---------------------------
OMB APPROVAL
---------------------------
OMB Number: 3235-0570
Expires: September 30, 2005
Estimated average burden
hours per response 19.4
---------------------------
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. Hal Liebes
Fred Alger Management, Inc.
111 Fifth Avenue
New York, New York 10003
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-806-8800
Date of fiscal year end: October 31
Date of reporting period: October 31, 2005
ITEM 1. REPORT(S) TO STOCKHOLDERS.
THE ALGER
INSTITUTIONAL FUNDS
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, 2005
[LOGO]
TABLE OF CONTENTS
THE ALGER INSTITUTIONAL FUNDS
Letter to Our Shareholders............................................. 1
Fund Highlights (Unaudited)............................................ 7
Portfolio Summary (Unaudited).......................................... 13
Schedules of Investments............................................... 14
Statements of Assets and Liabilities................................... 40
Statements of Operations............................................... 42
Statements of Changes in Net Assets.................................... 44
Financial Highlights................................................... 48
Notes to Financial Statements.......................................... 52
Report of Independent Registered Public Accounting Firm................ 64
Additional Information (Unaudited)..................................... 65
GO PAPERLESS WITH ALGER ELECTRONIC DELIVERY SERVICE
Alger is pleased to provide you with the ability to access regulatory materials
online. When documents such as prospectuses and annual and semi-annual reports
are available, we'll send you an e-mail notification with a convenient link that
will take you directly to the fund information on our website. To sign up for
this free service, simply enroll at www.icsdelivery.com/alger.
Dear Shareholders, December 12, 2005
THE YEAR IN REVIEW
The past 12 months had more than their share of challenges. Hurricanes
Katrina and Rita devastated the southern coast, leaving hundreds of thousands
jobless and without homes, and prompting investor fears of high energy prices
(which came true) and inflation (which did not). The war in Iraq entered its
third year, and the domestic debate about the war intensified. The job market
showed some improvement but job creation and wage growth remained sub-par
relative to economic growth and corporate profitability. The Fed--concerned
about inflation and the frothiness of the housing market--raised overnight
lending rates eight times to 3.75%, the highest level in 4.5 years. In response,
anxious investors--and Wall Street professionals, in particular--remained
skeptical, adopting a wait-and-see attitude.
Despite such understandable concerns, the U.S. equity markets have emerged
from the bear market of the early 2000s. In fact, since October of 2002, when
the market made a post-bubble low, the major U.S. indices have been very strong.
So has the economy, both domestically and globally. Over the past year, the U.S.
economy showed steady growth of around 3.5%, core inflation excluding energy
remained muted at around 2%, and corporate earnings stayed in double-digits,
much to the surprise of most strategists. Growth companies in particular saw
healthy stock appreciation. Going forward, we see even greater potential for the
better growth managers to outperform their benchmarks and the overall markets.
Challenges for consumers did not necessarily translate into problems for
investors. High energy prices created investment opportunities, and energy
stocks outperformed all other sectors. Additionally, high gas prices prompted
exploration into both alternative sources of energy and innovative solutions to
reducing fuel consumption.
The twin effects of productivity and globalization continue to reshape the
competitive landscape for dynamic companies. Information technologies no longer
attract the same attention, but their effects on companies are more significant
than ever. The result is higher productivity, which translates into higher
profitability for many corporations. In addition, more businesses are operating
on a global scale, and U.S. corporate profits rose dramatically from foreign
sales. Emerging economies in Asia, Latin America and Eastern Europe are all
contributing to global economic growth, and China, both as a consumer of raw
materials and finished goods and as a producer of products for global
consumption, shows no signs of diminishing.
Consumers have also been affected by these trends. In the United States, a
critical mass of consumers adopted high-speed broadband technology. As a result,
the Internet has become more fully integrated into day-to-day life as a
ubiquitous resource for retail, services, entertainment, education,
communication, and business needs. This has created opportunities for dynamic
new business models, whether it is
-2-
Google in the on-line search and advertising space, eBay and auctions, or Apple
iPods and downloadable music files.
In sum, for the 12 months ended October 31, 2005, the equity markets
experienced modest gains with the Dow gaining 6.4%, the Nasdaq up 8.1% and the
S&P 500 up 8.7%. While long-term Treasury yields were markedly inconsistent with
the Fed's overnight interest rate increases, the yield on the U.S. Treasury
10-year note was 4.57% on October 31, 2005, compared to 4.05% a year earlier.
PORTFOLIO MATTERS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
The Alger SmallCap Growth Institutional Fund gained 24.27% compared to the
Russell 2000 Growth Index which returned 10.90%. Our holdings in the information
technology sector represented an average weight of 25.50% and significantly
outperformed the benchmark. Strong contributors included aQuantive, Inc., one of
the industry's most successful families of digital marketing companies; Verifone
Holdings Inc., the global leader in secure electronic payment technologies; and
SiRF Technology Holdings, Inc. a major provider of wireless technologies. During
the fiscal year, we shifted our IT weightings out of computers, peripherals and
software, and solidified our weight in internet services.
Our holdings in the health care sector accounted for an average weight of
20.61%, and also outperformed the benchmark. Psychiatric Solutions, Inc., a
leading provider of behavioral health programs to children and adults, was among
the top performers. Other top holdings included Intuitive Surgical, Inc., a
leader in surgical robotics, and Versicor Inc., a bio-tech company integrating
biology and genomics. We were underweight in the industrial sector at 12.02%,
compared to the benchmark at 14.34%. However, we significantly outperformed.
Leading contributors included BE Aerospace Inc., the world's leading
manufacturer of cabin interior products for commercial aircraft and Joy Global
Inc., one of the world's leading providers of mining equipment.
In the financials sector, the Fund held a slight underweight to the
benchmark, at 9.28%. While our holdings in this sector outperformed, good
returns from GFI Group Inc. and National Financial Partners Corporation were
offset by poor performances from Universal American Financial Corp. and East
West Bancorp Inc. Consumer discretionary holdings were underweight compared to
the benchmark and underperformed.
In a year beset by rising oil costs, our energy holdings, at an average
weight of 7.95%, outperformed the benchmark. Contributors included TODCO, a
leading provider of offshore oil and gas drilling services, and Range Resources
Corp., an independent U.S. oil and gas company.
-3-
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
For the year ended October 31, 2005, the Alger MidCap Growth Institutional
Fund gained 15.97%, compared to the Russell MidCap Growth Index with a return of
15.90%. Our holdings in consumer discretionary, at an average weight of 22.23%,
were underweight but out performed the benchmark. Netflix Inc. and Sirius
Satellite Radio Inc., both entertainment and media distribution channels,
performed well. Toll Brothers Inc., the nation's leading builder of luxury
homes, also contributed to the solid performance. Over the course of the year,
we minimized our exposure to household durables and increased it in internet and
catalog and specialty retail.
In the energy sector, we took advantage of the rise in fuel costs by
increasing our holdings in oil, gas, and consumable fuels. Compared to the
benchmark, the Fund had an overweight at 9.86%, and our holdings significantly
outperformed. Strong performers included National Oilwell Varco Inc. and
Patterson-UTI Energy, Inc., both prominent oil and gas drilling companies, and
EOG Resources, Inc., one of the largest energy resource agencies in the U.S.
Both the materials and industrials sectors were also impacted by rising energy
prices and our holdings in these sectors outperformed the benchmark with
contributors like Peabody Energy Corporation and Joy Global Inc.
Information technology, at an average weight of 22.97%, was underweight
compared to the benchmark and underperformed. While we saw strong performances
from Apple Computer, Inc. and the continued sales dominance of its iPod
technology, some holdings underperformed, including PalmSource and Brocade
Communications Systems.
In the health care sector, the Fund, at 16.96%, was underweight compared
to the benchmark and underperformed. Detractors included Elan Corp, PLC and IVAX
Corporation, a pharmaceutical company. The Fund was also underweight in the
financials sector and underperformed the benchmark.
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
The Alger LargeCap Growth Institutional Fund gained 15.65% for the fiscal
year, solidly outperforming the Russell 1000 Growth Index return of 8.82%.
Information technology represented an average weight of 21.33%. Although the
Fund was underweight compared to the benchmark, it substantially outperformed in
this sector. Strong performers included Apple Computer, Inc. and internet
distribution channels Google Inc. and Yahoo! Inc. During the fiscal year we
shifted our weight in this sector from communications and electronic equipment
to computers, peripherals, and software.
At an average weight of 20.22% our holdings in the health care sector were
underweight in comparison to the benchmark, but still significantly outperformed
it. The Fund's health care holdings were buoyed by strong performances from
Genentech, Inc., a biotech firm, CIGNA Corporation, the leading provider of
medical insurance, and Caremark Rx, Inc., one of the nation's largest
pharmaceutical firms.
-4-
In the consumer discretionary sector, the Fund was overweight at 20.61%
compared to the benchmark, but outperformed with solid returns from Netflix
Inc., Hilton Hotels Corp., and MGM MIRAGE. While the Fund saw strong
performances in consumer discretionary, we reduced our overall holdings in this
sector over the course of the year. In the financials sector, the Fund also
outperformed the benchmark.
Energy stocks accounted for an average weight of 10.04% of the Fund's
holdings. Despite strong returns from oil and gas drilling companies, including
National Oilwell Varco Inc. and Transocean Inc., the Fund underperformed the
benchmark in this sector.
ALGER BALANCED INSTITUTIONAL FUND
The Alger Balanced Institutional Fund gained 10.05% for the fiscal year,
outperforming the Russell 1000 Growth Index return of 8.82%. Information
technology represented an average weight of 20.85% of the Fund's equity
holdings, an underweight compared to the benchmark, yet the Fund substantially
outperformed in this sector. Strong IT performers included Apple Computer, Inc.,
Google Inc. and Yahoo! Inc.
At an average weight of 20.01% our equity holdings in the health care
sector were underweight in comparison to the benchmark, but still significantly
outperformed it. The Fund's health care holdings were buoyed by strong
performances from Genentech, Inc., CIGNA Corporation, and Caremark Rx, Inc.
In the consumer discretionary sector, the Fund was overweight at 20.04%
compared to the benchmark, but outperformed with solid returns from Netflix
Inc., Hilton Hotels Corp. and MGM MIRAGE. While the Fund saw strong performances
in consumer discretionary, we reduced our overall holdings in this sector during
the year. In the financials sector, the Fund substantially outperformed the
benchmark.
Energy stocks accounted for an average weight of 10.18% of the Fund's
equity holdings. The Fund underperformed the benchmark in this sector.
The fixed income portion of the portfolio reflected a very subdued
marketplace this year. As bondholders endured eight 0.25% rate hikes, raising
the overnight target lending rate to 3.75% from 2.00% for the fiscal year ended
October 31, 2005, the Alger Balanced Fund returned 0.35%. The fixed income
portion held 8% Cash, 24% Corporates, 38% U.S. Treasuries, and 30% U.S. Agencies
with an average quality rating of Aa2/AA.
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
The Alger Socially Responsible Growth Institutional Fund gained 19.78% for
the year ended October 31, 2005, substantially outperforming the Russell 3000
Growth Index return of 8.99%.
Information technology represented an average weight of 27.78% of the
Fund's holdings, outperforming the benchmark. Strong performers included Google
Inc., Palm
-5-
Inc., and Verifone Holdings Inc. Throughout the year we shifted our weight in
this sector from software to internet services.
Slightly underweight to the benchmark, at 20.53%, our holdings in the
health care sector also significantly outperformed. The Fund's health care
holdings were buoyed by strong performances from Genentech, Inc., PacifiCare
Health Systems Inc., and Kinetic Concepts Inc., a provider of patient therapy
and equipment.
At an average weight of 7.55%, the Fund was overweight to the benchmark in
the energy sector, but outperformed. Strong returns in this sector included
National Oilwell Varco Inc., Lone Star Technologies, Inc., a provider of
pipeline and tubing for the oil and gas industries, and Talisman Energy Inc. The
materials and industrials sectors also benefited from high energy prices, and
the Fund saw solid returns from Peabody Energy Corporation, Burlington Northern
Santa Fe Corporation, and Uti Worldwide Inc.
In the consumer discretionary sector, the Fund was underweight at 10.56%
compared to the benchmark, but outperformed with holdings including Sirius
Satellite Radio Inc., eBay Inc., and Abercrombie & Fitch Co. The Fund was also
underweight in consumer staples, at 7.27%, but outperformed with solid fiscal
year-end performances by CVS Corporation, Wal-Mart Stores Inc., and Gillette. As
we observed continued strong performances in consumer staples, we increased our
holdings in this sector, and decreased in consumer discretionary.
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
The Alger Capital Appreciation Institutional Fund gained 20.18% for the
fiscal year, substantially outperforming the Russell 3000 Growth Index return of
8.99%. Information technology represented an average weight of 27.32% of the
Fund's holdings, and considerably outperformed the benchmark. Strong IT
performers included Google Inc., Palm Inc., and Verifone Holdings Inc.
Throughout the year we shifted our weight in this sector from software to
internet services.
At an average weight of 23.63% our holdings in the health care sector also
significantly outperformed the benchmark. The Fund's industrial holdings also
performed well, at an average weight of 9.89%. Strong performers included Uti
Worldwide, Inc. and the Burlington Northern Santa Fe Corporation railway.
In the consumer discretionary sector, the Fund was underweight at 11.26%
compared to the benchmark, but outperformed with a strong, early performance by
eBay Inc. and Sirius Satellite Radio Inc. At an average weight of 6.22%, the
Fund was markedly underweight in consumer staples. Poor performances by Wal-Mart
Stores, Inc. and Avon Products, Inc. were offset by strong returns from
contributors like CVS Corporation and Gillette. As we continued to observe
similar strong performances, we increased our holdings in this sector by year
end.
-6-
Energy stocks accounted for an average weight of 6.05%, and rising energy
prices saw strong returns in this sector. The materials sector also exploited
high energy prices. While the Fund held only a minor average weight of 3.03% in
this sector, the Fund markedly outperformed the benchmark, with strong returns
from Peabody Energy Corporation.
LOOKING AHEAD
At Alger, we look for dynamic, innovative companies regardless of whether
the stock markets are dominated by bulls or bears. Our long-term success is not
a product of momentum or fads, but that of a highly-disciplined approach
grounded in fundamental, bottom-up research, and bolstered by the thorough
conviction of our analysts. Looking ahead in 2006, we anticipate a year similar
to 2005, with continued strong corporate earnings, and an equity market that
increasingly recognizes growth and responds in kind.
As we end another fiscal year, we'd like to take the opportunity to thank
you for growing with us, and continuing to entrust us with your investment
needs.
Respectfully submitted,
/s/ Daniel C. Chung
Daniel C. Chung
CHIEF INVESTMENT OFFICER
IMPORTANT PERFORMANCE AND OTHER INFORMATION
The views of the funds' management and the portfolio holdings described in
this report are as of October 31, 2005; these views and portfolio holdings may
have changed subsequent to this date and they do not guarantee the future
performance of the markets or the Fund. Information provided in this report
should not be considered a recommendation to purchase or sell securities.
