Capital Markets Winter 2021

Winter 2021

Capital Markets: Observations and Insights

Road to Recovery and Beyond

Road to Recovery and Beyond

“The journey is the reward.” – Steve Jobs

With large amounts of monetary and fiscal stimulus as well as new vaccines, we believe the global economy has embarked on the path to recovery and could potentially hit a new peak in real GDP sometime this year. While forecasting the speed of the journey is difficult, the expansion will be long and there is considerable opportunity for growth along the way, in our view. In this presentation, we elaborate on the drivers of our optimism and detail how much progress may be yet to come. However, we do believe that this economic road to recovery and beyond will be different. We will not return to where we were, rather we will arrive at a new destination. The recession was caused by a pandemic, a very rare event. As a result, the reactions and responses of society and business have been unique, and the way the world will adapt will be as well. At Alger, we believe there will be lasting change from the pandemic recession of 2020. Over the past year, the world has dramatically accelerated its digital transformation, making the enduring themes we discuss in this presentation even more important and impactful. We believe that new ways of interacting with each other have forever changed the way business is done. From this transformation both corporate winners and losers will emerge. Within this evolving environment, Alger’s job of identifying companies that we believe will thrive in the future remains constant.

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

Brad Neuman, CFA Senior Vice President Director of Market Strategy

1

Key Observations and Themes

Road to Recovery and Beyond We detail our view of the powerful drivers of the economic and corporate earnings recovery, as well as the opportunities that the expansion presents.

3

I

Enduring Themes Secular investment trends may transcend economic volatility, politics, and central bank actions, producing compelling investment opportunities over the long term.

11

II

Lending vs. Owning With interest rates at historically low levels, stocks look attractive relative to bonds. We believe equities will outperform fixed income over the long term.

19

III

Valuation While elevated relative to history using traditional metrics, equity valuation looks more attractive after accounting for low interest rates and changing business models.

23

IV

Style Wars Powerful structural forces have caused Growth to diverge from Value. Shifts in leadership are likely but the long-term trend should stay intact, in our view.

27

V

2

I

Mind the Output Gap Road to Recovery

• The U.S. economy is operating substantially below its potential, implying that significant room is left in the expansion in our view

I

Large Output Gap Implies A Lot of Growth Left

II

Recession U.S. Output Gap

3%

Less Sustainable Growth Remaining

2%

III

1%

0%

-1%

IV

-2%

-3%

-4%

More Sustainable Growth Remaining

-5%

GDP / Potential GDP -1

V

-6%

-7%

1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

VI

Source: Alger using GDP consensus forecast as of 1/1/21 and Congressional Budget Office potential GDP estimates as of July 2020. The output gap indicates the difference between the actual output of an economy and the maximum potential output (the economy’s maximum sustainable output with underlying inputs including the natural rate of unemployment, various measures of the labor supply, capital services, and productivity) of an economy .

3

I

Hot Off the Press Road to Recovery

• Recent monetary stimulus has been unprecedented

I

• Explosion in money supply has yet to fully work its way into the real economy

II

Massive Increase in Money Supply

III

Massive increase of $4 trillion could potentially drive economic growth

30%

25%

20%

IV

15%

10%

Annual Increase

5%

V

0%

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

VI

Source: Federal Reserve with last datapoint being November 2020. Money supply is “M2,” a measure of the money supply that includes, generally, cash, checking deposits, savings deposits, shares in retail money market mutual funds.

4

I

The Check Is in The Mail Road to Recovery

• Enormous fiscal stimulus of approximately $5 trillion has been signed into law

I

• With Democrats in control, we believe more stimulus is to come

• Boosting disposable personal income may accelerate an already existing recovery

II

Huge Fiscal Stimulus

III

2021 stimulus is smaller but hits an already recovering economy

3% + More to Come?

2021: Boosting existing growth?

IV

2020: Mitigated stay-at-home recession

13%

V

VI

Fiscal Stimulus % of GDP

Source: Committee for a Responsible Federal Budget.

5

I

Savings Road to Recovery

• Last year the liquidity deluge created very high savings levels, which we believe will likely persist into early 2021 as more stimulus checks arrive

I

• Elevated savings could eventually be spent, potentially driving further economic growth

II

U.S. Personal Savings as a % of Disposable Income

18%

III

16%

14%

The U.S. consumer saved an incremental ~$1.6 trillion last year

12%

IV

10%

8%

6%

4%

V

2%

0%

VI

Source: U.S. Bureau of Economic Analysis. 2020 is based of YTD through November 2020.

