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CURRENT STRATEGY & REVIEW
AB SUSTAINABLE US THEMATIC PORTFOLIO
31 December 2019
LUXFLAGLabel
This document is issued by AllianceBernstein Limited, 50 Berkeley Street, London W1J 8HA. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA-Reference Number 147956). This information is directed solely at persons in jurisdictions where the Fund and relevant share class are registered, or who may otherwise lawfully receive it. The sale of the Fund may be restricted or subject to adverse tax consequences in certain jurisdictions. In particular, no shares may be offered or sold, directly or indirectly, in the US or to US persons, as described in the Fund’s prospectus. It is provided for marketing purposes but does not constitute investment advice or an invitation to purchase any security or other investment. The views and opinions expressed in this document are based on our internal forecasts and should not be relied upon as an indication of future market performance. Past performance does not guarantee future results. For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
The Sustainable US Thematic Portfolio is a portfolio of AB FCP I, a mutual investment fund (fonds commun de placement) organized under the laws of the Grand Duchy of Luxembourg. The US Thematic Research Portfolio was renamed AB Sustainable US Thematic Portfolio and its investment policies were changed on 31 October 2018.
1|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. Logos, brands and other trademarks in this presentation are the property of their respective trademark holders. They
are used for illustrative purposes only, and are not intended to convey any endorsement or sponsorship by, or association or affiliation with, the trademark holders. Investors must not rely on LuxFLAG or the LuxFLAG Label with regard to investor protection issues, and LuxFLAG shall not incur any liability related to the financial performance or default of the AB Sustainable US Thematic Portfolio. The LuxFLAG Label has been granted through 31 March 2020. ESG: environmental, social and governance*The AB Sustainable US Thematic Portfolio was awarded the LuxFLAG ESG Label concurrently with one other US-based manager. As of 31 December 2019Source: Label ISR and LuxFLAG
Awarded Both the Label ISR and LuxFLAG ESG Label
Externally Recognized for Excellence in Sustainable Investing
Label ISR: Saving Toward a More Sustainable WorldAwarded February 2019
LuxFLAG ESG Label: Raising Awareness of ESG Investing Awarded March 2019
� The Label ISR (or SRI—Socially Responsible Investing) helps investors choose sustainable and responsible investments
� Created and supported by the Finance Ministry in France, the purpose of the label is to increase the visibility of socially responsible investment products
� The Label ISR aims to reconcile economic performance with social and environmental impact by facilitating investments in companies that contribute to sustainable development
� LuxFLAG (the Luxembourg Finance Labelling Agency) is an independent body that raises awareness of and promotes the responsible investment industry
� The ESG Label is awarded to funds that screen 100% of the portfolio using ESG criteria
� AllianceBernstein is the first US-based asset manager to be awarded the ESG Label for an equity strategy*
� AB Sustainable US Thematic Portfolio is the first US equity strategy to receive the label
2|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. Holdings are subject to change.
Prior to 31 October 2018, the Portfolio was named US Thematic Research Portfolio. All data prior to 31 October 2018 relates to the US Thematic Research Portfolio.*Active share I Class vs. S&P 500†Up/down capture is vs. S&P 500 since June 2013 (when Daniel Roarty took over the strategy)‡Beta is a measure of an investment’s sensitivity to the market as a whole. A beta below 1 indicates lower sensitivity to the market; a higher beta indicates higher sensitivity.As of 31 December 2019Source: S&P and AB
AB Sustainable US Thematic Portfolio: Overview
Characteristics
Index S&P 500
Number of Holdings 30–60
Active Share* 80%–85%
Up/Down Capture (%)† 108/98
Beta‡ 0.90–1.10
Turnover 30%–70%
Capitalization Mid/Large
Encompassing Sustainability, ESG Integration and Management EngagementSeeking Positive Financial and Social Outcomes
Sustainable Themes
ActiveOwnership
ESGIntegration
The UN Sustainable Development Goals
(UNSDGs) are the foundation for our
investment themes
We engage company management teams on material ESG issues
We consider ESG factors at each step of our
fundamental investment process
3|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Philosophy
We seek to generate superior financial returnsthrough investments that
contribute to positive social and environmental
outcomes.
