================================================================================
THE |
ALGER | Meeting the challenge
AMERICAN | of investing
FUND |
ALGER AMERICAN
GROWTH PORTFOLIO
ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN
INCOME AND GROWTH PORTFOLIO
ALGER AMERICAN
BALANCED PORTFOLIO
ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN
LEVERAGED ALLCAP PORTFOLIO
|
ANNUAL | DECEMBER 31, 1995
REPORT |
|
<PAGE>
FELLOW SHAREHOLDERS: FEBRUARY 2, 1996
Unlike France in the 1790's, which Dickens described in the TALE OF TWO CITIES
as the "best of times and the worst of times," the late 1990's in the American
financial markets are purely the best of times. While all periods provide some
room for concern, the current period is more promising than almost any other in
recent history. While the daily news is dominated by disturbing, unconnected
events--the budget battle, horrific blizzards and lack of government statistics,
it is important to recognize that by June most of the upsetting issues
concerning the market will be behind us. I believe the budget battle will be
over, the snow will have melted and the economy will be rebounding driven by
lower rates.
1995 IN REVIEW
It is a matter of record that the stock market and the bond market both did
exceptionally well this past year. As expected, the economy slowed substantially
but the quarters reflected this in an erratic pattern. As 1995 dawned, the key
questions facing the markets concerned the need for future tightening of rates
by the Federal Reserve, the possible onset of inflation and the excessive
strength of the economy, all of which are naturally interrelated. It soon became
evident, however, that 1995 would be a year where the main concern was whether
the economy was growing too slowly. Some are now openly considering whether or
not we will have a recession in 1996.
As early as late 1994, we forecasted that the economy would slow and that there
would be a "soft landing." Thus far, this has been a correct forecast. There is
one main element which has contributed to this slowdown in business--consumer
spending, which constitutes 69% of the Gross Domestic Product (GDP). All four
components of consumer spending--housing, autos, consumer durables and
apparel--have slowed significantly. This slowdown in consumer spending was
sufficient to create the "soft landing" in the economy in 1995. Remember, a
"soft landing" implies a significant slowdown. The December 1994 quarter GDP
rate was up 5.1%. The rate of GDP growth DESIRED by the Federal Reserve is
2.5%-3%; this is a substantial reduction in growth. Overall the economy probably
grew in line with the Fed target at 2%-2.5%. Despite the gyrations and uneven
quarters, Federal Reserve Board Chairman Alan Greenspan should be commended,
like a quarterback he put the ball right on the numbers.
Recently, economic data suggests that a continuing slowdown is taking place.
Nevertheless, certainly any fears of "hard landing" or recession have now been
dispelled, if not by the recent data, then by the fact that the Fed has recently
taken action to lower rates. Whether they continue to lower rates is an open
question, but most believe they will. After all, inflation appears benign.
THE ECONOMY IN 1996
While the lack of timely economic statistics makes any projections tentative, we
are predicting that the economy will continue to grow through 1996. The rate of
growth in the first quarter could appear weak because of both the government
shutdown and severe winter weather. The exceptionally weak holiday season will
likely produce additional store closings and more bankruptcies. Since inventory
levels are still too high relative to the current rate of sales, manufacturers
will continue to cut back on production to bring inventories back in line. If
the economy does slow in the first quarter, the favorable outlook for inflation
should allow the Federal Reserve to lower short-term interest rates in small
increments.
We remain optimistic that economic activity will pick up in the second half. The
current expansion is already long-lived, but economic expansions do not simply
die of old age. Imbalances such as production bottlenecks, accelerating
inflation, rising interest rates, and excessive use of credit typically doom an
expansion. We do not believe that these conditions exist.
We expect that the economy will continue to generate new jobs. The rate of
increase should be in line with the growth in the labor force, so we do not
foresee a decline in the rate of unemployment. Wage gains will not accelerate,
in our view. Consumer confidence is still high, but we do not expect consumers
to abandon their cautious spending pattern. Consequently, the rate of increase
in personal income should remain modest, but enough to support continued limited
gains in consumer spending.
Businesses will continue to invest heavily to meet competitive pressures from
domestic and foreign rivals. Therefore, although the rate of growth in capital
spending will likely slow, we expect that capital spending will still be one of
the strong points for the U.S. economy.
The outlook for American exports seems cloudy. It is possible that export growth
could slow. The lower foreign exchange value of the dollar versus the Japanese
yen together with more aggressive marketing efforts by American corporations
resulted in a surge in growth of U.S. exports to Japan. A stronger Japanese
economy should solidify these gains in 1996. However, economic conditions appear
to have worsened in Germany and France, so U.S. exports to Europe may experience
a modest slowdown. We expect little or no improvement in U.S. exports to Mexico
or Canada, two of the largest markets for U.S. exporters.
PORTFOLIO MATTERS
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
The Alger American Small Capitalization Portfolio recorded excellent results for
the year ended December 31, 1995, with a total return of 44.3%. The Portfolio's
strong returns were due primarily to a calculated over commitment to the
technology sector throughout most of 1995. During the fourth quarter, the
technology sector was subject to extreme negative volatility. As a result of the
timely decision to scale back on select technology related holdings during this
period, the negative impact of the fourth quarter was lessened, and the
Portfolio was able to finish the year with returns significantly higher than
1
<PAGE>
those of the Wilshire Small Company Growth Index, which returned 35.2% and the
Russell 2000 Growth Index, which returned 31.0%. At present, the Portfolio is
well diversified, with Health Care, Communications and Computer Related and
Business Equipment representing the top three industry groups.
ALGER AMERICAN GROWTH PORTFOLIO
The Alger American Growth Portfolio generated a total return for the year ended
December 31, 1995 of 36.37%, which was slightly below that of the S&P 500, which
returned 37.6%. The Portfolio was negatively impacted by the volatility which
existed in the market during the fourth quarter. In general, growth stocks,
which had peaked at around 1.7 times the market multiples in September-October,
fell dramatically as investors took profits and rotated into defensive stocks,
sending the averages higher but depressing growth stocks. The decision by the
Federal Reserve to lower rates in December helped eliminate some of this
negativity, and the Portfolio regained its lost momentum.
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
The Alger American Income & Growth Portfolio had a total return for 1995 of
35.1% compared to 37.6% for the S&P 500. The Portfolio's strategy is to invest
in growth stocks of different market capitalization sizes that provide current
income through dividends. Therefore, although the Portfolio will have many of
the characteristics of the Growth and Small Capitalization Portfolios, it is
more conservative and performance can be expected to be somewhat less.
Nevertheless, the Portfolio posted impressive returns for the year,
underperforming the S&P 500 by only a small margin.
ALGER AMERICAN BALANCED PORTFOLIO
The Alger American Balanced Portfolio's total return for the year ended December
31, 1995 was 28.6% compared to 37.6% for the S&P 500 and 19.2% for the Lehman
Government/Corporate Bond. The Portfolio's holdings are a hybrid of stocks and
bonds, typically investing 50-60% in common stocks and 40-50% in bonds. As such,
the 28.6% total return was on target relative to the stock and bond benchmark
weightings. The driving force behind the strong overall performance was the
return generated in the more aggressive equity portion of the Portfolio,
although investments in long-term high quality bonds were also a contributing
factor.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
We are pleased to report that the Alger American MidCap Growth Portfolio posted
exceptional returns in 1995, gaining 44.5%. This compares very favorably to the
relative benchmark, the S&P MidCap 400, which had a return of 31.0% for the same
period. Although many of the same factors which resulted in the strong
performance returns for the Small Capitalization Portfolio were present in the
MidCap Growth Portfolio, the Portfolio had the added benefit of being invested
primarily in midcap stocks. Possibly the most exciting and yet to be recognized
sector of the equities market, midcap stocks have many of the upside
characteristics of small cap stocks without the attendant volatility
attributable to a lack of liquidity.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
The Alger American Leveraged AllCap Portfolio has only been in existence since
January 25, 1995. We are very happy to report that the results for the period
ended December 31, 1995 have been extraordinary. During this period the
Portfolio's total return was a staggering 74.3% compared to the 34.9% which the
S&P 500 returned over the same time frame. Our newest portfolio, the Leveraged
AllCap Portfolio employs an "allcap" (small, medium and large capitalizations)
portfolio management strategy which has been utilized by Fred Alger Management
for more than 32 years. In addition, the Portfolio may employ a management
technique known as leveraging, that is borrowing money for investment purposes,
in order to increase the Portfolio's holdings and, therefore, its exposure to
the stock market. It was through the careful use and precise timing of this
technique that the Portfolio was able to realize returns in excess of twice
those posted by the relative benchmark.
LOOKING AHEAD
Despite the strong gains in the stock market in 1995, we believe that the market
remains undervalued when measured against both long-term and short-term interest
rates. The ratio between earnings yield on the S&P Industrials and long-term
interest rates expresses the effect interest rates have on stock market
valuations. The most recent reading was well above the average of the last seven
years and indicates that the stock market is very undervalued. Our proprietary
model for the stock market valuation relative to short-term interest rates also
indicates that the market has room to advance.
Quality growth stocks typically trade at 1.5 to 2.5 times the market multiples.
When we analyze company multiples, we rank a sample of our universe of followed
companies by the rate of growth and predictability of earnings, credit quality
and market position. At the start of 1996, high quality growth companies traded
at only a modest premium. In general, to get back to traditional valuations, we
believe growth stocks could rise 50% relative to the market based on
estimated1996 earnings per share.
The inescapable conclusion for us is that the market has more going for it over
the next twelve months than at almost any other period in history:
1. The economy is moving ahead at a slow and hesitant rate, but nevertheless,
the weight of evidence points to the fact that it is still moving ahead.
2. Corporations have never been as profitable as they are now. Overall , return
on equity is at 20%, a new record. Consolidation and margin expansion have
put corporate America in a wonderful position. The strong stock market and
low interest rates have provided opportunities for financing so corporate
balance sheets are in excellent shape.
3. Interest rates are low and may go lower, especially at the short end of the
yield curve.
2
<PAGE>
4. There is modest inflation.
5. In an absolute sense and relative to debt, stocks
are undervalued.
6. Relative to the market as a whole, growth stocks are
undervalued.
Lastly, America's future is exciting and bright internationally. We lead in most
aspects of technology, our comparative costs of manufacturing are very low, and
our national deficit as a percentage of GDP is among the lowest in the world.
In conclusion, these are the best of times.
Respectfully submitted,
/s/ David D. Alger
David D. Alger
President
3
<PAGE>
TABLE OF CONTENTS
Alger American Growth Portfolio:
Portfolio Highlights .................................. 5
Schedule of Investments ............................... 6-7
Financial Highlights .................................. 8
Alger American Small Capitalization Portfolio:
Portfolio Highlights .................................. 9
Schedule of Investments ............................... 10-12
Financial Highlights .................................. 13
Alger American Income and Growth Portfolio:
Portfolio Highlights .................................. 14
Schedule of Investments ............................... 15
Financial Highlights .................................. 16
Alger American Balanced Portfolio:
Portfolio Highlights .................................. 17
Schedule of Investments ............................... 18-19
Financial Highlights .................................. 20
Alger American MidCap Growth Portfolio:
Portfolio Highlights .................................. 21
Schedule of Investments ............................... 22-23
Financial Highlights .................................. 24
Alger American Leveraged AllCap Portfolio:
Portfolio Highlights .................................. 25
Schedule of Investments ............................... 26-27
Financial Highlights .................................. 28
Statements of Assets and Liabilities ........................ 29
Statements of Operations .................................... 30
Statements of Cash Flows .................................... 31
Statements of Changes in Net Assets ......................... 32-33
Notes to Financial Statements ............................... 34-36
Report of Independent Public Accountants .................... 37
4
<PAGE>
- --------------------------------------------------------------------------------
ALGER AMERICAN GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
The Alger American Growth Portfolio invests in companies which generally
have broader product lines, markets, financial resources and depth of
management than smaller, newer companies.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION January 9, 1989
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece]
Alger
American
Growth S&P 500
-------- -------
01/09/89 10,000 10,000
12/31/89 12,410 13,012
12/31/90 12,924 12,598
12/31/91 18,144 16,437
12/31/92 20,390 17,684
12/31/93 24,971 19,460
12/31/94 25,330 19,717
12/31/95 34,542 27,127
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American Growth Portfolio and the S&P 500 on
January 9, 1989, the inception date of the Alger American Growth Portfolio.
