investment manager summary · 4/13/2016 · investment manager summary management firm name fred...

Item No. 14: Annual Presentation by Fred Alger Management, Inc. – Large-Cap Growth Manager (April 13, 2016, Regular Retirement Board Meeting)

INVESTMENT MANAGER SUMMARY

MANAGEMENT Firm Name Fred Alger & Company, Inc. Manager Tenure with Fund 12 Years Investment Strategy/Vehicle Large-Cap Growth Equity Contract Expiration 07/31/2018

ASSETS Total Firm AUM (12/31/2015) $22.1 Billion Total Firm Assets in Strategy (12/31/2015) $863.7 Million Total Assets Managed for WPERP (02/29/16) RP - $407.2 Million

HP - $68.4 Million

PERFORMANCE As of 02/29/2016 1 Year 3 Year 5 Year Inception

Fred Alger LCG (gross) -12.15% 10.67% 7.79% 7.59% Fred Alger LCG (est. net) -12.40% 10.36% 7.48% 7.23% Russell 1000 Growth Index -5.05% 12.54% 10.95% 7.31% Difference (net of fees) -7.35% -2.18% -3.47% -0.08%

FEES Schedule 28.5 bps on all assets

WATCH STATUS Recommended for short-term performance watch status April 13, 2016.

14

Los Angeles Department of Water & Power

April 13, 2016

1. Company Overview

2. Investment Process and Discipline

3. Market Overview

4. Performance Review

5. Portfolio Review and Characteristics

6. Fee Schedule

7. Additional Information and Disclosure

8. Appendix

9. Glossary of Investment Terms

Los Angeles Department of Water & PowerTable of Contents

For Institutional Presentation Purposes Only. Not for Distribution to the Public.

Presenters’ Biographies


Peter LataraSenior Vice President, Institutional Sales & ServicePeter Latara is Senior Vice President in Institutional Sales & Service. He joined Alger in 2004 and has 19 years ofexperience. Peter develops and manages relationships with both potential and existing institutional clients. He startedhis career at Alger as Vice President in Institutional Sales, where he was primarily responsible for relationshipmanagement as well as leading our initiatives in the middle market. Before joining Alger, he was with Gabelli AssetManagement for over eight years and was a major contributor to their institutional business and closed-end fundbusiness. Previously, Peter was with Black, Manafort, Stone & Kelly and at Alliance Capital Management Corp. Heearned a B.A. in Economics/Political Science from Emory University and an M.B.A. in Finance from the University ofMaryland Robert H. Smith School of Business.

Daniel C. Chung, CFA®

Chief Executive Officer, Chief Investment Officer, Portfolio ManagerDaniel C. Chung is Chief Executive Officer, Chief Investment Officer and Portfolio Manager of several Algerstrategies. Dan joined Alger in 1994 and has 22 years of investment experience. He was named Chief InvestmentOfficer in September 2001, President in 2003, and CEO in 2006. Dan graduated from Stanford University with B.A.and B.S. degrees, with Distinction and Phi Beta Kappa, in 1984. He earned his J.D. magna cum laude from HarvardLaw School in 1987, where he was an editor of the Harvard Law Review. After law school, he served as law clerk forthe Honorable Justice Anthony M. Kennedy, United States Supreme Court. He joined Simpson Thacher & Bartlett LLPin New York City in 1989 and earned an L.L.M. from New York University. Dan is a CFA charterholder and a memberof the CFA Institute. Throughout his tenure at Alger, Dan has made numerous TV appearances on Bloomberg, CNBC,and Fox Business. Dan has also been featured and quoted frequently in Barron’s, Citywire, Forbes, Investment News,Pensions & Investments, USA Today, and the Wall Street Journal.

1.0

We seek to uncover these opportunities through our:

• Singular focus on growth investing

• Vibrant, fundamental research-intensive culture

• Consistent process, time-tested for over 50 years

Company OverviewFred Alger Management, Inc.


We believe that the greatest opportunity for superior returns comes from a portfolio comprised of dynamically changing and fast-growing companies

• Hired in February 2004 to run a Large Cap Growth Equity mandateMandate:

Firm:

1.1


Total Assets Under Management

Numbers may not add up to totals exactly due to rounding.

Alger Category Strategy Institutional/Offshore Intermediary Total

Large Cap

• Capital Appreciation• Capital Appreciation Focus• Growth & Income• Large Cap Growth• Spectra

$10,449 $8,867 $19,317

Mid Cap• Mid Cap Focus• Mid Cap Growth• SMid Cap Growth

$339 $733 $1,071

Small Cap • Small Cap Focus• Small Cap Growth $555 $325 $879

International• Emerging Markets• Global Growth• International Growth

$31 $285 $316

Alternatives • Dynamic Opportunities (Long/Short) $64 $120 $184

Specialty

• Balanced• Green• Health Sciences• Other

$75 $272 $347

$11,514 $10,601 $22,115

As of 12/31/15

1.2

Company OverviewOrganizational Structure

OwnershipAlger Associates, Inc. is 100% owned by members of the Alger family. Alger Associates, Inc. is theowner of 100% of the shares of Fred Alger Management, Inc., which was formed in 1964. Inaddition, Alger has created various programs that allow key employees to participate in the long-termfinancial success of the Firm. These programs are The Alger Partners Plan and The Alger ProfitParticipation Plan. The Alger Partners Plan was approved by the Board on December 31, 2009 and,collectively for all participants, represents over 15% of the value of the Firm. Current members ofThe Alger Partners Plan include Dan Chung, CFA, CEO, CIO, Portfolio Manager; Ankur Crawford,Ph.D., Senior Analyst, Portfolio Manager; Jill Greenwald, CFA, Portfolio Manager; Patrick Kelly, CFA,Portfolio Manager, Head of Alger Capital Appreciation & Spectra Strategies; Hal Liebes, COO, ChiefLegal Officer; and James Tambone, Chief Distribution Officer. The Alger Profit Participation Planallows key Alger employees to create personal wealth from the growth in Alger by participating in theFirm’s investment and earnings results. Currently, approximately 34% of Alger’s employeesparticipate in the program including all senior investment team members.

Organizational StructureFred Alger Management, Inc. is led by the following executive officers:

• Daniel C. Chung, CFA, Chief Executive Officer and Chief Investment Officer• Hal Liebes, Chief Operating Officer and Chief Legal Officer• James Tambone, Chief Distribution Officer• Robert Kincel, Chief Financial Officer• Patrick Murphy, Chief Compliance Officer• Robert Isacco, Director of Human Resources

1.3


Alger’s Senior Investment Professionals

Pedro Marcal SVP, Portfolio Manager 26 Years of Experience

Jill Greenwald, CFA* EVP, Portfolio Manager 29 Years of Experience

Patrick Kelly, CFA EVP, Portfolio Manager, Head of Alger Capital Appreciation and Spectra Strategies 18 Years of Experience

Deborah Vélez Medenica, CFA SVP, Portfolio Manager 19 Years of Experience

Gregory S. Adams, CFA SVP, Portfolio Manager, Director of Quantitative & Risk Management 28 Years of Experience

Amy Y. Zhang, CFA SVP, Portfolio Manager 18 Years of Experience

Ankur Crawford, Ph.D. SVP, Senior Analyst, Portfolio Manager 11 Years of Experience

Daniel C. Chung, CFA CEO, Chief Investment Officer 21 Years of Experience

As of 3/15/16. *On temporary medical leave.

Kevin D. Collins, CFA SVP, Client Portfolio Manager 23 Years of Experience

William Rechter, CFA SVP, Client Portfolio Manager 44 Years of Experience

1.4

• One team, one process, supporting all portfolios

• Hire passionate, creative, and resilient people

• Diverse academic, financial services, and direct industry backgrounds

• Alger Training Program renowned for developing talent in “The Alger Way”

As of 3/15/16


Research Is the Foundation of Our Investment Process

Industry/Sector and Country/Regional Expertise

Role Total Number Average Years

of Experience

Senior Analyst 7 18

Analyst 15 15

Associate Analyst 5 9

Research Associate 6 1

A Deep and Experienced Research Team

• Broad expertise across the economic spectrum, geography, and market capitalization

• Culture of communication with open-door policy fostering continuous collaboration

• Shared research database and weekly global investment team meeting

Research Team Coverage

Technology/Telecom

Consumer

Health Care

Industrials

Energy/Materials/Utilities

Financials

Developed Non-U.S. Markets

Emerging Markets

Generalists

1.5


Assets by Channel

A Well-Balanced Array of Clients

Representative Clients

Public Funds • City of Lake Worth Employees’ Retirement System • City of Taylor (MI) Police and Fire Retirement System • City of Wichita Retirement Systems • Dallas/Fort Worth International Airport Board • Greater Orlando Aviation Authority Defined Benefit Pension Plan • Kansas City Public School Retirement System • Los Angeles Department of Water & Power • Oklahoma Firefighters Pension & Retirement Fund • Philadelphia Gas Works • Riviera Beach Police Pension Fund • Schuylkill County Employees Retirement Fund

Taft-Hartley • Carpenters Pension Trust Fund for Northern California • Iron Workers Mid-South Pension Fund • Laborers' District Council Construction Industry Pension Plan • Maritime Association—ILA Pension & Welfare Funds • Milk Drivers & Dairy Employees Local 264 Pension Fund • New Orleans Employers ILA, AFL-CIO Pension Fund • Operating Engineers Local No. 77 Pension Trust Fund • Plumbers and Steamfitters Local 486 Pension Fund • Teamsters Pension Trust Fund of Philadelphia & Vicinity • Waterfront Employers—ILA Pension Fund

Foundation/Endowment • Kern Family Foundation • Purdue Research Foundation • Saint Thomas Church • The Lutheran Foundation

Socially Responsible • Congregation of Our Lady of the Cenacle • Dominican Convent of Our Lady of the Rosary • Ursuline Sisters of Tildonk • Wisdom Charitable Trust

Sub-Advisory • ABN AMRO Multi-Manager Funds • AON Hewitt Group Trust

Corporate • Kaiser Permanente • Navistar, Inc.