4|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable US Thematic Portfolio: Investment Team
Investment team is subject to change.As of 31 December 2019Source: AB
Average: 20 Years of Industry Experience12 Years of Experience with AB
Ben Ruegsegger, CFATechnology19 Years of Industry Experience19 Years of Experience with ABUS
Joseph Sun, CFAConsumer Discretionary & Staples10 Years of Industry Experience9 Years of Experience with ABUS
Dave Wheeler, CFAEnergy & Industrials28 Years of Industry Experience12 Years of Experience with ABUS
William JohnstonFinancials 34 Years of Industry Experience 22 Years of Experience with ABUK
Ed Bryan, CFA Healthcare13 Years of Industry Experience13 Years of Experience with ABUK
Amy YangQuantitative Analysis7 Years of Industry Experience7 Years of Experience with ABUS
Lei QiuTechnology & Communication Services21 Years of Industry Experience8 Years of Experience with ABUS
Daniel Roarty, CFACIO27 Years of Industry Experience9 Years of Experience with ABUS
5|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For illustrative purposes only. There can be no assurance that any investment objectives will be achieved.
Investment Process
Investment Universe
400–500 companies
� Companies offering products that contribute to achieving the UNSDGs
� Proprietary product identification methodology
� Organized thematically
� Climate
� Health
� Empowerment
� $1 billion+ market cap with sufficient liquidity
Portfolio
~30–60 companies
� Reflect team’s highest-conviction ideas
� Size positions for optimal risk/reward spread and balanced theme exposure
� Disciplined risk-management and sell process
� Ongoing management engagement on material ESG issues
AB Sustainable Thematic Equities
Attractive Candidates
200–300 companies
� Fundamental research by sector experts emphasizes companies with superior:
� UNSDG Alignment
� Revenue Growth
� Profitability
� Management Quality
� Financial modeling reflects structured evaluation of material ESG factors
� Team collectively vets candidates
6|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only Source: United Nations and AB
UN Sustainable Development Goals Serve as the Foundation for the StrategyGoals Link Social and Financial Progress
UN Sustainable Development Goals A Powerful Framework of 17 Goals and 169 Sub-Targets � The UNSDGs represent an aspirational view of what
the world could look like by 2030
� The 17 goals address challenges relating to:
� Economic prosperity
� Environmental sustainability
� Social inclusion
� 193 nations collectively created, and committed to achieving, the goals, signaling broad political consensus
� The estimated costs to achieving the UNSDGs are massive—roughly US$90 trillion
� Business alignment with the UNSDGs can enhance long-term growth potential and reduce risk
� We invest exclusively in well-managed companies providing solutions to key UNSDG challenges
7|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes onlySource: United Nations and AB
Product Analysis Drives Universe and Theme CreationWe Have Identified Approximately 80 Sustainable Products
Proprietary Analysis Informs Investment Universe and ThemesDetailed Analysis of 169 UNSDG Sub-Targets Sharpens Investment Focus
Sustainable Products
Identify companies generating
revenues from sustainable product
sales
Group together to facilitate ongoing
research and client communication
Investment Universe
Investment Themes
Most Sub-Targets Require Private-Sector SolutionsOthers Depend Primarily on Policy Support
Policy
UNSDG 5c:“Adopt and strengthen
sound policies and enforceable legislation for
the promotion of gender equality…”
PrivateSector
UNSDG 7.2:“By 2030, increase
substantially the share of renewable energy in the
global energy mix”
63
106
Sustainable ProductsBatteries, Solar Panels, Wind Turbines, Smart-
Grid Equipment and Software
Not directlyinvestable
UNSDG Sub-targets
8|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Sustainable Products Fit Three Primary ThemesMisaligned Products Are Excluded
For informational purposes only*We exclude direct manufacturers of these products. We exclude distributors of these products and suppliers to manufacturers of these products if their business exposure exceeds 20% of their revenues. We also monitor companies for conduct-based violations, as generally defined by the United Nations Global Compact.Source: FEW Resources, United Nations and AB
