the Acquired Fund and the current service providers will continue to provide
services to the Acquired Fund. The Directors of the Acquired Fund will consider
options for the Acquired Fund, including continuing its operations as a
closed-end investment company.
The projected costs and expenses of the Acquisition, primarily legal,
accounting, printing and proxy solicitation expenses, are estimated to total
approximately $600,000. These costs and expenses will be borne by the Acquired
Fund, except that any costs and expenses that exceed $540,000 (other than fees
and expenses of counsel to the Directors who are not "interested persons" of the
Acquired Fund or the Acquiring Fund (the "Independent Directors")) will be paid
by the Adviser.
Completion of the Acquisition is subject to certain conditions set forth
in the Plan, including approval of the Acquisition by shareholders of the
Acquired Fund. Assuming satisfaction of the conditions in the Plan, the
Acquisition will be completed on the Closing Date, which is expected to be in
the first quarter of 2016. However, any shareholder of the Acquired Fund may
sell his or her shares prior to the Acquisition.
The Plan may be amended in any mutually agreed manner, except that no
amendment may be made subsequent to shareholder approval of the Acquisition that
materially alters the obligations of either party. The parties to the Plan may
terminate the Plan by mutual consent and either party has the right to terminate
the Plan under certain circumstances. Among other circumstances, either party
may at any time terminate the Plan unilaterally upon a determination by the
party's Directors that proceeding with the Plan is not in the best interests of
the relevant Fund or its shareholders.
A form of the Plan is attached as Appendix A.
Reasons for the Acquisition
Over the course of several meetings in 2014 and 2015, the Adviser
discussed with the Directors of the Acquired Fund issues relating to the Fund's
trading discount, increasingly significant ownership of the Fund by activist
shareholders, the activities engaged in by such shareholders and the potential
adverse consequences to the Fund of such activities. In particular, at the
meeting of the Directors held on May 5-7, 2015 (the "May Board Meeting"), the
Adviser discussed with the Directors the approval by the Acquired Fund's
shareholders of the Non-Binding Shareholder Proposal, which requested that the
Directors of the Acquired Fund consider authorizing a self-tender offer for all
of the Fund's outstanding common shares and, if more than 50% of such shares are
tendered, take steps to liquidate, merge or convert the Acquired Fund into an
open-end mutual fund. The Directors currently believe that authorizing such a
significant tender offer could have adverse consequences for the Fund and its
shareholders, because it could reduce the Fund's size, cause the Fund to
liquidate a large portion of its portfolio securities to pay for tendered
shares, and may lead to a material increase in the Fund's expense ratio, while
potentially having little or no long-term impact on the level of the discount.
At the meeting of the Directors held on August 4-5, 2015 (the "August
Board Meeting"), the Adviser discussed the proposed Acquisition with the
Directors, noting that reorganizing the Acquired Fund into the Acquiring Fund
through the Acquisition (which would not involve a tender offer) should be
consistent with the views of Acquired Fund shareholders who support open-ending
the Fund while also permitting the Acquired Fund to avoid incurring some of the
adverse effects of a significant tender offer of Acquired Fund shares. In
addition, the Adviser noted that the Acquisition would allow current
shareholders of the Acquired Fund to liquidate the shares of the Acquiring Fund
received in the Acquisition at their NAV. The Adviser also discussed with the
Board its expectation that the Acquiring Fund would serve as a desirable
investment option for retail customers, thereby helping to potentially offset
any increase in Fund expenses caused by redemptions by current Acquired Fund
shareholders. The Adviser recommended that the Directors approve, and recommend
to Acquired Fund shareholders for their approval, the proposed Plan and the
Acquisition.
Board Consideration of the Plan and Acquisition
In its consideration of the proposed Plan and the Acquisition, the
Directors reviewed detailed information provided by the Adviser and considered,
among other things, the factors discussed below in light of their fiduciary
duties under federal and state law. The Directors considered the differences
between closed-end funds and open-end funds generally and the advantages and
disadvantages of reorganizing the Acquired Fund into the Acquiring Fund.
Comparison of Closed-End Funds and Open-End Funds
The Directors considered that shareholders of a closed-end fund wishing to
buy or sell their shares generally must do so through a broker-dealer and pay or
receive the prevailing market price, which may be more or less than NAV, and
that closed-end funds are able to use leverage to a greater extent than open-end
funds. They also considered that open-end funds issue, and continuously offer,
shares that generally can be redeemed or sold back to the fund at the shares'
NAV (less any redemption fee or contingent deferred sales charge), and are
generally unable to use leverage to the same extent as closed-end funds. In
addition, the Directors considered that open-end funds are required to maintain
a higher percentage of liquid assets than closed-end funds.
Advantages of Reorganizing the Acquired Fund into the Acquiring Fund
Redemption at NAV. Shareholders of the Acquiring Fund will have the right
to redeem Advisor Class shares of the Acquiring Fund at any time (except in
certain circumstances, as permitted under the 1940 Act) at their current NAV
(subject to a 0.75% redemption fee during the three-month period following the
Closing Date). The ability to obtain the current NAV (without imposition of a
sales charges or long-term redemption fee) would constitute a potential
immediate benefit to shareholders of the Acquired Fund to the extent that its
shares are trading at a discount to NAV prior to the Acquisition.
Shareholder Services. The Acquiring Fund provides more services to its
shareholders than the Acquired Fund provides to its shareholders. For example,
the Acquiring Fund offers exchange privileges that permit its shareholders to
exchange their shares for shares of other open-end funds within the AB Fund
complex. Such exchange privileges are not available for the shareholders of the
Acquired Fund.
Raising Capital. The Acquired Fund has been limited recently in its
ability to raise capital through share sales because the 1940 Act restricts the
ability of a fund to sell its shares at a price below NAV. The Acquiring Fund
continuously offers its shares and may sell additional shares at any time.
Significant inflows of new capital into the Acquiring Fund in the future can
potentially result in a lower expense ratio for the Fund as fixed expenses are
spread over a larger asset base.
Annual Shareholder Meetings. The Acquired Fund is subject to NYSE rules
requiring annual meetings of shareholders. The Acquiring Fund is not required to
hold annual stockholder meetings, except under certain limited circumstances
required under the 1940 Act, and therefore will not bear the costs and expenses
of holding annual shareholder meetings.
Investment Policies of Acquiring Fund. The Acquiring Fund's investment
policy of normally investing at least 65% of its total assets in securities of
U.S. and foreign governments, their agencies and instrumentalities, and
repurchase agreements pertaining to U.S. government securities permits the
Acquiring Fund to invest a greater portion of its assets in foreign government
securities than the Acquired Fund. The Directors considered that such exposure
and diversification could provide a relatively low-risk source of income and
otherwise be beneficial to the Acquiring Fund, particularly in light of concerns
over rising U.S. interest rates. The Directors also considered that this
difference in the Acquiring Fund's investment policies could enable the Adviser
to better balance duration and credit risk.
Disadvantages of Reorganizing the Acquired Fund into the Acquiring Fund
Higher Expense Ratio. The gross expenses ratio of the Acquiring Fund is
expected to be significantly higher, at least initially, than the current
expense ratio of the Acquired Fund due to the additional costs of operating an
open-end fund (e.g., higher transfer agency and shareholder servicing costs and
SEC and state blue sky registration fees) and to the expected redemptions that
typically occur after a closed-end fund is reorganized into an open-end fund,
resulting in a decrease in fund assets.
Impact on Portfolio Management. Although the Funds' respective investment
objectives are the same, the Acquiring Fund will not be able to employ leverage
to the same extent as the Acquired Fund, and the use of leverage has
historically contributed positively to the Acquired Fund's net income per share.
Limitations on the use of leverage could cause the Acquiring Fund's yield to be
lower than the Acquired Fund's current yield. In addition, as an open-end fund,
the Acquiring Fund will normally be required to maintain a larger cash position
than the Acquired Fund currently maintains.
Potential Tax Consequences to Shareholders. Although the Acquired Fund and
its shareholders are not expected to recognize gain or loss upon the Acquisition
for federal income tax purposes, the Acquiring Fund may recognize gains that,
upon distribution, are taxable to shareholders as a result of sales of portfolio
securities after the Acquisition.
Investment Policies of Acquiring Fund. As noted above, the Acquiring
Fund's investment policies permit the Fund to invest a greater portion of its
assets in foreign government securities than the Acquired Fund. To the extent
that the Acquiring Fund invests more of its assets in foreign securities than
the Acquired Fund, it would be more subject to the risks associated with such
investments, such as greater price volatility and less liquidity.
Consideration of the Directors of the Acquired Fund
After careful consideration, the Directors (including all Directors who
are not "interested persons" of the Acquired Fund, the Adviser or its
affiliates), with the advice and assistance of independent counsel, determined
that the Acquisition would be in the best interests of the Acquired Fund. The
Directors approved the Plan and the Acquisition and dissolution and recommended
that the shareholders of the Acquired Fund vote in favor of the Acquisition by
approving the Plan. In reaching this conclusion, the Directors considered, among
other factors:
o Elimination of Activist Shareholder Activities and Related Costs.
The Acquired Fund has a charter provision that mandates the
submission to shareholders of an open-ending proposal if certain
discount related conditions are met and shareholders representing at
least 10% of the outstanding shares request such submission. This
and other factors have resulted in significant levels of activism in
the Acquired Fund in recent years. The Acquiring Fund, as an
open-end fund, is not susceptible to the type of activities
currently engaged in by activist shareholders of the Acquired Fund.
The Board considered that such activities have been, and could
continue to be, costly to the Acquired Fund.
o Shareholder Support for Liquidity at NAV. The Acquired Fund's
shareholders recently approved a shareholder proposal which
requested that the Board consider authorizing a self-tender offer
for all of the Acquired Fund's outstanding common shares and, if
more than 50% of such shares are tendered, take steps to liquidate,
merge or convert the Acquired Fund into an open-end mutual fund.
Such shareholder approval indicated significant shareholder support
for providing Acquired Fund shareholders with liquidity at NAV.
Acquiring Fund shares, which do not trade on an exchange, will not
be subject to discounts. Accordingly, shareholders who receive
Advisor Class shares of the Acquiring Fund through the Acquisition
will be able to redeem their shares at NAV (subject to a 0.75%
redemption fee for the three-month period following the Closing
Date) on each business day, as described in the Acquiring Fund's
prospectus.
o Investment Objective and Investment Strategies. The Acquiring Fund
will have the same investment objective as the Acquired Fund. Like
the Acquired Fund, the Acquiring Fund will normally invest at least
80% of its net assets in income-producing securities. In addition,
like the Acquired Fund, no more than 35% of the Acquiring Fund's net
assets may be invested in below investment grade securities. The
most significant difference between the Acquiring Fund and the
Acquired Fund is that, while the Acquired Fund invests at least 65%
of its total assets in securities issued by the U.S. government and
related repurchase agreements, the Acquiring Fund will invest at
least 65% of its total assets in securities of U.S. and foreign
governments and related repurchase agreements. To the extent that
the Acquiring Fund invests more of its assets in the securities of
foreign governments, as it is expected to do, it will be subject to,
among other risks associated with such investments, greater foreign
(non-U.S.) securities risk and emerging and frontier market risk
than those of securities of developed markets issuers. However, the
Acquiring Fund will have an additional policy to invest at least 65%
of its total assets in securities denominated in U.S. dollars, which
will serve to reduce the currency risks associated with investments
in foreign government securities, and no more than 25% of the
Acquiring Fund's total assets may be invested in securities of
issuers in any one country other than the U.S.
o Management and Service Providers. The Acquiring Fund will have the
same investment adviser and the same portfolio managers, and will be
overseen by the same Directors, and be serviced by some of the same
service providers as the Acquired Fund. ABIS, which currently
provides phone inquiry services to the Acquired Fund, will act as
the transfer agent for the Acquiring Fund and ABI, the Company's
principal underwriter, will be the distributor of the Acquiring
Fund's shares. ABIS and ABI are affiliates of the Adviser.
o Comparison of Investment Advisory Fees. The Acquiring Fund is
subject to an investment advisory fee rate that is structured
differently than the Acquired Fund's fee, since it will not be
partly based on the Acquiring Fund's income. Under the terms of the
Acquired Fund's investment advisory agreement with the Adviser, the
Fund pays the Adviser an advisory fee in an amount equal to a base
fee of 0.30% of the Fund's average weekly net assets up to $250
million, plus 0.25% of average weekly net assets in excess of $250
million, and an income-based fee of 4.75% of the Fund's daily gross
income (i.e., income other than gains from the sale of securities or
gains realized from options, futures and swaps, less interest on
money borrowed by the Fund). However, the Acquired Fund's advisory
fee may not exceed 0.80% of the Acquired Fund's average weekly net
assets during any month. The current advisory fee, as of August 31,
2015, is 0.49%, which, due to low interest rates, is lower than the
10-year average effective fee rate of 0.58%. Instituting a similar
income-based fee for the Acquiring Fund could be a marketing
impediment in distributing the Acquiring Fund's shares. The Adviser
recommended an asset-based fee typical for an open-end fund. The
proposed advisory fee at the annualized rate of 0.60% of the first
$2.5 billion of the Acquiring Fund's average daily net assets; 0.55%
of the excess of $2.5 billion up to $5 billion; and 0.50% of the
excess over $5 billion will be higher than the fee rate currently
paid by the Acquired Fund in the current low interest rate
environment, although it will be lower than the fee rate paid by the
Acquired Fund in most prior periods and very close to the 10-year
average effective rate of the Acquired Fund. The Acquired Fund and
the Acquiring Fund both reimburse the Adviser for the costs of
providing administrative and accounting services to the Funds.
o Expense Ratio. Because closed-end funds that open-end are typically
subject to substantial redemptions and a resulting decrease in
assets, which would affect the Acquiring Fund's expense ratio, the
gross expense ratio of the Acquiring Fund is expected to be, at
least initially, significantly higher. Expenses are also expected to
be higher because of the additional costs of operating an open-end
fund. The Adviser has agreed to waive fees and/or reimburse expenses
to limit the annual operating expenses of Advisor Class shares, the
class of shares that the Acquired Fund's shareholders will receive
in the Acquisition, to 0.63% for the two-year period beginning with
the Acquiring Fund's commencement of operations. This expense cap is
higher than, but comparable to, the current total expense ratio of
the Acquired Fund of 0.55%, although that expense ratio would be
expected to increase with an increase in market interest rates. As
noted above, substantial redemptions may accompany the
reorganization of a closed-end fund into an open-end fund. The
imposition of the 0.75% redemption fee on Advisor Class share
redemptions and exchanges for the three-month period following the
Closing Date is intended to help the Acquiring Fund defray expected
transaction costs incurred in response to redemption requests.
o Tax-Free Reorganization. The Acquisition is intended to qualify for
federal income tax purposes as a tax-free reorganization under the
Code. As a result, no gain or loss is expected to be recognized by
the Acquired Fund or the Fund's shareholders upon (i) the transfer
of the Acquired Fund's assets to the Acquiring Fund in exchange for
Advisor Class shares, (ii) the assumption of the Acquired Fund's
liabilities by the Acquiring Fund, (iii) the distribution of the
Advisor Class shares by the Acquired Fund to its shareholders in
complete liquidation of the Fund, or (iv) the receipt by Acquired
shareholders of Advisor Class shares of the Acquiring Fund in
exchange for their Acquired Fund shares.
o Costs and Expenses of the Acquisition. The costs and expenses of the
Acquisition are estimated to be approximately $600,000. These costs
and expenses will be paid by the Acquired Fund, except that any
costs and expenses that exceed $540,000(other than fees and expenses
of counsel to the Independent Directors) will be paid by the
Adviser.
o Exchange Privileges. Following the Closing Date, shareholders of the
Acquired Fund who received Advisor Class shares of the Acquiring
Fund through the Acquisition will have exchange privileges with
other AB mutual funds. Acquiring Fund shareholders are entitled to
exchange their Advisor Class shares for Advisor Class shares of
other fund in the AB mutual fund group of equivalent NAV (less a
0.75% redemption fee on Advisor Class shares of the Acquiring Fund
exchanged during the three-month period following the Closing Date)
without sales or service charges following the Closing Date.
Based on the foregoing and additional information presented at the August
Board Meeting and at other meetings of the Directors, the Directors determined
that the Acquisition would be in the best interests of the Acquired Fund and its
shareholders. The Directors approved the Plan and the Acquisition, subject to
approval by shareholders of the Acquired Fund, and the solicitation of the
shareholders of the Acquired Fund to vote "FOR" the approval of the Plan.
Description of the Securities to be Issued
Advisor Class shares of the Acquiring Fund will be issued to the Acquired
Fund's shareholders in accordance with the Plan, as described above. Advisor
Class shares will not be subject to an initial sales charge or 12b-1
distribution fees. Advisor Class shareholders will be entitled to exchange their
Advisor Class shares of the Acquiring Fund for Advisor Class shares of another
fund in the AB mutual fund group without sales or service charges. During the
three-month period following the Closing Date, Advisor Class shares redeemed or
exchanged for the Advisor Class shares of other AB mutual funds will be subject
to a redemption fee of 0.75% to help the Acquiring Fund defray expected
transaction costs incurred in response to redemption requests from former
shareholders of the Acquired Fund.
Under the Plan, the Acquiring Fund will issue shares of its Advisor Class
shares for distribution to the Acquired Fund shareholders. Each Advisor Class
share of the Acquiring Fund represents an equal proportionate interest with the
other Advisor Class shares of the Acquiring Fund. Each share has equal earnings,
assets and voting privileges and is entitled to dividends and other
distributions out of the income earned and gain realized on the assets belonging
to the Acquiring Fund as authorized by the Company's Directors. Advisor Class
shares of the Acquiring Fund authorize their holders to one vote per full share
and fractional votes for fractional shares held. Shares of the Acquiring Fund
issued to the shareholders of the Acquired Fund pursuant to the Acquisition will
be duly authorized, validly issued, fully paid and nonassessable when issued,
will be transferable without restriction and will have no preemptive or
conversion rights. Shares will be sold and redeemed based upon their NAV per
share next determined after receipt of the purchase or redemption request.
Dividends and Other Distributions
On or before the Valuation Time, as defined in the Plan, the Acquired Fund
will, if necessary, declare and pay as a distribution substantially all of its
undistributed net investment income, net short-term capital gain and net
long-term capital gain as applicable to maintain its treatment as a regulated
investment company under the Code.
Share Certificates
The Acquiring Fund will not issue certificates representing Acquiring Fund
shares generally or in connection with the Acquisition. Ownership of the
Acquiring Fund's shares will be shown on the books of the Acquiring Fund's
transfer agent. If you currently hold certificates representing shares of the
Acquired Fund, it is not necessary to surrender the certificates.
Federal Income Tax Consequences
Subject to certain stated assumptions contained therein, the Acquired Fund
and the Acquiring Fund will receive an opinion of Seward & Kissel LLP
substantially to the effect that, for United States federal income tax purposes:
(i) the Acquisition will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and each of the Acquired Fund and the Acquiring
Fund will be a "party to a reorganization" within the meaning of Section 368(b)
of the Code;
(ii) no gain or loss will be recognized by the Acquired Fund on the
transfer of all of the Acquired Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund shares and the assumption by the Acquiring Fund of
the liabilities of the Acquired Fund, or upon the distribution of the Acquiring
Fund shares to the shareholders of the Acquired Fund, except for (A) gain or
loss that may be recognized on the transfer of "section 1256 contracts" as
defined in Section 1256(b) of the Code, (B) gain that may be recognized on the
transfer of stock in a "passive foreign investment company" as defined in
Section 1297(a) of the Code, and (C) any other gain or loss that may be required
to be recognized upon the transfer of an asset regardless of whether such
transfer would otherwise be a non-recognition transaction under the Code;
(iii) the tax basis in the hands of the Acquiring Fund of each asset of
the Acquired Fund will be the same as the tax basis of such asset in the hands
of the Acquired Fund immediately prior to the transfer thereof, increased by the
amount of gain (or decreased by the amount of loss), if any, recognized by the
Acquired Fund on the transfer;
(iv) the holding period of each asset of the Acquired Fund in the hands of
the Acquiring Fund, other than assets with respect to which gain or loss is
required to be recognized, will include in each instance the period during which
such asset was held by the Acquired Fund (except where investment activities of
the Acquiring Fund have the effect of reducing or eliminating the holding period
with respect to an asset);
(v) no gain or loss will be recognized by the Acquiring Fund upon its
receipt of the assets of the Acquired Fund solely in exchange for Acquiring Fund
shares and the assumption of the liabilities of the Acquired Fund;
(vi) no gain or loss will be recognized by the Acquired Fund shareholders
upon the exchange of their Acquired Fund shares for Acquiring Fund shares as
part of the Acquisition;
(vii) the aggregate tax basis of the Acquiring Fund shares that each
Acquired Fund shareholder receives in the Acquisition will be the same as the
aggregate tax basis of the Acquired Fund shares exchanged therefor; and
(viii) each Acquired Fund shareholder's holding period for the Acquiring
Fund shares received in the Acquisition will include the period for which such
shareholder held the Acquired Fund shares exchanged therefor, provided that the
Acquired Fund shareholder held such Acquired Fund shares as capital assets on
the date of the exchange.