6

I

War Chests Road to Recovery

• Companies are awash in savings with S&P 500 cash balances surging by more than one third over the past year

I

• This could potentially lead to increased M&A and share repurchase activity

II

Corporate Cash Surges…Will Buybacks Follow?

Cash

Buybacks

III

2.0

4%

After prior surges in cash, buybacks have increased

1.8

IV

3%

1.6

1.4 $ Trillions

Buyback Yield

2%

V

1.2

1.0

1%

2016

2017

2018

2019

2020

VI

Source: FactSet and S&P. S&P 500 cash balances through December 2020 and buybacks through 3Q20.

7

I

More from Margins Road to Recovery

• In our view, earnings have a lot of room to bounce back from their depressed level

I

• EPS growth to be driven by 1) revenue growth 2) margin expansion 3) leverage/other

‒ S&P 500 operating margins historically peak at higher levels from one cycle to the next

II

Corporate Margin Can Potentially Drive Growth for Years

Multiple Drivers of Growth

Actual

Forecast

Revenue Growth Margin Expansion Other

III

18%

High Teens EPS Growth!

17%

16%

6%

IV

15%

14%

6%

13%

12%

V

7%

11%

Components of EPS Growth

S&P 500 Operating Margin

10%

2020-2022 S&P 500 Annual EPS Growth Est

VI

Source: Historical data from FactSet and forecast using Alger estimates based on bottom-up S&P 500 EPS consensus for 2021 and 2022 and Alger estimates thereafter. Earnings per share (EPS) is the portion of a company's earnings or profit allocated to each share of common stock.

8

I

Economic Dispersion Road to Recovery

• Certain areas of the economy are depressed while others are not

I

• We believe some of the weak end markets will rebound

Change in Personal Consumption During Pandemic

II

34%

16%

13%

III

-7%

-13%

-49%

-56% -62%

IV

-81% -86%

-94%

V

VI

Source: U.S. Bureau of Economic Analysis and Alger. Change is calculated as November 2020 spending versus December 2019.

9

I

Where to Invest? Road to Recovery

• Growth stocks with cyclical/depressed end market exposure are attractive, in our view

I

‒ Many investors use “Value” stocks as a shorthand for cyclicals, but we believe “Value” has structural problems (see Style Wars section at end of this presentation) ‒ Several key value industries may also be negatively impacted by new behavior, such as changes in business travel and office space, arising from the pandemic

II

III

IV

Sweet Spot

Cyclical

Growth

V

VI

Source: Alger.

10

II

Internet of Things Enduring Themes

• The explosion in connected devices is creating the “Internet of Things” or IoT, transmitting valuable and actionable information ‒ Applications include industrial monitoring and automation, health care, security, agriculture, inventory management, smart cities, utility metering, and connected cars

I

II

Drivers of IoT Spending

Data Volume of IoT Connected Devices Worldwide

III

22%

Compliance

79

31%

Improved ROI

32%

Business need

34% Annual Growth!

33%

Customer service

IV

36%

Reliability

36%

Competitiveness

Zettabytes

40%

Efficiencies

14

V

42%

Data analytics

46%

Security

2019

2025

Share of Respondents

VI

Source: Data volume forecast from IDC, July 2020, and drivers of IoT spending from 451 Research survey, December 2019.

11

II

Digital Payments Enduring Themes

• Digital payments continue to outgrow the broad economy as they gain penetration, driven by increasing e-commerce and mobile payments

I

‒ China has the largest volume of digital payments and Europe is growing fastest

• Payment networks, processors, and software companies can capitalize on the trend

II

Global Digital Transactions

Mobile Payments

E-Commerce

III

8.3

16.5% CAGR

7.3

6.4

4.2

IV

5.4

3.4

4.4

2.7

3.9

2.1

$ Trillions

1.5

1.1

V

4.1

3.9

3.7

3.3

2.9

2.8

2019

2020E

2021E

2022E

2023E

2024E

VI

Source: Statista Digital Market Outlook 2020. CAGR is compound annual growth rate, the rate of return required for a quantity to grow from its beginning balance to its ending balance. Mobile payments occur when smartphones are used to process transactions using wireless communication or scan QR barcodes.

