N-CSRS 1 c37054_n-csrs.txt ----------------------------- OMB APPROVAL ----------------------------- OMB Number: 3235-0570 Expires: September 30, 2007 Estimated average burden hours per response: 19.4 ----------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-1355 The Alger Funds (Exact name of registrant as specified in charter) 111 Fifth Avenue New York, New York 10003 (Address of principal executive offices) (Zip code) Mr. Frederick A. Blum Fred Alger Management, Inc. 111 Fifth Avenue New York, New York 10003 (Name and address of agent for service) Registrant's telephone number, including area code: 212-806-8800 Date of fiscal year end: October 31 Date of reporting period: April 30, 2005 ITEM 1. REPORT(S) TO STOCKHOLDERS. THE ALGER FUNDS (FORMERLY THE ALGER FUND) ALGER LARGECAP GROWTH FUND ALGER SMALLCAP GROWTH FUND ALGER BALANCED FUND ALGER MIDCAP GROWTH FUND ALGER CAPITAL APPRECIATION FUND ALGER HEALTH SCIENCES FUND ALGER SMALLCAP AND MIDCAP GROWTH FUND ALGER MONEY MARKET FUND SEMI-ANNUAL REPORT APRIL 30, 2005 (UNAUDITED) [ALGER LOGO OMITTED] TABLE OF CONTENTS THE ALGER FUNDS Letter to Our Shareholders.................................................. 1 Shareholder Expense Example................................................. 2 Portfolio Summary........................................................... 5 Schedules of Investments.................................................... 6 Statements of Assets and Liabilities........................................ 38 Statements of Operations.................................................... 40 Statements of Changes in Net Assets......................................... 42 Financial Highlights........................................................ 46 Notes to Financial Statements............................................... 58 Dear Shareholders, May 31, 2005 The more things change, the more they remain the same, or so it seemed for the six months ended April 30, 2005. The markets rallied strongly at the end of 2004 after the U.S. presidential election was decided, but they retreated in the first weeks of 2005 as investors confronted uncertainties about the direction of the economy, the pace of interest rate hikes, elections in Iraq, and rising energy costs. Through the winter and into spring, the markets traded in a narrow range and drifted down. While the broader economic data were positive and corporate earnings were stronger in the first quarter of 2005 than many had anticipated, general investor skepticism weighed on the markets. During the six-month reporting period, the S&P 500 was up 3.28%, the Dow was up 2.78% and the NASDAQ was down 2.38%. Corporate earnings continued to beat Wall Street's expectations. Energy companies thrived, as did innovative companies across sectors, especially those that were able to increase productivity and tap into growing global markets. The S&P 500's earnings grew by 13.6% in the first quarter of 2005, handily beating analysts' January estimates of approximately 8%. We continue to believe that the strength of the economy and the potential of the markets are being underestimated by both investors and commentators. Both the U.S. and the global economy have been expanding at more than a 4% annual rate, and many companies are generating double-digit earnings growth. Growth stocks in particular are trading at very modest multiples relative to the projected growth rates, and if past patterns hold, we believe it is only a matter of time before such stocks begin to outperform. We want you to know that we value the trust you have placed in Alger. We will continue to look for dynamic, forward-looking companies that are creating the businesses and marketplaces of tomorrow, bringing growth opportunities to our investors. Respectfully submitted, /s/ Daniel C. Chung ------------------------- Daniel C. Chung CHIEF INVESTMENT OFFICER THE ALGER FUNDS -2- SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) As a shareholder of the Fund, you incur two types of costs: transaction costs, if applicable, including sales charges (loads) and redemption fees; and ongoing costs, including management fees, distribution (12b-1) fees, if applicable, and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example below is based on an investment of $1,000 invested at the beginning of the six-month period starting November 1, 2004 and ending April 30, 2005. ACTUAL EXPENSES The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you would have paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) and redemption fees. Therefore, the second line under each class of shares in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. THE ALGER FUNDS -3- SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED)
Ratio of Expenses to Average Expenses Net Assets Beginning Ending Paid During For the Account Account the Period Six Months Value Value November 1, 2004 Ended November 1, April 30, to April 30, April 30, 2004 2005 2005(b) 2005(c) ----------- --------- ---------------- ----------- ALGER LARGECAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,030.90 $ 6.75 1.34% HYPOTHETICAL(a) ... 1,000.00 1,018.15 6.71 1.34 CLASS B ACTUAL ............ 1,000.00 1,027.30 10.51 2.09 HYPOTHETICAL(a) ... 1,000.00 1,014.43 10.44 2.09 CLASS C ACTUAL ............ 1,000.00 1,027.30 10.51 2.09 HYPOTHETICAL(a) ... 1,000.00 1,014.43 10.44 2.09 ALGER SMALLCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,028.70 $ 7.95 1.58% HYPOTHETICAL(a) ... 1,000.00 1,016.96 7.90 1.58 CLASS B ACTUAL ............ 1,000.00 1,025.80 11.70 2.33 HYPOTHETICAL(a) ... 1,000.00 1,013.24 11.63 2.33 CLASS C ACTUAL ............ 1,000.00 1,025.80 11.70 2.33 HYPOTHETICAL(a) ... 1,000.00 1,013.24 11.63 2.33 ALGER BALANCED FUND CLASS A ACTUAL ............ $1,000.00 $1,023.60 $ 6.42 1.28% HYPOTHETICAL(a) ... 1,000.00 1,018.45 6.41 1.28 CLASS B ACTUAL ............ 1,000.00 1,019.20 10.16 2.03 HYPOTHETICAL(a) ... 1,000.00 1,014.73 10.14 2.03 CLASS C ACTUAL ............ 1,000.00 1,019.50 10.16 2.03 HYPOTHETICAL(a) ... 1,000.00 1,014.73 10.14 2.03 ALGER MIDCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,027.90 $ 6.79 1.35% HYPOTHETICAL(a) ... 1,000.00 1,018.10 6.76 1.35 CLASS B ACTUAL ............ 1,000.00 1,023.20 10.48 2.09 HYPOTHETICAL(a) ... 1,000.00 1,014.43 10.44 2.09 CLASS C ACTUAL ............ 1,000.00 1,024.60 10.49 2.09 HYPOTHETICAL(a) ... 1,000.00 1,014.43 10.44 2.09 ALGER CAPITAL APPRECIATION FUND CLASS A ACTUAL ............ $1,000.00 $1,048.00 $ 7.97 1.57% HYPOTHETICAL(a) ... 1,000.00 1,017.01 7.85 1.57 CLASS B ACTUAL ............ 1,000.00 1,042.90 11.75 2.32 HYPOTHETICAL(a) ... 1,000.00 1,013.29 11.58 2.32 CLASS C ACTUAL ............ 1,000.00 1,044.30 11.76 2.32 HYPOTHETICAL(a) ... 1,000.00 1,013.29 11.58 2.32 ALGER HEALTH SCIENCES FUND CLASS A ACTUAL ............ $1,000.00 $1,135.80 $ 7.94 1.50% HYPOTHETICAL(a) ... 1,000.00 1,017.36 7.50 1.50 CLASS B ACTUAL ............ 1,000.00 1,132.00 11.89 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25 CLASS C ACTUAL ............ 1,000.00 1,132.00 11.89 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25
THE ALGER FUNDS -4- SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED)
Ratio of Expenses to Average Expenses Net Assets Beginning Ending Paid During For the Account Account the Period Six Months Value Value November 1, 2004 Ended November 1, April 30, to April 30, April 30, 2004 2005 2005(b) 2005(c) ----------- --------- ---------------- ----------- ALGER SMALLCAP AND MIDCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,043.20 $ 7.60 1.50% HYPOTHETICAL(a) ... 1,000.00 1,017.36 7.50 1.50 CLASS B ACTUAL ............ 1,000.00 1,040.90 11.39 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25 CLASS C ACTUAL ............ 1,000.00 1,040.90 11.39 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25 ALGER MONEY MARKET FUND ACTUAL ............ $1,000.00 $1,007.30 $ 4.18 0.84% HYPOTHETICAL(a) ... 1,000.00 1,020.63 4.21 0.84
------------------- (a) 5% annual return before expenses. (b) Expenses are equal to the annualized expense ratio of the respective share class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). (c) Annualized. THE ALGER FUNDS -5- PORTFOLIO SUMMARY* (UNAUDITED)
SMALLCAP AND LARGECAP SMALLCAP MIDCAP CAPITAL HEALTH MIDCAP SECTORS GROWTH GROWTH GROWTH APPRECIATION SCIENCES GROWTH ------- -------- -------- ------ ------------ -------- -------- Consumer Discretionary ..... 19.8% 13.8% 26.5% 10.2% 0.0% 13.4% Consumer Staples ........... 9.7 1.6 1.9 7.4 0.9 0.9 Energy ..................... 8.4 9.3 13.3 7.1 0.0 8.5 Financials ................. 7.2 8.0 6.0 7.4 1.5 8.9 Health Care ................ 23.1 19.8 17.9 26.4 90.7 19.7 Industrials ................ 8.1 13.9 9.1 10.3 0.0 12.0 Information Technology ..... 17.2 24.7 21.4 25.5 0.0 24.2 Materials .................. 2.6 2.3 2.0 0.7 1.4 3.5 Telecommunication Services.. 2.8 2.7 1.6 1.5 0.0 3.8 Utilities .................. 0.8 0.0 0.0 0.0 0.0 0.0 Cash and Net Other Assets... 0.3 3.9 0.3 3.5 5.5 5.1 ------ ------ ------ ------ ------ ------ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ====== ====== ====== ====== ====== ======
SECTORS/SECURITY TYPES BALANCED FUND ---------------------- ------------- Consumer Discretionary ......................................... 12.3% Consumer Staples ............................................... 6.6 Energy ......................................................... 5.6 Financials ..................................................... 4.6 Health Care .................................................... 15.0 Industrials .................................................... 5.2 Information Technology ......................................... 11.1 Materials ...................................................... 1.7 Telecommunication Services ..................................... 1.8 Utilities ...................................................... 0.5 ------- Total Common Stocks .......................................... 64.4 ------- Corporate Bonds ................................................ 14.5 Agency Bonds ................................................... 11.3 US Treasury Bonds .............................................. 8.6 ------- Total Bonds .................................................. 34.4 ------- Cash and Net Other Assets ...................................... 1.2 ------- 100.0% ======= MONEY MARKET DAYS TO MATURITY FUND ---------------- ------------ 0 to 30 ........................................................ 74.5% 31 to 60 ....................................................... 25.5 ------- 100.0% ======= -------------- * Based on net assets for each Fund, except for Money Market Fund which is based on total investments. THE ALGER FUNDS -6- ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 COMMON STOCKS--99.7% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--2.6% Boeing Company (The) ............................ 100,600 $ 5,987,712 General Dynamics Corporation .................... 51,900 5,452,095 ----------- 11,439,807 ----------- BEVERAGES--2.2% PepsiCo, Inc. ................................... 175,600 9,770,384 ----------- BIOTECHNOLOGY--1.2% Genentech, Inc.* ................................ 73,200 5,192,808 ----------- BUILDING & CONSTRUCTION--1.9% Pulte Homes Inc. ................................ 116,600 8,331,070 ----------- CAPITAL MARKETS--2.5% Merrill Lynch & Co., Inc. ....................... 116,600 6,288,238 Morgan Stanley .................................. 85,200 4,483,224 ----------- 10,771,462 ----------- CHEMICALS--2.6% Dow Chemical Company (The) ...................... 170,200 7,817,286 Rohm and Haas Company ........................... 78,350 3,420,761 ----------- 11,238,047 ----------- COMMUNICATION EQUIPMENT--2.3% Nokia Oyj ADR# .................................. 222,700 3,558,746 QUALCOMM Inc. ................................... 186,800 6,517,452 ----------- 10,076,198 ----------- COMMUNICATION TECHNOLOGY--.8% Nextel Partners, Inc. Cl. A* .................... 150,400 3,537,408 ----------- COMPUTERS & PERIPHERALS--3.1% Apple Computer, Inc.* ........................... 238,200 8,589,492 EMC Corporation* ................................ 370,600 4,862,272 ----------- 13,451,764 ----------- CONSUMER PRODUCTS--1.2% Eastman Kodak Company ........................... 213,800 5,345,000 ----------- DIVERSIFIED FINANCIAL SERVICES--2.1% Franklin Resources, Inc. ........................ 137,000 9,409,160 ----------- ELECTRICAL EQUIPMENT--.4% Rockwell Automation, Inc. ....................... 39,300 1,816,839 ----------- ELECTRIC UTILITIES--.8% Entergy Corporation ............................. 47,900 3,511,070 ----------- ENERGY EQUIPMENT & SERVICES--4.0% National-Oilwell Varco Inc.* .................... 149,300 5,933,182 Suncor Energy, Inc. ............................. 57,700 2,126,822 Transocean Inc.* ................................ 87,100 4,038,827 Williams Companies, Inc. (The) .................. 326,700 5,560,434 ----------- 17,659,265 ----------- THE ALGER FUNDS -7- ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- FINANCIAL INFORMATION SERVICES--1.0% Genworth Financial Inc. Cl. A ................... 162,200 $ 4,533,490 ------------- FOOD & BEVERAGES--.5% Yum! Brands, Inc. ............................... 44,000 2,066,240 ------------- FOOD & STAPLES RETAILING--3.4% CVS Corporation ................................. 164,100 8,464,278 Wal-Mart Stores, Inc. ........................... 139,650 6,583,101 ------------- 15,047,379 ------------- FREIGHT & LOGISTICS--1.5% FedEx Corp. ..................................... 78,200 6,643,090 ------------- HEALTH CARE--1.6% WellPoint Inc.* ................................. 54,500 6,962,375 ------------- HEALTH CARE EQUIPMENT & SUPPLIES--3.0% Baxter International Inc. ....................... 65,600 2,433,760 Medtronic, Inc. ................................. 163,400 8,611,180 Varian Medical Systems, Inc.* ................... 66,500 2,243,710 ------------- 13,288,650 ------------- HEALTH CARE PROVIDERS & SERVICES--8.2% Caremark Rx, Inc.* .............................. 113,150 4,531,657 CIGNA Corporation ............................... 88,700 8,158,626 HCA, Inc. ....................................... 210,000 11,726,400 Health Management Associates, Inc. Cl. A ........ 220,300 5,448,019 Humana Inc.* .................................... 100,600 3,485,790 PacifiCare Health Systems, Inc.* ................ 43,700 2,611,512 ------------- 35,962,004 ------------- HOTELS, RESTAURANTS & LEISURE--4.5% Harrah's Entertainment, Inc. .................... 117,200 7,690,664 Hilton Hotels Corporation ....................... 415,900 9,079,097 Starwood Hotels & Resorts Worldwide, Inc. ....... 49,800 2,706,132 ------------- 19,475,893 ------------- INDUSTRIAL CONGLOMERATES--1.4% Tyco International Ltd. ......................... 201,900 6,321,489 ------------- INSURANCE--1.5% St. Paul Travelers Companies, Inc. (The) ........ 185,700 6,648,060 ------------- INTERNET & CATALOG RETAIL--1.9% eBay Inc.* ...................................... 127,400 4,042,402 Netflix Inc.* ................................... 382,800 4,425,168 ------------- 8,467,570 ------------- INTERNET SOFTWARE & SERVICES--4.1% Google Inc. Cl. A* .............................. 35,800 7,876,000 Yahoo! Inc.* .................................... 289,700 9,997,547 ------------- 17,873,547 ------------- MACHINERY--2.1% Caterpillar Inc. ................................ 104,000 9,157,200 ------------- THE ALGER FUNDS -8- ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- MEDIA--4.9% Disney (Walt) Company ........................... 266,300 $ 7,030,320 News Corporation Cl. A .......................... 426,600 6,518,448 Viacom Inc. Cl. B ............................... 65,600 2,271,072 XM Satellite Radio Holdings Inc. Cl. A* ......... 200,500 5,561,870 ----------- 21,381,710 ----------- METALS & MINING--.8% Peabody Energy Corporation ...................... 75,400 3,300,258 ----------- MULTILINE RETAIL--2.5% Federated Department Stores, Inc. ............... 70,900 4,076,750 Penny, (JC) Co. Inc. ............................ 140,200 6,646,882 ----------- 10,723,632 ----------- OIL & GAS--3.7% BP PLC Sponsored ADR# ........................... 54,500 3,319,050 Enterprise Products Partners L.P. ............... 43,200 1,115,856 Exxon Mobil Corporation ......................... 148,400 8,463,252 Sasol Ltd. ADR# ................................. 133,450 3,102,713 ----------- 16,000,871 ----------- PERSONAL PRODUCTS--3.6% Avon Products, Inc. ............................. 161,300 6,464,904 Gillette Company (The) .......................... 176,200 9,098,968 ----------- 15,563,872 ----------- PHARMACEUTICALS--9.1% Johnson & Johnson ............................... 116,900 8,022,847 Merck & Co. Inc. ................................ 191,100 6,478,290 Novartis AG ADR# ................................ 91,400 4,453,922 Sanofi-Aventis ADR# ............................. 155,600 6,903,972 Schering-Plough Corporation ..................... 455,000 9,495,850 Wyeth ........................................... 100,600 4,520,964 ----------- 39,875,845 ----------- RETAIL--.9% Saks Incorporated ............................... 242,600 4,133,904 ----------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.1% Intel Corporation ............................... 360,750 8,484,840 Linear Technology Corporation ................... 202,750 7,246,285 Xilinx, Inc. .................................... 77,600 2,090,544 17,821,669 ----------- SOFTWARE--3.7% Electronic Arts Inc.* ........................... 45,000 2,402,550 Microsoft Corporation ........................... 286,730 7,254,269 Oracle Corporation* ............................. 551,100 6,370,716 ----------- 16,027,535 ----------- SPECIALTY RETAIL--1.5% Lowe's Companies, Inc. .......................... 127,200 6,628,392 ----------- THE ALGER FUNDS -9- ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- TOBACCO--.5% Altria Group, Inc. .............................. 34,500 $ 2,242,155 ------------ WIRELESS TELECOMMUNICATION SERVICES--2.0% Sprint Corporation .............................. 396,600 8,828,316 ------------ Total Common Stocks (Cost $431,357,076) ........................... 436,525,428 ------------ Total Investments (Cost $431,357,076)(a) ........................ 99.7% 436,525,428 Other Assets in Excess of Liabilities ........... 0.3 1,386,464 ----- ------------ Net Assets ...................................... 100.0% $437,911,892 ===== ============ ---------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005 the net unrealized appreciation of investments, based on cost for federal income tax purposes of $431,357,076, amounted to $5,168,352 which consisted of aggregate gross unrealized appreciation of $19,661,675 and aggregate gross unrealized depreciation of $14,493,323. See Notes to Financial Statements. THE ALGER FUNDS -10- ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 COMMON STOCKS--96.1% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--3.1% BE Aerospace, Inc.* ............................. 130,500 $ 1,584,270 Esterline Technologies Corporation* ............. 53,600 1,732,352 SI International Inc.* .......................... 56,000 1,262,240 ----------- 4,578,862 ----------- AIRLINES--.9% AirTran Holdings, Inc.* ......................... 161,400 1,339,620 ----------- BIOTECHNOLOGY--5.0% Encysive Pharmaceuticals Inc.* .................. 113,800 1,110,688 Protein Design Labs, Inc.* ...................... 60,750 1,086,210 Rigel Pharmaceuticals, Inc.* .................... 66,700 1,143,905 Serologicals Corporation* ....................... 47,100 1,014,063 Theravance, Inc* ................................ 73,000 1,292,100 Vicuron Pharmaceuticals Inc.* ................... 112,900 1,845,915 ----------- 7,492,881 ----------- BUSINESS SERVICES--.7% MicroStrategy Incorporated* ..................... 25,200 1,096,956 ----------- CAPITAL MARKETS--2.7% Affiliated Managers Group, Inc.* ................ 33,425 2,090,065 National Financial Partners Corporation ......... 48,700 1,862,288 ----------- 3,952,353 ----------- CHEMICALS--1.3% Lubrizol Corporation ............................ 50,700 1,965,639 ----------- COMMERCIAL BANKS--1.8% Boston Private Financial Holdings, Inc. ......... 78,100 1,744,754 East West Bancorp, Inc. ......................... 31,000 995,720 2,740,474 ----------- COMMERCIAL SERVICES & SUPPLIES--3.9% CoStar Group Inc.