FELLOW SHAREHOLDERS: DECEMBER 3, 1997
A YEAR-TO-DATE REVIEW
While the fiscal year ended October 31, 1997 resulted in strong performance
returns for all of the major stock market indices, the road was not a smooth
one. Thus far, the calendar year can be divided into two parts. The first part
took place from January all the way through the 27th of October. This period was
generally very positive for the market, but was punctuated by several sharp
downward corrections (e.g., March--April and August--September). The main focus
of investors during this period was the same as it had been since March of
1996--whether or not the Fed would raise rates. Against this background, it is
important to understand that most economists have consistently misunderstood the
nature of the market and the economy. While it is true that the economy was
strong for the first three quarters of 1997, dropping the unemployment rate to a
twenty-four year low of 4.7%, there was no resulting increase in inflation as
most observers had been expecting. In fact, inflation dropped throughout the
year until it finally attained a level which is the lowest in thirty-two years.
The broadest measure of this low inflation is the implicit price deflator, which
fell to a 1.4% annual rate in the third quarter. This occurred despite a 4.9%
increase in GDP in the first quarter, a 3.3% increase in the second quarter and
a 3.3% (revised) increase in the third quarter.
Because of the concern about a possible build-up in inflationary pressures,
investors and economists have been primarily concerned with the level of
economic activity. As recently as October 8th, for example, the market was still
focusing on excess strength in the economy. That day, comments from Alan
Greenspan hit both the stock and bond markets hard. In his comments, Greenspan
rebutted the developing theory that there was a new economic paradigm which
allowed for rapid economic expansion without inflation due to improved
productivity. On that day, just over two months ago, the long-bond traded at
6.37% in response to his comments. A week later, the PPI, which had been
negative for six months, shot up .5% in September, further aggravating the
situation.
As it had for eighteen months, Wall Street was nervously awaiting the Federal
Open-Market Committee meeting in November and many expected a rate increase.
Then, on October 27th, the market underwent a gigantic change with the Dow
falling 554 points to 7161, the largest point drop in the history of the market.
This drop was occasioned by a collapse of the Hong Kong market which in turn had
been precipitated by weaknesses in currency markets of other Asian countries. By
November 19th, the stock market had recovered most of its loss and closed at
7725, higher than its close of October 24th, the Friday before the big slide.
Recently the Dow re-penetrated 8000. It is fair to say, however, that most of
the rebound has been denominated by blue-chip stocks and utilities, which has
caused the S&P 500 to outdistance other market indices as well as growth stocks
in general. The fabric of the market is now very different than it was prior to
the events of late October. The differences are as follows:
1. It seems fairly obvious that the Federal Reserve will not raise rates. It
declined to do so in November, and most probably will refrain from doing so
in the near future. This is because turmoil in the currency markets,
especially in Asia, has taken center stage. Consequently, raising rates
would exacerbate the trade imbalance by leading to a stronger dollar and
further hurt weak Asian countries.
2. There is a rapidly emerging viewpoint that the problem with the economy is
not potential inflation, but potential deflation. This is a result of
pressures brought to bear on the American economy by the stronger dollar, as
well as weakness in Asian economies forcing them into competitive exporting.
The other side of the coin is, of course, that our own exports will
doubtlessly suffer. To put things in perspective, exports from the United
States account for 11% of our GDP, with 2% aimed at the affected countries
of Japan, Korea, Malaysia, Thailand, Philippines and Indonesia. Presumably,
our exports to these countries could fall as much as 20% which would mean a
reduction in GDP of 1/2 of 1%. Obviously, this is a very crude number, but
it gives an indication of the effect.
<PAGE>
3. The debt market has reacted to the turmoil in Asia, creating an offsetting
impulse in the market. The long-bond has now fallen to a yield of 6.01%,
down from 6.91% six months ago. This has caused a considerable flattening of
the yield curve. Ninety-day T-bills are actually higher than they were six
months ago and are trading at 5.24%, or only 77 basis points lower than the
long-bond. This flattening of the yield curve suggests that three things can
happen:
1) The price on the long-bond will drop to reassert a more normal
relationship.
2) The Fed will lower interest rates to avert an economic slowdown.
3) The economy will probably slow, causing the entire structure of the
yield curve to fall, ultimately leading the Fed to lower interest rates,
perhaps after the yield curve inverts.
I believe that given the possibility of a slowing economy, number one is
unlikely, number two is remote at present, and number three is quite
likely, perhaps in 1998.
4. In terms of valuation, the increase in the bond market has made stocks much
more attractive. Presently, the earnings yield on the S&P 500 is 80% of the
yield on the long-bond, which is higher than the fifteen year average. On
our short-term model, the Dow is fully valued but not over valued. On
balance, I would say valuation looks good. One possibility is that p/e
ratios will get to 20 times 1998 EPS next year, driven by low inflation and
low interest rates. As our bottom-up forecast of Dow earnings is $486 per
share, this suggests a Dow of 9720. Let's all hope! Furthermore, while
growth stocks have rallied somewhat this year, at 1.4 times the market
multiple they are still at historically low p/e levels. This is a function
of the significant drop in interest rates. Since quality growth stocks have
typically traded at 1.5 to 2 times the market multiple, we believe that
there is considerable room for further multiple expansion in the months
ahead.
PORTFOLIO MATTERS
ALGER SMALL CAPITALIZATION PORTFOLIO
The Portfolio's total return for the year was 12.85% versus a return of 21.17%
for the Russell 2000 Growth Index. The Portfolio's return was unfavorable
relative to the comparative index, due in large part to its relative
underweighting throughout the year in a few select industries, including
financial services and retail. While financial and retail companies did not, in
our opinion, offer the most exciting growth opportunities in 1997, stocks in
these industries, particularly those with predominantly U.S. exposure, held up
very well during what has been an extremely turbulent small cap market.
Additionally, while our comparative index includes growth stocks, the growth
stocks which we typically hold in the Portfolio tend to be faster growing and,
as a result, are more volatile during periods of economic uncertainty. For most
of 1997, investors have been primarily concerned that the economy was growing
too quickly, unemployment levels were too low, and inflation was just around the
corner. It was presumed that these concerns would lead to a series of increases
in Federal Reserve driven rates. In general, when the market is apprehensive
about the economic future, it is not willing to pay high p/e multiples for small
cap growth stocks. As a consequence, very fast growing small cap companies
experienced a severe multiple compression. This is evidenced in the Small
Capitalization Portfolio which, at October 31, had a p/e multiple of only 26.2
despite a 1 year estimated EPS growth rate of 42%. The result is that we are
entering fiscal year 1998 with a Portfolio comprising very attractive valuations
relative to the broad market.
ALGER GROWTH PORTFOLIO
For the year ended October 31, 1997, the Alger Growth Portfolio's total return
was 24.94% compared to 32.11% for the S&P 500. As stated previously, for most of
1997 the worries impacting both the bond and stock markets have been that the
economy was growing too quickly, unemployment levels were too low, and inflation
was just around the corner. While the level of economic activity in 1997 has
been stronger than we anticipated, inflation continues to be moderate to
non-existent. However, the economic uncertainty which prevailed throughout most
of the year resulted in defensive positioning of investors. As a result, there
was a "flight to quality" with investors favoring blue-chip type stocks with
predictable earnings over traditional growth stocks with more explosive earnings
potential. Stocks of companies which are expected to increase their earnings at
a faster rate, which are the types of stocks in which this Portfolio typically
invests, did not fare as well.
<PAGE>
ALGER MIDCAP GROWTH PORTFOLIO
For the year ended October 31, 1997, the Alger MidCap Growth Portfolio's total
return was 21.37% compared to 32.67% for the S&P MidCap 400 Index. Many of the
same factors which affected the Small Capitalization and Growth Portfolios were
in evidence for the MidCap Growth Portfolio. Most notable, in addition to the
general underperformance of the growth style relative to the major averages, was
the Portfolio's relative underweighting in the financial service and retail
industries. While the relative performance was disappointing, the Portfolio is
currently well diversified and boasts very attractive valuations relative to the
market based on 1998 estimates.
ALGER BALANCED PORTFOLIO
The Alger Balanced Portfolio's total return for the twelve-month period ended
October 31, 1997, was 19.25%, comparing unfavorably to the S&P 500 which
returned 32.11% but favorably to the Lehman Brothers Gov't/Corp. Bond Index
which returned 8.80%. Throughout the year, the Portfolio maintained a ratio of
approximately 55-65% common stocks and 35-45% debt securities. The total return
suffered as a result of the lackluster performance, for reasons discussed
previously, in the more aggressive equity portion of the portfolio.
ALGER CAPITAL APPRECIATION PORTFOLIO
For the year ended October 31, 1997, the Alger Capital Appreciation Portfolio's
total return was 21.00%, compared to 32.11% for the S&P 500. The shortfall
relative the S&P 500 is mainly stylistic in nature. This Portfolio employs an
"allcap" (small, medium and large capitalizations) portfolio management
strategy. Exposure to small cap growth stocks in the first half of the year
negatively impacted the Portfolio's return relative to the larger averages,
specifically the S&P 500. Additionally, as was the case with the other
Portfolios, the past year proved difficult for traditional growth stocks in
general. Given the possibility of a slowing economy and low inflation in the
coming year, we expect that growth stocks, which are currently selling at low
multiples, will do very well.
LOOKING AHEAD
How can we summarize? I believe that the problems in southeast Asia have a
deflationary component and will result in some slowing of our economy over the
next few years. On the other hand, I believe our economy seems to be in
sufficiently good shape due to low unemployment levels and high productivity to
withstand some slowing. I believe the fourth quarter will be slower than the
third, with growth of possibly 2.5%. Evidence that the economy is starting to
slow is beginning to appear. The most obvious data point is the National
Association of Purchasing Managers Index released several days ago. It fell to
54.4 in November from 56 in October. While this is still positive, it is well
below July's peak of 58.6. Auto sales have also been slow and retail sales are
not that robust, dropping 1.8% in the first week of November. However, those who
are predicting a dire slowdown may be sorely disappointed. The lower interest
rates are spurring real estate activity, leading housing starts to an eight
month high in October. Consumer confidence also remains strong despite the
problems in Asia. This is hardly surprising since most Americans have a very
localized view of the world and probably will not be concerned about Asia until
they see some actual effects on their own economic conditions.
This, plus the low inflation should keep the Federal Reserve from raising rates
for some time. Moreover, an overall pattern of lower interest rates could result
by year-end. I believe there is a strong chance that the yield on the long-bond
will fall below 6% by year-end. Because of the slowing economy, I believe
earnings will increase next year, but modestly. P/E ratios, however, could reach
very high levels because of the lack of inflation and lower interest rates.
Thus, I am still bullish on stocks, especially domestic growth stocks.
Respectfully submitted,
/s/ David D. Alger
------------------
David D. Alger
President
<PAGE>
TABLE OF CONTENTS
Alger Growth Portfolio:
Portfolio Highlights................................................... 5
Schedule of Investments................................................ 6
Financial Highlights................................................... 8
Alger Small Capitalization Portfolio:
Portfolio Highlights................................................... 9
Schedule of Investments................................................10
Financial Highlights...................................................13
Alger Balanced Portfolio:
Portfolio Highlights...................................................14
Schedule of Investments................................................15
Financial Highlights...................................................17
Alger MidCap Growth Portfolio:
Portfolio Highlights...................................................18
Schedule of Investments................................................19
Financial Highlights...................................................21
Alger Capital Appreciation Portfolio:
Portfolio Highlights...................................................22
Schedule of Investments................................................23
Financial Highlights...................................................25
Alger Money Market Portfolio:
Schedule of Investments................................................26
Financial Highlights...................................................28
Statements of Assets and Liabilities..........................................29
Statements of Operations .....................................................30
Statement of Cash Flows (Alger Capital Appreciation Portfolio)................31
Statements of Changes in Net Assets...........................................32
Notes to Financial Statements ................................................33
Report of Independent Public Accountants......................................39
<PAGE>
-5-
- --------------------------------------------------------------------------------
ALGER GROWTH PORTFOLIO PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/97
- --------------------------------------------------------------------------------
[CHART]
[The following table represents a graph in the printed piece]
Alger
Growth S&P 500
11/1/87 10000 10000
10773 11479
10/31/89 13680 14511
13134 13426
10/31/91 19148 17923
20998 19711
10/31/93 27125 22655
28230 23531
10/31/95 38895 29755
42039 36924
10/31/97 52613 48783
ENDING VALUE
ALGER GROWTH B:
$52,613
ENDING VALUE
S&P 500 INDEX:
$48,782
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Growth Class B shares and the S&P 500 Index for the
ten years ended October 31, 1997. Figures for both the Alger Growth Class B
shares and the S&P 500 Index, an unmanaged index of common stocks, include
reinvestment of dividends. Performance for the Alger Growth Class A and Class C
shares will vary from the results shown above due to differences in expenses and
sales charges those classes bear.
