THE ALGER FUNDS

              SUPPLEMENT DATED NOVEMBER 2, 2005 TO THE STATEMENT OF
               ADDITIONAL INFORMATION DATED FEBRUARY 18, 2005, AS
                            SUPPLEMENTED MAY 1, 2005

                                       I.

      The  Trustees  of the  Trust  have  modified  the  Alger  Balanced  Fund's
non-fundamental  investment policies to permit limited investment by the Fund in
lower-rated  securities.  In  addition,  in the future  the Fund's  fixed-income
investments   may   include   mortgage-backed   and   asset-backed   securities.
Accordingly, the Statement of Additional Information is revised as follows:

      1. The first paragraph of the section  captioned  "Alger Balanced Fund" on
page 2 is replaced with the following:

      The Fund  intends  to invest  based on  combined  considerations  of risk,
income,  capital  appreciation  and  protection of capital  value.  Under normal
circumstances,  the Fund invests in common stocks,  securities  convertible into
common stocks, and fixed-income  securities,  which may include corporate bonds,
debentures  and  notes,  U.S.   government   securities,   mortgage-backed   and
asset-backed   securities,   commercial   paper,   preferred  stock,  and  other
fixed-income  securities.  Most of the Fund's  fixed-income  investments will be
concentrated   within  the  four  highest  rating  categories  by  a  nationally
recognized  statistical rating  organization  (NRSRO) or, if unrated,  will have
been  determined  to be of  comparable  quality by Fred Alger  Management,  Inc.
("Alger Management"), the Fund's investment manager. The Fund also may invest up
to 10% of its net assets in lower-rated securities rated "B" (or the equivalent)
or better by any of those rating  agencies or, if unrated,  determined  to be of
comparable  quality by Alger Management.  Under normal  circumstances,  the Fund
will invest at least 25% of its net assets in fixed-income securities.

      2. The following is inserted after the paragraph captioned "Commercial
Paper" on page 4:

      MORTGAGE-BACKED SECURITIES
      (ALGER BALANCED FUND ONLY)

      The  Fund  may  invest  in  mortgage-backed  securities  that  are  Agency
Pass-Through  Certificates,  Private  Pass-Throughs or  collateralized  mortgage
obligations ("CMOs"), as defined and described below.


                                       1


      Agency Pass-Through  Certificates are mortgage  pass-through  certificates
representing  undivided  interests  in  pools  of  residential  mortgage  loans.
Distribution  of  principal  and interest on the mortgage  loans  underlying  an
Agency Pass-Through  Certificate is an obligation of or guaranteed by GNMA, FNMA
or FHLMC. GNMA is a wholly-owned corporate  instrumentality of the United States
within the  Department of Housing and Urban  Development.  The guarantee of GNMA
with respect to GNMA  certificates is backed by the full faith and credit of the
United States,  and GNMA is authorized to borrow from the United States Treasury
in an amount which is at any time  sufficient to enable GNMA, with no limitation
as to amount, to perform its guarantee.

      FNMA is a federally  chartered and privately owned  corporation  organized
and existing  under  federal law.  Although the Secretary of the Treasury of the
United  States has  discretionary  authority to lend funds to FNMA,  neither the
United States nor any agency thereof is obligated to finance FNMA's operation or
to assist FNMA in any other manner.

      FHLMC is a federally  chartered  corporation  organized and existing under
federal  law,  the common stock of which is owned by the Federal Home Loan Bank.
Neither the United States nor any agency thereof is obligated to finance FHLMC's
operations or to assist FHLMC in any other manner.

      The  mortgage  loans  underlying  GNMA   certificates  are  partially-  or
fully-guaranteed   by  the  Federal  Housing   Administration  or  the  Veterans
Administration,  while the mortgage loans underlying FNMA certificates and FHLMC
certificates are conventional  mortgage loans which are, in some cases,  insured
by private mortgage insurance companies. Agency Pass-Through Certificates may be
issued in a single  class with  respect to a given pool of mortgage  loans or in
multiple classes.

