As filed with the Securities and Exchange Commission
on February 27, 1996
Securities Act File No. 33-68124
Investment Company Act File No. 811-7986
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---
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Pre-Effective Amendment No. ---
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Post-Effective Amendment No. 4 X
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and/or
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ---
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Amendment No. 6 X
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(Check appropriate box or boxes)
THE ALGER DEFINED CONTRIBUTION TRUST
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(Exact Name of Registrant as Specified in Charter)
75 MAIDEN LANE
NEW YORK, NEW YORK 10038
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of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 212-806-8800
MR. GREGORY S. DUCH
FRED ALGER MANAGEMENT, INC.
75 MAIDEN LANE
NEW YORK, NY 10038
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(Name and Address of Agent for Service)
Page 1 of ____ Pages
Exhibit Index at Page ____
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It is proposed that this filing will become effective (check appropriate box):
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x immediately upon filing pursuant to paragraph (b), or
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on [date] pursuant to paragraph (b), or
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60 days after filing pursuant to paragraph (a), or
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on [date] pursuant to paragraph (a) of Rule 485
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DECLARATION PURSUANT TO RULE 24f-2
Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933, as amended, pursuant to Rule 24f-2(a)(1) under
the Investment Company Act of 1940, as amended. The Rule 24f-2 Notice for
Registrant's fiscal year ended October 31, 1995 was filed on December 28, 1995.
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PROSPECTUS
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THE ALGER DEFINED CONTRIBUTION TRUST
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75 Maiden Lane
New York, New York 10038
(800) 992-3362
The Alger Defined Contribution Trust (the "Fund") is a registered
investment company--a mutual fund--that presently offers interests in four
Portfolios. Each Portfolio has distinct investment objectives and policies and a
shareholder's interest is limited to the Portfolio in which he or she owns
shares. The investment objectives of each Portfolio are highlighted on page ii.
The four Portfolios are:
o Alger Defined Contribution Small Cap Portfolio
o Alger Defined Contribution MidCap Growth Portfolio
o Alger Defined Contribution Growth Portfolio
o Alger Defined Contribution Leveraged AllCap Portfolio
Shares of the Portfolios are available for investment without a sales
charge to defined contribution retirement plans (the "Plans") which elect to
make the Fund an investment option for participants in such Plans.
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.
This Prospectus, which should be retained for future reference, is designed
to provide you with certain essential information that you should know before
investing. A "Statement of Additional Information" dated February 27, 1996
containing further information about the Fund has been filed with the Securities
and Exchange Commission and is incorporated by reference into this Prospectus. A
copy of the Statement of Additional Information may be obtained, without charge,
by contacting the Fund at the address or phone number above.
FRED ALGER MANAGEMENT, INC.
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Investment Manager
FRED ALGER & COMPANY, INCORPORATED
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Distributor
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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FEBRUARY 27, 1996
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CONTENTS
PAGE
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The Portfolios' Expenses......................... i
Financial Highlights............................. iv
The Alger Defined Contribution Trust
Financial Highlights.......................... v
The Alger Defined Contribution Trust............. 1
Fred Alger Management, Inc....................... 1
Investment Objectives and Policies............... 1
All Portfolios................................. 2
Alger Defined Contribution
Small Cap Portfolio......................... 3
Alger Defined Contribution
MidCap Growth Portfolio..................... 3
Alger Defined Contribution
Growth Portfolio............................ 3
Alger Defined Contribution
Leveraged AllCap Portfolio.................. 3
Selecting Among the Portfolios................... 4
Certain Securities and Investment
Techniques.................................... 4
Management....................................... 8
Net Asset Value.................................. 10
Purchases and Redemptions........................ 10
Dividends and Distributions...................... 11
Taxes............................................ 11
Organization..................................... 12
Performance...................................... 12
Investor and Shareholder Information............. 13
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ii
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THE PORTFOLIOS' EXPENSES
The Table below is designed to assist an investor in the Portfolios in
understanding the various costs and expenses that he or she will bear directly
or indirectly. The Table does not reflect any charges or deductions which are,
or may be, imposed by the Plans.
The Example below assumes that all dividends and distributions are reinvested
and that the annual percentage amounts listed under Annual Fund Operating
Expenses remain the same in each of the periods shown. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
ALGER ALGER ALGER
DEFINED DEFINED ALGER DEFINED
CONTRI CONTRI- DEFINED CONTRI-
BUTION BUTION CONTRI- BUTION
SMALL MIDCAP BUTION LEVERAGED
CAP GROWTH GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases............................ None None None None
Maximum Sales Load Imposed on Reinvested Dividends................. None None None None
Deferred Sales Load................................................ None None None None
Redemption Fees.................................................... None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees.................................................... .85% .80% .75% .85%
Other Expenses..................................................... .28 .43 .36 1.85
---- ---- ---- ----
Total Fund Expenses................................................ 1.13% 1.23% 1.11% 2.70%
==== ==== ==== ====
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
One Year........................................................... 12 13 11 27
Three Years........................................................ 36 39 35 84
Five Years......................................................... 62 68 61 143
Ten Years.......................................................... 137 149 135 303
</TABLE>
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iii
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FINANCIAL HIGHLIGHTS
The Financial Highlights have been audited by Arthur Andersen LLP, the Fund's
independent public accountants, as indicated in their report dated December 19,
1995 on the Fund's financial statements as of October 31, 1995 which are
included in the Fund's Statement of Additional Information. The Financial
Highlights should be read in conjunction with the Fund's financial statements
and related notes. The Statement of Additional Information may be obtained from
the Fund without charge.
THE ALGER DEFINED CONTRIBUTION TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year ended October 31, 1995
<TABLE>
<CAPTION>
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year.......... $ 10.38 $ 10.83 $ 11.66 $ 10.08
-------- -------- -------- -------
Net investment (loss)....................... (0.01) (0.07) (0.07) (0.19)
Net realized and unrealized gain on
investments............................... 3.59 7.23 6.07 5.30
-------- -------- -------- -------
Total from investment operations........ 3.58 7.16 6.00 5.11
Distribution from net realized gains........ (2.31) (0.07) (1.32) (2.47)
-------- -------- -------- -------
Net asset value, end of year................ $ 11.65 $ 17.92 $ 16.34 $ 12.72
======== ======== ======== =======
Total Return................................ 37.1% 66.2% 54.1% 54.4%
======== ======== ======== =======
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) .. $ 13,042 $ 23,002 $ 10,914 $ 8,116
======== ======== ======== =======
Ratio of expenses excluding interest
to average net assets(i)................ 1.11% 1.13% 1.23% 1.43%
======== ======== ======== =======
Ratio of expenses including interest
to average net assets................... 1.11% 1.13% 1.23% 2.70%
======== ======== ======== =======
Ratio of net investment income (loss)
to average net assets................... (.18%) (.73%) (.69%) (2.32%)
======== ======== ======== =======
Portfolio Turnover Rate..................... 133.42% 104.84% 132.74% 188.53%
======== ======== ======== =======
Debt outstanding at end of year................................................................... $ 302,600
=========
Average amount of debt outstanding during the year................................................ $ 939,600
=========
Average daily number of shares outstanding during the year........................................ 565,805
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Average amount of debt per share during the year.................................................. $ 1.66
=========
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(i)Reflects total expenses, including fees offset by earnings credits. The
expense ratio net of earnings credits would have been 1.08%, 1.06%, 1.16% and
2.66% for the Growth Portfolio, Small Cap Portfolio, MidCap Growth Portfolio
and Leveraged AllCap Portfolio, respectively.
</TABLE>
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iv
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THE ALGER DEFINED CONTRIBUTION TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period from
November 8, 1993 (commencement of operations) through October 31, 1994*
<TABLE>
<CAPTION>
ALGER ALGER ALGER
DEFINED DEFINED ALGER DEFINED
CONTRIBUTION CONTRIBUTION DEFINED CONTRIBUTION
SMALL MIDCAP CONTRIBUTION LEVERAGED
CAP GROWTH GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period................. $10.00 $10.00 $10.00 $10.00
------ ------ ------ ------
Net investment (loss)................................ (0.07) (0.09) (0.03) (0.23)
Net realized and unrealized gain on investments...... .90 1.75 .41 .31
------ ------ ------ ------
Total from investment operations................. .83 1.66 .38 .08
------ ------ ------ ------
Net asset value, end of period....................... $10.83 $11.66 $10.38 $10.08
====== ====== ====== ======
Total Return......................................... 8.30% 16.60% 3.80% .80%
====== ====== ====== ======
Ratios and Supplemental Data:
Net assets, end of period (000's omitted).......... $9,513 $6,774 $9,365 $5,251
====== ====== ====== ======
Ratio of expenses excluding interest
to average net assets............................ 1.47% 1.53% 1.26% 1.78%
====== ====== ====== ======
Ratio of expenses including interest
to average net assets............................ 1.47% 1.53% 1.26% 2.87%
====== ====== ====== ======
Ratio of net investment income (loss)
to average net assets............................ (.80)% (.89)% (.29)% (2.53)%
====== ====== ====== ======
Portfolio Turnover Rate.............................. 186.76% 134.06% 103.79% 229.11%
====== ====== ====== ======
Debt outstanding at end of period............................................................... $955,600
========
Average amount of debt outstanding during the period............................................ $826,076
========
Average daily number of shares outstanding during the period.................................... 515,270
========
Average amount of debt per share during the period.............................................. $1.60
========
* Ratios have been annualized; total return has not been annualized.
</TABLE>
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v
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THE ALGER DEFINED CONTRIBUTION TRUST
The Fund is a diversified, open-end management investment company that offers
a selection of four Portfolios, each with the investment objective of long-term
capital appreciation. Shares of the Portfolios are only available for investment
through defined contribution retirement plans (the "Plans") which elect to make
the Fund an investment option for participants in such Plans. Individuals,
including participants in such Plans, cannot directly invest in the Fund but may
do so only through a participating Plan. The Fund reserves the right to make
shares of the Portfolios available to other investors, as may be approved by the
Trustees from time to time. The Fund's Board of Trustees may establish
additional Portfolios at any time.
Only the Plans may be record holders of the shares of the Portfolios. Within
the limitations applicable to a Plan, a participant in such Plan (a
"Participant") may direct the Plan to purchase or redeem shares of the Fund.
Participants in a Plan cannot contact the Fund directly to request the purchase
or redemption of the Portfolios' shares. Instead, Participants must contact
their Plan Sponsor or its agent designated for the purpose of processing
purchase and redemption requests. References in this Prospectus to shareholders
are to Plan Sponsors as the record holders of the Fund's shares. The assets of
the Fund are not plan assets of any of the Plans.
FRED ALGER MANAGEMENT, INC.
Subject to the supervision and direction of the Fund's Board of Trustees,
Alger Management is responsible for the overall administration of the Fund,
manages the Portfolios in accordance with the Portfolios' investment objectives
and stated investment policies, makes investment decisions for the Portfolios,
places orders to purchase and sell securities on behalf of the Portfolios and
employs professional securities analysts who provide research services
exclusively to the Portfolios and other accounts for which Alger Management or
its affiliates serve as investment adviser. Alger Management is generally
engaged in the business of rendering investment advisory services to mutual
funds, institutions and, to a lesser extent, individuals. Alger Management has
been engaged in the business of rendering investment advisory services since
1964 and as of December 31, 1995, had approximately $4.8 billion under
management--$3.0 billion in mutual fund accounts and $1.8 billion in other
advisory accounts.
INVESTMENT OBJECTIVES
AND POLICIES
The following is a brief description of the investment objectives and
policies of each Portfolio. No assurance can be given that any Portfolio's
objective(s) will be achieved. Certain instruments and techniques discussed in
this summary are described in greater detail in this Prospectus under the
caption "Certain Securities and Investment Techniques" and in the Statement of
Additional Information.
The Statement of Additional Information contains specific investment
restrictions that govern the Portfolios' investments. These restrictions and the
Portfolios' investment objectives are "fundamental" policies, which means that
they may not be changed without a majority vote of shareholders of the affected
Portfolio. Except for the investment objectives and the investment restrictions
specifically identified as fundamental, all investment policies and practices
described in this Prospectus and in the Statement of Additional Information are
not fundamental, so the Fund's Board of Trustees may change them without
shareholder approval. The fundamental restrictions applicable to the Portfolios
include, among others, (i) a prohibition on any Portfolio's purchasing a
security, other than obligations issued or guaranteed by the U. S. Government,
its agencies or instrumentalities ("U. S. Government securities"), if as a
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result more than five percent of the assets of the Portfolio would be invested
in the securities of the issuer or the Portfolio would own more than 10 percent
of the outstanding voting securities of the issuer, except that 25 percent of a
Portfolio's total assets may be invested without regard to the five percent
limitation; (ii) a prohibition on any Portfolio's investing more than 25 percent
of its total assets in the securities of issuers in a particular industry with
exceptions for U.S. Government securities; and (iii) a prohibition on any
Portfolio's borrowing money or pledging its assets, except for temporary or
emergency purposes in an amount not exceeding 10 percent of the Portfolio's
total assets, except that the Alger Defined Contribution Leveraged AllCap
Portfolio may borrow for investment purposes (see "Certain Securities and
Investment Techniques--Leverage Through Borrowing").
Each Portfolio may invest a portion of its assets in money market
instruments, including, but not limited to, certificates of deposit, time
deposits and bankers' acceptances issued by domestic bank and thrift
institutions, U.S. Government securities, commercial paper and repurchase
agreements.
No Portfolio will invest more than 15 percent of its net assets in "illiquid"
securities, which include restricted securities, securities for which there is
no readily available market and repurchase agreements with maturities of greater
than seven days; however, restricted securities that are determined by the Board
of Trustees to be liquid are not subject to this limitation (see "Certain
Securities and Investment Techniques--Restricted Securities"). In addition, each
Portfolio will limit its investments in warrants and rights to not more than
five percent of its net assets, of which not more than two percent of its net
assets may be invested in warrants not listed on a recognized domestic stock
exchange. Warrants or rights acquired as part of a unit attached to securities
at the time of acquisition are not subject to these limitations, which may be
changed without shareholder approval. Each Portfolio may lend its securities and
enter into "short sales against the box." See "Certain Securities and Investment
Techniques." The Portfolios will only invest in convertible debt securities
rated in one of the three highest rating categories by any nationally recognized
statistical rating organization ("NRSRO"). See the Statement of Additional
Information for a description of these ratings.
ALL PORTFOLIOS
The investment objective of each Portfolio is long-term capital appreciation.
Income is a consideration in the selection of investments but is not an
investment objective of a Portfolio. Each Portfolio seeks to achieve its
objective by investing in equity securities, such as common or preferred stocks
or securities convertible into or exchangeable for equity securities, including
warrants and rights. The capitalization criteria outlined below for each
Portfolio are not mutually exclusive and a given security may be owned by more
than one or all of the Portfolios.
It is anticipated that each Portfolio will invest primarily in companies
whose securities are traded on domestic stock exchanges or in the
over-the-counter market. These companies may still be in the developmental
stage, may be older companies that appear to be entering a new stage of growth
progress owing to factors such as management changes or development of new
technology, products or markets or may be companies providing products or
services with a high unit volume growth rate. The risks involved in investing in
smaller companies are discussed below under "Alger Defined Contribution Small
Cap Portfolio." In order to afford the Portfolio the flexibility to take
advantage of new opportunities for investments in accordance with its investment
objective, the Portfolio may hold up to 15 percent of its net assets in money
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market instruments and repurchase agreements and in excess of that amount during
temporary defensive periods. This amount may be higher than that maintained by
other funds with similar investment objectives. See "Certain Securities and
Investment Techniques."
ALGER DEFINED CONTRIBUTION SMALL
CAP PORTFOLIO
Except during temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at the time of
purchase of the securities, have "total market capitalization"--present market
value per share multiplied by the total number of shares outstanding--within the
range of companies included in the Russell 2000 Growth Index, updated quarterly.
The Russell 2000 Growth Index is designed to track the performance of small
capitalization companies. As of December 31, 1995, the range of market
capitalization of these companies was $20 million to $2.2 billion. The Portfolio
may invest up to 35% of its total assets in equity securities of companies that,
at the time of purchase, have total market capitalization outside the range of
companies included in the Russell 2000 Growth Index and in excess of that amount
(up to 100% of its assets) during temporary defensive periods.
Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers. Companies in which the Portfolio
is likely to invest may have limited product lines, markets or financial
resources and may lack management depth. The securities issued by 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.
ALGER DEFINED CONTRIBUTION MIDCAP
GROWTH PORTFOLIO
Except during temporary defensive periods, the Portfolio invests at least 65%
of its total assets in equity securities of companies that, at the time of
purchase of the securities, have total market capitalization within the range of
companies included in the S&P MidCap 400 Index, updated quarterly. The S&P
MidCap 400 Index is designed to track the performance of medium capitalization
companies. As of December 31, 1995, the range of market capitalization of these
companies was $118 million to $7.5 billion. The Portfolio may invest up to 35%
of its total assets in equity securities of companies that, at the time of
purchase, have total market capitalization 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 DEFINED CONTRIBUTION GROWTH PORTFOLIO
Except during temporary defensive periods, the Portfolio invests at least 65
percent 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 percent 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 DEFINED CONTRIBUTION LEVERAGED
ALLCAP PORTFOLIO
Except during temporary defensive periods, the Portfolio invests at least 85
percent of its net assets in equity securities of companies of any size. The
Portfolio may purchase put and call options and sell (write) covered call and
put options on securities and securities indexes to increase gain and to hedge
against the risk of unfavorable price movements, and may enter into futures
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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 may borrow only from banks and may not
borrow in excess of one-third of the market value of its assets, less
liabilities other than such borrowing. See "Certain Securities and Investment
Techniques."
SELECTING AMONG THE PORTFOLIOS
Set forth below is information that may be of assistance in selecting a
Portfolio suitable for a particular investor's needs. Further assistance in the
investment process is available by calling (800) 992-3362. Available at this
number will be licensed, registered representatives who are knowledgeable about
the Fund and each of the Portfolios. There is no charge for making this call.
Each of the Portfolios, like all other investments, can provide two types of
return: income return and capital return. Income return is the income received
from an investment, such as interest on bonds and money market instruments and
dividends from common and preferred stocks. Capital return is the change in the
market value of an investment, such as an increase in the price of a common
stock or of shares of a Portfolio. Total return is the sum of income return and
capital return. Thus, if a Portfolio over a year produces four percent in income
return and its shares increase in value by three percent, its total return is
seven percent. In general, the more that capital return is emphasized over
income return in an investment program, the more risk associated with the
program.
Growth funds such as the Portfolios seek primarily capital return. They
invest primarily in common stocks and offer the opportunity of the greatest
return over the long term but can be risky since their prices fluctuate with
changes in stock market prices, as described in the preceding paragraph.
Further, growth funds that invest in smaller companies, such as the Alger
Defined Contribution Small Cap Portfolio, offer potential for significant price
gains if the companies are successful, but there is also the risk that the
companies will not succeed and the price of the companies' shares will drop in
value. Growth funds that invest in larger, more established companies, such as
the Alger Defined Contribution Growth Portfolio and the Alger Defined
Contribution MidCap Growth Portfolio, generally offer relatively less
opportunity for capital return but a greater degree of safety. In addition,
funds that leverage through borrowing, such as the Alger Defined Contribution
Leveraged AllCap Portfolio, offer an opportunity for greater capital
appreciation, but at the same time increase exposure to capital risk.
Investors considering equity investing through the Portfolios should
carefully consider the inherent risks. Expectations of future inflation rates
should be considered in making investment decisions and even though over the
long term stocks may present attractive opportunities, the results of an equity
investment managed by a particular management firm may not match the market as a
whole.
CERTAIN SECURITIES AND
INVESTMENT TECHNIQUES
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.
4
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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.
RESTRICTED SECURITIES
Each Portfolio may invest in restricted securities, which are securities
subject to legal or contractual restrictions on their resale. These restrictions
might prevent the sale of the securities at a time when a sale would otherwise
be desirable. In order to sell securities that are not registered under the
federal securities laws it may be necessary for the Portfolio to bear the
expense of registration. No restricted securities will be acquired if the
acquisition would cause the aggregate value of all illiquid securities to exceed
15 percent of the Portfolio's net assets.
The Portfolios may invest in restricted securities issued under Rule 144A of
the Securities Act of 1933. In adopting Rule 144A, the Securities and Exchange
Commission 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. Examples of factors that the
Fund's Board of Trustees will take into account in evaluating the liquidity of a
Rule 144A security, both with respect to the initial purchase and on an ongoing
basis, will 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). In accordance with Rule
144A, the Board has delegated its responsibility to Alger Management to
determine the liquidity of each restricted security purchased by a Portfolio
pursuant to the Rule, subject to the Board's oversight and review. Because
institutional trading in restricted securities is relatively new, it is not
possible to predict how institutional markets will develop. If institutional
trading in restricted securities were to decline to limited levels, the
liquidity of the Fund's portfolios could be adversely affected.
LENDING OF PORTFOLIO SECURITIES
In order to generate income and to offset expenses, each Portfolio may lend
portfolio securities to brokers, dealers and other financial organizations.
Loans of securities by a Portfolio, if and when made, may not exceed 331/3
percent of the Portfolio's total assets and will be 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.
OPTIONS TRANSACTIONS
The Alger Defined Contribution Leveraged AllCap Portfolio may purchase or
sell (that is, write) listed options on securities as a means of achieving
additional return or of hedging the value of its portfolio. The Portfolio may
write covered call options on common stocks that it owns or has an immediate
right to acquire through conversion or exchange of other securities in an amount
not to exceed 25% of total assets. The Portfolio may only buy or sell options
that are listed on a national securities exchange.
A call option is a contract that gives the holder of the option the right to
buy from the writer (seller) of the call option, in return for a premium paid,
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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 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.
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. There can be no
assurance that a closing purchase transaction can be effected when the Portfolio
so desires.
An option may be closed out only on an exchange that provides a secondary
market for an option of the same series. Although the Portfolio will generally
purchase or write only those options for which there appears to be an active
secondary market, there is no assurance that a liquid secondary market on an
exchange will exist for any particular option. The Portfolio will not purchase
options if, as a result, the aggregate cost of all outstanding options exceeds
10% of the Portfolio's total assets, although no more than 5% will be committed
to transactions entered into for non-hedging purposes.
The Portfolio may write put and call options on stock indexes for the purpose
of increasing its gross income and to protect its portfolio against declines in
the value of the securities it owns or increases in the value of securities to
be acquired. In addition, the Portfolio may purchase put and call options on
stock indexes in order to hedge its investments against a decline in value or to
attempt to reduce the risk of missing a market or industry segment advance.
Options on stock indexes are similar to options on specific securities. However,
because options on stock indexes do not involve the delivery of an underlying
security, the option represents the holder's right to obtain from the writer,
cash in an amount equal to a fixed multiple of the amount by which the exercise
price exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying stock index on the exercise date. Therefore,
while one purpose of writing such options is to generate additional income for
the Portfolio, the Portfolio recognizes that it may be required to deliver an
amount of cash in excess of the market value of a stock index at such time as an
option written by the Portfolio is exercised by the holder. The writing and
purchase of options is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. The successful use of protective puts for hedging
purposes depends in part on Alger Management's ability to predict future price
fluctuations and the degree of correlation between the options and securities
markets.
STOCK INDEX FUTURES AND OPTIONS ON
STOCK INDEX FUTURES
The Alger Defined Contribution Leveraged AllCap Portfolio may purchase and
sell stock index futures contracts and options on stock index futures contracts.
These investments may be made solely for hedging or other permissible risk
management purposes, such as protecting the price of a security the Portfolio
intends to buy, but not for purposes of speculation. Aggregate initial margins
and premiums on such investments may not constitute more than 5% of the
Portfolio's assets. Hedging and other risk management transactions are
undertaken to reduce or eliminate any of several kinds of price fluctuation
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risk. For example, 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.
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 intends to purchase and
sell futures contracts on the stock index for which it can 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.
There can be no assurance of the Portfolio's successful use of stock index
futures as a hedging device. Due to the risk of an imperfect correlation between
securities in the Portfolio that are the subject of a hedging transaction and
the futures contract used as a hedging device, it is possible that the hedge
will not be fully effective in that, for example, losses on the portfolio
securities may be in excess of gains on the futures contract or losses on the
futures contract may be in excess of gains on the portfolio securities that were
the subject of the hedge. The risk of imperfect correlation increases 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 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 will 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 can be effected or that there will
be a correlation between price movements in the options on stock index futures
and price movements in the Portfolio's securities which are the subject of the
hedge. In addition, the Portfolio's purchase of such options will be based upon
predictions as to anticipated market trends, which could prove to be inaccurate.
LEVERAGE THROUGH BORROWING
The Alger Defined Contribution Leveraged AllCap Portfolio may borrow from
banks for investment purposes. This borrowing is known as leveraging. The
Portfolio may use up to 331/3 of its assets for leveraging. The Investment
Company Act of 1940, as amended, requires the Portfolio 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
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it may be disadvantageous from an investment standpoint to sell securities at
that time. Leveraging may exaggerate the effect on net asset value of any
increase or decrease in the market value of the Portfolio's securities. Money
borrowed for leveraging will be subject to interest costs which may or may not
be recovered by appreciation of the securities purchased; in certain cases,
interest costs may exceed the return received on the securities purchased. The
Portfolio also may be required to maintain minimum average balances in
connection with such borrowing or to pay a commitment or other fee to maintain a
line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.
PORTFOLIO TURNOVER
A Portfolio's turnover rate is calculated by dividing the lesser of purchases
or sales of securities for the fiscal year by the monthly average of the value
of the Portfolio's securities, with obligations with less than one year to
maturity excluded. A 100 percent turnover rate would occur, for example, if all
included securities were replaced once during the year.
The Portfolios will not normally engage in the trading of securities for the
purpose of realizing short-term profits, but will adjust their holdings as
considered advisable in view of prevailing or anticipated market conditions, and
turnover will not be a limiting factor should Alger Management deem it advisable
to purchase or sell securities.
In Alger Management's view, companies are organic entities that continuously
undergo changes in response to, among other things, economic, market,
environmental, technological, political and managerial factors. Generally,
securities will be purchased for capital appreciation and not for short-term
trading profits. However, the Portfolios may dispose of securities without
regard to the time they have been held when such action, for defensive or other
purposes, appears advisable. Moreover, it is Alger Management's philosophy to
pursue the Portfolios' investment objective of capital appreciation by managing
these Portfolios actively, which may result in high portfolio turnover.
Increased portfolio turnover will have the effect of increasing a Portfolio's
brokerage and custodial expenses.
MANAGEMENT
BOARD OF TRUSTEES
The affairs of the Fund are managed under the supervision of its Board of
Trustees. The Statement of Additional Information contains general background
information about each Trustee and executive officer of the Fund. By virtue of
the responsibilities assumed by Alger Management, the Fund requires no employees
other than its executive officers. None of the Fund's executive officers devotes
full time to the affairs of the Fund.
INVESTMENT MANAGER
Alger Management serves as the Fund's investment manager. In that capacity,
Alger Management, among other things, analyzes the Portfolios' assets, arranges
for the purchase and sale of the Portfolios' securities 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, Fred Alger & Company, Incorporated ("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 Securities
and Exchange Commission. In addition, Alger Management may select broker-dealers
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that provide it with brokerage and research services and may cause a Portfolio
to pay these broker-dealers commissions that exceed those other broker-dealers
may have charged, if it views the commissions as reasonable in relation to the
value of the brokerage and research services received. The Fund will consider
sales of its shares as a factor in the selection of broker-dealers to execute
over-the-counter portfolio transactions, subject to the requirements of best
price and execution.
Alger Management is a wholly owned subsidiary of Alger Inc. which in turn is
a wholly owned subsidiary of Alger Associates, Inc., a financial services
holding company. Fred M. Alger III and his brother, David D. Alger, own
approximately 53 percent and 17 percent, respectively, of Alger Associates, Inc.
and may be deemed to control that company and its subsidiaries.
As compensation for the investment management services rendered, each
Portfolio pays Alger Management a separate fee computed daily and paid monthly
at annual rates based on a percentage of the value of the relevant Portfolio's
average daily net assets, as follows: Alger Defined Contribution Small Cap
Portfolio and Alger Defined Contribution Leveraged AllCap Portfolio--.85
percent; Alger Defined Contribution MidCap Growth Portfolio--.80 percent; Alger
Defined Contribution Growth Portfolio--.75 percent. The management fees paid by
the Portfolios exceed those paid by most other investment companies.
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible
for the day-to-day management of the Portfolios of the Fund. Mr. Alger has been
employed by Alger Management as Executive Vice President and Director of
Research since 1971 and as President since 1995. Ms. Khoo has been employed by
Alger Management as a senior research analyst since 1989 and as a Senior Vice
President since 1995. Mr. Tartaro has been employed by Alger Management as a
senior research analyst since 1990 and as a Senior Vice President since 1995.
Mr. Alger, Ms. Khoo and Mr. Tartaro also serve as portfolio managers for other
mutual funds and investment accounts managed by Alger Management.
Alger Management personnel ("Access Persons") are permitted to engage in
personal securities transactions subject to the restrictions and procedures of
the Fund's Code of Ethics. Pursuant to the Code of Ethics, Access Persons
generally must preclear all personal securities transactions prior to trading
and are subject to certain prohibitions on personal trading. You can get a copy
of the Fund's Code of Ethics by calling the Fund toll-free at (800) 992-3863.
Alger Shareholder Services, Inc., an affiliate of Alger Management, serves as
transfer agent for the Fund. Certain record-keeping services that would
otherwise be performed by Alger Shareholder Services, Inc. may be performed by
other entities providing similar services to their customers who invest in the
Portfolios. The Fund, Alger Shareholder Services, Inc., Alger Inc. or any of its
affiliates may elect to enter into a contract to pay them for such services.
EXPENSES OF THE FUND
Each Portfolio will bear its own expenses. Operating expenses for each
Portfolio generally consist of all costs not specifically borne by Alger
Management, including investment management fees, fees for necessary
professional and brokerage services, costs of regulatory compliance and costs
associated with maintaining legal existence and shareholder relations. Each
Portfolio's investment management agreement with Alger Management provides that
it will reimburse the Portfolio to the extent required by applicable state law
for certain expenses that are described in the Statement of Additional
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<PAGE>
Information. 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. Alger Management will not be
reimbursed for such amounts if such action would violate the provisions of any
applicable state securities laws relating to the limitation of the applicable
Portfolio's expenses.
NET ASSET VALUE
The net asset value per share of each Portfolio is calculated on each day on
which the New York Stock Exchange, Inc. (the "NYSE") is open as of the close of
regular trading on the NYSE (currently 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st,
Washington's Birthday (the third Monday in February), Good Friday, Memorial Day
(the last Monday in May), July 4th, Labor Day (the first Monday in September),
Thanksgiving Day (the fourth Thursday in November) and December 25th or (ii) the
preceding Friday when any one of those holidays falls on a Saturday, or the
subsequent Monday when any one of those holidays falls on a Sunday. Net asset
value per share of a Portfolio is computed by dividing the value of the
Portfolio's net assets by the total number of its shares outstanding.
The assets of the Portfolios that are traded on a securities exchange or
other recognized market are valued on the basis of market quotations. Assets of
those Portfolios for which quotations are not readily available are valued at
fair value as determined in good faith under procedures approved by the Board of
Trustees. Instruments with remaining maturities of 60 days or less are valued on
the basis of amortized cost, as described in the Statement of Additional
Information.
PURCHASES AND REDEMPTIONS
All direct purchasers of shares of the Portfolios will be Plan Sponsors which
establish or maintain Plans. Participants may invest in shares of the Portfolios
only through their respective Plan Sponsor. Participants cannot contact the Fund
directly to purchase shares of the Portfolios. Instead, Participants must
contact their Plan Sponsor or its agent for the purpose of processing purchase
requests. There is no minimum amount for initial or subsequent investments for
any Plan Sponsor. Participants should contact their Plan Sponsor for information
concerning the appropriate procedure for investing in the Fund.
