THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
o VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
o VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
o QUALIFIED PENSION PLANS | NEW YORK, NY 10048
o QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN BALANCED PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
THE ALGER
AMERICAN FUND
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- ---------------------------------------------------------------------------
2 ............. Risk/Return Summary: Investments,
Risks & Performance
2 ...... Investments
Alger American Small
Capitalization Portfolio ............................ 2
Alger American MidCap
Growth Portfolio .................................... 2
Alger American Growth Portfolio ....................... 2
Alger American Balanced Portfolio ..................... 2
Alger American Leveraged
AllCap Portfolio .................................... 2
Alger American Income &
Growth Portfolio .................................... 3
3 ...... Principal Risks
Alger American Small
Capitalization Portfolio ............................ 3
Alger American MidCap
Growth Portfolio ................................... 3
Alger American Growth Portfolio ....................... 3
Alger American Balanced Portfolio ..................... 3
Alger American Leveraged
AllCap Portfolio ................................... 3
Alger American Income &
Growth Portfolio ................................... 4
4 ...... Performance
Alger American Small
Capitalization Portfolio ........................... 4
Alger American Growth Portfolio ....................... 4
Alger American MidCap
Growth Portfolio ................................... 5
Alger American Balanced Portfolio ..................... 5
Alger American Leveraged
AllCap Portfolio ................................... 5
Alger American Income &
Growth Portfolio ................................... 5
6 ............. Fees and Expenses
7 ............. Management & Organization
7 ............. Shareholder Information
Distributor ........................................... 7
Transfer Agent ........................................ 7
Purchasing and Redeeming Fund Shares .................. 8
9 ............. Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios (other than the fixed-income portion
of the Balanced Portfolio) invest primarily in equity securities, such as common
or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The Fund's
Manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell(R) 2000 Growth Index or
the S&P(R) SmallCap 600 Index.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P(R) MidCap 400 Index.
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
ALGER AMERICAN BALANCED PORTFOLIO
GOAL
THE ALGER AMERICAN BALANCED PORTFOLIO SEEKS CURRENT INCOME AND LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on stocks of companies with growth potential and fixed-income
securities, with emphasis on income-producing securities which appear to have
some potential for capital appreciation. Under normal circumstances, the
portfolio invests in common stocks and fixed-income securities, which include
commercial paper and bonds rated within the 4 highest rating categories by an
established rating agency or if not rated, which are determined by the Fund's
Manager to be of comparable quality. Ordinarily, at least 25% of the portfolio's
net assets are invested in fixed-income securities.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
GOAL
The Alger American Leveraged AllCap Portfolio seeks long-term capital
appreciation.
APPROACH
Under normal circumstances, the portfolio invests in the equity securities of
companies of any size which demonstrate promising growth potential.
2
<PAGE>
The portfolio can leverage, that is, borrow money, up to one-third of its total
assets to buy additional securities. By borrowing money, the portfolio has the
potential to increase its returns if the increase in the value of the securities
purchased exceeds the cost of borrowing, including interest paid on the money
borrowed.
ALGER AMERICAN INCOME &GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN INCOME &GROWTH PORTFOLIO PRIMARILY SEEKS TO PROVIDE A HIGH
LEVEL OF DIVIDEND INCOME; ITS SECONDARY GOAL IS TO PROVIDE CAPITAL APPRECIATION.
APPROACH
The portfolio invests in dividend paying equity securities, such as common or
preferred stocks, preferably those which the Manager believes also offer
opportunities for capital appreciation.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL EQUITY PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a Fund investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the equity portfolios' investment styles and objectives, an investment
in them may be better suited to investors who seek long-term capital growth and
can tolerate fluctuations in their investments' values.
A portfolio's trading in some stocks may be relatively short-term, meaning the
Fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in medium-sized companies rather
than larger, more established companies owing to such factors as
inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN GROWTH PORTFOLIO
The portfolio's primary risks are those summarized above in "Risks Applicable to
All Equity Portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
BALANCED PORTFOLIO
The primary risks arising from the fixed-income portion of the portfolio are:
o fixed income securities' sensitivity to interest rate movements
o the potential for a decline in the portfolio's market value in the event of
an issuer's falling credit rating or actual default
The primary risks for the equity portion of the portfolio are those summarized
above in "Risks Applicable to All Equity Portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
LEVERAGED ALLCAP PORTFOLIO
Additional risks of investing in the portfolio are:
o the possiblity of greater risk by investing in small- and medium-sized
companies (in addition to large, more established companies) owing to such
factors as inexperienced management and limited financial resources
o the risk that the cost of borrowing money to leverage will exceed the returns
for the securities purchased or that the securities purchased may actually go
down in value; thus, the portfolio's net asset value can decrease more
quickly than if the portfolio had not borrowed
3
<PAGE>
RISKS APPLICABLE TO ALGER AMERICAN
INCOME &GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility that companies may cut or fail to declare dividends due to
market downturns or other reasons
[GRAPHIC OMITTED]
PERFORMANCE
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
o S&P Midcap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies.
o Lehman Brothers Government/Corporate Bond Index(R): An index designed to
track performance of government and corporate bonds.
Since the Balanced Portfolio invests in both equity and fixed income securities,
you should compare its performance to both indexes presented.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter: -20.72% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- -------------------------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russell 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- -------------------------------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
================================================================================
4
<PAGE>
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
-1.54 44.45 11.90 15.01 33.30 31.85
- --------------------------------------------------------------------------------
94 95 96 97 98 99
Best Quarter: 27.07% Q4 1998
Worst Quarter: -14.91% Q3 1998
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years (5/3/93)
- --------------------------------------------------------------------------------
American MidCap Growth 31.85% 26.14% 24.72%
S&P Midcap 400 Index(R) 14.72% 23.05% 18.34%
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
12.04 19.68 57.83 78.06
------------------------------------
96 97 98 99
Best Quarter: 40.16% Q4 1999
Worst Quarter: -5.70% Q4 1997
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year (1/25/95)
- ---------------------------------------------------------------
American Leveraged
AllCap 78.06% 46.44%
S&P 500 Index(R) 21.04% 28.47%
================================================================================
ALGER AMERICAN BALANCED PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
6.53 4.70 9.48 7.79 -4.27 28.62 10.17 19.82 31.51 29.21
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 16.94% Q4 1998
Worst Quarter: -5.70% Q1 1994
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/5/89)
- -------------------------------------------------------------------------------
American Balanced 29.21% 23.60% 13.78% 13.61%
S&P 500 Index(R) 21.04% 28.56% 18.21% 17.78%
Lehman Brothers Gov't/
Corp Bond Index(R) (2.14)% 7.60% 7.66% 7.82%
================================================================================
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
0.28 23.51 8.64 10.34 -8.28 35.13 19.68 36.29 32.39 42.45
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 35.96% Q4 1999
Worst Quarter: -13.94% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (11/15/88)
- -------------------------------------------------------------------------------
American
Income & Growth 42.45% 32.97% 18.93% 17.71%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.23%
================================================================================
5
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
Shareholder
Fees
(fees paid
directly Total
from Annual Fund
your Management Distribution Other Operating
investment) Fees Fees Expenses Expenses
- --------------------------------------------------------------------------------
Alger American Small None .85% None .05% .90%
Capitalization
Portfolio
Alger American None .80% None .05% .85%
MidCap Growth
Portfolio
Alger American None .75% None .04% .79%
Growth
Portfolio
Alger American None .75% None .18% .93%
Balanced Portfolio
Alger American None .85% None .08%* .93%
Leveraged AllCap
Portfolio
Alger American None .625% None .075% .70%
Income & Growth
Portfolio
================================================================================
* Included in Other Expenses is 0.01% of interest expense.
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed in the preceding table, is intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Alger American Small $92 $287 $498 $1,108
Capitalization
Portfolio
Alger American $87 $271 $471 $1,049
MidCap Growth
Portfolio
Alger American $81 $252 $439 $ 978
Growth
Portfolio
Alger American $95 $296 $515 $1,143
Balanced
Portfolio
Alger American $95 $296 $515 $1,143
Leveraged AllCap
Portfolio
Alger American $72 $224 $390 $ 871
Income &Growth
Portfolio
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT
THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objective during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
6
<PAGE>
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers to purchase and sell securities on behalf of the portfolios. The
Fund has had the same manager since inception and, for the most recent fiscal
year, the portfolios paid the Manager fees at these annual rates based on a
percentage of average daily net assets: Small Capitalization and Leveraged
AllCap Portfolios--.85%; MidCap Growth Portfolio--.80%; Growth and Balanced
Portfolios--.75%; Income & Growth Portfolio--.625%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo, Ron Tartaro and Steven Thumm are the individuals
responsible for the day-to-day management of the portfolios' investments. Mr.
Alger, a manager of all of the portfolios since their inception, has been
employed by the Manager as Executive Vice President and Director of Research
since 1971, and as President since 1995. Ms. Khoo, a co-manager of the Small
Capitalization and Leveraged AllCap Portfolios, has been employed by the Manager
since 1989, as a senior research analyst until 1995 and as a Senior Vice
President and co-manager since 1995. Mr. Tartaro, a co-manager of the MidCap
Growth, Growth, Income & Growth and Balanced Portfolios, has been employed by
the Manager since 1990, as a senior research analyst until 1995 and as a Senior
Vice President and co-manager since 1995. Steven Thumm serves as co-manager of
the Balanced Portfolio. He has been employed by the Manager as a fixed income
analyst since 1991.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution. In certain cases, distributions
7
<PAGE>
made to a participant prior to the participant's reaching age 59 1/2 are subject
to a penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
8
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
For a share outstanding throughout the period
From
May 3, 1993
(commencement
of operations) to
Year Ended December 31, December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993(i)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss) (0.05) 0.00(ii) (0.04) 0.03 (0.03) 0.00(ii) (0.02)
Net realized and unrealized gain (loss)
on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Total distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======== ========
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $ 62,178 $ 21,301
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Amount has been reduced by 0.03% due to expense reimbursements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
For a share outstanding throughout the year
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- -------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- -------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- -------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- -------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- -------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ======== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ======== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ======== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ======== ========
===================================================================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- -------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
-------- -------- -------- -------- --------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
For a share outstanding throughout the year
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
===================================================================================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- -------- -------- -------- --------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
======== ======== ======== ======== ========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======== ======== ======== ========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======== ======== ======== ========
===============================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
For a share outstanding throughout the year
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
-------- -------- -------- -------- --------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain (loss)
on investments 5.26 3.30 2.94 1.87 4.54
-------- -------- -------- -------- --------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
-------- -------- -------- -------- --------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
-------- -------- -------- -------- --------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
======== ======== ======== ======== ========
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 91,250 $ 77,926 $ 47,399 $ 20,910 $ 8,639
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74
-------- -------- -------- -------- --------
Net investment income 0.17 0.07 0.08 0.09 0.11
Net realized and unrealized gain (loss)
on investments (1.47) 1.37 1.02 2.41 (0.08)
-------- -------- -------- -------- --------
Total from investment operations (1.30) 1.44 1.10 2.50 0.03
-------- -------- -------- -------- --------
Dividends from net investment income (0.15) (0.06) (0.12) (0.09) (0.10)
Distributions from net realized gains (0.56) -- (0.13) -- --
-------- -------- -------- -------- --------
Total Distributions (0.71) (0.06) (0.25) (0.09) (0.10)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
======== ======== ======== ======== ========
Total Return (8.28%) 10.34% 8.64% 23.51% 0.28%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 29,135 $ 31,895 $ 8,671 $ 2,663 $ 436
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.75% 0.97% 1.25% 1.25% 1.25%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- 0.01% 0.66% 5.41%
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 1.22% 1.51% 1.62% 2.54% 3.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 177.97% 105.80% 100.62% 61.11% 56.90%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
15
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Alger American Balanced Portfolio (i)
For a share outstanding throughout the year
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.98 $ 10.76 $ 9.24 $ 13.64 $ 10.80
-------- -------- -------- -------- --------
Net investment income (loss) 0.15 0.19 0.17 0.21(ii) 0.33(ii)
Net realized and unrealized gain (loss)
on investments 3.45 3.02 1.63 1.01 2.73
-------- -------- -------- -------- --------
Total from investment operations 3.60 3.21 1.80 1.22 3.06
-------- -------- -------- -------- --------
Dividends from net investment income (0.17) (0.18) (0.12) (0.73) (0.22)
Distributions from net realized gains (0.84) (0.81) (0.16) (4.89) --
-------- -------- -------- -------- --------
Total Distributions (1.01) (0.99) (0.28) (5.62) (0.22)
-------- -------- -------- -------- --------
Net asset value, end of year $ 15.57 $ 12.98 $ 10.76 $ 9.24 $ 13.64
======== ======== ======== ======== ========
Total Return 29.21% 31.51% 19.82% 10.17% 28.62%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 56,327 $ 28,208 $ 16,614 $ 10,486 $ 3,671
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.93% 0.92% 1.01% 1.14% 1.00%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 1.66% 2.09% 2.14% 2.06% 2.49%
======== ======== ======== ======== ========
Portfolio Turnover Rate 118.74% 94.64% 105.01% 68.66% 113.02%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 11.58 $ 10.77 $ 10.02 $ 10.01 $ 10.04
-------- -------- -------- -------- --------
Net investment income (loss) 0.20 0.15 0.22 0.45 0.66
Net realized and unrealized gain (loss)
on investments (0.70) 0.69 0.72 0.01 (0.03)
-------- -------- -------- -------- --------
Total from investment operations (0.50) 0.84 0.94 0.46 0.63
-------- -------- -------- -------- --------
Dividends from net investment income (0.13) (0.03) (0.19) (0.45) (0.66)
Distributions from net realized gains (0.15) -- -- -- --
-------- -------- -------- -------- --------
Total Distributions (0.28) (0.03) (0.19) (0.45) (0.66)
-------- -------- -------- -------- --------
Net asset value, end of year $ 10.80 $ 11.58 $ 10.77 $ 10.02 $ 10.01
======== ======== ======== ======== ========
Total Return (4.27%) 7.79% 9.48% 4.70% 6.53%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 10,394 $ 7,848 $ 4,009 $ 1,487 $ 365
======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.08% 1.25% 1.25% 1.25% 1.25%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- 0.19% 0.42% 1.37% 4.81%
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 2.30% 2.05% 1.99% 4.22% 6.60%
======== ======== ======== ======== ========
Portfolio Turnover Rate 78.80% 85.46% 15.27% -- 132.55%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Prior to October 1, 1992, the Alger American Balanced Portfolio was the
Alger American Fixed Income Portfolio.
(ii) Amount was computed based on average shares outstanding during the year.
17
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Alger American Leveraged AllCap Portfolio
For a share outstanding throughout the period
From
May 3, 1993
(commencement
of operations) to
Year Ended December 31, December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(i)
---------- ---------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.90 $ 23.17 $ 19.36 $ 17.43 $10.00
---------- ---------- ---------- ---------- ------
Net investment income (loss) (0.09) (0.05) (0.03) (0.03)(ii) (0.03)
Net realized and unrealized gain on investments 25.93 12.99 3.84 2.14 7.46
---------- ---------- ---------- ---------- ------
Total from investment operations 25.84 12.94 3.81 2.11 7.43
Distributions from net realized gains (2.77) (1.21) -- (0.18) --
---------- ---------- ---------- ---------- ------
Net asset value, end of period $ 57.97 $ 34.90 $ 23.17 $ 19.36 $17.43
========== ========== ========== ========== ======
Total Return 78.06% 57.83% 19.68% 12.04% 74.30%
========== ========== ========== ========== ======
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 362,500 $ 101,710 $ 53,488 $ 34,925 $5,497
========== ========== ========== ========== ======
Ratio of expenses excluding interest
to average net assets 0.92% 0.93% 0.96% 1.06% 1.50%
========== ========== ========== ========== ======
Ratio of expenses including interest
to average net assets 0.93% 0.96% 1.00% 1.09% 1.56%(iii)
========== ========== ========== ========== ======
Ratio of net investment income (loss)
to average net assets (0.49%) (0.27%) (0.17%) (0.15%) (0.71%)
========== ========== ========== ========== ======
Portfolio Turnover Rate 155.74% 143.59% 164.27% 102.10% 178.23%
========== ========== ========== ========== ======
Amount of debt outstanding at end of period -- -- -- -- --
========== ========== ========== ========== ======
Average amount of debt outstanding during the period $ 266,584 $ 246,101 $ 201,644 $ 76,079 $8,122
========== ========== ========== ========== ======
Average daily number of shares outstanding
during the period 4,395,246 2,480,478 2,135,458 1,107,187 75,460
========== ========== ========== ========== ======
Average amount of debt per share during the period $ 0.06 $ 0.10 $ 0.09 $ 0.07 $ 0.11
========== ========== ========== ========== ======
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 2.36% due to expense reimbursements.
18
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER | ONE WORLD TRADE CENTER
AMERICAN FUND | SUITE 9333
| NEW YORK, NY 10048
A POOLED FUNDING VEHICLE FOR: | 1-800-992-3863
|
o VARIABLE ANNUITY CONTRACTS |
|
o VARIABLE LIFE INSURANCE POLICIES |
|
o QUALIFIED PENSION PLANS |
|
o QUALIFIED RETIREMENT PLANS |
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ALGER AMERICAN INCOME &GROWTH PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
2 ........... Risk/Return Summary: Investments,
Risks & Performance
2 ..... Investments
Alger American Small
Capitalization Portfolio ..................... 2
Alger American MidCap
Growth Portfolio ............................. 2
Alger American Growth Portfolio ................ 2
Alger American Leveraged
AllCap Portfolio ............................. 2
Alger American Income &
Growth Portfolio ............................. 2
3 ..... Principal Risks
Alger American Small
Capitalization Portfolio ..................... 3
Alger American MidCap
Growth Portfolio ............................. 3
Alger American Growth Portfolio ................ 3
Alger American Leveraged
AllCap Portfolio ............................. 3
Alger American Income &
Growth Portfolio ............................. 3
3 ..... Performance
Alger American Small
Capitalization Portfolio ..................... 4
Alger American MidCap
Growth Portfolio ............................. 4
Alger American Growth Portfolio ................ 4
Alger American Leveraged
AllCap Portfolio ............................. 4
Alger American Income &
Growth Portfolio ............................. 5
5 ........... Fees and Expenses
6 ........... Management & Organization
7 ........... Shareholder Information
Distributor .................................... 7
Transfer Agent ................................. 7
8 ........... Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios invest primarily in equity securities,
such as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The Fund's
Manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell(R) 2000 Growth Index or
the S&P(R) SmallCap 600 Index.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P(R) MidCap 400 Index.
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
GOAL
THE ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
Under normal circumstances, the portfolio invests in the equity securities of
companies of any size which demonstrate promising growth potential.
The portfolio can leverage, that is, borrow money, up to one-third of its total
assets to buy additional securities. By borrowing money, the portfolio has the
potential to increase its returns if the increase in the value of the securities
purchased exceeds the cost of borrowing, including interest paid on the money
borrowed.
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN INCOME &GROWTH PORTFOLIO PRIMARILY SEEKS TO PROVIDE A HIGH
LEVEL OF DIVIDEND INCOME; ITS SECONDARY GOAL IS TO PROVIDE CAPITAL APPRECIATION.
APPROACH
The portfolio invests in dividend paying equity securities, such as common or
preferred stocks, preferably those which the Manager believes also offer
opportunities for capital appreciation.
2
<PAGE>
[GRAPHIC OMITTED]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a Fund investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investmentsyou
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolios' investment styles and objectives, an investment in them
may be better suited to investors who seek long-term capital growth and can
tolerate fluctuations in their investments' values.
A portfolio's trading in some stocks may be relatively short-term, meaning the
Fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in medium-sized companies rather
than larger, more established companies owing to such factors as
inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN GROWTH PORTFOLIO
The portfolio's primary risks are those summarized above in "Risks Applicable to
All Portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
LEVERAGED ALLCAP PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in small- and med- ium-sized
companies (in addition to larger, more established companies) owing to such
factors as inexperienced manage- ment and limited financial resources
o the risk that the cost of borrowing money to leverage will exceed the returns
for the securities purchased or that the securities purchased may actually go
down in value; thus, the portfolio's net asset value can decrease more
quickly than if the portfolio had not borrowed
RISKS APPLICABLE TO ALGER AMERICAN
INCOME &GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility that companies may cut or fail to declare dividends due to
market downturns or other reasons
[GRAPHIC OMITTED]
PERFORMANCE
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
o S&P Midcap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies.
3
<PAGE>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter: -20.72% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- --------------------------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russell 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
-1.54 44.45 11.90 15.01 30.3 31.85
- --------------------------------------------------------------------------------
94 95 96 97 98 99
Best Quarter: 27.07% Q4 1998
Worst Quarter: -14.91% Q3 1998
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years (5/3/93)
- -------------------------------------------------------------------------------
American MidCap Growth 31.85% 26.14% 24.72%
S&P Midcap 400 Index(R) 14.72% 23.05% 18.34%
================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- --------------------------------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
================================================================================
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
12.04 19.68 57.83 78.06
- --------------------------------------------------------------------------------
96 97 98 99
Best Quarter: 40.16% Q4 1999
Worst Quarter: -5.70% Q4 1997
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year (1/25/95)
- -------------------------------------------------
American Leveraged
AllCap 78.06% 46.44%
S&P 500 Index(R) 21.04% 28.47%
================================================================================
4
<PAGE>
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
0.28 23.51 8.64 10.34 -8.28 35.13 19.68 36.29 32.39 42.45
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 35.96% Q4 1999
Worst Quarter: -13.94% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (11/15/88)
- --------------------------------------------------------------------------------
American
Income & Growth 42.45% 32.97% 18.93% 17.71%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.23%
================================================================================
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
SHAREHOLDER
FEES
(fees paid
directly TOTAL
from ANNUAL FUND
your Management Distribution Other OPERATING
investment) Fees Fees Expenses EXPENSES
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL None .85% None .05% .90%
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN None .80% None .05% .85%
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN None .75% None .04% .79%
GROWTH
PORTFOLIO
ALGER AMERICAN None .85% None .08%* .93%
LEVERAGED ALLCAP
PORTFOLIO
ALGER AMERICAN None .625% None .075% .70%
INCOME &GROWTH
PORTFOLIO
================================================================================
* INCLUDED IN OTHER EXPENSES IS 0.01% OF INTEREST EXPENSE.
5
<PAGE>
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed in the preceding table, is intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN $87 $271 $471 $1,049
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN $81 $252 $439 $ 978
GROWTH
PORTFOLIO
ALGER AMERICAN $95 $296 $515 $1,143
LEVERAGED ALLCAP
PORTFOLIO
ALGER AMERICAN $72 $224 $390 $ 871
INCOME &GROWTH
PORTFOLIO
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objective during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers to purchase and sell securities on behalf of the portfolios. The
Fund has had the same manager since inception and, for the most recent fiscal
year, the portfolios paid the Manager fees at these annual rates based on a
percentage of average daily net assets: Small Capitalization and Leveraged
AllCap Portfolios -- .85%; MidCap Growth Portfolio--.80%; Growth Portfolio--
.75%; Income & Growth Portfolio-- .625%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo and Ron Tartaro are the individuals responsible for the
day-to-day management of the portfolios' investments. Mr. Alger, a manager of
all of the portfolios since their inception, has been employed by the Manager as
Executive Vice President and Director of Research since 1971, and as President
since 1995. Ms. Khoo, a co-manager of the Small Capitalization and Leveraged
AllCap Portfolios, has been employed by the Manager since 1989, as a senior
research analyst until 1995 and as a Senior Vice President and co-manager since
1995. Mr. Tartaro, a co-manager of the MidCap Growth, Income & Growth and Growth
Portfolios, has been employed by the Manager since 1990, as a senior research
analyst until 1995 and as a Senior Vice President and co-manager since 1995.
6
<PAGE>
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
7
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- ---------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- ---------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- ---------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ========== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ========== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ========== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ========== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ========== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ========== ========
===================================================================================================================================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- -------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
-------- -------- -------- -------- --------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
===================================================================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- -------- -------- -------- --------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
======== ======== ======== ======== ========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======== ======== ======== ========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
-------- -------- -------- -------- --------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain (loss)
on investments 5.26 3.30 2.94 1.87 4.54
-------- -------- -------- -------- --------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
-------- -------- -------- -------- --------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
-------- -------- -------- -------- --------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
======== ======== ======== ======== ========
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 91,250 $ 77,926 $ 47,399 $ 20,910 $ 8,639
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74
-------- -------- -------- -------- --------
Net investment income 0.17 0.07 0.08 0.09 0.11
Net realized and unrealized gain (loss)
on investments (1.47) 1.37 1.02 2.41 (0.08)
-------- -------- -------- -------- --------
Total from investment operations (1.30) 1.44 1.10 2.50 0.03
-------- -------- -------- -------- --------
Dividends from net investment income (0.15) (0.06) (0.12) (0.09) (0.10)
Distributions from net realized gains (0.56) -- (0.13) -- --
-------- -------- -------- -------- --------
Total Distributions (0.71) (0.06) (0.25) (0.09) (0.10)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
======== ======== ======== ======== ========
Total Return (8.28%) 10.34% 8.64% 23.51% 0.28%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 29,135 $ 31,895 $ 8,671 $ 2,663 $ 436
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.75% 0.97% 1.25% 1.25% 1.25%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- 0.01% 0.66% 5.41%
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 1.22% 1.51% 1.62% 2.54% 3.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 177.97% 105.80% 100.62% 61.11% 56.90%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
13
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
From
January 25, 1995
(commencement
of operations) to
Year Ended December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(i)
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.90 $ 23.17 $ 19.36 $ 17.43 $ 10.00
---------- ---------- ---------- ---------- --------
Net investment income (loss) (0.09) (0.05) (0.03) (0.03)(ii) (0.03)
Net realized and unrealized gain on investments 25.93 12.99 3.84 2.14 7.46
---------- ---------- ---------- ---------- --------
Total from investment operations 25.84 12.94 3.81 2.11 7.43
Distributions from net realized gains (2.77) (1.21) -- (0.18) --
---------- ---------- ---------- ---------- --------
Net asset value, end of period $ 57.97 $ 34.90 $ 23.17 $ 19.36 $ 17.43
========== ========== ========== ========== ========
Total Return 78.06% 57.83% 19.68% 12.04% 74.30%
========== ========== ========== ========== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 362,500 $ 101,710 $ 53,488 $ 34,925 $ 5,497
========== ========== ========== ========== ========
Ratio of expenses excluding interest
to average net assets 0.92% 0.93% 0.96% 1.06% 1.50%
========== ========== ========== ========== ========
Ratio of expenses including interest
to average net assets 0.93% 0.96% 1.00% 1.09% 1.56%(iii)
========== ========== ========== ========== ========
Ratio of net investment income (loss)
to average net assets (0.49%) (0.27%) (0.17%) (0.15%) (0.71%)
========== ========== ========== ========== ========
Portfolio Turnover Rate 155.74% 143.59% 164.27% 102.10% 178.23%
========== ========== ========== ========== ========
Amount of debt outstanding at end of period -- -- -- -- --
========== ========== ========== ========== ========
Average amount of debt outstanding during the period $ 266,584 $ 246,101 $ 201,644 $ 76,079 $ 8,122
========== ========== ========== ========== ========
Average daily number of shares outstanding
during the period 4,395,246 2,480,478 2,135,458 1,107,187 75,460
========== ========== ========== ========== ========
Average amount of debt per share during the period $ 0.06 $ 0.10 $ 0.09 $ 0.07 $ 0.11
========== ========== ========== ========== ========
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 2.36% due to expense reimbursements.
14
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
From
January 25, 1995
(commencement
of operations) to
Year Ended December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 (1993(i)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss) (0.05) 0.00(ii) (0.04) 0.03 (0.03) 0.00(ii) (0.02)
Net realized and unrealized
gain (loss) on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Total Distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======== ========
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $ 62,178 $ 21,301
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 0.03% due to expense reimbursements.
15
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER | ONE WORLD TRADE CENTER
AMERICAN FUND | SUITE 9333
| NEW YORK, NY 10048
A POOLED FUNDING VEHICLE FOR: | 1-800-992-3863
|
o VARIABLE ANNUITY CONTRACTS |
|
o VARIABLE LIFE INSURANCE POLICIES |
|
o QUALIFIED PENSION PLANS |
|
o QUALIFIED RETIREMENT PLANS |
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or by any other
government agency.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
3 ........Risk/Return Summary: Investments,
Risks & Performance
3 ...Investments
Alger American Small
Capitalization Portfolio .........3
Alger American MidCap
Growth Portfolio .................3
Alger American Growth Portfolio ....3
Alger American Leveraged
AllCap Portfolio .................3
4 ......Principal Risks
Alger American Small
Capitalization Portfolio .........4
Alger American MidCap
Growth Portfolio .................4
Alger American Growth Portfolio ....4
Alger American Leveraged
AllCap Portfolio ...................4
4 ......Performance
Alger American Small
Capitalization Portfolio .........5
Alger American MidCap
Growth Portfolio .................5
Alger American Growth Portfolio ....5
Alger American Leveraged
AllCap Portfolio .................5
6 ............Fees and Expenses
6 ............Management & Organization
7 ............Shareholder Information
Distributor .......................7
Transfer Agent ....................7
8 ............Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[This page intentionally left blank]
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios invest primarily in equity securities,
such as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The Fund's
Manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly expanding
marketplace. They include both established and emerging firms, offering new or
improved products, or firms simply fulfilling an increased demand for an
existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell 2000 Growth Index(R) or
the S&P SmallCap 600 Index(R).
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P MidCap 400 Index(R).
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
GOAL
THE ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
Under normal circumstances, the portfolio invests in the equity securities of
companies of any size which demonstrate promising growth potential.
The portfolio can leverage, that is, borrow money, up to one-third of its total
assets to buy additional securities. By borrowing money, the portfolio has the
potential to increase its returns if the increase in the value of the securities
purchased exceeds the cost of borrowing, including interest paid on the money
borrowed.
3
<PAGE>
[GRAPHIC OMITTED]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a Fund investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolios' investment styles and objectives, an investment in them
may be better suited to investors who seek long-term capital growth and can
tolerate fluctuations in their investments' values.
A portfolio's trading in some stocks may be relatively short-term, meaning the
Fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in medium-sized companies rather
than larger, more established companies owing to such factors as
inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN GROWTH PORTFOLIO
Theportfolio's primary risks are those summarized above in "Risks Applicable
to All Portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
LEVERAGED ALLCAP PORTFOLIO
Additional risks of investing in the portfolio are:
o the possibility of greater risk by investing in small- and med- ium-sized
companies (in addition to larger, more established companies) owing to such
factors as inexperienced management and limited financial resources
o the risk that the cost of borrowing money to leverage will exceed the returns
for the securities purchased or that the securities purchased may actually go
down in value; thus, the portfolio's net asset value can decrease more
quickly than if the portfolio had not borrowed
[GRAPHIC OMITTED]
PERFORMANCE
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
o S&P Midcap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies.
