PROSPECTUS
- ----------
THE 75 Maiden Lane
ALGER New York, New York 10038
FUND (800)992-FUND (992-3863)
The Alger Fund offers interests in six Portfolios. Each Portfolio has distinct
investment objectives and policies which are discussed starting on page 4. The
six Portfolios are:
o Alger Money Market Portfolio
o Alger Small Capitalization Portfolio
o Alger MidCap Growth Portfolio
o Alger Growth Portfolio
o Alger Balanced Portfolio
o Alger Capital Appreciation Portfolio (formerly
Alger Leveraged AllCap Portfolio)
This Prospectus, which should be retained for future reference, contains
important information that you should know before investing. A Statement of
Additional Information dated April 18, 1995 containing further information about
The Alger Fund has been filed with the Securities and Exchange Commission and is
incorporated by reference into this Prospectus. It is available at no charge by
contacting The Alger Fund at the address or phone number above.
TABLE OF CONTENTS
Page
-----
Portfolio Expenses............................. ii
Financial Highlights........................... iv
How to Buy Shares.............................. 1
Special Investor Services...................... 2
How to Sell Shares............................. 2
How to Exchange Shares......................... 3
Investment Objectives and Policies............. 4
Investment Practices........................... 6
Management of the Fund......................... 8
Net Asset Value................................ 10
Contingent Deferred Sales Charge............... 10
Dividends and Taxes............................ 11
Performance.................................... 12
SHARES OF THE ALGER MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE THAT THE ALGER MONEY
MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECUR- ITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE
APRIL 18, 1995
AS SUPPLEMENTED SEPTEMBER 18, 1995
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Portfolio Expenses
The Table below is designed to assist you in understanding the direct and
indirect costs and expenses that you will bear as a shareholder. The Example on
the next page shows the amount of expenses you would pay on a $1,000 investment
in the Portfolios. These amounts assume the reinvestment of all dividends and
distributions, payment of any applicable contingent deferred sales charge and
payment by the Portfolios of operating expenses as shown in the Table under
Annual Fund Operating Expenses. The Example is an illustration only and actual
expenses may be greater or less than those shown.
ALGER ALGER SMALL ALGER
MONEY ALGER ALGER MIDCAP CAPITALIZA- CAPITAL
MARKET BALANCED GROWTH GROWTH TION APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO*
-------- -------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed
on Purchases................................... None None None None None None
Maximum Sales Load Imposed on
Reinvested Dividends........................... None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage of
redemption proceeds)(a)........................ None 5.00% 5.00% 5.00% 5.00% 5.00%
Redemption Fees.................................. None None None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees (after expense
reimbursements)(b)............................. 0% .75% .75% .80% .85% .85%
12b-1 Fees(c).................................... 0 .75 .75 .75 .75 .75
Other Expenses (after expense
reimbursements)(b)(d)(e)....................... .27 1.68 .70 1.65 .58 3.93
--- ----- ---- ---- ---- --------
Total Fund Expenses (b) (c) (d) (e).............. .27% 3.18% 2.20% 3.20% 2.18% 5.53%
=== ===== ==== ==== ==== ====
(a) The amount of the contingent deferred sales charge will depend on the
number of years since the shareholder made the purchase
payment. See "Contingent Deferred Sales Charge."
(b) The investment manager is currently voluntarily waiving its management fee
with respect to the Alger Money Market Portfolio. Absent this waiver, the
amount of Management Fees and Total Fund Expenses would be .50% and .77%,
respectively, for the Alger Money Market Portfolio.
(c) The Fund reimburses Alger Inc. for the expenses it incurs in distributing
shares of each portfolio other than the Alger Money Market Portfolio at the
maximum annual rate of .75% of the Portfolio's average daily net assets.
Such reimbursement includes interest on the unreimbursed carryforward.
Long-term shareholders paying 12b-1 fees pursuant to the Fund's plan of
distribution may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the rules of the National Association
of Securities Dealers, Inc.
(d) Absent reimbursements, the amounts of Other Expenses and Total Fund
Expenses would be 1.72% and 3.27%, respectively, for the Alger MidCap
Growth Portfolio.
(e) Absent reimbursements, the amounts of Other Expenses and Total Fund
Expenses would be 4.78% and 6.38% for the Alger Capital Appreciation
Portfolio. Included in Other Expenses of the Alger Capital Appreciation
Portfolio is 1.40% of interest expense.
* Prior to March 27, 1994, the Alger Capital Appreciation Portfolio was known
as the Alger Leveraged AllCap Portfolio.
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
PORTFOLIO EXPENSES (CONTINUED)
ALGER
ALGER ALGER SMALL ALGER
MONEY ALGER ALGER MIDCAP CAPITALIZA- CAPITAL
MARKET BALANCED GROWTH GROWTH TION APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------- -------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
EXAMPLE
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period:
One Year ........................................ $ 3 $ 82 $ 72 $ 82 $ 72 $105
Three Years...................................... 9 128 99 129 98 195
Five Years....................................... 15 186 138 187 137 293
Ten Years........................................ 34 348 253 350 251 539
You would pay the following expenses on the
same investment, assuming no redemption:
One Year......................................... $ 3 $ 32 $ 22 $ 32 $ 22 $ 55
Three Years...................................... 9 98 69 99 68 165
Five Years....................................... 15 166 118 167 117 273
Ten Years........................................ 34 348 253 350 251 539
</TABLE>
iii
<PAGE>
FINANCIAL HIGHLIGHTS
The Financial Highlights for the years ended October 31, 1990 through 1994 have
been audited by Arthur Andersen LLP, the Fund's independent public accountants,
as indicated in their report dated December 9, 1994 on the Fund's financial
statements as of October 31, 1994 which are included in the Fund's Statement of
Additional Information. The Financial Highlights should be read in conjunction
with the Fund's financial statements and related notes. The Financial
Highlights, with the exception of the total return information, for the two
years ended October 31, 1989 and the period from November 11, 1986 (commencement
of operations) to October 31, 1987 have been audited by other independent
accountants, who have expressed an unqualified opinion thereon. The Statement of
Additional Information may be obtained from the Fund without charge.
THE ALGER FUND
MONEY MARKET PORTFOLIO
Financial Highlights
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
-------- -------- ------- ------- ------- -------- -------- --------
Net investment income.................... .0374 .0304 .0424 .0671 .0844 .0927 .0732 .0541
Dividends from net investment income..... (.0374) (.0304) (.0424) (.0671) (.0844) (.0927) (.0732) (.0541)
-------- -------- ------- ------- ------- -------- -------- --------
Net asset value, end of year............. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
======== ======== ======= ======= ======= ======== ======== ========
Total Return ...................... 3.8% 3.1% 4.3% 6.9% 8.8% 9.7%(i) 7.6%(i) 5.6%(i)
======== ======== ======= ======= ======= ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $163,170 $126,567 $135,288 $160,898 $143,420 $69,581 $11,509 $4,247
======== ======== ======== ======== ======== ======= ======== ========
Ratio of expenses to average net assets .27% .41% .25% .18% .03% -- -- .64%
======== ======== ======= ======= ======= ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements
and management fee waivers........... .50% .50% .60% .63% .84% .93% 1.73% 1.88%
======== ======== ======= ======= ======= ======== ========
Ratio of net investment income to
average net assets................... 3.78% 3.04% 4.30% 6.76% 8.37% 9.45% 7.16% 5.82%
======== ======== ======= ======= ======= ======== ========
*From November 11, 1986 (commencement of operations) through October 31, 1987. Ratios have been annualized; total return has not
been annualized.