A WORD ABOUT RISK
For a more detailed discussion of the risks associated with a Fund, please
see the Funds' Prospectus.
PERFORMANCE
PERFORMANCE DATA QUOTED IS HISTORICAL. PAST PERFORMANCE IS NOT AN
INDICATION OR A GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL
VALUE OF AN INVESTMENT WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. CURRENT
PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE QUOTED.
Investors should consider the Funds' investment objective, risks and
charges and expenses carefully before investing. The Funds' prospectus contains
this and other information about the Fund, and may be obtained by asking your
financial advisor, calling (800) 992-5437, visiting our website at
www.alger.com, or contacting the Funds' distributor, Fred Alger & Company,
Incorporated, 30 Montgomery Street, Jersey City, New Jersey 07302. Read the
prospectus carefully before investing.
-7-
- --------------------------------------------------------------------------------
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/05
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Alger Russell
LargeCap 1000
Growth Growth
Institutional I Index
--------------- -------
11/1/95 10000 10000
10/31/96 10819 12205
10/31/97 13939 15922
10/31/98 17482 19845
10/31/99 24824 26641
10/31/00 27374 29126
10/31/01 19839 17495
10/31/02 14841 14063
10/31/03 18270 17130
10/31/04 18526 17711
10/31/05 21426 19273
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, 2005. 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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
---------------------------------------------------
Class I (INCEPTION 11/8/93) 15.65% (4.78%) 7.92% 9.75%
Russell 1000 Growth Index 8.82% 7.93% 6.78% 8.40%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 15.15% -- -- 16.52%
Russell 1000 Growth Index 8.82% -- -- 13.70%
- --------------------------------------------------------------------------------
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.
-8-
- --------------------------------------------------------------------------------
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/05
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Alger Russell
SmallCap 2000
Growth Growth
Institutional I Index
--------------- -------
11/1/95 10000 10000
10/31/96 10920 11332
10/31/97 12994 13732
10/31/98 12763 11555
10/31/99 19493 14940
10/31/00 21453 17354
10/31/01 12044 11886
10/31/02 9897 9323
10/31/03 13623 13661
10/31/04 14498 14417
10/31/05 18016 15989
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, 2005. 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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------------
Class I (INCEPTION 11/8/93) 24.27% (3.43%) 6.06% 10.31%
Russell 2000 Growth Index 10.90% (1.63%) 4.80% 5.63%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 23.92% -- -- 24.71%
Russell 2000 Growth Index 10.90% -- -- 21.58%
- --------------------------------------------------------------------------------
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-
- --------------------------------------------------------------------------------
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/05
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Alger Russell
MidCap Midcap
Growth Growth
Institutional I Index
--------------- -------
11/1/95 10000 10000
10/31/96 10624 11796
10/31/97 13660 14698
10/31/98 15231 15054
10/31/99 21687 20727
10/31/00 32809 28741
10/31/01 26068 16445
10/31/02 21027 13548
10/31/03 28882 18873
10/31/04 30055 20529
10/31/05 34853 23792
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, 2005.
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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
--------------------------------------------------
Class I (INCEPTION 11/8/93) 15.97% 1.22% 13.30% 16.54%
Russell Midcap Growth Index 15.90% (3.71%) 9.05% 9.74%
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 15.37% -- -- 21.59%
Russell Midcap Growth Index 15.90% -- -- 22.41%
- --------------------------------------------------------------------------------
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.
-10-
- --------------------------------------------------------------------------------
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT IN CLASS I SHARES--10 YEARS ENDED 10/31/05
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Alger Russell
Capital 3000
Appreciation Growth
Institutional I Index
--------------- -------
11/1/95 10000 10000
10/31/96 10611 12114
10/31/97 13377 15705
10/31/98 17138 18907
10/31/99 31592 25316
10/31/00 35744 27798
10/31/01 23087 16861
10/31/02 17760 13532
10/31/03 21899 16691
10/31/04 21879 17279
10/31/05 26294 18832
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,
2005. 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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
----------------------------------------------
Class I shares (INCEPTION 11/8/93) 20.18% (5.96%) 10.15% 12.48%
Russell 3000 Growth Index 8.99% (7.49%) 6.53% 8.09%
- --------------------------------------------------------------------------------
Class R shares (INCEPTION 1/27/03) 19.54% -- -- 17.61%
Russell 3000 Growth Index 8.99% -- -- 14.23%
- --------------------------------------------------------------------------------
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.
-11-
- --------------------------------------------------------------------------------
ALGER BALANCED INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION DECEMBER 4, 2000
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Russell Lehman
Alger 1000 Gov't/Credit
Balanced Growth Bond
Institutional I Index Index
--------------- ------- ------------
12/4/00 10000 10000 10000
10/31/01 8200 11139 7067
10/31/02 6670 11749 5680
10/31/03 7410 12475 6919
10/31/04 7504 13172 7154
10/31/05 8258 13280 7785
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, 2005. 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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR SINCE INCEPTION
--------------------------------------
Class I shares (INCEPTION 12/4/00) 10.05% (3.82%)
Russell 1000 Growth Index 8.82% (4.97%)
Lehman Gov't/Credit Bond Index 0.82% 5.95%
- --------------------------------------------------------------------------------
Class R shares (INCEPTION 1/27/03) 9.56% 8.91%
Russell 1000 Growth Index 8.82% 13.70%
Lehman Gov't/Credit Bond Index 0.82% 3.57%
- --------------------------------------------------------------------------------
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 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.
-12-
- --------------------------------------------------------------------------------
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
FUND HIGHLIGHTS THROUGH OCTOBER 31, 2005
(UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$10,000 HYPOTHETICAL INVESTMENT SINCE INCEPTION DECEMBER 4, 2000
- --------------------------------------------------------------------------------
[The following table represents a line chart in the printed piece.]
Alger Russell
Socially 3000
Responsible Growth Growth
Institutional I Index
--------------- -------
12/4/00 10000 10000
10/31/01 6370 7305
10/31/02 4430 5863
10/31/03 5380 7232
10/31/04 5396 7487
10/31/05 6463 8159
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, 2005. 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, 2005
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
1 YEAR SINCE INCEPTION
------------------------------------------
Class I (INCEPTION 12/4/00) 19.78% (8.50%)
Russell 3000 Growth Index 8.99% (4.06%)
- --------------------------------------------------------------------------------
Class R (INCEPTION 1/27/03) 18.93% 17.05%
Russell 3000 Growth Index 8.99% 14.23%
- --------------------------------------------------------------------------------
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.
-13-
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 ....... 15.0% 11.8% 15.3% 10.6% 11.5%
Consumer Staples ............. 2.7 0.8 -- 9.1 8.4
Energy ....................... 14.6 7.6 15.5 8.8 10.7
Financials ................... 9.0 8.4 6.3 3.7 3.7
Health Care .................. 21.7 21.4 20.2 21.8 20.0
Industrials .................. 3.6 13.7 7.7 10.2 6.6
Information Technology ....... 27.4 23.4 23.2 27.0 28.0
Materials .................... 1.0 2.0 2.4 1.5 1.5
Telecommunication Services ... 2.1 2.9 3.8 4.6 5.1
Cash and Net Other Assets .... 2.9 8.0 5.6 2.7 4.5
------ ------ ------ ------ ------
100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ======
BALANCED
INSTITUTIONAL
SECTORS/SECURITY TYPE FUND
- --------------------- -------------
Consumer Discretionary ........................................ 10.8%
Consumer Staples .............................................. 1.8
Energy ........................................................ 9.4
Financials .................................................... 5.9
Health Care ................................................... 14.3
Industrials ................................................... 2.3
Information Technology ........................................ 17.9
Materials ..................................................... 0.6
Telecommunication Services .................................... 1.2
-------
Total Common Stocks ......................................... 64.2%
-------
Corporate Bonds ............................................... 8.3%
Agency Bonds .................................................. 10.1
US Treasury Bonds ............................................. 13.0
-------
Total Bonds ................................................. 31.4%
-------
Cash and Net Other Assets ..................................... 4.4%
-------
100.0%
=======
- ----------
* Based on Net Assets
-14-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--97.1% VALUE
--------- --------
AEROSPACE & DEFENSE--2.2%
17,450 General Dynamics Corporation .................... $ 2,029,435
-----------
BIOTECHNOLOGY--5.6%
23,150 Amgen Inc.* ..................................... 1,753,844
16,900 Genentech, Inc.* ................................ 1,531,140
18,600 Gilead Sciences, Inc.* .......................... 878,850
27,200 MedImmune, Inc.* ................................ 951,456
-----------
5,115,290
-----------
CAPITAL MARKETS--3.2%
15,000 Legg Mason, Inc. ................................ 1,609,650
19,600 Merrill Lynch & Co., Inc. ....................... 1,268,904
-----------
2,878,554
-----------
CHEMICALS--1.0%
32,300 Lyondell Chemical Company ...................... 865,640
-----------
COMMUNICATION EQUIPMENT--7.3%
50,100 Corning Incorporated* ........................... 1,006,509
89,100 Motorola, Inc. .................................. 1,974,456
42,100 QUALCOMM Inc. ................................... 1,673,896
31,250 Research In Motion Limited* ..................... 1,921,563
-----------
6,576,424
-----------
COMMUNICATION TECHNOLOGY--1.0%
36,950 Nextel Partners, Inc. Cl. A* .................... 929,292
-----------
COMPUTERS & PERIPHERALS--4.6%
56,000 Apple Computer, Inc.* ........................... 3,225,040
34,050 Network Appliance, Inc.* ........................ 931,608
-----------
4,156,648
-----------
DIVERSIFIED FINANCIAL SERVICES--2.4%
16,900 Citigroup Inc. .................................. 773,682
28,100 Principal Financial Group (The)* ................ 1,394,603
-----------
2,168,285
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.0%
15,300 ALLTEL Corporation .............................. 946,457
-----------
ELECTRONICS--1.0%
64,000 Nintendo Co., Ltd. ADR# ......................... 890,682
-----------
ENERGY EQUIPMENT & SERVICES--4.4%
33,850 National-Oilwell Varco Inc.* .................... 2,114,609
27,900 Suncor Energy, Inc. ............................. 1,496,277
8,050 Transocean Inc.* ................................ 462,795
-----------
4,073,681
-----------
FINANCIAL INFORMATION SERVICES--1.0%
28,900 Genworth Financial Inc. Cl. A ................... 915,840
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--1.8%
15,450 Medtronic, Inc. ................................. 875,397
15,450 St. Jude Medical, Inc.* ......................... 742,682
-----------
1,618,079
-----------
-15-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS) (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
HEALTH CARE PROVIDERS & SERVICES--8.8%
33,300 Caremark Rx, Inc.* .............................. $ 1,744,920
12,300 CIGNA Corporation ............................... 1,425,201
56,350 Humana Inc.* .................................... 2,501,377
41,450 Medco Health Solutions, Inc.* ................... 2,341,925
-----------
8,013,423
-----------
HOTELS, RESTAURANTS & LEISURE--3.3%
18,550 Carnival Corporation ............................ 921,379
16,100 Starbucks Corporation* .......................... 455,308
27,050 Starwood Hotels & Resorts Worldwide, Inc. ....... 1,580,531
-----------
2,957,218
-----------
HOUSEHOLD PRODUCTS--1.8%
28,356 Procter & Gamble Company ........................ 1,587,651
-----------
INSURANCE--2.4%
21,000 American International Group, Inc. .............. 1,360,800
27,300 Marsh & McLennan Companies, Inc. ................ 795,795
-----------
2,156,595
-----------
INTERNET & CATALOG RETAIL--3.5%
50,500 eBay Inc.* ...................................... 1,999,800
43,450 Netflix Inc.* ................................... 1,147,515
-----------
3,147,315
-----------
INTERNET SOFTWARE & SERVICES--6.7%
8,700 Google Inc. Cl. A* .............................. 3,237,618
76,250 Yahoo! Inc.* .................................... 2,818,963
-----------
6,056,581
-----------
MACHINERY--1.4%
23,450 Caterpillar Inc. ................................ 1,233,236
-----------
MEDIA--5.8%
42,050 Disney (Walt) Company ........................... 1,024,758
63,300 News Corporation Cl. A .......................... 902,025
218,850 Sirius Satellite Radio Inc.* .................... 1,365,624
17,100 Univision Communications Inc. Cl. A* ............ 446,994
53,050 XM Satellite Radio Holdings Inc. Cl. A* ......... 1,529,432
-----------
5,268,833
-----------
METALS & MINING--3.0%
34,200 Peabody Energy Corporation ...................... 2,673,072
-----------
MULTILINE RETAIL--.9%
13,000 Federated Department Stores, Inc. ............... 797,810
-----------
OIL & GAS--7.1%
10,050 Burlington Resources Inc. ....................... 725,811
28,550 Chesapeake Energy Corporation ................... 916,455
25,750 Sasol Ltd. ADR# ................................. 823,485
57,550 Talisman Energy Inc. ............................ 2,548,890
13,800 Valero Energy Corporation ....................... 1,452,312
-----------
6,466,953
-----------
-16-
THE ALGER INSTITUTIONAL FUNDS
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
PERSONAL CARE--1.9%
22,750 Bausch & Lomb Incorporated ...................... $ 1,687,823
-----------
PHARMACEUTICALS--3.6%
76,250 Schering-Plough Corporation ..................... 1,550,925
38,000 Wyeth ........................................... 1,693,280
-----------
3,244,205
-----------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--3.2%
53,500 Altera Corporation* ............................. 890,775
29,250 Intel Corporation ............................... 687,375
28,800 Marvell Technology Group Ltd.* .................. 1,336,608
-----------
2,914,758
-----------
SOFTWARE--4.6%
40,700 Check Point Software Technologies Ltd.* ......... 910,052
53,300 Microsoft Corporation ........................... 1,369,810
79,650 Oracle Corporation* ............................. 1,009,962
38,200 Symantec Corporation* ........................... 911,070
-----------
4,200,894
-----------
SPECIALTY RETAIL--1.6%
35,200 Bed Bath & Beyond Inc.* ......................... 1,426,304
-----------
TOBACCO--1.0%
11,800 Altria Group, Inc. .............................. 885,590
-----------
Total Common Stocks
(Cost $81,807,970) ............................ 87,882,568
-----------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--1.8%
----------
U.S. AGENCY OBLIGATIONS
$1,670,000 Federal National Mortgage Association, 3.62%,
11/1/05 (Cost $1,670,000) ..................... 1,670,000
-----------
Total Investments
(Cost $83,477,970)(a) ............................. 98.9% 89,552,568
Other Assets in Excess of Liabilities ............... 1.1 998,382
----- -----------
Net Assets .......................................... 100.0% $90,550,950
===== ===========
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $84,360,362 amounted to
$5,192,206 which consisted of aggregate gross unrealized appreciation of
$7,720,489 and aggregate gross unrealized depreciation of $2,528,283.
See Notes to Financial Statements.
