PROSPECTUS
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THE ALGER | 75 Maiden Lane
RETIREMENT | New York, New York 10038
FUND | (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 February 25, 1998
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 |
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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 25, 1998
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CONTENTS
Page
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The Portfolio's Expenses................................................. iii
Financial Highlights..................................................... iv
Alger Capital Appreciation Retirement
Portfolio ........................................................... 1
Fred Alger Management, Inc............................................... 1
Investment Objective and Policies........................................ 1
Certain Securities and Investment
Techniques........................................................... 3
Management .............................................................. 5
Net Asset Value.......................................................... 6
Purchases and Redemptions................................................ 7
Dividends and Distributions.............................................. 8
Taxes.................................................................... 8
Organization............................................................. 9
Performance.............................................................. 9
Investor and Shareholder Information..................................... 10
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ii
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THE PORTFOLIO'S EXPENSES
The Table below is designed to assist an investor 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 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
Exchange Fees ......................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE
OF AVERAGE NET ASSETS)
Management Fees....................................................... .75%
Other Expenses......................................................... .38
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Total Portfolio Operating Expenses.................................... 1.13%
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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
Three Years............................................................ 36
Five Years............................................................. 62
Ten Years.............................................................. 137
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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 12, 1997 on the Fund's financial statements as of October 31, 1997.
These financial statements are incorporated by reference into the Statement of
Additional Information. An Annual Report of the Fund is available by contacting
the Fund at (800) 992-3362. In addition to financial statements, the Annual
Report contains further information about performance of the Fund.
THE ALGER RETIREMENT FUND
GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
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<TABLE>
<CAPTION>
1997 1996 1995 1994(I)
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................. $ 9.32 $ 11.65 $ 10.38 $ 10.00
-------- -------- -------- -------
Net investment loss................................... (0.02)(ii) (0.01) (0.01) (0.03)
Net realized and unrealized gain on investments....... 2.65 0.91 3.59 0.41
-------- -------- -------- -------
Total from investment operations.................. 2.63 0.90 3.58 0.38
Distributions from net realized gains................. (1.17) (3.23) (2.31) --
-------- -------- -------- -------
Net asset value, end of period........................ $ 10.78 $ 9.32 $ 11.65 $ 10.38
======== ======== ======== =======
Total Return.......................................... 28.8% 8.2% 37.1% 3.8%
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Ratios and Supplemental Data:
Net assets, end of period (000's omitted) .......... $ 22,922 $ 11,325 $ 13,042 $ 9,365
======== ======== ======== =======
Ratio of expenses to average net assets............. 1.13% 1.07% 1.11% 1.26%
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Ratio of net investment loss
to average net assets............................. (0.22%) (0.09%) (0.18%) (0.29%)
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Portfolio Turnover Rate............................... 159.38% 142.83% 133.42% 103.79%
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Average Commission Rate Paid.......................... $ .0718 $ .0716
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</TABLE>
(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) Amount was computed based on average shares outstanding during the year.
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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, including the Portfolio, each with the
investment objective of long-term capital appreciation. The offering price of
the shares of the Portfolio is net asset value per share. 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. The Fund reserves the right to make shares of the Portfolio
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 Portfolio. 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 Portfolio in accordance with the
Portfolio's investment objectives and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs professional securities
analysts who provide research services exclusively to the Portfolio and other
accounts for which Alger Management or its affiliates serve as investment
adviser. 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 January 31, 1998,
had approximately $7.8 billion under management--$4.5 billion in mutual fund
accounts and $3.3 billion in other advisory accounts.
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
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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 include, among others, (i) a
prohibition on the 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 Alger Growth Retirement
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
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market. These companies may still be in the developmental stage, may be older
companies that appear to be entering a new stage of growth progress owing to
factors such as management changes or development of new technology, products or
markets or may be companies providing products or services with a high unit
volume growth rate. In order to afford the Portfolio the flexibility to take
advantage of new opportunities for investments in accordance with its investment
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 (up to
100% of its assets) during temporary defensive periods. This amount may be
higher than that maintained by other funds with similar investment objectives.
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
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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. The Fund's Board of Trustees 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. Examples of factors that will be taken into account in
evaluating the liquidity of a Rule 144A security, both with respect to the
initial purchase and on an ongoing basis, 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). 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 331/3
percent of the Portfolio's total assets, including all collateral on such loans
less liabilities exclusive of the obligation to return such collateral, 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 its 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
4
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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
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 Portfolio's transactions on securities exchanges and
will retain commissions in accordance with certain regulations of the Securities
and Exchange Commission. In addition, Alger Management may select broker-dealers
that provide it with brokerage and research services and may cause the 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 are the majority
shareholders of Alger Associates, Inc. and may be deemed to control that company
and its subsidiaries.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible for
the day-to-day management of the portfolios of the Fund. Mr. Alger has been
employed by Alger Management since 1971, as Executive Vice President and
Director of Research until 1995 and as President since 1995. Ms. Khoo has been
employed by Alger Management since 1989, as a senior research analyst until 1995
and as a Senior Vice President since 1995. Mr. Tartaro has been employed by
Alger Management since 1990, as a senior research analyst until 1995 and as a
Senior Vice President since 1995. Mr. Alger, Ms. Khoo and Mr. Tartaro also serve
as portfolio managers for other mutual funds and investment accounts managed by
Alger Management.
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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.
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.
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. 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.
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 (normally 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st, Dr. Martin
Luther King, Jr. Day, Presidents' Day (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 Fri-
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day 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
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 Portfolio. 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 generally
being required. The Fund believes such exchange provides a means by which
holders of certain securities may invest in the Portfolio 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 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
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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.
Under unusual circumstances, shares of a Portfolio may be redeemed "in kind,"
which means that the redemption proceeds will be paid with securities which are
held by the Portfolio. Please refer to the Statement of Additional Information
for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio of the Fund 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 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.
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.
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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
series, par value $.001 per share. An unlimited number of shares of four series,
representing the shares of the Fund's portfolios, have been authorized. No
series of shares has any preference over any other series.
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
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.
CONTROL SHAREHOLDERS
At February 2, 1998, Northern Trust Company, Trustee for IHC 401k, owned
beneficially or of record 53.61% of the Portfolio, and may therefore be deemed
to control the Portfolio.
