N-CSRS 1 c42473_ncsrs.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. Hal Liebes 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, 2006 ITEM 1. REPORT(S) TO STOCKHOLDERS. THE ALGER FUNDS 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 TECHNOLOGY FUND ALGER CORE FIXED-INCOME FUND ALGER MONEY MARKET FUND SEMI-ANNUAL REPORT APRIL 30, 2006 (UNAUDITED) [LOGO OMITTED] TABLE OF CONTENTS THE ALGER FUNDS Letter to Our Shareholders..................................... 1 Portfolio Summary.............................................. 3 Schedules of Investments....................................... 4 Statements of Assets and Liabilities........................... 44 Statements of Operations....................................... 46 Statements of Changes in Net Assets............................ 48 Financial Highlights........................................... 52 Notes to Financial Statements.................................. 66 Additional Information......................................... 83 GO PAPERLESS WITH ALGER ELECTRONIC DELIVERY SERVICE Alger is pleased to provide you with the ability to access regulatory materials online. When documents such as prospectuses and annual and semi-annual reports are available, we'll send you an e-mail notification with a convenient link that will take you directly to the fund information on our website. To sign up for this free service, simply enroll at www.icsdelivery.com/alger. Dear Shareholders, June 8, 2006 In the six months ended April 30, 2006, the U.S. economy remained strong, with inflation contained and overall Gross Domestic Product ("GDP") growth increasing at an annual rate of 4.8% as of March 31, 2006, three percentage points over the previous quarter's rate. And it wasn't simply that the economy overall was solid. During this period, corporate profits exceeded expectations; productivity stayed high; and growth companies in particular saw healthy stock appreciation. At the same time, the continued strength of the economy led to uncertainty about interest rates and inflation, and that in turn, kept the markets from breaking out of their trading range. At the Federal Open Market Committee (FOMC) meeting on March 28th, the Fed once again raised the key interest rate from 4.50% to 4.75%-the 15th consecutive increase since June 2004. The Fed noted that the current business climate is showing remarkable growth "but appears likely to moderate to a more sustainable pace."(1) After new Fed Chairman Ben Bernanke appeared before the U.S. Congress on April 27th, it was widely believed that the Fed would stop raising rates before the summer. Subsequent economic data clouded the picture yet again, and the markets retreated. Nonetheless, rates remain low relative to historical levels, and while the precise number of future increases is uncertain, it is our belief that we are close to the peak of the current cycle. Rising interest rates have been a headwind for the markets, but the uncertainty over when the increases will stop has been even more of an impediment. Even with that uncertainty hovering over the market, solid GDP growth and robust corporate profit growth propelled equities higher during the six months that ended on April 30th, and nearly every market sector posted positive returns. And because corporate profits have increased at a faster rate than the major indices, the market overall has continued to become less expensive. For the six months ending April 30, 2006, the major indices ended up, with the Dow Jones Industrials up 10.21%, the Standard & Poor's 500 Index up 15.27% and the NASDAQ up 9.55%. Globally, foreign markets and emerging economies have been torrid. Asian stock markets offered substantial gains in 2005, and by the end of December, China had revised its official GDP figures upward by about $300 billion, more accurately reflecting the size and scope of its economy and the growing power of its consumers. Even those investors not directly exposed to those markets tended to benefit. Many companies have global exposure, and their earnings growth reflects the strong global economy. In the bond market, we saw a dramatic re-steepening of the yield curve for the six months ending April 30, 2006, with yields on the 2-year bond up 34 basis points to 4.86% and rates on the 10-year rising more than 50 basis points to 5.05%. The dramatic move upward in interest rates corresponded to renewed fears of inflation -------------- (1) As of this writing, the key interest rate experienced another quarter percentage point hike on May 10, 2006 to 5.0%. -2- spurred on by rising energy and commodity prices as well as two more potential increases in the overnight target lending rate by the Fed. The 10-year Treasury note pierced 5.00% for the first time in nearly four years on the heels of a continued robust economic landscape, ever-increasing capacity utilization and tight labor markets. Despite the continued rise in interest rates, we believe that the overall low rates by historical standards and record levels of household net worth have buoyed consumer spending, with U.S. consumers now sustaining higher levels of debt than they have in years. In fact, in 2005 U.S. consumers defied expectations by absorbing rising energy prices without substantial decreases in spending. The first months of 2006 saw no significant change in these trends, as both growth and productivity outpaced expectations. Going forward, we believe that both the U.S. and the global economy will continue to expand, and our outlook for corporate earnings for 2006 is positive. U.S. markets may remain range-bound so long as the interest rate picture stays uncertain, but by most measures, the markets are trading at reasonable valuations backed by strong fundamentals. 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 business and marketplaces of tomorrow, bringing growth opportunities to our investors. Respectfully submitted, /s/ Daniel C. Chung ---------------------- Daniel C. Chung Chief Investment Officer This report and the financial statements contained herein are submitted for the general information of shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus for the Fund. The views of the Fund's management are as of June 8, 2006 and Fund holdings described in this document are as of April 30, 2006; these views and the fund holdings may have changed subsequent to these dates. Nothing in this document should be construed as a recommendation to purchase or sell securities, markets, or industries. MUTUAL FUNDS ARE NOT INSURED BY THE FDIC, ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY BANKS, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVE, RISKS AND CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT (800) 254-3796, OR VISITING OUR WEBSITE AT WWW.ALGER.COM, OR CONTACTING THE FUND'S DISTRIBUTOR, FRED ALGER & COMPANY, INCORPORATED, 30 MONTGOMERY STREET, JERSEY CITY, NEW JERSEY 07302. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. -3- PORTFOLIO SUMMARY* (UNAUDITED)
SMALLCAP AND LARGECAP SMALLCAP MIDCAP CAPITAL HEALTH MIDCAP SECTORS GROWTH GROWTH GROWTH APPRECIATION SCIENCES GROWTH TECHNOLOGY ------- ------ ------ ------ ------------ -------- ------ ---------- Consumer Discretionary ...... 10.0% 15.4% 15.5% 11.6% 0.7% 17.0% 0.0% Consumer Staples ............ 10.0 1.0 0.5 7.3 1.0 1.1 0.0 Energy ...................... 6.1 8.2 9.3 6.7 0.0 7.3 0.0 Financials .................. 12.4 9.5 9.8 8.2 1.2 7.5 0.0 Health Care ................. 6.9 17.8 13.4 13.2 88.2 14.0 0.0 Industrials ................. 12.2 13.7 13.4 11.2 0.0 15.9 2.5 Information Technology ...... 31.2 23.0 28.7 32.4 1.4 25.6 92.3 Materials ................... 7.8 3.3 5.7 4.0 1.9 3.3 0.0 Telecommunication Services .. 1.5 2.4 1.8 4.8 0.0 2.3 1.6 Utilities ................... 1.0 0.0 0.0 0.0 0.0 0.0 0.0 Cash and Net Other Assets ... 0.9 5.7 1.9 0.6 5.6 6.0 3.6 ------ ------ ------ ------ ------ ------ ------ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% ====== ====== ====== ====== ====== ====== ======
CORE FIXED- SECTORS/SECURITY TYPES BALANCED FUND INCOME FUND ---------------------- ------------- ----------- Consumer Discretionary ........................ 6.3% Consumer Staples .............................. 6.7 Energy ........................................ 4.1 Financials .................................... 8.4 Health Care ................................... 4.6 Industrials ................................... 8.1 Information Technology ........................ 20.4 Materials ..................................... 5.2 Telecommunication Services .................... 1.0 Utilities ..................................... 0.7 ------ Total Common Stocks ......................... 65.5% ------ Corporate Bonds ............................... 17.9% 25.1% Agency Bonds .................................. 12.5 28.5 U.S. Treasury Bonds ........................... 3.8 43.1 ------ ------ Total Bonds ................................. 34.2% 96.7% ------ ------ Cash and Net Other Assets ..................... 0.3% 3.3% ------ ------ 100.0% 100.0% ====== ====== MONEY MARKET DAYS TO MATURITY FUND ---------------- ------------ 0 to 30 ........................................................ 57.1% 31 to 60 ....................................................... 28.8 61 to 90 ....................................................... 14.1 ------ 100.0% ====== ---------- * Based on net assets for each Fund, except for Money Market Fund which is based on total investments. -4- THE ALGER FUNDS ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006
COMMON STOCKS--99.1% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--2.0% Boeing Company ....................................................... 113,600 $ 9,479,920 ------------- BIOTECHNOLOGY--2.9% Biogen Idec Inc.* .................................................... 100,800 4,520,880 Genentech, Inc.* ..................................................... 86,900 6,926,799 Vertex Pharmaceuticals Incorporated* ................................. 68,000 2,473,160 ------------- 13,920,839 ------------- CAPITAL MARKETS--2.0% Bear Stearns Companies Inc. .......................................... 32,300 4,603,073 Goldman Sachs Group, Inc. ............................................ 30,300 4,856,787 ------------- 9,459,860 ------------- CHEMICALS--.8% Air Products and Chemicals, Inc. ..................................... 53,900 3,693,228 ------------- COMMUNICATION EQUIPMENT--5.6% Cisco Systems, Inc.* ................................................. 691,500 14,486,925 Corning Incorporated* ................................................ 134,900 3,727,287 Motorola, Inc. ....................................................... 161,200 3,441,620 Nokia Oyj# ........................................................... 115,300 2,612,698 QUALCOMM Inc. ........................................................ 47,500 2,438,650 ------------- 26,707,180 ------------- COMPUTERS & PERIPHERALS--6.0% Apple Computer, Inc.* ................................................ 197,500 13,902,025 Network Appliance, Inc.* ............................................. 225,100 8,344,457 Seagate Technology ................................................... 235,900 6,265,504 ------------- 28,511,986 ------------- DIVERSIFIED FINANCIAL SERVICES--3.8% Citigroup Inc. ....................................................... 99,000 4,945,050 Principal Financial Group (The) ...................................... 72,900 3,740,499 Prudential Financial, Inc. ........................................... 122,700 9,586,551 ------------- 18,272,100 ------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.5% ALLTEL Corporation ................................................... 109,300 7,035,641 ------------- ELECTRIC UTILITIES--1.0% Exelon Corporation ................................................... 92,000 4,968,000 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.8% Emerson Electric Co. ................................................. 100,700 8,554,465 ------------- ELECTRONICS--2.0% Nintendo Co., Ltd.# .................................................. 518,100 9,640,649 ------------- ENERGY EQUIPMENT & SERVICES--4.2% National-Oilwell Varco Inc.* ......................................... 143,700 9,910,989 Transocean Inc.* ..................................................... 123,300 9,995,931 ------------- 19,906,920 -------------
-5- THE ALGER FUNDS ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- FINANCIAL INFORMATION SERVICES--.5% Genworth Financial Inc. Cl. A ........................................ 70,900 $ 2,353,880 ------------- FINANCIAL SERVICES--2.8% Hong Kong Exchanges & Clearing Limited ............................... 331,100 2,380,819 Janus Capital Group Inc. ............................................. 317,500 6,178,550 Schwab (Charles) Corporation (The) ................................... 272,300 4,874,170 ------------- 13,433,539 ------------- FOOD PRODUCTS--1.7% Archer-Daniels-Midland Company ....................................... 226,400 8,227,376 ------------- FOOD & STAPLES RETAILING--3.1% CVS Corporation ...................................................... 491,100 14,595,492 ------------- FREIGHT & LOGISTICS--1.9% FedEx Corp. .......................................................... 78,000 8,980,140 ------------- HEALTH CARE PROVIDERS & SERVICES--1.5% Medco Health Solutions, Inc.* ........................................ 134,200 7,143,466 ------------- HOTELS, RESTAURANTS & LEISURE--.5% Starbucks Corporation* ............................................... 66,850 2,491,500 ------------- HOUSEHOLD PRODUCTS--2.3% Procter & Gamble Company ............................................. 187,200 10,896,912 ------------- INDUSTRIAL CONGLOMERATES--3.6% General Electric Company ............................................. 495,400 17,135,886 ------------- INSURANCE--2.2% Hartford Financial Services Group, Inc. (The) ........................ 112,800 10,369,704 ------------- INTERNET & CATALOG RETAIL--5.3% eBay Inc.* ........................................................... 482,700 16,609,707 Netflix Inc.*+ ....................................................... 297,400 8,814,936 ------------- 25,424,643 ------------- INTERNET SOFTWARE & SERVICES--3.5% Yahoo! Inc.* ......................................................... 505,700 16,576,846 ------------- MACHINERY--2.0% Caterpillar Inc. ..................................................... 123,700 9,369,038 ------------- MEDIA--4.8% News Corporation Cl. A ............................................... 432,400 7,419,984 XM Satellite Radio Holdings Inc. Cl. A* .............................. 758,400 15,334,848 ------------- 22,754,832 -------------
-6- THE ALGER FUNDS ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- METALS & MINING--9.0% Cameco Corporation ................................................... 113,500 $ 4,613,775 Freeport-McMoRan Copper & Gold, Inc. Cl. B ........................... 90,900 5,870,322 Inco Limited ......................................................... 294,400 16,624,768 Peabody Energy Corporation ........................................... 70,500 4,502,130 Phelps Dodge Corporation ............................................. 70,900 6,110,871 Vedanta Resources PLC ................................................ 176,300 5,068,625 ------------- 42,790,491 ------------- MULTILINE RETAIL--2.3% Costco Wholesale Corporation* ........................................ 79,100 4,305,413 Federated Department Stores, Inc. .................................... 89,300 6,952,005 ------------- 11,257,418 ------------- PHARMACEUTICALS--2.5% Teva Pharmaceutical Industries Ltd.# ................................. 294,794 11,939,157 ------------- SAVINGS & LOANS--1.1% Golden West Financial Corp. .......................................... 72,200 5,189,014 ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--9.3% Broadcom Corporation Cl. A* .......................................... 215,050 8,840,705 Freescale Semiconductor Inc. Cl. A* .................................. 425,200 13,444,824 Marvell Technology Group Ltd.* ....................................... 172,700 9,859,443 Rambus Inc.* ......................................................... 182,100 7,070,943 Texas Instruments Incorporated ....................................... 150,100 5,209,971 ------------- 44,425,886 ------------- SOFTWARE--1.2% Microsoft Corporation ................................................ 243,730 5,886,080 ------------- SPECIALTY RETAIL--1.3% Home Depot, Inc. ..................................................... 157,000 6,269,010 ------------- TOBACCO--2.1% ALTRIA GROUP, INC .................................................... 134,100 9,810,756 TRANSPORTATION--1.0% Textron Inc. ......................................................... 51,300 4,614,435 ------------- Total Common Stocks (Cost $455,780,225) ............................................... 472,086,289 -------------
-7- THE ALGER FUNDS ALGER LARGECAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
PURCHASED OPTIONS CONTRACTS VALUE --------- ----- PUT OPTIONS Netflix Inc./June/25+ ................................................ 316 $ 7,900 Netflix Inc./June/30+ ................................................ 745 119,200 ------------- Total Purchased Put Options (Cost $296,123) ................................................... 127,100 ------------- PRINCIPAL AMOUNT --------- SHORT-TERM INVESTMENTS--1.9% U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $8,817,785) ................................................. $8,820,000 8,817,785 ------------- Total Investments (Cost $464,894,133)(a) ............................................ 101.0% 481,031,174 ------------- Liabilities in Excess of Other Assets ................................ (1.0) (4,783,797) ----- ------------- Net Assets ........................................................... 100.0% $ 476,247,377 ===== =============
------------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized appreciation of investments, based on cost for federal income tax purposes of $469,881,701, amounted to $11,149,473 which consisted of aggregate gross unrealized appreciation of $30,473,367 and aggregate gross unrealized depreciation of $19,323,894. + All or a portion of the securities are pledged as collateral for options written. See Notes to Financial Statements. -8- THE ALGER FUNDS ALGER LARGECAP GROWTH FUND SCHEDULE OF OPTIONS WRITTEN (UNAUDITED) April 30, 2006 SHARES SUBJECT CALL OPTIONS WRITTEN CONTRACTS TO CALL VALUE --------- -------- ------- Netflix Inc./June/35 (Premiums Received $165,682) ......... 1,061 106,100 $ 15,915 -------- PUT OPTIONS WRITTEN Netflix Inc./June/22.5 (Premiums Received $240,201) ......... 1,061 106,100 5,305 -------- TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED $405,883) ......... $ 21,220 ======== See Notes to Financial Statements. -9- THE ALGER FUNDS ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006
COMMON STOCKS--94.3% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--3.2% BE Aerospace, Inc.* .................................................. 122,000 $ 3,175,660 Esterline Technologies Corporation* .................................. 65,650 2,909,608 SI International Inc.* ............................................... 67,150 2,287,800 ------------- 8,373,068 ------------- AIRLINES--.7% AirTran Holdings, Inc.* .............................................. 135,350 1,892,193 ------------- APPAREL--1.3% Gymboree Corp.* ...................................................... 112,450 3,382,496 ------------- AUTO COMPONENTS--1.2% LKQ Corporation* ..................................................... 148,100 3,116,024 ------------- AUTO EQUIPMENT & SERVICES--.7% Tenneco Inc.* ........................................................ 73,300 1,762,865 ------------- BIOTECHNOLOGY--4.7% Alkermes, Inc.* ...................................................... 70,450 1,512,561 Cubist Pharmaceuticals, Inc.* ........................................ 74,300 1,684,381 Keryx Biopharmaceuticals, Inc.* ...................................... 86,650 1,475,650 Medarex, Inc.* ....................................................... 150,250 1,804,502 Myogen, Inc.* ........................................................ 46,450 1,535,637 Theravance, Inc.* .................................................... 86,150 2,417,369 Vertex Pharmaceuticals Incorporated* ................................. 49,150 1,787,585 ------------- 12,217,685 ------------- CAPITAL MARKETS--2.4% Affiliated Managers Group, Inc.* ..................................... 19,225 1,947,492 Greenhill & Co., Inc. ................................................ 35,750 2,535,390 National Financial Partners Corporation .............................. 32,800 1,705,600 ------------- 6,188,482 ------------- CHEMICALS--1.0% Zoltek Companies, Inc.* .............................................. 100,200 2,554,098 ------------- COMMERCIAL BANKS--2.4% Boston Private Financial Holdings, Inc. .............................. 58,250 1,936,813 Signature Bank* ...................................................... 82,600 2,921,562 Wintrust Financial Corporation ....................................... 25,500 1,319,625 ------------- 6,178,000 ------------- COMMERCIAL SERVICES & SUPPLIES--4.2% American Reprographics Co.* .......................................... 63,900 2,266,533 CoStar Group Inc.* ................................................... 36,450 2,057,603 FTI Consulting, Inc.* ............................................... 99,700 2,865,378 Gevity HR, Inc. ...................................................... 77,200 1,983,268 Navigant Consulting, Inc.* ........................................... 83,550 1,761,234 ------------- 10,934,016 -------------