PERFORMANCE COMPARISON AS OF 10/31/97+
AVERAGE ANNUAL TOTAL RETURNS
1 5 10 SINCE
YEAR YEARS YEARS INCEPTION
---------------------------------------------
CLASS A (INCEPTION 1/1/97) * * * 17.34%
S&P 500 Index * * * 25.31%
- --------------------------------------------------------------------------------
CLASS B (INCEPTION 11/11/86) 19.94% 19.93% 18.06% 16.01%
S&P 500 Index 32.11% 19.87% 17.17% 16.08%
- --------------------------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) * * * (4.97)%
S&P 500 Index * * * (3.76)%
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-6-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1997
COMMON STOCKS--91.5% SHARES VALUE
------ -----
AEROSPACE--4.0%
AMR Corp.*..................................... 78,200 $ 9,105,452
Gulfstream Aerospace Corp.*.................... 54,000 1,566,000
Sundstrand Corp................................ 65,400 3,556,125
------------
14,227,577
------------
APPAREL--.5%
Tommy Hilfiger Corporation*.................... 41,500 1,641,865
------------
APPLIANCES & TOOLS--3.1%
Sunbeam Corp................................... 247,500 11,214,968
------------
BIO-TECHNOLOGY--.4%
BioChem Pharma Inc.*........................... 60,000 1,503,780
------------
BROADCASTING--2.6%
Westinghouse Electric Corp..................... 353,000 9,332,613
------------
CHEMICALS--.6%
Du Pont E.I. De Nemours & Co................... 36,800 2,093,000
------------
COMMUNICATIONS--2.9%
America Online Inc.*........................... 57,000 4,389,000
WorldCom Inc.*................................. 178,900 6,015,513
------------
10,404,513
------------
COMMUNICATION
EQUIPMENT--7.1%
Bay Networks Inc.*............................. 151,300 4,784,862
CIENA Corporation*............................. 109,200 6,006,000
Cisco Systems, Inc.*........................... 136,100 11,164,419
Tellabs, Inc.*................................. 65,400 3,531,600
------------
25,486,881
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--5.4%
Compaq Computer Corporation*................... 169,100 10,780,125
Electronics For Imaging Inc.*.................. 73,700 3,445,475
International Business Machines Corp........... 53,100 5,207,145
------------
19,432,745
------------
COMPUTER SOFTWARE--5.6%
HBO & Company.................................. 94,500 4,110,750
Microsoft Corporation*......................... 55,000 7,150,000
Oracle Corp.*.................................. 150,150 5,372,516
Parametric Technology Corporation*............. 77,200 3,406,450
------------
20,039,716
------------
CONGLOMERATE--3.3%
General Electric Co............................ 22,700 1,465,580
Tyco International Ltd......................... 269,294 10,165,849
------------
11,631,429
------------
CONSUMER PRODUCTS--2.8%
CUC International Inc.*........................ 226,400 6,678,800
Fortune Brands Inc............................. 52,000 1,719,276
Newell Co...................................... 42,000 1,611,750
------------
10,009,826
------------
ENERGY & ENERGY
SERVICES--4.6%
Diamond Offshore Drilling Inc.................. 94,000 5,851,500
Nabors Industries Inc.*........................ 92,000 3,783,500
Schlumberger Ltd............................... 76,100 6,658,750
------------
16,293,750
------------
FINANCIAL SERVICES--9.2%
Banc One Corp.................................. 36,142 1,883,901
Bank of New York Inc........................... 100,000 4,706,300
Citicorp ...................................... 23,800 2,976,499
First Union Corp............................... 53,600 2,629,777
Federal Home Loan
Mortgage Corporation........................ 94,100 3,564,038
Household International Inc.................... 15,800 1,789,350
Money Store Inc. (The)......................... 106,300 3,016,263
Morgan Stanley, Dean Witter,
Discover & Co............................... 142,900 7,002,100
Paine Webber Group Inc......................... 43,300 1,913,340
Schwab (Charles)
Corporation (The)........................... 95,100 3,245,287
------------
32,726,855
------------
FOODS & BEVERAGES--.9%
PepsiCo., Inc.................................. 88,600 3,261,632
------------
HEALTH CARE--1.9%
Bergen Brunswig Corp. Cl. A.................... 20,500 821,292
Guidant Corp................................... 61,000 3,507,500
McKesson Corp.................................. 22,500 2,414,543
------------
6,743,335
------------
INSURANCE--1.7%
American International Group, Inc.............. 60,550 6,179,915
------------
LEISURE &
ENTERTAINMENT--3.4%
Carnival Corporation Cl. A..................... 157,000 7,614,500
International Game Technology.................. 151,800 3,880,463
Mirage Resorts, Incorporated*.................. 30,000 750,000
------------
12,244,963
------------
MEDICAL SERVICES--2.3%
AmeriSource Health Corp Cl. A*................. 30,500 1,810,937
Cardinal Health, Inc........................... 62,000 4,603,500
PhyCor, Inc.*.................................. 84,200 1,941,905
------------
8,356,342
------------
<PAGE>
-7-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
OIL & GAS--2.6%
Global Marine Inc*............................. 90,000 $ 2,801,250
Halliburton Co................................. 108,400 6,463,350
------------
9,264,600
------------
PHARMACEUTICALS--10.2%
Bristol Myers Squibb Co........................ 103,000 9,038,250
Eli Lilly & Company............................ 99,200 6,634,000
Merck & Co., Inc............................... 37,900 3,382,575
Pfizer Inc..................................... 40,200 2,844,150
Schering-Plough Corporation.................... 148,400 8,319,749
Warner-Lambert Co.............................. 44,500 6,371,866
------------
36,590,590
------------
POLLUTION CONTROL--1.3%
USA Waste Services, Inc.*...................... 122,900 4,547,300
------------
RETAILING--6.0%
General Nutrition Companies, Inc.*............. 60,100 1,893,150
Home Depot, Inc................................ 179,050 9,959,656
Staples Inc.*.................................. 54,500 1,430,625
Wal-Mart Stores Inc............................ 232,800 8,177,100
------------
21,460,531
------------
SEMICONDUCTORS--6.7%
Adaptec, Inc.*................................. 48,000 2,325,024
Altera Corporation*............................ 164,000 7,277,500
Linear Technology Corporation.................. 123,300 7,752,488
Maxim Integrated Products, Inc.*............... 51,500 3,411,875
Texas Instruments, Incorporated................ 31,400 3,350,003
------------
24,116,890
------------
SEMICONDUCTOR
CAPITAL EQUIPMENT--.9%
Applied Materials Inc.*........................ 51,500 1,718,813
Teradyne, Inc.*................................ 35,600 1,332,793
------------
3,051,606
------------
TOYS--.5%
Mattel Inc..................................... 45,700 1,776,587
------------
TRANSPORTATION--1.0%
Burlington Northern Santa Fe Co................ 19,400 1,843,000
Textron Inc.................................... 29,200 1,688,140
------------
3,531,140
------------
Total Common Stocks
(Cost $265,910,578)......................... 327,164,949
------------
SHORT-TERM CORPORATE PRINCIPAL
NOTES--11.8% AMOUNT
---------
Bell Atlantic Network Funding Co.,
5.60%, 11/14/97.............................. $ 6,650,000 6,636,552
Cooperative Association of
Tractor Dealers Inc.,
5.57%, 11/6/97............................... 2,800,000 2,797,834
Ford Motor Credit Company,
5.60%, 11/13/97.............................. 9,000,000 8,983,200
France Telecom.,
5.51%, 11/5/97............................... 350,000 349,786
GTE Funding Inc.,
5.56%, 11/6/97............................... 1,040,000 1,039,197
McDonald's Corp.,
5.57%, 11/5/97............................... 10,000,000 9,993,811
Omnibus Funding Corp. (Series C),
5.53%, 11/4/97(a)............................ 3,550,000 3,548,364
Triple-A One Plus Funding Corp.,
5.55%, 11/5/97(a)............................ 2,000,000 1,998,767
USAA Capital Corporation,
5.55%, 11/6/97............................... 6,700,000 6,694,835
------------
Total Short-Term Corporate Notes
(Cost $42,042,346).......................... 42,042,346
------------
Total Investments
(Cost $307,952,924)(b)...................... 103.3% 369,207,295
Liabilities in
Excess of Other Assets ..................... (3.3) (11,717,322)
------------
Net Assets..................................... 100.0% $357,489,973
===== ============
<PAGE>
-8-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS C CLASS A
(v)(vii) (vi)(vii) CLASS B(i)
------------ ---------- -------------------------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, -------------------------------------------------------------------
1997 1997 1997 1996 1995 1994 1993
------------ ---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ......................... $ 11.98 $ 9.40 $ 9.49 $ 9.38 $ 6.97 $ 7.43 $ 5.76
------- -------- -------- -------- -------- -------- -------
Net investment income (loss) ...... (.02) (.02) (.13) (.08)(ii) (.02) (.07)(ii) (.02)
Net realized and unrealized gain
(loss) on investments ........... (.46) 2.20 2.44 .78 2.59 .35 1.70
------- -------- -------- -------- -------- -------- -------
Total from investment operations .. (.48) 2.18 2.31 .70 2.57 .28 1.68
Distributions from net
realized gains .................. -- -- (.30) (.59) (.16) (.74) (.01)
------- -------- -------- -------- -------- -------- -------
Net asset value, end of period .... $ 11.50 $ 11.58 $ 11.50 $ 9.49 $ 9.38 $ 6.97 $ 7.43
======= ======== ======== ======== ======== ======== =======
Total Return (iii) ................ (4.0)% 23.2% 24.9% 8.1% 37.8% 4.1% 29.2%
======= ======== ======== ======== ======== ======== =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) .............. $ 199 $ 52,307 $304,984 $266,207 $154,284 $ 76,390 $37,988
======= ======== ======== ======== ======== ======== =======
Ratio of expenses to average
net assets ................... 2.02% 1.30% 2.08% 2.08%(iv) 2.09%(iv) 2.20%(iv) 2.20%(iv)
======= ======== ======== ======== ======== ======== =======
Ratio of net investment income
(loss) to average net assets . (1.43)% (.39)% (1.13)% (.84)% (1.03)% (1.01)% (1.16)%
======= ======== ======== ======== ======== ======== =======
Portfolio Turnover Rate ......... 128.26% 128.26% 128.26% 94.91% 118.16% 103.86% 108.54%
======= ======== ======== ======== ======== ======== =======
Average Commission Rate Paid .... $ .0699 $ .0699 $ .0699 $ .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) Amount was computed based on average shares outstanding during the year.
(iii) Does not reflect the effect of any sales charges.
(iv) 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 2.07% 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 fees
offset by earnings credits, if any.
(v) Initially offered August 1, 1997.
(vi) Initially offered January 1, 1997.
(vii) Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
<PAGE>
-9-
- --------------------------------------------------------------------------------
ALGER SMALL CAPITALIZATION PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/97
- --------------------------------------------------------------------------------
[CHART]
{The following table represents a graph in the printed piece]
Alger Russell
Small Cap 2000 Growth
11/1/87 10000 10000
11933 12312
10/31/89 19700 14617
18305 10766
10/31/91 29972 17930
30999 17866
10/31/93 38993 22809
38585 22601
10/31/95 56393 27249
58181 30879
10/31/97 65655 37418
ENDING VALUE
ALGER SMALL
CAPITALIZATION B:
$65,655
ENDING VALUE
RUSSELL 2000
GROWTH INDEX:
$37,418
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Small Capitalization Class B shares and the Russell
2000 Growth Index for the ten years ended October 31, 1997. Figures for both the
Alger Small Capitalization Class B shares and the Russell 2000 Growth Index, an
unmanaged index of common stocks, include reinvestment of dividends. Performance
for the Alger Small Capitalization Class A and Class C shares will vary from the
results shown above due to differences in expenses and sales charges those
classes bear.