Orders received by the Fund or the Fund's transfer agent are effected on days
on which the NYSE is open for trading. For orders received before the close of
regular trading on the NYSE, purchases and redemptions of the shares of each
Portfolio are effected at the respective net asset values per share determined
as of the close of regular trading on the NYSE on that same day. Orders received
after the close of regular trading on the NYSE are effected at the next
calculated net asset value. See "Net Asset Value." All orders for the purchase
of shares are subject to acceptance or rejection by the Fund. Payment for
redemptions will be made by the Fund's transfer agent on behalf of the Fund and
the relevant Portfolios within seven days after the request is received. The
Fund does not assess any fees, either when it sells or when it redeems its
shares.
Investors may exchange stock of companies acceptable to Alger Management for
shares of the Portfolios of the Fund with a minimum of 100 shares of each
company being generally required. The Fund believes such exchange provides a
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<PAGE>
means by which holders of certain securities may invest in the Portfolios of the
Fund without the expense of selling the securities in the public market. The
investor should furnish either in writing or by telephone to Alger Management a
list with a full and exact description of all securities proposed for exchange.
Alger Management will then notify the investor as to whether the securities are
acceptable and, if so, will send a Letter of Transmittal to be completed and
signed by the investor. Alger Management has the right to reject all or any part
of the securities offered for exchange. The securities must then be sent in
proper form for transfer with the Letter of Transmittal to the Custodian of the
Fund's assets. The investor must certify that there are no legal or contractual
restrictions on the free transfer and sale of the securities. Upon receipt by
the Custodian, the securities will be valued as of the close of business on the
day of receipt in the same manner as the Portfolio's securities are valued each
day. Shares of the Portfolio having an equal net asset value as of the close of
the same day will be registered in the investor's name. There is no sales charge
on the issuance of shares of the Portfolio, no charge for making the exchange
and no brokerage commission on the securities accepted, although applicable
stock transfer taxes, if any, may be deducted. The exchange of securities by the
investor pursuant to this offer may constitute a taxable transaction and may
result in a gain or loss for federal income tax purposes. The tax treatment
experienced by investors may vary depending upon individual circumstances. Each
investor should consult a tax adviser to determine Federal, state and local tax
consequences.
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 on the payment date for each shareholder's account in additional
shares of the Portfolio that paid the dividend or distribution at net asset
value. Dividends 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.
TAXES
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.
The Fund intends that each Portfolio will qualify separately as a "regulated
investment company" within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code") for each taxable year of each Portfolio. If so qualified,
and providing certain distribution requirements are met, a Portfolio will not be
subject to federal income tax on its net investment income and net capital gains
that it distributes to its shareholders.
With respect to participants in the Plans, dividends from net investment
income and net realized capital gains will ordinarily not be subject to taxation
until such dividends are distributed to such participants from their Plan
accounts. 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.
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Taxation of dividends and redemption payments received by Participants will
depend upon the nature of the Participant's retirement plan and the tax status
of that particular Participant.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. Participants should consult
their Plan Sponsors or tax advisers regarding the tax consequences of
participation in the Plan or of any Plan contributions or withdrawals.
ORGANIZATION
The Fund was organized on July 14,1993 under the laws of the Commonwealth of
Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund offers shares of beneficial interest of separate
classes, par value $.001 per share. An unlimited number of shares of four
classes, representing the shares of the Portfolios, have been authorized. No
class of shares has any preference over any other class.
When matters are submitted for shareholder vote, shareholders of each
Portfolio will have one vote for each full share held and proportionate,
fractional votes for fractional shares held. A separate vote of a Portfolio is
required on any matter affecting the Portfolio on which shareholders are
entitled to vote, such as approval of a Portfolio's agreement with Alger
Management. Shareholders of one Portfolio are not entitled to vote on a matter
that does not affect that Portfolio but that does require a separate vote of the
other Portfolios. There normally will be no annual meetings of shareholders for
the purpose of electing Trustees unless and until such time as less than a
majority of Trustees holding office have been elected by shareholders, at which
time the Trustees then in office will call a shareholders' meeting for the
election of Trustees. Any Trustee may be removed from office on the vote of
shareholders holding at least two-thirds of the Fund's outstanding shares at a
meeting called for that purpose. The Trustees are required to call such a
meeting on the written request of shareholders holding at least 10 percent of
the Fund's outstanding shares.
PERFORMANCE
Each Portfolio may include quotations of "total return" and/or "yield" in
advertisements or reports to shareholders or prospective investors. BOTH "TOTAL
RETURN" AND/OR "YIELD" FIGURES ARE BASED ON HISTORICAL EARNINGS AND ARE NOT
INTENDED TO INDICATE FUTURE PERFORMANCE. Total return figures show the aggregate
or average percentage change in value of an investment in 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). When considering "average" total return figures for periods
longer than one year, it is important to note that the Portfolio's annual total
return for any one year in the period might have been greater or less than the
average for the entire period. The Portfolio may also use "aggregate" total
return figures for various periods, representing the cumulative change in value
of an investment in the Portfolio for the specific period (again reflecting
changes in Portfolio share prices and assuming reinvestment of dividends and
distributions) as well as "actual annual" and "annualized" total return figures.
Total returns may be shown by means of schedules, charts or graphs, and may
indicate subtotals of the various components of total return (i. e., change in
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value of initial investment, income dividends and capital gains distributions).
The "yield" of the Portfolio refers to "net investment income" generated by the
Portfolio over a specified thirty-day period. This income is then "annualized."
That is, the amount of "net investment income" generated by the Portfolio during
that thirty-day period is assumed to be generated over a 12-month period and is
shown as a percentage of the investment. "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.
From time to time, advertisements or reports to shareholders may compare the
yield or performance of a Portfolio to that of other mutual funds with a similar
investment objective. The performance of a Portfolio might be compared to
rankings prepared by Lipper Analytical Services, Inc., which is a widely
recognized, independent service that monitors the performance of mutual funds,
as well as to various unmanaged indices, such as the S&P 500. In addition,
evaluations of the Portfolios published by nationally recognized ranking
services and by financial publications that are nationally recognized, such as
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 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) 992-3362
for further information regarding the Fund and the Portfolios, including current
performance quotations, as well as for assistance in selecting a Portfolio and
obtaining a Statement of Additional Information. The Fund's Annual Report
contains additional performance information and is available on request and
without charge by contacting the Fund at the toll-free number listed above.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE FUND'S SHARES,
AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
-------------------------
INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
THE ALGER DEFINED CONTRIBUTION TRUST
------------------------------------
Meeting the challenge of investing
ALGER DEFINED CONTRIBUTION
SMALL CAP PORTFOLIO
ALGER DEFINED CONTRIBUTION
MIDCAP GROWTH PORTFOLIO
ALGER DEFINED CONTRIBUTION GROWTH PORTFOLIO
ALGER DEFINED CONTRIBUTION
LEVERAGED ALLCAP PORTFOLIO
PROSPECTUS
FEBRUARY 27, 1996
<PAGE>
================================================================================
THE ALGER DEFINED CONTRIBUTION TRUST
------------------------------------
Meeting the challenge of investing
Alger Defined Contribution
Small Cap Portfolio
Alger Defined Contribution
MidCap Growth Portfolio
Alger Defined Contribution
Growth Portfolio
Alger Defined Contribution
Leveraged AllCap Portfolio
STATEMENT |
OF ADDITIONAL | February 27, 1996
INFORMATION |
================================================================================
<PAGE>
THE ALGER
DEFINED
CONTRIBUTION
TRUST
75 Maiden Lane
New York, New York 10038
(800) 992-3362
The Alger Defined Contribution Trust (the "Fund") is a registered
investment company--a mutual fund-- that presently offers interests in the
following four portfolios (the "Portfolios"):
* Alger Defined Contribution Small Cap Portfolio
* Alger Defined Contribution MidCap Growth Portfolio
* Alger Defined Contribution Growth Portfolio
* Alger Defined Contribution Leveraged AllCap Portfolio
Shares of the Fund are available for investment without a sales charge through
defined contribution retirement plans (the "Plans") which elect to make the Fund
an investment option for participants in such Plans. Individuals, including
participants in such Plans, cannot directly invest in the Fund but may do so
only through a participating Plan.
A Prospectus for the Fund dated February 27, 1996, which provides the basic
information investors should know before investing, may be obtained without
charge by contacting the Fund at the address or phone number above. This
Statement of Additional Information, which is not a prospectus, is intended to
provide additional information regarding the activities and operations of the
Fund, and should be read in conjunction with the Prospectus. Unless otherwise
noted, terms used in this Statement of Additional Information have the same
meaning as assigned to them in the Prospectus.
CONTENTS
Investment Objectives and Policies....................................... 2
Net Asset Value.......................................................... 7
Purchases and Redemptions................................................ 8
Management............................................................... 8
Taxes.................................................................... 10
Custodian................................................................ 11
Transfer Agent........................................................... 11
Certain Shareholders..................................................... 11
Organization............................................................. 12
Determination of Performance............................................. 13
Financial Statements..................................................... F-l
Appendix................................................................. A-l
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
The Prospectus discusses the investment objectives of each Portfolio and the
policies 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.
USE OF RATINGS AS INVESTMENT CRITERIA
The ratings of the nationally recognized statistical rating organizations, which
are described in the Appendix to this Statement of Additional Information,
represent their opinions as to the quality of corporate obligations. It should
be emphasized that ratings are general and not absolute standards of quality,
and obligations with the same maturity, interest rate and rating may have
different yields while obligations of the same maturity and interest rate with
different ratings may have the same yield. After being purchased by a Portfolio,
an obligation may cease to be rated or its rating may be reduced below the
minimum required for purchase by a Portfolio. In such case, although neither
event will require the sale of the obligation by a Portfolio, Fred Alger
Management, Inc. ("Alger Management") will consider the event in determining
whether a Portfolio should continue to hold the obligation.
U.S. GOVERNMENT SECURITIES
Examples of the types of U.S. Government securities that the Portfolios may hold
include, in addition to those described in the Prospectus and direct obligations
of the U.S. Treasury, the obligations of the Federal Housing Administration,
Farmers Home Administration, Small Business Administration, General Services
Administration, Central Bank for Cooperatives, Federal Farm Credit Banks,
Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks
and Maritime Administration.
LENDING OF PORTFOLIO SECURITIES
The Portfolios have the authority to lend securities 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 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 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 borrower 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.
REPURCHASE AGREEMENTS
Each Portfolio may engage in repurchase agreement transactions with banks,
registered broker-dealers and government securities dealers approved by the
Fund's Board of Trustees. 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. Thus, 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 a part of
the income from the agreement. Alger Management, acting under the supervision of
the Fund's Board of Trustees, reviews the creditworthiness of those banks and
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<PAGE>
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.
RULE 144A SECURITIES
Rule 144A under the Securities Act of 1933 is designed to facilitate efficient
trading of unregistered securities among institutional investors. The Rule
permits the resale to qualified institutions of restricted securities that, when
issued, were not of the same class as securities listed on a U.S. securities
exchange or quoted on NASDAQ.
Rule 144A allows for a broad institutional trading market for certain securities
subject to restriction on resale to the general public. In adopting Rule 144A,
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. Examples of factors that the
Fund's Board of Trustees will take into account in evaluating the liquidity of a
Rule 144A security will 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). In accordance with Rule 144A, the Board intends to delegate its
responsibility to Alger Management to determine the liquidity of each restricted
security purchased by a Portfolio, subject to the Board's oversight and review.
Because institutional trading in restricted securities is relatively new, it is
not possible to predict how institutional markets will develop. If institutional
trading in restricted securities were to decline to limited levels, the
liquidity of a Portfolio could be adversely affected.
OPTIONS (ALGER DEFINED CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO ONLY)
A call option 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 by its custodian) 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 held with its
custodian. A put option 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 held with its custodian, 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 either a closing
purchase or sale transaction can be effected when the Portfolio so desires.
The Portfolio will realize a profit from a closing transaction if the price of
the transaction is less than the premium received from writing the option or is
more than the premium paid to purchase the option; the Portfolio will realize a
loss from a closing transaction if the price of the transaction is 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. Although the Portfolio will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. In such event it might not be
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<PAGE>
possible to effect closing transactions in particular options, 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 options. If the
Portfolio, as a covered call option writer, is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or otherwise covers 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 is obligated, in return for the premium
received, to make delivery of this amount. The Portfolio may offset its position
in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may 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 will not purchase these options unless Alger
Management is satisfied with the development, depth and liquidity of the market
and Alger Management believes the options can 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 will 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 may be forced to liquidate
portfolio securities to meet settlement obligations.
The Portfolio has qualified and intends to continue to qualify as a "Regulated
Investment Company" under the Internal Revenue Code. One requirement for such
qualification is that the Portfolio must derive less than 30% of its gross
income from gains from the sale or other disposition of securities held for less
than three months. Therefore, the Portfolio may be limited in its ability to
engage in options transactions.
Although Alger Management will attempt to take appropriate measures to minimize
the risks relating to the Portfolio's writing of put and call options, there can
be no assurance that the Portfolio will succeed in any option-writing program it
undertakes.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES (ALGER DEFINED
CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO ONLY)
The Portfolio may enter into stock index futures contracts or purchase or sell
put and call options on such futures as a hedge against anticipated market
changes and for risk management 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 specific future time. 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.
The Portfolio's use 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 only 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 mark to market value of the contract fluctuates. In addition to the
initial deposit and variation margin, the Portfolio will maintain in a
segregated account with its custodian cash, U.S. Government securities or other
high grade short-term obligations in an amount equal to the difference between
(i) the sum of the total deposit and variation margin payments and (ii) the
contract amount. The purchase of an option on stock index futures involves
payment of a premium for the option without any further obligation on the part
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<PAGE>
of the Portfolio. If the Portfolio exercises an option on a futures contract it
will 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.
INVESTMENT RESTRICTIONS
The investment restrictions numbered 1 through 12 below have been adopted by the
Fund with respect to each of the Portfolios as fundamental policies. Under the
Investment Company Act of 1940, as amended (the "Act"), a "fundamental" policy
may not be changed without the vote of a "majority of the outstanding voting
securities" of the Fund, which is defined in the Act as the lesser of (a) 67
percent or more of the shares 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. A fundamental
policy affecting a particular Portfolio may not be changed without the vote of a
majority of the outstanding voting securities of the affected Portfolio.
Investment restrictions 12 through 18 may be changed by vote of a majority of
the Fund's Board of Trustees at any time.
The investment policies adopted by the Fund prohibit each Portfolio from:
1. Purchasing the securities of any issuer, other than U.S. Government
securities, if as a result more than five percent 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) all Portfolios other than the Alger Defined
Contribution Leveraged AllCap Portfolio may borrow for temporary or emergency
(but not leveraging) 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; and (b) the
Alger Defined Contribution Leveraged AllCap Portfolio may borrow from banks for
investment purposes as set forth in the Prospectus. Whenever borrowings
described in (a) exceed five percent of the value of the Portfolio's total
assets, the Portfolio, other than the Alger Defined Contribution Leveraged
AllCap Portfolio, will not make any additional investments. Immediately after
any borrowing the Portfolio will maintain asset coverage of not less than 300
percent with respect to all borrowings.
5. Pledging, hypothecating, mortgaging or otherwise encumbering more than 10
percent of the value of the Portfolio's total assets, except in connection with
borrowings as noted in 4(b) above.
6. Issuing senior securities, except that the Alger Defined Contribution
Leveraged AllCap Portfolio may borrow from banks for investment purposes so long
as the Portfolio maintains the required asset coverage.
7. 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.
8. Making loans to others, except through purchasing qualified debt obligations,
lending portfolio securities or entering into repurchase agreements.
9. 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.
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<PAGE>
10. 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.
11. Investing in commodities except that the Alger Defined Contribution
Leveraged AllCap Portfolio may purchase or sell stock index futures contracts
and related options thereon if thereafter no more than 5 percent of its total
assets are invested in margin and premiums.
12. Purchasing or selling real estate or real estate limited partnerships,
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.
13. Investing more than 15 percent 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 issued pursuant to Rule 144A of the Securities Act of
1933 may be purchased if they are determined to be liquid, and such purchases
would not be subject to the 15 percent limit stated above. The Board of Trustees
will in good faith determine the specific types of securities deemed to be
liquid and the value of such securities.