-10- THE ALGER FUNDS ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- COMMUNICATION EQUIPMENT--1.7% Polycom, Inc.* ....................................................... 119,900 $ 2,637,800 Powerwave Technologies, Inc.* ........................................ 154,650 1,724,347 ------------- 4,362,147 ------------- COMPUTERS & PERIPHERALS--.6% Mobility Electronics, Inc.* .......................................... 228,050 1,623,716 ------------- COMPUTER SERVICES--1.7% Internap Network Services Corporation* ............................... 1,255,100 1,644,181 Open Solutions Inc.* ................................................. 101,200 2,754,664 ------------- 4,398,845 ------------- COMPUTER TECHNOLOGY--1.4% Atheros Communications* .............................................. 68,400 1,736,676 Secure Computing Corporation* ........................................ 169,400 1,821,050 ------------- 3,557,726 ------------- CONSTRUCTION & ENGINEERING--1.1% URS Corporation* ..................................................... 64,500 2,778,015 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.1% Multi-Fineline Electronix, Inc.* ..................................... 48,600 2,832,408 ------------- ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS--.5% Netlogic Microsystems Inc.* .......................................... 32,500 1,308,775 ------------- ENERGY--1.2% Veritas DGC Inc.* .................................................... 65,100 3,119,592 ------------- ENERGY EQUIPMENT & SERVICES--1.2% Dril-Quip Inc. ....................................................... 44,400 3,195,912 ------------- FINANCIAL INFORMATION SERVICES--1.0% GFI Group Inc.* ...................................................... 45,700 2,599,416 ------------- FOOD & BEVERAGES--1.1% Hain Celestial Group Inc. (The)* ..................................... 100,100 2,692,690 ------------- HEALTH CARE EQUIPMENT & SUPPLIES--5.9% ArthroCare Corporation* .............................................. 60,000 2,719,800 Haemonetics Corporation* ............................................. 45,050 2,455,225 Hologic, Inc.* ....................................................... 55,450 2,643,301 Illumina, Inc.* ...................................................... 92,750 2,933,683 Intuitive Surgical, Inc.* ............................................ 11,200 1,422,400 Ventana Medical Systems, Inc.* ....................................... 62,850 3,060,795 ------------- 15,235,204 -------------
-11- THE ALGER FUNDS ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- HEALTH CARE PROVIDERS & SERVICES--5.5% Psychiatric Solutions, Inc.* ......................................... 88,000 $ 2,909,280 Radiation Therapy Services, Inc.* .................................... 68,900 1,760,395 Sierra Health Services, Inc.* ........................................ 60,800 2,383,968 Sunrise Senior Living Inc.* .......................................... 71,400 2,656,080 VCA Antech, Inc.* .................................................... 54,850 1,705,286 WellCare Health Plans Inc.* .......................................... 63,950 2,678,226 ------------- 14,093,235 ------------- HOTELS, RESTAURANTS & LEISURE--2.0% Applebee's International, Inc. ....................................... 73,312 1,701,572 Morgans Hotel Group* ................................................. 122,900 2,212,200 Orient-Express Hotels Ltd. Cl. A ..................................... 33,150 1,359,150 ------------- 5,272,922 ------------- INSURANCE--1.1% Ohio Casualty Corporation ............................................ 81,950 2,429,817 Platinum Underwriters Holdings, Inc. ................................. 17,300 476,961 ------------- 2,906,778 ------------- INTERNET & CATALOG RETAIL--1.1% Priceline.com Incorporated* .......................................... 117,600 2,874,144 ------------- INTERNET SOFTWARE & SERVICES--5.3% Allscripts Healthcare Solutions, Inc.* ............................... 147,450 2,511,074 DealerTrack Holdings Inc.* ........................................... 129,700 2,892,310 Jupitermedia Corporation* ............................................ 172,100 3,032,402 Openwave Systems, Inc.* .............................................. 122,483 2,279,409 WebEx Communications, Inc.* .......................................... 87,950 3,109,033 ------------- 13,824,228 ------------- IT SERVICES--1.3% Wright Express Corp.* ................................................ 109,250 3,363,808 ------------- LEISURE & ENTERTAINMENT--1.0% WMS Industries Inc.* ................................................. 84,450 2,639,062 LEISURE EQUIPMENT & PRODUCTS--1.0% LIFE TIME FITNESS, Inc.* ............................................. 53,500 2,450,300 ------------- MACHINERY--4.4% Actuant Corporation Cl. A ............................................ 39,150 2,503,643 Bucyrus International, Inc. Cl. A .................................... 62,925 3,266,437 ESCO Technologies Inc.* .............................................. 37,500 1,901,250 Gardner Denver Inc.* ................................................. 49,150 3,663,149 ------------- 11,334,479 ------------- MEDIA--2.7% Focus Media Holding Limited*# ........................................ 34,500 2,083,455 NeuStar, Inc. Cl. A* ................................................. 74,350 2,609,685 World Wrestling Entertainment, Inc. Cl. A ............................ 140,150 2,430,201 ------------- 7,123,341 -------------
-12- THE ALGER FUNDS ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- METALS--.8% RBC Bearings, Inc.* .................................................. 92,600 $ 2,193,694 ------------- METALS & MINING--2.3% Breakwater Resources, Ltd.* .......................................... 1,980,100 2,494,926 Paladin Resources Limited* ........................................... 954,450 3,388,298 ------------- 5,883,224 ------------- OIL & GAS--4.5% Carrizo Oil & Gas, Inc.* ............................................ 51,550 1,514,539 Giant Industries, Inc.* .............................................. 41,300 2,968,644 Grey Wolf, Inc.* ..................................................... 243,850 1,902,030 Holly Corporation .................................................... 30,200 2,330,534 TODCO Cl. A* ......................................................... 66,984 3,072,556 ------------- 11,788,303 ------------- OIL AND GAS EXPLORATION SERVICES--1.2% Petrobank Energy and Resources Ltd.* ................................. 249,350 3,094,433 ------------- PHARMACEUTICAL PREPARATIONS--.8% Adams Respiratory Therapeutics, Inc.* ................................ 50,100 2,148,789 ------------- REAL ESTATE--.9% Jones Lang LaSalle Incorporated ...................................... 26,300 2,229,188 ------------- RESTAURANTS--1.2% McCormick & Schmick's Seafood Restaurants, Inc.* ..................... 125,700 3,142,500 ------------- RETAIL--1.1% Phillips-Van Heusen Corporation ...................................... 69,050 2,775,810 ------------- ROAD & RAIL--.9% Landstar Systems, Inc. ............................................... 53,200 2,260,468 ------------- SEMICONDUCTOR CAPITAL EQUIPMENT--1.8% FormFactor Inc.* ..................................................... 65,000 2,709,850 SiRF Technology Holdings, Inc.* ...................................... 60,200 2,055,830 ------------- 4,765,680 ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.4% ATMI, Inc.* .......................................................... 82,050 2,330,220 Ikanos Communications* ............................................... 64,200 1,188,984 Microsemi Corporation* ............................................... 102,000 2,786,640 Tessera Technologies Inc.* ........................................... 75,100 2,408,457 Trident Microsystems, Inc.* .......................................... 102,000 2,713,200 ------------- 11,427,501 ------------- SOFTWARE--2.5% Quest Software, Inc.* ................................................ 185,950 3,200,200 VeriFone Holdings Inc.* .............................................. 105,000 3,250,800 ------------- 6,451,000 -------------
-13- THE ALGER FUNDS ALGER SMALLCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SPECIALTY RETAIL--2.5% Aeropostale, Inc.* ................................................... 66,200 $ 2,033,002 AnnTaylor Stores Corporation* ........................................ 52,650 1,965,425 DSW Inc. Cl. A* ...................................................... 82,800 2,591,640 ------------- 6,590,067 ------------- TEXTILES, APPAREL & LUXURY GOODS--.5% Deckers Outdoor Corporation* ......................................... 30,500 1,302,045 ------------- THRIFTS & MORTGAGE FINANCE--1.7% Brookline Bancorp, Inc. .............................................. 121,700 1,801,160 Flagstar Bancorp, Inc. ............................................... 171,000 2,736,000 ------------- 4,537,160 ------------- WIRELESS TELECOMMUNICATION SERVICES--1.5% SBA Communications Corporation Cl. A* ................................ 153,700 3,860,944 ------------- Total Common Stocks (Cost $188,807,101) ................................................ 244,636,476 ------------- PRINCIPAL SHORT-TERM INVESTMENTS--4.3% AMOUNT ---------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $11,027,230) ................................................. $11,030,000 11,027,230 ------------- Total Investments (Cost $199,834,331)(a) ............................................. 98.6% 255,663,706 Other Assets in Excess of Liabilities ................................ 1.4 3,663,140 ----- ------------- Net Assets ........................................................... 100.0% $ 259,326,846 ===== =============
-------------- * Non-income producing securities. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $199,874,056, amounted to $55,789,650 which consisted of aggregate gross unrealized appreciation of $57,912,469 and aggregate gross unrealized depreciation of $2,122,819. See Notes to Financial Statements. -14- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006
COMMON STOCKS--65.5% SHARES VALUE ------ ----- AEROSPACE & DEFENSE--1.4% Boeing Company ....................................................... 24,000 $ 2,002,800 ------------- BIOTECHNOLOGY--1.9% Biogen Idec Inc.* .................................................... 21,700 973,245 Genentech, Inc.* ..................................................... 18,500 1,474,635 Vertex Pharmaceuticals Incorporated* ................................. 14,600 531,002 ------------- 2,978,882 ------------- CAPITAL MARKETS--1.3% Bear Stearns Companies Inc. .......................................... 7,100 1,011,821 Goldman Sachs Group, Inc. ............................................ 6,500 1,041,885 ------------- 2,053,706 ------------- CHEMICALS--.5% Air Products and Chemicals, Inc. ..................................... 11,500 787,980 ------------- COMMUNICATION EQUIPMENT--3.7% Cisco Systems, Inc.* ................................................. 145,850 3,055,558 Corning Incorporated* ................................................ 29,100 804,033 Motorola, Inc. ....................................................... 34,000 725,900 Nokia Oyj# ........................................................... 24,500 555,170 QUALCOMM Inc ......................................................... 10,150 521,101 ------------- 5,661,762 ------------- COMPUTERS & PERIPHERALS--3.9% Apple Computer, Inc.* ................................................ 41,700 2,935,263 Network Appliance, Inc.* ............................................. 47,500 1,760,825 Seagate Technology ................................................... 46,950 1,246,992 ------------- 5,943,080 ------------- DIVERSIFIED FINANCIAL SERVICES--2.6% Citigroup Inc. ....................................................... 20,800 1,038,960 Principal Financial Group (The) ...................................... 16,800 862,008 Prudential Financial, Inc. ........................................... 27,600 2,156,388 ------------- 4,057,356 ------------- DIVERSIFIED TELECOMMUNICATION SERVICES--1.0% ALLTEL Corporation ................................................... 24,450 1,573,846 ------------- ELECTRIC UTILITIES--.7% Exelon Corporation ................................................... 19,550 1,055,700 ------------- ELECTRONICS--1.4% Nintendo Co., Ltd.# .................................................. 111,600 2,076,618 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--1.2% Emerson Electric Co. ................................................. 21,600 1,834,920 ------------- ENERGY EQUIPMENT & SERVICES--2.8% National-Oilwell Varco Inc.* ......................................... 30,950 2,134,622 Transocean Inc.* ..................................................... 26,600 2,156,462 ------------- 4,291,084 -------------
-15- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- FINANCIAL INFORMATION SERVICES--.3% Genworth Financial Inc. Cl. A ........................................ 15,100 $ 501,320 FINANCIAL SERVICES--1.9% Hong Kong Exchanges & Clearing Limited ............................... 67,200 483,211 Janus Capital Group Inc. ............................................. 68,600 1,334,956 Schwab (Charles) Corporation (The) ................................... 58,550 1,048,045 ------------- 2,866,212 ------------- FOOD PRODUCTS--1.1% Archer-Daniels-Midland Company ....................................... 47,800 1,737,052 ------------- FOOD & STAPLES RETAILING--2.0% CVS Corporation ...................................................... 104,400 3,102,768 ------------- FREIGHT & LOGISTICS--1.2% FedEx Corp. .......................................................... 16,500 1,899,645 ------------- HEALTH CARE PROVIDERS & SERVICES--1.0% Medco Health Solutions, Inc.* ........................................ 29,000 1,543,670 ------------- HOTELS, RESTAURANTS & LEISURE--.4% Starbucks Corporation* ............................................... 14,400 536,687 ------------- HOUSEHOLD PRODUCTS--1.6% Procter & Gamble Company ............................................. 42,305 2,462,573 ------------- INDUSTRIAL CONGLOMERATES--2.4% General Electric Company ............................................. 104,650 3,619,844 ------------- INSURANCE--1.4% Hartford Financial Services Group, Inc. (The) ........................ 23,800 2,187,934 ------------- INTERNET & CATALOG RETAIL--3.2% eBay Inc.* ........................................................... 101,850 3,504,659 Netflix Inc.* ........................................................ 46,300 1,372,332 ------------- 4,876,991 ------------- INTERNET SOFTWARE & SERVICES--2.3% Yahoo! Inc.* ......................................................... 106,700 3,497,626 ------------- MACHINERY--1.3% Caterpillar Inc. ..................................................... 26,250 1,988,175 ------------- MEDIA--3.2% News Corporation Cl. A ............................................... 92,950 1,595,022 XM Satellite Radio Holdings Inc. Cl. A* .............................. 163,450 3,304,959 ------------- 4,899,981 -------------
-16- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- METALS & MINING--6.0% Cameco Corporation ................................................... 24,100 $ 979,665 Freeport-McMoRan Copper & Gold, Inc. Cl. B ........................... 19,450 1,256,081 Inco Limited ......................................................... 62,250 3,515,258 Peabody Energy Corporation ........................................... 14,900 951,514 Phelps Dodge Corporation ............................................. 15,200 1,310,088 Vedanta Resources PLC ................................................ 37,500 1,078,125 ------------- 9,090,731 ------------- MULTILINE RETAIL--1.6% Costco Wholesale Corporation* ........................................ 16,700 908,981 Federated Department Stores, Inc. .................................... 19,000 1,479,150 ------------- 2,388,131 ------------- PHARMACEUTICALS--1.6% Teva Pharmaceutical Industries Ltd.# ................................. 62,148 2,516,994 ------------- SAVINGS & LOANS--.7% Golden West Financial Corp. .......................................... 15,400 1,106,798 ------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--6.2% Broadcom Corporation Cl. A* .......................................... 46,325 1,904,421 Freescale Semiconductor Inc. Cl. A* .................................. 89,700 2,836,314 Marvell Technology Group Ltd.* ....................................... 36,700 2,095,203 Rambus Inc.* ......................................................... 38,400 1,491,072 Texas Instruments Incorporated ....................................... 32,200 1,117,662 ------------- 9,444,672 ------------- SOFTWARE--.8% Microsoft Corporation ................................................ 52,350 1,264,253 ------------- SPECIALTY RETAIL--.9% Home Depot, Inc. ..................................................... 33,700 1,345,641 ------------- TOBACCO--1.4% Altria Group, Inc. ................................................... 28,300 2,070,428 ------------- TRANSPORTATION--.6% Textron Inc. ......................................................... 10,900 980,455 ------------- Total Common Stocks (Cost $96,655,897) ................................................. 100,246,315 -------------
-17- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
PRINCIPAL CORPORATE BONDS--17.9% AMOUNT VALUE ---------- ----- AEROSPACE & DEFENSE--.5% Alliant Techsystems Inc., 6.75%, 4/1/16 .............................. $ 407,000 $ 402,930 Systems 2001 Asset Trust Cl. G, 6.664%, 9/15/13(a) ................... 402,476 417,565 ------------- 820,495 ------------- APPAREL--.1% Levi Strauss & Co., 8.875%, 4/1/16(a) ................................ 175,000 176,312 ------------- AUTO EQUIPMENT & SERVICES--.2% Tenneco Inc., 8.625%, 11/15/14(a) .................................... 300,000 305,250 ------------- AUTOMOTIVE--1.1% Honda Auto Receivables Owner Trust, 5.07%, 2/18/10 ................... 900,000 897,532 Nissan Auto Receivables Owner Trust, 4.74%, 9/15/09 .................. 750,000 744,099 ------------- 1,641,631 ------------- BUSINESS SERVICES--.3% Preferred Term XXI, 5.71%, 3/22/38(a) ................................ 495,000 487,793 ------------- CAPITAL MARKETS--1.2% Goldman Sachs Group, Inc., 4.75%, 7/15/13 ............................ 915,000 860,715 J.P. Morgan Chase & Co., 4.60%, 1/17/11 .............................. 1,000,000 961,362 ------------- 1,822,077 ------------- COMMERCIAL BANKS--1.5% Associates Corp. North America, 6.95%, 11/1/18 ....................... 1,077,000 1,176,960 First Tennessee Bank, 5.65%, 4/1/16 .................................. 1,080,000 1,051,221 ------------- 2,228,181 ------------- CONSUMER FINANCE--.4% MBNA Credit Card Master Note Trust, 4.50%, 1/15/13 ................... 700,000 679,427 ------------- ELECTRIC UTILITIES--.2% General Electric Capital Corp., 5.50%, 4/28/11 ....................... 250,000 250,377 Sierra Pacific Power Company, 6.00%, 5/15/16(a) ...................... 115,000 111,965 ------------- 362,342 ------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--.6% GE Equipment Small Ticket, 4.88%, 10/22/09(a) ........................ 895,000 888,665 ------------- ELECTRONICS--.2% Centerpoint Energy Transition Bond Company, 4.97%, 8/1/14 ...................................................... 345,000 339,683 ------------- ENERGY--.5% Encana Holdings Financial Corp., 5.80%, 5/1/14 ....................... 800,000 796,766 -------------
-18- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
PRINCIPAL CORPORATE BONDS--(CONT.) AMOUNT VALUE ---------- ----- FINANCE--.8% Residential Capital, 6.50%, 4/17/13 .................................. $ 275,000 $ 274,471 SLM Corp., 5.45%, 4/25/11 ............................................ 900,000 894,750 ------------- 1,169,221 ------------- FINANCIAL SERVICES--.6% HSBC Bank USA, 5.625%, 8/15/35 ....................................... 345,000 311,255 Jefferies Group, Inc., 6.25%, 1/15/36 ................................ 645,000 591,143 ------------- 902,398 ------------- FOOD & STAPLES RETAILING--.5% CVS Corporation, 4.875%, 9/15/14 ..................................... 900,000 837,174 ------------- GAS UTILITIES--.3% Kinder Morgan Energy Partners, L.P., 5.80%, 3/15/35 .................. 500,000 443,679 ------------- HEALTH CARE EQUIPMENT & SUPPLIES--.4% Medtronic, Inc., Senior Note, 4.75%, 9/15/15(A) ...................... 700,000 647,647 ------------- HEALTH CARE PROVIDERS & SERVICES--.7% Omnicare, Inc., 6.75%, 12/15/13 ...................................... 550,000 546,563 UnitedHealth Group, 5.375%, 3/15/16 .................................. 600,000 576,838 ------------- 1,123,401 ------------- HOTELS, RESTAURANTS & LEISURE--.6% Boyd Gaming Corp., 7.125%, 2/1/16 .................................... 785,000 789,906 MGM MIRAGE, 6.75%, 4/1/13(a) ......................................... 150,000 148,500 ------------- 938,406 ------------- INSURANCE--1.5% American International Group, 5.05%, 10/1/15(a) ...................... 900,000 848,921 Franklin Auto Trust Series 2005-1, 4.91%, 4/20/10 .................... 1,140,000 1,133,045 The Chubb Corporation, 4.934%, 11/16/07 .............................. 250,000 248,237 ------------- 2,230,203 ------------- MACHINERY--.7% CNH Equipment Trust, 5.20%, 08/16/2010 ............................... 495,000 494,065 The Manitowoc Co., Inc., 7.125%, 11/1/13 ............................. 500,000 513,750 ------------- 1,007,815 ------------- MEDIA--.6% Clear Channel Communications, Inc. Senior Notes, 5.75%, 1/15/13 ..................................................... 800,000 760,908 Liberty Media Corporation Floating Rate Note, 6.41%, 9/17/06 ..................................................... 198,000 198,950 ------------- 959,858 ------------- METAL FABRICATING--.9% Timken Co., 5.75%, 2/15/10 ........................................... 1,350,000 1,329,678 -------------
-19- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006