-17-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--92.0% VALUE
--------- --------
AEROSPACE & DEFENSE--3.3%
47,550 BE Aerospace, Inc.* ............................. $ 862,081
21,750 Esterline Technologies Corporation* ............. 818,887
25,100 SI International Inc.* .......................... 724,637
-----------
2,405,605
-----------
AIRLINES--1.1%
52,250 AirTran Holdings, Inc.* ......................... 781,660
-----------
AUTO COMPONETS--.7%
17,900 LKQ Corporation* ................................ 542,370
-----------
COMMERCIAL BANKS--1.2%
31,650 Boston Private Financial Holdings, Inc. ......... 916,268
-----------
BIOTECHNOLOGY--4.8%
42,050 Alkermes, Inc.* ................................. 684,994
53,950 Encysive Pharmaceuticals Inc.* .................. 566,475
22,800 Keryx Biopharmaceuticals, Inc.* ................. 329,460
30,250 Rigel Pharmaceuticals, Inc.* .................... 679,113
27,300 Theravance, Inc.* ............................... 591,591
30,600 Vertex Pharmaceuticals Incorporated* ............ 696,150
-----------
3,547,783
-----------
CAPITAL MARKETS--3.1%
9,800 Affiliated Managers Group, Inc.* ................ 752,150
15,500 Greenhill & Co., Inc. ........................... 743,225
16,950 National Financial Partners Corporation ......... 766,649
-----------
2,262,024
-----------
CHEMICALS--.9%
21,550 Westlake Chemical Corporation ................... 627,105
-----------
COMMERCIAL SERVICES & SUPPLIES--5.2%
13,450 CoStar Group Inc.* .............................. 644,927
33,650 FTI Consulting, Inc.* ........................... 921,001
29,650 Gevity HR, Inc. ................................. 763,191
35,900 Navigant Consulting, Inc.* ...................... 752,823
24,550 Universal Technical Institute Inc.* ............. 769,151
-----------
3,851,093
-----------
COMMUNICATION EQUIPMENT--1.8%
11,975 F5 Networks, Inc.* .............................. 623,059
59,200 Powerwave Technologies, Inc.* ................... 663,632
-----------
1,286,691
-----------
COMPUTER SERVICES--1.0%
36,300 Open Solutions Inc.* ............................ 777,183
-----------
COMPUTER TECHNOLOGY--.9%
55,250 Secure Computing Corporation* ................... 661,895
-----------
CONSTRUCTION & ENGINEERING--1.2%
22,200 URS Corporation* ................................ 897,546
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS--.5%
12,900 Multi-Fineline Electronix, Inc.* ................ 343,398
-----------
-18-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
ENERGY EQUIPMENT & SERVICES--2.8%
28,400 Hornbeck Offshore Services, Inc.* ............... $ 914,764
13,000 Lone Star Technologies, Inc.* ................... 594,750
30,800 Pioneer Drilling Company* ....................... 527,604
-----------
2,037,118
-----------
FINANCIAL INFORMATION SERVICES--1.1%
17,700 GFI Group Inc.* ................................. 795,792
-----------
FOOD & STAPLES RETAILING--.9%
22,600 Performance Food Group Co.* ..................... 623,534
-----------
FOREIGN SEA FREIGHT--.8%
37,350 Genco Shipping & Trading Ltd.* .................. 613,661
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--6.1%
16,000 Haemonetics Corporation* ........................ 775,200
15,250 Hologic, Inc.* .................................. 845,765
47,700 Illumina, Inc.* ................................. 742,689
6,100 Intuitive Surgical, Inc.* ....................... 541,253
18,250 Sybron Dental Specialties, Inc.* ................ 782,925
21,800 Ventana Medical Systems, Inc.* .................. 835,594
-----------
4,523,426
-----------
HEALTH CARE PROVIDERS & SERVICES--6.6%
16,850 Psychiatric Solutions, Inc.* .................... 921,695
11,850 Sierra Health Services, Inc.* ................... 888,750
24,750 Sunrise Senior Living Inc.* .................... 800,415
38,200 Symbion, Inc.* .................................. 864,466
25,750 VCA Antech, Inc.* ............................... 664,350
23,250 WellCare Health Plans Inc.* ..................... 732,375
-----------
4,872,051
-----------
HOTELS, MOTELS, AND TOURIST COURTS--.4%
14,750 Isle of Capri Casinos, Inc.* .................... 313,880
-----------
HOTELS, RESTAURANTS & LEISURE--1.9%
28,142 Applebee's International, Inc. .................. 616,591
15,500 Red Robin Gourmet Burgers Inc.* ................. 747,565
-----------
1,364,156
-----------
INSURANCE--2.1%
31,400 Ohio Casualty Corporation ....................... 856,592
11,900 Platinum Underwriters Holdings, Inc. ............ 339,031
24,450 Universal American Financial Corp.* ............. 361,860
-----------
1,557,483
-----------
-19-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
INTERNET SOFTWARE & SERVICES--5.6%
41,450 Allscripts Healthcare Solutions, Inc.* .......... $ 663,200
27,400 aQuantive, Inc.* ................................ 593,210
80,400 iVillage Inc.* .................................. 590,940
43,650 Jupitermedia Corporation* ....................... 742,050
7,550 Netease.com Inc. ADR*# .......................... 575,839
30,800 Openwave Systems, Inc.* ......................... 550,396
6,550 TNS Inc.* ....................................... 115,149
13,150 WebEx Communications, Inc.* ..................... 301,267
-----------
4,132,051
-----------
INFORMATION TECHNOLOGY SERVICES--1.6%
17,400 Global Payments Inc. ............................ 745,590
31,900 Kanbay International Inc.* ...................... 465,102
-----------
1,210,692
-----------
LEISURE EQUIPMENT & PRODUCTS--1.2%
24,200 LIFE TIME FITNESS, Inc.* ........................ 898,788
-----------
MACHINERY--3.9%
17,450 Actuant Corporation Cl. A ....................... 849,815
18,500 Bucyrus International, Inc. Cl. A ............... 768,675
18,950 Gardner Denver Inc.* ............................ 920,970
12,550 Watts Water Technologies, Inc. Cl. A ............ 348,388
-----------
2,887,848
-----------
MEDIA--3.1%
115,350 Harris Interactive Inc.* ........................ 481,009
10,440 Media General, Inc. Cl. A ....................... 550,710
87,150 Spanish Broadcasting System, Inc. Cl. A* ........ 531,614
53,650 World Wrestling Entertainment, Inc. Cl. A ....... 684,037
-----------
2,247,370
-----------
MEDICAL TECHNOLOGY--.4%
9,050 Syneron Medical Ltd.* ........................... 325,257
-----------
METALS & MINING--2.0%
27,500 Alpha Natural Resources, Inc.* .................. 653,125
10,000 Cleveland-Cliffs Inc. ........................... 815,400
-----------
1,468,525
-----------
OIL & GAS--4.0%
23,900 Carrizo Oil & Gas, Inc.* ........................ 619,966
23,700 Energy Partners, Ltd. ........................... 601,269
93,350 Grey Wolf, Inc.* ................................ 716,928
21,764 TODCO* .......................................... 973,939
-----------
2,912,102
-----------
PHARMACEUTICALS--1.5%
41,150 Impax Laboratories, Inc.* ....................... 436,190
40,750 Medicines Company* .............................. 698,455
-----------
1,134,645
-----------
-20-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
PHARMACEUTICAL PREPARATIONS--1.0%
19,200 Adams Respiratory Therapeutics, Inc.* ........... $ 718,080
-----------
RETAIL--.9%
23,800 Phillips-Van Heusen Corporation ................. 677,110
-----------
ROAD & RAIL--1.2%
23,700 Landstar Systems, Inc. .......................... 912,924
-----------
SEMICONDUCTOR CAPITAL EQUIPMENT--2.7%
22,550 FormFactor Inc.* ................................ 555,181
30,700 SiRF Technology Holdings, Inc.* ................. 791,753
39,450 Veeco Instruments Inc.* ......................... 626,861
-----------
1,973,795
-----------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--4.2%
22,250 ATMI, Inc.* ..................................... 607,647
30,350 Microsemi Corporation* .......................... 703,209
27,050 Photronics, Inc.* ............................... 486,900
23,500 Tessera Technologies Inc.* ...................... 655,650
21,450 Trident Microsystems, Inc.* ..................... 649,077
-----------
3,102,483
-----------
SOFTWARE--4.0%
17,650 Hyperion Solutions Corporation* ................. 853,554
48,300 Quest Software, Inc.* ........................... 671,853
18,050 Take-Two Interactive Software, Inc.* ............ 372,733
46,150 Verifone Holdings Inc.* ......................... 1,070,680
-----------
2,968,820
-----------
SPECIALTY RETAIL--2.5%
30,650 AnnTaylor Stores Corporation* ................... 743,876
25,200 DSW Inc. Cl. A* ................................. 524,664
11,500 Guitar Center, Inc.* ............................ 599,265
-----------
1,867,805
-----------
THRIFTS & MORTGAGE FINANCE--.9%
46,600 Brookline Bancorp, Inc. ......................... 654,730
-----------
WIRELESS TELECOMMUNICATION SERVICES--2.9%
38,100 InPhonic, Inc.* ................................. 550,926
58,850 SBA Communications Corporation Cl. A* ........... 869,215
80,800 UbiquiTel Inc.* ................................. 698,112
-----------
2,118,253
-----------
Total Common Stocks
(Cost $59,642,904) ............................ 67,813,000
-----------
-21-
THE ALGER INSTITUTIONAL FUNDS
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--7.1% VALUE
--------- --------
U.S. AGENCY OBLIGATIONS
$5,270,000 Federal National Mortgage Association, 3.62%,
11/1/05 (Cost $5,270,000) ..................... $ 5,270,000
-----------
Total Investments
(Cost $64,912,904)(a) .............................. 99.1% 73,083,000
Other Assets in Excess of Liabilities ................ 0.9 628,326
----- -----------
Net Assets ........................................... 100.0% $73,711,326
===== ===========
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $65,011,602 amounted to
$8,071,398 which consisted of aggregate gross unrealized appreciation of
$11,250,909 and aggregate gross unrealized depreciation of $3,179,511.
See Notes to Financial Statements.
-22-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--94.4% VALUE
--------- --------
AEROSPACE & DEFENSE--1.0%
138,275 L-3 Communications Holdings, Inc. ................. $10,760,561
-----------
BIOTECHNOLOGY--3.5%
100,600 Celgene Corporation* .............................. 5,643,660
511,600 Charles River Laboratories International, Inc.* ... 22,387,616
1,347,300 Human Genome Sciences, Inc.* ...................... 11,249,955
-----------
39,281,231
-----------
CAPITAL MARKETS--3.6%
240,080 Affiliated Managers Group, Inc.* .................. 18,426,140
104,700 Legg Mason, Inc. .................................. 11,235,357
231,000 National Financial Partners Corporation ........... 10,448,130
-----------
40,109,627
-----------
CHEMICALS--.9%
392,200 Lyondell Chemical Company ........................ 10,510,960
-----------
COMMERCIAL SERVICES & SUPPLIES--3.6%
522,000 Education Management Corporation* ................. 16,098,480
639,500 Net 1 UEPS Technologies, Inc.* .................... 13,403,920
279,400 West Corporation* ................................. 11,022,330
-----------
40,524,730
-----------
COMMUNICATION EQUIPMENT--1.8%
324,700 Research In Motion Limited* ....................... 19,965,803
-----------
COMMUNICATION TECHNOLOGY--1.7%
740,050 Nextel Partners, Inc. Cl. A* ...................... 18,612,258
-----------
COMPUTERS & PERIPHERALS--5.1%
333,250 Apple Computer, Inc.* ............................. 19,191,867
340,500 M-Systems Flash Disk Pioneers Ltd.* ............... 10,790,445
403,900 Network Appliance, Inc.* .......................... 11,050,704
1,324,400 Western Digital Corporation* ...................... 16,025,240
-----------
57,058,256
-----------
COMPUTER TECHNOLOGY--.6%
164,950 NAVTEQ* ........................................... 6,452,844
-----------
ELECTRIC AND ELECTRONIC EQUIPMENT--1.4%
428,100 Roper Industries, Inc. ............................ 16,139,370
-----------
ELECTRONICS--1.0%
770,300 Nintendo Co., Ltd. ADR# ........................... 10,720,188
-----------
ENERGY EQUIPMENT & SERVICES--6.2%
634,800 BJ Services Company ............................... 22,059,300
120,800 Lone Star Technologies, Inc.* ..................... 5,526,600
531,950 National-Oilwell Varco Inc.* ...................... 33,230,916
397,250 Williams Companies, Inc. (The) .................... 8,858,675
-----------
69,675,491
-----------
ENGINEERING--1.3%
224,000 Jacobs Engineering Group Inc.* .................... 14,280,000
-----------
FINANCIAL INFORMATION SERVICES--1.3%
455,400 Genworth Financial Inc. Cl. A ..................... 14,431,626
-----------
-23-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
FINANCIAL SERVICES--1.5%
1,373,800 Hudson City Bancorp Inc. .......................... $16,265,792
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--1.2%
151,600 Intuitive Surgical, Inc.* ......................... 13,451,468
-----------
HEALTH CARE PROVIDERS & SERVICES--11.2%
192,650 Community Health Systems Inc.* .................... 7,149,241
399,400 DaVita, Inc.* ..................................... 19,642,492
320,300 Health Net Inc.* .................................. 15,002,852
414,100 Humana Inc.* ...................................... 18,381,899
312,000 Medco Health Solutions, Inc.* ..................... 17,628,000
405,800 Psychiatric Solutions, Inc.* ...................... 22,197,260
198,700 Sierra Health Services, Inc.* ..................... 14,902,500
295,800 Sunrise Senior Living Inc.* ....................... 9,566,172
-----------
124,470,416
-----------
HOTELS, RESTAURANTS & LEISURE--1.7%
84,300 Kerzner International Limited* .................... 4,918,905
305,100 Wynn Resorts, Limited* ............................ 14,242,068
-----------
19,160,973
-----------
INTERNET & CATALOG RETAIL--2.9%
1,206,217 Netflix Inc.* .................................... 31,856,191
-----------
INTERNET SOFTWARE & SERVICES--4.3%
718,100 iVillage Inc.* .................................... 5,278,035
195,600 Netease.com Inc. ADR*# ............................ 14,918,412
437,700 SINA Corp.* ....................................... 11,095,695
603,400 VeriSign, Inc.* ................................... 14,258,342
99,500 WebEx Communications, Inc.* ....................... 2,279,545
-----------
47,830,029
-----------
INFORMATION TECHNOLOGY SERVICES--.6%
1,208,600 Sapient Corporation* .............................. 6,272,634
-----------
LEISURE & ENTERTAINMENT--.4%
397,700 CKX, Inc.* ........................................ 4,987,158
-----------
MACHINERY--2.1%
121,125 Joy Global Inc. ................................... 5,556,004
325,400 Terex Corporation* ................................ 17,887,238
-----------
23,443,242
-----------
MACHINERY--OIL WELL EQUIPMENT & SERVICES--1.6%
532,950 Patterson-UTI Energy, Inc. ........................ 18,189,584
-----------
MANUFACTURING--.9%
455,100 American Power Conversion Corp. ................... 9,734,589
-----------
MEDIA--5.2%
163,250 Lamar Advertising Company, Cl. A* ................. 7,284,215
2,438,850 Sirius Satellite Radio Inc.* ...................... 15,218,424
706,800 Univision Communications Inc. Cl. A* .............. 18,475,752
601,450 XM Satellite Radio Holdings Inc. Cl. A* ........... 17,339,803
-----------
58,318,194
-----------
-24-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
MEDICAL TECHNOLOGY--1.4%
426,600 Syneron Medical Ltd.* .......................... $ 15,332,004
--------------
METALS & MINING--4.5%
204,400 Cleveland-Cliffs Inc. .......................... 16,666,776
434,500 Peabody Energy Corporation ..................... 33,960,520
--------------
50,627,296
--------------
OIL & GAS--4.6%
571,100 Chesapeake Energy Corporation .................. 18,332,310
342,200 Frontier Oil Corporation ....................... 12,620,336
462,050 Talisman Energy Inc. ........................... 20,464,194
--------------
51,416,840
--------------
PERSONAL CARE--1.0%
147,900 Bausch & Lomb Incorporated. .................... 10,972,701
--------------
PHARMACEUTICALS--2.0%
395,250 Sepracor Inc.* ................................. 22,232,813
--------------
SEMICONDUCTOR CAPITAL EQUIPMENT--.5%
219,240 SiRF Technology Holdings, Inc.* ................ 5,654,200
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--4.8%
536,900 Altera Corporation* ............................ 8,939,385
1,037,200 Cypress Semiconductor Corporation* ............. 14,105,920
464,100 Photronics, Inc.* .............................. 8,353,800
797,000 Tessera Technologies Inc.* ..................... 22,236,300
--------------
53,635,405
--------------
SOFTWARE--3.3%
480,000 Check Point Software Technologies Ltd.* ........ 10,732,800
655,200 Take-Two Interactive Software, Inc.* ........... 13,529,880
556,800 Verifone Holdings Inc.* ........................ 12,917,760
--------------
37,180,440
--------------
SPECIALTY RETAIL--2.6%
432,900 Bed Bath & Beyond Inc.* ........................ 17,541,108
316,893 Gamestop Corp. Cl. A* .......................... 11,243,364
--------------
28,784,472
--------------
TEXTILES, APPAREL & LUXURY GOODS--1.0%
351,900 Coach, Inc.* ................................... 11,324,142
--------------
WIRELESS TELECOMMUNICATION SERVICES--2.1%
374,700 Alamosa Holdings, Inc.* ........................ 5,545,560
221,200 NII Holdings Inc. Cl. B* ....................... 18,341,903
--------------
23,887,463
--------------
Total Common Stocks
(Cost $982,021,979) .......................... $1,053,550,991
--------------
-25-
THE ALGER INSTITUTIONAL FUNDS
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--3.6% VALUE
--------- --------
U.S. AGENCY OBLIGATIONS
$40,150,000 Federal National Mortgage Association, 3.62%,
11/1/05 (Cost $40,150,000) ................... $ 40,150,000
--------------
Total Investments
(Cost $1,022,171,979)(a) ............................. 98.0% 1,093,700,991
Other Assets in Excess of Liabilities .................. 2.0 21,912,407
----- --------------
Net Assets ............................................. 100.0% $1,115,613,398
===== ==============
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $1,028,858,568, amounted to
$64,842,423 which consisted of aggregate gross unrealized appreciation of
$99,781,655 and aggregate gross unrealized depreciation of $34,939,232.
