================================================================================
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
|
SEMI-ANNUAL | JUNE 30, 1998
REPORT | (UNAUDITED)
|
================================================================================
<PAGE>
Fellow Shareholders: JULY 23, 1998
A YEAR-TO-DATE REVIEW
For the first half of this year, the market has been divided into three distinct
periods. Each period has exemplified a real economic and stock market theme. The
first began on January 2, the first day of trading, when the Dow closed slightly
below 8000. It lasted exactly one month, ending on January 30. During this time,
the Dow was essentially flat, point-to-point. However, it did drop as low as
7600 mid-month. The primary theory of the market throughout this period was that
the Asian economic crisis would slow the American economy, leading to depressed
earnings.
The second period began on February 2nd when it became apparent that events in
Asia were not hurting the American economy. Moreover, the Federal Reserve had
retreated to a position of neutrality. This period extended through April 21,
during which time the Dow traded up in a fairly uniform manner with an intra-day
high above 9250. During this stretch, the market came to believe that Asia would
not affect the American economy nor would the Fed intervene by raising
short-term rates.
The third period began with a WALL STREET JOURNAL article suggesting that the
economy was so strong that the Fed would have to raise rates at the May Federal
Open-Market Committee meeting to guard against a jump in inflation. Most of the
economic data certainly did suggest that the economy was growing at a rapid pace
and there would have been an obvious case for higher rates had there been any
signs of rising inflation. However, inflation continued to drop. At the same
time, the situation in Asia was deteriorating to an alarming degree. The
outbreak of rioting in Indonesia and labor unrest in Korea caused investors to
worry that political and social unrest could jeopardize the already difficult
task of restoring economic and financial stability. Meanwhile, the Japanese
economy had slipped back into a recession. The Japanese yen continued to fall as
investors lost confidence in the Japanese government's ability to redress the
problems underlying the economy's malaise. The weakening Japanese economy,
together with the drop in the yen, was seen as accelerating the entire region's
financial and economic decline. To make matters even more alarming, Russia's
financial difficulties intensified. Worries mounted that the financial crisis in
Asia was spreading and threatening to swamp other countries. The impact of the
Asian downturn on the U.S. economy became more visible as the U.S. trade deficit
widened and more and more American companies began to warn that their earnings
would fall far short of expectations.
Needless to say, these two theories -- an unstoppable economy versus an economy
being dragged down by trouble overseas -- were somewhat mutually exclusive. It
is not too surprising that the market became quite rattled and began to trade in
a flat range with a high of 9200 and a low of approximately 8600. Stocks of
companies producing goods and services for the domestic economy fared well since
their earnings met or exceeded expectations and, therefore, gained favor with
investors. Investors deserted companies whose exposure to Asia or to basic
commodities cut into earnings. Thus, careful stock selection made a significant
difference and contributed to the strong performance of the Portfolios.
LOOKING AHEAD
Since the situation in Asia is likely to remain highly uncertain, investor
sentiment, we believe, will oscillate between guarded optimism and pessimism
and, as a result, the financial markets both here and abroad will continue to be
highly volatile. We expect economic conditions in the U.S. to remain
constructive, but the rate of growth should slow in response to the weakness in
the manufacturing sector. Investors will continue to favor companies which are
able to produce solid earnings gains in a challenging economic environment. We
believe that high quality growth companies with the ability to generate high
levels of earnings should continue to perform well.
Respectfully submitted,
/s/David D. Alger
----------------------
David D. Alger
President
<PAGE>
TABLE OF CONTENTS
Alger American Growth Portfolio:
Schedule of Investments............................................... 3-4
Financial Highlights.................................................. 5
Alger American Small Capitalization Portfolio:
Schedule of Investments............................................... 6-7
Financial Highlights.................................................. 8
Alger American Income and Growth Portfolio:
Schedule of Investments............................................... 9-10
Financial Highlights.................................................. 11
Alger American Balanced Portfolio:
Schedule of Investments...............................................12-13
Financial Highlights.................................................. 14
Alger American MidCap Growth Portfolio:
Schedule of Investments...............................................15-16
Financial Highlights.................................................. 17
Alger American Leveraged AllCap Portfolio:
Schedule of Investments...............................................18-19
Financial Highlights.................................................. 20
Statements of Assets and Liabilities....................................... 21
Statements of Operations................................................... 22
Statement of Cash Flows (Alger American Leveraged AllCap Portfolio)........ 23
Statements of Changes in Net Assets........................................ 24
Notes to Financial Statements..............................................25-27
2
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--93.0% VALUE
------ -----
APPLIANCES & TOOLS--.5%
114,300 Black & Decker Corp. .................... $ 6,972,300
------------
BROADCASTING--.9%
399,500 CBS Corp. ............................... 12,684,125
------------
BUILDING & CONSTRUCTION--1.6%
381,700 Masco Corp. ............................. 23,092,850
------------
BUSINESS SERVICES--2.5%
412,200 Cognizant Corp. ......................... 25,968,600
238,000 H&R Block Inc. .......................... 10,025,750
------------
35,994,350
------------
COMMUNICATIONS--5.8%
423,600 America Online Inc. ..................... 44,901,600
805,200 WorldCom Inc.* .......................... 39,002,278
------------
83,903,878
------------
COMMUNICATION EQUIPMENT--5.1%
147,200 Ascend Communications, Inc.*+ ........... 7,295,674
222,000 Bay Networks Inc.* ...................... 7,159,500
299,400 CIENA Corporation* ...................... 20,845,725
419,800 Cisco Systems, Inc.* .................... 38,648,046
------------
73,948,945
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--2.7%
943,200 Compaq Computer Corp. ................... 26,763,300
113,900 International Business Machines Corp. ... 13,077,201
------------
39,840,501
------------
COMPUTER SERVICES--.9%
289,500 Network Associates Inc.* ................ 13,859,813
------------
COMPUTER SOFTWARE--7.3%
526,800 Compuware Corp.* ........................ 26,932,650
919,300 HBO & Company ........................... 32,405,325
429,200 Microsoft Corporation* .................. 46,514,550
------------
105,852,525
------------
CONGLOMERATE--3.0%
699,180 Tyco International Ltd.+ ................ 44,048,340
------------
CONTAINERS--.9%
288,500 Owens-Illinois Inc.*+ ................... 12,910,375
------------
DRUG DISTRIBUTION--2.7%
217,700 Cardinal Health, Inc.+ .................. 20,409,375
228,800 McKesson Corp. .......................... 18,590,000
------------
38,999,375
------------
ENERGY & ENERGY SERVICES--1.0%
279,100 AES Corp* ............................... 14,670,333
------------
FINANCIAL SERVICES--17.4%
208,700 BankAmerica Corp. ....................... 18,039,611
250,000 BankBoston Corp. ........................ 13,906,250
422,500 Bank of New York Inc. ................... 25,640,680
287,000 Chase Manhattan Corp. ................... 21,668,500
399,800 Federal Home Loan Mortgage Corporation .. 18,815,787
127,000 First Chicago NBD Corp. ................. 11,255,375
471,400 First Union Corp. ....................... 27,459,050
589,200 Household International Inc.+ ........... 29,312,700
270,000 Kansas City Southern Industries Inc. .... 13,398,750
519,905 Morgan Stanley Dean Witter & Co. ........ 47,506,319
241,900 NationsBank Corp. . .................... 18,505,350
230,800 Schwab (Charles) Corporation (The) ...... 7,501,000
------------
253,009,372
------------
FOOD CHAINS--2.8%
150,000 Fred Meyer, Inc.* ....................... 6,375,000
850,600 Safeway Inc.* ........................... 34,609,213
------------
40,984,213
------------
INSURANCE--6.1%
218,350 American International Group, Inc. ...... 31,879,100
264,300 MGIC Investment Corp.+ .................. 15,081,751
689,900 Travelers Group Inc.+ ................... 41,825,188
------------
88,786,039
------------
LEISURE & ENTERTAINMENT--3.5%
886,600 Carnival Corp. .......................... 35,131,525
657,700 International Game Technology ........... 15,949,225
------------
51,080,750
------------
MEDICAL DEVICES--.8%
64,400 Guidant Corp. ........................... 4,592,557
114,500 Medtronic, Inc. ......................... 7,299,375
------------
11,891,932
------------
PHARMACEUTICALS--11.6%
255,000 Bristol Myers Squibb Co. ................ 29,309,190
155,000 Elan Corp PLC-ADR* ...................... 9,968,515
101,000 Eli Lilly & Company ..................... 6,672,363
369,300 Pfizer Inc. ............................. 40,138,478
434,100 Schering-Plough Corporation ............. 39,774,413
619,800 Warner-Lambert Co. ...................... 42,998,625
------------
168,861,584
------------
POLLUTION CONTROL--2.2%
652,700 USA Waste Services, Inc.* ............... 32,227,063
------------
3
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED) (CONT'D)
================================================================================
SHARES COMMON STOCKS (Continued) VALUE
------ -----
RETAILING--8.7%
712,400 CVS Corp.+ ..................................... $ 27,739,431
507,150 Home Depot, Inc. ............................... 42,125,400
312,000 Kmart Corp.* ................................... 6,006,000
300,000 Staples Inc.* .................................. 8,681,400
689,600 Wal-Mart Stores Inc. ........................... 41,893,200
--------------
126,445,431
--------------
TOYS--.5%
186,200 Mattel Inc.+ ................................... 7,878,681
--------------
TRANSPORTATION--4.5%
550,400 AMR Corp.* ..................................... 45,820,800
208,150 Burlington Northern Santa Fe Co. ............... 20,437,831
--------------
66,258,631
--------------
TOTAL COMMON STOCKS
(COST $975,184,574) ........................... 1,354,201,406
--------------
PREFERRED STOCK--1.2%
COMMUNICATION EQUIPMENT
246,000 Nokia Corporation, ADR
(COST $11,858,295) ............................. 17,850,498
--------------
PRINCIPAL
AMOUNT
- --------- SHORT-TERM CORPORATE NOTES--6.9%
$ 5,000,000 Cooperative Association of Tractor Dealers Inc.,
5.60%, 7/2/98 ................................. $ 4,999,222
10,000,000 General Electric Capital Services Inc.,
5.57%, 7/14/98 ................................ 9,979,886
15,000,000 General Motors Acceptance Corp.,
5.62%, 7/13/98 ................................ 14,971,900
25,000,000 Lexington Parker Capital Co. LLC,
5.57%, 7/2/98(a) .............................. 24,996,132
30,000,000 Merrill Lynch & Co. Inc.,
5.60%, 7/13/98 ................................ 29,944,000
15,000,000 Repsol International Finance B. V.,
5.43%, 7/2/98 ................................. 14,997,738
-------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $99,888,878) ............................ 99,888,878
-------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--1.0%
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $14,929,448; collateralized
by U.S. Treasury Strips (par value
$39,480,000 due 11/15/10-5/15/20) ............ 14,927,224
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $114,816,102) ........................... 114,816,102
--------------
TOTAL INVESTMENTS
(COST $1,101,858,971)(B) 102.1% 1,486,868,006
Liabilities in Excess of Other Assets (2.1) (29,962,348)
----- --------------
NET ASSETS 100.0% $1,456,905,658
===== ==============
- --------------------------------------------------------------------------------
* 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 June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $1,101,858,971, amounted to
$385,009,035 which consisted of aggregate gross unrealized appreciation of
$388,835,062 and aggregate gross unrealized depreciation of $3,826,027.
