================================================================================
THE ALGER |
RETIREMENT | Meeting the challenge
FUND | of investing
Alger Growth
Retirement Portfolio
Alger Small Cap
Retirement Portfolio
Alger MidCap Growth
Retirement Portfolio
Alger Capital Appreciation
Retirement Portfolio
SEMI-ANNUAL | April 30, 1997
REPORT | (Unaudited)
================================================================================
<PAGE>
FELLOW SHAREHOLDERS: May 23, 1997
A YEAR-TO-DATE REVIEW
Last year was a difficult year for growth stock managers, and we were no
exception. Unfortunately, some of the trends which penalized growth stocks last
year continued through the first four months of 1997. While 1996 is ancient
history by stock market standards, events which occurred last year formed the
basis for today's concerns about the market and provides the framework for the
discussion which follows.
The most important question, of course, is "What will happen the rest of this
year?" Essentially, the market sentiment has not changed since March 1996 with
the overriding concern being that the economy is growing too quickly and that
this will touch off a series of preemptive strikes on inflation by the Fed.
As we now know, the Fed did take action on March 25, 1997 and raised the Fed
Funds rate by twenty-five basis points. Since then, the market has been
preoccupied with whether rates would be raised again. This caused the market to
fall quite abruptly; the Dow fell from 7085 in mid-March to 6392 on April 11, a
drop of 9.8%. More recently, the Fed voted to leave rates unchanged at the May
20 Federal Open-Market Committee ("FOMC") meeting and the market has rebounded
to new highs as concern about interest rates ebbed. These extreme fluctuations
have confused many but the market does have its own internal logic. It resembles
the classical definition of chaos theory. What does it portend?
Rarely has an increase in the Fed Funds rate been so long anticipated as the one
on March 25, 1997. Indeed, the market has been anticipating increases in the Fed
Funds rate since March of 1996, when the calm of the market was shattered by
exceptionally strong employment numbers. During this time, the market has
frequently overestimated the degree of strength in the economy as well as
inflationary pressures building up within the system.
For all of 1996, the economy grew 2.4%, slightly less than the Fed's desired
target of 2.5%. In fact, even the fourth quarter, which was originally thought
to be extremely strong at 4.7%, grew only 3.8%. Moreover, the GDP deflator was
at a record low of 1.5%, indicating that inflation was not a factor at all
during the year -- despite substantial increases in energy and grain prices in
the early part of the year.
During the first few months of 1997, there was a heightened concern about
interest rates because there were a number of statistics to support the notion
that the economy was growing very rapidly. On April 30, GDP was announced for
the first quarter and it was a blockbuster, soaring 5.6%, which was higher than
anyone expected. Upon analysis, however, 1.7% may have come purely from
inventory buildup. Still, a 4% increase is quite high! I have maintained,
however, that part of the strength in the economy, especially in January and
February, related to the unusually pleasant weather in the Northeast. This not
only had the effect of encouraging real estate activity and retail sales, but
also played havoc with the seasonal adjustment factors. If my theory was true,
we would expect to see a visible deceleration in economic activity in April and
May. Thus far, this seems to be borne out by the most recent data. This economic
deceleration first became evident when March housing starts fell 6.4%, later
revised to a decrease of 7.7%. Additionally, retail sales weakened in March and
April and auto sales are now down on a year-to-date basis.
<PAGE>
Nowhere, however, is the slowing economy more evident than in the employment
numbers, which is interesting because it is the centerpiece of concern about
inflation. On May 2, the April data was announced and, while the jobless rate
fell below 5% to the lowest level since December 1973, job creation dropped to
142,000, representing the second month of slow employment growth (March numbers
were revised downward to 139,000). These paltry gains were lost in the sea of
publicity surrounding the 4.9% unemployment number. However, it is clear that
the job creation machine is slowing rapidly. In fact, included in the April
number was a drop in manufacturing and construction jobs.
Given all of this weak economic news, it is hardly surprising that the Fed
refrained from raising rates at its last FOMC meeting on May 20. Politically, of
course, it would have been very poor timing for the Fed to raise rates after a
bipartisan budget deal had been announced. There are, of course, those who
believe that the Fed will definitely act in early July to increase rates and
that the inevitable is merely being postponed for political reasons.
Clearly, however, there is no actual inflation. On May 14, the PPI for April was
announced and it dropped a surprising .6% (month-over-month). Those who fear
inflation should note that this is the fourth straight month of PPI deflation
and the largest decline in almost four years. Excluding food and energy, the PPI
declined .1%. The CPI for April increased only .1%, although the core rate did
rise .3%, somewhat higher than expected.
LOOKING AHEAD
Against this backdrop, the yield on the 30-year U.S. Treasury bond has
essentially traded in a range from 61/4% to 71/4% for the entire year. What this
tells me is that despite the tremendous concern about the inflationary
implications of a strong economy, the bond market really hasn't changed very
much. Of course, what has changed is the level of the stock market. Therefore, I
think it's fair to ask the question, "Is the stock market now overvalued,
especially in relation to the bond market and/or short-term interest rates?"
At Alger, we have three ways of analyzing the valuation level of the market
itself: 1) we compare the market to its historical relationship to the long
bond; 2) we compare the market to its historical relationship to short-term
interest rates; and 3) we compare the current market to its own history. All
three of these models suggest that the market is fairly valued to slightly
undervalued.
In the first instance, our analysis shows that during the last fifteen years the
earnings yield of the S&P Industrial Average has traded between 50% and 90% of
the yield on the 30-year U.S. Treasury bond. At 50%, as it was prior to the
crash of '87, it is always a good time to sell. At 90%, it has always been a
good time to buy. The median relationship is 70%, which is almost exactly where
the market is trading at present. Based on this analysis, the market could
appreciate 39% or decline 23% from its present level.
The second relationship relates the market to short-term interest rates. Here
our model uses the Dow which has been an excellent predictor of market tops.
Based on this model, the Dow could appreciate to 7700 given present levels of
short-term interest rates. Conversely, it could sustain another 25 basis point
increase in rates without becoming overvalued.
Lastly, the Dow at 7300 is trading at roughly 16.6x expected earnings. While
this is in the top half of its traditional multiple range, it is no where near
the high. For example, before the crash in `87, the market sold in excess of 20x
expected earnings and at that time the yield on the long bond was 9%.
<PAGE>
More striking is the relationship between the market and growth stocks. We have
a matrix which comes from our research data base that relates growth stocks to
the market. What we have found is that growth stocks go through a five year
cycle of expansion and compression of their p/e multiples relative to the
market. Presently, we are at the end of such a cycle, during which time growth
stocks have traded between a zero premium and 1.7x the market. This contrasts
with a historical relationship of 1.5 to 2.5x the market multiple. Presently,
our model shows that large cap growth stocks are trading at 1.1x the market and
small cap growth stocks are now trading at a discount (.98x the market), a
highly unusual development.