PERFORMANCE COMPARISON AS OF 10/31/97+
AVERAGE ANNUAL TOTAL RETURNS
1 5 10 SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------
CLASS A (INCEPTION 1/1/97) * * * 7.04%
Russell 2000 Growth Index * * * 15.64%
- -------------------------------------------------------------------------------
CLASS B (INCEPTION 11/11/86) 8.11% 15.97% 20.71% 17.57%
Russell 2000 Growth Index 21.17% 15.93% 14.11% 10.96%
- -------------------------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) * * * (1.86)%
Russell 2000 Growth Index * * * 4.55%
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-10-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1997
COMMON STOCKS--92.0% SHARES VALUE
------ -----
AEROSPACE--2.6%
Aviall Inc.* ................................. 115,000 $ 1,538,125
BE Aerospace Inc.* ........................... 100,000 2,812,500
Continental Airlines Inc. Cl. B* ............. 94,000 4,065,500
Thiokol Corporation .......................... 20,000 1,831,260
Wyman Gordon Co.* ............................ 223,200 5,384,700
------------
15,632,085
------------
ALUMINUM--.1%
Kaiser Aluminum Corp.* ....................... 55,000 690,965
------------
APPAREL--4.9%
Brylane Inc.* ................................ 67,000 2,910,346
Jones Apparel Group Inc.* .................... 162,300 8,257,013
Mens Wearhouse Inc.* ......................... 58,100 2,251,375
St. John Knits Inc. .......................... 165,500 6,651,114
Tommy Hilfiger Corporation* .................. 149,300 5,906,756
Warnaco Group Inc. Cl. A ..................... 88,000 2,486,000
Wolverine Worldwide Inc. ..................... 50,000 1,100,000
------------
29,562,604
------------
APPLIANCES & TOOLS--1.9%
Sunbeam Corp. ................................ 257,800 11,681,691
------------
AUTOMOTIVE--.3%
Navistar International Corp.* ................ 89,700 2,079,964
------------
AUTOMOTIVE EQUIPMENT
& SERVICES--.4%
Avis Rent A Car Inc.* ........................ 90,500 2,483,139
------------
BIO-TECHNOLOGY--3.2%
BioChem Pharma Inc.* ......................... 162,600 4,075,244
DEKALB Genetics Corp. Cl. B .................. 121,800 4,369,575
Genset ADR* .................................. 94,400 1,793,600
INCYTE Pharmaceuticals, Inc.* ................ 74,000 5,957,000
Interpore International Inc.* ................ 60,000 562,500
MedImmune Inc.* .............................. 60,000 2,392,500
------------
19,150,419
------------
BUILDING &
CONSTRUCTION--.4%
Morrison Knudsen Corp.* ...................... 220,000 2,585,000
------------
BUSINESS SERVICES--1.4%
Pierce Leahy Corp.* .......................... 97,500 2,730,000
United Stationers Inc.* ...................... 65,000 2,632,500
WPP Group ADR ................................ 70,000 3,228,750
------------
8,591,250
------------
COMMUNICATIONS--3.2%
America Online Inc.* ......................... 59,100 4,550,700
Cox Radio, Inc. Cl. A.* ...................... 40,000 1,362,520
Emmis Broadcasting Corp. Cl. A.* ............. 25,000 1,106,250
Jacor Communications Inc.* ................... 151,000 6,323,125
Outdoor Systems, Inc.* ....................... 100,000 3,075,000
Universal Outdoor Holdings Inc.* ............. 77,900 3,291,275
------------
19,708,870
------------
COMMUNICATION
EQUIPMENT--5.2%
Advanced Fibre
Communications Inc.* ....................... 254,800 7,405,252
Bay Networks Inc.* ........................... 280,400 8,867,650
CIENA Corporation* ........................... 164,400 9,042,000
Tellabs, Inc.* ............................... 120,800 6,523,200
------------
31,838,102
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--3.5%
Aavid Thermal
Technologies Inc.* ........................ 45,500 1,353,625
Electronics For Imaging Inc.* ................ 330,000 15,427,500
Essex International Inc.* .................... 118,100 3,912,063
Pameco Corp. Cl. A.* ......................... 12,200 207,400
------------
20,900,588
------------
COMPUTER SERVICES--4.9%
Aris Corp.* .................................. 55,500 1,311,187
CKS Group Inc.* .............................. 92,000 3,335,000
Cambridge Technology
Partners Inc.* ............................ 90,500 3,303,250
Keane Inc.* .................................. 84,500 2,503,313
QuickResponse Service Inc.* .................. 148,800 4,836,000
Sterling Commerce, Inc.* ..................... 120,400 3,995,835
Sungard Data Systems* ........................ 137,600 3,250,800
Technology Solutions Co.* .................... 162,500 5,118,750
Transaction Network
Services Inc.* ............................ 95,000 1,579,375
Whittman-Hart, Inc.* ......................... 16,400 475,600
------------
29,709,110
------------
COMPUTER SOFTWARE--6.9%
CBT Group PLC ADS* ........................... 112,300 8,619,025
Citrix Systems, Inc.* ........................ 124,000 9,106,311
HBO & Company ................................ 140,000 6,090,000
Peregrine Systems Inc.* ...................... 100,000 1,550,000
Radiant Systems Inc.* ........................ 77,500 1,404,688
Saville Systems PLC ADR* ..................... 121,000 7,229,750
Structural Dynamics
Research Corp.* ........................... 239,500 4,580,438
Systems & Computer
Technology Corp.* ......................... 70,000 3,018,750
------------
41,598,962
------------
COMPUTER
TECHNOLOGY--.1%
Digital Microwave Corp.* ..................... 23,500 846,000
------------
<PAGE>
-11-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
CONSUMER PRODUCTS--.8%
Coleman Co. Inc.* ............................ 124,500 $ 1,859,781
Helen of Troy Ltd.* .......................... 186,100 3,093,913
------------
4,953,694
------------
ENERGY &
ENERGY SERVICES--4.3%
Camco International Inc. ..................... 90,200 6,516,950
Diamond Offshore Drilling Inc. ............... 123,400 7,681,650
Hanover Compressor Co.* ...................... 69,500 1,502,938
Hvide Marine Inc. Cl. A* ..................... 95,900 3,164,700
Noble Drilling Corp.* ........................ 100,000 3,556,300
Smith International Inc.* .................... 20,000 1,525,000
UTI Energy Corp.* ............................ 25,000 1,115,625
Unifab International Inc.* ................... 41,000 1,312,000
------------
26,375,163
------------
FINANCIAL SERVICES--5.8%
CCB Financial Corp. .......................... 19,000 1,729,000
Colonial BancGroup Inc. ...................... 16,000 475,008
Commerce Bancshares Inc. ..................... 34,700 2,029,950
Compass Bancshares Inc. ...................... 67,500 2,543,940
E*TRADE Group, Inc.* ......................... 187,000 5,773,625
Mercantile Bankshares Corp. .................. 50,250 1,790,156
Money Store Inc. (The) ....................... 387,000 10,981,125
National Commerce Bancorp .................... 90,000 2,666,250
Provident Bankshares Corp. ................... 42,000 2,268,000
Sovereign Bancorp Inc. ....................... 172,000 3,053,000
Wilmington Trust Corp. ....................... 37,000 2,062,750
------------
35,372,804
------------
FOODS & BEVERAGES--3.8%
Earthgrains Company .......................... 141,300 5,810,963
Fine Host Corp.* ............................. 93,300 2,612,400
Flowers Industries Inc. ...................... 197,000 3,743,000
Interstate Bakeries Corp. .................... 67,200 4,292,400
JP Foodservice Inc.* ......................... 109,000 3,481,242
Morningstar Group Inc.* ...................... 80,000 3,420,000
------------
23,360,005
------------
FREIGHT--.2%
Expeditors International
of Washington Inc. ........................ 28,000 1,029,000
------------
HEALTH CARE--2.7%
Bergen Brunswig Corp. Cl. A .................. 72,700 2,912,580
McKesson Corp. ............................... 65,000 6,975,345
Omnicare, Inc. ............................... 166,700 4,636,427
Osteotech Inc.* .............................. 25,000 500,000
Universal Health
Services Inc. Cl.B.* ...................... 25,000 1,101,575
------------
16,125,927
------------
INDUSTRIAL
EQUIPMENT--.1%
Cal Dive International, Inc.* ................ 25,000 781,250
------------
INSURANCE--1.8%
Enhance Financial Services
Group Inc. ................................ 40,000 2,112,520
Executive Risk Inc. .......................... 48,500 3,194,938
USF&G Corp. .................................. 89,000 1,802,250
Vesta Insurance Group Inc. ................... 61,700 3,586,312
------------
10,696,020
------------
LEISURE &
ENTERTAINMENT--2.1%
Cinar Films, Inc. Cl. B.* .................... 41,500 1,613,313
Family Golf Centers Inc.* .................... 183,000 4,895,250
International Game Technology ................ 236,800 6,053,318
------------
12,561,881
------------
MANUFACTURING--.1%
Ballantyne of Omaha Inc.* .................... 20,000 335,000
------------
MEDICAL DEVICES--3.0%
Biomet Inc. .................................. 205,000 5,112,290
EndoSonics Corp.* ............................ 52,000 598,000
ESC Medical Systems Ltd. ..................... 148,700 5,836,475
Mentor Corp. ................................. 69,200 2,521,510
Ocular Sciences Inc.* ........................ 75,000 1,650,000
Safeskin Corp.* .............................. 54,800 2,486,550
------------
18,204,825
------------
MEDICAL SERVICES--2.8%
ArQule Inc.* ................................. 17,500 376,250
Express Scripts Inc. Cl. A.* ................. 51,000 2,875,125
Hooper Holmes Inc. ........................... 136,600 2,014,850
Lincare Holdings Inc.* ....................... 50,000 2,681,250
Pediatrix Medical Group Inc.* ................ 47,000 1,985,750
PhyCor, Inc.* ................................ 175,087 4,038,030
Protocol Systems Inc.* ....................... 57,500 610,938
Quorum Health Group Inc.* .................... 90,000 2,182,500
------------
16,764,693
------------
OIL & GAS--2.8%
EVI Inc.* .................................... 68,800 4,416,134
Global Industries Ltd.* ...................... 100,000 2,012,500
Global Marine Inc.* .......................... 115,000 3,579,375
Varco International Inc.* .................... 112,000 6,825,056
------------
16,833,065
------------
PAPER PACKAGING &
FOREST PRODUCTS--.8%
Sealed Air Corp.* ............................ 99,400 5,125,362
------------
PHARMACEUTICALS--2.4%
Dura Pharmaceuticals, Inc.* .................. 130,000 6,288,750
Elan Corp PLC-ADR* ........................... 169,000 8,428,875
------------
14,717,625
------------
<PAGE>
-12-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
POLLUTION CONTROL--2.9%
American Disposal Services Inc.* ............. 59,000 $ 2,079,750
USA Waste Services, Inc.* .................... 422,725 15,640,825
------------
17,720,575
------------
PUBLISHING--.2%
Big Flowers Press Holdings Inc.* ............. 60,000 1,320,000
------------
RESTAURANTS &
LODGING--.3%
Foodmaker Inc.* .............................. 129,000 2,120,502
------------
RETAILING--6.3%
BJS Wholesale Club Inc.* ..................... 122,500 3,529,592
Bed Bath & Beyond Inc.* ...................... 116,900 3,711,575
Borders Group Inc.* .......................... 188,600 4,891,907
CompUSA Inc.* ................................ 60,000 1,965,000
Dress Barn Inc.* ............................. 46,300 1,174,862
Family Dollar Stores Inc. .................... 98,400 2,312,400
General Nutrition Companies, Inc.* ........... 101,000 3,181,500
Genesco Inc.* ................................ 59,500 754,936
Michaels Stores Inc.* ........................ 136,800 4,112,618
Payless ShoeSource Inc.* ..................... 20,000 1,115,000
Proffitt's Inc.* ............................. 160,000 4,590,080
Quiksilver Inc.* ............................. 17,500 538,125
Stage Stores, Inc.* .......................... 82,800 3,022,200
WestPoint Stevens Inc.* ...................... 77,800 3,189,800
------------
38,089,595
------------
SEMICONDUCTORS--6.9%
Adaptec, Inc.* ............................... 26,200 1,269,075
Altera Corporation* .......................... 252,000 11,182,500
Linear Technology Corporation ................ 217,300 13,662,738
Maxim Integrated Products,lnc.* .............. 158,400 10,494,000
Microchip Technology
Incorporated* ............................. 122,300 4,876,713
Texas Instruments,
Incorporated .............................. 3,000 320,064
------------
41,805,090
------------
SUPERMARKETS--1.5%
Dominick's Supermarkets, Inc.* ............... 20,000 730,000
Fred Meyer, Inc.* ............................ 141,600 4,044,521
Whole Foods Market Inc.* ..................... 108,000 4,239,000
------------
9,013,521
------------
TRANSPORTATION--1.4%
Coach USA Inc.* .............................. 208,200 6,193,950
KnightsbridgeTankers Ltd.* ................... 75,000 2,250,000
------------
8,443,950
------------
Total Common Stocks
(Cost $429,051,368) ....................... 558,808,296
------------
Short-Term Principal
Corporate Notes--1.3% Amount
------------
Florida Power & Light Company,
5.54%, 11/12/97 ............................ $ 1,900,000 1,896,784
USAA Capital Corporation,
5.55%, 11/6/97 ............................. 5,800,000 5,795,529
------------
Total Short-Term Corporate Notes
(Cost $7,692,313) ......................... 7,692,313
------------
Total Investments
(Cost $436,743,681)(a) .................... 93.3% 566,500,609
Other Assets in Excess
of Liabilities ............................ 6.7 40,484,229
----- ------------
Net Assets ................................... 100.0% $606,984,838
===== ============
* Non-income producing security.
(a) At October 31, 1997, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $436,743,681, amounted to
$129,756,928 which consisted of aggregate gross unrealized appreciation of
$134,740,925 and aggregate gross unrealized depreciation of $4,983,997.
See Notes to Financial Statements.
<PAGE>
-13-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS C CLASS A
(iv)(vi) (v)(vi) CLASS B(i)
------------ ---------- ------------------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ------------------------------------------------------------
1997 1997 1997 1996 1995 1994 1993
------------ ---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ......................... $ 10.38 $ 9.21 $ 10.86 $ 11.13 $ 7.62 $ 8.65 $ 6.88
------- ------- -------- -------- -------- -------- --------
Net investment income (loss) ...... (.03) (.04) (.11) (.09) (.13) (.09) (.08)
Net realized and unrealized gain
(loss) on investments .......... (.06) 1.18 1.28 .42 3.64 (.02) 1.85
------- ------- -------- -------- -------- -------- --------
Total from investment operations .. (.09) 1.14 1.17 .33 3.51 (.11) 1.77
Distributions from net realized
gains .......................... -- -- (1.74) (.60) -- (.92) --
------- ------- -------- -------- -------- -------- --------
Net asset value, end of period .... $ 10.29 $ 10.35 $ 10.29 $ 10.86 $ 11.13 $ 7.62 $ 8.65
======= ======= ======== ======== ======== ======== ========
Total Return (ii) ................. (.9)% 12.4% 12.9% 3.2% 46.2% (1.1%) 25.8%
======= ======= ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) .............. $ 338 $25,996 $580,651 $553,872 $463,718 $294,890 $300,108
======= ======= ======== ======== ======== ======== ========
Ratio of expenses to average
net assets ................... 2.09% 1.38% 2.14% 2.13%(iii) 2.11%(iii) 2.18%(iii) 2.13%(iii)
======= ======= ======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets . (1.71)% (.93)% (1.67)% (1.59%) (1.75)% (1.51)% (1.52)%
======= ======= ======== ======== ======== ======== ========
Portfolio Turnover Rate ......... 120.27% 120.27% 120.27% 153.35% 97.37% 131.86% 148.49%
======= ======= ======== ======== ======== ======== ========
Average Commission Rate Paid .... $ .0652 $ .0652 $ .0652 $ .0611
======= ======= ======== ======== ======== ======== ========
</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) Does not reflect the effect of any sales charges.