(i)Unaudited.
</TABLE>
iv
<PAGE>
THE ALGER FUND
BALANCED PORTFOLIO
Financial Highlights
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
FROM JUNE 1, 1992
YEAR ENDED OCTOBER 31, (COMMENCEMENT
---------------------- OF OPERATIONS)
1994 1993 TO OCTOBER 31, 1992(I)
--------- --------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of year......................... $11.18 $ 9.95 $10.00
-------- -------- --------
Net investment income (loss)............................... (.05) (.01) (.12)
Net realized and unrealized gain (loss)
on investments........................................... (.39) 1.24 .07
-------- -------- --------
Total from investment operations........................... (.44) 1.23 (.05)
Distributions from net realized gains...................... (.09) -- --
-------- -------- --------
Net asset value, end of year............................... $10.65 $11.18 $ 9.95
======== ======== ========
Total Return (ii).......................................... (4.0%) 12.4% (0.5%)
======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted).................. $ 3,073 $ 3,125 $ 1,370
======== ======== ========
Ratio of expenses to average net assets.................. 3.18% 3.82% 5.62%
======== ======== ========
Decrease reflected in above expense ratios due
to expense reimbursements.............................. -- .75% .75%
======== ======== ========
Ratio of net investment income (loss) to average
net assets............................................. (.41%) (.97%) (3.07%)
======== ======== ========
Portfolio Turnover Rate.................................. 84.88% 115.17% 17.07%
======== ======== ========
(i)Ratios have been annualized; total return has not been annualized.
(ii)Does not reflect contingent deferred sales charge.
</TABLE>
v
<PAGE>
THE ALGER FUND
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
----- ---- ---- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $22.29 $17.28 $17.30 $12.74 $13.27 $10.45 $9.70 $10.00
------- -------- -------- ------- ------- ------- -------- --------
Net investment income (loss)............. (.21)(iii) (.06) (.18)(iii) (.05) (.07) (.14) (.11) (.09)
Net realized and unrealized gains
(loss) on investments.................. 1.06 5.10 1.84 5.57 (.46) 2.96 .86 (.21)
------- -------- -------- ------- ------- ------- -------- --------
Total from investment operations......... .85 5.04 1.66 5.52 (.53) 2.82 .75 (.30)
Distributions from net realized gains.... (2.22) (.03) (1.68) (.96) -- -- -- --
------- -------- -------- ------- ------- ------- -------- --------
Net asset value, end of year............. $20.92 $22.29 $17.28 $17.30 $12.74 $13.27 $10.45 $9.70
======= ======== ======== ======= ======= ======= ======== ========
Total Return (ii)........................ 4.1% 29.2% 9.7% 45.8% (4.0%) 27.0%(i) 7.7%(i) (3.0%)(i)
======= ======== ======== ======= ======= ======= ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $76,390 $37,988 $19,379 $10,213 $5,667 $5,463 $5,294 $5,305
======== ======== ======= ======= ======= ======= ======== ========
Ratio of expenses to average net assets 2.20% 2.20% 2.32% 2.70% 3.09% 3.32% 3.01% 3.00%
======== ======== ======= ======= ======= ======= ======== ========
Decrease reflected in above expense
ratios due to expense
reimbursements....................... -- -- -- -- -- -- .43% .83%
======== ======== ======== ======= ======= ======= ======== ========
Ratio of net investment income (loss)
to average net assets................ (1.01%) (1.16%) (1.07%) (1.06%) (.68%) (.70%) (.99%) (1.08%)
======== ======== ======== ======= ======= ======= ======== ========
Portfolio Turnover Rate................ 103.86% 108.54% 69.28% 76.06% 86.06% 106.73% 151.30% 135.50%
======== ======== ======== ======= ======= ======= ======== ========
*From November 11, 1986 (commencement of operations) through October 31, 1987. Ratios have been annualized; total return has not
been annualized.
(i)Unaudited.
(ii)Does not reflect contingent deferred sales charge.
(iii)Amount was computed based on average shares outstanding during the period.
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
THE ALGER FUND
MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
MAY 24, 1993
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
OCTOBER 31, 1994 TO OCTOBER 31, 1993(I)
---------------- --------------------
<S> <C> <C>
Net asset value, beginning of period............................. $12.48 $10.00
-------- --------
Net investment (loss)............................................ (.11) (.09)
Net realized and unrealized gain on investments.................. .68 2.57
-------- --------
Total from investment operations............................... .57 2.48
Distribution from net realized gains............................. (.28) --
-------- --------
Net asset value, end of period................................... $12.77 $12.48
======== ========
Total Return (ii)................................................ 4.7% 24.8%
======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted)...................... $ 18,516 $ 3,836
======== ========
Ratio of expenses to average net assets........................ 3.20% 3.73%
======== ========
Decrease reflected in above expense ratio due to expense
reimbursements............................................... .07% 0.80%
======== ========
Ratio of net investment income (loss) to average net assets.... (2.32%) (2.86%)
======== ========
Portfolio Turnover Rate........................................ 127.40% 57.64%
======== ========
(i)Ratios have been annualized; total return has not been annualized.
(ii)Does not reflect contingent deferred sales charge.
</TABLE>
vii
<PAGE>
THE ALGER FUND
SMALL CAPITALIZATION PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987*
----- ----- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year ....... $25.95 $20.63 $20.91 $13.00 $17.73 $10.74 $9.00 $10.00
-------- -------- -------- ------- -------- ------ ------ -------
Net investment income (loss) ............. (.26) (.24) (.33)(iii) (.09) (.18)(iii) (.01) (.21) (.18)
Net realized and unrealized gains (loss)
on investments ......................... (.07) 5.56 1.12 8.27 (.76) 7.00 1.95 (.82)
-------- -------- -------- ------- -------- ------- ------ -------
Total from investment operations ......... (.33) 5.32 .79 8.18 (.94) 6.99 1.74 (1.00)
Distributions from net realized gains .... (2.76) -- (1.07) (.27) (3.79) -- -- --
-------- -------- -------- -------- -------- ------- ------- -------
Net asset value, end of year ............. $22.86 $25.95 $20.63 $20.91 $13.00 $17.73 $10.74 $9.00
======== ======== ======== ======== ======== ======= ======= =======
Total Return (ii) ........................ (1.1%) 25.8% 3.4% 63.7% (7.1%) 65.1%(i) 19.3%(i)
======== ======== ======== ======== ======== ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $294,890 $300,108 $182,432 $61,273 $23,628 $11,990 $3,709 $3,190
======== ======== ======== ======== ======== ======= ======= =======
Ratio of expenses to average net assets 2.18% 2.13% 2.17% 2.23% 2.66% 3.25% 3.01% 3.00%
======== ======== ======== ======== ======== ======= ======= =======
Decrease reflected in above expense
ratios due to expense reimbursements ... -- -- -- -- -- -- 1.33% 1.62%
======== ======== ======== ======== ======== ======= ======= =======
Ratio of net investment income (loss) to
average net assets ................... (1.51%) (1.52%) (1.64%) (1.37%) (1.17%) (1.92%) (2.07%) (2.02%)
======== ======== ======== ======== ======== ======= ======= ========
Portfolio Turnover Rate ................ 131.86% 148.49% 121.00% 171.04% 252.66% 441.42% 228.32% 267.55%
======== ======== ======== ======== ======== ======= ======= ========
*From November 11, 1986 (commencement of operations) through October 31, 1987. Ratios have been annualized; total return has not
been annualized.
