Form N-CSRS ALGER GLOBAL FOCUS FUND For: Apr 30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number   811-21308

Alger Global Focus Fund

(Exact name of registrant as specified in charter)

100 Pearl Street, New York, New York 10004

(Address of principal executive offices) (Zip code)

Mr. Hal Liebes

Fred Alger Management, LLC

100 Pearl Street

New York, New York 10004

(Name and address of agent for service)

Registrant’s telephone number, including area code: 212-806-8800

Date of fiscal year end: October 31

Date of reporting period: April 30, 2022

Form N-CSR is to be used by management investment companies to file reports with the Commission, not later than 10 days after the transmission to Stockholders of any report to be transmitted to Stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e1).  The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public.  A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number.  Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.  The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

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Table of Contents

ALGER GLOBAL FOCUS FUND

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Shareholders’ Letter (Unaudited)

April 30, 2022

Dear Shareholders,

 

Many Investors Shun Powerful Wealth Creator

In 1924, economist John Maynard  Keynes wrote that  companies that  reinvest profits  can create “an element of compound interest operating in favour of a sound industrial investment.” At Alger, we believe reinvesting profits and producing compounding earnings growth is a powerful wealth creator. To that end, we seek companies that we believe have strong potential for compounding earnings growth, and we seek to avoid cyclical companies, including “short-duration” companies, or businesses with high current earnings that return most of their profits to shareholders. In most instances, these cyclical companies, in our view, have little or no potential for future long-term earnings growth.

 

As Warren Buffett has observed, investors “occasionally do crazy things,” which creates opportunities for investors who can “disregard mob fears or enthusiasms….and focus on a few simple fundamentals.” We believe recent concerns about interest rates, inflation and valuations have caused many investors to act irrationally by focusing on cyclical short-duration companies while shunning the “sound industrial investment” identified by Keynes.

 

Setting the Stage for a Difficult Six-Month Period

The strong trend of investors rejecting the appeal of long-term earnings growth, in our view, played a major role in our disappointing fund performance during the fiscal six-month period ended April 30, 2022. The fiscal period included the continuation of a dramatic rotation by many investors seeking instant gratification by favoring companies with high current earnings. This rotation was initially fueled prior to the reporting period by optimism that scaling back or eliminating measures to curtail the COVID-19 pandemic combined with unprecedented levels of fiscal stimulus would drive strong economic growth. More recently, however, optimism gave way to concerns that equities may be overvalued at a time when the economy could overheat and require the U.S. Federal Reserve (the “Fed”) to continue to raise interest rates to fight inflation.

 

These concerns were supported by the following developments:

 

 

 

 

In  response,  the  Fed  shifted  its  outlook-it  no  longer  maintained  that  inflation  was a transitory result of  supply chain issues and the economy reopening, and in March, the Fed raised the federal funds rate by 25 basis points (“BPS”), its first hike since cutting the rate to zero in 2020. Furthermore, Fed statements in March led many investors to anticipate a 50BPS rate hike in May and 200BPS in aggregate hikes by the end of 2022. Fears that rate hikes could eventually spark a recession also weighed upon investor sentiment.

 

Interest Rates Support Rotation Away from Quality

The rotation to short-duration companies was also partially supported by investors reacting to higher interest rates in a fairly typical fashion-they adjusted their cash flow modeling by increasing the rate at which they discount future cash flows back to the present, thereby lowering the value of long-duration companies. This process is similar to how long-term bonds are impacted more by rising rates than short-term bonds.

 

Not Just Growth, But High-Quality Small Cap Growth, Underperforms

Many small cap growth companies tend to have little or no current earnings, but strong potential for significant sales and earnings growth. Within the Russell 2000 Growth Index, for example, we believe many Health Care companies are high-quality businesses even though they may not generate profits due to their investments in new initiatives, their products or potential products can have high gross margins and potential for capturing market share. As a result of investors dismissing the appeal of potential earnings growth, the Health Care sector was one of the worst performing sectors within the small cap growth category. From a broader perspective, sectors that generally consist of companies that provide dividends and appear to be less susceptible to inflation, such as Energy and Consumer Staples, led.