14. Investing in oil, gas or other mineral leases, or exploration or development
programs, except that the Portfolio may invest in the securities of companies
that invest in or sponsor those programs.
15. Purchasing any security if as a result the Portfolio would then have more
than five percent 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.
16. Making investments for the purpose of exercising control or management.
17. 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 two percent 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.
18. 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 percent of the outstanding securities
of the issuer and together they own beneficially more than five percent of the
securities.
Except in the case of the 300 percent limitation set forth in Investment
Restriction No. 4, the percentage limitations contained in the foregoing
restrictions 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 Management, 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 most 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
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<PAGE>
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 Securities and Exchange Commission (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, as amended, provided to
the Portfolio involved, the other Portfolios and/or other accounts over which
Alger Management or its affiliates exercise investment discretion to the extent
permitted by law. The Fund will consider sales of its shares as a factor in the
selection of broker-dealers to execute over-the-counter transactions, subject to
the requirements of best price and execution. Alger Management's fees under its
agreements with the Portfolios are not reduced by reason of its receiving
brokerage and research services. 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 period from November 8, 1993
(commencement of operations) through October 31, 1994, and for the fiscal year
ended October 31, 1995, the Fund paid an aggregate of approximately $72,284 and
$82,777, respectively, in commissions to broker-dealers in connection with
portfolio transactions all of which was paid to Alger Inc. Alger Inc. does not
engage in principal transactions with the Fund and, accordingly, receives no
compensation in connection with securities purchased or sold in that manner,
which include securities traded in the over-the-counter markets, money market
investments and most debt securities.
NET ASSET VALUE
The Prospectus discusses the time at which the net asset values of the
Portfolios are determined for purposes of sales and redemptions. The following
is a description of the procedures used by the Fund in valuing the Portfolio's
assets.
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
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<PAGE>
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 only available for investment through defined
contribution retirement plans (the "Plans") which elect to make the Fund an
investment option for participants in such Plans. Individuals, including
participants in such Plans, cannot directly invest in the Fund but may do so
only through a participating Plan. However, the Fund reserves the right to make
shares of the Portfolios available to other investors, as may be approved by the
Trustees from time to time.
Only the Plans may be record holders of the shares of the Portfolios. Within the
limitations applicable to a Plan, a participant in such Plan (a "Participant")
may direct the Plan to purchase or redeem shares of the Fund. Participants in a
Plan cannot contact the Fund directly to request the purchase or redemption of
the shares. Instead, Participants must contact their Plan Sponsor or its agent
designated for the purpose of processing purchase and redemption requests.
References in the Prospectus and Statement of Additional Information to
shareholders are to Plan Sponsors as the record holders of the Fund's shares.
The assets of the Fund are not plan assets of any of the Plans.
Shares of the Portfolios are offered by the Fund on a continuous basis to Plan
Sponsors of defined contribution retirement plans and are distributed by Alger
Inc. as principal underwriter for the Fund pursuant to a distribution agreement
(the "Distribution Agreement"). The Distribution Agreement provides that Alger
Inc. accepts orders for shares at net asset value as no sales commission or load
is charged.
Purchases and redemptions of shares of a Portfolio will be effected on days on
which the New York Stock Exchange (the "NYSE") is open for trading. Such
purchases and redemptions of the shares of each Portfolio are effected at their
respective net asset values per share determined as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern time) on that same day. See
"Net Asset Value." Payment for redemptions will be made by the Fund's transfer
agent on behalf of the Fund and the relevant Portfolios within seven days after
receipt of redemption requests.
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.
MANAGEMENT
TRUSTEES AND OFFICERS OF THE FUND
The names of the Trustees and officers of the Fund, together with information
concerning their principal business occupations, are 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 other investment companies for which
Alger Management serves as investment adviser. Fred M. Alger III and David D.
Alger are "interested persons" of the Fund, as defined in the Act. Fred M. Alger
III and David D. Alger are brothers. Unless otherwise noted, the address of each
person named below is 75 Maiden Lane, New York, New York 10038.
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<TABLE>
<CAPTION>
NAME, POSITION WITH
THE FUND AND ADDRESS PRINCIPAL OCCUPATIONS
<S> <C>
Fred M. Alger III Chairman of the Board of Alger Associates, Inc. ("Associates"), Alger Inc.,
Chairman of the Board Alger Management, Alger Properties, Inc. ("Properties"), Alger Shareholder Services, Inc.
("Services"), Alger Life Insurance Agency, Inc. ("Agency") and Analysts Resources, Inc.
("ARI").
David D. Alger President and Director of Associates, Alger Management,
President and Trustee Alger Inc., Properties, Services and Agency; Executive Vice President and Director of ARI.
Gregory S. Duch Executive Vice President, Treasurer and Director of Alger Management and
Treasurer Properties; Executive Vice President and Treasurer of Associates, Alger Inc.,
ARI, Services and Agency.
Frederick A. Blum Senior Vice President of Associates, Alger Management, Alger Inc.,
Assistant Secretary Properties, ARI, Services and Agency.
Arthur M. Dubow President of Fourth Estate, Inc.; private investor since 1985;
Trustee Director of Coolidge Investment Corporation; formerly
P.O. Box 969 Chairman of the Board of Institutional Shareholder Services, Inc.
Wainscott, NY 11975
Stephen E. O'Neil Of counsel to the law firm of Baker, Nelson, Mishkin & Kohler; private
Trustee investor since 1981; Director of NovaCare, Inc., Syntro
460 Park Avenue Corporation and Brown Forman Distillers Corporation; formerly
New York, NY 10021 President and Vice Chairman of City Investing Company
and Director of Centerre Bancorporation.
Nathan Emile Saint-Amand, M. D. Medical doctor in private practice.
Trustee
2 East 88th Street
New York, NY 10128
John T. Sargent Private investor since 1987; Director of River Bank America and
Trustee Atlantic Mutual Insurance Co.
14 E. 69th Street
New York, NY 10021
</TABLE>
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 Trustee who is not a director, officer or employee
of Alger Management or its affiliates a quarterly fee of $1,500, which is
reduced by the proportion of the meetings not attended by the Trustee during the
quarter.
The Fund did not offer its Trustees any pension or retirement benefits during or
prior to the fiscal year ended October 31, 1995. The following table provides
compensation amounts paid to Disinterested Trustees of the Fund for the fiscal
year ended October 31, 1995.
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<TABLE>
<CAPTION>
COMPENSATION TABLE
TOTAL COMPENSATION PAID TO TRUSTEES FROM
THE ALGER DEFINED CONTRIBUTION TRUST,
AGGREGATE THE ALGER FUND,
COMPENSATION FROM THE ALGER AMERICAN FUND,
THE ALGER DEFINED CASTLE CONVERTIBLE FUND, INC. AND
NAME OF PERSON, POSITION CONTRIBUTION TRUST SPECTRA FUND, INC.
------------------------ ------------------- ---------------------------------------
<S> <C> <C>
Arthur M. Dubow, Trustee $5,881 $28,250
Stephen E. O'Neil, Trustee $5,881 $28,250
Nathan E. Saint-Amand, Trustee $5,881 $28,250
John T. Sargent, Trustee $5,881 $28,250
</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 pays the salaries of all officers who are employed by both it and the
Fund. 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.
Alger Management has agreed that, if in any fiscal year the aggregate expenses
of any Portfolio (including fees payable pursuant to its Management Agreement
but excluding interest, taxes, brokerage expenses, distribution expenses and if
permitted by the relevant state securities commissions, certain other expenses
including extraordinary expenses) exceed the expense limitation of any state
having jurisdiction over the Portfolio, Alger Management will reimburse the
Portfolio for that excess expense to the extent required by state law. An
expense reimbursement, if any, will be estimated and reconciled daily and paid
on a monthly basis. At the date of this Statement of Additional Information, the
most restrictive annual expense limitation applicable to any Portfolio is 2.5
percent of the Portfolio's first $30 million of average net assets, 2.0 percent
of the next $70 million of average net assets and 1.5 percent of the remaining
average net assets. However, under this limitation, Alger Management will not be
required to reimburse a Portfolio an amount in excess of its management fee
earned with respect to that Portfolio.
During the period from November 8, 1993 (commencement of operations) through
October 31, 1994, and for the fiscal year ended October 31, 1995, Alger
Management earned under the terms of the Management Agreements $65,445 and
$81,537, respectively, in respect of the Alger Defined Contribution Growth
Portfolio; $64,542 and $130,610, respectively, in respect of the Alger Defined
Contribution Small Cap Portfolio; $46,090 and $66,230, respectively, in respect
of the Alger Defined Contribution MidCap Growth Portfolio; and $41,006 and
$55,348, respectively, in respect of the Alger Defined Contribution Leveraged
AllCap Portfolio.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP serves as independent public accountants for the Fund.
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 intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). If
qualified as a regulated investment company, a Portfolio will pay no federal
income taxes on its taxable net investment income (that is, taxable income other
than net realized capital gains) and its net realized capital gains that are
distributed to shareholders. To qualify under Subchapter M, a Portfolio must,
among other things: (1) distribute to its shareholders at least 90% of its
10
<PAGE>
taxable net investment income and net realized short-term capital gains; (2)
derive at least 90% of its gross income from dividends, interest, payments with
respect to loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from options,
futures and forward contracts) derived with respect to the Portfolio's business
of investing in securities; (3) derive less than 30% of its annual gross income
from the sale or other disposition of securities, options, futures or forward
contracts held for less than three months; and (4) diversify its holdings so
that, at the end of each fiscal quarter of the Portfolio (a) at least 50% of the
market value of the Portfolio's assets is represented by cash, U.S. Government
securities and other securities, with those other securities limited, with
respect to any one issuer, to an amount no greater than 10% of the outstanding
voting securities of the issuer, and (b) not more than 25% of the market value
of the Portfolio's assets is invested in the securities of any one issuer (other
than U.S. Government securities or securities of other regulated investment
companies) or of two or more issuers that the Portfolio controls and that are
determined to be in the same or similar trades or businesses or related trades
or businesses. In meeting these requirements, a Portfolio may be restricted in
the selling of securities held by the Portfolio for less than three months and
in the utilization of certain of the investment techniques described above and
in the Fund's prospectus. As a regulated investment company, each Portfolio will
be subject to a 4% non-deductible excise tax measured with respect to certain
undistributed amounts of ordinary income and capital gain. However, each
Portfolio expects to pay the dividends and make the distributions necessary to
avoid the application of this excise tax.
CUSTODIAN
National Westminster Bank NJ, 10 Exchange Place, Jersey City, New Jersey 07302,
serves as custodian for the Fund pursuant to a custodian agreement under which
it holds the Portfolios' assets.
TRANSFER AGENT
Alger Shareholder Services, Inc., 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 Alger Shareholder Services, Inc.
processes purchases and redemptions of shares of the Portfolio, 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.
CERTAIN SHAREHOLDERS
Set forth below is certain information regarding significant shareholders of the
Portfolios. The Fred Alger & Company, Incorporated et al Pension Plan and the
Fred Alger Company, Incorporated et al Profit Sharing Plan (the "Plans") owned
beneficially or of record 19.22% and 24.33%, respectively, of the Alger Defined
Contribution Small Cap Portfolio; 42.63% and 52.49%, respectively, of the Alger
Defined Contribution Growth Portfolio; 40.76% and 51.52%, respectively, of the
Alger Defined Contribution MidCap Growth Portfolio; and 42.87% and 51.97%,
respectively, of the Alger Defined Contribution Leveraged AllCap Portfolio at
February 14, 1996. The only participants in the Plans are past and present
employees of Alger Inc. (a Delaware corporation), Alger Management (a New York
corporation), Alger Shareholder Services, Inc. (a Delaware corporation) and
Analysts Resources, Inc. (a Delaware corporation). Alger Management is a wholly
owned subsidiary of Alger Inc., which in turn is a wholly owned subsidiary of
Alger Associates, Inc. ("Associates") (a Delaware corporation). All the other
corporations listed above are also wholly owned subsidiaries of Associates. Fred
M. Alger III and David D. Alger own approximately 53% and 17%, respectively, of
Associates and may be deemed to control that company and its subsidiaries. As a
result of these securities holdings, the Plans may be deemed to control the
Portfolios, which may have the effect of proportionately diminishing the voting
power of other shareholders of these Portfolios. It can be expected, however,
that this effect will diminish as investors other than those identified above
purchase additional shares of the Portfolios.
The following table contains information regarding persons known to the Fund who
own beneficially or of record five percent or more of the shares of any
Portfolio. Unless otherwise noted, the address of each owner is 75 Maiden Lane,
New York, New York 10038. All holdings are expressed as a percentage of a
11
<PAGE>
Portfolio's outstanding shares as of February 21, 1996 and record and beneficial
holdings are in each instance denoted as follows: record/beneficial.
<TABLE>
<CAPTION>
Alger
Alger Alger Alger Defined
Defined Defined Defined Contribution
Contribution Contribution Contribution Leveraged
Small Cap Growth MidCap Growth AllCap
Name and Portfolio Portfolio Portfolio Portfolio
Address (Record/ (Record/ (Record/ (Record/
of Shareholders Beneficial) Beneficial) Beneficial) Beneficial)
- --------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Fred Alger & Company,
Incorporated et al
Pension Plan 19.22%/19.22% 42.63%/42.63% 40.76%/40.76% 42.87%/42.87%
Fred Alger & Company,
Incorporated et al
Profit Sharing Plan 24.33%/24.33% 52.49%/52.49% 51.52%/51.52% 51.97%/51.97%
Fred Alger & Company,
Incorporated
401(k) Plan -0- / -0- -0- / -0- 7.19%/7.19% -0- / -0-
Wachovia Bank of NC
Trustee for The
Spacelabs Issop
P. O. Box 3075
Winston-Salem,
NC 27102-3075 7.99%/ -0- -0- / -0- -0- / -0- -0- / -0-
Firnap & Co. Trustee
fbo Mentor Graphics
First Interstate Bank
of Oregon
P. O. Box 2971
Portland, OR 97208 41.26%/ -0- -0- / -0- -0- / -0- -0- / -0-
Officers and Trustees
of the Fund in the
Aggregate -0- / -0- -0- / -0- -0- / -0- -0- / -0-
</TABLE>
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 July 14, 1993 (the "Trust Agreement"). The word "Alger" in the
Fund's name has been adopted pursuant to a provision contained in the Agreement
and Declaration of Trust. 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 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.
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
12
<PAGE>
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.
DETERMINATION OF PERFORMANCE
The "total return" and "yield" described in the Prospectus 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:
/n/
P (1+T) =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
below were as follows:
Period from
Inception* Year-Ended
through 10/31/95 10/31/95
---------------- --------
Alger Defined Contribution
Small Cap Portfolio 34.54% 66.19%
Alger Defined Contribution
MidCap Growth Portfolio 34.42 54.10
Alger Defined Contribution
Growth Portfolio 19.50 37.10
Alger Defined Contribution
Leveraged AllCap Portfolio 25.02 54.40
* Commenced operations on November 8, 1993.
B. Yield--a Portfolio's net annualized yield described in the Prospectus is
computed according to the following formula:
a-b /6/
YIELD = 2[(----- + 1) - 1]
cd
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 the telephone number provided on the cover page of this Statement of
Additional Information. 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.
From time to time, in advertisements or in reports to shareholders, the
performances of the Portfolios may be quoted and compared to those of other
funds and accounts with similar investment objectives. In connection with
communicating its "yield" or "total return" to current or prospective
shareholders, each of the other Portfolios may compare these figures to the
performance of other mutual funds with similar investment objectives that are
tracked by mutual fund rating services or to other unmanaged indices which may
assume reinvestment of dividends but generally do not reflect deductions for
administrative and management costs.
13
<PAGE>
FELLOW SHAREHOLDERS:
Unlike France in the 1790's, which Charles Dickens described in the TALE OF TWO
CITIES as the "best of times and the worst of times," the late 1990's for the
American financial markets are purely the best of times. While all periods
provide some room for concern, the current period is more promising than almost
any other in recent history.
HOW WE ARRIVED AT THIS POINT
The stock market and the bond market have both done exceptionally well this
year. This year's performance results from the one-two combination punch to the
jaw of growth stocks which commenced with the Presidential election in 1992.
