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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-7986
The Alger Institutional 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. Frederick A. Blum
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, 2004
ITEM 1: REPORT(S) TO STOCKHOLDERS.
THE ALGER
INSTITUTIONAL FUNDS
(FORMERLY THE ALGER INSTITUTIONAL FUND)
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
ALGER BALANCED INSTITUTIONAL FUND
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
ANNUAL REPORT
OCTOBER 31, 2004
[LOGO]
TABLE OF CONTENTS
THE ALGER FUNDS
Letter to Our Shareholders............................................... 1
Shareholder Expense Example.............................................. 5
Portfolio Summary........................................................ 7
Fund Highlights and Schedules of Investments............................. 8
Financial Highlights..................................................... 40
Statements of Assets and Liabilities..................................... 44
Statements of Operations................................................. 46
Statements of Changes in Net Assets...................................... 48
Notes to Financial Statements............................................ 50
Report of Independent Registered Public Accounting Firm.................. 61
Trustees and Officers of the Funds....................................... 62
Tax Information.......................................................... 65
Dear Shareholders, December 6, 2004
THE YEAR IN REVIEW
It was an unusual year for investing. Corporate profit growth has rarely
been better, and both the U.S. and global economies expanded at a steady, stable
clip with very low inflation for most of the year. But a tight presidential
race, war in Iraq, rising energy and commodity prices, and continued investor
skepticism kept the markets muted until November.
The fiscal year began on a positive note, and through March, the markets
responded positively to strong manufacturing activity and growing consumer
confidence. In April the mood started to shift. Energy prices were on the rise,
economic growth led to speculation (correct as it turned out) that the Fed would
soon raise interest rates, and the situation in Iraq was not improving. Perhaps
just as unsettling to the markets, job growth lagged the broader economic
recovery. As a result, the markets retreated from their March peak and
progressively moved lower until August.
By autumn, manufacturing activity and consumer spending had slowed. The
price of oil continued to rise and the Fed increased the short-term rate from
1.00% to 1.75% by fiscal year end (October 31, 2004). The close presidential
race generated passion but also created uncertainty, and the markets remained
range-bound until election day. It may be a cliche, but investors truly dislike
uncertainty, and the markets only moved up significantly after the election was
over.
As a result, for the 12 months ended October 31, 2004, the equity markets
experienced modest gains with the Dow gaining 4.46%, the Nasdaq up 2.68% and the
S&P 500 up 9.42%. The yield on the U.S. Treasury 10-year note was 4.05% on
October 31, compared to 4.30% a year earlier.
PORTFOLIO MATTERS
Alger SmallCap Growth Institutional Fund
The Alger SmallCap Growth Institutional Fund gained 6.42% for the year
ended October 31, 2004 while the Russell 2000 Growth Index returned 5.54%. Our
holdings in the health care sector significantly outperformed the benchmark.
Intuitive Surgical, a leader in surgical robotics, was among the top-performing
holdings. Other top health care holdings included Immucor, which develops blood
diagnostics, and Tularik Inc., whose primary focus is on oral drugs that use
gene regulation to fight cancer, immune disorders and metabolic diseases. Dade
Behring Holdings, which makes diagnostic testing kits, also contributed to the
sector's positive performance.
Our holdings in the financial sector outperformed the benchmark with the
help of First Marblehead Corp., which provides services for student loan
originators. Top-performing energy holdings included oil and natural gas
exploration and production company Tom Brown, Inc. and drilling equipment maker
Varco International. Although our holdings in the industrials sector did quite
well, we underperformed the benchmark. The Fund also suffered from a number of
underperforming stocks in the information technology sector including Fairchild
Semiconductor, Intelligroup, Inc. and Chordiant Software.
-2-
Alger MidCap Growth Institutional Fund
For the year ended October 31, 2004, the Alger MidCap Growth Institutional
Fund posted a return of 4.06%, while the Russell Midcap Growth Index increased
8.77%. Holdings in the consumer discretionary sector significantly
underperformed the benchmark. The Fund suffered from DVD rental service Netflix,
which felt the effect of increased competition and was forced to lower its
subscription price. Sharper Image Corporation also detracted from Fund
performance. However, XM Satellite Radio had an exceptional year and was a top
contributor. Our technology holdings were down with disappointing returns from
Teradyne, which develops semiconductor testing equipment, and Novellus Systems,
a manufacturer of semiconductor production equipment.
Health care stocks did quite well and outperformed the benchmark. Top
performers included pharmaceutical firms Elan Corporation and Sepracor.
Industrial sector holdings significantly outperformed the benchmark with strong
returns from defense communications equipment supplier L-3 and freight shipper
Yellow Roadway.
Alger LargeCap Growth Institutional Fund
The Alger LargeCap Growth Institutional Fund gained 1.40% for the fiscal
year ended October 31, 2004, compared with a gain of 3.39% for the Russell 1000
Growth Index. Information technology holdings averaged above market weight and
underperformed the benchmark. The semiconductor and software industries
performed poorly, notably Applied Materials, a developer of semiconductor
production equipment, and Veritas, a provider of data management software. The
exception was Google, which was the top-performing holding in the Fund.
In the consumer discretionary sector, we were above market weight at 22%
of the Fund and we outperformed the benchmark, with Starwood Hotels and Target
two of the top contributors. Media companies also performed well with the
highest returns coming from XM Satellite Radio. In Internet retail, online
auctioneer eBay was a top performer. A notable exception was online DVD rental
service Netflix, which was hit hard after lowering its subscription price due to
increased competition. In health care, we were below market weight and performed
poorly. Our biotech holdings were particularly weak, with losses in ImClone,
ICOS, and Millennium Pharmaceuticals. In financials, we were just below market
weight and significantly outperformed the benchmark with a strong showing from
investment management firms T. Rowe Price and Affiliated Managers Group.
Alger Balanced Institutional Fund
For the year ended October 31, 2004, the Alger Balanced Institutional Fund
returned 1.27% while the Russell 1000 Growth Index returned 3.39% and the Lehman
Brothers Government/Credit Bond Index rose 5.59%. Information technology stocks
represented approximately a third of the equity portion of the portfolio. We
significantly underperformed the benchmark in the health care sector because of
our holdings in ImClone Systems and Millennium Pharmaceuticals. In consumer
discretionary we were on par with the Russell benchmark. However, eBay's solid
performance was not enough to offset the loss sustained by our position in
Netflix. Although our holdings
-3-
in industrials were below market weight, the Fund outperformed the benchmark in
this sector largely due to Tyco International.
The fixed-income portion of the portfolio benefited from its overweight in
corporate bonds. As the yield curve flattened, the Fund's overweighting in
longer-dated Treasuries also added significantly to returns. The Fund was able
to capitalize not only on shrinking credit spreads, but falling long-term
interest rates.
Alger Socially Responsible Growth Institutional Fund
The Alger Socially Responsible Growth Institutional Fund gained 0.30% for
the year ended October 31, 2004 while the Russell 3000 Growth Index returned
3.53% In consumer discretionary holdings we were above market weight and
slightly underperformed the benchmark. Contributors to performance were Sirius
Satellite Radio and eBay, both of which had an impressive year. The exception
here was online DVD rental service Netflix, which detracted from overall
performance. Although we were underweight in the financials sector, we
outperformed the benchmark due to First Marblehead's strong showing.
While we fared better than the benchmark in the information technology
sector, our holdings were still down for the year. Semiconductor stocks were hit
hardest, notably Kulicke & Soffa Industries, Novellus Systems, and Applied
Materials. In software, Red Hat and Veritas also took big hits. Research in
Motion Ltd., the creator of the widely-used, handheld Blackberry communication
product, was an exception.
Alger Capital Appreciation Institutional Fund
For the fiscal year ended October 31, 2004, the Alger Capital Appreciation
Institutional Fund lost .09% compared with a gain of 3.53% for the Russell 3000
Growth Index. Much of the underperformance was the result of being heavily
overweighted in information technology. While we fared better than the benchmark
in the information technology sector, our holdings were still down for the year.
Semiconductor stocks were hit hardest, notably Kulicke & Soffa Industries,
Novellus Systems, and Applied Materials. In software, Red Hat and Veritas also
took big hits. Research in Motion Ltd., the creator of the widely-used handheld
Blackberry communication product, was an exception.
Our holdings in consumer discretionary did better, and we were above
market weight. Satellite radio companies XM Satellite and Sirius both had an
impressive year, and online retailer eBay was among the top performers in the
Fund. The exception here was online DVD rental service Netflix, which detracted
from overall performance.
LOOKING AHEAD
For the first time in many years, we believe that the market is no longer
gripped by the irrational exuberance of the late 1990s or the irrational
pessimism of the first years of the new millennium. Instead, we think that this
market will reward or penalize companies based on how well those companies
perform. As a result, heading into 2005, we expect to see steady and rational
gains with less volatility than in past years. In light of impressive corporate
earnings growth and low interest rates, we believe
-4-
that much of the market is undervalued, and that companies achieving solid,
double-digit earnings should command better prices in the year ahead.
At the same time, employment and wage gains are likely to be less
impressive than corporate profit growth. Productivity remains high by historic
averages, and companies have not needed to initiate substantial new hiring. In
addition, higher energy prices look to be a mild check on what is otherwise a
very robust economy. While the pace of growth should slow from its pace a year
ago, corporate profits overall should grow in the high single-digits, with many
companies significantly exceeding that. GDP growth should be at least 3%.
Alger is celebrating its 40th anniversary of managing money, and our
investment philosophy and process remain the same. This year, however, was a bit
disappointing to us. Uncertainty trumped fundamentals, and our stocks didn't do
as well as we had expected. Looking back, perhaps this was simply the "pause
that refreshes." In the rally following the election, both the markets and our
performance have picked up considerably. We think this is a positive harbinger
for 2005.
As always, we will continue to use our time-tested, disciplined approach
in order to identify dynamic companies and invest in them. We value the trust
you have placed in us, and we thank you. We look forward to the year ahead.
Respectfully submitted,
/s/ Dan C. Chung
Dan C. Chung
Chief Investment Officer
-5-
THE ALGER INSTITUTIONAL FUNDS
SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED)
As a shareholder of the Fund, you incur two types of costs: transaction
costs, if applicable, 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, 2004 and ending October 31,
2004.
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. 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.
-6-
THE ALGER INSTITUTIONAL FUNDS
SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED)
RATIO OF
EXPENSES TO
EXPENSES PAID AVERAGE
BEGINNING ENDING DURING THE PERIOD NET ASSETS
ACCOUNT VALUE ACCOUNT VALUE MAY 1, 2004 TO YEAR ENDED
MAY 1, 2004 OCTOBER 31, 2004 OCTOBER 31, 2004(B) OCTOBER 31, 2004
----------- ---------------- ------------------- ----------------
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ........................ $1,000.00 $ 994.50 $5.67 1.13%
Hypothetical(a) ............... 1,000.00 1,019.46 5.74 1.13%
CLASS R:
Actual ........................ 1,000.00 991.70 8.21 1.64%
Hypothetical(a) ............... 1,000.00 1,016.89 8.31 1.64%
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
Class I:
Actual ........................ $1,000.00 $ 999.40 $6.28 1.25%
Hypothetical(a) ............... 1,000.00 1,018.85 6.34 1.25%
CLASS R:
Actual ........................ 1,000.00 996.90 8.78 1.75%
Hypothetical(a) ............... 1,000.00 1,016.34 8.87 1.75%
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ........................ $1,000.00 $1,020.60 $5.84 1.15%
Hypothetical(a) ............... 1,000.00 1,019.36 5.84 1.15%
CLASS R:
Actual ........................ 1,000.00 1,018.00 8.37 1.65%
Hypothetical(a) ............... 1,000.00 1,016.84 8.36 1.65%
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
CLASS I:
Actual ........................ $1,000.00 $ 991.00 $6.16 1.23%
Hypothetical(a) ............... 1,000.00 1,018.95 6.24 1.23%
CLASS R:
Actual ........................ 1,000.00 988.30 8.65 1.73%
Hypothetical(a) ............... 1,000.00 1,016.44 8.77 1.73%
ALGER BALANCED INSTITUTIONAL FUND
CLASS I:
Actual ........................ $1,000.00 $1,004.00 $6.80 1.35%
Hypothetical(a) ............... 1,000.00 1,018.35 6.85 1.35%
CLASS R:
Actual ........................ 1,000.00 1,000.00 9.15 1.82%
Hypothetical(a) ............... 1,000.00 1,015.99 9.22 1.82%
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ........................ $1,000.00 $ 998.10 $6.73 1.34%
Hypothetical(a) ............... 1,000.00 1,018.40 6.80 1.34%
CLASS R:
Actual ........................ 1,000.00 996.30 9.18 1.83%
Hypothetical(a) ............... 1,000.00 1,015.94 9.27 1.83%
- ----------
(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).
-7-
THE ALGER INSTITUTIONAL FUNDS
PORTFOLIO SUMMARY* (UNAUDITED)
SOCIALLY
LARGECAP SMALLCAP MIDCAP CAPITAL RESPONSIBLE
GROWTH GROWTH GROWTH APPRECIATION GROWTH
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
SECTORS FUND FUND FUND FUND FUND
- ------- ------------- ------------- ------------- ------------- -------------
Consumer Discretionary ........... 21.6% 14.7% 16.1% 15.9% 14.3%
Consumer Staples ................. 3.4 1.4 1.6 1.7 1.6
Energy ........................... 7.1 4.7 7.6 7.4 6.8
Financials ....................... 6.2 10.6 8.6 3.7 3.7
Health Care ...................... 18.5 21.7 21.4 23.2 20.7
Industrials ...................... 6.2 16.0 7.7 8.9 3.7
Information Technology ........... 31.5 26.3 28.6 32.4 32.1
Materials ........................ 1.9 2.4 2.8 3.1 3.1
Telecommunication Services ....... 2.2 1.0 2.1 0.9 0.7
Cash and Net Other Assets ........ 1.4 1.2 3.6 2.8 13.3
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
BALANCED
INSTITUTIONAL
SECTORS/SECURITY TYPE FUND
- --------------------- -------------
Consumer Discretionary ................................................................. 11.8%
Consumer Staples ....................................................................... 3.0
Energy ................................................................................. 5.1
Financials ............................................................................. 4.6
Health Care ............................................................................ 11.0
Industrials ............................................................................ 3.2
Information Technology ................................................................. 20.1
Materials .............................................................................. 2.8
Telecommunications Services ............................................................ 1.5
------
Total Common Stocks .................................................................. 63.1
------
Corporate Obligations .................................................................. 8,5
U.S. Agency Obligations ................................................................ 6.0
U.S. Treasury Obligations .............................................................. 14.3
------
Total Obligations .................................................................... 28.8
------
Cash and Net Other Assets .............................................................. 8.1
------
100.0%
======
- ----------
* Based on Net Assets
-8-
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
Fund Highlights Through October 31, 2004
(Unaudited)
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/04
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Russell
11/1/1994 10000 10000
10/31/1995 13710 12925
10/31/1996 14832 15774
10/31/1997 19110 20580
10/31/1998 23967 25649
10/31/1999 34032 34434
10/31/2000 37529 37646
10/31/2001 27199 22613
10/31/2002 20347 18177
10/31/2003 25047 22141
10/31/2004 25398 22891
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger LargeCap Growth Institutional Class I shares and
the Russell 1000 Growth Index for the ten years ended October 31, 2004. The
figures for the Alger LargeCap Growth Institutional Class I shares and the
Russell 1000 Growth Index (an unmanaged index of common stocks) include
reinvestment of dividends. Performance for the Alger LargeCap Growth
Institutional Class R shares may vary from the results shown above due to
differences in expenses the class bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
------------------------------------------------
Class I (INCEPTION 11/8/93) 1.40% (5.68)% 9.77% 9.23%
Russell 1000 Growth Index 3.39% 7.84% 8.63% 8.32%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 0.94% * * 17.30%
Russell 1000 Growth Index 3.39% * * 16.57%
- --------------------------------------------------------------------------------
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.