 

Also during the fiscal six-month period, growth underperformed value across the market cap spectrum, with the -26.77% return of the Russell 2000 Growth Index being a noteworthy laggard when compared to the -9.5% return of the Russell 2000 Value Index. The broad market, as measured by the S&P 500 Index, dropped 8.17%.

 

International Markets Also Struggle

Concerns about interest rates, inflation and the Russian invasion of Ukraine also extended beyond the U.S. Investors also assessed the spread of COVID-19 in China. Among non-U.S. equities, emerging markets significantly underperformed with the MSCI Emerging Markets Index declining 14.04% during the fiscal six-month reporting period. Within the index, the Utilities sector was the only sector to generate positive performance, as investors focused on companies that they perceived as having recession resistant fundamentals that provide a relatively high return of cash to shareholders. Consumer Discretionary, Health Care and Energy were among the worst performing sectors. The selloff also included developed markets with the MSCI EAFE Index declining 11.58%. From a broader perspective, the MSCI ACWI Index declined 11.45%.

 

Irrational Behavior Creates Opportunity

As a result of investors’ rotation out of quality companies, growth equities, we believe, are trading at attractive valuations. Notably, the Russell 2000 Growth Index price-to-earnings (P/E) ratio based on the next 12-months’ earnings, declined from 50.2x to approximately 33.5x during the six-month fiscal reporting period while the Russell 1000 Growth Index declined from 30.7x to 23.8x.

Navigating Fed Rate Hikes

Investors who are concerned about monetary policy may want to consider two points:

 

First, Fed rate increases don’t always lead to recessions. In fact, since 1965 there have been three instances in which the Fed increased the federal funds rate 300 BPS or more that resulted in continued real economic growth and slowing inflation rather than recessions. Additionally, during the 12-months following the end of Fed tightening in 1985 and 1995, as well as after the Fed relented in 2018, equities generated double-digit returns.

 

Second, the later phases of monetary tightening have been accompanied by growth stocks outperforming value equities. The six-month periods starting approximately three months after the beginning of Fed tightening cycles initiated in 1994, 1999, 2004 and 2015 illustrate this point. Based on the returns of the Russell 3000 Growth and Russell 3000 Value indices, the median outperformance of growth during those periods was 400BPS. During later phases of rate hikes, economic growth slows, so investors may be more willing to pay a premium for companies that can increase their earnings.

 

Going Forward

We continue to believe that unprecedented levels of innovation, such as health care advancements in genetic science, and digital technologies including artificial intelligence, e-commerce, the metaverse, streaming entertainment, and cloud computing are providing opportunities for leading companies to reward investors by generating long-term earnings growth. We will continue to focus on conducting in-depth fundamental research as we seek leaders of innovation rather than take short-term bets on the fickle nature of investor sentiment. We believe doing so is the best strategy for helping our valued shareholders reach their investment goals.

 

Portfolio Matters

 

Alger Global Focus Fund

The Alger Global Focus Fund returned -25.82% for the fiscal six-month period ended April 30, 2022, compared to the -11.45% return of its benchmark, the MSCI ACWI Index.

 

During the reporting period, the largest sector weightings were Information Technology and Consumer Discretionary. The largest sector overweight was Information Technology and the largest underweight was Financials.

 

Contributors to Performance

The Communication Services and Real Estate sectors provided the greatest contributions to relative performance during the reporting period. From a country perspective, Germany, Russia, South Korea, and Sweden were among the top contributors to relative performance.

