THE ALGER ETF TRUST
Statement of Operations for the year ended December 31, 2023 (Continued)
| | | Alger Weatherbie
Enduring Growth ETF | |
| | | From March 6, 2023
(commencement of
operations) to
December 31, 2023 | |
| INCOME: | | | |
| Dividends (net of foreign withholding taxes*) | | $ | 21,748 | |
| Interest | | | 9,458 | |
| Total Income | | | 31,206 | |
| | | | | |
| EXPENSES: | | | | |
| Investment management fees — Note 3(a) | | | 17,031 | |
| Custodian fees | | | 7,051 | |
| Fund accounting fees | | | 54,810 | |
| Professional fees | | | 31,646 | |
| Transfer agent fees | | | 13,692 | |
| External valuation specialist fees | | | 7,016 | |
| Printing fees | | | 5,125 | |
| Licensing fees | | | 894 | |
| Trustee fees — Note 3(c) | | | 328 | |
| Other expenses | | | 1,758 | |
| Total Expenses | | | 139,351 | |
| Less, expense reimbursements/waivers — Note 3(a) | | | (119,224 | ) |
| Net Expenses | | | 20,127 | |
| NET INVESTMENT INCOME | | | 11,079 | |
| | | | | |
| REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: | | | | |
| Net realized loss on unaffiliated investments | | | (110,732 | ) |
| Net change in unrealized appreciation on unaffiliated investments | | | 702,075 | |
| Net realized and unrealized gain on investments | | | 591,343 | |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 602,422 | |
| * Foreign withholding taxes | | $ | 538 | |
See Notes to Financial Statements.
- 30 -
THE ALGER ETF TRUST
Statements of Changes in Net Assets
| | | Alger 35 ETF | |
| | | For the
Year Ended
December 31, 2023 | | | For the
Year Ended
December 31, 2022 | |
| Net investment income (loss) | | $ | (10,697 | ) | | $ | 8,244 | |
| Net realized loss on investments and in-kind redemptions | | | (283,338 | ) | | | (2,980,855 | ) |
| Net change in unrealized appreciation (depreciation) on investments | | | 3,189,582 | | | | (1,824,201 | ) |
| Net increase (decrease) in net assets resulting from operations | | | 2,895,547 | | | | (4,796,812 | ) |
| | | | | | | | | |
| Dividends and distributions to shareholders: | | | | | | | | |
| Total dividends and distributions to shareholders | | | (1,125 | ) | | | (5,088 | ) |
| | | | | | | | | |
| Increase from shares of beneficial interest transactions — Note 6: | | | 1,099,250 | | | | 268,250 | |
| Total increase (decrease) | | | 3,993,672 | | | | (4,533,650 | ) |
| | | | | | | | | |
| Net Assets: | | | | | | | | |
| Beginning of period | | | 8,983,472 | | | | 13,517,122 | |
| END OF PERIOD | | $ | 12,977,144 | | | $ | 8,983,472 | |
See Notes to Financial Statements.
- 31 -
THE ALGER ETF TRUST
Statements of Changes in Net Assets (Continued)
| | | Alger Mid Cap 40 ETF | |
| | | For the
Year Ended
December 31, 2023 | | | For the
Year Ended
December 31, 2022 | |
| Net investment income (loss) | | $ | 17,935 | | | $ | (26,247 | ) |
| Net realized loss on investments and in-kind redemptions | | | (1,123,275 | ) | | | (16,910,773 | ) |
| Net change in unrealized appreciation on investments | | | 5,367,202 | | | | 122,251 | |
| Net increase (decrease) in net assets resulting from operations | | | 4,261,862 | | | | (16,814,769 | ) |
| | | | | | | | | |
| Increase (decrease) from shares of beneficial interest transactions — Note 6: | | | (4,848,000 | ) | | | 6,703,375 | |
| Total decrease | | | (586,138 | ) | | | (10,111,394 | ) |
| | | | | | | | | |
| Net Assets: | | | | | | | | |
| Beginning of period | | | 28,638,156 | | | | 38,749,550 | |
| END OF PERIOD | | $ | 28,052,018 | | | $ | 28,638,156 | |
See Notes to Financial Statements.
- 32 -
THE ALGER ETF TRUST
Statements of Changes in Net Assets (Continued)
| | | Alger Weatherbie
Enduring Growth ETF | |
| | | From March 6, 2023
(commencement of
operations) to
December 31, 2023 | |
| Net investment income | | $ | 11,079 | |
| Net realized loss on investments | | | (110,732 | ) |
| Net change in unrealized appreciation on investments | | | 702,075 | |
| Net increase in net assets resulting from operations | | | 602,422 | |
| | | | | |
| Dividends and distributions to shareholders: | | | | |
| Total dividends and distributions to shareholders | | | (10,700 | ) |
| | | | | |
| Increase from shares of beneficial interest transactions — Note 6: | | | 3,821,625 | |
| Total increase | | | 4,413,347 | |
| | | | | |
| Net Assets: | | | | |
| Beginning of period | | | - | |
| END OF PERIOD | | $ | 4,413,347 | |
See Notes to Financial Statements.
- 33 -
THE ALGER ETF TRUST
Financial Highlights for a share outstanding throughout the period
Alger 35 ETF
| | | For the
Year Ended
12/31/2023 | | | For the
Year Ended
12/31/2022 | | | From 5/03/2021
(commencement of
operations) to
12/31/2021(i) | |
| Net asset value, beginning of period | | $ | 13.07 | | | $ | 20.40 | | | $ | 20.00 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss)(ii) | | | (0.01 | ) | | | 0.01 | | | | (0.04 | ) |
| Net realized and unrealized gain (loss) on investments | | | 4.24 | | | | (7.33 | ) | | | 0.44 | |
| Total from investment operations | | | 4.23 | | | | (7.32 | ) | | | 0.40 | |
| Dividends from net investment income | | | — | (iii) | | | (0.01 | ) | | | — | |
| Net asset value, end of period | | $ | 17.30 | | | $ | 13.07 | | | $ | 20.40 | |
| Net asset value, Total return | | | 32.38 | % | | | (35.90 | )% | | | 2.00 | % |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | |
| Net assets, end of period (000’s omitted) | | $ | 12,977 | | | $ | 8,983 | | | $ | 13,517 | |
| Ratio of gross expenses to average net assets | | | 1.60 | % | | | 1.83 | % | | | 1.85 | % |
| Ratio of expense reimbursements to average net assets | | | (1.05 | )% | | | (1.28 | )% | | | (1.30 | )% |
| Ratio of net expenses to average net assets | | | 0.55 | % | | | 0.55 | % | | | 0.55 | % |
| Ratio of net investment income (loss) to average net assets | | | (0.10 | )% | | | 0.08 | % | | | (0.28 | )% |
| Portfolio turnover rate(iv) | | | 414.20 | % | | | 187.01 | % | | | 99.20 | % |
See Notes to Financial Statements.
| (i) | Ratios have been annualized; total return and portfolio turnover rate have not been annualized. |
| (ii) | Amount was computed based on average shares outstanding during the period. |
| (iii) | Amount was less than $0.005 per share. |
| (iv) | Portfolio turnover excludes the value of portfolio securities received or delivered as a result of in-kind fund share transactions. |
- 34 -
THE ALGER ETF TRUST
Financial Highlights for a share outstanding throughout the period
Alger Mid Cap 40 ETF
| | | For the
Year Ended
12/31/2023 | | | For the
Year Ended
12/31/2022 | | | From 2/26/2021
(commencement of
operations) to
12/31/2021(i) | |
| Net asset value, beginning of period | | $ | 11.69 | | | $ | 20.00 | | | $ | 20.00 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | |
| Net investment income (loss)(ii) | | | 0.01 | | | | (0.01 | ) | | | (0.08 | ) |
| Net realized and unrealized gain (loss) on investments | | | 1.90 | | | | (8.30 | ) | | | 1.15 | |
| Total from investment operations | | | 1.91 | | | | (8.31 | ) | | | 1.07 | |
| Distributions from net realized gains | | | — | | | | — | | | | (1.07 | ) |
| Net asset value, end of period | | $ | 13.60 | | | $ | 11.69 | | | $ | 20.00 | |
| Net asset value, Total return | | | 16.34 | % | | | (41.55 | )% | | | 5.62 | % |
| RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | | |
| Net assets, end of period (000’s omitted) | | $ | 28,052 | | | $ | 28,638 | | | $ | 38,750 | |
| Ratio of gross expenses to average net assets | | | 1.14 | %(iii) | | | 1.19 | % | | | 1.23 | % |
| Ratio of expense reimbursements to average net assets | | | (0.53 | )% | | | (0.59 | )% | | | (0.63 | )% |
| Ratio of net expenses to average net assets | | | 0.61 | %(iv) | | | 0.60 | % | | | 0.60 | % |
| Ratio of net investment income (loss) to average net assets | | | 0.06 | % | | | (0.09 | )% | | | (0.43 | )% |
| Portfolio turnover rate(v) | | | 206.82 | % | | | 256.37 | % | | | 417.06 | % |
See Notes to Financial Statements.