-9-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--98.6% VALUE
-------- -------
BIOTECHNOLOGY--7.6%
24,700 Biogen Idec Inc.* .............................. $ 1,436,552
13,500 Genentech, Inc.* ............................... 614,655
13,000 Genzyme Corporation General Division* .......... 682,110
44,900 Gilead Sciences, Inc.* ......................... 1,554,887
19,250 ImClone Systems Incorporated* .................. 843,150
28,150 OSI Pharmaceuticals, Inc.* ..................... 1,829,187
------------
6,960,541
------------
CAPITAL MARKETS--2.6%
16,350 Affiliated Managers Group, Inc.* ............... 912,984
14,950 Bank of New York Company, Inc. (The) ........... 485,277
18,100 T. Rowe Price Group Inc. ....................... 1,009,437
------------
2,407,698
------------
CHEMICALS--1.9%
38,800 Dow Chemical Company (The) ..................... 1,743,672
------------
COMMERCIAL BANKS--1.0%
15,350 Wells Fargo & Company .......................... 916,702
------------
COMMUNICATION EQUIPMENT--7.5%
83,300 Avaya Inc.* .................................... 1,199,520
113,600 Cisco Systems, Inc.* ........................... 2,182,256
23,400 Ericsson(LM)Telephone Co., Cl. B ADR*# ......... 676,494
103,500 Motorola, Inc. ................................. 1,786,410
11,000 Research In Motion Limited* .................... 970,200
------------
6,814,880
------------
COMPUTERS & PERIPHERALS--2.5%
14,500 Apple Computer, Inc.* .......................... 761,685
117,300 EMC Corporation* ............................... 1,509,651
------------
2,271,336
------------
CONSUMER FINANCE--1.5%
25,650 American Express Company ....................... 1,361,246
------------
DIVERSIFIED FINANCIAL SERVICES--1.0%
11,500 Lehman Brothers Holdings Inc. .................. 944,725
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.3%
79,700 Symbol Technologies, Inc. ...................... 1,170,793
------------
ENERGY EQUIPMENT & SERVICES--3.0%
27,700 National-Oilwell, Inc.* ........................ 933,767
29,000 Schlumberger Limited ........................... 1,825,260
------------
2,759,027
------------
FOOD & STAPLES RETAILING--3.4%
37,900 CVS Corporation ................................ 1,647,134
25,950 Wal-Mart Stores, Inc. .......................... 1,399,224
------------
3,046,358
------------
-10-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
FREIGHT & LOGISTICS--1.6%
15,750 FedEx Corp. .................................... $ 1,435,140
------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.2%
24,050 Boston Scientific Corporation* ................. 848,965
16,900 Guidant Corporation ............................ 1,125,878
17,450 Medtronic, Inc. ................................ 891,869
------------
2,866,712
------------
HEALTH CARE PROVIDERS & SERVICES--2.1%
20,800 Caremark Rx, Inc.* ............................. 623,376
17,650 UnitedHealth Group Incorporated ................ 1,277,860
------------
1,901,236
------------
HOTELS, RESTAURANTS & LEISURE--3.0%
4,200 MGM MIRAGE* .................................... 225,960
26,700 Carnival Corporation ........................... 1,349,952
23,600 Starwood Hotels & Resorts Worldwide, Inc. ...... 1,126,428
------------
2,702,340
------------
INDUSTRIAL CONGLOMERATES--4.6%
52,850 General Electric Company ....................... 1,803,242
76,000 Tyco International Ltd. ........................ 2,367,400
------------
4,170,642
------------
INFORMATION TECHNOLOGY SERVICES--.9%
19,550 Automatic Data Processing, Inc. ................ 848,275
------------
INTERNET & CATALOG RETAIL--5.8%
32,900 eBay Inc.* ..................................... 3,211,369
48,200 IAC/InterActiveCorp.* .......................... 1,042,084
101,800 Netflix Inc.* .................................. 964,046
------------
5,217,499
------------
INTERNET SOFTWARE & SERVICES--6.7%
7,050 Google Inc. Cl. A* ............................. 1,344,470
49,000 VeriSign, Inc.* ................................ 1,314,670
93,200 Yahoo! Inc.* ................................... 3,372,908
------------
6,032,048
------------
MACHINERY - OIL WELL EQUIPMENT & SERVICES--.5%
24,200 Patterson-UTI Energy, Inc. ..................... 465,366
------------
MEDIA--6.7%
2,100 DreamWorks Animation SKG, Inc.* ................ 82,005
121,700 Time Warner Inc.* .............................. 2,025,088
52,200 Viacom Inc. Cl. B .............................. 1,904,778
62,250 XM Satellite Radio Holdings Inc. Cl. A* ........ 2,011,920
------------
6,023,791
------------
MULTILINE RETAIL--3.2%
57,500 Target Corporation ............................. 2,876,150
------------
-11-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
OIL & GAS--3.6%
20,600 BP PLC Sponsored ADR # ......................... $ 1,199,950
11,875 Devon Energy Corporation ....................... 878,394
13,000 EOG Resources, Inc. ............................ 865,280
13,600 Sasol ADR # .................................... 273,768
------------
3,217,392
------------
PHARMACEUTICALS--5.5%
45,000 Abbott Laboratories ............................ 1,918,350
97,300 IVAX Corporation* .............................. 1,761,130
29,300 Sepracor Inc.* ................................. 1,345,749
------------
5,025,229
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--6.5%
20,100 Altera Corporation* ............................ 456,873
40,500 Analog Devices, Inc. ........................... 1,630,530
54,500 Applied Materials, Inc.* ....................... 877,450
56,500 Freescale Semiconductor Inc. Cl. A* ............ 878,010
56,350 Intel Corporation .............................. 1,254,351
20,250 Linear Technology Corporation .................. 767,070
------------
5,864,284
------------
SOFTWARE--6.9%
5,000 Electronic Arts Inc.* .......................... 224,600
150,400 Microsoft Corporation .......................... 4,209,696
71,300 Oracle Corporation* ............................ 902,658
43,100 VERITAS Software Corporation* .................. 943,028
------------
6,279,982
------------
SPECIALTY RETAIL--3.0%
33,900 Bed Bath & Beyond Inc.* ........................ 1,382,781
23,650 Lowe's Companies, Inc. ......................... 1,331,022
------------
2,713,803
------------
WIRELESS TELECOMMUNICATION SERVICES--1.5%
62,500 Sprint Corporation ............................. 1,309,375
------------
Total Common Stocks
(Cost $83,003,979) ........................... 89,346,242
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--3.0%
----------
U.S. AGENCY OBLIGATIONS
$2,700,000 Federal Home Loan Banks, 1.65%, 11/1/04
(Cost $2,700,000) ............................ 2,700,000
------------
Total Investments
(Cost $85,703,979) (a) ........................... 101.6% 92,046,242
Liabilities in Excess of Other Assets .............. (1.6) (1,454,938)
----- ------------
Net Assets ......................................... 100.0% $90,591,304
===== ============
- ----------
* Non-income producing security.
(#) American Depository Receipts.
(a) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $86,327,450, amounted to
$5,718,792 which consisted of aggregate gross unrealized appreciation of
$8,659,825 and aggregate gross unrealized depreciation of $2,941,033.
See Notes to Financial Statements.
-12-
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2004
(UNAUDITED)
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/04
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Russell
11/1/1994 10000 10000
10/31/1995 16619 12056
10/31/1996 18148 13663
10/31/1997 21596 16556
10/31/1998 21211 13932
10/31/1999 32396 18012
10/31/2000 35654 20932
10/31/2001 20016 14330
10/31/2002 15593 11240
10/31/2003 22640 16470
10/31/2004 24094 17382
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger SmallCap Growth Institutional Class I shares and
the Russell 2000 Growth Index for the ten years ended October 31, 2004. The
figures for the Alger SmallCap Growth Institutional Class I shares and the
Russell 2000 Growth Index (an unmanaged index of common stocks) include
reinvestment of dividends. Performance for the Alger SmallCap Growth
Institutional Class R shares may vary from the results shown above due to
differences in expenses the class bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------
Class I (INCEPTION 11/8/93) 6.42% (5.75)% 9.19% 9.13%
Russell 2000 Growth Index 5.54% (0.71)% 5.68% 5.17%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 5.85% * * 25.17%
Russell 2000 Growth Index 5.54% * * 28.10%
- --------------------------------------------------------------------------------
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.
-13-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--98.8% VALUE
-------- -------
AEROSPACE & DEFENSE--3.4%
16,150 Alliant Techsystems Inc.* ...................... $ 928,464
84,700 BE Aerospace, Inc.* ............................ 726,726
28,300 SI International Inc.* ......................... 733,819
------------
2,389,009
------------
AIRLINES--1.2%
71,900 AirTran Holdings, Inc.* ........................ 835,478
------------
BIOTECHNOLOGY--4.8%
65,700 Encysive Pharmaceuticals Inc.* ................. 573,561
40,750 Ligand Pharmaceuticals Incorporated Cl. B* ..... 363,286
37,800 QLT Inc.* ...................................... 629,370
22,400 Serologicals Corporation* ...................... 529,760
32,400 Theravance, Inc.* .............................. 549,828
51,100 Vicuron Pharmaceuticals Inc.* .................. 716,422
------------
3,362,227
------------
BUSINESS SERVICES--.8%
9,700 MicroStrategy Incorporated* .................... 581,806
------------
CAPITAL MARKETS--3.4%
15,000 Affiliated Managers Group, Inc.* ............... 837,600
28,800 National Financial Partners Corporation ........ 885,312
15,650 Piper Jaffray Companies, Inc.* ................. 684,375
------------
2,407,287
------------
CHEMICALS--1.3%
25,700 Lubrizol Corporation ........................... 892,561
------------
COMMERCIAL BANKS--3.4%
4,900 Boston Private Financial Holdings, Inc. ........ 120,246
26,000 East West Bancorp, Inc. ........................ 1,041,040
23,500 Southwest Bancorporation of Texas, Inc. ........ 550,840
17,250 Westcorp ....................................... 688,620
------------
2,400,746
------------
COMMERCIAL SERVICES & SUPPLIES--4.7%
19,150 CoStar Group Inc.* ............................. 773,086
30,300 Education Management Corporation* .............. 812,646
9,900 First Marblehead Corporation (The)* ............ 530,640
18,200 FTI Consulting, Inc.* .......................... 341,432
45,300 Gevity HR, Inc. ................................ 806,793
------------
3,264,597
------------
COMMUNICATION EQUIPMENT--1.9%
36,500 Foundry Networks, Inc.* ........................ 442,745
39,600 NETGEAR, Inc.* ................................. 539,748
49,200 Powerwave Technologies, Inc.* .................. 367,524
------------
1,350,017
------------
-14-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
COMPUTERS & PERIPHERALS--2.5%
18,650 Avid Technology, Inc.* ......................... $ 988,077
53,000 Silicon Image, Inc.* ........................... 726,100
------------
1,714,177
------------
COMPUTER SERVICES--1.3%
32,200 Open Solutions Inc.* ........................... 906,913
------------
COMPUTER TECHNOLOGY--1.5%
18,300 Cogent Inc.* ................................... 350,152
17,700 NAVTEQ* ........................................ 713,487
------------
1,063,639
------------
ELECTRIC AND ELECTRONIC EQUIPMENT--1.1%
12,200 Roper Industries, Inc. ......................... 752,252
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--.5%
11,300 Trimble Navigation Limited* .................... 324,197
------------
ENERGY--1.1%
23,600 Arch Coal, Inc. ................................ 767,472
------------
ENERGY EQUIPMENT & SERVICES--2.0%
26,900 Core Laboratories N.V.* ........................ 667,120
25,500 Varco International, Inc.* ..................... 705,840
------------
1,372,960
------------
FINANCIAL SERVICES--.8%
30,200 Calamos Asset Management, Inc.* ................ 588,900
------------
FOOD & STAPLES RETAILING--1.4%
38,100 NeighborCare, Inc.* ............................ 976,503
------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.7%
29,800 Immucor, Inc.* ................................. 919,330
12,300 INAMED Corporation* ............................ 653,745
27,300 Intuitive Surgical, Inc.* ...................... 796,614
6,000 Mentor Corporation ............................. 208,800
------------
2,578,489
------------
HEALTH CARE PROVIDERS & SERVICES--7.6%
14,800 Accredo Health, Incorporated* .................. 340,844
19,600 Centene Corporation* ........................... 929,628
34,550 Psychiatric Solutions, Inc.* ................... 879,297
22,700 Sierra Health Services, Inc.* .................. 1,083,244
27,600 Sunrise Senior Living Inc.* .................... 1,051,836
46,800 VCA Antech, Inc.* .............................. 1,049,256
------------
5,334,105
------------
HOTELS, RESTAURANTS & LEISURE--3.7%
27,542 Applebee's International, Inc. ................. 629,885
28,600 Aztar Corporation* ............................. 885,170
19,550 Red Robin Gourmet Burgers Inc.* ................ 815,430
10,300 Texas Roadhouse, Inc. Cl. A* ................... 237,106
------------
2,567,591
------------
-15-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
INFORMATION TECHNOLOGY SERVICES--2.8%
12,400 Alliance Data Systems Corporation* ............. $ 524,272
13,150 Global Payments Inc. ........................... 720,094
30,850 Kanbay International Inc.* ..................... 737,007
------------
1,981,373
------------
INSURANCE--.7%
13,450 Arch Capital Group Ltd.* ....................... 505,316
------------
INTERNET & CATALOG RETAIL--2.3%
2,000 Elong Inc.* .................................... 27,200
41,500 J. Jill Group Inc.* ............................ 729,570
43,300 Priceline.com Incorporated* .................... 863,402
------------
1,620,172
------------
INTERNET SOFTWARE & SERVICES--3.5%
193,700 Chordiant Software Inc.* ....................... 476,502
59,300 IVillage Inc.* ................................. 303,913
43,500 Openwave Systems, Inc.* ........................ 511,995
109,300 SonicWALL, Inc.* ............................... 546,500
66,100 ValueClick, Inc.* .............................. 614,069
------------
2,452,979
------------
LEISURE EQUIPMENT & PRODUCTS--1.1%
34,350 LIFE TIME FITNESS, Inc.* ....................... 800,355
------------
MACHINERY--3.1%
17,200 Actuant Corporation Cl. A* ..................... 682,324
18,600 Joy Global Inc. ................................ 628,494
23,050 Terex Corporation* ............................. 875,900
------------
2,186,718
------------
MEDIA--2.2%
11,340 Media General, Inc. Cl. A ...................... 661,122
90,000 Spanish Broadcasting System, Inc. Cl. A* ....... 910,800
------------
1,571,922
------------
MEDICAL DEVICES--1.5%
27,300 Advanced Medical Optics, Inc.* ................. 1,067,430
------------
MEDICAL PRODUCTS--.7%
11,100 Par Pharmaceutical Cos Inc.* ................... 437,895
------------
OIL & GAS--2.7%
13,150 General Maritime Corporation* .................. 499,700
105,600 Grey Wolf, Inc.* ............................... 547,008
50,864 Todco Cl. A* ................................... 863,162
------------
1,909,870
------------
PHARMACEUTICALS--2.3%
7,000 Eyetech Pharmaceuticals Inc.* .................. 297,080
52,600 Impax Laboratories, Inc.* ...................... 776,376
11,500 Pharmion Corp.* ................................ 528,425
------------
1,601,881
------------
-16-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
ROAD & RAIL--.8%
8,100 Landstar Systems, Inc.* ........................ $ 550,314
------------
SEMICONDUCTOR CAPITAL EQUIPMENT--.9%
52,800 SiRF Technology Holdings, Inc.* ................ 625,152
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--5.0%
37,100 AMIS Holdings, Inc.* ........................... 563,920
66,700 Axcelis Technologies, Inc.* .................... 573,620
23,900 Brooks Automation, Inc.* ....................... 355,632
22,950 Integrated Circuit Systems, Inc.* .............. 517,523
42,900 Semtech Corporation* ........................... 895,752
20,200 Sigmatel Incorporated* ......................... 595,900
------------
3,502,347
------------
SOFTWARE--6.8%
18,600 Cerner Corporation* ............................ 839,790
28,687 Fair Isaac Corporation ......................... 866,347
25,700 Hyperion Solutions Corporation* ................ 1,031,341
130,100 Micromuse Inc.* ................................ 558,129
41,100 Quest Software, Inc.* .......................... 602,937
27,150 Take-Two Interactive Software, Inc.* ........... 894,864
------------
4,793,408
------------
SPECIALTY RETAIL--3.9%
37,650 AnnTaylor Stores Corporation* .................. 845,619
20,900 Guitar Center, Inc.* ........................... 932,767
26,400 PETCO Animal Supplies, Inc.* ................... 944,328
------------
2,722,714
------------
TEXTILES, APPAREL & LUXURY GOODS--1.5%
37,950 Quiksilver, Inc.* .............................. 1,034,138
------------
THRIFTS & MORTGAGE FINANCE--1.4%
81,083 Bank Mutual Corporation ........................ 995,699
------------
TRADING COMPANIES & DISTRIBUTORS--1.4%
29,100 MSC Industrial Direct Co., Cl. A ............... 993,473
------------
TRANSPORTATION SERVICES--1.1%
31,100 Sirva Inc.* .................................... 746,400
------------
WIRELESS TELECOMMUNICATION SERVICES--1.0%
13,900 SpectraSite, Inc.* ............................. 713,070
------------
Total Common Stocks
(Cost $64,667,303) ........................... 69,243,552
------------
-17-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--1.6% VALUE
-------- -------
U.S. AGENCY OBLIGATIONS
$1,100,000 Federal Home Loan Banks, 1.65%, 11/1/04
(Cost $1,100,000) ............................ $ 1,100,000
------------
Total Investments
(Cost $65,767,303)(a) ............................... 100.4% 70,343,552
Liabilities in Excess of Other Assets ................. (.4) (271,617)
----- -----------
Net Assets ............................................ 100.0% $70,071,935
===== ===========
- ----------
* Non-income producing security.