In summary, we believe the following: First, unusual factors, such as the
weather, exacerbated and exaggerated economic strength in the first quarter
raising concern about interest rates. Secondly, the economy is now showing clear
signs of deceleration. Thirdly, the major averages are fairly valued, but not
overvalued. Lastly, growth stocks are dramatically undervalued compared to the
larger market averages.
In reviewing the outlook for the growth stocks we follow, we have concluded that
the drop in growth stock multiples does not reflect deteriorating company
fundamentals, but instead, negative investor psychology. If we are correct in
our view that the economy is not overheating, the fears of accelerating
inflation and future interest rate increases should abate. Market psychology
should improve dramatically once signs of a slowing economy become evident. We
expect that investor confidence will rebuild and premiums for quality growth
stocks will expand.
All of this leads us to continue to be bullish about the market in general, but
especially about growth stocks from now through the end of the year.
Respectfully submitted,
/s/ David D. Alger
------------------
David D. Alger
President
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
SHARES COMMON STOCKS--94.5% VALUE
------ -----
AEROSPACE--7.8%
3,200 Allied Signal Inc..................... $ 231,200
5,000 Boeing Company (The).................. 493,125
5,300 Gulfstream Aerospace Corp.*........... 135,150
2,000 Sundstrand Corp....................... 97,500
4,500 United Technologies Corp.............. 340,313
----------
1,297,288
----------
AGRICULTURE--.6%
1,300 Pioneer Hi-Bred International Inc..... 91,813
----------
APPAREL--.5%
2,000 Tommy Hilfiger Corporation*........... 79,500
----------
APPLIANCES & TOOLS--2.9%
15,000 Sunbeam Corp.......................... 476,250
----------
BUSINESS SERVICES--.7%
2,000 Cintas Corp........................... 109,500
----------
CHEMICALS--.7%
3,000 Avery Dennison Corp................... 110,250
----------
COMMUNICATION EQUIPMENT--4.4%
5,000 Cisco Systems, Inc.*.................. 258,750
2,200 LM Ericsson Telephone Co. ADR Cl. B... 73,975
10,000 Tellabs, Inc.*........................ 398,750
----------
731,475
----------
COMMUNICATIONS--1.2%
7,900 WorldCom Inc.*........................ 189,600
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--6.0%
7,600 Hewlett-Packard Company............... 399,000
2,200 International Business Machines Corp.. 353,650
5,100 Seagate Technology Inc.*.............. 233,963
----------
986,613
----------
COMPUTER SOFTWARE--5.2%
2,800 Microsoft Corporation*................ 340,200
8,600 Oracle Corp.*......................... 341,850
4,000 Parametric Technology Corporation*.... 181,000
----------
863,050
----------
CONGLOMERATE--3.3%
5,000 General Electric Co................... 554,375
----------
CONSUMER PRODUCTS--5.5%
13,900 CUC International Inc.*............... 293,638
6,000 Gillette Co........................... 510,000
2,600 Nabisco Holdings Corp. Cl. A.......... 99,775
----------
903,413
----------
ENERGY & ENERGY SERVICES--5.0%
2,500 Diamond Offshore Drilling Inc.*....... 160,938
10,100 Reading & Bates Corp.*................ 225,988
4,000 Schlumberger Ltd...................... 443,000
----------
829,926
----------
FINANCIAL SERVICES--10.2%
1,500 Chase Manhattan Corp.................. 138,938
4,500 Citicorp.............................. 506,813
3,028 First Data Corporation................ 104,466
10,300 Money Store Inc. (The)................ 222,738
8,500 Morgan Stanley Group Inc.............. 536,563
4,900 Schwab (Charles) Corporation (The).... 179,463
----------
1,688,981
----------
FOODS & BEVERAGES--1.1%
5,100 PepsiCo, Inc.......................... 177,863
----------
HEALTH CARE--.5%
1,200 McKesson Corp......................... 86,850
----------
HEALTH MAINTENANCE
ORGANIZATION--1.0%
2,600 Oxford Health Plans, Inc.*............ 171,275
----------
INSURANCE--3.7%
3,100 American International Group, Inc. ... 398,350
2,600 MGIC Investment Corp.................. 211,250
----------
609,600
----------
LEISURE & ENTERTAINMENT--3.3%
4,500 Carnival Corporation, Cl. A........... 165,938
20,000 International Game Technology......... 317,500
2,900 Mirage Resorts, Incorporated*......... 58,363
----------
541,801
----------
MEDICAL DEVICES--1.0%
1,700 Becton Dickinson & Co................. 78,200
1,200 Medtronic, Inc........................ 83,100
----------
161,300
----------
OIL & GAS--.2%
1,000 Tidewater Inc......................... 40,125
----------
PHARMACEUTICALS--8.8%
2,000 Bristol Myers Squibb Co............... 131,000
5,700 Eli Lilly & Company................... 500,887
5,700 Merck & Co., Inc...................... 515,850
800 Pfizer Inc............................ 76,800
2,400 Warner-Lambert Co..................... 235,200
----------
1,459,737
----------
POLLUTION CONTROL--1.0%
4,800 USA Waste Services, Inc.*............. 157,200
----------
RETAILING--7.2%
3,100 Gucci Group N.V....................... 215,063
10,000 Home Depot, Inc....................... 580,000
1,900 Nine West Group Inc.*................. 75,287
11,500 Wal-Mart Stores Inc................... 324,875
----------
1,195,225
----------
SEMICONDUCTORS--10.5%
4,600 Adaptec, Inc.*........................ 170,200
4,700 Altera Corporation*................... 232,946
2,300 Intel Corp............................ 352,187
4,600 Linear Technology Corporation......... 231,150
3,400 Maxim Integrated Products, Inc.*...... 179,775
2,200 Micron Technology Inc.*............... 77,550
2,800 Texas Instruments, Incorporated....... 249,900
5,000 Xilinx, Inc.*......................... 245,000
----------
1,738,708
----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--1.7%
5,000 Applied Materials Inc.*............... 274,375
----------
MISCELLANEOUS--.5%
2,400 Service Corp. International........... 82,200
----------
Total Common Stocks
(Cost $14,458,842) ................. 15,608,293
----------
4
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
April 30, 1997
SHARES PREFERRED STOCK--1.3% VALUE
------ -----
COMMUNICATION EQUIPMENT
3,400 Nokia Corporation, ADR
(Cost $181,430)..................... $ 219,725
-----------
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--6.3%
- ---------
$326,000 Fingerhut Owner Trust,
5.45%, 5/2/97....................... 325,951
Green Tree Financial Corp.,
156,000 5.57%, 5/5/97....................... 155,903
388,000 5.59%, 5/8/97....................... 387,578
170,000 Merrill Lynch & Co., Inc.,
5.42%, 5/6/97....................... 169,872
-----------
Total Short-Term Corporate Notes
(Cost $1,039,304)................... 1,039,304
-----------
Total Investments
(Cost $15,679,576) (a)............... 102.1% 16,867,322
Liabilities In Excess of Other Assets.. (2.1) (338,980)
----- -----------
Net Assets............................. 100.0% $16,528,342
===== ===========
*Non-income producing security.
