SUP-0115-0216 AB BOND FUNDS -AB Credit Long/Short Portfolio -AB High Yield Portfolio -AB Intermediate Bond Portfolio -AB Limited Duration High Income Portfolio -AB Tax-Aware Fixed Income Portfolio -AB Global Bond Fund -AB High Income Fund -AB Unconstrained Bond Fund (each a Portfolio or collectively, the Portfolios ) Supplement dated February 17, 2016 to the Prospectus dated January 29, 2016 of the AB Bonds Funds offering Class A, Class C and Advisor Class shares of AB Credit Long/Short Portfolio, AB Limited Duration High Income Portfolio and AB Tax-Aware Fixed Income Portfolio, Class A, Class C, Class R, Class K, Class I, Class Z and Advisor Class shares of AB High Yield Portfolio, and Class A, Class B, Class C, Class R, Class K, Class I, Class Z and Advisor Class shares of AB Intermediate Bond Portfolio, AB Global Bond Fund, AB High Income Fund and AB Unconstrained Bond Fund (the Prospectus ). * * * * * The following replaces The Different Share Class Expenses Sales Charges Class A Shares in the Investing in the Funds section of the Prospectus. Class A Shares. You can purchase Class A shares at their public offering price (or cost), which is NAV plus an initial sales charge of up to 4.25% of the offering price for all Funds except AB Tax-Aware Fixed Income Portfolio and 3.00% of the offering price for AB Tax-Aware Fixed Income Portfolio. Any applicable sales charge will be deducted directly from your investment. The initial sales charge you pay each time you buy Class A shares differs depending on the amount you invest and may be reduced or eliminated for larger purchases as indicated below. These discounts, which are also known as Breakpoints or Quantity Discounts, can reduce or, in some cases, eliminate the initial sales charges that would otherwise apply to your investment in Class A shares. The sales charge schedule of Class A share Quantity Discounts is as follows: AB Tax-Aware Fixed Income Portfolio: Initial Sales Charge Amount Purchased as % of Net Amount Invested as % of Offering Price Up to $100,000 3.09% 3.00% $100,000 up to $250,000 2.04 2.00 $250,000 up to $500,000 1.01 1.00 $500,000 and above 0.00 0.00
All Other Funds: Amount Purchased Initial Sales Charge as % of Net Amount Invested as % of Offering Price Up to $100,000 4.44% 4.25% $100,000 up to $250,000 3.36 3.25 $250,000 up to $500,000 2.30 2.25 $500,000 up to $1,000,000 1.78 1.75 $1,000,000 and above 0.00 0.00 Except as noted below, purchases of Class A shares in the amount of $1,000,000 or more for all Funds except AB Tax- Aware Fixed Income Portfolio and in the amount of $500,000 or more for AB Tax-Aware Fixed Income Portfolio, or by AllianceBernstein or non-alliancebernstein sponsored group retirement plans are not subject to an initial sales charge, but may be subject to a 1% CDSC if redeemed or terminated within one year. * * * * * The following paragraph replaces the paragraph under Hypothetical Investment and Expense Information in Appendix B of the Prospectus. A settlement agreement between the Adviser and the New York State Attorney General requires the Funds to include the following supplemental hypothetical investment information, which provides additional information calculated and presented in a manner different from expense information found under Fees and Expenses of the Fund in the Summary Information at the beginning of this Prospectus about the effect of a Fund s expenses, including investment advisory fees and other Fund costs, on each Fund s returns over a 10-year period. The chart shows the estimated expenses that would be charged on a hypothetical investment of $10,000 in Class A shares of each Fund assuming a 5% return each year, including an initial sales charge of 4.25% for all Funds except AB Tax-Aware Fixed Income Portfolio and an initial sales charge of 3.00% for AB Tax-Aware Fixed Income Portfolio. Except as otherwise indicated, the chart also assumes that the current annual expense ratio stays the same throughout the 10-year period. The current annual expense ratio for each Fund is the same as stated under Fees and Expenses of the Fund. If you wish to obtain hypothetical investment information for other classes of shares of each Fund, please refer to the Hypothetical Fee and Expense Calculator on www.abglobal.com (click on Menu Americas Individual Investors US (US Citizens), then Investments Calculators ). Your actual expenses may be higher or lower. * * * * * This Supplement should be read in conjunction with the Prospectus for the Portfolios. You should retain this Supplement with your Prospectus for future reference. The [A/B] Logo is a service mark of AllianceBernstein and AllianceBernstein is a registered trademark used by permission of the owner, AllianceBernstein L.P. 2 SUP-0115-0216
PROSPECTUS JANUARY 29, 2016 The AB Bond Funds Core (Shares Offered Exchange Ticker Symbol) AB Intermediate Bond Portfolio (Class A ABQUX; Class B ABQBX; Class C ABQCX; Advisor Class ABQYX; Class R ABQRX; Class K ABQKX; Class I ABQIX; Class Z ABQZX) AB Global Bond Fund (Class A ANAGX; Class B ANABX; Class C ANACX; Advisor Class ANAYX; Class R ANARX; Class K ANAKX; Class I ANAIX; Class Z ANAZX) Absolute Return (Shares Offered Exchange Ticker Symbol) AB Credit Long/Short Portfolio (Class A ALASX; Class C ALCSX; Advisor Class ALYSX) AB Unconstrained Bond Fund (Class A AGSAX; Class B AGSBX; Class C AGCCX; Advisor Class AGSIX; Class R AGSRX; Class K AGSKX; Class I AGLIX; Class Z AGSZX) High Income (Shares Offered Exchange Ticker Symbol) AB High Income Fund (Class A AGDAX; Class B AGDBX; Class C AGDCX; Advisor Class AGDYX; Class R AGDRX; Class K AGDKX; Class I AGDIX; Class Z AGDZX) AB Limited Duration High Income Portfolio (Class A ALHAX; Class C ALHCX; Advisor Class ALHYX) AB High Yield Portfolio (Class A HIYAX; Class C HIYCX; Advisor Class HIYYX; Class R HIYRX; Class K HIYKX; Class I HIYIX; Class Z HIYZX) Tax-Aware (Shares Offered Exchange Ticker Symbol) AB Tax-Aware Fixed Income Portfolio (Class A ATTAX; Class C ATCCX; Advisor Class ATTYX) The Securities and Exchange Commission and the Commodity Futures Trading Commission have not approved or disapproved these securities or passed upon the adequacy of this Prospectus. Any representation to the contrary is a criminal offense.
