water & power...apr 10, 2019 · the information in this presentation is confidential and is...
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Water & Power Employees’
Retirement Plan Large Cap Growth Equity (LCG)
April 10, 2019
Blair A. Boyer Managing Director, Co-Head of Large Cap Growth Equity
Peter H. Reinemann, CFA Managing Director
The information in this presentation is confidential and is intended for use by the recipient only. Further distribution is prohibited without Jennison's prior consent. For your reference, many key
terms in this presentation are defined in the Appendix.
1
Table of Contents
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 Disclosures
8. Glossary of Investment Terms
2
Company Overview
3
Blair A. Boyer, Managing Director, Co-Head of Large Cap Growth Equity
Blair is the Co-Head of Large Cap Growth Equity and a large cap growth equity portfolio manager. He joined Jennison in 1993 as an international equity analyst and portfolio manager. He joined the large cap growth team as a portfolio manager in 2003. Prior to Jennison, Blair managed international equity portfolios for five years at Bleichroeder. Before that, he was a research analyst and then a senior portfolio manager at Verus Capital. Blair received a BA in economics from Bucknell University and an MBA from New York University's Stern School of Business.
Peter H. Reinemann, CFA, Managing Director, Client Relationship Management Peter is a relationship manager. He joined Jennison in 1992. Prior to joining Jennison, Peter was a vice president at Paribas Asset Management where he was responsible for developing the firm's global asset allocation, global fixed income, and regional equity asset management activities in North America. He graduated cum laude with a BA in philosophy from Boston University.
Biographies - Presenters
4
Focus Investment Culture Stability
Investment management is Jennison’s
only business and our goal is to generate
superior long-term investment
outperformance*
Our skilled investment approach is based
on rigorous fundamental research and
manifests in conviction-based investing
Jennison is made up of deeply resourced,
dedicated investment teams in which
individual success is measured as
collective investment outperformance on
behalf of our clients
Jennison applies a long-term perspective
to investing and business planning with
strategic investments made to meet
evolving client needs and not short-term
business targets
Jennison Associates
Our Defining Characteristics
At A Glance
Location - New York and Boston
Number of Employees: 352
Investment Professionals: 71
Firm Inception: 1969
As of 12/31/18. ^In addition to the total assets under management noted, as of November 30, 2018, Jennison had $4.4bn in assets under advisement using our non-discretionary model portfolios.*Jennison’s core investment capabilities have outperformed their relevant indices, gross of fees, since their respective inception dates as of 12/31/18. There is no guarantee this objective will be met. See Firm Notes in the Additional Information and Disclosures section for our core capabilities and their indices. Blended portfolios are shown in their respective underlying capabilities.
• Large Cap Growth $54.0
• Focused Growth $11.2
• Health Care $2.7
• Large Cap Value $2.1
• Focused Value $2.8
• Core $2.1
• Income & Dividend $1.5
• Utilities/Infrastructure/ $4.7
Natural Resources
• Long Duration/LDI $40.1
• Intermediate $15.3
• Core $8.0
Growth Equity
$68.5
Fixed Income
$63.2
Assets Under Management
$160.7B^
• Small Cap $2.3
• SMid Cap $3.0
• Mid Cap $3.7
Value/Core Equity
$13.2 Small/SMid/Mid Cap Equity
$9.4
• Global Growth $5.1
• Focused Global Growth $0.2
• International Growth $1.0
Global/International/EM Equity
$6.3
5
Jennison Organization
As of 2/1/19.
Information Governance
Pak (Reports to Vrdoljak)
Operations
Minkler
Systems
Batalitzky, Cahill
Alternative Investment
Services Mohs
Investment Support Services
Miele
Legal
Hwang
Risk Mgmt.
Pelham
Compliance
Willis
Relationship Management
Value Equity
Koontz,
Esposito
Core/Opp. Equity
DeFranco, Gillott
Income &
Infrastructure
Hong,
Edemeka
Natural
Resources
Brown,
Saunders
Mid Cap Equity
Mullman,
Prasad, Bryan
Finance
Vrdoljak
Global Equity
Baribeau,
Davis
Growth Equity
Segalas,
McCarragher,
Del Balso,
Boyer,
Kuhlkin, Irwin
Health
Sciences
Chan
Value
Koontz
Small/Mid
Mullman
Small &
SMid Cap Equity Swiatek, Prasad,
Sartorius, Shapiro
Fixed Income
Wolfe
Custom Solutions
McManus
Custom Solutions
Group
McManus
Equity Trading
Wilburn
Consultant
Relations
COO
Moore
Growth
McCarragher
Credit Team
Wolfe
Zussman
Klemmer
Staudt
Gaul
Fixed Trading
Schmidt
Rates Team
Lourie
Kaplan
Investments
Human Resources
& Benefits
Brogle
Corporate Services
Graham
Product Mgmt &
Development
Marketing &
Communications
Product Distribution Business Support
Product &
Strategy
Clark
Global
Distribution
McEvoy
Becker - Chairman, Chief Executive Officer
Segalas - President, Chief Investment Officer
Product
Specialists Client Service
6
Portfolio Managers Average Experience: 36 years
Average Tenure with Jennison: 23 years
Industry Firm
Large Cap Growth
Spiros “Sig” Segalas 58 50
Kathleen A. McCarragher 39 21
Michael Del Balso 50 47
Blair A. Boyer 35 26
Rebecca Irwin 21 12
Natasha Kuhlkin, CFA 23 15
Global
Mark Baribeau, CFA 33 8
Thomas F. Davis 25 8
Experienced Large Cap Growth Investment Team Average 27 years of industry experience, 18 years with Jennison
Research Analysts Average Experience: 20 years
Average Tenure with Jennison: 14 years
Industry Firm
Consumer/Internet
Rebecca Irwin 21 12
Natasha Kuhlkin, CFA 23 15
Consumer
David A. Ravera 27 19
Health Care
David Chan, CFA 30 27
Debra Netschert 19 11
Steven M. Postal, CFA 18 2
Technology
Nick Rubinstein 25 21
Erika Klauer 27 17
Financials
Andrew M. Tucker, CFA 27 21
Industrials
Seth M. Ginns 18 17
Owuraka Koney, CFA 14 11
Health Care Portfolios
Christina Zhang, RN 9 5
Alison Yang, MD 11 4
Portfolio Specialist
Industry Firm
Richard K. Mastain 38 18
7
Long-Standing Client Relationships GREATER THAN 40 YEARS 15 - 20 YEARS 5 YEARS AND LESS
Abbott Laboratories AEGON USA ACEC Retirement Trust
AbbVie Inc. Dr. Scholl Foundation Board of Trustees of the Twin City Carpenters
Harbor Capital Advisors, Inc. John Hancock Investment Management Services, LLC and Joiners Pension Plan
Northrop Grumman Corporation National Rural Electric Cooperative Association Detroit Diesel Corporation Investment Committee
Unilever U.S., Inc. University of San Francisco± E. Rhodes and Leona B. Carpenter Foundation
Ericsson Inc.
