THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
ALGER SMALL CAP RETIREMENT PORTFOLIO
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
ANNUAL REPORT
OCTOBER 31, 2000
THE ALGER RETIREMENT FUND
1 World Trade Center
Suite 9333
New York, N.Y. 10048
(800) 992-3863
www.algerretirement.com
BOARD OF TRUSTEES
Fred M. Alger, Chairman
David D. Alger
Charles F. Baird, Jr.
Roger P. Cheever
Lester L. Colbert, Jr.
Stephen E. O'Neil
Nathan E. Saint-Amand
B. Joseph White
INVESTMENT MANAGER
Fred Alger Management, Inc.
1 World Trade Center
Suite 9333
New York, N.Y. 10048
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, N.J. 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, N.J. 07302
This report is submitted for the general information of the shareholders of The
Alger Retirement Fund. It is not authorized for distribution to prospective
investors unless accompanied by an effective Prospectus for the Fund, which
contains information concerning the Fund's investment policies, fees and
expenses as well as other pertinent information.
RREP100
<PAGE>
FELLOW SHAREHOLDERS:
November 20, 2000
THE YEAR IN REVIEW
In each of the last five years the U.S. stock market has posted yearly
gains of more than 20%, an unprecedented record of consecutive double-digit
returns. This year has seen a break in the market's momentum. For the year ended
October 31, 2000, the S&P 500 Index was up 6.1%. However, from January through
October the broad based index was down 1.8%, and the Dow Jones Industrial
Average, which ended 1999 very near the 11,500 we had predicted, was down more
than 4%.
PRICE SHOCKS SQUEEZE CORPORATE EARNINGS
Much of the stock market's volatility since March, when stock market
indices hovered near their highs, has been the result of investor uncertainty
over the effects of higher interest rates on the economy. During the summer
months, concerns about higher energy prices and the falling euro also came into
play, and the impacts of these shocks were seen in the third quarter as many
companies reported lower than expected earnings. Technology stocks in particular
came under pressure during the second half of the year following last year's
euphoric 86% gain in the Nasdaq.
After six Federal Reserve interest rate hikes since the summer of 1999
that culminated in a 50-basis-point increase in May 2000, the economy finally
began to show signs of slowing in the second half of the year. In July and
August stocks traded in a narrow range as investors watched oil prices and
waited for further signals on the direction of interest rates.
At its meeting on August 22, the Federal Open Market Committee (FOMC)
held rates steady but maintained an inflationary bias, in part due to higher
energy prices. Crude oil prices rose dramatically in August and in September
reached above $37 a barrel. Increased production by OPEC nations and the release
of emergency U.S. reserves helped stabilize prices but by the end of October
prices were still above $30 a barrel.
At the same time, the euro currency came under pressure in international
markets, falling to a low of $0.85 in September. Intervention by central banks
to support the currency temporarily halted the currency's slide, but on October
26, the currency reached a new low of 0.82, nearly 30% below its initial value
in January 1999.
Stock prices were negatively affected as companies began issuing
preannouncements in September warning that third quarter earnings would not meet
market expectations due to higher energy costs and the euro's decline. Earnings
of computer manufacturers were also affected by lower demand compared to last
year. The S&P 500 fell 0.97% during the third quarter while the technology-laden
Nasdaq Composite fell 7.39%. Small- and mid-capitalization stocks fared better,
with the S&P MidCap 400 rising 12.15% during the third quarter.
Corporate earnings reports continued to dominate the markets in October.
The Dow Jones Industrial Average gained 3% during the month to close at 10,971,
while the broader based S&P 500 fell 0.5%. The Nasdaq Composite fell 8.3% during
the month to close at 3,369.
Fixed income markets were mostly negatively affected during the year by
rising interest rates. Prices of long-term government bonds however were
supported by the Treasury department's buy-back program of $30 billion worth of
debt with maturities of ten to 30 years. At the end of October, 30-year bond
yields stood at 5.8%.
FURTHER SIGNS OF A SLOWER ECONOMY
Economic data released in early November showed further signs of a slower
economy, leading the FOMC to again hold interest rates steady at its last
meeting on November 15. The rate of growth in Gross Domestic Product slowed from
5.6% in the first quarter to 2.7% in the third quarter, within the targeted 2%
to 3% for a "soft landing." However, the Federal Reserve continues to maintain a
tightening bias in the face of higher core inflation and a tight labor market.
September's Consumer Price Index showed inflation at 3.4% year over year, with
core inflation (excluding food and energy) at 2.5% on an annual basis.
Unemployment remains near its 30-year low at 3.9%, and average hourly wages
showed an upward tick in October, rising 0.4% compared to analysts' expectations
of a 0.3% increase.
Consumer spending, responsible for two-thirds of the nation's GDP, may
also be slowing. The Consumer Board's measure of consumer confidence fell
sharply in October, reaching its lowest level since October 1999. Major
retailers have reported sluggish sales compared to year-ago levels and
<PAGE>
preliminary data from the National Association of Purchasing Management show
that manufacturing activity is also beginning to slow.
MARKING TIME WHILE THE VOTE COUNT CONTINUES
As this is an election year, the potential for a change in party
leadership affected individual stock sectors as investors took speculative
positions in anticipation of election results. As of November 20, however, there
is not yet a clear winner in the Presidential race, and the financial markets
have largely been marking time since November 7.
In the short-term, a prolonged court battle will likely have a negative
impact on the financial markets as investors in general are uncomfortable with
uncertainty. In the longer term, however, the election results may not have a
significant effect on stock prices. The Republicans have control of both the
Senate and the House, albiet by a narrow margin, limiting the likelihood that
any new social spending legislation will be enacted if Gore were to become
President. In the event of a Republican victory, proposed tax cuts may
eventually be enacted but the current proposals will likely have to be scaled
back in order to pass Congress.
PORTFOLIO MATTERS
ALGER SMALL CAP RETIREMENT PORTFOLIO
The Alger Small Cap Retirement Portfolio gained 10.06% for the twelve
months ended October 31, 2000, compared to a gain of 16.16% in the Russell 2000
Growth Index. While small-capitalization stocks in general have underperformed
larger companies in recent years, this trend reversed in 2000 as investors
sought attractive valuations among overlooked small-cap stocks. The Portfolio's
holdings in Internet and technology stocks came under pressure during the year,
while holdings in healthcare stocks contributed gains. During the year the
Portfolio's investment in semiconductor stocks was reduced in response to an
expectation that much of this sector's strong growth potential has been
realized. Positions in econom ically sensitive stocks were reduced in light of
the expected slower rate of economic growth.
ALGER GROWTH RETIREMENT PORTFOLIO
For the year ended October 31, 2000, the Alger Growth Retirement Portfolio
returned 10.27% compared to a 6.10% gain in the S&P 500. The Portfolio's
holdings in semiconductor, energy, and pharmaceutical stocks contributed gains
during the year, while holdings in Internet stocks and personal computer
manufacturers were adversely affected by the general downturn in the technology
sector. During the year the Portfolio's holdings in Internet and semiconductor
stocks were reduced. Selective investments in pharmaceuticals and financial
companies were among new holdings added to the Portfolio.
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
For the year ended October 31, 2000, the Alger MidCap Growth Retirement
Portfolio earned a total return of 51.29% compared to a 31.65% increase in the
benchmark S&P MidCap 400 Index. During the twelve months, mid-capitalization
stocks as a group turned in the best performance compared to the S&P 500 and the
Russell 2000 Growth Index, which tracks smaller companies. The Portfolio
substantially outperformed its benchmark index as a result of careful stock
selection, specifically semiconductor, energy, and pharmaceutical stocks.
Positions in Internet companies posted declines during the year and were trimmed
from the Portfolio in favor of new investments in healthcare and energy services
companies.
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
For the twelve months ended October 31, 2000 the Alger Capital
Appreciation Retirement Portfolio returned 13.14% compared to 6.10% for the S&P
500. The Portfolio employs an all-capitalization approach to selecting
securities and has benefited in recent years from a higher weighting towards
large-capitalization growth stocks. However, during the last twelve months the
Portfolio benefited from the positive trend in small- and mid-capitalization
issues. The Portfolio's holdings in Internet and
2
<PAGE>
technology stocks came under pressure with the general decline in technology
issues during the year, while healthcare, software, and energy stocks
contributed gains. During the second half of the year the Portfolio's holdings
in technology stocks were reduced in favor of new investments in stocks that are
positioned to sustain earnings in a period of slower economic growth. New
investments also included positions in biotechnology stocks offering strong
growth potential from product development efforts.
