Small Cap Focus Fund Receives Silver

ALGER SMALL CAP FOCUS FUND RECEIVES SILVER

Alger Small Cap Focus Fund Morningstar Analyst Rating

Inspired by Change, Driven by Growth.

Reprinted by permission of Morningstar, May 17, 2018

Alger Small Cap Focus Z AGOZX An upgrade to Silver.

Morningstar's Take AGOZX

expansion into related markets. These characteristics can make for attractive acquisition targets, and indeed the fund sees several takeouts each year. Zhang’s process courts considerable price risk as the firms she favors often have lofty valuations relative to their current earnings. On the other hand, their typically modest debt/capital levels lessen the likelihood of a blowup. Zhang won’t sell a name just because it hits a certain revenue or market-cap threshold. She will, however, trim positions once a stock comes within 10% of her price target and exit when her investment thesis no longer holds. Annual turnover has come down since Zhang overhauled the portfolio in 2015, notching 76% in 2016 and dropping to 45% in 2017, below the small-growth category average of 75%. Turnover will likely remain around this level or drop even lower. Amy Zhang crafts a best-ideas portfolio of roughly 40-50 stocks. Top positions typically take up 3%-5% of assets and are capped at 8%. That keeps security- specific risk in check to a degree, but with 30%-40% of assets in its top 10 holdings, the fund is among the more concentrated in the small-growth category. The fund stays rooted in cash-rich firms with competitive advantages that provide for continued growth, including expansion into other markets. Top holding Veeva Systems VEEV has benefited from businesses moving to cloud-based solutions, as it occupies a niche spot in the life sciences software industry. Such firms come at a cost, however. As of February 2018, the fund’s trailing P/E ratio was 51.1, more than double the Russell 2000 Growth Index’s 23.7. The fund’s heavy exposure to tech and healthcare stocks is notable, a characteristic shared with Zhang’s former charge. The two sectors dominate the portfolio, averaging around 80% of assets since Zhang took over, but even here, Zhang’s attention to

Zhang’s preference for cash-rich companies with several years of operating history has helped avoid stock blow-ups.

QQQQ

Morningstar Rating

Morningstar Analyst Rating

True to the fund’s moniker, Zhang crafts a concentrated portfolio of 40-50 stocks and keeps roughly a third of the fund’s assets in the top 10 positions. Though turnover was high in her early days, attributable in part to the management transition, she invests with a three- to five-year horizon, and turnover dropped to 45% in 2017. Results have been solid with Zhang at the helm, and through April 2018, the fund soundly beat its Russell 2000 Growth Index benchmark, placing in the category’s top decile. The fund isn’t without risks, however. In addition to its sector concentration, it courts considerable price risks relative to peers, as Zhang’s preferred companies don’t come cheap. Indeed, the fund boasts some of the category’s highest trailing price ratios, though below-average debt levels provide some solace. Zhang’s strong start hasn’t gone unnoticed, as investors have begun pouring into the fund. Encouragingly, fees have fallen as the fund has grown and now provide an edge relative to peers. Investors seeking small-growth exposure should consider this option while it’s still open. Process Pillar ∞ Positive | Christopher Franz. CFA 05/15/2018 The fund’s revenue-centric, benchmark-agnostic approach earns a Positive Process Pillar rating. Rather than defining small companies primarily by market capitalization, which can be unduly influenced by investor expectations, manager Amy Zhang focuses on publicly traded firms with operating revenues of $500 million or less. She looks for those with healthy balance sheets, durable business models, and good prospects for long-term growth because their differentiated products or services satisfy emerging needs and enable

Morningstar Pillars Process

∞ Positive ∞ Positive ∞ Positive ¶ Neutral ∞ Positive

Performance

People Parent

Price

Role In Portfolio Supporting Fund Performance AGOZX Year

Total Return (%)

