-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LwY42ba/e3HhJn4OsBsj+ZDU3Csuln+Jrzr893LFNKb+MBd83xM2ht6ndTM7WtYV K7TkX9vhJwEcYE+bA8cZQw== 0000930413-00-001585.txt : 20001228 0000930413-00-001585.hdr.sgml : 20001228 ACCESSION NUMBER: 0000930413-00-001585 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20001227 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALGER FUND CENTRAL INDEX KEY: 0000003521 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-01355 FILM NUMBER: 796279 BUSINESS ADDRESS: STREET 1: 75 MAIDEN LN CITY: NEW YORK STATE: NY ZIP: 10038 BUSINESS PHONE: 2128068800 N-30D 1 0001.txt ANNUAL REPORT The Alger Fund Alger LargeCap Growth Portfolio Alger Small Capitalization Portfolio Alger Balanced Portfolio Alger MidCap Growth Portfolio Alger Capital Appreciation Portfolio Alger Money Market Portfolio ANNUAL REPORT October 31, 2000 [LOGO] Fellow Shareholders: November 20, 2000 THE YEAR IN REVIEW In each of the last five years the U.S. stock market has posted yearly gains of more than 20%, an unprecedented record of consecutive double-digit returns. This year has seen a break in the market's momentum. For the year ended October 31, 2000, the S&P 500 Index was up 6.1%. However, from January through October the broad based index was down 1.8%, and the Dow Jones Industrial Average, which ended 1999 very near the 11,500 we had predicted, was down more than 4%. Price Shocks Squeeze Corporate Earnings Much of the stock market's volatility since March, when stock market indices hovered near their highs, has been the result of investor uncertainty over the effects of higher interest rates on the economy. During the summer months, concerns about higher energy prices and the falling euro also came into play, and the impacts of these shocks were seen in the third quarter as many companies reported lower than expected earnings. Technology stocks in particular came under pressure during the second half of the year following last year's euphoric 86% gain in the Nasdaq. After six Federal Reserve interest rate hikes since the summer of 1999 that culminated in a 50-basis-point increase in May 2000, the economy finally began to show signs of slowing in the second half of the year. In July and August, stocks traded in a narrow range as investors watched oil prices and waited for further signals on the direction of interest rates. At its meeting on August 22, the Federal Open Market Committee (FOMC) held rates steady but maintained an inflationary bias, in part due to higher energy prices. Crude oil prices rose dramatically in August and in September reached above $37 a barrel. Increased production by OPEC nations and the release of emergency U.S. reserves helped stabilize prices but by the end of October prices were still above $30 a barrel. At the same time, the euro currency came under pressure in international markets, falling to a low of $0.85 in September. Intervention by central banks to support the currency temporarily halted the currency's slide, but on October 26, the currency reached a new low of $0.82, nearly 30% below its initial value in January 1999. Stock prices were negatively affected as companies began issuing preannouncements in September warning that third quarter earnings would not meet market expectations due to higher energy costs and the euro's decline. Earnings of computer manufacturers were also affected by lower demand compared to last year. The S&P 500 fell 0.97% during the third quarter while the technology-laden Nasdaq Composite fell 7.39%. Small- and mid-capitalization stocks fared better, with the S&P MidCap 400 rising 12.15% during the third quarter. Corporate earnings reports continued to dominate the markets in October. The Dow Jones Industrial Average gained 3% during the month to close at 10,971, while the broader based S&P 500 fell 0.5%. The Nasdaq Composite fell 8.3% during the month to close at 3,369. Fixed income markets were mostly negatively affected during the year by rising interest rates. Prices of long-term government bonds however were supported by the Treasury department's buy-back program of $30 billion worth of debt with maturities of 10 to 30 years. At the end of October, 30-year bond yields stood at 5.8%. Further Signs of a Slower Economy Economic data released in early November showed further signs of a slower economy, leading the FOMC to again hold interest rates steady at its last meeting on November 15. The rate of growth in Gross Domestic Product slowed from 5.6% in the first quarter to 2.7% in the third quarter, within the targeted 2% to 3% for a "soft landing." However, the Federal Reserve continues to maintain a tightening bias in the face of higher core inflation and a tight labor market. September's Consumer Price Index showed inflation at 3.4% year over year, with core inflation (excluding food and energy) at 2.5% on an annual basis. Unemployment remains near its 30-year low at 3.9%, and average hourly wages showed an upward tick in October, rising 0.4% compared to analysts' expectations of a 0.3% increase. Consumer spending, responsible for two-thirds of the nation's GDP, may also be slowing. The Consumer Board's measure of consumer confidence fell sharply in October, reaching its lowest level since October 1999. Major retailers have reported sluggish sales compared to year-ago levels and preliminary data from the National Association of Purchasing - -------------------------------------------------------------------------------- Management show that manufacturing activity is also beginning to slow. Marking Time While the Vote Count Continues As this is an election year, the potential for a change in party leadership affected individual stock sectors as investors took speculative positions in anticipation of election results. As of November 20, however, there is not yet a clear winner in the Presidential race, and the financial markets have largely been marking time since November 7. In the short-term, a prolonged court battle will likely have a negative impact on the financial markets as investors in general are uncomfortable with uncertainty. In the longer term, however, the election results may not have a significant effect on stock prices. The Republicans have control of both the Senate and the House, albeit by a narrow margin, limiting the likelihood that any new social spending legislation will be enacted if Gore were to become President. In the event of a Republican victory, proposed tax cuts may eventually be enacted but the current proposals will likely have to be scaled back in order to pass Congress. PORTFOLIO MATTERS Alger Small Capitalization Portfolio The Alger Small Capitalization Portfolio lost .40% for the twelve months ended October 31, 2000, compared to a gain of 16.16% in the Russell 2000 Growth index. While small-cap stocks in general have underperformed larger companies in recent years, this trend reversed in 2000 as investors sought attractive valuations among overlooked small-cap stocks. The Portfolio's holdings in Internet and technology stocks came under pressure during the year, while holdings in health care stocks contributed gains. During the year the Portfolio's investment in semiconductor stocks was reduced in response to an expectation that much of this sector's strong growth potential has been realized. Positions in economically sensitive stocks were reduced in light of the expected slower rate of economic growth. Alger LargeCap Growth Portfolio For the year ended October 31, 2000 the Alger LargeCap Growth Portfolio returned 7.24% compared to a 6.10% gain in the S&P 500. The Portfolio's holdings in semiconductor, energy, and pharmaceutical stocks contributed gains during the year, while holdings in Internet stocks and PC manufacturers were adversely affected by the general downturn in the technology sector. During the year, the Portfolio's holdings in Internet and semiconductor stocks were reduced. Selective investments in pharmaceuticals and financial companies were among new holdings added to the Portfolio. Alger MidCap Growth Portfolio For the year ended October 31, 2000, the Alger MidCap Growth Portfolio earned a total return of 46.42% compared to a 31.65% increase in the benchmark S&P MidCap 400 index. During the twelve months mid-capitalization stocks as a group turned in the best performance compared to the S&P 500 and the Russell 2000 Growth index, which tracks smaller companies. The Portfolio substantially outperformed its benchmark index as a result of individual holdings in semiconductor, energy, and pharmaceutical stocks. Positions in Internet companies posted declines during the year and were trimmed from the Portfolio in favor of new investments in health care and energy services companies. Alger Capital Appreciation Portfolio For the twelve months ended October 31, 2000, the Alger Capital Appreciation Portfolio returned 11.60% compared to 6.10% for the S&P 500. The Portfolio employs an all-cap approach to selecting securities and has benefited in recent years from a higher weighting towards large-capitalization growth stocks. During the last twelve months the Portfolio benefited from the positive trend in small- and mid-cap issues. The Portfolio's holdings in Internet and technology stocks came under pressure with the general decline in technology issues during the year, while health care, software, and energy stocks contributed gains. During the second half of the year the Portfolio's holdings in tech- 2 - -------------------------------------------------------------------------------- nology stocks were reduced in favor of new investments in stocks that are positioned to sustain earnings in a period of slower economic growth. New investments also included positions in biotechnology stocks offering strong growth potential from product development efforts. Alger Balanced Portfolio The Alger Balanced Portfolio's total return for the twelve months ended October 31, 2000 was 9.36% compared to 7.11% for the Lehman Brothers Government/ Corporate Bond Index and 6.10% for the S&P 500. During the year the Portfolio maintained a ratio of approximately 60/40 common stocks to debt securities, producing results that were superior to those of a blended index made up of the two benchmark indexes. Portfolio holdings in semiconductor, energy and health care stocks contributed to the Portfolio's gains during the year. LOOKING AHEAD Looking ahead, we believe that sustained economic growth in the 2% to 3% range combined with moderate inflation will offer opportunities for a decline in interest rates in 2001, a move that would lend support to stocks. We expect the outcome of the Presidential election to have a modest impact on the economy and the markets over the long term, and the resolution of the current uncertainty will likely result in a rebound in stock prices. In our view, a Bush administration would undoubtedly be more pro-business than a Gore administration; however, if Gore is President the Republican control of Congress will likely result in gridlock, and that too can be good for the markets. More important than the election results, we believe, is the prospect of declining interest rates in 2001. Lower interest rates will set the stage for quality companies to sustain corporate earnings growth, and support a rally in bond prices and a resurgence in stock prices. In this environment, the Alger Portfolios will continue to seek investments in quality companies that offer superior growth potential, consistent with our fundamental approach to security selection. Respectfully submitted, /s/ David D. Alger David D. Alger President 3 - -------------------------------------------------------------------------------- TABLE OF CONTENTS - -------------------------------------------------------------------------------- Alger LargeCap Growth Portfolio: Portfolio Highlights ........................................ 7 Schedule of Investments ..................................... 8 Financial Highlights ........................................ 10 Alger Small Capitalization Portfolio: Portfolio Highlights ........................................ 13 Schedule of Investments ..................................... 14 Financial Highlights ........................................ 18 Alger Balanced Portfolio: Portfolio Highlights ........................................ 21 Schedule of Investments ..................................... 22 Financial Highlights ........................................ 26 Alger MidCap Growth Portfolio: Portfolio Highlights ........................................ 29 Schedule of Investments ..................................... 30 Financial Highlights ........................................ 32 Alger Capital Appreciation Portfolio: Portfolio Highlights ........................................ 35 Schedule of Investments ..................................... 36 Financial Highlights ........................................ 38 Alger Money Market Portfolio: Schedule of Investments ..................................... 40 Financial Highlights ........................................ 41 Statements of Assets and Liabilities ....................................... 42 Statements of Operations ................................................... 43 Statements of Changes in Net Assets ........................................ 44 Notes to Financial Statements .............................................. 46 Report of Independent Public Accountants ................................... 53 [This page intentionally left blank] -7- - -------------------------------------------------------------------------------- Alger LargeCap Growth Portfolio Portfolio Highlights Through October 31, 2000 (Unaudited) Prior to September 29, 2000, the Alger LargeCap Growth Portfolio was Alger Growth Portfolio. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Hypothetical $10,000 Investment in Class B Shares - 10 Years Ended 10/31/00 - -------------------------------------------------------------------------------- ALGER LARGE CAP GROWTH PLOT POINTS [GRAPHIC OMITTED] [The following table was depicted as a mountain chart in the printed material.] Alger LargeCap Growth B S&P 500 Index 11/1/90 10000 10000 14579 13350 10/31/92 15988 14681 20652 16874 10/31/94 21494 17527 29614 22163 10/31/96 32007 27502 40059 36335 10/31/98 48637 44323 68267 55700 10/31/2000 73735 59097 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger LargeCap Growth Class B shares and the S&P 500 Index for the ten years ended October 31, 2000. Figures for both the Alger LargeCap Growth Class B shares and the S&P 500 Index, an unmanaged index of common stocks, include reinvestment of dividends. Performance for the Alger LargeCap Growth Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear. - -------------------------------------------------------------------------------- Performance Comparison as of 10/31/00+ Average Annual Total Returns 1 5 10 Since Year Years Years Inception ------------------------------------------------- Class A (Inception 1/1/97) 2.88% * * 22.25% S&P 500 Index 6.10% * * 20.40% - -------------------------------------------------------------------------------- Class B (Inception 11/11/86) 2.74% 19.25% 22.11% 17.38% S&P 500 Index 6.10% 21.67% 19.44% 16.40% - -------------------------------------------------------------------------------- Class C (Inception 8/1/97) 5.28% * * 17.94% S&P 500 Index 6.10% * * 14.77% - -------------------------------------------------------------------------------- The Portfolio's average annual total returns include changes in share price and reinvestment of dividends and capital gains. Past performance does not guarantee future results. Investment return and principal will fluctuate and the Portfolio's shares, when redeemed, may be worth more or less than their original cost. + Returns reflect maximum initial sales charges on Class A and Class C shares and applicable contingent deferred sales charges on Class B and Class C shares. -8- THE ALGER FUND ALGER LARGECAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Common Stocks--89.0% Shares Value ------ ----- ADVERTISING--.9% Omnicom Group Inc. .......................... 118,500 $ 10,931,625 ------------- AEROSPACE--4.2% General Dynamics Corporation ................ 108,300 7,750,219 United Technologies Corporation ............. 670,900 46,837,206 ------------- 54,587,425 ------------- AUTOMOTIVE--.9% Harley-Davidson, Inc. ....................... 253,900 12,234,806 ------------- BIO-TECHNOLOGY RESEARCH & PRODUCTION--2.4% Amgen Inc.* ................................. 536,000 31,054,500 ------------- CABLE--2.7% Comcast Corp., Cl. A Special*+ .............. 284,200 11,581,150 Time Warner Inc. ............................ 303,050 23,004,526 ------------- 34,585,676 ------------- COMMUNICATION EQUIPMENT--4.3% Cisco Systems, Inc.* ........................ 691,200 37,238,400 Corning Incorporated+ ....................... 242,000 18,513,000 ------------- 55,751,400 ------------- COMMUNICATIONS TECHNOLOGY--5.4% America Online, Inc.* ....................... 386,300 19,481,109 AT&T Corp. Liberty Media Group, Series A* ................................ 714,800 12,866,400 Exodus Communications, Inc.* ................ 207,600 6,967,575 SBC Communications Inc.* .................... 105,000 6,057,188 Viacom Inc. Cl. B* .......................... 424,400 24,137,750 ------------- 69,510,022 ------------- COMPUTER RELATED & BUSINESS EQUIPMENT--4.3% Dell Computer Corporation* .................. 