12

II

Cloud Computing Enduring Themes

• Cloud computing optimizes IT assets, reducing costs and improving flexibility and accessibility ‒ The growth in online streaming entertainment, e-commerce, work from home, telehealth, e-sports, and virtual learning are all enabled by cloud computing

I

II

Cloud Computing Market Is Growing Rapidly

III

$362

$305

$258

$243

IV

$197

$145

V

Market in Billions ($)

2017

2018

2019 2020*

2021*

2022*

VI

Source: Gartner, November 2020. *Forecast. Market includes cloud application services, infrastructure services, business process services, and security.

13

II

5G Wireless Enduring Themes

• The next generation of wireless technology, 5G, is bringing faster speeds, increased capacity, much lower latency, and more efficient spectrum utilization ‒ 5G helps enable telematics, advanced health care monitoring, remote work, augmented/virtual reality, and autonomous driving applications

I

II

5G Mobile Subscriptions

III

2.8

1.9

IV

1.3

V

0.7

Billions of Subscribers

0.2

0.1

0.0

VI

2019 2020E 2021E 2022E 2023E 2024E 2025E

Source: Ericsson, July 2020.

14

II

Artificial Intelligence Enduring Themes

• As data growth explodes and computing becomes more powerful, artificial intelligence is likely to become more advanced and begin to permeate decision making • AI investment has been most prolific in autonomous driving, drug studies, facial recognition, and digital content*

I

II

Global AI Spending

Leading AI Use Cases

11%

III

$110

22% Annual Growth

7%

7%

6%

6%

IV

$50

Billions ($)

V

2020

2024

Automated customer service agents

Sales process recommendation and automation

Automated threat intelligence and prevention

IT automation Fraud analysis and investigation

VI

Source: AI spending and use cases from IDC, August 2020. *Stanford Artificial Intelligence Index, 2019 annual report.

15

II

Genomics Innovation Enduring Themes

• Genetic analysis and manipulation will increasingly impact the practice of health care

I

‒ Turning sick care into preventive health care by giving insight into predisposed diseases

‒ Delivering more efficacious treatments via targeted therapies (e.g., immuno-oncology)

II

The Genetic Sequencing Market Expected to Grow

As The Cost to Sequence A Genome Declines

$18.0

III

$1,352,982

$5,901

$1,176

IV

$689

$3.4

Market Size Billions ($)

V

2008 Cost Per Human Genome 2012

2016

2020

2018

2028*

VI

Source: Cost to sequence a genome from the National Human Genome Research Institute and sequencing based monitoring and diagnostic test market from BIS Research. *Estimated.

16

II

Emission Reductions Enduring Themes

• The rate of CO 2

emissions is not sustainable in our view

I

• Reducing emissions may provide opportunities in alternative energy sources and in electric vehicles and related products and services

II

CO

Emissions

2

Actual

Needed To Limit Warming

III

10 15 20 25 30 35 40 45 Billions of Annual Tonnes

IV

V

0 5

VI

Source: Robbie Andrews (2019) based on Global Carbon Project & IPPC SR15. Carbon budget based on >66% probability of staying below 2 o C warming, beginning in 2021.

17

II

Evolving Demographics Enduring Themes

• A burgeoning middle class will considerably impact spending patterns such as meat consumption and automobile ownership

• An aging population has important economic implications such as increased health care spending

I

II

The Asian Middle Class Is Expected to Grow

The World Expected to Be Older in 2100

1950 2100

2015 2020 2025 2030

4

III

48

47

46

3

30

29

2

IV

22

Median Age

1

V

0

Asia-Pacific Billions of Middle Class People

North America Europe

Asia

Europe

North America

VI

Source: Median age from United Nations Department of Economic and Social Affairs and middle class estimates from Brookings Institution. A middle-class family has an approximate income of $16,000 to $160,000 in purchasing power parity terms.

18

III

More Cash in Your Pocket? Lending vs. Owning

• In an unusual occurrence, equity dividend yields are higher than 10-year Treasury yields

I

‒ Over 10-year periods in the past half century, the S&P 500 dividend has grown an average of nearly 6% annually, while a Treasury bond coupon does not grow

II

…But Stock Dividends Can Grow!