This opinion of counsel will not be binding on the Internal Revenue
Service or a court and there is no assurance that the Internal Revenue Service
or a court will not take a view contrary to those expressed in the opinion.
Shareholders of the Acquired Fund are encouraged to consult their tax
advisers regarding the effect, if any, of the Acquisition in light of their
individual circumstances. Because the foregoing only relates to the federal
income tax consequences of the Acquisition, those shareholders also should
consult their tax advisers as to foreign, state and local tax consequences, if
any, of the Acquisition.
Capitalization Information
For information on the existing capitalization of the Acquired Fund and
pro forma capitalization of the Acquiring Fund, see Appendix H.
INFORMATION ABOUT THE FUNDS
Each of the Acquired Fund and the Acquiring Fund is a "diversified"
investment company registered under the 1940 Act. The Acquired Fund is a
closed-end management investment company organized as a Maryland corporation.
The Acquiring Fund is a newly formed series of the Company, an open-end
management investment company organized as a Maryland corporation.
Management of the Funds
Each of the Acquired Fund and the Acquiring Fund is overseen by the same
Board of Directors. In overseeing the management of the business and affairs of
each Fund, the Directors approve all significant agreements between the Fund (or
the Company, as applicable) and persons or companies furnishing services to it,
including the Fund's agreements with the Adviser and the Fund's other service
providers, including the administrator, custodian and transfer agent. The
day-to-day operations of each Fund are delegated to the Fund's officers, subject
to the Fund's investment objective and policies and the general supervision by
the Directors. Subsequent to the consummation of the Acquisition, the Directors
and officers of the Acquiring Fund will continue to serve as the Directors and
officers of the combined Fund.
The following table presents information about the Directors.
Number of
Portfolios in Other
AB Fund Public Company
Name, Address* Complex Directorship
Age and (Year First Principal Occupation(s) Overseen Currently Held
Elected**) During Past Five Years or Longer by Director by Director
------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
DIRECTORS
Chairman of the Board Private Investor since prior to 2010. Former Chairman and CEO of 121 Xilinx, Inc.
Marshall C. Turner, Jr.,# Dupont Photomasks, Inc. (components of semi-conductor (programmable
73 manufacturing). He has extensive operating leadership and logic semi-
(2005) venture capital investing experience, including five interim or conductors)
full-time CEO roles, and prior service as general partner of since 2007
institutional 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 Funds
since February 2014.
John H. Dobkin,# Independent Consultant since prior to 2010. Formerly, President 121 None
73 of Save Venice, Inc. (preservation organization) from 2001-2002;
(1998) Senior Adviser from June 1999-June 2000 and President of
Historic Hudson Valley (historic preservation) from December
1989-May 1999. Previously, Director of the National Academy of
Design. He has served as a director or trustee of various AB
Funds since 1992, and as Chairman of the Audit Committees of a
number of such Funds from 2001-2008.
Michael J. Downey,# Private Investor since prior to 2010. Formerly, managing partner 121 Asia Pacific Fund,
71 of Lexington Capital, LLC (investment advisory firm) from Inc.(registered
(2005) December 1997 until December 2003. He served as a Director investment
of Prospect Acquisition Corp. (financial services) from 2007 company) since
until 2009. From 1987 until 1993, Chairman and CEO of Prudential prior to 2010
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 and is a director and Chairman of one other
registered investment company.
William H. Foulk, Jr.,# Investment Adviser and an Independent Consultant since prior to 121 None
83 2010. Previously, he was Senior Manager of Barrett Associates,
(1998) Inc., a registered investment adviser. He was formerly Deputy
Comptroller and Chief Investment Officer of the State of New
York and, prior thereto, Chief Investment Officer of the New
York Bank for Savings. He has served as a director or trustee of
various AB Funds since 1983, and was Chairman of the Independent
Directors Committees of the AB Funds from 2003 until early
February 2014. He served as Chairman of such Funds from 2003
through December 2013. He is also active in a number of mutual
fund related organizations and committees.
D. James Guzy,# Chairman of the Board of SRC Computers, Inc. (semi-conductors), 121 None
79 with which he has been associated since prior to 2010. He served
(2005) as Chairman of the Board of PLX Technology (semi-conductors)
since prior to 2010 until November 2013. He was a director of
Intel Corporation (semi-conductors) from 1969 until 2008, and
served as Chairman of the Finance Committee of such company for
several years until May 2008. He has served as a director or
trustee of one or more of the AB Funds since 1982.
Nancy P. Jacklin,# Professorial Lecturer at the Johns Hopkins School of Advanced 121 None
67 International Studies (2008-2015). U.S. Executive Director of
(2006) the International Monetary Fund (which is responsible for
ensuring the stability of the international monetary system),
(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 Chairman of the Governance and Nominating
Committees of the AB Funds since August 2014.
Garry L. Moody,# Independent Consultant. Formerly, Partner, Deloitte & Touche LLP 121 None
63 (1995-2008) where he held a number of senior positions,
(2008) including Vice Chairman, and U.S. and Global Investment
Management Practice Managing Partner; President, Fidelity
Accounting and Custody Services Company (1993-1995); 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
both the Governing Council of the Independent Directors Council
(IDC), 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. 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 January 2007, of the law firm 121 None
76 Sullivan & Cromwell LLP and is a former member of the ABA
(2007) Federal Regulation of Securities Committee Task Force to draft
editions of the Fund Director's Guidebook. He also serves as a
director or trustee of various non-profit organizations and 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++ and head of 121 None
1345 Avenue of the Americas AllianceBernstein Investments, Inc. ("ABI")++ since July 2008;
New York, NY 10105 Director of ABI and President of the AB Mutual Funds.
55 Previously, he served as Executive Managing Director of ABI from
(2010) December 2006 to June 2008. Prior to joining ABI in 2006,
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 has been
associated since prior to 2004.
--------
* The address for each of the Fund's Independent Directors is c/o
AllianceBernstein L.P., Attention: Philip L. Kirstein, 1345 Avenue of the
Americas, New York, NY 10105.
** Under the Acquired Fund's Charter and Bylaws, the Board of Directors of
the Acquired Fund has been divided into three classes. The terms of Class
One Directors of the Acquired Fund, John H. Dobkin, Michael J. Downey and
Nancy P. Jacklin, will expire as of the annual meeting of shareholders of
the Acquired Fund in 2016, the terms of Class Two Directors of the
Acquired Fund, William H. Foulk, Jr., D. James Guzy and Robert M. Keith,
will expire as of the annual meeting of the shareholders of the Acquired
Fund in 2017, and the terms of Class Three Directors of the Acquired Fund,
Marshall C. Turner, Jr., Garry L. Moody and Earl D. Weiner, will expire as
of the annual meeting of shareholders of the Acquired Fund in 2018.
# Member of the Audit Committee, the Governance and Nominating Committee,
and the Independent Directors Committee for the Fund.
+ Mr. Keith is an "interested person," as defined in Section 2(a)(19) of the
Investment Company Act of 1940 (the "1940 Act"), of the Fund due to his
position as a Senior Vice President of the Adviser.
++ The Adviser and ABI are affiliates of the Fund.
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 2010 until July 2014, Mr.
Downey was a director of The Merger Fund (registered investment company) since
prior to 2010 until 2013, Mr. Guzy was Chairman of the Board of PLX Technology
(semi-conductors) since prior to 2010 until November 2013 and a director of
Cirrus Logic Corporation (semi-conductors) from prior to 2010 until July 2011,
and Mr. Moody was a director of Greenbacker Renewable Energy Company LLC
(renewable energy and energy efficiency projects) from August 2013 until January
2014.
The management of, and investment decisions for, the Acquiring Fund are
made by Paul J. DeNoon, Gershon M. Distenfeld, Douglas J. Peebles and Matthew S.
Sheridan, the same team responsible for managing the Acquired Fund.
Each of Mr. DeNoon, Mr. Distenfeld, Mr. Peebles and Mr. Sheridan is a
Senior Vice President of the Adviser, and has been associated with the Adviser
since prior to 2010. The Acquisition SAI provides additional information about
each portfolio manager's compensation, other accounts managed by each portfolio
manager, and each portfolio manager's ownership of securities in the Acquiring
Fund.
Advisory Agreements and Fees
Each Fund's investment adviser is the Adviser, which is located at 1345
Avenue of the Americas, New York, New York 10105. The Adviser is a leading
international investment adviser supervising client accounts with assets as of
June 30, 2015 totaling approximately $485 billion (of which more than $99
billion represented assets of registered investment companies sponsored by the
Adviser). As of June 30, 2015, the Adviser managed retirement assets for many of
the largest public and private employee benefit plans (including 18 of the
nation's FORTUNE 100 companies), for public employee retirement funds in 24
states and the District of Columbia, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide. The 33
registered investment companies managed by the Adviser, comprising approximately
139 separate investment portfolios, had as of June 30, 2015 approximately 2.8
million shareholder accounts. The Adviser also serves as each Fund's
administrator.
The Adviser provides investment advisory services to each Fund under an
advisory agreement (each an "Advisory Agreement"). Under its Advisory Agreement,
the Acquired Fund pays the Adviser a monthly advisory fee in an amount equal to
the sum of 1/12th of 0.30 of 1% of the Fund's average weekly net assets up to
$250 million, 1/12th of 0.25 of 1% of the Fund's average weekly net assets in
excess of $250 million, and 4.75% of the Fund's daily gross income (i.e., income
other than gains from the sale of securities and foreign currency transactions
or gains realized from options, futures and swaps, less interest on money
borrowed by the Fund) accrued by the Fund during the month. However, such
monthly advisory fee shall not exceed in the aggregate 1/12th of .80% of the
Fund's average weekly net assets during the month (approximately 0.80% on an
annual basis). Under the terms of its investment advisory agreement, the
Acquiring Fund will pay the Adviser a monthly advisory fee at an annualized rate
of 0.60% of the Fund's average daily net assets of up to $2.5 billion; 0.55% of
the excess over $2.5 billion up to $5 billion; and 0.50% of the excess over $5
billion.
The Acquired Fund pays the Adviser in its capacity as the Administrator
for the cost of providing certain services pursuant to an administration
agreement. Under the Acquiring Fund's Advisory Agreement, the Adviser has agreed
to provide certain clerical, accounting and administrative services to the Fund
and is entitled to receive reimbursement from the Acquiring Fund of the costs of
providing those services.
Each Advisory Agreement continues in effect (after an initial term of two
years) from year to year if such continuance is specifically approved, at least
annually, by a majority vote of the Directors of the Fund who neither are
interested persons of the Fund nor have any direct or indirect financial
interest in the Advisory Agreement, cast in person at a meeting called for the
purpose of voting on such approval. A discussion regarding the basis for the
Directors' approval of the Acquired Fund's Advisory Agreement is available in
the Acquired Fund's annual report to shareholders for the period ended December
31, 2014. A discussion regarding the basis for the Directors' approval of the
Acquiring Fund's Advisory Agreement is expected to be available in the Acquiring
Fund's first semi-annual report to shareholders for the period ending April 30,
2016.
In addition, the Adviser has entered into an expense limitation agreement
with the Company, on behalf of the Acquiring Fund, with an initial two-year term
beginning on the Acquiring Fund's commencement of operations. Pursuant to the
expense limitation agreement, the Adviser will waive its investment advisory fee
and/or pay the operating expenses of the Advisor Class shares of the Acquiring
Fund to the extent necessary to limit the total annual operating expenses of
such Advisor Class shares (excluding acquired fund fees and expenses (other than
those associated with any AB mutual fund in which the Acquiring Fund may
invest), interest expenses, brokerage commissions, and other transaction costs,
taxes and extraordinary expenses) to 0.63% of the Acquiring Fund's average daily
net assets. After the initial two-year term, the expense limitation agreement
may continue in effect from year-to-year unless terminated by the Adviser 60
days prior to the end of its then-current term. As a result of this undertaking,
for so long as the fee waivers and/or expense reimbursements are in effect, the
total operating expenses (after fee waivers and/or expense reimbursements) of
Advisor Class shares of the Acquiring Fund are expected to be approximately 8
basis points higher than the total fund operating expenses of the Acquired Fund,
but materially lower than they would be without the expense limitation.
Termination of the expense limitation agreement may, depending on the assets of
the Fund at termination, result in a substantial increase in the expense ratio
of the Advisor Class shares of the Acquiring Fund.
Acquiring Fund Distribution Arrangements
ABI, a wholly-owned subsidiary of the Adviser, serves as the distributor
(principal underwriter) of the Acquiring Fund's shares. Under a Distribution
Services Agreement between ABI and the Company (the "Distribution Services
Agreement"), the Acquiring Fund may pay distribution and service fees to ABI at
an annual rate of up to 0.25% of the Fund's average daily net assets
attributable to its Class A shares, up to 1.00% of the Fund's average daily net
assets attributable to its Class C shares, up to 0.50% of the Fund's average
daily net assets attributable to its Class R shares, and up to 0.25% of the
Fund's average daily net assets attributable to its Class K shares. The
Distribution Services Agreement is intended to defray expenses associated with
the distribution of such share classes in accordance with a plan of distribution
that is included in the Distribution Services Agreement and that has been duly
adopted and approved in accordance with Rule 12b-1 adopted by the SEC under the
1940 Act. The Distribution Services Agreement provides that the Distributor will
use such payments in their entirety for distribution assistance and promotional
activities. Because these fees are paid out of the Acquiring Fund's assets on an
ongoing basis, over time these fees will increase the cost of an investment in
these share classes and may cost more than paying other types of sales charges.
No distribution and/or service fees are paid with respect to Advisor Class
shares, which Acquired Fund shareholders will receive in the Acquisition, or
with respect to Class I shares or Class Z shares of the Acquiring Fund.
Administrative and Transfer Agency Arrangements
AllianceBernstein L.P., the Adviser, also acts as administrator for the
Acquired Fund. Under an Administration Agreement between the Adviser and the
Acquired Fund, the Acquired Fund pays the Adviser for the costs it incurs for
providing administrative services to the Fund. As noted above, under the
Acquiring Fund's Advisory Agreement, the Acquiring Fund reimburses the Adviser
for providing certain administrative services to the Fund.
Computershare acts as Dividend Paying Agent, Transfer Agent and Registrar
for the Acquired Fund. Under a Transfer Agency and Services Agreement between
Computershare and the Acquired Fund, Computershare Trust Company is compensated
for providing transfer agency and other services to the Fund. ABIS, an indirect
wholly-owned subsidiary of the Adviser, acts as transfer agent for the Acquiring
Fund. Under a Transfer Agency Agreement between ABIS and the Company, the
Acquiring Fund compensates ABIS for providing personnel and facilities to
perform transfer agency services for the Fund.
VOTING INFORMATION
The Directors have fixed the close of business on November 4, 2015 (the
"Record Date") as the date for the determination of shareholders entitled to
notice of, and to vote at, the Meeting and at any postponements or adjournments
thereof. Shareholders of record of the Acquired Fund at the close of business on
the Record Date are entitled to vote, even if they later sold such shares. As of
August 31, 2015, the Acquired Fund had 215,835,608 shares issued and
outstanding. Appendix I to this Proxy Statement/Prospectus identifies holders of
more than five percent (5%) of the Acquired Fund's shares, and contains
information about any holdings of the shares of the Acquired Fund by the
executive officers and Directors of the Acquired Fund.
Those shareholders who hold shares directly and not through a broker or
nominee (that is, a shareholder of record) may vote by appearing in person at
the Meeting, by returning the enclosed Proxy Card or by authorizing a proxy to
vote their shares or the Internet using the instructions provided on the
enclosed Proxy Card. To authorize a proxy to vote your shares by telephone or
using the Internet, please use the telephone number or Internet address, as
applicable, found on the Proxy Card. Owners of shares held through a broker or
nominee (who is the shareholder of record for those shares) should follow
directions provided to the shareholder by the broker or nominee to submit voting
instructions. Instructions to be followed by a shareholder of record to submit a
proxy via telephone or through the Internet, including use of the Control Number
on the shareholder's Proxy Card, are designed to verify shareholder identities,
to allow shareholders to give voting instructions and to confirm that
shareholder instructions have been recorded properly. Shareholders who authorize
proxies by telephone or through the Internet should not also return a Proxy
Card.
A shareholder of record may revoke that shareholder's proxy at any time
prior to exercise thereof by notifying the Secretary of the Fund in writing at
1345 Avenue of the Americas, New York, New York 10105, or by returning a proxy
with a later date. You also can revoke a proxy by voting in person at the
Meeting.
All properly executed proxies received prior to the Meeting will be voted
in accordance with the instructions marked thereon or otherwise as provided
therein. Unless instructions to the contrary are marked, proxies will be voted
"FOR" the approval of the Acquisition.
Properly executed proxies may be returned with instructions to abstain
from voting or to withhold authority to vote (an "abstention") or may represent
a broker "non-vote" (which is a proxy from a broker or nominee indicating that
the broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have discretionary power to vote).
Abstentions and broker non-votes will be considered present for purposes of
determining the existence of a quorum for the transaction of business but will
have the effect of a vote against the Acquisition.
Approval of the Proposal requires the affirmative vote of the holders of
two-thirds of the votes entitled to be cast on the matter.
A quorum for the transaction of business by shareholders of the Acquired
Fund at the Meeting will consist of the presence in person or by proxy of the
holders of a majority of the total outstanding shares of the Acquired Fund
entitled to vote at the Meeting. If a quorum is not represented at the Meeting
or, even if a quorum is so present, if sufficient votes are not received by the
date of the Meeting, or for any other reason, the chairman of the Meeting or a
person named as proxy may propose one or more adjournments from time to time to
permit further solicitation of proxies.
The Acquired Fund has engaged Computershare Fund Services (the "Proxy
Solicitor") to assist in soliciting proxies for the Meeting. The Acquired Fund
will pay the Proxy Solicitor a fee of approximately $170,000 for the Proxy
Solicitor's solicitation services for the Acquired Fund, plus reimbursement of
out-of-pocket expenses.
LEGAL MATTERS
The validity of shares offered hereby will be passed upon for the
Acquiring Fund by Seward & Kissel LLP.
FINANCIAL HIGHLIGHTS
The fiscal year-end of the Acquired Fund is December 31. The fiscal
year-end of the Acquiring Fund is October 31.
The financial highlights of the Acquired Fund for the five years ended
December 31, 2014, are contained in the Acquired Fund's most recent annual
report dated December 31, 2014, and have been audited by Ernst & Young LLP,
independent registered public accounting firm of the Acquired Fund.
Because the Acquiring Fund has not been operational for a full fiscal
period, financial highlights are not available.
INFORMATION FILED WITH THE SEC
The Fund and the Company are subject to the information requirements of
the Securities Exchange Act of 1934, as amended, and the 1940 Act and in
accordance therewith, file reports and other information, including proxy
materials and charter documents, with the SEC. Reports, proxy statements,
registration statements and other information filed by the Fund may be inspected
without charge and copied at the public reference facilities maintained by the
SEC at 100 F Street, N.E., Washington, DC 20549.
You may also view or obtain these documents from the SEC:
By phone: 1-202-551-8090 (for information on the operations of the
Public Reference Room only)
By electronic mail: publicinfo@sec.gov (duplicating fee required)
On the Internet: www.sec.gov
Information relating to the Acquired Fund and the Acquiring Fund can be
found in the following documents:
o The Acquisition SAI dated as of November 4, 2015 that has been filed
with the SEC in connection with the Proxy Statement/Prospectus;
o The annual report to shareholders for the Acquired Fund, which
contains audited financial statements and the related independent
registered public accounting firm's report for the Acquired Fund for
the fiscal year ended December 31, 2014; and
o The semi-annual report of the Acquired Fund, which contains
unaudited financial statements for the six-month period ended June
30, 2015.