+/- Category

YTD 2017 2016 2015 2014

10.41 29.27

7.75 7.77 -2.72 4.70 -0.28

8.48 2.28 2.16

Datathrough4-30-18

5-15-18 | by Christopher Franz. CFA

Increased confidence in Alger Small Cap Focus manager Amy Zhang and her supporting team and strong results since her 2015 start merit an upgrade in the fund’s Morningstar Analyst Rating to Silver from Bronze. Though Zhang took over in February 2015, she’s no stranger to small caps. Prior to joining Alger, she was a key contributor at Gold-rated Brown Capital Management Small Company BCSIX, helping to amass one of the small-growth Morningstar Category’s best risk-adjusted records over her 12- plus year tenure as comanager. Alongside four dedicated analysts, Zhang plies a similar approach here, focusing on firms with operating revenues of $500 million or less whose differentiated products or services satisfy emerging needs. This distinct, revenue-centric approach leads to a portfolio full of healthcare and technology names, comprising nearly 80% of the fund as of March 2018. Though this positioning presents obvious sector-specific risk,

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Reprinted by permission of Morningstar, May 17, 2018

Kelly's Alger Capital Appreciation ALARX has also excelled, but the firm has had less success running other strategies. That could change, though. Proven small-cap manager Amy Zhang joined in early 2015, and Alger acquired Weatherbie Capital in early 2017 for its small/mid-cap growth expertise. Both Zhang and the Weatherbie team build benchmark-agnostic portfolios of about 50 stocks. These additions are promising, but Alger still has room for improvement. Fees are above average, and overall manager investment is weak. The firm receives a Neutral Parent Pillar rating. Price Pillar ∞ Positive | Christopher Franz. CFA 05/15/2018 This fund’s fees have dropped as it’s grown and now offer an advantage relative to small-cap peers, meriting a Positive Price rating. Manager Amy Zhang’s solid start hasn’t gone unnoticed. The fund has received steady inflows, including more than $150 million in 2018 through April. Fees have dropped as well and rank below average relative to comparably sold small-cap peers for most share classes. The A shares offer the best relative value; their 1.20% levy currently ranks in the cheapest quintile of small-cap, front-load funds. Assets have increasingly shifted toward the institutional Z share class; at 0.90%, it falls below the no-load median of 0.99%. A fee waiver on most share classes keeps the fund’s feesmore competitive than they would otherwise be, but Alger has indicated a willingness to keep costs competitive.

Prior to joining Alger and taking over this fund in mid- February 2015, Amy Zhang spent 12 years at Baltimore-based Brown Capital Management. There she helped Gold-rated Brown Capital Management Small Company BCSIX to one of the best records in the small-growth category, handily beating the Russell 2000 Growth Index with less risk. Zhang’s industry experience dates to the late 1990s, where she had a brief stint in credit derivatives before working as a global equity analyst at Templeton from 1998 to mid-1999 and then as a manager and analyst at Epsilon until she joined Brown in late 2002. While her experience is noteworthy, her personal investment in the fund is low, between $100,001 and $500,000. Zhang’s support staff has grown since she took over the fund and totals four dedicated analysts. Nidhi Chadda, a generalist with a background in consumer stocks, joined Alger in 2014 and began supporting Zhang in early 2016. Healthcare-focused Tom DeBourcy joined Zhang’s group in mid-2016 after joining Alger the year before. Zhang added software specialist Kyle Chen in 2016 and more recently research associate Caleb Huang from an internal training program. Though the supporting group’s tenure at Alger is short, they average 11 years’ industry experience. Parent Pillar ¶ Neutral | Christopher Franz. CFA 06/09/2017 Established in 1964 as a growth shop, privately held Fred Alger Management has overcome a great deal since the early 2000s. Its World Trade Center headquarters were decimated on 9/11, claiming the lives of most of the firm's investment staff, including David Alger, the founder's brother and manager of Alger Spectra SPECX, which Smart Money magazine praised as the most successful mutual fund of the 1990s. Alumni returned to help rebuild the firm, but soon afterward it was implicated in the market- timing and late-trading scandal of 2003. Alger settled those charges by 2007. With a bolstered compliance department, it has had a clean regulatory record since. Alger Spectra has returned to prominence, as it has consistently been a top-performing large-cap growth fund since manager Patrick Kelly took the helm in September 2004.

