Capital Markets: Observations & Insights

Capital Markets: Observations and Insights Business Spending Boost Autumn 2017

The Earnings Stream

Money often flows like a river, cascading and meandering throughout the economy. In certain areas it picks up speed and intensity while in other places it slows to a trickle. This past spring, we wrote about an earnings resurgence in which corporate profits were set to rise strongly after a two year drought. Earnings growth has indeed been robust, registering the first consecutive quarters of double-digit gains in many years (since 2011). That earnings stream is now set to flow down to business spending. When corporate cash flows accelerate, so too do investments in areas such as intellectual property, advertising, and equipment. Ultimately, the cash will flow to employees in the form of higher wages but first it is business expenditure that will swell. Investors looking for growth may want to position for a potential torrent of business

spending. Sincerely,

Daniel C. Chung, CFA Chief Executive Officer Chief Investment Officer

Brad Neuman, CFA Senior Vice President Client Investment Strategist

Page 1

Key Observations

• Business spending is set to accelerate and outpace the broader economy, given an earnings resurgence, strengthening business confidence, and potential tax cuts • Growth equity fundamentals have outpaced those of Value stocks , driving performance results • Leading indicators suggest that economic growth and corporate profits will continue to expand

Table of Contents

Business Spending Boost Performance Fundamentals Valuation

Pages 3-7 Pages 8-16 Pages 17-24 Pages 25-29

Page 2

Earnings Resurgence = Business Spending Acceleration Business Spending Boost

• After a two-year earnings recession, S&P 500 profits are growing strongly • Robust profit growth typically leads to higher business spending

…Implies Acceleration in Business Spending

Strong Relationship…

S&P 500 EPS

Business Spending

S&P 500 EPS

Business Spending

140

20%

2,000

120

15%

100

Forecasted

10%

1,500

$ Billions

80

5%

60

$ EPS

0%

1,000

40

-5% Year-over-Year Change

20

-10%

0

500

1996

1997

1998

1999

2001

2002

2003

2004

2006

2007

2008

2009

2011

2012

2013

2014

2016

2017

Jun-12

Jun-13

Jun-14

Jun-15

Jun-16

Jun-17

Jun-18

Dec-11

Dec-12

Dec-13

Dec-14

Dec-15

Dec-16

Dec-17

Dec-18

Source: FactSet and U.S. Bureau of Economic Analysis as of 9/30/17. EPS is last 12 months. EPS forecast is based on bottom-up consensus estimates. Actual earnings per share might be materially different than shown. Business spending is U.S. private fixed nonresidential equipment and intellectual property expenditures.

Page 3

Less Regulation Is Good for Business Business Spending Boost

• Lower regulation is improving business confidence ‒ Regulation has gone from being the single most important problem in small businesses to being the third (behind taxes and quality of labor) ‒ In the past decade, new regulations have required 681 million hours of paperwork at a cost of $1.0 trillion, while year-to-date required paperwork has been reduced by more than 23 million hours

Business Confidence

Federal Rules

100 102 104 106 108 110

2,400

Final & Proposed Rules per Year

High Regulation

High Confidence

Recent decline in Federal rules strengthened business confidence

2,200

2,000

90 92 94 96 98

1,800

Low Confidence

Confidence Index

Low Regulation

1,600

1,400

Jun-16

Jun-17

Mar-16

Mar-17

Sep-16

Dec-16

Source: FactSet and George Washington University as of 9/30/17. Business confidence is NFIB Optimism Index and Federal Rules data is from Unified Agenda of Regulatory Actions. Small business concerns according to NFIB Economic Trends survey August 2017 vs. July 2016. Cost of regulations from American Action Forum.