Similar Yields…

S&P 500 Div Yield

10-Yr Treasury Yield

S&P 500 Dividend Growth

16%

12%

III

14%

10%

12%

8%

10%

6%

IV

8%

4%

6%

2%

4%

0%

2%

V

0%

-2%

Rolling 10-Yr Annual Growth

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

VI

Source: FactSet, Robert Shiller, Alger. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

19

III

A Better “Yield” Lending vs. Owning

• Investors are accepting much lower “yields” for the safety of Treasuries relative to equities but how risky are stock fundamentals over the long term? ‒ Over 10-year periods in the past half century, S&P 500 EPS has always grown (even through this pandemic), averaging nearly 7% annually, while bond coupons do not grow

I

II

Equity “Yield” Is Attractive Relative to Treasuries…

…And Equity EPS Can Grow!

S&P 500 EPS Growth

S&P 500 Earnings Yield

10-Yr Treasury Yield

III

16%

12%

10%

12%

8%

IV

6%

8%

4%

2%

4%

0%

V

0%

-2%

Rolling 10-Yr Annual Growth

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

VI

Source: FactSet, Robert Shiller, Alger. Notes: periods used were annual. Equity yield is LTM EPS / Price. Earnings per share (EPS) is the portion of a company's earnings or profit allocated to each share of common stock.

20

III

Many Happy Returns? Lending vs. Owning

• Strong relationship between starting valuations and ensuing 10-year returns with current data suggesting equities will outperform bonds over the coming decade ‒ Note that low real interest rates and stronger free cash flow generation imply higher multiples relative to history (see pages 23 & 24)

I

II

S&P 500 CAPE vs. 10-Year Returns Since 1950

25%

III

= month = current

R² = 0.68

20%

15%

10%

IV

5%

Return

0%

-5%

V

-10%

5x S&P 500 10-Year Annualized 10x

15x

20x

25x

30x

35x

40x

45x

S&P 500 Cyclically Adjusted Price/Earnings (CAPE)

Source: FactSet. Each dot represents the P/E during that year and the returns generated over the subsequent 10 years. The starting CAPE ratio is the price divided by the cyclically adjusted EPS, which is the average of the EPS over the last decade at the start of each 10-year period measured. Annual data utilized from 1950 through 2020. R-squared is a statistical measure used to analyze how differences in one variable can be explained by the difference in a second variable. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

VI

21

III

Long-Term Appeal of Stocks Lending vs. Owning

• U.S. stocks outperformed intermediate-term U.S. government bonds about two-thirds of the time over one-year periods since 1950, but beat bonds in every 20-year rolling period • The standard deviation of returns for stocks is almost three times larger than for bonds over one-year intervals but nearly equal over 20-year rolling periods

I

II

Proportion of Time That Stocks Outperform Bonds

III

100%

82%

75%

68%

IV

V

1 year

5 Years

10 Years

20 Years

VI

Source: Morningstar and Alger. Stocks are represented by the S&P 500 and bonds are the Ibbotson U.S. Intermediate-Term Government Bond Index. Data is annual rolling returns 1950 through 2020. Standard Deviation measures how much the portfolio’s return has deviated from its average historical return. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

22

IV

Reasonable Relative to Interest Rates Valuation

• One good way to incorporate interest rates into valuation is to calculate investors’ required rate of return above the prevailing risk-free interest rate ‒ Using the so-called Equity Risk Premium shows stocks are attractively valued relative to their historical average

I

II

Equity Risk Premiums Show Stocks Are Inexpensive

US World

III

10%

Cheaper

8%

6%

IV

0% Estimated Equity Risk Premium 2% 4%

More Expensive

V

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

VI

Source: Goldman Sachs. Note: The market implied equity risk premium (ERP) is the rate that at each point in time makes the theoretical value from GS Dividend Discount Model equal to the observed market price. U.S. equities are represented by the S&P 500. World equities are represented by a weighted average of MSCI Asia Pac ex-Japan (20%), TOPIX (10%), Stoxx 600 (30%), and S&P 500 (40%).

23

IV

More than Meets the Eye Valuation

• Companies are increasingly investing more in intangible assets (e.g., R&D), that are expensed rather than capitalized

• The result is depressed earnings relative to free cash flow, making the stock market look cheaper on free cash flow than earnings

I

II

Intangible vs. Tangible Investment

S&P 500 Valuation Relative to Past 30-Year Median

Intangible

Tangible

III

48%

90%

70%

IV

50%

30%

V

-12%

Share of U.S. Investment

10%

Price-to-Earnings

Price-to-Free Cash Flow

1980

1985

1990

1995

2000

2005

2010

2015

2020

VI

Source: Share of U.S. investment is based on gross private nonresidential domestic investment from the Bureau of Economic Analysis. Valuation is from FactSet as of 12/31/2020 with price-to-earnings being the current market price of a company divided by its last 12 months of earnings. Price-to-free cash flow is the current price of a company divided by its last 12 months of free cash flow.

