FELLOW SHAREHOLDERS: November 20, 1998
THE YEAR IN REVIEW
Following three years of euphoric gains, the U.S. stock market maintained
its torrid pace during the first half of 1998, fueled by strong domestic demand,
low inflation, stable interest rates, and a neutral monetary policy. The Dow
Jones Industrial Average, which broke through the 9000 level for the first time
in history during the month of April, continued its upward trend into the summer
months, rising to an intra-day high of 9412 on July 17th. The third quarter,
however, marked an abrupt reversal in the direction of the equity markets, with
all major stock market indices posting double-digit losses for the quarter.
During this period, the DJIA plunged to an intra-day low of 7379 on September
1st, representing a 22% drop from the high -- technically a bear market.
Subsequently, it fluctuated wildly between 7400 and 8200, testing the lower part
of the band six times. Recently, however, the market has come roaring back and
is currently trading at levels close to the highs set back in July.
What forces conspired to create this extreme volatility? We believe that
the market is normally confronted by one overriding problem at a time - the
"primary worry". For example, over the last several years the "primary worry"
has been the Federal Reserve raising interest rates. This year, however, the
market was confronted by several "primary worries", causing it to fluctuate
wildly as deepening gloom about the global economy as well as political
upheavals intensified the turbulence in the financial markets:
1. Japan -- The Japanese economy was clearly in a severe recession and the
banking system was very weak. Many banks had been allowed to continue in
business despite being effectively insolvent. The new government was thought to
be inept and slow to react. The fear was that if Japan sank further into the
abyss, it would drag down the rest of Asia, possibly even forcing a devaluation
in China and thus leading to a round of competitive devaluations.
2. "Contagion" -- The financial crisis that began in Thailand in the summer
of 1997 had infected other countries in Asia by the end of 1997. By the summer
of 1998, it had spread to other parts of the world. For a while, it looked like
Russia was going to devolve into political and economic chaos. Russia's stock
market collapsed, its currency was devalued and the country defaulted on
billions of dollars of debt. Furthermore, the Duma rejected Boris Yeltsin's
choice for Prime Minister. The prospect of chaos in Russia had implications far
beyond the economy as the wholesale selling of nuclear weapons was also a fear.
Events in Russia caused the risk premium for all investments in emerging
markets to rise dramatically and, as a result, there was a massive flight of
capital from these markets. Investors targeted Brazil in particular, whose
economy represents approximately 40% of the GDP of South America and is an
important partner of the U.S. Moreover, Brazil was in the middle of an election.
The fear developed that a collapse of Brazil would take down all of South
America.
3. Financial Market Instability -- The collapse of Long-Term Capital
Management and other smaller hedge funds hit the banking system hard, causing
substantial fear that the whole financial system was unstable.
4. The Clinton/Lewinsky Matter -- This had an important negative effect on
the market because it was perceived by foreigners as some form of coup d'etat.
You may recall that on the day the Starr report was released, the market dropped
249 points.
Against this background, the economy was clearly slowing, bringing into
question the issue of third quarter earnings and raising the possibility of a
recession in 1999. Investors, growing increasingly cautious, began to avoid risk
and every type of security began to look risky, except for the ultimate safe
haven -- U.S. Treasuries. The ensuing flight to quality drove the yield on the
30-year Treasury bond down to 4.70% by the start of October, and the spread
between U.S. Treasuries and corporate bonds widened dramatically.
Recently, however, the market has come back dramatically and we are
optimistic that this upward trend will continue. The primary catalyst for the
turnaround was the surprise move by the Federal Reserve on October 15th to lower
the Fed funds rate to 5% and the discount rate to 4.75%. This followed a 25
basis point cut of the Fed funds rate on September 29th, which the market had
viewed as inadequate. This move on October 15th, coming between
<PAGE>
Federal Open-Market Committee meetings, was a very strong statement that the Fed
would act to alleviate the credit crunch and fend off a possible recession. The
decision by the Fed on November 17th to lower both the Fed funds rate and the
discount rate by an additional 25 basis points should continue to drive the
market.
At the same time, the "primary worries" are abating:
1. Japan -- The Obuchi government succeeded in passing banking reform
legislation involving $500 billion of public money to shore up the "zombie"
banks. This is a substantial positive and should, in time, help Japan's business
and consumer confidence, perhaps leading to improved domestic spending and a
healthier economy. More importantly, the prospect of a more stable Japan has
taken some of the fear out of other Asian markets.
2. "Contagion" -- Fears began to subside that the economic and financial
turmoil was spreading around the world. The U.S. Congress approved additional
funding for the IMF. President Cardoso won reelection in Brazil. In the wake of
the elections, the Brazilian government proposed an austerity package,
considered essential both for its long-term fiscal and economic stability and
for receiving funding from the IMF. There will undoubtedly be some more nervous
moments from now until the end of the year. The only good news from Russia has
been that it has a government. The IMF has been unwilling to disburse any more
funds due to the lack of a satisfactory economic plan, and Russia is still in
talks with its creditors.
3. Financial Market Instability -- The Long-Term Capital Management/hedge
funds situation seems to have stabilized with no further rumors of major hedge
fund problems. The Fed's willingness to safeguard the financial system has
brought a great sense of relief to the market.
4. The Clinton/Lewinsky Matter -- The election is now over and voters
stated en masse that they were utterly unconcerned with the Monica Lewinsky
matter. It seems therefore increasingly improbable that Clinton will be removed
from office unless there is some new series of revelations. Consequently, we
think it is unlikely that this matter will continue to affect the stock market
in any profoundly negative way.
PORTFOLIO MATTERS
ALGER SMALL CAPITALIZATION PORTFOLIO
The Alger Small Capitalization Portfolio's total return for the year was
- -11.63% which, although negative, compared favorably to the benchmark return of
- -15.86% for the Russell 2000 Growth Index. Obviously, this was a particularly
difficult period for small cap growth stocks as investors continued to place a
high premium on liquidity and earnings predictability, causing large cap stocks
to drive the market. The explosive growth potential and attractive relative
valuations of smaller stocks were all but ignored by a risk-averse investment
community. The Portfolio's ability to generate a favorable relative return was
not the result of increased or limited exposure to certain sectors, as every
economic sector in the small cap discipline suffered, but rather was the result
of careful stock selection.
ALGER GROWTH PORTFOLIO
For the year ended October 31, 1998, the Alger Growth Portfolio's total
return was 20.50% as compared to 21.99% for the S&P 500. During this volatile
period, investors once again favored larger, more predictable stocks.
Additionally, many of the market factors discussed previously contributed to an
environment wherein stocks of certain sectors performed exceptionally well. In
particular, the Portfolio's heavy exposure to health care, retailing and
technology stocks enabled it to post strong double-digit returns. The strength
in retailing was primarily attributable to high employment, high consumer
confidence and falling interest rates, while the health care sector, including
pharmaceuticals and medical devices, fared well in the face of a slowing
economy. The technology sector was driven largely by internet companies, which
emerged as a major force in 1998. The Portfolio's slight underperformance
relative to the benchmark is due in part to its exposure to the poor performing
oil service industry at the beginning of the fiscal year. Thus far in fiscal
1999, however, the Portfolio has significantly outperformed the benchmark, a
trend we expect to continue as stocks with strong earnings growth potential
continue to be rewarded by investors.
ALGER MIDCAP GROWTH PORTFOLIO
For the year ended October 31, 1998, the Alger MidCap Growth Portfolio's
performance was in line with the benchmark, returning 6.24% as compared to 6.71%
for the S&P MidCap 400 Index. For the third year in a row, bigger was
<PAGE>
better as investors continued to flock toward the larger, "safer" companies. As
a result, large cap stocks fared better than mid cap stocks, which in turn fared
better than small cap stocks. The Portfolio's industry exposure was similar to
that of the Growth Portfolio, so both were helped and hurt by the same economic
factors discussed previously. Of note, holdings in the technology sector
performed particularly well, driven by continued strong capital investment by
businesses hoping to improve their productivity, time to market and competitive
edge. Given the possibility of a slowing economic environment, the Portfolio is
well positioned for strong performance as mid cap growth stocks, with their
generally higher earnings growth potential, are increasingly valued by the
market as earnings growth becomes more scarce.
ALGER BALANCED PORTFOLIO
The Alger Balanced Portfolio's total return for the twelve months ended
October 31, 1998 was 16.87%, compared to 10.27% for the Lehman Brothers
Government/Corporate Bond Index and 21.99% for the S&P 500. During this period,
the Portfolio maintained a ratio of approximately 60/40 common stocks to debt
securities, producing results that were in line with those of a blended index
comprising the two comparative indices. Similar to the Growth Portfolio,
exposure to technology, retail and health care sectors drove the equity portion
of the portfolio.
ALGER CAPITAL APPRECIATION PORTFOLIO
For the year ended October 31, 1998, the Alger Capital Appreciation
Portfolio's total return was 9.86%, compared to 21.99% for the S&P 500 Index.
The factors contributing to the Portfolio's disappointing returns were largely
stylistic in nature as this Portfolio employs an "allcap" (small, medium and
large capitalizations) portfolio management strategy. As stated previously, the
explosive growth potential and attractive relative valuations of small and mid
cap stocks were all but ignored by a risk-averse investment community in favor
of larger, "safer" companies. This trend was evidenced by the dismal return of
- -15.86% for the Russell 2000 Growth Index and the lackluster performance of
6.71% for the S&P MidCap 400 Index. As a result, the Capital Appreciation
Portfolio suffered severe negative repercussions from its exposure to small and
mid cap stocks.
LOOKING AHEAD
While recent events will likely result in slower economic growth in coming
quarters, we believe that the outlook for the U.S. economy remains constructive.
The positives - low inflation, low interest rates, high levels of employment,
reasonably high levels of consumer confidence, a well-capitalized banking
system, and prudent monetary and fiscal policies should offset the negative
impact of a weakening import/export sector. Growth in the U.S. will slow, but we
do not foresee a recession on the horizon.
Since economic growth will likely slow both here and abroad, the rate of
gain in corporate earnings will not be as robust as in recent years.
High-quality growth companies, however, have the ability to generate high levels
of earnings even in a weak economic environment. Today, growth stocks, which
typically sell at a premium to the market, are trading at only slightly more
than the market multiple. As stability returns to the market, we believe growth
stocks will regain their normal premium to the market. As a result, we believe
that The Alger Fund portfolios, which consist of quality growth stocks, should
produce superior performance in the months ahead.