220,000 6,490,000 EMC Corporation* ............................ 205,700 18,320,156 Hewlett-Packard Company ..................... 183,600 8,525,925 Sun Microsystems, Inc.* ..................... 200,200 22,197,175 ------------- 55,533,256 ------------- COMPUTER SERVICES--2.9% CNET Networks, Inc.*+ ....................... 104,600 3,294,900 eBay Inc.*+ ................................. 594,000 30,591,000 Yahoo Inc.* ................................. 61,970 3,632,991 ------------- 37,518,891 ------------- COMPUTER SOFTWARE--4.8% BEA Systems, Inc.* .......................... 120,700 8,660,225 Commerce One, Inc.* ......................... 108,000 6,932,250 i2 Technologies, Inc.* ...................... 53,075 9,022,750 Intuit Inc.* ................................ 203,300 12,490,244 Microsoft Corporation* ...................... 364,400 25,098,050 ------------- 62,203,519 ------------- CONGLOMERATE--5.3% General Electric Company .................... 227,900 12,491,768 Philip Morris Companies Inc. ................ 332,900 12,192,463 Tyco International Limited .................. 767,200 43,490,650 ------------- 68,174,881 ------------- ENERGY & ENERGY SERVICES--4.9% Calpine Corporation* ........................ 147,850 11,670,909 Duke Energy Corporation ..................... 74,000 6,396,375 Halliburton Company .........................1,085,700 40,238,756 Transocean Sedco Forex Inc. ................. 89,500 4,743,500 ------------- 63,049,540 ------------- FINANCIAL SERVICES--8.3% American Express Company .................... 153,000 9,180,000 Citigroup Inc. .............................. 699,733 36,823,449 Marsh & McLennan Companies, Inc. ............ 52,300 6,838,225 Merrill Lynch & Co., Inc. ................... 192,000 13,440,000 Schwab (Charles) Corporation (The) .................................... 435,975 15,313,622 Stilwell Financial Inc. ..................... 371,400 16,643,363 Washington Mutual, Inc.+ .................... 211,600 9,310,400 ------------- 107,549,059 ------------- FOOD CHAINS--2.4% The Kroger Co.* ............................. 322,900 7,285,431 Safeway Inc.* ............................... 435,300 23,805,469 ------------- 31,090,900 ------------- FOODS & BEVERAGES--1.3% The Coca-Cola Company ....................... 274,450 16,569,918 ------------- HEALTH CARE ADMINISTRATIVE SERVICES--2.9% Cardinal Health, Inc. ....................... 402,200 38,108,450 ------------- INSURANCE--2.0% American International Group, Inc. .......... 259,900 25,470,200 ------------- MANUFACTURING--2.0% Sanmina Corporation* ........................ 55,300 6,321,480 Solectron Corporation* ...................... 451,800 19,879,200 ------------- 26,200,680 ------------- MEDICAL DEVICES--1.5% Guidant Corporation* ........................ 217,900 11,535,081 Medtronic, Inc. ............................. 134,500 7,305,031 ------------- 18,840,112 ------------- -9- THE ALGER FUND ALGER LARGECAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Common Stocks--(cont.) Shares Value ------ ----- OIL & GAS--3.7% Exxon Mobil Corporation ................... 537,600 $ 47,947,200 ------------- PHARMACEUTICALS--8.5% Abbott Laboratories ....................... 147,500 7,789,844 American Home Products Corporation ............................ 448,464 28,477,464 Baxter International Inc. ................. 227,400 18,689,438 Pfizer Inc. ............................... 1,265,275 54,644,064 ------------- 109,600,810 ------------- RETAIL--5.0% Best Buy Co., Inc.* ....................... 339,400 17,033,637 Home Depot, Inc. .......................... 93,000 3,999,000 Walgreen Co. .............................. 198,750 9,067,969 Wal-Mart Stores, Inc. ..................... 770,300 34,952,363 ------------- 65,052,969 ------------- SEMICONDUCTOR CAPITAL EQUIPMENT--2.2% Applied Materials, Inc.* .................. 370,400 19,677,500 Teradyne, Inc.* ........................... 280,000 8,750,000 ------------- 28,427,500 ------------- SEMICONDUCTORS--6.2% Altera Corporation* ....................... 748,200 30,629,438 Intel Corporation ......................... 302,100 13,594,500 Linear Technology Corporation ............. 357,800 23,100,463 Texas Instruments, Incorporated ........... 258,600 12,687,563 ------------- 80,011,964 ------------- Total Common Stocks (Cost $1,024,840,248) .................. 1,150,005,303 ------------- Preferred Stock--.5% COMMUNICATIONS Nokia Corporation, ADR (Cost $6,139,553) ...................... 153,500 6,562,125 ------------- Principal Short-Term Investments--14.3% Amount Value ------ ----- SHORT-TERM CORPORATE NOTES--7.7% Cintas Executive Services, 6.47%, 11/9/00 .........................$30,000,000 $ 29,956,867 Florida Power & Light Company, 6.50%, 11/7/00 ......................... 4,000,000 3,995,667 Merrill Lynch & Co., Inc., 6.49%, 11/30/00 ........................ 20,700,000 20,591,779 Rembrandt International Company Holdings, 6.52%, 11/28/00(a) ..................... 42,600,000 42,391,686 Textron Financial Corporation, 6.52%, 11/17/00 ........................ 3,200,000 3,190,727 ------------- Total Short-Term Corporate Notes (Cost $100,126,726) .................... 100,126,726 ------------- SECURITIES HELD UNDER REPURCHASE AGREEMENTS--4.7% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust Company, dtd 10/31/00, repurchase price $60,210,819; collateralized by U.S. Treasury Bonds (par value $47,060,000, 8.50%, due 2/15/20) ....... 60,200,000 ------------- OTHER SHORT-TERM INVESTMENTS--1.9% Shares Securities Lending Quality Trust ------ (Cost $24,572,089) (c) ................. 24,572,089 24,572,089 ------------- Total Short-Term Investments (Cost $184,898,815) .................... 184,898,815 Total Investments (Cost $1,215,878,616) (b) .............. 103.8% 1,341,466,243 Liabilities in Excess of Other Assets ..... (3.8) (49,352,720) ----- ------------- Net Assets ................................ 100.0% $1,292,113,523 ====== ============== * Non-income producing security. + Securities partially or fully on loan. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity to qualified institutional buyers. (b) At October 31, 2000, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $1,215,878,616, amounted to $125,587,627 which consisted of aggregate gross unrealized appreciation of $187,117,192 and aggregate gross unrealized depreciation of $61,529,565. (c) Represents investment of cash collateral received for securities on loan. See Notes to Financial Statements. -10- THE ALGER FUND alger Largecap GROWTH PORTFOLIO (i) Financial Highlights For a share outstanding throughout the period
Class A (ii) Class B ------------------------------------------------------ ----------------------- Ten Months Year Ended October 31, Ended Year Ended October 31, -------------------------------------- October 31, ----------------------- 2000 1999 1998 1997(iv) 2000 1999 -------- -------- -------- ------- -------- -------- Net asset value, beginning of period ... $ 15.47 $ 12.19 $ 11.58 $ 9.40 $ 15.09 $ 12.00 -------- -------- -------- ------- -------- -------- Net investment income (loss) ........... (.05)(v) (.07)(v) (.03)(v) (.02) (.16)(v) (.18)(v) Net realized and unrealized gain (loss) on investments ...................... 1.33 4.64 2.13 2.20 1.31 4.56 -------- -------- -------- ------- -------- -------- Total from investment operations ....... 1.28 4.57 2.10 2.18 1.15 4.38 Distributions from net realized gains .. (2.66) (1.29) (1.49) -- (2.66) (1.29) -------- -------- -------- ------- -------- -------- Net asset value, end of period ......... $ 14.09 $ 15.47 $ 12.19 $ 11.58 $ 13.58 $ 15.09 ======== ======== ======== ======= ======== ======== Total Return (vi) ...................... 8.0% 40.4% 21.4% 23.2% 7.2% 39.3% ======== ======== ======== ======= ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................... $324,130 $228,896 $121,930 $52,307 $902,091 $770,311 ======== ======== ======== ======= ======== ======== Ratio of expenses to average net assets ....................... 1.20% 1.21% 1.25% 1.30% 1.96% 1.96% ======== ======== ======== ======= ======== ======== Ratio of net investment income (loss) to average net assets ............ (.32%) (.50%) (.23%) (.39%) (1.07%) (1.26%) ======== ======== ======== ======= ======== ======== Portfolio Turnover Rate ............. 96.13% 205.94% 146.64% 128.26% 96.13% 205.94% ======== ======== ======== ======= ======== ========
(i) Prior to September 29, 2000 the Alger LargeCap Growth Portfolio was the Alger Growth Portfolio. (ii) Initially offered January 1, 1997. (iii) Initially offered August 1, 1997. (iv) Ratios have been annualized; total return has not been annualized. (v) Amount was computed based on average shares outstanding during the period. (vi) Does not reflect the effect of any sales charges. See Notes to Financial Statements. -11-
Class B Class C (iii) ----------------------------------- --------------------------------------------------- Three Months Year Ended October 31, Year Ended October 31, Ended ----------------------------------- ----------------------------------- October 31, 1998 1997 1996 2000 1999 1998 1997(iv) -------- -------- -------- ------- ------- ------- ------- Net asset value, beginning of period ... $ 11.50 $ 9.49 $ 9.38 $ 15.08 $ 12.00 $ 11.50 $ 11.98 -------- -------- -------- ------- ------- ------- ------- Net investment income (loss) ........... (.11)(v) (.13) (.08)(v) (.16)(v) (.18)(v) (.11)(v) (.02) Net realized and unrealized gain (loss) on investments ...................... 2.10 2.44 .78 1.31 4.55 2.10 (.46) -------- -------- -------- ------- ------- ------- ------- Total from investment operations ....... 1.99 2.31 .70 1.15 4.37 1.99 (.48) Distributions from net realized gains .. (1.49) (.30) (.59) (2.66) (1.29) (1.49) -- -------- -------- -------- ------- ------- ------- ------- Net asset value, end of period ......... $ 12.00 $ 11.50 $ 9.49 $ 13.57 $ 15.08 $ 12.00 $ 11.50 ======== ======== ======== ======= ======= ======= ======= Total Return (vi) ...................... 20.5% 24.9% 8.1% 7.2% 39.2% 20.5% (4.0%) ======== ======== ======== ======= ======= ======= ======= Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................... $390,885 $304,984 $266,207 $65,893 $31,500 $ 3,312 $ 199 ======== ======== ======== ======= ======= ======= ======= Ratio of expenses to average net assets ....................... 2.00% 2.08% 2.08% 1.95% 1.97% 2.00% 2.02% ======== ======== ======== ======= ======= ======= ======= Ratio of net investment income (loss) to average net assets ............ (.98%) (1.13%) (.84%) (1.08%) (1.30%) (.97%) (1.43%) ======== ======== ======== ======= ======= ======= ======= Portfolio Turnover Rate ............. 146.64% 128.26% 94.91% 96.13% 205.94% 146.64% 128.26% ======== ======== ======== ======= ======= ======= =======
[This page intentionally left blank] -13- - -------------------------------------------------------------------------------- Alger Small Capitalization Portfolio Portfolio Highlights Through October 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Hypothetical $10,000 Investment in Class B Shares - 10 Years Ended 10/31/00 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] [The following table was depicted as a mountain chart in the printed material.] ALGER SMALL CAP PLOT POINTS Alger Small Capitalization Growth B S&P 500 Index 11/1/90 10000 10000 16374 16653 10/31/92 16935 16593 21302 21185 10/31/94 21079 20991 30807 25308 10/31/96 31784 28681 35867 34753 10/31/98 31973 29245 42421 37810 10/31/2000 42589 43920 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger Small Capitalization Class B shares and the Russell 2000 Growth Index for the ten years ended October 31, 2000. Figures for both the Alger Small Capitalization Class B shares and the Russell 2000 Growth Index, an unmanaged index of common stocks, include reinvestment of dividends. Performance for the Alger Small Capitalization Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear. - -------------------------------------------------------------------------------- Performance Comparison as of 10/31/00+ Average Annual Total Returns 1 5 10 Since Year Years Years Inception ------------------------------------------------- Class A (Inception 1/1/97) (4.37%) * * 6.46% Russell 2000 Growth Index 16.16% * * 10.40% - -------------------------------------------------------------------------------- Class B (Inception 11/11/86) (4.61%) 6.00% 15.59% 14.96% Russell 2000 Growth Index 16.16% 11.66% 15.95% 10.34% - -------------------------------------------------------------------------------- Class C (Inception 8/1/97) (2.10%) * * 4.18% Russell 2000 Growth Index 16.16% * * 8.94% - -------------------------------------------------------------------------------- The Portfolio's average annual total returns include changes in share price and reinvestment of dividends and capital gains. Past performance does not guarantee future results. Investment return and principal will fluctuate and the Portfolio's shares, when redeemed, may be worth more or less than their original cost. + Returns reflect maximum initial sales charges on Class A and Class C shares and applicable contingent deferred sales charges on Class B and Class C shares. -14- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Common Stocks--87.7% Shares Value ------ ----- AIR TRANSPORT--.5% SkyWest Inc. .............................. 41,400 $ 2,090,700 ------------- BANKS--.5% Greater Bay Bancorp ....................... 13,600 442,850 Southwest Bancorporation of Texas, Inc.* ........................... 43,750 1,596,875 ------------- 2,039,725 ------------- BIO-TECHNOLOGY RESEARCH & PRODUCTION--7.7% Albany Molecular Research, Inc.* .......... 41,000 2,383,125 Alexion Pharmaceuticals, Inc.* ............ 26,300 2,718,763 Aviron*+ .................................. 42,700 2,791,513 Celgene Corporation* ...................... 32,000 2,060,000 Cell Therapeutics, Inc.* .................. 24,800 1,658,887 Cephalon, Inc.* ........................... 88,629 4,752,730 Charles River Laboratories International, Inc.* ................... 79,850 2,096,063 IDEC Pharmaceuticals Corporation* ......... 32,500 6,374,063 Informax, Inc.* ........................... 85,830 2,387,147 Lexicon Genetics Incorporated* ............ 133,900 2,711,475 Myriad Genetics, Inc.* .................... 8,000 960,000 NPS Pharmaceuticals, Inc.* ................ 51,500 2,208,063 Titan Pharmaceuticals, Inc.* .............. 15,400 648,032 Variagenics, Inc.* ........................ 45,050 743,325 ------------- 34,493,186 ------------- BUSINESS SERVICES AvantGo, Inc.* ............................ 13,945 137,271 ------------- COMMERCIAL SERVICES--.5% Corporate Executive Board Co. ............. 45,200 2,084,850 ------------- COMMUNICATIONS TECHNOLOGY--7.3% Avocent Corporation* ...................... 80,500 5,710,469 Cobalt Networks, Inc.* .................... 172,500 9,509,063 Digital Lightwave, Inc.*+ ................. 49,500 2,509,031 Packeteer Inc. ............................ 93,400 2,323,325 Proxim, Inc.* ............................. 47,100 2,855,438 REMEC, Inc.* .............................. 73,500 2,191,219 Research in Motion Limited* ............... 63,200 6,320,000 TeleCommunication Systems, Inc. Cl. A* ............................ 78,900 1,242,675 ------------- 32,661,220 ------------- COMPUTER SERVICES--10.8% Actuate Corporation* ...................... 198,000 5,581,125 Aspen Technology, Inc.* ................... 88,000 3,635,500 Click Commerce, Inc.* ..................... 28,300 810,088 Documentum, Inc.* ......................... 19,400 1,649,000 Embarcadero Technologies, Inc.* ........... 5,120 309,440 Evolve Software, Inc.* .................... 88,000 1,380,500 Exult Inc.*+ .............................. 259,300 3,889,500 Informatica Corporation* .................. 38,000 3,591,000 Interwoven, Inc.* ......................... 60,308 6,076,031 Manugistics Group, Inc.* .................. 34,900 3,976,419 Micromuse Inc.* ........................... 32,500 5,514,844 Netegrity, Inc.* .......................... 38,350 2,991,300 Resonate Inc.* ............................ 25,200 1,067,850 SignalSoft Corporation* ................... 47,375 1,347,226 SpeechWorks International Inc.* ........... 80,450 6,697,463 ------------- 48,517,286 ------------- COMPUTER TECHNOLOGY--.6% Computer Network Technology Corporation* ........................... 86,395 2,625,598 ------------- DIVERSIFIED FINANCIAL SERVICES--2.2% BISYS Group, Inc.* ........................ 213,800 10,075,325 ------------- DRUGS & PHARMACEUTICALS--8.3% ALZA Corporation* ......................... 53,550 4,334,202 AmeriSource Health Corporation Cl. A* ................................. 284,100 12,340,594 Bindley Western Industries, Inc. .......... 230,750 8,292,578 COR Therapeutics, Inc.* ................... 52,400 2,960,600 Medicis Pharmaceutical Corporation* ........................... 39,650 2,919,231 Onyx Pharmaceuticals, Inc.*+ .............. 61,200 918,000 Priority Healthcare Corporation, Cl. B* ................................. 65,300 3,509,875 United Therapeutics Corporation*+ ......... 35,000 1,872,500 ------------- 37,147,580 ------------- ELECTRONICS--6.5% Benchmark Electronics, Inc.* .............. 94,800 3,815,700 DDi Corp.* ................................ 207,100 8,271,056 Keithley Instruments, Inc. ................ 59,900 3,204,650 Mettler-Toledo International Inc.* ........ 50,600 2,362,388 MRV Communications, Inc.* ................. 95,900 3,788,050 Plexus Corp.