-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TI/LPx7fxbG1bcZv/rwvfxIS07Nm1c7FXS0qBRZFKA9/+yAB8fMSeVAMRYnoJWuy z+yLArclJXwdn1/9V04lfg== 0000930413-96-000011.txt : 19960112 0000930413-96-000011.hdr.sgml : 19960111 ACCESSION NUMBER: 0000930413-96-000011 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19960110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALGER FUND CENTRAL INDEX KEY: 0000003521 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01355 FILM NUMBER: 96502459 BUSINESS ADDRESS: STREET 1: 75 MAIDEN LN CITY: NEW YORK STATE: NY ZIP: 10038 BUSINESS PHONE: 2128068800 N-30D 1 ANNUAL REPORT FELLOW SHAREHOLDERS: December 15, 1995 Unlike France in the 1790's, which Charles Dickens described in the Tale of Two Cities as the "best of times and the worst of times," the late 1990's for the American financial markets are purely the best of times. While all periods provide some room for concern, the current period is more promising than almost any other in recent history. HOW WE ARRIVED AT THIS POINT The stock market and the bond market have both done exceptionally well this year. This year's performance results from the one-two combination punch to the jaw of growth stocks which commenced with the Presidential election in 1992. After twelve years of Republican stewardship, the market and business community began to see a very unclear economic picture emerge. The first punch landed with the appointment of the President's new cabinet whose agenda was to create new taxes on the "rich" and to socialize the health care industry (which represents 15% of the Gross Domestic Product). Growth stocks, which rely on a reasonable visibility of the future, began to lose relative valuation. What seemed like a value market at the time was in reality a reluctance on the part of investors to face an uncertain future. An exceedingly lenient monetary policy, which touched off a boom in consumer spending in the fourth quarter of 1993, added to this confusion. This brought about the second punch to the jaw that growth stocks received. In February of 1994, the Federal Reserve began to tighten interest rates in a series of six consecutive steps. Once again, this clouded the economic future and created a compression of growth stock multiples. At this point, fear of the new administration's policies was replaced by fear of the Federal Reserve. The market declined and growth stocks collapsed on a relative basis. The collective body of market and economic forecasters who are colloquially known as "pundits" all unanimously agreed that inflation would soar and the stock market would collapse. Why were they so wrong? First, inflation fears were driven by soaring prices of industrial commodities. However, commodity based raw materials represent only 15% of the total cost of manufacturing. Much more important is the cost of labor, which did not rise rapidly. Inflation was subdued throughout 1994. Secondly, the forecaster's assumption of a stock market collapse was predicated on the view that the market abhors increases in short-term rates. Indeed, the crash of 1987 was preceded and perhaps caused by an increase in short-term rates. Thirdly, there was a generally accepted view that the market was overpriced. Although this view was widely expressed on television, it was never the case. By way of comparison, in the period prior to the crash of 1987, the earnings yield of the market was only half the yield of the 30-year U.S. Government Bond. This was below the normal range of 50% to 90%. Throughout 1994, the earnings yield of the stock market typically sold at about 75% of the U.S. Government Bond yield. Moreover, the bond market itself was undervalued, discounting a level of inflation which never materialized. Based on forward looking price earnings ratios, the market was, if anything, undervalued. CURRENT MARKET AND ECONOMY As 1995 dawned, the key questions facing the markets concerned the need for future tightening of interest rates by the Federal Reserve, the possible onset of inflation and the excessive strength of the economy, all of which are naturally interrelated. Now we are well into the fourth quarter and the concern of the market is not whether the economy is growing too fast, but whether it is growing too slowly. As early as last year, we forecasted that the economy would slow and that there would be a "soft landing". This has been a correct forecast, although it may now be obsolete. All four components of consumer spending, which constitute 69% of the Gross Domestic Product: housing, autos, consumer durables and apparel, have slowed significantly but should bounce back due to the drop in interest rates and a reduction in inventory levels. There is evidence, therefore, that we are no longer looking at a "soft landing," but rather a "touch and go landing." It would be overly optimistic to say that all is well with the economy. Consumer confidence, while better in some surveys, is not robust. While leading indicators are up slightly, many components of retail sales are still pointing down. Whether the Federal Reserve will continue to lower rates is an open question especially in light of the current Federal budget negotiations. While these negotiations may well drag into 1996, it would be disappointing for those who are expecting a cut in rates in the near term. The bond market continues to believe that interest rates are too high. The dramatic flattening of the yield curve and the fact that the Government pays less interest to borrow for 10 years than banks do overnight provides ample evidence. The price of gold, an excellent proxy for inflation, remains at a relatively low historic level (approximately $390 an ounce). We believe that the economy will soon begin to react to the drop in interest rates that we have experienced to date. As a result, we expect the economy to keep advancing at a slow rate and avoid a recession in 1996. As for the stock market, we feel it still remains undervalued. We use three measures to determine the appropriate valuation for the market. The first is simply to multiply our best estimate of Dow earnings for 1995 by the average multiple of the last ten years which is 16. The result is an expected target of the Dow of 5600. The second method relates the market to short-term interest rates. Our own proprietary model multiplies the bottom-up forecast for the Dow earnings by the reciprocal of the 90-day commercial paper rate adjusted for some smoothing techniques. This model states that the Dow would be correctly valued at 6200. The third technique involves the relationship between the industrial S&P indexes estimated earnings and the 30 year bond yield. Using the average relationship between these two variables for the period 1988 through 1994, suggests that the market could appreciate 33% next year. The Dow equivalent of this would be 6300. While none of these forecasts may be realized, it is interesting that they all agree that the market will appreciate significantly next year using only average relationships. ALGER FUND PORTFOLIO REVIEWS ALGER GROWTH PORTFOLIO The Alger Growth Portfolio recorded excellent results for the period ended October 31, 1995, with a gain of 37.8% relative to the S&P 500 Index return of 26.4%. The Portfolio is well represented in three industries which are full of fast growing, profitable and well run companies. The Healthcare, Computer Related & Business Equipment and Semiconductors industries represent 21.1%, 16.5% and 10.7%, respectively, of the Portfolio's composition. The Portfolio held 20 companies for the entire period, purchased 44 new companies and eliminated 38 companies. Intel Corporation, Cisco Systems, Inc. and Bay Networks Inc. were held for the entire year and each realized increases in excess of 100%. ALGER SMALL CAPITALIZATION PORTFOLIO For the year ended October 31, 1995, the Alger Small Capitalization Portfolio returned 46.2% significantly outperforming the Wilshire Small Company Growth Index which returned 25.2% and the Russell 2000 Growth Index which returned 20.6% over the same period. During this one year period, we purchased 64 new stocks, eliminated 54 and held 36 for the entire year. Of those stocks held for the entire year, 21 posted gains in excess of 50%. Three stocks, Alliance Semiconductor Corp., Altera Corporation and PhyCor performed particularly well over the period each posting gains of 200% or more. At present, we still own these companies as their products are innovative, in high demand by an expanding marketplace and have earnings that continue to grow at very high rates. ALGER BALANCED PORTFOLIO The Alger Balanced Portfolio enjoyed a return of 27.6% for the twelve month period ended October 31, 1995, while maintaining an approximately equal allocation of common stocks and bonds. The relative benchmark indexes returned 26.4% for the S&P 500 Index and 16.2% for the Lehman Government / Corporate Bond Index. Our conservative bond portfolio coupled with a moderately aggressive stock portfolio provided the Alger Balanced Portfolio with excellent results. ALGER MIDCAP GROWTH PORTFOLIO The Alger MidCap Growth Portfolio continues to provide its investors with strong, solid performance, returning 48.3% for the one year period ended October 31, 1995. Over the same period, the benchmark S&P MidCap 400 Index returned 21.2%. We added 39 new stocks, eliminated 25 and held 23 for the twelve month period. Altera Corporation, Bay Networks Inc. and Glenayre Technologies Inc. are three companies which the Portfolio held for the entire period and, in part, contributed to its success. Possibly the most exciting and yet to be recognized sectors of the equities market, midcap stocks have many of the upside characteristics of small cap stocks without the attendant volatility attributable to a lack of liquidity. ALGER CAPITAL APPRECIATION PORTFOLIO At the time of this writing, the Alger Capital Appreciation Portfolio is one of the nation's top performing mutual funds based on year-to-date 1995 total return. Our newest mutual fund portfolio, the Capital Appreciation Portfolio employs an "all cap" (small, medium and large capitalizations) portfolio management strategy which has been implemented at Fred Alger Management for over 31 years. In addition, the Portfolio may employ a management technique known as leveraging, that is borrowing money for investment purposes, in order to increase the Portfolio's holdings and, therefore, its exposure to the stock market. Over the year ended October 31, 1995, the Alger Capital Appreciation Portfolio returned 67.6% relative to the S&P 500 Index which returned 26.4%. An actively managed portfolio, the Alger Capital Appreciation Portfolio purchased 65 companies, sold 55 companies and held 21 for the entire year ended October 31, 1995. Similar to the Alger Growth Portfolio, the representative industry groups at year end included Computer Related & Business Equipment 20.7%, Semiconductors 18.8%, and Healthcare 16.0%. ALGER MONEY MARKET PORTFOLIO For the seven day period ended October 31, 1995, the Alger Money Market Portfolio yielded 5.74% on a compounded annualized basis and 5.58% on a simple annualized basis. The Portfolio continues to provide its shareholders with a safe, steady return on their money. LOOKING AHEAD Despite the rally year-to-date, growth stocks generally remain undervalued relative to the market. Technology stocks still represent excellent investments. While they have moved up a great deal, so have their earnings. Consequently, their price/earnings multiples have not greatly increased. An example of this is one of our favorite holdings, Altera Corporation, which has appreciated approximately 150% year-to-date . However, we expect Altera's earnings to be up 135% this year. Consequently, Altera is not trading at a substantially higher multiple of 1995 earnings compared to its 1994 earnings at this point last year. In 1991, I wrote a book entitled Raging Bull: How to Invest in the Growth Stocks of the 90's. In the last chapter I predicted that the Dow Jones Industrial Average would reach 6,000 by the millennium and perhaps sooner based on seven basic factors: 1. End of the Cold War, leading to increased American self confidence. 2. An average high level of employment, due mainly to demographics. 3. Modest inflation. 4. Normal real rates of interest. 5. Rapidly expanding exports. 6. The eventual elimination of the deficit. 7. Rapid technological change. Generally, I think we are still on target (even the deficit point is being debated) and I am extremely excited about the prospects for the market and especially growth stocks during the next 5 years. Respectfully submitted, /s/ David D. Alger David D. Alger President - -------------------------------------------------------------------------------- TABLE OF CONTENTS - --------------------------------------------------------------------------------
