PROSPECTUS
THE | 75 Maiden Lane
ALGER | New York, New York 10038
FUND | (800)992-FUND (3863)
The Alger Fund offers interests in six Portfolios. Each Portfolio has
distinct investment objectives and policies which are discussed in the section
entitled "Investment Objectives and Policies." 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
With the exception of Alger Money Market Portfolio, each Portfolio offers
three classes of shares, each with a different combination of sales
charges, ongoing fees and other features.
This Prospectus, which should be retained for future reference, contains
important information that you should know before investing. A Statement of
Additional Information dated February 25, 1998 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. The Securities and Exchange Commission maintains a Web
site at http://www.sec.gov where the Statement of Additional Information,
material incorporated by reference, and other information regarding The
Alger Fund may be accessed.
TABLE OF CONTENTS
Page
-----
Introduction................................... i
Portfolio Expenses............................. ii
Financial Highlights........................... vi
How to Purchase Shares......................... 1
How to Sell Shares............................. 5
Special Investor Services...................... 6
Investment Objectives and Policies............. 8
Investment Practices........................... 10
Management of the Fund......................... 12
Net Asset Value................................ 14
Dividends and Taxes............................ 14
Performance.................................... 15
SHARES OF ALGER MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE IS NO ASSURANCE
THAT ALGER MONEY MARKET PORTFOLIO WILL BE ABLE TO MAINTAIN
A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
SHARES OF THE ALGER 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 SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
FEBRUARY 25, 1998
AS SUPPLEMENTED ON MAY 18, 1998, AUGUST 5, 1998 AND AUGUST 20, 1998
<PAGE>
- --------------------------------------------------------------------------------
INTRODUCTION
The Alger Fund's portfolios, other than Alger Money Market Portfolio, offer
three classes of shares having different sales charges, ongoing fees and other
features. You may purchase the class of shares that is most beneficial to you
based upon the amount of the purchase, the length of time you expect to hold
shares and other circumstances.
CLASS A SHARES
An investor purchasing Class A Shares may pay a sales charge at the time of
purchase. Class A Shares are not subject to a charge when they are redeemed
(except for shares purchased for total proceeds of $1 million or more, which
have no initial sales charge and which may be subject to a contingent deferred
sales charge ["CDSC"]). The initial sales charge may be reduced or waived for
certain purchases. Class A Shares are subject to a shareholder servicing fee
equal to an annual rate of .25% of the Portfolio's average daily net assets
attributable to its Class A Shares. See "How to Purchase Shares--Class A Share
Information."
CLASS B SHARES
Class B Shares are offered for sale for purchases of less than $250,000.
Class B Shares have no initial sales charge, but may be subject to a CDSC of up
to 5% if you redeem within six years of purchase. They are subject to a
distribution (Rule 12b-1) fee at an annual rate of .75% of the Portfolio's
average daily net assets attributable to Class B Shares. Class B Shares also pay
a shareholder servicing fee calculated at an annual rate of .25% of the
Portfolio's average daily net assets attributable to its Class B Shares. Class B
Shares provide an investor the benefit of putting all of the investor's dollars
to work from the time the investment is made but will have a higher expense
ratio and generally will pay lower dividends than Class A Shares due to the
distribution fee on Class B Shares. Class B Shares will automatically convert to
Class A Shares eight years after the end of the calendar month in which the
investor's order to purchase was accepted. See "How to Purchase Shares--Class B
Share Information."
CLASS C SHARES
Class C Shares are offered for sale for purchases of less than $1,000,000.
There is no initial sales charge for Class C Shares, but they may be subject to
a CDSC of 1% if you redeem within the first year of purchase. They are subject
to a distribution (Rule 12b-1) fee at an annual rate of .75% of the Portfolio's
average daily net assets attributable to Class C Shares. In addition, an annual
shareholder servicing fee calculated at an annual rate of .25% of the
Portfolio's average daily net assets attributable to its Class C Shares will be
paid by Class C shareholders. Class C Shares provide an investor the benefit of
putting all of the investor's dollars to work from the time the investment is
made but will have a higher expense ratio and generally will pay lower dividends
than Class A Shares due to the distribution fee on Class C Shares. Class C
Shares will automatically convert to Class A Shares twelve years after the end
of the calendar month in which the investor's order to purchase was accepted.
See "How to Purchase Shares--Class C Share Information."
- --------------------------------------------------------------------------------
i
<PAGE>
- --------------------------------------------------------------------------------
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
beginning on page iv shows the amount of expenses you would pay on a $1,000
investment in each class of shares of the Portfolios. These amounts assume the
reinvestment of all dividends and distributions, payment of any applicable
initial sales charge or 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.
<TABLE>
<CAPTION>
ALGER ALGER ALGER
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------------- ------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage of
offering price)(a)(b) .............. None 4.75% None None 4.75% None None
Maximum Sales Charge Imposed on
Reinvested Dividends ............... None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage of
redemption proceeds)(b) ............ None None 5.00% 1.00% None 5.00% 1.00%
Redemption Fees ...................... None None None None None None None
Exchange Fees ........................ None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of
average net assets)
Management Fees ...................... .50% .75% .75% .75% .75% .75% .75%
Rule 12b-1 Fees(c) ................... None None .75% .75% None .75% .75%
Other Expenses (d)(e) ................ .31% 1.35% 1.39% 1.39% .55% .58% .58%
--- ---- ---- ---- ---- ---- ----
Total Fund Expenses (c)(d) ........... .81% 2.10% 2.89% 2.89% 1.30% 2.08% 2.08%
=== ==== ==== ==== ==== ==== ====
</TABLE>
- --------------------------------------------------------------------------------
ii
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
ALGER MIDCAP ALGER ALGER
GROWTH SMALL CAPITALIZATION CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------- ------------------------- ------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- ------- ------- ------- -------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Imposed
on Purchases (as a percentage of
offering price)(a)(b) ........................ 4.75% None None 4.75% None None 4.75% None None
Maximum Sales Load Imposed on
Reinvested Dividends ......................... None None None None None None None None None
Maximum Contingent Deferred
Sales Charge (as a percentage
of redemption proceeds)(b) ................... None 5.00% 1.00% None 5.00% 1.00% None 5.00% 1.00%
Redemption Fees ................................ None None None None None None None None None
Exchange Fees .................................. None None None None None None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees ................................ .80% .80% .80% .85% .85% .85% .85% .85% .85%
Rule 12b-1 Fees(c) ............................. None .75% .75% None .75% .75% None .75% .75%
Other Expenses (d)(e) .......................... .60% .64% .64% .53% .54% .54% .68% .78% .78%
---- ---- ---- ---- ---- ---- ---- ---- ----
Total Fund Expenses (c)(d) ..................... 1.40% 2.19% 2.19% 1.38% 2.14% 2.14% 1.53% 2.38% 2.38%
==== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
(a) The sales charge applicable to Class A Shares set forth in the above table
is the maximum charge imposed upon the purchase of shares. Shareholders may
pay less than 4.75% depending on the amount invested in Class A Shares of
the Fund. See "How to Purchase Shares--Class A Share Information."
(b) Class A purchases of $1 million or more are not subject to an initial sales
charge; however, a contingent deferred sales charge of 1% may be imposed on
certain redemptions within one year following such purchases. See "How to
Purchase Shares--Class A Share Information." For Class B purchases, the
amount of the contingent deferred sales charge, if applicable, will depend
on the number of years since the shareholder made the purchase payment. See
"How to Purchase Shares--Class B Share Information." For Class C purchases,
a contingent deferred sales charge of 1% may be imposed on redemptions
within one year following purchase. See "How to Purchase Shares--Class C
Share Information."
(c) The Alger Fund pays Fred Alger & Company, Incorporated for its services in
distributing Class B and Class C Shares of each Portfolio other than Alger
Money Market Portfolio at the maximum annual rate of .75% of the class's
average daily net assets. Long-term shareholders paying Rule 12b-1 fees
pursuant to The Alger Fund's plans 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) Included in Other Expenses of Alger Capital Appreciation Portfolio is 0.08%
of interest expense for Class A Shares and 0.11% of interest expense for
Class B and Class C Shares.
(e) Other Expenses for a Portfolio's Class C Shares are estimated on the basis
of amounts incurred by the Portfolio's Class B Shares during its most
recent fiscal year.