See Notes to Financial Statements.
4
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
====================================================================================================================================
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------------------
JUNE 30, 1998(i) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 42.76 $ 34.33 $ 31.16 $ 23.13 $ 24.67 $ 20.17
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.02 0.13 0.12 0.02 0.07 0.03
Net realized and unrealized gain on investments 10.83 8.66 4.00 8.33 0.15 4.50
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 10.85 8.79 4.12 8.35 0.22 4.53
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.13) (0.13) (0.02) (0.07) (0.03) (0.03)
Distributions from net realized gains (7.82) (0.23) (0.93) (0.25) (1.73) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (7.95) (0.36) (0.95) (0.32) (1.76) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 45.66 $ 42.76 $ 34.33 $ 31.16 $ 23.13 $ 24.67
====================================================================================================================================
Total Return 27.04% 25.75% 13.35% 36.37% 1.45% 22.47%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $1,456,906 $1,072,529 $991,028 $502,974 $150,390 $74,878
====================================================================================================================================
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.85% 0.86% 0.97%
====================================================================================================================================
Ratio of net investment income to average
net assets 0.13% 0.27% 0.50% 0.18% 0.48% 0.25%
====================================================================================================================================
Portfolio Turnover Rate 48.88% 129.50% 82.86% 118.33% 111.76% 112.64%
====================================================================================================================================
Average Commission Rate Paid $ .0707 $ .0697 $ .0683
====================================================================================================================================
(i) Unaudited. Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statments.
</TABLE>
5
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--93.6% VALUE
------ -----
AEROSPACE--.3%
275,500 Aviall Inc.* ...................................... $ 3,771,044
-----------
APPAREL--1.1%
277,400 Brylane Inc.* ..................................... 12,760,400
-----------
BIO-TECHNOLOGY--2.4%
162,400 IDEC Pharmaceuticals Corporation*+ ................ 3,826,631
498,000 INCYTE Pharmaceuticals, Inc.* ..................... 16,994,250
102,000 MedImmune Inc.*+ .................................. 6,362,250
-----------
27,183,131
-----------
BUSINESS SERVICES--3.2%
226,000 Cognizant Corp. ................................... 14,238,000
289,800 Rent-Way Inc.*+ ................................... 8,838,900
185,900 United Stationers Inc.*+ .......................... 12,037,025
-----------
35,113,925
-----------
COMMUNICATIONS--5.9%
160,300 America Online Inc. ............................... 16,991,800
63,524 Clear Channel Communications, Inc.* ............... 6,932,057
322,300 Jacor Communications Inc.*+ ....................... 19,015,700
825,150 Outdoor Systems, Inc.* ............................ 23,104,200
----------
66,043,757
----------
COMMUNICATION EQUIPMENT--3.3%
363,400 Ascend Communications, Inc.* ...................... 18,011,194
180,000 CIENA Corporation.* ............................... 12,532,500
175,900 Visual Networks, Inc.* ............................ 6,442,338
-----------
36,986,032
-----------
COMPUTER SERVICES--5.7%
175,000 International Telecommunication
Data Systems Inc.* ............................ 5,075,000
166,100 Keane Inc.* ....................................... 9,301,600
383,250 Network Associates Inc.* .......................... 18,348,094
158,700 QRS Corp.*+ ....................................... 5,971,088
411,900 Technology Solutions Co.* ......................... 13,052,287
71,000 Yahoo Inc.*+ ...................................... 11,182,500
-----------
62,930,569
-----------
COMPUTER SOFTWARE--6.9%
362,000 CBT Group PUB LTD ADR* ............................ 19,367,000
70,000 Citrix Systems, Inc.* ............................. 4,786,250
220,000 Compuware Corp.* .................................. 11,247,500
200,000 HBO & Company ..................................... 7,050,000
235,000 Intuit Inc.*+ ..................................... 14,393,750
398,300 Saville Systems PLC ADR*+ ......................... 19,964,788
----------
76,809,288
----------
CONSUMER PRODUCTS--1.4%
191,500 Furniture Brands International Inc.* .............. 5,374,065
131,150 Pittway Corp. Cl. A ............................... 9,688,705
----------
15,062,770
----------
DRUG DISTRIBUTION--3.8%
121,100 Bergen Brunswig Corp. Cl. A ....................... 5,616,013
248,500 McKesson Corp. .................................... 20,190,625
420,500 Omnicare, Inc.+ ................................... 16,031,562
-------------
41,838,200
-------------
ENGINEERING--.2%
87,500 SunSource Inc. .................................... 1,903,125
-------------
FINANCIAL SERVICES--8.1%
219,200 CMAC Investment Corp. ............................. 13,480,800
133,717 Commerce Bancshares Inc. . ....................... 6,527,128
78,300 Dime Community Bancorp, Inc. . ................... 2,344,145
119,000 Finova Group Inc. ................................. 6,738,375
384,900 IndyMac Mortgage Holdings Inc. .................... 8,756,475
378,000 Kansas City Southern Industries Inc. .............. 18,758,250
205,000 National Commerce Bancorp+ ........................ 8,584,375
330,000 North Fork Bancorp Inc. ........................... 8,064,540
573,600 Sovereign Bancorp Inc. ............................ 9,374,918
126,500 Wilmington Trust Corp. ............................ 7,700,688
-------------
90,329,694
-------------
FOOD CHAINS--1.9%
366,000 Fred Meyer, Inc.* ................................. 15,555,000
94,900 Whole Foods Market Inc.* .......................... 5,741,450
-------------
21,296,450
-------------
FOODS & BEVERAGES--6.5%
260,000 Aurora Foods Inc.* ................................ 5,492,500
326,620 CKE Restaurants Inc. .............................. 13,473,075
250,100 Earthgrains Company ............................... 13,974,338
433,100 Flowers Industries Inc. ........................... 8,851,698
321,300 Interstate Bakeries Corp.+ ........................ 10,663,304
222,100 Keebler Foods Co.* ................................ 6,107,750
81,500 Suiza Foods Corp.* ................................ 4,864,572
263,500 U.S. Foodservice* ................................. 9,239,100
-------------
72,666,337
-------------
HEALTH CARE--.5%
97,600 Universal Health Services Inc. Cl. B*+ ............ 5,697,400
-------------
INSURANCE--1.3%
300,000 Enhance Financial Services Group Inc.+ ............ 10,125,000
83,100 Fremont General Corp. ............................. 4,503,023
-------------
14,628,023
-------------
LEISURE & ENTERTAINMENT--2.6%
491,400 Family Golf Centers Inc.*+ ........................ 12,438,808
128,400 International Game Technology ..................... 3,113,700
193,700 Premier Parks Inc.*+ .............................. 12,905,263
-------------
28,457,771
-------------
MANFACTURING--1.4%
135,000 Knoll Inc.*+ ...................................... 3,982,500
229,200 Leggett & Platt Inc. .............................. 5,730,000
130,150 Palm Harbor Homes Inc.*+ .......................... 5,547,644
-------------
15,260,144
-------------
6
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)(CONT'D)
================================================================================
MEDICAL DEVICES--2.1%
373,000 Biomet Inc. ...................................... $ 12,332,499
256,000 Safeskin Corp.*+ ................................. 10,528,000
------------
22,860,499
------------
MEDICAL SERVICES--4.7%
52,400 Express Scripts Inc. Cl A* ....................... 4,224,750
377,300 Hooper Holmes Inc. ............................... 7,923,300
45,000 Impath Inc.* ..................................... 1,094,085
476,200 Lincare Holdings Inc.*+ .......................... 20,030,400
424,000 MedQuist Inc.*+ .................................. 12,243,000
293,600 VWR Scientific Products Corp.* ................... 7,229,900
------------
52,745,435
------------
OIL & GAS--.6%
331,500 Varco International Inc.* ........................ 6,568,010
------------
PHARMACEUTICALS--4.4%
286,400 Alza Corp.* ...................................... 12,386,800
297,000 Elan Corp PLC-ADR*+ .............................. 19,100,960
494,600 Forest Laboratories, Inc.* ....................... 17,681,950
------------
49,169,710
------------
POLLUTION CONTROL--2.2%
162,300 American Disposal Services Inc.* ................. 7,607,813
331,400 USA Waste Services, Inc.* ........................ 16,362,875
------------
23,970,688
------------
RESTAURANTS & LODGING--1.6%
356,300 Outback Steakhouse, Inc.* ........................ 13,895,700
100,000 Showbiz Pizza Time, Inc.* ........................ 4,031,300
------------
17,927,000
------------
RETAILING--16.9%
125,100 BJ's Wholesale Club Inc.* ........................ 5,082,188
295,000 Bed Bath & Beyond Inc.* .......................... 15,284,835
326,200 Bon-Ton Stores Inc.*+ ............................ 5,239,751
447,800 Borders Group Inc.* .............................. 16,568,600
82,700 Dress Barn Inc.*+ ................................ 2,057,163
333,000 Elder-Beerman Stores Corp.* ...................... 8,887,104
888,100 Family Dollar Stores Inc. ........................ 16,429,850
372,500 Finish Line (The) Inc. Cl. A* .................... 10,476,563
520,000 Kmart Corp.* ..................................... 10,010,000
553,200 Linens'n Things Inc.* ............................ 16,907,452
388,200 Michaels Stores Inc.*+ ........................... 13,696,084
228,000 Office Depot Inc.* ............................... 7,196,364
265,500 Pacific Sunwear of California Inc.* .............. 9,292,500
253,700 Proffitt's Inc.* ................................. 10,243,138
322,500 Stage Stores, Inc.*+ ............................. 14,593,125