(i)Unaudited.
(ii)Does not reflect contingent deferred sales charge.
(iii)Amount was computed based on average shares outstanding during the period.
</TABLE>
viii
<PAGE>
THE ALGER FUND
ALGER CAPITAL APPRECIATION PORTFOLIO (formerly Alger Leveraged AllCap Portfolio)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
YEAR ENDED
OCTOBER 31, 1994
----------------
Net asset value, beginning of year ........................... $ 10.00
--------
Net investment (loss) ........................................ (0.47)
Net realized and unrealized gain on investments .............. 1.58
--------
Total from investment operations ........................... 1.11
--------
Net asset value, end of year ................................. $ 11.11
========
Total Return (i) ............................................. 11.1%
========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) .................... $ 2,369
========
Ratio of expenses excluding interest to average net assets . 4.13%
========
Ratio of expenses including interest to average net assets . 5.53%
========
Decrease reflected in above expense ratios due to expense
reimbursements ......................................... 0.85%
========
Ratio of net investment income (loss) to average net assets (5.12%)
========
Portfolio Turnover Rate .................................... 231.99%
========
Debt outstanding at end of year ............................ $651,000
========
Average amount of debt outstanding during the year ......... $406,864
========
Average daily number of shares outstanding during the year . 191,676
========
Average amount of debt per share during the year ........... $ 2.12
========
(i)Does not reflect contingent deferred sales charge.
ix
<PAGE>
HOW TO BUY SHARES
IN GENERAL
You can buy shares of The Alger Fund (the "Fund") in any of the following
ways: through the Fund's transfer agent; through a broker, dealer or financial
institution who has a sales agreement with Fred Alger & Company, Incorporated
("Alger Inc."), the Fund's distributor; or automatically from your bank account
through an Automatic Investment Plan. THERE IS NO MINIMUM INVESTMENT REQUIREMENT
except for purchases through the TELEPURCHASE Privilege. The Fund or the
transfer agent may reject any purchase order.
PURCHASES THROUGH THE TRANSFER AGENT
You can buy shares through Alger Shareholder Services, Inc., the Fund's
transfer agent, by filling out the New Account Application and returning it with
a check drawn on a U.S. bank to Alger Shareholder Services, Inc. at 30
Montgomery Street, Box 2001, Jersey City, NJ 07302. You can also purchase shares
by wire transfer according to the instructions below.
Purchases for the Alger Money Market Portfolio will be processed at the net
asset value calculated after your order is received and accepted. If your
purchase is made by wire and is received by 12:00 noon Eastern time, your
account will be credited and begin earning dividends on the day of receipt. If
your wire purchase is received after 12:00 noon Eastern time, it will be
credited and begin earning dividends the next business day. Exchanges are
credited the day the request is received by mail or telephone, and begin earning
dividends the next business day. If your purchase is made by check, and received
by the close of business of the New York Stock Exchange (normally 4:00 p.m.
Eastern time), it will be credited and begin earning dividends the next business
day. You will be charged $10.00 for any check returned by your bank.
Purchases for the other Portfolios will be processed at the next net asset
value calculated for each Portfolio after your order is received and accepted.
If your purchase is made by check, wire or exchange and is received by the close
of business of the New York Stock Exchange (normally 4:00 p.m. Eastern time),
your account will be credited on the day of receipt. If your purchase is
received after such time, it will be credited the next business day. Third-party
checks will not be honored except in the case of employer sponsored retirement
plans.
WIRE TRANSFERS
Investors establishing new accounts by wire transfer should forward their
completed New Account Applications to the Transfer Agent, stating that the
account was established by wire transfer and the date and amount of the
transfer. Further information regarding wire transfers is available by calling
(800) 992-3863.
The following information should be included in wire transfers to Fund
accounts:
1. Nat West NJ/CUST/021200339
2. For Account 011313045 A/C Alger/NAME OF PORTFOLIO
3. Security Code (see below)--Account Number (if new account indicate such)
4. Name of Account
5. Social Security or Taxpayer Indentification Number
SECURITY CODES:
07--Alger Money Market Portfolio
11--Alger Small Capitalization Portfolio
12--Alger Growth Portfolio
14--Alger Balanced Portfolio
15--Alger MidCap Growth Portfolio
16--Alger Capital Appreciation Portfolio
EXAMPLE:
Nat West NJ/CUST/021200339
For Account 011313045 A/C
Alger/Money Market Portfolio
07-123456789 or 07-New Account
John & Jane Doe
123-45-6789
PURCHASES THROUGH BROKERS
You can buy shares of the Portfolios through brokers who have signed sales
agreements with Alger Inc. These brokers may purchase shares of the Portfolios
on a five day settlement basis (three day settlement beginning in June 1995)
through the National Securities Clearing Corporation Fund/SERV system.
1
<PAGE>
PURCHASES THROUGH PROCESSING ORGANIZATIONS
You can buy shares through a "Processing Organization", which is a
broker-dealer, bank or other financial institution that purchases shares for its
customers. Processing Organizations may impose charges and restrictions in
addition to or different from those applicable if you invest with the Fund
directly. Therefore, you should read the materials provided by the Processing
Organization in conjunction with this Prospectus. Certain Processing
Organizations may receive compensation from the Fund, Alger Inc., or any of its
affiliates.
SPECIAL INVESTOR SERVICES
TELEPURCHASE PRIVILEGE
You can purchase Fund shares by telephone (minimum $500, maximum $50,000) by
filling out the appropriate section of the New Account Application or sending an
Additional Services Form to the transfer agent. Your funds will be transferred
from your designated bank account to your Fund account normally within two
business days. To use this service, your bank must be a member of the Automated
Clearing House.
AUTOMATIC INVESTMENT PLAN
The Fund offers an Automatic Investment Plan which permits you to make
regular transfers to your Fund account from your bank account on the last
business day of every month. Your bank must be a member of the Automated
Clearing House.