Intermediary (51%)††

Non-U.S. (13%)

Institutional (49%)*

Separate Accounts by Client Type

Sub-Advisory (32%)

Foundation/Endowment (7%)

Taft-Hartley (18%) Corporate (24%)

Public (19%)

Socially Responsible (2%)

Assets breakdown as of 12/31/15. Representative clients as of 12/31/15. *Institutional includes separate accounts and institutional share classes of Alger mutual funds. ††Intermediary includes Alger mutual funds and Separately Managed Accounts (SMA). Entities listed above represent advisory clients of Fred Alger Management, Inc. or investors in the mutual funds advised by Fred Alger Management, Inc. These clients and investors were selected on the basis of being well known to the public and not on any performance based criteria. Inclusion on the list should not be viewed as an endorsement of Alger’s strategies.

1.6

Portfolio Management Daniel C. Chung, CFAChief Executive Officer, Chief Investment Officer, Portfolio [email protected]

Kevin Collins, CFASenior Vice President, Client Portfolio [email protected]

Client RelationsPeter Latara Michael LynamSenior Vice President, Institutional Sales & Service Vice President, Institutional Sales & [email protected] [email protected]

Chelsea CharetteAssistant Vice President, Institutional Sales & [email protected]

Consultant RelationsMeredith Genova NicolaescuVice President, Institutional Sales & [email protected]

William Rechter, CFASenior Vice President, Client Portfolio [email protected]

Address: 360 Park Avenue South, New York, NY 10010 Phone: (212) 806-8800

Company OverviewKey Contacts

For Institutional Presentation Purposes Only. Not for Distribution to the Public. 1.7


Alger’s Investment Philosophy

• We believe companies undergoing Positive Dynamic Change offer the best investment opportunities for our clients

• Our competitive edge is identifying these companies and capitalizing on the change before it is recognized by the market

• We embrace change found in “traditional” growth companies and in companies experiencing a “growth renaissance”

These “traditional”

growth companies

have growing

revenues, growing

unit volume,

increasing market

share, and an

expanding business A catalyst drives

these companies to

experience a

“growth

renaissance,”

resulting in an

improving

earnings trajectory

leading to P/E

expansion

2.0

“On an annual basis, the Manager is expected to outperform the Russell 1000 Growth Index return, net of fees, to be measured over a market cycle of three to five years”

– as stated in Los Angeles Department of Water & Power Guidelines

Investment Process and DisciplineInvestment Objective

2.1

NEW IDEAS Analysts identify companies experiencing dynamic change in their sectors and regions to generate potential investment ideas

ANALYSIS Analysts perform in-depth company analysis to develop a differentiated view supported by detailed financial models and stress-tested for a range of potential outcomes

DIALOGUE Analysts present their ideas to portfolio managers and have their investment thesis and assumptions challenged

CONSTRUCTION Portfolio managers construct portfolios of the highest conviction ideas while managing risk

Risks are collaboratively managed by analysts, portfolio managers, the Director of Quantitative and Risk Management, and compliance MONITORING


Alger’s Investment Process

Our investment process has been consistently applied for over 50 years

2.2


Stock Analysis

Original Research to Build a Differentiated View

• Link fundamentals explicitly to valuation and stock-specific risk factors

• Assess company fundamentals using detailed, proprietary financial models and a variety of valuation methods

• Stress test base case price targets for both upside surprise and downside risk

• Monitor the investment thesis and stock price after the initial inclusion in the portfolio, potentially buying on weakness or selling on strength

• Analysts leverage industry/sector and country/regional expertise to identify potential change beneficiaries

• Develop a differentiated view of a company’s total market and ability to execute its business model

• Quantify insights in detailed income, balance sheet, and cash flow models specific to a company’s key drivers

Time

BULL CASE

BASE CASE

BEAR CASE Current

Price

Pri

ce

BULL, BEAR, AND BASE CASE

Public Documents

ANALYST

Customers Suppliers

Competitors Partners

Mgmt Interviews

Stress Test Valuation Based on Key Stock Drivers

2.3

• Alger’s culture of communication

‒ Open-door policy

‒ Weekly global investment team meetings

‒ Shared database for notes on every contact about a company

• Alger’s investment teams typically meet weekly

‒ Review portfolios

‒ Discuss in-progress research

‒ Set future research priorities

• Portfolio Managers makes final decisions on portfolio construction


Portfolio Manager and Analyst Dialogue

Dialogue Analyst Portfolio

Manager

Alger’s investment teams leverage the deep industry/sector and country/regional

knowledge of Alger’s analysts

2.4


Portfolio Construction

Portfolio construction seeks to balance reward and risk through in-depth knowledge

of companies, broadly diversified holdings, and portfolio characteristics

Buy decisions and position size are based on:

– Highest conviction, relative investment opportunity

– Portfolio constraints

Sell decisions are based on:

– Stock achieving its target price

– Company experiencing deteriorating fundamentals

– New idea with greater reward/risk potential

Risk

Reward

Buy

&

Sell

2.5

Trading

• Five person in-house desk

• Charles River order management trading system

- All trades placed through system- Automates pre-trade/post trade compliance

• Continual communication between portfolio manager and trading desk

• Independent monitoring of trading

- Monthly Trading Practices Committee review- 3rd party (SJ Levinson/Abel Noser) analysis

Investment Process and DisciplineInvestment Process

2.6

Objective:• On an annual basis, the Manager is expected to outperform the Russell 1000 Growth Index

return, net of fees, to be measured over a market cycle of three to five years

Guidelines:• It is expected that the portfolio will be fully invested (<5% cash) at all times

• No more than 5% of the Portfolio, at the lesser of cost or market value, shall be invested in any one issue, unless that issue represents more than 5% of the Russell 1000 Growth Index. In such cases, the maximum amount allowed is 125% of the benchmark weight.

• Equity securities are limited to those issues listed on the New York, American, NASDAQ, or other nationally recognized U.S. Stock Exchange

Restrictions:• Foreign securities (except for Benefit Driven Incorporation (BDIs) included in the U.S. Russell

1000 Index)

• ADRs

• Short sales

• Futures

• Use of non-approved derivative securities (equity futures and forward contracts)

• Purchase of securities on margin• Direct investment in raw commodities

Investment Process and DisciplineInvestment Guidelines and Restrictions

2.7

CO M M E N TA RY

Listen to Dan as he discusses Alger’s optimistic outlook for equities.

www.alger.com/Dchung

Rather than react to the changing whims of investor sentiment, Alger selects stocks based on in-depth fundamental research that seeks to identify companies that are likely to benefit from changes such as emerging technologies, medical advancements, new regulations, corporate restructuring, and mergers and acquisitions. Our robust research also provides us with insights that often result in our firm generating an outlook for a stock or sector that is differentiated from the “street.”

In a recent podcast, Alger Chief Executive Officer and Chief Investment Officer Dan Chung discussed Alger’s optimistic outlook for equities. In this Q&A, he elaborates on this outlook and identifies developments that are likely to support stocks in the near future.

Q What factors have driven market performance in the aftermath of the Global Financial Crisis and what factors do you think investors will focus on going forward?

A In the past few years, investors’ focus on central banks providing liquidity has been extraordinary. Fundamentals have also played a key part in the recovery of the equity market. We believe fundamentals have been attractive, but we think investors’ focus on liquidity has been misguided with the U.S. Federal Reserve having lost control of interest rates. In December, the Fed raised the fed funds rate, the first increase since June of 2006. This decision followed the central bank’s earlier actions to end quantitative easing. Despite the December increase, Treasury bond interest rates declined early in 2016, which illustrates that market forces and not the Fed are in control. As the Fed continues to normalize rates and becomes less of a driver of investor sentiment, we believe investors will increasingly focus on corporate fundamentals and determine that stocks are the best option in the investment world.

Q Why haven’t more investors embraced equities?A Recent uncertainty resulting from the change in Fed policy has driven volatility in

equity markets, which can be unsettling for investors. At the same time, I think investors who have flocked to bonds and cash subscribe to a faulty premise that the drop in oil prices and a decline in earnings among energy companies will cause massive losses among banks that have exposure to commodity producers and companies that provide services to the energy sector. Many investors are viewing those fears from the perspective of having weathered the failure of global financial institutions during the 2008 Financial Crisis.