Investment Products Offered Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed
TABLE OF CONTENTS Page SUMMARY INFORMATION... 4 CORE... 4 AB Intermediate Bond Portfolio... 4 AB Global Bond Fund... 9 ABSOLUTE RETURN... 14 AB Credit Long/Short Fund... 14 AB Unconstrained Bond Fund... 19 HIGH INCOME... 24 AB High Income Fund... 24 AB Limited Duration High Income Portfolio... 29 AB High Yield Portfolio... 33 TAX-AWARE... 37 AB Tax-Aware Fixed Income Portfolio... 37 ADDITIONAL INFORMATION ABOUT THE FUNDS RISKS AND INVESTMENTS... 42 INVESTING IN THE FUNDS... 54 How to Buy Shares... 54 The Different Share Class Expenses... 55 Sales Charge Reduction Programs for Class A Shares... 57 CDSC Waivers and Other Programs... 58 Choosing a Share Class... 58 Payments to Financial Advisors and Their Firms... 59 How to Exchange Shares... 60 How to Sell or Redeem Shares... 60 Frequent Purchases and Redemptions of Fund Shares... 61 How the Funds Value Their Shares... 62 MANAGEMENT OF THE FUNDS... 64 DIVIDENDS, DISTRIBUTIONS AND TAXES... 70 GENERAL INFORMATION... 72 GLOSSARY OF INVESTMENT TERMS... 73 FINANCIAL HIGHLIGHTS... 74 APPENDIX A BOND RATINGS...A-1 APPENDIX B HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION...B-1
SUMMARY INFORMATION CORE AB Intermediate Bond Portfolio INVESTMENT OBJECTIVE The Fund s investment objective is to generate income and price appreciation without assuming what the Adviser considers undue risk. FEES AND EXPENSES OF THE FUND This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge reductions if you and members of your family invest, or agree to invest in the future, at least $100,000 in AB Mutual Funds. More information about these and other discounts is available from your financial intermediary and in Investing in the Funds Sales Charge Reduction Programs for Class A Shares on page 57 of this Prospectus and in Purchase of Shares Sales Charge Reduction Programs for Class A Shares on page 124 of the Fund s Statement of Additional Information ( SAI ). Shareholder Fees (fees paid directly from your investment) Class A Shares Class B Shares (not currently offered to new investors) Class C Shares Advisor Class Shares Class R, K, I and Z Shares Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.25% None None None None Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower) None(a) 3.00%(b) 1.00%(c) None None Exchange Fee None None None None None Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Class C Advisor Class Class R Class K Class I Class Z Management Fees.45%.45%.45%.45%.45%.45%.45%.45% Distribution and/or Service (12b-1) Fees.25% 1.00% 1.00% None.50%.25% None None Other Expenses: Transfer Agent.15%.17%.15%.15%.25%.20%.12%.02% Other Expenses.18%.18%.18%.17%.18%.18%.18%.24% Total Other Expenses.33%.35%.33%.32%.43%.38%.30%.26% Total Annual Fund Operating Expenses 1.03% 1.80% 1.78%.77% 1.38% 1.08%.75%.71% Fee Waiver and/or Expense Reimbursement(d) (.18)% (.20)% (.18)% (.17)% (.28)% (.23)% (.15)% (.11)% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement.85%(e) 1.60% 1.60%.60% 1.10%.85%.60%.60% (a) Purchases of Class A shares in amounts of $1,000,000 or more, or by certain group retirement plans, may be subject to a 1%, 1-year contingent deferred sales charge ( CDSC ), which may be subject to waiver in certain circumstances. (b) Class B shares automatically convert to Class A shares after six years. The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00% annually to 0% after the third year. (c) For Class C shares, the CDSC is 0% after the first year. (d) The fee waiver and/or expense reimbursements will remain in effect until January 31, 2017 and will continue thereafter from year-to-year unless the Adviser provides notice of termination 60 days prior to that date. (e) Net expenses have been restated to reflect current expenses. Examples The Examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the 4
end of those periods. The Examples also assume that your investment has a 5% return each year, that the Fund s operating expenses stay the same and that the fee waiver is in effect for only the first year. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Class A Class B Class C Advisor Class Class R Class K Class I Class Z After 1 Year $ 508 $ 463 $ 263 $ 61 $ 112 $ 87 $ 61 $ 61 After 3 Years $ 722 $ 647 $ 543 $229 $ 409 $ 321 $225 $216 After 5 Years $ 953 $ 956 $ 948 $411 $ 729 $ 573 $402 $384 After 10 Years $1,615 $1,710 $2,080 $938 $1,633 $1,296 $916 $872 For the share classes listed below, you would pay the following expenses if you did not redeem your shares at the end of the period: Class B Class C After 1 Year $ 163 $ 163 After 3 Years $ 547 $ 543 After 5 Years $ 956 $ 948 After 10 Years $1,710 $2,080 Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys or sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These transaction costs, which are not reflected in the Annual Fund Operating Expenses or in the Examples, affect the Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 198% of the average value of its portfolio. PRINCIPAL STRATEGIES The Fund invests, under normal circumstances, at least 80% of its net assets in fixed-income securities. The Fund expects to invest in readily marketable fixed-income securities with a range of maturities from short- to long-term and relatively attractive yields that do not involve undue risk of loss of capital. The Fund expects to invest in fixed-income securities with a dollar-weighted average maturity of between three to ten years and an average duration of three to six years. The Fund may invest up to 25% of its net assets in below investment grade bonds. The Fund may use leverage for investment purposes. The Fund may invest without limit in U.S. Dollar-denominated foreign fixed-income securities and may invest up to 25% of its assets in non-u.s. Dollar-denominated foreign fixed-income securities. These investments may include, in each case, developed and emerging market debt securities. The Adviser selects securities for purchase or