Page 4

Confidence Is Critical for Spending Business Spending Boost

• CEO confidence tends to lead business spending by 6-12 months • Strengthening business confidence indicates higher corporate spending

CEO Confidence

Business Spending

90

30%

Estimated

80

20%

70

Y-ear-over-Year Change

Increase in CEO confidence bodes well for business spending

60

10%

50

0%

40

30

-10%

Confidence Index

20

-20%

10

-30%

0

1981

1982

1983

1984

1986

1987

1988

1989

1991

1992

1993

1994

1996

1997

1998

1999

2001

2002

2003

2004

2006

2007

2008

2009

2011

2012

2013

2014

2016

2017

2018

Source: FactSet, U.S. Conference Board and U.S. Bureau of Economic Analysis as of 9/30/17. Business spending is U.S. private fixed nonresidential equipment and intellectual property expenditures. Estimate based on regression of confidence and business spending.

Page 5

Business Spending Boost

Tax Cut Would Likely Boost Business Spending

• Lower corporate tax rates  increase in enterprise cash flow  higher business spending ‒ The Tax Foundation’s analysis of the Trump campaign plan suggested that wages would rise 6% but capital stock, i.e. business spending, would be 24% higher

Impact of Trump Campaign Plan Relative to Baseline (Over a Decade)

The GOP’s September 2017 tax “blueprint” is similar to the Trump campaign’s original tax plan

24%

6%

Consumer

Business

Source: Tax Foundation. “Consumer” is wages and “Business” is capital stock.

Page 6

Business Spending Boost

Business Spending May Lift Productivity

• Stronger business spending should drive innovation as businesses have more cash to deploy to research and development and capital expenditures • Historically, increases in business spending lead to higher productivity

Capital Intensity vs. Labor Productivity (1988-2016)

R 2 = 0.64

10.0

= Year

8.0

6.0

Higher business spending leads to higher productivity

4.0

2.0

0.0

-2.0 % Increase in Business Spending

0.0

1.0

2.0

3.0

4.0

5.0

% Increase in Productivity

Source: Bureau of Labor Statistics. Note: “Business Spending” is Capital Intensity and “Productivity” is Labor Productivity which is advanced one year

Page 7

Growth Sectors Are Leading YTD Performance

• As investors refocused on growth and current fundamentals, growth-oriented sectors outperformed year-to-date

3Q17 Returns (%)

2017 YTD Returns (%)

Growth-Oriented Sectors

10

10 15 20 25 30 35

8

U.S.

World

U.S.

World

6

4

2

0 5

0

-10 -5

-2

Real Estate

Real Estate

Energy

Health Care Utilities

Energy

Utilities

Telecom

Materials

Telecom

Materials

Financials

Industrials

Financials

Industrials

Technology

Technology

Health Care

Consumer Staples

Consumer Staples

Consumer Discretionary

Consumer Discretionary

Source: FactSet as of 9/30/17. U.S. represented by S&P 500 and World is represented by MSCI All Country World Index (USD).

Page 8

Scale and Growth Rewarded Performance

• Characteristics of large secular growth stocks have done best this year, while last year’s leader, dividend yield, underperformed

2017 YTD Excess Return (%)

3Q17 Excess Return (%)

1.2

1.7

0.8

1.0 0.8

0.4

0.0

0.4 0.3 0.0

0.0

-0.8 -0.8

-0.4 -0.6 -0.6

-1.2 -1.3 -1.5

-1.2

-2.6

-3.1

Market Cap

Market Cap

Book / Price

Book / Price

EPS Growth

EPS Growth

Debt / Equity

Debt / Equity

Price Volatility

Price Volatility

Dividend Yield

Dividend Yield

Trading Activity

Trading Activity

Earnings / Price

Revenue / Price

Earnings / Price

Revenue / Price

Relative Strength

Relative Strength

Earnings Variability

Earnings Variability

Source: FactSet as of 9/30/17 using Northfield defined quantitative factors for the Northfield broad U.S. market database.

Page 9

Performance

Prices and Fundamentals Converge

• Last year, stock prices and fundamentals diverged as investors positioned for perceived changes following the U.S. presidential election • This year fundamentals took center stage again, which has been reflected in stock prices

Growth Relative to Value

110.0

Stock Prices

Fundamentals

Convergence

105.0

Disconnect

100.0

95.0

90.0

Jul-16

Jul-17

Oct-16

Apr-17

Jun-16

Jan-17

Jun-17

Feb-17

Mar-17

Aug-16

Sep-16

Nov-16

Dec-16

Aug-17

Sep-17

May-17

Source: FactSet as of 9/30/2017. S&P 500 Growth and Value Indices used to represent Growth and Value stocks. Fundamentals are LTM EPS.