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
9
<PAGE>
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
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
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE PORTFOLIO'S
SHARES, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
----------
INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
COUNSEL:
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
================================================================================
================================================================================
THE ALGER |
RETIREMENT | MEETING THE CHALLENGE
FUND | OF INVESTING
ALGER GROWTH
RETIREMENT PORTFOLIO
|
|
PROSPECTUS | February 25, 1998
|
|
|
================================================================================
<PAGE>
PROSPECTUS
- ----------
THE ALGER | 75 Maiden Lane
RETIREMENT | New York, New York 10038
FUND | (800) 992-3362
ALGER MIDCAP GROWTH RETIREMENT PORTFOLIO
================================================================================
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 MidCap 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 within the range of companies
included in the S&P MidCap 400 Index, updated quarterly.
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 February 25,
1998 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 |
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
February 25, 1998
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
Page
----
The Portfolio's Expenses .................................... iii
Financial Highlights ........................................ iv
Alger MidCap Growth Retirement Portfolio .................... 1
Fred Alger Management, Inc. ................................. 1
Investment Objective and Policies ........................... 1
Certain Securities and Investment
Techniques ................................................ 3
Management .................................................. 5
Net Asset Value ............................................. 6
Purchases and Redemptions ................................... 7
Dividends and Distributions ................................. 8
Taxes ....................................................... 8
Organization ................................................ 8
Performance ................................................. 9
Investor and Shareholder Information ......................... 10
- --------------------------------------------------------------------------------
ii
<PAGE>
- --------------------------------------------------------------------------------
THE PORTFOLIO'S EXPENSES
The Table below is designed to assist an investor 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 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
Exchange Fees ........................................................ None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees ...................................................... .80%
Other Expenses ....................................................... .51%
-----
Total Portfolio Operating Expenses ................................... 1.31%
=====
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 ............................................................. $ 13
Three Years .......................................................... 42
Five Years ........................................................... 72
Ten Years ............................................................ 158
- --------------------------------------------------------------------------------
iii
<PAGE>
- --------------------------------------------------------------------------------
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 12, 1997 on the Fund's financial statements as of October 31, 1997.
These financial statements are incorporated by reference into the Statement of
Additional Information. An Annual Report of the Fund is available by contacting
the Fund at (800) 992-3362. In addition to financial statements, the Annual
Report contains further information about performance of the Fund.
THE ALGER RETIREMENT FUND
MIDCAP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM
NOVEMBER 8, 1993
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------- TO OCTOBER 31,
1997 1996 1995 1994(i)
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .................. $ 14.48 $ 16.34 $ 11.66 $ 10.00
---------- --------- ---------- ---------
Net investment loss ................................... (0.15) (0.07) (0.07) (0.09)
Net realized and unrealized gain on investments ....... 3.46 1.09 6.07 1.75
---------- --------- ---------- ---------
Total from investment operations ................... 3.31 1.02 6.00 1.66
Distributions from net realized gains ................. (6.43) (2.88) (1.32) --
---------- --------- ---------- ---------
Net asset value, end of period ........................ $ 11.36 $ 14.48 $ 16.34 $ 11.66
========== ========= ========== =========
Total Return .......................................... 28.6% 6.2% 54.1% 16.6%
========== ========= ========== =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) .......... $ 6,435 $ 9,726 $ 10,914 $ 6,774
========== ========= ========== =========
Ratio of expenses to average net assets ............ 1.31% 1.16% 1.23% 1.53%
========== ========= ========== =========
Ratio of net investment loss
to average net assets ........................... (0.79%) (0.45%) (0.69%) (0.89%)
========== ========= ========== =========
Portfolio Turnover Rate ............................... 183.31% 170.21% 132.74% 134.06%
========== ========= ========== =========
Average Commission Rate Paid .......................... $ .0699 $ .0682
========== =========
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
- --------------------------------------------------------------------------------
iv
<PAGE>
ALGER MIDCAP GROWTH
RETIREMENT PORTFOLIO
The Fund is a diversified, open-end management investment company that
offers a selection of four portfolios, including the Portfolio, each with the
investment objective of long-term capital appreciation. The offering price of
the shares of the Portfolio is net asset value per share. 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. The Fund reserves the right to make shares of the Portfolio
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 Portfolio.
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 Portfolio in accordance with the
Portfolio's investment objectives and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs professional securities
analysts who provide research services exclusively to the Portfolio and other
accounts for which Alger Management or its affiliates serve as investment
adviser. 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 January 31, 1998,
had approximately $7.8 billion under management--$4.5 billion in mutual fund
accounts and $3.3 billion in other advisory accounts.
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
1
<PAGE>
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 include, among others, (i) a prohibition on the
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 iss uer 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 Alger MidCap Growth
Retirement Portfolio, formerly known as Alger Defined Contribution MidCap Growth
Portfolio, invests at least 65% of its total assets in equity securities of
companies that, at the time of purchase of the securities, have total market
capitalization within the range of companies included in the S&P MidCap 400
Index, updated quarterly. The S&P MidCap 400 Index is designed to track the
performance of medium capitalization companies. As of December 31, 1997, the
range of market capitalization of these companies was $213 million to $13.737
billion. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization outside the range of companies included in the S&P MidCap 400
Index and in excess of that amount (up to 100% of its assets) during temporary
defensive periods.
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.
2
<PAGE>
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 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 (up to 100% of its assets) during temporary
defensive periods. This amount may be higher than that maintained by other funds
with similar investment objectives. 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 liq-
3
<PAGE>
uid for purposes of investment limitations if the board of trustees (or the
fund's adviser acting subject to the board's supervision) determines that the
securities are in fact liquid. The Fund's Board of Trustees 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. Examples of factors that will be taken into account in
evaluating the liquidity of a Rule 144A security, both with respect to the
initial purchase and on an ongoing basis, 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). 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 331/3
percent of the Portfolio's total assets, including all collateral on such loans
less liabilities exclusive of the obligation to return such collateral, 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 its 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
4
<PAGE>
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
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 Portfolio's transactions on securities exchanges and
will retain commissions in accordance with certain regulations of the Securities
and Exchange Commission. In addition, Alger Management may select broker-dealers
that provide it with brokerage and research services and may cause the 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 are the majority
shareholders of Alger Associates, Inc. and may be deemed to control that company
and its subsidiaries.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible
for the day-to-day management of the portfolios of the Fund. Mr. Alger has been
employed by Alger Management since 1971, as Executive Vice President and
Director of Research until 1995 and as President since 1995. Ms. Khoo has been
employed by Alger Management since 1989, as a senior research analyst until 1995
and as a Senior Vice President since 1995. Mr. Tartaro has been employed by
Alger Management since 1990, as a senior research analyst until 1995 and as a
Senior Vice President since 1995. Mr. 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
5
<PAGE>
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.
