Download ab large cap growth fund

2Q
US Growth
6.30.17
Overall Morningstar Rating TM
Advisor Class Shares
★★★★★
Rated against 1277 funds in the Large Growth
Category, based on risk-adjusted returns.
AB LARGE CAP GROWTH FUND
Class A: APGAX / Class C: APGCX / Advisor Class: APGYX
OVERVIEW
Equity markets posted robust returns in the second quarter, capping
off a strong first half of 2017. Stock returns were solid across most
regions, boosted by solid corporate earnings and investors’
expectations for improving economic growth. US large-caps
performed in line with global peers. Smaller-cap US stocks trailed as
hopes faded for a broad tax cut that would benefit smaller companies.
Continuing their first-quarter trend, growth stocks outperformed their
value counterparts across the market spectrum. Technology and
healthcare stocks were strong in the quarter, although sharp swings
in technology shares in the last week of June pared gains. US crude oil
prices continued to fall, negatively affecting the energy sector.
With inflation generally subdued, developed-market central banks will
likely withdraw their relaxed monetary policies gradually in the coming
months. The US economy continued to do well with unemployment at
a 16-year low and robust consumer spending.
PORTFOLIO PERFORMANCE
For the quarter, the US Large Cap Growth Fund rose in absolute terms
and outperformed its benchmark, the Russell 1000 Growth Index.
Security selection drove the outperformance, owing mainly to stock
picks in the technology, healthcare, consumer staples and industrials
sectors.
Growth continues to outperform value. Our growth investment style,
which focuses on companies with strong and persistent profitability
and attractive earnings growth, has outperformed. Our largest
contributors to active risk were among the strongest relative
outperformers. Our Fund continues to have much stronger
fundamentals than the benchmark, in our view.
Edwards Lifesciences, a leader in the aortic valve business, reported a
strong quarter, significantly beating both sales and earnings-pershare estimates. The US business was particularly strong. We
continue to see return on assets improvement within the
transcatheter aortic valve replacement (TAVR) business and strong
product pipeline optionality, which has the opportunity to be
significantly larger than the existing TAVR market.
Robotic surgical equipment manufacturer Intuitive Surgical
outperformed in the quarter with results that beat expectations. The
company highlighted tailwinds that drove first-quarter procedure
growth, including Easter moving into the second quarter and patients
accelerating procedures ahead of healthcare reform. Nonetheless,
the outlook for procedure growth was increased to 12%-14% from
9%-12%.
Video-game company Electronic Arts benefited from the
announcement that fourth quarter 2017 revenues and earnings
outperformed versus expectations. We believe the company will
continue to improve profitability driven by increasing exposure to
digital subscription gaming.
Rare-disease drugmaker Alexion detracted from performance during
the quarter. Despite the company reporting a strong earnings report
in April, its stock underperformed after the company’s CEO
announced several senior management departures, including that of
the CFO, and a comprehensive review of business strategy. This
uncertainty resulted in our exiting the position.
Late in the quarter, we saw a pullback in growth-focused sectors as
investors sold year-to-date winners such as Google, Facebook and
Amazon.com and rotated into energy, industrials and financials that
have lagged. Amazon’s announced acquisition of Whole Foods Market
during June put pressure on consumer-discretionary stocks,
especially retailers. As a result, Fund holding Dollar Tree detracted.
The core Dollar Tree business remains strong, with productivity and
gross margin improvements. We continue to maintain our position as
we believe the Family Dollar acquisition will inflect positively.
O’Reilly Automotive underperformed after reporting weaker-thanexpected growth. Sales weakness was driven by weather and the later
tax refund season. On the bright side, second-quarter sales guidance
and full-year sales guidance were maintained despite the weak first
quarter, suggesting that sales trends have improved since quarterend. Earnings guidance was also maintained. We continue to hold the
position as the company’s outlook shows a continued positive trend.
Past performance does not guarantee future results. Morningstar ratings are specific metrics of performance and do not represent absolute performance of any fund. For each fund with at
least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance, placing
more emphasis on downward variations and rewarding consistent performance. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative
purposes. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star.