Respectfully submitted,
/s/ DAVID D. ALGER
------------------
David D. Alger
President
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Alger Growth Portfolio:
Portfolio Highlights ................................ 7
Schedule of Investments ............................. 8
Financial Highlights ................................ 10
Alger Small Capitalization Portfolio:
Portfolio Highlights ................................ 12
Schedule of Investments ............................. 13
Financial Highlights ................................ 15
Alger Balanced Portfolio:
Portfolio Highlights ................................ 17
Schedule of Investments ............................. 18
Financial Highlights ................................ 20
Alger MidCap Growth Portfolio:
Portfolio Highlights ................................ 22
Schedule of Investments ............................. 23
Financial Highlights ................................ 25
Alger Capital Appreciation Portfolio:
Portfolio Highlights ................................ 27
Schedule of Investments ............................. 28
Financial Highlights ................................ 30
Alger Money Market Portfolio:
Schedule of Investments ............................. 32
Financial Highlights ................................ 34
Statements of Assets and Liabilities ...................................... 35
Statements of Operations .................................................. 36
Statement of Cash Flows (Alger Capital Appreciation Portfolio) ............ 37
Statements of Changes in Net Assets ....................................... 38
Notes to Financial Statements ............................................. 40
Report of Independent Public Accountants .................................. 46
<PAGE>
-7-
- --------------------------------------------------------------------------------
ALGER GROWTH PORTFOLIO Portfolio Highlights Through October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/98
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece]
Alger Growth B S&P 500
11/1/88 10000 10000
12699 12641
10/31/90 12191 11695
17774 15613
10/31/92 19492 17171
25178 19735
10/31/94 26204 20498
36103 25920
10/31/96 39021 32165
48837 42496
10/31/98 59295 51838
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, 1998. 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 10/31/98+
AVERAGE ANNUAL TOTAL RETURNS
1 5 10 SINCE
YEAR YEARS YEARS INCEPTION
---------------------------------------------------
CLASS A (INCEPTION 1/1/97) 15.65% * * 21.30%
S&P 500 Index 21.99% * * 26.06%
- --------------------------------------------------------------------------------
CLASS B (INCEPTION 11/11/86) 15.50% 18.26% 19.48% 16.46%
S&P 500 Index 21.99% 21.31% 17.88% 16.56%
- --------------------------------------------------------------------------------
CLASS C (INCEPTION 8/1/97) 19.50% * * 12.33%
S&P 500 Index 21.99% * * 13.71%
- --------------------------------------------------------------------------------
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>
-8-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1998
COMMON STOCKS--86.3% SHARES VALUE
- -------------------- ------ -----
AIRLINES--1.1%
US Airways Group Inc.* .................... 100,500 $ 5,684,582
-------------
BROADCASTING--1.4%
Comcast Corp. CI. A. Special .............. 149,500 7,381,562
-------------
BUSINESS SERVICES--1.7%
IMS Health Inc. ........................... 131,400 8,738,100
-------------
COMMUNICATIONS--7.2%
AT&T Corp. ................................ 37,000 2,303,250
America Online Inc. ....................... 132,400 16,823,140
COX Communications Inc. Cl. A.* ........... 43,700 2,398,038
MCI Worldcom Inc.* ........................ 287,100 15,862,275
-------------
37,386,703
-------------
COMMUNICATION EQUIPMENT--4.3%
Ascend Communications, Inc.* .............. 156,400 7,546,300
Cisco Systems, Inc.* ...................... 234,775 14,790,825
-------------
22,337,125
-------------
COMPUTER RELATED & BUSINESS EQUIPMENT--6.6%
Compaq Computer Corp. ..................... 156,200 4,939,825
Dell Computer Corp.* ...................... 87,200 5,711,600
EMC Corp.* ................................ 143,500 9,237,813
International Business Machines Corp. ..... 95,100 14,116,454
-------------
34,005,692
-------------
COMPUTER SOFTWARE--4.5%
Compuware Corp.* .......................... 161,900 8,773,037
Microsoft Corporation* .................... 137,900 14,600,163
-------------
23,373,200
-------------
CONGLOMERATE--3.4%
General Electric Co. ...................... 28,000 2,450,000
Tyco International Ltd. ................... 244,294 15,131,082
-------------
17,581,082
-------------
CONSUMER PRODUCTS--.5%
Procter & Gamble Co. ...................... 27,000 2,399,625
-------------
DRUG DISTRIBUTION--2.5%
Cardinal Health, Inc. ..................... 85,100 8,047,310
McKesson Corp. ............................ 65,000 5,005,000
-------------
13,052,310
-------------
FINANCIAL SERVICES--12.2%
BankAmerica Corp. ......................... 173,800 9,982,724
Bank of New York Inc. ..................... 151,600 4,784,951
Citigroup Inc. ............................ 265,500 12,495,227
Federal Home Loan Mortgage Corporation .... 181,800 10,453,500
Firstar Corp. ............................. 49,200 2,792,100
First Union Corp. ......................... 100,972 5,856,376
Household International Inc. .............. 193,600 7,078,597
Kansas City Southern Industries Inc. ...... 180,200 6,960,225
SunAmerica Inc. ........................... 36,300 2,559,150
-------------
62,962,850
-------------
FOOD CHAINS--6.0%
Fred Meyer, Inc.* ......................... 47,100 2,511,042
Kroger Co.* ............................... 235,900 13,092,450
Safeway Inc.* ............................. 322,800 15,434,036
-------------
31,037,528
-------------
HEALTH CARE--.4%
Johnson & Johnson ......................... 27,000 2,200,500
-------------
INSURANCE--2.6%
American International Group, Inc. ........ 153,225 13,062,430
-------------
LEISURE & ENTERTAINMENT--1.0%
Carnival Corp. ............................ 159,500 5,163,813
-------------
Medical Devices--.5%
Medtronic, Inc. ........................... 37,800 2,457,000
-------------
OIL & GAS--.4%
Exxon Corp. ............................... 30,000 2,137,500
-------------
PHARMACEUTICALS--12.7%
Bristol Myers Squibb Co. .................. 110,000 12,161,930
Elan Corp PLC-ADR* ........................ 41,500 2,907,615
Merck & Co., Inc. ......................... 17,000 2,299,250
Pfizer Inc. ............................... 143,100 15,356,490
Schering-Plough Corporation ............... 143,600 14,772,850
SmithKline Beecham PLC ADS ................ 17,000 1,083,750
Warner-Lambert Co. ........................ 217,100 17,015,213
-------------
65,597,098
-------------
POLLUTION CONTROL--2.2%
Waste Management, Inc. .................... 253,100 11,421,138
-------------
RETAILING--10.2%
CVS Corp. ................................. 241,000 11,010,808
Home Depot, Inc. .......................... 345,100 15,011,850
Staples Inc.* ............................. 313,100 10,214,888
Wal-Mart Stores Inc. ...................... 239,100 16,497,900
-------------
52,735,446
-------------
<PAGE>
-9-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 1998
COMMON STOCKS--(CONT.) SHARES VALUE
- ---------------------- ------ -----
SEMICONDUCTORS--4.4%
Intel Corp. ............................... 137,900 $ 12,299,025
Texas Instruments, Incorporated ........... 158,900 10,159,747
-------------
22,458,772
-------------
TRANSPORTATION--.5%
Burlington Northern Santa Fe Co. .......... 76,400 2,358,850
-------------
Total Common Stocks(Cost $353,121,457) .... 445,532,906
-------------
SHORT-TERM CORPORATE PRINCIPAL
NOTES--13.4% AMOUNT
----------
Eagle Funding Capital Corp.,
5.27%, 11/5/98 (a) ...................... $ 8,500,000 8,495,023
Hertz Corporation,
5.12%, 11/6/98 .......................... 12,800,000 12,790,896
Market Street Funding Corp.,
5.25%, 11/6/98 .......................... 1,650,000 1,648,797
Merrill Lynch & Co., Inc.,
5.25%, 11/10/98 ......................... 10,600,000 10,586,087
Montauk Funding Corp.,
5.18%, 11/6/98 (a) ...................... 2,000,000 1,998,561
National Australia Funding, Inc.,
5.22%, 11/5/98 .......................... 16,700,000 16,690,315
Republic Industries Funding Corp.,
5.25%, 11/12/98 ......................... 6,950,000 6,938,852
World Omni Vehicle Leasing Inc.,
5.25%, 11/4/98 .......................... 10,000,000 9,995,625
-------------
Total Short-Term Corporate Notes
(Cost $69,144,156) ...................... 69,144,156
-------------
Total Investments
(Cost $422,265,613)(b) .................. 99.7% 514,677,062
Other Assets in Excess
of Liabilities .......................... .3 1,449,601
----- -------------
Net Assets ................................ 100.0% $516,126,663
===== =============
* Non-income producing security.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At October 31 1998, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $422,265,613, amounted to
$92,411,449 which consisted of aggregate gross unrealized appreciation of
$95,424,982 and aggregate gross unrealized depreciation of $3,013,533.
See Notes to Financial Statements.
<PAGE>
-10-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year
<TABLE>
<CAPTION>
CLASS B(i)
---------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 11.50 $ 9.49 $ 9.38 $ 6.97 $ 7.43
-------- -------- -------- -------- ---------
Net investment income (loss) (.11)(ii) (.13) (.08)(ii) (.02) (.07)(ii)
Net realized and unrealized gain (loss)
on investments 2.10 2.44 .78 2.59 .35
-------- -------- -------- -------- ---------
Total from investment operations 1.99 2.31 .70 2.57 .28
Distributions from net realized gains (1.49) (.30) (.59) (.16) (.74)
-------- -------- -------- -------- ---------
Net asset value, end of year $ 12.00 $ 11.50 $ 9.49 $ 9.38 $ 6.97
======== ======== ======== ======== =========
Total Return (iii) 20.5% 24.9% 8.1% 37.8% 4.1%
======== ======== ======== ======== =========
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted) $390,885 $304,984 $266,207 $154,284 $ 76,390
======== ======== ======== ======== =========
Ratio of expenses to average net assets 2.00% 2.08% 2.08% 2.09% 2.20%
======== ======== ======== ======== =========
Ratio of net investment income (loss)
to average net assets (.98%) (1.13%) (.84%) (1.03%) (1.01%)
======== ======== ======== ======== =========
Portfolio Turnover Rate 146.64% 128.26% 94.91% 118.16% 103.86%
======== ======== ======== ======== =========
</TABLE>
- -----------
See footnotes on page 11.
<PAGE>
-11-
THE ALGER FUND
ALGER GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS A (V) CLASS C (IV)
----------------------------- -----------------------------
YEAR TEN MONTHS YEAR THREE MONTHS
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997(VI) 1998 1997(VI)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.58 $ 9.40 $ 11.50 $ 11.98
-------- -------- -------- -------
Net investment income (loss) (.03)(ii) (.02) (.11)(ii) (.02)
Net realized and unrealized gain (loss)
on investments 2.13 2.20 2.10 (.46)
-------- -------- -------- -------
Total from investment operations 2.10 2.18 1.99 (.48)
Distributions from net realized gains (1.49) -- (1.49) --
-------- -------- -------- -------
Net asset value, end of period $ 12.19 $ 11.58 $ 12.00 $ 11.50
======== ======== ======== =======
Total Return (iii) 21.4% 23.2% 20.5% (4.0%)
======== ======== ======== =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $121,930 $ 52,307 $ 3,312 $ 199
======== ======== ======== =======
Ratio of expenses to average net assets 1.25% 1.30% 2.00% 2.02%
======== ========= ======== =======
Ratio of net investment income (loss)
to average net assets (.23%) (.39%) (.97%) (1.43%)
======== ========= ======== =======
Portfolio Turnover Rate 146.64% 128.26% 146.64% 128.26%
======== ========= ======== =======
</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) 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>
-12-
- --------------------------------------------------------------------------------
ALGER SMALL CAPITALIZATION PORTFOLIO
Portfolio Highlights Through October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES - 10 YEARS ENDED 10/31/98
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece]
Alger Russell
Small Cap B 2000 Growth
11/1/88 10000 10000
16508 11872
10/31/90 15339 8745
25117 14653
10/31/92 25977 14511
32676 18526
10/31/94 32334 18357
47256 22132
10/31/96 48755 25081
55018 30392
10/31/98 49045 25575
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, 1998. 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.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Performance Comparison as of 10/31/98+
Average Annual Total Returns
1 5 10 Since
Year Years Years Inception
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (Inception 1/1/97) (15.09)% * * (2.53)%
Russell 2000 Growth Index (15.86)% * * (1.47)%
--------------------------------------------------------------------------------------------
Class B (Inception 11/11/86) (15.82)% 7.98% 17.24% 14.89%
Russell 2000 Growth Index (15.86)% 6.66% 9.85% 8.42%
--------------------------------------------------------------------------------------------
Class C (Inception 8/1/97) (12.67)% * * (10.20)%
Russell 2000 Growth Index (15.86)% * * (9.74)%
</TABLE>
- --------------------------------------------------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE
AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE
AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-13-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1998
COMMON STOCKS--82.5% SHARES VALUE
- -------------------- ------ -----
ADVERTISING--1.0%