* .............................. 43,200 1,708,560 FTI Consulting, Inc.* ........................... 83,000 1,832,640 Gevity HR, Inc. ................................. 94,000 1,508,700 Universal Technical Institute Inc.* ............. 21,100 736,601 ----------- 5,786,501 ----------- COMMUNICATION EQUIPMENT--2.8% Arris Group Inc.* ............................... 218,800 1,660,692 NETGEAR, Inc.* .................................. 57,300 924,249 Powerwave Technologies, Inc.* ................... 226,400 1,634,608 ----------- 4,219,549 ----------- COMMUNICATION TECHNOLOGY--.8% Cox Radio, Inc. Cl. A* .......................... 78,900 1,240,308 ----------- COMPUTERS & PERIPHERALS--4.0% Applied Films Corporation* ...................... 58,700 1,403,517 Avid Technology, Inc.* .......................... 30,900 1,529,859 Maxtor Corporation* ............................. 287,800 1,395,830 Silicon Image, Inc.* ............................ 162,600 1,637,382 ----------- 5,966,588 ----------- THE ALGER FUNDS -11- ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- COMPUTER SERVICES--1.0% Open Solutions Inc.* ............................ 79,600 $ 1,488,520 ----------- ELECTRIC AND ELECTRONIC EQUIPMENT--1.2% Roper Industries, Inc. .......................... 26,250 1,776,337 ----------- ENERGY--.7% Arch Coal, Inc. ................................. 24,600 1,090,764 ----------- ENERGY EQUIPMENT & SERVICES--2.9% Core Laboratories N.V.* ......................... 66,200 1,562,320 Lone Star Technologies, Inc.* ................... 52,100 2,028,774 Pioneer Drilling Company* ....................... 60,300 795,357 ----------- 4,386,451 ----------- FINANCIAL INFORMATION SERVICES--1.0% GFI Group Inc.* ................................. 63,300 1,478,055 ----------- FOOD & STAPLES RETAILING--.8% Performance Food Group Co.* ..................... 44,100 1,185,849 ----------- FOOD PRODUCTS--.8% Ralcorp Holdings, Inc.* ......................... 31,700 1,255,954 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--3.3% ABIOMED, Inc.* .................................. 65,800 667,870 Given Imaging Ltd.* ............................. 25,000 669,000 Immucor, Inc.* .................................. 61,700 1,841,128 Intuitive Surgical, Inc.* ....................... 29,750 1,277,465 Sybron Dental Specialties, Inc.* ................ 11,900 443,275 ----------- 4,898,738 ----------- HEALTH CARE PROVIDERS & SERVICES--8.1% Psychiatric Solutions, Inc.* .................... 49,350 2,123,037 Sierra Health Services, Inc.* ................... 33,100 2,141,239 Sunrise Senior Living Inc.* ..................... 44,600 2,285,304 Symbion, Inc.* .................................. 98,900 2,104,592 VCA Antech, Inc.* ............................... 63,500 1,478,280 WellCare Health Plans Inc.* ..................... 67,500 1,991,250 ----------- 12,123,702 ----------- HOTELS, RESTAURANTS & LEISURE--2.3% Applebee's International, Inc. .................. 75,412 1,868,709 Red Robin Gourmet Burgers Inc.* ................. 33,450 1,620,987 ----------- 3,489,696 ----------- INFORMATION TECHNOLOGY SERVICES--2.4% Global Payments Inc. ............................ 33,150 2,146,794 Kanbay International Inc.* ...................... 78,700 1,415,026 ----------- 3,561,820 ----------- INSURANCE--1.6% Ohio Casualty Corporation* ...................... 46,900 1,099,805 Platinum Underwriters Holdings, Inc. ............ 43,800 1,296,480 ----------- 2,396,285 ----------- THE ALGER FUNDS -12- ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- INTERNET SOFTWARE & SERVICES--4.7% aQuantive, Inc.* ................................ 189,000 $ 2,097,900 Arbinet Holdings, Inc.* ......................... 54,300 1,048,533 Netease.com Inc. ADR*# .......................... 28,800 1,422,432 Openwave Systems, Inc.* ......................... 97,533 1,305,967 ValueClick, Inc.* ............................... 111,050 1,150,478 ----------- 7,025,310 ----------- LEISURE EQUIPMENT & PRODUCTS--1.5% LIFE TIME FITNESS, Inc.* ........................ 82,700 2,238,689 ----------- MACHINERY--5.0% Actuant Corporation Cl. A* ...................... 43,000 1,831,370 CUNO Incorporated* .............................. 15,000 760,800 Gardner Denver Inc.* ............................ 45,300 1,655,262 Joy Global Inc. ................................. 60,600 2,052,522 Watts Water Technologies, Inc. Cl. A ............ 34,500 1,078,125 ----------- 7,378,079 ----------- MEDIA--4.4% Harris Interactive Inc.* ........................ 284,500 1,183,520 Media General, Inc. Cl. A ....................... 34,170 2,093,938 Spanish Broadcasting System, Inc. Cl. A* ........ 214,900 1,794,415 World Wrestling Entertainment, Inc. ............. 132,300 1,414,287 ----------- 6,486,160 ----------- MEDICAL TECHNOLOGY--.7% Syneron Medical Ltd.* ........................... 35,500 1,029,500 ----------- METALS & MINING--2.0% Alpha Natural Resources, Inc.* .................. 67,800 1,569,570 Cleveland-Cliffs Inc. ........................... 24,600 1,427,046 ----------- 2,996,616 ----------- OIL & GAS--4.6% Grey Wolf, Inc.* ................................ 322,900 1,937,400 Range Resources Corporation ..................... 83,300 1,886,745 Todco* .......................................... 81,534 1,814,132 Whiting Petroleum Corporation* .................. 9,500 1,195,665 ----------- 6,833,942 ----------- PHARMACEUTICALS--1.4% Impax Laboratories, Inc.* ....................... 85,900 1,397,593 Pharmion Corp.* ................................. 28,800 665,280 ----------- 2,062,873 ----------- ROAD & RAIL--1.2% Landstar Systems, Inc.* ......................... 58,500 1,793,025 ----------- SEMICONDUCTOR CAPITAL EQUIPMENT--2.0% FormFactor Inc.* ................................ 50,900 1,162,556 SiRF Technology Holdings, Inc.* ................. 161,700 1,844,997 ----------- 3,007,553 ----------- THE ALGER FUNDS -13- ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.2% ATMI, Inc.* ..................................... 47,700 $ 1,093,045 Microsemi Corporation* .......................... 67,900 1,148,868 Semtech Corporation* ............................ 96,250 1,625,663 Sigmatel Incorporated* .......................... 33,000 864,270 ------------ 4,731,846 ------------ SOFTWARE--5.0% Cerner Corporation* ............................. 33,550 1,947,913 Fair Isaac Corporation .......................... 40,080 1,317,830 Hyperion Solutions Corporation* ................. 43,800 1,781,346 Quest Software, Inc.* ........................... 95,650 1,134,409 VeriFone Holdings, Inc.* ........................ 109,350 1,175,513 ------------ 7,357,011 ------------ SPECIALTY RETAIL--4.3% AnnTaylor Stores Corporation* ................... 64,900 1,589,401 Guitar Center, Inc.* ............................ 34,650 1,709,977 Pacific Sunwear of California, Inc.* ............ 51,600 1,166,676 Petco Animal Supplies, Inc.* .................... 60,000 1,878,000 6,344,054 ------------ THRIFTS & MORTGAGE FINANCE--1.0% Bank Mutual Corporation ......................... 135,624 1,428,121 ------------ WIRELESS TELECOMMUNICATION SERVICES--2.0% InPhonic, Inc.* ................................. 72,600 1,119,492 UbiquiTel Inc.* ................................. 260,900 1,886,307 ------------ 3,005,799 ------------ Total Common Stocks (Cost $133,712,986) ........................... 143,230,480 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--4.0% AMOUNT --------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 2.61%, 5/2/05 (Cost $6,012,128) ............................. $6,013,000 6,012,128 ------------ Total Investments (Cost $139,725,114)(a) ........................ 100.1% 149,242,608 Liabilities in Excess of Other Assets ........... (0.1) (188,493) ----- ------------ Net Assets ...................................... 100.0% $149,054,115 ===== ============ ------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $139,725,114 amounted to $9,517,494 which consisted of aggregate gross unrealized appreciation of $17,863,520 and aggregate gross unrealized depreciation of $8,346,026. See Notes to Financial Statements. THE ALGER FUNDS -14- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 COMMON STOCKS--64.4% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--1.6% Boeing Company (The) ............................ 25,300 $ 1,505,856 General Dynamics Corporation .................... 13,900 1,460,195 ----------- 2,966,051 ----------- BEVERAGES--1.5% PepsiCo, Inc. ................................... 48,700 2,709,667 ----------- BIOTECHNOLOGY--.8% Genentech, Inc.* ................................ 19,800 1,404,611 ----------- BUILDING & CONSTRUCTION--1.2% Pulte Homes Inc. ................................ 31,600 2,257,820 ----------- CAPITAL MARKETS--1.6% Merrill Lynch & Co., Inc. ....................... 32,400 1,747,332 Morgan Stanley .................................. 23,000 1,210,260 ----------- 2,957,592 ----------- CHEMICALS--1.7% Dow Chemical Company (The) ...................... 46,150 2,119,670 Rohm and Haas Company ........................... 21,300 929,958 ----------- 3,049,628 ----------- COMMUNICATION EQUIPMENT--1.6% Nokia Oyj ADR# .................................. 60,200 961,996 QUALCOMM Inc. ................................... 54,500 1,901,505 ----------- 2,863,501 ----------- COMMUNICATION TECHNOLOGY--.5% Nextel Partners, Inc. Cl. A* .................... 41,000 964,320 ----------- COMPUTERS & PERIPHERALS--2.0% Apple Computer, Inc.* ........................... 64,300 2,318,658 EMC Corporation* ................................ 100,500 1,318,560 ----------- 3,637,218 ----------- CONSUMER PRODUCTS--.8% Eastman Kodak Company ........................... 57,700 1,442,500 ----------- DIVERSIFIED FINANCIAL SERVICES--1.3% Franklin Resources, Inc. ........................ 33,900 2,328,252 ----------- ELECTRICAL EQUIPMENT--.3% Rockwell Automation, Inc. ....................... 10,600 490,038 ----------- ELECTRIC UTILITIES--.5% Entergy Corporation ............................. 13,000 952,900 ----------- ENERGY EQUIPMENT & SERVICES--2.6% National-Oilwell Varco Inc.* .................... 40,550 1,611,457 Suncor Energy, Inc. ............................. 15,800 582,388 Transocean Inc.* ................................ 23,600 1,094,332 Williams Companies, Inc. (The) .................. 89,900 1,530,098 ----------- 4,818,275 ----------- THE ALGER FUNDS -15- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- FINANCIAL INFORMATION SERVICES--.7% Genworth Financial Inc. Cl. A ................... 44,000 $ 1,229,800 ----------- FOOD & BEVERAGES--.3% Yum! Brands, Inc. ............................... 11,900 558,824 ----------- FOOD & STAPLES RETAILING--2.4% CVS Corporation ................................. 44,500 2,295,310 Wal-Mart Stores, Inc. ........................... 43,750 2,062,375 ----------- 4,357,685 ----------- FREIGHT & LOGISTICS--1.0% FedEx Corp. ..................................... 21,100 1,792,445 ----------- HEALTH CARE--1.1% WellPoint Inc.* ................................. 14,900 1,903,475 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--2.0% Baxter International Inc. ....................... 17,700 656,670 Medtronic, Inc. ................................. 44,300 2,334,610 Varian Medical Systems, Inc.* ................... 18,000 607,320 ----------- 3,598,600 ----------- HEALTH CARE PROVIDERS & SERVICES--5.3% Caremark Rx, Inc.* .............................. 30,650 1,227,533 CIGNA Corporation ............................... 24,100 2,216,718 HCA, Inc. ....................................... 57,000 3,182,880 Health Management Associates, Inc. Cl. A ........ 59,500 1,471,435 Humana Inc.* .................................... 28,200 977,130 PacifiCare Health Systems, Inc.* ................ 10,700 639,432 ----------- 9,715,128 ----------- HOTELS, RESTAURANTS & LEISURE--2.4% Harrah's Entertainment, Inc. .................... 28,200 1,850,484 Hilton Hotels Corporation ....................... 89,100 1,945,053 Starwood Hotels & Resorts Worldwide, Inc. ....... 10,300 559,702 ----------- 4,355,239 ----------- INDUSTRIAL CONGLOMERATES--.9% Tyco International Ltd. ......................... 54,550 1,707,961 ----------- INSURANCE--1.0% St. Paul Travelers Companies, Inc. (The) ........ 50,800 1,818,640 ----------- INTERNET & CATALOG RETAIL--1.2% eBay Inc.* ...................................... 34,400 1,091,512 Netflix Inc.* ................................... 92,950 1,074,502 ----------- 2,166,014 ----------- INTERNET SOFTWARE & SERVICES--2.6% Google Inc. Cl. A* .............................. 9,700 2,134,000 Yahoo! Inc.* .................................... 76,400 2,636,564 ----------- 4,770,564 ----------- MACHINERY--1.4% Caterpillar Inc. ................................ 28,150 2,478,608 ----------- THE ALGER FUNDS -16- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- MEDIA--3.2% Disney (Walt) Company ........................... 74,500 $ 1,966,800 News Corporation Cl. A .......................... 116,400 1,778,592 Viacom Inc. Cl. B ............................... 17,750 614,505 XM Satellite Radio Holdings Inc. Cl. A* ......... 54,150 1,502,121 ----------- 5,862,018 ----------- METALS & MINING--.5% Peabody Energy Corporation ...................... 20,500 897,285 ----------- MULTILINE RETAIL--1.6% Federated Department Stores, Inc. ............... 19,100 1,098,250 Penny, (JC) Co. Inc. ............................ 38,000 1,801,580 ----------- 2,899,830 ----------- OIL & GAS--2.4% BP PLC Sponsored ADR# ........................... 14,800 901,320 Enterprise Products Partners L.P. ............... 11,900 307,377 Exxon Mobil Corporation ......................... 41,200 2,349,636 Sasol Ltd. ADR# ................................. 36,200 841,650 ----------- 4,399,983 ----------- PERSONAL PRODUCTS--2.4% Avon Products, Inc. ............................. 43,600 1,747,488 Gillette Company (The) .......................... 51,000 2,633,640 ----------- 4,381,128 ----------- PHARMACEUTICALS--5.9% Johnson & Johnson ............................... 31,700 2,175,571 Merck & Co. Inc. ................................ 51,600 1,749,240 Novartis AG ADR# ................................ 24,700 1,203,631 Sanofi-Aventis ADR# ............................. 42,100 1,867,977 Schering-Plough Corporation ..................... 123,100 2,569,097 Wyeth ........................................... 27,200 1,222,368 ----------- 10,787,884 ----------- RETAIL--.6% Saks Incorporated ............................... 65,600 1,117,824 ----------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.5% Intel Corporation ............................... 90,900 2,137,968 Linear Technology Corporation ................... 49,800 1,779,852 Xilinx, Inc. .................................... 21,100 568,434 4,486,254 ----------- SOFTWARE--2.4% Electronic Arts Inc.* ........................... 12,200 651,358 Microsoft Corporation ........................... 78,750 1,992,375 Oracle Corporation* ............................. 154,400 1,784,864 ----------- 4,428,597 ----------- SPECIALTY RETAIL--1.0% Lowe's Companies, Inc. .......................... 34,400 1,792,584 ----------- THE ALGER FUNDS -17- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- TOBACCO--.3% Altria Group, Inc. .............................. 9,300 $ 604,407 ------------ WIRELESS TELECOMMUNICATION SERVICES--1.3% Sprint Corporation .............................. 107,750 2,398,515 ------------ Total Common Stocks (Cost $115,547,507) ........................... 117,351,665 ------------ PRINCIPAL CORPORATE BONDS--14.5% AMOUNT --------- AEROSPACE & DEFENSE--.6% Systems 2001 Asset Trust, Cl. G, 6.66%, 9/15/13(a) .................................... $ 422,765 461,401 United Technologies, 4.875%, 11/1/06 ............ 732,000 742,801 ------------ 1,204,202 ------------ AUTOMOTIVE--.9% DaimlerChrysler N. A. Holding Corp., 4.05%, 6/4/08 ........................................ 425,000 409,694 General Motors Acceptance Corp., 4.50%, 7/15/06 ....................................... 606,000 592,864 General Motors Acceptance Corp., 6.875%, 9/15/11 ....................................... 800,000 701,761 ------------ 1,704,319 ------------ BEVERAGES--.4% Anheuser-Busch Companies, Inc., 7.00%, 12/1/25 .. 650,000 682,113 ------------ BUILDING & CONSTRUCTION--.2% Pulte Homes Inc., 5.20%, 2/15/15 ................ 345,000 332,592 ------------ CABLE--.4% Cox Communications, Inc., 5.45%, 12/15/14(a) .... 700,000 698,660 ------------ CAPITAL MARKETS--1.0% Goldman Sachs Group, Inc., 4.75%, 7/15/13 ....... 1,215,000 1,195,850 J.P. Morgan Chase & Co., 3.625%, 5/1/08 ......... 750,000 736,835 ------------ 1,932,685 ------------ COMMERCIAL BANKS--2.1% Associates Corp. North America, 6.95%, 11/1/18 .. 1,077,000 1,265,003 Bank of America Corp., 5.375%, 6/15/14 .......... 800,000 835,001 US Bancorp National Association, Minneapolis, 6.50%, 2/1/08 ................................. 400,000 423,497 Wells Fargo & Co. Sr. Global, 6.375%, 8/1/11 .... 1,250,000 1,380,968 ------------ 3,904,469 ------------ COMPUTERS & PERIPHERALS--.6% International Business Machines Corp., 6.50%, 1/15/28 ................................ 1,000,000 1,147,840 ------------ DIVERSIFIED FINANCIAL SERVICES--.3% Block Financial Corp., 8.50%, 4/15/07 ........... 500,000 538,862 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES--.5% Verizon New York Inc., Series A, 6.875%, 4/1/12 ........................................ 789,000 865,406 ------------ THE ALGER FUNDS -18- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 PRINCIPAL CORPORATE BONDS--(CONT.) AMOUNT VALUE --------- ----- ENERGY EQUIPMENT & SERVICES--.6% Baker Hughes Inc., 6.25%, 1/15/09 ............... $1,000,000 $ 1,065,490 ----------- FINANCE--.5% Caterpillar Financial Services Corporation, 3.70%, 8/15/08 ................................ 1,000,000 981,869 ----------- FINANCIAL SERVICES--.3% John Deere Capital Corp., 4.125%, 1/15/10 ....... 490,000 483,884 ----------- GAS UTILITIES--.5% Kinder Morgan Energy Partners, L.P., 5.80%, 3/15/35 ....................................... 1,000,000 979,766 ----------- HEALTH CARE PROVIDERS & SERVICES--.4% UnitedHealth Group, 4.875%, 3/15/15 ............. 300,000 301,611 UnitedHealth Group, 4.75%, 2/10/14 .............. 400,000 397,848 ----------- 699,459 ----------- INSURANCE--1.2% Berkshire Hathaway Fin, Corp., 4.85%, 1/15/15(a) .................................... 1,295,000 1,288,048 Markel Corp., 7.00%, 5/15/08 .................... 800,000 855,238 ----------- 2,143,286 ----------- LEASING--.4% International Lease Finance Corp., 4.75%, 1/13/12 ....................................... 700,000 688,925 ----------- MEDIA--.8% Comcast Corporation, 6.50%, 1/15/15 ............. 459,000 506,232 Liberty Media Corporation Floating Rate Note, 3.99%, 9/17/06 ................................ 450,000 455,450 News America Inc., 6.625%, 1/9/08 ............... 435,000 458,308 ----------- 1,419,990 ----------- MULTI-UTILITIES UNREGULATED POWER--.6% Duke Energy Corporation, 5.625%, 11/30/12 ....... 1,000,000 1,048,071 ----------- OIL & GAS--.8% Conoco Funding Co., 6.35%, 10/15/11 ............. 750,000 830,295 Nexen Inc., 5.20%, 3/10/15 ...................... 575,000 570,243 ----------- 1,400,538 ----------- PHARMACEUTICALS--.8% Merck & Co. Inc., 4.75%, 3/1/15 ................. 1,500,000 1,478,244 ----------- THRIFTS & MORTGAGE FINANCE--.6% Washington Mutual, Inc., 4.375%, 1/15/08 ........ 1,050,000 1,050,929 ----------- Total Corporate Bonds (Cost $26,480,432) ............................ 26,451,599 ----------- U.S. GOVERNMENT & AGENCY OBLIGATIONS--19.9% Federal Home Loan Bank, 3.75%, 8/15/08 ................................ 650,000 643,423 4.84%, 1/25/12 ................................ 1,457,887 1,475,655 5.50%, 5/18/15 ................................ 1,000,000 1,003,846 THE ALGER FUNDS -19- ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 PRINCIPAL CORPORATE BONDS--(CONT.) AMOUNT VALUE -------- ----- U.S. GOVERNMENT & AGENCY OBLIGATIONS--(CONT.) Federal Home Loan Mortgage Corporation, 4.125%, 11/18/09 .............................. $2,185,000 $ 2,175,722 4.30%, 2/3/11 ................................. 3,335,000 3,291,702 6.25%, 3/5/12 ................................. 1,800,000 1,865,675 Federal National Mortgage Association, 6.625%, 10/15/07 .............................. 910,000 966,816 3.25%, 8/15/08 ................................ 940,000 916,743 3.85%, 4/14/09 ................................ 