business fundamentals shows. She’s cautious about buying biotech firms, for example, because of their binary outcomes. The few biotech names she does own, such as Bio-Techne TECH and Repligen RGEN, feature low debt levels and generate positive cash flow. Though the fund does own some larger-cap stocks, such as mid-cap merchant platform Shopify SHOP, its average market cap is in line with the category. Performance Pillar ∞ Positive | Christopher Franz. CFA 05/15/2018 Manager Amy Zhang’s solid start, on both a total return and risk-adjusted basis, earns the fund a Positive Performance rating. Zhang took over in mid-February 2015, and through April 2018 the fund has returned nearly 15% annualized versus 10% for both the Russell 2000 Growth Index and small-growth category average. Risk-adjusted, the fund’s performance is equally strong; its Sharpe and Sortino ratios are comfortably ahead of the index and category average. These solid returns don’t come without risk, however. The fund’s massive healthcare and tech overweightings leave it prone to big swings in short-term performance whenever stocks in those sectors soar or sell off, evident in the fund’s bottom-quintile result in the sharp equity market correction from late December 2015 through mid-February 2016. Over the long haul, stock-picking should drive results here, as it did in Zhang’s 12-year tenure at Brown Capital Management Small Company BCSIX. That was the case in this fund’s 2017 result, where stock picks within Zhang’s favored tech sector (alongside the notable healthcare overweighting) led to a sizable gain over the fund’s bogy and average peer. Sector-specific and price risks notwithstanding, Zhang helped post superior results while keeping volatility in check at her former charge and has thus far demonstrated the same ability here.

People Pillar ∞ Positive | Christopher Franz. CFA 05/15/2018 A proven manager with extensive expertise in small caps earns the fund a Positive People Pillar rating.

© 2018 Morningstar, Inc. All rights reserved. The Morningstar name is a registered trademark of Morningstar, Inc.