After twelve years of Republican stewardship, the market and business community
began to see a very unclear economic picture emerge. The first punch landed with
the appointment of the President's new cabinet whose agenda was to create new
taxes on the "rich" and to socialize the health care industry (which represents
15% of the Gross Domestic Product). Growth stocks, which rely on a reasonable
visibility of the future, began to lose relative valuation. What seemed like a
value market at the time was in reality a reluctance on the part of investors to
face an uncertain future. An exceedingly lenient monetary policy, which touched
off a boom in consumer spending in the fourth quarter of 1993, added to this
confusion. This brought about the second punch to the jaw that growth stocks
received. In February of 1994, the Federal Reserve began to tighten interest
rates in a series of six consecutive steps. Once again, this clouded the
economic future and created a compression of growth stock multiples.
At this point, fear of the new administration's policies was replaced by fear of
the Federal Reserve. The market declined and growth stocks collapsed on a
relative basis. The collective body of market and economic forecasters who are
colloquially known as "pundits" all unanimously agreed that inflation would soar
and the stock market would collapse.
Why were they so wrong? First, inflation fears were driven by soaring prices of
industrial commodities. However, commodity based raw materials represent only
15% of the total cost of manufacturing. Much more important is the cost of
labor, which did not rise rapidly. Inflation was subdued throughout 1994.
Secondly, the forecaster's assumption of a stock market collapse was predicated
on the view that the market abhors increases in short-term rates. Indeed, the
crash of 1987 was preceded and perhaps caused by an increase in short-term
rates. Thirdly, there was a generally accepted view that the market was
overpriced. Although this view was widely expressed on television, it was never
the case. By way of comparison, in the period prior to the crash of 1987, the
earnings yield of the market was only half the yield of the 30-year U.S.
Government Bond. This was below the normal range of 50% to 90%. Throughout 1994,
the earnings yield of the stock market typically sold at about 75% of the U.S.
Government Bond yield. Moreover, the bond market itself was undervalued,
discounting a level of inflation which never materialized. Based on forward
looking price earnings ratios, the market was, if anything, undervalued.
CURRENT MARKET AND ECONOMY
As 1995 dawned, the key questions facing the markets concerned the need for
future tightening of interest rates by the Federal Reserve, the possible onset
of inflation and the excessive strength of the economy, all of which are
naturally interrelated. Now we are well into the fourth quarter and the concern
of the market is not whether the economy is growing too fast, but whether it is
growing too slowly.
As early as last year, we forecasted that the economy would slow and that there
would be a "soft landing". This has been a correct forecast, although it may now
be obsolete. All four components of consumer spending, which constitute 69% of
the Gross Domestic Product: housing, autos, consumer durables and apparel, have
slowed significantly but should bounce back due to the drop in interest rates
and a reduction in inventory levels. There is evidence, therefore, that we are
no longer looking at a "soft landing," but rather a "touch and go landing."
F-1
<PAGE>
It would be overly optimistic to say that all is well with the economy. Consumer
confidence, while better in some surveys, is not robust. While leading
indicators are up slightly, many components of retail sales are still pointing
down. Whether the Federal Reserve will continue to lower rates is an open
question especially in light of the current Federal budget negotiations. While
these negotiations may well drag into 1996, it would be disappointing for those
who are expecting a cut in rates in the near term.
The bond market continues to believe that interest rates are too high. The
dramatic flattening of the yield curve and the fact that the Government pays
less interest to borrow for 10 years than banks do overnight provides ample
evidence. The price of gold, an excellent proxy for inflation, remains at a
relatively low historic level (approximately $390 an ounce). We believe that the
economy will soon begin to react to the drop in interest rates that we have
experienced to date. As a result, we expect the economy to keep advancing at a
slow rate and avoid a recession in 1996.
As for the stock market, we feel it still remains undervalued. We use three
measures to determine the appropriate valuation for the market. The first is
simply to multiply our best estimate of Dow earnings for 1995 by the average
multiple of the last ten years which is 16. The result is an expected target of
the Dow of 5600. The second method relates the market to short-term interest
rates. Our own proprietary model multiplies the bottom-up forecast for the Dow
earnings by the reciprocal of the 90-day commercial paper rate adjusted for some
smoothing techniques. This model states that the Dow would be correctly valued
at 6200. The third technique involves the relationship between the industrial
S&P indexes estimated earnings and the 30 year bond yield. Using the average
relationship between these two variables for the period 1988 through 1994,
suggests that the market could appreciate 33% next year. The Dow equivalent of
this would be 6300. While none of these forecasts may be realized, it is
interesting that they all agree that the market will appreciate significantly
next year using only average relationships.
THE ALGER DEFINED CONTRIBUTION TRUST PORTFOLIO REVIEWS
ALGER DEFINED CONTRIBUTION GROWTH PORTFOLIO
The Alger Defined Contribution Growth Portfolio recorded excellent results for
the period ended October 31, 1995, with a gain of 37.1%, relative to the S&P 500
Index return of 26.4%. The Portfolio is well represented in three industries
which are full of fast growing, profitable and well run companies. The
Healthcare, Computer Related & Business Equipment and Semiconductors industries
represent 23.1%, 15.2% and 11.6%, respectively, of the Portfolio's composition.
The top three holdings of the Portfolio at the period end were Altera
Corporation, Lone Star Steakhouse & Saloon, Inc. and Biochem Pharma Inc.
ALGER DEFINED CONTRIBUTION SMALL CAP PORTFOLIO
For the year ended October 31, 1995, the Alger Defined Contribution Small Cap
Portfolio returned 66.2%, significantly outperforming the Wilshire Small Company
Growth Index which returned 25.2% and the Russell 2000 Growth Index which
returned 20.6% over the same period. The Portfolio's largest three positions at
the end of the period were: U.S. Robotics Corp., Maxim Integrated Products Inc.
and Altera Corporation. The top representative industry groups at the period end
were: Semi-Conductors, Communications and Computer Related & Business Equipment.
At present, we continue to hold these companies and many companies in these
representative industries as their products are innovative, in high demand by an
expanding marketplace and have earnings that continue to grow at very high
rates.
ALGER DEFINED CONTRIBUTION MIDCAP GROWTH PORTFOLIO
The Alger Defined Contribution MidCap Growth Portfolio continues to provide its
investors with strong, solid performance, returning 54.1% for the one year
period ended October 31, 1995. Over the same period, the benchmark S&P MidCap
400 Index returned 21.2%. Possibly the most exciting and yet to be recognized
sector of the equities market, midcap stocks have many of the upside
characteristics of small cap stocks without the attendant volatility
F-2
<PAGE>
attributable to a lack of liquidity. The Portfolio's largest representative
industries at the period end were Computer Related & Business Equipment 21.7%,
Healthcare 16.1% and Communications 11.2%.
ALGER DEFINED CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO
The Alger Defined Contribution Leveraged AllCap Portfolio employs an "all cap"
(small, medium and large capitalizations) portfolio management strategy which
has been implemented at Fred Alger Management for over 31 years. In addition,
the Portfolio may employ a management technique known as leveraging, that is,
borrowing money for investment purposes in order to increase the Portfolio's
holdings and, therefore, its exposure to the stock market. Over the twelve month
period, the Portfolio returned 54.4% relative to the S&P 500 Index which
returned 26.4%. The largest representative industry groups at the period ended
included Semiconductors 23.9%, Computer Related & Business Equipment 18.4%, and
Healthcare 12.7%.
LOOKING AHEAD
Despite the rally year-to-date, growth stocks generally remain undervalued
relative to the market. Technology stocks still represent excellent investments.
While they have moved up a great deal, so have their earnings. Consequently,
their price/earnings multiples have not greatly increased. An example of this is
one of our favorite holdings, Altera Corporation, which has appreciated
approximately 150% year-to-date . However, we expect Altera's earnings to be up
135% this year. Consequently, Altera is not trading at a substantially higher
multiple of 1995 earnings compared to its 1994 earnings at this point last year.
In 1991, I wrote a book entitled RAGING BULL: HOW TO INVEST IN THE GROWTH STOCKS
OF THE 90'S. In the last chapter I predicted that the Dow Jones Industrial
Average would reach 6,000 by the millennium and perhaps sooner based on seven
basic factors:
1. End of the Cold War, leading to increased American self confidence.
2. An average high level of employment, due mainly to demographics.
3. Modest inflation.
4. Normal real rates of interest.
5. Rapidly expanding exports.
6. The eventual elimination of the deficit.
7. Rapid technological change.
Generally, I think we are still on target (even the deficit point is being
debated) and I am extremely excited about the prospects for the market and
especially growth stocks during the next 5 years.
Respectfully submitted,
/s/ David D. Alger
David D. Alger
President
F-3
<PAGE>
ALGER DEFINED CONTRIBUTION GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED)
The Alger Defined Contribution Growth Portfolio invests in companies which
generally have broader product lines, markets, financial resources and depth
of management than smaller, newer companies.
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 8, 1993
[The following table represents a chart in the printed piece]
Alger
Defined
Contribution
Growth S&P 500
------ -------
11-08-93 10,000 10,000
10-31-94 10,380 10,410
10-31-95 14,231 13,162
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Defined Contribution Growth Portfolio and the
S&P 500 on November 8, 1993, the inception date of the Alger Defined
Contribution Growth Portfolio. The figures for both the Alger Defined
Contribution Growth Portfolio and the S&P 500, an unmanaged index of common
stocks, include reinvestment of dividends.
PERFORMANCE COMPARISON THROUGH October 31, 1995
Average Annual Return
Since Inception
1 Year 11/8/93
----------------------------------------
Alger Defined Contribution
Growth Portfolio 37.10% 19.50%
S&P 500 26.44% 14.88%
----------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE
AND REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT
GUARANTEE FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND
THE PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
F-4
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
ALGER DEFINED CONTRIBUTION GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1995
SHARES COMMON STOCKS--97.7% VALUE
------ -----
AIRLINES--1.0%
2,000 Delta Air Lines Inc...................$ 131,250
------------
COMMUNICATIONS--5.6%
3,500 Century Telephone Enterprises, Inc.... 101,500
6,000 DSC Communications Corporation*....... 222,000
2,000 Glenayre Technologies Inc.*........... 128,500
8,000 Tellabs, Inc.*........................ 272,000
------------
724,000
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--15.2%
6,600 Altera Corporation*................... 399,300
3,000 Bay Networks Inc.*.................... 198,750
4,000 Dell Computer Corporation*............ 186,500
3,200 Hewlett-Packard Company............... 296,400
3,700 Read-Rite Corporation*................ 129,038
6,000 Seagate Technology*................... 268,500
5,000 3 Com Corp.*.......................... 235,000
5,900 Xilinx, Inc.*......................... 271,400
------------
1,984,888
------------
COMPUTER SOFTWARE--3.0%
4,500 Enterprise Systems Inc.*.............. 105,188
10,000 Informix Corporation*................. 291,250
------------
396,438
------------
COMPUTER TECHNOLOGY--1.5%
2,000 AVX Corporation*...................... 62,250
3,900 Silicon Graphics, Inc.*............... 129,675
------------
191,925
------------
DEFENSE--4.8%
2,679 Lockheed Martin Corp.................. 182,506
6,000 Loral Corporation..................... 177,750
3,300 McDonnell Douglas Corporation......... 269,775
------------
630,031
------------
FINANCIAL SERVICES--5.4%
4,965 First Data Corporation................ 328,294
4,300 Lehman Brothers Holdings Inc.......... 93,524
5,000 Merrill Lynch & Co., Inc.............. 277,500
------------
699,318
------------
FREIGHT--2.0%
3,200 Federal Express Corp.*................ 262,800
------------
HEALTHCARE--23.1%
3,100 Apria Healthcare Group Inc.*.......... 67,038
10,000 Biochem Pharma Inc.*.................. 382,500
3,000 Boston Scientific Corporation*........ 126,375
5,000 Cardinal Health, Inc.................. 256,875
5,000 Columbia/HCA Healthcare Corporation... 245,625
5,800 Healthsource Inc.*.................... 307,400
3,000 Lilly (Eli) Co........................ 289,875
3,200 Medtronic, Inc........................ 184,800
5,200 Merck & Co., Inc...................... 299,000
1,200 Nellcor Puritan Bennett Inc.*......... 69,000
1,800 Oxford Health Plans, Inc.*............ 140,850
6,000 SmithKline Beecham PLC ADS............ 311,250
6,200 Summit Technology Inc.*............... 275,900
2,000 United Dental Care, Inc.*............. 61,000
------------
3,017,488
------------
LEISURE & ENTERTAINMENT--3.1%
3,000 Disney (Walt) Productions............. 172,875
4,500 Viacom Inc. Cl. B.*................... 225,000
------------
397,875
------------
PAPER PACKAGING &
FOREST PRODUCTS--2.6%
3,900 Alco Standard Corporation............. 345,150
------------
POLLUTION CONTROL--1.6%
10,000 USA Waste Services Inc.*.............. 210,000
------------
RESTAURANTS & LODGING--3.0%
10,000 Lone Star Steakhouse & Saloon, Inc.*.. 386,250
------------
RETAILING--6.0%
15,250 OfficeMax Inc.*....................... 377,437
4,500 Tandy Corporation..................... 222,188
4,000 Viking Office Products, Inc.*......... 178,000
------------
777,625
------------
SEMICONDUCTORS--11.6%
3,500 Cirrus Logic, Inc.*................... 147,437
5,500 Integrated Device Technology, Inc.*... 104,500
2,200 Intel Corporation..................... 153,725
6,000 LSI Logic Corporation*................ 282,750
5,000 Linear Technology Corporation......... 218,750
3,000 Maxim Integrated Products, Inc.*...... 224,250
2,600 Micron Technology, Inc................ 183,625
3,000 Texas Instruments, Incorporated....... 204,750
------------
1,519,787
------------
SEMICONDUCTORS
CAPITAL EQUIPMENT--4.6%
6,600 Applied Materials, Inc.*.............. 330,825
7,500 Opal, Inc.*........................... 113,438
4,500 Teradyne, Inc.*....................... 150,188
------------
594,451
------------
MISCELLANEOUS--3.6%
5,000 Loewen Group Inc...................... 200,238
6,700 Service Corporation International..... 268,838
------------
469,076
------------
Total Common Stocks (Cost $10,242,384) 12,738,352
------------
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--3.4%
- ---------
$445,000 Washington Square Mortgage Co.,
5.78%, 11/3/95
(Cost $444,857)..................... 444,857
------------
Total Investments (Cost $10,687,241)(a) 101.1% 13,183,209
Liabilities in Excess of Other Assets (1.1) (141,472)
----- ----------
Net Assets............................. 100.0% $13,041,737
===== ==========
*Non-income producing security.
(a)At October 31, 1995, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $10,687,241, amounted to $2,495,968
which consisted of aggregate gross unrealized appreciation of $2,722,814 and
aggregate gross unrealized depreciation of $226,846.
See Notes to Financial Statements.
F-5
<PAGE>
ALGER DEFINED CONTRIBUTION SMALL CAP PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED)
The Alger Defined Contribution Small Cap Portfolio invests in small,
fast-growing companies that offer innovative products, services, or technologies
to a rapidly expanding marketplace.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 8, 1993
- --------------------------------------------------------------------------------
[This table represents a chart in the printed piece]
Alger
Defined Wilshire
Contribution Small Co. Russell 2000
Small Cap Growth Index Growth Index
--------- ------------ ------------
11-08-93 10,000 10,000 10,000
10-31-94 10,830 10,546 10,600
10-31-95 17,999 13,203 12,064
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Defined Contribution Small Cap Portfolio, Wilshire
Small Company Growth Index and the Russell 2000 Growth Index on November 8,
1993, the inception date of the Alger Defined Contribution Small Cap Portfolio.
The figures for the Alger Defined Contribution Small Cap Portfolio, Wilshire
Small Company Growth Index (an unmanaged index of common stocks) and the Russell
2000 Growth Index (an unmanaged index of common stocks) include reinvestment of
dividends.