LOOKING AHEAD
Looking ahead, we believe that sustained economic growth in the 2% to 3%
range combined with moderate inflation will offer opportunities for a decline in
interest rates in 2001, a move that would lend support to stocks. We expect the
outcome of the Presidential election to have a modest impact on the economy and
the markets over the long term, and the resolution of the current uncertainty
will likely result in a rebound in stock prices. In our view, a Bush
administration would undoubtedly be more pro-business than a Gore
administration; however, if Gore is President the Republican control of Congress
will likely result in gridlock, and that too can be good for the markets.
More important than the election results, we believe, is the prospect of
declining interest rates in 2001. Lower interest rates will set the stage for
quality companies to sustain corporate earnings growth, and support a rally in
bond prices and a resurgence in stock prices. In this environment, the Alger
Retirement Portfolios will continue to seek investments in quality companies
that offer superior growth potential, consistent with our fundamental approach
to security selection.
Respectfully submitted,
/s/ David D. Alger
----------------------
David D. Alger
President
3
<PAGE>
--------------------------------------------------------------------------------
ALGER GROWTH RETIREMENT PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION NOVEMBER 8, 1993
--------------------------------------------------------------------------------
[The table below represents a line chart in the printed piece.]
Alger
Retirement
Growth S&P 500
11/8/93 10000 10000
10/31/94 10380 10410
10/31/95 14231 13162
10/31/96 15396 16333
10/31/97 19836 21579
10/31/98 24878 26324
10/31/99 35326 33082
10/31/00 38955 35100
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Growth Retirement Portfolio and the S&P 500 Index
on November 8, 1993, the inception date of the Alger Growth Retirement
Portfolio. The figures for both the Alger Growth Retirement Portfolio and the
S&P 500 Index, an unmanaged index of common stocks, include reinvestment of
dividends.
--------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH OCTOBER 31, 2000
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE
INCEPTION
1 YEAR 5 YEARS 11/8/93
----------------------------------
ALGER GROWTH
RETIREMENT PORTFOLIO 10.27% 22.31% 21.51%
S&P 500 Index 6.10% 21.67% 19.70%
----------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
4
<PAGE>
--------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 2000
SHARES COMMON STOCKS--92.5% VALUE
------ -----
ADVERTISING--1.1%
15,300 Omnicom Group Inc. ............................... $ 1,411,425
------------
AEROSPACE--4.4%
10,900 General Dynamics Corporation ..................... 780,031
69,000 United Technologies Corporation .................. 4,817,063
------------
5,597,094
------------
AUTOMOTIVE--.8%
21,300 Harley-Davidson, Inc. ............................ 1,026,394
------------
BIO-TECHNOLOGY RESEARCH
& PRODUCTION--2.5%
53,800 Amgen Inc.* ...................................... 3,117,038
------------
CABLE--2.4%
33,800 Comcast Corp., Cl. A Special* .................... 1,377,350
22,000 Time Warner Inc. ................................. 1,670,020
------------
3,047,370
------------
COMMUNICATION
EQUIPMENT--3.8%
68,800 Cisco Systems, Inc.* ............................. 3,706,600
13,952 Corning Incorporated ............................. 1,067,328
------------
4,773,928
------------
COMMUNICATIONS
TECHNOLOGY--5.5%
38,300 America Online, Inc.* ............................ 1,931,469
68,000 AT&T Corp. Liberty Media
Group, Series A* ............................... 1,224,000
20,800 Exodus Communications, Inc.* ..................... 698,100
10,600 SBC Communications Inc. .......................... 611,488
44,400 Viacom Inc. Cl. B* ............................... 2,525,250
------------
6,990,307
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--4.5%
22,000 Dell Computer Corporation* ....................... 649,000
20,800 EMC Corporation* ................................. 1,852,500
18,000 Hewlett-Packard Company .......................... 835,875
21,200 Sun Microsystems, Inc.* .......................... 2,350,550
------------
5,687,925
------------
COMPUTER SERVICES--3.1%
18,000 CNET Networks, Inc.*+ ............................ 567,000
60,200 eBay Inc.*+ ...................................... 3,100,300
5,184 Yahoo Inc. *+ .................................... 303,912
------------
3,971,212
------------
COMPUTER SOFTWARE--5.3%
12,500 BEA Systems, Inc.*+ .............................. $ 896,875
17,200 Commerce One, Inc.*+ ............................. 1,104,025
20,600 Intuit Inc.* ..................................... 1,265,613
5,555 i2 Technologies, Inc.* ........................... 944,350
37,000 Microsoft Corporation* ........................... 2,548,375
------------
6,759,238
------------
CONGLOMERATE--5.6%
23,000 General Electric Company ......................... 1,260,688
33,500 Philip Morris Companies Inc. ..................... 1,226,936
81,100 Tyco International Limited ....................... 4,597,356
------------
7,084,980
------------
ENERGY & ENERGY
SERVICES--5.6%
15,650 Calpine Corporation * ............................ 1,235,372
7,800 Duke Energy Corporation .......................... 674,213
106,150 Halliburton Company .............................. 3,934,184
22,300 Transocean Sedco Forex Inc. ...................... 1,181,900
------------
7,025,669
------------
FINANCIAL SERVICES--9.1%
12,000 American Express Company ......................... 720,000
67,200 Citigroup Inc. ................................... 3,536,400
5,600 Marsh & McLennan Companies, Inc. ................. 732,200
19,700 Merrill Lynch & Co., Inc. ........................ 1,379,000
52,050 Schwab (Charles) Corporation (The) ............... 1,828,256
53,000 Stilwell Financial Inc. .......................... 2,375,062
22,200 Washington Mutual, Inc. .......................... 976,800
------------
11,547,718
------------
FOOD CHAINS--2.4%
31,100 The Kroger Co.* .................................. 701,694
43,500 Safeway Inc.* .................................... 2,378,906
------------
3,080,600
------------
FOODS & BEVERAGES--1.3%
27,700 The Coca-Cola Company ............................ 1,672,389
------------
HEALTH CARE ADMINiSTRATIVE
SERVICES--3.2%
42,500 Cardinal Health, Inc. ............................ 4,026,875
------------
INSURANCE--2.0%
26,000 American International Group, Inc. ............... 2,548,000
------------
MANUFACTURING--1.7%
5,600 Sanmina Corporation*+ ............................ 640,150
33,200 Solectron Corporation* ........................... 1,460,800
------------
2,100,950
------------
5
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
SHARES COMMON STOCKS (CONTINUED) VALUE
------ -----
MEDICAL DEVICES--1.7%
23,000 Guidant Corporation* ............................. $ 1,217,563
14,000 Medtronic, Inc. .................................. 760,375
------------
1,977,938
------------
OIL & GAS--3.5%
49,600 Exxon Mobil Corporation .......................... 4,423,700
------------
PHARMACEUTICALS--8.8%
15,200 Abbott Laboratories .............................. 802,750
46,805 American Home Products Corporation ............... 2,972,116
29,700 Baxter International Inc. ........................ 2,440,969
114,400 Pfizer Inc. ...................................... 4,940,650
------------
11,156,485
------------
RETAIL--5.3%
25,000 Best Buy Co., Inc.* .............................. 1,254,687
15,400 Home Depot, Inc. ................................. 662,200
29,700 Walgreen Co. ..................................... 1,355,062
76,800 Wal-Mart Stores, Inc. ............................ 3,484,800
------------
6,756,749
------------
SEMICONDUCTOR CAPITAL
EQUIPMENT--2.4%
37,300 Applied Materials, Inc.* ......................... 1,981,563
34,600 Teradyne, Inc.* .................................. 1,081,250
------------
3,062,813
------------
SEMICONDUCTORS--6.5%
81,100 Altera Corporation * ............................. 3,320,031
31,500 Intel Corporation ................................ 1,417,500
29,300 Linear Technology Corporation .................... 1,891,681
31,800 Texas Instruments, Incorporated .................. 1,560,188
------------
8,189,400
------------
Total Common Stocks
(Cost $105,597,631) ............................ 117,036,197
------------
PREFERRED STOCK--.5%
COMMUNICATIONS
15,400 Nokia Corporation, ADR*
(Cost $615,955) .................................. 658,350
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--14.2% VALUE
---------- ------------
SHORT-TERM CORPORATE
NOTES--9.5%
$4,500,000 AES Hawaii Inc.,
6.50%, 11/10/00 ................................ $ 4,492,688
4,500,000 AT&T Corp.,
6.54%, 11/21/00 ................................ 4,483,650
3,000,000 Potomac Electric Power Company,
6.49%, 11/21/00 ................................ 2,989,182
------------
Total Short-Term Corporate Notes
(Cost $11,965,520) ............................. 11,965,520
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--2.0%
Securities Held Under Repurchase
Agreements, 6.47%, 11/1/00,
with State Street Bank and Trust
Company, dtd 10/31/00, repurchase
price $2,525,454; collateralized by
Federal Home Loan Bank Discount
Notes (par value $2,520,000
due 2/22/05) ................................... 2,525,000
------------
OTHER SHORT-TERM
SHARES INVESTMENTS--2.7%
----------
3,477,755 Securities Lending Quality Trust
(Cost $3,477,755) (b) .......................... 3,477,755
------------
Total Short-Term Investments
(Cost $17,968,275) ............................. 17,968,275
Total Investments
(Cost $124,181,861)(a) ............................... 107.2% 135,662,822
Liabilities in Excess of Other Assets .................. (7.2) (9,089,796)
----- ------------
Net Assets ............................................. 100.0% $126,573,026
===== ============
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At October 31, 2000, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $124,181,861, amounted to
$11,480,961 which consisted of aggregate gross unrealized appreciation of
$17,315,165 and aggregate gross unrealized depreciation of $5,834,204.
