N-Q 1 d647402dnq.htm AB SUSTAINABLE GLOBAL THEMATIC FUND, INC. AB Sustainable Global Thematic Fund, Inc.

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-03131

AB SUSTAINABLE GLOBAL THEMATIC FUND, INC.

(Exact name of registrant as specified in charter)

1345 Avenue of the Americas, New York, New York 10105

(Address of principal executive offices) (Zip code)

Joseph J Mantineo

AllianceBernstein L.P.

1345 Avenue of the Americas

New York, New York 10105

(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 221-5672

Date of fiscal year end: July 31, 2019

Date of reporting period: October 31, 2018

 

 

 


ITEM 1.

SCHEDULE OF INVESTMENTS.


AB Sustainable Global Thematic Fund

Portfolio of Investments

October 31, 2018 (unaudited)

 

Company

   Shares        U.S. $ Value  

COMMON STOCKS - 96.8%

 

Health Care - 21.2%

 

Health Care Equipment & Supplies - 7.4%

 

Abbott Laboratories

     276,370        $ 19,052,948  

Danaher Corp.

     181,973          18,088,116  

EssilorLuxottica SA

     115,033          15,711,036  

West Pharmaceutical Services, Inc.

     127,723          13,528,420  
       

 

 

 
          66,380,520  
       

 

 

 

Health Care Providers & Services - 3.5%

       

Apollo Hospitals Enterprise Ltd.

     1,048,600          16,213,919  

UnitedHealth Group, Inc.

     59,807          15,630,559  
       

 

 

 
          31,844,478  
       

 

 

 

Health Care Technology - 1.6%

       

Medidata Solutions, Inc. (a)

     203,430          14,301,129  
       

 

 

 

Life Sciences Tools & Services - 8.4%

       

Bio-Rad Laboratories, Inc.-Class A (a)

     58,520          15,967,182  

Bruker Corp.

     506,794          15,877,856  

Gerresheimer AG

     147,500          10,395,153  

ICON PLC (a)

     137,970          19,050,898  

Tecan Group AG

     63,900          14,415,056  
       

 

 

 
          75,706,145  
       

 

 

 

Pharmaceuticals - 0.3%

       

Vectura Group PLC (a)

     3,530,270          3,207,034  
       

 

 

 
          191,439,306  
       

 

 

 

Financials - 17.3%

       

Banks - 5.7%

       

Bank Mandiri Persero Tbk PT

     20,899,500          9,390,589  

Credicorp Ltd.

     74,360          16,783,796  

HDFC Bank Ltd.

     315,390          8,153,991  

Svenska Handelsbanken AB-Class A

     749,600          8,148,030  

Swedbank AB-Class A

     380,900          8,568,167  
       

 

 

 
          51,044,573  
       

 

 

 

Capital Markets - 6.2%

       

Charles Schwab Corp. (The)

     356,725          16,494,964  

MSCI, Inc.-Class A

     150,480          22,629,182  

Partners Group Holding AG

     23,044          16,406,283  
       

 

 

 
          55,530,429  
       

 

 

 

Consumer Finance - 1.0%

       

Bharat Financial Inclusion Ltd. (a)

     759,608          8,961,880  
       

 

 

 

Insurance - 2.7%

       

AIA Group Ltd.

     2,024,000          15,396,655  

Prudential PLC

     472,050          9,452,154  
       

 

 

 
          24,848,809  
       

 

 

 

Thrifts & Mortgage Finance - 1.7%

       

Housing Development Finance Corp., Ltd.

     649,483          15,519,921  
       

 

 

 
          155,905,612  
       

 

 

 

 


Company

   Shares        U.S. $ Value  

Information Technology - 14.9%

 

IT Services - 3.2%

 

Visa, Inc.-Class A

     163,285        $ 22,508,837  

Wirecard AG

     35,450          6,631,168  
       

 

 

 
          29,140,005  
       

 

 

 

Semiconductors & Semiconductor Equipment - 4.1%

       

ams AG (a)(b)

     128,915          5,022,174  

Infineon Technologies AG

     807,313          16,176,043  

NVIDIA Corp.

     76,099          16,043,952  
       

 

 

 
          37,242,169  
       

 

 

 

Software - 5.1%

       

Dassault Systemes SE

     97,880          12,253,062  

Microsoft Corp.

     199,130          21,269,075  

SailPoint Technologies Holding, Inc. (a)

     485,660          12,646,587  
       

 

 

 
          46,168,724  
       

 

 

 

Technology Hardware, Storage & Peripherals - 2.5%

       

Apple, Inc.