The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. The
Fund was rated 5, 5 and 5 stars against 1277, 1152 and 803 funds in the category for the three-, five- and ten- year periods, respectively. The Fund’s other share classes may have different
performance characteristics.
© 2017 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate,
complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Investors should considerthe investment objectives, risks, charges and expenses ofthe Fund/Portfolio carefully before investing. For copies of
ourprospectusorsummaryprospectus,whichcontainthisandotherinformation,visitusonlineatwww.abfunds.comorcontactyourABrepresentative.
Please read the prospectus and/or summary prospectus carefully before investing.
Investment Products Offered
• Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed
AB LARGE CAP GROWTH FUND
Class A: APGAX / Class C: APGCX / Advisor Class: APGYX
OUTLOOK
Year to date, growth stocks have handily outperformed value stocks.
Companies with strong and persistent profitability and attractive
earnings growth have outperformed. While this has been a tailwind to
our performance, strong stock selection has been the primary
contributor to our year-to-date outperformance. We expect global
economic growth to remain moderate and will continue to assess the
ramifications for equities as the Federal Reserve continues its longerterm objective of gradual monetary policy tightening.
2Q
6.30.17
Our Fund continues to have much stronger fundamentals than the
benchmark, and we will maintain the tilt toward growth and
profitability, which is consistent with our investment philosophy. We
remain committed to finding exceptional growth companies that we
believe can grow organically throughout any market cycle, an attribute
that we think is ever more important in this environment. Our
opportunity set, persistent growth stocks, remains attractively valued
relative to history. As such, we will continue to own and add to the
Fund what we believe to be strong growth companies.
Current forecasts and performance are no guarantee of future results. References to specific securities are presented to illustrate our investment philosophy and are not to be considered
advice or recommendations. This information reflects prevailing market conditions and our judgments as of the date indicated, which are subject to change. In preparing this presentation, we have
relied upon and assumed without independent verification, the accuracy and completeness of all information available from third-party sources. It should not be assumed that any investments made
in the future will be profitable or will equal the performance of the selected investments referenced herein.
2Q
AB LARGE CAP GROWTH FUND
Class A: APGAX / Class C: APGCX / Advisor Class: APGYX
6.30.17
PORTFOLIO INFORMATION
Portfolio Characteristics
Portfolio
Total Number of Holdings
P/E Ratio
(Stock Price/Earnings; last 12 mo)
52
29.04x
Benchmark1
Top Ten Equity Holdings6
557
Company
Sector
27.86x
Alphabet
Facebook
Technology
Technology
7.49%
6.35
P/CF Ratio (Stock Price/Cash Flow)
19.14x
16.53x
Visa
Financial Services
4.85
ROE (Return on Equity; next 12 mo)
Median Market Cap ($ Billions)
28.74%
34.5
31.91%
10.0
UnitedHealth
Healthcare
4.05
164.3
185.3
Apple
Home Depot
Technology
Consumer Discretionary
3.78
3.74
13.79%
12.99%
Weighted Market Cap ($ Billions)
EPS (Earnings per Share) Growth Rate
(2017/2016)
Portfolio Statistics (source: Morningstar)
2
Beta (3 yr)
Sharpe Ratio (3 yr)3
Standard Deviation (3 yr)
Alpha (3 yr)5
Edwards Lifesciences
Healthcare
3.51
Nike
Intuitive Surgical
Consumer Discretionary
Healthcare
3.46
3.28
Xilinx
Technology
2.81
0.90
4
1.24
10.40
3.00
Sector Breakdown6
Portfolio
Benchmark1
Technology
Consumer Discretionary
29.51%
21.56
30.24%
19.65
Healthcare
Financial Services
18.95
8.98
13.41
10.60
Producer Durables
Consumer Staples
6.42
3.80
13.18
6.83
Materials & Processing
Cash and Cash Equivalents
Utilities
1.23
9.55
—
4.31
—
0.96
—
0.82
Energy
Top Five Contributors
Top Five Detractors
Edwards Lifesciences
Intuitive Surgical
Alexion Pharmaceuticals
Dollar Tree
Electronic Arts
UnitedHealth Group
Nvidia
Biogen
O’Reilly Automobile
Danaher
1 Russell 1000 Growth Index.
2 Beta measures a fund’s volatility relative to its benchmark. A fund with a beta higher than 1 has been more volatile than the benchmark over the period of measurement. Conversely, a fund
with a beta less than 1 has been less volatile than the benchmark over the given period of time.
