Capital Markets:Observations and Insights

Spring 2020

Navigating Through a Crisis

Navigating Through a Crisis

1

Daniel C. Chung, CFAChief Executive Officer

Chief Investment Officer

Brad Neuman, CFASenior Vice President

Director of Market Strategy

Our firm has navigated seven recessions and countless crises, including the Global Financial Crisis, the

dot.com bubble burst, the Asian Financial Crisis, and September 11th during our more than 55 years of

investing in growth equities.

We believe that the lessons learned throughout these events are applicable during this current crisis. First, our

experience and research show that innovation grows through all kinds of economic volatility. Second, strong

competitive advantages often translate into expanded market shares in times of stress in the economy. Third,

in our view, liquidity and balance sheet flexibility are paramount so that great companies can survive and thrive

in the inevitable recovery.

Throughout these market changing events, equities, and in particular, equities of innovative companies that

aggressively capture market share and maintain strong balance sheets, have historically been highly resilient.

We continue to use our time-tested approach to seek companies that we believe are best positioned for

uncertain times.

Navigating Through a Crisis We highlight strategies for investing through very difficult economic environments.

Innovative companies with strong competitive advantages and solid balance sheets

are key to building wealth over time, in our view.

3

Lending vs. OwningWith interest rates at very low levels, stocks look attractive relative to bonds.

We believe equities will outperform fixed income over the long term.

10

Accelerating InnovationInnovation is speeding up and changing the way the economy behaves, increasingly

driving stock performance.

14

The ElectionIn our view, evidence suggests investing in innovation and fundamentals is likely to

outperform strategies that attempt to profit from policy changes.

18

Style WarsPowerful structural forces have caused Growth to diverge from Value. Investors

looking for a reversion to the mean may be disappointed.

22

ValuationEquity valuation may look attractive, particularly after accounting for low interest

rates and changing business models, which generate more cash relative to earnings.

26

Key Observations and Themes

2

I

II

III

IV

V

VI

I

VI

V

IV

III

II

I• Innovation flourishes even when the economy languishes

‒ Through the 1918-1919 “Spanish Flu” pandemic/recession, automobiles grew at a

double-digit rate, TV ownership increased strongly in the 1950s “Asian Flu”

pandemic/recession, and more recently PCs and smartphones grew through recessions

Innovation Triumphs Over Economic Volatility

Navigating Through a Crisis

Source: Diego Comin and Bart Hobijn “Historical Cross County Technology Adoption Dataset”; GSM Association; FactSet.

3

0

100

200

300

400

500

20

06

20

07

20

08

20

09

20

10

+335%

+9%

80

100

120

140

160

19

88

19

89

19

90

19

91

19

92

+43%

+4%

Personal Computer Penetration Grew

Through Early ‘90s RecessionGlobal Smartphone Subscribers Grew Through

Global Financial Crisis

U.S. Real GDP Index

U.S. PC Index

Recession

Global Real GDP Index

Global Smartphone Subscriber Index

Recession

I

VI

V

IV

III

II

I

Source: Axioma, FactSet. This analysis measures leverage after accounting for overall market sensitivity (Beta) as well as other factors so it is the pure impact of debt/leverage. The

performance data quoted represents past performance, which is not an indication or a guarantee of future results.

• In times of economic stress, we believe strong balance sheets are important:

‒ As cash flows decline, companies still able to invest can drive market share

‒ Corporations must not be overly reliant on capital markets to roll over debt

Balance Sheets Matter

Navigating Through a Crisis

4

Leverage Underperformed in the

Global Financial Crisis

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

Dec-0

7

Ma

r-08

Jun

-08

Sep-0

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Dec-0

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Cu

mu

lati

ve

Rela

tive

Fa

cto

r P

erf

orm

an

ce

Leverage Underperformed in the

Coronavirus Pandemic

-4%

-3%

-2%

-1%

0%

Dec-1

9

Jan

-20

Feb

-20

Ma

r-20

Cu

mu

lati

ve

Rela

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I• We believe strong moats or competitive advantages are always important

• However, in times of economic weakness, there is often more market share up for grabs,

making this attribute of the utmost importance, in our view

Competitive Advantage Is Critical

Navigating Through a Crisis

Source: Morningstar. 10-year annualized returns for the period ended March 2020. Performance reflects Morningstar indices. Morningstar defines a wide-moat company as having “a

sustainable competitive advantage that enables it to keep competitors at bay for an extended period of time.” The performance data quoted represents past performance, which

is not an indication or a guarantee of future results.