(i) | Ratios have been annualized; total return and portfolio turnover rate have not been annualized. |
| (ii) | Amount was computed based on average shares outstanding during the period. |
| (iii) | This amount has been revised, due to the correction of an immaterial error, from the previously reported ratio of 1.15%. |
| (iv) | This amount has been revised, due to the correction of an immaterial error, from the previously reported ratio of 0.60%. |
| (v) | Portfolio turnover excludes the value of portfolio securities received or delivered as a result of in-kind fund share transactions. |
- 35 -
THE ALGER ETF TRUST
Financial Highlights for a share outstanding throughout the period
Alger Weatherbie Enduring Growth ETF
| | | From 3/6/2023
(commencement of
operations) to
12/31/2023(i) | |
| Net asset value, beginning of period | | $ | 19.90 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | |
| Net investment income(ii) | | | 0.06 | |
| Net realized and unrealized gain on investments | | | 2.16 | |
| Total from investment operations | | | 2.22 | |
| Dividends from net investment income | | | (0.05 | ) |
| Net asset value, end of period | | $ | 22.07 | |
| Net asset value, Total return | | | 11.18 | % |
| RATIOS/SUPPLEMENTAL DATA: | | | | |
| Net assets, end of period (000’s omitted) | | $ | 4,413 | |
| Ratio of gross expenses to average net assets | | | 4.48 | % |
| Ratio of expense reimbursements to average net assets | | | (3.83 | )% |
| Ratio of net expenses to average net assets | | | 0.65 | % |
| Ratio of net investment income to average net assets | | | 0.36 | % |
| Portfolio turnover rate | | | 35.65 | % |
See Notes to Financial Statements.
| (i) | Ratios have been annualized; total return and portfolio turnover rate have not been annualized. |
| (ii) | Amount was computed based on average shares outstanding during the period. |
- 36 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — General:
The Alger ETF Trust (the “Trust”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended (the “1940 Act”), and organized as a business trust under the laws of the Commonwealth of Massachusetts on March 24, 2020. The Alger 35 ETF, the Alger Mid Cap 40 ETF and the Alger Weatherbie Enduring Growth ETF are each separate non-diversified series of the Trust (each, a “Fund” and together, the “Funds”). The Trust qualifies as an investment company as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946-Financial Services – Investment Companies. Each Fund’s investment objective is to seek long-term capital appreciation. Under normal circumstances, each Fund invests primarily in equity securities. Shares of each Fund are listed for trading on the NYSE Arca, Inc.
The Alger Weatherbie Enduring Growth ETF commenced operations on March 6, 2023.
On May 23, 2023, the Board of Trustees of the Trust (the “Board”) approved the transition of each Fund’s custodian, administrator, and transfer agent from Brown Brothers Harriman & Company (the “Custodian”) to The Bank of New York Mellon. This change is anticipated to become effective in early 2024.
NOTE 2 — Significant Accounting Policies:
(a) Investment Valuation: The Funds value their financial instruments at fair value using independent dealers or pricing services under policies approved by the Board. Investments held by the Funds are valued on each day the New York Stock Exchange (the “NYSE”) is open, as of the close of the NYSE (normally 4:00 p.m. Eastern Time).
The Board has designated, pursuant to Rule 2a-5 under the 1940 Act, the Funds’ investment adviser, Fred Alger Management, LLC (“Alger Management” or the “Investment Manager”) as its valuation designee (the “Valuation Designee”) to make fair value determinations subject to the Board’s review and oversight. The Valuation Designee has established a Valuation Committee (“Committee”) comprised of representatives of the Investment Manager and officers of the Funds to assist in performing the duties and responsibilities of the Valuation Designee.
The Valuation Designee has established valuation processes, including but not limited to: (i) making fair value determinations when market quotations for financial instruments are not readily available in accordance with valuation policies and procedures adopted by the Board; (ii) assessing and managing material risks associated with fair valuation determinations; (iii) selecting, applying and testing fair valuation methodologies; and (iv) overseeing and evaluating pricing services used by the Funds. The Valuation Designee regularly reports its fair valuation determinations and related valuation information to the Board. The Committee generally meets quarterly and on an as-needed basis to review and evaluate the effectiveness of the valuation policies and procedures in accordance with the requirements of Rule 2a-5.
- 37 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Investments in money market funds and short-term securities held by the Funds having a remaining maturity of sixty days or less are valued at amortized cost which approximates market value.
Equity securities are valued at the last quoted sales price or official closing price on the primary market or exchange on which they are traded as reported by an independent pricing service. In the absence of quoted sales, such securities are generally valued at the bid price or, in the absence of a recent bid price, the equivalent as obtained from one or more of the major market makers for the securities to be valued.
FASB Accounting Standards Codification 820 – Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. ASC 820 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability and may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Funds. Unobservable inputs are inputs that reflect the Funds’ own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
| • | Level 1 – quoted prices in active markets for identical investments |
| • | Level 2 – significant other observable inputs (including quoted prices for similar investments, amortized cost, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments) |
The Funds’ valuation techniques are generally consistent with either the market or the income approach to fair value. The market approach considers prices and other relevant information generated by market transactions involving identical or comparable assets to measure fair value. The income approach converts future amounts to a current, or discounted, single amount. These fair value measurements are determined on the basis of the value indicated by current market expectations about such future events. Inputs for Level 1 include exchange-listed prices and broker quotes in an active market. The Funds cannot invest in Level 2 and Level 3 securities.
(b) Cash and Cash Equivalents: Cash and cash equivalents include U.S. dollars, U.S. Treasury securities, government money market funds, and repurchase agreements.
(c) Securities Transactions and Investment Income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis.
- 38 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
(d) Lending of Fund Securities: The Funds may lend their securities to financial institutions (other than to the Investment Manager or its affiliates), provided that the market value of the securities loaned will not at any time exceed one third of a Fund’s total assets including borrowings, as defined in its prospectus. The Funds earn fees on the securities loaned, which are included in interest income in the accompanying Statement of Operations. In order to protect against the risk of failure by the borrower to return the securities loaned or any delay in the delivery of such securities, the loan is collateralized by cash or securities that are maintained with the Custodian, in an amount equal to at least 102% of the current market value of U.S. loaned securities. The market value of the loaned securities is determined at the close of each business day of the Funds. Any required additional collateral is delivered to the Custodian each day and any excess collateral is returned to the borrower on the next business day. In the event the borrower fails to return the loaned securities when due, the Funds may take the collateral to replace the securities. If the value of the collateral is less than the purchase cost of replacement securities, the Custodian shall be responsible for any shortfall, but only to the extent that the shortfall is not due to any diminution in collateral value, as defined in the securities lending agreement. The Funds are required to maintain the collateral in a segregated account and determine its value each day until the loaned securities are returned. Cash collateral may be invested as determined by the Funds. Collateral is returned to the borrower upon settlement of the loan. There were no securities loaned as of December 31, 2023.
(e) Dividends to Shareholders: Dividends and distributions payable to shareholders are recorded by the Funds on the ex-dividend date. Dividends from net investment income, if available, are declared and paid annually. Dividends from net realized gains, offset by any loss carryforward, are declared and paid annually.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Funds’ distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income, net realized gain on investment transactions, or return of capital, depending on the type of book/tax differences that may exist. Capital accounts within the financial statements are adjusted for permanent book/tax differences. Reclassifications result primarily from the differences in tax treatment of net operating losses and redemption in kind adjustments. The reclassifications are done annually at year-end and have no impact on the net asset values of the Funds and are designed to present the Funds’ capital accounts on a tax basis.
(f) In-Kind Redemptions: For financial reporting purposes, in-kind redemptions are treated as sales of securities resulting in realized capital gains or losses to the Funds. Because such gains or losses are not taxable to the Funds and are not distributed to existing Fund shareholders, the gains or losses are reclassified from accumulated net realized gain (loss) to paid-in capital at the end of the Funds’ tax year. These reclassifications have no effect on net assets or net asset value (“NAV”) per share.
(g) Federal Income Taxes: It is each Fund’s policy to comply with the requirements of the Internal Revenue Code Subchapter M applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Provided that the Funds maintain such compliance, no federal income tax provision is required at the Fund level. Each Fund is treated as a separate entity for the purpose of determining such compliance.