3 Sharpe Ratio is a measure of the fund’s return relative to the investment risk it has taken. A higher Sharpe Ratio means the fund’s returns have been better given the level of risk the fund has
taken.
4 Standard Deviation is a measure of the dispersion of a portfolio’s return from its mean. The more spread apart the returns, the higher the deviation.
5 Alpha is the risk-adjusted measurement of ‘excess return’ over the benchmark.
6 Holdings are expressed as a percentage of total investments and may vary over time. They are provided for informational purposes only and should not be deemed as a recommendation to
buy or sell the securities mentioned.
2Q
AB LARGE CAP GROWTH FUND
Class A: APGAX / Class C: APGCX / Advisor Class: APGYX
6.30.17
QUARTERLY AVERAGE ANNUAL TOTAL RETURNS AS OF 06/30/17: ADVISOR CLASS PERFORMANCE
5 Yrs
10 Yrs
Since
Inception
22.36% 13.33%
17.76%
10.87%
9.81%
13.99
20.42
11.11
15.30
8.91
8.87
14.14
20.02
8.80
13.87
7.51
8.28
QTD
YTD
Large Cap Growth Fund†^
6.32%
16.83%
Russell 1000 Growth Index
4.67
Morningstar Large Growth Category
5.01
1 Yr
3 Yrs
Expense Ratios
as of 2/3/17
Gross
Net‡
0.77%
—
The performance shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the
performance information shown. You may obtain performance information current to the most recent month-end by visiting www.abfunds.com. The
investment return and principal value of an investment in the Portfolio will fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. Advisor Class shares have no front-end or contingent deferred sales charges, however when purchased through a financial advisor
additional fees may apply. Returns for other share classes will vary due to different charges and expenses. Performance assumes reinvestment of
distributions and does not account for taxes. If applicable, high double-digit returns are highly unusual and cannot be sustained; such returns are primarily
achieved during favorable market conditions.
† The performance for Advisor Class shares prior to 10/1/96, the share class’s inception date, reflects Class A share performance, adjusted for differences in
operating expenses. The inception date of the Class A shares is 9/28/92.
^ Reflects a 2.77% and 15.92% increase in NAV on January 18, 2011 and December 23, 2008, respectively, from the proceeds of the Enron class action
settlement. Reflects a 0.38% increase in NAV on June 8, 2016 as a result of the Fund recording a receivable on its books and records in connection with
the distribution by the Alliance Fair Fund.
‡ If applicable, this reflects the Adviser’s contractual waiver of a portion of its advisory fee and/or reimbursement of a portion of the Fund’s operating
expenses. Absent reimbursements or waivers, performance would have been lower.
Russell 1000 Growth Index represents the performance of 1,000 large-cap growth companies within the US.
Investors cannot invest directly in indices or averages, and their performance does not reflect fees and expenses or represent the performance of any AB fund.
Sources: FactSet, Morningstar Inc. and AB.
A WORD ABOUT RISK
Market Risk: The market values of the portfolio’s holdings rise and fall from day to day, so investments may lose value. Focused Portfolio Risk: Portfolios that hold a
smaller number of securities may be more volatile than more diversified portfolios, since gains or losses from each security will have a greater impact on the portfolio’s
overall value. Foreign (Non-US) Risk: Non-US securities may be more volatile because of political, regulatory, market and economic uncertainties associated with
such securities. Fluctuations in currency exchange rates may negatively affect the value of the investment or reduce returns. These risks are magnified in emerging or
developing markets. Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and
may be more volatile, especially in a down market.
AllianceBernstein Investments, Inc. (ABI) is the distributor of the AB family of mutual funds. ABI is a member of FINRA and is an affiliate of
AllianceBernstein L.P., the Adviser of the funds. 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. © 2017 AllianceBernstein L.P. www.abfunds.com
170710143918
LCG-11EC-0617