STATEMENT OF                                                   February 28, 2004
ADDITIONAL INFORMATION


                                 THE ALGER FUNDS


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     The Alger Funds (the "Trust") is a Massachusetts business trust, registered
with the  Securities  and  Exchange  Commission  (the  "SEC")  as an  investment
company, that offers interests in the following eight Funds:

                    * Alger LargeCap Growth Fund
                    * Alger MidCap Growth Fund
                    * Alger SmallCap Growth Fund
                    * Alger Capital Appreciation Fund
                    * Alger SmallCap and MidCap Growth Fund
                    * Alger Health Sciences Fund
                    * Alger Balanced Fund
                    * Alger Money Market Fund

     With the  exception of the Alger Money Market Fund,  each Fund offers three
classes of shares, each with a different  combination of sales charges,  ongoing
fees and other features.

     The Trust's  financial  statements  for the year ended October 31, 2003 are
contained in its annual report to shareholders and are incorporated by reference
into this Statement of Additional Information.

     This Statement of Additional Information is not a Prospectus. This document
contains additional  information about Funds and supplements  information in the
Funds'  Prospectus  dated  February 28, 2004.  It should be read together with a
Prospectus which may be obtained free of charge by writing the Fund at 111 Fifth
Avenue, New York, NY 10003 or calling (800) 992-3863.


                                    CONTENTS


The  Funds                                                                     2
Investment Strategies and Policies                                             3
Net Asset Value                                                               12
Classes of Shares                                                             14
Purchases                                                                     14
Redemptions                                                                   18
Exchanges and Conversions                                                     21
Management                                                                    23
Code of Ethics                                                                27
Taxes                                                                         27
Dividends                                                                     28
Custodian and Transfer Agent                                                  28
Certain Shareholders                                                          28
Organization                                                                  30
Appendix                                                                     A-1


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THE FUNDS
ALGER LARGECAP GROWTH FUND (FORMERLY ALGER LARGECAP GROWTH PORTFOLIO)

Under normal  circumstances,  the Fund invests at least 80% of its net assets in
equity  securities of companies that, at the time of purchase of the securities,
have total market  capitalization  of $10 billion or greater.  The Fund will not
change this policy without 60 days notice to  shareholders.  The Fund may invest
up to 20% of its net assets in equity  securities of companies that, at the time
of purchase,  have total market  capitalization  of less than $10 billion and in
excess of that  amount (up to 100% of its  assets)  during  temporary  defensive
periods.

ALGER MIDCAP GROWTH FUND (FORMERLY ALGER MIDCAP GROWTH PORTFOLIO)

Under normal  circumstances,  the Fund invests at least 80% of its net 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
Russell Midcap Growth Index or the S&P MidCap 400 Index, updated quarterly.  The
Fund will not change this policy  without 60 days notice to  shareholders.  Both
indexes  are  designed  to  track  the  performance  of  medium   capitalization
companies.  The Fund may invest up to 20% of its net assets in equity securities
of companies  that,  at the time of purchase,  have total market  capitalization
outside the range of companies  included in these  indexes and in excess of that
amount (up to 100% of its assets) during temporary defensive periods.

ALGER SMALLCAP GROWTH FUND (FORMERLY ALGER SMALL CAPITALIZATION PORTFOLIO)

Under normal  circumstances,  the Fund invests at least 80% of its net 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  or the S&P  SmallCap  600  Index,  updated
quarterly.  Both indexes are broad indexes of small  capitalization  stocks. The
Fund will not change this policy  without 60 days  notice to  shareholders.  The
Fund may invest up to 20% of its net 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.

ALGER CAPITAL APPRECIATION FUND (FORMERLY ALGER CAPITAL APPRECIATION PORTFOLIO)

Except during temporary defensive periods,  the Fund invests at least 85% of its
net assets in equity securities of companies of any size.

ALGER SMALLCAP AND MIDCAP GROWTH FUND (FORMERLY ALGER SMALLCAP AND MIDCAP GROWTH
PORTFOLIO)

Under normal circumstances, the Fund invests at least 80% of its net assets plus
any  borrowings  for  investment  purposes  in  equity  securities  of small and
midsized  companies.  This policy will not be changed  without 60 days notice to
shareholders.  Small and midsized  companies are companies  that, at the time of
purchase, have a market capitalization between $500 million and $10 billion. The
Fund may invest up to 20% of its net assets in equity  securities  of  companies
whose  market  capitalizations,  at the time of  purchase,  fall outside of that
range and in excess of that amount during temporary defensive periods.

ALGER HEALTH SCIENCES FUND (FORMERLY ALGER HEALTH SCIENCES PORTFOLIO)

Under normal circumstances, the Fund invests at least 80% of its net assets plus
any borrowings for investment  purposes in equity securities of companies of any
size that are engaged in the health  sciences  sector.  The Fund will not change
this policy without 60 days notice to shareholders. A company will be considered
to be engaged in the  health  sciences  sector if it derives at least 50% of its
earnings or revenues from, or devotes at least 50% of its assets to,  activities
in any area of the health  sciences  sector,  including  health  care  services,
pharmaceuticals,  medical  equipment  and  supplies  and  applied  research  and
development. Under normal circumstances,  the Fund may invest the balance of its
assets in equity  securities  of  companies  not engaged in the health  sciences
sector and in excess of that amount during temporary defensive periods.

ALGER BALANCED FUND (FORMERLY ALGER BALANCED PORTFOLIO)

The fund intends to invest  based on combined  considerations  of risk,  income,
capital appreciation and protection of capital value.  Normally,  it will invest
in common stocks and investment grade fixed-income  securities  (preferred stock
and debt  securities),  as well as securities  convertible  into common  stocks.
Except during temporary  defensive periods,  the fund will maintain at least 25%
of its net assets in fixed-income  securities.  With respect to debt securities,
the fund  will  invest  only in  instruments  which are rated in one of the four
highest rating  categories by any  established  rating agency,  or if not rated,
which are determined by fred alger management,  inc. ("Alger  management"),  the
funds' investment  manager, to be of comparable quality to instruments so rated.


                                      -2-





The Fund may invest up to 35% of its total  assets in money  market  instruments
and  repurchase  agreements  and in  excess  of that  amount  (up to 100% of its
assets) during temporary defensive periods.

ALGER MONEY MARKET FUND (FORMERLY ALGER MONEY MARKET PORTFOLIO)

The Fund may invest in "money market"  instruments,  including  certificates  of
deposit,  time deposits and bankers'  acceptances;  U.S. Government  securities;
corporate bonds having less than 397 days remaining to maturity;  and commercial
paper, including variable rate master demand notes. The Fund may also enter into
repurchase  agreements,   reverse  repurchase  agreements  and  firm  commitment
agreements.

The Fund will invest at least 95% of its total assets in money market securities
which are rated  within the  highest  credit  category  assigned by at least two
established  rating  agencies (or one rating  agency if the security is rated by
only one) and will only invest in money market  securities  rated at the time of
purchase  within  the  two  highest  credit  categories  or,  if not  rated,  of
equivalent   investment  quality  as  determined  by  Alger  Management.   Alger
Management  subjects all  securities  eligible for  investment to its own credit
analysis and considers all securities  purchased by the Fund to present  minimal
credit risks. Normally, the Fund will invest a substantial portion of its assets
in U.S. Government securities.

The Fund has a policy of  maintaining  a stable net asset  value of $1.00.  This
policy has been maintained since its inception;  however, the $1.00 price is not
guaranteed  or insured,  nor is its yield fixed.  The Fund  generally  purchases
securities  which mature in 13 months or less. The average  maturity of the Fund
will not be greater than 90 days.

ALGER SMALLCAP AND MIDCAP, CAPITAL APPRECIATION AND HEALTH SCIENCES FUNDS

These Funds 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 stock  indexes and purchase and sell call and put options on these
futures contracts. These Funds may also borrow money (leverage) for the purchase
of additional  securities.  A Fund may borrow only from banks and may not borrow
in excess of one-third of the market value of its total assets, less liabilities
other than such borrowing.  These practices are deemed to be speculative and may
cause the Fund's net asset value to be more volatile than the net asset value of
a fund that does not engage in these activities.


IN GENERAL


All of the Funds  other than the Alger Money  Market  Fund and the  fixed-income
portion of Alger Balanced Fund seek to achieve their  objectives by investing in
equity securities, such as common or preferred stocks, or securities convertible
into or exchangeable for equity  securities,  including warrants and rights. The
Funds will invest primarily in companies whose securities are traded on domestic
stock exchanges or in the over-the-counter market. These companies may 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
Funds the flexibility to take advantage of new  opportunities for investments in
accordance with their investment  objectives and to meet  redemptions,  they may
hold up to 15% of their  net  assets  (35% of net  assets,  in the case of Alger
Balanced  Fund) in money market  instruments  and  repurchase  agreements and in
excess of that amount (up to 100% of their assets)  during  temporary  defensive
periods.  This  amount may be higher  than that  maintained  by other funds with
similar investment objectives.

There is no guarantee that any Fund's objectives will be achieved.


INVESTMENT STRATEGIES AND POLICIES

CERTAIN SECURITIES AND INVESTMENT TECHNIQUES


The Prospectus discusses the investment  objectives of the Funds and the primary
strategies to be employed to achieve  those  objectives.  This section  contains
supplemental   information   concerning   the  types  of  securities  and  other
instruments in which the Funds may invest, the investment policies and portfolio
strategies  that the Funds may  utilize  and certain  risks  attendant  to those
investments, policies and strategies.


CONVERTIBLE SECURITIES


Each Fund  (other  than  Alger  Money  Market  Fund) may  invest in  convertible
securities,  which are debt  instruments  or  preferred  stocks  that make fixed
dividend or interest payments and are convertible into common stock.  Generally,
the market  prices of  convertible  securities  tend to reflect price changes in
their underlying common stocks, but also tend to respond inversely to changes in
interest rates.  Convertible  securities  typically entail less market risk than
investments in the


                                      -3-





common stock of the same issuers;  declines in their market prices are typically
not as  pronounced  as  those  of  their  underlying  common  stocks.  Like  all
fixed-income  securities,  convertible  securities  are  subject  to the risk of
default on their issuers' payment obligations.


U.S. GOVERNMENT OBLIGATIONS

Bills,  notes,  bonds, and other debt securities issued by the U.S. Treasury are
direct  obligations  of the U.S.  Government  and differ mainly in the length of
their maturities.

U.S. GOVERNMENT AGENCY SECURITIES

These  securities  are  issued  or  guaranteed  by  U.S.  Government   sponsored
enterprises and federal agencies. These include securities issued by the Federal
National Mortgage Association, Government National Mortgage Association, Federal
Home Loan Bank,  Federal  Land Banks,  Farmers  Home  Administration,  Banks for
Cooperatives,  Federal  Intermediate Credit Banks,  Federal Financing Bank, Farm
Credit Banks, the Small Business Administration,  Federal Housing Administration
and Maritime Administration.  Some of these securities are supported by the full
faith and credit of the U.S.  Treasury,  and the remainder are supported only by
the credit of the instrumentality, which may or may not include the right of the
issuer to borrow from the Treasury.

BANK OBLIGATIONS

These are certificates of deposit,  bankers'  acceptances,  and other short-term
debt  obligations.   Certificates  of  deposit  are  short-term  obligations  of
commercial  banks.  A bankers'  acceptance is a time draft drawn on a commercial
bank  by  a  borrower,  usually  in  connection  with  international  commercial
transactions. Certificates of deposit may have fixed or variable rates.


The Funds  will not  invest in any debt  security  issued by a  commercial  bank
unless (i) the bank has total assets of at least $1 billion,  or the  equivalent
in other  currencies,  or, in the case of domestic banks which do not have total
assets of at least $1 billion,  the  aggregate  investment  made in any one such
bank is limited to  $100,000  and the  principal  amount of such  investment  is
insured in full by the Federal Deposit Insurance  Corporation;  (ii) in the case
of a U.S. bank, it is a member of the Federal Deposit Insurance Corporation; and
(iii) in the case of foreign  banks,  the  security  is, in the opinion of Alger
Management,  of an investment  quality comparable to other debt securities which
may be purchased by the Funds. These limitations do not prohibit  investments in
securities  issued by foreign  branches of U.S. banks,  provided such U.S. banks
meet the foregoing requirements.


FOREIGN BANK OBLIGATIONS


Investments by the Funds in foreign bank  obligations and obligations of foreign
branches of domestic banks present certain risks, including the impact of future
political and economic  developments,  the possible  imposition  of  withholding
taxes on interest  income,  the possible seizure or  nationalization  of foreign
deposits, the possible establishment of exchange controls and/or the addition of
other foreign governmental  restrictions that might affect adversely the payment
of principal and interest on these obligations.  In addition,  there may be less
publicly  available  and  reliable  information  about a foreign bank than about
domestic  banks  owing  to  different   accounting,   auditing,   reporting  and
recordkeeping standards. In view of these risks, Alger Management will carefully
evaluate these investments on a case-by-case basis.


SHORT-TERM CORPORATE DEBT SECURITIES

These are outstanding  nonconvertible corporate debt securities (e.g., bonds and
debentures)  which have one year or less remaining to maturity.  Corporate notes
may have fixed, variable, or floating rates.

COMMERCIAL PAPER

These are  short-term  promissory  notes  issued by  corporations  primarily  to
finance short-term credit needs.

VARIABLE RATE MASTER DEMAND NOTES


These are unsecured instruments that permit the indebtedness  thereunder to vary
and provide for periodic  adjustments in the interest rate.  Because these notes
are direct lending  arrangements  between the Fund and the issuer,  they are not
normally traded.  Although no active secondary market may exist for these notes,
the Fund may demand payment of principal and accrued interest at any time or may
resell the note to a third  party.  While the notes are not  typically  rated by
credit  rating  agencies,  issuers of  variable  rate master  demand  notes must
satisfy Alger  Management that the same criteria for issuers of commercial paper
are met. In addition,  when purchasing  variable rate master demand notes, Alger
Management  will  consider  the earning  power,  cash flows and other  liquidity
ratios of the issuers of the notes and will continuously monitor their financial
status  and  ability  to meet  payment  on  demand.  In the event an issuer of a
variable rate master demand note were to default on its payment obligations, the
Fund  might be  unable  to  dispose  of the note  because  of the  absence  of a
secondary  market


                                      -4-



and  could,  for  this or other  reasons,  suffer  a loss to the  extent  of the
default.

REPURCHASE AGREEMENTS


Under the terms of a repurchase  agreement,  a Fund 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 Fund to
resell, the instrument at an agreed price (including accrued interest) and time,
thereby  determining  the yield  during the Fund's  holding  period.  Repurchase
agreements may be seen to be loans by the fund  collateralized by the underlying
instrument.  This  arrangement  results  in a fixed  rate of return  that is not
subject  to  market  fluctuations  during  the  fund's  holding  period  and not
necessarily  related  to the rate of return on the  underlying  instrument.  The
value of the underlying securities, including accrued interest, will be at least
equal at all times to the total amount of the repurchase  obligation,  including
interest.  A Fund  bears a risk of loss in the event  that the other  party to a
repurchase  agreement  defaults on its obligations and the Fund is delayed in or
prevented from  exercising  its rights to dispose of the collateral  securities,
including  the  risk  of a  possible  decline  in the  value  of the  underlying
securities during the period in which the Fund seeks to assert these rights, the
risk of incurring  expenses  associated with asserting these rights and the risk
of losing all or part of the income from the agreement. Alger Management reviews
the  creditworthiness of those banks and dealers with which the Funds enter into
repurchase  agreements to evaluate  these risks and monitors on an ongoing basis
the value of the securities subject to repurchase  agreements to ensure that the
value is maintained at the required level.

REVERSE REPURCHASE AGREEMENTS (ALGER MONEY MARKET AND BALANCED FUNDS)

Reverse repurchase agreements are the same as repurchase agreements except that,
in this  instance,  the Fund  would  assume the role of  seller/borrower  in the
transaction.  Each Fund will maintain  segregated accounts consisting of cash or
liquid  securities  that at all times are in an amount equal to its  obligations
under reverse repurchase agreements. The Funds will invest the proceeds in money
market  instruments  or  repurchase  agreements  maturing  not  later  than  the
expiration of the reverse repurchase  agreement.  Reverse repurchase  agreements
involve  the risk that the  market  value of the  securities  sold by a Fund may
decline  below the  repurchase  price of the  securities.  Under the  Investment
Company Act of 1940, as amended (the "Act"),  reverse repurchase  agreements may
be  considered  borrowings by the seller;  accordingly,  the Fund will limit its
investments in reverse  repurchase  agreements  and other  borrowings to no more
than one-third of its total assets.