Page 10

Earnings Drove Sector Performance YTD Performance

• In contrast to much of last year, this year sectors with the strongest earnings performance YTD had the best stock performance

Leading Price & EPS Performance

10 15 20 25 30

100

% Companies Beating Estimates

80

60

40

0 5

S&P 500 Sector

Returns YTD (%)

20

-10 -5

0

Real Estate

Energy

Utilities

Telecom

S&P 500

Materials

Financials

Industrials

Technology

Health Care

Consumer Staples

Consumer Discretionary

Source: FactSet as of 930/2017. Companies beating estimates based on average of earnings seasons reported in 2017: Q416, 1Q17, and 2Q17.

Page 11

The Earnings Growth Resurgence Is Boosting Performance Performance

Total Return = Dividend Yield + EPS Growth +/- P/E Change

MSCI All Country World Index ex-USA

S&P 500

Dividend

EPS Growth*

P/E Change

Dividend

EPS Growth*

P/E Change

10% 15% 20% 25% 30% 35%

10% 15% 20% 25%

0% 5%

0% 5%

EPS Growth Reversal

-20% -15% -10% -5%

EPS Growth Reversal

-15% -10% -5%

Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17

12- Month Total Return:

12- Month Total Return:

1% 30% 19% 20% -1% 15% 19%

-10% 14% 21% 11% -1% 7% 20%

Source: FactSet as of 9/30/17. *Based on consensus estimates of next 12-month EPS. Actual earnings per share might be materially different than shown. MSCI ACWI ex-US performance based on local currency.

Page 12

Performance

Bull Market Is Aging Well

• Bull markets have been getting longer over time ‒ Factors prolonging economic expansions include: increased fiscal and monetary intervention, structural changes in the economy, and technological advances such as improved inventory management ‒ The current bull market is 3.75 years younger than the 1990s bull market

14

2010-Current Average: ?? Years

12

1980-2010 Average: 7.2 Years

10

1950-1980 Average: 4.3 Years

Current Bull Market (ongoing)

8

1930-1950 Average: 1.7 Years

6

4

Duration of Bull Market (Years)

2

0

1932

1943

1954

1965

1976

1987

1998

2009

2020

Year that Bull Market Ended

Source: FactSet and Goldman Sachs as of 9/30/2017. Bull markets over 6-months in duration since 1930.

Page 13

Performance

Has Active Relative Performance Troughed?

• While there are secular pressures affecting U.S. active management, cyclical factors tend to be much more powerful in the short term, such as ‒ interest rates/bond-like equities ‒ small cap performance

‒ overall market performance ‒ non-U.S. stock performance

Active Relative Performance Is Cyclical

54% of large cap managers have outperformed their style benchmark year-to-date

100%

80%

60%

40%

20%

% of Fund Assets Outperforming

0%

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Source: Nomura/Instinet, Joseph Mezrich and FactSet through 9/30/17. Fund performance is trailing 5-year data. Year-to-date active performance from Bank of America Merrill Lynch.

Page 14

Small Caps Due for a Comeback Performance

• Small caps have had very weak year-to-date performance—one of the worst 9-month periods in the past decade—in stark contrast to their historic outperformance* • Taken together, these data points may imply small caps are poised for a comeback ‒ After underperforming by this much, small caps have outperformed by over 300bps in the following 12-month period, on average, over the past decade

S&P Small Cap Performance Relative to S&P Large Cap (rolling 9-months)

S&P Small Cap

S&P Large Cap

1,500

9% Annual Return

- 100 200 300 400 500 600 700

1,000

500

7% Annual Return

0

-500

Basis Points

-1,000

-1,500

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: FactSet as of 9/30/17. *Data from Ibbotson/Morningstar shows small caps have outperformed large caps by 189bps annually 1925-2016.