Investors may eventually realize that banks are unlikely to experience a financial contagion, or a repeat of 2008 and 2009. The banking system in the U.S. has been shored up considerably since the crisis and banks are much stronger now than in the years leading up to that event. During those years, banks expanded their balance sheets with excessive exposure to real estate securities right up until the crisis. They had also loosened lending standards for consumers and businesses that were overextended with debt that was held on banks’ balance sheets. When the real estate market finally burst, banks paid a heavy penalty. Banks today have stronger balance sheets, with tangible common equity being the highest it’s been in over 30 years, and

Daniel Chung, CFA

C H I E F E X E C U T I V E O F F I C E RC H I E F I N V E S T M E N T O F F I C E R

FUNDAMENTALS POINT TO POTENTIAL EQUITY GAINS

March 2016

Market Update

3.0

COMMENTARY 2/4

lending standards are much tighter. Risks of losses and a dislocation of the bond market, furthermore, have been shifted to a substantial extent to the bond market. The real estate recovery, meanwhile, is continuing at what we believe is a sustainable pace, aided by consumers who have reduced their debt service to rates not seen in 30 years. (See chart “Americans’ Debt Service Level is at a 30-Year Low.”)

I believe that investors will eventually conclude that the bond market is in a bubble. Even Bill Gross, who is nicknamed “The Bond King,” has expressed concerns over the bond market and has shortened his portfolio duration. Corporate bonds are trading at the equivalent of approximately 19 times earnings and government debt is trading at more than 30. The S&P 500 index, in comparison, is trading at a P/E of 15.2 based on forward earnings expectations compared to a median P/E of 16.0 since 1995. The S&P also has an earnings yield of 6%. Today, the S&P 500 earnings yield is higher than an investment grade bond. That is very rare from a 50-year point of view. Clearly, there is, in my view, little reason to believe that U.S. equities and equities from many other countries, including emerging markets, are overvalued.

Q What other characteristics are likely to make equities appealing among investors?

A We maintain that corporate fundamentals are strong. That is especially true with what we consider the core of the U.S. economy, which includes technology, consumer discretionary, financials, health care, and industrials. More specifically, S&P 500 earnings per share ex energy and materials grew 6.3% last year and are expected to grow at a similar rate this year. Growth has occurred despite a currency headwind of several hundred basis points over the past couple of years. A potential investor handoff from bonds to equities may also be driven by investors’ attraction to the potential for corporations to increase their dividends as earnings grow. Most bonds, of course, provide a fixed payment over their lifetime.

Investors may eventually realize that banks are unlikely to experience a financial contagion, or a repeat of 2008 and 2009. The banking system in the U.S. has been shored up considerably since the crisis and banks are much stronger now than in the years leading up to that event.

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Source: U.S. Federal Reserve

Debt Service as a Percentage of Disposable Personal Income

3.1

With those points in mind, we continue to have an optimistic view of equities. In one possible scenario, equity valuations relative to bond valuations would move closer to historical standards and earnings growth expectations would materialize. If those changes occur, the S&P could generate returns in the mid-teens compounded over two years.

Q What other tailwinds for equities exist?A Declining oil prices have weighed heavily upon equities, but we think lower energy costs

will be a net positive for the economy by cutting expenses for businesses and consumers. Energy cost savings, combined with a tight labor market supporting both wage increases and rising home values, are likely to support increased consumer spending. With new housing starts considerably below historical averages, the residential real estate recovery is likely to continue, in part because many millennials have delayed buying homes, which has created pent-up demand.

The scope and rapid pace of innovation in the U.S. is also a positive for equities, especially when viewed from a historical perspective. As discussed in Alger’s “The Impact of Innovation Deflation,” white paper and podcast, new products are quickly capturing market share, thereby helping corporations to grow their earnings while creating cost savings for consumers and businesses. Kitchen stoves, which were introduced in 1750, took 187 years to reach 50% market penetration and washing machines took approximately 60 years. Today, innovative products gain traction in the blink of an eye with smartphones and social media reaching the 50% threshold in 16 and 9 years respectively.1

Q What are the possible consequences for investors who sell equities during periods of market volatility?

A Investors who have been selling equities during market downturns may be making a very large mistake. The Global Financial Crisis illustrates the likely downside of selling equities during market declines with hopes of avoiding additional loses. Many investors sold at or near the market bottom and then failed to get back in the equity market quickly as stocks recovered. The Global Financial Crisis is a reminder that market corrections can be painful, but they can also be short lived, with the decline of 2008 and 2009 lasting less than nine months.

Q Will the transition of investors focusing on fundamentals instead of central bank liquidity have any impact on active versus passive investing?

A We believe market conditions are likely to be favorable for active portfolio management. At Alger, our in-depth research seeks leading companies that are likely to grow earnings by benefiting from large-scale changes, including unprecedented levels of innovation. At the same time, we seek to avoid old-school companies, such as brick and mortar retailers. Broadly speaking, those retailers are quickly losing market share to industry disrupters, including online retailers. Market benchmarks don’t discern between winners and losers of innovations and other trends, so passive investors may miss attractive opportunities that rapidly arise as a result of change and also have exposure to companies with outdated business models and weakening earnings.

Since we at Alger seek companies that are capable of growing their earnings, our portfolios tend to be weighted toward the most innovative and most promising growth parts of our economy, such as technology, health care, and consumer discretionary sectors, while being underweight energy and materials relative to the S&P 500. The difference is even more significant when compared to value indexes, which tend to have even less exposure to innovative and growing sectors of the U.S. economy. Additionally,

1 Source: Asymco

COMMENTARY 3/4

In one possible scenario, equity valuations relative to bond valuations would move closer to historical standards and earnings growth expectations would materialize. If those changes occur, the S&P could generate returns in the mid-teens compounded over two years.

3.2

as investors shift their focus away from central bank liquidity and increasingly seek companies with strong corporate fundamentals, the disparity in performance among companies that are capable of growing their earnings and companies that are losing market share to industry disrupters is likely to widen. The shift in investors’ focus to fundamentals is likely to be highly beneficial for investors like Alger and our clients.

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

COMMENTARY 4/4

The shift in investors’ focus to fundamentals is likely to be highly beneficial for investors like Alger and our clients.

DCPMQA031603.02.16

Asymco is a technology consulting firm. The S&P 500 index: An index of large company stocks considered representative of the U.S. stock market. Investors cannot invest directly in an index. Index performance does not reflect deduction for fees, expenses, or taxes.

The views expressed are the views of Fred Alger Management, Inc. as of March 2016. 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. Investing in foreign securities involves risks related to the political, social, and economic conditions of foreign countries, particularly emerging market countries. These risks may include political instability, exchange control regulations, expropriation, lack of comprehensive information, national policies restricting foreign investment, currency fluctuations, less liquidity, undiversified and immature economic structures, inflation and rapid fluctuations in inflation, withholding or other taxes, and operational risks. Special risks associated with investments in emerging country issuers include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and different auditing and legal standards. Foreign currencies are subject to risks caused by inflation, interest rates, budget deficits and low savings rates, political factors and government controls. Some of the countries may have restrictions that could limit the access to investment opportunities. The securities of issuers located in emerging markets can be more volatile and less liquid than those of issuers in more mature economies. Investing in emerging markets involves higher levels of risk, including increased information, market, and valuation risks, and may not be suitable for all investors.

Before investing, carefully consider a fund’s investment objective, risks, charges and expenses. For a prospectus or a summary prospectus containing this and other information about a fund, call us at (800) 992-3863 or visit us at www. alger.com. Read it carefully before investing. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE. Fred Alger & Company, Incorporated, Distributor. Member NYSE Euronext, SIPC.

3.3

Guidelines:• It is expected that the portfolio will be fully invested (<5% cash) at all times Yes• No more than 5% of the Portfolio, at the lesser of cost or market value, shall be invested

in any one issue, unless that issue represents more than 5% of the Russell 1000 Growth Index. In such cases, the maximum amount allowed is 125% of the benchmark weight. Yes

• Equity securities are limited to those issues listed on the New York, American,NASDAQ, or other nationally recognized U.S. Stock Exchanges Yes

Restrictions:• Foreign securities (except for Benefit Driven Incorporation (BDIs) included in the U.S.