Because the Acquiring Fund is a recently created fund that has not yet
commenced operations, no shareholder reports for the Acquiring Fund are
available.
Copies of the annual and semi-annual reports to shareholders of the
Acquired Fund are available, along with the Proxy Statement/Prospectus and
Acquisition SAI, upon request, without charge, by writing to the address or
calling the telephone number listed below.
By mail: c/o AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By phone: (800) 221-5672
THE DIRECTORS RECOMMEND THAT YOU VOTE FOR THE PROPOSAL.
Appendix A
FORM OF AGREEMENT AND PLAN OF ACQUISITION AND DISSOLUTION RELATING TO
THE ACQUISITION OF THE ASSETS AND LIABILITIES OF
ALLIANCEBERNSTEIN INCOME FUND, INC.
As of
[________], 2015
This Agreement and Plan of Acquisition and Dissolution (the "Plan") is
made as of this [__] day of [________], 2015, by and among AB Bond Fund Inc.
(the "Company"), a Maryland corporation, on behalf of its series, AB Income Fund
(the "Acquiring Fund"); AllianceBernstein Income Fund, Inc. (the "Acquired
Fund"), a Maryland corporation; and, solely for purposes of Section 24,
AllianceBernstein L.P., the investment adviser to the Acquiring Fund and the
Acquired Fund (the "Adviser").
WHEREAS, the Acquiring Fund is a series of the Company, an open-end
management investment company registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Acquired Fund is a closed-end management investment company
registered with the SEC under the 1940 Act, and shares of common stock, par
value $0.01 per share (the "Common Stock") of the Acquired Fund are currently
purchased and sold on the New York Stock Exchange (the "NYSE");
WHEREAS, the parties desire that the Acquired Fund transfer all of its
assets to the Acquiring Fund in exchange for Advisor Class shares of the
Acquiring Fund of equal net asset value ("Acquisition Shares") and the
assumption by the Acquiring Fund of the liabilities of the Acquired Fund and the
distribution of the Acquisition Shares to shareholders of the Acquired Fund (the
"Acquisition"); and that the Acquired Fund thereafter liquidate and dissolve;
and
WHEREAS, the parties intend that the Acquisition qualify as a
"reorganization" within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provisions, and that with respect to the Acquisition, the Acquiring Fund and the
Acquired Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
Now, therefore, the Company, on behalf of the Acquiring Fund, and the
Acquired Fund agree as follows:
1. Definitions
In addition to the terms elsewhere defined herein, each of the following
terms shall have the meaning indicated for that term as follows:
1933 Act......................Securities Act of 1933, as amended.
Assets .......................All assets of any kind and all interests, rights,
privileges and powers of or attributable to the
Acquired Fund or its shares, as appropriate,
whether or not determinable at the appropriate
Effective Time and wherever located, including,
without limitation, all cash, cash equivalents,
securities, commodities, futures interests,
claims (whether absolute or contingent, known or
unknown, accrued or unaccrued or conditional or
unmatured), contract rights, rights to register
shares under applicable securities laws, and
receivables (including dividend and interest
receivables) owned by the Acquired Fund or
attributable to its shares and any deferred or
prepaid expense shown as an asset on the Acquired
Fund's books.
Closing Date .................Shall be on such other date following the date
that shareholders of the Acquired Fund approve
the Plan as the parties may agree.
Effective Time ...............5:00 p.m. Eastern time on the Closing Date, or
such other time as the parties may agree to in
writing.
Financial Statements .........The audited financial statements of the Acquired
Fund for its most recently completed fiscal year
and, if applicable, the unaudited financial
statements of the Acquired Fund for its most
recently completed semi-annual period.
Fund .........................The Acquiring Fund and/or the Acquired Fund, as
the case may be.
Liabilities ..................All liabilities, expenses and obligations of any
kind whatsoever of the Acquired Fund, whether
known or unknown, accrued or unaccrued, absolute
or contingent or conditional or unmatured, except
that expenses of the Acquisition contemplated
hereby to be paid by the Acquired Fund pursuant
to Section 24 of the Plan and which shall not be
assumed or paid by the Acquiring Fund shall not
fall within the definition of Liabilities for
purposes of this Plan.
N-14 Registration Statement...The Registration Statement of the Company (with
respect to the Acquiring Fund) on Form N-14 under
the 1940 Act that will register the Acquisition
Shares to be issued in the Acquisition and will
include the proxy materials necessary for the
shareholders of the Acquired Fund to approve the
Acquisition.
Valuation Time ...............The close of regular session trading on the NYSE
on the day before the Closing Date or such other
time as may be mutually agreed upon, when for
purposes of the Plan, the Acquiring Fund
determines its net asset value per Acquisition
Share and the Acquired Fund determines the net
value of the Assets.
NAV ..........................A Fund's net asset value per share, which is
calculated by valuing and totaling its assets and
then subtracting its liabilities and then
dividing the balance by the number of shares that
are outstanding.
2. Regulatory Filings
The Company, on behalf of the Acquiring Fund, shall promptly prepare and
file the N-14 Registration Statement with the SEC, and the Company and the
Acquired Fund also shall make any other required or appropriate filings with
respect to the actions contemplated hereby.
3. Shareholder Action
As soon as practicable after the effective date of the N-14 Registration
Statement, the Acquired Fund shall hold a meeting of the shareholders of the
Acquired Fund to consider and vote upon the Plan and such other matters as the
Board of Directors may determine. Such approval by the shareholders of the
Acquired Fund shall, to the extent necessary to permit the consummation of the
transactions contemplated herein without violating any investment objective,
policy or restriction of the Acquired Fund, be deemed to constitute approval by
the shareholders of a temporary amendment of any investment objective, policy or
restriction that would otherwise be inconsistent with or violated upon the
consummation of such transactions solely for the purpose of consummating such
transactions.
4. Transfer of the Acquired Fund's Assets
The Acquiring Fund and the Acquired Fund shall take the following steps
with respect to the Acquisition, as applicable:
(a) On or prior to the Closing Date, the Acquired Fund shall pay or
provide for the payment of all of the Liabilities, expenses, costs
and charges of or attributable to the Acquired Fund that are known
to the Acquired Fund and that are due and payable prior to or as of
the Closing Date.
(b) On or prior to the Valuation Date, except to the extent prohibited
by Rule 19b-1 under the 1940 Act, the Acquired Fund will declare to
Acquired Fund shareholders of record a dividend or dividends which,
together with all previous such dividends, shall have the effect of
distributing (a) all the excess of (i) Acquired Fund's investment
income excludable from gross income under Section 103(a) of the Code
over (ii) Acquired Fund's deductions disallowed under Sections 265
and 171(a)(2) of the Code, (b) all of Acquired Fund's investment
company taxable income (as defined in Code Section 852), (computed
in each case without regard to any deduction for dividends paid),
and (c) all of Acquired Fund's net realized capital gain (as defined
in Code Section 1222), if any (after reduction for any capital loss
carryover), in each case for both the taxable year ending on
December 31, 2015, and for the short taxable year beginning on
January 1, 2016, and ending on the Closing Date. Such dividends will
be declared and paid to ensure continued qualification of the
Acquired Fund as a "regulated investment company" for tax purposes
and to eliminate fund-level tax.
(c) At the Effective Time, pursuant to Articles of Transfer accepted for
record by the State Department of Assessments and Taxation of
Maryland (the "SDAT"), the Acquired Fund shall assign, transfer,
deliver and convey the Assets to the Acquiring Fund, subject to the
Liabilities. The Acquiring Fund shall then accept the Assets and
assume the Liabilities such that at and after the Effective Time (i)
the Assets at and after the Effective Time shall become and be
assets of the Acquiring Fund, and (ii) the Liabilities at the
Effective Time shall attach to the Acquiring Fund, and shall be
enforceable against the Acquiring Fund to the same extent as if
initially incurred by the Acquiring Fund.
(d) Within a reasonable time prior to the Closing Date, the Acquired
Fund shall provide, if requested, a list of the Assets to the
Acquiring Fund. The Acquired Fund may sell any asset on such list
prior to the Effective Time. After the Acquired Fund provides such
list, the Acquired Fund will not acquire any additional securities
or permit to exist any encumbrances, rights, restrictions or claims
not reflected on such list, without the approval of the Acquiring
Fund. Within a reasonable time after receipt of the list and prior
to the Closing Date, the Acquiring Fund will advise the Acquired
Fund in writing of any investments shown on the list that the
Acquiring Fund has determined to be inconsistent with its investment
objective, policies and restrictions. The Acquired Fund will dispose
of any such securities prior to the Closing Date to the extent
practicable and consistent with applicable legal requirements,
including the Acquired Fund's investment objectives, policies and
restrictions. In addition, if the Acquiring Fund determines that, as
a result of the Acquisition, the Acquiring Fund would own an
aggregate amount of an investment that would exceed a percentage
limitation applicable to the Acquiring Fund, the Acquiring Fund will
advise the Acquired Fund in writing of any such limitation and the
Acquired Fund shall dispose of a sufficient amount of such
investment as may be necessary to avoid the limitation as of the
Effective Time, to the extent practicable and consistent with
applicable legal requirements, including the Acquired Fund's
investment objectives, policies and restrictions.
(e) The Acquired Fund shall assign, transfer, deliver and convey the
Assets to the Acquiring Fund at the Effective Time on the following
basis:
(1) The value of the Assets less the Liabilities of the Acquired
Fund shall be the value of such Assets determined as of the
Valuation Time using the valuation procedures of the Company,
or such other valuation procedures as shall be mutually agreed
upon by the parties, and, in exchange for the transfer of the
Assets by the Acquired Fund to the Acquiring Fund, the
Acquiring Fund shall assume the Liabilities and simultaneously
issue and deliver to the Acquired Fund the number of
Acquisition Shares (including fractional Acquisition Shares)
equal in aggregate net asset value to the aggregate net asset
value of shares of the Acquired Fund then outstanding, rounded
to the fourth decimal place or such other decimal place as the
parties may agree to in writing;
(2) The NAV of each Acquisition Share to be delivered to the
Acquired Fund shall be the NAV determined as of the Valuation
Time in accordance with the valuation procedures of the
Company, with the NAV of each Acquisition Share to be
delivered to the Acquired Fund being equal to the last
determined NAV of the Acquired Fund;
(3) The number of Acquisition Shares (including fractional shares,
if any) to be delivered to the Acquired Fund shall be
determined by dividing the aggregate net assets of the
Acquired Fund by the NAV per share of the Acquiring Fund
(determined in accordance with Section 4(e)(2) of this Plan);
and
(4) The portfolio securities of the Acquired Fund shall be made
available by the Acquired Fund to State Street Bank & Trust
Company, as custodian for the Acquiring Fund (the
"Custodian"), for examination no later than five business days
preceding the Valuation Time. On the Closing Date, such
portfolio securities and all the Acquired Fund's cash shall be
delivered by the Acquired Fund to the Custodian for the
account of the Acquiring Fund, such portfolio securities to be
duly endorsed in proper form for transfer in such manner and
condition as to constitute good delivery thereof in accordance
with the custom of brokers or, in the case of portfolio
securities held in the U.S. Treasury Department's book-entry
system or by The Depository Trust Company, Participants Trust
Company or other third party depositories, by transfer to the
account of the Custodian in accordance with Rule 17f-4, Rule
17f-5 or Rule 17f-7, as the case may be, under the 1940 Act
and accompanied by all necessary federal and state stock
transfer stamps or a check for the appropriate purchase price
thereof. The cash delivered shall be in the form of currency
or certified or official bank checks, payable to the order of
the Custodian or shall be wired to an account pursuant to
instructions provided by the Acquiring Fund.
(f) Promptly after the Closing Date, the Acquired Fund will deliver to
the Acquiring Fund a Statement of Assets and Liabilities of the
Acquired Fund as of the Closing Date.
5. Liquidation and Dissolution of the Acquired Fund, Registration of
Acquisition Shares and Access to Records
The Acquired Fund and the Acquiring Fund also shall take the following
steps, as applicable:
(a) At or as soon as reasonably practical after the Effective Time, the
Acquired Fund shall completely liquidate and dissolve by
transferring to its shareholders of record the Acquisition Shares it
receives pursuant this Plan. The Acquiring Fund shall establish
accounts on its share records and note on such accounts the names of
the former Acquired Fund shareholders and the amount of Acquisition
Shares that former Acquired Fund shareholders are due based on their
respective holdings of shares of the Acquired Fund as of the close
of business on the Closing Date. The Acquiring Fund shall not issue
certificates representing Acquisition Shares in connection with such
exchange. All issued and outstanding shares in connection with such
exchange will be simultaneously cancelled on the books of the
Acquired Fund. Ownership of Acquisition Shares will be shown on the
books of the Acquiring Fund's transfer agent.
Following distribution by the Acquired Fund to its shareholders of
all Acquisition Shares delivered to the Acquired Fund, the Acquired
Fund shall wind up its affairs and shall take all steps as are
necessary and proper to dissolve and terminate its existence as soon
as is reasonably possible after the Effective Time.
(b) At and after the Closing Date, the Acquired Fund shall provide the
Acquiring Fund and its transfer agent with immediate access to: (i)
all records containing the names, addresses and taxpayer
identification numbers of all of the Acquired Fund's shareholders
and the number and percentage ownership of the outstanding shares of
the Acquired Fund owned by shareholders as of the Effective Time,
and (ii) all original documentation (including all applicable
Internal Revenue Service forms, certificates, certifications and
correspondence) relating to the Acquired Fund shareholders' taxpayer
identification numbers and their liability for or exemption from
back-up withholding. The Acquired Fund shall preserve and maintain,
or shall direct its service providers to preserve and maintain,
records with respect to the Acquired Fund as required by Section 31
of, and Rules 31a-1 and 31a-2 under, the 1940 Act.
6. Certain Representations and Warranties of the Acquired Fund
The Acquired Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Acquired Fund is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Maryland. The Acquired Fund is registered with the SEC as a
closed-end management investment company under the 1940 Act and its
shares are duly registered with the SEC under the 1934 Act, and the
registration of the Acquired Fund shares will be in full force and
effect as of the Effective Time.
(b) The Acquired Fund has the power and all necessary federal, state and
local qualifications and authorizations to own all of the Assets, to
carry on its business, to enter into this Plan and to consummate the
transactions contemplated herein.
(c) The Board of Directors of the Acquired Fund has duly authorized the
execution and delivery of this Plan and the transactions
contemplated herein with respect to the Acquired Fund. Duly
authorized officers of the Acquired Fund have executed and delivered
the Plan. The Plan represents a valid and binding contract of the
Acquired Fund, enforceable against the Acquired Fund in accordance
with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, arrangement, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles. The execution and delivery of this
Plan by the Acquired Fund does not, and, subject to the approval of
shareholders referred to in Section 3 hereof, the consummation of
the transactions contemplated by this Plan will not, violate federal
securities laws or Maryland law, or the Acquired Fund's Charter or
Bylaws or any material agreement to which the Acquired Fund is
subject. Except for the approval of its shareholders and the Board
of Directors of the Acquired Fund, the Acquired Fund does not need
to take any other action to authorize its officers to effectuate
this Plan and the transactions contemplated herein on behalf of the
Acquired Fund.
(d) The Acquired Fund has qualified as a regulated investment company
under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code,
and has been eligible for taxation under Section 852(b) of the Code,
in respect of each taxable year since the commencement of its
operations and intends to continue to qualify as a regulated
investment company for its taxable year that includes the Closing
Date.
(e) The information pertaining to the Acquired Fund included within the
N-14 Registration Statement when filed with the SEC, when Part A of
the N-14 Registration Statement is distributed to shareholders, at
the time of the shareholder meeting of the Acquired Fund for
approval of the Acquisition and at the Effective Time, insofar as it
relates to the Acquired Fund, shall (i) comply in all material
respects with the applicable provisions of the 1933 Act and the 1940
Act, and the rules and regulations thereunder and applicable state
securities laws, and (ii) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(f) The Acquired Fund has duly authorized and validly issued all of its
issued and outstanding shares, and all such shares are fully paid
and nonassessable and were offered for sale and sold in conformity
with the registration requirements of all applicable federal and
state securities laws. There are no outstanding options, warrants or
other rights to subscribe for or purchase any of the shares of the
Acquired Fund, and there are no securities convertible into shares
of the Acquired Fund.
(g) The Acquired Fund shall operate its business in the ordinary course
between the date hereof and the Effective Time. Such ordinary course
of business will include the declaration and payment of customary
dividends and distributions and any other dividends and
distributions referred to in Section 4(b) hereof.
(h) At the Effective Time, the Acquired Fund will have good and
marketable title to the Assets and full right, power and authority
to assign, transfer, deliver and convey the Assets.
(i) The Financial Statements of the Acquired Fund, a copy of which has
been previously delivered to the Acquiring Fund, fairly present the
financial position of the Acquired Fund as of the Acquired Fund's
most recent fiscal year-end and the results of the Acquired Fund's
operations and changes in the Acquired Fund's net assets for the
periods indicated.
(j) To the knowledge of the Acquired Fund, the Acquired Fund has no
liabilities, whether or not determined or determinable, other than
the liabilities disclosed or provided for in its Financial
Statements or liabilities incurred in the ordinary course of
business subsequent to the date of the most recent Financial
Statement referencing liabilities and reflected in its NAV.
(k) To the knowledge of the Acquired Fund, except as has been disclosed
in writing to the Acquiring Fund, no claims, actions, suits,
investigations or proceedings of any type are pending or threatened
against the Acquired Fund or any of its properties or assets or any
person whom the Acquired Fund may be obligated to indemnify in
connection with such litigation, proceeding or investigation.
Subject to the foregoing, there are no facts that the Acquired Fund
has reason to believe are likely to form the basis for the
institution of any such claim, action, suit, investigation or
proceeding against the Acquired Fund. The Acquired Fund is not a
party to nor subject to the provisions of any order, decree or
judgment of any court or governmental body that adversely affects,
or is reasonably likely to adversely affect, its financial
condition, results of operations, or the Assets or its ability to
consummate the transactions contemplated by the Plan.
(l) Except for agreements entered into or granted in the ordinary course
of its business, in each case under which no material default
exists, and this Plan, the Acquired Fund is not a party to or
subject to any material contract or other commitments, which if
terminated, may result in material liability to the Acquired Fund or
under which (whether or not terminated) any material payment for
periods subsequent to the Closing Date will be due from the Acquired
Fund.
(m) The Acquired Fund has filed or will file its federal income tax
returns, copies of which have been previously made available or will
be made available to the Acquiring Fund, for all taxable years
ending on or before the Closing Date, and has paid or will pay all
taxes shown as due on such returns. All of the Acquired Fund's tax
liabilities will have been adequately provided for on its books. No
such return is currently under audit and no unpaid assessment has
been asserted with respect to such returns. To the best of the
Acquired Fund's knowledge, it will not have any tax deficiency or
liability asserted against it or question with respect thereto
raised, and it will not be under audit by the Internal Revenue
Service or by any state or local tax authority for taxes in excess
of those already paid. The Acquired Fund will timely file its
federal income tax return for each subsequent taxable year including
its current taxable year.
(n) Since the date of the Financial Statements of the Acquired Fund,
there has been no material adverse change in its financial
condition, results of operations, business, or Assets. For this
purpose, negative investment performance shall not be considered a
material adverse change.
(o) The Acquired Fund's investment operations from inception to the date
hereof have been in compliance in all material respects with the
investment policies and investment restrictions set forth in its
prospectus or prospectuses and statement or statements of additional
information as in effect from time to time, except as previously
disclosed in writing to the Acquiring Fund.
(p) The Acquisition Shares to be issued to the Acquired Fund pursuant to
paragraph 4(e)(1) will not be acquired for the purpose of making any
distribution thereof other than to the Acquired Fund shareholders as
provided in paragraph 4(e)(1).
(q) The Acquired Fund, or its agent(s), (i) holds or has obtained a
valid Form W-8BEN, Certificate of Foreign Status of Beneficial Owner
for United States Withholding (or other appropriate series of Form
W-8, as the case may be) or Form W-9, Request for Taxpayer
Identification Number and Certification, for each Acquired Fund
shareholder of record, which Form W-8 or Form W-9 can be associated
with reportable payments made by the Acquired Fund to such
shareholder, and/or (ii) has otherwise timely instituted any
required backup withholding procedures with respect to such
shareholder as provided by Section 3406 of the Code and the
regulations thereunder.