     100,739          22,047,737  
       

 

 

 
          134,598,635  
       

 

 

 

Industrials - 13.8%

       

Aerospace & Defense - 2.2%

       

Hexcel Corp.

     340,349          19,917,224  
       

 

 

 

Building Products - 2.9%

       

Cie de Saint-Gobain

     169,080          6,369,486  

Kingspan Group PLC

     442,435          19,243,168  
       

 

 

 
          25,612,654  
       

 

 

 

Commercial Services & Supplies - 1.3%

       

China Everbright International Ltd.

     14,173,740          11,338,929  
       

 

 

 

Electrical Equipment - 3.6%

       

Schneider Electric SE

     199,220          14,405,816  

Vestas Wind Systems A/S

     289,550          18,157,788  
       

 

 

 
          32,563,604  
       

 

 

 

Industrial Conglomerates - 1.5%

       

Siemens AG

     120,524          13,853,850  
       

 

 

 

Machinery - 2.3%

       

Xylem, Inc./NY

     315,128          20,666,094  
       

 

 

 
          123,952,355  
       

 

 

 

Consumer Discretionary - 7.8%

       

Auto Components - 2.3%

       

Aptiv PLC

     202,602          15,559,834  

Delphi Technologies PLC

     245,570          5,265,021  
       

 

 

 
          20,824,855  
       

 

 

 

Diversified Consumer Services - 1.7%

       

Bright Horizons Family Solutions, Inc. (a)

     131,220          15,078,490  
       

 

 

 

Internet & Direct Marketing Retail - 3.8%

       

Amazon.com, Inc. (a)

     13,177          21,056,978  


Company

   Shares        U.S. $ Value  

Etsy, Inc. (a)

     321,770        $ 13,681,660  
       

 

 

 
          34,738,638  
       

 

 

 
          70,641,983  
       

 

 

 

Consumer Staples - 7.5%

       

Food Products - 4.1%

       

Kerry Group PLC-Class A

     182,570          18,714,311  

Nestle SA

     213,825          18,051,766  
       

 

 

 
          36,766,077  
       

 

 

 

Household Products - 1.8%

       

Unicharm Corp.

     612,200          16,608,206  
       

 

 

 

Personal Products - 1.6%

       

Unilever PLC

     270,120          14,308,155  
       

 

 

 
          67,682,438  
       

 

 

 

Utilities - 5.4%

       

Multi-Utilities - 1.2%

       

Suez

     750,860          10,830,629  
       

 

 

 

Water Utilities - 4.2%

       

American Water Works Co., Inc.

     195,911          17,344,001  

Aqua America, Inc.

     263,630          8,575,884  

Beijing Enterprises Water Group Ltd. (a)

     22,454,000          11,466,339  
       

 

 

 
          37,386,224  
       

 

 

 
          48,216,853  
       

 

 

 

Materials - 4.0%

       

Chemicals - 4.0%

       

Ecolab, Inc.

     156,799          24,013,767  

Koninklijke DSM NV

     136,900          11,952,575  
       

 

 

 
          35,966,342  
       

 

 

 

Communication Services - 2.8%

       

Interactive Media & Services - 2.8%

       

Alphabet, Inc.-Class C (a)

     15,821          17,035,578  

Tencent Holdings Ltd.

     236,000          8,085,185  
       

 

 

 
          25,120,763  
       

 

 

 

Real Estate - 2.1%

       

Equity Real Estate Investment Trusts (REITs) - 1.5%

       

SBA Communications Corp. (a)

     82,790          13,426,055  
       

 

 

 

Real Estate Management & Development - 0.6%

       

SM Prime Holdings, Inc.

     8,406,600          5,314,848  
       

 

 

 
          18,740,903  
       

 

 

 

Total Common Stocks
(cost $743,160,041)

          872,265,190  
       

 

 

 


Company

   Shares        U.S. $ Value  

SHORT-TERM INVESTMENTS - 3.0%

 

Investment Companies - 3.0%

 

AB Fixed Income Shares, Inc.-Government Money Market Portfolio-Class AB,
2.08% (c)(d)(e)
(cost $27,011,255)

     27,011,255        $ 27,011,255  
       

 

 

 

Total Investments Before Security Lending Collateral for Securities Loaned - 99.8%
(cost $770,171,296)

 

       899,276,445  
       

 

 

 

INVESTMENTS OF CASH COLLATERAL FOR SECURITIES LOANED - 0.5%

       

Investment Companies - 0.5%

       

