-----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, GnOa78eoWBgoxyj/UukOzYQSEx7uubmYCSfJXdE/OxKsZXfImws07TzltEFuWrTL ft8fMGHcAm44G5eoMh17OA== 0000930413-01-501745.txt : 20020413 0000930413-01-501745.hdr.sgml : 20020413 ACCESSION NUMBER: 0000930413-01-501745 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011031 FILED AS OF DATE: 20011226 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: 1940 Act SEC FILE NUMBER: 811-01355 FILM NUMBER: 1822843 BUSINESS ADDRESS: STREET 1: 75 MAIDEN LN CITY: NEW YORK STATE: NY ZIP: 10038 BUSINESS PHONE: 2128068800 N-30D 1 c22139_n30d-.txt ANNUAL REPORT Fellow Shareholders: November 12, 2001 The Year In Review: By all measures, the year ended October 31, 2001, has been a difficult one. The long boom in the equities market came to a halt during these twelve months and the economy showed signs of trouble that had not been seen in nearly a decade. These facts were in turn dwarfed in importance by the events of September 11. Normally, a year-in-review letter assesses the performance of the funds and offers some thoughts about what the future holds. However, it has not been a normal year. The attacks of September 11 have altered some of our basic assumptions about American life, and the economic consequences have been significant. In the short-term, the attacks had a devastating effect, first on the families of those who were killed and then on the national psyche. That in turn has had negative effects on consumer confidence, consumer spending, and from there, on the entire economy. For the quarter ended October 31, 2001, the U.S. Gross Domestic Product (GDP) declined 1.1%, the first quarter the economy had contracted in almost ten years--unemployment reached a high of 5.4%; retail sales slumped; new home sales were flat; and manufacturing activity slowed substantially. Judging from all major economic data, the events of September 11 helped push the economy into a recession. While the attacks dealt a sharp blow to consumer spending, to the travel industry, and to manufacturing activity, they also led to a vigorous governmental response. Partisan bickering in Washington gave way to a renewed sense of national purpose to confront the dangers of terrorism at home and instability abroad. New spending measures to stimulate the economy will eliminate the federal surplus, which had been a severe drag on economic growth. And the Federal Reserve Open Market Committee acted aggressively to cut interest rates multiple times--ten times between January and November 2001--bringing the Fed Funds rate down from 6.5% to an astonishingly low level of 2.0%. In addition, however shocking the terrorist attacks were, they should not obscure the fact that the economy was already meandering toward recession before September 11. For the first three quarters of the year ended October 31, 2001, growth was anemic and declined each quarter. Before September 11, GDP had barely attained 1.0% growth over the course of the year. Unemployment was slowly creeping up; consumer confidence was slowly creeping down; and all signs pointed toward an end to the incredible period of economic prosperity that had begun in the early 1990s. As worrisome as that was, it did represent a natural part of the economic cycle. During the first two quarters of 2001, business inventories declined. However, after a marvelous period of growth, consumer spending was stalling, as was corporate spending, particularly on new technology. As a result, inflation stayed minimal, but inventories were growing in anticipation of spending that did not materialize. The inventory build-up, while economically painful for many companies, signaled that a much-needed correction was occurring, one that seemed to be coming to an end in the third quarter of 2001. The financial markets reflected the conditions in the overall economy. For the year ended October 31, 2001, the Dow Jones Industrial Average (DJIA) declined over 17%, from 10971 on October 31, 2000 to 9075 on October 31, 2001. The technology-laden Nasdaq Composite Index shed even more of its value, decreasing from 3370 to 1690 over the course of the year, a decline of 50%. The S&P 500 return was -24.91% for the year ended October 31, 2001. The performance of the equities markets directly mirrored the economic stagnation. Corporate profits were off precipitously in year-over-year figures in more major sectors. For the first three quarters of the fiscal year the DJIA, the Nasdaq Composite and the S&P 500 all finished lower. During the summer, the markets staged a brief rally and then declined again. As of September 11, the DJIA was down 8.2% from the quarter ended June 30, and the Nasdaq Composite was down 21.5% for the same period. The September 11 events closed the markets for four days, and when trading resumed on September 17, Wall Street had one of its worst weeks ever. It is a truism that markets recover ahead of the economy. Though it will take some time before the shock of September 11 is fully absorbed, many signs indicate that the economy is poised to rebound, and the markets reflect that. The Fund's fiscal year ended on an up note with a positive October 2001. - -------------------------------------------------------------------------------- Even though the economic news was grim and corporations continue to issue profit warnings, the markets performed well. The DJIA was up 2.7%, while the Nasdaq Composite was up 12.8%. The first weeks of November showed even more robust gains. PORTFOLIO MATTERS ALGER LARGECAP GROWTH PORTFOLIO The Alger LargeCap Growth Portfolio declined 28.06% during the 12 months ended October 31, 2001, while the S&P 500 fell 24.91%. Few sectors of the U.S. economy and the stock market were spared from the broad downturn this year. Not surprisingly then, nearly all economic sectors represented in the Portfolio declined in value for the year. The sole exception was health care. As of October 31, 2001, pharmaceuticals represented 9.6% of the portfolio, making them the largest industry holding. Health care providers and services represented 5.9% of the portfolio. Information technology stocks suffered the most of all holdings, followed by financials and consumer discretionary stocks. During the year, holdings in Internet software and services, semiconductors, and food and drug retailers were reduced. Selective investments in pharmaceuticals and energy equipment and services were among new holdings added to the portfolio. ALGER SMALL CAPITALIZATION PORTFOLIO The Alger Small Capitalization Portfolio fell 46.95% during the year ended October 31, 2001, while the Russell 2000 Growth Index declined 31.51%. Like mid-cap stocks, small-cap stocks had shown signs of outperforming their large-cap brethren earlier in the year, but couldn't overcome the burden of a slowing economy and a weakening stock market. Consumer staples were the best performing holdings in the Alger Small Capitalization Portfolio, losing only .08% as a group. Information technology holdings lagged all other sectors, and were reduced significantly--particularly producers of communications equipment and electronic equipment and instruments. With an eye to the consumer, America's economic engine, positions were added in household durables and specialty retailers, as well as more defensive consumer staples. ALGER MIDCAP GROWTH PORTFOLIO For the year ended October 31, 2001, the Alger MidCap Growth Portfolio lost 22.37%. The portfolio's benchmark index, the S&P MidCap 400, declined 12.45%. Early in the year, mid-cap stocks, along with small-cap stocks, were bright spots in the market. But eventually the broad economic and market downturn caught up with the mid-cap sector. Within the Alger MidCap Growth Portfolio, health care stocks were by far the best performers, gaining 2.99% for the year as a group. Industrials also delivered positive returns for the year, but not enough to overcome the impact of significant declines in information technology stocks, as well as consumer discretionary, energy, and financial stocks. Over the course of the year positions in makers of electronic equipment and semiconductor equipment were trimmed, while positions in specialty retailers, biotechnology, pharmaceuticals, and software were bolstered. ALGER BALANCED PORTFOLIO For the year ended October 31, 2001, the Alger Balanced Portfolio declined 11.96%, compared with a loss of 24.91% in the S&P 500 and a gain of 15.32% in the Lehman Brothers Government/Corporate Bond Index. Fixed-income holdings, including U.S. government bonds and corporate bonds, helped offset some of the losses in the equity holdings. As of October 31, 2001, government securities and corporate bonds represented 47.7% of the portfolio. The equity portion of the portfolio declined in value as a result of losses in information technology stocks, financials, energy stocks, and several other sectors. Health care was the only equity sector in the portfolio to show gains. Equity holdings in health care providers and services, and pharmaceuticals were added to the portfolio during the year, while holdings in Internet software and services, and semiconductors were reduced. ALGER CAPITAL APPRECIATION PORTFOLIO For the year ended October 31, 2001, the Alger Capital Appreciation Portfolio lost 37.15%. The S&P 500, the portfolio's benchmark, declined 24.91%. Economic uncertainty, exacerbated by the events of September 11, weighed heavily on large-company stocks. The portfolio's positions in financials and information technology declined most in value during the year. Energy stocks, industrials, and telecommu- - -------------------------------------------------------------------------------- nications services were among the top performers in the portfolio, though all three still lost value for the year. Among the major changes in the portfolio's holdings during the year-information technology stocks were sold across the board, while positions were added in health care, aerospace and defense, and commercial services. LOOKING AHEAD We believe that the coming months will continue to see profit warnings and negative economic growth. It is highly likely that the GDP will decline again in the 4th quarter of 2001, which will mean two consecutive quarters of decline and hence technically a recession. However, there is little reason to believe that this recession will be anything more than a necessary economic correction to the excess inventories and wasteful government budget surpluses that helped cause the downturn in the first place. Inflation remains extraordinarily low, and interest rates have been dramatically cut, both of which are further signs of a propitious business climate. The federal government is tackling the challenge of terrorism and consumers are adjusting to the tragedy of September 11. As a result, we expect that spending will grow steadily. Furthermore, the markets have already integrated the profit warnings and the economic downturn. The stock market has gone from being overvalued to more reasonable levels, and equities are already beginning to rebound in anticipation of renewed economic activity in 2002. We fully expect that 2002 will see robust performance in the stock market, perhaps not at the levels of 1999 and early 2000, but still yielding substantial gains. We at Fred Alger Management remain committed to identifying strong companies capable of significant growth in the coming years. By identifying strong management teams, growth markets, and companies that either lead their industries or are poised to assume industry leadership, we will continue to offer investors the chance at maximum returns. Respectfully submitted, /s/ Dan C. Chung Dan C. Chung Chief Investment Officer [This page intentionally left blank] - -------------------------------------------------------------------------------- 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 ..................... 16 Alger Balanced Portfolio: Portfolio Highlights ..................... 19 Schedule of Investments .................. 20 Financial Highlights ..................... 24 Alger MidCap Growth Portfolio: Portfolio Highlights ..................... 27 Schedule of Investments .................. 28 Financial Highlights ..................... 30 Alger Capital Appreciation Portfolio: Portfolio Highlights ..................... 33 Schedule of Investments .................. 34 Financial Highlights ..................... 36 Alger Money Market Portfolio: Schedule of Investments .................. 38 Financial Highlights ..................... 39 Statements of Assets and Liabilities .............................. 40 Statements of Operations .......................................... 41 Statements of Changes in Net Assets ............................... 42 Notes to Financial Statements ..................................... 44 [This page intentionally left blank] -7- - -------------------------------------------------------------------------------- ALGER LARGECAP GROWTH PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2001 (UNAUDITED) PRIOR TO SEPTEMBER 29, 2000, ALGER LARGECAP GROWTH PORTFOLIO WAS ALGER GROWTH PORTFOLIO. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/01 - -------------------------------------------------------------------------------- [The table below represents a line chart in the printed piece.] Large Cap S&P 500 --------- ------- 11/1/91 10000 10000 10/31/92 10966 10998 10/31/93 14165 12640 10/31/94 14743 13129 10/31/95 20312 16601 10/31/96 21954 20601 10/31/97 27476 27218 10/31/98 33360 33202 10/31/99 46825 41724 10/31/00 50825 44268 10/31/01 36703 33243 ENDING VALUE ENDING VALUE ALGER LARGECAP S&P 500 INDEX: GROWTH B: $33,243 $36,703 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, 2001. 