Outdoor Systems, Inc.* ......................... 249,075 $ 5,495,341
-----------
AIRLINES--3.2%
ASA Holdings Inc. .............................. 51,600 1,851,150
Continental Airlines Inc. Cl. B.* .............. 209,000 8,281,625
SkyWest Inc. ................................... 255,600 6,517,800
-----------
16,650,575
-----------
APPAREL--1.1%
AnnTaylor Stores Corporation* .................. 100,000 2,900,000
Jones Apparel Group Inc.* ...................... 167,500 2,889,375
-----------
5,789,375
-----------
BIO-TECHNOLOGY--4.2%
Centocor, Inc.* ................................ 171,400 7,627,300
IDEC Pharmaceuticals Corporation* .............. 115,500 3,450,562
Medimmune Inc.* ................................ 165,000 11,096,250
-----------
22,174,112
-----------
BROADCASTING--1.5%
Cablevision Systems Corp. Cl. A.* .............. 37,100 1,790,075
Clear Channel Communications Inc.* ............. 28,000 1,275,764
Jacor Communications Inc.* ..................... 90,500 4,977,500
-----------
8,043,339
-----------
BUILDING & CONSTRUCTION--.5%
Champion Enterprises Inc.* ..................... 118,500 2,355,188
-----------
BUSINESS SERVICES--4.0%
ChoicePoint Inc.* .............................. 50,700 2,395,575
IMS Health Inc. ................................ 131,500 8,744,750
Rent-Way Inc.* ................................. 204,500 4,831,312
United Stationers Inc.* ........................ 186,000 4,929,000
-----------
20,900,637
-----------
COMMUNICATION EQUIPMENT--2.1%
Ascend Communications, Inc.* ................... 90,700 4,376,275
Dycom Industries Inc.* ......................... 75,500 2,647,257
L-3 Communications Holdings, Inc.* ............. 43,000 1,849,000
Visual Networks, Inc.* ......................... 84,600 2,411,100
-----------
11,283,632
-----------
COMPUTER RELATED & BUSINESSEQUIPMENT--1.3%
Maxtor Corp.* .................................. 270,000 2,868,750
Sanmina Corporation* ........................... 97,500 3,997,500
-----------
6,866,250
-----------
COMPUTER SERVICES--6.9%
Ceridian Corp.* ................................ 167,800 $ 9,627,525
International Network Services* ................ 65,700 2,792,250
Keane Inc.* .................................... 130,000 4,322,500
Lycos Inc.* .................................... 200,000 8,125,000
QRS Corp.* ..................................... 78,800 2,994,400
Technology Solutions Co.* ...................... 395,050 4,740,600
Whittman-Hart, Inc.* ........................... 28,500 566,438
Yahoo Inc.* .................................... 25,000 3,271,100
-----------
36,439,813
-----------
COMPUTER SOFTWARE--4.5%
Citrix Systems, Inc.* .......................... 119,300 8,455,388
CSG Systems International Inc.* ................ 33,000 1,798,500
Compuware Corp.* ............................... 130,000 7,044,440
Intuit Inc.* ................................... 124,800 6,302,400
-----------
23,600,728
-----------
CONSUMER PRODUCTS--1.4%
Dial Corp. ................................. 18,000 496,134
Furniture Brands
International Inc.* ...................... 114,500 2,461,750
Penton Media Inc. .......................... 68,800 1,032,000
Pittway Corp. Cl. A ........................ 137,600 3,156,269
-----------
7,146,153
-----------
DRUG DISTRIBUTION--5.4%
Bergen Brunswig Corp. Cl. A ................ 251,700 12,286,232
McKesson Corp. ............................. 85,000 6,545,000
Omnicare, Inc. ............................. 271,700 9,390,767
-----------
28,221,999
-----------
FINANCIAL SERVICES--7.3%
Commerce Bancshares Inc. ................... 69,652 3,034,250
Dime Bancorp Inc. .......................... 275,000 6,548,575
Finova Group Inc. .......................... 95,000 4,631,250
Kansas City Southern
Industries Inc. .......................... 174,000 6,720,750
National Commerce Bancorp .................. 285,000 5,058,750
North Fork
Bancorporation Inc. ...................... 169,650 3,371,794
Sovereign Bancorp Inc. ..................... 362,400 4,756,500
Wilmington Trust Corp. ..................... 81,000 4,460,103
-----------
38,581,972
-----------
FOOD CHAINS--2.7%
Food Lion Inc. Cl. A ....................... 275,000 3,025,000
Fred Meyer, Inc.* .......................... 211,600 11,281,031
-----------
14,306,031
-----------
FOODS & BEVERAGES--4.6%
Earthgrains Company ........................ 185,800 5,574,000
Interstate Bakeries Corp. .................. 70,000 1,754,410
Starbucks Corp.* ........................... 243,300 10,553,138
U.S. Foodservice* .......................... 133,000 6,317,500
-----------
24,199,048
-----------
<PAGE>
-14-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 1998
COMMON STOCKS--(cont.) SHARES VALUE
- -------------------- ------ -----
INSURANCE--.5%
Fremont General Corp. ...................... 52,100 $ 2,572,438
-----------
MANUFACTURING--.7%
Leggett & Platt Inc. ....................... 154,200 3,604,425
-----------
MEDICAL DEVICES--1.1%
Biomet Inc. ................................ 165,000 5,599,770
-----------
MEDICAL SERVICES--3.5%
Hooper Holmes Inc. ......................... 159,700 3,802,936
Impath Inc.* ............................... 35,000 1,071,875
Lincare Holdings Inc.* ..................... 91,000 3,634,358
MedQuist Inc.* ............................. 320,400 8,630,935
VWR Scientific Products Corp.* ............. 57,000 1,385,841
-----------
18,525,945
-----------
PHARMACEUTICALS--5.2%
Alza Corp.* ................................ 224,000 10,724,000
Elan Corp PLC-ADR* ......................... 108,600 7,608,842
Forest Laboratories, Inc.* ................. 217,500 9,094,328
-----------
27,427,170
-----------
RESTAURANTS & LODGING--1.9%
CKE Restaurants Inc. ....................... 168,480 4,433,213
Outback Steakhouse, Inc.* .................. 156,200 5,408,425
-----------
9,841,638
-----------
RETAILING--15.6%
BJ's Wholesale Club Inc.* .................. 210,100 7,550,574
Bed Bath & Beyond Inc.* .................... 416,200 11,471,721
Borders Group Inc.* ........................ 248,600 6,308,225
Dollar General Corp. ....................... 345,000 8,236,875
Ethan Allen Interiors Inc. ................. 121,000 4,159,375
Family Dollar Stores Inc. .................. 513,000 9,298,125
Linens'n Things Inc.* ...................... 292,000 9,033,896
Mens Wearhouse Inc.* ....................... 60,000 1,455,000
Office Depot Inc.* ......................... 402,000 10,050,000
Pacific Sunwear
of California Inc.* .................... 177,500 3,838,438
Saks Incorporated* ......................... 63,900 1,453,725
Williams Sonoma Inc.* ...................... 327,800 8,932,550
-----------
81,788,504
-----------
SEMICONDUCTORS--.6%
Microchip Technology
Incorporated* ............................ 107,700 2,914,685
-----------
TEXTILES--.3%
WestPoint Stevens Inc.* .................... 48,600 $ 1,382,086
-----------
TRANSPORTATION--1.0%
Coach USA Inc.* ............................ 200,900 5,386,731
-----------
MISCELLANEOUS--.4%
Loewen Group Inc. .......................... 262,100 2,342,650
-----------
Total Common Stocks(Cost $389,779,123) ..... 433,440,235
-----------
SHORT-TERM CORPORATE PRINCIPAL
NOTES--17.6% AMOUNT
---------
Bayerische Vereinsbank A.G.,
5.22%, 11/5/98 ........................... $16,900,000 16,890,198
Block Financial Corp.,
5.12%, 11/2/98 ........................... 3,000,000 2,999,573
Hasbro Inc.,
5.20%, 11/12/98 .......................... 16,900,000 16,873,148
Hertz Corporation,
5.27%, 11/13/98 .......................... 12,700,000 12,677,690
Market Street Funding Corp.,
5.25%, 11/6/98 ........................... 8,400,000 8,393,875
National Australia Funding, Inc.,
5.22%, 11/5/98 ........................... 16,900,000 16,890,198
Progress Capital Holdings, Inc.,
5.22%, 11/10/98 .......................... 17,250,000 17,227,489
Repeat Offering Securitization Equity Inc.,
5.24%, 11/5/98(a) ........................ 500,000 499,709
-----------
Total Short-Term Corporate Notes
(Cost $92,451,880) ....................... 92,451,880
-----------
Total Investments
(Cost $482,231,003) (b) ................... 100.1% 525,892,115
Liabilities in Excess of Other Assets ...... (.1) (750,591)
----- ------------
Net Assets ................................. 100.0% $525,141,524
===== ============
* Non-income producing security.
(a)Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
(b)At October 31, 1998, the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $482,231,003, amounted
to $43,661,112 which consisted of aggregate gross unrealized
appreciation of $57,164,226 and aggregate gross unrealized depreciation
of $13,503,114.
See Notes to Financial Statements.
<PAGE>
-15-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
Financial Highlights
For a share outstanding throughout the year
<TABLE>
<CAPTION>
CLASS B(I)
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 10.29 $ 10.86 $ 11.13 $ 7.62 $ 8.65
-------- -------- -------- ------- -------
Net investment income (loss) ........................ (.14)(vi) (.11) (.09) (.13) (.09)
Net realized and unrealized gain (loss)
on investments .................................... (1.03) 1.28 .42 3.64 (.02)
-------- -------- -------- ------- -------
Total from investment operations .................... (1.17) 1.17 .33 3.51 (.11)
Distributions from net realized gains ............... (.51) (1.74) (.60) -- (.92)
-------- -------- -------- ------- -------
Net asset value, end of year ........................ $ 8.61 $ 10.29 $ 10.86 $ 11.13 $ 7.62
======== ======== ======== ======== ========
Total Return (ii) ................................... (11.6%) 12.9% 3.2% 46.2% (1.1%)
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted) ................................. $460,788 $580,651 $553,872 $463,718 $294,890
======== ======== ======== ======== ========
Ratio of expenses to average net assets ........... 2.12% 2.14% 2.13% 2.11% 2.18%
======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets .................... (1.51%) (1.67%) (1.59%) (1.75%) (1.51%)
======== ======== ======== ======== ========
Portfolio Turnover Rate ........................... 157.26% 120.27% 153.35% 97.37% 131.86%
======== ======== ======== ======== ========
- ------------------
See footnotes on page 16.
</TABLE>
<PAGE>
-16-
THE ALGER FUND
ALGER SMALL CAPITALIZATION PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS A (IV) CLASS C (III)
-------------------------- --------------------------
YEAR TEN MONTHS YEAR THREE MONTHS
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997(V) 1998 1997(V)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.35 $ 9.21 $ 10.29 $ 10.38
------- -------- -------- --------
Net investment income (loss) ................. (.06)(vi) (.04) (.10)(vi) (.03)
Net realized and unrealized gain (loss)
on investments ............................. (1.04) 1.18 (1.09) (.06)
------- -------- -------- --------
Total from investment operations ............. (1.10) 1.14 (1.19) (.09)
Distributions from net realized gains ........ (.51) -- (.51) --
------- -------- -------- --------
Net asset value, end of period ............... $ 8.74 $ 10.35 $ 8.59 $ 10.29
======= ======== ======== ========
Total Return (ii) ............................ (10.9%) 12.4% (11.8%) (.9%)
======= ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $59,516 $ 25,996 $ 4,838 $ 338
======= ======== ======== ========
Ratio of expenses to average
net assets ............................... 1.37% 1.38% 2.11% 2.09%
======= ======== ======== ========
Ratio of net investment income (loss)
to average net assets .................... (.71%) (.93%) (1.36%) (1.71%)
======= ======== ======== ========
Portfolio Turnover Rate .................... 157.26% 120.27% 157.26% 120.27%
======= ======== ======== ========
</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) Initially offered August 1, 1997.
(iv) Initially offered January 1, 1997.
(v) Ratios have been annualized; total return has not been annualized.
(vi) Amount was computed based on average shares outstanding during the
period.
See Notes to Financial Statements.
<PAGE>
-17-
- --------------------------------------------------------------------------------
Alger Balanced Portfolio
Portfolio Highlights Through October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 6/1/92 TO 10/31/98
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece.]
Alger Balanced S&P 500 Lehman Gov't/Corp. Bond Index
6/1/92 10000 10000 10000
10/31/92 9950 10198 10479
10/31/93 11180 11723 11911
10/31/94 10736 12177 11358
10/31/95 13700 15396 13193
10/31/96 14558 19105 13905
10/31/97 17360 25241 15130
10/31/98 20287 30794 16684
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, 1998. 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 10/31/98+
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 5 SINCE
YEAR YEARS INCEPTION
------------------------------------------------------------
<S> <C> <C> <C>
CLASS A (Inception 1/1/97) 12.15% * 16.79%
S&P 500 Index 21.99% * 26.06%
Lehman Gov't/Corp. Bond Index 10.27% * 10.03%
------------------------------------------------------------
CLASS B (Inception 6/1/92) 11.87% 12.41% 11.65%
S&P 500 Index 21.99% 21.31% 19.15%
Lehman Gov't/Corp. Bond Index 10.27% 6.97% 8.30%
------------------------------------------------------------
CLASS C (Inception 8/1/97) 15.83% * 11.14%
S&P 500 Index 21.99% * 13.71%
Lehman Gov't/Corp. Bond Index 10.27% * 9.91%
- ------------------------------------------------------------------------------------------------------
</TABLE>
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE
AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE
AND THE PORTFOLIO'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
+ RETURNS REFLECT MAXIMUM INITIAL SALES CHARGES ON CLASS A SHARES AND APPLICABLE
CONTINGENT DEFERRED SALES CHARGES ON CLASS B AND CLASS C SHARES.