The figures for both the Alger American Growth Portfolio and the S&P 500, an
unmanaged index of common stocks, include reinvestment of dividends.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH December 31, 1995
- --------------------------------------------------------------------------------
Average Annual Total Returns
1 Year 5 Years Since Inception
---------------------------------------------
Alger American Growth Portfolio 36.37% 21.73% 19.44%
S&P 500 37.58% 16.59% 15.38%
---------------------------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST
ASSETS OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN
FIGURES WOULD BE LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
5
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--81.9% VALUE
------ -----
AIRLINES--1.0%
70,000 Delta Air Lines Inc. ......................... $ 5,171,250
-----------
BIO-TECHNOLOGY--1.2%
96,900 Genzyme Corp.--General Division*+ ............ 6,044,138
-----------
BUILDING & CONSTRUCTION--2.0%
273,525 Clayton Homes Inc. ........................... 5,846,596
129,200 Pulte Corp.+ ................................. 4,344,350
-----------
10,190,946
-----------
COMMUNICATIONS--6.6%
54,000 ADC Telecommunications, Inc.* ................ 1,971,000
161,000 America Online Inc.*+ ........................ 6,037,500
139,000 DSC Communications Corporation*+ ............. 5,125,625
125,000 Glenayre Technologies Inc.* .................. 7,781,250
118,200 Tellabs, Inc.* ............................... 4,373,400
90,000 U.S. Robotics Corp* .......................... 7,897,500
-----------
33,186,275
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--16.9%
255,800 Altera Corporation* .......................... 12,726,050
265,250 Bay Networks Inc.* ........................... 10,908,405
161,600 Cisco Systems, Inc.* ......................... 12,059,400
82,500 Compaq Computer Corporation* ................. 3,960,000
224,800 Dell Computer Corporation* ................... 7,783,700
204,300 Digital Equipment Corporation* ............... 13,100,738
151,200 Seagate Technology*+ ......................... 7,182,000
216,600 3 Com Corp.* ................................. 10,098,975
231,900 Xilinx, Inc.*+ ............................... 7,072,950
-----------
84,892,218
-----------
COMPUTER SOFTWARE--2.0%
73,000 Broderbund Software Inc.* .................... 4,434,750
184,000 Informix Corporation* ........................ 5,520,000
-----------
9,954,750
-----------
COMPUTER TECHNOLOGY--.5%
99,800 Silicon Graphics, Inc.* ...................... 2,744,500
-----------
CONSUMER PRODUCTS--.1%
19,000 CUC International Inc.* ...................... 648,375
-----------
DEFENSE--3.8%
59,120 Lockheed Martin Corp. ........................ 4,670,480
157,400 Loral Corporation ............................ 5,568,025
96,100 McDonnell Douglas Corporation ................ 8,841,200
-----------
19,079,705
-----------
FINANCIAL SERVICES--4.5%
191,863 First Data Corporation ....................... 12,830,838
95,000 Lehman Brothers Holdings Inc. ................ 2,018,750
110,000 Merrill Lynch & Co., Inc. .................... 5,610,000
99,400 Schwab (Charles) Corporation (The)+ .......... 2,000,425
-----------
22,460,013
-----------
HEALTHCARE--21.5%
109,000 Apria Healthcare Group Inc.*+ ................ 3,079,250
238,500 Biochem Pharma Inc.*+ ........................ 9,569,813
61,600 Boston Scientific Corporation* ............... 3,018,400
204,200 Cardinal Health, Inc. ........................ 11,179,950
184,000 Columbia/HCA Healthcare Corporation .......... 9,338,000
317,000 Healthsource, Inc.*+ ......................... 11,412,000
163,000 Lilly (Eli) Co. .............................. 9,168,750
98,600 Medtronic, Inc. .............................. 5,509,275
163,800 Merck & Co., Inc. ............................ 10,769,850
43,400 Nellcor Puritan Bennett Inc.* ................ 2,517,200
175,000 Oxford Health Plans, Inc.* ................... 12,928,125
166,200 SmithKline Beecham PLC ADS+ .................. 9,224,100
183,500 Summit Technology Inc.*+ ..................... 6,193,125
65,000 United Healthcare Corporation ................ 4,257,500
-----------
108,165,338
-----------
INSURANCE--2.5%
66,000 American International, Group Inc. ........... 6,105,000
100,600 Travelers Group Inc. ......................... 6,325,225
------------
12,430,225
------------
LEISURE & ENTERTAINMENT--1.2%
124,500 Viacom Inc. Cl. B* ........................... 5,898,188
------------
POLLUTION CONTROL--.2%
50,000 USA Waste Services, Inc.* .................... 943,750
------------
RESTAURANTS &
LODGING--3.8%
55,000 Cracker Barrel Old Country Stores, Inc.+ ..... 948,750
144,900 La Quinta Inns, Inc. ......................... 3,966,638
366,100 Lone Star Steakhouse & Saloon, Inc.*+ ........ 14,049,088
------------
18,964,476
------------
RETAILING--4.9%
50,000 Cintas Corp. ................................. 2,225,000
191,500 The Gap, Inc. ................................ 8,043,000
569,000 OfficeMax, Inc.* ............................. 12,731,375
30,000 Viking Office Products, Inc.* ................ 1,395,000
------------
24,394,375
------------
SEMICONDUCTORS--6.9%
154,400 Intel Corporation ............................ 8,762,200
118,000 LSI Logic Corporation* ....................... 3,864,500
174,500 Linear Technology Corporation ................ 6,849,125
358,000 Maxim Integrated Products, Inc.* ............. 13,783,000
50,000 Microchip Technology Incorporated* ........... 1,825,000
------------
35,083,825
------------
MISCELLANEOUS--2.3%
260,800 Service Corporation International ............ 11,475,200
------------
6
<PAGE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995 (Cont'd)
- --------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS COMMON STOCKS (CONTINUED) VALUE
-------- -----
TOTAL COMMON STOCKS
(COST $358,592,571) .......................... $411,727,547
------------
WARRANTS
MANUFACTURING
1 Windmere Corp. Warrant,
expires 1/19/98 (COST $1) .................... 0
------------
SHORT-TERM INVESTMENTS--18.8%
PRINCIPAL SHORT-TERM
AMOUNT CORPORATE NOTES--11.4%
--------
$10,000,000 American Honda Finance Corp.,
5.75%, 2/8/96 .............................. 9,939,305
12,500,000 Barnett Banks, Inc.,
5.85%, 1/10/96 ............................. 12,481,719
12,500,000 Countrywide Funding Corp.,
5.77%, 1/4/96 .............................. 12,493,990
10,000,000 Mitsui & Co. (USA) Inc.,
5.68%, 1/26/96 ............................. 9,960,555
12,500,000 Triple-A One Funding Corp.,
5.85%, 1/5/96(a) ........................... 12,491,875
------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $57,367,444) ......................... 57,367,444
------------
SECURITIES HELD UNDER
REPURCHASE
AGREEMENTS--7.4%
Securities Held Under Repurchase
Agreements, 5.80%-6.00%, 1/2/96,
with Bear, Stearns & Co. Inc., dtd
12/29/95, repurchase price
$37,620,468; collateralized by
U.S. Treasury Strips
(par value $109,684,000, due
5/15/01-8/15/16) .................. $ 37,595,645
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $94,963,089) ......................... 94,963,089
------------
TOTAL INVESTMENTS ..................................
(COST $453,555,661)(B) ........................... 100.7% 506,690,636
Liabilities in Excess Of Other Assets .............. (.7) (3,717,097)
----- ------------
NET ASSETS ......................................... 100.0% $502,973,539
===== ============
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(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 December 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $453,555,661 amounted to
$53,134,975 which consisted of aggregate gross unrealized appreciation of
$58,285,984 and aggregate gross unrealized depreciation of $5,151,009.
</TABLE>
See Notes to Financial Statements
7
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
- -------------------------------------------------------------------------------------------------------------
Net investment income 0.02 0.07 0.03 0.03 0.08(i)
Net realized and unrealized gain on investments 8.33 0.15 4.50 2.19
5.11
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 8.35 0.22 4.53 2.22 5.19
- -------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.07) (0.03) (0.03) (0.03) (0.05)
Distributions from net realized gains (0.25) (1.73) -- (0.02) --
- -------------------------------------------------------------------------------------------------------------
Total Distributions (0.32) (1.76) (0.03) (0.05) (0.05)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 31.16 $ 23.13 $ 24.67 $ 20.17 $ 18.00
=============================================================================================================
Total Return 36.37% 1.45% 22.47% 12.38% 40.39%
=============================================================================================================
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $502,974 $150,390 $74,878 $30,316
$10,094
=============================================================================================================
Ratio of expenses to average net assets .85% .86% .97% .99%
1.29%
=============================================================================================================
Ratio of net investment income to average
net assets 0.18% 0.48% 0.25% 0.33% 0.52%
=============================================================================================================
Portfolio Turnover Rate 118.33% 111.76% 112.64% 63.91% 58.95%
=============================================================================================================
(i) Amount was computed based on average shares outstanding during the period.
</TABLE>
8
<PAGE>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
The Alger American Small Capitalization Portfolio invests in small,
fast-growing companies that offer innovative products, services, or
technologies to a rapidly expanding marketplace.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION September 21, 1988
[The following table represents a chart in the printed piece]
Alger
American
Small Russell
Capitalization Wishire 2000 Growth
-------------- ------- -----------
09/21/88 10,000 10,000
12/31/88 9,665 10,062 10,006.11
12/31/89 15,897 11,965 12,024.08
12/31/90 17,282 9,689 9,930.66
12/31/91 27,225 15,192 15,013.84
12/31/92 28,192 17,198 16,180.43
12/31/93 31,936 20,290 18,342.12
12/31/94 30,541 20,401 17,896.06
12/31/95 44,073 27,580 23,446.96
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American Small Capitalization Portfolio,
Wilshire Small Company Growth Index and the Russell 2000 Growth Index on
September 21, 1988, the inception date of the Alger American Small
Capitalization Portfolio. The figures for the Alger American Small
Capitalization Portfolio, Wilshire Small Company Growth Index (an unmanaged
index of common stocks) and the Russell 2000 Growth Index (an unmanaged index
of common stocks) include reinvestment of dividends.
For the upcoming fiscal year, the Portfolio will use only the Russell 2000
Growth Index (the "Russell 2000") as a comparative index. The Portfolio has
elected to change its comparative index because management of the Portfolio
believes the size of the companies in the Russell 2000 is more representative
of the size of the companies in which the Portfolio invests.