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 10/31/01+ AVERAGE ANNUAL TOTAL RETURNS 1 5 10 SINCE YEAR YEARS YEARS INCEPTION - -------------------------------------------------------------------------------- CLASS A (INCEPTION 1/1/97) (30.88%) * * 9.75% S&P 500 Index (24.91%) * * 9.20% - -------------------------------------------------------------------------------- CLASS B (INCEPTION 11/11/86) (31.38%) 9.84% 13.89% 13.67% S&P 500 Index (24.91%) 10.04% 12.76% 13.05% - -------------------------------------------------------------------------------- CLASS C (INCEPTION 8/1/97) (29.38%) * * 5.01% S&P 500 Index (24.91%) * * 3.88% - -------------------------------------------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE GRAPH AND TABLE ABOVE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD HAVE PAID ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. + 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, 2001 Common Stocks--91.3% Shares Value ------- --------- AEROSPACE & DEFENSE--2.8% General Dynamics Corporation ......................... 172,600 $14,084,160 United Technologies Corporation ...................... 185,550 9,999,290 ----------- 24,083,450 ----------- BANKS--.8% Washington Mutual, Inc. .............................. 220,600 6,659,914 ----------- BEVERAGES--2.0% PepsiCo, Inc. ........................................ 349,950 17,046,065 ----------- BIOTECHNOLOGY--2.7% Amgen Inc.* .......................................... 333,400 18,943,788 Immunex Corporation* ................................. 165,050 3,943,044 ----------- 22,886,832 ----------- COMMERCIAL SERVICES & SUPPLIES--7.1% eBay Inc.*+ .......................................... 569,900 29,908,352 First Data Corporation ............................... 458,100 30,953,817 ----------- 60,862,169 ----------- COMMUNICATION EQUIPMENT--3.0% Nokia Corporation, ADR ............................... 1,188,900 24,384,339 QUALCOMM Inc.* ....................................... 36,400 1,787,968 ----------- 26,172,307 ----------- COMPUTERS & PERIPHERALS--3.9% Dell Computer Corporation* ........................... 733,900 17,598,922 Sun Microsystems, Inc.* .............................. 1,597,900 16,218,685 ----------- 33,817,607 ----------- DIVERSIFIED FINANCIALS--8.5% Citigroup Inc. ....................................... 719,633 32,757,694 Federal Home Loan Mortgage Corporation .............................. 195,500 13,258,810 Lehman Brothers Holdings Inc. ........................ 83,900 5,240,394 Merrill Lynch & Co., Inc. ............................ 497,850 21,761,023 ----------- 73,017,921 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--.2% Sanmina Corporation* ................................. 109,100 1,651,774 ----------- ENERGY EQUIPMENT & SERVICES--2.9% BJ Services Company* ................................. 303,500 7,766,565 Halliburton Company .................................. 147,800 3,649,182 Nabors Industries, Inc.* ............................. 127,500 3,919,350 Transocean Sedco Forex Inc. .......................... 329,400 9,931,410 ----------- 25,266,507 ----------- HEALTHCARE EQUIPMENT & SUPPLIES--4.4% Baxter International Inc. ............................ 593,200 $28,693,084 Medtronic, Inc. ...................................... 225,900 9,103,770 ----------- 37,796,854 ----------- HEALTHCARE PROVIDERS & SERVICES--5.9% Cardinal Health, Inc. ................................ 391,050 26,243,365 Tenet Healthcare Corporation* ........................ 425,900 24,497,768 ----------- 50,741,133 ----------- INDUSTRIAL CONGLOMERATES--6.8% General Electric Company ............................. 585,390 21,314,050 Tyco International Ltd. .............................. 763,800 37,533,132 ----------- 58,847,182 ----------- Insurance--5.5% American International Group, Inc. ................... 438,000 34,426,800 Marsh & McLennan Companies, Inc. ..................... 130,700 12,645,225 ----------- 47,072,025 ----------- MEDIA--4.6% AOL Time Warner Inc.* ................................ 629,525 19,647,475 Comcast Corp., Cl. A Special* ........................ 284,200 10,185,728 Viacom Inc. Cl. B* ................................... 258,350 9,432,359 ----------- 39,265,562 ----------- MULTILINE RETAIL--4.6% Target Corporation ................................... 194,200 6,049,330 Wal-Mart Stores, Inc. ................................ 649,150 33,366,310 ----------- 39,415,640 ----------- OIL & GAS--3.0% ChevronTexaco Corporation ............................ 126,049 11,161,639 Exxon Mobil Corporation .............................. 376,800 14,864,760 ----------- 26,026,399 ----------- PHARMACEUTICALS--9.6% Abbott Laboratories .................................. 325,300 17,234,394 American Home Products Corporation ................... 509,964 28,471,290 Forest Laboratories, Inc.* ........................... 113,400 8,434,692 Merck & Co., Inc. .................................... 182,350 11,635,753 Pfizer Inc. .......................................... 414,875 17,383,263 ----------- 83,159,392 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--.5% Intel Corporation .................................... 189,200 4,620,264 ----------- -9- THE ALGER FUND ALGER LARGECAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 Common Stocks--(cont.) Shares Value ------- --------- SOFTWARE--4.6% Intuit Inc.* ......................................... 211,600 $ 8,510,552 Microsoft Corporation* ............................... 538,700 31,325,405 ----------- 39,835,957 ----------- SPECIALTY RETAIL--4.4% Best Buy Co., Inc.* .................................. 174,500 9,580,050 Home Depot, Inc. ..................................... 746,800 28,550,164 ----------- 38,130,214 ----------- TOBACCO--3.5% Philip Morris Companies Inc. ......................... 643,200 30,101,760 ----------- Total Common Stocks (Cost $830,152,610) ................................ 786,476,928 ----------- Principal Short-Term Investments--8.5% Amount Value ------- --------- U.S. GOVERNMENT & AGENCY OBLIGATIONS--6.7% Federal Home Loan Banks, 2.46%, 11/1/01 (Cost $57,600,000) .............................. $57,600,000 $ 57,600,000 ------------ OTHER SHORT-TERM INVESTMENTS--1.8% Shares ------- Securities Lending Quality Trust (Cost $15,490,585)(b) ............................ 15,490,585 15,490,585 ------------ Total Short-Term Investments (Cost $73,090,585) ............................... 73,090,585 ----------- Total Investments (Cost $903,243,195)(a) ......................... 99.8% 859,567,513 Other Assets in Excess of Liabilities .............. .2 1,757,122 ----- ------------ Net Assets ......................................... 100.0% $861,324,635 ===== ============ * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2001, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $922,114,815, amounted to $62,547,302 which consisted of aggregate gross unrealized appreciation of $48,461,270 and aggregate gross unrealized depreciation of $111,008,572. (b) 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) ----------------------------------------------------------------------- -------- Year Ended October 31, Ten Months ----------------------------------------------------- Ended October 31, 2001 2000 1999 1998 1997(iv) 2001 -------- -------- -------- -------- -------- -------- Net asset value, beginning of period ...... $ 14.09 $ 15.47 $ 12.19 $ 11.58 $ 9.40 $ 13.58 -------- -------- -------- -------- -------- -------- Net investment income (loss) .............. (.04)(v) (.05)(v) (.07)(v) (.03)(v) (.02) (.12)(v) Net realized and unrealized gain (loss) on investments .......................... (3.64) 1.33 4.64 2.13 2.20 (3.50) -------- -------- -------- -------- -------- -------- Total from investment operations .......... (3.68) 1.28 4.57 2.10 2.18 (3.62) Distributions from net realized gains ..... (.94) (2.66) (1.29) (1.49) -- (.94) -------- -------- -------- -------- -------- -------- Net asset value, end of period ............ $ 9.47 $ 14.09 $ 15.47 $ 12.19 $ 11.58 $ 9.02 ======== ======== ======== ======== ======== ======== Total Return (vi) ......................... (27.4%) 8.0% 40.4% 21.4% 23.2% (28.1%) ======== ======== ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ....................... $230,637 $324,130 $228,896 $121,930 $ 52,307 $581,770 ======== ======== ======== ======== ======== ======== Ratio of expenses to average net assets ............................ 1.26% 1.20% 1.21% 1.25% 1.30% 2.01% ======== ======== ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets ................. (.35%) (.32%) (.50%) (.23%) (.39%) (1.09%) ======== ======== ======== ======== ======== ======== Portfolio Turnover Rate ................. 91.40% 96.13% 205.94% 146.64% 128.26% 91.40% ======== ======== ======== ======== ======== ========
(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) - ----------------------------------------------------- ------------------------------------------------------------------------- Year Ended October 31, Year Ended October 31, Three Months - ----------------------------------------------------- ----------------------------------------------------- Ended October 31, 2000 1999 1998 1997 2001 2000 1999 1998 1997(iv) - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 15.09 $ 12.00 $ 11.50 $ 9.49 $ 13.57 $ 15.08 $ 12.00 $ 11.50 $ 11.98 - -------- -------- -------- -------- -------- -------- -------- -------- -------- (.16)(v) (.18)(v) (.11)(v) (.13) (.12)(v) (.16)(v) (.18)(v) (.11)(v) (.02) 1.31 4.56 2.10 2.44 (3.49) 1.31 4.55 2.10 (.46) - -------- -------- -------- -------- -------- -------- -------- -------- -------- 1.15 4.38 1.99 2.31 (3.61) 1.15 4.37 1.99 (.48) (2.66) (1.29) (1.49) (.30) (.94) (2.66) (1.29) (1.49) -- - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 13.58 $ 15.09 $ 12.00 $ 11.50 $ 9.02 $ 13.57 $ 15.08 $ 12.00 $ 11.50 ======== ======== ======== ======== ======== ======== ======== ======== ======== 7.2% 39.3% 20.5% 24.9% (28.0%) 7.2% 39.2% 20.5% (4.0%) ======== ======== ======== ======== ======== ======== ======== ======== ======== $902,091 $770,311 $390,885 $304,984 $ 48,918 $ 65,893 $ 31,500 $ 3,312 $ 199 ======== ======== ======== ======== ======== ======== ======== ======== ======== 1.96% 1.96% 2.00% 2.08% 2.01% 1.95% 1.97% 2.00% 2.02% ======== ======== ======== ======== ======== ======== ======== ======== ======== (1.07%) (1.26%) (.98%) (1.13%) (1.10%) (1.08%) (1.30%) (.97%) (1.43%) ======== ======== ======== ======== ======== ======== ======== ======== ======== 96.13% 205.94% 146.64% 128.26% 91.40% 96.13% 205.94% 146.64% 128.26% ======== ======== ======== ======== ======== ======== ======== ======== ========
[This page intentionally left blank] -13- - -------------------------------------------------------------------------------- ALGER SMALL CAPITALIZATION PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2001 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/01 - -------------------------------------------------------------------------------- [The table below represents a line chart in the printed piece.] Small Cap B Russell 2000 ----------- ------------ 11/1/91 10000 10000 10/31/92 10343 9964 10/31/93 13010 12721 10/31/94 12873 12606 10/31/95 18314 15197 10/31/96 19411 17222 10/31/97 21905 20869 10/31/98 19527 17561 10/31/99 25908 22704 10/31/00 26010 26373 10/31/01 13897 18083 ENDING VALUE ENDING VALUE RUSSELL 2000 ALGER SMALL GROWTH INDEX: CAPITALIZATION B: $18,063 $13,897 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, 2001. 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 10/31/01+ AVERAGE ANNUAL TOTAL RETURNS 1 5 10 SINCE YEAR YEARS YEARS INCEPTION - -------------------------------------------------------------------------------- CLASS A (INCEPTION 1/1/97) (49.11%) * * (7.69%) Russell 2000 Growth Index (31.51%) * * 0.02% - -------------------------------------------------------------------------------- CLASS B (INCEPTION 11/11/86) (48.92%) (7.16%) 3.35% 9.22% Russell 2000 Growth Index (31.51%) 0.96% 6.09% 6.88% - -------------------------------------------------------------------------------- CLASS C (INCEPTION 8/1/97) (47.93%) * * (11.13%) Russell 2000 Growth Index (31.51%) * * (2.32%) - -------------------------------------------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE GRAPH AND TABLE ABOVE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD HAVE PAID ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. + 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, 2001 Common Stocks--91.2% Shares Value ------- --------- AEROSPACE & DEFENSE--1.1% EDO Corporation ...................................... 16,800 $ 452,760 Mercury Computer Systems, Inc.* ...................... 36,900 1,740,204 ----------- 2,192,964 ----------- BANKS--4.1% Boston Private Financial Holdings, Inc. .............. 51,700 1,050,027 IndyMac Bancorp, Inc.* ............................... 105,600 2,711,808 Investors Financial Services Corp. ................... 28,800 1,523,520 UCBH Holdings, Inc. .................................. 100,800 2,923,200 ----------- 8,208,555 ----------- BEVERAGES--1.5% Constellation Brands, Inc.* .......................... 71,050 2,915,891 ----------- BIOTECHNOLOGY--7.9% Charles River Laboratories International, Inc.* ...... 171,600 5,765,760 CV Therapeutics, Inc.* ............................... 40,900 1,613,096 Enzon, Inc.* ......................................... 22,750 1,407,088 InterMune Inc.* ...................................... 22,000 960,740 NPS Pharmaceuticals, Inc.* ........................... 61,600 2,225,608 OSI Pharmaceuticals, Inc.* ........................... 52,950 2,418,756 Scios Inc.* .......................................... 56,150 1,297,065 ----------- 15,688,113 ----------- COMMERCIAL SERVICES & SUPPLIES--10.9% BISYS Group, Inc. (The)* ............................. 90,930 4,730,178 Career Education Corporation* ........................ 70,050 1,826,204 ChoicePoint Inc.* .................................... 52,900 2,263,062 Education Management Corporation* .................... 38,100 1,314,450 Exult Inc.* .......................................... 167,800 2,349,200 FactSet Research Systems Inc. ........................ 36,600 905,850 FreeMarkets Inc.*+ ................................... 192,875 2,578,739 HomeStore.com, Inc.*+ ................................ 