* ............................. 105,000 6,621,563 SMTC Corporation* ......................... 58,300 1,100,413 ------------- 29,163,820 ------------- ENERGY--1.1% CARBO Ceramics Inc. ....................... 52,800 1,580,700 FuelCell Energy, Inc.*+ ................... 34,840 2,667,437 Veritas DGC Inc.* ......................... 13,500 405,000 ------------- 4,653,137 ------------- -15- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Common Stocks--(cont.) Shares Value ------ ----- FINANCIAL INFORMATION SERVICES--2.5% FactSet Research Systems Inc. ............. 296,200 $ 11,217,094 ------------- FREIGHT EGL, Inc.* ................................ 11,200 319,200 ------------- HEALTH CARE--9.1% Advance Paradigm, Inc.* ................... 82,500 4,032,188 IMPATH Inc.* .............................. 80,900 6,118,062 Laboratory Corporation of America Holdings* .............................. 109,500 14,768,812 Orthodontic Centers Of America* ........... 141,895 4,735,746 Province Healthcare Company* .............. 257,825 10,860,878 ------------- 40,515,686 ------------- HOTELS--.2% Orient-Express Hotels Ltd., Cl. A* ........ 58,250 1,052,141 ------------- IDENTIFICATION CONTROL & FILTER DEVICES--.8% Artesyn Technologies, Inc.* ............... 92,500 3,757,812 ------------- INVESTMENT MANAGEMENT COMPANIES--5.0% Affiliated Managers Group, Inc.* .......... 92,400 5,555,550 Blackrock Inc.* ........................... 169,900 7,241,987 Federated Investors, Inc. Cl. B ........... 335,450 9,769,981 ------------- 22,567,518 ------------- MEDICAL & DENTAL INSTRUMENTS & SUPPLIES--2.5% Cytyc Corporation* ........................ 48,900 2,902,673 Enzon, Inc.* .............................. 114,800 8,179,500 ------------- 11,082,173 ------------- MEDICAL SERVICES--2.7% Aurora Biosciences Corp.* ................. 150,100 9,146,719 Deltagen, Inc.* ........................... 38,000 603,250 RehabCare Group, Inc.* .................... 51,258 2,213,705 ------------- 11,963,674 ------------- METAL FABRICATING--2.5% Shaw Group Inc. (The)* .................... 136,900 11,157,350 ------------- OIL--1.2% Cross Timbers Oil Company ................. 44,000 827,750 Grey Wolf, Inc.* .......................... 456,250 2,110,156 Mitchell Energy & Development Corp. .................................. 18,300 841,800 Spinnaker Exploration Company* ............ 10,500 317,625 St. Mary Land & Exploration Company ................................ 24,500 574,219 Swift Energy Company* ..................... 19,700 640,250 ------------- 5,311,800 ------------- PHOTOGRAPHY--1.2% Concord Camera Corp.* ..................... 168,435 5,210,957 ------------- PRODUCTION TECHNOLGY EQUIPMENT--.5% DuPont Photomasks, Inc.* .................. 36,929 2,072,640 ------------- RESTAURANTS--1.9% California Pizza Kitchen, Inc.* ........... 78,000 2,730,000 Cheesecake Factory Incorporated* .......... 122,200 5,414,988 Krispy Kreme Doughnuts Inc.* .............. 5,000 492,812 ------------- 8,637,800 ------------- RETAIL--1.3% Abercrombie & Fitch Co., Cl. A* ........... 147,800 3,482,537 Zale Corporation* ......................... 66,600 2,256,075 ------------- 5,738,612 ------------- SCIENTIFIC EQUIPMENT & SUPPLIERS--2.5% Newport Corporation ....................... 99,150 11,323,240 ------------- SECURITIES BROKERAGE & SERVICES--.6% Investment Technology Group, Inc.* ........ 71,300 2,566,800 ------------- SEMICONDUCTORS--5.9% Actel Corporation* ........................ 37,900 1,388,087 Applied Micro Circuits Corp.* ............. 33,069 2,527,696 Elantec Semiconductor Inc.* ............... 52,550 5,846,188 Exar Corporation* ......................... 44,400 1,984,125 Integrated Circuit Systems, Inc.* ......... 220,000 2,997,500 Microtune, Inc.* .......................... 90,000 2,531,250 Oak Technology Inc.* ...................... 168,500 4,728,531 OmniVision Technologies, Inc.* ............ 25,950 885,544 Pericom Semiconductor Corporation* ........................... 136,000 3,604,000 ------------- 26,492,921 ------------- TELECOMMUNICATIONS EQUIPMENT--.5% Plantronics, Inc.* ........................ 51,600 2,354,250 ------------- TRUCKERS--.8% Forward Air Corporation* .................. 86,500 3,557,312 ------------- UTILITIES TNPC, Inc.* ............................... 28,600 475,475 ------------- Total Common Stocks (Cost $367,942,398) 393,064,153 ------------- -16- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Principal Short-Term Investments--12.6% Amount Value ------ ----- SHORT-TERM CORPORATE NOTES--8.2% Cintas Executive Services, 6.47%, 11/9/00 .........................$12,200,000 $ 12,182,460 Merrill Lynch & Co., Inc., 6.49%, 11/30/00 ........................ 13,600,000 13,528,898 United Technologies Corporation, 6.47%, 11/1/00 (a) ..................... 11,200,000 11,200,000 ------------- Total Short-Term Corporate Notes (Cost $36,911,358) ..................... 36,911,358 ------------- SECURITIES HELD UNDER REPURCHASE AGREEMENTS--4.4% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust Company, dtd 10/31/00 repurchase price $19,653,532; collateralized by Federal Home Loan Bank Notes (par value $20,640,000, 6.47%, due 4/27/04) ....... 19,650,000 ------------- Total Short-Term Investments (Cost $56,561,358) ..................... 56,561,358 ------------- Total Investments (Cost $424,503,756) .................... 100.3% 449,625,511 Liabilities in Excess of Other Assets ..... (0.3) (1,475,786) ----- ------------- Net Assets ................................ 100.0% $ 448,149,725 ===== ============= * Non-income producing security. + Securities partially or fully on loan. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. (b) At October 31, 2000, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $424,503,756, amounted to $25,121,755 which consisted of aggregate gross unrealized appreciation of $53,987,476 and aggregate gross unrealized depreciation of $28,865,721. See Notes to Financial Statements. [This page intentionally left blank] -18- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO Financial Highlights For a share outstanding throughout the period
Class A (i) Class B ------------------------------------------------------ ----------------------- Ten Months Year Ended October 31, Ended Year Ended October 31, -------------------------------------- October 31, ----------------------- 2000 1999 1998 1997(iii) 2000 1999 -------- -------- -------- ------- -------- -------- Net asset value, beginning of period ... $ 10.35 $ 8.74 $ 10.35 $ 9.21 $ 10.13 $ 8.61 -------- ------- ------- ------- -------- -------- Net investment income (loss) ........... (.08)(iv) (.08)(iv) (.06)(iv) (.04) (.16)(iv) (.15)(iv) Net realized and unrealized gain (loss) on investments ......................... .35 2.71 (1.04) 1.18 .36 2.69 -------- ------- ------- ------- -------- -------- Total from investment operations ....... .27 2.63 (1.10) 1.14 .20 2.54 Distributions from net realized gains .. (1.81) (1.02) (.51) -- (1.81) (1.02) -------- ------- ------- ------- -------- -------- Net asset value, end of period ......... $ 8.81 $ 10.35 $ 8.74 $ 10.35 $ 8.52 $ 10.13 ======== ======= ======= ======= ======== ======== Total Return (v) ....................... .4% 32.7% (10.9%) 12.4% (.4%) 32.1% ======== ======= ======= ======= ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................. $111,665 $69,986 $59,516 $25,996 $325,382 $419,842 ======== ======= ======= ======= ======== ======== Ratio of expenses to average net assets ....................... 1.41% 1.38% 1.37% 1.38% 2.14% 2.14% ======== ======= ======= ======= ======== ======== Ratio of net investment income (loss) to average net assets ............ (.81%) (.79%) (.71%) (.93%) (1.58%) (1.58%) ======== ======= ======= ======= ======== ======== Portfolio Turnover Rate ............. 207.19% 110.92% 157.26% 120.27% 207.19% 110.92% ======== ======= ======= ======= ======== ========
(i) Initially offered January 1, 1997. (ii) Initially offered August 1, 1997. (iii) Ratios have been annualized; total return has not been annualized. (iv) Amount was computed based on average shares outstanding during the period. (v) Does not reflect the effect of any sales charges. See Notes to Financial Statements. -19-
Class B Class C (ii) ---------------------------------- --------------------------------------------------- Three Months Year Ended October 31, Year Ended October 31, Ended ---------------------------------- ----------------------------------- October 31, 1998 1997 1996 2000 1999 1998 1997(iii) -------- -------- -------- ------- ------- ------- -------- Net asset value, beginning of period ... $ 10.29 $ 10.86 $ 11.13 $ 10.13 $ 8.59 $ 10.29 $ 10.38 -------- -------- -------- ------- ------- ------- ------- Net investment income (loss) ........... (.14)(iv) (.11) (.09) (.16)(iv) (.16)(iv) (.10)(iv) (.03) Net realized and unrealized gain (loss) on investments ......................... (1.03) 1.28 .42 .37 2.72 (1.09) (.06) -------- -------- -------- ------- ------- ------- ------- Total from investment operations ....... (1.17) 1.17 .33 .21 2.56 (1.19) (.09) Distributions from net realized gains .. (.51) (1.74) (.60) (1.81) (1.02) (.51) -- -------- -------- -------- ------- ------- ------- ------- Net asset value, end of period ......... $ 8.61 $ 10.29 $ 10.86 $ 8.53 $ 10.13 $ 8.59 $ 10.29 ======== ======== ======== ======= ======= ======= ======= Total Return (v) ....................... (11.6%) 12.9% 3.2% (.3%) 32.4% (11.8%) (.9%) ======== ======== ======== ======= ======= ======= ======= Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................. $460,788 $580,651 $553,872 $11,103 $ 7,659 $ 4,838 $ 338 ======== ======== ======== ======= ======= ======= ======= Ratio of expenses to average net assets ....................... 2.12% 2.14% 2.13% 2.15% 2.13% 2.11% 2.09% ======== ======== ======== ======= ======= ======= ======= Ratio of net investment income (loss) to average net assets ............ (1.51%) (1.67%) (1.59%) (1.57%) (1.55%) (1.36%) (1.71%) ======== ======== ======== ======= ======= ======= ======= Portfolio Turnover Rate ............. 157.26% 120.27% 153.35% 207.19% 110.92% 157.26% 120.27% ======== ======== ======== ======= ======= ======= =======
[This page intentionally left blank] -21- - -------------------------------------------------------------------------------- Alger Balanced Portfolio Portfolio Highlights Through October 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Hypothetical $10,000 Investment in Class B Shares from 6/1/92 to 10/31/00 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] [The following table was depicted as a mountain chart in the printed material.] ALGER BALANCED PLOT POINTS Alger Balanced B S&P 500 Index Lehman Gov't/Corp. Bond Index 6/1/92 10000 10000 10000 10/31/92 9950 10197 10479 10/31/93 11180 11720 11911 10/31/94 10736 12173 11358 10/31/95 13700 15393 13193 10/31/96 14558 19101 13905 10/31/97 17360 25236 15130 10/31/98 20287 30784 16684 10/31/99 26675 38686 16575 10/31/2000 29171 41045 17754 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in Alger Balanced Class B shares, the S&P 500 Index, and the Lehman Brothers Government/Corporate Bond Index on June 1, 1992, the inception date of the Alger Balanced Portfolio, through October 31, 2000. Figures for the Alger Balanced Portfolio Class B shares, the S&P 500 Index, an unmanaged index of common stocks, and the Lehman Brothers Government/Corporate Bond Index, an unmanaged index of government and corporate bonds, include reinvestment of dividends and/or interest. Performance for the Alger Balanced Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear. - -------------------------------------------------------------------------------- Performance Comparison as of 10/31/00+ Average Annual Total Returns 1 5 Since Year Years Inception ------------------------------------------------- Class A (Inception 1/1/97) 4.95% * 18.89% S&P 500 Index 6.10% * 20.40% Lehman Gov't/Corp. Bond Index 7.11% * 6.38% - -------------------------------------------------------------------------------- Class B (Inception 6/1/92) 4.36% 16.10% 13.56% S&P 500 Index 6.10% 21.67% 18.26% Lehman Gov't/Corp. Bond Index 7.11% 6.12% 7.13% - -------------------------------------------------------------------------------- Class C (Inception 8/1/97) 7.23% * 16.10% S&P 500 Index 6.10% * 14.77% Lehman Gov't/Corp. Bond Index 7.11% * 5.70% - -------------------------------------------------------------------------------- The Portfolio's average annual total returns include changes in share price and reinvestment of dividends and capital gains. Past performance does not guarantee future results. Investment return and principal will fluctuate and the Portfolio's shares, when redeemed, may be worth more or less than their original cost. + Returns reflect maximum initial sales charges on Class A and Class C shares and applicable contingent deferred sales charges on Class B and Class C shares. -22- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Common Stocks--52.4% Shares Value ------ ----- ADVERTISING--.4% Omnicom Group Inc. ......................... 11,900 $ 1,097,775 ------------- AEROSPACE--2.4% General Dynamics Corporation ............... 22,500 1,610,156 United Technologies Corporation ............ 69,900 4,879,894 ------------- 6,490,050 ------------- AUTOMOTIVE--.4% Harley-Davidson, Inc.+ ..................... 25,000 1,204,688 ------------- BIO-TECHNOLOGY RESEARCH & PRODUCTION--1.5% Amgen Inc.* ................................ 69,200 4,009,275 ------------- CABLE--.8% Comcast Corp., Cl. A Special* .............. 25,000 1,018,750 Time Warner Inc. ........................... 17,250 1,309,448 ------------- 2,328,198 ------------- COMMUNICATION EQUIPMENT--2.6% Cisco Systems, Inc.* ....................... 85,900 4,627,862 Corning Incorporated ....................... 31,700 2,425,050 ------------- 7,052,912 ------------- COMMUNICATIONS TECHNOLOGY--3.3% America Online, Inc.* ...................... 63,400 3,197,262 AT&T Corp. Liberty Media Group, Series A* ............................... 55,000 990,000 Exodus Communications, Inc.* ............... 27,300 916,256 SBC Communications, Inc. ................... 14,000 807,625 Viacom Inc. Cl. B* ......................... 57,950 3,295,906 ------------- 9,207,049 ------------- COMPUTER RELATED & BUSINESS EQUIPMENT--2.6% Dell Computer Corporation* ................. 29,000 855,500 EMC Corporation* ........................... 27,150 2,418,047 Hewlett-Packard Company .................... 20,900 970,544 Sun Microsystems, Inc.* .................... 26,900 2,982,537 ------------- 7,226,628 ------------- COMPUTER SERVICES--2.0% CNET Networks, Inc.*+ ...................... 41,600 1,310,400 eBay Inc.*+ ................................ 76,400 3,934,600 Yahoo Inc.* ................................ 5,752 337,211 ------------- 5,582,211 ------------- COMPUTER SOFTWARE--3.6% BEA Systems, Inc.*+ ........................ 16,500 1,183,875 Commerce One, Inc.*+ ....................... 21,800 1,399,288 i2 Technologies, Inc.* ..................... 9,620 1,635,400 Intuit Inc.* ............................... 39,500 2,426,781 Microsoft Corporation* ..................... 46,900 3,230,237 ------------- 9,875,581 ------------- CONGLOMERATE--3.3% General Electric Company ................... 30,200 1,655,337 Philip Morris Companies Inc. ............... 44,000 1,611,500 Tyco International Limited ................. 103,000 5,838,813 ------------- 9,105,650 ------------- ENERGY & ENERGY SERVICES--2.9% Calpine Corporation*+ ...................... 21,600 1,705,050 Duke Energy Corporation .................... 9,500 821,156 Halliburton Company ........................ 107,150 3,971,247 Transocean Sedco Forex Inc. ................ 29,100 1,542,300 ------------- 8,039,753 ------------- FINANCIAL SERVICES--5.1% American Express Company ................... 22,500 1,350,000 Citigroup Inc. ............................. 88,066 4,634,473 Marsh & McLennan Companies, Inc. ........... 10,400 1,359,800 Merrill Lynch & Co., Inc. .................. 21,700 1,519,000 Schwab (Charles) Corporation (The) ......... 50,725 1,781,716 Stilwell Financial Inc. .................... 53,800 2,410,912 Washington Mutual, Inc. .................... 20,800 915,200 ------------- 13,971,101 ------------- FOOD CHAINS--1.4% The Kroger Co.* ............................ 52,900 1,193,556 Safeway Inc.* .............................. 47,500 2,597,656 ------------- 3,791,212 ------------- FOODS & BEVERAGES--.6% The Coca-Cola Company ...................... 29,450 1,778,044 ------------- HEALTH CARE ADMINISTRATIVE SERVICES--2.0% Cardinal Health, Inc. ...................... 57,300 5,429,175 ------------- INSURANCE--1.2% American International Group, Inc. ......... 34,200 3,351,600 ------------- MANUFACTURING--.9% Sanmina Corporation*+ ...................... 7,200 823,050 Solectron Corporation* ..................... 37,600 1,654,400 ------------- 2,477,450 ------------- MEDICAL DEVICES--.9% Guidant Corporation* ....................... 32,600 1,725,763 Medtronic, Inc. ............................ 15,200 825,550 ------------- 2,551,313 ------------- -23- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Common Stocks--(cont.) Shares Value ------ ----- OIL & GAS--1.9% Exxon Mobil Corporation .................... 58,000 $ 5,172,875 ------------- PHARMACEUTICALS--4.6% Abbott Laboratories ........................ 17,000 897,812 American Home Products Corporation ............................. 