<PAGE>
-18-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1998
COMMON STOCKS--59.3% SHARES VALUE
- -------------------- ------ -----
AIRLINES--.5%
US Airways Group Inc.* ........ 2,000 $ 113,126
----------
BROADCASTING--1.0%
Comcast Corp. Cl. A. Special .. 4,300 212,313
----------
BUSINESS SERVICES--1.3%
IMS Health Inc. ............... 4,100 272,650
----------
COMMUNICATIONS--4.7%
America Online Inc. ........... 3,800 482,839
COX Communications Inc. Cl. A.* 2,200 120,725
MCI Worldcom Inc.*. ........... 6,800 375,700
----------
979,264
----------
COMMUNICATION EQUIPMENT--2.8%
Ascend Communications, Inc.* .. 4,400 212,300
Cisco Systems, Inc.* .......... 6,025 379,575
----------
591,875
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--4.6%
Compaq Computer Corp. ......... 4,600 145,475
Dell Computer Corp.* .......... 2,600 170,300
EMC Corp.* .................... 4,000 257,500
International Business
Machines Corp. .............. 2,700 400,783
----------
974,058
----------
COMPUTER software--3.1%
Compuware Corp.* .............. 4,700 254,684
Microsoft Corporation* ........ 3,700 391,738
----------
646,422
----------
CONGLOMERATE--2.1%
Tyco International Ltd. ....... 6,946 430,221
----------
DRUG DISTRIBUTION--1.8%
Cardinal Health, Inc. ......... 2,400 226,951
McKesson Corp. ................ 1,900 146,300
----------
373,251
----------
FINANCIAL SERVICES--9.9%
BankAmerica Corp. ............. 4,900 281,446
Bank of New York Inc. ......... 4,300 135,721
Citigroup Inc. ................ 7,500 352,973
Federal Home Loan Mortgage
Corporation ................. 5,300 304,750
Firstar Corp. ................. 2,400 136,200
First Union Corp. ............. 2,872 166,576
Household International Inc. .. 6,300 230,347
Kansas City Southern
Industries Inc. ............. 6,300 243,338
Paine Webber Group Inc. ....... 2,450 81,923
SunAmerica Inc. ............... 2,000 141,000
----------
2,074,274
----------
FOOD CHAINS--4.7%
Fred Meyer, Inc.* ............. 2,400 127,951
Kroger Co.* ................... 7,300 405,150
Safeway Inc.* ................. 9,300 444,661
----------
977,762
----------
INSURANCE--1.2%
American International
Group, Inc. ................. 3,075 262,144
----------
LEISURE &
ENTERTAINMENT --.7%
Carnival Corp. ................ 4,500 145,688
----------
MEDICAL DEVICES--.3%
Medtronic, Inc. ............... 1,100 71,500
----------
PHARMACEUTICALS--8.6%
Bristol Myers Squibb Co. ...... 2,600 287,464
Elan Corp PLC-ADR* ............ 1,000 70,063
Forest Laboratories, Inc.* .... 1,600 66,901
Pfizer Inc. ................... 4,100 439,983
Schering-Plough Corporation ... 4,300 442,363
SmithKline Beecham PLC-ADS .... 500 31,875
Warner-Lambert Co. ............ 6,000 470,250
----------
1,808,899
----------
POLLUTION CONTROL--1.7%
Waste Management, Inc. ........ 7,700 347,463
----------
RETAILING--6.9%
CVS Corp. ..................... 6,800 310,678
Home Depot, Inc. .............. 10,000 435,000
Staples Inc.* ................. 9,200 300,150
Wal-Mart Stores Inc. .......... 5,800 400,200
----------
1,446,028
----------
SEMICONDUCTORS--3.1%
Intel Corp. ................... 3,900 347,834
Texas Instruments,
Incorporated ................ 4,700 300,509
----------
648,343
----------
TRANSPORTATION--.3%
Burlington Northern
Santa Fe Co. ................ 2,200 67,925
----------
Total Common Stocks
(Cost $9,479,015) ........... 12,443,206
----------
PRINCIPAL
CORPORATE BONDS--12.1% AMOUNT
- ---------------------- ---------
AUTOMOTIVE--2.8%
Ford Motor B.V.,
9.50%, 6/1/10 ................ $300,000 378,327
General Motors
Acceptance Corp.,
7.125%, 6/1/99 .............. 200,000 202,180
----------
580,507
----------
<PAGE>
-19-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 1998
PRINCIPAL
COMMON STOCKS--(cont.) AMOUNT VALUE
- ---------------------- ------ -----
CONSUMER PRODUCTS &
SERVICES--1.8%
Eastman Kodak Co.,
9.20%, 6/1/21 ............... $300,000 $ 370,989
-----------
ELECTRIC & GAS COMPANIES--2.4%
Cincinnati Gas & Electric Co.,
7.20%, 10/1/23 .............. 100,000 109,069
Pacific Gas & Electric Co.,
7.25%, 3/1/26 ............... 182,000 190,534
Potomac Electric Power Co.,
7.00%, 1/15/24 .............. 200,000 203,000
-----------
502,603
-----------
FINANCIAL SERVICES--4.1%
BankAmerica Corp.,
6.625%, 10/15/07 ............ 200,000 206,652
Bankers Trust Corp.,
7.00%, 3/13/18 .............. 300,000 303,000
Citicorp,
7.125%, 6/1/03 .............. 200,000 212,232
Merrill Lynch & Co., Inc.,
6.75%, 4/30/01 .............. 150,000 154,370
-----------
876,254
-----------
POLLUTION CONTROL--1.0%
Waste Management Inc.,
8.25%, 11/15/99 ............. 200,000 206,166
-----------
Total Corporate Bonds
(Cost $2,543,040) .......... 2,536,519
-----------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS--16.4%
U.S. Treasury Notes,
6.375%, 1/15/00 ............. 100,000 102,297
7.50%, 5/15/02 .............. 100,000 110,141
6.25%, 2/15/03 .............. 250,000 268,595
Federal Home Loan Bank Corp.,
6.00%, 1/27/03 .............. 250,000 250,553
5.87%, 4/22/03 .............. 300,000 313,500
5.935%, 4/22/05 ............. 400,000 420,688
6.505%, 6/17/08 ............. 300,000 302,343
7.30%, 12/24/12 ............. 300,000 300,798
Federal National
Mortgage Assoc.,
8.50%, 2/1/05 ............... 100,000 104,719
7.49%, 5/22/07 .............. 250,000 259,883
7.00%, 3/4/13 ............... 600,000 602,154
6.75%, 2/4/28 ............... 400,000 406,752
-----------
Total U.S. Government &
Agency Obligations
(Cost $3,414,211) .......... 3,442,423
-----------
SHORT-TERM CORPORATE
NOTES--11.0%
Allmerica Financial Corp.,
5.28%, 11/12/98 ............. 550,000 549,113
EagleFunding Capital Corp.,
5.27%, 11/5/98 (a) .......... 200,000 199,883
Montauk Funding Corp.,
5.18%, 11/6/98 (a) .......... 900,000 899,353
National Australia
Funding, Inc.,
5.22%, 11/5/98 .............. 650,000 649,622
-----------
Total Short-Term Corporate Notes
(Cost $2,297,971) ........... 2,297,971
-----------
Total Investments
(Cost $17,734,237)(b) ...... 98.8% 20,720,119
Other Assets in Excess of
Liabilities ................ 1.2 249,936
----- -----------
Net Assets 100.0% $20,970,055
===== ===========
* Non-income producing security.
(a)Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
(b)At October 31, 1998, the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $17,734,237, amounted
to $2,985,882 which consisted of aggregate gross unrealized appreciation
of $3,068,840 and aggregate gross unrealized depreciation of $82,958.
See Notes to Financial Statements
<PAGE>
-20-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
Financial Highlights
For a share outstanding throughout the year
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................... $ 16.48 $ 14.21 $ 13.59 $ 10.65 $ 11.18
-------- -------- -------- -------- --------
Net investment income (loss) .......................... .03(i) -- .12 (.02)(i) (.05)
Net realized and unrealized gain (loss)
on investments ...................................... 2.34 2.67 .72 2.96 (.39)
-------- -------- -------- -------- --------
Total from investment operations ...................... 2.37 2.67 .84 2.94 (.44)
-------- -------- -------- -------- --------
Dividends from net investment income .................. (.01) (.06) (.01) -- --
Distributions from net realized gains ................. (2.20) (.34) (.21) -- (.09)
-------- -------- -------- -------- --------
Total distributions ................................... (2.21) (.40) (.22) -- (.09)
-------- -------- -------- -------- --------
Net asset value, end of year .......................... $ 16.64 $ 16.48 $ 14.21 $ 13.59 $ 10.65
======== ======== ======== ======== ========
Total Return (ii) ..................................... 16.9% 19.3% 6.3% 27.6% (4.0%)
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted) ................................... $ 19,282 $ 12,653 $ 13,492 $ 6,214 $ 3,073
======== ======== ======== ======== ========
Ratio of expenses to average
net assets ........................................ 2.58% 2.89% 2.70% 3.34% 3.18%
======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to
expense reimbursements (iv) ....................... -- -- -- .24% --
======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets ...................... .19% .04% .47% (.13%) (.41%)
======== ======== ======== ======== ========
Portfolio Turnover Rate .............................. 93.23% 109.26% 85.51% 84.06% 84.88%
======== ======== ======== ======== ========
</TABLE>
- -------------------
See footnotes on page 21.
<PAGE>
-21-
THE ALGER FUND
ALGER BALANCED PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS A (VI) CLASS C (V)
-------------------------- --------------------------
YEAR TEN MONTHS YEAR THREE MONTHS
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997(III) 1998 1997(III)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 16.58 $ 13.99 $ 16.49 $ 16.88
-------- --------- -------- --------
Net investment income (loss) .................. .16(i) .05 .04(i) (.01)
Net realized and unrealized gain (loss)
on investments .............................. 2.35 2.54 2.33 (.38)
-------- --------- -------- --------
Total from investment operations .............. 2.51 2.59 2.37 (.39)
-------- --------- -------- --------
Dividends from net investment income .......... (.06) -- -- --
-------- --------- -------- --------
Distributions from net realized gains ......... (2.20) -- (2.20) --
-------- --------- -------- --------
Total distributions ........................... (2.26) -- (2.20) --
-------- --------- -------- --------
Net asset value, end of period ................ $ 16.83 $ 16.58 $ 16.66 $ 16.49
======== ========= ======== ========
Total Return (ii) ............................. 17.7% 18.5% 16.8% (2.31%)
======== ========= ======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ... $ 1,354 $ 459 $ 334 $ 48
======== ========= ======== ========
Ratio of expenses to average net assets ..... 1.79% 2.10% 2.53% 2.77%
======== ========= ======== ========
Ratio of net investment income (loss)
to average net assets ..................... .98% .72% .23% (.84%)
======== ========= ======== ========
Portfolio Turnover Rate ..................... 93.23% 109.26% 93.23% 109.26%
======== ========= ======== ========
</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) Represents expense reimbursements made pursuant to applicable state
expense limits.
(v) Initially offered August 1, 1997.
(vi) Initially offered January 1, 1997.
See Notes to Financial Statements.