30 - 40 YEARS 10 - 15 YEARS Navajo Nation
Baxter International Inc. American Electric Power State Highway Patrol Retirement System*
HP Inc. Prudential Retirement Insurance & Annuity Company State of Michigan*
Monsanto Company Shriners Hospital for Children Stryker Corporation
Motorola, Inc. Siebert Lutheran Foundation, Inc.± Vanguard U.S. Growth Fund
Navistar, Inc. State Board Administration of Florida±*
PPL Services Corporation Utah Retirement Systems*
PGIM, Inc. Vanguard Morgan Growth Fund
20 - 30 YEARS 5 - 10 YEARS
Air Products and Chemicals, Inc. Daimler Trucks North America LLC
The Boeing Company Employee Savings Plan American Cancer Society, Inc.
Ann & Robert H. Lurie Children’s Hospital of Chicago Master Trust
Carnegie Institute KeyCorp 401(k) Savings Plan
DeKalb County Employees Retirement System*
Lexington-Fayette Urban County Government
Dominion Resources, Inc. Policemen’s and Firefighters’ Pension Fund*
Hirtle, Callaghan & Co., Inc. Mercer Trust Company
Intermountain Health Care, Inc. Michigan Carpenters’ Pension Fund±
Laborer’s District Council & Contractors’ Pension North Central States Regional Council
Fund of Ohio of Carpenters Pension Fund
PGIM Investments Plumbers & Pipefitters National Pension Fund
Pittsburgh Symphony, Inc.
Prudential Trust Company
Sarkeys Foundation
The Texas A&M University System
University of Southern California
Approximately 60% of LCG assets are from
clients that have been with
Jennison for more than 15 years.
As of 12/31/18. This list includes all Jennison Large Cap Growth clients except for those that have restricted the use of their names. It is not known whether the listed clients approve or disapprove of Jennison or the advisory
services provided. Due to corporate restructurings, mergers, or acquisitions, client name listed may not necessarily be the entity that originally contracted with Jennison to provide services to such account. ±Participant in a Jennison-managed commingled vehicle.
*Large Cap Growth Equity Public Plans
8
Key Contacts
Lisa Beach Vice President, Director of Client Service 212-833-0566 / [email protected]
Client Service
Blair A. Boyer
Managing Director, Co-Head of Large Cap Growth Equity
212-833-0479 / [email protected]
Portfolio Management
Relationship Manager
Peter H. Reinemann, CFA
Managing Director, Client Relationship Management
212-833-0471 / [email protected]
9
Investment Process and Discipline
10
What we believe:
Growth in earnings and cash flows drive share prices over the long-term
Excess returns are generated by investing in market leading companies that create economic value
through long duration competitive advantages
How we build the portfolio:
A high conviction strategy with an agnostic view to the benchmark
Experienced, long-tenured research team drives bottom-up stock selection
Disciplined sell process reflecting fundamental and valuation measures
Integrated risk management embedded throughout the process
Results:
Strong excess return (gross and net of fee) since inception
Long-term track record for nearly five decades
Large Cap Growth Philosophy
Performance results are as of 2/28/19. The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior notice, and should not be considered investment advice. See Performance slide for additional performance information. See Portfolio Notes in the Additional Information and Disclosures section. Past performance does not guarantee future results.
Consistent philosophy and process for almost 50 years
11
Investment Process
There is no guarantee these objectives will be met. The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior notice, and should not be considered investment advice. See Portfolio Notes in the Additional Information and Disclosures section.
Unique business models building sustainable competitive advantages
Proprietary technology/patent protection
Economies of scale/network effects
Speed to market/supply chain
Catalysts driving long-term growth rates well above that of the market
Disruptive technologies or services
New product cycles
Expanding addressable markets
Superior financial characteristics
Strong revenue growth
Strengthening market position
Healthy balance sheets with financial flexibility
Attractive valuations
Buy Criteria
A fundamental approach to growth stock investing
Use a variety of valuation methodologies appropriate to
different industries
Understand the embedded growth rate in the company’s
current valuation
Constantly assess and re-evaluate fundamental characteristics
to reinforce valuation targets
Valuation
Analysis
12
Deep knowledge of company and industry dynamics,
competitive positioning, drivers of growth, etc.
Disciplined approach to valuation
Typical position limits
45% Sector
25% Industry
6% Security
Active review of portfolio characteristics
Investment Process
There is no guarantee these objectives will be met. The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior notice, and should not be considered investment advice. See Portfolio Notes in the Additional Information and Disclosures section.
Risk
Management
Fundamentals change unfavorably
Weakening competitive position
Negative earnings revisions
Change in management
Governance issues
Stock approaches full valuation
Better risk/reward stock idea emerges
Sell Criteria
13
Risk Management
Report Frequency Who
Portfolio Matrix Price Report Daily Portfolio Managers
Performance-Strategy Level Daily Portfolio Managers
EPS, P/E, Price Changes,
Pairwise Correlation Reports Daily Portfolio Managers
Barra Risk Reports Monthly Portfolio Managers
Factset Attribution Monthly Investment Team Heads &
Portfolio Managers
Portfolio Variation Report Quarterly Investment Team Heads
Compliance Guideline Monitoring Daily Chief Compliance Officer
Account Reconciliations Daily & Monthly
Head of Operations
Performance Dispersion Monthly
All analyses are available on demand
Function
Stock
Selection
Portfolio
Management
Portfolio
Analysis
Compliance
Oversight
Operations
Oversight
14
Investment Guidelines
Objective:
To provide superior performance versus the Russell 1000® Growth Index over a complete investment
cycle
L.A. Water & Power Employee’s Retirement Plan Guidelines:
It is expected that the portfolio will be fully invested (<5% in cash) at all times
Equities must trade on US stock exchanges, be denominated in USD, and be domiciled and
incorporated in the US
No more than 5% shall be invested in any one issuer. If an issuer represents >5% of the Russell
1000® Growth Index, the maximum weight allowed is 125% of the benchmark weight
No derivatives without prior approval
No short sales or buying on margin
See Portfolio Notes in the Additional Information and Disclosures section for index definitions.
15
Market Overview
16
Market Update
A sell-off in 2018’s fourth quarter reflected mounting investor concerns about the rising
risk of a major trade war with China, the pace of US growth, decelerating expansion in
non-US economies, US interest rate increases and their effect on US economic growth,
the state of US trade alliances with other major trading partners, and discord and
uncertainty about domestic policy.
US equity markets rebounded in the first couple months of 2019, as the Federal
Reserve signaled a pause in federal funds rate hikes, corporate earnings reports
generally indicated continued strength, and sentiment grew that trade friction would be
resolved.
As of 3/19. The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior
notice, and should not be considered investment advice. See Portfolio Notes in the Additional Information and Disclosures section.
17
Outlook
US real gross domestic product grew 2.6% in 2018’s fourth quarter, decelerating from +3.4% in
the third quarter. We expect a continued moderation in U.S. economic growth.
Trade tensions are exacerbating China’s economic slowdown. We expect Chinese authorities to
take additional stimulative actions to temper the slowdown.
Geopolitical uncertainties temper the international outlook, including issues with Brexit, Russia,
and the Middle East.