5

Performance Based on Degree of Competitive Advantage

Wide moats /

strong

competitive

advantages have

outperformed

6.5%

10.5%

12.0%

No Moat S&P 500 Wide Moat

I

VI

V

IV

III

II

I• Sentiment is an important factor in assessing the state of, and outlook for, the financial

markets. It can be gauged using the VIX Index, which measures the implied volatility of

S&P 500 Index options

• At extremes, this so-called “fear gauge” can be a contrarian signal to investors

Buy into Fear?

Navigating Through a Crisis

Source: FactSet and Alger. Data is for 30 years ending February 2020. The performance data quoted represents past performance, which is not an indication or a guarantee

of future results.

6

5.2%

21.9%19.3%

45.5%

31.9%

58.0%

1 Year 3 Years

VIX 20-30 VIX 30-40 VIX >40

Average S&P 500 Returns After Various VIX Levels

Higher anxiety has

been followed by

higher returns

I

VI

V

IV

III

II

I• In most periods, executives of companies are typically selling the stock that has been

awarded to them

• But when they are buying en masse, it may well be an important signal for investors

Follow the Executives

Navigating Through a Crisis

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

7

Record Insider Buying

Insider buying has

marked attractive

entry points

historically

-1000

-500

0

500

1000

1500

2000

Ne

t In

sid

ers

Bu

yin

g /

(S

ell

ing

)

S&P 500 +33% in next 12-months

S&P 500 +21% in next 12-months

I

VI

V

IV

III

II

I• A significant decline in aggregate earnings can be scary and can potentially move stock

prices violently

• However, we believe the value of a company (or group of companies) with stable, long-

term cash flows should not change much based on short-term cash flow fluctuations

Don’t Overreact

Navigating Through a Crisis

Source: Alger. Both values based on discounted cash flow using 7% cost of capital.

8

Value of $100 Per Year over

30 Years @ 7% Cost of Capital

$1,241

Value of $100 Per Year After Falling 40% in Year 1

and Gradually Returning to $100 for Years 4 to 30

$1,176 -5%

A 40% short-term

decline leads to

only a 5% reduction

in long-term value

I

VI

V

IV

III

II

I• While it is tempting to sell stocks for the relative safety of government bonds, history

suggests that stocks have outperformed over the long term

‒ Returns: over 20 year periods, stocks have outperformed bonds by almost 4% annually,

which equates to nearly a doubling cumulatively

‒ Risk: equity standard deviation drops from over 10 points more than bonds in one-year

periods to less than one percentage point more over 20-year periods

Take the Long-Term View

Navigating Through a Crisis

Source: Morningstar and Alger. Data is for 1950-2019 based on annual rolling periods. Stocks are S&P 500 and bonds are Ibbotson U.S. Intermediate Term Government Bond Index.

The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

9

67%74%

82%

100%

1-year 5-year 10-year 20-year

Percent of Time Stocks Outperform Bonds

Stocks have

consistently

outperformed

bonds over the

long term

II

VI

V

IV

III

I

II

• Over the past several years, and recently, as a result of the pandemic, investors have

been allocating away from equities and into government bonds and cash

Seeking Safety

Lending vs. Owning

Source: Morningstar, Investment Company Institute, Alger. Bond flows include taxable and municipals and stock flows include U.S. equity and international equity—all include passive

and ETF flows.

10

Investors Have Plowed Money into Bonds …And into Cash

0

200

400

600

800

1,000

1,200

1,400

Dec-1

6

Ma

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Sep-1

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Dec-1

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nd

Flo

w($

bil

lio

ns

)

Stocks Bonds

2,000

2,500

3,000

3,500

4,000

4,500

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07

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Mo

ney M

ark

et

Fu

nd

s

($ b

illi

on

s)

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II

VI

V

IV

III

II

More Cash in Your Pocket?

Lending vs. Owning

11

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

‒ The last time this occurred, stocks outperformed bonds by ~1,100 bps annually over the

following five years*

‒ 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

Source: FactSet, Robert Shiller, Alger. *S&P 500 returned 17.6% vs. 6.6% annually for the Ibbotson U.S. Long-Term Government Bond Index 11/30/08-11/30/13. The performance

data quoted represents past performance, which is not an indication or a guarantee of future results.

