Fellow Shareholders: May 23, 1997
A YEAR-TO-DATE REVIEW
Last year was a difficult year for growth stock managers, and we were no
exception. Unfortunately, some of the trends which penalized growth stocks last
year continued through the first four months of 1997. While 1996 is ancient
history by stock market standards, events which occurred last year formed the
basis for today's concerns about the market and provides the framework for the
discussion which follows.
The most important question, of course, is "What will happen the rest of this
year?" Essentially, the market sentiment has not changed since March 1996 with
the overriding concern being that the economy is growing too quickly and that
this will touch off a series of preemptive strikes on inflation by the Fed.
As we now know, the Fed did take action on March 25, 1997 and raised the Fed
Funds rate by twenty-five basis points. Since then, the market has been
preoccupied with whether rates would be raised again. This caused the market to
fall quite abruptly; the Dow fell from 7085 in mid-March to 6392 on April 11, a
drop of 9.8%. More recently, the Fed voted to leave rates unchanged at the May
20 Federal Open-Market Committee ("FOMC") meeting and the market has rebounded
to new highs as concern about interest rates ebbed. These extreme fluctuations
have confused many but the market does have its own internal logic. It resembles
the classical definition of chaos theory. What does it portend?
Rarely has an increase in the Fed Funds rate been so long anticipated as the one
on March 25, 1997. Indeed, the market has been anticipating increases in the Fed
Funds rate since March of 1996, when the calm of the market was shattered by
exceptionally strong employment numbers. During this time, the market has
frequently overestimated the degree of strength in the economy as well as
inflationary pressures building up within the system.
For all of 1996, the economy grew 2.4%, slightly less than the Fed's desired
target of 2.5%. In fact, even the fourth quarter, which was originally thought
to be extremely strong at 4.7%, grew only 3.8%. Moreover, the GDP deflator was
at a record low of 1.5%, indicating that inflation was not a factor at all
during the year--despite substantial increases in energy and grain prices in the
early part of the year.
During the first few months of 1997, there was a heightened concern about
interest rates because there were a number of statistics to support the notion
that the economy was growing very rapidly. On April 30, GDP was announced for
the first quarter and it was a blockbuster, soaring 5.6%, which was higher than
anyone expected. Upon analysis, however, 1.7% may have come purely from
inventory buildup. Still, a 4% increase is quite high! I have maintained,
however, that part of the strength in the economy, especially in January and
February, related to the unusually pleasant weather in the Northeast. This not
only had the effect of encouraging real estate activity and retail sales, but
also played havoc with the seasonal adjustment factors. If my theory was true,
we would expect to see a visible deceleration in economic activity in April and
May. Thus far, this seems to be borne out by the most recent data. This economic
deceleration first became evident when March housing starts fell 6.4%, later
revised to a decrease of 7.7%. Additionally, retail sales weakened in March and
April and auto sales are now down on a year-to-date basis.
<PAGE>
Nowhere, however, is the slowing economy more evident than in the employment
numbers, which is interesting because it is the centerpiece of concern about
inflation. On May 2, the April data was announced and, while the jobless rate
fell below 5% to the lowest level since December 1973, job creation dropped to
142,000, representing the second month of slow employment growth (March numbers
were revised downward to 139,000). These paltry gains were lost in the sea of
publicity surrounding the 4.9% unemployment number. However, it is clear that
the job creation machine is slowing rapidly. In fact, included in the April
number was a drop in manufacturing and construction jobs.
Given all of this weak economic news, it is hardly surprising that the Fed
refrained from raising rates at its last FOMC meeting on May 20. Politically, of
course, it would have been very poor timing for the Fed to raise rates after a
bipartisan budget deal had been announced. There are, of course, those who
believe that the Fed will definitely act in early July to increase rates and
that the inevitable is merely being postponed for political reasons.
Clearly, however, there is no actual inflation. On May 14, the PPI for April was
announced and it dropped a surprising .6% (month-over-month). Those who fear
inflation should note that this is the fourth straight month of PPI deflation
and the largest decline in almost four years. Excluding food and energy, the PPI
declined .1%. The CPI for April increased only .1%, although the core rate did
rise .3%, somewhat higher than expected.
LOOKING AHEAD
Against this backdrop, the yield on the 30-year U.S. Treasury bond has
essentially traded in a range from 61/4% to 71/4% for the entire year. What this
tells me is that despite the tremendous concern about the inflationary
implications of a strong economy, the bond market really hasn't changed very
much. Of course, what has changed is the level of the stock market. Therefore, I
think it's fair to ask the question, "Is the stock market now overvalued,
especially in relation to the bond market and/or short-term interest rates?"
At Alger, we have three ways of analyzing the valuation level of the market
itself: 1) we compare the market to its historical relationship to the long
bond; 2) we compare the market to its historical relationship to short-term
interest rates; and 3) we compare the current market to its own history. All
three of these models suggest that the market is fairly valued to slightly
undervalued.
In the first instance, our analysis shows that during the last fifteen years the
earnings yield of the S&P Industrial Average has traded between 50% and 90% of
the yield on the 30-year U.S. Treasury bond. At 50%, as it was prior to the
crash of '87, it is always a good time to sell. At 90%, it has always been a
good time to buy. The median relationship is 70%, which is almost exactly where
the market is trading at present. Based on this analysis, the market could
appreciate 39% or decline 23% from its present level.
The second relationship relates the market to short-term interest rates. Here
our model uses the Dow which has been an excellent predictor of market tops.
Based on this model, the Dow could appreciate to 7700 given present levels of
short-term interest rates. Conversely, it could sustain another 25 basis point
increase in rates without becoming overvalued.
Lastly, the Dow at 7300 is trading at roughly 16.6x expected earnings. While
this is in the top half of its traditional multiple range, it is no where near
the
<PAGE>
high. For example, before the crash in `87, the market sold in excess of 20x
expected earnings and at that time the yield on the long bond was 9%.
More striking is the relationship between the market and growth stocks. We have
a matrix which comes from our research data base that relates growth stocks to
the market. What we have found is that growth stocks go through a five year
cycle of expansion and compression of their p/e multiples relative to the
market. Presently, we are at the end of such a cycle, during which time growth
stocks have traded between a zero premium and 1.7x the market. This contrasts
with a historical relationship of 1.5 to 2.5x the market multiple. Presently,
our model shows that large cap growth stocks are trading at 1.1x the market and
small cap growth stocks are now trading at a discount (.98x the market), a
highly unusual development.
In summary, we believe the following: First, unusual factors, such as the
weather, exacerbated and exaggerated economic strength in the first quarter
raising concern about interest rates. Secondly, the economy is now showing clear
signs of deceleration. Thirdly, the major averages are fairly valued, but not
overvalued. Lastly, growth stocks are dramatically undervalued compared to the
larger market averages. In reviewing the outlook for the growth stocks we
follow, we have concluded that the drop in growth stock multiples does not
reflect deteriorating company fundamentals, but instead, negative investor
psychology. If we are correct in our view that the economy is not overheating,
the fears of accelerating inflation and future interest rate increases should
abate. Market psychology should improve dramatically once signs of a slowing
economy become evident. We expect that investor confidence will rebuild and
premiums for quality growth stocks will expand.
All of this leads us to continue to be bullish about the market in general, but
especially about growth stocks from now through the end of the year.
Respectfully submitted,
/s/ David D. Alger
--------------------------------------
David D. Alger
President
<PAGE>
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
Alger Growth Portfolio:
Schedule of Investments................................... 5-6
Financial Highlights...................................... 7
Alger Small Capitalization Portfolio:
Schedule of Investments................................... 8-10
Financial Highlights...................................... 11
Alger Balanced Portfolio:
Schedule of Investments...................................12-13
Financial Highlights...................................... 14
Alger MidCap Growth Portfolio:
Schedule of Investments...................................15-16
Financial Highlights...................................... 17
Alger Capital Appreciation Portfolio:
Schedule of Investments...................................18-19
Financial Highlights...................................... 20
Alger Money Market Portfolio:
Schedule of Investments...................................21-22
Financial Highlights...................................... 23
Statements of Assets and Liabilities..................................... 24
Statements of Operations 25
Statement of Cash Flows (Alger Capital Appreciation Portfolio)........... 26
Statements of Changes in Net Assets...................................... 27
Notes to Financial Statements............................................28-32
<PAGE>
-5-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Common Stocks--92.5% Shares Value
------ -----
AEROSPACE--7.8%
Allied Signal Inc. ........................... 56,800 $ 4,103,800
Boeing Company (The) ......................... 82,500 8,136,563
Gulfstream Aerospace Corp.* .................. 54,000 1,377,000
Sundstrand Corp. ............................. 70,400 3,432,000
United Technologies Corp. .................... 67,000 5,066,875
-----------
22,116,238
-----------
AGRICULTURE--.6%
Pioneer Hi-Bred International Inc. ........... 23,200 1,638,500
-----------
APPAREL--1.3%
Tommy Hilfiger Corporation* .................. 91,500 3,637,125
-----------
APPLIANCES & TOOLS--1.5%
Sunbeam Corp. ................................ 134,200 4,260,850
-----------
CHEMICALS--.5%
Monsanto Co. ................................. 36,300 1,551,825
-----------
COMMUNICATIONS--1.2%
WorldCom Inc.* ............................... 147,100 3,530,400
-----------
COMMUNICATION
EQUIPMENT--5.4%
Cisco Systems, Inc.* ......................... 96,800 5,009,400
LM Ericsson Telephone Co., ADR,
Cl. B ..................................... 34,200 1,149,975
Motorola, Inc. ............................... 101,700 5,822,325
Tellabs, Inc.* ............................... 82,000 3,269,750
-----------
15,251,450
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--5.8%
Hewlett-Packard Company ...................... 111,500 5,853,750
Ingram Micro Inc. Cl. A* ..................... 27,500 625,625
International Business Machines Corp. ........ 39,000 6,269,250
Seagate Technology Inc.* ..................... 82,400 3,780,100
-----------
16,528,725
-----------
COMPUTER SOFTWARE--5.0%
Electronics For Imaging Inc.* ................ 20,000 785,000
Microsoft Corporation* ....................... 68,300 8,298,450
Oracle Corp.* ................................ 100,100 3,978,975
Parametric Technology Corporation* ........... 25,000 1,131,250
-----------
14,193,675
-----------
CONGLOMERATE--3.5%