- 39 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
FASB Accounting Standards Codification 740 – Income Taxes (“ASC 740”) requires the Funds to measure and recognize in their financial statements the benefit of a tax position taken (or expected to be taken) on an income tax return if such position will more likely than not be sustained upon examination based on the technical merits of the position. No tax years are currently under investigation. The Funds file income tax returns in the U.S. Federal jurisdiction, as well as the New York State and New York City jurisdictions. The statute of limitations on the Funds’ tax returns remains open for three years. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
(h) Allocation Methods: The Trust accounts separately for the assets, liabilities and operations of each Fund. Expenses directly attributable to each Fund are charged to that Fund’s operations; expenses which are applicable to all Funds are allocated among them based on net assets.
(i) Estimates: These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require using estimates and assumptions that affect the reported amounts therein. Actual results may differ from those estimates. All such estimates are of a normal recurring nature.
NOTE 3 — Investment Management Fees and Other Transactions with Affiliates:
(a) Investment Management Fees: Fees incurred by each Fund, pursuant to the provisions of the Trust’s Investment Management Agreement with Alger Management, are payable monthly and computed based on the following annual rates based on a percentage of average daily net assets:
| | | Actual Rate | |
| Alger 35 ETF | | | 0.45 | % |
| Alger Mid Cap 40 ETF | | | 0.50 | % |
| Alger Weatherbie Enduring Growth ETF | | | 0.55 | % |
Alger Weatherbie Enduring Growth ETF's sub-adviser, Weatherbie Capital, LLC (“Weatherbie” or the “Sub-Adviser”), an affiliate of Alger Management, is paid a fee, out of the investment management fee that Alger Management receives at no additional cost to the Fund, which is equal to 70% of the net investment advisory fee paid by the Fund to Alger Management. For the period ended December 31, 2023, Alger Management paid no sub-advisory fee to Weatherbie, as investment management fees, payable by the Fund to Alger Management were fully waived by Alger Management.
Alger Management has contractually agreed to waive and/or reimburse Fund expenses (excluding custody fees, acquired fund fees and expenses, taxes, brokerage and extraordinary expenses, to the extent applicable) through April 30, 2025 to the extent necessary to limit other expenses based on average daily net assets, as listed in the table below.
- 40 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Prior to April 30, 2023, Alger Management had contractually agreed to waive and/or reimburse Fund expenses (excluding acquired fund fees and expenses, taxes, brokerage and extraordinary expenses, if applicable) for certain Funds in order for the total annual fund operating expenses to not exceed certain rates, based on daily average net assets.
| | | OTHER
EXPENSES
WAIVER /
REIMBURSEMENT | | | FEES WAIVED /
REIMBURSED FOR THE YEAR ENDED
DECEMBER 31,
2023 | |
| Alger 35 ETF | | | 0.10 | %(a) | | $ | 117,119 | |
| Alger Mid Cap 40 ETF | | | 0.10 | %(b) | | $ | 147,138 | |
| Alger Weatherbie Enduring Growth ETF(c) | | | 0.10 | % | | $ | 119,224 | |
(a) Prior to April 30, 2023, total annual fund operating expenses for Alger 35 ETF could not exceed 0.55%.
(b) Prior to April 30, 2023, total annual fund operating expenses for Alger Mid Cap 40 ETF could not exceed 0.60%.
(c) Alger Weatherbie Enduring Growth ETF commenced operations on March 6, 2023.
Alger Management may recoup any fees waived or expenses reimbursed pursuant to the contract; however, a Fund will only make repayments to Alger Management if such repayment does not cause the Fund’s expense ratio, after the repayment is taken into account, to exceed both (i) the expense cap in place at the time such amounts were waived or reimbursed, and (ii) the Fund’s current expense cap. Such recoupment is limited to two years from the date the amount is initially waived or reimbursed. For the year ended December 31, 2023, there were no recoupment payments made by the Funds to Alger Management.
(b) Brokerage Commissions: During the year ended December 31, 2023, Alger 35 ETF and Alger Mid Cap 40 ETF paid Fred Alger & Company, LLC, each Fund’s distributor and affiliate of Alger Management (the “Distributor” or “Alger LLC”), commissions of $7,887 and $6,733, respectively, in connection with securities transactions.
(c) Trustee Fees: Each trustee who is not an “interested person” of the Trust, as defined in the 1940 Act (“Independent Trustee”), receives a fee of $156,000 per annum, paid pro rata based on net assets by each fund in the Alger Fund Complex, plus travel expenses incurred for attending board meetings. The term “Alger Fund Complex” refers to the Trust, The Alger Institutional Funds, The Alger Funds II, The Alger Funds, The Alger Portfolios and Alger Global Focus Fund, each of which is a registered investment company managed by Alger Management. The Independent Trustee appointed as Chair of the Board receives additional compensation of $22,000 per annum paid pro rata based on net assets by each fund in the Alger Fund Complex. Additionally, each member of the Audit Committee receives a fee of $13,000 per annum, paid pro rata based on net assets by each fund in the Alger Fund Complex.
The Board has adopted a policy requiring Trustees to receive a minimum of 10% of their annual compensation in shares of one or more of the funds in the Alger Fund Complex.
(d) Interfund Loans: The Funds, along with other funds in the Alger Fund Complex, may borrow money from and lend money to each other for temporary or emergency purposes. To the extent permitted under their investment restrictions, the Funds may lend uninvested cash in an amount up to 15% of their net assets to other funds in the Alger Fund Complex. If a Fund has borrowed from other funds in the Alger Fund Complex and has aggregate borrowings from all sources that exceed 10% of that Fund’s total assets, such Fund will secure all of its loans from other funds in the Alger Fund Complex. The interest rate charged on interfund loans is equal to the average of the overnight time deposit rate and bank loan rate available to the Funds. There were no interfund loans outstanding as of December 31, 2023.
- 41 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
During the year ended December 31, 2023, the Funds did not incur interfund loan interest expense.
(e) Interfund Trades: The Funds may engage in purchase and sale transactions with other funds advised by Alger Management or sub-advised by Weatherbie. There were no interfund trades during the year ended December 31, 2023.
(f) Other Transactions with Affiliates: Certain officers and one Trustee of the Trust are directors and/or officers of Alger Management, the Distributor, or their affiliates. At December 31, 2023, Alger Management and its affiliated entities owned 157,494 shares of Alger Weatherbie Enduring Growth ETF.
NOTE 4 — Securities Transactions:
The following summarizes the securities transactions of each Fund, other than U.S. Government securities, in-kind transactions and short-term securities, for the year ended December 31, 2023:
| | | PURCHASES | | | SALES | |
| Alger 35 ETF | | $ | 44,673,395 | | | $ | 45,272,439 | |
| Alger Mid Cap 40 ETF | | | 54,416,615 | | | | 53,474,733 | |
| Alger Weatherbie Enduring Growth ETF(a) | | | 1,402,638 | | | | 1,313,743 | |
(a) Alger Weatherbie Enduring Growth ETF commenced operations on March 6, 2023.
The following summarizes the securities in-kind transactions of each Fund for the year ended December 31, 2023. Alger 35 ETF and the Alger Mid Cap 40 ETF had realized gains on in-kind transactions of $236,762 and $1,062,668, respectively. Net gains (losses) on in-kind redemptions are not considered taxable for federal income tax purposes.
| | | PURCHASES | | | SALES | |
| Alger 35 ETF | | $ | 3,054,646 | | | $ | 1,830,606 | |
| Alger Mid Cap 40 ETF | | | 2,429,650 | | | | 6,819,196 | |
| Alger Weatherbie Enduring Growth ETF(a) | | | 3,521,654 | | | | — | |
(a) Alger Weatherbie Enduring Growth ETF commenced operations on March 6, 2023.
NOTE 5 — Borrowings:
The Funds may borrow from the Custodian on an uncommitted basis. Each Fund pays the Custodian a market rate of interest, generally based upon a rate of return with respect to each respective currency borrowed, taking into consideration relevant overnight and short-term reference rates and the range of distribution between and among the interest rates paid on deposits to other institutions, less applicable commission, if any. The Funds may also borrow from other funds in the Alger Fund Complex, as discussed in Note 3(d). For the year ended December 31, 2023, the Funds had no borrowings from the Custodian or other funds in the Alger Fund Complex.