For the upcoming fiscal year, the Portfolio will use only the Russell 2000
Growth Index (the "Russell 2000") as a comparative index. The Portfolio has
elected to change its comparative index because management of the Portfolio
believes the size of the companies in the Russell 2000 is more representative of
the size of the companies in which the Portfolio invests.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH October 31, 1995
- --------------------------------------------------------------------------------
Average Annual Return
Since Inception
1 Year 11/8/93
---------------------------------------
Alger Defined Contribution
Small Cap Portfolio 66.19% 34.54%
Wilshire Small Co. Growth Index 25.20% 15.06%
Russell 2000 Growth Index 20.57% 9.93%
---------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
F-6
<PAGE>
THE ALGER DEFINED CONTRIBUTION TRUST
ALGER DEFINED CONTRIBUTION SMALL CAP PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1995
SHARES COMMON STOCKS--94.3% VALUE
------ -----
BUILDING & CONSTRUCTION--.4%
3,000 U.S. Home Corporation*................ $ 80,625
------------
COMMUNICATIONS--16.5%
5,000 Ascend Communications, Inc.*.......... 325,000
12,000 DSC Communications Corporation*....... 444,000
10,875 Glenayre Technologies Inc.*........... 698,719
9,000 Network Equipment Technologies, Inc.*. 293,625
16,400 Tellabs, Inc.*........................ 557,600
16,000 U.S. Robotics Corp.*.................. 1,480,000
------------
3,798,944
------------
COMPUTER RELATED &
BUSINESS EQUIPMENT--11.7%
12,200 Altera Corporation*................... 738,100
7,000 Bay Networks Inc.*.................... 463,750
4,600 Dell Computer Corporation*............ 214,475
5,000 Digital Equipment Corporation*........ 270,625
15,000 ESS Technology, Inc.*................. 450,000
2,000 Komag, Incorporated*.................. 114,000
7,000 Read-Rite Corporation*................ 244,125
4,500 Xilinx, Inc........................... 207,000
------------
2,702,075
------------
COMPUTER SOFTWARE--10.6%
9,000 Activision Inc.*...................... 150,750
4,000 Electronics For Imaging Inc.*......... 329,000
7,000 EPIC Design Technology, Inc.*......... 322,000
16,600 Informix Corporation*................. 483,475
10,000 Logic Works Inc.*..................... 152,500
5,000 Maxis Inc.*........................... 221,250
23,000 S3 Incorporated*...................... 393,875
12,000 Softkey International Inc.*........... 378,000
------------
2,430,850
------------
COMPUTER TECHNOLOGY--5.6%
3,000 Actel Corporation*.................... 35,250
5,700 Adaptec Inc.*......................... 253,650
17,600 C.P. Clare Corporation*............... 455,400
3,000 Integrated Silicon Systems, Inc. *.... 88,125
15,000 Pinnacle Systems, Inc.*............... 470,625
------------
1,303,050
------------
CONSUMER PRODUCTS--2.5%
15,000 De Rigo Spa (ADR)*.................... 309,375
8,000 Oakley, Inc.*......................... 276,000
------------
585,375
------------
HEALTHCARE--10.6%
20,000 AHI Healthcare Systems, Inc.*......... 280,000
16,500 Biochem Pharma Inc.*.................. 631,125
10,000 Depotech Corp.*....................... 145,000
2,000 HBO & Company......................... 141,500
5,000 Hologic, Inc.*........................ 130,000
12,500 IMNET Systems, Inc.*.................. 317,188
10,000 Liposome Company Inc.*................ 153,750
6,100 Metra Biosystems, Inc.*............... 112,850
7,575 PhyCor Inc.*.......................... 278,381
5,400 Summit Technology, Inc.*.............. 240,300
------------
2,430,094
------------
POLLUTION CONTROL--2.3%
5,800 United Waste Systems, Inc.*........... 229,100
14,500 USA Waste Services, Inc.*............. 304,500
------------
533,600
------------
RESTAURANTS & LODGING--2.9%
5,600 DF&R Restaurants, Inc.*............... 170,800
5,000 Lone Star Steakhouse & Saloon, Inc.*.. 193,125
9,499 Outback Steakhouse, Inc.*............. 298,030
------------
661,955
------------
RETAILING--4.4%
5,300 CompUSA Inc.*......................... 202,725
7,400 Fabri-Centers Of America Inc. Cl A.*.. 110,075
7,400 Fabri-Centers Of America Inc. Cl B.*.. 86,025
6,000 Guest Supply Inc.*.................... 113,250
16,500 OfficeMax, Inc.*...................... 408,375
2,034 Viking Office Products, Inc.*......... 90,512
------------
1,010,962
------------
SEMICONDUCTORS--19.4%
9,750 Alliance Semiconductor Corp.*......... 299,813
13,000 Cirrus Logic, Inc.*................... 547,625
16,600 Integrated Device Technology, Inc.*... 315,400
9,500 LSI Logic Corporation*................ 447,688
13,500 Linear Technology Corporation......... 590,625
10,800 Maxim Integrated Products Inc.*....... 807,300
9,000 Micrel, Incorporated*................. 204,750
20,500 Micro Linear Corporation*............. 315,188
17,000 Microchip Technology Incorporated*.... 674,696
10,900 TriQuint Semiconductor, Inc.*......... 247,975
------------
4,451,060
------------
SEMICONDUCTORS
CAPITAL EQUIPMENT--7.4%
5,000 AG Associates, Inc.*.................. 110,625
8,000 FSI International, Inc.*.............. 190,000
8,000 GaSonics International Corp.*......... 264,000
5,000 OnTrak Systems, Inc.*................. 98,125
5,200 Opal, Inc.*........................... 78,650
7,000 PRI Automation, Inc.*................. 259,000
5,700 Silicon Valley Group, Inc.*........... 184,538
12,000 Tencor Instruments*................... 511,500
------------
1,696,438
------------
Total Common Stocks (Cost $15,131,252) 21,685,028
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--5.0%
- ---------
$225,000 International Lease Finance Corp.,
5.72%, 11/01/95..................... 225,000
358,000 State Mutual Life Assurance Co. of
America,
5.73%, 11/03/95..................... 357,886
578,000 Washington Square Mortgage Co.,
5.78%, 11/03/95..................... 577,815
------------
Total Short-Term Corporate Notes
(Cost $1,160,701)................... 1,160,701
------------
Total Investments (Cost $16,291,953)(a) 99.3% 22,845,729
Other Assets in Excess of Liabilities.. .7 155,837
------ ------------
Net Assets............................. 100.0% $23,001,566
====== ============
- ----------
*Non-income producing security.
(a)At October 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $16,291,953, amounted to
$6,553,776 which consisted of aggregate gross unrealized appreciation of
$6,796,262 and aggregate gross unrealized depreciation of $242,486.
See Notes to Financial Statements.
F-7
<PAGE>
ALGER DEFINED CONTRIBUTION MIDCAP GROWTH PORTFOLIO
PORTFOLIO HIGHLIGHTS THROUGH OCTOBER 31, 1995 (UNAUDITED)
The Alger Defined Contribution MidCap Growth Portfolio invests in mid-sized
companies.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 8, 1993
- --------------------------------------------------------------------------------
Alger
Defined
Contribution
MidCap
Growth S&P 500
------ -------
11-08-93 10,000 10,000
10-31-94 11,660 10,292
10-31-95 17,968 12,4752
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Defined Contribution MidCap Growth Portfolio and
the S&P MidCap 400 Index on November 8, 1993, the inception date of the Alger
Defined Contribution MidCap Growth Portfolio. Figures for the Alger Defined
Contribution MidCap Growth Portfolio and the S&P MidCap 400 Index, an unmanaged
index of common stocks, include reinvestment of dividends.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH October 31, 1995
- --------------------------------------------------------------------------------
Average Annual Return
Since Inception
1 Year 11/8/93
-------------------------------------------
Alger Defined Contribution
MidCap Growth Portfolio 54.10% 34.42%
S&P MidCap 400 Index 21.21% 11.81%
-------------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
F-8
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
ALGER DEFINED CONTRIBUTION MIDCAP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1995
SHARES COMMON STOCKS--95.4% VALUE
------ -----
APPAREL--1.7%
5,000 Tommy Hilfiger Corporation*........... $ 190,625
------------
BUILDING & CONSTRUCTION--.9%
3,000 Pulte Corp............................ 94,875
-----------
COMMUNICATIONS--11.2%
4,000 Ascend Communications, Inc.*.......... 260,000
3,000 Century Telephone Enterprises, Inc.... 87,000
3,400 DSC Communications Corporation*....... 125,800
4,050 Glenayre Technologies Inc.*........... 260,212
9,000 Tellabs, Inc.*........................ 306,000
2,000 U.S. Robotics Corp.*.................. 185,000
-----------
1,224,012
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--21.7%
5,200 Altera Corporation*................... 314,600
6,000 Bay Networks Inc.*.................... 397,500
2,700 Cisco Systems, Inc.*.................. 209,250
4,800 Dell Computer Corporation*............ 223,800
7,000 ESS Technology, Inc.*................. 210,000
3,000 Read-Rite Corporation*................ 104,625
5,000 Seagate Technology*................... 223,750
8,000 3 Com Corp.*.......................... 376,000
6,700 Xilinx, Inc.*......................... 308,200
-----------
2,367,725
-----------
COMPUTER SOFTWARE--2.7%
6,000 Informix Corporation*................. 174,750
2,000 Learning Company (The)*............... 118,000
-----------
292,750
-----------
COMPUTER TECHNOLOGY--5.1%
2,000 AVX Corporation*...................... 62,250
2,800 Adaptec, Inc.*........................ 124,600
2,000 Integrated Silicon Systems, Inc.*..... 58,750
10,000 Pinnacle Systems, Inc.*............... 313,750
-----------
559,350
-----------
CONSUMER PRODUCTS--1.8%
5,700 Oakley, Inc.*......................... 196,650
-----------
FINANCIAL SERVICES--1.4%
3,000 Advanta Corp. Class B................. 107,250
1,800 Schwab (Charles) Corporation (The).... 41,175
-----------
148,425
-----------
HEALTHCARE--16.1%
3,100 Apria Healthcare Group Inc.*.......... 67,037
7,500 Biochem Pharma Inc.*.................. 286,875
2,000 Boston Scientific Corporation*........ 84,250
5,000 Cardinal Health, Inc.................. 256,875
2,000 Genzyme Corp.--General Division*....... 116,500
5,550 Health Management Associates, Inc.*... 119,325
5,500 Healthsource, Inc.*................... 291,500
4,000 MedPartners, Inc.*.................... 112,000
900 Nellcor Puritan Bennett Inc.*......... 51,750
1,500 Oxford Health Plans, Inc.*............ 117,375
5,600 Summit Technology Inc.*............... 249,200
-----------
1,752,687
-----------
POLLUTION CONTROL--2.3%
12,000 USA Waste Services, Inc.*............. 252,000
-----------
RESTAURANTS & LODGING--4.2%
6,000 La Quinta Inns, Inc................... 154,500
8,000 Lone Star Steakhouse & Saloon, Inc.*.. 309,000
-----------
463,500
-----------
RETAILING--8.5%
1,500 CompUSA Inc.*......................... 57,375
8,000 Global DirectMail Corp.*.............. 218,000
13,500 OfficeMax, Inc.*...................... 334,125
4,600 Tandy Corporation..................... 227,125
2,000 Viking Office Products, Inc.*......... 89,000
-----------
925,625
-----------
SEMICONDUCTORS--9.9%
4,000 Alliance Semiconductor Corp.*......... 123,000
2,800 Cirrus Logic, Inc.*................... 117,950
5,100 Integrated Device Technology, Inc.*... 96,900
5,000 LSI Logic Corporation*................ 235,625
2,000 Linear Technology Corporation......... 87,500
4,000 Maxim Integrated Products, Inc.*...... 299,000
3,000 Microchip Technology Incorporated*.... 119,063
-----------
1,079,038
-----------
SEMICONDUCTORS
CAPITAL EQUIPMENT--3.9%
2,000 ASM Lithography Holdings*............. 99,250
2,000 Lam Research Corporation*............. 121,750
2,500 Silicon Valley Group, Inc.*........... 80,937
3,800 Teradyne, Inc.*....................... 126,825
-----------
428,762
-----------
MISCELLANEOUS--4.0%
5,000 Loewen Group Inc...................... 200,237
5,800 Service Corporation International..... 232,725
-----------
432,962
-----------
Total Common Stocks (Cost $7,364,730). 10,408,986
-----------
PRINCIPAL
AMOUNT SHORT-TERM CORPORATE NOTES--4.5%
$490,000 State Mutual Life Assurance Co. of America,
5.73%, 11/03/95
(Cost $489,844)..................... 489,844
-----------
Total Investments (Cost $7,854,574)(a). 99.9% 10,898,830
Other Assets in Excess of Liabilities . .1 15,499
------- -----------
Net Assets............................. 100.0% $10,914,329
======= ===========
*Non-income producing security.
(a)At October 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $7,854,574, amounted to $3,044,256
which consisted of aggregate gross unrealized appreciation of $3,208,051 and
aggregate gross unrealized depreciation of $163,795.
See Notes to Financial Statements.
F-9
<PAGE>
- --------------------------------------------------------------------------------
ALGER DEFINED CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO PORTFOLIO HIGHLIGHTS
THROUGH OCTOBER 31, 1995 (UNAUDITED)
The Alger Defined Contribution Leveraged AllCap Portfolio focuses on companies
with promising growth potential and uses some special investment tools such as
leveraging and options and futures transactions.
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION November 8, 1993
- --------------------------------------------------------------------------------
[This table represents a chart in the printed piece]
Alger
Defined
Contribution
Leveraged
Allcap S&P 500
------ -------
11-08-93 10000 10000
10-31-94 10080 10410
10-31-95 15564 13162
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Defined Contribution Leveraged AllCap Portfolio and
the S&P 500 on November 8, 1993, the inception date of the Alger Defined
Contribution Leveraged AllCap Portfolio. Figures for the Portfolio and the S&P
500 Index, an unmanaged index of common stocks, include reinvestment of
dividends.