Alger Growth Portfolio: Portfolio Highlights.............................................. 5 Schedule of Investments........................................... 6-7 Financial Highlights.............................................. 8 Alger Small Capitalization Portfolio: Portfolio Highlights.............................................. 9 Schedule of Investments........................................... 10-11 Financial Highlights.............................................. 12 Alger Balanced Portfolio: Portfolio Highlights.............................................. 13 Schedule of Investments........................................... 14-15 Financial Highlights.............................................. 16 Alger MidCap Growth Portfolio: Portfolio Highlights.............................................. 17 Schedule of Investments........................................... 18-19 Financial Highlights.............................................. 20 Alger Capital Appreciation Portfolio: Portfolio Highlights.............................................. 21 Schedule of Investments........................................... 22-23 Financial Highlights.............................................. 24 Alger Money Market Portfolio: Schedule of Investments........................................... 25 Financial Highlights.............................................. 26 Statements of Assets and Liabilities.................................................... 27 Statements of Operations................................................................ 28 Statement of Cash Flows (Alger Capital Appreciation Portfolio).......................... 29 Statements of Changes in Net Assets..................................................... 30 Notes to Financial Statements........................................................... 31-34 Report of Independent Public Accountants................................................ 35
-5- - -------------------------------------------------------------------------------- ALGER GROWTH PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- The Alger Growth Portfolio invests in companies which generally have broader product lines, markets, financial resources and depth of management than smaller, newer companies. - -------------------------------------------------------------------------------- $10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 11, 1986 - -------------------------------------------------------------------------------- The following information was used to plot graph which appears on page 5. Alger Growth S&P 500 11-11-86 10000 10000 31-10-87 9700 10537 31-10-88 10450 12097 31-10-89 13270 15290 31-10-90 12740 14145 31-10-91 18574 18883 31-10-92 20369 20767 31-10-93 26311 23871 31-10-94 27383 24794 31-10-95 37728 31350 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger Growth Portfolio and the S&P 500 on November 11, 1986, the inception date of the Alger Growth Portfolio. The figures for both the Alger Growth Portfolio and the S&P 500, an unmanaged index of common stocks, include reinvestment of dividends. - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON THROUGH October 31, 1995 - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURN SINCE INCEPTION 1 YEAR 5 YEARS 11/11/86 ------------------------------------------- ALGER GROWTH PORTFOLIO 37.78% 24.25% 15.95% ASSUMING REDEMPTION AT THE END OF EACH PERIOD 32.78% 24.08% 15.95% S&P 500 26.44% 17.25% 13.58% ------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -6- THE ALGER FUND ALGER GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--90.3% SHARES VALUE ------ ----- AIRLINES--1.3% Delta Air Lines Inc.............. 30,000 $ 1,968,750 ------------ BUILDING & CONSTRUCTION--.4% Pulte Corp....................... 19,100 604,037 ------------ COMMUNICATIONS--5.8% ADC Telecommunications, Inc.*.... 16,600 664,000 DSC Communications Corporation*.. 67,900 2,512,300 Glenayre Technologies Inc.*...... 20,000 1,285,000 Tellabs, Inc.*................... 76,000 2,584,000 U.S. Robotics Corp.*............. 20,000 1,850,000 ------------ 8,895,300 ------------ COMPUTER RELATED & BUSINESS EQUIPMENT--16.5% Altera Corporation*.............. 63,400 3,835,700 Bay Networks Inc.*............... 61,000 4,041,250 Cisco Systems, Inc.*............. 37,800 2,929,500 Dell Computer Corporation*....... 34,000 1,585,250 Hewlett-Packard Company.......... 34,000 3,149,250 Read-Rite Corporation*........... 38,700 1,349,662 Seagate Technology*.............. 67,000 2,998,250 3 Com Corp.*..................... 40,000 1,880,000 Xilinx, Inc.*.................... 80,000 3,680,000 ------------ 25,448,862 ------------ COMPUTER SOFTWARE--2.1% Informix Corporation*............ 50,000 1,456,250 Learning Company (The)*.......... 30,000 1,770,000 ------------ 3,226,250 ------------ COMPUTER TECHNOLOGY--1.3% AVX Corporation*................. 25,000 778,125 Silicon Graphics, Inc.*.......... 38,000 1,263,500 ------------ 2,041,625 ------------ DEFENSE--5.1% Lockheed Martin Corp............. 38,789 2,642,500 Loral Corporation................ 79,000 2,340,375 McDonnell Douglas Corporation.... 35,500 2,902,125 ------------ 7,885,000 ------------ FINANCIAL SERVICES--6.4% First Data Corporation........... 63,112 4,173,297 Merrill Lynch & Co., Inc......... 65,000 3,607,500 Schwab (Charles) Corporation (The) 90,600 2,072,475 ------------ 9,853,272 ------------ FREIGHT--1.9% Federal Express Corp.*........... 35,200 2,890,800 ------------ HEALTHCARE--21.1% Apria Healthcare Group Inc.*..... 33,600 726,600 Biochem Pharma Inc.*............. 75,000 2,868,750 Boston Scientific Corporation*... 30,000 1,263,750 Cardinal Health, Inc............. 52,400 2,692,050 Columbia/HCA Healthcare Corporation.................... 70,000 3,438,750 Genzyme Corp.--General Division*. 17,500 1,019,375 Healthsource, Inc.*.............. 75,300 3,990,900 IMNET Systems, Inc.*............. 35,000 888,125 Lilly (Eli) Co................... 34,000 3,285,250 Medtronic, Inc................... 29,400 1,697,850 Merck & Co., Inc................. 40,000 2,300,000 Nellcor Puritan Bennett Inc.*.... 11,300 649,750 Oxford Health Plans, Inc.*....... 19,700 1,541,525 SmithKline Beecham PLC ADS....... 75,800 3,932,125 Summit Technology Inc.*.......... 36,100 1,606,450 United Healthcare Corporation.... 14,000 743,750 ------------ 32,645,000 ------------ LEISURE & ENTERTAINMENT--2.8% Disney (Walt) Productions........ 25,000 1,440,625 Mirage Resorts, Incorporated*.... 38,000 1,244,500 Viacom Inc. Cl. B.*.............. 33,000 1,650,000 ------------ 4,335,125 ------------ RESTAURANTS & LODGING--4.2% Cracker Barrel Old Country Stores, Inc.................... 51,000 867,000 La Quinta Inns, Inc.............. 65,000 1,673,750 Lone Star Steakhouse & Saloon, Inc.* 103,100 3,982,237 ------------ 6,522,987 ------------ RETAILING--4.7% OfficeMax, Inc.*.................157,700 3,903,075 Tandy Corporation................ 38,700 1,910,813 Viking Office Products, Inc.*.... 34,000 1,513,000 ------------ 7,326,888 ------------ SEMICONDUCTORS--10.7% Cirrus Logic, Inc.*.............. 35,000 1,474,375 Intel Corporation................ 23,800 1,663,025 LSI Logic Corporation*........... 72,000 3,393,000 Linear Technology Corporation.... 40,000 1,750,000 Maxim Integrated Products, Inc.*. 45,000 3,363,750 MEMC Electronic Materials, Inc.*. 25,000 800,000 Micron Technology, Inc........... 36,000 2,542,500 Texas Instruments, Incorporated.. 22,000 1,501,500 ------------ 16,488,150 ------------ -7- THE ALGER FUND ALGER GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 1995 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- SEMICONDUCTORS CAPITAL EQUIPMENT--2.8% Applied Materials, Inc.*......... 49,600 $ 2,486,200 Teradyne, Inc.*.................. 54,500 1,818,938 ------------ 4,305,138 ------------ MISCELLANEOUS--3.2% Loewen Group Inc................. 47,100 1,886,237 Service Corporation International 76,300 3,061,538 ------------ 4,947,775 ------------ Total Common Stocks (Cost $110,075,444)............ 139,384,959 ------------ Warrants MANUFACTURING Windmere Corp. Warrants, expire 1/19/98 (Cost $61)...... 81 0 ------------ PRINCIPAL SHORT-TERM CORPORATE AMOUNT VALUE Notes--9.3% --------- ------ Allied Signal Inc., 5.75%, 11/10/95 (a).........$7,300,000 $ 7,289,506 AT&T Corp., 5.73%, 11/14/95............. 4,400,000 4,390,896 International Lease Finance Corp., 5.72%, 11/01/95............. 400,000 400,000 Merrill Lynch & Co., Inc., 5.73%, 11/07/95............. 600,000 599,427 Spiegel Funding Corp., 5.80%, 11/06/95............. 700,000 699,436 Washington Square Mortgage Co, 5.78%, 11/03/95............. 900,000 899,711 ------------ Total Short-Term Corporate Notes (Cost $14,278,976)............. 14,278,976 ------------ Total Investments (Cost $124,354,481)(b)......... 99.6% 153,663,935 Other Assets in Excess of Liabilities .4 619,770 ----- ----------- Net Assets....................... 100.0% $154,283,705 ===== ============ *Non-income producing security. (a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. (b) At October 31, 1995, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $124,354,481, amounted to $29,309,454, which consisted of aggregate gross unrealized appreciation of $31,956,544, and aggregate gross unrealized depreciation of $2,647,090. See Notes to Financial Statements. -8- THE ALGER FUND ALGER GROWTH PORTFOLIO Financial Highlights For a share outstanding throughout the period (i)
YEAR ENDED OCTOBER 31, --------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Net asset value, beginning of year........... $ 6.97 $ 7.43 $ 5.76 $ 5.77 $ 4.25 -------- -------- ------- ------- ------- Net investment income (loss)................. (.02) (.07)(ii) (.02) (.06)(ii) (.02) Net realized and unrealized gain (loss) on investments............................ 2.59 .35 1.70 .61 1.86 -------- -------- ------- ------- ------- Total from investment operations............. 2.57 .28 1.68 .55 1.84 Distributions from net realized gains........ (.16) (.74) (.01) (.56) (.32) -------- -------- ------- ------- ------- Net asset value, end of year................. $ 9.38 $ 6.97 $ 7.43 $ 5.76 $ 5.77 ======== ======== ======= ======= ======= Total Return (iii)........................... 37.8% 4.1% 29.2% 9.7% 45.8% ======== ======== ======= ======= ======= Ratios and Supplemental Data: Net assets, end of year (000's omitted)... $154,284 $ 76,390 $37,988 $19,379 $10,213 ======== ======== ======= ======= ======= Ratio of expenses to average net assets.... 2.09%(iv) 2.20% 2.20% 2.32% 2.70% ======== ======== ======= ======= ======= Ratio of net investment income (loss) to average net assets................... (1.03%) (1.01%) (1.16%) (1.07%) (1.06%) ======== ======== ======= ======= ======= Portfolio Turnover Rate.................... 118.16% 103.86% 108.54% 69.28% 76.06% ======== ======== ======= ======= =======