Similar Yields… …But Stock Dividends Can Grow!

0%

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95

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00

20

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20

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20

20

S&P 500 Div Yield 10-Yr Treasury Yield

-2%

0%

2%

4%

6%

8%

10%

12%

197

0

197

5

198

0

198

5

199

0

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200

5

201

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201

5

202

0Ro

llin

g 1

0-Y

r A

nn

ua

l G

row

th

S&P 500 Dividend Treasury Bond Coupon

II

VI

V

IV

III

I

II

• 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 grown an average of

nearly 7% annually, or over 90%, while a Treasury bond coupon does not grow

An Easy Choice?

Lending vs. Owning

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.

12

Equity “Yield” Is Attractive Relative to Treasuries… …And Equity EPS Can Grow!

-2%

0%

2%

4%

6%

8%

10%

12%

197

0

197

7

198

4

199

1

199

8

200

5

201

2

201

9Ro

llin

g 1

0-Y

r A

nn

ual

Gro

wth

S&P 500 EPS Treasury Bond Coupon

0%

4%

8%

12%

16%

19

70

19

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19

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19

85

19

90

19

95

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00

20

05

20

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15

20

20

S&P 500 Earnings Yield 10-Yr Treasury Yield

I

II

VI

V

IV

III

II

Many Happy Returns?

Lending vs. Owning

13

• There is a strong relationship between starting valuation and ensuing 10-year returns for

both stocks and bonds

‒ Current valuations suggest strong equity performance relative to bonds over the

coming decade

Source: FactSet. Each dot represents the P/E during that month and the returns generated over the subsequent 10 years. The starting P/E ratio is the price divided by the last 12-

month earnings per share estimate at the start of each 10-year period measured. Monthly data through March 2020, beginning in March 1990 for stocks and January 1986 for bonds.

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.

S&P 500 P/E vs.

10-Year ReturnsTreasury Bond Yield vs.

U.S. Aggregate Bond 10-Year Returns

0%

2%

4%

6%

8%

10%

12%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%-5%

0%

5%

10%

15%

20%

25%

5x 10x 15x 20x 25x 30x 35x

S&P 500 LTM Price/Earnings

S&

P 5

00 1

0-Y

ear

An

nu

alized

Retu

rn

R² = 0.75

= month R² = 0.90

Blo

om

berg

Barc

lays U

.S.

Ag

gre

gate

Bo

nd

10

-Year

An

nu

alized

Retu

rn

10-Year Treasury Bond Yield

= current

III

VI

V

IV

II

I

III

Stepping on the Gas

Accelerating Innovation

14

• Data has indicated that innovation is accelerating across many areas of the economy

• As a result, new products and services are diffusing through society faster, disrupting

businesses at a greater pace

Years from Market Entry to 50% Penetration Years to Reach 1 Billion Users

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

III

VI

V

IV

II

I

III

• Research has shown that technological revolutions occur continuously about every

half century

‒ We believe we are in the irruptive phase of a new revolution, the Age of Connected

Intelligence, when intelligent computing will be ubiquitous and pervasive

A New Era Emerges

Accelerating Innovation

Source: Carlota Perez, “Technological Revolutions and Financial Capital,” Edward Elgar Publishing, 2002; Alger.

15

The Lifecycle of Technological Revolutions

III

VI

V

IV

II

I

III

Growing Intelligence

Accelerating Innovation

16

• With artificial intelligence (AI) further penetrating software and services, it is no wonder

companies are increasingly discussing their plans for the technology with investors

• However, only a minority of companies are regularly talking about artificial intelligence,

indicating we are still in the early innings of the adoption of this technological revolution

Source: FactSet and Alger. Trailing 12-month average of number of companies mentioning “artificial intelligence” or “AI” on quarterly earnings conference calls.

Number of S&P 500 Companies Discussing AI on Earnings Calls

40

50

60

70

80

4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20

AI increasingly

driving corporate

strategy and

fundamentals

III

VI

V

IV

II

I

III

• Studies have shown and our research demonstrates that the most innovative companies

grow their sales, earnings, and stock prices faster*

Innovation as Wealth Creator

Accelerating Innovation

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 February 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.