AB Fixed Income Shares, Inc.-Government Money Market Portfolio-Class AB,
2.08% (c)(d)(e)
(cost $4,630,214)

     4,630,214          4,630,214  
       

 

 

 

Total Investments - 100.3%
(cost $774,801,510) (f)

 

       903,906,659  

Other assets less liabilities - (0.3)%

          (2,371,953
       

 

 

 

Net Assets - 100.0%

        $ 901,534,706  
       

 

 

 

FORWARD CURRENCY EXCHANGE CONTRACTS

 

Counterparty

   Contracts to
Deliver
(000)
     In Exchange
For
(000)
     Settlement
Date
     Unrealized
Appreciation/
(Depreciation)
 

Bank of America, NA

   USD      3,409      RUB      225,797        11/14/18      $ 13,612  

Bank of America, NA

   PHP      608,151      USD      11,100        12/11/18        (276,723

Barclays Bank PLC

   USD      2,862      PHP      155,836        12/11/18        53,148  

Barclays Bank PLC

   USD      1,912      INR      143,087        12/13/18        10,181  

Barclays Bank PLC

   CHF      2,270      USD      2,294        12/14/18        31,365  

Barclays Bank PLC

   USD      29,620      CAD      38,672        12/14/18        (219,189

Barclays Bank PLC

   USD      2,986      JPY      333,998        12/14/18        (16,302

BNP Paribas SA

   TWD      68,032      USD      2,205        12/11/18        1,486  

BNP Paribas SA

   USD      5,401      INR      398,099        12/13/18        (52,725

Citibank, NA

   USD      15,977      KRW      18,068,797        11/15/18        (144,378

Citibank, NA

   INR      3,466,344      USD      49,679        12/13/18        3,111,187  

Citibank, NA

   CAD      3,705      USD      2,843        12/14/18        26,228  

Citibank, NA

   CHF      5,195      USD      5,275        12/14/18        95,760  

Citibank, NA

   EUR      61,631      USD      71,919        12/14/18        1,858,137  

Citibank, NA

   GBP      1,808      USD      2,384        12/14/18        68,337  

Goldman Sachs Bank USA

   CHF      2,355      USD      2,370        12/14/18        22,135  

Goldman Sachs Bank USA

   GBP      4,144      USD      5,415        12/14/18        107,545  

Goldman Sachs Bank USA

   JPY      247,184      USD      2,199        12/14/18        1,336  

Goldman Sachs Bank USA

   USD      2,536      JPY      279,522        12/14/18        (49,932

Goldman Sachs Bank USA

   USD      2,815      MXN      54,520        12/14/18        (147,817

JPMorgan Chase Bank, NA

   EUR      4,109      USD      4,767        12/14/18        96,300  

Morgan Stanley & Co., Inc.

   PEN      47,835      USD      14,288        11/15/18        105,133  

Morgan Stanley & Co., Inc.

   EUR      3,837      USD      4,480        12/14/18        118,456  

Morgan Stanley & Co., Inc.

   HKD      62,604      USD      7,989        12/14/18        (5,001

Morgan Stanley & Co., Inc.

   SEK      73,571      USD      8,198        12/14/18        127,315  

Morgan Stanley & Co., Inc.

   USD      19,414      AUD      27,246        12/14/18        (111,361

Morgan Stanley & Co., Inc.

   USD      10,366      EUR      8,949        12/14/18        (192,912

Morgan Stanley & Co., Inc.

   USD      27,474      GBP      21,029        12/14/18        (539,454

Morgan Stanley & Co., Inc.

   USD      48,361      JPY      5,355,764        12/14/18        (734,529


Counterparty

   Contracts to
Deliver
(000)
     In Exchange
For
(000)
     Settlement
Date
     Unrealized
Appreciation/
(Depreciation)
 

Natwest Markets PLC

     CHF        4,176        USD        4,242        12/14/18      $ 78,818  

Standard Chartered Bank

     KRW        2,729,010        USD        2,409        11/15/18        17,333  

Standard Chartered Bank

     USD        1,978        PHP        106,550        12/11/18        14,977  

Standard Chartered Bank

     USD        12,630        TWD        386,505        12/11/18        (110,386

Standard Chartered Bank

     JPY        295,616        USD        2,654        12/14/18        25,444  

Standard Chartered Bank

     USD        1,487        HKD        11,618        12/14/18        (3,179

State Street Bank & Trust Co.

     CHF        9,111        USD        9,464        12/14/18        380,209  

State Street Bank & Trust Co.

     EUR        5,536        USD        6,438        12/14/18        145,043  

State Street Bank & Trust Co.