3,500,000 3,465,599 4.30%, 1/19/10 ................................ 1,500,000 1,498,799 5.00%, 4/19/10 ................................ 1,200,000 1,210,808 4.80%, 4/25/10 ................................ 1,636,115 1,657,589 6.625%, 11/15/30 .............................. 350,000 432,975 U.S. Treasury Bonds, 7.50%, 11/15/16 ............................... 483,000 620,580 5.375%, 2/15/31 ............................... 1,500,000 1,694,649 U.S. Treasury Notes, 3.75%, 3/31/07 ................................ 2,400,000 2,405,158 4.375%, 5/15/07 ............................... 480,000 486,919 3.00%, 11/15/07 ............................... 2,276,000 2,238,837 2.625%, 3/15/09 ............................... 455,000 435,805 3.625%, 7/15/09 ............................... 197,000 195,392 3.50%, 11/15/09 ............................... 2,100,000 2,069,403 4.75%, 5/15/14 ................................ 552,000 575,590 4.25%, 11/15/14 ............................... 800,000 802,875 4.00%, 2/15/15 ................................ 4,138,000 4,072,214 ------------ Total U.S. Government & Agency Obligations (Cost $36,205,869) ............................ 36,202,774 ------------ SHORT-TERM INVESTMENTS--.2% U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 2.61%, 5/2/05 (Cost $379,945) ............................... 380,000 379,945 ------------ Total Investments (Cost $178,613,753)(b) ........................ 99.0% 180,385,983 Other Assets in Excess of Liabilities ........... 1.0 1,742,354 ----- ------------ Net Assets ...................................... 100.0% $182,128,337 ===== ============ ------------- * Non-income producing security. # American Depositary Receipts. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. These securities are deemed to be liquid and represent 1.3% of net assets of the Fund. (b) At April 30, 2005, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $178,613,753, amounted to $1,772,230 which consisted of aggregate gross unrealized appreciation of $6,191,712 and aggregate gross unrealized depreciation of $4,419,482. See Notes to Financial Statements. THE ALGER FUNDS -20- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 COMMON STOCKS--99.7% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--2.1% L-3 Communications Holdings, Inc. ............... 174,880 $12,411,234 ----------- BIOTECHNOLOGY--4.3% Charles River Laboratories International, Inc.* ......................................... 204,100 9,668,217 ImClone Systems Incorporated* ................... 298,900 9,519,965 OSI Pharmaceuticals, Inc.* ...................... 152,500 7,218,588 ----------- 26,406,770 ----------- BUILDING & CONSTRUCTION--2.5% Pulte Homes Inc. ................................ 130,000 9,288,500 Toll Brothers, Inc.* ............................ 81,250 6,158,750 ----------- 15,447,250 ----------- CAPITAL MARKETS--2.3% Affiliated Managers Group, Inc.* ................ 137,022 8,567,986 Greenhill & Co., Inc. ........................... 45,900 1,445,850 Investors Financial Services Corp. .............. 91,000 3,817,450 ----------- 13,831,286 ----------- CHEMICALS--1.5% Lyondell Chemical Company ....................... 366,905 9,205,645 ----------- COMMERCIAL SERVICES & SUPPLIES--4.0% Education Management Corporation* ............... 397,600 11,132,800 First Marblehead Corporation (The)* ............. 194,850 7,507,571 Service Corporation International ............... 813,350 5,725,984 ----------- 24,366,355 ----------- COMMUNICATION EQUIPMENT--1.7% Arris Group Inc.* ............................... 836,100 6,345,999 Brocade Communications Systems, Inc.* ........... 912,600 3,978,936 ----------- 10,324,935 ----------- COMMUNICATION TECHNOLOGY--1.6% Nextel Partners, Inc. Cl. A* .................... 403,100 9,480,912 ----------- COMPUTERS & PERIPHERALS--4.7% Apple Computer, Inc.* ........................... 387,800 13,984,068 PalmOne, Inc.* .................................. 473,600 10,149,248 Western Digital Corporation* .................... 367,300 4,661,037 ----------- 28,794,353 ----------- COMPUTER SERVICES-1.2% Akamai Technologies, Inc.* ...................... 595,150 7,028,722 ----------- CONSTRUCTION & ENGINEERING--.4% Chicago Bridge & Iron Company N.V. .............. 104,050 2,328,638 ----------- DIVERSIFIED FINANCIAL SERVICES--1.4% CapitalSource Inc.* ............................. 420,600 8,832,600 ----------- ELECTRICAL EQUIPMENT--1.5% Rockwell Automation, Inc. ....................... 201,200 9,301,475 ----------- THE ALGER FUNDS -21- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- ELECTRIC AND ELECTRONIC EQUIPMENT--2.2% Roper Industries, Inc. ........................... 196,900 $13,324,223 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.2% Trimble Navigation Limited* ...................... 208,200 7,166,244 ----------- ENERGY EQUIPMENT & SERVICES--6.6% BJ Services Company .............................. 233,600 11,388,000 Lone Star Technologies, Inc.* .................... 205,100 7,986,594 National-Oilwell Varco Inc.* ..................... 325,800 12,947,292 Transocean Inc.* ................................. 61,400 2,847,118 Williams Companies, Inc. (The) ................... 284,700 4,845,594 ----------- 40,014,598 ----------- FINANCIAL INFORMATION SERVICES--1.0% Genworth Financial Inc. Cl. A .................... 223,900 6,258,005 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--2.3% C.R. Bard, Inc. .................................. 131,850 9,383,765 Varian Medical Systems, Inc.* .................... 141,000 4,757,340 ----------- 14,141,105 ----------- HEALTH CARE PROVIDERS & SERVICES--9.7% AMERIGROUP Corporation* .......................... 165,400 5,808,848 Community Health Systems Inc.* ................... 324,100 11,813,445 Covance Inc.* .................................... 67,950 3,101,238 DaVita, Inc.* .................................... 132,500 5,339,750 Health Management Associates, Inc. Cl. A ......... 312,200 7,720,706 Humana Inc.* ..................................... 204,500 7,085,925 Medco Health Solutions, Inc.* .................... 61,400 3,129,558 PacifiCare Health Systems, Inc.* ................. 137,800 8,234,928 Quest Diagnostics Incorporated ................... 60,700 6,422,060 ----------- 58,656,458 ----------- HOTELS, RESTAURANTS & LEISURE--5.5% Applebee's International, Inc. ................... 163,750 4,057,725 Harrah's Entertainment, Inc. ..................... 121,300 7,959,706 Hilton Hotels Corporation ........................ 194,200 4,239,386 Kerzner International Limited* ................... 96,500 5,316,185 Penn National Gaming, Inc.* ...................... 208,400 6,564,600 Starwood Hotels & Resorts Worldwide, Inc. ........ 99,300 5,395,962 ----------- 33,533,564 ----------- HOUSEHOLD DURABLES--.4% Garmin Ltd. ...................................... 58,050 2,292,975 ----------- INFORMATION TECHNOLOGY SERVICES--1.5% Global Payments Inc. ............................. 141,100 9,137,636 ----------- INTERNET & CATALOG RETAIL--1.9% Netflix Inc.* .................................... 996,400 11,518,384 ----------- INTERNET SOFTWARE & SERVICES--1.6% Netease.com Inc. ADR*# ........................... 197,400 9,749,586 ----------- THE ALGER FUNDS -22- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- LEISURE & ENTERTAINMENT--1.9% Shanda Interactive Entertainment Ltd.* .......... 359,500 $11,565,115 ----------- MACHINERY--3.0% Joy Global Inc. ................................. 189,900 6,431,913 Pentair, Inc. ................................... 289,700 11,524,266 ----------- 17,956,179 ----------- MACHINERY--OIL WELL EQUIPMENT & SERVICES--1.7% Patterson-UTI Energy, Inc. ...................... 423,100 10,141,707 ----------- MEDIA--6.9% DreamWorks Animation SKG, Inc.* ................. 223,900 8,396,250 Lamar Advertising Company, Cl. A* ............... 217,300 8,122,674 Liberty Media International, Inc.* .............. 186,300 7,725,861 Univision Communications Inc. Cl. A* ............ 186,900 4,913,601 Westwood One, Inc.* ............................. 278,600 5,098,380 XM Satellite Radio Holdings Inc. Cl. A* ......... 264,300 7,331,682 ----------- 41,588,448 ----------- METALS & MINING--2.7% Cleveland-Cliffs Inc. ........................... 50,200 2,912,102 Peabody Energy Corporation ...................... 312,700 13,686,879 ----------- 16,598,981 ----------- OIL & GAS--2.8% Enterprise Products Partners L.P. ............... 182,800 4,721,724 EOG Resources, Inc. ............................. 196,400 9,338,820 Talisman Energy Inc. ............................ 94,900 2,861,235 ----------- 16,921,779 ----------- PERSONAL PRODUCTS--.8% Avon Products, Inc. ............................. 115,500 4,629,240 ----------- PHARMACEUTICALS--1.6% Sepracor Inc.* .................................. 158,000 9,467,360 ----------- RETAIL--3.3% Estee Lauder Companies Inc. Cl. A ............... 176,000 6,760,160 Saks Incorporated ............................... 776,800 13,236,672 ----------- 19,996,832 ----------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.9% ATI Technologies Inc.* .......................... 346,800 5,132,640 Linear Technology Corporation ................... 257,000 9,185,180 Teradyne, Inc.* ................................. 549,400 6,054,388 Xilinx, Inc. .................................... 343,500 9,253,890 ----------- 29,626,098 ----------- SOFTWARE--2.6% Electronic Arts Inc.* ........................... 117,200 6,257,308 Intuit Inc.* .................................... 123,950 4,995,185 Take-Two Interactive Software, Inc.* ............ 204,350 4,808,356 ----------- 16,060,849 ----------- THE ALGER FUNDS -23- ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SPECIALTY RETAIL--2.0% Electronics Boutique Holdings Corp.* ............ 78,000 $ 4,346,940 PETsMART, Inc. .................................. 286,000 7,621,900 ------------ 11,968,840 ------------ TEXTILES, APPAREL & LUXURY GOODS--2.4% Coach, Inc.* .................................... 298,000 7,986,400 Fossil, Inc.* ................................... 274,300 6,380,218 ------------ 14,366,618 ------------ Total Common Stocks (Cost $596,460,609) ........................... 604,440,999 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--.4% AMOUNT --------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 2.61%, 5/2/05 (Cost $2,419,649) ............................. $2,420,000 2,419,649 ------------ Total Investments (Cost $598,880,258)(a) ........................ 100.1% 606,860,648 Liabilities in Excess of Other Assets ........... (0.1) (885,338) ----- ------------ Net Assets ...................................... 100.0% $605,975,310 ===== ============ ------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $598,880,258, amounted to $7,980,390 which consisted of aggregate gross unrealized appreciation of $41,320,376 and aggregate gross unrealized depreciation of $33,339,986. See Notes to Financial Statements. THE ALGER FUNDS -24- ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 COMMON STOCKS--96.5% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--2.5 % General Dynamics Corporation .................... 38,400 $ 4,033,920 United Technologies Corporation ................. 45,000 4,577,400 ----------- 8,611,320 ----------- AIR FREIGHT & LOGISTICS--1.9% UTI Worldwide, Inc. ............................. 103,400 6,632,076 ----------- BEVERAGES--.9% PepsiCo, Inc. ................................... 52,600 2,926,664 ----------- BIOTECHNOLOGY--6.5% Amgen Inc.* ..................................... 76,500 4,453,065 Genentech, Inc.* ................................ 103,800 7,363,572 Gilead Sciences, Inc.* .......................... 162,400 6,025,040 OSI Pharmaceuticals, Inc.* ...................... 46,450 2,198,711 Serologicals Corporation* ....................... 104,600 2,252,038 ----------- 22,292,426 ----------- BUSINESS SERVICES--.4% MicroStrategy Incorporated* ..................... 32,900 1,432,137 ----------- CAPITAL MARKETS--1.0% Merrill Lynch & Co., Inc. ....................... 65,400 3,527,022 ----------- CHEMICALS--.7% Huntsman Corporation ............................ 24,800 521,792 Lubrizol Corporation ............................ 44,300 1,717,511 ----------- 2,239,303 ----------- COMMERCIAL BANKS--.8% Wells Fargo & Company ........................... 43,800 2,625,372 ----------- COMMERCIAL SERVICES & SUPPLIES--.7% First Marblehead Corporation (The)* ............. 58,500 2,254,005 ----------- COMMUNICATION EQUIPMENT--3.0% Arris Group Inc.* ............................... 108,100 820,479 Brocade Communications Systems, Inc.* ........... 261,500 1,140,140 Nokia Oyj ADR# .................................. 353,100 5,642,538 QUALCOMM Inc. ................................... 76,100 2,655,129 ----------- 10,258,286 ----------- COMMUNICATION TECHNOLOGY--1.1% Nextel Partners, Inc. Cl. A* .................... 159,300 3,746,736 ----------- COMPUTERS & PERIPHERALS--2.3% Apple Computer, Inc.* ........................... 86,200 3,108,372 EMC Corporation* ................................ 138,400 1,815,808 Memc Electronic Materials, Inc.* ................ 117,500 1,378,275 Western Digital Corporation* .................... 126,700 1,607,823 ----------- 7,910,278 ----------- THE ALGER FUNDS -25- ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- CONSUMER FINANCE--.2% Capital One Financial Corporation ............... 11,800 $ 836,502 ----------- DIVERSIFIED FINANCIAL SERVICES--2.1% Citigroup Inc. .................................. 78,300 3,676,968 Lehman Brothers Holdings Inc. ................... 37,600 3,448,672 ----------- 7,125,640 ----------- ENERGY EQUIPMENT & SERVICES--3.6% National-Oilwell Varco Inc.* .................... 229,000 9,100,460 Schlumberger Limited ............................ 44,700 3,057,927 ----------- 12,158,387 ----------- FINANCIAL INFORMATION SERVICES--1.7% Genworth Financial Inc. Cl. A ................... 208,050 5,814,997 ----------- FOOD & STAPLES RETAILING--3.7% CVS Corporation ................................. 198,200 10,223,156 Performance Food Group Co.* ..................... 87,400 2,350,186 ----------- 12,573,342 ----------- FREIGHT & LOGISTICS--1.1% FedEx Corp. ..................................... 46,400 3,941,680 ----------- HEALTH CARE--.8% WellPoint Inc.* ................................. 21,100 2,695,525 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--1.8% Beckman Coulter, Inc. ........................... 57,800 3,855,838 St. Jude Medical, Inc.* ......................... 55,500 2,166,165 ----------- 6,022,003 ----------- HEALTH CARE PROVIDERS & SERVICES--6.4% AMERIGROUP Corporation* ......................... 50,100 1,759,512 Caremark Rx, Inc.* .............................. 75,600 3,027,780 CIGNA Corporation ............................... 23,500 2,161,530 Community Health Systems Inc.* .................. 77,200 2,813,940 HCA, Inc. ....................................... 71,700 4,003,728 McKesson Corporation ............................ 65,500 2,423,500 PacifiCare Health Systems, Inc.* ................ 64,900 3,878,424 UnitedHealth Group Incorporated ................. 18,500 1,748,435 ----------- 21,816,849 ----------- HOTELS, RESTAURANTS & LEISURE--2.1% Hilton Hotels Corporation ....................... 331,800 7,243,194 ----------- HOUSEHOLD DURABLES--.1% Garmin Ltd. ..................................... 9,500 375,250 ----------- HOUSEHOLD PRODUCTS--1.4% Procter & Gamble Company ........................ 86,700 4,694,805 ----------- INDUSTRIAL CONGLOMERATES--3.7% General Electric Company ........................ 168,400 6,096,080 Tyco International Ltd. ......................... 204,100 6,390,371 ----------- 12,486,451 ----------- THE ALGER FUNDS -26- ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- INFORMATION TECHNOLOGY SERVICES--.2% Automatic Data Processing, Inc. ................. 15,800 $ 686,352 ----------- INSURANCE--.9% St. Paul Travelers Companies, Inc. (The) ........ 81,400 2,914,120 ----------- INTERNET SOFTWARE & SERVICES--8.6% Google Inc. Cl. A* .............................. 64,300 14,146,000 Netease.com Inc. ADR#* .......................... 76,600 3,783,274 Yahoo! Inc.* .................................... 324,500 11,198,495 ----------- 29,127,769 ----------- LEISURE & ENTERTAINMENT--1.7% Shanda Interactive Entertainment Ltd.* .......... 184,550 5,936,974 ----------- MACHINERY--OIL WELL EQUIPMENT & SERVICES--.6% Patterson-UTI Energy, Inc. ...................... 84,650 2,029,060 ----------- MEDIA--3.8% Entercom Communications Corp.* .................. 59,900 1,930,577 News Corporation Cl. A .......................... 362,500 5,539,000 Time Warner Inc.* ............................... 318,400 5,352,304 ----------- 12,821,881 ----------- METALS & MINING--1.9% Alpha Natural Resources, Inc.* .................. 42,200 976,930 Peabody Energy Corporation ...................... 121,600 5,322,432 ----------- 6,299,362 ----------- OIL & GAS--1.1% BP PLC Sponsored ADR# ........................... 60,600 3,690,540 ----------- PERSONAL PRODUCTS--1.4% Gillette Company (The) .......................... 94,400 4,874,816 ----------- PHARMACEUTICALS--11.0% Eli Lilly and Company ........................... 34,300 2,005,521 IVAX Corporation* ............................... 211,600 3,999,240 Johnson & Johnson ............................... 125,100 8,585,613 Merck & Co. Inc. ................................ 51,600 1,749,240 Novartis AG ADR# ................................ 82,800 4,034,844 Pfizer Inc. ..................................... 263,710 7,165,001 Sanofi-Aventis ADR# ............................. 86,200 3,824,694 Schering-Plough Corporation ..................... 167,100 3,487,377 Sepracor Inc.* .................................. 42,500 2,546,600 ----------- 37,398,130 ----------- RETAIL--1.0% Neiman Marcus Group, Inc. ....................... 34,500 3,392,040 ----------- ROAD & RAIL--1.0% Burlington Northern Santa Fe Corporation ........ 69,300 3,343,725 ----------- THE ALGER FUNDS -27- ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.2% ATI Technologies Inc.* .......................... 97,400 $ 1,441,520 Broadcom Corporation Cl. A* ..................... 54,300 1,624,113 Intel Corporation ............................... 178,700 4,203,024 Marvell Technology Group Ltd.* .................. 103,850 3,476,898 Skyworks Solutions, Inc.* ....................... 655,000 3,432,200 ------------ 14,177,755 ------------ SOFTWARE--5.1% Cognos, Inc.* ................................... 75,800 2,868,272 Intuit Inc.* .................................... 41,700 1,680,510 Microsoft Corporation ........................... 228,550 5,782,315 Oracle Corporation* ............................. 474,800 5,488,688 VeriFone Holdings, Inc.* ........................ 124,650 1,339,988 ------------ 17,159,773 ------------ SPECIALTY RETAIL--2.2% Abercrombie & Fitch Co. Cl. A ................... 14,000 755,300 Bed Bath & Beyond Inc.* ......................... 92,100 3,427,041 Lowe's Companies, Inc. .......................... 66,750 3,478,342 ------------ 7,660,683 ------------ TEXTILES, APPAREL & LUXURY GOODS--.9% Coach, Inc.* .................................... 120,600 3,232,080 ------------ WIRELESS TELECOMMUNICATION SERVICES--.4% SpectraSite, Inc.* .............................. 24,500 1,375,185 ------------ Total Common Stocks (Cost $312,798,505) ........................... 328,360,495 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--.7% AMOUNT --------- U.S. AGENCY OBLIGATIONS--.7% Federal Home Loan Banks, 2.61%, 5/2/05 (Cost $2,464,643) ............................. $2,465,000 2,464,643 ------------ Total Investments (Cost $315,263,148)(a) ........................ 97.2% 330,825,138 Other Assets in Excess of Liabilities ........... 2.8 9,624,493 ----- ------------ Net Assets ...................................... 100.0% $340,449,631 ===== ============ ------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005, the net unrealized appreciation of investments, based on cost for federal income tax purposes of $315,263,148, amounted to $15,561,990 which consisted of aggregate gross unrealized appreciation of $26,421,091 and aggregate gross unrealized depreciation of $10,859,101. See Notes to Financial Statements. THE ALGER FUNDS -28- ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--94.5% SHARES VALUE ------ ----- BIOTECHNOLOGY--21.2% Affymetrix Inc.* ................................ 8,000 $ 368,880 Amgen Inc.