PRINCIPAL CORPORATE BONDS--(CONT.) AMOUNT VALUE ---------- ----- METALS & MINING--.5% ALCAN INC., 5.00%, 6/1/15 ............................................ $ 745,000 $ 696,120 MISCELLANEOUS--.5% Jefferson Valley Floating Rate, 6.34%, 3/20/16(a) .................... 800,000 798,272 ------------- MULTI-UTILITIES UNREGULATED POWER--.5% PG&E Energy Recovery Funding, LLC. 4.85 06/25/11 ..................... 700,000 695,879 ------------- OIL & GAS--.2% Inergy LP, 8.25%, 3/1/16(a) .......................................... 347,000 358,278 ------------- OIL AND GAS EXTRACTION--.4% Enterprise Products Partners L.P., 6.875%, 3/1/33 .................... 600,000 599,921 ------------- REAL ESTATE--.4% ProLogis, 5.75%, 4/1/16 .............................................. 595,000 580,437 ------------- SOFTWARE--.3% Oracle Corporation, 5.25%, 1/15/16(a) ................................ 455,000 430,936 ------------- SPECIALTY RETAIL--.4% Home Depot, Inc., 5.20%, 3/1/11 ...................................... 595,000 589,616 ------------- WIRELESS TELECOMMUNICATION SERVICES--.3% Vodafone Group PLC, 5.50%, 6/15/11 ................................... 500,000 494,993 ------------- Total Corporate Bonds (Cost $27,971,518) ................................................. 27,382,554 -------------
-20- THE ALGER FUNDS ALGER BALANCED FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 PRINCIPAL U.S. GOVERNMENT & AGENCY OBLIGATIONS--16.3% AMOUNT VALUE ---------- ------------ Federal Home Loan Mortgage Corporation, 5.125%, 12/15/13 ................................ $ 600,000 $ 582,698 5.50%, 11/15/14 ................................. 839,601 837,723 5.00%, 4/15/16 .................................. 569,610 563,923 5.50%, 7/15/16 .................................. 864,124 859,953 5.00%, 8/15/16 .................................. 489,999 479,185 5.75%, 12/15/18 ................................. 800,000 797,000 5.00%, 10/15/28 ................................. 890,000 866,352 5.50%, 10/15/31 ................................. 1,000,000 971,020 5.00%, 9/15/33 .................................. 695,000 678,248 Final Maturity Amortizing Notes, 4.80%, 4/25/10 ... 1,244,508 1,221,563 Federal National Mortgage Association, 5.15%, 9/21/07 .................................. 1,800,000 1,796,519 3.25%, 8/15/08 .................................. 940,000 902,497 3.85%, 4/14/09 .................................. 1,000,000 964,654 5.00%, 4/19/10 .................................. 600,000 595,683 4.75%, 4/19/10 .................................. 710,000 695,303 6.00%, 1/25/15 .................................. 858,537 865,797 5.00%, 4/1/18 ................................... 948,376 925,529 5.00%, 1/25/20 .................................. 645,000 631,522 5.75%, 9/25/20 .................................. 837,096 829,375 6.625%, 11/15/30 ................................ 350,000 400,862 6.00%, 4/25/35 .................................. 950,000 935,506 Federal Home Loan Bank, 3.75%, 8/15/08 .................................. 650,000 630,182 5.50%, 5/18/15 .................................. 1,000,000 977,326 U.S. Treasury Bonds, 7.50%, 11/15/16 ................................. 483,000 575,034 5.375%, 2/15/31 ................................. 1,220,000 1,238,682 U.S. Treasury Notes, 2.625%, 3/15/09 ................................. 455,000 427,860 3.50%, 11/15/09 ................................. 2,100,000 2,006,157 4.75%, 5/15/14 .................................. 552,000 541,887 4.25%, 11/15/14 ................................. 800,000 756,469 4.50%, 2/15/16 .................................. 300,000 287,016 ------------ Total U.S. Government & Agency Obligations (Cost $25,287,915) .............................. 24,841,525 ------------ Total Investments (Cost $149,915,330)(b) .......................... 99.7% 152,470,394 Other Assets in Excess of Liabilities ............. .3 426,430 ---------- ------------ Net Assets ........................................ 100.0% $152,896,824 ========== ============ ---------- * Non-income producing security. # American Depositary Receipts. (a) Pursuant to Securites and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified instituitonal buyers. These securities are deemed to be liquid and represent 3.7% of net assets of the Fund. (b) At April 30, 2006, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $150,281,934 amounted to $2,188,460 which consisted of aggregate gross unrealized appreciation of $6,567,991 and aggregate gross unrealized depreciation of $4,379,531. See Notes to Financial Statements. -21- THE ALGER FUNDS ALGER MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 COMMON STOCKS--98.0% SHARES VALUE ---------- ------------ AEROSPACE & DEFENSE--3.5% BE Aerospace, Inc.* ............................... 414,700 $ 10,794,641 Hexcel Corporation* ............................... 243,600 5,381,124 L-3 Communications Holdings, Inc. ................. 108,680 8,879,156 ------------ 25,054,921 ------------ BEVERAGES--.5% Hansen Natural Corporation* ....................... 26,100 3,378,906 ------------ CAPITAL MARKETS--2.3% Affiliated Managers Group, Inc.* .................. 95,172 9,640,924 National Financial Partners Corporation ........... 121,900 6,338,800 ------------ 15,979,724 ------------ CASINOS & RESORTS--.9% Bally Technologies Inc.* .......................... 362,500 6,488,750 ------------ COMMERCIAL SERVICES & SUPPLIES--7.6% Net 1 UEPS Technologies, Inc.* .................... 555,450 17,418,912 Traffic.com, Inc.* ................................ 472,400 2,961,948 Weight Watchers International, Inc. ............... 295,300 14,573,055 West Corporation* ................................. 407,000 18,852,240 ------------ 53,806,155 ------------ COMMUNICATION EQUIPMENT--1.5% Sonus Networks, Inc.* ............................. 2,145,800 10,664,626 ------------ COMPUTERS & PERIPHERALS--4.8% Apple Computer, Inc.* ............................. 173,400 12,205,626 Network Appliance, Inc.* .......................... 445,600 16,518,392 Seagate Technology ................................ 136,600 3,628,096 Western Digital Corporation* ...................... 92,750 1,951,460 ------------ 34,303,574 ------------ COMPUTER SERVICES--.5% CNET Networks, Inc.* .............................. 335,500 3,616,690 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES--.6% Global Crossing Ltd.* ............................. 173,200 4,265,916 ------------ ELECTRIC AND ELECTRONIC EQUIPMENT--1.0% Roper Industries, Inc. ............................ 148,600 7,052,556 ------------ ELECTRONICS--1.1% Nintendo Co., Ltd.# ............................... 413,600 7,696,145 ------------ ENERGY EQUIPMENT & SERVICES--4.7% Diamond Offshore Drilling Inc. .................... 144,200 13,089,034 National-Oilwell Varco Inc.* ...................... 289,600 19,973,712 ------------ 33,062,746 ------------ ENGINEERING--1.2% Jacobs Engineering Group Inc.* .................... 103,800 8,584,260 ------------ FINANCIAL INFORMATION SERVICES--.7% GFI Group Inc.* ................................... 87,000 4,948,560 ------------ -22- THE ALGER FUNDS ALGER MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ FINANCIAL SERVICES--4.0% Chicago Mercantile Exchange Holdings Inc. ......... 14,500 $ 6,641,000 Hong Kong Exchanges & Clearing Limited ............ 500,175 3,596,576 Hudson City Bancorp Inc. .......................... 705,900 9,466,119 International Securities Exchange, Inc. Cl. A ..... 93,600 4,113,720 Janus Capital Group Inc. .......................... 220,000 4,281,200 ------------ 28,098,615 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--5.1% ArthroCare Corporation* ........................... 151,900 6,885,627 Hologic, Inc.* .................................... 187,900 8,957,193 Intuitive Surgical, Inc.* ......................... 96,600 12,268,200 Mentor Corporation ................................ 86,983 3,768,973 THORATEC CORPORATION* ............................. 243,000 4,376,430 36,256,423 ------------ HEALTH CARE PROVIDERS & SERVICES--6.6% DaVita, Inc.* ..................................... 154,150 8,672,479 Health Net Inc.* .................................. 172,400 7,016,680 HealthExtras, Inc.* ............................... 168,500 4,896,610 Medco Health Solutions, Inc.* ..................... 107,900 5,743,517 Psychiatric Solutions, Inc.* ...................... 294,400 9,732,864 WellCare Health Plans Inc.* ....................... 262,900 11,010,252 ------------ 47,072,402 ------------ HOTELS, RESTAURANTS & LEISURE--2.3% Orient-Express Hotels Ltd. Cl. A .................. 206,300 8,458,300 P.F. Chang's China Bistro, Inc.* .................. 73,800 3,144,618 Wynn Resorts, Limited* ............................ 65,600 4,992,816 ------------ 16,595,734 ------------ HOUSEHOLD DURABLES--.1% Garmin Ltd. ....................................... 8,600 742,696 ------------ INFORMATION TECHNOLOGY SERVICES--.7% Sapient Corporation* .............................. 643,500 5,038,605 ------------ INSURANCE--1.7% Endurance Specialty Holdings Limited .............. 400,100 12,387,096 ------------ INTERNET & CATALOG RETAIL--2.4% Netflix Inc.*+ .................................... 581,050 17,222,322 ------------ INTERNET SOFTWARE & SERVICES--5.8% Allscripts Healthcare Solutions, Inc.* ............ 388,000 6,607,640 DealerTrack Holdings Inc.* ........................ 319,400 7,122,620 Expedia, Inc.* .................................... 587,300 10,953,145 Openwave Systems, Inc.* ........................... 248,000 4,615,280 WebEx Communications, Inc.* ....................... 339,200 11,990,720 ------------ 41,289,405 ------------ IT SERVICES--1.9% SRA International, Inc.* .......................... 117,000 3,746,340 Wright Express Corp.* ............................. 322,600 9,932,854 ------------ 13,679,194 ------------ LEISURE EQUIPMENT & PRODUCTS--1.0% UBISOFT ENTERTAINMENT SA* ......................... 154,300 7,034,537 -23- THE ALGER FUNDS ALGER MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ MACHINERY--4.7% ESCO Technologies Inc.* ........................... 99,400 $ 5,039,580 Manitowoc Company, Inc. ........................... 95,900 4,755,681 Terex Corporation* ................................ 161,300 13,960,515 Trinity Industries, Inc. .......................... 149,700 9,505,950 ------------ 33,261,726 ------------ MEDIA--3.2% Imax Corporation* ................................. 157,300 1,568,281 XM Satellite Radio Holdings Inc. Cl. A* ........... 1,029,750 20,821,545 ------------ 22,389,826 ------------ METALS & MINING--8.3% Cameco Corporation ................................ 250,000 10,162,500 Freeport-McMoRan Copper & Gold, Inc. Cl. B ........ 163,900 10,584,662 Inco Limited ...................................... 271,400 15,325,958 Paladin Resources Limited* ........................ 1,885,600 6,693,880 Peabody Energy Corporation ........................ 138,700 8,857,382 Vedanta Resources PLC ............................. 263,100 7,564,125 ------------ 59,188,507 ------------ OIL & GAS--2.0% Quicksilver Resources Inc.* ....................... 85,100 3,526,544 Southwestern Energy Co. ........................... 191,500 6,897,830 Western Gas Resources, Inc. ....................... 69,900 3,634,800 ------------ 14,059,174 ------------ PHARMACEUTICALS--.7% Sepracor Inc.* .................................... 112,250 5,010,840 ------------ REAL ESTATE--1.1% Jones Lang LaSalle Incorporated ................... 94,700 8,026,772 ------------ SEMICONDUCTORS--.5% Himax Technologies, Inc.*# ........................ 400,000 3,560,000 ------------ SEMICONDUCTOR CAPITAL EQUIPMENT--.8% SiRF Technology Holdings, Inc.* ................... 169,400 5,785,010 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--7.9% Broadcom Corporation Cl. A* ....................... 200,100 8,226,111 Ikanos Communications* ............................ 347,200 6,430,144 Marvell Technology Group Ltd.* .................... 185,300 10,578,777 Microsemi Corporation* ............................ 126,500 3,455,980 Rambus Inc.* ...................................... 189,000 7,338,870 Tessera Technologies Inc.*+ ....................... 457,000 14,655,990 Xilinx, Inc. ...................................... 206,300 5,708,321 ------------ 56,394,193 ------------ SPECIALTY RETAIL--1.6% Gamestop Corp. Cl. A* ............................. 231,270 10,915,944 ------------ SOFTWARE--2.7% Activision, Inc.* ................................. 637,400 9,044,706 VeriFone Holdings Inc.* ........................... 329,500 10,201,320 ------------ 19,246,026 ------------ -24- THE ALGER FUNDS ALGER MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ TEXTILES, APPAREL & LUXURY GOODS--.4% Quiksilver, Inc.* ................................. 210,500 $ 2,877,535 ------------ TRANSPORTATION BY AIR--.3% UAL Corporation* .................................. 64,600 2,326,246 ------------ WIRELESS TELECOMMUNICATION SERVICES--1.3% NII Holdings Inc. Cl. B* .......................... 153,500 9,194,650 ------------ Total Common Stocks (Cost $638,797,782) ............................. 696,557,007 ------------ PURCHASED OPTIONS--.1% CONTRACTS ---------- PUT OPTIONS Netflix Inc./June/25+ ............................. 505 12,625 Netflix Inc./June/30+ ............................. 1,810 289,600 Tessera Technologies Inc./June/25 ................. 4,570 91,400 ------------ Total Purchased Put Options (Cost $1,702,015) ............................... 393,625 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--2.8% AMOUNT ---------- U.S. AGENCY OBIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $19,620,072) .............................. $19,625,000 19,620,072 ------------ Total Investments (Cost $660,119,869)(a) .......................... 100.9% 716,570,704 Liabilities in Excess of Other Assets ............. (0.9) (6,218,469) ---------- ------------ Net Assets ........................................ 100.0% $710,352,235 ========== ============ ---------- * Non-income producing security. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized appreciation of investments, based on cost for federal income tax purposes of $665,178,548, amounted to $51,392,156 which consisted of aggregate gross unrealized appreciation of $83,075,933 and aggregate gross unrealized depreciation of $31,683,777. + All or a portion of the securities are pledged as collateral for options written. See Notes to Financial Statements. -25- THE ALGER FUNDS ALGER MIDCAP GROWTH FUND SCHEDULE OF OPTIONS WRITTEN (UNAUDITED) April 30, 2006 SHARES SUBJECT TO CALL OPTIONS WRITTEN CONTRACTS CALL/PUT VALUE --------- ---------- -------- Netflix Inc./June/35 ........................ 2,315 231,500 $ 34,725 Tessera Technologies Inc./June/40 ........... 4,570 457,000 114,250 -------- Total (Premiums Received $668,646) .............. 148,975 -------- PUT OPTIONS WRITTEN Netflix Inc./June/22.5 (Premiums Received $516,392) .............. 2,315 231,500 11,575 -------- TOTAL OPTIONS WRITTEN (PREMIUMS RECEIVED $1,185,038) ............ $160,550 ======== See Notes to Financial Statements. -26- THE ALGER FUNDS ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 COMMON STOCKS--99.4% SHARES VALUE ---------- ------------ AEROSPACE & DEFENSE--2.5% BE Aerospace, Inc.* ............................... 141,900 $ 3,693,657 Hexcel Corporation* ............................... 122,500 2,706,025 United Technologies Corporation ................... 47,900 3,008,599 ------------ 9,408,281 ------------ AIR FREIGHT & LOGISTICS--.5% UTI Worldwide, Inc. ............................... 60,800 1,896,352 ------------ BIOTECHNOLOGY--2.6% Amgen Inc. ........................................ 30,500 2,064,850 DOV Pharmaceutical, Inc.* ......................... 70,800 576,312 Gilead Sciences, Inc. ............................. 45,700 2,627,750 ImClone Systems Incorporated* ..................... 75,500 2,725,550 Vertex Pharmaceuticals Incorporated* .............. 55,200 2,007,624 ------------ 10,002,086 ------------ CAPITAL MARKETS--2.4% Bear Stearns Companies Inc. ....................... 37,800 5,386,878 Goldman Sachs Group, Inc. ......................... 24,500 3,927,105 ------------ 9,313,983 ------------ CASINOS & RESORTS--.2% Bally Technologies Inc.* .......................... 36,700 656,930 ------------ COMMERCIAL SERVICES & SUPPLIES--.8% Net 1 UEPS Technologies, Inc.* .................... 81,275 2,548,784 Traffic.com, Inc.* ................................ 107,300 672,771 ------------ 3,221,555 ------------ COMMUNICATION EQUIPMENT--3.0% Comverse Technology, Inc.* ........................ 78,800 1,784,820 Motorola, Inc. .................................... 266,400 5,687,640 QUALCOMM Inc. ..................................... 78,500 4,030,190 ------------ 11,502,650 ------------ COMPUTERS & PERIPHERALS--3.1% Apple Computer, Inc.* ............................. 30,400 2,139,856 EMC Corporation* .................................. 169,200 2,285,892 Mobility Electronics, Inc.* ....................... 238,500 1,698,120 Network Appliance, Inc.* .......................... 151,000 5,597,570 ------------ 11,721,438 ------------ COMPUTER SERVICES--.6% Akamai Technologies, Inc.* ........................ 72,400 2,439,156 ------------ COMPUTER TECHNOLOGY--.5% NAVTEQ* ........................................... 47,400 1,968,048 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--.5% Multi-Fineline Electronix, Inc.* .................. 32,100 1,870,788 ------------ -27- THE ALGER FUNDS ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ ENERGY EQUIPMENT & SERVICES--3.9% Cooper Cameron Corporation* ....................... 108,600 $ 5,456,064 National-Oilwell Varco Inc.* ...................... 82,300 5,676,231 Transocean Inc.* .................................. 45,600 3,696,792 ------------ 14,829,087 ------------ FINANCIAL INFORMATION SERVICES--1.7% Genworth Financial Inc. Cl. A ..................... 157,150 5,217,380 GFI Group Inc.* ................................... 19,800 1,126,224 ------------ 6,343,604 ------------ FINANCIAL SERVICES--2.1% Chicago Mercantile Exchange Holdings Inc. ......... 5,500 2,519,000 Hong Kong Exchanges & Clearing Limited ............ 265,300 1,907,675 Hudson City Bancorp Inc. .......................... 214,100 2,871,081 International Securities Exchange, Inc. Cl. A ..... 18,400 808,680 ------------ 8,106,436 ------------ FOOD & STAPLES RETAILING--2.5% CVS Corporation ................................... 318,800 9,474,736 ------------ FREIGHT & LOGISTICS--1.1% FedEx Corp. ....................................... 35,400 4,075,602 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--3.1% Boston Scientific Corporation* .................... 81,800 1,901,032 Hologic, Inc.* .................................... 84,900 4,047,183 St. Jude Medical, Inc.* ........................... 42,400 1,673,952 Ventana Medical Systems, Inc.* .................... 87,400 4,256,380 ------------ 11,878,547 ------------ HEALTH CARE PROVIDERS & SERVICES--3.0% UnitedHealth Group Incorporated ................... 125,580 6,246,349 WellCare Health Plans Inc.* ....................... 124,400 5,209,872 ------------ 11,456,221 ------------ HOTELS, RESTAURANTS & LEISURE--2.3% GTECH Holdings Corporation ........................ 197,100 6,732,936 MGM MIRAGE ........................................ 43,900 1,971,110 ------------ 8,704,046 ------------ HOUSEHOLD PRODUCTS--2.9% Procter & Gamble Company .......................... 187,440 10,910,882 ------------ INDUSTRIAL CONGLOMERATES--2.0% General Electric Company .......................... 221,800 7,672,062 ------------ INFORMATION TECHNOLOGY SERVICES--.5% Sapient Corporation* .............................. 229,300 1,795,419 ------------ -28- THE ALGER FUNDS ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ INSURANCE--1.3% American International Group, Inc. ................ 15,200 $ 991,800 Endurance Specialty Holdings Limited .............. 122,400 3,789,504 ------------ 4,781,304 ------------ INTERNET & CATALOG RETAIL--1.1% eBay Inc.* ........................................ 121,200 4,170,492 ------------ INTERNET SOFTWARE & SERVICES--6.5% DealerTrack Holdings Inc.* ........................ 77,300 1,723,790 Google Inc. Cl. A* ................................ 17,100 7,146,774 Netease.com Inc.*# ................................ 800 17,344 Openwave Systems, Inc.* ........................... 186,000 3,461,460 Yahoo! Inc.* ...................................... 378,600 12,410,508 ------------ 24,759,876 ------------ IT SERVICES--.8% Wright Express Corp.* ............................. 95,300 2,934,286 ------------ MACHINERY--2.4% Caterpillar Inc. .................................. 25,100 1,901,074 ESCO Technologies Inc.* ........................... 38,700 1,962,090 Terex Corporation* ................................ 61,900 5,357,445 ------------ 9,220,609 ------------ MEDIA--2.7% Focus Media Holding Limited*# ..................... 53,500 3,230,865 NeuStar, Inc. Cl. A* .............................. 110,715 3,886,097 XM Satellite Radio Holdings Inc. Cl. A* ........... 160,000 3,235,200 ------------ 10,352,162 ------------ MEDICAL PRODUCTS--.3% Par Pharmaceutical Company Inc.* .................. 47,800 1,230,850 ------------ METALS & MINING--4.1% Breakwater Resources, Ltd.* ....................... 3,277,400 4,129,524 Inco Limited ...................................... 109,200 6,166,524 Paladin Resources Limited* ........................ 1,424,400 5,056,620 ------------ 15,352,668 ------------ MULTILINE RETAIL--4.3% Federated Department Stores, Inc. ................. 63,200 4,920,120 Kohl's Corporation* ............................... 204,400 11,413,696 ------------ 16,333,816 ------------ -29- THE ALGER FUNDS ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ OIL & GAS--3.5% Exxon Mobil Corporation ........................... 118,800 $ 7,493,904 Talisman Energy Inc. .............................. 38,700 2,185,776 Valero Energy Corporation ......................... 55,200 3,573,648 ------------ 13,253,328 ------------ OIL AND GAS EXPLORATION SERVICES--.3% Petrobank Energy and Resources Ltd.* .............. 76,900 954,329 ------------ PHARMACEUTICALS--2.3% Novartis AG# ...................................... 58,100 3,341,331 Teva Pharmaceutical Industries Ltd.# .............. 