FIRM COMMITMENT AGREEMENTS AND WHEN-ISSUED PURCHASES


Firm commitment agreements and "when-issued"  purchases call for the purchase of
securities at an agreed price on a specified  future date and would be used, for
example,  when a  decline  in the  yield  of  securities  of a given  issuer  is
anticipated  and a  more  advantageous  yield  may  be  obtained  by  committing
currently to purchase  securities to be issued later.  When the Fund purchases a
security under a firm commitment  agreement or on a when-issued basis it assumes
the risk of any decline in value of the security  occurring  between the date of
the agreement or purchase and the settlement date of the  transaction.  The Fund
will not use these transactions for leveraging purposes and,  accordingly,  will
segregate cash or liquid securities in an amount sufficient at all times to meet
its purchase obligations under these agreements.


WARRANTS AND RIGHTS


Each Fund may invest in  warrants  and  rights.  A warrant is a type of security
that  entitles  the holder to buy a  proportionate  amount of common  stock at a
specified  price,  usually higher than the market price at the time of issuance,
for a  period  of  years or to  perpetuity.  In  contrast,  rights,  which  also
represent the right to buy common  shares,  normally have a  subscription  price
lower than the  current  market  value of the common  stock and a life of two to
four  weeks.  Warrants  are  freely  transferable  and are  traded  on the major
securities exchanges.


RESTRICTED SECURITIES


Each Fund may invest in  restricted  securities  governed by Rule 144A under the
Securities  Act of 1933, as amended.  In adopting Rule 144A,  the Securities and
Exchange Commission (the "SEC")  specifically stated that restricted  securities
traded  under  Rule 144A may be treated as liquid  for  purposes  of  investment
limitations  if the board of trustees (or the fund's  adviser  acting subject to
the board's supervision)  determines that the securities are in fact liquid. The
Board of Trustees  has  delegated  its  responsibility  to Alger  Management  to
determine the liquidity of each restricted  security  purchased  pursuant to the
Rule,  subject to the Board of  Trustees'  oversight  and  review.  Examples  of
factors that will be taken into account in  evaluating  the  liq-


                                      -5-




uidity 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).  If institutional trading in restricted securities were to decline to
limited levels, the liquidity of the Fund could be adversely affected.


SHORT SALES


Each Fund other than Alger Money Market Fund may sell securities  "short against
the box." While a short sale is the sale of a security the Fund does not own, it
is  "against  the box" if at all times when the short  position is open the Fund
owns an equal  amount of the  securities  or  securities  convertible  into,  or
exchangeable without further  consideration for, securities of the same issue as
the securities sold short.

LENDING OF FUND SECURITIES

Each  Fund  may  lend  securities  to  brokers,   dealers  and  other  financial
organizations.  The Funds will not lend  securities  to Alger  Management or its
affiliates.  By  lending  its  securities,  a Fund can  increase  its  income by
continuing to receive interest or dividends on the loaned  securities as well as
by either  investing the cash collateral in short-term  securities or by earning
income  in the  form of  interest  paid by the  borrower  when  U.S.  Government
securities or letters of credit are used as collateral. Each Fund will adhere to
the following  conditions  whenever its securities are loaned: (a) the Fund must
receive at least 100 percent cash  collateral or equivalent  securities from the
borrower;  (b) the borrower must increase  this  collateral  whenever the market
value of the  securities  including  accrued  interest  exceeds the value of the
collateral; (c) the Fund must be able to terminate the loan at any time; (d) the
Fund must receive  reasonable  interest on the loan,  as well as any  dividends,
interest or other  distributions  on the loaned  securities  and any increase in
market value; (e) the Fund may pay only reasonable  custodian fees in connection
with the loan;  and (f) voting rights on the loaned  securities  may pass to the
borrower;  provided,  however,  that if a material event adversely affecting the
investment  occurs,  the Fund's Board of Trustees  must  terminate  the loan and
regain  the  right to vote the  securities.  A Fund  bears a risk of loss in the
event  that  the  other  party  to a  stock  loan  transaction  defaults  on its
obligations  and the Fund is delayed in or prevented from  exercising its rights
to dispose of the  collateral  including  the risk of a possible  decline in the
value of the collateral  securities during the period in which the Fund seeks to
assert these rights,  the risk of incurring  expenses  associated with asserting
these  rights  and the  risk of  losing  all or a part of the  income  from  the
transaction.


FOREIGN SECURITIES


Each Fund other than Alger  Money  Market Fund may invest up to 20% of the value
of its total assets in foreign  securities.  For the purpose of this definition,
foreign  securities  does not include  American  Depositary  Receipts,  American
Depositary  Shares or U.S.  dollar-denominated  securities  of foreign  issuers.
Foreign  securities  investments may be affected by changes in currency rates or
exchange control regulations, changes in governmental administration or economic
or monetary policy (in the United States and abroad) or changed circumstances in
dealing  between  nations.  Dividends paid by foreign  issuers may be subject to
withholding  and other  foreign  taxes that may decrease the net return on these
investments as compared to dividends paid to the Fund by domestic  corporations.
It should be noted that there may be less publicly  available  information about
foreign issuers than about domestic issuers, and foreign issuers are not subject
to  uniform   accounting,   auditing  and  financial   reporting  standards  and
requirements comparable to those of domestic issuers. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable domestic
issuers and  foreign  brokerage  commissions  are  generally  higher than in the
United States. Foreign securities markets may also be less liquid, more volatile
and less  subject to  government  supervision  than those in the United  States.
Investments in foreign  countries could be affected by other factors not present
in  the  United  States,  including  expropriation,  confiscatory  taxation  and
potential   difficulties  in  enforcing  contractual   obligations.   Securities
purchased on foreign  exchanges may be held in custody by a foreign  branch of a
domestic bank.

OPTIONS (ALGER SMALLCAP AND MIDCAP GROWTH, CAPITAL APPRECIATION AND HEALTH
SCIENCES FUNDS)

Alger SmallCap and MidCap Growth Fund, Alger Capital Appreciation Fund and Alger
Health  Sciences Fund may purchase put and call options and sell (write) covered
put and call options on securities and securities indexes to increase gain or to
hedge  against the risk of  unfavorable  price  movements,  although none of the


                                      -6-





Funds currently intends to rely on these strategies extensively, if at all.


A call  option on a security  is a contract  that gives the holder of the option
the right,  in return for a premium paid, to buy from the writer (seller) of the
call option the security  underlying the option at a specified exercise price at
any time  during the term of the  option.  The writer of the call option has the
obligation  upon exercise of the option to deliver the underlying  security upon
payment  of the  exercise  price  during the  option  period.  A put option on a
security is a contract that, in return for the premium,  gives the holder of the
option the right to sell to the writer  (seller)  the  underlying  security at a
specified  price  during  the term of the  option.  The  writer of the put,  who
receives the premium,  has the  obligation to buy the  underlying  security upon
exercise at the exercise price during the option period.


A Fund will not sell options that are not  covered.  A call option  written by a
Fund on a security is "covered" if the Fund owns the underlying security covered
by the call or has an absolute  and  immediate  right to acquire  that  security
without additional cash consideration (or for additional cash consideration held
in a segregated account) upon conversion or exchange of other securities held in
its  portfolio.  A call  option is also  covered if the Fund holds a call on the
same security as the call written  where the exercise  price of the call held is
(1) equal to or less than the exercise  price of the call written or (2) greater
than the exercise  price of the call written if the  difference is maintained by
the Fund in cash, U.S.  Government  securities or other  high-grade,  short-term
obligations  in a  segregated  account.  A put option is  "covered"  if the Fund
maintains cash or other high-grade, short-term obligations with a value equal to
the  exercise  price in a  segregated  account,  or else holds a put on the same
security as the put written where the exercise price of the put held is equal to
or greater than the exercise price of the put written.

If a Fund has written an option,  it may terminate its obligation by effecting a
closing  purchase  transaction.  This is accomplished by purchasing an option of
the same series as the option  previously  written.  However,  once the Fund has
been  assigned an exercise  notice,  the Fund will be unable to effect a closing
purchase transaction.  Similarly,  if the Fund is the holder of an option it may
liquidate  its  position  by  effecting  a  closing  sale  transaction.  This is
accomplished  by selling an option of the same  series as the option  previously
purchased.  There can be no  assurance  that  either a closing  purchase or sale
transaction can be effected when the Fund so desires.

The Fund would realize a profit from a closing  transaction  if the price of the
transaction  were less than the premium  received  from writing the option or is
more than the premium paid to purchase the option; the Fund would realize a loss
from a closing  transaction if the price of the  transaction  were less than the
premium paid to purchase the option.  Since call option prices generally reflect
increases in the price of the underlying  security,  any loss resulting from the
repurchase of a call option may also be wholly or partially offset by unrealized
appreciation of the underlying  security.  Other principal factors affecting the
market  value of a put or a call  option  include  supply and  demand,  interest
rates, the current market price and price volatility of the underlying  security
and the time remaining until the expiration date.

An option  position  may be closed  out only on an  exchange  which  provides  a
secondary market for an option of the same series.  There is no assurance that a
liquid secondary market on an exchange will exist for any particular  option. In
such event it might not be possible to effect closing transactions in particular
options,  so that the Fund would have to exercise its option in order to realize
any  profit and would  incur  brokerage  commissions  upon the  exercise  of the
options.  If the Fund, as a covered call option writer,  were unable to effect a
closing purchase transaction in a secondary market, it would not be able to sell
the underlying  security until the option expired or it delivered the underlying
security upon exercise or otherwise covered the position.

In addition to options on  securities,  the listed  Funds may also  purchase and
sell call and put options on  securities  indexes.  A stock index  reflects in a
single number the market value of many  different  stocks.  Relative  values are
assigned  to the  stocks  included  in an index  and the index  fluctuates  with
changes in the market  values of the  stocks.  The  options  give the holder the
right to receive a cash  settlement  during the term of the option  based on the
difference  between the exercise price and the value of the index.  By writing a
put or call option on a securities  index, the Fund is obligated,  in return for
the premium received,  to make delivery of this amount.  The Fund may offset its
position in stock index  options  prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.


Use of  options  on  securities  indexes  entails  the risk that  trading in the
options  may be  interrupted  if trading in

                                      -7-





certain  securities  included  in the  index  is  interrupted.  A Fund  will not
purchase   these  options   unless  Alger   Management  is  satisfied  with  the
development, depth and liquidity of the market and Alger Management believes the
options can be closed out.

Price  movements  in a  Fund's  securities  may  not  correlate  precisely  with
movements in the level of an index and, therefore, the use of options on indexes
cannot serve as a complete  hedge and would  depend,  in part, on the ability of
Alger  Management to predict  correctly  movements in the direction of the stock
market  generally or of a particular  industry.  Because  options on  securities
indexes  require  settlement  in  cash,  Alger  Management  might be  forced  to
liquidate Fund securities to meet settlement obligations.

Although Alger Management will attempt to take appropriate  measures to minimize
the risks  relating to any trading by the Funds in put and call  options,  there
can be no assurance  that a Fund will succeed in any option  trading  program it
undertakes.

STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES (ALGER SMALLCAP AND
MIDCAP, CAPITAL APPRECIATION AND HEALTH SCIENCES FUNDS)

If a Fund  utilizes  these  investments,  it will do so only  for  hedging,  not
speculative,  purposes. Futures are generally bought and sold on the commodities
exchanges where they are listed with payment of initial and variation  margin as
described below. The sale of a futures contract creates a firm obligation by the
Fund,  as seller,  to deliver to the buyer the net cash amount called for in the
contract at a specific future time. Put options on futures might be purchased to
protect  against  declines in the market  values of  securities  occasioned by a
decline in stock prices and  securities  index  futures might be sold to protect
against a general  decline in the value of  securities of the type that comprise
the index.  Options on futures  contracts  are similar to options on  securities
except that an option on a futures  contract  gives the purchaser the right,  in
return for the  premium  paid,  to assume a position in a futures  contract  and
obligates the seller to deliver such position.

A stock index future obligates the seller to deliver (and the purchaser to take)
an amount of cash equal to a specific dollar amount times the difference between
the value of a specific  stock index at the close of the last trading day of the
contract and the price at which the agreement is made.  No physical  delivery of
the underlying  stocks in the index is made.  While incidental to its securities
activities, a Fund may use index futures as a substitute for a comparable market
position in the underlying securities.  No Fund has invested in index futures in
the past.

If the Fund uses futures, or options thereon, for hedging, the risk of imperfect
correlation  will  increase  as the  composition  of the  Fund  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 Fund may, if it uses a
hedging  strategy,  buy or sell stock index  futures  contracts  in a greater or
lesser dollar amount than the dollar  amount of the  securities  being hedged if
the  historical  volatility  of the stock index futures has been less or greater
than  that of the  securities.  Such  "over  hedging"  or  "under  hedging"  may
adversely  affect the Fund'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.
A Fund  would sell  options on stock  index  futures  contracts  only as part of
closing purchase  transactions to terminate its options positions.  No assurance
can be given that such  closing  transactions  could be  effected  or that there
would be  correlation  between  price  movements  in the  options on stock index
futures and price movements in the Fund's  securities  which were the subject of
the hedge.  In addition,  any purchase by a Fund of such options  would be based
upon  predictions  as to  anticipated  market  trends,  which  could prove to be
inaccurate.

A Fund's use, if any, of stock  index  futures and options  thereon  will in all
cases be consistent with applicable  regulatory  requirements  and in particular
the rules and regulations of the Commodity  Futures Trading  Commission and will
be entered into only, if at all, for bona fide hedging, risk management or other
portfolio  management  purposes.  Typically,  maintaining a futures  contract or
selling an option  thereon  will  require  the Fund to deposit  with a financial
intermediary  as  security  for its  obligations  an  amount  of  cash or  other
specified  assets (initial margin) which initially is typically 1% to 10% of the
face  amount  of  the  contract  (but  may be  higher  in  some  circumstances).
Additional  cash or assets  (variation  margin) may be required to be  deposited
thereafter  on a  daily  basis  as the  mark to  market  value  of the  contract
fluctuates. The purchase of an option on

                                      -8-





stock index  futures  involves  payment of a premium for the option  without any
further obligation on the part of the Fund. If the Fund exercises an option on a
futures  contract it will be  obligated to post  initial  margin (and  potential
subsequent variation margin) for the resulting futures position just as it would
for any position. Futures contracts and options thereon are generally settled by
entering into an offsetting  transaction  but there can be no assurance that the
position can be offset prior to settlement at an  advantageous  price,  nor that
delivery will occur.

A Fund will not enter into a futures  contract  or related  option  (except  for
closing transactions) if, immediately  thereafter,  the sum of the amount of its
initial margin and premiums on open futures  contracts and options thereon would
exceed 5% of the Fund's total assets (taken at current value);  however,  in the
case of an  option  that  is  in-the-money  at the  time  of the  purchase,  the
in-the-money amount may be excluded in calculating the 5% limitation.


BORROWING


All of the Funds may borrow from banks for temporary or emergency  purposes.  In
addition,  the Alger SmallCap and MidCap Growth Fund, Alger Capital Appreciation
Fund and Alger  Health  Sciences  Fund may borrow money from banks and use it to
purchase additional securities. This borrowing is known as leveraging.  Leverage
increases both  investment  opportunity  and investment  risk. If the investment
gains on securities  purchased  with borrowed  money exceed the interest paid on
the  borrowing,  the net asset value of the Fund's  shares will rise faster than
would otherwise be the case. On the other hand, if the investment  gains fail to
cover the cost (including  interest) of borrowings,  or if there are losses, the
net asset value of the Fund's shares will decrease  faster than would  otherwise
be the case. A Fund is required to maintain  continuous asset coverage (that is,
total assets including borrowings,  less liabilities exclusive of borrowings) of
300% of the amount borrowed. If such asset coverage should decline below 300% as
a result of market  fluctuations  or other reasons,  the Fund 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.

FUND DEPOSITARY RECEIPTS (ALGER SMALLCAP AND MIDCAP AND HEALTH SCIENCES FUNDS)

To the extent otherwise consistent with their investment policies and applicable
law, these Funds may invest in Fund Depositary Receipts,  exchange-traded shares
issued by  investment  companies,  typically  unit  investment  trusts,  holding
portfolios  of common stocks  designed to replicate  and,  therefore,  track the
performance of various broad securities indexes or sectors of such indexes.  For
example,  the Funds may invest in Standard &Poor's Depositary  Receipts (SPDRs),
issued by a unit investment  trust whose portfolio  tracks the S&P 500 Composite
Stock Price Index, or Standard  &Poor's MidCap 400 Depositary  Receipts  (MidCap
SPDRs), similarly linked to the S&P MidCap 400 Index.