(a) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $65,982,035, amounted to
$4,361,517 which consisted of aggregate gross unrealized appreciation of
$7,366,420 and aggregate gross unrealized depreciation of $3,004,903.
See Notes to Financial Statements.
-18-
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2004 (UNAUDITED)
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/04
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Russell
11/1/1994 10000 10000
10/31/1995 15410 12423
10/31/1996 16371 14654
10/31/1997 21049 18260
10/31/1998 23470 18703
10/31/1999 33419 25750
10/31/2000 50558 35706
10/31/2001 40171 20430
10/31/2002 32401 16832
10/31/2003 44507 23447
10/31/2004 46314 25505
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger MidCap Growth Institutional Class I shares and the
Russell Midcap Growth Index for the ten years ended October 31, 2004. Figures
for the Alger MidCap Growth Institutional Class I shares and the Russell Midcap
Growth Index (an unmanaged index of common stocks) include reinvestment of
dividends. Performance for the Alger MidCap Growth Institutional Class R shares
may vary from the results shown above due to differences in expenses the class
bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------
Class I (INCEPTION 11/8/93) 4.06% 6.74% 16.57% 16.60%
Russell Midcap Growth Index 8.77% (0.19)% 9.82% 9.20%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 3.53% * * 25.25%
Russell Midcap Growth Index 8.77% * * 26.27%
- --------------------------------------------------------------------------------
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.
-19-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--96.4% VALUE
-------- -------
AEROSPACE & DEFENSE--2.0%
255,775 L-3 Communications Holdings, Inc. .............. $ 16,863,246
------------
AIRLINES--.6%
241,750 JetBlue Airways Corporation* ................... 5,330,587
------------
BIOTECHNOLOGY--4.9%
196,300 Genzyme Corporation General Division* .......... 10,299,861
258,250 ImClone Systems Incorporated* .................. 11,311,350
260,500 OSI Pharmaceuticals, Inc. ...................... 16,927,290
208,000 QLT Inc.* ...................................... 3,463,200
------------
42,001,701
------------
BUILDING & CONSTRUCTION--1.0%
183,400 Toll Brothers, Inc.* ........................... 8,500,590
------------
CAPITAL MARKETS--3.5%
305,193 Affiliated Managers Group, Inc.* ............... 17,041,977
201,450 Legg Mason, Inc. ............................... 12,834,379
------------
29,876,356
------------
CHEMICALS--1.4%
547,800 Millennium Chemicals Inc.* ..................... 11,766,744
------------
COMMERCIAL BANKS--3.8%
332,400 East West Bancorp, Inc. ........................ 13,309,296
193,400 North Fork Bancorporation, Inc. ................ 8,528,940
161,250 Zions Bancorporation ........................... 10,669,912
------------
32,508,148
------------
COMMERCIAL SERVICES & SUPPLIES--2.4%
154,300 First Marblehead Corporation (The)* ............ 8,270,480
1,847,600 Service Corporation International* ............. 12,212,636
------------
20,483,116
------------
COMMUNICATION EQUIPMENT--2.1%
776,600 Avaya Inc.* .................................... 11,183,040
998,800 Brocade Communications Systems, Inc.* .......... 6,781,852
------------
17,964,892
------------
COMMUNICATION TECHNOLOGY--.9%
474,500 Nextel Partners, Inc. Cl. A* ................... 7,990,580
------------
COMPUTERS & PERIPHERALS--5.0%
480,200 Apple Computer, Inc.* .......................... 25,224,906
601,350 PalmOne, Inc.* ................................. 17,421,109
------------
42,646,015
------------
COMPUTER SERVICES--1.5%
950,000 Akamai Technologies Inc.* ...................... 13,157,500
------------
COMPUTER TECHNOLOGY--.6%
119,350 NAVTEQ* ........................................ 4,810,998
------------
ELECTRICAL EQUIPMENT--2.1%
424,200 Rockwell Automation, Inc. ...................... 17,684,898
------------
-20-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
ELECTRONIC EQUIPMENT & INSTRUMENTS--1.6%
912,900 Symbol Technologies, Inc. ...................... $ 13,410,501
------------
ENERGY EQUIPMENT & SERVICES--2.9%
160,775 Cooper Cameron Corporation* .................... 7,773,471
488,300 National-Oilwell, Inc.* ........................ 16,460,593
------------
24,234,064
------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.6%
156,850 C.R. Bard, Inc. ................................ 8,909,080
186,700 Cytyc Corporation* ............................. 4,871,003
337,750 Kinetic Concepts, Inc.* ........................ 16,830,082
------------
30,610,165
------------
HEALTH CARE PROVIDERS & SERVICES--4.8%
88,200 American Healthways, Inc.* ..................... 2,661,876
226,400 AMERIGROUP Corporation* ........................ 13,584,000
365,350 Covance Inc.* .................................. 14,511,702
267,700 Magellan Health Services, Inc.* ................ 10,011,980
------------
40,769,558
------------
HOTELS, RESTAURANTS & LEISURE--4.3%
281,200 Applebee's International, Inc. ................. 6,431,044
167,600 Aztar Corporation* ............................. 5,187,220
179,000 Cheesecake Factory Incorporated (The)* ......... 7,770,390
13,000 International Speedway Corporation Cl. A ....... 611,520
167,500 Kerzner International Limited* ................. 8,495,600
174,600 Royal Caribbean Cruises Ltd. ................... 8,136,360
------------
36,632,134
------------
HOUSEHOLD DURABLES--2.1%
351,100 Garmin Ltd. .................................... 17,555,000
------------
INFORMATION TECHNOLOGY SERVICES--.7%
108,300 Global Payments Inc. ........................... 5,930,508
------------
INSURANCE--.3%
79,500 UICI ........................................... 2,351,610
------------
INTERNET & CATALOG RETAIL--1.4%
1,241,700 Netflix Inc.* .................................. 11,758,899
------------
INTERNET SOFTWARE & SERVICES--1.6%
102,750 Netease.com Inc. ADR* # ........................ 4,778,903
121,400 SINA Corp.* .................................... 4,066,900
186,100 VeriSign, Inc.* ................................ 4,993,063
------------
13,838,866
------------
LEISURE & ENTERTAINMENT--2.4%
663,100 Shanda Interactive Entertainment Ltd.* ......... 20,150,946
------------
MACHINERY--2.0%
155,300 Joy Global Inc. ................................ 5,247,587
312,100 Pentair, Inc. .................................. 11,666,298
------------
16,913,885
------------
-21-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
MACHINERY - OIL WELL EQUIPMENT
& SERVICES--1.9%
836,950 Patterson-UTI Energy, Inc. ..................... $ 16,094,549
------------
MEDIA--2.2%
21,500 DreamWorks Animation SKG, Inc.* ................ 839,575
53,500 Univision Communications Inc. Cl. A* ........... 1,656,360
514,150 XM Satellite Radio Holdings Inc. Cl. A* ........ 16,617,328
------------
19,113,263
------------
METALS & MINING--1.4%
188,800 Peabody Energy Corporation ..................... 12,041,664
------------
MULTILINE RETAIL--1.0%
295,000 Dollar Tree Stores, Inc.* ...................... 8,525,500
------------
OIL & GAS--2.9%
207,200 EOG Resources, Inc. ............................ 13,791,232
78,250 Frontline Limited .............................. 3,918,760
5,600 KFX Inc.* ...................................... 52,304
146,450 Teekay Shipping Corporation .................... 6,765,990
------------
24,528,286
------------
PHARMACEUTICALS--6.6%
633,100 Elan Corporation PLC Sponsored ADR* # .......... 16,333,980
206,250 Eyetech Pharmaceuticals Inc.* .................. 8,753,250
915,550 IVAX Corporation* .............................. 16,571,455
321,250 Sepracor Inc.* ................................. 14,755,013
------------
56,413,698
------------
RETAIL--1.4%
288,200 Estee Lauder Companies Inc. Cl. A .............. 12,378,190
------------
ROAD & RAIL--1.0%
176,600 Yellow Roadway Corporation* .................... 8,475,034
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--6.7%
290,250 Altera Corporation* ............................ 6,597,383
371,700 ATI Technologies Inc.* ......................... 6,709,185
428,400 Freescale Semiconductor Inc. Cl. A* ............ 6,657,336
142,600 KLA-Tencor Corporation* ........................ 6,492,578
156,000 Marvell Technology Group Ltd.* ................. 4,456,920
248,900 Rambus Inc.* ................................... 4,276,102
1,389,450 Semiconductor Manufacturing International
Corporation ADR* # ........................... 14,992,166
751,000 Skyworks Solutions, Inc.* ...................... 6,676,390
------------
56,858,060
------------
-22-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
SOFTWARE--6.5%
547,400 Citrix Systems, Inc.* .......................... $ 13,208,762
172,250 Cognos, Inc.* .................................. 6,805,598
70,000 Fair Isaac Corporation ......................... 2,114,000
182,950 Intuit Inc.* ................................... 8,298,612
581,780 PalmSource, Inc.* .............................. 13,043,508
359,700 Take-Two Interactive Software, Inc.* ........... 11,855,712
------------
55,326,192
------------
SPECIALTY RETAIL--1.8%
217,500 Chico's FAS, Inc.* ............................. 8,706,525
186,550 Tractor Supply Company* ........................ 6,768,034
------------
15,474,559
------------
TEXTILES, APPAREL & LUXURY GOODS--2.3%
169,150 Coach, Inc.* ................................... 7,887,464
159,350 Polo Ralph Lauren Corporation Cl. A ............ 5,884,796
214,900 Quiksilver, Inc.* .............................. 5,856,025
------------
19,628,285
------------
WIRELESS TELECOMMUNICATION SERVICES--1.2%
192,750 SpectraSite, Inc.* ............................. 9,888,075
------------
Total Common Stocks
(Cost $767,785,221) .......................... 820,486,862
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--4.4%
----------
U.S. AGENCY OBLIGATIONS
$37,300,000 Federal Home Loan Banks, 1.65%, 11/1/04
(Cost $37,300,000) ........................... 37,300,000
------------
Total Investments
(Cost $805,085,221)(a) ............................ 100.8% 857,786,862
Liabilities in Excess of Other Assets ............... (.8) (6,513,938)
------ ------------
Net Assets .......................................... 100.0% $851,272,924
====== ============
- ----------
* Non-income producing security.
# American Depository Receipts.
(a) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $810,444,584, amounted to
$47,342,278 which consisted of aggregate gross unrealized appreciation of
$75,848,680 and aggregate gross unrealized depreciation of $28,506,402.
See Notes to Financial Statements.
-23-
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2004 (UNAUDITED)
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/04
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Russell
11/1/1994 10000 10000
10/31/1995 15540 12835
10/31/1996 16384 15548
10/31/1997 20655 20157
10/31/1998 26461 24267
10/31/1999 48779 32494
10/31/2000 55189 35679
10/31/2001 35646 21642
10/31/2002 27422 17368
10/31/2003 33811 21422
10/31/2004 33781 22178
The chart above illustrates the growth in value of a hypothetical $10,000
investment made in the Alger Capital Appreciation Institutional Class I shares
and the Russell 3000 Growth Index for the ten years ended October 31, 2004.
Figures for the Alger Capital Appreciation Institutional Class I shares and the
Russell 3000 Growth Index (an unmanaged index of common stocks) include
reinvestment of dividends. Performance for the Alger Capital Appreciation
Institutional Class R shares may vary from the results shown above due to
differences in expenses the class bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------
Class I shares (INCEPTION 11/8/93) (0.09)% (7.08)% 12.94% 11.80%
Russell 3000 Growth Index 3.53% (7.35)% 8.29% 8.01%
- --------------------------------------------------------------------------------
Class R shares (INCEPTION 1/27/03) (0.54)% * * 16.53%
Russell 3000 Growth Index 3.53% * * 17.32%
- --------------------------------------------------------------------------------
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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS.