- --------------------------------------------------------------------------------
iii
<PAGE>
PORTFOLIO EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
ALGER ALGER ALGER
MONEY MARKET BALANCED GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ----------------------------- ------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- -------
EXAMPLE
You would pay the following
expenses on a $1,000
investment including
the maximum sales
charges and assuming
(1) 5% annual return and
(2) redemption at the end of
each time period:
<S> <C> <C> <C> <C> <C> <C> <C>
One Year .......................... $ 8 $ 68 $ 79 $ 39 $ 60 $ 71 $ 31
Three Years ....................... 26 110 119 89 87 95 65
Five Years ........................ 45 155 172 152 115 132 112
Ten Years ......................... 100 279 321 321 197 241 241
You would pay the following
expenses on the same
investment, assuming no
redemption at the end
of each time period:
One Year .......................... $ 8 $ 68 $ 29 $ 29 $ 60 $ 21 $ 21
Three Years ....................... 26 110 89 89 87 65 65
Five Years ........................ 45 155 152 152 115 112 112
Ten Years ......................... 100 279 321 321 197 241 241
</TABLE>
- --------------------------------------------------------------------------------
iv
<PAGE>
- --------------------------------------------------------------------------------
Portfolio Expenses (continued)
<TABLE>
<CAPTION>
ALGER MIDCAP ALGER ALGER
GROWTH SMALL CAPITALIZATION CAPITAL APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------- ------------------------- -------------------------
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
------- ------- ------- ------- ------- ------- ------- ------- -------
Example
You would pay the following
expenses on a $1,000
investment including the
maximum sales charges and
assuming (1) 5% annual
return and (2) redemption at
the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
One Year ..................... $ 61 $ 72 $ 32 $ 61 $ 72 $ 32 $ 62 $ 74 $ 34
Three Years................... 90 99 69 89 97 67 94 104 74
Five Years.................... 120 137 117 119 135 115 127 147 127
Ten Years..................... 207 252 252 205 247 247 221 272 272
You would pay the following
expenses on the same
investment, assuming no
redemption at the end
of each time period:
One Year...................... $ 61 $ 22 $ 22 $ 61 $ 22 $22 $ 62 $ 24 $ 24
Three Years................... 90 69 69 89 67 67 94 74 74
Five Years.................... 120 117 117 119 115 115 127 127 127
Ten Years..................... 207 252 252 205 247 247 221 272 272
</TABLE>
- --------------------------------------------------------------------------------
v
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The Financial Highlights for the years ended October 31, 1990 through 1997 have
been audited by Arthur Andersen LLP, The Alger Fund's (the "Fund") independent
public accountants. This information should be read in conjunction with the
financial statements of the Fund contained in its Annual Report, which financial
statements are incorporated by reference in the Statement of Additional
Information. An Annual Report of the Fund is available by contacting the Fund at
(800) 992-3863. In addition to financial statements, the Annual Report contains
further information about the performance of the Fund. The Financial Highlights,
with the exception of the total return information, for the two years ended
October 31, 1989, have been audited by other independent accountants, who have
expressed an unqualified opinion thereon.
THE ALGER FUND
MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
-------- -------- -------- -------- -------- --------
Net investment income................ .0479 .0521 .0573 .0374 .0304 .0424
Dividends from net investment
income............................. (.0479) (.0521) (.0573) (.0374) (.0304) (.0424)
-------- -------- -------- -------- -------- --------
Net asset value, end of period....... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
======== ======== ======== ======== ======== ========
Total Return ........................ 4.9% 5.3% 5.9% 3.8% 3.1% 4.3%
======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted).................. $179,407 $285,702 $185,822 $163,170 $126,567 $135,288
======== ======== ======== ======== ======== ========
Ratio of expenses to average net
assets........................... .81% .41% .29% .27% .41% .25%
======== ======== ======== ======== ======== ========
Decrease reflected in above
expense ratios due to expense
reimbursements and
management fee waivers........... --% .38% .50% .50% .50% .60%
======== ======== ======== ======== ======== ========
Ratio of net investment income
to average net assets............ 4.76% 5.18% 5.73% 3.78% 3.04% 4.30%
======== ======== ======== ======== ======== ========
- --------------------------------------------------------------------------------
</TABLE>
vi
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------
1991 1990 1989 1988
----- ----- ----- -----
<S> <C> <C> <C> <C>
Net asset value, beginning of period. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
--------- --------- --------- ---------
Net investment income................ .0671 .0844 .0927 .0732
Dividends from net investment
income............................. (.0671) (.0844) (.0927) (.0732)
--------- --------- --------- ---------
Net asset value, end of period....... $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000
========= ========= ========= =========
Total Return ........................ 6.9% 8.8% 9.7%(i) 7.6%(i)
========= ========= ========= =========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted).................. $160,898 $143,420 $ 69,581 $ 11,509
========= ========= ========= =========
Ratio of expenses to average net
assets........................... .18% .03% -- --
========= ========= ========= =========
Decrease reflected in above
expense ratios due to expense
reimbursements and
management fee waivers........... .63% .84% .93% 1.73%
========= ========= ========= =========
Ratio of net investment income
to average net assets............ 6.76% 8.37% 9.45% 7.16%
========= ========= ========= =========
(i) Unaudited.
</TABLE>
- --------------------------------------------------------------------------------
vii
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER FUND
BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS (i)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS A CLASS B
----------- ----------- ----------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ----------------------------
1997(ii) 1997(ii) 1997 1996
---------- ----------- ----------------------------
Net asset value,
beginning
<S> <C> <C> <C> <C>
of period....................... $ 16.88 $ 13.99 $ 14.21 $ 13.59
--------- --------- --------- ---------
Net investment income
(loss) ......................... (.01) .05 -- .12
Net realized and
unrealized gain
(loss) on
investments ................... (.38) 2.54 2.67 .72
--------- --------- --------- ---------
Total from investment
operations ..................... (.39) 2.59 2.67 .84
--------- --------- --------- ---------
Dividends from net
investment
income.......................... -- -- (.06) (.01)
Distributions from
net realized
gains........................... -- -- (.34) (.21)
--------- --------- --------- ---------
Total Distributions............... -- -- (.40) (.22)
--------- --------- --------- ---------
Net asset value,
end of period .................. $ 16.49 $ 16.58 $ 16.48 $ 14.21
========= ========= ========= =========
Total Return (iii) ............... (2.31%) 18.5% 19.3% 6.3%
========= ========= ========= =========
Ratios and
Supplemental Data:
Net assets, end
of period (000's
omitted)...................... $ 48 $ 459 $ 12,653 $ 13,492
========= ========= ========= =========
Ratio of
expenses to
average
net assets.................... 2.77% 2.10% 2.89% 2.70%
========= ========= ========= =========
Decrease reflected
in above expense
ratios due to
expense
reimbursements (v) ........... -- -- -- --
========= ========= ========= =========
Ratio of net
investment income
(loss) to
average net assets .......... (.84%) .72% .04% .47%
========= ========= ========= =========
Portfolio
Turnover Rate.. .............. 109.26% 109.26% 109.26% 85.51%
========= ========= ========= =========
Average Commission
Rate Paid .................... $ .0709 $ .0709 $ .0709 $ .0700
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------
FROM
JUNE 1, 1992
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------- TO OCTOBER 31,
1995 1994 1993 1992(ii)
---- ---- ---- --------
Net asset value,
beginning
<S> <C> <C> <C> <C>
of period...................... $ 10.65 $ 11.18 $ 9.95 $ 10.00
--------- --------- --------- --------
Net investment income
(loss) ........................ (.02)(iv) (.05) (.01) (.12)
Net realized and
unrealized gain
(loss) on
investments .................. 2.96 (.39) 1.24 .07
--------- --------- --------- --------
Total from investment
operations .................... 2.94 (.44) 1.23 (.05)
--------- --------- --------- --------
Dividends from net
investment
income......................... -- -- -- --
Distributions from
net realized
gains.......................... -- (.09) -- --
--------- --------- --------- --------
Total Distributions.............. -- (.09) -- --
--------- --------- --------- --------
Net asset value,
end of period ................. $ 13.59 $ 10.65 $ 11.18 $ 9.95
========= ========= ========= ========
Total Return (iii) ............... 27.6% (4.0%) 12.4% (0.5%)
========= ========= ========= ========
Ratios and
Supplemental Data:
Net assets, end
of period (000's
omitted)...................... $ 6,214 $ 3,073 $ 3,125 $ 1,370
========= ========= ========= ========
Ratio of
expenses to
average
net assets.................... 3.34% 3.18% 3.82% 5.62%
========= ========= ========= ========
Decrease reflected
in above expense
ratios due to
expense
reimbursements (v) ........... .24% -- .75% .75%
========= ========= ========= ========
Ratio of net
investment income
(loss) to
average net assets .......... (.13%) (.41%) (.97%) (3.07%)
========= ========= ========= ========
Portfolio
Turnover Rate.. .............. 84.06% 84.88% 115.17% 17.07%
========= ========= ========= ========
</TABLE>
(i) Class C Shares were initially offered August 1, 1997. Class A Shares were
initially offered January 1, 1997.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Does not reflect the effect of any sales charges.