FEES
The Portfolio pays Alger Management a management fee computed daily and
paid monthly at an annual rate of 0.80% of the Portfolio's average daily net
assets.
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. 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.
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 (normally 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st, Dr. Martin
Luther King, Jr. Day, Presidents' Day (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 the Portfolio is computed by dividing the
value of the Portfolio's net assets by the total number of its shares
outstanding.
6
<PAGE>
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 Portfolio. 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
generally being required. The Fund believes such exchange provides a means by
which holders of certain securities may invest in the Portfolio 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
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 ex-
7
<PAGE>
change 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.
Under unusual circumstances, shares of a Portfolio may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
which are held by the Portfolio. Please refer to the Statement of Additional
Information for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio of the Fund 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
series, par value $.001 per share. An unlimited number of shares of four series,
representing the shares of the Fund's portfolios, have been authorized. No
series of shares has any preference over any other series.
8
<PAGE>
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
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.
CONTROL SHAREHOLDERS
At February 2, 1998, the Fred Alger & Company, Incorporated et al Pension
Plan and the Fred Alger & Company, Incorporated et al Profit Sharing Plan, owned
beneficially or of record 35.00% and 41.64%, respectively, of the Portfolio, and
may therefore be deemed to control the Portfolio.
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
9
<PAGE>
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
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
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE PORTFOLIO'S
SHARES, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
---------------
INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
COUNSEL:
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
================================================================================
================================================================================
THE ALGER |
RETIREMENT | MEETING THE CHALLENGE
FUND | OF INVESTING
ALGER MIDCAP GROWTH
RETIREMENT PORTFOLIO
|
|
PROSPECTUS | February 25, 1998
|
|
|
================================================================================
<PAGE>
PROSPECTUS
- ----------
THE ALGER | 75 Maiden lane
RETIREMENT | New York, New York 10038
FUND | (800) 992-3362
ALGER SMALL CAP RETIREMENT PORTFOLIO
================================================================================
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 Small Cap 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 within the range of companies
included in the Russell 2000 Growth Index or the S&P SmallCap 600 Index, updated
quarterly.
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 February 25, 1998
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 |
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
February 25, 1998
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
Page
----
The Portfolio's Expenses ................................................. iii
Financial Highlights ..................................................... iv
Alger Small Cap Retirement Portfolio ..................................... 1
Fred Alger Management, Inc. .............................................. 1
Investment Objective and Policies ........................................ 1
Certain Securities and Investment
Techniques ........................................................... 3
Management ............................................................... 5
Net Asset Value .......................................................... 7
Purchases and Redemptions ................................................ 7
Dividends and Distributions .............................................. 8
Taxes .................................................................... 8
Organization ............................................................. 9
Performance .............................................................. 9
Investor and Shareholder Information ..................................... 10
- --------------------------------------------------------------------------------
ii
<PAGE>
- --------------------------------------------------------------------------------
THE PORTFOLIO'S EXPENSES
The Table below is designed to assist an investor 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 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
Exchange Fees ......................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fees ....................................................... .85%
Other Expenses ........................................................ .21%
-----
Total Portfolio Operating Expenses .................................... 1.06%
=====
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 ........................................................... 34
Five Years ............................................................ 58
Ten Years ............................................................. 129
- ----------------------------------------------------------------------------
iii
<PAGE>
- --------------------------------------------------------------------------------
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 12,
1997 on the Fund's financial statements as of October 31, 1997. These financial
statements are incorporated by reference into the Statement of Additional
Information. An Annual Report of the Fund is available by contacting the Fund at
(800) 992-3362. In addition to financial statements, the Annual Report contains
further information about performance of the Fund
THE ALGER RETIREMENT FUND
SMALL CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM
NOVEMBER 8, 1993
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------- TO OCTOBER 31,
1997 1996 1995 1994(i)
-------- -------- -------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............... $ 17.87 $ 17.92 $ 10.83 $ 10.00
------- ------- ------- -------
Net investment income (loss) ....................... (0.10) (0.05) (0.07) (0.07)
Net realized and unrealized gain on investments .... 3.13 1.72 7.23 0.90
------- ------- ------- -------
Total from investment operations ................. 3.03 1.67 7.16 0.83
Distributions from net realized gains .............. (2.90) (1.72) (0.07) --
------- ------- ------- -------
Net asset value, end of period ..................... $ 18.00 $ 17.87 $ 17.92 $ 10.83
======= ======= ======= =======
Total Return ....................................... 19.0% 9.2% 66.2% 8.3%
======= ======= ======= =======
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ........ $31,499 $30,043 $23,002 $ 9,513
======= ======= ======= =======
Ratio of expenses to average net assets .......... 1.06% 1.05% 1.13% 1.47%
======= ======= ======= =======
Ratio of net investment income (loss) to
average net assets ............................. (0.62%) (0.54%) (0.73%) (0.80%)
======= ======= ======= =======
Portfolio Turnover Rate ............................ 134.25% 182.49% 104.84% 186.76%
======= ======= ======= =======
Average Commission Rate Paid ....................... $ .0701 $ .0629
======= =======
</TABLE>
(i) Ratios have been annualized; total return has not been annualized.
- --------------------------------------------------------------------------------
iv
<PAGE>
ALGER SMALL CAP
RETIREMENT PORTFOLIO
The Fund is a diversified, open-end management investment company that
offers a selection of four portfolios, including the Portfolio, each with the
investment objective of long-term capital appreciation. The offering price of
the shares of the Portfolio is net asset value per share. 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. The Fund reserves the right to make shares of the Portfolio
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 Portfolio. 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 Portfolio in accordance with the
Portfolio's investment objectives and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs professional securities
analysts who provide research services exclusively to the Portfolio and other
accounts for which Alger Management or its affiliates serve as investment
adviser. 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 January 31, 1998,
had approximately $7.8 billion under management--$4.5 billion in mutual fund
accounts and $3.3 billion in other advisory accounts.