Russell 1000 Index) Yes• ADRs Yes• Short sales Yes• Futures Yes• Use of non-approved derivative securities (equity futures and forward contracts) Yes• Purchase of securities on margin Yes• Direct investment in raw commodities Yes

Performance ReviewInvestment Guidelines

4.0

Performance ReviewPerformance Comparison (as of February 29, 2016)

2004 (2/17/04 - 12/31/04) 3.33% 3.04% 2.05%2005 11.18% 10.82% 5.26%2006 4.28% 3.94% 9.07%2007 33.64% 33.21% 11.81%2008 -46.80% -46.98% -38.44%2009 47.47% 47.01% 37.21%2010 19.62% 19.23% 16.71%2011 -4.13% -4.46% 2.64%2012 15.31% 14.95% 15.26%2013 37.31% 36.92% 33.48%2014 11.74% 11.42% 13.05%2015 1.95% 1.66% 5.67%

2016 1st Quarter (through 2/29/16) -8.69% -8.69% -5.62%YTD -8.69% -8.69% -5.62%

Inception-To-Date* 7.44% 7.11% 7.17% -0.06%10 Years 7.51% 7.17% 7.74% -0.57%5 Years 7.86% 7.53% 10.95% -3.42%3 Years 10.78% 10.46% 12.54% -2.08%2 Years -0.54% -0.83% 5.06% -5.89%1 Year -11.89% -12.14% -5.05% -7.09%

*Inception date: 2/17/04

Excess Return

Annualized Returns for the Period Ending 2/29/16

Los Angeles Department of Water & Power Employees'

Retirement Plan Gross of Fees

Los Angeles Department of Water & Power Employees'

Retirement Plan Net of Fees

Russell 1000 Growth

4.1


2009 (9/11/09 - 12/31/09) 9.88% 9.77% 9.49%2010 19.50% 19.11% 16.71%2011 -3.97% -4.29% 2.64%2012 15.38% 15.03% 15.26%2013 37.35% 36.97% 33.48%2014 11.77% 11.45% 13.05%2015 2.03% 1.74% 5.67%

2016 1st Quarter (through 2/29/16) -8.71% -8.71% -5.62%YTD -8.71% -8.71% -5.62%

Inception-To-Date* 11.99% 11.66% 13.55% -1.89%5 Years 7.95% 7.62% 10.95% -3.33%3 Years 10.83% 10.52% 12.54% -2.02%2 Years -0.50% -0.78% 5.06% -5.84%1 Year -11.86% -12.11% -5.05% -7.06%

Russell 1000 Growth Excess Return

Annualized Returns for the Period Ending 2/29/16

*Inception Date: 9/11/09

Los Angeles Department of Water & Power Retiree

Health Benefits Fund Gross of Fees

Los Angeles Department of Water & Power Retiree

Health Benefits Fund Net of Fees

4.2

LADWP Employees’ Retirement Plan (Gross)LADWP Employees’ Retirement Plan (Net)Russell 1000 Growth IndexInception: 2/17/04


‐15%

‐10%

‐5%

0%

5%

10%

15%

Year‐to‐Date 1 Year 2 Years 3 Years 5 Years 10 Years Inception‐To‐Date(2/29/16)

4.3

‐15%

‐10%

‐5%

0%

5%

10%

15%

Year‐to‐Date 1 Year 2 Years 3 Years 5 Years Inception‐To‐Date(2/29/16)

LADWP Employees’ Retiree Health Benefits Fund Plan (Gross)LADWP Employees’ Retiree Health Benefits Fund Plan (Net)Russell 1000 Growth IndexInception: 9/11/09


4.4

eVestment Alliance, LLC and its affiliated entities (collectively, “eVestment”) collect information directly from investment management firms and other sources believed to be reliable, however, eVestment does not guarantee or warrantthe accuracy, timeliness, or completeness of the information provided and is not responsible for any errors or omissions. Performance results may be provided with additional disclosures available on eVestment’s systems and otherimportant considerations such as fees that may be applicable. Not for general distribution and limited distribution may only be made pursuant to client’s agreement terms. * All categories not necessarily included, Totals may not equal100%. Copyright 2012-2016 eVestment Alliance, LLC. All Rights Reserved. 4.5

Characteristic PortfolioRussell

1000 Growth

Market Cap (Weighted Average) $127.6B $128.1B

Market Cap (Median) $11.9B $8.3B

Estimated Earnings Growth – 1Year 13.5% 8.4%

P/E (1 Year Forecasted) 19.5x 17.3x

3–5 Year EPS Growth (Forecasted) 16.0% 11.9%

Price/Cash Flow 18.3x 16.6x

Holdings 81 638

Summary Characteristics

Sector PortfolioRussell

1000 Growth

ActiveWeight

Information Technology 37.4 27.6 9.8

Consumer Discretionary 21.9 21.3 0.6

Health Care 12.7 16.1 -3.4

Financials 8.4 5.5 2.9

Industrials 8.2 11.0 -2.8

Consumer Staples 4.9 12.1 -7.2

Telecommunication Services 0.9 2.4 -1.5

Materials 0.7 3.4 -2.7

Energy 0.4 0.5 -0.1

Utilities 0.0 0.1 -0.1

Cash 4.5 0.0 4.5

Sector Weights (%)Summary Characteristics

Performance ReviewSector Weightings and Characteristics (as of February 29, 2016)

Data included as supplemental information. Alger uses The Global Industry Classification Standard (GICS®) for categorizing companies into sectors and industries. GICS is designedto meet the needs of the investment community for a classification system that reflects a company’s primary business model as determined by its financial performance. P/E Ratio is aweighted harmonic average based on consensus earnings estimates for the next 12 months; Revenue growth metrics represent a weighted median based on consensus earningsestimates for the next 12 months/last 12 months.Source: Factset

4.6

Performance Review1 Year Sector Attribution Summary (as of February 29, 2016)

Russell 1000 Growth Variation Attribution Analysis

GICS Sector MappingAverage Weight

Total Return

Contribution to Return

Average Weight

Total Return


Average Weight

Total Return


Allocation Effect

Selection +Interaction

Total Effect

Industrials 7.60 -6.49 -0.46 11.18 -9.78 -1.04 -3.58 3.29 0.58 0.13 0.26 0.39

Materials 1.20 -11.96 -0.13 3.70 -16.01 -0.61 -2.49 4.06 0.47 0.20 0.13 0.34

Telecommunication Services 1.05 -25.35 -0.32 2.09 5.38 0.14 -1.04 -30.72 -0.46 -0.10 -0.41 -0.51

Consumer Discretionary 18.32 -3.64 -0.19 20.43 0.48 0.02 -2.11 -4.12 -0.22 0.04 -0.58 -0.54

Utilities 0.47 -80.10 -0.60 0.06 -7.63 -0.01 0.41 -72.47 -0.59 -0.11 -0.52 -0.63

Consumer Staples 5.68 1.44 0.11 10.93 6.47 0.74 -5.25 -5.03 -0.63 -0.58 -0.32 -0.90

Energy 2.04 -57.79 -1.37 1.95 -49.05 -0.38 0.09 -8.74 -0.98 -0.70 -0.26 -0.96

Health Care 18.34 -18.68 -3.20 16.22 -11.02 -2.26 2.12 -7.66 -0.93 0.21 -1.40 -1.18

Financials 6.26 -33.99 -1.91 5.24 -8.50 -0.48 1.03 -25.49 -1.42 0.04 -1.39 -1.35

Information Technology 37.49 -9.00 -3.82 28.21 -4.20 -1.18 9.27 -4.79 -2.64 0.02 -1.63 -1.61

[Cash] 1.57 0.18 0.00 -- -- -- 1.57 0.18 0.00 0.14 -- 0.14

Total 100.00 -12.14 -12.14 100.00 -5.06 -5.06 -- -7.08 -7.08 -0.96 -6.12 -7.08

Source: Factset

LADWP

4.7

Performance Review1 Year Top Ten Contributors and Detractors (as of February 29, 2016)

Top 10 Absolute Contributors Top 10 Absolute DetractorsAverage Portfolio

AllocAlger

Return

Average Bench Alloc

Bench Return

Alger Abs Contrib (bps)

Average Portfolio

AllocAlger

Return

Average Bench Alloc

Bench Return

Alger Abs Contrib (bps)

Facebook Inc. Class A 4.55 35.52 1.85 35.39 132 Apple Inc. 7.43 -23.39 6.44 -23.34 -161

Amazon.com Inc. 2.64 22.38 1.84 45.34 55 SunEdison Inc. 0.79 -86.93 0.02 -91.06 -105

Alphabet Inc. Class C 4.24 22.98 1.74 25.30 47 LendingClub Corp 1.15 -51.69 0.01 -55.57 -78

Dealertrack Technologies Inc. 0.18 58.19 -- -- 33 Anadarko Petroleum Corporation 0.98 -55.67 0.01 -2.77 -67

Home Depot Inc. 1.69 5.76 1.47 10.36 26 Wisdomtree Investments Inc. 1.09 -30.17 -- -- -66

Cigna Corporation 0.65 17.83 0.24 14.82 26 LinkedIn Corporation Class A 0.37 -59.75 0.22 -56.14 -54

Coach Inc. 0.21 35.74 0.04 -6.98 24 GrubHub Inc. 1.00 -39.52 -- -- -50

Molson Coors Brew ing Company Class B 0.64 21.09 -- -- 22 Biogen Inc. 1.24 -17.03 0.73 -36.66 -45

Stamps.com Inc. 0.09 15.62 -- -- 22 Devon Energy Corporation 0.56 -41.14 -- -- -45

Edwards Lifesciences Corporation 0.58 33.45 0.15 30.81 21 Demandware Inc. 0.80 -43.49 -- -- -43

Source: Factset

4.8

During the twelve months ending February 29, 2016, the Los Angeles Department of Water & Power’s LargeCap Growth portfolio returned -11.89% (gross of fees) compared to a return of -5.05% for the Russell 1000Growth Index. On average for the period, the largest weightings at the sector level were Information Technology,Health Care, and Consumer Discretionary. The largest sector overweight for the period was in InformationTechnology and the largest sector underweight for the period was in Consumer Staples. The Industrials andMaterials sectors contributed to relative performance, while Information Technology, Financials, and HealthCare detracted from the portfolio’s relative performance. The top absolute contributors at the stock level wereFacebook Inc. Class A, Amazon.com Inc., Alphabet Inc. Class C, Dealertrack Technologies Inc., and HomeDepot Inc. Conversely, detracting from overall results were Apple Inc., SunEdison Inc., LendingClub Corp,Anadarko Petroleum Corporation, and Wisdomtree Investments Inc..