See Notes to Financial Statements.
-26-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--97.3% VALUE
--------- --------
AEROSPACE & DEFENSE--2.2%
10,800 General Dynamics Corporation ...................... $ 1,256,040
30,400 United Technologies Corporation ................... 1,558,912
-----------
2,814,952
-----------
AIR FREIGHT & LOGISTICS--1.6%
24,300 UTI Worldwide, Inc. ............................... 2,078,622
-----------
BEVERAGES--.5%
11,700 PepsiCo, Inc. ..................................... 691,236
-----------
BIOTECHNOLOGY--4.9%
8,000 Affymetrix Inc.* .................................. 363,440
14,700 Amgen Inc.* ....................................... 1,113,672
11,600 Celgene Corporation* .............................. 650,760
22,100 Genentech, Inc.* .................................. 2,002,260
19,300 Gilead Sciences, Inc.* ............................ 911,925
13,500 MedImmune, Inc.* .................................. 472,230
35,800 Vertex Pharmaceuticals Incorporated* .............. 814,450
-----------
6,328,737
-----------
CAPITAL MARKETS--.9%
14,875 Ameritrade Holding Corporation* ................... 312,821
7,800 Legg Mason, Inc. .................................. 837,018
-----------
1,149,839
-----------
CHEMICALS--.9%
28,400 Lubrizol Corporation .............................. 1,181,156
-----------
COMMUNICATION EQUIPMENT--1.9%
60,200 Motorola, Inc. .................................... 1,334,032
29,250 QUALCOMM Inc. ..................................... 1,162,980
-----------
2,497,012
-----------
COMMUNICATION TECHNOLOGY--2.1%
106,000 Nextel Partners, Inc. Cl. A* ...................... 2,665,900
-----------
COMPUTERS & PERIPHERALS--3.5%
9,900 Apple Computer, Inc.* ............................. 570,141
19,200 Dell Inc.* ........................................ 612,096
91,800 EMC Corporation* .................................. 1,281,528
47,800 Network Appliance, Inc.* .......................... 1,307,808
65,800 Western Digital Corporation* ...................... 796,180
-----------
4,567,753
-----------
COMPUTER TECHNOLOGY--.8%
25,100 NAVTEQ* ........................................... 981,912
-----------
DIVERSIFIED FINANCIAL SERVICES--1.0%
28,000 Citigroup Inc. .................................... 1,281,840
-----------
ELECTRIC AND ELECTRONIC EQUIPMENT--.5%
17,900 Roper Industries, Inc. ............................ 674,830
-----------
-27-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
ENERGY EQUIPMENT & SERVICES--3.3%
60,300 National-Oilwell Varco Inc.* ...................... $ 3,766,941
6,100 Schlumberger Limited .............................. 553,697
-----------
4,320,638
-----------
FINANCIAL INFORMATION SERVICES--1.0%
38,900 Genworth Financial Inc. Cl. A ..................... 1,232,741
-----------
FINANCIAL SERVICES--.3%
32,600 Hudson City Bancorp Inc. .......................... 385,984
-----------
FOOD & STAPLES RETAILING--4.1%
122,300 CVS Corporation ................................... 2,985,343
49,600 Wal-Mart Stores, Inc. ............................. 2,346,576
-----------
5,331,919
-----------
FREIGHT & LOGISTICS--1.1%
15,800 FedEx Corp. ....................................... 1,452,494
-----------
HEALTH CARE--1.0%
17,600 WellPoint Inc.* ................................... 1,314,368
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--2.3%
5,000 Hologic, Inc.* .................................... 277,300
23,600 Medtronic, Inc. ................................... 1,337,176
29,800 St. Jude Medical, Inc.* ........................... 1,432,486
-----------
3,046,962
-----------
HEALTH CARE PROVIDERS & SERVICES--4.7%
13,800 AmerisourceBergen Corporation ..................... 1,052,526
32,100 Caremark Rx, Inc.* ................................ 1,682,040
11,400 CIGNA Corporation ................................. 1,320,918
6,400 McKesson Corporation .............................. 290,752
21,600 PacifiCare Health Systems, Inc.* .................. 1,778,976
-----------
6,125,212
-----------
HOTELS, RESTAURANTS & LEISURE--2.2%
13,400 Carnival Corporation .............................. 665,578
32,900 Fairmont Hotels & Resorts Inc. .................... 1,070,237
39,900 Penn National Gaming, Inc.* ....................... 1,179,045
-----------
2,914,860
-----------
HOUSEHOLD PRODUCTS--2.9%
67,102 Procter & Gamble Company .......................... 3,757,041
-----------
INDUSTRIAL CONGLOMERATES--2.2%
76,900 General Electric Company .......................... 2,607,679
9,100 Tyco International Ltd. ........................... 240,149
-----------
2,847,828
-----------
INSURANCE--.6%
11,600 American International Group, Inc. ................ 751,680
-----------
INTERNET & CATALOG RETAIL--.7%
21,200 eBay Inc.* ........................................ 839,520
-----------
-28-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
INTERNET SOFTWARE & SERVICES--8.9%
17,300 Google Inc. Cl. A* ................................ $ 6,438,022
14,200 Netease.com Inc. ADR#* ............................ 1,083,034
110,100 Yahoo! Inc.* ...................................... 4,070,397
-----------
11,591,453
-----------
LEISURE & ENTERTAINMENT--.5%
25,500 Shanda Interactive Entertainment Ltd. ADR*# ....... 631,635
-----------
MACHINERY--1.6%
22,400 Caterpillar Inc. .................................. 1,178,016
16,900 Terex Corporation* ................................ 928,993
-----------
2,107,009
-----------
MACHINERY--OIL WELL EQUIPMENT & SERVICES--1.4%
54,800 Patterson-UTI Energy, Inc. ........................ 1,870,324
-----------
MARINE CARGO HANDLING--.1%
3,200 American Commercial Lines Inc.* ................... 89,984
-----------
MEDIA--4.8%
52,400 Disney (Walt) Company ............................. 1,276,988
21,700 Pixar* ............................................ 1,100,841
100,600 Time Warner Inc. .................................. 1,793,698
65,500 Viacom Inc. Cl. B ................................. 2,028,535
-----------
6,200,062
-----------
METALS & MINING--4.4%
22,400 Alpha Natural Resources, Inc.* .................... 532,000
56,000 Peabody Energy Corporation ........................ 4,376,960
6,200 Phelps Dodge Corporation .......................... 746,914
-----------
5,655,874
-----------
MULTILINE RETAIL--.7%
19,800 Kohl's Corporation* ............................... 952,974
-----------
OIL & GAS--.3%
14,600 Energy Partners, Ltd.* ............................ 370,402
-----------
PERSONAL CARE--.7%
12,100 Bausch & Lomb Incorporated ........................ 897,699
-----------
PERSONAL PRODUCTS--.5%
24,100 Avon Products, Inc. ............................... 650,459
-----------
PHARMACEUTICALS--8.1%
19,500 AstraZeneca PLC Sponsored ADR# .................... 875,550
73,575 IVAX Corporation* ................................. 2,100,566
41,900 Johnson & Johnson ................................. 2,623,778
27,400 Novartis AG ADR# .................................. 1,474,668
28,400 Sanofi-Aventis ADR# ............................... 1,139,408
65,200 Schering-Plough Corporation ....................... 1,326,168
18,100 Sepracor Inc.* .................................... 1,018,125
-----------
10,558,263
-----------
ROAD & RAIL--.9%
18,600 Burlington Northern Santa Fe Corporation .......... 1,154,316
-----------
-29-
THE ALGER INSTITUTIONAL FUNDS
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--5.1%
54,400 Advanced Micro Devices, Inc.* ................... $ 1,263,168
21,300 Intel Corporation ............................... 500,550
61,100 Marvell Technology Group Ltd.* .................. 2,835,651
28,600 Silicon Storage Technology Inc.* ................ 144,430
58,300 Tessera Technologies Inc.* ...................... 1,626,570
8,400 Trident Microsystems, Inc.* ..................... 254,184
------------
6,624,553
------------
SOFTWARE--6.3%
183,700 Microsoft Corporation ........................... 4,721,090
71,500 Oracle Corporation* ............................. 906,620
110,850 Verifone Holdings Inc.* ......................... 2,571,720
------------
8,199,430
------------
SPECIALTY RETAIL--1.9%
23,400 Abercrombie & Fitch Co. Cl. A ................... 1,216,566
20,350 Lowe's Companies, Inc. .......................... 1,236,670
------------
2,453,236
------------
TEXTILES, APPAREL & LUXURY GOODS--.3%
7,400 Polo Ralph Lauren Corporation Cl. A ............. 364,080
------------
TOBACCO--1.0%
17,600 Altria Group, Inc. .............................. 1,320,880
------------
WIRELESS TELECOMMUNICATION SERVICES--2.6%
50,900 Alamosa Holdings, Inc.* ......................... 753,320
11,900 America Movil S.A. de C.V. ADR Series L# ........ 312,375
45,070 American Tower Corporation Cl. A* ............... 1,074,920
14,300 NII Holdings Inc. CI B* ......................... 1,185,756
------------
3,326,371
------------
Total Common Stocks
(Cost $111,832,397) ........................... 126,254,040
------------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--4.0%
----------
U.S. AGENCY OBLIGATIONS
$5,200,000 Federal National Mortgage Association, 3.62%,
11/1/05 (Cost $5,200,000) ..................... 5,200,000
------------
Total Investments
(Cost $117,032,397) (a) ............................... 101.3% 131,454,040
Liabilities in Excess of Other Assets ................... (1.3) (1,735,065)
----- ------------
Net Assets .............................................. 100.0% $129,718,975
===== ============
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $117,088,254 amounted to
$14,365,786 which consisted of aggregate gross unrealized appreciation of
$16,823,398 and aggregate gross unrealized depreciation of $2,457,612.
See Notes to Financial Statements.