(iii) 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 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 fees
offset by earnings credits, if any.
(iv) Initially offered August 1, 1997.
(v) Initially offered January 1, 1997.
(vi) Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
<PAGE>
-14-
- --------------------------------------------------------------------------------
ALGER BALANCED PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 6/1/92 TO 10/31/97
- --------------------------------------------------------------------------------
[CHART]
[The table below represents a graph in the printed piece]
Lehman
Alger Gov't/Corp.
Balanced S&P 500 Bond Index
6/1/92 10000 10000 10000
9950 10198 10479
10/31/93 11180 11723 11911
10736 12176 11358
10/31/95 13700 15396 13193
14558 19104 13905
10/31/97 17259 25241 15130
ENDING VALUE
S&P 500 INDEX:
$25,241
ENDING VALUE
ALGER BALANCED B:
$17,259
ENDING VALUE
LEHMAN BROTHERS
GOV'T/CORP.
BOND INDEX:
$15,130
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in Alger Balanced Class B shares, the S&P 500 Index, and the
Lehman Brothers Government/Corporate Bond Index on June 1, 1992, the inception
date of the Alger Balanced Portfolio, through October 31, 1997. Figures for the
Alger Balanced Portfolio, the S&P 500 Index, an unmanaged index of common
stocks, and the Lehman Brothers Government/Corporate Bond Index, an unmanaged
index of government and corporate bonds, include reinvestment of dividends
and/or interest. Performance for the Alger Balanced Class A and Class C shares
will vary from the results shown above due to differences in expenses and sales
charges those classes bear.
PERFORMANCE COMPARISON AS OF 10/31/97+
AVERAGE ANNUAL TOTAL RETURNS
1 5 SINCE
YEAR YEARS INCEPTION
- --------------------------------------------------------------------------------
CLASS A (INCEPTION 1/1/97) * * 12.88%
S&P 500 Index * * 25.31%
Lehman Gov't/Corp. Bond Index * * 8.04%
- --------------------------------------------------------------------------------
CLASS B (INCEPTION 6/1/92) 14.25% 11.51% 10.60%
S&P 500 Index 32.11% 19.87% 18.63%
Lehman Gov't/Corp. Bond Index 8.80% 7.62% 7.94%
- --------------------------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) * * (3.29)%
S&P 500 Index * * (3.76)%
Lehman Gov't/Corp. Bond Index * * 2.04%
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-15-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1997
COMMON STOCKS--61.1% SHARES VALUE
------ -----
AEROSPACE--2.7%
AMR Corp.* ................................... 1,600 $ 186,300
Gulfstream Aerospace Corp.* .................. 1,700 49,300
Sundstrand Corp. ............................. 2,100 114,188
-----------
349,788
-----------
APPLIANCES & TOOLS--1.4%
Sunbeam Corp. ................................ 4,000 181,252
-----------
BROADCASTING--1.8%
Westinghouse Electric Corp. .................. 9,000 237,942
-----------
CHEMICALS--.4%
Du Pont E.I. De Nemours & Co. ................ 900 51,187
-----------
COMMUNICATIONS--1.4%
America Online Inc.* ......................... 1,100 84,700
WorldCom Inc.* ............................... 3,100 104,237
-----------
188,937
-----------
COMMUNICATION
EQUIPMENT--4.4%
Bay Networks Inc.* ........................... 3,800 120,175
CIENA Corporation* ........................... 1,900 104,500
Cisco Systems, Inc.* ......................... 3,400 278,905
Tellabs, Inc.* ............................... 1,500 81,000
-----------
584,580
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--3.0%
Compaq Computer Corporation* ................. 4,000 255,000
International Business Machines Corp. ........ 1,400 137,287
-----------
392,287
-----------
COMPUTER SOFTWARE--3.7%
HBO & Company ................................ 3,100 134,850
Microsoft Corporation* ....................... 1,400 182,000
Oracle Corp.* ................................ 2,550 91,242
Parametric Technology Corporation* ........... 1,900 83,838
-----------
491,930
-----------
CONGLOMERATE--2.2%
General Electric Co. ......................... 600 38,738
Tyco International Ltd. ...................... 6,546 247,112
-----------
285,850
-----------
CONSUMER PRODUCTS--1.3%
CUC International Inc.* ...................... 3,000 88,500
Fortune Brands Inc. .......................... 1,300 42,982
Newell Co. ................................... 1,200 46,050
-----------
177,532
-----------
ENERGY & ENERGY
SERVICES--2.6%
Diamond Offshore Drilling Inc. ............... 1,500 93,375
Nabors Industries Inc.* ...................... 2,300 94,587
Schlumberger Ltd. ............................ 1,800 157,500
-----------
345,462
-----------
FINANCIAL SERVICES--8.0%
Banc One Corp. ............................... 1,800 93,825
Bank of New York Inc. ........................ 2,400 112,951
Citicorp ..................................... 500 62,535
First Union Corp. ............................ 1,300 63,782
Federal Home Loan
Mortgage Corporation ...................... 3,700 140,138
Household International Inc. ................. 400 45,300
Money Store Inc. (The) ....................... 6,000 170,250
Morgan Stanley, Dean Witter,
Discover & Co. ............................ 3,635 178,115
Paine Webber Group Inc. ...................... 2,300 101,632
Schwab (Charles) Corporation (The) ........... 2,250 76,780
-----------
1,045,308
-----------
FOODS & BEVERAGES--.7%
PepsiCo., Inc. ............................... 2,400 88,350
-----------
HEALTH CARE--2.0%
Guidant Corp. ................................ 1,600 92,000
McKesson Corp. ............................... 1,600 171,700
-----------
263,700
-----------
INSURANCE--1.8%
American International Group, Inc. ........... 1,550 158,197
MGIC Investment Corp. ........................ 1,200 72,376
-----------
230,573
-----------
LEISURE &
ENTERTAINMENT--2.3%
Carnival Corporation Cl. A ................... 4,200 203,700
International Game Technology ................ 4,000 102,252
-----------
305,952
-----------
MEDICAL SERVICES--.4%
PhyCor, Inc.* ................................ 2,000 46,126
-----------
OIL & GAS--3.2%
EVI Inc.* .................................... 1,200 77,026
Halliburton Co. .............................. 5,800 345,825
-----------
422,851
-----------
PHARMACEUTICALS--6.8%
Bristol Myers Squibb Co. ..................... 2,500 219,375
Eli Lilly & Company .......................... 2,400 160,500
Merck & Co., lnc ............................. 1,000 89,250
Pfizer Inc. .................................. 1,000 70,750
Schering-Plough Corporation .................. 3,800 213,039
Warner-Lambert Co. ........................... 1,000 143,188
-----------
896,102
-----------
POLLUTION CONTROL--.8%
USA Waste Services, Inc.* .................... 3,000 111,000
-----------
RETAILING--4.1%
Home Depot, Inc. ............................. 4,500 250,313
Staples Inc.* ................................ 1,700 44,625
Wal-Mart Stores Inc. ......................... 6,800 238,850
-----------
533,788
-----------
<PAGE>
-16-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
SEMICONDUCTORS--3.9%
Adaptec, Inc.* ............................... 1,000 $ 48,438
Altera Corporation* .......................... 3,500 155,313
Linear Technology Corporation ................ 2,400 150,900
Maxim Integrated Products, Inc.* ............. 1,200 79,500
Texas Instruments Incorporated ............... 800 85,350
-----------
519,501
-----------
SEMICONDUCTOR
CAPITAL EQUIPMENT--.6%
Applied Materials Inc.* ...................... 1,300 43,388
Teradyne, Inc.* .............................. 900 33,694
-----------
77,082
-----------
TOYS--.6%
Mattel Inc. .................................. 2,000 77,750
-----------
TRANSPORTATION--1.0%
Burlington Northern Santa Fe Co. ............. 1,000 95,000
Textron Inc. ................................. 700 40,469
-----------
135,469
-----------
Total Common Stocks
(Cost $6,449,339) ......................... 8,040,299
-----------
Principal
Corporate Bonds--13.5% Amount
-----------
AUTOMOTIVE--4.3%
Ford Motor B.V.,
9.50%, 6/1/10 ............................. $ 300,000 364,953
General Motors Acceptance Corp.,
7.125%, 6/1/99 ............................ 200,000 203,040
-----------
567,993
-----------
CONGLOMERATE--2.3%
GE Capital Corp.,
7.25%, 6/5/12 ............................. 300,000 301,149
-----------
ELECTRIC & GAS COMPANIES--2.2%
Cincinnati Gas & Electric Co.,
7.20%, 10/1/23 ............................ 100,000 101,891
Pacific Gas & Electric Co.,
7.25%, 3/1/26 ............................. 182,000 186,863
-----------
288,754
-----------
FINANCIAL SERVICES--3.1%
BankAmerica Corp.,
6.625%, 10/15/07 .......................... 200,000 199,960
Citicorp.,
7.125%, 6/1/03 ............................ 200,000 207,550
-----------
407,510
-----------
POLLUTION CONTROL--1.6%
Waste Management Inc.,
8.25%,11/15/99 ............................ 200,000 208,224
-----------
Principal
Amount Value
---------- -----------
Total Corporate Bonds
(Cost $1,800,102) ......................... 1,773,630
-----------
U.S. Government & Agency
Obligations--10.4%
U.S. Treasury Notes,
6.375%,1/15/00 ............................ $ 100,000 101,438
U.S. Treasury Notes,
7.50%, 5/15/02 ............................ 100,000 106,797
U.S. Treasury Notes,
6.25%, 2/15/03 ............................ 250,000 254,960
Federal Home Loan Bank Corp.,
7.58%, 7/9/12 ............................. 200,000 199,960
Federal Home Loan Mortgage Corp.,
6.50%, 6/10/03 ............................ 150,000 148,992
Federal Home Loan Mortgage Corp.,
7.00%, 3/6/07 ............................. 200,000 198,844
Federal National Mortgage Assoc.,
8.50%, 2/1/05 ............................. 100,000 105,328
Federal National Mortgage Assoc.,
7.49%, 5/22/07 ............................ 250,000 256,250
-----------
Total U.S. Government & Agency
Obligations (Cost $1,367,008) ............. 1,372,569
-----------
Short-Term Investments--16.2%
Short-Term Corporate Notes--9.5%
AT&T Corp.,
5.55%, 11/6/97 ............................ 400,000 399,692
Cooperative Association of
Tractor Dealers Inc.,
5.57%, 11/6/97 ............................ 300,000 299,768
France Telecom.,
5.51%, 11/5/97 ............................ 350,000 349,786
Mitsui & Co. (USA) Inc.,
5.51%, 11/6/97 ............................ 200,000 199,847
-----------
Total Short-Term Corporate Notes
(Cost $1,249,093) ......................... 1,249,093
-----------
Short-Term U.S. Government
Obligations--6.7%
U.S. Treasury Bills,
4.95%, 1/29/98 ............................ 450,000 444,612
4.97%, 4/30/98 ............................ 450,000 438,775
-----------
Total Short-Term U.S. Goverment
Obligations (Cost $883,310) ............... 883,387
-----------
Total Short-Term Investments
(Cost $2,132,403) ......................... 2,132,480
-----------
Total Investments
(Cost $11,748,852)(a) ..................... 101.2% 13,318,978
Liabilities in Excess of Other Assets ........ (1.2) (159,424)
----- -----------
Net Assets ................................... 100.0% $13,159,554
===== ===========
* Non-income producing security.
(a) At October 31, 1997, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $11,748,852 amounted to
$1,570,126 which consisted of aggregate gross unrealized appreciation of
$1,711,827 and aggregate gross unrealized depreciation of $141,701.
See Notes to Financial Statements.