61,191 3,885,629 Baxter International Inc. .................. 37,300 3,065,594 Pfizer Inc. ................................ 113,225 4,889,905 ------------- 12,738,940 ------------- RETAIL--3.2% Best Buy Co., Inc.* ........................ 40,200 2,017,537 Home Depot, Inc. ........................... 19,850 853,550 Walgreen Co. ............................... 42,300 1,929,938 Wal-Mart Stores, Inc. ...................... 86,950 3,945,356 ------------- 8,746,381 ------------- SEMICONDUCTOR CAPITAL EQUIPMENT--1.4% Applied Materials, Inc.* ................... 49,100 2,608,438 Teradyne, Inc.* ............................ 42,000 1,312,500 ------------- 3,920,938 ------------- SEMICONDUCTORS--3.4% Altera Corporation* ........................ 109,100 4,466,281 Intel Corporation .......................... 34,300 1,543,500 Linear Technology Corporation .............. 30,700 1,982,069 Texas Instruments, Incorporated ............ 26,200 1,285,437 ------------- 9,277,287 ------------- Total Common Stocks (Cost $137,603,156) 144,426,086 ------------- Preferred Stock--.3% Communication Equipment Nokia Corporation, ADR (Cost $807,941) ......................... 20,200 863,550 ------------- Principal Corporate Bonds--14.8% Amount ------ AUTOMOTIVE--1.6% Ford Motor Credit Company, 7.50%, 6/15/03 ..........................$2,000,000 2,011,560 General Motors Acceptance Corp., 6.55%, 11/17/03 ......................... 2,300,000 2,262,786 ------------- 4,274,346 ------------- BANKS--3.0% Associates Corp., North America Sr. Notes, 5.75%, 11/1/03 ............... 1,000,000 965,040 First USA Bank Wilmington Delaware, 7.65%, 8/1/03 ...........................$3,000,000 3,058,230 Signet Bank, 7.80%, 9/15/06 .......................... 3,000,000 3,124,500 Wells Fargo & Co. Sr. Global Notes, 6.625%, 7/15/04 ......................... 1,200,000 1,182,540 ------------- 8,330,310 ------------- CHEMICALS--.5% Du Pont E.I. De Nemours & Co., 6.50%, 9/1/02 ........................... 1,500,000 1,490,055 ------------- COMMUNICATIONS TECHNOLOGY--2.5% AT&T Corp., 7.00%, 5/15/05 .......................... 2,000,000 1,956,500 Beneficial Corp., 6.575%, 12/16/02 ........................ 500,000 494,470 TCI Communications Inc. Sr. Notes, 8.00%, 8/1/05 ........................... 1,000,000 1,010,580 Tele-Communications, Inc., 7.25%, 8/1/05 ........................... 500,000 488,705 Vodafone Group, PLC ADR, 7.625%, 2/15/05 (a) ..................... 3,000,000 3,043,080 ------------- 6,993,335 ------------- CONGLOMERATE--.2% Loews Corp., 7.625%, 6/1/23 .......................... 500,000 455,725 ------------- CONSUMER PRODUCTS--.1% Eastman Kodak Company, 9.20%, 6/1/21 ........................... 300,000 316,530 ------------- ELECTRIC & GAS COMPANIES--2.5% General Electric Capital Corp., 7.50%, 5/15/05 .......................... 3,000,000 3,084,780 GTE Florida Inc., 6.25%, 11/15/05 ......................... 3,000,000 2,927,520 Pacific Gas & Electric Co., 7.25%, 3/1/26 ........................... 182,000 162,542 Potomac Electric Power Co., 7.00%, 1/15/24 .......................... 200,000 175,000 Washington Gas Light Co., Medium Term Notes, 6.51%, 8/18/08 .......................... 500,000 478,460 ------------- 6,828,302 ------------- FINANCIAL SERVICES--4.0% Bank of America Corp., 7.20%, 4/15/06 .......................... 1,500,000 1,491,420 -24- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Principal Corporate Bonds--(cont.) Amount Value ------ ----- FINANCIAL SERVICES--(cont.) Block Financial Corp., 8.50%, 4/15/07 ..........................$ 500,000 $ 514,750 Chase Manhattan Corporation, 8.50%, 2/15/02 .......................... 200,000 202,988 Cit Group Inc., 7.125%, 10/15/04 ........................ 1,000,000 979,860 Citicorp, 7.125%, 6/1/03 ................... 200,000 201,472 Countrywide Home Loan Inc., 6.51%, 2/11/05 .......................... 1,524,000 1,458,209 6.935%, 7/16/07 ......................... 3,450,000 3,240,413 Goldman, Sachs Group, 6.65%, 5/15/09 .......................... 1,000,000 946,790 Morgan Stanley Dean Witter & Co., 6.875%, 3/1/07 .......................... 2,000,000 1,949,940 ------------- 10,985,842 ------------- RETAIL--.4% Wal-Mart Stores Inc., 6.55%, 8/10/04 .......................... 1,000,000 998,070 ------------- Total Corporate Bonds (Cost $40,720,961) ...................... 40,672,515 ------------- U.S. Government & Agency Obligations--19.1% Federal Home Loan Bank, 5.87%, 4/22/03 .......................... 300,000 295,782 5.935%, 4/22/05 ......................... 400,000 389,936 6.375%, 8/15/06 ......................... 3,000,000 2,968,800 7.625%, 5/15/07 ......................... 2,000,000 2,106,440 6.75%, 8/15/07 .......................... 3,000,000 3,021,390 6.12%, 8/26/08 .......................... 1,000,000 944,690 7.625%, 5/14/10 ......................... 2,000,000 2,125,880 Federal Home Loan Mortgage Corp., 6.00%, 6/23/04 .......................... 1,500,000 1,462,260 5.75%, 4/15/08 .......................... 1,000,000 945,780 6.625%, 9/15/09 ......................... 1,200,000 1,192,500 6.875%, 9/15/10 ......................... 2,000,000 2,025,320 7.08%, 3/17/14 .......................... 400,000 381,436 Federal National Mortgage Assoc., 5.38%, 1/16/01 .......................... 2,000,000 1,995,720 6.00%, 3/8/04 ........................... 3,000,000 2,950,260 7.125%, 2/15/05 ......................... 2,000,000 2,043,200 6.96%, 4/2/07 ........................... 500,000 507,420 7.49%, 5/22/07 .......................... 250,000 243,125 6.09%, 1/12/09 .......................... 1,000,000 935,470 7.00%, 3/4/13 ........................... 600,000 572,250 6.75%, 2/4/28 ........................... 400,000 361,252 U.S. Treasury Notes, 6.125%, 12/31/01 ........................ 1,000,000 998,440 6.50%, 3/31/02 .......................... 2,000,000 2,008,440 6.375%, 4/30/02 ......................... 2,000,000 2,006,880 7.50%, 5/15/02 .......................... 100,000 102,016 6.25%, 7/31/02 .......................... 3,500,000 3,511,410 6.25%, 2/15/03 .......................... 1,750,000 1,760,658 6.00%, 8/15/04 .......................... 1,500,000 1,506,795 5.875%, 11/15/04 ........................ 2,000,000 2,001,260 6.50%, 8/15/05 .......................... 6,000,000 6,165,000 6.50%, 10/15/06 ......................... 1,500,000 1,547,115 5.625%, 5/15/08 ......................... 1,500,000 1,479,615 6.00%, 8/15/09 .......................... 2,000,000 2,020,940 ------------- Total U.S. Government & Agency Obligations (Cost $52,082,016) ...................... 52,577,480 ------------- Short-Term Investments--17.3% SHORT-TERM CORPORATE NOTES--10.6% Consolidated Natural Gas Company, 6.55%, 11/30/00 ......................... 5,400,000 5,371,507 Indiana Gas Company, Inc., 6.48%, 11/8/00 .......................... 8,100,000 8,089,794 Merrill Lynch & Co., Inc., 6.49%, 11/30/00 ......................... 8,100,000 8,057,653 Textron Financial Corporation, 6.52%, 11/17/00 ......................... 6,700,000 6,680,585 United Technologies Corporation, 6.47%, 11/1/00 (a) ...................... 900,000 900,000 ------------- Total Short-Term Corporate Notes (Cost $29,099,539) ...................... 29,099,539 ------------- SECURITIES HELD UNDER REPURCHASE AGREEMENTS--4.4% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust, dtd 10/31/00, repurchase price $12,102,175; collateralized by Federal National Mortgage Association Discount Notes (par value $12,390,000 due 11/24/00) ........................... 12,100,000 ------------- OTHER SHORT-TERM INVESTMENTS--2.3% Shares Securities Lending Quality Trust ------ (Cost $6,418,900) (c) 6,418,900 6,418,900 ------------- Total Short-Term Investments (Cost $47,618,439) ...................... 47,618,439 ------------- -25- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Value ----- Total Investments (Cost $278,832,513) (b) ................. 103.9% 286,158,070 Liabilities in Excess of Other Assets ...... (3.9) (10,771,769) ----- ------------- Net Assets ................................. 100.0% $ 275,386,301 ===== ============= * Non-income producing security. + Securities partially or fully on loan. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity to qualified institutional buyers. (b) At October 31, 2000, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $278,832,513 amounted to $7,325,557 which consisted of aggregate gross unrealized appreciation of $16,426,320 and aggregate gross unrealized depreciation of $9,100,763. (c) Represents investments of cash collateral received for securities on loan. See Notes to Financial Statements. -26- THE ALGER FUND ALGER BALANCED PORTFOLIO Financial Highlights For a share outstanding throughout the period
Class A (i) Class B ------------------------------------------------- ----------------------- Ten Months Year Ended October 31, Ended Year Ended October 31, ---------------------------------- October 31, ----------------------- 2000 1999 1998 1997(iii) 2000 1999 ------- ------- ------ ------- -------- ------- Net asset value, beginning of period ... $ 20.95 $ 16.83 $16.58 $ 13.99 $ 20.59 $ 16.64 ------- ------- ------ ------- -------- ------- Net investment income (loss) ........... .39(iv) .25(iv) .16(iv) .05 .17(iv) .07(iv) Net realized and unrealized gain (loss) on investments ...................... 1.68 4.97 2.35 2.54 1.71 4.93 ------- ------- ------ ------- -------- ------- Total from investment operations ....... 2.07 5.22 2.51 2.59 1.88 5.00 ------- ------- ------ ------- -------- ------- Dividends from net investment income ... (.13) (.08) (.06) -- (.04) (.03) Distributions from net realized gains .. (1.60) (1.02) (2.20) -- (1.60) (1.02) ------- ------- ------ ------- -------- ------- Total distributions .................... (1.73) (1.10) (2.26) -- (1.64) (1.05) ------- ------- ------ ------- -------- ------- Net asset value, end of period ......... $ 21.29 $ 20.95 $16.83 $ 16.58 $ 20.83 $ 20.59 ======= ======= ====== ======= ======== ======= Total Return (v) ....................... 10.2% 32.5% 17.7% 18.5% 9.4% 31.5% ======= ======= ====== ======= ======== ======= Ratios and Supplemental Data: Net assets, end of period (000's omitted) ................... $93,671 $12,488 $1,354 $ 459 $132,123 $52,607 ======= ======= ====== ======= ======== ======= Ratio of expenses to average net assets ....................... 1.29% 1.40% 1.79% 2.10% 2.04% 2.18% ======= ======= ====== ======= ======== ======= Ratio of net investment income (loss) to average net assets ............ 1.80% 1.15% .98% .72% .98% .36% ======= ======= ====== ======= ======== ======= Portfolio Turnover Rate ............. 63.50% 126.01% 93.23% 109.26% 63.50% 126.01% ======= ======= ====== ======= ======== =======
(i) Initially offered January 1, 1997. (ii) Initially offered August 1, 1997. (iii) Ratios have been annualized; total return has not been annualized. (iv) Amount was computed based on average shares outstanding during the period. (v) Does not reflect the effect of any sales charges. See Notes to Financial Statements. -27-
Class B Class C (ii) --------------------------------- -------------------------------------------------- Three Months Year Ended October 31, Year Ended October 31, Ended --------------------------------- ---------------------------------- October 31, 1998 1997 1996 2000 1999 1998 1997(iii) ------- ------- ------- ------- ------- ------ --------- Net asset value, beginning of period ... $ 16.48 $ 14.21 $ 13.59 $ 20.65 $ 16.66 $16.49 $ 16.88 ------- ------- ------- ------- ------- ------ ------- Net investment income (loss) ........... .03(iv) -- .12 .21(iv) .07(iv) .04(iv) (.01) Net realized and unrealized gain (loss) on investments ...................... 2.34 2.67 .72 1.67 4.95 2.33 (.38) ------- ------- ------- ------- ------- ------ ------- Total from investment operations ....... 2.37 2.67 .84 1.88 5.02 2.37 (.39) ------- ------- ------- ------- ------- ------ ------- Dividends from net investment income ... (.01) (.06) (.01) (.03) (0.01) -- -- Distributions from net realized gains .. (2.20) (.34) (.21) (1.60) (1.02) (2.20) -- ------- ------- ------- ------- ------- ------ ------- Total distributions .................... (2.21) (.40) (.22) (1.63) (1.03) (2.20) -- ------- ------- ------- ------- ------- ------ ------- Net asset value, end of period ......... $ 16.64 $ 16.48 $ 14.21 $ 20.90 $ 20.65 $16.66 $ 16.49 ======= ======= ======= ======= ======= ====== ======= Total Return (v) ....................... 16.9% 19.3% 6.3% 9.3% 31.6% 16.8% (2.31%) ======= ======= ======= ======= ======= ====== ======= Ratios and Supplemental Data: Net assets, end of period (000's omitted) ................... $19,282 $12,653 $13,492 $49,592 $14,626 $ 334 $ 48 ======= ======= ======= ======= ======= ====== ======= Ratio of expenses to average net assets ....................... 2.58% 2.89% 2.70% 2.04% 2.16% 2.53% 2.77% ======= ======= ======= ======= ======= ====== ======= Ratio of net investment income (loss) to average net assets ............ .19% .04% .47% .99% .38% .23% (.84%) ======= ======= ======= ======= ======= ====== ======= Portfolio Turnover Rate ............. 93.23% 109.26% 85.51% 63.50% 126.01% 93.23% 109.26% ======= ======= ======= ======= ======= ====== =======
[This page intentionally left blank] -29- - -------------------------------------------------------------------------------- Alger MidCap Growth Portfolio Portfolio Highlights Through October 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Hypothetical $10,000 Investment in Class B Shares from 5/24/93 to 10/31/00 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] [The following table was depicted as a mountain chart in the printed material.] ALGER MID CAP PLOT POINTS Alger Midcap Growth B S&P MidCap 400 Index 5/24/93 10000 10000 10/31/93 12480 10714 10/31/94 13062 10969 10/31/95 19373 13295 10/31/96 20618 15600 10/31/97 25024 20694 10/31/98 26586 22084 10/31/99 35182 26736 10/31/2000 51513 35199 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in Alger MidCap Growth Class B shares and the S&P MidCap 400 Index on May 24, 1993, the inception date of the Alger MidCap Growth Portfolio, through October 31, 2000. Figures for both the Alger MidCap Growth Class B shares and the S&P MidCap 400 Index, an unmanaged index of common stocks, include reinvestment of dividends. Performance for the Alger MidCap Growth Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear. - -------------------------------------------------------------------------------- Performance Comparison as of 10/31/00+ Average Annual Total Returns 1 5 Since Year Years Inception ------------------------------------------------- Class A (Inception 1/1/97) 40.65% * 25.44% S&P MidCap 400 Index 31.65% * 21.85% - -------------------------------------------------------------------------------- Class B (Inception 5/24/93) 41.42% 21.42% 24.63% S&P MidCap 400 Index 31.65% 21.50% 18.42% - -------------------------------------------------------------------------------- Class C (Inception 8/1/97) 43.89% * 24.14% S&P MidCap 400 Index 31.65% * 18.12% - -------------------------------------------------------------------------------- The Portfolio's average annual total returns include changes in share price and reinvestment of dividends and capital gains. Past performance does not guarantee future results. Investment return and principal will fluctuate and the Portfolio's shares, when redeemed, may be worth more or less than their original cost. + Returns reflect maximum initial sales charges on Class A and Class C shares and applicable contingent deferred sales charges on Class B and Class C shares. -30- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Common Stocks--83.2% Shares Value ------ ----- ADVERTISING--1.1% Lamar Advertising Company, Cl. A* ........ 163,500 $ 7,848,000 ------------- AEROSPACE--.5% General Dynamics Corporation ............. 55,000 3,935,971 ------------- AIRLINES--.4% Continental Airlines, Inc. Cl. B* ........ 57,500 3,018,750 ------------- AUTOMOTIVE--1.1% Harley-Davidson, Inc. .................... 160,900 7,753,369 ------------- BIO-TECHNOLOGY RESEARCH & PRODUCTION--2.9% Affymetrix Inc.* ......................... 48,400 2,680,150 Cephalon, Inc.* .......................... 140,400 7,528,950 QLT Inc.* ................................ 222,900 11,085,792 ------------- 21,294,892 ------------- BROADCASTING--.4% Entravision Communications Corporation Cl. A* .................... 169,600 2,999,800 ------------- BUSINESS SERVICES--1.5% CSG Systems International Inc.* .......... 77,800 3,612,838 Fiserv Inc.* ............................. 137,600 7,215,400 ------------- 10,828,238 ------------- COMMUNICATION EQUIPMENT--1.6% Efficient Networks, Inc.* ................ 111,400 4,673,578 Spectrasite Holdings, Inc.* .............. 361,000 7,129,750 ------------- 11,803,328 ------------- COMMUNICATIONS TECHNOLOGY--.4% Exodus Communications, Inc.* ............. 88,800 2,980,350 ------------- COMPUTER SERVICES--5.4% Amdocs Limited* .......................... 92,800 6,014,600 CNET Networks, Inc.* ..................... 428,700 13,504,050 eBay Inc.* ............................... 382,700 19,709,050 ------------- 39,227,700 ------------- COMPUTER SOFTWARE--8.6% Commerce One, Inc.* ...................... 247,000 15,854,313 Intuit Inc.* ............................. 447,900 27,517,856 PeopleSoft, Inc.* ........................ 267,900 11,691,323 Software.com, Inc.* ...................... 48,800 7,271,200 ------------- 62,334,692 ------------- DRUGS & PHARMACEUTICALS--4.7% ALZA Corporation* ........................ 