(a)At April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $15,679,576, amounted to $1,187,746
which consisted of aggregate gross unrealized appreciation of $1,532,682 and
aggregate gross unrealized depreciation of $344,936.
See Notes to Financial Statements.
5
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
From
November 8, 1993
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED YEAR ENDED OF OPERATIONS)
APRIL 30, OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1997(i)(ii) 1996 1995 1994(ii)
------------ ------------ -------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 9.32 $ 11.65 $ 10.38 $ 10.00
---------- --------- ---------- ---------
Net investment income (loss) .............................. 0.00(iii) (0.01) (0.01) (0.03)
Net realized and unrealized gain on investments ........... 0.70 0.91 3.59 .41
---------- --------- ---------- ---------
Total from investment operations .................... 0.70 0.90 3.58 .38
Distributions from net realized gains ..................... -- (3.23) (2.31) --
---------- --------- ---------- ---------
Net asset value, end of period ............................ $ 10.02 $ 9.32 $ 11.65 $ 10.38
========== ========= ========== =========
Total Return .............................................. 7.5% 8.2% 37.1% 3.8%
========== ========= ========== =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ........... $ 16,528 $ 11,325 $ 13,042 $ 9,365
========== ========= ========== =========
Ratio of expenses to average net assets.............. 1.06% 1.07%(iv) 1.11%(iv) 1.26%(iv)
========== ========= ========== =========
Ratio of net investment income (loss) to
average net assets ................................ (.09%) (.09%) (.18%) (.29%)
========== ========= ========== =========
Portfolio Turnover Rate ............................. 88.42% 142.83% 133.42% 103.79%
========== ========= ========== =========
Average Commission Rate Paid ........................ $ .0729 $ .0716
========== =========
</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.
(iv) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been 1.06% and 1.08% for the years ended October 31,
1996 and 1995, respectively. The expense ratio for the period ended
October 31, 1994 has been reduced to reflect the effect of custody fees
offset by earnings credits.
See Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
SHARES COMMON STOCKS--95.9% VALUE
------ -----
AEROSPACE--3.1%
31,400 Aviall Inc.*.......................... $ 372,875
5,000 BE Aerospace Inc.*.................... 123,125
12,500 Wyman Gordon Co.*..................... 262,500
----------
758,500
----------
APPAREL--9.5%
12,000 Brylane Inc.*......................... 325,500
11,800 Gymboree Corp.*....................... 326,718
11,000 Jones Apparel Group Inc.*............. 459,250
9,500 Kellwood Co........................... 225,625
7,700 Mens Wearhouse Inc.................... 191,538
14,500 Nautica Enterprises Inc.*............. 320,812
3,600 St. John Knits Inc.................... 138,150
12,300 Warnaco Group Inc. Cl. A.............. 350,550
----------
2,338,143
----------
AUTOMOTIVE EQUIPMENT &
SERVICES--.1%
2,000 Cross-Continent Auto Retailers, Inc.*. 29,750
----------
BIO-TECHNOLOGY--2.1%
5,000 DEKALB Genetics Corp. Cl. B........... 315,000
4,700 INCYTE Pharmaceuticals, Inc.*......... 199,750
----------
514,750
----------
BUILDING & CONSTRUCTION--1.0%
19,900 Morrison Knudsen Corp.*............... 248,750
----------
BUSINESS SERVICES--3.2%
15,000 G & K Services Inc. Cl. A............. 435,000
8,700 Saville Systems PLC ADR*.............. 357,788
----------
792,788
----------
COMMUNICATION EQUIPMENT--3.4%
11,100 Powerwave Technologies, Inc........... 184,538
16,500 Tellabs, Inc.*........................ 657,938
----------
842,476
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--.4%
4,100 Read-Rite Corp.*...................... 106,088
----------
COMPUTER SERVICES--7.4%
5,100 Cambridge Technology Partners Inc.*... 135,788
18,800 Keane Inc.*........................... 871,850
14,900 Quick Response Service Inc.*.......... 402,300
4,700 Sterling Commerce, Inc.*.............. 121,613
10,600 Technology Solutions Co.*............. 279,575
----------
1,811,126
----------
COMPUTER SOFTWARE--9.1%
11,400 CBT Group PLC ADS*.................... 554,325
18,000 Electronics For Imaging Inc.*......... 706,500
11,700 Oracle Corp.*......................... 465,075
7,000 Parametric Technology Corporation*.... 316,750
8,600 Structural Dynamics Research Corp.*... 182,750
----------
2,225,400
----------
COMPUTER TECHNOLOGY--1.0%
10,000 Digital Microwave Corp.*.............. 257,500
----------
CONSUMER PRODUCTS--4.5%
24,500 Coleman Co. Inc.*..................... 379,750
6,000 Fred Meyer, Inc.*..................... 246,750
5,300 Helen of Troy Ltd.*................... 123,225
8,700 Samsonite Corp.*...................... 361,050
----------
1,110,775
----------
ENERGY SERVICES--.3%
4,500 Hvide Marine Inc. Cl. A*.............. 77,625
----------
FINANCIAL SERVICES--4.5%
2,000 CMAC Investments Corp................. 76,000
18,300 CWM Mortgage Holdings Inc............. 363,712
13,400 E* TRADE Group, Inc.*................. 201,000
21,000 Money Store Inc. (The)................ 454,125
----------
1,094,837
----------
FOODS & BEVERAGES--3.9%
18,000 Chiquita Brands International Inc..... 258,750
15,300 Fine Host Corp*....................... 386,325
6,000 JP Foodservice Inc.*.................. 167,250
6,000 Morningstar Group Inc.*............... 145,500
----------
957,825
----------
HEALTH CARE--1.7%
2,000 McKesson Corp......................... 144,750
11,700 Omnicare, Inc......................... 285,187
----------
429,937
----------
HEALTH MAINTENANCE
ORGANIZATION--1.1%
4,000 Oxford Health Plans, Inc.*............ 263,500
----------
INDUSTRIAL EQUIPMENT--1.5%
9,100 Valmont Industries Inc................ 362,863
----------
INSURANCE--1.3%
7,500 Vesta Insurance Group Inc............. 313,125
----------
LEISURE & ENTERTAINMENT--1.4%
14,800 Cinar Films, Inc. Cl. B.*............. 336,700
----------
MEDICAL DEVICES--4.2%
7,500 Acuson Corp.*......................... 181,875
10,650 ESC Medical Systems Ltd............... 286,218
25,200 Hologic, Inc.*........................ 522,900
2,000 Mentor Corp........................... 46,250
----------
1,037,243
----------