-24-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--97.2% VALUE
-------- -------
AEROSPACE & DEFENSE--3.4%
40,000 Lockheed Martin Corporation .................... $ 2,203,600
22,600 United Technologies Corporation ................ 2,097,732
------------
4,301,332
------------
COMMERCIAL BANKS--.5%
11,500 Wells Fargo & Company .......................... 686,780
------------
BIOTECHNOLOGY--7.8%
47,800 Biogen Idec Inc.* .............................. 2,780,048
28,800 Genentech, Inc.* ............................... 1,311,264
26,300 Genzyme Corporation General Division* .......... 1,379,961
86,000 Gilead Sciences, Inc.* ......................... 2,978,180
6,200 ImClone Systems Incorporated* .................. 271,560
15,800 OSI Pharmaceuticals, Inc.* ..................... 1,026,684
------------
9,747,697
------------
BUSINESS SERVICES--.7%
16,000 MicroStrategy Incorporated* .................... 959,680
------------
CAPITAL MARKETS--.8%
9,800 Bank of New York Company, Inc. (The) ........... 318,108
12,000 Merrill Lynch & Co., Inc. ...................... 647,280
------------
965,388
------------
CHEMICALS--1.5%
55,200 Lubrizol Corporation ........................... 1,917,096
------------
COMMERCIAL SERVICES & SUPPLIES--1.6%
36,800 First Marblehead Corporation (The)* ............ 1,972,480
------------
COMMUNICATION EQUIPMENT--6.0%
50,100 Motorola, Inc. ................................. 864,726
143,700 Nokia Oyj ADR# ................................. 2,215,854
43,150 QUALCOMM Inc. .................................. 1,804,102
29,850 Research In Motion Limited* .................... 2,632,770
------------
7,517,452
------------
COMPUTERS & PERIPHERALS--4.4%
45,900 Apple Computer, Inc.* .......................... 2,411,127
109,400 PalmOne, Inc.* ................................. 3,169,318
------------
5,580,445
------------
COMPUTER SOFTWARE--1.0%
57,800 Check Point Software Technologies Ltd.* ........ 1,307,494
------------
COMPUTER TECHNOLOGY--1.5%
46,700 NAVTEQ* ........................................ 1,882,477
------------
DIVERSIFIED FINANCIAL SERVICES--.8%
12,500 Lehman Brothers Holdings Inc. .................. 1,026,875
------------
ENERGY EQUIPMENT & SERVICES--2.4%
89,900 National-Oilwell, Inc.* ........................ 3,030,529
------------
FOOD & STAPLES RETAILING--1.7%
50,200 CVS Corporation ................................ 2,181,692
------------
-25-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
FREIGHT & LOGISTICS--1.2%
15,800 FedEx Corp. .................................... $ 1,439,696
------------
HEALTH CARE EQUIPMENT & SUPPLIES--3.9%
32,000 Kinetic Concepts, Inc.* ........................ 1,594,560
34,700 Fisher Scientific International Inc.* .......... 1,990,392
19,350 Guidant Corporation ............................ 1,289,097
------------
4,874,049
------------
HEALTH CARE PROVIDERS & SERVICES--3.4%
30,700 AMERIGROUP Corporation* ........................ 1,842,000
45,500 Caremark Rx, Inc.* ............................. 1,363,635
11,600 Quest Diagnostics Incorporated ................. 1,015,464
------------
4,221,099
------------
HOTELS, RESTAURANTS & LEISURE--.7%
19,300 Royal Caribbean Cruises Ltd. ................... 899,380
------------
HOUSEHOLD DURABLES--.4%
9,700 Garmin Ltd. .................................... 485,000
------------
INDUSTRIAL CONGLOMERATES--3.0%
48,200 General Electric Company ....................... 1,644,584
66,400 Tyco International Ltd. ........................ 2,068,360
------------
3,712,944
------------
INFORMATION TECHNOLOGY SERVICES--1.3%
25,900 Accenture Ltd. Cl. A* .......................... 627,039
28,600 Cognizant Technology Solutions Corporation Cl. A* 972,400
------------
1,599,439
------------
INTERNET & CATALOG RETAIL--4.0%
41,000 eBay Inc.* ..................................... 4,002,010
46,000 IAC/InterActiveCorp.* .......................... 994,520
------------
4,996,530
------------
INTERNET SOFTWARE & SERVICES--3.9%
13,600 Netease.com Inc. ADR #* ........................ 632,536
119,400 Yahoo! Inc.* ................................... 4,321,086
------------
4,953,622
------------
LEISURE & ENTERTAINMENT--.8%
33,700 Shanda Interactive Entertainment Ltd.* ......... 1,024,109
------------
MACHINERY - OIL WELL EQUIPMENT
& SERVICES--1.0%
66,100 Patterson-UTI Energy, Inc. ..................... 1,271,103
------------
MEDIA--5.1%
2,900 DreamWorks Animation SKG, Inc.* ................ 113,245
295,700 Sirius Satellite Radio Inc.* ................... 1,153,230
203,500 Time Warner Inc.* .............................. 3,386,240
49,500 Viacom Inc. Cl. B .............................. 1,806,255
------------
6,458,970
------------
MEDICAL DEVICES--1.0%
32,900 Advanced Medical Optics, Inc.* ................. 1,286,390
------------
-26-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUUED) VALUE
-------- -------
METALS & MINING--1.6%
31,900 Peabody Energy Corporation ..................... $ 2,034,582
------------
MULTILINE RETAIL--.8%
19,400 Kohl's Corporation* ............................ 984,744
------------
OFFICE EQUIPMENT--1.1%
26,200 Zebra Technologies Corporation* ................ 1,388,338
------------
OIL & GAS--4.0%
25,700 BP PLC Sponsored ADR # ......................... 1,497,025
21,400 EOG Resources, Inc. ............................ 1,424,384
42,800 Talisman Energy Inc. ........................... 1,150,036
19,600 Teekay Shipping Corporation .................... 905,520
------------
4,976,965
------------
PHARMACEUTICALS--7.2%
22,100 Allergan, Inc. ................................. 1,581,476
101,775 IVAX Corporation* .............................. 1,842,127
6,700 Novartis AG ADR # .............................. 321,667
43,830 Pfizer Inc. .................................... 1,268,879
73,100 Schering-Plough Corporation .................... 1,323,841
14,100 Sepracor Inc.* ................................. 647,613
38,100 Teva Pharmaceutical Industries Ltd. ADR # ...... 990,600
25,200 Wyeth .......................................... 999,180
------------
8,975,383
------------
ROAD & RAIL--1.3%
40,000 Burlington Northern Santa Fe Corporation ....... 1,672,400
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--3.4%
59,300 Broadcom Corporation Cl. A* .................... 1,604,065
33,700 Intel Corporation .............................. 750,162
12,100 Novellus Systems, Inc.* ........................ 313,511
174,000 Skyworks Solutions, Inc.* ...................... 1,546,860
------------
4,214,598
------------
SOFTWARE--8.2%
29,200 Cognos, Inc.* .................................. 1,153,692
73,800 Fair Isaac Corporation ......................... 2,228,760
33,600 Mercury Interactive Corporation* ............... 1,459,248
180,200 Microsoft Corporation .......................... 5,043,798
28,200 Red Hat, Inc.* ................................. 362,088
------------
10,247,586
------------
SPECIALTY RETAIL--3.3%
40,300 Bed Bath & Beyond Inc.* ........................ 1,643,837
22,850 Lowe's Companies, Inc. ......................... 1,285,998
34,000 Tractor Supply Company* ........................ 1,233,520
------------
4,163,355
------------
-27-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
TEXTILES, APPAREL & LUXURY GOODS--1.6%
28,000 Coach, Inc.* .................................... $ 1,305,640
17,700 Polo Ralph Lauren Corporation Cl. A ............. 653,661
------------
1,959,301
------------
WIRELESS TELECOMMUNICATION SERVICES--.9%
23,000 SpectraSite, Inc.* .............................. 1,179,900
------------
Total Common Stocks
(Cost $110,494,815) ........................... 122,096,900
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--2.7%
----------
U.S. AGENCY OBLIGATIONS
$3,350,000 Federal Home Loan Banks, 1.65% 11/1/04
(Cost $3,350,000) ............................. 3,350,000
------------
Total Investments
(Cost $113,844,815) (a) ............................. 99.9% 125,446,900
Other Assets in Excess of Liabilities ................. 0.1 148,035
------ ------------
Net Assets ............................................ 100.0% $125,594,935
====== ============
- ----------
* Non-income producing security.
(#) American Depository Receipts.
(a) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $113,981,024, amounted to
$11,465,876 which consisted of aggregate gross unrealized appreciation of
$13,756,165 and aggregate gross unrealized depreciation of $2,290,289.
See Notes to Financial Statements.
-28-
ALGER BALANCED INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2004 (UNAUDITED)
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION DECEMBER 4, 2000
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Lehman Russell
12/4/2000 10000 10000 10000
10/31/2001 8200 11317 7067
10/31/2002 6670 11937 5680
10/31/2003 7410 12674 6919
10/31/2004 7504 13382 7216
The chart above illustrates the change in value of a hypothetical $10,000
investment made in the Alger Balanced Institutional Class I shares, the Russell
1000 Growth Index and the Lehman Gov't/Credit Bond Index on December 4, 2000,
the inception date of the Alger Balanced Institutional Class I shares, through
October 31, 2004. Figures for the Alger Balanced Institutional Class I shares,
the Russell 1000 Growth Index (an unmanaged index of common stocks) and the
Lehman Gov't/Credit Bond Index (an unmanaged index of government and corporate
bonds) include reinvestment of dividends and/or interest. Performance for the
Alger Balanced Institutional Class R shares may vary from the results shown
above due to differences in expenses the class bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR SINCE INCEPTION
----------------------------
Class I shares (INCEPTION 12/4/00) 1.27% (7.08)%
Russell 1000 Growth Index 3.39% (8.30)%
Lehman Gov't/Credit Bond Index 5.59% 7.74%
- --------------------------------------------------------------------------------
Class R shares (INCEPTION 1/27/03) 0.68% 8.54%
Russell 1000 Growth Index 3.39% 16.57%
Lehman Gov't/Credit Bond Index 5.59% 5.34%
- --------------------------------------------------------------------------------
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 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
-29-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--63.1% VALUE
-------- -------
BIOTECHNOLOGY--4.9%
250 Biogen Idec Inc.* ................................ $ 14,540
150 Genentech, Inc.* ................................. 6,830
150 Genzyme Corporation General Division* ............ 7,871
500 Gilead Sciences, Inc.* ........................... 17,315
250 ImClone Systems Incorporated* .................... 10,950
325 OSI Pharmaceuticals, Inc.* ....................... 21,118
------------
78,624
------------
CAPITAL MARKETS--1.6%
150 Affiliated Managers Group, Inc.* ................. 8,376
200 Bank of New York Company, Inc. (The) ............. 6,492
200 T. Rowe Price Group Inc. ......................... 11,154
------------
26,022
------------
CHEMICALS--1.4%
500 Dow Chemical Company (The) ....................... 22,470
------------
COMMERCIAL BANKS--1.5%
175 Wells Fargo & Company ............................ 10,451
200 Zions Bancorporation ............................. 13,234
------------
23,685
------------
COMMUNICATION EQUIPMENT--4.3%
1,000 Avaya Inc.* ...................................... 14,400
530 Cisco Systems, Inc.* ............................. 10,181
300 Ericsson(LM)Telephone Co., Cl. B ADR*# ........... 8,673
1,250 Motorola, Inc. ................................... 21,575
150 Research In Motion Limited* ...................... 13,230
------------
68,059
------------
COMPUTERS & PERIPHERALS--1.9%
150 Apple Computer, Inc.* ............................ 7,879
1,100 EMC Corporation* ................................. 14,157
300 PalmOne, Inc.* ................................... 8,691
------------
30,727
------------
CONSUMER FINANCE--1.0%
300 American Express Company ......................... 15,921
------------
DIVERSIFIED FINANCIAL SERVICES--.5%
100 Lehman Brothers Holdings Inc. .................... 8,215
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--.9%
950 Symbol Technologies, Inc. ........................ 13,956
------------
ENERGY EQUIPMENT & SERVICES--2.4%
500 National-Oilwell, Inc.* .......................... 16,855
350 Schlumberger Limited ............................. 22,029
------------
38,884
------------
FOOD & STAPLES RETAILING--3.0%
450 CVS Corporation .................................. 19,557
300 Wal-Mart Stores, Inc. ............................ 16,176
150 Whole Foods Market, Inc. ......................... 12,214
------------
47,947
------------
-30-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
FREIGHT & LOGISTICS--.6%
100 FedEx Corp. ...................................... $ 9,112
------------
HEALTH CARE EQUIPMENT & SUPPLIES--2.2%
320 Boston Scientific Corporation* ................... 11,296
200 Guidant Corporation .............................. 13,324
200 Medtronic, Inc. .................................. 10,222
------------
34,842
------------
HEALTH CARE PROVIDERS & SERVICES--1.6%
250 Caremark Rx, Inc.* ............................... 7,493
250 UnitedHealth Group Incorporated .................. 18,100
------------
25,593
------------
HOTELS, RESTAURANTS & LEISURE--1.1%
300 Carnival Corporation ............................. 15,168
50 MGM MIRAGE* ...................................... 2,690
------------
17,858
------------
INDUSTRIAL CONGLOMERATES--2.6%
500 General Electric Company ......................... 17,060
800 Tyco International Ltd. .......................... 24,920
------------
41,980
------------
INFORMATION TECHNOLOGY SERVICES--.9%
350 Automatic Data Processing, Inc. .................. 15,187
------------
INTERNET & CATALOG RETAIL--3.8%
600 IAC/InterActiveCorp.* ............................ 12,972
380 eBay Inc.* ....................................... 37,092
1,200 Netflix Inc.* .................................... 11,364
------------
61,428
------------
INTERNET SOFTWARE & SERVICES--4.3%
95 Google Inc. Cl. A* ............................... 18,117
550 VeriSign, Inc.* .................................. 14,756
1,000 Yahoo! Inc.* ..................................... 36,190
------------
69,063
------------
MACHINERY - OIL WELL EQUIPMENT
& SERVICES--.6%
500 Patterson-UTI Energy, Inc. ....................... 9,615
------------
MEDIA--4.3%
25 DreamWorks Animation SKG, Inc.* .................. 976
1,450 Time Warner Inc.* ................................ 24,128
600 Viacom Inc. Cl. B ................................ 21,894
650 XM Satellite Radio Holdings Inc. Cl. A* .......... 21,008
------------
68,006
------------
METALS & MINING--1.4%
350 Peabody Energy Corporation ....................... 22,323
------------
-31-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
OIL & GAS--2.1%
200 BP PLC Sponsored ADR# .......................... $ 11,650
100 Devon Energy Corporation ....................... 7,397
150 EOG Resources, Inc. ............................ 9,984
200 Sasol ADR# ..................................... 4,026
------------
33,057
------------
PHARMACEUTICALS--2.4%
1,200 IVAX Corporation* .............................. 21,720
350 Sepracor Inc.* ................................. 16,075
------------
37,795
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--3.7%
250 Altera Corporation* ............................ 5,683
500 Analog Devices, Inc. ........................... 20,130
550 Applied Materials, Inc.* ....................... 8,855
650 Freescale Semiconductor Inc. Cl. A* ............ 10,101
650 Intel Corporation .............................. 14,469
------------
59,238
------------
SOFTWARE--4.6%
50 Electronic Arts Inc.* .......................... 2,246
1,800 Microsoft Corporation .......................... 50,382
300 Take-Two Interactive Software, Inc.* ........... 9,888
500 VERITAS Software Corporation* .................. 10,940
------------
73,456
------------
SPECIALTY RETAIL--2.1%
400 Bed Bath & Beyond Inc.* ........................ 16,316
300 Lowe's Companies, Inc. ......................... 16,884
------------
33,200
------------
TEXTILES, APPAREL & LUXURY GOODS--.5%
100 Coach, Inc.* ................................... 4,663
100 Polo Ralph Lauren Corporation Cl. A ............ 3,693
------------
8,356
------------
WIRELESS TELECOMMUNICATION SERVICES--.9%
700 Sprint Corporation ............................. 14,665
------------
Total Common Stocks
(Cost $943,022) .............................. 1,009,284
------------
PRINCIPAL
AMOUNT CORPORATE BONDS--8.5%
----------
AEROSPACE & DEFENSE--.3%
$ 5,000 United Technologies, 4.875%, 11/1/06 ........... 5,200
------------
AUTOMOTIVE--1.1%
4,000 General Motors Acceptance Corp., 4.50%, 7/15/06 4,061
13,000 General Motors Acceptance Corp., 7.75%, 1/19/10 14,204
------------
18,265
------------
-32-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
PRINCIPAL
AMOUNT CORPORATE BONDS (CONTINUED) VALUE
-------- -------
CAPITAL MARKETS--.2%
$ 3,000 J.P. Morgan Chase & Co., 3.625%, 5/1/08 ........ $ 3,017
------------
COMMERCIAL BANKS--.6%
4,000 Associates Corp. North America, 6.95%, 11/1/18 . 4,718
5,000 Bank of America Corp., 5.375%, 6/15/14 ......... 5,262
------------
9,980
------------
COMMUNICATION SERVICES--1.0%
15,000 AT&T Wireless Services Inc., 7.50%, 5/1/07 ..... 16,544
------------
COMPUTERS & PERIPHERALS--.3%
4,000 International Business Machines Corp.,
8.375%, 11/1/19 .............................. 5,331
------------
DIVERSIFIED FINANCIAL SERVICES--.5%
7,000 Household Finance Corp., 4.75%, 7/15/13 ........ 7,002
------------
DIVERSIFIED TELECOMMUNICATION SERVICES--.4%
6,000 Verizon New York Inc. Series A, 6.875%, 4/1/12 . 6,787
------------
FOOD CHAINS--.2%
3,000 Fred Meyer,Inc. Sr. Notes, 7.45%, 3/1/08 ....... 3,358
------------
FOOD PRODUCTS--.6%
5,000 Kellogg Co. Senior Note, 2.875%, 6/1/08 ........ 4,905
3,000 Kraft Foods Inc., 6.25%, 6/1/12 ................ 3,307
------------
8,212
------------
INDUSTRIAL CONGLOMERATES--1.2%
8,000 General Electric Company, 5.00%, 2/1/13 ........ 8,307
10,000 Tyco International Group SA, 6.00%, 11/15/13 ... 10,944
------------
19,251
------------
MEDIA--.8%
3,000 Comcast Corporation, 6.50%, 1/15/15 ............ 3,287
5,000 Cox Enterprises, Inc., 4.375%, 5/1/08 (a) ...... 4,963
5,000 Liberty Media Corporation Floating Rate Note,
3.02%, 9/17/06 ............................... 5,058
------------
13,308
------------
PAPER & FOREST PRODUCTS--1.0%
15,000 Domtar Inc., 8.75%, 8/1/06 ..................... 16,325
------------
UTILITIES--.3%
4,000 Southern California Edison Co., 5.00%, 1/15/14 . 4,105
------------
Total Corporate Bonds
(Cost $135,665) .............................. 136,685
------------
-33-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
PRINCIPAL
AMOUNT VALUE
-------- -------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--20.3%
Federal National Mortgage Association,
$ 18,000 1.875%, 9/15/05 .............................. $ 17,928
10,000 2.30%, 1/20/06 ............................... 9,978
25,000 3.125%, 7/15/06 .............................. 25,194
7,000 3.25%, 8/15/08 ............................... 6,988
5,000 4.25%, 5/15/09 ............................... 5,152
15,000 4.125%, 4/15/14 .............................. 14,661
5,000 6.625%, 11/15/30 ............................. 5,958
Federal Home Loan Mortgage Corporation,
5,000 4.25%, 7/15/09 ............................... 5,150
5,000 6.25%, 7/15/32 ............................... 5,751
U.S. Treasury Notes,
17,000 3.50%, 11/15/06 .............................. 17,318
73,000 3.25%, 8/15/07 ............................... 73,967
5,000 3.125%, 9/15/08 .............................. 5,016
27,000 4.375%, 8/15/12 .............................. 28,015
10,000 4.75%, 5/15/14 ............................... 10,577
U.S. Treasury Bonds,
13,000 7.25%, 5/15/16 ............................... 16,495
5,000 7.50%, 11/15/16 .............................. 6,477
6,000 6.25%, 8/15/23 ............................... 7,089
41,000 6.875%, 8/15/25 .............................. 52,080
10,000 5.375%, 2/15/31 .............................. 10,864
------------
Total U.S. Government & Agency Obligations
(Cost $320,512) .............................. 324,658
------------
Total Investments
(Cost $1,399,199)(b) ............................... 91.9% 1,470,627
Other Assets in Excess of Liabilities ................ 8.1 130,065
----- ------------
Net Assets ........................................... 100.0% $ 1,600,692
===== ============
- ----------
* Non-income producing security.