PERFORMANCE COMPARISON THROUGH December 31, 1995
Average Annual Total Returns
1 Year 5 Years Since Inception
----------------------------------------
ALGER AMERICAN SMALL
CAPITALIZATION PORTFOLIO 44.31% 20.59% 22.60%
WILSHIRE SMALL CO. GROWTH INDEX 35.19% 23.27% 14.96%
RUSSELL 2000 GROWTH INDEX 31.04% 18.75% 12.42%
----------------------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST
ASSETS OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN FIGURES
WOULD BE LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
9
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--81.9% VALUE
------- -----
APPAREL--1.9%
186,200 Kenneth Cole Productions Inc. CI.A.* ........ $ 3,491,250
126,000 St. John Knits, Inc.+ ....................... 6,693,750
190,700 Tommy Hilfiger Corporation*+ ................ 8,080,913
-----------
18,265,913
-----------
BIO-TECHNOLOGY--5.1%
253,900 Centocor, Inc.* ............................. 7,839,163
280,000 Cygnus, Inc.* ............................... 6,265,000
25,000 Cytotherapeutics, Inc.* ..................... 428,125
238,000 Genzyme Corp.--General Division*+ ........... 14,845,250
45,000 IDEC Pharmaceuticals Corp.* ................. 877,500
155,500 INCYTE Pharmaceuticals, Inc.*+ .............. 3,887,500
110,000 Oncogene Science, Inc.* ..................... 1,045,000
275,000 Sepracor Inc.*+ ............................. 5,053,125
258,000 VISX, Inc.*+ ................................ 10,062,000
-----------
50,302,663
-----------
BUILDING &
CONSTRUCTION--1.4%
397,500 Clayton Homes, Inc. ......................... 8,496,563
35,000 Continental Homes Holding Corp.+ ............ 861,875
136,600 U.S. Home Corporation*+ ..................... 3,978,475
-----------
13,336,913
-----------
COMMUNICATIONS--11.3%
167,400 ADC Telecommunications, Inc.* ............... 6,110,100
311,400 Ascend Communications, Inc.* ................ 25,262,325
196,200 DSC Communications Corporation* ............. 7,234,875
25,000 DSP Communications, Inc.* ................... 1,090,625
452,550 Glenayre Technologies Inc.* ................. 28,171,238
116,500 Mobile Telecommunications
Technologies Corp.* ......................... 2,490,188
240,000 Network Equipment Technologies, Inc.*+ ...... 6,570,000
45,000 Premisys Communications Inc.* ............... 2,520,000
424,200 Tellabs, Inc.* .............................. 15,695,400
188,500 U.S. Robotics Corp.* ........................ 16,540,875
-----------
111,685,626
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--11.1%
376,400 Altera Corporation* ......................... 18,725,900
656,850 Bay Networks Inc.* .......................... 27,012,956
60,000 Cisco Systems, Inc.* ........................ 4,477,500
274,000 Dell Computer Corporation* .................. 9,487,250
335,000 Digital Equipment Corporation* .............. 21,481,875
513,300 Gandalf Technologies Inc.* .................. 8,726,100
142,500 Komag, Incorporated* ........................ 6,572,813
113,700 Teltrend, Inc.* ............................. 5,315,475
160,000 3 Com Corp.* ................................ 7,460,000
-----------
109,259,869
-----------
COMPUTER SOFTWARE--9.0%
20,000 Broderbund Software Inc.*+ .................. $ 1,215,000
2,500 CBT Group ADS* .............................. 132,500
105,000 Computron Software, Inc.* ................... 1,890,000
236,000 Comshare, Incorporated* ..................... 6,136,000
100,000 Dendrite International Inc.* ................ 1,800,000
488,600 Electronics For Imaging Inc.* ............... 21,376,250
60,000 EPIC Design Technology, Inc.* ............... 1,260,000
105,000 Hyperion Software Corp.* .................... 2,231,250
40,000 Inference Corp. CI. A.* ..................... 760,000
631,000 Informix Corporation* ....................... 18,930,000
150,000 INSO Corp.*+ ................................ 6,375,000
78,000 Maxis, Inc.*+ ............................... 2,964,000
130,700 Medic Computer Systems Inc.* ................ 7,907,350
35,000 Parametric Technology Corporation* .......... 2,327,500
317,600 S3 Incorporated*+ ........................... 5,597,700
218,500 Softkey International Inc.*+ ................ 5,052,813
50,000 Symantec Corp.* ............................. 1,162,500
100,000 Tracor Inc.* ................................ 1,450,000
-----------
88,567,863
-----------
COMPUTER TECHNOLOGY--4.1%
375,000 Adaptec, Inc.* .............................. 15,375,000
145,000 ADFlex Solutions, Inc.*+ .................... 3,878,750
233,300 C.P. Clare Corporation* ..................... 4,782,650
551,400 General Datacomm Industries, Inc.* .......... 9,442,725
165,000 Pinnacle Systems, Inc.*+ .................... 4,083,750
65,100 Sanmina Corporation*+ ....................... 3,377,063
-----------
40,939,938
-----------
CONSUMER PRODUCTS--1.3%
75,000 G&K Services, Inc. Cl. A .................... 1,912,500
328,000 Oakley, Inc.* ............................... 11,152,000
-----------
13,064,500
-----------
FINANCIAL SERVICES--2.3%
83,100 Advanta Corp., Class B ...................... 3,022,763
60,000 AMRESCO, Inc. ............................... 765,000
281,000 Money Store, Inc.+ .......................... 4,390,625
206,500 Oxford Resources Corp. Cl. A.* .............. 4,646,250
467,400 Schwab (Charles) Corporation (The)+ ......... 9,406,425
-----------
22,231,063
-----------
HEALTHCARE--20.8%
268,200 Apria Healthcare Group Inc.* ................ 7,576,650
649,100 Biochem Pharma Inc.*+ ....................... 26,045,138
40,000 Cardinal Health, Inc. ....................... 2,190,000
134,000 CompDent Corp.*+ ............................ 5,561,000
102,500 Fuisz Technologies Ltd.*+ ................... 1,563,125
230,000 Gliatech, Inc.* ............................. 1,926,250
218,700 HBO & Company ............................... 16,757,888
196,650 Health Management Associates, Inc. Cl. A.* .. 5,137,481
512,800 Healthsource, Inc.* ......................... 18,460,800
10
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995 (Cont'd)
- --------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
210,500 Hologic, Inc.* .............................. $ 8,630,500
65,000 I-Stat Corp.*+ .............................. 2,112,500
25,000 IDEXX Laboratories Inc.* .................... 1,175,000
35,000 IMNET Systems, Inc.*+ ....................... 840,000
353,000 Lincare Holdings, Inc.*+ .................... 8,825,000
498,200 Liposome Company Inc.*+ ..................... 9,964,000
337,000 Medpartners/Mullikin, Inc.*+ ................ 11,121,000
100,000 Matrix Pharmaceuticals, Inc.* ............... 1,875,000
200,000 Metra Biosystems, Inc.*+ .................... 3,450,000
5,300 Nellcor Puritan Bennett Inc.* ............... 307,400
90,000 Neuromedical Systems, Inc.*+ ................ 1,811,250
235,300 Omnicare, Inc.+ ............................. 10,529,675
216,500 Oxford Health Plans, Inc.*+ ................. 15,993,938
50,000 Perclose, Inc.* ............................. 956,250
254,800 PhyCor Inc.*+ ............................... 12,883,452
55,000 Physicians Sales & Service, Inc.* ........... 1,567,500
89,000 Quintiles Transnational Corp.* .............. 3,649,000
75,000 Steris Corp.* ............................... 2,418,750
172,500 Summit Technology Inc.*+ .................... 5,821,875
158,600 Sybron International Corp.* ................. 3,766,750
264,600 Target Therapeutics, Inc.* .................. 11,311,650
-----------
204,228,822
-----------
POLLUTION CONTROL--2.5%
100,000 Continential Waste Industries, Inc.*+ ....... 1,162,500
350,900 United Waste Systems, Inc.* ................. 13,071,025
525,800 USA Waste Service, Inc.* .................... 9,924,475
-----------
24,158,000
-----------
RESTAURANTS &
LODGING--5.5%
180,400 Apple South, Inc. ........................... 3,878,600
86,800 Applebee's International, Inc. .............. 1,974,700
201,700 Boston Chicken, Inc.*+ ...................... 6,479,613
508,400 Landry's Seafood Restaurants, Inc.*+ ........ 8,674,829
580,500 Lone Star Steakhouse & Saloon, Inc.*+ ....... 22,276,688
192,000 O'Charley's Inc.* ........................... 2,832,000
211,000 Outback Steakhouse, Inc.*+ .................. 7,569,625
-----------
53,686,055
-----------
RETAILING--5.7%
149,000 CompUSA Inc.*+ .............................. $ 4,637,625
155,500 The Gap, Inc. ............................... 6,531,000
178,000 Gucci Group NV*+ ............................ 6,919,750
158,000 Global DirectMail Corp.*+ ................... 4,345,000
159,750 Guest Supply Inc.*+ ......................... 3,614,344
417,650 OfficeMax, Inc.* ............................ 9,344,919
96,800 Talbots,Inc.+ ............................... 2,783,000
297,000 Viking Office Products, Inc.*+ .............. 13,810,500
245,000 Williams-Sonoma, Inc.*+ ..................... 4,532,500
-----------
56,518,638
-----------
SEMICONDUCTORS--8.0%
180,000 LSI Logic Corporation* ...................... 5,895,000
375,000 Linear Technology Corporation ............... 14,718,750
818,800 Maxim Integrated Products, Inc.* ............ 31,523,800
612,125 Microchip Technology Incorporated* .......... 22,342,563
297,700 TriQuint Semiconductor, Inc.* ............... 4,018,950
35,000 Zoran Corp.*+ ............................... 726,250
-----------
79,225,313
-----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--2.1%
106,700 ASM Lithography Holdings NV* ................ 3,547,775
89,000 Electroglas, Inc.*+ ......................... 2,180,500
267,250 GaSonics International Corp.* ............... 3,607,875
50,000 PRI Automation, Inc.*+ ...................... 1,756,250
65,700 Semitool, Inc.* ............................. 854,100
171,000 Silicon Valley Group, Inc.* ................. 4,317,750
200,000 Tencor Instruments*+ ........................ 4,875,000
-----------
21,139,250
-----------
MISCELLANEOUS--.1%
30,000 COREStaff, Inc.*............................. 1,095,000
-----------
TOTAL COMMON STOCKS
(COST $666,437,434).......................... 907,705,426
-----------
11
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
PRINCIPAL SHORT-TERM INVESTMENTS-21.1% VALUE
AMOUNT SHORT-TERM CORPORATE NOTES-8.4% -------
--------
$ 254,000 American Honda Finance Corp.,
5.75%, 2/8/96 ............................. $ 252,458
12,500,000 Anchor Funding Corp.,
5.90%, 1/3/96(a) .......................... 12,495,903
12,500,000 Barnett Banks, Inc.,
5.85%, 1/10/96 ............................ 12,481,719
10,000,000 Countrywide Funding Corp.,
5.77%, 1/4/96 ............................. 9,995,192
Philip Morris Cos. Inc.,
2,946,000 5.70%, 1/4/96 ............................. 2,944,601
3,400,000 5.65%, 1/8/96 ............................. 3,396,265
6,600,000 5.62%, 1/9/96 ............................. 6,591,757
1,800,000 Sotheby's Inc.,
5.80%, 1/29/96 ............................ 1,791,880
12,500,000 Transamerica Finance Corp.,
5.81%, 1/2/96 ............................. 12,497,982
10,000,000 Triple-A One Funding Corp.,
5.85%, 1/5/96(a) .......................... 9,993,500
10,000,000 United Parcel Service Of America Inc.,
5.85%, 1/4/96 ............................. 9,995,125
-----------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $82,436,382 ) 82,436,382
-----------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS-- 12.7%
Securities Held Under Repurchase
Agreements, 5.80%-6.00%,
1/2/96, with Bear, Stearns & Co.
Inc., dtd 12/29/95, repurchase price
$125,135,400; collateralized by
U.S. Treasury Bonds and
U.S. Treasury Strips (par value
$442,154,000, due 8/15/05-8/15/23) .......... $ 125,052,300
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $207,488,682) ........................ 207,488,682
-------------
TOTAL INVESTMENTS
(COST $873,926,116)(B) ...................... 113.3% 1,115,194,108
Liabilities in Excess Of Other Assets ....... (13.3) (130,981,960)
------ ------------
NET ASSETS .................................... 100.0% $ 984,212,148
====== ============
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(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 December 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $873,926,116, amounted to
$241,267,992 which consisted of aggregate gross unrealized appreciation of
$262,127,949 and aggregate gross unrealized depreciation of $20,859,957.
12
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..... $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
- ---------------------------------------------------------------------------------------------------
Net investment income (loss) ........... (0.09) (0.03)(i) (0.06) (0.06) (0.03)
Net realized and unrealized gain
(loss) on investments ................ 12.19 (1.45) 3.67 0.91 9.82
- ---------------------------------------------------------------------------------------------------
Total from investment operations ... 12.10 (1.48) 3.62 0.85 9.79
- ---------------------------------------------------------------------------------------------------
Dividends from net investment income ... -- -- -- -- (0.02)
Distributions from net realized gains .. -- (2.09) -- (0.38) --
- ---------------------------------------------------------------------------------------------------
Total Distributions ................ -- (2.09) -- (0.38) (0.02)
- ---------------------------------------------------------------------------------------------------
Net asset value, end of year ........... $ 39.41 $ 27.31 $ 30.88 $ 27.26 $ 26.79
===================================================================================================
Total Return ........................... 44.31% (4.38%) 13.28% 3.55% 57.54%
===================================================================================================
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $984,212 $397,037 $238,850 $135,718 $ 56,798
===================================================================================================
Ratio of expenses to average net assets 0.92% 0.96% 1.03% .98% 1.06%
===================================================================================================
Ratio of net investment income (loss) to
average net assets ................. (0.48%) (0.10%) (0.35%) (0.37%) (0.12%)
====================================================================================================
Portfolio Turnover Rate .............. 80.66% 17.61% 148.07% 108.06% 125.90%
====================================================================================================
(i) Amount was computed based on average shares outstanding during the period.