INVESTMENT RESTRICTIONS


The investment restrictions numbered 1 through 13 below have been adopted by the
Trust  with  respect  to each of the Funds as  fundamental  policies,  except as
otherwise noted in this summary.  Under the Act, a "fundamental"  policy may not
be changed without the vote of a "majority of the outstanding voting securities"
of the Fund, which is defined in the Act as the lesser of (a) 67 percent or more
of the shares  present at a Fund  meeting if the holders of more than 50 percent
of the outstanding shares of the Fund are present or represented by proxy or (b)
more than 50 percent of the outstanding shares. The Funds' investment objectives
are fundamental  policies.  A fundamental policy affecting a particular Fund may
not be  changed  without  the  vote  of a  majority  of the  outstanding  voting
securities of the affected Fund.  Investment  restrictions  14 through 18 may be
changed by vote of a majority of the Board of Trustees at any time.

The  investment  policies  adopted by the Trust  prohibit  each Fund,  except as
otherwise noted, from:

1.  Purchasing  the  securities  of  any  issuer,  other  than  U.S.  Government
securities,  if as a result  more than five  percent  of the value of the Fund's
total assets would be invested in the  securities of the issuer,  except that up
to 25 percent of the value of the Fund's (other than Alger Money Market  Fund's)
total assets may be invested without regard to this limitation.


2. Purchasing more than 10 percent of the outstanding  voting  securities of any
one issuer or more than 10 percent of the outstanding  voting  securities of any
class of any one issuer.  This limitation shall not apply to investments in U.S.
Government securities.


3. Selling securities short or purchasing  securities on margin, except that the
Fund may obtain any short-term  credit  necessary for the clearance of purchases
and sales of  securities.  These  restrictions  shall not apply to


                                      -9-




transactions involving selling securities "short against the box."


4.  Borrowing  money,  except  that (a) all Funds may  borrow for  temporary  or
emergency  purposes  including  the meeting of  redemption  requests  that might
otherwise  require the  untimely  disposition  of  securities,  in an amount not
exceeding  10 percent of the value of the Fund's  total  assets  (including  the
amount borrowed)  valued at the lesser of cost or market,  less liabilities (not
including  the amount  borrowed) at the time the  borrowing  is made;  (b) Alger
Money Market Fund and Alger Balanced Fund may engage in  transactions in reverse
repurchase  agreements;  and (c) Alger  SmallCap and MidCap  Growth Fund,  Alger
Capital  Appreciation  Fund and Alger Health Sciences Fund may borrow from banks
for investment purposes in order to leverage (see "Borrowing"  above).  Whenever
borrowings described in (a) exceed five percent of the value of the Fund's total
assets, the Fund will not make any additional investments. Immediately after any
borrowing, including reverse repurchase agreements, the Fund will maintain asset
coverage of not less than 300 percent with respect to all borrowings.

5. Pledging,  hypothecating,  mortgaging or otherwise  encumbering  more than 10
percent  of the value of the  Fund's  total  assets  except in  connection  with
borrowings  as  noted in 4(c)  above.  These  restrictions  shall  not  apply to
transactions   involving  reverse  repurchase  agreements  or  the  purchase  of
securities subject to firm commitment agreements or on a when-issued basis.


6. Issuing senior  securities,  except in connection with  borrowings  permitted
under restriction 4.


7. Underwriting the securities of other issuers,  except insofar as the Fund may
be deemed to be an underwriter under the Securities Act of 1933, as amended,  by
virtue of disposing of portfolio securities.


8. Making loans to others, except through purchasing qualified debt obligations,
lending portfolio securities or entering into repurchase agreements.


9. Investing in securities of other investment companies,  except as they may be
acquired  as part of a merger,  consolidation,  reorganization,  acquisition  of
assets or offer of exchange,  except that Alger  SmallCap and MidCap Growth Fund
and Alger Health Sciences Fund may invest in other  investment  companies to the
extent permitted by applicable law.

10. Purchasing any securities that would cause more than 25 percent of the value
of the  Fund's  total  assets  to be  invested  in  the  securities  of  issuers
conducting their principal  business  activities in the same industry;  provided
that (a) there shall be no limit on the purchase of U.S. Government  securities,
(b)  there  shall be no limit on the  purchase  by Alger  Money  Market  Fund of
obligations issued by bank and thrift  institutions  described in the Prospectus
and this Statement of Additional  Information and (c) Alger Health Sciences Fund
will invest in the securities of issuers in the health sciences sector,  and the
group of industries that make up the health sciences  sector,  without limit, as
contemplated by its investment strategy.

11. Investing in commodities, except that Alger SmallCap and MidCap Growth Fund,
Alger Capital  Appreciation  Fund and Alger Health Sciences Fund may purchase or
sell stock index futures  contracts and related options thereon if,  thereafter,
no more than 5 percent of the Fund's  total  assets are  invested  in margin and
premiums.

12. Investing more than 10 percent (15 percent in the case of Alger SmallCap and
MidCap Growth Fund,  Alger Capital  Appreciation  Fund and Alger Health Sciences
Fund) of its net assets in  securities  which are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily available market.
However,  securities  with legal or  contractual  restrictions  on resale may be
purchased by Alger Money Market Fund if they are  determined  to be liquid,  and
such  purchases  would not be subject to the 10 percent limit stated above.  The
Board of Trustees will in good faith  determine the specific types of securities
deemed to be liquid and the value of such  securities held in Alger Money Market
Fund.  Alger Money Market Fund will not purchase time deposits  maturing in more
than seven calendar days and will limit to no more than 10 percent of its assets
its  investment  in time  deposits  maturing  in  excess of two  business  days,
together with all other illiquid securities.

13.  Purchasing  or selling  real  estate or real estate  limited  partnerships,
except that the Fund may  purchase and sell  securities  secured by real estate,
mortgages or interests  therein and securities that are issued by companies that
invest or deal in real estate.

14. Writing or selling puts, calls, straddles,  spreads or combinations thereof,
except that Alger  SmallCap and MidCap Growth Fund,  Alger Capital  Appreciation
Fund and Alger Health Sciences Fund may buy and sell (write) options.


                                      -10-





15. Investing in oil, gas or other mineral exploration or development  programs,
except that the Fund may invest in the securities of companies that invest in or
sponsor those programs.


16. Making investments for the purpose of exercising control or management.


17. Investing in warrants,  except that the Fund may invest in warrants if, as a
result, the investments (valued at the lower of cost or market) would not exceed
five  percent of the value of the Fund's net assets,  of which not more than two
percent of the Fund's net assets may be  invested  in  warrants  not listed on a
recognized  domestic stock exchange.  Warrants acquired by the Fund as part of a
unit or attached to  securities  at the time of  acquisition  are not subject to
this limitation.

18. Purchasing or retaining the securities of any issuer if, to the knowledge of
the Trust,  any of the  officers,  directors  or  trustees of the Trust or Alger
Management  individually owns more than .5 percent of the outstanding securities
of the issuer and together they own  beneficially  more than five percent of the
securities.

Shares of Alger  LargeCap  Growth  Fund,  Alger  SmallCap  Growth Fund and Alger
MidCap Growth Fund are registered for sale in Germany. As long as Alger LargeCap
Growth  Fund,  Alger  SmallCap  Growth  Fund and Alger  MidCap  Growth  Fund are
registered  in  Germany,  these Funds may not  without  prior  approval of their
shareholders:


   a. Invest in the  securities  of any other  domestic  or  foreign  investment
      company or investment  fund except in connection  with a plan of merger or
      consolidation  with or acquisition of substantially all the assets of such
      other investment company or investment fund;


   b. Purchase  or sell real  estate or any  interest  therein,  and real estate
      mortgage  loans,  except  that the  Funds  may  invest  in  securities  of
      corporate or  governmental  entities  secured by real estate or marketable
      interests  therein or  securities  issued by  companies  (other  than real
      estate limited partnerships, real estate investment trusts and real estate
      funds) that invest in real estate or interests therein;

   c. Borrow  money,  except for  temporary  or emergency  (but not  leveraging)
      purposes including the meeting of redemption requests that might otherwise
      require the untimely disposition of securities, in an amount not exceeding
      10 percent of the value of the Fund's total assets  (including  the amount
      borrowed)  valued at the lesser of cost or market,  less  liabilities (not
      including the amount borrowed) at the time the borrowing is made;


   d. Pledge, hypothecate, mortgage or otherwise encumber their assets except to
      secure indebtedness permitted under section c.;

   e. Purchase securities on margin or make short sales; or

   f. Redeem their securities in kind.


These  Funds will  comply  with the more  restrictive  policies  required by the
German  regulatory  authorities,  as  stated  above,  as long as such  Funds are
registered in Germany.

Except  in the  case of the 300  percent  limitation  set  forth  in  Investment
Restriction  No. 4 and as may be stated  otherwise,  the percentage  limitations
contained  in the  foregoing  restrictions  and in the Funds'  other  investment
policies  apply  at the  time  of the  purchase  of the  securities  and a later
increase or decrease in percentage  resulting from a change in the values of the
securities or in the amount of the Fund's assets will not constitute a violation
of the restriction.

FUND TRANSACTIONS

Decisions to buy and sell securities and other financial  instruments for a Fund
are made by Alger  Management,  which  also is  responsible  for  placing  these
transactions,  subject to the overall  review of the Trust's  Board of Trustees.
Although investment  requirements for each Fund are reviewed  independently from
those of the other accounts  managed by Alger  Management and those of the other
Funds,  investments  of the  type the  Funds  may make may also be made by these
other  accounts  or Funds.  When a Fund and one or more other  Funds or accounts
managed by Alger  Management are prepared to invest in, or desire to dispose of,
the same  security  or other  financial  instrument,  available  investments  or
opportunities  for  sales  will be  allocated  in a  manner  believed  by  Alger
Management  to be equitable to each.  In some cases,  this  procedure may affect
adversely  the  price  paid or  received  by a Fund or the size of the  position
obtained or disposed of by a Fund.


Transactions  in equity  securities  are in many cases  effected  on U. S. stock
exchanges and involve the payment of negotiated brokerage commissions.  There is
generally  no  stated  commission  in  the  case  of  securities  traded  in the
over-the-counter markets, but the prices of those securities include undisclosed
commissions  or mark-ups.  Purchases and sales of money market  instruments  and
debt  securities  usually  are  principal  trans-

                                      -11-




actions.  These  securities are normally  purchased  directly from the issuer or
from an underwriter or market maker for the  securities.  The cost of securities
purchased from  underwriters  includes an underwriting  commission or concession
and the  prices  at which  securities  are  purchased  from and sold to  dealers
include a  dealer's  mark-up  or  mark-down.  U. S.  Government  securities  are
generally purchased from underwriters or dealers,  although certain newly-issued
U. S. Government securities may be purchased directly from the U. S. Treasury or
from the issuing agency or instrumentality.


To the extent consistent with applicable provisions of the Act and the rules and
exemptions  adopted  by  the  SEC  thereunder,   as  well  as  other  regulatory
requirements,   the  Trust's  Board  of  Trustees  has   determined   that  Fund
transactions   will  generally  be  executed   through  Fred  Alger  &  Company,
Incorporated ("Alger Inc."), a registered broker-dealer,  if, in the judgment of
Alger  Management,  the use of Alger  Inc.  is  likely  to  result  in price and
execution at least as favorable as those of other qualified  broker-dealers  and
if, in  particular  transactions,  Alger Inc.  charges the Fund  involved a rate
consistent  with that charged to  comparable  unaffiliated  customers in similar
transactions.  Over-the-counter purchases and sales are transacted directly with
principal  market  makers  except  in those  cases in which  better  prices  and
executions may be obtained  elsewhere.  Principal  transactions  are not entered
into with  affiliates of the Fund except  pursuant to exemptive  rules or orders
adopted by the SEC.

In selecting brokers or dealers to execute portfolio transactions on behalf of a
Fund, Alger Management seeks the best overall terms available.  In assessing the
best overall terms available for any transaction, Alger Management will consider
the  factors  it deems  relevant,  including  the  breadth  of the market in the
investment,  the price of the investment,  the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission,  if
any, for the specific transaction and on a continuing basis. In addition,  Alger
Management  is  authorized,   in  selecting  parties  to  execute  a  particular
transaction and in evaluating the best overall terms available,  to consider the
brokerage and research services,  as those terms are defined in section 28(e) of
the Securities Exchange Act of 1934, as amended,  provided to the Fund involved,
the other  Funds  and/or  other  accounts  over which  Alger  Management  or its
affiliates exercise investment discretion.  The Trust will consider sales of its
shares  as  a  factor   in  the   selection   of   broker-dealers   to   execute
over-the-counter  transactions,  subject to the  requirements  of best price and
execution.  Alger  Management's fees under its agreements with the Funds are not
reduced by reason of its receiving brokerage and research service.  The Board of
Trustees will periodically review the commissions paid by the Funds to determine
if the commissions  paid over  representative  periods of time are reasonable in
relation to the  benefits  inuring to the Funds.  During the fiscal  years ended
October 31,  2001,  2002 and 2003 the Fund paid an  aggregate  of  approximately
$6,104,818,  $15,195,123  and  $14,979,156  in brokerage  commissions,  of which
approximately $6,103,255, $10,589,631 and $8,851,245,  respectively, was paid to
Alger  Inc.  The  commissions  paid to Alger Inc.  during the fiscal  year ended
October 31, 2003 constituted 59% of the aggregate brokerage  commissions paid by
the Fund;  during that year, 66% of the aggregate  dollar amount of transactions
by the Fund involving the payment of brokerage  commissions was effected through
Alger Inc.  Alger Inc. does not engage in principal  transactions  with the Fund
and,  accordingly,  received  no  compensation  in  connection  with  securities
purchased  or  sold in that  manner,  which  include  securities  traded  in the
over-the-counter  markets,  money market  investments and most debt  securities.
Aggregate  brokerage  commissions paid during the fiscal years ended October 31,
2002 and 2003 significantly  exceeded those paid in the prior year due to higher
portfolio   turnover  and  the  payment  of  commissions   in   over-the-counter
transactions  that would  previously  have been  executed on a principal  basis.
During the  fiscal  year ended  October  31,  2003,  $222,170,757  in  portfolio
transactions,  incurring  $599,117 in commissions,  was allocated to brokers who
supplied research to the Fund or Alger Management.


NET ASSET VALUE


The price of one  share of a class is based on its "net  asset  value."  The net
asset value is computed by adding the value of the Fund's  investments plus cash
and other assets allocable to the class,  deducting  applicable  liabilities and
then dividing the result by the number of its shares outstanding.  The net asset
value of a share of a given  class may  differ  from  that of one or more  other
classes.  Net asset value is  calculated  as of the close of business  (normally
4:00 p.m.  Eastern  time) or,  for Alger  Money  Market  Fund,  as of 12:00 noon
Eastern time on each day the New York Stock Exchange ("NYSE") is open.

Purchases  for Alger Money  Market Fund will be processed at the net asset value
calculated  after your order


                                      -12-




is received and  accepted.  If your  purchase is made by wire and is received by
12:00 noon  Eastern  time,  your  account  will be  credited  and begin  earning
dividends on the day of receipt.  If your wire purchase is received  after 12:00
noon Eastern  time,  it will be credited and begin  earning  dividends  the next
business day.  Exchanges are credited the day the request is received by mail or
telephone,  and begin earning  dividends the next business day. If your purchase
is made by check,  and  received by the close of business of the NYSE  (normally
4:00 p.m.  Eastern  time),  it will be credited and begin earning  dividends the
next business day.


Purchases  for the  other  Funds  will be based  upon the next net  asset  value
calculated  for each class after your order is received  and  accepted.  If your
purchase  is made by check,  wire or  exchange  and is  received by the close of
business of the NYSE  (normally 4:00 p.m.  Eastern  time),  your account will be
credited on the day of receipt. If your purchase is received after such time, it
will be credited the next business day.


The NYSE is generally open on each Monday through Friday, except New Year's Day,
Martin  Luther King,  Jr. Day,  Presidents'  Day (the third Monday in February),
Good Friday,  Memorial Day (the last Monday in May), Independence Day, Labor Day
(the first  Monday in  September),  Thanksgiving  Day (the  fourth  Thursday  in
November) and Christmas Day.


The assets of the Funds other than Alger Money Market Fund are generally  valued
on the basis of market  quotations.  Securities  whose principal market is on an
exchange or in the over-the-counter market are valued at the last reported sales
price or, in the  absence of  reported  sales,  at the mean  between the bid and
asked price or, in the absence of a recent bid or asked price, the equivalent as
obtained  from one or more of the major market  makers for the  securities to be
valued.  Bonds and other  fixed-income  securities may be valued on the basis of
prices provided by a pricing service when the Trust's Board of Trustees believes
that  these  prices  reflect  the fair  market  value of the  securities.  Other
investments and other assets, including restricted securities and securities for
which  market  quotations  are not readily  available,  are valued at fair value
under procedures approved by the Board of Trustees.  Short-term  securities with
maturities of 60 days or less are valued at amortized cost, as described  below,
which constitutes fair value as determined by the Board of Trustees.