291,950 1,500,623 InterCept Group, Inc. (The)* ......................... 33,050 1,179,885 Service Corporation International* ................... 476,500 3,035,305 ----------- 21,683,496 ----------- COMMUNICATION EQUIPMENT--1.9% Finisar Corporation* ................................. 314,400 2,458,608 McDATA Corporation Cl. A* ............................ 91,200 1,341,552 ----------- 3,800,160 ----------- CONSTRUCTION & ENGINEERING--1.2% Shaw Group Inc. (The)* ............................... 89,050 2,448,875 ----------- DIVERSIFIED FINANCIALS--2.7% Affiliated Managers Group, Inc.* ..................... 38,850 $ 2,397,045 Federated Investors, Inc. Cl. B ...................... 116,350 3,036,735 ----------- 5,433,780 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--.3% Rambus Inc.*+ ........................................ 79,350 645,115 ----------- FOOD & DRUG RETAILING--2.2% Duane Reade Inc.* .................................... 146,250 4,375,800 ----------- HEALTHCARE EQUIPMENT & SUPPLIES--1.0% Cytyc Corporation* ................................... 78,450 2,056,958 ----------- HEALTHCARE PROVIDERS & SERVICES--17.1% Accredo Health, Incorporated* ........................ 77,700 2,651,123 AmerisourceBergen Corporation* ....................... 74,100 4,709,796 Caremark Rx, Inc.* ................................... 250,000 3,350,000 Community Health Systems Inc.* ....................... 39,400 985,000 Covance Inc.* ........................................ 80,050 1,468,918 Cross Country, Inc.*+ ................................ 25,000 509,750 Eclipsys Corporation* ................................ 168,250 2,101,443 Laboratory Corporation of America Holdings* .......... 51,050 4,400,510 LifePoint Hospitals, Inc.* ........................... 74,250 2,315,115 Manor Care, Inc.* .................................... 108,500 2,534,560 Mid Atlantic Medical Services, Inc.* ................. 27,800 515,690 Priority Healthcare Corporation, Cl. B* .............. 46,350 1,339,052 Province Healthcare Company* ......................... 95,100 2,620,005 Triad Hospitals, Inc.* ............................... 90,800 2,442,520 Unilab Corporation* .................................. 84,000 1,989,120 ----------- 33,932,602 ----------- HOTELS, RESTAURANTS & LEISURE--7.5% AFC Enterprises, Inc.* ............................... 49,100 1,239,775 Applebee's International, Inc. ....................... 120,300 3,621,030 Cheesecake Factory Incorporated (The)* ............... 159,625 4,501,425 Panera Bread Company* ................................ 76,600 3,152,090 Ruby Tuesday, Inc. ................................... 137,250 2,366,190 ----------- 14,880,510 ----------- HOUSEHOLD DURABLES--.9% Mohawk Industries, Inc.* ............................. 41,200 1,779,840 ----------- HOUSEHOLD PRODUCTS--1.3% Church & Dwight Co., Inc. ............................ 97,250 2,528,500 ----------- -15- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 Common Stocks--(cont.) Shares Value ------- --------- INTERNET SOFTWARE & SERVICES--1.3% Netegrity, Inc.* ..................................... 116,700 $ 1,370,058 Overture Services Inc.* .............................. 48,700 1,283,245 ----------- 2,653,303 ----------- LEISURE EQUIPMENT & PRODUCTS--2.8% Action Performance Companies, Inc.*+ ................. 111,950 2,934,210 Activision, Inc.* .................................... 73,400 2,653,410 ----------- 5,587,620 ----------- OIL & GAS--1.2% Spinnaker Exploration Company* ....................... 53,100 2,330,028 ----------- PERSONAL PRODUCTS--1.3% Yankee Candle Company, Inc. (The)*+ .................. 142,250 2,603,175 ----------- PHARMACEUTICALS--4.5% Barr Laboratories, Inc.* ............................. 26,250 1,911,000 Cell Therapeutics, Inc.* ............................. 27,950 839,338 Cubist Pharmaceuticals, Inc.* ........................ 56,300 2,268,890 First Horizon Pharmaceutical Corporation* ............ 71,550 1,885,343 Pharmaceutical Resources, Inc.* ...................... 56,950 1,953,385 ----------- 8,857,956 ----------- RETAIL--1.0% Michaels Stores, Inc.* ............................... 40,100 2,059,937 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--4.3% Photronics Inc.* ..................................... 92,400 2,293,368 Power Integrations, Inc.* ............................ 68,450 1,575,035 TriQuint Semiconductor, Inc.* ........................ 147,600 2,609,568 Zoran Corporation* ................................... 80,000 2,023,200 ----------- 8,501,171 ----------- SPECIALTY RETAIL--2.5% Barnes & Noble, Inc.* ................................ 31,300 $ 1,150,275 Circuit City Stores, Inc. - CarMax Group* ............ 96,200 1,760,460 Electronics Boutique Holdings Corp.* ................. 67,150 2,085,008 ----------- 4,995,743 ----------- SOFTWARE--7.6% Borland Software Corporation* ........................ 162,600 1,819,494 Fair, Isaac and Company, Incorporated ................ 52,750 2,508,263 NetIQ Corporation* ................................... 80,000 2,252,000 Simplex Solutions, Inc.* ............................. 20,000 244,000 Synopsys, Inc.* ...................................... 86,575 4,069,025 THQ Inc.* ............................................ 83,850 4,175,730 ----------- 15,068,512 ----------- TEXTILES & APPAREL--2.2% Coach, Inc.* ......................................... 157,300 4,388,670 ----------- WIRELESS TELECOM- MUNICATION SERVICES--.9% Alamosa Holdings, Inc.* .............................. 132,300 1,862,783 ----------- Total Common Stocks (Cost $181,330,141) ............................... 181,480,057 ----------- Total Investments (Cost $181,330,141)(a) ......................... 91.2% 181,480,057 Other Assets in Excess of Liabilities ............. 8.8 17,476,768 ----- ------------ Net Assets ........................................ 100.0% $198,956,825 ===== ============ * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2001, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $185,661,424, amounted to $4,181,367 which consisted of aggregate gross unrealized appreciation of $12,658,537 and aggregate gross unrealized depreciation of $16,839,904. See Notes to Financial Statements. -16- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO FINANCIAL HIGHLIGHTS For a share outstanding throughout the period
Class A (i) ----------------------------------------------------------------------- -------- Year Ended October 31, Ten Months ----------------------------------------------------- Ended -------- October 31, 2001 2000 1999 1998 1997(iii) 2001 -------- -------- -------- -------- ---------- -------- Net asset value, beginning of period ....... $ 8.81 $ 10.35 $ 8.74 $ 10.35 $ 9.21 $ 8.52 -------- -------- -------- -------- -------- -------- Net investment income (loss) ............... (.04)(iv) (.08)(iv) (.08)(iv) (.06)(iv) (.04) (.08)(iv) Net realized and unrealized gain (loss) on investments ............................. (3.41) .35 2.71 (1.04) 1.18 (3.26) -------- -------- -------- -------- -------- -------- Total from investment operations ........... (3.45) .27 2.63 (1.10) 1.14 (3.34) Distributions from net realized gains ...... (1.82) (1.81) (1.02) (.51) -- (1.82) -------- -------- -------- -------- -------- -------- Net asset value, end of period ............. $ 3.54 $ 8.81 $ 10.35 $ 8.74 $ 10.35 $ 3.36 ======== ======== ======== ======== ======== ======== Total Return (v) ........................... (46.6%) .4% 32.7% (10.9%) 12.4% (47.0%) ======== ======== ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ........................ $ 64,164 $111,665 $ 69,986 $ 59,516 $ 25,996 $130,559 ======== ======== ======== ======== ======== ======== Ratio of expenses to average net assets ............................. 1.54% 1.41% 1.38% 1.37% 1.38% 2.28% ======== ======== ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets .................. (.95%) (.81%) (.79%) (.71%) (.93%) (1.66%) ======== ======== ======== ======== ======== ======== Portfolio Turnover Rate .................. 195.72% 207.19% 110.92% 157.26% 120.27% 195.72% ======== ======== ======== ======== ======== ========
(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. -17-
Class B Class C (ii) - ----------------------------------------------------- -------------------------------------------------------------------- Year Ended October 31, Year Ended October 31, Three Months - ----------------------------------------------------- ----------------------------------------------------- Ended October 31, 2000 1999 1998 1997 2001 2000 1999 1998 1997(iii) - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 10.13 $ 8.61 $ 10.29 $ 10.86 $ 8.53 $ 10.13 $ 8.59 $ 10.29 $ 10.38 - -------- -------- -------- -------- -------- -------- -------- -------- -------- (.16)(iv) (.15)(iv) (.14)(iv) (.11) (.08)(iv) (.16)(iv) (.16)(iv) (.10)(iv) (.03) .36 2.69 (1.03) 1.28 (3.27) .37 2.72 (1.09) (.06) - -------- -------- -------- -------- -------- -------- -------- -------- -------- .20 2.54 (1.17) 1.17 (3.35) .21 2.56 (1.19) (.09) (1.81) (1.02) (.51) (1.74) (1.82) (1.81) (1.02) (.51) -- - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 8.52 $ 10.13 $ 8.61 $ 10.29 $ 3.36 $ 8.53 $ 10.13 $ 8.59 $ 10.29 ======== ======== ======== ======== ======== ======== ======== ======== ======== (.4%) 32.1% (11.6%) 12.9% (47.0%) (.3%) 32.4% (11.8%) (.9%) ======== ======== ======== ======== ======== ======== ======== ======== ======== $325,382 $419,842 $460,788 $580,651 $ 4,234 $ 11,103 $ 7,659 $ 4,838 $ 338 ======== ======== ======== ======== ======== ======== ======== ======== ======== 2.14% 2.14% 2.12% 2.14% 2.28% 2.15% 2.13% 2.11% 2.09% ======== ======== ======== ======== ======== ======== ======== ======== ======== (1.58%) (1.58%) (1.51%) (1.67%) (1.66%) (1.57%) (1.55%) (1.36%) (1.71%) ======== ======== ======== ======== ======== ======== ======== ======== ======== 207.19% 110.92% 157.26% 120.27% 195.72% 207.19% 110.92% 157.26% 120.27% ======== ======== ======== ======== ======== ======== ======== ======== ========
[This page intentionally left blank] -19- - -------------------------------------------------------------------------------- ALGER BALANCED PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2001 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 6/1/92 TO 10/31/01 - -------------------------------------------------------------------------------- [The table below represents a line chart in the printed piece.] Lehman Gov't/Corp. Alger Balanced S&P 500 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 10/31/00 29171 41045 17754 10/31/01 25684 30831 20474 ENDING VALUE ENDING VALUE ENDING VALUE ALGER BALANCED B: S&P 500 INDEX: LEHMAN BROTHERS $25,684 $30,831 GOV'T/CORP. BOND INDEX: $20,474 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, 2001. 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/Cor-porate 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 10/31/01+ AVERAGE ANNUAL TOTAL RETURNS 1 5 SINCE YEAR YEARS INCEPTION - -------------------------------------------------------------------------------- CLASS A (INCEPTION 1/1/97) (15.54%) * 11.88% S&P 500 Index (24.91%) * 9.20% Lehman Gov't/Corp. Bond Index 15.32% * 8.17% - -------------------------------------------------------------------------------- CLASS B (INCEPTION 6/1/92) (16.32%) 11.77% 10.53% S&P 500 Index (24.91%) 10.04% 12.69% Lehman Gov't/Corp. Bond Index 15.32% 8.05% 7.90% - -------------------------------------------------------------------------------- CLASS C (INCEPTION 8/1/97) (13.69%) * 8.79% S&P 500 Index (24.91%) * 3.88% Lehman Gov't/Corp. Bond Index 15.32% * 7.89% - -------------------------------------------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE GRAPH AND TABLE ABOVE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD HAVE PAID ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. + 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. -20- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2001 Common Stocks--52.0% Shares Value ------- --------- AEROSPACE & DEFENSE--2.0% General Dynamics Corporation ......................... 50,400 $ 4,112,640 United Technologies Corporation ...................... 40,250 2,169,073 ----------- 6,281,713 ----------- BANKS--.6% Washington Mutual, Inc. .............................. 61,600 1,859,704 ----------- BEVERAGES--1.5% PepsiCo, Inc. ........................................ 100,900 4,914,839 ----------- BIOTECHNOLOGY--1.6% Amgen Inc.* .......................................... 74,700 4,244,454 Immunex Corporation* ................................. 37,000 883,930 ----------- 5,128,384 ----------- COMMERCIAL SERVICES & SUPPLIES--3.8% eBay Inc.* ........................................... 106,750 5,602,240 First Data Corporation ............................... 94,700 6,398,879 ----------- 12,001,119 ----------- COMMUNICATION EQUIPMENT--1.7% Nokia Corporation, ADR ............................... 248,200 5,090,582 QUALCOMM Inc.* ....................................... 6,800 334,016 ----------- 5,424,598 ----------- COMPUTERS & PERIPHERALS--2.1% Dell Computer Corporation* ........................... 141,950 3,403,961 Sun Microsystems, Inc.* .............................. 314,900 3,196,235 ----------- 6,600,196 ----------- DIVERSIFIED FINANCIALS--4.5% Citigroup Inc. ....................................... 123,166 5,606,516 Federal Home Loan Mortgage Corporation ............... 55,200 3,743,664 Lehman Brothers Holdings Inc. ........................ 15,500 968,130 Merrill Lynch & Co., Inc. ............................ 90,400 3,951,384 ----------- 14,269,694 ----------- ENERGY EQUIPMENT & SERVICES--1.2% BJ Services Company*+ ................................ 51,600 1,320,444 Halliburton Company .................................. 27,400 676,505 Transocean Sedco Forex Inc. .......................... 60,650 1,828,598 ----------- 3,825,547 ----------- HEALTHCARE EQUIPMENT & SUPPLIES--2.3% Baxter International Inc. ............................ 114,200 5,523,854 Medtronic, Inc. ...................................... 