MEDICAL SERVICES--1.6%
3,600 Express Scripts Inc. Cl. A*........... 132,300
15,000 Hooper Holmes Inc..................... 260,625
----------
392,925
----------
MEDICAL TECHNOLOGY--.5%
5,000 Curative Health Services Inc.*........ 118,125
----------
OIL & GAS--1.0%
6,400 Global Industries LTD ................ 134,400
5,000 Varco International Inc.*............. 115,000
----------
249,400
----------
PAPER PACKAGING &
FOREST PRODUCTS--.7%
3,600 Sealed Air Corp.*..................... 166,500
----------
PHARMACEUTICALS--.7%
5,800 Dura Pharmaceuticals, Inc.*........... 168,200
----------
POLLUTION CONTROL--2.3%
7,400 USA Waste Services, Inc.*............. 242,350
9,700 United Waste Systems, Inc.*........... 327,375
----------
569,725
----------
7
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
April 30, 1997
SHARES COMMON STOCKS--(Continued) VALUE
------ -----
RETAILING--3.7%
7,500 Bed Bath & Beyond Inc.*............... $ 205,312
7,900 Stage Stores, Inc.*................... 163,925
9,600 TJX Companies, Inc.................... 453,600
3,500 West Marine Inc.*..................... 91,000
----------
913,837
----------
SEMICONDUCTORS--13.7%
13,900 Adaptec, Inc.*........................ 514,300
16,000 Altera Corporation*................... 793,007
10,200 Linear Technology Corporation......... 512,550
10,200 Maxim Integrated Products, Inc.*...... 539,325
3,300 Micron Technology Inc.*............... 116,325
4,300 Texas Instruments, Incorporated....... 383,775
10,100 Xilinx, Inc.*......................... 494,900
----------
3,354,182
----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--4.5%
8,000 Applied Materials Inc.*............... 439,000
3,300 ASM Lithography Holding NV*........... 262,350
14,000 Kulicke & Soffa Industries Inc.*...... 391,131
----------
1,092,481
----------
TRANSPORTATION--2.5%
20,000 Coach USA Inc.*....................... 510,000
5,000 Knightsbridge Tankers Ltd............. 113,750
----------
623,750
----------
Total Common Stocks
(Cost $20,198,457) ................. 23,558,826
----------
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--5.4% VALUE
- --------- -----
$146,000 Green Tree Financial Corp.,
5.59%, 5/8/97....................... $ 145,841
583,000 Merrill Lynch & Co., Inc.,
5.50%, 5/14/97...................... 581,842
589,000 Wood Street Funding Corp.,
5.55%, 5/7/97 (a)................... 588,456
----------
Total Short-Term Corporate Notes
(Cost $1,316,139)................... 1,316,139
----------
Total Investments
(Cost $21,514,596) (b) .............. 101.3% 24,874,965
Liabilities In Excess of Other Assets.. (1.3) (328,251)
----- -----------
Net Assets............................. 100.0% $24,546,714
===== ===========
* Non-income producing security.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At April 30, 1997 the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $21,514,596, amounted to $3,360,369,
which consisted of aggregate gross unrealized appreciation of $3,875,704 and
aggregate gross unrealized depreciation of $515,335.
See Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
From
November 8, 1993
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED YEAR ENDED OF OPERATIONS)
APRIL 30, OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1997(i)(ii) 1996 1995 1994(ii)
------------ ------------ -------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period....................... $ 17.87 $ 17.92 $ 10.83 $ 10.00
--------- -------- --------- ---------
Net investment income (loss)............................... (0.08) (0.05) (0.07) (0.07)
Net realized and unrealized gain (loss) on investments..... (1.56) 1.72 7.23 .90
--------- -------- --------- ---------
Total from investment operations....................... (1.64) 1.67 7.16 .83
Distributions from net realized gains...................... -- (1.72) (0.07) --
--------- -------- --------- ---------
Net asset value, end of period............................. $ 16.23 $ 17.87 $ 17.92 $ 10.83
========= ======== ========= =========
Total Return............................................... (9.2%) 9.2% 66.2% 8.3%
========= ======== ========= =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted)................ $ 24,547 $ 30,043 $ 23,002 $ 9,513
========= ======== ========= =========
Ratio of expenses to average net assets ................. 1.05% 1.05%(iii) 1.13%(iii) 1.47%(iii)
========= ======== ========= =========
Ratio of net investment income (loss) to
average net assets..................................... (.62%) (.54%) (.73%) (.80%)
========= ======== ========= =========
Portfolio Turnover Rate.................................. 78.71% 182.49% 104.84% 186.76%
========= ======== ========= =========
Average Commission Rate Paid............................. $ .0689 $ .0629
========= ========
</TABLE>
(i) Unaudited.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been 1.03% and 1.06% for the years ended October 31,
1996 and 1995, respectively. The expense ratio for the period ended
October 31, 1994 has been reduced to reflect the effect of custody fees
offset by earnings credits.
See Notes to Financial Statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
SHARES COMMON STOCKS--89.6% VALUE
------ -----
AEROSPACE--2.4%
4,200 Gulfstream Aerospace Corp.*........... $ 107,100
500 Sundstrand Corp....................... 24,375
---------
131,475
---------
APPLIANCES & TOOLS--3.4%
5,800 Sunbeam Corp.......................... 184,150
---------
APPAREL--2.8%
2,500 Nautica Enterprises Inc.*............. 55,313
2,000 Warnaco Group Inc. Cl. A.............. 57,000
1,000 Tommy Hilfiger Corporation*........... 39,750
---------
152,063
---------
BIO-TECHNOLOGY--.3%
1,000 BioChem Pharma Inc.*.................. 17,984
---------
BUSINESS SERVICES--1.9%
1,000 Cintas Corp........................... 54,750
1,000 Paychex, Inc.......................... 46,812
---------
101,562
---------
CHEMICALS--1.0%
1,500 Avery Dennison Corp................... 55,125
---------
COMMUNICATION EQUIPMENT--4.7%
2,000 Cisco Systems, Inc.*.................. 103,500
3,800 Tellabs, Inc.*........................ 151,525
---------
255,025
---------
COMPUTER RELATED &
BUSINESS EQUIPMENT--3.5%
900 Read-Rite Corp.*...................... 23,288
3,700 Seagate Technology Inc.*.............. 169,738
---------
193,026
---------
COMPUTER SERVICES--1.7%