(b) Represents investment of cash collateral received for securities on loan.
See Notes to Financial Statements.
6
<PAGE>
THE ALGER RETIREMENT FUND
alger GROWTH Retirement PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........... $ 17.17 $ 12.37 $ 10.78 $ 9.32 $ 11.65
-------- -------- -------- -------- --------
Net investment income (loss) ................. (0.03)(i) (0.05) (0.01)(i) (0.02)(i) (0.01)
Net realized and unrealized
gain on investments ....................... 1.92 5.23 2.82 2.65 0.91
-------- -------- -------- -------- --------
Total from investment
operations ............................ 1.89 5.18 2.81 2.63 0.90
Distributions from net
realized gains ............................ (1.91) (0.38) (1.22) (1.17) (3.23)
-------- -------- -------- -------- --------
Net asset value,
end of year ............................... $ 17.15 $ 17.17 $ 12.37 $ 10.78 $ 9.32
======== ======== ======== ======== ========
Total Return ................................. 10.3% 42.0% 25.4% 28.8% 8.2%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year
(000's omitted) ......................... $126,573 $ 72,746 $ 40,196 $ 22,922 $ 11,325
======== ======== ======== ======== ========
Ratio of expenses to
average net assets ...................... 1.06% 1.07% 1.11% 1.13% 1.07%
======== ======== ======== ======== ========
Ratio of net investment
income (loss) to
average net assets ...................... (0.16%) (0.39%) (0.06%) (0.22%) (0.09%)
======== ======== ======== ======== ========
Portfolio Turnover Rate .................... 101.29% 143.80% 130.31% 159.38% 142.83%
======== ======== ======== ======== ========
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
7
<PAGE>
-------------------------------------------------------------------------------
ALGER SMALL CAP RETIREMENT PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2000 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION NOVEMBER 8, 1993
-------------------------------------------------------------------------------
[The table below represents a line chart in the printed piece.]
Alger
Small Cap Russell 2000
Retirement Growth Index
11/8/93 10000 10000
10/31/94 10830 10005
10/31/95 17999 12063
10/31/96 19654 13671
10/31/97 23388 16565
10/31/98 22971 13940
10/31/99 35085 18022
10/31/00 38614 20934
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Small Cap Retirement Portfolio and the Russell 2000
Growth Index on November 8, 1993, the inception date of the Alger Small Cap
Retirement Portfolio. The figures for the Alger Small Cap Retirement Portfolio
and the Russell 2000 Growth Index, an unmanaged index of common stocks, include
reinvestment of dividends.
-------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH OCTOBER 31, 2000
-------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE
INCEPTION
1 YEAR 5 YEARS 11/8/93
----------------------------------
Alger Small Cap
Retirement Portfolio 10.06% 16.49% 21.35%
Russell 2000 Growth Index 16.16% 11.66% 11.16%
----------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
8
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 2000
SHARES COMMON STOCKS--86.7% VALUE
------ -----
AIR TRANSPORT--.4%
15,900 SkyWest, Inc. .................................... $ 802,950
------------
BANKS--.5%
5,800 Greater Bay Bancorp .............................. 188,862
19,100 Southwest Bancorporation
of Texas, Inc.* .................................. 697,150
------------
886,012
------------
BIO-TECHNOLOGY RESEARCH
& PRODUCTION--7.2%
17,370 Albany Molecular Research, Inc.* ................. 1,009,631
10,200 Alexion Pharmaceuticals, Inc.* ................... 1,054,425
17,300 Aviron* .......................................... 1,130,987
9,500 Cell Therapeutics, Inc.* ......................... 635,461
35,594 Cephalon, Inc.* .................................. 1,908,728
37,900 Charles River Laboratories International, Inc.* .. 994,875
13,700 IDEC Pharmaceuticals Corporation* ................ 2,686,913
36,700 Informax, Inc.* .................................. 1,020,719
58,200 Lexicon Genetics Incorporated* ................... 1,178,550
3,400 Myriad Genetics, Inc.* ........................... 408,000
21,600 NPS Pharmaceuticals, Inc.* ....................... 926,100
6,250 Titan Pharmaceuticals, Inc.* ..................... 263,000
18,150 Variagenics, Inc.* ............................... 299,475
------------
13,516,864
------------
BUSINESS SERVICES
5,720 AvantGo, Inc.* ................................... 56,305
------------
COMMERCIAL SERVICES--.5%
19,300 Corporate Executive Board Co. .................... 890,213
------------
COMMUNICATIONS
TECHNOLOGY--7.4%
34,700 Avocent Corporation* ............................. 2,461,531
74,500 Cobalt Networks, Inc.* ........................... 4,106,812
18,800 Digital Lightwave, Inc.*+ ........................ 952,925
40,200 Packeteer, Inc.* ................................. 999,975
20,200 Proxim, Inc.* .................................... 1,224,625
30,100 REMEC, Inc.* ..................................... 897,356
27,700 Research in Motion Limited* ...................... 2,770,000
29,200 TeleCommunication
Systems, Inc. Cl. A.* ............................ 459,900
------------
13,873,124
------------
COMPUTER SERVICES--10.8%
79,500 Actuate Corporation* ............................. 2,240,906
37,100 Aspen Technology, Inc.* .......................... 1,532,694
11,900 Click Commerce, Inc.* ............................ 340,638
7,900 Documentum, Inc.* ................................ 671,500
2,160 Embarcadero Technologies, Inc.* .................. 130,545
39,000 Evolve Software, Inc.* ........................... 611,813
106,500 Exult Inc.*+ ..................................... 1,597,500
15,300 Informatica Corporation* ......................... 1,445,850
25,612 Interwoven, Inc.* ................................ 2,580,409
15,100 Manugistics Group, Inc.* ......................... 1,720,456
13,400 Micromuse Inc.* .................................. 2,273,812
20,100 Netegrity, Inc.* ................................. 1,567,800
9,700 Resonate Inc.* ................................... 411,038
20,600 SignalSoft Corporation* .......................... 585,813
32,150 SpeechWorks International Inc.* .................. 2,676,488
------------
20,387,262
------------
COMPUTER TECHNOLOGY--.6%
37,010 Computer Network Technology Corporation* ......... 1,124,756
------------
DIVERSIFIED FINANCIAL
SERVICES--2.3%
92,000 BISYS Group, Inc.* ............................... 4,335,500
------------
DRUGS &
PHARMACEUTICALS--8.2%
23,250 ALZA Corporation* ................................ 1,881,797
120,000 AmeriSource Health Corporation Cl. A* ............ 5,212,500
97,030 Bindley Western Industries, Inc. ................. 3,487,015
22,200 COR Therapeutics, Inc.* .......................... 1,254,300
16,000 Medicis Pharmaceutical Corporation* .............. 1,178,000
24,900 Onyx Pharmaceuticals, Inc.*+ ..................... 373,500
26,100 Priority Healthcare Corporation, Cl. B* .......... 1,402,875
12,000 United Therapeutics Corporation*+ ................ 642,000
------------
15,431,987
------------
ELECTRONICS--6.5%
40,200 Benchmark Electronics, Inc.* ..................... 1,618,050
88,000 DDi Corp.* ....................................... 3,514,500
25,300 Keithley Instruments, Inc. ....................... 1,353,550
20,200 Mettler-Toledo International Inc. * .............. 943,088
40,300 MRV Communications, Inc.* ........................ 1,591,850
41,800 Plexus Corp.* .................................... 2,636,012
26,300 SMTC Corporation* ................................ 496,413
------------
12,153,463
------------
ENERGY--.9%
21,100 CARBO Ceramics Inc. .............................. 631,681
12,890 FuelCell Energy, Inc.*+ .......................... 986,891
5,700 Veritas DGC Inc.* ................................ 171,000
------------
1,789,572
------------
FINANCIAL INFORMATION
SERVICES--2.2%
110,750 FactSet Research Systems Inc. .................... 4,194,103
------------
9
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
SHARES COMMON STOCKS (CONTINUED) VALUE