      The   residential   mortgage  loans   evidenced  by  Agency   Pass-Through
Certificates  and upon  which  CMOs are based  generally  are  secured  by first
mortgages on one-to  four-family  residential  dwellings.  Such  mortgage  loans
generally  have final  maturities  ranging  from 15 to 30 years and  provide for
monthly  payments in amounts  sufficient to amortize  their  original  principal
amounts by the maturity  dates.  Each  monthly  payment on such  mortgage  loans
generally includes both an interest component and a principal component, so that
the holder of the mortgage loan  receives both interest and a partial  return of
principal  in each  monthly  payment.  In general,  such  mortgage  loans can be
prepaid  by the  borrowers  at any  time  without  any  prepayment  penalty.  In
addition, many such mortgage loans contain a "due-on-

                                       2


sale"  clause  requiring  the  loans to be  repaid  in full upon the sale of the
property  securing  the loans.  Because  residential  mortgage  loans  generally
provide for  monthly  amortization  and may be prepaid in full at any time,  the
weighted average  maturity of a pool of residential  mortgage loans is likely to
be substantially  shorter than its stated final maturity date. The rate at which
a pool of  residential  mortgage  loans is  prepaid  may be  influenced  by many
factors and is not predictable  with precision.  Private  mortgage  pass-through
securities ("Private  Pass-Throughs") are structured similarly to GNMA, FNMA and
FHLMC  mortgage  pass-through  securities  and are issued by  originators of and
investors in mortgage loans,  including savings and loan associations,  mortgage
bankers,  commercial banks, investment banks and special purpose subsidiaries of
the foregoing.  These  securities  usually are backed by a pool of  conventional
fixed rate or adjustable loans.  Since Private  Pass-Throughs  typically are not
guaranteed by an entity having the credit  status of GNMA,  FNMA or FHLMC,  such
securities   generally  are  structured   with  one  or  more  types  of  credit
enhancement.  Such  credit  support  falls into two  categories:  (i)  liquidity
protection and (ii) protection against losses resulting from ultimate default by
an  obligor  on  the  underlying  assets.  Liquidity  protection  refers  to the
provisions  of  advances,  generally  by the  entity  administering  the pool of
assets,  to ensure that the  pass-through of payments due on the underlying pool
occurs in a timely fashion.  Protection  against losses  resulting from ultimate
default  enhances the  likelihood of ultimate  payment of the  obligations on at
least a portion  of the  assets in the pool.  Such  protection  may be  provided
through  guarantees,  insurance  policies  or letters of credit  obtained by the
issuer or sponsor from third parties,  through  various means of structuring the
transaction or through a combination of such  approaches.  The Fund will not pay
any additional  fees for such credit  support,  although the existence of credit
support may increase the price of a security.

      The  ratings  of  securities  for  which  third-party  credit  enhancement
provides  liquidity  protection  or protection  against  losses from default are
generally  dependent  upon the  continued  creditworthiness  of the  enhancement
provider.  The ratings of such  securities  could be subject to reduction in the
event  of  deterioration  in  the  creditworthiness  of the  credit  enhancement
provider  even in  cases  where  the  delinquency  and  loss  experience  on the
underlying pool of assets is better than expected.

      The  Fund  may  invest  in  stripped  mortgage-backed   securities.   Such
securities are created when a U.S. government agency or a financial  institution
separates the interest and principal  components of a  mortgage-backed  security
and sells them as individual securi-



                                       3


ties.  The holder of the  "principal-only"  security (PO) receives the principal
payments made by the underlying  mortgage-backed  security,  while the holder of
the  "interest-only"  security  (IO)  receives  interest  payments from the same
underlying security.  The prices of stripped  mortgage-backed  securities may be
particularly  affected by changes in  interest  rates.  As interest  rates fall,
prepayment  rates  tend to  increase,  which  tends to reduce  prices of IOs and
increase prices of POs. Rising interest rates can have the opposite effect.