(iv) Amount was computed based on average shares outstanding during the
period.
(v) Represents expense reimbursements made pursuant to applicable state
expense limits.
- --------------------------------------------------------------------------------
viii
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER FUND
MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS (i)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS A CLASS B
----------- ----------- ----------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ----------------------------
1997(ii) 1997(ii) 1997 1996
---------- ----------- ----------------------------
Net asset value,
beginning
<S> <C> <C> <C> <C>
of period...................... $ 22.49 $ 18.92 $ 18.87 $ 18.94
-------- -------- -------- --------
Net investment
income (loss).................. (.03) (.10) (.29) (.25)(iv)
Net realized and
unrealized gain (loss)
on investments................. (.13) 3.64 4.23 1.35
-------- -------- -------- --------
Total from
investment operations........ (.16) 3.54 3.94 1.10
Distribution from
net realized gains ............ -- -- (.48) (1.17)
-------- -------- -------- --------
Net asset value,
end of period.................. $ 22.33 $ 22.46 $ 22.33 $ 18.87
======== ======== ======== ========
Total Return (iii)............... (.7%) 18.7% 21.4% 6.4%
======== ======== ======== ========
Ratios and
Supplemental Data:
Net assets, end of period
(000's omitted) ................ $ 84 $ 5,436 $166,475 $125,686
======== ======== ======== ========
Ratio of expenses
to average net assets ....... 1.97% 1.40% 2.19% 2.27%
======== ======== ======== ========
Decrease reflected
in above expense
ratio due to expense
reimbursements (v)........... -- -- -- --
======== ======== ======== ========
Ratio of net investment
income (loss) to
average net assets........... (1.55%) (.83%) (1.58%) (1.33%)
======== ======== ======== ========
Portfolio
Turnover Rate................ 160.09% 160.09% 160.09% 113.95%
======== ======== ======== ========
Average Commission
Rate Paid................... $ .0680 $ .0680 $ .0680 $ .0690
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------
FROM
MAY 24, 1993
YEAR ENDED (COMMENCEMENT
OCTOBER 31, OF OPERATIONS)
-------------------- TO OCTOBER 31,
1995 1994 1993(ii)
---- ---- --------
Net asset value,
beginning
<S> <C> <C> <C>
of period...................... $ 12.77 $ 12.48 $ 10.00
-------- -------- --------
Net investment
income (loss).................. (.08) (.11) (.09)
Net realized and
unrealized gain (loss)
on investments................. 6.25 .68 2.57
-------- -------- --------
Total from
investment operations........ 6.17 .57 2.48
Distribution from
net realized gains ............ -- (.28) --
-------- -------- --------
Net asset value,
end of period.................. $ 18.94 $ 12.77 $ 12.48
======== ======== ========
Total Return (iii)............... 48.3% 4.7% 24.8%
======== ======== ========
Ratios and
Supplemental Data:
Net assets, end of period
(000's omitted) ................ $ 54,016 $ 18,516 $ 3,836
======== ======== ========
Ratio of expenses
to average net assets ....... 2.39% 3.20% 3.73%
======== ======== ========
Decrease reflected
in above expense
ratio due to expense
reimbursements (v)........... -- .07% .80%
======== ======== ========
Ratio of net investment
income (loss) to
average net assets........... (1.71%) (2.32%) (2.86%)
======== ======== ========
Portfolio
Turnover Rate................ 121.60% 127.40% 57.64%
======== ======== ========
</TABLE>
(i) Class C Shares were initially offered August 1, 1997. Class A Shares were
initially offered January 1, 1997.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Does not reflect the effect of any sales charges.
(iv) Amount was computed based on average shares outstanding during the
period.
(v) Represents expense reimbursements made pursuant to applicable state
expense limits.
- --------------------------------------------------------------------------------
ix
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER FUND
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS (i)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS A CLASS B (ii)
----------- ----------- ----------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, ----------------------------
1997(vi) 1997(vi) 1997 1996
---------- ----------- ----------------------------
Net asset value,
<S> <C> <C> <C> <C>
beginning of period ........... $ 11.98 $ 9.40 $ 9.49 $ 9.38
-------- -------- -------- --------
Net investment
income (loss).................. (.02) (.02) (.13) (.08)(v)
Net realized and
unrealized gain
(loss) on investments.......... (.46) 2.20 2.44 .78
-------- -------- -------- --------
Total from
investment operations. ........ (.48) 2.18 2.31 .70
Distributions from
net realized gains ............ -- -- (.30) (.59)
-------- -------- -------- --------
Net asset value,
end of period... .............. $ 11.50 $ 11.58 $ 11.50 $ 9.49
======== ======== ======== ========
Total Return (iv)................ (4.0%) 23.2% 24.9% 8.1%
======== ======== ======== ========
Ratios and
Supplemental Data:
Net assets,
end of period
(000's omitted).............. $ 199 $ 52,307 $304,984 $266,207
======== ======== ======== ========
Ratio of expenses
to average
net assets................... 2.02% 1.30% 2.08% 2.08%
======== ======== ======== ========
Decrease reflected
in above expense
ratios due to expense
reimbursements............... -- -- -- --
======== ======== ======== ========
Ratio of net
investment
income (loss)
to average net assets........ (1.43%) (.39%) (1.13%) (.84%)
======== ======== ======== ========
Portfolio
Turnover Rate................ 128.26% 128.26% 128.26% 94.91%
======== ======== ======== ========
Average Commission
Rate Paid... ................ $ .0699 $ .0699 $ .0699 $ .0715
======== ======== ======== ========
</TABLE>
CLASS B (ii)
-------------------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------------------
1995 1994 1993
---- ---- ----
Net asset value,
beginning of period ......... $ 6.97 $ 7.43 $ 5.76
-------- -------- --------
Net investment
income (loss)................ (.02) (.07)(v) (.02)
Net realized and
unrealized gain
(loss) on investments........ 2.59 .35 1.70
-------- -------- --------
Total from
investment operations. ...... 2.57 .28 1.68
Distributions from
net realized gains .......... (.16) (.74) (.01)
-------- -------- --------
Net asset value,
end of period... ............ $ 9.38 $ 6.97 $ 7.43
======== ======== ========
Total Return (iv).............. 37.8% 4.1% 29.2%
======== ======== ========
Ratios and
Supplemental Data:
Net assets,
end of period
(000's omitted)............ $154,284 $ 76,390 $ 37,988
======== ======== ========
Ratio of expenses
to average
net assets................. 2.09% 2.20% 2.20%
======== ======== ========
Decrease reflected
in above expense
ratios due to expense
reimbursements............. -- -- --
======== ======== ========
Ratio of net
investment
income (loss)
to average net assets...... (1.03%) (1.01%) (1.16%)
======== ======== ========
Portfolio
Turnover Rate.............. 118.16% 103.86% 108.54%
======== ======== ========
- --------------------------------------------------------------------------------
x
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B (ii)
---------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------
1992 1991 1990 1989 1988
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 5.77 $ 4.25 $ 4.42 $ 3.48 $ 3.23
---------- ---------- --------- --------- ---------
Net investment income (loss) ................... (.06)(v) (.02) (.02) (.05) (.04)
Net realized and unrealized gain
(loss) on investments ........................ .61 1.86 (.15) .99 .29
---------- ---------- --------- --------- ---------
Total from investment operations ............... .55 1.84 (.17) .94 .25
Distributions from net realized gains .......... (.56) (.32) -- -- --
---------- ---------- --------- --------- ---------
Net asset value, end of period ................. $ 5.76 $ 5.77 $ 4.25 $ 4.42 $ 3.48
========== ========== ========= ========= =========
Total Return (iv) .............................. 9.7% 45.8% (4.0%) 27.0%(iii) 7.7%(iii)
========== ========== ========= ========= =========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ............................ $ 19,379 $ 10,213 $ 5,667 $ 5,463 $ 5,294
========== ========== ========= ========= =========
Ratio of expenses to average
net assets ................................. 2.32% 2.70% 3.09% 3.32% 3.01%
========== ========== ========= ========= =========
Decrease reflected in above
expense ratios due to expense
reimbursements ............................. -- -- -- -- .43%
========== ========== ========= ========= =========
Ratio of net investment
income (loss)
to average net assets ...................... (1.07%) (1.06%) (.68%) (.70%) (.99%)
========== ========== ========= ========= =========
Portfolio Turnover Rate ...................... 69.28% 76.06% 86.06% 106.73% 151.30%
========== ========== ========= ========= =========
</TABLE>
- --------------------------------------------------------------------------------
(i) Class C Shares were initially offered August 1, 1997. Class A Shares were
initially offered January 1, 1997. (ii) Per share data have been adjusted
to reflect the effect of a 3 for 1 stock split which occurred September
27, 1995.
