PROSPECTUS
- ----------
THE |
ALGER | 75 Maiden Lane
AMERICAN | New York, New York 10038
FUND | (800) 992-FUND (992-3863)
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
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The Alger American Fund (the "Fund") is a registered investment
company--a mutual fund--that presently offers interests in six portfolios. This
Prospectus sets forth information about the Alger American Income and Growth
Portfolio (the "Portfolio"). The Portfolio seeks primarily to provide a high
level of dividend income by investing primarily in a diversified, actively
managed portfolio of dividend paying equity securities, and, to a lesser extent,
in money market instruments and repurchase agreements. Capital appreciation is a
secondary objective of the Portfolio.
Shares of the Portfolio are offered as a pooled funding vehicle for
insurance companies writing all types of variable annuity contracts ("VA
contracts") and variable life insurance policies ("VLI policies") and are also
offered directly to qualified pension and retirement plans (the "Plans"). See
"Alger American Income and Growth Portfolio."
SHARES OF THE PORTFOLIO 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.
This Prospectus, which should be retained for future reference, contains
important information that you should know before investing. Please read it
along with the prospectuses issued by the insurance companies with respect to
the VA contracts and VLI policies or with the Plan documents. A "Statement of
Additional Information" dated May 1, 1997 containing further information about
all the portfolios of the Fund, including the Portfolio, 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 Fund at the address
or phone number above.
FRED ALGER | FRED ALGER |
MANAGEMENT | INVESTMENT MANAGER & COMPANY | DISTRIBUTOR
INC. | INCORPORATED |
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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.
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MAY 1, 1997
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CONTENTS
Page
----
Portfolio Expenses ....................................................... iii
Financial Highlights ...................................................... iv
Alger American Income & Growth Portfolio ................................... 1
Participating Insurance Companies and Plans ................................ 1
Investment Objective and Policies .......................................... 1
Investment Practices ....................................................... 2
Management of the Fund ..................................................... 2
Net Asset Value ............................................................ 4
Purchases and Redemptions .................................................. 4
Dividends and Distributions ................................................ 4
Taxes ...................................................................... 5
Performance ................................................................ 5
Investor and Shareholder Information ....................................... 5
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ii
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PORTFOLIO EXPENSES
The Table below is designed to assist you in understanding the various
costs and expenses that you will bear as a shareholder. THE TABLE DOES NOT
REFLECT CHARGES AND DEDUCTIONS WHICH ARE, OR MAY BE, IMPOSED UNDER THE VA
CONTRACTS, VLI POLICIES OR PLANS; SUCH CHARGES AND DEDUCTIONS ARE DESCRIBED IN
THE PROSPECTUS FOR THE VA CONTRACT OR VLI POLICY ACCOMPANYING THIS PROSPECTUS OR
IN THE PLAN DOCUMENTS.
The Example below shows the amount of expenses you would pay on a $1,000
investment in the Portfolio. These amounts assume the reinvestment of all
dividends and distributions and payment by the Portfolio of operating expenses
as shown in the Table under Annual Portfolio Operating Expenses. The Example is
an illustration only and actual expenses may be greater or less than those
shown.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases ................................. None
Maximum Sales Load Imposed on Reinvested Dividends ..................... None
Deferred Sales Load .................................................... None
Redemption Fees ........................................................ None
Exchange Fees .......................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ........................................................ .625%
12b-1 Fees ............................................................. --
Other Expenses ......................................................... .185%
----
Total Portfolio Operating Expenses ..................................... .810%
====
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
One Year ............................................................... $ 8
Three Years ............................................................ 26
Five Years ............................................................. 45
Ten Years .............................................................. 100
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FINANCIAL HIGHLIGHTS
The Financial Highlights for the years ended December 31, 1990 through 1996
have been audited by Arthur Andersen LLP, the Fund's independent public
accountants. This information should be read in conjunction with the financial
statements of the Fund as contained in its Statement of Additional Information.
The Financial Highlights, with the exception of the total return information,
for the periods ended December 31, 1989 and 1988 have been audited by other
independent accountants, who have expressed an unqualified opinion thereon. The
Fund's Annual Report contains additional performance information and is
available upon request and without charge by contacting the Fund at (800)
992-3863.