The  valuation of the  securities  held by Alger Money  Market Fund,  as well as
money market  instruments  with  maturities of 60 days or less held by the other
Funds,  is  based on their  amortized  cost  which  does not take  into  account
unrealized capital gains or losses.  Amortized cost valuation involves initially
valuing  an  instrument  at  its  cost  and   thereafter   assuming  a  constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument.  Although this
method  provides  certainty in valuation,  it may result in periods during which
value, as determined by amortized cost, is higher or lower than the price a Fund
would receive if it sold the instrument.

Alger  Money  Market  Fund's use of the  amortized  cost  method of valuing  its
securities is permitted by a rule adopted by the SEC.  Under this rule, the Fund
must maintain a dollar-weighted  average portfolio  maturity of 90 days or less,
purchase only instruments having remaining  maturities of less than 397 days, as
determined in  accordance  with the  provisions of the rule,  and invest only in
securities  determined by Alger Management,  acting under the supervision of the
Trust's Board of Trustees, to be of high quality with minimal credit risks.

Pursuant to the rule,  the Board of  Trustees  also has  established  procedures
designed to stabilize,  to the extent  reasonably  possible,  Alger Money Market
Fund's price per share as computed for the purpose of sales and  redemptions  at
$1.00.  These  procedures  include review of the Fund's holdings by the Board of
Trustees,  at such intervals as it deems  appropriate,  to determine whether the
Fund's net asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost.

The rule also provides  that the extent of any deviation  between the Fund's net
asset value based on available market quotations or market equivalents and $1.00
per share net asset value based on amortized  cost must be examined by the Board
of  Trustees.  In the event the Board of  Trustees  determines  that a deviation
exists that may result in material dilution or other unfair results to investors
or existing shareholders,  pursuant to the rule the Board of Trustees must cause
the Fund to take such  corrective  action as the Board of  Trustees  regards  as
necessary and appropriate,  including:  selling  portfolio  instruments prior to
maturity  to realize  capital  gains or losses or to shorten  average  portfolio
maturity,  withholding dividends or paying distributions from capital or capital
gains,  redeeming  shares in kind or  establishing  net asset value per share by
using available market quotations.


                                      -13-



CLASSES OF SHARES


As described in the  Prospectus,  the equity Funds have three classes of shares:
Class A Shares, which are generally subject to a front-end load, Class B Shares,
which are generally  subject to a back-end load,  and Class C Shares,  which are
generally subject to a front-end load and a back-end load.


CLASS A SHARES AND CLASS C SHARES

From time to time, Alger Inc. may reallow to brokers or financial intermediaries
all or substantially all of the initial sales charge. To the extent that it does
so, such persons may be deemed to be  underwriters of the Fund as defined in the
Securities Act of 1933, as amended.

CONVERSION OF CLASS B AND CLASS C SHARES


Class B Shares,  and Class C Shares  purchased  prior to  August 1,  2000,  will
automatically  convert to Class A Shares eight and twelve  years,  respectively,
after the end of the calendar  month in which the order to purchase was accepted
and will  thereafter not be subject to the original  Class' Rule 12b-1 fees. The
conversion  will be  completed on the basis of the relative net asset values per
share  without the  imposition  of any sales  charge,  fee or other  charge.  At
conversion,  a proportionate amount of shares representing  reinvested dividends
and reinvested capital gains will also be converted into Class A Shares. Because
Alger Money Market Fund is not subject to any distribution  fees, the running of
the  applicable  conversion  period is suspended for any period of time in which
shares received in exchange for Class B or Class C Shares are held in that Fund.


The conversion of Class B Shares and Class C Shares is subject to the continuing
availability  of an opinion of counsel  to the  effect  that the  conversion  of
shares does not  constitute a taxable event under Federal  income tax laws.  The
conversion  of Class B and Class C Shares may be suspended if such an opinion is
no longer available.

CLASS C SHARES PURCHASED AFTER AUGUST 1, 2000

Class C Shares purchased on or after August 1, 2000, are generally  subject to a
1% front-end load. Furthermore, Class C Shares purchased after that date will no
longer be eligible for conversion to Class A Shares after twelve years. As Class
C Shares they will remain subject to the Class's annual Rule 12b-1 fee.

Conversion  from one class to  another is not  subject to the Funds'  redemption
fee.

PURCHASES


Shares of the Funds are offered continuously by the Trust and are distributed on
a best  efforts  basis by Alger  Inc.  as  principal  underwriter  for the Funds
pursuant to distribution agreements (the "Distribution  Agreements").  Under the
Distribution  Agreements,  Alger Inc. bears all selling expenses,  including the
costs of  advertising  and of printing  prospectuses  and  distributing  them to
prospective  shareholders.  Each of the officers of the Trust is an  "affiliated
person," as defined in the Act, of the Fund and of Alger Inc.

The  Funds  do not  accept  cash  or  cash  alternatives  for  share  purchases.
Third-party checks will not be honored except in the case of  employer-sponsored
retirement plans. You will be charged a fee for any check returned by your bank.

Investors may exchange  stock of companies  acceptable to Alger  Management  for
shares of the Funds with a minimum of 100 shares of each company generally being
required.  The Trust believes such exchange provides a means by which holders of
certain  securities  may invest in the Funds  without the expense of selling the
securities in the open 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 Fund's  securities  are valued each day.  Shares of the Fund having an equal
net asset as of the close of the same day will be registered  in the  investor's
name.  Applicable sales charges,  if any, will apply, but there is 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.

CONFIRMATIONS AND ACCOUNT STATEMENTS

All of your transactions through the Transfer Agent, Alger Shareholder Services,
Inc., will be confirmed on separate  written  transaction  confirmations  and on
periodic  account  statements.  You should  promptly  and  carefully  review the
transaction  confirmations and period statements  provided to you and notify the
Transfer Agent in writing of any discrepancy or unauthorized  account  activity.
Any information  contained on transaction  confirmations and account  statements
will  be  conclusive  unless  you  notify  the  Transfer  Agent  of an  apparent
discrepancy or unauthorized account activity within ten (10) business days after
the information is transmitted to you.

DISTRIBUTION PLANS

As stated in the Prospectus,  in connection with the distribution  activities of
Alger Inc.  in respect of the

                                      -14-





Funds'  Class B and Class C Shares,  respectively,  the  Trust has  adopted  two
Distribution  Plans (the "Plans")  pursuant to Rule 12b-1 under the Act, one for
each  class.  In each  case,  the Rule  12b-1  fee,  sometimes  described  as an
"asset-based  sales  charge,"  allows  investors to buy shares with little or no
initial sales charge while allowing  Alger Inc. to compensate  dealers that sell
Class B or Class C Shares of the Funds. Typically, Alger Inc., in its discretion
or pursuant to dealer  agreements,  pays sales  commissions  of up to 4% (5% for
non-U.S.  dealers) of the amount invested in Class B Shares, and up to 1% of the
amount invested in Class C Shares, to dealers from its own resources at the time
of sale and pays continuing  commissions after purchase to dealers selling Class
C Shares.  In  addition,  the 1% initial  sales charge on Class C shares is also
reallowed to dealers.  For Class B Shares,  Alger Inc.  retains the  asset-based
sales charge to recoup the sales  commissions and other  sales-related  expenses
its pays. For Class C Shares,  the asset-based sales charge is retained by Alger
Inc. in the first year after purchase;  in subsequent years, all or a portion of
it typically is paid to the dealers who sold the Class C Shares.  In some cases,
the selling dealer is Alger Inc.

The Class B Plan is a "reimbursement"  plan under which Alger Inc. is reimbursed
for its actual  distribution  expenses.  Any  contingent  deferred sales charges
("CDSCs") on Class B Shares  received by Alger Inc. will reduce the amount to be
reimbursed  under  the  Class B  Plan.  Under  the  Class  B  Plan,  any  excess
distribution expenses may be carried forward,  with interest,  and reimbursed in
future  years.  At October 31,  2003,  the  following  approximate  amounts were
carried forward under the Class B Plan: Alger SmallCap Growth  Fund--$15,450,000
(8.9% of net assets); Alger MidCap Growth Fund--$8,176,000 (1.3% of net assets);
Alger LargeCap  Growth  Fund--$18,622,000  (3.3% of net assets);  Alger Balanced
Fund--$4,822,000    (1.8%   of   net   assets);   Alger   Capital   Appreciation
Fund--$23,186,000  (4.7% of net  assets);  Alger Health  Sciences  Fund--$55,000
(0.4% of net assets);  and Alger SmallCap and MidCap Growth  Fund--$21,000 (0.2%
of net assets).


Reimbursable  distribution  expenses  covered under the Class B Plan may include
payments made to and expenses of persons who are engaged in, or provide  support
services in connection  with, the  distribution  of the class'  shares,  such as
answering routine telephone inquiries for prospective shareholders; compensation
in the form of sales concessions and continuing  compensation paid to securities
dealers  whose  customers  hold  shares  of  the  class;  costs  related  to the
formulation  and   implementation  of  marketing  and  promotional   activities,
including direct mail promotions and television,  radio, newspaper, magazine and
other mass media  advertising;  costs of printing and distributing  prospectuses
and  reports  to  prospective  shareholders  of the  class;  costs  involved  in
preparing,  printing and distributing  sales literature for the class; and costs
involved in obtaining whatever information, analyses and reports with respect to
marketing and promotional  activities on behalf of the class that the Fund deems
advisable.


Historically,  distribution  expenses  incurred by Alger Inc.  have exceeded the
Class B assets available for  reimbursement  under the Plan; it is possible that
in the future the converse may be true. Distribution expenses incurred in a year
in respect of Class B Shares of a Fund in excess of CDSCs received by Alger Inc.
relating to  redemptions of shares of the class during that year and .75 percent
of the class'  average daily net assets may be carried  forward and sought to be
reimbursed in future years.  Interest at the prevailing  broker loan rate may be
charged to the applicable  Fund's Class B Shares on any expenses carried forward
and those  expenses  and interest  will be reflected as current  expenses on the
Fund's  statement  of  operations  for the  year in  which  the  amounts  become
accounting  liabilities,  which is  anticipated  to be the  year in which  these
amounts are actually  paid.  Although  the Trust's  Board of Trustees may change
this policy, it is currently  anticipated that payments under the Plan in a year
will be applied first to distribution  expenses  incurred in that year and then,
up to the maximum amount  permitted  under the Plan, to previously  incurred but
unreimbursed expenses carried forward plus interest thereon.


The Plan for Class C Shares  annually pays a flat percentage (up to .75 percent)
of the class' average daily net assets to Alger Inc.,  regardless of whether the
associated  distribution  expenses incurred are higher or lower than the fee. No
excess  distribution  expense shall be carried forward to subsequent years under
this Plan.  Distribution  services for which Alger Inc. is compensated under the
Class C Plan may  include,  but are not limited to,  organizing  and  conducting
sales  seminars,  advertising  programs,  payment of finders' fees,  printing of
prospectuses and statements of additional information and reports for other than
existing shareholders,  preparation and distribution of advertising material and
sales  literature,   overhead,   supplemental  payments  to  dealers  and  other
institutions  as  asset-based  sales  charges or as payments of  commissions  or
service fees, and the costs of administering the Plan.


Alger Inc. has  acknowledged  that  payments  under the Plans are subject to the
approval of the Board of Trustees and that no Fund is contractually obligated to
make pay-


                                      -15-




ments in any amount or at any time, including payments in reimbursement of Alger
Inc. for expenses and interest thereon incurred in a prior year.


Under their terms,  the Plans remain in effect from year to year,  provided such
continuation  is approved in each case  annually by vote of the Trust's Board of
Trustees, including a majority of the Trustees who are not interested persons of
the Trust and who have no direct or indirect financial interest in the operation
of the Plan  ("Independent  Trustees").  A Plan may not be amended  to  increase
materially  the  amount  to be spent for the  services  provided  by Alger  Inc.
without the approval of shareholders of the applicable  class,  and all material
amendments  of a Plan must be approved by the  Trustees in the manner  described
above.  A Plan may be  terminated  at any time,  without  penalty,  by vote of a
majority of the Independent  Trustees or, with respect to the Class B or Class C
Shares  of any  Fund to which a Plan  relates,  by a vote of a  majority  of the
outstanding  voting  securities of the class,  on not more than 30 days' written
notice to any other party to the Plan. If a Plan is  terminated,  or not renewed
with respect to any one or more Funds, it may continue in effect with respect to
the  Class  B or  Class  C  Shares  of any  Fund as to  which  it has  not  been
terminated,  or has been  renewed.  Alger  Inc.  will  provide  to the  Board of
Trustees  quarterly  reports of amounts expended under each Plan and the purpose
for which such  expenditures were made. During the fiscal year ended October 31,
2003, the Fund reimbursed  approximately  $8,510,000 to Alger Inc. as the Fund's
underwriter,  under the  provisions  of the Class B Shares'  Plan.  Alger Inc.'s
selling  expenses  during that period  totaled  $9,806,000,  which  consisted of
$434,000 in printing and mailing of prospectuses  and other sales  literature to
prospective  investors;  $715,000 in advertising;  $3,376,000 in compensation to
dealers;  $2,891,000  in  compensation  to sales  personnel;  $179,000  in other
marketing  expenses;  and  $2,211,000 in interest,  carrying or other  financing
charges.  If in any month, the costs incurred by Alger Inc. are in excess of the
distribution  expenses  charged  to Class B Shares of a Fund,  the excess may be
carried forward, with interest, and sought to be paid in future periods.  During
the fiscal year ended October 31, 2003, the Fund paid  approximately  $1,374,000
to Alger Inc. under the provisions of the Class C Shares' Plan.

The  Trust has not  adopted  a  Distribution  Plan for the  Money  Market  Fund;
however,  Alger Inc. or the Fund's investment  adviser,  Alger Management,  may,
from its own resources  without  reimbursement by the Fund,  compensate  dealers
that have sold shares of the Fund.


SHAREHOLDER SERVICING AGREEMENT


Payments under the Shareholder  Servicing  Agreement are not tied exclusively to
the  shareholder  servicing  expenses  actually  incurred by Alger Inc.  and the
payments  may exceed  expenses  actually  incurred  by Alger  Inc.  The Board of
Trustees evaluates the  appropriateness of the Shareholder  Servicing  Agreement
and its  payment  terms on a  continuing  basis  and in doing so  considers  all
relevant  factors,  including  expenses  borne by Alger Inc.  and the amounts it
receives under the Shareholder Servicing Agreement. During the fiscal year ended
October 31, 2003,  the Funds paid  approximately  $4,775,000 to Alger Inc. under
the Shareholder Servicing Agreement.

EXPENSES OF THE FUNDS

Each Fund will bear its own expenses. Operating expenses for each Fund 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.  In addition,  Class B and Class C of
each Fund other than Alger  Money  Market Fund may pay Alger Inc.  for  expenses
incurred in distributing  shares of that class and each such Fund may compensate
Alger  Inc.  for  servicing   shareholder   accounts.   Trustwide  expenses  not
identifiable  to any  particular  Fund or class  will be  allocated  in a manner
deemed fair and  equitable  by the Board of Trustees.  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 Funds while  retaining the ability to be
paid by the  applicable  Fund for such  amounts  prior to the end of the  fiscal
year.  This will have the  effect of  lowering  the  applicable  Fund'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.


PURCHASES THROUGH PROCESSING ORGANIZATIONS


You can purchase and redeem shares through a "Processing Organization," which is
a  broker-dealer,  bank or other financial  institution that purchases shares of
one or more  Funds for its  clients  or  customers.  The Trust may  authorize  a
Processing   Organization   to  receive,   or  to  designate   other   financial
organizations to receive,  purchase and redemption orders on a Fund's behalf. In
the case,  the Fund will be deemed to have received an


                                      -16-





order when the Processing Organization or its intermediary receives it in proper
form,  and the order will be processed  based on the net asset value of the Fund
next  calculated  after the order is received  in proper form by the  Processing
Organization or its designee.

When shares are purchased this way, the Processing Organization, rather than its
customer,  may be the  shareholder of record of the shares.  The minimum initial
and subsequent  investments in classes of the Funds for  shareholders who invest
through a Processing  Organization  will be set by the Processing  Organization.
Processing  Organizations  may charge their  customers a fee in connection  with
services offered to customers.


TELEPURCHASE PRIVILEGE


The price the  shareholder  will receive will be the price next  computed  after
Alger Shareholder  Services,  Inc. ("Services" or the "Transfer Agent") receives
the investment from the  shareholder's  bank, which is normally one banking day.
While  there  is no  charge  to  shareholders  for this  service,  a fee will be
deducted from a shareholder's  Fund account in case of insufficient  funds. This
privilege  may be  terminated  at any time  without  charge  or  penalty  by the
shareholder,  the Trust,  the Transfer  Agent or Alger Inc.  Class A and Class C
Share purchases will remain subject to the initial sales charge.