47,000 1,894,100 ----------- 7,417,954 ----------- HEALTHCARE PROVIDERS & SERVICES--4.0% Cardinal Health, Inc. ................................ 74,700 5,013,116 McKesson Corporation ................................. 48,900 1,808,811 Tenet Healthcare Corporation* ........................ 104,750 6,025,220 ----------- 12,847,147 ----------- INDUSTRIAL CONGLOMERATES--4.1% General Electric Company ............................. 159,650 5,812,857 Tyco International Ltd. .............................. 146,100 7,179,354 ----------- 12,992,211 ----------- Insurance--2.6% American International Group, Inc. ................... 74,200 5,832,120 Marsh & McLennan Companies, Inc. ..................... 24,450 2,365,538 ----------- 8,197,658 ----------- MEDIA--2.7% AOL Time Warner Inc.* ................................ 152,075 4,746,261 Comcast Corp., Cl. A Special* ........................ 53,300 1,910,272 Viacom Inc. Cl. B* ................................... 49,350 1,801,769 ----------- 8,458,302 ----------- MULTILINE RETAIL--2.3% Target Corporation ................................... 35,700 1,112,055 Wal-Mart Stores, Inc. ................................ 123,900 6,368,460 ----------- 7,480,515 ----------- OIL & GAS--2.2% ChevronTexaco Corporation ............................ 48,717 4,313,890 Exxon Mobil Corporation .............................. 67,000 2,643,150 ----------- 6,957,040 ----------- PHARMACEUTICALS--5.4% Abbott Laboratories .................................. 59,200 3,136,415 American Home Products Corporation ................... 112,391 6,274,790 Forest Laboratories, Inc.* ........................... 20,950 1,558,261 Merck & Co., Inc. .................................... 44,950 2,868,260 Pfizer Inc. .......................................... 77,675 3,254,583 ----------- 17,092,309 ----------- -21- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 Common Stocks--(cont.) Shares Value ------- --------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--.3% Intel Corporation .................................... 36,800 $ 898,656 ----------- SOFTWARE--2.8% Intuit Inc.* ......................................... 67,500 2,714,850 Microsoft Corporation* ............................... 105,900 6,158,085 ----------- 8,872,935 ----------- SPECIALTY RETAIL--2.4% Best Buy Co., Inc.* .................................. 30,800 1,690,920 Home Depot, Inc. ..................................... 154,900 5,921,826 ----------- 7,612,746 ----------- TOBACCO--1.9% Philip Morris Companies Inc. ......................... 126,900 5,938,920 ----------- Total Common Stocks (Cost $173,560,870) ............................... 165,072,187 ----------- Principal Corporate Bonds--16.0% Amount --------- AEROSPACE & DEFENSE--.8% United Technologies, 6.35%, 3/1/11 .....................................$ 2,000,000 2,106,840 ----------- AUTOMOTIVE--.7% General Motors Acceptance Corp., 6.55%, 11/17/03 ................................... 2,300,000 2,385,721 ----------- BANKS--2.2% Bank of America Corp., 7.125%, 9/15/06 ................................... 2,000,000 2,199,440 Chase Manhattan Corporation, 8.50%, 2/15/02 .................................... 200,000 202,938 FleetBoston Financial Corp., 7.25%, 9/15/05 .................................... 2,000,000 2,187,840 Signet Bank, 7.80%, 9/15/06 .................................... 2,000,000 2,234,460 ----------- 6,824,678 ----------- CHEMICALS--.5% Du Pont E.I. De Nemours & Co., 6.50%, 9/1/02 ..................................... 1,500,000 1,544,820 ----------- DIVERSIFIED FINANCIALS--3.5% Block Financial Corp., 8.50%, 4/15/07 .................................... 500,000 560,830 CIT Group, Inc., 7.125%, 10/15/04 .................................. 1,000,000 1,076,060 Citigroup Inc., 6.20%, 3/15/09 .................................... 2,500,000 2,604,675 Countrywide Home Loan Inc., 6.51%, 2/11/05 .................................... 1,524,000 1,626,687 Household Finance Corp., 7.20%, 7/15/06 .................................... 2,000,000 2,189,760 Merrill Lynch & Co., Inc., 6.00%, 2/17/09 .................................... 2,000,000 2,032,800 Morgan (J.P.) & Co. Incorporated, 7.625%, 9/15/04 ................................... 1,000,000 1,098,390 ----------- 11,189,202 ----------- DIVERSIFIED TELECOM- MUNICATION SERVICES--.9% SBC Communications Inc., 6.25%, 3/15/11 .................................... 2,750,000 2,864,483 ----------- ELECTRIC UTILITIES--1.0% Duke Capital Corp., 7.25%, 10/1/04 .................................... 2,150,000 2,330,987 Potomac Electric Power Co., 7.00%, 1/15/24 .................................... 200,000 196,334 Washington Gas Light Co., 6.51%, 8/18/08 .................................... 500,000 522,460 ----------- 3,049,781 ----------- FOOD & BEVERAGES--.5% Anheuser Busch Companies Inc., 7.00%, 12/1/25 .................................... 2,000,000 2,057,740 ----------- INDUSTRIAL CONGLOMERATES--.7% Tyco International Group SA, 6.75%, 2/15/11 .................................... 2,000,000 2,117,040 ----------- INSURANCE--.9% GE Global Insurance, 7.50%, 6/15/10 .................................... 2,000,000 2,232,200 Loews Corp., 7.625%, 6/1/23 .................................... 500,000 506,315 ----------- 2,738,515 ----------- LEASING--.7% International Lease Finance Corp., 5.80%, 8/15/07 .................................... 2,100,000 2,114,868 ----------- MULTILINE RETAIL--1.3% Target Corporation, 6.35%, 1/15/11 .................................... 2,000,000 2,108,000 Wal-Mart Stores, Inc., 5.45%, 8/1/06 ..................................... 2,000,000 2,101,760 ----------- 4,209,760 ----------- OIL & GAS--1.3% Baker Hughes Inc., 6.25%, 1/15/09 .................................... 2,000,000 2,038,040 -22- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 Principal Corporate Bonds--(cont.) Amount Value --------- ----------- Chevron Corp., 6.625%, 10/1/04 ...................................$ 2,000,000 $ 2,171,700 ----------- 4,209,740 ----------- PHARMACEUTICALS--.3% Pharmacia Corporation, 6.50%, 12/1/18 .................................... 1,000,000 1,014,910 ----------- WIRELESS TELECOM- MUNICATION SERVICES--.7% Vodafone Group PLC ADR, 7.625%, 2/15/05 ................................... 2,000,000 2,175,880 ----------- Total Corporate Bonds (Cost $48,236,959) 50,603,978 ----------- U.S. Government & Agency Obligations--25.0% Federal Home Loan Banks, 6.375%, 8/15/06 ................................... 3,000,000 3,284,520 7.625%, 5/15/07 ................................... 2,000,000 2,318,120 6.75%, 8/15/07 .................................... 3,000,000 3,363,270 5.875%, 11/15/07 .................................. 3,000,000 3,228,750 5.89%, 6/30/08 .................................... 3,000,000 3,204,840 6.12%, 8/26/08 .................................... 1,000,000 1,041,410 7.625%, 5/14/10 ................................... 2,000,000 2,360,940 Federal Home Loan Mortgage Corporation, 5.125%, 11/4/04 ................................... 3,000,000 3,078,750 5.65%, 4/25/06 .................................... 3,000,000 3,115,320 5.75%, 4/15/08 .................................... 1,000,000 1,065,780 6.625%, 9/15/09 ................................... 1,200,000 1,337,628 6.875%, 9/15/10 ................................... 2,000,000 2,266,880 Federal National Mortgage Association, 7.125%, 2/15/05 ................................... 2,000,000 2,221,560 6.96%, 4/2/07 ..................................... 500,000 563,360 6.75%, 2/4/28 ..................................... 400,000 397,248 Federal Farm Credit Banks, 6.80%, 10/12/07 ................................... 9,000,000 10,078,560 5.75%, 1/18/11 .................................... 3,000,000 3,125,610 Student Loan Marketing Association, 5.25%, 3/15/06 .................................... 3,000,000 3,149,070 U.S. Treasury Notes, 6.125%, 12/31/01 .................................. 1,000,000 1,006,560 6.50%, 3/31/02 .................................... 2,000,000 2,036,880 6.375%, 4/30/02 ................................... 2,000,000 2,043,740 7.50%, 5/15/02 .................................... 100,000 102,969 6.25%, 7/31/02 .................................... 3,500,000 3,611,545 6.25%, 2/15/03 .................................... 1,750,000 1,839,408 6.00%, 8/15/04 .................................... 1,500,000 1,623,750 5.875%, 11/15/04 .................................. 4,000,000 4,325,640 5.625%, 2/15/06 ................................... 9,000,000 9,743,940 6.50%, 10/15/06 ................................... 1,500,000 1,684,920 6.00%, 8/15/09 .................................... 2,000,000 2,227,180 ----------- Total U.S. Government & Agency Obligations (Cost $73,904,898) ................................ 79,448,148 ----------- SHORT-TERM INVESTMENTS--8.9% U.S. Government & Agency Obligations--6.7% Federal Home Loan Banks, 2.46%, 11/1/01 (Cost $21,200,000) ................................ 21,200,000 21,200,000 ----------- OTHER SHORT-TERM INVESTMENTS--2.2% Shares ------ Securities Lending Quality Trust (Cost $6,976,740) (b) ............................. 6,976,740 6,976,740 ----------- Total Short-Term Investments (Cost $28,176,740) ................................ 28,176,740 ----------- Total Investments (Cost $323,879,467)(a) ......................... 101.9% 323,301,053 Liabilities in Excess of Other Assets ............. (1.9) (5,901,973) ----- ------------ Net Assets ........................................ 100.0% $317,399,080 ===== ============ * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2001, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $326,748,461 amounted to $3,447,408 which consisted of aggregate gross unrealized appreciation of $16,358,700 and aggregate gross unrealized depreciation of $19,806,108. (b) Represents investment of cash collateral received for securities on loan. See Notes to Financial Statements. [This page intentionally left blank] -24- THE ALGER FUND ALGER BALANCED PORTFOLIO FINANCIAL HIGHLIGHTS For a share outstanding throughout the period
Class A (i) --------------------------------------------------------------------- -------- Year Ended October 31, Ten Months ----------------------------------------------------- Ended -------- October 31, 2001 2000 1999 1998 1997(iii) 2001 -------- -------- -------- -------- -------- -------- Net asset value, beginning of period ........ $ 21.29 $ 20.95 $ 16.83 $ 16.58 $ 13.99 $ 20.83 -------- -------- -------- -------- -------- -------- Net investment income (loss) ................ .43(iv) .39(iv) .25(iv) .16(iv) .05 .27(iv) Net realized and unrealized gain (loss) on investments ............................ (2.83) 1.68 4.97 2.35 2.54 (2.75) -------- -------- -------- -------- -------- -------- Total from investment operations ............ (2.40) 2.07 5.22 2.51 2.59 (2.48) -------- -------- -------- -------- -------- -------- Dividends from net investment income ........ (.22) (.13) (.08) (.06) -- (.18) Distributions from net realized gains ....... -- (1.60) (1.02) (2.20) -- -- -------- -------- -------- -------- -------- -------- Total distributions ......................... (.22) (1.73) (1.10) (2.26) -- (.18) -------- -------- -------- -------- -------- -------- Net asset value, end of period .............. $ 18.67 $ 21.29 $ 20.95 $ 16.83 $ 16.58 $ 18.17 ======== ======== ======== ======== ======== ======== Total Return (v) ............................ (11.3%) 10.2% 32.5% 17.7% 18.5% (12.0%) ======== ======== ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ......................... $101,440 $ 93,671 $ 12,488 $ 1,354 $ 459 $158,766 ======== ======== ======== ======== ======== ======== Ratio of expenses to average net assets .............................. 1.20% 1.29% 1.40% 1.79% 2.10% 1.95% ======== ======== ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets ................... 2.15% 1.80% 1.15% .98% .72% 1.40% ======== ======== ======== ======== ======== ======== Portfolio Turnover Rate ................... 74.15% 63.50% 126.01% 93.23% 109.26% 74.15% ======== ======== ======== ======== ======== ========
(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. -25-
Class B Class C (ii) - ----------------------------------------------------- -------------------------------------------------------------------- Year Ended October 31, Year Ended October 31, Three Months - ----------------------------------------------------- ----------------------------------------------------- Ended October 31, 2000 1999 1998 1997 2001 2000 1999 1998 1997(iii) - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 20.59 $ 16.64 $ 16.48 $ 14.21 $ 20.90 $ 20.65 $ 16.66 $ 16.49 $ 16.88 - -------- -------- -------- -------- -------- -------- -------- -------- -------- .17(iv) .07(iv) .03(iv) -- .27(iv) .21(iv) .07(iv) .04(iv) (.01) 1.71 4.93 2.34 2.67 (2.75) 1.67 4.95 2.33 (.38) - -------- -------- -------- -------- -------- -------- -------- -------- -------- 1.88 5.00 2.37 2.67 (2.48) 1.88 5.02 2.37 (.39) - -------- -------- -------- -------- -------- -------- -------- -------- -------- (.04) (.03) (.01) (.06) (.18) (.03) (0.01) -- -- (1.60) (1.02) (2.20) (.34) -- (1.60) (1.02) (2.20) -- - -------- -------- -------- -------- -------- -------- -------- -------- -------- (1.64) (1.05) (2.21) (.40) (.18) (1.63) (1.03) (2.20) -- - -------- -------- -------- -------- -------- -------- -------- -------- -------- $ 20.83 $ 20.59 $ 16.64 $ 16.48 $ 18.24 $ 20.90 $ 20.65 $ 16.66 $ 16.49 ======== ======== ======== ======== ======== ======== ======== ======== ======== 9.4% 31.5% 16.9% 19.3% (12.0%) 9.3% 31.6% 16.8% (2.3%) ======== ======== ======== ======== ======== ======== ======== ======== ======== $132,123 $ 52,607 $ 19,282 $ 12,653 $ 57,193 $ 49,592 $ 14,626 $ 334 $ 48 ======== ======== ======== ======== ======== ======== ======== ======== ======== 2.04% 2.18% 2.58% 2.89% 1.95% 2.04% 2.16% 2.53% 2.77% ======== ======== ======== ======== ======== ======== ======== ======== ======== .98% .36% .19% .04% 1.40% .99% .38% .23% (.84%) ======== ======== ======== ======== ======== ======== ======== ======== ======== 63.50% 126.01% 93.23% 109.26% 74.15% 63.50% 126.01% 93.23% 109.26% ======== ======== ======== ======== ======== ======== ======== ======== ========