AUTOMATIC EXCHANGE PLAN
The Fund also offers an Automatic Exchange Plan which permits you to exchange
a specified amount from your Alger Money Market Portfolio account into one or
all of the other Portfolios on or about the fifteenth day of the month.
For more information on any of the services discussed above, please call the
Fund toll-free at (800) 992-3863.
RETIREMENT PLANS
Shares of the Portfolios are available as an investment for your retirement
plans, including IRAs, Keogh Plans, corporate pension and profit-sharing plans,
Simplified Employee Pension IRAs, 401(k) Plans and 403(b) Plans. Please call the
Fund at (800) 992-3863 to receive the appropriate documents which contain
important information and applications.
HOW TO SELL SHARES
You can sell (redeem) some or all of your shares on any business day. Your
shares will be sold at the next net asset value calculated after your redemption
request is received and accepted by the transfer agent and your payment will be
made by check within seven days. A contingent deferred sales charge may be
charged on certain redemptions. See "Contingent Deferred Sales Charge" for
details. Redemptions may be suspended and payments delayed under certain
emergency circumstances as determined by the Securities and Exchange Commission.
The Fund's transfer agent will reject any redemption request made within 15 days
after receipt of the purchase check order against which such redemption is
requested. You can sell your shares in any of the following ways: by mail, by
telephone, by check or through your broker.
SELLING SHARES BY MAIL
You should send a letter of instruction to the transfer agent that includes
your name, account number, Portfolio name, the number of shares or dollar amount
and where you want the money to be sent. The letter must be signed by all
authorized signers and, if the redemption is for more than $5,000 or if the
proceeds are to be sent to an address other than the address of record, the
signature must be guaranteed. The transfer agent will accept a signature
guarantee by the following financial institutions: a U.S. bank, trust company,
broker, dealer, municipal securities broker or dealer, government securities
broker or dealer, credit union which is authorized to provide signature
guarantees, national securities exchange, registered securities association or
clearing agency.
2
<PAGE>
SELLING SHARES BY TELEPHONE
If you wish to use this service, you should mark the appropriate box on the
New Account Application or send a written request with a guaranteed signature.
To sell shares by telephone, please call (800) 992-3863. If your redemption
request is received before 12:00 noon Eastern time for the Alger Money Market
Portfolio, your redemption proceeds will be wired the same day. Redemption
requests for Portfolios other than the Alger Money Market Portfolio and requests
received after 12:00 noon for the Alger Money Market Portfolio will be paid on
the next business day. If your proceeds are less than $2,500, they will be
mailed to your address of record. If the proceeds are more than $2,500 they will
be mailed to your address of record or wired to your designated bank account.
This service is not available within 90 days of changing your address or bank
account of record. Redemption requests made before 12:00 noon Eastern time for
the Alger Money Market Portfolio will not receive a dividend for that day.
The Fund, the transfer agent and their affiliates are not liable for acting
in good faith on telephone instructions relating to your account, so long as
they follow reasonable procedures to determine that the telephone instructions
are genuine. Such procedures may include recording the telephone calls and
requiring some form of personal identification. You should verify the accuracy
of telephone transactions immediately upon receipt of your confirmation
statement.
You may use the TELEREDEMPTION Service to transfer funds (minimum $500,
maximum $50,000) between your Fund account and your designated bank account.
Your bank must be a member of the Automated Clearing House. Redemption proceeds
will be transferred to your bank account, generally within two business days
after your redemption request is received. Although the Fund is authorized to
charge a fee of $17.00 for each wire redemption, it does not currently intend to
do so. Shares held in any Alger retirement plan and shares issued in certificate
form are not eligible for this service.
SELLING SHARES BY CHECK (ALGER MONEY
MARKET PORTFOLIO ONLY)
You may redeem shares in your Alger Money Market Portfolio account by writing
a check for at least $500. Dividends are earned until the check clears. If you
mark the appropriate box on the New Account Application and sign the signature
card, the Fund will send you redemption checks. There is no charge to you for
this service.
Your redemption may be reduced by any applicable contingent deferred sales
charge as described below. If your account is not adequate to cover the amount
of your check and any applicable contingent deferred sales charge, the check
will be returned marked insufficient funds. As a result, checks should not be
used to close an account.
SYSTEMATIC WITHDRAWAL PLAN
If your account is $10,000 or more in any Portfolio, you can establish a
Systematic Withdrawal Plan to receive payments of at least $50 on a monthly,
quarterly or annual basis, without payment of the contingent deferred sales
charge. The maximum monthly withdrawal is one percent of the current account
value in the Portfolio at the time you begin participation in the Plan.
REDEMPTION IN KIND
Under unusual circumstances, shares of a Portfolio may be redeemed "in kind",
which means that the redemption proceeds will be paid with securities which are
held by the Portfolio. Please refer to the Statement of Additional Information
for more details.
HOW TO EXCHANGE SHARES
If you want to authorize exchanges by telephone, you should mark the
appropriate box on the New Account Application. Shares of one Portfolio may be
exchanged for shares of another Portfolio at net asset value per share at the
time of the exchange. No contingent deferred sales charge is assessed in
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connection with exchanges. For tax purposes, an exchange of shares is treated as
a sale of the shares exchanged and, therefore, you may realize a taxable gain or
loss when you exchange shares. Shares exchanged prior to the close of business
of the New York Stock Exchange (normally 4:00 p.m. Eastern time) from the Alger
Money Market Portfolio to any other Portfolio will receive dividends from the
Alger Money Market Portfolio for the day of the exchange. Shares of the Alger
Money Market Portfolio received in exchange for shares of any other Portfolio
will earn dividends beginning on the next business day after the exchange.
You may make up to six exchanges annually by telephone or in writing. The
Fund may charge a $5.00 transaction fee for each exchange, although it does not
intend to do so at present. You will be notified at least 60 days in advance if
the Fund decides to impose this fee. The Fund reserves the right to terminate or
modify the exchange privilege upon notice to shareholders.
INVESTMENT OBJECTIVES
AND POLICIES
The investment objectives and restrictions summarized below are fundamental
which means that they may not be changed without shareholder approval. All
investment policies and practices described elsewhere in this Prospectus are not
fundamental, so the Fund's Board of Trustees may change them without shareholder
approval. There is no guarantee that any Portfolio's objectives will be
achieved.
As a matter of fundamental policy, no Portfolio will: (1) with respect to 75%
of its total assets, invest more than 5% of its total assets in any one issuer,
except for obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities ("U.S. Government securities"); (2) own more than 10% of
the outstanding voting securities of any company; (3) invest more than 10% (15%
for the Alger Capital Appreciation Portfolio) of its net assets in securities
that are not readily marketable and in repurchase agreements with maturities of
more than seven days; (4) invest more than 25% of its total assets in any one
industry, except for U.S. Government securities and, with respect to the Alger
Money Market Portfolio, bank and thrift obligations; (5) borrow money or pledge
its assets, except for temporary or emergency purposes, in an amount not
exceeding 10% of its total assets; except that the Alger Capital Appreciation
Portfolio may borrow for investment purposes. The Statement of Additional
Information contains additional investment restrictions as well as additional
information on the Portfolios' investment practices.