24

IV

Bargains Abroad? Valuation

• International developed and emerging markets are trading at historically large discounts to the S&P 500

I

II

Non-U.S. Stocks are Inexpensive Relative to U.S. Equities

MSCI EAFE MSCI EM

10%

III

0%

-10%

Non-U.S. stocks look relatively cheap

IV

-20%

-30%

-40%

V

Discount to S&P 500

-50%

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

VI

Source: Alger and FactSet through December 2020.

25

IV

Smaller Capitalization Stocks Look Attractive Valuation

• Small caps are expected to grow much faster than large caps

• Underperformance has compressed small cap valuations as compared to history

I

II

Estimated Earnings Per Share Trajectory

Price-to-Earnings S&P Small Cap 600 / S&P 500

S&P Small Cap 600 S&P 500

40%

III

220

20%

200

Small caps growing faster

180

0%

IV

160

-20%

140

-40%

EPS Indexed to 100

120

V

-60%

100

2020

2021

2022

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

VI

Source: FactSet as of 12/31/20. P/E is price divided by earnings per share over last 12-months. Estimated EPS trajectory based on consensus estimates from FactSet.

26

V

Accelerating Change Style Wars

I • Innovation is accelerating across many areas of the economy, causing new products and services to diffuse through society faster and disrupt businesses at a greater pace • This may be a tailwind to growth companies, which we believe are the drivers of innovation, and a headwind to value stocks, which may be victims of change

II

Years from Market Entry to 50% Penetration

Years to Reach 1 Billion Users

III

IV

V

VI

Source: Asymco, Visual Capitalist, company disclosures, Alger estimates.

27

V

Structural Issues Driving Growth vs. Value Style Wars

• Growth stocks have dramatically outperformed Value stocks over the past decade

I

• The driver has been the very weak performance of the Price-to-Book valuation metric, which is used heavily in index classifications of Growth vs. Value stocks • As accounting fails to keep up with the changing economy, book value may no longer be as relevant (e.g., R&D is not capitalized in book value)

II

20%

III

10%

Style classification too dependent upon outdated book value

0%

-10%

IV

-20%

-30%

-40%

Russell 1000 Value / Growth

Cumulative Return

V

-50%

R² = 0.87

Low P/B

-60%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

VI

Source: FactSet, Kenneth R. French, and Alger as of December 2020. Low price-to-book returns are based on the B/P Frama/French factor for the CRSP universe which includes US firms listed on the NYSE, AMEX, or NASDAQ . The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

28

V

The Growth Advantage Style Wars

I • Three variables drive P/E multiples: growth, return on capital, and risk

• The Russell 1000 Growth Index has higher expected EPS growth, higher return on equity, and lower risk in the form of better balance sheets as compared to the Russell 1000 Value Index

II

Lower Risk

Higher Returns

Stronger Growth

Return on Equity

Net Debt / EBITDA

Long-Term EPS Growth

III

2.9x

29.7%

17.6%

IV

7.8%

8.7%

0.7x

V

Russell 1000 Growth

Russell 1000 Value

Russell 1000 Growth

Russell 1000 Value

Russell 1000 Growth

Russell 1000 Value

VI

Source: FactSet as of 12/31/20. Growth represents consensus long-term analyst estimates and actual future EPS growth rates might be materially different than the forecasts shown.

29

V

Winners vs. Losers Style Wars

• Analyst estimates suggest Growth stock fundamentals are accelerating relative to Value

I

Estimated Long-Term EPS Growth

II

Russell 1000 Value

Russell 1000 Growth

20%

The fundamental spread between growth and value companies is larger than normal

18%

16%

III

14%

12%

10%

IV

8%

6%

4%

V

2%

0%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

VI

Source: Long-term EPS growth represents consensus long-term analyst estimates and actual future EPS growth rates might be materially different than the forecasts shown.