- 42 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6 — Share Capital:
Each Fund offers and issues shares at its NAV per share only in aggregations of a specified number of shares (a “Creation Unit”), generally in exchange for a designated portfolio of securities (including any portion of such securities for which cash may be substituted) (“Deposit Securities”), together with the deposit of a specified cash payment (“Cash Component”). Shares of the Funds are listed for trading on NYSE Arca, Inc., a national securities exchange. Shares of the Funds are traded in the secondary market and elsewhere at market prices that may be at, above or below each Fund’s NAV. Shares of each Fund are redeemable only in Creation Units, generally in exchange for Deposit Securities and a Cash Component. Creation Units are typically a specified number of shares, generally 12,500 or multiples thereof, for each Fund. All orders to purchase Creation Units must be placed by or through authorized participants (“APs”) who have entered into agreements with Alger LLC, a registered broker-dealer. Each AP will establish and maintain a confidential brokerage account with an agent (known as an AP Representative), for the benefit of the AP, in order to engage in in-kind creation and redemption activity with the Funds.
| | | FOR THE YEAR ENDED | | | FOR THE YEAR ENDED | |
| | | DECEMBER 31, 2023 | | | DECEMBER 31, 2022 | |
| | | SHARES | | | AMOUNT | | | SHARES | | | AMOUNT | |
| Alger 35 ETF | | | | | | | | | | | | | | | | |
| Shares sold | | | 200,000 | | | $ | 3,069,000 | | | | 112,500 | | | $ | 1,787,125 | |
| Shares redeemed | | | (137,500 | ) | | | (1,969,750 | ) | | | (87,500 | ) | | | (1,518,875 | ) |
| Net increase | | | 62,500 | | | $ | 1,099,250 | | | | 25,000 | | | $ | 268,250 | |
| | | | | | | | | | | | | | | | | |
| Alger Mid Cap 40 ETF | | | | | | | | | | | | | | | | |
| Shares sold | | | 212,500 | | | $ | 2,603,625 | | | | 825,000 | | | $ | 11,579,000 | |
| Redemptions in-kind* | | | (175,000 | ) | | | (2,161,250 | ) | | | — | | | | — | |
| Shares redeemed | | | (425,000 | ) | | | (5,290,375 | ) | | | (312,500 | ) | | | (4,875,625 | ) |
| Net increase (decrease) | | | (387,500 | ) | | $ | (4,848,000 | ) | | | 512,500 | | | $ | 6,703,375 | |
| | | | | | | | | | | | | | | | | |
| Alger Weatherbie Enduring Growth ETF** | | | | | | | | | | | | | | | | |
| Shares sold | | | 200,000 | | | $ | 3,821,625 | | | | — | | | | — | |
| Shares redeemed | | | — | | | | — | | | | — | | | | — | |
| Net increase | | | 200,000 | | | $ | 3,821,625 | | | | — | | | | — | |
* Certain shareholders of the Fund redeemed shares in-kind.
** Inception date March 6, 2023.
- 43 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7 — Income Tax Information:
The tax character of distributions paid during the year ended December 31, 2023 and the period ended December 31, 2022 was as follows:
| | | FOR THE YEAR ENDED DECEMBER 31, 2023 | | | FOR THE PERIOD ENDED DECEMBER 31, 2022 | |
| Alger 35 ETF | | | | | | | | |
| Distributions paid from: | | | | | | | | |
| Ordinary Income | | $ | 1,125 | | | $ | 5,088 | |
| Long-term capital gain | | | — | | | | — | |
| Total distributions paid | | $ | 1,125 | | | $ | 5,088 | |
| | | | | | | | | |
| Alger Mid Cap 40 ETF | | | | | | | | |
| Distributions paid from: | | | | | | | | |
| Ordinary Income | | $ | — | | | $ | — | |
| Long-term capital gain | | | — | | | | — | |
| Total distributions paid | | $ | — | | | $ | — | |
| | | | | | | | | |
| Alger Weatherbie Enduring Growth ETF* | | | | | | | | |
| Distributions paid from: | | | | | | | | |
| Ordinary Income | | $ | 10,700 | | | $ | — | |
| Long-term capital gain | | | — | | | | — | |
| Total distributions paid | | $ | 10,700 | | | $ | — | |
* Inception date March 6, 2023.
As of December 31, 2023, the components of accumulated gains (losses) on a tax basis were as follows:
| Alger 35 ETF | | | | |
| Undistributed ordinary income | | $ | — | |
| Undistributed long-term gains | | | — | |
| Net accumulated earnings | | | — | |
| Capital loss carryforwards | | | (3,961,429 | ) |
| Net unrealized appreciation | | | 2,238,974 | |
| Total accumulated losses | | $ | (1,722,455 | ) |
| Alger Mid Cap 40 ETF | | | | |
| Undistributed ordinary income | | $ | 17,935 | |
| Undistributed long-term gains | | | — | |
| Net accumulated earnings | | | 17,935 | |
| Capital loss carryforwards | | | (20,499,697 | ) |
| Net unrealized appreciation | | | 4,973,711 | |
| Total accumulated losses | | $ | (15,508,051 | ) |
- 44 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
| Alger Weatherbie Enduring Growth ETF | | | |
| Undistributed ordinary income | | $ | 379 | |
| Undistributed long-term gains | | | — | |
| Net accumulated earnings | | | 379 | |
| Capital loss carryforwards | | | (110,694 | ) |
| Net unrealized appreciation | | | 702,037 | |
| Total accumulated earnings | | $ | 591,722 | |
During the year ended December 31, 2023, the Alger 35 ETF, the Alger Mid Cap 40 ETF and the Alger Weatherbie Enduring Growth ETF, for federal income tax purpose, had capital loss carryforwards of $3,961,429, $20,499,697 and $110,694, respectively. These amounts will not be subject to expiration under the Regulated Investment Company Modernization Act of 2010, and these amounts may be applied against future net realized gains until their utilization.
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is determined annually and is attributable primarily to the tax deferral of losses on wash sales.
The Funds accrue tax on unrealized gains in foreign jurisdictions that impose a foreign capital tax.
Permanent differences, primarily from in-kind redemptions on the Alger 35 ETF and in-kind redemptions on the Alger Mid Cap 40 ETF, resulted in the following reclassifications among the Funds’ components of net assets at December 31, 2023:
| Alger 35 ETF | | | |
| Net Earnings/(Loss) | | $ | (205,122 | ) |
| Paid in Capital | | $ | 205,122 | |
| Alger Mid Cap 40 ETF | | | |
| Net Earnings/(Loss) | | $ | (1,033,763 | ) |
| Paid in Capital | | $ | 1,033,763 | |
NOTE 8 — Fair Value Measurements:
The following is a summary of the inputs used as of December 31, 2023 in valuing the Funds’ investments carried at fair value on a recurring basis. Based upon the nature, characteristics, and risks associated with their investments, the Funds have determined that presenting them by security type and sector is appropriate.