-30-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--64.2% VALUE
--------- --------
AEROSPACE & DEFENSE--1.5%
225 General Dynamics Corporation ........................ $ 26,168
--------
BIOTECHNOLOGY--3.6%
295 Amgen Inc.* ......................................... 22,349
200 Genentech, Inc.* .................................... 18,120
240 Gilead Sciences, Inc.* .............................. 11,340
345 MedImmune, Inc.* .................................... 12,068
--------
63,877
--------
CAPITAL MARKETS--2.1%
190 Legg Mason, Inc. .................................... 20,389
250 Merrill Lynch & Co., Inc. ........................... 16,185
--------
36,574
--------
CHEMICALS--.6%
415 Lyondell Chemical Company ........................... 11,122
--------
COMMUNICATION EQUIPMENT--4.7%
590 Corning Incorporated* ............................... 11,853
1,130 Motorola, Inc. ...................................... 25,041
530 QUALCOMM Inc. ....................................... 21,073
395 Research In Motion Limited* ......................... 24,288
--------
82,255
--------
COMMUNICATION TECHNOLOGY--.6%
425 Nextel Partners, Inc. Cl. A* ........................ 10,689
--------
COMPUTERS & PERIPHERALS--3.1%
705 Apple Computer, Inc.* ............................... 40,601
465 Network Appliance, Inc.* ............................ 12,722
--------
53,323
--------
DIVERSIFIED FINANCIAL SERVICES--1.6%
210 Citigroup Inc. ...................................... 9,613
355 Principal Financial Group (The)* .................... 17,619
--------
27,232
--------
DIVERSIFIED TELECOMMUNICATION SERVICES--.6%
180 ALLTEL Corporation .................................. 11,135
--------
ELECTRONICS--.6%
810 Nintendo Co., Ltd. ADR# ............................. 11,273
--------
ENERGY EQUIPMENT & SERVICES--3.0%
390 National-Oilwell Varco Inc.* ........................ 24,364
345 Suncor Energy, Inc. ................................. 18,503
165 Transocean Inc.* .................................... 9,485
--------
52,352
--------
FINANCIAL INFORMATION SERVICES--.7%
365 Genworth Financial Inc. Cl. A ....................... 11,567
--------
HEALTH CARE EQUIPMENT & SUPPLIES--1.2%
205 Medtronic, Inc. ..................................... 11,615
200 St. Jude Medical, Inc.* ............................. 9,614
--------
21,229
--------
-31-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
HEALTH CARE PROVIDERS & SERVICES--5.8%
430 Caremark Rx, Inc.* .................................. $ 22,531
155 CIGNA Corporation ................................... 17,960
715 Humana Inc.* ........................................ 31,739
525 Medco Health Solutions, Inc.* ....................... 29,663
--------
101,893
--------
HOTELS, RESTAURANTS & LEISURE--2.2%
235 Carnival Corporation ................................ 11,672
205 Starbucks Corporation* .............................. 5,798
345 Starwood Hotels & Resorts Worldwide, Inc. ........... 20,158
--------
37,628
--------
HOUSEHOLD PRODUCTS--1.1%
351 Procter & Gamble Company ............................ 19,653
--------
INSURANCE--1.6%
265 American International Group, Inc. .................. 17,172
345 Marsh & McLennan Companies, Inc. .................... 10,057
--------
27,229
--------
INTERNET & CATALOG RETAIL--2.4%
680 eBay Inc.* .......................................... 26,928
555 Netflix Inc.* ....................................... 14,658
--------
41,586
--------
INTERNET SOFTWARE & SERVICES--4.4%
110 Google Inc. Cl. A* .................................. 40,935
965 Yahoo! Inc.* ........................................ 35,676
--------
76,611
--------
MACHINERY--.8%
275 Caterpillar Inc. .................................... 14,462
--------
MEDIA--4.3%
645 Disney (Walt) Company ............................... 15,718
885 News Corporation Cl. A .............................. 12,611
3,570 Sirius Satellite Radio Inc.* ........................ 22,277
225 Univision Communications Inc. Cl. A* ................ 5,882
655 XM Satellite Radio Holdings Inc. Cl. A* ............. 18,884
--------
75,372
--------
METALS & MINING--1.9%
435 Peabody Energy Corporation .......................... 34,000
--------
MULTILINE RETAIL--.9%
255 Federated Department Stores, Inc. ................... 15,649
--------
OIL & GAS--4.5%
115 Burlington Resources Inc. ........................... 8,305
330 Chesapeake Energy Corporation ....................... 10,594
330 Sasol Ltd. ADR# ..................................... 10,553
675 Talisman Energy Inc. ................................ 29,896
180 Valero Energy Corporation ........................... 18,943
--------
78,291
--------
-32-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
PERSONAL CARE--1.2%
285 Bausch & Lomb Incorporated ......................... $ 21,144
----------
PHARMACEUTICALS--2.4%
970 Schering-Plough Corporation ........................ 19,730
485 Wyeth .............................................. 21,611
----------
41,341
----------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--2.1%
675 Altera Corporation* ................................ 11,238
370 Intel Corporation .................................. 8,695
365 Marvell Technology Group Ltd.* ..................... 16,940
----------
36,873
----------
SOFTWARE--3.0%
515 Check Point Software Technologies Ltd.* ............ 11,516
680 Microsoft Corporation .............................. 17,476
930 Oracle Corporation* ................................ 11,792
485 Symantec Corporation* .............................. 11,567
----------
52,351
----------
SPECIALTY RETAIL--1.0%
440 Bed Bath & Beyond Inc.* ............................ 17,829
----------
TOBACCO--.7%
160 Altria Group, Inc. ................................. 12,008
----------
Total Common Stocks
(Cost $1,044,356) ................................ 1,122,716
----------
PRINCIPAL
AMOUNT CORPORATE BONDS--8.3%
---------
AEROSPACE & DEFENSE--.6%
$ 6,227 Systems 2001 Asset Trust Cl. G, 6.66%, 9/15/13(a) .. 6,596
5,000 United Technologies, 4.875%, 11/1/06 ............... 5,019
----------
11,615
----------
CABLE--.3%
6,000 Cox Communications, Inc., 5.45%, 12/15/14 .......... 5,838
----------
CAPITAL MARKETS--.5%
10,000 Goldman Sachs Group, Inc., 4.75%, 7/15/13 .......... 9,606
----------
COMMERCIAL BANKS--.8%
4,000 Associates Corp. North America, 6.95%, 11/1/18 ..... 4,580
5,000 Key Bank NA, 4.95%, 9/15/15 ........................ 4,843
5,000 Synovus Financial Corp., 5.125%, 6/15/17 ........... 4,871
----------
14,294
----------
-33-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
PRINCIPAL
AMOUNT CORPORATE BONDS (CONTINUED) VALUE
--------- --------
DIVERSIFIED FINANCIAL SERVICES--1.2%
$ 5,000 CIT Group, Inc., 5.20%, 11/3/10 .................... $ 4,999
5,000 JPMorgan Chase & Co., 7.00%, 11/15/09 .............. 5,358
10,000 J.P. Morgan Chase & Co., 4.60%, 1/17/11 ............ 9,755
----------
20,112
----------
DIVERSIFIED TELECOMMUNICATION SERVICES--.8%
15,000 Telecom Italia Capital, 4.95%, 9/30/14 ............. 14,259
----------
ELECTRIC UTILITIES--.6%
10,000 First Energy, 5.65%, 6/15/09(a) .................... 10,135
----------
FINANCE--.5%
5,000 Caterpillar Financial Services Corporation,
3.70%, 8/15/08 ................................... 4,856
5,000 SLM Corp., 4.50%, 7/26/10 .......................... 4,884
----------
9,740
----------
GAS UTILITIES--.3%
5,000 Nisource Inc., 5.25%, 9/15/17 ...................... 4,793
----------
HEALTH CARE PROVIDERS & SERVICES--.6%
5,000 Manor Care, Inc., 6.25%, 5/1/13 .................... 5,158
5,000 Quest Diagnostics Incorporated, 5.125%, 11/1/10(a) . 4,996
----------
10,154
----------
INSURANCE--.6%
5,000 Markel Corp., 7.00%, 5/15/08 ....................... 5,195
5,000 The Chubb Corporation, 4.93%, 11/16/07 ............. 5,001
----------
10,196
----------
MEDIA--.3%
3,000 Comcast Corporation, 6.50%, 1/15/15 ................ 3,149
2,000 Liberty Media Corporation Floating Rate Note,
5.37%, 9/17/06 ................................... 2,016
----------
5,165
----------
METAL FABRICATING--.3%
5,000 Timken Co., 5.75%, 2/15/10 ......................... 5,005
----------
OIL & GAS--.3%
5,000 Canadian Natural Resources, 4.90%, 12/1/14 ......... 4,863
----------
OIL AND GAS EXTRACTION--.3%
5,000 Enterprise Products Partners Series B, 5.60%,
10/15/14 ......................................... 4,915
----------
WIRELESS TELECOMMUNICATION SERVICES--.3%
5,000 Nextel Communications, Inc., 7.375%, 8/1/15 ........ 5,296
----------
Total Corporate Bonds
(Cost $149,081) .................................. 145,986
----------
-34-
THE ALGER INSTITUTIONAL FUNDS
ALGER BALANCED INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
PRINCIPAL
AMOUNT VALUE
--------- --------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--23.1%
Federal National Mortgage Association,
$20,000 4.25%, 7/15/07 ................................... $ 19,882
7,000 3.25%, 8/15/08 ................................... 6,748
5,000 4.25%, 5/15/09 ................................... 4,935
15,000 4.01%, 10/21/09 .................................. 14,616
20,000 4.30%, 1/19/10 ................................... 19,655
10,000 5.00%, 4/19/10 ................................... 9,954
8,177 4.80%, 4/25/10 ................................... 8,124
15,000 4.125%, 4/15/14 .................................. 14,194
5,000 6.625%, 11/15/30 ................................. 6,035
Federal Home Loan Mortgage Corporation,
30,000 4.125%, 11/18/09 ................................. 29,340
15,000 4.30%, 2/3/11 .................................... 14,523
10,000 4.50%, 1/15/14 ................................... 9,748
Federal Home Loan Banks,
9,770 4.75%, 10/25/10 .................................. 9,678
10,000 5.50%, 5/18/15 ................................... 9,819
U.S. Treasury Bonds,
5,000 7.50%, 11/15/16 .................................. 6,205
25,000 5.375%, 2/15/31 .................................. 27,272
U.S. Treasury Notes,
10,000 3.75%, 3/31/07 ................................... 9,915
73,000 3.25%, 8/15/07 ................................... 71,606
20,000 3.00%, 11/15/07 .................................. 19,473
5,000 3.125%, 9/15/08 .................................. 4,829
20,000 3.50%, 11/15/09 .................................. 19,302
27,000 4.375%, 8/15/12 .................................. 26,785
10,000 4.25%, 8/15/13 ................................... 9,810
10,000 4.75%, 5/15/14 ................................... 10,128
22,000 4.00%, 2/15/15 ................................... 21,043
----------
Total U.S. Government & Agency Obligations
(Cost $411,620) .................................. 403,619
Total Investments,
(Cost $1,605,057)(b) ................................. 95.6% 1,672,321
Other Assets in Excess of Liabilities .................. 4.4 76,061
----- ----------
Net Assets ............................................. 100.0% $1,748,382
===== ==========
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
These securities are deemed to be liquid and represent 1.2% of net assets of
the Portfolio.
(b) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $1,608,894 amounted to $63,427
which consisted of aggregate gross unrealized appreciation of $100,399 and
aggregate gross unrealized depreciation of $36,972.
See Notes to Financial Statements.
-35-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS
October 31, 2005
SHARES COMMON STOCKS--95.5% VALUE
--------- --------
AIR FREIGHT & LOGISTICS--1.5%
325 UTI Worldwide, Inc. ................................ $ 27,801
----------
BEVERAGES--.5%
170 PepsiCo, Inc. ...................................... 10,044
----------
BIOTECHNOLOGY--4.8%
115 Affymetrix Inc.* ................................... 5,224
215 Amgen Inc.* ........................................ 16,288
165 Celgene Corporation* ............................... 9,257
320 Genentech, Inc.* ................................... 28,992
280 Gilead Sciences, Inc.* ............................. 13,230
195 MedImmune, Inc.* ................................... 6,821
450 Vertex Pharmaceuticals Incorporated* ............... 10,238
----------
90,050
----------
CAPITAL MARKETS--.9%
225 Ameritrade Holding Corporation* .................... 4,731
115 Legg Mason, Inc. ................................... 12,341
----------
17,072
----------
CHEMICALS--.9%
405 Lubrizol Corporation ............................... 16,844
----------
COMMUNICATION EQUIPMENT--1.9%
860 Motorola, Inc. ..................................... 19,058
420 QUALCOMM Inc. ...................................... 16,699
----------
35,757
----------
COMMUNICATION TECHNOLOGY--2.6%
1,895 Nextel Partners, Inc. Cl. A* ....................... 47,659
----------
COMPUTERS & PERIPHERALS--3.5%
145 Apple Computer, Inc.* .............................. 8,350
260 Dell Inc.* ......................................... 8,289
1,335 EMC Corporation* ................................... 18,637
690 Network Appliance, Inc.* ........................... 18,878
950 Western Digital Corporation* ....................... 11,495
----------
65,649
----------
COMPUTER TECHNOLOGY--.8%
360 NAVTEQ* ............................................ 14,083
----------
DIVERSIFIED FINANCIAL SERVICES--.9%
350 Citigroup Inc. ..................................... 16,023
----------
ELECTRIC AND ELECTRONIC EQUIPMENT--1.4%
705 Roper Industries, Inc. ............................. 26,578
----------
ENERGY EQUIPMENT & SERVICES--4.1%
850 National-Oilwell Varco Inc.* ....................... 53,100
90 Schlumberger Limited ............................... 8,168
250 Transocean Inc.* ................................... 14,373
----------
75,641
----------
FINANCIAL INFORMATION SERVICES--1.0%
560 Genworth Financial Inc. Cl. A ...................... 17,746
----------
-36-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
FINANCIAL SERVICES--.3%
470 Hudson City Bancorp Inc. .......................... $ 5,565
----------
FOOD & STAPLES RETAILING--3.9%
1,600 CVS Corporation ................................... 39,056
710 Wal-Mart Stores, Inc. ............................. 33,590
----------
72,646
----------
FREIGHT & LOGISTICS--.7%
150 FedEx Corp. ....................................... 13,790
----------
HEALTH CARE--1.0%
240 WellPoint Inc.* ................................... 17,923
----------
HEALTH CARE EQUIPMENT & SUPPLIES--3.0%
80 Hologic, Inc.* .................................... 4,436
475 Medtronic, Inc. ................................... 26,914
510 St. Jude Medical, Inc.* ........................... 24,516
----------
55,866
----------
HEALTH CARE PROVIDERS & SERVICES--4.1%
150 AmerisourceBergen Corporation ..................... 11,440
150 CIGNA Corporation ................................. 17,380
150 McKesson Corporation .............................. 6,815
505 PacifiCare Health Systems, Inc.* .................. 41,592
----------
77,227
----------
HOTELS, RESTAURANTS & LEISURE--2.6%
190 Carnival Corporation .............................. 9,437
1,175 Fairmont Hotels & Resorts Inc. .................... 38,223
----------
47,660
----------
HOUSEHOLD PRODUCTS--3.4%
1,144 Procter & Gamble Company .......................... 64,052
----------
INDUSTRIAL CONGLOMERATES--.2%
130 Tyco International Ltd. ........................... 3,431
----------
INSURANCE--.7%
150 American International Group, Inc. ................ 9,720
65 St. Paul Travelers Companies, Inc. (The) .......... 2,927
----------
12,647
----------
INTERNET & CATALOG RETAIL--.7%
305 eBay Inc.* ........................................ 12,078
----------
INTERNET SOFTWARE & SERVICES--9.9%
400 aQuantive, Inc.* .................................. 8,660
250 Google Inc. Cl. A* ................................ 93,035
555 Jupitermedia Corporation* ......................... 9,435
205 Netease.com Inc. ADR*# ............................ 15,635
1,585 Yahoo! Inc.* ...................................... 58,597
----------
185,362
----------
LEISURE & ENTERTAINMENT--.5%
365 Shanda Interactive Entertainment Ltd. ADR*# ....... 9,041
----------
-37-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
MACHINERY--1.8%
380 Caterpillar Inc. ................................... $ 19,984
245 Terex Corporation* ................................. 13,468
----------
33,452
----------
MACHINERY--OIL WELL EQUIPMENT & SERVICES--1.5%
790 Patterson-UTI Energy, Inc. ......................... 26,962
----------
MARINE CARGO HANDLING--.1%
50 American Commercial Lines Inc.* .................... 1,406
----------
MEDIA--5.5%
750 Disney (Walt) Company .............................. 18,278
310 Pixar* ............................................. 15,726
1,800 Time Warner Inc. ................................... 32,094
1,170 Viacom Inc. Cl. B .................................. 36,235
----------
102,333
----------
METALS & MINING--4.4%
325 Alpha Natural Resources, Inc.* ..................... 7,719
805 Peabody Energy Corporation ......................... 62,919
90 Phelps Dodge Corporation ........................... 10,842
----------
81,480
----------
MULTILINE RETAIL--.7%
285 Kohl's Corporation* ................................ 13,717
----------
OIL & GAS--1.3%
210 Energy Partners, Ltd.* ............................. 5,327
450 Talisman Energy Inc. ............................... 19,931
----------
25,258
----------
PERSONAL CARE--1.0%
240 Bausch & Lomb Incorporated ......................... 17,806
----------
PERSONAL PRODUCTS--.5%
345 Avon Products, Inc. ................................ 9,312
----------
PHARMACEUTICALS--6.1%
400 AstraZeneca PLC Sponsored ADR# ..................... 17,960
900 IVAX Corporation* .................................. 25,695
350 Novartis AG ADR# ................................... 18,837
350 Sanofi-Aventis ADR# ................................ 14,042
800 Schering-Plough Corporation ........................ 16,272
370 Sepracor Inc.* ..................................... 20,813
----------
113,619
----------
ROAD & RAIL--.9%
270 Burlington Northern Santa Fe Corporation ........... 16,756
----------
-38-
THE ALGER INSTITUTIONAL FUNDS
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
October 31, 2005
SHARES COMMON STOCKS (CONTINUED) VALUE
--------- --------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT--5.2%
790 Advanced Micro Devices, Inc.* .................... $ 18,344
310 Intel Corporation ................................ 7,285
855 Marvell Technology Group Ltd.* ................... 39,681
410 Silicon Storage Technology Inc.* ................. 2,071
945 Tessera Technologies Inc.* ....................... 26,366
120 Trident Microsystems, Inc.* ...................... 3,631
------------
97,378
------------
SOFTWARE--6.1%
2,575 Microsoft Corporation ............................ 66,178
980 Oracle Corporation* .............................. 12,426
1,480 Verifone Holdings Inc.* .......................... 34,336
------------
112,940
------------
SPECIALTY RETAIL--1.8%
340 Abercrombie & Fitch Co. Cl. A .................... 17,676
250 Lowe's Companies, Inc. .......................... 15,193
------------
32,869
------------
TEXTILES, APPAREL & LUXURY GOODS--.3%
105 Polo Ralph Lauren Corporation Cl. A .............. 5,165
------------
WIRELESS TELECOMMUNICATION SERVICES--2.5%
695 Alamosa Holdings, Inc.* .......................... 10,286
170 America Movil S.A. de C.V. ADR Series L# ......... 4,463
649 American Tower Corporation Cl. A* ................ 15,479
195 NII Holdings Inc. CI. B* ......................... 16,170
------------
46,398
------------
Total Common Stocks
(Cost $1,567,725) .............................. 1,775,086
------------
Total Investments
(Cost $1,567,725)(a) ................................. 95.5% 1,775,086
Other Assets in Excess of Liabilities .................. 4.5 84,572
----- ------------
Net Assets ............................................. 100.0% $ 1,859,658
===== ============
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At October 31, 2005, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $1,568,208 amounted to $206,878
which consisted of aggregate gross unrealized appreciation of $238,873 and
aggregate gross unrealized depreciation of $31,995.