(iii) Unaudited.
(iv) Does not reflect the effect of any sales charges.
(v) Amount was computed based on average shares outstanding during the year.
(vi) Ratios have been annualized; total return has not been annualized.
- --------------------------------------------------------------------------------
xi
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER FUND
SMALL CAPITALIZATION PORTFOLIO
FINANCIAL HIGHLIGHTS (i)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS A CLASS B (ii)
------------- ------------ -----------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, -----------------------------------------------------
1997(vi) 1997(vi) 1997 1996 1995 1994 1993
------------- ---------- ----- ----- ----- ----- -----
Net asset value,
<S> <C> <C> <C> <C> <C> <C> <C>
beginning of period ........... $ 10.38 $ 9.21 $ 10.86 $ 11.13 $ 7.62 $ 8.65 $ 6.88
-------- -------- -------- -------- -------- -------- --------
Net investment
income (loss).................. (.03) (.04) (.11) (.09) (.13) (.09) (.08)
Net realized
and unrealized
gain (loss)
on investments................. (.06) 1.18 1.28 .42 3.64 (.02) 1.85
-------- -------- -------- -------- -------- -------- --------
Total from
investment operations.......... (.09) 1.14 1.17 .33 3.51 (.11) 1.77
Distributions from
net realized gains ............ -- -- (1.74) (.60) -- (.92) --
-------- -------- -------- -------- -------- -------- --------
Net asset value,
end of period.................. $ 10.29 $ 10.35 $ 10.29 $ 10.86 $ 11.13 $ 7.62 $ 8.65
======== ======== ======== ======== ======== ======== ========
Total Return (iv)................ (.9%) 12.4% 12.9% 3.2% 46.2% (1.1%) 25.8%
======== ======== ======== ======== ======== ======== ========
Ratios and
Supplemental Data:
Net assets, end
of period
(000's omitted).............. $ 338 $ 25,996 $580,651 $553,872 $463,718 $294,890 $300,108
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to
average net assets......... 2.09% 1.38% 2.14% 2.13% 2.11% 2.18% 2.13%
======== ======== ======== ======== ======== ======== ========
Decrease reflected
in above expense
ratios due to expense
reimbursements............. -- -- -- -- -- -- --
======== ======== ======== ======== ======== ======== ========
Ratio of net investment
income (loss) to
average net assets........... (1.71%) (.93%) (1.67%) (1.59%) (1.75%) (1.51%) (1.52%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate........ 120.27% 120.27% 120.27% 153.35% 97.37% 131.86% 148.49%
======== ======== ======== ======== ======== ======== ========
Average Commission Rate Paid... $ .0652 $ .0652 $ .0652 $ .0611
======== ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
xii
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B (ii)
--------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------------------------
1992 1991 1990 1989 1988
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 6.97 $ 4.33 $ 5.91 $ 3.58 $ 3.00
----------- ---------- ---------- ---------- ---------
Net investment income (loss) .............. (.11)(v) (.03) (.06)(v) -- (.07)
Net realized and unrealized
gain (loss) on investments ............ .37 2.76 (.25) 2.33 .65
----------- ---------- ---------- ---------- ---------
Total from investment operations .......... .26 2.73 (.31) 2.33 .58
Distributions from net realized gains ..... (.35) (.09) (1.27) -- --
----------- ---------- ---------- ---------- ---------
Net asset value, end of period ............ $ 6.88 $ 6.97 $ 4.33 $ 5.91 $ 3.58
=========== ========== ========== ========== =========
Total Return (iv) ......................... 3.4% 63.7% (7.1%) 65.1%(iii) 19.3%(iii)
=========== ========== ========== ========== =========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ..................... $ 182,432 $ 61,273 $ 23,628 $ 11,990 $ 3,709
=========== ========== ========== ========== =========
Ratio of expenses to
average net assets .................. 2.17% 2.23% 2.66% 3.25% 3.01%
=========== ========== ========== ========== =========
Decrease reflected in above expense
ratios due to expense
reimbursements ...................... -- -- -- -- 1.33%
=========== ========== ========== ========== =========
Ratio of net investment
income (loss) to
average net assets .................... (1.64%) (1.37%) (1.17%) (1.92%) (2.07%)
=========== ========== ========== ========== =========
Portfolio Turnover Rate ................. 121.00% 171.04% 252.66% 441.42% 228.32%
=========== ========== ========== ========== =========
</TABLE>
(i) Class C Shares were initially offered August 1, 1997. Class A Shares were
initially offered January 1, 1997.
(ii) Per share data have been adjusted to reflect the effect of a 3 for 1
stock split which occurred September 27, 1995.
(iii) Unaudited.
(iv) Does not reflect the effect of any sales charges.
(v) Amount was computed based on average shares outstanding during the
period.
(vi) Ratios have been annualized; total return has not been annualized.
- --------------------------------------------------------------------------------
xiii
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER FUND
CAPITAL APPRECIATION PORTFOLIO (i)
FINANCIAL HIGHLIGHTS (ii)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS A CLASS B
----------- ----------- -----------------------------------------------------------
THREE MONTHS TEN MONTHS
ENDED ENDED YEAR ENDED OCTOBER 31,
OCTOBER 31, OCTOBER 31, -----------------------------------------------------------
1997(v) 1997(v) 1997 1996 1995 1994
----------- ----------- --------- --------- -------- --------
Net asset value,
<S> <C> <C> <C> <C> <C> <C>
beginning of period............ $ 27.67 $ 21.59 $ 21.62 $ 18.62 $ 11.11 $ 10.00
---------- ---------- ---------- ---------- ---------- ----------
Net investment
income (loss)................. (.05) (.09) (.33) (.34)(iii) (0.47)(iii) (0.47)
Net realized and
unrealized gain
on investments................. (1.62) 4.67 4.85 3.88 7.98 1.58
---------- ---------- ---------- ---------- ---------- ----------
Total from
investment operations........ (1.67) 4.58 4.52 3.54 7.51 1.11
Distributions from
net realized gains............. -- -- (.14) (.54) -- --
---------- ---------- ---------- ---------- ---------- ----------
Net asset value,
end of period.................. $ 26.00 $ 26.17 $ 26.00 $ 21.62 $ 18.62 $ 11.11
========== ========== ========== ========== ========== ==========
Total Return (iv)................ (6.0%) 21.2% 21.0% 19.5% 67.6% 11.1%
========== ========== ========== ========== ========== ==========
Ratios and
Supplemental Data:
Net assets, end
of period
(000's omitted) $ 631 $ 15,572 $ 212,895 $ 150,258 $ 33,640 $ 2,369
========== ========== ========== ========== ========== ==========
Ratio of expenses
excluding interest to
average net assets........... 2.18% 1.45% 2.27% 2.44% 3.26% 4.13%
========== ========== ========== ========== ========== ==========
Ratio of expenses
including interest to
average net assets........... 2.25% 1.53% 2.38% 2.46% 3.54% 5.53%
========== ========== ========== ========== ========== ==========
Decrease reflected
in above expense
ratios due to expense
reimbursements (vi).......... -- -- -- -- -- 0.85%
========== ========== ========== ========== ========== ==========
Ratio of net
investment income
(loss) to average
net assets.................. (1.80%) (.85%) (1.72%) (1.61%) (3.02%) (5.12%)
========== ========== ========== ========== ========== ==========
Portfolio
Turnover Rate............... 157.63% 157.63% 157.63% 162.37% 197.65% 231.99%
========== ========== ========== ========== ========== ==========
Average Commission
Rate Paid................... $ .0702 $ .0702 $ .0702 $ .0647
========== ========== ========== ==========
Amount of debt
outstanding at end
of period.................... -- -- -- $7,700,000 -- $ 651,000
========== ========== ========== ========== ========== ==========
Average amount of debt
outstanding
during the period............ $2,940,097 $2,940,097 $2,940,097 $ 239,966 $ 293,153 $ 406,864
========== ========== ========== ========== ========== ==========
Average daily number
of shares outstanding
during the period............ 7,739,199 7,739,199 7,739,199 4,852,286 543,270 191,676
========== ========== ========== ========== ========== ==========
Average amount of debt per
share during the period...... $ 0.38 $ 0.38 $ 0.38 $ 0.05 $ 0.54 $ 2.12
========== ========== ========== ========== ========== ==========
</TABLE>
(i) Prior to March 27, 1995, the Capital Appreciation Portfolio was the
Leveraged AllCap Portfolio.