4
<PAGE>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter: -20.72% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- --------------------------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russell 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
- -1.54 44.45 11.90 15.01 30.30 31.85
- --------------------------------------------------------------------------------
94 95 96 97 98 99
Best Quarter: 27.07% Q4 1998
Worst Quarter: -14.91% Q3 1998
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years (5/3/93)
- --------------------------------------------------------------------------------
American MidCap Growth 31.85% 26.14% 24.72%
S&P Midcap 400 Index(R) 14.72% 23.05% 18.34%
================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- --------------------------------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
================================================================================
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
12.04 19.68 57.83 78.06
- --------------------------------------------------------------------------------
96 97 98 99
Best Quarter: 40.16% Q4 1999
Worst Quarter: -5.70% Q4 1997
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year (1/25/95)
- --------------------------------------------------------------------------------
American Leveraged
AllCap 78.06% 46.44%
S&P 500 Index(R) 21.04% 28.47%
================================================================================
5
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
Shareholder
Fees
(fees paid
directly Total
from Annual Fund
your Management Distribution Other Operating
investment) Fees Fees Expenses Expenses
- --------------------------------------------------------------------------------
Alger American Small None .85% None .05% .90%
Capitalization
Portfolio
Alger American None .80% None .05% .85%
MidCap Growth
Portfolio
Alger American None .75% None .04% .79%
Growth
Portfolio
Alger American None .85% None .08%* .93%
Leveraged AllCap
Portfolio
================================================================================
* Included in Other Expenses is 0.01% of interest expense.
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN $87 $271 $471 $1,049
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN $81 $252 $439 $978
GROWTH
PORTFOLIO
ALGER AMERICAN $95 $296 $515 $1,143
LEVERAGED ALLCAP
PORTFOLIO
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objective during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
6
<PAGE>
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers to purchase and sell securities on behalf of the portfolios. The
Fund has had the same manager since inception and, for the most recent fiscal
year, the portfolios paid the Manager fees at these annual rates based on a
percentage of average daily net assets: Small Capitalization and Leveraged
AllCap Portfolios--.85%; MidCap Growth Portfolio--.80%; Growth Portfolio--.75%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo and Ron Tartaro are the individuals responsible for the
day-to-day management of the portfolios' investments. Mr. Alger, a manager of
all of the portfolios since their inception, has been employed by the Manager as
Executive Vice President and Director of Research since 1971, and as President
since 1995. Ms. Khoo, a co-manager of the Small Capitalization and Leveraged
AllCap Portfolios, has been employed by the Manager since 1989, as a senior
research analyst until 1995 and as a Senior Vice President and co-manager since
1995. Mr. Tartaro, a co-manager of the MidCap Growth and Growth Portfolios, has
been employed by the Manager since 1990, as a senior research analyst until 1995
and as a Senior Vice President and co-manager since 1995.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
7
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- ---------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- ---------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- ---------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ========== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ========== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ========== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ========== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ========== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ========== ========
===================================================================================================================================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- -------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
-------- -------- -------- -------- --------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
===================================================================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $12.41
-------- ------- ------- ------- ------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- ------- ------- ------- ------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- ------- ------- ------- ------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- ------- ------- ------- ------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- ------- ------- ------- ------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $12.86
======== ======= ======= ======= ======
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======= ======= ======= ======
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $150,390 $74,878 $30,316 $10,094 $1,228
======== ======= ======= ======= ======
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======= ======= ======= ======
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======= ======= ======= ======
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======= ======= ======= ======
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
From
January 25, 1995
(commencement
of operations) to
Year Ended December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(i)
---------- ---------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.90 $ 23.17 $ 19.36 $ 17.43 $ 10.00
---------- ---------- ---------- ---------- -------
Net investment income (loss) (0.09) (0.05) (0.03) (0.03)(ii) (0.03)
Net realized and unrealized gain on investments 25.93 12.99 3.84 2.14 7.46
---------- ---------- ---------- ---------- -------
Total from investment operations 25.84 12.94 3.81 2.11 7.43
Distributions from net realized gains (2.77) (1.21) -- (0.18) --
---------- ---------- ---------- ---------- -------
Net asset value, end of period $ 57.97 $ 34.90 $ 23.17 $ 19.36 $ 17.43
========== ========== ========== ========== =======
Total Return 78.06% 57.83% 19.68% 12.04% 74.30%
========== ========== ========== ========== =======
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 362,500 $ 101,710 $ 53,488 $ 34,925 $ 5,497
========== ========== ========== ========== =======
Ratio of expenses excluding interest
to average net assets 0.92% 0.93% 0.96% 1.06% 1.50%
========== ========== ========== ========== =======
Ratio of expenses including interest
to average net assets 0.93% 0.96% 1.00% 1.09% 1.56%(iii)
========== ========== ========== ========== =======
Ratio of net investment income (loss)
to average net assets (0.49%) (0.27%) (0.17%) (0.15%) (0.71%)
========== ========== ========== ========== =======
Portfolio Turnover Rate 155.74% 143.59% 164.27% 102.10% 178.23%
========== ========== ========== ========== =======
Amount of debt outstanding at end of period -- -- -- -- --
========== ========== ========== ========== =======
Average amount of debt outstanding during the period $ 266,584 $ 246,101 $ 201,644 $ 76,079 $ 8,122
========== ========== ========== ========== =======
Average daily number of shares outstanding
during the period 4,395,246 2,480,478 2,135,458 1,107,187 75,460
========== ========== ========== ========== =======
Average amount of debt per share during the period $ 0.06 $ 0.10 $ 0.09 $ 0.07 $ 0.11
========== ========== ========== ========== =======
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 2.36% due to expense reimbursements.
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
From
January 25, 1995
(commencement
of operations) to
Year Ended December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993(i)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss) (0.05) 0.00(ii) 0.03 (0.03) 0.00(ii)
Net realized and unrealized gain (loss)
on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Total Distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======== ========
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $ 62,178 $ 21,301
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 0.03% due to expense reimbursements.
13
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and to make inquiries of
the Fund, by calling the Fund's toll-free number or by writing to the address
above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER
AMERICAN FUND
A POOLED FUNDING VEHICLE FOR:
o VARIABLE ANNUITY CONTRACTS ONE WORLD TRADE CENTER
o VARIABLE LIFE INSURANCE POLICIES SUITE 9333
o QUALIFIED PENSION PLANS NEW YORK, NY 10048
o QUALIFIED RETIREMENT PLANS 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
3 ............Risk/Return Summary: Investments,
Risks & Performance
3 ......Investments
Alger American Small
Capitalization Portfolio ................3
Alger American Midcap
Growth Portfolio ......................3
Alger American Growth Portfolio ........3
Alger American Income &
Growth Portfolio ......................3
3 ......Principal Risks
Alger American Small
Capitalization Portfolio ..............4
Alger American Midcap
Growth Portfolio ......................4
Alger American Growth Portfolio .........4
Alger American Income &
Growth Portfolio ......................4
4 ......Performance
Alger American Small
Capitalization Portfolio ..............5
Alger American Midcap
Growth Portfolio ......................5
Alger American Growth Portfolio .........5
Alger American Income &
Growth Portfolio ......................5
6 ............Fees and Expenses
6 ............Management & Organization
7 ............Shareholder Information
Distributor .............................7
Transfer Agent ..........................7
Purchasing and Redeeming
Fund Shares ...........................7
8 ............Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios invest primarily in equity securities,
such as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The fund's
manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o HIGH UNIT VOLUME GROWTH
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o POSITIVE LIFE CYCLE CHANGE
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell(R) 2000 growth index or
the S&P(R) SmallCap 600 Index.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P(R) MidCap 400 Index.
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
ALGER AMERICAN INCOME &GROWTH PORTFOLIO
GOAL
The ALGER AMERICAN INCOME & GROWTH PORTFOLIO primarily seeks to provide a high
level of dividend income; its secondary goal is to provide capital appreciation.
APPROACH
The portfolio invests in dividend paying equity securities, such as common or
preferred stocks, preferably those which the manager believes also offer
opportunities for capital appreciation.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a fund investment may
3
<PAGE>
not grow as fast as the rate of inflation and stocks tend to be more volatile
than some other investmentsyou could make, such as bonds. Furthermore, the
returns of a fund concentrating on "growth" stocks tend to vary more widely over
time than those of funds that focus on "value" stocks; prices of growth stocks
tend to be higher in relation to their companies' earnings and may be more
sensitive to market, political and economic developments than other stocks,
making their prices more volatile. Based on the portfolios' investment styles
and objectives, an investment in them may be better suited to investors who seek
long-term capital growth and can tolerate fluctuations in their investments'
values.
A portfolio's trading in some stocks may be relatively short-term, meaning the
fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o The possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o The possibility of greater risk by investing in medium-sized companies rather
than larger, more established companies owing to such factors as
inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN GROWTH PORTFOLIO
The portfolio's primary risks are those summarized above in "risks applicable to
all portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
INCOME &GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o The possibility that companies may cut or fail to declare dividends due to
market downturns or other reasons
[GRAPHIC OMITTED]
Performance
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. Stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
o S&P MidCap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies.
4
<PAGE>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR GRAPH OMITTED]
ANNUAL TOTAL RETURN AS OF DECEMBER 31 EACH YEAR (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
BEST QUARTER: 31.06% Q4 1999
WORST QUARTER: -20.72% Q3 1990
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (9/21/88)
- --------------------------------------------------------------
AMERICAN SMALL
CAPITALIZATION 43.42% 22.64% 18.22% 20.86%
RUSSELL 2000 GROWTH
INDEX(R) 43.10% 18.99% 13.51% 13.73%
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
[BAR GRAPH OMITTED]
ANNUAL TOTAL RETURN AS OF DECEMBER 31 EACH YEAR (%)
- -1.54 44.45 11.90 15.01 30.30 31.85
- -----------------------------------------------------------------
94 95 96 97 98 99
BEST QUARTER: 27.07% Q4 1998
WORST QUARTER: -14.91% Q3 1998
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS (5/3/93)
- -------------------------------------------------------------
AMERICAN MIDCAP GROWTH 31.85% 26.14% 24.72%
S&P MIDCAP 400 INDEX(R) 14.72% 23.05% 18.34%
ALGER AMERICAN GROWTH PORTFOLIO
[BAR GRAPH OMITTED]
ANNUAL TOTAL RETURN AS OF DECEMBER 31 EACH YEAR (%)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
</TABLE>
BEST QUARTER: 25.93% Q4 1998
WORST QUARTER: -16.21% Q3 1990
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (1/9/89)
- -------------------------------------------------------------
AMERICAN GROWTH 33.74% 30.94% 22.89% 23.05%
S&P 500 INDEX(R) 21.04% 28.56% 18.21% 019.22%
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
[BAR GRAPH OMITTED]
ANNUAL TOTAL RETURN AS OF DECEMBER 31 EACH YEAR (%)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0.28 23.51 8.64 10.34 -8.28 35.13 19.68 36.29 32.39 42.45
- ----------------------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
</TABLE>
BEST QUARTER: 35.96% Q4 1999
WORST QUARTER: -13.94% Q3 1990
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 1999
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (11/15/88)
- ---------------------------------------------------------------
AMERICAN
INCOME & GROWTH 42.45% 32.97% 18.93% 17.71%
S&P 500 INDEX(R) 21.04% 28.56% 18.21% 19.23%
<PAGE>
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
----------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY MANAGEMENT DISTRIBUTION OTHER TOTAL ANNUAL FUND
FROM YOUR INVESTMENT) FEES FEES EXPENSES OPERATING EXPENSES
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALGER AMERICAN SMALL NONE .85% NONE .05% .90%
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN NONE .80% NONE .05% .85%
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN NONE .75% NONE .04% .79%
GROWTH
PORTFOLIO
ALGER AMERICAN NONE .625% NONE .075% .70%
INCOME &GROWTH
PORTFOLIO
</TABLE>
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN $87 $271 $471 $1,049
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN $81 $252 $439 $978
GROWTH
PORTFOLIO
ALGER AMERICAN $72 $224 $390 $871
INCOME &GROWTH
PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
plan documents.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objectives during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
statement of additional information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
FRED ALGER MANAGEMENT, INC.
ONE WORLD TRADE CENTER
SUITE 9333
NEW YORK, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers
6
<PAGE>
to purchase and sell securities on behalf of the portfolios. The Fund has had
the same manager since inception and, for the most recent fiscal year, the
portfolios paid the manager fees at these annual rates based on a percentage of
average daily net assets: Small Capitalization Portfolio--.85%; MidCap Growth
Portfolio--.80%; Growth Portfolio--.75%; Income & Growth Portfolio--.625%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo and Ron Tartaro are the individuals responsible for the
day-to-day management of the portfolios' investments. Mr. Alger, a manager of
all of the portfolios since their inception, has been employed by the Manager as
Executive Vice President and Director of Research since 1971, and as President
since 1995. Ms. Khoo, a Co-Manager of the Small Capitalization Portfolio, has
been employed by the Manager since 1989, As a Senior Research Analyst until 1995
and as a Senior Vice President and Co-Manager since 1995. Mr. Tartaro, a
Co-Manager of the Midcap Growth, Income & Growth and Growth Portfolios, has been
employed by the Manager since 1990, As a Senior Research Analyst until 1995 and
as a Senior Vice President and Co-Manager since 1995.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
FRED ALGER & COMPANY, INCORPORATED
30 MONTGOMERY STREET
JERSEY CITY, NJ 07302
TRANSFER AGENT
ALGER SHAREHOLDER SERVICES, INC.
30 MONTGOMERY STREET
JERSEY CITY, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. the Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIP'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER
OF ITS OUTSTANDING SHARES.
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the nav next calculated after the
purchase or redemption request is received in good order by the transfer agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
transfer agent. The transfer agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
7
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
For a share outstanding throughout the year
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- ---------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- ---------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- ---------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ========== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ========== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ========== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ========== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ========== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ========== ========
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- -------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
======== ======== ======== ======== ========
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
</TABLE>
(i)Amount was computed based on average shares outstanding during the year.
(ii)Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
9
<PAGE>
ALGER AMERICAN GROWTH PORTFOLIO
For a share outstanding throughout the year
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
-------- -------- -------- -------- --------
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- -------- -------- -------- --------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
======== ======== ======== ======== ========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======== ======== ======== ========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======== ======== ======== ========
</TABLE>
(i)Amount was computed based on average shares outstanding during the year.
(ii)Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
For a share outstanding throughout the year
<TABLE>
<CAPTION>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
-------- -------- -------- -------- --------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain (loss)
on investments 5.26 3.30 2.94 1.87 4.54
-------- -------- -------- -------- --------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
-------- -------- -------- -------- --------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
-------- -------- -------- -------- --------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
======== ======== ======== ======== ========
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 91,250 $ 77,926 $ 47,399 $ 20,910 $ 8,639
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
======== ======== ======== ======== ========
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74
-------- -------- -------- -------- --------
Net investment income 0.17 0.07 0.08 0.09 0.11
Net realized and unrealized gain (loss)
on investments (1.47) 1.37 1.02 2.41 (0.08)
-------- -------- -------- -------- --------
Total from investment operations (1.30) 1.44 1.10 2.50 0.03
-------- -------- -------- -------- --------
Dividends from net investment income (0.15) (0.06) (0.12) (0.09) (0.10)
Distributions from net realized gains (0.56) -- (0.13) -- --
-------- -------- -------- -------- --------
Total Distributions (0.71) (0.06) (0.25) (0.09) (0.10)
-------- -------- -------- -------- --------
Net asset value, end of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
======== ======== ======== ======== ========
Total Return (8.28%) 10.34% 8.64% 23.51% 0.28%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 29,135 $31,895 $ 8,671 $ 2,663 $ 436
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.75% 0.97% 1.25% 1.25% 1.25%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- 0.01% 0.66% 5.41%
======== ======== ======== ======== ========
Ratio of net investment income to
average net assets 1.22% 1.51% 1.62% 2.54% 3.61%
======== ======== ======== ======== ========
Portfolio Turnover Rate 177.97% 105.80% 100.62% 61.11% 56.90%
======== ======== ======== ======== ========
</TABLE>
(i)Amount was computed based on average shares outstanding during the year.
13
<PAGE>
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
For a share outstanding throughout the period
<TABLE>
<CAPTION>
From
May 3, 1993
(commencement
of operations) to
Year Ended December 31, December 31,
- ------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993(i)
----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss) (0.05) 0.00(ii) (0.04) 0.03 (0.03) 0.00(ii) (0.02)
Net realized and unrealized gain
(loss) on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Total Distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======== ========
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $ 62,178 $ 21,301
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average
net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income
(loss) to average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======== ========
</TABLE>
(i)Ratios have been annualized; total return has not been annualized.
(ii)Amount was computed based on average shares outstanding during the year.
(iii)Amount has been reduced by 0.03% due to expense reimbursements.
14
<PAGE>
For Fund Information:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
The Alger American Fund
SEC File #811-5550
<PAGE>
THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
o VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
o VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
o QUALIFIED PENSION PLANS | NEW YORK, NY 10048
o QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALLCAPITALIZATION PORTFOLIO
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- ------------------------------------------------
3 ............. Risk/Return Summary: Investments,
Risks & Performance
3 ...... Investments
Alger American Small
Capitalization Portfolio ............................. 3
Alger American MidCap
Growth Portfolio ..................................... 3
Alger American Growth Portfolio ......................... 3
3 ...... Principal Risks
Alger American Small
Capitalization Portfolio ............................. 4
Alger American MidCap
Growth Portfolio ..................................... 4
Alger American Growth Portfolio ......................... 4
4 ...... Performance
Alger American Small
Capitalization Portfolio ............................. 4
Alger American MidCap
Growth Portfolio ..................................... 5
Alger American Growth Portfolio ......................... 5
5 ............. Fees and Expenses
6 ............. Management & Organization
7 ............. Shareholder Information
Distributor ............................................. 7
Transfer Agent .......................................... 7
8 ............. Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[This page intentionally left blank]
2
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios invest primarily in equity securities,
such as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The Fund's
Manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell(R) 2000 Growth Index or
the S&P(R) SmallCap 600 Index.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P(R) MidCap 400 Index.
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a Fund investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolios' investment styles and objectives, an investment in them
may be better suited to investors who seek long-term capital growth and can
tolerate fluctuations in their investments' values.
3
<PAGE>
A portfolio's trading in some stocks may be relatively short-term, meaning the
Fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
MIDCAP GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in medium-sized companies rather
than larger, more established companies owing to such factors as
inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN GROWTH
PORTFOLIO
The portfolio's primary risks are those summarized above in "Risks Applicable to
All Portfolios."
[GRAPHIC OMITTED]
PERFORMANCE
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
o S&P Midcap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter: -20.72% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- --------------------------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russell 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
4
<PAGE>
ALGER AMERICAN GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- --------------------------------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
-1.54 44.45 11.90 15.01 30.30 31.85
----------------------------------------------------------
94 95 96 97 98 99
Best Quarter: 27.07% Q4 1998
Worst Quarter: -14.91% Q3 1998
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years (5/3/93)
- --------------------------------------------------------------------------------
American MidCap Growth 31.85% 26.14% 24.72%
S&P Midcap 400 Index(R) 14.72% 23.05% 18.34%
================================================================================
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
SHAREHOLDER
FEES
(fees paid
directly TOTAL
from ANNUAL FUND
your Management Distribution Other OPERATING
investment) Fees Fees Expenses EXPENSES
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL None .85% None .05% .90%
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN None .80% None .05% .85%
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN None .75% None .04% .79%
GROWTH
PORTFOLIO
================================================================================
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
5
<PAGE>
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN $87 $271 $471 $1,049
MIDCAP GROWTH
PORTFOLIO
ALGER AMERICAN $81 $252 $439 $978
GROWTH
PORTFOLIO
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT
THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objective during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers to purchase and sell securities on behalf of the portfolios. The
Fund has had the same manager since inception and, for the most recent fiscal
year, the portfolios paid the Manager fees at these annual rates based on a
percentage of average daily net assets: Small Capitalization Portfolio--.85%;
MidCap Growth Portfolio--.80%; Growth Portfolio--.75%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo and Ron Tartaro are the individuals responsible for the
day-to-day management of the portfolios' investments. Mr. Alger, a manager of
all of the portfolios since their inception has been employed by the Manager as
Executive Vice President and Director of Research since 1971, and as President
since 1995. Ms. Khoo, a co-manager of the Small Capitalization Portfolio, has
been employed by the Manager since 1989, as a senior research analyst until 1995
and as a Senior Vice President and co-manager since 1995. Mr. Tartaro, a
co-manager of the MidCap Growth and Growth Portfolios, has been employed by the
Manager since 1990, as a senior research analyst until 1995 and as a Senior Vice
President and co-manager since 1995.
6
<PAGE>
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
7
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- ---------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- ---------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- ---------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ========== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ========== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ========== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ========== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ========== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ========== ========
===================================================================================================================================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- -------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
-------- -------- -------- -------- --------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
===================================================================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- -------- -------- -------- --------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
======== ======== ======== ======== ========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======== ======== ======== ========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
From
May 3, 1993
(commencement
of operations) to
Year Ended December 31, December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993(i)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- -------- --------
Net investment income (loss) (0.05) 0.00(ii) (0.04) 0.03 (0.03) 0.00(ii) (0.02)
Net realized and unrealized gain (loss)
on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- -------- --------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- -------- --------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Total Distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======== ========
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $ 62,178 $ 21,301
======== ======== ======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======== ========
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======== ========
===================================================================================================================================
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 0.03% due to expense reimbursements.
12
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and to make inquiries of
the Fund, by calling the Fund's toll-free number or by writing to the address
above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
o VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
o VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
o QUALIFIED PENSION PLANS | NEW YORK, NY 10048
o QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
ALGER AMERICAN GROWTH PORTFOLIO
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- ----------------------------------------------------------------------------
3 ............. Risk/Return Summary: Investments, Risks & Performance
3 ...... Investments
Alger American Small
Capitalization Portfolio ............................. 3
Alger American Growth Portfolio ......................... 3
Alger American Income &
Growth Portfolio ..................................... 3
3 ...... Principal Risks
Alger American Small
Capitalization Portfolio ............................. 4
Alger American Growth Portfolio ......................... 4
Alger American Income &
Growth Portfolio ..................................... 4
4 ...... Performance
Alger American Small
Capitalization Portfolio ............................. 4
Alger American Growth Portfolio ......................... 4
Alger American Income &
Growth Portfolio ..................................... 5
5 ............. Fees and Expenses
6 ............. Management & Organization
6 ............. Shareholder Information
Distributor ............................................. 6
Transfer Agent .......................................... 6
8 ............. Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[This page intentionally left blank.]
<PAGE>
[Graphic Omitted]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENTS: THE ALGER AMERICAN FUND
The investment goal and primary approach of each portfolio is discussed
individually below. All of the portfolios invest primarily in equity securities,
such as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. They invest primarily in "growth" stocks. The Fund's
Manager, Fred Alger Management, Inc., believes that these companies tend to fall
into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The company's market capitalization will dictate in which portfolio(s) it will
be placed. The market capitalization of a company is its price per share
multiplied by its number of outstanding shares.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
GOAL
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
APPROACH
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell(R) 2000 Growth Index or
the S&P(R) SmallCap 600 Index.
ALGER AMERICAN GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
APPROACH
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater.
ALGER AMERICAN INCOME &GROWTH PORTFOLIO
GOAL
THE ALGER AMERICAN INCOME &GROWTH PORTFOLIO PRIMARILY SEEKS TO PROVIDE A HIGH
LEVEL OF DIVIDEND INCOME; ITS SECONDARY GOAL IS TO PROVIDE CAPITAL APPRECIATION.
APPROACH
The portfolio invests in dividend paying equity securities, such as common or
preferred stocks, preferably those which the Manager believes also offer
opportunities for capital appreciation.
[Graphic Omitted]
PRINCIPAL RISKS
RISKS APPLICABLE TO ALL PORTFOLIOS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. A portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a Fund investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolios' investment styles and objectives, an investment in them
may be better suited to investors who seek long-term capital growth and can
tolerate fluctuations in their investments' values.
3
<PAGE>
A portfolio's trading in some stocks may be relatively short-term, meaning the
Fund may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
There may be additional risks applicable to a specific portfolio because of its
investment approach.
RISKS APPLICABLE TO ALGER AMERICAN
SMALL CAPITALIZATION PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility of greater risk by investing in smaller, less seasoned
companies rather than larger, more established companies owing to such
factors as inexperienced management and limited financial resources
RISKS APPLICABLE TO ALGER AMERICAN
GROWTH PORTFOLIO
The portfolio's primary risks are those summarized above in "Risks Applicable to
All Portfolios."
RISKS APPLICABLE TO ALGER AMERICAN
INCOME &GROWTH PORTFOLIO
An additional risk of investing in the portfolio is:
o the possibility that companies may cut or fail to declare dividends due to
market downturns or other reasons
[Graphic Omitted]
PERFORMANCE
The following bar charts show the changes in each portfolio's performance from
year to year and give you some indication of the risks of investing in the Fund.
They assume reinvestment of dividends and distributions.
The Average Annual Total Return tables compare a portfolio's performance over
several periods with that of an appropriate benchmark index. The annual returns
assume reinvestment of dividends and distributions. Remember that how a
portfolio has performed in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the tables is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter: -20.72% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- --------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russell 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- --------------------------------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
================================================================================
4
<PAGE>
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
0.28 23.51 8.64 10.34 -8.28 35.13 19.68 36.29 32.39 42.45
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 35.96% Q4 1999
Worst Quarter: -13.94% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (11/15/88)
- --------------------------------------------------------------------------------
American
Income & Growth 42.45% 32.97% 18.93% 17.71%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.23%
================================================================================
[Graphic Omitted]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the Fund. The following table shows the fees and expenses that you may incur if
you buy and hold shares of the portfolios.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
Shareholder
Fees
(fees paid
directly Total
from Annual Fund
your Management Distribution Other Operating
investment) Fees Fees Expenses Expenses
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL None .85% None .05% .90%
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN None .75% None .04% .79%
GROWTH
PORTFOLIO
ALGER AMERICAN None .625% None .075% .70%
INCOME &GROWTH
PORTFOLIO
================================================================================
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same as in the prior
table. The figures shown would be the same whether or not you sold your shares
at the end of each period. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
ALGER AMERICAN $81 $252 $439 $978
GROWTH
PORTFOLIO
ALGER AMERICAN $72 $224 $390 $871
INCOME &GROWTH
PORTFOLIO
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT
THE FUND'S INVESTMENTS
Each portfolio may invest up to 100% of its assets in cash, high-grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from a temporary unacceptable risk of loss, rather than
directly to promote the portfolio's investment objective. The portfolio may not
achieve its objective during such periods.
Other securities the portfolios may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
5
<PAGE>
[Graphic Omitted]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing each
portfolio's assets according to its goal and for placing orders with
broker-dealers to purchase and sell securities on behalf of the portfolios. The
Fund has had the same manager since inception and, for the most recent fiscal
year, the portfolios paid the Manager fees at these annual rates based on a
percentage of daily net assets: Small Capitalization Portfolio--.85%; Growth
Portfolio--.75%; Income & Growth Portfolio--.625%.
PORTFOLIO MANAGERS
David Alger, Seilai Khoo and Ron Tartaro are the individuals responsible for the
day-to-day management of the portfolios' investments. Mr. Alger, a manager of
all of the portfolios since their inception, has been employed by the Manager as
Executive Vice President and Director of Research since 1971, and as President
since 1995. Ms. Khoo, a co-manager of the Small Capitalization Portfolio, has
been employed by the Manager since 1989, as a senior research analyst until 1995
and as a Senior Vice President and co-manager since 1995. Mr. Tartaro, a
co-manager of the Growth and Income & Growth Portfolios, has been employed by
the Manager since 1990, as a senior research analyst until 1995 and as a Senior
Vice President and co-manager since 1995.
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for each
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of each portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolios are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolios
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code.
6
<PAGE>
Participants in qualified pension and retirement plans ordinarily will not be
subject to taxation on dividends from net investment income and distributions
from net realized capital gains until they receive a distribution of the
dividends from their plan accounts. Generally, distributions from plan accounts
are taxable as ordinary income at the rate applicable to each participant at the
time of distribution.In certain cases, distributions made to a participant prior
to the participant's reaching age 59-1/2 are subject to a penalty tax equivalent
to 10% of the distributed amount, in addition to the ordinary income tax payable
on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in a portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
7
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand each
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
---------- ---------- ---------- ---------- ----------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
---------- ---------- ---------- ---------- ----------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
---------- ---------- ---------- ---------- ----------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
---------- ---------- ---------- ---------- ----------
Total distributions (5.68) (6.06) (1.56) (0.16) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
========== ========== ========== ========== ==========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 674,864 $1,216,584 $ 997,586 $1,469,518 $ 984,212
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
========== ========== ========== ========== ==========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
========== ========== ========== ========== ==========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
---------- ---------- ---------- ---------- ----------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
---------- ---------- ---------- ---------- ----------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
---------- ---------- ---------- ---------- ----------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
---------- ---------- ---------- ---------- ----------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
========== ========== ========== ========== ==========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 397,037 $ 238,850 $ 135,718 $ 56,798 $ 7,149
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
========== ========== ========== ========== ==========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
========== ========== ========== ========== ==========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
9
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- ---------- ----------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- ---------- ----------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- ---------- ----------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- ---------- ----------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ========== ==========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $ 991,028 $ 502,974
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ========== ==========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ========== ==========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
---------- ---------- ---------- ---------- ----------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
---------- ---------- ---------- ---------- ----------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
---------- ---------- ---------- ---------- ----------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
---------- ---------- ---------- ---------- ----------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
========== ========== ========== ========== ==========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
========== ========== ========== ========== ==========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
========== ========== ========== ========== ==========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
11
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
---------- ---------- ---------- ---------- ----------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain (loss)
on investments 5.26 3.30 2.94 1.87 4.54
---------- ---------- ---------- ---------- ----------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
---------- ---------- ---------- ---------- ----------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
---------- ---------- ---------- ---------- ----------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
========== ========== ========== ========== ==========
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 91,250 $ 77,926 $ 47,399 $ 20,910 $ 8,639
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
========== ========== ========== ========== ==========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
========== ========== ========== ========== ==========
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74
---------- ---------- ---------- ---------- ----------
Net investment income 0.17 0.07 0.08 0.09 0.11
Net realized and unrealized gain (loss)
on investments (1.47) 1.37 1.02 2.41 (0.08)
---------- ---------- ---------- ---------- ----------
Total from investment operations (1.30) 1.44 1.10 2.50 0.03
---------- ---------- ---------- ---------- ----------
Dividends from net investment income (0.15) (0.06) (0.12) (0.09) (0.10)
Distributions from net realized gains (0.56) -- (0.13) -- --
---------- ---------- ---------- ---------- ----------
Total Distributions (0.71) (0.06) (0.25) (0.09) (0.10)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
========== ========== ========== ========== ==========
Total Return (8.28%) 10.34% 8.64% 23.51% 0.28%
========== ========== ========== ========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 29,135 $ 31,895 $ 8,671 $ 2,663 $ 436
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.75% 0.97% 1.25% 1.25% 1.25%
========== ========== ========== ========== ==========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- 0.01% 0.66% 5.41%
========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets 1.22% 1.51% 1.62% 2.54% 3.61%
========== ========== ========== ========== ==========
Portfolio Turnover Rate 177.97% 105.80% 100.62% 61.11% 56.90%
========== ========== ========== ========== ==========
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
13
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
|
o VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
|
o VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
|
o QUALIFIED PENSION PLANS | NEW YORK, NY 10048
|
o QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE PORTFOLIO IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY OTHER
GOVERNMENT AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
2 ............Risk/Return Summary: Investments, Risks & Performance
3 ............Fees and Expenses
4 ............Management & Organization
4 ............Shareholder Information
Distributor .............................4
Transfer Agent ..........................4
Purchasing and Redeeming Fund Shares ....5
6 ............Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[GRAPHIC OMITTED]
THE ALGER AMERICAN FUND--
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
It invests primarily in equity securities, such as common or preferred stocks,
which are listed on U.S. exchanges or in the over-the-counter market. The
portfolio invests primarily in "growth" stocks. The portfolio's Manager, Fred
Alger Management, Inc., believes that these companies tend to fall into one of
two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
It focuses on small, fast-growing companies that offer innovative products,
services or technologies to a rapidly expanding marketplace. Under normal
circumstances, the portfolio invests primarily in the equity securities of small
capitalization companies. A small capitalization company is one that has a
market capitalization within the range of the Russell 2000 Growth Index(R) or
the S&P SmallCap 600 Index(R). The market capitalization of a company is its
price per share multiplied by its number of outstanding shares.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolio's investment style and objective, an investment in it may
be better suited to investors who seek long-term capital growth and can tolerate
fluctuations in their investments' values.