------ -----
FREIGHT--.1%
4,300 EGL, Inc.* ....................................... $ 122,550
------------
HEALTH CARE--9.3%
35,700 Advance Paradigm, Inc.* .......................... 1,744,838
35,300 IMPATH Inc.* ..................................... 2,669,562
46,250 Laboratory Corporation of America Holdings* ...... 6,237,969
57,310 Orthodontic Centers Of America* .................. 1,912,721
114,000 Province Healthcare Company* ..................... 4,802,250
------------
17,367,340
------------
HOTELS--.2%
22,500 Orient-Express Hotels Ltd. Cl. A.* ............... 406,406
------------
IDENTIFICATION CONTROL
& FILTER DEVICES--.9%
39,600 Artesyn Technologies, Inc.* ...................... 1,608,750
------------
INVESTMENT MANAGEMENT
COMPANIES--4.9%
39,600 Affiliated Managers Group, Inc.* ................. 2,380,950
70,800 Blackrock Inc.* .................................. 3,017,850
130,800 Federated Investors, Inc. Cl. B .................. 3,809,550
------------
9,208,350
------------
MEDICAL & DENTAL
INSTRUMENTS
& SUPPLIES--2.5%
21,100 Cytyc Corporation* ............................... 1,252,483
48,700 Enzon, Inc* ...................................... 3,469,875
------------
4,722,358
------------
MEDICAL SERVICES--2.6%
61,500 Aurora Biosciences Corp.* ........................ 3,747,655
15,200 Deltagen, Inc.* .................................. 241,300
21,940 RehabCare Group, Inc.* ........................... 947,534
------------
4,936,489
------------
METAL FABRICATING--2.5%
58,690 Shaw Group Inc. (The)* ........................... 4,783,235
------------
OIL & GAS--1.2%
19,000 Cross Timbers Oil Company ........................ 357,438
182,300 Grey Wolf, Inc.* ................................. 843,138
7,800 Mitchell Energy & Development Corp. .............. 358,800
4,530 Spinnaker Exploration Company* ................... 137,032
10,500 St. Mary Land & Exploration Company .............. 246,094
8,400 Swift Energy Company* ............................ 273,000
------------
2,215,502
------------
PHOTOGRAPHY--1.2%
71,385 Concord Camera Corp.* ............................ $ 2,208,473
------------
PRODUCTION TECHNOLOGY
EQUIPMENT--.4%
14,222 DuPont Photomasks, Inc.* ......................... 798,210
------------
RESTAURANTS--2.0%
33,650 California Pizza Kitchen, Inc.* .................. 1,177,750
53,900 Cheesecake Factory Incorporated*2,388,444
3,000 Krispy Kreme Doughnuts Inc.* ..................... 295,688
------------
3,861,882
------------
RETAIL--1.2%
62,800 Abercrombie & Fitch Co., CL. A * ................. 1,479,725
23,000 Zale Corporation* ................................ 779,125
------------
2,258,850
------------
SCIENTIFIC EQUIPMENT
& SUPPLIERS--2.3%
38,600 Newport Corporation .............................. 4,408,241
------------
SECURITIES BROKERAGE
& SERVICES--.6%
30,100 Investment Technology Group, Inc.* ............... 1,083,600
------------
SEMICONDUCTORS--5.9%
15,500 Actel Corporation* ............................... 567,688
14,651 Applied Micro Circuits Corp.* .................... 1,119,907
21,300 Elantec Semiconductor Inc.* ...................... 2,369,625
18,000 Exar Corporation* ................................ 804,375
100,000 Integrated Circuit Systems, Inc.* ................ 1,362,500
36,300 Microtune, Inc.* ................................. 1,020,938
68,100 Oak Technology Inc.* ............................. 1,911,056
10,000 OmniVision Technologies, Inc.* ................... 341,250
57,500 Pericom Semiconductor Corporation* ............... 1,523,750
------------
11,021,089
------------
TELECOMMUNICATIONS
EQUIPMENT--.5%
21,400 Plantronics, Inc.* ............................... 976,375
------------
TRUCKERS--.8%
34,750 Forward Air Corporation* ......................... 1,429,094
------------
UTILITIES--.1%
12,295 TNPC, Inc.* ...................................... 204,404
------------
Total Common Stocks
(Cost $145,667,265) ............................ 163,063,309
10
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--16.4% VALUE
--------- ------
SHORT-TERM CORPORATE
NOTES--13.6%
$4,500,000 AESHawaii Inc.,
6.50%, 11/10/00 ................................ $ 4,492,688
4,500,000 National Australia Funding (Del),
6.43%, 11/30/00 ................................ 4,476,691
7,500,000 Potomac Electric Power Company,
6.49%, 11/21/00 ................................ 7,472,958
9,000,000 Textron Financial Corporation,
6.52%, 11/17/00 ................................ 8,973,920
------------
Total Short-Term Corporate Notes
(Cost $25,416,257) ............................. 25,416,257
------------
SECURITIES HELD UNDER
REPURCHASE
AGREEMENTS--2.8%
Securities Held Under Repurchase
Agreements, 6.47%, 11/1/00, with
State Street Bank and Trust
Company, dtd 10/31/00, repurchase
price $5,290,951; collateralized by
Federal Home Loan Bank Discount
Notes (par value $5,280,000
due 2/22/05) ................................... 5,290,000
------------
Total Short-Term Investments
(Cost $30,706,257) ............................. 30,706,257
------------
Total Investments
(Cost $176,373,522) (a) ............................. 103.1% 193,769,566
Liabilities in Excess of Other Assets ................. (3.1) (5,796,432)
----- ------------
Net Assets ............................................ 100.0% $187,973,134
===== ============
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At October 31, 2000, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $176,373,522, amounted to
$17,396,044 which consisted of aggregate gross unrealized appreciation of
$27,632,137 and aggregate gross unrealized depreciation of $10,236,093.
See Notes to Financial Statements.
11
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER SMALL CAP RETIREMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........... $ 22.82 $ 16.37 $ 18.00 $ 17.87 $ 17.92
-------- -------- -------- -------- --------
Net investment income (loss) ................. (0.06)(i) (0.12)(i) (0.08) (0.10) (0.05)
Net realized and unrealized
gain on investments ....................... 2.50 8.65 0.02 3.13 1.72
-------- -------- -------- -------- --------
Total from investment operations ......... 2.44 8.53 (0.06) 3.03 1.67
Distributions from net realized gains ........ (1.48) (2.08) (1.57) (2.90) (1.72)
-------- -------- -------- -------- --------
Net asset value, end of year ................. $ 23.78 $ 22.82 $ 16.37 $ 18.00 $ 17.87
======== ======== ======== ======== ========
Total Return ................................. 10.1% 52.7% (1.8%) 19.0% 9.2%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) .... $187,973 $ 63,711 $ 29,938 $ 31,499 $ 30,043
======== ======== ======== ======== ========
Ratio of expenses to average net assets .... 1.17% 1.02% 1.03% 1.06% 1.05%
======== ======== ======== ======== ========
Ratio of net investment income (loss) to
average net assets ...................... (0.23%) (0.57%) (0.55%) (0.62%) (0.54%)
======== ======== ======== ======== ========
Portfolio Turnover Rate .................... 242.45% 193.32% 169.97% 134.25% 182.49%
======== ======== ======== ======== ========
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
12
<PAGE>
-------------------------------------------------------------------------------
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2000 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION NOVEMBER 8, 1993
-------------------------------------------------------------------------------
[The table below represents a line chart in the printed piece.]
Alger
MicCap
Growth S&P MidCap
Retirement 400 Index
11/8/93 10000 10000
10/31/94 11660 10292
10/31/95 17968 12475
10/31/96 19088 14637
10/31/97 24544 19417
10/31/98 27366 20721
10/31/99 38966 25087
10/31/00 58951 33027
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger MidCap Growth Retirement Portfolio and the S&P
MidCap 400 Index on November 8, 1993, the inception date of the Alger MidCap
Growth Retirement Portfolio. Figures for the Alger MidCap Growth Retirement
Portfolio and the S&P MidCap 400 Index, an unmanaged index of common stocks,
include reinvestment of dividends.