Page 15

Performance

Structural Issues Driving Growth vs. Value

• Growth stocks have dramatically outperformed Value stocks—35%—over the past decade • The culprit for value investors has been very weak performance in buying low P/B stocks, while P/E strategies have fared much better • Book value may no longer be as relevant given changing business models, e.g., R&D is not capitalized in book value

110

P/E

100

P/B, not P/E, has driven Value underperformance

90

80

P/B Russell 1000 Value / Growth

70

60

40 2017 Total Return Index Source: FactSet as of 9/30/17. Price-to-earnings and price-to-book returns are based on the E/P and B/P Northfield factors for the Northfield broad U.S. market database. 50 2007 2009 2011 2013 2015

Page 16

Leading Cycle Indicators Are Benign Fundamentals

• Every major recession in the past 75 years has been preceded by substantial Fed Funds rate tightening or inflation acceleration, or both • We believe the Fed can be patient given forces weighing on inflation including innovation (price transparency), labor dynamics (retirees), and globalization

Recession

Fed Funds Effective Rate

Inflation

10 12 14 16 18 20

Today, short-term interest rates and inflation are both less than 2%

-2 0 2 4 6 8

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

Source: FactSet as of September 2017. Inflation represented by PCE Price Index ex-food and energy (year over year).

Page 17

A Slow Fed Keeps Away the Red? Fundamentals

• On average, the U.S. has not entered a recession until about three years after material Fed tightening • But the Fed is tightening much more slowly than it has historically

Fed Has Been Tightening Very Slowly (Basis Points per Month)

25

20

18

17

16

15

5

'83-84 (16 months)

'86-89 (27 months)

'94-95 (12 months)

'99-00 (11 months)

'04-06 (24 months)

Average (18 months)

'15-Current (22 months)

Source: FactSet and J.P. Morgan as of 9/30/2017.

Page 18

Fundamentals

Leading Indicators Suggest Earnings Will Continue to Rise

• The Conference Board Leading Economic Index (LEI) typically leads earnings by 6-18 months and usually peaks one to two years prior to a recession • Given that the LEI is increasing solidly year-over-year and hit a record high in 3Q17, we believe the economy and earnings have room to run

130

Leading Economic Index indicates further EPS growth

$150

120

$130

18 Month Lead

S&P 500 EPS

110

$110

100

$90

90

$70

Leading Economic Index

80

$50

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: FactSet, Conference Board as of September 2017. Based on NTM EPS estimates.

Page 19

Economic Outlook Fundamentals

Tailwinds

• Strong business and consumer confidence • Solid U.S. consumer balance sheet

• Robust corporate profits • Potential fiscal stimulus

Headwinds

• Tightening monetary policy • Rising U.S. labor costs • China debt levels • Political risk

Page 20

Smaller Capitalization Stocks Poised to Outperform Fundamentals

• Stronger fundamentals : Estimated EPS growth for 2018 more than double that of large cap • More levered to fiscal stimulus : Small caps are more U.S.-oriented and have higher operating leverage • Rising interest rates : Small caps have historically outperformed large caps in rising rate environments and vice versa in falling rate environments • Attractive valuation : Small cap sales multiple discount implies opportunity

Earnings Per Share

Enterprise Value / Sales R2000 / R1000

-35% -30% -25% -20% -15% -10% -5% 0%

R2000

R1000

100 110 120 130 140 150 160 170

Historically Large Discount

Small Caps Growing Faster

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2013

2014

2015

2016

2017

2018

Source: FactSet as of September 2017. EPS for 2017-2018 are consensus estimates and actual earnings per share might be materially different than shown.