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred September 27, 1995. (ii) Amount was computed based on average shares outstanding during the period. (iii)Does not reflect contingent deferred sales charge. (iv) Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been 2.07%. See Notes to Financial Statements. -9- - -------------------------------------------------------------------------------- ALGER SMALL CAPITALIZATION PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- The Alger Small Capitalization Portfolio invests in small, fast-growing companies that offer innovative products, services, or technologies to a rapidly expanding marketplace. - -------------------------------------------------------------------------------- $10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 11, 1986 - -------------------------------------------------------------------------------- The following information was used to plot graph which appears on page 9. Wilshire Sm Co Gr Index S&P 500 Russell 2,000 Growth IndeX ----------------------- ------- -------------------------- 11-11-86 10000 10000 10000 31-10-87 8595 9000 8336 31-10-88 10605 10740 10301 31-10-89 12639 17730 12229 31-10-90 8603 16474 9008 31-10-91 15065 26975 15001 31-10-92 16133 27899 14947 31-10-93 20989 35093 19083 31-10-94 22013 34726 18909 31-10-95 27560 50753 22798 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger Small Capitalization Portfolio, Wilshire Small Company Growth Index and the Russell 2000 Growth Index on November 11, 1986, the inception date of the Alger Small Capitalization Portfolio. The figures for the Alger Small Capitalization Portfolio, Wilshire Small Company Growth Index (an unmanaged index of common stocks) and the Russell 2000 Growth Index (an unmanaged index of common stocks) include reinvestment of dividends. For the upcoming fiscal year, the Portfolio will use only the Russell 2000 Growth Index (the "Russell 2000") as a comparative index. The Portfolio has elected to change its comparative index because management of the Portfolio believes the size of the companies in the Russell 2000 is more representative of the size of the companies in which the Portfolio invests. - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON THROUGH October 31, 1995 - --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURN SINCE INCEPTION 1 YEAR 5 YEARS 11/11/86 ----------------------------------------------- ALGER SMALL CAPITALIZATION PORTFOLIO 46.15% 25.24% 19.85% ASSUMING REDEMPTION AT THE END OF EACH PERIOD 41.15% 25.07% 19.85% WILSHIRE SMALL CO. GROWTH INDEX 25.20% 26.22% 11.96% RUSSELL 2000 GROWTH INDEX 20.57% 20.41% 9.62% -----------------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -10- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--96.0% SHARES VALUE ------ ----- APPAREL--1.4% Kenneth Cole Productions Inc. Cl. A.*................. 52,200 $ 2,133,675 Tommy Hilfiger Corporation*.... 117,700 4,487,312 ----------- 6,620,987 ----------- COMMUNICATIONS--15.1% ADC Telecommunications, Inc.*.. 140,800 5,632,000 Ascend Communications, Inc.*... 148,400 9,646,000 DSC Communications Corporation* 216,600 8,014,200 DSP Communications, Inc.*...... 80,000 2,900,000 Glenayre Technologies Inc.*.... 264,750 17,010,186 Network Equipment Technologies, Inc.*.......... 170,400 5,559,300 Tekelec Inc.*.................. 41,800 606,100 Tellabs, Inc.*................. 236,300 8,034,200 U.S. Robotics Corp.*........... 136,000 12,580,000 ----------- 69,981,986 ----------- COMPUTER RELATED & BUSINESS EQUIPMENT--10.2% Altera Corporation*............ 246,000 14,883,000 Avid Technology, Inc.*......... 20,000 875,000 Bay Networks Inc.*............. 230,400 15,264,000 Creative Technology Ltd.*...... 129,000 1,499,624 ESS Technology, Inc.*.......... 100,000 3,000,000 Gateway 2000, Inc.*............ 25,000 834,375 Komag, Incorporated*........... 102,300 5,831,100 Read-Rite Corporation*......... 138,300 4,823,214 Xilinx, Inc.*.................. 7,500 345,000 ----------- 47,355,313 ----------- COMPUTER SOFTWARE--8.7% Activision Inc.*............... 71,000 1,189,250 Broderbund Software, Inc.*..... 20,000 1,387,500 Computron Software, Inc.*...... 25,000 425,000 Electronics For Imaging Inc.*.. 140,000 11,515,000 Enterprise Systems Inc.*....... 25,000 584,375 EPIC Design Technology, Inc.*.. 23,000 1,058,000 Informix Corporation*.......... 345,000 10,048,125 INSO Corp*..................... 40,000 1,430,000 S3 Incorporated*............... 300,000 5,137,500 Softkey International Inc.*.... 149,000 4,693,500 Symantec Corp.*................ 40,000 972,520 Wonderware Corporation*........ 54,600 1,733,550 ----------- 40,174,320 ----------- COMPUTER TECHNOLOGY--3.5% Adaptec, Inc.*................. 96,100 4,276,450 ADFlex Solutions, Inc.*........ 62,500 1,656,250 C.P. Clare Corporation*........ 156,900 4,059,790 Integrated Silicon Systems, Inc.* 72,000 2,115,000 Pinnacle Systems, Inc.*........ 130,000 4,078,750 ----------- 16,186,240 ----------- CONSUMER PRODUCTS--1.3% Oakley, Inc.*.................. 177,000 6,106,500 ----------- FINANCIAL SERVICES--3.6% Advanta Corp. Class B.......... 96,100 3,435,575 Oxford Resources Corp. Cl. A.*. 100,000 2,625,000 Schwab (Charles) Corporation (The) 456,100 10,433,290 ----------- 16,493,865 ----------- HEALTHCARE--12.7% Apria Healthcare Group Inc.*... 43,800 947,175 Biochem Pharma Inc.*........... 315,000 12,048,750 CellPro Incorporated*.......... 28,000 325,500 CompDent Corp.*................ 40,000 1,245,000 Genzyme Corp.--General Division* 60,000 3,495,000 HBO & Company.................. 67,500 4,775,625 Health Management Associates, Inc.* 118,950 2,557,423 Healthsource, Inc.*............ 143,800 7,621,400 Hologic, Inc.*................. 25,000 650,000 I-Stat Corp.*.................. 30,000 930,000 IDEXX Laboratories Inc.*....... 30,000 1,222,500 Liposome Company Inc.*......... 235,000 3,613,125 Metra Biosystems, Inc.*........ 105,000 1,942,500 Omnicare, Inc.................. 111,800 4,052,750 PhyCor Inc.*................... 64,125 2,356,593 Sepracor Inc.*................. 50,000 843,750 Summit Technology Inc.*........ 95,900 4,267,550 Sybron International Corp.*.... 64,900 2,758,250 Target Therapeutics, Inc.*..... 40,000 3,100,000 ----------- 58,752,891 ----------- POLLUTION CONTROL--2.5% United Waste Systems, Inc.*.... 159,000 6,280,500 USA Waste Services, Inc.*...... 255,100 5,357,100 ----------- 11,637,600 ----------- RESTAURANTS & LODGING--4.7% Apple South, Inc............... 29,500 604,750 DF&R Restaurants, Inc.*........ 5,000 152,500 Landry's Seafood Restaurants, Inc.* 263,400 3,555,900 Lone Star Steakhouse & Saloon, Inc.* 303,400 11,718,824 O'Charley's Inc.*.............. 120,500 1,385,750 Outback Steakhouse, Inc.*...... 141,500 4,439,564 ----------- 21,857,288 ----------- -11- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO SCHEDULE OF INVESTMENTS (Continued) October 31, 1995 COMMON STOCKS--(CONT.) SHARES VALUE ------ ----- RETAILING--5.6% CompUSA Inc.*.................. 62,900 $ 2,405,925 Fabri-Centers Of America Inc. Cl. A.*...................... 104,600 1,555,925 Fabri-Centers Of America Inc. Cl B.*....................... 83,500 970,688 Gucci Group NV*................ 133,000 3,990,000 Guest Supply Inc.*............. 136,500 2,576,436 OfficeMax, Inc.*............... 262,500 6,496,875 Viking Office Products, Inc.*.. 179,200 7,974,400 ----------- 25,970,249 ----------- SEMICONDUCTORS--19.3% Alliance Semiconductor Corp.*.. 256,875 7,898,904 Cirrus Logic, Inc.*............ 255,000 10,741,875 Integrated Device Technology, Inc.* 327,000 6,213,000 Intel Corporation.............. 40,000 2,795,000 LSI Logic Corporation*......... 193,000 9,095,125 LTX Corporation*............... 212,000 2,623,500 Linear Technology Corporation.. 315,000 13,781,250 Maxim Integrated Products, Inc.* 234,600 17,536,350 Micrel, Incorporated*.......... 9,000 204,750 Micro Linear Corporation*...... 218,400 3,357,900 Microchip Technology Incorporated* 326,500 12,958,131 TriQuint Semiconductor, Inc.*.. 100,000 2,275,000 ----------- 89,480,785 ----------- SEMICONDUCTORS CAPITAL EQUIPMENT--6.5% AG Associates, Inc.*........... 75,000 1,659,375 ASM Lithography Holdings *..... 12,500 620,310 Electroglas, Inc.*............. 12,500 878,125 FSI International, Inc.*....... 92,000 2,185,000 GaSonics International Corp.*.. 178,000 5,874,000 Lam Research Corporation*...... 84,500 5,143,937 Opal, Inc.*.................... 48,000 726,000 PRI Automation, Inc.*.......... 81,600 3,019,200 Semitool, Inc.................. 132,950 2,160,438 Silicon Valley Group, Inc.*.... 94,000 3,043,250 Tencor Instruments*............ 118,600 5,055,325 Ultratech Stepper, Inc.*....... 5,000 200,000 ----------- 30,564,960 ----------- MISCELLANEOUS--.9% Loewen Group Inc............... 100,000 4,004,750 ----------- Total Common Stocks (Cost $287,758,762).......... 445,187,734 ----------- SHORT-TERM PRINCIPAL CORPORATE NOTES--3.5% AMOUNT --------- AT&T Corp., 5.73%, 11/14/95............. $6,500,000 6,486,550 International Lease Finance Corp., 5.72%, 11/01/95............. 1,400,000 1,400,000 Merrill Lynch & Co., Inc., 5.73%, 11/07/95............. 1,300,000 1,298,759 Spiegel Funding Corp., 5.80%, 11/06/95............. 7,100,000 7,094,281 ----------- Total Short-Term Corporate Notes (Cost $16,279,590)........... 16,279,590 ----------- Total Investments (Cost $304,038,352)(a)....... 99.5% 461,467,324 Other Assets in Excess of Liabilities............... .5 2,250,428 ----- ----------- Net Assets..................... 100.0% $463,717,752 ===== ============ *Non-income producing security. (a)At October 31, 1995, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $304,038,352, amounted to $157,428,972, which consisted of aggregate gross unrealized appreciation of $162,412,994 and aggregate gross unrealized depreciation of $4,984,022. See Notes to Financial Statements. -12- THE ALGER FUND ALGER SMALL CAPITALIZATION PORTFOLIO Financial Highlights For a share outstanding throughout the period (i)
YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- Net asset value, beginning of year........... $ 7.62 $ 8.65 $ 6.88 $ 6.97 $ 4.33 -------- -------- -------- -------- -------- Net investment income (loss)................. (.13) (.09) (.08) (.11)(ii) (.03) Net realized and unrealized gain (loss) on investments............................ 3.64 (.02) 1.85 .37 2.76 -------- -------- -------- -------- -------- Total from investment operations............. 3.51 (.11) 1.77 .26 2.73 Distributions from net realized gains........ -- (.92) -- (.35) (.09) -------- -------- -------- -------- -------- Net asset value, end of year................. $ 11.13 $ 7.62 $ 8.65 $ 6.88 $ 6.97 ======== ======== ========= ======== ======== Total Return (iii)........................... 46.2% (1.1%) 25.8% 3.4% 63.7% ======== ======== ========= ======== ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted)... $463,718 $294,890 $300,108 $182,432 $ 61,273 ======== ======== ========= ======== ======== Ratio of expenses to average net assets.... 2.11%(iv) 2.18% 2.13% 2.17% 2.23% ======== ======== ========= ======== ======== Ratio of net investment income (loss) to average net assets................... (1.75%) (1.51%) (1.52%) (1.64%) (1.37%) ======== ======== ========= ======== ======== Portfolio Turnover Rate.................... 97.37% 131.86% 148.49% 121.00% 171.04% ======== ======== ========= ======== ========
(i)Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred September 27, 1995. (ii)Amount was computed based on average shares outstanding during the period. (iii)Does not reflect contingent deferred sales charge. (iv)Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been the same. See Notes to Financial Statements. -13- - -------------------------------------------------------------------------------- ALGER BALANCED PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- The Alger Balanced Portfolio invests in stocks of companies with growth potential and fixed-income securities, with emphasis on income-producing securities which appear to have some potential for capital appreciation. $10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION June 1, 1992 [The following table represents a graph in the printed piece] Balanced S&P 500 Sh/Leh Bros 01-06-92 10000 10000 10000 31-10-92 9950 10196 10479 31-10-93 11180 11722 11911 31-10-94 10736 12175 11356 31-10-95 13500 15395 13193 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger Balanced Portfolio, the S&P 500 Index, and the Lehman Government/Corporate Bond Index on June 1, 1992, the inception date of the Alger Balanced Portfolio. Figures for the Alger Balanced Portfolio, the S&P 500, an unmanaged index of common stocks, and the Lehman Government/Corporate Bond Index, an unmanaged index of government and corporate bonds, include reinvestment of dividends and/or interest. - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON THROUGH October 31, 1995 - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURN SINCE INCEPTION 1 YEAR 6/1/92 ------------------------------------------- ALGER BALANCED PORTFOLIO 27.61% 9.65% ASSUMING REDEMPTION AT THE END OF EACH PERIOD 22.61% 9.17% S&P 500 26.44% 13.45% LEHMAN CORP./GOV'T BOND INDEX 16.16% 8.44% ------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -14- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--52.1% ........................... SHARES VALUE ------ ----- AIRLINES--.6% Delta Air Lines Inc. ........................... 600 $ 39,375 -------- APPAREL--.8% Tommy Hilfiger Corporation* .................... 1,300 49,563 -------- COMMUNICATIONS--4.9% DSC Communications Corporation* ................ 1,000 37,000 Glenayre Technologies Inc.* .................... 2,025 130,106 Tellabs, Inc.* ................................. 1,800 61,200 U.S. Robotics Corp.* ........................... 800 74,000 -------- 302,306 -------- COMPUTER RELATED & BUSINESS EQUIPMENT--7.5% Altera Corporation* ............................ 1,600 96,800 Cisco Systems, Inc.* ........................... 900 69,750 Dell Computer Corporation* ..................... 