ab sustainable us thematic portfolio 4q-2019 · the esg label is awarded to funds that screen 100%...

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


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


Philosophy

We seek to generate superior financial returnsthrough investments that

contribute to positive social and environmental

outcomes.


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


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


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


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


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


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


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


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)


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


� 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?


PORTFOLIO REVIEW


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%


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%


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


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


Attribution by Sector* Contributors

Trailing 12 Months (Basis Points)

Attribution

421

133

67

–23

–61

–78

Healthcare


Real Estate

Detractors

Technology

Energy

Communication Services

Attribution by Theme†


MSCI Financials Empowerment +123

ANSYS Technology Climate +84

Bruker Healthcare Health +74

Lumentum Holdings Technology Empowerment +61

Bio-Rad Laboratories Healthcare Health +60


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


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


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%


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


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


S&P 500

Revenue GrowthFive-Year History (Percent)

9.87.9


S&P 500

10.38.2

Compound AnnualReturn (IRR)

Hurdle Rate(Cost of Equity)

Return-Risk Spread: 2.1%


OUTCOME REVIEW


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


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


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


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


74.0

19.0



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


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


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.

Note to European Readers: This information is issued by AllianceBernstein Limited, 50 Berkeley Street, London W1J 8HA, it is for marketing purposes. Registered in England, No. 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA).

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.

Note to Swiss Readers: This document is issued by AllianceBernstein Schweiz AG, Zürich, a company registered in Switzerland under company number CHE-306.220.501. AllianceBernstein Schweiz AG is authorised and regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA) as a distributor of collective investment schemes. Swiss Representative & Swiss Paying Agent: BNP Paribas Securities Services, Paris, succursale de Zürich. Registered office: Selnaustrasse 16, 8002 Zürich, Switzerland, which is also the place of performance and the place of jurisdiction for any litigation in relation to the distribution of shares in Switzerland. The Prospectus, the key investor information documents, the Articles or management regulations and the annual and semiannual reports of the concerned fund may be requested without cost at the offices of the Swiss representative. This document is directed at Qualified Investors only.

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.

The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.

© 2020 AllianceBernstein L.P. www.AllianceBernstein.com

LF-96212-2020-01-16IC2020037

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