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
1
<PAGE>
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 include, among others, (i) a
prohibition on the 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 Alger Small Cap Retirement
Portfolio, formerly known as Alger Defined Contribution Small Cap 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 ("Russell Index"), or the S&P SmallCap 600 Index ("S&P
Index"), updated quarterly. Both indexes are broad indexes of small
capitalization stocks. As of December 31, 1997, the range of market
capitalization of the companies in the Russell Index was $20 million to $2.97
billion; the range of market capitalization of the companies in the S&P Index at
that date was $21 million to $2.934 billion. The combined range as of that date
was $20 million to $2.97 billion. The Portfolio may invest up to 35% of its
total assets in equity securities of companies that, at the time of purchase,
have total market capitalization outside this combined range and in excess of
that amount (up to 100% of its assets) during temporary defensive periods.
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 average in general. Accordingly, an investment in the Portfolio may not
be appropriate for all investors.
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 war-
2
<PAGE>
rants 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 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 (up to 100% of its assets) during temporary
defensive periods. This amount may be higher than that maintained by other funds
with similar investment objectives. 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 Port-
3
<PAGE>
folio 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. The Fund's Board of Trustees
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. Examples of factors that will be
taken into account in evaluating the liquidity of a Rule 144A security, both
with respect to the initial purchase and on an ongoing basis, 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). 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 331/3
percent of the Portfolio's total assets, including all collateral on such loans
less liabilities exclusive of the obligation to return such collateral, 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
4
<PAGE>
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 its 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
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 Portfolio's transactions on securities exchanges and
will retain commissions in accordance with certain regulations of the Securities
and Exchange Commission. In addition, Alger Management may select broker-dealers
that provide it with brokerage and research services and may cause the 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.
5
<PAGE>
Fred M. Alger III and his brother, David D. Alger are the majority
shareholders of Alger Associates, Inc. and may be deemed to
control that company and its subsidiaries.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible
for the day-to-day management of the portfolios of the Fund. Mr. Alger has been
employed by Alger Management since 1971, as Executive Vice President and
Director of Research until 1995 and as President since 1995. Ms. Khoo has been
employed by Alger Management since 1989, as a senior research analyst until 1995
and as a Senior Vice President since 1995. Mr. Tartaro has been employed by
Alger Management since 1990, as a senior research analyst until 1995 and as a
Senior Vice President since 1995. Mr. 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.
FEES
The Portfolio pays Alger Management a management fee computed daily and
paid monthly at an annual rate of 0.85% of the Portfolio's average daily net
assets.
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. 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.
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 pro-
6
<PAGE>
viding 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 (normally 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st, Dr. Martin
Luther King, Jr. Day, Presidents' Day (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 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 Portfolio. 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 com-
7
<PAGE>
pany generally being required. The Fund believes such exchange provides a means
by which holders of certain securities may invest in the Portfolio 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
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.
Under unusual circumstances, shares of a Portfolio may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
which are held by the Portfolio. Please refer to the Statement of Additional
Information for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio of the Fund 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 pen-
8
<PAGE>
alty 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
series, par value $.001 per share. An unlimited number of shares of four series,
representing the shares of the Fund's portfolios, have been authorized. No
series of shares has any preference over any other series.
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
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.
CONTROL SHAREHOLDERS
At February 2, 1998, Wells Fargo Bank, Trustee for Mentor Graphics, owned
beneficially or of record 57.38% of the Portfolio, and may therefore be deemed
to control the Portfolio.
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
9
<PAGE>
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
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
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE PORTFOLIO'S
SHARES, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
----------
INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
COUNSEL:
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
================================================================================
================================================================================
THE ALGER |
RETIREMENT | MEETING THE CHALLENGE
FUND | OF INVESTING
ALGER SMALL CAP
RETIREMENT PORTFOLIO
|
|
PROSPECTUS | February 25, 1998
|
|
================================================================================
<PAGE>
PROSPECTUS
- ----------
THE ALGER | 75 MAIDEN LANE
RETIREMENT | NEW YORK, NEW YORK 10038
FUND | (800) 992-3362
ALGER CAPITAL APPRECIATION RETIREMENT PORTFOLIO
================================================================================
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 Capital Appreciation Retirement Portfolio (the
"Portfolio"). The Portfolio seeks long-term capital appreciation by investing in
a diversified, actively managed portfolio of equity securities. The Portfolio
may engage in leveraging (up to 331/3% of its assets) and options and futures
transactions, which are deemed to be speculative and which may cause the
Portfolio's net asset value to be more volatile than the net asset value of a
fund that does not engage in these activities.
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 February 25, 1998
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 |
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
FEBRUARY 25, 1998
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
PAGE
----
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 ............................................................. 7
Net Asset Value......................................................... 9
Purchases and Redemptions............................................... 9
Dividends and Distributions............................................. 10
Taxes................................................................... 11
Organization............................................................ 11
Performance............................................................. 12
Investor and Shareholder Information.................................... 12
- --------------------------------------------------------------------------------
ii
<PAGE>
- --------------------------------------------------------------------------------
THE PORTFOLIO'S EXPENSES
The Table below is designed to assist an investor 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 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
Exchange Fees ....................................................... None
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Management Fees...................................................... .85%
Other Expenses....................................................... .77%*
-----
Total Portfolio Operating Expenses.................................. 1.62%
=====
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............................................................. $ 16
Three Years.......................................................... 51
Five Years........................................................... 88
Ten Years............................................................ 192
*Included in Other Expenses of the Capital Appreciation Retirement Portfolio is
0.15% of interest expense.
- --------------------------------------------------------------------------------
iii
<PAGE>
- --------------------------------------------------------------------------------
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 12,
1997 on the Fund's financial statements as of October 31, 1997. These financial
statements are incorporated by reference into the Statement of Additional
Information. An Annual Report of the Fund is available by contacting the Fund at
(800) 992-3362. In addition to financial statements, the Annual Report contains
further information about performance of the Fund.