289,000 Staples Inc.* .................................... 8,363,082
507,800 Sunglass Hut International Inc.* ................. 5,617,791
377,100 WestPoint Stevens Inc.*+ ......................... 12,444,300
-----------
188,389,890
-----------
SEMICONDUCTORS--.5%
224,200 Micron Technology Inc.* .......................... 5,563,075
-------------
TRANSPORTATION--4.1%
347,200 Coach USA Inc.*+ ................................. 15,841,000
284,300 Continental Airlines Inc. Cl. B*+ ................ 17,306,762
466,000 SkyWest Inc.+ .................................... 13,048,000
-------------
46,195,762
-------------
TOTAL COMMON STOCKS
(COST $786,299,707) ............................. 1,042,128,129
-------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--6.9%
--------
SHORT-TERM CORPORATE NOTES--4.5%
$10,000,000 B.A.T. Capital Corp.,
5.70%, 7/8/98 ................................... 9,988,917
15,000,000 General Motors Acceptance Corp.,
5.62%, 7/13/98 .................................. 14,971,900
5,000,000 Lexington Parker Capital Co. LLC,
5.57%, 7/2/98(a) ................................ 4,999,226
15,000,000 Merrill Lynch & Co. Inc.,
5.60%, 7/13/98 .................................. 14,972,000
5,000,000 Repsol International Finance B.V.,
5.43%, 7/2/98 ................................... 4,999,246
--------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $49,931,289) ............................. 49,931,289
--------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--2.4%
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $27,073,530;
collateralized by U.S. Treasury Strips
(par value $95,421,000
due 2/15/19-5/15/21) ........................... 27,069,389
--------------
TOTAL SHORT-TERM INVESTMENTS
(COST $77,000,678) ............................. 77,000,678
--------------
TOTAL INVESTMENTS
(COST $863,300,385)(B) ............................. 100.5% 1,119,128,807
Liabilities in Excess of Other Assets ............... (.5) (5,929,439)
------ -------------
NET ASSETS .......................................... 100.0% $1,113,199,368
====== =============
- --------------------------------------------------------------------------------
* 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 June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $863,300,385, amounted to
$255,828,422 which consisted of aggregate gross unrealized appreciation of
$267,803,384 and aggregate gross unrealized depreciation of $11,974,962.
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
====================================================================================================================================
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------------------
JUNE 30, 1998(i) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 43.75 $ 40.91 $ 39.41 $ 27.31 $ 30.88 $ 27.26
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.02) (0.05)(ii) (0.04)(ii) (0.09) (0.03)(ii) (0.05)
Net realized and unrealized gain
(loss) on investments 5.46 4.45 1.70 12.19 (1.45) 3.67
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.44 4.40 1.66 12.10 (1.48) 3.62
Distributions from net realized gains (6.06) (1.56) (0.16) -- (2.09) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 43.13 $ 43.75 $ 40.91 $ 39.41 $ 27.31 $ 30.88
====================================================================================================================================
Total Return 13.32% 11.39% 4.18% 44.31% (4.38%) 13.28%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $1,113,199 $997,586 $1,469,518 $984,212 $397,037 $238,850
====================================================================================================================================
Ratio of expenses to average net assets 0.89% 0.89% 0.88% 0.92% 0.96% 1.03%
====================================================================================================================================
Ratio of net investment loss to
average net assets (0.29%) (0.12%) (0.09%) (0.48%) (0.10%) (0.35%)
====================================================================================================================================
Portfolio Turnover Rate 67.09% 104.43% 110.04% 80.66% 117.61% 148.07%
====================================================================================================================================
Average Commission Rate Paid $ .0676 $ .0640 $ .0591
=================================================================================================
(i) Unaudited. Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--92.7% VALUE
------ -----
APPAREL--.9%
12,400 Brylane Inc.* ................................... $ 570,400
-----------
APPLIANCES & TOOLS--.8%
7,500 Black & Decker Corp. ............................ 457,500
-----------
BROADCASTING--.8%
15,300 CBS Corp. ....................................... 485,775
----------
BUILDING & CONSTRUCTION--.5%
5,000 Masco Corp. ..................................... 302,500
----------
BUSINESS SERVICES--2.6%
25,400 Cognizant Corp. ................................. 1,600,200
----------
COMMUNICATIONS--1.6%
12,000 Lucent Technologies Inc. ........................ 998,256
----------
COMMUNICATION EQUIPMENT--2.4%
15,000 Ascend Communications, Inc.* .................... 743,445
10,000 Tellabs, Inc.* .................................. 716,250
----------
1,459,695
----------
COMPUTER SOFTWARE--4.1%
22,700 Microsoft Corporation* .......................... 2,460,113
----------
CONGLOMERATE--3.8%
36,804 Tyco International Ltd. ......................... 2,318,651
----------
CONSUMER PRODUCTS--1.3%
16,000 Nike, Inc. Cl. B ................................ 779,007
---------
DRUG DISTRIBUTION--4.3%
7,000 Cardinal Health, Inc.+ .......................... 656,250
24,000 McKesson Corp. .................................. 1,950,000
----------
2,606,250
----------
FINANCIAL SERVICES--18.7%
11,000 American Express Co. ............................ 1,254,000
21,000 Bank of New York Inc. ........................... 1,274,448
10,000 BankBoston Corp. ................................ 556,250
12,200 Chase Manhattan Corp. ........................... 921,100
8,250 Comerica Inc. ................................... 546,563
11,400 Federal Home Loan Mortgage Corporation .......... 536,518
11,000 Fifth Third Bancorp ............................. 693,000
12,000 Household International Inc.+ ................... 597,000
10,000 IndyMac Mortgage Holdings Inc. .................. 227,500
36,000 Kansas City Southern Industries Inc. ............ 1,786,500
12,000 Mellon Bank Corp. ............................... 835,500
18,500 State Street Corp. .............................. 1,285,750
15,000 SunAmerica Inc. ................................. 861,570
----------
11,375,699
----------
FOOD CHAINS--1.7%
24,000 Kroger Co.* ..................................... 1,029,000
-----------
FOODS & BEVERAGES--1.7%
19,000 Earthgrains Company ............................. 1,061,625
----------
INSURANCE--8.0%
5,350 American International Group, Inc. .............. 781,100
17,000 Enhance Financial Services Group Inc.+ .......... 573,750
18,000 Fremont General Corp. ........................... 975,384
15,300 MGIC Investment Corp.+ .......................... 873,064
27,400 Travelers Group Inc.+ ........................... 1,661,125
----------
4,864,423
----------
LEISURE & ENTERTAINMENT--3.0%
46,000 Carnival Corp. .................................. 1,822,750
----------
MEDICAL DEVICES--1.1%
10,000 Medtronic, Inc. ................................. 637,500
----------
OIL & GAS--1.0%
2,000 Chevron Corp. ................................... 166,126
6,000 Exxon Corp. ..................................... 427,878
----------
594,004
----------
PHARMACEUTICALS--15.1%
17,000 Bristol Myers Squibb Co. ........................ 1,953,946
15,000 Elan Corp PLC-ADR*+ ............................. 964,695
14,400 Forest Laboratories, Inc.* ...................... 514,800
19,900 Pfizer Inc. ..................................... 2,162,891
19,900 Schering-Plough Corporation ..................... 1,823,338
25,500 Warner-Lambert Co. .............................. 1,769,063
----------
9,188,733
----------
POLLUTION CONTROL--3.1%
38,100 USA Waste Services, Inc.* ....................... 1,881,188
----------
RETAILING--13.6%
48,800 CVS Corp.+ ...................................... 1,900,174
40,000 Family Dollar Stores Inc. ....................... 740,000
29,350 Home Depot, Inc. ................................ 2,437,899
40,000 Kmart Corp.* .................................... 770,000
17,000 Rite Aid Corp. .................................. 638,571
29,000 Wal-Mart Stores Inc. ............................ 1,761,750
----------
8,248,394
----------
TRANSPORTATION--2.6%
19,200 AMR Corp.* ...................................... 1,598,400
----------
TOTAL COMMON STOCKS
(COST $43,876,838) ............................. 56,340,063
----------
9
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED) (CONT'D)
================================================================================
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--5.9% VALUE
- -------- -----
SHORT-TERM CORPORATE NOTES--4.1%
$ 500,000 B.A.T. Capital Corp.,
5.57%, 7/8/98 .................................. $ 499,446
Merrill Lynch & Co. Inc.,
1,000,000 5.57%, 7/2/98 ................................... 999,845
1,000,000 5.60%, 7/13/98 .................................. 998,134
-----------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $2,497,425) .............................. 2,497,425
-----------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--1.8%
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $1,104,007; collateralized
by U.S. Treasury Strips (par value $3,660,000
due 2/15/19) ................................... 1,103,839
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $3,601,264) .............................. 3,601,264
-----------
TOTAL INVESTMENTS
(COST $47,478,102)(A) ............................... 98.6% 59,941,327
Other Assets In Excess of Liabilities ................ 1.4 832,406
----- -----------
NET ASSETS ........................................... 100.0% $60,773,733
===== ===========
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $47,478,102, amounted to $12,463,225
which consisted of aggregate gross unrealized appreciation of $12,616,800
and aggregate gross unrealized depreciation of $153,575.