Performance OverviewExplanation for Performance vs. the Benchmark

4.9

Company Portfolio Weight Sector

Russell 1000

Growth

Apple Inc. 6.3 Information Technology 5.6

Alphabet Inc. Class C 5.6 Information Technology 2.1

Facebook, Inc. Class A 4.9 Information Technology 2.3

Amazon.com, Inc. 3.6 Consumer Discretionary 2.1

Microsoft Corporation 3.6 Information Technology 2.4

Norwegian Cruise Line Holdings Ltd. 2.2 Consumer Discretionary 0.1

LendingClub Corp 2.0 Financials 0.0

Intuitive Surgical, Inc. 1.9 Health Care 0.2

Wisdomtree Investments, Inc. 1.9 Financials 0.0

Home Depot, Inc. 1.9 Consumer Discretionary 1.6

Total 33.9 16.4

Portfolio Review and CharacteristicsTop Ten Holdings (as of February 29, 2016)

Source: Factset

Top 10 Holdings (%)

5.0

Portfolio Review and CharacteristicsPortfolio Holdings by Sector (as of February 29, 2016)

LADWPR1000

Growth LADWPR1000

Growth LADWPR1000

GrowthConsumer Discretionary 21.9 21.3 Industrials 8.2 11.0 Cash 4.5 0.0

Amazon.com, Inc. 3.6 2.1 Danaher Corporation 1.0 0.1CBS Corporation Class B 1.2 0.2 Delta Air Lines, Inc. 1.0 0.4Chipotle Mexican Grill, Inc. 1.0 0.2 HD Supply Holdings, Inc. 1.6 0.1 Total 100.0 100.0Coach, Inc. 0.7 0.0 Hexcel Corporation 0.9 0.0Comcast Corporation Class A 0.7 1.3 Honeywell International Inc. 1.3 0.8Discovery Communications, Inc. Class A 0.2 0.0 Stericycle, Inc. 0.6 0.1Hanesbrands Inc. 0.2 0.1 TransDigm Group Incorporated 0.6 0.1Home Depot, Inc. 1.9 1.6 Verisk Analytics Inc 1.2 0.1Lennar Corporation Class A 0.9 0.0Live Nation Entertainment, Inc. 0.5 0.0Michael Kors Holdings Ltd 0.5 0.1 Information Technology 37.4 27.6Netflix, Inc. 1.5 0.4 Adobe Systems Incorporated 0.8 0.4Norwegian Cruise Line Holdings Ltd. 2.2 0.1 Alphabet Inc. Class C 5.6 2.1Panera Bread Company Class A 0.9 0.1 Apple Inc. 6.3 5.6Priceline Group Inc 1.1 0.7 CoStar Group, Inc. 0.4 0.1Ralph Lauren Corporation Class A 0.7 0.0 Demandware, Inc. 0.3 0.0Shake Shack, Inc. Class A 1.4 0.0 Electronic Arts Inc. 0.5 0.2Signet Jewelers Limited 0.9 0.1 Euronet Worldwide, Inc. 0.8 0.0Tesla Motors, Inc. 0.5 0.2 Facebook, Inc. Class A 4.9 2.3Tiffany & Co. 0.5 0.1 FLIR Systems, Inc. 1.7 0.0Time Warner Inc. 0.9 0.3 GrubHub, Inc. 0.8 0.0

Guidewire Software, Inc. 0.7 0.0Juniper Networks, Inc. 1.0 0.0

Consumer Staples 4.9 12.1 Microsemi Corporation 1.4 0.0Kraft Heinz Company 1.2 0.5 Microsoft Corporation 3.6 2.4Kroger Co. 1.2 0.4 salesforce.com, inc. 0.6 0.5Molson Coors Brewing Company Class B 0.9 0.0 ServiceNow, Inc. 0.7 0.1TreeHouse Foods, Inc. 0.7 0.0 Skyworks Solutions, Inc. 1.3 0.1WhiteWave Foods Company 0.9 0.1 Stamps.com Inc. 1.2 0.0

Take-Two Interactive Software, Inc. 0.5 0.0Trimble Navigation Limited 0.8 0.0

Energy 0.4 0.5 TubeMogul, Inc. 1.4 0.0Anadarko Petroleum Corporation 0.4 0.0 Ultimate Software Group, Inc. 0.4 0.1

Vantiv, Inc. Class A 0.5 0.1Visa Inc. Class A 1.4 1.4

Financials 8.4 5.5Affiliated Managers Group, Inc. 1.2 0.1American Express Company 0.5 0.1 Materials 0.7 3.4AvalonBay Communities, Inc. 1.4 0.0 Air Products and Chemicals, Inc. 0.7 0.2Blackstone Group L.P. 1.5 0.0LendingClub Corp 2.0 0.0Wisdomtree Investments, Inc. 1.9 0.0 Telecommunication Services 0.9 2.4

SBA Communications Corporation 0.9 0.1

Health Care 12.7 16.1Biogen Inc. 0.9 0.6 Utilities 0.0 0.1Bristol-Myers Squibb Company 1.4 1.0Celgene Corporation 1.3 0.8Edwards Lifesciences Corporation 0.6 0.2Eli Lilly and Company 0.6 0.7Gilead Sciences, Inc. 1.1 1.3Hologic, Inc. 1.0 0.1Incyte Corporation 0.4 0.1Intuitive Surgical, Inc. 1.9 0.2Neogen Corporation 0.4 0.0Pacira Pharmaceuticals, Inc. 0.6 0.0Thermo Fisher Scientific Inc. 0.7 0.2Veeva Systems Inc Class A 0.5 0.0Vertex Pharmaceuticals Incorporated 1.2 0.2

5.1

*Beginning balance is as of inception (Retirement 2/17/04, Health Benefit Fund 9/11/09) ``````

LADWP Retirement Plan Health Benefits Fund

Beginning Balance* $243,664,121 $43,098,188

Contributions $70,102,466 $6,593,876

Withdrawals -$291,719,175 -$37,300,327

Investment Return $385,136,506 $56,016,284

Ending Balance (2/29/16) $407,183,918 $68,408,021

Portfolio Review and CharacteristicsPortfolio Asset Change Analysis (as of February 29, 2016)

5.2

Characteristic PortfolioRussell

1000 Growth

Market Cap (Weighted Average) $127.6B $128.1B

Market Cap (Median) $11.9B $8.3B

Estimated Earnings Growth – 1Year 13.5% 8.4%

P/E (1 Year Forecasted) 19.5x 17.3x

3–5 Year EPS Growth (Forecasted) 16.0% 11.9%

Price/Cash Flow 18.3x 16.6x

Holdings 81 638

Summary Characteristics

Sector PortfolioRussell

1000 Growth

ActiveWeight

Information Technology 37.4 27.6 9.8

Consumer Discretionary 21.9 21.3 0.6

Health Care 12.7 16.1 -3.4

Financials 8.4 5.5 2.9

Industrials 8.2 11.0 -2.8

Consumer Staples 4.9 12.1 -7.2

Telecommunication Services 0.9 2.4 -1.5

Materials 0.7 3.4 -2.7

Energy 0.4 0.5 -0.1

Utilities 0.0 0.1 -0.1

Cash 4.5 0.0 4.5

Sector Weights (%)Summary Characteristics

Performance ReviewSector Weightings and Characteristics (as of February 29, 2016)

Data included as supplemental information. Alger uses The Global Industry Classification Standard (GICS®) for categorizing companies into sectors and industries. GICS is designedto meet the needs of the investment community for a classification system that reflects a company’s primary business model as determined by its financial performance. P/E Ratio is aweighted harmonic average based on consensus earnings estimates for the next 12 months; Revenue growth metrics represent a weighted median based on consensus earningsestimates for the next 12 months/last 12 months.Source: Factset

5.3

We use a bottom-up, stock selection process. Any sector or industry weighting is a residual of our bottom-up stock selection process. As of February 29, 2016, stock selection resulted in the portfolio being overweight in the Information Technology, Financials, and Consumer Discretionary sectors. Underweight sectors included Energy, Utilities, Telecommunication Services, Materials, Industrials, Health Care, and Consumer Staples.