General Electric Co. ......................... 73,500 8,149,313
Tyco International Ltd. ...................... 30,000 1,830,000
-----------
9,979,313
-----------
CONSUMER PRODUCTS--6.4%
CUC International Inc.* .................... 196,400 4,148,950
Colgate Palmolive Co. ...................... 26,000 2,886,000
Gillette Co. ............................... 111,800 9,503,000
Nabisco Holdings Corp., Cl.A ............... 45,800 1,757,575
-----------
18,295,525
-----------
ENERGY & ENERGY SERVICES--3.9%
Diamond Offshore Drilling Inc.* ............ 32,000 2,060,000
Reading & Bates Corp.* ..................... 148,500 3,322,688
Schlumberger Ltd. .......................... 53,000 5,869,750
-----------
11,252,438
-----------
FINANCIAL SERVICES--9.5%
Chase Manhattan Corp. ...................... 26,900 2,491,613
Citicorp ................................... 84,700 9,539,338
Money Store Inc.(The) ...................... 106,300 2,298,738
Morgan Stanley Group Inc. .................. 140,000 8,837,500
Schwab (Charles)Corporation(The) ........... 108,400 3,970,150
-----------
27,137,339
-----------
FOODS & BEVERAGES--1.1%
PepsiCo, Inc. .............................. 88,600 3,089,925
-----------
HEALTH CARE--.6%
McKesson Corp. ............................. 22,500 1,628,438
-----------
HEALTH MAINTENANCE
ORGANIZATION--.5%
Oxford Health Plans, Inc.* ................. 22,500 1,482,188
-----------
INSURANCE--3.3%
American International Group, Inc. ......... 73,100 9,393,350
-----------
LEISURE & ENTERTAINMENT--2.2%
Carnival Corporation Cl. A ................. 78,400 2,891,000
International Game Technology .............. 174,000 2,762,250
Mirage Resorts, Incorporated* .............. 30,000 603,750
-----------
6,257,000
-----------
MEDICAL DEVICES--1.6%
Becton Dickinson & Co. ..................... 65,000 2,990,000
Medtronic, Inc. ............................ 21,000 1,454,250
-----------
4,444,250
-----------
OIL & GAS--2.2%
Global Marine Inc* ......................... 90,000 1,811,250
Halliburton Co. ............................ 54,200 3,827,875
Tidewater Inc. ............................. 17,300 694,162
-----------
6,333,287
-----------
<PAGE>
THE ALGER FUND -6-
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Common Stocks--92.5% Shares Value
------ -----
PHARMACEUTICALS--9.1%
Bristol Myers Squibb Co. .................... 25,000 $ 1,637,500
Eli Lilly & Company ......................... 101,400 8,910,525
Merck & Co., Inc. ........................... 104,200 9,430,100
Pfizer Inc. ................................. 16,500 1,584,000
Warner-Lambert Co. .......................... 44,500 4,361,000
------------
25,923,125
------------
POLLUTION CONTROL--1.0%
USA Waste Services, Inc.* ................... 87,500 2,865,625
------------
RESTAURANTS--.5%
Lone Star Steakhouse & Saloon, Inc.* ........ 70,900 1,400,275
------------
RETAILING--6.4%
Gucci Group N.V ............................. 57,100 3,961,312
Home Depot, Inc. ............................ 146,500 8,497,000
Wal-Mart Stores Inc. ........................ 206,900 5,844,925
------------
18,303,237
------------
SEMICONDUCTORS--10.0%
Altera Corporation* ......................... 88,000 4,361,543
Intel Corp. ................................. 43,000 6,584,375
Linear Technology Corporation ............... 88,300 4,437,075
Maxim Integrated Products,Inc.* ............. 44,700 2,363,513
Micron Technology Inc.* ..................... 38,100 1,343,025
Texas Instruments, Incorporated ............. 49,700 4,435,725
Xilinx, Inc.* ............................... 100,500 4,924,500
------------
28,449,756
------------
SEMICONDUCTORS
CAPITAL EQUIPMENT--1.1%
Applied Materials Inc.* ..................... 59,500 3,265,062
------------
MISCELLANEOUS--.5%
Service Corp., International ................ 41,400 1,417,950
------------
Total Common Stocks
(Cost $229,520,092) ...................... 263,626,871
------------
Preferred Stock--1.5%
COMMUNICATION EQUIPMENT
Nokia Corporation, ADR
(Cost $3,755,407) ........................ 66,900 4,323,413
------------
Warrants
MANUFACTURING
Windmere Corp.,*
expire 1/19/98 (Cost $61) ................ 81 456
------------
Short-Term Corporate Principal
Notes--3.3% .............................. Amount
------------
Countrywide Funding Corporation,
5.47%, 5/1/97 ............................ $ 1,110,000 1,110,000
Green Tree Financial Corp.,
5.57%, 5/5/97 ............................ 2,200,000 2,198,638
5.59%, 5/8/97 ............................ 1,750,000 1,748,098
Merrill Lynch & Co., Inc.,
5.42%, 5/6/97 ............................ 3,190,000 3,187,599
Wood Street Funding Corp.,
5.55%, 5/7/97 (a) ........................ 1,350,000 1,348,751
------------
Total Short-Term Corporate Notes
(Cost $9,593,086) ........................ 9,593,086
------------
Total Investments
(Cost $242,868,646)(b) ................... 97.3% 277,543,826
Other Assets in
Excess of Liabilities .................... 2.7 7,588,275
------ ------------
Net Assets .................................. 100.0% $285,132,101
====== ============
* 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 April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $242,868,646, amounted to
$34,675,180 which consisted of aggregate gross unrealized appreciation of
$41,149,704 and aggregate gross unrealized depreciation of $6,474,524.
See Notes to Financial Statements.
<PAGE>
THE ALGER FUND -7-
ALGER GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Class A(vi) Class B(i)
----------- -------------------------------------------------------------------------
Four Six
Months Months
Ended Ended Year Ended October 31,
April 30, April 30, ----------------------------------------------------------
1997(ii) 1997(ii) 1996 1995 1994 1993 1992
-------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period......................... $ 9.40 $ 9.49 $ 9.38 $ 6.97 $ 7.43 $ 5.76 $ 5.77
-------- -------- -------- -------- -------- -------- -------
Net investment income (loss)......... -- (.08) (.08)(iii) (.02) (.07)(iii) (.02) (.06)(iii)
Net realized and unrealized
gain (loss) on investments........ .29 .55 .78 2.59 .35 1.70 .61
-------- -------- -------- -------- -------- -------- -------
Total from investment
operations........................ .29 .47 .70 2.57 .28 1.68 .55
Distributions from net
realized gains.................... -- (.30) (.59) (.16) (.74) (.01) (.56)
-------- -------- -------- -------- -------- -------- -------
Net asset value, end of period....... $ 9.69 $ 9.66 $ 9.49 $ 9.38 $ 6.97 $ 7.43 $ 5.76
======== ======== ======== ======== ======== ======== =======
Total Return(iv)..................... 3.1% 4.9% 8.1% 37.8% 4.1% 29.2% 9.7%
======== ======== ======== ======== ======== ======== =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted)................. $ 38,129 $247,003 $266,207 $154,284 $ 76,390 $ 37,988 $19,379
======== ======== ======== ======== ======== ======== =======
Ratio of expenses to average
net assets...................... 1.34% 2.11% 2.08%(v) 2.09%(v) 2.20%(v) 2.20%(v) 2.32%(v)
======== ======== ======== ======== ======== ======== =======
Ratio of net investment
income (loss) to average
net assets...................... (.25%) (1.09%) (.84%) (1.03%) (1.01%) (1.16%) (1.07%)
======== ======== ======== ======== ======== ======== =======
Portfolio Turnover Rate............ 64.12% 64.12% 94.91% 118.16% 103.86% 108.54% 69.28%
======== ======== ======== ======== ======== ======== =======
Average Commission
Rate Paid....................... $ .0682 $ .0682 $ .0715
======== ======== ========
</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) Unaudited. Ratios have been annualized; total return has not been
annualized.
(iii) Amount was computed based on average shares outstanding during the year.
(iv) Does not reflect the effect of any sales charges.
(v) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been 2.07% for both years ended October 31, 1996 and
1995, respectively. Expense ratios for the years ended prior to October
31, 1995, have been reduced to reflect the effect of custody fees
offset by earnings credits, if any.
(vi) Initially offered January 1, 1997.
See Notes to Financial Statements.
<PAGE>
THE ALGER FUND -8-
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Common Stocks--89.8% Shares Value
------ -----
AEROSPACE--1.9%
Aviall Inc.* ........................................ 122,500 $ 1,454,687
BE Aerospace Inc.* .................................. 105,000 2,585,625
Wyman Gordon Co* .................................... 223,200 4,687,200
-----------
8,727,512
-----------
ALUMINUM--.4%
Kaiser Aluminum Corp.* .............................. 155,000 1,666,250
-----------
APPAREL--6.0%
Gymboree Corp* ...................................... 60,000 1,661,280
Harold's Stores, Inc.* .............................. 27,445 257,297
Jones Apparel Group Inc.* ........................... 120,000 5,010,000
Kellwood Co. ........................................ 65,400 1,553,250
Mens Wearhouse Inc.* ................................ 57,500 1,430,313
Nautica Enterprises Inc.* ........................... 223,000 4,933,875
St. John Knits Inc. ................................. 108,000 4,144,500
Warnaco Group Inc. Cl.A ............................. 163,800 4,668,300
Tommy Hilfiger Corporation* ......................... 84,000 3,339,000
-----------
26,997,815
-----------
APPLIANCES & TOOLS--1.1%
Sunbeam Corp. ....................................... 147,300 4,676,775
-----------
AUTOMOTIVE--.2%
Navistar International Corp.* ....................... 56,200 632,250
-----------
AUTOMOTIVE EQUIPMENT
& SERVICES--.2%
Cross-Continent Auto Retailers, Inc.* ............... 43,70 650,038
-----------
BIO-TECHNOLOGY--1.0%
BioChem Pharma Inc.* ................................ 72,600 1,305,638
INCYTE Pharmaceuticals, Inc.* ....................... 74,000 3,145,000
-----------
4,450,638
-----------
BUILDING & CONSTRUCTION--.5%
Morrison Knudsen Corp.* ............................. 170,000 2,125,000
-----------
BUSINESS SERVICES--2.2%
Cintas Corp. ........................................ 45,000 2,463,750
G & K Services Inc. Cl. A ........................... 69,500 2,015,500
Harte Hanks Communications, Inc. .................... 29,600 806,600
Saville Systems PLC ADR* ............................ 106,000 4,359,250
-----------
9,645,100
-----------
COMMUNICATIONS--.4%
Sitel Corp.* ........................................ 75,000 740,625
Teleport Communications
Group Inc. Cl. A.* ............................... 36,600 1,043,100
-----------
1,783,725
----------
COMMUNICATION
EQUIPMENT--3.4%
Essex International Inc.* ........................... 49,400 889,200
Pairgain Technologies Inc.* ......................... 85,700 2,228,200
Powerwave Technologies, Inc.* ....................... 78,300 1,301,738
Tellabs, Inc.* ...................................... 270,500 10,786,188
-----------
15,205,326
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--.6%
Auspex Systems Inc.* ................................ 77,100 616,800
Read-Rite Corp.* .................................... 82,600 2,137,275
-----------
2,754,075
-----------
COMPUTER SERVICES--5.5%
CKS Group Inc.* ..................................... 92,000 1,943,500
Cambridge Technology Partners Inc.* ................. 90,500 2,409,563
Keane Inc.* ......................................... 103,000 4,776,625
Logicon Inc. ........................................ 61,300 2,436,675
Quick Response Service Inc.* ........................ 148,800 4,017,600
Sterling Commerce, Inc.* ............................ 120,400 3,115,350
Sungard Data Systems* ............................... 81,800 3,629,875
Technology Solutions Co.* ........................... 50,000 1,318,750
Whittman-Hart, Inc.* ................................ 36,400 691,600
-----------
24,339,538
-----------
COMPUTER SOFTWARE--7.8%
CBT Group PLC ADS* .................................. 82,300 4,001,838
Electronics For Imaging Inc.* ....................... 330,000 12,952,500
Oracle Corp.* ....................................... 136,000 5,406,000
Parametric Technology Corporation* .................. 95,000 4,298,750
Peregrine Systems Inc.* ............................. 100,000 925,000
Structural Dynamics Research Corp.* ................. 299,500 6,364,375
3D Labs Inc. Ltd.* .................................. 42,500 998,750
-----------
34,947,213
-----------
COMPUTER TECHNOLOGY--.3%
Digital Microwave Corp.* ............................ 55,000 1,416,250