</TABLE>
See Notes to Financial Statements
13
<PAGE>
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
The Alger American Income and Growth Portfolio seeks a high level of dividend
income consistent with prudent investment mangement by investing in dividend
paying equity securities. Capital appreciation is a secondary objective of
the Portfolio.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 15, 1988
[The following table represents a chart in the printed piece]
Alger
American
Income and
Growth S&P 500
---------- -------
11/15/88 10,000 10,000
12/31/88 10,095 10,422
12/31/89 10,842 13,715
12/31/90 10,872 13,279
12/31/91 13,428 17,325
12/31/92 14,589 18,640
12/31/93 16,097 20,512
12/31/94 14,765 20,783
12/31/95 19,952 28,593
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American Income and Growth Portfolio and the S&P
500 on November 15, 1988, the inception date of the Alger American Income and
Growth Portfolio. Figures for the Alger American Income and Growth Portfolio
and the S&P 500, an unmanaged index of common stocks, include reinvestment of
dividends.
PERFORMANCE COMPARISON THROUGH DECEMBER 31, 1995
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS SINCE INCEPTION
----------------------------------------
ALGER AMERICAN INCOME
AND GROWTH PORTFOLIO 35.13% 12.91% 10.17%
S&P 500 37.58% 16.59% 15.88%
----------------------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST
ASSETS OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN FIGURES
WOULD BE LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
14
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--88.2% VALUE
------ -----
BUILDING &
CONSTRUCTION--4.5%
3,600 Continental Homes Holding Corp.+ ...................... $ 88,650
9,000 Pulte Corp ............................................ 302,625
-----------
391,275
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--18.2%
5,600 Altera Corporation* ................................... 278,600
7,100 Bay Networks Inc.* .................................... 291,988
3,900 Cisco Systems, Inc.* .................................. 291,038
4,700 Digital Equipment Corporation* ........................ 301,388
8,800 3 Com Corp.* .......................................... 410,300
-----------
1,573,314
-----------
COMPUTER SOFTWARE--3.4%
9,900 Informix Corporation* ................................. 297,000
-----------
DEFENSE--7.0%
3,850 Lockheed Martin Corporation ........................... 304,150
3,300 McDonnell Douglas Corporation ......................... 303,600
-----------
607,750
-----------
FINANCIAL SERVICES--7.2%
4,837 First Data Corporation ................................ 323,474
5,800 Merrill Lynch & Co., Inc. ............................. 295,800
-----------
619,274
-----------
HEALTHCARE--24.5%
5,600 Cardinal Health, Inc. ................................. 306,600
5,900 Columbia/HCA Healthcare Corporation ................... 299,425
5,300 Lilly (Eli) Co. ....................................... 298,125
5,300 Medtronic, Inc. ....................................... 296,138
4,600 Merck & Co., Inc. ..................................... 302,450
6,900 Omnicare, Inc.+ ....................................... 308,775
5,500 SmithKline Beecham PLC ADS+ ........................... 305,250
-----------
2,116,763
-----------
INSURANCE--7.2%
3,200 American International Group .......................... 296,000
5,100 Travelers Group Inc. .................................. 320,663
-----------
616,663
-----------
MANUFACTURING--4.1%
8,850 Precision Castparts Corp.+ ............................ 351,788
-----------
SEMICONDUCTORS--8.3%
2,500 Linear Technology Corporation ......................... 98,125
8,100 Maxim Integrated Products, Inc.* ...................... 311,850
8,300 Microchip Technology Incorporated*+ ................... 302,950
-----------
712,925
-----------
MISCELLANEOUS--3.8%
7,500 Service Corporation International ..................... 330,000
-----------
TOTAL COMMON STOCKS
(COST $6,252,431) ................................... 7,616,752
-----------
Principal SHORT-TERM INVESTMENTS--365.9%
Amount SHORT-TERM CORPORATE NOTES--127.1%
- -----------
$ 1,500,000 AT&T Corp.,
5.78%, 1/2/96 ............................... 1,499,759
1,750,000 American Honda Finance Corp.,
5.75%, 2/8/96 ............................... 1,739,378
1,500,000 Anheuser-Busch Companies Inc.,
5.85%, 1/3/96 ............................... 1,499,513
1,500,000 Bridgestone/Firestone Inc.,
6.08%, 1/4/96 ............................... 1,499,240
1,750,000 Mitsui & Co., (USA) Inc.,
5.68%, 1/26/96 .............................. 1,743,097
1,500,000 Philip Morris Cos. Inc.,
5.92%, 1/3/96 ............................... 1,499,504
1,500,000 Spiegel Funding Corp.,
6.00%, 1/2/96 ............................... 1,499,750
-----------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $10,980,241) ................................. 10,980,241
-----------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS--218.8%
19,000,000 U.S. Treasury Bills, 4.45%, 2/8/96
(Cost $18,910,753) ................................. 18,910,753
-----------
SECURITIES HELD
UNDER REPURCHASE
AGREEMENTS--20.0%
Securities Held Under Repurchase
Agreements, 5.80%-6.00%, 1/2/96,
with Bear, Stearns & Co. Inc., dtd 12/29/95,
repurchase price $1,726,553; collateralized
by U.S. Treasury Strips (par value
$4,355,000, due 2/15/11) ............................ 1,725,424
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $31,616,418) ................................ 31,616,418
-----------
TOTAL INVESTMENTS
(COST $37,868,849)(A) .................... 454.1% 39,233,170
Liabilities in Excess Of Other Assets (354.1) (30,593,711)
----- ------------
NET ASSETS ................................. 100.0% $ 8,639,459
===== ============
* Non-income producing security.
+ Securities partially or fully on loan.
(a)At December 31, 1995, the net unrealized appreciation on investments,
based on costs for federal income tax purposes of $37,868,849, amounted
to $1,364,321 which consisted of aggregate gross unrealized appreciation
of $1,417,926 and aggregate gross unrealized depreciation of $53,605.
See Notes to Financial Statements
15
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
- -------------------------------------------------------------------------------------------------------------
Net investment income 0.11(i) 0.17 0.07 0.08 0.09
Net realized and unrealized gain
(loss) on investments 4.54 (1.47) 1.37 1.02 2.41
- -------------------------------------------------------------------------------------------------------------
Total from investment operations 4.65 (1.30) 1.44 1.10 2.50
- -------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.16) (0.15) (0.06) (0.12) (0.09)
Distributions from net realized gains -- (0.56) -- (0.13) --
- -------------------------------------------------------------------------------------------------------------
Total Distributions (0.16) (0.71) (0.06) (0.25) (0.09)
- -------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 17.79 $ 13.30 $ 15.31 $ 13.93 $ 13.08
=============================================================================================================
Total Return 35.13% (8.28%) 10.34% 8.64% 23.51%
=============================================================================================================
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 8,639 $ 29,135 $ 31,895 $ 8,671 $ 2,663
=============================================================================================================
Ratio of expenses to average net assets .75% .75% .97% 1.25% 1.25%
=============================================================================================================
Decrease reflected in above expense ratios
due to expense reimbursements -- -- -- 0.01% 0.66%
=============================================================================================================
Ratio of net investment income to average
net assets 0.61% 1.22% 1.51% 1.62% 2.54%
=============================================================================================================
Portfolio Turnover Rate 164.05% 177.97% 105.80% 100.62% 61.11%
=============================================================================================================
(i) Amount was computed based on average shares outstanding during the period.
</TABLE>
16
<PAGE>
ALGER AMERICAN BALANCED PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
The Alger American Balanced Portfolio invests in stocks of companies with
growth potential and fixed-income securities, with emphasis on
income-producing securities which appear to have some potential for capital
appreciation.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION September 5, 1989
[The following table represents a chart in the printed piece]
Alger
American Lehman Govt/
Balanced S&P 500 Corp Bond Index
-------- ------- ---------------
09/05/89 10,000 10,000 10,000
12/31/89 10,265 10,170 10,399
12/31/90 10,933 9,847 11,261
12/31/91 11,447 12,847 13,077
12/31/92 12,535 13,822 14,067
12/31/93 13,511 15,210 15,623
12/31/94 12,935 15,410 15,075
12/31/95 16,638 21,201 17,975
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American Balanced Portfolio, the S&P 500, and
the Lehman Government/Corporate Bond Index on September 5, 1989, the
inception date of the Alger American Balanced Portfolio. Figures for the
Alger American Balanced Portfolio, the S&P 500, an unmanaged index of common
stocks, and the Lehman Government/Corporate Bond Index, an unmanaged index of
government and corporate bonds, include reinvestment of dividends and/or
interest.
PERFORMANCE COMPARISON THROUGH December 31, 1995
Average Annual Total Returns
1 Year 5 Years Since Inception
---------------------------------------
Alger American Balanced Portfolio 28.62% 8.75% 8.38%
S&P 500 37.58% 16.59% 12.63%
Lehman Corp./Gov't Bond Index 19.24% 9.80% 9.73%
----------------------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST
ASSETS OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN FIGURES
WOULD BE LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
17
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--81.9% VALUE
------ -----
BUILDING & CONSTRUCTION--2.2%
3,750 Clayton Homes, Inc. ......................... $ 80,156
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--15.6%
1,900 Altera Corporation* ......................... 94,525
2,350 Bay Networks Inc.* .......................... 96,644
1,300 Cisco Systems, Inc.* ........................ 97,013
2,800 Dell Computer Corporation* .................. 96,950
1,600 Digital Equipment Corporation* .............. 102,600
1,800 3 Com Corp.* ................................ 83,925
-----------
571,657
-----------
COMPUTER SOFTWARE--2.7%
3,300 Informix Corporation* ....................... 99,000
-----------
DEFENSE--2.7%
1,241 Lockheed Martin Corp. ....................... 98,039
-----------
FINANCIAL SERVICES--2.8%
1,513 First Data Corporation ...................... 101,182
-----------
HEALTHCARE--10.5%
1,900 Cardinal Health, Inc. ....................... 104,025
2,000 Columbia/HCA Healthcare Corporation ......... 101,500
1,500 Merck & Co., Inc. ........................... 98,625
1,100 Oxford Health Plans, Inc.* .................. 81,263
-----------
385,413
-----------
INSURANCE--2.5%
1,000 American International Group ................ 92,500
-----------
RESTAURANTS & LODGING--2.7%
2,600 Lone Star Steakhouse & Saloon, Inc.* ........ 99,775
-----------
RETAILING--2.6%
2,300 The Gap, Inc. ............................... 96,600
-----------
SEMICONDUCTORS--2.8%
2,700 Maxim Intergrated Products, Inc.* ........... 103,950
-----------
TOTAL COMMON STOCK
(COST $1,360,879) 1,728,272
....................................................... -----------
PRINCIPAL
AMOUNT CORPORATE BONDS--11.7% VALUE
- -------- -----
AUTOMOTIVE--5.9%
$200,000 Ford Motor Credit Corp.,
7.75%, 11/15/02 .......................... $ 217,912
----------
FINANCIAL SERVICES--2.9%
100,000 Associates Corp. of North America
7.50%, 4/15/02 ........................... 107,710
-----------
INSURANCE--2.9%
100,000 Travelers Inc.,
7.75%, 6/15/99 ........................... 105,644
-----------
TOTAL CORPORATE BONDS
(COST $403,681) .......................... 431,266
-----------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS--30.0%
200,000 U.S. Treasury Notes, 7.50%, 10/31/99 ....... 214,750
200,000 U.S. Treasury Notes, 7.50%, 5/15/02 ........ 221,906
200,000 U.S. Treasury Bonds, 7.625%, 11/15/22 ...... 241,562
200,000 Federal Home Loan Mortgage Corp.,
8.20%, 1/16/98 ........................... 205,812
200,000 Federal National Mortgage Association,
8.50%, 2/1/05 ............................ 219,126
-----------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (COST $989,251) 1,103,156
-----------
SHORT-TERM INVESTMENTS--271.0%
SHORT-TERM CORPORATE NOTES--122.5%
500,000 Anheuser-Busch Companies Inc.,
5.85%,1/3/96 ............................. 499,838
500,000 AT&T Corp.,
5.78%, 1/2/96 ............................ 499,920
500,000 Bridgestone/Firestone Inc.,
6.08%, 1/4/96 ............................ 499,747
500,000 Dupont (E.I.) De Nemours & Co.,
5.95%, 1/5/96 ............................ 499,669
500,000 GTE California Inc.,
5.92%, 1/5/96 ............................ 499,671
500,000 Mitsui & Co., (USA) Inc.,
5.68%, 1/26/96 ........................... 498,028
500,000 PHH Corp.,
5.95%, 1/2/96 ............................ 499,917
500,000 Philip Morris Cos. Inc.,
5.92%, 1/3/96 ............................ 499,835
500,000 Spiegel Funding Corp.,
6.00%, 1/2/96 ............................ 499,917
-----------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $4,496,542) ........................ 4,496,542
-----------
18
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995 (Cont'd)
- --------------------------------------------------------------------------------
SHORT-TERM
U.S. GOVERNMENT
OBLIGATIONS--135.6%
$5,000,000 U.S. Treasury Bills, 4.45%, 2/8/96 ......... $ 4,976,512
------------
(COST $4,976,512)
SECURITIES HELD UNDER
REPURCHASE
AGREEMENTS--12.9%
Securities Held Under Repurchase
Agreements, 5.80%, 1/2/96,
with Bear, Stearns & Co. Inc., dtd
12/29/95, repurchase price $474,547;
collateralized by U.S. Treasury Bonds
(par value $2,500,000, due
2/15/23) ................................. 474,242
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $9,947,296) ....................... 9,947,296
------------
TOTAL INVESTMENTS
(COST $12,701,107)(a) 359.8% 13,209,990
Liabilities in Excess Of Other Assets (259.8) (9,538,821)
------ ----------
NET ASSETS 100.0% $ 3,671,169
====== ============
* Non-income producing security.