- 45 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
| Alger 35 ETF | | TOTAL | | | LEVEL 1 | | | LEVEL 2 | | | LEVEL 3 | |
| COMMON STOCKS | | | | | | | | | | | | | | | | |
| Communication Services | | $ | 1,229,775 | | | $ | 1,229,775 | | | $ | — | | | $ | — | |
| Consumer Discretionary | | | 2,336,708 | | | | 2,336,708 | | | | — | | | | — | |
| Financials | | | 110,350 | | | | 110,350 | | | | — | | | | — | |
| Healthcare | | | 2,176,095 | | | | 2,176,095 | | | | — | | | | — | |
| Industrials | | | 1,014,547 | | | | 1,014,547 | | | | — | | | | — | |
| Information Technology | | | 4,881,871 | | | | 4,881,871 | | | | — | | | | — | |
| TOTAL COMMON STOCKS | | $ | 11,749,346 | | | $ | 11,749,346 | | | $ | — | | | $ | — | |
| REAL ESTATE INVESTMENT TRUST | | | | | | | | | | | | | | | | |
| Real Estate | | | 231,071 | | | | 231,071 | | | | — | | | | — | |
| TOTAL INVESTMENTS IN SECURITIES | | $ | 11,980,417 | | | $ | 11,980,417 | | | $ | — | | | $ | — | |
| Alger Mid Cap 40 ETF | | TOTAL | | | LEVEL 1 | | | LEVEL 2 | | | LEVEL 3 | |
| COMMON STOCKS | | | | | | | | | | | | | | | | |
| Communication Services | | | 2,139,319 | | | | 2,139,319 | | | | — | | | | — | |
| Consumer Discretionary | | | 4,872,111 | | | | 4,872,111 | | | | — | | | | — | |
| Consumer Staples | | | 1,232,180 | | | | 1,232,180 | | | | — | | | | — | |
| Energy | | | 1,233,661 | | | | 1,233,661 | | | | — | | | | — | |
| Financials | | | 531,302 | | | | 531,302 | | | | — | | | | — | |
| Healthcare | | | 3,689,641 | | | | 3,689,641 | | | | — | | | | — | |
| Industrials | | | 4,766,976 | | | | 4,766,976 | | | | — | | | | — | |
| Information Technology | | | 8,352,800 | | | | 8,352,800 | | | | — | | | | — | |
| TOTAL COMMON STOCKS | | $ | 26,817,990 | | | $ | 26,817,990 | | | $ | — | | | $ | — | |
| TOTAL INVESTMENTS IN SECURITIES | | $ | 26,817,990 | | | $ | 26,817,990 | | | $ | — | | | $ | — | |
| Alger Weatherbie Enduring Growth ETF | | TOTAL | | | LEVEL 1 | | | LEVEL 2 | | | LEVEL 3 | |
| COMMON STOCKS | | | | | | | | | | | | | | | | |
| Communication Services | | | 49,221 | | | | 49,221 | | | | — | | | | — | |
| Consumer Discretionary | | | 157,320 | | | | 157,320 | | | | — | | | | — | |
| Financials | | | 129,691 | | | | 129,691 | | | | — | | | | — | |
| Healthcare | | | 1,185,444 | | | | 1,185,444 | | | | — | | | | — | |
| Industrials | | | 1,639,910 | | | | 1,639,910 | | | | — | | | | — | |
| Information Technology | | | 736,711 | | | | 736,711 | | | | — | | | | — | |
| Real Estate | | | 303,595 | | | | 303,595 | | | | — | | | | — | |
| TOTAL COMMON STOCKS | | $ | 4,201,892 | | | $ | 4,201,892 | | | $ | — | | | $ | — | |
| TOTAL INVESTMENTS IN SECURITIES | | $ | 4,201,892 | | | $ | 4,201,892 | | | $ | — | | | $ | — | |
Certain of the Funds’ assets and liabilities are held at carrying amount or face value, which approximates fair value for financial reporting purposes. As of December 31, 2023, such assets were categorized within the ASC 820 disclosure hierarchy as follows:
- 46 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
| | | TOTAL FUND | | | LEVEL 1 | | | LEVEL 2 | | | LEVEL 3 | |
| Cash and cash equivalents | | | | | | | | | | | | | | | | |
| Alger 35 ETF | | $ | 1,008,185 | | | $ | — | | | $ | 1,008,185 | | | $ | — | |
| Alger Mid Cap 40 ETF | | | 1,250,348 | | | | — | | | | 1,250,348 | | | | — | |
| Alger Weatherbie Enduring Growth ETF | | | 247,936 | | | | — | | | | 247,936 | | | | — | |
NOTE 9 — Principal Risks:
Each Fund is an actively managed ETF that does not seek to replicate the performance of a specified index. The Fund does not provide daily disclosure of its portfolio holdings, but instead provides a verified intraday indicative value (“VIIV”) calculated and disseminated every second throughout the trading day. The VIIV is designed to be a highly correlated per share value of the underlying portfolio, but there is a risk that market price of the Fund may vary significantly from its NAV. The VIIV Calculation Methodology and a historical daily comparison of the Fund’s VIIV to its NAV is available on www.alger.com. Because the Fund trades on the basis of a VIIV, it may trade at a wider bid/ask spread than ETFs that publish their portfolios on a daily basis, especially during periods of market disruption or volatility, and, therefore, may cost investors more to trade. Although the Fund seeks to benefit from keeping its portfolio information confidential, market participants may attempt to identify the Fund’s trading strategy, which, if successful, could result in such market participants engaging in certain predatory trading practices that may have the potential to harm the Fund and its shareholders. The Fund’s shares trade in the secondary market on NYSE Arca, Inc. and therefore may experience associated risks, such as the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility, and disruptions in the creation and/or redemption process of the Fund. Any of these factors may cause the Fund’s shares to trade at a premium or discount to NAV. Creations and redemptions in the Fund occur through an agent called an “AP Representative” who is not obligated to engage in creations or redemptions. The Fund may have a limited number of AP Representatives and if AP Representatives are not able to proceed with creations and/ or redemptions the Fund’s shares may trade at a discount to NAV and possibly face trading halts and/or delisting, and investors could experience significant losses as a result.
- 47 -
THE ALGER ETF TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
Investing in the stock market involves risks, including the potential loss of principal. Your investment in Fund shares represents an indirect investment in the securities owned by the Fund. The value of these securities, like other investments, may move up or down, sometimes rapidly and unpredictably. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Local, regional or global events such as environmental or natural disasters, war, terrorism, pandemics, outbreaks of infectious diseases and similar public health threats, recessions, or other events could have a significant impact on investments. A significant portion of assets may be invested in securities of companies in related sectors, and may be similarly affected by economic, political, or market events and conditions and may be more vulnerable to unfavorable sector developments. Investing in companies of small and medium capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. Each Fund is classified as a “non-diversified fund” under federal securities laws because it can invest in fewer individual companies than a diversified fund. Assets may be focused in a small number of holdings, making them susceptible to risks associated with a single economic, political or regulatory event than a more diversified portfolio. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment.
NOTE 10 — Subsequent Events:
Management of each Fund has evaluated events that have occurred subsequent to December 31, 2023, through the issuance date of the Financial Statements. No such events have been identified which require recognition and/or disclosure.
- 48 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of Alger 35 ETF, Alger Mid Cap 40 ETF and Alger Weatherbie Enduring Growth ETF and the Board of Trustees of The Alger ETF Trust:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statements of assets and liabilities of The Alger ETF Trust, comprising Alger 35 ETF, Alger Mid Cap 40 ETF and Alger Weatherbie Enduring Growth ETF (collectively, the “Funds”), including the schedules of investments, as of December 31, 2023, the related statements of operations, changes in net assets, and the financial highlights for the periods indicated in the table below, and the related notes.
In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of each of the Funds listed above constituting Alger ETF Trust as of December 31, 2023, and the results of their operations, the changes in their net assets and the financial highlights for the periods indicated in the table below, in conformity with accounting principles generally accepted in the United States of America.
Individual Fund
Comprising the
Alger ETF Trust | Statement of
Operations | Statements of
Changes in Net
Assets | Financial Highlights |
| Alger 35 ETF | For the year ended December 31, 2023 | For the years ended December 31, 2023 and 2022 | For the years ended December 31, 2023, 2022, and the period from May 3, 2021 (commencement of operations) through December 31, 2021 |
| Alger Mid Cap 40 ETF | For the year ended December 31, 2023 | For the years ended December 31, 2023 and 2022 | For the years ended December 31, 2023, 2022, and the period from February 26, 2021 (commencement of operations) through December 31, 2021 |
Alger Weatherbie
Enduring Growth
ETF | For the period from March 6, 2023 (commencement of operations) through December 31, 2023 |
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
- 49 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
Deloitte & Touche LLP
New York, New York
February 26, 2024
We have served as the auditor of one or more investment companies within the Alger group of investment companies since 2009.
- 50 -
THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited)
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: transaction costs, such as brokerage commissions paid on purchases and sales of Fund shares, if applicable; and ongoing costs, including management fees, and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other funds.
The example below is based on an investment of $1,000 invested at the beginning of the six-month period starting July 1, 2023 and ending December 31, 2023 and held for the entire period.
Actual Expenses
The first line for each Fund in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Six Months Ended December 31, 2023” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each Fund in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the Fund’s shares and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as brokerage commissions paid on purchases and sales of Fund shares or deduction of insurance charges against assets or annuities. Therefore, the second line under each Fund in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
- 51 -
THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
| | | Beginning
Account
Value
July 1, 2023 | | | Ending
Account
Value
December 31, 2023 | | | Expenses
Paid During
the Six Months
Ended
December 31,
2023(a) | | | Annualized
Expense Ratio
For the
Six Months
Ended
December 31,
2023(b) | |
| Alger 35 ETF | | | | | | | | | | | | | | | | |
| Actual | | $ | 1,000.00 | | | $ | 1,108.40 | | | $ | 2.92 | | | | 0.55 | % |
| Hypothetical(c) | | | 1,000.00 | | | | 1,022.43 | | | | 2.80 | | | | 0.55 | |
| | | | | | | | | | | | | | | | | |
| Alger Mid Cap 40 ETF | | | | | | | | | | | | | | | | |
| Actual | | $ | 1,000.00 | | | $ | 1,067.50 | | | $ | 3.13 | | | | 0.60 | % |
| Hypothetical(c) | | | 1,000.00 | | | | 1,022.18 | | | | 3.06 | | | | 0.60 | |
| | | | | | | | | | | | | | | | | |
| Alger Weatherbie Enduring Growth ETF | | | | | | | | | | | | | | | | |
| Actual | | $ | 1,000.00 | | | $ | 1,057.10 | | | $ | 3.37 | | | | 0.65 | % |
| Hypothetical(c) | | | 1,000.00 | | | | 1,021.93 | | | | 3.31 | | | | 0.65 | |
| (a) | Expenses are equal to the annualized expense ratio of the Fund, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| (c) | 5% annual return before expenses. |
- 52 -
THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
Trustees and Officers of the Trust
Information about the Trustees and officers of the Trust is set forth below. In the table the term “Alger Fund Complex” refers to the Trust, The Alger Portfolios, The Alger Funds, The Alger Institutional Funds, Alger Global Focus Fund and The Alger Funds II, each of which is a registered investment company managed by Alger Management. Each Trustee serves until an event of termination, such as death or resignation, or until his or her successor is duly elected; each officer’s term of office is one year.