In addition, there is the possibility of greater risk because the portfolio
invests in smaller, less seasoned companies rather than larger, more established
companies. Increased risk may result from such factors as inexperienced
management and limited financial resources.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
2
<PAGE>
[GRAPHIC OMITTED]
PERFORMANCE
The following bar chart shows the changes in the portfolio's performance from
year to year and gives you some indication of the risks of investing in the
portfolio. It assumes reinvestment of dividends and distributions. The Average
Annual Total Return Table beneath it compares the portfolio's performance over
several periods with that of a broad measure of market performance. The annual
returns assume reinvestment of dividends and distributions. Remember that the
portfolio's performance in the past is not necessarily an indication of how it
will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
o Russell 2000 Growth Index(R): An index of common stocks designed to track
performance of small capitalization companies. The index is unmanaged and no
expenses or fees are reflected in the returns for the index. The returns for
the index assume reinvestment of dividends of the underlying securities that
make up the index.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
[BAR CHART OMITTED]
================================================================================
Annual Total Return as of December 31 each year (%)
8.71 57.54 3.55 13.28 -4.38 44.31 4.18 11.39 15.53 43.42
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 31.06% Q4 1999
Worst Quarter -20.72 Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (9/21/88)
- ----------------------------------------------------------------------------
American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Russel 2000 Growth
Index(R) 43.10% 18.99% 13.51% 13.73%
================================================================================
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------------------------------
SHAREHOLDER FEES TOTAL ANNUAL
(fees paid directly FUND OPERATING
from your investment) Management Fees Distribution Fees Other Expenses EXPENSES
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alger American None .85% None .05% .90%
Small Capitalization
Portfolio
</TABLE>
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio's operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------
ALGER AMERICAN SMALL $92 $287 $498 $1,108
CAPITALIZATION
PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
3
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing the portfolio's
assets according to its goal and for placing orders with broker-dealers to
purchase and sell securities on behalf of the portfolio. The portfolio has had
the same manager since inception and, for the most recent fiscal year, the
portfolio paid the Manager a fee at the annual rate based on a percentage of
average daily net assets of .85%.
PORTFOLIO MANAGERS
David Alger and Seilai Khoo are the individuals responsible for the day-to-day
management of the portfolio's investments. Mr. Alger, a manager of the portfolio
since its inception, has been employed by the Manager as Executive Vice
President and Director of Research since 1971, and as President since 1995. Ms.
Khoo has been employed by the Manager since 1989, as a senior research analyst
until 1995 and as a Senior Vice President and co-manager since 1995.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code.
4
<PAGE>
Participants in qualified pension and retirement plans ordinarily will not be
subject to taxation on dividends from net investment income and distributions
from net realized capital gains until they receive a distribution of the
dividends from their plan accounts. Generally, distributions from plan accounts
are taxable as ordinary income at the rate applicable to each participant at the
time of distribution.In certain cases, distributions made to a participant prior
to the participant's reaching age 59-1/2 are subject to a penalty tax equivalent
to 10% of the distributed amount, in addition to the ordinary income tax payable
on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
NAV (NET ASSET VALUE IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIP'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER
OF ITS OUTSTANDING SHARES.
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the portfolio (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
----- ----- ----- ----- -----
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
-------- ---------- -------- ---------- --------
Net investment income (loss) (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain (loss)
on investments 16.98 6.30 4.45 1.70 12.19
-------- ---------- -------- ---------- --------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
-------- ---------- -------- ---------- --------
Dividends from net investment income -- -- -- -- --
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Total distributions (5.68) (6.06) (1.56) (0.16) --
-------- ---------- -------- ---------- --------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
======== ========== ======== ========== ========
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
======== ========== ======== ========== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
======== ========== ======== ========== ========
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
======== ========== ======== ========== ========
Ratio of net investment income (loss)
to average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
======== ========== ======== ========== ========
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
======== ========== ======== ========== ========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 30.88 $ 27.26 $ 26.79 $ 17.02 $ 15.79
-------- -------- -------- -------- --------
Net investment income (loss) (0.03)(i) (0.05) (0.06) (0.03) 0.02
Net realized and unrealized gain (loss)
on investments (1.45) 3.67 0.91 9.82 1.35
-------- -------- -------- -------- --------
Total from investment operations (1.48) 3.62 0.85 9.79 1.37
-------- -------- ---------- -------- --------
Dividends from net investment income -- -- -- (0.02) (0.01)
Distributions from net realized gains (2.09) -- (0.38) -- (0.13)
-------- -------- -------- -------- --------
Total distributions (2.09) -- (0.38) (0.02) (0.14)
-------- -------- -------- -------- --------
Net asset value, end of year $27.31 $ 30.88 $ 27.26 $ 26.79 $ 17.02
======== ======== ======== ======== ========
Total Return (4.38%) 13.28% 3.55% 57.54% 8.71%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $397,037 $238,850 $135,718 $ 56,798 $ 7,149
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.96% 1.03% 0.98% 1.06% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets (0.10%) (0.35%) (0.37%) (0.12%) 0.50%
======== ======== ======== ======== ========
Portfolio Turnover Rate 117.61% 148.07% 108.06% 125.90% 132.46%
======== ======== ======== ======== ========
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 0.33% for the year ended December 31, 1990, due
to expense reimbursements.
7
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
O VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
O VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
O QUALIFIED PENSION PLANS | NEW YORK, NY 10048
O QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN GROWTH PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE PORTFOLIO IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
TABLE OF CONTENTS
---------------------------------------------
2 .... Risk/Return Summary: Investments,
Risks & Performance
ALGER AMERICAN GROWTH PORTFOLIO 3 .... FEES AND EXPENSES
4 .... Management & Organization
PROSPECTUS 4 .... Shareholder Information
MAY 1, 2000 Distributor ..................... 4
Transfer Agent .................. 4
Net Asset Value ................. 4
Dividends and Distributions ..... 4
Purchasing and Redeeming
Fund Shares ..................... 5
6 .... Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[Graphic Omitted]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS &
PERFORMANCE
THE ALGER AMERICAN FUND--
ALGER AMERICAN GROWTH PORTFOLIO
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN GROWTH PORTFOLIO SEEKS LONG-TERM
CAPITAL APPRECIATION.
It invests primarily in equity securities, such as common or preferred stocks,
which are listed on U.S. exchanges or in the over-the-counter market. The
portfolio invests primarily in "growth" stocks. The portfolio's Manager, Fred
Alger Management, Inc., believes that these companies tend to fall into one of
two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly expanding
marketplace. They include both established and emerging firms, offering new or
improved products, or firms simply fulfilling an increased demand for an
existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
It focuses on growing companies that generally have broad product lines,
markets, financial resources and depth of management. Under normal
circumstances, the portfolio invests primarily in the equity securities of large
companies. The portfolio considers a large company to have a market
capitalization of $1 billion or greater. The market capitalization of a company
is its price per share multiplied by its number of shares outstanding.
[Graphic Omitted]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolio's investment style and objective, an investment in it may
be better suited to investors who seek long-term capital growth and can tolerate
fluctuations in their investments' values.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
[Graphic Omitted]
PERFORMANCE
The following bar chart shows changes in the portfolio's performance from year
to year and gives you some indication of the risks of investing in the
portfolio.
The Average Annual Total Return Table beneath it compares the portfolio's
performance over several periods with that of a broad measure of market
performance. The annual returns assume reinvestment of dividends and
distributions. Remember that how the portfolio has performed in the past is not
necessarily an indication of how it will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
2
<PAGE>
o S&P 500(R) Index: An index of large company common stocks considered to be
representative of the U.S. stock market in general. The index is unmanaged and
no expenses or fees are reflected in the returns for the index. The returns
for the index assume reinvestment of dividends of the underlying securities
that make up the index.
ALGER AMERICAN GROWTH PORTFOLIO
[Bar Chart Represented Below in Text Form]
Annual Total Return as of December 31 each year (%)
4.14 40.39 12.38 22.47 1.45 36.37 13.35 25.75 48.07 33.74
90 91 92 93 94 95 96 97 98 99
Best Quarter: 25.93% Q4 1998
Worst Quarter: -16.21% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (1/9/89)
- --------------------------------------------------------
American Growth 33.74% 30.94% 22.89% 23.05%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.22%
[Graphic Omitted]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
ALGER AMERICAN GROWTH PORTFOLIO
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES
(fees paid directly from
your investment) None
- --------------------------------------------------------------------------------
Management Fees .75%
- --------------------------------------------------------------------------------
Distribution Fees None
- --------------------------------------------------------------------------------
Other Expenses .04%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES .79%
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio's operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN $81 $252 $439 $978
GROWTH
PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT
THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
3
<PAGE>
[Graphic Omitted]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing the portfolio's
assets according to its goal and for placing orders with broker-dealers to
purchase and sell securities on behalf of the portfolio. The portfolio has had
the same manager since inception and, for the most recent fiscal year, the
portfolio paid the Manager a fee at the annual rate based on a percentage of
average daily net assets of .75%.
PORTFOLIO MANAGERS
David Alger and Ron Tartaro are the individuals responsible for the day-to-day
management of the portfolio's investments. Mr. Alger, a manager of the portfolio
since its inception, has been employed by the Manager as Executive Vice
President and Director of Research since 1971, and as President since 1995. Mr.
Tartaro has been employed by the Manager since 1990, as a senior research
analyst until 1995 and as a Senior Vice President and co-manager since 1995.
[Graphic Omitted]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code.
4
<PAGE>
Participants in qualified pension and retirement plans ordinarily will not be
subject to taxation on dividends from net investment income and distributions
from net realized capital gains until they receive a distribution of the
dividends from their plan accounts. Generally, distributions from plan accounts
are taxable as ordinary income at the rate applicable to each participant at the
time of distribution.In certain cases, distributions made to a participant prior
to the participant's reaching age 59-1/2 are subject to a penalty tax equivalent
to 10% of the distributed amount, in addition to the ordinary income tax payable
on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING TOGETHER THE VALUE OF THE
PORTFOLIO'S INVESTMENTS PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BYTHE NUMBER OF ITS OUTSTANDING SHARES.
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[Graphic Omitted]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the portfolio (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
ALGER AMERICAN GROWTH PORTFOLIO
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
Year Ended December 31,
- --------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
---------- ---------- ---------- -------- --------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain (loss)
on investments 16.66 18.32 8.66 4.00 8.33
---------- ---------- ---------- -------- --------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
---------- ---------- ---------- -------- --------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
---------- ---------- ---------- -------- --------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
---------- ---------- ---------- -------- --------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
========== ========== ========== ======== ========
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
========== ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
========== ========== ========== ======== ========
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
========== ========== ========== ======== ========
Ratio of net investment income (loss)
to average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
========== ========== ========== ======== ========
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
========== ========== ========== ======== ========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 24.67 $ 20.17 $ 18.00 $ 12.86 $ 12.41
-------- -------- -------- -------- --------
Net investment income (loss) 0.07 0.03 0.03 0.08(i) 0.07
Net realized and unrealized gain (loss)
on investments 0.15 4.50 2.19 5.11 0.44
-------- -------- -------- -------- --------
Total from investment operations 0.22 4.53 2.22 5.19 0.51
-------- -------- -------- -------- --------
Dividends from net investment income (0.03) (0.03) (0.03) (0.05) (0.06)
Distributions from net realized gains (1.73) -- (0.02) -- --
-------- -------- -------- -------- --------
Total Distributions (1.76) (0.03) (0.05) (0.05) (0.06)
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.13 $ 24.67 $ 20.17 $ 18.00 $ 12.86
======== ======== ======== ======== ========
Total Return 1.45% 22.47% 12.38% 40.39% 4.14%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) 150,390 $ 74,878 $ 30,316 $ 10,094 $ 1,228
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.86% 0.97% 0.99% 1.29% 1.50%(ii)
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 0.48% 0.25% 0.33% 0.52% 1.69%
======== ======== ======== ======== ========
Portfolio Turnover Rate 111.76% 112.64% 63.91% 58.95% 86.77%
======== ======== ======== ======== ========
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
(ii) Ratio has been reduced by 2.31% for the year ended December 31, 1990, due
to expense reimbursements.
7
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER | ONE WORLD TRADE CENTER
AMERICAN FUND | SUITE 9333
| NEW YORK, NY 10048
A POOLED FUNDING VEHICLE FOR: | 1-800-992-3863
|
o VARIABLE ANNUITY CONTRACTS |
|
o VARIABLE LIFE INSURANCE POLICIES |
|
o QUALIFIED PENSION PLANS |
|
o QUALIFIED RETIREMENT PLANS |
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
As with all mutual funds, the Securities and Exchange Commission has not
determined if the information in this Prospectus is accurate or complete, nor
has it approved or disapproved these securities. It is a criminal offense to
represent otherwise.
An investment in the Portfolio is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN INCOME &
GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
3 ........... Risk/Return Summary: Investments, Risks & Performance
4 ........... Fees and Expenses
4 ........... Management & Organization
5 ........... Shareholder Information
Distributor ........................................ 5
Transfer Agent ..................................... 5
Purchasing and Redeeming Fund Shares ............... 5
6 ........... Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[This page intentionally left blank]
<PAGE>
[GRAPHIC OMITTED]
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
THE ALGER AMERICAN FUND--
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN INCOME & GROWTH PORTFOLIO SEEKS TO PROVIDE A HIGH LEVEL OF
DIVIDEND INCOME; ITS SECONDARY GOAL IS TO PROVIDE CAPITAL APPRECIATION.
It invests primarily in equity securities, such as common or preferred stocks,
which are listed on U.S. exchanges or in the over-the-counter market. The
portfolio invests primarily in "growth" stocks. The portfolio's Manager, Fred
Alger Management, Inc., believes that these companies tend to fall into one of
two categories:
o High Unit Volume Growth Vital, creative companies which offer goods or
services to a rapidly expanding marketplace. They include both established
and emerging firms, offering new or improved products, or firms simply
fulfilling an increased demand for an existing line.
o Positive Life Cycle Change Companies experiencing a major change which is
expected to produce advantageous results. These changes may be as varied as
new management, products or technologies; restructuring or reorganization; or
merger and acquisition.
The portfolio invests in dividend paying equity securities, such as common or
preferred stocks, preferably those which the Manager believes also offer
opportunities for capital appreciation.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation. Furthermore, the returns of a fund concentrating on "growth" stocks
tend to vary more widely over time than those of funds that focus on "value"
stocks; prices of growth stocks tend to be higher in relation to their
companies' earnings and may be more sensitive to market, political and economic
developments than other stocks, making their prices more volatile. Based on the
portfolio's investment styles and objectives, an investment in it may be better
suited to investors who seek long-term capital growth and can tolerate
fluctuations in their investments' values.
In addition, there is the possibility that companies may cut or fail to declare
dividends due to market downturns or other reasons.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
[GRAPHIC OMITTED]
PERFORMANCE
The following bar chart shows the changes in the portfolio's performance from
year to year and gives you some indication of the risks of investing in the
portfolio. It assumes reinvestment of dividends and distributions.
The Average Annual Total Return Table beneath it compares the portfolio's
performance over several periods with that of a broad measure of market
performance. The performance reflects reinvestment of dividends and
distributions. Remember that the portfolio's performance in the past is not
necessarily an indication of how it will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general. The index is unmanaged and
no expenses or fees are reflected in the returns for the index. The returns for
the index assume reinvestment of dividends of the underlying securities that
make up the index.
3
<PAGE>
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
================================================================================
Annual Total Return as of December 31 each year (%)
0.28 23.51 8.64 10.34 -8.28 35.13 19.68 36.29 32.39 42.45
- --------------------------------------------------------------------------------
90 91 92 93 94 95 96 97 98 99
Best Quarter: 35.96% Q4 1999
Worst Quarter: -13.94% Q3 1990
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 Years (11/15/88)
- --------------------------------------------------------------------------------
American
Income & Growth 42.45% 32.97% 18.93% 17.71%
S&P 500 Index(R) 21.04% 28.56% 18.21% 19.23%
================================================================================
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
================================================================================
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
-------------------------------------------------
Shareholder
Fees
(fees paid
directly Total
from Annual Fund
your Management Distribution Other Operating
investment) Fees Fees Expenses Expenses
- --------------------------------------------------------------------------------
Alger American None .625% None .075% .70%
Income & Growth
Portfolio
================================================================================
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio's operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
================================================================================
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
Alger American $72 $224 $390 $871
Income & Growth
Portfolio
================================================================================
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in
4
<PAGE>
mutual fund assets as well as $6.75 billion in other assets. The Manager is
responsible for managing the portfolio's assets according to its goal and for
placing orders with broker-dealers to purchase and sell securities on behalf of
the portfolio. The portfolio has had the same manager since inception and, for
the most recent fiscal year, the portfolio paid the Manager a fee at the annual
rate based on a percentage of average daily net assets of .625%.
PORTFOLIO MANAGERS
David Alger and Ron Tartaro are the individuals responsible for the day-to-day
management of the portfolio's investments. Mr. Alger, a manager of the portfolio
since its inception, has been employed by the Manager as Executive Vice
President and Director of Research since 1971, and as President since 1995. Mr.
Tartaro has been employed by the Manager since 1990, as a senior research
analyst until 1995 and as a Senior Vice President and co-manager since 1995.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
=======================================================
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIO'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF
ITS OUTSTANDING SHARES.
=======================================================
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
===================================================================================================================================
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
For a share outstanding throughout the year
Year Ended December 31,
- ----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
------- ------- ------- ------- -------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain (loss)
on investments 5.26 3.30 2.94 1.87 4.54
------- ------- ------- ------- -------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
------- ------- ------- ------- -------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
------- ------- ------- ------- -------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
------- ------- ------- ------- -------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
======= ======= ======= ======= =======
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
======= ======= ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $91,250 $77,926 $47,399 $20,910 $ 8,639
======= ======= ======= ======= =======
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
======= ======= ======= ======= =======
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======= ======= ======= ======= =======
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
======= ======= ======= ======= =======
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
======= ======= ======= ======= =======
===================================================================================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 15.31 $ 13.93 $ 13.08 $ 10.67 $ 10.74
------- ------- ------- ------- -------
Net investment income 0.17 0.07 0.08 0.09 0.11
Net realized and unrealized gain (loss)
on investments (1.47) 1.37 1.02 2.41 (0.08)
------- ------- ------- ------- -------
Total from investment operations (1.30) 1.44 1.10 2.50 0.03
------- ------- ------- ------- -------
Dividends from net investment income (0.15) (0.06) (0.12) (0.09) (0.10)
Distributions from net realized gains (0.56) -- (0.13) -- --
------- ------- ------- ------- -------
Total Distributions (0.71) (0.06) (0.25) (0.09) (0.10)
------- ------- ------- ------- -------
Net asset value, end of year $ 13.30 $ 15.31 $ 13.93 $ 13.08 $ 10.67
======= ======= ======= ======= =======
Total Return (8.28%) 10.34% 8.64% 23.51% 0.28%
======= ======= ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $29,135 $31,895 $ 8,671 $ 2,663 $ 436
======= ======= ======= ======= =======
Ratio of expenses to average net assets 0.75% 0.97% 1.25% 1.25% 1.25%
======= ======= ======= ======= =======
Decrease reflected in above expense
ratios due to expense reimbursements -- -- 0.01% 0.66% 5.41%
======= ======= ======= ======= =======
Ratio of net investment income to
average net assets 1.22% 1.51% 1.62% 2.54% 3.61%
======= ======= ======= ======= =======
Portfolio Turnover Rate 177.97% 105.80% 100.62% 61.11% 56.90%
======= ======= ======= ======= =======
===================================================================================================================================
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
7
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER
AMERICAN FUND
A POOLED FUNDING VEHICLE FOR:
o VARIABLE ANNUITY CONTRACTS ONE WORLD TRADE CENTER
o VARIABLE LIFE INSURANCE POLICIES SUITE 9333
o QUALIFIED PENSION PLANS NEW YORK, NY 10048
o QUALIFIED RETIREMENT PLANS 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE PORTFOLIO IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
2 ............Risk/Return Summary: Investments,
Risks & Performance
3 ............Fees and Expenses
4 ............Management & Organization
4 ............Shareholder Information
Distributor .............................4
Transfer Agent ..........................4
6 ............Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[GRAPHIC OMITTED]
THE ALGER AMERICAN FUND-
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN MIDCAP GROWTH PORTFOLIO SEEKS LONG-TERM CAPITAL APPRECIATION.
It invests primarily in equity securities, such as common or preferred stocks,
which are listed on U.S. exchanges or in the over-the-counter market. The
portfolio invests primarily in "growth" stocks. The portfolio's Manager, Fred
Alger Management, Inc., believes that these companies tend to fall into one of
two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
It focuses on midsize companies with promising growth potential. Under normal
circumstances, the portfolio invests primarily in the equity securities of
companies having a market capitalization within the range of companies in the
S&P(R) MidCap 400 Index. The market capitalization of a company is its price per
share multiplied by its number of outstanding shares.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolio's investment style and objective, an investment in it may
be better suited to investors who seek long-term capital growth and can tolerate
fluctuations in their investments' values.
In addition, there is the possibility of greater risk because the portfolio
invests in medium-sized companies rather than larger, more established
companies. Increased risk may result from such factors as inexperienced
management and limited financial resources.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
2
<PAGE>
[GRAPHIC OMITTED]
PERFORMANCE
The following bar chart shows the changes in the portfolio's performance from
year to year and gives you some indication of the risks of investing in the
portfolio. It assumes reinvestment of dividends and distributions.
The Average Annual Total Return Table beneath it compares the portfolio's
performance over several periods with that of a broad measure of market
performance. The annual returns assume reinvestment of dividends and
distributions. Remember that the portfolio's performance in the past is not
necessarily an indication of how it will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
o S&P MidCap 400 Index(R): An index of common stocks designed to track
performance of medium capitalization companies. The index is unmanaged and no
expenses or fees are reflected in the returns for the index. The returns for
the index assume reinvestment of dividends of the underlying securities that
make up the index.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
[BAR GRAPH OMITTED]
Annual Total Return as of December 31 each year (%)
- -1.54 44.45 11.90 15.01 30.30 31.85
- --------------------------------------------------
94 95 96 97 98 99
Best Quarter: 27.07% Q4 1998
Worst Quarter: -14.91% Q3 1998
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years (5/3/93)
- -------------------------------------------------------
American MidCap Growth 31.85% 26.14% 24.72%
S&P Midcap 400 Index(R) 14.72% 23.05% 18.34%
[GRAPHIC OMITTED]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING
EXPENSES
(EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
-------------------------------------------------------------------------------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM TOTAL ANNUAL FUND
YOUR INVESTMENT) MANAGEMENT FEES DISTRIBUTION FEES OTHER EXPENSES OPERATING EXPENSES
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ALGER AMERICAN None .80% None .05% .85%
MIDCAP GROWTH
PORTFOLIO
</TABLE>
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------------------
ALGER AMERICAN $87 $271 $471 $1,049
MIDCAP GROWTH
PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
3
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC OMITTED]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing the portfolio's
assets according to its goal and for placing orders with broker-dealers to
purchase and sell securities on behalf of the portfolio. The Fund has had the
same manager since inception and, for the most recent fiscal year, the portfolio
paid the Manager a fee at the annual rate based on a percentage of average daily
net assets of .80%.
PORTFOLIO MANAGERS
David Alger and Ron Tartaro are the individuals responsible for the day-to-day
management of the portfolio's investments. Mr. Alger, a manager of the portfolio
since its inception, has been employed by the Manager as Executive Vice
President and Director of Research since 1971, and as President since 1995. Mr.
Tartaro has been employed by the Manager since 1990, as a senior research
analyst until 1995 and as a Senior Vice President and co-manager since 1995.
[GRAPHIC OMITTED]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
4
<PAGE>
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59-1/2 are subject to a
penalty tax equivalent to 10% of the distributed amount, in addition to the
ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
NAV (NET ASSET VALUE IS COMPUTED BY ADDING
TOGETHER THE VALUE OF THE PORTFOLIP'S INVESTMENTS
PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER
OF ITS OUTSTANDING SHARES.
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
For a share outstanding throughout the period
<TABLE>
<CAPTION>
From
May 3, 1993
(commencement
of operations) to
Year Ended December 31, December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993(i)
----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72 $ 10.00
-------- -------- -------- -------- -------- ------- -------
Net investment income (loss) (0.05) 0.00(ii) (0.04) 0.03 (0.03) 0.00(ii) (0.02)
Net realized and unrealized
gain (loss) on investments 8.00 6.95 3.20 2.29 6.01 (0.21) 3.88
-------- -------- -------- -------- -------- ------- -------
Total from investment operations 7.95 6.95 3.16 2.32 5.98 (0.21) 3.86
-------- -------- -------- -------- -------- ------- -------
Dividends from net investment income -- -- (0.01) -- -- -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- ------- -------
Total Distributions (4.59) (2.26) (0.33) (0.41) -- (0.05) (0.14)
-------- -------- -------- -------- -------- ------- -------
Net asset value, end of period $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46 $ 13.72
======== ======== ======== ======== ======== ======= =======
Total Return 31.85% 30.30% 15.01% 11.90% 44.45% (1.54%) 38.67%
======== ======== ======== ======== ======== ======= =======
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349 $62,178 $21,301
======== ======== ======== ======== ======== ======= =======
Ratio of expenses to 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
average net assets 0.85% 0.84% 0.84% 0.84% 0.90% 0.97% 1.50%(iii)
======== ======== ======== ======== ======== ======= =======
Ratio of net investment
income (loss) to average
net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%) 0.03% (0.58%)
======== ======== ======== ======== ======== ======= =======
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74% 83.96% 67.22%
======== ======== ======== ======== ======== ======= =======
</TABLE>
(i)Ratios have been annualized; total return has not been annualized.
(ii)Amount was computed based on average shares outstanding during the year.
(iii)Amount has been reduced by 0.03% due to expense reimbursements.
6
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER
AMERICAN FUND
A POOLED FUNDING VEHICLE FOR:
o VARIABLE ANNUITY CONTRACTS
o VARIABLE LIFE INSURANCE POLICIES
o QUALIFIED PENSION PLANS
o QUALIFIED RETIREMENT PLANS
ONE WORLD TRADE CENTER
SUITE 9333
NEW YORK, NY 10048
1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE PORTFOLIO IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN LEVERAGED
ALLCAP PORTFOLIO
PROSPECTUS
MAY 1, 2000
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
2 ...... Risk/Return Summary: Investments, Risks & Performance
3 ...... Fees and Expenses
4 ...... Management & Organization
4 ...... Shareholder Information
Distributor ................ 4
Transfer Agent ............. 4
6 ...... Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[GRAPHIC]
THE ALGER AMERICAN FUND--
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
RISK/RETURN SUMMARY: INVESTMENTS,
RISKS & PERFORMANCE
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO SEEKS LONG-TERM CAPITAL
APPRECIATION.
It invests primarily in equity securities, such as common or preferred stocks,
which are listed on U.S. exchanges or in the over-the-counter market. The
portfolio invests primarily in "growth" stocks. The portfolio's Manager, Fred
Alger Management, Inc., believes that these companies tend to fall into one of
two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
Under normal circumstances, the portfolio invests in the equity securities of
companies of any size which demonstrate promising growth potential.
The portfolio can leverage, that is, borrow money, up to one-third of its total
assets to buy additional securities. By borrowing money, the portfolio has the
potential to increase its returns if the increase in the value of the securities
purchased exceeds the cost of borrowing, including interest paid for the money
borrowed.
[GRAPHIC]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the portfolio's investment style and objective, an investment in it may
be better suited to investors who seek long-term capital growth and can tolerate
fluctuations in their investments' values.
There is the possibility of greater risk by investing in small- and medium-sized
companies (in addition to large, more established companies) owing to such
factors as inexperienced management and limited financial resources.
In addition, there is the risk that the cost of borrowing money to leverage will
exceed the returns for the security purchased or that the security purchased may
actually go down in value; thus, the portfolio's net asset value can decrease
more quickly than if the portfolio had not borrowed.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
2
<PAGE>
[GRAPHIC]
PERFORMANCE
The following bar chart shows the changes in the portfolio's performance from
year to year and gives you some indication of the risks of investing in the
portfolio. It assumes reinvestment of dividends and distributions.
The Average Annual Return Table beneath it compares the portfolio's performance
over several periods with that of a broad measure of market performance. The
performance reflects reinvestment of dividends and distributions. Remember that
the portfolio's performance in the past is not necessarily an indication of how
it will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general. The index is unmanaged and
no expenses or fees are reflected in the returns for the index. The returns
for the index assume reinvestment of dividends of the underlying securities
that make up the index.
- --------------------------------------------------------------------------------
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
Annual Total Return as of December 31 each year (%)
[The following table represents a chart in the printed piece.]
12.04 19.68 57.83 78.06
96 97 98 99
Best Quarter: 40.16% Q4 1999
Worst Quarter: -5.70% Q4 1997
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year (1/25/95)
- --------------------------------------------------------------------------------
American Leveraged
AllCap 78.06% 46.44%
S&P 500 Index(R) 21.04% 28.47%
- --------------------------------------------------------------------------------
[GRAPHIC]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
ANNUAL FUND OPERATING
EXPENSES
(expenses that are deducted
from Fund assets)
ALGER AMERICAN
LEVERAGED ALLCAP
PORTFOLIO
- -----------------------------------------
SHAREHOLDER FEES
(fees paid directly from
your investment) None
- -----------------------------------------
Management Fees .85%
- -----------------------------------------
Distribution Fees None
- -----------------------------------------
Other Expenses* .08%
- -----------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES .93%
- -----------------------------------------
*Included in Other Expenses is 0.01% of interest expense.
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio's operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
ALGER AMERICAN $95 $296 $515 $1,143
LEVERAGED ALLCAP
PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
3
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[GRAPHIC]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing the portfolio's
assets according to its goal and for placing orders with broker-dealers to
purchase and sell securities on behalf of the portfolio. The portfolio has had
the same manager since inception and, for the most recent fiscal year, the
portfolio paid the Manager a fee at the annual rate based on a percentage of
average daily net assets of .85%.
PORTFOLIO MANAGERS
David Alger and Selai Khoo are the individuals responsible for the day-to-day
management of the portfolio's investments. Mr. Alger, a manager of the portfolio
since its inception, has been employed by the Manager as Executive Vice
President and Director of Research since 1971, and as President since 1995. Ms.
Khoo has been employed by the Manager since 1989, as a senior research analyst
until 1995 and as a Senior Vice President and co-manager since 1995.
[GRAPHIC]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until
4
<PAGE>
they receive a distribution of the dividends from their plan accounts.