-----------
CONSUMER PRODUCTS--1.6%
Coleman Co. Inc.* ................................... 124,500 1,929,750
Fred Meyer, Inc.* ................................... 64,500 2,652,562
Helen of Troy Ltd.* ................................. 50,000 1,162,500
Samsonite Corp.* .................................... 30,000 1,245,000
-----------
6,989,812
-----------
ENERGY & ENERGY SERVICES--2.3%
Camco International Inc. ............................ 90,200 4,002,625
Hvide Marine Inc. Cl. A* ............................ 90,900 1,568,025
Noble Drilling Corp.* ............................... 100,000 1,737,500
Reading & Bates Corp.* .............................. 95,000 2,125,625
Smith International Inc.* ........................... 20,000 947,500
-----------
10,381,275
-----------
<PAGE>
THE ALGER FUND -9-
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Common Stocks--89.8% Shares Value
------ -----
AEROSPACE--1.9%
FINANCIAL SERVICES--5.2%
Associated Banc-Corp ................................ 12,000 $ 447,000
CCB Financial Corp. ................................. 19,000 1,289,625
Colonial BancGroup Inc. ............................. 16,000 360,000
Commerce Bancshares Inc. ............................ 34,700 1,570,175
Compass Bancshares Inc. ............................. 67,500 2,041,875
E*TRADE Group, Inc.* ................................ 92,000 1,380,000
Mercantile Bankshares Corp. ......................... 33,500 1,231,125
Money Store Inc.(The) ............................... 387,000 8,368,875
National Commerce Bancorp ........................... 45,000 1,923,750
Provident Bankshares Corp. .......................... 42,000 1,480,500
Signet Banking Corp. ................................ 54,600 1,685,775
Wilmington Trust Corp. .............................. 37,000 1,591,000
-----------
23,369,700
-----------
FOOD & BEVERAGES--3.4%
Chiquita Brands International Inc. .................. 287,000 4,125,625
Fine Host Corp* ..................................... 69,800 1,762,450
Interstate Bakeries Corp. ........................... 47,200 2,448,500
JP Foodservice Inc.* ................................ 109,000 3,038,375
Morningstar Group Inc.* ............................. 60,000 1,455,000
Smithfield Foods Inc.* .............................. 50,000 2,306,250
-----------
15,136,200
-----------
FREIGHT--.1%
Landstar Systems Inc.* .............................. 24,100 617,562
-----------
HEALTH CARE--2.4%
Elan Corp PLC-ADR* .................................. 99,000 3,366,000
McKesson Corp. ...................................... 45,600 3,300,300
Omnicare, Inc. ...................................... 126,700 3,088,312
United Dental Care, Inc.* ........................... 45,000 990,000
-----------
10,744,612
-----------
HEALTH MAINTENANCE
ORGANIZATION--1.0%
Oxford Health Plans, Inc.* .......................... 70,000 4,611,250
-----------
INDUSTRIAL EQUIPMENT--.3%
Waters Corp.* ....................................... 40,000 1,185,000
-----------
INSURANCE--2.4%
Equitable Of Iowa Companies ......................... 25,000 1,221,875
Executive Risk Inc. ................................. 48,500 2,194,625
HCC Insurance Holdings Inc. ......................... 60,000 1,507,500
Protective Life Corp. ............................... 36,500 1,615,125
USF&G Corp. ......................................... 89,000 1,780,000
Vesta Insurance Group Inc. .......................... 61,700 2,575,975
-----------
10,895,100
-----------
LEISURE &
ENTERTAINMENT--.7%
Cinar Films,Inc. Cl. B.* ............................ 41,500 944,125
International Game Technology ....................... 145,000 2,301,875
-----------
3,246,000
-----------
MEDICAL DEVICES--3.2%
Acuson Corp.* ....................................... 102,600 2,488,050
Biopsys Medical Inc.* ............................... 50,000 1,025,000
ESC Medical Systems Ltd. ............................ 201,200 5,407,250
Hologic, Inc.* ...................................... 207,000 4,295,250
Mentor Corp. ........................................ 54,200 1,253,375
-----------
14,468,925
-----------
MEDICAL SERVICES--2.4%
Express Scripts Inc. Cl. A.* ........................ 43,000 1,580,250
Hooper Holmes Inc. .................................. 43,300 752,337
Lincare Holdings Inc.* .............................. 126,700 4,972,975
National Surgery Centers, Inc.* ..................... 30,800 924,000
PhyCor, Inc.* ....................................... 97,087 2,584,940
-----------
10,814,502
-----------
MEDICAL TECHNOLOGY--.3%
Curative Health Services Inc.* ...................... 55,000 1,299,375
-----------
METALS--.8%
Special Metals Corp.* ............................... 81,000 1,144,125
Titanium Metals Corporation* ........................ 84,100 2,176,087
-----------
3,320,212
-----------
OIL & GAS--1.8%
Energy Ventures Inc.* ............................... 34,400 2,300,500
Global Marine Inc* .................................. 165,000 3,320,625
Varco International Inc.* ........................... 112,000 2,576,000
-----------
8,197,125
-----------
PACKAGING & FOREST
PRODUCTS--1.0%
Sealed Air Corp.* ................................... 99,400 4,597,250
-----------
PHARMACEUTICALS--.8%
Dura Pharmaceuticals, Inc.* ......................... 130,000 3,770,000
-----------
POLLUTION CONTROL--3.4%
Culligan Water Technologies Inc.* ................... 45,000 1,839,375
USA Waste Services, Inc.* ........................... 140,000 4,585,000
United Waste Systems, Inc.* ......................... 263,000 8,876,250
-----------
15,300,625
-----------
RESTAURANTS & LODGING--.6
Prime Hospitality Corp.* ............................ 160,000 2,660,000
-----------
RETAILING--5.8%
Bed Bath & Beyond Inc.* ............................. 116,900 3,200,137
Borders Group Inc.* ................................. 118,600 2,520,250
Dominick's Supermarkets, Inc.* ...................... 25,000 512,500
Family Dollar Stores Inc. ........................... 26,600 694,925
Genesco Inc.* ....................................... 59,500 691,687
Gucci Group N.V ..................................... 75,700 5,251,687
Quiksilver Inc.* .................................... 37,500 815,625
Sothebys Holdings Inc., Cl. A ....................... 50,200 796,925
Stage Stores, Inc.* ................................. 110,000 2,282,500
TJX Companies, Inc. ................................. 117,700 5,561,325
<PAGE>
THE ALGER FUND -10-
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Common Stocks--(cont.) Shares Value
------ -----
RETAILING--(cont.)
Tiffany & Co. ....................................... 13,500 $ 534,937
West Marine Inc.* ................................... 68,600 1,783,600
WestPoint Stevens Inc.* ............................. 35,000 1,369,375
-----------
26,015,473
-----------
SEMICONDUCTORS--13.4%
Adaptec, Inc.* ...................................... 227,400 8,413,800
Altera Corporation* ................................. 270,000 13,382,010
Linear Technology Corporation ....................... 139,300 6,999,825
Maxim Integrated Products,Inc.* ..................... 188,400 9,961,650
Microchip Technology
Incorporated* .................................... 87,300 2,728,125
Micron Technology Inc.* ............................. 61,600 2,171,400
Texas Instruments, Incorporated ..................... 74,500 6,649,125
Xilinx, Inc.* ....................................... 200,200 9,809,800
-----------
60,115,735
-----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--3.0%
Applied Materials Inc.* ............................. 80,500 4,417,437
ASM Lithography Holding NV* ......................... 41,300 3,283,350
Integrated Process Equipment
Corp.* ........................................... 72,600 989,175
Kulicke & Soffa Industries Inc.* .................... 172,000 4,805,336
-----------
13,495,298
-----------
TRANSPORTATION--1.5%
Coach USA Inc* ...................................... 193,200 4,926,600
Knightsbridge Tankers Ltd. .......................... 75,000 1,706,250
-----------
6,632,850
-----------
UTILITIES--.2%
Westcoast Energy Inc. ............................... 51,000 873,375
-----------
MISCELLANEOUS--.7%
Loewen Group Inc. ................................... 34,900 1,003,375
Ogden Corp. ......................................... 100,300 2,106,300
-----------
3,109,675
-----------
Total Common Stocks
(Cost $348,005,975) .............................. 401,864,436
-----------
Short-Term Corporate Principal
Notes--10.2% Amount
---------
Delaware Funding Corp.,
5.45%, 5/8/97 (a) ...................... $ 7,500,000 7,492,052
Dynamic Funding Corp.,
5.65%, 5/9/97 .......................... 9,520,000 9,508,047
Green Tree Financial Corp.,
5.57%, 5/5/97 .......................... 6,000,000 5,996,287
Merrill Lynch & Co., Inc.,
5.42%, 5/6/97 .......................... 800,000 799,398
5.50%, 5/14/97 ......................... 6,800,000 6,786,494
Omnibus Funding Corp.,
5.50%, 5/13/97 (a) ..................... 10,950,000 10,929,925
Wood Street Funding Corp.,
5.55%, 5/7/97 (a) ...................... 4,230,000 4,226,087
------------
Total Short-Term Corporate Notes
(Cost $45,738,290) ..................... 45,738,290
------------
Total Investments
(Cost $393,744,265) (b) ................ 100.0% 447,602,726
Other Assets in
Excess of Liabilities .................. .0 158,618
------- ------------
Net Assets ................................ 100.0% $447,761,344
======= ============
* 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 April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $393,744,265, amounted to
$53,858,461 which consisted of aggregate gross unrealized appreciation of
$66,985,799 and aggregate gross unrealized depreciation of $13,127,338.
See Notes to Financial Statements.
<PAGE>
<TABLE>
-11-
<CAPTION>
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
Class A(vi) Class B(i)
----------- ----------------------------------------------------------------------
Four Six
Months Months
Ended Ended Year Ended October 31,
April 30, April 30, --------------------------------------------------------
1997(ii) 1997(ii) 1996 1995 1994 1993 1992
----------- --------- ------- ------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period..................... $ 9.21 $ 10.86 $ 11.13 $ 7.62 $ 8.65 $ 6.88 $ 6.97
------- -------- -------- -------- ------- ------- -------
Net investment income (loss)..... (.01) (.05) (.09) (.13) (.09) (.08) (.11)(iii)
Net realized and unrealized
gain (loss) on investments.... (1.10) (.99) .42 3.64 (.02) 1.85 .37
------- -------- -------- -------- ------- ------- -------
Total from investment
operations.................... (1.11) (1.04) .33 3.51 (.11) 1.77 .26
Distributions from net
realized gains................ -- (1.74) (.60) -- (.92) -- (.35)
------- -------- -------- -------- ------- ------- -------
Net asset value, end of period... $ 8.10 $ 8.08 $ 10.86 $ 11.13 $ 7.62 $ 8.65 $ 6.88
======= ======== ======== ======== ======= ====== ======
Total Return(iv)................. (12.1%) (11.4%) 3.2% 46.2% (1.1%) 25.8% 3.4%
======= ======== ======== ======== ======= ====== ======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted)............. $ 8,989 $438,772 $553,872 $463,718 $294,890 $300,108 $182,432
======= ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets.................. 1.40% 2.15% 2.13%(v) 2.11%(v) 2.18%(v) 2.13%(v) 2.17%(v)
======= ======== ======== ======== ======== ======== ========
Ratio of net investment
income (loss) to average
net assets.................. (.76%) (1.65%) (1.59%) (1.75%) (1.51%) (1.52%) (1.64%)
======= ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate........ 63.24% 63.24% 153.35% 97.37% 131.86% 148.49% 121.00%
======= ======== ======== ======== ======== ======== ========
Average Commission
Rate Paid................... $ .0635 $ .0635 $ .0611
======= ======== ========
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock split which occurred September 27, 1995.
(ii) Unaudited. Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the year.
(iv) Does not reflect the effect of any sales charges.
(v) Reflects total expenses, including custody fees offset by earnings credits resulting from balances left on deposit. The
expense ratio net of earnings credits would have been the same for the years ended October 31, 1996 and 1995, respectively.
Expense ratios for the years ended prior to October 31, 1995, have been reduced to reflect the effect of custody fees
offset by earnings credits, if any.