sale based on its assessment of the securities risk and return characteristics as well as the securities impact on the overall risk and return characteristics of the Fund. In making this assessment, the Adviser takes into account various factors, including the credit quality and sensitivity to interest rates of the securities under consideration and of the Fund s other holdings. The Fund may invest in mortgage-related and other asset-backed securities, loan participations, inflation-protected securities, structured securities, variable, floating, and inverse floating-rate instruments and preferred stock, and may use other investment techniques. The Fund intends, among other things, to enter into transactions such as reverse repurchase agreements and dollar rolls. The Fund may invest, without limit, in derivatives, such as options, futures contracts, forwards, or swaps. PRINCIPAL RISKS Market Risk: The value of the Fund s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market. Interest Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Fund may be subject to a greater risk of rising interest rates as the recent period of historically low rates is beginning to end and rates have begun rising. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations. Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor 5
may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Below Investment Grade Securities Risk: Investments in fixed-income securities with lower ratings (commonly known 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 perceptions 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. Fixedincome securities with longer durations have more risk and will decrease in price as interest rates rise. For example, a fixedincome security with a duration of three years will decrease in value by approximately 3% if interest rates increase by 1%. Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund s assets can decline as can the value of the Fund s distributions. This risk is significantly greater if the Fund invests a significant portion of its assets in fixed-income securities with longer maturities. Foreign (Non-U.S.) Risk: Investments in securities of non-u.s. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. Emerging Market Risk: Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties. Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Fund s investments or reduce its returns. Prepayment Risk: The value of mortgage-related or asset-backed securities may be particularly sensitive to changes in prevailing interest rates. Early payments of principal on some mortgage-related securities may occur during periods of falling mortgage interest rates and expose the Fund to a lower rate of return upon reinvestment of principal. Early payments associated with mortgage-related securities cause these securities to experience significantly greater price and yield volatility than is experienced by traditional fixed-income securities. During periods of rising interest rates, a reduction in prepayments may increase the effective life of mortgage-related securities, subjecting them to greater risk of decline in market value in response to rising interest rates. If the life of a mortgage-related security is inaccurately predicted, the Fund may not be able to realize the rate of return it expected. Leverage Risk: To the extent the Fund uses leveraging techniques, its net asset value, or NAV, may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Fund s investments. 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. Liquidity Risk: Liquidity risk occurs when certain investments become difficult to purchase or sell. Difficulty in selling less liquid securities may result in sales at disadvantageous prices affecting the value of your investment in the Fund. Causes of liquidity risk may include low trading volumes, large positions and heavy redemptions of Fund shares. Over recent years liquidity risk has also increased because the capacity of dealers in the secondary market for fixed-income securities to make markets in these securities has decreased, even as the overall bond market has grown significantly, due to, among other things, structural changes, additional regulatory requirements and capital and risk restraints that have led to reduced inventories. Liquidity risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline. Management Risk: The Fund is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results. As with all investments, you may lose money by investing in the Fund. BAR CHART AND PERFORMANCE INFORMATION The bar chart and performance information provide an indication of the historical risk of an investment in the Fund by showing: how the Fund s performance changed from year to year over ten years; and how the Fund s average annual returns for one, five and ten years compare to those of a broad-based securities market index. 6
You may obtain updated performance information on the website at www.abglobal.com (click on Menu Americas Individual Investors US (US Citizens), then Investments Mutual Funds ). The Fund s past performance before and after taxes, of course, does not necessarily indicate how it will perform in the future. Bar Chart The annual returns in the bar chart are for the Fund s Class A shares and do not reflect sales loads. If sales loads were reflected, returns would be less than those shown. 19.18 9.20 3.97 5.68 6.39 5.57 6.61-8.26-1.59-0.03 06 07 09 10 11 12 13 14 15 08 Calendar Year End (%) During the period shown in the bar chart, the Fund s: Best Quarter was up 7.86%, 3rd quarter, 2009; and Worst Quarter was down -4.57%, 3rd quarter, 2008. Performance Table Average Annual Total Returns (For the periods ended December 31, 2015) 1 Year 5 Years 10 Years Class A* Return Before Taxes -4.30% 2.43% 4.00% Return After Taxes on Distributions -5.68% 1.14% 2.56% Return After Taxes on Distributions and Sale of Fund Shares -2.43% 1.32% 2.51% Class B Return Before Taxes -3.74% 2.61% 4.08% Class C Return Before Taxes -1.72% 2.62% 3.73% Advisor Class Return Before Taxes 0.15% 3.63% 4.76% Class R Return Before Taxes -0.26% 3.12% 4.23% Class K Return Before Taxes -0.01% 3.39% 4.49% Class I Return Before Taxes 0.15% 3.63% 4.75% Class Z Return Before Taxes 0.14% 3.63% 4.76% Barclays U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes) 0.55% 3.25% 4.51% * After-tax Returns: Are shown for Class A shares only and will vary for the other Classes of shares because these Classes have different expense ratios; Are an estimate, which is based on the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes; actual after-tax returns depend on an individual investor s tax situation and are likely to differ from those shown; and Are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. 7