AUTOMATIC INVESTMENT PLAN


While  there  is no  charge  to  shareholders  for this  service,  a fee will be
deducted from a shareholder's Fund account in the case of insufficient  funds. A
shareholder's  Automatic  Investment  Plan may be terminated at any time without
charge or penalty by the  shareholder,  the Trust,  the Transfer  Agent or Alger
Inc.  Transfers from your bank account to a Trust-sponsored  retirement  account
are  considered  current-year  contributions.  If the fifteenth day of the month
falls on a weekend  or a NYSE  holiday,  the  purchase  will be made on the next
business day.  Class A and Class C Share  purchases  will remain  subject to the
initial sales charge.


AUTOMATIC EXCHANGE PLAN


The Trust also offers an Automatic Exchange Plan which permits you to exchange a
specified  amount from your Alger Money  Market Fund account into one or more of
the other Funds on or about the fifteenth day of the month.  The minimum monthly
exchange amount is $25 per Fund.

There is no charge to shareholders for this service.  A shareholder's  Automatic
Exchange  Plan may be  terminated  at any time without  charge or penalty by the
shareholder,  the  Trust,  the  Transfer  Agent or Alger Inc.  If the  automatic
exchange  amount  exceeds the Alger Money  Market Fund  balance,  any  remaining
balance in Alger Money Market Fund will be exchanged. Shares held in certificate
form are not eligible for this service. Class A and Class C Share purchases will
remain subject to the initial sales charge.


RIGHT OF ACCUMULATION (CLASS A SHARES)


Class A Shares of the Fund may be purchased by "any person"  (which  includes an
individual, his or her spouse and children, or a trustee or other fiduciary of a
single trust,  estate or single fiduciary  account) at a reduced sales charge as
determined by aggregating  the dollar amount of the new purchase and the current
value (at offering price) of all Class A Shares of the Funds,  other than shares
of the Money Market Fund, then held by such person and applying the sales charge
applicable to such  aggregate.  In order to obtain such discount,  the purchaser
must  provide  sufficient   information  at  the  time  of  purchase  to  permit
verification that the purchase qualifies for the reduced sales charge. The right
of accumulation is subject to  modification or  discontinuance  at any time with
respect to all shares purchased thereafter.


LETTER OF INTENT (CLASS A SHARES)


A Letter of Intent ("LOI") contemplating aggregate purchases of $100,000 or more
provides an  opportunity  for an investor  to obtain a reduced  sales  charge by
aggregating  investments  over a 13-month  period,  provided  that the  investor
refers to such LOI when placing  orders.  For  purposes of a LOI, the  "Purchase
Amount" as  referred to in the sales  charge  table in the  Prospectus  includes
purchases by "any person" (as defined  above) of all Class A Shares of the Funds
offered with a sales charge over the following 13 months.  An  alternative is to
compute the 13-month  period starting up to 90 days before the date of execution
of the LOI.

The minimum initial investment under the LOI is 5% of the total LOI amount. Each
investment  in Class A Shares made during the period  receives the reduced sales
charge  applicable to the total amount of the investment goal.  Shares purchased
with the first 5% of the total LOI amount will be held in escrow by the Transfer
Agent to assure any necessary payment of a higher applicable sales charge if the
investment goal is not met. If the goal is not achieved  within the period,  the
investor must pay the  difference  between the sales  charges  applicable to the
purchases  made and the charges  previously  paid, or an  appropriate  number of
escrowed shares will be redeemed.


                                      -17-




REDEMPTIONS


The right of  redemption  of shares  of a Fund may be  suspended  or the date of
payment  postponed for more than seven days (a) for any periods during which the
NYSE is closed (other than for customary weekend and holiday closings), (b) when
trading  in  the  markets  the  Fund  normally  utilizes  is  restricted,  or an
emergency,  as defined by the rules and regulations of the SEC,  exists,  making
disposal of the Fund's  investments or determination of its net asset values not
reasonably  practicable  or (c) for such  other  periods as the SEC by order may
permit for protection of the Fund's shareholders.


No interest  will accrue on amounts  represented  by  uncashed  distribution  or
redemption checks.


CHECK REDEMPTION PRIVILEGE (ALGER MONEY MARKET FUND)

You may redeem shares in your Alger Money Market Fund account by writing a check
for at least $500.  Dividends are earned until the check clears. If you mark the
appropriate box on the New Account  Application and sign the signature card, the
Fund will send you redemption checks. There is no charge for this privilege.

Your redemption may be increased to cover any applicable  CDSC (see  "Contingent
Deferred Sales Charge").  If your account is not adequate to cover the amount of
your  check  and  any  applicable  CDSC,  the  check  will  be  returned  marked
"insufficient  funds."  As a  result,  checks  should  not be used to  close  an
account.  Shares  held  in any  Alger  retirement  plan  and  shares  issued  in
certificate form are not eligible for this service.

Unless investors elect otherwise, checks drawn on jointly-owned accounts will be
honored with the signature of either of the joint owners. Shareholders should be
aware that use of the check redemption procedure does not give rise to a banking
relationship  between the  shareholder  and the  Transfer  Agent,  which will be
acting  solely as  transfer  agent  for the  Fund;  nor does it create a banking
relationship between the shareholder and the Trust. When a check is presented to
the Transfer Agent for payment,  the Transfer  Agent,  as the investor's  agent,
will cause the Trust to redeem a sufficient number of shares from the investor's
account to cover the amount of the check.

The check redemption  privilege may be modified or terminated at any time by the
Trust or by the Transfer Agent.


TELEPHONE REDEMPTIONS


You  automatically  have the ability to make redemptions by telephone unless you
refuse the telephone redemption privilege.  To sell shares by telephone,  please
call (800) 992-3863.  If your  redemption  request is received before 12:00 noon
Eastern  time for  Alger  Money  Market  Fund,  your  redemption  proceeds  will
generally  be mailed on the next  business  day.  Redemption  requests for Funds
other than Alger Money  Market Fund  received  prior to the close of business of
the NYSE (normally 4:00 p.m.  Eastern time) will generally be mailed on the next
business day.  Requests  received  after 12:00 noon Eastern time for Alger Money
Market Fund will  generally  be mailed on the business  day  following  the next
business  day.  Shares held in any Alger  retirement  plan and shares  issued in
certificate form are not eligible for this service.

Redemption  proceeds  are  mailed to the  address  of record.  Any  request  for
redemption  proceeds to be sent to the address of record must be in writing with
the  signature(s)  guaranteed  if made within 60 days of changing  your address.
Redemption  requests  made before 12:00 noon Eastern time for Alger Money Market
Fund will not receive a dividend for that day.

The Trust,  the Transfer Agent and their affiliates are not liable for acting in
good faith on telephone  instructions  relating to your account, so long as they
follow  reasonable  procedures to determine that the telephone  instructions are
genuine. Such procedures may include recording the telephone calls and requiring
some  form of  personal  identification.  You  should  verify  the  accuracy  of
telephone transactions immediately upon receipt of your confirmation statement.


REDEMPTIONS IN KIND


Payment for shares tendered for redemption is ordinarily made in cash.  However,
if the Board of Trustees of the Trust determines that it would be detrimental to
the best interest of the remaining shareholders of the Fund to make payment of a
redemption  order  wholly  or partly  in cash,  the Fund may pay the  redemption
proceeds in whole or in part by a distribution  "in kind" of securities from the
Fund, in lieu of cash, in conformity with applicable rules of the SEC. The Trust
has elected to be governed by Rule 18f-1 under the Act, pursuant to which a Fund
is obligated to redeem  shares solely in cash up to the lesser of $250,000 or 1%
of the net assets of the Fund during any 90-day period for any one  shareholder.
If shares are redeemed in kind, the redeeming  shareholder might incur brokerage
or other  costs in  selling  the  securities  for cash.  The  method of  valuing
securities  used to make  redemptions in kind will be the same as the method the
Fund uses to value its


                                      -18-




portfolio  securities  and  such  valuation  will  be made  as of the  time  the
redemption price is determined.

CONTINGENT DEFERRED SALES CHARGE


No CDSC is imposed  on the  redemption  of shares of Alger  Money  Market  Fund,
except  that shares of the Fund  acquired  in  exchange  for shares of the other
Funds will bear any CDSC that would apply to the exchanged shares.

With respect to Class B Shares, there is no initial sales charge on purchases of
shares of any Fund, but a CDSC may be charged on certain  redemptions.  The CDSC
is imposed on any  redemption  that causes the current  value of your account in
the Class B shares of the Fund to fall  below the  amount of  purchase  payments
made during a six-year holding period.


Certain  Class A  Shares  also  are  subject  to a CDSC.  Those  Class A  Shares
purchased  in an amount of $1 million or more which have not been subject to the
class'  initial  sales  charge  and which have not been held for a full year are
subject to a CDSC of 1% at the time of redemption.

Class C  Shares  are  subject  to a CDSC of 1% if  redeemed  within  one year of
purchase.


For  purposes of the CDSC,  it is assumed that the shares of the Fund from which
the  redemption  is made are the shares of that Fund which  result in the lowest
charge, if any.

Redemptions  of shares of each of the Funds  are  deemed to be made  first  from
amounts, if any, to which a CDSC does not apply. There is no CDSC on redemptions
of (i) shares that represent  appreciation on your original investment,  or (ii)
shares purchased through  reinvestment of dividends and capital gains.  Since no
charge is imposed on shares  purchased  and retained in Alger Money Market Fund,
you may wish to consider redeeming those shares, if any, before redeeming shares
that are subject to a CDSC.


WAIVERS OF SALES CHARGES


No initial  sales  charge  (Class A or Class C) or CDSC  (Classes  A, B or C) is
imposed on purchases or  redemptions  (1) by (i) employees of Alger inc. and its
affiliates,  (ii)  IRAs,  Keogh  Plans  and  employee  benefit  plans  for those
employees and (iii) spouses,  children,  siblings and parents of those employees
and trusts of which those individuals are  beneficiaries,  as long as orders for
the  shares  on  behalf  of those  individuals  and  trusts  were  placed by the
employees;  (2) by (i) accounts  managed by  investment  advisory  affiliates of
Alger inc. That are  registered  under the  Investment  Advisers Act of 1940, as
amended, (ii) employees, participants and beneficiaries of those accounts, (iii)
IRAs, Keogh Plans and employee  benefit plans for those employees,  participants
and  beneficiaries  and (iv)  spouses  and minor  children  of those  employees,
participants  and  beneficiaries as long as orders for the shares were placed by
the employees,  participants and beneficiaries;  (3) by directors or trustees of
any investment  company for which Alger inc. Or any of its affiliates  serves as
investment   adviser  or  distributor;   (4)  of  shares  held  through  defined
contribution plans as defined by the Employee  Retirement Income Security Act of
1974,  as  amended,  ("ERISA")  (except  that a defined  contribution  plan that
redeems all of its shares within 12 months of its initial  purchase will incur a
1.00% CDSC if the dealer of record was paid a concession);  (5) by an investment
company  registered under the 1940 Act in connection with the combination of the
investment  company  with the fund by  merger,  acquisition  of assets or by any
other transaction; (6) by registered investment advisers for their own accounts;
(7) on behalf of their clients by registered  investment advisers,  banks, trust
companies and other financial institutions,  including broker-dealers with which
either the Fund or Alger inc.  Has entered  into  agreements  contemplating  the
waiver of such charges;  (8) by a Processing  Organization,  as  shareholder  of
record on behalf of (i) investment  advisers or financial  planners  trading for
their own accounts or the accounts of their clients and who charge a management,
consulting  or other fee for  their  services  and  clients  of such  investment
advisers or  financial  planners  trading for their own accounts if the accounts
are linked to the master account of such investment adviser or financial planner
on the books and records of the Processing Organization, and (ii) retirement and
deferred  compensation  plans  and  trusts  used to  fund  those  plans;  (9) by
registered  representatives  of broker-dealers  which have entered into Selected
Dealer  Agreements  with Alger Inc., and their spouses,  children,  siblings and
parents;  (10) by  donor-advised  charitable gift funds; and (11) by children or
spouses of individuals who died in the terrorist attacks of September 11, 2001.

Class C shares may be purchased  without an initial sales charge by any investor
who  buys  Class  C  shares  through  an  account  with  any  of  the  following
institutions:  Merrill Lynch Pierce Fenner & Smith,  Inc.,  Morgan  Stanley Dean
Witter & Co., UBS Financial Services,  RBC Dain Rauscher,  Wachovia  Securities,
LLC and Linsco/Private Ledger.


                                      -19-





A CDSC may apply, however, if the shares are sold within 12 months of purchase.

In  addition,  no initial  sales  charge will be imposed on purchases of Class A
shares by members of a "qualified  group." A qualified  group is one which:  (i)
has been in existence  for more than six months;  (ii) was not organized for the
purpose of buying shares of the Funds or making similar  investments;  and (iii)
satisfies  uniform criteria  established by Alger Inc. that result in economy of
sales effort or expense,  such as a criterion  that  purchases be made through a
central  administration  or through a single dealer.  A qualified group does not
include a group whose sole organizational  connection is participation as credit
card holders of a company,  policyholders of an insurance company,  customers of
either a bank or  broker-dealer,  clients of an investment  adviser or a similar
connection.  Shares purchased by members of a qualified group will be subject to
a CDSC of 1% if redeemed within one year of purchase.

Investors  purchasing  Class A or Class C Shares subject to one of the foregoing
waivers are required to claim and substantiate  their eligibility for the waiver
at the time of purchase. It is also the responsibility of shareholders redeeming
shares otherwise  subject to a CDSC but qualifying for a waiver of the charge to
assert  this  status  at the time of  redemption.  Information  regarding  these
procedures is available by contacting the Funds at (800) 992-3863.


CERTAIN WAIVERS OF THE CONTINGENT DEFERRED SALES CHARGE

Any CDSC which  otherwise would be imposed on redemptions of Fund shares will be
waived in certain  instances,  including (a)  redemptions  of shares held at the
time  a  shareholder  becomes  disabled  or  dies,  including  the  shares  of a
shareholder  who owns the shares  with his or her spouse as joint  tenants  with
right of survivorship, provided that the redemption is requested within one year
after the death or initial  determination  of  disability,  (b)  redemptions  in
connection  with the following  retirement plan  distributions:  (i) lump-sum or
other  distributions  from  a  qualified  corporate  or  Keogh  retirement  plan
following retirement,  termination of employment, death or disability (or in the
case of a five percent  owner of the employer  maintaining  the plan,  following
attainment  of age  70l/2);  (ii)  required  distributions  from  an  Individual
Retirement  Account  ("IRA")  following  the  attainment  of age 70l/2 or from a
custodial  account under Section 403(b)(7) of the Internal Revenue Code of 1986,
as amended,  following the later of  retirement or attainment of age 70l/2;  and
(iii) a tax-free return of an excess  contribution to an IRA, and (c) systematic
withdrawal payments. For purposes of the waiver described in (a) above, a person
will be deemed  "disabled" if the person is unable to engage in any  substantial
gainful  activity  by reason of any  medically  determinable  physical or mental
impairment  that can be expected  to result in death or to be of  long-continued
and indefinite duration.

Shareholders  claiming  a  waiver  must  assert  their  status  at the  time  of
redemption.

REINSTATEMENT PRIVILEGE


A shareholder  who has redeemed shares in a Fund may reinvest all or part of the
redemption  proceeds in the Fund  without an initial  sales charge and receive a
credit for any CDSC paid on the  redemption,  provided the  reinvestment is made
within 30 days after the redemption. Reinvestment will be at the net asset value
of the Fund next determined  upon receipt of the proceeds and letter  requesting
this privilege be exercised, subject to confirmation of the shareholder's status
or holdings, as the case may be. You will also receive a pro rata credit for any
CDSC  imposed.  This  reinstatement  privilege  may be exercised  only once by a
shareholder.  Reinstatement  will not alter any capital gains tax payable on the
redemption and a loss may not be allowed for tax purposes.


SYSTEMATIC WITHDRAWAL PLAN


A  systematic   withdrawal  plan  (the   "Withdrawal   Plan")  is  available  to
shareholders  who own shares of a Fund with a value  exceeding  $10,000  and who
wish to receive specific amounts of cash  periodically.  Withdrawals of at least
$50 monthly (but no more than one percent of the value of a shareholder's shares
in the Fund) may be made under the  Withdrawal  Plan by redeeming as many shares
of the Fund as may be necessary to cover the stipulated  withdrawal  payment. To
the extent that withdrawals exceed dividends,  distributions and appreciation of
a shareholder's  investment in the Fund,  there will be a reduction in the value
of the shareholder's investment and continued withdrawal payments may reduce the
shareholder's  investment and ultimately exhaust it. Withdrawal  payments should
not be considered as income from investment in a Fund.