THE ALGER AMERICAN FUND
INCOME AND GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988(ii)
-------- -------- -------- -------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year ...... $ 17.79 $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74 $10.00 $10.00
--------- -------- -------- -------- -------- ------- ------- ------ ------
Net investment income .... 0.09(iii) 0.11(iii) 0.17 0.07 0.08 0.09 0.11 0.18 0.10
Net realized and
unrealized
gain (loss)
on investments ......... 1.87 4.54 (1.47) 1.37 1.02 2.41 (0.08) 0.56 -
--------- -------- -------- -------- -------- ------- ------- ------ ------
Total from investment
operations ............. 1.96 4.65 (1.30) 1.44 1.10 2.50 0.03 0.74 0.10
--------- -------- -------- -------- -------- ------- ------- ------ ------
Dividends from net
investment income ...... (0.33) (0.16) (0.15) (0.06) (0.12) (0.09) (0.10) -- (0.10)
Distributions from net
realized gains ......... (11.00) -- (0.56) -- (0.13) -- -- -- --
--------- -------- -------- -------- -------- ------- ------- ------ ------
Total Distributions .... (11.33) (0.16) (0.71) (0.06) (0.25) (0.09) (0.10) -- (0.10)
--------- -------- -------- -------- -------- ------- ------- ------ ------
Net asset value,
end of year $ 8.42 $ 17.79 $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67 $10.74 $10.00
========= ======== ======== ======== ======== ======= ======= ====== ======
Total Return ............. 19.68% 35.13% (8.28%) 10.34% 8.64% 23.51% 0.28% 7.40%(i) 0.95%(i)
========= ======== ======== ======== ======== ======= ======= ====== ======
Ratios and
Supplemental Data:
Net assets,
end of year
(000's omitted) ...... $ 20.910 $ 8.639 $ 29.135 $ 31.895 $ 8.671 $ 2.663 $ 436 $ 98 $ 28
========= ======== ======== ======== ======== ======= ======= ====== ======
Ratio of expenses to
average net assets ... 0.81% 0.75% 0.75% 0.97% 1.25% 1.25% 1.25% 1.25% 1.25%
========= ======== ======== ======== ======== ======= ======= ====== ======
Decrease reflected
in above expense
ratios due to
expense
reimbursements ....... -- -- -- -- 0.01% 0.66% 5.41% 23.72% 20.26%
========= ======== ======== ======== ======== ======= ======= ====== ======
Ratio of net
investment
income to average
net assets ........... 0.94% 0.61% 1.22% 1.51% 1.62% 2.54% 3.61% 7.36% 7.30%
========= ======== ======== ======== ======== ======= ======= ====== ======
Portfolio
Turnover Rate ... 121.60% 164.05% 177.97% 105.80% 100.62% 61.11% 56.90% -- --
========= ======== ======== ======== ======== ======= ======= ====== ======
Average Commission
Rate Paid .............. $ .0728
=========
</TABLE>
(i) Unaudited.
(ii) For the period November 15, 1988 (commencement of operations) to
December 31, 1988. Ratios have been annualized; total return has
not been annualized.
(iii) Amount was computed based on average shares outstanding during the period.
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iv
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ALGER AMERICAN INCOME
AND GROWTH PORTFOLIO
The Portfolio is designed to permit insurance companies that issue VA
contracts and VLI policies to offer contract and policy holders the opportunity
to participate in the performance of the Portfolio. The Portfolio may also be a
funding vehicle for Plans which elect to make the Portfolio an investment option
for Plan participants.
The Fund is a diversified, open-end management investment company that
offers a selection of six portfolios, each having distinct investment objectives
and policies. The Fund's Board of Trustees may establish additional portfolios
at any time.
PARTICIPATING INSURANCE
COMPANIES AND PLANS
The Portfolio is intended to be a funding vehicle for VA contracts and VLI
policies to be offered by the separate accounts of certain life insurance
companies ("Participating Insurance Companies") and Plans. Individuals cannot
invest in the Portfolio directly but may do so only through a VA contract or VLI
policy or a Plan. The Fund currently does not foresee any disadvantages to the
holders of VA contracts and VLI Policies arising from the fact that the
interests of the holders of VA contracts and VLI policies may differ, that the
Participating Insurance Companies may not be affiliated with each other or that
the Portfolio may offer its shares to Plans. Nevertheless, the Fund's Board of
Trustees intends to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise due to differences of tax
treatment or other considerations, and to determine what action, if any, should
be taken in response to such conflicts. If such a conflict were to occur, one or
more Participating Insurance Company separate accounts or Plans might withdraw
its investment in the Portfolio, which may cause the Portfolio to sell portfolio
securities at disadvantageous prices. The VA contracts and VLI policies are
described in the separate prospectuses issued by the Participating Insurance
Companies, and the Plans are described in the Plan documents made available by
the Plan sponsors. The Fund assumes no responsibility for such prospectuses or
Plan documents.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Portfolio 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, and not explicitly identified as
fundamental, are not fundamental, so the Fund's Board of Trustees may change
them without shareholder approval. There is no guarantee that the Portfolio's
objectives will be achieved.
