See Notes to Financial Statements.
THE ALGER PORTFOLIOS
Financial Highlights for a share outstanding throughout the period (Unaudited)
| Alger Growth & Income Portfolio | | Class I-2 | |
| | | Six months ended 6/30/2022(i) | | | Year ended 12/31/2021 | | | Year ended 12/31/2020 | | | Year ended 12/31/2019 | | | Year ended 12/31/2018 | | | Year ended 12/31/2017 | |
| Net asset value, beginning of period | | $ | 29.53 | | | $ | 24.34 | | | $ | 21.58 | | | $ | 18.52 | | | $ | 21.02 | | | $ | 17.59 | |
| INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income(ii) | | | 0.18 | | | | 0.35 | | | | 0.31 | | | | 0.38 | | | | 0.37 | | | | 0.33 | |
| Net realized and unrealized gain (loss) on investments | | | (5.28 | ) | | | 7.29 | | | | 2.86 | | | | 5.02 | | | | (1.30 | ) | | | 3.40 | |
| Total from investment operations | | | (5.10 | ) | | | 7.64 | | | | 3.17 | | | | 5.40 | | | | (0.93 | ) | | | 3.73 | |
| Dividends from net investment income | | | (0.15 | ) | | | (0.32 | ) | | | (0.30 | ) | | | (0.34 | ) | | | (0.36 | ) | | | (0.30 | ) |
| Distributions from net realized gains | | | – | | | | (2.13 | ) | | | (0.11 | ) | | | (2.00 | ) | | | (1.21 | ) | | | – | |
| Net asset value, end of period | | $ | 24.28 | | | $ | 29.53 | | | $ | 24.34 | | | $ | 21.58 | | | $ | 18.52 | | | $ | 21.02 | |
| Total return | | | (17.30 | )% | | | | | | | 14.88 | % | | | 29.47 | % | | | (4.61 | )% | | | 21.32 | % |
RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000's omitted)
| | $
| 32,503
| | | $ | | | | $ | | | | | 32,597
| | | $ | 31,451 | | | $ | 39,184 | |
Ratio of net expenses to average net assets | | | 0.92
| % | | | | | | | | | | | 1.02 | % | | | 0.96 | % | | | 0.94 | % |
| Ratio of net investment income to average net assets | | | 1.36 | % | | | | | | | | | | | 1.81 | % | | | 1.74 | % | | | 1.70 | % |
| Portfolio turnover rate | | | 1.68 | % | | | | | | | | | | | 7.33 | % | | | 8.19 | % | | | 7.95 | % |
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.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
NOTES TO FINANCIAL STATEMENTS (Unaudited) |
NOTE 1 — General:
The Alger Portfolios (the “Fund”) is an open-end registered investment company organized as a business trust under the laws of the Commonwealth of Massachusetts. The Fund qualifies as an investment company as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 – Financial Services – Investment Companies. The Fund operates as a series company currently offering seven series of shares of beneficial interest: Alger Capital Appreciation Portfolio, Alger Large Cap Growth Portfolio, Alger Growth & Income Portfolio, Alger Mid Cap Growth Portfolio, Alger Weatherbie Specialized Growth Portfolio, Alger Small Cap Growth Portfolio and Alger Balanced Portfolio (collectively, the “Portfolios”). These financial statements include only the Alger Growth & Income Portfolio (the “Portfolio”). The Portfolio’s investment objective is capital appreciation and current income; it invests primarily in equity securities. Shares of the Portfolio are available to investment vehicles for variable annuity contracts and variable life insurance policies offered by separate accounts of life insurance companies, as well as qualified pension and retirement plans.
NOTE 2 — Significant Accounting Policies:
(a) Investment Valuation: The Portfolio values its financial instruments at fair value using independent dealers or pricing services under policies approved by the Fund’s Board of Trustees (the “Board”). Investments held by the Portfolio 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).
Investments in money market funds and short-term securities held by the Portfolio having a remaining maturity of sixty days or less are valued at amortized cost which approximates market value.
Equity securities, including traded rights, warrants and option contracts for which valuation information is readily available, 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.
Securities for which market quotations are not readily available are valued at fair value, as determined in good faith pursuant to procedures established by the Board and described further herein.