Generally, distributions from plan accounts are taxable as ordinary income at
the rate applicable to each participant at the time of distribution. In certain
cases, distributions made to a participant prior to the participant's reaching
age 59-1/2 are subject to a penalty tax equivalent to 10% of the distributed
amount, in addition to the ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
- --------------------------------------------------------------------------------
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING TOGETHER THE VALUE OF THE
PORTFOLIO'S INVESTMENTS PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF ITS OUTSTANDING SHARES.
- --------------------------------------------------------------------------------
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[GRAPHIC]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
- --------------------------------------------------------------------------------
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
For a share outstanding throughout the period
<TABLE>
<CAPTION>
From
January 25, 1995
(commencement
of operations) to
Year Ended December 31, December 31,
- -----------------------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995(i)
----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.90 $ 23.17 $ 19.36 $ 17.43 $ 10.00
---------- --------- --------- --------- --------
Net investment income (loss) (0.09) (0.05) (0.03) (0.03)(ii) (0.03)
Net realized and unrealized gain on investments 25.93 12.99 3.84 2.14 7.46
---------- --------- --------- --------- --------
Total from investment operations 25.84 12.94 3.81 2.11 7.43
Distributions from net realized gains (2.77) (1.21) -- (0.18) --
---------- --------- --------- --------- --------
Net asset value, end of period $ 57.97 $ 34.90 $ 23.17 $ 19.36 $ 17.43
========== ========= ========= ========= ========
Total Return 78.06% 57.83% 19.68% 12.04% 74.30%
========== ========= ========= ========= ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 362,500 $ 101,710 $ 53,488 $ 34,925 $ 5,497
========== ========= ========= ========= ========
Ratio of expenses excluding interest to average net assets 0.92% 0.93% 0.96% 1.06% 1.50%
========== ========= ========= ========= ========
Ratio of expenses including interest to average net assets 0.93% 0.96% 1.00% 1.09% 1.56%(iii)
========== ========= ========= ========= ========
Ratio of net investment income (loss) to average net assets (0.49%) (0.27%) (0.17%) (0.15%) (0.71%)
========== ========= ========= ========= ========
Portfolio Turnover Rate 155.74% 143.59% 164.27% 102.10% 178.23%
========== ========= ========= ========= ========
Amount of debt outstanding at end of period -- -- -- -- --
========== ========= ========= ========= ========
Average amount of debt outstanding during the period $ 266,584 $ 246,101 $ 201,644 $ 76,079 $ 8,122
========== ========= ========= ========= ========
Average daily number of shares outstanding
during the period 4,395,246 2,480,478 2,135,458 1,107,187 75,460
========== ========= ========= ========= ========
Average amount of debt per share during the period $ 0.06 $ 0.10 $ 0.09 $ 0.07 $ 0.11
========== ========= ========= ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
(iii) Amount has been reduced by 2.36% due to expense reimbursements.
6
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and to make inquiries of
the Fund, by calling the Fund's toll-free number or by writing to the address
above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE ALGER |
AMERICAN FUND |
|
A POOLED FUNDING VEHICLE FOR: |
O VARIABLE ANNUITY CONTRACTS | ONE WORLD TRADE CENTER
O VARIABLE LIFE INSURANCE POLICIES | SUITE 9333
O QUALIFIED PENSION PLANS | NEW YORK, NY 10048
O QUALIFIED RETIREMENT PLANS | 1-800-992-3863
PROSPECTUS
MAY 1, 2000
ALGER AMERICAN BALANCED PORTFOLIO
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
DETERMINED IF THE INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE, NOR
HAS IT APPROVED OR DISAPPROVED THESE SECURITIES. IT IS A CRIMINAL OFFENSE TO
REPRESENT OTHERWISE.
AN INVESTMENT IN THE PORTFOLIO IS NOT A DEPOSIT OF A BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY OTHER
GOVERNMENT AGENCY.
<PAGE>
THE ALGER
AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO TABLE OF CONTENTS
-----------------------------------------
2 ... Risk/Return Summary: Investments,
PROSPECTUS Risks & Performance
MAY 1, 2000 3 ... Fees and Expenses
4 ... Management & Organization
4 ... Shareholder Information
Distributor ................... 4
Transfer Agent ................ 4
Purchasing and Redeeming
Fund Shares ................... 5
6 ... Financial Highlights
Back Cover: How to obtain more information
<PAGE>
[Graphic Omitted]
THE ALGER AMERICAN FUND--
ALGER AMERICAN BALANCED PORTFOLIO
RISK/RETURN SUMMARY: INVESTMENTS, RISKS & PERFORMANCE
INVESTMENT GOAL AND APPROACH
THE ALGER AMERICAN BALANCED PORTFOLIO SEEKS CURRENT INCOME AND LONG-TERM CAPITAL
APPRECIATION.
The equity portion of the portfolio invests primarily in equity securities, such
as common or preferred stocks, which are listed on U.S. exchanges or in the
over-the-counter market. The portfolio invests primarily in "growth" stocks. The
portfolio's Manager, FredAlger Management, Inc., believes that these companies
tend to fall into one of two categories:
o High Unit Volume Growth
Vital, creative companies which offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line.
o Positive Life Cycle Change
Companies experiencing a major change which is expected to produce
advantageous results. These changes may be as varied as new management,
products or technologies; restructuring or reorganization; or merger and
acquisition.
The portfolio focuses on stocks of companies with growth potential and
fixed-income securities, with emphasis on income- producing securities which
appear to have some potential for capital appreciation. Under normal
circumstances, the portfolio invests in common stocks and fixed-income
securities, which include commercial paper and bonds rated within the 4 highest
rating categories by an established rating agency or if not rated, which are
determined by the Fund's Manager to be of comparable quality. Ordinarily, at
least 25% of the portfolio's net assets are invested in fixed-income securities.
[Graphic Omitted]
PRINCIPAL RISKS
As with any fund that invests in stocks, your investment will go up or down in
value, and the loss of your investment is a risk of investing. The portfolio's
price per share will fluctuate due to changes in the market prices of its
investments. Also, a portfolio investment may not grow as fast as the rate of
inflation and stocks tend to be more volatile than some other investments you
could make, such as bonds. Furthermore, the returns of a fund concentrating on
"growth" stocks tend to vary more widely over time than those of funds that
focus on "value" stocks; prices of growth stocks tend to be higher in relation
to their companies' earnings and may be more sensitive to market, political and
economic developments than other stocks, making their prices more volatile.
Based on the equity portion of the portfolio's investment style and objective,
an investment in it may be better suited to investors who seek long-term capital
growth and can tolerate fluctuations in their investments' values.
The fixed-income portion of the portfolio is subject to additional risks,
including fixed income securities' sensitivity to interest rate movements and
the potential for a decline in the portfolio's market value in the event of an
issuer's falling credit rating or actual default.
The portfolio's trading in some stocks may be relatively short-term, meaning
that it may buy a security and sell it a short time later to take advantage of
current gains if it is believed that an alternative investment may provide
greater future growth. This activity may create higher transaction costs due to
commissions and other expenses.
2
<PAGE>
[Graphic Omitted]
PERFORMANCE
The following bar chart shows the changes in the portfolio's performance from
year to year and gives you some indication of the risks of investing in the
portfolio. It assumes reinvestment of dividends and distributions.
The Average Annual Total Return Table beneath it compares the portfolio's
performance over several periods with that of a broad measure of market
performance. The annual returns assume reinvestment of dividends and
distributions. Remember that the portfolio's performance in the past is not
necessarily an indication of how it will perform in the future.
The performance disclosed in these charts does not reflect separate account
charges which, if reflected, would lower returns.
Each index used in the table is a broad index designed to track a particular
market or market segment. No expenses or fees are reflected in the returns for
the indexes, which are unmanaged. All returns for the indexes assume
reinvestment of dividends and interest on the underlying securities that make up
the respective index.
o S&P 500 Index(R): An index of large company common stocks considered to be
representative of the U.S. stock market in general.
o Lehman Brothers Government/Corporate Bond Index(R): An index designed to
track performance of government and corporate bonds. Since the Balanced
Portfolio invests in both equity and fixed income securities, you should
compare its performance to both indexes presented.
ALGER AMERICAN BALANCED PORTFOLIO
Annual Total Return as of December 31 each year (%)
[The figures below represent chart in printed piece]
6.53 4.7 9.48 7.79 -4.27 28.62 10.17 19.82 31.51 29.21
90 91 92 93 94 95 96 97 98 99
Best Quarter: 16.94% Q4 1998
Worst Quarter: -5.70% Q1 1994
Average Annual Total Return as of December 31, 1999
Since
Inception
1 Year 5 Years 10 years (9/5/89)
- ---------------------------------------------------------
Alger American
Balanced 29.21% 23.60% 13.78% 13.61%
S&P 500 Index(R) 21.04% 28.56% 18.21% 17.78%
Lehman Brothers Gov't/
Corp Bond Index(R) (2.14%) 7.60% 7.66% 7.82%
[Graphic Omitted]
FEES AND EXPENSES
Investors incur certain fees and expenses in connection with an investment in
the portfolio. The following table shows the fees and expenses that you may
incur if you buy and hold shares of the portfolio.
ANNUAL FUND OPERATING ALGER AMERICAN
EXPENSES BALANCED
(expenses that are deducted PORTFOLIO
from Fund assets)
- --------------------------------------------------------------------------------
SHAREHOLDER FEES None
(fees paid directly from
your investment)
- --------------------------------------------------------------------------------
Management Fees .75%
- --------------------------------------------------------------------------------
Distribution Fees None
- --------------------------------------------------------------------------------
Other Expenses .18%
- --------------------------------------------------------------------------------
TOTAL ANNUAL FUND
OPERATING EXPENSES .93%
EXAMPLE
The following example, which reflects the shareholder fees and operating
expenses listed above, is intended to help you compare the cost of investing in
the portfolio with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the portfolio for the time
periods indicated. The example also assumes that your investment has a 5% return
each year and that the portfolio's operating expenses remain the same as in the
prior table. The figures shown would be the same whether or not you sold your
shares at the end of each period. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
- --------------------------------------------------------------------------------
ALGER AMERICAN $95 $296 $515 $1,143
BALANCED PORTFOLIO
The example above does not reflect charges and deductions which are, or may be,
imposed under variable annuity contracts, variable life insurance policies, or
pension or retirement plans. Such charges and deductions are described in the
prospectus for the contract or policy accompanying this prospectus or in the
Plan documents.
3
<PAGE>
ADDITIONAL INFORMATION ABOUT THE PORTFOLIO'S INVESTMENTS
The portfolio may invest up to 100% of its assets in cash, high grade bonds, or
cash equivalents for temporary defensive reasons if the Manager believes that
adverse market or other conditions warrant. This is to attempt to protect the
portfolio's assets from loss, rather than directly to promote the portfolio's
investment objective. The portfolio may not achieve its objective during such
periods.
Other securities the portfolio may invest in are discussed in the Fund's
Statement of Additional Information (see back cover).
[Graphic Omitted]
MANAGEMENT AND ORGANIZATION
MANAGER
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, NY 10048
The Manager has been an investment adviser since 1964, and manages investments
totaling (at 12/31/99) $10.69 billion in mutual fund assets as well as $6.75
billion in other assets. The Manager is responsible for managing the portfolio's
assets according to its goal and for placing orders with broker-dealers to
purchase and sell securities on behalf of the portfolio. The portfolio has had
the same manager since inception and, for the most recent fiscal year, the
portfolio paid the Manager a fee at the annual rate based on a percentage of
average daily net assets of .75%.
PORTFOLIO MANAGERS
David Alger, Ron Tartaro and Steve Thumm are the individuals responsible for the
day-to-day management of the portfolio's investments. Mr. Alger, a manager of
the portfolio since its inception, has been employed by the Manager as Executive
Vice President and Director of Research since 1971, and as President since 1995.
Mr. Tartaro has been employed by the Manager since 1990, as a senior research
analyst until 1995 and as a Senior Vice President and co-manager since 1995. Mr.
Thumm serves as co-manager. He has been employed by the Manager as a fixed
income analyst since 1991.
[Graphic Omitted]
SHAREHOLDER INFORMATION
DISTRIBUTOR
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, NJ 07302
TRANSFER AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
NET ASSET VALUE
The price of one share is its "net asset value," or NAV. The NAV for the
portfolio is calculated as of the close of business (normally 4:00 p.m. Eastern
time) every day the New York Stock Exchange is open. Generally, the Exchange is
closed on weekends and various national holidays. It may close on other days
from time to time.
The Fund generally values the assets of the portfolio on the basis of market
quotations or, where market quotations are not readily available, on the basis
of fair value as determined by the Manager under procedures adopted by the
Fund's Board of Trustees. Short-term money market instruments held by the
portfolio are valued on the basis of amortized cost.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares and pays dividends and distributions by the portfolio
annually. The Fund expects that these annual payments to shareholders will
consist of both capital gains and net investment income.
Federal income taxation of separate accounts of insurance companies, variable
annuity contracts and variable life insurance contracts is discussed in the
prospectuses of participating insurance companies. Generally, distributions by
the Fund will not be taxable to holders of variable annuity contracts or
variable life insurance policies if the insurance company separate accounts to
which those distributions are made meet certain requirements, including certain
diversification requirements that the Fund has undertaken to meet, under the
Internal Revenue Code. Participants in qualified pension and retirement plans
ordinarily will not be subject to taxation on dividends from net investment
income and distributions from net realized capital gains until they receive a
distribution of the dividends from their plan accounts. Generally, distributions
from plan accounts are taxable as ordinary income at the rate applicable to each
participant at the time of distribution.In certain cases, distributions made to
a participant prior to the participant's reaching age 59 1/2 are subject to a
penalty tax equivalent to 10% of the distributed
4
<PAGE>
amount, in addition to the ordinary income tax payable on such amount.
Because everyone's tax situation is unique, see a tax advisor about federal,
state and local tax consequences of investing in the Fund.
NAV (NET ASSET VALUE) IS COMPUTED BY ADDING TOGETHER THE VALUE OF THE
PORTFOLIO'S INVESTMENTS PLUS CASH AND OTHER ASSETS, SUBTRACTING ITS LIABILITIES
AND THEN DIVIDING THE RESULT BY THE NUMBER OF ITS OUTSTANDING SHARES.
PURCHASING AND REDEEMING FUND SHARES
The Fund is an investment vehicle for variable annuity contracts and variable
life insurance policies offered by the separate accounts of life insurance
companies, as well as qualified pension and retirement plans. An individual
cannot invest in the portfolio directly, but may do so only through one of these
sources. The Fund's shares are held in the names of the separate accounts and
plans.
Shares of the Fund can be purchased or redeemed on any day the New York Stock
Exchange is open. They will be processed at the NAV next calculated after the
purchase or redemption request is received in good order by the Transfer Agent.
All orders for purchase of shares are subject to acceptance by the Fund or its
Transfer Agent. The Transfer Agent pays for redemptions within 7 days after it
accepts a redemption request.
The Fund may redeem some shares "in kind," which means that some of the proceeds
will be paid with securities the Fund owns instead of cash.
5
<PAGE>
[Graphic Omitted]
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
portfolio's financial performance for the periods shown. Certain information
reflects financial results for a single portfolio share. The total returns in
the table represent the rate that an investor would have earned or lost on an
investment in the portfolio (assuming reinvestment of all dividends and
distributions). The financial highlights have been audited by Arthur Andersen
LLP, the Fund's independent public accountants. Arthur Andersen LLP's report,
along with the Fund's financial statements, are included in the Annual Report,
which is available upon request.
Note that the Financial Highlights do not reflect charges and deductions which
are, or may be, imposed under variable annuity contracts, variable life
insurance policies, or pension or retirement plans. Such charges and deductions
are described in the prospectus for the contract or policy accompanying this
prospectus or in the plan documents.
<TABLE>
<CAPTION>
ALGER AMERICAN BALANCED PORTFOLIO (I)
For a share outstanding throughout the year
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.98 $ 10.76 $ 9.24 $ 13.64 $ 10.80
-------- -------- -------- -------- --------
Net investment income (loss) 0.15 0.19 0.17 0.21(ii) 0.33(ii)
Net realized and unrealized gain (loss)
on investments 3.45 3.02 1.63 1.01 2.73
-------- -------- -------- -------- --------
Total from investment operations 3.60 3.21 1.80 1.22 3.06
-------- -------- -------- -------- --------
Dividends from net investment income (0.17) (0.18) (0.12) (0.73) (0.22)
Distributions from net realized gains (0.84) (0.81) (0.16) (4.89) --
-------- -------- -------- -------- --------
Total Distributions (1.01) (0.99) (0.28) (5.62) (0.22)
-------- -------- -------- -------- --------
Net asset value, end of year $ 15.57 $ 12.98 $ 10.76 $ 9.24 $ 13.64
======== ======== ======== ======== ========
Total Return 29.21% 31.51% 19.82% 10.17% 28.62%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $56,327 $28,208 $16,614 $10,486 $ 3,671
======== ======== ======== ======== ========
Ratio of expenses to average net assets 0.93% 0.92% 1.01% 1.14% 1.00%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- -- -- -- --
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 1.66% 2.09% 2.14% 2.06% 2.49%
======== ======== ======== ======== ========
Portfolio Turnover Rate 118.74% 94.64% 105.01% 68.66% 113.02%
======== ======== ======== ======== ========
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 11.58 $ 10.77 $ 10.02 $ 10.01 $ 10.04
-------- -------- -------- -------- --------
Net investment income (loss) 0.20 0.15 0.22 0.45 0.66
Net realized and unrealized gain (loss)
on investments (0.70) 0.69 0.72 0.01 (0.03)
-------- -------- -------- -------- --------
Total from investment operations (0.50) 0.84 0.94 0.46 0.63
-------- -------- -------- -------- --------
Dividends from net investment income (0.13) (0.03) (0.19) (0.45) (0.66)
Distributions from net realized gains (0.15) -- -- -- --
-------- -------- -------- -------- --------
Total Distributions (0.28) (0.03) (0.19) (0.45) (0.66)
-------- -------- -------- -------- --------
Net asset value, end of year $ 10.80 $ 11.58 $ 10.77 $ 10.02 $ 10.01
======== ======== ======== ======== ========
Total Return (4.27)% 7.79% 9.48% 4.70% 6.53%
======== ======== ======== ======== ========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $ 10,394 $ 7,848 $ 4,009 $ 1,487 $ 365
======== ======== ======== ======== ========
Ratio of expenses to average net assets 1.08% 1.25% 1.25% 1.25% 1.25%
======== ======== ======== ======== ========
Decrease reflected in above expense
ratios due to expense reimbursements -- 0.19% 0.42% 1.37% 4.81%
======== ======== ======== ======== ========
Ratio of net investment income (loss)
to average net assets 2.30% 2.05% 1.99% 4.22% 6.60%
======== ======== ======== ======== ========
Portfolio Turnover Rate 78.80% 85.46% 15.27% -- 132.55%
======== ======== ======== ======== ========
</TABLE>
(i) Prior to October 1, 1992, the Alger American Balanced Portfolio was the
Alger American Fixed Income Portfolio.
(ii) Amount was computed based on average shares outstanding during the year.
7
<PAGE>
FOR FUND INFORMATION:
By telephone: 1-800-992-3863
By mail: The Alger American Fund
One World Trade Center
Suite 9333
New York, NY 10048
STATEMENT OF ADDITIONAL INFORMATION
For more detailed information about the Fund and its policies, please read the
Statement of Additional Information, which is incorporated by reference into (is
legally made a part of) this Prospectus. You can get a free copy of the
Statement of Additional Information by calling the Fund's toll-free number or by
writing to the address above. The Statement of Additional Information is on file
with the Securities and Exchange Commission.
ANNUAL AND SEMI-ANNUAL REPORTS
Additional information about the Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the Fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the period covered by the
report. You can receive free copies of these reports, and make inquiries of the
Fund, by calling the Fund's toll-free number or by writing to the address above.
Another way you can review and copy Fund documents is by visiting the SEC's
Public Reference Room in Washington, D.C. Copies can also be obtained, for a
duplicating fee by E-mail request to [email protected] or by writing to the
SEC's Public Reference Section, Washington, DC 20549-0102. Information on the
operation of the Public Reference Room is available by calling 1-202-942-8090.
Fund documents are also available on the EDGAR database on the SEC's internet
site at http://www.sec.gov.
DISTRIBUTOR: FRED ALGER & COMPANY, INCORPORATED
THE ALGER AMERICAN FUND
SEC FILE #811-5550
<PAGE>
THE
ALGER
AMERICAN
FUND
Statement
of Additional May 1, 2000
Information
Alger American
Balanced Portfolio
Alger American
Income and Growth Portfolio
Alger American
Small Capitalization Portfolio
Alger American
Growth Portfolio
Alger American
MidCap Growth Portfolio
Alger American
Leveraged AllCap Portfolio
This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated May 1, 2000. It should be read together
with the Prospectus which may be obtained free of charge by writing or calling
the Fund at (800) 992-3863.
<PAGE>
May 1, 2000
THE One World Trade Center
ALGER Suite 9333
AMERICAN New York, New York 10048
FUND (800) 992-3863
===============================================================================
The Alger American Fund (the "Fund") is a registered investment company -- a
mutual fund - that presently offers interests in the following six portfolios
(the "Portfolios"):
* Alger American Balanced Portfolio
* Alger American Income & Growth Portfolio
* Alger American Small Capitalization Portfolio
* Alger American Growth Portfolio
* Alger American MidCap Growth Portfolio
* Alger American Leveraged AllCap Portfolio
The Fund is designed to permit insurance companies that issue variable annuity
contracts ("VA contracts") and variable life insurance policies ("VLI
policies") to offer VA contract and VLI policy holders the opportunity to
participate in the performance of one or more of the Portfolios. The Fund also
offers participation to qualified pension and retirement plans (the "Plans")
which elect to make the Fund an investment option for plan participants.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
CONTENTS
The Portfolios ............................................................ 2
Investment Strategies and Policies ........................................ 3
Net Asset Value ........................................................... 12
Purchases and Redemptions ................................................. 12
Participating Insurance Companies and Plans ............................... 13
Management ................................................................ 13
Expenses .................................................................. 16
Dividends and Distributions ............................................... 16
Taxes ..................................................................... 16
Custodian ................................................................. 17
Transfer Agent ............................................................ 17
Counsel to the Fund ....................................................... 18
Certain Shareholders ...................................................... 18
Organization .............................................................. 21
Determination of Performance .............................................. 22
Investor and Shareholder Information ...................................... 23
Financial Statements ...................................................... F-1
Appendix .................................................................. A-1
<PAGE>
THE PORTFOLIOS
The Fund is a diversified, open-end management investment company that offers a
selection of six portfolios, each having distinct investment objectives and
policies.
ALGER AMERICAN BALANCED PORTFOLIO
The investment objectives of the Portfolio are 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 tem-porary 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 Fred Alger
Management, Inc. ("Alger Management"), the Fund's investment manager, 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 total assets) during temporary defensive periods.
ALGER AMERICAN INCOME & GROWTH PORTFOLIO
The primary investment objective of the Portfolio is to provide a high level of
dividend income. Capital appreciation is a secondary investment 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, 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 total assets) during temporary defensive periods.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at the time of
purchase, have "total market capitalization"--present market value per share
multiplied by the total number of shares outstanding--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. 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 of this combined range, and
in excess of that amount (up to 100% of its assets) during temporary defensive
periods.
ALGER AMERICAN 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 of $1 billion or
greater. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization of less than $1 billion.
ALGER AMERICAN 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. 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 AMERICAN LEVERAGED ALLCAP PORTFOLIO
The investment objective of the Portfolio is long-term capital appreciation.
Except during temporary defensive periods, the Portfolio invests at least 85%
of its net assets in equity securities of companies of any size.
The Portfolio may purchase put and call options and sell (write) covered call
and put options on securities and securities indexes to increase gains 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 for the
purchase of additional securities. The Portfolio
-2-
<PAGE>
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.
IN GENERAL
In order to afford the Portfolios the flexibility to take advantage of new
opportunities for investments in accordance with their investment objectives or
to meet redemptions, they may each hold up to 15% (or a higher percentage where
so stated) of their total assets in money market instruments and repurchase
agreements and in excess of that amount (up to 100% of their total assets)
during temporary defensive periods. These amounts may be higher than those
maintained by other funds with similar investment objectives.
INVESTMENT Strategies AND POLICIES
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The Prospectus discusses the investment objectives of each Portfolio and the
primary strategies to be employed to achieve those objectives. This section
contains supplemental information concerning the types of securities and other
instruments in which the Portfolios may invest, the investment policies and
portfolio strategies that the Portfolios may utilize and certain risks
attendant to those investments, policies and strategies. There is no guarantee
that any Portfolio's objectives will be achieved.
Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers. Companies in which Alger
American 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.
U.S. GOVERNMENT OBLIGATIONS
Bills, notes, bonds and other debt securities issued by the U.S. Treasury are
direct obligations of the U.S. Government and differ mainly in the length of
their maturities.
U.S. GOVERNMENT AGENCY SECURITIES
These securities are issued or guaranteed by U.S. Government-sponsored
enterprises and federal agencies. These include securities issued by the
Federal National Mortgage Association, Government National Mortgage
Association, Federal Home Loan Bank, Federal Land Banks, Farmers Home
Administration, Banks for Cooperatives, Federal Intermediate Credit Banks,
Federal Financing Bank, Farm Credit Banks, the Small Business Administration,
Federal Housing Administration and Maritime Administration. Some of these
securities are supported by the full faith and credit of the U.S. Treasury; and
the remainder are supported only by the credit of the instrumentality, which
may or may not include the right of the issuer to borrow from the Treasury.
Certain of these securities may have volatility risks, prepayment risks and
extension risk, which could have a negative impact on the investing portfolio's
net asset value.
BANK OBLIGATIONS
These are certificates of deposit, bankers' acceptances and other short-term
debt obligations. Certificates of deposit are short-term obligations of
commercial banks. A bankers' acceptance is a time draft drawn on a commercial
bank by a borrower, usually in connection with international commercial
transactions. Certificates of deposit may have fixed or variable rates.
The Portfolios will not invest in any debt security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion, or the equivalent
in other currencies, or, in the case of domestic banks which do not have total
assets of at least $1 billion, the aggregate investment made in any one such
bank is limited to $100,000 and the principal amount of such investment is
insured in full by the Federal Deposit Insurance Corporation, (ii) in the case
of U.S. banks, it is a member of the Federal Deposit Insurance Corporation, and
(iii) in the case of foreign banks, the security is, in the opinion of Alger
Management, the Fund's investment manager, of an investment quality comparable
to other debt securities which may be purchased by the Portfolios. These
limitations do not prohibit investments in securities issued by foreign
-3-
<PAGE>
branches of U.S. banks, provided such U.S. banks meet the foregoing
requirements.
FOREIGN BANK OBLIGATIONS
Investments by the Portfolios in foreign bank obligations and obligations of
foreign branches of domestic banks present certain risks, including the impact
of future political and economic developments, the possible imposition of
withholding taxes on interest income, the possible seizure or nationalization
of foreign deposits, the possible establishment of exchange controls and/or the
addition of other foreign governmental restrictions that might affect adversely
the payment of principal and interest on these obligations. In addition, there
may be less publicly available and reliable information about a foreign bank
than about domestic banks owing to different accounting, auditing, reporting
and recordkeeping standards. In view of these risks, Alger Management will
carefully evaluate these investments on a case-by-case basis.
SHORT-TERM CORPORATE DEBT SECURITIES
These are outstanding nonconvertible corporate debt securities (e.g., bonds and
debentures) which have one year or less remaining to maturity. Corporate notes
may have fixed, variable or floating rates.
COMMERCIAL PAPER
These are short-term promissory notes issued by corporations primarily to
finance short-term credit needs.
VARIABLE RATE MASTER DEMAND NOTES
These are unsecured instruments that permit the indebtedness thereunder to vary
and provide for periodic adjustments in the interest rate. Because these notes
are direct lending arrangements between the Portfolio and the issuer, they are
not normally traded. Although no active secondary market may exist for these
notes, the Portfolio may demand payment of principal and accrued interest at
any time or may resell the note to a third party. While the notes are not
typically rated by credit rating agencies, issuers of variable rate master
demand notes must satisfy Alger Management that the same criteria for issuers
of commercial paper are met. In addition, when purchasing variable rate master
demand notes, Alger Management will consider the earning power, cash flows and
other liquidity ratios of the issuers of the notes and will continuously
monitor their financial status and ability to meet payment on demand. In the
event an issuer of a variable rate master demand note were to default on its
payment obligations, the Portfolio might be unable to dispose of the note
because of the absence of a secondary market and could, for this or other
reasons, suffer a loss to the extent of the default.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, a Portfolio would acquire a high
quality money market instrument for a relatively short period (usually not more
than one week) subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the instrument at an agreed price (including accrued
interest) and time, thereby determining the yield during the Portfolio's
holding period. Repurchase agreements may be seen to be loans by the Portfolio
collateralized by the underlying instrument. This arrangement results in a
fixed rate of return that is not subject to market fluctuations during the
Portfolio's holding period and not necessarily related to the rate of return on
the underlying instrument. The value of the underlying securities, including
accrued interest, will be at least equal at all times to the total amount of
the repurchase obligation, including interest. A Portfolio bears a risk of loss
in the event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed in or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the period in
which the Portfolio seeks to assert these rights, the risk of incurring
expenses associated with asserting these rights and the risk of losing all or
part of the income from the agreement. Alger Management, acting under the
supervision of the Fund's Board of Trustees, reviews the credit worthiness of
those banks and dealers with which the Portfolios enter into repurchase
agreements to evaluate these risks and monitors on an ongoing basis the value
of the securities subject to repurchase agreements to ensure that the value is
maintained at the required level.
REVERSE REPURCHASE AGREEMENTS
(ALGER AMERICAN BALANCED PORTFOLIO)
Reverse repurchase agreements are the same as repurchase agreements except
that, in this instance, the Portfolio would assume the role of seller/borrower
in the transaction. The Portfolio will maintain segregated accounts consisting
of cash or liquid securities that at all times are in an amount equal to their
obligations under reverse repurchase agreements. The Portfolio will invest the
proceeds in money market instruments or repurchase agreements maturing not
later than the expiration of the reverse repurchase agreement. Reverse
repurchase agreements involve the risk that the market value of the securities
sold by the Portfolio
-4-
<PAGE>
may decline below the repurchase price of the securities. Under the Investment
Company Act of 1940, as amended (the "Act"), reverse repurchase agreements may
be considered borrowings by the seller; accordingly, the Portfolio will limit
its investments in reverse repurchase agreements and other borrowings to no
more than one-third of its total assets less liabilities other than the
repurchase obligation.
FIRM COMMITMENT AGREEMENTS AND
WHEN-ISSUED PURCHASES
Firm commitment agreements and "when-issued" purchases call for the purchase of
securities at an agreed price on a specified future date and would be used, for
example, when a decline in the yield of securities of a given issuer is
anticipated and a more advantageous yield may be obtained by committing
currently to purchase securities to be issued later. When a Portfolio purchases
a security under a firm commitment agreement or on a when-issued basis it
assumes the risk of any decline in value of the security occurring between the
date of the agreement or purchase and the settlement date of the transaction. A
Portfolio will not use these transactions for leveraging purposes and,
accordingly, will segregate cash or liquid securities in an amount sufficient
at all times to meet its purchase obligations under these agreements.
WARRANTS AND RIGHTS
Each Portfolio may invest in warrants and rights. A warrant is a type of
security that entitles the holder to buy a proportionate amount of common stock
at a specified price, usually higher than the market price at the time of
issuance, for a period of years or to perpetuity. In contrast, rights, which
also represent the right to buy common shares, normally have a subscription
price lower than the current market value of the common stock and a life of two
to four weeks. Warrants are freely transferable and are traded on the major
securities exchanges.