(vi) Initially offered January 1, 1997.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-12-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Common Stocks--59.2% Shares Value
------ -----
AEROSPACE--5.0%
Allied Signal Inc........................... 1,500 $ 108,375
Boeing Company (The)........................ 2,200 216,975
Gulfstream Aerospace Corp.*................. 1,700 43,350
Sundstrand Corp............................. 2,100 102,375
United Technologies Corp.................... 1,700 128,563
---------
599,638
---------
AGRICULTURE--.4%
Pioneer Hi-Bred International Inc........... 600 42,375
---------
APPAREL--.2%
Tommy Hilfiger Corporation*................. 700 27,825
---------
APPLIANCES & TOOLS--1.3%
Sunbeam Corp................................ 5,000 158,750
---------
CHEMICALS--.7%
Avery Dennison Corp......................... 1,000 36,750
Monsanto Co................................. 1,000 42,750
---------
79,500
---------
COMMUNICATIONS--.6%
WorldCom Inc.*.............................. 3,100 74,400
---------
COMMUNICATION
EQUIPMENT--3.3%
Cisco Systems, Inc.*........................ 2,500 129,375
LM Ericsson Telephone Co. ADR
Cl. B.................................... 800 26,900
Motorola, Inc............................... 2,600 148,850
Tellabs, Inc.*.............................. 2,100 83,738
---------
388,863
---------
COMPUTER RELATED &
BUSINESS EQUIPMENT--3.3%
Hewlett-Packard Company..................... 3,000 157,500
International Business Machines Corp........ 1,000 160,750
Seagate Technology Inc.*.................... 1,600 73,400
---------
391,650
---------
COMPUTER SOFTWARE--3.2%
Microsoft Corporation*...................... 1,800 218,700
Oracle Corp.*............................... 4,300 170,925
---------
389,625
---------
CONGLOMERATE--2.0%
General Electric Co. ....................... 2,200 243,925
---------
CONSUMER PRODUCTS--3.7%
CUC International Inc.*..................... 3,000 63,375
Colgate Palmolive Co........................ 700 77,700
Gillette Co................................. 3,000 255,000
Nabisco Holdings Corp Cl.A.................. 1,200 46,050
---------
442,125
---------
ENERGY & ENERGY
SERVICES--2.2%
Reading & Bates Corp.*...................... 4,000 89,500
Schlumberger Ltd............................ 1,600 177,200
---------
266,700
---------
FINANCIAL SERVICES--7.5%
Chase Manhattan Corp........................ 900 83,363
Citicorp.................................... 2,500 281,563
First Data Corporation...................... 1,436 49,542
Money Store Inc. (The)...................... 6,000 129,750
Morgan Stanley Group Inc.................... 3,900 246,188
Schwab (Charles) Corporation (The).......... 3,000 109,875
---------
900,281
---------
FOODS & BEVERAGES--.7%
PepsiCo, Inc................................ 2,400 83,700
---------
HEALTH CARE--.4%
McKesson Corp............................... 600 43,425
---------
HEALTH MAINTENANCE
ORGANIZATION--.3%
Oxford Health Plans Inc.*................... 600 39,525
---------
INSURANCE--3.0%
American International Group Inc............ 2,400 308,400
MGIC Investment Corp........................ 600 48,750
---------
357,150
---------
LEISURE &
ENTERTAINMENT--1.3%
Carnival Corporation Cl. A.................. 2,200 81,125
International Game Technology............... 5,000 79,375
---------
160,500
---------
MEDICAL DEVICES--.5%
Becton Dickinson & Co....................... 600 27,600
Medtronic, Inc.............................. 500 34,625
---------
62,225
---------
OIL & GAS--1.0%
Halliburton Co.............................. 1,400 98,875
Tidewater Inc............................... 500 20,063
---------
118,938
---------
PHARMACEUTICALS--6.5%
Bristol Myers Squibb Co..................... 800 52,400
Eli Lilly & Company......................... 3,200 281,200
Merck & Co., Inc............................ 3,200 289,600
Pfizer Inc.................................. 400 38,400
Warner-Lambert Co........................... 1,200 117,600
---------
779,200
---------
POLLUTION CONTROL--.7%
USA Waste Services, Inc.*................... 2,400 78,600
---------
RETAILING--4.1%
Gucci Group N.V............................. 1,000 69,375
Home Depot, Inc............................. 3,900 226,200
Nine West Group Inc.*....................... 900 35,663
Wal-Mart Stores Inc......................... 5,700 161,025
---------
492,263
---------
<PAGE>
-13-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Common Stocks--(cont.) Shares Value
------ -----
SEMICONDUCTORS--6.4%
Adaptec, Inc.*.............................. 2,500 $ 92,500
Altera Corporation*......................... 2,400 118,950
Intel Corp.................................. 1,100 168,438
Linear Technology Corporation............... 2,400 120,600
Maxim Integrated Products, Inc.*............ 1,200 63,450
Micron Technology Inc.*..................... 1,000 35,250
Texas Instruments, Incorporated............. 600 53,550
Xilinx, Inc.*............................... 2,400 117,600
---------
770,338
---------
SEMICONDUCTORS CAPITAL
EQUIPMENT--.4%
Applied Materials Inc.*..................... 900 49,388
---------
MISCELLANEOUS--.5%
Loewen Group Inc............................ 600 17,250
Service Corp., International................ 1,100 37,675
---------
54,925
---------
Total Common Stocks
(Cost $6,031,451)........................ 7,095,834
---------
Preferred Stock--1.0%
COMMUNICATION EQUIPMENT
Nokia Corporation, ADR
(Cost $98,845)........................... 1,800 116,325
---------
Principal
Amount
Corporate Bonds--14.4% ---------
AUTOMOTIVE--4.6%
Ford Motor Capital B.V.,
9.50%, 6/1/10............................ $300,000 349,362
General Motors Acceptance Corp.,
7.125%, 6/1/99........................... 200,000 201,898
---------
551,260
---------
CHEMICALS &
PHARMACEUTICALS--1.7%
WMX Technologies Corp.,
8.25%, 11/15/99........................... 200,000 206,868
---------
ELECTRIC &
GAS COMPANIES--2.2%
Cincinnati Gas & Electric Co.,
7.20%, 10/1/23........................... 100,000 93,845
Pacific Gas & Electric Co.,
7.25%, 3/1/26............................ 182,000 171,249
---------
265,094
---------
FINANCIAL SERVICES--3.4%
Merrill Lynch & Co., Inc.,
6.375%, 9/8/06........................... $100,000 93,470
Transamerica Financial Corp.
7.85%, 10/21/99.......................... 300,000 306,000
---------
399,470
---------
MANUFACTURING--2.5%
Allied Signal Inc.
6.75%, 8/15/00........................... 300,000 299,394
---------
Total Corporate Bonds
(Cost $1,790,432)........................ 1,722,086
---------
U.S. Government & Agency
Obligations--23.6%
U.S. Treasury Notes,
5.75%, 9/30/97........................... 250,000 250,078
U.S. Treasury Notes,
5.625%, 11/30/98......................... 200,000 198,344
U.S. Treasury Notes,
7.50%, 10/31/99.......................... 100,000 102,531
U.S. Treasury Notes,
6.375%, 1/15/00.......................... 100,000 100,000
U.S. Treasury Notes,
5.875%, 11/30/01......................... 200,000 194,626
U.S. Treasury Notes,
7.50%, 5/15/02........................... 100,000 103,984
U.S. Treasury Notes,
6.25%, 2/15/03........................... 250,000 245,743
Federal Home Loan Bank Corp.,
6.683%, 10/16/00......................... 250,000 248,320
Federal Home Loan Bank Corp.,
8.02%, 1/30/12........................... 400,000 393,812
Federal Home Loan Mortgage Corp.,
6.50%, 6/10/03........................... 150,000 145,476
Federal Home Loan Mortgage Corp.,
7.00%, 3/6/07............................ 200,000 192,594
Federal National Mortgage Assoc.,
7.11%, 4/16/01........................... 250,000 248,980
Federal National Mortgage Assoc.,
7.60%, 4/1/04............................ 300,000 297,375
Federal National Mortgage Assoc.,
8.50%, 2/1/05............................ 100,000 103,953
-----------
Total U.S. Government & Agency
Obligations (Cost $2,861,523)............ 2,825,816
-----------
Total Investments
(Cost $10,782,251) (a)................... 98.2% 11,760,061
Other Assets in
Excess of Liabilities.................... 1.8 218,116
----- -----------
Net Assets.................................. 100.0% $11,978,177
===== ===========
* Non-income producing security.
(a) At April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $10,782,251, amounted to $977,810
which consisted of aggregate gross unrealized appreciation of $1,234,112 and
aggregate gross unrealized depreciation of $256,302.
See Notes to Financial Statements.
<PAGE>
-14-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Class A(vii) Class B
------------- ----------------------------------------------------------
From
June 1, 1992
(commencement
Four Months Six Months Year Ended October 31, of operations)
Ended Ended to October 31,
April 30, April 30, ------------------------------------------
1997(i)(iv) 1997(i)(iv) 1996 1995 1994 1993 1992 (iv)
----------- ---------- -------- ----- ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period....................... $ 13.99 $ 14.21 $ 13.59 $ 10.65 $ 11.18 $ 9.95 $ 10.00
-------- -------- -------- -------- -------- ------- --------
Net investment income (loss)....... .02 .01 .12 (.02)(ii) (.05) (.01) (.12)
Net realized and unrealized
gain (loss) on investments...... .36 .52 .72 2.96 (.39) 1.24 .07
-------- -------- -------- -------- -------- ------- --------
Total from investment
operations...................... .38 .53 .84 2.94 (.44) 1.23 (.05)
-------- -------- -------- -------- -------- ------- --------
Dividends from net investment
income.......................... -- (.06) (.01) -- -- -- --
Distributions from net realized
gains........................... -- (.34) (.21) -- (.09) -- --
-------- -------- -------- -------- -------- ------- --------
Total Distributions................ -- (.40) (.22) -- (.09) -- --
-------- -------- -------- -------- -------- ------- --------
Net asset value, end of period..... $ 14.37 $ 14.34 $ 14.21 $ 13.59 $ 10.65 $ 11.18 $ 9.95
======== ======== ======== ======== ======== ======== ========
Total Return(iii).................. 2.7% 3.8% 6.3% 27.6% (4.0%) 12.4% (0.5%)
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted)............... $ 285 $ 11,693 $ 13,492 $ 6,214 $ 3,073 $ 3,125 $ 1,370
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets.................... 2.16% 2.93% 2.70%(v) 3.34%(v) 3.18%(v) 3.82%(v) 5.62%(v)
======== ======== ======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to expense
reimbursements (vi)........... -- -- -- .24% -- .75% .75%
======== ======== ======== ======= ======= ======= ========
Ratio of net investment income
(loss) to average net assets.. 1.13% .14% .47% (.13%) (.41%) (.97%) (3.07%)
======== ======== ======= ======= ======= ======= ========
Portfolio Turnover Rate.......... 42.34% 42.34% 85.51% 84.06% 84.88% 115.17% 17.07%
======== ======== ======= ======= ======= ======= ========
Average Commission
Rate Paid..................... $ .0715 $ .0715 $ .0700
======== ======== ========
(i) Unaudited.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of any sales charges.
(iv) Ratios have been annualized; total return has not been annualized.
(v) Reflects total expenses, including custody fees offset by earnings credits resulting from balances left on deposit.
The expense ratio net of earnings credits would have been 2.69% and 3.25% for the years ended October 31, 1996 and 1995,
respectively. Expense ratios for the period ended prior to October 31, 1995, have been reduced to reflect the effect
of custody fees offset by earnings credits, if any.
(vi) Represents expense reimbursements made pursuant to applicable state expense limits.