<PAGE>
-22-
- --------------------------------------------------------------------------------
ALGER MIDCAP GROWTH PORTFOLIO
Portfolio Highlights Through October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 5/24/93 TO 10/31/98
- --------------------------------------------------------------------------------
Alger Midcap Growth S&P 400
5/24/93 10000 10000
10/31/93 12480 10714
10/31/94 13062 10969
10/31/95 19373 13295
10/31/96 20618 15600
10/31/97 25024 20694
10/31/98 26486 22084
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, 1998. 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 10/31/98+
AVERAGE ANNUAL TOTAL RETURNS
1 5 SINCE
YEAR YEARS INCEPTION
---------------------------------------------------
CLASS A (Inception 1/1/97) 2.06% * 11.04%
S&P MidCap 400 Index 6.71% * 17.26%
- --------------------------------------------------------------------------------
CLASS B (Inception 5/24/93) 1.57% 16.11% 19.60%
S&P MidCap 400 Index 6.71% 15.57% 15.67%
- --------------------------------------------------------------------------------
CLASS C (Inception 8/1/97) 5.16% * 4.24%
S&P MidCap 400 Index 6.71% * 6.21%
- --------------------------------------------------------------------------------
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 MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1998
COMMON STOCKS--88.1% SHARES VALUE
- -------------------- ------ -----
AIRLINES--3.4%
ASA Holdings Inc. ............ 36,000 $ 1,291,500
Continental
Airlines Inc. Cl. B.* ...... 86,400 3,423,600
US Airways Group Inc.* ....... 54,000 3,054,402
------------
7,769,502
------------
APPAREL--.5%
Tommy Hilfiger Corporation* .. 26,100 1,212,031
------------
BIO-TECHNOLOGY--1.6%
Centocor, Inc.* .............. 79,000 3,515,500
------------
BROADCASTING--3.0%
Comcast Corp. Cl. A. Special . 92,600 4,572,125
Jacor Communications, Inc.* .. 41,000 2,255,000
------------
6,827,125
------------
BUILDING & CONSTRUCTION--1.2%
Champion Enterprises Inc.* ... 137,500 2,732,813
------------
BUSINESS SERVICES--2.7%
IMS Health Inc. .............. 90,500 6,018,250
------------
COMMUNICATIONS--4.2%
America Online Inc. .......... 57,200 7,268,004
COX Communications
Inc. Cl. A.* ............... 41,000 2,249,875
------------
9,517,879
------------
COMMUNICATION EQUIPMENT--2.0%
Ascend Communications, Inc.* . 91,800 4,429,350
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--1.6%
Quantum Corp.* ............... 67,000 1,176,688
Sanmina Corporation* ......... 60,200 2,468,200
------------
3,644,888
------------
COMPUTER SERVICES--2.5%
Ceridian Corp.* .............. 98,000 5,622,750
------------
COMPUTER SOFTWARE--6.7%
Citrix Systems, Inc.* ........ 70,200 4,975,425
Compuware Corp.* ............. 111,400 6,036,543
Intuit Inc.* ................. 82,700 4,176,350
------------
15,188,318
------------
CONSUMER PRODUCTS--.9%
Furniture Brands
International Inc.* ........ 98,500 2,117,750
------------
DRUG DISTRIBUTION--6.7%
Bergen Brunswig Corp. Cl. A. . 22,500 1,098,293
Cardinal Health, Inc. ........ 21,200 2,004,735
McKesson Corp. ............... 82,600 6,360,200
Omnicare, Inc. ............... 162,500 5,616,488
------------
15,079,716
------------
FINANCIAL SERVICES--12.3%
Dime Bancorp Inc. ............ 170,000 $ 4,048,210
Finova Group Inc. ............ 34,200 1,667,250
Firstar Corp. ................ 93,500 5,306,125
Kansas City Southern
Industries Inc. ............ 180,500 6,971,813
Paine Webber Group Inc. ...... 36,900 1,233,862
Sovereign Bancorp Inc. ....... 206,200 2,706,375
State Street Corp. ........... 33,100 2,064,613
SunAmerica Inc. .............. 54,800 3,863,400
------------
27,861,648
------------
FOOD CHAINS--1.7%
Fred Meyer, Inc.* ............ 72,000 3,838,535
------------
FOODS & BEVERAGES--4.0%
Aurora Foods Inc.* ........... 101,400 1,774,500
Starbucks Corp.* ............. 136,700 5,929,363
U.S. Foodservice* ............ 30,000 1,425,000
------------
9,128,863
------------
INSURANCE--1.4%
Fremont General Corp. ........ 25,000 1,234,375
MGIC Investment Corp. ........ 50,500 1,969,500
------------
3,203,875
------------
LEISURE & ENTERTAINMENT--2.5%
International Game Technology 245,500 5,539,217
------------
MANUFACTURING--2.7%
Leggett & Platt Inc. ......... 194,800 4,553,450
Wabash National Corp. ........ 82,100 1,457,275
------------
6,010,725
------------
MEDICAL DEVICES--3.6%
Allegiance Corp. ............. 100,000 3,718,800
Biomatrix Inc.* .............. 27,500 1,292,500
Biomet Inc. .................. 93,700 3,179,990
------------
8,191,290
------------
PHARMACEUTICALS--5.7%
Alza Corp.* .................. 87,400 4,184,275
Elan Corp PLC-ADR* ........... 79,200 5,548,990
Forest Laboratories, Inc.* ... 75,800 3,169,425
------------
12,902,690
------------
POLLUTION CONTROL--1.1%
Waste Management, Inc. ....... 53,400 2,409,675
------------
RESTAURANTS & LODGING--2.6%
Outback Steakhouse, Inc.* .... 169,500 5,868,938
------------
<PAGE>
-24-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 1998
COMMON STOCKS--(cont.) SHARES VALUE
- ---------------------- ------ -----
RETAILING--9.1%
Bed Bath & Beyond Inc.* ...... 168,300 $ 4,638,853
Borders Group Inc.* .......... 146,000 3,704,750
CVS Corp. .................... 65,800 3,006,270
Office Depot Inc.* ........... 139,000 3,475,000
Staples, Inc.* ............... 104,550 3,410,944
Williams Sonoma Inc.* ........ 89,600 2,441,600
------------
20,677,417
------------
SEMICONDUCTORS--3.3%
Microchip Technology
Incorporated* .............. 223,300 6,043,168
Micron Technology Inc.* ...... 38,000 1,444,000
------------
7,487,168
------------
TRANSPORTATION--1.1%
Coach USA Inc.* .............. 88,500 2,372,950
------------
Total Common Stocks
(Cost $185,816,962) ........ 199,168,863
------------
SHORT-TERM CORPORATE PRINCIPAL
NOTES--13.5% AMOUNT
----------
Bayerische Vereinsbank A.G.,
5.22%, 11/5/98 ............$5,400,000 5,396,868
Hertz Corporation,
5.27%, 11/13/98 ...........$5,500,000 $ 5,490,338
Market Street Funding Corp.,
5.25%, 11/6/98 ........... 850,000 849,380
Merrill Lynch & Co., Inc.,
5.25%, 11/10/98 ........... 5,500,000 5,492,782
National Australia
Funding, Inc.,
5.22%, 11/5/98 ............ 5,400,000 5,396,868
Progress Capital
Holdings, Inc.,
5.15%, 11/3/98 ............ 2,650,000 2,649,242
Repeat Offering
Securitization Equity Inc.,
5.24%, 11/5/98(a) ......... 3,500,000 3,497,962
Republic Industries
Funding Corp.,
5.25%, 11/12/98 ........... 1,750,000 1,747,193
------------
Total Short-Term
Corporate Notes
(Cost $30,520,633) ........ 30,520,633
------------
Total Investments
(Cost $216,337,595) 101.6% 229,689,496
Liabilities in Excess of
Other Assets .............. (1.6) (3,549,242)
----- ------------
Net Assets .................. 100.0% $226,140,254
===== ============
* Non-income producing security.
(a)Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
(b)At October 31, 1998, the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $216,337,595, amounted
to $13,351,901 which consisted of aggregate gross unrealized
appreciation of $20,821,033 and aggregate gross unrealized depreciation
of $7,469,132.
See Notes to Financial Statements.
<PAGE>
-25-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the year
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ................. $ 22.33 $ 18.87 $ 18.94 $ 12.77 $ 12.48
-------- -------- -------- -------- --------
Net investment income (loss) ....................... (.29)(ii) (.29) (.25)(ii) (.08) (.11)
Net realized and unrealized gain (loss)
on investments ................................... 1.31 4.23 1.35 6.25 .68
Total from investment operations ................... 1.02 3.94 1.10 6.17 .57
Distributions from net realized gains .............. (2.46) (.48) (1.17) -- (.28)
-------- -------- -------- -------- --------
Net asset value, end of year ....................... $ 20.89 $ 22.33 $ 18.87 $ 18.94 $ 12.77
======== ======== ======== ======== ========
Total Return (iii) ................................. 6.2% 21.4% 6.4% 48.3% 4.7%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted) ................................ $191,934 $166,475 $125,686 $ 54,016 $ 18,516
======== ======== ======== ======== ========
Ratio of expenses to average net assets .......... 2.10% 2.19% 2.27% 2.39% 3.20%
======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to
expense reimbursements (iv) .................... -- -- -- -- .07%
======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets ................... (1.38%) (1.58%) (1.33%) (1.71%) (2.32%)
======== ======== ======== ======== ========
Portfolio Turnover Rate .......................... 180.98% 160.09% 113.95% 121.60% 127.40%
======== ======== ======== ======== ========
</TABLE>
- ---------------
See footnotes on page 26.
<PAGE>
-26-
THE ALGER FUND
ALGER MIDCAP GROWTH PORTFOLIO
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
CLASS A (VI) CLASS C (V)
-------------------------- ---------------------------
YEAR TEN MONTHS YEAR THREE MONTHS
ENDED ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1998 1997 (I) 1998 1997 (I)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 22.46 $ 18.92 $ 22.33 $ 22.49
-------- -------- -------- --------
Net investment income (loss) ................. (.10)(ii) (.10) (.28)(ii) (.03)
Net realized and unrealized gain (loss)
on investments ............................. 1.31 3.64 1.27 (.13)
-------- -------- -------- --------
Total from investment operations ............. 1.21 3.54 .99 (.16)
Distributions from net realized gains ........ (2.46) -- (2.46) --
-------- -------- -------- --------
Net asset value, end of period ............... $ 21.21 $ 22.46 $ 20.86 $ 22.33
======== ======== ======== ========
Total Return (iii) ........................... 7.2% 18.7% 6.1% (.7%)
======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ............................ $ 32,447 $ 5,436 $ 1,759 $ 84
======== ======== ======== ========
Ratio of expenses to average net assets .... 1.34% 1.40% 2.08% 1.97%
======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets .................... (.53%) (.83%) (1.26%) (1.55%)
======== ======== ======== ========
Portfolio Turnover Rate .................... 180.98% 160.09% 180.98% 160.09%
======== ======== ======== ========
(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) Represents expense reimbursements made pursuant to applicable state
expense limits.
(v) Initially offered August 1, 1997.
(vi) Initially offered January 1, 1997.
</TABLE>
See Notes to Financial Statements.
<PAGE>
-27-
- --------------------------------------------------------------------------------
ALGER CAPITAL APPRECIATION PORTFOLIO
Portfolio Highlights Through October 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HYPOTHETICAL $10,000 INVESTMENT IN CLASS B SHARES FROM 11/1/93 TO 10/31/98
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece.]
Alger Cap App B S&P 500
11/1/93 10,000 10,000
10/31/94 11,110 10,387
10/31/95 18,620 13,133
10/31/96 22,246 16,297
10/31/97 26,918 21,531
10/31/98 29,372 26,267
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, 1998. 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 10/31/98+
AVERAGE ANNUAL TOTAL RETURNS
1 5 SINCE
YEAR YEARS INCEPTION
------------------------------------------------
CLASS A (Inception 1/1/97) 5.42% * 14.31%
S&P 500 Index 21.99% * 26.06%
- --------------------------------------------------------------------------------
CLASS B (Inception 11/1/93) 4.86% 24.05% 24.05%
S&P 500 Index 21.99% 21.31% 21.31%
- --------------------------------------------------------------------------------
CLASS C (Inception 8/1/97) 8.86% * 2.57%
S&P 500 Index 21.99% * 13.71%
- --------------------------------------------------------------------------------
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>
-28-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1998
COMMON STOCKS--85.4% SHARES VALUE
- -------------------- ------ -----
ADVERTISING--.8%
Outdoor Systems, Inc.* ...... 105,000 $ 2,316,615
------------
AEROSPACE--.5%
Boeing Company (The) ........ 30,000 1,125,000
Gulfstream Aerospace Corp.* . 11,500 508,875
------------
1,633,875