Themes Guide Capital-Allocation Decisions
Themes Reflect Most Compelling Opportunities for the Private Sector
Climate
� Cleaner Energy
� Resource Efficiency
� Sanitation and Recycling
� Sustainable Transportation
Health
� Access to Quality Care
� Food Security andClean Water
� Medical Innovation
� Well Being
Empowerment
� Educational Services
� Financial Security and Inclusion
� Information and Communication Technologies
� Sustainable Infrastructure
Misalignments/Exclusions*
� Alcohol
� Coal
� Gambling
� Pornography
� Prisons
� Tobacco
� Weapons
9|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only As of 31 December 2019Source: AB
Grassroots ResearchUnique Research Approach Helps Clarify Sustainable Investment Opportunities
20142013 2018GhanaNigeriaSouth AfricaThailand
PhilippinesIndonesia
VietnamChinaSouth KoreaIndia
2015 2017BrazilChilePeruColombia
MexicoChina
JapanIndonesiaPhilippines
ChinaIndia
ChinaSouth Africa
2016
China (2017)
South Africa (2018)
2012 India
Indonesia (2016)
Affordable Medical Care, Enabling Technologies, Financial Inclusion, Women’s Empowerment
Enabling Technologies, Sustainable Production, Water
India (2015)
Economic Infrastructure, Enabling Technologies, Financial Inclusion, Low Carbon, Water, Women’s Empowerment
Affordable Medical Care, Financial Inclusion, Healthy Lifestyles, Women’s Empowerment
2011 InnerMongolia
2019 Tennessee
10|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only*IRR: internal rate of return. This analysis targets a portfolio IRR of 12%–15% based on the weighted average of analyst estimates for individual securities in the portfolio.Source: AB
Disciplined Fundamental Research Process
Invest Based on (Return-Risk) Spread
� Think like long-term private-equity owners to capitalize on market’s short-term focus
� Sector experts develop proprietary five-year financial forecasts
� Apply a conservative exit multiple to determine expected returns (IRRs)
� Use the (Return-Risk) spread to assess relative stock attractiveness
� Stocks with high spreads generally have stronger appeal
� Target portfolio IRR of 12%–15% and (Return-Risk) spread of +300 b.p.*
� Forward-looking risk analysis incorporates ESG and traditional risk factors
� Utilize propriety mapping process to evaluate and quantify most material risks
� Proprietary scoring methodology determines cost of equity
Estimate Return Potential (IRR)* Estimate Risk (Cost of Equity)
Investment Attractiveness
Return
Risk
Environmental
Governance
OperationalFinancial
Time
Price
Private Equity-Like Mentality Can Improve Stock Selection
Strategic Social
Compound Annual Return
Hurdle Rate
11|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Historical and current analyses do not guarantee future results. This example is provided for the sole purpose of illustrating how research can be used to help identify investable ideas in the portfolio-management process, and is not to be considered a recommendation by AllianceBernstein L.P. For informational purposes only.As of 31 December 2019Source: Nav, Square and AB
SquareAffordable and Accessible Platform for Economic Growth
ThesisTheme: Empowerment Outcome
0
10
20
30
40
50
0
50
100
150
200
250
2015
2016
2017
2018
2019
2020E
2021E
2022E
2023E
Perc
ent
Gross Payment Volume EstimatesUSD (Thousands)
20.2%
9.4%
Return/RiskSpread of
10.8%
Hurdle Rate
Compound Annual Return
� The global trend away from paper toward digital payments offers substantial long-term growth
� Square’s total addressable global market is estimated to be as high as $13.5 trillion by 2026
� 20% of the small businesses in a recent study reportedly considered shutting down, primarily because of lack of growth or cash-flow issues
� 53% of small businesses applied for funding or credit lines over the past five years, and more than one in four sought loans multiple times
� Square’s holistic platform model, including payment processing, has increased opportunities for small businesses by allowing them to accept card payments and access small-business loans
� Micro-merchant gross payment volume in 2018 was $41,953 million—over 19% YoY growth
YoY Growth (Right Scale)
12|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For illustrative purposes only. There can be no assurance that any investment objectives will be achieved.