<PAGE>
-17-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS C CLASS A
(iii)(vi) (iii)(vii) CLASS B
------------ ----------- ------------------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ------------------------------------------------------------
1997 1997 1997 1996 1995 1994 1993
------------ ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 16.88 $ 13.99 $ 14.21 $ 13.59 $10.65 $11.18 $ 9.95
------- ------- ------- ------- ------ ------ -------
Net investment income (loss ......... (.01) .05 -- .12 (.02)(i) (.05) (.01)
Net realized and unrealized gain
(loss) on investments ............. (.38) 2.54 2.67 .72 2.96 (.39) 1.24
------- ------- ------- ------- ------ ------ -------
Total from investment operations .... (.39) 2.59 2.67 .84 2.94 (.44) 1.23
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 ...... $ 16.49 $ 16.58 $ 16.48 $ 14.21 $13.59 $10.65 $ 11.18
======= ======= ======= ======= ====== ====== =======
Total Return (ii) ................... (2.31)% 18.5% 19.3% 6.3% 27.6% (4.0%) 12.4%
======= ======= ======= ======= ====== ====== =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ................ $ 48 $ 459 $12,653 $13,492 $6,214 $3,073 $ 3,125
======= ======= ======= ======= ====== ====== =======
Ratio of expenses to average
net assets ..................... 2.77% 2.10% 2.89% 2.70%(iv) 3.34%(iv) 3.18%(iv) 3.82%(iv)
======= ======= ======= ======= ====== ====== =======
Decrease reflected in above
expense ratios due to
expense reimbursements (v) ..... -- -- -- -- .24% -- .75%
======= ======= ======= ======= ====== ====== =======
Ratio of net investment income
(loss) to average net assets ... (.84)% .72% .04% .47% (.13)% (.41)% (.97)%
======= ======= ======= ======= ====== ====== =======
Portfolio Turnover Rate ........... 109.26% 109.26% 109.26% 85.51% 84.06% 84.88% 115.17%
======= ======= ======= ======= ====== ====== =======
Average Commission Rate Paid ...... $ .0709 $ .0709 $ .0709 $ .0700
======= ======= ======= =======
</TABLE>
(i) Amount was computed based on average shares outstanding during the
period.
(ii) Does not reflect the effect of any sales charges.
(iii) Ratios have been annualized; total return has not been annualized.
(iv) 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 2.69% and 3.25% 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 fees offset by earnings credits, if any.
(v) Represents expense reimbursements made pursuant to applicable state
expense limits.
(vi) Initially offered August 1, 1997.
(vii) Initially offered January 1, 1997.
See Notes to Financial Statements.
<PAGE>
-18-
- --------------------------------------------------------------------------------
ALGER MIDCAP GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 5/24/93 TO 10/31/97
- --------------------------------------------------------------------------------
[CHART]
[The following table represents a graph in the printed piece]
Alger MidCap
Growth S&P 400
5/24/93 10000 10000
10/31/93 12480 10714
13062 10969
10/31/95 19373 13295
20618 15600
10/31/97 24824 20694
ENDING VALUE
ALGER MIDCAP
GROWTH B:
$24,824
ENDING VALUE
S&P MIDCAP
400 INDEX:
$20,694
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in Alger MidCap Growth Class B shares and the S&P MidCap 400
Index on May 24, 1993, the inception date of the Alger MidCap Growth Portfolio,
through October 31, 1997. Figures for both the Alger MidCap Growth Class B
shares and the S&P MidCap 400 Index, an unmanaged index of common stocks,
include reinvestment of dividends. Performance for the Alger MidCap Growth Class
A and Class C shares will vary from the results shown above due to differences
in expenses and sales charges those classes bear.
PERFORMANCE COMPARISON AS OF 10/31/97+
AVERAGE ANNUAL TOTAL RETURNS
SINCE
1 YEAR INCEPTION
----------------------------
CLASS A (INCEPTION 1/1/97) * 13.07%
S&P MidCap 400 Index * 25.45%
- ------------------------------------------------------------
CLASS B (INCEPTION 5/24/93) 16.37% 22.72%
S&P MidCap 400 Index 32.67% 17.79%
- ------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) * (1.70)%
S&P MidCap 400 Index * 1.03%
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-19-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1997
COMMON STOCKS--95.8% SHARES VALUE
------ -----
AEROSPACE--5.2%
AMR Corp.* ............................... 23,700 $ 2,759,580
BE Aerospace Inc.* ....................... 25,400 714,375
Continental Airlines Inc. Cl. B* ......... 23,100 999,075
Gulfstream Aerospace Corp.* .............. 85,000 2,465,000
Sundstrand Corp. ......................... 38,200 2,077,125
------------
9,015,155
------------
APPAREL--2.3%
Nautica Enterprises Inc.* ................ 31,800 846,675
Tommy Hilfiger Corporation* .............. 79,200 3,133,390
------------
3,980,065
------------
APPLIANCES & TOOLS--3.3%
Sunbeam Corp. ............................ 125,900 5,704,906
------------
BIO-TECHNOLOGY--1.5%
BioChem Pharma Inc.* ..................... 106,200 2,661,690
------------
BUSINESS SERVICES--1.1%
Paychex, Inc. ............................ 49,000 1,868,125
------------
COMMUNICATION
EQUIPMENT-- 5.0%
Advanced Fibre Communications Inc.* ...... 35,000 1,017,205
Bay Networks Inc.* ....................... 48,800 1,543,300
CIENA Corporation* ....................... 48,800 2,684,000
Cisco Systems, Inc.* ..................... 22,500 1,845,698
Tellabs, Inc.* ........................... 26,300 1,420,200
------------
8,510,403
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--2.4%
Electronics For Imaging Inc.* ............ 87,200 4,076,600
------------
COMPUTER SERVICES--.7%
Sterling Commerce, lnc.* ................. 34,500 1,144,986
------------
COMPUTER SOFTWARE--5.7%
Citrix Systems, Inc.* .................... 13,000 954,694
HBO & Company ............................ 101,400 4,410,900
Parametric Technology Corporation* ....... 82,300 3,631,488
Systems & Computer
Technology Corp.* ..................... 20,000 862,500
------------
9,859,582
------------
CONGLOMERATE--1.4%
Tyco International Ltd. .................. 65,020 2,454,505
------------
CONSUMER PRODUCTS--2.8%
CUC International Inc.* .................. 134,500 3,967,750
Fortune Brands Inc. ...................... 28,000 925,764
------------
4,893,514
------------
ENERGY &
ENERGY SERVICES--5.3%
Diamond Offshore Drilling Inc. ........... 49,900 3,106,275
Nabors Industries Inc.* .................. 84,500 3,475,063
Santa Fe International Corp. ............. 20,000 983,760
Smith International Inc.* ................ 20,000 1,525,000
------------
9,090,098
------------
FINANCIAL SERVICES--6.9%
E*TRADE Group, Inc.* ..................... 49,000 1,512,875
Money Store Inc. (The) ................... 182,100 5,167,088
Paine Webber Group Inc. .................. 44,700 1,975,204
Sovereign Bancorp Inc. ................... 56,000 994,000
Star Banc Corp. .......................... 18,400 902,759
SunAmerica Inc. .......................... 36,000 1,293,768
------------
11,845,694
------------
HEALTH CARE--6.0%
Bergen Brunswig Corp. Cl. A .............. 47,500 1,902,993
Guidant Corp. ............................ 48,500 2,788,750
McKesson Corp. ........................... 37,800 4,056,431
Omnicare, Inc. ........................... 60,000 1,668,780
------------
10,416,954
------------
INSURANCE--2.7%
MGIC Investment Corp. .................... 76,000 4,583,788
------------
LEISURE &
ENTERTAINMENT--5.4%
Carnival Corporation Cl. A ............... 49,100 2,381,350
International Game Technology ............ 204,800 5,235,302
Mirage Resorts, Incorporated* ............ 64,600 1,615,000
------------
9,231,652
------------
MEDICAL DEVICES--2.9%
Biomatrix Inc.* .......................... 20,000 692,500
Biomet Inc. .............................. 83,700 2,087,310
Mentor Corp. ............................. 25,000 910,950
Safeskin Corp.* .......................... 30,200 1,370,325
------------
5,061,085
------------
MEDICAL SERVICES--6.7%
AmeriSource Health Corp. Cl. A* .......... 59,300 3,520,938
Cardinal Health, lnc ..................... 57,900 4,299,075
PhyCor, Inc.* ............................ 43,800 1,010,159
Quorum Health Group Inc.* ................ 112,150 2,719,638
------------
11,549,810
------------
<PAGE>
-20-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
OIL & GAS--4.1%
EVI Inc.* ................................ 22,400 $ 1,437,810
Global Industries Ltd.* .................. 50,000 1,006,250
Global Marine Inc.* ...................... 80,000 2,490,000
Halliburton Co. .......................... 34,000 2,027,250
------------
6,961,310
------------
PHARMACEUTICALS--1.2%
Elan Corp PLC-ADR* ....................... 41,000 2,044,875
------------
POLLUTION CONTROL--2.4%
Allied Waste Industries Inc.* ............ 50,000 1,018,750
USA Waste Services, Inc.* ................ 84,100 3,111,700
------------
4,130,450
------------
RETAILING--8.5%
BJS Wholesale Club Inc.* ................. 31,700 913,372
Borders Group Inc.* ...................... 81,000 2,100,978
CompUSA Inc.* ............................ 103,600 3,392,900
General Nutrition Companies, Inc.* ....... 171,400 5,399,100
Rite Aid Corp. ........................... 33,700 2,000,938
Staples Inc.* ............................ 34,000 892,500
------------
14,699,788
------------
SEMICONDUCTORS--9.5%
Adaptec, Inc.* ........................... 28,900 1,399,858
Altera Corporation* ...................... 113,100 5,018,813
Linear Technology Corporation ............ 86,200 5,419,825
Maxim Integrated Products, Inc.* ......... 44,400 2,941,500
Texas Instruments, Incorporated .......... 13,900 1,482,963
------------
16,262,959
------------
SEMICONDUCTOR
CAPITAL EQUIPMENT--1.5%
Applied Materials Inc.* .................. 25,500 851,063
Teradyne, Inc.* .......................... 47,900 1,793,280
------------
2,644,343
------------
TOYS--.8%
Mattel Inc. .............................. 34,000 1,321,750
------------
TRANSPORTATION--.5%
Coach USA Inc.* .......................... 26,300 782,425
------------
Total Common Stocks
(Cost $140,636,559) ................... 164,796,512
------------
PRINCIPAL
SHORT-TERM CORPORATE NOTES--4.6% AMOUNT
-------------
Ford Motor Credit Company,
5.60%, 11/13/97 ....................... $ 220,000 219,589
McDonald's Corp.,
5.57%, 11/5/97 ........................ 5,150,000 5,146,813
USAA Capital Corporation,
5.55%, 11/6/97 ........................ 2,500,000 2,498,073
------------
Total Short-Term Corporate Notes
(Cost $7,864,475 ) .................... 7,864,475
------------
Total Investments
(Cost $148,501,034)(a) ................ 100.4% 172,660,987
Liabilities in Excess of Other Assets .... (.4) (666,004)
----- ------------
Net Assets ............................... 100.0% $171,994,983
===== ============
* Non-income producing security.
(a) At October 31, 1997, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $148,501,034, amounted to
$24,159,953 which consisted of aggregate gross unrealized appreciation of
$27,121,135 and aggregate gross unrealized depreciation of $2,961,182.
See Notes to Financial Statements.
<PAGE>
-21-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS C CLASS A
(i)(vi) (i)(vii) CLASS B
------------ ---------- ----------------------------------------------------------------
FROM
MAY 24, 1993
THREE MONTHS TEN MONTHS (COMMENCEMENT
ENDED ENDED YEAR ENDED OCTOBER 31, OF OPERATIONS) TO
OCTOBER 31, OCTOBER 31, -------------------------------------------- OCTOBER 31,
1997 1997 1997 1996 1995 1994 1993(i)
---------- ----------- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 22.49 $ 18.92 $ 18.87 $ 18.94 $ 12.77 $ 12.48 $ 10.00
------- ------- -------- -------- ------- ------- -------
Net investment income (loss) ......... (.03) (.10) (.29) (.25)(ii) (.08) (.11) (.09)
Net realized and unrealized gain
(loss) on investments ............. (.13) 3.64 4.23 1.35 6.25 .68 2.57
------- ------- -------- -------- ------- ------- -------
Total from investment operations ..... (.16) 3.54 3.94 1.10 6.17 .57 2.48
Distributions from net realized
gains ............................. -- -- (.48) (1.17) -- (.28) --
------- ------- -------- -------- ------- ------- -------
Net asset value, end of period ....... $ 22.33 $ 22.46 $ 22.33 $ 18.87 $ 18.94 $ 12.77 $ 12.48
======= ======= ======== ======== ======= ======= =======
Total Return (iii) ................... (.7)% 18.7% 21.4% 6.4% 48.3% 4.7% 24.8%
======= ======= ======== ======== ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ................. $ 84 $ 5,436 $166,475 $125,686 $54,016 $18,516 $ 3,836
======= ======= ======== ======== ======= ======= =======
Ratio of expenses to average
net assets ...................... 1.97% 1.40% 2.19% 2.27%(iv) 2.39%(iv) 3.20%(iv) 3.73%(iv)
======= ======= ======== ======== ======= ======= =======
Decrease reflected in above
expense ratios due to
expense reimbursements (v) ...... -- -- -- -- -- .07% .80%
======= ======= ======== ======== ======= ======= =======
Ratio of net investment income
(loss) to average net assets .... (1.55)% (.83)% (1.58)% (1.33)% (1.71)% (2.32)% (2.86)%
======= ======= ======== ======== ======= ======= =======
Portfolio Turnover Rate ............ 160.09% 160.09% 160.09% 113.95% 121.60% 127.40% 57.64%
======= ======= ======== ======== ======= ======= =======
Average Commission Rate Paid ....... $ .0680 $ .0680 $ .0680 $ .0690
======= ======= ======== ========
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of any sales charges.
(iv) 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 2.26% 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 fees offset by earnings credits, if any.
(v) Represents expense reimbursements made pursuant to applicable state
expense limits.
(vi) Initially offered August 1, 1997.
(vii) Initially offered January 1, 1997.
See Notes to Financial Statements.
