N-CSR 1 a08-25074_1ncsr.htm N-CSR

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number			811-01355

The Alger Funds
(Exact name of registrant as specified in charter)

111 Fifth Avenue New York, New York					10003
(Address of principal executive offices)					(Zip code)

Mr. Hal Liebes Fred Alger Management, Inc. 111 Fifth Avenue New York, New York 10003
(Name and address of agent for service)

Registrant’s telephone number, including area code:				212-806-8800

Date of fiscal year end:	October 31

Date of reporting period:		October 31, 2008

ITEM 1. REPORTS TO STOCKHOLDERS.

The Alger Funds

ANNUAL REPORT

October 31, 2008

Table Of Contents

THE ALGER FUNDS

Letter to Our Shareholders (Unaudited)					1

Fund Highlights (Unaudited)					8

Portfolio Summary (Unaudited)					16

Schedules of Investments					17

Statements of Assets and Liabilities					62

Statements of Operations					65

Statements of Changes in Net Assets					68

Financial Highlights					74

Notes to Financial Statements					104

Additional Information (Unaudited)					125

Dear Shareholders, November 25, 2008

The last year in the markets has been as unreal and fantastic as something out of Lewis Carroll's Alice's Adventures in Wonderland. Much like our world today, Wonderland was a sometimes frightening and dangerous place, where nothing made sense and rules changed frequently. It's far too true these days that, as Lewis' protagonist would say, things have gotten curiouser and curiouser. And there are no signs that conditions will become less curious anytime soon. Although investors remain steeped in uncertainty, the situation has already achieved a level of historical significance in that online encyclopedia Wikipedia has an entry for it: "Global Financial Crisis of 2008."

Wikipedia marks the week of September 7, 2008, as the beginning, but we can trace the tumult back to late 2007, when the unraveling of the housing market appeared, at first, to be the bottom. Like a tumble down the rabbit hole, however, there was yet more room to fall. Alice's descent relates to our own. The hole, Lewis writes, "went straight on like a tunnel for some way, and then dipped suddenly down, so suddenly that Alice had not a moment to think about stopping herself before she found herself falling down what seemed to be a very deep well."

Indications that the subprime disaster was not the deepest part of the well appeared in the spring with the collapse of Bear Stearns. A deceptively quiet few months followed, and then in August, perhaps in an early sign of what broad distress was to come, consumer credit dropped for the first time since 1998, declining by $7.9 billion. According to the Federal Reserve, it was the biggest monthly drop in more than half a century.

The Queen's Croquet Ground

By summer's end, the country's major financial institutions appeared as though they had been playing croquet with the Queen of Hearts, successful in her infamous demand, "Off with their heads!" Lehman Brothers was bankrupt, Bank of America had taken over embattled Merrill Lynch, the FDIC seized Washington Mutual — the U.S.'s largest savings and loan — and the Fed approved the multibillion dollar bailouts of Fannie Mae, Freddie Mac, and AIG.

In an effort to put some kind of bandage on the U.S.'s worsening economic wound, Congress passed the controversial $700 billion Emergency Economic Stabilization Act of 2008 in early October. As the month pushed forward, however, we saw more evidence of just how low the markets were capable of going. With investors fixating on the threat of a recession, the markets reflected the uncertainty over whether or not we had hit a bottom; record-breaking drops and rises littered the month. In one five-day period in early October, the Dow Jones Industrial Averageⁱ lost 1,400 points. The period was topped the very next week during which the Dow traversed 1,600 points, from a high of 9,794 to a low of about 8,197. The S&P 500 Indexⁱⁱ, swung considerably, too, posting its biggest gain since the 1930s on October 13 before plunging

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two days later as retailers reported their sharpest sales drop in three years. Our fiscal year may have finished at the end of the month, but the tumult didn't.

In early November, the U.S. underwent an executive regime change with the election of Barack Obama to the presidency. As we foretold, the election itself had a minimal impact on the economy. Instead, the U.S. — and global — markets for the rest of the month succumbed to their own mayhem. The economies of Germany and Japan were officially in recession (with the U.S. following in early December), an automotive industry rescue was in debate, controversy surrounded the way in which the funds from the financial bailout plan were to be dispersed, and stocks continued to plunge. On November 20, the S&P 500, down 49% for the year, had its lowest close since 1997, and the Dow and NASDAQⁱⁱⁱ were at 5 1/2–year closing lows. The Dow itself was down 50% from its all-time high set in October 2007. The very next week, the bailout of Citigroup, Inc. joined the lengthening agenda.

Who Stole the Tarts?

Taking a magnifying glass to the third quarter, U.S. GDP declined 0.3% in its worst showing since 2001, when it declined 1.4% in the third quarter. Though little consolation, the current decline, which followed a 2.8% increase posted in the second quarter, was less than the -0.5% analysts were predicting.

The primary contributor to GDP decline was the squeezing of the American consumer. Although the Consumer Staples sector within the S&P 500 was the only sector to produce positive returns during the quarter, Americans reigned in their spending after the impact of the government's tax rebates wore off, cutting back on purchases of cars, furniture, household appliances, clothes, and other items. Personal consumption expenditures were 3.1% lower than in the second quarter, following a 1.2% increase in the first quarter. Compounding matters, disposable income fell at an annual rate of 8.7% in the third quarter, the largest quarterly drop since 1947. And the Price Index for Gross Domestic Purchases increased 4.8% from the 4.2% increase posted in the second quarter. The unemployment rate rose from 6.1% to 6.5% in October and then to 6.7% in November, a 15-year high; analysts said it could hit 8% or higher in 2009.

Businesses also cut back sharply in the third quarter, slashing spending on equipment and software at a 5.5% pace — the most since the first quarter of 2002 when the economy was struggling to recover from the 2001 recession. In addition to cuts in equipment and software, other negative contributions came from residential fixed investment. Home builders, too, cut spending at a 19.1% pace, indicating the 11th straight quarterly cutback.

However, there were some brighter spots: federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending were all positive contributors while imports, which are negative for the GDP, decreased in the quarter.

Although they grew at a 5.9% pace, U.S. exports did slow from the second quarter's 12.3% growth rate, reflecting less demand from overseas buyers who were now dealing with their own economic troubles. One year ago, we could say that the global economy was functioning separately from the U.S. economy: still

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healthy, still humming. But international markets are now also under pressure. With European recession official and U.S. exports weaker, it has become clear that any stability beyond the U.S. has been seriously diluted. China, however, holds more sway than it has in a long time; it is the largest holder of U.S. Treasuries and its huge trade surplus has helped it accumulate more foreign-currency reserves than any other country.

A Mad Tea Party

Like the Mad Hatter's watch that told only the day of the month and not the time, watching the nearly hour-by-hour destruction of the financial services sector became far too painful. Although the tea party borne from the overconfidence in the credit and housing markets has now become significantly smaller, we may not have seen the end of the chaos in financial services. It has been and continues to be massively reshaped and while some have not survived and others have had opportunities radically altered, there are some that will likely emerge better companies; our analysts are actively searching for those companies — across all sectors.

Through the Looking Glass

Carroll's follow up to Alice's Adventures in Wonderland — Through the Looking-Glass, and What Alice Found There — contains one of the greatest nonsensical poems ever written: Jabberwocky, which contains lines such as, "All mimsy were the borogoves,/And the mome raths outgrabe."

Similarly, these are mimsy, nonsensical times. However, we still do not believe that the global financial system is in dire jeopardy. In fact, we could be nearing the bottom in the equity market. And with a bottom comes opportunity. At the moment, stocks are at their lowest valuations since the 1980s; comparatively, Treasury valuations are at an all-time high and home values are still above where they were in the 1990s.

The vast concern over when — and how hard — we will hit the bottom certainly falls in the category of "curiouser." Growth may continue to be depressed in the near future, but we believe there is hope for a gradual recovery in 2009. Historically, the market has found the bottom and begun to rebound six to nine months ahead of an official recovery. Surveys of economists suggest the current recession will last throughout 2009, which, if the stock market follows a historical looking glass, would suggest it would bottom out in mid-2009. This estimate also — and perhaps too nicely — matches the 20-month average duration of bear markets since 1937, putting a similar stake in the ground for the bottom of this bear market at June of 2009. Unfortunately, these are only averages, meant, like records, to be broken. We have already, for example, fallen well below the average bear market decline (again since 1937) of roughly 34% with an S&P 500 decline of more than 44% as of this writing.

This year, high-quality companies with higher expected growth rates — the kinds of companies in which Alger invests — were punished by the market. Next year, our investment firm enters its 45th year in business. We have weathered many times of frightening uncertainty often coupled with deep bear markets. In each of those periods, Alger investment professionals have remained true, focused, and disciplined in executing upon our investment philosophy and process and on seeking out stock

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opportunities where others "fold" or "flee." We are confident now that, as in past bear markets, our discipline will allow us to fully participate in the upside of growth stocks when the markets once again reward high-quality, high-growth companies.

Why? At Alger, we think these difficult times favor our style of investing, which seeks out high-growth, high-quality companies. Specifically, by analyzing companies' financials and looking for "high quality," we are looking for companies with strong balance sheets, strong market positions, strong management teams — the ingredients that help any company prosper in good times and endure difficult ones. Further, to focus on "high-growth" companies might seem odd in a period when most companies are finding it difficult to even hold course. But, to this end, our sector analysts focus on identifying companies that — after this recession and over the longer term — we believe will be the market-share gainers, the shareholder-value generators, and the creators of new products and services in their sectors despite the recession. While, at present, all companies are focused on cost-cutting and tiptoeing through the madness of this recession, it is never more true than during times of recession that the strongest companies plant the seeds for higher future growth and, we believe, production of superior investment results for their shareholders.

Alice's Adventures in Wonderland was a knowing children's tale, an allegory meant to entertain the youngest generations and help them navigate the absurdities of an adult world. In the end, Alice woke up — a luxury that we, unfortunately, do not have. What we do have are defining principles and processes, expertise, and experience that have carried us through and will continue to enable us to guide our investors to a successful tomorrow. Like Alice in Wonderland, we've been thrust into a bizarre world. But Carroll also wrote Through the Looking-Glass, an almost equally as successful sequel to his famous story; now, we are eagerly awaiting the sequel to ours.

Respectfully submitted,

Daniel C. Chung

Chief Investment Officer

ⁱ The Dow Jones Industrial Average is an index of common stocks comprised of major industrial companies and assumes reinvestment of dividends. It is frequently used as a general measure of stock market performance.

ⁱⁱ Standard & Poor's 500 Index is an index of the 500 largest and most profitable companies in the United States.

ⁱⁱⁱ The Nasdaq Composite Index is a market value-weighted index that measures all domestic and non-U.S.-based securities listed on the Nasdaq stock market.

Investors cannot invest directly in an index. Index performance does not reflect the deduction for fees, expenses, or taxes.

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This report and the financial statements contained herein are submitted for the general information of shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless proceeded or accompanied by an effective prospectus for the Fund.

Standard performance results can be found on the following pages. The investment return and principal value of an investment in a fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end, visit us at www.alger.com, or call us at (800) 992-3863.

The views and opinions of the Fund's management in this report are as of the date of the Shareholders letter and are subject to change at any time subsequent to this date. There is no guarantee that any of the assumptions that formed the basis for the opinions stated herein are accurate or that they will materialize. Moreover, the information forming the basis for such assumptions is from sources believed to be reliable; however, there is no guarantee that such information is accurate. Any securities mentioned, whether owned in a fund or otherwise, are considered in the context of the construction of an overall portfolio of securities and therefore reference to them should not be construed as a recommendation or offer to purchase or sell any such security. Inclusion of such securities in a fund and transactions in such securities, if any, may be for a variety of reasons, including without limitation, in response to cash flows, inclusion in a benchmark, and risk control. The reference to a specific security should also be understood in such context and not viewed as a statement that the security is a significant holding in a portfolio. Please refer to the Schedule of Investments for each fund which is included in this report for a complete list of fund holdings as of October 31, 2008. Securities mentioned in the Shareholders letter, if not found in the Schedule of Investments, may have been held by the Funds during the Funds' fiscal year.

A Word About Risk

Growth stocks tend to be more volatile than other stocks as the price of growth stocks tends to be higher in relation to their companies' earnings and may be more sensitive to market, political, and economic developments. Investing in the stock market involves gains and losses and may not be suitable for all investors. Stocks of small- and mid-sized companies are subject to greater risk than stocks of larger, more established companies owing to such factors as limited liquidity, inexperienced management, and limited financial resources. Funds that invest in fixed-income securities, such as the Balanced Fund, are subject to the fixed-income securities' sensitivity to interest rate movements; their market values tend to fall when interest rates rise and to rise when interest rates fall. These funds are also subject to the risk of a decline in the value of the fund's securities in the event of an issue's falling credit rating or actual default. Funds that participate in leveraging, such as the Capital Appreciation, SMidCap, and Health Sciences Funds, are subject to the risk that borrowing money to leverage will exceed the returns for securities purchased or that the securities

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purchased may actually go down in value; thus, the funds' net asset value can decrease more quickly than if the fund had not borrowed. For a more detailed discussion of the risks associated with a Fund, please see the Fund's Prospectus.

Before investing, carefully consider a fund's investment objective, risks, charges, and expenses. For a prospectus containing this and other information about The Alger Funds, call us at (800) 992-3863 or visit us at www.alger.com. Read it carefully before investing. Fred Alger & Company, Incorporated, Distributor. Member NYSE, SIPC.

NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.

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FUND PERFORMANCE AS OF 9/30/08 (Unaudited)

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Alger LargeCap Class A
(Inception 1/1/97)		(29.92	%)		2.87	%		1.49	%		4.46	%
Alger LargeCap Class B
(Inception 11/11/86)		(30.21	%)		2.90	%		1.44	%		9.50	%
Alger LargeCap Class C
(Inception 8/1/97)		(27.21	%)		3.25	%		1.30	%		2.14	%
Alger SmallCap Class A
(Inception 1/1/97)		(29.50	%)		8.05	%		0.89	%		0.58	%
Alger SmallCap Class B
(Inception 11/11/86)		(29.69	%)		8.16	%		0.86	%		8.48	%
Alger SmallCap Class C
(Inception 8/1/97)		(26.73	%)		8.45	%		0.75	%		(0.72	%)
Alger Balanced Class A
(Inception 1/1/97)		(21.12	%)		2.38	%		3.95	%		6.09	%
Alger Balanced Class B
(Inception 6/1/92)		(21.48	%)		2.36	%		3.89	%		7.03	%
Alger Balanced Class C
(Inception 8/1/97)		(18.22	%)		2.71	%		3.73	%		4.32	%
Alger MidCap Class A
(Inception 1/1/97)		(39.88	%)		3.22	%		6.64	%		7.29	%
Alger MidCap Class B
(Inception 5/24/93)		(39.69	%)		3.27	%		6.58	%		10.96	%
Alger MidCap Class C
(Inception 8/1/97)		(37.68	%)		3.51	%		6.38	%		5.66	%
Alger Capital Appreciation Class A
(Inception 1/1/97)		(29.00	%)		7.71	%		4.35	%		6.04	%
Alger Capital Appreciation Class B
(Inception 11/11/86)		(29.35	%)		7.78	%		4.30	%		10.67	%
Alger Capital Appreciation Class C
(Inception 8/1/97)		(26.39	%)		8.05	%		4.14	%		3.71	%
Alger Health Sciences Class A
(Inception 5/1/02)		(13.52	%)		10.49	%		n/a			10.66	%
Alger Health Sciences Class B
(Inception 5/1/02)		(13.60	%)		10.74	%		n/a			10.70	%
Alger Health Sciences Class C
(Inception 5/1/02)		(10.26	%)		10.87	%		n/a			10.78	%
Alger SMidCap Class A
(Inception 5/8/02)		(29.99	%)		9.42	%		n/a			5.72	%
Alger SMidCap Class B
(Inception 5/8/02)		(30.25	%)		9.70	%		n/a			5.75	%
Alger SMidCap Class C
(Inception 5/8/02)		(27.36	%)		9.84	%		n/a			5.87	%
Alger SMidCap Class I
(Inception 8/6/07)*		(26.05	%)		10.68	%		n/a			6.67	%
Alger Growth Opportunities Class A
(Inception 3/3/08)		n/a			n/a			n/a			(19.51	%)
Alger Growth Opportunities Class C
(Inception 3/3/08)		n/a			n/a			n/a			(16.74	%)
Alger Growth Opportunities Class I
(Inception 3/3/08)		n/a			n/a			n/a			(15.40	%)

* Historical performance prior to August 6, 2007, inception of the class, is that of the Fund's Class A Shares, which has been adjusted to remove the front-end sales charge imposed by Class A Shares.

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ALGER LARGECAP GROWTH FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in the Alger LargeCap Growth Class B shares and the Russell 1000 Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2008. Figures for the Alger LargeCap Growth Class B shares and the Russell 1000 Growth Index include reinvestment of dividends. Performance for the Alger LargeCap Growth Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Class A (Inception 1/1/97)		(45.48	%)		(2.61	%)		(1.02	%)		2.57	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		1.89	%
Class B (Inception 11/11/86)		(45.74	%)		(2.68	%)		(1.08	%)		8.41	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		7.77	%
Class C (Inception 8/1/97)		(43.40	%)		(2.29	%)		(1.22	%)		0.20	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		(0.37	%)

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund's average annual total returns include changes in share price and reinvestment of dividends and capital gains. The graph and table above do not reflect the deduction of taxes that a shareholder would have paid on fund distributions or on the redemption of fund shares. Investment return and principal will fluctuate and the Fund's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. For performance current to the most recent month end, visit us at www.alger.com or call us at (800) 992-3863.

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

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ALGER SMALLCAP GROWTH FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in the Alger SmallCap Growth Class B shares and the Russell 2000 Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2008. Figures for both the Alger SmallCap Growth Class B shares and the Russell 2000 Growth Index, include reinvestment of dividends. Performance for the Alger SmallCap Growth Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Class A (Inception 1/1/97)		(48.37	%)		0.95	%		(1.82	%)		(1.52	%)
Russell 2000 Growth Index		(37.86	%)		(0.12	%)		1.63	%		1.14	%
Class B (Inception 11/11/86)		(45.59	%)		0.88	%		(1.86	%)		7.22	%
Russell 2000 Growth Index		(37.86	%)		(0.12	%)		1.63	%		5.27	%
Class C (Inception 8/1/97)		(46.36	%)		1.32	%		(1.96	%)		(2.91	%)
Russell 2000 Growth Index		(37.86	%)		(0.12	%)		1.63	%		0.29	%

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

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ALGER BALANCED FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Balanced Class B shares, the Russell 1000 Growth Index (an unmanaged index of common stocks) and the Barclay's Government/Credit Bond Index (an unmanaged index of government and corporate bonds) for the ten years ended October 31, 2008. Figures for the Alger Balanced Class B shares, the Russell 1000 Growth Index and the Barclay's Government/Credit Bond Index include reinvestment of dividends and/or interest. Performance for the Alger Balanced Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Class A (Inception 1/1/97)		(34.02	%)		(1.41	%)		2.11	%		4.68	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		1.89	%
Barclay's Gov't/Credit Bond Index		(1.07	%)		3.08	%		4.81	%		5.60	%
Class B (Inception 6/1/92)		(34.31	%)		(1.48	%)		2.04	%		6.01	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		5.54	%
Barclay's Gov't/Credit Bond Index		(1.07	%)		3.08	%		4.81	%		6.16	%
Class C (Inception 8/1/97)		(31.58	%)		(1.08	%)		1.90	%		2.88	%
Russell 1000 Growth Index		(36.95	%)		(1.28	%)		(2.09	%)		(0.37	%)
Barclay's Gov't/Credit Bond Index		(1.07	%)		3.08	%		4.81	%		5.36	%

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

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ALGER MIDCAP GROWTH FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger MidCap Growth Class B shares and Russell Midcap Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2008. Figures for the Alger MidCap Growth Class B shares and Russell Midcap Growth Index include reinvestment of dividends. Performance for the Alger MidCap Growth Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Class A (Inception 1/1/97)		(57.14	%)		(4.39	%)		3.00	%		4.63	%
Russell Midcap Growth Index		(42.65	%)		(0.18	%)		2.20	%		3.62	%
Class B (Inception 5/24/93)		(57.01	%)		(4.35	%)		2.94	%		8.83	%
Russell Midcap Growth Index		(42.65	%)		(0.18	%)		2.20	%		6.39	%
Class C (Inception 8/1/97)		(55.57	%)		(4.08	%)		2.76	%		2.92	%
Russell Midcap Growth Index		(42.65	%)		(0.18	%)		2.20	%		2.06	%

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

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ALGER CAPITAL APPRECIATION FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Capital Appreciation Class B shares and the Russell 3000 Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2008. Figures for the Alger Capital Appreciation Class B shares and the Russell 3000 Growth Index include reinvestment of dividends. Performance for Alger Capital Appreciation Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			10 YEARS			SINCE INCEPTION
Class A (Inception 1/1/97)		(44.09	%)		2.49	%		2.21	%		4.43	%
Russell 3000 Growth Index		(37.04	%)		(1.20	%)		(1.83	%)		1.77	%
Class B (Inception 11/1/93)		(44.32	%)		2.48	%		2.15	%		9.31	%
Russell 3000 Growth Index		(37.04	%)		(1.20	%)		(1.83	%)		5.12	%
Class C (Inception 8/1/97)		(42.01	%)		2.82	%		2.00	%		2.06	%
Russell 3000 Growth Index		(37.04	%)		(1.20	%)		(1.83	%)		(0.36	%)

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

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ALGER HEALTH SCIENCES FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Health Sciences Class B shares, with a contingent deferred sales charge of 1%, and the Standard & Poor's 500 Index (an unmanaged index of common stocks) on May 1, 2002, the inception date of the Alger Health Sciences Fund, through October 31, 2008. Figures for both the Alger Health Sciences Class B shares and the Standard & Poor's 500 Index include reinvestment of dividends. Performance for the Alger Health Sciences Class A and Class C shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			SINCE INCEPTION
Class A (Inception 5/1/02)		(29.87	%)		6.15	%		7.54	%
S&P 500 Index		(36.10	%)		0.26	%		0.24	%
Class B (Inception 5/1/02)		(29.97	%)		6.36	%		7.54	%
S&P 500 Index		(36.10	%)		0.26	%		0.24	%
Class C (Inception 5/1/02)		(27.23	%)		6.52	%		7.65	%
S&P 500 Index		(36.10	%)		0.26	%		0.24	%

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund's total returns include changes in share price and reinvestment of dividends and capital gains. The graph and table above do not reflect the deduction of taxes that a shareholder would have paid on fund distributions or on the redemption of fund shares. Investment return and principal will fluctuate and the Fund's shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. For performance current to the most recent month end, visit us at www.alger.com or call us at (800) 992-3863.

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

-13-

ALGER SMIDCAP GROWTH FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger SMidCap Growth Class B shares, with a contingent deferred sales charge of 1%, and the Russell 2500 Growth Index (an unmanaged index of common stocks) on May 8, 2002, the inception date of the Alger SMidCap Growth Fund, through October 31, 2008. Figures for both the Alger SMidCap Growth Class B shares and the Russell 2500 Growth Index include reinvestment of dividends. Performance for the Alger SMidCap Growth Class A, Class C and Class I shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

AVERAGE ANNUAL TOTAL RETURNS

	1 YEAR			5 YEARS			SINCE INCEPTION
Class A (Inception 5/8/02)		(48.50	%)		2.35	%		1.76	%
Russell 2500 Growth Index		(41.00	%)		(0.11	%)		1.01	%
Class B (Inception 5/8/02)		(48.71	%)		2.55	%		1.73	%
Russell 2500 Growth Index		(41.00	%)		(0.17	%)		1.01	%
Class C (Inception 5/8/02)		(46.56	%)		2.77	%		1.90	%
Russell 2500 Growth Index		(41.00	%)		(0.17	%)		1.01	%
Class I (Inception 8/6/07)*		(45.63	%)		3.53	%		2.66	%
Russell 2500 Growth Index		(41.00	%)		(0.17	%)		1.01	%

* Historical performance prior to August 6, 2007, inception of the class, is that of the Fund's Class A shares, which has been adjusted to remove the front-end sales charge imposed by Class A shares.

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class B and Class C shares.

-14-

ALGER GROWTH OPPORTUNITIES FUND

Fund Highlights Through October 31, 2008 (Unaudited)

The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Growth Opportunities Class A shares, with an initial sales charge of 5.25% maximum sales charge, and the Russell 2500 Growth Index (an unmanaged index of common stocks) on March 3, 2008, the inception date of the Alger Growth Opportunities Fund, through October 31, 2008. Figures for both the Alger Growth Opportunities Class A shares and the Russell 2500 Growth Index include reinvestment of dividends. Performance for the Alger Growth Opportunities Class C and Class I shares will vary from the results shown above due to differences in expenses and sales charges those classes bear.

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

PERFORMANCE COMPARISON AS OF 10/31/08†

TOTAL RETURNS

	SINCE INCEPTION
Class A (Inception 3/3/08)		(37.61	%)
Russell 2500 Growth Index		(30.27	%)
Class C (Inception 3/3/08)		(35.55	%)
Russell 2500 Growth Index		(30.27	%)
Class I (Inception 3/3/08)		(34.50	%)
Russell 2500 Growth Index		(30.27	%)

† Returns reflect maximum initial sales charges on Class A shares and applicable contingent deferred sales charges on Class C shares.

-15-

PORTFOLIO SUMMARY†

October 31, 2008 (Unaudited)

SECTORS	LARGECAP GROWTH			SMALLCAP GROWTH			MIDCAP GROWTH			CAPITAL APPRECIATION			HEALTH SCIENCES			SMIDCAP GROWTH			GROWTH OPPORTUNITIES
Consumer Discretionary		9.0	%		12.9	%		14.0	%		5.6	%		0.3	%		14.4	%		12.8	%
Consumer Staples		13.5			2.2			1.8			9.4			0.9			2.3			2.6
Energy		9.2			9.0			11.2			9.9			0.0			8.7			8.0
Financials		8.4			6.6			10.1			6.2			0.0			8.2			8.4
Health Care		10.2			21.1			13.6			17.8			85.1			22.9			20.5
Industrials		11.5			14.0			13.4			9.2			0.0			11.8			13.4
Information Technology		29.9			25.5			30.0			25.6			0.0			19.5			23.3
Materials		4.6			1.5			2.3			5.2			0.0			2.7			2.0
Telecommunication Services		0.0			2.0			1.8			1.8			0.0			2.1			1.6
Utilities		0.0			1.5			0.5			0.6			0.0			1.2			1.3
Cash and Net Other Assets		3.7			3.7			1.3			8.7			13.7			6.2			6.1
		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

SECTORS/SECURITY TYPES	BALANCED FUND
Consumer Discretionary		6.3	%
Consumer Staples		9.0
Energy		5.8
Financials		6.4
Health Care		7.2
Industrials		8.0
Information Technology		15.0
Materials		2.0
Telecommunication Services		0.5
Utilities		0.0
Total Common Stocks		60.2	%
Corporate Bonds		19.3	%
Agency Bonds		13.7
U.S. Treasury Bonds		5.0
Total Bonds		38.0	%
Cash and Net Other Assets		1.8	%
		100.0	%
DAYS TO MATURITY	MONEY MARKET FUND
0 to 30		91.1	%
31 to 60		8.9
61 to 90		0.0
		100.0	%

† Based on net assets for each Fund, except for Money Market Fund which is based on total investments.