7. Certain Representations and Warranties of the Acquiring Fund
The Company, on behalf of itself or the Acquiring Fund, as applicable,
represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Fund is a duly established series of the Company,
which is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Maryland. The Company
is registered with the SEC as an open-end management investment
company under the 1940 Act and the registration of the Acquiring
Fund shares under the 1933 Act will be in full force and effect as
of the Effective Time.
(b) The Acquiring Fund has the power and all necessary federal, state
and local qualifications and authorizations to own all of its
assets, to carry on its business, to enter into this Plan and to
consummate the transactions contemplated herein.
(c) The Board of Directors of the Company has duly authorized execution
and delivery of this Plan and the transactions contemplated herein
on behalf of the Company, on behalf of the Acquiring Fund. Duly
authorized officers of the Acquiring Fund have executed and
delivered the Plan. The Plan represents a valid and binding contract
of the Acquiring Fund, enforceable against the Acquiring Fund in
accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution
and delivery of this Plan by the Company does not, and the
consummation of the transactions contemplated by this Plan will not,
violate the federal securities laws or Maryland law or the Company's
Charter or Bylaws or any material agreement to which the Acquiring
Fund is subject. Except for the approval of the Board of Directors
of the Company, the Company does not need to take any other action
to authorize its officers to effectuate the Plan and the
transactions contemplated herein on behalf of the Acquiring Fund.
(d) The Acquiring Fund is a recently formed separate series of the
Company that, immediately after the Acquisition, will be treated as
a separate corporation from each other series of the Company under
Section 851(g) of the Code. Prior to the Closing Date, the Acquiring
Fund will have no assets (except cash in payment for the Initial
Share), liabilities or operations of any kind. The Acquiring Fund
intends to qualify as a regulated investment company under Part I of
Subchapter M of Subtitle A, Chapter 1, of the Code and to be
eligible for taxation under Section 852(b) of the Code for the
taxable year that will include the Closing Date and each subsequent
taxable year.
(e) The N-14 Registration Statement, when filed with the SEC, when Part
A of the N-14 Registration Statement is distributed to shareholders
of the Acquired Fund, at the time of the shareholder meeting of the
Acquired Fund for approval of this Plan providing for the
Acquisition and at the Effective Time, insofar as it relates to the
Acquiring Fund, shall (i) comply in all material respects with the
applicable provisions of the 1933 Act and the 1940 Act, and the
rules and regulations thereunder and applicable state securities
laws and (ii) not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(f) The Company has duly authorized and validly issued all issued and
outstanding shares of the Acquiring Fund, and all such shares are
fully paid and non-assessable and were offered for sale and sold in
conformity with the registration requirements of all applicable
federal and state securities laws. The Acquiring Fund has duly
authorized the Acquisition Shares referred to in Section 4(e) hereof
to be issued and delivered to the Acquired Fund as of the Effective
Time. When issued and delivered, such Acquisition Shares shall be
validly issued, fully paid and non-assessable, and no shareholder of
the Acquiring Fund shall have any preemptive right of subscription
or purchase in respect of any such share. There are no outstanding
options, warrants or other rights to subscribe for or purchase any
Acquisition Shares, nor are there any securities convertible into
Acquisition Shares.
(g) To the knowledge of the Acquiring Fund, except as has been disclosed
in writing to the Acquired Fund, no claims, actions, suits,
investigations or proceedings of any type are pending or threatened
against the Acquiring Fund or any of its properties or assets or any
person whom the Acquiring Fund may be obligated to indemnify in
connection with such litigation, proceeding or investigation.
Subject to the foregoing, there are no facts that the Acquiring Fund
currently has reason to believe are likely to form the basis for the
institution of any such claim, action, suit, investigation or
proceeding against the Acquiring Fund. The Acquiring Fund is not a
party to or subject to the provisions of any order, decree or
judgment of any court or governmental body that adversely affects,
or is reasonably likely to adversely affect its financial condition,
results of operations, its assets or its ability to consummate the
transactions contemplated by this Plan.
(h) Except for agreements entered into or granted in the ordinary course
of its business, in each case under which no material default
exists, the Acquiring Fund is not a party to or subject to any
material contract, debt instrument, employee benefit plan, lease,
franchise, license or permit of any kind or nature whatsoever.
(i) The Acquiring Fund will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act
and such state securities laws as it may deem appropriate in order
to continue its operations after the Closing Date.
8. Conditions to the Obligations of the Acquiring Fund and the Acquired Fund
The obligations of the Acquiring Fund and the Acquired Fund with respect
to the Acquisition shall be subject to the following conditions precedent:
(a) The shareholders of the Acquired Fund shall have approved the
Acquisition in the manner required by the Charter of the Acquired
Fund, its Bylaws and applicable law. If shareholders of the Acquired
Fund fail to approve this Plan providing for the Acquisition as
required, that failure shall release the Funds of their obligations
under this Plan.
(b) The Acquiring Fund and the Acquired Fund shall have delivered to the
other party a certificate dated as of the Closing Date and executed
in its name by its Secretary or an Assistant Secretary, in a form
reasonably satisfactory to the receiving party, stating that the
representations and warranties of the Acquiring Fund or the Acquired
Fund, as applicable, in this Plan that apply to the Acquisition are
true and correct in all material respects at and as of the Valuation
Time.
(c) The Acquiring Fund and the Acquired Fund shall have performed and
complied in all material respects with each of its representations
and warranties required by this Plan to be performed or complied
with by it prior to or at the Valuation Time and the Effective Time.
(d) There shall have been no material adverse change in the financial
condition, results of operations, business, properties or assets of
the Acquired Fund since the date of its most recent financial
statement. Negative investment performance shall not be considered a
material adverse change.
(e) The Acquiring Fund and the Acquired Fund shall have received an
opinion of Seward & Kissel LLP reasonably satisfactory to each of
them, substantially to the effect that for federal income tax
purposes:
(1) the Acquisition will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and that each of the
Acquiring Fund and the Acquired Fund will be "a party to a
reorganization" within the meaning of Section 368(b) of the
Code;
(2) no gain or loss will be recognized by the Acquired Fund on the
transfer of all of the Acquired Fund's Assets to the Acquiring
Fund solely in exchange for the Acquisition Shares and the
assumption by the Acquiring Fund of the Liabilities, or upon
the distribution of the Acquisition Shares to shareholders of
the Acquired Fund;
(3) the tax basis in the hands of the Acquiring Fund of each Asset
of the Acquired Fund will be the same as the tax basis of such
Asset in the hands of the Acquired Fund immediately prior to
the transfer thereof, increased by the amount of gain (or
decreased by the amount of loss), if any, recognized by the
Acquired Fund on the transfer;
(4) the holding period of each Asset of the Acquired Fund in the
hands of the Acquiring Fund, other than Assets with respect to
which gain or loss is required to be recognized, will include
in each instance the period during which such Asset was held
by the Acquired Fund (except where investment activities of
the Acquiring Fund have the effect of reducing or eliminating
the holding period with respect to an Asset);
(5) no gain or loss will be recognized by the Acquiring Fund upon
its receipt of the Assets of the Acquired Fund solely in
exchange for Acquisition Shares and the assumption of the
Liabilities;
(6) no gain or loss will be recognized by the shareholders of the
Acquired Fund upon the exchange of their Acquired Fund shares
for Acquisition Shares as part of the Acquisition;
(7) the aggregate tax basis of the Acquisition Shares that each
shareholder of the Acquired Fund receives in the Acquisition
will be the same as the aggregate tax basis of the Acquired
Fund shares exchanged therefor; and
(8) each Acquired Fund shareholder's holding period for the
Acquisition Shares received in the Acquisition will include
the period for which such shareholder held the Acquired Fund
shares exchanged therefor, provided that the shareholder held
such Acquired Fund shares as capital assets on the date of the
exchange.
The opinion will be based on certain factual certifications made by
officers of the Company, on behalf of the Acquired Fund, or the
Acquired Fund, as applicable, and will also be based on customary
assumptions and subject to certain qualifications. The opinion is
not a guarantee that the tax consequences of the Acquisition will be
as described above.
Notwithstanding this subparagraph (e), Seward & Kissel LLP will
express no view with respect to the effect of the Acquisition on any
transferred asset as to which any unrealized gain or loss is
required to be recognized at the end of a taxable year (or on the
termination or transfer thereof) under federal income tax
principles. The Company, on behalf of the Acquiring Fund and the
Acquired Fund shall agree to make and provide to Seward & Kissel LLP
additional factual representations with respect to the Funds that
are reasonably necessary to enable Seward & Kissel LLP to deliver
the tax opinion. Notwithstanding anything in this Plan to the
contrary, neither Fund may waive in any material respect the
conditions set forth under this subparagraph (e).
(f) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Acquisition Shares, and the SEC shall not
have instituted and, to the knowledge of the Acquiring Fund, is not
contemplating instituting any stop order suspending the
effectiveness of the N-14 Registration Statement.
(g) No action, suit or other proceeding shall be threatened or pending
before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in
connection with, the Acquisition.
(h) The SEC shall not have issued any unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceeding seeking
to enjoin consummation of the Acquisition under Section 25(c) of the
1940 Act.
(i) Neither party shall have terminated this Plan with respect to the
Acquisition pursuant to Section 13 of this Plan.
(j) Before the Closing Date, the Company's Board of Directors shall have
authorized the issuance of, and the Company shall have issued, one
share of the Acquiring Fund (the "Initial Share") to the Adviser or
an affiliate thereof, in consideration of the payment of the amount
determined in accordance with Section 4(e)(2) of this Plan), to vote
on the investment advisory agreement for the Acquiring Fund and to
take whatever action it may be required to take as the Acquiring
Fund's sole shareholder.
9. Conditions to the Obligations of the Acquired Fund
The obligations of the Acquired Fund with respect to the Acquisition shall
be subject to the following conditions precedent:
(a) The Acquired Fund shall have received an opinion of Seward & Kissel
LLP, counsel to the Company and the Acquiring Fund, in form and
substance reasonably satisfactory to the Acquired Fund and dated as
of the Closing Date, substantially to the effect that:
(1) The Acquiring Fund is a series of a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Maryland and is a series of an open-end
management investment company registered under the 1940 Act;
(2) This Plan has been duly authorized, executed and delivered by
the Company, on behalf of the Acquiring Fund, and, assuming
the N-14 Registration Statement referred to in Section 2 of
this Plan does not contain any material misstatements or
omissions, and assuming due authorization, execution and
delivery of this Plan by the Acquired Fund, represents a
legal, valid and binding contract, enforceable in accordance
with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, fraudulent conveyance and transfer and
similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto, and
further subject to the application of equitable principles in
any proceeding, whether at law or in equity or with respect to
the enforcement of provisions of the Plan and the effect of
judicial decisions which have held that certain provisions are
unenforceable when their enforcement would violate an implied
covenant of good faith and fair dealing or would be
commercially unreasonable or when default under the Plan is
not material;
(3) The Acquisition Shares to be delivered as provided for by this
Plan are duly authorized and upon delivery will be validly
issued, fully paid and non-assessable by the Acquiring Fund;
(4) The execution and delivery of this Plan did not, and the
consummation of the Acquisition will not, violate the Charter
of the Company, its Bylaws or any agreement of the Company,
with respect to the Acquiring Fund, known to such counsel,
after reasonable inquiry, and no approval of the Plan by the
shareholders of the Acquiring Fund is required under the
Charter, Bylaws or applicable law; and
(5) To the knowledge of such counsel, no consent, approval,
authorization or order of any federal or state court or
administrative or regulatory agency, other than the acceptance
of record of Articles of Transfer by the SDAT, is required for
the Company to enter into this Plan on behalf of the Acquiring
Fund or carry out its terms, except those that have been
obtained under the 1933 Act, the 1934 Act, the 1940 Act and
the rules and regulations under those Acts, if any, or that
may be required under state securities laws or subsequent to
the Effective Time or when the failure to obtain the consent,
approval, authorization or order would not have a material
adverse effect on the operation of the Company or the
Acquiring Fund, as applicable.
In rendering such opinion, Seward & Kissel LLP may (i) rely on the
opinion of Venable LLP as to matters of Maryland law to the extent
set forth in such opinion, (ii) make assumptions regarding the
authenticity, genuineness and/or conformity of documents and copies
thereof without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys
then with such firm who have devoted substantive attention to
matters directly related to this Plan and (v) rely on certificates
of officers or directors of the Company as to factual matters.
(b) The Acquired Fund shall have received a letter from the Adviser with
respect to insurance matters in form and substance satisfactory to
the Acquired Fund.
10. Conditions to the Obligations of the Company or the Acquiring Fund
The obligations of the Company or the Acquiring Fund, as applicable, with
respect to the Acquisition shall be subject to the following conditions
precedent:
(a) The Company, on behalf of the Acquiring Fund, shall have received an
opinion of Seward & Kissel LLP, counsel to the Acquired Fund, in
form and substance reasonably satisfactory to the Company and dated
as of the Closing Date, substantially to the effect that:
(1) The Acquired Fund is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Maryland and is a closed-end management investment company
registered under the 1940 Act and duly registered under the
1934 Act;
(2) This Plan has been duly authorized, executed and delivered by
the Acquired Fund and, assuming the N-14 Registration
Statement referred to in Section 2 of this Plan does not
contain any material misstatements or omissions, and assuming
due authorization, execution and delivery of this Plan by the
Company, on behalf of the Acquiring Fund, represents a legal,
valid and binding contract, enforceable in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
moratorium, fraudulent conveyance and transfer and similar
laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and further subject to
the application of equitable principles in any proceeding,
whether at law or in equity or with respect to the enforcement
of provisions of the Plan and the effect of judicial decisions
which have held that certain provisions are unenforceable when
their enforcement would violate an implied covenant of good
faith and fair dealing or would be commercially unreasonable
or when default under the Plan is not material;
(3) The execution and delivery of this Plan did not, and the
consummation of the Acquisition will not, violate the Charter
of the Acquired Fund, its Bylaws or any agreement of the
Acquired Fund known to such counsel, after reasonable inquiry,
and no approval of the Plan by the shareholders of the
Acquiring Fund is required under the Company's Charter, Bylaws
or applicable law; and
(4) To the knowledge of such counsel, no consent, approval,
authorization or order of any federal or state court or
administrative or regulatory agency, other than the acceptance
of record of Articles of Transfer by the SDAT, is required for
the Acquired Fund to enter into the Plan or carry out its
terms, except those that have been obtained under the 1933
Act, the 1934 Act, the 1940 Act and the rules and regulations
under those Acts, if any, or that may be required under state
securities laws or subsequent to the Effective Time or when
the failure to obtain the consent, approval, authorization or
order would not have a material adverse effect on the
operation of the Acquired Fund.
In rendering such opinion, Seward & Kissel LLP may (i) rely on the
opinion of Venable LLP as to matters of Maryland law, (ii) make
assumptions regarding the authenticity, genuineness and/or
conformity of documents and copies thereof without independent
verification thereof, (iii) limit such opinion to applicable federal
and state law, (iv) define the word "knowledge" and related terms to
mean the knowledge of attorneys then with such firm who have devoted
substantive attention to matters directly related to this Plan and
(v) rely on certificates of officers or directors of the Acquired
Fund as to factual matters.
(b) The Company, on behalf of the Acquiring Fund, shall have received a
letter from the Adviser agreeing to indemnify the Acquiring Fund in
respect of certain liabilities of the Acquired Fund in form and
substance satisfactory to the Company.
11. Closing
(a) The Closing shall be held at the offices of the Funds, 1345 Avenue
of the Americas, New York, New York 10105, or at such other time or
place as the parties may agree.
(b) In the event that at the Valuation Time (a) the NYSE shall be closed
to trading or trading thereon shall be restricted, or (b) trading or
the reporting of trading on the NYSE or elsewhere shall be disrupted
so that accurate appraisal of the value of the net assets of the
Acquired Fund or the Acquiring Fund is impracticable, the Closing
Date shall be postponed until the first business day after the day
when trading shall have been fully resumed and reporting shall have
been restored; provided that if trading shall not be fully resumed
and reporting restored within three business days of the Valuation
Time, this Plan may be terminated by either the Acquired Fund or the
Acquiring Fund upon the giving of written notice to the other party.
(c) The Acquiring Fund will provide to the Acquired Fund evidence
satisfactory to the Acquired Fund that Acquisition Shares issuable
pursuant to the Acquisition have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. After the Closing
Date, the Acquiring Fund will provide to the Acquired Fund evidence
satisfactory to the Acquired Fund that such Acquisition Shares have
been credited to open accounts in the names of the Acquired Fund
shareholders.
(d) At the Closing, each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party
or its counsel may reasonably request in connection with the
transfer of assets, assumption of liabilities and liquidation
contemplated by the Plan.
12. Survival of Representations and Warranties
(a) Except for Sections 6, 7, 14, 18, 19, 21, 22, 23 and 24, no
representations, warranties or covenants in or pursuant to this Plan
(including certificates of officers) shall survive the completion of
the transactions contemplated herein.
(b) Each party agrees to treat confidentially and as proprietary
information of the other party all records and other information,
including any information relating to portfolio holdings, of its
Fund and not to use such records and information for any purpose
other than the performance of its duties under the Plan; provided,
however, that after prior notification of and written approval by
party (which approval shall not be withheld if the other party would
be exposed to civil or criminal contempt proceedings for failure to
comply when requested to divulge such information by duly
constituted authorities having proper jurisdiction, and which
approval shall not be withheld unreasonably in any other
circumstance), the other party may disclose such records and/or
information as so approved.
13. Termination of Plan
A majority of the Directors of either the Company or the Acquired Fund may
terminate this Plan with respect to the Acquiring Fund or the Acquired Fund,
respectively, at any time before the applicable Effective Time if: (i) the
conditions precedent set forth in Sections 8, 9 or 10 as appropriate, are not
satisfied; or (ii) either the Board of Directors of the Company or the Acquired
Fund determines that the consummation of the Acquisition is not in the best
interests of the Fund or its shareholders and gives notice of such termination
to the other party.
14. Governing Law
This Plan and the transactions contemplated hereby shall be governed,
construed and enforced in accordance with the laws of the State of New York,
except to the extent preempted by federal law, without regard to conflicts of
law principles.
15. Brokerage Fees
Each party represents and warrants that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for in the Plan.
16. Amendments
The Company, on behalf of the Acquiring Fund, and the Acquired Fund may,
by agreement in writing authorized by its respective Board of Directors, amend
this Plan at any time before or after the shareholders of the Acquired Fund
approve this Plan providing for the Acquisition. However, after shareholders of
the Acquired Fund approve the Acquisition, the parties may not amend this Plan
in a manner that materially alters the obligations of the other party. This
Section 16 shall not preclude the parties from changing the Closing Date or the
Effective Time by mutual agreement.
17. Waivers
At any time prior to the Closing Date, either party may by written
instrument signed by it (i) waive the effect of any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the agreements, covenants or conditions made for its
benefit contained herein. Any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or future
inaccuracy or lack of compliance.
18. Indemnification of Directors
The Acquiring Fund agrees that all rights to indemnification and all
limitations of liability existing in favor of the Acquired Fund's current and
former Directors and officers, acting in their capacities as such, under the
Acquired Fund's Charter and Bylaws as in effect as of the date of this Plan
shall survive the Acquisition as obligations of the Company or the Acquiring
Fund, as applicable, and shall continue in full force and effect, without any
amendment thereto, and shall constitute rights which may be asserted against the
Acquiring Fund, its successors or assigns.
19. Cooperation and Further Assurances
Each party will cooperate with the other in fulfilling its obligations
under this Plan and will provide such information and documentation as is
reasonably requested by the other in carrying out the Plan's terms. Each party
will provide such further assurances concerning the performance of its
obligations hereunder and execute all documents for or in connection with the
consummation of the Acquisition as, with respect to such assurances or
documents, the other shall deem necessary or appropriate.
20. Updating of N-14 Registration Statement
If at any time prior to the Effective Time, a party becomes aware of any
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements made in the
N-14 Registration Statement not misleading, the party discovering the item shall
notify the other party and the parties shall cooperate in promptly preparing,
filing and clearing with the SEC and, if appropriate, distributing to
shareholders appropriate disclosure with respect to such item.
21. Limitation on Liabilities
The obligations of the Acquired Fund, the Company and the Acquiring Fund
shall not bind any of the directors, shareholders, nominees, officers, employees
or agents of the Acquired Fund or the Company personally, but shall bind only
the Acquired Fund, the Company or the Acquiring Fund, as appropriate. The
execution and delivery of this Plan by an officer of either party shall not be
deemed to have been made by the officer individually or to impose any liability
on the officer personally, but shall bind only the Acquired Fund or the Company,
as appropriate. No other series of the Company shall be liable for the
obligations of the Acquiring Fund.