* ..................................... 11,000 640,310 Amylin Pharmaceuticals, Inc.* ................... 21,000 357,000 Biogen Idec Inc.* ............................... 3,500 126,840 Celgene Corporation* ............................ 15,000 568,650 Curis, Inc.* .................................... 44,000 148,280 Encysive Pharmaceuticals Inc.* .................. 30,000 292,800 Genentech, Inc.* ................................ 15,500 1,099,570 Gen-Probe Incorporated* ......................... 9,000 451,710 Gilead Sciences, Inc.* .......................... 20,000 742,000 Idenix Pharmaceuticals Inc.* .................... 16,000 302,560 ImClone Systems Incorporated* ................... 9,000 286,650 Incyte Corporation* ............................. 48,000 313,920 Keryx Biopharmaceuticals, Inc.* ................. 16,000 231,840 Ligand Pharmaceuticals Incorporated Cl. B* ...... 30,000 158,400 Onyx Pharmaceuticals, Inc.* ..................... 12,500 386,125 OSI Pharmaceuticals, Inc.* ...................... 7,000 331,345 Rigel Pharmaceuticals, Inc.* .................... 20,000 343,000 Serologicals Corporation* ....................... 6,000 129,180 Theravance, Inc* ................................ 15,000 265,500 Vertex Pharmaceuticals Incorporated* ............ 40,000 381,600 Vicuron Pharmaceuticals Inc.* ................... 25,000 408,750 ----------- 8,334,910 ----------- CHEMICALS--1.4% Monsanto Company ................................ 9,500 556,890 ----------- FOOD & STAPLES RETAILING--.9% CVS Corporation ................................. 7,000 361,060 ----------- HEALTH CARE--1.0% WellPoint Inc.* ................................. 3,000 383,250 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--9.8% Alcon, Inc. ..................................... 2,000 194,000 Animas Corporation* ............................. 17,000 318,665 Baxter International Inc. ....................... 6,000 222,600 Beckman Coulter, Inc. ........................... 9,000 600,390 C.R. Bard, Inc. ................................. 5,000 355,850 Hologic, Inc.* .................................. 14,000 498,120 Nektar Therapeutics* ............................ 22,000 313,720 Orthofix International N.V.* .................... 6,000 282,000 St. Jude Medical, Inc.* ......................... 15,000 585,450 Ventana Medical Systems, Inc.* .................. 12,000 477,840 ----------- 3,848,635 ----------- HEALTH CARE PROVIDERS & SERVICES--27.3% American Retirement Corporation* ................ 30,000 445,200 AmerisourceBergen Corporation ................... 7,500 459,600 Caremark Rx, Inc.* .............................. 9,500 380,475 Centene Corporation* ............................ 8,000 222,800 CIGNA Corporation ............................... 3,500 321,930 Community Health Systems Inc.* .................. 20,000 729,000 THE ALGER FUNDS -29- ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- HEALTH CARE PROVIDERS & SERVICES--(CONT.) HCA, Inc. ....................................... 17,500 $ 977,200 Health Net Inc.* ................................ 6,000 204,180 HealthStream, Inc.* ............................. 30,300 86,355 Humana Inc.* .................................... 24,000 831,600 McKesson Corporation ............................ 10,000 370,000 Medco Health Solutions, Inc.* ................... 6,500 331,305 Omnicell, Inc.* ................................. 50,000 307,500 PacifiCare Health Systems, Inc.* ................ 12,500 747,000 Psychiatric Solutions, Inc.* .................... 13,850 595,827 Sierra Health Services, Inc.* ................... 9,500 614,555 Sunrise Senior Living Inc.* ..................... 9,000 461,160 Symbion, Inc.* .................................. 13,000 276,640 UnitedHealth Group Incorporated ................. 3,000 283,530 Universal Health Services, Inc., Cl. B* ......... 15,000 851,100 Ventiv Health, Inc.* ............................ 18,000 375,300 WellCare Health Plans Inc.* ..................... 15,000 442,500 WellChoice Inc.* ................................ 7,000 393,400 ----------- 10,708,157 ----------- INTERNET SOFTWARE & SERVICES--1.1% Allscripts Healthcare Solutions, Inc.* .......... 32,000 418,880 ----------- MEDICAL INSTRUMENTS AND SUPPLIES--.1% Neurometrix Inc.* ............................... 4,000 45,960 ----------- PERSONAL CARE--1.3% Bausch & Lomb Incorporated ...................... 6,800 510,000 ----------- PHARMACEUTICALS--27.9% Allergan, Inc. .................................. 1,000 70,390 Altana AG ADR*# ................................. 3,000 187,950 Aspreva Pharmaceuticals Corporation* ............ 23,000 333,960 AstraZeneca PLC Sponsored ADR# .................. 15,000 659,250 Bone Care International , Inc.* ................. 18,000 464,580 Cortex Pharmaceuticals, Inc.* ................... 50,000 113,000 Eli Lilly and Company ........................... 15,000 877,050 GlaxoSmithKline PLC Sponsored ADR# .............. 12,000 606,600 Impax Laboratories, Inc.* ....................... 26,000 423,020 IVAX Corporation* ............................... 28,450 537,705 Johnson & Johnson ............................... 14,500 995,135 Merck & Co. Inc. ................................ 22,500 762,750 Novartis AG ADR# ................................ 22,000 1,072,060 Novo Nordisk A/S Cl. B ADR# ..................... 7,000 356,090 Perrigo Company ................................. 15,000 274,800 Pfizer Inc. ..................................... 28,510 774,617 Pharmion Corp.* ................................. 10,000 231,000 Sanofi-Aventis ADR# ............................. 18,240 809,309 Schering-Plough Corporation ..................... 45,000 939,150 Sepracor Inc.* .................................. 8,000 479,360 ----------- 10,967,776 ----------- REAL ESTATE--1.5% Ventas, Inc. .................................... 22,000 593,560 ----------- THE ALGER FUNDS -30- ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SOFTWARE--1.0% Cerner Corporation* ............................. 7,000 $ 406,420 ----------- Total Common Stocks (Cost $34,046,763) ............................ 37,135,498 ----------- PRINCIPAL SHORT-TERM INVESTMENTS--3.8% AMOUNT --------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 2.61%, 5/2/05 (Cost $1,499,782) ............................. $1,500,000 1,499,782 ----------- Total Investments (Cost $35,546,545)(a) ......................... 98.3% 38,635,280 Other Assets in Excess of Liabilities ........... 1.7 667,105 ----- ----------- Net Assets ...................................... 100.0% $39,302,385 ===== =========== ------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $35,546,545, amounted to $3,088,735 which consisted of aggregate gross unrealized appreciation of $4,504,055 and aggregate gross unrealized depreciation of $1,415,320. See Notes to Financial Statements. THE ALGER FUNDS -31- ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--94.9% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--4.1% Alliant Techsystems Inc.* ....................... 2,800 $ 193,704 BE Aerospace, Inc.* ............................. 14,400 174,816 Esterline Technologies Corporation* ............. 4,100 132,512 SI International Inc.* .......................... 6,300 142,002 ----------- 643,034 ----------- AIRLINES--.8% AirTran Holdings, Inc.* ......................... 14,400 119,520 ----------- BIOTECHNOLOGY--2.5% Encysive Pharmaceuticals Inc.* .................. 14,600 142,496 Serologicals Corporation* ....................... 6,400 137,792 Theravance, Inc.* ............................... 6,600 116,820 ----------- 397,108 ----------- BROADCASTING--.9% Salem Communications Corporation Cl. A.* ........ 7,600 146,071 ----------- BUSINESS SERVICES--.6% MicroStrategy Incorporated* ..................... 2,300 100,118 ----------- CAPITAL MARKETS--2.5% Affiliated Managers Group, Inc.* ................ 3,412 213,352 National Financial Partners Corporation ......... 4,500 172,080 ----------- 385,432 ----------- CHEMICALS--1.2% Lubrizol Corporation ............................ 5,000 193,850 ----------- COMMERCIAL BANKS--3.0% Boston Private Financial Holdings, Inc. ......... 5,800 129,572 Compass Bancshares, Inc. ........................ 3,750 161,325 East West Bancorp, Inc. ......................... 5,400 173,448 ----------- 464,345 ----------- COMMERCIAL SERVICES & SUPPLIES--3.4% CoStar Group Inc.* .............................. 3,900 154,245 Education Management Corporation* ............... 4,950 138,600 First Marblehead Corporation (The)* ............. 3,100 119,443 Gevity HR, Inc. ................................. 7,250 116,363 ----------- 528,651 ----------- COMMUNICATION EQUIPMENT--2.8% Arris Group Inc.* ............................... 22,200 168,498 F5 Networks, Inc.* .............................. 2,100 89,901 NETGEAR, Inc.* .................................. 10,900 175,817 ----------- 434,216 ----------- COMMUNICATION TECHNOLOGY--1.0% Cox Radio, Inc. Cl. A* .......................... 10,300 161,916 ----------- THE ALGER FUNDS -32- ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- COMPUTERS & PERIPHERALS--2.2% Maxtor Corporation* ............................. 33,300 $ 161,505 Memc Electronic Materials,* Inc. ................ 6,000 70,380 Silicon Image, Inc.* ............................ 12,100 121,847 ----------- 353,732 ----------- COMPUTER SERVICES--.9% Open Solutions Inc.* ............................ 7,300 136,510 ----------- COMPUTER TECHNOLOGY--1.4% Cogent Inc.* .................................... 3,700 83,250 NAVTEQ* ......................................... 3,700 134,754 ----------- 218,004 ----------- ELECTRICAL EQUIPMENT--1.3% AMETEK, Inc. .................................... 5,350 202,605 ----------- ELECTRIC AND ELECTRONIC EQUIPMENT--1.1% Roper Industries, Inc. .......................... 2,650 179,326 ----------- ENERGY--1.3% Arch Coal, Inc. ................................. 4,600 203,964 ----------- ENERGY EQUIPMENT & SERVICES--3.1% Lone Star Technologies, Inc.* ................... 5,600 218,064 National-Oilwell Varco Inc.* .................... 4,700 186,778 Pioneer Drilling Company* ....................... 6,300 83,097 ----------- 487,939 ----------- FINANCIAL INFORMATION SERVICES--.9% GFI Group Inc.* ................................. 6,300 147,105 ----------- FOOD PRODUCTS--.9% Ralcorp Holdings, Inc.* ......................... 3,700 146,594 ----------- HEALTH CARE--1.1% Chemed Corporation .............................. 2,500 177,100 ----------- HEALTH CARE EQUIPMENT & SUPPLIES--4.0% Animas Corporation* ............................. 6,300 118,094 Cooper Companies, Inc. (The) .................... 2,300 155,365 Cutera, Inc.* ................................... 9,500 163,400 Intuitive Surgical, Inc.* ....................... 4,400 188,936 ----------- 625,795 ----------- HEALTH CARE PROVIDERS & SERVICES--7.6% Centene Corporation* ............................ 6,900 192,165 Psychiatric Solutions, Inc.* .................... 4,750 204,345 Sunrise Senior Living Inc.* ..................... 4,800 245,952 Symbion, Inc.* .................................. 8,100 172,368 VCA Antech, Inc.* ............................... 8,500 197,880 WellCare Health Plans Inc.* ..................... 6,250 184,375 ----------- 1,197,085 ----------- THE ALGER FUNDS -33- ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- HOTELS, RESTAURANTS & LEISURE--3.5% Applebee's International, Inc. .................. 7,450 $ 184,611 Red Robin Gourmet Burgers Inc.* ................. 3,350 162,341 Station Casinos, Inc. ........................... 3,100 200,043 ----------- 546,995 ----------- INFORMATION TECHNOLOGY SERVICES--3.8% Alliance Data Systems Corporation* .............. 4,850 195,940 Global Payments Inc. ............................ 3,700 239,612 Kanbay International Inc.* ...................... 8,600 154,628 ----------- 590,180 ----------- INSURANCE--1.8% Ohio Casualty Corporation* ...................... 4,900 114,905 Platinum Underwriters Holdings, Inc. ............ 5,400 159,840 ----------- 274,745 ----------- INTERNET SOFTWARE & SERVICES--3.6% aQuantive, Inc.* ................................ 17,900 198,690 Arbinet Holdings, Inc.* ......................... 5,500 106,205 Fastclick, Inc.* ................................ 1,300 12,545 Netease.com Inc., ADR*# ......................... 2,400 118,536 ValueClick, Inc.* ............................... 11,850 122,766 ----------- 558,742 ----------- LEISURE EQUIPMENT & PRODUCTS--1.2% LIFE TIME FITNESS, Inc.* ........................ 7,000 189,490 ----------- MACHINERY--3.1% Actuant Corporation Cl. A* ...................... 4,500 191,655 Gardner Denver Inc.* ............................ 4,200 153,468 Joy Global Inc. ................................. 4,200 142,254 ----------- 487,377 ----------- MACHINERY--OIL WELL EQUIPMENT & SERVICES--1.2% Patterson-UTI Energy, Inc. ...................... 7,600 182,172 ----------- MEDIA--1.8% Media General, Inc. Cl. A ....................... 2,600 159,328 Westwood One, Inc.* ............................. 6,700 122,610 ----------- 281,938 ----------- MEDICAL DEVICES--.7% IntraLase Corp.* ................................ 6,400 107,008 ----------- MEDICAL TECHNOLOGY--.4% Syneron Medical Ltd.* ........................... 2,300 66,700 ----------- METALS & MINING--1.6% Alpha Natural Resources, Inc.* .................. 4,700 108,805 Cleveland-Cliffs Inc. ........................... 2,500 145,025 ----------- 253,830 ----------- -34- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- OIL & GAS--2.3% Carrizo Oil & Gas, Inc.* ........................ 15,000 $ 247,950 Whiting Petroleum Corporation* .................. 3,600 108,972 ----------- 356,922 ----------- PAPER & FOREST PRODUCTS--1.3% Louisiana-Pacific Corporation ................... 8,250 202,950 ----------- PHARMACEUTICALS--3.3% Bone Care International , Inc.* ................. 6,000 154,860 Impax Laboratories, Inc.* ....................... 9,100 148,057 IVAX Corporation* ............................... 11,250 212,625 ----------- 515,542 ----------- ROAD & RAIL--.7% Landstar Systems, Inc.* ......................... 3,800 116,470 ----------- SEMICONDUCTOR CAPITAL EQUIPMENT--1.1% SiRF Technology Holdings, Inc.* ................. 14,800 168,869 ----------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.1% ATMI, Inc.* ..................................... 5,000 114,575 International Rectifier Corporation* ............ 2,800 119,112 Semtech Corporation* ............................ 8,700 146,943 Sigmatel Incorporated* .......................... 4,000 104,760 ----------- 485,390 ----------- SOFTWARE--4.6% Cognos, Inc.* ................................... 4,250 160,820 Fair Isaac Corporation .......................... 4,800 157,824 Hyperion Solutions Corporation* ................. 4,400 178,948 Quest Software, Inc.* ........................... 8,900 105,554 VeriFone Holdings, Inc.* ........................ 11,500 123,625 ----------- 726,771 ----------- SPECIALTY RETAIL--4.0% AnnTaylor Stores Corporation* ................... 6,800 166,532 Pacific Sunwear of California, Inc.* ............ 7,900 178,619 Urban Outfitters, Inc.* ......................... 2,500 110,750 Williams-Sonoma, Inc.* .......................... 5,300 177,497 ----------- 633,398 ----------- WIRELESS TELECOMMUNICATION SERVICES--3.2% American Tower Corporation Cl. A* ............... 11,400 196,422 InPhonic, Inc.* ................................. 7,700 118,734 UbiquiTel Inc.* ................................. 25,100 181,473 ----------- 496,629 ----------- Total Common Stocks Cost ($13,238,668) ............................ 14,892,138 ----------- THE ALGER FUNDS -35- ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2005 PRINCIPAL VALUE AMOUNT --------- SHORT-TERM INVESTMENTS--6.1% U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 2.61%, 5/2/05 Cost ($949,862) ............................... $950,000 $ 949,862 ----------- Total Investments Cost ($14,188,530)(a) ......................... 101.0% 15,842,000 Liabilities In Excess of Other Assets ........... (1.0) (155,291) ----- ----------- Net Assets ...................................... 100.0% $15,686,709 ===== =========== ------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2005, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $14,188,530, amounted to $1,653,470 which consisted of aggregate gross unrealized appreciation of $2,267,091 and aggregate gross unrealized depreciation of $613,621. See Notes to Financial Statements. THE ALGER FUNDS -36- ALGER MONEY MARKET FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2005 PRINCIPAL AMOUNT VALUE --------- ----- U.S. AGENCY OBLIGATIONS--98.9% Federal Home Loan Banks 2.61%, 5/2/05 ................................. $15,000,000 $15,000,000 2.67%, 5/6/05 ................................. 9,580,000 9,577,158 2.70%, 5/13/05 ................................ 8,000,000 7,993,400 2.86%, 6/22/05 ................................ 6,850,000 6,822,246 Federal National Mortgage Association 2.71%, 5/4/05 ................................. 8,800,000 8,798,675 2.71%, 5/16/05 ................................ 7,420,000 7,412,180 Freddie Mac 2.83%, 6/23/05 ................................ 10,100,000 10,058,714 ----------- Total U.S. Agency Obligations (Cost $65,662,373) ............................ 65,662,373 ----------- REPURCHASE AGREEMENTS--.8% Securities Held Under Repurchase Agreements, 2.25%, 5/2/05, with State Street Bank and Trust Company dtd 4/29/05, repurchase price $524,098, collateralized by Federal Home Loan Mortgage Corporation (par value $535,000, 2.875%, due 9/15/05, (Cost $524,000) ..................................... 524,000 524,000 ----------- Total Investments (Cost $66,186,373)(a) ......................... 99.7% 66,186,373 Other Assets in Excess of Liabilities ........... 0.3 192,345 ----- ----------- Net Assets ...................................... 100.0% $66,378,718 ====== =========== ------------- (a) At April 30, 2005, 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. [This page intentionally left blank] THE ALGER FUNDS -38- STATEMENTS OF ASSETS AND LIABILITIES (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) April 30, 2005 LargeCap SmallCap Growth Growth Fund Fund --------- --------- ASSETS: Investments in securities, at value (identified cost*)-- see accompanying schedules of investments ............ $ 436,525 $ 149,243 Cash ................................................... 4 2 Receivable for investment securities sold .............. 4,244 2,419 Receivable for shares of beneficial interest sold ...... 272 385 Dividends and interest receivable ...................... 195 7 Receivable from Investment Manager--Note 3(a) .......... -- -- Prepaid expenses ....................................... 202 -- --------- --------- Total Assets ......................................... 441,442 152,056 --------- --------- LIABILITIES: Payable for investment securities purchased ............ -- 2,036 Bank loan payable ...................................... 1,860 -- Payable for shares of beneficial interest redeemed ..... 599 553 Accrued investment management fees ..................... 266 105 Accrued transfer agent fees ............................ 406 163 Accrued distribution fees .............................. 181 41 Accrued shareholder servicing fees ..................... 89 31 Dividends payable--Note 2(f) ........................... -- -- Accrued expenses ....................................... 129 73 --------- --------- Total Liabilities .................................... 3,530 3,002 --------- --------- NET ASSETS ............................................. $ 437,912 $ 149,054 ========= ========= Net Assets Consist of: Paid-in capital ...................................... $ 692,634 $ 267,690 Undistributed net investment income (accumulated loss) 308 (1,296) Undistributed net realized gain (accumulated loss) ... (260,199) (126,858) Net unrealized appreciation of investments ........... 5,169 9,518 --------- --------- NET ASSETS ............................................. $ 437,912 $ 149,054 ========= ========= Class A Net Asset Value Per Share ............................ $ 9.33 $ 4.30 ========= ========= Offering Price Per Share ............................. $ 9.85 $ 4.54 ========= ========= Class B Net Asset Value and Offering Price Per Share ......... $ 8.67 $ 3.98 ========= ========= Class C Net Asset Value Per Share ............................ $ 8.66 $ 3.98 ========= ========= Offering Price Per Share ............................. $ 8.75 $ 4.02 ========= ========= Shares of beneficial interest outstanding--Note 6 Class A .............................................. 15,280 19,734 ========= ========= Class B .............................................. 29,666 15,052 ========= ========= Class C .............................................. 4,405 1,073 ========= ========= *Identified cost ...................................... $ 431,357 $ 139,725 ========= ========= See Notes to Financial Statements. -39-