-16-

THE ALGER FUNDS | ALGER LARGECAP GROWTH FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—96.3%	SHARES		VALUE
AEROSPACE & DEFENSE—4.7%
BE Aerospace Inc.*		140,500	$	1,808,235
Boeing Co.		66,740		3,488,500
General Dynamics Corp.		65,990		3,980,517
Lockheed Martin Corp.		33,000		2,806,650
				12,083,902
AIR FREIGHT & LOGISTICS—1.5%
United Parcel Service Inc.		73,500		3,879,330
APPAREL RETAIL—.5%
Abercrombie & Fitch Co.		40,600		1,175,776
ASSET MANAGEMENT & CUSTODY BANKS—2.7%
AllianceBernstein Holding LP		50,275		1,178,446
BlackRock Inc.		26,700		3,506,778
Invesco Ltd.		145,000		2,161,950
				6,847,174
BIOTECHNOLOGY—3.0%
Biogen Idec Inc.*		60,000		2,553,000
Gilead Sciences Inc.*		111,800		5,126,030
				7,679,030
CABLE & SATELLITE—1.3%
Scripps Networks Interactive Inc.		110,900		3,149,560
CASINOS & GAMING—.6%
Wynn Resorts Ltd.		23,000		1,389,200
COAL & CONSUMABLE FUELS—.7%
Consol Energy Inc.		60,000		1,883,400
COMMUNICATIONS EQUIPMENT—4.8%
Cisco Systems Inc.*		312,700		5,556,679
Nokia OYJ#		150,800		2,289,144
Research In Motion Ltd.*		90,975		4,587,869
				12,433,692
COMPUTER & ELECTRONICS RETAIL—.8%
GameStop Corp., Cl. A*		74,200		2,032,338
COMPUTER HARDWARE—4.3%
Apple Inc.*		69,960		7,526,996
Hewlett-Packard Co.		93,065		3,562,528
				11,089,524
COMPUTER STORAGE & PERIPHERALS—1.5%
EMC Corp.*		291,300		3,431,514
SanDisk Corp.*		75,800		673,862
				4,105,376
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.7%
Deere & Co.		112,700		4,345,712

-17-

THE ALGER FUNDS | ALGER LARGECAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
DATA PROCESSING & OUTSOURCED SERVICES—1.6%
Mastercard Inc.		27,000	$	3,991,140
DIVERSIFIED CHEMICALS—.9%
EI Du Pont de Nemours & Co.		70,500		2,256,000
DIVERSIFIED METALS & MINING—1.3%
Freeport-McMoRan Copper & Gold Inc.		117,302		3,413,488
DRUG RETAIL—1.9%
Walgreen Co.		193,525		4,927,147
ELECTRICAL COMPONENTS & EQUIPMENT—.3%
JA Solar Holdings Co., Ltd.*#		147,700		708,960
FERTILIZERS & AGRICULTURAL CHEMICALS—2.4%
Monsanto Co.		46,780		4,162,484
Potash Corp., of Saskatchewan		23,900		2,037,714
				6,200,198
FOOD RETAIL—.4%
Whole Foods Market Inc.		95,700		1,025,904
FOOTWEAR—.7%
Nike Inc, Cl. B		29,400		1,694,322
HEALTH CARE EQUIPMENT—2.1%
Boston Scientific Corp.*		244,000		2,203,320
Hologic Inc.*		150,360		1,840,406
Zimmer Holdings Inc.*		31,500		1,462,545
				5,506,271
HEALTH CARE SUPPLIES—.5%
Inverness Medical Innovations Inc.*		60,800		1,164,320
HOME ENTERTAINMENT SOFTWARE—3.1%
Activision Blizzard Inc.*		298,900		3,724,294
Nintendo Co., Ltd.#		110,815		4,309,784
				8,034,078
HOUSEHOLD PRODUCTS—1.3%
Procter & Gamble Co.		52,860		3,411,584
INDUSTRIAL CONGLOMERATES—3.3%
General Electric Co.		193,900		3,782,989
McDermott International Inc.*		270,100		4,626,813
				8,409,802
INTEGRATED OIL & GAS—4.1%
Chevron Corp.		82,000		6,117,200
Hess Corp.		33,500		2,017,035
Petroleo Brasileiro SA#		88,500		2,379,765
				10,514,000

-18-

THE ALGER FUNDS | ALGER LARGECAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
INTERNET RETAIL—1.2%
Amazon.com Inc.*		52,200	$	2,987,928
INTERNET SOFTWARE & SERVICES—5.7%
eBay Inc.*		516,755		7,890,849
Google Inc., Cl. A*		18,995		6,826,043
				14,716,892
INVESTMENT BANKING & BROKERAGE—1.6%
Goldman Sachs Group Inc.,/The		19,800		1,831,500
Lazard Ltd., Cl. A		77,200		2,329,124
				4,160,624
IT CONSULTING & OTHER SERVICES—1.6%
Cognizant Technology Solutions Corp., Cl. A*		208,500		4,003,200
LIFE SCIENCES TOOLS & SERVICES—.5%
Thermo Fisher Scientific Inc.*		34,500		1,400,700
MANAGED HEALTH CARE—.7%
UnitedHealth Group Inc.		70,800		1,680,084
MOVIES & ENTERTAINMENT—2.6%
Regal Entertainment Group		245,000		3,145,800
Viacom Inc., Cl. B*		174,200		3,522,324
				6,668,124
OIL & GAS DRILLING—1.3%
Transocean Inc.*		40,133		3,304,150
OIL & GAS EQUIPMENT & SERVICES—.5%
Schlumberger Ltd.		23,630		1,220,490
OIL & GAS EXPLORATION & PRODUCTION—2.6%
Devon Energy Corp.		83,500		6,751,810
OTHER DIVERSIFIED FINANCIAL SERVICES—1.7%
Bank of America Corp.		44,800		1,082,816
JPMorgan Chase & Co.		81,500		3,361,875
				4,444,691
PHARMACEUTICALS—3.4%
Abbott Laboratories		70,700		3,899,105
Johnson & Johnson		56,800		3,484,112
Wyeth		42,100		1,354,778
				8,737,995
RESTAURANTS—1.5%
Starbucks Corp.*		297,300		3,903,549
SEMICONDUCTOR EQUIPMENT—1.0%
MEMC Electronic Materials Inc.*		133,475		2,453,271

-19-

THE ALGER FUNDS | ALGER LARGECAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
SEMICONDUCTORS—1.9%
Broadcom Corp., Cl. A*		70,400		$	1,202,432
Intel Corp.		225,330			3,605,280
					4,807,712
SOFT DRINKS—5.6%
Coca-Cola Co.,/The		174,400			7,684,064
Hansen Natural Corp.*		79,600			2,015,472
PepsiCo Inc.		83,700			4,771,737
					14,471,273
SPECIALIZED FINANCE—2.3%
CME Group Inc.		7,200			2,031,480
NYSE Euronext		130,700			3,944,526
					5,976,006
SYSTEMS SOFTWARE—4.4%
Microsoft Corp.		500,195			11,169,354
TOBACCO—4.2%
Altria Group Inc.		251,885			4,833,673
Philip Morris International Inc.		136,585			5,937,350
					10,771,023
TOTAL COMMON STOCKS (Cost $357,918,359)					246,980,104
SHORT-TERM INVESTMENTS—2.9%	PRINCIPAL AMOUNT
TIME DEPOSITS
Citibank London, .96%, 11/3/08 (Cost $7,544,833)	$	7,544,833			7,544,833
Total Investments (Cost $365,463,192)(a)		99.2	%		254,524,937
Other Assets in Excess of Liabilities		0.8			2,094,526
NET ASSETS		100.0	%	$	256,619,463

* Non-income producing securities.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $369,145,041 amounted to $114,620,104 which consisted of aggregate gross unrealized appreciation of $3,038,499 and aggregate gross unrealized depreciation of $117,658,603.

See Notes to Financial Statements.

-20-

THE ALGER FUNDS | ALGER SMALLCAP GROWTH FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—96.3%	SHARES		VALUE
AEROSPACE & DEFENSE—1.7%
BE Aerospace Inc.*		146,945	$	1,891,182
Esterline Technologies Corp.*		87,720		3,162,306
				5,053,488
AIRLINES—.7%
Airtran Holdings Inc.*		557,845		2,281,586
APPAREL RETAIL—1.3%
Aeropostale Inc.*		89,600		2,169,216
AnnTaylor Stores Corp.*		147,670		1,856,212
				4,025,428
APPLICATION SOFTWARE—6.6%
Ansys Inc.*		75,295		2,155,696
Concur Technologies Inc.*		105,195		2,654,070
Informatica Corp.*		278,000		3,905,900
Solera Holdings Inc.*		168,245		4,187,618
Synchronoss Technologies Inc.*		160,565		1,247,590
Taleo Corp.*		254,000		3,505,200
TIBCO Software Inc.*		447,560		2,304,934
				19,961,008
BIOTECHNOLOGY—7.8%
Acorda Therapeutics Inc.*		79,335		1,618,434
Alexion Pharmaceuticals Inc.*		103,600		4,221,700
Cepheid Inc.*		96,700		1,147,829
Cubist Pharmaceuticals Inc.*		172,865		4,389,042
InterMune Inc.*		187,710		2,764,968
Myriad Genetics Inc.*		55,900		3,526,731
OSI Pharmaceuticals Inc.*		65,700		2,493,315
United Therapeutics Corp.*		38,260		3,337,420
				23,499,439
CASINOS & GAMING—2.2%
Bally Technologies Inc.*		162,425		3,597,714
WMS Industries Inc.*		118,200		2,955,000
				6,552,714
COAL & CONSUMABLE FUELS—.8%
International Coal Group Inc.*		503,590		2,356,801
COMMUNICATIONS EQUIPMENT—3.2%
Foundry Networks Inc.*		121,400		1,802,790
Nice Systems Ltd.*#		172,925		3,866,603
Polycom Inc.*		123,575		2,596,311
Sonus Networks Inc.*		646,600		1,428,986
				9,694,690
COMPUTER STORAGE & PERIPHERALS—1.1%
Synaptics Inc.*		113,377		3,502,216

-21-

THE ALGER FUNDS | ALGER SMALLCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
CONSTRUCTION & ENGINEERING—2.1%
Aecom Technology Corp.*		189,795	$	3,346,086
URS Corp.*		102,485		3,012,034
				6,358,120
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.3%
Bucyrus International Inc.		87,160		2,103,171
Titan Machinery Inc.*		143,700		1,779,006
				3,882,177
DATA PROCESSING & OUTSOURCED SERVICES—3.2%
NeuStar Inc., Cl. A*		146,650		2,889,005
TeleTech Holdings Inc.*		288,200		2,605,328
VeriFone Holdings Inc.*		203,045		2,306,591
Wright Express Corp.*		131,775		1,804,000
				9,604,924
DISTILLERS & VINTNERS—1.0%
Central European Distribution Corp.*		109,946		3,165,345
DISTRIBUTORS—1.1%
LKQ Corp.*		299,170		3,422,505
EDUCATION SERVICES—1.5%
Corinthian Colleges Inc.*		314,800		4,495,344
ELECTRIC UTILITIES—1.5%
ITC Holdings Corp.		108,000		4,382,640
ELECTRICAL COMPONENTS & EQUIPMENT—.4%
JA Solar Holdings Co., Ltd.*#		254,220		1,220,256
ENVIRONMENTAL & FACILITIES SERVICES—1.4%
Waste Connections Inc.*		125,000		4,231,250
FOOTWEAR—2.0%
Deckers Outdoor Corp.*		30,385		2,578,471
Iconix Brand Group Inc.*		307,925		3,353,303
				5,931,774
HEALTH CARE EQUIPMENT—5.0%
ev3 Inc.*		222,000		1,436,340
Hologic Inc.*		104,470		1,278,713
Insulet Corp.*		145,300		813,680
Masimo Corp.*		91,900		2,939,881
Meridian Bioscience Inc.		188,600		4,635,788
Thoratec Corp.*		164,928		4,060,527
				15,164,929
HEALTH CARE FACILITIES—1.2%
Tenet Healthcare Corp.*		810,300		3,549,114

-22-

THE ALGER FUNDS | ALGER SMALLCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HEALTH CARE SERVICES—2.8%
Gentiva Health Services Inc.*		168,900	$	4,585,635
Immucor Inc.*		95,500		2,535,525
Inverness Medical Innovations Inc.*		74,450		1,425,718
				8,546,878
HOME ENTERTAINMENT SOFTWARE—.7%
THQ Inc.*		267,100		1,989,895
HOUSEWARES & SPECIALTIES—1.3%
Tupperware Brands Corp.		155,700		3,939,210
INDUSTRIAL MACHINERY—3.4%
Actuant Corp., Cl. A		182,740		3,276,528
Clarcor Inc.		115,400		4,084,006
RBC Bearings Inc.*		116,800		2,771,664
				10,132,198
INTEGRATED TELECOMMUNICATION SERVICES—.4%
Cincinnati Bell Inc.*		498,700		1,191,893
INTERNET RETAIL—.8%
priceline.com Inc.*		43,115		2,269,142
INTERNET SOFTWARE & SERVICES—3.9%
GSI Commerce Inc.*		344,749		3,568,152
Interwoven Inc.*		315,600		3,979,716
Omniture Inc.*		130,975		1,506,213
VistaPrint Ltd.*		152,900		2,610,003
				11,664,084
INVESTMENT BANKING & BROKERAGE—2.1%
Greenhill & Co., Inc.		28,765		1,897,627
Investment Technology Group Inc.*		106,700		2,177,747
Lazard Ltd., Cl. A		79,100		2,386,447
				6,461,821
IT CONSULTING & OTHER SERVICES—.9%
SI International Inc.*		98,275		2,830,320
LEISURE FACILITIES—1.0%
Life Time Fitness Inc.*		158,175		3,011,652
LEISURE PRODUCTS—.8%
Phillips-Van Heusen Corp.		94,580		2,318,156
LIFE SCIENCES TOOLS & SERVICES—3.5%
Bruker Corp.*		201,100		822,499
Icon PLC*#		140,300		3,559,411
Illumina Inc.*		119,120		3,672,470
Parexel International Corp.*		225,508		2,345,283
				10,399,663

-23-

THE ALGER FUNDS | ALGER SMALLCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
METAL & GLASS CONTAINERS—1.5%
Silgan Holdings Inc.		94,685	$	4,406,640
MOVIES & ENTERTAINMENT—.6%
Regal Entertainment Group		142,400		1,828,416
OIL & GAS EQUIPMENT & SERVICES—3.2%
Cal Dive International Inc.*		218,212		1,856,984
Dril-Quip Inc.*		97,220		2,401,334
IHS Inc., Cl. A*		88,500		3,132,015
T-3 Energy Services Inc.*		94,240		2,272,126
				9,662,459
OIL & GAS EXPLORATION & PRODUCTION—5.1%
Carrizo Oil & Gas Inc.*		94,060		2,200,064
Comstock Resources Inc.*		60,600		2,994,852
Concho Resources Inc.*		179,771		3,820,134
Mariner Energy Inc.*		192,159		2,765,168
Petrobank Energy & Resources Ltd.*		120,295		2,275,597
Whiting Petroleum Corp.*		22,700		1,180,173
				15,235,988
PACKAGED FOODS & MEATS—1.1%
Hain Celestial Group Inc.*		146,820		3,412,097
PHARMACEUTICALS—.8%
Auxilium Pharmaceuticals Inc.*		59,400		1,167,210
Optimer Pharmaceuticals Inc.*		154,000		639,100
Par Pharmaceutical Cos., Inc.*		72,500		725,000
				2,531,310
PROPERTY & CASUALTY INSURANCE—1.1%
First Mercury Financial Corp.*		294,235		3,174,796
REGIONAL BANKS—1.7%
First Commonwealth Financial Corp.		159,100		1,759,646
Signature Bank*		101,430		3,304,589
				5,064,235
REINSURANCE—.5%
Platinum Underwriters Holdings Ltd.		46,800		1,485,432
RESEARCH & CONSULTING SERVICES—1.4%
FTI Consulting Inc.*		72,800		4,240,600
RESTAURANTS—.3%
McCormick & Schmick's Seafood Restaurants Inc.*		201,635		985,995
SECURITY & ALARM SERVICES—1.6%
Geo Group Inc.,/The*		268,370		4,739,414

-24-

THE ALGER FUNDS | ALGER SMALLCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
SEMICONDUCTOR EQUIPMENT—.8%
Tessera Technologies Inc.*		144,005		$	2,488,406
SEMICONDUCTORS—4.2%
Atheros Communications Inc.*		186,225			3,346,463
Cavium Networks Inc.*		132,600			1,689,324
Microsemi Corp.*		211,100			4,589,314
ON Semiconductor Corp.*		572,470			2,925,322
					12,550,423
TECHNOLOGY DISTRIBUTORS—.9%
Mellanox Technologies Ltd.*		363,861			2,823,561
THRIFTS & MORTGAGE FINANCE—1.2%
Brookline Bancorp Inc.		309,500			3,621,150
WIRELESS TELECOMMUNICATION SERVICES—1.6%
SBA Communications Corp.*		224,576			4,713,850
TOTAL COMMON STOCKS (Cost $408,598,460)					290,055,432
SHORT-TERM INVESTMENTS—4.1%	PRINCIPAL AMOUNT
TIME DEPOSITS
Citibank London, .96%, 11/3/08	$	11,600,000			11,600,000
JP Morgan Chase London, .96%, 11/3/08		799,848			799,848
TOTAL TIME DEPOSITS (Cost $12,399,848)					12,399,848
Total Investments (Cost $420,998,308)(a)		100.4	%		302,455,280
Liabilities in Excess of Other Assets		(0.4	)		(1,091,568	)
NET ASSETS		100.0	%	$	301,363,712

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $421,234,793 amounted to $118,779,513 which consisted of aggregate gross unrealized appreciation of $10,884,900 and aggregate gross unrealized depreciation of $129,664,413.

See Notes to Financial Statements.

-25-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—59.8%	SHARES		VALUE
ADVERTISING—.3%
Focus Media Holding Ltd.*#		8,500	$	157,505
AEROSPACE & DEFENSE—2.7%
BE Aerospace Inc.*		12,200		157,015
Boeing Co.		12,020		628,285
General Dynamics Corp.		8,800		530,816
Lockheed Martin Corp.		4,200		357,210
				1,673,326
AIR FREIGHT & LOGISTICS—1.0%
FedEx Corp.		3,300		215,722
United Parcel Service Inc.		7,600		401,128
				616,850
APPLICATION SOFTWARE—.2%
Intuit Inc.*		4,000		100,240
ASSET MANAGEMENT & CUSTODY BANKS—.7%
AllianceBernstein Holding LP		4,400		103,136
BlackRock Inc.		1,700		223,278
Invesco Ltd.		8,200		122,262
				448,676
BIOTECHNOLOGY—1.0%
Biogen Idec Inc.*		1,800		76,590
Genentech Inc.*		4,700		389,818
Gilead Sciences Inc.*		4,100		187,985
				654,393
BROADCASTING & CABLE TV—.2%
Discovery Communications Inc.*		9,700		132,308
CABLE & SATELLITE—1.0%
Comcast Corp., Cl. A		7,200		111,024
Scripps Networks Interactive Inc.		17,800		505,520
				616,544
CASINOS & GAMING—.2%
International Game Technology		8,800		123,200
CATALOG RETAIL—.1%
HSN Inc.*		6,080		37,392
COAL & CONSUMABLE FUELS—.3%
Peabody Energy Corp.		4,900		169,099
COMMODITY CHEMICALS—.1%
Celanese Corp.		5,400		74,844
COMMUNICATIONS EQUIPMENT—2.1%
Cisco Systems Inc.*		36,955		656,691
Nokia OYJ#		12,700		192,786
QUALCOMM Inc.		3,800		145,388

-26-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
COMMUNICATIONS EQUIPMENT—(CONT.)
Research In Motion Ltd.*		5,445	$	274,591
TomTom NV*		7,000		53,088
				1,322,544
COMPUTER & ELECTRONICS RETAIL—.1%
GameStop Corp., Cl. A*		3,100		84,909
COMPUTER HARDWARE—2.4%
Apple Inc.*		8,465		910,749
Hewlett-Packard Co.		15,600		597,168
				1,507,917
COMPUTER STORAGE & PERIPHERALS—.9%
EMC Corp.*		34,200		402,876
NetApp Inc.*		6,400		86,592
SanDisk Corp.*		11,400		101,346
				590,814
CONSTRUCTION & ENGINEERING—.3%
Fluor Corp.		5,100		203,643
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—.4%
Deere & Co.		4,100		158,096
Joy Global Inc.		2,300		66,654
				224,750
CONSUMER ELECTRONICS—.7%
Garmin Ltd.*		5,100		114,495
Harman International Industries Inc.		6,200		113,894
Sony Corp.#		10,400		241,696
				470,085
DATA PROCESSING & OUTSOURCED SERVICES—.9%
Alliance Data Systems Corp.*		4,000		200,640
Mastercard Inc.		1,600		236,512
VeriFone Holdings Inc.*		8,600		97,696
				534,848
DEPARTMENT STORES—.2%
Nordstrom Inc.		8,100		146,529
DIVERSIFIED CHEMICALS—.5%
EI Du Pont de Nemours & Co.		9,400		300,800
DIVERSIFIED METALS & MINING—.3%
Freeport-McMoRan Copper & Gold Inc.		5,760		167,616
DRUG RETAIL—1.7%
CVS/Caremark Corp.		16,500		505,725
Walgreen Co.		23,100		588,126
				1,093,851

-27-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
ELECTRICAL COMPONENTS & EQUIPMENT—.3%
First Solar Inc.*		700	$	100,590
General Cable Corp.*		5,800		99,064
				199,654
FERTILIZERS & AGRICULTURAL CHEMICALS—.5%
Monsanto Co.		3,300		293,634
FOOD RETAIL—.2%
Whole Foods Market Inc.		10,800		115,776
FOOTWEAR—.4%
Nike Inc., Cl. B		4,300		247,809
GOLD—.3%
Yamana Gold Inc.		34,100		157,883
HEALTH CARE EQUIPMENT—2.1%
Beckman Coulter Inc.		3,200		159,744
Boston Scientific Corp.*		34,900		315,147
Hologic Inc.*		15,700		192,168
St. Jude Medical Inc.*		8,900		338,467
Zimmer Holdings Inc.*		6,400		297,152
				1,302,678
HEALTH CARE SERVICES—.6%
Quest Diagnostics Inc.		7,400		346,320
HEALTH CARE SUPPLIES—.3%
Inverness Medical Innovations Inc.*		8,300		158,945
HOME ENTERTAINMENT SOFTWARE—1.2%
Nintendo Co., Ltd.#		10,245		398,445
Take-Two Interactive Software Inc.		32,000		379,520
				777,965
HOTELS RESORTS & CRUISE LINES—.2%
Accor SA		3,900		150,957
HOUSEHOLD PRODUCTS—1.0%
Procter & Gamble Co.		9,425		608,290
INDUSTRIAL CONGLOMERATES—2.4%
3M Co.		6,500		417,950
General Electric Co.		43,200		842,832
McDermott International Inc.*		14,900		255,237
				1,516,019
INDUSTRIAL GASES—.2%
Praxair Inc.		1,800		117,270
INDUSTRIAL MACHINERY—.3%
ITT Corp.		4,010		178,445

-28-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
INDUSTRIAL REITS—.1%
DuPont Fabros Technology Inc.		14,900	$	92,827
INSURANCE BROKERS—.2%
Willis Group Holdings Ltd.		4,600		120,704
INTEGRATED OIL & GAS—2.1%
ConocoPhillips		5,300		275,706
Exxon Mobil Corp.		7,600		563,312
Hess Corp.		4,600		276,966
Petroleo Brasileiro SA#		8,100		217,809
				1,333,793
INTEGRATED TELECOMMUNICATION SERVICES—.5%
AT&T Inc.		10,800		289,116
INTERNET RETAIL—.5%
Amazon.com Inc.*		2,300		131,652
Expedia Inc.*		7,600		72,276
Ticketmaster Entertainment Inc.*		11,680		113,062
				316,990
INTERNET SOFTWARE & SERVICES—2.3%
eBay Inc.*		34,890		532,770
Google Inc., Cl. A*		1,605		576,773
IAC/InterActiveCorp.*		13,300		222,908
Yahoo! Inc.*		10,000		128,200
				1,460,651
INVESTMENT BANKING & BROKERAGE—1.4%
Goldman Sachs Group Inc.,/The		3,400		314,500
Greenhill & Co., Inc.		3,300		217,701
Lazard Ltd., Cl. A		12,400		374,108
				906,309
IT CONSULTING & OTHER SERVICES—.4%
Cognizant Technology Solutions Corp., Cl. A*		14,000		268,800
LEISURE PRODUCTS—.3%
Gildan Activewear Inc.*		8,600		200,896
LIFE & HEALTH INSURANCE—.2%
Aflac Inc.		3,500		154,980
MANAGED HEALTH CARE—.7%
Aetna Inc.		4,500		111,915
UnitedHealth Group Inc.		13,100		310,863
				422,778
METAL & GLASS CONTAINERS—.2%
Owens-Illinois Inc.*		5,600		128,128

-29-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
MOVIES & ENTERTAINMENT—1.2%
DreamWorks Animation SKG Inc.*		4,000	$	112,400
Regal Entertainment Group		26,400		338,976
Viacom Inc., Cl. B*		14,200		287,124
				738,500
OFFICE REITS—.4%
Digital Realty Trust Inc.		7,100		237,708
OIL & GAS DRILLING—.8%
Transocean Inc.*		6,316		519,996
OIL & GAS EQUIPMENT & SERVICES—1.6%
Cameron International Corp.*		8,800		213,488
National Oilwell Varco Inc.*		6,060		181,133
Schlumberger Ltd.		12,225		631,422
				1,026,043
OIL & GAS EXPLORATION & PRODUCTION—1.0%
Chesapeake Energy Corp.		4,100		90,077
Devon Energy Corp.		6,700		541,762
				631,839
OTHER DIVERSIFIED FINANCIAL SERVICES—1.4%
Bank of America Corp.		4,200		101,514
BM&F BOVESPA SA		20,232		55,082
JPMorgan Chase & Co.		18,300		754,875
				911,471
PACKAGED FOODS & MEATS—.7%
Kraft Foods Inc., Cl. A		16,100		469,154
PHARMACEUTICALS—2.6%
Abbott Laboratories		9,900		545,985
Johnson & Johnson		6,800		417,112
Merck & Co., Inc.		9,600		297,120
Mylan Inc.*		22,300		191,111
Shire PLC#		5,200		205,140
				1,656,468
RESEARCH & CONSULTING SERVICES—.5%
FTI Consulting Inc.*		5,600		326,200
RESTAURANTS—.8%
Cheesecake Factory/The*		14,000		123,200
Starbucks Corp.*		31,200		409,656
				532,856
SEMICONDUCTOR EQUIPMENT—.8%
Kla-Tencor Corp.		3,900		90,675
Lam Research Corp.*		6,800		152,048
MEMC Electronic Materials Inc.*		8,230		151,267
Tessera Technologies Inc.*		7,300		126,144
				520,134