(vii) Initially offered January 1, 1997.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-15-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Common Stocks--85.4% Shares Value
------ -----
AEROSPACE--4.0%
BE Aerospace Inc.*.......................... 25,400 $ 625,475
Gulfstream Aerospace Corp.*................. 105,800 2,697,900
Sundstrand Corp............................. 47,900 2,335,125
----------
5,658,500
----------
AGRICULTURE--1.6%
Pioneer Hi-Bred International Inc........... 32,100 2,267,063
----------
APPAREL--2.3%
Nautica Enterprises Inc.*................... 63,600 1,407,150
Warnaco Group Inc. Cl. A.................... 24,200 689,700
Tommy Hilfiger Corporation*................. 30,000 1,192,500
----------
3,289,350
----------
APPLIANCES & TOOLS--3.1%
Sunbeam Corp................................ 137,100 4,352,925
----------
BUSINESS SERVICES--2.2%
Cintas Corp................................. 34,700 1,899,825
Paychex, Inc................................ 26,000 1,217,137
----------
3,116,962
----------
BIO-TECHNOLOGY--.3%
BioChem Pharma Inc.*........................ 25,000 449,600
----------
BROADCASTING--.6%
Univision Communications Inc.,
Cl. A.*.................................. 25,000 850,000
----------
CHEMICALS--.6%
Avery Dennison Corp......................... 21,000 771,750
----------
COMMUNICATIONS--.9%
WorldCom Inc.*.............................. 55,200 1,324,800
----------
COMMUNICATION
EQUIPMENT--3.6%
Cisco Systems, Inc.*........................ 33,300 1,723,275
Pairgain Technologies Inc.*................. 6,900 179,400
Tellabs, Inc.*.............................. 79,600 3,174,050
----------
5,076,725
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--3.3%
Ingram Micro Inc. Cl. A.*................... 20,000 455,000
Read-Rite Corp.*............................ 22,200 574,425
Seagate Technology Inc.*.................... 77,500 3,555,312
----------
4,584,737
----------
COMPUTER SERVICES--.8%
Sterling Commerce, Inc.*.................... 44,500 1,151,438
----------
COMPUTER SOFTWARE--4.3%
Electronics For Imaging Inc.*............... 63,300 2,484,525
Parametric Technology Corporation*.......... 79,400 3,592,850
----------
6,077,375
----------
CONGLOMERATE--.8%
Tyco International Ltd...................... 19,100 1,165,100
----------
CONSUMER PRODUCTS--2.0%
CUC International Inc.*..................... 134,500 2,841,313
----------
ENERGY &
ENERGY SERVICES--1.9%
Reading & Bates Corp.*...................... 74,500 1,666,938
Smith International Inc.*................... 20,000 947,500
----------
2,614,438
----------
FINANCIAL SERVICES--7.3%
Equifax, Inc................................ 72,000 2,070,000
First Data Corporation...................... 26,188 903,486
Money Store Inc. (The)...................... 162,100 3,505,412
Schwab (Charles) Corporation (The).......... 85,100 3,116,788
SunAmerica Inc.............................. 14,000 644,000
----------
10,239,686
----------
FOODS & BEVERAGES--.8%
Chiquita Brands International Inc........... 74,500 1,070,938
----------
HEALTH CARE--2.5%
Elan Corp PLC-ADR*.......................... 61,000 2,074,000
McKesson Corp............................... 19,800 1,433,025
----------
3,507,025
----------
HEALTH MAINTENANCE
ORGANIZATION--1.6%
Oxford Health Plans, Inc.*.................. 33,900 2,233,163
----------
INDUSTRIAL EQUIPMENT--.3%
Waters Corp.*............................... 14,500 429,563
----------
INSURANCE--2.2%
MGIC Investment Corp........................ 38,000 3,087,500
----------
LEISURE &
ENTERTAINMENT--3.5%
Carnival Corporation Class A................ 19,200 708,000
International Game Technology............... 230,000 3,651,250
Mirage Resorts, Incorporated*............... 25,800 519,225
----------
4,878,475
----------
MEDICAL DEVICES--.9%
Becton Dickinson & Co....................... 27,000 1,242,000
----------
<PAGE>
-16-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Common Stocks--(cont.) Shares Value
------ -----
MEDICAL SERVICES--1.1%
Cardinal Health, Inc........................ 13,000 $ 692,250
PhyCor, Inc.*............................... 32,500 865,313
----------
1,557,563
----------
METALS--.9%
Special Metals Corp.*....................... 20,000 282,500
Titanium Metals Corporation*................ 40,800 1,055,700
----------
1,338,200
----------
OIL & GAS--2.7%
Global Marine Inc*.......................... 80,000 1,610,000
Halliburton Co.............................. 27,000 1,906,875
Tidewater Inc............................... 8,400 337,050
----------
3,853,925
----------
PAPER PACKAGING &
FOREST PRODUCTS--1.6%
Sealed Air Corp.*........................... 47,700 2,206,125
----------
POLLUTION CONTROL--3.0%
USA Waste Services, Inc.*................... 41,100 1,346,025
U.S. Filter Corp.*.......................... 50,500 1,533,938
United Waste Systems, Inc.*................. 40,000 1,350,000
----------
4,229,963
----------
RESTAURANTS & LODGING--1.3%
Boston Chicken Inc.*........................ 32,600 778,325
Lone Star Steakhouse & Saloon, Inc.*........ 53,100 1,048,725
----------
1,827,050
----------
RETAILING--5.3%
Borders Group Inc.*......................... 41,000 871,250
Gucci Group N.V............................. 39,000 2,705,625
Nine West Group Inc.*....................... 15,600 618,150
Rite Aid Corp............................... 23,700 1,090,200
TJX Companies, Inc.......................... 47,200 2,230,200
----------
7,515,425
----------
SEMICONDUCTORS--12.6%
Adaptec, Inc.*.............................. 87,900 3,252,300
Altera Corporation*......................... 85,400 4,232,680
Linear Technology Corporation............... 81,200 4,080,300
Maxim Integrated Products, Inc.*............ 74,900 3,960,338
Xilinx, Inc.*............................... 46,500 2,278,500
----------
17,804,118
----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--4.2%
Applied Materials Inc.*..................... 57,100 $ 3,133,363
Kulicke & Soffa Industries Inc.*............ 45,500 1,271,179
ASM Lithography Holding NV*................. 20,000 1,590,000
-----------
5,994,542
-----------
TRANSPORTATION--.5%
Coach USA Inc*............................ 26,300 670,650
-----------
MISCELLANEOUS--.8%
Loewen Group Inc.......................... 13,600 391,000
Service Corp. International............... 20,300 695,273
-----------
1,086,273
-----------
Total Common Stocks
(Cost $114,019,132).................... 120,364,260
-----------
Preferred Stock--3.2%
COMMUNICATION EQUIPMENT
Nokia Corporation, ADR
(Cost $3,900,740)...................... 69,500 4,491,438
-----------
Short-Term Corporate Principal
Notes--15.8% Amount
---------
Countrywide Funding Corporation,
5.47%, 5/1/97.......................... $1,300,000 1,300,000
Delaware Funding Corp.,
5.45%, 5/8/97 (a)...................... 3,050,000 3,046,768
Green Tree Financial Corp.,
5.57%, 5/5/97.......................... 2,800,000 2,798,267
5.59%, 5/8/97.......................... 3,800,000 3,795,138
Merrill Lynch & Co., Inc.,
5.47%, 5/9/97.......................... 4,000,000 3,995,870
Trident Capital Finance Inc.,
5.53%, 5/14/97 (a)..................... 3,500,000 3,493,010
Wood Street Funding Corp.,
5.55%, 5/7/97 (a)...................... 3,900,000 3,896,393
-----------
Total Short-Term Corporate Notes
(Cost $22,325,446)..................... 22,325,446
-----------
Total Investments
(Cost $140,245,318) (b)................ 104.4% 147,181,144
Liabilities in Excess
of Other Assets........................ (4.4) (6,233,188)
----- -------------
Net Assets................................ 100.0% $140,947,956
===== ============
* 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 April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $140,245,318, amounted to $6,935,826
which consisted of aggregate gross unrealized appreciation of $11,558,002
and aggregate gross unrealized depreciation of $4,622,176.
See Notes to Financial Statements.
<PAGE>
-17-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Class A(vii) Class B
-------------- ----------------------------------------------------------------------------
From
May 24, 1993
Four Months Six Months (commencement
Ended Ended Year Ended October 31, of operations) to
April 30, April 30 -------------------------------------- October 31,
1997(i)(ii) 1997(i)(ii) 1996 1995 1994 1993(ii)
------------ ----------- -------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period...................... $ 18.92 $ 18.87 $ 18.94 $ 12.77 $ 12.48 $ 10.00
------- -------- -------- --------- -------- --------
Net investment income (loss)...... (.01) (.11) (.25)(iii) (.08) (.11) (.09)
Net realized and unrealized
gain (loss) on investments..... (.83) (.24) 1.35 6.25 .68 2.57
------- -------- -------- --------- -------- --------
Total from investment
operations..................... (.84) (.35) 1.10 6.17 .57 2.48
Distributions from net
realized gains................. -- (.48) (1.17) -- (.28) --
------- -------- -------- --------- -------- --------
Net asset value, end of period.... $ 18.08 $ 18.04 $ 18.87 $ 18.94 $ 12.77 $ 12.48
======= ======== ======== ========= ========= ========
Total Return(iv).................. (4.4%) (1.9%) 6.4% 48.3% 4.7% 24.8%
======= ======== ======== ========= ========= ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted).............. $ 4,183 $136,765 $125,686 $ 54,016 $ 18,516 $ 3,836
======= ======== ======== ========= ========= ========
Ratio of expenses to average
net assets................... 1.52% 2.27% 2.27%(v) 2.39%(v) 3.20%(v) 3.73%(v)
======= ======== ======== ========= ========= ========
Decrease reflected in above
expense ratio due to expense
reimbursements(vi)........... -- -- -- -- .07% .80%
======= ======== ======== ========= ========= ========
Ratio of net investment
income (loss) to average
net assets................... (.63%) (1.56%) (1.33%) (1.71%) (2.32%) (2.86%)
======= ========= ======== ========= ========= ========
Portfolio Turnover Rate......... 77.52% 77.52% 113.95% 121.60% 127.40% 57.64%
======= ======== ======== ========= ========= ========
Average Commission
Rate Paid.................... $ .0686 $ .0686 $ .0690
======= ======== =======
(i) Unaudited.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the period.
(iv) Does not reflect the effect of any sales charges.
(v) Reflects total expenses, including custody fees offset by earnings credits resulting from balances left on deposit.
The expense ratio net of earnings credits would have been 2.26% and 2.34% for the years ended October 31, 1996 and 1995,
respectively. Expense ratios for the periods ended prior to October 31, 1995, have been reduced to reflect the effect
of custody fees offset by earnings credits, if any.
(vi) Represents expense reimbursements made pursuant to applicable state expense limits.