SmallCap MidCap Capital Health and MidCap Money Balanced Growth Appreciation Sciences Growth Market Fund Fund Fund Fund Fund Fund --------- --------- --------- --------- --------- --------- ASSETS: Investments in securities, at value (identified cost*)-- see accompanying schedules of investments ............ $ 180,386 $ 606,861 $ 330,825 $ 38,635 $ 15,842 $ 66,186 Cash ................................................... 5 6 149 46 20 1 Receivable for investment securities sold .............. 4,546 1,815 13,580 1,457 -- -- Receivable for shares of beneficial interest sold ...... 331 1,407 2,446 298 45 1,228 Dividends and interest receivable ...................... 757 165 155 4 1 -- Receivable from Investment Manager--Note 3(a) .......... -- -- -- 8 5 -- Prepaid expenses ....................................... 60 78 14 13 14 19 --------- --------- --------- --------- --------- --------- Total Assets ......................................... 186,085 610,332 347,169 40,461 15,927 67,434 --------- --------- --------- --------- --------- --------- LIABILITIES: Payable for investment securities purchased ............ 3,017 1,088 2,485 975 163 -- Bank loan payable ...................................... -- -- -- -- -- -- Payable for shares of beneficial interest redeemed ..... 492 1,883 3,286 114 45 925 Accrued investment management fees ..................... 111 402 238 26 11 28 Accrued transfer agent fees ............................ 147 471 414 11 4 51 Accrued distribution fees .............................. 74 201 141 9 2 -- Accrued shareholder servicing fees ..................... 37 126 70 8 3 -- Dividends payable--Note 2(f) ........................... -- -- -- -- -- 3 Accrued expenses ....................................... 79 186 85 16 12 48 --------- --------- --------- --------- --------- --------- Total Liabilities .................................... 3,957 4,357 6,719 1,159 240 1,055 --------- --------- --------- --------- --------- --------- NET ASSETS ............................................. $ 182,128 $ 605,975 $ 340,450 $ 39,302 $ 15,687 $ 66,379 ========= ========= ========= ========= ========= ========= Net Assets Consist of: Paid-in capital ...................................... $ 220,299 $ 574,246 $ 888,237 $ 34,459 $ 13,252 $ 66,597 Undistributed net investment income (accumulated loss) (266) (4,330) (806) (191) (109) -- Undistributed net realized gain (accumulated loss) ... (39,677) 28,078 (562,543) 1,945 890 (218) Net unrealized appreciation of investments ........... 1,772 7,981 15,562 3,089 1,654 -- --------- --------- --------- --------- --------- --------- NET ASSETS ............................................. $ 182,128 $ 605,975 $ 340,450 $ 39,302 $ 15,687 $ 66,379 ========= ========= ========= ========= ========= ========= Class A Net Asset Value Per Share ............................ $ 18.81 $ 8.11 $ 8.08 $ 14.38 $ 10.15 $ -- ========= ========= ========= ========= ========= ========= Offering Price Per Share ............................. $ 19.85 $ 8.56 $ 8.53 $ 15.18 $ 10.71 $ -- ========= ========= ========= ========= ========= ========= Class B Net Asset Value and Offering Price Per Share ......... $ 18.43 $ 7.50 $ 7.54 $ 14.06 $ 9.93 $ 1.00 ========= ========= ========= ========= ========= ========= Class C Net Asset Value Per Share ............................ $ 18.52 $ 7.49 $ 7.54 $ 14.06 $ 9.93 $ -- ========= ========= ========= ========= ========= ========= Offering Price Per Share ............................. $ 18.71 $ 7.57 $ 7.62 $ 14.20 $10.03 $ -- ========= ========= ========= ========= ========= ========= Shares of beneficial interest outstanding--Note 6 Class A .............................................. 3,260 35,022 13,942 1,632 1,152 -- ========= ========= ========= ========= ========= ========= Class B .............................................. 5,108 33,986 25,762 730 255 66,538 ========= ========= ========= ========= ========= ========= Class C .............................................. 1,439 8,956 4,434 396 147 -- ========= ========= ========= ========= ========= ========= *Identified cost ...................................... $ 178,614 $ 598,880 $ 315,263 $ 35,546 $ 14,188 $ 66,186 ========= ========= ========= ========= ========= =========
THE ALGER FUNDS -40- STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED) FOR THE SIX MONTHS ENDED APRIL 30, 2005 LargeCap SmallCap Growth Growth Fund Fund -------- -------- Income: Dividends ......................................... $ 4,606 $ 201 Interest .......................................... 46 66 -------- -------- Total Income ...................................... 4,652 267 -------- -------- Expenses: Management fees--Note 3(a) ........................ 1,764 689 Distribution fees--Note 3(b): Class B ......................................... 1,037 262 Class C ......................................... 156 18 Shareholder servicing fees--Note 3(f) ............. 588 203 Interest on line of credit utilized--Note 5 ....... 20 -- Custodian fees .................................... 25 15 Transfer agent fees and expenses--Note 3(e) ....... 575 275 Professional fees ................................. 42 17 Registration fees ................................. 17 30 Miscellaneous ..................................... 120 54 -------- -------- 4,344 1,563 Less, expense reimbursements Note 3(a) ............. -- -- -------- -------- Total Expenses .................................... 4,344 1,563 -------- -------- NET INVESTMENT INCOME (LOSS) ....................... 308 (1,296) -------- -------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS Net realized gain on investments ................... 43,167 10,366 Net change in unrealized appreciation (depreciation) on investments ................................... (27,911) (4,002) -------- -------- Net realized and unrealized gain on investments .... 15,256 6,364 -------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $ 15,564 $ 5,068 ======== ======== See Notes to Financial Statements. -41-
SmallCap MidCap Capital Health and MidCap Money Balanced Growth Appreciation Sciences Growth Market Fund Fund Fund Fund Fund Fund -------- -------- -------- -------- -------- -------- Income: Dividends ......................................... $ 1,311 $ 1,202 $ 3,088 $ 88 $ 21 $ -- Interest .......................................... 1,483 153 64 19 5 819 -------- -------- -------- -------- -------- -------- Total Income ...................................... 2,794 1,355 3,152 107 26 819 -------- -------- -------- -------- -------- -------- Expenses: Management fees--Note 3(a) ........................ 751 2,593 1,615 140 68 180 Distribution fees--Note 3(b): Class B ......................................... 390 1,054 822 34 10 -- Class C ......................................... 115 273 146 17 6 -- Shareholder servicing fees--Note 3(f) ............. 250 810 475 41 20 -- Interest on line of credit utilized--Note 5 ....... -- 1 5 -- -- -- Custodian fees .................................... 18 40 24 9 5 5 Transfer agent fees and expenses--Note 3(e) ....... 178 644 696 26 8 82 Professional fees ................................. 13 65 23 3 3 4 Registration fees ................................. 10 16 34 21 18 8 Miscellaneous ..................................... 65 189 118 20 15 22 -------- -------- -------- -------- -------- -------- 1,790 5,685 3,958 311 153 301 Less, expense reimbursements Note 3(a) ............. -- -- -- (13) (18) -- -------- -------- -------- -------- -------- -------- Total Expenses .................................... 1,790 5,685 3,958 298 135 301 -------- -------- -------- -------- -------- -------- NET INVESTMENT INCOME (LOSS) ....................... 1,004 (4,330) (806) (191) (109) 518 -------- -------- -------- -------- -------- -------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS Net realized gain on investments ................... 14,541 56,046 41,636 2,052 889 -- Net change in unrealized appreciation (depreciation) on investments ................................... (10,501) (33,833) (21,257) 2,016 (191) -- -------- -------- -------- -------- -------- -------- Net realized and unrealized gain on investments .... 4,040 22,213 20,379 4,068 698 -- -------- -------- -------- -------- -------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $ 5,044 $ 17,883 $ 19,573 $ 3,877 $ 589 $ 518 ======== ======== ======== ======== ======== ========
THE ALGER FUNDS -42- STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
LargeCap Growth Fund ----------------------------- For the Six Months For the Ended Year Ended April 30, 2005 October 31, (Unaudited) 2004 -------------- ------------ Net investment income (loss) ............................ $ 308 $ (6,600) Net realized gain on investments ........................ 43,167 56,527 Net change in unrealized appreciation (depreciation) on investments ........................................ (27,911) (40,501) --------- --------- Net increase in net assets resulting from operations ............................. 15,564 9,426 --------- --------- Dividends to shareholders from: Net investment income Class A ............................................... -- -- Class B ............................................... -- -- Class C ............................................... -- -- --------- --------- Total dividends to shareholders ......................... -- -- --------- --------- Decrease from shares of beneficial interest transactions: Class A ............................................... (29,926) (5,085) Class B ............................................... (31,271) (77,035) Class C ............................................... (5,335) (24) --------- --------- Net decrease from shares of beneficial interest transactions--Note 6 .................................. (66,532) (82,144) --------- --------- Total increase (decrease) ............................. (50,968) (72,718) Net Assets: Beginning of period ................................... 488,880 561,598 --------- --------- End of period ......................................... $ 437,912 $ 488,880 ========= ========= Undistributed net investment income (accumulated loss) .. $ 308 $ -- ========= =========
See Notes to Financial Statements. -43-
SmallCap MidCap Growth Balanced Growth Fund Fund Fund -------------------------- ------------------------ ----------------------- For the Six For the Six For the Six Months Ended For the Months Ended For the Months Ended For the April 30, Year Ended April 30, Year Ended April 30, Year Ended 2005 October 31, 2005 October 31, 2005 October 31, (Unaudited) 2004 (Unaudited) 2004 (Unaudited) 2004 ------------ ------------ ------------ ----------- ------------ ---------- Net investment income (loss) ............................ $ (1,296) $ (3,147) $ 1,004 $ 9 $ (4,330) $ (9,704) Net realized gain on investments ........................ 10,366 35,504 14,541 20,515 56,046 76,357 Net change in unrealized appreciation (depreciation) on investments ........................................ (4,002) (23,229) (10,501) (15,068) (33,833) (43,853) --------- --------- --------- --------- --------- --------- Net increase in net assets resulting from operations ............................. 5,068 9,128 5,044 5,456 17,883 22,800 --------- --------- --------- --------- --------- --------- Dividends to shareholders from: Net investment income Class A ............................................... -- -- (758) (719) -- -- Class B ............................................... -- -- (283) (248) -- -- Class C ............................................... -- -- (82) (71) -- -- --------- --------- --------- --------- --------- --------- Total dividends to shareholders ......................... -- -- (1,123) (1,038) -- -- --------- --------- --------- --------- --------- --------- Decrease from shares of beneficial interest transactions: Class A ............................................... (490) 5,234 (8,288) (12,048) 114 34,556 Class B ............................................... (12,849) (28,777) (22,465) (31,815) (30,183) (60,164) Class C ............................................... (539) (577) (8,913) (10,635) (5,574) 6,190 --------- --------- --------- --------- --------- --------- Net decrease from shares of beneficial interest transactions--Note 6 .................................. (13,878) (24,120) (39,666) (54,498) (35,643) (19,418) --------- --------- --------- --------- --------- --------- Total increase (decrease) ............................. (8,810) (14,992) (35,745) (50,080) (17,760) 3,382 Net Assets: Beginning of period ................................... 157,864 172,856 217,873 267,953 623,735 620,353 --------- --------- --------- --------- --------- --------- End of period ......................................... $ 149,054 $ 157,864 $ 182,128 $ 217,873 $ 605,975 $ 623,735 ========= ========= ========= ========= ========= ========= Undistributed net investment income (accumulated loss) .. $ (1,296) $ -- $ (266) $ (147) $ (4,330) $ -- ========= ========= ========= ========= ========= =========
THE ALGER FUNDS -44- STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Capital Appreciation Fund ---------------------------- For the Six Months For the Ended Year Ended April 30, 2005 October 31, (Unaudited) 2004 -------------- ----------- Net investment income (loss) ....................................... $ (806) $ (8,003) Net realized gain (loss) on investments ............................ 41,636 31,334 Net change in unrealized appreciation (depreciation) on investments ................................................... (21,257) (25,988) --------- --------- Net increase (decrease) in net assets resulting from operations .................................................. 19,573 (2,657) --------- --------- Dividends and distributions to shareholders from: Net investment income Class A .......................................................... -- -- Class B .......................................................... -- -- Class C .......................................................... -- -- Net realized gains Class A .......................................................... -- -- Class B .......................................................... -- -- Class C .......................................................... -- -- --------- --------- Total dividends and distributions to shareholders .................. -- -- --------- --------- Increase (decrease) from shares of beneficial interest transactions: Class A .......................................................... (14,964) 10,673 Class B .......................................................... (45,492) (94,734) Class C .......................................................... (10,248) (12,297) --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ......................... (70,704) (96,358) --------- --------- Total increase (decrease) ......................................... (51,131) (99,015) Net Assets: Beginning of period ............................................... 391,581 490,596 --------- --------- End of period ..................................................... $ 340,450 $ 391,581 ========= ========= Undistributed net investment income (accumulated loss) ............. $ (806) $ -- ========= =========
See Notes to Financial Statements. -45-
SmallCap Health and MidCap Money Sciences Growth Market Fund Fund Fund ------------------------- ------------------------- ------------------------- For the Six For the Six For the Six Months Ended For the Months Ended For the Months Ended For the April 30, Year Ended April 30, Year Ended April 30, Year Ended 2005 October 31, 2005 October 31, 2005 October 31, (Unaudited) 2004 (Unaudited) 2004 (Unaudited) 2004 ------------ ----------- ------------ ----------- ------------- ----------- Net investment income (loss) ......................... $ (191) $ (292) $ (109) $ (190) $ 518 $ 342 Net realized gain (loss) on investments .............. 2,052 1,665 889 1,451 -- (1) Net change in unrealized appreciation (depreciation) on investments ..................................... 2,016 331 (191) (683) -- -- --------- --------- --------- --------- --------- --------- Net increase (decrease) in net assets resulting from operations .................................... 3,877 1,704 589 578 518 341 --------- --------- --------- --------- --------- --------- Dividends and distributions to shareholders from: Net investment income Class A ............................................ -- -- -- -- -- -- Class B ............................................ -- -- -- -- (518) (342) Class C ............................................ -- -- -- -- -- -- Net realized gains Class A ............................................ (828) (174) (875) -- -- -- Class B ............................................ (427) (79) (183) -- -- -- Class C ............................................ (205) (31) (107) -- -- -- --------- --------- --------- --------- --------- --------- Total dividends and distributions to shareholders .... (1,460) (284) (1,165) -- (518) (342) --------- --------- --------- --------- --------- --------- Increase (decrease) from shares of beneficial interest transactions: Class A ............................................ 6,912 5,570 1,285 411 -- -- Class B ............................................ 1,682 3,959 340 1,029 (14,149) (35,406) Class C ............................................ 1,507 2,264 175 339 -- -- --------- --------- --------- --------- --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ........... 10,101 11,793 1,800 1,779 (14,149) (35,406) --------- --------- --------- --------- --------- --------- Total increase (decrease) .......................... 12,518 13,213 1,224 2,357 (14,149) (35,407) Net Assets: Beginning of period ................................ 26,784 13,571 14,463 12,106 80,528 115,935 --------- --------- --------- --------- --------- --------- End of period ...................................... $ 39,302 $ 26,784 $ 15,687 $ 14,463 $ 66,379 $ 80,528 ========= ========= ========= ========= ========= ========= Undistributed net investment income (accumulated loss) $ (191) $ -- $ (109) $ -- $ -- $ -- ========= ========= ========= ========= ========= =========
THE ALGER FUNDS -46- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD Income from Investment Operations ------------------------- Net Realized and Net Asset Net Unrealized Total Value, Investment Gain from Beginning Income (Loss) on Investment of Period (Loss) (ii) Investments Operations ---------- ----------- ------------- ---------- ALGER LARGECAP GROWTH FUND (i) CLASS A Six months ended 4/30/05 (iv) $ 9.05 $ 0.03 $ 0.25 $ 0.28 Year ended 10/31/04 .......... 8.87 (0.07) 0.25 0.18 Year ended 10/31/03 .......... 7.16 (0.05) 1.76 1.71 Year ended 10/31/02 .......... 9.47 (0.04) (2.27) (2.31) Year ended 10/31/01 .......... 14.09 (0.04) (3.64) (3.68) Year ended 10/31/00 .......... 15.47 (0.05) 1.33 1.28 CLASS B Six months ended 4/30/05 (iv) $ 8.44 $ (0.01) $ 0.24 $ 0.23 Year ended 10/31/04 .......... 8.33 (0.13) 0.24 0.11 Year ended 10/31/03 .......... 6.76 (0.10) 1.67 1.57 Year ended 10/31/02 .......... 9.02 (0.10) (2.16) (2.26) Year ended 10/31/01 .......... 13.58 (0.12) (3.50) (3.62) Year ended 10/31/00 .......... 15.09 (0.16) 1.31 1.15 CLASS C Six months ended 4/30/05 (iv) $ 8.43 $ (0.01) $ 0.24 $ 0.23 Year ended 10/31/04 .......... 8.33 (0.13) 0.23 0.10 Year ended 10/31/03 .......... 6.76 (0.10) 1.67 1.57 Year ended 10/31/02 .......... 9.02 (0.10) (2.16) (2.26) Year ended 10/31/01 .......... 13.57 (0.12) (3.49) (3.61) Year ended 10/31/00 .......... 15.08 (0.16) 1.31 1.15 ALGER SMALLCAP GROWTH FUND CLASS A Six months ended 4/30/05 (iv) $ 4.18 $ (0.03) $ 0.15 $ 0.12 Year ended 10/31/04 .......... 3.95 (0.06) 0.29 0.23 Year ended 10/31/03 .......... 2.85 (0.05) 1.15 1.10 Year ended 10/31/02 .......... 3.54 (0.05) (0.64) (0.69) Year ended 10/31/01 .......... 8.81 (0.04) (3.41) (3.45) Year ended 10/31/00 .......... 10.35 (0.08) 0.35 0.27 -------------------- (i) Prior to September 29, 2000, the Alger LargeCap Growth Fund was the Alger Growth Portfolio. (ii) Amount was computed based on average shares outstanding during the period. (iii) Does not reflect the effect of any sales charges. (iv) Unaudited. Ratios have been annualized; total return has not been annualized. See Notes to Financial Statements. -47-