Securities in which the Portfolio invests may be traded in foreign markets that close before the close of the NYSE. Developments that occur between the close of the foreign markets and the close of the NYSE may result in adjustments to the closing prices to reflect what the Portfolio’s investment adviser, pursuant to policies established by the Board, believes to be the fair value of these securities as of the close of the NYSE. The Portfolio may also fair value securities in other situations, for example, when a particular foreign market is closed but the Portfolio is open.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
FASB Accounting Standards Codification 820 – Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that the Portfolio 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 Portfolio. Unobservable inputs are inputs that reflect the Portfolio’s 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, interest rates, prepayment speeds, credit risk, etc.) |
| • | Level 3 – significant unobservable inputs (including the Portfolio’s own assump- tions in determining the fair value of investments) |
The Portfolio’s 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 Portfolio may significantly differ from the valuations that would have been assigned by the Portfolio had there been an active market for such securities.
Valuation processes are determined by a Valuation Committee (“Committee”) authorized by the Board and comprised of representatives of the Portfolio’s investment adviser and officers of the Fund. The Committee reports its fair value determinations and related valuation information to the Board. The Board is responsible for approving the valuation policy and procedures.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
While Committee meetings are held on an as-needed basis, the Committee generally meets quarterly to review and evaluate the effectiveness of the procedures for making fair value determinations. The Committee considers, among other things, the results of quarterly back testing of the fair value model for foreign securities, pricing comparisons between primary and secondary price sources, the outcome of price challenges put to the Portfolio’s pricing vendor, and variances between transactional prices and the previous day’s prices.
In December 2020, the Securities and Exchange Commission (the “SEC”) adopted Rule 2a-5 under the Investment Company Act of 1940, as amended (the “1940 Act”), which is intended to address valuation practices and the role of the board of directors with respect to the fair value of the investments of a registered investment company. Among other things, Rule 2a-5 will permit the Board to designate the Fund’s investment adviser, Fred Alger Management, LLC (“Alger Management” or the “Investment Manager”), to perform the Portfolio’s fair value determinations, which will be subject to the Board’s oversight and certain reporting and other requirements intended to ensure that the Board receives the information it needs to oversee the Investment Manager’s fair value determinations. Compliance with Rule 2a-5 will not be required until September 2022. The Fund, the Board, and the Investment Manager are currently in the process of implementing the requirements of Rule 2a-5 by the deadline.
(b) Cash and Cash Equivalents: Cash and cash equivalents include U.S. dollars, foreign cash and overnight time deposits.
(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.
Premiums and discounts on debt securities purchased are amortized or accreted over the lives of the respective securities.
(d) Foreign Currency Transactions: The books and records of the Portfolio are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the prevailing rates of exchange on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the prevailing exchange rates on the respective dates of such transactions.
Net realized gains and losses on foreign currency transactions represent net gains and losses from the disposition of foreign currencies, currency gains and losses realized between the trade dates and settlement dates of security transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included in realized and unrealized gain or loss on investments in the accompanying Statement of Operations.
(e) Lending of Fund Securities: The Portfolio may lend its securities to financial institutions, provided that the market value of the securities loaned will not at any time exceed one third of the Portfolio’s total assets including borrowings, as defined in its prospectus.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
The Portfolio earns 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 Brown Brothers Harriman & Company, the Portfolio’s custodian (“BBH” or the “Custodian”), in an amount equal to at least 102% of the current market value of U.S. loaned securities or 105% for non-U.S. loaned securities. The market value of the loaned securities is determined at the close of business of the Portfolio. 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 Portfolio 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 Portfolio is 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 Portfolio. Collateral is returned to the borrower upon settlement of the loan. There were no securities loaned as of June 30, 2022.
(f) Dividends to Shareholders: Dividends and distributions payable to shareholders are recorded by the Portfolio on the ex-dividend date.
Dividends from net investment income, if available, are declared and paid quarterly. Dividends from net realized gains, offset by any loss carryforward, are declared and paid annually after the end of the fiscal year in which they were earned.
The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Portfolio’s 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, passive foreign investment companies, and foreign currency transactions. The reclassifications are done annually at year-end and have no impact on the net asset value of the Portfolio and are designed to present the Portfolio’s capital accounts on a tax basis.
(g) Federal Income Taxes: It is the Portfolio’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 Portfolio maintains such compliance, no federal income tax is required.
FASB Accounting Standards Codification 740 – Income Taxes (“ASC 740”) requires the Portfolio to measure and recognize in its 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 Portfolio files income tax returns in the U.S. Federal jurisdiction, as well as the New York State and New York City jurisdictions.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
The statute of limitations on the Portfolio’s tax returns remains open for the tax years 2018-2021. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
(h) Allocation Methods: The Fund accounts separately for the assets, liabilities and operations of the Portfolio. Expenses directly attributable to the Portfolio are charged to the Portfolio’s operations; expenses which are applicable to all Portfolios 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. These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, necessary to present a fair statement of results for the interim period. Actual results may differ from those estimates. All such estimates are of a normal recurring nature.