(a)At December 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $12,701,107, amounted to $508,883
which consisted of aggregate gross unrealized appreciation of $522,176 and
aggregate gross unrealized depreciation of $13,293.
19
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO (I)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 10.80 $ 11.58 $ 10.77 $ 10.02 $ 10.01
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.33(ii) 0.20 0.15 0.22 0.45
Net realized and unrealized gain
(loss) on investments 2.73 (0.70) 0.69 0.72 0.01
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.06 (0.50) 0.84 0.94 0.46
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.22) (0.13) (0.03) (0.19) (0.45)
Distributions from net realized gains -- (0.15) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.22) (0.28) (0.03) (0.19) (0.45)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 13.64 $ 10.80 $ 11.58 $ 10.77 $ 10.02
====================================================================================================================================
Total Return 28.62% (4.27%) 7.79% 9.48% 4.70%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 3,671 $ 10,394 $ 7,848 $ 4,009 $ 1,487
====================================================================================================================================
Ratio of expenses to average net assets 1.00% 1.08% 1.25% 1.25% 1.25%
====================================================================================================================================
Decrease reflected in above expense ratios
due to expense reimbursements -- -- 0.19% 0.42% 1.37%
====================================================================================================================================
Ratio of net investment income to average
net assets 2.49% 2.30% 2.05% 1.99% 4.22%
====================================================================================================================================
Portfolio Turnover Rate 113.02% 78.80% 85.46% 15.27% --
====================================================================================================================================
</TABLE>
(i) Prior to October 1, 1992, the American Balanced Portfolio was the American
Fixed Income Portfolio.
(ii) Amount was computed based on average shares outstanding during the period.
20
<PAGE>
- --------------------------------------------------------------------------------
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
The Alger American MidCap Growth Portfolio invests in mid-sized companies.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION May 3, 1993
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece]
Alger
American
Midcap
Growth S&P Midcap 400
------ --------------
05/23/93 10,000 10,000
12/31/93 13,867 11,297
12/31/94 13,653 10,893
12/31/95 19,722 14,624
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American MidCap Growth Portfolio and the S&P
MidCap 400 on May 3, 1993, the inception date of the Alger American MidCap
Growth Portfolio. Figures for the Alger American MidCap Growth Portfolio and
the S&P MidCap 400, an unmanaged index of common stock, include reinvestment
of dividends.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH December 31, 1995
- --------------------------------------------------------------------------------
Average Annual Total Return
1 Year Since Inception
-------------------------------------
Alger American MidCap Growth Portfolio 44.45% 29.02%
S&P MidCap 400 30.95% 14.24%
-------------------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST ASSETS
OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN FIGURES WOULD BE
LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
21
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Shares COMMON STOCKS--91.6% Value
------ -----
APPAREL--.9%
38,000 Tommy Hilfiger Corporation* ............. $ 1,610,250
---------------
BIO-TECHNOLOGY--2.2%
42,300 Centocor, Inc.* ......................... 1,306,012
45,100 Genzyme Corp.--General Division* ........ 2,813,113
---------------
4,119,125
---------------
BUILDING AND
CONSTRUCTION--2.6%
118,025 Clayton Homes, Inc. ..................... 2,522,783
68,500 Pulte Corp. ............................. 2,303,313
---------------
4,826,096
---------------
COMMUNICATIONS--8.9%
30,000 America Online, Inc.*+ .................. 1,125,000
60,000 Ascend Communications, Inc.* ............ 4,867,500
47,800 DSC Communications Corporation* ......... 1,762,625
54,050 Glenayre Technologies Inc.* ............. 3,364,612
64,000 Tellabs, Inc.* .......................... 2,368,000
33,600 U.S. Robotics Corp.* .................... 2,948,400
---------------
16,436,137
---------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--13.3%
99,900 Altera Corporation* ..................... 4,970,025
104,850 Bay Networks Inc.* ...................... 4,311,955
101,300 Dell Computer Corporation* .............. 3,507,512
50,000 Digital Equipment Corporation* .......... 3,206,250
74,000 Seagate Technology*+ .................... 3,515,000
45,000 3 Com Corp.* ............................ 2,098,125
97,200 Xilinx Inc.* ............................ 2,964,600
---------------
24,573,467
---------------
COMPUTER SOFTWARE--4.9%
40,000 Broderbund Software, Inc.*+ ............. 2,430,000
10,000 Computron Software, Inc.* ............... 180,000
50,000 Electronics For Imaging Inc.* ........... 2,187,500
54,000 Informix Corporation* ................... 1,620,000
113,100 Softkey International Inc.*+ ............ 2,615,437
---------------
9,032,937
---------------
COMPUTER TECHNOLOGY--1.4%
35,000 Adaptec, Inc.* .......................... 1,435,000
64,000 General Datacomm Industries, Inc.* ...... 1,096,000
---------------
2,531,000
---------------
CONSUMER PRODUCTS--2.6%
70,500 CUC International Inc.* ................. 2,405,813
70,200 Oakley, Inc.* ........................... 2,386,800
---------------
4,792,613
---------------
Shares Value
------ -----
FINANCIAL SERVICES--4.8%
50,000 Advanta Corp., Class B .................. $ 1,818,750
55,506 First Data Corporation .................. 3,711,964
167,500 Money Store, Inc.+ ...................... 2,617,188
40,000 Schwab (Charles) Corporation (The)+ ..... 805,000
---------------
8,952,902
---------------
HEALTHCARE--20.5%
52,100 Apria Healthcare Group Inc.* ............ 1,471,825
145,600 Biochem Pharma Inc.*+ ................... 5,842,200
30,000 Boston Scientific Corporation* .......... 1,470,000
96,100 Cardinal Health, Inc. ................... 5,261,475
33,750 Health Management Associates, Inc.* ..... 881,719
158,800 Healthsource, Inc.* ..................... 5,716,800
45,000 IDEXX Laboratories Inc.* ................ 2,115,000
135,000 Liposome Company Inc.*+ ................. 2,700,000
66,500 MedPartners/Mullikin, Inc.*+ ............ 2,194,500
21,500 Nellcor Puritan Bennett Inc.*+ .......... 1,247,000
40,700 Oxford Health Plans, Inc.* .............. 3,006,713
119,550 Summit Technology Inc.*+ ................ 4,034,813
30,000 United Healthcare Corporation ........... 1,965,000
---------------
37,907,045
---------------
LEISURE &
ENTERTAINMENT--.5%
27,000 Mirage Resorts, Incorporated* ........... 931,500
---------------
POLLUTION CONTROL--3.1% .................
91,300 United Waste Systems, Inc.* ............. 3,400,925
127,700 USA Waste Services, Inc.* ............... 2,410,338
---------------
5,811,263
---------------
RESTAURANTS &
LODGING--5.6%
78,700 Boston Chicken Inc.*+ ................... 2,528,238
144,300 Lone Star Steakhouse & Saloon, Inc.* .... 5,537,513
63,500 Outback Steakhouse, Inc.* ............... 2,278,062
---------------
10,343,813
---------------
RETAILING--9.5%
40,600 Cintas Corp. ............................ 1,806,700
82,400 CompUSA Inc.*+ .......................... 2,564,700
45,000 The Gap, Inc. ........................... 1,890,000
90,000 Global DirectMail Corp.* ................ 2,475,000
25,000 Gucci Group NV*+ ........................ 971,875
240,200 OfficeMax, Inc.* ........................ 5,374,475
56,400 Viking Office Products Inc.* ............ 2,622,600
---------------
17,705,350
---------------
22
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995 (Cont'd)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS (Continued) Value
------ -----
SEMICONDUCTORS--7.1%
58,600 LSI Logic Corporation* .................. $ 1,919,150
80,000 Linear Technology Corporation ........... 3,140,000
151,800 Maxim Integrated Products, Inc.* ........ 5,844,300
65,000 Microchip Technology Incorporated* ...... 2,372,500
---------------
13,275,950
---------------
SEMICONDUCTORS
CAPITAL EQUIPMENT--.9%
35,000 ASM Lithography Holdings NV* ............ 1,163,750
23,300 Silicon Valley Group, Inc.* ............. 588,325
---------------
1,752,075
---------------
MISCELLANEOUS--2.8%
119,000 Service Corporation International ....... 5,236,000
---------------
TOTAL COMMON STOCKS
(COST $138,228,577) ................... 169,837,523
---------------
Principal
Amount SHORT TERM INVESTMENTS--16.3% Value
------ -----
SHORT-TERM
CORPORATE NOTES--6.7%
$5,000,000 Barnett Banks, Inc.
5.85%, 1/10/96 ........................ $ 4,992,688
7,500,000 Philip Morris Cos. Inc.
5.70%, 1/04/96 ........................ 7,496,437
---------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $12,489,125) .................... 12,489,125
---------------
SECURITIES HELD
UNDER REPURCHASE
AGREEMENTS--9.6%
Securities Held Under Repurchase
Agreements, 5.80%-6.00%, 1/2/96,
with Bear, Stearns & Co. Inc., dtd
12/29/95, repurchase price
$17,698,587; collateralized by
U.S. Treasury Bonds and U.S.
Treasury Strips (par value $62,675,000,
due 8/15/10-2/15/23) .................. 17,686,905
---------------
TOTAL SHORT-TERM INVESTMENTS
(COST $30,176,030) ..................... 30,176,030
---------------
TOTAL INVESTMENTS
(COST $168,404,607)(A) 107.9% 200,013,553
Liabilities in Excess Of Other Assets (7.9) (14,664,790)
-------- ---------------
NET ASSETS 100.0% $185,348,763
======== ================
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At December 31,1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $168,404,607, amounted to
$31,608,946 which consisted of aggregate gross unrealized appreciation of
$35,398,742 and aggregate gross unrealized depreciation of $3,789,796.
See Notes to Financial Statements.
23
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM MAY 3, 1993
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
------------------------------- OPERATIONS)
1995 1994 TO DECEMBER 31, 1993(I)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year $ 13.46 $ 13.72 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.03) 0.00(ii) (0.02)
Net realized and unrealized gain (loss) on investments 6.01 (0.21) 3.88
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.98 (0.21) 3.86
Distributions from net realized gains -- (0.05) (0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 19.44 $ 13.46 $ 13.72
====================================================================================================================================
Total Return 44.45% (1.54%) 38.67%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $185,349 $62,178 $21,301
====================================================================================================================================
Ratio of expenses to average net assets 0.90% 0.97% 1.50%
====================================================================================================================================
Decrease reflected in above expense ratio
due to expense reimbursements -- -- 0.03%
====================================================================================================================================
Ratio of net investment income (loss) to average
net assets (0.25%) 0.03% (0.58%)
====================================================================================================================================
Portfolio Turnover Rate 104.74% 83.96% 67.22%
====================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the period.
See Notes to Financial Statements.