800 37,300 Hewlett-Packard Company ........................ 800 74,100 Seagate Technology* ............................ 2,000 89,500 Xilinx, Inc.* .................................. 2,100 96,600 -------- 464,050 -------- COMPUTER SOFTWARE--1.1% Informix Corporation.* ......................... 2,400 69,900 -------- COMPUTER TECHNOLOGY--.3% AVX Corporation* ............................... 500 15,563 -------- DEFENSE--2.7% Lockheed Martin Corp. .......................... 652 44,418 Loral Corporation .............................. 2,000 59,250 McDonnell Douglas Corporation .................. 800 65,400 -------- 169,068 -------- FINANCIAL SERVICES--4.0% First Data Corporation ......................... 1,869 123,569 Lehman Brothers Holdings Inc. .................. 1,200 26,100 Merrill Lynch & Co., Inc. ...................... 1,200 66,600 Schwab (Charles) Corporation (The) ............... 1,500 34,313 -------- 250,582 -------- FREIGHT--1.1% Federal Express Corp.* ........................... 800 65,700 -------- HEALTHCARE--10.3% Biochem Pharma Inc.* ............................. 1,000 38,250 Boston Scientific Corporation* ................... 700 29,488 Cardinal Health, Inc. ............................ 1,200 61,650 Columbia/HCA Healthcare Corporation .................................... 1,500 73,688 Healthsource, Inc.* .............................. 1,500 79,500 Lilly (Eli) Co. .................................. 800 77,300 Merck & Co., Inc. ................................ 900 51,750 Nellcor Puritan Bennett Inc.* .................... 500 28,750 Omnicare, Inc. ................................... 400 14,500 Oxford Health Plans, Inc.* ....................... 400 31,300 SmithKline Beecham PLC ADS ....................... 1,500 77,813 Summit Technology Inc.* .......................... 1,700 75,650 -------- 639,639 -------- LEISURE & ENTERTAINMENT--2.3% Disney (Walt) Productions ........................ 800 46,100 Mirage Resorts, Incorporated* .................... 1,000 32,750 Viacom Inc. Cl B.* ............................... 1,300 65,000 -------- 143,850 -------- RESTAURANTS & LODGING--2.8% La Quinta Inns, Inc. ............................. 2,200 56,650 Lone Star Steakhouse & Saloon, Inc.* ............. 2,300 88,838 Outback Steakhouse, Inc.* ........................ 1,000 31,375 ------- 176,863 ------- RETAILING--2.9% CompUSA Inc.* .................................... 1,000 38,250 OfficeMax, Inc.* ................................. 3,750 92,813 Tandy Corporation ................................ 1,000 49,375 ------- 180,438 ------- SEMICONDUCTORS--6.6% Intel Corporation ................................ 900 62,888 LSI Logic Corporation* ........................... 1,000 47,125 Linear Technology Corporation .................... 1,200 52,500 Maxim Integrated Products, Inc.* ................ 1,300 97,175 Microchip Technology Incorporated* ............... 1,000 39,688 Micron Technology, Inc. .......................... 800 56,500 Texas Instruments, Incorporated .................. 800 54,600 ------- 410,476 ------- SEMICONDUCTORS CAPITAL EQUIPMENT--1.8% Applied Materials, Inc.* ......................... 1,400 70,175 Teradyne, Inc.* .................................. 1,300 43,388 ------- 113,563 ------- -15- THE ALGER FUND ALGER BALANCED PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--52.1% ........................... SHARES VALUE ------ ----- MISCELLANEOUS--2.4% Loewen Group Inc.................................. 1,700 $ 68,080 Service Corporation International 2,000 80,250 ---------- 148,330 ---------- Total Common Stocks (Cost $2,463,475) 3,239,266 ---------- PRINCIPAL AMOUNT --------- Corporate Bonds--6.6% AUTOMOTIVE--1.7% Ford Motor Credit Corp., 7.75%, 11/15/02................................. $100,000 106,867 ---------- BROKERAGE--1.5% Merrill Lynch & Co., Inc., 6.375%, 9/08/06................................. 100,000 95,239 ---------- FINANCIAL SERVICES--3.4% Associates Corp. of North America 7.50%, 4/15/02.................................. 200,000 211,010 ---------- Total Corporate Bonds (Cost $390,024) ................................ 413,116 ---------- U.S. Government and Agency Obligations--20.3% U.S. Treasury Notes, 7.50%, 10/31/99................................. 100,000 106,016 U.S. Treasury Notes, 6.375%, 1/15/00................................. 100,000 102,094 U.S. Treasury Notes, 7.50%, 5/15/02.................................. 100,000 108,672 U.S. Treasury Notes, 5.75%, 9/30/97.................................. 250,000 250,625 U.S. Treasury Bonds, 7.625%, 11/15/22................................ 100,000 115,297 Federal Home Loan Mortgage Corp., 8.20%, 1/16/98.................................. 100,000 102,859 Federal Home Loan Mortgage Corp., 4.75%, 9/20/00.................................. 120,000 116,400 Federal Home Loan Mortgage Corp., 6.50%, 6/10/03.................................. 150,000 147,891 Federal National Mortgage Assoc., 7.39%, 7/15/99.................................. 100,000 100,969 Federal National Mortgage Assoc., 8.50%, 2/01/05.................................. 100,000 108,031 ---------- Total U.S. Government & Agency Obligations (Cost $1,203,007) .............................. 1,258,854 ---------- Short-Term Corporate Notes--9.8% Allied Signal Inc., 5.75%, 11/10/95 (a)............................. $250,000 249,641 International Lease Finance Corp., 5.72%, 11/01/95................................. 160,000 160,000 Spiegel Funding Corp., 5.73%, 11/02/95................................. 200,000 199,968 ---------- Total Short-Term Corporate Notes (Cost $609,609) ................................. 609,609 ---------- Short-Term U.S. Government Obligations--5.5% U.S. Treasury Bills, 5.64%, 11/09/95 ................................. 75,000 74,906 5.29%, 10/17/96.................................. 280,000 266,024 ---------- Total Short-Term U.S. Government Obligations (Cost $340,461) ..................... 340,930 ---------- Total Investments (Cost $5,006,576)(b) ............................ 94.3% 5,861,775 Other Assets in Excess of Liabilities ............. 5.7 351,866 ---------- ---------- Net Assets ........................................ 100.0% $6,213,641 ========== ========== *Non-income producing security. (a) Pursuant to securities and Exchange Commission Rule 144A, these securities may be sold prior to teir maturity only to qualified institutional buyers. (b) At October 31, 1995, the net unrealzied appreciation on investments, based on cost for federa income tax purposes of $5,006,576, amounted to $855,199, which consisted of aggregate gross unrealized appreciation of $930,445 and aggregate gross unrealized depreciation of $75,246. See Notes to Finanical Statements -16- THE ALGER FUND ALGER BALANCED PORTFOLIO Financial Highlights For a share outstanding throughout the period
FROM JUNE 1, 1992 (COMMENCEMENT OF YEAR ENDED OCTOBER 31, OPERATIONS) ----------------------------------------- TO OCTOBER 31, 1995 1994 1993 1992(III) -------- -------- -------- ---------------- Net asset value, beginning of year........................... $ 10.65 $ 11.18 $ 9.95 $ 10.00 -------- -------- --------- -------- Net investment income (loss)......... (.02)(i) (.05) (.01) (.12) Net realized and unrealized gain (loss) on investments........ 2.96 (.39) 1.24 .07 -------- -------- -------- -------- Total from investment operations........................ 2.94 (.44) 1.23 (.05) Distributions from net realized gains............................. ---- (.09) ---- ---- -------- -------- -------- -------- Net asset value, end of year......... $ 13.59 $ 10.65 $ 11.18 $ 9.95 ======== ======== ======== ======== Total Return (ii).................... 27.6% (4.0%) 12.4% (0.5%) ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted)................. $ 6,214 $ 3,073 $ 3,125 $ 1,370 ======== ======== ======== ======== Ratio of expenses to average net assets...................... 3.34%(iv) 3.18% 3.82% 5.62% ======== ======== ======== ======== Decrease reflected in above expense ratios due to expense reimbursements--Note 3(a)........ .24% ---- .75% .75% ======== ======== ======== ======== Ratio of net investment income (loss) to average net assets.... (.13%) (.41%) (.97%) (3.07%) ======== ======== ======== ======== Portfolio Turnover Rate.............. 84.06% 84.88% 115.17% 17.07% ======== ======== ======== ========
(i) Amount was computed based on average shares outstanding during the period. (ii) Does not reflect contingent deferred sales charge. (iii)Ratios have been annualized; total return has not been annualized. (iv) Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been 3.25%. See Notes to Financial Statements -17- - -------------------------------------------------------------------------------- ALGER MIDCAP GROWTH PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- The Alger MidCap Growth Portfolio invests in mid-sized companies. - -------------------------------------------------------------------------------- $10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION May 24, 1993 - -------------------------------------------------------------------------------- [The following table represents a graph in the printed piece] MidCap Growth S&P 400 24-5-93 10000 10000 31-10-93 12480 10714 31-10-94 13062 10969 31-10-95 19073 13296 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger MidCap Growth Portfolio and the S&P MidCap 400 Index on May 24, 1993, the inception date of the Alger MidCap Growth Portfolio. Figures for the Alger MidCap Growth Portfolio and the S&P MidCap 400 Index, an unmanaged index of common stocks, include reinvestment of dividends. PERFORMANCE COMPARISON THROUGH October 31, 1995 AVERAGE ANNUAL RETURN SINCE INCEPTION 1 YEAR 5/24/93 ------------------------------------------- ALGER MIDCAP GROWTH PORTFOLIO 48.32% 31.11% ASSUMING REDEMPTION AT THE END OF EACH PERIOD 43.32% 30.28% S&P MIDCAP 400 INDEX 21.21% 12.38% ------------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -18- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--88.7% ............................. SHARES VALUE ------ ----- APPAREL--.9% Tommy Hilfiger Corporation* ...................... 13,000 $ 495,625 ---------- BUILDING & CONSTRUCTION--.6% Pulte Corp. ...................................... 10,900 344,713 ---------- COMMUNICATIONS--8.9% Ascend Communications, Inc.* ..................... 14,000 910,000 DSC Communications Corporation*................... 17,200 636,400 Glenayre Technologies Inc.* ...................... 21,150 1,358,888 Tellabs, Inc.* ................................... 24,000 816,000 U.S. Robotics Corp.* ............................. 12,000 1,110,000 ---------- 4,831,288 ---------- COMPUTER RELATED & BUSINESS EQUIPMENT--12.5% Altera Corporation* .............................. 24,800 1,500,400 Bay Networks Inc.* ............................... 24,000 1,590,000 Dell Computer Corporation* ....................... 8,800 410,300 Read-Rite Corporation* ........................... 13,100 456,862 Seagate Technology* .............................. 25,000 1,118,750 3 Com Corp.* ..................................... 6,000 282,000 Xilinx, Inc.* .................................... 30,200 1,389,200 ---------- 6,747,512 ---------- COMPUTER SOFTWARE--2.5% Computron Software, Inc.* ........................ 15,000 255,000 Informix Corporation* ............................ 16,800 489,300 Learning Company (The)* .......................... 10,000 590,000 ---------- 1,334,300 ---------- COMPUTER TECHNOLOGY--2.5% AVX Corporation* ................................. 8,000 249,000 Adaptec, Inc.* ................................... 12,000 534,000 Integrated Silicon Systems, Inc.* ................ 20,000 587,500 ---------- 1,370,500 ---------- CONSUMER PRODUCTS--2.0% CUC International Inc.* .......................... 9,000 311,625 Oakley, Inc.* .................................... 22,500 776,250 ---------- 1,087,875 ---------- FINANCIAL SERVICES--4.3% Advanta Corp. Class B ............................ 7,250 259,188 First Data Corporation ........................... 22,445 1,484,169 Lehman Brothers Holdings Inc. .................... 14,200 308,850 Schwab (Charles) Corporation (The) ............... 10,900 249,338 ---------- 2,301,545 ---------- HEALTHCARE--16.6% Apria Healthcare Group Inc.* ..................... 15,300 330,862 Biochem Pharma Inc.* ............................. 30,300 1,158,975 Boston Scientific Corporation* ................... 10,000 421,250 Cardinal Health, Inc. ............................ 22,000 1,130,250 Genzyme Corp.--General Division*.................. 10,000 582,500 Health Management Associates, Inc.* .............. 