22. Termination of the Acquired Fund
If the parties complete the Acquisition, the Acquired Fund shall terminate
its registration under the 1940 Act, the 1933 Act, and the 1934 Act and
liquidate and dissolve.
23. Notices
Any notice, report, statement, certificate or demand required or permitted
by any provision of the Plan shall be in writing and shall be given in person or
by telecopy, certified mail or overnight express courier to:
For the Acquired Fund:
AllianceBernstein Income Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
For the Acquiring Fund:
AB Bond Fund, Inc. - AB Income Fund
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
24. Expenses
All expenses relating to the Acquisition up to and including $540,000
shall be paid by the Acquired Fund, and all expenses relating to the Acquisition
in excess of $540,000 (other than fees and expenses of counsel to the Directors
who are not "interested persons" of the Acquired Fund or the Acquiring Fund)
shall be paid by AllianceBernstein L.P. Notwithstanding the foregoing, expenses
relating to the Acquisition will in any event be paid by the party directly
incurring such expenses if and to the extent that the payment by another person
of such expenses would result in a Fund's failure to qualify for tax treatment
as a "regulated investment company" within the meaning of Section 851 of the
Code or would prevent the Acquisition from qualifying as a "reorganization"
within the meaning of Section 368(a) of the Code.
25. General
This Plan supersedes all prior agreements between the parties with respect
to the subject matter hereof and may be amended only by a writing signed by both
parties. The headings contained in this Plan are for reference only and shall
not affect in any way the meaning or interpretation of this Plan. Whenever the
context so requires, the use in the Plan of the singular will be deemed to
include the plural and vice versa. Nothing in this Plan, expressed or implied,
confers upon any other person any rights or remedies under or by reason of this
Plan. Neither party may assign or transfer any right or obligation under this
Plan without the written consent of the other party.
In Witness Whereof, the parties hereto have executed this Plan as of the
day and year first above written.
AllianceBernstein Income Fund, Inc.
Attest:
__________________________________ By: ____________________________
Name: ____________________ Name: ______________________
Title: ___________________ Title: _____________________
AB Bond Fund, Inc., on behalf of its series,
AB Income Fund
Attest:
__________________________________ By: ____________________________
Name: ____________________ Name: ______________________
Title: ___________________ Title: _____________________
Accepted and agreed with respect to Section 24 only:
AllianceBernstein L.P.
By: ____________________________
Name: ______________________
Title: ____________________
Appendix B
FUND PERFORMANCE
Set forth below is the performance information for the Acquired Fund. The
Acquiring Fund is a newly created fund that does not have performance
information for at least one calendar year. As a result, no performance
information for the Acquiring Fund is included in this Proxy
Statement/Prospectus.
The performance information provided below indicates some of the risks of
investing in the Acquired Fund by showing changes in the Acquired Fund's
performance from year to year and by comparing the performance of the Acquired
Fund with the performance of a broad-based securities market index. The table
below illustrates the Acquired Fund's total return compared with a broad-based
securities market index. Updated performance information is available on the
Acquired Fund's website at www.ABglobal.com. Performance information represents
only past performance, before and after taxes, and does not necessarily indicate
future results. The Acquired Fund and the Acquiring Fund may not perform at the
same level in the future.
Through August 31, 2015, the year-to-date unannualized return for the
Acquired Fund's shares was 2.09%.
[Bar Chart]
8.32 8.71 12.89 -5.46 19.97 11.04 9.67 12.15 -2.86 8.96
--------------------------------------------------------------------------------
05 06 07 08 09 10 11 12 13 14
Calendar Year End (%)
Best Quarter was up 8.21%, 3rd quarter, 2009; and Worst Quarter was down -4.31%,
2nd quarter, 2013.
Average Annual Total Returns
(for periods ended December 31, 2014)
--------------------------------------------------------------------------------
Since
Five Inception
One Year Years Ten Years (8/28/87)
--------------------------------------------------------------------------------
Return Before Taxes 11.28% 5.61% 7.06% 8.46%
--------------------------------------------------------------------------------
Return After Taxes on Distributions* 8.41% 2.86% 4.2% 4.74%
--------------------------------------------------------------------------------
Return After Taxes on Distributions
and Sale of Fund Shares* 6.34% 3.33% 4.4% 4.95%
--------------------------------------------------------------------------------
Barclays US Aggregate Bond Index
(reflects no deduction for fees,
expenses, or taxes) 5.97% 4.45% 4.71% 6.88%
--------------------------------------------------------------------------------
* After-tax returns are estimated and based on calculations using the historical
highest 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.
After-tax returns are not relevant to investors who hold Acquired Fund shares
through tax-deferred arrangements, such as 401(k) plans or individual retirement
accounts.
Appendix C
FEE INFORMATION
Fee Table
The purpose of the tables below is to assist an investor in understanding
the various costs and expenses that a shareholder bears directly and indirectly
from an investment in the Funds. The tables allow you to compare any sales
charges and expenses of the Acquired Fund and (pro forma) estimates for the
Acquiring Fund in its first year following the Acquisition. Under the Plan,
shares of beneficial interest in the Acquired Fund will be reorganized into
Advisor Class shares of the Acquiring Fund. The tables also include Annual Fund
Operating Expenses and Expense Examples on a pro forma combined basis.
The Annual Fund Operating Expenses and Expense Example tables shown below
are based on annualized expenses as of the period ended March 31, 2015, for the
Acquired Fund, and estimated expenses for the fiscal year ending October 31,
2016, for the Acquiring Fund. Pro forma numbers are estimated in good faith and
are hypothetical. As indicated in the fee and expense information set forth
below, the total fund operating expenses after fee waiver and/or expense
reimbursement for Advisor Class shares of the Acquiring Fund will be the same as
for shares of the Acquired Fund.
Shareholder Fees (fees paid directly from your investment)
Acquiring Fund -
Acquired Fund Advisor Class Shares
--------------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases N/A None
--------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) N/A None
--------------------------------------------------------------------------------
Redemption fee if redeemed or exchanged
within 90 days as of purchase (as a
percentage of amount redeemed) N/A 0.75%*
Exchange Fee N/A None
--------------------------------------------------------------------------------
* In connection with the proposed Acquisition, Advisor Class shares issued to
current Acquired Fund shareholders will be subject to a 0.75% redemption fee for
the three-month period following the Closing Date.
Annual Fund Operating Expenses (expenses that you pay each year as a percentage
of the value of your investment)
Acquiring Fund -
Advisor Class
Acquired Fund (pro forma)
--------------------------------------------------------------------------------
Management Fees 0.48% 0.60%*
Distribution and/or Service (12b-1) Fees N/A None
Other Expenses:
Transfer Agent 0.01% 0.10%
Other Expenses 0.06% 0.12%
----------------- -----------------
Total Other Expenses(a) 0.07% 0.22%
----------------- -----------------
Total Annual Fund Operating Expenses
Before Waiver, If Applicable 0.55% 0.82%
================= =================
Fee Waiver and/or Expense Reimbursement N/A (0.19)%(b)
----------------- -----------------
Total Annual Fund Operating Expenses
After Fee Waiver and/or Expense
Reimbursement, If Applicable 0.55% 0.63%
================= =================
--------------------------------------------------------------------------------
* The advisory fee of the Acquiring Fund is equal to an annualized rate of
0.60% of the first $2.5 billion of the Acquiring Fund's average daily net
assets; 0.55% of the excess of $2.5 billion up to $5 billion; and 0.50% of
the excess over $5 billion.
(a) Total other expenses are based on estimated amounts for the current fiscal
year.
(b) The Adviser has contractually agreed to waive its investment advisory fees
and/or to bear expenses of the Acquiring Fund for a two-year period
beginning with the Acquiring Fund's commencement of operations to the
extent necessary to prevent 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, taxes, extraordinary
expenses, and brokerage commissions and other transaction costs), on an
annual basis, from exceeding 0.63% of the average daily net assets for
Advisor Class shares. 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. After the initial two-year term, the expense limitation
agreement may continue in effect from year-to-year unless terminated by
the Adviser 60 days prior to the end of its then-current term.
Examples
The following examples are intended to help you compare the costs of
investing in each of the Acquired Fund and the Acquiring Fund. The examples
assume that you invest $10,000 in each of the Acquired Fund and the Acquiring
Fund after the Acquisition for the time periods indicated. The examples also
assume that your investment has a 5% return each year, that all distributions
are reinvested and that each Fund's operating expenses remain the same. The
examples reflect the contractual fee waivers through the end of their respective
terms. Your actual costs may be higher or lower.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Acquired Fund $56 $176 $307 $689
Acquiring Fund - Advisor Class (pro forma) $64 $243 $436 $996
Portfolio Turnover
Each Fund pays transaction costs, such as commissions, when it buys and
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 costs, which are not reflected
in annual fund operating expenses or in the examples, affect the Fund's
performance. During its most recent fiscal year, the Acquired Fund's portfolio
turnover rate was 32% of the average value of its portfolio.
Appendix D
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The Acquired Fund and the Acquiring Fund have identical investment
objectives. For purposes of this comparison, each of the Acquired Fund and the
Acquiring Fund may be referred to as a "Fund." The following chart compares the
investment objective, status and investment policies of each Fund. The second
chart contained in this Appendix compares the fundamental and non-fundamental
investment policies of each Fund. Fundamental investment policies are policies
that may not be changed without a shareholder vote.
AllianceBernstein Income Fund, Inc. AB Icome Fund
----------------------------------- ---------------
(Acquired Fund) (Acquiring Fund)
----------------------------------------------------------------------------------------------------
Investment The Fund's investment objective is high Same.
Objective current income consistent with
preservation of capital.
This is a fundamental policy. This is not a fundamental policy.
Status The Fund is diversified. Same.
Investment Policies
----------------------------------------------------------------------------------------------------
80% Policy - The Acquired Fund normally invests at Same.
Income- least 80% of its net assets in
Producing income-producing securities.
Securities
Government The Acquired Fund normally invests at The Acquiring Fund normally invests at
Securities least 65% of its total assets in least 65% of its total assets in
securities issued or guaranteed by the securities of U.S. and foreign
U.S. government, its agencies or governments, their agencies or
instrumentalities ("U.S. Government instrumentalities and repurchase
Securities") and repurchase agreements agreements relating to U.S. Government
pertaining to U.S. Government Securities.
Securities.
The Acquired Fund may also invest in
other debt securities, including those
of foreign governmental issuers. The
Acquired Fund may invest up to 35% of
its total assets in obligations issued
or guaranteed by a foreign government or
any of its political subdivisions,
authorities, agencies or
instrumentalities ("Foreign Government
Securities") of issuers considered
stable by the Adviser.
65% Policy - The Acquired Fund normally invests at The Acquiring Fund normally invests at
Government least 65% of its total assets in U.S. least 65% of its total assets in
Securities Government Securities, and repurchase securities of U.S. and foreign
agreements pertaining to U.S. Government governments, their agencies or
Securities. instrumentalities and repurchase
agreements relating to U.S. Government
Securities.
This is a fundamental policy. This is not a fundamental policy.
Other The Acquired Fund may invest up to 35% The Acquiring Fund may invest up to 35%
Securities of its total assets in other of its total assets in non-government
fixed-income securities, corporate debt fixed-income securities, including
securities, certificates of deposit, corporate debt securities,
bankers' acceptances and non-government mortgage-backed and other
interest-bearing savings deposits of asset-backed securities, certificates of
banks and commercial paper. deposit and commercial paper.
Other The Fund utilizes certain other Same.
Investment investment techniques, including
Techniques options, futures, forwards and swaps,
intended to enhance income and reduce
market risk.
Below The Acquired Fund may invest up to 35% The Acquiring Fund may invest up to 35%
Investment- of its net assets in securities rated of its net assets in securities rated
Grade below Baa by Moody's Investor Service, below investment-grade (commonly known
Securities Inc. or below BBB by S&P Rating Services as "junk bonds").
or, if not rated, of comparable
investment quality as determined by the
Adviser.
Foreign The Acquired Fund will not invest 25% or The Acquiring Fund will not invest more
Government more of its total assets in the Foreign than 25% of its total assets in
Securities Government Securities of any one securities of issuers in any one country
country. outside the U.S.
U.S. Dollar No comparable policy. The Acquiring Fund invests at least 65%
Denominated of its total assets in U.S. dollar
Securities denominated securities.
Fundamental Policies
----------------------------------------------------------------------------------------------------
Concentration The Acquired Fund may not concentrate The Acquiring Fund may not concentrate
its investments (i.e., invest 25% or investments in an industry, as
more of its total assets in securities concentration may be defined under the
of issuers conducting their principal 1940 Act, or the rules and regulations
business activities in the same thereunder (as such statute, rules or
industry), provided that this limitation regulations may be amended from time to
shall not apply with respect to time) or by guidance regarding,
investments in U.S. Government interpretations of, or exemptive orders
Securities. under, the 1940 Act or the rules or
regulations thereunder published by
appropriate regulatory authorities
(collectively, "Regulatory Guidance").
Make Loans The Acquired Fund may not make loans Same, except that the Acquiring Fund may
except through the purchase of debt make loans to affiliated funds as
obligations in accordance with its permitted under the 1940 Act, the rules
investment objective and policies, the and regulations thereunder or SEC
lending of portfolio securities, or the guidance.
use of repurchase agreements. (1)
Issue Senior The Fund may not borrow money, except The Fund may not issue any senior
Securities; the Fund may borrow from a bank or other security (as that term is defined in the
Borrow entity in a privately arranged 1940 Act) or borrow money, except to the
Money transaction and issue commercial paper, extent permitted by the 1940 Act or the
bonds, debentures or notes, in series or rules and regulations thereunder or by
otherwise, with such interest rates, Regulatory Guidance. For the purposes of
conversion rights and other terms and this restriction, margin and collateral
provisions as are determined by the arrangements, including, for example,
Directors, if after such borrowing or with respect to permitted borrowings,
issuance there is asset coverage of at options, futures contracts, options on
least 300% as defined in the 1940 Act, futures contracts and other derivatives
and the Fund may borrow for temporary such as swaps, are not deemed to be the
purposes in an amount not exceeding 5% issuance of a senior security.
of the value of the total assets of the
Fund.
Pledge Assets The Fund may not pledge, hypothecate, No comparable fundamental policy.
mortgage or otherwise encumber its However, the Fund does not intend to
assets, except to secure permitted pledge, hypothecate, mortgage or
borrowings. otherwise encumber its assets.
Joint The Fund may not participate on a joint No comparable fundamental policy.
Participations or joint and several basis in any However, the Fund does not intend to
securities trading account. participate on a joint or joint and
several basis in any securities trading
account.
--------
(1) The Acquired Fund may lend its portfolio securities to brokers, dealers and financial
institutions and receive collateral in the form of cash or U.S. Government Securities,
which collateral must be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities (including interest accrued on the
loaned securities).
Control The Acquired Fund may not invest in No comparable fundamental policy.
Positions companies for the purpose of exercising However, the Acquiring Fund does not
control. intend to invest in companies for the
purpose of exercising control.
Illiquid The Acquired Fund may invest up to 20% No comparable fundamental policy.
Securities of its total assets in illiquid However, in accordance with current
securities. (2) guidelines of the SEC, the Acquiring
Fund may invest up to 15% of its net
assets in illiquid securities.
Short Sales The Acquired Fund may not make short No comparable fundamental policy.
sales of securities or maintain a short However, in the event that the Acquiring
position, unless at all times when a Fund engages in a short sale, it will,
short position is open it owns an equal in accordance with guidance provided by
amount of such securities or securities the SEC or its staff in, among other
convertible into or exchangeable for, things, regulations, interpretative
without payment of any further releases and no-action letters, deposit
consideration, securities of the same in a segregated account certain liquid
issue as, and equal in amount to, the assets with a value at least equal to
securities sold short (i.e., short sales the Fund's exposure, on a
against the box), and unless not more marked-to-market or other relevant
than 10% of the Fund's net assets (taken basis, to the transaction.
at market value) is held as collateral
for such sales at any one time.
Real Estate The Acquired Fund may not purchase or The Acquiring Fund may not purchase or
sell real estate, except that it may sell real estate, except that it may
purchase and sell securities of dispose of real estate acquired as a
companies which deal in real estate or result of the ownership of securities or
interests therein, purchase or sell other instruments, and it may invest in
commodities or commodity contracts securities or other instruments backed
(except currencies, currency futures, by real estate or in securities of
forward contracts or contracts for the companies engaged in the real estate
future acquisition or delivery of fixed business.
income securities and related options
and other similar contracts), invest in
interests in oil, gas, or other mineral
exploration or development programs,
purchase securities on margin, except
for such short-term credits as may be
necessary for the clearance of
transactions, and 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 of 1933, as
amended (the "Securities Act").
Underwritings No comparable fundamental policy. The Acquiring Fund 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.
--------
(2) For purposes of this restriction, repurchase agreements not terminable within seven days
will be deemed illiquid. Options purchased by the Acquired Fund in privately negotiated
transactions and the securities covering options written by the Fund in privately negotiated
transactions are not subject to this limitation.
Appendix E
DESCRIPTION OF PRINCIPAL RISKS OF THE FUNDS
Each Fund has the many of the same investment risks, although some may be
described differently. These common risks are market risk, credit risk, interest
rate risk, foreign (non-U.S.) risk, derivatives risk, leveraging risk, currency
risk, duration risk, mortgage-backed and/or other asset-backed securities risk,
below investment grade risk, liquidity risk and management risk. To the extent
that the Acquiring Fund invests more of its assets in the securities of foreign
governments, as it is expected to do, it will be subject to, among other risks
associated with such investments, greater foreign (non-U.S.) securities risk
than those of securities of developed markets issuers. In addition, certain
other risks are applicable to each of the Acquired Fund and the Acquiring Fund
based on the Fund's structure or investment strategy. Each of these risks is
more fully described below. Each Fund could become subject to additional risks
because the types of investments made by each Fund can change over time.
Risks of Investing in both the Acquired Fund and Acquiring Fund
---------------------------------------------------------------
Interest Rate Risk Interest rate risk is the risk that changes in interest
rates will affect the value of the Fund's investments in
fixed income securities. Increases in interest rates may
cause the value of the Fund's investments to decline.
Foreign (Non-U.S.) Foreign risk is the risk that investments in issuers
Risk located in foreign countries may have greater price
volatility and less liquidity. Foreign markets can be
more volatile than the U.S. market due to increased risks
of adverse issuer, political, regulatory, market or
economic developments. The Acquiring Fund may be subject
to greater foreign risk than the Acquired Fund, as the
Acquiring Fund is permitted to invest a greater
percentage of its total assets in the securities of
foreign governments, their agencies and instrumentalities
than the Acquired Fund.
Credit Risk Credit risk is the risk that the issuer or the guarantor
of a debt security or the counterparty to a derivatives
contract will be unable or unwilling to make timely
payments of interest or principal or to otherwise honor
its obligations.
Market Risk Market risk is the risk that the value of the Fund's
investments will fluctuate as the bond markets fluctuate
and that prices overall will decline over shorter or
longer-term periods.
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.
Leveraging Risk Because the Fund may use derivative strategies and other
leveraging techniques speculatively to enhance returns,
it is subject to greater risk and its returns may be more
volatile than other funds, particularly in periods of
market declines.
Currency Risk Currency risk is the risk that fluctuations in the
exchange rates between the U.S. dollar and foreign
currencies could negatively affect the value of the
Fund's investments.
Below Investment Investments in fixed-income securities with lower ratings
Grade Risk (often referred to as "junk bonds") are subject to a
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 perception
of the junk bond market generally and less secondary
market liquidity.
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 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.
Liquidity Risk Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing the
Fund from selling out of these illiquid securities at an
advantageous price. The Fund may be subject to liquidity
risk because derivatives and securities involving
substantial interest rate and credit risk tend to involve
greater liquidity risk.
Mortgage-Backed Investments in mortgage-backed and other asset-backed
and/or Other securities are subject to certain additional risks. The
Asset-Backed value of these securities may be particularly sensitive
Securities Risk 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 Acquired
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.
Management Risk The Fund is subject to management risk because it is an
actively managed investment fund. There can be no
guarantee that the Adviser's investment decisions will
produce desired results.