Portfolio Review and CharacteristicsExplanation for Sector Diversification vs. the Benchmark

5.4

Portfolio Review and CharacteristicsPortfolio Characteristics (as of February 29, 2016)

Characteristics

# of Holdings 81 638Wtd Avg Mkt Cap ($B) $127.6 $128.1Median Market Cap ($B) $11.9 $8.3Div Yield 1.0% 1.7%P/E (12M Trailing) 20.8x 18.2xP/E (12M Forward) 19.5x 17.3xPrice/Book 4.3x 5.4xPrice/Sales 2.5x 1.9xPrice/Cash flow 18.3x 16.6x1 Yr EPS Growth 13.5x 8.4xHist 3 Yr EPS Growth 50.7% 46.2%Est 3-5Yr EPS Growth 16.0% 11.9%ROE 20.5% 27.7%

Source: FactSet

Portfolio Commissions

12-month trailing commissions as of 2/29/16: $1,420,323.18 3.24¢ avg cost per share

BenchmarkPortfolio

5.5

Portfolio Review and CharacteristicsPortfolio Characteristics (as of February 29, 2016)

Risk (Benchmark: Russell 1000 Growth)

LADWP

Tracking Error 1.36%Annualized Std Dev 13.09%Relative Volatility 1.18xCorrelation 0.94Beta 1.10R-Squared 87.86Annualized Alpha -2.82Jensen's Alpha -2.86Information Ratio -0.42Sharpe Ratio 0.81Treynor Ratio 9.59Highest Excess Return 8.06%Lowest Excess Return -3.30%1 Year Turnover 248%

Source: FactSet, based on monthly returns from 2/28/13 through 2/29/16, unless noted otherwise

5.6

6

7

8

9

10

11

14 15 16 17 18 19 20

Return (%

)

Standard Deviation (%)

LADWP Russell 1000 Growth

Return Std. Dev.LADWP Ret. 7.51 18.00R1000 Growth 7.74 15.33

Portfolio Review and CharacteristicsRisk/Return Chart – 10 Years ending (as of February 29, 2016)

5.7

0.285%

Annual Fee on all Assets

Fee Schedule

6.0

In September 2015, Vikram Khullar, CFA joined Alger as Senior Analyst covering the Technology sector. Vikram has 17 years of investment experience.

In February 2015, Alger Management, Ltd. began a joint partnership with La Française, an international multi-class asset manager. This alliance offers the opportunity to create synergies in distribution, market development, and product diversification. La Française, through its European network and with the support of its majority shareholder, Credit Mutuel Nord Europe, provides distribution capabilities and acceleration capital, and Alger contributes its recognized expertise in growth equities.

Additional Information and Disclosures

7.0

In July 2011, a lawsuit was filed against Fred Alger Management, Inc., among others, by a former Fred Alger Management, Inc. employee alleging among other things that she was wrongfully discharged. Fred Alger Management, Inc., as well as the other parties to the suit moved to dismiss this complaint on the basis of its belief that the allegations fail to state a case. On September 27, 2012, 9 of 10 claims brought were dismissed. Alger remains convinced that this remaining claim is without merit. Fred Alger Management, Inc. does not consider this case to be material to its operations or financial condition.

Additional Information and Disclosures

7.1

Appendix

8.0

Senior Investment Professional Biographies

Daniel C. Chung, CFA Chief Executive Officer, Chief Investment Officer, Portfolio Manager Investment experience: 21 years

Daniel C. Chung is Chief Executive Officer, Chief Investment Officer and Portfolio Manager of several Alger strategies. Dan joined Alger in 1994 and has 21 years of investment experience. He was named Chief Investment Officer in September 2001, President in 2003, and CEO in 2006. Dan graduated from Stanford University with B.A. and B.S. degrees, with Distinction and Phi Beta Kappa, in 1984. He earned his J.D. magna cum laude from Harvard Law School in 1987, where he was an editor of the Harvard Law Review. After law school, he served as law clerk for the Honorable Justice Anthony M. Kennedy, United States Supreme Court. He joined Simpson Thacher & Bartlett LLP in New York City in 1989 and earned an L.L.M. from New York University. Dan is a CFA charterholder and a member of the CFA Institute. Throughout his tenure at Alger, Dan has made numerous TV appearances on Bloomberg, CNBC, and Fox Business. Dan has also been featured and quoted frequently in Barron’s, Citywire, Forbes, Investment News, Pensions & Investments, USA Today, and the Wall Street Journal.

Jill Greenwald, CFA* Executive Vice President, Portfolio Manager Investment experience: 29 years

Jill Greenwald is Executive Vice President and Portfolio Manager of the Alger SMid Cap Growth strategies and, along with Amy Zhang, the Alger Small Cap Growth strategies. She first joined Alger in 1986 and has 29 years of investment experience. Jill, who returned to Alger in 2001, began her career in Alger's analyst program, rising from Research Associate to Senior Analyst. She joined Prudential Equity Investors in 1992 where she was a Director. In 1993, she joined Chase Asset Management where she rose from Analyst to Managing Director and Senior Portfolio Manager of Chase Vista Small Cap Equity Fund and Co-Manager of Chase Vista Small Cap Opportunities Fund. She joined J&W Seligman & Co. as a Senior Vice President, Investment Officer and Co-Manager of Seligman Emerging Growth in 1999. Jill earned a B.A. from Yale University and M.B.A. from New York University. Jill is a CFA charterholder and a member of the CFA Institute.

Patrick Kelly is Executive Vice President, Portfolio Manager and Head of Alger Capital Appreciation and Spectra Strategies. He is Portfolio Manager of the Alger Capital Appreciation, Alger Capital Appreciation Focus, Alger Spectra, and Alger Dynamic Opportunities strategies. He joined Alger in 1999 and has 18 years of investment experience. Previously, Patrick was an investment banking analyst with SG Cowen. He began his career at Alger as a Research Associate and completed Alger’s in-house analyst training program. In early 2001, Patrick was promoted to Associate Analyst and Assistant Vice President, and in September of 2001 he was promoted to Senior Analyst, responsible for the Technology sector. Patrick was named portfolio manager of the Alger Capital Appreciation and Alger Spectra strategies in September 2004, and was named as head of the strategies in 2015. He graduated with honors from Georgetown University. Patrick is a CFA charterholder and a member of the CFA Institute.

Patrick Kelly, CFA Executive Vice President, Portfolio Manager, Head of Alger Capital Appreciation and Spectra Strategies Investment experience: 18 years


*On temporary medical leave.

8.1

Alex Goldman is Senior Vice President, Senior Analyst covering the industrials sector, and a Portfolio Manager of the Alger Mid Cap Focus as well as Alger Mid Cap Growth strategies. He joined Alger in 2011 and has 17 years of investment experience, most recently as a research analyst at CastleRock Management. He has also served in various roles at Morgan Stanley in the Equity Financing Services, Risk Management Group, and Sell-Side Research Department. Alex earned his B.S. from Columbia University School of Engineering and Applied Science and his M.B.A. from Columbia University School of Business.

Alex Goldman Senior Vice President, Senior Analyst, Portfolio Manager Investment experience: 17 years

Gregory Adams is a Senior Vice President, Portfolio Manager of the Alger Dynamic Opportunities strategy, the Alger Growth and Income strategy, and Director of Quantitative & Risk Management. Greg joined Alger in 2006 and has 28 years of experience. Previously, he was Director of Quantitative Research at Lord Abbett & Co., and was responsible for portfolio construction simulation and quantitative stock selection. Over the course of his career, Greg was Managing Director and Portfolio Manager at Deutsche Asset Management and The Chase Manhattan Bank. At Deutsche, where he managed over $10 billion in assets, he was the lead Portfolio Manager for the U.S. Large Cap Core Funds, including Scudder’s flagship

Growth & Income Fund. Greg began his tenure at Chase in 1987 as an equity analyst and was promoted to Co‐Manager of the Chase Vista Balanced Fund and the Chase Vista Growth & Income Fund, managing over $2 billion during his tenure. In 1994, Greg was named Manager of the Chase Vista Large Cap Equity Fund. Greg earned a B.A. in American History from the University of Pennsylvania’s School of Arts & Sciences and a B.S. in

Economics and Finance from The Wharton School. Greg is a CFA charterholder and a member of the CFA Institute.

Gregory S. Adams, CFA Senior Vice President, Portfolio Manager, Director of Quantitative & Risk Management Investment experience: 28 years

Ankur Crawford, Ph.D. Senior Vice President, Senior Analyst, Portfolio Manager Investment experience: 11 years

Ankur Crawford is Senior Vice President, Senior Analyst, and Portfolio Manager of the Alger Capital Appreciation, Alger Spectra, and Alger Mid Cap Growth strategies. Ankur joined Alger in September 2004 and has 11 years of investment experience. She began her career at Alger as a Research Associate and completed Alger’s in-house analyst training program. Over the next several years, Ankur was promoted to Associate Analyst, Analyst, and then ultimately to Senior Analyst. Ankur also became a portfolio manager to the Alger Mid Cap Growth strategies in 2010. In 2015, Ankur was named a portfolio manager of the Alger Capital Appreciation and Alger Spectra strategies. Prior to joining Alger, she earned a Ph.D. in Materials Science and Engineering from Stanford University. Ankur was an awardee of the prestigious Intel Corporation Ph.D. Fellowship Program and worked as an engineer with Intel. Previously, she was a summer analyst with Merrill Lynch. She graduated from the University of California, Berkeley, with a B.S. in Mechanical Engineering and a B.S. in Materials Science and Engineering.