Shareholders  who wish to participate in the Withdrawal  Plan and who hold their
shares in  certificated  form must deposit their share  certificates of the Fund
from  which  withdrawals  will be made  with the  Transfer  Agent,  as agent for
Withdrawal  Plan  members.  All  dividends  and  distributions  on shares in the
Withdrawal Plan are automatically reinvested at net asset value in additional


                                      -20-





shares of the Fund involved. For additional information regarding the Withdrawal
Plan, contact the Funds.


SIGNATURE GUARANTEES

The  Transfer  Agent has  adopted  standards  and  procedures  pursuant to which
Medallion  Signature  Guarantees in proper form  generally will be accepted from
domestic  banks,  brokers,  dealers,  credit  unions,  and  national  securities
exchanges,  that are  participants  in the New  York  Stock  Exchange  Medallion
Signature  Program  (MSP),  the Securities  Transfer  Agents  Medallion  Program
(STAMP), and the Stock Exchanges Medallion Program (SEMP).

EXCHANGES AND CONVERSIONS

IN GENERAL


Except as limited below,  shareholders  may exchange some or all of their shares
for shares of another portfolio. However, effective June 1, 2004 you may incur a
2% redemption fee if you exchange shares of any Fund other than the Money Market
Fund  within 30 days of having  acquired  them.  One class of shares  may not be
exchanged for another class of shares.  Alger Money Market Fund shares  acquired
by direct  purchase may be exchanged for Class A, B or C Shares of another Fund;
however,  any  applicable  sales  charge  will  apply  to the  shares  acquired,
depending  upon their  class.  Shares of Alger  Money  Market  Fund  acquired by
exchange  rather than by direct  purchase may be exchanged for shares of another
Fund,  but only for shares of the same class as those  originally  exchanged for
Alger Money Market Fund shares. Once an initial sales charge has been imposed on
a  purchase  of Class A or Class C Shares,  no  additional  charge is imposed in
connection  with their exchange.  For example,  a purchase of Alger Money Market
Fund  shares and  subsequent  exchange to Class A or Class C Shares of any other
Fund (each a "Charge  Fund") would result in the  imposition of an initial sales
charge at the time of exchange;  but if the initial purchase had been of Class A
or Class C Shares in a Charge  Fund,  an exchange to the same class of shares of
any other Fund would not result in an additional  initial sales charge.  No CDSC
is assessed in connection  with  exchanges at any time. In addition,  no CDSC is
imposed on the redemption of reinvested dividends or capital gains distributions
or on  increases  in the net  asset  value of shares  of a Fund  above  purchase
payments made with respect to that Fund during the six-year  holding  period for
Class B Shares and the  one-year  holding  period for Class C Shares and certain
Class A Shares.

For  purposes of  calculating  the  eight-year  holding  periods  for  automatic
conversion of Class B Shares to Class A Shares,  shares  acquired in an exchange
are  deemed to have been  purchased  on the date on which  the  shares  given in
exchange were purchased, provided, however, that if Class B Shares are exchanged
for shares of Alger Money Market Fund,  the period  during which the Alger Money
Market  Fund  shares are held will not be  included  in the  holding  period for
purposes of determining eligibility for automatic conversion, and the running of
the holding period will  recommence  only when those shares are  reexchanged for
shares of the  original  class.  The same  calculation  method  shall be used to
determine the automatic  conversion of Class C Shares  purchased prior to August
1, 2000, and held for 12 years.

You  automatically  have the ability to make  exchanges by telephone  unless you
refuse the telephone  exchange  privilege.  Exchanges can be made among Funds of
the same class of shares for identically  registered accounts. For tax purposes,
an  exchange  of  shares  is  treated  as a sale of the  shares  exchanged  and,
therefore,  you may  realize a taxable  gain or loss when you  exchange  shares.
Shares  exchanged prior to the close of business of the NYSE (normally 4:00 p.m.
Eastern  time)  from Alger  Money  Market  Fund to any other  Fund will  receive
dividends  from Alger Money Market Fund for the day of the  exchange.  Shares of
Alger Money  Market Fund  received in exchange for shares of any other Fund will
earn dividends beginning on the next business day after the exchange.

The Trust reserves the right to terminate or modify the exchange  privilege upon
notice to shareholders.

FOR  SHAREHOLDERS  MAINTAINING  AN ACTIVE  ACCOUNT ON OCTOBER 17, 1992.  Class B
Shares  acquired  in an  exchange  are  deemed to have been  purchased  on,  and
continuously  held since,  the date on which the shares  given in exchange  were
purchased;  thus, an exchange  would not affect the running of any  CDSC-related
holding  period.  No initial  sales charge or CDSC would apply to an exchange of
Class B Shares for shares of Alger Money Market Fund, but  redemptions of shares
of that  Fund  acquired  by  exchange  of  Class B  Shares  are  subject  to any
applicable CDSC on the same terms as the shares given in exchange.  If shares of
Alger Money Market Fund are exchanged for Class B Shares,  any later redemptions
of those shares would be subject to any  applicable  CDSC based on the period of
time since the shares given in exchange were purchased.


                                      -21-





Thus, the period of time shares were held in Alger Money Market  Portfolio would
be counted toward the six-year holding period.

FOR NEW  SHAREHOLDERS  OPENING AN ACCOUNT  AFTER  OCTOBER  17,  1992.  Effective
October 17,  1992,  new  shareholders  of the Fund are subject to the  following
terms and  conditions  regarding the exchange of shares of the Fund's  Funds.  A
CDSC,  if any,  is  assessed  on  redemptions  of Class B and Class C Shares and
certain  Class A Shares of the Funds and of shares of Alger  Money  Market  Fund
that have been acquired in exchange for such shares,  based solely on the period
of time the shares are  retained  in a Fund  other than the Money  Market  Fund.
Thus,  the period of time shares are held in Alger Money Market Fund will not be
counted towards the holding period described above in the calculation of a CDSC.

CERTAIN ALGER MONEY MARKET FUND SHARES

Shares of Alger Money Market Fund that have been acquired in exchange for shares
of Spectra Fund (a mutual fund managed by Alger Management), together with Alger
Money  Market Fund shares  acquired  through  reinvestment  of dividends on such
shares,  may be  exchanged  for Spectra  Fund shares.  These  exchanges  will be
effected  at the  respective  net asset  values of Spectra  Fund and Alger Money
Market Fund next  determined  after the exchange  request is  accepted,  with no
sales charge or  transaction  fee imposed,  except that exchanges of Alger Money
Market Fund shares  representing  reinvested  dividends for Spectra Fund Class A
shares will be subject to the Class A initial sales charge. For more information
about such exchanges,  please call (800) 992-3863.  The Trust reserves the right
to terminate or modify this exchange privilege upon notice to shareholders.


                                      -22-




MANAGEMENT


TRUSTEES AND OFFICERS OF THE TRUST

The Trust is governed by a Board of Trustees which is responsible for protecting
the interests of shareholders under Massachusetts law.

The Board of Trustees has one standing  committee,  the Audit  Committee,  which
oversees  (a) the  Trust's  accounting  and  financial  reporting  policies  and
practices and its internal  controls and (b) the quality and  objectivity of the
Trust's financial  statements and the independent audit thereof.  The members of
the  Committee,  which met twice during the Trust's last fiscal year, are Lester
L. Colbert, Jr., Stephen E. O'Neil and Nathan E. Saint-Amand.

Information  about the Trustees and officers of the Trust is set forth below. In
the following tables,  the term "Alger Fund Complex" refers to the Trust and the
five other registered  investment  companies managed by Alger  Management.  Each
Trustee serves until an event of termination,  such as death or resignation,  or
until his successor is duly elected;  each officer's term of office is one year.
The address of Messrs.  Alger and Chung is 111 Fifth Avenue, New York, NY 10003;
that of Ms. Sanders and Mr. Blum is 30 Montgomery Street, Jersey City, NJ 07302.
The  address of Ms.  Alger and each of the  non-interested  Trustees  is c/o The
Alger Funds, 111 Fifth Avenue, New York, NY 10003.




                                                                                                                   NUMBER OF
                                                                                                                     FUNDS
                                                                                                                  IN THE ALGER
                                                                                                                  FUND COMPLEX
                                                                                                  TRUSTEE          WHICH ARE
  NAME, AGE, POSITION WITH                                                                        AND/OR            OVERSEEN
    THE FUND AND ADDRESS                  PRINCIPAL OCCUPATIONS                                OFFICER SINCE       BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------

INTERESTED TRUSTEES
                                                                                                             
Fred M. Alger III (69)        Chairman of the Board of Alger Associates, Inc. ("Associates"),        1986               22
   Chairman of the Board      Fred Alger & Company, Incorporated ("Alger Inc."), Alger
                              Management, Alger Properties, Inc. ("Properties"), Alger
                              Shareholder Services, Inc. ("Services"), Alger Life Insurance
                              Agency, Inc. ("Agency"), Fred Alger International Advisory S.A.
                              ("International"), five of the six investment companies
                              in the Alger Fund Complex, Alger SICAV ("SICAV") and Analysts
                              Resources, Inc. ("ARI").


Dan C. Chung (41)             President since September 2003 and Chief Investment Officer and        2001               16
   Trustee and                Director since 2001 of Alger Management; President since 2003 and
   President                  Director since 2001 of Associates, Properties, Services, agency
                              International, Trust and ARI; Trustee/Director of four of the six
                              investment companies in the Alger Fund Complex since 2001; senior
                              analyst with Alger Management 1998-2001.

Hilary M. Alger, CFA (42)     Trustee/Director of five of the six investment companies in the        2003               17
   Trustee                    Alger Fund Complex since 2003; Associate Director of Development,
                              College of Arts and Sciences and Graduate School, University of
                              Virginia 1999-2003; Director of Development and Communications,
                              Lenox Hill Neighborhood House 1997-99; securities analyst, Alger
                              Management 1987-92.




NON-INTERESTED TRUSTEES

Stephen E. O'Neil (71)        Attorney; Private investor since 1981; Director of Brown- Forman       1986               23
   Trustee                    Corporation since 1978; Trustee/Director of the six investment
                              companies in the Alger Fund Complex since the inception of each;
                              of Counsel to the law firm of Kohler & Barnes to 1998.


Joseph S. Nye, Jr. (66)       Trustee/Director of the six investment companies in the Alger          2003               23
   Trustee                    Fund Complex; Dean, John F. Kennedy School of Government, Harvard
                              University, since 1955; Assistant Secretary of Defense for
                              International Security Affairs 1994-1995; Chairman, National
                              Intelligence Council, 1993-1994.



                                      -23-






                                                                                                                   NUMBER OF
                                                                                                                     FUNDS
                                                                                                                  IN THE ALGER
                                                                                                                  FUND COMPLEX
                                                                                                  TRUSTEE          WHICH ARE
  NAME, AGE, POSITION WITH                                                                        AND/OR            OVERSEEN
    THE FUND AND ADDRESS                  PRINCIPAL OCCUPATIONS                                OFFICER SINCE       BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------

                                                                                                             
Charles F. Baird, Jr. (50)    Managing Partner of North Castle Partners, a private equity           2000               16
   Trustee                    securities Group; Chairman of Equinox, Leiner Health Products,
                              Elizabeth  Arden Day Spas,  Grand  Expeditions  of
                              EAS; Trustee/Director of four of the six investment companies
                              funds in the Alger Fund Complex. Formerly Managing Director
                              of AEA Investors, Inc.

Roger P. Cheever (58)         Associate Dean of Development, Harvard University; Trustee/           2000               16
   Trustee                    Director of four of the six investment companies in the Alger
                              Fund Complex. Formerly Deputy Director of the Harvard College
                              Fund.

Lester L. Colbert, Jr. (70)   Private investor since 1988; Trustee/Director of three of the         2000               17
   Trustee                    six investment companies in the Alger Fund Complex since 2000,
                              of one since 2003, and of another since 1974. Chairman of the
                              Board, President and Chief Executive Officer of Xidex Corporation
                              1972-87.

Nathan E. Saint-Amand         Medical doctor in private practice; Member of the Board of the        1986               23
M.D. (66)                     Manhattan Institute since 1988; Trustee/Director of each of
   Trustee                    the six investment companies in the Alger Fund complex since the
                              or its inception; formerly Co-Chairman, Special Projects
                              later of 1986 Committee, Memorial Sloan Kettering.

OFFICERS

Frederick A. Blum (50)        Executive Vice President and Treasurer of Alger Inc.,                 1996              N/A
   Treasurer                  Alger Management, Properties, Associates, ARI, Services
   Assistant Secretary        and Agency since September 2003 and Senior Vice President
                              prior thereto;  Treasurer or Assistant  Treasurer,
                              and Assistant  Secretary,  of the other five investment
                              companies in the Alger Fund Complex since 1996.  Chairman of
                              the  Board  of  (and  prior  thereto  Senior  Vice
                              President)  and  Treasurer  of Alger  National  Trust
                              Company since 2003.

Dorothy G. Sanders (48)       Senior Vice President, General Counsel and Secretary of Alger         2000              N/A
   Secretary                  Inc., General Counsel and Secretary of Associates, Agency,
                              Properties,  Services,  ARI and Alger  Management,
                              and Secretary of International  and the other five investment
                              companies in the Alger Fund Complex since 2000.  Senior Vice
                              President, Fleet Financial Group 1998-2000.






Mr. Alger and Mr. Chung are  "interested  persons" (as defined in the Investment
Company Act) of the Trust because of their  affiliations  with Alger  Management
and Alger Inc.,  the Fund's  principal  underwriter.  Mr.  Chung is Mr.  Alger's
son-in-law. Ms. Alger is Mr. Alger's daughter and is an interested person of the
Trust by virtue of that  relationship.  No Trustee  is a director  of any public
company except as may be indicated under "Principal Occupations."

No director,  officer or employee of Alger Management or its affiliates receives
any  compensation  from the Trust for  serving  as an  officer or Trustee of the
Trust.  The Trust  pays each  independent  Trustee  $2,000  for each  meeting he
attends, to a maximum of $8,000, plus travel expenses incurred for attending the
meeting.

The Trust did not offer its Trustees any pension or retirement  benefits  during
or prior to the fiscal year ended October 31, 2003. The following table provides
compensation  amounts paid to current independent  Trustees of the Trust for the
fiscal year ended October 31, 2003.


                                            COMPENSATION TABLE




                                                AGGREGATE
                                              COMPENSATION
                                                  FROM                 TOTAL COMPENSATION PAID TO TRUSTEES FROM
            NAME OF PERSON                   THE ALGER FUNDS                    THE ALGER FUND COMPLEX
           ----------------             ------------------------        ---------------------------------------
                                                                                  
       Charles F. Baird, Jr.                    $6,000                                  $22,500
       Roger P. Cheever                         $8,000                                  $30,000
       Lester L. Colbert, Jr.                   $8,000                                  $32,000
       Stephen E. O'Neil                        $8,000                                  $38,000
       Nathan E. Saint-Amand                    $8,000                                  $36,000




                                      -24-






The following table shows each Trustee's  beneficial ownership as of the date of
this Statement of Additional Information,  by dollar range, of equity securities
of the Funds and of all of the funds in the Alger Fund Complex  overseen by that
Trustee.   The  ranges  are  as  follows:  A  =  none;  B  =  $1-$10,000;   C  =
$10,000-$50,000; D = $50,000-$100,000; E = over $100,000.


None of the  non-interested  Trustees and none of their immediate family members
owns any  securities  issued by Alger  Management,  Alger  Inc.,  or any company
(other than a registered investment company) controlling, controlled by or under
common control with Alger Management or Alger Inc.






                                                              EQUITY SECURITIES
                                                                OF EACH FUND
                                       -------------------------------------------------------------

                                       SMALLCAP
                                       AND                                  CAPITAL                      AGGREGATE EQUITY SECURITIES
                             SMALLCAP  MIDCAP   MIDCAP  LARGECAP            APPRECI-  MONEY  HEALTH         OF FUNDS IN ALGER FUND
     NAME OF TRUSTEE         GROWTH    GROWTH   GROWTH  GROWTH    BALANCED  ATION     MARKET SCIENCES    COMPLEX OVERSEEN BY TRUSTEE
- ------------------------    -------------------------------------------------------------------------    ---------------------------
INTERESTED TRUSTEES

                                                                                          
Fred M. Alger III              A         A        A        E         A         A         A       A                    E
Hilary M. Alger                E         A        E        E         A         E         A       A                    E
Dan C. Chung                   D         A        E        E         D         D         E       D                    E
NON-INTERESTED TRUSTEES
- -----------------------
Charles F. Baird, Jr.          A         A        A        A         A         A         A       A                    A
Roger P. Cheever               A         A        A        A         A         A         A       A                    E
Lester L. Colbert, Jr.         A         A        A        C         A         A         A       A                    D
Joseph S. Nye                  A         A        A        A         A         A         A       A                    A
Stephen E. O'Neil              A         A        A        A         A         A         A       A                    A
Nathan E. Saint-Amand          A         A        A        A         A         A         A       A                    E





INVESTMENT MANAGER


Alger Management  serves as investment  manager to each of the Funds pursuant to
separate written agreements (the "Management Agreements").