See Notes to Financial Statements.
This Page Intentionally Left Blank
-40-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 2005
LargeCap SmallCap
Growth Growth
Fund Fund
------------ ----------
ASSETS:
Investments in securities, at value
(identified cost*)--see accompanying
schedules of investments ..................... $ 89,552,568 $ 73,083,000
Cash ........................................... 466,155 20,362
Receivable for investment securities sold ...... 1,406,837 751,548
Receivable for shares of beneficial
interest sold ................................ 105,711 853,947
Dividends and interest receivable .............. 22,990 7,240
Receivable from Investment Manager--
Note 3(a) .................................... -- --
Prepaid expenses ............................... 839 2,503
------------ ------------
Total Assets ................................. 91,555,100 74,718,600
------------ ------------
LIABILITIES:
Payable for investment securities purchased .... 783,867 834,349
Payable for shares of beneficial interest
redeemed ..................................... 119,290 89,302
Accrued investment management fees ............. 57,063 51,732
Accrued transfer agent fees .................... 666 1,821
Accrued expenses ............................... 43,264 30,070
------------ ------------
Total Liabilities ............................ 1,004,150 1,007,274
------------ ------------
NET ASSETS ..................................... $ 90,550,950 $ 73,711,326
============ ============
Net Assets Consist of:
Paid-in capital .............................. $109,444,055 $128,171,458
Accumulated net investment income (loss) ..... 274,397 --
Undistributed net realized gain
(accumulated loss) ......................... (25,242,100) (62,630,228)
Net unrealized appreciation (depreciation) ... 6,074,598 8,170,096
------------ ------------
NET ASSETS ..................................... $ 90,550,950 $ 73,711,326
============ ============
Shares of beneficial interest outstanding--
Note 6
Class I ...................................... 6,902,835 3,566,115
============ ============
Class R ...................................... 308,797 125,998
============ ============
Net Asset Value Per Share
Class I ...................................... $ 12.56 $ 19.97
============ ============
Class R ...................................... $ 12.39 $ 19.74
============ ============
*Identified cost ............................... $ 83,477,970 $ 64,912,904
============ ============
See Notes to Financial Statements.
-41-
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
--------- ------------ ---------- ------------
ASSETS:
Investments in securities, at value
(identified cost*)--see accompanying
schedules of investments ..................... $1,093,700,991 $131,454,040 $1,672,321 $1,775,086
Cash ........................................... 3,363,940 37,211 68,063 162,293
Receivable for investment securities sold ...... 90,246,013 1,085,878 14,206 15,886
Receivable for shares of beneficial
interest sold ................................ 3,078,662 403,959 1,226 --
Dividends and interest receivable .............. 15,055 38,657 6,655 544
Receivable from Investment Manager--
Note 3(a) .................................... -- -- 692 1,017
Prepaid expenses ............................... 12,703 1,165 109 429
-------------- ------------ ---------- ----------
Total Assets ................................. 1,190,417,364 133,020,910 1,763,272 1,955,255
-------------- ------------ ---------- ----------
LIABILITIES:
Payable for investment securities purchased .... 72,730,405 3,062,355 9,934 90,298
Payable for shares of beneficial interest
redeemed ..................................... 962,970 99,435 -- --
Accrued investment management fees ............. 744,814 91,350 1,103 1,159
Accrued transfer agent fees .................... 13,083 1,862 121 126
Accrued expenses ............................... 352,694 46,933 3,732 4,014
-------------- ------------ ---------- ----------
Total Liabilities ............................ 74,803,966 3,301,935 14,890 95,597
-------------- ------------ ---------- ----------
NET ASSETS ..................................... $1,115,613,398 $129,718,975 $1,748,382 $1,859,658
============== ============ ========== ==========
Net Assets Consist of:
Paid-in capital .............................. $ 927,521,288 217,858,156 1,541,818 1,449,596
Accumulated net investment income (loss) ..... -- 46,145 7,357 --
Undistributed net realized gain
(accumulated loss) ......................... 116,563,098 (102,606,969) 131,943 202,701
Net unrealized appreciation (depreciation) ... 71,529,012 14,421,643 67,264 207,361
-------------- ------------ ---------- ----------
NET ASSETS ..................................... $1,115,613,398 129,718,975 1,748,382 1,859,658
============== ============ ========== ==========
Shares of beneficial interest outstanding--
Note 6
Class I ...................................... 62,233,472 9,689,139 193,914 244,013
============== ============ ========== ==========
Class R ...................................... 1,276,432 81,916 25,320 58,233
============== ============ ========== ==========
Net Asset Value Per Share
Class I ...................................... 17.57 13.28 7.99 6.17
============== ============ ========== ==========
Class R ...................................... $ 17.34 $ 13.09 $ 7.90 $ 6.09
============== ============ ========== ==========
*Identified cost ............................... $1,022,171,979 $117,032,397 $1,605,057 $1,567,725
============== ============ ========== ==========
-42-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF OPERATIONS
For the year ended October, 2005
LargeCap SmallCap
Growth Growth
Fund Fund
------------ ----------
INVESTMENT INCOME
Income:
Dividends (net of foreign
withholding taxes*) ....................... $ 1,266,644 $ 194,669
Interest .................................... 46,021 97,513
------------ ------------
Total income ............................... 1,312,665 292,182
------------ ------------
Expenses:
Management fees--Note 3(a) .................. 712,120 569,374
Shareholder servicing fees .................. 237,373 167,463
Custodian fees .............................. 26,007 22,749
Transfer agent fees--Note 3(d) .............. 7,027 9,649
Professional fees ........................... 8,030 4,341
Printing fees ............................... 6,490 10,665
Distribution fees--Note 3(b) ................ 16,919 6,485
Trustees' fees .............................. 2,308 1,637
Interest expense ............................ 3,077 3,196
Miscellaneous ............................... 18,917 17,323
------------ ------------
1,038,268 812,882
Less expense reimbursement--Note 3(a) ......... -- --
------------ ------------
Total Expenses .............................. 1,038,268 812,882
------------ ------------
NET INVESTMENT INCOME (LOSS) .................. 274,397 (520,700)
------------ ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ............ 13,970,405 12,443,285
Net change in unrealized appreciation
(depreciation) on investments ............... (267,665) 3,593,847
------------ ------------
Net realized and unrealized gain
on investments ............................ 13,702,740 16,037,132
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................... $ 13,977,137 $ 15,516,432
============ ============
*Foreign withholding taxes .................... $ 332 $ --
============ ============
See Notes to Financial Statements.
-43-
Socially
MidCap Capital Responsible
Growth Appreciation Balanced Growth
Fund Fund Fund Fund
--------- ------------ ---------- ------------
INVESTMENT INCOME
Income:
Dividends (net of foreign
withholding taxes*) ....................... $ 3,172,026 $ 1,443,816 $ 14,424 $ 15,830
Interest .................................... 1,424,468 123,827 21,668 70
------------- ------------ --------- ---------
Total income ............................... 4,596,494 1,567,643 36,092 15,900
------------- ------------ --------- ---------
Expenses:
Management fees--Note 3(a) .................. 8,060,299 1,098,969 12,579 12,369
Shareholder servicing fees .................. 2,518,843 323,226 3,073 3,091
Custodian fees .............................. 101,555 28,291 12,593 11,529
Transfer agent fees--Note 3(d) .............. 79,038 11,341 380 554
Professional fees ........................... 45,980 6,951 2,144 1,709
Printing fees ............................... 117,725 11,265 2,007 2,007
Distribution fees--Note 3(b) ................ 87,076 4,544 947 1,234
Trustees' fees .............................. 24,341 3,146 40 40
Interest expense ............................ 0 607 -- --
Miscellaneous ............................... 146,756 33,158 1,631 1,613
------------- ------------ --------- ---------
11,181,613 1,521,498 35,394 34,146
Less expense reimbursement--Note 3(a) ......... -- -- (13,482) (12,294)
------------- ------------ --------- ---------
Total Expenses .............................. 11,181,613 1,521,498 21,912 21,852
------------- ------------ --------- ---------
NET INVESTMENT INCOME (LOSS) .................. (6,585,119) 46,145 14,180 (5,952)
------------- ------------ --------- ---------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on investments ............ 128,514,342 20,951,677 147,670 209,975
Net change in unrealized appreciation
(depreciation) on investments ............... 18,827,371 2,819,558 (4,164) 85,690
------------- ------------ --------- ---------
Net realized and unrealized gain
on investments ............................ 147,341,713 23,771,235 143,506 295,665
------------- ------------ --------- ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................... $ 140,756,594 $ 23,817,380 $ 157,686 $ 289,713
============= ============ ========= =========
*Foreign withholding taxes .................... $ 4,952 $ 3,710 $ 4 $ 63
============= ============ ========= =========
-44-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
LargeCap
Growth
Fund
---------------------------------
For the For the
Year Ended Year Ended
October 31, October 31,
2005 2004
------------- -------------
Net investment income (loss) ................ $ 274,397 $ (501,149)
Net realized gain on investments ............ 13,970,405 8,360,426
Net change in unrealized appreciation
(depreciation) on investments ............. (267,665) (6,519,566)
------------- -------------
Net increase in net assets
resulting from operations ................. 13,977,137 1,339,711
------------- -------------
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 ................................... (14,888,992) (4,892,989)
Class R ................................... 871,501 2,423,531
------------- -------------
Net increase (decrease) from shares
of beneficial interest
transactions--Note 6 ...................... (14,017,491) (2,469,458)
------------- -------------
Total increase (decrease) ............... (40,354) (1,129,747)
Net Assets:
Beginning of year ......................... 90,591,304 91,721,051
------------- -------------
End of year ............................... $ 90,550,950 $ 90,591,304
============= =============
Undistributed net investment income
(accumulated loss) ........................ $ 274,397 $ (501,149)
============= =============
See Notes to Financial Statements.
-45-
SmallCap MidCap
Growth Growth
Fund Fund
------------------------------------ -------------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
2005 2004 2005 2004
------------- ------------- --------------- -------------
Net investment income (loss) .................. $ (520,700) $ (918,437) $ (6,585,119) $ (6,352,257)
Net realized gain on investments .............. 12,443,285 19,348,420 128,514,342 38,265,061
Net change in unrealized appreciation
(depreciation) on investments ............... 3,593,847 (13,191,873) 18,827,371 (10,878,579)
------------- ------------- --------------- -------------
Net increase in net assets
resulting from operations ................... 15,516,432 5,238,110 140,756,594 21,034,225
------------- ------------- --------------- -------------
Dividends and distributions to
shareholders from:
Net investment income
Class I ..................................... -- -- -- --
Class R ..................................... -- -- -- --
Net realized gains
Class I ..................................... -- -- (14,080,915) --
Class R ..................................... -- -- (225,450) --
------------- ------------- --------------- -------------
Total dividends and distributions to
shareholders ................................ -- -- (14,306,365) --
------------- ------------- --------------- -------------
Increase (decrease) from shares
of beneficial interest transactions:
Class I ..................................... (13,839,314) (28,739,464) 129,721,799 277,510,949
Class R ..................................... 1,962,273 203,378 8,168,446 11,195,628
------------- ------------- --------------- -------------
Net increase (decrease) from shares
of beneficial interest
transactions--Note 6 ........................ (11,877,041) (28,536,086) 137,890,245 288,706,577
------------- ------------- --------------- -------------
Total increase (decrease) ................. 3,639,391 (23,297,976) 264,340,474 309,740,802
Net Assets:
Beginning of year ........................... 70,071,935 93,369,911 851,272,924 541,532,122
------------- ------------- --------------- -------------
End of year ................................. $ 73,711,326 $ 70,071,935 $ 1,115,613,398 $ 851,272,924
============= ============= =============== =============
Undistributed net investment income
(accumulated loss) .......................... $ -- $ (918,437) $ -- $ (6,352,257)
============= ============= =============== =============
-46-
THE ALGER INSTITUTIONAL FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
Capital
Appreciation
Fund
--------------------------------
For the For the
Year Ended Year Ended
October 31, October 31,
2005 2004
------------ ------------
Net investment income (loss) ................ $ 46,145 $ (1,322,488)
Net realized gain on investments ............ 20,951,677 10,282,251
Net change in unrealized appreciation
(depreciation) on investments ............. 2,819,558 (8,886,695)
------------ ------------
Net increase in net assets
resulting from operations ................. 23,817,380 73,068
------------ ------------
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 ................................... (19,901,503) (35,772,587)
Class R ................................... 208,163 659,615
------------ ------------
Net increase (decrease) from shares
of beneficial interest
transactions--Note 6 ...................... (19,693,340) (35,112,972)
------------ ------------
Total increase (decrease) ............... 4,124,040 (35,039,904)
Net Assets:
Beginning of year ......................... 125,594,935 160,634,839
------------ ------------
End of year ............................... $129,718,975 $125,594,935
============ ============
Undistributed net investment income
(accumulated loss) ........................ $ 46,145 $ (1,322,488)
============= =============
See Notes to Financial Statements.