INVESTMENT ADVISER AllianceBernstein L.P. is the investment adviser for the Fund. PORTFOLIO MANAGERS The following table lists the persons responsible for day-to-day management of the Fund s portfolio: Employee Length of Service Title Michael S. Canter Since January 2016 Senior Vice President of the Adviser Paul J. DeNoon Since 2009 Senior Vice President of the Adviser Shawn E. Keegan Since 2005 Vice President of the Adviser Douglas J. Peebles Since 2007 Senior Vice President of the Adviser Greg J. Wilensky Since 2005 Senior Vice President of the Adviser ADDITIONAL INFORMATION For important information about the purchase and sale of Fund shares, tax information and financial intermediary compensation, please turn to ADDITIONAL INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL INTERMEDIARIES, page 41 in this Prospectus. 8
AB Global Bond Fund INVESTMENT OBJECTIVE The Fund s investment objective is to generate current income consistent with preservation of capital. FEES AND EXPENSES OF THE FUND This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge reductions if you and members of your family invest, or agree to invest in the future, at least $100,000 in AB Mutual Funds. More information about these and other discounts is available from your financial intermediary and in Investing in the Funds Sales Charge Reduction Programs for Class A Shares on page 57 of this Prospectus and in Purchase of Shares Sales Charge Reduction Programs for Class A Shares on page 124 of the Fund s Statement of Additional Information ( SAI ). Shareholder Fees (fees paid directly from your investment) Class A Shares Class B Shares (not currently offered to new investors) Class C Shares Advisor Class Shares Class R, K, I and Z Shares Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.25% None None None None Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower) None(a) 3.00%(b) 1.00%(c) None None Exchange Fee None None None None None Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class B Class C Advisor Class Class R Class K Class I Class Z Management Fees.48%.48%.48%.48%.48%.48%.48%.48% Distribution and/or Service (12b-1) Fees.25% 1.00% 1.00% None.50%.25% None None Other Expenses: Transfer Agent.08%.12%.09%.08%.26%.19%.07%.02% Other Expenses.04%.03%.03%.04%.03%.03%.04%.03% Total Other Expenses.12%.15%.12%.12%.29%.22%.11%.05% Total Annual Fund Operating Expenses.85%(d) 1.63% 1.60%.60% 1.27%.95%.59%.53% (a) Purchases of Class A shares in amounts of $1,000,000 or more, or by certain group retirement plans, may be subject to a 1%, 1-year contingent deferred sales charge ( CDSC ), which may be subject to waiver in certain circumstances. (b) Class B shares automatically convert to Class A shares after six years. The CDSC decreases over time. For Class B shares, the CDSC decreases 1.00% annually to 0% after the third year. (c) For Class C shares, the CDSC is 0% after the first year. (d) Net expenses have been restated to reflect current expenses. Examples The Examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year and that the Fund s operating expenses stay the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Class A Class B Class C Advisor Class Class R Class K Class I Class Z After 1 Year $ 508 $ 466 $ 263 $ 61 $ 129 $ 97 $ 60 $ 54 After 3 Years $ 685 $ 614 $ 505 $192 $ 403 $ 303 $189 $170 After 5 Years $ 876 $ 887 $ 871 $335 $ 697 $ 525 $329 $296 After 10 Years $1,429 $1,533 $1,900 $750 $1,534 $1,166 $738 $665 9
For the share classes listed below, you would pay the following expenses if you did not redeem your shares at the end of the period: Class B Class C After 1 Year $ 166 $ 163 After 3 Years $ 514 $ 505 After 5 Years $ 887 $ 871 After 10 Years $1,533 $1,900 Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys or sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These transaction costs, which are not reflected in the Annual Fund Operating Expenses or in the Examples, affect the Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 167% of the average value of its portfolio. PRINCIPAL STRATEGIES The Fund invests, under normal circumstances, at least 80% of its net assets in fixed-income securities. Under normal market conditions, the Fund invests significantly in fixed-income securities of non-u.s. companies. In addition, the Fund invests, under normal circumstances, in the fixed-income securities of companies located in at least three countries. The Fund may invest in a broad range of fixed-income securities in both developed and emerging markets. The Fund may invest across all fixed-income sectors, including U.S. and non-u.s. Government and corporate debt securities. The Fund s investments may be denominated in local currency or U.S. Dollar-denominated. The Fund may invest in debt securities with a range of maturities from short- to long-term. The Fund may use borrowings or other leverage for investment purposes. The Adviser selects securities for purchase or sale based on its assessment of the securities risk and return characteristics as well as the securities impact on the overall risk and return characteristics of the Fund. In making this assessment, the Adviser takes into account various factors, including the credit quality and sensitivity to interest