[This page intentionally left blank] -27- - -------------------------------------------------------------------------------- ALGER MIDCAP GROWTH PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2001 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 5/24/93 TO 10/31/01 - -------------------------------------------------------------------------------- [The table below represents a line chart in the printed piece.] Alger S&P ----- --- 10000 10000 12480 10714 13062 10969 19373 13295 20618 15600 25024 20694 26586 22084 35182 26736 51513 35199 39992 30817 ENDING VALUE ENDING VALUE ALGER MIDCAP S&P MIDCAP GROWTH B: 400 INDEX: $39,992 $30,817 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, 2001. 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 10/31/01+ AVERAGE ANNUAL TOTAL RETURNS 1 5 SINCE YEAR YEARS INCEPTION - -------------------------------------------------------------------------------- CLASS A (INCEPTION 1/1/97) (25.58%) * 13.73% S&P MidCap 400 Index (12.45%) * 13.80% - -------------------------------------------------------------------------------- CLASS B (INCEPTION 5/24/93) (25.73%) 13.93% 17.84% S&P MidCap 400 Index (12.45%) 14.59% 14.26% - -------------------------------------------------------------------------------- CLASS C (INCEPTION 8/1/97) (23.87%) * 11.14% S&P MidCap 400 Index (12.45%) * 10.08% - -------------------------------------------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE GRAPH AND TABLE ABOVE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD HAVE PAID ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. + 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. THE ALGER FUND -28- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2001 COMMON STOCKS--95.5% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--4.8% General Dynamics Corporation ........................ 79,500 $ 6,487,200 L-3 Communications Holdings, Inc.* .................................. 274,700 23,863,189 ----------- 30,350,389 ----------- AIRLINES--1.0% Continental Airlines, Inc. Cl. B* ................... 359,300 6,284,157 ----------- BANKS--1.0% Commerce Bancorp, Inc. .............................. 47,150 3,441,950 GreenPoint Financial Corp. .......................... 90,000 2,884,500 ----------- 6,326,450 ----------- BIOTECHNOLOGY--8.2% Biogen, Inc.* ....................................... 91,000 5,005,000 Cephalon, Inc.* ..................................... 22,550 1,421,777 Charles River Laboratories International, Inc.* ............................. 206,300 6,931,680 Enzon, Inc.* ........................................ 86,050 5,322,192 Genzyme Corp.-General Division* ..................... 343,300 18,521,035 Gilead Sciences Inc.* ............................... 230,900 14,523,610 ----------- 51,725,294 ----------- COMMERCIAL SERVICES & SUPPLIES--13.1% Amdocs Limited* ..................................... 609,775 15,921,225 BISYS Group, Inc. (The)* ............................ 319,200 16,604,784 ChoicePoint Inc.* ................................... 94,650 4,049,127 Concord EFS Inc.* ................................... 731,400 20,018,418 eBay Inc.* .......................................... 224,800 11,797,504 Fiserv, Inc.* ....................................... 122,550 4,557,635 HomeStore.com, Inc.*+ ............................... 656,950 3,376,722 IMS Health Incorporated ............................. 312,100 6,669,577 ----------- 82,994,992 ----------- COMMUNICATION EQUIPMENT--.7% McDATA Corporation Cl. A* ........................... 281,900 4,146,749 ----------- DIVERSIFIED FINANCIALS--.9% Principal Financial Group (The)* .................... 265,200 5,967,000 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--2.2% Flextronics International Ltd.* ..................... 107,600 2,141,240 Sanmina Corporation* ................................ 162,400 2,458,736 Waters Corporation* ................................. 270,325 9,593,834 ----------- 14,193,810 ----------- COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- ENERGY EQUIPMENT & SERVICES--5.3% BJ Services Company* ................................ 329,200 $ 8,424,228 Cooper Cameron Corporation* ......................... 247,533 9,653,787 Santa Fe International Corporation ...................................... 160,000 3,894,400 Smith International, Inc.* .......................... 56,500 2,672,450 Transocean Sedco Forex Inc. ......................... 290,600 8,761,590 ----------- 33,406,455 ----------- HEALTHCARE EQUIPMENT & SUPPLIES--.6% Becton, Dickinson and Company ....................... 84,650 3,030,470 St. Jude Medical, Inc.* ............................. 13,500 958,500 ----------- 3,988,970 ----------- HEALTHCARE PROVIDERS & SERVICES--11.8% AmerisourceBergen Corporation* ...................... 341,484 21,704,723 Caremark Rx, Inc.* .................................. 494,150 6,621,610 Community Health Systems Inc.* ...................... 176,600 4,415,000 Express Scripts, Inc.* .............................. 171,550 7,023,257 Health Management Associates, Inc. Cl. A* .......................... 163,410 3,184,861 Laboratory Corporation of America Holdings* ................................ 228,000 19,653,600 Manor Care, Inc.* ................................... 186,500 4,356,640 Triad Hospitals, Inc.* .............................. 25,100 675,190 Universal Health Services, Inc., Cl. B* ........................... 179,150 7,235,869 ----------- 74,870,750 ----------- HOTELS, RESTAURANTS & LEISURE--5.0% Brinker International, Inc.* ........................ 458,650 11,649,710 Outback Steakhouse, Inc.* ........................... 404,950 11,682,808 Starbucks Corporation* .............................. 504,500 8,637,040 ----------- 31,969,558 ----------- HOUSEHOLD DURABLES--.6% Mohawk Industries, Inc.* ............................ 82,050 3,544,560 ----------- INFORMATIONTECHNOLOGY CONSULTING & SERVICES--4.1% Accenture Ltd. Cl. A* ............................... 225,000 3,953,250 Affiliated Computer Services, Inc. Cl. A* ............................ 208,200 18,332,010 Investment Technology Group, Inc.* ..................................... 52,900 3,407,289 ----------- 25,692,549 ----------- INTERNET SOFTWARE & SERVICES--3.2% Overture Services Inc.* ............................. 244,000 6,429,400 VeriSign, Inc.* ..................................... 360,000 13,935,600 ----------- 20,365,000 ----------- THE ALGER FUND -29- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 Common Stocks--(cont.) Shares Value ------ ----- MACHINERY--1.8% SPX Corporation* ................................ 117,600 $ 11,712,960 ------------ PHARMACEUTICALS--11.1% Allergan, Inc. .................................. 293,250 21,052,418 Barr Laboratories, Inc.* ........................ 94,550 6,883,240 Forest Laboratories, Inc.* ...................... 128,100 9,528,078 King Pharmaceuticals, Inc.* ..................... 554,166 21,606,932 Teva Pharmaceutical Industries Ltd. ADR .......................... 190,550 11,775,990 ------------ 70,846,658 ------------ RETAIL--.1% Michaels Stores, Inc.* .......................... 16,000 821,920 ------------ SEMICONDUCTOR EQUIPMENT & PRODUCTS--3.3% Intersil Corporation Cl. A* ..................... 122,000 3,995,500 Microchip Technology Incorporated* ................................ 543,825 16,978,217 ------------ 20,973,717 ------------ SOFTWARE--10.2% Adobe Systems Incorporated ...................... 326,250 8,613,000 BMC Software, Inc.* ............................. 615,200 9,271,064 Fair, Isaac and Company, Incorporated ................................. 62,350 2,964,743 Intuit Inc.* .................................... 629,200 25,306,424 Rational Software Corporation* .................. 282,600 3,707,712 Synopsys, Inc.* ................................. 314,700 14,790,900 ------------ 64,653,843 ------------ SPECIALTY RETAIL--6.1% Abercrombie & Fitch Co., Cl. A* ................. 282,800 5,322,296 Barnes & Noble, Inc.* ........................... 161,000 5,916,750 Bed Bath & Beyond Inc.* ......................... 245,700 6,157,242 Best Buy Co., Inc.* ............................. 137,100 7,526,790 Office Depot, Inc.* ............................. 318,000 4,324,800 Toys ORO Us, Inc.* .............................. 501,000 9,519,000 ------------ 38,766,878 ------------ TEXTILES & APPAREL--.4% Coach, Inc.* .................................... 89,330 2,492,307 ------------ Total Common Stocks (Cost $613,257,070) .......................... 606,094,966 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--7.0% AMOUNT VALUE ------ ----- U.S. Government & Agency Obligations Federal Home Loan Banks, 2.46%, 11/1/01 (Cost $44,500,000) ........................... $44,500,000 $ 44,500,000 ------------ Total Investments (Cost $657,757,070)(a) ....................... 102.5% 650,594,966 Liabilities in Excess of Other Assets ........... (2.5) (15,891,835) ----- ------------ Net Assets ...................................... 100.0% $634,703,131 ===== ============ * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2001, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $662,209,423, amounted to $11,614,457 which consisted of aggregate gross unrealized appreciation of $59,247,832 and aggregate gross unrealized depreciation of $70,862,289. See Notes to Financial Statements. THE ALGER FUND -30- ALGER MIDCAP GROWTH PORTFOLIO(I) Financial Highlights For a share outstanding throughout the period
Class A (ii) -------------------------------------------------------------------- -------- Year Ended October 31, Ten Months ---------------------------------------------------- Ended -------- October 31, 2001 2000 1999 1998 1997(iv) 2001 -------- -------- -------- -------- ------- -------- Net asset value, beginning of period ........ $ 10.17 $ 8.20 $ 7.07 $ 7.49 $ 6.31 $ 9.79 -------- -------- -------- -------- ------- -------- Net investment income (loss) ................ (.06)(v) (.04)(v) (.05)(v) (.03)(v) (.03) (.11)(v) Net realized and unrealized gain (loss) on investments .............................. (2.01) 3.51 2.16 .43 1.21 (1.92) -------- -------- -------- -------- ------- -------- Total from investment operations ............ (2.07) 3.47 2.11 .40 1.18 (2.03) Distributions from net realized gains ....... (1.18) (1.50) (.98) (.82) -- (1.18) -------- -------- -------- -------- ------- -------- Net asset value, end of period .............. $ 6.92 $ 10.17 $ 8.20 $ 7.07 $ 7.49 $ 6.58 ======== ======== ======== ======== ======= ======== Total Return (vi) ........................... (21.9%) 47.7% 33.3% 7.2% 18.7% (22.4%) ======== ======== ======== ======== ======= ======== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ......................... $154,412 $141,558 $ 49,246 $ 32,447 $ 5,436 $426,699 ======== ======== ======== ======== ======= ======== Ratio of expenses to average net assets .............................. 1.31% 1.29% 1.31% 1.34% 1.40% 2.06% ======== ======== ======== ======== ======= ======== Ratio of net investment income (loss) to average net assets ................... (.77%) (.46%) (.58%) (.53%) (.83%) (1.49%) ======== ======== ======== ======== ======= ======== Portfolio Turnover Rate ................... 115.45% 97.11% 203.86% 180.98% 160.09% 115.45% ======== ======== ======== ======== ======= ========
(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. -31-
Class B Class C (iii) - ------------------------------------------------------------------------ -------------------------------------------------- Three Months Year Ended October 31, Year Ended October 31, Ended - ------------------------------------------------------------------------ ----------------------------------- October 31, 2000 1999 1998 1997 2001 2000 1999 1998 1997(iv) - -------- -------- -------- -------- -------- ------- -------- ------- ------ $ 8.00 $ 6.96 $ 7.44 $ 6.29 $ 9.77 $ 7.99 $ 6.95 $ 7.44 $ 7.50 - -------- -------- -------- -------- -------- ------- -------- ------- ------ (.12)(v) (.11)(v) (.10) (.10) (.11)(v) (.11)(v) (.11)(v) (.09)(v) (.01) 3.41 2.13 .44 1.41 (1.92) 3.39 2.13 .42 (.05) - -------- -------- -------- -------- -------- ------- -------- ------- ------ 3.29 2.02 .34 1.31 (2.03) 3.28 2.02 .33 (.06) (1.50) (.98) (.82) (.16) (1.18) (1.50) (.98) (.82) -- - -------- -------- -------- -------- -------- ------- -------- ------- ------ $ 9.79 $ 8.00 $ 6.96 $ 7.44 $ 6.56 $ 9.77 $ 7.99 $ 6.95 $ 7.44 ======== ======== ======== ======== ======== ======= ======== ======= ====== 46.4% 32.3% 6.2% 21.4% (22.4%) 46.4% 32.4% 6.1% (.7%) ======== ======== ======== ======== ======== ======= ======== ======= ====== $532,476 $248,139 $191,934 $166,475 $ 53,592 $51,335 $ 10,827 $ 1,759 $ 84 ======== ======== ======== ======== ======== ======= ======== ======= ====== 2.04% 2.07% 2.10% 2.19% 2.06% 2.04% 2.08% 2.08% 1.97% ======== ======== ======== ======== ======== ======= ======== ======= ====== (1.23%) (1.39%) (1.38%) (1.58%) (1.51%) (1.22%) (1.40%) (1.26%) (1.55%) ======== ======== ======== ======== ======== ======= ======== ======= ====== 97.11% 203.86% 180.98% 160.09% 115.45% 97.11% 203.86% 180.98% 160.09% ======== ======== ======== ======== ======== ======= ======== ======= ======