     USD        3,428        EUR        2,968        12/14/18        (54,073

State Street Bank & Trust Co.

     USD        1,500        NOK        12,435        12/14/18        (21,997

UBS AG

     EUR        9,705        USD        11,181        12/14/18        148,214  
                 

 

 

 
                  $ 3,977,741  
                 

 

 

 

 

(a)

Non-income producing security.

(b)

Represents entire or partial securities out on loan.

(c)

Affiliated investments.

(d)

The rate shown represents the 7-day yield as of period end.

(e)

To obtain a copy of the fund’s shareholder report, please go to the Securities and Exchange Commission’s website at www.sec.gov, or call AB at (800) 227-4618.

(f)

As of October 31, 2018, the cost basis of investment securities owned was substantially identical for both book and tax purposes. Gross unrealized appreciation of investments was $187,477,056 and gross unrealized depreciation of investments was $(54,394,166), resulting in net unrealized appreciation of $133,082,890.

Please note: The sector classifications presented herein are based on the Global Industry Classification Standard (GICS) which was developed by Morgan Stanley Capital International and Standard & Poor’s. The components are divided into sector, industry group, and industry sub-indices as classified by the GICS for each of the market capitalization indices in the broad market.

Currency Abbreviations:

 

AUD    -    Australian Dollar
CAD    -    Canadian Dollar
CHF    -    Swiss Franc
EUR    -    Euro
GBP    -    Great British Pound
HKD    -    Hong Kong Dollar
INR    -    Indian Rupee
JPY    -    Japanese Yen
KRW    -    South Korean Won
MXN    -    Mexican Peso
NOK    -    Norwegian Krone
PEN    -    Peruvian Sol
PHP    -    Philippine Peso
RUB    -    Russian Ruble
SEK    -    Swedish Krona
TWD    -    New Taiwan Dollar
USD    -    United States Dollar


Country Breakdown*

October 31, 2018 (unaudited)

 

  50.8%       

United States

  6.6%       

France

  5.4%       

Switzerland

  5.4%       

India

  5.2%       

Germany

  4.2%       

Ireland

  3.5%       

China

  3.0%       

United Kingdom

  2.0%       

Denmark

  1.9%       

Peru

  1.9%       

Sweden

  1.9%       

Japan

  1.7%       

Hong Kong

  3.5%       

Other

  3.0%       

Short-Term

 

 

      
  100.0%       

Total Investments

 

 

      

 

*

All data are as of October 31, 2018. The Fund’s country breakdown is expressed as a percentage of total investments and may vary over time. “Other” country weightings represent 1.3% or less in the following countries: Austria, Indonesia, Netherlands and Philippines.


AB Sustainable Global Thematic Fund

October 31, 2018 (unaudited)

In accordance with U.S. GAAP regarding fair value measurements, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability (including those valued based on their market values). Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund. Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. The three-tier hierarchy of inputs is summarized below.

 

   

Level 1—quoted prices in active markets for identical investments

   

Level 2—other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

   

Level 3—significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

Where readily available market prices or relevant bid prices are not available for certain equity investments, such investments may be valued based on similar publicly traded investments, movements in relevant indices since last available prices or based upon underlying company fundamentals and comparable company data (such as multiples to earnings or other multiples to equity). Where an investment is valued using an observable input, by pricing vendors, such as another publicly traded security, the investment will be classified as Level 2. If management determines that an adjustment is appropriate based on restrictions on resale, illiquidity or uncertainty, and such adjustment is a significant component of the valuation, the investment will be classified as Level 3. An investment will also be classified as Level 3 where management uses company fundamentals and other significant inputs to determine the valuation.

The following table summarizes the valuation of the Fund’s investments by the above fair value hierarchy levels as of October 31, 2018:

 

Investments in Securities:

   Level 1     Level 2     Level 3     Total  

Assets:

 

Common Stocks:

      

Health Care

   $ 131,497,108     $ 59,942,198     $ – 0  –    $ 191,439,306  

Financials

     64,061,933       91,843,679       – 0  –      155,905,612  

Information Technology

     94,516,188       40,082,447       – 0  –      134,598,635  

Industrials

     59,826,486       64,125,869       – 0  –      123,952,355  

Consumer Discretionary

     70,641,983       – 0  –      – 0  –      70,641,983  

Consumer Staples

     18,714,311       48,968,127       – 0  –      67,682,438  

Utilities

     25,919,885       22,296,968       – 0  –      48,216,853  

Materials

     24,013,767       11,952,575       – 0  –      35,966,342  

Communication Services

     17,035,578       8,085,185       – 0  –      25,120,763  

Real Estate

     13,426,055       5,314,848       – 0  –      18,740,903  

Short-Term Investments

     27,011,255       – 0  –      – 0  –      27,011,255  

Investments of Cash Collateral for Securities Loaned in Affiliated Money Market Fund