rates of the securities under consideration and of the Fund s other holdings. The Adviser will actively manage the Fund s assets in relation to market conditions and general economic conditions and adjust the Fund s investments in an effort to best enable the Fund to achieve its investment objective. Thus, the percentage of the Fund s assets invested in a particular country or denominated in a particular currency will vary in accordance with the Adviser s assessment of the relative yield and appreciation potential of such securities and the relationship of the country s currency to the U.S. Dollar. Under normal circumstances, the Fund invests at least 75% of its net assets in fixed-income securities rated investment grade at the time of investment and may invest up to 25% of its net assets in below investment grade fixed-income securities (commonly known as junk bonds ). The Fund may invest in mortgage-related and other asset-backed securities, loan participations, inflation-protected securities, structured securities, variable, floating, and inverse floating-rate instruments and preferred stock, and may use other investment techniques. The Fund intends, among other things, to enter into transactions such as reverse repurchase agreements and dollar rolls. The Fund may invest, without limit, in derivatives, such as options, futures contracts, forwards, or swaps. PRINCIPAL RISKS Market Risk: The value of the Fund s assets will fluctuate as the stock or bond market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market. Interest Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Fund may be subject to a greater risk of rising interest rates as the recent period of historically low rates is beginning to end and rates are have begun rising. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations. Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. 10
Below Investment Grade Securities Risk: Investments in fixed-income securities with lower ratings (commonly known 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 perceptions 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. Fixedincome securities with longer durations have more risk and will decrease in price as interest rates rise. For example, a fixedincome security with a duration of three years will decrease in value by approximately 3% if interest rates increase by 1%. Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund s assets can decline as can the value of the Fund s distributions. This risk is significantly greater if the Fund invests a significant portion of its assets in fixed-income securities with longer maturities. Foreign (Non-U.S.) Risk: Investments in securities of non-u.s. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. Emerging Market Risk: Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties. Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Fund s investments or reduce its returns. Leverage Risk: To the extent the Fund uses leveraging techniques, its net asset value, or NAV, may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Fund s investments. 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. Liquidity Risk: Liquidity risk occurs when certain investments become difficult to purchase or sell. Difficulty in selling less liquid securities may result in sales at disadvantageous prices affecting the value of your investment in the Fund. Causes of liquidity risk may include low trading volumes, large positions and heavy redemption of Fund shares. Foreign fixed-income securities may have more liquidity risk because secondary trading markets for these securities may be smaller and less well-developed and the securities may trade less frequently. Liquidity risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline. Management Risk: The Fund is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results. As with all investments, you may lose money by investing in the Fund. BAR CHART AND PERFORMANCE INFORMATION The bar chart and performance information provide an indication of the historical risk of an investment in the Fund by showing: how the Fund s performance changed from year to year over ten years; and how the Fund s average annual returns for one, five and ten years compare to those of a broad-based securities market index. You may obtain updated performance information on the website at www.abglobal.com (click on Menu Americas Individual Investors US (US Citizens), then Investments Mutual Funds ). The Fund s past performance before and after taxes, of course, does not necessarily indicate how it will perform in the future. 11
Bar Chart The annual returns in the bar chart are for the Fund s Class A shares and do not reflect sales loads. If sales loads were reflected, returns would be less than those shown. 23.96 9.90 9.53 6.57 7.03 6.92 4.44-10.71-2.15 0.48 06 07 09 10 11 12 14 15 13 08 Calendar Year End (%) During the period shown in the bar chart, the Fund s: Best Quarter was up 11.30%, 2nd quarter, 2009; and Worst Quarter was down -5.57%, 4th quarter, 2008. Performance Table Average Annual Total Returns (For the periods ended December 31, 2015) 1 Year 5 Years 10 Years Class A* Return Before Taxes -3.75% 2.39% 4.80% Return After Taxes on Distributions -5.24% 0.92% 3.08% Return After Taxes on Distributions and Sale of Fund Shares -2.12% 1.25% 3.04% Class B Return Before Taxes -3.28% 2.54% 4.83% Class C Return Before Taxes -1.31% 2.52% 4.50% Advisor Class** Return Before Taxes 0.66% 3.59% 5.55% Class R** Return Before Taxes -0.01% 2.92% 5.03% Class K** Return Before Taxes 0.30% 3.27% 5.28% Class I** Return Before Taxes 0.67% 3.60% 5.58% Class Z** Return Before Taxes 0.72% 3.66% 5.64% Barclays Global Aggregate Bond Index (U.S. hedged) (reflects no deduction for fees, expenses, or taxes) 1.02% 3.87% 4.36% * After-tax Returns: Are shown for Class A shares only and will vary for the other Classes of shares because these Classes have different expense ratios; Are an estimate, which is based on