132,529 5,367,425 ------------ 8,708,756 ------------ PHARMACEUTICAL PREPARATIONS--1.8% Adams Respiratory Therapeutics, Inc.* ............. 157,975 6,775,548 ------------ ROAD & RAIL--.5% Burlington Northern Santa Fe Corporation .......... 21,600 1,717,848 ------------ SAVINGS & LOANS--.9% Golden West Financial Corp. ....................... 45,800 3,291,646 ------------ SEMICONDUCTOR CAPITAL EQUIPMENT--1.9% FormFactor Inc.* .................................. 174,200 7,262,398 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.8% Applied Micro Circuits Corporation* ............... 1,232,400 4,522,907 ATMI, Inc.* ....................................... 4,500 127,800 Broadcom Corporation Cl. A* ....................... 76,850 3,159,304 Marvell Technology Group Ltd.* .................... 57,950 3,308,366 Tessera Technologies Inc.* ........................ 207,700 6,660,939 Trident Microsystems, Inc.* ....................... 158,900 4,226,740 ------------ 22,006,056 ------------ SOFTWARE--6.2% Electronic Arts Inc.* ............................. 73,686 4,185,365 Microsoft Corporation ............................. 394,850 9,535,627 Oracle Corporation* ............................... 147,400 2,150,566 VeriFone Holdings Inc.* ........................... 246,250 7,623,900 ------------ 23,495,458 ------------ SPECIALTY RETAIL--2.7% Abercrombie & Fitch Co. Cl. A ..................... 68,100 4,135,713 Lowe's Companies, Inc. ............................ 46,500 2,931,825 PETsMART, Inc. .................................... 111,400 3,081,324 ------------ 10,148,862 ------------ TEXTILES, APPAREL & LUXURY GOODS--.5% Quiksilver, Inc.* ................................. 126,500 1,729,255 ------------ -30- THE ALGER FUNDS ALGER CAPITAL APPRECIATION FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ TOBACCO--2.0% Altria Group, Inc. ................................ 102,500 $ 7,498,900 ------------ TRANSPORTATION--2.1% Textron Inc ....................................... 86,800 7,807,660 ------------ WIRELESS TELECOMMUNICATION SERVICES--3.6% America Movil S.A. de C.V. Series L# .............. 92,100 3,399,411 American Tower Corporation Cl. A* ................. 133,097 4,543,932 NII Holdings Inc. Cl. B* .......................... 98,000 5,870,200 ------------ 13,813,543 ------------ Total Common Stocks (Cost $339,985,149) ............................. 376,847,559 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--1.2% AMOUNT ---------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $4,659,830) ............................... $4,661,000 4,659,830 ------------ Total Investments (Cost $344,644,979)(a) .......................... 100.6% 381,507,389 Liabilities in Excess of Other Assets ............. (0.6) (2,068,507) ---------- ------------ Net Assets ........................................ 100.0% $379,438,882 ========== ============ ---------- * Non-income producing securities. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $344,780,907, amounted to $36,726,482, which consisted of aggregate gross unrealized appreciation of $44,389,070 and aggregate gross unrealized depreciation of $7,662,588. See Notes to Financial Statements. -31- THE ALGER FUNDS ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 COMMON STOCKS--94.4% SHARES VALUE ---------- ------------ BIOTECHNOLOGY--19.5% Amgen Inc. ........................................ 49,750 $ 3,368,074 Biogen Idec Inc.* ................................. 18,150 814,028 BioMarin Pharmaceutical Inc. ...................... 84,350 1,037,505 Celgene Corporation* .............................. 69,600 2,934,336 Coley Pharmaceutical Group* ....................... 75,800 1,212,042 Cubist Pharmaceuticals, Inc.* ..................... 42,000 952,140 Gen-Probe Incorporated* ........................... 58,800 3,144,036 Genzyme Corporation General Division* ............. 26,750 1,636,030 Gilead Sciences, Inc. ............................. 40,300 2,317,250 Human Genome Sciences, Inc.* ...................... 41,800 476,938 InterMune Inc.* ................................... 29,450 470,906 Keryx Biopharmaceuticals, Inc.* ................... 121,950 2,076,809 Medarex, Inc.* .................................... 38,000 456,380 MedImmune, Inc* ................................... 70,100 2,206,047 Myogen, Inc.* ..................................... 26,600 879,396 PDL BioPharma Inc.* ............................... 38,550 1,109,469 Progenics Pharmaceuticals, Inc.* .................. 66,250 1,552,900 Tanox Inc.* ....................................... 86,450 1,390,981 Theravance, Inc.* ................................. 52,750 1,480,164 Vertex Pharmaceuticals Incorporated* .............. 73,900 2,687,743 Viropharma Inc. ................................... 155,850 1,751,754 ------------ 33,954,928 ------------ CHEMICALS--1.8% Monsanto Company .................................. 37,950 3,165,030 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--.5% Agilent Technologies, Inc. * ...................... 22,600 868,292 ------------ FOOD & STAPLES RETAILING--1.0% CVS Corporation ................................... 59,050 1,754,966 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--12.0% ArthroCare Corporation* ........................... 60,000 2,719,800 Boston Scientific Corporation* .................... 60,400 1,403,696 Fisher Scientific International Inc.* ............. 25,300 1,784,915 Hologic, Inc.* .................................... 66,770 3,182,926 Medtronic, Inc. ................................... 31,400 1,573,768 Mentor Corporation ................................ 39,900 1,728,867 NMT Medical, Inc.* ................................ 21,300 284,142 SonoSite, Inc.* ................................... 9,100 343,525 St. Jude Medical, Inc.* ........................... 31,400 1,239,672 Sybron Dental Specialties, Inc.* .................. 44,450 2,090,928 Varian Medical Systems, Inc.* ..................... 35,400 1,854,252 Ventana Medical Systems, Inc.* .................... 42,200 2,055,140 Wright Medical Group, Inc.* ....................... 32,050 752,214 ------------ 21,013,845 ------------ -32- THE ALGER FUNDS ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ HEALTH CARE PROVIDERS & SERVICES--22.6% Aetna Inc. ........................................ 46,900 $ 1,805,650 American Retirement Corporation* .................. 73,000 1,854,200 Cardinal Health, Inc. ............................. 41,900 2,821,965 Caremark Rx, Inc.* ................................ 83,800 3,817,090 Community Health Systems Inc.* .................... 35,000 1,268,400 HCA, Inc. ......................................... 58,900 2,585,121 Health Net Inc.* .................................. 43,550 1,772,485 HealthExtras, Inc.* ............................... 39,700 1,153,682 Humana Inc.* ...................................... 44,600 2,015,028 Manor Care, Inc. .................................. 30,950 1,357,157 McKesson Corporation .............................. 52,000 2,526,680 Medco Health Solutions, Inc.* ..................... 30,550 1,626,177 Omnicare, Inc. .................................... 19,500 1,105,845 PRA International Inc.* ........................... 42,600 990,876 Psychiatric Solutions, Inc.* ...................... 53,550 1,770,363 Radiation Therapy Services, Inc.* ................. 34,800 889,140 Sunrise Senior Living Inc.* ....................... 26,350 980,220 UnitedHealth Group Incorporated ................... 117,645 5,851,662 WellCare Health Plans Inc.* ....................... 76,000 3,182,880 ------------ 39,374,621 ------------ INTERNET SOFTWARE & SERVICES--.8% Allscripts Healthcare Solutions, Inc.* ............ 80,500 1,370,915 ------------ MEDICAL DEVICES--.9% Advanced Medical Optics, Inc.* .................... 18,600 866,760 Dexcom Inc.* ...................................... 28,050 705,738 ------------ 1,572,498 ------------ MEDICAL TECHNOLOGY--2.3% Conor Medsystems, Inc.* ........................... 107,050 2,890,350 WebMD Health Corp.* ............................... 27,100 1,179,392 ------------ 4,069,742 ------------ PHARMACEUTICALS--27.6% Allergan, Inc. .................................... 23,950 2,460,144 Andrx Corp.* ...................................... 42,450 989,510 Bristol-Myers Squibb, Company ..................... 18,898 479,630 Eli Lilly and Company ............................. 47,700 2,524,284 Forest Laboratories, Inc.* ........................ 65,700 2,652,966 GlaxoSmithKline PLC Sponsored# .................... 83,700 4,760,856 Johnson & Johnson ................................. 28,000 1,641,080 Medicines Company* ................................ 56,150 1,079,203 Merck & Co. Inc. .................................. 101,650 3,498,793 Novartis AG# ...................................... 63,150 3,631,757 Novo Nordisk A/S Cl. B# ........................... 21,250 1,367,438 Panacos Pharmaceuticals Inc.* ..................... 58,700 410,313 Penwest Pharmaceuticals Co.* ...................... 26,200 524,524 Pfizer Inc. ....................................... 217,000 5,496,610 Sanofi-Aventis# ................................... 16,240 763,930 Schering-Plough Corporation ....................... 177,150 3,422,538 -33- THE ALGER FUNDS ALGER HEALTH SCIENCES FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ PHARMACEUTICALS--(CONT.) Sepracor Inc.* .................................... 24,950 $ 1,113,768 Shire PLC ......................................... 64,700 3,064,191 Teva Pharmaceutical Industries Ltd.# .............. 74,138 3,002,589 Wyeth ............................................. 110,500 5,378,035 ------------ 48,262,159 ------------ PHARMACEUTICAL PREPARATIONS--1.5% Adams Respiratory Therapeutics, Inc.* ............. 61,950 2,657,036 ------------ REAL ESTATE--1.2% Ventas, Inc. ...................................... 62,400 2,038,608 ------------ SOFTWARE--2.0% Cerner Corporation* ............................... 45,700 1,812,005 Quality Systems, Inc. ............................. 47,200 1,584,032 ------------ 3,396,037 ------------ SPECIALTY RETAIL--.7% PETsMART, Inc. .................................... 45,900 1,269,594 ------------ Total Common Stocks (Cost $157,979,639) ............................. 164,768,271 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--6.7% AMOUNT ----------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $11,757,047) .............................. $11,760,000 11,757,047 ------------ Total Investments (Cost $169,736,686)(a) .......................... 101.1% 176,525,318 ------------ Liabilities in Excess of Other Assets ............. (1.1) (1,875,896) ----------- ------------ Net Assets ........................................ 100.0% $174,649,422 =========== ============ ---------- * Non-income producing securities. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $169,892,349, amounted to $6,632,969, which consisted of aggregate gross unrealized appreciation of $12,137,177 and aggregate gross unrealized depreciation of $5,504,208. See Notes to Financial Statements. -34- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 COMMON STOCKS--94.0% SHARES VALUE ---------- ------------ AEROSPACE & DEFENSE--3.0% BE Aerospace, Inc.* ............................... 16,400 $ 426,892 Esterline Technologies Corporation* ............... 10,250 454,280 SI International Inc.* ............................ 8,200 279,374 ------------ 1,160,546 ------------ AIRLINES--.5% AirTran Holdings, Inc.* ........................... 15,050 210,398 ------------ APPAREL--1.0% Gymboree Corp.* ................................... 13,500 406,080 ------------ AUTO COMPONETS--1.2% LKQ Corporation* .................................. 21,600 454,463 ------------ BIOTECHNOLOGY--4.5% BioMarin Pharmaceutical Inc. ...................... 22,500 276,750 Cubist Pharmaceuticals, Inc.* ..................... 9,900 224,433 Gen-Probe Incorporated* ........................... 6,200 331,514 Medarex, Inc.* .................................... 19,850 238,399 Myogen, Inc.* ..................................... 7,450 246,297 Theravance, Inc.* ................................. 8,550 239,913 Vertex Pharmaceuticals Incorporated* .............. 4,800 174,576 ------------ 1,731,882 ------------ CAPITAL MARKETS--2.6% Affiliated Managers Group, Inc.* .................. 3,562 360,831 Greenhill & Co., Inc. ............................. 5,350 379,422 National Financial Partners Corporation ........... 4,700 244,400 ------------ 984,653 ------------ CHEMICALS--1.2% Zoltek Companies, Inc.* ........................... 17,750 452,447 ------------ COMMERCIAL BANKS--1.5% Compass Bancshares, Inc. .......................... 4,650 255,564 Signature Bank* ................................... 8,900 314,793 ------------ 570,357 ------------ COMMERCIAL SERVICES & SUPPLIES--5.0% American Reprographics Co.* ....................... 11,300 400,811 CoStar Group Inc.* ................................ 5,550 313,298 FTI Consulting, Inc.* ............................. 14,800 425,352 Weight Watchers International, Inc. ............... 7,500 370,125 West Corporation* ................................. 9,250 428,460 ------------ 1,938,046 ------------ COMMUNICATION EQUIPMENT--1.2% Polycom, Inc.* .................................... 20,750 456,500 ------------ -35- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ COMPUTERS & PERIPHERALS--.7% Mobility Electronics, Inc.* ....................... 37,100 $ 264,151 ------------ COMPUTER SERVICES--1.5% Internap Network Services Corporation* ............ 163,750 214,513 Open Solutions Inc.* .............................. 12,900 351,138 ------------ 565,651 ------------ COMPUTER TECHNOLOGY--1.2% Atheros Communications* ........................... 6,850 173,922 Secure Computing Corporation* ..................... 27,100 291,325 ------------ 465,247 ------------ CONSTRUCTION & ENGINEERING--1.1% URS Corporation* .................................. 10,050 432,853 ------------ ELECTRICAL EQUIPMENT--1.1% AMETEK, Inc. ...................................... 8,600 423,721 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--1.8% International DisplayWorks Inc.* .................. 56,550 317,811 Multi-Fineline Electronix, Inc.* .................. 6,450 375,906 ------------ 693,717 ------------ ELECTRIC AND ELECTRONIC EQUIPMENT--1.0% Roper Industries, Inc. ............................ 7,850 372,560 ------------ ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS--.5% Netlogic Microsystems Inc.* ....................... 4,750 191,282 ------------ ENERGY--1.7% Arch Coal, Inc. ................................... 3,550 337,215 SunPower Corporation Cl. A* ....................... 8,550 328,491 ------------ 665,706 ------------ ENERGY EQUIPMENT & SERVICES--1.0% Grant Prideco, Inc.* .............................. 7,500 384,000 ------------ FINANCIAL INFORMATION SERVICES--1.1% GFI Group Inc.* ................................... 7,150 406,691 ------------ FOOD & BEVERAGES--1.1% Hain Celestial Group Inc. (The)* .................. 15,400 414,260 ------------ HEALTH CARE EQUIPMENT & SUPPLIES--3.7% Haemonetics Corporation* .......................... 6,700 365,150 Hologic, Inc.* .................................... 3,650 173,996 Intuitive Surgical, Inc.* ......................... 3,300 419,100 Ventana Medical Systems, Inc.* .................... 9,400 457,780 ------------ 1,416,026 ------------ -36- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ HEALTH CARE PROVIDERS & SERVICES--4.6% Psychiatric Solutions, Inc.* ...................... 10,950 $ 362,007 Radiation Therapy Services, Inc.* ................. 14,400 367,920 Sunrise Senior Living Inc.* ....................... 9,500 353,400 VCA Antech, Inc.* ................................. 8,850 275,147 WellCare Health Plans Inc.* ....................... 9,900 414,612 ------------ 1,773,086 ------------ HOTELS, RESTAURANTS & LEISURE--4.2% Churchill Downs Incorporated ...................... 9,400 355,602 Orient-Express Hotels Ltd. Cl. A .................. 9,000 369,000 Ruth's Chris Steak House, Inc.* ................... 19,000 443,650 Station Casinos, Inc. ............................. 5,850 450,918 ------------ 1,619,170 ------------ INSURANCE--1.5% Ohio Casualty Corporation ......................... 11,500 340,975 Platinum Underwriters Holdings, Inc. .............. 8,150 224,696 ------------ 565,671 ------------ INTERNET & CATALOG RETAIL--1.0% Priceline.com Incorporated* ....................... 15,150 370,266 ------------ INTERNET SOFTWARE & SERVICES--5.7% DealerTrack Holdings Inc.* ........................ 16,939 377,740 Jupitermedia Corporation* ......................... 26,850 473,097 Openwave Systems, Inc.* ........................... 17,150 319,162 PlanetOut, Inc.* .................................. 35,800 334,371 WebEx Communications, Inc.* ....................... 13,550 478,993 WebSideStory, Inc.* ............................... 10,750 184,685 ------------ 2,168,048 ------------ IT SERVICES--2.0% SRA International, Inc.* .......................... 8,600 275,372 Wright Express Corp.* ............................. 15,950 491,101 ------------ 766,473 ------------ LEISURE EQUIPMENT & PRODUCTS--.9% LIFE TIME FITNESS, Inc.* .......................... 7,300 334,340 ------------ MACHINERY--4.8% Actuant Corporation Cl. A ......................... 4,700 300,565 Bucyrus International, Inc. Cl. A ................. 7,350 381,538 ESCO Technologies Inc.* ........................... 7,250 367,575 Gardner Denver Inc.* .............................. 5,250 391,283 Trinity Industries, Inc. .......................... 6,300 400,050 ------------ 1,841,011 ------------ MACHINERY - OIL WELL EQUIPMENT & SERVICES--.7% Patterson-UTI Energy, Inc. ........................ 7,950 257,261 ------------ -37- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ MEDIA--2.7% Focus Media Holding Limited*# ..................... 6,000 $ 362,340 NeuStar, Inc. Cl. A* .............................. 11,550 405,405 World Wrestling Entertainment, Inc. Cl. A ......... 14,800 256,632 ------------ 1,024,377 ------------ METALS & MINING--2.1% Breakwater Resources, Ltd.* ....................... 335,350 422,541 Paladin Resources Limited* ........................ 107,650 382,158 ------------ 804,699 ------------ OIL & GAS--3.7% Carrizo Oil & Gas, Inc.* .......................... 11,800 346,684 Holly Corporation ................................. 5,100 393,567 Range Resources Corporation ....................... 12,700 336,931 TODCO Cl. A* ...................................... 7,650 350,906 ------------ 1,428,088 ------------ OIL AND GAS EXPLORATION SERVICES--1.0% Petrobank Energy and Resources Ltd.* .............. 30,200 374,782 ------------ PHARMACEUTICAL PREPARATIONS--1.1% Adams Respiratory Therapeutics, Inc.* ............. 9,800 420,322 ------------ REAL ESTATE--.9% Jones Lang LaSalle Incorporated ................... 3,900 330,564 ------------ RESTAURANTS--1.1% McCormick & Schmick's Seafood Restaurants, Inc.* .. 16,800 420,000 ------------ RETAIL--1.1% Phillips-Van Heusen Corporation ................... 10,200 410,040 ------------ ROAD & RAIL--1.0% Landstar Systems, Inc. ............................ 8,550 363,290 ------------ SEMICONDUCTOR CAPITAL EQUIPMENT--1.8% FormFactor Inc.* .................................. 8,850 368,957 SiRF Technology Holdings, Inc.* ................... 9,200 314,180 ------------ 683,137 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--4.6% ATMI, Inc.* ....................................... 12,700 360,680 Cypress Semiconductor Corporation* ................ 20,900 358,644 Ikanos Communications* ............................ 18,510 342,805 Microsemi Corporation* ............................ 14,350 392,042 Trident Microsystems, Inc.* ....................... 11,950 317,870 ------------ 1,772,041 ------------ -38- THE ALGER FUNDS ALGER SMALLCAP AND MIDCAP GROWTH FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ SOFTWARE--3.1% Quest Software, Inc.* ............................. 21,050 $ 362,271 Quality Systems, Inc. ............................. 11,050 370,838 VeriFone Holdings Inc.* ........................... 14,600 452,016 ------------ 1,185,125 ------------ SPECIALTY RETAIL--3.9% Aeropostale, Inc.* ................................ 10,100 310,171 AnnTaylor Stores Corporation* ..................... 9,750 363,968 Gamestop Corp. Cl. A* ............................. 8,500 401,200 PETsMART, Inc. .................................... 15,250 421,815 ------------ 1,497,154 ------------ WIRELESS TELECOMMUNICATION SERVICES--1.3% SBA Communications Corporation Cl. A* ............. 20,650 518,728 ------------ TOTAL COMMON STOCKS (Cost $29,260,267) .............................. 35,988,910 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--4.9% AMOUNT ---------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $1,879,528) ............................... $1,880,000 1,879,528 ------------ Total Investments (Cost $31,139,795)(a) ........................... 98.9% 37,868,438 Other Assets in Excess of Liabilities ............. 1.1 417,412 ---------- ------------ Net Assets ........................................ 100.0% $ 38,285,850 ========== ============ ---------- * Non-income producing securities. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $31,139,795, amounted to $6,728,643, which consisted of aggregate gross unrealized appreciation of $7,068,819 and aggregate gross unrealized depreciation of $340,176. See Notes to Financial Statements. -39- THE ALGER FUNDS ALGER TECHNOLOGY FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 COMMON STOCKS--96.4% SHARES VALUE ---------- ------------ COMMERCIAL SERVICES & SUPPLIES--2.6% Traffic.com, Inc.* ................................ 500 $ 3,135 West Corporation* ................................. 2,750 127,380 ------------ 130,515 ------------ COMMUNICATION EQUIPMENT--6.5% Cisco Systems, Inc.* .............................. 3,900 81,705 Corning Incorporated* ............................. 4,100 113,283 Motorola, Inc. .................................... 3,400 72,590 Research In Motion Limited* ....................... 840 64,369 ------------ 331,947 ------------ COMPUTER SERVICES--1.1% Embarcadero Technologies, Inc.