See Notes to Financial Statements.
10
<PAGE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
====================================================================================================================================
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------------------------------
JUNE 30, 1998(i) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.99 $ 8.42 $ 17.79 $ 13.30 $ 15.31 $ 13.93
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.02 0.03 0.09(ii) 0.11(ii) 0.17 0.07
Net realized and unrealized gain
(loss) on investments 1.92 2.94 1.87 4.54 (1.47) 1.37
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.94 2.97 1.96 4.65 (1.30) 1.44
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.04) (0.04) (0.33) (0.16) (0.15) (0.06)
Distributions from net realized gains (1.16) (0.36) (11.00) -- (0.56) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.20) (0.40) (11.33) (0.16) (0.71) (0.06)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.73 $ 10.99 $ 8.42 $ 17.79 $ 13.30 $ 15.31
====================================================================================================================================
Total Return 18.36% 36.29% 19.68% 35.13% (8.28%) 10.34%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 60,774 $47,399 $20,910 $ 8,639 $29,135 $31,895
====================================================================================================================================
Ratio of expenses to average net assets 0.71% 0.74% 0.81% 0.75% 0.75% 0.97%
====================================================================================================================================
Ratio of net investment income to average
net assets 0.37% 0.56% 0.94% 0.61% 1.22% 1.51%
====================================================================================================================================
Portfolio Turnover Rate 73.92% 150.09% 121.60% 164.05% 177.97% 105.80%
====================================================================================================================================
Average Commission Rate Paid $ .0726 $ .0724 $ .0728
==================================================================================================
(i) Unaudited. Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--60.4% VALUE
------ -----
APPLIANCES & TOOLS--.3%
1,100 Black & Decker Corp. ............................... $ 67,100
---------
BROADCASTING--.6%
4,100 CBS Corp. .......................................... 130,175
---------
BUILDING & CONSTRUCTION--.9%
3,100 Masco Corp. ........................................ 187,550
---------
BUSINESS SERVICES--1.4%
4,700 Cognizant Corp. .................................... 296,100
----------
COMMUNICATIONS--4.0%
4,700 America Online Inc. ................................ 498,200
7,200 WorldCom Inc.* ..................................... 348,754
---------
846,954
---------
COMMUNICATION EQUIPMENT--3.4%
1,400 Ascend Communications, Inc.* ....................... 69,388
2,200 Bay Networks Inc.* ................................. 70,950
3,000 CIENA Corporation* ................................. 208,875
4,200 Cisco Systems, Inc.* ............................... 386,665
----------
735,878
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--1.8%
9,100 Compaq Computer Corp. .............................. 258,213
1,100 International Business Machines Corp. .............. 126,294
---------
384,507
---------
COMPUTER SERVICES--.5%
2,100 Network Associates Inc.* ........................... 100,538
----------
COMPUTER SOFTWARE--4.4%
4,100 Compuware Corp.* ................................... 209,613
8,000 HBO & Company ...................................... 282,000
4,100 Microsoft Corporation* ............................. 444,338
---------
935,951
---------
CONGLOMERATE--2.0%
6,850 Tyco International Ltd. ............................ 431,550
---------
CONSUMER PRODUCTS--.3%
1,500 Newell Co. ......................................... 74,720
---------
DRUG DISTRIBUTION--1.7%
2,100 Cardinal Health, Inc.+ ............................. 196,875
2,000 McKesson Corp. ..................................... 162,500
----------
359,375
----------
ENERGY & ENERGY SERVICES--.7%
2,700 AES Corp.* ......................................... 141,920
---------
FINANCIAL SERVICES--11.6%
2,200 Banc One Corp. ..................................... 122,789
2,000 BankAmerica Corp. .................................. 172,876
5,600 Bank of New York Inc. .............................. 339,853
2,600 BankBoston Corp. ................................... 144,625
2,000 Chase Manhattan Corp. .............................. 151,000
4,000 Federal Home Loan Mortgage Corporation ............. 188,252
4,972 First Union Corp. .................................. 289,619
5,100 Household International Inc.+ ...................... 253,725
3,000 Kansas City Southern Industries Inc. ............... 148,875
3,905 Morgan Stanley Dean Witter & Co. ................... 356,819
2,300 NationsBank Corp. .................................. 175,950
3,300 Paine Webber Group Inc. ............................ 141,488
---------
2,485,871
---------
FOOD CHAINS--1.8%
1,500 Fred Meyer, Inc.* .................................. 63,750
8,200 Safeway Inc.* ...................................... 333,642
---------
397,392
---------
INSURANCE--3.6%
1,900 American International Group, Inc. ................. 277,400
1,900 MGIC Investment Corp.+ ............................. 108,420
6,500 Travelers Group Inc.+ .............................. 394,063
----------
779,883
----------
LEISURE & ENTERTAINMENT--1.9%
6,400 Carnival Corp. ..................................... 253,600
6,400 International Game Technology ...................... 155,200
----------
408,800
----------
MEDICAL DEVICES--.6%
2,000 Medtronic, Inc. .................................... 127,500
---------
PHARMACEUTICALS--7.9%
2,400 Bristol Myers Squibb Co. ........................... 275,851
1,000 Elan Corp PLC-ADR* ................................. 64,313
1,000 Eli Lilly & Company ................................ 66,063
1,600 Forest Laboratories, Inc.* ......................... 57,200
3,100 Pfizer Inc. ........................................ 336,933
4,700 Schering-Plough Corporation ........................ 430,638
6,600 Warner-Lambert Co. ................................. 457,875
----------
1,688,873
----------
POLLUTION CONTROL--1.3%
5,700 USA Waste Services, Inc.* .......................... 281,438
----------
RETAILING--6.3%
7,000 CVS Corp.+ ......................................... 272,566
5,400 Home Depot, Inc. ................................... 448,540
3,300 Kmart Corp.* ....................................... 63,525
5,400 Staples Inc.* ...................................... 156,265
6,700 Wal-Mart Stores Inc. ............................... 407,025
----------
1,347,921
----------
TOYS--.7%
3,500 Mattel Inc.+ ....................................... 148,096
----------
TRANSPORATION--2.7%
5,000 AMR Corp.* ......................................... 416,250
1,600 Burlington Northern Santa Fe Co. ................... 157,101
----------
573,351
----------
TOTAL COMMON STOCKS
(COST $9,252,374) ............................... 12,931,443
----------
12
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED) (CONT'D)
================================================================================
SHARES PREFERRED STOCK--.9% VALUE
------ -----
COMMUNICATION EQUIPMENT
2,400 Nokia Corporation, ADR
(COST $115,831) ............................... $ 174,151
---------
PRINCIPAL
AMOUNT CORPORATE BONDS--15.7%
------
AUTOMOTIVE--2.1%
$200,000 Ford Motor Capital B.V.,
9.50%, 6/1/10 ................................... 248,934
200,000 General Motors Acceptance Corp.,
7.125%, 6/1/99 .................................. 202,132
---------
451,066
---------
COMPUTER RELATED--2.1%
440,000 International Business Machines Corp.,
6.45%, 8/1/07 ................................... 452,038
---------
ELECTRIC & GAS COMPANIES--2.4%
100,000 Cincinnati Gas & Electric Co.,
7.20%, 10/1/23 .................................. 101,819
400,000 Potomac Electric Power Co.,
7.00%, 1/15/24 .................................. 417,568
---------
519,387
---------
FINANCIAL SERVICES--6.2%
BankAmerica Corp.,
100,000 7.125%, 5/12/05+ ................................ 105,016
200,000 6.625%, 10/15/07 ................................ 204,310
400,000 Bankers Trust Corp.,
7.00%, 3/13/18 .................................. 407,000
200,000 Citicorp.,
7.125%, 6/1/03 .................................. 207,588
200,000 Nationsbank Corp.,
7.23%, 5/2/99 ................................... 202,274
200,000 Transamerica Financial Corp.,
7.85%, 10/21/99 ................................. 205,500
---------
1,331,688
---------
INSURANCE--.5%
100,000 Travelers Group Inc.,
7.75%, 6/15/99 ................................ 101,720
---------
LEISURE & ENTERTAINMENT--1.4%
300,000 Walt Disney Corp.,
6.375%, 3/30/01+ .............................. 303,714
---------
POLLUTION CONTROL--1.0%
200,000 Waste Management Inc.,
8.25%, 11/15/99 ............................... 205,078
---------
TOTAL CORPORATE BONDS
(Cost $3,369,180) ............................... 3,364,691
---------
OBLIGATIONS--11.1%
200,000 U.S. Treasury Notes,
7.50%, 10/31/99 ................................. 204,906
250,000 Federal Home Loan Bank Corp.,
6.00%, 1/27/03 .................................. 248,605
300,000 Federal Home Loan Bank Corp.,
7.58%, 7/9/12 ................................... 299,940
400,000 Federal Home Loan Bank Corp.,
7.30%, 12/24/12 ................................. 400,936
200,000 Federal National Mortgage Association,
8.50%, 2/1/05 ................................... 207,906
633,000 Federal National Mortgage Association,
7.00%, 3/4/13 ................................... 626,866
400,000 Federal National Mortgage Association,
6.75%, 2/4/28 ................................... 394,124
---------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(COST $2,397,374) ............................. 2,383,283
---------
SHORT-TERM INVESTMENTS--11.0%
SHORT-TERM CORPORATE NOTES--3.5%
750,000 Merrill Lynch & Co. Inc.,
5.57%, 7/2/98
(COST $749,884) ................................ 749,884
---------
SHORT-TERM U.S. GOVERNMENT
OBLIGATIONS--3.5%
750,000 U.S. Treasury Bills, 5.15%, 8/20/98
(COST $744,635) ................................ 744,635
---------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--4.0%
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $862,470; collateralized
by U.S. Treasury Strips (par value
$2,085,000 due 8/15/13) ....................... 862,334
---------
TOTAL SHORT-TERM INVESTMENTS
(COST $2,356,853) ............................... 2,356,853
---------
TOTAL INVESTMENTS
(COST $17,491,612)(A) ............................... 99.1% 21,210,421
Other Assets In Excess of Liabilities ................ .9 201,506
----- ----------
NET ASSETS ........................................... 100.0% $21,411,927
===== ===========
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $17,491,612, amounted to $3,718,809
which consisted of aggregate gross unrealized appreciation of $3,785,270 and
aggregate gross unrealized depreciation of $66,461.