30

V

Multiples vs. Fundamentals Style Wars

I • The large spread in fundamentals helps offset the elevated premium at which Growth stocks trade, making them cheaper per unit of growth

Russell 1000 Growth vs. Russell 1000 Value PEG Ratio

Russell 1000 Growth Relative to Russell 1000 Value P/E

II

225%

200%

Growth stocks are cheaper relative to long-term growth

III

175%

2.3x

150%

1.8x

125%

IV

100%

74%

Median: 41%

75%

50%

V

25%

0%

Russell 1000 Value

Russell 1000 Growth

1979 1984 1989 1994 1999 2004 2009 2014 2019

VI

Source: FactSet, Bank of America as of 12/31/20. PEG ratio is P/E divided by long-term growth rate. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

31

V

A Powerful New Investing Factor? Style Wars

• Studies have shown and our research demonstrates that the most innovative companies grow their sales, earnings, and stock prices faster*

I

Innovative Companies Have Outperformed Over the Past Decade

II

100%

Most Innovative +5% per year

80%

III

60%

40%

20%

IV

0%

-20%

V

Least Innovative -3% per year

Cumulative Excess Return

-40%

-60%

VI

Source: FactSet. Most/least innovative stock excess performance is derived from highest and lowest S&P 1500 quintiles based on R&D as % of sales, normalized for market value, using one month returns for 10 years ending November 2020. * Baruch Lev and Suresh Radhakrishnan, “The Stock Market Valuation of R&D Leaders.” The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

32

Disclosure

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of January 2021. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Risk Disclosures : Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Past performance is not indicative of future performance . Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments.

Important Information for US Investors : This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds.

Important Information for UK and EU Investors : This material is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations). It is for information purposes only and has been prepared and is made available for the benefit investors. This material does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorised or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees. The original recipient is solely responsible for any actions in further distributing this material and should be satisfied in doing so that there is no breach of local legislation or regulation.

Certain products may be subject to restrictions with regard to certain persons or in certain countries under national regulations applicable to such persons or countries.

Alger Management, Ltd. (company house number 8634056, domiciled at 78 Brook Street, London W1K 5EF, UK) is authorised and regulated by the Financial Conduct Authority, for the distribution of regulated financial products and services. FAM and/or Weatherbie Capital, LLC, U.S. registered investment advisors, serve as sub-portfolio manager to financial products distributed by Alger Management, Ltd. Alger Group Holdings, LLC (parent company of FAM and Alger Management, Ltd.), FAM, and Fred Alger & Company, LLC are not an authorized persons for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”) and this material has not been approved by an authorized person for the purposes of Section 21(2)(b) of the FSMA. Important information for Investors in Israel : This material is provided in Israel only to investors of the type listed in the first schedule of the Securities Law, 1968 (the "Securities Law") and the Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995. The Fund units will not be sold to investors who are not of the type listed in the first schedule of the Securities Law.

Fred Alger Management, LLC • 360 Park Avenue South, New York, NY 10010 • 800.992.3863 • www.alger.com

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Disclosure

The S&P 500 Index is an unmanaged index generally representative of the U.S. stock market without regard to company size. The S&P 500 Growth and Value style indices are weighted by float market capitalization and they measure the performance of U.S. equities fully or partially categorized as either growth or value stocks, as determined by Style Scores for each security. The S&P Composite 1500 is an unmanaged index that covers approximately 90% of the U.S. market capitalization. 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 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The MSCI AC Asia Pacific ex Japan Index captures large and mid cap representation across 4 of 5 Developed Markets countries (excluding Japan) and 9 Emerging Markets countries in the Asia Pacific region. TOPIX (Tokyo Stock Price Index) is a free-float adjusted market capitalization- weighted index that is calculated based on all the domestic common stocks listed on the Tokyo Stock Exchange First Section. The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index. The STOXX Europe 600 Index represents large, mid and small capitalization companies across 17 countries of the European region. The STOXX Europe Total Market Index represents the Western Europe region as a whole. It covers approximately 95 percent of the free float market capitalization across 17 European countries. The Ibbotson U.S. Intermediate-Term Government Bond Index is measured using a one-bond portfolio with a maturity near five years. The Morgan Stanley Capital International (MSCI) Emerging Markets Index (EM) is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. MSCI Emerging Markets Europe, Middle East and Africa Index (EAFE) is a free float-adjusted market-cap index that measures equity market performance in the emerging market countries of Europe, the Middle East and Africa. S&P SmallCap 600 Index is a market-value weighted index considered representative of small-cap US stocks. 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, LLC 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.

FactSet is an independent source, which Alger believes to be a reliable source. FAM, however, makes no representation that it is complete or accurate.

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Fred Alger Management, LLC • 360 Park Avenue South, New York, NY 10010 • 800.992.3863 • www.alger.com

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