(vii) Initially offered January 1, 1997.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-18-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Common Stocks--95.5% Shares Value
----- -----
AEROSPACE--7.5%
Allied Signal Inc........................... 31,800 $ 2,297,550
Boeing Company (The)........................ 51,700 5,098,912
Gulfstream Aerospace Corp.*................. 31,000 790,500
Sundstrand Corp............................. 9,500 463,125
United Technologies Corp.................... 43,600 3,297,250
Wyman Gordon Co.*........................... 25,000 525,000
------------
12,472,337
------------
AGRICULTURE--.6%
Pioneer Hi-Bred International Inc........... 13,000 918,125
------------
APPAREL--.7%
Nautica Enterprises Inc.*................... 25,000 553,125
Tommy Hilfiger Corporation*................. 14,500 576,375
------------
1,129,500
------------
BIO-TECHNOLOGY--.1%
BioChem Pharma Inc.*........................ 10,000 179,840
------------
BROADCASTING--.4%
Univision Communications Inc., Cl. A.*....... 20,000 680,000
------------
BUSINESS SERVICES--.6%
Saville Systems PLC, ADR*................... 25,000 1,028,125
------------
CHEMICALS--1.0%
Avery Dennison Corp......................... 25,500 937,125
Monsanto Co................................. 18,100 773,775
------------
1,710,900
------------
COMMUNICATIONS--.9%
WorldCom Inc.*.............................. 62,700 1,504,800
------------
COMMUNICATION
EQUIPMENT--6.4%
Cisco Systems, Inc.*........................ 53,000 2,742,750
LM EricssonTelephone Co., ADR,
Cl. B.................................... 14,500 487,562
Motorola, Inc............................... 46,500 2,662,125
Pairgain Technologies Inc.*................. 20,000 520,000
Tellabs, Inc.*.............................. 106,900 4,262,638
------------
10,675,075
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--4.1%
Hewlett-Packard Company..................... 46,100 2,420,250
International Business Machines Corp........ 20,500 3,295,375
Seagate Technology Inc.*.................... 25,000 1,146,875
------------
6,862,500
------------
COMPUTER SERVICES--.9%
Sterling Commerce, Inc.*.................... 56,500 1,461,938
------------
COMPUTER SOFTWARE--10.4%
Electronics For Imaging Inc.*............... 98,000 3,846,500
Microsoft Corporation*...................... 53,100 6,451,650
Oracle Corp.*............................... 87,800 3,490,050
Parametric Technology Corporation*.......... 58,000 2,624,500
Structural Dynamics Research Corp.*......... 40,000 850,000
------------
17,262,700
------------
CONSUMER PRODUCTS--5.1%
Colgate Palmolive Co........................ 21,700 2,408,700
Gillette Co................................. 60,000 5,100,000
Nabisco Holdings Corp., Cl. A............... 26,000 997,750
------------
8,506,450
------------
ENERGY &
ENERGY SERVICES--4.0%
Diamond Offshore Drilling Inc.*............. 12,900 830,438
ENSCO International Inc.*................... 18,000 855,000
Reading & Bates Corp.*...................... 81,000 1,812,375
Schlumberger Ltd............................ 29,300 3,244,975
------------
6,742,788
------------
FINANCIAL SERVICES--10.0%
Chase Manhattan Corp........................ 34,400 3,186,300
Citicorp.................................... 44,600 5,023,075
Money Store Inc. (The)...................... 92,200 1,993,825
Morgan Stanley Group Inc.................... 49,200 3,105,750
Schwab (Charles) Corporation (The).......... 91,000 3,332,875
------------
16,641,825
------------
HEALTH CARE--.5%
McKesson Corp............................... 12,000 868,500
------------
HEALTH MAINTENANCE
ORGANIZATION--1.2%
Oxford Health Plans, Inc.*.................. 31,300 2,061,888
------------
INSURANCE--3.0%
American International Group, Inc........... 39,400 5,062,900
------------
LEISURE &
ENTERTAINMENT--.6%
Carnival Corporation, Cl. A................. 27,500 1,014,063
------------
MEDICAL DEVICES--3.5%
Becton Dickinson & Co....................... 48,000 2,208,000
Hologic, Inc.*.............................. 75,300 1,562,475
Medtronic, Inc.............................. 11,700 810,225
ESC Medical Systems Ltd..................... 45,000 1,209,375
------------
5,790,075
- - ------------
<PAGE>
-19-
METALS--.5%
Titanium Metals Corporation*................ 30,000 $ 776,250
------------
OIL & GAS--1.6%
Global Marine Inc*.......................... 40,000 805,000
Halliburton Co.............................. 20,500 1,447,813
Tidewater Inc............................... 9,700 389,212
------------
2,642,025
------------
PHARMACEUTICALS--9.3%
Bristol Myers Squibb Co..................... 47,500 3,111,250
Eli Lilly & Company......................... 58,200 5,114,325
Merck & Co.,Inc............................. 44,800 4,054,400
Pfizer Inc.................................. 8,500 816,000
Warner-Lambert Co........................... 24,500 2,401,000
------------
15,496,975
------------
POLLUTION CONTROL--1.0%
USA Waste Services, Inc.*................... 48,600 1,591,650
------------
RETAILING--5.2%
Gucci Group N.V............................. 30,300 2,102,062
Home Depot, Inc............................. 68,300 3,961,400
TJX Companies, Inc.......................... 41,500 1,960,875
Wal-Mart Stores Inc......................... 23,500 663,875
------------
8,688,212
------------
SEMICONDUCTORS--13.8%
Adaptec, Inc.*.............................. 69,000 2,553,000
Altera Corporation*......................... 93,400 4,629,184
Intel Corp.................................. 23,400 3,583,125
Linear Technology Corporation............... 65,900 3,311,475
Maxim Integrated Products,Inc.*............. 52,300 2,765,362
Micron Technology Inc.*..................... 21,600 761,400
Texas Instruments, Incorporated............. 28,200 2,516,850
Xilinx, Inc.*............................... 60,000 2,940,000
------------
23,060,396
------------
SEMICONDUCTORS CAPITAL
EQUIPMENT--2.4%
Applied Materials Inc.*................... 60,700 3,330,913
Kulicke & Soffa Industries Inc.*.......... 23,000 642,573
------------
3,973,486
------------
MISCELLANEOUS--.2%
Loewen Group Inc.......................... 12,400 356,500
------------
Total Common Stocks
(Cost $146,173,477).................... 159,159,823
------------
Preferred Stock--1.0%
COMMUNICATION EQUIPMENT
Nokia Corporation, ADR
(Cost $1,318,571)...................... 25,500 1,647,938
------------
Short-Term Corporate Principal
Notes--3.8% Amount
---------
Green Tree Financial Corp.,
5.59%, 5/8/97.......................... $ 150,000 149,837
Merrill Lynch & Co., Inc.,
5.50%, 5/14/97......................... 3,250,000 3,243,545
Wood Street Funding Corp.,
5.55%, 5/7/97 (a)...................... 2,950,000 2,947,271
------------
Total Short-Term Corporate Notes
(Cost $6,340,653)...................... 6,340,653
------------
Total Investments
(Cost $153,832,701) (b)................ 100.3% 167,148,414
Liabilities in
Excess of Other Assets................. (.3) (445,944)
------ ------------
Net Assets................................ 100.0% $166,702,470
====== ============
* 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 April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $153,832,701, amounted to
$13,315,713 which consisted of aggregate gross unrealized appreciation of
$17,937,889 and aggregate gross unrealized depreciation of $4,622,176.
See Notes to Financial Statements.
<PAGE>
-20-
<TABLE>
<CAPTION>
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO (i)
Financial Highlights
For a share outstanding throughout the period
Class A(vii) Class B
------------- ---------------------------------------------------------------
Four Months Six Months
Ended Ended Year Ended October 31,
April 30, April 30, -----------------------------------------------
1997(ii) 1997(ii) 1996 1995 1994
------------ ------------ -------- ------- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 21.59 $ 21.62 $ 18.62 $ 11.11 $ 10.00
---------- --------- -- --------- --------- --------
Net investment income (loss) ............ (.01) (.19) (.34)(iii) (0.47)(iii) (0.47)
Net realized and unrealized gain
on investments ...................... .11 .34 3.88 7.98 1.58
---------- --------- -- --------- --------- --------
Total from investment operations ........ .10 .15 3.54 7.51 1.11
Distributions from net realized gains ... -- (.14) (.54) -- --
---------- --------- ------------ --------- --------
Net asset value, end of period .......... $ 21.69 $ 21.63 $ 21.62 $ 18.62 $ 11.11
========== ========= =========== ========== ========
Total Return(iv) ........................ .5% .7% 19.5% 67.6% 11.1%
========== ========= =========== ========== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ................. $ 7,805 $ 158,897 $ 150,258 $ 33,640 $ 2,369
=========== ========= =========== ========== =========
Ratio of expenses excluding
interest to average net assets .. 1.47% 2.35% 2.44% 3.26% 4.13%
=========== ========= =========== ========== =========
Ratio of expenses including
interest to average net assets .. 1.58% 2.50% 2.46%(v) 3.54%(v) 5.53%(v)
=========== ========= =========== ========== =========
Decrease reflected in above
expense ratios due to expense
reimbursements(vi) .............. -- -- -- -- 0.85%
=========== ========= =========== ========== =========
Ratio of net investment income
(loss) to average net assets .... (.71%) (1.85%) (1.61%) (3.02%) (5.12%)
=========== ========= =========== ========== =========
Portfolio Turnover Rate ............. 80.35% 80.35% 162.37% 197.65% 231.99%
=========== ========= =========== ========== =========
Average Commission Rate Paid ........ $ .0699 $ .0699 $ .0647
=========== ========= ===========
Amount of debt outstanding at end
of period ....................... -- -- $ 7,700,000 -- $ 651,000
=========== ========= =========== ========== =========
Average amount of debt
outstanding during the period ... $ 3,603,066 $3,603,066 $ 239,966 $ 293,153 $ 406,864
=========== ========== =========== ========== =========
Average daily number of shares
outstanding during the period ... 7,381,854 7,381,854 4,852,286 543,270 191,676
=========== ========== =========== ========== =========
Average amount of debt per
share during the period ......... $ 0.49 $ 0.49 $ 0.05 $ 0.54 $ 2.12
=========== ========== =========== ========== =========
(i) Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the Alger Leveraged AllCap Portfolio.
(ii) Unaudited. Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the year.
(iv) Does not reflect the effect of any sales charges.
(v) Reflects total expenses, including custody fees offset by earnings credits resulting from balances left on deposit.
The expense ratios net of earnings credits would have been 2.45% and 3.43% for the years ended October 31, 1996 and 1995,
respectively. The expense ratio for the year ended October 31, 1994, has been reduced to reflect the effect of custody fees
offset by earnings credits.
(vi) Represents expense reimbursements made pursuant to applicable state expense limits.
(vii) Initially offered January 1, 1997.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-21-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
Short-Term Corporate Principal
Notes--95.6% Amount Value
--------- ------
AGRICULTURE--2.6%
Cargill Inc.,
5.39%, 5/6/97.......................... $ 6,300,000 $ 6,295,284
-----------
AUTOMOTIVE EQUIPMENT &
SERVICES--3.0%
Eaton Corp.,
5.48%, 5/27/97 (a)..................... 6,300,000 6,275,066
Ford Motor Credit Corp.,
5.53%, 5/1/97.......................... 1,100,000 1,100,000
-----------
7,375,066
-----------
BANKS--18.6%
Banque Nationale de Paris.,
5.50%, 5/20/97......................... 10,000,000 9,970,972
Caisse Centrale Desjardins
Du Quebec.,
5.58%, 5/2/97.......................... 3,850,000 3,849,403
Great Western Bank, FSB,
5.56%, 6/4/97.......................... 4,600,000 4,575,845
Industrial Bank of Japan Limited,
5.63%, 6/3/97.......................... 9,000,000 8,953,553
Oak Funding Corp.,
5.60%, 5/12/97......................... 6,500,000 6,488,878
Ryobi Finance Corp.,
5.62%, 6/3/97.......................... 4,000,000 3,979,393
Toronto Dominion Holdings (USA),
5.34%, 7/8/97.......................... 8,400,000 8,315,272
-----------
46,133,316
-----------
ELECTRONICS--5.8%
Hitachi Credit America Corp.,
5.35%, 5/1/97.......................... 5,000,000 5,000,000
Toshiba Capital (Asia) Ltd.,
5.53%, 5/20/97......................... 4,000,000 3,988,325
Toshiba America Inc.,
5.33%, 6/30/97......................... 5,500,000 5,451,142
-----------
14,439,467
-----------
FINANCE--20.9%
BAT Capital Corp.,
5.50%, 5/20/97......................... 9,225,000 9,198,222
Cades.,
5.32%, 6/24/97......................... 11,400,000 11,011,422
FP Funding Corp.,
5.40%, 7/2/97 (a)...................... 5,000,000 4,953,500
FINANCE--(cont.)