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, as amended. Each Portfolio may invest in restricted securities
governed by Rule 144A under the Securities Act of 1933, as amended. In adopting
Rule 144A, the Securities and Exchange Commission (the "SEC") specifically
stated that restricted securities traded under Rule 144A may be treated as
liquid for purposes of investment limitations if the board of trustees (or the
fund's adviser acting subject to the board's supervision) determines that the
securities are in fact liquid. The Board of Trustees has delegated its
responsibility to Alger Management to determine the liquidity of each
restricted security purchased pursuant to the Rule, subject to the Board of
Trustees' oversight and review. Examples of factors that will be taken into
account in evaluating the liquidity of a Rule 144A security, both with respect
to the initial purchase and on an ongoing basis, include, among others: (1) the
frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the nature of the marketplace trades (e.g., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer). If institutional trading in restricted securities were
to decline to limited levels, the liquidity of the Fund's portfolio could be
adversely affected.
SHORT SALES
Each Portfolio may sell securities "short against the box." While a short sale
is the sale of a security the Portfolio does not own, it is "against the box"
if at all times when the short position is open the Portfolio owns an equal
amount of the securities or securities convertible into, or exchangeable
without further consideration for, securities of the same issue as the
securities sold short.
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 collateral on such loans, less liabilities exclusive of the
obligation to return such collateral, to brokers, dealers and other financial
organizations. The Portfolios will not lend securities to Alger Management or
its affiliates. By lending its securities, a Portfolio can increase its income
by continuing to receive interest or dividends on the loaned securities as well
as by either investing the cash collateral in short-term securities or by
earning income in the form of interest paid by the borrower when U.S.
Government securities or letters of credit are used as collateral. Each
Portfolio will adhere to the following conditions whenever its securities are
loaned: (a) the Portfolio must receive at least 100 percent cash collateral or
equivalent securities from the borrower; (b) the bor
-5-
<PAGE>
rower must increase this collateral whenever the market value of the
securities, including accrued interest, exceeds the value of the collateral;
(c) the Portfolio must be able to terminate the loan at any time; (d) the
Portfolio must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities and any
increase in market value; (e) the Portfolio may pay only reasonable custodian
fees in connection with the loan; and (f) voting rights on the loaned
securities may pass to the borrower; provided, however, that if a material
event adversely affecting the investment occurs, the Fund's Board of Trustees
must terminate the loan and regain the right to vote the securities. A
Portfolio bears a risk of loss in the event that the other party to a
securities loan transaction defaults on its obligations and the Portfolio is
delayed in or prevented from exercising its rights to dispose of the collateral
including the risk of a possible decline in the value of the collateral
securities during the period in which the Portfolio seeks to assert these
rights, the risk of incurring expenses associated with asserting these rights
and the risk of losing all or a part of the income from the transaction.
FOREIGN SECURITIES
Each Portfolio may invest up to 20% of the value of its total assets in foreign
securities (not including American Depositary Receipts, American Depositary
Shares or U.S. dollar-denominated securities of foreign issuers). Foreign
securities investments may be affected by changes in currency exchange rates or
exchange control regulations, changes in governmental administration or
economic or monetary policy (in the United States and abroad) or changed
circumstances in dealing among nations. Dividends paid by foreign issuers may
be subject to withholding and other foreign taxes that may decrease the net
return on these investments as compared to dividends paid to the Portfolio by
domestic corporations. It should be noted that there may be less publicly
available information about foreign issuers than about domestic issuers, and
foreign issuers are not subject to uniform accounting, auditing and financial
reporting standards and requirements comparable to those of domestic issuers.
Securities of some foreign issuers are less liquid and more volatile than
securities of comparable domestic issuers and foreign brokerage commissions are
generally higher than in the United States. Foreign securities markets may also
be less liquid, more volatile and less subject to government supervision than
those in the United States. Investments in foreign countries could be affected
by other factors not present in the United States, including expropriation,
confiscatory taxation and potential difficulties in enforcing contractual
obligations. Securities purchased on a foreign exchange may be held in custody
by a bank or other depository located in that market. It should be noted that
certain of the risks associated with foreign securities may also apply to
American Depositary Receipts and American Depositary Shares.
BORROWING (ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO)
Alger American Leveraged AllCap Portfolio may borrow money from banks and use
it to purchase additional securities. This borrowing is known as leveraging.
Leveraging increases both investment opportunity and investment risk. If the
investment gains on securities purchased with borrowed money exceed the cost of
borrowing, including 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 may
also borrow from banks for temporary or emergency purposes. 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 AMERICAN LEVERAGED
ALLCAP PORTFOLIO)
The Portfolio may buy and sell (write) exchange listed options in order to
obtain additional return or to hedge the value of its portfolio although, as in
the past, it does not currently intend to rely on these strategies extensively,
if at all. 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". Although the Portfolio will in any event generally not
purchase or write options that appear to lack 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
-6-
<PAGE>
be committed to transactions entered into for non-hedging purposes.
A call option on a security is a contract that gives the holder of the option
the right, in return for a premium paid, to buy from the writer (seller) of the
call option the security underlying the option at a specified exercise price at
any time during the term of the option. The writer of the call option has the
obligation upon exercise of the option to deliver the underlying security upon
payment of the exercise price during the option period. A put option on a
security is a contract that, in return for the premium, gives the holder of the
option the right to sell to the writer (seller) the underlying security at a
specified price during the term of the option. The writer of the put, who
receives the premium, has the obligation to buy the underlying security upon
exercise at the exercise price during the option period.
A call option written by the Portfolio on a security is "covered" if the
Portfolio owns the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a segregated
account) upon conversion or exchange of other securities held in its portfolio.
A call option is also covered if the Portfolio holds a call on the same
security as the call written where the exercise price of the call held is (1)
equal to or less than the exercise price of the call written or (2) greater
than the exercise price of the call written if the difference is maintained by
the Portfolio in cash, U.S. Government securities or other high-grade
short-term obligations in a segregated account. A put option written by the
Portfolio is "covered" if the Portfolio maintains cash or other high-grade
short-term obligations with a value equal to the exercise price in a segregated
account, or else holds a put on the same security as the put written where the
exercise price of the put held is equal to or greater than the exercise price
of the put written.
If the Portfolio has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously written. However, once the
Portfolio has been assigned an exercise notice, the Portfolio will be unable to
effect a closing purchase transaction. Similarly, if the Portfolio is the
holder of an option it may liquidate its position by effecting a closing sale
transaction. This is accomplished by selling an option of the same series as
the option previously purchased. There can be no assurance that a closing
purchase or sale transaction can be effected when the Portfolio so desires.
The Portfolio would realize a profit from a closing transaction if the price of
the transaction were less than the premium received from writing the option or
more than the premium paid to purchase the option; the Portfolio would realize
a loss from a closing transaction if the price of the transaction were less
than the premium paid to purchase the option. Since call option prices
generally reflect increases in the price of the underlying security, any loss
resulting from the repurchase of a call option may also be wholly or partially
offset by unrealized appreciation of the underlying security. Other principal
factors affecting the market value of a put or a call option include supply and
demand, interest rates, the current market price and price volatility of the
underlying security and the time remaining until the expiration date.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. There is no assurance that a
liquid secondary market on an exchange will exist for any particular option. In
such event it might not be possible to effect closing transactions in a
particular option so that the Portfolio would have to exercise its option in
order to realize any profit and would incur brokerage commissions upon the
exercise of the option. If the Portfolio, as a covered call option writer, were
unable to effect a closing purchase transaction in a secondary market, it would
not be able to sell the underlying security until the option expired or it
delivered the underlying security upon exercise or otherwise cover the
position.
In addition to options on securities, the Portfolio may also purchase and sell
call and put options on securities indexes. A stock index reflects in a single
number the market value of many different stocks. Relative values are assigned
to the stocks included in an index and the index fluctuates with changes in the
market values of the stocks. The options give the holder the right to receive a
cash settlement during the term of the option based on the difference between
the exercise price and the value of the index. By writing a put or call option
on a securities index, the Portfolio would be obligated, in return for the
premium received, to make delivery of this amount. The Portfolio could offset
its position in stock index options prior to expira-
-7-
<PAGE>
tion by entering into a closing transaction on an exchange or it could let the
option expire unexercised.
Use of options on securities indexes entails the risk that trading in the
options may be interrupted if trading in certain securities included in the
index is interrupted. The Portfolio would not purchase these options unless
Alger Management were satisfied with the development, depth and liquidity of
the market and Alger Management believed the options could be closed out.
Price movements in the Portfolio's securities may not correlate precisely with
movements in the level of an index and, therefore, the use of options on
indexes cannot serve as a complete hedge and would depend, in part, on the
ability of Alger Management to predict correctly movements in the direction of
the stock market generally or of a particular industry. Because options on
securities indexes require settlement in cash, Alger Management might be forced
to liquidate portfolio securities to meet settlement obligations.
Although Alger Management will attempt to take appropriate measures to minimize
the risks relating to any trading by the Portfolio input and call options,
there can be no assurance that the Portfolio will succeed in any option-trading
program it undertakes.
STOCK INDEX FUTURES AND OPTIONS ON STOCK
INDEX FUTURES (ALGER AMERICAN LEVERAGED
ALLCAP PORTFOLIO)
If the Portfolio utilizes these investments, it will do so only for hedging,
not speculative, purposes. Futures are generally bought and sold on the
commodities exchanges where they are listed with payment of initial and
variation margin as described below. The sale of a futures contract creates a
firm obligation by the Portfolio, as seller, to deliver to the buyer the net
cash amount called for in the contract at a specified future time. Put options
on futures might be purchased to protect against declines in the market values
of securities occasioned by a decline in stock prices and securities index
futures might be sold to protect against a general decline in the value of
securities of the type that comprise the index. Options on futures contracts
are similar to options on securities except that an option on a futures
contract gives the purchaser the right in return for the premium paid to assume
a position in a futures contract and obligates the seller to deliver such
position.
A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading
day of the contract and the price at which the agreement is made. No physical
delivery of the underlying stocks in the index is made. With respect to stock
indexes that are permitted investments, the Portfolio would purchase and sell
futures contracts on the stock index for which it could obtain the best price
with considerations also given to liquidity. While incidental to its securities
activities, the Portfolio may use index futures as a substitute for a
comparable market position in the underlying securities, although it has not
invested in index futures in the past.
The risk of imperfect correlation will increase as the composition of the
Portfolio varies from the composition of the stock index. In an effort to
compensate for the imperfect correlation of movements in the price of the
securities being hedged and movements in the price of the stock index futures,
the Portfolio may, if it uses a hedging strategy, buy or sell stock index
futures contracts in a greater or lesser dollar amount than the dollar amount
of the securities being hedged if the historical volatility of the stock index
futures has been less or greater than that of the securities. Such
"over-hedging" or "under-hedging" may adversely affect the Portfolio's net
investment results if market movements are not as anticipated when the hedge is
established.
An option on a stock index futures contract, as contrasted with the direct
investment in such a contract, gives the purchaser the right, in return for the
premium paid, to assume a position in a stock index futures contract at a
specified exercise price at any time prior to the expiration date of the
option. The Portfolio would sell options on stock index futures contracts only
as part of closing purchase transactions to terminate its options positions. No
assurance can be given that such closing transactions could be effected or that
there would be correlation between price movements in the options on stock
index futures and price movements in the Portfolio's securities which were the
subject of the hedge. In addition, the Portfolio's purchase of such options
would be based upon predictions as to anticipated market trends, which could
prove to be inaccurate.
The Portfolio's use, if any, of stock index futures and options thereon will in
all cases be consistent with applicable regulatory requirements and in
particular the rules and regulations of the Commodity Futures Trading
Commission and will be entered into, if at all, only
-8-
<PAGE>
for bona fide hedging, risk management or other portfolio management purposes.
Typically, maintaining a futures contract or selling an option thereon requires
the Portfolio to deposit with a financial intermediary as security for its
obligations an amount of cash or other specified assets (initial margin) which
initially is typically 1% to 10% of the face amount of the contract (but may be
higher in some circumstances). Additional cash or assets (variation margin) may
be required to be deposited thereafter on a daily basis as the market-to-market
value of the contract fluctuates. The purchase of an option on stock index
futures involves payment of a premium for the option without any further
obligation on the part of the Portfolio. If the Portfolio were to exercise an
option on a futures contract it would be obligated to post initial margin (and
potential subsequent variation margin) for the resulting futures position just
as it would for any position. Futures contracts and options thereon are
generally settled by entering into an offsetting transaction but there can be
no assurance that the position can be offset prior to settlement at an
advantageous price, nor that delivery will occur.
The Portfolio will not enter into a futures contract or related option (except
for closing transactions) if, immediately thereafter, the sum of the amount of
its initial margin and premiums on open futures contracts and options thereon
would exceed 5% of the Portfolio's total assets (taken at current value);
however, in the case of an option that is in-the-money at the time of the
purchase, the in-the-money amount may be excluded in calculating the 5%
limitation.
OTHER INVESTMENTS
In addition to the securities and investment techniques listed above under "The
Portfolios," each 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, variable rate master demand notes, firm commitment
agreements and "when-issued" purchases.
INVESTMENT RESTRICTIONS
The investment restrictions numbered 1 through 12 below have been adopted by
each of the Portfolios as fundamental policies. The Portfolios' investment
objectives are also fundamental policies. Under the Act, a "fundamental" policy
may not be changed without the vote of a "majority of the outstanding voting
securities" of the Portfolio, which is defined in the Act as the lesser of (a)
67 percent or more of the shares of the Portfolio present at a Fund meeting if
the holders of more than 50 percent of the outstanding shares of the Fund are
present or represented by proxy or (b) more than 50 percent of the outstanding
shares of the Portfolio. Investment restrictions 13 through 19 may be changed
by vote of a majority of the Fund's Board of Trustees at any time.
The investment policies prohibit each Portfolio from:
1. Purchasing the securities of any issuer, other than U.S. Government
securities, if as a result more than 5% of the value of a Portfolio's total
assets would be invested in the securities of the issuer, except that up to 25
percent of the value of the Portfolio's total assets may be invested without
regard to this limitation.
2. Purchasing more than 10 percent of the voting securities of any one issuer
or more than 10 percent of the securities of any class of any one issuer. This
limitation shall not apply to investments in U.S. Government securities.
3. Selling securities short or purchasing securities on margin, except that the
Portfolio may obtain any short-term credit necessary for the clearance of
purchases and sales of securities. These restrictions shall not apply to
transactions involving selling securities "short against the box."
4. Borrowing money, except that (a) the Portfolio may borrow for temporary or
emergency (but not leveraging, except for the Alger American Leveraged AllCap
Portfolio) purposes, including the meeting of redemption requests that might
otherwise require the untimely disposition of securities, in an amount not
exceeding 10 percent of the value of the Portfolio's total assets (including
the amount borrowed) valued at the lesser of cost or market, less liabilities
(not including the amount borrowed) at the time the borrowing is made; (b) the
Alger American Balanced Portfolio may engage in transactions in reverse
repurchase agreements; and (c) the Alger American Leveraged AllCap Portfolio
may borrow from banks for investment purposes as set forth in the Prospectus.
Whenever borrowings described in (a) exceed 5% of the value of the Portfolio's
total assets, the Portfolio will not make any additional investments.
Immediately after any borrowing, including reverse repurchase agreements and
mortgage-backed rolls, the Portfolio will maintain asset coverage of not less
than 300 percent with respect to all borrowings.
-9-
<PAGE>
5. Pledging, hypothecating, mortgaging or otherwise encumbering more than 10
percent of the value of the Portfolio's total assets except in conjunction with
borrowings as noted in 4(c) above. These restrictions shall not apply to
transactions involving reverse repurchase agreements or the purchase of
securities subject to firm commitment agreements or on a when-issued basis.
6. Underwriting the securities of other issuers, except insofar as the
Portfolio may be deemed to be an underwriter under the Securities Act of 1933,
as amended, by virtue of disposing of portfolio securities.
7. Making loans to others, except through purchasing qualified debt
obligations, lending portfolio securities or entering into repurchase
agreements.
8. Investing in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation, reorganization, acquisition of
assets or offer of exchange.
9. Purchasing any securities that would cause more than 25 percent of the value
of the Portfolio's total assets to be invested in the securities of issuers
conducting their principal business activities in the same industry; provided
that there shall be no limit on the purchase of U.S. Government securities.
10. Investing in commodities, except that the Alger American Leveraged AllCap
Portfolio may purchase or sell stock index futures contracts and related
options thereon if, thereafter, no more than 5% of its total assets are
invested in margin and premiums.
11. Investing more than 10 percent (15 percent in the case of Alger American
Leveraged AllCap Portfolio) of its net assets in securities which are illiquid
by virtue of legal or contractual restrictions on resale or the absence of a
readily available market. However, securities with legal and contractual
restrictions on resale may be purchased if they are determined to be liquid,
and such purchases would not be subject to the limit stated above.
12. Issuing senior securities, except that the Alger American Leveraged AllCap
Portfolio may borrow from banks for investment purposes so long as the
Portfolio maintains the required asset coverage.
13. Purchasing or selling real estate, except that the Portfolio may purchase
and sell securities secured by real estate, mortgages or interests therein and
securities that are issued by companies that invest or deal in real estate.
14. Writing or selling puts, calls, straddles, spreads or combinations thereof,
except that Alger American Leveraged AllCap Portfolio may buy and sell (write)
options.
15. Investing in oil, gas or other mineral exploration or development programs,
except that the Portfolio may invest in the securities of companies that invest
in or sponsor those programs.
16. Purchasing any security if as a result the Portfolio would then have more
than 5% of its total assets invested in securities of issuers (including
predecessors) that have been in continual operation for less than three years.
This limitation shall not apply to investments in U.S. Government securities.
17. Making investments for the purpose of exercising control or management.
18. Investing in warrants, except that the Portfolio may invest in warrants if,
as a result, the investments (valued at the lower of cost or market) would not
exceed five percent of the value of the Portfolio's net assets, of which not
more than 2% of the Portfolio's net assets may be invested in warrants not
listed on a recognized domestic stock exchange. Warrants acquired by the
Portfolio as part of a unit or attached to securities at the time of
acquisition are not subject to this limitation.
19. Purchasing or retaining the securities of any issuer if, to the knowledge
of the Fund, any of the officers, directors or trustees of the Fund or Alger
Management individually owns more than .5% of the outstanding securities of the
issuer and together they own beneficially more than 5% of the securities.
Except in the case of the 300 percent limitation set forth in Investment
Restriction No. 4 and as may be otherwise stated, the percentage limitations
contained in the foregoing restrictions and in the Fund's other investment
policies apply at the time of the purchase of the securities and a later
increase or decrease in percentage resulting from a change in the values of the
securities or in the amount of the Portfolio's assets will not constitute a
violation of the restriction.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities and other financial instruments for a
Portfolio are made by Alger Manage
-10-
<PAGE>
ment, which also is responsible for placing these transactions, subject to the
overall review of the Fund's Board of Trustees. Although investment
requirements for each Portfolio are reviewed independently from those of the
other accounts managed by Alger Management and those of the other Portfolios,
investments of the type the Portfolios may make may also be made by these other
accounts or Portfolios. When a Portfolio and one or more other Portfolios or
accounts managed by Alger Management are prepared to invest in, or desire to
dispose of, the same security or other financial instrument, available
investments or opportunities for sales will be allocated in a manner believed
by Alger Management to be equitable to each. In some cases, this procedure may
affect adversely the price paid or received by a Portfolio or the size of the
position obtained or disposed of by a Portfolio.
Transactions in equity securities are in many cases effected on U.S. stock
exchanges and involve the payment of negotiated brokerage commissions. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the prices of those securities include
undisclosed commissions or mark-ups. Purchases and sales of money market
instruments and debt securities usually are principal transactions. These
securities are normally purchased directly from the issuer or from an
underwriter or market maker for the securities. The cost of securities
purchased from underwriters includes an underwriting commission or concession
and the prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down. U.S. Government securities are
generally purchased from underwriters or dealers, although certain newly issued
U.S. Government securities may be purchased directly from the U.S. Treasury or
from the issuing agency or instrumentality.
To the extent consistent with applicable provisions of the Act and the rules and
exemptions adopted by the SEC thereunder, as well as other regulatory
requirements, the Fund's Board of Trustees has determined that portfolio
transactions will be executed through Fred Alger & Company, Incorporated ("Alger
Inc.") if, in the judgment of Alger Management, the use of Alger Inc. is likely
to result in price and execution at least as favorable as those of other
qualified broker-dealers and if, in particular transactions, Alger Inc. charges
the Portfolio involved a rate consistent with that charged to comparable
unaffiliated customers in similar transactions. Such transactions will be fair
and reasonable to the Portfolio's shareholders. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those cases
in which better prices and executions may be obtained elsewhere. Principal
transactions are not entered into with affiliates of the Fund except pursuant to
exemptive rules or orders adopted by the SEC.
In selecting brokers or dealers to execute portfolio transactions on behalf of
a Portfolio, Alger Management seeks the best overall terms available. In
assessing the best overall terms available for any transaction, Alger
Management will consider the factors it deems relevant, including the breadth
of the market in the investment, the price of the investment, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In addition, Alger Management is authorized, in selecting
parties to execute a particular transaction and in evaluating the best overall
terms available, to consider the brokerage and research services, as those
terms are defined in section 28(e) of the Securities Exchange Act of 1934,
provided to the Portfolio involved, the other Portfolios and/or other accounts
over which Alger Management or its affiliates exercise investment discretion.
Alger Management's fees under its agreements with the Portfolios are not
reduced by reason of its receiving brokerage and research service. The Fund's
Board of Trustees will periodically review the commissions paid by the
Portfolios to determine if the commissions paid over representative periods of
time are reasonable in relation to the benefits inuring to the Portfolios.
During the fiscal year ended December 31, 1997, the Fund paid an aggregate of
approximately $7,837,883 in commissions to broker-dealers in connection with
portfolio transactions of which $7,712,699 was paid to Alger Inc. During the
fiscal year ended December 31, 1998, the Fund paid an aggregate of
approximately $7,974,970 in commissions to broker-dealers in connection with
portfolio transactions, of which $7,917,064 was paid to Alger Inc. During the
fiscal year ended December 31, 1999 the Fund paid an aggregate of approximately
$9,923,576 in commissions to broker-dealers in connection with portfolio
transactions of which $9,838,129 (99%) was paid to Alger Inc. Alger Inc. does
not engage in principal transactions with the Fund and, accordingly, received
no compensation in connection with securities purchased or sold in that manner,
which includes securities traded in the
-11-
<PAGE>
over-the-counter markets, money market investments and most debt securities.
Unusually unsettled market conditions for 1999 were reflected in higher
portfolio turnover rates for each portfolio in comparison with 1998.
NET ASSET VALUE
Net Asset Value 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.
The assets of the Portfolios are generally valued on the basis of market
quotations. Securities whose principal market is on an exchange or in the
over-the-counter market are valued at the last reported sales price or, in the
absence of reported sales, at the mean between the bid and asked price or, in
the absence of a recent bid or asked price, the equivalent as obtained from one
or more of the major market makers for the securities to be valued. Bonds and
other fixed income securities may be valued on the basis of prices provided by
a pricing service when the Fund's Board of Trustees believes that these prices
reflect the fair market value of the securities. Other investments and other
assets, including restricted securities and securities for which market
quotations are not readily available, are valued at fair value under procedures
approved by the Fund's Board of Trustees. Short-term securities with maturities
of 60 days or less are valued at amortized cost, as described below, which
constitutes fair value as determined by the Fund's Board of Trustees.
The valuation of money market instruments with maturities of 60 days or less is
based on their amortized cost which does not take into account unrealized
capital gains or losses. Amortized cost valuation involves initially valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. Although this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price a Portfolio
would receive if it sold the instrument.
PURCHASES AND REDEMPTIONS
Shares of the Portfolios are offered by the Fund on a continuous basis to
separate accounts of certain life insurance companies ("Participating Insurance
Companies") and to Plans. Shares are distributed by Alger Inc. as principal
underwriter for the Fund pursuant to a distribution agreement (the
"Distribution Agreement") which provides that Alger Inc. accepts orders for
shares at net asset value and no sales commission or load is charged.
The separate accounts of the Participating Insurance Companies place orders to
purchase and redeem shares of each 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 Portfolios but may invest in shares of the
Portfolios only through their Plan. The Fund does not assess any fees, either
when it sells or when it redeems its shares. Surrender charges, mortality and
expense risk frees 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. Participants
should contact their Plan sponsor for information concerning the appropriate
procedure for investing in the Fund.
The Fund may suspend the right of redemption of shares of any Portfolio and may
postpone payment for any period: (i) during which the NYSE is closed other than
customary weekend and holiday closings or during which trading on the NYSE is
restricted; (ii) when the SEC determines that a state of emergency exists which
may make payment or transfer not reasonably practicable; (iii) as the SEC may
by order permit for the protection of the shareholders of the Fund; or (iv) at
any other time when the Fund may, under applicable laws and regulations,
suspend payment on the redemption of its shares.
Payment for shares tendered for redemption is ordinarily made in cash. However,
if the Board of Trustees of the Fund determines that it would be detrimental to
the best interest of the remaining shareholders of a Portfolio to make payment
of a redemption order wholly or partly in cash, the Portfolio may pay the
redemption proceeds in whole or in part by a distribution "in kind" of
securities from the Portfolio, in lieu of cash, in conformity with applicable
rules of the Securities and Exchange Commission. The Fund has
-12-
<PAGE>
elected to be governed by Rule 18f-1 under the Act, pursuant to which a
Portfolio is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Portfolio, during any 90-day period for
any one shareholder. If shares are redeemed in kind, the redeeming shareholder
might incur brokerage or other costs in selling the securities for cash. The
method of valuing securities used to make redemptions in kind will be the same
as the method the Fund uses to value its portfolio securities and such
valuation will be made as of the time the redemption price is determined.
PARTICIPATING INSURANCE
COMPANIES AND PLANS
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 Fund 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 a Portfolio, which might cause the Portfolio to sell portfolio
securities at disadvantageous prices, and orderly portfolio management could be
disrupted to the potential detriment of the VA contract and VLI policy holders
or Plan Participants. 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.
MANAGEMENT
TRUSTEES AND OFFICERS OF THE FUND
The Fund is governed by a Board of Trustees which is responsible for protecting
the interests of shareholders under Massachusetts law. Certain information
about the Trustees and officers of the Fund is set forth below. Each of the
officers of the Fund is also an officer, and each of the Trustees is also a
director or trustee, as the case may be, of Castle Convertible Fund, Inc., a
registered closed-end investment company, and The Alger Fund, The Alger
Retirement Fund and Spectra Fund, registered open-end management investment
companies, for all of which Alger Management serves as investment adviser. The
following companies are affiliates of Alger Management: Alger Associates, Inc.
("Associates"), Alger Inc., Alger Properties, Inc. ("Properties"), Alger
Shareholder Services, Inc. ("Services"), Alger Life Insurance Agency, Inc.
("Agency"), and Analysts Resources, Inc. ("ARI"). Unless otherwise noted, the
address of each person named below is One World Trade Center, Suite 9333, New
York, New York 10048.
-13-
<PAGE>
Name, Age and Position
with the Fund and Address Principal Occupations
Fred M. Alger III (65)* Chairman of the Boards of Associates,
Chairman of the Board Alger Inc., Alger Management,
Properties, Services, Agency, Fred Alger
International Advisory S.A.
("International"), The Alger American
Asset Growth Fund ("Asset Growth") and
ARI.
David D. Alger (56)* President and Director of Associates,
President and Trustee Alger Management, Alger Inc., ARI,
Properties, Services, International and
Agency; Director of Asset Growth.
Gregory S. Duch (48) Executive Vice President, Treasurer and
Treasurer Director of Alger Management, Properties
and Associates; Executive Vice President
and Treasurer of Alger Inc., ARI,
Services and Agency; Director and
Treasurer of International.
Mary E. Marsden-Cochran (47) Vice President, General Counsel and
Secretary Secretary of Associates, Alger
Management, Alger Inc., Properties, ARI,
Services and Agency (2/96-present);
Secretary of International
(7/96-present); Associate General
Counsel and Vice President of Smith
Barney Inc. (12/94-2/96).
Frederick A. Blum (46) Senior Vice President of Alger Inc.
Assistant Secretary &
Assistant Treasurer
Stephen E. O'Neil (67) Attorney-at-law; private investor since
Trustee 1981; Director of Nova Care, Inc. and
805 Third Avenue Brown-Forman Distillers Corporation;
New York, NY 10022 formerly President and Vice Chairman of
City Investing Company, Director of
Centerre Bancorporation and Syntro
Corporation, and Counsel to the law firm
of Kohler & Barnes P.C.
Nathan E. Saint-Amand, M.D. (62) Medical doctor in private practice.
Trustee
2 East 88th Street
New York, NY 10128
B. Joseph White (54) Dean, University of Michigan Business
Trustee School; President, William Davidson
University of Michigan Institute at the University of Michigan
Business School Business School; Professor of Business
701 Tappan Street Administration, University of Michigan
Ann Arbor, MI 48109 Business School; Director, Gordon Food
Service; Trustee and Chair, Audit
Committee, Equity Residential Properties
Trust; Director and Chair, Compensation
Committee, Kelly Services, Inc.
* Fred M. Alger III and David D. Alger are "interested persons" of the Fund, as
defined in the Act. Fred M. Alger and David D. Alger are brothers.
-14-
<PAGE>
No director, officer or employee of Alger Management or its affiliates will
receive any compensation from the Fund for serving as an officer or Trustee of
the Fund. The Fund pays each independent Trustee a fee of $1500 for each
meeting he attends, to an annual maximum of $6000, and reimburses independent
Trustees for their expenses in attending meetings. The Fund does not offer its
Trustees any pension or retirement benefits and has not done so in the past.
The following table provides compensation amounts paid to independent Trustees
of the Fund for the fiscal year ended December 31, 1999. Mr. White has been a
Trustee of the Fund since February, 1999.
Compensation Table
<TABLE>
<CAPTION>
TOTAL COMPENSATION PAID TO TRUSTEES FROM
THE ALGER RETIREMENT FUND,
AGGREGATE THE ALGER FUND,
COMPENSATION THE ALGER AMERICAN FUND,
FROM THE ALGER CASTLE CONVERTIBLE FUND, INC. AND
NAME OF PERSON, POSITION AMERICAN FUND SPECTRA FUND
------------------------ ---------------- ---------------------------------------
<S> <C> <C>
Stephen E. O'Neil, Trustee $6,000 $34,250
Nathan E. Saint-Amand, Trustee $6,000 $34,250
B. Joseph White, Trustee $4,500 $27,000
</TABLE>
INVESTMENT MANAGER
Alger Management serves as investment manager to each of the Portfolios
pursuant to separate written agreements (the "Management Agreements"). Certain
of the services provided by, and the fees paid by the Portfolios to, Alger
Management under the Management Agreements are described in the Prospectus.
Alger Management is responsible for the overall administration of the Fund,
subject to the supervision of the Board of Trustees. It pays the salaries of
all officers who are employed by both it and the Fund. 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 the Fund's distributor,
Alger Inc., an affiliate of Alger Management, 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 SEC. Alger Management has agreed to maintain office facilities for the
Fund, furnish the Fund with statistical and research data, clerical, accounting
and bookkeeping services, and certain other services required by the Fund, and
to compute the net asset value, net income and realized capital gains or losses
of the Portfolios. Alger Management prepares semi-annual reports to the SEC and
to shareholders, prepares federal and state tax returns and filings with state
securities commissions, maintains the Fund's financial accounts and records and
generally assists in all aspects of the Fund's operations. Alger Management
bears all expenses in connection with the performance of its services under the
Management Agreements.