[This page intentionally left blank] -33- - -------------------------------------------------------------------------------- ALGER CAPITAL APPRECIATION PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2001 (UNAUDITED) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 11/1/93 TO 10/31/01 - -------------------------------------------------------------------------------- [The table below represents a line chart in the printed piece.] Capital Appreciation Alger S&P 500 ----- ------- 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 10/31/00 53789 35024 10/31/01 33808 26302 ENDING VALUE ALGER CAPITAL APPRECIATION B: $33,808 ENDING VALUE S&P 500 INDEX: $26,302 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, 2001. 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 10/31/01+ AVERAGE ANNUAL TOTAL RETURNS 1 5 SINCE YEAR YEARS INCEPTION ------------------------------------------ CLASS A (INCEPTION 1/1/97) (39.79%) * 8.62% S&P 500 Index (24.91%) * 9.20% - -------------------------------------------------------------------------------- CLASS B (INCEPTION 11/1/93) (40.16%) 8.44% 16.43% S&P 500 Index (24.91%) 10.04% 12.85% - -------------------------------------------------------------------------------- CLASS C (INCEPTION 8/1/97) (38.45%) * 3.70% S&P 500 Index (24.91%) * 3.88% - -------------------------------------------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. THE GRAPH AND TABLE ABOVE DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD HAVE PAID ON FUND DISTRIBUTIONS OR ON THE REDEMPTION OF FUND SHARES. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. +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. THE ALGER FUND -34- ALGER CAPITAL APPRECIATION PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 2001 COMMON STOCKS--90.7% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--1.9% General Dynamics Corporation .......................... 97,300 $ 7,939,680 United Technologies Corporation ....................... 157,200 8,471,508 ----------- 16,411,188 ----------- BANKS--1.0% Commerce Bancorp, Inc. ................................ 62,400 4,555,200 GreenPoint Financial Corp. ............................ 116,600 3,737,030 ----------- 8,292,230 ----------- BIOTECHNOLOGY--9.6% Amgen Inc.* ........................................... 393,950 22,384,239 Biogen, Inc.* ......................................... 156,200 8,591,000 Cephalon, Inc.*+ ...................................... 85,000 5,359,250 Enzon, Inc.*+ ......................................... 67,300 4,162,505 Genzyme Corp.-General Division* ....................... 299,000 16,131,050 Gilead Sciences Inc.* ................................. 101,100 6,359,190 IDEC Pharmaceuticals Corporation*+ ...................................... 158,050 9,479,839 Immunex Corporation* .................................. 364,600 8,710,294 ----------- 81,177,367 ----------- COMMERCIAL SERVICES & SUPPLIES--8.9% BISYS Group, Inc. (The)*+ ............................. 169,800 8,832,996 Career Education Corporation* ......................... 150,700 3,928,749 Concord EFS Inc.* ..................................... 337,400 9,234,637 eBay Inc.*+ ........................................... 588,600 30,889,728 First Data Corporation ................................ 336,400 22,730,548 ----------- 75,616,658 ----------- COMMUNICATION EQUIPMENT--3.2% Nokia Corporation, ADR ................................1,112,500 22,817,375 QUALCOMM Inc.* ........................................ 95,900 4,710,608 ----------- 27,527,983 ----------- DIVERSIFIED FINANCIALS--11.1% Citigroup Inc. ........................................1,042,333 47,446,998 Merrill Lynch & Co., Inc. ............................. 457,700 20,006,067 Moody's Corporation ................................... 125,100 4,343,472 Morgan Stanley Dean Witter & Co. ....................................... 458,500 22,429,820 ----------- 94,226,357 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--.3% Waters Corporation* ................................... 81,925 2,907,518 ----------- HEALTH & PERSONAL CARE--.3% Anthem, Inc.* ......................................... 55,450 2,322,246 ----------- HEALTHCARE ADMINISTRATIVE SERVICES--1.1% Genentech, Inc.* ...................................... 171,200 8,945,200 ----------- HEALTHCARE EQUIPMENT & SUPPLIES--4.4% Baxter International Inc. ............................. 419,600 20,296,052 Boston Scientific Corporation* ........................ 204,500 4,650,330 Guidant Corporation* .................................. 166,400 6,907,264 St. Jude Medical, Inc.* ............................... 80,700 5,729,700 ----------- 37,583,346 ----------- HEALTHCARE PROVIDERS & SERVICES--8.3% AmerisourceBergen Corporation* ........................ 394,600 25,080,776 Cardinal Health, Inc. ................................. 215,800 14,482,338 Community Health Systems Inc.* ........................ 138,000 3,450,000 Laboratory Corporation of America Holdings* .......................................... 56,050 4,831,510 Manor Care, Inc.* ..................................... 153,000 3,574,080 McKesson Corporation .................................. 182,050 6,734,030 Tenet Healthcare Corporation* ......................... 213,200 12,263,264 ----------- 70,415,998 ----------- HOTELS, RESTAURANTS & LEISURE--1.4% Brinker International, Inc.* .......................... 468,400 11,897,360 ----------- INDUSTRIAL CONGLOMERATES--3.0% Tyco International Ltd. ............................... 519,250 25,515,945 ----------- INFORMATION TECHNOLOGY CONSULTING & SERVICES--.9% Affiliated Computer Services, Inc. Cl. A* .............................. 83,500 7,352,175 ----------- INSURANCE--3.4% American International Group, Inc. ........................................ 319,890 25,143,354 Marsh & McLennan Companies, Inc. .................................... 41,900 4,053,825 ----------- 29,197,179 ----------- INTERNET SOFTWARE & SERVICES--.5% VeriSign, Inc.*+ ...................................... 116,750 4,519,393 ----------- MEDIA--3.6% AOL Time Warner Inc.* ................................. 549,400 17,146,774 Comcast Corp., Cl. A Special* ......................... 250,200 8,967,168 Viacom Inc. Cl. B* .................................... 108,400 3,957,684 ----------- 30,071,626 ----------- -35- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 2001 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- MULTILINE RETAIL--4.8% Family Dollar Stores, Inc. ...................... 149,800 $ 4,323,228 Target Corporation .............................. 43,300 1,348,795 Wal-Mart Stores, Inc. ........................... 679,350 34,918,590 ----------- 40,590,613 ----------- PHARMACEUTICALS--5.8% American Home Products Corporation .................................. 354,400 19,786,152 Barr Laboratories, Inc.*+ ....................... 52,000 3,785,600 Johnson & Johnson ............................... 79,300 4,592,263 King Pharmaceuticals, Inc.* ..................... 304,133 11,858,146 Pfizer Inc. ..................................... 219,022 9,177,022 ----------- 49,199,183 ----------- RETAIL--.8% Michaels Stores, Inc.* .......................... 124,700 6,405,839 ----------- SEMICONDUCTOR EQUIPMENT & PRODUCTS--.6% Intersil Corporation Cl. A* ..................... 164,000 5,371,000 ----------- SOFTWARE--5.9% Intuit Inc.* .................................... 563,600 22,667,992 Microsoft Corporation* .......................... 469,100 27,278,165 ----------- 49,946,157 ----------- SPECIALTY RETAIL--7.6% Barnes & Noble, Inc.*+ .......................... 142,400 5,233,200 Bed Bath & Beyond Inc.* ......................... 172,000 4,310,320 Best Buy Co., Inc.* ............................. 238,550 13,096,395 Home Depot, Inc. ................................ 853,675 32,635,995 Office Depot, Inc.* ............................. 308,000 4,188,800 Toys ORO Us, Inc.* .............................. 247,200 4,696,800 ----------- 64,161,510 ----------- TOBACCO--2.3% Philip Morris Companies Inc. ................... 415,300 19,436,040 ----------- Total Common Stocks (Cost $823,358,157) ......................... 769,090,111 ----------- PRINCIPAL AMOUNT VALUE SHORT-TERM INVESTMENTS--15.0% .................. ------ ----- U.S. GOVERNMENT & AGENCY OBLIGATIONS--8.7% Federal Home Loan Banks, 2.46%, 11/1/01 (Cost $73,900,000) .......................... $73,900,000 $ 73,900,000 ------------ OTHER SHORT-TERM INVESTMENTS--6.3% Shares Securities Lending Quality Trust ------ (Cost $53,605,571) (b) ...................... 53,605,571 53,605,571 ------------ Total Short-Term Investments (Cost $127,505,571) ......................... 127,505,571 ------------ Total Investments (Cost $950,863,728)(a) ...................... 105.7% 896,595,682 Liabilities in Excess of Other Assets........... (5.7) (48,711,541) ----- ------------ Net Assets ..................................... 100.0% $847,884,141 ===== ============ * Non-income producing security. + Securities partially or fully on loan. (a) At October 31, 2001, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $952,783,899 amounted to $56,188,217 which consisted of aggregate gross unrealized appreciation of $44,891,000 and aggregate gross unrealized depreciation of $101,079,217. (b) Represents investment of cash collateral received for securities on loan. See Notes to Financial Statements. THE ALGER FUND -36- ALGER CAPITAL APPRECIATION PORTFOLIO(I) FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
CLASS A (II) ------------------------------------------------------------------------ ----------- YEAR ENDED OCTOBER 31, TEN MONTHS -------------------------------------------------------- ENDED ----------- OCTOBER 31, 2001 2000 1999 1998 1997(iv) 2001 ----------- ---------- ---------- ---------- ---------- ----------- Net asset value, beginning of period ...... $ 13.54 $ 13.57 $ 9.03 $ 8.72 $ 7.20 $ 13.09 ------------ ---------- ---------- ---------- ---------- ----------- Net investment income (loss) .............. (.05)(v) (.11)(v) (.12)(v) (.05)(v) (.03) (.12)(v) Net realized and unrealized gain (loss) on investments .......................... (4.80) 2.01 5.50 .90 1.55 (4.61) ------------ ----------- ----------- ---------- ---------- ----------- Total from investment operations .......... (4.85) 1.90 5.38 .85 1.52 (4.73) Distributions from net realized gains ..... (.48) (1.93) (.84) (.54) -- (.48) ----------- ---------- ---------- ---------- ---------- ----------- Net asset value, end of period ............ $ 8.21 $ 13.54 $ 13.57 $ 9.03 $ 8.72 $ 7.88 =========== ========== ========== ========== ========== =========== Total Return (vi) ......................... (36.8%) 12.6% 63.9% 10.7% 21.2% (37.2%) =========== ========== ========== ========== ========== =========== Ratios and Supplemental Data: Net assets, end of period (000's omitted) ....................... $ 179,365 $ 366,296 $ 147,929 $ 54,415 $ 15,572 $ 572,068 =========== ========== ========== ========== ========== =========== Ratio of expenses excluding interest to average net assets ................. 1.40% 1.36% 1.38% 1.42% 1.45% 2.15% =========== ========== ========== ========== ========== =========== Ratio of expenses including interest to average net assets ................. 1.40% 1.36% 1.44% 1.49% 1.53% 2.15% =========== ========== ========== ========== ========== =========== Ratio of net investment income (loss) to average net assets ................. (.46%) (.66%) (.98%) (.67%) (.85%) (1.20%) =========== ========== ========== ========== ========== =========== Portfolio Turnover Rate ................. 102.58% 132.37% 186.93% 184.07% 157.63% 102.58% =========== ========== ========== ========== ========== =========== Amount of debt outstanding at end of period .......... -- -- -- -- -- -- =========== ========== =========== ========== ========== =========== Average amount of debt outstanding during the period ......... $ 174,795 $ 138,087 $7,758,649 $2,814,493 $2,940,097 $ 174,795 =========== ========== =========== ========== ========== =========== Average daily number of portfolio shares outstanding during the period .. 116,640,268 97,199,509 42,330,298 29,012,853 23,217,597 116,640,268 =========== ========== =========== ========== ========== =========== Average amount of debt per portfolio share during the period ............... -- -- $ 0.18 $ 0.10 $ 0.13 -- =========== ========== =========== ========== ========== ===========
(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. -37-
CLASS B CLASS C (III) - ------------------------------------------------------- -------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, THREE MONTHS - ------------------------------------------------------- --------------------------------------------------------- ENDED October 31, 2000 1999 1998 1997 2001 2000 1999 1998 1997(iv) - ---------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- $ 13.28 $ 8.90 $ 8.67 $ 7.21 $ 13.09 $ 13.27 $ 8.90 $ 8.67 $ 9.22 - ---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- ---------- (.22)(v) (.21)(v) (.13)(v) (.11) (.12)(v) (.22)(v) (.22)(v) (.12)(v) (.02) 1.96 5.43 .90 1.62 (4.62) 1.97 5.43 .89 (.53) - ---------- ---------- ---------- ---------- ----------- ----------- ---------- ---------- ---------- 1.74 5.22 .77 1.51 (4.74) 1.75 5.21 .77 (.55) (1.93) (.84) (.54) (.05) (.48) (1.93) (.84) (.54) -- - ---------- ---------- ---------- ---------- ----------- ----------- ---------- --------- ---------- $ 13.09 $ 13.28 $ 8.90 $ 8.67 $ 7.87 $ 13.09 $ 13.27 $ 8.90 $ 8.67 ========== ========== ========== ========== =========== =========== ========== ========== ========== 11.6% 63.0% 9.9% 21.0% (37.2%) 11.7% 62.9% 9.9% (6.0%) ========== ========== ========== ========== =========== =========== ========== ========== ========== $1,056,831 $ 594,971 $ 242,941 212,895 $ 96,451 $ 180,663 $ 43,789 $ 2,967 $ 631 ========== ========== ========== ========== =========== =========== ========== ========== ========== 2.11% 2.12% 2.19% 2.27% 2.15% 2.12% 2.12% 2.18% 2.18% ========== ========== ========== ========== =========== =========== ========= ========== ========== 2.11% 2.21% 2.26% 2.38% 2.15% 2.12% 2.21% 2.25% 2.25% ========== ========== ========== ========== =========== =========== ========== ========== ========== (1.41%) (1.77%) (1.48%) (1.72%) (1.20%) (1.42%) (1.80%) (1.46%) (1.80%) ========== ========== ========== ========== =========== =========== ========== ========== ========== 132.37% 186.93% 184.07% 157.63% 102.58% 132.37% 186.93% 184.07% 157.63% ========== ========== ========== ========== =========== =========== ========== ========== ========== -- -- -- -- -- -- -- -- -- ========== ========== ========== ========== =========== =========== ========== ========== ========== $ 138,087 $7,758,649 $2,814,493 $2,940,097 $ 174,795 $ 138,087 $7,758,649 $2,814,493 $2,940,097 ========== ========== ========== ========== =========== =========== ========== ========== ========== 97,199,509 42,330,298 29,012,853 23,217,597 116,640,268 97,199,509 42,330,298 29,012,853 23,217,597 ========== ========== ========== ========== =========== =========== ========== ========== ========== -- $ 0.18 $ 0.10 $ 0.13 -- -- $ 0.18 $ 0.10 $ 0.13 ========== ========== ========== ========== =========== =========== ========== ========== ==========