 

Regarding individual positions, Schlumberger NV; Freeport-McMoRan, Inc.; Samsonite International S.A.; East Money Information Co., Ltd., Cl. A; and Hensoldt AG were the top contributors to absolute performance. Schlumberger NV engages in the provision of technology and services for reservoir characterization, drilling, production and processing to the oil and gas industry. Industry dynamics began to improve in 2021 following a multi-year recessionary cycle in the oil and gas industry that had resulted from oversupply, macroeconomic pressures and the COVID-19 pandemic leading to a 50% reduction in rig counts in 2020. Exploration and production companies benefitted from the rationalization of  industry capacity, as well as a refined focus on free cash flow generation, supported by stable and improving oil prices. As a result, the oilfield services segment witnessed an improved backdrop for activity in 2021, with rig counts growing throughout the year and 44% year-over-year in the fourth quarter. This momentum continued into the first quarter of 2022 with 35% year-over-year growth. Geopolitical conflicts between Russia and Ukraine have increased pressure on the supply/demand dynamics, driving oil prices even higher and pushing political pressure on increased energy production activity.

Detractors from Performance

The Information Technology and Health Care sectors were among the sectors that detracted from relative performance during the reporting period. From a country perspective, the United States, Norway, the Netherlands, Australia and Italy were among the top detractors from relative performance.

 

Regarding individual positions, Amazon.com, Inc.; MSCI Inc., Cl. A; Intuit, Inc.; Adobe, Inc.; and EPAM Systems, Inc. were among the top detractors from absolute performance. EPAM Systems provides software product development and digital platform engineering services. The company continues to benefit from secular growth in corporate digital initiatives, delivering 2021 earnings that beat consensus expectations. It also provided guidance of 38% year-over-year revenue growth for 2022. However, geopolitical conflict in Russia and Ukraine forced the company to pull guidance and focus on business continuity plans in the first quarter of 2022. While less than 5% of revenues are exposed to Russia, Ukraine and Belarus, the company has operating exposure to those countries as its software engineers are located within the region. Demand remains strong and management has focused on relocating talent outside of conflict zones, along with recruitment across non-conflict regions, to maintain project delivery timelines. The stock de-rated significantly during the early part of 2022 as investors weighed uncertainties related to EPAM’s business operations.

I thank you for putting your trust in Alger.

Sincerely,

Daniel C. Chung, CFA

Chief Executive Officer

Fred Alger Management, LLC

 

Investors cannot invest directly in an index. Index performance does not reflect the deduction for fees, expenses, or taxes.

 

This report and the financial statements contained herein are submitted for the general information of  shareholders of  the Fund. This report is not authorized for distribution  to prospective investors in the Fund unless preceded or accompanied by an effective prospectus for the Fund. Fund performance returns represent the six-month period return of Class A shares prior to the deduction of any sales charges and include the reinvestment of any dividends or distributions.

 

The performance data quoted represents past performance, which is not an indication or guarantee of future results.

Standardized performance results can be found on the following pages. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end, visit us at www.alger.com or call us at (800) 992-3863.

 

The views and opinions of the Fund’s management in this report are as of the date of the Shareholders’ Letter and are subject to change at any time subsequent to this date. There  is no guarantee that any of the assumptions that formed the basis for the opinions stated herein are accurate or that they will materialize. Moreover, the information forming the basis for such assumptions is from sources believed to be reliable; however, there is no guarantee that such information is accurate. Any securities mentioned, whether owned in the Fund or otherwise, are considered in the context of the construction of an overall portfolio of securities and therefore reference to them should not be construed as a recommendation or offer to purchase or sell any such security. Inclusion of such securities in the Fund and transactions in such securities, if any, may be for a variety of reasons, including, without limitation, in response to cash flows, inclusion in a benchmark, and risk control. The reference to a specific security should also be understood in such context and not viewed as a statement that the security is a significant holding in the Fund. Please refer to the Schedule of Investments for the Fund which is included in this report for a complete list of Fund holdings as of April 30, 2022. Securities mentioned in the Shareholders’ Letter, if not found in the Schedule of Investments, may have been held by the Fund during the fiscal six-month period ended April 30, 2022.