-47-
Socially
Responsible
Balanced Growth
Fund Fund
--------------------------------- --------------------------------
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
October 31, October 31, October 31, October 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net investment income (loss) ................ $ 14,180 $ 3,788 $ (5,952) $ (14,986)
Net realized gain on investments ............ 147,670 45,169 209,975 62,678
Net change in unrealized appreciation
(depreciation) on investments ............. (4,164) (31,014) 85,690 (41,602)
---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations ................. 157,686 17,943 289,713 6,090
---------- ---------- ---------- ----------
Dividends and distributions to
shareholders from:
Net investment income
Class I ................................... (12,752) (756) -- --
Class R ................................... (1,011) -- -- --
Net realized gains
Class I ................................... (35,778) -- (56,378) (6,181)
Class R ................................... (4,123) -- (7,512) (397)
---------- ---------- ---------- ----------
Total dividends and distributions to
shareholders .............................. (53,664) (756) (63,890) (6,578)
---------- ---------- ---------- ----------
Increase (decrease) from shares of
beneficial interest transactions:
Class I ................................... 20,615 11,547 34,899 951
Class R ................................... 23,053 105,281 214,520 40,664
---------- ---------- ---------- ----------
Net increase (decrease) from shares
of beneficial interest
transactions--Note 6 ...................... 43,668 116,828 249,419 41,615
---------- ---------- ---------- ----------
Total increase (decrease) ............... 147,690 134,015 475,242 41,127
Net Assets:
Beginning of year ......................... 1,600,692 1,466,677 1,384,416 1,343,289
---------- ---------- ---------- ----------
End of year ............................... $1,748,382 $1,600,692 $1,859,658 $1,384,416
========== ========== ========== ==========
Undistributed net investment income
(accumulated loss) ........................ $ 7,357 $ 1,274 $ -- $ (14,986)
========== ========== ========== ==========
-48-
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 LARGECAP GROWTH INSTITUTIONAL FUND (i)
CLASS I
Year ended 10/31/05 ................... $10.86 $ 0.04 $ 1.66 $ 1.70 $ -- $12.56
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
CLASS R
Year ended 10/31/05 ................... $10.76 $(0.03) $ 1.66 $ 1.63 $ -- $12.39
Year ended 10/31/04 ................... 10.66 (0.12) 0.22 0.10 -- 10.76
From 1/27/03 to 10/31/03(ii)(iv) ...... 8.12 (0.06) 2.60 2.54 -- 10.66
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 ................... $16.07 $(0.14) $ 4.04 $ 3.90 $ -- $19.97
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
CLASS R
Year ended 10/31/05 ................... $15.93 $(0.22) $ 4.03 $ 3.81 $ -- $19.74
Year ended 10/31/04 ................... 15.05 (0.25) 1.13 0.88 -- 15.93
From 1/27/03 to 10/31/03(ii)(iv) ...... 10.72 (0.14) 4.47 4.33 -- 15.05
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 ................... $15.38 $(0.11) $ 2.55 $ 2.44 $(0.25) $17.57
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
CLASS R
Year ended 10/31/05 ................... $15.25 $(0.19) $ 2.53 $ 2.34 $(0.25) $17.34
Year ended 10/31/04 ................... 14.73 (0.21) 0.73 0.52 -- 15.25
From 1/27/03 to 10/31/03(ii)(iv) ...... 10.25 (0.14) 4.62 4.48 -- 14.73
- ----------
(i) Prior to March 1, 2002, the Alger LargeCap Growth Institutional Fund was
the Alger Growth Retirement Portfolio.
(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.
See Notes to Financial Statements.
-49-
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
------ -------- -------- ------------ ---------
ALGER LARGECAP GROWTH INSTITUTIONAL FUND (i)
CLASS I
Year ended 10/31/05 ................... 15.7% $ 86,725 1.08% 0.31% 249.06%
Year ended 10/31/04 ................... 1.4 88,098 1.13 (0.51) 191.48
Year ended 10/31/03 ................... 23.1 91,588 1.14 (0.31) 255.49
Year ended 10/31/02 ................... (25.2) 108,660 1.14 (0.24) 202.07
Year ended 10/31/01 ................... (27.5) 97,308 1.09 (0.20) 89.54
CLASS R
Year ended 10/31/05 ................... 15.2% $ 3,826 1.57% (0.29)% 249.06%
Year ended 10/31/04 ................... 0.9 2,493 1.64 (1.05) 191.48
From 1/27/03 to 10/31/03(ii)(iv) ...... 31.3 133 1.62 (0.84) 255.49
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 ................... 24.3% $ 71,224 1.20% (0.77)% 116.16%
Year ended 10/31/04 ................... 6.4 69,788 1.25 (1.03) 135.80
Year ended 10/31/03 ................... 37.7 93,300 1.24 (0.99) 139.97
Year ended 10/31/02 ................... (17.8) 62,780 1.25 (1.01) 138.01
Year ended 10/31/01 ................... (43.9) 86,790 1.19 (0.46) 191.89
CLASS R
Year ended 10/31/05 ................... 23.9% $ 2,487 1.68% (1.20)% 116.16%
Year ended 10/31/04 ................... 5.8 284 1.75 (1.55) 135.80
From 1/27/03 to 10/31/03(ii)(iv) ...... 40.4 70 1.74 (1.49) 139.97
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 ................... 16.0% $1,093,486 1.10% (0.64)% 237.74%
Year ended 10/31/04 ................... 4.1 839,273 1.15 (0.87) 190.93
Year ended 10/31/03 ................... 37.4 540,742 1.17 (0.89) 217.33
Year ended 10/31/02 ................... (19.3) 215,727 1.17 (0.81) 284.69
Year ended 10/31/01 ................... (20.6) 217,153 1.13 (0.51) 130.93
CLASS R
Year ended 10/31/05 ................... 15.4% $ 22,127 1.60% (1.15)% 237.74%
Year ended 10/31/04 ................... 3.5 12,000 1.65 (1.37) 190.93
From 1/27/03 to 10/31/03(ii)(iv) ...... 43.7 790 1.66 (1.40) 217.33
-50-
THE ALGER INSTITUTIONAL FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
Income from
Investment Operations
------------------------
Net
Realized and
Net Asset Net Unrealized Total Dividends Distributions
Value, Investment Gain from from Net from
Beginning Income (Loss) on Investment Investment Net Realized
of Period (Loss)(iii) Investments Operations Income Gains
--------- ----------- ----------- ---------- ---------- ------------
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $11.05 $ -- $2.23 $2.23 $ -- $ --
Year ended 10/31/04 .................. 11.06 (0.10) 0.09 (0.01) -- --
Year ended 10/31/03 .................. 8.97 (0.06) 2.15 2.09 -- --
Year ended 10/31/02 .................. 11.66 (0.08) (2.61) (2.69) -- --
Year ended 10/31/01 .................. 18.12 (0.03) (6.37) (6.40) -- (0.06)
CLASS R
Year ended 10/31/05 .................. $10.95 $ (0.06) $2.20 $2.14 $ -- $ --
Year ended 10/31/04 .................. 11.01 (0.16) 0.10 (0.06) -- --
From 1/27/03 to 10/31/03(ii)(iv) ..... 8.36 (0.08) 2.73 2.65 -- --
ALGER BALANCED INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $ 7.50 $ 0.07 $0.67 $0.74 $(0.07) $(0.18)
Year ended 10/31/04 .................. 7.41 0.02 0.07 0.09 -- --
Year ended 10/31/03 .................. 6.67 (0.01) 0.75 0.74 -- --
Year ended 10/31/02 .................. 8.20 (0.39) (1.14) (1.53) -- --
From 12/4/00 to 10/31/01(i)(iv) ...... 10.00 (0.11) (1.69) (1.80) -- --
CLASS R
Year ended 10/31/05 .................. $ 7.43 $ 0.03 $0.67 $0.70 $(0.05) $(0.18)
Year ended 10/31/04 .................. 7.38 (0.02) 0.07 0.05 -- --
From 1/27/03 to 10/31/03(ii)(iv) ..... 6.43 (0.04) 0.99 0.95 -- --
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $ 5.37 $ (0.01) $1.05 $1.04 $ -- $(0.24)
Year ended 10/31/04 .................. 5.38 (0.05) 0.07 0.02 -- (0.03)
Year ended 10/31/03 .................. 4.43 (0.09) 1.04 0.95 -- --
Year ended 10/31/02 .................. 6.37 (0.77) (1.17) (1.94) -- --
From 12/4/00 to 10/31/01(i)(iv) ...... 10.00 (0.30) (3.33) (3.63) -- --
CLASS R
Year ended 10/31/05 .................. $ 5.34 $ (0.05) $1.04 $0.99 $ -- $(0.24)
Year ended 10/31/04 .................. 5.37 (0.08) 0.08 -- -- (0.03)
From 1/27/03 to 10/31/03(ii)(iv) ..... 4.13 (0.08) 1.32 1.24 -- --
- ----------
(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 0.80% due to expense reimbursement.
(vii) Amount has been reduced by 1.00% due to expense reimbursement.
(viii) Amount has been reduced by 0.81% due to expense reimbursement.
(ix) Amount has been reduced by 0.90% due to expense reimbursement.
(x) Amount has been reduced by 0.75% due to expense reimbursement.
(xi) Amount has been reduced by 0.94% due to expense reimbursement.
(xii) Amount has been reduced by 0.73% due to expense reimbursement.
See Notes to Financial Statements.
-51-
Ratios/Supplemental Data
-----------------------------------------------
Net Ratio of Ratio of Net
Net Assets, Expenses Investment
Asset End of to Income
Value, Period Average (Loss) to Portfolio
Total End of Total (000's Net Average Turnover
Distributions Period Return omitted) Assets Net Assets Rate
------------- ------ ------ -------- -------- ------------ ---------
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $ -- $13.28 20.2% $128,646 1.17% 0.04% 148.91%
Year ended 10/31/04 .................. -- 11.05 (0.1) 124,889 1.23 (0.87) 160.00
Year ended 10/31/03 .................. -- 11.06 23.3 160,569 1.23 (0.59) 187.72
Year ended 10/31/02 .................. -- 8.97 (23.1) 132,010 1.23 (0.73) 180.39
Year ended 10/31/01 .................. (0.06) 11.66 (35.4) 187,187 1.18 (0.21) 104.17
CLASS R
Year ended 10/31/05 .................. $ -- $13.09 19.5% $ 1,073 1.67% (0.51)% 148.91%
Year ended 10/31/04 .................. -- 10.95 (0.5) 706 1.73 (1.39) 160.00
From 1/27/03 to 10/31/03(ii)(iv) ..... -- 11.01 31.7 66 1.72 (1.01) 187.72
ALGER BALANCED INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $(0.25) $ 7.99 10.1% $ 1,548 1.25%(vi) 0.90% 211.26%
Year ended 10/31/04 .................. -- 7.50 1.3 1,435 1.35(v) 0.28 184.21
Year ended 10/31/03 .................. -- 7.41 11.1 1,409 2.00 (0.15) 149.42
Year ended 10/31/02 .................. -- 6.67 (18.7) 225 6.72 (5.21) 321.89
From 12/4/00 to 10/31/01(i)(iv) ...... -- 8.20 (18.0) 108 3.13 (1.44) 15.99
CLASS R
Year ended 10/31/05 .................. $(0.23) $ 7.90 9.6% $ 200 1.75%(viii) (0.38)% 211.26%
Year ended 10/31/04 .................. -- 7.43 0.7 166 1.82(vii) (0.28) 184.21
From 1/27/03 to 10/31/03(ii)(iv) ..... -- 7.38 14.8 58 2.56 (0.74) 149.42
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
CLASS I
Year ended 10/31/05 .................. $(0.24) $ 6.17 19.8% $ 1,505 1.25%(x) (0.25)% 152.60%
Year ended 10/31/04 .................. (0.03) 5.37 0.3 1,277 1.34(ix) (1.04) 166.03
Year ended 10/31/03 .................. -- 5.38 21.4 1,277 2.26 (1.69) 187.82
Year ended 10/31/02 .................. -- 4.43 (30.5) 46 13.48 (13.17) 205.83
From 12/4/00 to 10/31/01(i)(iv) ...... -- 6.37 (36.3) 77 5.31 (4.75) 114.33
CLASS R
Year ended 10/31/05 .................. $(0.24) $ 6.09 18.9% $ 355 1.75%(xii) (0.97)% 152.60%
Year ended 10/31/04 .................. (0.03) 5.34 (0.1) 107 1.83(xi) (1.53) 166.03
From 1/27/03 to 10/31/03(ii)(iv) ..... -- 5.37 30.0 66 2.92 (2.29) 187.82
-52-
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.
-53-
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 may lend their securities to financial
institutions, provided that the market value of the securities loaned will not
at any time exceed one third of 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, 2005, 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 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
-54-
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,
-55-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
of average daily net assets. For the year ended October 31, 2005, Alger
Management reimbursed the Balanced Fund and the Socially Responsible Growth Fund
$13,482 and $12,294, 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 (the "Distributor") and an affiliate of
Alger Management, 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, 2005, 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
paid the Distributor commissions of $363,357, $90,754, $2,928,917, $240,632,
$4,186 and $3,111, 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, 2005, the LargeCap Growth Fund, the Small Cap Growth
Fund, the MidCap Growth Fund, the Capital Appreciation Fund, the Balanced Fund
and the Socially Responsible Growth Fund incurred fees of $3,840, $3,084,
$37,195, $5,321, $67 and $60, 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. ("BFDS").
Effective February 28, 2005, the Trust has entered into a shareholder
administrative services agreement with Alger Services to compensate Alger
Services on a per account basis for its liaison and administrative oversight
ofBFDSand related services. During the year ended October 31, 2005, 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
incurred fees of $195, $1,044, $3,026, $420, $10 and $45, respectively, for
these services provided by Alger Services.