344,400 27,874,875 AmeriSource Health Corporation Cl. A* ................................ 139,800 6,072,563 ------------- 33,947,438 ------------- ELECTRONICS: SEMICONDUCTORS/ COMPONENTS--.3% Elantec Semiconductor Inc.* .............. 20,000 2,225,000 ------------- ENERGY & ENERGY SERVICES--13.1% BJ Services Company* ..................... 416,000 21,814,000 Calpine Corporation* ..................... 168,700 13,316,756 Cooper Cameron Corporation* .............. 296,133 16,139,249 Nabors Industries, Inc.* ................. 450,250 22,917,725 Santa Fe International Corporation ....... 160,000 5,840,000 Smith International, Inc.* ............... 150,500 10,610,250 Southern Energy Inc.* .................... 30,000 817,500 Transocean Sedco Forex Inc. .............. 62,000 3,286,000 ------------- 94,741,480 ------------- FINANCIAL SERVICES--3.4% Concord EFS Inc.* ........................ 128,200 5,296,262 Stilwell Financial Inc. .................. 430,200 19,278,338 ------------- 24,574,600 ------------- FOODS & BEVERAGES--3.0% Starbucks Corporation* ................... 489,200 21,861,125 ------------- HEALTH CARE FACILITIES--1.5% Laboratory Corporation of America Holdings* ............................. 83,400 11,248,575 ------------- INDUSTRIAL EQUIPMENT--4.1% SPX Corporation* ......................... 76,000 9,395,500 Waters Corporation* ...................... 278,700 20,223,169 ------------- 29,618,669 ------------- MANUFACTURING--7.9% Dover Corporation ........................ 124,600 5,287,712 Flextronics International Ltd.* .......... 59,000 2,242,000 Jabil Circuit, Inc.* ..................... 125,150 7,141,372 Millipore Corporation .................... 360,100 18,905,250 Sanmina Corporation* ..................... 206,700 23,628,394 ------------- 57,204,728 ------------- MEDICAL SERVICES--1.0% Express Scripts Inc. Cl. A* .............. 110,100 7,397,344 ------------- OIL & GAS--2.2% Devon Energy Corporation ................. 171,800 8,658,720 EOG Resources Inc. ....................... 178,950 7,046,155 ------------- 15,704,875 ------------- -31- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Common Stocks--(cont.) Shares Value ------ ----- PHARMACEUTICALS--4.6% Allergan, Inc. ........................... 45,200 $ 3,799,625 Forest Laboratories, Inc.* ............... 223,300 29,587,250 ------------- 33,386,875 ------------- RESTAURANTS--2.4% Outback Steakhouse, Inc.* ................ 611,850 17,437,725 ------------- RETAIL--.5% Best Buy Co., Inc.* ...................... 68,200 3,422,788 ------------- SCIENTIFIC EQUIPMENT & SUPPLIERS--.6% Newport Corporation ...................... 35,000 3,997,108 ------------- SECURITIES BROKERAGE & SERVICES--.4% Investment Technology Group, Inc.* ....... 82,900 2,984,400 ------------- SEMICONDUCTOR CAPITAL EQUIPMENT--1.5% ATMI, Inc.* .............................. 93,900 1,772,363 Teradyne, Inc.* .......................... 299,368 9,355,250 ------------- 11,127,613 ------------- SEMICONDUCTORS--8.1% Altera Corporation* ...................... 399,500 16,354,531 Linear Technology Corporation ............ 292,000 18,852,250 Microchip Technology Incorporated* ......................... 653,525 20,667,728 Vishay Intertechnology, Inc.* ............ 90,000 2,700,000 ------------- 58,574,509 ------------- Total Common Stocks (Cost $507,064,691) ................... 603,479,942 ------------- Principal Short-Term Investments--13.3% Amount Value ------ ----- SHORT-TERM CORPORATE NOTES--8.8% Boeing Capital Corporation, 6.47%, 11/1/00 ........................ $11,800,000 $ 11,800,000 Cintas Executive Services, 6.47%, 11/9/00 ........................ 6,500,000 6,490,654 General Re Corporation, 6.47%, 11/30/00 ....................... 9,400,000 9,351,008 Rembrandt International Company Holdings, 6.52%, 11/28/00 (a) ................... 21,400,000 21,295,354 Textron Financial Corporation, 6.52%, 11/17/00 ....................... 15,200,000 15,155,954 ------------- Total Short-Term Corporate Notes (Cost $64,092,970) .................... 64,092,970 ------------- SECURITIES HELD UNDER REPURCHASE AGREEMENTS--4.5% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust Company, dtd 10/31/00, repurchase price $32,205,787; collateralized by Federal National Mortgage Association Discount Notes (par value $32,970,000 due 11/24/00) ....... 32,200,000 ------------- Total Short-Term Investments (Cost $96,292,970) .................... 96,292,970 ------------- Total Investments (Cost $603,357,661) (b) ............... 96.5% 699,772,912 Other Assets in Excess of Liabilities .... 3.5 25,595,651 ----- ------------- Net Assets ............................... 100.0% $ 725,368,563 ===== ============= * Non-income producing security. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity to qualified institutional buyers. (b) At October 31, 2000, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $603,357,661, amounted to $96,415,251 which consisted of aggregate gross unrealized appreciation of $134,266,923 and aggregate gross unrealized depreciation of $37,851,672. See Notes to Financial Statements. -32- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO(i) Financial Highlights For a share outstanding throughout the period
Class A (ii) Class B ---------------------------------------------------- ----------------------- Ten Months Year Ended October 31, Ended Year Ended October 31, ------------------------------------ October 31, ----------------------- 2000 1999 1998 1997(iv) 2000 1999 -------- ------- ------- ----------- -------- -------- Net asset value, beginning of period ... $ 8.20 $ 7.07 $ 7.49 $ 6.31 $ 8.00 $ 6.96 -------- ------- ------- ------- -------- -------- Net investment income (loss) ........... (.04)(v) (.05)(v) (.03)(v) (.03) (.12)(v) (.11)(v) Net realized and unrealized gain (loss) on investments ...................... 3.51 2.16 .43 1.21 3.41 2.13 -------- ------- ------- ------- -------- -------- Total from investment operations ....... 3.47 2.11 .40 1.18 3.29 2.02 Distributions from net realized gains .. (1.50) (.98) (.82) -- (1.50) (.98) -------- ------- ------- ------- -------- -------- Net asset value, end of period ......... $ 10.17 $ 8.20 $ 7.07 $ 7.49 $ 9.79 $ 8.00 ======== ======= ======= ======= ======== ======== Total Return (vi) ...................... 47.7% 33.3% 7.2% 18.7% 46.4% 32.3% ======== ======= ======= ======= ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................... $141,558 $49,246 $32,447 $ 5,436 $532,476 $248,139 ======== ======= ======= ======= ======== ======== Ratio of expenses to average net assets ....................... 1.29% 1.31% 1.34% 1.40% 2.04% 2.07% ======== ======= ======= ======= ======== ======== Ratio of net investment income (loss) to average net assets ............ (.46%) (.58%) (.53%) (.83%) (1.23%) (1.39%) ======== ======= ======= ======= ======== ======== Portfolio Turnover Rate ............. 97.11% 203.86% 180.98% 160.09% 97.11% 203.86% ======== ======= ======= ======= ======== ========
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred April 20, 2000. (ii) Initially offered January 1, 1997. (iii) Initially offered August 1, 1997. (iv) Ratios have been annualized; total return has not been annualized. (v) Amount was computed based on average shares outstanding during the period. (vi) Does not reflect the effect of any sales charges. See Notes to Financial Statements. -33-
Class B ------------------------------------ Year Ended October 31, ------------------------------------ 1998 1997 1996 -------- -------- -------- Net asset value, beginning of period ... $ 7.44 $ 6.29 $ 6.31 -------- -------- -------- Net investment income (loss) ........... (.10)(v) (.10) (.08)(v) Net realized and unrealized gain (loss) on investments ...................... .44 1.41 .45 -------- -------- -------- Total from investment operations ....... .34 1.31 .37 Distributions from net realized gains .. (.82) (.16) (.39) -------- -------- -------- Net asset value, end of period ......... $ 6.96 $ 7.44 $ 6.29 ======== ======== ======== Total Return (vi) ...................... 6.2% 21.4% 6.4% ======== ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................... $191,934 $166,475 $125,686 ======== ======== ======== Ratio of expenses to average net assets ....................... 2.10% 2.19% 2.27% ======== ======== ======== Ratio of net investment income (loss) to average net assets ............ (1.38%) (1.58%) (1.33%) ======== ======== ======== Portfolio Turnover Rate ............. 180.98% 160.09% 113.95% ======== ======== ======== Class C (iii) ---------------------------------------------------- Three Months Year Ended October 31, Ended ----------------------------------- October 31, 2000 1999 1998 1997(iv) ------- ------- ------- ------- Net asset value, beginning of period ... $ 7.99 $ 6.95 $ 7.44 $ 7.50 ------- ------- ------- ------- Net investment income (loss) ........... (.11)(v) (.11)(v) (.09)(v) (.01) Net realized and unrealized gain (loss) on investments ...................... 3.39 2.13 .42 (.05) ------- ------- ------- ------- Total from investment operations ....... 3.28 2.02 .33 (.06) Distributions from net realized gains .. (1.50) (.98) (.82) -- ------- ------- ------- ------- Net asset value, end of period ......... $ 9.77 $ 7.99 $ 6.95 $ 7.44 ======= ======= ======= ======= Total Return (vi) ...................... 46.4% 32.4% 6.1% (.7%) ======= ======= ======= ======= Ratios and Supplemental Data: Net assets, end of period (000's omitted) .................... $51,335 $10,827 $ 1,759 $ 84 ======= ======= ======= ======= Ratio of expenses to average net assets ....................... 2.04% 2.08% 2.08% 1.97% ======= ======= ======= ======= Ratio of net investment income (loss) to average net assets ............ (1.22%) (1.40%) (1.26%) (1.55%) ======= ======= ======= ======= Portfolio Turnover Rate ............. 97.11% 203.86% 180.98% 160.09% ======= ======= ======= =======
[This page intentionally left blank] -35- - -------------------------------------------------------------------------------- Alger Capital Appreciation Portfolio Portfolio Highlights Through October 31, 2000 (Unaudited) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Hypothetical $10,000 Investment in Class B Shares from 11/1/93 to 10/31/00 - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] [The following table was depicted as a mountain chart in the printed material.] ALGER CAPITAL APPRECIATION PLOT POINTS Alger Capital Appreciation B S&P 500 Index 11/1/93 10000 10000 10/31/94 11110 10387 10/31/95 18620 13133 10/31/96 22246 16297 10/31/97 26918 21531 10/31/98 29572 26267 10/31/99 48198 33009 10/31/2000 53789 35024 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in Alger Capital Appreciation Class B shares and the S&P 500 Index on November 1, 1993, the inception date of the Alger Capital Appreciation Portfolio, through October 31, 2000. Figures for the Alger Capital Appreciation Class B shares and the S&P 500 Index, an unmanaged index of common stocks, include reinvestment of dividends. Performance for Alger Capital Appreciation Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear. - -------------------------------------------------------------------------------- Performance Comparison as of 10/31/00+ Average Annual Total Returns 1 5 Since Year Years Inception ------------------------------------------------- Class A (Inception 1/1/97) 7.28% * 25.12% S&P 500 Index 6.10% * 20.40% - -------------------------------------------------------------------------------- Class B (Inception 11/1/93) 6.67% 23.46% 27.16% S&P 500 Index 6.10% 21.67% 19.60% - -------------------------------------------------------------------------------- Class C (Inception 8/1/97) 9.60% * 21.01% S&P 500 Index 6.10% * 14.77% - -------------------------------------------------------------------------------- The Portfolio's average annual total returns include changes in share price and reinvestment of dividends and capital gains. Past performance does not guarantee future results. Investment return and principal will fluctuate and the Portfolio's shares, when redeemed, may be worth more or less than their original cost. + Returns reflect maximum initial sales charges on Class A and Class C shares and applicable contingent deferred sales charges on Class B and Class C shares. -36- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Common Stocks--83.9 % Shares Value ------ ----- BIO-TECHNOLOGY RESEARCH & PRODUCTION--4.7% Affymetrix Inc.* ........................ 97,000 $ 5,371,375 Amgen Inc.* ............................. 820,850 47,557,997 Celgene Corporation*+ ................... 170,900 11,001,688 QLT Inc.*+ .............................. 230,000 11,438,906 ------------- 75,369,966 ------------- CABLE--1.1% Comcast Corp., Cl. A Special* ........... 419,400 17,090,550 ------------- COMMUNICATION EQUIPMENT--7.2% Cisco Systems, Inc.* .................... 922,500 49,699,688 Nortel Networks Corporation ............. 854,100 38,861,550 QUALCOMM Inc.* .......................... 274,000 17,839,969 Redback Networks Inc.*+ ................. 81,200 8,642,725 ------------- 115,043,932 ------------- COMMUNICATIONS TECHNOLOGY--5.0% America Online, Inc.* ................... 706,850 35,646,446 AT&T Corp. Liberty Media Group, Series A* ..................... 542,200 9,759,600 Exodus Communications, Inc.* ............ 222,500 7,467,656 McLeodUSA Incorporated Cl. A*+ .......... 295,000 5,678,750 Research in Motion Limited* ............. 213,800 21,380,000 ------------- 79,932,452 ------------- COMPUTER RELATED & BUSINESS EQUIPMENT--6.6% EMC Corporation* ........................ 282,750 25,182,422 Hewlett-Packard Company ................. 235,100 10,917,456 Sun Microsystems, Inc.* ................. 629,900 69,840,163 ------------- 105,940,041 ------------- COMPUTER SERVICES--5.2% Amdocs Limited* ......................... 385,300 24,972,256 CNET Networks, Inc.*+ ................... 239,200 7,534,800 eBay Inc.*+ ............................. 924,000 47,586,000 Yahoo Inc.* ............................. 55,900 3,277,138 ------------- 83,370,194 ------------- COMPUTER SOFTWARE--15.0% Ariba, Inc.* ............................ 389,450 49,216,744 BEA Systems, Inc.*+ ..................... 402,200 28,857,850 Business Objects ADS* ................... 71,000 5,594,578 Commerce One, Inc.*+ .................... 288,500 18,518,094 i2 Technologies, Inc.* .................. 256,400 43,588,000 Mercury Interactive Corporation* ........ 126,000 13,986,000 Oracle Corporation* ..................... 986,200 32,544,600 Phone.com Inc.*+ ........................ 475,200 43,985,700 Vitria Technology, Inc.*+ ............... 143,800 3,864,625 ------------- 240,156,191 ------------- CONGLOMERATE--2.5% General Electric Company ................ 558,212 30,596,995 Tyco International Ltd. ................. 167,100 9,472,481 ------------- 40,069,476 ------------- ENERGY & ENERGY SERVICES--1.2% Calpine Corporation*+ ................... 138,650 10,944,684 Duke Energy Corporation ................. 95,500 8,254,781 ------------- 19,199,465 ------------- FINANCIAL SERVICES--8.0% Bank of New York Inc. ................... 130,000 7,483,125 Citigroup Inc. .......................... 1,105,933 58,199,724 Marsh & McLennan Companies, Inc. ........ 219,515 28,701,586 Schwab (Charles) Corporation (The) ...... 704,350 24,740,294 State Street Corp. ...................... 30,600 3,817,044 Stilwell Financial Inc. ................. 117,700 5,274,431 ------------- 128,216,204 ------------- FOOD CHAINS--1.9% Safeway Inc.* ........................... 566,400 30,975,000 ------------- INSURANCE--2.5% American International Group, Inc. ...... 415,275 40,696,950 ------------- MANUFACTURING--1.4% Solectron Corporation* .................. 516,700 22,734,800 ------------- MEDICAL DEVICES--1.2% Guidant Corporation* .................... 147,750 7,821,516 Medtronic, Inc. ......................... 217,100 11,791,244 ------------- 19,612,760 ------------- PHARMACEUTICALS--9.3% American Home Products Corporation ...... 711,700 45,192,950 Baxter International Inc. ............... 315,900 25,963,030 Eli Lilly and Company ................... 341,450 30,517,094 Pfizer Inc. ............................. 1,082,912 46,768,262 ------------- 148,441,336 ------------- RETAIL--5.2% Home Depot, Inc. ........................ 957,125 41,156,375 Wal-Mart Stores, Inc. ................... 927,500 42,085,313 ------------- 83,241,688 ------------- -37- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2000 Common Stocks--(cont.) Shares Value ------ ----- SEMICONDUCTORS--5.9% Altera Corporation* ..................... 847,000 $ 34,674,062 Broadcom Corporation Cl. A* ............. 194,000 43,140,750 Texas Instruments, Incorporated ......... 209,350 10,271,234 Vitesse Semiconductor Corporation* ...... 104,900 7,336,444 -------------- 95,422,490 -------------- Total Common Stocks (Cost $1,281,940,746) 1,345,513,495 -------------- Preferred Stock--2.0% COMMUNICATION EQUIPMENT Nokia Corporation, ADR (Cost $29,019,575) ................... 765,550 32,727,263 -------------- Principal Short-Term Investments--23.9% Amount ------ SHORT-TERM CORPORATE NOTES--11.0% Aetna Services, Inc., 6.60%, 11/28/00 ...................... $50,000,000 49,752,500 Caisse Centrale Desjardins du Quebec, 6.47%, 11/30/00 ...................... 3,800,000 3,780,195 Cintas Executive Services, 6.47%, 11/9/00 ....................... 29,200,000 29,158,017 General Re Corporation, 6.47%, 11/30/00 ...................... 50,000,000 49,739,403 Merrill Lynch & Co., Inc., 6.48%, 11/8/00 ....................... 6,400,000 6,391,936 Schering Corporation, 6.42%, 11/20/00 ...................... 38,000,000 37,871,243 -------------- Total Short-Term Corporate Notes (Cost $176,693,294) .................. 176,693,294 -------------- SECURITIES HELD UNDER REPURCHASE AGREEMENTS--4.5% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust, dtd 10/31/00, repurchase price $72,212,976; collateralized by U.S. Treasury Bonds (par value $56,445,000, 8.50%, due 2/15/20) $ 72,200,000 -------------- OTHER SHORT-TERM INVESTMENTS--8.4% Shares Securities Lending Quality Trust ------ (Cost $134,609,456) (b) .............. 134,609,456 134,609,456 -------------- Total Short-Term Investments (Cost $383,502,750) 383,502,750 -------------- Total Investments (Cost $1,694,463,071) (a) ............ 109.8% 1,761,743,508 Liabilities in Excess of Other Assets ... (9.8) (157,953,395) ----- -------------- Net Assets 100.0% $1,603,790,113 ===== ============== * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2000, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $1,694,463,071, amounted to $67,280,437 which consisted of aggregate gross unrealized appreciation of $178,771,339 and aggregate gross unrealized depreciation of $111,490,902. (b) Represents investments of cash collateral received for securities on loan. See Notes to Financial Statements. -38- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO(i) Financial Highlights For a share outstanding throughout the period