Pedro Marcal is Senior Vice President, Portfolio Manager of the Alger International Growth Strategy, and Portfolio Manager of the Alger Global Growth Strategy, for which he manages the international developed portion of the portfolio. He joined Alger in 2013 and has 26 years of investment experience. Prior to joining Alger, Pedro worked at Allianz Global Investors (formerly Nicholas-Applegate Capital Management), where he focused on international equities including developed and emerging markets. During his tenure there, he helped develop the firm’s emerging markets products before moving on to

manage global and developed international equity portfolios. Pedro earned his B.A. from the University of California at San Diego and his M.B.A. from the UCLA Anderson School of Management.

Pedro Marcal Senior Vice President, Portfolio Manager Investment experience: 26 years

Teresa McRoberts Senior Vice President, Senior Analyst, Portfolio Manager Investment experience: 33 years

Teresa McRoberts is Senior Vice President, Senior Analyst, and Portfolio Manager of the Alger Health Sciences Fund, as well as a Portfolio Manager on the Alger Mid Cap Growth strategy. She first joined Alger in 1994 and has 33 years of investment experience. Before rejoining Alger in 2015, Teresa was the portfolio manager at Bienville Health Science Partners, a company she founded. Her previous experience includes health care portfolio manager roles at Galleon Group, Carlyle Blue Wave Partners, and Tribeca Global Management (Citigroup). Prior to that, she returned to Alger in 2001 as Senior Health Care Analyst and Portfolio Manager, and launched the Alger Health Sciences Fund. Before returning to Alger, she was a portfolio manager and principal at Morgan Stanley. Her prior experience includes working as a health care analyst at Alger, and analyst and corporate finance roles at JP Morgan. Teresa earned her B.A. from Oberlin College and her M.B.A. from Columbia University.

Deborah Vélez Medenica is Senior Vice President, Portfolio Manager of the Alger Emerging Markets Strategy, and Portfolio Manager of the Alger Global Growth Strategy, for which she manages the emerging markets portion of the portfolio. She joined Alger in December 2010 and has 19 years of experience in emerging markets. Prior to joining Alger, Deborah worked at PineBridge Investments (formerly AIG Investments), where she rose from investment analyst to portfolio manager to the head of emerging market equities. Prior to PineBridge, she worked as an analyst for Baring Asset Management, Toronto Dominion Bank, and Cambridge Associates. Deborah graduated with an A.B. from Harvard-Radcliffe College, earned her M.A. in International Economics and Latin American Studies from Johns Hopkins School of Advanced International Studies, and earned her M.B.A. from The Wharton School. In addition, Deborah is a CFA charterholder and a member of the CFA Institute.

Deborah Vélez Medenica, CFA Senior Vice President, Portfolio Manager Investment experience: 19 years



Michael J. Melnyk, CFA Senior Vice President, Senior Analyst, Portfolio Manager Investment experience: 16 years

Michael Melnyk is Senior Vice President and Senior Analyst covering the consumer sector with a focus on leisure, media, REITs, telecommunications, packaging, gaming, and hotels. Michael is also a Portfolio Manager of the Alger Mid Cap Growth strategy. He rejoined Alger in 2007 and has 16 years of investment experience. Previously, Mike covered the consumer sector as an analyst at SAC Capital Management/CR Intrinsic and as Senior Analyst at Maverick Capital. From 2001 to 2004, he was Assistant Vice President and Analyst at Fred Alger Management, Inc. focusing on consumer stocks. Mike’s earliest assignments were at Credit Suisse First

Boston as an investment banking analyst and later as equity research associate. He graduated summa cum laude from the University of Notre Dame with a B.B.A. in Finance. Mike is also a CFA charterholder and a member of the CFA Institute.

Christopher R. Walsh, CFA Senior Vice President, Senior Analyst, Portfolio Manager Investment experience: 18 years

Christopher Walsh is Senior Vice President, Portfolio Manager of the Alger Green Fund, and a Portfolio Manager of the Alger Mid Cap Growth strategy. He is also Senior Analyst responsible for the retailing, footwear, apparel manufacturing, auto/auto suppliers, and restaurant industries. He joined Alger in 2001 and has 18 years of investment experience. Previously, he worked at Van Der Moolen Specialists USA as an equity analyst and at Prudential Securities as an associate retail analyst. He graduated with a B.S. from the University of Vermont. Christopher is a CFA charterholder and a member of the CFA Institute.

Amy Zhang is Senior Vice President and Portfolio Manager of the Alger Small Cap Focus Fund and, along with Jill Greenwald, the Alger Small Cap Growth strategies. She joined Alger in 2015 and has 18 years of investment experience. Prior to joining Alger, Amy worked at Brown Capital Management as a Managing Director and Senior Portfolio Manager of its Brown Capital Small Company Fund. Her previous experience includes working as a Portfolio Manager/Analyst at Epsilon Investment Management, Research Analyst at Templeton Worldwide, and Associate at Citicorp Securities. Amy earned her B.A. from Manhattanville College, where she graduated Summa Cum Laude. She earned her M.B.A. from Columbia Business School, where she was inducted into the Beta Gamma Sigma honor society and named to the Dean’s List. She is also a member of the

Columbia Business School Ambassadors Program. Amy is a CFA charterholder and a member of the CFA Institute. She is a former President of the CFA Society Baltimore and is currently chair of their Advisory Board. She also served as a member on the Board of Directors, as well as Vice President and Programs Chair for the CFA Society of Stamford.

Amy Y. Zhang, CFA Senior Vice President, Portfolio Manager Investment experience: 18 years


Client Portfolio Manager Biographies

Kevin D. Collins is Senior Vice President and Client Portfolio Manager. Kevin joined Alger in 1996 as an analyst covering industrials and business services. He has 23 years of investment experience. Prior to his role as Client Portfolio Manager, he was Portfolio Manager of the Income and Growth portfolios and the equity portion of Alger's Balanced portfolios. Before joining Alger, Kevin was an equity analyst at The Bank of New York. He received his B.A. degree from the University of Pennsylvania and earned his M.B.A. from Northwestern University. Kevin is a CFA charterholder and a member of both the CFA Institute and the New York Society of Security Analysts.

Kevin D. Collins, CFA Senior Vice President, Client Portfolio Manager Investment experience: 23 years

Bill Rechter is a Senior Vice President and Client Portfolio Manager. He joined Alger in 2005 and has 44 years of investment experience. Prior to joining Alger, Bill worked at ING Investment Management as a Senior Vice President and Senior Portfolio Specialist representing the Value, Growth, and International investment teams. Over the course of his career, Bill has been the Chief Investment Officer of Hillview Capital Advisors, Managing Director and Senior Portfolio Manager at SG Cowen Asset Management, and President of Sperry Capital Management Corp. He has also held analytical and portfolio management positions at Value Line, Lehman Brothers, U.S. Trust Company and Manufacturers Hanover Trust Company. Bill graduated with a B.B.A. in finance from the University of Massachusetts and earned his M.B.A. in finance and investments from the New York University Graduate School of Business. He is a CFA charterholder and a member of the CFA Institute.

William Rechter, CFA Senior Vice President, Client Portfolio Manager Investment experience: 44 years


Analyst Biographies

Michael Anderson, CFA

Associate Analyst Sector: Technology Investment Experience: 7 years Education: B.S., Cornell University; M.B.A., Cornell University, Johnson Graduate School of Management

Darryl Ah Now, CFA Senior Vice President, Senior Analyst Sector: Consumer Investment Experience: 15 years Education: B.Com., Queens University; M.B.A., University of Chicago

Natalie Blosser Research Associate Sector: Health Care Investment Experience: 1 year Education: B.A., Harvard University

Nidhi Chadda

Vice President, Analyst Sector: Consumer Investment Experience: 14 years Education: B.S., Wharton School, University of Pennsylvania ; M.B.A., Harvard Business School

Peter Chang, CFA

Associate Analyst Sector: Industrials Investment Experience: 13 years Education: B.B.A., University of Michigan Business School

Jeff Chen Research Associate Sector: Financials Investment Experience: 1 year Education: B.A., Dartmouth College

Thomas DeBourcy, CFA

Vice President, Analyst Sector: Health Care Investment Experience: 10 years Education: B.S., Wharton School, University of Pennsylvania Anna Gurvich

Associate Analyst Sector: Consumer Investment Experience: 7 years Education: B.S., Cornell University School of Hotel Administration

Andrew Gustin

Vice President, Analyst Sector: Industrials Investment Experience: 11 years Education: B.A. and M.A., Stanford University; M.B.A., Stanford Business School

Brian Hertzog Vice President, Analyst Sector: Technology, Portfolio Support (Small/SMid)

Investment Experience: 16 years Industry Experience: 2 years (General Partner, Ridge Partners LLC) Education: B.A., St. John’s University

Tim Jausovec Research Associate Sector: Technology Investment Experience: 1 year Education: B.S., Stanford University

Karen Jay, Ph.D. Associate Analyst Sector: Health Care Investment Experience: 11 years Industry Experience: 6 years (research assistant, Robarts Research Institute, Krembil Center for Stem Cell Biology, Canada) Education: B.Sc., University of Toronto; Ph.D., University of Western Ontario