Industrial Funding Corp.,
5.60%, 5/22/97......................... 5,000,000 4,983,667
Progress Capital Corp.,
5.52%, 5/21/97......................... 8,000,000 7,975,467
Progress Funding Corp. Series A,
5.63%, 5/22/97 (a)..................... 5,000,000 4,983,579
Sanwa Business Credit Corp.,
5.56%, 5/16/97......................... 5,000,000 4,988,417
Sigma Finance Corp.,
5.35%, 5/13/97 (a)..................... 4,000,000 3,992,866
-----------
52,087,410
-----------
FINANCIAL SERVICES--5.2%
Dean Witter, Discover & Co.,
5.30%, 5/1/97.......................... 5,800,000 5,800,000
Merrill Lynch & Co., Inc.,
5.48%, 5/2/97.......................... 7,000,000 6,998,934
-----------
12,798,934
-----------
LEASING--4.7%
Mitsui & Co.,
5.53%, 5/27/97......................... 11,750,000 11,703,072
-----------
MACHINERY & EQUIPMENT--1.3%
Cooperative Association of
Tractor Dealers Inc.,
5.53%, 5/5/97.......................... 3,300,000 3,297,972
-----------
MORTGAGE COMPANIES--5.8%
Countrywide Funding Corporation,
5.47%, 5/1/97.......................... 4,800,000 4,800,000
Reliastar Mortgage Corp.,
5.36-5.52%, 5/13/97-5/22/97............ 9,500,000 9,475,143
-----------
14,275,143
-----------
OIL--3.8%
Petrofina (DE) Inc.,
5.48-5.50%, 5/12/97-5/16/97 (a)........ 9,415,000 9,396,215
-----------
RETAIL MERCHANDISING--4.2%
Southland Corp.,
5.35-5.58%, 5/14/97-6/17/97............ 10,500,000 10,452,950
-----------
<PAGE>
-22-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued) (Unaudited)
April 30, 1997
Short-Term Corporate Principal
Notes--95.6% Amount Value
--------- ------
REAL ESTATE--4.0%
Yorkshire Building Society,
5.33%, 6/9/97.......................... $10,000,000 $ 9,942,258
-----------
TOBACCO--4.0%
Philip Morris Companies, Inc.,
5.52%, 6/9/97.......................... 10,000,000 9,940,200
-----------
UTILITIES--11.7%
Carolina Power and Light Co.,
5.60%, 5/5/97.......................... 7,000,000 6,995,645
Consolidated Natural Gas Co.,
5.45%, 5/2/97.......................... 11,750,000 11,748,221
National Rural Utilities
Cooperative Finance Corp.,
5.32-5.33%, 5/5/97..................... 10,200,000 10,193,965
-----------
28,937,831
-----------
Total Short-Term Corporate Notes
(Cost $237,074,848).................... 237,074,848
-----------
Certificate of Deposit--2.4%
Banco Espirito Santo E Commercial,
5.71%, 7/28/97
(Cost $6,000,000)...................... 6,000,000 6,000,000
-----------
Total Investments
(Cost $243,074,848) (b)................ 98.0% 243,074,848
Other Assets in
Excess of Liabilities.................. 2.0 4,919,069
----- ------------
Net Assets................................ 100.0% $247,993,917
===== ============
(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 April 30, 1997, 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>
-23-
<TABLE>
<CAPTION>
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
Six Months
Ended Year Ended October 31,
April 30, --------------------------------------------------------------------------
1997(i) 1996 1995 1994 1993 1992
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period...................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- --------
Net investment income............. .0231 .0521 .0573 .0374 .0304 .0424
Dividends from net
investment income.............. (.0231) (.0521) (.0573) (.0374) (.0304) (.0424)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ========
Total Return...................... 2.3% 5.3% 5.9% 3.8% 3.1% 4.3%
======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted).............. $247,994 $285,702 $185,822 $163,170 $126,567 $135,288
======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets........... .85% .41%(ii) .29%(ii) .27%(ii) .41%(ii) .25%(ii)
======== ======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to
expense reimbursements
and management fee
waivers...................... -- .38% .50% .50% .50% .60%
======== ======== ======== ======== ======== ========
Ratio of net investment
income to average
net assets................... 4.65% 5.18% 5.73% 3.78% 3.04% 4.30%
======== ======== ======== ======== ======== ========
(i) Unaudited. Ratios have been annualized; total return has not been annualized.
(ii) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been .40% and .27% for the years ended October 31, 1996
and 1995, respectively. Expense ratios for the years ended prior to
October 31, 1995, have been reduced to reflect the effect of custody fees
offset by earnings credits, if any.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-24-
<TABLE>
<CAPTION>
THE ALGER FUND
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts) (Unaudited)
April 30, 1997
Small Capital
Capital- MidCap Appre- Money
Growth ization Balanced Growth ciation Market
ASSETS: Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Investments in securities, at value
(identified cost*)-see accompany-
ing schedules of investments ........... $277,544 $447,603 $11,760 $147,181 $167,148 $243,075
Cash ...................................... -- -- 16 -- 19 4,086
Receivable for investment
securities sold......................... 10,758 7,962 169 2,983 7,252 --
Receivable for shares of beneficial
interest sold........................... 688 821 63 332 963 2,233
Dividends and interest
receivable.............................. 132 57 82 14 72 3
Prepaid expenses and other assets.......... 23 27 13 14 -- 27
-------- -------- ------- -------- -------- --------
Total Assets........................... 289,145 456,470 12,103 150,524 175,454 249,424
-------- -------- ------- -------- -------- --------
LIABILITIES:
Payable for investment
securities purchased.................... 2,853 4,549 62 9,052 7,942 --
Bank overdraft............................. 32 497 -- 39 -- --
Payable for shares of beneficial
interest redeemed....................... 390 2,461 16 117 266 985
Interest payable........................... -- -- -- -- 90 --
Accrued investment management fees......... 175 322 8 90 110 99
Accrued distribution fees Class-B.......... 156 281 7 83 95 --
Accrued shareholder servicing fees......... 58 95 3 28 32 --
Dividends payable-Note 2(c)................ -- -- -- -- -- 13
Accrued expenses........................... 349 504 29 167 217 333
-------- -------- ------- -------- -------- --------
Total Liabilities...................... 4,013 8,709 125 9,576 8,752 1,430
-------- -------- ------- -------- -------- --------
NET ASSETS ............................... $285,132 $447,761 $11,978 $140,948 $166,702 $247,994
======== ======== ======= ======== ======== ========
Net Assets Consist of:
Paid-in capital......................... $235,255 $435,454 $10,353 $132,671 $154,932 $248,064
Undistributed net investment
income (accumulated loss)............. (5,818) (30,294) (52) (3,102) (3,499) --
Undistributed net realized
gain (accumulated loss)............... 21,020 (11,257) 699 4,443 1,953 (70)
Net unrealized appreciation.............. 34,675 53,858 978 6,936 13,316 --
-------- -------- ------- -------- -------- --------
NET ASSETS ............................... $285,132 $447,761 $11,978 $140,948 $166,702 $247,994
======== ======== ======= ======== ======== ========
Class A
Net Asset Value Per Share ............... $ 9.69 $ 8.10 $ 14.37 $ 18.08 $ 21.69 --
======== ======== ======= ======== ======== ========
Offering Price Per Share................. $ 10.17 $ 8.50 $ 15.09 $ 18.98 $ 22.77 --
======== ======== ======= ======== ======== ========
Class B
Net Asset Value and Offering Price
Per Share.......... ..................... $ 9.66 $ 8.08 $ 14.34 $ 18.04 $ 21.63 $ 1.00
======== ======== ======= ======== ======== ========
Shares of beneficial interest
outstanding-Note 6
Class A.................................. 3,933 1,110 20 231 360 --
======== ======== ======= ======== ======== ========
Class B.................................. 25,558 54,331 816 7,580 7,346 248,063
======== ======== ======= ======== ======== ========
*Identified cost......................... $242,869 $393,745 $10,782 $140,245 $153,832 $243,075
======== ======== ======= ======== ======== ========
See Notes to Financial Statements.
</TABLE>
<PAGE>
-25-
<TABLE>
<CAPTION>
THE ALGER FUND
STATEMENTS OF OPERATIONS (in thousands) (Unaudited)
For the six months ended April 30, 1997
Small Capital
Capital- MidCap Appre- Money
Growth ization Balanced Growth ciation Market
INVESTMENT INCOME: Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income:
Dividends ............................. $ 1,101 $ 458 $ 31 $ 218 $ 481 $ --
Interest .............................. 392 918 160 282 40 6,221
-------- ---------- ------- -------- --------- ---------
Total Income........................... 1,493 1,376 191 500 521 6,221
Expenses:
Management fees-Note 3(a).............. 1,094 2,310 47 561 689 565
Distribution fees, Class-B-Note 3(b)... 1,063 2,030 46 523 603 --
Shareholder servicing fees-Note 3(f)... 365 680 16 175 203 --
Interest on line of credit
utilized-Note 5........................ -- -- -- -- 115 --
Custodian fees......................... 27 54 4 17 17 21
Transfer agent fees and
expenses-Note 3(e).................. 392 614 28 210 325 301
Professional fees...................... 15 16 7 14 7 7
Trustees' fees......................... 3 3 3 3 3 3
Registration fees...................... 61 87 28 54 47 54
Miscellaneous.......................... 28 46 3 31 7 13
-------- ---------- ------- -------- --------- ---------
Total Expenses....................... 3,048 5,840 182 1,588 2,016 964
-------- ---------- ------- -------- --------- ---------
NET INVESTMENT
INCOME (LOSS)......................... (1,555) (4,464) 9 (1,088) (1,495) 5,257
-------- ---------- ------- -------- --------- ---------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments.. 19,601 (23,302) 702 3,779 235 (6)
Net change in unrealized appreciation
(depreciation) on investments.......... (5,147) (33,781) (276) (6,312) 1,346 --
-------- ---------- ------- -------- --------- ---------
Net realized and unrealized
gain (loss) on investments............. 14,454 (57,083) 426 (2,533) 1,581 (6)
-------- ---------- ------- -------- --------- ----------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS..................... $ 12,899 $(61,547) $ 435 $(3,621) $ 86 $ 5,251
======== ======== ===== ======= ========= ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
-26-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO STATEMENT OF CASH FLOWS (in thousands)
(Unaudited) For the six months ended April 30, 1997
Increase (decrease) in cash:
Cash flows from operating activities:
Dividends received .......................................... $ 435
Interest received ........................................... 40
Interest paid ............................................... (37)
Operating expenses paid ..................................... (1,864)
Purchase of investment securities ........................... (131,580)
Purchase of short-term securities, net ...................... (6,341)
Proceeds from disposition of investment securities .......... 129,966
Other ....................................................... 7
---------
Net cash used in operating activities ................... (9,374)
---------
Cash flows from financing activities:
Dividends paid ........................................... (970)
Proceeds from shares sold and dividends reinvested .......... 120,061
Payments on shares redeemed ................................. (102,079)
Decrease in bank borrowings ................................. (7,700)
---------
Net cash provided by financing activities ............ 9,312
---------
Net decrease in cash ............................................ (62)
Cash--beginning of period ....................................... 81
---------
Cash--end of period ............................................. $ 19
=========
Reconciliation of net increase in net assets to
net cash used in operating activities:
Net increase in net assets resulting from operations...... 86
Increase in investments .................................. (5,712)
Increase in interest and dividends receivable ............ (46)
Increase in receivable for investment securities sold .... (3,013)
Increase in payable for investment securities purchased .. 774
Net realized gain ........................................ (235)
Net increase in unrealized appreciation .................. (1,346)
Increase in accrued expenses and other liabilities ....... 115
Net decrease in other assets ............................. 3
---------
Net cash used in operating activities ................ $ (9,374)
=========
See Notes to Financial Statements.
<PAGE>
-27-
<TABLE>
<CAPTION>
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands) (Unaudited)
For the six months ended April 30, 1997
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)................... $ (1,555) $ (4,464) $ 9 $ (1,088) $ (1,495) $ 5,257
Net realized gain (loss)
on investments.............................. 19,601 (23,302) 702 3,779 235 (6)
Net change in unrealized appreciation
(depreciation) on investments............... (5,147) (33,781) (276) (6,312) 1,346 --
-------- -------- ------- -------- -------- --------
Net increase (decrease) in net assets resulting
from operations......................... 12,899 (61,547) 435 (3,621) 86 5,251
Dividends to shareholders--Class B:
Net investment income........................ -- -- (50) -- -- (5,257)
Net realized gains........................... (8,740) (93,115) (288) (3,458) (970) --
Additional paid-in capital..................... -- 578 -- -- -- --
Net increase (decrease) from shares of beneficial
interest transactions-Note 6
Class A...................................... 38,400 9,512 284 4,308 7,795 --
Class B...................................... (23,634) 38,461 (1,895) 18,033 9,533 (37,702)
-------- -------- ------- -------- -------- --------
Total increase (decrease)...................... 18,925 (106,111) (1,514) 15,262 16,444 (37,708)
Net Assets:
Beginning of period......................... 266,207 553,872 13,492 125,686 150,258 285,702
-------- -------- ------- -------- -------- --------
End of period............................... $285,132 $447,761 $11,978 $140,948 $166,702 $247,994
======== ======== ======= ======== ======== ========
Undistributed net investment
income (accumulated loss).................. $ (5,818) $(30,294) $ (52) $ (3,102) $ (3,499) --
======== ======== ======= ======== ======== ========
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1996
Small Capital
Capital- MidCap Appre- Money
Growth ization Balanced Growth ciation Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
----------- ---------- ---------- --------- --------- ---------
Net investment income (loss).................. $ (1,857) $ (8,359) $ 51 $ (1,197) $ (1,631) $ 12,586
Net realized gain (loss)
on investments............................. 8,966 94,157 280 3,375 2,538 (14)
Net change in unrealized appreciation
(depreciation) on investments.............. 10,513 (69,790) 399 3,534 10,813 --
-------- -------- ------- -------- -------- --------
Net increase in net assets
resulting from operations.............. 17,622 16,008 730 5,712 11,720 12,572
Dividends to shareholders--Class B:
Net investment income....................... -- -- (7) -- -- (12,586)
Net realized gains.......................... (10,925) (26,253) (125) (3,809) (1,331) --
Net increase from shares of beneficial
interest transactions-Note 6............... 105,226 100,399 6,680 69,767 106,229 99,894
-------- -------- ------- -------- -------- --------
Total increase.......................... 111,923 90,154 7,278 71,670 116,618 99,880
Net Assets:
Beginning of year.......................... 154,284 463,718 6,214 54,016 33,640 185,822
-------- -------- ------- -------- -------- --------
End of year................................. $266,207 $553,872 $13,492 $125,686 $150,258 $285,702
======== ======== ======= ======== ======== ========
Undistributed net investment
income (accumulated loss).................. $ (4,263) $(25,830) $ (11) $ (2,014) $ (2,004) $ --
======== ======== ======= ======== ======== ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
-28-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 an unlimited number of shares of beneficial interest in six
portfolios--Growth Portfolio, Small Capitalization Portfolio, Balanced
Portfolio, MidCap Growth Portfolio, Capital Appreciation Portfolio and Money
Market Portfolio (the "Portfolios"). Each Portfolio, other than the Money Market
Portfolio, offers Class A and Class B shares. Class A shares, which were first
offered on January 1, 1997, are generally subject to an initial sales charge and
Class B shares are generally subject to a deferred sales charge. Each class has
identical rights to assets and earnings except that only Class B shares have a
plan of distribution and bear the related expenses.