Additional information regarding the Trustees and officers of the Trust is available in the Trust’s Statement of Additional Information.
Name (Year of Birth)
and Address(1) | Position(s)
Held with
the Trust and
Length of
Time Served | Principal Occupation(s)
During Past Five Years | Number
of Funds
in the
Alger Fund
Complex(3)
which are
Overseen
by Trustee | Other
Directorships
Held by
Trustee
During
Past Five
Years |
| Interested Trustee(2): | | | | |
| | | | | |
| Hilary M. Alger (1961) | Trustee since 2020 | Non-Profit Fundraising Consultant since 2015, Schultz & Williams, Non-profit Fundraising Consultant since 2014, Hilary Alger Consulting, Emeritus Trustee since 2020 and Trustee from 2013 to 2020, Philadelphia Ballet; School Committee Member from 2017 to 2023, Germantown Friends School; Trustee, Target Margin Theatre from 1995 to 2023. | 28 | Board of Directors, Alger Associates, Inc. |
| Non-Interested Trustees: | | | | |
| | | | | |
| Charles F. Baird, Jr. (1953) | Trustee since 2020 | Managing Partner since 1997, North Castle Partners (private equity securities group). | 28 | None |
| David Rosenberg (1962) | Trustee since 2020 | Associate Professor of Law since August 2000, Zicklin School of Business, Baruch College, City University of New York. | 28 | None |
| Nathan E. Saint-Amand M.D. (1938) | Trustee since 2020 | Medical doctor in private practice since 1970; Member of the Board of the Manhattan Institute (non-profit policy research) since 1988. | 28 | None |
(1) The address of each Trustee is c/o Fred Alger Management, LLC, 100 Pearl Street, 27th Floor, New York, NY 10004.
(2) Ms. Alger is an “interested person” (as defined in the Investment Company Act of 1940, as amended) of the Trust by virtue of her ownership control of Alger Associates, Inc., which indirectly controls Alger Management and its affiliates.
(3) “Alger Fund Complex” refers to the Trust and the five other registered investment companies managed by Alger Management and the series therof. Each Trustee serves until an event of termination, such as death or resignation, or until his or her successor is duly elected. Each of the Trustees serves on the board of trustees of the other five registered investment companies in the Alger Fund Complex.
- 53 -
THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
| Name (Year of Birth), Position | | Officer |
| with Trust and Address(1) | Principal Occupations | Since |
| Officers(2): | | |
| | | |
Hal Liebes (1964)
President,
Principal Executive Officer | Executive Vice President, Chief Operating Officer (“COO”) and Secretary, Alger Management; COO and Secretary, Alger Associates, Inc.; Director, Alger SICAV; Vice President, COO, Manager and Secretary, Alger Capital, LLC and Alger Group Holdings, LLC; Executive Director and Chairman, Alger Management, Ltd.; COO and Secretary, Weatherbie Capital, LLC; Secretary and Manager, Alger Apple Real Estate LLC; Manager, Alger Partners Investors I LLC, Alger Partners Investors II LLC, Alger Partners Investors-Crossbay LLC, and Alger Partners Investors KEIGF; Secretary, Alger Boulder I. | 2020 |
Tina Payne (1974)
Secretary,
Chief Compliance Officer,
Chief Legal Officer | Senior Vice President, General Counsel, Chief Compliance Officer (“CCO”) and Assistant Secretary, Alger Management; Senior Vice President, General Counsel, and Secretary, Alger LLC; CCO and Authorized Signer, Alger Management, Ltd.; Vice President and Assistant Secretary, Alger Group Holdings, LLC; Assistant Secretary, Weatherbie Capital, LLC. | 2020 |
Michael D. Martins (1965)
Treasurer,
Principal Financial Officer | Senior Vice President of Alger Management. | 2020 |
Sergio M. Pavone (1961)
Assistant Treasurer | Vice President of Alger Management. | 2020 |
Mia G. Pillinger (1989)
Assistant Secretary | Vice President and Associate Counsel of Alger Management. Formerly, Associate at Willkie Farr & Gallagher, LLP, from 2016 to 2020. | 2020 |
Sushmita Sahu (1981)
AML Compliance Officer | Vice President of Alger Management. | 2021 |
| (1) | The address of each officer is c/o Fred Alger Management, LLC, 100 Pearl Street, 27th Floor, New York, NY 10004. |
| (2) | Each officer’s term of office is one year. Each officer serves in the same capacity for the other funds in the Alger Fund Complex. |
The Statement of Additional Information contains additional information about the Trust’s Trustees and officers and is available without charge upon request by calling (800) 223-3810.
- 54 -
THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT
At a meeting held on September 19, 2023 (the “Meeting”), the Board of Trustees (the “Board”) of The Alger ETF Trust (the “Trust”), including a majority of the trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Trust (the “Independent Trustees”), reviewed and approved the continuation of the investment management agreement between Fred Alger Management, LLC (“Fred Alger Management”) and the Trust, on behalf of each Fund, and the investment sub-advisory agreement between Fred Alger Management and Weatherbie Capital, LLC (the “Sub-Adviser”), an affiliate of Fred Alger Management, on behalf of Alger Weatherbie Enduring Growth ETF (each, a “Management Agreement”), for an additional one-year period. Fred Alger Management and the Sub-Adviser are collectively referred to herein as the “Manager.”
In considering the continuation of each Management Agreement, the Board reviewed and considered information provided by the Manager and its representatives at the Meeting and throughout the year at meetings of the Board and its committees. The Board also reviewed and considered information the Manager provided in response to a request for information Independent Trustee counsel submitted to the Manager on behalf of the Independent Trustees in connection with the Board’s annual contract consideration, as well as information provided in response to a supplemental request from Independent Trustee counsel on behalf of the Independent Trustees. The materials for the Meeting included a presentation and analysis of the Funds and the Manager by FUSE Research Network LLC (“FUSE”), an independent consulting firm. The Board also received a presentation from FUSE representatives at the Meeting and, among other things, received a description of the methodology FUSE used to select the exchange-traded funds (“ETFs”) included in each Fund’s Peer Universe and Peer Group (as described below). The Board considered the information provided to it about the Funds together, and with respect to each Fund separately, as the Board deemed appropriate.
The Independent Trustees also received advice from, and met separately with, their Independent Trustee counsel in considering whether to approve the continuation of each Management Agreement. The Independent Trustees also received a memorandum from Independent Trustee counsel discussing the legal standards and their duties in considering the continuation of the Management Agreements, and counsel reviewed those standards with the Independent Trustees during their separate meeting. The Independent Trustees also met separately with senior management of the Manager, during which time the Independent Trustees discussed various matters related to proposed continuation of the Management Agreements.
The Board reviewed the materials provided and considered all of the factors it deemed relevant in approving the continuance of the Management Agreement, including, but not limited to: (i) the nature, extent and quality of the services provided by the Manager; (ii) the short- and long-term investment performance of each Fund; (iii) the costs of the services the Manager provided and profits it realized; (iv) the extent to which economies of scale are realized as a Fund grows; and (v) whether fee levels reflect these economies of scale for the benefit of Fund shareholders. The Board did not identify any one factor as dispositive, and each Board member may have attributed different weights to the factors considered.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
In the discussions that follow, reference is made to the “median” in the Peer Group and Peer Universe categories. With respect to performance, below median performance represents performance that is worse relative to the median, and above median performance represents performance that is better relative to the median of the funds in the relevant Performance Universe. With respect to expenses, below median fees or expenses represent fees or expenses that are lower relative to the median, and above median fees or expenses represent fees or expenses that are higher relative to the median of the funds in the relevant Expense Group (as described below).