      CMOs are debt obligations  typically  issued by a private  special-purpose
entity and collateralized by residential or commercial  mortgage loans or Agency
Pass-Through  Certificates.   Because  CMOs  are  debt  obligations  of  private
entities, payments on CMOs generally are not obligations of or guaranteed by any
governmental  entity, and their ratings and  creditworthiness  typically depend,
among other factors,  on the legal insulation of the issuer and transaction from
the consequences of a sponsoring entity's bankruptcy.

      CMOs generally are issued in multiple classes,  with holders of each class
entitled to receive specified portions of the principal payments and prepayments
and/or  of  the  interest  payments  on the  underlying  mortgage  loans.  These
entitlements  can be specified  in a wide  variety of ways,  so that the payment
characteristics  of various  classes may differ  greatly from one  another.  For
instance,  holders may hold interests in CMO tranches  called  Z-tranches  which
defer interest and principal payments until one or other classes of the CMO have
been paid in full. In addition, for example:

o    In a  sequential-pay  CMO  structure,  one class is entitled to receive all
     principal payments and pre- payments on the underlying  mortgage loans (and
     interest on unpaid principal) until the principal of the class is repaid in
     full,  while the remaining  classes  receive only interest;  when the first
     class is repaid in full,  a second  class  becomes  entitled to receive all
     principal  payments and prepayments on the underlying  mortgage loans until
     the class is repaid in full, and so forth.

o    A  planned  amortization  class  ("PAC")  of CMOs is  entitled  to  receive
     principal on a stated  schedule to the extent that it is available from the
     underlying  mortgage  loans,  thus  providing a greater (but not  absolute)
     degree of certainty as to the schedule upon which principal will be repaid.

o    An accrual  class of CMOs  provides  for interest to accrue and be added to
     principal (but not be paid currently)  until  specified  payments have been
     made on prior  classes,  at which time the  principal of the accrual  class
     (including the accrued interest


                                       4


     which was  added to  principal)  and  interest  there-on  begins to be paid
     from payments on the under- lying mortgage loans.

o    As   discussed   above  with  respect  to   pass-through,   mortgage-backed
     securities,  an interest-only  class of CMOs entitles the holder to receive
     all of the interest and none of the  principal on the underly- ing mortgage
     loans, while a principal-only  class of CMOs entitles the holder to receive
     all of the principal  payments and  prepayments and none of the interest on
     the underlying mortgage loans.

o    A floating rate class of CMOs entitles the holder to receive  interest at a
     rate which  changes in the same  direction  and  magnitude  as changes in a
     specified  index rate. An inverse  floating rate class of CMOs entitles the
     holder  to  receive  interest  at a rate  which  changes  in  the  opposite
     direction  from,  and in the same  magnitude  as,  or in a  multi-  ple of,
     changes in a specified index rate.  Floating rate and inverse floating rate
     classes  also may be subject to "caps" and "floors" on  adjustments  to the
     interest rates which they bear.

o    A subordinated  class of CMOs is subordinated in right of payment to one or
     more other classes.  Such a subordinated  class provides some or all of the
     credit support for the classes that are senior to it by absorbing losses on
     the underlying  mortgage loans before the senior classes absorb any losses.
     A  subordinated  class  which is  subordinated  to one or more  classes but
     senior  to  one  or  more  other  classes  is  sometimes  referred  to as a
     "mezzanine"  class. A subordinated  class generally  carries a lower rating
     than the classes  that are senior to it, but may still carry an  investment
     grade rating.