See Notes to Financial Statements.
13
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
====================================================================================================================================
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------------------
JUNE 30, 1998(i) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.76 $ 9.24 $ 13.64 $ 10.80 $ 11.58 $ 10.77
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.10 0.17 0.21(ii) 0.33(ii) 0.20 0.15
Net realized and unrealized gain
(loss) on investments 1.69 1.63 1.01 2.73 (0.70) 0.69
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.79 1.80 1.22 3.06 (0.50) 0.84
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.18) (0.12) (0.73) (0.22) (0.13) (0.03)
Distributions from net realized gains (0.81) (0.16) (4.89) -- (0.15) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.99) (0.28) (5.62) (0.22) (0.28) (0.03)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.56 $ 10.76 $ 9.24 $ 13.64 $ 10.80 $ 11.58
====================================================================================================================================
Total Return 17.13% 19.82% 10.17% 28.62% (4.27%) 7.79%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $21,412 $16,614 $10,486 $ 3,671 $10,394 $ 7,848
====================================================================================================================================
Ratio of expenses to average net assets 0.94% 1.01% 1.14% 1.00% 1.08% 1.25%
====================================================================================================================================
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- -- 0.19%
====================================================================================================================================
Ratio of net investment income to
average net assets 2.11% 2.14% 2.06% 2.49% 2.30% 2.05%
====================================================================================================================================
Portfolio Turnover Rate 35.93% 105.01% 68.66% 113.02% 78.80% 85.46%
====================================================================================================================================
Average Commission Rate Paid $ .0746 $ .0712 $ .0712
=======================================================================================================
(i) Unaudited. Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
</TABLE>
See Notes to Financial Sttemetns.
14
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--91.9% VALUE
------ -----
APPAREL--.8%
67,800 Tommy Hilfiger Corporation* ..................... $ 4,237,500
-----------
APPLIANCES & TOOLS--.5%
44,500 Black & Decker Corp. ............................ 2,714,500
-----------
BROADCASTING--.5%
100,000 Capstar Broadcasting Corportion Cl. A*+ ......... 2,512,500
-----------
BUILDING & CONSTRUCTION--5.0%
180,500 Champion Enterprises Inc.*+ ..................... 5,279,625
255,700 Masco Corp. ..................................... 15,469,850
234,900 Royal Group Technologies Ltd.*+ ................. 6,812,100
-----------
27,561,575
-----------
BUSINESS SERVICES--4.4%
295,600 Cognizant Corp. ................................. 18,622,800
146,600 Paychex, Inc. ................................... 5,964,860
-----------
24,587,660
-----------
COMMUNICATIONS--3.3%
170,700 America Online Inc. ............................. 18,094,200
-----------
COMMUNICATION EQUIPMENT--2.7%
52,500 Ascend Communications, Inc.* .................... 2,602,058
91,700 Bay Networks Inc.* .............................. 2,957,325
135,000 CIENA Corporation* .............................. 9,399,375
-----------
14,958,758
-----------
COMPUTER SERVICES--1.5%
237,600 Amkor Technology, Inc.*+ ........................ 2,220,134
117,650 Network Associates Inc.* ........................ 5,632,494
-----------
7,852,628
-----------
COMPUTER SOFTWARE--6.6%
80,900 Citrix Systems, Inc.* ........................... 5,531,538
262,300 Compuware Corp.* ................................ 13,410,088
406,600 HBO & Company ................................... 14,332,650
53,700 Intuit Inc.*+ ................................... 3,289,125
-----------
36,563,401
-----------
CONSUMER PRODUCTS--1.9%
225,000 Furniture Brands International Inc.* ............ 6,314,175
83,700 Newell Co. ...................................... 4,169,348
-----------
10,483,523
-----------
CONTAINERS--1.5%
191,300 Owens-Illinois Inc.* ............................ 8,560,675
-----------
DRUG DISTRIBUTION--7.4%
47,700 AmeriSource Health Corp Cl. A* .................. 3,133,318
57,200 Bergen Brunswig Corp. Cl. A ..................... 2,652,650
140,600 Cardinal Health, Inc.+ .......................... 13,181,250
167,400 McKesson Corp. .................................. 13,601,250
222,800 Omnicare, Inc.+ ................................. 8,494,250
-----------
41,062,718
-----------
ENERGY & ENERGY SERVICES--1.8%
188,100 AES Corp.* ...................................... 9,887,100
-----------
FINANCIAL SERVICES--9.9%
253,900 Dime Community Bancorp, Inc. .................... 7,601,258
48,000 Finova Group Inc. ............................... 2,718,000
173,000 IndyMac Mortgage Holdings Inc. .................. 3,935,750
223,200 Kansas City Southern Industries Inc. ............ 11,076,300
178,050 Paine Webber Group Inc. ......................... 7,633,894
250,000 Sovereign Bancorp Inc. .......................... 4,086,000
54,700 Star Banc Corp.+ ................................ 3,493,963
111,800 State Street Corp. .............................. 7,770,100
117,100 SunAmerica Inc. ................................. 6,725,990
-----------
55,041,255
-----------
FOOD CHAINS--1.3%
174,100 Fred Meyer, Inc.* ............................... 7,399,250
-----------
FOODS & BEVERAGES--4.1%
223,300 Aurora Foods Inc.* .............................. 4,717,213
51,600 Starbucks Corp.* ................................ 2,757,401
244,500 Suiza Foods Corp.* .............................. 14,593,716
13,000 U.S. Foodservice* ............................... 455,819
-----------
22,524,149
-----------
INSURANCE--1.7%
169,500 MGIC Investment Corp.+ .......................... 9,672,179
-----------
LEISURE & ENTERTAINMENT--5.3%
157,000 Carnival Corp. .................................. 6,221,125
555,900 International Game Technology ................... 13,480,575
144,600 Premier Parks Inc.*+ ............................ 9,633,975
-----------
29,335,675
-----------
MANUFACTURING--2.2%
403,600 Leggett & Platt Inc. ............................ 10,090,000
85,800 Wabash National Corp.+ .......................... 2,209,350
-----------
12,299,350
-----------
MEDICAL DEVICES--2.6%
230,200 Biomet Inc. ..................................... 7,611,103
167,600 Safeskin Corp.* ................................. 6,892,550
-----------
14,503,653
-----------
MEDICAL SERVICES--1.2%
259,800 Quorum Health Group Inc.* ....................... 6,884,700
-----------
PHARMACEUTICALS--5.1%
172,700 Alza Corp.* ..................................... 7,469,275
162,500 Elan Corp PLC-ADR*+ ............................. 10,450,863
290,900 Forest Laboratories, Inc.* ...................... 10,399,675
-----------
28,319,813
-----------
POLLUTION CONTROL--3.3%
371,120 USA Waste Services, Inc.* ....................... 18,324,050
-----------
15
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED) (CONT'D)
================================================================================
SHARES COMMON STOCKS (Continued) VALUE
------ -----
RESTAURANTS & LODGING--3.1%
221,700 Outback Steakhouse, Inc.* ....................... $ 8,646,300
209,800 Showbiz Pizza Time, Inc.* ....................... 8,457,667
-----------
17,103,967
-----------
RETAILING--6.4%
236,400 Borders Group Inc.* ............................. 8,746,800
213,200 CVS Corp.+ ...................................... 8,301,582
124,400 Kmart Corp.* .................................... 2,394,700
92,000 Office Depot Inc.* .............................. 2,903,796
456,900 Staples Inc.* ................................... 13,221,772
-----------
35,568,650
-----------
TEXTILES--.4%
53,100 Pillowtex Corp. ................................. 2,130,638
-----------
TOYS--.7%
91,600 Mattel Inc.+ .................................... 3,875,871
-----------
TRANSPORTATION--6.7%
98,000 Alaska Air Group Inc.*+ ......................... 5,347,174
95,200 AMR Corp.* ...................................... 7,925,400
170,300 Coach USA Inc.*+ ................................ 7,769,938
264,400 Continental Airlines Inc. Cl. B*+ ............... 16,095,350
-----------
37,137,862
-----------
TOTAL COMMON STOCKS
(Cost $402,750,908) ............................ 509,197,800
-----------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--9.4% VALUE
- --------- -----
SHORT-TERM CORPORATE NOTES--3.2%
$18,000,000 Merrill Lynch & Co. Inc.,
5.60%, 7/13/98
(COST $17,966,400) ............................. $ 17,966,400
-----------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--6.2%
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $34,659,365; collateralized
by U.S. Treasury Strips (par value $96,002,000
due 8/15/13-11/15/22) .......................... 34,653,976
TOTAL SHORT-TERM INVESTMENTS
(COST $52,620,376) ............................. 52,620,376
-----------
TOTAL INVESTMENTS
(COST $455,371,284)(A) ............................ 101.3% 561,818,176
Liabilities in Excess of Other Assets .............. (1.3) (7,451,695)
----- ------------
NET ASSETS ......................................... 100.0% $554,366,481
===== ============
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $455,371,284, amounted to
$106,446,892 which consisted of aggregate gross unrealized appreciation of
$110,642,728 and aggregate gross unrealized depreciation of $4,195,836.