25,500 548,250 Healthsource, Inc.* .............................. 25,800 1,367,400 MedPartners, Inc.* ............................... 24,000 672,000 Nellcor Puritan Bennett Inc.* .................... 5,600 322,000 Oxford Health Plans, Inc.* ....................... 12,900 1,009,425 Summit Technology Inc.* .......................... 27,300 1,214,850 United Healthcare Corporation .................... 3,600 191,250 ---------- 8,949,012 ---------- LEISURE & ENTERTAINMENT--.6% Mirage Resorts, Incorporated* .................... 9,200 301,300 ---------- POLLUTION CONTROL--4.3% United Waste Systems, Inc.* ...................... 25,000 987,500 USA Waste Services, Inc.* ........................ 65,200 1,369,200 ---------- 2,356,700 ---------- RESTAURANTS & LODGING--5.4% La Quinta Inns, Inc. ............................. 35,000 901,250 Lone Star Steakhouse & Saloon, Inc.* ............. 37,100 1,432,988 Outback Steakhouse, Inc.* ........................ 18,500 580,438 ----------- 2,914,676 ----------- RETAILING--8.5% CompUSA Inc.* .................................... 21,000 803,250 Global DirectMail Corp.* ......................... 20,000 545,000 OfficeMax, Inc.* ................................. 58,500 1,447,875 Tandy Corporation ................................ 19,900 982,562 Viking Office Products, Inc.* .................... 18,200 809,900 ----------- 4,588,587 ----------- SEMICONDUCTORS--10.7% Alliance Semiconductor Corp.* .................... 15,000 461,250 Cirrus Logic, Inc.* .............................. 15,000 631,875 Integrated Device Technology, Inc.* .............. 23,400 444,600 LSI Logic Corporation* ........................... 21,500 1,013,188 Linear Technology Corporation .................... 25,000 1,093,750 Maxim Integrated Products, Inc.*. ................ 18,000 1,345,500 Microchip Technology Incorporated* ............... 20,000 793,760 ----------- 5,783,923 ----------- SEMICONDUCTORS CAPITAL EQUIPMENT--4.2% ASM Lithography Holdings* ........................ 13,000 645,125 Lam Research Corporation* ........................ 11,000 669,625 OnTrak Systems, Inc.* ............................ 11,000 215,875 Teradyne, Inc.* .................................. 21,700 724,238 ----------- 2,254,863 ----------- -19- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--(CONT.) ........................... SHARES VALUE ------ ----- MISCELLANEOUS--4.2% Loewen Group Inc. ................................ 25,000 $ 1,001,188 Service Corporation International ................ 31,600 1,267,950 ----------- 2,269,138 ----------- Total Common Stocks (Cost $ 38,217,155) ............................ 47,931,557 ----------- SHORT-TERM PRINCIPAL CORPORATE NOTES--11.7% AMOUNT VALUE ---------- ----- AT&T Corp., 5.73%, 11/14/95................................. $1,200,000 $ 1,197,517 International Lease Finance Corp., 5.72%, 11/01/95................................. 1,200,000 1,200,000 Merrill Lynch & Co., Inc., 5.73%, 11/07/95 ................................ 100,000 99,905 Spiegel Funding Corp., 5.73%, 11/02/95................................. 1,300,000 1,299,793 5.80%, 11/06/95................................. 1,000,000 999,194 State Mutual Life Assurance Co. of America, 5.73%, 11/03/95................................. 1,400,000 1,399,554 Washington Square Mortgage Co., 5.78%, 11/03/95 ................................ 100,000 99,968 ------------ Total Short-Term Corporate Notes (Cost $6,295,931) .............................. 6,295,931 ------------ Total Investments (Cost $44,513,086)(a) .......................... 100.4% 54,227,488 Liabilities in Excess of Other Assets ................................... (.4) (211,008) ----------- ------------ Net Assets ....................................... 100.0% $54,016,480 =========== ============ * Non-income producing security. (a)At October 31, 1995, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $44,513,086, amounted to $9,714,402, which consisted of aggregate gross unrealized appreciation of $10,781,781 and aggregate gross unrealized depreciation of $1,067,379. See Notes to Financial Statements. -20- THE ALGER FUND ALGER MIDCAP GROWTH PORTFOLIO Financial Highlights For a share outstanding throughout the period
FROM MAY 24, 1993 (COMMENCEMENT OF YEAR ENDED OCTOBER 31, OPERATIONS) ---------------------------------- TO OCTOBER 31, 1995 1994 1993(I) ------ ------ ------------------ Net asset value, beginning of year........................... $12.77 $12.48 $10.00 ------ ------ ------ Net investment income (loss)......... (.08) (.11) (.09) Net realized and unrealized gain (loss) on investments........ 6.25 .68 2.57 ------ ------ ------ Total from investment operations........................ 6.17 .57 2.48 Distributions from net realized gains............................. ---- (.28) ---- ------ ------ ------ Net asset value, end of year......... $18.94 $12.77 $12.48 ======= ====== ====== Total Return (ii).................... 48.3% 4.7% 24.8% ======= ====== ====== Ratios and Supplemental Data: Net assets, end of year (000's omitted)................. $54,016 $18,516 $3,836 ======= ======= ====== Ratio of expenses to average net assets...................... 2.39%(iii) 3.20% 3.73% ======= ======= ====== Decrease reflected in above expense ratio due to expense reimbursements-Note 3(a)........ ---- .07% .80% ======= ======= ====== Ratio of net investment income (loss) to average net assets.... (1.71%) (2.32%) (2.86%) ======= ======= ====== Portfolio Turnover Rate............ 121.60% 127.40% 57.64% ======= ======= ======
(i) Ratios have been annualized; total return has not been annualized. (ii) Does not reflect contingent deferred sales charge. (iii)Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been 2.34%. See Notes to Financial Statements. -21- - -------------------------------------------------------------------------------- ALGER CAPITAL APPRECIATION PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED) - -------------------------------------------------------------------------------- The Alger Capital Appreciation Portfolio focuses on companies with promising growth potential and uses some special investment tools such as leveraging and options and futures transactions. - -------------------------------------------------------------------------------- $10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 1, 1993 - -------------------------------------------------------------------------------- [The following table represents a graph in the printed piece] CAPITAL APPRECIATION S&P 500 11-1-93 10000 10000 31-10-94 11110 10387 31-10-95 18220 13133 The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger Capital Appreciation Portfolio and the S&P 500 on November 1, 1993, the inception date of the Alger Capital Appreciation Portfolio. Figures for the Alger Capital Appreciation Portfolio and the S&P 500 Index, an unmanaged index of common stocks, include reinvestment of dividends. - -------------------------------------------------------------------------------- PERFORMANCE COMPARISON THROUGH October 31, 1995 - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURN SINCE INCEPTION 1 YEAR 11/1/93 ----------------------------------------- ALGER CAPITAL APPRECIATION PORTFOLIO 67.60% 36.46% ASSUMING REDEMPTION AT THE END OF EACH PERIOD 62.60% 34.98% S&P 500 26.44% 14.60% ----------------------------------------- THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. -22- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 COMMON STOCKS--95.4% ............................. SHARES VALUE ------ ----- APPAREL--.1% Tommy Hilfiger Corporation* ...................... 1,000 $ 38,125 --------- COMMUNICATIONS--6.6% ADC Telecommunications, Inc.* .................... 3,200 128,000 DSC Communications Corporation*................... 14,500 536,500 DSP Communications, Inc.* ........................ 3,000 108,750 Glenayre Technologies Inc.* ...................... 10,300 661,775 Network Equipment Technologies, Inc.* ............................ 2,300 75,036 U.S. Robotics Corp.* ............................. 7,600 703,000 --------- 2,213,061 --------- COMPUTER RELATED & BUSINESS EQUIPMENT--20.7% Altera Corporation* .............................. 14,600 883,300 Bay Networks Inc.* ............................... 17,700 1,172,625 Cisco Systems, Inc.* ............................. 2,000 155,000 Creative Technology Ltd.* ........................ 48,000 558,000 Dell Computer Corporation* ....................... 7,000 326,375 Digital Equipment Corporation* ................... 10,000 541,250 ESS Technology, Inc.* ............................ 25,000 750,000 Gateway 2000, Inc.* .............................. 5,000 166,875 Komag, Incorporated* ............................. 17,500 997,500 Read-Rite Corporation* ........................... 10,000 348,750 Stormedia Inc., Cl. A* ........................... 5,000 230,000 3 Com Corp.* ..................................... 2,000 94,000 Xilinx, Inc.* .................................... 16,000 736,000 --------- 6,959,675 --------- COMPUTER SOFTWARE--9.8% Activision Inc.* ................................. 35,000 586,250 Cooper & Chyan Technology, Inc.*. ................ 13,000 183,625 Electronics For Imaging Inc.* .................... 6,000 493,500 Enterprise Systems Inc.* ......................... 12,000 280,500 EPIC Design Technology, Inc.* .................... 2,500 115,000 Logic Works Inc. ................................. 10,000 152,500 Maxis Inc.* ...................................... 19,500 862,875 Microsoft Corporation* ........................... 2,600 260,000 S3 Incorporated* ................................. 7,000 119,875 Symantec Corp.* .................................. 10,000 243,130 --------- 3,297,255 --------- COMPUTER TECHNOLOGY--3.8% Actel Corporation* ............................... 19,000 223,250 Adaptec, Inc.* ................................... 1,400 62,300 C.P. Clare Corporation* .......................... 28,000 724,500 Pinnacle Systems, Inc.* .......................... 8,000 251,000 --------- 1,261,050 --------- DEFENSE--.5% McDonnell Douglas Corporation .................... 500 40,875 Tracor, Inc.* .................................... 7,600 121,600 --------- 162,475 --------- FINANCIAL SERVICES--1.9% First Data Corporation ........................... 9,572 632,935 Lehman Brothers Holdings Inc. .................... 1,000 21,750 ---------- 654,685 ---------- HEALTHCARE--16.0% Biochem Pharma Inc.* ............................. 30,000 1,147,500 Cardinal Health, Inc. ............................ 5,000 256,875 CellPro Incorporated* ............................ 25,000 290,625 Genzyme Corp.--General Division* ................. 7,000 407,750 HPR Inc.* ........................................ 5,000 130,000 Healthsource, Inc.* .............................. 7,800 413,400 Hologic, Inc.* ................................... 17,500 455,000 IDEXX Laboratories Inc.* ......................... 5,000 203,750 Lilly (Eli) Co. .................................. 3,800 367,175 Liposome Company Inc.* ........................... 20,000 307,500 Medtronic, Inc. .................................. 2,000 115,500 Nellcor Puritan Bennett Inc.* .................... 3,000 172,500 Summit Technology Inc.* .......................... 7,700 342,650 Target Therapeutics, Inc.* ....................... 10,000 775,000 ---------- 5,385,225 ---------- POLLUTION CONTROL--1.3% United Waste Systems, Inc.* ...................... 10,000 395,000 USA Waste Services, Inc.* ........................ 1,700 35,700 ---------- 430,700 ---------- RESTAURANTS & LODGING--2.5% DF&R Restaurants, Inc.* .......................... 7,400 225,700 Lone Star Steakhouse & Saloon, Inc.* ............. 15,300 590,962 Outback Steakhouse, Inc.* ........................ 1,100 34,512 ---------- 851,174 ---------- RETAILING--2.0% CompUSA Inc.* .................................... 7,500 286,875 OfficeMax, Inc.* ................................. 13,300 329,175 Viking Office Products, Inc.* .................... 1,500 66,750 ---------- 682,800 ---------- -23- SEMICONDUCTORS--18.8% Alliance Semiconductor Corp.* .................... 10,000 $ 307,500 Cirrus Logic, Inc.* .............................. 16,000 674,000 Integrated Device Technology, Inc.* .............. 25,600 486,400 Intel Corporation ................................ 10,000 698,750 LSI Logic Corporation* ........................... 13,600 640,900 Linear Technology Corporation .................... 2,000 87,500 Maxim Integrated Products, Inc.*. ................ 13,500 1,009,125 Micro Linear Corporation* ........................ 23,200 356,700 Microchip Technology Incorporated* ............... 