* ................... 9,525 58,007 ------------ COMPUTERS & PERIPHERALS--12.3% Apple Computer, Inc.* ............................. 3,000 211,170 Mobility Electronics, Inc.* ....................... 19,500 138,840 Network Appliance, Inc.* .......................... 4,550 168,668 Western Digital Corporation* ...................... 5,215 109,724 ------------ 628,402 ------------ COMPUTER TECHNOLOGY--2.1% Secure Computing Corporation* ..................... 9,760 104,920 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS--7.4% Multi-Fineline Electronix, Inc.* .................. 4,750 276,830 International DisplayWorks Inc.* .................. 18,500 103,970 ------------ 380,800 ------------ INFORMATION TECHNOLOGY SERVICES--7.9% Accenture Ltd. Cl. A* ............................. 3,655 106,250 Cognizant Technology Solutions Corporation Cl. A* . 850 54,069 Kanbay International Inc.* ........................ 6,760 104,780 Sapient Corporation* .............................. 17,650 138,200 ------------ 403,299 INTERNET & CATALOG RETAIL--2.2% eBay Inc.* ........................................ 3,300 113,552 ------------ INTERNET SOFTWARE & SERVICES--9.3% DealerTrack Holdings Inc.* ........................ 9,350 208,505 WebEx Communications, Inc.* ....................... 2,300 81,305 Yahoo! Inc. * ..................................... 5,685 186,354 ------------ 476,164 ------------ IT SERVICES--2.1% SRA International, Inc.* .......................... 3,300 105,665 ------------ MEDIA--1.6% NeuStar, Inc. Cl. A* .............................. 2,395 84,065 ------------ -40- THE ALGER FUNDS ALGER TECHNOLOGY FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 COMMON STOCKS--(CONT.) SHARES VALUE ---------- ------------ SEMICONDUCTOR CAPITAL EQUIPMENT--4.9% FormFactor Inc.* .................................. 1,925 $ 80,253 SiRF Technology Holdings, Inc.* ................... 5,050 172,458 ------------ 252,711 ------------ SEMICONDUCTORS--.3% Himax Technologies, Inc.*# ........................ 1,625 14,463 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--9.3% Freescale Semiconductor Inc. Cl. A* ............... 2,840 89,801 Ikanos Communications* ............................ 2,375 43,985 Marvell Technology Group Ltd.* .................... 1,550 88,490 Microsemi Corporation* ............................ 3,600 98,352 Tessera Technologies Inc.* ........................ 3,165 101,501 Texas Instruments Incorporated .................... 1,600 55,536 ------------ 477,665 ------------ SOFTWARE--26.8% BEA Systems, Inc.* ................................ 4,160 55,120 Check Point Software Technologies Ltd.* ........... 5,035 97,427 Electronic Arts Inc.* ............................. 1,450 82,360 Microsoft Corporation ............................. 10,550 254,783 Oracle Corporation* ............................... 17,750 258,973 Quest Software, Inc. * ............................ 6,325 108,853 Symantec Corporation* ............................. 11,600 190,008 Tibco Software Inc.* .............................. 13,400 115,508 VeriFone Holdings Inc.* ........................... 6,750 208,980 ------------ 1,372,012 ------------ Total Common Stocks (Cost $4,946,164) ............................... 4,934,187 ------------ PRINCIPAL SHORT-TERM INVESTMENTS--10.2% AMOUNT ---------- U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $522,869) ................................. $ 523,000 522,869 ------------ Total Investments (Cost $5,469,033)(a) ............................ 106.6% 5,457,056 Liabilities in Excess of Other Assets ............. (6.6) (337,533) ---------- ------------ Net Assets ........................................ 100.0% $ 5,119,523 ========== ============ ---------- * Non-income producing securities. # American Depositary Receipts. (a) At April 30, 2006, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $5,469,033, amounted to $11,977, which consisted of aggregate gross unrealized appreciation of $195,513 and aggregate gross unrealized depreciation of $207,490. See Notes to Financial Statements. -41- THE ALGER FUNDS ALGER CORE FIXED-INCOME FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 PRINCIPAL CORPORATE BONDS--25.1% AMOUNT VALUE ---------- ------------ APPAREL--.3% Levi Strauss & Co., 8.875%, 4/1/16(a) ............. $ 15,000 $ 15,113 ------------ AUTOMOTIVE--1.9% Honda Auto Receivables Owner Trust, 5.07%, 2/18/10 100,000 99,726 ------------ AUTOMOTIVE EQUIPMENT & SERVICE--.8% Tenneco Inc., 8.625%, 11/15/14 .................... 40,000 40,700 ------------ COMMERCIAL BANKS--1.4% First Tennessee Bank, 5.65%, 4/1/16 ............... 75,000 73,001 ------------ ELECTRIC UTILITIES--3.8% Appalachian Power Co., 5.55%, 4/1/11 .............. 80,000 79,532 General Electric Capital Corp., 5.50%, 4/28/11 .... 80,000 80,121 Sierra Pacific Power Company, 6.00%, 5/15/16(a) ... 40,000 38,943 ------------ 198,596 ------------ ENERGY--1.4% Encana Holdings Financial Corp., 5.80%, 5/1/14 .... 75,000 74,697 ------------ FINANCE--1.9% SLM Corp., 5.45%, 4/25/11 ......................... 75,000 74,562 Residential Capital, 6.50%, 4/17/13 ............... 25,000 24,952 ------------ 99,514 ------------ HEALTH CARE PROVIDERS & SERVICES--1.4% UnitedHealth Group, 5.375%, 3/15/16 ............... 75,000 72,105 ------------ HOTELS, RESTAURANTS & LEISURE--1.5% Boyd Gaming Corp., 7.125%, 2/1/16 ................. 60,000 60,375 MGM MIRAGE, 6.75%, 4/1/13(a) ...................... 15,000 14,850 ------------ 75,225 ------------ INDUSTRIAL CONGLOMERATES--1.5% Textron Financial Corporation, 5.875%, 6/1/07 ..... 75,000 75,453 ------------ MACHINERY--3.4% The Manitowoc Co. Inc., 7.125%, 11/1/13 ........... 75,000 77,063 CNH Equipment Trust, 5.20%, 8/16/10 ............... 100,000 99,811 ------------ 176,874 ------------ MEDIA--1.5% Clear Channel Communications, Inc., 5.75%, 1/15/13 80,000 76,091 ------------ REAL ESTATE--1.4% ProLogis, 5.75%, 4/1/16 ........................... 75,000 73,164 ------------ SPECIALTY RETAIL--1.4% Home Depot, Inc., 5.20%, 3/1/11 ................... 75,000 74,321 ------------ -42- THE ALGER FUNDS ALGER CORE FIXED-INCOME FUND SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED) April 30, 2006 PRINCIPAL CORPORATE BONDS--(CONT.) AMOUNT VALUE ---------- ------------ WIRELESS TELECOMMUNICATION SERVICES--1.5% Vodafone Group PLC, 5.50%, 6/15/11 ................ $ 75,000 $ 74,249 ------------ Total Corpoate Bonds (Cost $1,307,431) ............................... 1,298,829 ------------ U.S. GOVERNMENT & AGENCY OBLIGATIONS--71.6% Federal Home Loan Mortgage Corporation, 5.10%, 3/14/08 .................................. 200,000 199,523 5.25%, 3/16/09 .................................. 175,000 174,571 5.125%, 12/15/13 ................................ 100,000 97,116 5.75%, 12/15/18 ................................. 100,000 99,625 5.50%, 10/15/31 ................................. 75,000 72,826 Federal National Mortgage Association, 5.17%, 2/23/09 .................................. 175,000 174,341 4.75%, 4/19/10 .................................. 100,000 97,930 4.50%, 2/15/11 .................................. 150,000 145,446 5.75%, 9/25/20 .................................. 99,065 98,151 6.00%, 4/25/35 .................................. 120,000 118,169 Federal Home Loan Banks, 5.10%, 3/6/08 ................................... 200,000 199,548 U.S. Treasury Notes, 4.375%, 5/15/07 ................................. 375,000 373,096 4.375%, 1/31/08 ................................. 275,000 272,712 4.75%, 11/15/08 ................................. 380,000 378,961 4.50%, 2/15/09 .................................. 480,000 475,425 3.50%, 11/15/09 ................................. 230,000 219,722 4.50%, 2/28/11 .................................. 150,000 147,305 4.875%, 2/15/12 ................................. 150,000 149,496 4.25%, 11/15/13 ................................. 100,000 95,219 4.25%, 8/15/15 .................................. 130,000 122,276 ------------ Total U.S. Government & Agency Obligations (Cost $3,735,976) ............................... 3,711,458 ------------ SHORT-TERM INVESTMENTS--3.2% U.S. AGENCY OBLIGATIONS Federal Home Loan Banks, 4.52%, 5/1/06 (Cost $166,958) ................................. 167,000 166,958 ------------ Total Investments (Cost $5,210,365)(b) ............................ 99.9% 5,177,245 Other Assets in Excess of Liabilities ............. 0.1 2,915 ---------- ------------ Net Assets ........................................ 100.0% $ 5,180,160 ========== ============ ---------- * Non-income producing security. # American Depositary Receipts. (a) Pursuant to Securites and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified instituitonal buyers. These securities are deemed to be liquid and represent 1.3% of net assets of the Fund. (b) At April 30, 2006, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $5,210,365 amounted to $33,120 which consisted of aggregate gross unrealized appreciation of $752 and aggregate gross unrealized depreciation of $33,872. See Notes to Financial Statements. -43- THE ALGER FUNDS ALGER MONEY MARKET FUND SCHEDULE OF INVESTMENTS (UNAUDITED) April 30, 2006 PRINCIPAL AMOUNT VALUE -------- ----- U.S. AGENCY OBLIGATIONS--99.6% Federal Farm Credit Banks, 4.52%, 6/15/06 .................................. $8,000,000 $ 7,954,800 Federal National Mortgage Association, 4.70%, 5/22/06 .................................. 8,400,000 8,376,970 Freddie Mac, 4.70%, 5/16/06 .................................. 7,500,000 7,485,313 4.54%, 6/13/06 .................................. 7,850,000 7,807,431 4.85%, 7/18/06 .................................. 7,800,000 7,718,035 Federal Home Loan Banks, 4.52%, 5/01/06 .................................. 15,152,000 15,152,000 ------------ Total U.S. Agency Obligations (Cost $54,494,549) .............................. 54,494,549 ------------ REPURCHASE AGREEMENTS--.5% Securities Held Under Repurchase Agreements, 4.25%, 5/1/06, with State Street Bank and Trust Company dtd 4/28/06, repurchase price $278,098, collateralized by Federal National Mortgage Association (par value $280,000, 5.262%, due 9/1/35), (Cost $278,000) .................... 278,000 278,000 ------------ Total Investments (Cost $54,772,549)(a) ........................... 100.1% 54,772,549 Liabilities in Excess of Other Assets ............. (0.1) (54,574) ---------- ------------ Net Assets ........................................ 100.0% $ 54,717,975 ========== ============ ---------- (a) At April 30, 2006, 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. -44- THE ALGER FUNDS STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) April 30, 2006
LargeCap SmallCap Growth Growth Balanced Fund Fund Fund ---------- ---------- ---------- ASSETS: Investments in securities, at value (identified cost*)-- see accompanying schedules of investments ............ $ 481,031 $ 255,664 $ 152,470 Cash ................................................... 13 -- 977 Receivable for investment securities sold .............. 32,878 6,256 7,903 Receivable for shares of beneficial interest sold ...... 1,671 2,410 416 Dividends and interest receivable ...................... 199 16 538 Receivable from Investment Manager--Note 3(a) .......... -- -- -- Prepaid expenses ....................................... 177 30 10 ---------- ---------- ---------- Total Assets ......................................... 515,969 264,376 162,314 ---------- ---------- ---------- LIABILITIES: Payable for investment securities purchased ............ 37,249 3,697 8,400 Written options outstanding ............................ 21 -- -- Payable for shares of beneficial interest redeemed ..... 1,487 955 708 Accrued investment management fees ..................... 276 166 89 Accrued transfer agent fees ............................ 274 54 61 Accrued distribution fees .............................. 172 44 62 Accrued shareholder servicing fees ..................... 92 49 30 Dividends payable--Note 2(f) ........................... -- -- -- Accrued expenses ....................................... 151 84 67 ---------- ---------- ---------- Total Liabilities .................................... 39,722 5,049 9,417 ---------- ---------- ---------- NET ASSETS ............................................. $ 476,247 $ 259,327 $ 152,897 ========== ========== ========== Net Assets Consist of: Paid-in capital ...................................... $ 643,261 $ 304,517 $ 171,250 Undistributed net investment income (accumulated loss) ................................. (1,807) (1,244) 120 Undistributed net realized gain (accumulated loss) ... (181,729) (99,775) (21,028) Net unrealized appreciation (depreciation) of investments ........................................ 16,522 55,829 2,555 ---------- ---------- ---------- NET ASSETS ............................................. $ 476,247 $ 259,327 $ 152,897 ========== ========== ========== Class A Net Asset Value Per Share ............................ $ 11.29 $ 6.29 $ 21.03 ========== ========== ========== Offering Price Per Share ............................. $ 11.92 $ 6.64 $ 22.20 ========== ========== ========== Class B Net Asset Value and Offering Price Per Share ......... $ 10.40 $ 5.77 $ 20.62 ========== ========== ========== Class C Net Asset Value and Offering Price Per Share ......... $ 10.40 $ 5.78 $ 20.71 ========== ========== ========== Shares of beneficial interest outstanding--Note 6 Class A .............................................. 15,866 29,014 2,236 ========== ========== ========== Class B .............................................. 24,389 11,272 3,915 ========== ========== ========== CLASS C .............................................. 4,177 2,056 1,214 ========== ========== ========== *Identified cost ...................................... $ 464,894 $ 199,834 $ 149,915 ========== ========== ==========
See Notes to Financial Statements. -45-
Capital SmallCap Core MidCap Appre- Health and MidCap Tech- Fixed- Money Growth ciation Sciences Growth nology Income Market Fund Fund Fund Fund Fund Fund Fund ---------- ---------- ---------- -------- ------- ------- -------- ASSETS: Investments in securities, at value (identified cost*)-- see accompanying schedules of investments ............ $ 716,571 $ 381,507 $ 176,525 $ 37,868 $ 5,457 $ 5,177 $ 54,773 Cash ................................................... 1,923 5 7 2 1 1 -- Receivable for investment securities sold .............. 13,942 19,586 3,987 181 -- -- -- Receivable for shares of beneficial interest sold ...... 3,229 247 1,019 437 -- -- 254 Dividends and interest receivable ...................... 92 101 19 1 -- 53 -- Receivable from Investment Manager--Note 3(a) .......... -- -- 4 7 9 10 -- Prepaid expenses ....................................... 15 29 24 23 38 38 12 ---------- ---------- ---------- -------- ------- ------- -------- Total Assets ......................................... 735,772 401,475 181,585 38,519 5,505 5,279 55,039 ---------- ---------- ---------- -------- ------- ------- -------- LIABILITIES: Payable for investment securities purchased ............ 20,413 20,573 5,611 85 363 77 -- Written options outstanding ............................ 161 -- -- -- -- -- -- Payable for shares of beneficial interest redeemed ..... 3,536 701 1,058 75 -- 1 237 Accrued investment management fees ..................... 441 251 116 24 3 2 21 Accrued transfer agent fees ............................ 282 221 29 21 17 17 20 Accrued distribution fees .............................. 204 134 36 7 -- -- -- Accrued shareholder servicing fees ..................... 138 74 34 7 1 1 -- Dividends payable--Note 2(f) ........................... -- -- -- -- -- -- 3 Accrued expenses ....................................... 245 82 52 14 2 1 40 ---------- ---------- ---------- -------- ------- ------- -------- Total Liabilities .................................... 25,420 22,036 6,936 233 386 99 321 ---------- ---------- ---------- -------- ------- ------- -------- NET ASSETS ............................................. $ 710,352 $ 379,439 $ 174,649 $ 38,286 $ 5,119 $ 5,180 $ 54,718 ========== ========== ========== ======== ======= ======= ======== Net Assets Consist of: Paid-in capital ...................................... $ 584,109 $ 828,930 $ 164,439 $ 28,757 $ 5,143 $ 5,230 $ 54,936 Undistributed net investment income (accumulated loss) ................................. (3,811) (1,694) (486) (164) (11) -- -- Undistributed net realized gain (accumulated loss) ... 72,579 (484,660) 3,907 2,964 (1) (17) (218) Net unrealized appreciation (depreciation) of investments ........................................ 57,475 36,863 6,789 6,729 (12) (33) -- ---------- ---------- ---------- -------- ------- ------- -------- NET ASSETS ............................................. $ 710,352 $ 379,439 $ 174,649 $ 38,286 $ 5,119 $ 5,180 $ 54,718 ========== ========== ========== ======== ======= ======= ======== Class A Net Asset Value Per Share ............................ $ 9.40 $ 10.55 $ 16.52 $ 14.04 $ 9.95 $ 9.90 $ -- ========== ========== ========== ======== ======= ======= ======== Offering Price Per Share ............................. $ 9.92 $ 11.13 $ 17.44 $ 14.82 $ 10.50 $ 10.39 $ -- ========== ========== ========== ======== ======= ======= ======== Class B Net Asset Value and Offering Price Per Share ......... $ 8.55 $ 9.78 $ 16.03 $ 13.61 $ 9.94 $ 9.90 $ 1.00 ========== ========== ========== ======== ======= ======= ======== Class C Net Asset Value and Offering Price Per Share ......... $ 8.53 $ 9.78 $ 16.02 $ 13.62 $ 9.94 $ 9.90 $ -- ========== ========== ========== ======== ======= ======= ======== Shares of beneficial interest outstanding--Note 6 Class A .............................................. 38,276 14,157 6,830 1,853 494 503 -- ========== ========== ========== ======== ======= ======= ======== Class B .............................................. 31,204 19,872 1,325 387 10 10 54,815 ========== ========== ========== ======== ======= ======= ======== CLASS C .............................................. 9,813 3,646 2,534 515 10 10 -- ========== ========== ========== ======== ======= ======= ======== *Identified cost ...................................... $ 660,120 $ 344,645 $ 169,736 $ 31,140 $ 5,469 $ 5,210 $ 54,773 ========== ========== ========== ======== ======= ======= ========
-46- THE ALGER FUNDS STATEMENTS OF OPERATIONS (IN THOUSANDS) (UNAUDITED) For the six months ended April 30, 2006
LargeCap SmallCap Growth Growth Balanced Fund Fund Fund ---------- ---------- ---------- Income: Dividends (net of foreign withholding taxes*) ......... $ 2,126 $ 303 $ 477 Interest .............................................. 162 229 1,363 ---------- ---------- ---------- Total Income .......................................... 2,288 532 1,840 ---------- ---------- ---------- Expenses: Management fees--Note 3(a) ............................ 1,762 921 598 Distribution fees--Note 3(b): Class B ............................................. 968 233 317 Class C ............................................. 158 28 95 Shareholder servicing fees--Note 3(f) ................. 588 271 200 Interest on line of credit utilized--Note 5 ........... 5 -- 3 Custodian fees ........................................ 26 20 17 Transfer agent fees and expenses--Note 3(e) ........... 438 223 179 Professional fees ..................................... 47 24 13 Registration fees ..................................... 21 18 19 Miscellaneous ......................................... 82 38 36 ---------- ---------- ---------- 4,095 1,776 1,477 Less, expense reimbursements Note 3(a) ................. -- -- -- ---------- ---------- ---------- Total Expenses ........................................ 4,095 1,776 1.477 ---------- ---------- ---------- NET INVESTMENT INCOME (LOSS) ........................... (1,807) (1,244) 363 ---------- ---------- ---------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS AND OPTIONS Net realized gain (loss) on investments ................ 49,034 9,489 11,088 Net realized loss on options ........................... (120) -- -- Net change in unrealized appreciation (depreciation) on investments and foreign currency translations ..... (13,283) 31,815 (4,176) Net change in unrealized appreciation (depreciation) on options ........................................... 61 -- -- ---------- ---------- ---------- Net realized and unrealized gain (loss) on investments, foreign currency translations and options ............ 35,692 41,304 6,912 ---------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ $ 33,885 $ 40,060 $ 7,275 ========== ========== ========== * Foreign withholding taxes ............................ $ 2 $ -- $ 1 ========== ========== ==========