The Federal Reserve raised the federal funds rate target in December to 2.25%-2.50% from
2.00%-2.25%. However, with slowing economic growth and subdued inflation, the Fed is
signaling a pause in monetary tightening.
As of 3/19. The views expressed herein are those of Jennison investment professionals at the time the comments were made. They may not be reflective of their current opinions, are subject to change without prior
notice, and should not be considered investment advice. See Portfolio Notes in the Additional Information and Disclosures section.
18
Performance Review
19
Attestation
March 26, 2019
Jeremy Wolfson
Chief Investment Officer
Los Angeles Water & Power Employees’ Retirement Plan
111 North Hope Street, Suite 357
Los Angeles, California 90012
Re: Los Angeles Water and Power Employees’ Retirement Plan and the Retiree Health Benefits Fund
Dear Mr. Wolfson,
For the period from inception through March 25, 2019, to the best of our knowledge, the LA Water and
Power accounts managed by Jennison Associates LLC were in compliance with the investment
guidelines described in the current Statement of Investment Objectives, Goals, and Guidelines.
Should you have questions or would like additional information, please do not hesitate to contact us at
212-421-1000 or [email protected].
Kind regards,
Jesse Lindenberger-Schutz
Senior Compliance Analyst
20
Portfolio Investment Results
As of 2/28/19. Gross and Net of Fee. 1Inception of L.A. Water & Power Employees’ Retirement Plan portfolio: 2/1/19. 2Inception of L.A. Water & Power Retiree Health Benefits Fund portfolio: 2/1/19. R1000G = Russell 1000® Growth Index. See Portfolio Notes in the Additional Information and Disclosures section for additional client performance information and term definitions. Past performance does not guarantee future results.
L.A. Water & Power Employees’
Retirement Plan1 R1000G
-- Excess Returns --
Gross Net Net
Since Inception 4.1% 4.1% 3.6% 0.5%
L.A. Water & Power Retiree Health Benefits Fund2 R1000G
-- Excess Returns --
Gross Net Net
Since Inception 4.1% 4.1% 3.6% 0.5%
4.1% 4.1% 3.6%
0.0%
2.0%
4.0%
6.0%
Gross Net R1000G
4.1% 4.1% 3.6%
0.0%
2.0%
4.0%
6.0%
Gross Net R1000G
L.A. Water & Power Employees’ Retirement Plan1
L.A. Water & Power Retiree Health Benefits Fund2
21
Superior Investment Results
As of 2/28/19. Net of Fee. Inception of Russell 1000® Growth Index (R1000G): 1/1/79. Inception of Large Cap Growth Equity Composite: 7/31/69. Source for line chart data: FactSet. Periods greater than 1 year are annualized unless otherwise noted. Superior results and significant performance claims are based on a review of the strategy's long term cumulative performance history. See Large Cap Growth Equity Composite presentation and Portfolio Notes in the Additional Information and Disclosures section for additional performance information and term definitions. Past performance does not guarantee future results.
Nearly half a century of significant outperformance
Underperformance Outperformance
66%
34%
Rolling 1 Year
86%
14%
Rolling 5 Years
1%
Rolling 10 Years
99%
13.4%
15,726%
11.3%
7,384%
Frequency of outperformance (since inception of R1000G)
Cumulative returns
LCG Equity Composite R1000G
Monthly Observations: 471 Monthly Observations: 423 Monthly Observations: 363
LCG Equity
Composite R1000G
Excess
-- Returns --
YTD to 2/28/19 15.0% 12.9% 2.1%
Full Year 2018 -0.4 -1.5 1.1
One Year 6.1% 6.6% -0.6%
Three Years 20.8 18.0 2.8
Five Years 12.7 12.6 0.1
Ten Years 18.3 18.2 0.1
Twenty Years 7.0 5.6 1.4
Inception Composite
49.6 Years S&P 500®
Excess
-- Returns --
Annualized 11.5% 10.4% 1.2%
Cumulative 22,497.5 13,182.0 9,315.5
Inception R1000G
40.2 Years
LCG Equity
Composite R1000G
Excess
-- Returns --
Annualized 13.4% 11.3% 2.1%
Cumulative 15,726.1 7,383.9 8,342.1
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
12/78 12/81 12/84 12/87 12/90 12/93 12/96 12/99 12/02 12/05 12/08 12/11 12/14 12/17
22
Performance Attribution
Gross of Fee. Inception of L.A. Water & Power Employees’ Retirement Plan portfolio: 2/1/19. Source for data: FactSet. R1000G = Russell 1000® Growth Index. Due to attribution calculation methodology, contribution to return
may deviate from actual returns. See Portfolio Notes in the Additional Information and Disclosures section for additional performance information, GICS classification, and term definitions. Past performance does
not guarantee future results.
Inception to 2/28/19 L.A. Water & Power Employees’
Retirement Plan
R1000G Attribution
Average Weight
Total Return
Contribution to Return
Average Weight
Total Return
Contribution to Return
Allocation Effect
Stock Selection + Interaction
Total Effect
Consumer Staples 6% 5% 0.30% 6% 2% 0.13% -0.01% 0.15% 14 bps
Consumer Discretionary 16 0 0.06 15 1 0.11 -0.03 -0.05 -8
Communication Services 14 0 0.02 12 0 -0.04 -0.05 0.07 2
Information Technology 33 8 2.58 32 7 2.22 0.04 0.27 31
Health Care 15 3 0.49 14 0 -0.04 -0.03 0.52 49
Financials 4 2 0.09 4 5 0.22 0.00 -0.13 -13
Real Estate 1 2 0.01 2 2 0.04 0.03 0.00 3
Industrials 5 10 0.54 12 7 0.86 -0.24 0.16 -8
Energy 2 -6 -0.14 1 -3 -0.02 -0.07 -0.08 -16
Materials 1 13 0.14 2 5 0.09 -0.01 0.09 8
Cash 3 0 0.01 -- -- -- -0.10 -- -10
Total 100% 4% 4.09% 100% 4% 3.58% -0.48% 0.99% 51 bps
23
Largest Absolute Impact - Since Inception to 2/28/19
Gross of Fee. Inception of L.A. Water & Power Employees’ Retirement Plan portfolio: 2/1/19. Source for data: FactSet. The holdings identified do not represent all of the securities purchased, sold or recommended by
Jennison during the time period shown. A complete list of holdings and how each contributed to the portfolio’s return is available upon request. See Portfolio Notes in the Additional Information and Disclosures
section for additional performance information, GICS classification, holdings information, and term definitions. Past performance does not guarantee future results.