THE ALGER RETIREMENT FUND
CAPITAL APPRECIATION PORTFOLIO(i)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FROM
NOVEMBER 8, 1993
(COMMENCEMENT
YEAR ENDED OCTOBER 31, OF OPERATIONS)
-------------------------------------------- TO OCTOBER 31,
1997 1996 1995 1994(ii)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.................. $ 9.88 $ 12.72 $ 10.08 $ 10.00
--------- --------- --------- ---------
Net investment income loss............................ (0.10)(iii) (0.07) (0.19) (0.23)
Net realized and unrealized gain on investments....... 2.51 0.83 5.30 0.31
--------- --------- --------- ---------
Total from investment operations.................. 2.41 0.76 5.11 0.08
Distributions from net realized gains................. (2.59) (3.60) (2.47) --
--------- --------- --------- ---------
Net asset value, end of period........................ $ 9.70 $ 9.88 $ 12.72 $ 10.08
========= ========= ========= =========
Total Return.......................................... 26.1% 6.1% 54.4% 0.8%
========= ========= ========= =========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) .......... $ 4,520 $ 6,703 $ 8,116 $ 5,251
========= ========= ========= =========
Ratio of expenses excluding interest to
average net assets................................ 1.47% 1.37% 1.43% 1.78%
========= ========= ========= =========
Ratio of expenses including interest to
average net assets................................ 1.62% 1.44% 2.70% 2.87%
========= ========= ========= =========
Ratio of net investment income (loss) to
average net assets................................ (1.02%) (0.94%) (2.32%) (2.53%)
========= ========= ========= =========
Portfolio Turnover Rate............................... 159.56% 203.46% 188.53% 229.11%
========= ========= ========= =========
Average Commission Rate Paid.......................... $ .0711 $ .0668 -- --
========= ========= ========= =========
Amount of debt outstanding at end of period........... $ 127,000 -- $ 302,600 $ 955,600
========= ========= ========= =========
Average amount of debt outstanding
during the period................................... $ 127,915 $ 62,130 $ 939,600 $ 826,076
========= ========= ========= =========
Average daily number of shares outstanding
during the period................................... 511,947 595,051 565,805 515,270
========= ========= ========= =========
Average amount of debt per share
during the period................................... $ .25 $ .10 $ 1.66 $ 1.60
========= ========= ========= =========
</TABLE>
(i) Prior to April 12, 1996, the Alger Capital Appreciation Retirement
Portfolio was the Alger Defined Contribution Leveraged AllCap Portfolio.
(ii) Ratios have been annualized; total return has not been annualized.
(iii) Amount was computed based on average shares outstanding during the year.
- --------------------------------------------------------------------------------
iv
<PAGE>
ALGER CAPITAL APPRECIATION
RETIREMENT PORTFOLIO
The Fund is a diversified, open-end management investment company that offers
a selection of four portfolios, including the Portfolio, each with the
investment objective of long-term capital appreciation. The offering price of
the shares of the Portfolio is net asset value per share. 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. The Fund reserves the right to make shares of the Portfolio
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 Portfolio. 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 Portfolio in accordance with the
Portfolio's investment objectives and stated investment policies, makes
investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs professional securities
analysts who provide research services exclusively to the Portfolio and other
accounts for which Alger Management or its affiliates serve as investment
adviser. 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 January 31, 1998,
had approximately $7.8 billion under management--$4.5 billion in mutual fund
accounts and $3.3 billion in other advisory accounts.
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 identi-
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fied 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 include, among others,
(i) a prohibition on the 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 for temporary or emergency purposes in an amount
exceeding 10 percent of the Portfolio's total assets. The Portfolio also may
borrow for investment purposes (see "Certain Securities and Investment
Techniques--Leverage Through Borrowing").
Except during temporary defensive periods, the Portfolio, formerly known as
Alger Defined Contribution Leveraged AllCap 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
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."
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 secu-
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rities, 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
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 (up to
100% of its assets) during temporary defensive periods. This amount may be
higher than that maintained by other funds with similar investment objectives.
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 Ex-
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change 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. The Fund's Board
of Trustees 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. Examples of factors that
will be taken into account in evaluating the liquidity of a Rule 144A security,
both with respect to the initial purchase and on an ongoing basis, 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). 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 331/3
percent of the Portfolio's total assets, including all collateral on such loans
less liabilities exclusive of the obligation to return such collateral, 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 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 on a security is a contract that gives the holder of the option
the right, in return for a premium paid, to buy from the writer (seller) of the
call option the security underlying the option at a specified exercise price at
any time during the term of the option. The writer of the call option has the
obligation upon exercise of the option to deliver the underlying security upon
payment of the exercise price during the option period.
A put option on a security is a contract that, in return for the premium,
gives the holder of the option the right to sell to the writer (seller) the
underlying security at a specified price during the term of the option. The
writer of the put, who receives the premium, has the obligation to buy the
underlying security upon exercise, at the exercise price during the option
period.
If the Portfolio has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
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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 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 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
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<PAGE>
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 Portfolio may borrow from banks for investment purposes. This borrowing
is known as leveraging. The Portfolio may use up to 331/3 percent 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 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
main-
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tain 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.
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 its 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
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 Portfolio's
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<PAGE>
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 the 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 are the majority
shareholders of Alger Associates, Inc. and may be deemed to control that company
and its subsidiaries.
PORTFOLIO MANAGERS
David D. Alger, Seilai Khoo and Ronald Tartaro are primarily responsible for
the day-to-day management of the portfolios of the Fund. Mr. Alger has been
employed by Alger Management since 1971, as Executive Vice President and
Director of Research until 1995 and as President since 1995. Ms. Khoo has been
employed by Alger Management since 1989, as a senior research analyst until 1995
and as a Senior Vice President since 1995. Mr. Tartaro has been employed by
Alger Management since 1990, as a senior research analyst until 1995 and as a
Senior Vice President since 1995. Mr. 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.
FEES
The Portfolio pays Alger Management a management fee computed daily and paid
monthly at an annual rate of 0.85% of the Portfolio's average daily net assets.
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. 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
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<PAGE>
ratio and of increasing yield to investors, or the converse, at the time such
amounts are assumed or reimbursed, as the case may be.
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 (normally 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st, Dr. Martin
Luther King, Jr. Day, Presidents' Day (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 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 Portfolio. 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.
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<PAGE>
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 generally
being required. The Fund believes such exchange provides a means by which
holders of certain securities may invest in the Portfolio 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 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.