(#) American Depository Receipts.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional
buyers.
(b) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $1,414,809, amounted to $55,818
which consisted of aggregate gross unrealized appreciation of $98,570 and
aggregate gross unrealized depreciation of $42,752.
See Notes to Financial Statements.
-34-
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2004 (UNAUDITED)
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION DECEMBER 4, 2000
[The following graph was depicted as a line chart in the printed materials.]
[LINE CHART]
Alger Russell
12/4/2000 10000 10000
10/31/2001 6370 7305
10/31/2002 4430 5863
10/31/2003 5380 7232
10/31/2004 5396 7504
The chart above illustrates the change in value of a hypothetical $10,000
investment made in the Alger Socially Responsible Growth Institutional Class I
shares and the Russell 3000 Growth Index on December 4, 2000, the inception date
of the Alger Socially Responsible Growth Institutional Class I shares, through
October 31, 2004. Figures for the Alger Socially Responsible Growth
Institutional Class I shares and the Russell 3000 Growth Index (an unmanaged
index of common stocks) include reinvestment of dividends. Performance for the
Alger Socially Responsible Growth Institutional Class R shares may vary from the
results shown above due to differences in expenses the class bears.
PERFORMANCE COMPARISON AS OF OCTOBER 31, 2004
AVERAGE ANNUAL RETURNS
1 YEAR SINCE INCEPTION
--------------------------
Class I (INCEPTION 12/4/00) 0.30% (14.59)%
Russell 3000 Growth Index 3.53% (7.13)%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) (0.07)% 16.00%
Russell 3000 Growth Index 3.53% 17.32%
- --------------------------------------------------------------------------------
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 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. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.
-35-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2004
SHARES COMMON STOCKS--86.7% VALUE
-------- -------
BIOTECHNOLOGY--7.5%
550 Biogen Idec Inc.* .............................. $ 31,988
300 Genentech, Inc.* ............................... 13,659
300 Genzyme Corporation General Division* .......... 15,741
900 Gilead Sciences, Inc.* ......................... 31,167
50 ImClone Systems Incorporated* .................. 2,190
150 OSI Pharmaceuticals, Inc.* ..................... 9,747
------------
104,492
------------
BUSINESS SERVICES--.9%
200 MicroStrategy Incorporated* .................... 11,996
------------
CAPITAL MARKETS--.8%
100 Bank of New York Company, Inc. (The) ........... 3,246
150 Merrill Lynch & Co., Inc. ...................... 8,091
------------
11,337
------------
CHEMICALS--1.5%
600 Lubrizol Corporation ........................... 20,838
------------
COMMERCIAL BANKS--.4%
100 Wells Fargo & Company .......................... 5,972
------------
COMMERCIAL SERVICES & SUPPLIES--1.5%
400 First Marblehead Corporation (The)* ............ 21,440
------------
COMMUNICATION EQUIPMENT--6.1%
550 Motorola, Inc. ................................. 9,493
1,600 Nokia Oyj ADR# ................................. 24,672
450 QUALCOMM Inc. .................................. 18,815
350 Research In Motion Limited* .................... 30,870
------------
83,850
------------
COMPUTERS & PERIPHERALS--4.2%
500 Apple Computer, Inc.* .......................... 26,265
1,100 PalmOne, Inc.* ................................. 31,867
------------
58,132
------------
COMPUTER SOFTWARE--1.1%
700 Check Point Software Technologies Ltd.* ........ 15,835
------------
COMPUTER TECHNOLOGY--1.3%
450 NAVTEQ* ........................................ 18,139
------------
DIVERSIFIED FINANCIAL SERVICES--.9%
150 Lehman Brothers Holdings Inc. .................. 12,322
------------
ENERGY EQUIPMENT & SERVICES--2.1%
850 National-Oilwell, Inc.* ........................ 28,653
------------
FOOD & STAPLES RETAILING--1.6%
525 CVS Corporation ................................ 22,816
------------
FREIGHT & LOGISTICS--1.0%
150 FedEx Corp. .................................... 13,668
------------
-36-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
HEALTH CARE EQUIPMENT & SUPPLIES--3.7%
350 Fisher Scientific International Inc.* .......... $ 20,076
200 Guidant Corporation ............................ 13,324
350 Kinetic Concepts, Inc.* ........................ 17,440
------------
50,840
------------
HEALTH CARE PROVIDERS & SERVICES--2.5%
350 AMERIGROUP Corporation* ........................ 21,000
150 Quest Diagnostics Incorporated ................. 13,131
------------
34,131
------------
HOTELS, RESTAURANTS & LEISURE--.7%
200 Royal Caribbean Cruises Ltd. ................... 9,320
------------
HOUSEHOLD DURABLES--.4%
100 Garmin Ltd. .................................... 5,000
------------
INDUSTRIAL CONGLOMERATES--1.5%
650 Tyco International Ltd. ........................ 20,248
------------
INFORMATION TECHNOLOGY SERVICES--1.3%
300 Accenture Ltd. Cl. A* .......................... 7,263
300 Cognizant Technology Solutions Corporation Cl. A* 10,200
------------
17,463
------------
INTERNET & CATALOG RETAIL--3.6%
400 eBay Inc.* ..................................... 39,044
500 IAC/InterActiveCorp.* .......................... 10,810
------------
49,854
------------
INTERNET SOFTWARE & SERVICES--4.1%
200 Netease.com Inc. ADR*# ......................... 9,302
1,300 Yahoo! Inc.* ................................... 47,047
------------
56,349
------------
LEISURE & ENTERTAINMENT--.9%
400 Shanda Interactive Entertainment Ltd.* ......... 12,156
------------
MACHINERY - OIL WELL EQUIPMENT
& SERVICES--1.0%
700 Patterson-UTI Energy, Inc. ..................... 13,461
------------
MEDIA--4.6%
25 DreamWorks Animation SKG, Inc.* ................ 976
3,250 Sirius Satellite Radio Inc.* ................... 12,675
1,900 Time Warner Inc.* .............................. 31,616
500 Viacom Inc. Cl. B .............................. 18,245
------------
63,512
------------
MEDICAL DEVICES--1.0%
350 Advanced Medical Optics, Inc.* ................. 13,685
------------
METALS & MINING--1.6%
350 Peabody Energy Corporation ..................... 22,323
------------
-37-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
MULTILINE RETAIL--.7%
200 Kohl's Corporation* ............................ $ 10,152
------------
OFFICE EQUIPMENT--1.0%
275 Zebra Technologies Corporation* ................ 14,572
------------
OIL & GAS--3.8%
250 BP PLC Sponsored ADR# .......................... 14,562
250 EOG Resources, Inc. ............................ 16,640
400 Talisman Energy Inc. ........................... 10,748
225 Teekay Shipping Corporation .................... 10,395
------------
52,345
------------
PHARMACEUTICALS--6.0%
250 Allergan, Inc. ................................. 17,890
1,100 IVAX Corporation* .............................. 19,910
50 Novartis AG ADR# ............................... 2,401
450 Pfizer Inc. .................................... 13,028
700 Schering-Plough Corporation .................... 12,677
150 Sepracor Inc.* ................................. 6,890
400 Teva Pharmaceutical Industries Ltd. ADR# ....... 10,400
------------
83,196
------------
ROAD & RAIL--1.2%
400 Burlington Northern Santa Fe Corporation ....... 16,724
------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--3.2%
650 Broadcom Corporation Cl. A* .................... 17,583
300 Intel Corporation .............................. 6,678
150 Novellus Systems, Inc.* ........................ 3,887
1,900 Skyworks Solutions, Inc.* ...................... 16,891
------------
45,039
------------
SOFTWARE--8.0%
300 Cognos, Inc.* .................................. 11,853
800 Fair Isaac Corporation ......................... 24,160
350 Mercury Interactive Corporation* ............... 15,200
2,000 Microsoft Corporation .......................... 55,980
300 Red Hat, Inc.* ................................. 3,852
------------
111,045
------------
SPECIALTY RETAIL--3.1%
400 Bed Bath & Beyond Inc.* ........................ 16,316
250 Lowe's Companies, Inc. ......................... 14,070
350 Tractor Supply Company* ........................ 12,698
------------
43,084
------------
TEXTILES, APPAREL & LUXURY GOODS--1.2%
200 Coach, Inc.* ................................... 9,326
200 Polo Ralph Lauren Corporation Cl. A ............ 7,386
------------
16,712
------------
-38-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
WIRELESS TELECOMMUNICATION SERVICES--.7%
200 SpectraSite, Inc.* ............................. $ 10,260
------------
Total Common Stocks
(Cost $1,079,290) ............................ 1,200,961
------------
Total Investments
(Cost $1,079,290)(a) ............................... 86.7% 1,200,961
Other assets in Excess of Liabilities ................ 13.3 183,455
----- -----------
Net Assets ........................................... 100.0% $ 1,384,416
===== ===========
- ----------
* Non-income producing security.
# American Depository Receipts.
(a) At October 31, 2004, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $1,080,612, amounted to
$120,349 which consisted of aggregate gross unrealized appreciation of
$144,342 and aggregate gross unrealized depreciation of $23,993.
See Notes to Financial Statements.
(This Page Intentionally Left Blank)
-40-
THE ALGER INSTITUTIONAL FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from
Investment Operations
--------------------------
Net
Realized and Net
Net Asset Net Unrealized Total Distributions Asset
Value, Investment Gain from from Value,
Beginning Income (Loss) on Investment Net Realized End of
of Period (Loss)(iv) Investments Operations Gains Period
--------- ---------- ------------ ---------- ------------- ------
ALGER LARGECAP GROWTH INSTITUTIONAL FUND (I)
CLASS I
Year ended 10/31/04 ............. $10.71 $(0.06) $ 0.21 $ 0.15 $ -- $10.86
Year ended 10/31/03 ............. 8.70 (0.03) 2.04 2.01 -- 10.71
Year ended 10/31/02 ............. 11.63 (0.03) (2.90) (2.93) -- 8.70
Year ended 10/31/01 ............. 17.15 (0.03) (4.50) (4.53) (0.99) 11.63
Year ended 10/31/00 ............. 17.17 (0.03) 1.92 1.89 (1.91) 17.15
CLASS R
Year ended 10/31/04 ............. $10.66 $(0.12) $ 0.22 $ 0.10 $ -- $10.76
From 1/27/03 to 10/31/03(iii)(v) 8.12 (0.06) 2.60 2.54 -- 10.66
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND (II)
CLASS I
Year ended 10/31/04 ............. $15.10 $(0.16) $ 1.13 $ 0.97 $ -- $16.07
Year ended 10/31/03 ............. 10.97 (0.12) 4.25 4.13 -- 15.10
Year ended 10/31/02 ............. 13.35 (0.13) (2.25) (2.38) -- 10.97
Year ended 10/31/01 ............. 23.78 (0.08) (10.35) (10.43) -- 13.35
Year ended 10/31/00 ............. 22.82 (0.06) 2.50 2.44 (1.48) 23.78
CLASS R
Year ended 10/31/04 ............. $15.05 $(0.25) $ 1.13 $ 0.88 $ -- $15.93
From 1/27/03 to 10/31/03(iii)(v) 10.72 (0.14) 4.47 4.33 -- 15.05
ALGER MIDCAP GROWTH INSTITUTIONAL FUND (VI)
CLASS I
Year ended 10/31/04 ............. $14.78 $(0.13) $ 0.73 $ 0.60 $ -- $15.38
Year ended 10/31/03 ............. 10.76 (0.11) 4.13 4.02 -- 14.78
Year ended 10/31/02 ............. 13.34 (0.10) (2.48) (2.58) -- 10.76
Year ended 10/31/01 ............. 17.53 (0.08) (3.44) (3.52) (0.67) 13.34
Year ended 10/31/00 ............. 11.80 (0.04) 6.07 6.03 (0.30) 17.53
CLASS R
Year ended 10/31/04 ............. $14.73 $(0.21) $ 0.73 $ 0.52 $ -- $15.25
From 1/27/03 to 10/31/03(iii)(v) 10.25 (0.14) 4.62 4.48 -- 14.73
- ----------
(i) Prior to February 28, 2004, the Alger LargeCap Growth Institutional Fund
was the Alger LargeCap Growth Institutional Portfolio and prior to March
1, 2002 it was the Alger Growth Retirement Portfolio.