L.A. Water & Power Employees’ Retirement Plan
Top Ten
Average
Weight
Total
Return
Contribution
to Return Business Description
Boeing 2.7% 15% 38 bps World’s largest aerospace company and a leading manufacturer of commercial jetliners and defense, space, and security systems
Salesforce.com 5.0 8 38 A leading provider of business applications delivered on the web using a “software as a service” business model and a cloud
computing technology infrastructure
Visa 3.9 10 37 No. 1 payment system in the US
MasterCard 4.1 6 27 No. 2 payment system in the US
Microsoft 3.5 8 26 A global leader in software, services, devices, and solutions
Estee Lauder 1.7 15 25 Makes skin care, makeup, fragrance, and hair care products, which it sells through high-end stores, specialty retailers, and
online in more than 150 countries
FleetCor 1.6 16 23 A leading provider of fleet cards and payment-processing services for commercial and government fleets
Netflix 3.8 5 21 A global leader in video streaming and entertainment content creation
Merck 2.2 9 20 Diversified global health care company with businesses in prescription medicines, vaccines, biologics, and animal health
Illumina 1.7 12 19 Leading provider of genotyping, next-generation sequencing, and gene-expression tools
Bottom Ten
Amazon.com 5.9% -5% -31 bps World’s largest ecommerce retailer, major cloud infrastructure provider
UnitedHealth 1.6 -10 -16 One of the largest managed care providers in the United States
Facebook 3.2 -3 -10 One of the world’s preeminent internet-based social networks
Activision Blizzard 0.8 -11 -10 World’s leading video game publisher
Concho 0.8 -8 -7 Independent oil and natural gas company, with core operations in the Permian Basin in West Texas and Southeast New Mexico
Booking 1.0 -7 -7 A leading online travel company
EOG 1.2 -5 -6 Exploration and production company with significant land positions in emerging US shale oil growth sites
BioMarin 1.1 -5 -6 Develops pharmaceuticals for rare, often genetic, diseases that affect small populations
Allergan 0.8 -5 -5 Global pharmaceutical company
Constellation 1.1 -2 -2 A leading producer and seller of wine, beer, and spirits
24
L.A. Water & Power Employees’ Retirement Plan Portfolio
Performance Commentary
As of 2/28/19. Inception of L.A. Water & Power Employees’ Retirement Plan portfolio: 2/1/19. The holdings identified do not represent all of the securities purchased, sold or recommended by Jennison during the time period
shown. A complete list of holdings and how each contributed to the portfolio’s return is available upon request. See Portfolio Notes in the Additional Information and Disclosures section for additional
performance information, GICS classification, holdings information, index definitions, and term definitions. Past performance does not guarantee future results.
From the portfolio’s performance inception on February 1, 2019, through February 28, 2019,
the Russell 1000® Growth Index rose 3.6%.
Industrials, information technology, financials, and materials were the benchmark’s best-performing
sectors. Energy, communication services, and health care declined.
The portfolio advanced 4.1% (gross of fee) in the period.
Stock selection contributed positively to absolute and relative performance in information technology,
industrials, consumer staples, and materials.
Health care positions also outperformed the benchmark sector.
Holdings in financials and consumer discretionary rose but less than the benchmark’s corresponding
sectors.
Energy positions detracted from absolute and relative performance.
Key contributors to positive return included Boeing, Salesforce.com, and Visa.
Key detractors included Amazon.com, UnitedHealth, and Facebook.
25
Transactions - 2/1/19 to 2/28/19
Five largest positions initiated, eliminated, increased or decreased during the period shown, based on each transaction’s value (net of costs) divided by the average market value of the portfolio. If the number of transactions equals less than five (per category) all transactions are shown. See Portfolio Notes in the Additional Information and Disclosures section for holdings information.
New
Danaher
Chipotle Mexican Grill
Eliminated
Allergan
Monster Beverage
L.A. Water & Power Employees’ Retirement Plan
Increased
ServiceNow
Red Hat
Alphabet
Abbott
Decreased
Booking
Merck
UnitedHealth
26
Portfolio Review and Characteristics
27
Security
% of
Portfolio
3-Yr Earnings
Growth (E)
P/E
2019E
L.A. Water &
Power Employees’
Retirement Plan
Purchased
Jennison Large Cap
Growth Equity*
Purchased
Amazon.com 5.9% 28% 51x 2019 2007
Alphabet 5.8 17 23 2019 2004
Salesforce.com 5.0 20 33 2019 2009
MasterCard 4.2 18 29 2019 2009
Visa 3.9 18 26 2019 2011
Netflix 3.8 55 85 2019 2013
Microsoft 3.5 13 21 2019 2015
NIKE 3.5 15 29 2019 2018
Facebook 3.3 20 21 2019 2012
Adobe 2.9 19 33 2019 2013
41.8%
Largest Equity Holdings
As of 2/28/19. *Information is supplemental to the Large Cap Growth Equity Composite presentation as provided in the Appendix. Purchased = The year in which the security was most recently purchased and consistently held. See Portfolio Notes in the Additional Information and Disclosures section for holdings information and term definitions.
L.A. Water & Power Employees’ Retirement Plan
28
As of 2/28/19. See Portfolio Notes in the Additional Information and Disclosures section for GICS classification, holdings information, and term definitions.
Portfolio Holdings L.A. Water & Power Employees’ Retirement Plan
ESTIMATED 3-YEAR NORMALIZED EARNINGS GROWTH
WEIGHT IN PORTFOLIO (%) >20% 15-19% <15%
Consumer Staples 5.7
Costco 1.9
Estee Lauder 1.8
Constellation 1.1
Mondelez Int’l 1.0
Consumer Discretionary 15.8
Amazon.com 5.9 NIKE 3.5 Home Depot 1.9
Tesla 1.8 Marriott Int'l 2.0
Chipotle Mexican Grill 0.3 Booking 0.5
Communication Services 13.6
Netflix 3.8 Alphabet 5.8
Facebook 3.3 Activision Blizzard 0.8
Information Technology 34.4
Salesforce.com 5.0 MasterCard 4.2 Microsoft 3.5
Workday 1.9 Visa 3.9 Apple 2.9
Splunk 1.4 Adobe 2.9
Square 1.2 Red Hat 2.0
NVIDIA 1.2 FleetCor 1.7
ServiceNow 1.0 PayPal 1.6
Health Care 14.1
Alexion 1.6 Illumina 1.8 Abbott 2.3
Vertex 1.5 Danaher 0.5 Merck 2.0
BioMarin 1.1 UnitedHealth 1.2
Intuitive Surgical 1.0 Bristol-Myers Squibb 1.0
Financials 4.3
Goldman Sachs 1.2
S&P Global 1.2
PNC Financial Services 1.0
JPMorgan Chase 0.9
Real Estate 0.7
American Tower 0.7
Industrials 5.5
Boeing 2.9
Parker-Hannifin 1.8
Caterpillar 0.8
Energy 1.9
Concho Resources 0.8 EOG Resources 1.1
Materials 1.2
Albemarle 1.2
EQUITY 97.1
CASH 2.9
TOTAL 100.0
TOTAL MARKET VALUE $675.9MM 33.1 32.5 31.5
29
As of 2/28/19. See Portfolio Notes in the Additional Information and Disclosures section for GICS classification, holdings information, and term definitions.