------------
AIRLINES--1.7%
ASA Holdings Inc. ........... 42,000 1,506,750
SkyWest Inc. ................ 93,500 2,384,250
US Airways Group Inc.* ...... 21,500 1,216,105
------------
5,107,105
------------
APPAREL--.5%
Tommy Hilfiger Corporation* . 35,000 1,625,330
------------
BIO-TECHNOLOGY--2.0%
Centocor, Inc.* ............. 50,000 2,225,000
Gliatech Inc.* .............. 50,000 968,750
Medimmune Inc.* ............. 43,400 2,918,650
------------
6,112,400
------------
BROADCASTING--4.2%
Cablevision Systems
Corp. Cl. A.* ............. 30,000 1,447,500
Clear Channel
Communications Inc.* ...... 28,000 1,275,763
Comcast Corp. Cl. A. Special 146,000 7,208,750
Jacor Communications Inc.* .. 48,000 2,640,000
------------
12,572,013
------------
BUSINESS SERVICES--2.8%
ChoicePoint Inc.* ........... 24,000 1,134,000
IMS Health Inc. ............. 58,200 3,870,300
Rent-Way Inc.* .............. 90,000 2,126,250
United Stationers Inc.* ..... 47,500 1,258,750
------------
8,389,300
------------
COMMUNICATIONS--5.5%
America Online Inc. ......... 73,600 9,351,837
America Tower
Systems Corp. Cl. A.* ..... 50,000 1,093,750
MCI Worldcom Inc.* .......... 108,700 6,005,675
------------
16,451,262
------------
COMMUNICATIONEQUIPMENT--3.9%
Ascend Communications, Inc.* 120,000 5,790,000
Cisco Systems, Inc.* ........ 67,250 4,236,750
Global Crossing Ltd.* ....... 14,000 402,500
L-3 Communications
Holdings, Inc.* ........... 28,300 1,216,900
------------
11,646,150
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--5.5%
Dell Computer Corp.* ........ 80,000 5,240,000
International Business
Machines Corp. ............ 30,000 4,453,140
Maxtor Corp.* ............... 200,000 2,125,000
Quantum Corp.* .............. 100,000 1,756,250
Sanmina Corporation* ........ 70,000 2,870,000
------------
16,444,390
------------
CompuTER SERVICES--1.1%
Keane Inc.* ................. 77,000 2,560,250
Technology Solutions Co.* ... 54,275 651,300
------------
3,211,550
------------
COMPUTER SOFTWARE--5.0%
Compuware Corp.* ............ 145,000 7,857,260
Dendrite International Inc.* 20,000 412,500
Microsoft Corporation* ...... 62,700 6,638,362
------------
14,908,122
------------
CONGLOMERATE--2.5%
Tyco International Ltd. ..... 119,434 7,397,503
------------
DRUG DISTRIBUTION--2.4%
Bergen Brunswig Corp. Cl. A. 15,400 751,720
McKesson Corp. .............. 73,700 5,674,900
Omnicare, Inc. .............. 25,000 864,075
------------
7,290,695
------------
FINANCIAL SERVICES--11.9%
Bank of New York Inc. ....... 190,000 5,996,970
Citigroup Inc. .............. 155,000 7,294,765
Dime Bancorp Inc. ........... 50,000 1,190,650
Federal Home Loan
Mortgage Corporation ...... 35,000 2,012,500
Finova Group Inc. ........... 40,000 1,950,000
Household International Inc. 95,000 3,473,485
Kansas City Southern
Industries Inc. ........... 100,000 3,862,500
Knight/Trimark
Group Inc. Cl. A.* ........ 55,000 446,875
Morgan Stanley
Dean Witter & Co. ......... 100,000 6,475,000
U.S. Bancorp Inc. ........... 80,000 2,920,000
------------
35,622,745
------------
FOOD CHAINS--3.8%
Food Lion Inc. Cl. A. ....... 100,000 1,100,000
Fred Meyer, Inc.* ........... 70,000 3,731,910
Kroger Co.* ................. 65,000 3,607,500
Safeway Inc.* ............... 65,000 3,107,845
------------
11,547,255
------------
FOODS & BEVERAGES--2.5%
Aurora Foods Inc.* .......... 55,000 962,500
Earthgrains Company ......... 123,000 3,690,000
U.S. Foodservice* ........... 60,000 2,850,000
------------
7,502,500
------------
<PAGE>
-29-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 1998
COMMON STOCKS--85.4% SHARES VALUE
- -------------------- ------ -----
INSURANCE--2.9%
American International
Group, Inc. ............... 55,000 $ 4,688,750
Enhance Financial
Services GroupInc. ........ 90,000 2,210,670
MGIC Investment Corp. ....... 50,000 1,950,000
------------
8,849,420
------------
LEISURE &ENTERTAINMENT--.9%
Carnival Corp. .............. 80,000 2,590,000
------------
MEDICAL DEVICES--1.4%
Allegiance Corp. ............ 50,000 1,859,400
Guidant Corp. ............... 15,000 1,147,500
Safeskin Corp.* ............. 50,000 1,106,250
------------
4,113,150
------------
MEDICAL SERVICES--2.1%
Hanger Orthopedic Group Inc.* 80,000 1,580,000
Hooper Holmes Inc. .......... 60,000 1,428,780
MedQuist Inc.* .............. 85,000 2,289,730
Province Healthcare Co.* .... 25,000 653,125
Sunrise Assisted Living Inc.* 10,000 430,630
------------
6,382,265
------------
PHARMACEUTICALS--9.1%
Bristol Myers Squibb Co. .... 40,000 4,422,520
Elan Corp PLC-ADR* .......... 52,000 3,643,275
Pfizer Inc. ................. 51,200 5,494,426
Schering-Plough Corporation . 60,000 6,172,500
SmithKline Beecham PLC ADS .. 10,000 637,500
Warner-Lambert Co. .......... 90,000 7,053,750
------------
27,423,971
------------
POLLUTION CONTROL--.8%
Waste Management, Inc. ...... 50,000 2,256,250
------------
RETAILING--10.7%
Amazon.com Inc.* ............ 27,500 3,477,045
Bed Bath & Beyond Inc.* ..... 25,000 689,075
CVS Corp. ................... 50,000 2,284,400
Family Dollar Stores Inc. ... 30,000 543,750
Home Depot, Inc. ............ 180,000 7,830,000
Office Depot Inc.* .......... 140,000 3,500,000
Pacific Sunwear of
California Inc.* .......... 50,000 1,081,250
Rite Aid Corp. .............. 45,000 1,785,960
Staples Inc.* ............... 110,650 3,609,956
Wal-Mart Stores Inc. ........ 80,500 5,554,500
Williams Sonoma Inc.* ....... 70,000 1,907,500
------------
32,263,436
------------
SEMICONDUCTORS--.9%
Altera Corporation* ......... 30,000 1,248,750
Micron Technology Inc.* ..... 40,000 1,520,000
------------
2,768,750
------------
Total Common Stocks
(Cost $219,869,966) ........ 256,426,052
------------
SHORT-TERM CORPORATE PRINCIPAL
NOTES--14.2% AMOUNT
------------ ------
Bayerische Vereinsbank A.G.,
5.22%, 11/5/98 ............$9,750,000 9,744,345
Edison Asset
Securitization Corp.,
5.23%, 11/13/98(a) ........ 500,000 499,128
Hasbro Inc.,
5.20%, 11/12/98 ........... 9,850,000 9,834,349
Hertz Corporation,
5.27%, 11/13/98 ........... 5,900,000 5,889,636
Merrill Lynch & Co., Inc.,
5.10%, 11/6/98 ............ 7,000,000 6,995,042
National Australia
Funding, Inc.,
5.22%, 11/5/98 ............ 9,750,000 9,744,345
Total Short-Term
Corporate Notes
(Cost $42,706,845) ........ 42,706,845
Total Investments
(Cost $262,576,811) (b) .... 99.6% 299,132,897
Other Assets in Excess
of Liabilities ............ .4 1,190,516
----- -------------
Net Assets 100.0% $300,323,413
----- -------------
* Non-income producing security.
(a)Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
(b)At October 31, 1998, the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $262,576,811, amounted
to $36,556,086 which consisted of aggregate gross unrealized
appreciation of $44,001,006 and aggregate gross unrealized depreciation
of $7,444,920.
See Notes to Financial Statements.
<PAGE>
-30-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO (i)
Financial Highlights
For a share outstanding throughout the year
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............. $ 26.00 $ 21.62 $ 18.62 $ 11.11 $ 10.00
---------- ---------- ---------- -------- --------
Net investment income (loss) ................... (.39)(ii) (.33) (.34)(ii) (0.47)(ii) (0.47)
Net realized and unrealized gain (loss)
on investments ............................... 2.69 4.85 3.88 7.98 1.58
---------- ---------- ---------- -------- --------
Total from investment operations ............... 2.30 4.52 3.54 7.51 1.11
Distributions from net realized gains .......... (1.61) (.14) (.54) -- --
---------- ---------- ---------- -------- --------
Net asset value, end of year ................... $ 26.69 $ 26.00 $ 21.62 $ 18.62 $ 11.11
========== ========== ========== ======== ========
Total Return (iii) ............................. 9.9% 21.0% 19.5% 67.6% 11.1%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) ...... $ 242,941 $ 212,895 $ 150,258 $ 33,640 $ 2,369
========== ========== ========== ======== ========
Ratio of expenses excluding interest
to average net assets ........................ 2.19% 2.27% 2.44% 3.26% 4.13%
========== ========== ========== ======== ========
Ratio of expenses including interest
to average net assets ...................... 2.26% 2.38% 2.46% 3.54% 5.53%
========== ========== ========== ======== ========
Decrease reflected in above expense ratios
due to expense reimbursements (iv) ......... -- -- -- -- .85%
========== ========== ========== ======== ========
Ratio of net investment income
(loss) to average net assets ............... (1.48%) (1.72%) (1.61%) (3.02%) (5.12%)
========== ========== ========== ======== ========
Portfolio Turnover Rate ...................... 184.07% 157.63% 162.37% 197.65% 231.99%
========== ========== ========== ======== ========
Amount of debt outstanding at end of year .... -- -- $7,700,000 -- $651,000
========== ========== ========== ======== ========
Average amount of debt outstanding
during the year ............................ $2,814,493 $2,940,097 $ 239,966 $293,153 $406,864
========== ========== ========== ======== ========
Average daily number of portfolio shares
outstanding during the year ................ 9,670,951 7,739,199 4,852,286 543,270 191,676
========== ========== ========== ======== ========
Average amount of debt per portfolio share
during the year ............................ $ 0.29 $ 0.38 $ 0.05 $ 0.54 $ 2.12
========== ========== ========== ======== ========
</TABLE>
- ---------------------
See footnotes on page 31.
<PAGE>
-31-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO (i)
Financial Highlights
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Class A (vi) Class C (v)
--------------------------- ---------------------------
Year Ten Months Year Three Months
Ended Ended Ended Ended
October 31, October 31, October 31, October 31,
1998 1997 (vii) 1998 1997 (vii)
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.......... $ 26.17 $ 21.59 $ 26.00 $ 27.67
---------- ----------- ----------- -----------
Net investment income (loss).................. (.16)(ii) (.09) (.37)(ii) (.05)
Net realized and unrealized gain (loss)
on investments............................. 2.68 4.67 2.67 (1.62)
---------- ----------- ----------- -----------
Total from investment operations.............. 2.52 4.58 2.30 (1.67)
Distributions from net realized gains......... (1.61) -- (1.61) --
---------- ----------- ----------- -----------
Net asset value, end of period................ $ 27.08 $ 26.17 $ 26.69 $ 26.00
========== =========== =========== ===========
Total Return (iii)............................ 10.7% 21.2% 9.9% (6.0%)
========== =========== =========== ===========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted).. $ 54,415 $ 15,572 $ 2,967 $ 631
========== =========== =========== ===========
Ratio of expenses excluding interest
to average net assets.................... 1.42% 1.45% 2.18% 2.18%
========== =========== =========== ===========
Ratio of expenses including interest
to average net assets.................... 1.49% 1.53% 2.25% 2.25%
========== =========== =========== ===========
Ratio of net investment income (loss)
to average net assets.................... (.67%) (.85%) (1.46%) (1.80%)
========== =========== =========== ===========
Portfolio Turnover Rate..................... 184.07% 157.63% 184.07% 157.63%
========== =========== =========== ===========
Amount of debt oustanding at end of period.. -- -- -- --
========== =========== =========== ===========
Average amount of debt oustanding
during the period......................... $2,814,493 $2,940,097 $2,814,493 $2,940,097
========== =========== =========== ===========
Average daily number of portfolio shares
outstanding during the period............. 9,670,951 7,739,199 9,670,951 7,739,199
========== =========== =========== ===========
Average amount of debt per portfolio share
during the period......................... $ 0.29 $ 0.38 $ 0.29 $ 0.38
========== =========== =========== ===========
</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) Represents expense reimbursements made pursuant to applicable state
expense limits.