      It generally is more  difficult to predict the effect of changes in market
interest rates on the return on  mortgage-backed  securities than to predict the
effect  of  such  changes  on  the  return  of a  conventional  fixed-rate  debt
instrument,  and the magnitude of such effects may be greater in some cases. The
return  on  interest-only  and  principal-only   mortgage-backed  securities  is
particularly  sensitive to changes in interest rates and prepayment speeds. When
interest  rates  decline  and  prepayment  speeds  increase,  the  holder  of an
interest-only   mortgage-backed  security  may  not  even  recover  its  initial
investment.  Similarly,  the return on an inverse floating rate CMO is likely to
decline  more  sharply in periods of  increasing  interest  rates than that of a
fixed-rate  security.  For  these  reasons,  interest-only,  principal-only  and
inverse  floating rate  mortgage-backed  securities  generally have greater risk
than more conventional classes of mortgage-backed securities.


                                       5


      ASSET-BACKED SECURITIES
      (ALGER BALANCED FUND ONLY)

      The Fund may invest in types of  asset-backed  securities  which represent
forms of  consumer  credit  such as  automobile  and  credit  card  receivables,
manufactured  (mobile) home loans, home improvement loans and home equity loans.
Asset-backed  securities  are generally  privately  issued and pass through cash
flows to investors.  Interest and principal  payments depend upon payment of the
underlying  loans by  individuals,  although the  securities may be supported by
letters  of  credit or other  credit  enhancements.  The  value of  asset-backed
securities may also depend on the  creditworthiness  of the servicing  agent for
the loan  pool,  the  originator  of the  loans,  or the  financial  institution
providing the credit enhancement.

      Generally,  asset-backed  securities  include many of the risks associated
with mortgage-related securities. In general, however, the collateral supporting
asset-backed  securities is of shorter  maturity than mortgage loans and is less
likely to experience substantial  prepayments.  Asset-backed  securities involve
certain risks that are not posed by mortgage-backed securities, resulting mainly
from the fact that  asset-backed  securities do not usually contain the complete
benefit of a security interest in the related  collateral.  For example,  credit
card  receivables  generally  are  unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws,  including the
bankruptcy laws, some of which may reduce the ability to obtain full payment. In
the case of automobile  receivables,  due to various legal and economic factors,
proceeds for  repossessed  collateral  may not always be  sufficient  to support
payments on these securities.

      LOWER-RATED SECURITIES
      (ALGER BALANCED FUND ONLY)

      As indicated in the Prospectus,  the Balanced Fund may invest up to 10% of
its  net  assets  in  fixed-income   securities  rated  below  investment  grade
("high-yield  securities,"  or "junk bonds"),  provided that such securities are
rated in one of the two  categories  just  below  investment  grade (BB and B of
Standard & Poor's,  Fitch, and Dominion,  Ba and B of Moody's,  bb and b of A.M.
Best) by at least one NRSRO or, if unrated,  are determined by Alger  Management
to be of  equivalent  quality.  Such  lower-rated  securities  may be subject to
certain risks with respect to the issuer's ability to make scheduled payments of
principal and interest,  and to greater  market  fluctuations.  While  generally
providing  higher  coupons or  interest  rates than  higher-quality  securities,
lower-quality  fixed-income securities involve greater risk of loss of principal
and income, including the possibility



                                       6


of default or bankruptcy of their issuers, and exhibit greater price volatility,
especially during periods of economic uncertainty or change. Lower-quality fixed
income  securities  tend to be  affected  by  economic  changes  and  short-term
corporate  and industry  developments  to a greater  extent than  higher-quality
securities,  which react  primarily  to  fluctuations  in the  general  level of
interest rates.  The market for lower-rated  securities is generally less liquid
than the market for  investment-grade  fixed-income  securities.  It may be more
difficult to sell lower-rated securities in order to meet redemption requests or
respond to changes in the market.