** Commenced operations March 1, 2006. See Notes to Financial Statements. -47-
Capital SmallCap Core MidCap Appre- Health and MidCap Tech- Fixed- Money Growth ciation Sciences Growth nology Income Market Fund Fund Fund Fund Fund** Fund** Fund ---------- ---------- --------- -------- ------ ------ ------- Income: Dividends (net of foreign withholding taxes*) ......... $ 1,482 $ 1,737 $ 471 $ 37 $ -- $ -- $ -- Interest .............................................. 266 51 279 36 4 40 1,215 ---------- ---------- --------- -------- ------ ------ ------- Total Income .......................................... 1,748 1,788 750 73 4 40 1,215 ---------- ---------- --------- -------- ------ ------ ------- Expenses: Management fees--Note 3(a) ............................ 2,715 1,578 645 117 7 3 142 Distribution fees--Note 3(b): Class B ............................................. 989 727 73 15 -- -- -- Class C ............................................. 293 130 127 15 -- -- -- Shareholder servicing fees--Note 3(f) ................. 849 464 190 34 2 2 -- Interest on line of credit utilized--Note 5 ........... 23 20 -- -- -- -- -- Custodian fees ........................................ 42 22 15 7 1 1 7 Transfer agent fees and expenses--Note 3(e) ........... 447 439 120 73 17 17 96 Professional fees ..................................... 69 24 14 3 -- -- 6 Registration fees ..................................... 26 19 19 11 7 7 10 Miscellaneous ......................................... 106 59 37 7 1 1 5 ---------- ---------- --------- -------- ------ ------ ------- 5,559 3,482 1,240 282 35 31 266 Less, expense reimbursements Note 3(a) ................. -- -- (4) (45) (20) (22) -- ---------- ---------- --------- -------- ------ ------ ------- Total Expenses ........................................ 5,559 3,482 1,239 237 15 9 266 ---------- ---------- --------- -------- ------ ------ ------- NET INVESTMENT INCOME (LOSS) ........................... (3,811) (1,694) (486) (164) (11) 31 949 ---------- ---------- --------- -------- ------ ------ ------- REALIZED AND UNREALIZED GAIN(LOSS) ON INVESTMENTS AND OPTIONS Net realized gain (loss) on investments ................ 78,184 54,704 4,064 2,963 (1) (17) -- Net realized loss on options ........................... (535) -- -- -- -- -- -- Net change in unrealized appreciation (depreciation) on investments and foreign currency translations ..... 19,620 (5,277) (1,108) 2,455 (12) (33) -- Net change in unrealized appreciation (depreciation) on options ........................................... (746) -- -- -- -- -- -- ---------- ---------- --------- -------- ------ ------ ------- Net realized and unrealized gain (loss) on investments, foreign currency translations and options ............ 96,523 49,427 2,956 5,418 (13) (50) -- ---------- ---------- --------- -------- ------ ------ ------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ............................ $ 92,712 $ 47,733 $ 2,470 $ 5,254 $ (24) $ (19) $ 949 ========== ========== ========= ======== ====== ====== ======= * Foreign withholding taxes ............................ $ 12 $ 1 $ -- $ -- $ -- $ -- $ -- ========== ========== ========= ======== ====== ====== =======
-48- THE ALGER FUNDS STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
LargeCap Growth Fund ------------------------ For the Six Months Ended For the April 30, Year Ended 2006 October 31, (Unaudited) 2005 ------------ ----------- Net investment income (loss) .................................. $ (1,807) $ (2,184) Net realized gain on investments and options .................. 48,914 72,723 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options .................................... (13,222) (3,336) --------- --------- Net increase in net assets resulting from operations ............................................. 33,885 67,203 --------- --------- 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 ..................................................... 9,634 (32,625) Class B ..................................................... (25,801) (57,572) Class C ..................................................... 918 (8,275) --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ............................... (15,249) (98,472) --------- --------- Total increase (decrease) .................................... 18,636 (31,269) Net Assets: Beginning of period .......................................... 457,611 488,880 --------- --------- End of period ................................................ $ 476,247 $ 457,611 ========= ========= Undistributed net investment income (accumulated loss) .......................................... $ (1,807) $ -- ========= =========
See Notes to Financial Statements. -49-
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 2006 October 31, 2006 October 31, 2006 October 31, (Unaudited) 2005 (Unaudited) 2005 (Unaudited) 2005 ------------ ----------- ------------ ----------- ------------ ----------- Net investment income (loss) ....................... $ (1,244) $ (2,533) $ 363 $ 1,234 $ (3,811) $ (8,923) Net realized gain on investments and options ....... 9,489 27,960 11,088 22,703 77,649 105,413 Net change in unrealized appreciation (depreciation) on investments, foreign currency translations and options ......................... 31,815 10,494 (4,176) (5,542) 18,874 (3,213) --------- --------- --------- --------- --------- --------- Net increase in net assets resulting from operations .................................. 40,060 35,921 7,275 18,395 92,712 93,277 --------- --------- --------- --------- --------- --------- Dividends and distributions to shareholders from: Net investment income Class A .......................................... -- -- (538) (758) -- -- Class B .......................................... -- -- (205) (283) -- -- Class C .......................................... -- -- (65) (82) -- -- Net realized gains Class A .......................................... -- -- -- -- (34,821) -- Class B .......................................... -- -- -- -- (30,115) -- Class C .......................................... -- -- -- -- (8,656) -- --------- --------- --------- --------- --------- --------- Total dividends and distributions to shareholders .. -- -- (808) (1,123) (73,592) -- --------- --------- --------- --------- --------- --------- Increase (decrease) from shares of beneficial interest transactions: Class A .......................................... 44,988 6,894 (8,311) (20,734) 30,013 (1,395) Class B .......................................... (8,082) (23,181) (9,439) (36,838) (71) (55,450) Class C .......................................... 5,427 (564) (1,303) (12,090) 8,896 (7,773) --------- --------- --------- --------- --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 .................... 42,333 (16,851) (19,053) (69,662) 38,838 (64,618) --------- --------- --------- --------- --------- --------- Total increase (decrease) ......................... 82,393 19,070 (12,586) (52,390) 57,958 28,659 Net Assets: Beginning of period ............................... 176,934 157,864 165,483 217,873 652,394 623,735 --------- --------- --------- --------- --------- --------- End of period ..................................... $ 259,327 $ 176,934 $ 152,897 $ 165,483 $ 710,352 $ 652,394 ========= ========= ========= ========= ========= ========= Undistributed net investment income (accumulated loss) ............................... $ (1,244) $ -- $ 120 $ 565 $ (3,811) $ -- ========= ========= ========= ========= ========= =========
-50- THE ALGER FUNDS STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Capital Appreciation Fund ------------------------- For the Six Months Ended For the April 30, Year Ended 2006 October 31, (Unaudited) 2005 ------------ ----------- Net investment income (loss) .................... $ (1,694) $ (3,363) Net realized gain (loss) on investments and options ............... 54,704 64,815 Net change in unrealized appreciation (depreciation) on investments and options ... (5,277) 5,321 --------- --------- Net increase (decrease) in net assets resulting from operations 47,733 .... 66,773 2,470 --------- --------- 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 ................... 2,259 (14,991) Class B ................... (23,567) (73,357) Class C ................... (2,421) (14,571) --------- --------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ...... (23,729) (102,919) --------- --------- Total increase (decrease) .. 24,004 (36,146) Net Assets: Beginning of period ........ 355,435 391,581 --------- --------- End of period .............. $ 379,439 $ 355,435 ========= ========= Undistributed net investment income (accumulated loss) ........ $ (1,694) $ -- ========= =========
* Commenced operations March 1, 2006. See Notes to Financial Statements. -51-
SmallCap Core Health and MidCap Fixed- Money Sciences Growth Technology Income Market Fund Fund Fund* Fund* Fund ------------------------- ------------------------- ------------ ---------- ------------------------- For the Six For the Six For the Six For the Six Months Ended For the Months Ended For the Months Ended For the Months Ended For the April 30, Year Ended April 30, Year Ended April 30, Year Ended April 30, Year Ended 2006 October 31, 2006 October 31, 2006 October 31, 2006 October 31, (Unaudited) 2005 (Unaudited) 2005 (Unaudited) 2005 (Unaudited) 2005 ------------ ----------- ------------ ----------- ------------ ---------- ------------ ----------- Net investment income (loss) .................... $ (486) $ (522) $ (164) $ (227) $ (11) $ 31 $ 949 $ 1,250 Net realized gain (loss) on investments and options ............... 4,064 3,410 2,963 1,578 (1) (17) -- -- Net change in unrealized appreciation (depreciation) on investments and options ... (1,108) 6,824 2,455 2,429 (12) (33) -- -- --------- -------- -------- -------- ------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations 47,733 .... 9,712 5,254 3,780 (24) (19) 949 1,250 --------- -------- -------- -------- ------- -------- -------- -------- Dividends and distributions to shareholders from: Net investment income Class A ................... -- -- -- -- -- (29) -- -- Class B ................... -- -- -- -- -- (1) (949) (1,250) Class C ................... -- -- -- -- -- (1) -- -- Net realized gains Class A ................... (1,897) (828) (960) (875) -- -- -- -- Class B ................... (395) (427) (219) (183) -- -- -- -- Class C ................... (646) (205) (172) (107) -- -- -- -- --------- -------- -------- -------- ------- -------- -------- -------- Total dividends and distributions to shareholders ........... (2,938) (1,460) (1,351) (1,165) -- (31) (949) (1,250) --------- -------- -------- -------- ------- -------- -------- -------- Increase (decrease) from shares of beneficial interest transactions: Class A ................... 62,627 30,569 8,848 1,601 4,940 5,029 -- -- Class B ................... 4,928 6,276 1,440 557 103 101 (6,852) (18,958) Class C ................... 15,486 20,195 4,484 375 100 100 -- -- --------- -------- -------- -------- ------- -------- -------- -------- Net increase (decrease) from shares of beneficial interest transactions--Note 6 ...... 83,041 57,040 14,772 2,533 5,143 5,230 (6,852) (18,958) --------- -------- -------- -------- ------- -------- -------- -------- Total increase (decrease) .. 82,573 65,292 18,675 5,148 5,119 5,180 (6,852) (18,958) Net Assets: Beginning of period ........ 92,076 26,784 19,611 14,463 -- -- 61,570 80,528 --------- -------- -------- -------- ------- -------- -------- -------- End of period .............. $ 174,649 $ 92,076 $ 38,286 $ 19,611 $ 5,119 $ 5,180 $ 54,718 $ 61,570 ========= ======== ======== ======== ======= ======== ======== ======== Undistributed net investment income (accumulated loss) ........ $ (486) $ -- $ (164) $ -- $ (11) $ -- $ -- $ -- ========= ======== ======== ======== ======= ======== ======== ========
-52- THE ALGER FUNDS 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 LARGECAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) ... $10.48 $(0.02) $ 0.83 $ 0.81 Year ended 10/31/05 .............. 9.05 0.01 1.42 1.43 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) CLASS B Six Months ended 4/30/06 (iii) ... $ 9.70 $(0.05) $ 0.75 $ 0.70 Year ended 10/31/05 .............. 8.44 (0.07) 1.33 1.26 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) CLASS C Six Months ended 4/30/06 (iii) ... $ 9.69 $(0.05) $ 0.76 $ 0.71 Year ended 10/31/05 .............. 8.43 (0.07) 1.33 1.26 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) ALGER SMALLCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) ... $ 5.21 $(0.03) $ 1.11 $ 1.08 Year ended 10/31/05 .............. 4.18 (0.06) 1.09 1.03 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)
---------- (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. -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 LARGECAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) ... $ -- $11.29 7.7% $179,081 1.26% (0.29)% 144.97% Year ended 10/31/05 .............. -- 10.48 15.8 157,205 1.37 0.05 249.17 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 CLASS B Six Months ended 4/30/06 (iii) ... $ -- $10.40 7.2% $253,732 2.02% (1.04)% 144.97% Year ended 10/31/05 .............. -- 9.70 14.9 260,786 2.12 (0.72) 249.17 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 CLASS C Six Months ended 4/30/06 (iii) ... $ -- $10.40 7.3% $ 43,434 2.01% (1.04)% 144.97% Year ended 10/31/05 .............. -- 9.69 15.0 39,620 2.12 (0.72) 249.17 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 ALGER SMALLCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) ... $ -- $ 6.29 20.7% $182,400 1.39% (0.91)% 47.20% Year ended 10/31/05 .............. -- 5.21 24.6 110,329 1.62 (1.19) 104.30 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
-54- THE ALGER FUNDS 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 4/30/06 (iii) ....... $ 4.80 $(0.04) $ 1.01 $ 0.97 $ -- $ -- Year ended 10/31/05 .................. 3.88 (0.08) 1.00 0.92 -- -- 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) CLASS C Six Months ended 4/30/06 (iii) ....... $ 4.81 $(0.04) $ 1.01 $ 0.97 $ -- $ -- Year ended 10/31/05 .................. 3.88 (0.09) 1.02 0.93 -- -- 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) ALGER BALANCED FUND CLASS A Six Months ended 4/30/06 (iii) ....... $20.29 $ 0.10 $ 0.85 $ 0.95 $(0.21) $ -- Year ended 10/31/05 ................. 18.58 0.22 1.70 1.92 (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) -- CLASS B Six Months ended 4/30/06 (iii) ....... $19.81 $ 0.02 $ 0.84 $ 0.86 $(0.05) $ -- Year ended 10/31/05 .................. 18.13 0.08 1.65 1.73 (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) --
---------- (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. -55-
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 4/30/06 (iii) ....... $ -- $ 5.77 20.2% $ 65,045 2.16% (1.66)% 47.20% Year ended 10/31/05 .................. -- 4.80 23.7 61,499 2.36 (1.94) 104.30 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 CLASS C Six Months ended 4/30/06 (iii) ....... $ -- $ 5.78 20.2% $ 11,882 2.14% (1.66)% 47.20% Year ended 10/31/05 .................. -- 4.81 24.0 5,106 2.37 (1.95) 104.30 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 ALGER BALANCED FUND CLASS A Six Months ended 4/30/06 (iii) ....... $(0.21) $21.03 4.7% $ 47,030 1.34% 0.97% 123.42% Year ended 10/31/05 ................. (0.21) 20.29 10.4 53,415 1.31 1.15 218.75 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 CLASS B Six Months ended 4/30/06 (iii) ....... $(0.05) $20.62 4.3% $ 80,726 2.08% 0.22% 123.42% Year ended 10/31/05 .................. (0.05) 19.81 9.6 86,647 2.06 0.41 218.75 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
-56- THE ALGER FUNDS 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 4/30/06 (iii) ....... $19.90 $ 0.02 $ 0.84 $ 0.86 $(0.05) $ -- Year ended 10/31/05 .................. 18.21 0.08 1.66 1.74 (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) -- ALGER MIDCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) ....... $ 9.15 $(0.03) $ 1.28 $ 1.25 $ -- $(1.00) Year ended 10/31/05 .................. 7.89 (0.08) 1.34 1.26 -- -- 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) CLASS B Six Months ended 4/30/06 (iii) ....... $ 8.43 $(0.06) $ 1.18 $ 1.12 $ -- $(1.00) Year ended 10/31/05 .................. 7.33 (0.14) 1.24 1.10 -- -- 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) CLASS C Six Months ended 4/30/06 (iii) ....... $ 8.41 $(0.06) $ 1.18 $ 1.12 $ -- $(1.00) Year ended 10/31/05 .................. 7.31 (0.14) 1.24 1.10 -- -- 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)
---------- (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. -57-
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 4/30/06 (iii) .. $(0.05) $20.71 4.3% $ 25,141 2.08% 0.22% 123.42% Year ended 10/31/05 ............. (0.05) 19.90 9.5 25,421 2.06 0.42 218.75 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 ALGER MIDCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) .. $(1.00) $ 9.40 14.8% $359,949 1.26% (0.75)% 112.62% Year ended 10/31/05 ............. -- 9.15 16.0 318,423 1.36 (0.96) 239.32 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 CLASS B Six Months ended 4/30/06 (iii) .. $(1.00) $ 8.55 14.4% $266,711 2.01% (1.49)% 112.62% Year ended 10/31/05 ............. -- 8.43 15.0 260,986 2.11 (1.71) 239.32 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 CLASS C Six Months ended 4/30/06 (iii) .. $(1.00) $ 8.53 14.4% $ 83,692 2.01% (1.49)% 112.62% Year ended 10/31/05 ............. -- 8.41 15.1 72,985 2.11 (1.71) 239.32 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
-58- THE ALGER FUNDS 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 4/30/06 (iii) ... $ 9.27 $(0.02) $ 1.30 $ 1.28 Year ended 10/31/05 .............. 7.71 (0.04) 1.60 1.56 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) CLASS B Six Months ended 4/30/06 (iii) ... $ 8.62 $(0.06) $ 1.22 $ 1.16 Year ended 10/31/05 .............. 7.23 (0.09) 1.48 1.39 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) CLASS C Six Months ended 4/30/06 (iii) ... $ 8.61 $(0.06) $ 1.23 $ 1.17 Year ended 10/31/05 .............. 7.22 (0.09) 1.48 1.39 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)
---------- (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. -59-
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 4/30/06 (iii) ... $ -- $10.55 13.8% $149,417 1.41% (0.45)% 97.23% Year ended 10/31/05 .............. -- 9.27 20.2 128,816 1.63 (0.44) 144.61 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 CLASS B Six Months ended 4/30/06 (iii) ... $ -- $ 9.78 13.5% $194,377 2.17% (1.20)% 97.23% Year ended 10/31/05 .............. -- 8.62 19.2 192,976 2.37 (1.15) 144.61 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 CLASS C Six Months ended 4/30/06 (iii) ... $ -- $ 9.78 13.6% $ 35,645 2.16% (1.20)% 97.23% Year ended 10/31/05 .............. -- 8.61 19.3 33,643 2.37 (1.13) 144.61 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
-60- THE ALGER FUNDS 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 CLASS A Six Months ended 4/30/06 (iii) (vii) ... $16.24 $(0.03) $ 0.66 $ 0.63 Year ended 10/31/05 .................... 13.29 (0.11) 3.76 3.65 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) CLASS B Six Months ended 4/30/06 (iii) (vii) ... $15.83 $(0.09) $ 0.64 $ 0.55 Year ended 10/31/05 .................... 13.05 (0.22) 3.70 3.48 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 4/30/06 (iii) (vii) ... $15.82 $(0.09) $ 0.64 $ 0.55 Year ended 10/31/05 .................... 13.05 (0.22) 3.69 3.47 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)
(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 0.03% due to expense reimbursements. (vi) Amount has been reduced by 0.15% due to expense reimbursements. (vii) Unaudited. See Notes to Financial Statements. -61-
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 HEALTH SCIENCES FUND CLASS A Six Months ended 4/30/06 (iii) (vii) ... $(0.35) $16.52 3.9% $112,806 1.37% (0.38)% 66.86% Year ended 10/31/05 .................... (0.70) 16.24 28.3 50,581 1.50(v) (0.77) 127.78 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 CLASS B Six Months ended 4/30/06 (iii) (vii) ... $(0.35) $16.03 3.5% $ 21,239 2.11% (1.12)% 66.86% Year ended 10/31/05 .................... (0.70) 15.83 27.5 16,244 2.25(viii) (1.52) 127.78 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 4/30/06 (iii) (vii) ... $(0.35) $16.02 3.5% $ 40,604 2.12%(x) (1.13)% 66.86% Year ended 10/31/05 .................... (0.70) 15.82 27.4 25,251 2.25(ix) (1.52) 127.78 Year ended 10/31/04 .................... (0.23) 13.05 12.9 3,740 2.29(vi) (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
(viii) Amount has been reduced by 0.02% due to expense reimbursements. (ix) Amount has been reduced by 0.04% due to expense reimbursements. (x) Amount has been reduced by 0.01% due to expense reimbursements. -62- THE ALGER FUNDS 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 SMALLCAP AND MIDCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) (xi) ... $12.23 $(0.06) $ 2.62 $ 2.56 Year ended 10/31/05 ................... 10.46 (0.13) 2.71 2.58 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 4/30/06 (iii) (xi) ... $11.92 $(0.11) $ 2.55 $ 2.44 Year ended 10/31/05 ................... 10.27 (0.20) 2.66 2.46 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 4/30/06 (iii) (xi) ... $11.92 $(0.11) $ 2.56 $ 2.45 Year ended 10/31/05 ................... 10.27 (0.20) 2.66 2.46 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 0.33% due to expense reimbursements. (v) Amount has been reduced by 0.17% due to expense reimbursements. (vi) Amount has been reduced by 0.14% due to expense reimbursements. See Notes to Financial Statements. -63-
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 SMALLCAP AND MIDCAP GROWTH FUND CLASS A Six Months ended 4/30/06 (iii) (xi) ... $(0.75) $14.04 21.8% $26,012 1.50%(iv) (0.97)% 52.53% Year ended 10/31/05 ................... (0.81) 12.23 25.7 14,389 1.50(v) (1.13) 80.54 Year ended 10/31/04 ................... -- 10.46 4.9 10,827 1.53(vi) (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 4/30/06 (iii) (xi) ... $(0.75) $13.61 21.4% $ 5,264 2.25%(vii) (1.72)% 52.53% Year ended 10/31/05 ................... (0.81) 11.92 25.0 3,262 2.25(v) (1.88) 80.54 Year ended 10/31/04 ................... -- 10.27 4.1 2,291 2.27(vii) (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 4/30/06 (iii) (xi) ... $(0.75) $13.62 21.4% $ 7,010 2.25%(ix) (1.73)% 52.53% Year ended 10/31/05 ................... (0.81) 11.92 25.0 1,960 2.25(x) (1.88) 80.54 Year ended 10/31/04 ................... -- 10.27 4.2 1,345 2.28(viii) (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