Under the Management Agreements, Alger Management receives a fee from each
Portfolio at the following annual rates based on the Portfolio's average daily
net assets: .85% (Alger American Small Capitalization and Leveraged AllCap
Portfolios), .80% (Alger American MidCap Growth Portfolio), .75% (Alger
American Growth and Balanced Portfolios) and .625% (Alger American Income &
Growth Portfolio). This fee is computed daily and paid monthly.
During the fiscal years ended December 31, 1997, 1998, and 1999, Alger
Management earned under the terms of the Management Agreements $217,844,
$365,820 and $610,561 respectively, in respect of Alger American Income &
Growth Portfolio; $12,582,027, $8,665,222, and $6,401,767, respectively, in
respect of Alger American Small Capitalization Portfolio; $8,988,054,
$10,304,264, and $19,706,780 respectively, in respect of Alger American Growth
Portfolio; $103,223, $154,672, and $301,241, respectively, in respect of Alger
American Balanced Portfolio; $3,536,454, $4,156,932, and $5,967,972,
respectively, in respect of Alger American MidCap Growth Portfolio; and
$399,269, $567,333, and $1,585,846 respectively, in respect of Alger American
Leveraged AllCap Portfolio.
-15-
<PAGE>
From time to time Alger Management or its affiliates may compensate insurance
companies or their affiliates whose customers hold shares of the Portfolios for
providing a variety of record-keeping, administrative, marketing and/or
shareholder support services. This compensation, which may be paid at a rate of
up to .45% of the net asset value of shares held by those customers, will be
paid from Alger Management's or its affiliates' resources and not from the
assets of the Fund.
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.
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.
UNDERWRITER
Alger Inc., the Underwriter for the Fund, is located at 30 Montgomery Street,
Jersey City, NJ 07302. It is the corporate parent of Alger Management.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP serves as independent public accountants for the Fund.
EXPENSES
Each 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 Portfolios to the extent that the annual operating expenses
(excluding interest, taxes, fees for brokerage services and extraordinary
expenses) of Alger American Balanced Portfolio or Alger American Income and
Growth Portfolio exceed 1.25%, or such expenses of Alger American Small
Capitalization Portfolio, Alger American Growth Portfolio, Alger American
MidCap Growth Portfolio, or Alger American Leveraged AllCap Portfolio exceed
1.50%, of the average daily net assets of the applicable Portfolio for any
fiscal year. Any such expense reimbursements will be estimated and reconciled
daily and paid on a monthly basis. In addition, from time to time, Alger
Management, in its sole discretion and as it deems appropriate, may assume
certain expenses of one or more of the Portfolios while retaining the ability
to be reimbursed by the applicable Portfolio for such amounts prior to the end
of the fiscal year. This will have the effect of lowering the applicable
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.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio will be treated separately in determining the amounts of
dividends of investment income and distributions of capital gains payable to
holders of its shares. Dividends and distributions will be automatically
reinvested at net asset value on the payment date for each shareholder's
account in additional shares of the Portfolio that paid the dividend or
distribution 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 Portfolios will be declared and paid annually. Distributions of any net
realized capital gains earned by a 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 relevant Portfolio for federal income
tax purposes.
TAXES
The following is a summary of selected federal income tax considerations that
may affect the Fund and its shareholders. The summary is not intended to
substitute for individual tax advice and investors are urged to consult their
own tax advisers as to the federal, state and local tax consequences of
investing in the Fund.
Each Portfolio will be treated as a separate taxpayer with the result that, for
federal income tax purposes, the amounts of net investment income and capital
gains earned will be determined on a Portfolio-by-Portfolio (rather than on a
Fund-wide) basis.
If, in any taxable year, a Portfolio fails to qualify as a regulated investment
company under the Code or fails to meet the distribution requirement, it would
be taxed in the same manner as an ordinary corporation and distributions to its
shareholders would not be deductible by the Portfolio in computing its taxable
-16-
<PAGE>
income. In addition, in the event of a failure to qualify, the Portfolio's
distributions, to the extent derived from the Portfolio's current or
accumulated earnings and profits would constitute dividends (eligible for the
corporate dividends-received deduction) which are taxable to shareholders as
ordinary income, even though those distributions might otherwise (at least in
part) have been treated in the shareholders' hands as long-term capital gains.
If a Portfolio fails to qualify as a regulated investment company in any year,
it must pay out its earnings and profits accumulated in that year in order to
qualify again as a regulated investment company. In addition, if a Portfolio
failed to qualify as a regulated investment company for a period greater than
one taxable year, the Portfolio may be required to recognize any net built-in
gains (the excess of the aggregate gains, including items of income, over
aggregate losses that would have been realized if it had been liquidated) in
order to qualify as a regulated investment company in a subsequent year.
Each Portfolio has been structured so that each qualifies separately as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). To so qualify, a Portfolio must, among other
things: (a) derive at least 90% of its gross income in each taxable year from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock or securities; and (b) meet certain
quarterly diversification tests.
As a regulated investment company, a Portfolio will not be subject to federal
income tax on its net investment income and net realized capital gains that it
distributes to its shareholders, provided that at least 90% of its net
investment income and net realized short-term capital gains for the taxable
year is distributed. All net investment income and net realized capital gains
distributed by a Portfolio will be reinvested automatically in additional
shares of the Portfolio or paid in cash. Amounts reinvested in additional
shares will be considered to have been distributed to shareholders.
The Fund distributes shares in the Portfolios to Participating Insurance
Companies which will hold those shares, directly or indirectly, in a
"segregated asset account" within the meaning of the Code. To qualify as a
segregated asset account, the Portfolio in which such an account holds shares
must meet the diversification requirements of Section 817(h) of the Code and
the regulations promulgated thereunder.
The Fund has undertaken to meet the diversification requirements of Section
817(h) of the Code. This undertaking may limit the ability of a particular
Portfolio to make certain otherwise permitted investments.
Income on assets of a segregated asset account will not be taxable currently to
VA contracts or VLI policy holders if that account has met the diversification
requirements under Section 817(h) of the Code. In the event an account is not
so qualified, all VA contracts or VLI policies allocating any amount of
premiums to such account will not qualify as "annuity contracts" or "life
insurance" for federal income tax purposes. In that event, the holder of the VA
contract or VLI policy would be taxed as though he owned a proportionate amount
of the assets held by such account during and after all periods for which the
account failed to be qualified.
Generally, distributions from a Plan will be taxable as ordinary income at the
rate applicable to the participant at the time of distribution. In certain
cases, distributions made to a participant from a Plan prior to the date on
which the participant reaches age 591/2 are subject to a penalty tax equivalent
to 10% of the amount so distributed, in addition to the ordinary income tax
payable on such amount for the year in which it is distributed.
CUSTODIAN
Custodial Trust Company, 101 Carnegie Center, Princeton, New Jersey 08540-6231,
serves as custodian for the Fund pursuant to a custodian agreement under which
it holds the Portfolios' assets.
TRANSFER AGENT
Alger Shareholder Services, Inc. ("Services"), 30 Montgomery Street, Jersey
City, New Jersey 07302, serves as transfer agent for the Fund pursuant to a
transfer agency agreement. Under the transfer agency agreement Services
processes purchases and redemptions of shares of the Portfolios, maintains the
shareholder account records for each Portfolio, handles certain communications
between shareholders and the Fund and distributes any dividends and
distributions payable by the Fund. Pursuant to the transfer agency agreement
Services is compensated on a per-account and, for certain transactions, a
per-transaction basis.
-17-
<PAGE>
COUNSEL TO THE FUND
The law firm Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone LLP, 551
Fifth Avenue, New York, NY 10176, acts as counsel to the Fund.
CERTAIN SHAREHOLDERS
Set forth below is certain information regarding significant shareholders of
the Portfolios at April 1, 2000. Ameritas Variable Life Insurance Co. Separate
Account VA-2 Variable Annuity owned beneficially or of record 62.80% of Alger
American Balanced Portfolio. American Skandia Life Assurance Company owned
beneficially or of record 47.15% of Alger American Growth Portfolio and 78.02%
of Alger American MidCap Growth Portfolio. Sun Life of Canada (US) owned
beneficially or of record 25.66% of Alger American Income & Growth Portfolio.
The shareholders identified above may be deemed to control the specified
Portfolios, which may have the effect of proportionately diminishing the voting
power of other shareholders of these Portfolios.
At April 1, 2000, the Fund's officers and Trustees as a group owned less than
1% of any portfolio's shares.
The following table contains information regarding persons known by the Fund to
own beneficially or of record 5% or more of the shares of any Portfolio. All
holdings are expressed as a percentage of a Portfolio's outstanding shares as
of April 1, 2000 and record and beneficial holdings are in each instance
denoted as follows: record/beneficial.
-18-
<PAGE>
<TABLE>
<CAPTION>
Alger Alger
American American Alger Alger
Income Small Alger Alger American American
and Capital- American American MidCap Leveraged
Growth ization Growth Balanced Growth AllCap
Name and Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Address of (Record/ (Record/ (Record/ (Record/ (Record/ (Record/
Shareholders Beneficial) Beneficial) Beneficial) Beneficial) Beneficial) Beneficial)
- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
American Skandia */-- */-- 47.15%/-- */-- 78.02%/-- */--
Life Assurance
Company
P. O. Box 883
Shelton, CT 06484
Transamerica 22.66%/-- */-- */-- */-- */-- */--
Life Ins. & Annuity Co.
Separate Account VA6
401 N. Tryon St. Suite 700
Charlotte, NC 28210
Ameritas Variable */-- */-- */-- 8.09%/-- */-- 5.09%/--
Life Insurance Co.
Separate Acct V
Variable Life Product
P.O. Box 82550
Lincoln, NE 68501
Ameritas Variable */-- */-- */-- 62.80%/-- */-- 21.69%/--
Life Insurance Co.
Separate Acct. VA-2
Variable Annuity Product
P.O. Box 82550
Lincoln, NE 68501
Sun Life of Canada (US) 25.66%/-- */-- */-- */-- */-- */--
Retirement Products
P.O. Box 9134
Boston, MA 02117
Aetna Life Insurance 16.98%/-- */-- */-- 8.22%/-- */-- 5.06%/--
and Annuity Company
151 Farmington Avenue
Hartford, CT 06156
Security First Life Ins. Co. */-- 11.49%/-- */-- */-- */-- */--
Separate Account A
11365 W. Olympic Blvd
Los Angeles, CA 90064
New York Life */-- 19.40%/-- */-- */-- */-- */--
300 Interpace Pkwy
Parsippany, NJ 07054
CG Variable Annuity */-- */-- */-- */-- */-- 7.76%/--
Separate Acct II
1300 South Clinton
Ft. Wayne, IN 46802
Conseco Variable */-- */-- */-- */-- */-- 17.44%/--
Insurance Co.
11825 North Pennsylvania St.
Carmel, IN 46032
GE Life & Annuity Assurance Co. */-- 22.29%/-- 10.48%/-- */-- */-- */--
Separate Acct. III
6610 W. Broad St.
Richmond, VA 23230
Lincoln Benefit 10.51%/-- */-- */-- */-- */-- */--
Life
Variable Annuity
P.O. Box 80469
Lincoln, NE 68501-0469
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
Alger Alger
American American Alger Alger
Income Small Alger Alger American American
and Capital- American American MidCap Leveraged
Growth ization Growth Balanced Growth AllCap
Name and Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Address of (Record/ (Record/ (Record/ (Record/ (Record/ (Record/
Shareholders Beneficial) Beneficial) Beneficial) Beneficial) Beneficial) Beneficial)
- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Security Life of Denver */-- */-- */-- */-- */-- 5.60%/--
Separate Account L1
1290 Broadway
Denver, CO 80203-5699
Lincoln Benefit Life 8.01%/-- */-- */-- */-- */-- */--
Variable Annunity IA
P.O. Box 80469
Lincoln, NE 68501-0469
United of Omaha */-- 6.18%/-- */-- */-- */-- */--
Life Insurance
Mutual of Omaha Plaza
Omaha, NE68175
Provident Mutual */-- 5.41%/-- */-- */-- */-- */--
Life Insurance Co.
Variable Life
1000 Chesterbrook Blvd
Berwyn, PA19312-1181
Allmerica Financial */-- */-- */-- 9.37%/-- */-- */--
Life Insurance and
Annuity Company
440 Lincoln Street
Worcester, MA01653
Great-West Life & */-- */-- */-- 6.68%/-- */-- */--
Annuity Insurance Co.
8515 East Orchard Rd.
Englewood, CO 80111-5097
Allianz Lfe Insurance */-- */-- */-- */-- */-- 5.84%/--
Co. of North America
1750 Hennepin Ave.
Minneapolis, MN 55403
Reliastar Life Insurance Co. */-- */-- */-- */-- */-- 11.19%/--
Northern Variable Annuity
P.O. Box 20
Minneapolis, MN 55440-0020
</TABLE>
- ----------------------
* Indicates shareholder owns less than 5% of the Portfolio's shares.
-20-
<PAGE>
ORGANIZATION
The Fund has been organized as an unincorporated business trust under the laws
of the Commonwealth of Massachusetts pursuant to an Agreement and Declaration
of Trust dated April 6, 1988 (the "Trust Agreement"). Alger American Small
Capitalization Portfolio, Alger American Income & Growth Portfolio, Alger
American Growth Portfolio, Alger American Balanced Portfolio (formerly the
Alger American Fixed Income Portfolio), Alger American MidCap Growth Portfolio
and Alger American Leveraged AllCap Portfolio commenced operations on September
21, 1988, November 15, 1988, January 9, 1989, September 5, 1989, May 3, 1993,
and January 25, 1995, respectively. The Fund offers an unlimited number of
shares of six series, representing the shares of the Portfolios. The Fund's
Board of Trustees may establish additional Portfolios at any time. The word
"Alger" in the Fund's name has been adopted pursuant to a provision contained
in the Trust Agreement. Under that provision, Alger Associates, Inc. may
terminate the Fund's license to use the word "Alger" in its name when Alger
Management ceases to act as the Fund's investment manager.
Shares do not have cumulative voting rights, which means that holders of more
than 50 percent of the shares voting for the election of Trustees can elect all
Trustees. Shares have equal voting rates, which cannot be adversely modified,
other than by majority vote. Shares are transferable but have no preemptive,
conversion or subscription rights. Shareholders generally vote by Portfolio,
except with respect to the election of Trustees and the ratification of the
selection of independent accountants. In the interest of economy and
convenience, certificates representing shares of a Portfolio are physically
issued only upon specific written request of a shareholder.
Meetings of shareholders normally will not be held for the purpose of electing
Trustees unless and until such time as less than a majority of the 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.
Under the Act, shareholders of record of no less than two-thirds of the
outstanding shares of the Fund may remove a Trustee through a declaration in
writing or by vote cast in person or by proxy at a meeting called for that
purpose. Under the Trust Agreement, the Trustees are required to call a meeting
of shareholders for the purpose of voting on the question of removal of any
such Trustee when requested in writing to do so by the shareholders of record
of not less than 10 percent of the Fund's outstanding 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.
Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Fund
or a Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Fund. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations, a possibility
that the Fund believes is remote. Upon payment of any liability incurred by the
Fund, the shareholder paying the liability will be entitled to reimbursement
from the general assets of the Fund. The Trustees intend to conduct the
operations of the Fund in a manner so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Fund.
Under normal circumstances, other than the shares issued to Alger Inc. in
connection with its creation and initial capitalization, the Fund intends to
distribute shares of the Portfolios 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 Portfolios. 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
voting rights please refer to the Participating Insurance Companies'
prospectuses or the Plan documents.
-21-
<PAGE>
DETERMINATION OF PERFORMANCE
Each Portfolio may include quotations of its "total return" in advertisements
or reports to shareholders or prospective investors. Total return figures show
the aggregate or average percentage change in value of an investment in a
Portfolio from the beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of the Portfolio's
shares and assume that any income dividends and/or capital gains distributions
made by the Portfolio during the period were reinvested in shares of the
Portfolio. Figures will be given for recent 1, 5 and 10 year periods, and may
be given for other periods as well (such as from commencement of the
Portfolio's operations, or on a year-by-year basis) and may utilize dollar cost
averaging. The Portfolio may use "aggregate" total return figures for various
periods, representing the cumulative change in value of an investment in the
Portfolio for the specific period (again reflecting changes in Portfolio share
price and assuming reinvestment of dividends and distributions) as well as
"actual annual" and "annualized" total return figures. Total returns may be
shown by means of schedules, charts or graphs, and may indicate subtotals of
the various components of total return (i.e., change in value of initial
investment, income dividends and capital gains distributions). "Total return"
and "yield" for a Portfolio will vary based on changes in market conditions. In
addition, since the deduction of a Portfolio's expenses is reflected in the
total return and yield figures, "total return" and "yield" will also vary based
on the level of the Portfolio's expenses.
The "total return" and "yield" as to each of the Portfolios are computed
according to formulas prescribed by the SEC. These performance figures are
calculated in the following manner:
A. Total Return--a Portfolio's average annual total return described in the
Prospectus is computed according to the following formula:
P (1+T)n=ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5, or 10 year periods at the end of the
1, 5 and 10 year periods (or fractional portion thereof);
The average annual total returns for the Portfolios for the periods indicated
were as follows:
Period
Five Ten from
Years Years Inception*
Year Ended Ended Ended through
12/31/99 12/31/99 12/31/99 12/31/99
-------- -------- -------- --------
Alger American Balanced
(formerly Alger
American Fixed Income) 29.21% 23.60% 13.78% 13.61%
Alger American Income &
Growth 42.45% 32.97% 18.93% 17.71%
Alger American Small
Capitalization 43.42% 22.64% 18.22% 20.86%
Alger American Growth 33.74% 30.94% 22.89% 23.05%
Alger American MidCap
Growth 31.85% 26.14% N/A 24.72%
Alger American Leveraged
AllCap 78.06% N/A N/A 46.44%
* The Alger American Balanced Portfolio, the Alger American Income & Growth
Portfolio, the Alger American Small Capitalization Portfolio, the Alger
American Growth Portfolio, the Alger American MidCap Growth Portfolio and
the Alger American Leveraged AllCap Portfolio commenced operations on
September 5, 1989, November 15, 1988, September 21, 1988, January 9, 1989,
May 3, 1993 and January 25, 1995, respectively.
B. Yield--a Portfolio's net annualized yield described in the Prospectus is
computed according to the following formula:
6
YIELD = 2[(a-b/cd + 1) - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
IN GENERAL
Current performance information for the Portfolios may be obtained by calling
the Fund at (800) 992-3863. All performance figures are based on historical
earnings. A Portfolio's quoted performance may not be indicative of future
performance. A Portfolio's performance will depend upon factors such as the
Portfolio's expenses and the types and maturities of instruments held by the
Portfolio. In addition, the actual return to a holder of a VA contract or a VLI
policy will be affected by charges imposed by the separate
-22-
<PAGE>
accounts of Participating Insurance Companies or, in the case of Plan
participants, by any charges imposed under the Plan.
From time to time, advertisements or reports to shareholders may compare the
yield or performance of a Portfolio with that of other mutual funds with a
similar investment objective. The performance of the Portfolios, for example,
might be compared with rankings prepared by Lipper Analytical Services Inc.,
which is a widely recognized, independent service that monitors the performance
of mutual funds, as well as with various unmanaged indexes, such as the S&P 500
Index, the Russell 2000 Growth Index, the S&P SmallCap 600 Index, the Wilshire
Small Company Growth Index, the Lehman Government/Corporate Bond Index or the
S&P MidCap 400 Index. In addition, evaluations of the Portfolios published by
nationally recognized ranking services or articles regarding performance,
rankings and other Portfolio characteristics may appear in national
publications including, but not limited to, BARRON'S, BUSINESS WEEK, FORBES,
INSTITUTIONAL INVESTOR, INVESTOR'S BUSINESS DAILY, KIPLINGER'S PERSONAL
FINANCE, MONEY, MORNINGSTAR, THE NEW YORK TIMES, USA TODAY AND THE WALL STREET
JOURNAL and may be included in advertisements or communications to
shareholders. Any given performance comparison should not be considered as
representative of such Portfolio's performance for any future period.
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 Portfolios, including current
performance quotations, as well as for assistance in selecting a Portfolio.
Holders of VA contracts or VLI policies issued by Participating Insurance
Companies and participants in Plans for which shares of one or more Portfolios
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 each of the
Portfolios and the market values of the investments and will provide other
information about the Fund and its operations.
-23-
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--90.5% VALUE
------ -------------------- -----
ADVERTISING--.5%
170,000 Omnicom Group Inc. $ 17,000,000
------------
AEROSPACE--4.1%
1,139,000 Honeywell International Inc. 65,706,063
1,106,800 United Technologies Corp. 71,942,000
------------
137,648,063
AUTOMOTIVE--1.0%
543,600 Harley Davidson, Inc. 34,824,375
------------
BIO-TECHNOLOGY--3.4%
1,713,400 Amgen Inc.* 102,911,087
167,900 Biogen Inc.* 14,187,550
------------
117,098,637
------------
BROADCASTING--1.1%
198,000 Clear Channel Communications Inc.* 17,671,500
194,400 EchoStar Communications Corp., Cl. A* 18,954,000
------------
36,625,500
------------
BUILDING & CONSTRUCTION--.3%
414,500 Masco Corp. 10,517,937
------------
BUSINESS SERVICES--1.0%
1,299,200 IMS Health Inc. 35,322,000
------------
COMMUNICATION EQUIPMENT--9.2%
1,106,300 Cisco Systems, Inc.* 118,512,388
792,400 Corning Inc. 102,170,075
626,400 Motorola, Inc. 92,237,400
------------
312,919,863
------------
COMMUNICATIONS--12.1%
1,492,000 America Online Inc.* 112,552,750
881,550 At Home Corp. Series A* 37,796,456
953,500 AT&T Corp. Liberty Media Group, Cl. A* 54,111,125
945,100 Comcast Corp. Cl. A Special 47,786,619
364,400 Cox Communications Inc., Cl. A* 18,766,600
533,550 MCI Worldcom Inc.* 28,311,497
565,900 MediaOne Group Inc.* 43,468,194
156,000 Qualcomm Inc.* 27,475,500
581,100 Sprint Corp. 39,115,294
------------
409,384,035
------------
COMPUTER RELATED & BUSINESS EQUIPMENT--2.8%
1,856,200 Dell Computer Corp.* 94,666,200
------------
SHARES VALUE
------ -----
COMPUTER SERVICES--5.8%
663,400 eBay Inc.* $ 83,049,387
259,794 Yahoo Inc.* 112,409,616
------------
195,459,003
------------
COMPUTER SOFTWARE--5.7%
564,200 Intuit Inc.* 33,816,737
1,367,000 Microsoft Corporation* 159,597,250
------------
193,413,987
------------
ENERGY & ENERGY SERVICES--2.6%
2,206,000 Halliburton Co. 88,791,500
------------
FINANCIAL SERVICES--11.9%
143,500 American Express Co. 23,856,875
1,197,369 Bank of America Corp. 60,092,957
1,757,050 Citigroup Inc. 97,626,091
418,437 Firstar Corp. 8,839,482
835,200 Household International Inc. 31,111,200
500,900 Kansas City Southern Industries, Inc. 37,379,663
196,100 Merrill Lynch & Co., Inc. 16,374,350
884,400 Morgan Stanley Dean Witter & Co. 126,248,100
------------
401,528,718
------------
FREIGHT--2.5%
1,222,400 United Parcel Service Inc., Cl. B 84,345,600
------------
INSURANCE--2.5%
783,883 American International Group, Inc. 84,757,349
------------
LEISURE & ENTERTAINMENT--.4%
314,000 Carnival Corp. 15,013,125
------------
PHARMACEUTICALS--6.2%
956,100 Bristol Myers Squibb Co. 61,369,669
1,299,650 Pfizer Inc. 42,157,397
1,280,500 Warner-Lambert Co. 104,920,969
------------
208,448,035
------------
RETAILING--7.7%
508,100 Amazon.com Inc.* 38,679,112
645,800 Best Buy Company Inc.* 32,411,088
212,900 Costco Wholesale Corp.* 19,427,125
1,534,200 Home Depot, Inc. 105,188,588
951,800 Wal-Mart Stores Inc. 65,793,175
------------
261,499,088
------------
See Notes to Financial Statements.
F-1
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS (CONT'D) VALUE
------ -----
SEMICONDUCTOR CAPITAL EQUIPMENT--4.2%
811,700 Applied Materials Inc.* $ 102,832,243
583,300 Teradyne, Inc.* 38,497,800
-------------
141,330,043
-------------
SEMICONDUCTORS--5.5%
858,100 Altera Corporation* 42,529,581
993,500 Intel Corp. 81,777,469
650,900 Linear Technology Corporation 46,580,031
156,000 Texas Instruments, Incorporated 15,112,500
-------------
185,999,581
-------------
TOTAL COMMON STOCKS
(COST $2,244,799,324) 3,066,592,639
-------------
PREFERRED STOCK--.6%
COMMUNICATIONS
102,500 Nokia Corporation, ADR
(COST $ 17,261,765) 19,475,000
-----------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--11.6%
------
SHORT-TERM CORPORATE NOTES--10.8%
$50,000,000 AT&T Capital Corporation,
6.36%, 1/14/00 49,885,167
50,000,000 Corporate Receivables Corp.,
6.60%, 1/14/00(a) 49,880,833
50,000,000 Ford Motor Credit Company,
6.41%, 1/13/00 49,893,167
40,000,000 Forrestal Funding Master Trust,
5.50%, 1/24/00(a) 39,859,444
50,000,000 Inter-American Development Bank,
5.74%, 1/12/00 49,912,306
40,000,000 Merrill Lynch & Co., Inc.,
5.55%, 1/27/00 39,839,667
35,000,000 Petrofina (DE) Inc.,
6.25%, 1/10/00 34,945,312
50,000,000 Toronto-Dominion Holdings (USA) Inc.,
5.94%, 1/27/00 49,785,517
-------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $364,001,413) 364,001,413
-------------
VALUE
-----
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--.8%
Securities Held Under Repurchase
Agreements, 2.87%, 1/03/00, with
Bear, Stearns & Co. Inc., dtd 12/31/99,
repurchase price $27,462,298; collateralized
by U.S. Treasury Notes and U.S. Treasury Bonds
(Total par value $28,515,000 due
1/15/09-4/15/28) $ 27,455,731
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $391,457,144) 391,457,144
-------------
TOTAL INVESTMENTS
(COST $2,653,518,233)(B) 102.7% 3,477,524,783
Liabilities in Excess of Other Assets (2.7) (89,998,876)
------ --------------
NET ASSETS 100.0% $3,387,525,907
===== ==============
- ------------------------
* Non-income producing security.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $2,653,518,233, amounted to
$824,006,550 which consisted of aggregate gross unrealized appreciation of
$904,324,526 and aggregate gross unrealized depreciation of $80,317,976.
See Notes to Financial Statements.
F-2
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 53.22 $ 42.76 $ 34.33 $ 31.16 $ 23.13
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.03) 0.09 0.13 0.12 0.02
Net realized and unrealized gain
(loss) on investments 16.66 18.32 8.66 4.00 8.33
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 16.63 18.41 8.79 4.12 8.35
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.08) (0.13) (0.13) (0.02) (0.07)
Distributions from net realized gains (5.39) (7.82) (0.23) (0.93) (0.25)
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (5.47) (7.95) (0.36) (0.95) (0.32)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 64.38 $ 53.22 $ 42.76 $ 34.33 $ 31.16
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 33.74% 48.07% 25.75% 13.35% 36.37%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $3,387,526 $1,905,719 $1,072,529 $991,028 $502,974
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.79% 0.79% 0.79% 0.79% 0.85%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (0.03%) 0.25% 0.27% 0.50% 0.18%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 135.13% 127.38% 129.50% 82.86% 118.33%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- -------------------------------------------------------------------------------
SHARES COMMON STOCKS--90.4% VALUE
------ -----
ADVERTISING--1.8%
170,600 Young & Rubicam Inc. $12,069,950
-----------
AIRLINES--.5%
111,000 SkyWest Inc. 3,108,000
-----------
BIO-TECHNOLOGY--4.8%
413,500 Cygnus, Inc.* 7,546,375
48,000 IDEC Pharmaceuticals Corporation* 4,716,000
34,800 Medimmune Inc.* 5,772,450
120,000 Protein Design Labs Inc.* 8,400,000
57,600 Sepracor Inc.* 5,713,200
-----------
32,148,025
-----------
BROADCASTING--6.1%
65,400 Acme Communications Inc.* 2,174,550
192,000 Adelphia Business Solutions Inc., 9,216,000
Cl. A*
185,100 Citadel Communications Corp.* 12,008,363
40,000 Cumulus Media Inc., Cl. A* 2,030,000
99,600 Emmis Communications Corp., CI. A* 12,414,205
139,900 Salem Communications Corp., Cl. A* 3,165,238
-----------
41,008,356
-----------
BUSINESS SERVICES--11.4%
50,000 Ariba Inc.* 8,868,750
243,300 BISYS Group Inc.* 15,875,325
274,100 eSpeed Inc.* 9,747,682
176,300 FactSet Research Systems Inc. 14,037,888
102,100 F.Y.I. Incorporated* 3,471,400
138,700 Getty Images Inc.* 6,778,963
288,000 The Management Network Group Inc.* 9,396,000
225,600 Marketing Services Group Inc.* 3,778,800
168,100 Source Information Management Co.* 2,815,675
70,000 United Stationers Inc.* 1,999,375
-----------
76,769,858
-----------
COMMUNICATION EQUIPMENT--1.7%
120,000 Alpha Industries Inc.* 6,877,500
99,600 Aware Inc.* 3,622,950
42,000 MCK Communications Inc.* 945,000
-----------
11,445,450
-----------
COMMUNICATIONS--2.6%
90,400 AirGate PCS Inc.* 4,768,600
21,000 Cox Radio, Inc., Cl. A* 2,094,750
160,900 ITC DeltaCom Inc.* 4,444,863
94,500 Primus Telecommunications ,614,625
Group Incorporated*
51,000 Time Warner Telecom Inc., Cl. A* 2,546,812
-----------
17,469,650
-----------
COMPUTER RELATED & BUSINESS EQUIPMENT--1.3%
229,000 Antec Corp.* 8,358,500
12,000 Digital Lightwave Inc.* 768,000
-----------
9,126,500
-----------
SHARES VALUE
------ -----
COMPUTER SERVICES--10.1%
168,800 CNET Inc.* $ 9,579,400
83,600 Critical Path, Inc.* 7,889,750
49,300 eBay Inc.* 6,171,744
134,400 Exodus Communications, Inc.* 11,936,400
86,200 Insituform Technologies Inc.* 2,435,150
164,000 Official Payments Corp.* 8,528,000
93,087 QRS Corp.* 9,774,135
73,400 Vignette Corp.* 11,964,200
-----------
68,278,779
-----------
COMPUTER SOFTWARE--7.7%
127,800 Advent Software Inc.* 8,235,113
196,700 BSquare Corp.* 8,249,106
42,000 Business Objects ADS 5,612,250
361,900 Intuit Inc.* 21,691,381
29,600 Micromuse Inc.* 5,032,000
84,100 Radiant Systems Inc.* 3,379,769
-----------
52,199,619
-----------
CONSUMER PRODUCTS--2.9%
33,400 Furniture Brands International Inc.* 734,800
175,500 Mettler-Toledo International Inc.* 6,701,906
276,600 Pittway Corp., Cl. A 12,395,138
-----------
19,831,844
-----------
ENERGY & ENERGY SERVICES--1.0%
107,800 Calpine Corp.* 6,899,200
-----------
FOODS & BEVERAGES--1.2%
199,000 Beringer Wine Estates 7,935,125
Holdings, Cl. B*
-----------
HEALTH CARE--2.6%
141,200 Cytyc Corporation* 8,622,025
202,600 ENZON Inc.* 8,787,775
-----------
17,409,800
-----------
MEDICAL DEVICES--2.3%
109,400 Caliper Technologies Corp.* 7,302,450
150,400 CONMED Corporation* 3,891,600
210,100 Varian Inc.* 4,727,250
-----------
15,921,300
-----------
MEDICAL SERVICES--2.0%
292,500 Hooper Holmes Inc. 7,531,875
150,000 ILEX Oncology Inc.* 3,618,750
99,400 MedQuist Inc.* 2,565,763
-----------
13,716,388
-----------
OIL & GAS--1.7%
163,100 B.J. Services Company* 6,819,619
460,900 Varco International Inc.* 4,695,417
-----------
11,515,036
-----------
See Notes to Financial Statements.