Portfolio Holdings L.A. Water & Power Retiree Health Benefits Fund
ESTIMATED 3-YEAR NORMALIZED EARNINGS GROWTH
WEIGHT IN PORTFOLIO (%) >20% 15-19% <15%
Consumer Staples 5.7
Costco 1.9
Estee Lauder 1.8
Constellation 1.1
Mondelez Int’l 1.0
Consumer Discretionary 15.8
Amazon.com 5.9 NIKE 3.5 Home Depot 1.9
Tesla 1.8 Marriott Int'l 2.0
Chipotle Mexican Grill 0.3 Booking 0.5
Communication Services 13.6
Netflix 3.8 Alphabet 5.8
Facebook 3.3 Activision Blizzard 0.8
Information Technology 34.4
Salesforce.com 5.0 MasterCard 4.2 Microsoft 3.5
Workday 1.9 Visa 3.9 Apple 2.9
Splunk 1.4 Adobe 2.9
Square 1.2 Red Hat 2.0
NVIDIA 1.2 FleetCor 1.7
ServiceNow 1.0 PayPal 1.6
Health Care 14.1
Alexion 1.6 Illumina 1.8 Abbott 2.3
Vertex 1.5 Danaher 0.5 Merck 2.0
BioMarin 1.1 UnitedHealth 1.2
Intuitive Surgical 1.0 Bristol-Myers Squibb 1.0
Financials 4.3
Goldman Sachs 1.2
S&P Global 1.2
PNC Financial Services 1.0
JPMorgan Chase 0.9
Real Estate 0.7
American Tower 0.7
Industrials 5.5
Boeing 2.9
Parker-Hannifin 1.8
Caterpillar 0.8
Energy 1.9
Concho Resources 0.8 EOG Resources 1.1
Materials 1.2
Albemarle 1.2
EQUITY 97.1
CASH 2.9
TOTAL 100.0
TOTAL MARKET VALUE $113.5MM 33.1 32.5 31.5
30
Summary of Our Highly Valued Relationship with
Water & Power Employees’ Retirement Plan
Account Strategy Inception Date
Initial Funding
Amount ($M)
Since Inception
Net Flows ($M)
Current AUM as
of 2/28/19
L.A. Water & Power Employees’
Retirement Plan
Large Cap
Growth Equity 1/16/19 $619.2 N/A $675.9M
L.A. Water & Power Retiree Health
Benefits Fund
Large Cap
Growth Equity 1/16/19 $104.0 N/A $113.5M
Total $789.4M
As of 2/28/19, unless otherwise noted. Due to rounding, individual fund assets may not sum to total AUM shown. Past performance does not guarantee future results.
31
0 1
2 2 1
0
-2
-7
1
-1
3
-10%
-5%
0%
5%
Consumer
Staples
Consumer
Discretionary
Comm.
Services
Information
Technology
Health Care Financials Real Estate Industrials Energy Materials Cash
Sector Allocation
+Over/-Under Weight (Portfolio vs. R1000G)
As of 2/28/19. R1000G = Russell 1000® Growth Index. See Portfolio Notes in the Additional Information and Disclosures section for GICS classification and holdings information.
6
16 14
34
14
4
1
5
2 1 3
0%
10%
20%
30%
40%
Consumer
Staples
Consumer
Discretionary
Comm.
Services
Information
Technology
Health Care Financials Real Estate Industrials Energy Materials Cash
L.A. Water & Power Employees’ Retirement Plan
32
33
17
25
10
20
7
0%
5%
10%
15%
20%
25%
30%
35%
2018E 2019E
EPS Growth
27 24
22 21 18 17
0
5
10
15
20
25
30
2018E 2019E
P/E
Other Characteristics
Number of Holdings: 50
Cash: 2.9%
Dividend Yield: 0.8%
Portfolio Characteristics
123 114
150 141
0%
25%
50%
75%
100%
125%
150%
175%
2018E 2019E
Relative P/E
256
77
240
12
198
21
0
40
80
120
160
200
240
280
320
Weighted Average Median
Market Capitalization ($Billion)
As of 2/28/19. Dollar-Weighted Median EPS Growth shown. S&P 500® EPS are estimates determined by Jennison investment professionals based on qualitative and quantitative factors. R1000G = Russell 1000® Growth Index. See Portfolio Notes in the Additional Information and Disclosures section for term definitions.
2018E S&P 500® forecasts incorporate the
estimated positive impact of changes in corporate
tax rates
L.A. Water & Power Employees’ Retirement Plan
R1000G
S&P 500®
33
Portfolio Characteristics & Risk Measures and Controls
As of 2/28/19. Source for data: Factset. ^Data is for the last twelve months. ~Data is from 3/1/14-2/28/19. *Information is supplemental to the Large Cap Growth Equity Composite presentation as provided in the Appendix. R1000G = Russell 1000® Growth Index. See Large Cap Growth Equity Composite presentation and Portfolio Notes in the Additional Information and Disclosures section for index and term definitions. Past performance does not guarantee future results.
Holdings Based^ LCG Rep Account* R1000G
ROE 22.0% 31.3%
Price / Book 8.0 7.0
Price / Sales 4.4 2.9
Price / Cash Flow 21.3 15.5
Annualized Turnover 39% --
Risk Adjusted Returns~ LCG Composite R1000G
Annualized Standard Deviation 14.2% 12.2%
Tracking Error 1.33% --
Relative Volatility 1.16x --
R Squared 90% 100%
Correlation 0.95 --
Beta 1.11 1.00
Alpha -0.04 0.00
Sharpe Ratio 0.96 1.05
Information Ratio 0.16 --
Jensen Alpha -0.45 --
Treynor Ratio 12.28 12.86
Value at Risk -8.6 -8.6
60-month average cost per share as of 2/28/19: $0.031
34
Risk/Return
Data from 3/1/14 to 2/28/19. Gross of Fee. Source for data: Factset. See Large Cap Growth Equity Composite presentation and Portfolio Notes in the Additional Information and Disclosures section for index and term definitions. Past performance does not guarantee future results.
Large Cap Growth Equity Composite Russell 1000® Growth Index
35
Fee Schedule
36
L.A. Water & Power Employees’ Retirement Plan
Fee Schedule
The above schedule is offered for separately managed accounts with Large Cap Growth clients. Minimum institutional separate account size is typically $50 million. Minimum institutional defined contribution separate account size is typically $100 million. The term assets managed includes all income receivables and income accruals. Jennison reserves the right to waive minimum account sizes at our discretion.
If assets under management are greater than or equal to $500 million, the annual fee schedule
shall be as follows:
25bps on all assets
If assets under management fall under $500 million, the annual fee schedule shall be as follows:
75bps on first $10 million assets managed;
50bps on the next $30 million;
35bps on the next $25 million;
25bps on the next $335 million;
22bps on the balance.
37
Additional Information
and Disclosures
38
Additional Information
Significant Firm Changes
There were no significant firm changes.
Team Changes
Blair Boyer, who has been with Jennison since 1993 and a Large Cap Growth portfolio manager since
2003, was named Co-Head of Large Cap Growth Equity, joining Kathleen McCarragher, effective
January 1, 2019.
As of 2/28/19.