Page 21

Fundamentals

Innovative Companies Grow Earnings and Stock Prices Faster

• Innovation propels economic growth over time ‒ Studies have shown, and our research demonstrates, that the most innovative companies grow their sales, earnings, and stock prices faster*

Innovation Drives:

EPS Growth…

and

…Stock Prices

9%

400

Most Innovative

300

5%

200

Least Innovative

100

Est. EPS Growth 2007-2017

-

Most Innovative

Least Innovative

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Source: FactSet. Most/least innovative based on R&D % of sales. Est EPS growth July 2007- July 2017 measured after classification of S&P 1500 companies into innovation quintiles in Dec. 06. Most/least innovative stock performance based on S&P 1500 quintiles one month returns for same time period, normalized for market value. * Baruch Lev and Suresh Radhakrishnan, “The Stock Market Valuation of R&D Leaders.” Page 22

Speed of Innovation Is Accelerating Fundamentals

• Innovations are penetrating U.S. markets at an even faster pace ‒ “Growth” stocks should benefit from innovation while “value” stocks that appear cheap may simply be victims of change

Years from Market Entry to 50% Penetration in the U.S.

The faster speed of innovation may be exacerbating the disparity between growth and value fundamentals

120 160 200

0 40 80

Dishwasher - 1924 Air Con. - 1933 TV - 1936

PC - 1974

VCR - 1965

ATM - 1969

Stove - 1750

Radio - 1897

MP3 Player - 1998 Social Media - 2004

Wash. Mach. - 1904

Telephone - 1880 Roads - 1880

Internet - 1989

Railroad - 1830

Hospitals - 1776

Cable TV - 1950

Air Travel - 1914

Microwave - 1967

Steam ship - 1810

Newspaper - 1704

Credit Card - 1950

Smartphone - 1996

Second. Sch. - 1810

Electric power - 1882

Source: Asymco.

Page 23

Fundamentals

The Growth Advantage

• Three variables drive P/E multiples: growth, returns, and risk • As compared to the Russell 1000 Value, the Russell 1000 Growth has higher expected EPS growth, higher returns on equity, and lower risk in the form of better balance sheets

Stronger Growth

Higher Returns

Lower Risk

R1000G R1000V

R1000G R1000V

R1000G R1000V

14.7%

25.2%

2.5x

9.2%

1.3x

10.1%

Long-Term EPS Growth

Return on Equity

Net Debt / EBITDA

Source: FactSet as of September 2017. Growth represents consensus long-term analyst estimates, and actual future EPS growth rates might be materially different than the forecasts shown. Page 24

The Great Rotation Valuation

• Moving from monetary stimulus and quantitative easing to fiscal stimulus and increased deficits should drive a Great Rotation from bonds to stocks • The magnitude of the rotation will be fueled by the valuation disparity between equities and bonds, which are expensive by comparison ‒ The earnings yield for equities is more than 300 bps greater than 10-year Treasury notes vs. a 60 bps median over the past half-century

Equity vs. Bond “Yields”

S&P 500 EPS Yield

Treasury Bond Yield

10 12 14 16

Stocks are attractively valued relative to bonds

0 2 4 6 8

>300 bps

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

Source: FactSet, Federal Reserve, and S&P, as of 09/30/17.

Page 25

Not All Sectors Are Expensive Valuation

• Growth-oriented sectors are reasonably valued compared to history, particularly given low levels of interest rates—in contrast to many other sectors

31%

Reasonably Valued

21%

14% 14% 13%

8%

7%

1%

-1%

P/E Relative to 20-Year Median

Real Estate

Utilities

Materials

Financials

Industrials

Cons Disc

Technology

Health Care

Cons Staples

Source: FactSet, based on S&P 500 Index, 9/30/17. Note: energy and telecom are excluded; the former because of an extremely high P/E due to depressed earnings and the latter owing to a small number of constituents. Real estate is a new sector classification, so for the historical data shown above, an industry group category that has approximately 16 years of data was utilized.

Page 26

Growth Valuations Are Reasonable Valuation

• Despite their recent outperformance, Growth stocks remain attractively valued compared to Value stocks, relative to history and their respective growth rates

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio (P/E Divided by Long-Term Growth Rate)

Russell 1000 Growth vs. Russell 1000 Value P/E

30% premium is low relative to history

1.7x

1.4x

Russell 1000 Value

Russell 1000 Growth

Source: FactSet, Bank of America as of 09/30/2017.