As a matter of fundamental policy, the Portfolio will not: (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% 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; (5) borrow money or pledge its assets, except that
it may borrow or pledge its assets in an amount up to 10% of its total assets
for temporary or emergency purposes. The Statement of Additional Information
contains additional investment restrictions.
The primary investment objective of the Portfolio is to provide a high level
of dividend income. Capital appreciation is a secondary objective of the
Portfolio. Except during temporary defensive periods, the Portfolio attempts to
invest 100%, and it is a fundamental policy of the Portfolio to invest at least
65%, of its total assets in dividend paying equity securities. In selecting
among dividend paying equity securities, Fred Alger Management, Inc. ("Alger
Management") will favor securities it believes also offer opportunities for
capital appreciation. 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.
IN GENERAL
The Portfolio seeks to achieve its 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
Portfolio 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 Portfolio the flexibility to take advantage of new
opportunities for investments in accordance with its investment objectives or to
meet redemptions, it may hold up to 15% of its net assets in money market
instruments and repurchase agreements and in excess of that amount (up to 100%
of its 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
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issuers. Smaller, newer issuers 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.
INVESTMENT PRACTICES
The Portfolio 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 Portfolio.
REPURCHASE AGREEMENTS
In a repurchase agreement, the 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. The 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 Portfolio's Rule 144A investments.
LENDING OF PORTFOLIO SECURITIES
In order to generate income and to offset expenses, the Portfolio may lend
portfolio securities with a value up to 331/3% of the Portfolio's total assets
to brokers, dealers and other financial organizations. Any such loan will be
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
The 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.
The 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.
OTHER INVESTMENTS
In addition to the securities and investment techniques listed above, the
Portfolio may invest in bank and thrift obligations, obligations issued or
guaranteed by the U.S. Government or by its agencies or instrumentalities,
foreign bank obligations and obligations of foreign branches of domestic banks,
and variable rate master demand notes. See "Investment Objectives and Policies"
in the Statement of Additional Information.
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. Increased portfolio turnover will have the effect of increasing the
Portfolio's brokerage and custodial expenses.
MANAGEMENT OF THE FUND
ORGANIZATION
The Fund was organized on April 6, 1988 as a multi-series Massachusetts
business trust. The Fund offers an unlimited number of shares of six series,
representing the shares of the Fund's portfolios, including the Portfolio.
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 the
Portfolio may vote only on matters that affect the Portfolio.
2
<PAGE>
Under normal circumstances, other than the shares issued to Fred Alger &
Company, Incorporated ("Alger Inc.") in connection with its creation and initial
capitalization, the Fund intends to distribute shares of the Portfolio only to
Participating Insurance Companies and Plans, so that only Participating
Insurance Companies and their separate accounts and Plans will be considered
shareholders of the Portfolio. Although the Participating Insurance Companies
and their separate accounts and the Plans are the shareholders or investors, the
Participating Insurance Companies will pass through voting rights to their VA
contract and VLI policy holders. Plan sponsors may or may not pass through
voting rights to Plan participants, depending on the terms of the Plan's
governing documents. For a discussion of the voting rights, please refer to the
Participating Insurance Companies' prospectuses or the Plan documents.
When matters are submitted for shareholder vote, shareholders of the
Portfolio will have one vote for each full share held and proportionate,
fractional votes for fractional shares held. A separate vote of a portfolio of
the Fund is required on any matter affecting the portfolio on which shareholders
are entitled to vote, such as approval of a portfolio's agreement with Alger
Management. Shareholders of one portfolio are not entitled to vote on a matter
that does not affect that portfolio but that does require a separate vote of the
other portfolios. There normally will be no annual meetings of shareholders for
the purpose of electing Trustees unless and until such time as less than a
majority of Trustees holding office have been elected by shareholders, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Any Trustee may be removed from office on the vote of
shareholders holding at least two-thirds of the Fund's outstanding shares at a
meeting called for that purpose. The Trustees are required to call such a
meeting on the written request of shareholders holding at least 10% of the
Fund's outstanding shares.