See Notes to Financial Statements.
16
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
====================================================================================================================================
FROM MAY 3, 1993
(COMMENCEMENT OF
SIX MONTHS YEAR ENDED DECEMBER 31, OPERATIONS)
ENDED ------------------------------------------------ TO DECEMBER 31,
JUNE 30, 1998(i)(ii) 1997 1996 1995 1994 1994 (ii)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.01) (0.04) 0.03 (0.03) 0.00(iii) (0.02)
Net realized and unrealized gain
(loss) on investments 4.79 3.20 2.29 6.01 (0.21) 3.88
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.78 3.16 2.32 5.98 (0.21) 3.86
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- (0.01) -- -- -- --
Distributions from net realized gains (2.26) (0.32) (0.41) -- (0.05) (0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (2.26) (0.33) (0.41) -- (0.05) (0.14)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.70 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
====================================================================================================================================
Total Return 20.51% 15.01 %11.90% 44.45% (1.54%) 38.67%
====================================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $554,366 $444,967 $394,847 $185,349 $62,178 $21,301
====================================================================================================================================
Ratio of expenses to average
net assets 0.84% 0.84% 0.84% 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 (0.12%) (0.15)% 0.08% (0.25%) 0.03% (0.58%)
====================================================================================================================================
Portfolio Turnover Rate 71.46% 151.98% 90.97% 104.74% 83.96% 67.22%
====================================================================================================================================
Average Commission Rate Paid $ .0693 $ .0676 $ .0663
=====================================================================================
</TABLE>
(i) Unaudited.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the period.
See Notes to Financial Statements.
17
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED)
================================================================================
SHARES COMMON STOCKS--98.9% VALUE
------ -----
APPAREL--.2%
2,700 Brylane Inc.* .................................... $ 124,200
-----------
BIO-TECHNOLOGY--.9%
18,500 INCYTE Pharmaceuticals,Inc.* ..................... 631,313
-----------
BROADCASTING--1.3%
28,100 CBS Corp. ........................................ 892,175
-----------
BUILDING & CONSTRUCTION--.4%
5,000 Masco Corp. ...................................... 302,500
-----------
BUSINESS SERVICES--2.1%
22,700 Cognizant Corp. .................................. 1,430,100
-----------
COMMUNICATIONS--8.4%
26,400 America Online Inc. .............................. 2,798,400
3,000 Clear Channel Communications Inc.* ............... 327,375
12,000 Jacor Communications Inc.* ....................... 708,000
38,700 WorldCom Inc.* ................................... 1,874,550
-----------
5,708,325
-----------
COMMUNICATION EQUIPMENT--8.7%
30,900 Ascend Communications, Inc.* ..................... 1,531,497
15,000 CIENA Corporation* ............................... 1,044,375
25,000 Cisco Systems, Inc.* ............................. 2,301,575
15,000 Tellabs, Inc.* ................................... 1,074,375
-----------
5,951,822
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--.4%
10,000 Compaq Computer Corp. ............................ 283,750
-----------
COMPUTER SERVICES--2.6%
21,000 Network Associates Inc.* ......................... 1,005,375
5,000 Yahoo Inc.*+ ..................................... 787,500
-----------
1,792,875
-----------
COMPUTER SOFTWARE--10.4%
10,000 Citrix Systems, Inc.* ............................ 683,750
25,500 Compuware Corp.* ................................. 1,303,688
50,000 HBO & Company .................................... 1,762,500
25,000 Microsoft Corporation* ........................... 2,709,375
12,500 Saville Systems PLC ADR*+ ........................ 626,563
-----------
7,085,876
-----------
CONGLOMERATE--2.6%
27,730 Tyco International Ltd. .......................... 1,746,990
-----------
DRUG DISTRIBUTION--3.1%
6,900 Bergen Brunswig Corp. Cl. A ...................... 319,988
22,400 McKesson Corp. ................................... 1,820,000
-----------
2,139,988
-----------
ENERGY & ENERGY SERVICES--.9%
12,000 AES Corp.* ....................................... 630,755
-----------
FINANCIAL SERVICES--10.9%
11,300 BankAmerica Corp. ................................ 976,749
27,300 Bank of New York Inc. ............................ 1,656,782
4,600 Chase Manhattan Corp. ............................ 347,300
14,100 Federal Home Loan Mortgage Corporation ........... 663,588
30,000 IndyMac Mortgage Holdings Inc. ................... 682,500
16,000 Kansas City Southern Industries, Inc. ............ 794,000
14,470 Morgan Stanley Dean Witter & Co. ................. 1,322,196
12,900 NationsBank Corp. ................................ 986,850
-----------
7,429,965
-----------
FOOD CHAINS--2.2%
14,900 Kroger Co.* ...................................... 638,838
21,200 Safeway Inc.* .................................... 862,586
-----------
1,501,424
-----------
INSURANCE--6.3%
8,900 American International Group, Inc. ............... 1,299,400
19,400 Enhance Financial Services Group Inc.+ ........... 654,750
13,800 MGIC Investment Corp.+ ........................... 787,469
26,100 Travelers Group Inc.+ ............................ 1,582,313
-----------
4,323,932
-----------
LEISURE & ENTERTAINMENT--1.8%
22,000 Carnival Corp. ................................... 871,750
5,000 Premier Parks Inc.*+ ............................. 333,125
-----------
1,204,875
-----------
MEDICAL DEVICES--.9%
10,000 Medtronic, Inc. .................................. 637,500
-----------
PHARMACEUTICALS--15.3%
15,000 Alza Corp.* ...................................... 648,750
14,000 Bristol Myers Squibb Co. ......................... 1,609,132
20,100 Elan Corp PLC-ADR*+ .............................. 1,292,691
35,900 Forest Laboratories,Inc.* ........................ 1,283,425
21,800 Pfizer Inc. ...................................... 2,369,398
21,200 Schering-Plough Corporation ...................... 1,942,450
18,300 Warner-Lambert Co. ............................... 1,269,561
-----------
10,415,407
-----------
POLLUTION CONTROL--2.8%
38,240 USA Waste Services, Inc.* ........................ 1,888,100
-----------
RETAILING--13.8%
43,000 CVS Corp.+ ....................................... 1,674,334
31,950 Home Depot, Inc. ................................. 2,653,863
44,500 Kmart Corp.* ..................................... 856,625
10,000 Linens'n Things Inc.* ............................ 305,630
17,000 Rite Aid Corp. ................................... 638,570
41,450 Staples Inc.* .................................... 1,199,480
34,200 Wal-Mart Stores Inc. ............................. 2,077,650
-----------
9,406,152
-----------
TRANSPORTATION--2.9%
18,600 AMR Corp.* ....................................... 1,548,450
10,000 Coach USA Inc.*+ ................................. 456,250
-----------
2,004,700
-----------
TOTAL COMMON STOCKS
(COST $50,174,076) .............................. 67,532,724
-----------
18
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--JUNE 30, 1998 (UNAUDITED) (CONT'D)
================================================================================
SHARES VALUE
------ -----
PREFERRED STOCK--1.3%
COMMUNICATION EQUIPMENT
12,000 Nokia Corporation, ADR
(COST $579,154) ................................... $ 870,756
-----------
SHORT-TERM INVESTMENTS--1.8%
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS
Securities Held Under Repurchase
Agreements, 5.80-6.25%, 7/1/98, with
Bear, Stearns & Co. Inc., dtd 06/30/98,
repurchase price $1,209,293; collateralized
by U.S. Treasury Bonds (par value $4,925,000
due 8/15/22-11/15/24)
(COST $1,209,125) ................................. 1,209,125
-----------
TOTAL INVESTMENTS
(COST $51,962,355)(A) ............................ 102.0% 69,612,605
Liabilities in Excess of Other Assets .............. (2.0) (1,342,089)
----- -----------
NET ASSETS ......................................... 100.0% $68,270,516
===== ===========
- --------------------------------------------------------------------------------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At June 30, 1998, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $51,962,355, amounted to $17,650,250
which consisted of aggregate gross unrealized appreciation of $17,918,132
and aggregate gross unrealized depreciation of $267,882.