(ii) Class C Shares were initially offered August 1, 1997. Class A Shares were
initially offered January 1, 1997.
(iii) Amount was computed based on average shares outstanding during the year.
(iv) Does not reflect the effect of any sales charges.
(v) Ratios have been annualized; total return has not been annualized.
(vi) Represents expense reimbursements made pursuant to applicable state
expense limits.
- --------------------------------------------------------------------------------
xiv
<PAGE>
HOW TO PURCHASE SHARES
IN GENERAL
The Alger Fund (the "Fund") offers Class A, Class B and Class C Shares
(except for Alger Money Market Portfolio which has a single class of shares) for
investors. The offering price for Class A Shares is net asset value plus an
initial sales charge that declines for larger purchases (see "Class A Share
Information" below). Purchases of Class A Shares in amounts of $1 million or
more incur no initial sales charge but may be subject to a contingent deferred
sales charge ("CDSC") if held for less than one year. The offering price for
Class B Shares is net asset value with no initial sales charge but such shares
may be subject to a CDSC if held for less than six years. Class B Shares
automatically convert to Class A Shares after they have been held for eight
years (see "Class B Share Information" below). Class C shares also are sold at
net asset value without an initial sales charge, but they may be subject to a
CDSC of 1% if held for less than one year. Class C Shares automatically convert
to Class A Shares after they have been held for twelve years (see "Class C Share
Information" below). Alger Money Market Portfolio is sold without an initial
sales charge or CDSC. There is no minimum imposed on initial or subsequent
investments in any Portfolio other than Alger Money Market Portfolio. The
minimum initial investment in Alger Money Market Portfolio is $500, and
subsequent investments must be at least $25. These minimums may be waived under
certain circumstances. The Fund or the transfer agent may reject any purchase
order.
METHODS OF PURCHASING SHARES
MAIL
You can buy shares through Alger Shareholder Services, Inc., the Fund's
transfer agent ("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.
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.
BROKERS
You can buy shares of the Portfolios through brokers who have signed sales
agreements with the Fund's Distributor, Fred Alger & Company, Incorporated
("Alger Inc.").
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.
CLASS A SHARE INFORMATION
Class A Shares are available in all Portfolios except Alger Money Market
Portfolio. These shares may be subject to an initial sales charge (indicated
below) on purchases of less than $1 million. Purchases of Class A Shares in the
amount of $1 million or more avoid the initial sales charge, but are subject to
a CDSC of 1% if held for less than one year. See "Contingent Deferred Sales
Charge" below.
INITIAL SALES CHARGE
The sales charges applicable to purchases of Class A Shares of the Portfolios
(other than the Alger Money Market Portfolio) are:
SALES CHARGE SALES CHARGE DEALER ALLOWANCE
PURCHASE AS % OF AS % OF AS % OF
AMOUNT OFFERING PRICE NET ASSET VALUE OFFERING PRICE
------ -------------- --------------- --------------
Less than $100,000 4.75% 4.99% 4.00%
$100,000 - $249,999 4.00% 4.17% 3.25%
$250,000 - $499,999 3.00% 3.09% 2.50%
$500,000 - $999,999 2.25% 2.30% 1.75%
$1,000,000 and over * * 1.00%
- ------------------
* Purchases of Class A Shares, which when combined with current holdings of
Class A Shares offered with a sales charge equal to or exceeding $1,000,000 in
the aggregate, may be made at net asset value without any initial sales
charge, but will be subject to a CDSC of 1.00% on redemptions made within 12
months of purchase. The CDSC is waived in certain circumstances. See "Waivers
of Sales Charges."
1
<PAGE>
The reduced sales charges shown above apply to the aggregate of purchases of
Class A Shares of the Fund made at one time (unless a Letter of Intent is on
file with the Fund) by "any person," which includes an individual, his or her
spouse and children, or a trustee or other fiduciary of a single trust, estate
or single fiduciary account. See "Letter of Intent."
From time to time Alger Inc. may reallow to brokers or financial
intermediaries all or substantially all of the initial sales charge. To the
extent that it does so, such persons may be deemed to be underwriters of the
Fund as defined in the Securities Act of 1933, as amended.
RIGHT OF ACCUMULATION
Class A Shares of the Fund may be purchased by "any person" (as defined
above) at a reduced sales charge as determined by aggregating the dollar amount
of the new purchase and the current value (at offering price) of all Class A
Shares of the Fund then held by such person and applying the sales charge
applicable to such aggregate. In order to obtain such discount, the purchaser
must provide sufficient information at the time of purchase to permit
verification that the purchase qualifies for the reduced sales charge. The right
of accumulation is subject to modification or discontinuance at any time with
respect to all shares purchased thereafter.
LETTER OF INTENT
A Letter of Intent ("LOI") contemplating aggregate purchases of $100,000 or
more provides an opportunity for an investor to obtain a reduced sales charge by
aggregating investments over a 13-month period, provided that the investor
refers to such LOI when placing orders. For purposes of a LOI, the "Purchase
Amount" as referred to in the preceding sales charge table includes purchases of
all Class A Shares of the Fund offered with a sales charge over the following 13
months. An alternative is to compute the 13-month period starting up to 90 days
before the date of execution of the LOI.
The minimum initial investment under the LOI is 5% of the total LOI amount.
Each investment made during the period receives the reduced sales charge
applicable to the total amount of the investment goal. Shares purchased with the
first 5% of the total LOI amount will be held in escrow by the Transfer Agent to
assure any necessary payment of a higher applicable sales charge if the
investment goal is not met. If the goal is not achieved within the period, the
investor must pay the difference between the sales charges applicable to the
purchases made and the charges previously paid, or an appropriate number of
escrowed shares will be redeemed.
CLASS B SHARE INFORMATION
Class B Shares are offered for sale for purchases of less than $250,000.
Class B Shares are sold at net asset value with no initial sales charge. This
provides investors the benefit of putting all of their dollars to work at the
time the investment is made. However, a CDSC of up to 5% may be imposed if you
redeem your shares within six years of purchase. See "Contingent Deferred Sales
Charge." Class B Shares are subject to certain Rule 12b-1 fees as well, which
are described below. Once Class B Shares have been held for eight years, they
will automatically convert to Class A Shares. See "Conversion of Class B and
Class C Shares."
CLASS C SHARE INFORMATION
Class C shares are offered for sale for purchases of less than $1,000,000.
Class C Shares are sold at net asset value with no initial sales charge. This
provides investors the benefit of putting all of their dollars to work at the
time the investment is made. However, a CDSC of 1% may be imposed if you redeem
your shares within one year of purchase. See "Contingent Deferred Sales Charge."
Class C Shares are subject to certain Rule 12b-1 fees as well, which are
described below. Once Class C Shares have been held for twelve years, they will
automatically convert to Class A Shares. (See "Conversion of Class B and Class C
Shares.")