---------- (vii) Amount has been reduced by 0.31% due to expense reimbursements. (viii) Amount has been reduced by 0.15% due to expense reimbursements. (ix) Amount has been reduced by 0.37% due to expense reimbursements. (x) Amount has been reduced by 0.16% due to expense reimbursements. (xi) Unaudited. -64- THE ALGER FUNDS FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from Investment Operations --------------------------- Net Realized and Net Asset Unrealized Total Value, Net Gain from Beginning Investment (Loss) on Investment of Period Income (Loss) Investments Operations --------- ------------- ----------- ---------- ALGER TECHNOLOGY FUND CLASS A From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ (0.02)(ii) $(0.03) $ (0.05) CLASS B From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ (0.03)(ii) $(0.03) $ (0.06) CLASS C From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ (0.03)(ii) $(0.03) $ (0.06) ALGER CORE FIXED-INCOME FUND CLASS A From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ 0.06(ii) $(0.10) $ (0.04) CLASS B From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ 0.05(ii) $(0.10) $ (0.05) CLASS C From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $10.00 $ 0.05(ii) $(0.10) $ (0.05) ALGER MONEY MARKET FUND Six Months ended 4/30/06 (i) ..... $ 1.00 $0.0166 $ -- $0.0166 Year ended 10/31/05 .............. 1.00 0.0188 -- 0.0188 Year ended 10/31/04 .............. 1.00 0.0039 -- 0.0039 Year ended 10/31/03 .............. 1.00 0.0033 -- 0.0033 Year ended 10/31/02 .............. 1.00 0.0097 -- 0.0097 Year ended 10/31/01 .............. 1.00 0.0387 -- 0.0387
---------- (i) Unaudited. Ratios have been annualized; total return has not been annualized. (ii) Amount was computed based on average shares outstanding during the period. (iii) Amount has been reduced by 2.43% due to expense reimbursements. (iv) Amount has been reduced by 2.45% due to expense reimbursements. (v) Amount has been reduced by 2.44% due to expense reimbursements. (vi) Amount has been reduced by 2.68% due to expense reimbursements. See Notes to Financial Statements. -65-
Ratios/Supplemental Data ------------------------------------------------- Ratio of Net Ratio of Net Net Assets, Expenses Investment Dividends Asset End of to Income from Net Value, Period Average to Portfolio Investment End of Total (000's Net Average Turnover Income Period Return Omitted) Assets Net Assets Rate ---------- ------ ------ -------- -------- ---------- --------- ALGER TECHNOLOGY FUND CLASS A From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ -- $ 9.95 (0.50)% $ 4,918 1.75%(iii) (1.25)% 86.10% CLASS B From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ -- $ 9.94 (0.60)% $ 102 2.50%(iv) (2.00)% 86.10% CLASS C From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ -- $ 9.94 (0.60)% $ 99 2.50%(v) (1.99)% 86.10% ALGER CORE FIXED-INCOME FUND CLASS A From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ (0.06) $ 9.90 (0.41)% $ 4,981 1.00%(vi) 3.81% 187.41% CLASS B From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ (0.05) $ 9.90 (0.53)% $ 100 1.75%(vi) 3.06% 187.41% CLASS C From 3/1/06 (commencement of operations) to 4/30/06 (i) ..... $ (0.05) $ 9.90 (0.53)% $ 99 1.75%(vi) 3.06% 187.41% ALGER MONEY MARKET FUND Six Months ended 4/30/06 (i) ..... $(0.0166) $ 1.00 1.7% $ 54,718 0.94% 3.35% --% Year ended 10/31/05 .............. (0.0188) 1.00 1.9 61,570 0.90 1.84 -- Year ended 10/31/04 .............. (0.0039) 1.00 0.4 80,528 0.77 0.37 -- Year ended 10/31/03 .............. (0.0033) 1.00 0.3 115,935 0.82 0.34 -- Year ended 10/31/02 .............. (0.0097) 1.00 1.0 330,213 0.79 0.99 -- Year ended 10/31/01 .............. (0.0387) 1.00 3.9 402,515 0.71 3.88 --
-66- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 -- GENERAL: The Alger Funds (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 ten funds--LargeCap Growth Fund, SmallCap Growth Fund, Balanced Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund, SmallCap and MidCap Growth Fund, Technology Fund, Core Fixed-Income Fund and Money Market Fund (collectively, the "Funds" or individually, each a "Fund"). The LargeCap Growth Fund, SmallCap Growth Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund, SmallCap and MidCap Growth Fund and Technology 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 Core Fixed-Income Fund's investment objective is current income consistent with the preservation of capital value, which it seeks by investing in 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 readily available 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 listed on foreign exchanges are valued at the last reported sales price or, in the absence of reported sales, at the mean between the bid and asked price. 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 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. -67- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Securities in which the Funds invest may be traded in markets that close before the close of the NYSE. Normally, developments that occur between the close of the foreign markets and the close of the NYSE (normally 4:00 p.m. Eastern time) will not be reflected in the Funds' net asset values. However, if it be determined that such developments are so significant that they will materially affect the value of the Funds' securities, the Funds may adjust the previous closing prices to reflect what the investment manager, under the direction of the Board of Trustees, believes to be the fair value of these securities as of the close of the NYSE. The Funds may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open. 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) FOREIGN CURRENCY TRANSLATIONS--The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the prevailing rates of exchange on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the prevailing exchange rates on the respective dates of such transactions. Net realized gains and losses on foreign currency transactions represent net gains and losses from the disposition of foreign currencies, currency gains and losses realized between the trade dates and settlement dates of security transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included in realized and unrealized gain or loss on investments in the Statements of Operations. (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) OPTION CONTRACTS: When a Fund writes an option, an amount equal to the premium -68- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option. The Funds may also purchase put and call options. Purchasing call and put options tends to decrease the Fund's exposure to the underlying instrument. The Fund pays a premium which is included in the Fund's Statement ofAssets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying security to determine the realized gain or loss. (e) LENDING OF FUND SECURITIES: The Funds may 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, 2006, there were no securities on loan. (f) 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; the Core Fixed-Income Fund declares dividends monthly 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. Each class is treated separately in determining the amounts of dividends of net investment income payable to holders of its shares. -69- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 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. (g) 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. (h) 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. (i) 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. (j) OTHER: These financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which require 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: LargeCap Growth Fund .............................. .750% SmallCap Growth Fund .............................. .850 Balanced Fund ..................................... .750 MidCap Growth Fund ................................ .800 Capital Appreciation Fund ......................... .850 Health Sciences Fund .............................. .850 -70- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) SmallCap and MidCap Growth Fund ................... .850% Technology Fund ................................... .850 Core Fixed-Income Fund ............................ .375 Money Market Fund ................................. .500 Alger Management has established an expense cap for the Health Sciences Fund and the SmallCap and MidCap Growth Fund effective March 1, 2004, and for the Technology Fund and the Core Fixed-Income Fund effective March 1, 2006. 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, for the Health Sciences Fund and the SmallCap and MidCap Growth Fund; 1.75% of average daily net assets for Class A and 2.50% of average daily net assets for Class B and Class C shares for the Technology Fund; and 1.00% of average daily net assets for Class A and 1.75% of average daily net assets for Class B and Class C for the Core Fixed-Income Fund. For the period ended April 30, 2006, Alger Management reimbursed the Health Sciences Fund, SmallCap and MidCap Growth Fund, Technology Fund and the Core Fixed-Income Fund, $3,728, $45,351, $19,907 and $22,135, respectively. Alger Management has contractually agreed to extend each expense cap through February 28, 2007. (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" or "Alger Inc.") 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, 2006, such excess carried forward was approximately $16,890,739, $13,306,848, $4,387,303, $10,556,389, $20,363,666, $253,260, $74,599, $0 and $0. 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, the SmallCap and MidCap Growth Fund, the Technology Fund and the Core Fixed-Income 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. -71- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) (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 deferred sales charges. For the period ended April 30, 2006, the initial sales charges and contingent deferred sales charges retained by the Distributor were approximately $19,974 and $764,408, 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 period ended April 30, 2006, 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 Technology Fund paid the Distributor commissions of $734,733, $126,722, $165,105, $750,399, $378,728, $141,165, $18,521 and $3,045, respectively, in connection with securities transactions. (e) SHAREHOLDER ADMINISTRATIVE FEES AND EXPENSES: The Trust has entered into a shareholder administrative services agreement with Alger Shareholder Services, Inc. ("Alger Services") to compensate Alger Services on a per account basis for its liaison and administrative oversight of Boston Financial Data Services, Inc., the transfer agent for the Funds ("BFDS") and other related services. During the period ended April 30, 2006, 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, the Technology Fund, the Core Fixed-Income Fund and the Money Market Fund incurred fees of $79,152, $45,570, $22,956, $78,000, $102,525, $13,780, $2,835, $5, $3 and $12,778, respectively, for these services provided by Alger Services. In addition, during the period ended April 30, 2006, 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, the Technology Fund, the Core Fixed-Income Fund and the Money Market Fund reimbursed Alger Services $61,259, $28,165, $20,936, $76,176, $60,756, $9,271, $2,265, $0, $0 and $9,054, 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 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. At April 30, 2006,Alger Management and its affiliates owned 622,332 shares, 886,535 shares, 500,000 shares and 502,969 shares of the Health Sciences Fund, the SmallCap and MidCap Growth Fund, the Technology Fund and the Core Fixed-Income Fund, respectively. -72- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 4 -- SECURITIES TRANSACTIONS: The following summarizes the securities transactions by the Trust, other than short-term securities, for the period ended April 30, 2006: PURCHASES SALES ------------ ------------ LargeCap Growth Fund ......................... $675,608,633 $687,679,287 SmallCap Growth Fund ......................... 135,852,285 99,234,151 Balanced Fund ................................ 196,493,959 212,069,771 MidCap Growth Fund ........................... 755,867,483 787,460,535 Capital Appreciation Fund .................... 364,062,376 386,689,894 Health Sciences Fund ......................... 178,384,915 92,391,341 SmallCap and MidCap Growth Fund .............. 25,816,688 13,974,549 Technology Fund .............................. 6,158,573 1,211,044 Core Fixed-Income Fund ....................... 7,710,744 2,651,457 As of April 30, 2006, the Alger LargeCap Growth Fund and the Alger MidCap Growth Fund had portfolio securities valued at $3,271,904 and $21,819,875, respectively, segregated as collateral for written options. Written call and put option activity for the six months ended April 30, 2006, was as follows: NUMBER OF PREMIUMS CONTRACTS RECEIVED ------------ ------------ Alger LargeCap Growth Fund Options outstanding at October 31, 2005 ......................... 2,754 $ 573,703 Options written ............................ 4,012 574,086 Options closed or expired .................. (4,319) (692,508) Options exercised .......................... (325) (49,398) ------------ ------------ OPTIONS OUTSTANDING AT APRIL 30, 2006 ........................... 2,122 $ 405,883 ============ ============ Alger MidCap Growth Fund Options outstanding at October 31, 2005 ......................... 20,120 $ 3,748,292 Options written ............................ 16,110 1,993,304 Options closed or expired .................. (26,008) (4,399,331) Options exercised .......................... (1,022) (157,227) ------------ ------------ Options outstanding at April 30, 2006 ........................... 9,200 $ 1,185,038 ============ ============ -73- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 5 -- LINES OF CREDIT: The Trust participates in committed lines of credit with other Mutual Funds managed by Alger Management. All borrowings have variable interest rates and are payable on demand. With the exception of the Capital Appreciation Fund and the Technology Fund, the Trust borrows under such lines of credit exclusively for temporary or emergency purposes. The Capital Appreciation Fund and the Technology Fund, may each borrow under these lines up to 1/3 of the value of their assets, to purchase additional securities. To the extent the Capital Appreciation Fund or the Technology Fund borrow under these lines, they must pledge securities with a total value of at least twice the amount borrowed. For the six months ended April 30, 2006, the Trust had the following borrowings: AVERAGE WEIGHTED AVERAGE BORROWING INTEREST RATE ------------ ---------------- LargeCap Growth Fund ......................... $200,738 5.05% Balanced Fund ................................ 109,508 4.86 MidCap Growth Fund ........................... 956,481 4.86 Capital Appreciation Fund .................... 803,304 5.06 -74- THE ALGER FUNDS 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 ten 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 PERIOD ENDED FOR THE YEAR ENDED APRIL 30, 2006 OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT ------------ ------------ ------------ ------------ Alger LargeCap Growth Fund Class A: Shares sold ..................... 2,006,373 $ 22,318,868 2,324,619 $ 22,925,032 Shares converted from Class B ... 694,483 7,698,156 1,361,971 13,427,631 Shares redeemed ................. (1,833,207) (20,383,007) (7,105,754) (68,977,578) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 867,649 $ 9,634,017 (3,419,164) $(32,624,915) ============ ============ ============ ============ Class B: Shares sold ..................... 1,046,679 $ 10,706,873 2,285,190 $ 20,756,134 Shares converted to Class A ..... (751,861) (7,698,156) (1,466,535) (13,427,631) Shares redeemed ................. (2,800,129) (28,809,749) (7,106,248) (64,900,208) ------------ ------------ ------------ ------------ Net decrease .................... (2,505,311) $(25,801,032) (6,287,593) $(57,571,705) ============ ============ ============ ============ Class C: Shares sold ..................... 502,771 $ 5,173,610 562,997 $ 5,142,979 Shares redeemed ................. (413,609) (4,255,442) (1,478,761) (13,418,208) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 89,162 $ 918,168 (915,764) $ (8,275,229) ============ ============ ============ ============ Alger SmallCap Growth Fund Class A: Shares sold ..................... 9,311,056 $ 53,844,251 2,412,214 $ 12,193,513 Shares converted from Class B ... 1,066,332 6,096,182 2,928,153 13,680,093 Shares redeemed ................. (2,535,227) (14,952,468) (3,995,808) (18,979,042) ------------ ------------ ------------ ------------ Net increase .................... 7,842,161 $ 44,987,965 1,344,559 $ 6,894,564 ============ ============ ============ ============ Class B: Shares sold ..................... 780,010 $ 4,191,645 1,446,314 $ 6,355,365 Shares converted to Class A ..... (1,158,976) (6,096,182) (3,124,262) (13,680,093) Shares redeemed ................. (1,159,385) (6,177,685) (3,631,233) (15,856,746) ------------ ------------ ------------ ------------ Net decrease .................... (1,538,351) $ (8,082,222) (5,309,181) $(23,181,474) ============ ============ ============ ============ Class C: Shares sold ..................... 1,126,525 $ 6,138,681 236,479 $ 1,073,190 Shares redeemed ................. (132,195) (711,213) (376,634) (1,637,419) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 994,330 $ 5,427,468 (140,155) $ (564,229) ============ ============ ============ ============
-75- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE PERIOD ENDED FOR THE YEAR ENDED APRIL 30, 2006 OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT ------------ ------------ ------------ ------------ Alger Balanced Fund Class A: Shares sold ..................... 159,608 $ 3,369,823 490,076 $ 9,565,181 Shares converted from Class B ... 28,066 586,015 87,013 1,698,164 Dividends reinvested ............ 24,300 506,652 21,332 411,710 Shares redeemed ................. (608,501) (12,773,103) (1,659,398) (32,409,362) ------------ ------------ ------------ ------------ Net decrease .................... (396,527) $ (8,310,613) (1,060,977) $(20,734,307) ============ ============ ============ ============ Class B: Shares sold ..................... 129,948 $ 2,665,565 253,609 $ 4,821,665 Dividends reinvested ............ 8,911 182,673 11,126 211,063 Shares converted to Class A ..... (28,636) (586,015) (88,824) (1,698,164) Shares redeemed ................. (568,740) (11,701,302) (2,111,540) (40,172,190) ------------ ------------ ------------ ------------ Net decrease .................... (458,517) $ (9,439,079) (1,935,629) $(36,837,626) ============ ============ ============ ============ Class C: Shares sold ..................... 64,049 $ 1,323,103 62,755 $ 1,215,149 Dividends reinvested ............ 2,969 61,125 3,453 65,822 Shares redeemed ................. (130,342) (2,687,740) (702,031) (13,370,597) ------------ ------------ ------------ ------------ Net decrease .................... (63,324) $ (1,303,512) (635,823) $(12,089,626) ============ ============ ============ ============ Alger MidCap Growth Fund Class A: Shares sold ..................... 5,833,721 $ 53,429,620 7,892,150 $ 68,849,847 Dividends Reinvested ............ 3,627,043 31,156,299 -- -- Shares converted from Class B ... 941,646 8,690,870 2,330,615 20,431,026 Shares redeemed ................. (6,943,720) (63,263,526) (10,385,586) (90,676,209) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 3,458,690 $ 30,013,263 (162,821) $ (1,395,336) ============ ============ ============ ============ Class B: Shares sold ..................... 2,375,804 $ 19,567,065 3,963,737 $ 31,948,237 Dividends Reinvested ............ 3,521,745 27,575,261 -- -- Shares converted to Class A ..... (1,030,443) (8,690,870) (2,519,535) (20,431,026) Shares redeemed ................. (4,634,834) (38,522,348) (8,283,623) (66,967,057) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 232,272 $ (70,892) (6,839,421) $(55,449,846) ============ ============ ============ ============ Class C: Shares sold ..................... 1,418,482 $ 11,636,873 1,657,418 $ 13,478,329 Dividends Reinvested ............ 1,042,599 8,142,699 -- -- Shares redeemed ................. (1,325,463) (10,883,666) (2,645,778) (21,251,185) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 1,135,618 $ 8,895,906 (988,360) $ (7,772,856) ============ ============ ============ ============
-76- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE PERIOD ENDED FOR THE YEAR ENDED APRIL 30, 2006 OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT ------------ ------------ ------------ ------------ Alger Capital Appreciation Fund Class A: Shares sold ..................... 1,186,203 $ 11,924,716 2,234,005 $ 19,314,402 Shares converted from Class B ... 579,473 5,783,148 1,634,174 13,915,183 Shares redeemed ................. (1,511,675) (15,448,653) (5,700,896) (48,220,944) ------------ ------------ ------------ ------------ Net increase (decrease) ......... 254,001 $ 2,259,211 (1,832,717) $(14,991,359) ============ ============ ============ ============ Class B: Shares sold ..................... 404,641 $ 3,834,004 1,041,065 $ 8,250,166 Shares converted to Class A ..... (623,657) (5,783,148) (1,749,940) (13,915,183) Shares redeemed ................. (2,299,947) (21,617,947) (8,542,286) (67,692,076) ------------ ------------ ------------ ------------ Net decrease .................... (2,518,963) $(23,567,091) (9,251,161) $(73,357,093) ============ ============ ============ ============ Class C: Shares sold ..................... 168,379 $ 1,601,313 242,476 $ 1,939,799 Shares redeemed ................. (428,066) (4,022,431) (2,095,745) (16,510,970) ------------ ------------ ------------ ------------ Net decrease .................... (259,687) $ (2,421,118) (1,853,269) $(14,571,171) ============ ============ ============ ============ Alger Health Sciences Fund Class A: Shares sold ..................... 4,163,540 $ 70,194,622 2,148,646 $ 33,257,004 Shares converted from Class B ... 11,041 186,948 24,886 370,287 Dividends reinvested ............ 93,237 1,539,352 46,853 657,351 Shares redeemed ................. (551,596) (9,293,727) (243,126) (3,716,151) ------------ ------------ ------------ ------------ Net increase .................... 3,716,222 $ 62,627,195 1,977,259 $ 30,568,491 ============ ============ ============ ============ Class B: Shares sold ..................... 374,935 $ 6,177,092 544,014 $ 8,166,377 Dividends reinvested ............ 14,641 235,133 18,064 248,555 Shares converted to Class A ..... (11,352) (186,948) (25,440) (370,287) Shares redeemed ................. (79,173) (1,297,794) (118,760) (1,768,601) ------------ ------------ ------------ ------------ Net increase .................... 299,051 $ 4,927,483 417,878 $ 6,276,044 ============ ============ ============ ============ Class C: Shares sold ..................... 1,020,131 $ 16,829,697 1,376,587 $ 21,208,881 Dividends reinvested ............ 25,825 414,753 11,371 156,462 Shares redeemed ................. (107,622) (1,758,150) (78,811) (1,170,187) ------------ ------------ ------------ ------------ Net increase .................... 938,334 $ 15,486,300 1,309,147 $ 20,195,156 ============ ============ ============ ============ Alger SmallCap and MidCap Growth Fund Class A: Shares sold ..................... 720,690 $ 9,506,864 173,667 $ 1,977,626 Shares converted from Class B ... 4,704 62,083 11,604 129,423 Dividends reinvested ............ 48,077 587,989 42,535 457,679 Shares redeemed ................. (97,377) (1,309,837) (85,976) (963,466) ------------ ------------ ------------ ------------ Net increase .................... 676,094 $ 8,847,097 141,830 $ 1,601,262 ============ ============ ============ ============ Class B: Shares sold ..................... 118,924 $ 1,528,817 98,482 $ 1,091,860 Dividends reinvested ............ 17,794 211,565 16,197 171,044 Shares converted to Class A ..... (4,840) (62,083) (11,858) (129,423) Shares redeemed ................. (18,909) (238,004) (52,174) (576,738) ------------ ------------ ------------ ------------ Net increase .................... 112,969 $ 1,440,295 50,647 $ 556,743 ============ ============ ============ ============
