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
<PAGE>
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.
<PAGE>
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
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
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
</TABLE>
<PAGE>
-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.
<PAGE>
-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
------------
<PAGE>
-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.
<PAGE>
-8-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period (i)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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%
======== ======== ======= ======= =======
</TABLE>
(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.
<PAGE>
-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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURN
SINCE INCEPTION
1 YEAR 5 YEARS 11/11/86
-----------------------------------------------
<S> <C> <C> <C>
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%
-----------------------------------------------
</TABLE>
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.
<PAGE>
-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
-----------
<PAGE>
-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.
<PAGE>
-12-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
Financial Highlights
For a share outstanding throughout the period (i)
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
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%
======== ======== ========= ======== ========
</TABLE>
(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.
<PAGE>
-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.
<PAGE>
-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
-------
<PAGE>
-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
<PAGE>
-16-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
FROM JUNE 1, 1992
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS)
----------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992(III)
-------- -------- -------- ----------------
<S> <C> <C> <C> <C>
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%
======== ======== ======== ========
</TABLE>
(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
<PAGE>
-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.
<PAGE>
-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
-----------
<PAGE>
-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.
<PAGE>
-20-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
FROM MAY 24, 1993
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS)
---------------------------------- TO OCTOBER 31,
1995 1994 1993(I)
------ ------ ------------------
<S> <C> <C> <C>
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%
======= ======= ======
</TABLE>
(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.
<PAGE>
-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.
<PAGE>
-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
----------
<PAGE>
-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.
<PAGE>
-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.
<PAGE>
-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.
<PAGE>
-26-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1995 1994 1993 1992 1991
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
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%
======= ======== ======== ======== ========
</TABLE>
(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.
<PAGE>
-27-
THE ALGER FUND
STATEMENTS OF ASSETS AND LIABILITIES (in thousands, except per share amounts)
October 31, 1995
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
======== ======== ====== ======= ======= ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
-28-
THE ALGER FUND
STATEMENTS OF OPERATIONS (in thousands)
For the year ended October 31, 1995
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
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
======= ======== ====== ======= ====== ======
</TABLE>
*Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger
Leveraged AllCap Portfolio.
See Notes to Financial Statements.
<PAGE>
-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.
<PAGE>
-30-
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1995
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
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) $ --
======== ======== ====== ======= ======= ========
</TABLE>
See Notes to Financial Statements.
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1994
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO
--------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
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) $--
======= ======== ====== ======= ====== ========
</TABLE>
*Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger
Leveraged AllCap Portfolio.
See Notes to Financial Statements
<PAGE>
-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.
<PAGE>
-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
<PAGE>
-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%.
<PAGE>
-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:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
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
=========== ============ =========== ============
</TABLE>
* Adjusted to reflect the effect of a 3 for 1 stock split which occurred on
September 27, 1995.
<PAGE>
-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
<PAGE>
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
<PAGE>
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
