PROSPECTUS
- ---------- THE ALGER |
RETIREMENT | 75 MAIDEN LANE
FUND | NEW YORK, NEW YORK 10038
(800) 992-3362
ALGER GROWTH RETIREMENT PORTFOLIO
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The Alger Retirement Fund (the "Fund"), formerly known as The Alger Defined
Contribution Trust, is a registered investment company--a mutual fund--that
presently offers interests in four Portfolios. This Prospectus sets forth
information about the Alger Growth Retirement Portfolio (the "Portfolio"). The
Portfolio seeks long-term capital appreciation by investing in a diversified,
actively managed portfolio of equity securities, primarily of companies with
total market capitalization of $1 billion or greater.
Shares of the Portfolio 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 April 12, 1996
containing further information about all portfolios of the Fund, including the
Portfolio, 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 | FRED ALGER |
MANAGEMENT, | Investment Manager & COMPANY, | Distributor
INC. | INCORPORATED |
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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April 12, 1996
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CONTENTS
Page
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The Portfolio's Expenses......................... iii
Financial Highlights............................. iv
Alger Growth Retirement Portfolio................ 1
Fred Alger Management, Inc....................... 1
Investment Objective and Policies................ 1
Certain Securities and Investment
Techniques................................... 3
Management ...................................... 4
Net Asset Value.................................. 7
Purchases and Redemptions........................ 7
Dividends and Distributions...................... 8
Taxes............................................ 8
Organization..................................... 8
Performance...................................... 9
Investor and Shareholder Information............. 10
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THE PORTFOLIO'S EXPENSES
The Table below is designed to assist you in understanding the various
costs and expenses that you will bear as a shareholder. The Table does not
reflect any charges or deductions which are, or may be, imposed by the Plans.
The Example below asssumes that all dividends and distributions are
reinvested and that the annual percentage amounts listed under Annual Portfolio
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.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases................................ None
Maximum Sales Load Imposed on Reinvested Dividends..................... None
Deferred Sales Load.................................................... None
Redemption Fees........................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)*
Management Fees........................................................ .75%
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Other Expenses......................................................... .37
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Total Portfolio Expenses............................................... 1.12%
====
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............................................................... $ 11
Three Years............................................................ 36
Five Years............................................................. 62
Ten Years.............................................................. 136
* Based on expenses incurred during the Portfolio's last fiscal year, restated
to reflect the estimated future effect of compensating providers of
record-keeping and/or administrative services to participating retirement
plans. See Management--Expenses.
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FINANCIAL HIGHLIGHTS
The Financial Highlights for the year ended October 31, 1995 and the period
from November 8, 1993 (commencement of operations) through October 31, 1994 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 RETIREMENT FUND
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
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1995 1994(i)
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Net asset value, beginning of period.............. $ 10.38 $ 10.00
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Net investment (loss)............................. (0.01) (0.03)
Net realized and unrealized gain on investments... 3.59 0.41
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Total from investment operations.............. 3.58 0.38
Distributions from net realized gains............. (2.31) --
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Net asset value, end of period.................... $ 11.65 $ 10.38
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Total Return...................................... 37.1% 3.8%
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Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ...... $ 13,042 $ 9,365
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Ratio of expenses to average net assets(ii)..... 1.11% 1.26%
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Ratio of net investment income (loss)
to average net assets......................... (.18%) (0.29%)
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Portfolio Turnover Rate........................... 133.42% 103.79%
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(i) For the period November 8, 1993 (commencement of operations) through
October 31, 1994. Ratios have been annualized; total return has not been
annualized.
(ii) Reflects total expenses, including fees offset by earnings credits. The
expense ratio net of earnings credits would have been 1.08% for the year
ended October 31, 1995.
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iv
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ALGER GROWTH
RETIREMENT PORTFOLIO
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. 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.
Shares of the Portfolio are only available for investment through defined
contribution retirement plans (the "Plans") which elect to make the Portfolio an
investment option for participants in such Plans. Individuals, including
participants in such Plans, cannot directly invest in the Portfolio but may do
so only through a participating Plan.