39
Biographies - Large Cap Growth Equity Portfolio Management
Spiros Segalas, Founder, President & Chief Investment Officer One of the founders of Jennison in 1969, Spiros “Sig” Segalas has built the firm into an institutional investment manager with a range of equity and fixed income investment strategies and assets under management of more than $160 billion. He has managed Jennison client portfolios over the past half century. Sig began his investment career at Bankers Trust as a research analyst, before managing client assets. Prior to Bankers Trust, he worked in the shipping and construction industries and served as an officer in the US Navy. Sig received a BA in economics from Princeton University.
Kathleen A. McCarragher, Managing Director, Head of Growth Equity Kathleen is the Head of Growth Equity and a large cap growth equity portfolio manager. She joined Jennison in 1998. Prior to Jennison, she spent six years with Weiss, Peck & Greer, where she was a managing director and the director of large cap growth equities. Previously, she spent 10 years with State Street Research & Management. Kathleen received a BBA, summa cum laude, in finance and economics from the University of Wisconsin-Eau Claire and an MBA from Harvard Business School.
Michael Del Balso, Managing Director Michael is a large cap growth equity portfolio manager. He joined Jennison in 1972 as a research analyst and became a portfolio manager in 1999. Previously, he was a vice president and portfolio manager for four years at White, Weld & Company. Michael received a BS in industrial administration from Yale University and an MBA from Columbia University.
Blair A. Boyer, Managing Director, Co-Head of Large Cap Growth Equity Blair is the Co-Head of Large Cap Growth Equity and a large cap growth equity portfolio manager. He joined Jennison in 1993 as an international equity analyst and portfolio manager. He joined the large cap growth team as a portfolio manager in 2003. Prior to Jennison, Blair managed international equity portfolios for five years at Bleichroeder. Before that, he was a research analyst and then a senior portfolio manager at Verus Capital. Blair received a BA in economics from Bucknell University and an MBA from New York University's Stern School of Business.
Rebecca Irwin, Managing Director Rebecca is a large cap growth equity portfolio manager and research analyst. She joined Jennison in 2006. Previously, she worked as a health care analyst at Viking Global Investors. In the decade before Viking, she was with UBS and Salomon Smith Barney. Before that, she was a corporate associate at Fried, Frank, Harris, Shriver & Jacobson. Rebecca received a BA in economics from Queen’s University at Kingston, an LLB from the University of Toronto, and an LLM from Harvard Law School.
Natasha Kuhlkin, CFA, Managing Director Natasha is a large cap growth equity portfolio manager and research analyst. She joined Jennison in 2004. Prior to Jennison, she was an equity research analyst for five years, first at Evergreen Investment Management then at Palisade Capital Management. Natasha received a BS, magna cum laude, in accounting from Binghamton University.
40
Biographies - Global Equity Portfolio Management
Mark B. Baribeau, CFA, Managing Director, Head of Global Equity Mark is the Head of Global Equity and a global equity portfolio manager. He joined Jennison in 2011. He was previously with Loomis Sayles for more than 21 years, where he was a global equity and large cap growth portfolio manager. Prior to Loomis, he was an economist at John Hancock Financial Services. Mark received a BA in economics from the University of Vermont and an MA in economics from the University of Maryland.
Thomas F. Davis, Managing Director Tom joined Jennison in 2011 as a global equity portfolio manager. He was previously with Loomis Sayles for 11 years, most recently as a co-portfolio manager of global equity portfolios. He began his tenure at Loomis as a research analyst. Prior to Loomis, Tom was a global equity research analyst at Putnam Investments. Tom received a BA in economics from Dartmouth College and an MBA from Duke University.
41
David Chan, CFA, Managing Director David is a health sciences equity portfolio manager and research analyst. He joined Jennison in 1992. He was previously with the Boston Consulting Group, where he was a team leader and consultant on projects in a wide variety of industries, but with a special focus in the health care area. David received a BA in biochemistry from Harvard University and an MBA from Columbia University.
Seth M. Ginns, Managing Director Seth is an equity research analyst. He joined Jennison in 2002. Prior to Jennison, he was a financial analyst in the health care investment banking group at Credit Suisse First Boston, where he worked with life sciences and health care services companies. Seth received a BA in mathematics and South Asia regional studies from the University of Pennsylvania.
Erika Klauer, Managing Director Erika is a technology equity portfolio manager and research analyst. She joined Jennison in 2001. Prior to Jennison, she was director of global semiconductor research at Deutsche Bank Alex. Brown and a senior semiconductor equipment analyst at Salomon Brothers. She began her career at Paine Webber. Erika received a BA in English and philosophy from Georgetown University.
N. Owuraka Koney, CFA, Managing Director Owuraka is an equity research analyst. He joined Jennison in 2007. Prior to Jennison, he worked as an equity research associate covering the aerospace and defense sector at UBS. Owuraka received a BA in economics and political science from Williams College.
Debra Netschert, Managing Director Debra is a health sciences equity portfolio manager and research analyst. She joined Jennison in 2008. Prior to Jennison, she worked at Magnetar Capital where she was a senior analyst responsible for health care coverage. Prior to Magnetar, she worked at Amaranth Advisors and Lazard Capital Markets. She began her research career as an associate biotechnology analyst at UBS. She received a BS in health science and MS in physical therapy from Boston University.
Steven M. Postal, CFA, Principal Steven is an equity research analyst. He joined Jennison in 2016. Before Jennison, he worked as a research analyst at EverPoint Asset Management covering medical devices and health care services companies. Previously, he was a healthcare analyst and portfolio manager at GE Asset Management. Prior to GE, he worked at Lehman Brothers as a healthcare supply chain analyst and began his career as an associate research analyst at Lehman. Steven received a BBA from George Washington University.
Biographies - Large Cap Growth Equity Research
42
David A. Ravera, Managing Director David is an equity research analyst. He joined Jennison in 2000. Previously, he was an equity analyst at Putnam Investments and Paine Webber. He received a BA with honors in economics from Trinity College, graduating Phi Beta Kappa, and an MBA from the Tuck School of Business at Dartmouth College.
Nick Rubinstein, Managing Director Nick is a technology equity portfolio manager and research analyst. He joined Jennison in 1997. He was previously an analyst for the technology corporate finance group at Morgan Stanley, where he focused on the financing needs and strategic positioning of companies in high-technology industries. Prior to Morgan Stanley, Nick was an analyst for the technology corporate finance group at Paine Webber. He received a BA with honors in international relations from Brown University.
Andrew M. Tucker, CFA, Managing Director Andrew is a financial services equity portfolio manager research analyst. He joined Jennison in 1997. Prior to Jennison, he was an equity analyst and portfolio manager at the Wachovia Bank of North Carolina. Prior to that, he was a corporate loan credit officer. He began his career as a financial analyst in Wachovia's mergers and acquisitions group. Andrew graduated magna cum laude with a BSBA from Washington and Lee University.
Alison Yang, MD, Managing Director Alison is an equity research analyst. She joined Jennison in 2014. She was previously a senior analyst covering biotechnology and pharmaceuticals at JP Morgan Asset Management and a team analyst at Barclays Capital. She began her career at Oliver Wyman Group’s health and life sciences practice. She received a BS in molecular biochemistry and biophysics from Yale University and an MD from Harvard Medical School.