the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes; actual after-tax returns depend on an individual investor s tax situation and are likely to differ from those shown; and Are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. ** Inception date of Class R, Class K, Class I and Advisor Class shares: 11/5/07, and Class Z shares: 10/15/13. Performance information for periods prior to the inception of Advisor Class, Class R, Class K, Class I and Class Z shares is the performance of the Fund s Class A shares, adjusted to reflect the net expense differences between Class A and Advisor Class, Class R, Class K, Class I and Class Z shares, respectively. INVESTMENT ADVISER AllianceBernstein L.P. is the investment adviser for the Fund. PORTFOLIO MANAGERS The following table lists the persons responsible for day-to-day management of the Fund s portfolio: Employee Length of Service Title Paul J. DeNoon Since 2002 Senior Vice President of the Adviser Scott A. DiMaggio Since 2005 Senior Vice President of the Adviser Douglas J. Peebles Since 1992 Senior Vice President of the Adviser Matthew S. Sheridan Since 2007 Senior Vice President of the Adviser 12
ADDITIONAL INFORMATION For important information about the purchase and sale of Fund shares, tax information and financial intermediary compensation, please turn to ADDITIONAL INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL INTERMEDIARIES, page 41 in this Prospectus. 13
ABSOLUTE RETURN AB Credit Long/Short Portfolio INVESTMENT OBJECTIVE The Fund s investment objective is to seek absolute return over a full market cycle. FEES AND EXPENSES OF THE FUND This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund. You may qualify for sales charge reductions if you and members of your family invest, or agree to invest in the future, at least $100,000 in AB Mutual Funds. More information about these and other discounts is available from your financial intermediary and in Investing in the Funds Sales Charge Reduction Programs for Class A Shares on page 57 of this Prospectus and in Purchase of Shares Sales Charge Reduction Programs for Class A Shares on page 124 of the Fund s Statement of Additional Information ( SAI ). Shareholder Fees (fees paid directly from your investment) Class A Shares Class C Shares Advisor Class Shares Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.25% None None Maximum Deferred Sales Charge (Load) (as a percentage of offering price or redemption proceeds, whichever is lower) None(a) 1.00%(b) None Exchange Fee None None None Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Class A Class C Advisor Class Management Fees.90%.90%.90% Distribution and/or Service (12b-1) Fees.25% 1.00% None Other Expenses: Transfer Agent.09%.11%.09% Interest Dividend Expense, Borrowing Costs and Brokerage Expense on Securities Sold Short 3.67% 3.68% 3.57% Other Expenses 2.37% 2.39% 2.35% Total Other Expenses 6.13% 6.18% 6.01% Total Annual Fund Operating Expenses 7.28% 8.08% 6.91% Fee Waiver and/or Expense Reimbursement(c) (2.26)% (2.30)% (2.24)% Total Annual Fund Operating Expenses After Fee Waiver and/or Expense Reimbursement 5.02% 5.78% 4.67% (a) Purchases of Class A shares in amounts of $1,000,000 or more, or by certain group retirement plans, may be subject to a 1%, 1-year contingent deferred sales charge ( CDSC ), which may be subject to waiver in certain circumstances. (b) For Class C shares, the CDSC is 0% after the first year. (c) The Adviser has contractually agreed to waive its management fees and/or to bear expenses of the Fund through January 31, 2017 to the extent necessary to prevent total Fund operating expenses (excluding expenses associated with securities sold short, acquired fund fees and expenses other than the advisory fees of any AB Mutual Funds in which the Fund may invest, interest expense, taxes, extraordinary expenses, and brokerage commissions and other transaction costs), on an annualized basis, from exceeding 1.35%, 2.10% and 1.10% of average daily net assets, respectively, for Class A, Class C and Advisor Class shares ( expense limitations ). 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 limitations. Examples The Examples are intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The Examples assume that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The Examples also assume that your investment has a 5% return each year, that the Fund s operating expenses 14
stay the same and that the fee waiver is in effect for only the first year. Although your actual costs may be higher or lower, based on these assumptions your costs would be: Class A Class C Advisor Class After 1 Year $ 906 $ 676* $ 468 After 3 Years $2,268 $2,130 $1,828 After 5 Years $3,569 $3,590 $3,137 After 10 Years $6,570 $6,865 $6,196 * If you did not redeem your shares redemption at the end of the period, your expenses would be decreased by $100. Portfolio Turnover The Fund pays transaction costs, such as commissions, when it buys or sells securities (or turns over its portfolio). A higher portfolio turnover rate may indicate higher transaction costs and may result in higher taxes when Fund shares are held in a taxable account. These transaction costs, which are not reflected in the Annual Fund Operating Expenses or in the Examples, affect the Fund s performance. During the most recent fiscal year, the Fund s portfolio turnover rate was 147% of the average value of its portfolio. PRINCIPAL STRATEGIES At least 80% of the Fund s net assets will under normal circumstances be invested in long and short positions in credit-related instruments. For purposes of this 80% requirement, credit-related instruments will include any type of fixed-income security, such as corporate bonds, convertible fixed-income securities, preferred stocks, U.S. government and agency securities, securities of foreign governments and supranational entities, mortgage-related and asset-backed securities, and loan participations. It is expected that a substantial portion of the Fund s long and short positions will relate to