     4,630,214       – 0  –      – 0  –      4,630,214  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Investments in Securities

     551,294,763       352,611,896 (a)      – 0  –      903,906,659  

Other Financial Instruments (b):

      

Assets:

        

Forward Currency Exchange Contracts

     – 0  –      6,657,699       – 0  –      6,657,699  

Liabilities:

        

Forward Currency Exchange Contracts

     – 0  –      (2,679,958     – 0  –      (2,679,958
  

 

 

   

 

 

   

 

 

   

 

 

 

Total (c)

   $     551,294,763     $     356,589,637     $             – 0  –    $     907,884,400  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

A significant portion of the Fund’s foreign equity investments are categorized as Level 2 investments since they are valued using fair value prices based on third party vendor modeling tools to the extent available.

(b)

Other financial instruments are derivative instruments, such as futures, forwards and swaps, which are valued at the unrealized appreciation/(depreciation) on the instrument. Other financial instruments may also include swaps with upfront premiums, options written and swaptions written which are valued at market value.

(c)

There were no transfers between any levels during the reporting period.


The Fund recognizes all transfers between levels of the fair value hierarchy assuming the financial instruments were transferred at the beginning of the reporting period.

The Adviser established the Valuation Committee (the “Committee”) to oversee the pricing and valuation of all securities held in the Fund. The Committee operates under pricing and valuation policies and procedures established by the Adviser and approved by the Board, including pricing policies which set forth the mechanisms and processes to be employed on a daily basis to implement these policies and procedures. In particular, the pricing policies describe how to determine market quotations for securities and other instruments. The Committee’s responsibilities include: 1) fair value and liquidity determinations (and oversight of any third parties to whom any responsibility for fair value and liquidity determinations is delegated), and 2) regular monitoring of the Adviser’s pricing and valuation policies and procedures and modification or enhancement of these policies and procedures (or recommendation of the modification of these policies and procedures) as the Committee believes appropriate.

The Committee is also responsible for monitoring the implementation of the pricing policies by the Adviser’s Pricing Group (the “Pricing Group”) and any third party which performs certain pricing functions in accordance with the pricing policies. The Pricing Group is responsible for the oversight of the third party on a day-to-day basis. The Committee and the Pricing Group perform a series of activities to provide reasonable assurance of the accuracy of prices including: 1) periodic vendor due diligence meetings, review of methodologies, new developments and process at vendors, 2) daily comparison of security valuation versus prior day for all securities that exceeded established thresholds, and 3) daily review of unpriced, stale, and variance reports with exceptions reviewed by senior management and the Committee.

In addition, several processes outside of the pricing process are used to monitor valuation issues including: 1) performance and performance attribution reports are monitored for anomalous impacts based upon benchmark performance, and 2) portfolio managers review all portfolios for performance and analytics (which are generated using the Adviser’s prices).

A summary of the Fund’s transactions in AB mutual funds for the three months ended October 31, 2018 is as follows:

 

Fund

   Market Value
7/31/18
(000)
     Purchases
at Cost
(000)
     Sales
Proceeds
(000)
     Market Value
10/31/18
(000)
     Dividend
Income
(000)
 

Government Money Market Portfolio

   $ 42,108      $ 60,595      $ 75,692      $ 27,011      $ 185  

Government Money Market Portfolio*

     270        18,546        14,186        4,630        39  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 42,378      $ 79,141      $ 89,878      $ 31,641      $ 224  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

*

Investments of cash collateral for securities lending transactions


ITEM 2.

CONTROLS AND PROCEDURES.

(a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b) There were no significant changes in the registrant’s internal control over financial reporting that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

 

ITEM 3.

EXHIBITS.

The following exhibits are attached to this Form N-Q:

 

EXHIBIT NO.

 

DESCRIPTION OF EXHIBIT

11 (a) (1)   Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
11 (a) (2)   Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant): AB Sustainable Global Thematic Fund, Inc.

 

By:   /s/    Robert M. Keith
  Robert M. Keith
  President
Date:   December 24, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:   /s/    Robert M. Keith
  Robert M. Keith
  President
Date:   December 24, 2018
By:   /s/    Joseph J. Mantineo
  Joseph J. Mantineo
  Treasurer and Chief Financial Officer
Date:   December 24, 2018