27,400 1,087,450 Micron Technology, Inc. .......................... 3,000 211,875 Paradigm Technology, Inc.* ....................... 8,500 187,000 Texas Instruments, Incorporated .................. 3,600 245,700 TriQuint Semiconductor, Inc.* .................... 13,900 316,225 ---------- 6,309,125 ---------- SEMICONDUCTORS CAPITAL EQUIPMENT--9.7% AG Associates, Inc.* ............................. 6,000 132,750 ASM Lithography Holdings* ........................ 14,900 739,412 FSI International, Inc.* ......................... 10,800 256,500 GaSonics International Corp.* .................... 6,200 204,600 Kulicke and Soffa Industries, Inc.* .............. 6,000 210,000 Lam Research Corporation* ........................ 3,200 194,800 OnTrak Systems, Inc.* ............................ 7,200 141,300 Opal, Inc.* ...................................... 12,000 181,500 Tencor Instruments* .............................. 9,200 392,150 Teradyne, Inc.* .................................. 5,800 193,575 Ultratech Stepper, Inc.* ......................... 15,800 632,000 ---------- 3,278,587 ---------- MISCELLANEOUS--1.7% Redhook Ale Brewery, Incorporated* ............... 4,500 132,750 Service Corporation International ................ 11,000 441,375 ---------- 574,125 ---------- Total Common Stocks (Cost $30,960,476) ............................. 32,098,062 ---------- WARRANTS--2.2% SEMI-CONDUCTORS Intel Corp. Warrants, expire 3/14/98 (Cost $720,833). 20,000 740,000 ---------- Principal Short-Term Amount Value Corporate Notes--4.6% ----------- ----------- AT&T Corp., 5.73%, 11/14/95................ $600,000 $ 598,759 International Lease Finance Corp., 5.72%, 11/01/95................ 280,000 280,000 Merrill Lynch & Co. Inc., 5.73%, 11/07/95................ 180,000 179,828 Spiegel Funding Corp., 5.73%, 11/02/95................ 200,000 199,968 Washington Square Mortgage Co., 5.78%, 11/03/95............... 290,000 289,906 ----------- Total Short-Term Corporate Notes (Cost $1,548,461) ....................... 1,548,461 ----------- Total Investments (Cost $33,229,770)(a) ................... 102.2% 34,386,523 Liabilities in Excess of Other Assets ............................ (2.2) (746,972) ----- ----------- Net Assets ................................ 100.0% $33,639,551 ===== =========== *Non-income producing security. (a)At October 31, 1995, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $33,229,770 amounted to $1,156,753, which consisted of aggregate gross unrealized appreciation of $3,066,212 and aggregate gross unrealized depreciation of $1,909,459. See Notes to Financial Statements. -24- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO (i) Financial Highlights For a share outstanding throughout the period YEAR ENDED OCTOBER 31, --------------------- 1995 1994 --------- -------- Net asset value, beginning of year ............. $ 11.11 $ 10.00 --------- -------- Net investment income (loss) ................... (0.47)(ii) (0.47) Net realized and unrealized gain (loss) on investments ................................ 7.98 1.58 --------- -------- Total from investment operations ......... 7.51 1.11 --------- -------- Net asset value, end of year ................... $ 18.62 $ 11.11 ========= ======== Total Return (iii) ............................. 67.6% 11.1% ========= ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted) .. $ 33,640 $ 2,369 ========= ======== Ratio of expenses excluding interest to average net assets ................... 3.26% 4.13% ========= ======== Ratio of expenses including interest to average net assets ................... 3.54%(iv) 5.53% ========= ======== Decrease reflected in above expense ratios due to expense reimbursements--Note 3(a) ............... -- 0.85% ========= ======== Ratio of net investment income (loss) to average net assets ................... (3.02%) (5.12%) ========= ======== Portfolio Turnover Rate .................. 197.65% 231.99% ========= ======== Debt outstanding at end of year .......... -- $651,000 ========= ======== Average amount of debt outstanding during the year ......................... $ 293,153 $406,864 ========= ======== Average daily number of shares outstanding during the year ............. 543,270 191,676 ========= ======== Average amount of debt per share during the year ......................... $ 0.54 $ 2.12 ========= ======== (i) Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger Leveraged AllCap Portfolio. (ii) Amount was computed based on average shares outstanding during the period. (iii)Does not reflect contingent deferred sales charge. (iv) Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been 3.43%. See Notes to Financial Statements. -25- THE ALGER FUND ALGER MONEY MARKET PORTFOLIO SCHEDULE OF INVESTMENTS October 31, 1995 SHORT-TERM CORPORATE ..................... PRINCIPAL NOTES--93.1% ........................... AMOUNT VALUE ----------- ----------- AUTOMOBILES--7.6% American Honda Finance Corp. ............. 5.77%, 11/7/95 ......................... $ 7,700,000 $ 7,692,595 Daimler-Benz North America Corp., 5.71%, 11/7/95 ......................... 200,000 199,810 Ford Motor Credit Corp., 5.72%, 11/1/95 ......................... 6,200,000 6,200,000 ----------- 14,092,405 ----------- AUTOMOTIVE EQUIPMENT & SERVICES--4.4% Bridgestone/Firestone Inc., 5.75%, 1/18/96 ......................... 8,200,000 8,097,842 ----------- BANKS--20.1% Bank of America, 5.00%, 6/1/96 .......................... 3,000,000 2,985,097 Banca CRT Financial Corp., 5.75%, 11/8/95 ......................... 8,100,000 8,090,944 BOT Financial Corp., 5.90%, 1/16/96 (a) ..................... 8,600,000 8,492,882 Caisse Centrale Desjardins Du Quebec, 5.70%, 11/14/95 ........................ 4,000,000 3,991,767 ING Group Bank, 5.73%, 11/9/95 ......................... 6,000,000 5,992,360 Shinhan Bank, 5.80%, 11/27/95 ........................ 8,000,000 7,966,489 ----------- 37,519,539 ----------- BROKERAGE--5.2% Dean Witter, Discover & Co., 5.73%, 11/17/95 ........................ 7,800,000 7,780,136 Merrill Lynch & Co., Inc. ................ 5.73%, 11/7/95 ......................... 1,800,000 1,798,281 ---------- 9,578,417 ---------- COMPUTER TECHNOLOGY--4.4% CSC Enterprises, 5.68-5.77%, 11/21/95-12/11/95 .......... 8,200,000 8,160,671 ---------- CONSUMER PRODUCTS--2.8% Golden Peanut Co., 5.68%, 1/5/96 .......................... 5,200,000 5,146,671 ---------- ELECTRONICS--4.5% Hitachi, LTD, 5.68%, 11/1/95 ......................... 8,300,000 8,300,000 ---------- FINANCE--19.1% Dynamic Funding Corp., 5.90%, 1/11/96 ......................... 4,000,000 3,953,456 Honeywell, Inc., 5.75%, 11/1/95 ......................... $7,700,000 7,700,000 Province of Quebec, 5.70%, 2/1/96 .......................... 7,000,000 6,898,033 Sanwa Business Credit Corp., 5.78-5.86%, 1/18/96-1/25/96 ............ 9,000,000 8,882,039 SRD Finance Inc., 5.85%, 11/21/95 ........................ 8,000,000 7,974,000 ---------- 35,407,528 ---------- HEALTHCARE--2.7% Allergan Inc., 5.73%, 11/7/95 ......................... 5,000,000 4,995,225 ---------- ---------- IMPORT/EXPORT--1.6% The Harper Group Inc., 5.71%, 11/9/95 ......................... 3,000,000 2,996,193 ---------- ---------- REAL ESTATE--4.6% Washington Square Mortgage Corp., 5.78%, 11/3/95-11/9/95 ................. 8,500,000 8,492,984 ---------- ---------- RETAIL--1.8% Spiegal Inc., 5.80%, 11/6/95 ......................... 3.400,000 3,397,261 ---------- ---------- TRADING COMPANY--7.4% Mitsubishi International Corp., 5.74%, 11/10/95 ........................ 6,000,000 5,991,390 Mitsui & Co., (USA) Inc., 5.60%, 3/11/96 ......................... 8,000,000 7,836,978 ---------- ---------- 13,828,368 ---------- UTILITIES--6.9% AT&T Capital Corp., 5.73%, 11/14/95 ........................ 8,800,000 8,781,791 Elmore Funding L.P., 5.72%, 1/11/96 ......................... 4,100,000 4,053,747 ---------- ----------- 12,835,538 ----------- Total Short-Term Corporate Notes (Cost $172,848,642) .............. 172,848,642 ----------- CERTIFICATES OF DEPOSIT--4.7% Banco Espirito Santo North America Capital Corp., 5.8125%, 1/25/96 (Cost $8,800,000) ...................... 8,800,000 8,800,000 --------- Total Investments (Cost $181,648,642)(b) ................. 97.8% 181,648,642 Other Assets in Excess of Liabilities 2.2 4,172,890 ---- ------------ Net Assets ............................... 100% $185,821,532 ==== ============ (a)Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. (b)At October 31, 1995, the cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes. See Notes to Financial Statements. -26- THE ALGER FUND ALGER MONEY MARKET PORTFOLIO Financial Highlights For a share outstanding throughout the period
YEAR ENDED OCTOBER 31, ---------------------------------------------------------- 1995 1994 1993 1992 1991 ------- -------- -------- -------- -------- Net asset value, beginning of year......................... $ 1.000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 ------- -------- -------- -------- -------- Net investment income.............. .0573 .0374 .0304 .0424 .0671 Dividends from net investment income............... (.0573) (.0374) (.0304) (.0424) (.0671) ------- -------- -------- -------- -------- Net asset value, end of year....... $ 1.000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 ======= ======== ======== ======== ======== Total Return....................... 5.9% 3.8% 3.1% 4.3% 6.9% ======= ======== ======== ======== ======== Ratios and Supplemental Data: Net assets, end of year (000's omitted)............... $185,822 $163,170 $126,567 $135,288 $160,898 ======= ======== ======== ======== ======== Ratio of expenses to average net assets.................... .29%(i) .27% .41% .25% .18% ======= ======== ======== ======== ======== Decrease reflected in above expense ratios due to expense reimbursements and management fee waivers-Note 3(a)............. .50% .50% .50% .60% .63% ======= ======== ======== ======== ======== Ratio of net investment income to average net assets........................ 5.73% 3.78% 3.04% 4.30% 6.76% ======= ======== ======== ======== ========
(i) Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been 0.27%. See Notes to Financial Statements. -27- THE ALGER FUND STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts) October 31, 1995
SMALL CAPITAL CAPITAL- MIDCAP APPRE- MONEY GROWTH IZATION BALANCED GROWTH CIATION MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO --------- --------- --------- --------- --------- --------- ASSETS: Investments in securities, at value (identified cost*)-see accompany- ing schedules of investments ......... $153,664 $461,467 $5,862 $54,227 $34,387 $181,649 Cash .................................... 70 2,957 18 127 695 260 Receivable for investment securities sold....................... -- 6,160 35 531 521 -- Receivable for shares of beneficial interest sold........................ 1,984 3,294 371 817 799 5,029 Dividends and interest receivable............................ 50 31 27 2 -- 80 Prepaid expenses and other assets........ 16 35 5 5 5 8 ------- ------- ----- ------ ------ ------- Total Assets......................... 155,784 473,944 6,318 55,709 36,407 187,026 ------- ------- ----- ------ ------ ------- LIABILITIES: Payable for investment securities purchased.................. 1,142 6,794 73 321 1,795 -- Payable for shares of beneficial interest redeemed..................... 41 2,461 -- 1,244 872 1,044 Interest payable......................... -- -- -- -- 4 -- Accrued investment management fees....... 96 341 4 35 23 -- Accrued distribution fees ............... 96 301 4 33 20 -- Accrued shareholder servicing fees....... 32 100 1 11 7 -- Dividends payable-Note 2(c).............. -- -- -- -- -- 20 Accrued expenses......................... 93 229 22 49 46 140 -------- -------- ------ ------- ------- -------- Total Liabilities.................... 1,500 10,226 104 1,693 2,767 1,204 -------- -------- ------ ------- ------- -------- NET ASSETS ............................. $154,284 $463,718 $6,214 $54,016 $33,640 $185,822 ======== ======== ====== ======= ======= ======== Net Assets Consist of: Paid-in capital....................... $115,263 $286,504 $5,284 $40,563 $31,375 $185,872 Undistributed net investment income (accumulated loss)........... (2,406) (17,471) (55) (817) (373) -- Undistributed net realized gain (accumulated loss)............. 12,118 37,256 130 4,556 1,481 (50) Net unrealized appreciation............ 29,309 157,429 855 9,714 1,157 -- -------- -------- ------ ------- ------- -------- NET ASSETS .............................. $154,284 $463,718 $6,214 $54,016 $33,640 $185,822 ======== ======== ====== ======= ======= ======== Shares of beneficial interest outstanding-Note 6.................... 16,442 41,675 457 2,853 1,806 185,872 ======== ======== ====== ======= ======= ======== NET ASSET VALUE PER SHARE................ $9.38 $ 11.13 $13.59 $18.94 $18.62 $1.00 ======== ======== ====== ======= ======= ======== *Identified cost........................ $124,355 $304,038 $5,007 $44,513 $33,230 $181,649 ======== ======== ====== ======= ======= ========