      Securities ratings are based largely on the issuer's historical  financial
condition  and the rating  agencies'  analysis  of the issuer at the time of the
rating.  Therefore,  the  rating  assigned  to any  particular  security  is not
necessarily a reflection on the issuer's current financial  condition or ability
to make timely payments of interest and principal,  which may be better or worse
than  the  rating  would  indicate.  In  addition,  the  ratings  by  nationally
recognized  securities  rating  organizations  do  not  necessarily  reflect  an
assessment of the volatility of a security's  market value or liquidity.  To the
extent  that  the  Fund  invests  in such  securities,  the  achievement  of its
investment  objective  may be more  dependent on Alger  Management's  own credit
analysis. If a security in which the Fund has invested is downgraded, so that it
would no  longer  be  eligible  for  purchase  by the  Fund,  the Fund  will not
necessarily  sell the  security  immediately;  Alger  Management  will  consider
whether  to  retain  or  dispose  of the  security  in  the  light  of  all  the
circumstances.  See the  Appendix  to this SAI for a  discussion  of the  rating
categories.

      3.     The Appendix to the SAI is replaced with the following:

                                    APPENDIX

      Description of certain rating categories  assigned by Standard & Poor's, a
division of the McGraw-Hill Companies,  Inc ("S&P"),  Moody's Investors Service,
Inc.  ("Moody's"),  Fitch, Inc. ("Fitch"),  Dominion Bond Rating Service Limited
("DBRS") and A. M. Best Company, Inc. ("Best")

      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.



                                       7


      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.

      BOND AND LONG-TERM RATINGS

      S&P

      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.


                                       8



      Debt rated BB and B by S&P is regarded as having predominantly speculative
characteristics  with respect to capacity to pay  interest and repay  principal.
While such debt will likely have some  quality and  protective  characteristics,
these are outweighed by large  uncertainties  or major risk exposures to adverse
conditions.

      Debt  rated BB has less  near-term  vulnerability  to  default  than other
speculative  grade  debt.  However,  it faces  major  ongoing  uncertainties  or
exposure to adverse business,  financial, or economic conditions that could lead
to inadequate  capacity to meet timely interest and principal  payments.  The BB
rating  category  is also  used for debt  subordinated  to  senior  debt that is
assigned an actual or implied BBB rating.

      Debt rated B by S&P has greater vulnerability to default but presently has
the  capacity  to meet  interest  payments  and  principal  repayments.  Adverse
business,  financial,  or economic  conditions  would likely impair  capacity or
willingness to pay interest and repay  principal.  The B rating category also is
used for debt  subordinated to senior debt that is assigned an actual or implied
BB or BB rating.

      MOODY'S

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

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

      Bonds rated Ba by Moody's are judged to have speculative  elements;  their
future cannot be considered as  well-assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during both good and bad times


                                       9



over the future. Uncertainty of position characterizes bonds in this class.

      Bonds rated B by Moody's generally lack  characteristics  of the desirable
investment.  Assurance of interest and principal  payments or of  maintenance of
other terms of the contract over any long period of time may be small.

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

      FITCH

      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 A by Fitch are  considered to be investment  grade and of high
credit  quality.  The obligor's  ability to pay interest and repay  principal is
considered  to be  strong,  but may be more  vulnerable  to  adverse  changes in
economic conditions and circumstances than bonds with higher ratings.

      BBB-rated bonds are considered to be investment  grade and of satisfactory
credit  quality.  The obligor's  ability to pay interest and repay  principal is
considered  to  be  adequate.   Adverse  changes  in  economic   conditions  and
circumstances,  however,  are more likely to have adverse impact on these bonds,
and therefore  impair timely  payment.  The likelihood that the ratings of these
bonds  will fall below  investment  grade is higher  than for bonds with  higher
ratings.

      Fitch's BB-rated bonds are considered  speculative.  The obligor's ability
to pay  interest  and repay  principal  may be  affected  over  time by  adverse
economic changes. However, business and financial



                                       10


alternatives  can be identified which could assist the obligor in satisfying its
debt service requirements.