In particular, in approving the continuance of each Management Agreement, the Board considered the following factors:
Nature, Extent and Quality of Services
The Board reviewed and considered information regarding the nature, extent and quality of investment management services provided by the Manager to the Funds. This information included, among other things, the qualifications, background and experience of the professional personnel who perform services for the Funds; the structure of investment professional compensation; oversight of third-party service providers; investment performance, fee and expense information; fees and payments to intermediaries for fund administration, transfer agency and shareholder services; legal and compliance matters, including related to each Fund’s operation as an ETF pursuant to exemptive relief obtained from the Securities and Exchange Commission; risk controls; pricing and other services provided by the Manager; and the range of advisory fees the Manager charged to other funds and accounts under its management, including the Manager’s explanation of differences among such funds and accounts and the Funds, where relevant. The Board noted that it received information at regular meetings throughout the year regarding the services rendered by the Manager concerning the management of each Fund’s affairs, including certain portfolio manager presentations, and Fred Alger Management’s role in coordinating and overseeing providers of other services to the Funds. The Board also noted the work undertaken by the Manager with respect to implementing new regulatory requirements applicable to the Funds. The Trustees also noted that the Funds are not designed to track the performance of an index, and investment decisions are the primary responsibility of Fred Alger Management.
The Board noted Fred Alger Management’s history and expertise in the “growth” style of investment management, as well as Fred Alger Management’s consistency in applying its “growth” style investment philosophy and process. With respect to the Alger Weatherbie Enduring Growth ETF, the Board also considered the investment approach of the Sub-Adviser, which takes a fundamental, bottom-up research approach to investing in growth equities, similar to that of Fred Alger Management. The Board noted the length of time the Manager had provided services as an investment adviser to each Fund and also noted FUSE’s analysis that the long-term performance record of certain series in the Alger Family of Funds supports Fred Alger Management’s view on its overall investment capabilities.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
The Board also reviewed and considered the benefits provided to Fund shareholders of investing in a Fund that is part of the Alger Family of Funds. The Board noted the continuing strong financial position of the Manager and its commitment to the fund business.
Following consideration of such information, the Trustees determined that they remain satisfied with the nature, extent and quality of services provided by the Manager to the Funds under the Management Agreements.
Fund Performance
The Board reviewed and considered the performance results of each Fund over various time periods. The Board considered the performance returns for each Fund in comparison to the performance returns of a universe of ETFs deemed comparable to the Fund based on various investment, operational, and pricing characteristics (“Peer Universe”), and a group of ETFs from within such Peer Universe deemed comparable to the Fund based primarily on investment strategy similarity (“Peer Group”), each as selected by FUSE, as well as to the Fund’s benchmark index.
The Board also reviewed and considered Fund performance reports provided by management and discussions that occurred with investment personnel and senior management at Board meetings throughout the year. The Board further noted that representatives of the Manager review with the Trustees the recent and longer-term performance of each Fund, including contributors to and detractors from Fund performance at every quarterly meeting of the Board throughout the year. In considering the Funds’ performance generally, the Board observed the Manager’s consistency in implementing its growth style investment process and philosophy for the Funds and considered how a strategy’s “growthiness” as compared to peers can impact relative performance results, even among comparisons that either FUSE or the Manager already have identified as having growth characteristics. In this regard, the Board considered FUSE’s commentary regarding the Funds’ growth investment style as compared to a universe of peers comprised of actively managed funds within each Fund’s Morningstar category and as compared to each Fund’s benchmark index, as measured by Morningstar’s Raw Value-Growth score.
The Trustees concluded that each Fund’s performance was acceptable, including particularly in the context of management’s plans to address underperformance where applicable. Further discussion of the Board’s considerations with respect to each Fund’s performance is set forth below.
Alger 35 ETF. The Board considered that the Fund had recently commenced operations and thus had a limited performance history. The Board noted that the Fund’s annualized total return for the one-year and since inception periods underperformed the median of its Peer Group and was in the fourth quartile of its Peer Universe. In this regard, the Board considered FUSE’s commentary that “growthier” large growth funds have underperformed peers during the last three years, as well as sector weightings that contributed to underperformance.
Alger 40 Mid Cap ETF. The Board considered that the Fund had recently commenced operations and thus had a limited performance history. The Board noted that the Fund’s annualized total return for the one-year and since inception periods underperformed the median of its Peer Group. and was in the fourth quartile of its Peer Universe. The Board noted the concentrated nature of the Fund’s strategy and considered FUSE’s commentary that concentrated strategies often deliver either significant excess or lagging results.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
Alger Weatherbie Enduring Growth ETF. The Board considered that the Fund had recently commenced operations and thus had a limited performance history. The Board noted that the Fund’s annualized total return for the since inception period outperformed the median of its Peer Group and was in the first quartile of its Peer Universe.
Comparative Fees and Expenses
For each Fund, the Board reviewed and considered the contractual management fee (the “Contractual Management Fee”) payable by the Fund to Fred Alger Management in light of the nature, extent and quality of the services provided by the Manager pursuant to the Management Agreements. The Board also reviewed and considered the fee waiver and/ or expense reimbursement arrangements for each Fund, and considered the actual fee rate (after taking such waivers and reimbursements into account) payable by the Fund (the “Actual Management Fee”). Additionally, the Board received and considered information comparing each Fund’s Contractual Management Fee, Actual Management Fee and overall expenses, including administrative fees payable to Fred Alger Management, with those of the funds in the Peer Group provided by FUSE. The Board reviewed the methodology used by FUSE in calculating expense information, including that for purposes of the comparisons below, the Contractual Management Fee used by FUSE for the Fund and peers includes the advisor fee and administrative fee, if a fund reports both.
The Board discussed the factors that could contribute to each Fund’s Contractual Management Fee, Actual Management Fee or total expenses being above or below the median of the Fund’s Peer Group. The Board concluded that the Contractual Management Fee charged to each Fund is reasonable in relation to the services rendered by Fred Alger Management and is the product of arm’s length negotiations. Further discussion of the Board’s considerations with respect to each Fund’s comparative fees and expenses is set forth below.
Alger 35 ETF. The Board noted that the Contractual Management Fee and total expenses for the Fund were below the median, and in the first (least expensive) quartile of its Peer Group.
Alger Mid Cap 40 ETF. The Board noted that the Contractual Management Fee and total expenses for the Fund were equal to the median and in the second quartile of its Peer Group.
Alger Weatherbie Enduring Growth ETF. The Board noted that the Contractual Management Fee and total expenses for the Fund were above the median and in the third quartile of its Peer Group. The Board also noted that, with respect to the Fund, the Sub-Adviser is paid by Fred Alger Management out of the management fee Fred Alger Management receives from the Fund.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
In connection with its consideration of each Fund’s fees payable under the Management Agreement, the Board also received information on the range of fees charged by the Manager for funds and accounts of a similar investment strategy to the Funds that are under its management. The Board noted management’s explanation that comparisons with such accounts may be of limited relevance given the different structures and regulatory requirements of U.S. registered funds, such as the Funds, versus those accounts and the differences in the levels of services required by the Funds as compared to those accounts.
Profitability
The Board reviewed and considered information regarding the profits realized by Fred Alger Management in connection with the operation of each Fund. In this respect, the Board considered overall profitability, including in comparison to certain investment advisory peers, as well as the profits of Fred Alger Management in providing investment management and other services to each Fund during the year ended June 30, 2023. The Board also reviewed the profitability methodology and any changes thereto, noting that management maintains a consistent methodology year to year. The Board considered FUSE’s view that Fred Alger Management’s expense allocation policies align with accepted industry practices.
The Board noted that costs incurred in establishing and maintaining the infrastructure necessary for the fund operations conducted by Fred Alger Management may not be fully reflected in the expenses allocated to each Fund in determining Fred Alger Management’s profitability.
The Board also considered the extent to which the Manager might derive ancillary benefits from Fund operations, including, for example, through soft dollar arrangements. Based upon its consideration of all these factors, the Trustees concluded that the level of profits realized by Fred Alger Management and its affiliates from providing services to each Fund was not excessive in view of the nature, extent and quality of services provided to each Fund.
Economies of Scale
For each Fund, the Board reviewed and considered the extent to which the Manager may realize economies of scale, if any, as the Fund grows larger and whether the Fund’s management fee structure reflects any economies of scale for the benefit of Fund shareholders. The Board considered the Manager’s view that the overall size of Fred Alger Management allows it to realize other economies of scale, such as with office space, purchases of technology, and other general business expenses.
The Trustees concluded that for each Fund, to the extent economies of scale may be realized by Fred Alger Management, the benefits of such economies of scale would be shared with the Fund and its shareholders as the Fund grows.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
Conclusion
The Board’s consideration of the Contractual Management Fee for each Fund also had the benefit of a number of years of reviews of the Management Agreement, during which lengthy discussions took place between the Board and representatives of the Manager. Certain aspects of the arrangements may receive greater scrutiny in some years than in others, and the Board’s conclusions may be based, in part, on its consideration of the Fund’s arrangements in prior years.