-------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH OCTOBER 31, 2000
-------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE
INCEPTION
1 YEAR 5 YEARS 11/8/93
----------------------------------
Alger MidCap Growth
Retirement Portfolio 51.29% 26.82% 28.94%
S&P MidCap 400 Index 31.65% 21.50% 18.66%
----------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
13
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 2000
SHARES COMMON STOCKS--85.3% VALUE
------- -----
ADVERTISING--1.1%
38,800 Lamar Advertising Company, Cl. A* ................ $ 1,862,400
------------
AEROSPACE--.7%
18,000 General Dynamics Corporation ..................... 1,288,125
------------
AIRLINES--.5%
17,000 Continental Airlines, Inc. Cl. B* ................ 892,500
------------
AUTOMOTIVE .5%
18,100 Harley-Davidson, Inc. ............................ 872,194
------------
BIO-TECHNOLOGY RESEARCH
& PRODUCTION--3.3%
12,100 Affymetrix Inc.* ................................. 670,037
46,900 Cephalon, Inc.* .................................. 2,515,013
54,300 QLT Inc.* ........................................ 2,700,577
------------
5,885,627
------------
BROADCASTING--.4%
34,800 Entravision Communications Corporation Cl. A* .... 615,525
------------
BUSINESS SERVICES--1.5%
19,000 CSG Systems International Inc.* .................. 882,312
33,850 Fiserv Inc.* ..................................... 1,775,009
------------
2,657,321
------------
COMMUNICATION
EQUIPMENT--1.5%
27,100 Efficient Networks, Inc.* ........................ 1,136,930
81,300 Spectrasite Holdings, Inc.* ...................... 1,605,675
------------
2,742,605
------------
COMMUNICATIONS
TECHNOLOGY--.4%
21,200 Exodus Communications, Inc.* ..................... 711,525
------------
COMPUTER SERVICES--5.3%
8,800 Amdocs Limited* .................................. 570,350
121,600 CNET Networks, Inc.* ............................. 3,830,400
98,500 eBay Inc.* ....................................... 5,072,750
------------
9,473,500
------------
COMPUTER SOFTWARE--9.1%
81,000 Commerce One, Inc.* .............................. 5,199,187
112,100 Intuit Inc.* ..................................... 6,887,144
56,900 PeopleSoft, Inc.* ................................ 2,483,152
11,100 Software.com, Inc.* .............................. 1,653,900
------------
16,223,383
------------
DRUGS &
PHARMACEUTICALS--5.5%
72,150 ALZA Corporation* ................................ 5,839,641
91,200 AmeriSource Health Corporation Cl. A* ............ 3,961,500
------------
9,801,141
------------
ENERGY & ENERGY
SERVICES--13.6%
100,200 BJ Services Company* ............................. 5,254,237
55,900 Calpine Corporation* ............................. 4,412,606
69,134 Cooper Cameron Corporation* ...................... 3,767,803
104,950 Nabors Industries, Inc.* ......................... 5,341,955
40,000 Santa Fe International Corporation ............... 1,460,000
40,600 Smith International, Inc.* ....................... 2,862,300
10,000 Southern Energy Inc.* ............................ 272,500
15,000 Transocean Sedco Forex Inc. ...................... 795,000
------------
24,166,401
------------
FINANCIAL SERVICES--3.3%
34,700 Concord EFS Inc.* ................................ 1,433,544
97,400 Stilwell Financial Inc. .......................... 4,364,737
------------
5,798,281
------------
FOODS & BEVERAGES--3.5%
138,400 Starbucks Corporation* ........................... 6,184,750
------------
HEALTH CARE--1.5%
20,350 Laboratory Corporation of America Holdings* ...... 2,744,706
------------
INDUSTRIAL EQUIPMENT--3.9%
16,000 SPX Corporation* ................................. 1,978,000
68,400 Waters Corporation* .............................. 4,963,275
------------
6,941,275
------------
MANUFACTURING--8.5%
32,500 Dover Corporation ................................ 1,379,219
20,200 Flextronics International Ltd.* .................. 767,600
33,150 Jabil Circuit, Inc.* ............................. 1,891,622
93,300 Millipore Corporation ............................ 4,898,250
53,720 Sanmina Corporation* ............................. 6,140,867
------------
15,077,558
------------
MEDICAL SERVICES--1.5%
39,200 Express Scripts Inc. Cl. A* ...................... 2,633,750
------------
OIL & GAS--2.4%
40,300 Devon Energy Corporation ......................... 2,031,120
55,550 EOG Resources Inc. ............................... 2,187,281
------------
4,218,401
------------
14
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
SHARES COMMON STOCKS--(Continued) VALUE
------- -----
PHARMACEUTICALS--4.4%
17,100 Allergan, Inc. ................................... $ 1,437,469
48,400 Forest Laboratories, Inc.* ....................... 6,413,000
------------
7,850,469
------------
RESTAURANTS--2.0%
127,400 Outback Steakhouse, Inc.* ........................ 3,630,900
------------
RETAIL--.5%
16,700 Best Buy Co., Inc.* .............................. 838,131
------------
SCIENTIFIC EQUIPMENT &
SUPPLIERS--.4%
6,000 Newport Corporation .............................. 685,219
------------
SECURITIES BROKERAGE &
SERVICES--.4%
17,450 Investment Technology Group, Inc.* ............... 628,200
------------
SEMICONDUCTOR CAPITAL
EQUIPMENT--1.6%
16,900 ATMI, Inc.* ...................................... 318,988
80,713 Teradyne, Inc.* .................................. 2,522,281
------------
2,841,269
------------
SEMICONDUCTORS--8.0%
96,600 Altera Corporation* .............................. 3,954,563
70,600 Linear Technology Corporation .................... 4,558,112
168,200 Microchip Technology Incorporated* ............... 5,319,325
15,000 Vishay Intertechnology, Inc.* .................... 450,000
------------
14,282,000
------------
Total Common Stocks
(Cost $136,159,932) 151,547,156
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--12.0% VALUE
--------- -----
SHORT-TERM CORPORATE
NOTES--9.0%
$5,000,000 AES Hawaii Inc.,
6.50%, 11/10/00 ................................ $ 4,991,875
5,000,000 AT&T Corp.,
6.54%, 11/21/00 ................................ 4,981,833
6,000,000 Consolidated Natural Gas Company,
6.55%, 11/30/00 ................................ 5,968,343
------------
Total Short-Term Corporate Notes
(Cost $15,942,051) ............................. 15,942,051
------------
SECURITIES HELD UNDER
REPURCHASE
AGREEMENTS--3.0%
Securities Held Under Repurchase
Agreements, 6.47%, 11/1/00,
with State Street Bank and Trust
Company, dtd 10/31/00, repurchase
price $5,240,942; collateralized by
Federal Home Loan Bank Discount
Notes (par value $5,230,000
due 2/22/05) ................................... 5,240,000
------------
Total Short-Term Investments
(Cost $21,182,051) ............................. 21,182,051
------------
Total Investments
(Cost $157,341,983)(a) ............................. 97.3% 172,729,207
Other Assets in Excess of Liabilities ................ 2.7 4,836,389
----- ------------
Net Assets ........................................... 100.0% $177,565,596
===== ============
* Non-income producing security.
(a) At October 31, 2000, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $157,341,983, amounted to
$15,387,224 which consisted of aggregate gross unrealized appreciation of
$24,374,095 and aggregate gross unrealized depreciation of $8,986,871.
See Notes to Financial Statements.
15
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........... $ 11.80 $ 8.83 $ 11.36 $ 14.48 $ 16.34
-------- -------- -------- -------- --------
Net investment income (loss) ................. (0.04)(i) (0.05)(i) (0.06)(i) (0.15) (0.07)
Net realized and unrealized
gain on investments ....................... 6.07 3.78 1.78 3.46 1.09
-------- -------- -------- -------- --------
Total from investment operations ........ 6.03 3.73 1.72 3.31 1.02
Distributions from net realized gains ........ (0.30) (0.76) (4.25) (6.43) (2.88)
-------- -------- -------- -------- --------
Net asset value, end of year ................. $ 17.53 $ 11.80 $ 8.83 $ 11.36 $ 14.48
======== ======== ======== ======== ========
Total Return ................................. 51.3% 42.4% 11.5% 28.6% 6.2%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) .... $177,566 $ 28,233 $ 6,667 $ 6,435 $ 9,726
======== ======== ======== ======== ========
Ratio of expenses to average net assets .... 1.12% 1.23% 1.22% 1.31% 1.16%
======== ======== ======== ======== ========
Ratio of net investment income (loss) to
average net assets ...................... (0.24%) (0.49%) (0.52%) (0.79%) (0.45%)
======== ======== ======== ======== ========
Portfolio Turnover Rate .................... 113.14% 165.68% 184.23% 183.31% 170.21%
======== ======== ======== ======== ========
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
16
<PAGE>
-------------------------------------------------------------------------------
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 2000 (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION NOVEMBER 8, 1993
-------------------------------------------------------------------------------
[The table below represents a line chart in the printed piece.]