Under unusual circumstances, shares of a Portfolio may be redeemed "in kind,"
which means that the redemption proceeds will be paid with securities which are
held by the Portfolio. Please refer to the Statement of Additional Information
for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio of the Fund 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.
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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 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.
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
series, par value $.001 per share. An unlimited number of shares of four series,
representing the shares of the Fund's portfolios, have been authorized. No
series of shares has any preference over any other series.
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
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.
CONTROL SHAREHOLDERS
At February 2, 1998, the Fred Alger & Company, Incorporated et al Pension
Plan and the Fred Alger & Company, Incorporated et al Profit Sharing Plan owned
beneficially or of record 38.27% and 38.75%, respectively, of the Portfolio, and
may therefore be deemed to control the Portfolio.
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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
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.
12
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR THE STATEMENT
OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING OF THE PORTFOLIO'S
SHARES, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER
MAY NOT LAWFULLY BE MADE.
------------
INVESTMENT MANAGER:
Fred Alger Management, Inc.
75 Maiden Lane
New York, New York 10038
DISTRIBUTOR:
Fred Alger & Company, Incorporated
30 Montgomery Street
Jersey City, New Jersey 07302
TRANSFER AGENT:
Alger Shareholder Services, Inc.
30 Montgomery Street
Box 2001
Jersey City, New Jersey 07302
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
1345 Avenue of the Americas
New York, New York 10105
COUNSEL:
Hollyer Brady Smith Troxell
Barrett Rockett Hines & Mone LLP
551 Fifth Avenue
New York, New York 10176
================================================================================
THE ALGER |
RETIREMENT | MEETING THE CHALLENGE
FUND | OF INVESTING
ALGER CAPITAL APPRECIATION
RETIREMENT PORTFOLIO
|
|
PROSPECTUS | February 25, 1998
|
|
================================================================================
<PAGE>
PROSPECTUS
- ----------
THE ALGER | 75 MAIDEN LANE
RETIREMENT | NEW YORK, NEW YORK 10038
FUND | (800) 992-3362
================================================================================
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 three of these portfolios (the "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 beginning on page 1. The
three Portfolios are:
o Alger Small Cap Retirement Portfolio
o Alger MidCap Growth Retirement Portfolio
o Alger Capital Appreciation Retirement 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 25, 1998
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 | FRED ALGER |
MANAGEMENT | INVESTMENT MANAGER & COMPANY, | DISTRIBUTOR
INC. | INCORPORATED |
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
February 25, 1998
<PAGE>
- --------------------------------------------------------------------------------
CONTENTS
Page
----
The Portfolios' Expenses ................................ iii
Financial Highlights .................................... iv
The Alger Retirement Fund ............................... 1
Fred Alger Management, Inc. ............................. 1
Investment Objectives and Policies ...................... 1
All Portfolios ........................................ 2
Alger Small Cap Retirement Portfolio .................. 3
Alger MidCap Growth
Retirement Portfolio ................................ 3
Alger Capital Appreciation
Retirement 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
- --------------------------------------------------------------------------------
ii
<PAGE>
- --------------------------------------------------------------------------------
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
SMALL MIDCAP CAPITAL
CAP GROWTH APPRECIATION
RETIREMENT RETIREMENT RETIREMENT
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- -----------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases ................... None None None
Maximum Sales Load Imposed on Reinvested Dividends ........ None None None
Deferred Sales Load ....................................... None None None
Redemption Fees ........................................... None None None
Exchange Fees ............................................. None None None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
Management Fees ........................................... .85% .80% .85%
Other Expenses ............................................ .21% .51% .77%*
---- ---- ----
Total Fund Operating Expenses ............................. 1.06% 1.31% 1.62%
==== ==== ====
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 $ 13 $ 16
Three Years ............................................... 34 42 51
Five Years ................................................ 58 72 88
Ten Years ................................................. 129 158 192
</TABLE>
* Included in Other Expenses of the Capital Appreciation Retirement Portfolio is
0.15% of interest expense.
- --------------------------------------------------------------------------------
iii
<PAGE>
- --------------------------------------------------------------------------------
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 12,
1997 on the Fund's financial statements as of October 31, 1997. These financial
statements are incorporated by reference into the Statement of Additional
Information. An Annual Report of the Fund is available by contacting the Fund at
(800) 992-3362. In addition to financial statements, the Annual Report contains
further information about performance of the Fund.
THE ALGER RETIREMENT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year ended October 31, 1997
<TABLE>
<CAPTION>
MidCap Capital
Small Cap Growth Appreciation
Retirement Retiremen Retirement
Portfolio Portfolio Portfolio
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of year ............................... $ 17.87 $ 14.48 $ 9.88
----------- ----------- ----------
Net investment loss .............................................. (0.10) (0.15) (0.10)(i)
Net realized and unrealized gain on investments .................. 3.13 3.46 2.51
----------- ----------- ----------
Total from investment operations ............................. 3.03 3.31 2.41
Distributions from net realized gains ............................ (2.90) (6.43) (2.59)
----------- ----------- ----------
Net asset value, end of year ..................................... $ 18.00 $ 11.36 $ 9.70
=========== =========== ==========
Total Return ..................................................... 19.0% 28.6% 26.1%
=========== =========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) ........................ $ 31,499 $ 6,435 $ 4,520
=========== =========== ==========
Ratio of expenses excluding interest
to average net assets ........................................ 1.06% 1.31% 1.47%
=========== =========== ==========
Ratio of expenses including interest
to average net assets ........................................ 1.06% 1.31% 1.62%
=========== =========== ==========
Ratio of net investment loss
to average net assets ........................................ (.62%) (.79%) (1.02%)
=========== =========== ==========
Portfolio Turnover Rate .......................................... 134.25% 183.31% 159.56%
=========== =========== ==========
Average Commission Rate Paid ..................................... $ .0701 $ .0699 .0711
=========== =========== ==========
Amount of debt outstanding at end of year ............................................................ $ 127,000
==========
Average amount of debt outstanding during the year ................................................... $ 127,915
==========
Average daily number of shares outstanding during the year ........................................... 511,947
==========
Average amount of debt per share during the year ..................................................... $ .25
==========
</TABLE>
- --------------------
(i) Amount was computed based on average shares outstanding during the year.