Christina Zhang, RN, Managing Director Christina is an equity research analyst. She joined Jennison in 2013. She was previously with Barclays Capital for three years as a biotechnology and life sciences tools and diagnostics analyst. She received a BS in economics with a concentration in health care management from the Wharton School of the University of Pennsylvania and a BS in nursing from the University of Pennsylvania School of Nursing.
43
Notes
These materials may not take into account all individual client circumstances, objectives or needs. Jennison makes no representations regarding the suitability of any
securities, financial instruments or strategies described in these materials for particular clients or prospects.
These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment
management services. These materials do not constitute investment advice and should not be used as the basis for any investment decision. There is no assurance that
any securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. It should not be
assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in
the future will be profitable or will equal the investment performance of the securities discussed herein.
These materials do not purport to provide any legal, tax or accounting advice.
For ERISA Clients and Prospects - These materials are for informational or educational purposes. In providing these materials, Jennison is not acting as your fiduciary and is
not giving advice in a fiduciary capacity.
Firm
Jennison’s core capabilities (Large Cap Growth Equity Composite - Russell 1000® Growth Index, Opportunistic Equity Composite - Russell 3000® Index, Utility Equity Composite - S&P
Composite 1500® Utilities Index, Small Cap Core Equity Composite - Russell 2000® Index, Large Cap Value Equity Composite - Russell 1000® Value Index, Global Equity Opportunities
Composite - MSCI All Country World Index) have outperformed their relevant benchmark, gross of fees, since their respective inception dates as of December 31, 2018.
Due to rounding, individual product assets may not sum to total AUM shown.
Portfolio
Unless otherwise noted, source for Russell® Indices data: Mellon Analytical Solutions or FactSet. Source for S&P 500® Index data: Standard & Poor’s or FT Interactive Data Corporation.
Jennison Associates LLC began offering its Large Cap Growth Equity strategy to institutional clients in July of 1969. Since the composite’s inception in 1969, the Large Cap Growth Equity
institutional composite has outperformed the S&P 500® Index and the Russell 1000® Growth Index on a cumulative and annualized basis (since the index’s inception, gross of fees) through
December 31, 2018.
Client Performance Information: Performance results are calculated in US dollars and reflect reinvestment of dividends and other earnings. Gross of fee performance is presented before
custodial and Jennison’s actual advisory fees but after transaction costs. Where provided, net of fee performance is presented net of Jennison’s actual advisory fees and transaction costs.
Certain third party information in this document has been obtained from sources that Jennison believes to be reliable as of the date presented; however, Jennison cannot guarantee the
accuracy of such information, assure its completeness, or warrant such information will not be changed. Jennison has no obligation to update any or all such third party information.
Due to rounding, calculations based on the returns provided may not result exactly in Excess Returns shown. Excess Return is the additional return generated by the portfolio or composite
relative to the market index.
Excess returns for the value add chart are calculated using the rolling 1-year, 5-year, and 10-year annualized composite return minus the rolling 1-year, 5-year, and 10-year annualized index
return.
Due to rounding, percentages may not sum to 100% or totals shown. If shown, the cash percentage represents trade date cash and cash equivalents.
44
Notes
Portfolio (continued)
The Russell 1000® Growth Index (R1000G) contains those securities in the Russell 1000 Index with a greater-than-average growth orientation. Companies in this index tend to exhibit higher
price-to-book and price-to-earnings ratios. The S&P 500® Index provides a broad indicator of stock price movements. The financial indices referenced herein are provided for informational
purposes only. When comparing the performance of a manager to its benchmark(s), please note that the manager's holdings and portfolio characteristics may differ from those of the
benchmark(s). Additional factors impacting the performance displayed herein may include portfolio-rebalancing, the timing of cash flows, and differences in volatility, none of which impact the
performance of the financial indices. Financial indices are unmanaged and assume reinvestment of dividends but do not reflect the impact of fees, applicable taxes or trading costs which may
also reduce the returns shown. All indices referenced in this presentation are registered trade names or trademark/service marks of third parties. References to such trade names or
trademark/service marks and data is proprietary and confidential and cannot be redistributed without Jennison's prior consent. Investors cannot directly invest in an index.
Average Weight is the dollar value (price times the shares held) of the security or group, divided by the total dollar value of the entire portfolio displayed as a percentage. It is calculated as the
simple arithmetic average of daily values. Total Return is the price change of a security or group including dividends accrued over the report period or the "in-portfolio return" which includes
only the time period that each security was in the portfolio. Contribution to Return is the contribution of a security or group to the overall portfolio return. It is calculated as the security weight
multiplied by the daily security return linked daily across the reporting period. Allocation Effect is the portion of portfolio excess return that is attributable to taking different group bets from the
benchmark. (If either the portfolio or the benchmark has no position in a given group, allocation effect is the lone effect.) A group’s allocation effect equals the average percent capitalization of
the portfolio’s group minus the average percent cap of the benchmark’s group times the total return of the benchmark group minus the total return of the benchmark. Stock Selection is the
portion of portfolio excess return attributable to choosing different securities within groups from the benchmark. A group’s security selection effect equals the average weight of the
benchmark’s group times the total return of the portfolio’s group minus the total return of the benchmark’s group. It is calculated as the security weight multiplied by the daily security return
linked daily across the reporting period. Total Effect is the sum of Allocation Effect and Stock Selection. The total effect represents the opportunity cost of what was done in a group relative to
the overall portfolio. It is not just the difference between percent contribution in the portfolio and benchmark. At the overall portfolio level, the two numbers are equal. At the group level, they
can be different. This information should not be considered as a recommendation to purchase or sell a particular security and there is no assurance that certain securities will remain in or out
of the portfolio. These sectors, stock selections and holdings may change at any time and may not represent current or future sectors or stock selections.
GICS Classification: The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI, Inc. (“MSCI”) and Standard & Poor’s
Financial Services LLC (“S&P”) and is licensed for use by Jennison Associates LLC “as is”. As of October 1, 2009, Jennison Associates LLC (“Jennison”) does not reclassify securities classified
by S&P/MSCI GICS. Only securities not classified by S&P/MSCI GICS will be classified by Jennison. Therefore, this report may include companies that have been classified by S&P/MSCI GICS or
classified by Jennison. Companies classified by Jennison are not sponsored by the S&P/MSCI GICS classification system. Jennison has excluded the Utilities sector from data charts as it
considers the sector’s small weighting within the Russell 1000® Growth Index non-material. Companies within the sector typically do not possess the fundamental attributes that meet the
strategy’s requirements for investment. The Portfolio does not hold securities in the sector.
Holdings Information: The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings.
Please note that certain securities of foreign issuers may be held as ADRs. Additionally, different classes of securities from the same issuer may be combined for illustrative purposes. Please
see Portfolio Holdings page for a complete list of the securities held in the portfolio.
The Estimated 3 Yr Growth Rates are expected earnings based on long-term market trends, rather than short-term considerations. They are determined by Jennison investment professionals
and are subject to periodic change.