 

Risk Disclosures

Investing in the stock market involves risks, including the potential loss of principal. 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. 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. Foreign securities and emerging markets involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility. Investing in companies of small capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment.

 

Before investing, carefully consider a fund’s investment objective, risks, charges, and expenses. For a prospectus and summary prospectus containing this  and other information or for the Alger Global Focus Fund’s most recent month-end performance data, visit www.alger.com, call (800) 992-3863 or consult your financial advisor. Read the prospectus and summary prospectus carefully before investing.

 

Distributor: Fred Alger & Company, LLC.

NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.

Definitions:

 

 

 

 

 

 

 

 

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. Before March 28, 2018, the Fund followed different investment strategies and was managed by different portfolio managers, and before August 15, 2018 was named “Alger Global Growth Fund”. Prior to May 31, 2013, the Fund was named “Alger China-U.S. Growth Fund” and followed different investment strategies. Performance prior to March 28, 2018, reflects these prior management styles and does not reflect the Fund’s current investment strategies and investment personnel.

 

*	Since inception performance is calculated since the inception of Class A shares. Historical performance prior to March 3, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares.

ALGER GLOBAL FOCUS FUND

Fund Highlights Through April 30, 2022 (Unaudited)

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HYPOTHETICAL $10,000 INVESTMENT IN CLASS A SHARES

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PERFORMANCE COMPARISON AS OF 4/30/22

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. Before March 28, 2018, the Fund followed different investment strategies and was managed by different portfolio managers, and before August 15, 2018 was named ‘Alger Global Growth Fund”. Prior to May 31, 2013, the Fund was named ‘Alger China-U.S. Growth Fund” and followed different investment strategies. Performance prior to March 28, 2018, reflects these prior management styles and does not reflect the Fund’s current investment strategies and investment personnel. The chart and table above do not reflect the deduction of taxes that a shareholder would have paid on Fund distributions or on the redemption of Fund shares. Investment return and principal will fluctuate and the Fund’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863.

*	Since inception performance is calculated since the inception of Class A shares. Historical performance prior to March 3, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares.

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COUNTRY		Alger Global Focus Fund
Australia			4.0	%
China			4.2
France			9.5
Germany			4.2
Hong Kong			2.9
India			2.6
Ireland			2.8
Italy			6.7
Netherlands			8.7
Norway			4.1
Spain			2.2
Switzerland			5.0
Taiwan			1.5
United States			39.9
Cash and Net Other Assets			1.7
			100.0	%

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ALGER GLOBAL FOCUS FUND

Schedule of Investments April 30, 2022 (Unaudited) (Continued)

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Security		Acquisition Date(s)		Acquisition Cost				% of net assets (Acquisition Date)				Market Value				% of net assets as of 4/30/2022
Prosetta Biosciences, Inc., Series D		2/6/15		$	152,361				0.40	%		$	0				0.00	%
Total												$	0				0.00	%

See Notes to Financial Statements.

 

 

NET ASSETS CONSIST OF:

See Notes to Financial Statements.

Alger Global Focus Fund

SHARES OF BENEFICIAL INTEREST OUTSTANDING — NOTE 6:

 

See Notes to Financial Statements.

^(a) At April 30, 2022, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $18,091,117, amounted to $3,141,021 which consisted of aggregate gross unrealized appreciation of $5,238,384 and aggregate gross unrealized depreciation of $2,097,363.

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See Notes to Financial Statements.