Class C Shares are subject to the same ongoing distribution and service fees
as Class B Shares but are subject to a CDSC for a shorter period of time (one
year versus six years) than Class B Shares. However, Class B Shares convert to
Class A Shares after a shorter period of time than do Class C Shares (eight
years versus twelve years).
CONVERSION OF CLASS B AND CLASS C SHARES
Class B and Class C Shares will automatically convert to Class A Shares eight
and twelve years,
2
<PAGE>
respectively, after the end of the calendar month in which the order to purchase
was accepted and will thereafter not be subject to the original Class's Rule
12b-1 fees. The conversion will be completed on the basis of the relative net
asset values per share without the imposition of any sales charge, fee or other
charge. At conversion, a proportionate amount of shares representing reinvested
dividends and reinvested capital gains will also be converted into Class A
Shares. Because Alger Money Market Portfolio is not subject to any distribution
fees, the running of the applicable conversion period is suspended for any
period of time in which shares received in exchange for Class B or Class C
Shares are held in that Portfolio. For purposes of determining the conversion
date of Class B Shares outstanding prior to August 1, 1997, such shares will be
deemed to have been held for either eight years or the period (adjusted as set
forth in the preceding sentence) since their purchase acceptance, whichever is
shorter. Accordingly, all Class B Shares outstanding for at least eight years as
of August 28, 1997 were converted to Class A Shares on August 28, 1997.
The conversion of Class B Shares and Class C Shares is subject to the
continuing availability of an opinion of counsel to the effect that the
conversion of shares does not constitute a taxable event under Federal income
tax laws. The conversion of Class B and Class C Shares may be suspended if such
an opinion is no longer available.
DISTRIBUTION PLANS
The Fund has adopted separate Distribution Plans (the "Plans") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
under which Classes B and C of each Portfolio other than Alger Money Market
Portfolio may make payments to Alger Inc. in connection with its activities in
promoting sales of that Portfolio's Class B and C Shares--at a maximum annual
rate of .75% of the Portfolio's average daily net assets represented by such
shares (each a Rule 12b-1 fee). Under the Class B Plan, the Rule 12b-1 fee is
paid, up to the maximum annual rate, to the extent necessary to reimburse Alger
Inc.'s expenses incurred in promoting distribution of Class B shares. Under the
Class C Plan, the Rule 12b-1 fee constitutes compensation to Alger Inc. for its
activities in distributing Class C Shares, and the expenses incurred by Alger
Inc. in connection with such activities may be greater or less than the
compensation received from the Portfolio. In each case, the Rule 12b-1 fee,
sometimes described as an "asset-based sales charge," allows investors to buy
shares without an initial sales charge while allowing Alger Inc. to compensate
dealers that sell Class B or C Shares of the Portfolios. Typically, Alger Inc.,
in its discretion or pursuant to dealer agreements, pays sales commissions of up
to 4.75% of the amount invested in Class B Shares, and up to 1% of the amount
invested in Class C Shares, to dealers from its own resources at the time of
sale and pays continuing commissions after purchase to dealers selling Class C
Shares. For Class B Shares, Alger Inc. retains the asset-based sales charge to
recoup the sales commissions and other sales-related expenses its pays. For
Class C Shares, the asset-based sales charge is retained by Alger Inc. in the
first year after purchase; in subsequent years, all or a portion of it typically
is paid to the dealers who sold the Class C Shares. In some cases, the selling
dealer is Alger Inc. Any CDSCs on Class B Shares received by Alger Inc. will
reduce the amount to be reimbursed under the Class B Plan. Under the Class B
Plan, any excess distribution expenses may be carried forward, with interest,
and reimbursed in future years. At October 31, 1997, the end of the Fund's
fiscal year, the following approximate amounts were carried forward under the
Class B Plan: Alger Small Capitalization Portfolio--$16,444,000 (2.71% of net
assets); Alger MidCap Growth Portfolio--$3,218,000 (1.87%); Alger Growth
Portfolio--$7,605,000 (2.13%); Alger Balanced Portfolio--$225,000 (1.71%); and
Alger Capital Appreciation Portfolio--$2,124,000 (.93%).
CONTINGENT DEFERRED SALES CHARGE
No CDSC is imposed on the redemption of shares of Alger Money Market
Portfolio, except that shares
3
<PAGE>
of the Portfolio acquired in exchange for shares of the other Portfolios will
bear any CDSC that would apply to the exchanged shares.
With respect to Class B Shares, there is no initial sales charge on purchases
of shares of any Portfolio, but a CDSC may be charged on certain redemptions.
The CDSC is imposed on any redemption that causes the current value of your
account in the Class B shares of the Portfolio to fall below the amount of
purchase payments made during a six-year holding period. The amount of the
charge is based on the length of time shares are held, according to the
following table:
CONTINGENT
DEFERRED SALES
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%
Certain Class A Shares also are subject to a CDSC. Those Class A Shares
purchased in an amount of $1 million or more which have not been subject to the
Class's initial sales charge and which have not been held for a full year are
subject to a CDSC of 1% at the time of redemption.
Class C Shares have no initial sales charge but are subject to a CDSC of 1%
if redeemed within one year of purchase.
IN GENERAL
For purposes of the CDSC, it is assumed that the shares of the Portfolio from
which the redemption is made are the shares of that Portfolio which result in
the lowest charge, if any.
Redemptions of shares of each of the Portfolios are deemed to be made first
from amounts, if any, to which a CDSC does not apply. There is no CDSC on
redemptions of (i) shares that represent appreciation on your original
investment, or (ii) shares purchased through reinvestment of dividends and
capital gains. Since no charge is imposed on shares purchased and retained in
Alger Money Market Portfolio, you may wish to consider redeeming those shares,
if any, before redeeming shares that are subject to a CDSC. Please see the
Statement of Additional Information for examples of how the CDSC is calculated
when shares are exchanged.
WAIVERS OF SALES CHARGES
No initial sales charge (Class A) or CDSC (Class A, B or C) is imposed on
purchases or redemptions (1) 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) 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) by directors or trustees of
any investment company for which Alger Inc. or any of its affiliates serves as
investment adviser or distributor; (4) of shares held through defined
contribution plans as defined by ERISA; (5) by an investment company registered
under the 1940 Act in connection with the combination of the investment company
with the Fund by merger, acquisition of assets or by any other transaction; (6)
by registered investment advisers, banks, trust companies and other financial
institutions on behalf of their clients; (7) by registered investment advisers
for their own accounts; (8) 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
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those plans; (9) by registered representatives of broker-dealers which have
entered into Selected Dealer Agreements with Alger Inc., and their spouses,
children, siblings and parents; and (10) of Class A shares purchased with the
proceeds of a redemption of shares of a mutual fund other than the Fund, if an
initial or deferred sales charge was paid in connection with the investment in
the other fund and the redemption from the other fund occurred within 90 days of
the purchase of Class A shares.
Any CDSC is also waived on (1) Systematic Withdrawal Plan payments, (2)
redemptions of shares in connection with certain required post-retirement
withdrawals from an IRA or other retirement plan or (3) redemptions following
the death or disability of a shareholder.
Investors purchasing Class A 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
otherwise subject to a CDSC but qualifying for 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.
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 CDSC may be charged on certain redemptions.
See "Contingent Deferred Sales Charge" above for details. Redemptions may be
suspended and payments delayed under certain emergency circumstances as
determined by the Securities and Exchange Commission. The Transfer Agent will
reject any redemption request made within 15 days after receipt of the purchase
check, the TelePurchase order or Automatic Investment Plan transfer against
which such redemption is requested. You can sell your shares in any of the
following ways: by mail, by telephone, by check (Alger Money Market Portfolio
only) or through your broker. Please note that, although the Fund is authorized
to charge a fee for each wire redemption, it does not currently intend to do so.
MAIL
You should send a letter of instruction to the Transfer Agent that includes
your name, account number, Portfolio name, the class of shares (if applicable),
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(s) must be guaranteed. In addition, any
request for redemption proceeds to be sent to the address of record must have
the signature(s) guaranteed if made within 60 days of changing your address. 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.
TELEPHONE WIRE REDEMPTION OPTION
If you wish to use this service, you should mark the appropriate box on the
New Account Application or complete a Telephone Services Form 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 Alger Money
Market Portfolio, your redemption proceeds will be wired the same day.