24
<PAGE>
- --------------------------------------------------------------------------------
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH DECEMBER 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
The Alger American Leveraged AllCap Portfolio focuses on companies with
promising growth potential and uses some special investment tools such as
leveraging and options and futures transactions.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION January 25, 1995
- --------------------------------------------------------------------------------
[The following table represents a chart in the printed piece]
Alger
American
Leveraged
AllCap S&P 500
------ -------
01/25/95 10,000 10,000
12/31/95 17,430 13,489
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger American Leveraged AllCap Portfolio and the S&P
500 on January 25, 1995, the inception date of the Alger American Leveraged
AllCap Portfolio. Figures for the Alger American Leveraged AllCap Portfolio
and the S&P 500, an unmanaged index of common stocks, include reinvestment
of dividends.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH December 31, 1995
- --------------------------------------------------------------------------------
Cumulative Total Return
Since Inception
-------------------------
Alger American Leveraged AllCap Portfolio 74.30%
S&P 500 34.89%
-------------------------
PERFORMANCE FIGURES DO NOT REFLECT DEDUCTION OF INSURANCE CHARGES AGAINST
ASSETS OR ANNUITIES. IF THESE CHARGES WERE DEDUCTED, THE TOTAL RETURN
FIGURES WOULD BE LOWER. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
25
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995
- --------------------------------------------------------------------------------
Shares COMMON STOCKS--95.4% Value
------ -----
BIO-TECHNOLOGY--11.3%
3,500 CellPro Incorporated* .................... $ 56,000
3,000 Centocor, Inc.* .......................... 92,625
2,000 Cygnus Inc.* ............................. 44,750
3,400 Cytotherapeutics, Inc.* .................. 58,225
1,200 Genzyme Corp.-General Division* .......... 74,850
2,300 INCYTE Pharmaceuticals, Inc.* ............ 57,500
1,000 Myriad Genetics, Inc.* ................... 32,625
2,100 Oncogene Science, Inc.* .................. 19,950
3,000 Sepracor Inc.*+ .......................... 55,125
3,300 VISX, Inc.* .............................. 128,700
---------------
620,350
---------------
BUILDING & CONSTRUCTION--3.5%
1,000 Centex Corp. ............................ 34,750
4,250 Clayton Homes Inc. ...................... 90,843
1,000 Pulte Corp. ............................. 33,625
1,100 U.S. Home Corporation* .................. 32,038
---------------
191,256
---------------
CHEMICALS--1.5%
700 Monsanto Co. ............................ 85,750
---------------
COMMUNICATIONS--6.0%
1,300 Ascend Communications, Inc.* ............ 105,463
800 DSC Communications Corporation* ......... 29,500
2,000 DSP Communications, Inc.* ............... 87,250
850 Glenayre Technologies Inc.* ............. 52,912
1,100 Network Equipment Technologies, Inc.* ... 30,112
300 U.S. Robotics Corp.* .................... 26,325
---------------
331,562
---------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--17.3%
2,300 Altera Corporation* ..................... 114,425
3,300 Bay Networks Inc.* ...................... 135,713
1,650 Cisco Systems, Inc.* .................... 123,130
1,600 Compaq Computer Corporation* ............ 76,800
2,600 Digital Equipment Corporation* .......... 166,725
2,000 ESS Technology, Inc.* ................... 46,000
2,000 Network Appliance, Inc.* ................ 80,250
1,500 Teltrend, Inc.* ......................... 70,125
3,000 3 Com Corp.* ............................ 139,875
---------------
953,043
---------------
COMPUTER SOFTWARE--7.5%
2,000 Activision Inc.*+ ....................... 22,000
3,000 Comshare, Incorporated* ................. 78,000
600 Electronics For Imaging Inc.* ........... 26,250
1,600 EPIC Design Technology, Inc.* ........... 33,600
2,000 Inference Corp. Cl. A.* ................. 38,000
3,300 Informix Corporation* ................... 99,000
500 Maxis, Inc.*+ ........................... 19,000
Shares Value
------ -----
3,900 Softkey International Inc.*+ ............ $ 90,187
400 Tracor Inc.* ............................ 5,800
---------------
411,837
---------------
COMPUTER TECHNOLOGY--4.6%
2,100 Adaptec, Inc.* .......................... 86,100
1,000 C.P. Clare Corporation* ................. 20,500
2,000 General Datacomm Industries, Inc.* ...... 34,250
100 Pinnacle Systems, Inc.* ................. 2,475
2,000 Secure Computing Corporation* ........... 112,000
---------------
255,325
---------------
CONSUMER PRODUCTS--2.2%
2,000 Lauder (Estee) Companies, Inc. Class A* . 69,750
1,500 Oakley, Inc.* ........................... 51,000
---------------
120,750
---------------
DEFENSE--1.2%
700 McDonnell Douglas Corporation ........... 64,400
---------------
FINANCIAL SERVICES--3.9%
4,000 AMRESCO Inc. ............................ 51,000
1,400 First Data Corporation .................. 93,625
4,000 Money Store, Inc. ....................... 62,500
300 Schwab (Charles) Corporation (The)+ ..... 6,038
---------------
213,163
---------------
HEALTHCARE--19.7%
2,700 Biochem Pharma Inc.*+ ................... 108,337
2,300 Cardinal Health, Inc. ................... 125,925
1,000 HBO & Company ........................... 76,625
1,600 Healthsource, Inc.* ..................... 57,600
200 Hologic, Inc.* .......................... 8,200
2,400 Lilly (Eli) Co. ......................... 135,000
3,500 Liposome Company Inc.* .................. 70,000
2,250 Lunar Corp.*+ ........................... 61,875
2,000 Medpartners/Mullikin, Inc.* ............. 66,000
1,000 Medtronic, Inc. ......................... 55,875
200 Merck & Co., Inc. ....................... 13,150
500 Nellcor Puritan Bennett Inc.* ........... 29,000
1,000 Oxford Health Plans, Inc.* .............. 73,875
1,000 Quintiles Transnational Corp.* .......... 41,000
750 Summit Technology, Inc.*+ ............... 25,313
400 Target Therapeutics, Inc.* .............. 17,100
1,800 United Healthcare Corporation ........... 117,900
---------------
1,082,775
---------------
INSURANCE--2.0%
500 American International Group ............ 46,250
1,000 Travelers Group Inc. .................... 62,875
---------------
109,125
---------------
26
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1995 (Cont'd)
- --------------------------------------------------------------------------------
Shares COMMON STOCKS (CONTINUED) Value
------ -----
POLLUTION CONTROL--.4%
600 United Waste Systems, Inc.* ............. $ 22,350
---------------
RESTAURANTS & LODGING--2.7%
3,900 Lone Star Steakhouse & Saloon, Inc.* .... 149,663
---------------
RETAILING--1.2%
300 CompUSA Inc.* ........................... 9,338
500 The Gap, Inc. ........................... 21,000
200 Viking Office Products, Inc.* ........... 9,300
1,500 Williams-Sonoma, Inc.*+ ................. 27,750
---------------
67,388
---------------
SEMICONDUCTORS--7.2%
3,300 Linear Technology Corporation ........... 129,525
2,600 Maxim Integrated Products, Inc.* ........ 100,100
3,350 Microchip Technology Incorporated* ...... 122,275
3,000 Sandisk Corp.* .......................... 45,000
---------------
396,900
---------------
SEMICONDUCTORS CAPITAL
EQUIPMENT--.4%
850 Tencor Instruments* ..................... 20,719
---------------
MISCELLANEOUS--2.8%
1,500 DST Systems, Inc.* ...................... 42,750
2,500 Service Corporation International ....... 110,000
---------------
152,750
---------------
TOTAL COMMON STOCKS
(COST $4,845,395) ..................... 5,249,106
---------------
Principal
Amount SHORT-TERM INVESTMENTS--22.1% Value
------ -----
SHORT-TERM CORPORATE NOTES--16.4%
$200,000 Barnett Banks, Inc., 5.85%, 1/10/96 ..... $ 199,707
200,000 GTE California Inc., 5.92%, 1/5/96 ...... 199,868
100,000 Mitsui & Co. (USA) Inc., 5.68%, 1/26/96 . 99,606
200,000 Narragansett Electric Co., 6.00%, 1/3/96 199,933
200,000 United Parcel Service Of America Inc.,
5.85%, 1/4/96 ......................... 199,904
---------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $899,018) ....................... 899,018
---------------
SECURITIES HELD
UNDER REPURCHASE
AGREEMENTS--5.7%
Securities Held Under Repurchase
Agreements, 5.80%-6.00%, 1/2/96,
with Bear, Stearns & Co. Inc., dtd
12/29/95, repurchase price
$313,673; collateralized by
U.S. Treasury Strips
(par value $770,000, due
8/15/10) .............................. 313,467
---------------
TOTAL SHORT-TERM INVESTMENTS
(COST $1,212,485) ..................... 1,212,485
---------------
TOTAL INVESTMENTS
(COST $6,057,880)(A) .................. 117.5% 6,461,591
Liabilities in Excess Of Other Assets ... (17.5) (964,505)
-------- ---------------
NET ASSETS .............................. 100.0% $ 5,497,086
======== ===============
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At December 31, 1995, the net unrealized appreciation on
investments, based on cost for federal income tax purposes of
$6,057,880, amounted to $403,711, which consisted of aggregate
gross unrealized appreciation of $555,479 and aggregate gross
unrealized depreciation of $151,768.