Analyst Biographies

Vikram Khullar, CFA Vice President, Senior Analyst Sector: Technology Investment Experience: 16 years Industry Experience: 16 years Education: B.S., Indian Institute of Technology; M.A., Ohio State University; M.B.A. New York University Stern School of Business

Marcus Kupferschmidt

Vice President, Analyst Sector: Technology Investment Experience: 16 years Education: B.A., Northwestern University

David Lewis Vice President, Analyst Sector: Portfolio Support Investment Experience: 13 years Education: B.A. and B.S, Georgetown University; M.B.A., New York University Stern School of Business

Matthew Margolis Vice President, Analyst Sector: Health Care Investment Experience: 12 years Education: B.A., Amherst College

Andrew Merrill, CFA Vice President, Analyst Sector: Energy/Materials/Utilities Investment Experience: 8 years Education: B.S., Boston College Wallace E. Carroll School of Management

David B. Molnar, CFA Vice President, Analyst Sector: Emerging Markets Investment Experience: 18 years Education: B.A., Haverford College; Diploma, Economics, London School of Economics and Political Science; M.A., Fletcher School of Law and Diplomacy, Tufts University George Ortega Research Associate Sector: Technology Investment Experience: 2 years Education: B.A., Yale University

Ben Reynolds

Vice President, Analyst Sector: Technology/Telecom Investment Experience: 13 years Education: B.S., University of Virginia McIntire School of Commerce; M.B.A., New York University Stern School of Business

Eric Richards, CFA

Vice President, Analyst Sector: Energy/Materials/Utilities Investment Experience: 16 years Education: B.A., Saint Olaf College; M.B.A., Georgetown

Brendan Rice Research Associate Sector: Consumer Investment Experience: 2 years Education: B.S., Boston College Carroll School of Management

Kirsten Schnackenberg Research Associate Sector: Generalist, On Rotation Investment Experience: 1 year Education: B.A., Yale University

CJ Sylvester

Vice President, Analyst Sector: Health Care Investment Experience: 18 years Education: B.A., Bucknell University; M.S., The College of William & Mary


Analyst Biographies

Siang Meng Tan, CFA Vice President, Analyst Sector: Emerging Markets Investment Experience: 20 years Industry Experience: 3 years (relationship manager, offshore/onshore business at Citibank) Education: B.S., Indiana University; M.B.A., University of North Carolina

Timothy Wengerd, CFA Associate Analyst Sector: Portfolio Support Investment Experience: 7 years Education: B.S., Wharton School, University of Pennsylvania; M.B.A., New York University Stern School of Business

Steven Yang Vice President, Analyst Sector: Industrials Investment Experience: 11 years Industry Experience: 7 years (senior auditor, KPMG LLP, health care and life sciences sector, and analyst and strategic planning specialist at Stanford University Medical Center) Education: B.A., Yale University; M.B.A., New York University Stern School of Business

Warren Zhang, CFA Vice President, Analyst Sector: International Markets Investment Experience: 19 years Education: B.S., Tongji University; M. A., University of California at Riverside; M.A., Yale University School of Management



Alger Institutional Sales & Service

Peter W. Latara Senior Vice President

Experience: 19 years

• Gabelli Asset Management, Inc.; Vice President

• Black, Manafort, Stone & Kelly; Senior Research Associate

Education: • University of Maryland, Robert H. Smith, School of Business, M.B.A. • Emory University, B.A.

Chelsea Charette

Assistant Vice President

Experience: 5 years

• Lord, Abbett & Co.; Regional Consultant

Education:

• Union College, B.A.

Michael Lynam

Vice President


• Franklin Templeton Resources, Inc.; Relationship Manager • Goldman Sachs & Co.; Business Development Services

Education:

• Loyola University Maryland, B.A.

Robert O’Dell, CFA, CAIA

Vice President

Experience: 9 years

• New York Life Investment Management; Internal Wholesaler • Ameriprise Financial; Financial Advisor

Education:

• Villanova University, B.A.

Ted Doyle

Senior Vice President


• Ark Asset Management Co., Inc.; Senior Manager

• Bloomberg, L.P.; Account Executive

Education: • United States Military Academy at West Point, B.S

Meredith Genova Nicolaescu

Vice President


• Stux Capital Management; Marketing, Consultant Relations • AllianceBernstein L.P.; Consultant Relations, Subadvisory Services

Education:

• The College of William and Mary, B.A.

John Carbone

Senior Vice President


• BNY Mellon Investment Management; Vice President and Director,

Institutional Investments

• The Hartford; Managing Director, Institutional Sales Education:

Providence College, B.S.

Sales & Consultant Relations Client Service

8.9


Compensation and Incentives Aligned With Talent Retention

As of 12/31/15. *Members in the Alger Partners Plan do not currently participate in the Alger Profit Participation Plan. Alger Associates, Inc. is the owner of 100% of the shares of Fred Alger & Company, Incorporated which in turn owns 100% of the shares of Fred Alger Management, Inc.

Founded in 1964, Alger remains an independent, family-owned business with incentive programs

to attract and retain key employees

Alger Partners Plan

• 35% of total employee base • 100% of eligible Senior Analysts and

Portfolio Managers* • 67% of Analysts

• Daniel Chung, CFA, CEO, CIO, Portfolio Manager • Ankur Crawford, Ph.D., Senior Analyst, Portfolio Manager • Jill Greenwald, CFA, Portfolio Manager • Patrick Kelly, CFA, Portfolio Manager • Hal Liebes, COO, Chief Legal Officer • James Tambone, Chief Distribution Officer

Fred Alger

Management, Inc.

The Alger Partners Plan incentivizes key investment and non‐investment executives through a phantom equity program that grants pro‐rata rights to growth in the Firm’s book value, dividend payments, and participation in any

significant corporate transactions (e.g. partial sale, initial public offering, merger, etc.) The Firm does not have a limit on the overall percentage of the Firm’s value that it will convey through this program; presently, grants made

under The Alger Partners Plan represents over 15% of the value of the Firm. Grants are determined annually.

The Alger Profit Participation Plan gives key personnel the opportunity to have equity‐like participation in the long‐term growth and profitability of the Firm. There is broad participation in the program amongst the investment professionals, and reinforces our analysts and portfolio managers’ commitment

seeking to generate superior investment performance for our clients. The awards are invested in Alger mutual funds and have a four‐year vesting schedule. The total award earned can increase or decrease with Alger’s

investment and Alger’s earnings results over the four-year period. Participation is determined annually.

Fred Alger & Company,

Incorporated

Alger

Associates, Inc.

Profit Participation Program

8.10

Alpha

Alpha is a risk (beta-adjusted) return measurement. If two managers had the same return, but one had a lower beta, that manager would have a higher alpha.

This value is annualized by raising the Alpha to the number of annual periods.

Beta

The systematic risk of a portfolio excluding the cash return. The beta of a portfolio is its sensitivity to a benchmark. A portfolio with a beta of 1 is as risky as the benchmark and would therefore provide expected returns equal to those of the market during both up and down periods. A portfolio with a beta of 2 would move approximately twice as much as the benchmark.

Glossary of Investment Terms

Correlation

The linear relationship between two return series. Correlation shows the strength of the relationship between two return series. The higher the correlation, the more similar the returns.

Information Ratio

A measure of consistency in excess return. The annualized excess return over a benchmark divided by the annualized standard deviation of excess return.

Jensen’s Alpha

A risk-adjusted performance measure that is the average return on a portfolio over and above that predicted by the CAPM, given the portfolio's beta and the average market return. Jensen’s Alpha measures the value added of an active strategy.

9.0

R-Square

R-Square is the correlation squared. It is used in style analysis to determine how much information about a return series the style benchmark has been able to capture. The higher the R-squared, the better the benchmark. Thus, if you are looking at the R-Squarestatistic for a fund versus 2 different benchmarks, the benchmark with the higher statistic does a better job explaining the return of the fund in question.

Sharpe Ratio

A risk-adjusted measure that measures reward per unit of risk. The higher the Sharpe Ratio, the better. The numerator is the difference between the portfolio’s annualized return and the annualized return of the risk-free instrument (T-Bills). The denominator is the portfolio’s annualized standard deviation (population).

Glossary of Investment Terms

Standard Deviation

A statistical measure of the degree to which an individual portfolio return tends to vary from the mean, based on a sample. The greater degree of dispersion, the greater degree of risk.

This value is annualized by multiplying the sample standard deviation by the square root of the annual number of the frequency (260 for daily frequency, 12 for monthly frequency, 4 for quarterly frequency). The greater degree of dispersion, the greater degree of risk.

Tracking ErrorThe active risk of the portfolio. It determines the annualized standard deviation of the excess returns between the portfolio and the benchmark. In other words, create a new return series of the excess returns and then calculate the population standard deviation of that return series.

Treynor Ratio

Measures reward per unit of beta risk. The numerator of this ratio is the difference between the portfolio annualized return, and the annualized return of the risk-free instrument (T-Bills). The denominator is the portfolio’s beta.

9.1