Ratios/Supplemental Data --------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Distributions Asset End of to Income from Value, Period Average (Loss) to Portfolio Net Realized End of Total (000's Net Average Turnover Gains Period Return (iii) omitted) Assets Net Assets Rate ------------- --------- ------------ --------- --------- ----------- --------- ALGER LARGECAP GROWTH FUND (i) CLASS A Six months ended 4/30/05 (iv) $ -- $ 9.33 3.1% $142,628 1.34% 0.69% 131.93% Year ended 10/31/04 .......... -- 9.05 2.0 166,720 1.34 (0.72) 191.13 Year ended 10/31/03 .......... -- 8.87 23.9 168,720 1.44 (0.62) 215.81 Year ended 10/31/02 .......... -- 7.16 (24.4) 130,464 1.36 (0.47) 213.97 Year ended 10/31/01 .......... (0.94) 9.47 (27.4) 230,637 1.26 (0.35) 91.40 Year ended 10/31/00 .......... (2.66) 14.09 8.0 324,130 1.20 (0.32) 96.13 CLASS B Six months ended 4/30/05 (iv) $ -- $ 8.67 2.7% $257,129 2.09% (0.14)% 131.93% Year ended 10/31/04 .......... -- 8.44 1.3 279,963 2.09 (1.46) 191.13 Year ended 10/31/03 .......... -- 8.33 23.2 350,972 2.20 (1.37) 215.81 Year ended 10/31/02 .......... -- 6.76 (25.1) 323,809 2.11 (1.21) 213.97 Year ended 10/31/01 .......... (0.94) 9.02 (28.1) 581,770 2.01 (1.09) 91.40 Year ended 10/31/00 .......... (2.66) 13.58 7.2 902,091 1.96 (1.07) 96.13 CLASS C Six months ended 4/30/05 (iv) $ -- $ 8.66 2.7% $ 38,155 2.09% (0.14)% 131.93% Year ended 10/31/04 .......... -- 8.43 1.2 42,196 2.09 (1.47) 191.13 Year ended 10/31/03 .......... -- 8.33 23.2 41,906 2.19 (1.37) 215.81 Year ended 10/31/02 .......... -- 6.76 (25.1) 34,813 2.11 (1.22) 213.97 Year ended 10/31/01 .......... (0.94) 9.02 (28.0) 48,918 2.01 (1.10) 91.40 Year ended 10/31/00 .......... (2.66) 13.57 7.2 65,893 1.95 (1.08) 96.13 ALGER SMALLCAP GROWTH FUND CLASS A Six months ended 4/30/05 (iv) $ -- $ 4.30 2.9% $ 84,900 1.58% (1.25)% 56.31% Year ended 10/31/04 .......... -- 4.18 5.8 82,891 1.69 (1.47) 128.79 Year ended 10/31/03 .......... -- 3.95 38.6 73,616 1.79 (1.55) 139.28 Year ended 10/31/02 .......... -- 2.85 (19.5) 46,143 1.75 (1.52) 132.35 Year ended 10/31/01 .......... (1.82) 3.54 (46.6) 64,164 1.54 (0.95) 195.72 Year ended 10/31/00 .......... (1.81) 8.81 0.4 111,665 1.41 (0.81) 207.19
THE ALGER FUNDS -48- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from Investment Operations ------------------------ Net Realized and Net Asset Net Unrealized Total Dividends Distributions Value, Investment Gain from from Net from Beginning Income (Loss) on Investment Investment Net Realized of Period (Loss)(i) Investments Operations Income Gains --------- ---------- ----------- ---------- ---------- ------------- ALGER SMALLCAP GROWTH FUND (CONTINUED) CLASS B Six months ended 4/30/05 (iii) ....... $ 3.88 $ (0.04) $ 0.14 $ 0.10 $ -- $ -- Year ended 10/31/04 .................. 3.70 (0.09) 0.27 0.18 -- -- Year ended 10/31/03 .................. 2.68 (0.07) 1.09 1.02 -- -- Year ended 10/31/02 .................. 3.36 (0.07) (0.61) (0.68) -- -- Year ended 10/31/01 .................. 8.52 (0.08) (3.26) (3.34) -- (1.82) Year ended 10/31/00 .................. 10.13 (0.16) 0.36 0.20 -- (1.81) CLASS C Six months ended 4/30/05 (iii) ....... $ 3.88 $ (0.04) $ 0.14 $ 0.10 $ -- $ -- Year ended 10/31/04 .................. 3.70 (0.09) 0.27 0.18 -- -- Year ended 10/31/03 .................. 2.68 (0.07) 1.09 1.02 -- -- Year ended 10/31/02 .................. 3.36 (0.07) (0.61) (0.68) -- -- Year ended 10/31/01 .................. 8.53 (0.08) (3.27) (3.35) -- (1.82) Year ended 10/31/00 .................. 10.13 (0.16) 0.37 0.21 -- (1.81) ALGER BALANCED FUND CLASS A Six months ended 4/30/05 (iii) ....... $ 18.58 $ 0.14 $ 0.30 $ 0.44 $ (0.21) $ -- Year ended 10/31/04 .................. 18.29 0.10 0.36 0.46 (0.17) -- Year ended 10/31/03 .................. 16.02 0.13 2.43 2.56 (0.29) -- Year ended 10/31/02 .................. 18.67 0.27 (2.48) (2.21) (0.44) -- Year ended 10/31/01 .................. 21.29 0.43 (2.83) (2.40) (0.22) -- Year ended 10/31/00 .................. 20.95 0.39 1.68 2.07 (0.13) (1.60) CLASS B Six months ended 4/30/05 (iii) ....... $ 18.13 $ 0.07 $ 0.28 $ 0.35 $ (0.05) $ -- Year ended 10/31/04 .................. 17.86 (0.04) 0.34 0.30 (0.03) -- Year ended 10/31/03 .................. 15.62 0.01 2.39 2.40 (0.16) -- Year ended 10/31/02 .................. 18.17 0.14 (2.44) (2.30) (0.25) -- Year ended 10/31/01 .................. 20.83 0.27 (2.75) (2.48) (0.18) -- Year ended 10/31/00 .................. 20.59 0.17 1.71 1.88 (0.04) (1.60)
----------------- (i) Amount was computed based on average shares outstanding during the period. (ii) Does not reflect the effect of any sales charges. (iii) Unaudited. Ratios have been annualized; total return has not been annualized. See Notes to Financial Statements. -49-
Ratios/Supplemental Data ---------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Asset End of to Income Value, Period Average (Loss) to Portfolio Total End of Total (000's Net Average Turnover Distributions Period Return (ii) Omitted) Assets Net Assets Rate ------------- --------- ----------- --------- --------- ---------- --------- ALGER SMALLCAP GROWTH FUND (CONTINUED) CLASS B Six months ended 4/30/05 (iii) ....... $ -- $ 3.98 2.6% $ 59,880 2.33% (2.00)% 56.31% Year ended 10/31/04 .................. -- 3.88 4.9 70,304 2.43 (2.21) 128.79 Year ended 10/31/03 .................. -- 3.70 38.1 94,241 2.57 (2.32) 139.28 Year ended 10/31/02 .................. -- 2.68 (20.2) 81,758 2.49 (2.27) 132.35 Year ended 10/31/01 .................. (1.82) 3.36 (47.0) 130,559 2.28 (1.66) 195.72 Year ended 10/31/00 .................. (1.81) 8.52 (0.4) 325,382 2.14 (1.58) 207.19 CLASS C Six months ended 4/30/05 (iii) ....... $ -- $ 3.98 2.6% $ 4,274 2.33% (2.00)% 56.31% Year ended 10/31/04 .................. -- 3.88 4.9 4,669 2.44 (2.21) 128.79 Year ended 10/31/03 .................. -- 3.70 38.1 4,999 2.56 (2.32) 139.28 Year ended 10/31/02 .................. -- 2.68 (20.2) 3,209 2.49 (2.27) 132.35 Year ended 10/31/01 .................. (1.82) 3.36 (47.0) 4,234 2.28 (1.66) 195.72 Year ended 10/31/00 .................. (1.81) 8.53 (0.3) 11,103 2.15 (1.57) 207.19 ALGER BALANCED FUND CLASS A Six months ended 4/30/05 (iii) ....... $ (0.21) $ 18.81 2.4% $ 61,302 1.28% 1.48% 125.17% Year ended 10/31/04 .................. (0.17) 18.58 2.5 68,646 1.26 0.52 167.72 Year ended 10/31/03 .................. (0.29) 18.29 16.3 79,387 1.31 0.80 174.97 Year ended 10/31/02 .................. (0.44) 16.02 (12.2) 78,167 1.28 1.53 203.96 Year ended 10/31/01 .................. (0.22) 18.67 (11.3) 101,440 1.20 2.15 74.15 Year ended 10/31/00 .................. (1.73) 21.29 10.2 93,671 1.29 1.80 63.50 CLASS B Six months ended 4/30/05 (iii) ....... $(0,05) $ 18.43 1.9% $ 94,171 2.03% 0.76% 125.17% Year ended 10/31/04 .................. (0.03) 18.13 1.7 114,387 2.01 (0.23) 167.72 Year ended 10/31/03 .................. (0.16) 17.86 15.5 143,765 2.06 0.05 174.97 Year ended 10/31/02 .................. (0.25) 15.62 (12.9) 137,070 2.03 0.78 203.96 Year ended 10/31/01 .................. (0.18) 18.17 (12.0) 158,766 1.95 1.40 74.15 Year ended 10/31/00 .................. (1.64) 20.83 9.4 132,123 2.04 0.98 63.50
THE ALGER FUNDS -50- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from Investment Operations ------------------------ Net Realized and Net Asset Net Unrealized Total Dividends Distributions Value, Investment Gain from from Net from Beginning Income (Loss) on Investment Investment Net Realized of Period (Loss)(i) Investments Operations Income Gains --------- ---------- ----------- ---------- ---------- ------------- ALGER BALANCED FUND (CONTINUED) CLASS C Six months ended 4/30/05 (iv) ....... $ 18.21 $ 0.07 $ 0.29 $ 0.36 $ (0.05) $ -- Year ended 10/31/04 ................. 17.93 (0.04) 0.35 0.31 (0.03) -- Year ended 10/31/03 ................. 15.68 0.01 2.39 2.40 (0.15) -- Year ended 10/31/02 ................. 18.24 0.14 (2.45) (2.31) (0.25) -- Year ended 10/31/01 ................. 20.90 0.27 (2.75) (2.48) (0.18) -- Year ended 10/31/00 ................. 20.65 0.21 1.67 1.88 (0.03) (1.60) ALGER MIDCAP GROWTH FUND (iii) CLASS A Six months ended 4/30/05 (iv) ....... $ 7.89 $ (0.04) $ 0.26 $ 0.22 $ -- $ -- Year ended 10/31/04 ................. 7.57 (0.08) 0.40 0.32 -- -- Year ended 10/31/03 ................. 5.48 (0.07) 2.16 2.09 -- -- Year ended 10/31/02 ................. 6.92 (0.07) (1.37) (1.44) -- -- Year ended 10/31/01 ................. 10.17 (0.06) (2.01) (2.07) -- (1.18) Year ended 10/31/00 ................. 8.20 (0.04) 3.51 3.47 -- (1.50) CLASS B Six months ended 4/30/05 (iv) ....... $ 7.33 $ (0.07) $ 0.24 $0.17 $ -- $ -- Year ended 10/31/04 ................. 7.08 (0.13) 0.38 0.25 -- -- Year ended 10/31/03 ................. 5.17 (0.11) 2.02 1.91 -- -- Year ended 10/31/02 ................. 6.58 (0.11) (1.30) (1.41) -- -- Year ended 10/31/01 ................. 9.79 (0.11) (1.92) (2.03) -- (1.18) Year ended 10/31/00 ................. 8.00 (0.12) 3.41 3.29 -- (1.50) CLASS C Six months ended 4/30/05 (iv) ....... $ 7.31 $ (0.07) $ 0.25 $0.18 $ -- $ -- Year ended 10/31/04 ................. 7.06 (0.13) 0.38 0.25 -- -- Year ended 10/31/03 ................. 5.16 (0.11) 2.01 1.90 -- -- Year ended 10/31/02 ................. 6.56 (0.11) (1.29) (1.40) -- -- Year ended 10/31/01 ................. 9.77 (0.11) (1.92) (2.03) -- (1.18) Year ended 10/31/00 ................. 7.99 (0.11) 3.39 3.28 -- (1.50)
-------------- (i) Amount was computed based on average shares outstanding during the period. (ii) Does not reflect the effect of any sales charges. (iii) Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred April 20, 2000. (iv) Unaudited. Ratios have been annualized; total return has not been annualized. See Notes to Financial Statements. -51-
Ratios/Supplemental Data ---------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Asset End of to Income Value, Period Average (Loss) to Portfolio Total End of Total (000's Net Average Turnover Distributions Period Return (ii) Omitted) Assets Net Assets Rate ------------- --------- ----------- --------- --------- ---------- --------- ALGER BALANCED FUND (CONTINUED) CLASS C Six months ended 4/30/05 (iv) ...... $ (0.05) $ 18.52 2.0% $ 26,655 2.03% 0.78% 125.17 Year ended 10/31/04 ................ (0.03) 18.21 1.7 34,840 2.01 (0.23) 167.72 Year ended 10/31/03 ................ (0.15) 17.93 15.4 44,801 2.06 0.05 174.97 Year ended 10/31/02 ................ (0.25) 15.68 (12.9) 45,516 2.03 0.78 203.96 Year ended 10/31/01 ................ (0.18) 18.24 (12.0) 57,193 1.95 1.40 74.15 Year ended 10/31/00 ................ (1.63) 20.90 9.3 49,592 2.04 0.99 63.50 ALGER MIDCAP GROWTH FUND (iii) CLASS A Six months ended 4/30/05 (iv) ..... $ -- $ 8.11 2.8% $284,036 1.35% (0.93)% 110.77% Year ended 10/31/04 ............... -- 7.89 4.2 276,076 1.34 (1.08) 210.18 Year ended 10/31/03 ............... -- 7.57 38.1 231,711 1.45 (1.16) 238.17 Year ended 10/31/02 ............... -- 5.48 (20.8) 133,113 1.41 (1.05) 324.69 Year ended 10/31/01 ............... (1.18) 6.92 (21.9) 154,412 1.31 (0.77) 115.45 Year ended 10/31/00 ............... (1.50) 10.17 47.7 141,558 1.29 (0.46) 97.11 CLASS B Six months ended 4/30/05 (iv) ..... $ -- $ 7.50 2.3% $254,887 2.09% (1.68)% 110.77% Year ended 10/31/04 ............... -- 7.33 3.5 276,982 2.09 (1.83) 210.18 Year ended 10/31/03 ............... -- 7.08 36.9 326,015 2.20 (1.92) 238.17 Year ended 10/31/02 ............... -- 5.17 (21.4) 247,201 2.15 (1.80) 324.69 Year ended 10/31/01 ............... (1.18) 6.58 (22.4) 426,699 2.06 (1.49) 115.45 Year ended 10/31/00 ............... (1.50) 9.79 46.4 532,476 2.04 (1.23) 97.11 CLASS C Six months ended 4/30/05 (iv) ..... $ -- $ 7.49 2.5% $ 67,052 2.09% (1.68)% 110.77% Year ended 10/31/04 ............... -- 7.31 3.5 70,677 2.09 (1.83) 210.18 Year ended 10/31/03 ............... -- 7.06 36.8 62,627 2.20 (1.92) 238.17 Year ended 10/31/02 ............... -- 5.16 (21.3) 46,238 2.16 (1.80) 324.69 Year ended 10/31/01 ............... (1.18) 6.56 (22.4) 53,592 2.06 (1.51) 115.45 Year ended 10/31/00 ............... (1.50) 9.77 46.4 51,335 2.04 (1.22) 97.11
THE ALGER FUNDS -52- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from Investment Operations ----------------------- Net Realized and Net Asset Net Unrealized Total Value, Investment Gain from Beginning Income (Loss) on Investment of Period (Loss) (i) Investments Operations --------- ---------- ----------- ---------- ALGER CAPITAL APPRECIATION FUND CLASS A Six months ended 4/30/05 (iii)(vi) $ 7.71 $ -- $ 0.37 $ 0.37 Year ended 10/31/04 .............. 7.74 (0.10) 0.07 (0.03) Year ended 10/31/03 .............. 6.23 (0.07) 1.58 1.51 Year ended 10/31/02 .............. 8.21 (0.08) (1.90) (1.98) Year ended 10/31/01 .............. 13.54 (0.05) (4.80) (4.85) Year ended 10/31/00 .............. 13.57 (0.11) 2.01 1.90 CLASS B Six months ended 4/30/05 (iii)(vi) $ 7.23 $(0.03) $ 0.34 $ 0.31 Year ended 10/31/04 .............. 7.31 (0.15) 0.07 (0.08) Year ended 10/31/03 .............. 5.93 (0.11) 1.49 1.38 Year ended 10/31/02 .............. 7.88 (0.14) (1.81) (1.95) Year ended 10/31/01 .............. 13.09 (0.12) (4.61) (4.73) Year ended 10/31/00 .............. 13.28 (0.22) 1.96 1.74 CLASS C Six months ended 4/30/05 (iii)(vi) $ 7.22 $(0.02) $ 0.34 $ 0.32 Year ended 10/31/04 .............. 7.31 (0.10) 0.01 (0.09) Year ended 10/31/03 .............. 5.93 (0.11) 1.49 1.38 Year ended 10/31/02 .............. 7.87 (0.14) (1.80) (1.94) Year ended 10/31/01 .............. 13.09 (0.12) (4.62) (4.74) Year ended 10/31/00 .............. 13.27 (0.22) 1.97 1.75 ALGER HEALTH SCIENCES FUND CLASS A Six months ended 4/30/05 (iii)(vi) $ 13.29 $(0.06) $ 1.85 $ 1.79 Year ended 10/31/04 .............. 11.91 (0.14) 1.75 1.61 Year ended 10/31/03 .............. 9.29 (0.20) 2.82 2.62 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) 10.00 (0.06) (0.65) (0.71)
---------------- (i) Amount was computed based on average shares outstanding during the period. (ii) Does not reflect the effect of any sales charges. (iii) Ratios have been annualized; total return has not been annualized. (iv) Amount has been reduced by 0.14% due to expense reimbursements. (v) Amount has been reduced by 0.08% due to expense reimbursements. (vi) Unaudited. See Notes to Financial Statements. -53-
Ratios/Supplemental Data ------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Distributions Asset End of to Income from Value, Period Average (Loss) to Portfolio Net Realized End of Total (000's Net Average Turnover Gains Period Return (ii) omitted) Assets Net Assets Rate ------------- --------- ----------- ---------- -------- ---------- --------- ALGER CAPITAL APPRECIATION FUND CLASS A Six months ended 4/30/05 (iii)(vi) $ -- $ 8.08 4.8% $ 112,662 1.57% 0.07% 83.37% Year ended 10/31/04 .............. -- 7.71 (0.4) 121,341 1.58 (1.23) 157.23 Year ended 10/31/03 .............. -- 7.74 24.2 112,031 1.70 (1.06) 202.81 Year ended 10/31/02 .............. -- 6.23 (24.1) 97,962 1.53 (1.06) 174.83 Year ended 10/31/01 .............. (0.48) 8.21 (36.8) 179,365 1.40 (0.46) 102.58 Year ended 10/31/00 .............. (1.93) 13.54 12.6 366,296 1.36 (0.66) 132.37 CLASS B Six months ended 4/30/05 (iii)(vi) $ -- $ 7.54 4.3% $ 194,352 2.32% (0.66)% 83.37% Year ended 10/31/04 .............. -- 7.23 (1.1) 228,646 2.33 (1.97) 157.23 Year ended 10/31/03 .............. -- 7.31 23.3 324,292 2.45 (1.82) 202.81 Year ended 10/31/02 .............. -- 5.93 (24.8) 342,592 2.28 (1.82) 174.83 Year ended 10/31/01 .............. (0.48) 7.88 (37.2) 572,068 2.15 (1.20) 102.58 Year ended 10/31/00 .............. (1.93) 13.09 11.6 1,056,831 2.11 (1.41) 132.37 CLASS C Six months ended 4/30/05 (iii)(vi) $ -- $ 7.54 4.4% $ 33,436 2.32% (0.64)% 83.37% Year ended 10/31/04 .............. -- 7.22 (1.2) 41,595 2.33 (1.98) 157.23 Year ended 10/31/03 .............. -- 7.31 23.3 54,273 2.45 (1.81) 202.81 Year ended 10/31/02 .............. -- 5.93 (24.7) 53,936 2.28 (1.82) 174.83 Year ended 10/31/01 .............. (0.48) 7.87 (37.2) 96,451 2.15 (1.20) 102.58 Year ended 10/31/00 .............. (1.93) 13.09 11.7 180,663 2.12 (1.42) 132.37 ALGER HEALTH SCIENCES FUND CLASS A Six months ended 4/30/05 (iii)(vi) $ (0.70) $ 14.38 13.6% $ 23,469 1.50%(v) (0.84)% 94.38% Year ended 10/31/04 .............. (0.23) 13.29 13.7 15,106 1.55(iv) (1.04) 202.79 Year ended 10/31/03 .............. -- 11.91 28.2 8,594 2.36 (1.80) 246.96 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) -- 9.29 (7.1) 712 2.15 (1.43) 135.82
THE ALGER FUNDS -54- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from Investment Operations ------------------------- Net Realized and Net Asset Net Unrealized Total Value, Investment Gain from Beginning Income (Loss) on Investment of Period (Loss) (i) Investments Operations --------- ----------- ----------- ---------- ALGER HEALTH SCIENCES FUND (CONTINUED) CLASS B Six months ended 4/30/05 (iii)(viii) . $ 13.05 $ (0.11) $ 1.82 $ 1.71 Year ended 10/31/04 .................. 11.78 (0.24) 1.74 1.50 Year ended 10/31/03 .................. 9.26 (0.28) 2.80 2.52 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) .... 10.00 (0.10) (0.64) (0.74) CLASS C Six months ended 4/30/05 (iii)(viii) . $ 13.05 $ (0.11) $ 1.82 $ 1.71 Year ended 10/31/04 .................. 11.78 (0.24) 1.74 1.50 Year ended 10/31/03 .................. 9.26 (0.29) 2.81 2.52 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) .... 10.00 (0.10) (0.64) (0.74) ALGER SMALLCAP AND MIDCAP GROWTH FUND CLASS A Six months ended 4/30/05 (iii)(viii) . $ 10.46 $ (0.06) $ 0.56 $ 0.50 Year ended 10/31/04 .................. 9.97 (0.13) 0.62 0.49 Year ended 10/31/03 .................. 7.65 (0.09) 2.41 2.32 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... 10.00 (0.01) (2.34) (2.35) CLASS B Six months ended 4/30/05 (iii)(viii) . $ 10.27 $ (0.10) $ 0.57 $ 0.47 Year ended 10/31/04 .................. 9.87 (0.20) 0.60 0.40 Year ended 10/31/03 .................. 7.63 (0.16) 2.40 2.24 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... 10.00 (0.09) (2.28) (2.37) CLASS C Six months ended 4/30/05 (iii)(viii) . $ 10.27 $ (0.10) $ 0.57 $ 0.47 Year ended 10/31/04 .................. 9.86 (0.20) 0.61 0.41 Year ended 10/31/03 .................. 7.63 (0.16) 2.39 2.23 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... 10.00 (0.09) (2.28) (2.37)
------------------ (i) Amount was computed based on average shares outstanding during the period. (ii) Does not reflect the effect of any sales charges. (iii) Ratios have been annualized; total return has not been annualized. (iv) Amount has been reduced by 0.14% due to expense reimbursement. (v) Amount has been reduced by 0.15% due to expense reimbursement. (vi) Amount has been reduced by 0.08% due to expense reimbursements. (vii) Amount has been reduced by 0.22% due to expense reimbursements. (viii) Unaudited. See Notes to Financial Statements. -55-