Class A (ii) ----------------------------------------------------------------- Ten Months Year Ended October 31, Ended ----------------------------------------------- October 31, 2000 1999 1998 1997(iv) ----------- ----------- ----------- ----------- Net asset value, beginning of period ... $ 13.57 $ 9.03 $ 8.72 $ 7.20 ----------- ----------- ----------- ----------- Net investment income (loss) ........... (.11)(v) (.12)(v) (.05)(v) (.03) Net realized and unrealized gain (loss) on investments ...................... 2.01 5.50 .90 1.55 ----------- ----------- ----------- ----------- Total from investment operations ....... 1.90 5.38 .85 1.52 Distributions from net realized gains .. (1.93) (.84) (.54) -- ----------- ----------- ----------- ----------- Net asset value, end of period ......... $ 13.54 $ 13.57 $ 9.03 $ 8.72 =========== =========== =========== =========== Total Return (vi) ...................... 12.6% 63.9% 10.7% 21.2% =========== =========== =========== =========== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ................... $ 366,296 $ 147,929 $ 54,415 $ 15,572 =========== =========== =========== =========== Ratio of expenses excluding interest to average net assets ............ 1.36% 1.38% 1.42% 1.45% =========== =========== =========== =========== Ratio of expenses including interest to average net assets ............ 1.36% 1.44% 1.49% 1.53% =========== =========== =========== =========== Ratio of net investment income (loss) to average net assets ............ (.66%) (.98%) (.67%) (.85%) =========== =========== =========== =========== Portfolio Turnover Rate ............. 132.37% 186.93% 184.07% 157.63% =========== =========== =========== =========== Amount of debt outstanding at end of period ..... -- -- -- -- =========== =========== =========== =========== Average amount of debt outstanding during the period .... $ 138,087 $ 7,758,649 $ 2,814,493 $ 2,940,097 =========== =========== =========== =========== Average daily number of portfolio shares outstanding during the period 97,199,509 42,330,298 29,012,853 23,217,597 =========== =========== =========== =========== Average amount of debt per portfolio share during the period .......... -- $ 0.18 $ 0.10 $ 0.13 =========== =========== =========== =========== Class B ----------------------------- Year Ended October 31, ----------------------------- 2000 1999 ----------- ----------- Net asset value, beginning of period ... $ 13.28 $ 8.90 ----------- ----------- Net investment income (loss) ........... (.22)(v) (.21)(v) Net realized and unrealized gain (loss) on investments ...................... 1.96 5.43 ----------- ----------- Total from investment operations ....... 1.74 5.22 Distributions from net realized gains .. (1.93) (.84) ----------- ----------- Net asset value, end of period ......... $ 13.09 $ 13.28 =========== =========== Total Return (vi) ...................... 11.6% 63.0% =========== =========== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ................... $ 1,056,831 $ 594,971 =========== =========== Ratio of expenses excluding interest to average net assets ............ 2.11% 2.12% =========== =========== Ratio of expenses including interest to average net assets ............ 2.11% 2.21% =========== =========== Ratio of net investment income (loss) to average net assets ............ (1.41%) (1.77%) =========== =========== Portfolio Turnover Rate ............. 132.37% 186.93% =========== =========== Amount of debt outstanding at end of period ..... -- -- =========== =========== Average amount of debt outstanding during the period .... $ 138,087 $ 7,758,649 =========== =========== Average daily number of portfolio shares outstanding during the period 97,199,509 42,330,298 =========== =========== Average amount of debt per portfolio share during the period .......... -- $ 0.18 =========== ===========
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred January 8, 1998. (ii) Initially offered January 1, 1997. (iii) Initially offered August 1, 1997. (iv) Ratios have been annualized; total return has not been annualized. (v) Amount was computed based on average shares outstanding during the period. (vi) Does not reflect the effect of any sales charges. See Notes to Financial Statements. -39-
Class B --------------------------------------------- Year Ended October 31, --------------------------------------------- 1998 1997 1996 ----------- ----------- ----------- Net asset value, beginning of period ...... $ 8.67 $ 7.21 $ 6.21 ----------- ----------- ----------- Net investment income (loss) .............. (.13)(v) (.11) (.11)(v) Net realized and unrealized gain (loss) on investments ......................... .90 1.62 1.29 ----------- ----------- ----------- Total from investment operations .......... .77 1.51 1.18 Distributions from net realized gains ..... (.54) (.05) (.18) ----------- ----------- ----------- Net asset value, end of period ............ $ 8.90 $ 8.67 $ 7.21 =========== =========== =========== Total Return (vi) ......................... 9.9% 21.0% 19.5% =========== =========== =========== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ...................... $ 242,941 $ 212,895 $ 150,258 =========== =========== =========== Ratio of expenses excluding interest to average net assets ............... 2.19% 2.27% 2.44% =========== =========== =========== Ratio of expenses including interest to average net assets ............... 2.26% 2.38% 2.46% =========== =========== =========== Ratio of net investment income (loss) to average net assets ............... (1.48%) (1.72%) (1.61%) =========== =========== =========== Portfolio Turnover Rate ................ 184.07% 157.63% 162.37% =========== =========== =========== Amount of debt outstanding at end of period ........ -- -- $ 7,700,000 =========== =========== =========== Average amount of debt outstanding during the period ....... $ 2,814,493 $ 2,940,097 $ 239,966 =========== =========== =========== Average daily number of portfolio shares outstanding during the period 29,012,853 23,217,597 14,556,858 =========== =========== =========== Average amount of debt per portfolio share during the period ............. $ 0.10 $ 0.13 $ 0.02 =========== =========== =========== Class C (iii) ----------------------------------------------------------------- Three Months Year Ended October 31, Ended ----------------------------------------------- October 31, 2000 1999 1998 1997(iv) ----------- ----------- ----------- ----------- Net asset value, beginning of period ...... $ 13.27 $ 8.90 $ 8.67 $ 9.22 ----------- ----------- ----------- ----------- Net investment income (loss) .............. (.22)(v) (.22)(v) (.12)(v) (.02) Net realized and unrealized gain (loss) on investments ......................... 1.97 5.43 .89 (.53) ----------- ----------- ----------- ----------- Total from investment operations .......... 1.75 5.21 .77 (.55) Distributions from net realized gains ..... (1.93) (.84) (.54) -- ----------- ----------- ----------- ----------- Net asset value, end of period ............ $ 13.09 $ 13.27 $ 8.90 $ 8.67 =========== =========== =========== =========== Total Return (vi) ......................... 11.7% 62.9% 9.9% (6.0%) =========== =========== =========== =========== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ...................... $ 180,663 $ 43,789 $ 2,967 $ 631 =========== =========== =========== =========== Ratio of expenses excluding interest to average net assets ............... 2.12% 2.12% 2.18% 2.18% =========== =========== =========== =========== Ratio of expenses including interest to average net assets ............... 2.12% 2.21% 2.25% 2.25% =========== =========== =========== =========== Ratio of net investment income (loss) to average net assets ............... (1.42%) (1.80%) (1.46%) (1.80%) =========== =========== =========== =========== Portfolio Turnover Rate ................ 132.37% 186.93% 184.07% 157.63% =========== =========== =========== =========== Amount of debt outstanding at end of period ........ -- -- -- -- =========== =========== =========== =========== Average amount of debt outstanding during the period ....... $ 138,087 $ 7,758,649 $ 2,814,493 $ 2,940,097 =========== =========== =========== =========== Average daily number of portfolio shares outstanding during the period 97,199,509 42,330,298 29,012,853 23,217,597 =========== =========== =========== =========== Average amount of debt per portfolio share during the period ............. -- $ 0.18 $ 0.10 $ 0.13 =========== =========== =========== ===========
-40- THE ALGER FUND ALGER MONEY MARKET PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2000 Short-Term Corporate Principal Notes--64.7% Amount Value ------ ----- AEROSPACE--3.4% Honeywell International Inc., 6.47%, 11/9/00 ......................... $8,000,000 $ 7,988,498 ------------- BANKS--3.4% Svenska Handelsbanken, Inc., 6.50%, 1/26/01 ......................... 8,000,000 7,875,778 ------------- BUILDING & CONSTRUCTION--3.4% WW Grainger Inc., 6.50%, 1/29/01 ......................... 8,000,000 7,871,444 ------------- COMMUNICATIONS TECHNOLOGY--6.8% BellSouth Telecommunications, Inc., 6.43%, 12/1/00 ......................... 8,000,000 7,957,133 France Telecom, 6.48%, 12/14/00(a) ..................... 8,000,000 7,938,080 ------------- 15,895,213 ------------- CONGLOMERATE--3.4% Fluor Corporation, 6.49%, 11/14/00(a) ..................... 8,000,000 7,981,251 ------------- ELECTRONICS--3.4% Hitachi Credit America Corp., 6.50%, 12/5/00 ......................... 8,000,000 7,950,889 ------------- ENERGY & ENERGY SERVICES--6.8% Allegheny Energy, 6.50%, 12/4/00 ......................... 8,000,000 7,952,333 Centennial Energy Holdings, Inc., 6.52%, 12/5/00(a) ...................... 8,000,000 7,950,738 ------------- 15,903,071 ------------- FINANCIAL SERVICES--13.6% AEP Credit Incorporated, 6.48%, 11/28/00 ........................ 8,000,000 7,961,120 Fairway Finance Corporation, 6.55%, 11/1/00(a) ...................... 8,000,000 8,000,000 General Electric Capital Corporation, 6.49%, 1/16/01 ......................... 8,000,000 7,890,391 Merrill Lynch & Co., Inc., 6.48%, 11/16/00 ........................ 8,000,000 7,978,400 ------------- 31,829,911 ------------- MORTGAGE COMPANIES--6.8% Homeside Lending, Inc., 6.49%, 11/3/00 ......................... 8,000,000 7,997,116 Woolwich PLC, 6.52%, 1/10/01 ......................... 8,000,000 7,898,578 ------------- 15,895,694 ------------- RETAIL--6.9% May Department Stores Company (The), 6.45%, 11/17/00 ................. 8,000,000 7,977,067 Nike, Inc., 6.47%, 11/16/00 ........................ 8,000,000 7,978,433 ------------- 15,955,500 ------------- TELEPHONES--3.4% AT&T Corp., 6.46%, 12/13/00 ........................ 8,000,000 7,939,707 ------------- UTILITIES--3.4% Kansas City Power & Light Company, 6.48%, 11/29/00 ............... 8,000,000 7,959,680 ------------- Total Short-Term Corporate Notes (Cost $151,046,636) .................... 151,046,636 ------------- U.S. Government & Agency Obligations--69.6% Federal Home Loan Mortgage Corp., 6.35%, 11/1/00 (Cost $162,500,000) ....................162,500,000 162,500,000 ------------- Securities Held Under Repurchase Agreements--4.6% Securities Held Under Repurchase Agreements, 6.47%, 11/1/00, with State Street Bank and Trust Company, dtd 10/31/00, repurchase price $10,801,941; collateralized by Federal Home Loan Bank Notes (par value $11,060,000, 5.70%, due 8/2/02) ..................... 10,800,000 ------------- Total Investments (Cost $324,346,636)(b) ................. 138.9% 324,346,636 Liabilities in Excess of Other Assets ..... (38.9) (90,820,825) ----- ------------- Net Assets ................................ 100.0% $ 233,525,811 ===== ============= (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. (b) At October 31, 2000, the net unrealized appreciation on investments based on cost for federal income tax purposes was the same as the cost for financial reporting purposes. See Notes to Financial Statements. -41- THE ALGER FUND Alger MONEY MARKET PORTFOLIO Financial Highlights For a share outstanding throughout the year
Year Ended October 31, ------------------------------------------------------------ 2000 1999 1998 1997 1996 -------- -------- -------- -------- -------- Net asset value, beginning of year .... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 -------- -------- -------- -------- -------- Net investment income ................. .0527 .0423 .0476 .0479 .0521 Dividends from net investment income .. (.0527) (.0423) (.0476) (.0479) (.0521) -------- -------- -------- -------- -------- Net asset value, end of year .......... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 ======== ======== ======== ======== ======== Total Return .......................... 5.4% 4.3% 4.9% 4.9% 5.3% ======== ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted) .................... $233,526 $241,310 $172,862 $179,407 $285,702 ======== ======== ======== ======== ======== Ratio of expenses to average net assets .78% .72% .76% .81% .41% ======== ======== ======== ======== ======== Decrease reflected in above expense ratios due to management fee waivers ............. -- -- -- -- .38% ======== ======== ======== ======== ======== Ratio of net investment income to average net assets .............. 5.14% 4.37% 4.84% 4.76% 5.18% ======== ======== ======== ======== ========
See Notes to Financial Statements. -42- THE ALGER FUND STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts) October 31, 2000
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market ASSETS: Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ----------- ----------- ----------- ----------- ----------- ----------- Investments in securities, at value (identified cost*)--see accompanying schedules of investments .............. $ 1,341,466 $ 449,626 $ 286,158 $ 699,773 $ 1,761,743 $ 324,347 Cash .................................... 45 19 15 11 47 54 Receivable for investment securities sold 21,209 12,127 955 15,661 32,083 -- Receivable for shares of beneficial interest sold ......................... 22,382 11,425 2,499 14,665 61,044 237 Dividends and interest receivable ............................ 191 8 1,587 23 115 2 Prepaid expenses ........................ 21 49 3 24 3 11 ----------- ----------- ----------- ----------- ----------- ----------- Total Assets ............................ 1,385,314 473,254 291,217 730,157 1,855,035 324,651 ----------- ----------- ----------- ----------- ----------- ----------- LIABILITIES: Payable for securities loaned ........... 24,572 -- 6,419 -- 134,609 -- Payable for investment securities purchased .................. 65,205 23,695 8,671 2,895 111,003 -- Payable for shares of beneficial interest redeemed ..................... 1,138 346 234 559 2,172 90,571 Accrued investment management fees ...... 817 329 174 476 1,190 149 Accrued distribution fees ............... 625 225 115 366 831 -- Accrued shareholder servicing fees ...... 273 97 58 149 350 -- Dividends payable--Note 2(e) ............ -- -- -- -- -- 165 Accrued expenses ........................ 570 412 160 343 1,090 240 ----------- ----------- ----------- ----------- ----------- ----------- Total Liabilities ..................... 93,200 25,104 15,831 4,788 251,245 91,125 ----------- ----------- ----------- ----------- ----------- ----------- NET ASSETS .............................. $ 1,292,114 $ 448,150 $ 275,386 $ 725,369 $ 1,603,790 $ 233,526 =========== =========== =========== =========== =========== =========== Net Assets Consist of: Paid-in capital ....................... $ 1,105,305 $ 341,637 $ 267,243 $ 552,831 $ 1,522,474 $ 233,605 Undistributed net investment income (accumulated loss) ............ (11,368) (7,913) 1,915 (5,729) (18,684) -- Undistributed net realized gain (accumulated loss) .............. 72,590 89,304 (1,097) 81,852 32,719 (79) Net unrealized appreciation ........... 125,587 25,122 7,325 96,415 67,281 ----------- ----------- ----------- ----------- ----------- ----------- NET ASSETS .............................. $ 1,292,114 $ 448,150 $ 275,386 $ 725,369 $ 1,603,790 $ 233,526 =========== =========== =========== =========== =========== =========== Class A Net Asset Value Per Share ............. $ 14.09 $ 8.81 $ 21.29 $ 10.17 $ 13.54 -- =========== =========== =========== =========== =========== =========== Offering Price Per Share .............. $ 14.79 $ 9.25 $ 22.35 $ 10.68 $ 14.22 -- =========== =========== =========== =========== =========== =========== Class B Net Asset Value and Offering Price Per Share ............. $ 13.58 $ 8.52 $ 20.83 $ 9.79 $ 13.09 $ 1.00 =========== =========== =========== =========== =========== =========== Class C Net Asset Value Per Share ............. $ 13.57 $ 8.53 $ 20.90 $ 9.77 $ 13.09 -- =========== =========== =========== =========== =========== =========== Offering Price Per Share .............. $ 13.71 $ 8.62 $ 21.11 $ 9.87 $ 13.22 -- =========== =========== =========== =========== =========== =========== Shares of beneficial interest outstanding--Note 6 Class A ............................... 22,997 12,669 4,401 13,925 27,050 -- =========== =========== =========== =========== =========== =========== Class B ............................... 66,449 38,192 6,344 54,416 80,720 233,605 =========== =========== =========== =========== =========== =========== Class C ............................... 4,856 1,302 2,373 5,255 13,804 -- =========== =========== =========== =========== =========== =========== *Identified cost ........................ $ 1,215,879 $ 424,504 $ 278,833 $ 603,358 $ 1,694,463 $ 324,347 =========== =========== =========== =========== =========== ===========