- -------------------------------------------------------------------------------
iv
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year ended October 31, 1996
<TABLE>
<CAPTION>
MidCap Capital
Small Cap Growth Appreciation
Retirement Retiremen Retirement
Portfolio Portfolio Portfolio*
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of year ............................... $ 17.92 $ 16.34 $ 12.72
----------- ----------- ----------
Net investment loss .............................................. (0.05) (0.07) (0.07)
Net realized and unrealized gain on
investments .................................................... 1.72 1.09 0.83
----------- ----------- ----------
Total from investment operations ............................. 1.67 1.02 0.76
Distributions from net realized gains ............................ (1.72) (2.88) (3.60)
----------- ----------- ----------
Net asset value, end of year ..................................... $ 17.87 $ 14.48 $ 9.88
=========== =========== ==========
Total Return ..................................................... 9.2% 6.2% 6.1%
=========== =========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) ........................ $ 30,043 $ 9,726 $ 6,703
=========== =========== ==========
Ratio of expenses excluding interest
to average net assets ........................................ 1.05% 1.16% 1.37%
=========== =========== ==========
Ratio of expenses including interest
to average net assets ........................................ 1.05% 1.16% 1.44%
=========== =========== ==========
Ratio of net investment loss
to average net assets ........................................ (.54%) (.45%) (.94%)
=========== =========== ==========
Portfolio Turnover Rate .......................................... 182.49% 170.21% 203.46%
=========== =========== ==========
Average Commission Rate Paid ..................................... $ .0629 $ .0682 $ .0668
=========== =========== ==========
Amount of debt outstanding at end of year ............................................................ $ --
==========
Average amount of debt outstanding during the year ................................................... $ 62,130
==========
Average daily number of shares outstanding during the year ........................................... 595,051
==========
Average amount of debt per share during the year ..................................................... $ .10
==========
</TABLE>
- --------------------
* Prior to April 12, 1996, the Alger Capital Appreciation Retirement Portfolio
was the Alger Defined Contribution Leveraged AllCap Portfolio.
- --------------------------------------------------------------------------------
v
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the year ended October 31, 1995
<TABLE>
<CAPTION>
MidCap Capital
Small Cap Growth Appreciation
Retirement Retiremen Retirement
Portfolio Portfolio Portfolio*
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of year ............................... $ 10.83 $ 11.66 $ 10.08
---------- ----------- ----------
Net investment loss .............................................. (0.07) (0.07) (0.19)
Net realized and unrealized gain on
investments .................................................... 7.23 6.07 5.30
---------- ----------- ----------
Total from investment operations ............................. 7.16 6.00 5.11
Distributions from net realized gains (0.07) (1.32) (2.47)
---------- ----------- ----------
Net asset value, end of year ..................................... $ 17.92 $ 16.34 $ 12.72
========== =========== ==========
Total Return 66.2% 54.1% 54.4%
========== =========== ==========
Ratios and Supplemental Data:
Net assets, end of year (000's omitted) ........................ $ 23,002 $ 10,914 $ 8,116
========== =========== ==========
Ratio of expenses excluding interest
to average net assets ........................................ 1.13% 1.23% 1.43%
========== =========== ==========
Ratio of expenses including interest
to average net assets ........................................ 1.13% 1.23% 2.70%
========== =========== ==========
Ratio of net investment loss
to average net assets ........................................ (.73%) (.69%) (2.32%)
========== =========== ==========
Portfolio Turnover Rate .......................................... 104.84% 132.74% 188.53%
========== =========== ==========
Amount of 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
==========
</TABLE>
- --------------------
* Prior to April 12, 1996, the Alger Capital Appreciation Retirement Portfolio
was the Alger Defined Contribution Leveraged
- --------------------------------------------------------------------------------
vi
<PAGE>
- --------------------------------------------------------------------------------
THE ALGER RETIREMENT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period from
November 8, 1993 (commencement of operations) through October 31, 1994*
<TABLE>
<CAPTION>
MidCap Capital
Small Cap Growth Appreciation
Retirement Retiremen Retirement
Portfolio Portfolio Portfolio**
----------- ----------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period .............................. $ 10.00 $ 10.00 $ 10.00
-------- -------- --------
Net investment loss ............................................... (0.07) (0.09) (0.23)
Net realized and unrealized gain on investments ................... 0.90 1.75 0.31
-------- -------- --------
Total from investment operations .............................. 0.83 1.66 0.08
-------- -------- --------
Net asset value, end of period .................................... $ 10.83 $ 11.66 $ 10.08
======== ======== ========
Total Return ...................................................... 8.3% 16.6% 0.8%
======== ======== ========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ....................... $ 9,513 $ 6,774 $ 5,251
======== ======== ========
Ratio of expenses excluding interest
to average net assets ......................................... 1.47% 1.53% 1.78%
======== ======== ========
Ratio of expenses including interest
to average net assets ......................................... 1.47% 1.53% 2.87%
======== ======== ========
Ratio of net investment loss
to average net assets ......................................... (0.80)% (0.89)% (2.53)%
======== ======== ========
Portfolio Turnover Rate ........................................... 186.76% 134.06% 229.11%
======== ======== ========
Amount of 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.
** Prior to April 12, 1996, the Alger Capital Appreciation Retirement Portfolio
was the Alger Defined Contribution Leveraged AllCap Portfolio.
- --------------------------------------------------------------------------------
vii
<PAGE>
THE PORTFOLIOS
The Fund is a diversified, open-end management investment company that
offers a selection of four portfolios, including the Portfolios, each with the
investment objective of long-term capital appreciation. The offering price of
the shares of each Portfolio is net asset value per share. 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,
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. Alger Management has been engaged in the business of
rendering investment advisory services since 1964 and as of January 31, 1998,
had approximately $7.8 billion under management--$4.5 billion in mutual fund
accounts and $3.3 billion in other advisory accounts.
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)
1
<PAGE>
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 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
Capital Appreciation Retirement 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 Small Cap Retirement
Portfolio." In order to afford a Portfolio the flexibility to take advantage of
new opportuni-
2
<PAGE>
ties for investments in accordance with its investment objective or to meet
redemptions, each Portfolio may hold up to 15 percent of its net assets in money
market instruments and repurchase agreements and in excess of this amount (up to
100% of its assets) during temporary defensive periods. This amount may be
higher than that maintained by other funds with similar investment objectives.
See "Certain Securities and Investment Techniques."