fixed-income securities rated below investment grade (commonly known as junk bonds ). In selecting securities for purchase or sale by the Fund and securities for the Fund to take short positions in, the Adviser will attempt to take advantage of inefficiencies that it believes exist in the global debt markets. These inefficiencies arise from investor behavior, market complexity, and the investment limitations to which investors are subject. The Adviser will combine quantitative analysis with fundamental credit and economic research in seeking to exploit these inefficiencies. Under normal market conditions, the net exposure of the Fund (long exposure minus short exposure) will range between 150% and -150%. For example, the Fund may hold long positions in fixed-income securities with a value equal to 95% of its net assets and hold short positions equal to 75% of its net assets, resulting in 20% net long exposure. The Fund may also take long and short positions in equity securities. Short positions may be effectuated through derivative instruments or through conventional short sales. When the Fund sells securities short, it sells a security that it does not own (but has borrowed) at its current market price in anticipation that the price of the security will decline. To complete, or close out, the short sale transaction, the Fund buys the same security in the market at a later date and returns it to the lender. The Adviser expects that the Fund s long positions will be effectuated both through derivatives and actual purchases of fixed-income securities. The Fund may invest in fixed-income securities with a range of maturities from short- to long-term, and expects to maintain a weighted average duration of between -3 and 6 years. The Fund would have a negative duration when the Adviser expects the value of the Fund s assets to increase as interest rates rise. While the Fund s investments will be focused on U.S. dollar-denominated securities, the Fund may invest to a lesser extent in securities denominated in foreign currencies. Fluctuations in currency exchange rates can have a dramatic impact on the returns of fixed-income securities. While the Adviser may hedge the foreign currency exposure resulting from the Fund s security positions through the use of currency-related derivatives, it is not required to do so. The Fund may take long and short positions in currencies (or related derivatives) independent of any such security positions, including taking a position in a currency when it does not hold any securities denominated in that currency. The Fund expects to use derivatives, such as options, futures contracts, forwards and swaps, to a significant extent. Derivatives may provide a more efficient and economical exposure to market segments than direct investments, and may also be a more efficient way to alter the Fund s exposure. The Fund may, for example, use credit default, interest rate and total return swaps to establish exposure to the fixed-income markets or particular fixed-income securities and, as noted above, may use currency derivatives to hedge foreign currency exposure. The Fund may borrow money and enter into transactions such as reverse repurchase agreements that are similar to borrowings (in addition to the borrowing of securities inherent in short sale transactions) for investment purposes. As a result of these borrowing transactions and the use of derivatives, the Fund will at times be highly leveraged, with aggregate exposure (long and short) substantially in excess of its net assets. 15
The Fund is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified fund. PRINCIPAL RISKS Market Risk: The value of the Fund s assets will fluctuate as the bond or stock market fluctuates. The value of its investments may decline, sometimes rapidly and unpredictably, simply because of economic changes or other events that affect large portions of the market. Interest Rate Risk: Changes in interest rates will affect the value of investments in fixed-income securities. When interest rates rise, the value of investments in fixed-income securities tends to fall and this decrease in value may not be offset by higher income from new investments. The Fund may be subject to a greater risk of rising interest rates as the recent period of historically low rates is beginning to end and rates have begun rising. Interest rate risk is generally greater for fixed-income securities with longer maturities or durations. Credit Risk: An issuer or guarantor of a fixed-income security, or the counterparty to a derivatives or other contract, may be unable or unwilling to make timely payments of interest or principal, or to otherwise honor its obligations. The issuer or guarantor may default, causing a loss of the full principal amount of a security and accrued interest. The degree of risk for a particular security may be reflected in its credit rating. There is the possibility that the credit rating of a fixed-income security may be downgraded after purchase, which may adversely affect the value of the security. Below Investment Grade Securities Risk: Investments in fixed-income securities with lower ratings (commonly known 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 perceptions 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. Fixedincome securities with longer durations have more risk and will decrease in price as interest rates rise. For example, a fixedincome security with a duration of three years will decrease in value by approximately 3% if interest rates increase by 1%. Inflation Risk: This is the risk that the value of assets or income from investments will be less in the future as inflation decreases the value of money. As inflation increases, the value of the Fund s assets can decline as can the value of the Fund s distributions. This risk is significantly greater if the Fund invests a significant portion of its assets in fixed-income securities with longer maturities. 