In order to permit sales of shares in certain jurisdictions, the Fund may
commit to policies more restrictive than those stated above, and the Fund may
terminate any such commitment by discontinuing sales of shares in the applicable
jurisdiction.
ALGER MONEY MARKET PORTFOLIO
The investment objective of the Portfolio is to earn high current income
consistent with preservation of principal and maintenance of liquidity. The
Portfolio may invest in "money market" instruments including, certificates of
deposit, time deposits and bankers' acceptances; U.S. Government securities;
corporate bonds having less than 397 days remaining to maturity; and commercial
paper, including variable rate master demand notes. The Portfolio may also enter
into repurchase agreements, reverse repurchase agreements and firm commitment
agreements. The Statement of Additional Information contains more information on
these instruments.
The Portfolio will invest at least 95% of its total assets in money market
securities which are rated within the highest credit category assigned by at
least two established rating agencies (or one rating agency if the security is
rated by only one) and will only invest in money market securities rated at the
time of purchase within the two highest credit categories or, if not rated of
equivalent investment quality as determined by Fred Alger Management, Inc.
("Alger Management"), the Fund's investment manager. Alger Management subjects
all securities eligible for investment to its own credit analysis and considers
all securities purchased by the Portfolio to present minimal credit risks.
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The Portfolio has a policy of maintaining a stable net asset value of $1.00.
This policy has been maintained since its inception; however, the $1.00 price is
not guaranteed or insured, nor is its yield fixed. The Portfolio generally
purchases securities which mature in 13 months or less. The average maturity of
the Portfolio will not be greater than 90 days. A discussion of rating agencies
is included in the Appendix to the Statement of Additional Information.
ALGER BALANCED PORTFOLIO
The investment objective of the Portfolio is current income and long-term
capital appreciation. The Portfolio intends to invest based on combined
considerations of risk, income, capital appreciation and protection of capital
value. Normally, it will invest in common stocks and investment grade fixed
income securities (preferred stock and debt securities), as well as securities
convertible into common stocks. Except during temporary defensive periods, the
Portfolio will maintain at least 25% of its net assets in fixed income (senior)
securities. With respect to debt securities, the Portfolio will invest only in
instruments which are rated in one of the four highest rating categories by any
established rating agency, or if not rated, which are determined by Alger
Management to be of comparable quality to instruments so rated.
The Portfolio may invest up to 35% of its total assets in money market
instruments and repurchase agreements and in excess of that amount (up to 100%
of its assets) during temporary defensive periods.
ALGER GROWTH PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of purchase
of the securities, have total market capitalization--present market value per
share multiplied by the total number of shares outstanding--of $1 billion or
greater. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization of less than $1 billion.
ALGER MIDCAP GROWTH PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of purchase
of the securities, have total market capitalization between $750 million and
$3.5 billion. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization of less than $750 million or more than $3.5 billion.
ALGER SMALL CAPITALIZATION PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65% of
its total assets in equity securities of companies that, at the time of
purchase, have total market capitalization of less than $1 billion. The
Portfolio may invest up to 35% of its total assets in equity securities of
companies that, at the time of purchase, have total market capitalization of $1
billion or greater and in excess of that amount (up to 100% of its assets)
during temporary defensive periods.
ALGER CAPITAL APPRECIATION PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 85% of
its net assets in equity securities of companies of any size.
The Portfolio may purchase put and call options and sell (write) covered call
and put options on securities and securities indexes to increase gain and to
hedge against the risk of unfavorable price movements, and may enter into
futures contracts on securities indexes and purchase and sell call and put
options on these futures contracts. The Portfolio may also borrow money
(leverage) for the purchase of additional securities. The Portfolio may borrow
only from banks and may not borrow in excess of one-third of the market value of
its total assets, less liabilities other than such borrowing. These practices
are deemed to be speculative and may cause the Portfolio's net asset value to be
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more volatile than the net asset value of a fund that does not engage in these
activities. See "Investment Practices."
IN GENERAL
The Alger Small Capitalization Portfolio, Alger MidCap Growth Portfolio,
Alger Growth Portfolio, Alger Capital Appreciation Portfolio, and the equity
portion of Alger Balanced Portfolio seek to achieve their objectives by
investing in equity securities, such as common or preferred stocks, or
securities convertible into or exchangeable for equity securities, including
warrants and rights. The Portfolios will invest primarily in companies whose
securities are traded on domestic stock exchanges or in the over-the-counter
market. These companies may still be in the developmental stage, may be older
companies that appear to be entering a new stage of growth progress owing to
factors such as management changes or development of new technology, products or
markets or may be companies providing products or services with a high unit
volume growth rate. In order to afford the Portfolios the flexibility to take
advantage of new opportunities for investments in accordance with their
investment objectives, they may hold up to 15 percent of their net assets in
money market instruments and repurchase agreements and in excess of that amount
(up to 100% of their assets) during temporary defensive periods. This amount may
be higher than that maintained by other funds with similar investment
objectives.
Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers. Companies in which the Alger
Small Capitalization Portfolio is likely to invest may have limited product
lines, markets or financial resources and may lack management depth. The
securities in such companies may have limited marketability and may be subject
to more abrupt or erratic market movements than securities of larger, more
established companies or the market averages in general. Accordingly, an
investment in the Portfolio may not be appropriate for all investors. These
risks may also apply to investments in developmental stage companies by the
Alger MidCap Growth Portfolio, the Alger Growth Portfolio and the Alger Capital
Appreciation Portfolio.
INVESTMENT PRACTICES
The Portfolios may use the investment strategies and invest in the types of
securities described below, which may involve certain risks. The Statement of
Additional Information contains more detailed information about these practices
and information about other investment practices of the Portfolios.
REPURCHASE AGREEMENTS
In a repurchase agreement, a Portfolio buys a security at one price and
simultaneously agrees to sell it back at a higher price. In the event of a
bankruptcy or default of the other party to the repurchase agreement, the
Portfolio could experience costs and delays in liquidating the underlying
security, which is held as collateral, and the Portfolio might incur a loss if
the value of the collateral held declines during this period.
ILLIQUID AND RESTRICTED SECURITIES
Under the policies and procedures established by the Fund's Board of
Trustees, Alger Management determines the liquidity of the Portfolios'
investments. Investments may be illiquid because of the absence of an active
trading market, making it difficult to sell promptly at an acceptable price.