Alignment Between Fundamental Conviction and Risk Is Dynamically Monitored
Risk Management and Sell Discipline
No predefined formula or mechanical trading rules—all transactions require a qualified review
Fundamentals
Valuation
Portfolio Construction
Stock Risk � Focus on fundamental conviction and thesis risk
� Valuation (IRR–Cost of EquityFramework)
Portfolio Risk � Individual stock contribution to active risk, risk boundaries and alignment with conviction
� Thematic exposure
Style Risk � Minimize unintended factor exposures
� Emphasize idiosyncratic over style risk
ESG Risk � Ensure UNSDG company alignment
� Monitor for major ESG controversies
Risk Management Sell Discipline
CompoundAnnual Return
HurdleRate
13|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
� Firmwide commitment to responsible investing, leveraging the resources of nearly 200 experienced global research analysts
� Proprietary technology (eSight) to document and share ESG analysis and engagement
� Long history of research and investment in social and environmental themes
Why AB?
� Significant and underappreciated role for the private sector in achieving global sustainability
� Rising consumer, corporate and regulatory focus on ESG issues
� ESG increasingly influencing investor behavior
Why Now?
� Thematic alignment with the UNSDGs links positive social and financial outcomes
� Deep ESG integration at all steps of investment process improves fundamental analysis
� Active ownership with emphasis on ESG issues positively influences management behavior
Why ABSustainable US Thematic Portfolio?
Why AB Sustainable US Thematic Portfolio?
14|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
PORTFOLIO REVIEW
15|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable US Thematic PortfolioTotal Returns, Class I Shares (USD)
Past performance does not guarantee future results. Prior to 31 October 2018, the Portfolio was named US Thematic Research Portfolio. All data prior to 31 October 2018 relates to the US Thematic Research Portfolio. Returns are shown net of fees. Shares of the Portfolio are offered only pursuant to the Portfolio’s current Prospectus together with the most recent financial statements. The information on this page is for informational purposes only and should not be construed as an offer to sell, or solicitation of an offer to buy, or a recommendation for the securities of the Portfolio. Returns denominated in a currency other than that of the fund may increase or decrease as a result of foreign-exchange currency fluctuations. Inception date: AB Sustainable US Thematic Portfolio I Shares—7 May 2001As of 31 December 2019Source: S&P and AB
Periods Ended 31 December 2019
4Q 2019
OneYear
ThreeYears
FiveYears
10Years
AB Sustainable US Thematic Portfolio 7.4% 34.2% 19.2% 13.2% 13.3%
S&P 500 8.9 30.7 14.6 11.0 12.9
Relative Performance –1.5% +3.5% +4.6% +2.2% +0.4%
16|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable US Thematic PortfolioTotal Returns, Class A Shares (USD)
Past performance does not guarantee future results. Prior to 31 October 2018, the Portfolio was named US Thematic Research Portfolio. All data prior to 31 October 2018 relates to the US Thematic Research Portfolio. Returns are shown net of fees. Shares of the Portfolio are offered only pursuant to the Portfolio’s current Prospectus together with the most recent financial statements. The information on this page is for informational purposes only and should not be construed as an offer to sell, or solicitation of an offer to buy, or a recommendation for the securities of the Portfolio. Returns denominated in a currency other than that of the fund may increase or decrease as a result of foreign-exchange currency fluctuations. Inception date: AB Sustainable US Thematic Portfolio A Shares—24 April 2001As of 31 December 2019Source: S&P and AB
Periods Ended 31 December 2019
4Q 2019
OneYear
ThreeYears
FiveYears
10Years
AB Sustainable US Thematic Portfolio 7.2% 33.2% 18.2% 12.3% 12.4%
S&P 500 8.9 30.7 14.6 11.0 12.9
Relative Performance –1.7% +2.5% +3.6% +1.3% –0.5%