Additional Risks of Investing in the Acquired Fund
--------------------------------------------------
Trading Discount The shares of the Acquired Fund, a closed-end management
investment company, trade at a discount to NAV (i.e., the
market price per share is less than the NAV per share).
Indemnification Risk In the ordinary course of business, the Acquired Fund
enters into contracts that contain a variety of
indemnifications. The Acquired Fund's maximum exposure
under these arrangements is unknown. However, the
Acquired Fund has not had prior claims or losses pursuant
to these indemnification provisions and expects the risk
of loss thereunder to be remote. Therefore, the Acquired
Fund has not accrued any liability in connection with
these indemnification provisions.
Additional Risks of Investing in the Acquiring Fund
---------------------------------------------------
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.
Appendix F
CERTAIN INFORMATION APPLICABLE TO SHARES OF THE ACQUIRING FUND
Acquired Fund shareholders will receive Advisor Class shares of the
Acquiring Fund through the Acquisition, as described in this Proxy
Statement/Prospectus. Each shareholder of the Acquired Fund will become the
owner of the number of full and fractional Advisor Class shares of the Acquiring
Fund having an NAV equal to the aggregate NAV of the shareholder's Acquired Fund
shares as of the Valuation Time (as such term is defined in the Proxy
Statement/Prospectus). Advisor Class shares are available only to Acquired Fund
shareholders in connection with the Acquisition. The Acquiring Fund also
currently offers Class A, Class C, Class R, Class K, Class I and Class Z shares,
collectively, the Additional Share Classes. Investors may purchase shares of the
Additional Share Classes on any business day (i.e., any day that the NYSE) is
open for trading). The purchase of shares of Additional Share Classes is priced
at the next-determined NAV after an order is received in proper form.
Shareholders may "redeem" shares of any class of the Acquiring Fund (i.e., sell
their shares to the Fund) on any day the NYSE is open, either directly or
through a financial intermediary. The sale price will be the next-determined
NAV, less any applicable contingent deferred sales charge (if any), after the
Fund receives the redemption request in proper form. Each share class represents
an investment in the same portfolio of securities, but the classes may have
different sales charges and bear different ongoing distribution expenses.
The following information pertains to Advisor Class shares, as well as the
Additional Share Classes, as applicable. Additional information regarding the
Additional Share Classes, including the expenses of the Additional Share Classes
and more detailed information about the purchase and redemption procedures for
the Additional Share Classes, is available in the Acquiring Fund's prospectus.
HOW TO BUY SHARES
Advisor Class Shares
As noted above, Acquired Fund shareholders will receive Advisor Class
shares of the Acquiring Fund through the Acquisition. Each shareholder of the
Acquired Fund will become the owner of the number of full and fractional Advisor
Class shares of the Acquiring Fund having an NAV equal to the aggregate NAV of
the shareholder's Acquired Fund shares as of the Valuation Time, as such term is
defined in the Proxy Statement/Prospectus.
Advisor Class shares will not be subject to an initial sales charge or
12b-1 distribution fees. Advisor Class shareholders will be entitled to exchange
their Advisor Class shares of the Acquiring Fund for Advisor Class shares of
another fund in the AB mutual fund group without sales or service charges.
During the three-month period following the Closing Date, Advisor Class shares
redeemed or exchanged for the Advisor Class shares of other AB mutual funds will
be subject to a redemption fee of 0.75% to help the Acquiring Fund defray the
transaction costs that it might incur in response to redemption requests from
former shareholders of the Acquired Fund.
Purchase Information for Additional Share Classes
A shareholder's broker or financial advisor must receive a purchase
request by the Fund Closing Time, which is the close of regular trading on any
day the NYSE 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) and submit it to the Acquiring Fund by a pre-arranged time for you
to receive the next-determined NAV.
Existing Fund shareholders who have completed the appropriate section of
the Mutual Fund Application may purchase additional shares by telephone with
payment by electronic funds transfer in amounts not exceeding $500,000.
AllianceBernstein Investor Services, Inc., or ABIS, must receive and confirm
telephone requests before the Fund Closing Time to receive that day's public
offering price. Call 800-221-5672 to arrange a transfer from your bank account.
Payment may be made by wire transfer or check. All checks should be made
payable to the Fund. Payment must be made in U.S. Dollars. All purchase orders
will be confirmed in writing.
Required Information
The Fund is required by law to obtain, verify and record certain personal
information from you or persons on your behalf in order to establish an account.
Required information includes name, date of birth, permanent residential address
and taxpayer identification number (for most investors, your social security
number). The Fund may also ask to see other identifying documents. If you do not
provide the information, the Fund will not be able to open your account. If the
Fund is unable to verify your identity, or that of another person(s) authorized
to act on your behalf, or if the Fund believes it has identified potentially
criminal activity, the Fund reserves the right to take any action it deems
appropriate or as required by law, which may include closing your account. If
you are not a U.S. citizen or resident alien, your account must be affiliated
with a Financial Industry Regulatory Authority, or FINRA, member firm.
The Fund is required to withhold 28% of taxable dividends, capital gains
distributions, and redemptions paid to any shareholder who has not provided the
Fund with his or her correct taxpayer identification number. To avoid this, you
must provide your correct tax identification number on your Mutual Fund
Application.
General
IRA custodians, plan sponsors, plan fiduciaries, plan recordkeepers, and
other financial intermediaries may establish their own eligibility requirements
as to the purchase, sale or exchange of Fund shares, including minimum and
maximum investment requirements. The Fund is not responsible for, and has no
control over, the decisions of any plan sponsor, fiduciary or other financial
intermediary to impose such differing requirements. ABI may refuse any order to
purchase shares. The 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.
SHARE CLASS EXPENSES
Information about the expenses applicable to the Additional Share Classes
is available in the Acquiring Fund's prospectus.
A transaction, service, administrative or other similar fee may be charged
by your broker-dealer, agent or other financial intermediary, with respect to
the purchase, sale or exchange of Advisor Class shares made through your
financial advisor. Financial intermediaries, a fee-based program, or, for group
retirement plans, a plan sponsor or plan fiduciary, also may impose requirements
on the purchase, sale or exchange of shares that are different from, or in
addition to, those described in the Fund's Prospectus and SAI, including
requirements as to the minimum initial and subsequent investment amounts. The
Fund is not responsible for, and has no control over, the decision of any
financial intermediary, plan sponsor or fiduciary to impose such differing
requirements.
OTHER PROGRAMS
Dividend Reinvestment Program
Unless you specifically have elected to receive dividends or distributions
in cash, they will automatically be reinvested in the same class of additional
shares of the Fund. If you elect to receive distributions in cash, you will only
receive a check if the amount of the distribution is equal to or exceeds $25.00.
Distributions of less than $25.00 will automatically be reinvested in shares of
the Fund. 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". In addition, the Fund may reinvest your
distribution check (and future checks) in additional shares of the Fund if your
check (i) is returned as undeliverable or (ii) remains uncashed for nine months.
Dividend Direction Plan
A shareholder who already maintains accounts in more than one AB mutual
fund may direct the automatic investment of income dividends and/or capital
gains by one Fund, in any amount, without the payment of any sales charges, in
shares of the same class of one or more other AB mutual fund(s).
Automatic Investment Program
The Automatic Investment Program allows investors to purchase shares of
the Acquiring Fund through pre-authorized transfers of funds from the investor's
bank account. Under the Automatic Investment Program, an investor may (i) make
an initial purchase of at least $2,500 and invest at least $50 monthly or (ii)
make an initial purchase of less than $2,500 and commit to a monthly investment
of $200 or more until the investor's account balance is $2,500 or more. Please
see the Acquiring Fund's Statement of Additional Information for more details.
PAYMENTS TO FINANCIAL ADVISORS AND THEIR FIRMS
Financial intermediaries market and sell shares of the Acquiring Fund.
These financial intermediaries employ financial advisors and receive
compensation for selling shares of the Fund. Your individual financial advisor
may receive some or all of the amounts paid to the financial intermediary that
employs him or her.
--------------------------------------------------------------------------------
WHAT IS A FINANCIAL INTERMEDIARY?
A financial intermediary is a firm that receives compensation for
selling shares of the Fund and/or provides services to the Fund's
shareholders. Financial intermediaries may include, among others, your
broker, your financial planner or advisors, banks and insurance companies.
Financial intermediaries may employ financial advisors who deal with you and
other investors on an individual basis.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Your financial advisor's firm receives compensation from the Acquiring Fund,
ABI and/or the Adviser in several ways from various sources, which include
some or all of the following:
- up front sales commissions;
- Rule 12b-1 fees;
- additional distribution support;
- defrayal of costs for educational seminars and training; and
- payments related to providing shareholder recordkeeping and/or transfer
agency services.
Please read the Acquiring Fund's prospectus carefully for information on this
compensation.
--------------------------------------------------------------------------------
Other Payments for Distribution Services and Educational Support
In addition to the commissions paid to financial intermediaries at the
time of sale and Rule 12b-1 fees, some or all of which may be paid to financial
intermediaries (and, in turn, to financial advisors), 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 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. ABI may pay a portion of "ticket" or
other transactional charges.
For 2015, 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 2014, ABI paid approximately 0.05% of the average
monthly assets of the AB mutual funds or approximately $21 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 and 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.
The Fund and ABI also make payments for recordkeeping and other transfer
agency services to financial intermediaries that sell AB mutual fund shares.
These expenses paid by the Fund are included in "Other Expenses" under "Fees and
Expenses of the Fund--Annual Fund Operating Expenses" in the Summary Information
at the beginning of the Acquiring Fund's 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 Acquiring 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 purchase.
--------------------------------------------------------------------------------
As of the date of the Acquiring Fund's prospectus, ABI anticipates that
the firms that will receive additional payments for distribution services and/or
educational support include:
Advisor Group, Inc.
Ameriprise Financial Services
AXA Advisors
Cadaret, Grant & Co.
CCO Investment Services Corp.
Commonwealth Financial Network
Donegal Securities
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
Santander Securities
UBS Financial Services
US Bancorp Investments
Wells Fargo Advisors
Although the Fund may use brokers and dealers that sell shares of the Fund
to effect portfolio transactions, the Fund does not consider the sale of AB
mutual funds shares as a factor when selecting brokers or dealers to effect
portfolio transactions.
HOW TO EXCHANGE ADVISOR CLASS SHARES
Following the date of the closing of the Acquisition (the "Closing Date"),
shareholders of the Acquired Fund who received Advisor Class shares of the
Acquiring Fund through the Acquisition will have exchange privileges with other
AB mutual funds. Acquiring Fund shareholders may generally exchange their
Advisor Class shares for Advisor Class shares of another fund in the AB mutual
fund group (subject to a 0.75% redemption fee during the three-month period
following the Closing Date). Exchanges of each class of Acquiring Fund shares
are made at the next-determined NAV after an order is received in proper form.
All exchanges are subject to the minimum investment restrictions set forth in
the prospectus for the AB mutual fund whose shares are being acquired.
Shareholders may request an exchange either directly or through a financial
intermediary or, in the case of retirement plan participants, by following the
procedures specified by the plan sponsor or plan recordkeeper. 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. The Fund may modify, restrict or terminate
the exchange privilege on 60 days' written notice.
HOW TO SELL OR REDEEM SHARES OF THE ACQUIRING FUND
Shareholders of the Acquiring Fund, including shareholders who received
Advisor Class shares through the Acquisition, may "redeem" their shares (i.e.,
sell shares to the Acquiring Fund) on any day the NYSE is open, either directly
or through a financial intermediary or, in the case of retirement plan
participants, by following the procedures specified by the plan sponsor or plan
recordkeeper. The sale price will be the next-determined NAV after the Fund
receives the redemption request in proper form. Normally, redemption proceeds
are sent to shareholders within seven days. If shares were recently purchased by
check or electronic funds transfer, the redemption payment may be delayed until
the Fund is reasonably satisfied that the check or electronic funds transfer has
been collected (which may take up to 15 days). Any shareholder who is in doubt
about what procedures or documents are required by a fee-based program or
employee benefit plan to sell shares should contact the financial advisor. As
described in the Proxy Statement/Prospectus, shareholders who receive Advisor
Class shares of the Acquiring Fund in the Acquisition will be able to redeem
such shares at NAV (subject to a 0.75% redemption fee during the three-month
period following the Closing Date).
Selling Shares Through a Financial Intermediary or Retirement Plan
A shareholder's financial intermediary or plan recordkeeper must receive a
sales request by the Fund Closing Time and submit it to the Fund by a
pre-arranged time for the shareholder to receive that day's NAV. Your financial
intermediary, plan sponsor or plan recordkeeper is responsible for submitting
all necessary documentation to the Fund and may charge a fee for this service.
Selling Shares Directly to the Fund By Mail:
o Send a signed letter of instruction or stock power, along with
certificates, to:
AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
o For certified or overnight deliveries, send to:
AllianceBernstein Investor Services, Inc.
8000 IH 10 W, 4th floor
San Antonio, TX 78230
o For your protection, a bank, a member firm of a national stock
exchange or another eligible guarantor institution must guarantee
signatures. Stock power forms are available from your financial
intermediary, ABIS and many commercial banks. Additional
documentation is required for the sale of shares by corporations,
intermediaries, fiduciaries and surviving joint owners. If you have
any questions about these procedures, contact ABIS.
By Telephone:
o You may redeem your shares for which no stock certificates have been
issued by telephone request. Call ABIS at 800-221-5672 with
instructions on how you wish to receive your sale proceeds.
o ABIS must receive and confirm a telephone redemption request by the
Fund Closing Time for you to receive that day's NAV.
o For your protection, ABIS will request personal or other information
from you to verify your identity and will generally record the
calls. Neither the Fund nor the Adviser, ABIS, ABI or other Fund
agent will be liable for any loss, injury, damage or expense as a
result of acting upon telephone instructions purporting to be on
your behalf that ABIS reasonably believes to be genuine.
o If you have selected electronic funds transfer in your Mutual Fund
Application, the redemption proceeds will be sent directly to your
bank. Otherwise, the proceeds will be mailed to you.
o Redemption requests by electronic funds transfer or check may not
exceed $100,000 per Fund account per day.
o Telephone redemption is not available for shares held in nominee or
"street name" accounts, retirement plan accounts, or shares held by
a shareholder who has changed his or her address of record within
the previous 30 calendar days.
FREQUENT PURCHASES AND REDEMPTIONS OF FUND SHARES
-------------------------------------------------
The Acquiring Fund's Board has adopted policies and procedures designed to
detect and deter frequent purchases and redemptions of Acquiring 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
Acquiring Fund 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 avoid
frequent trading in Acquiring Fund shares through purchases, sales and exchanges
of shares. The Acquiring 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
Acquiring Fund 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 the Acquiring Fund's shares dilute the value of shares
held by long-term shareholders. Volatility resulting from excessive purchases
and sales or exchanges of Acquiring Fund shares, especially involving large
dollar amounts, may disrupt efficient portfolio management and cause the
Acquiring Fund to sell shares at inopportune times to raise cash to accommodate
redemptions relating to short-term trading activity. In particular, the
Acquiring 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, the 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 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 a
fund calculates its own share price (referred to as "time zone arbitrage"). The
Acquiring Fund has 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 the Acquiring Fund
calculates its NAV. While there is no assurance, the Acquiring Fund expects 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 Acquiring Fund shareholders.
A shareholder engaging in a short-term trading strategy may also target
the Acquiring 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 relatively illiquid 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"). The
Acquiring Fund may be adversely affected by price arbitrage.
Policy Regarding Short-Term Trading. Purchases and exchanges of shares of
the Acquiring Fund should be made for investment purposes only. The Acquiring
Fund seeks to prevent patterns of excessive purchases and sales of Acquiring
Fund shares to the extent they are detected by the procedures described below,
subject to the Acquiring Fund's ability to monitor purchase, sale and exchange
activity. The Acquiring Fund reserves 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 Acquiring Fund, through its
agents, ABI and ABIS, maintains surveillance procedures to detect
excessive or short-term trading in Fund shares. This surveillance
process involves several factors, which include scrutinizing
transactions in Acquiring 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 Acquiring Fund 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
Acquiring Fund shares, the Acquiring Fund 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 Acquiring Fund determines, in
its 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
Acquiring Fund 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 Acquiring Fund shares back
to the Fund or redemptions will continue to be permitted in
accordance with the terms of the Acquiring 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 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 Acquiring 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 Acquiring Fund, particularly among certain brokers,
dealers and other financial intermediaries, including sponsors of
retirement plans. The Acquiring Fund applies its surveillance
procedures to these omnibus account arrangements. As required by SEC
rules, the Acquiring Fund has entered into agreements with all of
its financial intermediaries that require the financial
intermediaries to provide the Fund, upon the request of the Fund or
its agents, with individual account level information about their
transactions. If the Acquiring Fund detects excessive trading
through its monitoring of omnibus accounts, including trading at the
individual account level, the financial intermediaries will also
execute instructions from the Acquiring Fund to take actions to
curtail the activity, which may include applying blocks to accounts
to prohibit future purchases and exchanges of Acquiring Fund shares.
For certain retirement plan accounts, the Fund may request that the
retirement plan or other intermediary revoke the relevant
participant's privilege to effect transactions in Acquiring 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).
DIVIDENDS, DISTRIBUTIONS AND TAXES
Income dividends and capital gains distributions, if any, declared by the
Acquiring Fund on its outstanding shares will, at the election of each
shareholder, be paid in cash or in additional shares of the same class of shares
of the Acquiring Fund. If paid in additional shares, the shares will have an
aggregate NAV as of the close of business on the declaration date of the
dividend or distribution equal to the cash amount of the dividend or
distribution. You may make an election to receive dividends and distributions in
cash or in shares at the time you purchase shares. Your election can be changed
at any time prior to a record date for a dividend. There is no sales or other
charge in connection with the reinvestment of dividends or capital gains
distributions. Cash dividends may be paid by check, or, at your election,
electronically via the ACH network.
If you receive an income dividend or capital gains distribution in cash
you may, within 120 days following the date of its payment, reinvest the
dividend or distribution in additional shares of the Acquiring Fund without
charge by returning to the Adviser, with appropriate instructions, the check
representing the dividend or distribution. Thereafter, unless you otherwise
specify, you will be deemed to have elected to reinvest all subsequent dividends
and distributions in shares of the Acquiring Fund.
While it is the intention of the Acquiring Fund to distribute to its
shareholders substantially all of each fiscal year's net income and net realized
capital gains, if any, the amount and timing of any dividend or distribution
will depend on the realization by the Fund of income and capital gains from
investments. There is no fixed dividend rate and there can be no assurance that
the Acquiring Fund will pay any dividends or realize any capital gains. The
final determination of the amount of the Acquiring Fund's return of capital
distributions for the period will be made after the end of each calendar year.
You will normally have to pay federal income tax, and any state or local
income taxes, on the distributions you receive from the Acquiring Fund, whether
you take the distributions in cash or reinvest them in additional shares.
Distributions of net capital gains from the sale of investments that the
Acquiring Fund owned for more than one year and that are properly designated as
capital gains distributions are taxable as long-term capital gains.
Distributions of dividends to the Acquiring Fund's non-corporate shareholders
may be treated as "qualified dividend income", which is taxed at the same
preferential tax rates applicable to long-term capital gains, if, in general,
such distributions are derived from, and designated by the Acquiring Fund as,
"qualified dividend income" and provided that holding period and other
requirements are met by both the shareholder and the Fund. "Qualified dividend
income" generally is income derived from dividends from U.S. corporations and
"qualified foreign corporations".
Other distributions by the Acquiring Fund are generally taxable to you as
ordinary income. Dividends declared in October, November, or December and paid
in January of the following year are taxable as if they had been paid the
previous December. The Fund will notify you as to how much of the Fund's
distributions, if any, qualify for these reduced tax rates.
Investment income received by the Acquiring Fund from sources within
foreign countries may be subject to foreign income taxes withheld at the source.
To the extent that the Acquiring Fund is liable for foreign income taxes
withheld at the source, the Fund intends, if possible, to operate so as to meet
the requirements of the Code to "pass through" to the Acquiring Fund's
shareholders credits for foreign income taxes paid (or to permit shareholders to
claim a deduction for such foreign taxes), but there can be no assurance that
the Acquiring Fund will be able to do so. Furthermore, a shareholder's ability
to claim a foreign tax credit or deduction for foreign taxes paid by the Fund
may be subject to certain limitations imposed by the Code, as a result of which
a shareholder may not be permitted to claim a credit or deduction for all or a
portion of the amount of such taxes.