Each Portfolio may purchase securities eligible for resale under Rule 144A of
the Securities Act of 1933. This rule permits otherwise restricted securities to
be sold to certain institutional buyers. The Fund will limit its purchases of
these securities to those which Alger Management, under the supervision of the
Fund's Board of Trustees, determines to be liquid. A restricted security is one
that has a contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
LENDING OF PORTFOLIO SECURITIES
In order to generate income and to offset expenses, each Portfolio may lend
portfolio securities with a value up to 331/3% of the Portfolio's total assets
to brokers, dealers and other financial organizations. Any such loan will be
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continuously secured by collateral at least equal to the value of the securities
loaned. Such lending could result in delays in receiving additional collateral
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
FOREIGN SECURITIES
Each Portfolio other than the Alger Money Market Portfolio may invest up to
20% of its total assets in foreign securities. Investing in securities of
foreign companies and foreign governments, which generally are denominated in
foreign currencies, may involve certain risk and opportunity considerations not
typically associated with investing in domestic companies and could cause the
Portfolio to be affected favorably or unfavorably by changes in currency
exchange rates and revaluations of currencies.
Each Portfolio may purchase American Depositary Receipts ("ADRs") or U.S.
dollar-denominated securities of foreign issuers that are not included in the
20% foreign securities limitation. ADRs are receipts issued by U.S. banks or
trust companies in respect of securities of foreign issuers held on deposit for
use in the U.S. securities markets. While ADRs may not necessarily be
denominated in the same currency as the securities into which they may be
converted, many of the risks associated with foreign securities may also apply
to ADRs.
LEVERAGE THROUGH BORROWING
The Alger Capital Appreciation Portfolio may borrow money from banks and use
it to purchase additional securities. This borrowing is known as leveraging.
Leverage increases both investment opportunity and investment risk. If the
investment gains on securities purchased with borrowed money exceed the interest
paid on the borrowing, the net asset value of the Portfolio's shares will rise
faster than would otherwise be the case. On the other hand, if the investment
gains fail to cover the cost (including interest) of borrowings, or if there are
losses, the net asset value of the Portfolio's shares will decrease faster than
would otherwise be the case. The Portfolio is required to maintain continuous
asset coverage (that is, total assets including borrowings, less liabilities
exclusive of borrowings) of 300% of the amount borrowed. If such asset coverage
should decline below 300% as a result of market fluctuations or other reasons,
the Portfolio may be required to sell some of its portfolio holdings within
three days to reduce the debt and restore the 300% asset coverage, even though
it may be disadvantageous from an investment standpoint to sell securities at
that time.
OPTIONS
The Alger Capital Appreciation Portfolio may buy and sell (write) exchange
listed options in order to obtain additional return or to hedge the value of its
portfolio. The Portfolio may write covered call options only if the Portfolio
owns the securities on which the call is written or owns securities which are
exchangeable or convertible into such securities. Although the Portfolio will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. The Portfolio will not
purchase options if, as a result, the aggregate cost of all outstanding options
exceeds 10% of the Portfolio's total assets, although no more than 5% will be
committed to transactions entered into for non-hedging purposes. The Portfolio
may purchase and sell put and call options on stock indexes in order to increase
its gross income or to hedge its portfolio against price fluctuations.
The writing and purchase of options is a highly specialized activity which
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. Additional discussion of these risks
and techniques is included in the Statement of Additional Information.
STOCK INDEX FUTURES AND OPTIONS ON
STOCK INDEX FUTURES
The Alger Capital Appreciation Portfolio may purchase and sell stock index
futures contracts and options on stock index futures contracts. These
investments may be made only for hedging, not speculative, purposes. Hedging
transactions are made to reduce the risk of price fluctuations.
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There can be no assurance of the Portfolio's successful use of stock index
futures as a hedging device. If Alger Management uses a hedging instrument at
the wrong time or judges market conditions incorrectly, hedging strategies may
reduce the Portfolio's return. The Portfolio could also experience losses if the
prices of its futures and options positions were not correlated with its other
investments or if it could not close out a position because of an illiquid
market for the future or option.
PORTFOLIO TURNOVER
Portfolio changes will generally be made without regard to the length of time
a security has been held or whether a sale would result in a profit or loss.
Higher levels of portfolio activity generally result in higher transaction costs
and may also result in taxes on realized capital gains to be borne by the
Portfolio's shareholders.
MANAGEMENT OF THE FUND
ORGANIZATION
The Fund was organized on March 20, 1986 as a multi-series Massachusetts
business trust. The Fund offers an unlimited number of shares of six series,
representing the shares of the Portfolios.
Although the Fund is not required by law to hold annual shareholder meetings,
it may hold meetings from time to time on important matters, and shareholders
have the right to call a meeting to remove a Trustee or to take other action
described in the Trust's Declaration of Trust. Shareholders of one Portfolio may
vote only on matters that affect that Portfolio.
BOARD OF TRUSTEES
The Fund is governed by a Board of Trustees which is responsible for
protecting the interests of shareholders under Massachusetts law. The Statement
of Additional Information contains general background information about each
Trustee and officer of the Fund.
INVESTMENT MANAGER
Alger Management is the Fund's investment manager and is responsible for the
overall administration of the Fund, subject to the supervision of the Board of
Trustees. Alger Management makes investment decisions for the Portfolios, places
orders to purchase and sell securities on behalf of the Portfolios and selects
broker-dealers that, in its judgment, provide prompt and reliable execution at
favorable prices and reasonable commission rates. It is anticipated that Alger
Inc. will serve as the Fund's broker in effecting substantially all of the
Portfolios' transactions on securities exchanges and will retain commissions in
accordance with certain regulations of the Securities and Exchange Commission.
The Fund will consider sales of its shares as a factor in the selection of
broker-dealers to execute over-the-counter portfolio transactions, subject to
the requirements of best price and execution. In addition, Alger Management
employs professional securities analysts who provide research services
exclusively to the Portfolios and other accounts for which Alger Management or
its affiliates serve as investment adviser or subadviser.
Alger Management has been in the business of providing investment advisory
services since 1964 and, as of December 31, 1994, had approximately $2.9 billion
under management, $1.4 billion in mutual fund accounts and $1.5 billion in other
advisory accounts. Alger Management is owned by Alger Inc. which in turn is
owned by Alger Associates, Inc., a financial services holding company. Fred M.
Alger, III and his brother, David D. Alger, are the majority shareholders of
Alger Associates, Inc. and may be deemed to control that company and its
subsidiaries. As of April 3, 1995, those persons and companies may also be
deemed to control the Alger Capital Appreciation Portfolio and the Alger
Balanced Portfolio.
Portfolio Managers
David D. Alger, President of Alger Management, is primarily responsible for
the day-to-day management of the Portfolios of the Fund. He has been employed by
Alger Management as Executive Vice President and Director of Research since 1971
and as President since 1995 and he serves as portfolio manager for other mutual
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funds and investment accounts managed by Alger Management. Steven R. Thumm
serves as co-manager of the Alger Balanced Portfolio. He has been employed by
Alger Management as a fixed income analyst since 1991 and prior to that he was
employed by Marine Midland Bank as Assistant Vice President. Also participating
in the management of the Fund's Portfolios are Ronald Tartaro and Seilai Khoo.