17|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. Holdings are subject to change.*Sector attribution includes sector-allocation effect and stock-selection effect, showing top three and bottom three; numbers may not sum due to rounding.†Theme attribution is based on AB’s own theme assessment for the individual holdings in both the portfolio and benchmark.As of 31 December 2019Source: S&P and AB
4Q:2019 (Basis Points)
Attribution
Attribution by Sector*
49
16
12
–26
–34
–45
Technology
Energy
Consumer Staples
Contributors
Detractors
Financials
Consumer Discretionary
Attribution by Theme†
Company Sector Theme Attribution
Lumentum Holdings Technology Empowerment +51
UnitedHealth Group Healthcare Health +36
NVIDIA Technology Empowerment +36
Rockwell Automation Industrials Climate +30
Flex Technology Empowerment +23
Company Sector Theme Attribution
Hexcel Industrials Climate –39
Etsy Cons. Discretionary Empowerment –38
Proofpoint Technology Empowerment –36
Xylem Industrials Climate –34
Ecolab Materials Climate –31
–121
–31
–3
Empowerment
Climate
Health
Materials
18|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Attribution by Sector* Contributors
Trailing 12 Months (Basis Points)
Attribution
421
133
67
–23
–61
–78
Healthcare
Consumer Discretionary
Real Estate
Detractors
Technology
Energy
Communication Services
Attribution by Theme†
Company Sector Theme Attribution
MSCI Financials Empowerment +123
ANSYS Technology Climate +84
Bruker Healthcare Health +74
Lumentum Holdings Technology Empowerment +61
Bio-Rad Laboratories Healthcare Health +60
Company Sector Theme Attribution
Concho Resources Energy Climate –113
Apple Technology Climate –63
EOG Resources Energy Climate –56
Square Technology Empowerment –48
Xylem Industrials Climate –42
50
3
401
Past performance does not guarantee future results.Holdings are subject to change.*Sector attribution includes sector-allocation effect and stock-selection effect, showing top three and bottom three; numbers may not sum due to rounding.†Theme attribution is based on AB’s own theme assessment for the individual holdings in both the portfolio and benchmark.As of 31 December 2019Source: S&P and AB
Empowerment
Climate
Health
19|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Sector weights and holdings are subject to change. For illustrative purposes only. Numbers may not sum due to rounding. Numbers are net of cash.As of 31 December 2019Source: S&P and AB
4Q:2019
Sector Exposure and Top Holdings
Sector Overview (Percent)
32.1
19.0
17.1
9.9
8.3
5.0
3.6
2.7
2.3
23.2
14.2
9.8
13.0
9.1
3.3
7.2
2.7
10.4
4.3
2.9
Technology
Healthcare
Consumer Discretionary
Financials
Industrials
Utilities
Consumer Staples
Materials
Communication Services
Energy
Real Estate
AB Sustainable US Thematic Portfolio S&P 500
10 Largest Holdings
Security Name Weight (%) Theme
Danaher 3.5 Health
Procter & Gamble 3.3 Health
Xylem 3.1 Climate
Nike 3.0 Health
IntercontinentalExhange 3.0 Empowerment
West Pharmaceutical Services 3.0 Health
Bio-Rad Laboratories 2.8 Health
American Water Works 2.7 Climate
Apple 2.6 Climate
ANSYS 2.6 Climate
Total 29.7%
20|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Investment theme weightings are subject to change. References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described herein do not represent all of the securities purchased, sold or recommended for the fund, and it should not be assumed that investments in the securities identified were or will be profitable. Holdings are subject to change.As of 31 December 2019Source: AB
Holdings by Theme
� Abbott Laboratories� Bio-Rad Laboratories� Bruker� Danaher
� ICON� lululemon athletica� NXP Semiconductors� UnitedHealth Group
� Aflac� Bright Horizons Family Solutions� Charles Schwab� Ciena� Comcast
� Flex� IntercontinentalExchange� Lumentum Holdings� Microsoft � MSCI
� NVIDIA� PayPal� Proofpoint� Salesforce.com� Square
� American Water Works� ANSYS� Apple� Aptiv� Ecolab
� Hexcel� Nike� Procter & Gamble� Home Depot� Monolithic Power Systems
Health: 26.5%
Sub-themes: medical innovation; affordable medical care; healthy lifestyles; food security; physical safety
Empowerment: 37.7%
Sub-themes: economic infrastructure; enabling technologies; financial inclusion; women’s empowerment
Climate: 35.8%
Sub-themes: low carbon generation; energy efficiency; clean transportation; water; sanitation and recycling; sustainable production