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		Alger Global Focus Fund
		For the Six Months Ended April 30, 2022				For the Year Ended October 31, 2021
Net investment loss		$	(138,204	)		$	(268,690	)
Net realized gain (loss) on investments, forward foreign currency contracts and foreign currency			(307,754	)			3,835,656
Net change in unrealized appreciation (depreciation) on investments and foreign currency			(8,099,404	)			6,025,100
Net increase (decrease) in net assets resulting from operations			(8,545,362	)			9,592,066
Dividends and distributions to shareholders:
Class A			(1,963,744	)			—
Class C			(161,011	)			—
Class I			(33,673	)			—
Class Z			(884,100	)			—
Total dividends and distributions to shareholders			(3,042,528	)			—
Increase (decrease) from shares of beneficial interest transactions:
Class A			1,418,676				(887,406	)
Class C			(93,868	)			(632,800	)
Class I			58,347				(305,088	)
Class Z			(3,756,471	)			5,293,665
Net increase (decrease) from shares of beneficial interest transactions — Note 6			(2,373,316	)			3,468,371
Total increase (decrease)			(13,961,206	)			13,060,437
Net Assets:
Beginning of period			35,564,714				22,504,277
END OF PERIOD		$	21,603,508			$	35,564,714

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NOTE 1 — General:

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Alger Global Focus Fund (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’s investment objective is long-term capital appreciation. It seeks to achieve its objective by investing in equity securities in the United States and foreign countries. The Fund’s foreign investments will include securities of companies in both developed and emerging market countries.

 

The Fund offers Class A, C, I and Z shares. Class A shares are generally subject to an initial sales charge while Class C shares are generally subject to a deferred sales charge. Class C shares will automatically convert to Class A shares on the fifth business day of the month following the eighth anniversary of the purchase date of a shareholder’s Class C shares, without the imposition of any sales load, fee or other charge. Class C shares held at certain dealers may not convert to Class A shares or may be converted on a different schedule. At conversion, a proportionate amount of shares representing reinvested dividends and distributions will also be converted into Class A shares. Effective August 27, 2019, Class C shares were closed to direct shareholders and are only available for purchase through certain financial intermediaries and group retirement plan recordkeeping platforms. Class  I shares are sold to institutional investors without an initial or deferred sales charge and Class Z shares are generally subject to a minimum initial investment of $500,000. Each class has identical rights to assets and earnings, except that each share class bears the pro rata allocation of the Fund’s expenses other than a class expense (not including advisory or custodial fees or other expenses related to the management of the Fund’s assets).

 

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(a)    Investment Valuation: The Fund 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 Fund 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 Fund 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.

 

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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 Fund 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 foreign prices to reflect what the Fund’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 Fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open.

 

FASB Accounting Standards Codification 820 - Fair Value Measurements and Disclosures (“ASC  820”) defines fair value as the price that the Fund 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 Fund. Unobservable inputs are inputs that reflect the Fund’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.

 

 

 

The Fund’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 Fund may significantly differ from the valuations that would have been assigned by the Fund 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 Fund’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.

 

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 Fund’s pricing vendor, and variances between transactional prices and the previous day’s prices.

 

In December 2020, the Securities and Exchange Commission 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 Board to designate the Fund’s investment adviser, Fred Alger Management, LLC (“Alger Management” or the “Investment Manager”), to perform the Fund’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 Funds, the Board, and the Investment Manager are currently in the process of implementing the requirements of Rule 2a-5 for compliance with these requirements by the September 2022 compliance 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.

ALGER GLOBAL FOCUS FUND

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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 Fund 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)    Forward Foreign Exchange Contracts: The Fund may enter into forward foreign currency contracts to hedge against foreign currency exchange rate risk on its non-U.S. dollar denominated securities or to facilitate settlement of foreign currency denominated portfolio transactions. A forward foreign currency contract is an agreement between two parties to buy and sell a currency at a set price on a future date. The contract is marked-to-market daily and the change in value is recorded by the Fund as an unrealized gain or loss. Realized gains or losses equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed are recorded upon delivery or receipt of the currency.