NOTE 2- Significant Accounting Policies:
(a) INVESTMENT VALUATION: Investments of the Portfolios, other than the Money
Market Portfolio, are valued on each day the New York Stock Exchange (the
"NYSE") is open as of the close of the NYSE (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. Each class will be treated separately in
determining the amounts of dividends of investment income and distributions of
capital gains payable to holders of its shares.
(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.
Provided a Portfolio maintains such compliance, no federal income tax provision
is required. Each Portfolio is treated as a separate entity for the purpose of
determining such compliance. At October 31, 1996, the net capital loss
carryforwards of the Money Market Portfolio which may be used to offset future
net realized gains were approximately $62,000, and expire between 1997 and 2004.
<PAGE>
-29-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
(e) ALLOCATION METHODS: The Fund accounts separately for the assets, liabilities
and operations of each Portfolio. Expenses directly attributable to each
Portfolio are charged to that Portfolio's operations; expenses which are
applicable to all Portfolios are allocated among them. Income, realized and
unrealized gains and losses, and expenses of each Portfolio, other than the
Money Market Portfolio, are allocated between the Portfolio's classes based on
relative net assets, with the exception of distribution fees which are only
applicable to Class B shares.
(f) OTHER: These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 3- Investment Management Fees and Other Transactions with Affiliates:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to the
provisions of Investment Management Agreements (the "Agreements") with Fred
Alger Management, Inc. ("Alger Management"), are payable monthly and are
computed based on the value of the average daily net assets of each Portfolio at
the following annual rates:
Growth Portfolio............................................ .75%
Small Capitalization Portfolio.............................. .85
Balanced Portfolio.......................................... .75
MidCap Growth Portfolio..................................... .80
Capital Appreciation Portfolio.............................. .85
Money Market Portfolio..................................... .50
(b) DISTRIBUTION FEES: The Fund has adopted an Amended and Restated Plan of
Distribution (the "Plan") pursuant to which Class B shares of each Portfolio,
other than the Money Market Portfolio, reimburse Fred Alger & Company,
Incorporated, the Fund's distributor (the "Distributor"), for costs and expenses
incurred by the Distributor in connection with advertising and marketing Class B
shares of the Fund's Portfolios. The distribution fee is not to exceed .75% of
the average daily net assets of the Class B shares of the designated Portfolio.
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 April 30,
1997, such excess carried forward was approximately $7,738,000, $16,201,000,
$254,000, $3,201,000 and $1,934,000 for Class B shares of 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 of Class B shares 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 Class B 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 Class B shares sold, from its distribution
fee received from the Portfolios.
(c) SALES CHARGES: The purchases and sales of shares of the Fund, other than the
Money Market Portfolio, may be subject to initial sales charges or contingent
deferred sales charges. For the six months ended April 30, 1997, the initial and
contingent deferred sales charges retained by the Distributor were approximately
$17,000 and $2,156,000, respectively. The contingent deferred sales charges are
used by the Distributor to offset distribution expenses previously incurred.
Sales charges do not represent expenses of the Fund.
(d) BROKERAGE COMMISSIONS: During the six months ended April 30, 1997, the
Growth Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio,
the MidCap Growth Portfolio and the Capital Appreciation Portfolio paid the
<PAGE>
-30-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
Distributor commissions of $381,760, $601,417, $9,894, $214,319 and $220,031,
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
six months ended April 30, 1997, 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 $231,670,
$441,400, $21,935, $149,735, $244,450 and $156,380, respectively, for services
provided by Alger Services. In addition, during the six months ended April 30,
1997, 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 $160,000, $173,000, $6,125,
$60,000, $80,600 and $144,800, 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 April 30, 1997, Alger Management and its affiliates owned 786,212
Class B shares, 768,322 Class B shares, 1,336 Class B shares, 233,298 Class B
shares, 102,899 Class B shares and 4,677,551 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.
During the six months ended April 30, 1997, Alger Management contributed
additional paid-in capital of approximately $577,653 to the Small Capitalization
Portfolio for the purpose of correcting an error.
NOTE 4- Securities Transactions:
The following summarizes the securities transactions by the Fund, other
than short-term securities, for the six months ended April 30, 1997 (in
thousands):
Purchases Sales
--------- ------
Growth Portfolio................ $179,871 $176,280
Small Capitalization
Portfolio..................... 317,330 385,767
Balanced Portfolio.............. 5,814 4,934
MidCap Growth
Portfolio..................... 111,746 101,332
Capital Appreciation
Portfolio..................... 132,354 132,979
NOTE 5- Lines of Credit:
The Capital Appreciation Portfolio has lines of credit with banks whereby
it may borrow up to 1/3 of its assets, as defined, up to a maximum of
$45,000,000. Such borrowings have variable interest rates and are payable on
demand. For the six months ended April 30, 1997, the Portfolio had borrowings
which averaged $3,603,066 at a weighted average interest rate of 6.36%.
<PAGE>
-31-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
NOTE 6- Share Capital:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value which are presently divided into six series. Each series, other
than the Money Market Portfolio, is divided into two separate classes. During
the six months ended April 30, 1997, transactions of shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
------ ------ ------- ------
<S> <C> <C> <C> <C>
Alger Growth Portfolio
Class A:*
Shares sold.................... 5,443,190 $ 53,207,658 -- --
Shares redeemed................ (1,509,693) (14,807,814) -- --
---------- ------------ ---------- ------------
-- --
Net increase................... 3,933,497 $ 38,399,844 -- --
========== ============ ========== ============
Class B:
Shares sold.................... 11,655,615 $114,442,396 20,439,840 $185,976,149
Dividends reinvested........... 887,671 8,477,253 1,233,917 10,587,010
---------- ------------ ---------- ------------
12,543,286 122,919,649 21,673,757 196,563,159
Shares redeemed................ (15,047,400) (146,553,289) (10,053,996) (91,337,193)
---------- ------------ ---------- ------------
Net increase (decrease)........ (2,504,114) $(23,633,640) 11,619,761 $105,225,966
========== ============ ========== ============
Alger Small Capitalization Portfolio
Class A:*
Shares sold.................... 2,344,420 $ 19,859,434 -- --
Shares redeemed................ (1,234,423) (10,347,321) -- --
---------- ------------ ---------- ------------
Net increase................... 1,109,997 $ 9,512,113 -- --
========== ============ ========== ============
Class B:
Shares sold.................... 50,192,210 $476,269,786 65,877,346 $715,329,513
Dividends reinvested........... 9,868,408 89,901,198 2,431,612 25,264,448
---------- ------------ ---------- ------------
60,060,618 566,170,984 68,308,958 740,593,961
Shares redeemed................ (56,734,048) (527,709,489) (58,979,523) (640,194,617)
---------- ------------ ---------- ------------
Net increase................... 3,326,570 $ 38,461,495 9,329,435 $100,399,344
========== ============ ========== ============
Alger Balanced Portfolio
Class A:*
Shares sold.................... 21,975 $ 315,411 -- --
Shares redeemed................ (2,160) (31,337) -- --
---------- ------------ ---------- ------------
Net increase................... 19,815 $ 284,074 -- --
========== ============ ========== ============
Class B:
Shares sold.................... 313,875 $ 4,515,745 1,054,356 $ 14,459,376
Dividends reinvested........... 23,152 328,056 9,599 129,105
---------- ------------ ---------- ------------
337,027 4,843,801 1,063,955 14,588,481
Shares redeemed................ (471,261) (6,738,625) (571,454) (7,908,926)
---------- ------------ ---------- ------------
Net increase (decrease)........ (134,234) $ (1,894,824) 492,501 $ 6,679,555
========== ============ ========== ============
</TABLE>
<PAGE>
-32-
<TABLE>
<CAPTION>
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited)
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
------ ------ ------- ------
<S> <C> <C> <C> <C>
Alger MidCap Growth Portfolio
Class A:*
Shares sold .................... 689,314 $ 12,570,510 -- --
Shares redeemed ................ (458,009) (8,262,055) -- --
------------- ------------- ------------- -------------
Net increase ................... 231,305 $ 4,308,455 -- --
============= ============= ============= =============
Class B:
Shares sold .................... 3,167,285 $ 60,485,482 5,967,864 $ 109,772,851
Dividends reinvested ........... 176,660 3,335,332 208,813 3,587,405
------------- ------------- ------------- -------------
3,343,945 63,820,814 6,176,677 113,360,256
Shares redeemed ................ (2,423,434) (45,788,045) (2,369,463) (43,593,307)
------------- ------------- ------------- -------------
Net increase ................... 920,511 $ 18,032,769 3,807,214 $ 69,766,949
============= ============= ============= =============
Alger Capital Appreciation Portfolio
Class A:*
Shares sold .................... 794,115 $ 16,925,487 -- --
Shares redeemed ................ (434,233) (9,130,056) -- --
------------- ------------- ------------- -------------
Net increase ................... 359,882 $ 7,795,431 -- --
============= ============= ============= =============
Class B:
Shares sold .................... 4,625,631 $ 101,613,263 9,017,193 $ 187,170,688
Dividends reinvested ........... 43,004 941,804 69,287 1,293,585
------------- ------------- ------------- -------------
4,668,635 102,555,067 9,086,480 188,464,273
Shares redeemed ................ (4,271,464) (93,022,340) (3,944,113) (82,235,369)
------------- ------------- ------------- -------------
Net increase ................... 397,171 $ 9,532,727 5,142,367 $ 106,228,904
============= ============= ============= =============
Alger Money Market Portfolio:
Shares sold .................... 691,276,098 $ 691,276,098 903,938,157 $ 903,938,157
Dividends reinvested ........... 4,762,285 4,762,285 11,911,938 11,911,938
------------- ------------- ------------- -------------
696,038,383 696,038,383 915,850,095 915,850,095
Shares redeemed ................ (733,740,772) (733,740,772) (815,956,070) (815,956,070)
------------- ------------- ------------- -------------
Net increase (decrease) ........ (37,702,389) $ (37,702,389) 99,894,025 $ 99,894,025
============= ============= ============= =============
</TABLE>
*Initially offered January 1, 1997.
<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
- -------------------------------------------------------------------------------
Transfer Agent
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, N.J. 07302
- -------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of The
Alger Fund. It is not authorized for distribution to prospective investors
unless accompanied by an effective Prospectus for the Fund, which contains
information concerning the Fund's investment policies, fees and expenses as well
as other pertinent information.
REP 47
===============================================================================
THE|
ALGER| MEETING THE CHALLENGE
FUND| OF INVESTING
Alger Growth Portfolio
Alger Small Capitalization Portfolio
Alger Balanced Portfolio
Alger MidCap Growth Portfolio
Alger Capital Appreciation Portfolio
Alger Money Market Portfolio
SEMI-ANNUAL| April 30, 1997
REPORT| (Unaudited)