(ii) Prior to February 28, 2004, the Alger SmallCap Growth Institutional Fund
was the Alger Small Cap Institutional Portfolio.
(iii) Commenced operations January 27, 2003.
(iv) Amount was computed based on average shares outstanding during the period.
(v) Ratios have been annualized; total return has not been annualized.
(vi) Prior to February 28, 2004, the Alger MidCap Growth Institutional Fund was
the Alger MidCap Growth Institutional Portfolio.
See Notes to Financial Statements.
-41-
Ratios/Supplemental Data
--------------------------------------------------------
Net Ratio of Ratio of Net
Assets, Expenses Investment
End of to Income
Period Average (Loss) to Portfolio
Total (000's Net Average Turnover
Return omitted) Assets Net Assets Rate
------ -------- -------- ------------ ---------
1.4% $ 88,098 1.13% (0.51)% 191.48%
23.1 91,588 1.14 (0.31) 255.49
(25.2) 108,660 1.14 (0.24) 202.07
(27.5) 97,308 1.09 (0.20) 89.54
10.3 126,573 1.06 (0.16) 101.29
0.9% $ 2,493 1.64% (1.05)% 191.48%
31.3 133 1.62 (0.84) 255.49
6.4% $ 69,788 1.25% (1.03)% 135.80%
37.7 93,300 1.24 (0.99) 139.97
(17.8) 62,780 1.25 (1.01) 138.01
(43.9) 86,790 1.19 (0.46) 191.89
10.1 187,973 1.17 (0.23) 242.45
5.8% $ 284 1.75% (1.55)% 135.80%
40.4 70 1.74 (1.49) 139.97
4.1% $839,273 1.15% (0.87)% 190.93%
37.4 540,742 1.17 (0.89) 217.33
(19.3) 215,727 1.17 (0.81) 284.69
(20.6) 217,153 1.13 (0.51) 130.93
51.3 177,566 1.12 (0.24) 113.14
3.5% $ 12,000 1.65% (1.37)% 190.93%
43.7 790 1.66 (1.40) 217.33
-42-
THE ALGER INSTITUTIONAL FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from
Investment Operations
------------------------------
Net
Realized and Net
Net Asset Net Unrealized Total Distributions Asset
Value, Investment Gain from from Value,
Beginning Income (Loss) on Investment Net Realized End of
of Period (Loss)(iii) Investments Operations Gains Period
--------- ----------- ------------ ---------- ------------- ------
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND (IX)
CLASS I
Year ended 10/31/04 ...................... $11.06 $(0.10) $ 0.09 $ (0.01) $ -- $11.05
Year ended 10/31/03 ...................... 8.97 (0.06) 2.15 2.09 -- 11.06
Year ended 10/31/02 ...................... 11.66 (0.08) (2.61) (2.69) -- 8.97
Year ended 10/31/01 ...................... 18.12 (0.03) (6.37) (6.40) (0.06) 11.66
Year ended 10/31/00 ...................... 16.19 (0.09) 2.24 2.15 (0.22) 18.12
CLASS R
Year ended 10/31/04 ...................... $11.01 $(0.16) $ 0.10 $ (0.06) $ -- $10.95
From 1/27/03 to 10/31/03(ii)(iv) ......... 8.36 (0.08) 2.73 2.65 -- 11.01
ALGER BALANCED INSTITUTIONAL FUND (X)
CLASS I
Year ended 10/31/04 ...................... $ 7.41 $ 0.02 $ 0.07 $ 0.09 $ -- $ 7.50
Year ended 10/31/03 ...................... 6.67 (0.01) 0.75 0.74 -- 7.41
Year ended 10/31/02 ...................... 8.20 (0.39) (1.14) (1.53) -- 6.67
From 12/4/00 to 10/31/01(i)(iv) .......... 10.00 (0.11) (1.69) (1.80) -- 8.20
CLASS R
Year ended 10/31/04 ...................... $ 7.38 $(0.02) $ 0.07 $ 0.05 $ -- $ 7.43
From 1/27/03 to 10/31/03(ii)(iv) ......... 6.43 (0.04) 0.99 0.95 -- 7.38
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND (XI)
CLASS I
Year ended 10/31/04 ...................... $ 5.38 $(0.05) $ 0.07 $ 0.02 $ (0.03) $ 5.37
Year ended 10/31/03 ...................... 4.43 (0.09) 1.04 0.95 -- 5.38
Year ended 10/31/02 ...................... 6.37 (0.77) (1.17) (1.94) -- 4.43
From 12/4/00 to 10/31/01(i)(iv) .......... 10.00 (0.30) (3.33) (3.63) -- 6.37
CLASS R
Year ended 10/31/04 ...................... $ 5.37 $(0.08) $ 0.08 $ -- $ (0.03) $ 5.34
From 1/27/03 to 10/31/03(ii)(iv) ......... 4.13 (0.08) 1.32 1.24 -- 5.37
- ----------
(i) Commenced operations December 4, 2000.
(ii) Commenced operations January 27, 2003.
(iii) Amount was computed based on average shares outstanding during the
period.
(iv) Ratios have been annualized; total return has not been annualized.
(v) Amount has been reduced by 1.01% due to expense reimbursement.
(vi) Amount has been reduced by 1.00% due to expense reimbursement.
(vii) Amount has been reduced by .090% due to expense reimbursement.
(viii) Amount has been reduced by .094% due to expense reimbursement.
(ix) Prior to February 28, 2004 the Alger Capital Appreciation Institutional
Fund was the Alger Capital Appreciation Institutional Portfolio.
(x) Prior to February 28, 2004 the Alger Socially Responsible Growth
Institutional Fund was the Alger Socially Responsible Growth
Institutional Portfolio.
(xi) Prior to February 28, 2004 the Alger Balanced Institutional Fund was the
Alger Balanced Institutional Portfolio.
See Notes to Financial Statements.
-43-
Ratios/Supplemental Data
----------------------------------------------------------------
Net Ratio of Ratio of Net
Assets, Expenses Investment
End of to Income
Period Average (Loss) to Portfolio
Total (000's Net Average Turnover
Return omitted) Assets Net Assets Rate
------ -------- -------- ------------ ---------
(0.1)% $124,889 1.23% (0.87)% 160.00%
23.3 160,569 1.23 (0.59) 187.72
(23.1) 132,010 1.23 (0.73) 180.39
(35.4) 187,187 1.18 (0.21) 104.17
13.1 279,916 1.14 (0.43) 144.16
(0.5)% $ 706 1.73% (1.39)% 160.00%
31.7 66 1.72 (1.01) 187.72
1.3% $ 1,435 1.35%(v) 0.28% 184.21%
11.1 1,409 2.00 (0.15) 149.42
(18.7) 225 6.72 (5.21) 321.89
(18.0) 108 3.13 (1.44) 15.99
0.7% $ 166 1.82%(vi) (0.28)% 184.21%
14.8 58 2.56 (0.74) 149.42
0.3% $ 1,277 1.34%(vii) (1.04)% 166.03%
21.4 1,277 2.26 (1.69) 187.82
(30.5) 46 13.48 (13.17) 205.83
(36.3) 77 5.31 (4.75) 114.33
(0.1)% $ 107 1.83%(viii) (1.53)% 166.03%
30.0 66 2.92 (2.29) 187.82
-44-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2004
LargeCap SmallCap
Growth Growth
Fund Fund
------------- -------------
ASSETS:
Investments in securities, at value (identified cost*)
--see accompanying schedules of investments ....... $ 92,046,242 $ 70,343,552
Cash ................................................. 47,594 27,153
Receivable for investment securities sold ............ 633,751 2,363,343
Receivable for shares of beneficial interest sold .... 122,555 18,724
Dividends and interest receivable .................... 19,066 1,300
Receivable from Investment Manager--Note 3(a) ........ -- --
Prepaid expenses ..................................... 12,760 13,676
------------- -------------
Total Assets ....................................... 92,881,968 72,767,748
------------- -------------
LIABILITIES:
Payable for investment securities purchased .......... 2,093,425 2,572,737
Payable for shares of beneficial interest redeemed ... 88,526 31,101
Accrued investment management fees ................... 57,127 50,452
Accrued transfer agent fees .......................... 3,808 2,968
Accrued expenses ..................................... 47,778 38,555
------------- -------------
Total Liabilities .................................. 2,290,664 2,695,813
------------- -------------
NET ASSETS ........................................... $ 90,591,304 $ 70,071,935
============= =============
Net Assets Consist of:
Paid-in capital .................................... $ 123,461,546 $ 140,569,199
Accumulated net investment loss .................... -- --
Undistributed net realized gain (accumulated loss) . (39,212,505) (75,073,513)
Net unrealized appreciation (depreciation) ......... 6,342,263 4,576,249
------------- -------------
NET ASSETS ........................................... $ 90,591,304 $ 70,071,935
============= =============
Shares of beneficial interest outstanding--Note 6
Class I ........................................... 8,114,060 4,342,776
============= =============
Class R ........................................... 231,673 17,795
============= =============
Net Asset Value Per Share
Class I ........................................... $ 10.86 $ 16.07
============= =============
Class R ........................................... $ 10.76 $ 15.93
============= =============
*Identified cost ..................................... $ 85,703,979 $ 65,767,303
============= =============
See Notes to Financial Statements.
-45-
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
------------- ------------- ------------- -------------
$ 857,786,862 $ 125,446,900 $ 1,470,627 $ 1,200,961
52,686 55,639 108,435 186,753
54,445,170 3,597,296 30,354 35,106
1,760,598 150,658 62 855
138,160 4,174 6,471 43
-- -- 2,152 1,079
109,573 19,828 300 607
------------- ------------- ------------- -------------
914,293,049 129,274,495 1,618,401 1,425,404
------------- ------------- ------------- -------------
61,501,490 3,241,305 9,421 33,825
588,342 283,562 -- --
563,250 90,351 1,012 869
35,203 5,315 67 58
331,840 59,027 7,209 6,236
------------- ------------- ------------- -------------
63,020,125 3,679,560 17,709 40,988
------------- ------------- ------------- -------------
$ 851,272,924 $ 125,594,935 $ 1,600,692 $ 1,384,416
============= ============= ============= =============
$ 789,631,043 $ 237,551,496 $ 1,498,150 $ 1,200,226
-- -- 3,078 --
8,940,240 (123,558,646) 28,036 62,519
52,701,641 11,602,085 71,428 121,671
------------- ------------- ------------- -------------
$ 851,272,924 $ 125,594,935 $ 1,600,692 $ 1,384,416
============= ============= ============= =============
54,585,000 11,302,740 191,381 237,739
============= ============= ============= =============
787,039 64,438 22,274 20,030
============= ============= ============= =============
$ 15.38 $ 11.05 $ 7.50 $ 5.37
============= ============= ============= =============
$ 15.25 $ 10.95 $ 7.43 $ 5.34
============= ============= ============= =============
$ 805,085,221 $ 113,844,815 $ 1,399,199 $ 1,079,290
============= ============= ============= =============
-46-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF OPERATIONS
For the year ended October 31, 2004
LargeCap SmallCap
Growth Growth
Fund Fund
------------ ------------
INVESTMENT INCOME
Income:
Dividends ............................. $ 569,956 $ 156,346
Interest .............................. 15,246 36,789
Security Lending ..................... 8,375 1,944
------------ ------------
Total income ......................... 593,577 195,079
------------ ------------
Expenses:
Management fees--Note 3(a) ............ 722,861 759,625
Shareholder servicing fees ............ 240,953 223,419
Custodian fees ........................ 25,153 33,686
Transfer agent fees--Note 3(d) ........ 48,191 44,684
Professional Fees ..................... 11,870 11,991
Printing Fees ......................... 20,388 20,801
Distribution fees--Note 3(b) .......... 6,675 696
Trustees' fees ........................ 2,919 2,699
Interest expense ...................... 1,872 2,230
Miscellaneous ......................... 13,844 13,685
------------ ------------
1,094,726 1,113,516
Less expense reimbursement--Note 3(a) ... -- --
------------ ------------
Total Expenses ........................ 1,094,726 1,113,516
------------ ------------
NET INVESTMENT INCOME (LOSS) ............ (501,149) (918,437)
------------ ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ...... 8,360,426 19,348,420
Net change in unrealized appreciation
(depreciation) on investments ........ (6,519,566) (13,191,873)
------------ ------------
Net realized and unrealized gain (loss)
on investments ..................... 1,840,860 6,156,547
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................... $ 1,339,711 $ 5,238,110
============ ============
See Notes to Financial Statements.