See Notes to Financial Statements. -43- THE ALGER FUND STATEMENTS of operations (in thousands) For the year ended October 31, 2000
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market Investment Income: Portfolio* Portfolio Portfolio Portfolio Portfolio Portfolio --------- --------- --------- --------- --------- --------- Income: Dividends .................................. $ 4,964 $ 243 $ 385 $ 400 $ 2,566 $ -- Interest ................................... 6,328 2,847 4,554 3,828 7,833 18,349 --------- --------- --------- --------- --------- --------- Total Income ............................... 11,292 3,090 4,939 4,228 10,399 18,349 --------- --------- --------- --------- --------- --------- Expenses: Management fees--Note 3(a) ................ 9,539 4,627 1,220 4,160 12,610 1,551 Distribution fees--Note 3(b): Class B ................................. 6,929 3,319 697 3,040 7,795 -- Class C ................................. 406 89 232 213 1,087 -- Shareholder servicing fees--Note 3(f) ..... 3,180 1,361 407 1,300 3,716 -- Interest on line of credit utilized--Note 5 -- 11 -- -- 10 7 Custodian fees ............................ 106 59 23 51 124 52 Transfer agent fees and expenses--Note 3(e) ..................... 1,880 1,254 277 847 2,830 588 Professional fees ......................... 31 29 16 30 21 15 Trustees' fees ............................ 6 6 6 6 6 6 Registration fees ......................... 204 62 97 144 393 151 Miscellaneous ............................. 379 186 49 166 491 49 --------- --------- --------- --------- --------- --------- Total Expenses ............................. 22,660 11,003 3,024 9,957 29,083 2,419 --------- --------- --------- --------- --------- --------- NET INVESTMENT INCOME (LOSS) ............................ (11,368) (7,913) 1,915 (5,729) (18,684) 15,930 --------- --------- --------- --------- --------- --------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments ..... 82,649 92,099 (924) 84,452 39,348 (3) Net change in unrealized appreciation (depreciation) on investments .............. (5,654) (83,423) 1,906 71,287 (49,790) -- --------- --------- --------- --------- --------- --------- Net realized and unrealized gain (loss) on investments ................. 76,995 8,676 982 155,739 (10,442) (3) --------- --------- --------- --------- --------- --------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................... $ 65,627 $ 763 $ 2,897 $ 150,010 $ (29,126) $ 15,927 ========= ========= ========= ========= ========= =========
* Prior to September 29, 2000, the Alger LargeCap Growth Portfolio was the Alger Growth Portfolio. See Notes to Financial Statements. -44- THE ALGER FUND STATEMENTS OF CHANGES IN NET ASSETS (in thousands) For the year ended October 31, 2000
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market Portfolio* Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- --------- --------- ---------- --------- Net investment income (loss) .................... $ (11,368) $ (7,913) $ 1,915 $ (5,729) $ (18,684) $ 15,930 Net realized gain (loss) on investments ......... 82,649 92,099 (924) 84,452 39,348 (3) Net change in unrealized appreciation (depreciation) on investments ................ (5,654) (83,423) 1,906 71,287 (49,790) -- ---------- --------- --------- --------- ---------- --------- Net increase (decrease) in net assets resulting from operations .................. 65,627 763 2,897 150,010 (29,126) 15,927 ---------- --------- --------- --------- ---------- --------- Dividends and distributions to shareholders from: Net investment income Class A ....................................... -- -- (85) -- -- -- Class B ....................................... -- -- (118) -- -- (15,930) Class C ....................................... -- -- (24) -- -- -- Net realized gains Class A ....................................... (38,393) (9,118) (1,018) (7,104) (24,442) -- Class B ....................................... (136,938) (73,991) (4,386) (47,287) (91,441) -- Class C ....................................... (6,306) (1,539) (1,265) (2,332) (7,820) -- ---------- --------- --------- --------- ---------- --------- Total dividends and distributions to shareholders (181,637) (84,648) (6,896) (56,723) (123,703) (15,930) ---------- --------- --------- --------- ---------- --------- Increase (decrease) from shares of beneficial interest transactions: Class A ....................................... 120,024 56,656 82,915 74,593 248,964 -- Class B ....................................... 216,520 (28,373) 81,066 212,448 556,754 (7,781) Class C ....................................... 40,873 6,265 35,683 36,829 164,212 -- ---------- --------- --------- --------- ---------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ................ 377,417 34,548 199,664 323,870 969,930 (7,781) ---------- --------- --------- --------- ---------- --------- Total increase (decrease) .................... 261,407 (49,337) 195,665 417,157 817,101 (7,784) Net Assets: Beginning of year ........................... 1,030,707 497,487 79,721 308,212 786,689 241,310 ---------- --------- --------- --------- ---------- --------- End of year ................................. $1,292,114 $ 448,150 $ 275,386 $ 725,369 $1,603,790 $ 233,526 ========== ========= ========= ========= ========== ========= Undistributed net investment income (accumulated loss) .................... $ (11,368) $ (7,913) $ 1,915 $ (5,729) $ (18,684) $ -- ========== ========= ========= ========= ========== =========
* Prior to September 29, 2000, the Alger LargeCap Growth Portfolio was the Alger Growth Portfolio. See Notes to Financial Statements. -45- THE ALGER FUND STATEMENTS OF CHANGES IN NET ASSETS (in thousands) For the year ended October 31, 1999
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market Portfolio* Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- --------- --------- --------- --------- Net investment income (loss) .................... $ (8,357) $ (8,029) $ 225 $ (3,366) $ (8,093) $ 12,382 Net realized gain (loss) on investments ......... 182,147 90,139 6,539 58,127 125,466 (2) Net change in unrealized appreciation (depreciation) on investments ................. 38,830 64,884 2,433 11,776 80,515 -- ---------- --------- --------- --------- --------- --------- Net increase in net assets resulting from operations ................... 212,620 146,994 9,197 66,537 197,888 12,380 ---------- --------- --------- --------- --------- --------- Dividends and distributions to shareholders from: Net investment income Class A ....................................... -- -- (7) -- -- -- Class B ....................................... -- -- (31) -- -- (12,382) Net realized gains Class A ....................................... (12,572) (5,621) (101) (2,780) (3,154) -- Class B ....................................... (40,774) (49,513) (1,123) (24,072) (21,244) -- Class C ....................................... (432) (236) (34) (331) (354) -- ---------- --------- --------- --------- --------- --------- Total dividends and distributions to shareholders (53,778) (55,370) (1,296) (27,183) (24,752) (12,382) ---------- --------- --------- --------- --------- --------- Increase (decrease) from shares of beneficial interest transactions: Class A ....................................... 70,710 (2,005) 10,077 11,740 64,516 -- Class B ....................................... 258,777 (119,313) 27,338 22,482 213,052 68,450 Class C ....................................... 26,251 2,039 13,435 8,496 35,662 -- ---------- --------- --------- --------- --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ................ 355,738 (119,279) 50,850 42,718 313,230 68,450 ---------- --------- --------- --------- --------- --------- Total increase (decrease) .................... 514,580 (27,655) 58,751 82,072 486,366 68,448 Net Assets: Beginning of year ........................... 516,127 525,142 20,970 226,140 300,323 172,862 ---------- --------- --------- --------- --------- --------- End of year ................................. $1,030,707 $ 497,487 $ 79,721 $ 308,212 $ 786,689 $ 241,310 ========== ========= ========= ========= ========= ========= Undistributed net investment income (accumulated loss) .................... $ (19,428) $ (51,039) $ 160 $ (10,312) $ (16,864) $ -- ========== ========= ========= ========= ========= =========
* Prior to September 29, 2000, the Alger LargeCap Growth Portfolio was the Alger Growth Portfolio. See Notes to Financial Statements. -46- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS NOTE 1 -- General: The Alger Fund (the "Fund") is a diversified, open-end registered investment company organized as a business trust under the laws of the Commonwealth of Massachusetts. The Fund operates as a series company currently issuing an unlimited number of shares of beneficial interest in six portfolios--LargeCap Growth Portfolio, Small Capitalization Portfolio, Balanced Portfolio, MidCap Growth Portfolio, Capital Appreciation Portfolio and Money Market Portfolio (the "Portfolios"). Prior to September 29, 2000, the LargeCap Growth Portfolio was the Growth Portfolio. The LargeCap Growth Portfolio, Small Capitalization Portfolio, MidCap Growth Portfolio and Capital Appreciation Portfolio normally invest primarily in equity securities and each has an investment objective of long-term capital appreciation. The Balanced Portfolio's investment objectives are current income and long-term capital appreciation which it seeks to achieve through investing in equity and fixed income securities. The Money Market Portfolio's investment objective is high current income which it seeks to achieve by investing in short-term instruments. Each Portfolio, other than the Money Market Portfolio, offers Class A, Class B and Class C shares. Class A and Class C shares were first offered on January 1, 1997 and August 1, 1997, respectively. Class A shares are generally subject to an initial sales charge while Class B shares are generally subject to a deferred sales charge. Class C shares are generally subject to an initial sales charge and a deferred sales charge. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month in which the order to purchase was accepted. The conversion is completed without the imposition of any sales charges or other fees. Each class has identical rights to assets and earnings except that only Class B and Class C shares have plans of distribution and bear the related expenses. NOTE 2 -- Significant Accounting Policies: (a) Investment Valuation: Investments of the Portfolios, other than the Money Market 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). Listed and unlisted securities for which such information is regularly reported are valued at the last reported sales price or, in the absence of reported sales, at the mean between the bid and asked price or, in the absence of a recent bid or asked 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 of Trustees. The investments of the Money Market Portfolio, and short-term securities held by the other Portfolios having a remaining maturity of sixty days or less, are valued at amortized cost which approximates market value. Shares of mutual funds are valued at the net asset value of the underlying mutual fund. (b) 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. (c) Repurchase Agreements: The Portfolios enter into repurchase agreements with approved institutions. The repurchase agreements are collateralized by U.S. Government securities, which are either received and held in physical possession by the custodian or received by such custodian in book-entry form through the Federal Reserve book-entry system. The collateral is valued on a daily basis during the term of the agreement to ensure that its value equals or exceeds the agreed-upon repurchase price to be repaid to the Portfolio. Additional collateral is obtained when necessary. (d) Lending of Portfolio Securities: The Portfolios lend their securities to financial institutions, provided that the market value of the securities loaned will not at any time -47- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) exceed one third of the Portfolio's total assets, as defined. The Portfolios earn fees on the securities loaned, which are included in interest income in the accompanying Statements 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, letters of credit or U.S. Government securities that are maintained in an amount equal to at least 100 percent of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Portfolios and any required additional collateral is delivered to the Portfolios on the next business day. At October 31, 2000, the value of securities loaned and collateral received thereon were as follows: Value of Securities Value of Loaned Collateral ---------- ---------- LargeCap Growth Portfolio ........................ $ 24,666,230 $ 24,572,089 Small Capitalization Portfolio ...................................... 8,417,225 8,796,757 Balanced Portfolio ............................... 6,705,756 6,418,900 MidCap Growth Portfolio ...................................... 3,641,812 4,153,277 Capital Appreciation Portfolio ...................................... 