- --------------------------------------------------------------------------------
PERFORMANCE COMPARISON THROUGH October 31, 1995
- --------------------------------------------------------------------------------
Average Annual Return
Since Inception
1 Year 11/8/93
-------------------------------------------
Alger Defined Contribution
Leveraged AllCap Portfolio 54.40% 25.02%
S&P 500 26.44% 14.88%
-------------------------------------------
THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS INCLUDE CHANGES IN SHARE PRICE AND
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL WILL FLUCTUATE AND THE
PORTFOLIO'S SHARES WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
F-10
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
ALGER DEFINED CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO
SCHEDULE OF INVESTMENTS
October 31, 1995
SHARES COMMON STOCKS--95.2% VALUE
------ -----
APPAREL--.9%
2,000 Tommy Hilfiger Corporation*........... $ 76,250
-----------
COMMUNICATIONS--7.7%
4,600 ADC Telecommunications, Inc.*......... 184,000
2,100 Glenayre Technologies Inc.*........... 134,925
4,900 Network Equipment Technologies, Inc.*. 159,862
1,600 U.S. Robotics Corp.*.................. 148,000
-----------
626,787
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT--18.4%
5,100 Altera Corporation*................... 308,550
3,100 Bay Networks Inc.*.................... 205,374
2,100 Cisco Systems, Inc.*.................. 162,750
15,000 Creative Technology, Ltd.*............ 174,375
4,000 Dell Computer Corporation*............ 186,500
4,200 3 Com Corp.*.......................... 197,400
5,700 Xilinix, Inc.*........................ 262,200
-----------
1,497,149
-----------
COMPUTER SOFTWARE--8.5%
10,000 Activision Inc.*...................... 167,500
3,200 Electronics For Imaging Inc.*......... 263,200
3,000 Maxis Inc.*........................... 132,750
7,400 S3 Incorporated*...................... 126,725
-----------
690,175
-----------
COMPUTER TECHNOLOGY--5.6%
7,400 C.P. Clare Corporation*............... 191,474
6,700 Pinnacle Systems, Inc.*............... 210,212
1,800 VideoServer Inc.*..................... 54,900
-----------
456,586
-----------
CONSUMER PRODUCTS--2.1%
5,000 Oakley, Inc.*......................... 172,500
-----------
HEALTHCARE--12.7%
8,000 Biochem Pharma Inc.*.................. 306,000
1,600 Cardinal Health, Inc.................. 82,200
1,000 Genzyme Corp.--General Division*...... 58,250
2,300 Healthsource, Inc.*................... 121,900
5,200 Liposome Company Inc.*................ 79,950
2,000 Medtronic, Inc........................ 115,500
2,000 Summit Technology Inc.*............... 89,000
1,500 Target Therapeutics, Inc.*............ 116,250
2,000 United Dental Care Inc.*.............. 61,000
-----------
1,030,050
-----------
POLLUTION CONTROL--2.9%
4,000 United Waste Systems, Inc.*........... 158,000
3,500 USA Waste Services, Inc.*............. 73,500
-----------
231,500
-----------
RESTAURANTS & LODGING--.7%
1,800 Outback Steakhouse, Inc.*............. 56,475
-----------
RETAILING--1.4%
4,500 OfficeMax, Inc.*...................... 111,375
-----------
SEMICONDUCTORS--23.9%
2,000 Alliance Semiconductor Corp.*......... 61,500
4,000 Cirrus Logic, Inc.*................... 168,500
6,400 Integrated Device Technology, Inc.*... 121,600
3,400 LSI Logic Corporation*................ 160,225
4,800 Linear Technology Corporation+........ 210,000
4,000 Maxim Integrated Products, Inc.*...... 299,000
4,500 Micrel, Incorporated*................. 102,375
16,500 Micro Linear Corporation*+............ 253,688
4,300 Microchip Technology Incorporated*+... 170,657
3,000 Micron Technology, Inc.+.............. 211,875
1,600 Texas Instruments, Incorporated....... 109,200
3,000 TriQuint Semiconductor, Inc.*......... 68,250
-----------
1,936,870
-----------
SEMICONDUCTORS
CAPITAL EQUIPMENT--10.4%
4,600 Applied Materials, Inc.*.............. 230,575
5,000 ASM Lithography Holdings*............. 248,125
6,100 FSI International, Inc.*.............. 144,875
7,200 On Trak Systems, Inc.*................ 141,300
1,800 Tencor Instruments*................... 76,725
-----------
841,600
-----------
Total Common Stocks (Cost $6,169,894). 7,727,317
-----------
WARRANTS--1.8%
SEMI-CONDUCTORS
4,000 Intel Corp. Warrants,
expire 3/14/98 (Cost $141,833)...... 148,000
-----------
Total Investments (Cost $6,311,727)(a). 97.0% 7,875,317
Other Assets in Excess of Liabilities.. 3.0 240,702
------- -----------
Net Assets............................. 100.0% $8,116,019
======= ===========
*Non-income producing security.
+Securities partially or fully pledged (see note 5).
(a)At October 31, 1995, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $6,311,727, amounted to $1,563,590
which consisted of aggregate gross unrealized appreciation of $1,900,810 and
aggregate gross unrealized depreciation of $337,220.
See Notes to Financial Statements.
F-11
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
<TABLE>
<CAPTION>
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value (identified cost*)-
see accompanying schedules of investments............. $13,183,209 $22,845,729 $10,898,830 $7,875,317
Cash.................................................... 39,441 664,256 41,870 178,136
Receivable for investment securities sold............... -- 504,972 104,105 663,488
Receivable for shares of beneficial interest sold....... 6,018 61,566 6,365 3,383
Dividends receivable.................................... 778 540 252 192
Organizational expenses, net............................ 2,114 2,114 2,114 2,114
Prepaid expenses........................................ 1,380 3,117 1,226 1,153
----------- ----------- ----------- ----------
Total Assets........................................ 13,232,940 24,082,294 11,054,762 8,723,783
----------- ----------- ----------- ----------
LIABILITIES:
Payable for investment securities purchased............. 168,716 1,049,104 119,383 277,744
Demand loan payable to bank............................. -- -- -- 302,600
Interest payable........................................ -- -- -- 6,739
Accrued investment management fees...................... 8,554 16,742 7,440 5,972
Accrued expenses........................................ 13,933 14,882 13,610 14,709
Total Liabilities................................... 191,203 1,080,728 140,433 607,764
----------- ----------- ----------- ----------
NET ASSETS.............................................. $13,041,737 $23,001,566 $10,914,329 $8,116,019
=========== =========== =========== ==========
Net Assets Consist of:
Paid-in capital....................................... $ 7,663,834 $14,001,808 $ 6,253,075 $4,817,747
Undistributed net investment income
(accumulated loss).................................. (44,939) (172,946) (108,429) (273,102)
Undistributed net realized gain....................... 2,926,874 2,618,928 1,725,427 2,007,784
Net unrealized appreciation........................... 2,495,968 6,553,776 3,044,256 1,563,590
----------- ----------- ----------- ----------
NET ASSETS.............................................. $13,041,737 $23,001,566 $10,914,329 $8,116,019
=========== =========== =========== ==========
Shares of beneficial interest outstanding--Note 6........ 1,119,754 1,283,263 667,898 638,068
=========== =========== =========== ==========
NET ASSET VALUE PER SHARE............................... $ 11.65 $ 17.92 $ 16.34 $ 12.72
=========== =========== =========== ==========
*Identified cost........................................ $10,687,241 $16,291,953 $ 7,854,574 $6,311,727
=========== =========== ============ ==========
</TABLE>
See Notes to Financial Statements.
F-12
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
STATEMENTS OF OPERATIONS
For the year ended October 31, 1995
<TABLE>
<CAPTION>
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Income:
Dividends............................................ . $ 72,760 $ 8,166 $ 17,564 $ 22,248
Interest.............................................. 25,177 42,102 21,449 --
--------- --------- --------- ---------
Total Income........................................ 97,937 50,268 39,013 22,248
--------- --------- --------- ---------
Expenses:
Management fees--Note 3(a)............................. 81,537 130,610 66,230 55,348
Interest on line of credit utilized--Note 5............ -- -- -- 82,890
Custodian fees........................................ 7,145 11,604 7,381 9,232
Transfer agent fees--Note 3(c)......................... 2,500 2,500 2,500 2,500
Professional fees..................................... 9,580 9,580 9,580 9,580
Trustees' fees........................................ 6,000 6,000 6,000 6,000
Registration fees..................................... 6,245 8,179 5,733 5,774
Miscellaneous......................................... 7,769 4,959 4,706 4,791
--------- --------- --------- ---------
120,776 173,432 102,130 176,115
Less, earnings credits--Note 2(e)...................... (3,002) (11,134) (6,176) (2,604)
--------- --------- --------- ---------
Total net expenses.................................. 117,774 162,298 95,954 173,511
--------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS)............................ (19,837) (112,030) (56,941) (151,263)
--------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments...................... 2,914,058 2,620,966 1,676,799 1,934,036
Net change in unrealized appreciation
on investments...................................... 617,050 5,485,820 2,165,746 1,097,196
--------- --------- --------- ---------
Net realized and unrealized gain
on investments...................................... 3,531,108 8,106,786 3,842,545 3,031,232
--------- --------- --------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................................... $3,511,271 $7,994,756 $3,785,604 $2,879,969
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-13
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
ALGER DEFINED CONTRIBUTION LEVERAGED ALLCAP PORTFOLIO
STATEMENT OF CASH FLOWS
For the year ended October 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH: Cash flows from operating activities:
Dividends received............................................................................................... $ 22,804
Interest paid.................................................................................................... (76,150)
Operating expenses paid.......................................................................................... (87,880)
Maturity of short-term securities, net........................................................................... 370,701
Purchase of investment securities................................................................................ (13,728,841)
Proceeds from disposition of investment securities............................................................... 14,337,889
Other............................................................................................................ 5,718
-----------
Net cash provided by operating activities...................................................................... 844,241
-----------
Cash flows from financing activities:
Proceeds from shares sold........................................................................................ 164,174
Payments on shares redeemed...................................................................................... (177,912)
Repayment of bank borrowings.................................................................................... (653,000)
-----------
Net cash used in financing activities.......................................................................... (666,738)
-----------
Net increase in cash............................................................................................... 177,503
Cash--beginning of year............................................................................................ 633
-----------
Cash--end of year.................................................................................................. $ 178,136
===========
Reconciliation of net increase in net assets to net cash provided by operations:
Net increase in net assets resulting from operations............................................................. $ 2,879,969
Decrease in investments.......................................................................................... 1,759,768
Increase in receivable for investment securities sold............................................................ (650,488)
Decrease in dividends receivable................................................................................. 561
Decrease in payable for investment securities purchased.......................................................... (129,530)
Net realized gain on investments................................................................................. (1,934,036)
Net increase in unrealized appreciation on investments........................................................... (1,097,196)
Increase in accrued expenses and other liabilities............................................................... 8,775
Net decrease in other assets..................................................................................... 6,418
-----------
Net cash provided by operating activities...................................................................... $ 844,241
===========
</TABLE>
See Notes to Financial Statements.
F-14
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 1995
<TABLE>
<CAPTION>
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net investment (loss)................................... $ (19,837) $ (112,030) $ (56,941) $ (151,263)
Net realized gain on investments........................ 2,914,058 2,620,966 1,676,799 1,934,036
Net change in unrealized appreciation
on investments........................................ 617,050 5,485,820 2,165,746 1,097,196
----------- ----------- ----------- ----------
Net increase in net assets resulting from operations.. 3,511,271 7,994,756 3,785,604 2,879,969
Dividends to Shareholders:
Net realized gains.................................... (2,104,329) (75,100) (790,355) (1,300,367)
Net increase from shares of beneficial
interest transactions--Note 6......................... 2,270,180 5,569,368 1,145,072 1,285,910
----------- ----------- ----------- ----------
Total increase...................................... 3,677,122 13,489,024 4,140,321 2,865,512
Net Assets:
Beginning of period................................... 9,364,615 9,512,542 6,774,008 5,250,507
----------- ----------- ----------- ----------
End of period......................................... $13,041,737 $23,001,566 $10,914,329 $8,116,019
=========== =========== =========== ==========
Undistributed net investment income (accumulated loss).. $ (44,939) $ (172,946) $ (108,429) $ (273,102)
=========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
For the period November 8, 1993 (commencement of operations) through October 31, 1994
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net investment (loss)................................... $ (25,102) $ (60,916) $ (51,488) $ (121,839)
Net realized gain on investments........................ 2,117,145 73,062 838,983 1,374,115
Net change in unrealized appreciation on investments.... 1,878,918 1,067,956 878,510 466,394
---------- ---------- ---------- -----------
Net increase in net assets resulting from operations.. 3,970,961 1,080,102 1,666,005 1,718,670
Net increase from shares of beneficial
interest transactions--Note 6......................... 5,360,654 8,431,440 5,075,003 3,498,837
---------- ---------- ---------- -----------
Total increase...................................... 9,331,615 9,511,542 6,741,008 5,217,507
Net Assets:
Beginning of period................................... 33,000 1,000 33,000 33,000
End of period......................................... $9,364,615 $9,512,542 $6,774,008 $5,250,507
========== ========== ========== ==========
Undistributed net investment income (accumulated loss).. $ (25,102) $ (60,916) $ (51,488) $ (121,839)
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
F-15
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year ended October 31, 1995
<TABLE>
<CAPTION>
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of year...................... $ 10.38 $ 10.83 $ 11.66 $ 10.08
-------- -------- -------- ---------
Net investment (loss)................................... (0.01) (0.07) (0.07) (0.19)
Net realized and unrealized gain on investments......... 3.59 7.23 6.07 5.30
-------- -------- -------- ---------
Total from investment operations.................... 3.58 7.16 6.00 5.11
Distribution from net realized gains.................... (2.31) (0.07) (1.32) (2.47)
-------- -------- -------- ---------
Net asset value, end of year............................ $ 11.65 $ 17.92 $ 16.34 $ 12.72
======== ======== ======== =========
Total Return............................................ 37.1% 66.2% 54.1% 54.4%
======== ======== ======== =========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) .............. $ 13,042 $ 23,002 $ 10,914 $ 8,116
======== ======== ======== =========
Ratio of expenses excluding interest
to average net assets(i)............................ 1.11% 1.13% 1.23% 1.43%
======== ======== ======== =========
Ratio of expenses including interest
to average net assets............................... 1.11% 1.13% 1.23% 2.70%
======== ======== ======== =========
Ratio of net investment income (loss)
to average net assets............................... (.18%) (.73%) (.69%) (2.32%)
======== ======== ======== =========
Portfolio Turnover Rate................................. 133.42% 104.84% 132.74% 188.53%
======== ======== ======== =========
Debt outstanding at end of year....................................................................................... $ 302,600
=========
Average amount of debt outstanding during the year.................................................................... $ 939,600
=========
Average daily number of shares outstanding during the year............................................................ 565,805
=========
Average amount of debt per share during the year...................................................................... $ 1.66
=========
- ----------
(i)Reflects total expenses, including fees offset by earnings credits. The expense ratio net of earnings credits would have been
1.08%, 1.06%, 1.16% and 2.66% for the Growth Portfolio, Small Cap Portfolio,
MidCap Growth Portfolio and Leveraged AllCap Portfolio, respectively.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
THE ALGER DEFINED CONTRIBUTION TRUST
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period November 8, 1993 (commencement of
operations) through October 31, 1994*
MIDCAP LEVERAGED
GROWTH SMALL CAP GROWTH ALLCAP
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................... $ 10.00 $ 10.00 $ 10.00 $ 10.00
------- ------- ------- -------
Net investment (loss)................................... (0.03) (0.07) (0.09) (0.23)
Net realized and unrealized gain on investments......... .41 .90 1.75 0.31
------- ------- ------- -------
Total from investment operations.................... .38 .83 1.66 .08
------- ------- ------- -------
Net asset value, end of period.......................... $ 10.38 $ 10.83 $ 11.66 $ 10.08
======= ======= ======= =======
Total Return............................................ 3.8% 8.3% 16.6% .8%
======= ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ............ $ 9,365 $ 9,513 $ 6,774 $ 5,251
======= ======= ======= =======
Ratio of expenses excluding interest
to average net assets............................... 1.26% 1.47% 1.53% 1.78%
======= ======= ======= =======
Ratio of expenses including interest
to average net assets............................... 1.26% 1.47% 1.53% 2.87%
======= ======= ======= =======
Ratio of net investment income (loss)
to average net assets............................... (.29%) (.80%) (.89%) (2.53%)
======= ======= ======= =======
Portfolio Turnover Rate................................. 103.79% 186.76% 134.06% 229.11%
======= ======= ======= =======
Debt outstanding at end of period..................................................................................... $ 955,600
=========
Average amount of debt outstanding during the period.................................................................. $ 826,076
=========
Average daily number of shares outstanding during the period.......................................................... 515,270
=========
Average amount of debt per share during the period.................................................................... $ 1.60
=========
</TABLE>
- ----------
*Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
F-16
<PAGE>
THE ALGER DEFINED CONTRIBUTION TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1--General:
The Alger Defined Contribution Trust (the "Fund") is a diversified, open-end
registered investment company organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts. The Fund operates as a
series company and currently issues four classes of shares of beneficial
interest --Growth Portfolio, Small Cap Portfolio, MidCap Growth Portfolio and
Leveraged AllCap Portfolio (the "Portfolios").
NOTE 2--Significant Accounting Policies:
(a) INVESTMENT VALUATION: Investments of the Portfolios are valued on each
day the New York Stock Exchange (the "NYSE") is open as of the close of the NYSE
(currently 4:00 p.m. Eastern time). Listed and unlisted securities for which
such information is regularly reported are valued at the last reported sales
price or, in the absence of reported sales, at the mean between the bid and
asked price or, in the absence of a recent bid or asked price, the equivalent as
obtained from one or more of the major market makers for the securities to be
valued.
Securities for which market quotations are not readily available are valued
at fair value, as determined in good faith pursuant to procedures established by
the Board of Trustees.
Short-term securities having a remaining maturity of sixty days or less are
valued at amortized cost which approximates market value.
(b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions
are recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Dividend income is
recognized on the ex-dividend date and interest income is recognized on the
accrual basis.
(c) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded
on the ex-dividend date. With respect to all Portfolios, dividends from net
investment income and dividends from net realized gains, offset by any loss
carry forward, are declared and paid annually after the end of the fiscal year
in which earned.
(d) 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 its taxable income to its shareholders.