THE ALGER FUND ALGER MONEY MARKET PORTFOLIO -38- SCHEDULE OF INVESTMENTS October 31, 2001 U.S. GOVERNMENT & PRINCIPAL AGENCY OBLIGATIONS--105.1% AMOUNT VALUE ------ ----- Federal Farm Credit Banks, 2.46%, 11/1/01 .................... $ 65,000,000 $ 65,000,000 Federal Agricultural Mortgage Corporation, 2.29%, 1/3/02 ..................... 10,000,000 9,959,925 Federal Home Loan Banks, 2.46%, 11/1/01 .................... 91,600,000 91,600,000 2.28%, 12/17/01 ................... 10,000,000 9,970,867 2.29%, 12/26/01 ................... 10,000,000 9,965,014 2.22%, 1/10/02 .................... 10,000,000 9,956,833 2.16%, 1/22/02 .................... 10,000,000 9,950,800 2.16%, 1/30/02 .................... 10,000,000 9,946,000 Federal National Mortgage Assoc., 2.36%, 11/1/01 .................... 10,000,000 10,000,000 2.48%, 11/1/01 .................... 50,000,000 50,000,000 2.36%, 11/8/01 .................... 10,000,000 9,995,411 2.34%, 11/15/01 ................... 10,000,000 9,990,900 2.33%, 11/23/01 ................... 10,000,000 9,985,761 2.32%, 11/29/01 ................... 10,000,000 9,981,956 2.31%, 12/5/01 .................... 10,000,000 9,978,183 2.30%, 12/12/01 ................... 10,000,000 9,973,807 2.23%, 1/17/02 .................... 10,000,000 9,952,303 Federal Home Loan Mortgage Corp., 2.44%, 11/1/01 .................... 50,000,000 50,000,000 2.22%, 2/27/02 .................... 10,000,000 9,927,232 Student Loan Marketing Assoc., 2.46%, 11/1/01 .................... 17,000,000 17,000,000 ------------ Total U.S. Government & Agency Obligations (Cost $423,134,992) ............... 423,134,992 ------------ SECURITIES HELD UNDER REPURCHASE AGREEMENTS--1.2% Securities Held Under Repurchase Agreements, 2.50%, 11/1/01, with State Street Bank and Trust Company, dtd 10/31/01, repurchase price $4,900,340; collateralized by Federal Home Loan Banks (par value $4,895,000, 4.75%, due 6/4/03) ................ $ 4,900,000 ------------ Total Investments (Cost $428,034,992) (a) ........... 106.3% 428,034,992 Liabilities in Excess of Other Assets (6.3) (25,520,165) ----- ------------ Net Assets ........................... 100.0% $402,514,827 ===== ============ (a) At October 31, 2001, 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. THE ALGER FUND Alger MONEY MARKET PORTFOLIO -39- Financial Highlights For a share outstanding throughout the year
Year Ended October 31, ------------------------------------------------------ 2001 2000 1999 1998 1997 --------- -------- -------- -------- -------- Net asset value, beginning of year ............ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 --------- -------- -------- -------- -------- Net investment income ......................... .0387 .0527 .0423 .0476 .0479 Dividends from net investment income .......... (.0387) (.0527) (.042) (.0476) (.0479) --------- -------- -------- -------- -------- Net asset value, end of year .................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 ========= ======== ======== ======== ======== Total Return .................................. 3.9% 5.4% 4.3% 4.9% 4.9% ========= ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted) ............................ $ 402,515 $233,526 $241,310 $172,862 $179,407 ========= ======== ======== ======== ======== Ratio of expenses to average net assets ....... .71% .78% .72% .76% .81% ========= ======== ======== ======== ======== Ratio of net investment income to average net assets ...................... 3.88% 5.14% 4.37% 4.84% 4.76% ========= ======== ======== ======== ========
See Notes to Financial Statements. THE ALGER FUND STATEMENTS OF ASSETS AND LIABILITIES -40- (in thousands, except per share amounts) October 31, 2001
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 ............................ $ 859,568 $ 181,480 $ 323,301 $ 650,595 $ 896,596 $ 428,035 Cash .................................................. 28 87 95 62 57 27 Receivable for investment securities sold ............. -- 21,399 -- 9,489 22,562 -- Receivable for shares of beneficial interest sold .................................... 20,643 6,132 1,178 14,785 10,224 5,155 Dividends and interest receivable ....................................... 355 3 1,696 29 165 -- Prepaid expenses ...................................... 86 49 38 25 85 70 ----------- --------- --------- --------- ----------- --------- Total Assets .......................................... 880,680 209,150 326,308 674,985 929,689 433,287 ----------- --------- --------- --------- ----------- --------- LIABILITIES: Payable for securities loaned ......................... 15,491 -- 6,977 -- 53,606 -- Bank loan payable ..................................... -- 6,900 -- -- -- -- Payable for investment securities purchased ............................. -- 2,117 -- 13,913 24,078 -- Payable for shares of beneficial interest redeemed ................................ 1,990 583 1,314 24,957 2,075 30,345 Accrued investment management fees .................... 568 152 207 457 643 136 Accrued distribution fees ............................. 414 88 139 311 437 -- Accrued shareholder servicing fees .................... 190 44 69 143 186 -- Dividends payable--Note 2(e) .......................... -- -- -- -- -- 46 Accrued expenses ...................................... 702 309 203 501 780 245 ----------- --------- --------- --------- ----------- --------- Total Liabilities ................................... 19,355 10,193 8,909 40,282 81,805 30,772 ----------- --------- --------- --------- ----------- --------- NET ASSETS ............................................ $ 861,325 $ 198,957 $ 317,399 $ 634,703 $ 847,884 $ 402,515 =========== ========= ========= ========= =========== ========= Net Assets Consist of: Paid-in capital ..................................... $ 1,098,570 $ 369,557 $ 351,636 $ 724,619 $ 1,367,028 $ 402,812 Undistributed net investment income (accumulated loss) ......................... (9,703) (4,186) 4,512 (9,355) (11,878) -- Undistributed net realized gain (accumulated loss) ........................... (183,867) (166,564) (38,171) (73,399) (452,998) (297) Net unrealized appreciation (depreciation) .......... (43,675) 150 (578) (7,162) (54,268) -- ----------- --------- --------- --------- ----------- --------- NET ASSETS ............................................ $ 861,325 $ 198,957 $ 317,399 $ 634,703 $ 847,884 $ 402,515 =========== ========= ========= ========= =========== ========= Class A Net Asset Value Per Share .......................... $ 9.47 $ 3.54 $ 18.67 $ 6.92 $ 8.21 -- =========== ========= ========= ========= =========== ========= Offering Price Per Share ........................... $ 9.94 $ 3.72 $ 19.60 $ 7.27 $ 8.62 -- =========== ========= ========= ========= =========== ========= Class B Net Asset Value and Offering Price Per Share .......................... $ 9.02 $ 3.36 $ 18.17 $ 6.58 $ 7.88 $ 1.00 =========== ========= ========= ========= =========== ========= Class C Net Asset Value Per Share ........................... $ 9.02 $ 3.36 $ 18.24 $ 6.56 $ 7.87 -- =========== ========= ========= ========= =========== ========= Offering Price Per Share ............................ $ 9.11 $ 3.39 $ 18.42 $ 6.63 $ 7.95 -- =========== ========= ========= ========= =========== ========= Shares of beneficial interest outstanding--Note 6 Class A ............................................. 24,356 18,128 5,433 22,298 21,837 -- =========== ========= ========= ========= =========== ========= Class B ............................................. 64,466 38,892 8,740 64,881 72,623 402,813 =========== ========= ========= ========= =========== ========= Class C ............................................. 5,424 1,260 3,136 8,165 12,250 -- =========== ========= ========= ========= =========== ========= *Identified cost ...................................... $ 903,243 $ 181,330 $ 323,879 $ 657,757 $ 950,864 $ 428,035 =========== ========= ========= ========= =========== =========
See Notes to Financial Statements THE ALGER FUND -41- STATEMENTS OF OPERATIONS (in thousands) For the year ended October 31, 2001
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market INVESTMENT INCOME: Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ---------- --------- -------- --------- --------- -------- Income: Dividends .................................. $ 7,479 $ 202 $ 1,173 $ 461 $ 6,566 $ -- Interest ................................... 2,328 1,551 9,546 3,520 4,102 15,891 --------- --------- -------- --------- --------- -------- Total Income ............................... 9,807 1,753 10,719 3,981 10,668 15,891 --------- --------- -------- --------- --------- -------- Expenses: Management fees--Note 3(a) ................ 8,021 2,427 2,416 5,622 9,595 1,730 Distribution fees--Note 3(b): Class B ................................. 5,586 1,494 1,166 3,691 5,747 -- Class C ................................. 447 51 430 418 1,005 -- Shareholder servicing fees--Note 3(f) ..... 2,674 714 805 1,757 2,822 -- Interest on line of credit utilized--Note 5 7 3 1 1 5 1 Custodian fees ............................ 98 46 40 75 105 47 Transfer agent fees and expenses--Note 3(e) ..................... 2,313 1,021 478 1,411 2,995 542 Professional fees ......................... 69 21 6 49 39 12 Trustees' fees ............................ 8 8 8 8 8 8 Registration fees ......................... 64 77 53 155 42 22 Miscellaneous ............................. 223 77 52 149 183 90 --------- --------- -------- --------- --------- -------- Total Expenses ............................ 19,510 5,939 5,455 13,336 22,546 2,452 --------- --------- -------- --------- --------- -------- NET INVESTMENT INCOME (LOSS) ............................ (9,703) (4,186) 5,264 (9,355) (11,878) 13,439 --------- --------- -------- --------- --------- -------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on investments ............ (172,699) (166,193) (37,024) (64,016) (431,225) (218) Net change in unrealized appreciation (depreciation) on investments .............. (169,262) (24,972) (7,862) (103,577) (121,549) -- --------- --------- -------- --------- --------- -------- Net realized and unrealized loss on investments ........................ (341,961) (191,165) (44,886) (167,593) (552,774) (218) --------- --------- -------- --------- --------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................... $(351,664) $(195,351) $(39,622) $(176,948) $(564,652) $ 13,221 ========= ========= ======== ========= ========= ========
See Notes to Financial Statements. THE ALGER FUND -42- STATEMENTS OF CHANGES IN NET ASSETS (in thousands) For the year ended October 31, 2001
Small Capital LargeCap Capital- MidCap Appre- Money Growth ization Balanced Growth ciation Market Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio ---------- ---------- --------- ----------- ---------- --------- Net investment income (loss) .................... $ (9,703) $ (4,186) $ 5,264 $ (9,355) $ (11,878) $13,439 Net realized loss on investments ................ (172,699) (166,193) (37,024) (64,016) (431,225) (218) Net change in unrealized appreciation (depreciation) on investments ................ (169,262) (24,972) (7,862) (103,577) (121,549) -- ----------- --------- --------- ----------- --------- ------- Net increase (decrease) in net assets resulting from operations .................. (351,664) (195,351) (39,622) (176,948) (564,652) 13,221 ----------- --------- --------- ----------- --------- ------- Dividends and distributions to shareholders from: Net investment income Class A ....................................... -- -- (1,065) -- -- -- Class B ....................................... -- -- (1,254) -- -- (13,439) Class C ...................................... -- -- (441) -- -- -- Net realized gains Class A ...................................... (18,355) (20,030) -- (14,320) (10,161) -- Class B ....................................... (60,776) (67,405) -- (64,744) (37,779) -- Class C ....................................... (4,659) (2,276) -- (6,442) (6,592) -- ----------- --------- --------- ----------- --------- ------- Total dividends and distributions to shareholders (83,790) (89,711) (2,760) (85,506) (54,532) (13,439) ----------- --------- --------- ----------- --------- ------- Increase (decrease) from shares of beneficial interest transactions: Class A ....................................... 7,650 22,542 21,325 60,822 (64,520) -- Class B ....................................... (10,769) 13,133 47,431 87,484 (61,794) 169,207 Class C ....................................... 7,784 194 15,639 23,482 (10,408) -- ----------- --------- --------- ----------- --------- ------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ................ 4,665 35,869 84,395 171,788 (136,722) 169,207 ----------- --------- --------- ----------- --------- ------- Total increase (decrease) .................... (430,789) (249,193) 42,013 (90,666) (755,906) 168,989 Net Assets: Beginning of year ........................... 1,292,114 448,150 275,386 725,369 1,603,790 233,526 ----------- --------- --------- ----------- --------- ------- End of year ................................. $ 861,325 $ 198,957 $ 317,399 $ 634,703 $ 847,884 $ 402,515 =========== ========= ========= ========= =========== ========= Undistributed net investment income (accumulated loss) .................... $ (9,703) $ (4,186) $ 4,512 $ (9,355) $ (11,878) $ -- =========== ========= ========= ========= =========== =========