See Notes to Financial Statements.
19
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
=====================================================================================================================
FROM JANUARY 25, 1995
(COMMENCEMENT OF
SIX MONTHS YEAR ENDED DECEMBER 31, OPERATIONS)
ENDED ------------------------- TO DECEMBER 31,
JUNE 30, 1998(i)(ii) 1997 1996 1995 (ii)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 23.17 $ 19.36 $ 17.43 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------
Net investment loss (0.03) (0.03) (0.03)(iii) (0.03)
Net realized and unrealized gain
on investments 5.85 3.84 2.14 7.46
- ---------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.82 3.81 2.11 7.43
Distribution from net realized gains (1.21) -- (0.18) --
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 27.78 $ 23.17 $ 19.36 $ 17.43
=====================================================================================================================
Total Return 25.63% 19.68% 12.04% 74.30%
=====================================================================================================================
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $ 68,271 $53,488 $ 34,925 $ 5,497
=====================================================================================================================
Ratio of expenses excluding
interest to average net assets 0.92% 0.96% 1.06% 1.50%
=====================================================================================================================
Ratio of expenses including interest
to average net assets 0.99% 1.00% 1.09% 1.56%
=====================================================================================================================
Decrease reflected in above expense ratios
due to expense reimbursements -- -- -- 2.36%
=====================================================================================================================
Ratio of net investment loss to
average net assets (0.24%) (0.17%) (0.15%) (0.71%)
=====================================================================================================================
Portfolio Turnover Rate 65.50% 164.27% 102.10% 178.23%
=====================================================================================================================
Amount of debt outstanding at end of period -- -- -- --
=====================================================================================================================
Average amount of debt outstanding
during the period $ 473,354 $ 201,644 $ 76,079 $ 8,122
=====================================================================================================================
Average daily number of shares
outstanding during the period 2,326,624 2,135,458 1,107,187 75,460
=====================================================================================================================
Average amount of debt per share
during the period $ 0.20 $ 0.09 $ 0.07 $ 0.11
=====================================================================================================================
Average Commission Rate Paid $ .0706 $ .0703 $ .0682
===========================================================================================
(i) Unaudited.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the period.
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998
====================================================================================================================================
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C> <C> <C> <C> <C> <C>
Investments in securities, at value
(identified cost*)--see accompany-
ing schedules of investments $1,486,868,006 $1,119,128,807 $59,941,327 $21,210,421 $561,818,176 $69,612,605
Receivable for investment securities
sold 5,462,044 26,525,302 2,961,586 132,494 10,269,078 333,702
Receivable for shares of beneficial
interest sold 1,564,857 675,130 13,160 12,444 2,754,851 369,211
Interest and dividends receivable 645,208 216,810 33,418 118,269 198,986 16,529
Other assets 32,735 43,951 1,055 348 11,847 1,284
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 1,494,572,850 1,146,590,000 62,950,546 21,473,976 575,052,938 70,333,331
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities
purchased 29,724,805 15,179,064 1,946,071 -- 17,640,231 1,618,993
Payable for securities loaned 2,438,519 2,961,013 138,544 33,310 2,612,141 359,246
Payable for shares of beneficial
interest redeemed 4,580,751 14,439,289 45,744 5,687 53,458 22,498
Interest payable -- -- -- -- -- 1,577
Accrued investment management fees 820,021 720,371 29,808 12,417 335,476 44,000
Accrued expenses 103,096 90,895 16,646 10,635 45,151 16,501
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 37,667,192 33,390,632 2,176,813 62,049 20,686,457 2,062,815
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,456,905,658 $1,113,199,368 $60,773,733 $21,411,927 $554,366,481 $68,270,516
===================================================================================================================================
NET ASSETS CONSIST OF:
Paid-in capital $ 981,534,344 $ 765,336,913 $44,541,457 $16,858,420 $396,063,998 $47,854,608
Undistributed net investment
income (accumulated loss) 815,862 (8,886,317) 108,889 185,974 (1,266,329) (189,344)
Undistributed net realized gain 89,546,417 100,920,350 3,660,162 648,724 53,121,920 2,955,002
Net unrealized appreciation 385,009,035 255,828,422 12,463,225 3,718,809 106,446,892 17,650,250
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $1,456,905,658 $1,113,199,368 $60,773,733 $21,411,927 $554,366,481 $68,270,516
===================================================================================================================================
Shares of beneficial interest
outstanding--Note 6 31,906,038 25,808,431 5,181,970 1,853,040 20,766,165 2,457,409
===================================================================================================================================
NET ASSET VALUE PER SHARE $ 45.66 $ 43.13 $ 11.73 $ 11.56 $ 26.70 $ 27.28
===================================================================================================================================
*Identified cost $1,101,858,971 $ 863,300,385 $47,478,102 $17,491,612 $455,371,284 $51,962,355
===================================================================================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
====================================================================================================================================
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $ 1,632,804 $ 1,213,955 $ 84,181 $ 240,263 $ 779,488 $ 33,409
Dividends 3,964,817 1,842,550 200,797 40,137 997,237 188,733
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 5,597,621 3,056,505 284,978 280,400 1,776,725 222,142
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fees-- Note 3(a) 4,578,061 4,357,851 164,108 68,830 1,982,131 250,196
Interest on line of credit utilized -- -- -- -- -- 20,229
Custodian fees 132,400 128,275 11,500 7,679 63,755 11,586
Transfer agent fees 1,240 1,240 1,240 1,240 1,240 1,240
Professional fees 22,245 20,530 2,389 1,792 9,288 2,154
Trustees' fees 1,984 1,984 1,984 1,984 1,984 1,984
Miscellaneous 61,591 52,189 5,643 4,885 17,588 4,419
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 4,797,521 4,562,069 186,864 86,410 2,075,986 291,808
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income
(Loss) 800,100 (1,505,564) 98,114 193,990 (299,261) (69,666)
- ------------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on investments 89,573,070 100,920,615 3,675,744 643,227 56,324,889 2,879,096
Net change in unrealized appreciation
on investments 206,709,180 32,287,428 5,205,901 2,126,271 36,842,714 10,959,708
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 296,282,250 133,208,043 8,881,645 2,769,498 93,167,603 13,838,804
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $297,082,350 $131,702,479 $8,979,759 $2,963,488 $92,868,342 $13,769,138
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
================================================================================
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Interest received $ 36,061
Dividends received 198,778
Interest paid (18,735)
Operating expenses paid (271,189)
Disposition of short-term securities, net 1,210,152
Purchase of portfolio securities (40,625,372)
Proceeds from disposition of portfolio securities 38,448,259
Other 814
- --------------------------------------------------------------------------------
Net cash used in operating activities (1,021,232)
- --------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends Paid (2,761,338)
Proceeds from shares sold and dividends reinvested 12,700,144
Payments on shares redeemed (9,276,820)
Increase in cash collateral received on securities loaned 359,246
- --------------------------------------------------------------------------------
Net cash provided by financing activities 1,021,232
- --------------------------------------------------------------------------------
Net increase in cash --
Cash--beginning of period --
- --------------------------------------------------------------------------------
Cash--end of period $ --
================================================================================
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $13,769,138
Increase in investments (2,252,253)
Increase in receivable for investments sold (333,702)
Decrease in interest and dividends receivable 12,698
Increase in payable for investments purchased 1,618,993
Net realized gain (2,879,096)
Net increase in unrealized appreciation (10,959,708)
Increase in accrued expenses 1,884
Net decrease in other assets 814
- --------------------------------------------------------------------------------
Net cash used in operating activities $(1,021,232)
================================================================================
See Notes to Financial Statements.