Alger
Capital
Appreciation S&P 500
Retirement Index
11/8/93 10000 10000
10/31/94 10080 10410
10/31/95 15564 13162
10/31/96 16515 16333
10/31/97 20820 21579
10/31/98 26672 26324
10/31/99 49169 33082
10/31/00 55,631 35,100
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Capital Appreciation Retirement Portfolio and the
S&P 500 Index on November 8, 1993, the inception date of the Alger Capital
Appreciation Retirement Portfolio. Figures for the Portfolio and the S&P 500
Index, an unmanaged index of common stocks, include reinvestment of dividends.
-------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH OCTOBER 31, 2000
-------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
SINCE
INCEPTION
1 YEAR 5 YEARS 11/8/93
----------------------------------
Alger Capital Appreciation
Retirement Portfolio 13.14% 29.02% 27.87%
S&P 500 Index 6.10% 21.67% 19.70%
----------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
17
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENTFUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 2000
SHARES COMMON STOCKS--86.1% VALUE
------- -----
BIO-TECHNOLOGY RESEARCH &
PRODUCTION--5.7%
18,000 Affymetrix Inc.* ................................. $ 996,751
140,700 Amgen Inc.* ...................................... 8,151,805
34,000 Celgene Corporation*+ ............................ 2,188,750
30,000 Cephalon, Inc.*+ ................................. 1,608,750
40,000 QIAGEN N.V.*+ .................................... 1,725,000
28,400 QLT Inc.*+ ....................................... 1,412,456
------------
16,083,512
------------
CABLE--.7%
47,900 Comcast Corp., Cl. A Special* .................... 1,951,925
------------
COMMUNICATION
EQUIPMENT--7.3%
166,900 Cisco Systems, Inc.* ............................. 8,991,738
13,700 Redback Networks Inc.*+ .......................... 1,458,194
150,850 Nortel Networks Corporation ...................... 6,863,675
49,000 QUALCOMM Inc.* ................................... 3,190,359
------------
20,503,966
------------
COMMUNICATIONS
TECHNOLOGY--4.4%
118,700 America Online, Inc.* ............................ 5,986,040
41,400 Exodus Communications, Inc.* ..................... 1,389,488
54,800 McLeodUSA Incorporated Cl. A*+ ................... 1,054,900
39,000 Research in Motion Limited* ...................... 3,900,000
------------
12,330,428
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--6.5%
48,950 EMC Corporation* ................................. 4,359,609
39,100 Hewlett-Packard Company .......................... 1,815,706
109,300 Sun Microsystems, Inc.* .......................... 12,118,638
------------
18,293,953
------------
COMPUTER SERVICES--5.7%
68,000 Amdocs Limited* .................................. 4,407,250
50,500 CNET Networks, Inc.*+ ............................ 1,590,750
180,800 eBay Inc.* ....................................... 9,311,200
8,600 Yahoo Inc.* ...................................... 504,175
------------
15,813,375
------------
COMPUTER SOFTWARE--15.1%
69,750 Ariba, Inc.* ..................................... 8,814,655
80,000 BEA Systems, Inc.*+ .............................. 5,740,000
30,000 Business Objects ADS*+ ........................... 2,363,906
45,000 Commerce One, Inc.*+ ............................. 2,888,438
48,100 i2 Technologies, Inc.* ........................... 8,177,000
161,000 Oracle Corporation* .............................. 5,313,000
85,700 Phone.com, Inc.*+ ................................ 7,932,606
40,000 Vitria Technology, Inc.*+ ........................ 1,075,000
------------
42,304,605
------------
CONGLOMERATE--2.5%
99,200 General Electric Company ......................... $ 5,437,400
28,900 Tyco International Limited ....................... 1,638,269
------------
7,075,669
------------
ENERGY & ENERGY
SERVICES--1.2%
23,950 Calpine Corporation* ............................. 1,890,553
16,600 Duke Energy Corporation .......................... 1,434,863
------------
3,325,416
------------
FINANCIAL SERVICES--9.8%
24,000 Bank Of New York Inc. ............................ 1,381,500
181,933 Citigroup Inc. ................................... 9,574,224
38,200 Marsh & McLennan Companies, Inc. ................. 4,994,650
35,000 Northern Trust Corporation ....................... 2,988,125
127,250 Schwab (Charles) Corporation (The) ............... 4,469,656
5,600 State Street Corp. ............................... 698,544
71,400 Stilwell Financial Inc. .......................... 3,199,613
------------
27,306,312
------------
FOOD CHAINS--1.9%
97,700 Safeway Inc.* .................................... 5,342,969
------------
INSURANCE--2.5%
72,400 American International Group, Inc. ............... 7,095,200
------------
MANUFACTURING--1.4%
89,700 Solectron Corporation* ........................... 3,946,800
------------
MEDICAL DEVICES--1.3%
25,300 Guidant Corporation* ............................. 1,339,318
40,200 Medtronic, Inc. .................................. 2,183,363
------------
3,522,681
------------
PHARMACEUTICALS--9.3%
123,550 American Home Products Corporation ............... 7,845,425
55,750 Baxter International Inc. ........................ 4,581,953
61,600 Eli Lilly and Company ............................ 5,505,500
187,587 Pfizer Inc. ...................................... 8,101,414
------------
26,034,292
------------
RETAIL--5.2%
170,700 Home Depot, Inc. ................................. 7,340,100
156,150 Wal-Mart Stores, Inc. ............................ 7,085,306
------------
14,425,406
------------
18
<PAGE>
THE ALGER RETIREMENTFUND
ALGER capital appreciation RETIREMENTPORTFOLIO
SCHEDULE OF INVESTMENTS (Continued)
October 31, 2000
SHARES COMMON STOCKS (CONTINUED) VALUE
------- -----
SEMICONDUCTORS--5.6%
129,750 Altera Corporation* .............................. $ 5,311,640
33,500 Broadcom Corporation Cl. A* ...................... 7,449,563
32,434 Texas Instruments, Incorporated .................. 1,591,293
20,200 Vitesse Semiconductor Corporation* ............... 1,412,738
------------
15,765,234
------------
Total Common Stocks
(Cost $239,548,263) ............................ 241,121,743
------------
PREFERRED STOCK--2.1%
COMMUNICATIONS
136,550 Nokia Corporation, ADR*
(Cost $5,182,296) .............................. 5,837,513
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--28.0% VALUE
--------- -----
SHORT-TERM CORPORATE
NOTES--16.4%
$10,000,000 AT&T Corp.,
6.54%, 11/21/00 ................................ $ 9,963,667
10,000,000 Consolidated Natural Gas Company,
6.56%, 11/30/00 ................................ 9,947,155
10,000,000 National Australia Funding (Del),
6.43%, 11/30/00 ................................ 9,948,203
8,000,000 Potomac Electric Power Company,
6.49%, 11/21/00 ................................ 7,971,156
8,000,000 Toyota Credit De Puerto Rico,
6.51%, 11/29/00 ................................ 7,959,493
------------
Total Short-Term Corporate Notes
(Cost $45,789,674) ............................. 45,789,674
------------
SECURITIES HELD UNDER
REPURCHASE
AGREEMENTS--2.4%
Securities Held Under Repurchase
Agreements, 6.47%, 11/1/00,
with State Street Bank and Trust
Company, dtd 10/31/00, repurchase
price $6,691,202; collateralized by
Federal Home Loan Bank Discount
Notes (par value $6,675,000 due
2/22/05) ......................................... 6,690,000
------------
OTHER SHORT-TERM
SHARES INVESTMENTS--9.2%
25,883,945 Securities Lending Quality Trust
(Cost $25,883,945) (b) ......................... 25,883,945
------------
Total Short-Term Investments
(Cost $78,363,619) ............................. 78,363,619
------------
Total Investments
(Cost $323,094,178) (a) ........................... 116.2% 325,322,875
Liabilities in Excess of Other Assets ............... (16.2) (45,406,543)
----- ------------
Net Assets .......................................... 100.0% $279,916,332
===== ============
* Non-income producing security.