Redemption requests for Portfolios other than Alger Money Market Portfolio
received prior to the close of business of the New York Stock Exchange ("NYSE")
(normally 4:00 p.m. Eastern time) and requests received after 12:00 noon for
Alger Money Market Portfolio will be paid on the next business day. The minimum
wire redemption amount is $2,500. If your proceeds are less than $2,500, they
will be mailed to your address of record. Redemption requests made before 12:00
noon Eastern time for Alger Money Market Portfolio will not receive a dividend
for that day. Shares held in any Alger retirement plan and shares issued in
certificate form are not eligible for this service.
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TELEPHONE REDEMPTIONS
You automatically have the ability to make redemptions by telephone unless
you refuse the telephone redemption privilege. To sell shares by telephone,
please call (800) 992-3863. If your redemption request is received before 12:00
noon Eastern time for Alger Money Market Portfolio, your redemption proceeds
will generally be mailed on the next business day. Redemption requests for
Portfolios other than Alger Money Market Portfolio received prior to the close
of business of the NYSE (normally 4:00 p.m. Eastern time) will generally be
mailed on the next business day. Requests received after 12:00 noon Eastern time
for Alger Money Market Portfolio will generally be mailed on the business day
following the next business day. Shares held in any Alger retirement plan and
shares issued in certificate form are not eligible for this service.
Redemption proceeds are mailed to the address of record. Any request for
redemption proceeds to be sent to the address of record must be in writing with
the signature(s) guaranteed if made within 60 days of changing your address.
Redemption requests made before 12:00 noon Eastern time for 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.
CHECK REDEMPTIONS (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 for the first
five checks you write in any one calendar year. You will be charged $2.50 for
each additional check you write.
Your redemption may be reduced by any applicable CDSC (see "Contingent
Deferred Sales Charge"). If your account is not adequate to cover the amount of
your check and any applicable CDSC, the check will be returned marked
insufficient funds. As a result, checks should not be used to close an account.
Shares held in any Alger retirement plan and shares issued in certificate form
are not eligible for this service.
The use of the check redemption procedure does not give rise to a banking
relationship between the shareholder and the Fund or the Transfer Agent, which
will be acting solely as transfer agent for the Portfolio.
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.
SPECIAL INVESTOR SERVICES
EXCHANGE PRIVILEGE
Except as limited below, shareholders may exchange some or all of their
shares for shares of another Portfolio of the Fund. Class A shareholders may
exchange their shares for Class A Shares of another Portfolio or for shares of
Alger Money Market Portfolio. Class B shareholders may exchange their shares for
Class B Shares of another Portfolio or for shares of Alger Money Market
Portfolio. Class C shareholders may exchange their shares for Class C Shares of
another Portfolio or for shares of Alger Money Market Portfolio. Alger Money
Market Portfolio shares acquired by direct purchase may be exchanged for Class A
, Class B or Class C Shares of another Portfolio; however, any applicable sales
charge will apply to the shares acquired, depending upon their class. Shares of
Alger Money Market Portfolio acquired by exchange rather than by direct purchase
may be exchanged for shares of another Portfolio, but only for shares of the
same class as those originally exchanged for Alger Money Market Portfolio
shares. The period
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of time shares are held in Alger Money Market Portfolio shall not be considered
in scheduling of the automatic conversion to Class A Shares or, for accounts
opened after October 17, 1992, in the calculation of a CDSC.
You automatically have the ability to make exchanges by telephone unless you
refuse the telephone exchange privilege. Exchanges can be made among Portfolios
of the same class of shares for identically registered accounts. 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 NYSE (normally 4:00 p.m.
Eastern time) from Alger Money Market Portfolio to any other Portfolio will
receive dividends from Alger Money Market Portfolio for the day of the exchange.
Shares of 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 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.
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. The minimum monthly investment amount is $25 per
Portfolio. 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
more of the other Portfolios on or about the fifteenth day of the month. The
minimum monthly exchange amount is $25 per Portfolio.
For more information on any of the services discussed above, please call the
Fund toll-free at (800) 992-3863.
TELEPURCHASE AND TELEREDEMPTION PRIVILEGES
The TELEPURCHASE Privilege allows you to purchase Fund shares by telephone
(minimum $500, maximum $50,000) by filling out the appropriate section of the
New Account Application or sending a Telephone Services Form to the Transfer
Agent. Your funds will be transferred from your designated bank account to your
Fund account normally within one business day.
The TELEREDEMPTION Privilege allows you to transfer funds (minimum $500,
maximum $50,000) between your Fund account and your designated bank account.
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 Automated Clearing House
redemption, it does not currently intend to do so.
To use these privileges, your bank must be a member of the Automated Clearing
House. Shares held in any Alger retirement plan and shares issued in certificate
form are not eligible for this service.
RETIREMENT PLANS
Shares of the Portfolios are available as an investment for your retirement
plans, including regular IRAs, Keogh Plans, corporate pension and profit-sharing
plans, Simplified Employee Pension IRAs, SIMPLE IRAs, Roth IRAs, education 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.
SYSTEMATIC WITHDRAWAL PLAN
If your account balance in any Portfolio is $10,000 or more, you may
establish a Systematic Withdrawal Plan to receive payments of at least $50 on a
monthly, quarterly or annual basis, without payment of a CDSC. The maximum
monthly withdrawal is one percent of the current account value in the Portfolio
at the time you begin participation in the Plan. Shares held in certificate form
are not eligible for this service.
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REINSTATEMENT PRIVILEGE
A shareholder who has redeemed shares of a Portfolio may, within 30 days of
the redemption, reinstate any portion or all of the net proceeds of such
redemption in Portfolio shares of the same class by exercise of the
Reinstatement Privilege. Reinvestment will be at the net asset value of the
Portfolio next determined upon receipt of the proceeds and letter requesting
this privilege be exercised, subject to confirmation of the shareholder's status
or holdings, as the case may be. You will also receive a pro rata credit for any
CDSC imposed. This privilege may be exercised only once by a shareholder.
Exercising the Reinstatement Privilege will not alter any tax payable on the
redemption and a loss may not be allowed for tax purposes.
INVESTMENT OBJECTIVES
AND POLICIES
The investment objectives of the Portfolios and the investment restrictions
summarized in the next paragraph 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, which means 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 Alger Capital Appreciation Portfolio) of its net assets in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market; (4) invest more than 25% of its total
assets in any one industry, except for U.S. Government securities and, with
respect to Alger Money Market Portfolio, bank and thrift obligations; (5) borrow
money or pledge its assets, except that it may borrow money or pledge its assets
in an amount of up to 10% of its total assets for temporary or emergency
purposes and that Alger Capital Appreciation Portfolio may borrow for investment
purposes as described below under "Alger Capital Appreciation Portfolio." The
Statement of Additional Information contains additional investment restrictions
as well as additional information on the Portfolios' investment practices.
Except in the case of percentage limitations on borrowing by the Portfolios
and as may be otherwise stated, the percentage limitations contained in the
Fund's investment restrictions and other investment policies apply at the time
of purchase of a security, and a later increase or decrease in percentage
resulting from a change in value of securities or in the amount of the
Portfolio's assets will not constitute a violation of the restriction or policy.
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.
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.
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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. Accordingly, 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 within the range of
companies included in the S&P MidCap 400 Index, updated quarterly. The S&P
MidCap 400 Index is designed to track the performance of medium capitalization
companies. As of December 31, 1997, the range of market capitalization of these
companies was $213 million to $13.737 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 outside the range of companies
included in the S&P MidCap 400 Index and in excess of that amount (up to 100% of
its assets) during temporary defensive periods.
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
of the securities, have total market capitalization within the range of
companies included in the Russell 2000 Growth Index ("Russell Index") or the S&P
SmallCap 600 Index ("S&P Index"), updated quarterly. Both indexes are broad
indexes of small capitalization stocks. As of December 31, 1997, the range of
market capitalization of the companies in the Russell Index was $20 million to
$2.97 billion; the range of market capitalization of the companies in the S&P
Index at that date was $21 million to $2.934 billion. The combined range as of
that date was $20 million to $2.97 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 outside this combined range, 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.
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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
more volatile than the net asset value of a fund that does not engage in these
activities. See "Investment Practices."