3,600 Sterling Commerce, Inc.*.............. 93,150
---------
COMPUTER SOFTWARE--5.7%
3,500 Electronics For Imaging Inc.*......... 137,375
3,800 Parametric Technology Corporation*.... 171,950
---------
309,325
---------
CONSUMER PRODUCTS--2.6%
6,750 CUC International Inc.*............... 142,594
---------
ENERGY & ENERGY SERVICES--2.3%
5,500 Reading & Bates Corp.*................ 123,063
---------
FINANCIAL SERVICES--7.9%
3,000 CWM Mortgage Holdings Inc............. 59,625
3,400 Equifax, Inc.......................... 97,750
7,700 Money Store Inc. (The)................ 166,513
3,000 Schwab (Charles) Corporation (The).... 109,875
---------
433,763
---------
FOODS & BEVERAGES--.5%
2,000 Chiquita Brands International Inc..... 28,750
---------
HEALTH CARE--2.7%
2,500 Elan Corp PLC-ADR*.................... 85,000
900 McKesson Corp......................... 65,138
---------
150,138
---------
HEALTH MAINTENANCE
ORGANIZATION--1.6%
1,300 Oxford Health Plans, Inc.*............ 85,638
---------
INSURANCE--2.4%
1,600 MGIC Investment Corp.................. 130,000
---------
LEISURE & ENTERTAINMENT--3.7%
700 Carnival Corporation Class A.......... 25,812
10,000 International Game Technology......... 158,750
1,000 Mirage Resorts, Incorporated*......... 20,125
---------
204,687
---------
MEDICAL SERVICES--2.0%
500 Cardinal Health, Inc. ................ 26,625
3,000 PhyCor, Inc.* ........................ 79,875
---------
106,500
---------
METALS--2.2%
900 Special Metals Corp.*................. 12,713
4,100 Titanium Metals Corporation*.......... 106,088
---------
118,801
---------
OIL & GAS--.2%
300 Tidewater Inc......................... 12,037
---------
PAPER PACKAGING &
FOREST PRODUCTS--2.5%
3,000 Sealed Air Corp.*..................... 138,750
---------
POLLUTION CONTROL--3.3%
1,600 USA Waste Services, Inc.*............. 52,400
2,000 U.S. Filter Corp.*.................... 60,750
2,000 United Waste Systems, Inc.*........... 67,500
---------
180,650
---------
REAL ESTATE--1.3%
1,100 Vornado Realty Trust.................. 69,988
---------
RETAILING--5.3%
1,600 Gucci Group N.V....................... 111,000
600 Nine West Group Inc.*................. 23,775
2,000 TJX Companies, Inc.................... 94,500
2,300 West Marine Inc.*..................... 59,800
---------
289,075
---------
SEMICONDUCTORS--14.7%
4,100 Adaptec, Inc.*........................ 151,700
3,900 Altera Corporation*................... 193,296
3,400 Linear Technology Corporation......... 170,850
3,300 Maxim Integrated Products, Inc.*...... 174,487
2,300 Xilinx, Inc.*......................... 112,700
---------
803,033
---------
SEMICONDUCTORS CAPITAL
EQUIPMENT--4.8%
2,300 Applied Materials Inc.*............... 126,212
1,000 ASM Lithography Holding NV*........... 79,500
2,000 Kulicke & Soffa Industries Inc.*...... 55,876
---------
261,588
---------
TRANSPORTATION--2.2%
4,700 Coach USA Inc*........................ 119,850
---------
Total Common Stocks
(Cost $4,684,400) .................. 4,891,790
---------
PREFERRED STOCK--2.7%
COMMUNICATION EQUIPMENT
2,300 Nokia Corporation, ADR
(Cost $105,639) .................... 148,638
---------
10
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
April 30, 1997
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--15.0% VALUE
- --------- -----
$112,000 Cooperative Association of
Tractor Dealers Inc.,
5.53%, 5/5/97....................... $ 111,932
177,000 Countrywide Funding Corporation,
5.57%, 5/5/97....................... 177,005
141,000 Fingerhut Owner Trust,
5.45%, 5/2/97....................... 140,978
225,000 Green Tree Financial Corp.,
5.57%, 5/5/97....................... 224,860
164,000 Merrill Lynch & Co., Inc.,
5.50%, 5/14/97...................... 163,670
---------
Total Short-Term Corporate Notes
(Cost $818,445) .................... 818,445
---------
Total Investments
(Cost $5,608,484) (a) ............... 107.3% 5,858,873
Liabilities In Excess of Other Assets.. (7.3) (400,457)
----- -----------
Net Assets............................. 100.0% $ 5,458,416
===== ===========
*Non-income producing security.
(a)At April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $5,608,484, amounted to $250,389
which consisted of aggregate gross unrealized appreciation of $442,090 and
aggregate gross unrealized depreciation of $191,701.
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
FROM
NOVEMBER 8, 1993
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED YEAR ENDED OF OPERATIONS)
APRIL 30, OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1997(i)(ii) 1996 1995 1994(ii)
------------ ------------ ------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 14.48 $ 16.34 $ 11.66 $ 10.00
--------- -------- --------- ---------
Net investment loss ....................................... (0.06)(iii) (0.07) (0.07) (0.09)
Net realized and unrealized gain (loss) on investments .... (0.09) 1.09 6.07 1.75
--------- -------- --------- ---------
Total from investment operations .................... (0.15) 1.02 6.00 1.66
Distributions from net realized gains ..................... -- (2.88) (1.32) --
--------- -------- --------- ---------
Net asset value, end of period ............................ $ 14.33 $ 14.48 $ 16.34 $ 11.66
========= ======== ========= =========
Total Return .............................................. (1.0%) 6.2% 54.1% 16.6%
========= ======== ========= =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ........... $ 5,458 $ 9,726 $ 10,914 $ 6,774
========= ======== ========= =========
Ratio of expenses to average net assets ............. 1.29% 1.16%(iv) 1.23%(iv) 1.53%(iv)
========= ======== ========= =========
Ratio of net investment income (loss) to
average net assets ................................ (.80%) (.45%) (.69%) (.89%)
========= ======== ========= =========
Portfolio Turnover Rate ............................. 86.06% 170.21% 132.74% 134.06%
========= ======== ========= =========
Average Commission Rate Paid......................... $ .0696 $ .0682
========= ========
</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.
(iv) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been 1.14% and 1.16% for the years ended October 31,
1996 and 1995, respectively. The expense ratio for the period ended
October 31, 1994 has been reduced to reflect the effect of custody fees
offset by earnings credits.