-30-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
SEMICONDUCTORS—1.5%
Intel Corp.		26,600	$	425,600
Intersil Corp.		6,300		86,247
Maxim Integrated Products Inc.		17,100		232,560
Nvidia Corp.*		19,800		173,448
				917,855
SOFT DRINKS—3.6%
Coca-Cola Co.,/The		25,300		1,114,718
Hansen Natural Corp.*		8,900		225,348
PepsiCo Inc.		16,200		923,562
				2,263,628
SPECIALIZED FINANCE—1.1%
CME Group Inc.		1,590		448,618
Hong Kong Exchanges and Clearing Ltd.		12,900		130,810
NYSE Euronext		2,800		84,504
				663,932
SYSTEMS SOFTWARE—2.2%
Microsoft Corp.		62,900		1,404,557
THRIFTS & MORTGAGE FINANCE—.4%
New York Community Bancorp Inc.		16,300		255,258
TOBACCO—1.8%
Altria Group Inc.		30,815		591,340
Philip Morris International Inc.		12,515		544,027
				1,135,367
TRUCKING—.2%
Landstar System Inc.		2,700		104,193
TOTAL COMMON STOCKS (Cost $55,986,845)				37,635,459
PREFERRED STOCKS—.4%
OTHER DIVERSIFIED FINANCIAL SERVICES
JPMorgan Chase & Co., 8.625%, Pfd (Cost $225,000)		9,000		224,100
CORPORATE BONDS—18.8%	PRINCIPAL AMOUNT
BREWERS—.5%
SABMiller PLC, 5.70%, 1/15/14(a)	$	350,000		331,132
COAL & CONSUMABLE FUELS—.5%
Massey Energy Co., 6.875%, 12/15/13		350,000		285,250

-31-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

CORPORATE BONDS—(CONT.)	PRINCIPAL AMOUNT		VALUE
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—.3%
Caterpillar Financial Services Corp., 6.20%, 9/30/13	$	200,000	$	193,081
ELECTRIC UTILITIES—1.5%
Entergy Gulf States Louisiana LLC, 6.00%, 5/1/18(a)		300,000		234,407
Exelon Generation Co., LLC, 6.20%, 10/1/17		175,000		138,929
Florida Power Corp., 5.80%, 9/15/17		300,000		270,836
Southern Co., 5.30%, 1/15/12		300,000		289,793
				933,965
ELECTRICAL COMPONENTS & EQUIPMENT—.4%
Cooper US Inc., 6.10%, 7/1/17		330,000		282,924
FOOD RETAIL—.4%
Kroger Co.,/The, 6.15%, 1/15/20		300,000		246,756
INDUSTRIAL CONGLOMERATES—.7%
Ge Capital Commercial Mortgage Corp., 6.59%, 8/11/33		425,000		409,920
INDUSTRIAL MACHINERY—.5%
Systems 2001 Asset Trust LLC, 6.664%, 9/15/13(b)		318,257		320,335
INTEGRATED OIL & GAS—.2%
Marathon Oil Corp., 5.90%, 3/15/18		150,000		116,550
INTEGRATED TELECOMMUNICATION SERVICES—1.3%
AT&T Inc., 4.95%, 1/15/13		600,000		556,035
Verizon Communications Inc., 5.25%, 4/15/13		250,000		230,004
				786,039
INVESTMENT BANKING & BROKERAGE—3.8%
Bear Stearns Commercial Mortgage Securities, 4.888%, 5/14/16		350,000		352,868
Bear Stearns Commercial Mortgage Securities, 5.064%, 5/14/16		300,000		302,739
Goldman Sachs Group Inc.,/The, 3.294%, 12/22/08		325,000		322,170
Goldman Sachs Group Inc.,/The, 6.15%, 4/1/18		275,000		228,192
Lazard Group, 6.85%, 6/15/17		370,000		266,125
Morgan Stanley Capital I, 5.178%, 9/15/42		600,000		518,765
Morgan Stanley Capital I, 5.514%, 11/12/49		500,000		375,197
				2,366,056
MULTI-UTILITIES—.7%
CenterPoint Energy Transition Bond Co., LLC, 4.97%, 8/1/14		345,000		349,780
Virginia Electric and Power Co., 5.10%, 11/30/12		125,000		114,053
				463,833
OFFICE ELECTRONICS—.1%
Xerox Corp., 5.65%, 5/15/13		100,000		79,000
OIL & GAS EQUIPMENT & SERVICES—.5%
Weatherford International Ltd., 6.00%, 3/15/18		375,000		286,913

-32-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

CORPORATE BONDS—(CONT.)	PRINCIPAL AMOUNT		VALUE
OIL & GAS EXPLORATION & PRODUCTION—.9%
PetroHawk Energy Corp., 7.875%, 6/1/15(a)	$	100,000	$	68,250
XTO Energy Inc., 5.90%, 8/1/12		500,000		464,569
				532,819
OIL & GAS REFINING & MARKETING—.6%
Tesoro Corp., 6.25%, 11/1/12		200,000		154,000
Valero Energy Corp., 6.875%, 4/15/12		250,000		240,923
				394,923
OIL & GAS STORAGE & TRANSPORTATION—1.2%
Enterprise Products Operating LP, 8.375%, 8/1/66		610,000		453,508
Inergy LP/Inergy Finance Corp., 8.25%, 3/1/16		347,000		268,058
				721,566
OTHER DIVERSIFIED FINANCIAL SERVICES—1.7%
Bank of America Corp., 8.00%, 1/30/18		150,000		112,472
Bank of America Corp., 8.125%, 5/15/18		400,000		310,472
Barclays Bank PLC, 6.05%, 12/4/17(a)		225,000		169,983
Citigroup Inc., 8.40%, 4/30/18		550,000		382,993
JPMorgan Chase & Co., 7.90%, 4/30/18		150,000		121,879
				1,097,799
PROPERTY & CASUALTY INSURANCE—.9%
Ace INA Holdings Inc., 5.60%, 5/15/15		350,000		301,224
Liberty Mutual Group Inc., 7.80%, 3/15/37(a)		600,000		296,376
				597,600
RESTAURANTS—.3%
Darden Restaurants Inc., 5.625%, 10/15/12		250,000		214,463
SOFT DRINKS—.7%
Dr. Pepper Snapple Group Inc., 6.82%, 5/1/18(a)		250,000		219,247
PepsiCo Inc., 4.65%, 2/15/13		250,000		240,459
				459,706
STEEL—.3%
ArcelorMittal, 6.125%, 6/1/18(a)		300,000		207,051
SYSTEMS SOFTWARE—.1%
Oracle Corp., 4.95%, 4/15/13		100,000		93,784
WIRELESS TELECOMMUNICATION SERVICES—.7%
American Tower Trust, 5.957%, 4/15/37		500,000		417,754
TOTAL CORPORATE BONDS (Cost $13,571,632)				11,839,219

-33-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

CONVERTIBLE CORPORATE BONDS—.5%	PRINCIPAL AMOUNT		VALUE
OIL & GAS DRILLING—.2%
Transocean Inc., 1.50%, 12/15/37	$	135,000	$	103,444
SPECIALIZED REITS—.3%
Rayonier TRS Holdings Inc., 3.75%, 10/15/12(a)		300,000		226,125
TOTAL CONVERTIBLE CORPORATE BONDS (Cost $964,360)				329,569
U.S. GOVERNMENT & AGENCY OBLIGATIONS—18.7%
Federal National Mortgage Association, 3.85%, 4/14/09 3.25%, 4/9/13 5.00%, 4/1/18 5.50%, 10/25/20 5.50%, 12/25/20 6.625%, 11/15/30 6.00%, 4/25/35	500,000 500,000 589,201 550,000 521,389 350,000 950,000			502,745 482,724 581,587 562,638 523,405 396,765 934,208
Federal Farm Credit Bank, 5.20%, 9/26/17 4.95%, 10/18/18	1,000,000 455,000			992,640 442,288
Federal Home Loan Banks, 5.375%, 6/8/12	275,000			289,844
Federal Home Loan Mortgage Corporation, 5.50%, 7/15/10 5.50%, 12/15/20 6.00%, 8/15/29 6.00%, 3/15/36	320,359 532,990 900,000 699,582			322,670 537,915 913,833 678,912
Government National Mortgage Association, 5.00%, 5/16/29	439,324			441,314
U.S. Treasury Notes, 4.875%, 8/15/09 5.00%, 8/15/11 4.75%, 5/15/14 4.25%, 11/15/14 4.50%, 2/15/16 4.75%, 8/15/17	300,000 700,000 552,000 800,000 300,000 300,000			308,156 765,570 605,864 858,188 316,477 317,625
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (Cost $11,602,354)				11,775,368

-34-

THE ALGER FUNDS | ALGER BALANCED FUND

Schedule of Investments (Continued) October 31, 2008

SHORT-TERM INVESTMENTS—2.3%	PRINCIPAL AMOUNT			VALUE
TIME DEPOSITS
Citibank London, .96%, 11/3/08 (Cost $1,456,470)	$	1,456,470		$	1,456,470
Total Investments (Cost $83,806,661)(c)		100.5	%		63,260,185
Liabilities in Excess of Other Assets		(0.5	)		(338,829	)
NET ASSETS		100.0	%	$	62,921,356

* Non-income producing securities.

# American Depositary Receipts.

(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities may be sold prior to their maturity only to qualified institutional buyers. These securities are deemed to be liquid and represent 3.3% of the net assets of the fund.

(b) Security may be sold prior to maturity only to qualified institutional buyers. Security was acquired on February 9, 2005 for a cost of $336,636.00.

(c) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $83,921,977 amounted to $20,661,793 which consisted of aggregate gross unrealized appreciation of $670,609 and aggregate gross unrealized depreciation of $21,332,402.

See Notes to Financial Statements.

-35-

THE ALGER FUNDS | ALGER MIDCAP GROWTH FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—98.4%	SHARES		VALUE
AEROSPACE & DEFENSE—1.0%
BE Aerospace Inc.*		223,550	$	2,877,089
APPAREL RETAIL—1.8%
Aeropostale Inc.*		48,300		1,169,343
Chico's FAS Inc.*		442,300		1,503,820
J Crew Group Inc.*		83,400		1,688,850
Urban Outfitters Inc.*		51,800		1,126,132
				5,488,145
APPLICATION SOFTWARE—2.6%
Autodesk Inc.*		146,300		3,117,653
Informatica Corp.*		129,500		1,819,475
Taleo Corp.*		58,400		805,920
TIBCO Software Inc.*		441,100		2,271,665
				8,014,713
ASSET MANAGEMENT & CUSTODY BANKS—4.4%
AllianceBernstein Holding LP		38,000		890,720
BlackRock Inc.		21,100		2,771,274
Blackstone Group LP/The		240,000		2,193,600
Invesco Ltd.		348,700		5,199,117
State Street Corp.		52,200		2,262,870
				13,317,581
BIOTECHNOLOGY—5.0%
Alexion Pharmaceuticals Inc.*		88,800		3,618,600
Biogen Idec Inc.*		36,300		1,544,565
Celgene Corp.*		30,800		1,979,208
Metabolix Inc.*		534,300		5,006,391
United Therapeutics Corp.*		33,050		2,882,952
				15,031,716
COAL & CONSUMABLE FUELS—1.1%
Consol Energy Inc.		104,400		3,277,116
COMMUNICATIONS EQUIPMENT—2.1%
Juniper Networks Inc.*		108,200		2,027,668
Research In Motion Ltd.*		86,000		4,336,980
				6,364,648
COMPUTER & ELECTRONICS RETAIL—1.2%
GameStop Corp., Cl. A*		127,000		3,478,530
COMPUTER HARDWARE—1.7%
Apple Inc.*		46,800		5,035,212
COMPUTER STORAGE & PERIPHERALS—.5%
NetApp Inc.*		105,700		1,430,121
CONSTRUCTION & ENGINEERING—2.2%
Fluor Corp.		167,100		6,672,303

-36-

THE ALGER FUNDS | ALGER MIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.5%
Deere & Co.		73,500	$	2,834,160
Joy Global Inc.		56,300		1,631,574
				4,465,734
DEPARTMENT STORES—.5%
Kohl's Corp.*		46,100		1,619,493
DISTRIBUTORS—.7%
LKQ Corp.*		187,300		2,142,712
DIVERSIFIED METALS & MINING—0.0%
Thompson Creek Metals Co., Inc.*		10,000		59,600
DRUG RETAIL—.3%
China Nepstar Chain Drugstore Ltd.#		220,600		915,490
EDUCATION SERVICES—.9%
Corinthian Colleges Inc.*		106,400		1,519,392
ITT Educational Services Inc.*		14,000		1,227,100
				2,746,492
ELECTRIC UTILITIES—.5%
ITC Holdings Corp.		37,900		1,537,982
ELECTRICAL COMPONENTS & EQUIPMENT—2.2%
General Cable Corp.*		234,400		4,003,552
JA Solar Holdings Co., Ltd.*#		554,100		2,659,680
				6,663,232
FERTILIZERS & AGRICULTURAL CHEMICALS—.5%
Mosaic Co.,/The		39,200		1,544,872
FOOD RETAIL—.7%
Whole Foods Market Inc.		210,700		2,258,704
FOOTWEAR—1.4%
Iconix Brand Group Inc.*		400,900		4,365,801
HEALTH CARE EQUIPMENT—2.3%
Insulet Corp.*		248,500		1,391,600
Varian Medical Systems Inc.*		125,600		5,716,056
				7,107,656
HEALTH CARE FACILITIES—1.9%
Community Health Systems Inc.*		123,400		2,529,700
Tenet Healthcare Corp.*		713,300		3,124,254
				5,653,954
HEALTH CARE SERVICES—.3%
Gentiva Health Services Inc.*		32,800		890,520
HEAVY ELECTRICAL EQUIPMENT—.3%
Vestas Wind Systems A/S*		26,000		1,059,431

-37-

THE ALGER FUNDS | ALGER MIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HOME ENTERTAINMENT SOFTWARE—5.2%
Activision Blizzard Inc.*		470,300	$	5,859,938
Nintendo Co., Ltd.#		239,640		9,320,007
Take-Two Interactive Software Inc.		58,100		689,066
				15,869,011
HOMEBUILDING—.5%
KB Home		82,900		1,383,601
INDUSTRIAL CONGLOMERATES—2.8%
McDermott International Inc.*		489,050		8,377,427
INDUSTRIAL GASES—1.8%
Praxair Inc.		82,400		5,368,360
INTERNET RETAIL—1.8%
Expedia Inc.*		442,100		4,204,371
Shutterfly Inc.*		150,300		1,146,789
				5,351,160
INTERNET SOFTWARE & SERVICES—7.6%
eBay Inc.*		372,900		5,694,183
Interwoven Inc.*		195,000		2,458,950
Netease.com*#		208,500		4,691,250
Omniture Inc.*		213,300		2,452,950
Sina Corp.*		184,500		5,977,800
Vignette Corp.*		222,600		1,807,512
				23,082,645
INVESTMENT BANKING & BROKERAGE—1.7%
Lazard Ltd., Cl. A		165,900		5,005,203
IT CONSULTING & OTHER SERVICES—5.4%
Cognizant Technology Solutions Corp., Cl. A*		471,300		9,048,960
Satyam Computer Services Ltd.#		473,200		7,443,436
				16,492,396
LEISURE PRODUCTS—2.7%
Gildan Activewear Inc.*		261,500		6,108,640
Polo Ralph Lauren Corp., Cl. A		46,900		2,212,273
				8,320,913
LIFE SCIENCES TOOLS & SERVICES—2.2%
Icon PLC*#		24,600		624,102
Parexel International Corp.*		292,400		3,040,960
Thermo Fisher Scientific Inc.*		75,500		3,065,300
				6,730,362
MANAGED HEALTH CARE—.4%
Aetna Inc.		54,800		1,362,876
OIL & GAS DRILLING—1.4%
Nabors Industries Ltd.*		297,600		4,279,488

-38-

THE ALGER FUNDS | ALGER MIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
OIL & GAS EQUIPMENT & SERVICES—3.4%
Acergy SA#		136,100	$	952,700
Cameron International Corp.*		119,450		2,897,857
National Oilwell Varco Inc.*		53,500		1,599,115
Weatherford International Ltd.*		289,900		4,893,512
				10,343,184
OIL & GAS EXPLORATION & PRODUCTION—5.0%
Concho Resources Inc.*		158,900		3,376,625
Denbury Resources Inc.*		245,600		3,121,576
Linc Energy Ltd.*		546,600		1,062,629
Newfield Exploration Co.*		106,700		2,451,966
Nexen Inc.		315,700		5,048,043
				15,060,839
OTHER DIVERSIFIED FINANCIAL SERVICES—.7%
BM&F BOVESPA SA		802,727		2,185,447
PHARMACEUTICALS—1.4%
Auxilium Pharmaceuticals Inc.*		60,900		1,196,685
Mylan Inc.*		371,700		3,185,469
				4,382,154
REGIONAL BANKS—.1%
SunTrust Banks Inc.		4,300		172,601
RESEARCH & CONSULTING SERVICES—1.9%
FTI Consulting Inc.*		97,800		5,696,850
RESTAURANTS—2.5%
Burger King Holdings Inc.		149,700		2,976,036
McCormick & Schmick's Seafood Restaurants Inc.*		117,600		575,064
Starbucks Corp.*		296,300		3,890,419
				7,441,519
SECURITY & ALARM SERVICES—1.6%
Geo Group Inc.*		279,200		4,930,672
SEMICONDUCTOR EQUIPMENT—.9%
MEMC Electronic Materials Inc.*		103,225		1,897,276
Tessera Technologies Inc.*		42,300		730,944
				2,628,220
SEMICONDUCTORS—3.5%
Atheros Communications Inc.*		206,565		3,711,973
Broadcom Corp., Cl. A*		75,200		1,284,416
Intersil Corp.		197,500		2,703,775
Marvell Technology Group Ltd.*		215,000		1,496,400
Skyworks Solutions Inc.*		213,300		1,520,829
				10,717,393
SOFT DRINKS—.7%
Hansen Natural Corp.*		87,200		2,207,904

-39-

THE ALGER FUNDS | ALGER MIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
SPECIALIZED FINANCE—2.0%
CME Group Inc.		7,200		$	2,031,480
NYSE Euronext		130,500			3,938,490
					5,969,970
TECHNOLOGY DISTRIBUTORS—.5%
Mellanox Technologies Ltd.*		198,800			1,542,687
THRIFTS & MORTGAGE FINANCE—1.3%
People's United Financial Inc.		229,000			4,007,500
WIRELESS TELECOMMUNICATION SERVICES—1.8%
SBA Communications Corp.*		255,930			5,371,970
TOTAL COMMON STOCKS (Cost $437,534,636)					298,301,199
CONVERTIBLE CORPORATE BONDS—.3%	PRINCIPAL AMOUNT
OIL & GAS DRILLING
Transocean Inc., 1.50%, 12/15/2037 (Cost $1,400,000)	$	1,400,000			1,072,750
SHORT-TERM INVESTMENTS—1.0%
TIME DEPOSITS
Citibank London, .96%, 11/3/08 (Cost $2,934,847)		2,934,847			2,934,847
Total Investments (Cost $441,869,483)(a)		99.7	%		302,308,796
Other Assets in Excess of Liabilities		0.3			922,394
NET ASSETS		100.0	%	$	303,231,190

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $474,538,200 amounted to $172,229,404 which consisted of aggregate gross unrealized appreciation of $5,136,760 and aggregate gross unrealized depreciation of $177,366,164.

See Notes to Financial Statements.

-40-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments October 31, 2008

COMM0N STOCKS—91.0%	SHARES		VALUE
AEROSPACE & DEFENSE—3.9%
BE Aerospace Inc.*		407,200	$	5,240,664
General Dynamics Corp.		165,145		9,961,546
Lockheed Martin Corp.		62,800		5,341,140
				20,543,350
AIR FREIGHT & LOGISTICS—.4%
United Parcel Service Inc.		37,700		1,989,806
APPLICATION SOFTWARE—3.3%
Autodesk Inc.*		239,700		5,108,007
Intuit Inc.*		82,800		2,074,968
Net 1 UEPS Technologies Inc.*		109,405		1,531,670
Solera Holdings Inc.*		211,735		5,270,084
Synopsys Inc.*		206,600		3,776,648
				17,761,377
ASSET MANAGEMENT & CUSTODY BANKS—1.6%
Affiliated Managers Group Inc.*		40,600		1,883,028
AllianceBernstein Holding LP		137,515		3,223,352
Invesco Ltd.		237,000		3,533,670
				8,640,050
BIOTECHNOLOGY—6.4%
Alexion Pharmaceuticals Inc.*		38,100		1,552,575
Amgen Inc.*		31,700		1,898,513
Biogen Idec Inc.*		158,500		6,744,175
Cephalon Inc.*		97,789		7,013,427
Genentech Inc.*		119,400		9,903,036
Gilead Sciences Inc.*		54,900		2,517,165
United Therapeutics Corp.*		51,775		4,516,333
				34,145,224
CABLE & SATELLITE—.5%
Comcast Corp., Cl. A		170,373		2,627,152
COAL & CONSUMABLE FUELS—.6%
Alpha Natural Resources Inc.*		19,700		704,669
Consol Energy Inc.		51,600		1,619,724
Peabody Energy Corp.		21,800		752,318
				3,076,711
COMMODITY CHEMICALS—.6%
Celanese Corp.		231,190		3,204,293
COMMUNICATIONS EQUIPMENT—2.1%
Cisco Systems Inc.*		75,300		1,338,081
Nice Systems Ltd.*#		234,300		5,238,948
Research In Motion Ltd.*		41,560		2,095,871
Sonus Networks Inc.*		1,179,175		2,605,977
				11,278,877

-41-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
COMPUTER HARDWARE—1.0%
Apple Inc.*		48,245	$	5,190,680
COMPUTER STORAGE & PERIPHERALS—.2%
EMC Corp.*		110,700		1,304,046
CONSTRUCTION & ENGINEERING—.5%
Quanta Services Inc.*		144,800		2,861,248
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.0%
Deere & Co.		139,400		5,375,264
DATA PROCESSING & OUTSOURCED SERVICES—.3%
Visa Inc., Cl. A		29,800		1,649,430
DIVERSIFIED METALS & MINING—1.2%
Freeport-McMoRan Copper & Gold Inc.		136,575		3,974,333
Thompson Creek Metals Co., Inc.*		374,900		2,234,404
				6,208,737
DRUG RETAIL—1.2%
CVS/Caremark Corp.		208,425		6,388,226
ELECTRIC UTILITIES—.6%
FirstEnergy Corp.		58,900		3,072,224
ELECTRICAL COMPONENTS & EQUIPMENT—1.0%
First Solar Inc.*		4,400		632,280
General Cable Corp.*		95,850		1,637,118
JA Solar Holdings Co., Ltd.*#		608,609		2,921,323
				5,190,721
ENVIRONMENTAL & FACILITIES SERVICES—.4%
Waste Connections Inc.*		62,800		2,125,780
FERTILIZERS & AGRICULTURAL CHEMICALS—1.4%
Monsanto Co.		9,700		863,106
Mosaic Co.,/The		114,100		4,496,681
Potash Corp., of Saskatchewan		21,700		1,850,142
Terra Industries Inc.		18,800		413,412
				7,623,341
FOOTWEAR—.1%
Deckers Outdoor Corp.*		6,390		542,255
GENERAL MERCHANDISE STORES—.5%
Family Dollar Stores Inc.		97,100		2,612,961
HEALTH CARE EQUIPMENT—2.6%
Baxter International Inc.		85,100		5,147,699
Covidien Ltd.		117,200		5,190,788
Hologic Inc.*		104,884		1,283,780
Insulet Corp.*		58,600		328,160

-42-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HEALTH CARE EQUIPMENT—(CONT.)
Varian Medical Systems Inc.*		27,400	$	1,246,974
Zimmer Holdings Inc.*		16,600		770,738
				13,968,139
HEALTH CARE SUPPLIES—1.1%
Inverness Medical Innovations Inc.*		300,500		5,754,575
HOME ENTERTAINMENT SOFTWARE—5.5%
Activision Blizzard Inc.*		470,100		5,857,446
Nintendo Co., Ltd.#		605,433		23,546,319
				29,403,765
HOUSEHOLD PRODUCTS—.5%
Procter & Gamble Co.		42,500		2,742,950
HOUSEWARES & SPECIALTIES—.3%
Tupperware Brands Corp.		59,900		1,515,470
INDUSTRIAL CONGLOMERATES—1.1%
McDermott International Inc.*		243,900		4,178,007
Tyco International Ltd.		63,400		1,602,752
				5,780,759
INDUSTRIAL MACHINERY—.9%
ITT Corp.		80,800		3,595,600
SPX Corp.		26,800		1,038,232
				4,633,832
INTEGRATED OIL & GAS—1.5%
Chevron Corp.		94,200		7,027,320
Exxon Mobil Corp.		7,300		541,076
Marathon Oil Corp.		19,400		564,540
				8,132,936
INTERNET RETAIL—.4%
Expedia Inc.*		234,800		2,232,948
INTERNET SOFTWARE & SERVICES—6.1%
eBay Inc.*		726,410		11,092,281
IAC/InterActiveCorp.*		820,700		13,754,932
Netease.com*#		132,000		2,970,000
Sina Corp.*		148,660		4,816,584
				32,633,797
INVESTMENT BANKING & BROKERAGE—.9%
Lazard Ltd., Cl. A		153,600		4,634,112
IT CONSULTING & OTHER SERVICES—.6%
Cognizant Technology Solutions Corp., Cl. A*		86,200		1,655,040
Satyam Computer Services Ltd.#		101,415		1,595,258
				3,250,298

-43-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
LEISURE PRODUCTS—1.5%
Gildan Activewear Inc.*		290,600	$	6,788,416
Polo Ralph Lauren Corp., Cl. A		30,300		1,429,251
				8,217,667
LIFE & HEALTH INSURANCE—.4%
MetLife Inc.		67,629		2,246,635
LIFE SCIENCES TOOLS & SERVICES—2.5%
Invitrogen Corp.*		270,000		7,773,300
Thermo Fisher Scientific Inc.*		143,200		5,813,920
				13,587,220
MANAGED HEALTH CARE—.2%
UnitedHealth Group Inc.		51,400		1,219,722
METAL & GLASS CONTAINERS—1.3%
Owens-Illinois Inc.*		301,950		6,908,616
MOVIES & ENTERTAINMENT—1.1%
DreamWorks Animation SKG Inc.*		55,000		1,545,500
Regal Entertainment Group		234,100		3,005,844
Viacom Inc., Cl. B*		71,000		1,435,620
				5,986,964
OIL & GAS EQUIPMENT & SERVICES—2.8%
Baker Hughes Inc.		56,000		1,957,200
Weatherford International Ltd.*		755,750		12,757,060
				14,714,260
OIL & GAS EXPLORATION & PRODUCTION—5.1%
Concho Resources Inc.*		115,100		2,445,876
Denbury Resources Inc.*		585,600		7,442,976
Devon Energy Corp.		3,600		291,096
Newfield Exploration Co.*		213,100		4,897,038
Nexen Inc.		644,741		10,309,409
Petrobank Energy & Resources Ltd.*		37,185		703,421
Whiting Petroleum Corp.*		17,100		889,029
				26,978,845
OTHER DIVERSIFIED FINANCIAL SERVICES—.6%
BM&F BOVESPA SA		286,073		778,842
JPMorgan Chase & Co.		63,650		2,625,562
				3,404,404
PACKAGED FOODS & MEATS—.5%
ConAgra Foods Inc.		154,900		2,698,358
PHARMACEUTICALS—4.9%
Abbott Laboratories		361,320		19,926,798
Mylan Inc.*		228,000		1,953,960
Pfizer Inc.		237,400		4,204,354
				26,085,112

-44-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
PROPERTY & CASUALTY INSURANCE—.3%
ACE Ltd.		31,400	$	1,801,104
PUBLISHING—1.0%
McGraw-Hill Cos., Inc.,/The		207,800		5,577,352
SEMICONDUCTOR EQUIPMENT—.4%
Tessera Technologies Inc.*		110,390		1,907,539
SEMICONDUCTORS—3.2%
Atheros Communications Inc.*		248,500		4,465,545
Intel Corp.		331,400		5,302,400
Marvell Technology Group Ltd.*		260,400		1,812,384
Skyworks Solutions Inc.*		748,000		5,333,240
				16,913,569
SOFT DRINKS—.3%
Coca-Cola Co.,/The		29,800		1,312,988
SPECIALIZED FINANCE—.8%
NYSE Euronext		147,400		4,448,532
STEEL—.8%
Cliffs Natural Resources Inc.		147,500		3,981,025
SYSTEMS SOFTWARE—2.8%
Microsoft Corp.		633,185		14,139,021
Symantec Corp.*		74,100		932,178
				15,071,199
THRIFTS & MORTGAGE FINANCE—1.4%
People's United Financial Inc.		439,000		7,682,500
TOBACCO—7.0%
Altria Group Inc.		487,300		9,351,287
Philip Morris International Inc.		637,460		27,710,386
				37,061,673
WIRELESS TELECOMMUNICATION SERVICES—1.8%
American Tower Corp.*		17,700		571,887
NII Holdings Inc., Cl. B*		126,200		3,250,912
SBA Communications Corp.*		265,800		5,579,142
				9,401,941
TOTAL COMMON STOCKS (Cost $646,113,206)				485,302,559

-45-

THE ALGER FUNDS | ALGER CAPITAL APPRECIATION FUND

Schedule of Investments (Continued) October 31, 2008

CONVERTIBLE CORPORATE BONDS—.3%	PRINCIPAL AMOUNT			VALUE
ELECTRICAL COMPONENTS & EQUIPMENT—.2%
JA Solar Holdings Co., Ltd., 4.50%, 5/15/13	$	2,550,000		$	793,688
FOOTWEAR—.1%
Iconix Brand Group Inc., 1.875%, 6/30/12		810,000			409,050
TOTAL CONVERTIBLE CORPORATE BONDS (Cost $3,360,000)					1,202,738
SHORT-TERM INVESTMENTS—5.8%
TIME DEPOSITS
Citibank London, .96%, 11/3/08		20,200,000			20,200,000
JP Morgan Chase London, .96%, 11/3/08		10,656,384			10,656,384
TOTAL TIME DEPOSITS (Cost $30,856,384)					30,856,384
Total Investments (Cost $680,329,590)(a)		97.1	%		517,361,681
Other Assets in Excess of Liabilities		2.9			15,580,131
NET ASSETS		100.0	%	$	532,941,812

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $711,671,424 amounted to $194,309,743 which consisted of aggregate gross unrealized appreciation of $9,554,153 and aggregate gross unrealized depreciation of $203,863,896.