NOTE 3 — Investment Advisory Fees and Other Transactions with Affiliates:
(a) Investment Advisory Fees: Fees incurred by the Portfolio, pursuant to the provisions of the Fund’s Investment Advisory Agreement with the Investment Manager, are payable monthly and computed based on the following rate. The rate paid as a percentage of average daily net assets, for the six months ended June 30, 2022, is set forth below under the heading “Rate”:
|
| Rate
|
| Alger Growth & Income Portfolio |
|
| 0.50% |
(b) Administration Fees: Fees incurred by the Portfolio, pursuant to the provisions of the Fund’s Fund Administration Agreement with Alger Management, are payable monthly and computed based on the average daily net assets of the Portfolio at the annual rate of 0.0275%.
(c) Brokerage Commissions: During the six months ended June 30, 2022, there were no payments to Fred Alger & Company, LLC, the Fund’s distributor and affiliate of Alger Management (the “Distributor”), in connection with securities transactions.
(d) Interfund Loans: The Portfolio, along with other funds in the Alger Fund Complex (as defined below), may borrow money from and lend money to each other for temporary or emergency purposes. To the extent permitted under its investment restrictions, the Portfolio may lend uninvested cash in an amount up to 15% of its net assets to other funds in the Alger Fund Complex. If the Portfolio has borrowed from other funds in the Alger Fund Complex and has aggregate borrowings from all sources that exceed 10% of the Portfolio’s total assets, the Portfolio 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 Portfolio. There were no interfund loans outstanding as of June 30, 2022.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
(e) Other Transactions with Affiliates: Certain officers and one Trustee of the Fund are directors and/or officers of Alger Management, the Distributor, or their affiliates. No shares of the Portfolio were held by Alger Management and its affiliated entities as of June 30, 2022.
(f) Shareholder Administrative Fees: The Fund has entered into a Shareholder Administrative Services Agreement with Alger Management to compensate Alger Management for providing administrative oversight of the Fund’s transfer agent and for other related services. The Portfolio compensates Alger Management at the annual rate of 0.01% of the average daily net assets for these services.
(g) Trustee Fees: Effective January 1, 2022, each trustee who is not an “interested person” of the Fund, 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 Fund, The Alger Institutional Funds, The Alger Funds II, The Alger Funds, Alger Global Focus Fund and The Alger ETF Trust, each of which is a registered investment company managed by Alger Management. The Independent Trustee appointed as Chairman 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.
Effective January 1, 2022, the Board 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.
(h) Interfund Trades: The Portfolio may engage in purchase and sale transactions with other funds advised by Alger Management or Weatherbie Capital, LLC, an affiliate of Alger Management. There were no interfund trades during the six months ended June 30, 2022.
NOTE 4 — Securities Transactions:
Purchases and sales of securities, other than U.S. Government securities and short-term securities, for the six months ended June 30, 2022, were as follows:
| | | PURCHASES | | | SALES | |
| Alger Growth & Income Portfolio | | $ | 619,799 | | | $ | 1,670,029 | |
NOTE 5 — Borrowings:
The Portfolio may borrow from the Custodian on an uncommitted basis. The Portfolio 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 commissions, if any. The Portfolio may also borrow from other funds in the Alger Fund Complex, as discussed in Note 3(d). For the six months ended June 30, 2022, the Portfolio had the following borrowings from the Custodian and other funds in the Alger Fund Complex:
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
| | | AVERAGE DAILY BORROWING | | | WEIGHTED AVERAGE INTEREST RATE | |
Alger Growth & Income Portfolio | | $ | 17,045 | | | | 2.48 | % |
The highest amount borrowed from the Custodian and other funds in the Alger Fund Complex during the six months ended June 30, 2022 by the Portfolio was as follows:
| | | HIGHEST BORROWING | |
Alger Growth & Income Portfolio | | $ | 132,162 | |
On September 7, 2021, BBH announced that it had entered into an agreement with State Street Bank and Trust Company (“State Street”) to sell BBH’s Investor Services business to State Street (the “Transaction”). The completion of the Transaction is subject to customary closing conditions and regulatory approvals. If the Transaction is finalized, it is expected that State Street will replace BBH as the Fund’s custodian. The timing for completion of the Transaction is not currently known.