Under certain circumstances, if the Acquiring Fund realizes losses (e.g.,
from fluctuations in currency exchange rates) after paying a dividend, all or a
portion of the dividend may subsequently be characterized as a return of
capital. Returns of capital are generally nontaxable, but will reduce a
shareholder's basis in shares of the Acquiring Fund. If that basis is reduced to
zero (which could happen if the shareholder does not reinvest distributions and
returns of capital are significant), any further returns of capital will be
taxable as capital gain.
If you buy shares just before the Fund deducts a distribution from its
NAV, you will pay the full price for the shares and then receive a portion of
the price back as a taxable distribution.
The sale or exchange of Fund shares is a taxable transaction for federal
income tax purposes.
Each year shortly after December 31, the Acquiring Fund will send you tax
information stating the amount and type of all its distributions for the year.
You are encouraged to consult your tax adviser about the federal, state, and
local tax consequences in your particular circumstances, as well as about any
possible foreign tax consequences.
Non-U.S. Shareholders
If you are a nonresident alien individual or a foreign corporation for federal
income tax purposes, please see the Fund's SAI for information on how you will
be taxed as a result of holding shares in the Fund.
Appendix G
COMPARISON OF BUSINESS STRUCTURE AND ORGANIZATION
The following information provides only a summary of the key features of
the organizational structure and governing documents of the Acquired Fund and
the Acquiring Fund. The Acquiring Fund is a series of the Company, an open-end
management investment company organized as a Maryland corporation. The Charter
and Bylaw provisions that govern the Company apply to the Acquiring Fund. The
Acquired Fund is a closed-end management investment company organized as a
Maryland corporation. It is governed by the Acquiring Fund's Charter and Bylaw
provisions. Certain differences in the respective Charter and Bylaw provisions
of the Acquiring Fund and the Acquired Fund are noted below. Each Fund's
shareholders have the rights due to them under Maryland law.
Shareholder Meetings
Each Fund has procedures available to its respective shareholders for
calling shareholders' meetings and for the removal of Directors. Under Maryland
law, unless a charter provides otherwise (which the Company's do not), a
director may be removed, either with or without cause, at a meeting duly called
and at which a quorum is present by the affirmative vote of the holders of a
majority of the votes entitled to be cast for the election of directors. The
Acquired Fund has opted into section 3-804 of the Maryland General Corporation
Law, which provides that a director may only be removed by the affirmative vote
of at least two-thirds of all the votes entitled to be cast by the stockholders
generally in the election of directors. Under the Bylaws of the Company, a
special meeting of shareholders may be called by the secretary upon the written
request of shareholders entitled to cast not less than a majority of all the
votes entitled to be cast at such meeting. Under the Charter and Bylaws of the
Acquired Fund, a special meeting of shareholders may also be called by the
secretary upon the written request of shareholders entitled to cast not less
than a majority of all the votes entitled to be cast at such meeting.
For the Company, and with respect to the Acquiring Fund, the presence in
person or by proxy of shareholders entitled to cast one-third of all the votes
entitled to be cast at any meeting of shareholders on any matter shall
constitute a quorum. When a quorum is present at any meeting, the affirmative
vote of a majority of the votes (or with respect to the election of Directors, a
plurality of votes) cast or, with respect to any matter requiring a class vote,
the affirmative vote of a majority of the votes cast of each class entitled to
vote as a class on the matter, shall decide any question brought before such
meeting, except as otherwise required by law. For the Acquired Fund, the
presence in person or by proxy of stockholders entitled to cast a majority of
the votes entitled to be cast shall constitute a quorum. When a quorum is
present at any meeting, a director shall be elected by the affirmative vote of
the holders of a majority of the votes entitled to be cast thereon, except as
otherwise required by law. The Acquired Fund's Charter provides that the
conversion of the Fund from a closed-end fund to an open-end fund, and any
amendment to the Charter to effect any such conversion, requires the affirmative
vote of two-thirds of the outstanding shares.
Shares of the Funds
The Acquired Fund's Charter authorizes the issuance of a set number of
shares of capital stock, and permits the Acquired Fund to issue shares in
fractional denominations to the same extent as its whole shares, with such
fractional shares having proportionate rights. The Company's Charter authorizes
a set number of shares, and the Company may issue shares of stock in fractional
denominations to the same extent as its whole shares, with such fractional
shares having proportionate rights. The Directors of the Company may classify
any unissued shares of common stock in one or more series or classes of stock.
The Company's Charter provides that no shareholder is entitled to any
preemptive rights except as the Board may establish. Shareholders of the
Acquired Fund are also not entitled to preemptive rights except as the Board may
establish. Each share has equal voting, dividend, distribution and liquidation
rights. Shareholders are entitled to one vote per share. All voting rights for
the election of Directors are non-cumulative, which means that the holders of
more than 50% of the shares of common stock of the Fund can elect 100% of the
Directors then nominated for election if they choose to do so and, in such
event, the holders of the remaining shares will not be able to elect any
Directors.
The Acquired Fund holds annual meetings of shareholders. The Acquired
Fund's Bylaws provide that annual meeting of stockholders for the election of
directors and the transaction of business shall be held on a date and time set
by the Board. The Company is not required to, and does not, hold annual meetings
of shareholders and has no current intention to hold such meetings, except as
required by the 1940 Act. Under the 1940 Act, the Company is required to hold a
shareholder meeting if, among other reasons, the number of Directors elected by
shareholders is less than a majority of the total number of Directors, or if the
Acquiring Fund seeks to change its fundamental investment policies.
Dividends and Distributions
For each Fund, dividends may be authorized by the Board and declared by
the Fund at any time, and the amount and number of capital gains distributions
paid to shareholders during each fiscal year are determined by the Board. Each
such payment shall be accompanied by a statement as to the source of such
payment, to the extent required by law. For the Acquiring Fund, each share class
is entitled to such dividends or distributions, in cash, property or additional
shares of stock or the same or another series of the Company or class, as may be
authorized from time to time by the Board.
A shareholder of the Acquiring Fund may make an election to receive
dividends and distributions in cash or in shares at the time of purchase of
shares. The shareholder's election can be changed at any time prior to a record
date for a dividend. There is no sales or other charge in connection with the
reinvestment of dividends or capital gains distributions.
Indemnification and Liability of Directors and Officers
The respective Charter and Bylaws of each of the Company and the Acquired
Fund provide for the indemnification of officers and Directors, as applicable,
to the full extent permitted by Maryland law. This indemnification does not
protect any such person against any liability to the Company or the Acquired
Fund, as applicable, or any shareholder thereof to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the satisfaction of
such person's office.
Maryland law permits a Maryland corporation to include in its charter a
provision limiting the liability of its Directors and officers to the
corporation and its shareholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter of each of
the Company and the Acquiring Fund contains such a provision that eliminates
Directors' and officers' liability to the maximum extent permitted by Maryland
law. This exculpation does not protect any such person against any liability to
the Company or the Acquired Fund or any shareholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the satisfaction of
such person's office.
Appendix H
CAPITALIZATION
The following table shows on an unaudited basis the capitalization of each
of the Funds as of August 31, 2015, and on a pro forma combined basis, giving
effect to the acquisition of the assets and liabilities of the Acquired Fund by
the Acquiring Fund at net asset value as of August 31, 2015:
Acquiring Fund Pro Forma Combined Fund
Acquired Fund (Advisor Class) Adjustments (Advisor Class)
(pro forma)(1)
---------------- ----------------- ------------------------------
Total Net Assets $1,780,581,036 $0 $(0) $1,780,581,036
Shares Outstanding 215,835,608 0 (0) 215,835,608(2)
NAV Per Share $8.25 $0 -- $8.25
--------
(1) Assumes the Acquisition was consummated on August 31, 2015 and is for
information purposes only. No assurance can be given as to how many shares
of the Acquiring Fund will be received by shareholders of the Acquired
Fund on the date the Acquisition takes place, and the foregoing should not
be relied upon to reflect the number of shares of the Acquiring Fund that
will actually be received on or after such date.
(2) In connection with the Acquisition, shares of the Acquiring Fund will be
issued to the shareholders of the Acquired Fund. The number of shares
assumed to be issued is equal to the net asset value of the Acquired Fund
divided by the net asset value per share of the Acquiring Fund as of
August 31, 2015.
Appendix I
SHARE OWNERSHIP INFORMATION
Shares Outstanding
As of August 31, 2015, the Acquired Fund had 215,835,608 shares of common
stock outstanding.
Ownership of Shares
As of August 31, 2015, the Directors and officers of the Acquired Fund as
a group beneficially owned less than 1% of the outstanding shares of common
stock of the Acquired Fund. To the knowledge of the Acquired Fund, the
following table shows the persons owning as of August 31, 2015 either of record
or beneficially, 5% or more of the outstanding shares of the Acquired Fund. As
of August 31, 2015, no shareholders may be deemed to "control" the Acquired
Fund. "Control" for this purpose is the ownership of more than 25% of the
Acquired Fund's voting securities.
Name and Address Number of Outstanding Percentage of Outstanding
of Shareholder Shares Owned Shares Owned
--------------- ------------ ------------
Karpus Management, Inc., d/b/a Karpus 16,824,591 7.80%
Investment Management, 183 Sully's Trail
Pittsford, New York 14534
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
EASY VOTING OPTIONS:
VOTE ON THE INTERNET
Log on to:
www.proxy-direct.com
--------------------
or scan the QR code
Follow the on-screen instructions
available 24 hours
VOTE BY PHONE
Call 1-800-337-3503
Follow the recorded instructions
available 24 hours
VOTE BY MAIL
Vote, sign and date this Proxy Card
and return in the postage-paid
envelope
VOTE IN PERSON
Attend Shareholder Meeting
1345 Avenue of the Americas
New York, NY 10105
on February 1, 2016
Please detach at perforation before mailing.
PROXY CARD ALLIANCEBERNSTEIN INCOME FUND, INC. PROXY
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 1, 2016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND. The
undersigned shareholder of AllianceBernstein Income Fund, Inc. (the "Fund"), a
Maryland corporation, hereby appoints Nancy Hay and Carol Rappa, or either of
them, as proxies for the undersigned, with full power of substitution in each of
them, to attend the Special Meeting of Shareholders of the Fund (the "Meeting")
to be held on Monday, February 1, 2016, at 3:00 p.m., Eastern Time at the
offices of AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New
York 10105, and any postponement or adjournment thereof, to cast on behalf of
the undersigned all votes that the undersigned is entitled to cast at the
Meeting and otherwise to represent the undersigned with all powers possessed by
the undersigned if personally present at such Meeting. The undersigned hereby
acknowledges receipt of the Notice of Special Meeting of Shareholders and
accompanying Proxy Statement/Prospectus and revokes any proxy heretofore given
with respect to the Meeting.
Receipt of the Notice of Special Meeting of Shareholders and the accompanying
Proxy Statement/Prospectus is hereby acknowledged. The shares represented hereby
will be voted as indicated or FOR the Proposal if no choice is indicated.
VOTE VIA THE INTERNET: www.proxy-direct.com
VOTE VIA THE TELEPHONE: 1-800-337-3503
----------------- ------------------
----------------- ------------------
Note: Please sign exactly as your name(s) appear(s) on
this card. When signing as attorney, executor,
administrator, trustee, guardian or as custodian for a
minor, please sign your name and give your full title as
such. If signing on behalf of a corporation, please sign
the full corporate name and your name and indicate your
title. If you are a partner signing for a partnership,
please sign the partnership name, your name and indicate
your title. Joint owners should each sign these
instructions. Please sign, date and return.
----------------------------------
Signature and Title, if applicable
----------------------------------
Signature (if held jointly)
----------------------------------
Date
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
Important Notice Regarding the Availability of Proxy Materials for the
AllianceBernstein Income Fund, Inc.
Special Meeting of Shareholders to Be Held on February 1, 2016.
The Proxy Statement and Proxy Card for this meeting are available at:
www.proxy-direct.com/all-27135
IF YOU VOTE ON THE INTERNET OR BY TELEPHONE,
YOU NEED NOT RETURN THIS PROXY CARD
Please detach at perforation before mailing.
PLEASE MARK A BOX BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [X]
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS A VOTE "FOR" THE PROPOSAL.
FOR AGAINST ABSTAIN
[_] [_] [_]
1. To approve an Agreement and Plan of Acquisition and Dissolution providing
for the acquisition of all of the assets of AllianceBernstein Income Fund,
Inc. (the "Acquired Fund") in exchange for shares of common stock of AB
Income Fund (the "Acquiring Fund"), a series of AB Bond Fund, Inc., a
Maryland corporation and an open-end investment company, assumption by the
Acquiring Fund of all of the liabilities of the Acquired Fund and the
dissolution of the Acquired Fund.
WE URGE YOU TO SIGN, DATE AND MAIL THE ENCLOSED PROXY PROMPTLY
-----------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
November 4, 2015
For the Reorganization of:
AllianceBernstein Income Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
INTO
AB Income Fund,
a series of AB Bond Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
-----------------------------------------
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Proxy Statement/Prospectus dated November 4, 2015
relating to the Special Meeting of Shareholders of AllianceBernstein Income
Fund, Inc. (the "Acquired Fund"), to be held at 3:00 p.m. Eastern time at the
offices of AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New
York l0105, on February 1, 2016 (the "Meeting"). The purpose of the Meeting is
to seek approval of the Acquired Fund's shareholders of an Agreement and Plan of
Acquisition and Dissolution (the "Plan") providing for the acquisition of all of
the assets of the Acquired Fund, a closed-end management investment company, in
exchange for shares of common stock of AB Income Fund (the "Acquiring Fund"), a
series of AB Bond Fund, Inc., an open-end management investment company, and the
assumption by the Acquiring Fund of all of the liabilities of the Acquired Fund
(the "Acquisition"). Subject to the approval of the shareholders of the Acquired
Fund, the Plan provides for:
o the transfer of all of the assets of the Acquired Fund in exchange
for Advisor Class shares of the Acquiring Fund and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund;
o the distribution of the Advisor Class shares of the Acquiring Fund
received by the Acquired Fund to shareholders of the Acquired Fund;
and
o the complete liquidation and dissolution of the Acquired Fund.
Shareholders of the Acquired Fund at the time of the Acquisition will
become Advisor Class shareholders of the Acquiring Fund. If the Plan is approved
by the Acquired Fund's shareholders at the Meeting, the Acquisition is expected
to occur during the first quarter of 2016.
The Proxy Statement/Prospectus and this Statement of Additional
Information are available upon request, without charge, by writing to the
applicable address or calling the telephone numbers listed below.
By mail: c/o AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By phone: (800) 221-5672
All of this additional information is also available in documents filed
with the Securities and Exchange Commission (the "SEC"). You may view or obtain
these documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, DC
By phone: 1-202-551-8090 (for information on the operations of
the Public Reference Room only)
By mail: Public Reference Branch, Office of Consumer Affairs and
Information Services, Securities and Exchange Commission,
Washington, DC 20549 (copies may be obtained at prescribed rates)
On the Internet: www.sec.gov
In addition, reports, proxy statements and other information concerning
the Acquired Fund may be inspected at the New York Stock Exchange.
TABLE OF CONTENTS
ADDITIONAL INFORMATION ABOUT THE FUNDS 3
FINANCIAL INFORMATION 3
ADDITIONAL INFORMATION ABOUT THE FUNDS
This Statement of Additional Information, which supplements and is related
to the Proxy Statement/Prospectus, is accompanied by and incorporates by
reference the Statement of Additional Information of the Acquiring Fund dated
November 4, 2015 (Filed on ___________, 2015; Accession No. _______________),
as supplemented or amended to the date hereof.
FINANCIAL INFORMATION
This Statement of Additional Information is accompanied by the documents
referenced below, which contain historical financial information regarding the
Acquired Fund. The Acquiring Fund is newly formed and has not yet commenced
operations.
o The annual report to shareholders for the Acquired Fund, which
contains audited financial statements and the related independent
registered public accounting firm's report for the Acquired Fund for
the fiscal year ended December 31, 2014; and
o The semi-annual report of the Acquired Fund, which contains
unaudited financial statements for the six-month period ended June
30, 2015.
The Acquiring Fund is recently formed and has not prepared or filed any
shareholder reports.
No pro forma financial statements have been prepared and included relating
to the Acquisition of the Acquired Fund into the Acquiring Fund because the
Acquiring Fund is a newly organized fund and does not have any assets or
liabilities as of the date hereof.
PART C
OTHER INFORMATION
ITEM 15. Indemnification.
It is the Registrant's policy to indemnify its directors and
officers, employees and other agents to the maximum extent permitted
by Section 2-418 of the General Corporation Law of the State of
Maryland, which is incorporated by reference herein, and as set
forth in Article EIGHTH of Registrant's Articles of Amendment and
Restatement of Articles of Incorporation, Article IX of the
Registrant's Amended and Restated By-laws filed as Exhibit (2) in
response to Item 16 and Section 10(a) of the Distribution Services
Agreement filed as Exhibit (7)(a) in response to Item 16, all as set
forth below.
The liability of the Registrant's directors and officers is dealt
with in Article EIGHTH of Registrant's Articles of Amendment and
Restatement of Articles of Incorporation, as set forth below. The
Investment Adviser's liability for any loss suffered by the
Registrant or its shareholders is set forth in Section 4 of the
Investment Advisory Contract filed as Exhibit (6) in response to
Item 16, as set forth below.
ARTICLE EIGHTH OF THE REGISTRANT'S ARTICLES OF AMENDMENT AND RESTATEMENT OF
ARTICLES OF INCORPORATION READS AS FOLLOWS:
(1) To the maximum extent that Maryland law in effect from time to
time permits limitation of the liability of directors and officers of a
corporation, no present or former director or officer of the Corporation shall
be liable to the Corporation or its stockholders for money damages.
(2) The Corporation shall have the power, to the maximum extent
permitted by Maryland law in effect from time to time, to obligate itself to
indemnify, and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to, (a) any individual who is a present or former
director or officer of the Corporation or (b) any individual who, while a
director or officer of the Corporation and at the request of the Corporation,
serves or has served as a director, officer, partner or trustee of another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or any other enterprise from and against any claim or
liability to which such person may become subject or which such person may incur
by reason of his status as a present or former director or officer of the
Corporation. The Corporation shall have the power, with the approval of the
Board of Directors, to provide such indemnification and advancement of expenses
to a person who served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the Corporation or
a predecessor of the Corporation.
(3) The provisions of this Article EIGHTH shall be subject to the
limitations of the Investment Company Act.
(4) Neither the amendment nor repeal of this Article EIGHTH, nor the
adoption or amendment of any other provision of the Charter or Bylaws
inconsistent with this Article EIGHTH, shall apply to or affect in any respect
the applicability of the preceding sections of this Article EIGHTH with respect
to any act or failure to act which occurred prior to such amendment, repeal or
adoption.
ARTICLE IX OF THE REGISTRANT'S AMENDED AND RESTATED BYLAWS READS AS FOLLOWS:
To the maximum extent permitted by Maryland law in effect from time to
time, the Corporation shall indemnify and, without requiring a preliminary
determination of the ultimate entitlement to indemnification, shall pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any individual who is a present or former director or officer of the
Corporation and who is made or threatened to be made a party to the proceeding
by reason of his or her service in any such capacity or (b) any individual who,
while a director or officer of the Corporation and at the request of the
Corporation, serves or has served as a director, officer, partner or trustee of
another corporation, real estate investment trust, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made or threatened
to be made a party to the proceeding by reason of his or her service in any such
capacity. The Corporation may, with the approval of its Board of Directors or
any duly authorized committee thereof, provide such indemnification and advance
for expenses to a person who served a predecessor of the Corporation in any of
the capacities described in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation. The termination of any claim,
action, suit or other proceeding involving any person, by judgment, settlement
(whether with or without court approval) or conviction or upon a plea of guilty
or nolo contendere, or its equivalent, shall not create a presumption that such
person did not meet the standards of conduct required for indemnification or
payment of expenses to be required or permitted under Maryland law, these Bylaws
or the Charter. Any indemnification or advance of expenses made pursuant to this
Article shall be subject to applicable requirements of the 1940 Act. The
indemnification and payment of expenses provided in these Bylaws shall not be
deemed exclusive of or limit in any way other rights to which any person seeking
indemnification or payment of expenses may be or may become entitled under any
bylaw, regulation, insurance, agreement or otherwise.