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 Portfolio, places
orders to purchase and sell securities on behalf of the Portfolio and selects
broker-dealers that, in its judgment, provide prompt and reliable execution at
favorable prices and reasonable commission rates. It is anticipated that the
Fund's distributor, Alger Inc., an affiliate of Alger Management, will serve as
the Fund's broker in effecting substantially all of the Portfolio's transactions
on securities exchanges and will retain commissions in accordance with certain
regulations of the Securities and Exchange Commission. In addition, Alger
Management employs professional securities analysts who provide research
services exclusively to the Portfolio 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 March 31, 1997, had approximately $6.4 billion
under management, $4.9 billion in mutual fund accounts and $1.5 billion in other
advisory accounts. Alger Management is owned by Alger Inc. which in turn is
owned by Alger Associates, Inc., a financial services holding company. Fred M.
Alger III and his brother, David D. Alger, are the majority shareholders of
Alger Associates, Inc. and may be deemed to control that company and its
subsidiaries.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible for
the day-to-day management of the Portfolios of the Fund. Mr. Alger has been
employed by Alger Management as Executive Vice President and Director of
Research since 1971 and as President since 1995. Ms. Khoo has been employed by
Alger Management as a senior research analyst since 1989 and as a Senior Vice
President since 1995. Mr. Tartaro has been employed by Alger Management as a
senior research analyst since 1990 and as a Senior Vice President since 1995.
Mr. Alger, Ms. Khoo and Mr. Tartaro also serve as portfolio managers for other
mutual funds and investment accounts managed by Alger Management.
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.
FEES
The Portfolio pays Alger Management a management fee computed daily and paid
monthly at an annual rate of .625% of the value of the Portfolio's average daily
net assets.
From time to time Alger Management or its affiliates may compensate
insurance companies or their affiliates whose customers hold shares of the
Portfolio for providing a variety
3
<PAGE>
of record-keeping, administrative, marketing and/or shareholder support
services. This compensation, which may be paid at a rate of up to .30% of the
net asset value of shares held by those customers, will be paid from Alger
Management's own resources and not from the assets of the Portfolio.
EXPENSES
The Portfolio pays expenses related to its daily operations, such as
management fees, brokerage fees, custodian fees, Trustees' fees, transfer agency
fees and legal and auditing costs. Alger Management has agreed to reimburse the
Portfolio to the extent that its annual operating expenses (excluding interest,
taxes, fees for brokerage services and extraordinary expenses) exceed 1.25% of
its average daily net assets for any fiscal year. In addition, from time to
time, Alger Management, in its sole discretion and as it deems appropriate, may
assume certain expenses of the Portfolio while retaining the ability to be
reimbursed by the Portfolio for such amounts prior to the end of the fiscal
year. This will have the effect of lowering the Portfolio's overall expense
ratio and of increasing yield to investors, or the converse, at the time such
amounts are assumed or reimbursed, as the case may be. More information about
the Portfolio's investment management agreement and other expenses paid by the
Portfolio 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.
NET ASSET VALUE
The price of one share of the Portfolio is its "net asset value." The net
asset value is computed by adding the value of the Portfolio's investments plus
cash and other assets, deducting liabilities and then dividing the result by the
number of its shares outstanding. The net asset value of the Portfolio is
calculated as of the close of business (normally 4:00 p.m. Eastern time) on each
day the New York Stock Exchange ("NYSE") is open.
PURCHASES AND REDEMPTIONS
Contract or policy holders or Plan participants will not deal directly with
the Fund regarding the purchase or redemption of the Portfolio's shares. The
separate accounts of the Participating Insurance Companies place orders to
purchase and redeem shares of the Portfolio based on, among other things, the
amount of premium payments to be invested and the amount of surrender and
transfer requests (as defined in the prospectuses describing the VA contracts
and VLI policies issued by the Participating Insurance Companies) to be effected
on that day pursuant to VA contracts and VLI Policies. Plan trustees purchase
and redeem Portfolio shares. Plan participants cannot contact the Fund directly
to purchase shares of the Portfolio but may invest in shares of the Portfolio
only through their Plan. Participants should contact their Plan sponsor for
information concerning the appropriate procedure for investing in the Portfolio.
Orders for shares of the Portfolio received by the Fund or the Fund's
transfer agent are effected on days on which the NYSE is open for trading. For
orders received before the close of regular trading on the NYSE, purchases and
redemptions of the shares of the Portfolio are effected at the net asset value
per share determined as of the close of regular trading on the NYSE on the same
day. Orders received after the close of regular trading on the NYSE are effected
at the next calculated net asset value. See "Net Asset Value." All orders for
the purchase of shares are subject to acceptance or rejection by the Fund.
Payment for redemptions will be made by the Fund's transfer agent on behalf of
the Fund and the Portfolio within seven days after the request is received.