Mr. Tartaro has been employed by Alger Management since 1990 and he serves as a
senior research analyst. Prior to 1990, he was a member of the technical staff
at AT&T Bell Laboratories. Ms. Khoo has been employed by Alger Management since
1989 and she serves as a senior research analyst.
Fund personnel ("Access Persons") are permitted to engage in personal
securities transactions subject to the restrictions and procedures of the Fund's
Code of Ethics. Pursuant to the Code of Ethics, Access Persons generally must
preclear all personal securities transactions prior to trading and are subject
to certain prohibitions on personal trading. You can get a copy of the Fund's
Code of Ethics by calling the Fund toll-free at (800) 992-3863.
FEES AND EXPENSES
Each Portfolio pays Alger Management a management fee computed daily and paid
monthly at annual rates based on a percentage of the value of the relevant
Portfolio's average daily net assets, as follows: Alger Money Market
Portfolio-.50%; Alger Small Capitalization Portfolio and Alger Capital
Appreciation Portfolio-.85%; Alger MidCap Growth Portfolio-.80%; Alger Growth
Portfolio and Alger Balanced Portfolio-.75%. The management fees paid by the
Alger Small Capitalization Portfolio, the Alger MidCap Growth Portfolio, the
Alger Growth Portfolio, the Alger Balanced Portfolio and the Alger Capital
Appreciation Portfolio are higher than those paid by most other investment
companies.
Each Portfolio pays other expenses related to its daily operations, such as
custodian fees, Trustees' fees, transfer agency fees, legal and auditing costs.
More information about each Portfolio's investment management agreement and
other expenses paid by the Portfolios is included in the Statement of Additional
Information.
The Statement of Additional Information contains information about the Fund's
brokerage policies and practices.
DISTRIBUTOR
Alger Inc. serves as the Fund's distributor and also distributes the shares
of other mutual funds managed by Alger Management.
TRANSFER AGENT
Alger Shareholder Services, Inc., an affiliate of Alger Management, serves as
transfer agent for the Fund. Certain record-keeping services that would
otherwise be performed by Alger Shareholder Services, Inc. may be performed by
other entities providing similar services to their customers who invest in the
Portfolios. The Fund, Alger Shareholder Services, Inc., Alger Inc. or any of its
affiliates may elect to enter into a contract to pay them for such services.
DISTRIBUTION PLAN
The Fund has adopted an Amended and Restated Distribution Plan (the "Plan")
under which each Portfolio other than the Alger Money Market Portfolio may
reimburse Alger Inc. for the expenses it incurs in promoting sales of that
Portfolio's shares--at a maximum annual rate of .75% of its average daily net
assets. This fee is known as an "asset-based sales charge" and allows investors
to buy shares without a front end sales charge while allowing Alger Inc. to
compensate dealers that sell shares of the Portfolios. Alger Inc. pays sales
commissions of 4.00% of the amount invested to dealers from its own resources at
the time of sale. Alger Inc. retains the asset-based sales charge to recoup the
sales commissions and other sales related expenses its pays. Any contingent
deferred sales charges received by Alger Inc. will reduce the amount to be
reimbursed under the Plan. Any excess distribution expenses may be carried
forward, with interest, and reimbursed in future years.
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SHAREHOLDER SERVICING AGREEMENT
The Fund pays Alger Inc. a shareholder servicing fee of .25% of the average
daily net assets of each Portfolio other than the Alger Money Market Portfolio
for ongoing service and maintenance of shareholder accounts. Alger Inc. will
compensate dealers from this fee who provide personal service and maintenance of
customer accounts.
NET ASSET VALUE
The price of one share of a Portfolio is its "net asset value." The net asset
value is computed by adding the value of the Portfolio's investments plus cash
and other assets, deducting liabilities and then dividing the result by the
number of its shares outstanding. The net asset value of each Portfolio is
calculated on each day the New York Stock Exchange is open as of the close of
business (normally 4:00 p.m. Eastern time) or, for the Alger Money Market
Portfolio, as of 12:00 noon Eastern time.
CONTINGENT DEFERRED
SALES CHARGE
There is no initial sales charge on purchases of shares of any Portfolio, but
a contingent deferred sales charge may be charged on certain redemptions. The
charge is imposed on any redemption that causes the current value of your
account in any Portfolio other than the Alger Money Market Portfolio to fall
below the amount of purchase payments made during a six-year holding period.
There is no charge on redemptions of (i) shares that represent appreciation on
your original investment, or (ii) shares purchased through reinvestment of
dividends and capital gains. No charge is imposed on the redemption of shares of
the Alger Money Market Portfolio, except for redemption of shares acquired in
exchange for shares of the other Portfolios. The amount of the charge is based
on the length of time shares are held, according to the following table:
CONTINGENT
DEFERRED
YEARS SHARES WERE HELD CHARGE
- ------------------------------------- ----------
Less than one........................ 5%
One but less than two................ 4%
Two but less than three.............. 3%
Three but less than four............. 2%
Four but less than five.............. 2%
Five but less than six............... 1%
Six and greater...................... 0%
For purposes of the charge, it is assumed that the shares of the Portfolio
from which the redemption is made are the shares of that Portfolio held the
longest and which result in the lowest charge.
Exchanges
No contingent deferred sales charge is assessed in connection with exchanges.
Because the charge is applied on the basis of the net asset value of your
account on a Portfolio by Portfolio rather than a Fund-wide basis, the amount of
the charge in a particular instance may be affected by the choice of
Portfolio(s) for the redemption and whether there have been any exchanges among
those Portfolios. Consequently, you should consider the advisability of
exchanging shares of one Portfolio for shares of another Portfolio prior to
redeeming shares if the exchange would reduce the charge applicable to the
redemption.
Redemptions of shares of each of the Portfolios are deemed to be made first
from amounts, if any, to which the charge does not apply. Since no charge is
imposed on shares purchased and retained in the Alger Money Market Portfolio,
you may wish to consider redeeming those shares, if any, before redeeming shares
of the other Portfolios. The exchange privilege may be modified or terminated at
any time upon notice to shareholders. Please see the Statement of Additional
Information for examples of how the contingent deferred sales charge is
calculated when shares are exchanged.
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WAIVERS OF THE CHARGE
The contingent deferred sales charge is waived on Systematic Withdrawal Plan
payments and on redemptions of shares in connection with certain post-retirement
withdrawals from an IRA or other retirement plan or following the death or
disability of a shareholder. A shareholder who has redeemed may reinvest all or
part of the redemption proceeds within 30 days and receive a pro rata credit for
any charge imposed. This privilege may be exercised only once by a shareholder.
Reinvestment will not alter any tax payable on the redemption and a loss may not
be allowed for tax purposes.