 

These contracts may involve market risk in excess of the unrealized gain or loss reflected on the Statement of Assets and Liabilities. In addition, the Fund could be exposed to risk if the counterparties are unable to meet the terms of the contracts or if the value of the currency changes unfavorably to the base currency.

 

(f)    Dividends to Shareholders: Dividends and distributions payable to shareholders are  recorded by the Fund on the ex-dividend date. The Fund declares and pays dividends from net investment income, if available, annually. 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.

 

Each share class is treated separately in determining the amount of  dividends from net investment income payable to holders of its shares.

 

The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Fund’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 Fund and are designed to present the Fund’s capital accounts on a tax basis.

 

(g)    Federal Income Taxes: It is the 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 Fund maintains such compliance, no federal income tax is required.

 

FASB Accounting Standards Codification 740 - Income  Taxes  (“ASC  740”)  requires the Fund 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 Fund files 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 Fund’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: Income, realized and unrealized gains and losses, and expenses of the Fund are allocated among the Fund’s classes based on relative net assets, with the exception of distribution fees, transfer agency fees, and shareholder servicing and related fees.

(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:          

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(a)   Investment Advisory Fees: Fees incurred by  the  Fund,  pursuant  to  the  provisions  of the Fund’s Investment Advisory Agreement with the Investment Manager, are payable monthly and computed based on the following rates. The actual rate paid as a percentage of average daily net assets, for the six months ended April 30, 2022, is set forth below under the heading “Actual Rate”:

		Tier 1				Tier 2				Actual Rate
Alger Global Focus Fund(a)			0.80	%			0.70	%			0.80	%

^(a) Tier 1 rate is paid on assets up to $500 million, Tier 2 rate is paid on assets in excess of $500 million.

Alger Management has contractually agreed to waive fees or to reimburse Fund expenses (excluding acquired fund fees and expenses, dividend expense on short sales, borrowing costs, interest, taxes, brokerage and extraordinary expenses) through February 29, 2024 to the extent necessary to limit the total annual fund operating expenses exceed the rates, based on average daily net assets, as listed in the table below:

			CLASS															FEES WAIVED / REIMBURSED FOR THE SIX MONTHS ENDED
			A				C				I				Z			APRIL 30, 2022
Alger Global Focus Fund			1.50	%			2.25	%			1.25	%			0.99	%		$	58,879

		CONTINGENT DEFERRED SALES CHARGES
Alger Global Focus Fund		$	77

		FOR THE SIX MONTHS ENDED APRIL 30, 2022						FOR THE YEAR ENDED OCTOBER 31, 2021
		SHARES			AMOUNT			SHARES			AMOUNT
Alger Global Focus Fund
Class A:
Shares sold		13,354		$	453,041			25,347		$	805,581
Shares converted from Class C		18			545			295			9,527
Dividends reinvested		57,047			1,844,318			—			—
Shares redeemed		(30,018)			(879,228)			(51,837)			(1,702,514)
Net increase (decrease)		40,401		$	1,418,676			(26,195)		$	(887,406)
Class C:
Shares sold		239		$	6,785			383		$	12,690
Shares converted to Class A		(19)			(545)			(316)			(9,527)
Dividends reinvested		5,401			161,011			—			—
Shares redeemed		(8,447)			(261,119)			(21,505)			(635,963)
Net decrease		(2,826)		$	(93,868)			(21,438)		$	(632,800)
Class I:
Shares sold		1,584		$	43,399			751		$	23,197
Dividends reinvested		1,073			33,673			—			—
Shares redeemed		(610)			(18,725)			(11,694)			(328,285)
Net increase (decrease)		2,047		$	58,347			(10,943)		$	(305,088)
Class Z:
Shares sold		14,746 $			552,729			188,197		$	6,112,681
Dividends reinvested		24,862			828,146			—			—
Shares redeemed		(173,480)			(5,137,346)			(24,688)			(819,016)
Net increase (decrease)		(133,872)		$	(3,756,471)			163,509		$	5,293,665