F-4
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
SHARES COMMON STOCKS (CONT'D) VALUE
------ ---------------------- -----
PHARMACEUTICALS--2.0%
172,300 Alpharma Inc., Cl. A* $ 5,298,225
100,000 BioCryst Pharmaceuticals Inc.* 2,950,000
75,600 Celgene Corp.* 5,292,000
-----------
13,540,225
-----------
RETAILING--12.9%
94,000 Bed Bath & Beyond Inc.* 3,266,500
420,300 BJ's Wholesale Club Inc.* 15,340,950
100,900 Cost Plus Inc.* 3,594,563
384,400 Ethan Allen Interiors Inc. 12,324,825
407,700 Linens'n Things Inc.* 12,078,113
265,100 Michaels Stores Inc.* 7,555,350
94,850 Pacific Sunwear of California Inc.* 3,023,344
227,200 Sharper Image Corp.* 2,882,600
245,000 Sunglass Hut International Inc* 2,756,250
84,100 Too Inc.* 1,450,725
105,100 Tuesday Morning Corp.* 1,937,780
320,600 Tweeter Home Entertainment Group Inc.* 11,381,300
84,100 Valuevision International Inc., Cl. A* 4,819,981
100,150 Williams Sonoma Inc.* 4,606,900
-----------
87,019,181
-----------
SEMICONDUCTOR CAPITAL EQUIPMENT--5.7%
133,200 ASM Lithography Holding NV* 15,151,500
236,500 Atmi Inc.* 7,819,281
230,200 PRI Automation, Inc.* 15,452,175
-----------
38,422,956
-----------
SEMICONDUCTORS--7.2%
42,000 Applied Micro Circuits Corp.* 5,344,500
151,200 Conexant Systems Inc.* 10,035,900
101,300 Dallas Semiconductor Corp. 6,527,518
206,100 Lattice Semiconductor Corp.* 9,712,463
157,200 Microchip Technology Incorporated* 10,758,375
116,800 Vitesse Semiconductor Corp.* 6,124,700
-----------
48,503,456
-----------
TRANSPORTATION--.3%
42,000 Forward Air Corporation * 1,821,750
-----------
MISCELLANEOUS--.6%
278,600 Coinstar Inc.* 3,900,400
-----------
TOTAL COMMON STOCKS
(COST $407,124,415) 610,060,848
-----------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--11.9% VALUE
------ -----
SHORT-TERM CORPORATE NOTES--10.4%
$10,000,000 Forrestal Funding Master Trust,
5.50%, 1/24/00 (a) $ 9,964,861
25,000,000 Inter-American Development Bank,
5.74%, 1/12/00 24,956,153
15,000,000 Merrill Lynch & Co., Inc.,
6.55%, 1/19/00 14,950,875
20,000,000 Petrofina (DE) Inc.,
6.25%, 1/11/00 19,965,277
------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $69,837,166) 69,837,166
------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--1.5%
Securities Held Under Repurchase
Agreements, 2.87%, 1/03/00, with
Bear, Stearns & Co. Inc., dtd
12/31/99, repurchase price
$10,348,327; collateralized by
U.S. Treasury Notes (par value
$10,725,000 due 1/15/09) ...... 10,345,853
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $80,183,019) 80,183,019
------------
TOTAL INVESTMENTS
(COST $487,307,434)(B) 102.3% 690,243,867
Liabilities in Excess of Other Assets (2.3) (15,379,680)
----- ------------
NET ASSETS 100.0% $674,864,187
===== ============
- ------------------------
+ Securities partially or fully on loan.
* Non-income producing security.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $487,307,434, amounted to
$202,936,433 which consisted of aggregate gross unrealized appreciation of
$212,312,675 and aggregate gross unrealized depreciation of $9,376,242.
See Notes to Financial Statements.
F-5
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 43.97 $ 43.75 $ 40.91 $ 39.41 $ 27.31
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.12)(i) (0.02) (0.05)(i) (0.04)(i) (0.09)
Net realized and unrealized gain
(loss) on investments 16.98 6.30 4.45 1.70 12.19
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 16.86 6.28 4.40 1.66 12.10
Distributions from net realized gains (5.68) (6.06) (1.56) (0.16) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 55.15 $ 43.97 $ 43.75 $ 40.91 $ 39.41
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 43.42% 15.53% 11.39% 4.18% 44.31%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $674,864 $1,216,584 $997,586 $1,469,518 $984,212
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.90% 0.89% 0.89% 0.88% 0.92%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to
average net assets (0.28%) (0.20%) (0.12%) (0.09%) (0.48%)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 182.25% 142.90% 104.43% 110.04% 80.66%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
F-6
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- -------------------------------------------------------------------------------
SHARES COMMON STOCKS--90.2% VALUE
------ -----
ADVERTISING--4.1%
21,600 Omnicom Group Inc. $ 2,160,000
22,600 Young & Rubicam Inc. 1,598,950
-----------
3,758,950
-----------
AEROSPACE--1.4%
22,600 Honeywell International Inc. 1,303,738
-----------
BIO-TECHNOLOGY--3.9%
59,800 Amgen Inc.* 3,591,738
-----------
BROADCASTING--3.9%
12,900 Cablevision Systems Corp., Cl. A* 973,950
23,700 Clear Channel Communications Inc.* 2,115,225
5,300 EchoStar Communications Corp., Cl. A* 516,750
-----------
3,605,925
-----------
COMMUNICATION EQUIPMENT-- 6.5%
28,000 Cisco Systems, Inc.* 2,999,500
20,100 Motorola, Inc. 2,959,725
----------
5,959,225
----------
COMMUNICATIONS--15.8%
51,600 America Online Inc.* 3,892,575
28,700 At Home Corp. Series A* 1,230,513
15,500 AT&T Corp Liberty Media Group, Cl. A* 879,625
49,400 Comcast Corp., Cl. A Special 2,497,788
20,600 Nextel Communications Inc., Cl. A* 2,124,375
4,400 Qualcomm Inc.* 774,950
12,900 Sprint (PCS Group) Corp.* 1,322,250
23,200 Time Warner Inc. 1,680,550
-----------
14,402,626
-----------
COMPUTER RELATED & BUSINESS EQUIPMENT--1.0%
17,600 Dell Computer Corp.* 897,600
-----------
COMPUTER SERVICES--13.1%
12,900 CNET Inc.* 732,075
20,600 eBay Inc.* 2,578,863
31,000 Exodus Communications, Inc.* 2,753,187
13,700 Yahoo Inc.* 5,927,818
----------
11,991,943
----------
COMPUTER SOFTWARE--4.0%
31,400 Microsoft Corporation* 3,665,950
-----------
CONGLOMERATE--2.3%
13,400 General Electric Co. 2,073,650
-----------
CONSUMER PRODUCTS--2.2%
75,000 Cendant Corp.* 1,992,187
-----------
SHARES VALUE
------ -----
ENERGY & ENERGY SERVICES--2.4%
53,600 Halliburton Co. $ 2,157,400
-----------
FINANCIAL SERVICES--8.2%
17,300 American Express Co. 2,876,125
18,109 Bank of America Corp. 908,845
51,100 Citigroup Inc. 2,839,244
5,700 Morgan Stanley Dean Witter & Co. 813,675
-----------
7,437,889
-----------
INSURANCE--.7%
5,781 American International Group, Inc. 625,071
----------
PHARMACEUTICALS--2.8%
25,200 Bristol Myers Squibb Co. 1,617,525
11,200 Warner-Lambert Co. 917,700
----------
2,535,225
----------
RETAILING--5.8%
13,400 Bed Bath & Beyond Inc.* 465,650
7,100 Costco Wholesale Corp.* 647,875
42,450 Home Depot, Inc. 2,910,478
17,850 Wal-Mart Stores Inc. 1,233,881
----------
5,257,884
----------
SEMICONDUCTOR CAPITAL EQUIPMENT--2.2%
10,300 Applied Materials Inc.* 1,304,881
10,300 Teradyne, Inc.* 679,800
----------
1,984,681
----------
SEMICONDUCTORS--9.9%
8,200 Broadcom Corp., Cl. A* 2,233,475
27,800 Conexant Systems Inc.* 1,845,225
23,200 Linear Technology Corporation 1,660,250
25,800 Texas Instruments, Incorporated 2,499,375
15,500 Vitesse Semiconductor Corp.* 812,781
----------
9,051,106
----------
TOTAL COMMON STOCKS
(COST $58,808,720) 82,292,788
----------
PRINCIPAL SHORT-TERM INVESTMENTS--5.6%
AMOUNT SHORT-TERM CORPORATE NOTES--3.3%
------
$3,000,000 Toronto-Dominion Holdings (USA) Inc.,
5.94%, 1/27/00
(COST $2,987,134) 2,987,134
----------
See Notes to Financial Statements.
F-7
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (CONT'D) VALUE
-----
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--2.3%
Securities Held Under Repurchase
Agreements, 2.87%, 1/03/00, with
Bear, Stearns & Co. Inc., dtd
12/31/99, repurchase price
$2,143,143; collateralized by U.S.
Treasury Notes (par value
$2,225,000 due 1/15/09) .......... $ 2,142,631
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $5,129,765) 5,129,765
-----------
TOTAL INVESTMENTS
(COST $63,938,485)(A) 95.8% 87,422,553
Other Assets in Excess of Liabilities 4.2 3,827,327
----- -----------
NET ASSETS 100.0% $91,249,880
===== ===========
- ------------------------
+ Securities partially or fully on loan.
* Non-income producing security.
(a) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $63,938,485, amounted to
$23,484,068 which consisted of aggregate gross unrealized appreciation of
$24,536,752 and aggregate gross unrealized depreciation of $1,052,684.
See Notes to Financial Statements.
F-8
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN INCOME AND GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 13.12 $ 10.99 $ 8.42 $ 17.79 $ 13.30
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.00 0.03 0.03 0.09(i) 0.11(i)
Net realized and unrealized gain
(loss) on investments 5.26 3.30 2.94 1.87 4.54
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.26 3.33 2.97 1.96 4.65
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.03) (0.04) (0.04) (0.33) (0.16)
Distributions from net realized gains (0.77) (1.16) (0.36) (11.00) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.80) (1.20) (0.40) (11.33) (0.16)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 17.58 $ 13.12 $ 10.99 $ 8.42 $ 17.79
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 42.45% 32.39% 36.29% 19.68% 35.13%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $91,250 $77,926 $47,399 $20,910 $ 8,639
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.70% 0.70% 0.74% 0.81% 0.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets 0.03% 0.31% 0.56% 0.94% 0.61%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 193.23% 131.67% 150.09% 121.60% 164.05%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
F-9
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--61.1% VALUE
------ -----
ADVERTISING--.3%
1,800 Omnicom Group Inc. $ 180,000
-----------
AEROSPACE--2.4 %
10,900 Honeywell International Inc. 628,794
11,000 United Technologies Corp. 715,000
-----------
1,343,794
-----------
AUTOMOTIVE--.8%
6,700 Harley Davidson, Inc. 429,219
-----------
BIO-TECHNOLOGY--2.4%
20,200 Amgen Inc.* 1,213,262
1,800 Biogen Inc.* 152,100
-----------
1,365,362
-----------
BROADCASTING--.9%
2,000 Clear Channel Communications Inc.* 178,500
3,200 EchoStar Communications Corp., Cl. A* 312,000
-----------
490,500
-----------
BUILDING & CONSTRUCTION--.2%
4,400 Masco Corp. 111,650
-----------
BUSINESS SERVICES--.7%
13,500 IMS Health Inc. 367,031
-----------
COMMUNICATION EQUIPMENT--5.9%
12,200 Cisco Systems, Inc.* 1,306,925
8,800 Corning Inc. 1,134,650
6,000 Motorola, Inc. 883,500
-----------
3,325,075
-----------
COMMUNICATIONS--9.0%
19,000 America Online Inc.* 1,433,312
12,726 At Home Corp., Series A* 545,628
10,400 AT&T Corp Liberty Media Group, Cl. A* 590,200
9,000 Comcast Corp., Cl. A Special 455,062
5,700 Cox Communications Inc., Cl. A* 293,550
8,250 MCI Worldcom Inc.* 437,766
8,000 MediaOne Group Inc.* 614,500
1,600 Qualcomm Inc.* 281,800
6,400 Sprint Corp. 430,800
-----------
5,082,618
-----------
COMPUTER RELATED & BUSINESS EQUIPMENT--1.6%
17,600 Dell Computer Corp.* 897,600
-----------
COMPUTER SERVICES--4.0%
7,700 eBay Inc.* 963,944
3,044 Yahoo Inc.* 1,317,101
-----------
2,281,045
-----------
COMPUTER SOFTWARE--3.7%
5,700 Intuit Inc.* 341,644
14,800 Microsoft Corporation* 1,727,900
-----------
2,069,544
-----------
SHARES VALUE
------ -----
ENERGY & ENERGY SERVICES--1.7%
23,850 Halliburton Co. $ 959,962
-----------
FINANCIAL SERVICES--8.7%
1,500 American Express Co. 249,375
15,016 Bank of America Corp. 753,615
20,200 Citigroup Inc. 1,122,362
4,391 Firstar Corp. 92,760
9,400 Household International Inc. 350,150
9,300 Kansas City Southern Industries, Inc. 694,012
2,100 Merrill Lynch & Co., Inc. 175,350
9,200 Morgan Stanley Dean Witter & Co. 1,313,300
3,300 Paine Webber Group Inc. 128,081
-----------
4,879,005
-----------
FREIGHT--1.7%
13,800 United Parcel Service Inc., Cl. B 952,200
-----------
INSURANCE--1.6%
8,637 American International Group, Inc. 933,876
-----------
LEISURE & ENTERTAINMENT--.3%
3,400 Carnival Corp. 162,562
-----------
PHARMACEUTICALS--4.0%
10,600 Bristol Myers Squibb Co. 680,387
14,166 Pfizer Inc. 459,510
13,900 Warner-Lambert Co. 1,138,931
-----------
2,278,828
-----------
RETAILING--4.9%
7,100 Amazon.com Inc.* 540,488
5,800 Best Buy Company Inc.* 291,088
1,800 Costco Wholesale Corp.* 164,250
17,325 Home Depot, Inc. 1,187,845
8,150 Wal-Mart Stores Inc. 563,370
-----------
2,747,041
-----------
SEMICONDUCTOR CAPITAL EQUIPMENT--3.0%
9,700 Applied Materials Inc.* 1,228,869
7,000 Teradyne, Inc.* 462,000
-----------
1,690,869
-----------
SEMICONDUCTORS--3.3%
9,400 Altera Corporation* 465,887
9,000 Intel Corp. 740,812
6,600 Linear Technology Corporation 472,312
1,700 Texas Instruments, Incorporated 164,689
-----------
1,843,700
-----------
TOTAL COMMON STOCKS
(COST $24,918,426) 34,391,481
-----------
PREFERRED STOCK--.4%
COMMUNICATIONS
1,200 Nokia Corporation, ADR
(COST $202,089) 228,000
-----------
F-10
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT CORPORATE BONDS--15.4% VALUE
------ -----
AUTOMOTIVE--.4%
$200,000 Ford Capital B.V.,
9.50%, 6/01/10 $ 225,850
-----------
COMMUNICATIONS--2.9%
300,000 MCI Worldcom Inc.,
8.25%, 1/20/23 310,635
800,000 TCI Communications Inc.,
8.00%, 8/01/05 825,832
500,000 Tele-Communications Inc.,
7.25%, 8/01/05 501,870
-----------
1,638,337
-----------
ELECTRIC & GAS COMPANIES--1.6%
100,000 Cincinnati Gas & Electric Co.,
7.20%, 10/01/23 92,091
400,000 Potomac Electric Power Co.,
7.00%, 1/15/24 368,000
500,000 Washington Gas Light Co.,
6.51%, 8/18/08 470,285
-----------
930,376
-----------
FINANCIAL SERVICES--6.9%
800,000 Associates Corp. North America,
5.75%, 11/01/03 764,760
BankAmerica Corp.,
100,000 7.125%, 5/12/05 99,079
800,000 7.20%, 4/15/06 794,592
200,000 6.625%, 10/15/07 190,054
400,000 Bankers Trust Corp.,
7.00%, 3/13/18 355,448
260,000 Chase Manhattan Corp.,
8.50%, 2/15/02 267,795
200,000 Citicorp,
7.125%, 6/01/03 199,784
800,000 Goldman Sachs Group,
6.65%, 5/15/09 747,760
200,000 Merrill Lynch & Co., Inc.,
6.75%, 4/30/01 199,488
290,000 Morgan Stanley Dean Witter & Co.,
7.50%, 2/01/24 264,787
-----------
3,883,547
-----------
PRINCIPAL
AMOUNT VALUE
------ -----
INSURANCE--1.7%
$500,000 Beneficial Corp.,
6.575%, 12/16/02 $ 491,950
500,000 Loews Corp.,
7.625%, 6/01/23 460,820
-----------
952,770
-----------
LEISURE & ENTERTAINMENT--.5%
300,000 Disney(Walt) Company,
6.375%, 3/30/01 298,941
-----------
RETAILING--1.4%
800,000 Wal-Mart Stores Inc.,
6.55%, 8/10/04 788,032
-----------
TOTAL CORPORATE BONDS
(COST $9,047,036) 8,717,853
-----------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS--14.5%
255,000 Federal Home Loan Bank Corp.,
6.55%, 9/09/13 229,459
Federal Home Loan Mortgage Corp.,
800,000 6.00%, 6/23/04 770,376
800,000 5.75%, 4/15/08 739,624
600,000 7.08%, 3/17/14 553,314
Federal National Mortgage Assoc.,
200,000 8.50%, 2/01/05 200,312
500,000 6.96%, 4/02/07 498,205
300,000 6.42%, 7/14/08 280,077
633,000 7.00%, 3/04/13 586,810
400,000 6.75%, 2/04/28 345,064
U.S. Treasury Notes,
800,000 6.125%, 12/31/01 799,128
800,000 6.25%, 2/15/03 799,000
800,000 6.00%, 8/15/04 789,496
800,000 6.50%, 10/15/06 800,248
800,000 5.625%, 5/15/08 755,377
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(COST $8,383,454) 8,146,490
-----------
See Notes to Financial Statements.
F-11
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--9.3% VALUE
------ -----
SHORT-TERM CORPORATE NOTES--8.9%
$2,000,000 Bell Atlantic Network Funding Corporation,
6.28%, 1/05/00 $ 1,998,607
1,500,000 Indianapolis Power & Light Company,
6.45%, 1/12/00 1,497,044
1,500,000 Standard Life Assurance,
6.45%, 1/12/00 1,497,044
-----------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $4,992,695) 4,992,695
-----------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--.4%
Securities Held Under Repurchase
Agreements, 2.87%, 1/03/00, with
Bear, Stearns & Co. Inc., dtd 12/31/99,
repurchase price $239,372; collateralized
by U.S. Treasury Notes
(par value $250,000 due 2/28/03) 239,315
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $5,232,010) 5,232,010
-----------
TOTAL INVESTMENTS (COST $47,783,015)(A) 100.7% 56,715,834
Liabilities in Excess of Other Assets (.7) (389,326)
----- ----------
Net Assets 100.0% $56,326,508
===== ===========
- ------------------
* Non-income producing security.
(a) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $47,783,015, amounted to
$8,932,819 which consisted of aggregate gross unrealized appreciation of
$10,278,764 and aggregate gross unrealized depreciation of $1,345,945.
See Notes to Financial Statements.
F-12
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN BALANCED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 12.98 $ 10.76 $ 9.24 $ 13.64 $10.80
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.15 0.19 0.17 0.21(i) 0.33(i)
Net realized and unrealized gain
(loss) on investments 3.45 3.02 1.63 1.01 2.73
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.60 3.21 1.80 1.22 3.06
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income (0.17) (0.18) (0.12) (0.73) (0.22)
Distributions from net realized gains (0.84) (0.81) (0.16) (4.89) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total Distributions (1.01) (0.99) (0.28) (5.62) (0.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 15.57 $ 12.98 $ 10.76 $ 9.24 $13.64
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 29.21% 31.51% 19.82% 10.17% 28.62%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $56,327 $28,208 $16,614 $10,486 $3,671
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.93% 0.92% 1.01% 1.14% 1.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets 1.66% 2.09% 2.14% 2.06% 2.49%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 118.74% 94.64% 105.01% 68.66% 113.02%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
F-13
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- --------------------------------------------------------------------------------
SHARES COMMON STOCKS--92.7% VALUE
------ -----
ADVERTISING--1.6%
75,100 Lamar Advertising Co., Cl. A* $ 4,548,243
144,000 Young & Rubicam Inc. 10,188,000
------------
14,736,243
------------
AUTOMOTIVE--2.6%
382,000 Harley Davidson, Inc. 24,471,875
------------
BIO-TECHNOLOGY--4.9%
33,200 Affymetrix Inc.* 5,633,625
294,400 Biogen Inc.* 24,876,800
91,100 Medimmune Inc.* 15,111,212
------------
45,621,637
------------
BROADCASTING--1.4%
130,900 EchoStar Communications Corp., Cl. A* 12,762,750
------------
BUSINESS SERVICES--6.5%
44,800 Ariba Inc.* 7,946,400
37,600 Digital Island Inc.* 3,576,700
121,700 eSpeed Inc.* 4,327,956
695,250 Fiserv Inc.* 26,636,766
648,883 IMS Health Inc. 17,641,507
------------
60,129,329
------------
COMMUNICATION EQUIPMENT--5.2%
57,500 Brocade Communications Systems Inc.* 10,177,500
183,300 Corning Inc. 23,634,244
51,000 Emulex Corp.* 5,737,500
44,000 VeriSign Inc.* 8,401,250
------------
47,950,494
------------
COMMUNICATIONS--2.0%
441,864 At Home Corp., Series A* 18,944,918
------------
COMPUTER SERVICES--6.3%
223,400 Amdocs Limited* 7,707,300
427,300 CNET Inc.* 24,249,275
104,900 eBay Inc.* 13,132,169
72,600 Exodus Communications, Inc.* 6,447,788
44,000 Vignette Corp.* 7,172,000
------------
58,708,532
------------
COMPUTER SOFTWARE--5.7%
15,000 Commerce One Inc.* 2,947,500
119,400 CSG Systems International Inc.* 4,761,075
680,700 Intuit Inc.* 40,799,456
66,600 Legato Systems Inc.* 4,582,912
------------
53,090,943
------------
SHARES VALUE
------ -----
ENERGY & ENERGY SERVICES--8.1%
487,939 Calpine Corp.* $ 31,228,096
235,700 Devon Energy Corporation 7,748,637
219,400 EOG Resources Inc. 3,853,212
951,400 Nabors Industries Inc.* 29,433,938
278,800 Union Pacific Resources Group Inc. 3,554,700
------------
75,818,583
------------
FINANCIAL SERVICES--6.1%
454,600 Kansas City Southern Industries Inc. 33,924,525
593,250 Paine Webber Group Inc. 23,025,516
------------
56,950,041
------------
INDUSTRIAL EQUIPMENT--2.7%
130,100 SPX Corp.* 10,513,706
272,100 Waters Corp.* 14,421,300
------------
24,935,006
------------
LEISURE & ENTERTAINMENT--2.5%
1,153,457 Mandalay Resort Group* 23,213,322
------------
MEDICAL SERVICES--3.3%
334,500 Express Scripts Inc., Cl. A* 21,408,000
93,200 Gilead Sciences Inc.* 5,044,450
150,600 MedQuist Inc.* 3,887,362
------------
30,339,812
------------
OIL & GAS--3.1%
698,700 B.J. Services Company* 29,214,394
------------
PHARMACEUTICALS--3.3%
505,700 Forest Laboratories, Inc.* 31,068,944
------------
RESTAURANTS & LODGING--2.5%
898,250 Outback Steakhouse, Inc.* 23,298,359
------------
RETAILING--10.1%
389,200 Abercrombie & Fitch Co., Cl. A* 10,386,775
167,500 Amazon.com Inc.* 12,750,938
632,600 Bed Bath & Beyond Inc.* 21,982,850
275,700 Best Buy Company Inc.* 13,836,694
130,000 BJ's Wholesale Club Inc.* 4,745,000
177,800 Gucci Group N.V. 20,358,100
221,900 Williams Sonoma Inc.* 10,207,400
------------
94,267,757
------------
SEMICONDUCTOR CAPITAL EQUIPMENT--4.8%
81,200 ASM Lithography Holding NV* 9,236,500
98,200 Atmi Inc.* 3,246,738
487,300 Teradyne, Inc.* 32,161,800
------------
44,645,038
------------
See Notes to Financial Statements.
F-14
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
SHARES COMMON STOCKS (CONT'D) VALUE
------ -----
SEMICONDUCTORS--10.0%
523,500 Altera Corporation* $ 25,945,969
67,200 Conexant Systems Inc.* 4,460,400
370,700 Linear Technology Corporation 26,528,219
249,000 Maxim Integrated Products, Inc.* 11,749,688
204,300 Microchip Technology Incorporated* 13,981,781
34,500 Qlogic Corp.* 5,515,688
90,400 Vitesse Semiconductor Corp.* 4,740,350
------------
92,922,095
------------
TOTAL COMMON STOCKS
(COST $668,920,070) 863,090,072
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--8.4%
------
SHORT-TERM CORPORATE NOTES--7.0%
$10,000,000 Inter-American Development Bank,
5.74%, 1/12/00 9,982,461
35,000,000 Kansas City Power & Light Company,
6.50%, 1/10/00 34,943,125
20,000,000 Standard Life Assurance,
6.45%, 1/13/00 19,957,080
------------
TOTAL SHORT-TERM CORPORATE NOTES
(COST $64,882,666) 64,882,666
------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--1.4%
Securities Held Under Repurchase
Agreements, 2.87%, 1/03/00, with
Bear, Stearns & Co. Inc., dtd 12/31/99,
repurchase price $13,866,787; collateralized
by U.S. Treasury Notes (par value $14,220,000
due 2/28/03) 13,863,471
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $78,746,137) 78,746,137
------------
TOTAL INVESTMENTS
(COST $747,666,207)(A) 101.1% 941,836,209
Liabilities in Excess of Other Assets (1.1) (10,438,910)
----- -----------
NET ASSETS 100.0% $931,397,299
===== ============
- ------------------
+ Securities partially or fully on loan.
* Non-income producing security.
(a) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $747,666,207, amounted to
$194,170,002 which consisted of aggregate gross unrealized appreciation of
$209,579,714, and aggregate gross unrealized depreciation of $15,409,712.
See Notes to Financial Statements.
F-15
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 28.87 $ 24.18 $ 21.35 $ 19.44 $ 13.46
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (0.05) 0.00(i) (0.04) 0.03 (0.03)
Net realized and unrealized gain
(loss) on investments 8.00 6.95 3.20 2.29 6.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 7.95 6.95 3.16 2.32 5.98
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income -- -- (0.01) -- --
Distributions from net realized gains (4.59) (2.26) (0.32) (0.41) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (4.59) (2.26) (0.33) (0.41) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 32.23 $ 28.87 $ 24.18 $ 21.35 $ 19.44
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return 31.85% 30.30% 15.01% 11.90% 44.45%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) $931,397 $689,571 $444,967 $394,847 $185,349
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.85% 0.84% 0.84% 0.84% 0.90%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets (0.21%) 0.00% (0.15%) 0.08% (0.25%)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 162.30% 152.21% 151.98% 90.97% 104.74%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
F-16
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999
- -------------------------------------------------------------------------------
SHARES COMMON STOCKS--92.2% VALUE
------ -----
ADVERTISING--1.5%
53,000 Omnicom Group Inc. $ 5,300,000
------------
AEROSPACE--.4%
24,700 Honeywell International Inc. 1,424,881
------------
BIO-TECHNOLOGY--3.7%
220,300 Amgen Inc.* 13,231,769
------------
BROADCASTING--4.6%
54,000 Cablevision Systems Corp., Cl. A* 4,077,000
78,000 Clear Channel Communications Inc.* 6,961,500
57,900 EchoStar Communications Corp., Cl. A* 5,645,250
------------
16,683,750
------------
BUSINESS SERVICES--2.4%
30,000 Ariba Inc.* 5,321,250
34,800 Digital Island Inc.* 3,310,350
------------
8,631,600
------------
COMMUNICATION EQUIPMENT--9.3%
49,000 Brocade Communications Systems Inc.* 8,673,000
104,500 Cisco Systems, Inc.* 11,194,563
67,000 Motorola, Inc. 9,865,750
17,600 SDL Inc.* 3,836,800
------------
33,570,113
------------
COMMUNICATIONS--14.9%
191,000 America Online Inc.* 14,408,563
112,200 At Home Corp., Series A* 4,810,575
206,000 Comcast Corp., Cl. A Special 10,415,875
108,000 Cox Communications Inc., Cl. A* 5,562,000
30,000 McLeodUSA Inc., Cl. A* 1,766,250
81,600 Nextel Communications Inc., Cl. A* 8,415,000
48,000 Qualcomm Inc.* 8,454,000
------------
53,832,263
------------
COMPUTER RELATED & BUSINESS EQUIPMENT--3.2%
67,200 Dell Computer Corp.* 3,427,200
106,400 Sun Microsystems Inc.* 8,239,350
------------
11,666,550
------------
COMPUTER SERVICES--16.8%
97,600 CNET Inc.* 5,538,800
114,700 eBay Inc.* 14,359,006
166,000 Exodus Communications, Inc.* 14,742,875
30,000 Vignette Corp.* 4,890,000
49,590 Yahoo Inc.* 21,456,973
------------
60,987,654
------------
SHARES VALUE
------ -----
COMPUTER SOFTWARE--5.2%
101,700 Intuit Inc.* $ 6,095,644
110,200 Microsoft Corporation* 12,865,850
------------
18,961,494
------------
CONSUMER PRODUCTS--1.0%
136,000 Cendant Corp.* 3,612,500
------------
ENERGY & ENERGY SERVICES--2.1%
187,000 Halliburton Co. 7,526,750
------------
FINANCIAL SERVICES--6.5%
42,234 American Express Co. 7,021,402
71,527 Bank of America Corp. 3,589,761
181,750 Citigroup Inc. 10,098,484
20,000 Morgan Stanley Dean Witter & Co. 2,855,000
------------
23,564,647
------------
INSURANCE--.5%
15,437 American International Group, Inc. 1,669,126
------------
OIL & GAS--.4%
37,100 B.J. Services Company* 1,551,244
------------
PHARMACEUTICALS--1.9%
54,674 Bristol Myers Squibb Co. 3,509,387
42,100 Warner-Lambert Co. 3,449,568
------------
6,958,955
------------
RETAILING--3.6%
23,400 Costco Wholesale Corp. 2,135,250
99,600 Home Depot, Inc. 6,828,825
61,900 Wal-Mart Stores Inc. 4,278,838
------------
13,242,913
------------
SEMICONDUCTOR CAPITAL EQUIPMENT--4.4%
55,000 Applied Materials Inc.* 6,967,812
33,000 ASM Lithography Holding NV* 3,753,750
80,800 Teradyne, Inc.* 5,332,800
------------
16,054,362
------------
SEMICONDUCTORS--9.8%
58,000 Altera Corporation* 2,874,625
28,100 Broadcom Corp., Cl. A* 7,653,738
140,000 Conexant Systems Inc.* 9,292,500
48,000 Linear Technology Corporation 3,435,000
72,000 Texas Instruments, Incorporated 6,975,000
103,000 Vitesse Semiconductor Corp.* 5,401,063
------------
35,631,926
------------
TOTAL COMMON STOCKS
(COST $223,646,841) 334,102,497
------------
See Notes to Financial Statements.