Ratios/Supplemental Data ---------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Dividends Asset End of to Income from Net Value, Period Average (Loss) to Portfolio Realized End of Total (000's Net Average Turnover Gains Period Return (ii) omitted) Assets Net Assets Rate ------------- --------- ----------- -------- -------- ---------- --------- ALGER HEALTH SCIENCES FUND (CONTINUED) CLASS B Six months ended 4/30/05 (iii)(viii) . $ (0.70) $ 14.06 13.2% $10,268 2.25%(vi) (1.61)% 94.38% Year ended 10/31/04 .................. (0.23) 13.05 12.9 7,939 2.29(iv) (1.78) 202.79 Year ended 10/31/03 .................. -- 11.78 27.2 3,620 3.22 (2.63) 246.96 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) .... -- 9.26 (7.4) 325 2.91 (2.18) 135.82 CLASS C Six months ended 4/30/05 (iii)(viii) . $ (0.70) $ 14.06 13.2% $ 5,565 2.25%(vi) (1.61)% 4.38% Year ended 10/31/04 .................. (0.23) 13.05 12.9 3,740 2.29(v) (1.78) 202.79 Year ended 10/31/03 .................. -- 11.78 27.2 1,357 3.30 (2.69) 246.96 From 5/1/02 (commencement of operations) to 10/31/2002 (iii) .... -- 9.26 (7.4) 309 2.90 (2.17) 135.82 ALGER SMALLCAP AND MIDCAP GROWTH FUND CLASS A Six months ended 4/30/05 (iii)(viii) . $ (0.81) $ 10.15 4.3% $11,693 1.50%(vii) (1.17)% 40.85% Year ended 10/31/04 .................. -- 10.46 4.9 10,827 1.53(iv) (1.21) 101.16 Year ended 10/31/03 .................. -- 9.97 30.3 9,932 1.58 (1.06) 83.67 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... -- 7.65 (23.5) 7,775 1.89 (1.57) 34.09 CLASS B Six months ended 4/30/05 (iii)(viii) . $ (0.81) $ 9.93 4.1% $ 2,533 2.25%(vii) (1.92)% 40.85% Year ended 10/31/04 .................. -- 10.27 4.1 2,291 2.27(v) (1.95) 101.16 Year ended 10/31/03 .................. -- 9.87 29.4 1,205 2.37 (1.87) 83.67 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... -- 7.63 (23.7) 269 2.64 (2.32) 34.09 CLASS C Six months ended 4/30/05 (iii)(viii) . $ (0.81) $ 9.93 4.1% $ 1,461 2.25%(vii) (1.92)% 40.85% Year ended 10/31/04 .................. -- 10.27 4.2 1,345 2.28(v) (1.95) 101.16 Year ended 10/31/03 .................. -- 9.86 29.2 969 2.38 (1.86) 83.67 From 5/8/02 (commencement of operations) to 10/31/2002 (iii) .... -- 7.63 (23.7) 254 2.64 (2.32) 34.09
THE ALGER FUNDS -56- FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD Income from Investment Operations ----------------------- Net Net Asset Net Dividends Asset Value, Investment from Net Value, Beginning Income Investment End of of Period (Loss) Income Period ---------- ---------- ---------- ------- ALGER MONEY MARKET FUND Six months ended 4/30/05 (i) . $1.0000 $0.0072 $(0.0072) $1.0000 Year ended 10/31/04 .......... 1.0000 0.0039 (0.0039) 1.0000 Year ended 10/31/03 .......... 1.0000 0.0033 (0.0033) 1.0000 Year ended 10/31/02 .......... 1.0000 0.0097 (0.0097) 1.0000 Year ended 10/31/01 .......... 1.0000 0.0387 (0.0387) 1.0000 Year ended 10/31/00 .......... 1.0000 0.0527 (0.0527) 1.0000 ---------------- (i) Unaudited. Ratios have been annualized; total return has not been annualized. See Notes to Financial Statements. -57- Ratios/Supplemental Data ---------------------------------- Ratio of Net Ratio of Net Assets, Expenses Investment End of to Income Period Average to Total (000's Net Average Return omitted) Assets Net Assets ------- --------- -------- ---------- ALGER MONEY MARKET FUND Six months ended 4/30/05 (i) . 0.7% $ 66,379 0.84% 1.44% Year ended 10/31/04 .......... 0.4 80,528 0.77 0.37 Year ended 10/31/03 .......... 0.3 115,935 0.82 0.34 Year ended 10/31/02 .......... 1.0 330,213 0.79 0.99 Year ended 10/31/01 .......... 3.9 402,515 0.71 3.88 Year ended 10/31/00 .......... 5.4 233,526 0.78 5.14 THE ALGER FUNDS -58- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- GENERAL: The Alger Funds (formerly The Alger Fund) (the "Trust") is a diversified, open-end registered investment company organized as a business trust under the laws of the Commonwealth of Massachusetts. The Trust operates as a series company currently issuing an unlimited number of shares of beneficial interest in eight Funds--LargeCap Growth Fund, SmallCap Growth Fund, Balanced Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund, SmallCap and MidCap Growth Fund and Money Market Fund (the "Funds"). Prior to February 28, 2004, the LargeCap Growth Fund was the LargeCap Growth Portfolio, the SmallCap Growth Fund was the Small Capitalization Portfolio, the Balanced Fund was the Balanced Portfolio, the MidCap Growth Fund was the MidCap Growth Portfolio, the Capital Appreciation Fund was the Capital Appreciation Portfolio, the Health Sciences Fund was the Health Sciences Portfolio, the SmallCap and MidCap Growth Fund was the SmallCap and MidCap Portfolio and the Money Market Fund was the Money Market Portfolio. The LargeCap Growth Fund, SmallCap Growth Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund and SmallCap and MidCap Growth Fund normally invest primarily in equity securities and each has an investment objective of long-term capital appreciation. The Balanced Fund'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 Fund's investment objective is high current income which it seeks to achieve by investing in short-term instruments. Each Fund, other than the Money Market Fund, offers Class A, Class B and Class C shares. Class A shares are generally subject to an initial sales charge while Class B and C shares are generally subject to 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 Funds, other than the Money Market Fund, are valued on each day the NewYork Stock Exchange (the "NYSE") is open as of the close of the NYSE (normally 4:00 p.m. Eastern time). Listed 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 included within the Nasdaq market shall be valued at the Nasdaq official closing price (NOCP) on the day of valuation, or if there is no NOCP issued, at the last sale price on such day. Securities included within the Nasdaq market for which there is no NOCP and THE ALGER FUNDS -59- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) no last sale price on the day of valuation shall be valued at the mean between the last bid and asked prices on such day. 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 Fund, and short-term securities held by the other Funds 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. Premiums and discounts on debt securities purchased are amortized or accreted over the lives of the respective securities. (c) REPURCHASE AGREEMENTS: The Funds enter into repurchase agreements with approved institutions. The repurchase agreements are collateralized by U.S. Government securities, which are either received and held in physical possession by the custodian or received by such custodian in book-entry form through the Federal Reserve book-entry system. The collateral is valued on a daily basis during the term of the agreement to ensure that its value equals or exceeds the agreed-upon repurchase price to be repaid to the Fund. Additional collateral is obtained when necessary. (d) LENDING OF FUND SECURITIES: The Funds 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 Fund's total assets, as defined. The Funds earn fees on the securities loaned. 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 Funds and any required additional collateral is delivered to the Funds on the next business day. As of April 30, 2005, there were no securities on loan. (e) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded on the ex-dividend date. The Money Market Fund declares dividends daily from net investment income; such dividends are paid monthly. The dividends from net investment income of the other Funds are declared and paid annually. With respect to all Funds, 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. THE ALGER FUNDS -60- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Each class is treated separately in determining the amounts of dividends of net investment income and 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 Funds' distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income, net realized gain on investment transactions, or return of capital, depending on the type of book/tax differences that may exist. Capital accounts within the financial statements are adjusted for permanent book/tax differences. Reclassifications result primarily from the differences in tax treatment of net operating losses and premium/discount of debt securities. The reclassifications had no impact on the net asset values of the Funds and are designed to present the Funds' capital accounts on a tax basis. (f) FEDERAL INCOME TAXES: It is each Fund'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 Fund maintains such compliance, no federal income tax provision is required. Each Fund is treated as a separate entity for the purpose of determining such compliance. (g) ALLOCATION METHODS: The Trust accounts separately for the assets, liabilities and operations of each Fund. Expenses directly attributable to each Fund are charged to that Fund's operations; expenses which are applicable to all Funds are allocated among them based on net assets. Income, realized and unrealized gains and losses, and expenses of each Fund, other than the Money Market Fund, are allocated among the Fund'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) INDEMNIFICATION: The Trust enters into contracts that contain a variety of indemnification provisions. The Trust's maximum exposure under these arrangements is unknown. The Trust does not anticipate recognizing any loss related to these arrangements. (i) 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 Fund, 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 Fund at the following annual rates: THE ALGER FUNDS -61- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) LargeCap Growth Fund .............................. .75% SmallCap Growth Fund .............................. .85 Balanced Fund ..................................... .75 MidCap Growth Fund ................................ .80 Capital Appreciation Fund ......................... .85 Health Sciences Fund .............................. .85 SmallCap and MidCap Growth Fund ................... .85 Money Market Fund ................................. .50 Alger Management has established an expense cap for the Health Sciences Fund and the SmallCap and MidCap Growth Fund effective March 1, 2004. Alger Management will reimburse these Funds if annualized operating expenses exceed 1.50% of average daily net assets for Class A shares and 2.25% of average daily net assets for Class B and Class C shares, respectively. For the period ended April 30, 2005, Alger Management reimbursed the Health Sciences Fund and the SmallCap and MidCap Growth Fund $13,050 and $17,576, respectively. Alger Management has contractually agreed to extend the expense cap through February 28, 2006. (b) DISTRIBUTION FEES: Class B Shares--The Trust has adopted an Amended and Restated Plan of Distribution pursuant to which Class B shares of each Fund, other than the Money Market Fund, reimburse Fred Alger & Company, Incorporated, the Fund's distributor (the "Distributor") and an affiliate of Alger Management, 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 Funds. 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 Funds, the excess may be carried forward, with interest, and sought to be reimbursed in future periods. As of April 30, 2005, such excess carried forward was approximately $17,016,000, $13,356,000, $4,317,000, $10,912,000, $20,236,000, $571,000 and $88,000 for Class B shares of the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund and the SmallCap and MidCap Growth Fund, 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 Trust has adopted a Distribution Plan pursuant to which Class C shares of each Fund, other than the Money Market Fund, 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 Funds 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: Purchases and sales of shares of the Funds, other than the Money Market Fund, may be subject to initial sales charges or contingent THE ALGER FUNDS -62- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) deferred sales charges. For the six months ended April 30, 2005, the initial sales charges and contingent deferred sales charges retained by the Distributor were approximately $19,900 and $1,421,498, 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 Trust. (d) BROKERAGE COMMISSIONS: During the six months ended April 30, 2005, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund and the SmallCap and MidCap Growth Fund paid the Distributor commissions of $1,053,669, $111,002, $304,454, $1,043,528, $416,173, $43,354 and $7,611 respectively, in connection with securities transactions. (e) TRANSFER AGENT FEES AND EXPENSES: Alger Shareholder Services, Inc. ("Alger Services"), an affiliate of Alger Management, served as transfer agent for the Trust. During the six months ended April 30, 2005, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, the SmallCap and MidCap Growth Fund and the Money Market Fund incurred fees of $32,503, $17,793, $10,148, $31,854, $44,685, $2,036, $736 and $5,192, respectively, for services provided by Alger Services. Effective November 22, 2004, State Street Bank and Trust Company replaced Alger Services as the Funds' transfer agent. Transfer agent services are provided by State Street Bank and Trust Company's affiliate, Boston Financial Data Services, Inc. ("BFDS"). Effective February 28, 2005, the Trust has entered into a shareholder administrative services agreement with Alger Services to compensate Alger Services on a per account basis for its liaison and administrative oversight of BFDS and related services. During the six months ended April 30, 2005, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, the SmallCap and MidCap Growth Fund and the Money Market Fund incurred fees of $29,810, $16,026, $8,725, $27,950, $39,200, $1,988, $625 and $4,856, respectively, for these services provided by Alger Services. In addition, during the six months ended April 30, 2005, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, the SmallCap and MidCap Growth Fund, and the Money Market Fund reimbursed Alger Services $204,616, $70,464, $87,129, $281,935, $165,311, $14,327, $6,955 and $31,284, respectively, for shareholder administrative related expenses paid by Alger Services on behalf of the Funds. (f) SHAREHOLDER SERVICING FEES: The Trust has entered into a shareholder servicing agreement with the Distributor whereby the Distributor provides each Fund, other than the Money Market Fund, with ongoing servicing of shareholder accounts. As compensation for such services, each designated Fund THE ALGER FUNDS -63- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) pays the Distributor a monthly fee at an annual rate equal to .25% of each Fund's average daily net assets. (g) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the Trust are directors and officers of Alger Management, the Distributor and Alger Services. NOTE 4 -- SECURITIES TRANSACTIONS: The following summarizes the securities transactions by the Trust, other than short-term securities, for the year ended April 30, 2005: PURCHASES SALES ---------- ----- LargeCap Growth Fund ......................... $625,932,041 $691,937,693 SmallCap Growth Fund ......................... 88,208,757 103,592,117 Balanced Fund ................................ 250,696,066 284,947,022 MidCap Growth Fund ........................... 708,716,992 733,712,608 Capital Appreciation Fund .................... 312,714,535 374,971,096 Health Sciences Fund ......................... 38,355,560 30,214,943 SmallCap and MidCap Growth Fund .............. 6,355,027 6,406,195 NOTE 5 -- LINES OF CREDIT: The Trust 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 Fund, the Trust borrows under such lines of credit exclusively for temporary or emergency purposes. The Capital Appreciation Fund 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 Fund borrows under these lines, it must pledge securities with a total value of at least twice the amount borrowed. For the six months ended April 30, 2005, the Fund had borrowings which averaged $174,218 at a weighted average interest rate of 3.01%. THE ALGER FUNDS -64- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 6 -- SHARE CAPITAL: The Trust has an unlimited number of authorized shares of beneficial interest of $.001 par value which are presently divided into eight series. Each series, other than the Money Market Fund, is divided into three separate classes. The transactions of shares of beneficial interest were as follows:
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 SHARES AMOUNT SHARES AMOUNT --------- -------- -------- -------- Alger LargeCap Growth Fund Class A: Shares sold ................. 1,224,135 $ 11,612,803 3,785,781 $ 34,961,378 Shares converted from Class B 820,133 7,827,865 4,951,285 45,970,273 Shares redeemed ............. (5,181,553) (49,366,475) (9,331,571) (86,016,972) ------------- ------------- ------------- ------------- Net decrease ................ (3,137,285) $ (29,925,807) (594,505) $ (5,085,321) ============= ============= ============= ============= Class B: Shares sold ................. 1,301,699$ 11,523,667 3,625,445 $ 31,437,096 Shares converted to Class A . (881,854) (7,827,865) (5,290,324) (45,970,273) Shares redeemed ............. (3,935,970) (34,966,368) (7,267,198) (62,501,351) ------------- ------------- ------------- ------------- Net decrease ................ (3,516,125) $ (31,270,566) (8,932,077) $ (77,034,528) ============= ============= ============= ============= Class C: Shares sold ................. 323,168 $ 2,853,520 1,471,428 $ 12,812,280 Shares redeemed ............. (922,621) (8,189,039) (1,498,494) (12,836,202) ------------- ------------- ------------- ------------- Net decrease ................ (599,453) $ (5,335,519) (27,066) $ (23,922) ============= ============= ============= ============= Alger SmallCap Growth Fund Class A: Shares sold ................. 372,244 $ 1,840,375 1,181,044 $ 4,955,133 Shares converted from Class B 1,673,943 7,371,026 5,051,160 21,245,305 Shares redeemed ............. (2,139,625) (9,701,015) (5,027,530) (20,965,950) ------------- ------------- ------------- ------------- Net increase (decrease) ..... (93,438) $ (489,614) 1,204,674 $ 5,234,488 ============= ============= ============= ============= Class B: Shares sold ................. 667,053 $ 2,795,415 2,159,641 $ 8,451,362 Shares converted to Class A . (1,764,894) (7,371,026) (5,423,212) (21,245,305) Shares redeemed ............. (1,969,789) (8,273,178) (4,112,290) (15,983,490) ------------- ------------- ------------- ------------- Net decrease ................ (3,067,630) $ (12,848,789) (7,375,861) $ (28,777,433) ============= ============= ============= ============= Class C: Shares sold ................. 76,351 $ 320,331 256,688 $ 984,448 Shares redeemed ............. (205,680) (859,763) (405,714) (1,561,201) ------------- ------------- ------------- ------------- Net decrease ................ (129,329) $ (539,432) (149,026) $ (576,753) ============= ============= ============= =============
THE ALGER FUNDS -65- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 SHARES AMOUNT SHARES AMOUNT --------- -------- -------- -------- Alger Balanced Fund Class A: Shares sold ................. 258,935 $ 4,942,036 786,535 $ 14,753,407 Shares converted from Class B 50,643 967,558 209,794 3,938,485 Dividends reinvested ........ 21,332 411,710 37,398 692,621 Shares redeemed ............. (764,962) (14,609,005) (1,679,123) (31,432,047) ------------- ------------- ------------- ------------- Net decrease ................ (434,052) $ (8,287,701) (645,396) $ (12,047,534) ============= ============= ============= ============= Class B: Shares sold ................. 160,753 $ 3,005,626 659,551 $ 12,118,921 Dividends reinvested ........ 11,126 211,063 12,407 225,684 Shares converted to Class A . (51,660) (967,558) (214,310) (3,938,485) Shares redeemed ............. (1,320,539) (24,714,284) (2,200,661) (40,221,437) ------------- ------------- ------------- ------------- Net decrease ................ (1,200,320) $ (22,465,153) (1,743,013) $ (31,815,317) ============= ============= ============= ============= Class C: Shares sold ................. 22,660 $ 425,084 233,090 $ 4,341,356 Dividends reinvested ........ 3,453 65,822 3,643 66,554 Shares redeemed ............. (499,780) (9,404,377) (822,031) (15,043,212) ------------- ------------- ------------- ------------- Net decrease ................ (473,667) $ (8,913,471) (585,298) $ (10,635,302) ============= ============= ============= ============= Alger MidCap Growth Fund Class A: Shares sold ................. 4,253,809 $ 35,934,444 14,804,827 $ 116,632,798 Shares converted from Class B 1,507,419 12,864,155 5,032,695 39,698,864 Shares redeemed ............. (5,719,624) (48,683,990) (15,480,099) (121,775,451) ------------- ------------- ------------- ------------- Net increase ................ 41,604 $ 114,609 4,357,423 $ 34,556,211 ============= ============= ============= ============= Class B: Shares sold ................. 2,420,495 $ 19,130,048 6,665,291 $ 49,119,085 Shares converted to Class A . (1,627,164) (12,864,155) (5,403,047) (39,698,864) Shares redeemed ............. (4,618,530) (36,449,116) (9,524,724) (69,584,665) ------------- ------------- ------------- ------------- Net decrease ................ (3,825,199) $ (30,183,223) (8,262,480) $ (60,164,444) ============= ============= ============= ============= Class C: Shares sold ................. 819,502 $ 6,456,397 3,207,328 $ 23,687,883 Shares redeemed ............. (1,528,710) (12,030,430) (2,408,406) (17,497,437) ------------- ------------- ------------- ------------- Net increase (decrease) ..... (709,208) $ (5,574,033) 798,922 $ 6,190,446 ============= ============= ============= =============