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. Leverage Risk: To the extent the Fund uses leveraging techniques, its net asset value, or NAV, may be more volatile because leverage tends to exaggerate the effect of changes in interest rates and any increase or decrease in the value of the Fund s investments. Short Sale Risk: Short sales involve the risk that the Fund will incur a loss by subsequently buying a security at a higher price than the price at which it sold the security. The amount of such loss is theoretically unlimited, as it will be based on the increase in value of the security sold short. In contrast, the risk of loss from a long position is limited to the Fund s investment in the security, because the price of the security cannot fall below zero. The Fund may not always be able to close out a short position on favorable terms. Foreign (Non-U.S.) Risk: Investments in securities of non-u.s. issuers may involve more risk than those of U.S. issuers. These securities may fluctuate more widely in price and may be less liquid due to adverse market, economic, political, regulatory or other factors. Emerging Market Risk: Investments in emerging market countries may have more risk because the markets are less developed and less liquid, and because these investments may be subject to increased economic, political, regulatory or other uncertainties. Currency Risk: Fluctuations in currency exchange rates may negatively affect the value of the Fund s investments or reduce its returns. Diversification Risk: The Fund may have more risk because it is non-diversified, meaning that it can invest more of its assets in a smaller number of issuers. Accordingly, changes in the value of a single security may have a more significant effect, either negative or positive, on the Fund s NAV. Liquidity Risk: Liquidity risk occurs when certain investments become difficult to purchase or sell. Difficulty in selling less liquid securities may result in sales at disadvantageous prices affecting the value of your investment in the Fund. Causes of liquidity risk may include low trading volumes, large positions and heavy redemptions of Fund shares. Over recent years liquidity risk has also increased because the capacity of dealers in the secondary market for fixed-income securities to make markets in these securities has decreased, even as the overall bond market has grown significantly, due to, among other things, structural changes, 16
additional regulatory requirements and capital and risk restraints that have led to reduced inventories. Liquidity risk may be higher in a rising interest rate environment, when the value and liquidity of fixed-income securities generally decline. Management Risk: The Fund is subject to management risk because it is an actively-managed investment fund. The Adviser will apply its investment techniques and risk analyses in making investment decisions, but there is no guarantee that its techniques will produce the intended results. As with all investments, you may lose money by investing in the Fund. BAR CHART AND PERFORMANCE INFORMATION The bar chart and performance information provide an indication of the historical risk of an investment in the Fund by showing: how the Fund s performance changed over the life of the Fund; and how the Fund s average annual returns for one year and since inception compare to those of a broad-based securities market index. You may obtain updated performance information on the website at www.abglobal.com (click on Menu Americas Individual Investors US (US Citizens), then Investments Mutual Funds ). The Fund s past performance before and after taxes, of course, does not necessarily indicate how it will perform in the future. Bar Chart The annual returns in the bar chart are for the Fund s Class A shares and do not reflect sales loads. If sales loads were reflected, returns would be less than those shown. n/a n/a n/a n/a n/a n/a n/a n/a n/a -0.52 06 07 08 09 10 11 12 13 14 15 Calendar Year End (%) During the period shown in the bar chart, the Fund s: Best Quarter was up 0.71%, 2nd quarter, 2015; and Worst Quarter was down -0.61%, 3rd quarter, 2015. Performance Table Average Annual Total Returns (For the periods ended December 31, 2015) Since 1 Year Inception* Class A** Return Before Taxes -4.78% -3.15% Return After Taxes on Distributions -4.97% -3.56% Return After Taxes on Distributions and Sale of Fund Shares -2.69% -2.56% Class C Return Before Taxes -2.19% -1.29% Advisor Class Return Before Taxes -0.28% -0.33% BofA Merrill Lynch 3-Month U.S. Treasury Bill Index (reflects no deduction for fees, expenses or taxes) 0.05% 0.04% * Inception date for all Classes is 05/7/14. ** After-tax Returns: Are shown for Class A shares only and will vary for the other Classes of shares because these Classes have different expense ratios; Are an estimate, which is based on the highest historical individual federal marginal income tax rates, and do not reflect the impact of state and local taxes; actual after-tax returns depend on an individual investor s tax situation and are likely to differ from those shown; and Are not relevant to investors who hold Fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. 17
INVESTMENT ADVISER AllianceBernstein L.P. is the investment adviser for the Fund. PORTFOLIO MANAGERS The following table lists the persons responsible for day-to-day management of the Fund s portfolio: Employee Length of Service Title Gershon M. Distenfeld Since 2014 Senior Vice President of the Adviser Sherif M. Hamid Since 2014 Vice President of the Adviser Ivan Rudolph-Shabinsky Since 2014 Senior Vice President of the Adviser Robert Schwartz Since 2014 Senior Vice President of the Adviser Ashish C. Shah Since 2014 Senior Vice President of the Adviser ADDITIONAL INFORMATION For important information about the purchase and sale of Fund shares, tax information and financial intermediary compensation, please turn to ADDITIONAL INFORMATION ABOUT PURCHASE AND SALE OF FUND SHARES, TAXES AND FINANCIAL INTERMEDIARIES, page 41 in this Prospectus. 18