      Fitch's B-rated bonds are considered  highly  speculative.  While bonds in
this class are currently meeting debt service  requirements,  the probability of
continued  timely  payment of  principal  and interest  reflects  the  obligor's
limited  margin of safety  and the need for  reasonable  business  and  economic
activity throughout the life of the issue.

      DBRS

      Bonds  rated  AAA by  DBRS  are  considered  to be of the  highest  credit
quality,  with  exceptionally  strong  protection  for the timely  repayment  of
principal and interest.  Earnings are  considered  stable,  the structure of the
industry  in which the entity  operates  is strong,  and the  outlook for future
profitability is favorable. There are few qualifying factors present which would
detract  from the  performance  of the entity,  the  strength of  liquidity  and
coverage  ratios is  unquestioned  and the entity has  established  a creditable
track record of superior performance. Given the extremely tough definition which
DBRS has established  for this category,  few entities are able to achieve a AAA
rating.

      Bonds rated AA are of superior credit quality,  and protection of interest
and  principal is considered  high. In many cases,  they differ from bonds rated
AAA only to a small degree.  Given the extremely tough definition which DBRS has
for the AAA category  (which few companies are able to achieve),  entities rated
AA  are  also  considered  to  be  strong  credits  which  typically   exemplify
above-average  strength  in key areas of  consideration  and are  unlikely to be
significantly affected by reasonably foreseeable events.

      Bonds rated A are of satisfactory  credit quality.  Protection of interest
and principal is still substantial, but the degree of strength is less than with
AA rated entities.  While a respectable  rating,  entities in the A category are
considered  to be more  susceptible  to  adverse  economic  conditions  and have
greater cyclical tendencies than higher rated companies.

      Bonds  rated  BBB  are  considered  to  be  of  adequate  credit  quality.
Protection of interest and principal is considered  adequate,  but the entity is
more  susceptible to adverse  changes in financial and economic  conditions,  or
there may be other  adversities  present which reduce the strength of the entity
and its rated securities.

      Bonds  rated  BB are  defined  to be  speculative,  where  the  degree  of
protection  afforded  interest and principal is uncertain,  particularly  during
periods of economic recession. Entities in the BB


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area typically have limited access to capital  markets and additional  liquidity
support and, in many cases,  small size or lack of  competitive  strength may be
additional negative considerations.

      Bonds  rated  "B" are  regarded  as  highly  speculative  and  there  is a
reasonably  high  level of  uncertainty  as to the  ability of the entity to pay
interest  and  principal  on a  continuing  basis in the future,  especially  in
periods of economic recession or industry adversity.

      A.M. BEST

      The issuer of long-term  debt rated aaa has, in A.M.  Best's  opinion,  an
exceptional  ability  to meet the  terms of its  obligation.  The  rating  aa is
assigned to issues where the issuer has, in A.M. Best's  opinion,  a very strong
ability to meet the terms of its  obligation.,  and issues are rated a where the
ability to meet the terms of the obligation is regarded as strong. The issuer of
debt rated bbb is  considered  to have an adequate  ability to meet the terms of
its  obligation  but to be more  susceptible  to  changes in  economic  or other
conditions.

      The  issuer of  bb-rated  long-term  debt  has,  in A.M.  Best's  opinion,
speculative  credit  characteristics,  generally  due to a  moderate  margin  of
principal and interest payment protection and vulnerability to economic changes.
The issuer of long-term debt rated b is considered to have extremely speculative
credit  characteristics,  generally  due to a modest  margin  of  principal  and
interest payment protection and extreme vulnerability to economic changes.

                                       II.

      The  first  sentence  of the  first  paragraph  of the  section  captioned
"Options (All of the Funds other than Alger Money Market Fund)" on page 6 may be
thought to imply that the Funds intend to purchase and sell options very seldom,
if at all. Because this is no longer the Funds' fixed intention, the sentence is
replaced with the following in order to remove the implication:

      With the  exception of the Alger Money  Market Fund,  all of the Funds 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.










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