See Notes to Financial Statements.

-46-

THE ALGER FUNDS | ALGER HEALTH SCIENCES FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—86.3%	SHARES		VALUE
BIOTECHNOLOGY—23.0%
Actelion Ltd.*		29,100	$	1,526,300
Alexion Pharmaceuticals Inc.*		120,300		4,902,225
Allos Therapeutics Inc.*		200,000		1,462,000
Biogen Idec Inc.*		146,650		6,239,958
Celgene Corp.*		109,459		7,033,835
Cephalon Inc.*		87,900		6,304,188
Cepheid Inc.*		54,100		642,167
Cubist Pharmaceuticals Inc.*		147,700		3,750,103
Genentech Inc.*		148,100		12,283,414
Gilead Sciences Inc.*		97,750		4,481,838
InterMune Inc.*		186,404		2,745,730
Myriad Genetics Inc.*		50,000		3,154,500
OSI Pharmaceuticals Inc.*		34,150		1,295,993
Pharmasset Inc.*		43,352		775,134
Savient Pharmaceuticals Inc.*		204,350		972,706
United Therapeutics Corp.*		45,900		4,003,857
				61,573,948
DRUG RETAIL—.9%
CVS/Caremark Corp.		77,600		2,378,440
HEALTH CARE EQUIPMENT—19.0%
Abiomed Inc.*		75,000		1,093,500
Baxter International Inc.		63,050		3,813,895
Boston Scientific Corp.*		314,300		2,838,129
Covidien Ltd.		170,650		7,558,089
ev3 Inc.*		130,000		841,100
Hologic Inc.*		60,340		738,562
Insulet Corp.*		169,750		950,600
Intuitive Surgical Inc.*		6,850		1,183,612
Masimo Corp.*		88,650		2,835,914
Medtronic Inc.		32,500		1,310,725
Meridian Bioscience Inc.		122,950		3,022,110
Micrus Endovascular Corp.*		155,597		1,836,045
Smith & Nephew PLC		45,850		2,116,895
St. Jude Medical Inc.*		152,800		5,810,984
Stryker Corp.		51,850		2,771,900
Thoratec Corp.*		161,350		3,972,437
Varian Medical Systems Inc.*		73,750		3,356,363
Zimmer Holdings Inc.*		102,500		4,759,075
				50,809,935
HEALTH CARE FACILITIES—2.8%
Community Health Systems Inc.*		114,250		2,342,125
Health Management Associates Inc., Cl. A*		375,000		787,500
Tenet Healthcare Corp.*		281,750		1,234,065
Universal Health Services Inc.		75,500		3,174,020
				7,537,710

-47-

THE ALGER FUNDS | ALGER HEALTH SCIENCES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HEALTH CARE SERVICES—3.8%
Gentiva Health Services Inc.*		137,701	$	3,738,581
IPC The Hospitalist Co., Inc.*		152,000		3,094,720
Quest Diagnostics Inc.		66,800		3,126,240
				9,959,541
HEALTH CARE SUPPLIES—1.9%
Inverness Medical Innovations Inc.*		253,500		4,854,525
Power Medical Interventions Inc.*		274,100		194,610
				5,049,135
LIFE SCIENCES TOOLS & SERVICES—4.4%
Icon PLC*#		47,500		1,205,074
Illumina Inc.*		126,380		3,896,294
Invitrogen Corp.*		25,000		719,750
Luminex Corp.*		90,000		1,678,500
Parexel International Corp.*		172,674		1,795,810
Thermo Fisher Scientific Inc.*		63,150		2,563,890
				11,859,318
MANAGED HEALTH CARE—5.7%
AMERIGROUP Corp.*		212,000		5,300,000
Humana Inc.*		120,600		3,568,554
UnitedHealth Group Inc.		275,250		6,531,683
				15,400,237
PHARMACEUTICALS—24.5%
Abbott Laboratories		189,350		10,442,653
Allergan Inc.		20,000		793,400
Ardea Biosciences Inc.*		64,000		649,600
Auxilium Pharmaceuticals Inc.*		130,600		2,566,290
Bayer AG#		11,850		662,666
Eli Lilly & Co.		60,000		2,029,200
Johnson & Johnson		179,400		11,004,396
Medicines Co.,/The*		96,150		1,675,895
Medicis Pharmaceutical Corp.		67,750		966,793
Mylan Inc.*		554,850		4,755,065
Optimer Pharmaceuticals Inc.*		400,000		1,660,000
Par Pharmaceutical Cos., Inc*		170,719		1,707,190
Perrigo Co.		73,250		2,490,500
Pfizer Inc.		230,000		4,073,300
Shire PLC#		71,300		2,812,785
Teva Pharmaceutical Industries Ltd.#		92,450		3,964,256
Watson Pharmaceuticals Inc.*		75,000		1,962,750
Wyeth		310,000		9,975,800
XenoPort Inc.		28,400		1,181,724
				65,374,263

-48-

THE ALGER FUNDS | ALGER HEALTH SCIENCES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
SPECIALIZED CONSUMER SERVICES—.3%
Stewart Enterprises Inc., Cl. A		130,000		$	672,100
TOTAL COMMON STOCKS (Cost $265,256,178)					230,614,627
SHORT-TERM INVESTMENTS—12.7%	PRINCIPAL AMOUNTS
TIME DEPOSITS
Citibank London, .96%, 11/3/08	$	10,600,000			10,600,000
HSBC Bank USA, Grand Cayman, .96%, 11/3/08		2,014,517			2,014,517
JP Morgan Chase London, .96%, 11/3/08		10,600,000			10,600,000
Wells Fargo Grand Cayman, .96%, 11/3/08		10,600,000			10,600,000
TOTAL TIME DEPOSITS (Cost $33,814,517)					33,814,517
Total Investments (Cost $299,070,695)(a)		99.0	%		264,429,144
Other Assets in Excess of Liabilities		1.0			2,712,878
NET ASSETS		100.0	%	$	267,142,022

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $307,155,240 amounted to $42,726,095 which consisted of aggregate gross unrealized appreciation of $7,303,679 and aggregate gross unrealized depreciation of $50,029,774.

See Notes to Financial Statements.

-49-

THE ALGER FUNDS | ALGER SMIDCAP GROWTH FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—93.8%	SHARES		VALUE
AEROSPACE & DEFENSE—1.5%
Alliant Techsystems Inc.*		47,750	$	3,941,285
BE Aerospace Inc.*		187,300		2,410,551
				6,351,836
AIRLINES—.8%
Airtran Holdings Inc.*		795,530		3,253,718
APPAREL RETAIL—2.0%
Aeropostale Inc.*		121,450		2,940,304
AnnTaylor Stores Corp.*		175,550		2,206,663
Urban Outfitters Inc.*		153,850		3,344,699
				8,491,666
APPLICATION SOFTWARE—5.9%
Ansys Inc.*		100,675		2,882,325
Concur Technologies Inc.*		138,300		3,489,309
Informatica Corp.*		354,950		4,987,048
PROS Holdings Inc.*		305,100		1,638,387
Solera Holdings Inc.*		237,206		5,904,057
Synchronoss Technologies Inc.*		223,800		1,738,926
Taleo Corp.*		298,800		4,123,440
				24,763,492
ASSET MANAGEMENT & CUSTODY BANKS—.8%
Affiliated Managers Group Inc.*		74,962		3,476,738
BIOTECHNOLOGY—7.9%
Acorda Therapeutics Inc.*		103,700		2,115,480
Alexion Pharmaceuticals Inc.*		138,050		5,625,537
Cephalon Inc.*		53,650		3,847,778
Cepheid Inc.*		162,800		1,932,436
Cubist Pharmaceuticals Inc.*		246,700		6,263,713
ImClone Systems Inc.*		58,950		4,053,402
OSI Pharmaceuticals Inc.*		98,800		3,749,460
United Therapeutics Corp.*		64,600		5,635,058
				33,222,864
CASINOS & GAMING—1.2%
Bally Technologies Inc.*		226,545		5,017,972
COAL & CONSUMABLE FUELS—.7%
International Coal Group Inc.*		608,450		2,847,546
COMMUNICATIONS EQUIPMENT—2.5%
Nice Systems Ltd.*#		228,600		5,111,496
Polycom Inc.*		164,350		3,452,994
Sonus Networks Inc.*		815,950		1,803,250
				10,367,740
COMPUTER & ELECTRONICS RETAIL—.7%
GameStop Corp., Cl. A*		104,950		2,874,581

-50-

THE ALGER FUNDS | ALGER SMIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
COMPUTER HARDWARE—1.2%
NCR Corp.*		282,925	$	5,171,869
CONSTRUCTION & ENGINEERING—1.3%
Aecom Technology Corp.*		230,890		4,070,591
Shaw Group Inc.,/The*		81,250		1,453,563
				5,524,154
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.0%
Bucyrus International Inc.		83,550		2,016,061
Titan Machinery Inc.*		175,200		2,168,976
				4,185,037
DATA PROCESSING & OUTSOURCED SERVICES—3.2%
Genpact Ltd.*		113,000		884,790
NeuStar Inc., Cl. A*		193,300		3,808,010
TeleTech Holdings Inc.*		376,450		3,403,108
VeriFone Holdings Inc.*		280,100		3,181,936
Wright Express Corp.*		162,000		2,217,780
				13,495,624
DISTILLERS & VINTNERS—1.0%
Central European Distribution Corp.*		144,350		4,155,836
DISTRIBUTORS—1.2%
LKQ Corp.*		425,500		4,867,720
EDUCATION SERVICES—1.5%
ITT Educational Services Inc.*		71,150		6,236,298
ELECTRIC UTILITIES—1.2%
ITC Holdings Corp.		128,850		5,228,733
ELECTRICAL COMPONENTS & EQUIPMENT—2.8%
Ametek Inc.		144,100		4,791,325
JA Solar Holdings Co., Ltd.*#		352,550		1,692,240
Roper Industries Inc.		87,550		3,970,392
Sunpower Corp., Cl. B*		39,417		1,167,137
				11,621,094
ELECTRONIC COMPONENTS—.7%
Dolby Laboratories Inc., Cl. A*		94,200		2,973,894
ENVIRONMENTAL & FACILITIES SERVICES—1.7%
EnergySolutions Inc.		323,450		1,458,759
Waste Connections Inc.*		171,900		5,818,815
				7,277,574
FERTILIZERS & AGRICULTURAL CHEMICALS—.5%
Terra Industries Inc.		96,150		2,114,339
FOOTWEAR—1.0%
Iconix Brand Group Inc.*		406,600		4,427,874

-51-

THE ALGER FUNDS | ALGER SMIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HEALTH CARE EQUIPMENT—4.7%
Hologic Inc.*		139,250	$	1,704,420
Intuitive Surgical Inc.*		15,300		2,643,687
Masimo Corp.*		129,150		4,131,508
Meridian Bioscience Inc.		227,700		5,596,866
Thoratec Corp.*		227,500		5,601,050
				19,677,531
HEALTH CARE FACILITIES—2.2%
Community Health Systems Inc.*		224,100		4,594,050
Tenet Healthcare Corp.*		1,102,050		4,826,979
				9,421,029
HEALTH CARE SERVICES—1.9%
IPC The Hospitalist Co., Inc.*		256,250		5,217,250
Immucor Inc.*		113,350		3,009,442
				8,226,692
HOUSEWARES & SPECIALTIES—1.0%
Tupperware Brands Corp.		163,500		4,136,550
INDUSTRIAL GASES—.8%
Airgas Inc.		88,650		3,400,614
INTEGRATED TELECOMMUNICATION SERVICES—.6%
Cincinnati Bell Inc.*		1,054,400		2,520,016
INTERNET RETAIL—.7%
priceline.com Inc.*		53,550		2,818,336
INTERNET SOFTWARE & SERVICES—.5%
Omniture Inc.*		184,800		2,125,200
INVESTMENT BANKING & BROKERAGE—1.9%
Investment Technology Group Inc.*		129,350		2,640,034
Lazard Ltd., Cl. A		176,550		5,326,514
				7,966,548
IT CONSULTING & OTHER SERVICES—1.0%
SI International Inc.*		139,450		4,016,160
LEISURE FACILITIES—.8%
Life Time Fitness Inc.*		183,700		3,497,648
LEISURE PRODUCTS—2.3%
Gildan Activewear Inc.*		257,550		6,016,368
Phillips-Van Heusen Corp.		142,050		3,481,645
				9,498,013
LIFE SCIENCES TOOLS & SERVICES—3.1%
Icon PLC*#		202,000		5,124,740
Illumina Inc.*		161,700		4,985,211
Parexel International Corp.*		290,400		3,020,160
				13,130,111

-52-

THE ALGER FUNDS | ALGER SMIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
METAL & GLASS CONTAINERS—1.4%
Silgan Holdings Inc.		129,800	$	6,040,892
MOVIES & ENTERTAINMENT—.9%
DreamWorks Animation SKG Inc.*		140,250		3,941,025
OFFICE REITS—1.1%
Digital Realty Trust Inc.		132,500		4,436,100
OIL & GAS EQUIPMENT & SERVICES—3.2%
Cal Dive International Inc.*		479,250		4,078,418
Cameron International Corp.*		143,000		3,469,180
IHS Inc., Cl. A*		105,200		3,723,028
T-3 Energy Services Inc.*		90,613		2,184,679
				13,455,305
OIL & GAS EXPLORATION & PRODUCTION—4.8%
Carrizo Oil & Gas Inc.*		124,200		2,905,038
Concho Resources Inc.*		243,700		5,178,625
Petrobank Energy & Resources Ltd.*		141,328		2,673,475
Range Resources Corp.		123,150		5,199,393
Whiting Petroleum Corp.*		81,000		4,211,190
				20,167,721
PACKAGED FOODS & MEATS—1.3%
Hain Celestial Group Inc.*		237,550		5,520,662
PHARMACEUTICALS—3.0%
Auxilium Pharmaceuticals Inc.*		82,600		1,623,090
Mylan Inc.*		603,850		5,174,994
Perrigo Co.		171,900		5,844,600
				12,642,684
PROPERTY & CASUALTY INSURANCE—.8%
First Mercury Financial Corp.*		309,400		3,338,426
REGIONAL BANKS—1.0%
Signature Bank*		129,410		4,216,178
REINSURANCE—.6%
Platinum Underwriters Holdings Ltd.		76,750		2,436,045
RESEARCH & CONSULTING SERVICES—1.3%
FTI Consulting Inc.*		93,950		5,472,587
RESTAURANTS—1.1%
Darden Restaurants Inc.		211,200		4,682,304
SECURITY & ALARM SERVICES—1.4%
Geo Group Inc.,/The*		332,700		5,875,482

-53-

THE ALGER FUNDS | ALGER SMIDCAP GROWTH FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
SEMICONDUCTORS—3.8%
Atheros Communications Inc.*		278,250		$	5,000,153
Intersil Corp.		153,550			2,102,100
Microsemi Corp.*		273,000			5,935,020
ON Semiconductor Corp.*		547,550			2,797,980
					15,835,253
TECHNOLOGY DISTRIBUTORS—.7%
Mellanox Technologies Ltd.*		389,955			3,026,051
THRIFTS & MORTGAGE FINANCE—2.1%
Brookline Bancorp Inc.		284,400			3,327,480
People's United Financial Inc.		313,000			5,477,500
					8,804,980
WIRELESS TELECOMMUNICATION SERVICES—1.5%
SBA Communications Corp.*		298,700			6,269,713
TOTAL COMMON STOCKS (Cost $561,644,632)					394,544,055
SHORT-TERM INVESTMENTS—5.4%	PRINCIPAL AMOUNT
TIME DEPOSITS
Citibank London, .96%, 11/3/08	$	15,900,000			15,900,000
JP Morgan Chase London, .96%, 11/3/08		6,642,479			6,642,479
TOTAL TIME DEPOSITS (Cost $22,542,479)					22,542,479
Total Investments (Cost $584,187,111)(a)		99.2	%		417,086,534
Other Assets in Excess of Liabilities		0.8			3,231,286
NET ASSETS		100.0	%	$	420,317,820

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $587,462,590 amounted to $170,376,056 which consisted of aggregate gross unrealized appreciation of $6,694,117 and aggregate gross unrealized depreciation of $177,070,173.

See Notes to Financial Statements.

-54-

THE ALGER FUNDS | ALGER GROWTH OPPORTUNITIES FUND

Schedule of Investments October 31, 2008

COMMON STOCKS—93.9%	SHARES		VALUE
AEROSPACE & DEFENSE—2.4%
Alliant Techsystems Inc.*		555	$	45,810
BE Aerospace Inc.*		1,620		20,849
Esterline Technologies Corp.*		1,070		38,574
				105,233
APPAREL RETAIL—.7%
AnnTaylor Stores Corp.*		2,430		30,545
APPLICATION SOFTWARE—7.0%
Ansys Inc.*		1,715		49,100
Concur Technologies Inc.*		1,430		36,079
Informatica Corp.*		3,875		54,444
Solera Holdings Inc.*		2,945		73,301
Taleo Corp.*		2,730		37,674
VanceInfo Technologies Inc.*#		8,290		60,932
				311,530
ASSET MANAGEMENT & CUSTODY BANKS—2.0%
Affiliated Managers Group Inc.*		805		37,336
Riskmetrics Group Inc.*		3,185		49,081
				86,417
BIOTECHNOLOGY—5.1%
Acorda Therapeutics Inc.*		1,045		21,318
Alexion Pharmaceuticals Inc.*		1,220		49,715
Cephalon Inc.*		595		42,673
Cepheid Inc.*		2,445		29,022
Molecular Insight Pharmaceuticals Inc.*		5,155		25,775
United Therapeutics Corp.*		645		56,263
				224,766
CASINOS & GAMING—2.0%
Bally Technologies Inc.*		2,205		48,841
WMS Industries Inc.*		1,585		39,625
				88,466
COAL & CONSUMABLE FUELS—.6%
International Coal Group Inc.*		5,835		27,308
COMMUNICATIONS EQUIPMENT—2.3%
Nice Systems Ltd.*#		2,760		61,714
Polycom Inc.*		1,870		39,289
				101,003
COMPUTER & ELECTRONICS RETAIL—.6%
GameStop Corp., Cl. A*		985		26,979
COMPUTER HARDWARE—1.1%
NCR Corp.*		2,700		49,356
COMPUTER STORAGE & PERIPHERALS—.9%
Data Domain Inc.*		2,055		37,935

-55-

THE ALGER FUNDS | ALGER GROWTH OPPORTUNITIES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
CONSTRUCTION & ENGINEERING—1.4%
Aecom Technology Corp.*		2,480	$	43,722
Shaw Group Inc.,/The*		1,005		17,979
				61,701
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.2%
Bucyrus International Inc.		1,055		25,457
Titan Machinery Inc.*		2,185		27,050
				52,507
DATA PROCESSING & OUTSOURCED SERVICES—1.9%
NeuStar Inc., Cl. A*		2,380		46,886
TeleTech Holdings Inc.*		4,165		37,652
				84,538
DISTILLERS & VINTNERS—.8%
Central European Distribution Corp.*		1,215		34,980
DISTRIBUTORS—1.1%
LKQ Corp.*		4,085		46,732
ELECTRIC UTILITIES—1.3%
ITC Holdings Corp.		1,420		57,624
ELECTRICAL COMPONENTS & EQUIPMENT—1.5%
Ametek Inc.		1,515		50,374
JA Solar Holdings Co., Ltd.*#		3,700		17,760
				68,134
ELECTRONIC COMPONENTS—.7%
Dolby Laboratories Inc., Cl. A*		965		30,465
ENVIRONMENTAL & FACILITIES SERVICES—1.7%
EnergySolutions Inc.		3,605		16,259
Waste Connections Inc.*		1,790		60,592
				76,851
FERTILIZERS & AGRICULTURAL CHEMICALS—.6%
Terra Industries Inc.		1,170		25,728
FOOTWEAR—1.2%
Deckers Outdoor Corp.*		610		51,765
HEALTH CARE EQUIPMENT—3.5%
Hologic Inc.*		1,410		17,258
Insulet Corp.*		3,660		20,496
Meridian Bioscience Inc.		2,270		55,797
Micrus Endovascular Corp.*		5,065		59,767
				153,318
HEALTH CARE FACILITIES—2.1%
Community Health Systems Inc.*		2,395		49,098
Tenet Healthcare Corp.*		9,500		41,610
				90,708

-56-

THE ALGER FUNDS | ALGER GROWTH OPPORTUNITIES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
HEALTH CARE SERVICES—3.0%
Gentiva Health Services Inc.*		2,745	$	74,527
IPC The Hospitalist Co., Inc.*		2,885		58,739
				133,266
HEALTH CARE SUPPLIES—.4%
RTI Biologics Inc.*		5,260		16,043
HOME ENTERTAINMENT SOFTWARE—.4%
THQ Inc.*		2,640		19,668
HOTELS RESORTS & CRUISE LINES—.7%
Ctrip.com International Ltd.#		1,075		32,874
HOUSEHOLD PRODUCTS—.5%
Energizer Holdings Inc.*		460		22,476
INDUSTRIAL MACHINERY—2.4%
Clarcor Inc.		1,690		59,809
RBC Bearings Inc.*		1,925		45,680
				105,489
INTERNET RETAIL—.6%
priceline.com Inc.*		535		28,157
INTERNET SOFTWARE & SERVICES—2.7%
GSI Commerce Inc.*		3,875		40,106
Interwoven Inc.*		3,535		44,576
VistaPrint Ltd.*		2,105		35,932
				120,614
INVESTMENT BANKING & BROKERAGE—1.8%
Investment Technology Group Inc.*		1,470		30,003
Lazard Ltd., Cl. A		1,630		49,177
				79,180
IT CONSULTING & OTHER SERVICES—1.1%
Ness Technologies Inc.*		6,400		47,296
LEISURE FACILITIES—.9%
Life Time Fitness Inc.*		2,125		40,460
LEISURE PRODUCTS—2.5%
American Apparel Inc.*		8,280		48,686
Gildan Activewear Inc.*		2,600		60,736
				109,422
LIFE SCIENCES TOOLS & SERVICES—2.9%
Icon PLC*#		1,910		48,457
Illumina Inc.*		1,710		52,719
Parexel International Corp.*		2,670		27,768
				128,944

-57-

THE ALGER FUNDS | ALGER GROWTH OPPORTUNITIES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES		VALUE
METAL & GLASS CONTAINERS—1.4%
Silgan Holdings Inc.		1,375	$	63,993
MOVIES & ENTERTAINMENT—1.3%
DreamWorks Animation SKG Inc.*		1,370		38,497
Regal Entertainment Group		1,625		20,865
				59,362
OFFICE REITS—1.2%
Digital Realty Trust Inc.		1,540		51,559
OIL & GAS EQUIPMENT & SERVICES—3.9%
Cal Dive International Inc.*		3,650		31,062
Cameron International Corp.*		1,420		34,449
Dril-Quip Inc.*		1,295		31,987
IHS Inc., Cl. A*		1,195		42,291
T-3 Energy Services Inc.*		1,330		32,066
				171,855
OIL & GAS EXPLORATION & PRODUCTION—3.5%
Carrizo Oil & Gas Inc.*		1,015		23,741
Concho Resources Inc.*		2,610		55,463
Petrobank Energy & Resources Ltd.*		1,155		21,849
Range Resources Corp.		1,265		53,408
				154,461
PACKAGED FOODS & MEATS—1.3%
Hain Celestial Group Inc.*		2,545		59,146
PHARMACEUTICALS—3.6%
Auxilium Pharmaceuticals Inc.*		805		15,818
Mylan Inc.*		6,790		58,190
Optimer Pharmaceuticals Inc.*		5,505		22,846
Perrigo Co.		1,845		62,730
				159,584
REGIONAL BANKS—1.2%
Signature Bank*		1,570		51,151
RESEARCH & CONSULTING SERVICES—1.3%
FTI Consulting Inc.*		1,015		59,124
RESTAURANTS—1.2%
Darden Restaurants Inc.		2,365		52,432
SECURITY & ALARM SERVICES—1.4%
Geo Group Inc.,/The*		3,480		61,456
SEMICONDUCTORS—4.2%
Atheros Communications Inc.*		2,980		53,551
Cavium Networks Inc.*		2,270		28,920
Microsemi Corp.*		2,965		64,459
ON Semiconductor Corp.*		7,575		38,708
				185,638

-58-

THE ALGER FUNDS | ALGER GROWTH OPPORTUNITIES FUND

Schedule of Investments (Continued) October 31, 2008

COMMON STOCKS—(CONT.)	SHARES			VALUE
TECHNOLOGY DISTRIBUTORS—.9%
Mellanox Technologies Ltd.*		4,900		$	38,023
THRIFTS & MORTGAGE FINANCE—2.3%
Brookline Bancorp Inc.		3,530			41,301
People's United Financial Inc.		3,490			61,075
					102,376
WIRELESS TELECOMMUNICATION SERVICES—1.6%
SBA Communications Corp.*		3,365			70,630
TOTAL COMMON STOCKS (Cost $5,859,055)					4,149,268
SHORT-TERM INVESTMENTS—5.0%	PRINCIPAL AMOUNT
TIME DEPOSITS
Brown Brothers Harriman Cayman, .96%, 11/3/08	$	20,460			20,460
Citibank London, .96%, 11/3/08		100,000			100,000
JP Morgan Chase London, .96%, 11/3/08		100,000			100,000
TOTAL TIME DEPOSITS (Cost $220,460)					220,460
Total Investments (Cost $6,079,515)(a)		98.9	%		4,369,728
Other Assets in Excess of Liabilities		1.1			50,275
NET ASSETS		100.0	%	$	4,420,003

* Non-income producing security.