� NextEra Energy� Rockwell Automation� Starbucks� VF
� Visa� Zendesk
� West Pharmaceutical Services� Xylem
21|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. *Weighted average of analyst estimated IRR and cost of equityAs of 31 December 2019Source: S&P and AB
Strong Fundamental Characteristics
EPS GrowthPast Five Years (Percent)
19.015.0
AB Sustainable USThematic Portfolio
S&P 500
Portfolio Return-Risk SpreadWeighted Average (Percent)*
ROENext 12 Months (Percent)
22.8 20.3
AB Sustainable USThematic Portfolio
S&P 500
Revenue GrowthFive-Year History (Percent)
9.87.9
AB Sustainable USThematic Portfolio
S&P 500
10.38.2
Compound AnnualReturn (IRR)
Hurdle Rate(Cost of Equity)
Return-Risk Spread: 2.1%
22|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
OUTCOME REVIEW
23|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results.*Product impact reflects our assessment of net revenue exposure (revenue from aligned products minus misaligned products) to the UNSDGs.†Corporate behavior score leverages MSCI ratings to assess corporate behavior relative to peers as well as changes in behavior over time.As of 31 December 2019Source: MSCI, S&P and AB
A Practical Framework for Assessing Enterprise Impact
Social Value Creation
Measuring Enterprise ImpactThe Big Idea
� Investors often confuse two types of impact:
� Investment Impact: Did my specific investment create measurable social impact?
� Enterprise Impact: Are the companies I invest in having a positive impact on society?
� Only Enterprise Impact is relevant for investors, who must choose appropriate metrics to match their objectives
� Firms can sell products that help (vaccines) or hurt (tobacco) society
� Corporate behavior can be positive (fair gender pay) or negative (corruption and bribery)
� All companies—and portfolios—can be evaluated on these two dimensions
� We believe that social value creation and economic value creation are mutually reinforcing
Pro
duct Im
pact*
Corporate Behavior†
AB Sustainable US Thematic
Portfolio
S&P 500
Social ValueDestruction
Social ValueCreation
Negative
Positiv
eWeaker Stronger
24|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Tilted Toward the Most Attractive Opportunities for Private Capital
Past performance does not guarantee future results. For informational purposes only. Each UNSDG includes a series of specific targets to help assess the progress toward
achieving each of the 17 goals. The Portfolio is designed to maximize exposure to the most attractive opportunities (goal or target) for private capital. Numbers are net of cash. As of 31 December 2019Source: MSCI, United Nations and AB
Measuring Allocation to UNSDGs
Allocation to UNSDGs in PortfolioPortfolio Weight (Percent)
� Goal 12 (Responsible Consumption and Production) and Goal 3 (Good Health and Well Being) are the most common UNSDG exposures
� Over 75% of our Portfolio is invested in five UNSDGs: 12, 3, 8, 9 and 7
� Some relevant products apply equally to multiple UNSDGs, which makes precise portfolio mapping to the UNSDGs difficult. We map our holdings in this case to one UNSDG
21.3
18.8
14.3
11.4
8.9
5.8
3.72.6 2.2 1.9
25|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Current analysis does not guarantee future results and is for illustrative purposes only.References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described herein do not represent all of the securities purchased, sold or recommended for the portfolio, and it should not be assumed that investments in the securities identified were or will be profitable. Holdings are subject to change.As of 31 December 2019Source: Company reports and AB
Top Holdings: Product ImpactHow Our Companies Are Creating Social Value
Security UNSDG Social Contribution
DanaherDanaher seeks to deliver life-science, diagnostic, dental and environmental solutions worldwide. Developing markets offer a significant opportunity for impact and exemplify how Danaher is providing broader access. In 2018, 31% of its sales were attributed to developing markets
Procter & GambleP&G has committed to reducing its emissions from operations by 50% by 2030 from a 2010 base year. In 2018, P&G achieved a total emissions reduction of 21% from 2010