Alger  Management is the Funds'  investment  manager and is responsible  for the
overall  administration of the Trust, subject to the supervision of the Board of
Trustees.  Alger Management makes investment  decisions for the Funds,  provides
administrative services, places orders to purchase and sell securities on behalf
of the Funds and selects  broker-dealers  that, in its judgment,  provide prompt
and reliable  execution at favorable prices and reasonable  commission rates. It
is  anticipated  that Alger Inc.  will serve as the Trust's  broker in effecting
most  of the  Funds'  transactions  on  securities  exchanges  and  will  retain
commissions  in  accordance  with certain  regulations  of the SEC. In addition,
Alger Management employs  professional  securities analysts who provide research
services  exclusively to the Funds and other accounts for which Alger Management
or its affiliates serve as investment adviser or subadviser.

Alger Management pays the salaries of all officers who are employed by it. Alger
Management has agreed to maintain office  facilities for the Trust,  furnish the
Trust with statistical and research data,  clerical,  accounting and bookkeeping
services,  and certain other services  required by the Trust, and to compute the
net asset values,  net income and realized capital gains or losses of the Funds.
Alger Management  prepares  semi-annual  reports to the SEC and to shareholders,
prepares  federal  and state tax  returns  and  filings  with  state  securities
commissions,  maintains the Trust's financial accounts and records and generally
assists in all aspects of the Trust's  operations.  Alger  Management  bears all
expenses in connection with the performance of its services under the Management
Agreements.

Alger  Management  has been in the  business of  providing  investment  advisory
services  since 1964 and, as of December  31,  2003,  had  approximately  $10.88
billion  under  management,  $6.59  billion in mutual  fund  accounts  and $4.29
billion in other  advisory  accounts.  Alger  Management  is owned by Alger Inc.
which in turn is owned by Alger Associates,  Inc., a financial  services holding
company. Fred M. Alger III, who holds in excess of 25% of the outstanding voting
securities of Alger Associates,  Inc., may be deemed to control that company and
its  subsidiaries.  Mr.  Alger  holds his  shares  through  a limited  liability
company, of which he is president and majority shareholder.


                                      -25-





Each  Management  Agreement  provides that if, in any fiscal year, the aggregate
expenses of the Fund  (exclusive  of certain  specified  categories  of expense)
exceed the expense  limitation of any state having  jurisdiction  over the Fund,
Alger  Management  will reimburse the Fund for that excess expense to the extent
required by state law. At the date of this Statement of Additional  Information,
there is no state expense limitation applicable to any Fund.

Each Fund pays Alger Management a management fee computed daily and paid monthly
at  annual  rates  based on a  percentage  of the value of the  relevant  Fund's
average  daily net assets,  as follows:  Alger Money  Market  Fund--.50%;  Alger
SmallCap  Growth Fund,  Alger  SmallCap  Growth and MidCap  Growth  Fund,  Alger
Capital Appreciation Fund, Alger Health Sciences Fund--.85%; Alger MidCap Growth
Fund--.80%;  Alger LargeCap  Growth Fund (formerly  Alger Growth Fund) and Alger
Balanced  Fund--.75%.  During the fiscal years ended October 31, 2001,  2002 and
2003  Alger  Management  earned  under  the terms of the  Management  Agreements
$1,730,000,  1,484,000  and  $1,282,000,  respectively,  in respect of the Alger
Money Market Fund;  $2,427,000,  $1,506,000  and  $1,334,000,  respectively,  in
respect  of  the  Alger  SmallCap  Growth  Fund;   $8,021,000,   $5,536,000  and
$3,870,000,  respectively,  in  respect  of  the  Alger  LargeCap  Growth  Fund;
$2,416,000,  $2,314,000 and  $1,945,000,  respectively,  in respect of the Alger
Balanced Fund; $5,622,000,  $4,578,000 and $3,905,000,  respectively, in respect
of  the  Alger  MidCap  Growth  Fund;  $9,595,000,  $6,209,000  and  $4,044,000,
respectively,  in respect of the Alger  Capital  Appreciation  Fund.  During the
fiscal years ended October 31, 2002 and 2003 Alger  Management  earned under the
terms of the Management  Agreements $6,000 and $45,000,  respectively in respect
of the Alger Health Sciences Fund and $3,000 and $77,000 in respect of the Alger
Small Cap and MidCap Growth Fund.

At their meeting called to consider the annual renewal of the Funds'  Investment
Management Agreements with Alger Management,  the Trustees considered the nature
and quality of the  services  provided in relation to the fees paid by the Funds
and  the  other  benefits   received  by  Alger  Management  by  virtue  of  its
relationship  with the Fund.  In their  deliberations,  the Trustees  considered
materials,  which they had  reviewed in advance of the  meeting,  regarding  the
Funds'   performance  and  expenses,   including  advisory  fees  and  brokerage
commissions,  and Alger  Management's  financial  condition,  overall investment
advisory operations,  brokerage practices with respect to the Funds, and profits
from its mutual fund  operations  (reflecting  not only  advisory  fees but also
receipt by an affiliate of brokerage commissions and of payments from the Funds'
Rule 12b- 1 Plans,  and by another  affiliate  of  transfer  agency  fees).  The
Trustees  had also  received  a  memorandum  discussing  the  factors  generally
regarded as  appropriate  to consider in evaluating  advisory  arrangements  and
copies of the Investment  Management Agreements  themselves.  In considering the
Management  Agreements,  the  Trustees  also drew upon  prior  discussions  with
representatives of Alger Management,  at each quarterly  meeting,  of the Funds'
performance and expenses and their  familiarity with the personnel and resources
of  Alger  Management  and  its  affiliates.   To  consider  the  renewals,  the
non-interested  Trustees met in executive session with independent  counsel.  In
considering the nature and quality of the services  provided by Alger Management
in relation to its fees and other  benefits  received,  they  concluded that the
overall  investment  performance of the Funds had been satisfactory in the light
of market  conditions  and noted that the general fund  administrative  services
also provided by Alger Management  under the terms of its Management  Agreements
were of high quality; in this connection they noted, for example,  that the Fund
had been  highly  rated by an  independent  company  evaluating  the  quality of
service  provided by fund  telephone  representatives,  and that the most recent
regulatory  inspections had produced no material  adverse comments on the Funds'
operations. The Trustees considered the fact that, in addition to its management
fees,  Alger  Management  benefits from its  affiliate's  providing  most of the
brokerage for the Funds;  they concluded that, even in light of this fact and of
other  tangible  and  intangible   benefits  arising  from  Alger   Management's
relationship with the Funds, the management fees paid by the Funds were fair and
reasonable in relation to the services  rendered and that the services  rendered
were satisfactory.


DISTRIBUTOR


Alger  Inc.,  the  corporate  parent of Alger  Management,  serves as the Funds'
principal  underwriter,  or  distributor,  and receives  payments from the Funds
under the Trust's Distribution Plans (see  "Purchases--Distribution  Plans") and
the  Shareholder  Servicing  Agreement  (see  "Purchases--Shareholder  Servicing
Agreement").  It  also  receives  brokerage  commissions  from  the  Trust  (see
"Investment  Strategies and  Policies--Fund  Transactions").  During the Trust's
fiscal year ended October 31, 2003, Alger Inc. retained approximately $3,520,000
in CDSCs and $216,000 in initial sales charges.

INDEPENDENT PUBLIC AUDITORS

Ernst & Young LLP serves as the Trust's independent public auditors.


                                      -26-




CODE OF ETHICS


Alger  Management  personnel  ("Access  Persons")  are  permitted  to  engage in
personal securities transactions,  including transactions in securities that may
be purchased or held by the Funds, subject to the restrictions and procedures of
the  Trust'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 Trust's Code of Ethics by calling the Trust toll-free at (800) 992-3863.


TAXES


The following is a summary of selected  federal income tax  considerations  that
may affect the Funds and their  shareholders.  The  summary is not  intended  to
substitute  for  individual  tax advice and investors are urged to consult their
own tax  advisers  as to the  federal,  state  and  local  tax  consequences  of
investing in the Funds.

Each  Fund  intends  to  qualify  as  a  "regulated  investment  company"  under
Subchapter M of the Internal  Revenue Code of 1986, as amended (the "Code").  If
qualified as a regulated  investment  company, a Fund will pay no federal income
taxes on its taxable net  investment  income (that is, taxable income other than
net  realized  capital  gains)  and its net  realized  capital  gains  that  are
distributed to  shareholders.  To qualify under Subchapter M, a Fund must, among
other things: (1) distribute to its shareholders at least 90% of its taxable net
investment income and net realized short-term capital gains; (2) derive at least
90% of its gross income from dividends, interest, payments with respect to loans
of securities,  gains from the sale or other disposition of securities, or other
income (including,  but not limited to, gains from options,  futures and forward
contracts)  derived  with  respect  to  the  Fund's  business  of  investing  in
securities;  and (3)  diversify  its holdings so that, at the end of each fiscal
quarter of the Fund (a) at least 50% of the market value of the Fund's assets is
represented by cash, U.S. Government securities and other securities, with those
other  securities  limited,  with  respect  to any one  issuer,  to an amount no
greater in value than 5% of the Fund's  total assets and to not more than 10% of
the outstanding  voting  securities of the issuer,  and (b) not more than 25% of
the market value of the Fund's  assets is invested in the  securities of any one
issuer (other than U.S.  Government  securities or securities of other regulated
investment  companies) or of two or more issuers that the Fund controls and that
are  determined  to be in the same or similar  trades or  businesses  or related
trades or businesses. In meeting these requirements, a Fund may be restricted in
the utilization of certain of the investment  techniques  described above and in
the Funds' prospectus.  As a regulated investment company,  each Fund is subject
to a  non-deductible  excise tax of 4% with  respect  to  certain  undistributed
amounts of income and capital gains during the calendar  year. The Trust expects
each  Fund  to  make  additional  distributions  or  change  the  timing  of its
distributions  so as to avoid the  application  of this tax.  Although the Trust
expects  each  Fund to make such  distributions  as are  necessary  to avoid the
application  of this tax,  certain of such  distributions,  if made in  January,
might be included in the taxable income of shareholders in the year ended in the
previous December.

Payments  reflecting  the dividend  income of the Funds will not qualify for the
dividends-received  deduction for  corporations if the Fund sells the underlying
stock before satisfying a 46-day holding period requirement (91 days for certain
preferred stock).  Dividends-received  deductions will be allowed to a corporate
shareholder only if similar holding period  requirements  with respect to shares
of the Fund have been met. None of the dividends paid by Alger Money Market Fund
will be eligible for the dividends-received deduction.

In general,  any gain or loss on the  redemption or exchange of Fund shares will
be long-term  capital gain or loss if held by the  shareholder for more than one
year, and will be short-term  capital gain or loss if held for one year or less.
However, if a shareholder  receives a distribution  taxable as long-term capital
gain with respect to Fund shares,  and redeems or  exchanges  the shares  before
holding them for more than six months, any loss on the redemption or exchange up
to the amount of the distribution will be treated as a long-term capital loss.

Dividends of a Fund's net investment  income and distributions of its short-term
capital  gains will be taxable as ordinary  income.  Distributions  of long-term
capital gains will be taxable as such at the appropriate rate, regardless of the
length of time you have held shares of the Fund.

If a Fund is the  holder  of  record  of any  stock on the  record  date for any
dividends payable with respect to such stock, such dividends are included in the
Fund's  gross  income  as of the  later  of  (a)  the  date  such  stock  became
ex-dividend  with respect to such dividends  (i.e., the date on which a buyer of
the stock would not be entitled to receive the declared, but unpaid,  dividends)
or (b) the date the Fund acquired such stock.  Accordingly,  in order to satisfy
its income  distribution  requirements,  a Fund may be required to pay dividends
based on  anticipated  earnings  and  shareholders  may receive  dividends in an
earlier year than would otherwise be the case.

Investors  considering buying shares of a Fund just prior to a record date for a
taxable dividend or capital gain distribution  should be aware that,  regardless
of


                                      -27-





whether the price of the Fund shares to be purchased  reflects the amount of the
forthcoming dividend or distribution payment, any such payment will be a taxable
dividend or distribution payment.

If a  shareholder  fails to furnish a correct  taxpayer  identification  number,
fails to fully report dividend or interest  income,  or fails to certify that he
or she has provided a correct taxpayer  identification number and that he or she
is not subject to such withholding,  then the shareholder may be subject to a 28
percent "backup  withholding tax" with respect to (i) any taxable  dividends and
distributions  and  (ii) any  proceeds  of any  redemption  of Fund  shares.  An
individual's  taxpayer  identification  number  is his or  her  social  security
number.  The 28 percent backup  withholding tax is not an additional tax and may
be credited against a shareholder's regular federal income tax liability.

Shortly  after the close of each  calendar  year,  you will  receive a statement
setting  forth the dollar  amounts of dividends  and any  distributions  for the
prior  calendar year and the tax status of the dividends and  distributions  for
federal  income tax purposes.  You should consult your tax adviser to assess the
federal,  state and local tax  consequences  of  investing  in each  Fund.  This
discussion is not intended to address the tax consequences of an investment by a
nonresident alien.


DIVIDENDS


Each share  class will be  treated  separately  in  determining  the  amounts of
dividends of  investment  income and  distributions  of capital gains payable to
holders  of its  shares.  Dividends  and  distributions  will  be  automatically
reinvested  at net asset value on the payment date in  additional  shares of the
class that paid the  dividend or  distribution  at net asset  value,  unless you
elected in  writing  to have all  dividends  and  distributions  paid in cash or
reinvested  at net asset value into another  identically  registered  Alger Fund
account you have established.  In addition, accounts whose dividend/distribution
checks   have   been   returned   as    undeliverable    shall   reinvest   that
dividend/distribution  at the net asset value next determined after the Transfer
Agent    receives   the    undelivered    check.    Furthermore,    all   future
dividend/distribution  checks  shall be  reinvested  automatically  at net asset
value on the  payment  date until a written  request for  reinstatement  of cash
distribution  and a valid  mailing  address are provided by the  shareholder(s).
Shares purchased  through  reinvestment of dividends and  distributions  are not
subject to a CDSC or front-end sales charge. Any dividends of Alger Money Market
Fund are declared  daily and paid monthly,  and any dividends of the other Funds
are declared and paid annually. Distributions of any net realized short-term and
long-term capital gains earned by a Fund usually will be made annually after the
close of the fiscal year in which the gains are earned.

The classes of a Fund may have different dividend and distribution  rates. Class
A dividends  generally  will be greater than those of Class B and Class C due to
the Rule  12b-1  fees  associated  with  Class B and  Class C  Shares.  However,
dividends  paid to each class of shares in a Fund will be  declared  and paid at
the same time and will be  determined  in the same  manner as those paid to each
other class.



CUSTODIAN AND TRANSFER AGENT


State Street Bank and Trust Company, 225 Franklin Street, Boston,  Massachusetts
02110  serves  as  custodian  of the  Trusts'  assets  pursuant  to a  custodian
agreement under which it holds the Funds' assets.  Alger  Shareholder  Services,
Inc., 30 Montgomery  Street,  Jersey City, New Jersey 07302,  serves as transfer
agent for the Funds pursuant to a transfer agency agreement.  Under the transfer
agency agreement services  processes  purchases and redemptions of shares of the
Funds,  maintains the shareholder account records for each Fund, handles certain
communications  between shareholders and the Trust and distributes any dividends
and  distributions  payable  by  the  Funds.  Pursuant  to the  transfer  agency
agreement,   Services  is  compensated   on  a  per-account   and,  for  certain
transactions,  a per-transaction  basis.  Certain  record-keeping  services that
would  otherwise be  performed  by Services  may be performed by other  entities
providing  similar  services  to their  customers  who invest in the Funds.  The
Trust,  Services,  Alger Inc. or any of its affiliates may elect to enter into a
contract to pay them for such services.