+ Securities partially or fully on loan.
(a) At October 31, 2000, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $323,094,178, amounted to
$2,228,697 which consisted of aggregate gross unrealized appreciation of
$25,274,683 and aggregate gross unrealized depreciation of $23,045,986.
(b) Represents investments of cash collateral received for securities on loan.
See Notes to Financial Statements.
19
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO(i)
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
` ------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ...........$ 16.19 $ 8.98 $ 9.70 $ 9.88 $ 12.72
----------- ----------- ----------- ----------- ---------
Net investment income (loss) ................. (0.09)(ii) (0.09)(ii) (0.08)(ii) (0.10)(ii) (0.07)
Net realized and unrealized
gain on investments ....................... 2.24 7.63 2.96 2.51 0.83
----------- ----------- ----------- ----------- ---------
Total from investment operations ........... 2.15 7.54 2.88 2.41 0.76
Distributions from net realized gains ....... (0.22) (0.33) (3.60) (2.59) (3.60)
----------- ------------ ----------- ----------- ---------
Net asset value, end of year .................$ 18.12 $ 16.19 $ 8.98 $ 9.70 $ 9.88
=========== =========== =========== =========== =========
Total Return ................................. 13.1% 84.3% 28.1% 26.1% 6.1%
=========== =========== =========== =========== =========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) ...$ 279,916 $ 96,711 $ 5,587 $ 4,520 $ 6,703
=========== =========== =========== =========== =========
Ratio of expenses excluding
interest to average net assets .......... 1.14% 1.28% 1.37% 1.47% 1.37%
=========== =========== =========== =========== =========
Ratio of expenses including
interest to average net assets .......... 1.14% 1.29% 1.44% 1.62% 1.44%
=========== =========== =========== =========== =========
Ratio of net investment income (loss)
to average net assets ................... (0.43%) (0.59%) (0.79%) (1.02%) (0.94%)
=========== =========== =========== =========== =========
Portfolio Turnover Rate .................... 144.16% 155.40% 177.09% 159.56% 203.46%
=========== =========== =========== =========== =========
Amount of debt outstanding at end of year .. -- -- -- $ 127,000 --
=========== =========== =========== =========== =========
Average amount of debt outstanding
during the year ......................... -- $ 42,036 $ 49,890 $ 127,915 $ 62,130
=========== =========== =========== =========== =========
Average daily number of shares
outstanding during the year ............. 12,487,537 2,470,314 505,939 511,947 595,051
=========== =========== =========== =========== =========
Average amount of debt per share
during the year ......................... -- $ 0.02 $ 0.10 $ 0.25 $ 0.10
=========== =========== =========== =========== =========
</TABLE>
(i) Prior to April 12, 1996, the Alger Capital Appreciation Retirement
Portfolio was the Alger Defined Contribution Leveraged AllCap Portfolio.
(ii) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
20
<PAGE>
-------------------------------------------------------------------------------
THE ALGER Retirement FUND
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2000
<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 ............... $135,662,822 $193,769,566 $172,729,207 $325,322,875
Cash ....................................................... 69,959 49,209 72,795 100,875
Receivable for investment securities sold .................. 1,212,605 5,165,002 4,380,510 6,378,476
Receivable for shares of beneficial interest sold .......... 75,612 177,286 2,241,337 310,656
Dividends and interest receivable .......................... 18,822 2,534 5,140 18,853
Prepaid expenses ........................................... 5,518 7,067 2,364 5,135
------------ ------------ ------------ ------------
Total Assets ............................................. 137,045,338 199,170,664 179,431,353 332,136,870
------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities loaned .............................. 3,477,755 -- -- 25,883,945
Payable for investment securities purchased ................ 6,425,629 10,467,492 1,462,673 25,603,596
Payable for shares of beneficial interest redeemed ......... 172,563 229,521 85,810 63,409
Accrued investment management fees ......................... 83,359 138,786 114,905 207,713
Accrued expenses ........................................... 313,006 361,731 202,369 461,875
------------ ------------ ------------ ------------
Total Liabilities ........................................ 10,472,312 11,197,530 1,865,757 52,220,538
------------ ------------ ------------ ------------
NET ASSETS ................................................. $126,573,026 $187,973,134 $177,565,596 $279,916,332
============ ============ ============ ============
Net Assets Consist of:
Paid-in capital .......................................... $108,878,565 $192,572,708 $156,382,612 $281,025,227
Undistributed net investment income
(accumulated loss) .................................... (177,215) (352,294) (217,673) (1,084,040)
Undistributed net realized gain (accumulated loss) ....... 6,390,715 (21,643,324) 6,013,433
(2,253,552)
Net unrealized appreciation .............................. 11,480,961 17,396,044 15,387,224 2,228,697
------------ ------------ ------------ ------------
NET ASSETS ................................................. $126,573,026 $187,973,134 $177,565,596 $279,916,332
============ ============ ============ ============
Shares of beneficial interest outstanding--Note 6 .......... 7,380,654 7,904,738 10,127,762 15,445,001
============ ============ ============ ============
NET ASSET VALUE PER SHARE .................................. $ 17.15 $ 23.78 $ 17.53 $ 18.12
============ ============ ============ ============
*Identified cost ........................................... $124,181,861 $176,373,522 $157,341,983 $323,094,178
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF OPERATIONS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends ................................................. $ 436,916 $ 38,516 $ 70,066 $ 414,477
Interest .................................................. 579,972 1,417,062 721,331 1,371,383
----------- ------------ ------------ ------------
Total income ............................................ 1,016,888 1,455,578 791,397 1,785,860
----------- ------------ ------------ ------------
Expenses:
Management fees--Note 3(a) ................................ 846,300 1,318,381 720,352 2,140,955
Shareholder servicing fees ................................ 245,254 340,763 170,608 535,013
Custodian fees ............................................ 16,704 28,380 18,100 28,747
Transfer agent fees--Note 3(c) ............................ 2,500 2,500 2,500 2,500
Shareholder reports ....................................... 9,350 24,495 14,490 34,110
Professional fees ......................................... 8,544 12,054 13,168 13,695
Trustees' fees ............................................ 7,138 7,138 7,138 7,138
Miscellaneous ............................................. 58,313 74,161 62,714 107,742
----------- ------------ ------------ ------------
Total Expenses .......................................... 1,194,103 1,807,872 1,009,070 2,869,900
----------- ------------ ------------ ------------
NET INVESTMENT LOSS ......................................... (177,215) (352,294) (217,673) (1,084,040)
----------- ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on investments ................... 6,883,930 (21,314,002) 6,173,848 (996,080)
Net change in unrealized appreciation (depreciation)
on investments ......................................... (2,363,996) 7,596,304 13,539,700 (9,451,696)
----------- ------------ ------------ ------------
Net realized and unrealized gain (loss)
on investments ......................................... 4,519,934 (13,717,698) 19,713,548 (10,447,776)
----------- ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 4,342,719 $(14,069,992) $ 19,495,875 $(11,531,816)
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 2000
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment loss ......................................... $ (177,215) $ (352,294) $ (217,673) $ (1,084,040)
Net realized gain (loss) on investments ..................... 6,883,930 (21,314,002) 6,173,848 (996,080)
Net change in unrealized appreciation (depreciation)
on investments ........................................... (2,363,996) 7,596,304 13,539,700 (9,451,696)
----------- ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations .......................................... 4,342,719 (14,069,992) 19,495,875 (11,531,816)
Distributions to Shareholders:
Net realized gains ....................................... (12,723,935) (9,682,531) (1,985,992) (3,045,425)
Net increase from shares of beneficial
interest transactions--Note 6 ............................ 62,208,318 148,014,967 131,822,365 197,782,802
----------- ------------ ------------ ------------
Total increase .......................................... 53,827,102 124,262,444 149,332,248 183,205,561
Net Assets:
Beginning of year ......................................... 72,745,924 63,710,690 28,233,348 96,710,771
----------- ------------ ------------ ------------
End of year ............................................... $126,573,026 $187,973,134 $177,565,596 $279,916,332
=========== ============ ============ ============
Undistributed net investment income (accumulated loss) ...... $ (177,215) $ (352,294) $ (217,673) $ (1,084,040)
=========== ============ ============ ============
</TABLE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 1999
<TABLE>
<CAPTION>
MIDCAP CAPITAL
GROWTH SMALL CAP GROWTH APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment loss ......................................... $ (236,983) $ (250,412) $ (72,311) $ (210,506)
Net realized gain on investments ............................ 12,595,530 9,628,923 1,917,140 2,007,349
Net change in unrealized appreciation (depreciation)
on investments ........................................... 6,033,835 7,219,880 1,394,775 10,598,903
----------- ------------ ------------ ------------
Net increase in net assets resulting
from operations .......................................... 18,392,382 16,598,391 3,239,604 12,395,746
Distributions to Shareholders:
Net realized gains ....................................... (1,518,169) (3,871,054) (1,161,271) (824,545)
Net increase from shares of beneficial
interest transactions--Note 6 ............................ 15,675,939 21,045,643 19,488,397 79,552,891
----------- ------------ ------------ ------------
Total increase .......................................... 32,550,152 33,772,980 21,566,730 91,124,092
Net Assets:
Beginning of year ......................................... 40,195,772 29,937,710 6,666,618 5,586,679
----------- ------------ ------------ ------------
End of year ............................................... $72,745,924 $ 63,710,690 $ 28,233,348 $ 96,710,771
=========== ============ ============ ============
Undistributed net investment income (accumulated loss) ...... $ (351,215) $ (926,145) $ (319,989) $ (641,486)
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
-------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
NOTES TO FINANCIAL STATEMENTS
NOTE 1--General:
The Alger Retirement Fund (the "Fund"), is a diversified, open-end
registered investment company organized as a business trust under the laws of
the Commonwealth of Massachusetts. The Fund operates as a series company and
currently issues four classes of shares of beneficial interest --Growth
Portfolio, Small Cap Portfolio, MidCap Growth Portfolio and Capital Appreciation
Portfolio (the "Portfolios"). The investment objective of each Portfolio is
long-term capital appreciation. Each Portfolio seeks to achieve its objective by
investing primarily in equity securities.