-47-
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
------------ ------------ ------------ ------------
$ 1,607,559 $ 492,699 $ 5,457 $ 4,110
354,657 31,702 19,272 35
60,057 17,672 -- --
------------ ------------ ------------ ------------
2,022,273 542,073 24,729 4,145
------------ ------------ ------------ ------------
5,780,662 1,284,598 11,466 10,445
1,806,457 377,823 -- --
97,750 27,281 11,875 9,318
361,291 75,565 764 696
42,648 12,889 9,121 8,016
130,640 31,810 1,072 1,103
32,805 2,651 386 457
21,936 4,582 46 42
379 19,815 -- --
99,962 27,547 1,675 1,584
------------ ------------ ------------ ------------
8,374,530 1,864,561 36,405 31,661
-- -- (15,464) (12,530)
------------ ------------ ------------ ------------
8,374,530 1,864,561 20,941 19,131
------------ ------------ ------------ ------------
(6,352,257) (1,322,488) 3,788 (14,986)
------------ ------------ ------------ ------------
38,265,061 10,282,251 45,169 62,678
(10,878,579) (8,886,695) (31,014) (41,602)
------------ ------------ ------------ ------------
27,386,482 1,395,556 14,155 21,076
------------ ------------ ------------ ------------
$ 21,034,225 $ 73,068 $ 17,943 $ 6,090
============ ============ ============ ============
-48-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 2004
LargeCap SmallCap
Growth Growth
Fund Fund
------------- -------------
Net investment income (loss) .................... $ (501,149) $ (918,437)
Net realized gain on investments ................ 8,360,426 19,348,420
Net change in unrealized appreciation
(depreciation) on investments ................ (6,519,566) (13,191,873)
------------- -------------
Net increase in net assets
resulting from operations .................... 1,339,711 5,238,110
------------- -------------
Dividends and distributions to
shareholders from:
Net investment income
Class I ...................................... -- --
Class R ...................................... -- --
Net realized gains
Class I ...................................... -- --
Class R ...................................... -- --
------------- -------------
Total Dividends and distributions to shareholders -- --
------------- -------------
Increase (decrease) from shares
of beneficial interest transactions:
Class I ...................................... (4,892,989) (28,739,464)
Class R ...................................... 2,423,531 203,378
------------- -------------
Net increase (decrease) from shares
of beneficial interest
transactions--Note 6 ......................... (2,469,458) (28,536,086)
------------- -------------
Total increase (decrease) ................... (1,129,747) (23,297,976)
Net Assets:
Beginning of year ............................. 91,721,051 93,369,911
------------- -------------
End of year ................................... $ 90,591,304 $ 70,071,935
============= =============
Undistributed net investment income
(accumulated loss) ........................... $ (501,149) $ (918,437)
============= =============
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the year ended October 31, 2003
LargeCap SmallCap
Growth Growth
Fund Fund
------------- -------------
Net investment income (loss) ................. $ (261,009) $ (710,692)
Net realized gain on investments ............. 1,152,603 6,987,791
Net change in unrealized appreciation
(depreciation) on investments ............. 15,611,686 18,406,668
------------- -------------
Net increase in net assets resulting
from operations ........................... 16,503,280 24,683,767
Increase (decrease) from shares
of beneficial interest transactions:
Class I ................................... (33,554,980) 5,856,223
Class R ................................... 113,202 50,000
------------- -------------
Net increase (decrease) from shares
of beneficial interest transactions--Note 6 (33,441,778) 5,906,223
------------- -------------
Total increase (decrease) ................ (16,938,498) 30,589,990
Net Assets:
Beginning of year .......................... 108,659,549 62,779,921
------------- -------------
End of year ................................ $ 91,721,051 $ 93,369,911
============= =============
Accumulated net investment loss .............. $ -- $ --
============= =============
See Notes to Financial Statements.
-49-
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
------------- ------------- ------------- -------------
$ (6,352,257) $ (1,322,488) $ 3,788 $ (14,986)
38,265,061 10,282,251 45,169 62,678
(10,878,579) (8,886,695) (31,014) (41,602)
------------- ------------- ------------- -------------
21,034,225 73,068 17,943 6,090
------------- ------------- ------------- -------------
-- -- (756) --
-- -- -- --
-- -- -- (6,181)
-- -- -- (397)
------------- ------------- ------------- -------------
-- -- (756) (6,578)
------------- ------------- ------------- -------------
277,510,949 (35,772,587) 11,547 951
11,195,628 659,615 105,281 40,664
------------- ------------- ------------- -------------
288,706,577 (35,112,972) 116,828 41,615
------------- ------------- ------------- -------------
309,740,802 (35,039,904) 134,015 41,127
541,532,122 160,634,839 1,466,677 1,343,289
------------- ------------- ------------- -------------
$ 851,272,924 $ 125,594,935 $ 1,600,692 $ 1,384,416
============= ============= ============= =============
$ (6,352,257) $ (1,322,488) $ 1,274 $ (14,986)
============= ============= ============= =============
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
------------- ------------- ------------- -------------
$ (2,845,362) $ (810,731) $ (2,146) $ (19,332)
56,150,560 6,960,195 38,966 71,228
62,853,285 24,157,024 99,718 164,707
------------- ------------- ------------- -------------
116,158,483 30,306,488 136,538 216,603
208,938,090 (1,731,344) 1,055,634 1,029,125
708,160 50,000 50,000 51,231
------------- ------------- ------------- -------------
209,646,250 (1,681,344) 1,105,634 1,080,356
------------- ------------- ------------- -------------
325,804,733 28,625,144 1,242,172 1,296,959
215,727,389 132,009,695 224,505 46,330
------------- ------------- ------------- -------------
$ 541,532,122 $ 160,634,839 $ 1,466,677 $ 1,343,289
============= ============= ============= =============
$ -- $ -- $ (1,758) $ --
============= ============= ============= =============
-50-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS
NOTE 1--GENERAL:
The Alger Institutional Funds (formerly The Alger Institutional Fund) (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 and currently issues an unlimited number of shares
of beneficial interest in six funds--LargeCap Growth Fund, SmallCap Growth Fund,
MidCap Growth Fund, Capital Appreciation Fund, Balanced Fund and Socially
Responsible Growth Fund (the "Funds"). Prior to February 28, 2004, the LargeCap
Growth Fund was the LargeCap Growth Portfolio, the SmallCap Growth Fund was the
Small Cap Portfolio, the MidCap Growth Fund was the MidCap Growth Portfolio, the
Capital Appreciation Fund was the Capital Appreciation Portfolio, the Balanced
Fund was the Balanced Portfolio and the Socially Responsible Growth Fund was the
Socially Responsible Growth Portfolio. The LargeCap Growth Fund, SmallCap Growth
Fund, MidCap Growth Fund, Capital Appreciation Fund and Socially Responsible
Growth 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.
Each Fund offers Class I and Class R shares. Class R shares were first
offered January 27, 2003. Each class has identical rights to assets and earnings
except that only Class R shares have a plan of distribution and bear the related
expenses.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(A) INVESTMENT VALUATION: Investments of the Funds are valued on each day the
New York Stock Exchange (the "NYSE") is open as of the close of the NYSE
(currently 4:00 p.m. Eastern time). Listed securities for which such information
is regularly reported are valued at the last reported sales price or, in the
absence of reported sales, at the mean between the bid and asked price or, in
the absence of a recent bid or asked price, the equivalent as obtained from one
or more of the major market makers for the securities to be valued. Securities
included within the Nasdaq market shall be valued at the Nasdaq official closing
price (NOCP) on the day of valuation, or if there be no NOCP issued, at the last
sale price on such day. Securities included within the Nasdaq market for which
there is no NOCP and no last sale price on the day of valuation shall be valued
at the mean between the last bid and asked prices on such day.
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.
-51-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Short-term securities 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.
(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) REPURCHASE AGREEMENTS: The Funds enter into repurchase agreements with
approved institutions. The repurchase agreements are collateralized by U.S.
Government securities, which are either received and held in physical possession
by the custodian or received by such custodian in book-entry form through the
Federal Reserve book-entry system. The collateral is valued on a daily basis
during the term of the agreement to ensure that its value equals or exceeds the
agreed-upon repurchase price to be repaid to the Funds. Additional collateral is
obtained when necessary.
(D) LENDING OF FUND SECURITIES: The Funds lend their securities to financial
institutions, provided that the market value of the securities loaned will not
at any time exceed one third of a 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. As of October 31, 2004, there were no securities on loan.
(E) DIVIDENDS TO SHAREHOLDERS: Dividends payable to shareholders are recorded on
the ex-dividend date. With respect to all Funds, dividends from net investment
income and distributions from net realized gains, offset by any loss carry
forward, 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 and capital gains 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
-52-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
financial statements are adjusted for permanent book/tax differences.
Reclassifications result primarily from the differences in tax treatment of net
operating losses and amortization adjustments on 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.
(F) 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.
(G) 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, are allocated among the
Fund's classes based on relative net assets, with the exception of distribution
fees, which are only applicable to Class R shares.
(H) 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.
(I) OTHER: These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 3--INVESTMENT MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT MANAGEMENT FEES: Fees incurred by each Fund, pursuant to the
provisions of its Investment Management Agreement with Fred Alger Management,
Inc. ("Alger Management"), are payable monthly and are computed based on the
value of the average daily net assets of each Fund at the following annual
rates:
LargeCap Growth Fund .................................................. .75%
SmallCap Growth Fund .................................................. .85
MidCap Growth Fund .................................................... .80
Capital Appreciation Fund ............................................. .85
Balanced Fund ......................................................... .75
Socially Responsible Growth Fund ...................................... .75
Alger Management has established an expense cap for the Balanced Fund and
the Socially Responsible Growth Fund effective March 1, 2004. Alger Management
will reimburse these Funds if annualized operating expenses exceed 1.25% and
1.75% for Class I Shares and Class R Shares, respectively,
-53-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of average daily net assets. For the period ended October 31, 2004, Alger
Management reimbursed the Balanced Fund and the Socially Responsible Growth Fund
$15,464 and $12,530, respectively.
(B) DISTRIBUTION FEES: Class R Shares--The Funds have adopted a Distribution
Plan pursuant to which Class R shares of each Fund pays Fred Alger & Company,
Incorporated, the Trust's distributor and an affiliate of Alger Management (the
"Distributor"), a fee at the annual rate of .50% of the respective average daily
net assets of the Class R shares of the designated Funds to compensate the
Distributor for its activities and expenses incurred in distributing the Class R
shares. The fees charged may be more or less than the expenses incurred by the
Distributor.
(C) BROKERAGE COMMISSIONS: During the year ended October 31, 2004, the LargeCap
Growth Fund, the Small Cap Fund, the MidCap Growth Fund, the Capital
Appreciation Fund, the Balanced Fund and the Socially Responsible Growth Fund
paid the Distributor commissions of $319,749, $145,918, $2,125,793, $395,242,
$3,578 and $3,375, respectively, in connection with securities transactions.
(D) TRANSFER AGENT FEES: Alger Shareholder Services, Inc. ("Alger Services"), an
affiliate of Alger Management, serves as transfer agent for the Trust. During
the year ended October 31, 2004, the LargeCap Growth Fund, the Small Cap Fund,
the MidCap Growth Fund, the Capital Appreciation Fund, the Balanced Fund and the
Socially Responsible Growth Fund incurred fees of $48,191, $44,684, $361,291,
$75,565, $764 and $696, respectively, for services provided by Alger Services.
Effective November 22, 2004, State Street Bank and Trust Company replaced Alger
Services as the Funds' transfer agent. Transfer agent services are provided by
State Street Bank and Trust Company's affiliate, Boston Financial Data Services,
Inc.
(E) OTHER TRANSACTIONS WITH AFFILIATES: Certain trustees and officers of the
Trust are directors and officers of Alger Management, the Distributor and Alger
Services. At October 31, 2004, Alger Management and its affiliates owned 7,330
shares, 4,815 shares, 8,077 shares, 7,349 shares, 171,926 shares and 233,848
shares of the LargeCap Growth Fund, the SmallCap Growth Fund, the MidCap Growth
Fund, the Capital Appreciation Fund, the Balanced Fund and the Socially
Responsible Growth Fund, respectively.
NOTE 4--SECURITIES TRANSACTIONS:
The following summarizes the securities transactions by the Funds, other
than short-term securities, for the year ended October 31, 2004:
PURCHASES SALES
--------- -----
LargeCap Growth Fund ....................... $ 182,068,360 $ 185,206,610
SmallCap Growth Fund ....................... 116,670,600 142,007,392
MidCap Growth Fund ......................... 1,635,993,978 1,321,840,835
Capital Appreciation Fund .................. 238,460,266 278,767,562
Balanced Fund .............................. 2,791,750 2,692,086
Socially Responsible Growth Fund ........... 2,181,841 2,324,661
-54-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 5--LINES OF CREDIT:
The Trust has both committed and uncommitted lines of credit with banks.
All borrowings have variable interest rates and are payable on demand. With the
exception of the Capital Appreciation Fund, the Trust borrows under such lines
of credit exclusively for temporary or emergency purposes.
The Capital Appreciation Fund may borrow up to 1/3 of the value of its
assets, as defined, to purchase additional securities. To the extent the Capital
Appreciation Fund borrows under these lines, it must pledge securities with a
total value of at least twice the amount borrowed. For the year ended October
31, 2004, the Fund had borrowings which averaged $1,262,500 at a weighted
average interest rate of 1.57%.
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 six series. Each
series is divided into two separate classes.
-55-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended October 31, 2004, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
------ ------
LargeCap Growth Fund
Class I
Shares sold ........................ 3,182,162 $ 35,531,451
Shares redeemed .................... (3,622,713) (40,424,440)
------------- -------------
Net decrease ....................... (440,551) $ (4,892,989)
============= =============
Class R
Shares sold ........................ 262,650 $ 2,902,113
Shares redeemed .................... (43,434) (478,582)
------------- -------------
Net increase ....................... 219,216 $ 2,423,531
============= =============
SmallCap Growth Fund
Class I
Shares sold ........................ 2,187,748 $ 35,342,244
Shares redeemed .................... (4,022,745) (64,081,708)
------------- -------------
Net decrease ....................... (1,834,997) $ (28,739,464)
============= =============
Class R
Shares sold ........................ 21,118 $ 328,354
Shares redeemed .................... (7,987) (124,976)
------------- -------------
Net increase ....................... 13,131 $ 203,378
============= =============
MidCap Growth Fund
Class I
Shares sold ........................ 34,583,348 $ 531,972,510
Shares redeemed .................... (16,573,777) (254,461,561)
------------- -------------
Net increase ....................... 18,009,571 $ 277,510,949
============= =============
Class R
Shares sold ........................ 936,539 $ 14,301,063
Shares redeemed .................... (203,152) (3,105,435)
------------- -------------
Net increase ....................... 733,387 $ 11,195,628
============= =============
Capital Appreciation Fund
Class I
Shares sold ........................ 5,719,480 $ 65,521,012
Shares redeemed .................... (8,939,452) (101,293,599)
------------- -------------
Net decrease ....................... (3,219,972) $ (35,772,587)
============= =============
Class R
Shares sold ........................ 72,246 $ 816,970
Shares redeemed .................... (13,789) (157,355)
------------- -------------
Net increase ....................... 58,457 $ 659,615
============= =============
-56-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SHARES AMOUNT
------ ------
Balanced Fund
Class I
Shares sold ................................ 12,405 $ 93,926
Dividends reinvested ....................... 100 756
Shares redeemed ............................ (11,277) (83,135)
--------- ---------
Net increase ............................... 1,228 $ 11,547
========= =========
Class R
Shares sold ................................ 14,498 $ 105,281
Shares redeemed ............................ -- --
--------- ---------
Net increase ............................... 14,498 $ 105,281
========= =========
Socially Responsible Growth Fund
Class I
Shares sold ................................ 632 $ 3,477
Dividends reinvested ....................... 1,124 6,014
Shares redeemed ............................ (1,613) (8,540)
--------- ---------
Net increase ............................... 143 $ 951
========= =========
Class R
Shares sold ................................ 9,021 $ 47,809
Dividends reinvested ....................... 74 398
Shares redeemed ............................ (1,400) (7,543)
--------- ---------
Net increase ............................... 7,695 $ 40,664
========= =========
During the year ended October 31, 2003, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
------ ------
LargeCap Growth Fund
Class I
Shares sold ........................ 3,441,255 $ 31,652,971
Shares redeemed .................... (7,375,519) (65,207,951)
------------ ------------
Net decrease ....................... (3,934,264) $(33,554,980)
============ ============
Class R*
Shares sold ........................ 12,585 $ 114,463
Shares redeemed .................... (128) (1,261)
------------ ------------
Net increase ....................... 12,457 $ 113,202
============ ============
SmallCap Growth Fund
Class I
Shares sold ........................ 2,571,061 $ 32,428,232
Shares redeemed .................... (2,118,720) (26,572,009)
------------ ------------
Net increase ....................... 452,341 $ 5,856,223
============ ============
Class R*
Shares sold ........................ 4,664 $ 50,000
============ ============
-57-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SHARES AMOUNT
------ ------
MidCap Growth Fund
Class I
Shares sold ............................ 25,008,417 $ 310,763,082
Shares redeemed ........................ (8,479,728) (101,824,992)
------------- -------------
Net increase ........................... 16,528,689 $ 208,938,090
============= =============
Class R*
Shares sold ............................ 56,993 $ 754,543
Shares redeemed ........................ (3,341) (46,383)
------------- -------------
Net increase ........................... 53,652 $ 708,160
============= =============
Capital Appreciation Fund
Class I
Shares sold ............................ 5,572,926 $ 54,110,955
Shares redeemed ........................ (5,763,698) (55,842,299)
------------- -------------
Net decrease ........................... (190,772) $ (1,731,344)
============= =============
Class R*
Shares sold ............................ 5,981 $ 50,000
============= =============
Balanced Fund
Class I
Shares sold ............................ 167,211 $ 1,126,128
Shares redeemed ........................ (10,703) (70,494)
------------- -------------
Net increase ........................... 156,508 $ 1,055,634
============= =============
Class R*
Shares sold ............................ 7,776 $ 50,000
============= =============
Socially Responsible Growth Fund
Class I
Shares sold ............................ 254,629 $ 1,157,804
Shares redeemed ........................ (27,498) (128,679)
------------- -------------
Net increase ........................... 227,131 $ 1,029,125
============= =============
Class R*
Shares sold ............................ 12,335 $ 51,231
============= =============
- ----------
* Initially offered January 27, 2003.