See Notes to Financial Statements
27
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
FROM JANUARY 25, 1995
(COMMENCEMENT OF
OPERATIONS)
TO DECEMBER 31, 1995(I)
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
- --------------------------------------------------------------------------------
Net investment (loss) (0.03)
Net realized and unrealized gain (loss) on investments 7.46
- --------------------------------------------------------------------------------
Total from investment operations 7.43
- --------------------------------------------------------------------------------
Net asset value, end of period $ 17.43
================================================================================
Total Return 74.30%
================================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 5,497
================================================================================
Ratio of expenses excluding interest to average net assets 1.50%
================================================================================
Ratio of expenses including interest to average net assets 1.56%
================================================================================
Decrease reflected in above expense ratios
due to expense reimbursements 2.36%
================================================================================
Ratio of net investment (loss) to average net assets (0.71%)
================================================================================
Portfolio Turnover Rate 178.23%
================================================================================
Debt outstanding at end of period $ 0
================================================================================
Average amount of debt outstanding during the period $ 8,122
================================================================================
Average daily number of shares outstanding during the period 75,460
================================================================================
Average amount of debt per share during the period $ 0.11
================================================================================
(i) Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
28
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
SMALL INCOME
AMERICAN CAPITALIZA- AND
GROWTH TION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost*)--see accompany-
ing schedules of investments $506,690,636 $1,115,194,108 $39,233,170
Receivable for investment securities
sold -- 2,519,387 --
Receivable for shares of beneficial
interest sold 67,463,666 2,478,261 9,800
Interest and dividends receivable 213,098 107,348 55,403
Receivable from Investment
Manager--Note 3(a) -- -- --
Other assets 6,155 16,752 6,570
- ------------------------------------------------------------------------------------------------------------
Total Assets 574,373,555 1,120,315,856 39,304,943
- ------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities loaned 27,639,745 114,379,873 776,167
Payable for investment securities
purchased 43,329,864 18,273,986 --
Payable for shares of beneficial
interest redeemed 13,715 2,518,403 29,855,415
Interest payable -- -- --
Accrued investment management fees 258,354 674,370 20,688
Accrued expenses 158,338 257,076 13,214
- ------------------------------------------------------------------------------------------------------------
Total Liabilities 71,400,016 136,103,708 30,665,484
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $502,973,539 $ 984,212,148 $ 8,639,459
============================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $434,692,227 $ 769,498,764 $ (610,924)
Undistributed net investment
income (accumulated loss) 448,672 (4,389,480) 240,007
Undistributed net realized gain
(accumulated loss) 14,697,665 (22,165,128) 7,646,055
Net unrealized appreciation 53,134,975 241,267,992 1,364,321
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $502,973,539 $ 984,212,148 $ 8,639,459
============================================================================================================
Shares of beneficial interest
outstanding--Note 6 16,143,581 24,976,457 485,739
============================================================================================================
NET ASSET VALUE PER SHARE $ 31.16 $ 39.41 $ 17.79
============================================================================================================
*Identified cost $453,555,661 $ 873,926,116 $37,868,849
============================================================================================================
</TABLE>
THE ALGER AMERICAN FUND
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
AMERICAN MIDCAP LEVERAGED
BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost*)--see accompany-
ing schedules of investments $13,209,990 $200,013,553 $6,461,591
Receivable for investment securities
sold 1,172,674 -- --
Receivable for shares of beneficial
interest sold 16,430 830,074 118,620
Interest and dividends receivable 30,328 47,455 2,118
Receivable from Investment
Manager--Note 3(a) -- -- 8,549
Other assets 2,429 3,683 12
- ------------------------------------------------------------------------------------------------------------
Total Assets 14,431,851 200,894,765 6,590,890
- ------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities loaned -- 13,414,005 188,673
Payable for investment securities
purchased -- 1,950,213 886,306
Payable for shares of beneficial
interest redeemed 10,741,530 72 946
Interest payable -- -- 139
Accrued investment management fees 9,339 120,898 3,080
Accrued expenses 9,813 60,814 14,660
- ------------------------------------------------------------------------------------------------------------
Total Liabilities 10,760,682 15,546,002 1,093,804
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 3,671,169 $185,348,763 $5,497,086
============================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 676,343 $152,728,945 $5,210,790
Undistributed net investment
income (accumulated loss) 319,185 (304,781) (8,065)
Undistributed net realized gain
(accumulated loss) 2,166,758 1,315,653 (109,350)
Net unrealized appreciation 508,883 31,608,946 403,711
- ------------------------------------------------------------------------------------------------------------
NET ASSETS $ 3,671,169 $185,348,763 $5,497,086
============================================================================================================
Shares of beneficial interest
outstanding--Note 6 269,192 9,533,195 315,382
============================================================================================================
NET ASSET VALUE PER SHARE $ 13.64 $ 19.44 $ 17.43
============================================================================================================
*Identified cost $12,701,107 $168,404,607 $6,057,880
============================================================================================================
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
SMALL INCOME
AMERICAN CAPITALIZA- AND
GROWTH TION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 1,329,367 $ 2,298,429 $ 109,016
Dividends 1,263,383 618,628 401,049
- ------------------------------------------------------------------------------------------------------------
Total Income 2,592,750 2,917,057 510,065
- ------------------------------------------------------------------------------------------------------------
Expenses:
Management fees-- Note 3(a) 1,894,223 5,628,002 235,434
Interest expense -- -- --
Custodian fees 76,320 178,020 18,749
Transfer Agent fees 2,500 2,500 2,500
Professional fees 37,836 77,846 10,309
Trustees' fees 4,000 4,000 4,000
Miscellaneous 130,694 203,958 9,872
- ------------------------------------------------------------------------------------------------------------
2,145,573 6,094,326 280,864
Less, expense reimbursement
Note 3(a) -- -- --
- ------------------------------------------------------------------------------------------------------------
Total Expenses 2,145,573 6,094,326 280,864
- ------------------------------------------------------------------------------------------------------------
Net Investment Income
(Loss) 447,177 (3,177,269) 229,201
- ------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 15,710,698 (5,203,810) 10,080,314
Net change in unrealized appreciation
on investments 42,409,681 195,831,810 678,273
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 58,120,379 190,628,000 10,758,587
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $58,567,556 $187,450,731 $10,987,788
============================================================================================================
</TABLE>
THE ALGER AMERICAN FUND
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
AMERICAN MIDCAP LEVERAGED
BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO(*)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 409,706 $ 555,343 $ 7,631
Dividends 38,778 181,692 1,942
- ------------------------------------------------------------------------------------------------------------
Total Income 448,484 737,035 9,573
- ------------------------------------------------------------------------------------------------------------
Expenses:
Management fees-- Note 3(a) 96,391 900,673 9,604
Interest expense -- -- 690
Custodian fees 13,345 41,930 13,452
Transfer Agent fees 2,500 2,500 2,500
Professional fees 8,585 21,485 5,278
Trustees' fees 4,000 4,000 4,000
Miscellaneous 3,487 42,419 8,785
- ------------------------------------------------------------------------------------------------------------
128,308 1,013,007 44,309
Less, expense reimbursement
Note 3(a) -- -- (26,671)
- ------------------------------------------------------------------------------------------------------------
Total Expenses 128,308 1,013,007 17,638
- ------------------------------------------------------------------------------------------------------------
Net Investment Income
(Loss) 320,176 (275,972) (8,065)
- ------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on investments 2,423,578 3,625,757 (109,350)
Net change in unrealized appreciation
on investments 354,713 26,654,319 403,711
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 2,778,291 30,280,076 294,361
- ------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $3,098,467 $30,004,104 $286,296
============================================================================================================
</TABLE>
(*) Commenced operations January 25, 1995.
See Notes to Financial Statements.
30
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN
AMERICAN INCOME
AMERICAN SMALL AND
GROWTH CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH Cash flows from operating activities:
Interest received $ 1,284,056 $ 2,257,218 $ 107,560
Dividends received 1,284,564 651,822 412,621
Operating expenses paid (1,863,413) (5,537,740) (272,801)
Purchase of short-term securities, net (62,246,511) (56,163,927) (25,637,367)
Purchase of portfolio securities (466,813,895) (882,002,846) (57,052,607)
Proceeds from disposition of
portfolio securities 282,951,993 510,524,878 86,109,362
Other (1,195) (3,881) (4,977)
- ------------------------------------------------------------------------------------------------------------
Net cash (used for) provided
by operating activities (245,404,401) (430,274,476) 3,661,791
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (2,183,739) 0 (352,788)
Proceeds from shares sold and
dividends reinvested 336,098,077 689,235,046 14,937,635
Payments on shares redeemed (107,132,855) (293,464,899) (16,633,691)
Increase (decrease) in cash collateral
received on securities loaned 18,622,918 34,504,329 (1,612,947)
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities 245,404,401 430,274,476 (3,661,791)
- ------------------------------------------------------------------------------------------------------------
Net increase in cash 0 0 0
Cash--beginning of year 0 0 0
- ------------------------------------------------------------------------------------------------------------
Cash--end of year $ 0 $ 0 $
============================================================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH (USED FOR) PROVIDED
BY OPERATING ACTIVITIES:
Net increase in net assets
resulting from operations $ 58,567,556 $187,450,731 $10,987,788
(Increase) decrease in investments (279,282,731) (421,521,851) 4,803,370
(Increase) decrease in receivable for
investments sold 0 (619,287) 364,733
(Increase) decrease in interest and
dividends receivable (24,130) (8,017) 10,116
Increase (decrease) in payable
for investments purchased 33,174,315 (5,500,758) (1,748,723)
Net realized gain (loss) (15,710,698) 5,203,810 (10,080,314)
Net (increase) in unrealized appreciation (42,409,681) (195,831,810) (678,273)
Increase in accrued expenses 282,160 556,586 8,063
Net (increase) in other assets (1,192) (3,880) (4,969)
- ------------------------------------------------------------------------------------------------------------
Net cash (used for) provided by
operating activities $(245,404,401) $(430,274,476) $ 3,661,791
============================================================================================================
(*) Commenced operations January 25, 1995.
</TABLE>
THE ALGER AMERICAN FUND
STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
AMERICAN MIDCAP LEVERAGED
BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO(*)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH Cash flows from operating activities:
Interest received $ 415,577 $ 533,022 $ 5,907
Dividends received 39,342 177,458 1,548
Operating expenses paid (124,658) (897,315) (8,308)
Purchase of short-term securities, net (5,693,864) (10,380,018) (1,212,484)
Purchase of portfolio securities (12,041,910) (199,719,781) (6,310,543)
Proceeds from disposition of
portfolio securities 17,288,738 112,883,607 2,242,103
Other (1,596) (1,193) (12)
- ------------------------------------------------------------------------------------------------------------
Net cash (used for) provided
by operating activities (118,371) (97,404,220) (5,281,789)
- ------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (217,622) (10,668) 0
Proceeds from shares sold and
dividends reinvested 5,141,339 159,569,464 6,625,927
Payments on shares redeemed (4,020,864) (66,975,668) (1,532,811)
Increase (decrease) in cash collateral
received on securities loaned (784,482) 4,821,092 188,673
- ------------------------------------------------------------------------------------------------------------
Net cash provided by (used for)
financing activities 118,371 97,404,220 5,281,789
- ------------------------------------------------------------------------------------------------------------
Net increase in cash 0 0 0
Cash--beginning of year 0 0 0
- ------------------------------------------------------------------------------------------------------------
Cash--end of year $ 0 $ 0 $ 0
============================================================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH (USED FOR) PROVIDED
BY OPERATING ACTIVITIES:
Net increase in net assets
resulting from operations $3,098,467 $ 30,004,104 $ 286,296
(Increase) decrease in investments 764,087 (94,433,309) (6,167,231)
(Increase) decrease in receivable for
investments sold (963,254) 650,966 0
(Increase) decrease in interest and
dividends receivable 6,435 (26,555) (2,118)
Increase (decrease) in payable
for investments purchased (247,870) (3,433,850) 886,306
Net realized gain (loss) (2,423,578) (3,625,757) 109,350
Net (increase) in unrealized appreciation (354,713) (26,654,319) (403,711)
Increase in accrued expenses 3,650 115,692 17,879
Net (increase) in other assets (1,595) (1,192) (8,560)
- ------------------------------------------------------------------------------------------------------------
Net cash (used for) provided by
operating activities $ (118,371) $ (97,404,220) $(5,281,789)
============================================================================================================
</TABLE>
(*) Commenced operations January 25, 1995.
See Notes to Financial Statements.
31
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN
AMERICAN INCOME
AMERICAN SMALL AND
GROWTH CAPITALIZATION GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income (loss) $ 447,177 $ (3,177,269) $ 229,201
Net realized gain (loss) on investments 15,710,698 (5,203,810) 10,080,314
Net change in unrealized appreciation
on investments 42,409,681 195,831,810 678,273
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 58,567,556 187,450,731 10,987,788
Dividends to shareholders:
Net investment income (480,697) -- (352,788)
Net realized gains (1,703,042) -- --
Net increase (decrease) from
shares of beneficial interest
transactions-- Note 6 296,199,246 399,724,319 (31,130,440)
- ------------------------------------------------------------------------------------------------------------
Total increase (decrease) 352,583,063 587,175,050 (20,495,440)
Net Assets
Beginning of year 150,390,476 397,037,098 29,134,899
- ------------------------------------------------------------------------------------------------------------
End of year $ 502,973,539 $ 984,212,148 $ 8,639,459
============================================================================================================
Undistributed net investment income
(accumulated loss) $ 448,672 $ (4,389,480) $ 240,007
============================================================================================================
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
AMERICAN AMERICAN
AMERICAN MIDCAP LEVERAGED
BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO(*)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net investment income (loss) $ 320,176 $ (275,972) $ (8,065)
Net realized gain (loss) on investments 2,423,578 3,625,757 (109,350)
Net change in unrealized appreciation
on investments 354,713 26,654,319 403,711
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 3,098,467 30,004,104 286,296
Dividends to shareholders:
Net investment income (217,622) (10,668) --
Net realized gains -- -- --
Net increase (decrease) from
shares of beneficial interest
transactions-- Note 6 (9,604,163) 93,177,691 5,210,790
- ------------------------------------------------------------------------------------------------------------
Total increase (decrease) (6,723,318) 123,171,127 5,497,086
Net Assets
Beginning of year 10,394,487 62,177,636 --
- ------------------------------------------------------------------------------------------------------------
End of year $ 3,671,169 $ 185,348,763 $ 5,497,086
============================================================================================================
Undistributed net investment income
(accumulated loss) $ 319,185 $ (304,781) $ (8,065)
============================================================================================================
(*) Commenced operations January 25, 1995.
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN
AMERICAN INCOME AMERICAN
AMERICAN SMALL AND AMERICAN MIDCAP
GROWTH CAPITALIZATION GROWTH BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ 483,387 $ (280,867) $ 363,898 $ 217,713 $ 12,161
Net realized gain (loss) on investments 705,938 (17,564,040) (2,087,625) (256,903) (2,319,155)
Net change in unrealized appreciation
(depreciation) on investments 1,040,130 14,069,231 (1,210,449) (332,427) 2,842,601
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 2,229,455 (3,775,676) (2,934,176) (371,617) 535,607
Dividends to shareholders:
Net investment income (122,545) -- (296,743) (109,638) --
Net realized gains (6,409,484) (18,316,556) (1,140,543) (123,976) (122,328)
Net increase from shares of beneficial
interest transactions-- Note 6 79,815,236 180,279,205 1,611,518 3,151,811 40,463,768
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 75,512,662 158,186,973 (2,759,944) 2,546,580 40,877,047
Net Assets
Beginning of year 74,877,814 238,850,125 31,894,843 7,847,907 21,300,589
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $150,390,476 $ 397,037,098 $ 29,134,899 $ 10,394,487 $ 62,177,636
====================================================================================================================================
Undistributed net investment income
(accumulated loss) $ 482,192 $ (1,212,211) $ 363,594 $ 216,631 $ (18,141)
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
33
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
NOTE 1--GENERAL:
The Alger American Fund (the "Fund") is a diversified, open-end registered
investment company organized as an unincorporated business trust under the laws
of the Commonwealth of Massachusetts. The Fund operates as a series company
currently issuing six classes of shares of beneficial interest: American Growth
Portfolio, American Small Capitalization Portfolio, American Income and Growth
Portfolio, American Balanced Portfolio, American MidCap Growth Portfolio and
American Leveraged AllCap Portfolio (collectively "the Portfolios"). Shares of
the Portfolios are available and are being marketed exclusively as a pooled
funding vehicle for qualified retirement plans and for life insurance companies
writing all types of variable annuity contracts and variable life insurance
policies.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(a) INVESTMENT VALUATION: Investments of the Portfolios are valued at 4:00 p.m.