ALGER SMALL CAP RETIREMENT PORTFOLIO
Except during temporary defensive periods, the Alger Small Cap Retirement
Portfolio, formerly known as Alger Defined Contribution Small Cap 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 ("Russell Index") or the S&P SmallCap 600 Index ("S&P Index"),
updated quarterly. Both indexes are broad indexes of small capitalization
stocks. As of December 31, 1997, the range of market capitalization of the
companies in the Russell Index was $20 million to $2.97 billion; the range of
market capitalization of the companies in the S&P Index at that date was $21
million to $2.934 billion. The combined range as of that date was $20 million to
$2.97 billion. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization outside this combined range and in excess of that amount (up to
100% of its assets) during temporary defensive periods.
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 MIDCAP GROWTH
RETIREMENT PORTFOLIO
Except during temporary defensive periods, the Alger MidCap Growth
Retirement Portfolio, formerly known as Alger Defined Contribution MidCap Growth
Portfolio, invests at least 65% of its total assets in equity securities of
companies that, at the time of purchase of the securities, have total market
capitalization within the range of companies included in the S&P MidCap 400
Index, updated quarterly. The S&P MidCap 400 Index is designed to track the
performance of medium capitalization companies. As of December 31, 1997, the
range of market capitalization of these companies was $213 million to $13.737
billion. The Portfolio may invest up to 35% of its total assets in equity
securities of companies that, at the time of purchase, have total market
capitalization outside the range of companies included in the S&P MidCap 400
Index and in excess of that amount (up to 100% of its assets) during temporary
defensive periods.
ALGER CAPITAL APPRECIATION
RETIREMENT PORTFOLIO
Except during temporary defensive periods, the Alger Capital Appreciation
Retirement Portfolio, formerly known as Alger Defined Contribution Leveraged
AllCap 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
3
<PAGE>
on securities and securities indexes to increase gain and to hedge against the
risk of unfavorable price movements, and may enter into futures contracts on
securities indexes and purchase and sell call and put options on these futures
contracts. The Portfolio may also borrow money 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 is
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 Small
Cap Retirement 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 MidCap
Growth Retirement 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 Capital Appreciation Retirement 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 those of 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
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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
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 governed by Rule 144A
under 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. The Fund's Board
of Trustees 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. Examples of factors that
will be taken into account in evaluating the liquidity of a Rule 144A security,
both with respect to the initial purchase and on an ongoing basis, 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). 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 including all collateral on such loans,
less liabilities exclusive of the obligation to return such collateral, 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 Capital Appreciation Retirement 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
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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 on a security is a contract that gives the holder of the
option the right, in return for a premium paid, to buy from the writer (seller)
of the call option the security underlying the option at a specified exercise
price at any time during the term of the option. The writer of the call option
has the obligation upon exercise of the option to deliver the underlying
security upon payment of the exercise price during the option period.
A put option on a security is a contract that, in return for the premium,
gives the holder of the option the right to sell to the writer (seller) the
underlying security at a specified price during the term of the option. The
writer of the put, who receives the premium, has the obligation to buy the
underlying security upon exercise, at the exercise price during the option
period.
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 Capital Appreciation Retirement 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
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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
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 Capital Appreciation Retirement Portfolio may borrow from banks
for investment purposes. This borrowing is known as leveraging. The Portfolio
may use up to 331/3 percent of its assets for leveraging. The Investment Company
Act of 1940, as amended, requires the
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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 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 &
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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.
Fred M. Alger III and his brother, David D. Alger, are the majority
shareholders of Alger Associates, Inc. and may be deemed to control that company
and its subsidiaries.
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 Small Cap Retirement Portfolio and
Alger Capital Appreciation Retirement Portfolio--.85 percent; Alger MidCap
Growth Retirement Portfolio--.80 percent.
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 since 1971, as Executive Vice President and
Director of Research until 1995 and as President since 1995. Ms. Khoo has been
employed by Alger Management since 1989 as a senior research analyst until 1995
and as a Senior Vice President since 1995. Mr. Tartaro has been employed by
Alger Management since 1990 as a senior research analyst until 1995 and as a
Senior Vice President since 1995. Mr. 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.
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. 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
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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.
Each Portfolio of the Fund 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.
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 (normally 4:00 p.m. Eastern time). The NYSE is
currently open on each Monday through Friday, except (i) January 1st, Dr. Martin
Luther King, Jr. Day, Presidents' Day (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 or redeem 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 generally being required.
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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 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.
Under unusual circumstances, shares of a Portfolio may be redeemed "in
kind," which means that the redemption proceeds will be paid with securities
which are held by the Portfolio. Please refer to the Statement of Additional
Information for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Portfolio will be treated separately in determining the
amounts of dividends of net 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 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
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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.
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
series, par value $.001 per share. An unlimited number of shares of four series,
representing the shares of the Portfolios, have been authorized. No series of
shares has any preference over any other series.
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.
CONTROL SHAREHOLDERS
At February 2, 1998, Wells Fargo Bank, Trustee for Mentor Graphics, owned
beneficially or of record 57.38% of the Alger Small Cap Retirement Portfolio.
The Fred Alger & Company, Incorporated et al Pension Plan and the Fred Alger &
Company, Incorporated et al Profit Sharing Plan owned beneficially or of record
35.00% and 41.64%, respectively, of the Alger MidCap Growth Retirement
Portfolio; and 38.27% and 38.75%, respectively, of the Alger Capital
Appreciation Retirement Portfolio at February 2, 1998. These shareholders may be
deemed to control the specified portfolios.
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
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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 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
with rankings prepared by Lipper Analytical Services, Inc., which is a widely
recognized, independent service that monitors the performance of mutual funds,
as well as 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, 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.
13
<PAGE>
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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.
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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
COUNSEL:
Hollyer Brady Smith Troxell Barrett Rockett
Hines & Mone LLP
551 Fifth Avenue
New York, NY 10176
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THE ALGER |
RETIREMENT | MEETING THE CHALLENGE
FUND | OF INVESTING
ALGER SMALL CAP
RETIREMENT PORTFOLIO
ALGER MIDCAP GROWTH
RETIREMENT PORTFOLIO
ALGER CAPITAL APPRECIATION
RETIREMENT PORTFOLIO
PROSPECTUS
FEBRUARY 25, 1998
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