# American Depositary Receipts.

(a) At October 31, 2008, the net unrealized depreciation on investments, based on cost for federal income tax purposes of $6,087,640 amounted to $1,717,912 which consisted of aggregate gross unrealized appreciation of $31,663 and aggregate gross unrealized depreciation of $1,749,575.

See Notes to Financial Statements.

-59-

THE ALGER FUNDS | ALGER MONEY MARKET FUND

Schedule of Investments October 31, 2008

U.S. AGENCY OBLIGATIONS—95.7%	PRINCIPAL AMOUNT			VALUE
Federal Agricultural Mortgage Association, 1.25%, 11/20/08	$	5,000,000		$	4,996,701
Federal Home Loan Bank, 2.09%, 11/3/08 2.06%, 11/4/08 0.90%, 11/24/08 0.90%, 11/25/08 1.31%, 12/1/08 1.31%, 12/10/08		6,000,000 8,000,000 9,000,000 9,000,000 5,000,000 5,000,000			5,999,303 7,998,627 8,994,825 8,994,600 4,994,542 4,992,904
Federal National Mortgage Association, 2.12%, 11/4/08		7,000,000			6,998,787
TOTAL U.S. AGENCY OBLIGATIONS (Cost $53,970,289)					53,970,289
SHORT-TERM INVESTMENTS—4.3%
TIME DEPOSITS
Citibank London, .96%, 11/3/08		2,200,000			2,200,000
JP Morgan Chase London, .96%, 11/3/08		228,691			228,691
TOTAL TIME DEPOSITS (Cost $2,428,691)					2,428,691
Total Investments (Cost $56,398,980)(a)		100.0	%		56,398,980
Liabilities in Excess of Other Assets		—			(3,624	)
NET ASSETS		100.0	%	$	56,395,356

(a) At October 31, 2008, the net unrealized appreciation on investments, based on cost of federal income tax purposes was the same as the cost for financial reporting purposes.

See Notes to Financial Statements.

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THE ALGER FUNDS

Statements of Assets and Liabilities October 31, 2008

(in thousands, except per share amounts)

	LargeCap Growth Fund			SmallCap Growth Fund			Balanced Fund			MidCap Growth Fund
ASSETS:
Investments in securities, at value (identified cost)* see accompanying schedules of investments	$	254,525		$	302,455		$	63,260		$	302,309
Cash		4			—			—			1
Receivable for investment securities sold		9,020			3,758			104			18,954
Receivable foreign currency contracts		1			—			—			—
Receivable for shares of beneficial interest sold		255			470			46			583
Dividends and interest receivable		192			26			317			85
Receivable from Investment Manager		—			—			—			—
Prepaid expenses		93			101			47			117
Total Assets		264,090			306,810			63,774			322,049
LIABILITES:
Payable for investment securities purchased		6,529			3,305			584			16,832
Payable foreign currency contracts		—			—			—			1
Payable for shares of beneficial interest redeemed		316			1,458			90			1,177
Due to Custodian		—			—			—			—
Accrued investment advisory fees		212			289			45			276
Accrued transfer agent fees		124			145			35			154
Accrued distribution fees		179			127			46			187
Accrued administrative fees		8			10			2			10
Accrued expenses		103			112			51			181
Total Liabilites		7,471			5,446			853			18,818
NET ASSETS	$	256,619		$	301,364		$	62,921		$	303,231
Net Assets Consist of:
Paid in capital	$	521,772		$	482,266		$	95,045		$	577,497
Undistributed net investment income (accumulated loss)		—			—			850			—
Undistributed net realized gain (accumulated loss)		(154,207	)		(62,359	)		(12,428	)		(134,705	)
Net unrealized appreciation (depreciation) of investments		(110,946	)		(118,543	)		(20,546	)		(139,561	)
NET ASSETS	$	256,619		$	301,364		$	62,921		$	303,231
SHARES OF BENEFICIAL INTEREST OUTSTANDING—NOTE 6
Class A		16,652			59,216			1,833			46,333
Class B		12,699			6,033			1,250			18,917
Class C		3,491			4,763			664			10,038
Class I		—			—			—			—
Class A — Net Asset Value Per Share	$	8.20		$	4.37		$	16.97		$	4.26
Class A — Offering Price Per Share	$	8.65		$	4.61		$	17.91		$	4.50
Class B — Net Asset Value and Offering Price Per Share	$	7.42		$	3.94		$	16.61		$	3.66
Class C — Net Asset Value and Offering Price Per Share	$	7.42		$	3.95		$	16.66		$	3.64
Class I — Net Asset Value and Offering Price Per Share	$	—		$	—		$	—		$	—
*Identified cost	$	365,463		$	420,998		$	83,806		$	441,870

See Notes to Financial Statements.

-62-

	Capital Appreciation Fund			Health Sciences Fund			SMidCap Growth Fund			Growth Opportunities Fund
ASSETS:
Investments in securities, at value (identified cost)* see accompanying schedules of investments	$	517,362		$	264,430		$	417,086		$	4,370
Cash		—			—			—			—
Receivable for investment securities sold		47,038			9,191			7,452			—
Receivable foreign currency contracts		—			—			—			—
Receivable for shares of beneficial interest sold		2,022			1,085			2,440			47
Dividends and interest receivable		657			123			113			1
Receivable from Investment Manager		—			—			—			4
Prepaid expenses		138			85			126			19
Total Assets		567,217			274,914			427,217			4,441
LIABILITES:
Payable for investment securities purchased		31,869			4,648			4,763			—
Payable foreign currency contracts		—			—			—			—
Payable for shares of beneficial interest redeemed		1,226			2,518			1,340			—
Due to Custodian		1			—			—			—
Accrued investment advisory fees		491			251			387			4
Accrued transfer agent fees		260			99			151			1
Accrued distribution fees		265			153			162			2
Accrued administrative fees		17			9			13			—
Accrued expenses		146			94			83			14
Total Liabilites		34,275			7,772			6,899			21
NET ASSETS	$	532,942		$	267,142		$	420,318		$	4,420
Net Assets Consist of:
Paid in capital	$	1,156,747		$	337,068		$	653,183		$	6,573
Undistributed net investment income (accumulated loss)		—			—			—			—
Undistributed net realized gain (accumulated loss)		(460,837	)		(35,283	)		(65,764	)		(443	)
Net unrealized appreciation (depreciation) of investments		(162,968	)		(34,643	)		(167,101	)		(1,710	)
NET ASSETS	$	532,942		$	267,142		$	420,318		$	4,420
SHARES OF BENEFICIAL INTEREST OUTSTANDING—NOTE 6
Class A		43,367			13,206			30,818			346
Class B		7,043			1,291			944			—
Class C		8,722			5,439			4,422			137
Class I		—			—			7,290			192
Class A — Net Asset Value Per Share	$	9.24		$	13.65		$	9.72		$	6.55
Class A — Offering Price Per Share	$	9.75		$	14.41		$	10.26		$	6.91
Class B — Net Asset Value and Offering Price Per Share	$	8.40		$	12.92		$	9.23		$	—
Class C — Net Asset Value and Offering Price Per Share	$	8.40		$	12.92		$	9.24		$	6.51
Class I — Net Asset Value and Offering Price Per Share	$	—		$	—		$	9.75		$	6.55
*Identified cost	$	680,330		$	299,071		$	584,187		$	6,080

-63-

THE ALGER FUNDS

Statements of Assets and Liabilities October 31, 2008

(in thousands, except per share amounts)

	Money Market Fund
ASSETS:
Investments in securities, at value (identified cost)* see accompanying schedules of investments	$	56,399
Receivable for shares of beneficial interest sold		203
Prepaid expenses		30
Total Assets		56,632
LIABILITES:
Payable for shares of beneficial interest redeemed		146
Accrued investment advisory fees		27
Accrued transfer agent fees		16
Accrued administrative fees		2
Accrued expenses		46
Total Liabilites		237
NET ASSETS	$	56,395
Net Assets Consist of:
Paid in capital	$	56,613
Undistributed net investment income (accumulated loss)		—
Undistributed net realized gain (accumulated loss)		(218	)
NET ASSETS	$	56,395
SHARES OF BENEFICIAL INTEREST OUTSTANDING—NOTE 6		56,492
Net Asset Value Per Share	$	1.00
*Identified cost	$	56,399

See Notes to Financial Statements.

-64-

THE ALGER FUNDS

Statements of Operations (in thousands)

For the year ended October 31, 2008

	LargeCap Growth Fund
INCOME:
Dividends (net of foreign withholding taxes*)	$	4,446
Interest and other income		337
Total Income		4,783
EXPENSES:
Advisory fees—Note 3(a)		2,848
Distribution fees—Note 3(b):
Class A		518
Class B		1,550
Class C		392
Administrative fees—Note 3(a)		131
Custodian fees		70
Transfer agent fees—Note 3(e)		720
Professional fees		63
Registration fees		185
Miscellaneous		194
Total Expenses		6,671
NET INVESTMENT LOSS		(1,888	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments		(18,141	)
Net realized gain on foreign currency transactions		317
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations		(180,125	)
Net realized and unrealized gain (loss) on investments and foreign currency		(197,949	)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(199,837	)
*Foreign withholding taxes	$	29

See Notes to Financial Statements.

-65-

THE ALGER FUNDS

Statements of Operations (in thousands)

For the period ended October 31, 2008

	SmallCap Growth Fund			Balanced Fund			MidCap Growth Fund			Capital Appreciation Fund
INCOME:
Dividends (net of foreign withholding taxes*)	$	819		$	739		$	2,861		$	5,720
Interest and other income		480			1,763			821			1,556
Total Income		1,299			2,502			3,682			7,276
EXPENSES:
Advisory fees—Note 3(a)		3,708			631			4,483			6,193
Distribution fees—Note 3(b):
Class A		958			92			921			1,353
Class B		409			373			1,526			1,205
Class C		339			150			689			1,033
Class I		—			—			—			—
Administrative fees—Note 3(a)		150			29			193			246
Interest expense—Note 5		—			—			4			1
Custodian fees		47			29			134			142
Transfer agent fees—Note 3(e)		879			181			903			1,340
Professional fees		85			13			113			95
Registration fees		56			21			39			59
Miscellaneous		237			50			304			319
Total Expenses		6,868			1,569			9,309			11,986
Less, expense reimbursements Note 3(a)		—			(80	)		—			—
Net Expenses		6,868			1,489			9,309			11,986
NET INVESTMENT INCOME (LOSS)		(5,569	)		1,013			(5,627	)		(4,710	)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments		(26,048	)		(362	)		(140,107	)		(122,313	)
Net realized gain on foreign currency transactions		—			23			1,215			1,097
Net realized gain (loss) on options written		—			—			3,142			(409	)
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations		(231,950	)		(30,462	)		(260,748	)		(246,483	)
Net change in unrealized appreciation (depreciation) on options	—						—			7,720
Net realized and unrealized loss on investments, options and foreign currency		(257,998	)		(30,801	)		(388,778	)		(368,108	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(263,567	)	$	(29,788	)	$	(394,405	)	$	(372,818	)
*Foreign withholding taxes	$	—		$	9		$	58		$	41

See Notes to Financial Statements.

-66-

	Health Sciences Fund			SMidCap Growth Fund			Growth Opportunities Fund			Money Market Fund
INCOME:
Dividends (net of foreign withholding taxes*)	$	1,601		$	1,203		$	7		$	—
Interest and other income		902			683			3			1,538
Total Income		2,503			1,886			10			1,538
EXPENSES:
Advisory fees—Note 3(a)		2,635			3,985			21			256
Distribution fees—Note 3(b):
Class A		557			963			2			—
Class B		213			137			—			—
Class C		810			552			4			—
Class I		—			95			3			—
Administrative fees—Note 3(a)		105			155			1			18
Interest expense—Note 5		—			—			—			—
Custodian fees		37			56			21			14
Transfer agent fees—Note 3(e)		445			726			11			106
Professional fees		41			64			5			11
Registration fees		62			93			—			17
Miscellaneous		133			222			11			44
Total Expenses		5,038			7,048			79			466
Less, expense reimbursements Note 3(a)		—			—			(42	)		—
Net Expenses		5,038			7,048			37			466
NET INVESTMENT INCOME (LOSS)		(2,535	)		(5,162	)		(27	)		1,072
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss on investments		(33,501	)		(65,732	)		(443	)		—
Net realized gain on foreign currency transactions		5			—			—			—
Net realized gain (loss) on options written		—			—			—			—
Net change in unrealized appreciation (depreciation) on investments and foreign currency translations		(62,406	)		(218,784	)		(1,710	)		—
Net change in unrealized appreciation (depreciation) on options	—			3			—			—
Net realized and unrealized loss on investments, options and foreign currency		(95,899	)		(284,516	)		(2,153	)		—
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(98,434	)	$	(289,678	)	$	(2,180	)	$	1,072
*Foreign withholding taxes	$	54		$	—		$	—		$	—

-67-

THE ALGER FUNDS

Statements of Changes in Net Assets (in thousands)

	LargeCap Growth Fund						SmallCap Growth Fund
	For the Year Ended October 31, 2008			For the Year Ended October 31, 2007			For the Year Ended October 31, 2008			For the Year Ended October 31, 2007
Net investment income (loss)	$	(1,888	)	$	(2,177	)	$	(5,569	)	$	(5,059	)
Net realized gain (loss) on investments, options and foreign currency transactions		(17,824	)		63,015			(26,048	)		54,478
Net change in unrealized appreciation (depreciation) on investments, options and foreign currency translations		(180,125	)		43,948			(231,950	)		62,205
Net increase (decrease) in net assets resulting from operations		(199,837	)		104,786			(263,567	)		111,624
Dividends and distributions to shareholders from:
Net investment income
Class A		—			—			—			—
Class B		—			—			—			—
Class C		—			—			—			—
Net realized gains
Class A		—			—			—			—
Class B		—			—			—			—
Class C		—			—			—			—
Total dividends and distributions to shareholders		—			—			—			—
Increase (decrease) from shares of beneficial interest transactions:
Class A		15,747			22,232			(1,378	)		171,083
Class B		(36,354	)		(64,364	)		(10,985	)		(13,645	)
Class C		758			(4,983	)		(9,411	)		21,116
Net increase (decrease) from shares of beneficial interest transactions—Note 6		(19,849	)		(47,115	)		(21,774	)		178,554
Total increase (decrease)		(219,686	)		57,671			(285,341	)		290,178
Net Assets:
Beginning of year		476,305			418,634			586,705			296,527
END OF YEAR	$	256,619		$	476,305		$	301,364		$	586,705
Undistributed net investment income (accumulated loss)	$	—		$	—		$	—		$	—

See Notes to Financial Statements.

-68-

	Balanced Fund						MidCap Growth Fund
	For the Year Ended October 31, 2008			For the Year Ended October 31, 2007			For the Year Ended October 31, 2008			For the Year Ended October 31, 2007
Net investment income (loss)	$	1,013		$	872		$	(5,627	)	$	(6,406	)
Net realized gain (loss) on investments, options and foreign currency transactions		(339	)		13,122			(135,750	)		150,420
Net change in unrealized appreciation (depreciation) on investments, options and foreign currency translations		(30,462	)		4,277			(253,028	)		75,272
Net increase (decrease) in net assets resulting from operations		(29,788	)		18,271			(394,405	)		219,286
Dividends and distributions to shareholders from:
Net investment income
Class A		(496	)		(601	)		—			—
Class B		(266	)		(369	)		—			—
Class C		(102	)		(131	)		—			—
Net realized gains
Class A		—			—			(71,511	)		(33,472	)
Class B		—			—			(38,204	)		(24,034	)
Class C		—			—			(15,167	)		(7,865	)
Total dividends and distributions to shareholders		(864	)		(1,101	)		(124,882	)		(65,371	)
Increase (decrease) from shares of beneficial interest transactions:
Class A		8,873			(12,799	)		72,381			37,125
Class B		(21,404	)		(22,319	)		(13,450	)		(40,649	)
Class C		(692	)		(8,007	)		14,055			(1,142	)
Net increase (decrease) from shares of beneficial interest transactions—Note 6		(13,223	)		(43,125	)		72,986			(4,666	)
Total increase (decrease)		(43,875	)		(25,955	)		(446,301	)		149,249
Net Assets:
Beginning of year		106,796			132,751			749,532			600,283
END OF YEAR	$	62,921		$	106,796		$	303,231		$	749,532
Undistributed net investment income (accumulated loss)	$	850		$	639		$	—		$	(1,185	)

-69-

THE ALGER FUNDS

Statements of Changes in Net Assets (in thousands)

	Capital Appreciation Fund						Health Sciences Fund
	For the Year Ended October 31, 2008			For the Year Ended October 31, 2007			For the Year Ended October 31, 2008			For the Year Ended October 31, 2007
Net investment loss	$	(4,710	)	$	(4,915	)	$	(2,535	)	$	(1,426	)
Net realized gain on investments, options and foreign currency transactions		(121,625	)		119,743			(33,496	)		24,429
Net change in unrealized appreciation (depreciation) on investments, options and foreign currency translations		(246,483	)		56,963			(62,403	)		8,640
Net increase (decrease) in net assets resulting from operations		(372,818	)		171,791			(98,434	)		31,643
Distributions to shareholders from:
Net realized gains
Class A		—			—			(15,938	)		(5,404	)
Class B		—			—			(1,771	)		(1,129	)
Class C		—			—			(5,902	)		(2,269	)
Class I		—			—			—			—
Total distributions to shareholders		—			—			(23,611	)		(8,802	)
Increase from shares of beneficial interest transactions:
Class A		217,320			208,400			70,324			61,112
Class B		(74,519	)		(54,873	)		2,033			(2,178	)
Class C		30,111			40,083			31,442			18,506
Class I		—			—			—			—
Net increase from shares of beneficial interest transactions—Note 6		172,912			193,610			103,799			77,440
Total increase (decrease)		(199,906	)		365,401			(18,246	)		100,281
Net Assets:
Beginning of period		732,848			367,447			285,388			185,107
END OF PERIOD	$	532,942		$	732,848		$	267,142		$	285,388
Undistributed net investment income (accumulated loss)	$	—		$	—		$	—		$	—

*Commenced operations March 3, 2008.

See Notes to Financial Statements.

-70-

	SMidCap Growth Fund						Growth Opportunities Fund*
	For the Year Ended October 31, 2008			For the Year Ended October 31, 2007			For the Period Ended October 31, 2008
Net investment loss	$	(5,162	)	$	(1,255	)	$	(27	)
Net realized gain on investments, options and foreign currency transactions		(65,732	)		6,822			(443	)
Net change in unrealized appreciation (depreciation) on investments, options and foreign currency translations		(218,784	)		44,181			(1,710	)
Net increase (decrease) in net assets resulting from operations		(289,678	)		49,748			(2,180	)
Distributions to shareholders from:
Net realized gains
Class A		(4,773	)		(1,703	)		—
Class B		(249	)		(388	)		—
Class C		(835	)		(642	)		—
Class I		(141	)		—			—
Total distributions to shareholders		(5,998	)		(2,733	)		—
Increase from shares of beneficial interest transactions:
Class A		242,532			210,744			3,371
Class B		389			5,920			—
Class C		26,947			27,531			1,296
Class I		99,387			2,919			1,933
Net increase from shares of beneficial interest transactions—Note 6		369,255			247,114			6,600
Total increase (decrease)		73,579			294,129			4,420
Net Assets:
Beginning of period		346,739			52,610			—
END OF PERIOD	$	420,318		$	346,739		$	4,420
Undistributed net investment income (accumulated loss)	$	—		$	—		$	—

-71-

THE ALGER FUNDS

Statements of Changes in Net Assets (in thousands)

	Money Market Fund
	For the Year Ended October 31, 2008			For the Year Ended October 31, 2007
Net investment income	$	1,072		$	2,277
Net increase in net assets resulting from operations		1,072			2,277
Dividends to shareholders from:
Net investment income		(1,072	)		(2,277	)
Total dividends to shareholders		(1,072	)		(2,277	)
Net increase (decrease) from shares of beneficial interest transactions—Note 6		2,188			(861	)
Total increase (decrease)		2,188			(861	)
Net Assets:
Beginning of year		54,207			55,068
END OF YEAR	$	56,395		$	54,207
Undistributed net investment income (accumulated loss)	$	—		$	—

See Notes to Financial Statements.

-72-

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THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER LARGECAP GROWTH FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	14.25		$	11.13		$	10.48		$	9.05		$	8.87
Net investment income (loss) (i)		(0.01	)		(0.01	)		(0.02	)		0.01			(0.07	)
Net realized and unrealized gain (loss) on investments		(6.04	)		3.13			0.67			1.42			0.25
Total from investment operations		(6.05	)		3.12			0.65			1.43			0.18
Net asset value, end of year	$	8.20		$	14.25		$	11.13		$	10.48		$	9.05
Total return (ii)		(42.5	)%		28.0	%		6.2	%		15.8	%		2.0	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	136,464		$	224,617		$	157,185		$	157,205		$	166,720
Ratio of expenses to average net assets		1.30	%		1.34	%		1.21	%		1.37	%		1.34	%
Ratio of net investment income (loss) to average net assets		(0.10	)%		(0.08	)%		(0.14	)%		0.05	%		(0.72	)%
Portfolio turnover rate		181.48	%		171.78	%		322.94	%		249.17	%		191.13	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-74-

-75-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER LARGECAP GROWTH FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	12.99		$	10.22		$	9.70		$	8.44		$	8.33
Net investment income (loss) (i)		(0.09	)		(0.09	)		(0.09	)		(0.07	)		(0.13	)
Net realized and unrealized gain (loss) on investments		(5.48	)		2.86			0.61			1.33			0.24
Total from investment operations		(5.57	)		2.77			0.52			1.26			0.11
Net asset value, end of year	$	7.42		$	12.99		$	10.22		$	9.70		$	8.44
Total return (ii)		(42.9	)%		27.1	%		5.4	%		14.9	%		1.3	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	94,253		$	206,695		$	221,298		$	260,786		$	279,963
Ratio of expenses to average net assets		2.05	%		2.10	%		1.96	%		2.12	%		2.09	%
Ratio of net investment income (loss) to average net assets		(0.87	)%		(0.81	)%		(0.91	)%		(0.72	)%		(1.46	)%
Portfolio turnover rate		181.48	%		171.78	%		322.94	%		249.17	%		191.13	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-76-

ALGER LARGECAP GROWTH FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	12.98		$	10.21		$	9.69		$	8.43		$	8.33
Net investment income (loss) (i)		(0.09	)		(0.09	)		(0.09	)		(0.07	)		(0.13	)
Net realized and unrealized gain (loss) on investments		(5.47	)		2.86			0.61			1.33			0.23
Total from investment operations		(5.56	)		2.77			0.52			1.26			0.10
Net asset value, end of year	$	7.42		$	12.98		$	10.21		$	9.69		$	8.43
Total return (ii)		(42.8	)%		27.1	%		5.4	%		15.0	%		1.2	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	25,902		$	44,993		$	40,151		$	39,620		$	42,196
Ratio of expenses to average net assets		2.05	%		2.09	%		1.96	%		2.12	%		2.09	%
Ratio of net investment income (loss) to average net assets		(0.86	)%		(0.82	)%		(0.90	)%		(0.72	)%		(1.47	)%
Portfolio turnover rate		181.48	%		171.78	%		322.94	%		249.17	%		191.13	%

-77-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER SMALLCAP GROWTH FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	8.02		$	6.31		$	5.21		$	4.18		$	3.95
Net investment income (loss) (i)		(0.07	)		(0.07	)		(0.05	)		(0.06	)		(0.06	)
Net realized and unrealized gain (loss) on investments		(3.58	)		1.78			1.15			1.09			0.29
Total from investment operations		(3.65	)		1.71			1.10			1.03			0.23
Net asset value, end of year	$	4.37		$	8.02		$	6.31		$	5.21		$	4.18
Total return (ii)		(45.5	)%		27.1	%		21.1	%		24.6	%		5.8	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	258,783		$	482,318		$	221,019		$	110,329		$	82,891
Ratio of expenses to average net assets		1.38	%		1.41	%		1.37	%		1.62	%		1.69	%
Ratio of net investment income (loss) to average net assets		(1.09	)%		(0.97	)%		(0.91	)%		(1.19	)%		(1.47	)%
Portfolio turnover rate		62.37	%		73.54	%		83.72	%		104.30	%		128.79	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-78-

-79-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER SMALLCAP GROWTH FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	7.28		$	5.77		$	4.80		$	3.88		$	3.70
Net investment income (loss) (i)		(0.11	)		(0.11	)		(0.09	)		(0.08	)		(0.09	)
Net realized and unrealized gain (loss) on investments		(3.23	)		1.62			1.06			1.00			0.27
Total from investment operations		(3.34	)		1.51			0.97			0.92			0.18
Net asset value, end of year	$	3.94		$	7.28		$	5.77		$	4.80		$	3.88
Total return (ii)		(45.9	)%		26.2	%		20.2	%		23.7	%		4.9	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	23,783		$	57,448		$	57,928		$	61,499		$	70,304
Ratio of expenses to average net assets		2.13	%		2.16	%		2.14	%		2.36	%		2.43	%
Ratio of net investment income (loss) to average net assets		(1.84	)%		(1.70	)%		(1.66	)%		(1.94	)%		(2.21	)%
Portfolio turnover rate		62.37	%		73.54	%		83.72	%		104.30	%		128.79	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-80-

ALGER SMALLCAP GROWTH FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	7.29		$	5.78		$	4.81		$	3.88		$	3.70
Net investment income (loss) (i)		(0.11	)		(0.11	)		(0.09	)		(0.09	)		(0.09	)
Net realized and unrealized gain (loss) on investments		(3.23	)		1.62			1.06			1.02			0.27
Total from investment operations		(3.34	)		1.51			0.97			0.93			0.18
Net asset value, end of year	$	3.95		$	7.29		$	5.78		$	4.81		$	3.88
Total return (ii)		(45.8	)%		26.1	%		20.2	%		24.0	%		4.9	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	18,798		$	46,939		$	17,580		$	5,106		$	4,669
Ratio of expenses to average net assets		2.13	%		2.16	%		2.12	%		2.37	%		2.44	%
Ratio of net investment income (loss) to average net assets		(1.84	)%		(1.72	)%		(1.66	)%		(1.95	)%		(2.21	)%
Portfolio turnover rate		62.37	%		73.54	%		83.72	%		104.30	%		128.79	%

-81-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER BALANCED FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	24.71		$	21.15		$	20.29		$	18.58		$	18.29
Net investment income (loss) (i)		0.35			0.29			0.23			0.22			0.10
Net realized and unrealized gain (loss) on investments		(7.76	)		3.57			0.84			1.70			0.36
Total from investment operations		(7.41	)		3.86			1.07			1.92			0.46
Dividends from net investment income		(0.33	)		(0.30	)		(0.21	)		(0.21	)		(0.17	)
Net asset value, end of year	$	16.97		$	24.71		$	21.15		$	20.29		$	18.58
Total return (ii)		(30.4	)%		18.5	%		5.3	%		10.4	%		2.5	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	31,102		$	35,789		$	43,224		$	53,415		$	68,646
Ratio of expenses to average net assets		1.24	%(iv)		1.25	%(iii)		1.32	%		1.31	%		1.26	%
Ratio of net investment income to average net assets		1.60	%		1.26	%		1.15	%		1.15	%		0.52	%
Portfolio turnover rate		78.04	%		139.18	%		271.30	%		218.75	%		167.72	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by .08% due to expense reimbursement.