F-17
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS--DECEMBER 31, 1999 (CONT'D)
- -------------------------------------------------------------------------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--5.6% VALUE
------ -----
SHORT-TERM CORPORATE NOTES--2.8%
$10,000,000 Constellation Energy Group,
6.35%, 1/10/00(a)
(COST $9,984,125) $ 9,984,125
------------
SECURITIES HELD UNDER
REPURCHASE AGREEMENTS--2.8%
Securities Held Under Repurchase
Agreements, 2.87%, 01/03/00, with
Bear, Stearns & Co. Inc., dtd
12/31/99, repurchase price
$10,390,042; collateralized by
U.S. Treasury Notes & U.S.
Treasury Strips (Total par value
$11,195,000 due 2/28/03-2/15/06) 10,387,558
------------
TOTAL SHORT-TERM INVESTMENTS
(COST $20,371,683) 20,371,683
------------
TOTAL INVESTMENTS
(COST $244,018,524)(B) 97.8% 354,474,180
Other Assets in Excess of Liabilities 2.2 8,025,565
---- -----------
NET ASSETS 100.0% $362,499,745
===== ============
- -----------------------------
+ Securities partially or fully on loan.
* Non-income producing security.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At December 31, 1999, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $244,018,524, amounted to
$110,455,656 which consisted of aggregate gross unrealized appreciation of
$114,617,673 and aggregate gross unrealized depreciation of $4,162,017.
See Notes to Financial Statements.
F-18
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM JANUARY 25, 1995
YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
_____________________________________________________ OPERATIONS)
1999 1998 1997 1996 TO DECEMBER 31, 1995(I)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 34.90 $ 23.17 $ 19.36 $ 17.43 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.09) (0.05) (0.03) (0.03)(ii) (0.03)
Net realized and unrealized gain
on investments 25.93 12.99 3.84 2.14 7.46
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 25.84 12.94 3.81 2.11 7.43
Distributions from net realized gains (2.77) (1.21) -- (0.18 --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 57.97 $ 34.90 $ 23.17 $ 19.36 $ 17.43
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 78.06% 57.83% 19.68% 12.04 74.30%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) $ 362,500 $ 101,710 $ 53,488 $ 34,925 $ 5,497
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses excluding interest to
average net assets 0.92% 0.93% 0.96% 1.06 1.50%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses including interest to
average net assets 0.93% 0.96% 1.00% 1.09 1.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Decrease reflected in above expense ratios
due to expense reimbursements -- -- -- -- 2.36%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment loss to
average net assets (0.49%) (0.27%) (0.17%) (0.15 ) (0.71%)
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 155.74% 143.59% 164.27% 102.10 178.23%
- ------------------------------------------------------------------------------------------------------------------------------------
Amount of debt outstanding
at end of period -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Average amount of debt outstanding
during the period $ 266,584 $ 246,101 $ 201,644 $ 76,079 $ 8,122
- ------------------------------------------------------------------------------------------------------------------------------------
Average daily number of shares
outstanding during the period 4,395,246 2,480,478 2,135,458 1,107,187 75,460
- ------------------------------------------------------------------------------------------------------------------------------------
Average amount of debt per share
during the period $ 0.06 $ 0.10 $ 0.09 $ 0.07 $ 0.11
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
(ii) Amount was computed based on average shares outstanding during the year.
See Notes to Financial Statements.
F-19
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value
(identified cost*)--see accompany-
ing schedules of investments $3,477,524,783 $690,243,867 $87,422,553 $56,715,834 $941,836,209 $354,474,180
Receivable for investment securities
sold -- 4,482,740 4,123,665 -- -- 11,492,912
Receivable for shares of beneficial
interest sold 9,325,508 1,196,539 12,035 80,370 1,475,216 1,095,323
Interest and dividends receivable 443,983 22,258 13,779 304,917 74,949 21,238
Other assets 123,317 35,596 22,951 3,162 36,512 6,226
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets 3,487,417,591 695,981,000 91,594,983 57,104,283 943,422,886 367,089,879
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities
purchased 93,457,355 2,403,313 -- 721,247 4,437,048 3,596,784
Payable for shares of beneficial
interest redeemed 4,113,664 18,197,902 279,591 11,481 6,918,280 725,145
Accrued investment management fees 2,053,337 453,415 44,961 34,149 602,182 238,306
Accrued expenses 267,328 62,183 20,551 10,898 68,077 29,899
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 99,891,684 21,116,813 345,103 777,775 12,025,587 4,590,134
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $3,387,525,907 $674,864,187 $91,249,880 $56,326,508 $931,397,299 $362,499,745
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid-in capital $2,111,525,013 $189,791,334 $41,624,610 $40,560,862 $608,652,119 $205,947,718
Undistributed net investment
income (accumulated loss) (698,692) (11,484,511) 39,433 655,687 (2,526,046) (1,219,985)
Undistributed net realized gain 452,693,036 293,620,931 26,101,769 6,177,140 131,101,224 47,316,356
Net unrealized appreciation 824,006,550 202,936,433 23,484,068 8,932,819 194,170,002 110,455,656
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $3,387,525,907 $674,864,187 $91,249,880 $56,326,508 $931,397,299 $362,499,745
- ------------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest
outstanding--Note 6 52,617,786 12,236,096 5,190,600 3,618,469 28,894,318 6,253,045
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE $ 64.38 $ 55.15 $ 17.58 $ 15.57 $ 32.23 $ 57.97
- ------------------------------------------------------------------------------------------------------------------------------------
*Identified cost $2,653,518,233 $487,307,434 $63,938,485 $47,783,015 $747,666,207 $244,018,524
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
F-20
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN AMERICAN
SMALL INCOME AMERICAN AMERICAN
AMERICAN CAPITALIZA- AND AMERICAN MIDCAP LEVERAGED
GROWTH TION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income
Income:
Interest $ 10,062,396 $ 3,991,159 $ 318,511 $ 932,573 $ 3,593,656 $ 395,629
Dividends 10,086,205 715,744 399,240 106,118 1,176,070 412,028
- ------------------------------------------------------------------------------------------------------------------------------------
Total Income 20,148,601 4,706,903 717,751 1,038,691 4,769,726 807,657
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses:
Management fees-- Note 3(a) 19,706,786 6,401,767 610,561 301,241 5,967,972 1,585,846
Interest on line of credit utilized -- -- -- -- -- 16,269
Custodian fees 565,790 198,065 34,340 29,901 173,428 50,551
Transfer agent fees 211,321 47,586 8,341 3,871 58,566 16,372
Professional fees 76,243 21,150 8,993 8,147 26,309 14,044
Trustees' fees 3,750 3,750 3,750 3,750 3,750 3,750
Miscellaneous 280,769 113,189 20,784 26,343 94,267 42,173
- ------------------------------------------------------------------------------------------------------------------------------------
Total Expenses 20,844,659 6,785,507 686,769 373,253 6,324,292 1,729,005
- ------------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (696,058) (2,078,604) 30,982 665,438 (1,554,566) (921,348)
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and Unrealized
Gain (LOSS) on Investments
Net realized gain on investments 460,411,703 293,080,766 26,152,817 6,227,204 131,041,471 47,112,154
Net change in unrealized appreciation
(depreciation) on investments 307,222,865 (71,914,674) 4,721,973 3,870,767 88,777,695 80,489,142
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain
on investments 767,634,568 221,166,092 30,874,790 10,097,971 219,819,166 127,601,296
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net
assets resulting from
operations $766,938,510 $219,087,488 $30,905,772 $10,763,409 $218,264,600 $126,679,948
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
F-21
<PAGE>
THE ALGER AMERICAN FUND
ALGER AMERICAN LEVERAGED ALLCAP PORTFOLIO
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
- -----------------------------------------------------
- -----------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN CASH
Cash flows from operating activities:
Interest received $ 401,885
Dividends received 397,682
Interest paid (16,313)
Operating expenses paid (1,530,916)
Purchase of short-term securities, net (17, 579,686)
Purchase of portfolio securities (387,841,248)
Proceeds from disposition of portfolio securities 272,503,835
Other (4,642)
- ------------------------------------------------------------------------------------------------
Net cash used in operating activities (133,669,403)
- ------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Dividends paid (10,215,601)
Proceeds from shares sold and dividends reinvested 211,880,629
Payments on shares redeemed (67,995,625)
- ------------------------------------------------------------------------------------------------
Net cash provided by financing activities 133,669,403
- ------------------------------------------------------------------------------------------------
Net increase in cash --
Cash--beginning of year --
- ------------------------------------------------------------------------------------------------
Cash--end of year $ --
- ------------------------------------------------------------------------------------------------
RECONCILIATION OF NET INCREASE IN NET ASSETS TO NET CASH USED IN OPERATING
ACTIVITIES:
Net increase in net assets resulting from operations $ 126,679,948
Increase in investments (125,940,740)
Increase in receivable for investments sold (10,573,143)
Increase in payable for securities purchased 3,596,784
Increase in interest and dividends receivable (8,090)
Net realized gain (47,112,154)
Net increase in unrealized appreciation (80,489,142)
Increase in accrued expenses 181,776
Net increase in other assets (4,642)
- ------------------------------------------------------------------------------------------------
Net cash used in operating activities $ (133,669,403)
- ------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
F-22
<PAGE>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN
AMERICAN INCOME AMERICAN AMERICAN
AMERICAN SMALL AND AMERICAN MIDCAP LEVERAGED
GROWTH CAPITALIZATION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ (696,058) $ (2,078,604) $ 30,982 $ 665,438 $ (1,554,566) $ (921,348)
Net realized gain on investments 460,411,703 293,080,766 26,152,817 6,227,204 131,041,471 47,112,154
Net change in unrealized appreciation
(depreciation) on investments 307,222,865 (71,914,674) 4,721,973 3,870,767 88,777,695 80,489,142
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 766,938,510 219,087,488 30,905,772 10,763,409 218,264,600 126,679,948
Dividends to shareholders:
Net investment income (3,390,608) -- (184,311) (431,942) -- --
Net realized gains (231,505,570) (121,889,784) (5,479,715) (2,190,935) (109,670,539) (10,215,601)
Net increase (decrease) from
shares of beneficial interest
transactions--Note 6 949,764,622 (638,917,257) (11,917,487) 19,977,656 133,231,781 144,325,873
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 1,481,806,954 (541,719,553) 13,324,259 28,118,188 241,825,842 260,790,220
Net Assets
Beginning of year 1,905,718,953 1,216,583,740 77,925,621 28,208,320 689,571,457 101,709,525
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $3,387,525,907 $ 674,864,187 $91,249,880 $56,326,508 $931,397,299 $362,499,745
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
(accumulated loss) $ (698,692) $ (11,484,511) $ 39,433 $ 655,687 $ (2,526,046) $ (1,219,985)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ALGER AMERICAN FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN
AMERICAN INCOME AMERICAN AMERICAN
AMERICAN SMALL AND AMERICAN MIDCAP LEVERAGED
GROWTH CAPITALIZATION GROWTH BALANCED GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $ 3,372,212 $ (2,025,154) $ 181,987 $ 430,207 $ (4,412) $ (178,959)
Net realized gain on investments 223,813,556 122,430,214 5,444,249 2,135,374 112,933,261 10,343,897
Net change in unrealized appreciation
on investments 338,483,830 51,310,113 11,504,771 3,469,514 35,788,129 23,275,972
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 565,669,598 171,715,173 17,131,007 6,035,095 148,716,978 33,440,910
Dividends to shareholders:
Net investment income (3,246,329) -- (194,463) (295,352) -- --
Net realized gains (198,381,152) (131,575,498) (5,380,156) (1,311,952) (41,830,668) (2,761,338)
Net increase from
shares of beneficial interest
transactions--Note 6 469,147,944 178,858,157 18,970,341 7,166,779 137,718,447 17,541,955
- ------------------------------------------------------------------------------------------------------------------------------------
Total increase 833,190,061 218,997,832 30,526,729 11,594,570 244,604,757 48,221,527
Net Assets
Beginning of year 1,072,528,892 997,585,908 47,398,892 16,613,750 444,966,700 53,487,998
- ------------------------------------------------------------------------------------------------------------------------------------
End of year $1,905,718,953 $1,216,583,740 $77,925,621 $28,208,320 $689,571,457 $101,709,525
- ------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income
(accumulated loss) $ 3,387,974 $ (9,405,907) $ 192,762 $ 422,191 $ (971,480) $ (298,637)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
F-23
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
- -------------------------------------------------------------------------------
NOTE 1--GENERAL:
The Alger American Fund (the "Fund") is a diversified, open-end registered
investment company organized as a business trust under the laws of the
Commonwealth of Massachusetts. The Fund operates as a series company currently
issuing six series of shares of beneficial interest: American Growth Portfolio,
American Small Capitalization Portfolio, American Income and Growth Portfolio,
American Balanced Portfolio, American MidCap Growth Portfolio and American
Leveraged AllCap Portfolio (collectively the "Portfolios"). The American Growth
Portfolio, American Small Capitalization Portfolio, American MidCap Growth
Portfolio and American Leveraged AllCap Portfolio invest primarily in equity
securities and each has an investment objective of long-term capital
appreciation. The American Income and Growth Portfolio's primary investment
objective is to provide a high level of dividend income by investing primarily
in dividend-paying equity securities; capital appreciation is a secondary
objective. The American Balanced Portfolio's investment objectives are current
income and long-term capital appreciation which it seeks to achieve through
investing in equity and fixed income securities. Shares of the Portfolios are
available and are being marketed exclusively as a pooled funding vehicle for
qualified retirement plans and for life insurance companies writing all types of
variable annuity contracts and variable life insurance policies.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(a) INVESTMENT VALUATION: Investments of the Portfolios are valued on each day
the New York Stock Exchange ("NYSE") is open as of the close of the NYSE
(normally 4:00 p.m. Eastern time). Listed and unlisted securities for which such
information is regularly reported are valued at the last reported sales price
or, in the absence of reported sales, at the mean between the bid and the asked
price, or, in the absence of a recent bid or asked price, the equivalent as
obtained from one or more of the major market makers for the securities to be
valued.
Securities for which market quotations are not readily available are valued
according to procedures established by the Board of Trustees to determine fair
value in good faith.
Securities having a remaining maturity of sixty days or less are valued at
amortized cost which approximates market value.
(b) SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on a trade date basis. Resulting receivables and payables are carried
at amounts which approximate fair value. Realized gains and losses from
security transactions are recorded on the identified cost basis. Dividend
income is recognized on the ex-dividend date and interest income is recognized
on the accrual basis.
(c) REPURCHASE AGREEMENTS: The Portfolios enter into repurchase agreements with
approved institutions, primarily U.S. Government securities dealers. The
repurchase agreements are collateralized by U.S. Government securities which
are verified by the investment manager as being either received and held in
physical possession by the custodian or as having been received by such
custodian in book-entry form through the Federal Reserve book-entry system. The
investment manager monitors the value of the collateral at the time the
repurchase agreement is entered into and on a daily basis during the term of
the agreement to ensure that its value equals or exceeds the agreed-upon
repurchase price to be repaid to the Portfolio. Additional collateral is
obtained when necessary.
(d) LENDING OF PORTFOLIO SECURITIES: The Portfolios lend their securities to
financial institutions, including an affiliate of the custodian, provided that
the market value of securities loaned will not at any time exceed one-third of
the Portfolio's total assets, as defined. The Portfolios earn fees on the
securities loaned which are included in interest income in the accompanying
Statements of Operations. In order to protect against the risk of failure by
the borrower to return the securities loaned or any delay in the delivery of
such securities, the investment manager ensures that the loan is collateralized
by cash, letters of credit or U.S. Government securities that are maintained at
all times in an amount equal to at least 100 percent of the current market
value of the loaned securities. At December 31, 1999, the value of securities
loaned and collateral received thereon were as follows:
VALUE OF
SECURITIES VALUE OF
LOANED COLLATERAL
----------- -----------
American Growth Portfolio $ -- $ --
American Small Capitalization
Portfolio 44,009,766 44,894,197
American Income and Growth
Portfolio 691,400 708,565
American Balanced Portfolio -- --
American MidCap Growth
Portfolio 4,782,294 4,878,374
American Leveraged AllCap
Portfolio 4,242,650 4,328,917
(e) DIVIDENDS TO SHAREHOLDERS: Dividends and distributions payable to
shareholders are recorded by the Fund on the ex-dividend date.
Dividends from net investment income are declared and paid annually.
F-24
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
Distributions from net realized gains, offset by any loss carryforward, are
declared and paid annually after the end of the fiscal year in which earned.
(f) FEDERAL INCOME TAXES: It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of the taxable income, including net realized
capital gains, of each Portfolio to its respective shareholders. Therefore, no
federal income tax provision is required. Each Portfolio is treated as a
separate entity for the purpose of determining such compliance.
(g) EXPENSES: The Fund accounts separately for the assets, liabilities and
operations of each Portfolio. Expenses directly attributable to each Portfolio
are charged to that Portfolio's operations; expenses which are applicable to all
Portfolios are allocated among them.
(h) OTHER: These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 3--INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to the
provisions of its Investment Management Agreement (the "Agreement") with Fred
Alger Management, Inc. ("Alger Management"), are payable monthly and computed
based on the average daily net assets of each Portfolio at the following annual
rates:
American Growth Portfolio .750%
American Small Capitalization Portfolio .850
American Income and Growth Portfolio .625
American Balanced Portfolio .750
American MidCap Growth Portfolio .800
American Leveraged AllCap Portfolio .850
Each Agreement further provides that if in any fiscal year the aggregate
expenses, excluding interest, taxes, brokerage commissions, and extraordinary
expenses, of the American Growth Portfolio exceed 1.50%; the American Small
Capitalization Portfolio exceed 1.50%; the American Income and Growth Portfolio
exceed 1.25%; the American Balanced Portfolio exceed 1.25%; the American MidCap
Growth Portfolio exceed 1.50% and the American Leveraged AllCap Portfolio exceed
1.50% of the average daily net assets of the applicable Portfolio, Alger
Management will reimburse that Portfolio for the excess expenses.
(b) BROKERAGE COMMISSIONS: During the year ended December 31, 1999, the American
Growth Portfolio, American Small Capitalization Portfolio, American Income and
Growth Portfolio, American Balanced Portfolio, American MidCap Growth Portfolio
and the American Leveraged AllCap Portfolio paid Fred Alger & Company,
Incorporated ("Alger Inc.") $5,111,202, $2,278,921, $231,116, $53,606,
$1,821,363 and $341,921, respectively, in connection with securities
transactions.
(c) TRANSFER AGENCY FEES: The Fund has entered into a transfer agency agreement
with Alger Shareholder Services, Inc. ("Services"), an affiliate of Alger
Management, whereby Services will act as transfer agent for the Fund.
(d) Certain trustees and officers of the Fund are directors and officers of
Alger Management, Alger Inc. and Services.
NOTE 4--SECURITIES TRANSACTIONS:
Purchases and sales of securities, other than short-term securities, for the
year ended December 31, 1999, were as follows:
PURCHASES SALES
--------- ------
American Growth Portfolio $3,954,279,606 $3,289,891,955
American Small Capitalization
Portfolio 1,236,782,165 1,932,594,294
American Income and Growth
Portfolio 178,438,444 200,800,089
American Balanced Portfolio 58,114,482 38,749,526
American MidCap Growth
Portfolio 1,171,313,352 1,112,905,571
American Leveraged AllCap
Portfolio 391,438,032 283,074,144
NOTE 5--LINE OF CREDIT:
The American Leveraged AllCap Portfolio has a line of credit with its custodian
bank whereby it may borrow up to one-third of the value of its assets, as
defined, up to a maximum of $25,000,000. Such borrowings have a variable
interest rate and are payable on demand. To the extent American Leveraged AllCap
Portfolio borrows under this line, it must pledge securities with a total value
of at least twice the amount borrowed. During the year ended December 31, 1999,
the American Leveraged AllCap Portfolio had borrowings which averaged $266,584
at a weighted average interest rate of 6.02%.
NOTE 6--SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial interest of
$.001 par value.
<PAGE>
F-25
<PAGE>
THE ALGER AMERICAN FUND
NOTES TO FINANCIAL STATEMENTS (CONT'D)
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
During the year ended December 31, 1999, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------- --------
American Growth
Portfolio:
Shares sold 46,703,529 $2,602,462,915
Dividends reinvested 4,531,199 234,852,067
--------- -------------
51,234,728 2,837,314,982
Shares redeemed (34,425,887) (1,887,550,360)
--------- -------------
Net increase 16,808,841 $949,764,622
========= =============
SHARES AMOUNT
------- --------
American Small Capitalization
Portfolio:
Shares sold 31,804,437 $1,387,733,383
Dividends reinvested 3,077,857 121,883,144
--------- ------------
34,882,294 1,509,616,527
Shares redeemed (50,315,702) (2,148,533,784)
--------- ------------
Net decrease (15,433,408) $(638,917,257)
========= ============
SHARES AMOUNT
------- --------
American Income and Growth
Portfolio:
Shares sold 4,609,317 $ 62,276,927
Dividends reinvested 447,209 5,661,661
--------- ------------
5,056,526 67,938,588
Shares redeemed (5,803,323) (79,856,075)
--------- ------------
Net decrease (746,797) $(11,917,487)
========= ============
SHARES AMOUNT
------- --------
American Balanced
Portfolio:
Shares sold 1,671,901 $ 23,274,857
Dividends reinvested 200,644 2,620,408
--------- ------------
1,872,545 25,895,265
Shares redeemed (427,507) (5,917,609)
--------- ------------
Net increase 1,445,038 $ 19,977,656
========= ============
SHARES AMOUNT
------- --------
American MidCap Growth
Portfolio:
Shares sold 41,675,397 $1,149,683,205
Dividends reinvested 4,326,254 109,670,534
--------- ------------
46,001,651 1,259,353,739
Shares redeemed (40,988,951) (1,126,121,958)
--------- ------------
Net increase 5,012,700 $ 133,231,781
========= ============
SHARES AMOUNT
------- --------
American Leveraged AllCap
Portfolio:
Shares sold 4,701,044 $ 202,660,204
Dividends reinvested 263,906 10,147,195
--------- ------------
4,964,950 212,807,399
Shares redeemed (1,626,596) (68,481,526)
--------- ------------
Net increase 3,338,354 $ 144,325,873
========= ============
During the year ended December 31, 1998, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
------- --------
American Growth
Portfolio:
Shares sold 22,276,285 $1,015,249,072
Dividends reinvested 4,809,435 201,563,406
--------- ------------
27,085,720 1,216,812,478
Shares redeemed (16,358,040) (747,664,534)
--------- ------------
Net increase 10,727,680 $ 469,147,944
========= ============
SHARES AMOUNT
------- --------
American Small Capitalization
Portfolio:
Shares sold 33,401,217 $1,342,889,723
Dividends reinvested 3,247,801 131,568,417
--------- ------------
36,649,018 1,474,458,140
Shares redeemed (31,781,393) (1,295,599,983)
--------- ------------
Net increase 4,867,625 $ 178,858,157
========= ============
SHARES AMOUNT
------- --------
American Income and Growth
Portfolio:
Shares sold 2,355,653 $ 27,413,251
Dividends reinvested 504,168 5,571,055
--------- ------------
2,859,821 32,984,306
Shares redeemed (1,236,899) (14,013,965)
--------- ------------
Net increase 1,622,922 $ 18,970,341
========= ============
SHARES AMOUNT
------- --------
American Balanced
Portfolio:
Shares sold 781,832 $ 8,989,415
Dividends reinvested 146,968 1,604,892
--------- ------------
928,800 10,594,307
Shares redeemed (299,561) (3,427,528)
--------- ------------
Net increase 629,239 $ 7,166,779
========= ============
SHARES AMOUNT
------- --------
American MidCap Growth
Portfolio:
Shares sold 14,298,667 $ 361,534,632
Dividends reinvested 1,688,763 41,830,666
--------- ------------
15,987,430 403,365,298
Shares redeemed (10,509,008) (265,646,851)
--------- ------------
Net increase 5,478,422 $ 137,718,447
========= ============
SHARES AMOUNT
------- --------
American Leveraged AllCap
Portfolio:
Shares sold 1,353,912 $ 37,604,075
Dividends reinvested 107,618 2,731,336
--------- ------------
1,461,530 40,335,411
Shares redeemed (854,961) (22,793,456)
--------- ------------
Net increase 606,569 $ 17,541,955
========= ============
F-26
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES
OF THE ALGER AMERICAN FUND:
We have audited the statements of assets and liabilities, including the
schedules of investments, of The Alger American Fund (a Massachusetts business
trust comprising, respectively, the Alger American Growth Portfolio, Alger
American Small Capitalization Portfolio, Alger American Income and Growth
Portfolio, Alger American Balanced Portfolio, Alger American MidCap Growth
Portfolio and Alger American Leveraged AllCap Portfolio), as of December 31,
1999, and the related statements of operations and cash flows for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, except for the Alger American Leveraged AllCap Portfolio,
which is for the four years in the period then ended, and for the period ended
December 31, 1995. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1999, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting The Alger American Fund, as of
December 31, 1999, the results of their operations and cash flows for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and their financial highlights for each of the five years in
the period then ended,except for the Alger American Leveraged AllCap Portfolio,
which is for the four years in the period then ended, and for the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
February 8, 2000
F-27
<PAGE>
APPENDIX
Corporate Bond Ratings
Bonds rated Aa by Moody's Investors Service, Inc. ("Moody's") are judged by
Moody's to be of high quality by all standards. Together with bonds rated Aaa
(Moody's highest rating), they comprise what are generally known as high-grade
bonds. Aa bonds are rated lower than Aaa bonds because margins of protection may
not be as large as those of Aaa bonds, or fluctuation of protective elements may
be of greater amplitude, or there may be other elements present that make the
long-term risks appear somewhat larger than those applicable to Aaa securities.
Bonds that are rated A by Moody's possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present that suggest a susceptibility to impairment in the future.
Moody's Baa rated bonds are considered as medium-grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and, in
fact, have speculative characteristics as well.
Bonds rated Ba by Moody's are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times in the future. Uncertainty of position
characterizes bonds in this class. Bonds which are rated B by Moody's generally
lack characteristics of a desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the contract over any
period of time may be small.
Moody's applies the numerical modifiers 1, 2 and 3 to each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
Bonds rated AA by Standard & Poor's Corporation ("S&P") are judged by S&P
to be high-grade obligations and in the majority of instances differ only in
small degree from issues rated AAA (S&P's highest rating). Bonds rated AAA are
considered by S&P to be the highest grade obligations and possess the ultimate
degree of protection as to principal and interest. With A bonds, as with AAA
bonds, prices move with the long-term money market. Bonds rated A by S&P have a
strong capacity to pay principal and interest, although they are somewhat more
susceptible to the adverse effects of changes in circumstances and economic
conditions. S&P's BBB rated bonds, or medium-grade category bonds, are
borderline between definitely sound obligations and those where the speculative
elements begin to predominate. These bonds have adequate asset coverage and
normally are protected by satisfactory earnings. Their susceptibility to
changing conditions, particularly to depressions, necessitates constant
watching. These bonds generally are more responsive to business and trade
conditions than to interest rates. This group is the lowest-rated that qualifies
for commercial bank investment. Bonds rated BB and B by S&P are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. These
ratings may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories. Debt rated BB has less near-term
vulnerability to default than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business, financial or economic
conditions that could lead to inadequate capacity to meet timely interest and
principal payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating. Debt rated B has
a greater vulnerability to default but currently has the capacity to meet
interest payments and principal repayments. Adverse business, financial or
economic conditions will likely impair capacity or willingness to pay interest
and repay principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating. Bonds rated
AAA by Fitch Investors Service, Inc. ("Fitch") are judged by Fitch to be
strictly high-grade, broadly marketable, suitable for investment by trustees and
fiduciary institutions and liable to but slight market fluctuation other than
through changes in the money rate. The prime feature of an AAA bond is a showing
of earnings several times or many times interest requirements, with such
stability of applicable earnings that safety is beyond reasonable question
whatever changes occur in conditions. Bonds rated AA by Fitch are judged by
Fitch to be of safety virtually beyond question and are readily salable, whose
merits are not unlike those of the
A-1
<PAGE>
APPENDIX
(continued)
AAA class, but whose margin of safety is less strikingly broad. The issue may be
the obligation of a small company, strongly secured but influenced as to rating
by the lesser financial power of the enterprise and more local type of market.
Bonds rated Duff-1 are judged by Duff and Phelps, Inc. ("Duff") to be of
the highest credit quality with negligible risk factors; only slightly more than
U.S. Treasury debt. Bonds rated Duff-2, 3 and 4 are judged by Duff to be of high
credit quality with strong protection factors. Risk is modest but may vary
slightly from time to time because of economic conditions.
COMMERCIAL PAPER RATINGS
Moody's Commercial Paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. The rating Prime-1 is the highest commercial paper rating
assigned by Moody's. Issuers rated Prime-1, or related supporting institutions,
are considered to have a superior capacity for repayment of short-term
promissory obligations. Issuers rated Prime-2, or related supporting
institutions, are considered to have a strong capacity for repayment of
short-term promissory obligations. This will normally be evidenced by many of
the characteristics of issuers rated Prime-1, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample liquidity is maintained.
Commercial paper ratings of S&P are current assessments of the likelihood of
timely payment of debts having original maturities of no more than 365 days.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted A-1+. Capacity for
timely payment on commercial paper rated A-2 is strong, but the relative degree
of safety is not as high as for issues designated A-1.
The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest
degree of assurance for timely payment. The rating Fitch-2 (Very Good Grade) is
the second highest commercial paper rating assigned by Fitch which reflects an
assurance of timely payment only slightly less in degree than the strongest
issues.
The rating Duff-l is the highest commercial paper rating assigned by Duff.
Paper rated Duff-l is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.
A-2
<PAGE>
INVESTMENT MANAGER:
Fred Alger Management, Inc.
One World Trade Center
Suite 9333
New York, New York 10048
- --------------------------------------------
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, N.Y 10176
- --------------------------------------------
THE
ALGER Meeting the challenge
AMERICAN of investing
FUND
STATEMENT
OF ADDITIONAL May 1, 2000
INFORMATION