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. Shares of mutual funds
are valued at the net asset value of the underlying mutual fund.
(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) REPURCHASE AGREEMENTS: The Portfolios enter into repurchase agreements
with approved institutions. The repurchase agreements are collateralized by U.S.
Government securities, which are either received and held in physical possession
by the custodian or received by such custodian in book-entry form through the
Federal Reserve book-entry system. The collateral is valued 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, provided that the market value of the 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 loan is
collateralized by cash, letters of credit or U.S. Government securities that are
maintained in an amount equal to at least 100 percent of the current market
value of the loaned securities. The market value of the loaned securities is
determined at the close of business of the Portfolios and any required
additional collateral is delivered to the Portfolios on the next business day.
At October 31, 2000, the value of securities loaned and collateral received
thereon were as follows:
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
----------- -----------
Growth Portfolio .............................. $ 3,756,740 $ 3,477,755
Small Cap Portfolio ........................... 3,220,472 3,265,660
MidCap Growth Portfolio ....................... 328,289 323,994
Capital Appreciation Portfolio ................ 27,428,020 25,883,945
(e) 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 distributions from net realized gains, offset by any
loss carryforward, are declared and paid annually after the end of the fiscal
year in which earned.
The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of the Portfolios' distributions may be shown in the
accompanying financial statements as either from or in excess of net investment
income or net realized gain on investment transactions, or from paid-in capital,
depending on the type of book/tax differences that may exist.
24
<PAGE>
THE ALGER RETIREMENT FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
At October 31, 2000, the Growth Portfolio, the Small Cap Portfolio, the
MidCap Growth Portfolio and the Capital Appreciation Portfolio reclassified
$351,215, $926,145, $319,989 and $641,486, respectively, from undistributed net
investment loss to either accumulated undistributed net realized gain or paid-in
capital. The reclassifications had no impact on the net asset values of the
Portfolios and are designed to present the Portfolios' capital accounts on a tax
basis.
(f) FEDERAL INCOME TAXES: It is each Portfolio's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its investment company taxable income to its
shareholders. Provided a Portfolio maintains such compliance, no federal income
tax provision is required. Each Portfolio is treated as a separate entity for
the purpose of determining such compliance.
(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 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 year ended October 31, 2000, 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 $186,923, $258,366, $156,001 and
$302,662, 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 year ended October 31, 2000, each Portfolio incurred fees of
$2,500 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 October 31, 2000, Alger Management and its affiliates owned 623,160
shares, 309,445 shares, 813,718 shares and 732,099 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 year ended October 31, 2000:
PURCHASES SALES
------------ ------------
Growth Portfolio ............................... $147,072,064 $102,263,684
Small Cap Portfolio ............................ 440,054,144 318,772,299
MidCap Growth Portfolio ........................ 198,180,316 92,112,815
Capital Appreciation Portfolio ................. 485,696,473 318,976,964
NOTE 5--Lines of Credit:
The Fund has both committed and uncommitted lines of credit with banks. All
borrowings have variable interest rates and are payable on demand. With the
exception of the Capital Appreciation Portfolio, the Fund borrows under such
lines of credit exclusively for temporary or emergency purposes.
The Capital Appreciation Portfolio may borrow up to 1/3 of the value of its
assets, as defined, to purchase additional securities. To the extent the Capital
Appreciation Portfolio borrows under these lines, it must pledge securities with
a total value of at least twice the amount borrowed. For the year ended October
31, 2000, the Capital Appreciation Portfolio had no such borrowings.
25
<PAGE>
THE ALGER RETIREMENT FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 6--Share Capital:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value which are presently divided into four classes of
shares.
During the year ended October 31, 2000, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
----------- -----------
Growth Portfolio
Shares sold ................................ 3,667,027 $72,555,147
Dividends reinvested ....................... 691,518 12,723,935
Shares redeemed ............................ (1,214,174) (23,070,764)
----------- -----------
Net increase ............................... 3,144,371 $62,208,318
=========== ===========
Small Cap Portfolio
Shares sold ................................ 5,971,533 $171,259,657
Dividends reinvested ....................... 367,877 9,682,531
Shares redeemed ............................ (1,226,681) (32,927,221)
----------- -----------
Net increase ............................... 5,112,729 $148,014,967
=========== ===========
MidCap Growth Portfolio
Shares sold ................................ 9,277,026 $155,201,329
Dividends reinvested ....................... 120,729 1,985,992
Shares redeemed ............................ (1,663,351) (25,364,956)
----------- -----------
Net increase ............................... 7,734,404 $131,822,365
=========== ===========
Capital Appreciation Portfolio
Shares sold ................................ 13,993,709 $290,676,986
Dividends reinvested ....................... 153,113 3,045,425
Shares redeemed ............................ (4,673,523) (95,939,609)
----------- -----------
Net Increase ............................... 9,473,299 $197,782,802
=========== ===========
During the year ended October 31, 1999, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
----------- -----------
Growth Portfolio
Shares sold ................................ 1,735,529 $27,485,084
Dividends reinvested ....................... 91,899 1,518,169
Shares redeemed ............................ (841,672) (13,327,314)
----------- -----------
Net increase ............................... 985,756 $15,675,939
=========== ===========
Small Cap Portfolio
Shares sold ................................ 1,661,996 $36,124,686
Dividends reinvested ....................... 178,225 3,871,054
Shares redeemed ............................ (876,494) (18,950,097)
----------- -----------
Net increase ............................... 963,727 $21,045,643
=========== ===========
MidCap Growth Portfolio
Shares sold ................................ 2,250,079 $25,688,243
Dividends reinvested ....................... 99,680 1,161,271
Shares redeemed ............................ (711,449) (7,361,117)
----------- -----------
Net increase ............................... 1,638,310 $19,488,397
=========== ===========
Capital Appreciation Portfolio
Shares sold ................................ 6,444,281 $95,011,629
Dividends reinvested ....................... 57,062 824,545
Shares redeemed ............................ (1,151,755) (16,283,283)
----------- -----------
Net increase ............................... 5,349,588 $79,552,891
=========== ===========
26
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
of The Alger Retirement Fund:
We have audited the statements of assets and liabilities, including the
schedules of investments, of The Alger Retirement Fund (a Massachusetts business
trust comprising, respectively, the Alger Growth Retirement, Alger Small Cap
Retirement, Alger MidCap Growth Retirement, and Alger Capital Appreciation
Retirement Portfolios) as of October 31, 2000, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of October 31, 2000, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting The Alger Retirement Fund, as of
October 31, 2000, the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended, in conformity with accounting principles generally accepted in the United
States.
ARTHUR ANDERSEN LLP
New York, New York
November 28, 2000
27