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 1997
SHARES COMMON STOCKS--94.6% VALUE
------ -----
AEROSPACE--8.1%
600 Allied Signal Inc..................... $ 43,350
1,500 Boeing Company (The).................. 147,938
1,700 United Technologies Corp. ............ 128,563
--------
319,851
--------
CHEMICALS--.9%
1,000 Avery Dennison Corp................... 36,750
--------
COMMUNICATION EQUIPMENT--4.0%
600 Cisco Systems, Inc.*.................. 31,050
700 LM Ericsson Telephone Co. ADR Cl. B... 23,538
2,600 Tellabs, Inc.*........................ 103,675
--------
158,263
--------
COMMUNICATIONS--1.0%
1,700 WorldCom Inc.*........................ 40,800
--------
COMPUTER RELATED &
BUSINESS EQUIPMENT--4.7%
1,100 Hewlett-Packard Company............... 57,750
500 International Business Machines Corp.. 80,375
1,000 Seagate Tecnnology Inc.*.............. 45,875
--------
184,000
--------
COMPUTER SOFTWARE--10.7%
3,000 Electronics For Imaging Inc.*......... 117,750
1,300 Microsoft Corporation*................ 157,950
2,100 Oracle Corp.*......................... 83,475
1,400 Parametric Technology Corporation*.... 63,350
--------
422,525
--------
CONSUMER PRODUCTS--3.6%
500 Colgate Palmolive Co.................. 55,500
1,000 Gillette Co........................... 85,000
--------
140,500
--------
ENERGY & ENERGY SERVICES--3.9%
500 Diamond Offshore Drilling Inc.*....... 32,188
1,000 Reading & Bates Corp.*................ 22,375
900 Schlumberger Ltd...................... 99,675
--------
154,238
--------
FINANCIAL SERVICES--11.6%
900 Chase Manhattan Corp.................. 83,363
1,500 Citicorp.............................. 168,938
2,000 Money Store Inc. (The)................ 43,250
1,200 Morgan Stanley Group Inc.............. 75,750
2,300 Schwab (Charles) Corporation (The).... 84,238
--------
455,539
--------
HEALTH CARE--.5%
300 McKesson Corp......................... 21,713
--------
HEALTH MAINTENANCE
ORGANIZATION--1.7%
1,000 Oxford Health Plans, Inc.*............ 65,875
--------
INSURANCE--3.3%
1,000 American International Group, Inc..... 128,500
--------
LEISURE & ENTERTAINMENT--.5%
500 Carnival Corporation, Cl. A........... 18,438
--------
MEDICAL DEVICES--3.1%
1,400 Becton Dickinson & Co................. 64,400
1,800 Hologic, Inc.*........................ 37,350
300 Medtronic, Inc........................ 20,775
--------
122,525
--------
OIL & GAS--2.4%
1,200 Halliburton Co........................ 84,750
200 Tidewater Inc......................... 8,025
--------
92,775
--------
PHARMACEUTICALS--10.1%
1,200 Bristol Myers Squibb Co............... 78,600
1,600 Eli Lilly & Company................... 140,600
1,100 Merck & Co.,lnc....................... 99,550
200 Pfizer Inc............................ 19,200
600 Warner-Lambert Co..................... 58,800
--------
396,750
--------
POLLUTION CONTROL--.9%
1,100 USA Waste Services, Inc.*............. 36,025
--------
RETAILING--4.6%
500 Gucci Group N.V....................... 34,688
1,600 Home Depot, Inc....................... 92,800
1,100 TJX Companies, Inc.................... 51,975
--------
179,463
--------
SEMICONDUCTORS--15.4%
2,200 Adaptec, Inc.*........................ 81,400
2,000 Altera Corporation*................... 99,126
600 Intel Corp............................ 91,875
1,600 Linear Technology Corporation......... 80,400
1,400 Maxim Integrated Products, Inc.*...... 74,025
500 Micron Technology Inc.*............... 17,625
700 Texas Instruments, Incorporated....... 62,475
2,000 Xilinx, Inc.*......................... 98,000
--------
604,926
--------
SEMICONDUCTORS CAPITAL
EQUIPMENT--3.6%
1,600 Applied Materials Inc.*............... 87,800
2,000 Kulicke & Soffa Industries Inc.*...... 55,876
--------
143,676
--------
Total Common Stocks
(Cost $3,283,298) .................. 3,723,132
---------
PREFERRED STOCK--1.8%
COMMUNICATION EQUIPMENT
1,000 Nokia Corporation, ADR
(Cost $56,639) ..................... 71,088
---------
13
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Unaudited) (Continued)
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--6.3% VALUE
- --------- -----
$124,000 Merrill Lynch & Co., Inc.,
5.50%, 5/14/97...................... $ 123,754
124,000 Philip Morris Cos. Inc.,
5.48%, 5/14/97...................... 123,754
----------
Total Short-Term Corporate Notes
(Cost $247,508) .................... 247,508
----------
Total Investments
(Cost $3,587,445) (a)................ 102.7% 4,041,728
Liabilities In Excess of Other Assets.. (2.7) (108,050)
----- ----------
Net Assets ............................ 100.0% $3,933,678
===== ==========
*Non-income producing security.
(a)At April 30, 1997, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $3,587,445, amounted to $454,283
which consisted of aggregate gross unrealized appreciation of $483,277 and
aggregate gross unrealized depreciation of $28,994.
See Notes to Financial Statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO(i)
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
FROM
NOVEMBER 8, 1993
SIX MONTHS (COMMENCEMENT
ENDED YEAR ENDED YEAR ENDED OF OPERATIONS)
APRIL 30, OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1997(ii)(iii) 1996 1995 1994(iii)
------------ ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 9.88 $ 12.72 $ 10.08 $ 10.00
--------- --------- ---------- ---------
Net investment loss ....................................... (0.05)(iv) (0.07) (0.19) (0.23)
Net realized and unrealized gain on investments ........... 0.36 0.83 5.30 0.31
--------- --------- ---------- ---------
Total from investment operations .................... 0.31 0.76 5.11 0.08
Distributions from net realized gain ...................... -- (3.60) (2.47) --
--------- --------- ---------- ---------
Net asset value, end of period ............................ $ 10.19 $ 9.88 $ 12.72 $ 10.08
========= ========= ========== =========
Total Return .............................................. 3.1% 6.1% 54.4% 0.8%
========= ========= ========== =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ........... $ 3,934 $ 6,703 $ 8,116 $ 5,251
========= ========= ========== =========
Ratio of expenses excluding interest to
average net assets ................................ 1.46% 1.37% 1.43% 1.78%
========= ========= ========== =========
Ratio of expenses including interest to
average net assets................................. 1.63% 1.44%(v) 2.70%(v) 2.87%(v)
========= ========= ========== =========
Ratio of net investment income (loss) to
average net assets ................................ (1.06%) (0.94%) (2.32%) (2.53%)
========= ========= ========== =========
Portfolio Turnover Rate ................................... 72.06% 203.46% 188.53% 229.11%
========= ========= ========== =========
Average Commission Rate Paid .............................. $ .0701 $ .0668 -- --
========= ========= ========== =========
Amount of debt outstanding at end of period ............... $ -- $ -- $ 302,600 $ 955,600
========= ========= ========== =========
Average amount of debt outstanding during
the period .............................................. $ 154,834 $ 62,130 $ 939,600 $ 826,076
========= ========= ========== =========
Average daily number of shares outstanding
during the period........................................ 566,047 595,051 565,805 515,270
========= ========= ========== =========
Average amount of debt per share during
the period .............................................. $ .27 $ .10 $ 1.66 $ 1.60
========= ========= ========== =========
</TABLE>
(i) Prior to April 12, 1996, the Alger Capital Appreciation Retirement
Portfolio was the Alger Defined Contribution Leveraged AllCap Portfolio.
(ii) Unaudited.
(iii) Ratios have been annualized; total return has not been annualized.
(iv) Amount was computed based on average shares outstanding during the period.
(v) Reflects total expenses, including custody fees offset by earnings credits
resulting from balances left on deposit. The expense ratio net of earnings
credits would have been 1.42% and 2.66% for the years ended October 31,
1996 and October 31, 1995, respectively. The expense ratio for the period
ended October 31, 1994 has been reduced to reflect the effect of custody
fees offset by earnings credits.
See Notes to Financial Statements.