(iv) Amount has been reduced by .09% due to expense reimbursement.

See Notes to Financial Statements.

-82-

-83-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER BALANCED FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	24.16		$	20.66		$	19.81		$	18.13		$	17.86
Net investment income (loss) (i)		0.18			0.12			0.08			0.08			(0.04	)
Net realized and unrealized gain (loss) on investments		(7.60	)		3.50			0.82			1.65			0.34
Total from investment operations		(7.42	)		3.62			0.90			1.73			0.30
Dividends from net investment income		(0.13	)		(0.12	)		(0.05	)		(0.05	)		(0.03	)
Net asset value, end of year	$	16.61		$	24.16		$	20.66		$	19.81		$	18.13
Total return (ii)		(30.9	)%		17.6	%		4.5	%		9.6	%		1.7	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	20,762		$	53,928		$	67,170		$	86,647		$	114,387
Ratio of expenses to average net assets		1.98	%(iv)		1.99	%(iii)		2.07	%		2.06	%		2.01	%
Ratio of net investment income (loss) to average net assets		0.81	%		0.53	%		0.40	%		0.41	%		(0.23	)%
Portfolio turnover rate		78.04	%		139.18	%		271.30	%		218.75	%		167.72	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by .08% due to expense reimbursement.

(iv) Amount has been reduced by .09% due to expense reimbursement.

See Notes to Financial Statements.

-84-

ALGER BALANCED FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	24.26		$	20.75		$	19.90		$	18.21		$	17.93
Net investment income (loss) (i)		0.18			0.12			0.08			0.08			(0.04	)
Net realized and unrealized gain (loss) on investments		(7.63	)		3.52			0.82			1.66			0.35
Total from investment operations		(7.45	)		3.64			0.90			1.74			0.31
Dividends from net investment income		(0.15	)		(0.13	)		(0.05	)		(0.05	)		(0.03	)
Net asset value, end of year	$	16.66		$	24.26		$	20.75		$	19.90		$	18.21
Total return (ii)		(30.9	)%		17.6	%		4.5	%		9.5	%		1.7	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	11,057		$	17,079		$	22,357		$	25,421		$	34,840
Ratio of expenses to average net assets		1.98	%(iv)		1.98	%(iii)		2.07	%		2.06	%		2.01	%
Ratio of net investment income (loss) to average net assets		0.84	%		0.53	%		0.41	%		0.42	%		(0.23	)%
Portfolio turnover rate		78.04	%		139.18	%		271.30	%		218.75	%		167.72	%

-85-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER MIDCAP GROWTH FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	11.36		$	8.93		$	9.15		$	7.89		$	7.57
Net investment income (loss) (i)		(0.05	)		(0.07	)		(0.07	)		(0.08	)		(0.08	)
Net realized and unrealized gain (loss) on investments		(5.23	)		3.46			0.85			1.34			0.40
Total from investment operations		(5.28	)		3.39			0.78			1.26			0.32
Distributions from net realized gains		(1.82	)		(0.96	)		(1.00	)		—			—
Net asset value, end of year	$	4.26		$	11.36		$	8.93		$	9.15		$	7.89
Total return (ii)		(54.9	)%		41.6	%		8.9	%		16.0	%		4.2	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	197,507		$	445,903		$	318,934		$	318,423		$	276,076
Ratio of expenses to average net assets		1.30	%		1.33	%		1.23	%		1.36	%		1.34	%
Ratio of net investment income (loss) to average net assets		(0.67	)%		(0.69	)%		(0.77	)%		(0.96	)%		(1.08	)%
Portfolio turnover rate		328.95	%		279.32	%		272.41	%		239.32	%		210.18	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-86-

-87-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER MIDCAP GROWTH FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	10.09		$	8.09		$	8.43		$	7.33		$	7.08
Net investment income (loss) (i)		(0.09	)		(0.12	)		(0.12	)		(0.14	)		(0.13	)
Net realized and unrealized gain (loss) on investments		(4.52	)		3.08			0.78			1.24			0.38
Total from investment operations		(4.61	)		2.96			0.66			1.10			0.25
Distributions from net realized gains		(1.82	)		(0.96	)		(1.00	)		—			—
Net asset value, end of year	$	3.66		$	10.09		$	8.09		$	8.43		$	7.33
Total return (ii)		(55.2	)%		40.5	%		8.2	%		15.0	%		3.5	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	69,142		$	218,783		$	212,286		$	260,986		$	276,982
Ratio of expenses to average net assets		2.04	%		2.08	%		1.98	%		2.11	%		2.09	%
Ratio of net investment income (loss) to average net assets		(1.42	)%		(1.43	)%		(1.52	)%		(1.71	)%		(1.83	)%
Portfolio turnover rate		328.95	%		279.32	%		272.41	%		239.32	%		210.18	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-88-

ALGER MIDCAP GROWTH FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	10.07		$	8.07		$	8.41		$	7.31		$	7.06
Net investment income (loss) (i)		(0.10	)		(0.12	)		(0.12	)		(0.14	)		(0.13	)
Net realized and unrealized gain (loss) on investments		(4.51	)		3.08			0.78			1.24			0.38
Total from investment operations		(4.61	)		2.96			0.66			1.10			0.25
Distributions from net realized gains		(1.82	)		(0.96	)		(1.00	)		—			—
Net asset value, end of year	$	3.64		$	10.07		$	8.07		$	8.41		$	7.31
Total return (ii)		(55.3	)%		40.6	%		8.2	%		15.1	%		3.5	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	36,582		$	84,846		$	69,063		$	72,985		$	70,677
Ratio of expenses to average net assets		2.05	%		2.08	%		1.98	%		2.11	%		2.09	%
Ratio of net investment income (loss) to average net assets		(1.42	)%		(1.43	)%		(1.52	)%		(1.71	)%		(1.83	)%
Portfolio turnover rate		328.95	%		279.32	%		272.41	%		239.32	%		210.18	%

-89-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER CAPITAL APPRECIATION FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	15.66		$	11.05		$	9.27		$	7.71		$	7.74
Net investment income (loss) (i)		(0.05	)		(0.09	)		(0.06	)		(0.04	)		(0.10	)
Net realized and unrealized gain (loss) on investments		(6.37	)		4.70			1.84			1.60			0.07
Total from investment operations		(6.42	)		4.61			1.78			1.56			(0.03	)
Net asset value, end of year	$	9.24		$	15.66		$	11.05		$	9.27		$	7.71
Total return (ii)		(41.0	)%		41.7	%		19.2	%		20.2	%		(0.4	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	400,523		$	452,152		$	152,808		$	128,816		$	121,341
Ratio of expenses to average net assets		1.35	%		1.44	%		1.39	%		1.63	%		1.58	%
Ratio of net investment income (loss) to average net assets		(0.40	)%		(0.69	)%		(0.57	)%		(0.44	)%		(1.23	)%
Portfolio turnover rate		288.74	%		251.53	%		223.23	%		144.61	%		157.23	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-90-

-91-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER CAPITAL APPRECIATION FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	14.35		$	10.20		$	8.62		$	7.23		$	7.31
Net investment income (loss) (i)		(0.14	)		(0.17	)		(0.12	)		(0.09	)		(0.15	)
Net realized and unrealized gain (loss) on investments		(5.81	)		4.32			1.70			1.48			0.07
Total from investment operations		(5.95	)		4.15			1.58			1.39			(0.08	)
Net asset value, end of year	$	8.40		$	14.35		$	10.20		$	8.62		$	7.23
Total return (ii)		(41.5	)%		40.7	%		18.3	%		19.2	%		(1.1	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	59,164		$	186,431		$	179,706		$	192,976		$	228,646
Ratio of expenses to average net assets		2.09	%		2.21	%		2.14	%		2.37	%		2.33	%
Ratio of net investment income (loss) to average net assets		(1.15	)%		(1.42	)%		(1.31	)%		(1.15	)%		(1.97	)%
Portfolio turnover rate		288.74	%		251.53	%		223.23	%		144.61	%		157.23	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

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ALGER CAPITAL APPRECIATION FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	14.34		$	10.19		$	8.61		$	7.22		$	7.31
Net investment income (loss) (i)		(0.14	)		(0.17	)		(0.12	)		(0.09	)		(0.10	)
Net realized and unrealized gain (loss) on investments		(5.80	)		4.32			1.70			1.48			0.01
Total from investment operations		(5.94	)		4.15			1.58			1.39			(0.09	)
Net asset value, end of year	$	8.40		$	14.34		$	10.19		$	8.61		$	7.22
Total return (ii)		(41.4	)%		40.7	%		18.4	%		19.3	%		(1.2	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	73,255		$	94,265		$	34,933		$	33,643		$	41,595
Ratio of expenses to average net assets		2.10	%		2.19	%		2.14	%		2.37	%		2.33	%
Ratio of net investment income (loss) to average net assets		(1.15	)%		(1.44	)%		(1.31	)%		(1.13	)%		(1.98	)%
Portfolio turnover rate		288.74	%		251.53	%		223.23	%		144.61	%		157.23	%

-93-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER HEALTH SCIENCES FUND	CLASS A						CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	19.94		$	18.17		$	16.24		$	13.29		$	11.91
Net investment income (loss) (i)		(0.09	)		(0.08	)		(0.07	)		(0.11	)		(0.14	)
Net realized and unrealized gain (loss) on investments		(4.71	)		2.72			2.35			3.76			1.75
Total from investment operations		(4.80	)		2.64			2.28			3.65			1.61
Distributions from net realized gains		(1.49	)		(0.87	)		(0.35	)		(0.70	)		(0.23	)
Net asset value, end of year	$	13.65		$	19.94		$	18.17		$	16.24		$	13.29
Total return (ii)		(26.0	)%		15.3	%		14.3	%		28.3	%		13.7	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	180,210		$	193,165		$	116,165		$	50,581		$	15,106
Ratio of expenses to average net assets		1.31	%		1.35	%		1.35	%		1.50	%(iv)		1.55	%(iii)
Ratio of net investment income (loss) to average net assets		(0.54	)%		(0.42	)%		(0.40	)%		(0.77	)%		(1.04	)%
Portfolio turnover rate		202.86	%		183.27	%		168.87	%		127.78	%		202.79	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by 0.14% due to expense reimbursements.

(iv) Amount has been reduced by 0.03% due to expense reimbursements.

See Notes to Financial Statements.

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-95-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER HEALTH SCIENCES FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	19.10		$	17.56		$	15.83		$	13.05		$	11.78
Net investment income (loss) (i)		(0.21	)		(0.20	)		(0.19	)		(0.22	)		(0.24	)
Net realized and unrealized gain (loss) on investments		(4.48	)		2.61			2.27			3.70			1.74
Total from investment operations		(4.69	)		2.41			2.08			3.48			1.50
Distributions from net realized gains		(1.49	)		(0.87	)		(0.35	)		(0.70	)		(0.23	)
Net asset value, end of year	$	12.92		$	19.10		$	17.56		$	15.83		$	13.05
Total return (ii)		(26.6	)%		14.5	%		13.3	%		27.5	%		12.9	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	16,677		$	22,605		$	22,995		$	16,244		$	7,939
Ratio of expenses to average net assets		2.06	%		2.10	%		2.10	%		2.25	%(iii)		2.29	%(iv)
Ratio of net investment income (loss) to average net assets		(1.29	)%		(1.16	)%		(1.15	)%		(1.52	)%		(1.78	)%
Portfolio turnover rate		202.86	%		183.27	%		168.87	%		127.78	%		202.79	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by 0.02% due to expense reimbursements.

(iv) Amount has been reduced by 0.14% due to expense reimbursements.

(v) Amount has been reduced by 0.01% due to expense reimbursements.

(vi) Amount has been reduced by 0.04% due to expense reimbursements.

(vii) Amount has been reduced by 0.15% due to expense reimbursements.

See Notes to Financial Statements.

-96-

ALGER HEALTH SCIENCES FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	19.09		$	17.56		$	15.82		$	13.05		$	11.78
Net investment income (loss) (i)		(0.21	)		(0.20	)		(0.19	)		(0.22	)		(0.24	)
Net realized and unrealized gain (loss) on investments		(4.47	)		2.60			2.28			3.69			1.74
Total from investment operations		(4.68	)		2.40			2.09			3.47			1.50
Distributions from net realized gains		(1.49	)		(0.87	)		(0.35	)		(0.70	)		(0.23	)
Net asset value, end of year	$	12.92		$	19.09		$	17.56		$	15.82		$	13.05
Total return (ii)		(26.6	)%		14.4	%		13.4	%		27.4	%		12.9	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	70,255		$	69,618		$	45,947		$	25,251		$	3,740
Ratio of expenses to average net assets		2.06	%		2.10	%		2.11	%(v)		2.25	%(vi)		2.29	%(vii)
Ratio of net investment income (loss) to average net assets		(1.30	)%		(1.16	)%		(1.15	)%		(1.52	)%		(1.78	)%
Portfolio turnover rate		202.86	%		183.27	%		168.87	%		127.78	%		202.79	%

-97-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER SMIDCAP GROWTH FUND	CLASS A
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	18.16		$	13.92		$	12.23		$	10.46		$	9.97
Net investment income (loss) (i)		(0.14	)		(0.12	)		(0.14	)		(0.13	)		(0.13	)
Net realized and unrealized gain (loss) on investments		(8.04	)		5.05			2.58			2.71			0.62
Total from investment operations		(8.18	)		4.93			2.44			2.58			0.49
Distributions from net realized gains		(0.26	)		(0.69	)		(0.75	)		(0.81	)		—
Net asset value, end of year	$	9.72		$	18.16		$	13.92		$	12.23		$	10.46
Total return (ii)		(45.6	)%		37.0	%		20.8	%		25.7	%		4.9	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	299,644		$	280,672		$	33,419		$	14,389		$	10,827
Ratio of expenses to average net assets		1.34	%		1.34	%		1.50	%(iii)		1.50	%(iv)		1.53	%(v)
Ratio of net investment income (loss) to average net assets		(0.95	)%		(0.80	)%		(1.02	)%		(1.13	)%		(1.21	)%
Portfolio turnover rate		68.50	%		64.72	%		80.64	%		80.54	%		101.16	%

(i) Amount was computed based on average shares outstanding during the year.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by 0.18% due to expense reimbursements.

(iv) Amount has been reduced by 0.17% due to expense reimbursements.

(v) Amount has been reduced by 0.14% due to expense reimbursements.

(vi) Amount has been reduced by 0.18% due to expense reimbursements.

See Notes to Financial Statements.

-98-

ALGER SMIDCAP GROWTH FUND	CLASS B
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	17.39		$	13.44		$	11.92		$	10.27		$	9.87
Net investment income (loss) (i)		(0.24	)		(0.23	)		(0.23	)		(0.20	)		(0.20	)
Net realized and unrealized gain (loss) on investments		(7.66	)		4.87			2.50			2.66			0.60
Total from investment operations		(7.90	)		4.64			2.27			2.46			0.40
Distributions from net realized gains		(0.26	)		(0.69	)		(0.75	)		(0.81	)		—
Net asset value, end of year	$	9.23		$	17.39		$	13.44		$	11.92		$	10.27
Total return (ii)		(46.1	)%		36.1	%		19.8	%		25.0	%		4.1	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	8,717		$	16,285		$	7,251		$	3,262		$	2,291
Ratio of expenses to average net assets		2.13	%		2.15	%		2.25	%(vi)		2.25	%(iv)		2.27	%(vi)
Ratio of net investment income (loss) to average net assets		(1.74	)%		(1.58	)%		(1.77	)%		(1.88	)%		(1.95	)%
Portfolio turnover rate		68.50	%		64.72	%		80.64	%		80.54	%		101.16	%

-99-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the period

ALGER SMIDCAP GROWTH FUND	CLASS C
	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of period	$	17.40		$	13.45		$	11.92		$	10.27		$	9.86
Net investment income (loss) (i)		(0.23	)		(0.23	)		(0.23	)		(0.20	)		(0.20	)
Net realized and unrealized gain (loss) on investments		(7.67	)		4.87			2.51			2.66			0.61
Total from investment operations		(7.90	)		4.64			2.28			2.46			0.41
Distributions from net realized gains		(0.26	)		(0.69	)		(0.75	)		(0.81	)		—
Net asset value, end of period	$	9.24		$	17.40		$	13.45		$	11.92		$	10.27
Total return (ii)		(46.0	)%		36.0	%		19.9	%		25.0	%		4.2	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)	$	40,849		$	46,775		$	11,940		$	1,960		$	1,345
Ratio of expenses to average net assets		2.07	%		2.12	%		2.25	%(iii)		2.25	%(iv)		2.28	%(v)
Ratio of net investment income (loss) to average net assets		(1.68	)%		(1.55	)%		(1.79	)%		(1.88	)%		(1.95	)%
Portfolio turnover rate		68.50	%		64.72	%		80.64	%		80.54	%		101.16	%

(i) Amount was computed based on average shares outstanding during the period.

(ii) Does not reflect the effect of any sales charges.

(iii) Amount has been reduced by 0.17% due to expense reimbursements.

(iv) Amount has been reduced by 0.16% due to expense reimbursements.

(v) Amount has been reduced by 0.15% due to expense reimbursements.

(vi) Amount has been reduced by 1.10% due to expense reimbursements.

(vii) Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

See Notes to Financial Statements.

-100-

ALGER SMIDCAP GROWTH FUND	CLASS I
	Year ended 10/31/08			From 8/6/07 (commence- ment of operations) to 10/31/07 (vii)
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of period	$	18.21		$	15.64
Net investment income (loss) (i)		(0.12	)		(0.02	)
Net realized and unrealized gain (loss) on investments		(8.08	)		2.59
Total from investment operations		(8.20	)		2.57
Distributions from net realized gains		(0.26	)		—
Net asset value, end of period	$	9.75		$	18.21
Total return (ii)		(45.6	)%		16.4	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)	$	71,108		$	3,007
Ratio of expenses to average net assets		1.24	%		1.25	%(vi)
Ratio of net investment income (loss) to average net assets		(0.87	)%		(0.94	)%
Portfolio turnover rate		68.50	%		64.72	%

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THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the period

ALGER GROWTH OPPORTUNITIES FUND	CLASS A			CLASS C			CLASS I
	From 3/3/08 (commencement of operations) to 10/31/08 (iii)			From 3/3/08 (commencement of operations) to 10/31/08 (iii)			From 3/3/08 (commencement of operations) to 10/31/08 (iii)
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of period	$	10.00		$	10.00		$	10.00
Net investment income (loss) (i)		(0.06	)		(0.09	)		(0.05	)
Net realized and unrealized gain (loss) on investments		(3.39	)		(3.40	)		(3.40	)
Total from investment operations		(3.45	)		(3.49	)		(3.45	)
Net asset value, end of period	$	6.55		$	6.51		$	6.55
Total return (ii)		(34.5	)%		(34.9	)%		(34.5	)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted)	$	2,266		$	895		$	1,259
Ratio of expenses to average net assets		1.50	%(iv)		2.25	%(v)		1.25	%(vi)
Ratio of net investment income to average net assets		(1.11	)%		(1.85	)%		(0.83	)%
Portfolio turnover rate		27.80	%		27.80	%		27.80	%

(i) Amount was computed based on average shares outstanding during the period.

(ii) Does not reflect the effect of any sales charges.

(iii) Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

(iv) Amount has been reduced by 1.64% due to expense reimbursements.

(v) Amount has been reduced by 1.63% due to expense reimbursement.

(vi) Amount has been reduced by 1.80% due to expense reimbursement.

See Notes to Financial Statements.

-102-

THE ALGER FUNDS

Financial Highlights for a share outstanding throughout the year

ALGER MONEY MARKET FUND

	Year ended 10/31/08			Year ended 10/31/07			Year ended 10/31/06			Year ended 10/31/05			Year ended 10/31/04
INCOME FROM INVESTMENT OPERATIONS
Net asset value, beginning of year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Net investment income (loss)		0.0194			0.0419			0.0374			0.0188			0.0039
Dividends from net investment income		(0.0194	)		(0.0419	)		(0.0374	)		(0.0188	)		(0.0039	)
Net asset value, end of year	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total return (i)		1.9	%		4.3	%		3.8	%		1.9	%		0.4	%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted)	$	56,395		$	54,207		$	55,068		$	61,570		$	80,528
Ratio of expenses to average net assets		0.84	%		0.88	%		0.90	%		0.90	%		0.77	%
Ratio of net investment income to average net assets		1.93	%		4.20	%		3.78	%		1.84	%		0.37	%

(i) Does not reflect the effect of any sales charges.

See Notes to Financial Statements.

-103-

THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS

NOTE 1 — General:

The Alger Funds (the "Trust") is a diversified, open-end registered investment company organized as a business trust under the laws of the Commonwealth of Massachusetts. The Trust operates as a series company currently issuing an unlimited number of shares of beneficial interest in nine funds—LargeCap Growth Fund, SmallCap Growth Fund, Balanced Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund, SMidCap Growth Fund, Growth Opportunities Fund and Money Market Fund (collectively, the "Funds" or individually, each a "Fund"). The LargeCap Growth Fund, SmallCap Growth Fund, MidCap Growth Fund, Capital Appreciation Fund, Health Sciences Fund, SMidCap Growth Fund and Growth Opportunities Fund normally invest primarily in equity securities and each has an investment objective of long-term capital appreciation. The Balanced Fund's investment objectives are current income and long-term capital appreciation which it seeks to achieve through investing in equity and fixed income securities. The Money Market Fund's investment objective is high current income which it seeks to achieve by investing in short-term instruments. On May 13, 2008 the Board of Trustees approved the liquidation of the Core Fixed-Income Fund effective June 27, 2008.

Each Fund, other than the Money Market Fund and the Growth Opportunities Fund, offers Class A, Class B and Class C shares. Class A shares are generally subject to an initial sales charge while Class B and C shares are generally subject to a deferred sales charge. Class B shares will automatically convert to Class A shares eight years after the end of the calendar month in which the order to purchase was accepted. The conversion is completed without the imposition of any sales charges or other fees. The Growth Opportunities offers Class A, C and I shares. The SMidCap Growth Fund also offers Class I shares. Class I shares are sold to institutional investors without an initial or deferred sales charge. Each class has identical rights to assets and earnings except each share class bears the cost for its plan of distribution and transfer agency services.

NOTE 2 — Significant Accounting Policies:

(a) Investment Valuation: Investments of the Funds, other than the Money Market Fund, are valued on each day the New York Stock Exchange (the "NYSE") is open as of the close of the NYSE (normally 4:00 p.m. Eastern time). Securities for which such information is readily available are valued at the last reported sales price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the absence of reported sales, securities are valued at a price within 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.

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

Securities for which market quotations are not readily available are valued at fair value, as determined in good faith pursuant to procedures established by the Board of Trustees.

Securities in which the Funds invest may be traded in markets that close before the close of the NYSE. Developments that occur between the close of the foreign markets and the close of the NYSE (normally 4:00 p.m. Eastern time) may result in adjustments to the closing prices to reflect what the investment manager, pursuant to policies established by the Board of Trustees, believes to be the fair value of these securities as of the close of the NYSE. The Funds may also fair value securities in other situations, for example, when a particular foreign market is closed but the Funds are open.

The investments of the Money Market Fund, and short-term securities held by the other Funds having a remaining maturity of sixty days or less, are valued at amortized cost which approximates market value. Shares of mutual funds are valued at the net asset value of the underlying mutual fund.

Recent Accounting Pronouncements

Statement on Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157) defines fair value for financial reporting, establishes a framework for measuring fair value and requires additional disclosures about the use of fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Fund does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements, however, additional disclosures will be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements reported in the statement of operations for a fiscal period. These inputs are summarized in the three broad levels listed below:

• Level 1 – quoted prices in active markets for identical securities

• Level 2 – other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

• Level 3 – significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.

In March 2008, the Financial Accounting Standards Board issued the Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities ("FAS 161"). FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures

-105-

THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

about the Fund's derivative and hedging activities, including how such activities are accounted for and their effect on the Fund's financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Fund's financial statements and related disclosures.

(b) Securities Transactions and Investment Income: Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions are recorded on the identified cost basis. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis.

Premiums and discounts on debt securities purchased are amortized or accreted over the lives of the respective securities.

(c) Foreign Currency Translations: The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the prevailing rates of exchange on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the prevailing exchange rates on the respective dates of such transactions.

Net realized gains and losses on foreign currency transactions represent net gains and losses from the disposition of foreign currencies, currency gains and losses realized between the trade dates and settlement dates of security transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included in realized and unrealized gain or loss on investments in the Statements of Operations.

(d) Option Contracts: When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a written call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.

The Funds may also purchase put and call options. Purchasing call and put options tends to decrease the Fund's exposure to the underlying instrument. The Fund pays

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

a premium which is included in the Fund's Statement of Assets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying security to determine the realized gain or loss.

(e) Lending of Fund Securities: The Funds may lend their securities to financial institutions, provided that the market value of the securities loaned will not at any time exceed one third of the Fund's total assets, as defined. The Funds earn fees on the securities loaned. In order to protect against the risk of failure by the borrower to return the securities loaned or any delay in the delivery of such securities, the loan is collateralized by cash, letters of credit or U.S. Government securities that are maintained in an amount equal to at least 100 percent of the current market value of the loaned securities. The market value of the loaned securities is determined at the close of business of the Funds and any required additional collateral is delivered to the Funds on the next business day. There were no securities on loan during the year ended October 31, 2008.

(f) Dividends to Shareholders: Dividends payable to shareholders are recorded on the ex-dividend date.

The Money Market Fund declares dividends daily from net investment income; such dividends are paid monthly. The dividends from net investment income of the other Funds are declared and paid annually.

With respect to all Funds, dividends from net realized gains, offset by any loss carryforward, are declared and paid annually after the end of the fiscal year in which earned.

Each class is treated separately in determining the amounts of dividends of net investment income payable to holders of its shares.

The characterization of distributions to shareholders for financial reporting purposes is determined in accordance with federal income tax rules. Therefore, the source of the Funds' distributions may be shown in the accompanying financial statements as either from, or in excess of, net investment income, net realized gain on investment transactions, or return of capital, depending on the type of book/tax differences that may exist. Capital accounts within the financial statements are adjusted for permanent book/tax differences. Reclassifications result primarily from the differences in tax treatment of net operating losses, passive foreign investment companies, foreign currency transactions and premium/discount of debt securities. The reclassifications had no impact on the net asset values of the Funds and are designed to present the Funds' capital accounts on a tax basis.

