THE ALGER ETF TRUST

 

ALGER 35 ETF

ALGER MID CAP 40 ETF

QUARTERLY REPORT

SEPTEMBER 30, 2022

 

Alger is a signatory to the PRI and carbon neutral.

#	American Depositary Receipts.

 

See Notes to Financial Statements.

See 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 and the Alger Mid Cap 40 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.

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 of Trustees (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 Investment Company Act of 1940, as amended (the “1940 Act”), the Funds’ investment adviser, Fred Alger Management, LLC (“Alger Management” or the “Investment Manager”) as the 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 Funds’ 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: making fair value determinations when market quotations for a financial instrument are not readily available in accordance with valuation policies and procedures adopted by the Board; assessing and managing material risks associated with fair valuation determinations; selecting, applying and testing fair valuation methodologies; and overseeing and evaluating pricing services used by the Funds. The Valuation Designee reports its fair valuation determinations and related valuation information to the Board. The Committee meets on an as-needed basis and generally meets quarterly to review and evaluate the effectiveness of the valuation policies and procedures in accordance with the requirements of Rule 2a-5.

 

Investments in money market funds and short-term securities held by the Funds with maturities of 60 days or less are valued at their amortized cost which does not take into account unrealized capital gains or losses and 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 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.

 

 

 

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. Inputs for Level 2 include the last trade price in the case of a halted security, an exchange-listed price which has been adjusted for fair value factors, and prices of closely related securities. Additional Level 2 inputs include an evaluated price which is based upon a compilation of observable market information such as spreads for fixed income and preferred securities. Inputs for Level 3 include, but are not limited to, revenue multiples, earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples, discount rates, time to exit and the probabilities of success of certain outcomes. Such unobservable market information may be obtained from a company’s financial statements and from industry studies, market data, and market indicators such as benchmarks and indexes. Because of the inherent uncertainty and often limited markets for restricted securities, the valuations assigned to such securities by the Funds may significantly differ from the valuations that would have been assigned by the Funds had there been an active market for such securities.

 

(b)  Cash and Cash Equivalents: Cash and cash equivalents include U.S. dollars and overnight time deposits.

The following is a summary of  the inputs used as of  September 30, 2022, 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.

Alger 35 ETF		TOTAL				LEVEL 1				LEVEL 2				LEVEL 3
COMMON STOCKS
Communication Services		$	1,226,052			$	1,226,052			$	—			$	—
Consumer Discretionary			844,337				844,337				—				—
Energy			528,282				528,282				—				—
Financials			174,965				174,965				—				—
Healthcare			2,840,385				2,840,385				—				—
Industrials			381,979				381,979				—				—
Information Technology			2,549,203				2,549,203				—				—
Real Estate			243,732				243,732				—				—
TOTAL COMMON STOCKS		$	8,788,935			$	8,788,935			$	—			$	—
REAL ESTATE INVESTMENT TRUST
Real Estate			257,299				257,299				—				—
TOTAL INVESTMENTS IN SECURITIES		$	9,046,234			$	9,046,234			$	—			$	—

Alger Mid Cap 40 ETF		TOTAL				LEVEL 1				LEVEL 2				LEVEL 3
COMMON STOCKS
Communication Services		$	2,961,023			$	2,961,023			$	—			$	—
Consumer Discretionary			1,927,185				1,927,185				—				—
Consumer Staples			1,248,396				1,248,396				—				—
Energy			928,265				928,265				—				—
Healthcare			7,596,140				7,596,140				—				—
Industrials			4,228,036				4,228,036				—				—
Information Technology			8,497,025				8,497,025				—				—
TOTAL COMMON STOCKS		$	27,386,070			$	27,386,070			$	—			$	—
TOTAL INVESTMENTS IN SECURITIES		$	27,386,070			$	27,386,070			$	—			$	—

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 September 30, 2022, such assets were categorized within the ASC 820 disclosure hierarchy as follows:

 

		TOTAL FUND				LEVEL 1				LEVEL 2				LEVEL 3
Cash and cash equivalents:
Alger 35 ETF		$	33,358			$	—			$	33,358			$	—
Alger Mid Cap 40 ETF			940,508				—				940,508				—