Portfolio EPS are estimates and are based on Jennison and I/B/E/S estimates. Russell 1000® Growth Index EPS are I/B/E/S data. Portfolio and Russell 1000® Growth Index earnings growth
rates are calculated using dollar weighted median methodology and P/Es are calculated using weighted harmonic average. S&P 500® EPS are estimates determined by Jennison investment
professionals based on quantitative and qualitative factors. Estimates are subject to change without prior notice. Although Jennison believes that the expectations reflected in such forward
looking statements are based on reasonable assumptions, actual results may differ materially from those projected.
Jennison’s calculations as noted above may include subjective factors and it is possible that each of these estimates may differ from data published elsewhere by these third parties. The EPS
and P/E illustrations are not sponsored by, endorsed by or prepared by Russell® or Standard & Poor’s.
GDP data are provided by the US Department of Commerce Bureau of Economic Analysis.
45
Glossary of Investment Terms
46
Glossary of Investment Terms
Alpha: 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.
Beta: Measures the volatility of the composite relative to the chosen risk market index.
Correlation: A statistical measure of the degree to which the movements of two variables are related.
Dividend Yield: The ratio of a security’s dividend payment relative to its share price.
Information Ratio: The excess return of the composite over the market index divided by the Tracking Error.
Jensen Alpha: A risk-adjusted performance measure that is the excess return of a portfolio over and above that predicted by the CAPM, given the portfolio's beta and the average market return.
Jensen Alpha measures the value added of an active strategy.
Price to Book Ratio: Price to Book Ratio is the ration of a stock’s price to its book value per share.
Price to Sales Ratio: Price to Sales Ratio is the ratio of a stock’s price to its per-share sales.
R Squared: Used in style analysis to determine how much information about the composite return series the style benchmark has been able to capture. The higher the R-squared, the better
the benchmark.
Relative Volatility: It's a measure of the volatility in comparison to another asset or index
ROE: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates
with the money shareholders have invested.
Sharpe Ratio: The measure of risk adjusted returns. It is a risk-adjusted measure developed by Professor William F. Sharpe, which 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. It is the performance of the Composite less the performance of the risk-free instrument divided by the standard deviation of the Composite.
Standard Deviation: A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution. The annualized standard
deviation shows how far away numbers on a list are from their averages and takes that number and multiplies it by the square root of the frequency. For example, monthly frequency would
multiply the standard deviation * the square root of 12 ( 3.4641). The greater degree of dispersion, the greater degree of risk.
Tracking Error: The standard deviation of the difference in monthly returns between the composite and the market index.
Treynor Ratio: Measures reward per unit of beta risk. The number 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.
Turnover: The percentage of a portfolio that is sold in a particular month or year.
Value at risk (VaR): Quantifies the level of financial risk within a firm, portfolio or position over a specific time frame.
47
Year Ended
Composite Gross of Fee Returns (%)
Composite Net of Fee
Returns (%)
Russell 1000® Growth Index Returns (%)
Composite Gross of Fee 3-Yr Std Dev
(%)
Russell 1000® Growth Index
3-Yr Std Dev (%)
Composite Assets
($ in Millions) # of
Accounts Internal Dispersion (Equal-Weighted)
Total Firm Assets
($ in Millions) 2009 42.71 42.30 37.21 18.27 19.73 31,046.1 93 1.02 93,316.5
2010 12.51 12.20 16.71 20.97 22.11 36,625.9 97 0.52 123,901.0
2011 1.14 0.87 2.64 17.60 17.76 35,182.1 95 0.32 135,729.3
2012 16.79 16.49 15.26 17.03 15.66 41,370.1 90 1.28 156,514.8
2013 38.26 37.91 33.48 13.76 12.18 52,229.8 87 0.88 175,312.2
2014 10.60 10.33 13.05 11.90 9.59 55,316.8 88 0.53 184,048.8
2015 11.68 11.40 5.67 12.01 10.70 56,974.7 96 0.33 174,180.3
2016 -0.12 -0.37 7.08 13.36 11.15 50,325.6 90 0.63 159,780.6
2017 37.38 37.04 30.21 12.52 10.54 59,815.7 87 0.66 175,421.4
2018 -0.17 -0.41 -1.51 14.17 12.13 52,801.4 86 0.68 160,734.1
Large Cap Growth Equity Composite December 31, 2008 to December 31, 2018
1. Jennison Associates LLC (Jennison or the Firm) claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in
compliance with the GIPS standards. Jennison has been independently verified for the period from January 1, 1993 through December 31, 2017. Verification assesses whether
(1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to
calculate and present performance in compliance with the GIPS standards. The Large Cap Growth Equity Composite (Composite) has been examined for the period from January
1, 1993 through December 31, 2017. The verification and performance examination reports are available upon request.
2. Jennison Associates LLC is an investment adviser registered under the Investment Advisers Act of 1940, as amended, and an indirect wholly owned subsidiary of Prudential
Financial, Inc. (Parent). Registration does not imply a certain level of skill or training. Prudential Financial, Inc. of the United States is not affiliated in any manner with Prudential
plc, a company incorporated in the United Kingdom. On January 1, 2006, Jennison redefined the Firm to include JMA assets, for all periods after January 1, 2006.
3. The Composite inception date was July 31, 1969 and the creation date under the GIPS standards was January 1, 1993. The Large Cap Growth Equity strategy seeks long-term
growth of capital by investing primarily in stocks of large cap companies we believe, based on fundamental analysis, have sustainable above-average earnings growth. Valuations
of these companies may likewise be above the market average. Accounts in this Composite typically have approximately 50-70 holdings. A list of Jennison’s composite
descriptions is available upon request. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.
4. Performance results are calculated in US dollars and reflect reinvestment of dividends and other earnings. Gross of fee performance is presented before custodial and
Jennison’s actual advisory fees but after transaction costs. Net of fee performance is presented net of Jennison’s actual advisory fees and transaction costs. Returns are gross of
reclaimable withholding taxes, if any, and net of non-reclaimable withholding taxes. For a large cap growth equity separate account the fee schedule offered to institutional
clients is as follows: 0.75% on first $10 million of assets managed; 0.50% on next $30 million; 0.35% on next $25 million; 0.25% on next $335 million; 0.22% on the balance.
Actual advisory fees charged and actual account minimum size may vary by account due to various conditions described in Jennison Associates LLC’s Form ADV.
5. The data presented represents past performance and does not guarantee future results. Performance results fluctuate, and there can be no assurances that objectives will be
achieved. Client’s principal may be at risk under certain market conditions.
6. The annual composite dispersion presented is an equal weighted standard deviation calculated for the accounts in the composite for the entire year. For annual periods with
less than 6 accounts included for the entire year, dispersion is not presented. The three-year annualized ex-post standard deviation is not required to be presented prior to 2011
or when 36 monthly composite returns are not available.
7. The Benchmark for the Strategy is the Russell 1000® Growth Index. Prior to April 1, 2018, the S&P 500® Index and Lipper Large Cap Growth Funds Index were presented as
secondary benchmarks. The benchmarks were removed as it was determined that the primary benchmark is considered most representative of the strategy.