<PAGE>
-22-
- --------------------------------------------------------------------------------
ALGER CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 11/1/93 TO 10/31/97
- --------------------------------------------------------------------------------
[CHART]
[The table below represents a graph in the printed piece]
Alger
Cap App S&P 500
11/1/93 10000 10000
11110 10386
10/31/95 18620 13133
22246 16297
10/31/97 26718 21531
ENDING VALUE
ALGER CAPITAL APPRECIATION B:
$26,718
ENDING VALUE
S&P 500 INDEX:
$21,531
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in Alger Capital Appreciation Class B shares and the S&P 500
Index on November 1, 1993, the inception date of the Alger Capital Appreciation
Portfolio, through October 31, 1997. Figures for the Alger Capital Appreciation
Class B shares and the S&P 500 Index, an unmanaged index of common stocks,
include reinvestment of dividends. Performance for Alger Capital Appreciation
Class A and Class C shares will vary from the results shown above due to
differences in expenses and sales charges those classes bear.
PERFORMANCE COMPARISON AS OF 10/31/97+
AVERAGE ANNUAL TOTAL RETURNS
SINCE
1 YEAR INCEPTION
- ----------------------------------------------------------------
CLASS A (INCEPTION 1/1/97) * 15.46%
S&P 500 Index * 25.31%
- ----------------------------------------------------------------
CLASS B (INCEPTION 11/1/93) 16.00% 27.85%
S&P 500 Index 32.11% 21.13%
- ----------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) * (6.97)%
S&P 500 Index * (3.76)%
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-23-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1997
COMMON STOCKS--94.9% SHARES VALUE
------ -----
AEROSPACE--1.4%
Sundstrand Corp. ......................... 49,700 $ 2,702,438
Wyman Gordon Co.* ........................ 25,000 603,125
------------
3,305,563
------------
APPAREL--1.0%
Nautica Enterprises Inc.* ................ 25,000 665,625
Tommy Hilfiger Corporation* .............. 41,500 1,641,865
------------
2,307,490
------------
APPLIANCES & TOOLS--1.2%
Sunbeam Corp. ............................ 60,200 2,727,843
------------
AUTOMOTIVE EQUIPMENT &
SERVICES--.6%
Avis Rent A Car Inc.* .................... 50,000 1,371,900
------------
BIO-TECHNOLOGY--.1%
BioChem Pharma Inc.* ..................... 10,000 250,630
------------
BROADCASTING--2.0%
Westinghouse Electric Corp. .............. 173,600 4,589,636
------------
CHEMICALS--.6%
Du Pont E.I. De Nemours & Co. ............ 23,000 1,308,125
------------
COMMUNICATIONS--3.4%
America Online Inc.* ..................... 41,200 3,172,400
Jacor Communications Inc.* ............... 58,000 2,428,750
WorldCom Inc.* ........................... 62,700 2,108,288
------------
7,709,438
------------
COMMUNICATION
EQUIPMENT--8.4%
Advanced Fibre Communications Inc.* ...... 95,000 2,760,985
Bay Networks Inc.* ....................... 145,600 4,604,600
CIENA Corporation* ....................... 62,500 3,437,500
Cisco Systems, Inc.* ..................... 73,000 5,988,262
Tellabs, Inc.* ........................... 43,900 2,370,600
------------
19,161,947
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--6.4%
Compaq Computer Corporation* ............. 84,700 5,399,625
Electronics For Imaging Inc.* ............ 121,500 5,680,125
International Business Machines Corp. .... 31,500 3,088,985
Quantum Corp.* ........................... 15,000 474,375
------------
14,643,110
------------
COMPUTER SERVICES--1.2%
Sterling Commerce, Inc.* ................. 56,500 1,875,122
Transaction Network Services Inc.* ....... 51,900 862,837
------------
2,737,959
------------
COMPUTER SOFTWARE--8.2%
Citrix Systems, Inc.* .................... 35,300 2,592,361
J. D. Edwards & Co.* ..................... 60,000 2,040,000
HBO & Company ............................ 64,100 2,788,350
Microsoft Corporation* ................... 54,700 7,111,000
Oracle Corp.* ............................ 34,500 1,234,445
Saville Systems PLC ADR* ................. 50,000 2,987,500
------------
18,753,656
------------
CONGLOMERATE--3.2%
General Electric Co. ..................... 14,200 916,795
Tyco International Ltd. .................. 168,434 6,358,384
------------
7,275,179
------------
ENERGY & ENERGY
SERVICES--4.8%
Diamond Offshore Drilling Inc. ........... 91,300 5,683,425
Nabors Industries Inc.* .................. 29,500 1,213,188
Schlumberger Ltd. ........................ 46,600 4,077,500
------------
10,974,113
------------
FINANCIAL SERVICES--10.8%
Bank of New York Inc. .................... 50,000 2,353,150
Citicorp ................................. 13,300 1,663,338
E*TRADE Group, Inc.* ..................... 52,700 1,627,113
First Union Corp. ........................ 33,900 1,663,236
Federal Home Loan
Mortgage Corporation .................. 59,500 2,253,563
Household International Inc. ............. 32,100 3,635,325
Money Store Inc. (The) ................... 92,200 2,616,175
Morgan Stanley, Dean Witter,
Discover & Co. ........................ 81,180 3,977,820
Schwab (Charles) Corporation (The) ....... 144,000 4,914,000
------------
24,703,720
------------
FOOD & BEVERAGES--.5%
PepsiCo., Inc. ........................... 30,000 1,104,390
------------
HEALTH CARE--3.9%
Guidant Corp. ............................ 109,800 6,313,500
McKesson Corp. ........................... 24,500 2,629,169
------------
8,942,669
------------
INSURANCE--2.1%
American International Group, Inc. ....... 47,100 4,807,167
------------
LEISURE &
ENTERTAINMENT--1.2%
International Game Technology ............ 111,000 2,837,492
------------
MEDICAL DEVICES--.8%
ESC Medical Systems Ltd. ................. 45,000 1,766,250
------------
<PAGE>
-24-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
October 31, 1997
COMMON STOCKS--(cont'd) SHARES VALUE
------ -----
MEDICAL SERVICES--.2%
PhyCor, Inc.* ............................ 22,100 $ 509,692
------------
OIL & GAS--2.9%
Halliburton Co. .......................... 111,000 6,618,375
------------
PHARMACEUTICALS--13.6%
Bristol Myers Squibb Co. ................. 68,200 5,984,550
Elan Corp PLC-ADR* ....................... 64,400 3,211,950
Eli Lilly & Company ...................... 62,200 4,159,625
Merck & Co., Inc. ........................ 23,700 2,115,225
Pfizer Inc. .............................. 54,200 3,834,650
Schering-Plough Corporation .............. 97,000 5,438,110
Warner-Lambert Co. ....................... 45,300 6,486,416
------------
31,230,526
------------
POLLUTION CONTROL--2.1%
USA Waste Services, Inc.* ................ 128,500 4,754,500
------------
RETAILING--5.3%
Home Depot, Inc. ......................... 102,450 5,698,780
Nordstrom Inc. ........................... 20,700 1,267,875
Staples Inc.* ............................ 54,200 1,422,750
Wal-Mart Stores Inc. ..................... 109,500 3,846,188
------------
12,235,593
------------
SEMICONDUCTORS--7.4%
Altera Corporation* ...................... 130,900 5,808,688
Linear Technology Corporation ............ 90,900 5,715,337
Maxim Integrated Products, Inc.* ......... 48,300 3,199,875
Texas Instruments, Incorporated .......... 22,000 2,347,136
------------
17,071,036
------------
SEMICONDUCTOR
CAPITAL EQUIPMENT--1.6%
Applied Materials Inc.* .................. 33,300 1,111,388
Teradyne, Inc.* .......................... 71,300 2,669,329
------------
3,780,717
------------
Total Common Stocks
(Cost $187,275,834) ................... 217,478,716
------------
PRINCIPAL
SHORT-TERM CORPORATE NOTES--4.6% AMOUNT
-------------
Ford Motor Credit Company,
5.60%, 11/13/97 ....................... $ 2,850,000 2,844,680
McDonald's Corp.,
5.57%, 11/5/97 ........................ 7,750,000 7,745,204
------------
Total Short-Term Corporate Notes
(Cost $10,589,884) .................... 10,589,884
------------
Total Investments
(Cost $197,865,718) (a) ............... 99.5% 228,068,600
Other Assets In Excess
of Liabilities ........................ .5 1,029,378
----- ------------
Net Assets ............................... 100.0% $229,097,978
===== ============
* Non-income producing security.
(a) At October 31, 1997, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $197,865,718, amounted to
$30,202,882 which consisted of aggregate gross unrealized appreciation of
$33,500,596 and aggregate gross unrealized depreciation of $3,297,714.
See Notes to Financial Statements.
<PAGE>
-25-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO (i)
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS C(vi)(viii) CLASS A(vii)(viii) CLASS B
-------------- -------------- --------------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, --------------------------------------------------------
1997 1997 1997 1996 1995 1994
------------ -------------- ---- ---- ---- ----
Net asset value, beginning
<S> <C> <C> <C> <C> <C> <C>
of period ..................... $ 27.67 $ 21.59 $ 21.62 $ 18.62 $ 11.11 $ 10.00
Net investment income (loss) .... (.05) (.09) (.33) (.34)(ii) (0.47)(ii) (0.47)
Net realized and unrealized
gain (loss)on investments ..... (1.62) 4.67 4.85 3.88 7.98 1.58
Total from investment
operations (1.67) 4.58 4.52 3.54 7.51 1.11
Distributions from
net realized gains ............ -- -- (.14) (.54) -- --
Net asset value, end of period .. $ 26.00 $ 26.17 $ 26.00 $ 21.62 $ 18.62 $ 11.11
Total Return (iii) .............. (6.0)% 21.2% 21.0% 19.5% 67.6% 11.1%
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ................ $ 631 $ 15,572 $ 212,895 $ 150,258 $ 33,640 $ 2,369
Ratio of expenses
excluding interest
to average net assets ...... 2.18% 1.45% 2.27% 2.44% 3.26% 4.13%
Ratio of expenses
including interest
to average net assets ...... 2.25% 1.53% 2.38% 2.46%(iv) 3.54%(iv) 5.53%(iv)
Decrease reflected
in above expense
ratios due to
expense reimbursements (v) . -- -- -- -- -- 0.85%
Ratio of net investment income
(loss) to average net assets (1.80)% (.85)% (1.72)% (1.61%) (3.02%) (5.12%)
Portfolio Turnover Rate ....... 157.63% 157.63% 157.63% 162.37% 197.65% 231.99%
Average Commission Rate Paid .. $ .0702 $ .0702 $ .0702 .0647
Amount of debt outstanding
at end of period ........... -- -- -- $7,700,000 -- $ 651,000
Average amount of debt
outstanding
during the period .......... $2,940,097 $2,940,097 $2,940,097 $ 239,966 $ 293,153 $ 406,864
Average daily number
of portfolio shares
outstanding during
the period ................. 7,739,199 7,739,199 7,739,199 4,852,286 543,270 191,676
Average amount of
debt per share
during the period .......... $ 0.38 $ 0.38 $ 0.38 0.05 $ 0.54 $ 2.12
</TABLE>
(i) Prior to March 27, 1995, the Alger Capital Appreciation Portfolio was the
Alger Leveraged AllCap Portfolio.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Does not reflect the effect of any sales charges.
(iv) 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 fees
offset by earnings credits.
(v) Represents expense reimbursements made pursuant to applicable state
expense limits.
(vi) Initially offered August 1, 1997.
(vii) Initially offered January 1, 1997.
(viii) Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
<PAGE>
-26-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
SHORT-TERM CORPORATE PRINCIPAL
NOTES--121.6% AMOUNT VALUE
----------- -----
AGRICULTURE--3.3%
Cargill, Incorporated,
5.47%, 12/12/97 ......................... $6,000,000 $ 5,962,622
------------
AUTOMOTIVE EQUIPMENT &
SERVICES--13.0%
Ford Motor Credit Company,
5.47%, 12/31/97 ......................... 6,000,000 5,945,300
General Motors Acceptance Corp.,
5.50%, 11/4/97 .......................... 8,000,000 7,996,333
Toyota Motor Credit Corporation,
5.48%, 11/14/97 ......................... 9,300,000 9,281,596
------------
23,223,229
------------
BANKS--4.5%
Banco Mercantile Del Norte,
5.51%, 11/18/97 ......................... 8,000,000 7,979,184
------------
BROKERAGE--3.3%
Merrill Lynch & Co., Inc.,
5.62%, 11/3/97 .......................... 6,000,000 5,998,127
------------
BUSINESS & COMPUTER
SERVICES--5.2%
United Parcel Service of America,
5.50%, 11/18/97 ......................... 9,400,000 9,375,586
------------
COMMUNICATIONS--5.6%
Ameritech Corporation,
5.45%, 11/24/97 ......................... 8,000,000 7,972,144
France Telecom.,
5.50%, 11/14/97 ......................... 2,000,000 1,996,028
------------
9,968,172
------------
ELECTRONICS--7.8%
Emerson Electric Co.,
5.46%, 12/12/97 ......................... 2,000,000 1,987,563
Hitachi America, Ltd.,
5.61%, 11/12/97 ......................... 6,000,000 5,989,715
Mitsui & Co. (USA) Inc.,
5.51%, 11/6/97 .......................... 6,000,000 5,995,408
------------
13,972,686
------------
ENERGY &
ENERGY SERVICES--4.5%
Petrofina Delaware, Incorporated,
5.51%, 11/12/97 ......................... 8,000,000 7,986,531
------------
FINANCE--18.4%
Corporacion Andina de Fomento,
5.52%, 11/7/97 .......................... $6,000,000 5,994,480
Countrywide Home Loans Inc.