Therefore, no federal income tax provision is required. Each Portfolio is
treated as a separate entity for the purpose of determining such compliance.
(e) 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. Organizational expenses are being amortized
from the date operations commenced over a five year period. The Fund's custodian
fees have been reduced as a result of earnings credits received on overnight
cash balances. Balances left on deposit with the custodian preclude their use
elsewhere.
NOTE 3--Investment Management Fees and Other Transactions with Affiliates:
(a) INVESTMENT MANAGEMENT FEES: Fees incurred by each Portfolio, pursuant to
the provisions of Investment Management Agreements (the "Agreements") with Fred
Alger Management, Inc. ("Alger Management"), are payable monthly and computed
based on the value of the average daily net assets of each Portfolio at the
following annual rates:
Growth Portfolio............................. .75%
Small Cap Portfolio.......................... .85
MidCap Growth Portfolio...................... .80
Leveraged AllCap Portfolio................... .85
The Agreements further provide that if in any fiscal year the aggregate
expenses of any Portfolio, excluding interest, taxes, brokerage commissions,
distribution fees and extraordinary expenses, exceed the expense limitation of
any state securities laws having jurisdiction over a Portfolio, Alger Management
will reimburse that Portfolio for the excess expense to the extent required by
such state laws.
(b) BROKERAGE COMMISSIONS: During the year ended October 31, 1995, the Growth
Portfolio, the Small Cap Portfolio, the MidCap Growth Portfolio and the
Leveraged AllCap Portfolio paid Fred Alger & Company, Incorporated ("Alger,
Inc."), the Fund's distributor, commissions of $31,030, $15,461, $21,998 and
$14,288, respectively, in connection with securities transactions.
(c) TRANSFER AGENT FEES: Alger Shareholder Services, Inc. ("Alger
Services"), an affiliate of Alger Management, serves as transfer agent for the
Fund. During the year ended October 31, 1995, each Portfolio incurred fees of
$2,500, for services provided by Alger Services.
(d) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the
Fund are directors and officers of Alger Management, Alger, Inc. and Alger
Services. At October 31, 1995 Alger Management and its affiliates owned
1,119,754 shares, 661,403 shares, 667,898 shares and 638,068 shares of the
Growth Portfolio, the Small Cap Portfolio, the MidCap Growth Portfolio and the
Leveraged AllCap Portfolio, respectively.
NOTE 4--Securities Transactions:
The following summarizes the securities transactions by the Fund, other than
short-term securities, for the year ended October 31, 1995:
PURCHASES SALES
--------- -----
Growth Portfolio.................. $ 14,164,422 $ 13,951,323
Small Cap Portfolio............... 20,866,351 15,348,682
MidCap Growth Portfolio........... 11,037,985 10,580,743
Leveraged AllCap Portfolio........ 13,595,564 14,987,896
F-17
<PAGE>
THE ALGER DEFINED CONTRIBUTION TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5--Short-Term Borrowings:
The Leveraged AllCap Portfolio has a line of credit with a bank whereby it
may borrow up to 1/3 of its assets, as defined, up to a maximum of $25,000,000.
Such borrowings are collateralized by securities owned by the Portfolio, have a
variable interest rate and are payable on demand. For the year ended October 31,
1995, the Portfolio had borrowings which averaged $939,600 at a weighted average
interest rate of 8.82%.
NOTE 6--Share Capital:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value which are presently divided into four classes of
shares.
During the year ended October 31, 1995, transactions of shares of beneficial
interest were as follows:
SHARES AMOUNT
--------- ---------
Growth Portfolio
Shares sold 15,649 $ 171,231
Dividends reinvested 202,145 2,104,329
------- -----------
217,794 2,275,560
Shares redeemed (470) (5,380)
Net increase 217,324 $ 2,270,180
======= ===========
Small Cap Portfolio
Shares sold 422,015 $ 5,804,623
Dividends reinvested 5,085 75,100
------- -----------
427,100 5,879,723
Shares redeemed (21,812) (310,355)
------- -----------
Net increase 405,288 $ 5,569,368
======= ===========
MidCap Growth Portfolio
Shares sold 27,857 $ 369,295
Dividends reinvested 59,875 790,355
------- -----------
87,732 1,159,650
Shares redeemed (1,007) (14,578)
------- -----------
Net increase 86,725 $ 1,145,072
======= ===========
Leveraged AllCap Portfolio
Shares sold 14,786 $ 163,455
Dividends reinvested 117,787 1,300,367
------- -----------
132,573 1,463,822
Shares redeemed (15,285) (177,912)
Net increase 117,288 $ 1,285,910
======= ===========
During the period November 8, 1993 through October 31, 1994, transactions of
shares of beneficial interest were as follows:
SHARES AMOUNT
--------- ---------
Growth Portfolio
Shares sold 900,251 $ 5,372,304
Shares redeemed (1,121) (11,650)
------- -----------
Net increase 899,130 $ 5,360,654
======= ===========
Small Cap Portfolio
Shares sold 889,510 $ 8,542,594
Shares redeemed (11,635) (111,154)
------- -----------
Net increase 877,875 $ 8,431,440
======= ===========
MidCap Growth Portfolio
Shares sold 579,888 $ 5,095,040
Shares redeemed (2,014) (20,037)
------- -----------
Net increase 577,874 $ 5,075,003
======= ===========
Leveraged AllCap Portfolio
Shares sold 520,548 $ 3,527,824
Shares redeemed (3,068) (28,987)
------- -----------
Net increase 517,480 $ 3,498,837
======= ===========
The dollar amounts received for shares sold do not include the amounts
credited to net unrealized appreciation related to marketable securities
received in exchange for shares of beneficial interest.
F-18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees
of The Alger Defined Contribution Trust:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of The Alger Defined Contribution Trust
(a Massachusetts business trust comprising, respectively, the Alger Defined
Contribution Growth Portfolio, Alger Defined Contribution Small Cap Portfolio,
Alger Defined Contribution MidCap Growth Portfolio and Alger Defined
Contribution Leveraged AllCap Portfolio) as of October 31, 1995, and the related
statements of operations and cash flows for the year then ended and the
statements of changes in net assets and the financial highlights for the year
then ended and for the period ended October 31, 1994. 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. Our procedures included confirmation of securities owned as of
October 31, 1995, 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 Defined Contribution
Trust as of October 31, 1995, the results of their operations and their cash
flows for the year then ended and the changes in their net assets and the
financial highlights for the year then ended and for the period ended October
31, 1994, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
December 19, 1995
F-19
<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 over 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
long 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 AA 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 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.
A-1
<PAGE>
APPENDIX
(continued)
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 AA 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 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-l, 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 deter mined
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-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 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.
75 Maiden Lane
New York, New York 10038
- --------------------------------------------------------------------------------
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
- --------------------------------------------------------------------------------
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
- --------------------------------------------------------------------------------
THE ALGER |
DEFINED | MEETING THE CHALLENGE
CONTRIBUTION | OF INVESTING
TRUST |
STATEMENT |
OF ADDITIONAL | FEBRUARY 27, 1996
INFORMATION |
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in Part A:
Condensed Financial Information
(2) Financial Statements included in Part B:
(i) Report of Independent Accountants;
(ii) Financial Statements as of October 31, 1995 and for
the period then ended.
(b) Exhibits:
Exhibit No. Description of Exhibit
1 Agreement and Declaration of Trust (1)
2 By-laws of Registrant (1)
3 Not applicable
4 Specimen Share Certificates (1)
5 Investment Management Agreements (1)
6 Distribution Agreement
7 Not applicable
8 Custody Agreement (1)
9 Transfer Agency Agreement (1)
10 Opinion and Consent of Sullivan & Worcester (1)
11 Consent of Arthur Andersen LLP
<PAGE>
12 Not applicable
13 Subscription Agreement (1)
14 Not applicable
15 Not applicable
16 Schedule for computation of performance quotations
provided in the Statement of Additional Information
- -----------------------
(1) Incorporated by reference to Registrant's Registration Statement (the
"Registration Statement") filed with the Securities and Exchange
Commission (the "SEC") on August 27, 1993.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
Set forth below is information regarding the number of record holders of
each class of Registrant's securities as of January 30, 1996.
Title or Class Number of Record Holders
-------------- ------------------------
Alger Defined Contribution Money Market Portfolio 7
Alger Defined Contribution MidCap Growth Portfolio 4
Alger Defined Contribution Growth Portfolio 5
Alger Defined Contribution Leveraged AllCap Portfolio 4
<PAGE>
Item 27. Indemnification
Under Section 8.4 of Registrant's Agreement and Declaration of Trust, any
past or present Trustee or officer of Registrant (including persons who serve at
Registrant's request as directors, officers or Trustees of another organization
in which Registrant has any interest as a shareholder, creditor or
otherwise[hereinafter referred to as a "Covered Person"]) is indemnified to the
fullest extent permitted by law against liability and all expenses reasonably
incurred by him in connection with any action, suit or proceeding to which he
may be a party or otherwise involved by reason of his being or having been a
Covered Person. This provision does not authorize indemnification when it is
determined, in the manner specified in the Agreement and Declaration of Trust,
that such Covered Person has not acted in good faith in the reasonable belief
that his actions were in or not opposed to the best interests of Registrant.
Moreover, this provision does not authorize indemnification when it is
determined , in the manner specified in the Agreement and Declaration of Trust,
that such Covered Person would otherwise be liable to Registrant or its
shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties. Expenses may be paid by Registrant in advance
of the final disposition of any action, suit or proceeding upon receipt of an
undertaking by such Covered Person to repay such expenses to Registrant in the
event that it is ultimately determined that indemnification of such expenses is
not authorized under the Agreement and Declaration of Trust and either (i) the
Covered Person provides security for such undertaking, (ii) Registrant is
insured against losses from such advances, or (iii) the disinterested Trustees
or independent legal counsel determines, in the manner specified in the
Agreement and Declaration of Trust, that there is reason to believe the Covered
Person will be found to be entitled to indemnification.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to Trustees, officers and
controlling persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission (the "SEC") such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of Registrant in the successful defense of any action, suit
or proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
Alger Management, which serves as investment manager to Registrant, is
generally engaged in rendering investment advisory services to institutions and,
to a lesser extent, individuals. Alger Management presently serves as investment
adviser to two closed-end investment companies and to two other open-end
investment companies. The list required by this Item 28 regarding any other
business, profession, vocation or employment of a substantial nature engaged in
by officers and directors of Alger Management during the past two years is
incorporated by reference to Schedules A and D of Form ADV filed by Alger
Management pursuant to the Investment Advisers Act of 1940 (SEC File No.
801-06709).
<PAGE>
Item 29. Principal Underwriter
(a) Alger Inc. acts as principal underwriter for Registrant, The Alger Fund
and The Alger American Fund and has acted as subscription agent for Castle
Convertible Fund, Inc. and Spectra Fund, Inc.
(b) The information required by this Item 29 with respect to each director,
officer or partner of Alger Inc. is incorporated by reference to Schedule A of
Form BD filed by Alger Inc. pursuant to the Securities Exchange Act of 1934 (SEC
File No. 8-6423).
(c) Not applicable.
Item 30. Location of Accounts and Records
All accounts and records of Registrant are maintained by Mr. Gregory S.
Duch, Fred Alger & Company, Incorporated, 30 Montgomery Street, Jersey City, NJ
07302.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Registrant hereby undertakes to call a meeting of its shareholders for
the purpose of voting upon the question of removal of a director or directors of
Registrant when requested in writing to do so by the holders of at least 10% of
Registrant's outstanding shares. Registrant undertakes further, in connection
with the meeting, to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940, as amended, relating to communications with the
shareholders of certain common law trusts.
(c) Registrant hereby undertakes to provide its annual report without
charge to any recipient of its annual report without charge to any recipient of
its Prospectus who requests the information.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, Registrant certifies that this
Registration Statement meets all of the requirements for effectiveness pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Amendment to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York and State of New York on the 15th day of
February, 1996.
THE ALGER DEFINED CONTRIBUTION TRUST
By: /s/ David D. Alger
-------------------------------
David D. Alger, President
ATTEST: /s/ Gregory S. Duch
-----------------------------
Gregory S. Duch, Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Fred M. Alger III* Chairman of the Board February 15, 1996
- ----------------------------
Fred M. Alger III
/s/ David D. Alger President and Trustee February 15, 1996
- ---------------------------- (Chief Executive Officer)
David D. Alger
/s/ Gregory S. Duch Treasurer February 15, 1996
- ---------------------------- (Chief Financial and
Gregory S. Duch Accounting Officer)
/s/ Nathan E. Saint-Amand* Trustee February 15, 1996
- ----------------------------
Nathan E. Saint-Amand
/s/ Stephen E. O'Neil* Trustee February 15, 1996
- ----------------------------
Stephen E. O'Neil
/s/ Arthur M. Dubow* Trustee February 15, 1996
- ----------------------------
Arthur M. Dubow
/s/ John T. Sargent* Trustee February 15, 1996
- ----------------------------
John T. Sargent
* By: Gregory S. Duch
-------------------------
Gregory S. Duch
Attorney-in-Fact
<PAGE>
Securities Act File No. 33-68124
Investment Company Act File No. 811-7986
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
---
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---
---
Pre-Effective Amendment No. ---
---
Post-Effective Amendment No. 4 X
---
and/or
---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 ---
---
Amendment No. 6 x
---
(Check appropriate box or boxes)
THE ALGER DEFINED CONTRIBUTION TRUST
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
--------------------------
E X H I B I T S
--------------------------
<PAGE>
INDEX TO EXHIBITS
Exhibit Page Number in Sequential
No. Number System
- ------ -------------------------
11 Consent of Arthur Andersen LLP .............
16 Schedule for computation of performance
quotations provided in the Statement
of Additional Information ..................
ARTHUR ANDERSEN
Arthur Andersen & Co. SC
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated December 19, 1995, on the financial statements of The Alger Defined
Contribution Trust for the period ended October 31, 1995 and to all references
to our Firm included in or made a part of the registration statement of The
Alger Defined Contribution Trust, filed on Form N-1A (Amendment No. 6),
Investment Company Act File No. 811-7986 with the Securities and Exchange
Commission.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New York, New York
February 22, 1996
AVERAGE ANNUAL RETURN COMPUTATION
The Average Annual Return for each Portfolio was
computed according to the following formula:
n
FORMULA: P(1+T) =ERV
Where: P= a hypothetical investment 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 (or other) periods at the
end of the 1, 5 or 10 year (or other)
periods (or fractional portion thereof)
<TABLE>
<CAPTION>
ENDING AVERAGE
PERIOD REDEEMABLE ANNUAL RATE
PORTFOLIO COVERED VALUE OF RETURN FORMULA*
- --------- ------- ----- --------- --------
<S> <C> <C> <C> <C>
ALGER DEFINED
CONTRIBUTION SMALL
CAP 11/8/93 (commencement
of operations)
through 10/31/95** 1,799.88 34.54% @RATE(1799.88,1000,1.98)
YEAR ENDED 10/31/95 1,661.94 66.19% @RATE(1661.94,1000,1)
ALGER DEFINED
CONTRIBUTION MIDCAP
GROWTH: 11/8/93 (commencement
of operations)
through 10/31/95** 1,796.78 34.42% @RATE(1796.78,1000,1.98)
YEAR ENDED 10/31/95 1,540.98 54.10% @RATE(1540.98,1000,1)
ALGER DEFINED
CONTRIBUTION GROWTH: 11/8/93 (commencement
of operations)
through 10/31/95** 1,423.07 19.50% @RATE(1423.07,1000,1.98)
YEAR ENDED 10/31/95 1,370.97 37.10% @RATE(1370.97,1000,1)
ALGER DEFINED
CONTRIBUTION
LEVERAGED ALLCAP: 11/8/93 (commencement
of operations)
through 10/31/95** 1,556.36 25.02% @RATE(1556.36,1000,1.98)
YEAR ENDED 10/31/95 1,544.00 54.40% @RATE(1544.00,1000,1)
*LOTUS 123 @RATE FUNCTION:
@RATE(FV,PV,TERM) The periodic interest rate necessary for
present value "pv", to grow to future
value "fv", over the number of compounding periods in "term".
**Period equals 1.98 years.
</TABLE>