IN GENERAL
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 and
to meet redemptions, they may hold up to 15% of their net assets (35% of total
assets, in the case of Alger Balanced Portfolio) 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 Alger Small
Capitalization Portfolio is likely to invest may have limited product lines,
markets or financial resources and may lack management depth. The securities of
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 smaller companies by all other Portfolios except Alger Money
Market 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
An investment may be illiquid because of the absence of an active trading
market, making it difficult to sell promptly at an acceptable price. 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. 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. Under the policies and procedures
established by the Fund's Board of Trustees, Alger Management determines the
liquidity of the Portfolios' Rule 144A investments.
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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,
including all collateral on such loans less liabilities exclusive of the
obligation to return such collateral, to brokers, dealers and other financial
organizations. Any such loan will be continuously secured by collateral at least
equal to the value of the securities loaned. Default by the borrower could
result in delays, costs and/or losses in disposing of the collateral or
recovering the loaned securities and, should the borrower fail financially,
possible loss of rights in the collateral.
FOREIGN SECURITIES
Each Portfolio other than 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"), American
Depositary Shares ("ADSs"), or U.S. dollar-denominated securities of foreign
issuers, none of which are included in the 20% foreign securities limitation.
ADRs and ADSs are traded in the U.S. securities markets and represent the
securities of foreign issuers. While ADRs and ADSs may not necessarily be
denominated in the same currency as the foreign securities they represent, many
of the risks associated with foreign securities may also apply to ADRs and ADSs.
LEVERAGE THROUGH BORROWING
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
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. Hedging transactions are intended to reduce the risk of price
fluctuations. The Portfolio may write an option on a security only if the option
is "covered" (for a discussion of covered options, see the Statement of
Additional Information). 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 are highly specialized activities which
involve 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.
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STOCK INDEX FUTURES AND OPTIONS ON
STOCK INDEX FUTURES
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.
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 its shares of the Portfolios. With the exception of Alger Money
Market Portfolio, each Portfolio offers three classes of shares.
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 Fund's Declaration of Trust. Shareholders of one Portfolio may
vote only on matters that affect that Portfolio. Shareholders of a class have
exclusive voting rights with respect to matters affecting only that class, and
shareholders vote separately by class on matters in which the interests of one
class differ from those of another. 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 January 31, 1998, had approximately $7.8 billion
under management, $4.5 billion in mutual fund accounts and $3.3 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.
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PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo, Ronald Tartaro and David Hyun are primarily
responsible for the day-to-day management of the Portfolios of the Fund. Mr.
Alger has been employed by Alger Management since 1971, as Executive Vice
President and Director of Research until 1995 and as President since 1995. Ms.
Khoo has been employed by Alger Management since 1989, as a senior research
analyst until 1995 and as a Senior Vice President since 1995. Mr. Tartaro has
been employed by Alger Management since 1990, as a senior research analyst until
1995 and as a Senior Vice President since 1995. Mr. Hyun has been employed by
Alger Management since 1991 as an analyst until 1998 and as a Portfolio Manager
since 1998. Mr. Alger, Ms. Khoo, Mr. Tartaro and Mr. Hyun also serve as
portfolio managers for other mutual funds and investment accounts managed by
Alger Management. Steven R. Thumm serves as co-manager of the Alger Balanced
Portfolio and other mutual funds managed by Alger Management. He has been
employed by Alger Management as a fixed income analyst since 1991.
Alger Management 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.
CERTAIN SHAREHOLDERS
Set forth below is certain information regarding significant shareholders of
the Portfolios. At February 2, 1998, Merrill Lynch & Co. Trustee FBO Qualified
Retirement Plans owned beneficially or of record 32.07% of Alger Growth
Portfolio--Class A Shares, and Dreyfus Retirement Services owned beneficially or
of record 37.34% of Alger Growth Portfolio--Class A Shares. On the same date,
FTC & Co.--Datalynx House Acct. owned beneficially or of record 32.35% of Alger
MidCap Growth Portfolio--Class A Shares. On that date, Donaldson Lufkin Jenrette
Securities Corp. owned beneficially or of record 27.99% of Alger Balanced
Portfolio--Class C Shares, and Ken's Auto Service, Inc. owned beneficially or of
record 26.88% of Alger Balanced Portfolio--Class C Shares. Also on February 2,
1998, Merrill Lynch Pierce Fenner & Smith FBO its Customers owned beneficially
or of record 39.35% of Alger MidCap Growth Portfolio--Class C Shares, 29.01% of
Alger Growth Portfolio--Class C Shares and 29.18% of Alger Capital Appreciation
Portfolio--Class C Shares. The shareholders identified above may be deemed to
control the specified Classes, which may have the effect of proportionately
diminishing the voting power of other shareholders of these Classes.
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%.
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.
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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 Alger Money Market Portfolio for
ongoing service and maintenance of shareholder accounts. Alger Inc. will
compensate third parties from this fee who provide personal service and
maintenance of customer accounts.
NET ASSET VALUE
The price of one share of a class is based on its "net asset value." The net
asset value is computed by adding the value of the Portfolio's investments plus
cash and other assets allocable to the class, deducting applicable liabilities
and then dividing the result by the number of its shares outstanding. The net
asset value of a share of a given class may differ from that of one or more
other classes. Net asset value is calculated as of the close of business
(normally 4:00 p.m. Eastern time) or, for Alger Money Market Portfolio, as of
12:00 noon Eastern time on each day the NYSE is open.
Purchases for 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 NYSE (normally 4:00 p.m. Eastern time), it will be credited
and begin earning dividends the next business day.
Purchases for the other Portfolios will be based upon the next net asset
value calculated for each class 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 NYSE (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. You will be charged a fee for any check
returned by your bank.
DIVIDENDS AND TAXES
DIVIDENDS
Each class 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 at net
asset value on the payment date in additional shares of the class that paid the
dividend or distribution at net asset value, unless you elected in writing to
have all dividends and distributions paid in cash or reinvested at net asset
value into another identically registered Alger Portfolio account you have
established. In addition, accounts whose dividend/distribution checks have been
returned as undeliverable shall reinvest that dividend/distribution at the net
asset value next determined after the Transfer Agent receives the undelivered
check. Furthermore, all future dividend/distribution checks shall be reinvested
automatically at net asset value on the payment date until a written request for
reinstatement of cash distribution and a valid mailing address are provided by
the shareholder(s). Shares purchased through reinvestment of dividends and
distributions are not subject to a CDSC or front-end sales charge. Any dividends
of Alger Money Market Portfolio are declared daily and paid monthly, and any
dividends 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.
The classes of a Portfolio may have different dividend and distribution
rates. Class A dividends generally will be greater than those of Classes B and C
due to the Rule 12b-1 fees associated with Class B and C Shares. However,
dividends paid to each class of shares in a Portfolio will be declared and paid
at the same time and will be determined in the same manner as those paid to each
other class.
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
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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 and their underlying classes 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. Yield
and total return figures may be different among the classes of a portfolio.
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.
Alger Money Market Portfolio may advertise its "yield" and "effective yield."
The "yield" of the Portfolio refers to certain 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 classes of the Portfolios other than 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 class from
the beginning date of the measuring period to the end of the measuring period.
These figures reflect changes in the price of the class's shares and assume that
any income dividends and/or capital gains distributions made by the class during
the period were reinvested in shares of the class. 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 class's operations, or on a year-by-year
basis) and may utilize dollar cost averaging. The class may use "aggregate"
total return figures for various periods, representing the cumulative change in
value of an investment in the class for the specific period (again reflecting
changes in class 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 CDSC or
initial sales charge to which the 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
class will vary based on changes in market conditions. In addition, since the
deduction of a class's expenses is reflected in the total return and yield
figures, "total return" and "yield" will also vary based on the level of the
class's expenses.
The Statement of Additional Information, which is incorporated by reference,
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.
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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.
---------------------------
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
COUNSEL:
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, NY 10176
AS898
ALGER MONEY MARKET PORTFOLIO
ALGER SMALL CAPITALIZATION PORTFOLIO
ALGER MIDCAP GROWTH PORTFOLIO
ALGER GROWTH PORTFOLIO
ALGER BALANCED PORTFOLIO
ALGER CAPITAL APPRECIATION PORTFOLIO
PROSPECTUS
February 25, 1998
As Supplemented On May 18, 1998, August 5, 1998 and August 20, 1998