5.60%, 1/5/98 ........................... 6,250,000 6,186,806
IBM Credit Corporation,
5.46%,12/12/97 .......................... 6,000,000 5,962,690
IMI Funding Corporation (USA),
5.53%, 11/12/97 ......................... 2,750,000 2,745,353
Industrial Funding Corp.,
5.61%, 12/18/97 ......................... 6,250,000 6,204,225
USAA Capital Corporation
5.51%, 11/5/97 .......................... 6,000,000 5,996,327
------------
33,089,881
------------
FOODS & BEVERAGES--4.7%
Coca-Cola Company, The,
5.39%, 11/20/97 ......................... 8,500,000 8,475,820
------------
INSURANCE--6.7%
Aetna Services Inc.,
5.61%, 11/7/97 .......................... 6,000,000 5,994,490
A.I. Credit Corporation,
5.67%, 11/3/97 .......................... 6,000,000 5,998,110
------------
11,992,600
------------
LEASING--3.4%
International Lease Finance
Corporation,
5.54%, 1/8/98 ........................... 6,250,000 6,184,597
------------
MACHINERY &
EQUIPMENT--1.8%
Cooperative Association of
Tractor Dealers Inc.,
5.53%, 11/3/97 .......................... 3,150,000 3,149,032
------------
MORTGAGE COMPANIES--4.5%
Reliastar Mortgage Corp.,
5.51%, 11/13/97 ......................... 8,100,000 8,085,123
------------
REAL ESTATE--5.0%
Halifax Building Society,
5.45%, 11/13/97 ......................... 9,000,000 8,983,650
------------
<PAGE>
THE ALGER FUND -27-
ALGER MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (continued)
SHORT-TERM CORPORATE PRINCIPAL
NOTES--(CONT.) AMOUNT VALUE
----------- -----
RETAIL-FOOD CHAINS--2.9%
Southland Corporation
5.53%, 11/5/97 .......................... $5,200,000 $ 5,196,805
------------
TELECOMMUNICATIONS--2.4%
AT&T Corp.,
5.55%, 11/6/97 .......................... 4,300,000 4,296,685
------------
TELEPHONES--3.3%
BellSouth Telecommunications Inc.,
5.48%, 11/4/97 .......................... 6,000,000 5,997,260
------------
TRADING COMPANY--3.4%
Mitsubishi International Corporation,
5.65%, 11/3/97 .......................... 6,000,000 5,998,117
------------
UTILITIES--17.9%
Consolidated Natural Gas Company,
5.48%, 11/7/97 .......................... 6,000,000 5,994,520
Delmarva Power & Light Company,
5.60%, 11/21/97 ......................... $6,000,000 5,981,333
GTE Corporation,
5.60%, 11/26/97 ......................... 6,250,000 6,225,695
National Power PLC,
5.62%, 11/7/97 .......................... 8,000,000 7,992,640
New England Power Company,
5.60%, 11/10/97 ......................... 6,000,000 5,991,600
------------
32,185,788
------------
Total Investments
(Cost $218,101,495) (a).................. 121.6% 218,101,495
Liabilities in Excess of
Others Assets............................ (21.6) (38,694,244)
----- -----------
Net Assets.................................. 100.0% $179,407,251
===== ============
(a) At October 31, 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>
THE ALGER FUND -28-
ALGER MONEY MARKET PORTFOLIO
Financial Highlights
For a share outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year........... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Net investment income........................ .0479 .0521 .0573 .0374 .0304
Dividends from net investment
income.................................... (.0479) (.0521) (.0573) (.0374) (.0304)
Net asset value, end of year................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
Total Return................................. 4.9% 5.3% 5.9% 3.8% 3.1%
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted)......................... $179,407 $285,702 $185,822 $163,170 $126,567
Ratio of expenses to average
net assets.............................. .81% .41%(i) .29%(i) .27%(i) .41%(i)
Decrease reflected in above
expense ratios due to
expense reimbursements
and management fee
waivers................................. --% .38% .50% .50% .50%
Ratio of net investment income
to average net assets................... 4.76% 5.18% 5.73% 3.78% 3.04%
</TABLE>
(i) Reflects total expenses (net of expense reimbursements and management fee
waivers), including custody fees offset by earnings credits resulting from
balances left on deposit. The expense ratios 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 fees offset by earnings
credits, if any.
See Notes to Financial Statements.
<PAGE>
THE ALGER FUND -29-
STATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts)
October 31, 1997
<TABLE>
<CAPTION>
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 ...................... $ 369,207 $ 566,501 $ 13,319 $ 172,661 $ 228,069 $ 218,101
Cash ................................................. 104 70 65 47 59 325
Receivable for investment securities sold ............ 14,839 11,494 343 4,141 7,513 --
Receivable for shares of beneficial
interest sold .................................... 2,737 30,851 19 2,238 6,862 594
Dividends and interest
receivable ........................................ 64 155 79 21 44 --
Prepaid expenses and other assets .................... 34 43 11 20 37 11
--------- --------- --------- --------- --------- ---------
Total Assets ..................................... 386,985 609,114 13,836 179,128 242,584 219,031
--------- --------- --------- --------- --------- ---------
LIABILITIES:
Payable for investment
securities purchased .............................. 28,454 -- 613 6,607 12,629 --
Payable for shares of beneficial
interest redeemed ................................. 236 761 13 122 230 39,296
Interest payable ..................................... -- -- -- -- 87 --
Accrued investment management fees ................... 241 458 9 125 173 82
Accrued distribution fees ............................ 205 386 8 113 143 --
Accrued shareholder servicing fees ................... 80 135 3 39 51 --
Dividends payable-Note 2(c) .......................... -- -- -- -- -- 39
Accrued expenses ..................................... 279 389 30 127 173 207
--------- --------- --------- --------- --------- ---------
Total Liabilities ................................ 29,495 2,129 676 7,133 13,486 39,624
--------- --------- --------- --------- --------- ---------
NET ASSETS ........................................... $ 357,490 $ 606,985 $ 13,160 $ 171,995 $ 229,098 $ 179,407
========= ========= ========= ========= ========= =========
Net Assets Consist of:
Paid-in capital ................................... $ 253,685 $ 471,504 $ 9,792 $ 130,062 $ 184,978 $ 179,487
Undistributed net investment
income (accumulated loss) ....................... (7,662) (35,019) (55) (4,426) (5,158) --
Undistributed net realized
gain (accumulated loss) ......................... 50,213 40,743 1,853 22,199 19,075 (80)
Net unrealized appreciation ........................ 61,254 129,757 1,570 24,160 30,203 --
--------- --------- --------- --------- --------- ---------
NET ASSETS ........................................... $ 357,490 $ 606,985 $ 13,160 $ 171,995 $ 229,098 $ 179,407
========= ========= ========= ========= ========= =========
Class A
Net Asset Value Per Share .......................... $ 11.58 $ 10.35 $ 16.58 $ 22.46 $ 26.17 --
========= ========= ========= ========= ========= =========
Offering Price Per Share ........................... $ 12.16 $ 10.87 $ 17.41 $ 23.58 $ 27,48 --
========= ========= ========= ========= ========= =========
Class B
Net Asset Value and Offering Price Per Share ....... $ 11.50 $ 10.29 $ 16.48 $ 22.33 $ 26.00 $ 1.00
========= ========= ========= ========= ========= =========
Class C
Net Asset Value and Offering Price Per Share ....... $ 11.50 $ 10.29 $ 16.49 $ 22.33 $ 26.00 --
========= ========= ========= ========= ========= =========
Shares of beneficial interest outstanding-Note 6
Class A ............................................ 4,516 2,511 28 242 595 --
========= ========= ========= ========= ========= =========
Class B ............................................ 26,510 56,448 768 7,454 8,189 179,487
========= ========= ========= ========= ========= =========
Class C ............................................ 17 33 3 4 24 --
========= ========= ========= ========= ========= =========
*Identified cost ..................................... $ 307,953 $ 436,744 $ 11,749 $ 148,501 $ 197,866 $ 218,101
========= ========= ========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
THE ALGER FUND -30-
STATEMENTS OF OPERATIONS (in thousands)
For the year ended October 31, 1997
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
INVESTMENT INCOME: PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
Income:
<S> <C> <C> <C> <C> <C> <C>
Dividends ........................................... $ 2,179 $ 1,177 $ 60 $ 439 $ 1,091 $ --
Interest ............................................ 836 1,449 314 514 140 12,304
-------- -------- -------- -------- -------- --------
Total Income ........................................ 3,015 2,626 374 953 1,231 12,304
Expenses:
Management fees-Note 3(a) ........................... 2,396 4,715 96 1,236 1,587 1,104
Distribution fees-Note 3(b):
Class B ........................................... 2,190 4,083 95 1,137 1,353 --
Class C ........................................... -- -- -- -- 1 --
Shareholder servicing fees-Note 3(f) ................ 799 1,387 32 386 467 --
Interest on line of credit utilized-Note 5 .......... -- -- -- -- 192 --
Custodian fees ...................................... 54 98 10 35 36 41
Transfer agent fees and
expenses-Note 3(e) ............................... 755 1,222 55 393 633 520
Professional fees ................................... 32 34 19 28 19 11
Trustees' fees ...................................... 5 5 5 5 5 5
Registration fees ................................... 97 125 49 82 59 89
Miscellaneous ....................................... 86 146 7 63 33 28
-------- -------- -------- -------- -------- --------
Total Expenses ...................................... 6,414 11,815 368 3,365 4,385 1,798
-------- -------- -------- -------- -------- --------
NET INVESTMENT
INCOME (LOSS) ...................................... (3,399) (9,189) 6 (2,412) (3,154) 10,506
-------- -------- -------- -------- -------- --------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments ............... 48,794 28,698 1,856 21,535 17,357 (16)
Net change in unrealized appreciation
on investments ...................................... 21,432 42,118 316 10,912 18,233 --
-------- -------- -------- -------- -------- --------
Net realized and unrealized
gain (loss) on investments .......................... 70,226 70,816 2,172 32,447 35,590 (16)
-------- -------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .......................... $ 66,827 $ 61,627 $ 2,178 $ 30,035 $ 32,436 $ 10,490
-------- -------- -------- -------- -------- --------
</TABLE>
<PAGE>
THE ALGER FUND -31-
ALGER CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF CASH FLOWS (in thousands)
For the year ended October 31, 1997
Increase (decrease) in cash:
Cash flows from operating activities:
Dividends received ............................................ $ 1,073
Interest received ............................................. 140
Interest paid ................................................. (117)
Operating expenses paid ....................................... (4,070)
Purchase of investment securities ............................. (308,958)
Purchase of short-term securities, net ........................ (10,591)
Proceeds from disposition of investment securities ............ 289,114
Other ......................................................... (35)
---------
Net cash used in operating activities ..................... (33,444)
---------
Cash flows from financing activities:
Dividends paid ............................................. (970)
Proceeds from shares sold and dividends reinvested ............ 388,484
Payments on shares redeemed ................................... (346,392)
Decrease in bank loan payable ................................. (7,700)
---------
Net cash provided by financing activities .............. 33,422
---------
Net decrease in cash .............................................. (22)
Cash--beginning of year ........................................... 81
---------
Cash--end of year ................................................. $ 59
=========
Reconciliation of net increase in net assets to net cash used in
operating activities:
Net increase in net assets resulting from operations ....... $ 32,436
Increase in investments .................................... (32,623)
Increase in interest and dividends receivable .............. (18)
Increase in receivable for investment securities sold ...... (3,274)
Increase in payable for investment securities purchased .... 5,461
Net realized gain .......................................... (17,357)
Net increase in unrealized appreciation .................... (18,233)
Increase in accrued expenses and other liabilities ......... 198
Net increase in other assets ............................... (34)
---------
Net cash used in operating activities .................. $ (33,444)
=========
See Notes to Financial Statements.
<PAGE>
THE ALGER FUND -32-
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1997
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ................... $ (3,399) $ (9,189) $ 6 $ (2,412) $ (3,154) $ 10,506
Net realized gain (loss)
on investments .............................. 48,794 28,698 1,856 21,535 17,357 (16)
Net change in unrealized
appreciation on investments ................. 21,432 42,118 316 10,912 18,233 --
--------- --------- --------- --------- --------- ---------
Net increase in net assets
resulting from operations ............... 66,827 61,627 2,178 30,035 32,436 10,490
Dividends to shareholders-Class B:
Net investment income ........................ -- -- (50) -- -- (10,506)
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 ...................................... 45,431 23,494 417 4,665 14,238 --
Class B ...................................... (12,447) 60,181 (2,639) 14,976 32,464 (106,279)
Class C ...................................... 212 348 50 91 672 --
--------- --------- --------- --------- --------- ---------
Total increase (decrease) ................ 91,283 53,113 (332) 46,309 78,840 (106,295)
Net Assets:
Beginning of year ........................... 266,207 553,872 13,492 125,686 150,258 285,702
--------- --------- --------- --------- --------- ---------
End of year .................................. 357,490 606,985 13,160 171,995 229,098 179,407
Undistributed net investment
income (accumulated loss) ................... $ (7,662) $ (35,019) $ (55) $ (4,426) $ (5,158) $ --
========= ========= ========= ========= ========= =========
</TABLE>
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1996
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ................... $ (1,857) $ (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 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:
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) $ --
========= ========= ========= ========= ========= =========
See Notes to Financial Statements.