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NOTES TO FINANCIAL STATEMENTS (Continued)

(g) Federal Income Taxes: It is each Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its investment company taxable income to its shareholders. Provided a Fund maintains such compliance, no federal income tax provision is required. Each Fund is treated as a separate entity for the purpose of determining such compliance.

(h) Allocation Methods: The Trust accounts separately for the assets, liabilities and operations of each Fund. Expenses directly attributable to each Fund are charged to that Fund's operations; expenses which are applicable to all Funds are allocated among them based on net assets. Income, realized and unrealized gains and losses, and expenses of each Fund, other than the Money Market Fund, are allocated among the Fund's classes based on relative net assets, with the exception of distribution fees and transfer agency fees.

(i) Indemnification: The Trust enters into contracts that contain a variety of indemnification provisions. The Trust's maximum exposure under these arrangements is unknown. The Trust does not anticipate recognizing any loss related to these arrangements.

(j) Other: These financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which require using estimates and assumptions that affect the reported amounts therein. Actual results may differ from those estimates.

NOTE 3 — Investment Advisory Fees and Other Transactions with Affiliates:

(a) Investment Advisory and Administration Fees: Fees incurred by each Fund, pursuant to the provisions of its Investment Advisory Agreement and its Administration Agreement with Fred Alger Management, Inc. (Alger Management), are payable monthly and computed based on the value of the average daily net assets of each Fund, at the following rates:

	Advisory Fee			Administration Fee through March 16, 2008			Administration Fee Effective March 17, 2008
LargeCap Growth Fund		.710	%		.0400	%		.0275	%
SmallCap Growth Fund		.810			.0400			.0275
Balanced Fund		.710			.0400			.0275
MidCap Growth Fund		.760			.0400			.0275

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	Advisory Fee			Administration Fee through March 16, 2008			Administration Fee Effective March 17, 2008
Capital Appreciation Fund		.810	%		.0400	%		.0275	%
Health Sciences Fund		.810			.0400			.0275
SMidCap Growth Fund		.810			.0400			.0275
Growth Opportunities Fund		.850			.0275			.0275
Money Market Fund		.460			.0400			.0275

Alger Management has established an expense cap for the Growth Opportunities Fund effective March 3, 2008. Alger Management will reimburse the Fund if annualized operating expenses exceed 1.25% of average daily net assets for Class I shares, 1.50% of average daily net assets for Class A shares and 2.25% of average daily net assets for Class C shares. Alger Management has contractually agreed to extend each expense cap through September 24, 2009. As part of the settlement with the New York Attorney General (see Note 8—Litigation) Alger Management has agreed to reduce its advisory fee through November 30, 2011, to 0.62% for the Alger Balanced Fund. For the year ended October 31, 2008, Alger Management reimbursed the Balanced Fund and the Growth Opportunities Fund $80,014 and $42,183, respectively.

(b) Distribution Fees: Class A Shares: The Trust has adopted a Distribution Plan pursuant to which Class A shares of each Fund paid Fred Alger & Company, Incorporated, the Fund's distributor (the "Distributor" or "Alger Inc.") and an affiliate of Alger Management, a fee at the annual rate of .25% of the respective average daily net assets of the Class A shares of the designated Funds to compensate the Distributor for its activities and expenses incurred in distributing the Class A shares. Fees charged may be more or less than the expenses incurred by the Distributor.

Class B Shares: The Trust has adopted an Amended and Restated Plan of Distribution pursuant to which Class B shares of each Fund, other than the Growth Opportunities Fund and the Money Market Fund, reimburse the Distributor for costs and expenses incurred by the Distributor in connection with advertising, marketing and selling the Class B shares providing that the distribution fee does not exceed an annual rate of 1% of the respective average daily net assets of the Class B shares of the designated Funds. If in any month, the costs incurred by the Distributor relating to the Class B shares are in excess of the distribution fees charged to the Class B shares of the Funds, the excess may be carried forward, with interest, and sought to be reimbursed in future periods. As of October 31, 2008, such excess carried forward was approximately $16,653,000, $14,462,000,

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NOTES TO FINANCIAL STATEMENTS (Continued)

$4,037,000, $10,970,000, $20,147,000, $1,531,000 and $668,000 for Class B shares of the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, and the SMidCap Growth Fund, respectively. Contingent deferred sales charges imposed on redemptions of Class B shares will reduce the amount of distribution expenses for which reimbursement may be sought. See Note 3(c) below.

Class C Shares: The Trust has adopted a Distribution Plan pursuant to which Class C shares of each Fund, other than the Money Market Fund, paid the Distributor a fee at the annual rate of 1% of the respective average daily net assets of the Class C shares of the designated Funds to compensate the Distributor for its activities and expenses incurred in distributing the Class C shares. The fees charged may be more or less than the expenses incurred by the Distributor.

(c) Sales Charges: Purchases and sales of shares of the Funds, other than the Money Market Fund, may be subject to initial sales charges or contingent deferred sales charges. For the year ended October 31, 2008, the initial sales charges and contingent deferred sales charges retained by the Distributor were approximately $53,067 and $688,274, respectively. The contingent deferred sales charges are used by the Distributor to offset distribution expenses previously incurred. Sales charges do not represent expenses of the Trust.

(d) Brokerage Commissions: During the year ended October 31, 2008, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, the SMidCap Growth Fund and the Growth Opportunities Fund paid the Distributor commissions of $623,616, $319,076, $58,082, $1,821,086, $1,643,408, $612,365, $460,769 and $4,784 respectively, in connection with securities transactions.

(e) Shareholder Administrative Fees and Expenses: The Trust has entered into a shareholder administrative services agreement with Alger Management to compensate Alger Management on a per account basis for its liaison and administrative oversight of Boston Financial Data Services, Inc., the transfer agent for the Funds ("BFDS") and other related services. During the year ended October 31, 2008, the LargeCap Growth Fund, the SmallCap Growth Fund, the Balanced Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Health Sciences Fund, the SMidCap Growth Fund, the Growth Opportunities Fund and the Money Market Fund incurred fees of $123,512, $154,083, $31,688, $133,463, $218,645, $59,974, $99,537, $550 and $19,377, respectively, for these services provided by Alger Management which are included in the transfer agent fees and expenses in the Statement of Operations.

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NOTES TO FINANCIAL STATEMENTS (Continued)

(f) Trustee Fees: Each Fund pays each Trustee who is not affiliated with the Advisor or its affiliates $500 for each meeting attended, to a maximum of $2,000 per annum. The Chairman of the Board of Trustees receives an additional annual fee of $10,000 which is paid, pro rata, by all funds managed by Alger Management. Additionally, each member of the audit committee receives an additional $50 from each Fund for each audit committee meeting attended, to a maximum of $200 per annum.

NOTE 4 — Securities Transactions:

The following summarizes the securities transactions by the Trust, other than short-term securities, for the year ended October 31, 2008:

	PURCHASES		SALES
LargeCap Growth Fund	$	696,572,357	$	711,418,588
SmallCap Growth Fund		276,626,871		291,662,635
Balanced Fund		67,834,474		78,966,184
MidCap Growth Fund		1,908,819,339		1,961,478,509
Capital Appreciation Fund		2,157,018,126		2,013,587,322
Health Sciences Fund		644,202,829		574,996,183
SMidCap Growth Fund		677,749,493		313,494,329
Growth Opportunities Fund		7,325,378		1,022,987

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NOTES TO FINANCIAL STATEMENTS (Continued)

Written call and put option activity for the year ended October 31, 2008, was as follows:

	NUMBER OF CONTRACTS			PREMIUMS RECEIVED
ALGER MIDCAP GROWTH FUND
Options outstanding at October 31, 2007		180		$	646,020
Options written		24,111			10,826,939
Options closed or expired		(24,291	)		(11,472,959	)
Options exercised		—			—
Options outstanding at October 31, 2008		—		$	—
ALGER CAPITAL APPRECIATION FUND
Options outstanding at October 31, 2007		—		$	—
Options written		5,597			2,277,551
Options closed or expired		(5,496	)		(2,235,716	)
Options exercised		(101	)		(41,835	)
Options outstanding at October 31, 2008		—		$	—

NOTE 5 — Lines of Credit:

The Trust participated in $50 million committed lines of credit with other mutual funds managed by Alger Management through March 14, 2008. All borrowings had variable interest rates and were payable on demand.

With the exception of the Capital Appreciation Fund, the Health Sciences Fund and the SMidCap Growth Fund, the Trust borrowed under such lines of credit exclusively for temporary or emergency purposes. The Capital Appreciation Fund, the Health Sciences Fund and the SMidCap Growth Fund, may have each borrow under these lines up to 1/3 of the value of their assets, to purchase additional securities. To the extent the Capital Appreciation Fund, the Health Sciences Fund and the SMidCap Growth Fund borrowed under these lines, they must pledge securities with a total value of at least twice the amount borrowed. Effective March 17, 2008, the Funds borrows from its custodian on an uncommitted basis.

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

For the year ended October 31, 2008, the Trust had the following borrowings:

	AVERAGE BORROWING		WEIGHTED AVERAGE INTEREST RATE
MidCap Growth Fund	$	86,932		4.16	%
Capital Appreciation Fund		2,186		5.13

NOTE 6 — Share Capital:

The Trust has an unlimited number of authorized shares of beneficial interest of $.001 par value which are presently divided into nine series. Each series, other than the Money Market Fund, is divided into separate classes. The transactions of shares of beneficial interest were as follows:

	FOR THE YEAR ENDED OCTOBER 31, 2008						FOR THE YEAR ENDED OCTOBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
ALGER LARGECAP GROWTH FUND
Class A:
Shares sold		3,918,821		$	48,835,718			3,414,751		$	43,547,917
Shares converted from Class B		2,732,162			34,470,946			2,409,346			29,857,182
Shares redeemed		(5,756,216	)		(67,559,535	)		(4,185,654	)		(51,172,813	)
Net increase		894,767		$	15,747,129			1,638,443		$	22,232,286
Class B:
Shares sold		1,481,679		$	16,574,063			1,075,565		$	12,070,203
Shares converted to Class A		(3,003,198	)		(34,470,946	)		(2,633,772	)		(29,857,182	)
Shares redeemed		(1,689,263	)		(18,457,546	)		(4,181,311	)		(46,577,253	)
Net decrease		(3,210,782	)	$	(36,354,429	)		(5,739,518	)	$	(64,364,232	)
Class C:
Shares sold		936,772		$	10,530,897			667,906		$	7,799,132
Shares redeemed		(910,530	)		(9,773,468	)		(1,133,317	)		(12,781,836	)
Net increase (decrease)		26,242		$	757,429			(465,411	)	$	(4,982,704	)

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NOTES TO FINANCIAL STATEMENTS (Continued)

	FOR THE YEAR ENDED OCTOBER 31, 2008						FOR THE YEAR ENDED OCTOBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
ALGER SMALLCAP GROWTH FUND
Class A:
Shares sold		23,864,937		$	152,346,069			41,213,195		$	285,785,530
Shares converted from Class B		945,212			6,469,017			1,106,874			7,641,192
Shares redeemed		(25,706,827	)		(160,194,662	)		(17,210,375	)		(122,344,304	)
Net increase (decrease)		(896,678	)	$	(1,379,576	)		25,109,694		$	171,082,418
Class B:
Shares sold		416,017		$	2,466,607			910,888		$	5,683,981
Shares converted to Class A		(1,043,358	)		(6,469,017	)		(1,214,413	)		(7,641,192	)
Shares redeemed		(1,228,103	)		(6,982,851	)		(1,841,640	)		(11,687,425	)
Net decrease		(1,855,444	)	$	(10,985,261	)		(2,145,165	)	$	(13,644,636	)
Class C:
Shares sold		562,648		$	3,420,596			4,077,304		$	25,550,902
Shares redeemed		(2,237,870	)		(12,831,980	)		(679,670	)		(4,435,017	)
Net increase (decrease)		(1,675,222	)	$	(9,411,384	)		3,397,634		$	21,115,885
ALGER BALANCED FUND
Class A:
Shares sold		342,416		$	7,665,768			208,178		$	4,670,654
Shares converted from Class B		524,601			11,691,992			204,865			4,676,830
Dividends reinvested		12,404			289,641			18,395			396,969
Shares redeemed		(495,151	)		(10,775,632	)		(1,026,633	)		(22,543,299	)
Net increase (decrease)		384,270		$	8,871,769			(595,195	)	$	(12,798,846	)
Class B:
Shares sold		116,963		$	2,464,226			146,721		$	3,274,383
Dividends reinvested		9,418			216,609			13,438			285,295
Shares converted to Class A		(534,344	)		(11,691,992	)		(208,996	)		(4,676,830	)
Shares redeemed		(574,145	)		(12,393,791	)		(969,897	)		(21,202,100	)
Net decrease		(982,108	)	$	(21,404,948	)		(1,018,734	)	$	(22,319,252	)
Class C:
Shares sold		151,156		$	3,257,441			53,080		$	1,197,869
Dividends reinvested		3,409			78,636			4,927			105,047
Shares redeemed		(195,087	)		(4,027,923	)		(431,174	)		(9,309,561	)
Net decrease		(40,522	)	$	(691,846	)		(373,167	)	$	(8,006,645	)

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NOTES TO FINANCIAL STATEMENTS (Continued)

	FOR THE YEAR ENDED OCTOBER 31, 2008						FOR THE YEAR ENDED OCTOBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
ALGER MIDCAP GROWTH FUND
Class A:
Shares sold		19,264,599		$	154,422,686			12,317,821		$	121,900,933
Shares converted from Class B		3,344,356			26,745,623			1,755,625			16,659,060
Dividends reinvested		6,160,531			55,013,537			3,097,727			26,455,593
Shares redeemed		(21,680,397	)		(163,800,751	)		(13,643,760	)		(127,890,005	)
Net increase		7,089,089		$	72,381,095			3,527,413		$	37,125,581
Class B:
Shares sold		2,695,716		$	19,197,260			2,475,812		$	20,669,297
Dividends reinvested		3,953,279			30,519,317			2,367,397			18,063,241
Shares converted to Class A		(3,875,596	)		(26,745,623	)		(1,965,917	)		(16,659,060	)
Shares redeemed		(5,537,667	)		(36,421,834	)		(7,452,078	)		(62,722,394	)
Net increase (decrease)		(2,764,268	)	$	(13,450,880	)		(4,574,786	)	$	(40,648,916	)
Class C:
Shares sold		3,552,430		$	25,659,419			1,924,194		$	16,676,448
Dividends reinvested		1,111,011			8,554,785			561,661			4,274,237
Shares redeemed		(3,054,399	)		(20,159,417	)		(2,617,013	)		(22,092,217	)
Net increase (decrease)		1,609,042		$	14,054,787			(131,158	)	$	(1,141,532	)
ALGER CAPITAL APPRECIATION FUND
Class A:
Shares sold		30,688,427		$	421,895,171			16,842,243		$	231,328,387
Shares converted from Class B		4,135,225			57,411,010			2,166,545			28,622,638
Shares redeemed		(20,331,242	)		(261,986,380	)		(3,967,556	)		(51,551,279	)
Net increase		14,492,410		$	217,319,801			15,041,232		$	208,399,746
Class B:
Shares sold		1,052,684		$	13,288,553			1,350,613		$	16,277,849
Shares converted to Class A		(4,525,994	)		(57,411,010	)		(2,356,464	)		(28,622,638	)
Shares redeemed		(2,475,315	)		(30,398,380	)		(3,624,018	)		(42,528,657	)
Net decrease		(5,948,625	)	$	(74,520,837	)		(4,629,869	)	$	(54,873,446	)
Class C:
Shares sold		4,390,615		$	55,580,080			3,808,289		$	47,978,086
Shares redeemed		(2,240,633	)		(25,469,531	)		(663,221	)		(7,894,714	)
Net increase		2,149,982		$	30,110,549			3,145,068		$	40,083,372

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NOTES TO FINANCIAL STATEMENTS (Continued)

	FOR THE YEAR ENDED OCTOBER 31, 2008						FOR THE YEAR ENDED OCTOBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
ALGER HEALTH SCIENCES FUND
Class A:
Shares sold		10,133,532		$	177,539,270			5,302,724		$	97,932,709
Shares converted from Class B		70,414			1,224,661			52,327			954,730
Dividends reinvested		729,168			13,358,370			263,528			4,522,135
Shares redeemed		(7,412,025	)		(121,795,387	)		(2,326,451	)		(42,296,218	)
Net increase		3,521,089		$	70,326,914			3,292,128		$	61,113,356
Class B:
Shares sold		336,385		$	5,571,789			256,509		$	4,545,584
Dividends reinvested		70,238			1,226,360			42,682			705,960
Shares converted to Class A		(74,041	)		(1,224,661	)		(54,436	)		(954,730	)
Shares redeemed		(225,192	)		(3,540,625	)		(370,541	)		(6,473,843	)
Net increase (decrease)		107,390		$	2,032,863			(125,786	)	$	(2,177,029	)
Class C:
Shares sold		2,633,885		$	44,101,363			1,499,223		$	26,856,807
Dividends reinvested		193,874			3,385,044			84,574			1,398,848
Shares redeemed		(1,034,730	)		(16,044,671	)		(554,507	)		(9,748,745	)
Net increase		1,793,029		$	31,441,736			1,029,290		$	18,506,910
ALGER SMIDCAP GROWTH FUND
Class A:
Shares sold		27,616,449		$	411,849,534			14,934,048		$	239,954,236
Shares converted from Class B		75,163			1,125,434			21,247			332,142
Dividends reinvested		227,285			3,795,653			107,112			1,480,293
Shares redeemed		(12,553,653	)		(174,238,731	)		(2,011,427	)		(31,022,944	)
Net increase		15,365,244		$	242,531,890			13,050,980		$	210,743,727
Class B:
Shares sold		260,015		$	3,788,587			505,628		$	7,590,993
Dividends reinvested		11,073			176,722			23,843			317,349
Shares converted to Class A		(78,859	)		(1,125,434	)		(22,111	)		(332,142	)
Shares redeemed		(184,005	)		(2,451,917	)		(110,571	)		(1,656,532	)
Net increase		8,224		$	387,958			396,789		$	5,919,668
Class C:
Shares sold		2,491,253		$	36,602,640			1,878,622		$	28,786,967
Dividends reinvested		37,339			596,308			36,900			491,137
Shares redeemed		(794,777	)		(10,251,589	)		(115,192	)		(1,746,623	)
Net increase		1,733,815		$	26,947,359			1,800,330		$	27,531,481

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NOTES TO FINANCIAL STATEMENTS (Continued)

	FOR THE YEAR ENDED OCTOBER 31, 2008						FOR THE YEAR ENDED OCTOBER 31, 2007
	SHARES			AMOUNT			SHARES			AMOUNT
ALGER SMIDCAP GROWTH FUND (Continued)
Class I:*
Shares sold		8,381,926		$	116,205,107			170,433		$	3,012,475
Dividends reinvested		8,416			140,887			—			—
Shares redeemed		(1,265,967	)		(16,959,297	)		(5,267	)		(93,254	)
Net increase		7,124,375		$	99,386,697			165,166		$	2,919,221
ALGER GROWTH OPPORTUNITIES FUND**
Class A:
Shares sold		388,223		$	3,739,135			—		$	—
Shares redeemed		(42,001	)		(368,157	)		—			—
Net increase		346,222		$	3,370,978			—		$	—
Class C:
Shares sold		144,925		$	1,355,785			—		$	—
Shares redeemed		(7,479	)		(60,416	)		—			—
Net increase		137,446		$	1,295,369			—		$	—
Class I:
Shares sold		203,595		$	2,033,196			—		$	—
Shares redeemed		(11,553	)		(99,854	)		—			—
Net increase		192,042		$	1,933,342			—		$	—
ALGER MONEY MARKET FUND
Shares sold		45,006,396		$	45,006,396			35,074,772		$	35,074,772
Dividends reinvested		1,041,331			1,041,331			2,208,640			2,208,640
Shares redeemed		(43,859,566	)		(43,859,566	)		(38,144,773	)		(38,144,773	)
Net increase		2,188,161		$	2,188,161			(861,361	)	$	(861,361	)

* Initially offered August 6, 2007.

** Initially offered March 3, 2008.

NOTE 7 — Tax Character of Distributions to Shareholders:

The tax character of distributions paid during the years ended October 31, 2008 and October 31, 2007 were as follows:

	YEAR ENDED OCTOBER 31, 2008		YEAR ENDED OCTOBER 31, 2007
LARGECAP GROWTH FUND
Distributions paid from:
Ordinary Income		—		—
Long-term capital gain		—		—
Total distributions paid		—		—

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

	YEAR ENDED OCTOBER 31, 2008		YEAR ENDED OCTOBER 31, 2007
SMALLCAP GROWTH FUND
Distributions paid from:
Ordinary Income		—		—
Long-term capital gain		—		—
Total distributions paid		—		—
BALANCED FUND
Distributions paid from:
Ordinary Income	$	863,850	$	1,101,222
Long-term capital gain		—		—
Total distributions paid	$	863,850	$	1,101,222
MIDCAP GROWTH FUND
Distributions paid from:
Ordinary Income	$	118,453,642	$	32,099,178
Long-term capital gain		6,427,983		33,270,970
Total distributions paid	$	124,881,625	$	65,370,148
CAPITAL APPRECIATION FUND
Distributions paid from:
Ordinary Income		—		—
Long-term capital gain		—		—
Total distributions paid		—		—
HEALTH SCIENCES FUND
Distributions paid from:
Ordinary Income	$	18,485,807	$	1,400,122
Long-term capital gain		5,125,250		7,401,655
Total distributions paid	$	23,611,057	$	8,801,777
SMIDCAP GROWTH FUND
Distributions paid from:
Ordinary Income	$	89,941		—
Long-term capital gain		5,908,421	$	2,733,323
Total distributions paid	$	5,998,362	$	2,733,323
GROWTH OPPORTUNITIES FUND
Distributions paid from:
Ordinary Income		—		—
Long-term capital gain		—		—
Total distributions paid		—		—
MONEY MARKET FUND
Distributions paid from:
Ordinary Income	$	1,072,228	$	2,276,793
Long-term capital gain		—		—
Total distributions paid	$	1,072,228	$	2,276,793

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

As of October 31, 2008, the components of distributable earnings on a tax basis were as follows:

LARGECAP GROWTH FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(114,628,188	)
SMALLCAP GROWTH FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(118,779,513	)
BALANCED FUND
Undistributed ordinary income	$	886,452
Undistributed long-term gain		—
Unrealized appreciation	$	(20,661,793	)
MIDCAP GROWTH FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(172,229,404	)
CAPITAL APPRECIATION FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(194,309,743	)
HEALTH SCIENCES FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(42,727,822	)
SMIDCAP GROWTH FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(170,376,056	)
GROWTH OPPORTUNITIES FUND
Undistributed ordinary income		—
Undistributed long-term gain		—
Unrealized appreciation	$	(1,717,912	)
MONEY MARKET FUND
Undistributed ordinary income	$	—
Undistributed long-term gain		—
Unrealized appreciation		—

The difference between book basis and tax basis unrealized appreciation is determined annually and is attributable primarily to the tax deferral of losses on wash sales.

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

At October 31, 2008, the Funds, for federal income tax purposes, had capital loss carryforwards which expire as set forth in the table below. These amounts may be applied against future net realized gains until the earlier of their utilization or expiration.

EXPIRATION DATE

2009	2010		2011		2012		2016		TOTAL
LargeCap Growth Fund $—	$	113,790,122	$	21,526,122		—	$	15,208,829	$	150,525,073
SmallCap Growth Fund $5,314,206	$	30,152,501		—		—	$	26,656,278	$	62,122,985
Balanced Fund —	$	9,077,300	$	2,892,067		—	$	379,594	$	12,348,961
MidCap Growth Fund —		—		—		—	$	102,036,246	$	102,036,246
Capital Appreciation Fund $131,767,356	$	204,820,909		—		—	$	92,906,761	$	429,495,026
Health Sciences Fund —		—		—		—	$	27,198,128	$	27,198,128
SMidCap Growth Fund —		—		—		—	$	62,488,808	$	62,488,808
Growth Opportunities Fund —		—		—		—	$	435,210	$	435,210
Money Market Fund $216,474		—		—	$	640		—	$	217,114

NOTE 8 — Litigation:

Alger Management has responded to inquiries, document requests and/or subpoenas from various regulatory authorities, in connection with their investigations of practices in the mutual fund industry identified as "market timing" and "late trading." On October 11, 2006, Alger Management, Alger Inc. and Alger Shareholder Services, Inc. executed an Assurance of Discontinuance with the Office of the New York State Attorney General ("NYAG"). On January 18, 2007 the Securities and Exchange Commission issued an order implementing settlements reached with Alger Management and Alger Inc. As part of the settlements with the Commission and the NYAG, without admitting or denying liability, the firms paid $30 million to reimburse fund shareholders and a fine of $10 million; and agreed to certain other remedial measures including a reduction in management fees of $1 million per year for five years. The entire $40 million and fee reduction will be available for the benefit of investors. Alger Management has advised the Funds that the settlement has not adversely affected the operations of Alger Management, Alger Inc. or their affiliates, or adversely affect their ability to continue to provide services to the Funds.

On August 31, 2005, the West Virginia Securities Commissioner (the "WVSC") in an ex parte Summary Order to Cease and Desist and Notice of Right to Hearing concluded that Alger Management and Alger Inc. had violated the West Virginia Uniform Securities Act (the "WVUSA"), and ordered Alger Management and Alger Inc. to cease and desist from further violations of the WVUSA by engaging in the market-timing related conduct described in the order. The ex parte order provided notice of their right to a hearing with respect to the violations of law asserted by the WVSC. Other firms unaffiliated with Alger Management were served with

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

similar orders. Alger Management and Alger Inc. intend to request a hearing for the purpose of seeking to vacate or modify the order.

In addition, in 2003 and 2004 several purported class actions and shareholder derivative suits were filed against various parties in the mutual fund industry, including Alger Management, certain mutual funds managed by Alger Management (the "Alger Mutual Funds"), and certain current and former Alger Mutual Fund trustees and officers, alleging wrongful conduct related to market-timing and late-trading by mutual fund shareholders. These cases were transferred to the U.S. District Court of Maryland by the Judicial Panel on Multidistrict Litigation for consolidated pre-trial proceedings. In September 2004, consolidated amended complaints involving these cases—a Consolidated Amended Fund Derivative Complaint (the "Derivative Complaint") and two substantially identical Consolidated Amended Class Action Complaints (together, the "Class Action Complaint")—were filed in the Maryland federal district court under the caption number 1:04-MD-15863 (JFM). In April 2005, a civil lawsuit involving similar allegations was filed by the West Virginia Attorney General and also transferred to the Maryland District Court, but such lawsuit has since been withdrawn.