Based on its review, consideration and evaluation of all factors it believed relevant, including the above-described factors and conclusions, the Board, including the Independent Trustees voting separately, unanimously approved the continuation of each Management Agreement for an additional one-year period.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
Privacy Policy
| U.S. Consumer Privacy Notice | Rev. 6/22/21 |
| | |
FACTS | WHAT DOES ALGER DO WITH YOUR PERSONAL INFORMATION? |
| | |
| Why? | Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
| What? | The types of personal information we collect and share depend on the product or service you have with us. This information can include: • Social Security number and • Account balances and • Transaction history and • Purchase history and • Assets When you are no longer our customer, we continue to share your information as described in this notice. |
| How? | All financial companies need to share personal information to run their everyday business. In the section below, we list the reasons financial companies can share personal information; the reasons Alger chooses to share; and whether you can limit this sharing. |
| | | |
Reasons we can share your personal information | Does Alger share? | Can you limit this sharing? |
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | Yes | No |
For our marketing purposes — to offer our products and services to you | Yes | No |
For joint marketing with other financial companies | No | We don’t share |
For our affiliates’ everyday business purposes — information about your transactions and experiences | Yes | No |
For our affiliates’ everyday business purposes — information about your creditworthiness | No | We don’t share |
| For nonaffiliates to market to you | No | We don’t share |
| Questions? Call 1-800-223-3810 | | |
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
| Who we are | |
| Who is providing this notice? | Alger includes Fred Alger Management, LLC and Fred Alger & Company, LLC as well as the following funds: The Alger Funds, The Alger Funds II, The Alger Institutional Funds, The Alger Portfolios, Alger Global Focus Fund, and The Alger ETF Trust. |
| What we do | |
| How does Alger protect my personal information? | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. |
| How does Alger collect my personal information? | We collect your personal information, for example, when you: • Open an account or • Make deposits or withdrawals from your account or • Give us your contact information or • Provide account information or • Pay us by check. |
| Why can’t I limit all sharing? | Federal law gives you the right to limit some but not all sharing related to: • sharing for affiliates’ everyday business purposes – information about your credit worthiness • affiliates from using your information to market to you • sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. |
| Definitions | |
| Affiliates | Companies related by common ownership or control. They can be financial and nonfinancial companies. • Our affiliates include Fred Alger Management, LLC, Weatherbie Capital, LLC and Fred Alger & Company, LLC as well as the following funds: The Alger Funds, The Alger Funds II, The Alger Institutional Funds, The Alger Portfolios, Alger Global Focus Fund, and The Alger ETF Trust. |
| Nonaffiliates | Companies not related by common ownership or control. They can be financial and nonfinancial companies. |
| Joint marketing | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
Proxy Voting Policies
A description of the policies and procedures the Funds use to determine how to vote proxies relating to portfolio securities and the proxy voting record is available, without charge, by calling (800) 223-3810 or online on the Funds’ website at http://www.alger.com or on the SEC’s website at http://www.sec.gov.
Fund Holdings
The Board has adopted policies and procedures relating to disclosure of the Funds’ portfolio securities. These policies and procedures recognize that there may be legitimate business reasons for holdings to be disclosed and seek to balance those interests to protect the proprietary nature of the trading strategies and implementation thereof by the Funds.
Generally, the policies prohibit the release of information concerning portfolio holdings, which have not previously been made public, to individual investors, institutional investors, intermediaries that distribute the Funds’ shares and other parties which are not employed by the Investment Manager or its affiliates except when the legitimate business purposes for selective disclosure and other conditions (designed to protect the Funds) are acceptable.
The Funds file their complete schedules of portfolio holdings with the SEC semi-annually in shareholder reports on Form N-CSR and after the first and third fiscal quarters as an exhibit to their reports on Form N-PORT. The Funds’ Forms N-CSR and N-PORT are available online on the SEC’s website at www.sec.gov.
In addition, the Funds make publicly available their month-end top 10 holdings (with respect to Alger Mid Cap 40 ETF) and month-end top 5 holdings (with respect to Alger 35 ETF and Alger Weatherbie Enduring Growth ETF) with a 10 day lag and their month-end full portfolios with a 60 day lag on their website www.alger.com and through other marketing communications (including printed advertising/sales literature and/or shareholder telephone customer service centers). No compensation or other consideration is received for the non-public disclosure of portfolio holdings information.
In accordance with the foregoing, the Funds provide portfolio holdings information to third parties including AP Representatives, financial intermediaries and service providers who need access to this information in the performance of their services and are subject to duties of confidentiality (1) imposed by law, including a duty not to trade on non-public information, and/or (2) pursuant to an agreement that confidential information is not to be disclosed or used (including trading on such information) other than as required by law. From time to time, the Funds will communicate with these third parties to confirm that they understand the Funds’ policies and procedures regarding such disclosure. These agreements must be approved by the Trust’s Chief Compliance Officer.
The Board periodically reviews a report disclosing the third parties to whom each Fund’s holdings information has been disclosed and the purpose for such disclosure, and it considers whether or not the release of information to such third parties is in the best interest of the Fund and its shareholders.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
In addition to material the Funds routinely provide to shareholders, the Investment Manager may make additional statistical information available regarding the Alger Family of Funds. Such information may include, but not be limited to, relative weightings and characteristics of a Fund versus an index (such as P/E ratio, alpha, beta, capture ratio, maximum drawdown, standard deviation, EPS forecasts, Sharpe ratio, information ratio, R-squared, and market cap analysis), security specific impact on overall portfolio performance, month-end top ten contributors to and detractors from performance, portfolio turnover, and other similar information. Shareholders should visit www.alger.com or may also contact the Funds at (800) 223-3810 to obtain such information.
Liquidity Risk Management Program
In accordance with Rule 22e-4 under the 1940 Act (the “Liquidity Rule”), the Trust has adopted and implemented a liquidity risk management program (the “LRMP”), which is reasonably designed to assess and manage each Fund’s liquidity risk.
The Board met on December 12, 2023 (the “Meeting”) to review the LRMP. The Board previously appointed Alger Management as the program administrator for the LRMP and approved an agreement with ICE Data Services (“ICE”), a third party vendor that assists each Fund with liquidity classifications required by the Liquidity Rule. Alger Management also previously delegated oversight of the LRMP to the Liquidity Risk Committee (the “Committee”). At the Meeting, the Committee, on behalf of Alger Management, provided the Board with a report that addressed the operation of the LRMP and assessed its adequacy and effectiveness of implementation, and any material changes to the LRMP (the “Report”). The Report covered the period from December 1, 2022 through November 30, 2023 (the “Review Period”).
The Report stated that the Committee assessed each Fund’s liquidity risk by considering qualitative factors such as each Fund’s investment strategy, holdings, diversification of investments, redemption policies, cash flows, cash levels, shareholder concentration, access to borrowings, the relationship between each Fund’s liquidity and the way in which each Fund’s shares trade, including the efficiency of the arbitrage function and the level of active participation by market participants including authorized participants, and the effect of the composition of baskets on the overall liquidity of each Fund’s portfolio, among others, in conjunction with the quantitative classifications generated by ICE. In addition, in connection with the review of each Fund’s liquidity risks and the operation of the LRMP and the adequacy and effectiveness of its implementation, the Committee also evaluated the levels at which to set the reasonably anticipated trade size (“RATS”) and market price impact. The Report described the process for determining that each Fund primarily holds investments that are highly liquid. The Report noted that the Committee also performed stress tests on each Fund, concluded that each Fund remained primarily highly liquid. The Report stated that during the Reporting Period, based on updates to Alger Management’s Rule 144A Policy and Procedures, the reporting of Rule 144A securities was updated to reflect the factors used to determine whether such securities, which are deemed illiquid, are liquid and freely tradeable.
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THE ALGER ETF TRUST
ADDITIONAL INFORMATION (Unaudited) (Continued)
There were no material changes to the LRMP during the Review Period. The Report provided to the Board stated that the Committee concluded that, based on the operation of the functions, as described in the Report, during the Review Period, the Trust’s LRMP was operating effectively and adequately with respect to the Funds and has been effectively implemented during the Review Period.
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THE ALGER ETF TRUST
100 Pearl Street, 27th Floor
New York, NY 10004
(800) 223-3810
www.alger.com
Investment Manager
Fred Alger Management, LLC
100 Pearl Street, 27th Floor
New York, NY 10004
Sub-Adviser
Weatherbie Capital, LLC
265 Franklin Street, Suite 1603
Boston, MA 02110
Distributor
Fred Alger & Company, LLC
100 Pearl Street, 27th Floor
New York, NY 10004
Custodian, Transfer Agent and Dividend Disbursing Agent
Brown Brothers Harriman & Company
50 Post Office Square
Boston, MA 02110
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
30 Rockefeller Plaza
New York, NY 10112
This report is submitted for the general information of the shareholders of The Alger ETF Trust. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Trust, which contains information concerning the Trust’s investment policies, fees and expenses as well as other pertinent information.
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