-58-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 7--DISTRIBUTIONS TO SHAREHOLDERS:
Distributions paid by the Funds during the year ended October 31, 2004,
consisted entirely of ordinary income. There were no distributions paid for the
year ended October 31, 2003.
As of October 31, 2004, the components of distributable earnings on a tax
basis were as follows:
LargeCap Growth Fund
Undistributed ordinary income ......................... --
Undistributed long-term gain .......................... --
Unrealized appreciation ............................... $ 5,718,792
SmallCap Growth Fund
Undistributed ordinary income ......................... --
Undistributed long-term gain .......................... --
Unrealized appreciation ............................... $ 4,361,517
MidCap Growth Fund
Undistributed ordinary income ......................... --
Undistributed long-term gain .......................... $14,299,602
Unrealized appreciation ............................... 47,342,278
Capital Appreciation Fund
Undistributed ordinary income ......................... --
Undistributed long-term gain .......................... --
Unrealized appreciation ............................... $11,465,876
Balanced Fund
Undistributed ordinary income ......................... $ 11,953
Undistributed long-term gain .......................... 34,771
Unrealized appreciation ............................... 55,818
Socially Responsible Growth Fund
Undistributed ordinary income ......................... --
Undistributed long-term gain .......................... $ 63,841
Unrealized appreciation ............................... 120,349
The differences between book basis and tax basis unrealized appreciation
is attributable primarily to the tax deferral of losses on wash sales.
At October 31, 2004, 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.
-59-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
LARGECAP SMALLCAP CAPITAL
GROWTH GROWTH APPRECIATION
EXPIRATION DATE FUND FUND FUND
----------- ----------- ------------
2009 $10,902,646 $62,515,944 $ 76,937,585
2010 22,615,727 12,342,837 46,484,857
2011 5,070,663 -- --
----------- ----------- ------------
$38,589,036 $74,858,781 $123,422,442
=========== =========== ============
NOTE 8--REGULATORY MATTERS AND LEGAL PROCEEDINGS:
Alger Management has been responding to inquiries, document requests
and/or subpoenas from regulatory authorities, including the United States
Securities and Exchange Commission ("SEC"), the Office of the New York State
Attorney General, and the Attorney General of New Jersey, in connection with
their investigation of practices in the mutual fund industry identified as
"market timing" and "late trading." Alger Management has assured the board of
the Trust that if it be determined that improper trading practices in the Trust
detrimentally affected its performance, Alger Management will make appropriate
restitution. At the present time, Alger Management is unable to estimate the
impact, if any, that the outcome of these investigations may have on the Trust's
results of operations or financial condition.
Certain civil actions have developed out of the regulatory investigations.
Several purported class actions and shareholder derivative suits have been filed
against various parties, including, depending on the lawsuit, Alger Management,
certain of the mutual funds managed by Alger Management (the "Alger Mutual
Funds"), and certain current and former Alger Mutual Fund trustees and officers,
alleging wrongful market-timing and late-trading activities. These cases have
been transferred to the U.S. District Court of Maryland by the Judicial Panel on
Multidistrict Litigation for consolidated pre-trial proceedings. On September
29, 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).
The Derivative Complaint, brought on behalf of the Alger Mutual Funds and
Castle Convertible Fund, Inc., a registered closed-end fund managed by Alger
Management, alleges (i) violations, by Alger Management and, depending on the
specific offense alleged, by its immediate parent the Distributor (Fred Alger &
Company, Incorporated) and/or the fund trustee defendants, of Sections 36(a),
36(b), 47, and 48 of the Investment Company Act of 1940 and of Sections 206 and
215 of the Investment Advisers Act of 1940, breach of fiduciary duty, and breach
of contract, (ii) various offenses by other, unrelated, third-party defendants,
and (iii) unjust enrichment by all the named defendants, all by virtue of
-60-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
the alleged wrongful market-timing and late-trading activities. The complaint
seeks, among other things, removal of the trustee defendants and of Alger
Management, certain rescissory relief, disgorgement of management fees and
allegedly unlawful profits, compensatory and punitive monetary damages, and
plaintiffs' fees and expenses (including attorney and expert fees). The Class
Action Complaint names the Alger-related defendants named in the Derivative
Complaint as well as certain defendants not named in the Derivative Complaint,
including certain entities affiliated with Alger Management, certain Alger
Mutual Funds, including the Trust, and certain additional former trustees and a
former officer of the defendant Alger Mutual Funds. It alleges, on the basis of
factual allegations similar to those of the Derivative Complaint with respect to
the Alger defendants, (i) offenses by Alger defendants similar to those alleged
in the Derivative Complaint, (ii) violations, by Alger Management, the
Distributor, their affiliates, the funds named as defendants, and the current
and former fund trustees and officers, of Sections 11, 12(a)(2), and 15 of the
Securities Act of 1933, Sections 10(b) (and Rule 10b-5 thereunder) and 20(a) of
the Securities Exchange Act of 1934, and Section 34(b) of the Investment Company
Act of 1940, (iii) breach of contract by the funds named as defendants, and (iv)
unjust enrichment by all of the named defendants. It seeks relief similar to
that sought in the Derivative Complaint.
Alger Management does not believe that the foregoing lawsuits will
materially affect its ability to perform its management contracts with any of
the funds that it manages, and the management of the Trust believes that it will
not be materially adversely affected by the pending lawsuits.
-61-
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Trustees of
The Alger Institutional Funds:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of The Alger Institutional Funds
(comprising the LargeCap Growth Institutional, SmallCap Growth Institutional,
MidCap Growth Institutional, Capital Appreciation Institutional, Balanced
Institutional, and Socially Responsible Growth Institutional Funds)
(collectively, the "Funds"), as of October 31, 2004, and the related statements
of operations for the year then ended, the statements of changes in net assets
for each of the two years in the period then ended, and the financial highlights
for each of the three years in the period then ended. 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. The financial highlights for the two
years ended October 31, 2001 were audited by other auditors, whose report, dated
November 30, 2001, expressed an unqualified opinion on those financial
highlights.
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.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial highlights. Our
procedures included confirmation of investments owned as of October 31, 2004, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above, and audited by us, present fairly, in all material respects, the
financial position of The Alger Institutional Funds at October 31, 2004, the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, in conformity
with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
December 15, 2004
-62-
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 Fund, The Alger
Funds, The Alger American Fund, Spectra Fund, The 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. Unless
otherwise noted, the address of each person named below is 111 Fifth Avenue, New
York, NY 10003.
NUMBER OF
PORTFOLIOS
IN THE
ALGER FUND
TRUSTEE COMPLEX
AND/OR WHICH ARE
NAME, AGE, POSITION WITH OFFICER OVERSEEN
THE FUND AND ADDRESS PRINCIPAL OCCUPATIONS SINCE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
Fred M. Alger III (69) Chairman of the Board of Alger Associates, Inc. 1993 22
Chairman of the Board ("Associates"), Fred Alger & Company, Incorporated
("Alger Inc."), Alger Management, Alger
Properties, Inc. ("Properties"), Alger Shareholder
Services, Inc. ("Services"), Alger Life Insurance
Agency, Inc. ("Agency"), Fred Alger International
Advisory S.A. ("International"), and five of the six
funds in the Alger Fund Complex; Chairman of the
Boards of Alger SICAV ("SICAV") and Analysts
Resources, Inc. ("ARI").
Dan C. Chung (42) President, Director and Chief Investment Officer 2001 16
President and of Alger Management; President and Director of
Trustee Associates, Alger Inc., Properties, Services, Agency,
International, ARI and Trust; Trustee/Director of four
of the six funds in the Alger Fund Complex.
Hilary M. Alger (43) Trustee/Director of five of the six funds in the 2003 17
Trustee Alger Fund Complex; Director of Development,
Pennsylvania Ballet; formerly Associate Director of
Development, College of Arts and Sciences,
University of Virginia, formerly Director of
Development and Communications, Lenox Hill
Neighborhood House.
NON-INTERESTED TRUSTEES
Stephen E. O'Neil (72) Attorney; Private investor since 1981; Director of 1993 23
Trustee Brown-Forman Corporation; Trustee/Director of
the six funds in the Alger Fund Complex; formerly
of Counsel to the law firm of Kohler & Barnes.
-63-
NUMBER OF
PORTFOLIOS
IN THE
ALGER FUND
TRUSTEE COMPLEX
AND/OR WHICH ARE
NAME, AGE, POSITION WITH OFFICER OVERSEEN
THE FUND AND ADDRESS PRINCIPAL OCCUPATIONS SINCE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------
Charles F. Baird, Jr. (51) Managing Partner of North Castle Partners, a private 2000 16
Trustee equity securities group; Chairman of Equinox, Leiner
Health Products, Elizabeth Arden Day Spas, Grand
Expeditions and EAS; Trustee/Director of four of the
six funds in the Alger Fund Complex. Formerly
Managing Director of AEAInvestors, Inc.
Roger P. Cheever (59) Associate Dean of Development, Harvard University; 2000 16
Trustee Trustee/Director of four of the six funds in the Alger
Fund Complex. Formerly Deputy Director of the
Harvard College Fund.
Lester L. Colbert, Jr. (70) Private investor; Trustee/Director of five of the six 2000 17
Trustee funds in the Alger Fund Complex. Formerly Chairman
of the Board and Chief Executive Officer of Xidex
Corporation.
Nathan E. Saint-Amand, Medical doctor in private practice; Co-Partner Fishers 1993 23
M.D. (66) Island Partners; Member of the Board of the Manhattan
Trustee Institute; Trustee/Director of the six funds in the Alger
Fund Complex. Formerly Co-Chairman Special Projects
Committee of Memorial Sloan Kettering.
Joseph S. Nye, Jr. (66) Trustee/Director of the six funds in the Alger Fund Complex;
Trustee Dean, John F. Kennedy School of Government,Harvard
University, since 1995; Assistant Secretary of Defense
for International Security Affairs 1994-1995; Chairman,
National Intelligence Council, 1993-1994.
OFFICERS
Frederick A. Blum (51) Executive Vice President and Treasurer of Alger Inc., 1996 N/A
Treasurer and Alger Management, Properties, Associates, ARI,
Assistant Secretary Services and Agency since September 2003 and
Senior Vice President prior thereto; Treasurer or
Assistant Treasurer, and Assistant Secretary, of
each of the other five investment companies in
the Alger Fund Complex since the later of 1996
or its inception. Director of SICAV and International
and Chairman of the Board (and prior thereto,
Senior Vice President) and Treasurer of Alger
National Trust Company since 2003.
-64-
NUMBER OF
PORTFOLIOS
IN THE
ALGER FUND
TRUSTEE COMPLEX
AND/OR WHICH ARE
NAME, AGE, POSITION WITH OFFICER OVERSEEN
THE FUND AND ADDRESS PRINCIPAL OCCUPATIONS SINCE BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------
Dorothy G. Sanders (49) Senior Vice President, General Counsel and Secretary 2000 N/A
Secretary of Alger, Inc., General Counsel and Secretary of
Associates, Agency, Properties, Services, ARI and
Alger Management; Secretary of International, and
the six funds in the Alger Fund Complex. Formerly
Senior Vice President, Fleet Financial Group.
Messrs. Alger and Chung are "interested persons"(as defined in the
Investment Company Act) of the Fund because of their affiliations with Alger
Management. Mr. Chung is Mr. Alger's son-in-law. Ms. Alger is a daughter of Fred
M. Alger III. Ms. Alger is an "interested person" because she is an immediate
family member of Mr. Alger. No Trustee is a director of any public company
except as may be indicated under "Principal Occupations." Mr. Nye has given
notice of his intention to resign as Trustee of the Trust. Ms. Sanders resigned
as Secretary effective November 19, 2004.
The Statement of Additional Information contains additional information
about the Funds' Trustees and is available without charge upon request by
calling (800) 992-3863.
-65-
TAX INFORMATION
(UNAUDITED)
In accordance with subchapter Mof the Internal Revenue Code of 1986, as
amended, for the year ended October 31, 2004, 12.48% of the Balanced Fund's
ordinary dividends qualified for the dividends received deduction for
corporations. For the year ended October 31, 2004, 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, $756 represents the maximum amount that may be considered
qualified dividend income of the Balanced Institutional Fund.
Shareholders should not use the above information to prepare their tax
reeturns. Since the Trust's fiscal year is not the calendar year, another
notification will be sent with respect to calendar year 2004. 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 2005. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Trust.
NOTES:
THE ALGER INSTITUTIONAL FUNDS
111 Fifth Avenue
New York, NY 10003
(800) 992-3362
www.alger.com
INVESTMENT MANAGER
Fred Alger Management, Inc.
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 Institutional Funds. It is not authorized for distribution to prospective
investors unless accompanied by an effective Prospectus for the Trust, which
contains information concerning the Trust's investment policies, fees and
expenses as well as other pertinent information.
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) 992-3362 or online on the Funds'
website at http://www.alger.com or on the SEC's website at http://www.sec.gov.
QUARTERLY FUND HOLDINGS
Commencing with the fiscal quarter ending July 31, 2004, the Funds file their
complete schedule of portfolio holdings with the SEC for the first and third
quarter of each fiscal year on Form N-Q. Forms N-Q are available online on the
Funds' website at http://www.alger.com or on the SEC's website at
HTTP://WWW.SEC.GOV. The Funds' Forms N-Q 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) 992-3362.
[LOGO]
SAIFI61404 L1
The Alger Institutional Funds
[LOGO] Boston Financial Data Services, Inc.
P.O. Box 8480
Boston, MA 02266
SAIFI61404 L2
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 not amended its Code of Ethics during the period
covered by the shareholder report presented in Item 1 hereto.
(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, 2004 $35,350
October 31, 2003 $32,000
b) Audit-Related Fees: NONE
c) Tax Fees for tax advice, tax compliance and tax planning:
October 31, 2004 $25,300
October 31, 2003 $15,900
d) ALL Other Fees:
October 31, 2004 $13,500
October 31, 2003 $0
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, 2004 $157,449 and 82,300 Euros
October 31, 2003 $61,400 and 113,827 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. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 10. 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 last fiscal half-year that
materially affected, or are reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11. 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 Institutional Funds
By: /s/Dan C. Chung
Dan C. Chung
President
Date: January 5, 2005
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: January 5, 2005
By: /s/Frederick A. Blum
Frederick A. Blum
Treasurer
Date: January 5, 2005