See Notes to Financial Statements. -28- THE ALGER FUND STATEMENTS OF OPERATIONS (in thousands) For the year ended October 31, 1995
SMALL CAPITAL CAPITAL- MIDCAP APPRE- MONEY GROWTH IZATION BALANCED GROWTH CIATION MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO --------- --------- --------- --------- ---------- --------- INVESTMENT INCOME: Income: Dividends ............................. $ 714 $ 379 $ 13 $ 61 $ 17 $ -- Interest .............................. 332 912 98 132 20 9,961 ------- -------- ------ ------- ------ ------ Total Income........................... 1,046 1,291 111 193 37 9,961 Expenses: Management fees-Note 3(a).............. 760 3,118 27 244 77 830 Distribution fees-Note 3(b)............ 760 2,751 27 229 68 -- Shareholder servicing fees-Note 3(f)... 253 917 9 76 23 -- Interest on line of credit utilized-Note 5 -- -- -- -- 25 -- Custodian fees......................... 33 51 5 14 13 38 Transfer agent fees and expenses-Note 3(e).................. 197 696 14 79 52 322 Professional fees...................... 35 37 20 32 20 18 Trustees' fees......................... 5 5 5 5 5 5 Registration fees...................... 37 42 17 30 32 51 Miscellaneous.......................... 40 139 4 20 6 42 ------- -------- ------ ------- ------ ------ 2,120 7,756 128 729 321 1,306 Less, earnings credits-Note 2(e)......... (27) (32) (3) (14) (11) (22) Less, expense reimbursements and fee waivers- Note 3(a)........................... -- -- (9) -- -- (830) Total net expenses..................... 2,093 7,724 116 715 310 454 ------- -------- ------ ------- ------ ------ NET INVESTMENT INCOME (LOSS)......................... (1,047) (6,433) (5) (522) (273) 9,507 ------- -------- ------ ------- ------ ------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments.. 11,826 32,765 215 4,286 1,551 (20) Net change in unrealized appreciation on investments......................... 22,002 114,070 644 8,407 826 -- ------- -------- ------ ------- ------ ------ Net realized and unrealized gain (loss) on investments............. 33,828 146,835 859 12,693 2,377 (20) ------- -------- ------ ------- ------ ------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........... $32,781 $140,402 $ 854 $12,171 $2,104 $9,487 ======= ======== ====== ======= ====== ======
*Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger Leveraged AllCap Portfolio. See Notes to Financial Statements. -29- THE ALGER FUND ALGER CAPITAL APPRECIATION PORTFOLIO* STATEMENT OF CASH FLOWS (in thousands) For the year ended October 31, 1995 Increase (decrease) in Cash: Cash flows from operating activities: Dividends received ........................................... $ 17 Interest received ............................................ 20 Interest paid ................................................ (21) Operating expenses paid ...................................... (207) Purchase of investment securities ............................ (45,802) Purchase of short-term securities, net ....................... (1,548) Proceeds from disposition of investment securities ........... 19,629 Other 5 -------- Net cash used in operating activities .................... (27,907) -------- Cash flows from financing activities: Proceeds from shares sold .................................... 38,186 Payments on shares redeemed .................................. (8,948) Repayment of bank borrowings ................................. (651) -------- Net cash provided by financing activities .............. 28,587 -------- Net increase in cash 680 Cash--beginning of year .......................................... 15 Cash--end of year ................................................ $ 695 ======== Reconciliation of net increase in net assets to net cash used in operating activities: Net increase in net assets resulting from operations ....... $ 2,104 Increase in investments in securities (28,930) Increase in receivable for investment securities sold ...... (521) Increase in payable for investment securities purchased .... 1,729 Net realized gain .......................................... (1,552) Net increase in unrealized appreciation .................... (826) Increase in accrued expenses and other liabilities ......... 81 Net decrease in other assets ............................... 8 -------- Net cash used in operating activities .................. $(27,907) ======== *Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger Leveraged AllCap Portfolio. See Notes to Financial Statements. -30- THE ALGER FUND STATEMENTS OF CHANGES IN NET ASSETS (in thousands) For the year ended October 31, 1995
SMALL CAPITAL CAPITAL- MIDCAP APPRE- MONEY GROWTH IZATION BALANCED GROWTH CIATION MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO --------- --------- --------- --------- ---------- --------- Net investment income (loss)............ $ (1,047) $ (6,433) $ (5) $ (522) $ (273) $ 9,507 Net realized gain (loss) on investments........................ 11,826 32,765 215 4,286 1,551 (20) Net change in unrealized appreciation on investments........................ 22,002 114,070 644 8,407 826 -- -------- -------- ------ ------- ------- -------- Net increase in net assets resulting from operations......... 32,781 140,402 854 12,171 2,104 9,487 Dividends to shareholders: Net investment income.................. -- -- -- -- -- (9,507) Net realized gains.................... (1,768) (170) -- -- -- -- Net increase from shares of beneficial interest transactions-Note 6................... 46,881 28,596 2,287 23,329 29,167 22,672 -------- -------- ------ ------- ------- -------- Total increase..................... 77,894 168,828 3,141 35,500 31,271 22,652 Net Assets: Beginning of period .................. 76,390 294,890 3,073 18,516 2,369 163,170 -------- -------- ------ ------- ------- -------- End of period.......................... $154,284 $463,718 $6,214 $54,016 $33,640 $185,822 ======== ======== ====== ======= ======= ======== Undistributed net investment income (accumulated loss)............ $ (2,406) $(17,471) $ (55) $ (817) $ (373) $ -- ======== ======== ====== ======= ======= ========
See Notes to Financial Statements. THE ALGER FUND STATEMENTS OF CHANGES IN NET ASSETS (in thousands) For the year ended October 31, 1994
SMALL CAPITAL CAPITAL- MIDCAP APPRE- MONEY GROWTH IZATION BALANCED GROWTH CIATION MARKET PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO --------- --------- --------- --------- ---------- --------- Net investment income (loss)............ $ (595) $ (4,194) $ (14) $ (267) $ (100) $ 5,377 Net realized gain (loss) on investments........................ 1,641 47 (85) 242 (70) (19) Net change in unrealized appreciation (depreciation) on investments......... 789 1,079 (50) 845 331 -- ------- -------- ------ ------- ------ -------- Net increase (decrease) in net assets resulting from operations.. 1,835 (3,068) (149) 820 161 5,358 Dividends to shareholders: Net investment income.................. -- -- -- -- -- (5,377) Net realized gains.................... (3,909) (30,622) (28) (111) -- -- Net increase from shares of beneficial interest transactions-Note 6.......... 40,476 28,472 125 13,971 2,208 36,622 ------- -------- ------ ------- ------ -------- Total increase (decrease).......... 38,402 (5,218) (52) 14,680 2,369 36,603 Net Assets: Beginning of year..................... 37,988 300,108 3,125 3,836 -- 126,567 ------- -------- ------ ------- ------ -------- End of year............................ $76,390 $294,890 $3,073 $18,516 $2,369 $163,170 ======= ======== ====== ======= ====== ======== Undistributed net investment income (accumulated loss)............ $(1,359) $ (11,038) $ (50) $ (295) $ (100) $-- ======= ======== ====== ======= ====== ========
*Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger Leveraged AllCap Portfolio. See Notes to Financial Statements -31- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS NOTE 1- General: The Alger Fund (the "Fund") is a diversified, open-end registered investment company organized as an unincorporated business trust under the laws of the Commonwealth of Massachusetts. The Fund operates as a series company currently issuing six classes of shares of beneficial interest--Growth Portfolio, Small Capitalization Portfolio, Balanced Portfolio, MidCap Growth Portfolio, Capital Appreciation Portfolio and Money Market Portfolio (the "Portfolios"). Prior to March 27, 1995, the Capital Appreciation Portfolio was known as the Leveraged AllCap Portfolio. The Income and Growth Portfolio was liquidated in May 1995, pursuant to a plan of liquidation approved by the Board of Trustees and the shareholders. NOTE 2- Significant Accounting Policies: (a) INVESTMENT VALUATION: Investments of the Portfolios, other than the Money Market Portfolio, are valued on each day the New York Stock Exchange (the "NYSE") is open as of the close of the NYSE (currently 4:00 p.m. Eastern time). Listed and unlisted securities for which such information is regularly reported are valued at the last reported sales price or, in the absence of reported sales, at the mean between the bid and asked price or, in the absence of a recent bid or asked price, the equivalent as obtained from one or more of the major market makers for the securities to be valued. Securities for which market quotations are not readily available are valued at fair value, as determined in good faith pursuant to procedures established by the Board of Trustees. The investments of the Money Market Portfolio, and short-term securities held by the other Portfolios having a remaining maturity of sixty days or less, are valued at amortized cost which approximates market value. (b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. (c) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded on the ex-dividend date. The Money Market Portfolio declares dividends daily from net investment income; such dividends are paid monthly. The dividends from net investment income of the other Portfolios are declared and paid annually. With respect to all Portfolios, dividends from net realized gains, offset by any loss carryforward, are declared and paid annually after the end of the fiscal year in which earned. (d) FEDERAL INCOME TAXES: It is each Portfolio's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. To the extent a Portfolio maintains such compliance, no federal income tax provision is required. Each Portfolio is treated as a separate entity for the purpose of determining such compliance. At October 31, 1995, the net capital loss carryforwards of the Money Market Portfolio which may be used to offset future net realized gains was approximately $50,000, and expires between 1996 and 2003. (e) EXPENSES: The Fund accounts separately for the assets, liabilities and operations of each Portfolio. Expenses directly attributable to each Portfolio are charged to that Portfolio's operations; expenses which are applicable to all Portfolios are allocated among them. The Fund's custodian fees have been reduced as a result of earnings credits received on overnight cash balances. Balances left on deposit with the custodian preclude their use elsewhere. -32- NOTE 3- Investment Management Fees and Other Transactions with Affiliates: (a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to the provisions of Investment Management Agreements (the "Agreements") with Fred Alger Management, Inc. ("Alger Management"), are payable monthly and computed based on the value of the average daily net assets of each Portfolio at the following annual rates: Growth Portfolio............................ .75% Small Capitalization Portfolio.............. .85 Balanced Portfolio.......................... .75 MidCap Growth Portfolio..................... .80 Capital Appreciation Portfolio.............. .85 Money Market Portfolio...................... .50 The Agreements further provide that if in any fiscal year the aggregate expenses of any Portfolio, excluding interest, taxes, brokerage commissions, distribution fees and extraordinary expenses, exceed the expense limitation of any state securities laws having jurisdiction over a Portfolio, Alger Management will reimburse that Portfolio for the excess expense to the extent required by such state laws. During the year ended October 31, 1995, Alger Management reimbursed the Balanced Portfolio $8,668, pursuant to the state expense limitation applicable to that Portfolio. With respect to the Money Market Portfolio, Alger Management undertook to waive its management fee of $829,603 for the year ended October 31, 1995. Alger Management has undertaken to waive its fee through December 31, 1995 at which time Alger Management may extend this undertaking in whole or in part. (b) DISTRIBUTION FEES: The Fund has adopted an Amended and Restated Plan of Distribution pursuant to which each Portfolio, other than the Money Market Portfolio, has agreed to reimburse Fred Alger & Company, Incorporated, the Fund's distributor (the "Distributor"), for costs and expenses incurred by the Distributor in connection with advertising and marketing shares of the Fund's Portfolios. The distribution fee is not to exceed .75% of the average daily net assets of each of the designated Portfolios. If in any month, the costs incurred by the Distributor are in excess of the distribution fees charged to the Portfolios, the excess may be carried forward, with interest, and sought to be reimbursed in future periods. As of October 31, 1995, such excess carried forward was approximately $5,561,000, $10,680,000, $118,000, $1,034,000 and $533,000 for the Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, and the Capital Appreciation Portfolio, respectively. Contingent deferred sales charges imposed on redemptions will reduce the amount of distribution expenses for which reimbursement may be sought. See Note 3(c) below. The Distributor has entered into arrangements with broker/dealers for the sale of shares of certain of the Fund's Portfolios. In connection with these arrangements, the Distributor has agreed to pay these broker/dealers, with respect to the shares sold, from its distribution fee received from the Portfolios. (c) CONTINGENT DEFERRED SALES CHARGE: A contingent deferred sales charge is imposed if an investor redeems an amount which causes the current value of the investor's account of any Portfolio to fall below the total dollar amount of investments made during the past six years, except that no sales charge is imposed on the amount of the investment redeemed which is attributable to reinvested dividends or capital gain distributions or is derived from increases in the value of the investor's account above the amount invested during the past six years. The amount of the charge is 5% of the purchase payment for redemptions made in the first year. For redemptions made in the second, third, fourth, fifth and sixth years, the amount of the charge is 4%, 3%, 2%, 2% and 1%, respectively. In addition, no charge is imposed on the redemption of shares -33- of the Money Market Portfolio, except for redemptions of shares acquired in exchange for shares of the other Portfolios. Any sales charges imposed on redemptions are paid to the Distributor. During the year ended October 31, 1995, such charges amounted to approximately $1,385,000. (d) BROKERAGE COMMISSIONS: During the year ended October 31, 1995, the Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio and the Capital Appreciation Portfolio paid the Distributor commissions of $301,536, $373,332, $6,782, $93,354 and $24,442, respectively, in connection with securities transactions. (e) TRANSFER AGENT FEES: Alger Shareholder Services, Inc. ("Alger Services"), an affiliate of Alger Management, serves as transfer agent for the Fund. During the year ended October 31, 1995, the Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio and the Money Market Portfolio incurred fees of $151,445, $513,340, $10,600, $64,932, $39,504 and $209,765, respectively, for services provided by Alger Services. In addition, during the year ended October 31, 1995, the Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio and the Money Market Portfolio reimbursed Alger Services $45,050, $182,160, $3,710, $13,525, $12,145 and $112,543, respectively, for transfer agent related expenses paid by Alger Services on behalf of the Portfolios. (f) SHAREHOLDER SERVICING FEES: The Fund has entered into a shareholder servicing agreement with the Distributor whereby the Distributor provides each Portfolio other than the Money Market Portfolio with ongoing servicing of shareholder accounts. As compensation for such services, each designated Portfolio pays the Distributor a monthly fee at an annual rate equal to .25% of the Portfolios' average daily net assets. (g) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the Fund are directors and officers of Alger Management, the Distributor and Alger Services. At October 31, 1995, Alger Management and its affiliates owned 705,834 shares, 736,184 shares, 101,546 shares, 211,677 shares, 100,001 shares and 1,322,487 shares of the Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the MidCap Growth Portfolio, the Capital Appreciation Portfolio, and the Money Market Portfolio, respectively. NOTE 4- Securities Transactions: The following summarizes the securities transactions by the Fund, other than short-term securities, for the year ended October 31, 1995: PURCHASES SALES ------------ ------------ Growth Portfolio......... $147,174,071 $114,517,379 Small Capitalization Portfolio.............. 371,516,614 341,726,870 Balanced Portfolio....... 4,654,434 2,838,541 MidCap Growth Portfolio.............. 54,595,775 35,368,745 Capital Appreciation Portfolio.............. 47,526,708 20,149,187 NOTE 5- Short-Term Borrowings: The Capital Appreciation Portfolio has a line of credit with a bank whereby it may borrow up to 1/3 of its assets, as defined, up to a maximum of $25,000,000. Such borrowings have a variable interest rate and are payable on demand. For the year ended October 31, 1995, the Portfolio had borrowings which averaged $293,153 at a weighted average interest rate of 8.69%. -34- THE ALGER FUND NOTES TO FINANCIAL STATEMENTS (continued) NOTE 6- Share Capital: The Fund has an unlimited number of authorized shares of beneficial interest of $.001 par value which were divided into different classes of shares during the year ended October 31, 1995. Transactions of shares of beneficial interest were as follows:
FOR THE YEAR ENDED FOR THE YEAR ENDED OCTOBER 31, 1995 OCTOBER 31, 1994 SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Alger Growth Portfolio* Shares sold................. 14,201,363 $ 76,768,669 7,653,918 $ 52,802,599 Dividends reinvested........ 266,844 1,726,486 559,827 3,806,820 ----------- ------------ ----------- ------------ 14,468,207 78,495,155 8,213,745 56,609,419 Shares redeemed............. (1,678,400) (31,613,563) (2,369,604) (16,133,616) ----------- ------------ ----------- ------------ Net increase................ 12,789,807 $ 46,881,592 5,844,141 $ 40,475,803 =========== ============ =========== ============ Alger Small Capitalization Portfolio* Shares sold................. 42,344,546 $322,359,498 20,307,321 $149,953,791 Dividends reinvested........ 22,836 161,233 3,902,973 29,168,225 ----------- ------------ ----------- ------------ 42,367,382 322,520,731 24,210,294 179,122,016 Shares redeemed............. (13,590,168) (293,925,307) (20,213,790) (150,649,904) ----------- ------------ ----------- ------------ Net increase................ 28,777,214 $ 28,595,424 3,996,504 $ 28,472,112 =========== ============ =========== ============ Alger Balanced Portfolio Shares sold................. 274,506 $ 3,523,634 156,133 $ 1,697,838 Dividends reinvested........ -- -- 2,549 27,938 ----------- ------------ ----------- ------------ 274,506 3,523,634 158,682 1,725,776 Shares redeemed............. (105,829) (1,237,116) (149,768) (1,600,522) ----------- ------------ ----------- ------------ Net increase................ 168,677 $ 2,286,518 8,914 $ 125,254 =========== ============ =========== ============ Alger MidCap Growth Portfolio Shares sold................. 2,932,971 $ 47,462,566 1,383,145 $ 16,842,733 Dividends reinvested........ -- -- 8,710 105,566 ----------- ------------ ----------- ------------ 2,932,971 47,462,566 1,391,855 16,948,299 Shares redeemed............. (1,530,303) (24,133,228) (249,243) (2,977,761) ----------- ------------ ----------- ------------ Net increase................ 1,402,668 $ 23,329,338 1,142,612 $ 13,970,538 =========== ============ =========== ============ Alger Capital Appreciation Portfolio Shares sold................. 2,155,985 $ 38,975,452 403,937 $ 4,150,543 Shares redeemed............. (562,915) (9,808,970) (190,793) (1,942,219) ----------- ------------ ----------- ------------ Net increase................ 1,593,070 $ 29,166,482 213,144 $ 2,208,324 =========== ============ =========== ============ Alger Money Market Portfolio Shares sold................. 354,232,048 $354,232,048 245,130,350 $245,130,350 Dividends reinvested........ 9,136,546 9,136,546 5,201,659 5,201,659 ----------- ------------ ----------- ------------ 363,368,594 363,368,594 250,332,009 250,332,009 Shares redeemed............. (340,696,846) (340,696,846) (213,710,015) (213,710,015) ----------- ------------ ----------- ------------ Net increase................ 22,671,748 $ 22,671,748 36,621,994 $ 36,621,994 =========== ============ =========== ============
* Adjusted to reflect the effect of a 3 for 1 stock split which occurred on September 27, 1995. -35- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Trustees of The Alger Fund: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of The Alger Fund (a Massachusetts business trust comprising, respectively, the Growth Portfolio, Small Capitalization Portfolio, Balanced Portfolio, MidCap Growth Portfolio, Capital Appreciation Portfolio and Money Market Portfolio) as of October 31, 1995, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of October 31, 1995, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective portfolios constituting The Alger Fund as of October 31, 1995, the results of their operations and cash flows for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP New York, New York December 14, 1995 The Alger Fund 75 Maiden Lane New York, N.Y. 10038 (800) 992-3863 - -------------------------------------------------------------------------------- Board of Trustees - -------------------------------------------------------------------------------- Fred M. Alger, Chairman David D. Alger Arthur M. Dubow Stephen E. O'Neil Nathan E. Saint-Amand John T. Sargent - -------------------------------------------------------------------------------- Investment Manager - -------------------------------------------------------------------------------- Fred Alger Management, Inc. 75 Maiden Lane New York, N.Y. 10038 - -------------------------------------------------------------------------------- Distributor Fred Alger & Company, Incorporated 30 Montgomery Street Jersey City, N.J. 07302 - -------------------------------------------------------------------------------- Custodian NatWest Bank National Association 10 Exchange Place Jersey City, N.J. 07302 - -------------------------------------------------------------------------------- Transfer Agent Alger Shareholder Services, Inc. 30 Montgomery Street Jersey City, N.J. 07302 - -------------------------------------------------------------------------------- Independent Public Accountants Arthur Andersen LLP 1345 Avenue of the Americas New York, N.Y. 10105 - -------------------------------------------------------------------------------- This report was prepared for distribution to shareholders and to others who may be interested in current information concerning the Fund. It was not prepared for use, nor is it circulated in connection with any offer to sell, or solicitation of any offer to buy, any securities. For details thereof and other material information, see the Prospectus. Past performance does not guarantee future results. Investment return and principal will fluctuate, and the Portfolios' shares, when redeemed, may be worth more or less than the original cost. Maximum contingent deferred sales charge is 5% on redemptions during the first year, and declines to 0% after six years. This communication must be accompanied or preceded by a current Alger Fund Prospectus. A3105 THE ALGER FUND MEETING THE CHALLENGE OF INVESTMENT ALGER GROWTH PORTFOLIO ALGER SMALL CAPITALIZATION PORTFOLIO ALGER BALANCED PORTFOLIO ALGER MIDCAP GROWTH PORTFOLIO ALGER CAPITAL APPRECIATION PORTFOLIO ALGER MONEY MARKET PORTFOLIO ANNUAL REPORT OCTOBER 31, 1995 -----END PRIVACY-ENHANCED MESSAGE-----