The Derivative Complaint (which was later amended a second time) alleged (i) violations, by Alger Management and, depending on the specific offense alleged, by Alger Inc. and/or the fund trustee defendants, of Sections 36(a), 36(b), 47, and 48 of the Investment Company Act of 1940, as amended, (the "1940 Act") and of Sections 206 and 215 of the Investment Advisers Act of 1940, as amended, breach of fiduciary duty, and breach of contract, (ii) various offenses by other third-party defendants, and (iii) unjust enrichment by all the named defendants. The Class Action Complaint alleged, in addition to the offenses listed above, (i) violations, by Alger Management, Alger Inc., their affiliates, the funds named as defendants, including the Funds, and the current and former fund trustees and officers, of Sections 11, 12(a)(2), and 15 of the Securities Act of 1933, as amended, Sections 10(b) (and Rule 10b-5 thereunder) and 20(a) of the Securities Exchange Act of 1934, as amended, (the "1934 Act"), and Section 34(b) of the Investment Company Act, (ii) breach of contract by the funds named as defendants, and (iii) unjust enrichment of the defendants.

Motions to dismiss the Class Action Complaint and the Derivative Complaint were subsequently filed.

As a result of a series of court orders, all claims in the Class Action Complaint and the Derivative Complaint have been dismissed, other than claims under the 1934 Act against Alger Management, Alger Inc., Alger Associates, Inc. and Alger Shareholder Services, Inc., and certain present and former members of the senior management of Alger Management and/or Alger Inc., and claims under Section 36(b) of the Investment Company Act against Alger Management, Alger Inc., Alger Associates, Inc. and Alger Shareholder Services, Inc.

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

The class and derivative suits have been settled in principle, but such settlement is subject to court approval.

NOTE 9 — Acquisition of Certain Funds of SM&R Investments, Inc.

On December 7, 2007, the LargeCap Growth Fund, SmallCap Growth Fund, and Capital Appreciation Fund (the "Funds") acquired all the net assets of the SM&R Alger Growth Fund, SM&R Alger Small-Cap Fund, and SM&R Alger Aggressive Growth Fund, respectively, (the "Acquired Funds") pursuant to a plan of reorganization approved by the Funds' shareholders on November 26, 2007. The acquisition was accomplished by a tax-free exchange of shares on December 7, 2007 as follows:

	SHARES ISSUED		VALUE
LargeCap Growth Fund — Class A		184,407	$	2,585,381
SmallCap Growth Fund — Class A		460,035		3,496,263
Capital Appreciation Fund — Class A		184,313		2,855,003
	SHARES ACQUIRED		VALUE
SM&R ALGER GROWTH FUND
Class A		253,507		1,703,566
Class B		139,528		881,815
SM&R ALGER SMALL-CAP FUND
Class A		375,516		2,730,004
Class B		109,622		766,259
SM&R ALGER AGGRESSIVE GROWTH FUND
Class A		324,568		1,953,896
Class B		161,489		901,107

The Acquired Funds' net assets at that date, including unrealized appreciation, were as follows:

	NET ASSETS		UNREALIZED APPRECIATION
SM&R Alger Growth Fund	$	2,585,381	$	337,854
SM&R Alger Small-Cap Fund		3,496,263		616,011
SM&R Alger Aggressive Growth Fund		2,855,003		267,396

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THE ALGER FUNDS |

NOTES TO FINANCIAL STATEMENTS (Continued)

The combined net assets of the Funds and Acquired Funds immediately after the acquisition were as follows:

FUNDS	ACQUIRED FUNDS	COMBINED NET ASSETS
LargeCap Growth Fund — Class A	SM&R Alger Growth Fund	$	231,906,943
SmallCap Growth Fund — Class A	SM&R Alger Small-Cap Fund		471,251,931
Capital Appreciation Fund — Class A	SM&R Alger Aggressive Growth Fund		508,375,334

-123-

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and
Board of Trustees of The Alger Funds:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of The Alger Funds (comprising, respectively, the LargeCap Growth, SmallCap Growth, Balanced, MidCap Growth, Capital Appreciation, Health Sciences, SMidCap Growth, Growth Opportunities and Money Market Funds) (collectively, the "Funds") as of October 31, 2008, and the related statements of operations for the year then ended, and the statements of changes in net assets and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Alger Funds at October 31, 2008, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for each of the indicated periods, in conformity with U.S. generally accepted accounting principles.

December 16, 2008
New York, N.Y.

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THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited)

Shareholder Expense Example (Unaudited)

As a shareholder of the Fund, you incur two types of costs: transaction costs, if applicable, including sales charges (loads) and redemption fees; and ongoing costs, including management fees, distribution (12b-1) fees, if applicable, and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

The example below is based on an investment of $1,000 invested at the beginning of the six-month period starting May 1, 2008 and ending October 31, 2008.

Actual Expenses

The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you would have paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) and redemption fees. Therefore, the second line under each class of shares in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

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THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Shareholder Expense Example (Continued)

		Beginning Account Value May 1, 2008		Ending Account Value October 31, 2008		Expenses Paid During the Six Months Ended October 31, 2008(b)		Ratio of Expenses to Average Net Assets For the Six Months Ended October 31, 2008(c)
ALGER LARGECAP GROWTH FUND
Class A	Actual	$	1,000.00	$	650.30	$	5.39		1.30	%
	Hypothetical(a)		1,000.00		1,018.60		6.60		1.30
Class B	Actual		1,000.00		647.50		8.49		2.05
	Hypothetical(a)		1,000.00		1,014.83		10.38		2.05
Class C	Actual		1,000.00		647.50		8.49		2.05
	Hypothetical(a)		1,000.00		1,014.83		10.38		2.05
ALGER SMALLCAP GROWTH FUND
Class A	Actual	$	1,000.00	$	665.10	$	5.78		1.38	%
	Hypothetical(a)		1,000.00		1,018.20		7.00		1.38
Class B	Actual		1,000.00		662.20		8.90		2.13
	Hypothetical(a)		1,000.00		1,014.43		10.79		2.13
Class C	Actual		1,000.00		662.80		8.90		2.13
	Hypothetical(a)		1,000.00		1,014.43		10.79		2.13
ALGER BALANCED FUND
Class A	Actual	$	1,000.00	$	755.20	$	5.47		1.24	%
	Hypothetical(a)		1,000.00		1,018.90		6.29		1.24
Class B	Actual		1,000.00		752.30		8.72		1.98
	Hypothetical(a)		1,000.00		1,015.18		10.03		1.98
Class C	Actual		1,000.00		752.10		8.72		1.98
	Hypothetical(a)		1,000.00		1,015.18		10.03		1.98
ALGER MIDCAP GROWTH FUND
Class A	Actual	$	1,000.00	$	533.20	$	5.01		1.30	%
	Hypothetical(a)		1,000.00		1,018.60		6.60		1.30
Class B	Actual		1,000.00		532.00		7.86		2.04
	Hypothetical(a)		1,000.00		1,014.88		10.33		2.04
Class C	Actual		1,000.00		530.60		7.89		2.05
	Hypothetical(a)		1,000.00		1,014.83		10.38		2.05
ALGER CAPITAL APPRECIATION FUND
Class A	Actual	$	1,000.00	$	667.10	$	5.66		1.35	%
	Hypothetical(a)		1,000.00		1,018.35		6.85		1.35
Class B	Actual		1,000.00		664.00		8.74		2.09
	Hypothetical(a)		1,000.00		1,014.63		10.58		2.09
Class C	Actual		1,000.00		664.00		8.78		2.10
	Hypothetical(a)		1,000.00		1,014.58		10.63		2.10

-126-

THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Shareholder Expense Example (Continued)

		Beginning Account Value May 1, 2008		Ending Account Value October 31, 2008		Expenses Paid During the Six Months Ended October 31, 2008(b)		Ratio of Expenses to Average Net Assets For the Six Months Ended October 31, 2008(c)
ALGER HEALTH SCIENCES FUND
Class A	Actual	$	1,000.00	$	815.41	$	5.98		1.31	%
	Hypothetical(a)		1,000.00		1,018.55		6.65		1.31
Class B	Actual		1,000.00		812.07		9.38		2.06
	Hypothetical(a)		1,000.00		1,014.78		10.43		2.06
Class C	Actual		1,000.00		812.58		9.39		2.06
	Hypothetical(a)		1,000.00		1,014.78		10.43		2.06
ALGER SMIDCAP GROWTH FUND
Class A	Actual	$	1,000.00	$	645.80	$	5.54		1.34	%
	Hypothetical(a)		1,000.00		1,018.40		6.80		1.34
Class B	Actual		1,000.00		643.70		8.80		2.13
	Hypothetical(a)		1,000.00		1,014.43		10.79		2.13
Class C	Actual		1,000.00		643.90		8.55		2.07
	Hypothetical(a)		1,000.00		1,014.73		10.48		2.07
Class I	Actual		1,000.00		646.80		5.13		1.24
	Hypothetical(a)		1,000.00		1,018.90		6.29		1.24
ALGER GROWTH OPPORTUNITIES FUND*
Class A	Actual	$	1,000.00	$	631.00	$	6.15		1.50	%
	Hypothetical(a)		1,000.00		1,017.60		7.61		1.50
Class C	Actual		1,000.00		628.40		9.21		2.25
	Hypothetical(a)		1,000.00		1,013.83		11.39		2.25
Class I	Actual		1,000.00		631.00		5.12		1.25
	Hypothetical(a)		1,000.00		1,018.85		6.34		1.25
ALGER MONEY MARKET FUND
	Actual	$	1,000.00	$	1,006.30	$	4.24		0.84	%
	Hypothetical(a)		1,000.00		1,020.91		4.27		0.84

* From March 3, 2008 — commencement of operations.

(a) 5% annual return before expenses.

(b) Expenses are equal to the annualized expense ratio of the respective share class, multiplied by the average account value over the period, multiplied by 184/366 (to reflect the one-half year period).

(c) Annualized.

-127-

THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Tax Information (Unaudited)

In accordance with subchapter M of the Internal Revenue Code of 1986, as amended, for the year ended October 31, 2008, 64.10%, 2.02%, 5.43%, and 100.00% of the Balanced Fund, MidCap Growth Fund, Health Sciences Fund, and SMidCap Growth Fund's ordinary dividend qualified for the dividends received deduction for corporations. For the year ended October 31, 2008, certain dividends paid by the funds may be subject to a maximum rate of 15%, as provided by the Jobs and Growth Tax Relief Reconciliation Act of 2003. Of the distributions paid during the fiscal year, the following represents the maximum amount that may be considered qualified dividend income:

Alger Balanced Fund	$	748,062
Alger MidCap Growth Fund	$	2,919,467
Alger Health Sciences Fund	$	1,655,305
Alger SMidCap Growth Fund	$	89,941

Shareholders should not use the above information to prepare their tax returns. Since the trust's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2008. Such notification, which will reflect the amount to be used by taxpayers on their federal income tax returns, will be made in conjunction with Form 1099 DIV and will be mailed in January 2009. Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in the Trust.

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THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Trustees and Officers of the Funds (Unaudited)

Information about the Trustees and officers of the Funds is set forth below. In the table the term "Alger Fund Complex" refers to the Funds, The Alger Funds II, The Alger American Fund, The Alger Institutional Funds, Alger China-U.S. Growth Fund and Castle Convertible Fund, Inc., each of which is a registered investment company managed by Fred Alger Management, Inc. ("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 each person named below is 111 Fifth Avenue, New York, NY 10003.

Name, Age,
Position with the Fund

Principal Occupations

Trustee
and/or
Officer Since

Number of
Portfolios in the
Alger Fund
Complex which
are Overseen
by Trustee

INTERESTED TRUSTEES

Hilary M. Alger, CFA (47)

Director of Development, Pennsylvania Ballet since 2004; Associate Director of Development, College of Arts and Sciences and Graduate School, University of Virginia 1999-2003.

2003

NON-INTERESTED TRUSTEES

Charles F. Baird, Jr. (55)

Managing Partner of North Castle Partners, a private equity securities group; Chairman of Leiner Health Products, Enzymatic Therapy and Caleel & Hayden (skincare business); former Chairman of Elizabeth Arden Day Spas, Naked Juice, Equinox (fitness company) and EAS (manufacturer of nutritional products). Formerly Managing Director of AEA Investors, Inc.

2000

Roger P. Cheever (63)

Senior Associate Dean of Development, Harvard University. Formerly Deputy Director of the Harvard College Fund.

2000

Lester L. Colbert, Jr. (74)

Private investor since 1988. Formerly, Chairman of the Board, President and Chief Executive Officer of Xidex Corporation (manufacturer of computer information media).

2000

-129-

THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Name, Age,
Position with the Fund

Principal Occupations

Trustee
and/or
Officer Since

Number of
Portfolios in the
Alger Fund
Complex which
are Overseen
by Trustee

NON-INTERESTED TRUSTEES (Continued)

Stephen E. O'Neil (76)

Attorney; Private investor since 1981. Formerly of Counsel to the law firm of Kohler & Barnes.

1986

David Rosenberg (46)

Associate Professor of Law since January 2006 (Assistant Professor 2000-2005), Zicklin School of Business, Baruch College, City University of New York.

2007

Nathan E. Saint-Amand,
M.D. (70)

Medical doctor in private practice; Member of the Board of the Manhattan Institute (non-profit policy research) since 1988. Formerly Co-Chairman, Special Projects Committee, Memorial Sloan Kettering.

1986

OFFICERS

Daniel C. Chung (46)
President

President since September 2003 and Chief Investment Officer and Director since 2001 of Alger Management; President since 2003 and Director since 2001 of Alger Associates, Fred Alger International Advisory S.A. (Director since 2003) and Analysts Resources, Inc. ("ARI"). Formerly, Director of the Fund from 2001-2006.

2001

N/A

Hal Liebes (44)
Secretary

Executive Vice President, Director, Chief Legal Officer, Chief Operating Officer, and Secretary of Fred Alger & Company, Incorporated and Alger Management; Director since 2006 of Alger Associates, and ARI. Formerly Chief Compliance Officer of AMVESCAP PLC from 2004-2005; U.S. General Counsel from 1994-2002 and Global General Counsel from 2002-2004 of Credit Suisse Asset Management.

2005

N/A

Michael D. Martins (43)
Treasurer

Senior Vice President of Alger Management; Assistant Treasurer from 2005 to 2006 of the Fund. Formerly Vice President, Brown Brothers Harriman & Co. from 1997-2004.

2005

N/A

-130-

THE ALGER FUNDS

ADDITIONAL INFORMATION (Unaudited) (Continued)

Name, Age,
Position with the Fund

Principal Occupations

Trustee
and/or
Officer Since

Number of
Portfolios in the
Alger Fund
Complex which
are Overseen
by Trustee

OFFICERS (Continued)

Lisa A. Moss (43)
Assistant Secretary

Vice President and Assistant General Counsel of Alger Management since June 2006. Formerly, Director of Merrill Lynch Investment Managers, L.P. from 2005-2006; Assistant General Counsel of AIM Management, Inc. from 1995–2005.

2006

N/A

Barry J. Mullen (55)
Chief Compliance Officer

Senior Vice President and Director of Compliance of Alger Management since May 2006. Formerly, Director of BlackRock, Inc. from 2004-2006; Vice President of J.P. Morgan Investment Management from 1996–2004.

2006

N/A

Anthony S. Caputo (53)
Assistant Treasurer

Employed by Alger Management since 1986, currently serving as Vice President

2007

N/A

Sergio M. Pavone (47)
Assistant Treasurer

Employed by Alger Management since 2002, currently serving as Vice President

2007

N/A

Ms. Alger is an "interested person" (as defined in the Investment Company Act) of the Fund because of her affiliations with Alger Management. No Trustee is a director of any public company except as may be indicated under "Principal Occupations."

The Statement of Additional Information contains additional information about the Fund's Trustees and is available without charge upon request by calling (800) 992-3863.

Investment Management Agreement Renewal (unaudited)

At an in-person meeting held on September 9, 2008, the Trustees, including the Independent Trustees, unanimously approved renewal of the Investment Advisory Agreement between the Trust and Alger Management (the "Agreement"). The Independent Trustees were assisted in their review by independent legal counsel and met with counsel in executive session separate from representatives of Alger Management.

In evaluating the Agreement, the Trustees drew on materials that they had requested and which were provided to them in advance of the meeting by Alger Management and by counsel. The materials covered, among other matters, (i) the nature, extent and quality of the services provided by Alger Management under the Agreement, (ii) the investment performance of the Trust's portfolios (each a "Fund"), (iii) the costs to

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Alger Management of its services and the profits realized by Alger Management and Alger Inc. from their relationship with the Trust, and (iv) the extent to which economies of scale would be realized if and as the Funds grow and whether the fee levels in the Agreement reflect these economies of scale. These materials included an analysis of the Funds and Alger Management's services by Callan Associates Inc. ("Callan"), an independent consulting firm whose specialties include assistance to fund trustees and directors in their review of advisory contracts pursuant to section 15(c) of the 1940 Act. At the meeting, senior Callan personnel provided a presentation to the Trustees based on the Callan materials.

In deciding whether to approve renewal of the Agreement, the Trustees considered various factors, including those enumerated above. They also considered other direct and indirect benefits to Alger Management and its affiliates from their relationship with the Trust.

NATURE, EXTENT AND QUALITY OF SERVICES

In considering the nature, extent and quality of the services provided by Alger Management pursuant to the Agreement, the Trustees relied on their prior experience as Trustees of the Trust, their familiarity with the personnel and resources of Alger Management and its affiliates, and the materials provided at the meeting. They noted that under the Agreement Alger Management is responsible for managing the investment operations of the Funds. They also noted that administrative, compliance, reporting and accounting services necessary for the conduct of the Trust's affairs are provided under the separate Administration Agreement. The Trustees reviewed the background and experience of Alger Management's senior investment management personnel, including the individuals currently responsible for the investment operations of the Funds. They also considered the resources, operational structures and practices of Alger Management in managing each of the Fund's portfolios, as well as Alger Management's overall investment management business. They noted especially Alger Management's history of expertise in managing portfolios of "growth" stocks and that, according to an analysis provided by Callan, the characteristics of each equity Fund had been typical of a fund that holds itself out to investors as growth-oriented. They also took notice of the ability of the portfolio managers of Alger Balanced Fund and Alger Money Market Fund to manage fixed-income instruments across the credit and credit quality spectra. The Trustees concluded that Alger Management's experience, resources and strength in the areas of importance to the Funds are considerable. The Trustees considered the level and depth of Alger Management's ability to execute portfolio transactions to effect investment decisions, including those through Alger Inc. The Trustees also considered the ongoing enhancements to the control and compliance environment at Alger Management and within the Trust.

INVESTMENT PERFORMANCE OF THE FUNDS

Drawing upon information provided at the meeting by Alger Management as well as Callan and upon reports provided to the Trustees by Alger Management throughout the preceding year, the Trustees reviewed each Fund's returns for the year-to-date (at 6/30/08), last-quarter, and 1-year, 3-year, 5-year, and 10-year periods to the extent

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available (and its year-by-year returns) and compared them with benchmark and peer-group data for the same periods. They noted that the performance of each of the equity Funds, which had generally been satisfactory in recent periods (or longer), was disappointing for the year to date. Noting that the 2008 market environment for domestic stocks in general and for "growth" stocks in particular had thus far been challenging in 2008, the Trustees discussed the Funds' recent performance with Alger Management and the performance prospects for the remainder of the year and beyond. The Trustees noted that the performance of the Balanced Fund, which had been improving relative to its peers and benchmarks, had lagged by both measures for the year to date but had shown marked improvement during the quarter ended June 30, 2008. The Money Market Fund had generally underperformed relative to the majority of its peers in 2007 and 2008, but had shown improved performance in the quarter ended June 30, 2008.

FUND FEES AND EXPENSE RATIOS; PROFITABILITY TO ALGER MANAGEMENT AND ITS AFFILIATES

The Trustees considered the profitability of the Investment Advisory Agreement to Alger Management and its affiliates, and the methodology used by Alger Management in determining such profitability. The Trustees reviewed previously-provided data on each Fund's profitability to Alger Management and its affiliates for the year ended June 30, 2008. In addition, the Trustees reviewed each Fund's management fee and expense ratio and compared them with a group of comparable funds. In order to assist the Trustees in this comparison, Callan had provided the Trustees with comparative information with respect to fees paid, and expense ratios incurred, by similar funds. That information indicated that while most fees and expense ratios were at or below the median for the applicable Callan reference group, the fees and expense ratios of the Capital Appreciation, Money Market and Balanced Funds, the expense ratio of LargeCap Fund, and the fee of MidCap Fund were above the median. In the latter cases, the Trustees determined that such information should be taken into account in weighing the size of the fee against the nature, extent and quality of the services provided. After discussing with representatives of the Adviser and Callan the methodologies used in computing the costs that formed the bases of the profitability calculations, the Trustees turned to the profitability data provided. After analysis and discussion, they concluded that, to the extent that Alger Management's and its affiliates' relationships with the Funds had been profitable to either or both of those entities, the profit margin in each case was not unacceptable.

ECONOMIES OF SCALE

On the basis of their discussions with management and their analysis of information provided at the meeting, the Trustees determined that the nature of the Funds and their operations is such that Alger Management is likely to realize economies of scale in the management of each Fund at some point as it grows in size, but that adoption of breakpoints in one or more of the advisory fees, while possibly appropriate at a later date, could await further analysis of the sources and potential scale of the economies and the fee structure that would best reflect them. Accordingly, the Trustees requested that Alger Management address this topic with the Trustees at future meetings.

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OTHER BENEFITS TO ALGER MANAGEMENT

The Trustees considered whether Alger Management benefits in other ways from its relationship with one or more of the Funds. They noted that Alger Management maintains soft-dollar arrangements in connection with the Funds' brokerage transactions (other than those of Alger Money Market Fund), reports on which are regularly supplied to the Trustees at their quarterly meetings and summaries of which, listing commissions by Fund through June 30, 2008 and December 31, 2007, had been included in the materials supplied prior to the meeting. The Trustees also noted that Alger, Inc. provides a substantial portion of the Funds' equity brokerage and receives shareholder servicing fees from the Funds (other than Alger Money Market Fund) as well, and that Alger Management receives fees from the Funds under a shareholder administrative services agreement. The Trustees had been provided with information regarding, and had considered, the brokerage and shareholder servicing fee benefits in connection with their review of the profitability to Alger Management and its affiliates of their relationships with the Funds. As to other benefits received, the Trustees decided that none were so significant as to render Alger Management's fees excessive.

CONCLUSIONS AND DETERMINATIONS

At the conclusion of these discussions, each of the Independent Trustees expressed the opinion that he had been furnished with sufficient information to make an informed business decision with respect to renewal of the Investment Advisory Agreement. Based on its discussions and considerations as described above, the Board made the following conclusions and determinations:

• The Board concluded that the nature, extent and quality of the services provided to each Fund by Alger Management are adequate and appropriate.

• The Board was satisfied with the performance of the Funds on a relatively long-term basis, but determined to monitor the progress of Alger Management's steps to improve the performance of the equity Funds by comparison with that of the first half of 2008.

• The Board concluded that each advisory fee paid to Alger Management was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by Alger Management from the relationship with the Fund.

• The Board determined that there were not at this time significant economies of scale to be realized by Alger Management in managing the Funds' assets but that, to the extent that material economies of scale should be realized in the future, the Board would seek to ensure that they were shared with the applicable Fund.

The Board considered these conclusions and determinations and, without any one factor being dispositive, determined with respect to each Fund that renewal of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders.

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Proxy Voting Policies

A description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities and the proxy voting record is available, without charge, by calling (800) 992-3863 or online on the Funds' website at http://www.alger.com or on the SEC's website at http://www.sec.gov.

Fund Holdings

The Funds' most recent month end portfolio holdings are available approximately sixty days after month end on the Funds' website at www.alger.com. The Funds also file their complete schedule of portfolio holdings with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Funds' Forms N-Q is available online on the SEC's website at www.sec.gov or may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information regarding the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of the most recent quarterly holdings may also be obtained from the Funds by calling (800) 992-3863.

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THE ALGER FUNDS

111 Fifth Avenue
New York, NY 10003
(800) 992-3863
www.alger.com

Investment Manager

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

Distributor

Fred Alger & Company, Incorporated
111 Fifth Avenue
New York, NY 10003

Transfer Agent and Dividend Disbursing Agent

Boston Financial Data Services, Inc.
P.O. Box 8480
Boston, MA 02266

This report is submitted for the general information of the shareholders of The Alger Funds. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Funds, which contains information concerning the Trust's investment policies, fees and expenses as well as other pertinent information.

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SAA 103108

ITEM 2. CODE OF ETHICS.

(a) The Registrant has adopted a code of ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

(b) Not applicable.

(c) The Registrant has amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto whereby the code applies to officers of the registrant rather than officers of the investment advisor and other related entities.

(d) The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.

(e) Not applicable.

(f) The Registrant’s Code of Ethics is attached as an Exhibit hereto.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Board of Trustees of the Registrant determined that Stephen E. O’Neil is an audit committee financial expert (within the meaning of that phrase specified in the instructions to Form N-CSR) on the Registrant’s audit committee. Mr. O’Neil is an “independent” trustee — i.e., he is not an interested person of the Registrant as defined in the Investment Company Act of 1940, nor has he accepted directly or indirectly any consulting, advisory or other compensatory fee from the Registrant, other than in his capacity as Trustee.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

a) Audit Fees:

October 31, 2008		$	264,600
October 31, 2007		$	252,000

b) Audit-Related Fees: NONE

c) Tax Fees for tax advice, tax compliance and tax planning:

October 31, 2008		$	70,850
October 31, 2007		$	74,676

d) All Other Fees:

October 31, 2008		$	40,900
October 31, 2007		$	40,500

Other fees include a review and consent for Registrants registration statement filing and a review of the semi-annual financial statements.

e) 1) Audit Committee Pre-Approval Policies And Procedures:

Audit and non-audit services provided by the Registrant’s independent registered public accounting firm (the “Auditors”) on behalf the Registrant must be pre-approved by the Audit Committee. Non-audit services provided by the Auditors on behalf of the Registrant’s Investment Adviser or any entity controlling, controlled by, or under common control with the Investment Adviser must be pre-approved by the Audit Committee if such non-audit services directly relate to the operations or financial reporting of the Registrant.

2) All fees in item 4(b) through 4(d) above were approved by the Registrants’ Audit Committee.

f) Not Applicable

g) Non-Audit Fees:

October 31, 2008		$282,950 and 15,068 Euros
October 31, 2007		$282,811 and 70,773 Euros

h) The audit committee of the board of trustees has considered whether the provision of the non-audit services that were rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control, with the adviser that provides ongoing services to the registrant that were not approved pursuant to (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principle accountant’s independence.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable

ITEM 6. INVESTMENTS.

Not applicable

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED–END MANAGEMENT INVESTMENT COMPANIES.

Not applicable

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None

ITEM 11. CONTROLS AND PROCEDURES.

(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this document.

(b) No changes in the Registrant’s internal control over financial reporting occurred during the Registrant’s second fiscal half-year that materially affected, or are

reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

ITEM 12. EXHIBITS.

(a) (1) Code of Ethics as Exhibit 99.CODE ETH

(a) (2) Certifications of principal executive officer and principal financial officer as required by rule 30a-2(a) under the Investment Company Act of 1940 are attached as Exhibit 99.CERT

(b) Certifications of principal executive officer and principal financial officer as required by rule 30a-2(b) under the Investment Company Act of 1940 are attached as Exhibit 99.906CERT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

The Alger Funds

By:	/s/Dan C. Chung

	Dan C. Chung

	President

Date: December 15, 2008

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/Dan C. Chung

	Dan C. Chung

	President

Date: December 15, 2008

By:	/s/Michael D. Martins

	Michael D. Martins

	Treasurer

Date: December 15, 2008