THE ALGER FUNDS -66- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 SHARES AMOUNT SHARES AMOUNT --------- -------- -------- -------- Alger Capital Appreciation Fund Class A: Shares sold ................. 918,018 $ 7,480,067 1,957,522 $ 15,512,290 Shares converted from Class B 1,069,103 8,834,891 4,670,294 37,504,791 Shares redeemed ............. (3,780,799) (31,279,570) (5,362,253) (42,343,889) ------------ ------------- ------------ ------------- Net increase (decrease) ..... (1,793,678) $ (14,964,612) 1,265,563 $ 10,673,192 ============ ============= ============ ============= Class B: Shares sold ................. 637,408 $ 4,909,795 2,196,054 $ 16,518,900 Shares converted to Class A . (1,143,155) (8,834,891) (4,965,396) (37,504,791) Shares redeemed ............. (5,375,158) (41,567,189) (9,956,627) (73,748,590) ------------ ------------- ------------ ------------- Net decrease ................ (5,880,905) $ (45,492,285) (12,725,969) $ (94,734,481) ============ ============= ============ ============= Class C: Shares sold ................. 134,387 $ 1,038,905 629,566 $ 4,764,214 Shares redeemed ............. (1,459,110) (11,287,133) (2,298,916) (17,061,481) ------------ ------------- ------------ ------------- Net decrease ................ (1,324,723) $ (10,248,228) (1,669,350) $ (12,297,267) ============ ============= ============ ============= Alger Health Sciences Fund Class A: Shares sold ................. 519,488 $ 7,248,507 563,963 $ 7,639,625 Shares converted from Class B 14,056 199,113 10,929 146,271 Dividends reinvested ........ 46,853 657,351 13,576 167,934 Shares redeemed ............. (84,770) (1,192,617) (173,720) (2,383,764) ------------ ------------- ------------ ------------- Net increase ................ 495,627 $ 6,912,354 414,748 $ 5,570,066 ============ ============= ============ ============= Class B: Shares sold ................. 164,235 $ 2,267,471 396,834 $ 5,173,379 Dividends reinvested ........ 18,064 248,555 3,637 44,444 Shares converted to Class A . (14,345) (199,113) (11,091) (146,271) Shares redeemed ............. (46,167) (635,204) (88,324) (1,112,852) ------------ ------------- ------------ ------------- Net increase ................ 121,787 $ 1,681,709 301,056 $ 3,958,700 ============ ============= ============ ============= Class C: Shares sold ................. 116,212 $ 1,605,745 192,177 $ 2,535,031 Dividends reinvested ........ 11,371 156,462 2,366 28,911 Shares redeemed ............. (18,418) (255,419) (23,169) (299,835) ------------ ------------- ------------ ------------- Net increase ................ 109,165 $ 1,506,788 171,374 $ 2,264,107 ============ ============= ============ =============
THE ALGER FUNDS -67- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 SHARES AMOUNT SHARES AMOUNT --------- -------- -------- -------- Alger SmallCap and MidCap Growth Fund Class A: Shares sold ................. 86,674 $ 958,963 98,734 $ 1,035,622 Shares converted from Class B 7,281 80,164 4,329 43,957 Dividends reinvested ........ 42,535 457,679 -- -- Shares redeemed ............. (19,721) (211,945) (64,161) (668,477) ------------- ------------- ------------- ------------- Net increase ................ 116,769 $ 1,284,861 38,902 $ 411,102 ============= ============= ============= ============= Class B: Shares sold ................. 51,435 $ 548,301 133,855 $ 1,360,513 Dividends reinvested ........ 16,197 171,044 -- -- Shares converted to Class A . (7,434) (80,164) (4,398) (43,957) Shares redeemed ............. (28,285) (299,547) (28,523) (287,651) ------------- ------------- ------------- ------------- Net increase ................ 31,913 $ 339,634 100,934 $ 1,028,905 ============= ============= ============= ============= Class C: Shares sold ................. 15,001 $ 162,212 54,030 $ 556,186 Dividends reinvested ........ 8,606 90,884 -- -- Shares redeemed ............. (7,442) (77,642) (21,312) (216,701) ------------- ------------- ------------- ------------- Net increase ................ 16,165 $ 175,454 32,718 $ 339,485 ============= ============= ============= ============= Alger Money Market Fund Shares sold ................. 19,671,930 $ 19,711,930* 66,115,637 $ 66,158,584+ Dividends reinvested ........ 499,236 499,236 330,082 330,082 Shares redeemed ............. (34,360,067) (34,360,068) (101,895,323) (101,895,323) ------------- ------------- ------------- -------------- Net decrease ................ (14,188,901) $ (14,148,902) (35,449,604) $ (35,406,657) ============= ============= ============= ============== *Dollar amount of shares sold includes a reimbursement by Alger Management of $40,000 for losses on portfolio investments incurred in previous fiscal years. +Dollar amount of shares sold includes a reimbursement by Alger Management of $42,947 for losses on portfolio investments incurred in previous fiscal years. THE ALGER FUNDS -68- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 7 -- TAX CHARACTER OF DISTRIBUTIONS TO SHAREHOLDERS: The tax character of distributions paid during the six months ended April 30, 2005 and the year ended October 31, 2004 were as follows: SIX MONTHS ENDED YEAR ENDED APRIL 30, 2005 OCTOBER 31, 2004 ---------------- ---------------- LargeCap Growth Fund Distributions paid from: Ordinary Income ............. -- -- Long-term capital gain ...... -- -- ------------ ------------ Total distributions paid .... -- -- ============ ============ SmallCap Growth Fund Distributions paid from: Ordinary Income ............. -- -- Long-term capital gain ...... -- -- ------------ ------------ Total distributions paid .... -- -- ============ ============ Balanced Fund Distributions paid from: Ordinary Income ............. $ 1,122,926 $ 1,038,280 Long-term capital gain ...... -- ------------ ------------ Total distributions paid .... $ 1,122,926 $ 1,038,280 ============ ============ MidCap Growth Fund Distributions paid from: Ordinary Income ............. -- -- Long-term capital gain ...... -- -- ------------ ------------ Total distributions paid .... -- -- ============ ============ Capital Appreciation Fund Distributions paid from: Ordinary Income ............. -- -- Long-term capital gain ...... -- -- ------------ ------------ Total distributions paid .... -- -- ============ ============ Health Sciences Fund Distributions paid from: Ordinary Income ............. $ -- $ 242,648 Long-term capital gain ...... 1,459,827 41,250 ------------ ------------ Total distributions paid .... $ 1,459,827 $ 283,898 ============ ============ SmallCap and MidCap Growth Fund Distributions paid from: Ordinary Income ............. $ -- $ -- Long-term capital gain ...... 1,165,415 -- ------------ ------------ Total distributions paid .... $ 1,165,415 $ -- ============ ============ Money Market Fund Distributions paid from: Ordinary Income ............. $ 518,175 $ 342,302 Long-term capital gain ...... -- -- ------------ ------------ Total distributions paid .... $ 518,175 $ 342,302 ============ ============
-69- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) As of October 31, 2004, the components of distributable earnings on a tax basis were as follows: LargeCap Growth Fund Undistributed ordinary income ............................... -- Undistributed long-term gain ................................ -- Unrealized appreciation ..................................... $28,973,500 SmallCap Growth Fund Undistributed ordinary income ............................... -- Undistributed long-term gain ................................ -- Unrealized appreciation ..................................... $13,250,759 Balanced Fund Undistributed ordinary income ............................... $ 282,804 Undistributed long-term gain -- Unrealized appreciation ..................................... 10,244,039 MidCap Growth Fund Undistributed ordinary income ............................... -- Undistributed long-term gain ................................ -- Unrealized appreciation ..................................... $39,041,080 Capital Appreciation Fund Undistributed ordinary income ............................... -- Undistributed long-term gain ................................ -- Unrealized appreciation ..................................... $36,339,450 Health Sciences Fund Undistributed ordinary income ............................... $ 1,113,122 Undistributed long-term gain ................................ 343,643 Unrealized appreciation ..................................... 968,950 SmallCap and MidCap Growth Fund Undistributed ordinary income ............................... $ 166,869 Undistributed long-term gain ................................ 998,061 Unrealized appreciation ..................................... 1,844,859 Money Market Fund Undistributed ordinary income ............................... -- Undistributed long-term gain ................................ -- Unrealized appreciation ..................................... -- The difference between book basis and tax basis unrealized appreciation is attributable primarily to the tax deferral of losses on wash sales. At October 31, 2004, the Funds, for federal income tax purposes, had capital loss caryforwards which expire as set forth in the table below. These amounts may be applied against future net realized gains until the earlier of their utilization or expiration.
EXPIRATION DATE -------------------------------------------------- 2009 2010 2011 2012 TOTAL -------- -------- -------- -------- -------- LargeCap Growth Fund ................. $111,770,355 $165,962,647 $21,526,122 -- $299,259,124 SmallCap Growth Fund ................. $106,802,360 $ 30,152,501 -- -- $136,954,861 Balanced Fund .......... $ 15,717,959 $ 34,009,327 $ 2,892,067 -- $ 52,619,353 MidCap Growth Fund ................. -- $ 25,196,444 -- -- $ 25,196,444 Capital Appreciation Fund ................. $398,880,536 $204,820,909 -- -- $603,701,445 Money Market Fund ...... $ 216,474 -- $640 $ 217,114
THE ALGER FUNDS -70- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 8 -- REGULATORY MATTERS AND LEGAL PROCEEDINGS: Alger Management has been responding to inquiries, document requests and/or subpoenas from regulatory authorities, including the United States Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General, and the Attorney General of New Jersey, in connection with their investigation of practices in the mutual fund industry identified as "market timing" and "late trading." Alger Management has assured the board of the Trust that if it is determined that improper trading practices in the Trust detrimentally affected its performance, Alger Management will make appropriate restitution. Certain civil actions have developed out of the regulatory investigations. Several purported class actions and shareholder derivative suits have been filed against various parties, including, depending on the lawsuit, Alger Management, certain of the mutual funds managed by Alger Management (the "Alger Mutual Funds"), and certain current and former Alger Mutual Fund trustees and officers, alleging wrongful market-timing and late-trading activities. These cases have been transferred to the U.S. District Court of Maryland by the Judicial Panel on Multidistrict Litigation for consolidated pre-trial proceedings. On September 29, 2004, consolidated amended complaints involving these cases -- a Consolidated Amended Fund Derivative Complaint (the "Derivative Complaint") and two substantially identical Consolidated Amended Class Action Complaints (together, the "Class Action Complaint") -- were filed in the Maryland federal district court under the caption number 1:04-MD-15863 (JFM). The Derivative Complaint, brought on behalf of the Alger Mutual Funds and Castle Convertible Fund, Inc., a registered closed-end fund managed by Alger Management, alleges (i) violations, by Alger Management and, depending on the specific offense alleged, by its immediate parent the Distributor (Fred Alger & Company, Incorporated) and/or the fund trustee defendants, of Sections 36(a), 36(b), 47, and 48 of the Investment Company Act of 1940 and of Sections 206 and 215 of the Investment Advisers Act of 1940, breach of fiduciary duty, and breach of contract, (ii) various offenses by other, unrelated, third-party defendants, and (iii) unjust enrichment by all the named defendants, all by virtue of the alleged wrongful market-timing and late-trading activities. The complaint seeks, among other things, removal of the trustee defendants and of Alger Management, certain rescissory relief, disgorgement of management fees and allegedly unlawful profits, compensatory and punitive monetary damages, and plaintiffs' fees and expenses (including attorney and expert fees). The Class Action Complaint names the Alger-related defendants named in the Derivative Complaint as well as certain defendants not named in the Derivative Complaint, including certain entities affiliated with Alger Management, certain Alger Mutual Funds, including the Trust, and certain additional former trustees and a former officer of the defendant Alger Mutual Funds. It alleges, on the basis of factual allegations similar to those of the Derivative Complaint with respect to the Alger defendants, (i) offenses by Alger defendants similar to those alleged in the Derivative THE ALGER FUNDS -71- NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Complaint, (ii) violations, by Alger Management, the Distributor, their affiliates, the funds named as defendants, and the current and former fund trustees and officers, of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, Sections 10(b) (and Rule 10b-5 thereunder) and 20(a) of the Securities Exchange Act of 1934, and Section 34(b) of the Investment Company Act of 1940, (iii) breach of contract by the funds named as defendants, and (iv) unjust enrichment by all of the named defendants. It seeks relief similar to that sought in the Derivative Complaint. On or about April 12, 2005, the Attorney General of the State of West Virginia filed a complaint in the Circuit Court of Marshall County, West Virginia against a number of mutual fund investment advisers, distributors and others, including Alger Management and the Distributor, alleging violations of the West Virginia Consumer Credit and Protection Act and other wrongful conduct. Insofar as the factual allegations in the complaint relate to Alger Management and the Distributor, they ascribe improper conduct to these entities relating to "market timing" in one or more of the Alger Mutual Funds. The complaint seeks injunctive relief, civil monetary penalties, costs and attorney fees, and other relief. Alger Management continues to cooperate with the SEC and state investigations, which have not, as of the present date, been resolved. Although Alger Management does not believe that the Alger Mutual Funds are themselves targets of these regulators' investigations as potential enforcement defendants, the actions of Alger Management and certain of its affiliates and their senior executives and Alger Mutual Fund senior personnel are of interest to the investigators. Although no regulatory enforcement action has yet been commenced against Alger Management, board members or personnel in connection with the matters being investigated (other than the actions resolved in the fall of 2003 against James P. Connelly, Jr., former Vice Chairman of the Distributor), it is possible that the SEC and the states may pursue actions in the future. The potential timing of any such action or the relief or remedies that may be sought are not known at this time. Alger Management is not yet able to predict whether or on what terms matters might be resolved with the SEC or the states. The SEC and, in some cases, state government authorities have a variety of administrative and civil enforcement powers, including injunctive powers, authority to assess substantial fines and penalties and order restitution, authority to limit the activities of a person or company (including license and registration revocations, injunctive authority and prohibition from engaging in the investment or securities businesses) and other enforcement powers, that may be exercised administratively or by going into court. -72- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Under Section 9(a) of the Investment Company Act, if any of the various regulatory investigations or lawsuits were to result in a court injunction against Alger Management or the Distributor, both companies would, in the absence of exemptive relief granted by the SEC, be barred from serving as investment adviser/sub-adviser or principal underwriter for any registered investment company, including the Trust. There is no assurance that such exemptive relief would be granted if sought. In addition, it is possible that these matters and/or other developments resulting from these matters could result in increased Trust redemptions, loss of Alger Management personnel or Trust board members, diversion of time and attention of Alger Management personnel, diminishment of financial resources of Alger Management, or other consequences potentially adverse to the Trust. Alger Management cannot predict the potential effect of such actions upon Alger Management or the Trust. There can be no assurance that the effect, if any, would not be material. NOTES: ------ NOTES: ------ NOTES: ------ NOTES: ------ THE ALGER FUNDS 111 Fifth Avenue New York, NY 10003 (800) 992-3863 www.alger.com INVESTMENT MANAGER Fred Alger Management, Inc. 111 Fifth Avenue New York, NY 10003 DISTRIBUTOR Fred Alger & Company, Incorporated 30 Montgomery Street Jersey City, NJ 07302 TRANSFER AGENT AND DIVIDEND DISBURSING AGENT Boston Financial Data Services, Inc. P.O. Box 8480 Boston, MA 02266 This report is submitted for the general information of the shareholders of The Alger Funds. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Funds, which contains information concerning the Trust's investment policies, fees and expenses as well as other pertinent information. PROXY VOTING POLICIES A description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities and the proxy voting record is available, without charge, by calling (800) 992-3863 or online on the Funds' website at http://www.alger.com or on the SEC's website at http://www.sec.gov. QUARTERLY FUND HOLDINGS The Funds file their complete schedule of portfolio holdings with the SEC for the first and third quarter of each fiscal year on Form N-Q. Forms N-Q are available online on the Funds' website at http://www.alger.com or on the SEC's website at http://www.sec.gov. The Funds' Forms N-Q may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of the most recent quarterly holdings may also be obtained from the Funds by calling (800) 992-3863. The Alger Funds [LOGO OMITTED] Boston Financial Data Services, Inc. P.O. Box 8480 Boston, MA 02266 ASAR 43005 L2 ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this document. (b) No changes in the registrant's internal control over financial reporting occurred during the registrant's second fiscal quarter of the period covered by this report that materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Not applicable (a) (2) Certifications of principal executive officer and principal financial officer as required by rule 30a-2(a) under the Investment Company Act of 1940 are attached as Exhibit 99.CERT (b) Certifications of principal executive officer and principal financial officer as required by rule 30a-2(b) under the Investment Company Act of 1940 are attached as Exhibit 99.906CERT SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Alger Funds By: /s/ Dan C. Chung ---------------- Dan C. Chung President Date: June 28, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Dan C. Chung ---------------- Dan C. Chung President Date: June 28, 2005 By: /s/ Frederick A. Blum --------------------- Frederick A. Blum Treasurer Date: June 28, 2005