See Notes to Financial Statements. THE ALGER FUND -43- 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. -44- 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"). 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. Effective November 1, 2000, premiums and discounts on debt securities purchased are amortized or accreted over the lives of the respective securities. This change in accounting policy which has been applied retroactively had no material effect on the accompanying financial statements. (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- -45- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) 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 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, 2001, the value of securities loaned and collateral received thereon were as follows: Value of Securities Value of Loaned Collateral ---------- ---------- LargeCap Growth Portfolio ............... $21,093,157 $21,545,883 LargeCap Growth Portfolio ............................. $14,780,835 $15,490,585 Small Capitalization Portfolio ............................. 8,256,542 11,181,995 Balanced Portfolio ...................... 6,638,891 6,976,740 MidCap Growth Portfolio ............................. 1,891,263 2,230,942 Capital Appreciation Portfolio ............................. 51,726,614 53,605,571 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, 2001, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio and the Capital Appreciation Portfolio reclassified $30,796,626, $58,952,361, $64,677, $16,040,977 and $35,548,213, 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, 2001, the net capital loss carryforwards of the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio and the Money Market Portfolio which may be used to offset future net realized gains were approximately THE ALGER FUND -46- NOTES TO FINANCIAL STATEMENTS (Continued) $164,971,000, $162,218,000, $35,419,000, $68,890,000, $450,587,000 and $296,000, respectively, and expire between 2002 and 2009. (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. (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 Funan 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, 2001, such excess carried forward was approximately $20,306,000, $15,838,000, $5,341,000, $7,950,000 and $27,356,000 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, 2001, the initial sales charges and contingent deferred sales charges retained by the Distributor were approximately $100,000 and $6,625,000, 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. -47- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (Continued) (d) BROKERAGE COMMISSIONS: During the year ended October 31, 2001, 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 $1,905,984, $719,985, $330,188, $1,245,923 and $1,901,175, 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, 2001, the LargeCap Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio and the Money Market Portfolio incurred fees of $1,693,620, $921,050, $364,685, $1,078,956, $2,548,150 and $396,940, respectively, for services provided by Alger Services. In addition, during the year ended October 31 2001, 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 $619,190, $100,263, $112,942, $332,448, $446,657 and $145,131, 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, 2001 (in thousands): PURCHASES SALES --------- ----- LargeCap Growth Portfolio ..................... $ 931,954,663 $960,033,883 Small Capitalization Portfolio ..................... 516,145,450 535,279,755 Balanced Portfolio ............. 318,783,345 217,247,847 MidCap Growth Portfolio ..................... 910,270,501 740,033,751 Capital Appreciation Portfolio ..................... 1,094,991,267 1,151,323,913 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. Loans outstanding on October 31, 2001 had an interest rate of 3.19%. 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, 2001, the Capital Appreciation Portfolio had borrowings which averaged $174,795 at a weighted average interest rate of 2.77%. THE ALGER FUND -48- 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, 2001 OCTOBER 31, 2000 SHARES AMOUNT SHARES AMOUNT ------ ------ ------ ------ Alger LargeCap Growth Portfolio Class A: Shares sold ...................... 162,527,138 $ 1,830,805,578 162,449,155 $ 2,482,401,072 Shares converted from Class B .... 1,744,902 19,313,841 1,743,049 26,577,277 Dividends reinvested ............. 1,455,788 17,178,299 2,500,745 35,785,660 Shares redeemed .................. (164,368,986) (1,859,646,946) (158,493,375) (2,424,739,451) ------------ --------------- ------------ --------------- Net increase ..................... 1,358,842 $ 7,650,772 8,199,574 $ 120,024,558 ============ =============== ============ =============== Class B: Shares sold ...................... 113,158,724 $ 1,222,173,474 207,051,376 $ 3,059,360,172 Dividends reinvested ............. 5,101,144 57,744,954 9,240,884 128,263,469 Shares converted to Class A ...... (1,824,694) (19,313,841) (1,801,857) (26,577,277) Shares redeemed .................. (118,417,762) (1,271,372,944) (199,088,996) (2,944,526,617) ------------ --------------- ------------ --------------- Net increase (decrease) .......... (1,982,588) $ (10,768,357) 15,401,407 $ 216,519,747 ============ =============== ============ =============== Class C: Shares sold ...................... 3,079,453 $ 33,423,162 6,077,592 $ 89,824,465 Dividends reinvested ............. 395,810 4,476,606 439,173 6,091,330 Shares redeemed .................. (2,907,126) (30,115,675) (3,749,529) (55,042,716) ------------ --------------- ------------ --------------- Net increase ..................... 568,137 $ 7,784,093 2,767,236 $ 40,873,079 ============ =============== ============ =============== Alger Small Capitalization Portfolio Class A: Shares sold ...................... 198,728,297 $ 882,271,963 61,143,690 $ 634,356,124 Shares converted from Class B .... 5,644,043 27,015,364 5,197,378 53,753,929 Dividends reinvested ............. 3,184,639 17,611,053 760,113 7,654,340 Shares redeemed .................. (202,098,063) (904,356,750) (61,193,895) (639,108,096) ------------ --------------- ------------ --------------- Net increase ..................... 5,458,916 $ 22,541,630 5,907,286 $ 56,656,297 ============ =============== ============ =============== Class B: Shares sold ...................... 22,841,143 $ 95,596,070 45,801,106 $ 475,351,587 Dividends reinvested ............. 12,370,011 65,313,656 7,118,807 69,835,497 Shares converted to Class A ...... (5,922,135) (27,015,364) (5,353,313) (53,753,929) Shares redeemed .................. (28,588,548) (120,761,077) (50,806,572) (519,806,493) ------------ --------------- ------------ --------------- Net increase (decrease) .......... 700,471 $ 13,133,285 (3,239,972) $ (28,373,338) ============ =============== ============ =============== Class C: Shares sold ...................... 240,494 $ 1,131,896 1,523,544 $ 16,682,243 Dividends reinvested ............. 401,376 2,119,264 144,825 1,419,283 Shares redeemed .................. (683,960) (3,057,492) (1,122,291) (11,836,447 ------------ --------------- ------------ --------------- Net increase (decrease) .......... (42,090) $ 193,668 546,078 $ 6,265,079 ============ =============== ============ ===============
THE ALGER FUND -49- NOTES TO FINANCIAL STATEMENTS (Continued)
For the year ended For the year ended October 31, 2001 October 31, 2000 Shares Amount Shares Amount ------ ------ ------ ------ Alger Balanced Portfolio Class A: Shares sold ................. 6,768,510 $ 132,115,149 4,565,490 $ 99,530,708 Shares converted from Class B 89,153 1,743,871 71,386 1,557,011 Dividends reinvested ........ 50,567 1,011,849 50,553 1,040,369 Shares redeemed ............. (5,876,424) (113,546,080) (882,695) (19,213,016) ------------- --------------- ------------ --------------- Net increase ................ 1,031,806 $ 21,324,789 3,804,734 $ 82,915,072 ============= =============== ============ =============== Class B: Shares sold ................. 7,906,564 $ 152,560,732 8,075,884 $ 173,063,380 Dividends reinvested ........ 59,494 1,166,087 208,439 4,227,147 Shares converted to Class A . (91,355) (1,743,871) (72,703) (1,557,011) Shares redeemed ............. (5,478,908) (104,552,368) (4,422,449) (94,667,065) ------------- --------------- ------------ --------------- Net increase ................ 2,395,795 $ 47,430,580 3,789,171 $ 81,066,451 ============= =============== ============ =============== Class C: Shares sold ................. 2,014,351 $ 39,232,676 1,898,378 $ 40,718,761 Dividends reinvested ........ 20,669 406,567 54,299 1,104,984 Shares redeemed ............. (1,271,687) (24,000,107) (288,169) (6,141,241) ------------- --------------- ------------ --------------- Net increase ................ 763,333 $ 15,639,136 1,664,508 $ 35,682,504 ============= =============== ============ =============== Alger MidCap Growth Portfolio Class A:* Shares sold ................. 270,656,811 $ 2,080,103,823 145,344,275 $ 1,400,353,840 Shares converted from Class B 1,583,901 12,360,222 1,036,760 9,984,433 Dividends reinvested ........ 1,711,048 13,585,724 869,019 6,856,558 Shares redeemed ............. (265,578,828) (2,045,227,353) (139,332,954) (1,342,601,390) ------------- --------------- ------------ --------------- Net increase ................ 8,372,932 $ 60,822,416 7,917,100 $ 74,593,441 ============= =============== ============ =============== Class B:* Shares sold ................. 59,173,020 $ 453,904,946 54,409,817 $ 511,828,795 Dividends reinvested ........ 7,947,406 60,320,808 5,616,424 42,984,366 Shares converted to Class A . (1,661,494) (12,360,222) (1,072,154) (9,984,433) Shares redeemed ............. (54,994,107) (414,381,042) (35,562,632) (332,380,942) ------------- --------------- ------------ --------------- Net increase ................ 10,464,825 $ 87,484,490 23,391,455 $ 212,447,786 ============= =============== ============ =============== Class C:* Shares sold ................. 6,129,849 $ 46,967,325 5,308,692 $ 50,459,581 Dividends reinvested ........ 812,983 6,162,412 284,495 2,173,537 Shares redeemed ............. (4,033,062) (29,647,378) (1,693,505) (15,804,677) ------------- --------------- ------------ --------------- Net increase ................ 2,909,770 $ 23,482,359 3,899,682 $ 36,828,441 ============= =============== ============ ===============
THE ALGER FUND -50- NOTES TO FINANCIAL STATEMENTS (Continued)
FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 2001 OCTOBER 31, 2000 SHARES AMOUNT SHARES AMOUNT ------ ------ ------ -------- Alger Capital Appreciation Portfolio Class A: Shares sold ................. 151,270,242 $ 1,527,584,316 167,135,442 $ 2,628,765,000 Shares converted from Class B 642,324 6,213,185 910,674 14,344,012 Dividends reinvested ........ 877,332 9,791,019 1,559,442 23,422,814 Shares redeemed ............. (158,003,028) (1,608,108,893) (153,453,836) (2,417,567,657) --------------- --------------- --------------- ---------------- Net increase (decrease) ...... (5,213,130) $ (64,520,373) 16,151,722 $ 248,964,169 =============== =============== =============== ================ Class B: Shares sold ................. 59,832,435 $ 613,455,067 137,803,098 $ 2,111,394,871 Dividends reinvested ........ 3,314,857 35,701,014 5,932,840 86,797,445 Shares converted to Class A . (667,378) (6,213,185) (937,583) (14,344,012) Shares redeemed ............. (70,576,090) (704,737,305) (106,892,604) (1,627,094,311) --------------- --------------- --------------- ---------------- Net increase (decrease) ..... (8,096,176) $ (61,794,409) 35,905,751 $ 556,753,993 =============== =============== =============== ================ Class C: Shares sold .................. 10,635,925 $ 104,323,214 16,104,072 $ 247,401,803 Dividends reinvested ......... 575,854 6,196,182 498,863 7,293,385 Shares redeemed .............. (12,765,556) (120,927,216) (6,097,998) (90,483,748) --------------- --------------- --------------- ---------------- Net increase (decrease) ..... (1,553,777) $ (10,407,820) 10,504,937 $ 164,211,440 =============== =============== =============== ================ Alger Money Market Portfolio Shares sold .................. 7,934,516,620 $ 7,934,516,620 11,125,335,270 $ 11,125,335,270 Dividends reinvested ......... 11,070,046 11,070,046 12,394,274 12,394,274 Shares redeemed .............. (7,776,379,195) (7,776,379,195) (11,145,511,173) (11,145,511,173) --------------- --------------- --------------- ---------------- Net increase (decrease) ..... 169,207,471 $ 169,207,471 (7,781,629) $ (7,781,629) =============== =============== =============== ================
- ----------------- * Adjusted to reflect the effect of a 3 for 1 stock split which occurred on April 20, 2000. -51- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Trustees of The Alger Fund: We have audited the accompanying 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, 2001, 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. Our procedures included confirmation of securities owned as of October 31, 2001, 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, 2001, 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 November 30, 2001 [This page intentionally left blank] [This page intentionally left blank] [This page intentionally left blank] THE ALGER FUND 30 Montgomery Street Jersey City, NJ 07302 (800) 992-3863 www.algerfund.com BOARD OF TRUSTEES THE ALGER FUND Fred M. Alger, Chairman James P. Connelly, Jr., Vice Chairman Charles F. Baird, Jr. Roger P. Cheever Lester L. Colbert, Jr. Stephen E. O'Neil Nathan E. Saint-Amand B. Joseph White INVESTMENT MANAGER Fred Alger Management, Inc. 30 Montgomery Street Jersey City, NJ 07302 ALGER LARGECAP GROWTH PORTFOLIO ALGER SMALL CAPITALIZATION PORTFOLIO DISTRIBUTOR ALGER BALANCED PORTFOLIO ALGER MIDCAP GROWTH PORTFOLIO Fred Alger & Company, Incorporated ALGER CAPITAL APPRECIATION PORTFOLIO 30 Montgomery Street ALGER MONEY MARKET PORTFOLIO 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 ANNUAL REPORT shareholders of The Alger Fund. OCTOBER 31, 2001 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. REP101 [LOGO] -----END PRIVACY-ENHANCED MESSAGE-----