Neither the amendment nor repeal of this Article, nor the adoption or
amendment of any other provision of the Bylaws or Charter inconsistent with this
Article, shall apply to or affect in any respect the applicability of the
preceding paragraph with respect to any act or failure to act which occurred
prior to such amendment, repeal or adoption.
Section 10(a) of the Distribution Services Agreement reads as follows:
Section 10. Indemnification.
(a) The Fund agrees to indemnify, defend and hold the
Underwriter, and any person who controls the Underwriter within the
meaning of Section 15 of the Securities Act of 1933, as amended (the
"Securities Act"), free and harmless form and against any and all
claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and
any counsel fees incurred in connection therewith) which the
Underwriter or any such controlling person may incur, under the
Securities Act, or under common law or otherwise, arising out of or
based upon any alleged untrue statements of a material fact
contained in the Fund's Registration Statement or Prospectus or
Statement of Additional Information in effect from time to time
under the Securities Act or arising out of or based upon any alleged
omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not
misleading; provided, however, that in no event shall anything
therein contained by so construed as to protect the Underwriter
against any liability to the Fund or its security holders to which
the Underwriter would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of the Underwriter's reckless disregard of its
obligations and duties under this agreement. The Fund's agreement to
indemnify the Underwriter or any such controlling person, such
notification to be given by letter or by telegram addressed to the
Fund at its principal office in New York, New York, and sent to the
Fund by the person against whom such action is brought within ten
days after the summons or other first legal process shall have been
served. The failure so to notify the Fund of the commencement of any
such action shall not relieve the Fund from any liability which it
may have to the person against whom such action is brought by reason
of any such alleged untrue statement or omission otherwise than on
account of the indemnity agreement contained in this Section 10. The
Fund will be entitled to assume the defense of any such suit brought
to enforce any such claim, and to retain counsel of good standing
chosen by the Fund and approved by the Underwriter. In the event the
Fund does elect to assume the defense of any such suit and retain
counsel of good standing approved by the Underwriter, the defendant
or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but in case the Fund
does not elect to assume the defense of any such suit, or in case
the Underwriter does not approve of counsel chosen by the Fund, the
Fund will reimburse the Underwriter or the controlling person or
persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by the Underwriter or such
persons. The indemnification agreement contained in this Section 10
shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Underwriter or any
controlling person and shall survive the sale of any of the Fund's
shares made pursuant to subscriptions obtained by the Underwriter.
This agreement of indemnity will inure exclusively to the benefit of
the Underwriter, to the benefit of its successors and assigns, and
to the benefit of any controlling persons and their successors and
assigns. The Fund agrees promptly to notify the Underwriter of the
commencement of any litigation or proceeding against the Fund in
connection with the issue and sale of any of its shares.
Section 4 of the Investment Advisory Contract reads as follows:
4. We shall expect of you, and you will give us the benefit of, your
best judgment and efforts in rendering these services to us, and we
agree as an inducement to your undertaking these services that you
shall not be liable hereunder for any mistake of judgment or in any
event whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to protect,
you against any liability to us or to our security holders to which
you would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of your duties
hereunder, or by reason of your reckless disregard of your
obligations and duties hereunder.
The foregoing summaries are qualified by the entire text of
Registrant's Articles of Amendment and Restatement of Articles of
Incorporation, Amended and Restated By-laws, the Investment Advisory
Contract between Registrant and AllianceBernstein L.P. and the
Distribution Services Agreement between Registrant and
AllianceBernstein Investments, Inc. ("ABI").
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer of controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2, 1980),
the Registrant will indemnify its directors, officers, investment
manager and principal underwriters only if (1) a final decision on
the merits was issued by the court or other body before whom the
proceeding was brought that the person to be indemnified (the
"indemnitee") was not liable by reason or willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office ("disabling conduct") or (2) a
reasonable determination is made, based upon a review of the facts,
that the indemnitee was not liable by reason of disabling conduct,
by (a) the vote of a majority of a quorum of the directors who are
neither "interested persons" of the Registrant as defined in section
2(a)(19) of the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party directors"), or (b) an
independent legal counsel in a written opinion. The Registrant will
advance attorneys fees or other expenses incurred by its directors,
officers, investment adviser or principal underwriters in defending
a proceeding, upon the undertaking by or on behalf of the indemnitee
to repay the advance unless it is ultimately determined that he is
entitled to indemnification and, as a condition to the advance, (1)
the indemnitee shall provide a security for his undertaking, (2) the
Registrant shall be insured against losses arising by reason of any
lawful advances, or (3) a majority of a quorum of disinterested,
non-party directors of the Registrant, or an independent legal
counsel in a written opinion, shall determine, based on a review of
readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will
be found entitled to indemnification.
The Registrant participates in a joint directors liability
insurance policy issued by the ICI Mutual Insurance Company. Under
this policy, outside trustees and directors are covered up to the
limits specified for any claim against them for acts committed in
their capacities as trustee or director. A pro rata share of the
premium for this coverage is charged to each participating
investment company. In addition, the Adviser's liability insurance
policy, which is issued by a number of underwriters, including
Greenwich Insurance Company as primary underwriter, extends to
officers of the Registrant and such officers are covered up to the
limits specified for any claim against them for acts committed in
their capacities as officers of the investment companies sponsored
by the Adviser.
ITEM 16. Exhibits
(1) (a) Articles of Amendment and Restatement to Articles of
Incorporation of the Registrant dated, February 1, 2006 and
filed February 23, 2006 - Incorporated by reference to Exhibit
(a) to Post-Effective Amendment No. 87 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 31, 2007.
(b) Articles of Amendment to Articles of Incorporation of the
Registrant, dated November 2, 2007 and filed June 18, 2008 -
Incorporated by reference to Exhibit (a)(2) to Post-Effective
Amendment No. 89 of the Registrant's Registration Statement on
Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on January 28, 2009.
(c) Articles Supplementary to Articles of Incorporation of the
Registrant, dated November 30, 2009 and filed December 3, 2009
- Incorporated by reference to Exhibit (a)(3) to
Post-Effective Amendment No. 93 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on December 21, 2009.
(d) Articles Supplementary to Articles of Incorporation of the
Registrant, dated December 17, 2009 and filed December 21,
2009 - Incorporated by reference to Exhibit (a)(4) to
Post-Effective Amendment No. 95 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 26, 2010.
(e) Articles of Amendment to Articles of Incorporation of the
Registrant, dated September 22, 2010 and filed September 22,
2010 - Incorporated by reference to Exhibit (a)(5) to
Post-Effective Amendment No. 99 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 28, 2011.
(f) Articles Supplementary to Articles of Incorporation of the
Registrant, dated September 21, 2011 and filed September 21,
2011 - Incorporated by reference to Exhibit (a)(6) to
Post-Effective Amendment No. 103 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on September 23, 2011.
(g) Articles Supplementary to Articles of Incorporation of the
Registrant, dated January 6, 2012 and filed January 12, 2012 -
Incorporated by reference to Exhibit (a)(7) to Post-Effective
Amendment No. 115 of the Registrant's Registration Statement
on Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on March 19, 2013.
(h) Articles Supplementary to Articles of Incorporation of the
Registrant, dated March 5, 2013 and filed March 6, 2013 -
Incorporated by reference to Exhibit (a)(8) to Post-Effective
Amendment No. 115 of the Registrant's Registration Statement
on Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on March 19, 2013.
(i) Articles Supplementary to Articles of Incorporation of the
Registrant, dated November 21, 2013 and filed November 25,
2013 - Incorporated by reference to Exhibit (a)(9) to
Post-Effective Amendment No. 119 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on December 11, 2013.
(j) Articles Supplementary to Articles of Incorporation of the
Registrant, dated December 30, 2013 and filed January 13, 2014
- Incorporated by reference to Exhibit (a)(10) to
Post-Effective Amendment No. 122 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 31, 2014.
(k) Articles Supplementary to Articles of Incorporation of the
Registrant, dated February 6, 2014 and filed February 7, 2014
- Incorporated by reference to Exhibit (a)(11) to
Post-Effective Amendment No. 123 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on February 12, 2014.
(l) Articles Supplementary to Articles of Incorporation of the
Registrant, dated April 22, 2014 and filed April 22, 2014 -
Incorporated by reference to Exhibit (a)(12) to Post-Effective
Amendment No. 126 of the Registrant's Registration Statement
on Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on April 28, 2014.
(m) Articles Supplementary to Articles of Incorporation of the
Registrant, dated November 11, 2014 and filed December 1, 2014
- Incorporated by reference to Exhibit (a)(13) to
Post-Effective Amendment No. 131 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on December 12, 2014.
(n) Articles of Amendment to Articles of Incorporation of the
Registrant, dated December 12, 2014 and filed December 12,
2014 -Incorporated by reference to Exhibit (a)(14) to
Post-Effective Amendment No. 133 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 30, 2015.
(o) Articles of Amendment to Articles of Incorporation of the
Registrant, effective January 20, 2015 and filed January 20,
2015 - Incorporated by reference to Exhibit (a)(15) to
Post-Effective Amendment No. 133 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 30, 2015.
(p) Articles Supplementary to Articles of Incorporation of the
Registrant, dated August 6, 2015 and filed August 6, 2015 -
Incorporated by reference to Exhibit (a)(16) to Post-Effective
Amendment No. 139 of the Registrant's Registration Statement
on Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on August 10, 2015.
(2) Amended and Restated By-Laws of the Registrant - Incorporated by
reference to Exhibit 99.77Q1 - Other Exhibits of the Registrant's
Semi-Annual Report on Form NSAR-A (File No. 811-02383), filed with
the Securities and Exchange Commission on May 30, 2006.
(3) Voting Trust Agreements - Not applicable.
(4) Form of Agreement and Plan of Acquisition and Dissolution - filed as
Appendix A to the Proxy Statement/Prospectus.
(5) Instruments defining the rights of holders of the securities being
registered - Not applicable.
(6) Investment Advisory Contract between the Registrant and
AllianceBernstein L.P., dated July 22, 1992, as amended December 29,
1992, July 1, 1999, September 7, 2004, June 14, 2006, December 16,
2009, February 4, 2010, December 7, 2011, May 1, 2013, December 11,
2013, May 7, 2014 and July 15, 2014 - Incorporated by reference to
Exhibit (d) to Post-Effective Amendment No. 129 of the Registrant's
Registration Statement on Form N-1A (file Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission on
August 28, 2014.
(7) (a) Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. (formerly known as
Alliance Fund Distributors, Inc.), dated as of July 22, 1992,
as amended, April 30, 1993 - Incorporated by reference to
Exhibit 6(a) to Post-Effective Amendment No. 65 of the
Registrant's Registration Statement on Form N-1A (File Nos.
2-48227 and 811-02383), filed with the Securities and Exchange
Commission on October 31, 1997.
(b) Amendment to the Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc. (formerly
known as Alliance Fund Distributors, Inc.), dated as of June
4, 1996 - Incorporated by reference to Exhibit 6(f) to
Post-Effective Amendment No. 64 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on October 31, 1996.
(c) Form of Amendment to the Distribution Services Agreement
between the Registrant and AllianceBernstein Investments, Inc.
(formerly known as AllianceBernstein Research and Management,
Inc.) - Incorporated by reference to Exhibit (e)(3) to
Post-Effective Amendment No. 81 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on October 31, 2003.
(d) Form of Amendment to the Distribution Services Agreement
between the Registrant and AllianceBernstein Investments, Inc.
(formerly known as AllianceBernstein Research and Management,
Inc.), dated as of December 16, 2004 - Incorporated by
reference to Exhibit (e)(4) to the Post-Effective Amendment
No. 84 of the Registrant's Registration Statement on Form N-1A
(File Nos. 2-48227 and 811-02383), filed with the Securities
and Exchange Commission on January 31, 2005.
(e) Amendment to Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc., dated as
of June 14, 2006 - Incorporated by reference to Exhibit (e)(5)
to Post-Effective Amendment No. 87 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on January 31, 2007.
(f) Form of Selected Dealer Agreement between AllianceBernstein
Investments, Inc. and selected dealers offering shares of
Registrant - Incorporated by reference to Exhibit (e)(6) to
Post-Effective Amendment No. 39 of the Registration Statement
on Form N-1A of AllianceBernstein Large Cap Growth Fund, Inc.
(File Nos. 33-49530 and 811-06730), filed with the Securities
and Exchange Commission on October 15, 2009.
(g) Form of Selected Agent Agreement between AllianceBernstein
Investments, Inc. (formerly known as AllianceBernstein
Research and Management, Inc.) and selected agents making
available shares of the Registrant - Incorporated by reference
to Exhibit (e)(6) to the Post-Effective Amendment No. 84 of
the Registrant's Registration Statement on Form N-1A (File
Nos. 2-48227 and 811-02383), filed with the Securities and
Exchange Commission on January 31, 2005.
(h) Selected Dealer Agreement between Alliance Bernstein
Investments, Inc. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated making available shares of the Registrant
effective April 30, 2009 - Incorporated by reference to
Exhibit (e)(8) to Post-Effective Amendment No. 39 of the
Registration Statement on Form N-1A of AllianceBernstein Large
Cap Growth Fund, Inc. (File Nos. 33-49530 and 811-06730),
filed with the Securities and Exchange Commission on October
15, 2009.
(i) Loading Fund Operating Agreement between Alliance Bernstein
Investments, Inc. and Charles Schwab & Co., Inc. making
available shares of the Registrant, dated as of June 1, 2007 -
Incorporated by reference to Exhibit (e)(9) to Post-Effective
Amendment No. 39 of the Registration Statement on Form N-1-A
of AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
33-49530 and 811-06730), filed with the Securities and
Exchange Commission on October 15, 2009.
(j) Cooperation Agreement between AllianceBernstein Investments,
Inc. (formerly known as AllianceBernstein Research and
Management, Inc.) and UBS AG, dated November 1, 2005 -
Incorporated by reference to Exhibit (e)(10) to Post-Effective
Amendment No. 39 of the Registration Statement on Form N-1A of
AllianceBernstein Large Cap Growth Fund, Inc. (File Nos.
33-49530 and 811-06730), filed with the Securities and
Exchange Commission on October 15, 2009.
(k) Form of Amendment to the Distribution Services Agreement
between the Registrant and AllianceBernstein Investments, Inc.
- Incorporated by reference to Exhibit (e)(11) to
Post-Effective Amendment No. 92 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on December 18, 2009.
(l) Amendment to the Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc., dated as
of August 9, 2013 - Incorporated by reference to Exhibit
(e)(12) to Post-Effective Amendment No. 126 of the
Registrant's Registration Statement on Form N-1A (File Nos.
2-48227 and 811-02383), filed with the Securities and Exchange
Commission on April 28, 2014.
(8) Bonus, profit sharing, pension or other similar contracts or
arrangements - Not applicable.
(9) Master Custodian Agreement between the Registrant and State Street
Bank and Trust Company, effective August 3, 2009 - Incorporated by
reference to Exhibit (g) to Post-Effective Amendment No. 51 of the
Registration Statement on Form N-1A of AllianceBernstein Variable
Products Series Fund, Inc. (File Nos. 33-18647 and 811-05398), filed
with the Securities and Exchange Commission on April 29, 2010.
(10) (a) Rule 12b-1 Plan - See Exhibit (7)(a) hereto.
(b) Amended and Restated Rule 18f-3 Plan, dated August 9, 2013 -
Incorporated by reference to Exhibit (n) to Post-Effective
Amendment No. 126 of the Registrant's Registration Statement
on Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on April 28, 2014.
(11) Opinion and Consent of Seward & Kissel LLP regarding the legality of
securities being registered - Filed herewith.
(12) Opinion and Consent of Seward & Kissel LLP as to Tax matters - To be
filed by amendment.
(13) (a) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. (formerly known as
Alliance Fund Services, Inc.), dated as of September 14, 1988
- Incorporated by reference to Exhibit 9 to Post-Effective
Amendment No. 65 of the Registrant's Registration Statement on
Form N-1A (File Nos. 2-48227 and 811-02383), filed with the
Securities and Exchange Commission on October 31, 1997.
(b) Form of Amendment to Transfer Agency Agreement between the
Registrant and AllianceBernstein Investor Services, Inc.,
dated as of June 14, 2006 - Incorporated by reference to
Exhibit (h)(2) to Post-Effective Amendment No. 87 of the
Registrant's Registration Statement on Form N-1A (File Nos.
2-48227 and 811-02383), filed with the Securities and Exchange
Commission on January 31, 2007.
(c) Form of Expense Limitation Undertaking by AllianceBernstein
L.P. (formerly known as Alliance Capital Management L.P.),
with respect to Quality Bond Portfolio - Incorporated by
reference to Exhibit (h)(3) to Post-Effective Amendment No. 84
of the Registrant's Registration Statement on Form N-1A (File
Nos. 2-48227 and 811-02383), filed with the Securities and
Exchange Commission on January 31, 2005.
(d) Form of Expense Limitation Agreement by AllianceBernstein L.P.
with respect to AllianceBernstein Government Reserves
Portfolio - Incorporated by reference to Exhibit (h)(4) to
Post-Effective Amendment No. 115 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on March 19, 2013.
(e) Form of Expense Limitation Agreement by AllianceBernstein L.P.
with respect to AllianceBernstein Tax-Aware Fixed Income
Portfolio - Incorporated by reference to Exhibit (h)(5) to
Post-Effective Amendment No. 119 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on December 11, 2013.
(f) Expense Limitation Agreement by AllianceBernstein L.P. with
respect to AllianceBernstein Credit Long/Short Portfolio,
dated May 7, 2014 - Incorporated by reference to Exhibit
(h)(6) to Post-Effective Amendment No. 129 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on August 28, 2014.
(g) Expense Limitation Agreement by AllianceBernstein L.P. with
respect to AllianceBernstein High Yield Portfolio, dated July
15, 2014 - Incorporated by reference to Exhibit (h)(7) to
Post-Effective Amendment No. 129 of the Registrant's
Registration Statement on Form N-1A (File Nos. 2-48227 and
811-02383), filed with the Securities and Exchange Commission
on August 28, 2014.
(14) Consent of Independent Registered Public Accounting Firm - Filed
herewith.
(15) Financial statements omitted pursuant to Item 14(a)(1). - Not
applicable.
(16) Powers of Attorney for: John H. Dobkin, Michael J. Downey, William
H. Foulk, Jr., D. James Guzy, Nancy P. Jacklin, Robert M. Keith,
Garry L. Moody, Marshall C. Turner, Jr. and Earl D. Weiner -
Incorporated by reference to Other Exhibits to Post-Effective
Amendment No. 139 of the Registrant's Registration Statement on Form
N-1A (File Nos. 2-48227 and 811-02383), filed with the Securities
and Exchange Commission on August 10, 2015.
ITEM 17. Undertakings.
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act 17 CFR 230.145(c), the
reoffering prospectus will contain the information called for by the
applicable registration form for reofferings by persons who may be
deemed underwriters, in addition to the information called for by
the other items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until
the amendment is effective, and that, in determining any liability
under the 1933 Act, each post-effective amendment shall be deemed to
be a new registration statement for the securities offered therein,
and the offering of the securities at that time shall be deemed to
be the initial bona fide offering of them.
(3) The undersigned registrant undertakes to file a post-effective
amendment to this registration statement upon the closing of the
Acquisition described in this registration statement that contains
an opinion of counsel supporting the tax matters discussed in this
registration statement.
SIGNATURES
----------
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of New York
and the State of New York, on the 28th day of September, 2015.
AB BOND FUND, INC.
By: /s/ Robert M. Keith
---------------------
Robert M. Keith
President
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated:
Signature Title Date
--------- ----- ----
(1) Principal Executive Officer:
/s/ Robert M. Keith President and September 28, 2015
--------------------- Chief Executive
Robert Keith Officer
(2) Principal Financial and
Accounting Officer:
/s/ Joseph J. Mantineo Treasurer September 28, 2015
---------------------- and Chief
Joseph J. Mantineo Financial Officer
(3) Directors:
----------
John H. Dobkin*
Michael J. Downey*
William H. Foulk, Jr.*
D. James Guzy*
Nancy P. Jacklin*
Robert M. Keith*
Garry L. Moody*
Marshall C. Turner, Jr.*
Earl D. Weiner*
*By: /s/ Stephen J. Laffey September 28, 2015
-----------------------
Stephen J. Laffey
(Attorney-in-fact)
Index to Exhibits
-----------------
Exhibit No. Description of Exhibits
----------- -----------------------
(11) Opinion and Consent of Seward & Kissel LLP
(14) Consent of Independent Registered Public Accounting Firm