141,021,099 134,609,456 Money Market Portfolio ...................................... -- -- (e) Dividends to Shareholders: Dividends payable to shareholders are recorded on the ex-dividend date. The Money Market Portfolio declares dividends daily from net investment income; such dividends are paid monthly. The dividends from net investment income of the other Portfolios are declared and paid annually. With respect to all Portfolios, dividends from net realized gains, offset by any loss carryforward, are declared and paid annually after the end of the fiscal year in which earned. Each class is treated separately in determining the amounts of dividends of net investment income and distributions of capital gains 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 Portfolios' distributions, other than the Money Market Portfolio, may be shown in the accompanying financial statements as either from or in excess of net investment income or net realized gain on investment transactions, or from paid-in capital, depending on the type of book/tax differences that may exist. At October 31, 2000, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio and the Capital Appreciation Portfolio reclassified $19,428,146, $51,039,525, $67,077, $10,311,424 and $16,864,558, respectively, from undistributed net investment loss to either accumulated undistributed net realized gain or paid-in capital. The reclassifications had no impact on the net asset values of the Portfolios and are designed to present the Portfolios' capital accounts on a tax basis. (f) Federal Income Taxes: It is each Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income to its shareholders. Provided a Portfolio maintains such compliance, no federal income tax provision is required. Each Portfolio is treated as a separate entity for the purpose of determining such compliance. At October 31, 2000, the net capital loss carryforwards of the Money Market Portfolio which may be used to offset future net realized gains were approximately $75,000, and expire between 2001 and 2007. (g) Allocation Methods: The Fund accounts separately for the assets, liabilities and operations of each Portfolio. Expenses directly attributable to each Portfolio are charged to that Portfolio's operations; expenses which are applicable to all Portfolios are allocated among them. Income, realized and unrealized gains and losses, and expenses of each Portfolio, other than the Money Market Portfolio, are allocated among the Portfolio's classes based on relative net assets, with the exception of distribution fees, which are only applicable to Class B and Class C shares. -48- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) (h) Other: These financial statements have been prepared using estimates and assumptions that affect the reported amounts therein. Actual results may differ from those estimates. NOTE 3 -- Investment Management Fees and Other Transactions with Affiliates: (a) Investment Management Fees: Fees incurred by each Portfolio, pursuant to the provisions of its Investment Management Agreement with Fred Alger Management, Inc. ("Alger Management"), are payable monthly and are computed based on the value of the average daily net assets of each Portfolio at the following annual rates: LargeCap Growth Portfolio ............................................... .75% Small Capitalization Portfolio .......................................... .85 Balanced Portfolio ...................................................... .75 MidCap Growth Portfolio ................................................. .80 Capital Appreciation Portfolio .......................................... .85 Money Market Portfolio .................................................. .50 (b) Distribution Fees: Class B Shares--The Fund has adopted an Amended and Restated Plan of Distribution pursuant to which Class B shares of each Portfolio, other than the Money Market Portfolio, reimburse Fred Alger & Company, Incorporated, the Fund's distributor (the "Distributor"), for costs and expenses incurred by the Distributor in connection with advertising, marketing and selling the Class B shares. The distribution fee is not to exceed an annual rate of .75% of the respective average daily net assets of the Class B shares of the designated Portfolios. If in any month, the costs incurred by the Distributor relating to the Class B shares are in excess of the distribution fees charged to the Class B shares of the Portfolios, the excess may be carried forward, with interest, and sought to be reimbursed in future periods. As of October 31, 2000, such excess carried forward was approximately $20,577,000, $15,545,000, $3,789,000, $6,957,000 and $28,476,000 for Class B shares of the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, and the Capital Appreciation Portfolio, respectively. Contingent deferred sales charges imposed on redemptions of Class B shares will reduce the amount of distribution expenses for which reimbursement may be sought. See Note 3(c) below. Class C Shares--The Fund has adopted a Distribution Plan pursuant to which Class C shares of each Portfolio, other than the Money Market Portfolio, pay the Distributor a fee at the annual rate of .75% of the respective average daily net assets of the Class C shares of the designated Portfolios to compensate the Distributor for its activities and expenses incurred in distributing the Class C shares. The fees charged may be more or less than the expenses incurred by the Distributor. (c) Sales Charges: The purchases and sales of shares of the Portfolios, other than the Money Market Portfolio, may be subject to initial sales charges or contingent deferred sales charges. For the year ended October 31, 2000, the initial sales charges and contingent deferred sales charges retained by the Distributor were approximately $334,000 and $5,265,000, respectively. The contingent deferred sales charges are used by the Distributor to offset distribution expenses previously incurred. Sales charges do not represent expenses of the Fund. (d) Brokerage Commissions: During the year ended October 31, 2000, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio and the Capital Appreciation Portfolio paid the Distributor commissions of $1,934,509, $891,329, $187,039, $662,316 and $1,597,714, respectively, in connection with securities transactions. (e) Transfer Agent Fees and Expenses: Alger Shareholder Services, Inc. ("Alger Services"), an affiliate of Alger Management, serves as transfer agent for the Fund. During the year ended October 31, 2000, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the -49- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) Capital Appreciation Portfolio and the Money Market Portfolio incurred fees of $1,566,724, $967,235, $213,748, $687,905, $2,229,520 and $464,660, respectively, for services provided by Alger Services. In addition, during the year ended October 31, 2000, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio and the Money Market Portfolio reimbursed Alger Services $312,975, $286,566, $63,179, $158,979, $600,382 and $123,081, respectively, for transfer agent related expenses paid by Alger Services on behalf of the Portfolios. (f) Shareholder Servicing Fees: The Fund has entered into a shareholder servicing agreement with the Distributor whereby the Distributor provides each Portfolio, other than the Money Market Portfolio, with ongoing servicing of shareholder accounts. As compensation for such services, each designated Portfolio pays the Distributor a monthly fee at an annual rate equal to .25% of each Portfolio's average daily net assets. (g) Other Transactions With Affiliates: Certain trustees and officers of the Fund are directors and officers of Alger Management, the Distributor and Alger Services. NOTE 4 -- Securities Transactions: The following summarizes the securities transactions by the Fund, other than short-term securities, for the year ended October 31, 2000 (in thousands): Purchases Sales --------- ----- LargeCap Growth Portfolio ...................................... $1,286,700 $1,110,574 Small Capitalization Portfolio ...................................... 1,023,871 1,109,481 Balanced Portfolio .............................. 267,586 85,573 MidCap Growth Portfolio ...................................... 449,886 534,340 Capital Appreciation Portfolio ...................................... 2,427,510 1,763,574 NOTE 5 -- Lines of Credit: The Fund has both committed and uncommitted lines of credit with banks. All borrowings have variable interest rates and are payable on demand. With the exception of the Capital Appreciation Portfolio, the Fund borrows under such lines of credit exclusively for temporary or emergency purposes. The Capital Appreciation Portfolio may borrow under these lines up to 1/3 of the value of its assets, as defined, to purchase additional securities. To the extent the Capital Appreciation Portfolio borrows under these lines, it must pledge securities with a total value of at least twice the amount borrowed. For the year ended October 31, 2000, the Capital Appreciation Portfolio had no such borrowings. -50- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) Note 6 -- Share Capital: The Fund has an unlimited number of authorized shares of beneficial interest of $.001 par value which are presently divided into six series. Each series, other than the Money Market Portfolio, is divided into three separate classes. The transactions of shares of beneficial interest were as follows:
For the year ended For the year ended October 31, 2000 October 31, 1999 Shares Amount Shares Amount ------ ------ ------ ------ Alger LargeCap Growth Portfolio Class A: Shares sold ...................... 162,449,155 $ 2,482,401,072 93,010,120 $ 1,345,815,062 Shares converted from Class B .... 1,743,049 26,577,277 765,156 10,723,156 Dividends reinvested ............. 2,500,745 35,785,660 676,360 8,211,015 Shares redeemed .................. (158,493,375) (2,424,739,451) (89,655,055) (1,294,039,354) --------------- --------------- --------------- --------------- Net increase ..................... 8,199,574 $ 120,024,558 4,796,581 $ 70,709,879 =============== =============== =============== =============== Class B: Shares sold ...................... 207,051,376 $ 3,059,360,172 118,806,283 $ 1,673,356,937 Dividends reinvested ............. 9,240,884 128,263,469 3,233,151 38,571,496 Shares converted to Class A ...... (1,801,857) (26,577,277) (779,638) (10,723,156) Shares redeemed .................. (199,088,996) (2,944,526,617) (102,786,502) (1,442,428,434) --------------- --------------- --------------- --------------- Net increase ..................... 15,401,407 $ 216,519,747 18,473,294 $ 258,776,843 =============== =============== =============== =============== Class C: Shares sold ...................... 6,077,592 $ 89,824,465 2,593,259 $ 37,501,908 Dividends reinvested ............. 439,173 6,091,330 29,615 353,009 Shares redeemed .................. (3,749,529) (55,042,716) (810,252) (11,603,192) --------------- --------------- --------------- --------------- Net increase ..................... 2,767,236 $ 40,873,079 1,812,622 $ 26,251,725 =============== =============== =============== =============== Alger Small Capitalization Portfolio Class A: Shares sold ...................... 61,143,690 $ 634,356,124 149,420,839 $ 1,465,519,097 Shares converted from Class B .... 5,197,378 53,753,929 1,236,266 12,164,811 Dividends reinvested ............. 760,113 7,654,340 571,350 4,845,050 Shares redeemed .................. (61,193,895) (639,108,096) (151,276,967) (1,484,533,596) --------------- --------------- --------------- --------------- Net increase (decrease) .......... 5,907,286 $ 56,656,297 (48,512) $ (2,004,638) =============== =============== =============== =============== Class B: Shares sold ...................... 45,801,106 $ 475,351,587 314,933,540 $ 3,028,416,304 Dividends reinvested ............. 7,118,807 69,835,497 5,742,442 47,777,113 Shares converted to Class A ...... (5,353,313) (53,753,929) (1,259,686) (12,164,811) Shares redeemed .................. (50,806,572) (519,806,493) (331,525,302) (3,183,341,861) --------------- --------------- --------------- --------------- Net decrease ..................... (3,239,972) $ (28,373,338) (12,109,006) $ (119,313,255) =============== =============== =============== =============== Class C: Shares sold ...................... 1,523,544 $ 16,682,243 9,797,623 $ 94,352,794 Dividends reinvested ............. 144,825 1,419,283 21,996 182,783 Shares redeemed .................. (1,122,291) (11,836,447) (9,626,258) (92,496,428) --------------- --------------- --------------- --------------- Net increase ..................... 546,078 $ 6,265,079 193,361 $ 2,039,149 =============== =============== =============== ===============
-51- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued)
For the year ended For the year ended October 31, 2000 October 31, 1999 Shares Amount Shares Amount ------ ------ ------ ------ Alger Balanced Portfolio Class A: Shares sold ................. 4,565,490 $ 99,530,708 4,284,737 $ 85,443,461 Shares converted from Class B 71,386 1,557,011 6,645 130,732 Dividends reinvested ........ 50,553 1,040,369 5,413 91,866 Shares redeemed ............. (882,695) (19,213,016) (3,781,145) (75,588,660) --------------- --------------- --------------- --------------- Net increase ................ 3,804,734 $ 82,915,072 515,650 $ 10,077,399 =============== =============== =============== =============== Class B: Shares sold ................. 8,075,884 $ 173,063,380 5,166,089 $ 99,682,060 Dividends reinvested ........ 208,439 4,227,147 64,040 1,075,875 Shares converted to Class A . (72,703) (1,557,011) (6,739) (130,732) Shares redeemed ............. (4,422,449) (94,667,065) (3,827,743) (73,289,320) --------------- --------------- --------------- --------------- Net increase ................ 3,789,171 $ 81,066,451 1,395,647 $ 27,337,883 =============== =============== =============== =============== Class C: Shares sold ................. 1,898,378 $ 40,718,761 886,244 $ 17,342,456 Dividends reinvested ........ 54,299 1,104,984 1,551 26,116 Shares redeemed ............. (288,169) (6,141,241) (199,452) (3,933,326) --------------- --------------- --------------- --------------- Net increase ................ 1,664,508 $ 35,682,504 688,343 $ 13,435,246 =============== =============== =============== =============== Alger MidCap Growth Portfolio Class A:** Shares sold ................. 145,344,275 $ 1,400,353,840 153,362,394 $ 1,191,539,173 Shares converted from Class B 1,036,760 9,984,433 113,655 886,475 Dividends reinvested ........ 869,019 6,856,558 393,936 2,575,026 Shares redeemed ............. (139,332,954) (1,342,601,390) (152,455,266) (1,183,261,041) --------------- --------------- --------------- --------------- Net increase ................ 7,917,100 $ 74,593,441 1,414,719 $ 11,739,633 =============== =============== =============== =============== Class B:** Shares sold ................. 54,409,817 $ 511,828,795 57,683,991 $ 433,987,342 Dividends reinvested ........ 5,616,424 42,984,366 3,378,093 21,676,093 Shares converted to Class A . (1,072,154) (9,984,433) (116,127) (886,475) Shares redeemed ............. (35,562,632) (332,380,942) (57,482,649) (432,294,954) --------------- --------------- --------------- --------------- Net increase ................ 23,391,455 $ 212,447,786 3,463,308 $ 22,482,006 =============== =============== =============== =============== Class C:** Shares sold ................. 5,308,692 $ 50,459,581 1,774,719 $ 13,714,796 Dividends reinvested ........ 284,495 2,173,537 40,833 261,599 Shares redeemed ............. (1,693,505) (15,804,677) (712,755) (5,479,710) --------------- --------------- --------------- --------------- Net increase ................ 3,899,682 $ 36,828,441 1,102,797 $ 8,496,685 =============== =============== =============== ===============
-52- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued)
For the year ended For the year ended October 31, 2000 October 31, 1999 Shares Amount Shares Amount ------ ------ ------ ------ Alger Capital Appreciation Portfolio Class A:* Shares sold ..................... 167,135,442 $ 2,628,765,000 168,941,613 $ 2,013,311,342 Shares converted from Class B ... 910,674 14,344,012 175,365 2,161,488 Dividends reinvested ............ 1,559,442 23,422,814 316,690 2,952,608 Shares redeemed ................. (153,453,836) (2,417,567,657) (164,563,152) (1,953,909,113) ---------------- ---------------- ---------------- ---------------- Net increase ..................... 16,151,722 $ 248,964,169 4,870,516 $ 64,516,325 ================ ================ ================ ================ Class B:* Shares sold ..................... 137,803,098 $ 2,111,394,871 127,184,924 $ 1,494,488,538 Dividends reinvested ............ 5,932,840 86,797,445 2,154,183 19,746,682 Shares converted to Class A ..... (937,583) (14,344,012) (178,924) (2,161,488) Shares redeemed ................. (106,892,604) (1,627,094,311) (111,652,359) (1,299,022,116) ---------------- ---------------- ---------------- ---------------- Net increase .................... 35,905,751 $ 556,753,993 17,507,824 $ 213,051,616 ================ ================ ================ ================ Class C:* Shares sold ...................... 16,104,072 $ 247,401,803 4,353,255 $ 52,799,128 Dividends reinvested ............. 498,863 7,293,385 25,529 233,926 Shares redeemed .................. (6,097,998) (90,483,748) (1,413,209) (17,370,934) ---------------- ---------------- ---------------- ---------------- Net increase .................... 10,504,937 $ 164,211,440 2,965,575 $ 35,662,120 ================ ================ ================ ================ Alger Money Market Portfolio Shares sold ...................... 11,125,335,270 $ 11,125,335,270 9,851,815,099 $ 9,851,815,099 Dividends reinvested ............. 12,394,274 12,394,274 9,402,809 9,402,809 Shares redeemed .................. (11,145,511,173) (11,145,511,173) (9,792,767,208) (9,792,767,208) ---------------- ---------------- ---------------- ---------------- Net increase (decrease) ......... (7,781,629) $ (7,781,629) 68,450,700 $ 68,450,700 ================ ================ ================ ================
- ---------- * Adjusted to reflect the effect of a 3 for 1 stock split which occurred on January 8, 1999. ** Adjusted to reflect the effect of a 3 for 1 stock split which occurred on April 20, 2000. -53- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Trustees of The Alger Fund: We have audited the statements of assets and liabilities, including the schedules of investments, of The Alger Fund (a Massachusetts business trust comprising, respectively, the LargeCap Growth, Small Capitalization, Balanced, MidCap Growth, Capital Appreciation and Money Market Portfolios) as of October 31, 2000, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2000, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting The Alger Fund, as of October 31, 2000, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP New York, New York December 8, 2000 The Alger Fund 1 World Trade Center Suite 9333 New York, N.Y. 10048 (800) 992-3863 www.algerfund.com Board of Trustees Fred M. Alger, Chairman David D. Alger Charles F. Baird, Jr. Roger P. Cheever Lester L. Colbert, Jr. James P. Connelly, Jr. Stephen E. O'Neil Nathan E. Saint-Amand B. Joseph White Investment Manager Fred Alger Management, Inc. 1 World Trade Center Suite 9333 New York, N.Y. 10048 Distributor Fred Alger & Company, Incorporated 30 Montgomery Street Jersey City, N.J. 07302 Transfer Agent Alger Shareholder Services, Inc. 30 Montgomery Street Jersey City, N.J. 07302 This report is submitted for the general information of the shareholders of The Alger Fund. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Fund, which contains information concerning the Fund's investment policies, fees and expenses as well as other pertinent information. REP100 -----END PRIVACY-ENHANCED MESSAGE-----