17

-60%

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-20%

0%

20%

40%

60%

80%

100%

Cu

mu

lati

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Ex

ce

ss

Retu

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Least Innovative

-4% per year

Most Innovative

+6% per year

Innovative Companies Have Outperformed Over the Past Decade

IV

VI

V

III

II

I

IV

• The economy may be a good indicator of whether the incumbent will be re-elected

• A recession in the preceding two years has typically indicated a change in the Oval Office

It’s the Economy

The Election

Source: Bruce Mehlman: The Roaring 2020s and Alger.

18

Year CandidateRecession in Past

Two Years?Re-Elected?

2012 Obama

2004 GW Bush

1996 Clinton

1992 GH Bush X

1984 Reagan

1980 Carter X

1976 Ford X

1972 Nixon

1964 Johnson

1956 Eisenhower

1948 Truman

1944 Roosevelt

1940 Roosevelt

1936 Roosevelt

1932 Hoover X

IV

VI

V

III

II

I

IV

Meaningful Policy Changes? Not Without a Sweep

The Election

19

Source: Cook Political Report

Senate Signals? Head of the House?

• Democrats appear likely to retain control of

the House

• Republicans appear likely to retain control of

the Senate

217

193

25

Likely Democrat Likely Republican Toss-Up

4650

4

Likely Democrat Likely Republican Toss-Up

IV

VI

V

III

II

I

IV

• Fiscal stimulus and resulting larger deficits, through lower taxes or higher spending, are

increasingly acceptable to both parties, as evidenced by the recent coronavirus relief bill

‒ This may benefit the entire stock market more than many expect

Something in Common

The Election

Source: Alger.

20

Deficit Spending

Democrats Republicans

• Higher Taxes; Higher Wages

• Coalitions to Work

with Allies

• More Free Borders

• Gun Control

• Pro-Choice

• Government Health Care

• Environmental and Worker

Protection

• Lower Taxes

• America First/

Tariffs as Weapons

• Border Control

• Gun Rights

• Pro-Life

• Private Sector Health Care

• Reduced Regulations

IV

VI

V

III

II

I

IV

Fundamentals > Politics

The Election

21

• Domestically focused companies that should have benefitted from the administration’s

policies have actually underperformed while the most innovative companies outperformed

‒ Investors may want to consider secular growth companies irrespective of politics

Source: Alger using FactSet Alpha Testing. High domestic exposure is companies in highest quintile of U.S. sales as percent of total sales in S&P 500. Most Innovative Companies

are the highest quintile of R&D % of sales in the S&P 500. Both are normalized for sector exposure. The performance data quoted represents past performance, which is not an

indication or a guarantee of future results.

High Domestic Exposure

Most Innovative Companies

-6%

14%

-15%

-10%

-5%

0%

5%

10%

15%

Cum

ula

tive

Exce

ss R

etu

rn

V

VI

IV

III

II

I

V

Structural Issues Driving Growth vs. Value

Style Wars

22

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

• 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)

Source: FactSet, Kenneth R. French, and Alger through February 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.

-40%

-30%

-20%

-10%

0%

10%

201

0

201

1

201

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Cum

ula

tive

Retu

rn

Style classification

too dependent upon

outdated book value

Low P/B

Russell 1000 Value /

Growth

V

VI

IV

V

III

II

I

Risk Mitigation

Style Wars

Source: FactSet and Alger

23

• Understanding the downside to sales, earnings, and cash flows in a difficult economic

environment is key to understanding risk in portfolios

‒ Value stocks have often acted like sailboats that depend on the wind of economic

activity, while Growth stocks enjoy a secular motor to help protect against volatility

-60%

-40%

-20%

0%

20%

0 1 2 3 4 5 6 7 8 9 10 11 12

Ch

an

ge in

EP

S

Months After Beginning of 2001 Recession

S&P 500 Growth S&P 500 Value

-60%

-40%

-20%

0%

20%

0 1 2 3 4 5 6 7 8 9 10 11 12

Ch

an

ge in

EP

S

Months After Beginning of 2008 Recession

S&P 500 Growth S&P 500 Value

Look for Stocks Where Fundamentals May Prove Resilient

V

VI

IV

III

II

I

V

The Growth Advantage

Style Wars

24

• 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

Source: FactSet as of 3/31/20. Growth represents consensus long-term analyst estimates and actual future EPS growth rates might be materially different than the forecasts shown.