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
Portfolio. Participants in a Plan cannot contact the Fund directly to request
the purchase or redemption of the Portfolio's 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 Portfolio's shares. The assets
of the Portfolio 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,
Fred Alger Management, Inc. ("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.
INVESTMENT OBJECTIVE
AND POLICIES
The following is a brief description of the investment objective and policies
of the Portfolio. No assurance can be given that the Portfolio's objective 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 Portfolio's investments. These restrictions and the
Portfolio's investment objective are "fundamental" policies, which means that
they may not be changed without a majority vote of shareholders of the
Portfolio. Except for the investment objective 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 Portfolio
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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
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
the Portfolio's total assets may be invested without regard to the five percent
limitation; (ii) a prohibition on the 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 the
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 during temporary defensive periods, the Portfolio, formerly known as
Alger Defined Contribution Growth 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.
The Portfolio will not 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, the 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. The Portfolio may lend its
securities and enter into "short sales against the box." See "Certain Securities
and Investment Techniques." The Portfolio 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.
The investment objective of the Portfolio is long-term capital appreciation.
Income is a consideration in the selection of investments but is not an
investment objective of the Portfolio. The 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.
It is anticipated that the Portfolio will invest primarily in companies whose
securities are traded on domestic stock exchanges or in the over-the-counter
market. These companies may still be in the developmental stage, may be older
companies that appear to be entering a new stage of growth progress owing to
factors such as management changes or development of new technology, products or
markets or may be companies providing products or services with a high unit
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volume growth rate. 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
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."
Investors considering equity investing through the Portfolio 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
The Portfolio may use the investment strategies and invest in the types of
securities described below, which may involve certain risks. The Statement of
Additional Information contains more detailed information about these practices
and information about other investment practices of the Portfolio.
REPURCHASE AGREEMENTS
Under the terms of a repurchase agreement, the 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.
SHORT SALES
The 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
The 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 Portfolio 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
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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 the 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 Portfolio could be adversely affected.
LENDING OF PORTFOLIO SECURITIES
In order to generate income and to offset expenses, the Portfolio may lend
portfolio securities to brokers, dealers and other financial organizations.
Loans of securities by the Portfolio, if and when made, may not exceed 33 1/3
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.
OTHER INVESTMENTS
The 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.
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 Portfolio 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 Portfolio 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 Portfolio's investment objective of capital appreciation by managing
this Portfolio actively, which may result in high portfolio turnover. Increased
portfolio turnover will have the effect of increasing the 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
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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 Portfolio's assets, arranges
for the purchase and sale of the Portfolio's 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
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. As of February 21, 1996, Fred M. Alger III and his brother,
David D. Alger, owned approximately 53 percent and 17 percent, respectively, of
Alger Associates, Inc. and may be deemed to control that company and its
subsidiaries.
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.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible for
the day-to-day management of the Portfolios of the Fund. Mr. Alger has been
employed by Alger Management as Executive Vice President and Director of
Research since 1971 and as President since 1995. Ms. Khoo has been employed by
Alger Management as a senior research analyst since 1989 and as a Senior Vice
President since 1995. Mr. Tartaro has been employed by Alger Management as a
senior research analyst since 1990 and as a Senior Vice President since 1995.
Mr. Alger, Ms. Khoo and Mr. Tartaro also serve as portfolio managers for other
mutual funds and investment accounts managed by Alger Management.
Alger Management personnel ("Access Persons") are permitted to engage in
personal securities transactions subject to the restrictions and procedures of
the Fund's Code of Ethics. Pursuant to the Code of Ethics, Access Persons
generally must preclear all personal securities transactions prior to trading
and are subject to certain prohibitions on personal trading. You can get a copy
of the Fund's Code of Ethics by calling the Fund toll-free at (800) 992-3362.
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FEES
The Portfolio pays Alger Management a management fee computed daily and paid
monthly at an annual rate of 0.75% of the Portfolio's average daily net assets.
This management fee is higher than that paid by most other investment companies.
EXPENSES
Operating expenses for the 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. The 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 Information. From time to time, Alger Management, in its sole
discretion and as it deems appropriate, may assume certain expenses of the
Portfolio while retaining the ability to be reimbursed by the Portfolio for such
amounts prior to the end of the fiscal year. This will have the effect of
lowering the Portfolio's overall expense ratio and of increasing yield to
investors, or the converse, at the time such amounts are assumed or reimbursed,
as the case may be. 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 limitations of the applicable Portfolio's expenses.