</TABLE>
<PAGE>
THE ALGER FUND -33-
NOTES TO FINANCIAL STATEMENTS
NOTE 1- General:
The Alger Fund (the "Fund") is a diversified, open-end registered
investment company organized as an unincorporated business trust under the laws
of the Commonwealth of Massachusetts. The Fund operates as a series company
currently issuing 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"). The Growth Portfolio, Small Capitalization
Portfolio, MidCap Growth Portfolio and Capital Appreciation Portfolio normally
invest primarily in equity securities and each has an investment objective of
long-term capital appreciation. The Balanced Portfolio's investment objectives
are current income and long-term capital appreciation which it seeks to achieve
through investing in equity and fixed income securities.
Each Portfolio, other than the Money Market Portfolio, offers Class A,
Class B and Class C shares. Class A and Class C shares were first offered on
January 1, 1997 and August 1, 1997, respectively. Class A shares are generally
subject to an initial sales charge while Class B and Class C shares are
generally subject to a deferred sales charge. Class B and Class C shares held
for eight and twelve years, respectively, after the end of the calendar month in
which the order to purchase was accepted, convert to Class A shares. The
conversion is completed without the imposition of any sales charges or other
fees. Each class has identical rights to assets and earnings except that only
Class B and Class C shares have plans of distribution and bear the related
expenses.
NOTE 2- Significant Accounting Policies:
(a) INVESTMENT VALUATION: Investments of the 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 (normally 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 is 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 share-
<PAGE>
THE ALGER FUND -34-
NOTES TO FINANCIAL STATEMENTS (Continued)
holders. 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, 1997, the net capital
loss carryforwards of the Money Market Portfolio which may be used to offset
future net realized gains were approximately $78,000, and expire between 1998
and 2005.
(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 among the Portfolio's classes based on
relative net assets, with the exception of distribution fees which are only
applicable to Class B and Class C 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: Class B Shares--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 an annual rate of .75% of the respective average daily net assets of
the Class B shares of the designated Portfolios. If in any month, the costs
incurred by the Distributor relating to the Class B shares are in excess of the
distribution fees charged to the Portfolios, the excess may be carried forward,
with interest, and sought to be reimbursed in future periods. As of October 31,
1997, such excess carried forward was approximately $7,605,000, $16,444,000,
$225,000, $3,218,000 and $2,124,000 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.
Class C Shares--The Fund has adopted a Distribution Plan pursuant to which Class
C shares of each Portfolio, other than the Money Market Portfolio, pay the
Distributor a fee at the annual rate of .75% of the respective average daily net
assets of the Class C shares of the designated Portfolios to compensate the
Distributor for its activities and expenses in distributing the Class C shares.
The fees charged may be more or less than the expenses incurred by the
Distributor.
The Distributor has entered into arrangements with broker/dealers for the sale
of Class B shares and Class C shares of certain of the Fund's Portfolios. In
connec-
<PAGE>
THE ALGER FUND -35-
NOTES TO FINANCIAL STATEMENTS (Continued)
tion with these arrangements, the Distributor has agreed to make payments to
these broker/dealers with respect to the Class B shares and Class C shares sold.
(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 year ended October 31, 1997, the initial sales
charges and contingent deferred sales charges retained by the Distributor were
approximately $108,000 and $3,914,000, 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 year ended October 31, 1997, the Growth
Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the
MidCap Growth Portfolio and the Capital Appreciation Portfolio paid the
Distributor commissions of $796,176, $1,107,011, $21,482, $436,141 and $514,917,
respectively, in connection with securities transactions.
(e) TRANSFER AGENT FEES AND EXPENSES: Alger Shareholder Services, Inc. ("Alger
Services"), an affiliate of Alger Management, serves as transfer agent for the
Fund. During the year ended October 31, 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 $496,410, $888,000, $45,175, $308,175, $515,700 and $368,220, respectively,
for services provided by Alger Services. In addition, during the year ended
October 31, 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 $258,800,
$333,800, $10,265, $85,200, $116,800 and $151,820, 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: During the year ended October 31, 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 year ended October 31, 1997 (in thousands):
Purchases Sales
--------- -----
Growth Portfolio ......................... $392,283 $385,253
Small Capitalization
Portfolio .............................. 629,143 668,489
Balanced Portfolio ....................... 12,730 14,418
MidCap Growth
Portfolio .............................. 248,627 233,252
Capital Appreciation
Portfolio .............................. 314,419 292,384
NOTE 5- Lines of Credit:
The Capital Appreciation Portfolio has lines of credit with banks whereby
it may borrow up to 1/3 of the value 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 year ended October 31, 1997, the Portfolio had borrowings which
averaged $2,940,097 at a weighted average interest rate of 6.43%.
<PAGE>
THE ALGER FUND -36-
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6- Share Capital:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value which are presently divided into six series. Each series, other
than the Money Market Portfolio, is divided into three separate classes. During
the year ended October 31, 1997, transactions of shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Alger Growth Portfolio
<S> <C> <C> <C> <C>
Class A:*
Shares sold ............................ 5,044,972 $ 51,947,397 -- --
Shares converted from Class B .......... 2,227,219 22,695,978 -- --
------------- --------------- ------------- ---------------
7,272,191 74,643,375 -- --
Shares redeemed ........................ (2,756,124) (29,211,908) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 4,516,067 $ 45,431,467 -- --
============= =============== ============= ===============
Class B:
Shares sold ............................ 19,936,199 $ 209,548,326 20,439,840 $ 185,976,149
Dividends reinvested ................... 887,671 8,477,253 1,233,917 10,587,010
------------- --------------- ------------- ---------------
20,823,870 218,025,579 21,673,757 196,563,159
Shares converted to Class A ............ (2,233,829) (22,695,978) --
Shares redeemed ........................ (20,141,745) (207,776,866) (10,053,996) (91,337,193)
------------- --------------- ------------- ---------------
Net increase (decrease) ................ (1,551,704) $ (12,447,265) 11,619,761 $ 105,225,966
============= =============== ============= ===============
Class C:**
Shares sold ............................ 22,512 $ 273,258 -- --
Shares redeemed ........................ (5,189) (61,432) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 17,323 $ 211,826 -- --
============= =============== ============= ===============
Alger Small Capitalization Portfolio
Class A:*
Shares sold............................. 7,681,584 $ 75,848,391 -- --
Shares converted from Class B........... 1,829,173 17,139,109
------------- --------------- ------------- ---------------
9,510,757 92,987,500 -- --
Shares redeemed......................... (6,999,709) (69,493,610) -- --
------------- --------------- ------------- ---------------
Net increase............................ 2,511,048 $ 23,493,890 -- --
============= =============== ============= ===============
Class B:
Shares sold............................. 106,288,557 $ 1,038,455,771 65,877,346 $ 715,329,513
Dividends reinvested.................... 9,868,408 89,901,198 2,431,612 25,264,448
------------- --------------- ------------- ---------------
116,156,965 1,128,356,969 68,308,958 740,593,961
Shares converted to Class A............. (1,835,958) (17,139,109) -- --
Shares redeemed......................... (108,877,400) (1,051,036,361) (58,979,523) (640,194,617)
------------- --------------- ------------- ---------------
Net increase............................ 5,443,607 $ 60,181,499 9,329,435 $ 100,399,344
============= =============== ============= ===============
Class C:**
Shares sold............................. 42,583 $ 451,031 -- --
Shares redeemed......................... (9,782) (102,933) -- --
------------- --------------- ------------- ---------------
Net increase............................ 32,801 $ 348,098 -- --
============= =============== ============= ===============
</TABLE>
<PAGE>
THE ALGER FUND -37-
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Alger Balanced Portfolio
<S> <C> <C> <C> <C>
Class A:*
Shares sold ............................ 19,407 $ 305,198 -- --
Shares converted from Class B .......... 13,383 192,101 -- --
------------- --------------- ------------- ---------------
32,790 497,299 -- --
Shares redeemed ........................ (5,110) (80,451) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 27,680 $ 416,848 -- --
============= =============== ============= ===============
Class B:
Shares sold ............................ 626,022 $ 9,511,649 1,054,356 $ 14,459,376
Dividends reinvested ................... 23,152 328,056 9,599 129,105
------------- --------------- ------------- ---------------
649,174 9,839,705 1,063,955 14,588,481
Shares converted to Class A ............ (13,405) (192,101) -- --
Shares redeemed ........................ (817,576) (12,286,748) (571,454) (7,908,926)
------------- --------------- ------------- ---------------
Net increase (decrease) ................ (181,807) $ (2,639,144) 492,501 $ 6,679,555
============= =============== ============= ===============
Class C:**
Shares sold ............................ 3,179 $ 54,326 -- --
Shares redeemed ........................ (259) (4,321) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 2,920 $ 50,005 -- --
============= =============== ============= ===============
Alger MidCapGrowth Portfolio
Class A:*
Shares sold ............................ 1,533,288 $ 31,807,270 -- --
Shares converted from Class B .......... 148,365 2,732,385 -- --
1,681,653 34,539,655 -- --
Shares redeemed ........................ (1,439,653) (29,874,723) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 242,000 $ 4,664,932 -- --
============= =============== ============= ===============
Class B:
Shares sold ............................ 6,111,087 $ 124,416,537 5,967,864 $ 109,772,851
Dividends reinvested ................... 176,660 3,335,332 208,813 3,587,405
------------- --------------- ------------- ---------------
6,287,747 127,751,869 6,176,677 113,360,256
Shares converted to Class A ............ (148,651) (2,732,385) -- --
Shares redeemed ........................ (5,345,132) (110,043,722) (2,369,463) (43,593,307)
------------- --------------- ------------- ---------------
Net increase ........................... 793,964 $ 14,975,762 3,807,214 $ 69,766,949
============= =============== ============= ===============
Class C:**
Shares sold ............................ 5,118 $ 120,922 -- --
Shares redeemed ........................ (1,348) (29,837) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 3,770 $ 91,085 -- --
============= =============== ============= ===============
</TABLE>
<PAGE>
THE ALGER FUND -38-
NOTES TO FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Alger Capital Appreciation Portfolio
<S> <C> <C> <C> <C>
Class A:*
Shares sold ............................ 3,241,124 $ 82,052,318 -- --
Shares converted from Class B .......... 233,151 5,186,684 -- --
------------- --------------- ------------- ---------------
3,474,275 87,239,002 -- --
Shares redeemed ........................ (2,879,210) (73,001,214) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 595,065 $ 14,237,788 -- --
============= =============== ============= ===============
Class B:
Shares sold ............................ 12,410,336 $ 304,603,104 9,017,193 $ 187,170,688
Dividends reinvested ................... 43,004 941,804 69,287 1,293,585
------------- --------------- ------------- ---------------
12,453,340 305,544,908 9,086,480 188,464,273
Shares converted to Class A ............ (233,764) (5,186,684) -- --
Shares redeemed ........................ (10,979,223) (267,894,646) (3,944,113) (82,235,369)
------------- --------------- ------------- ---------------
Net increase ........................... 1,240,353 $ 32,463,578 5,142,367 $ 106,228,904
============= =============== ============= ===============
Class C:**
Shares sold ............................ 36,710 $ 1,019,125 -- --
Shares redeemed ........................ (12,451) (346,883) -- --
------------- --------------- ------------- ---------------
Net increase ........................... 24,259 $ 672,242 -- --
============= =============== ============= ===============
Alger Money Market Portfolio
Shares sold ............................ 1,583,643,437 $ 1,583,643,437 903,938,157 $ 903,938,157
Dividends reinvested ................... 9,418,392 9,418,392 11,911,938 11,911,938
------------- --------------- ------------- ---------------
1,593,061,829 1,593,061,829 915,850,095 915,850,095
Shares redeemed ........................ (1,699,340,499) (1,699,340,499) (815,956,070) (815,956,070)
------------- --------------- ------------- ---------------
Net increase (decrease) ................ (106,278,670) $ (106,278,670) 99,894,025 $ 99,894,025
============= =============== ============= ===============
</TABLE>
- -------------------
* Initially offered January 1, 1997.
** Initially offered August 1, 1997.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS -39-
To the Shareholders and
Board of Trustees of The Alger Fund:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of The Alger Fund (a Massachusetts
business trust comprising, respectively, the Growth Portfolio, Small
Capitalization Portfolio, Balanced Portfolio, MidCap Growth Portfolio, Capital
Appreciation Portfolio and Money Market Portfolio) as of October 31, 1997, and
the related statements of operations and cash flows for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting The Alger Fund as of October 31,
1997, the results of their operations and cash flows for the year then ended,
the changes in their net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
December 3, 1997
<PAGE>
================================================================================
THE | Meeting the challenge
ALGER | of investing
FUND |
Alger Growth Portfolio
Alger Small Capitalization Portfolio
Alger Balanced Portfolio
Alger MidCap Growth Portfolio
Alger Capital Appreciation Portfolio
Alger Money Market Portfolio
|
ANNUAL |
REPORT | October 31, 1997
|
================================================================================
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
- --------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP
1345 Avenue of the Americas
New York, N.Y. 10105
- --------------------------------------------------------------------------------
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 107