NOTE 6 — Share Capital:
The Portfolio has an unlimited number of authorized shares of beneficial interest of $.001 par value. During the six months ended June 30, 2022, and the year ended December 31, 2021, transactions of shares of beneficial interest were as follows:
|
| FOR THE YEAR ENDED DECEMBER 31, 2022 |
|
| FOR THE YEAR ENDED DECEMBER 31, 2021 | |
| |
| SHARES | |
| AMOUNT |
|
| SHARES | | | AMOUNT | |
| Alger Growth & Income Portfolio |
| | |
| |
|
| | | | | |
| Class I-2: |
| | |
| |
|
| | | | | |
| Shares sold |
|
| 29,380 | |
| $ | 792,545 |
|
| | 69,586 | | | $ | 1,946,058 | |
| Dividends reinvested |
|
| 7,747 | |
| | |
|
| | | | | | | |
| Shares redeemed |
|
| (88,585 | ) |
| | (2,425,060 |
|
| | (195,943 | ) | | | (5,483,045 | ) |
| Net decrease |
|
| (51,458 | ) |
| $ | (1,430,010 |
|
| | (15,418 | ) | | $ | (314,117 | ) |
NOTE 7 — Income Tax Information:
At December 31, 2021, the Portfolio had no capital loss carryforwards utilized for federal income tax purposes.
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,
U.S. Internal Revenue Code Section 988 currency transactions, tax treatment of partnership investments, realization of unrealized appreciation of passive foreign investment companies, and return of capital from real estate investment trust investments.
The Portfolio accrues tax on unrealized gains in foreign jurisdictions that impose a foreign capital tax.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
NOTE 8 — Fair Value Measurements:
The major categories of securities and their respective fair value inputs are detailed in the Portfolio’s Schedule of Investments. Based upon the nature, characteristics, and risks associated with its investments as of June 30, 2022, the Portfolio has determined that presenting them by security type and sector is appropriate.
Alger Growth & Income Portfolio
| | TOTAL | | | LEVEL 1 | | | LEVEL 2 | | | LEVEL 3 | |
| COMMON STOCKS | | | | | | | | | | | | |
Communication Services
| | $ | 3,551,543 | | | $ | 3,551,543 | | | $ | — | | | $ | — | |
| Consumer Discretionary | | | 2,224,716 | | | | 2,224,716 | | | | — | | | | —
| |
| Consumer Staples | | | 2,602,179 | | | | 2,602,179 | | | | — | | | | —
| |
| Energy | | | 1,536,773 | | | | 1,536,773 | | | | — | | | | —
| |
| Financials | | | 3,632,257 | | | | 3,632,257 | | | | — | | | | —
| |
| Healthcare | | | 5,499,054 | | | | 5,499,054 | | | | — | | | | —
| |
| Industrials | | | 2,083,683 | | | | 2,083,683 | | | | — | | | | —
| |
| Information Technology | | | 8,492,488 | | | | 8,492,488 | | | | — | | | | —
| |
| Materials | | | 695,435 | | | | 695,435 | | | | — | | | | —
| |
| Utilities | | | 494,878 | | | | 494,878 | | | | — | | | | —
| |
TOTAL COMMON STOCKS
| | $ | 30,813,006 | | | $ | 30,813,006 | | | $ | | | | $ | — | |
| MASTER LIMITED PARTNERSHIP | | | | | | | | | | | | | | | —
| |
| Energy | | | 181,948 | | | | 181,948 | | | | — | | | | —
| |
| REAL ESTATE INVESTMENT TRUST | | | | | | | | | | | | | | | | |
| Financials | | | 233,590 | | | | 233,590 | | | | — | | | | —
| |
| Real Estate | | | 1,281,840 | | | | 1,281,840 | | | | — | | | | —
| |
TOTAL REAL ESTATE INVESTMENT TRUST
| | $ | 1,515,430 | | | $ | 1,515,430 | | | $ | | | | $ | — | |
TOTAL INVESTMENTS IN SECURITIES
| | $ | 32,510,384 | | | $ | 32,510,384 | | | $ | | | | $ | — | |
Certain of the Portfolio’s assets and liabilities are held at carrying amount or face value, which approximates fair value for financial reporting purposes. As of June 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 | | $ | 24,164 | | | $ | — | | | $ | 24,164 | | | $ | — | |
NOTE 9 — Risk Disclosures:
Investing in the stock market involves risks, including the potential loss of principal. Your investment in Portfolio shares represents an indirect investment in the securities owned by the Portfolio. The value of these securities, like other investments, may move up or down, sometimes rapidly and unpredictably. Your Portfolio shares at any point in time may be worth less than what you invested, even after taking into account the reinvestment of Portfolio dividends and distributions. 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. 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. 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. Income-producing securities may cut or fail to declare dividends due to market downturns or for other reasons.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued) |
NOTE 10 — Subsequent Events:
Management of the Portfolio has evaluated events that have occurred subsequent to June 30, 2022, through the issuance date of the financial statements. No such events have been identified which require recognition and/or disclosure.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
ADDITIONAL INFORMATION (Unaudited) |
Shareholder Expense Example
As a shareholder of the Portfolio, you incur two types of costs: transaction costs, 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 Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds.