Neither the Fund nor the Portfolio assesses any fees, either when it sells or
when it redeems the Portfolio's shares. Surrender charges, mortality and expense
risk fees and other charges may be assessed by Participating Insurance Companies
under the VA contracts or VLI policies. These fees should be described in the
Participating Insurance Companies' prospectuses. Any charges assessed by the
Plans should be described in the Plan documents.
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.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions will be automatically reinvested at net asset
value on the payment date for each shareholder's account in additional shares of
the Portfolio or, in the case of VA contracts and VLI policies, will be paid in
cash at the election of the Participating Insurance Company. Any dividends of
the Portfolio will be declared
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<PAGE>
and paid annually. Distributions of any net realized capital gains earned by the
Portfolio usually will be made annually after the close of the fiscal year in
which the gains are earned. Participating Insurance Companies and Plans will be
informed about the amount and character of dividends and distributions from the
Portfolio for federal income tax purposes.
TAXES
The Fund intends that the Portfolio will qualify separately as a "regulated
investment company" (within the meaning of the Internal Revenue Code of 1986, as
amended) for each taxable year. If so qualified, and providing certain
distribution requirements are met, the Portfolio will not be subject to federal
income tax on its net investment income and net capital gains that it
distributes to its shareholders.
Dividends paid from net investment income and distributions of net realized
short-term capital gains are treated as ordinary income earned by the
shareholders of the Portfolio. Distributions of net long-term capital gains are
treated as such by shareholders for federal income tax purposes. Federal income
taxation of separate accounts of life insurance companies, VA contracts, VLI
policies and of the Plans is discussed in the prospectuses of the Participating
Insurance Companies and in the Plan documents. With respect to participants in
the Plans, dividends from net investment income and net realized capital gains
will ordinarily not be subject to taxation until such dividends are distributed
to such participants from their Plan accounts.
PERFORMANCE
All performance figures are based on historical earnings and are not
intended to indicate future performance.
The Portfolio may include quotations of its "total return" and/or "yield" in
advertisements or reports to shareholders or prospective investors. BOTH "TOTAL
RETURN" AND/OR "YIELD" FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. Total return figures show the aggregate
or average percentage change in value of an investment in the Portfolio from the
beginning date of the measuring period to the end of the measuring period. These
figures reflect changes in the price of the Portfolio's shares and assume that
any income dividends and/or capital gains distributions made by the Portfolio
during the period were reinvested in shares of the Portfolio. Figures will be
given for recent 1, 5 and 10 year periods, and may be given for other periods as
well (such as from commencement of the Portfolio's operations, or on a
year-by-year basis). The Portfolio may use "aggregate" total return figures for
various periods, representing the cumulative change in value of an investment in
the Portfolio for the specific period (again reflecting changes in Portfolio
share prices and assuming reinvestment of dividends and distributions) as well
as "actual annual" and "annualized" total return figures. Total returns 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 the Portfolio will vary based on changes in market conditions. In addition,
since the deduction of the Portfolio's expenses is reflected in the total return
and yield figures, "total return" and "yield" will also vary based on the level
of the Portfolio's expenses.
The Statement of Additional Information further describes the method used to
determine the yields and total return figures. Current yield and/or total return
quotations may be obtained by contacting the Fund.
The actual return to a holder of a VA contract or VLI policy will also be
affected by charges imposed by the separate accounts of Participating Insurance
Companies or, in the case of Plan participants, by any charges imposed under the
Plan.
INVESTOR AND SHAREHOLDER
INFORMATION
Investors and shareholders may contact the Fund toll-free at (800) 992-3863
for further information regarding the Fund and the Portfolio, including current
performance quotations, as well as for assistance in obtaining a Statement of
Additional Information which is hereby incorporated by reference. Holders of VA
contracts or VLI policies issued by Participating Insurance Companies and
participants in Plans for which shares of the Portfolio are the investment
vehicle may receive from the Participating Insurance Companies or Plan sponsor
unaudited semi-annual financial statements and year-end financial statements
audited by the Fund's independent public accountants. Each report will show the
investments owned by the Portfolio and the market values of the investments and
will provide other information about the Portfolio and its operations. The
Fund's Annual Report contains additional performance information and is
available upon request and without charge by contacting the Fund at the
toll-free number listed above.
5
<PAGE>
THE |
ALGER | MEETING THE CHALLENGE
AMERICAN | OF INVESTING
FUND |
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE PORTFOLIO'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 LAWFULLY BE 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
INDEPENDENT PUBLIC ACCOUNTANTS:
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, New York 10176