The Portfolio may compensate certain entities other than Alger Inc. and its
affiliates for providing record-keeping and/or administrative services to
participating retirement plans. This compensation may be paid at an annual rate
of up to .25% of the net asset value of shares of the Portfolio held by those
plans.
DISTRIBUTOR
Alger Inc. serves as the Fund's distributor and also distributes the shares
of other mutual funds managed by Alger Management.
TRANSFER AGENT
Alger Shareholder Services, Inc., an affiliate of Alger Management, serves as
transfer agent for the Fund. Certain record-keeping services that would
otherwise be performed by Alger Shareholder Services, Inc. may be performed by
other entities providing similar services to their customers who invest in the
Portfolio. 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.
NET ASSET VALUE
The net asset value per share of the 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
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subsequent Monday when any one of those holidays falls on a Sunday. Net asset
value per share of the 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 Portfolio that are traded on a securities exchange or other
recognized market are valued on the basis of market quotations. Those assets 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 Portfolio will be Plan Sponsors which
establish or maintain Plans. Participants may invest in shares of the Portfolio
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 Portfolio.
Orders for shares of the Portfolio received by the Fund or the Fund's
transfer agent are effected on days on which the NYSE is open for trading. For
orders received before the close of regular trading on the NYSE, purchases and
redemptions of the shares of the Portfolio are effected at the net asset value
per share determined as of the close of regular trading on the NYSE on 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 Portfolio within seven days after the request is received.
Neither the Fund nor the Portfolio assesses any fees, either when it sells or
when it redeems its shares.
Investors may exchange stock of companies acceptable to Alger Management for
shares of the Portfolio with a minimum of 100 shares of each company being
generally required. The Fund believes such exchange provides a 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 Portfolio's
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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 at net asset value. Dividends will be declared and paid
annually. Distributions of any net realized capital gains earned by the
Portfolio usually will be made annually after the close of the fiscal year in
which the gains are earned.
TAXES
The Fund intends that the Portfolio will qualify separately as a "regulated
investment company" within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code") for each taxable year of each Portfolio. If so qualified,
and providing certain distribution requirements are met, the Portfolio will not
be subject to federal income tax on its net investment income and net capital
gains that it distributes to its shareholders.
With respect to participants in the Plans, dividends from net investment
income and net realized capital gains ordinarily will 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 59 1/2 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.
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 the
Portfolio will have one vote for each full share held and proportionate,
fractional votes for fractional shares held. A separate vote of a Portfolio 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
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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
The 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 the Portfolio from the
beginning date of the measuring period to the end of the measuring period. These
figures reflect changes in the price of the Portfolio's shares and assume that
any income dividends and/or capital gains distributions made by the Portfolio
during the period were reinvested in shares of the Portfolio. Figures will be
given for recent 1, 5 and 10 year periods, and may be given for other periods as
well (such as from commencement of the Portfolio's operations, or on a
year-by-year basis). 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
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 the
Portfolio will vary based on changes in market conditions. In addition, since
the deduction of the Portfolio's expenses is reflected in the total return and
yield figures, "total return" and "yield" will also vary based on the level of
the Portfolio's expenses.
From time to time, advertisements or reports to shareholders may compare the
yield or performance of the Portfolio to that of other mutual funds with a
similar investment objective. The performance of the 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 Portfolio published by nationally recognized ranking services
9
<PAGE>
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 the 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 Portfolio, including current
performance quotations, as well as for assistance in 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.
10
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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 Portfolio's
shares, and if given or made, such other information or representations must not
be relied on as having been authorized by the Fund. This Prospectus does not
constitute an offer in any state in which, or to any person to whom, such offer
may not lawfully be made.
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Investment Manager:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
Distributor:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
Transfer Agent:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
Independent Public Accountants:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
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THE ALGER |
RETIREMENT | Meeting the challenge
FUND | of investing
ALGER GROWTH
RETIREMENT PORTFOLIO
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PROSPECTUS | April 12, 1996
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