-77- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FOR THE PERIOD ENDED FOR THE YEAR ENDED APRIL 30, 2006 OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT ------------ ------------ ------------ ------------ Alger SmallCap and MidCap Growth Fund Class C: Shares sold ..................... 354,885 $ 4,555,309 44,485 $ 500,079 Dividends reinvested ............ 12,118 144,205 8,606 90,884 Shares redeemed ................. (16,585) (215,453) (19,684) (216,131) ------------ ------------ ------------ ------------ Net increase .................... 350,418 $ 4,484,061 33,407 $ 374,832 ============ ============ ============ ============ Alger Technology Fund** Class A: Shares sold ..................... 494,084 $ 4,940,628 -- $ -- Shares redeemed ................. (33) (327) -- -- ------------ ------------ ------------ ------------ Net increase .................... 494,051 4,940,301 -- $ -- ============ ============ ============ ============ Class B: Shares sold ..................... 10,381 $ 103,806 -- $ -- Shares redeemed ................. (79) (791) -- -- ------------ ------------ ------------ ------------ Net increase .................... 10,302 $ 103,015 -- $ -- ============ ============ ============ ============ Class C: Shares sold ..................... 10,000 $ 100,000 -- $ -- ============ ============ ============ ============ Alger Core Fixed-Income Fund** Class A: Shares sold ..................... 500,000 $ 5,000,000 -- $ -- Dividends reinvested ............ 2,993 29,692 -- -- Shares redeemed ................. (59) (586) -- -- ------------ ------------ ------------ ------------ Net increase .................... 502,934 $ 5,029,106 -- $ -- ============ ============ ============ ============ Class B: Shares sold ..................... 10,000 $ 100,000 -- $ -- Dividends reinvested ............ 48 475 -- -- ------------ ------------ ------------ ------------ Net increase .................... 10,048 $ 100,475 -- $ -- ============ ============ ============ ============ Class C: Shares sold ..................... 10,000 $ 100,000 -- $ -- Dividends reinvested ............ 48 475 -- -- ------------ ------------ ------------ ------------ Net increase .................... 10,048 $ 100,475 -- $ -- ============ ============ ============ ============ Alger Money Market Fund Shares sold ..................... 13,249,187 $ 13,276,187+ 35,368,581 $ 35,443,581* Dividends reinvested ............ 919,940 919,940 1,210,005 1,210,005 Shares redeemed ................. (21,048,575) (21,048,575) (55,611,776) (55,611,776) ------------ ------------ ------------ ------------ Net decrease .................... (6,879,448) $ (6,852,448) (19,033,190) $(18,958,190) ============ ============ ============ ============
---------- * Dollar amount of shares sold includes a reimbursement by Alger Management of $75,000 for losses on portfolio investments incurred in previous fiscal years. + Dollar amount of shares sold includes a reimbursement by Alger Management of $27,000 for losses on portfolio investments incurred in previous fiscal years. ** Intitally offered March 1, 2006 -78- THE ALGER FUNDS 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, 2006 and the year ended October 31, 2005 were as follows: SIX MONTHS ENDED YEAR ENDED APRIL 30, 2006 OCTOBER 31, 2005 ------------------ ---------------- 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 .......................... $ 808,232 $ 1,122,926 Long-term capital gain ................... -- -- ------------ ------------ Total distributions paid ................. $ 808,232 $ 1,122,926 ============ ============ MidCap Growth Fund Distributions paid from: Ordinary Income .......................... 49,398,077 -- Long-term capital gain ................... 24,194,224 -- ------------ ------------ Total distributions paid ................. 73,592,301 -- ============ ============ Capital Appreciation Fund Distributions paid from: Ordinary Income .......................... -- -- Long-term capital gain ................... -- -- ------------ ------------ Total distributions paid ................. -- -- ------------ ------------ ------------ Health Sciences Fund Distributions paid from: Ordinary Income .......................... $ 1,970,103 $ 1,114,739 Long-term capital gain ................... 967,799 345,088 ------------ ------------ Total distributions paid ................. $ 2,937,902 $ 1,459,827 ============ ============ SmallCap and MidCap Growth Fund Distributions paid from: Ordinary Income .......................... $ 391,354 $ 167,312 Long-term capital gain ................... 959,496 998,103 ------------ ------------ Total distributions paid ................. $ 1,350,850 $ 1,165,415 ============ ============ Core Fixed-Income Fund* Distributions paid from: Ordinary Income .......................... $ 30,642 $ -- Long-term capital gain ................... -- -- ------------ ------------ Total distributions paid ................. $ 30,642 $ -- ============ ============ Money Market Fund Distributions paid from: Ordinary Income .......................... $ 949,060 $ 1,249,958 Long-term capital gain ................... -- -- ------------ ------------ Total distributions paid ................. $ 949,060 $ 1,249,958 ============ ============ * Commenced operations March 1, 2006. -79- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) As of October 31, 2005, the components of distributable earnings on a tax basis were as follows: LargeCap Growth Fund Undistributed ordinary income .................................. -- Undistributed long-term gain ................................... -- Unrealized appreciation ........................................ $24,756,405 SmallCap Growth Fund Undistributed ordinary income .................................. -- Undistributed long-term gain ................................... -- Unrealized appreciation ........................................ $23,974,259 Balanced Fund Undistributed ordinary income .................................. $ 647,347 Undistributed long-term gain ................................... -- Unrealized appreciation ........................................ 6,364,715 MidCap Growth Fund Undistributed ordinary income .................................. $49,391,586 Undistributed long-term gain ................................... 24,188,128 Unrealized appreciation ........................................ 33,542,074 Capital Appreciation Fund Undistributed ordinary income .................................. -- Undistributed long-term gain ................................... -- Unrealized appreciation ........................................ $42,003,644 Health Sciences Fund Undistributed ordinary income .................................. $ 1,969,329 Undistributed long-term gain ................................... 967,519 Unrealized appreciation ........................................ 7,740,872 SmallCap and MidCap Growth Fund Undistributed ordinary income .................................. $ 391,183 Undistributed long-term gain ................................... 959,460 Unrealized appreciation ........................................ 4,273,912 Money Market Fund Undistributed ordinary income .................................. -- Undistributed long-term gain ................................... -- Unrealized appreciation ........................................ -- The difference between book basis and tax basis unrealized appreciation is determined annually and is attributable primarily to the tax deferral of losses on wash sales. Tax basis unrealized appreciation as of April 30, 2006, does not reflect any potential tax adjustments subsequent to October 31, 2005. At October 31, 2005, the Funds, for federal income tax purposes, had capital loss carryforwards 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 ........ $ 38,166,509 $165,962,647 $21,526,122 -- $225,655,278 SmallCap Growth Fund ........ $ 79,071,807 $ 30,152,501 -- -- $109,224,308 Balanced Fund ............... -- $ 28,940,251 $ 2,892,067 -- $ 31,832,318 Capital Appreciation Fund ... $334,408,610 $204,820,909 -- -- $539,229,519 Money Market Fund ........... $ 216,474 -- $640 $ 217,114
-80- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) NOTE 8 -- LITIGATION: Alger Management has responded 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, the Attorney General of New Jersey, and the West Virginia Securities Commissioner, in connection with their investigations of practices in the mutual fund industry identified as "market timing" and "late trading." On December 16, 2005, Alger Management received from the staff of the SEC a "Wells Notice" which indicated that the staff intends to recommend that the Commission bring civil enforcement action for possible violations of the federal securities laws. "Wells Notices" also have been sent to certain companies affiliated with Alger Management, as well as certain present and former members of its senior management. The Wells Notices arose out of the SEC's staff ongoing investigation of market timing and late trading practices in the mutual fund industry. Alger Management and the other recipients have the opportunity to respond to the staff before the staff makes a formal recommendation. Alger Management submitted a response in January 2006. On June 7, 2006, Alger Management, its parent, Alger Inc., and their affiliated companies reached an agreement in principle with the staff of the New York Regional Office of the SEC and with the staff of the New York State Attorney General's office ("NYAG") resolving all issues with the SEC and the NYAG related to the allegations of mutual fund market timing and late trading that were the subject of the December 2005 Wells Notice. Alger Management and Alger Inc. are working with the staff of the SEC and the NYAG to finalize the agreement. The agreement is subject to the approval of the SEC and the NYAG. In the proposed settlement agreement, without admitting or denying liability, the firm will consent to the payment of $30 million dollars to reimburse fund shareholders; a fine of $10 million; and certain other remedial measures including a reduction in management fees of $1 million per year for five years. The entire $40 million and fee reduction will be available for the benefit of investors. Alger Management has advised the Fund that the proposed settlement payment is not expected to adversely affect the operations of the Manager, Alger Inc. or their affilates, or adversely affect their ability to continue to provide services to the Fund. On August 31, 2005, the West Virginia Securities Commissioner in an ex parte Summary Order to Cease and Desist and Notice of Right to Hearing concluded that Alger Management and Alger Inc. had violated the West Virginia Uniform Securities Act, and ordered Alger Management and Alger Inc. to cease and desist from further violations of the Act by engaging in the market-timing related conduct described in the order. The ex parte order provided notice of their right to a hearing with respect to the violations of law asserted by the Commissioner. Other firms unaffiliated with Alger Management were served with similar orders. Alger Management and Alger Inc. intend to request a hearing for the purpose of seeking to vacate or modify the order. -81- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) In addition, in 2003 and 2004 several purported class actions and shareholder derivative suits were filed against various parties in the mutual fund industry, including Alger Management, certain mutual funds managed by Alger Management (the "Alger Mutual Funds"), and certain current and former Alger Mutual Fund trustees and officers, alleging wrongful conduct related to market-timing and late-trading by mutual fund shareholders. These cases were transferred to the U.S. District Court of Maryland by the Judicial Panel on Multidistrict Litigation for consolidated pre-trial proceedings. In September 2004, consolidated amended complaints involving these cases (not yet including the West Virginia action) -- 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). In April 2005, a civil lawsuit involving similar allegations was filed by the West Virginia Attorney General and also transferred to the Maryland District Court. The Derivative Complaint alleged (i) violations, by Alger Management and, depending on the specific offense alleged, by its immediate parent, Alger Inc., which is the Distributor of the Alger Mutual Funds, and/or the fund trustee defendants, of Sections 36(a), 36(b), 47, and 48 of the Investment Company Act of 1940 (the "Investment Company Act") 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 third-party defendants, and (iii) unjust enrichment by all the named defendants. The Class Action Complaint alleged, in addition to the offenses listed above, (i) violations, by Alger Management, Alger Inc., 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 (the "1934 Act"), and Section 34(b) of the Investment Company Act of 1940, (ii) breach of contract by the funds named as defendants, and (iii) unjust enrichment of the defendants. The West Virginia attorney general action also alleges violations of the West Virginia Consumer Credit and Protection Act and other wrongful conduct. Motions to dismiss the Class Action Complaint and the Derivative Complaint were subsequently filed. On November 3, 2005, the district court issued letter rulings dismissing both complaints in their entirety with respect to the Alger Mutual Funds and dismissing all claims against the other Alger defendants, other than the claims under the 1934Act and Section 36(b) of the Investment Company Act (as to which the court deferred ruling with respect to the Alger Mutual Fund Trustees), with leave to the class action plaintiffs to file amended complaints against those defendants with respect to claims under state law. Orders implementing the letter rulings are being entered. On January 11, 2006, the Alger defendants filed a motion for partial reconsideration of the district court's ruling with respect to the Section 10(b), Rule 10b-5 and Section 36(b) claims against them; the district court denied the motion on February 9, 2006. -82- THE ALGER FUNDS NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Alger Management does not believe that the Alger Mutual Funds are themselves targets of the regulatory investigations as potential enforcement defendants. The SEC and, in some cases, state government authorities have a variety of administrative and civil enforcement powers, including injunctive powers, authority to assess fines and penalties and order restitution, authority to limit the activities of a person or company and other enforcement powers, that may be exercised administratively or through the courts. Under Section 9(a) of the Investment Company Act, if any of the various regulatory proceedings or lawsuits were to result in a court injunction against Alger Management or Alger Inc., Alger Management would, in the absence of exemptive relief granted by the SEC, be barred from serving as investment adviser/sub-adviser for any registered investment company, including the Fund. While exemptive relief from Section 9(a) has been granted in certain other cases, 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 loss of Alger Management personnel, diversion of time and attention of Alger Management personnel, diminishment of financial resources of Alger Management, or other consequences potentially adverse to the Fund. Alger Management cannot predict the potential effect of such actions upon Alger Management or the Fund. There can be no assurance that the effect, if any, would not be material. -83- THE ALGER FUNDS ADDITIONAL INFORMATION (UNAUDITED) 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, 2005 and ending April 30, 2006. 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. -84- SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED) Ratio of Expenses to Expenses Average Paid During Net Assets Beginning Ending the Period For the Account Account November 1, Six Months Value Value 2005 Ended November 1, April 30, to April 30, April 30, 2005 2006 2006(b) 2006(c) ---------- -------- ------------ ----------- ALGER LARGECAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,077.30 $ 6.49 1.26% HYPOTHETICAL(a) ... 1,000.00 1,018.55 6.31 1.26 CLASS B ACTUAL ............ 1,000.00 1,072.20 10.38 2.02 HYPOTHETICAL(a) ... 1,000.00 1,014.78 10.09 2.02 CLASS C ACTUAL ............ 1,000.00 1,073.30 10.33 2.01 HYPOTHETICAL(a) ... 1,000.00 1.014.83 10.04 2.01 ALGER SMALLCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,207.30 $ 7.61 1.39% HYPOTHETICAL(a) ... 1,000.00 1,017.90 6.95 1.39 CLASS B ACTUAL ............ 1,000.00 1,202.10 11.79 2.16 HYPOTHETICAL(a) ... 1,000.00 1,014.08 10.79 2.16 CLASS C ACTUAL ............ 1,000.00 1,201.70 11.68 2.14 HYPOTHETICAL(a) ... 1,000.00 1,014.18 10.69 2.14 ALGER BALANCED FUND CLASS A ACTUAL ............ $1,000.00 $1,047.10 $ 6.80 1.34% HYPOTHETICAL(a) ... 1,000.00 1,018.15 6.71 1.34 CLASS B ACTUAL ............ 1,000.00 1,043.30 10.54 2.08 HYPOTHETICAL(a) ... 1,000.00 1,014.48 10.39 2.08 CLASS C ACTUAL ............ 1,000.00 1,043.30 10.54 2.08 HYPOTHETICAL(a) ... 1,000.00 1,014.48 10.39 2.08 ALGER MIDCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,148.00 $ 6.71 1.26% HYPOTHETICAL(a) ... 1,000.00 1,018.55 6.31 1.26 CLASS B ACTUAL ............ 1,000.00 1,143.60 10.68 2.01 HYPOTHETICAL(a) ... 1,000.00 1,014.83 10.04 2.01 CLASS C ACTUAL ............ 1,000.00 1,144.00 10.69 2.01 HYPOTHETICAL(a) ... 1,000.00 1,014.83 10.04 2.01 ALGER CAPITAL APPRECIATION FUND CLASS A ACTUAL ............ $1,000.00 $1,138.10 $ 7.47 1.41% HYPOTHETICAL(a) ... 1,000.00 1,017.80 7.05 1.41 CLASS B ACTUAL ............ 1,000.00 1,134.60 11.49 2.17 HYPOTHETICAL(a) ... 1,000.00 1,014.03 10.84 2.17 CLASS C ACTUAL ............ 1,000.00 1,135.90 11.44 2.16 HYPOTHETICAL(a) ... 1,000.00 1,014.08 10.79 2.16 ALGER HEALTH SCIENCES FUND CLASS A ACTUAL ............ $1,000.00 $1,038.82 $ 6.93 1.37% HYPOTHETICAL(a) ... 1,000.00 1,018.02 6.85 1.37 CLASS B ACTUAL ............ 1,000.00 1,034.60 10.65 2.11 HYPOTHETICAL(a) ... 1,000.00 1,014.33 10.54 2.11 CLASS C ACTUAL ............ 1,000.00 1,034.70 10.70 2.12 HYPOTHETICAL(a) ... 1,000.00 1,014.28 10.59 2.12 -85- SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED) Ratio of Expenses to Expenses Average Paid During Net Assets Beginning Ending the Period For the Account Account November 1, Six Months Value Value 2005 Ended November 1, April 30, to April 30, April 30, 2005 2006 2006(b) 2006(c) ---------- -------- ------------ ----------- ALGER SMALLCAP AND MIDCAP GROWTH FUND CLASS A ACTUAL ............ $1,000.00 $1,218.10 $ 8.25 1.50% HYPOTHETICAL(a) ... 1,000.00 1,017.36 7.50 1.50 CLASS B ACTUAL ............ 1,000.00 1,213.50 12.35 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25 CLASS C ACTUAL ............ 1,000.00 1,214.40 12.35 2.25 HYPOTHETICAL(a) ... 1,000.00 1,013.64 11.23 2.25 ALGER TECHNOLOGY FUND CLASS A ACTUAL* ........... $1,000.00 $995.00 $ 8.66 1.75% HYPOTHETICAL(a) ... 1,000.00 1,016.12 8.75 1.75 CLASS B ACTUAL* ........... 1,000.00 994.00 12.36 2.50 HYPOTHETICAL(a) ... 1,000.00 1,012.40 12.47 2.50 CLASS C ACTUAL* ........... 1,000.00 994.00 12.36 2.50 HYPOTHETICAL(a) ... 1,000.00 1,012.40 12.47 2.50 ALGER CORE FIXED-INCOME FUND CLASS A ACTUAL* ........... $1,000.00 $995.90 $ 4.95 1.00% HYPOTHETICAL(a) ... 1,000.00 1,019.84 5.01 1.00 CLASS B ACTUAL* ........... 1,000.00 994.70 8.66 1.75 HYPOTHETICAL(a) ... 1,000.00 1,016.12 8.75 1.75 CLASS C ACTUAL* ........... 1,000.00 994.70 8.66 1.75 HYPOTHETICAL(a) ... 1,000.00 1,016.12 8.75 1.75 ALGER MONEY MARKET FUND ACTUAL ............ $1,000.00 $1,106.70 $ 4.70 0.94% HYPOTHETICAL(a) ... 1,000.00 1,020.13 4.71 0.94 ---------- * From March 1, 2006 -- commencement of operations. (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. -86- 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. NOTES: ------ NOTES: ------ 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. [ALGER LOGO] ASAR 43006 [ALGER LOGO] The Alger Funds Boston Financial Data Services, Inc. P.O. Box 8480 Boston, MA 02266 ASAR 43006 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 22, 2006 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 22, 2006 By: /s/ Frederick A. Blum Frederick A. Blum Treasurer Date: June 22, 2006