CERTAIN SHAREHOLDERS


At February 3, 2004,  Merrill Lynch owned 26.55% of the Alger  Balanced Fund. At
February 3, 2004,  Alger  Management,  a New York  corporation,  owned 35.53% of
Alger Health  Sciences Fund and 40.19% of Alger SmallCap and MidCap Growth Fund.
At February 3, 2004,  Alger Inc.,  a Delaware  corporation,  owned 32.19% of the
Alger  SmallCap  and  MidCap  Growth  Fund.  These  companies  are  wholly-owned
subsidiaries of


                                      -28-





Alger  Associates,  Inc.,  a New York  corporation,  which  may be  deemed to be
controlled by Fred M. Alger III. Accordingly, Mr. Alger may be deemed to control
Alger Health Sciences Fund and Alger SmallCap and MidCap Growth Fund,  which may
have the effect of  disproportionately  diminishing  the  voting  power of other
shareholders of these Funds.

The following table contains information regarding persons who own of record, or
are known to own  beneficially,  five percent or more of the shares of any Fund.
All holdings are expressed as a percentage of a Fund's  outstanding shares as of
February 3, 2004 and record and beneficial holdings are in each instance denoted
as follows: record/beneficial.

Alger Small Cap Growth Fund - Class A
Charles Schwab                             5.41%/+
Special Custody Acct.
101 Montgomery Street
San Francisco, CA 94104

Alger Small Cap Growth Fund - Class C
Merrill Lynch FBO                         21.34%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Charles E. Magraw Pension Plan             5.39%/+
FBO Dolores H. Magraw
69 Pickwick Road
W. Newton, MA 02465-2818

Alger LargeCap Growth Fund-Class A
Deutsche Bank Securities                   6.98%/+
PO Box 1346
Baltimore, MD 21203

Mellon Bank as Agent                      10.12%/+
Dreyfus Retirement
135 Santilli Highway
Everett, MA 02149

Merrill Lynch FBO                          6.44%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger LargeCap Growth Fund-Class B
Wuerttembergische Lebensvericherung        9.92%/+
Rothebuehlstr. 70
Stuttgart, Germany D-70178

Merrill Lynch FBO                          9.05%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger LargeCap Growth Fund-Class C
Merrill Lynch FBO                         25.57%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger MidCap Growth Fund-Class A
Charles Schwab                             6.69%/+
Special Custody Acct.
101 Montgomery St.
San Francisco, CA 94104

Merrill Lynch FBO                         16.38%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger MidCap Growth Fund-Class B
Merrill Lynch FBO                         18.29%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger MidCap Growth Fund-Class C
Merrill Lynch FBO                         38.89%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Capital Appreciation Fund-Class A
Merrill Lynch FBO                         22.49%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Capital Appreciation Fund-Class B
Merrill Lynch FBO                         11.18%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Capital Appreciation Fund-Class C
Merrill Lynch FBO                         22.81%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Balanced Fund-Class A
Merrill Lynch FBO                         45.90%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Putnam Fiduciary Trust Co. FBO            12.63%/+
CDICorporation 401(k) Savings Plan
859 Willard St. MS-E-2-C
Attn: Trading Services
Quincy, MA 02269-9110

State Street Bank & Trust Free             5.92%/+
ADP/Morgan Stanley Alliance
105 Rosemont Avenue
Westwood, MA 02090

Alger Balanced Fund-Class B
Merrill Lynch FBO                         18.32%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Balanced Fund-Class C
Merrill Lynch FBO                         16.69%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger Health Sciences Fund - Class A
All of the following are located at
111 Fifth Avenue
New York, NY 10003

Fred Alger Management, Inc.               51.97%/51.97%
Alger Associates, Inc.                    11.07%/11.07%

Alger Health Sciences Fund - Class B
Fred Alger Management, Inc.                7.33%/7.33%
111 Fifth Avenue
New York, NY 10003


                                      -29-





Alger Health Sciences Fund - Class C
Fred Alger Management, Inc.               21.37%/21.37%
111 Fifth Avenue
New York, NY 10003

Merrill Lynch FBO                         16.38%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Alger SmallCap and MidCap Growth Fund - Class A
Fred Alger Management, Inc.               44.75%/44.75%
111 Fifth Avenue
New York, NY 10003

Fred Alger & Company, Incorporated        41.06%/41.06%
30 Montgomery Street
Jersey City, NJ 07302

Alger SmallCap and MidCap Growth Fund - Class B
Fred Alger Management, Inc.               19.17%/19.17%
111 Fifth Avenue
New York, NY 10003

Citigroup Global Markets                   5.31%/+
Salomon Smith Barney
333 W 34th Street
New York, NY 10001

Alger SmallCap and MidCap Growth Fund - Class C
Fred Alger Management, Inc.               30.39%/30.39%
111 Fifth Avenue
New York, NY 10003

Merrill Lynch FBO                         25.13%/+
its Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246

Mark Kohl                                  5.30%/+
61 Morning Star Drive
Sparta, MJ 07871


+ The Fund believes that the underlying customers are the beneficial owners.


As of February 3, 2004 the Trustees and officers of the Fund,  as a group,  hold
1.25% of Alger Health Science Fund's outstanding  shares. They hold less than 1%
of the shares of any class of any other Fund.


ORGANIZATION


The Trust has been organized as an unincorporated  business trust under the laws
of the Commonwealth of Massachusetts pursuant to an Agreement and Declaration of
Trust  dated  March  20,  1986  (the  "Trust  Agreement").  Alger  Money  Market
Portfolio,  Alger Small  Capitalization  Portfolio  and Alger  Growth  Portfolio
commenced  operations on November 11, 1986. On September 29, 2000,  Alger Growth
Portfolio was re-named Alger LargeCap Growth Portfolio. Alger Balanced Portfolio
commenced  operations on June 1, 1992, Alger MidCap Growth  Portfolio  commenced
operations on May 24, 1993 and Alger Capital  Appreciation  Portfolio  commenced
operations  on November  1, 1993.  Alger  Health  Sciences  Portfolio  commenced
operations on May 1, 2002. Alger SmallCap and MidCap Growth Portfolio  commenced
operations on May 8, 2002. The word "Alger" in the Trust's name has been adopted
pursuant to a provision contained in the Trust Agreement.  Under that provision,
Alger  Management  may terminate the Trust's  license to use the word "Alger" in
its name when Alger Management ceases to act as the Trust's investment  manager.
On December 31, 1996,  Class A Shares were added to all  portfolios of the Trust
except  Alger  Money  Market  Portfolio.  Class A shares  have an initial  sales
charge. The previously  existing shares in those portfolios,  subject to a CDSC,
were designated Class B Shares on that date.  Class C Shares,  which are subject
to a CDSC,  were created on August 1, 1997.  On February 24, 2004,  the names of
the Trust and its portfolios were changed to their current names.

Shares of each Fund other than Alger  Money  Market Fund are thus  divided  into
three  classes,  Class A, Class B and Class C. The classes  differ in that:  (a)
each class has a different class designation;  (b) the Class A Shares, and Class
C Shares issued after August 1, 2000, are subject to initial sales charges;  (c)
the Class B and Class C Shares are subject to CDSCs,  and certain Class A Shares
may also be  subject  to a CDSC;  (d) only the  Class B and  Class C Shares  (as
described  below) are subject to distribution  fees under plans adopted pursuant
to Rule 12b-1 under the Act (each, a "Rule 12b-1 Plan");  (e) to the extent that
one class alone is affected by a matter submitted to a vote of the shareholders,
then only that  class  has  voting  power on the  matter;  and (f) the  exchange
privileges and conversion rights of each class differ from those of the others.

Although, as a Massachusetts business trust, the Trust is not required by law to
hold annual  shareholder  meetings,  it may hold  meetings  from time to time on
important matters, and shareholders have the right to call a meeting to remove a
Trustee or to take other action described in the Trust's Declaration of Trust.

Meetings of  shareholders  normally will not be held for the purpose of electing
Trustees  unless  and until such time as less than a  majority  of the  Trustees
holding  office have been  elected by  shareholders,  at which time the Trustees
then in office will call a  shareholders'  meeting for the election of Trustees.
Under  the  Act,  shareholders  of  record  of no less  than  two-thirds  of the
outstanding  shares of the Trust may remove a Trustee  through a declaration  in
writing  or by vote  cast in per-


                                      -30-





son or by proxy at a meeting called for that purpose. Under the Trust Agreement,
the Trustees are required to call a meeting of  shareholders  for the purpose of
voting on the question of removal of any such Trustee when  requested in writing
to do so by the  shareholders  of  record  of not less  than 10  percent  of the
Trust's outstanding shares.

Shares do not have  cumulative  voting rights,  which means that holders of more
than 50 percent of the shares  voting for the election of Trustees can elect all
Trustees.  Shares have equal voting rights,  which cannot be adversely  modified
other than by majority  vote.  Shares are  transferable  but have no preemptive,
conversion or subscription rights.  Shareholders  generally vote by Fund, except
with respect to the election of Trustees and the  ratification  of the selection
of independent  accountants,  and by class within a Fund on matters in which the
interests  of one class  differ from those of another;  see also item (e) in the
preceding  paragraph.  In the interest of economy and convenience,  certificates
representing  shares of a Fund are physically  issued only upon specific written
request of a shareholder.

Massachusetts law provides that shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust.  However,  the Trust
Agreement disclaims  shareholder  liability for acts or obligations of the Trust
and  requires  that  notice  of such  disclaimer  be  given  in each  agreement,
obligation or instrument entered into or executed by the Trust or a Trustee. The
Trust Agreement provides for  indemnification  from the Trust's property for all
losses  and  expenses  of  any  shareholder  held  personally   liable  for  the
obligations of the Trust. Thus, the risk of a shareholder's  incurring financial
loss on account of shareholder  liability is limited to  circumstances  in which
the Trust itself would be unable to meet its obligations, a possibility that the
Trust believes is remote.  Upon payment of any liability  incurred by the Trust,
the shareholder  paying the liability will be entitled to reimbursement from the
general assets of the Fund. The Trustees intend to conduct the operations of the
Fund in a manner so as to avoid, as far as possible,  ultimate  liability of the
shareholders for liabilities of the Trust.

The  Funds  are  classified  as  "diversified"  investment  companies  under the
Investment Company Act of 1940. A "diversified"  investment company is required,
with  respect to 75% of its assets,  to limit its  investment  in any one issuer
(other than the U.S.  government) to no more than 5% of the investment company's
total  assets.  The Funds  intended  to  continue  to  qualify  as a  "regulated
investment  companies"  under the Internal Revenue Code; one of the requirements
for such qualification is a quarterly  diversification  test,  applicable to 50%
(rather than 75%) of the Fund's assets, similar to the requirement stated above.

FINANCIAL STATEMENTS


The Trust's audited financial statements for the year ended October 31, 2003 are
contained in its Annual  Report to  Shareholders  for that period and are hereby
incorporated by reference.  Copies of the Annual Report to  Shareholders  may be
obtained by telephoning (800) 992-3863.

                                      -31-




Appendix

    Description  of the  highest  commercial  paper,  bond and other  short- and
long-term rating categories  assigned by Standard & Poor's Corporation  ("S&P"),
Moody's Investors  Service,  Inc.  ("Moody's"),  Fitch Investors  Service,  Inc.
("Fitch") and Duff and Phelps, Inc. ("Duff").

COMMERCIAL PAPER AND SHORT-TERM RATINGS

    The  designation  A-l by S&P indicates  that the degree of safety  regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess  overwhelming  safety  characteristics  are denoted with a plus sign (+)
designation.  Capacity for timely  payment on issues with an A-2  designation is
strong.  However,  the  relative  degree of safety is not as high as for  issues
designated A-l.

    The rating Prime-l (P-l) is the highest  commercial paper rating assigned by
Moody's.  Issuers of P-l paper must have a superior  capacity  for  repayment of
short-term  promissory  obligations  and ordinarily will be evidenced by leading
market positions in well-established  industries,  high rates of return of funds
employed,  conservative capitalization structures with moderate reliance on debt
and  ample  asset  protection,  broad  margins  in  earnings  coverage  of fixed
financial charges and high internal cash generation, and well-established access
to a range of  financial  markets and assured  sources of  alternate  liquidity.
Issues rated  Prime-2  (P-2) have a strong  capacity for repayment of short-term
promissory  obligations.  This  ordinarily  will  be  evidenced  by  many of the
characteristics  cited  above,  but to a  lesser  degree.  Earnings  trends  and
coverage ratios, while sound, will be more subject to variation.  Capitalization
characteristics,  while  still  appropriate,  may be more  affected  by external
conditions. Ample alternate liquidity is maintained.

    The rating Fitch-l  (Highest Grade) is the highest  commercial  paper rating
assigned  by Fitch.  Paper rated  Fitch-l is  regarded  as having the  strongest
degree of assurance for timely payment.  The rating Fitch-2 (Very Good Grade) is
the second highest  commercial  paper rating assigned by Fitch which reflects an
assurance of timely  payment  only  slightly  less in degree than the  strongest
issues.

    The rating Duff-l is the highest  commercial  paper rating assigned by Duff.
Paper rated Duff-l is regarded as having very high  certainty of timely  payment
with excellent  liquidity factors which are supported by ample asset protection.
Risk factors are minor.  Paper rated Duff-2 is regarded as having good certainty
of timely payment,  good access to capital  markets and sound liquidity  factors
and company fundamentals. Risk factors are small.

BOND AND LONG-TERM RATINGS

    Bonds rated AA by S&P are judged by S&P to be high-grade  obligations and in
the  majority of  instances  differ only in small  degree from issues  rated AAA
(S&P's highest rating).  Bonds rated AAA are considered by S&P to be the highest
grade  obligations and possess the ultimate degree of protection as to principal
and interest.  With AA bonds, as with AAA bonds,  prices move with the long-term
money market.  Bonds rated A by S&P have a strong  capacity to pay principal and
interest,  although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.

    S&P's BBB rated  bonds,  or  medium-grade  category  bonds,  are  borderline
between  definitely sound  obligations and those where the speculative  elements
begin to predominate.  These bonds have adequate asset coverage and normally are
protected by satisfactory earnings. Their susceptibility to changing conditions,
particularly  to  depressions,   necessitates  constant  watching.  These  bonds
generally are more responsive to business and trade  conditions than to interest
rates. This group is the lowest that qualifies for commercial bank investment.

    Bonds rated Aa by Moody's are judged to be of high quality by all standards.
Together  with bonds rated Aaa (Moody's  highest  rating) they comprise what are
generally  known as  high-grade  bonds.  Aa bonds are rated lower than Aaa bonds
because  margins of  protection  may not be as large as those of Aaa  bonds,  or
fluctuation of protective elements may be of greater amplitude,  or there may be
other elements present that make the long-term risks appear somewhat larger than
those  applicable to Aaa  securities.  Bonds that are rated A by Moody's possess
many  favorable  investment  attributes  and  are  to  be  considered  as  upper
medium-grade obligations.  Factors giving security to principal and interest are
con-

                                      A-1



APPENDIX
(continued)

sidered  adequate,  but elements may be present that suggest a susceptibility to
impairment in the future.

    Moody's Baa rated bonds are considered as  medium-grade  obligations,  i.e.,
they are neither  highly  protected nor poorly  secured.  Interest  payments and
principal  security  appear  adequate  for the present,  but certain  protective
elements may be lacking or may be  characteristically  unreliable over any great
length of time. Such bonds lack outstanding  investment  characteristics and, in
fact, have speculative characteristics as well.

    Moody's  applies the numerical  modifiers 1, 2 and 3 to each generic  rating
classification  from Aa through B. The  modifier 1 indicates  that the  security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range  ranking;  and the modifier 3 indicates  that the issue ranks in the
lower end of its generic rating category.

    Bonds  rated AAA by Fitch are  judged by Fitch to be  strictly  high  grade,
broadly   marketable,   suitable  for   investment  by  trustees  and  fiduciary
institutions  and liable to but slight  market  fluctuation  other than  through
changes  in the money  rate.  The prime  feature  of an AAA bond is a showing of
earnings several times or many times interest requirements,  with such stability
of  applicable  earnings  that  safety is beyond  reasonable  question  whatever
changes occur in  conditions.  Bonds rated AA by Fitch are judged by Fitch to be
of safety virtually  beyond question and are readily  salable,  whose merits are
not unlike those of the AAA class, but whose margin of safety is less strikingly
broad. The issue may be the obligation of a small company,  strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more
local type of market.

    Bonds rated  Duff-l are judged by Duff to be of the highest  credit  quality
with negligible risk factors,  only slightly more than U.S. Treasury debt. Bonds
rated  Duff-2,  -3 and -4 are judged by Duff to be of high credit  quality  with
strong  protection  factors.  Risk is modest but may vary  slightly from time to
time because of economic conditions.

                                      A-2







INVESTMENT MANAGER:

Fred Alger Management, Inc.
111 Fifth Avenue
New York, New York 10003

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








SAI 24

THE ALGER FUNDS


STATEMENT OF
ADDITIONAL
INFORMATION


FEBRUARY 28, 2004

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