15
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited)
April 30, 1997
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (identified cost*)-
see accompanying schedules of investments............. $16,867,322 $24,874,965 $5,858,873 $4,041,728
Cash.................................................... -- 82,609 1,069 1,213
Receivable for investment securities sold............... 171,333 468,419 156,166 146,003
Receivable for shares of beneficial interest sold....... 150 100,900 -- --
Dividends receivable.................................... 6,879 9,256 1,895 2,037
Prepaid expenses and other assets....................... 3,308 5,614 3,159 2,904
----------- ----------- ---------- ----------
Total Assets........................................ 17,048,992 25,541,763 6,021,162 4,193,885
----------- ----------- ---------- ----------
LIABILITIES:
Payable for investment securities purchased............. 445,107 950,872 545,883 240,322
Bank overdraft.......................................... 48,296 -- -- --
Interest payable........................................ -- -- -- 4,906
Payable for shares of beneficial interest redeemed...... 827 -- -- --
Accrued investment management fees...................... 9,790 16,917 3,565 2,630
Accrued expenses........................................ 16,630 27,260 13,298 12,349
----------- ----------- ---------- ----------
Total Liabilities................................... 520,650 995,049 562,746 260,207
----------- ----------- ---------- ----------
NET ASSETS.............................................. $16,528,342 $24,546,714 $5,458,416 $3,933,678
=========== =========== ========== ==========
Net Assets Consist of:
Paid-in capital....................................... $11,749,310 $18,125,212 $1,522,651 $1,675,963
Undistributed net investment income
(accumulated loss).................................. (61,935) (404,735) (187,338) (368,430)
Undistributed net realized gain....................... 3,653,221 3,465,868 3,872,714 2,171,862
Net unrealized appreciation........................... 1,187,746 3,360,369 250,389 454,283
----------- ----------- ---------- ----------
NET ASSETS.............................................. $16,528,342 $24,546,714 $5,458,416 $3,933,678
=========== =========== ========== ==========
Shares of beneficial interest outstanding--Note 6........ 1,649,812 1,512,461 381,040 385,93
=========== =========== ========== ==========
NET ASSET VALUE PER SHARE............................... $ 10.02 $ 16.23 $ 14.33 $ 10.19
=========== =========== ========== ==========
*Identified cost........................................ $15,679,576 $21,514,596 $5,608,484 $3,587,445
=========== =========== ========== ==========
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF OPERATIONS (Unaudited)
For the six months ended April 30, 1997
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends............................................. $ 55,773 $ 22,286 $ 10,026 $ 15,324
Interest.............................................. 19,584 38,841 10,596 1,037
--------- ---------- --------- ---------
Total income........................................ 75,357 61,127 20,622 16,361
--------- ---------- --------- ---------
Expenses:
Management fees--Note 3(a)............................. 58,188 121,450 33,714 24,445
Interest on line of credit utilized--Note 5............ -- -- -- 4,906
Custodian fees........................................ 6,147 6,520 5,973 3,915
Transfer agent fees--Note 3(c)......................... 1,250 1,250 1,250 1,250
Professional fees..................................... 4,230 4,230 4,230 4,230
Trustees' fees........................................ 2,976 2,976 2,976 2,976
Miscellaneous......................................... 9,380 13,801 6,073 5,034
--------- ---------- --------- ---------
Total Expenses...................................... 82,171 150,227 54,216 46,756
--------- ---------- --------- ---------
NET INVESTMENT (LOSS)................................... (6,814) (89,100) (33,594) (30,395)
--------- ---------- --------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments............... 1,661,782 (1,062,435) 1,259,906 859,805
Net change in unrealized depreciation
on investments...................................... (411,162) (1,248,009) (993,194) (543,647)
--------- ---------- --------- ---------
Net realized and unrealized gain (loss)
on investments...................................... 1,250,620 (2,310,444) 266,712 316,158
--------- ---------- --------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS........................... $1,243,806 $(2,399,544) $ 233,118 $ 285,763
========== =========== ========= =========
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
STATEMENT OF CASH FLOWS (Unaudited)
For the six months ended April 30, 1997
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH:
Cash flows from operating activities:
Dividends received...................................... $ 14,249
Interest received....................................... 1,037
Operating expenses paid................................. (45,113)
Purchase of investment securities....................... (4,357,722)
Purchase of short-term securities, net.................. (247,508)
Proceeds from disposition of investment securities...... 7,619,759
Other................................................... 662
-----------
Net cash provided by operating activities............. 2,985,364
-----------
Cash flows from financing activities:
Proceeds from shares sold............................... 189,738
Payments on shares redeemed............................. (3,238,661)
-----------
Net cash used in financing activities................. (3,048,923)
-----------
Net decrease in cash...................................... (63,559)
Cash--beginning of year................................... 64,772
-----------
Cash--end of year......................................... $ 1,213
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from operations.... $ 285,763
Decrease in investments................................. 2,981,278
Decrease in receivable for investment securities sold... 275,242
Increase in dividends receivable........................ (1,075)
Decrease in payable for investment securities purchased. (241,991)
Net realized gain on investments........................ (859,805)
Net decrease in unrealized appreciation on investments.. 543,647
Increase in accrued expenses and other liabilities...... 1,643
Net decrease in other assets............................ 662
-----------
Net cash provided by operating activities............. $ 2,985,364
-----------
See Notes to Financial Statements.
18
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS (Unaudited)
For the six months ended April 30, 1997
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Net investment loss..................................... $ (6,814) $ (89,100) $ (33,594) $ (30,395)
Net realized gain (loss) on investments................. 1,661,782 (1,062,435) 1,259,906 859,805
Net change in unrealized appreciation (depreciation)
on investments........................................ (411,162) (1,248,009) (993,194) (543,647)
---------- ----------- ---------- ---------
Net increase (decrease) in net assets resulting
from operations..................................... 1,243,806 (2,399,544) 233,118 285,763
Net increase (decrease) from shares of beneficial
interest transactions--Note 6.......................... 3,959,380 (3,096,477) (4,500,625) (3,055,456)
---------- ----------- ---------- ---------
Total increase (decrease)........................... 5,203,186 (5,496,021) (4,267,507) (2,769,693)
Net Assets:
Beginning of period................................... 11,325,156 30,042,735 9,725,923 6,703,371
---------- ----------- ---------- ---------
End of period......................................... $16,528,342 $24,546,714 $ 5,458,416 $3,933,678
=========== =========== =========== ==========
Undistributed net investment income (accumulated loss).. $ (61,935) $ (404,735) $ (187,338) $ (368,430)
=========== =========== =========== ==========
</TABLE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 1996
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*
---------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Net investment loss..................................... $ (10,182) $ (142,689) $ (45,315) $ (64,933)
Net realized gain on investments........................ 1,959,971 4,416,600 2,505,853 1,069,584
Net change in unrealized (depreciation)
on investments........................................ (897,060) (1,945,398) (1,800,673) (565,660)
---------- ----------- ---------- ---------
Net increase in net assets resulting from operations.. 1,052,729 2,328,513 659,865 438,991
Dividends to Shareholders:
Net realized gains.................................... (2,895,406) (2,507,225) (1,618,472) (1,765,311)
Net increase (decrease) from shares of beneficial
interest transactions--Note 6.......................... 126,096 7,219,881 (229,799) (86,328)
---------- ----------- ---------- ---------
Total increase (decrease)........................... (1,716,581) 7,041,169 (1,188,406) (1,412,648)
Net Assets:
Beginning of year..................................... 13,041,737 23,001,566 10,914,329 8,116,019
---------- ----------- ---------- ---------
End of year........................................... $11,325,156 $30,042,735 $ 9,725,923 $6,703,371
=========== =========== =========== ==========
Undistributed net investment income (accumulated loss).. $ (55,121) $ (315,635) $ (153,744) $ (338,035)
=========== =========== =========== ==========
</TABLE>
*Prior to April 12, 1996, the Alger Capital Appreciation Retirement Portfolio
was the Alger Defined Contribution Leveraged AllCap Portfolio.