23
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1998
====================================================================================================================================
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 800,100 $ (1,505,564) $ 98,114 $ 193,990 $ (299,261) $ (69,666)
Net realized gain on investments 89,573,070 100,920,615 3,675,744 643,227 56,324,889 2,879,096
Net change in unrealized appreciation
on investments 206,709,180 32,287,428 5,205,901 2,126,271 36,842,714 10,959,708
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 297,082,350 131,702,479 8,979,759 2,963,488 92,868,342 13,769,138
Dividends to shareholders:
Net investment income (3,246,329) -- (194,463) (295,352) -- --
Net realized gains (198,381,152) (131,575,498) (5,380,156) (1,311,952) (41,830,668) (2,761,338)
Net increase from
shares of beneficial
interest transactions-- Note 6 288,921,897 115,486,479 9,969,701 3,441,993 58,362,107 3,774,718
- -----------------------------------------------------------------------------------------------------------------------------------
Total increase 384,376,766 115,613,460 13,374,841 4,798,177 109,399,781 14,782,518
Net Assets
Beginning of period 1,072,528,892 997,585,908 47,398,892 16,613,750 444,966,700 53,487,998
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $1,456,905,658 $1,113,199,368 $60,773,733 $21,411,927 $554,366,481 $ 68,270,516
====================================================================================================================================
Undistributed net investment income
(accumulated loss) $ 815,862 $ (8,886,317) $ 108,889 $ 185,974 $ (1,266,329) $ (189,344)
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
====================================================================================================================================
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 3,277,196 $ (1,820,125) $ 195,876 $ 294,655 $ (653,590) $ (79,311)
Net realized gain on investments 199,900,299 139,147,522 5,378,374 1,319,306 38,971,626 3,587,761
Net change in unrealized appreciation
on investments 49,343,495 22,504,405 4,254,496 756,566 20,863,695 4,257,904
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 252,520,990 159,831,802 9,828,746 2,370,527 59,181,731 7,766,354
Dividends to shareholders:
Net investment income (3,760,721) -- (141,500) (155,278) (250,596) --
Net realized gains (6,810,754) (54,749,439) (1,170,590) (210,546) (6,110,692) --
Net increase (decrease) from
shares of beneficial interest
transactions-- Note 6 (160,448,991) (577,014,924) 17,971,996 4,123,363 (2,700,477) 10,796,374
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 81,500,524 (471,932,561) 26,488,652 6,128,066 50,119,966 18,562,728
Net Assets
Beginning of year 991,028,368 1,469,518,469 20,910,240 10,485,684 394,846,734 34,925,270
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $1,072,528,892 $ 997,585,908 $47,398,892 $16,613,750 $444,966,700 $53,487,998
====================================================================================================================================
Undistributed net investment income
(accumulated loss) $ 3,262,091 $ (7,380,753) $ 205,238 $ 287,336 $ (967,068) $ (119,678)
====================================================================================================================================
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
================================================================================
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 series 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"). The
American Growth Portfolio, American Small Capitalization Portfolio, American
MidCap Growth Portfolio and American Leveraged AllCap Portfolio invest primarily
in equity securities and each has an investment objective of long-term capital
appreciation. The American Income and Growth Portfolio's primary investment
objective is to provide a high level of dividend income by investing primarily
in dividend-paying equity securities; capital appreciation is a second
objective. The American Balanced Portfolio's investment objectives are current
income and long-term capital appreciation which it seeks to achieve through
investing in equity and fixed income securities. 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 on each day
the New York Stock Exchange ("NYSE") is open as of the close of the NYSE
(normally 4:00 p.m. Eastern time). Listed and unlisted securities for which such
information is regularly reported are valued at the last reported sales price
or, in the absence of reported sales, at the mean between the bid and 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. The
repurchase agreements are collateralized by U.S. Government securities which are
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, as defined. The Portfolios earn fees on the
securities loaned which are included in interest income in the accompanying
Statements of Operations. 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 June 30, 1998, the value of securities loaned and
collateral received thereon were as follows:
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
------------ ------------
American Growth Portfolio......................... $ 14,560,964 $ 14,804,312
American Small Capitalization
Portfolio ...................................... 117,196,874 119,482,859
American Income and Growth
Portfolio ...................................... 1,068,536 1,087,584
American Balanced Portfolio ...................... 138,450 141,366
American MidCap Growth
Portfolio ...................................... 26,167,127 26,638,407
American Leveraged AllCap
Portfolio ...................................... 1,979,292 2,011,891
(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.
25
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
JUNE 30, 1998
================================================================================
Dividends from net realized gains, offset by any loss carryforward, are declared
and paid annually after the end of the fiscal year in which earned.
(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, including net realized
capital gains, 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: These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 3--INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to the
provisions of its Investment Management Agreement (the "Agreement") 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
Each Agreement further provides 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.
(b) BROKERAGE COMMISSIONS: During the six months ended June 30, 1998, 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.") $1,360,076, $1,206,679, $90,040, $12,857, $789,236
and $82,093, 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.
NOTE 4--SECURITIES TRANSACTIONS:
Purchases and sales of securities, other than short-term securities, for the six
months ended June 30, 1998, were as follows:
PURCHASES SALES
----------- -----------
American Growth Portfolio ...................... $684,226,326 $574,546,420
American Small Capitalization
Portfolio .................................... 668,488,295 681,927,496
American Income and Growth
Portfolio .................................... 39,985,845 36,748,308
American Balanced Portfolio .................... 8,163,573 5,984,461
American MidCap Growth
Portfolio .................................... 340,711,192 336,244,085
American Leveraged AllCap
Portfolio .................................... 42,244,365 38,782,008
NOTE 5--LINE OF CREDIT:
The American Leveraged AllCap Portfolio has a line of credit with its custodian
bank whereby it may borrow up to one-third of the value 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. During the six months ended June 30,
1998, the American Leveraged AllCap Portfolio had borrowings which averaged
$473,354 at a weighted average interest rate of 8.50%.
NOTE 6--SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value.
26
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONT'D)
JUNE 30, 1998
================================================================================
During the six months ended June 30, 1998, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------ ------
American Growth
Portfolio:
Shares sold .................................. 6,529,805 $299,722,888
Dividends reinvested ......................... 4,809,435 201,563,406
----------- ------------
11,339,240 501,286,294
Shares redeemed .............................. (4,514,468) (212,364,397)
----------- ------------
Net increase ................................ 6,824,772 $288,921,897
=========== ============
SHARES AMOUNT
------ ------
American Small Capitalization
Portfolio:
Shares sold .................................. 11,786,682 $525,119,300
Dividends reinvested ......................... 3,247,801 131,568,417
----------- ------------
15,034,483 656,687,717
Shares redeemed (12,027,931) (541,201,238)
----------- ------------
Net increase ................................ 3,006,552 $115,486,479
=========== ============
SHARES AMOUNT
------ ------
American Income and Growth
Portfolio:
Shares sold .................................. 886,350 $ 10,401,322
Dividends reinvested ......................... 504,168 5,571,055
----------- ------------
1,390,518 15,972,377
Shares redeemed .............................. (523,023) (6,002,676)
----------- ------------
Net increase ................................ 867,495 $ 9,969,701
=========== ============
SHARES AMOUNT
------ ------
American Balanced
Portfolio:
Shares sold .................................. 253,600 $ 2,895,223
Dividends reinvested ......................... 146,968 1,604,892
----------- ------------
400,568 4,500,115
Shares redeemed .............................. (91,720) (1,058,122)
----------- ------------
Net increase ................................ 308,848 $ 3,441,993
=========== ============
SHARES AMOUNT
------ ------
American MidCap Growth
Portfolio:
Shares sold .................................. 4,692,258 $123,365,333
Dividends reinvested ......................... 1,688,763 41,830,666
----------- ------------
6,381,021 165,195,999
Shares redeemed .............................. (4,018,052) (106,833,892)
----------- ------------
Net increase ................................ 2,362,969 $ 58,362,107
=========== ============
SHARES AMOUNT
------ ------
American Leveraged AllCap
Portfolio:
Shares sold .................................. 403,615 $ 10,310,669
Dividends reinvested ......................... 107,618 2,731,336
----------- ------------
511,233 13,042,005
Shares redeemed .............................. (361,946) (9,267,287)
----------- ------------
Net increase ................................ 149,287 $ 3,774,718
=========== ============
During the year ended December 31, 1997, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------ ------
American Growth
Portfolio:
Shares sold .................................. 16,488,837 $ 655,951,502
Dividends reinvested ......................... 283,342 10,571,475
------------ --------------
16,772,179 666,522,977
Shares redeemed .............................. (20,559,387) (826,971,968)
------------ --------------
Net decrease ................................ (3,787,208) $ (160,448,991)
============ ==============
SHARES AMOUNT
------ ------
American Small Capitalization
Portfolio:
Shares sold .................................. 24,762,826 $1,038,991,957
Dividends reinvested ......................... 1,463,106 54,749,439
------------ --------------
26,225,932 1,093,741,396
Shares redeemed .............................. (39,348,743) (1,670,756,320)
------------ --------------
Net decrease ................................ (13,122,811) $ (577,014,924)
============ ==============
SHARES AMOUNT
------ ------
American Income and Growth
Portfolio:
Shares sold .................................. 2,857,584 $ 27,984,376
Dividends reinvested ......................... 142,001 1,312,090
------------ --------------
2,999,585 29,296,466
Shares redeemed .............................. (1,167,593) (11,324,470)
------------ --------------
Net increase ................................ 1,831,992 $ 17,971,996
============ ==============
SHARES AMOUNT
------ ------
American Balanced
Portfolio:
Shares sold .................................. 592,297 $ 6,003,090
Dividends reinvested ......................... 38,027 365,824
------------ --------------
630,324 6,368,914
Shares redeemed .............................. (220,624) (2,245,551)
------------ --------------
Net increase ................................ 409,700 $ 4,123,363
============ ==============
SHARES AMOUNT
------ ------
American MidCap Growth
Portfolio:
Shares sold .................................. 14,279,060 $ 328,791,802
Dividends reinvested ......................... 297,953 6,361,288
------------ --------------
14,577,013 335,153,090
Shares redeemed .............................. (14,668,073) (337,853,567)
------------ --------------
Net decrease ................................ (91,060) $ (2,700,477)
============ ==============
SHARES AMOUNT
------ ------
American Leveraged AllCap
Portfolio:
Shares sold .................................. 1,381,000 $ 30,139,481
Shares redeemed .............................. (876,756) (19,343,107)
------------ --------------
Net increase ................................ 504,244 $ 10,796,374
============ ==============
27