In addition, no contingent deferred sales charge is imposed on (1)
redemptions by (i) employees of Alger Inc. and its affiliates, (ii) IRAs, Keogh
Plans and employee benefit plans for those employees and (iii) spouses,
children, siblings and parents of those employees and trusts of which those
individuals are beneficiaries, as long as orders for the shares on behalf of
those individuals and trusts were placed by the employees; (2) redemptions by
(i) accounts managed by investment advisory affiliates of Alger Inc. that are
registered under the Investment Advisers Act of 1940, as amended, (ii)
employees, participants and beneficiaries of those accounts, (iii) IRAs, Keogh
Plans and employee benefit plans for those employees, participants and
beneficiaries and (iv) spouses and minor children of those employees,
participants and beneficiaries as long as orders for the shares were placed by
the employees, participants and beneficiaries; (3) redemptions by directors or
trustees of any investment company for which Alger Inc. or any of its affiliates
serves as investment adviser or distributor; (4) redemptions of shares held
through defined contribution plans; (5) redemptions by an investment company
registered under the Act in connection with the combination of the investment
company with the Fund by merger, acquisition of assets or by any other
transaction; (6) redemptions by registered investment advisers, banks, trust
companies and other financial institutions exercising discretionary authority
with respect to the money invested in Fund shares; (7) redemptions by registered
investment advisers for their own accounts; (8) redemptions of shares purchased
by a Processing Organization, as shareholder of record, on behalf of (i)
investment advisers or financial planners trading for their own accounts or the
accounts of their clients and who charge a management, consulting or other fee
for their services; and clients of such investment advisers or financial
planners trading for their own accounts if the accounts are linked to the master
account of such investment adviser or financial planner on the books and records
of the Processing Organization, and (ii) retirement and deferred compensation
plans and trusts used to fund those plans; and (9) redemptions of shares
purchased by registered representatives of broker-dealers which have entered
into Selected Dealer Agreements with Alger Inc., and their spouses, children,
siblings and parents. Investors purchasing shares subject to one of the
foregoing waivers are required to claim and substantiate their eligibility for
the waiver at the time of purchase. It is also the responsibility of
shareholders redeeming shares subject to a waiver of the charge to assert this
status at the time of redemption. Information regarding these procedures is
available by contacting the Fund at (800) 992-3863.
DIVIDENDS AND TAXES
DIVIDENDS
Each Portfolio will be treated separately in determining the amounts of
dividends of investment income and distributions of capital gains payable to
holders of its shares. Dividends and distributions will be automatically
reinvested on the payment date in additional shares of the Portfolio that paid
the dividend or distribution at net asset value, unless you elected on the New
Account Application to have all dividends and distributions paid in cash. Shares
of the Portfolios purchased through reinvestment of dividends and distributions
are not subject to the contingent deferred sales charge. Dividends of the Alger
Money Market Portfolio are declared daily and paid monthly and those of the
other Portfolios are declared and paid annually. Distributions of any net
realized short-term and long-term capital gains earned by a Portfolio usually
will be made annually after the close of the fiscal year in which the gains are
earned.
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TAXES
Each Portfolio intends to qualify and elect to be treated each year as a
"regulated investment company" for federal income tax purposes. A regulated
investment company is not subject to regular income tax on any income or capital
gains distributed to its shareholders if it, among other things, distributes at
least 90 percent of its investment company taxable income to them within
applicable time periods. Each Portfolio is treated as a separate taxable entity,
with the result that taxable dividends and distributions from a Portfolio
reflect only the income and gains, net of losses, of that Portfolio.
For federal income tax purposes dividends and distributions from a Portfolio
are taxable to you whether paid in cash or reinvested in additional shares. You
may also be liable for tax on any gain realized upon the redemption or exchange
of shares in the Portfolios.
Shortly after the close of each calendar year, you will receive a statement
setting forth the dollar amounts of dividends and any distributions for the
prior calendar year and the tax status of the dividends and distributions for
federal income tax purposes. You should consult your tax adviser to assess the
federal, state and local tax consequences of investing in each Portfolio. This
discussion is not intended to address the tax consequences of an investment by a
nonresident alien.
PERFORMANCE
The Portfolios advertise different types of yield and total return
performance. All performance figures are based on historical earnings and are
not intended to indicate future performance. Further information about the
Fund's performance is contained in its Annual Report to Shareholders, which may
be obtained without charge by contacting the Fund.
The Alger Money Market Portfolio may advertise its "yield" and "effective
yield." The "yield" of the Portfolio refers to the income generated by an
investment in the Portfolio over a particular base period. This income is then
"annualized." That is, the amount of income generated by the investment during
the period is assumed to be generated over a 52 week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Portfolio is assumed
to be reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect on this assumed reinvestment.
Each of the Portfolios other than the Alger Money Market Portfolio may also
include quotations of their "total return" in advertisements or reports to
shareholders or prospective investors. Total return figures show the aggregate
or average percentage change in value of an investment in a Portfolio from the
beginning date of the measuring period to the end of the measuring period. These
figures reflect changes in the price of the Portfolio's shares and assume that
any income dividends and/or capital gains distributions made by the Portfolio
during the period were reinvested in shares of the Portfolio. Figures will be
given for recent 1, 5, and 10 year periods, and may be given for other periods
as well (such as from commencement of the Portfolio's operations, or on a
year-by-year basis) and may utilize dollar cost averaging. The Portfolio may
also use "aggregate" total return figures for various periods, representing the
cumulative change in value of an investment in the Portfolio for the specific
period (again reflecting changes in Portfolio share price and assuming
reinvestment of dividends and distributions) as well as "actual annual" and
"annualized" total return figures. Total returns may be calculated either with
or without the effect of the contingent deferred sales charge to which the
Portfolio's shares are subject and may be shown by means of schedules, charts or
graphs, and may indicate subtotals of the various components of total return
(i.e., change in value of initial investment, income dividends and capital gains
distributions). "Total return" and "yield" for a Portfolio will vary based on
changes in market conditions. In addition, since the deduction of a Portfolio's
expenses is reflected in the total return and yield figures, "total return" and
"yield" will also vary based on the level of the Portfolio's expenses.
The Statement of Additional Information further describes the method used to
determine the yields and total return figures. Current yield and/or total return
quotations may be obtained by contacting the Fund.
12
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement of
Additional Information or the Fund's official sales literature in connection
with the offering of the Fund's shares, and if given or made, such other
information or representations must not be relied on as having been authorized
by the Fund. This Prospectus does not constitute an offer in any state in which,
or to any person to whom, such offer may not be lawfully made.
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INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
AUDITORS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
THE
ALGER
FUND
MEETING THE CHALLENGE OF INVESTING
ALGER MONEY MARKET PORTFOLIO
ALGER BALANCED PORTFOLIO
ALGER GROWTH PORTFOLIO
ALGER MIDCAP GROWTH PORTFOLIO
ALGER SMALL CAPITALIZATION PORTFOLIO
ALGER CAPITAL APPRECIATION PORTFOLIO
PROSPECTUS
PROSPECTUS
APRIL 18, 1995
AS SUPPLEMENTED
SEPTEMBER 18, 1995
AS195