See Notes to Financial Statements.
19
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--General:
The Alger Retirement 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 and
currently issues four classes of shares of beneficial interest --Growth
Portfolio, Small Cap Portfolio, MidCap Growth Portfolio and Capital Appreciation
Portfolio (the "Portfolios").
NOTE 2--Significant Accounting Policies:
(a) INVESTMENT VALUATION: Investments of the Portfolios are valued on each
day the New York Stock Exchange (the "NYSE") is open as of the close of the NYSE
(currently 4:00 p.m. Eastern time). Listed and unlisted securities for which
such information is regularly reported are valued at the last reported sales
price or, in the absence of reported sales, at the mean between the bid and
asked price or, in the absence of a recent bid or asked price, the equivalent as
obtained from one or more of the major market makers for the securities to be
valued.
Securities for which market quotations are not readily available are valued
at fair value, as determined in good faith pursuant to procedures established by
the Board of Trustees.
Short-term securities having a remaining maturity of sixty days or less are
valued at amortized cost which approximates market value.
(b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income is recognized on the
accrual basis.
(c) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded
on the ex-dividend date. With respect to all Portfolios, dividends from net
investment income and dividends from net realized gains, offset by any loss
carry forward, are declared and paid annually after the end of the fiscal year
in which earned.
(d) 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 its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Each Portfolio is
treated as a separate entity for the purpose of determining such compliance.
(e) 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. Organizational expenses are being amortized
from the date operations commenced over a five year period.
(f) OTHER: These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 3--Investment Management Fees and Other Transactions with Affiliates:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to
the provisions of Investment Management Agreements (the "Agreements") with Fred
Alger Management, Inc. ("Alger Management"), are payable monthly and are
computed based on the value of the average daily net assets of each Portfolio at
the following annual rates:
Growth Portfolio............................. .75%
Small Cap Portfolio.......................... .85
MidCap Growth Portfolio...................... .80
Capital Appreciation Portfolio............... .85
(b) BROKERAGE COMMISSIONS: During the six months ended April 30, 1997, the
Growth Portfolio, the Small Cap Portfolio, the MidCap Growth Portfolio and the
Capital Appreciation Portfolio paid Fred Alger & Company, Incorporated ("Alger
Inc."), the Fund's distributor, commissions of $28,236, $36,459, $15,825 and
$8,320, respectively, in connection with securities transactions.
(c) TRANSFER AGENT FEES: Alger Shareholder Services, Inc. ("Alger Services"),
an affiliate of Alger Management, serves as transfer agent for the Fund. During
the six months ended April 30, 1997, each Portfolio incurred fees of $1,250 for
services provided by Alger Services.
(d) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the
Fund are directors and officers of Alger Management, Alger Inc. and Alger
Services. At April 30, 1997, Alger Management and its affiliates owned 764,011
shares, 287,724 shares, 381,040 shares and 385,933 shares of the Growth
Portfolio, the Small Cap Portfolio, the MidCap Growth Portfolio and the Capital
Appreciation Portfolio, respectively.
NOTE 4--Securities Transactions:
The following summarizes the securities transactions by the Fund, other than
short-term securities, for the six months ended April 30, 1997:
PURCHASES SALES
--------- -----
Growth Portfolio.................. $16,176,196 $12,653,417
Small Cap Portfolio............... 21,321,413 24,654,044
MidCap Growth Portfolio........... 6,766,680 11,593,569
Capital Appreciation Portfolio.... 4,115,731 7,338,513
20
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 5--Lines of Credit:
The Capital Appreciation Portfolio has lines of credit with banks whereby it
may borrow up to 1/3 of its assets, as defined, up to a maximum of $45,000,000.
Such borrowings have variable interest rates and are payable on demand. For the
six months ended April 30, 1997, the Portfolio had borrowings which averaged
$154,834 at a weighted average interest rate of 6.30%.
NOTE 6--Share Capital:
The Fund has an unlimited number of authorized shares of beneficial interest
of $.001 par value which are presently divided into four classes of shares.
During the six months ended April 30, 1997, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
------ ------
Growth Portfolio
Shares sold 950,191 $ 9,229,319
Shares redeemed (515,035) (5,269,939)
---------- -----------
Net increase 435,156 $ 3,959,380
========== ===========
Small Cap Portfolio
Shares sold 364,643 $ 6,573,356
Shares redeemed (533,474) (9,669,833)
---------- -----------
Net decrease (168,831) $(3,096,477)
========== ===========
MidCap Growth Portfolio
Shares sold 10,155 $ 155,995
Shares redeemed (300,727) (4,656,620)
---------- -----------
Net decrease (290,572) $(4,500,625)
========== ===========
Capital Appreciation Portfolio
Shares sold 17,681 $ 183,205
Shares redeemed (310,304) (3,238,661)
---------- -----------
Net decrease (292,623) $(3,055,456)
========== ===========
During the year ended October 31, 1996, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------ ------
Growth Portfolio
Shares sold 61,014 $ 717,882
Dividends reinvested 315,748 2,895,406
---------- -----------
376,762 3,613,288
Shares redeemed (281,860) (3,487,192)
---------- -----------
Net increase 94,902 $ 126,096
========== ===========
Small Cap Portfolio
Shares sold 567,108 $10,311,184
Dividends reinvested 138,215 2,507,225
---------- -----------
705,323 12,818,409
Shares redeemed (307,294) (5,598,528)
---------- -----------
Net increase 398,029 $ 7,219,881
========== ===========
MidCap Growth Portfolio
Shares sold 50,525 $ 813,902
Dividends reinvested 111,850 1,618,472
---------- -----------
162,375 2,432,374
Shares redeemed (158,661) (2,662,173)
---------- -----------
Net increase (decrease) 3,714 $ (229,799)
========== ===========
Capital Appreciation Portfolio
Shares sold 53,444 $ 588,689
Dividends reinvested 179,584 1,765,311
---------- -----------
233,028 2,354,000
Shares redeemed (192,540) (2,440,328)
---------- -----------
Net increase (decrease) 40,488 $ (86,328)
========== ===========
21