(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>
-32-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
Schedule of Investments
October 31, 1998
SHORT-TERM CORPORATE PRINCIPAL
NOTES--95.6% AMOUNT VALUE
- -------------------- --------- -----
AUTOMOTIVE EQUIPMENT
& SERVICES--9.2%
Ford Motor Credit Company,
5.00%, 12/4/98 ............. $8,000,000 $ 7,963,333
General Motors Acceptance
Corporation,
5.02%, 12/10/98 ............ 8,000,000 7,956,493
-----------
15,919,826
-----------
BANKS--8.5%
Banca CRT Financial Corp.,
5.61%, 11/2/98 ............. 6,700,000 6,698,956
Merita North America Inc.,
5.03%, 12/21/98 ............ 8,000,000 7,944,111
-----------
14,643,067
-----------
BUSINESS &
CONSUMER SERVICES--4.6%
American Express
Credit Corporation,
5.08%, 11/10/98 ............ 8,000,000 7,989,840
-----------
COMPUTERS--4.6%
CSC Enterprises,
5.08%, 12/8/98 ............. 8,000,000 7,958,231
-----------
DRUGS & HEALTH CARE--9.2%
Allergan, Inc.,
5.27%, 11/17/98 ............ 5,000,000 4,988,290
5.40%, 11/17/98 ............ 3,000,000 2,992,800
Western Medical Systems, Inc.,
5.42%, 11/13/98 ............ 8,000,000 7,985,547
-----------
15,966,637
-----------
ENERGY &
ENERGY SERVICES--4.6%
Midamerican Energy Co.,
5.25%, 11/18/98 ............ 8,000,000 7,980,167
-----------
FINANCIAL SERVICES--23.6%
Block Financial Corp.,
5.25%, 11/10/98 ............ 5,000,000 4,993,438
Checkpoint Charlie, Inc.,
5.30%, 1/5/99 (a) .......... 8,000,000 7,923,444
Chinatex Capital, Inc.,
5.10%, 12/14/98 ............ 8,000,000 7,951,267
Merrill Lynch & Co., Inc.,
5.11%, 11/10/98 ............ 8,000,000 7,989,780
Moat Funding, LLC,
5.30%, 12/4/98 (a) ......... 8,000,000 7,961,133
USAA Capital Corporation,
5.19%, 11/9/98 ............. 4,000,000 3,995,387
-----------
40,814,449
-----------
FUEL--3.5%
Centerior Fuel Corporation,
5.65%, 11/2/98 ............. 6,000,000 5,999,058
-----------
INSURANCE--9.2%
Aetna Services, Inc.,
5.26%, 11/9/98 ............. 3,000,000 2,996,493
5.21%, 12/8/98 ............. 5,000,000 4,973,226
Prudential Funding
Corporation,
5.06%, 11/13/98 ............ 8,000,000 7,986,507
-----------
15,956,226
-----------
MACHINERY & EQUIPMENT--4.7%
Cooperative Association of
Tractor Dealers Inc.,
5.40%, 11/2/98 ............. 8,000,000 7,998,800
-----------
UTILITIES--13.9%
General Electric Capital
Corporation,
5.06%, 12/2/98 ............. 8,000,000 7,965,142
New Jersey Natural Gas Company,
5.07%, 11/10/98 ............ 8,000,000 7,989,860
Northwestern Public
Service Company,
5.45%, 11/4/98 ............. 8,000,000 7,996,367
-----------
23,951,369
-----------
Total Short-Term
Corporate Notes
(Cost $165,177,670) ........ 165,177,670
-----------
<PAGE>
-33-
THE ALGER FUND
ALGER MONEY MARKET PORTFOLIO
Schedule of Investments (Continued)
October 31, 1998
PRINCIPAL
AMOUNT VALUE
--------- -----
CERTIFICATES OF DEPOSIT--4.6%
Banco Espirito Santo
e Commercial,
de Lisboa,
5.20%, 11/13/98
(Cost $7,986,133) .......... $8,000,000 $ 7,986,133
------------
Total Investments
(Cost $173,163,803)(b) ..... 100.2% 173,163,803
Liabilities In Excess of
Other Assets ............... (.2) (302,188)
----- ------------
Net Assets ................... 100.0% $172,861,615
----- ------------
(a)Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
(b)At October 31 1998, 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>
-34-
THE ALGER FUNDAlger MONEY MARKET PORTFOLIO Financial Highlights For a share
outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
---------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<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 .............................. .0476 .0479 .0521 .0573 .0374
---------- --------- --------- --------- ---------
Dividends from net investment income ............... (.0476) (.0479) (.0521) (.0573) (.0374)
Net asset value, end of year ....................... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========== ========= ========= ========= =========
Total Return ....................................... 4.9% 4.9% 5.3% 5.9% 3.8%
========== ========= ========= ========= =========
Ratios and Supplemental Data:Net assets,
end of year (000's omitted) ...................... $ 172,862 $ 179,407 $ 285,702 $ 185,822 $ 163,170
========== ========= ========= ========= =========
Ratio of expenses to average net assets ............ .76% .81% .41% .29% .27%
========== ========= ========= ========= =========
Decrease reflected in aboveexpense ratios due to
management fee waivers ........................... -- -- .38% .50% .50%
========== ========= ========= ========= =========
Ratio of net investment incometo average net assets 4.84% 4.76% 5.18% 5.73% 3.78%
========== ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
<PAGE>
THE ALGER FUNDSTATEMENTS OF ASSETS AND LIABILITIES
(in thousands, except per share amounts) October 31, 1998
-35-
<TABLE>
<CAPTION>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost*)-see accompany-ing
schedules of investments .................. $514,677 $525,892 $20,720 $229,689 $299,133 $173,164
Cash ........................................ 55 145 60 6 132 --
Receivable for investment securities sold ... 6,231 5,346 125 4,402 11,326 --
Receivable for shares of beneficial
interest sold ............................. 3,706 878 137 271 1,024 499
Dividends and interest receivable ........... 198 121 118 50 81 --
Prepaid expenses ............................ 12 5 3 5 26 19
-------- -------- ------- -------- -------- --------
Total Assets .............................. 524,879 532,387 21,163 234,423 311,722 173,682
-------- -------- ------- -------- -------- --------
LIABILITIES:
Payable for investmentsecurities purchased .. 7,640 4,749 129 6,513 10,592 --
Payable for shares of beneficial
interest redeemed ......................... 209 1,410 3 1,358 241 468
Interest payable ............................ -- -- -- -- 5 --
Accrued investment management fees .......... 284 319 12 131 182 114
Accrued distribution fees ................... 218 256 11 110 139 --
Accrued shareholder servicing fees .......... 95 94 4 41 54 --
Dividends payable-Note 2(c) ................. -- -- -- -- -- 44
Accrued expenses ............................ 306 417 34 130 186 194
-------- -------- ------- -------- -------- --------
Total Liabilities ......................... 8,752 7,245 193 8,283 11,399 820
-------- -------- ------- -------- -------- --------
NET ASSETS .................................. $516,127 $525,142 $20,970 $226,140 $300,323 $172,862
======== ======== ======= ======== ======== ========
Net Assets Consist of: Paid-in
capital ................................... $378,347 $451,132 $16,780 $187,453 $239,415 $172,936
Undistributed net investment income
(accumulated loss) ......................... (11,071) (43,010) (27) (6,946) (8,771) --
Undistributed net realized gain
(accumulated loss) ........................ 56,440 73,359 1,231 32,281 33,123 (74)
Net unrealized appreciation ................. 92,411 43,661 2,986 13,352 36,556 --
-------- -------- ------- -------- -------- --------
NET ASSETS .................................. $516,127 $525,142 $20,970 $226,140 $300,323 $172,862
======== ======== ======= ======== ======== ========
Class A
Net Asset Value Per Share .................. $ 12.19 $ 8.74 $ 16.83 $ 21.21 $ 27.08 --
======== ======== ======= ======== ======== ========
Offering Price Per Share ................... $ 12.80 $ 9.18 $ 17.67 $ 22.27 $ 28.43 --
======== ======== ======= ======== ======== ========
Class B
Net Asset Value and Offering Price Per Share $ 12.00 $ 8.61 $ 16.64 $ 20.89 $ 26.69 $ 1.00
======== ======== ======= ======== ======== ========
Class C
Net Asset Value and Offering Price Per Share $ 12.00 $ 8.59 $ 16.66 $ 20.86 $ 26.69 --
======== ======== ======= ======== ======== ========
Shares of beneficial interest
outstanding-Note 6
Class A ..................................... 10,001 6,810 80 1,531 2,009 --
======== ======== ======= ======== ======== ========
Class B ..................................... 32,574 53,541 1,159 9,187 9,102 172,936
======== ======== ======= ======== ======== ========
Class C ..................................... 276 563 20 84 111 --
======== ======== ======= ======== ======== ========
*Identified cost ............................ $422,266 $482,231 $17,734 $216,337 $262,577 $173,164
======== ======== ======= ======== ======== ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
-36-
THE ALGER FUND
STATEMENTS OF OPERATIONS (in thousands)
For the year ended October 31, 1998
<TABLE>
SMALL CAPITAL
CAPITAL- MIDCAP APPRE- MONEY
GROWTH IZATION BALANCED GROWTH CIATION MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends .................................... $ 2,572 $ 1,350 $ 75 $ 616 $ 1,233 $ --
Interest ..................................... 1,679 2,028 390 755 787 12,516
------- -------- ------- ------- ------- -------
Total Income ................................. 4,251 3,378 465 1,371 2,020 12,516
Expenses:
Management fees-Note 3(a) .................... 3,133 4,679 126 1,517 2,192 1,116
Distribution fees-Note 3(b):
Class B ..................................... 2,436 3,834 119 1,331 1,733 --
Class C 12 11 1 6 15 --
Shareholder servicing fees-Note 3(f) ........ 1,044 1,376 42 474 645 --
Interest on line of credit utilized-Note 5 .. -- -- -- -- 188 --
Custodian fees .............................. 64 87 8 37 47 51
Transfer agent fees and expenses-Note 3(e) .. 784 1,160 65 398 693 435
Professional fees ........................... 20 20 18 23 18 16
Trustees' fees .............................. 5 5 5 5 5 5
Registration fees ........................... 80 80 37 54 67 62
Miscellaneous ................................ 82 117 5 46 30 18
------- -------- ------- ------- ------- -------
Total Expenses ............................... 7,660 11,369 426 3,891 5,633 1,703
------- -------- ------- ------- ------- -------
NET INVESTMENT INCOME (LOSS) .................. (3,409) (7,991) 39 (2,520) (3,613) 10,813
------- -------- ------- ------- ------- -------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments .............. 52,782 60,965 1,229 29,077 28,168 6
Net change in unrealized appreciation
(depreciation) on investments ................ 31,157 (86,096) 1,416 (10,808) 6,353 --
------- -------- ------- ------- ------- -------
Net realized and unrealized
gain (loss) on investments ................... 83,939 (25,131) 2,645 18,269 34,521 6
------- -------- ------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................... $80,530 $(33,122) $ 2,684 $15,749 $30,908 $10,819
======= ======== ======= ======= ======= =======
</TABLE>
See Notes to Financial Statements.
<PAGE>
-37-
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO
STATEMENT OF CASH FLOWS (in thousands)
For the year ended October 31, 1998
Increase (decrease) in cash: Cash flows from operating activities:
Dividends received ........................................... $ 1,197
Interest received ............................................ 787
Interest paid ................................................ (270)
Operating expenses paid ...................................... (5,425)
Purchase of investment securities ............................ (458,473)
Purchase of short-term securities, net ....................... (32,117)
Proceeds from disposition of investment securities ........... 448,197
Other ........................................................ 11
----------
Net cash used in operating activities ...................... (46,093)
----------
Cash flows from financing activities:
Dividends paid ............................................... (14,120)
Proceeds from shares sold and dividends reinvested ........... 1,128,665
Payments on shares redeemed .................................. (1,068,379)
----------
Net cash provided by financing activities ............... 46,166
----------
Net increase in cash ........................................... 73
Cash--beginning of year ........................................ 59
----------
Cash--end of year .............................................. $ 132
==========
Reconciliation of net increase in net assets
to net cash used in operating activities:
Net increase in net assets resulting from operations ...... $ 30,908
Increase in investments ................................... (36,543)
Increase in interest and dividends receivable ............. (37)
Increase in receivable for investment securities sold ..... (3,813)
Decrease in payable for investment securities purchased ... (2,037)
Net realized gain ......................................... (28,168)
Net increase in unrealized appreciation ................... (6,353)
Decrease in accrued expenses and other liabilities ........ (61)
Net decrease in other assets .............................. 11
----------
Net cash used in operating activities ................... $ (46,093)
==========
See Notes to Financial Statements.
<PAGE>
-38-
THE ALGER FUND
STATEMENTS OF CHANGES IN NET ASSETS (in thousands)
For the year ended October 31, 1998
<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) ................ $ (3,409) $ (7,991) $ 39 $ (2,520) $ (3,613) $ 10,813
Net realized gain on investments ............ 52,782 60,965 1,229 29,077 28,168 6
Net change in unrealized appreciation
(depreciation) on investments ............. 31,157 (86,096) 1,416 (10,808) 6,353 --
-------- -------- ------- -------- -------- --------
Net increase (decrease) in net assets
resulting from operations ............... 80,530 (33,122) 2,684 15,749 30,908 10,819
-------- -------- ------- -------- -------- --------
Dividends and distributions to shareholders from:
Net investment income
Class A ................................... -- -- (2) -- -- --
Class B ................................... -- -- (9) -- -- (10,813)
Net realized gains
Class A ................................... (10,089) (1,188) (64) (574) (880) --
Class B ................................... (36,412) (27,136) (1,780) (18,402) (13,178) --
Class C ................................... (54) (25) (7) (19) (62) --
-------- -------- ------- -------- -------- --------
Total dividends and distributions to
shareholders .............................. (46,555) (28,349) (1,862) (18,995) (14,120) (10,813)
-------- -------- ------- -------- -------- --------
Increase (decrease) from shares of
beneficial interest transactions:
Class A ................................... 60,108 35,329 825 22,940 33,947 --
Class B ................................... 61,703 (59,944) 5,891 32,756 18,172 (6,551)
Class C ................................... 2,851 4,243 272 1,695 2,318 --
-------- -------- ------- -------- -------- --------
Net increase (decrease) from shares
of beneficial interest
transactions-Note 6 ........................ 124,662 (20,372) 6,988 57,391 54,437 (6,551)
-------- -------- ------- -------- -------- --------
Total increase (decrease) ................ 158,637 (81,843) 7,810 54,145 71,225 (6,545)
Net Assets:Beginning of year ................ 357,490 606,985 13,160 171,995 229,098 179,407
-------- -------- ------- -------- -------- --------
End of year ............................... $516,127 $525,142 $20,970 $226,140 $300,323 $172,862
======== ======== ======= ======== ======== ========
Undistributed net investment income
(accumulated loss) ........................ $ (11,071) $ (43,010) $ (27) $ (6,946) $ (8,771) --
======== ======== ======= ======== ======== ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
-39-
THE ALGER FUND
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 and distributions to
shareholders-Class B:
Net investment income .................... -- -- (50) -- -- (10,506)
Net realized gains ....................... (8,740) (93,115) (288) (3,458) (970) --
---------- --------- ------- --------- -------- --------
Total dividends and distributions to
shareholders ............................ (8,740) (93,115) (338) (3,458) (970) (10,506)
---------- --------- ------- --------- -------- --------
Additional paid-in capital ................ -- 578 -- -- -- --
---------- --------- ------- --------- -------- --------
Increase (decrease) from shares of
beneficial interest transactions:
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 --
---------- --------- ------- --------- -------- --------
Net increase (decrease) from shares of
beneficial interest transactions-Note 6 .. 33,196 84,023 (2,172) 19,732 47,374 (106,279)
---------- --------- ------- --------- -------- --------
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>
See Notes to Financial Statements.