This article reprint, originally published by Morningstar on May 15, 2018, is considered sales literature for theAlger funds mentioned only and not for any other products shown. Please note that Morningstar is an independent publication and the performance and ratings cited in the article do not represent the experience of any individual investor. For the period ending March 31, 2018, theAlger Small Cap Focus Fund (the“Fund”) returned the following: Average Annual Total Returns (%) (as of 3/31/18) YTD 1 Year 3 Years 5 Years Since Inception Alger Small Cap Focus Class Z (incepted 12/29/10) 7.46 27.95 12.76 14.29 12.59 Russell 2000 Growth Index 2.30 18.63 8.77 12.90 12.10 Morningstar Percentile Rank (Small Growth) Based on Total Returns — 10% 70/684 9% 52/592 13% 63/531 — Total Annual Fund Operating Expenses (Prospectus Dated 3/1/18) 0.90% Only periods greater than 12months are annualized. Prior to 8/07/15,the Fund followed different investment strategies under the name“Alger Growth Opportunities Fund”and prior to 2/12/15 was managed by a different portfoliomanager.Ac- cordingly,performance prior to those dates does not reflect the Fund’s current investment strategies and investment personnel.Effective 8/07/15,the Fund’s primary benchmark is Russell 2000 Growth Index. Z shares are available to certain investors with an initial investment minimumof $500,000.Please consult the prospectus for more information. The performance data quoted represents past performance, which is not an indication or a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. Performance figures assume all distri- butions are reinvested. For performance current to the most recent month end, visit www.alger. com or call 800.992.3863. Risk Disclosures: Investing in the stock market involves gains and losses and may not be suitable for all investors.The value of an investment may move up or down, sometimes rapidly and unpredictably, and may be worth more or less than what you invested. Stocks tend to be more volatile than other investments such as bonds. 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. Investing in companies of small capitalizations involve the risk that such issuers may have limited product lines or financial resources, lack management depth, or have more limited liquidity.The Fund may have a more concentrated portfolio than other funds, so it may be more vulnerable to changes in the market value of a single issuer and may be more susceptible to risks associated with a single economic, political or regulatory occurrence than a fund that has a more diversified portfolio. Since the Fund concentrates its investments in the health sciences sector, the value of the Fund’s shares may be more volatile than those that do not similarly concentrate their investments. Changes in applicable regulations could adversely affect companies in these industries, and the pace of product development and technological advancement in comparative companies may result in greater volatility of the price of secu- rities of such companies. Many technology companies have limited operating histories and prices of these companies’securities have historically been more volatile than other securities due to increased competition, government regulation, and risk of obsolescence due to the progress of technological developments.The Fund may have a significant portion of its assets invested in securities of healthcare companies, which may be significantly affected by intense competition, aggressive pricing, government regulation, technological innovations, product obsolescence, patent considerations, product compatibility and consumer preferences, and may be more volatile than the securities of other companies.The cost of borrowing money to leverage may exceed the returns for the securities purchased or the securities purchased may actually go down in value more quickly than if the Fund had not borrowed. Foreign invest- ing involves special risks including currency risk and risks related to political, social, or economic conditions. The Russell 2000® Growth Index is an unmanaged index designed to measure the performance of the 2,000 smallest companies in the Russell 3000® Index with higher price-to-book ratios and higher forecasted growth values.The Russell 3000 Index measures the performance of the 3,000 largest U.S. companies based on the total market capitalization, which represents 99% of the U.S. equity market. Investors cannot invest directly in any index. Index performance does not reflect deductions for fees, expenses or taxes. Note that comparing the performance to a different index might have materially different results than those shown.Any views and opinions expressed herein are not meant to provide investment advice and there is no guarantee that they will come to pass. Morningstar calculates a Morningstar RatingTM based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance.The top 10% of the 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. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Morningstar Rating TM may differ among share classes of a mutual fund as a result of different sales loads and/or expense structures. It may be based, in part, on the performance of a predecessor fund.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.Alger Small Cap Focus Fund Class Z were rated 4, 4, and 3 Star(s) for the 3-, 5-, and 10-year periods among 592, 531, and 402 Small Growth funds as of 3/31/18. The Morningstar ratings and rankings are displayed for informational purposes only and should not be relied upon when making investment decisions. ©2018 Morningstar, Inc.All Rights Reserved.The information contained herein: (1) is proprietary to Morningstar and its content providers; (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.When an expense waiver is in effect, it may have a material effect on the total return or yield, and therefore the ranking and/or rating for the period. Past performance is no guarantee of future results. Investors should not consider references to individual securities as an endorsement or recommendation to purchase or sell such security.Transactions in such securities may be made that seemingly contra- dict the references to them for a variety of reasons, including, but not limited to, liquidity to meet redemptions or overall portfolio rebalancing. Holdings are subject to change. Morningstar percentile rankings are based on the total return percentile rank that includes reinvested dividends and capital gains (excluding sales charge) within each Morningstar Category.The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. If sales charges were included performance would be lower and the rank may be lower. The Morningstar Analyst Rating is not a credit or risk rating. It is a subjective evaluation performed by the manager research analysts of Morningstar. Morningstar evaluates funds based on five key pillars, which are process, performance, people, parent, and price.Analysts use this five pillar evaluation to determine how they believe funds are likely to perform over the long term on a risk-adjusted basis.They consider quantitative and qualitative factors in their research, and the weighting of each pillar may vary.The Analyst Rating scale is Gold, Silver, Bronze, Neutral, and Negative.AMorningstar Analyst Rating of Gold, Silver, or Bronze reflects an Analyst’s conviction in a fund’s prospects for outperformance.Analyst Ratings are continuously monitored and reevaluated at least every 14 months. If a fund receives a positive rating of Gold, Silver, or Bronze, it means Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years. Gold: Best-of-breed fund that distinguishes itself across the five pillars and has garnered the analysts’highest level of conviction. Silver: Fund with advantages that outweigh the disadvantages across the five pillars and with sufficient level of analyst conviction to warrant a positive rating. Bronze: Fund with notable advantages across several but perhaps not all of the five pillars—strengths that give the analysts a high level of conviction. Neutral: Fund that isn’t likely to deliver standout returns but also isn’t likely to significantly underperform, according to the analysts. Negative: Fund that has at least one flaw likely to significantly hamper future performance and that is considered by analysts an inferior offering to its peers. As of March 31, 2018,Alger’s assets under management: Veeva Systems Inc. 0.30%, Bio-Techne Corp. 0.24%; Shopify Inc. 0.08%; Repligen Corp. 0.06%. Before investing, carefully consider the Fund’s investment objective, risks, charges, and expenses. For a prospectus and summary prospectus containing this and other information, or for the Fund’s most recent month-end performance data, visit www.alger.com, call (800) 992-3863, or consult your financial advisor. Read the prospectus and summary prospectus carefully before investing. Distributor: Fred Alger & Company, Incorporated, Member NYSE Euronext, SIPC. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.

Fred Alger & Company, Incorporated 360 Park Avenue South, New York, NY 10010 / 800.992.3863 / www.alger.com

MSAZANALYR-0518

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