XylemXylem's goal is to save more than 16.5 billion cubic meters of water through the use of advanced technologies and prevent over 7 billion cubic meters of polluted water from flooding communities or entering local waterways by 2025
NikeNike has a large opportunity to reduce its environmental footprint. Using recycled materials reduces natural resource consumption and CO2
emissions from the manufacture of newly acquired raw materials. In 2018, 65% of the materials used in Nike footwear and apparel products were recycled
Intercontinental
Exchange
Through organic investments and strategic acquisitions over nearly two decades, ICE has enabled transparency in over-the-counter electric power trading. Its platform is relied upon to establish prices across the globe
West Pharmaceutical
Services
WST enables more effective, consumer-friendly drug consumption via novel delivery systems and easier-to-use syringes. The company
produced 41 billion components in 2017
Bio-Rad LaboratoriesBio-Rad sells diagnostic instruments used to treat a wide array of diseases. The number of products offered in its life-science segment rose approximately 20% between 2016 and 2018, demonstrating Bio-Rad’s advancement of tools used to answer complex biological questions
American Water WorksAWK is the largest and most geographically diversified investor-owned water and wastewater utility company in the US. In 2018, the
company reduced water use by 3.5 billion gallons year over year through conservation
AppleApple has a massive physical presence, which makes its potential impact on the world quite significant. 100% of Apple’s operations are powered by renewable energy, and it has a goal of adding 4 GW of new clean power by 2020
ANSYS
ANSYS’s simulation software helps companies improve efficiency throughout the manufacturing cycle and reduce waste and consumption of natural resources while improving product performance, safety and reliability. Its actual contract value (ACV), US$1.325 billion in 2018, represents the value of the investments companies are making by adoption simulation to reduce waste and adopt more sustainable production processes
26|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
We Seek Strong Relative Performance and Continuous Improvement
Measuring ESG: Select Portfolio Metrics
Social: Companies with Female Representation in Executive Ranks*Percent
Current analysis does not guarantee future results and is for illustrative purposes only. Carbon emissions are defined as tons per million dollars invested. *Female representation in executive ranks: Percentage of women on the board of directors, as reported by the company. This is updated annually by the companies. In Europe, where the company has a supervisory board and a management board, this is the percentage of women on the supervisory board. †Companies with ESG-linked executive compensation: Companies report whether their executive compensation is linked to environmental, social and governance (ESG) goals. This is updated annually by the companies. As of 31 December 2019Source: Bloomberg, MSCI Barra, S&P, Sustainalytics and AB
Environmental: Carbon FootprintTons CO2e/USD Millions Invested
25.7
27.8
S&P 500 AB Sustainable USThematic Portfolio
Governance: Companies with ESG-Linked Executive Compensation†
Percent
24.8
12.2
S&P 500 AB Sustainable USThematic Portfolio
74.0
19.0
S&P 500 AB Sustainable USThematic Portfolio
27|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
4Q:19 Engagement Examples
Analysis provided for illustrative purposes only and is subject to revision. ESG: environmental, social and governanceAs of 31 December 2019Source: AB
StockESG Pillar ESG Factor
Impact on Thesis
Portfolio Action
Bio-RadLaboratories
SHuman Capital Development
NeutralMaintained
Position
Monolithic Power
S, GGender Equality,
PayPositive
Maintained Position
Amazon SSupply Chain Labor
StandardsNegative
Exited Position
Ciena S, GHuman Capital
Development, PayPositive
Maintained Position
Management Engagement Drives Change and Uncovers New Information
ESG Engagement: 4Q 19
Annual Engagement SummaryNumber of Engagements per Category
Environmental22
Social71