<PAGE>
-40-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1- General:
The Alger Fund (the "Fund") is a diversified, open-end registered
investment company organized as a 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. The Money Market
Portfolio's investment objective is high current income which it seeks to
achieve by investing in short-term instruments.
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 will
automatically convert to Class A shares eight and twelve years, respectively,
after the end of the calendar month in which the order to purchase was accepted.
The conversion is completed without the imposition of any sales charges or other
fees. Each class has identical rights to assets and earnings except that only
Class B and Class C shares have plans of distribution and bear the related
expenses.
NOTE 2- Significant Accounting Policies:
(a) INVESTMENT VALUATION: Investments of the 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 net 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
NOTES TO FINANCIAL STATEMENTS (Continued)
-41-
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, 1998, the net capital
loss carryforwards of the Money Market Portfolio which may be used to offset
future net realized gains were approximately $72,000, and expire between 1999
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 its Investment Management Agreement with Fred Alger Management,
Inc. ("Alger Management"), are payable monthly and are computed based on the
value of the average daily net assets of each 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 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, marketing
and selling the Class B shares. The distribution fee is not to exceed an annual
rate of .75% of the respective average daily net assets of the Class B shares of
the designated 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 Class B shares of the Portfolios, the excess may be carried
forward, with interest, and sought to be reimbursed in future periods. As of
October 31, 1998, such excess carried forward was approximately $8,039,000,
$16,063,000, $204,000, $3,520,000 and $1,781,000 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 incurred in distributing the Class C
shares. The fees charged may be more or less than the expenses incurred by the
Distributor.
(c) SALES CHARGES: The purchases and sales of shares of the Portfolios, other
than the Money Market Portfolio, may be subject to initial sales charges or
contingent deferred sales charges. For the year ended October 31, 1998, the
initial sales charges and contingent deferred sales charges retained by the
Distributor were
<PAGE>
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
-42-
approximately $52,000 and $3,258,000, 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, 1998, the Growth
Portfolio, the Small Capitalization Portfolio, the Balanced Portfolio, the
MidCap Growth Portfolio and the Capital Appreciation Portfolio paid the
Distributor commissions of $1,244,587, $1,697,119, $32,459, $752,626 and
$876,328, 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, 1998, 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 $581,940, $863,450, $54,841, $340,400, $600,940 and $332,520, respectively,
for services provided by Alger Services. In addition, during the year ended
October 31, 1998, 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 $202,020,
$296,440, $10,269, $58,060, $91,680 and $102,830, 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
each Portfolio's average daily net assets.
(g) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the
Fund are directors and officers of Alger Management, the Distributor and Alger
Services.
NOTE 4- Securities Transactions:
The following summarizes the securities transactions by the Fund, other than
short-term securities, for the year ended October 31, 1998 (in thousands):
PURCHASES SALES
--------- -----
Growth Portfolio .......... $604,012 $569,591
Small Capitalization
Portfolio ................ 802,029 901,926
Balanced Portfolio ........ 18,865 14,272
MidCap Growth
Portfolio ................ 339,342 323,249
Capital Appreciation
Portfolio ................ 456,436 452,026
NOTE 5- Lines of Credit:
The Fund has both committed and uncommitted lines of credit with banks.
All borrowings have variable interest rates and are payable on demand. With the
exception of the Capital Appreciation Portfolio, the Fund borrows under such
lines of credit exclusively for temporary or emergency purposes.
The Capital Appreciation Portfolio may borrow under these lines up to 1/3
of the value of its assets, as defined, to purchase additional securities. To
the extent the Capital Appreciation Portfolio borrows under these lines, it must
pledge securities with a total value of at least twice the amount borrowed. For
the year ended October 31, 1998, the Capital Appreciation Portfolio had
borrowings which averaged $2,814,493 at a weighted average interest rate of
6.60%.
<PAGE>
-43-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6- Share Capital:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value which are presently divided into six series. Each series, other
than the Money Market Portfolio, is divided into three separate classes. The
transactions of shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Alger Growth Portfolio
Class A:*
Shares sold ........................ 21,100,549 $ 251,594,946 5,044,972 $ 51,947,397
Shares converted from Class B ...... 2,515,306 28,918,933 2,227,219 22,695,978
Dividends reinvested ............... 1,012,458 9,861,339 -- --
Shares redeemed .................... (19,143,051) (230,266,858) (2,756,124) (29,211,908)
------------ -------------- ------------ --------------
Net increase ....................... 5,485,262 $ 60,108,360 4,516,067 $ 45,431,467
============ ============== ============ ==============
Class B:
Shares sold ........................ 32,510,335 $ 378,490,196 19,936,199 $ 209,548,326
Dividends reinvested ............... 3,613,386 34,869,174 887,671 8,477,253
Shares converted to Class A ........ (2,536,424) (28,918,933) (2,233,829) (22,695,978)
Shares redeemed .................... (27,523,316) (322,737,781) (20,141,745) (207,776,866)
------------ -------------- ------------ --------------
Net increase (decrease) ............ 6,063,981 $ 61,702,656 (1,551,704) $ (12,447,265)
============ ============== ============ ==============
Class C:**
Shares sold ........................ 921,931 $ 11,159,179 22,512 $ 273,258
Dividends reinvested ............... 5,128 49,487 -- --
Shares redeemed .................... (668,318) (8,358,166) (5,189) (61,432)
------------ -------------- ------------ --------------
Net increase ....................... 258,741 $ 2,850,500 17,323 $ 211,826
============ ============== ============ ==============
Alger Small Capitalization Portfolio
Class A:*
Shares sold ........................ 61,503,618 $ 589,789,058 7,681,584 $ 75,848,391
Shares converted from Class B ...... 1,666,233 16,755,718 1,829,173 17,139,109
Dividends reinvested ............... 120,213 1,097,543 -- --
Shares redeemed .................... (58,990,985) (572,313,304) (6,999,709) (69,493,610)
------------ -------------- ------------ --------------
Net increase ....................... 4,299,079 $ 35,329,015 2,511,048 $ 23,493,890
============ ============== ============ ==============
Class B:
Shares sold ........................ 176,830,341 $1,671,198,375 106,288,557 $1,038,455,771
Dividends reinvested ............... 2,899,072 26,265,587 9,868,408 89,901,198
Shares converted to Class A ........ (1,684,647) (16,755,718) (1,835,958) (17,139,109)
Shares redeemed .................... (180,951,992) (1,740,652,109) (108,877,400) (1,051,036,361)
------------ -------------- ------------ --------------
Net increase (decrease) ............ (2,907,226) $ (59,943,865) 5,443,607 $ 60,181,499
============ ============== ============ ==============
Class C:**
Shares sold ........................ 2,997,520 $ 28,283,527 42,583 $ 451,031
Dividends reinvested ............... 2,485 22,515 -- --
Shares redeemed .................... (2,469,935) (24,063,272) (9,782) (102,933)
------------ -------------- ------------ --------------
Net increase ....................... 530,070 $ 4,242,770 32,801 $ 348,098
============ ============== ============ ==============
</TABLE>
<PAGE>
-44-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
<S> <C> <C> <C> <C>
Alger Balanced Portfolio
Class A:*
Shares sold ........................ 140,560 $ 2,276,674 19,407 $ 305,198
Shares converted from Class B ...... 7,838 120,962 13,383 192,101
Dividends reinvested ............... 4,622 65,126 -- --
Shares redeemed .................... (100,269) (1,638,040) (5,110) (80,451)
------------ ------------ ------------ ------------
Net increase ....................... 52,751 $ 824,722 27,680 $ 416,848
============ ============ ============ ============
Class B:
Shares sold ........................ 710,530 $ 11,206,494 626,022 $ 9,511,649
Dividends reinvested ............... 122,289 1,714,490 23,152 328,056
Shares converted to Class A ........ (7,894) (120,962) (13,405) (192,101)
Shares redeemed .................... (433,903) (6,908,568) (817,576) (12,286,748)
------------ ------------ ------------ -------------
Net increase (decrease) ............ 391,022 $ 5,891,454 (181,807) $ (2,639,144)
============ ============ ============ =============
Class C:**
Shares sold ........................ 21,158 $ 335,495 3,179 $ 54,326
Dividends reinvested ............... 473 6,646 -- --
Shares redeemed .................... (4,478) (70,500) (259) (4,321)
------------ ------------ ------------ ------------
Net increase ....................... 17,153 $ 271,641 2,920 $ 50,005
============ ============ ============ ============
Alger MidCap Growth Portfolio
Class A:*
Shares sold ........................ 17,759,678 $373,805,169 1,533,288 $ 31,807,270
Shares converted from Class B ...... 30,842 653,860 148,365 2,732,385
Dividends reinvested ............... 28,826 526,934 -- --
Shares redeemed .................... (16,530,334) (352,045,613) (1,439,653) (29,874,723)
------------ ------------ ------------ ------------
Net increase ....................... 1,289,012 $ 22,940,350 242,000 $ 4,664,932
============ ============ ============ ============
Class B:
Shares sold ........................ 9,670,177 $202,901,737 6,111,087 $124,416,537
Dividends reinvested ............... 952,240 17,273,632 176,660 3,335,332
Shares converted to Class A ........ (31,165) (653,860) (148,651) (2,732,385)
Shares redeemed .................... (8,858,104) (186,765,967) (5,345,132) (110,043,722)
------------ ------------ ------------ ------------
Net increase ....................... 1,733,148 $ 32,755,542 793,964 $ 14,975,762
============ ============ ============ ============
Class C:**
Shares sold ........................ 253,315 $ 5,217,737 5,118 $ 120,922
Dividends reinvested ............... 761 13,810 -- --
Shares redeemed ................... (173,525) (3,536,369) (1,348) (29,837)
------------ ------------ ------------ ------------
Net increase ....................... 80,551 $ 1,695,178 3,770 $ 91,085
============ ============ ============ ============
</TABLE>
<PAGE>
-45-
THE ALGER FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD ENDED
OCTOBER 31, 1998 OCTOBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
Alger Capital Appreciation Portfolio
Class A:*
<S> <C> <C> <C> <C>
Shares sold ..................... 19,422,304 $ 523,464,891 3,241,124 $ 82,052,318
Shares converted from Class B ... 64,040 1,760,871 233,151 5,186,684
Dividends reinvested ........... 36,380 843,296 -- --
Shares redeemed ................. (18,108,492) (492,122,233) (2,879,210) (73,001,214)
-------------- -------------- ------------- --------------
Net increase .................... 1,414,232 $ 33,946,825 595,065 $ 14,237,788
============== ============== ============= ==============
Class B:
Shares sold ..................... 21,532,988 $ 569,383,745 12,410,336 $ 304,603,104
Dividends reinvested ............ 541,761 12,460,510 43,004 941,804
Shares converted to Class A ..... (64,764) (1,760,871) (233,764) (5,186,684)
Shares redeemed ................. (21,096,919) (561,910,894) (10,979,223) (267,894,646)
-------------- -------------- ------------- --------------
Net increase .................... 913,066 $ 18,172,490 1,240,353 $ 32,463,578
============== ============== ============= ==============
Class C:**
Shares sold ..................... 557,313 $ 14,867,062 36,710 $ 1,019,125
Dividends reinvested ........... 2,031 46,713 -- --
Shares redeemed ................. (472,417) (12,595,276) (12,451) (346,883)
-------------- -------------- ------------- --------------
Net increase .................... 86,927 $ 2,318,499 24,259 $ 672,242
============== ============== ============= ==============
Alger Money Market Portfolio
Shares sold ..................... 3,890,533,124 $3,890,533,124 1,583,643,437 $1,583,643,437
Dividends reinvested ............ 8,949,498 8,949,498 9,418,392 9,418,392
Shares redeemed ................. (3,906,034,069) (3,906,034,069) (1,699,340,499) (1,699,340,499)
-------------- -------------- ------------- --------------
Net decrease .................... (6,551,447) $ (6,551,447) (106,278,670) $ (106,278,670)
============== ============== ============= ==============
</TABLE>
- ------------
* Initially offered January 1, 1997.
** Initially offered August 1, 1997.
<PAGE>
-46-
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Trustees of The Alger Fund:
We have audited the accompanying statements of assets and liabilities
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), including the schedules of investments, as of October 31, 1998,
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, 1998, 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, 1998, 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 11, 1998
<PAGE>
The Alger Fund
1 World Trade CenterSuite 9333
New York, N.Y. 10048
(800) 992-3863
www.algerfund.com
- --------------------------------------------------------------------------------
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.
1 World Trade Center
Suite 9333
New York, N.Y. 10048
- --------------------------------------------------------------------------------
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.
REP108
ALGER |
GROWTH | Meeting the challenge
PORTFOLIO | of investing
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, 1998