The example below is based on an investment of $1,000 invested at the beginning of the six-month period starting January 1, 2022 and ending June 30, 2022 and held for the entire period.
Actual Expenses
The first line for each class of shares 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 June 30, 2022” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for each class of the Portfolio’s shares and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’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 Portfolio 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 or deduction of insurance charges against assets or annuities. Therefore, the second line under each class of shares 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.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| ADDITIONAL INFORMATION (Unaudited) (Continued) |
| | Beginning Account Value January 1, 2022 | | | Ending Account Value June 30, 2022 | | | Paid During the Six Months Ended June 30, 2022(a) | | | For the Six Months Ended June 30, 2022(b) | |
| Alger Growth & Income Portfolio | | | | | | | | | | | | |
| Class I-2 | Actual | | $ | 1,000.00 | | | $ | 827.00 | | | $ | 4.17 | | | | 0.92 | % |
| Hypothetical(c) | | | 1,000.00 | | | | 1,020.23 | | | | 4.61 | | | | 0.92 | |
| (a) | Expenses are equal to the annualized expense ratio of the share class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
| (c) | 5% annual return before expenses. |
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| ADDITIONAL INFORMATION (Unaudited) (Continued) |
| U.S. Consumer Privacy Notice | Rev. 06/22/21 |
| 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 their 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 | | |
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| 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. |
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| ADDITIONAL INFORMATION (Unaudited) (Continued) |
A description of the policies and procedures the Portfolio uses to determine how to vote proxies relating to portfolio securities and the proxy voting record is available, without charge, by calling (800) 992-3863 or online on the Portfolio’s website at http://www.alger. com or on the SEC’s website at http://www.sec.gov.
The Board has adopted policies and procedures relating to disclosure of the Portfolio’s 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 Portfolio.
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 Portfolio’s 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 Portfolio) are acceptable.
The Portfolio files its complete schedule 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 its reports on Form N-PORT. The Portfolio’s Forms N-CSR and N-PORT are available online on the SEC’s website at www.sec.gov.
In addition, the Portfolio makes publicly available its month-end top 10 holdings with a 10 day lag and its month-end full portfolio with a 60 day lag on its 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 directly received for the non-public disclosure of portfolio holdings information.
In accordance with the foregoing, the Portfolio provides portfolio holdings information to third parties including 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 Fund will communicate with these third parties to confirm that they understand the Portfolio’s policies and procedures regarding such disclosure. These agreements must be approved by the Portfolio’s Chief Compliance Officer.
The Board periodically reviews a report disclosing the third parties to whom the Portfolio’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 Portfolio and its shareholders.
| THE ALGER PORTFOLIOS | Alger Growth & Income Portfolio |
| ADDITIONAL INFORMATION (Unaudited) (Continued) |
In addition to material the Portfolio routinely provides 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 the Portfolio 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) 992-3863 to obtain such information.
THE ALGER PORTFOLIOS |
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100 Pearl Street, 27th Floor New York, NY 10004 (800) 992-3863 |
www.alger.com |
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Investment Manager |
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| Fred Alger Management, LLC 100 Pearl Street, 27th Floor New York, NY 10004 |
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Distributor
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Fred Alger & Company, LLC 100 Pearl Street, 27th Floor New York, NY 10004 |
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Transfer Agent and Dividend Disbursing Agent |
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UMB Fund Services, Inc. 235 W. Galena Street Milwaukee, WI 53212 |
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Custodian
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Brown Brothers Harriman & Company 50 Post Office Square |
Boston, MA 02110 |
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Independent Registered Public Accounting Firm
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Deloitte & Touche LLP 30 Rockefeller Plaza New York, NY 10112 |
This report is submitted for the general information of the shareholders of Alger Growth & Income Portfolio. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Portfolio, which contains information concerning the Portfolio’s investment policies, fees and expenses as well as other pertinent information.
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