Eastern time on each day the New York Stock Exchange is open. 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 the 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
according to procedures established by the Board of Trustees to determine fair
value in good faith.
Securities having a remaining maturity of sixty days or less are valued at
amortized cost which approximates market value.
(b) SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on a trade date basis. Resulting receivables and payables are carried
at amounts which approximate fair value. Realized gains and losses from security
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) REPURCHASE AGREEMENTS: The Portfolios enter into repurchase agreements with
approved institutions, primarily U.S. Government securities dealers, and are
collateralized by U.S. Government securities. Such collateral is verified by the
investment manager as being either received and held in physical possession by
the custodian or as having been received by such custodian in book-entry form
through the Federal Reserve book-entry system. The investment manager monitors
the value of the collateral at the time the repurchase agreement is entered into
and on a daily basis during the term of the agreement to ensure that its value
equals or exceeds the agreed-upon repurchase price to be repaid to the
Portfolio. Additional collateral is obtained when necessary.
(d) LENDING OF PORTFOLIO SECURITIES: The Portfolios lend their securities to
financial institutions, including an affiliate of the custodian, provided that
the market value of securities loaned will not at any time exceed one-third of
the Portfolio's total assets. In order to protect against the risk of failure by
the borrower to return the securities loaned or any delay in the delivery of
such securities, the investment manager ensures that the loan is collateralized
by cash, letters of credit or U.S. Government securities that are maintained at
all times in an amount equal to at least 100 percent of the current market value
of the loaned securities. At December 31, 1995, the value of securities loaned
and cash collateral received thereon were as follows:
VALUE OF CASH
SECURITIES COLLATERAL
LOANED RECEIVED
--------- ---------
American Growth Portfolio............. $ 26,693,177 $ 27,639,745
American Small Capitalization
Portfolio.......................... 111,387,107 114,379,873
American Income and Growth
Portfolio.......................... 763,981 776,167
American Balanced Portfolio........... -- --
American MidCap Growth
Portfolio.......................... 12,981,913 13,414,005
American Leveraged AllCap
Portfolio.......................... 185,934 188,673
The Portfolios invest the cash collateral and rebate a portion of the interest
earned to the borrower of the securities. During the year ended December 31,
1995, the American Growth Portfolio, the American Small Capitalization
Portfolio, the American Income and Growth Portfolio, the American Balanced
Portfolio, the American MidCap Growth Portfolio and the American Leveraged
AllCap Portfolio received $57,569, $329,699, $9,625, $2,804, $33,854, and $408,
respectively, of stock loan fees, net of rebates paid. Such net fees are
included in interest income in the accompanying Statements of Operations.
(e) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded by
the Fund on the ex-dividend date.
Dividends from net investment income are declared and paid annually.
Dividends from net realized gains, offset by any loss carry forward, are
declared and paid annually after the end of the fiscal year in which earned.
34
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
(f) FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income of each Portfolio to its
respective shareholders. Therefore, no federal income tax provision is required.
Each Portfolio is treated as a separate entity for the purpose of determining
such compliance.
(g) EXPENSES: The Fund accounts separately for the assets, liabilities and
operations of each Portfolio. Expenses directly attributable to each Portfolio
are charged to that Portfolio's operations; expenses which are applicable to all
Portfolios are allocated among them.
(h) OTHER: The negative balance in paid-in-capital for the American Income and
Growth Portfolio as of December 31, 1995 is the result of payments for fund
shares redeemed exceeding the receipts for fund shares sold on an aggregate
basis.
NOTE 3--INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to the
provisions of the Investment Management Agreements (the "Agreements") with Fred
Alger Management, Inc. ("Alger Management"), are payable monthly and computed
based on the average daily net assets of each Portfolio at the following annual
rates:
American Growth Portfolio..................................... .750%
American Small Capitalization Portfolio....................... .850
American Income and Growth Portfolio.......................... .625
American Balanced Portfolio................................... .750
American MidCap Growth Portfolio.............................. .800
American Leveraged AllCap Portfolio........................... .850
The Agreements further provide that if in any fiscal year the aggregate
expenses, excluding interest, taxes, brokerage commissions, and extraordinary
expenses, of the American Growth Portfolio exceed 1.50%; the American Small
Capitalization Portfolio exceed 1.50%; the American Income and Growth Portfolio
exceed 1.25%; the American Balanced Portfolio exceed 1.25%; the American MidCap
Growth Portfolio exceed 1.50% and the American Leveraged AllCap Portfolio exceed
1.50% of the average daily net assets of the applicable Portfolio, Alger
Management will reimburse that Portfolio for the excess expenses. For the year
ended December 31, 1995, Alger Management reimbursed the American Leveraged
AllCap Portfolio $26,671.
(b) BROKERAGE COMMISSIONS: During the year ended December 31, 1995, the American
Growth Portfolio, American Small Capitalization Portfolio, American Income and
Growth Portfolio, American Balanced Portfolio, American MidCap Growth Portfolio
and the American Leveraged AllCap Portfolio paid Fred Alger & Company,
Incorporated ("Alger Inc.") $815,307, $697,538, $154,254, $25,463, $326,893 and
$4,108, respectively, in connection with securities transactions.
(c) TRANSFER AGENCY FEES: The Fund has entered into a transfer agency agreement
with Alger Shareholder Services, Inc. ("Services"), whereby Services will act as
transfer agent for the Fund for a fee of $2,500 per year, per Portfolio plus
out-of-pocket expenses.
(d) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the
Fund are directors and officers of Alger Management, Alger Inc. and Services. At
December 31, 1995, Alger Inc. and affiliates owned 35,482 shares, 21,919 shares,
1,122 shares, 1,464 shares, 1 share, and 24,501 shares of the American Growth
Portfolio, American Small Capitalization Portfolio, American Income and Growth
Portfolio, American Balanced Portfolio, American MidCap Growth Portfolio and
American Leveraged AllCap Portfolio, respectively.
NOTE 4--SECURITIES TRANSACTIONS:
Purchases and sales of securities, other than short-term securities, for the
year ended December 31, 1995, were as follows:
PURCHASES SALES
--------- -----
American Growth Portfolio............. $499,988,210 $282,949,942
American Small Capitalization
Portfolio.......................... 876,502,088 511,075,264
American Income and Growth
Portfolio.......................... 55,303,884 85,744,658
American Balanced Portfolio........... 11,794,040 18,252,029
American MidCap Growth
Portfolio.......................... 196,285,931 112,233,087
American Leveraged AllCap
Portfolio.......................... 7,196,849 2,242,107
NOTE 5--SHORT-TERM BORROWINGS:
The American Leveraged AllCap Portfolio has a line of credit with a bank whereby
it may borrow up to one-third of its assets, as defined, up to a maximum of
$25,000,000. Such borrowings have a variable interest rate and are payable on
demand. For the period ended December 31, 1995, the Portfolio had borrowings
which averaged $8,122 at a weighted average interest rate of 8.97%.
NOTE 6--SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value.
35
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1995
- --------------------------------------------------------------------------------
During the year ended December 31, 1995, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------ -------
American Growth
Portfolio:
Shares sold....................... 13,397,031 $401,141,672
Dividends reinvested.............. 84,119 2,183,739
--------- -----------
13,481,150 403,325,411
Shares redeemed...................... (3,839,223) (107,126,165)
--------- -----------
Net increase.................... 9,641,927 $296,199,246
========= ===========
SHARES AMOUNT
------ -------
American Small Capitalization
Portfolio:
Shares sold....................... 18,702,535 $ 691,048,373
Shares redeemed...................... (8,263,881) (291,324,054)
--------- -----------
Net increase.................... 10,438,654 $ 399,724,319
========= ===========
SHARES AMOUNT
------ -------
American Income and Growth
Portfolio:
Shares sold....................... 887,706 $ 14,574,940
Dividends reinvested.............. 23,363 352,788
--------- -----------
911,069 14,927,728
Shares redeemed...................... (2,616,215) (46,058,168)
--------- -----------
Net decrease....................... (1,705,146) $ (31,130,440)
========= ===========
SHARES AMOUNT
------ -------
American Balanced
Portfolio:
Shares sold....................... 392,582 $ 4,925,776
Dividends reinvested.............. 18,568 217,622
--------- -----------
411,150 5,143,398
Shares redeemed...................... (1,104,001) (14,747,561)
--------- -----------
Net decrease....................... (692,851) $ (9,604,163)
========= ===========
SHARES AMOUNT
------ -------
American MidCap Growth
Portfolio:
Shares sold....................... 8,606,684 $ 160,082,716
Dividends reinvested.............. 706 10,668
--------- -----------
8,607,390 160,093,384
Shares redeemed...................... (3,694,620) (66,915,693)
--------- -----------
Net increase.................... 4,912,770 $ 93,177,691
========= ===========
SHARES AMOUNT
------ -------
American Leveraged AllCap
Portfolio:
Shares sold....................... 405,310 $ 6,744,547
Shares redeemed...................... (89,928) (1,533,757)
--------- -----------
Net increase.................... 315,382 $ 5,210,790
========= ===========
During the year ended December 31, 1994, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------ -------
American Growth
Portfolio:
Shares sold....................... 5,373,649 $124,532,301
Dividends reinvested.............. 304,524 6,532,029
--------- -----------
5,678,173 131,064,330
Shares redeemed...................... (2,211,790) (51,249,094)
--------- -----------
Net increase.................... 3,466,383 $ 79,815,236
========= ===========
SHARES AMOUNT
------ -------
American Small Capitalization
Portfolio:
Shares sold....................... 12,403,211 $335,183,769
Dividends reinvested.............. 711,599 18,316,556
--------- -----------
13,114,810 353,500,325
Shares redeemed...................... (6,312,212) (173,221,120)
--------- -----------
Net increase.................... 6,802,598 $180,279,205
========= ===========
SHARES AMOUNT
------ -------
American Income and Growth
Portfolio:
Shares sold....................... 682,155 $ 9,507,480
Dividends reinvested.............. 112,640 1,437,286
--------- -----------
794,795 10,944,766
Shares redeemed...................... (686,690) (9,333,248)
--------- -----------
Net increase.................... 108,105 $ 1,611,518
========= ===========
SHARES AMOUNT
------ -------
American Balanced
Portfolio:
Shares sold....................... 413,116 $ 4,551,206
Dividends reinvested.............. 22,313 233,615
--------- -----------
435,429 4,784,821
Shares redeemed...................... (151,358) (1,633,010)
--------- -----------
Net increase.................... 284,071 $ 3,151,811
========= ===========
SHARES AMOUNT
------ -------
American MidCap Growth
Portfolio:
Shares sold....................... 3,901,955 $ 51,365,282
Dividends reinvested.............. 9,794 122,329
--------- -----------
3,911,749 51,487,611
Shares redeemed...................... (843,779) (11,023,843)
--------- -----------
Net increase.................... 3,067,970 $ 40,463,768
========= ===========
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND
BOARD OF TRUSTEES OF THE ALGER AMERICAN FUND:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of The Alger American Fund (a Massachusetts
business trust comprising, respectively, the Alger American Growth Portfolio,
Alger American Small Capitalization Portfolio, Alger American Income and Growth
Portfolio, Alger American Balanced Portfolio, Alger American MidCap Growth
Portfolio and Alger American Leveraged AllCap Portfolio) as of December 31,
1995, and the related statements of operations and cash flows for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Alger American Fund as of December
31, 1995, the results of their operations and cash flows for the year then
ended, the changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
February 5, 1996