Page 27

Valuation The Single Greatest Predictor of Future Stock Market Returns

• There is a strong relationship between starting valuation and ensuing 10-year returns • Current valuations suggest equities should materially outperform bonds over the coming decade (mid-single digit vs. low-single digit annualized returns) owing to the low interest rate environment

S&P 500 P/E vs. 10-Year Returns

Russell 1000 Growth vs. 10-Year Returns

= month = current

Tech bubble

10% 15% 20% 25%

10% 15% 20% 25%

R² = 0.79 (0.85 ex-tech bubble)

R² = 0.85

0% 5%

0% 5%

-10% -5%

-10% -5%

5

10

15

20

25

30

5

10

15

20

25

S&P 500 10-Year Annualized Return

Russell 1000G 10-Year Annualized Return

Russell 1000 Growth Price/Earnings

S&P 500 Price/Earnings

Source: FactSet. Monthly data through September 2017 and beginning in January 1986 (S&P 500) and December 1978 (Russell 1000 Growth). The tech bubble, represented by the 10-year returns beginning in April 1987-March 1990 and ending in April 1997- March 2000, skewed the regression by resulting in higher returns for given valuations than the historical relationship would imply. Page 28

Addressing Interest Rate Risks—It’s Too Soon to Worry Valuation

• Potential Risk : higher bond yields  lower equity valuations? • Potential Solution : favor equities over bonds given that increasing interest rates have supported higher P/E multiples at low absolute levels

S&P 500 NTM P/E vs. 10-Yr Treasury Note Yield 1964-2017

25

Higher Rates Rising P/E

Higher Rates Falling P/E

= Month

20

15

P/E

10

5

-

5

10

15

10-Year Yield

Source: RBC Capital Markets and FactSet. Data is through September, 2017.

Page 29

Disclosure The views expressed are the views of Fred Alger Management, Inc. as of September 2017. Alger has used sources of information which it believes to be reliable; however, this publication is not intended to be and does not constitute investment advice. These views are subject to change at any time and they do not guarantee the future performance of the markets, any security, or any funds managed by Fred Alger Management, Inc. These views should not be considered a recommendation to purchase or sell securities. Individual securities or industries/sectors mentioned, if any, should be considered in the context of an overall portfolio and therefore reference to them should not be construed as a recommendation or offer to purchase or sell securities. References to or implications regarding the performance of an individual security or group of securities are not intended as an indication of the characteristics or performance of any specific sector, industry, security, group of securities, or a portfolio and are for illustrative purposes only. Risk Disclosures : Investing in the stock market involves gains and losses and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as the prices of growth stocks tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic developments. The S&P 500 Index is an unmanaged index generally representative of the U.S. stock market without regard to company size. The Russell 1000® Growth Index is an unmanaged index designed to measure the performance of the largest 1000 companies in the Russell 3000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Growth Index is an unmanaged index generally representative of common stocks designed to track performance of small-capitalization companies with greater than average growth orientation. The Russell 2000 Value Index is an unmanaged index generally representative of the small-cap value segment of the U.S. equity universe and measures the performance of Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. The Russell 3000® Growth Index is an unmanaged index designed to measure the performance of those Russell 3000® Index companies with higher price-to-book ratios and higher forecasted growth values. The Russell 3000 Value Index is an unmanaged index generally representative of stocks from the Russell 3000 Index with lower price-to-book ratios and lower expected growth rates. The MSCI ACWI Index (gross) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI consists of 45 country indices comprising 24 developed and 21 emerging market country indices. The indices presented are provided for illustrative purposes, reflect the reinvestment of dividends and do not assess fees and expenses that would have the effect of reducing returns. Investors cannot invest directly in any index. The index performance does not represent the returns of any portfolio advised by Fred Alger Management, Inc. and actual client results might differ materially than the indices shown. Note that past performance is no guarantee of future results. Comparison to a different index might have materially different results than those shown. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell ® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.

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