Long-Term EPS Growth

13.0%

7.3%

Russell 1000Growth

Russell 1000Value

29.0%

11.4%

Russell 1000Growth

Russell 1000Value

0.9x

2.8x

Russell 1000Growth

Russell 1000Value

Stronger Growth

Return on Equity

Higher Returns

Net Debt / EBITDA

Lower Risk

V

VI

IV

V

III

II

I• Growth stocks are beginning to look more expensive compared to their Value equity

counterparts, but we believe earnings of Value stocks will decline more significantly,

potentially reducing the valuation spread over the coming months

Oscillating Valuations

Style Wars

Source: FactSet, Bank of America as of 3/31/20. 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.

25

Russell 1000 Growth vs.

Russell 1000 Value PEG Ratio

Russell 1000 Growth Relative to

Russell 1000 Value P/E

0%

25%

50%

75%

100%

125%

150%

175%

200%

225%

1979 1984 1989 1994 1999 2004 2009 2014 2019Russell 1000

ValueRussell 1000

Growth

1.7x

1.6x

Growth

stocks are

cheaper

relative to

long-term

growth

Value is Attractive

Growth is Attractive

Median: 41%65%

VI

V

VI

IV

III

II

I• 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

Cheap Relative to Interest Rates

Valuation

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%).

26

Equity Risk Premiums Show Stocks Are Inexpensive

0%

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US World

Cheaper

More

Expensive

Es

tim

ate

d E

qu

ity R

isk

P

rem

ium

VI

V

VI

IV

III

II

I• The stock market looks cheaper on free cash flow than earnings

‒ Companies’ increasing investment in intangible assets (e.g., R&D), that are expensed

rather than capitalized, has depressed earnings relative to free cash flow

More than Meets the Eye

Valuation

Source: FactSet as of 3/31/2020. Note: Price-to-earnings is 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.

27

-5%

-19%

Price-to-Earnings Price-to-Free Cash Flow

S&P 500 Valuation Relative to Past 25-Year Median

Better free cash flow

generation makes

stocks look cheaper on

that metric than

earnings

VI

V

VI

IV

III

II

I• Small caps underperformed YTD (through

3/31/20) but have historically outperformed

by ~1,400 bps in the 12 months following

the trough of a recession*

Smaller Capitalization Stocks Look Attractive

Valuation

Source: FactSet. P/E is price divided by earnings per share over last 12-months. *Based on S&P 500 vs. Russell 2000 performance after stock market troughs during the past three

recessions: 12 months following 10/31/90, 9/30/01, 2/28/09, respectively. The performance data quoted represents past performance, which is not an indication or a

guarantee of future results.

28

Price-to-Earnings

Russell 2000 / Russell 1000Small Caps Have Outperformed in Recoveries

Performance One Year After Recession Trough

0%

20%

40%

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100%

120%

140%

160%

199

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0

Median

• Underperformance has compressed small

cap valuations as compared to history

24%

38%

S&P 500 Russell 2000

Large Caps More Attractive

Small Caps More Attractive

Disclosure

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and Alger Management Ltd. (together with their affiliated entities “Alger”) as of April

2020. 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 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 Alger.Risk Disclosures: Investing in the stock market involves

certain risks, and may not be suitable for all investors. Growth stocks tend to 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 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.

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

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 1000 Index is a stock market index that tracks the highest-ranking

1,000 stocks in the Russell 3000 Index, which represent about 90% of the total market capitalization of that index. 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 Bloomberg Barclays U.S. Aggregate Bond Index is a broad-

based benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The Ibbotson U.S. Intermediate-Term

Government Bond Index is an unweighted index which measures the performance of five-year maturity U.S. Treasury Bonds. The Ibbotson U.S. Long-Term

Government Bond Index is an unweighted index which measures the performance of twenty-year maturity U.S. Treasury Bonds. The Morningstar Wide Moat Index

is a float market cap weighted index of all securities in the Morningstar US Market Index with a ‘Wide Moat’ rating, which are those companies with “a sustainable

competitive advantage that enables it to keep competitors at bay for an extended period of time. . The Morningstar No Moat index consists of all securities in the

Morningstar US Market Index where Morningstar expects the company to be unable to achieve high returns on invested capital relative to cost of capital and has

little to no competitive advantage. The VIX index measure the market’s expectation of future volatility and is based on options of the S&P 500® Index.

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. Beta

measures a portfolio’s sensitivity to market movements relative to a particular index; a portfolio with a beta of 1.00 would be expected to have returns equal to such

index. Standard Deviation measures how much the portfolio’s return has deviated from its average historical return.

ALCAPPRESSPRP-0420

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