Governance70
28|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
A Word About Risk
Investment in the Fund entails certain risks. The investment returns and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Dividends are not paid for all share classes and are not guaranteed. The Fund is meant as a vehicle for diversification and does not represent a complete investment program. Some of the principal risks of investing in the Fund include focused portfolio risk, turnover risk, derivatives risk, OTC derivatives counterparty risk and equity securities risk. These and other risks are described in the Fund’s prospectus. Prospective investors should read the prospectus carefully and discuss risk and the Fund’s fees and charges with their financial adviser to determine if the investment is appropriate for them.
This information is directed at Investment Professionals only and should not be relied upon by any other persons. It is provided for informational purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, product or other instrument, or to enter into any type of transaction as a consequence of any information contained herein. The views and opinions expressed in this document are based on our internal forecasts and should not be relied upon as an indication of future market performance.
References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described in this presentation do not represent all of the securities purchased, sold or recommended for the portfolio, and it should not be assumed that investments in the securities identified were or will be profitable.
The value of an investment in the Fund can go down as well as up, and investors may not get back the full amount they invested. Before investing in the Fund, investors should review the Fund’s full prospectus, together with the Fund’s Key Investor Information Document and the most recent financial statements. Copies of these documents, including the latest annual report and, if issued thereafter, the latest semiannual report, may be obtained free of charge by visiting www.alliancebernstein.com or by contacting the local distributor in the jurisdictions in which the Fund is authorized for distribution, or in the case of Swiss investors, from the registered office of the Swiss representative.
AB Sustainable US Thematic Portfolio
29|AB Sustainable US Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable US Thematic Portfolio
Important Information
Prior to 31 October 2018, the Portfolio was named AB US Thematic Research Portfolio. All data prior to 31 October 2018 relates to the AB US Thematic Research Portfolio. An investor cannot invest directly in an index or average, and these do not include the sales charges or operating expenses associated with an investment in a mutual fund, which would reduce total returns.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Note to Canadian Readers: AllianceBernstein provides its investment-management services in Canada through its affiliates Sanford C. Bernstein & Co., LLC and AllianceBernstein Canada, Inc.
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Note to Austrian and German Readers: Local paying and information agents: Austria—UniCredit Bank, Rothschildplatz 1 1020 Vienna; Germany—BHF-Bank Aktiengesellschaft, Bockenheimer Landstrasse 10, 60323 Frankfurt am Main.
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Note to Hong Kong Readers: This document is issued in Hong Kong by AllianceBernstein Hong Kong Limited (聯博香港有限公司), a licensed entity regulated by the Hong Kong Securities and Futures Commission. This document has not been reviewed by the Hong Kong Securities and Futures Commission.
Note to Singapore Readers: This document has been issued by AllianceBernstein (Singapore) Ltd. (“ABSL”, Company Registration No. 199703364C). AllianceBernstein (Luxembourg) S.à r.l. is the management company of the portfolio and has appointed ABSL as its agent for service of process and as its Singapore representative. AllianceBernstein (Singapore) Ltd. is regulated by the Monetary Authority of Singapore. This advertisement has not been reviewed by the Monetary Authority of Singapore.
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