(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, 2005, Alger Management and its affiliates owned 7,330
shares, 4,815 shares, 8,200 shares, 7,349 shares, 177,646 shares and 243,785
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.
-56-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SECURITIES TRANSACTIONS:
The following summarizes the securities transactions by the Funds, other
than short-term securities, for the year ended October 31, 2005:
PURCHASES SALES
--------- -----
LargeCap Growth Fund ........................ $ 231,818,216 $ 246,984,629
SmallCap Growth Fund ........................ 74,940,925 92,368,104
MidCap Growth Fund .......................... 2,362,919,009 2,277,148,306
Capital Appreciation Fund ................... 186,251,197 205,865,199
Balanced Fund ............................... 3,423,630 3,388,370
Socially Responsible Growth Fund ............ 2,607,492 2,329,033
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, 2005, the Funds had the following borrowings:
AVERAGE WEIGHTED AVERAGE
BORROWING INTEREST RATE
----------- ----------------
LargeCap Growth Fund ........................ $ 73,808 4.17%
SmallCap Growth Fund ........................ 107,425 2.98
Capital Appreciation Fund ................... 22,288 2.72
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.
-57-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
During the year ended October 31, 2005, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
------ ------
LargeCap Growth Fund
Class I
Shares sold ................................ 2,200,355 $ 26,022,349
Shares redeemed ............................ (3,411,580) (40,911,341)
----------- ------------
Net decrease ............................... (1,211,225) $(14,888,992)
=========== ============
Class R
Shares sold ................................ 154,719 $ 1,781,735
Shares redeemed ............................ (77,595) (910,234)
----------- ------------
Net increase ............................... 77,124 $ 871,501
=========== ============
SmallCap Growth Fund
Class I
Shares sold ................................ 1,548,513 $ 28,225,343
Shares redeemed ............................ (2,325,174) (42,064,657)
----------- ------------
Net decrease ............................... (776,661) $(13,839,314)
=========== ============
Class R
Shares sold ................................ 153,157 $ 2,767,356
Shares redeemed ............................ (44,954) (805,083)
----------- ------------
Net increase ............................... 108,203 $ 1,962,273
=========== ============
MidCap Growth Fund
Class I
Shares sold ................................ 23,802,074 $401,271,219
Dividends reinvested ....................... 843,221 14,005,908
Shares redeemed ............................ (16,996,823) (285,555,328)
----------- ------------
Net increase ............................... 7,648,472 $129,721,799
=========== ============
Class R
Shares sold ................................ 904,309 $ 15,093,802
Dividends reinvested ....................... 13,818 227,446
Shares redeemed ............................ (428,734) (7,152,802)
----------- ------------
Net increase ............................... 489,393 $ 8,168,446
=========== ============
Capital Appreciation Fund
Class I
Shares sold ................................ 2,623,699 $ 32,136,928
Shares redeemed ............................ (4,237,300) (52,038,431)
----------- ------------
Net decrease ............................... (1,613,601) $(19,901,503)
=========== ============
Class R
Shares sold ................................ 40,879 $ 488,568
Shares redeemed ............................ (23,401) (280,405)
----------- ------------
Net increase ............................... 17,478 $ 208,163
=========== ============
-58-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SHARES AMOUNT
------ ------
Balanced Fund
Class I
Shares sold ........................... 9,813 $ 75,364
Dividends reinvested .................. 5,423 41,217
Shares redeemed ....................... (12,703) (95,966)
------------ ------------
Net increase .......................... 2,533 $ 20,615
============ ============
Class R
Shares sold ........................... 3,179 $ 24,043
Dividends reinvested .................. 685 5,169
Shares redeemed ....................... (818) (6,159)
------------ ------------
Net increase .......................... 3,046 $ 23,053
============ ============
Socially Responsible Growth Fund
Class I
Shares sold ........................... 50 $ 288
Dividends reinvested .................. 9,429 52,611
Shares redeemed ....................... (3,205) (18,000)
------------ ------------
Net increase .......................... 6,274 $ 34,899
============ ============
Class R
Shares sold ........................... 39,735 $ 223,738
Dividends reinvested .................. 1,012 5,594
Shares redeemed ....................... (2,544) (14,812)
------------ ------------
Net increase .......................... 38,203 $ 214,520
============ ============
During the year ended October 31, 2004, transactions of shares of
beneficial interest were as follows:
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
============ ============
-59-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SHARES AMOUNT
-------- --------
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
============= =============
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
============= =============
-60-
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. The tax character of distributions paid
during the year ended October 31, 2005 were as follows:
MidCap Growth Fund
Distributions paid from:
Ordinary income ........................................ $ --
Long-term capital gain ................................. 14,306,365
-----------
Total distributions paid ............................... $14,306,365
===========
Balanced Fund
Distributions paid from:
Ordinary income ........................................ $ 18,724
Long-term capital gain ................................. 34,940
-----------
Total distributions paid ............................... $ 53,664
===========
Socially Responsible Growth Fund
Distributions paid from:
Ordinary income ........................................ $ --
Long-term capital gain ................................. 63,890
-----------
Total distributions paid ............................... 63,890
===========
As of October 31, 2005, the components of distributable earnings on a tax
basis were as follows:
LargeCap Growth Fund
Undistributed ordinary income .......................... $ 274,397
Undistributed long-term gain ........................... --
Unrealized appreciation ................................ 5,192,206
SmallCap Growth Fund
Undistributed ordinary income .......................... --
Undistributed long-term gain ........................... --
Unrealized appreciation ................................ $ 8,071,398
MidCap Growth Fund
Undistributed ordinary income .......................... $93,048,523
Undistributed long-term gain ........................... 30,201,163
Unrealized appreciation ................................ 64,842,423
Capital Appreciation Fund
Undistributed ordinary income .......................... $ 46,145
Undistributed long-term gain ........................... --
Unrealized appreciation ................................ 14,365,786
-61-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Balanced Fund
Undistributed ordinary income ...................................... $112,638
Undistributed long-term gain ....................................... 30,499
Unrealized appreciation ............................................ 63,427
Socially Responsible Growth Fund
Undistributed ordinary income ...................................... $144,418
Undistributed long-term gain ....................................... 58,766
Unrealized appreciation ............................................ 206,878
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, 2005, 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.
LARGECAP SMALLCAP CAPITAL
GROWTH GROWTH APPRECIATION
EXPIRATION DATE FUND FUND FUND
------------ ------------ ------------
2009 $ -- $ 50,188,693 $ 56,066,260
2010 19,289,047 12,342,837 46,484,857
2011 5,070,663 -- --
------------ ------------ ------------
$ 24,359,710 $ 62,531,530 $102,551,117
============ ============ ============
NOTE 8--LITIGATION:
Alger Management has responded 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, the Attorney General of New Jersey, and the West Virginia Securities
Commissioner, in connection with their investigations of practices in the mutual
fund industry identified as "market timing" and "late trading."
On December 16, 2005, Alger Management received from the staff of the SEC
a "Wells Notice" which indicated that the staff intends to recommend that the
Commission bring civil enforcement action for possible violations of the federal
securities laws. "Wells Notices" also have been sent to certain companies
affiliated with Alger Management, as well as certain present and former members
of its senior management. The Wells Notices arose out of the SEC's staff ongoing
investigation of market timing and late trading practices in the mutual fund
industry. Alger Management and the other recipients have the opportunity to
respond to the staff before the staff makes a formal recommendation. Alger
Management plans to send a Wells submission to the staff in January 2006.
On August 31, 2005, the West Virginia Securities Commissioner in an ex
parte Summary Order to Cease and Desist and Notice of Right to Hearing con-
-62-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
cluded that Alger Management and Alger Inc. had violated the West Virginia
Uniform Securities Act, and ordered Alger Management and Alger Inc. to cease and
desist from further violations of the Act by engaging in the market-timing
related conduct described in the order. The ex parte order provided notice of
their right to a hearing with respect to the violations of law asserted by the
Commissioner. Other firms unaffiliated with Alger Management were served with
similar orders. Alger Management and Alger Inc. intend to request a hearing for
the purpose of seeking to vacate or modify the order.
In addition, in 2003 and 2004 several purported class actions and
shareholder derivative suits were filed against various parties in the mutual
fund industry, including Alger Management, certain mutual funds managed by Alger
Management (the "Alger Mutual Funds"), and certain current and former Alger
Mutual Fund trustees and officers, alleging wrongful conduct related to
market-timing and late-trading by mutual fund shareholders. These cases were
transferred to the U.S. District Court of Maryland by the Judicial Panel on
Multidistrict Litigation for consolidated pre-trial proceedings. In September
2004, consolidated amended complaints involving these cases -- a Consolidated
Amended Fund Derivative Complaint (the "Derivative Complaint") and two
substantially identical Consolidated Amended Class Action Complaints (together,
the "Class Action Complaint") -- were filed in the Maryland federal district
court under the caption number 1:04-MD-15863 (JFM). In April 2005, a civil
lawsuit involving similar allegations was filed by the West Virginia Attorney
General and also transferred to the Maryland District Court.
The Derivative Complaint alleged (i) violations, by Alger Management and,
depending on the specific offense alleged, by its immediate parent, Alger Inc.,
which is the Distributor of the Alger Mutual Funds, and/or the fund trustee
defendants, of Sections 36(a), 36(b), 47, and 48 of the Investment Company Act
of 1940 (the "Investment Company Act") 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 third-party defendants, and (iii)
unjust enrichment by all the named defendants. The Class Action Complaint
alleged, in addition to the offenses listed above, (i) violations, by Alger
Management, Alger Inc., their affiliates, the funds named as defendants, 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 (the "1934 Act"), and Section 34(b)
of the Investment Company Act of 1940, (ii) breach of contract by the funds
named as defendants, and (iii) unjust enrichment of the defendants. The West
Virginia attorney general action also alleges violations of the West Virginia
Consumer Credit and Protection Act and other wrongful conduct.
Motions to dismiss the Class Action Complaint and the Derivative Complaint
-63-
THE ALGER INSTITUTIONAL FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
were subsequently filed. On November 3, 2005, the district court dismissed both
complaints in their entirety with respect to the Alger Mutual Funds and
dismissed all claims against the other Alger defendants other than the claims
under the 1934 Act and Section 36(b) of the Investment Company Act, with leave
to the class action plaintiffs to file amended complaints against those
defendants with respect to claims under state law. It is anticipated that orders
implementing the rulings will be entered in or about January 2006, and that
motions for reconsideration will thereafter be filed.
Alger Management does not believe that the Alger Mutual Funds are
themselves targets of the regulatory investigations as potential enforcement
defendants.
The SEC and, in some cases, state government authorities have a variety of
administrative and civil enforcement powers, including injunctive powers,
authority to assess fines and penalties and order restitution, authority to
limit the activities of a person or company and other enforcement powers, that
may be exercised administratively or through the courts.
Under Section 9(a) of the Investment Company Act, if any of the various
regulatory proceedings or lawsuits were to result in a court injunction against
Alger Management or Alger Inc., Alger Management would, in the absence of
exemptive relief granted by the SEC, be barred from serving as investment
adviser/sub-adviser for any registered investment company, including the Fund.
While exemptive relief from Section 9(a) has been granted in certain other
cases, there is no assurance that such exemptive relief would be granted if
sought. In addition, it is possible that these matters and/or other developments
resulting from these matters could result in loss of Alger Management personnel,
diversion of time and attention of Alger Management personnel, diminishment of
financial resources of Alger Management, or other consequences potentially
adverse to the Fund. Alger Management cannot predict the potential effect of
such actions upon Alger Management or the Fund. There can be no assurance that
the effect, if any, would not be material.
-64-
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, 2005, 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 four 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 year
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.
We were not engaged to perform an audit of the Funds' internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Funds' internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of October 31, 2005, by correspondence with custodians
and brokers. 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, 2005, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the four years in the period then ended, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young LLP
December 12, 2005
-65-
THE ALGER INSTITUTIONAL FUNDS
ADDITIONAL INFORMATION (UNAUDITED)
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, 2005 and ending October 31,
2005.
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.
-66-
SHAREHOLDER EXPENSE EXAMPLE (UNAUDITED) (CONTINUED)
RATIO OF
EXPENSES TO
AVERAGE
EXPENSES PAID NET ASSETS
BEGINNING ENDING DURING THE PERIOD FOR THE SIX
ACCOUNT VALUE ACCOUNT VALUE MAY 1, 2005 TO MONTHS ENDED
MAY 1, 2005 OCTOBER 31, 2005 OCTOBER 31, 2005(b) OCTOBER 31, 2005(c)
-------------- ---------------- ------------------- -------------------
ALGER LARGECAP GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,124.40 $5.78 1.08%
Hypothetical(a) ...... 1,000.00 1,019.76 5.50 1.08
CLASS R:
Actual ............... 1,000.00 1,121.30 8.39 1.57
Hypothetical(a) ...... 1,000.00 1,017.29 7.98 1.57
ALGER SMALLCAP GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,209.60 $6.68 1.20%
Hypothetical(a) ...... 1,000.00 1,019.16 6.11 1.20
CLASS R:
Actual ............... 1,000.00 1,206.60 9.34 1.68
Hypothetical(a) ...... 1,000.00 1,016.74 8.54 1.68
ALGER MIDCAP GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,129.90 $5.91 1.10%
Hypothetical(a) ...... 1,000.00 1,019.66 5.60 1.10
CLASS R:
Actual ............... 1,000.00 1,126.10 8.57 1.60
Hypothetical(a) ...... 1,000.00 1,017.14 8.13 1.60
ALGER CAPITAL APPRECIATION INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,142.90 $6.32 1.17%
Hypothetical(a) ...... 1,000.00 1,019.31 5.96 1.17
CLASS R:
Actual ............... 1,000.00 1,139.30 9.00 1.67
Hypothetical(a) ...... 1,000.00 1,016.79 8.49 1.67
ALGER BALANCED INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,078.30 $6.55 1.25%
Hypothetical(a) ...... 1,000.00 1,018.90 6.36 1.25
CLASS R:
Actual ............... 1,000.00 1,074.80 9.15 1.75
Hypothetical(a) ...... 1,000.00 1,016.38 8.89 1.75
ALGER SOCIALLY RESPONSIBLE GROWTH INSTITUTIONAL FUND
CLASS I:
Actual ............... $1,000.00 $1,149.00 $6.77 1.25%
Hypothetical(a) ...... 1,000.00 1,018.90 6.36 1.25
CLASS R:
Actual ............... 1,000.00 1,146.90 9.47 1.75
Hypothetical(a) ...... 1,000.00 1,016.38 8.89 1.75
- ---------------------
(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 184/365 (to reflect the one-half year period).
(c) Annualized.
-67-
TAX INFORMATION
(UNAUDITED)
In accordance with subchapter M of the Internal Revenue Code of 1986, as
amended, for the year ended October 31, 2005, 18.44% of the Balanced Fund's
ordinary dividends qualified for the dividends received deduction for
corporations. For the year ended October 31, 2005, 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, $18,724 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
returns. Since the Trust's fiscal year is not the calendar year, another
notification will be sent with respect to calendar year 2005. 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 2006. Shareholders are advised to consult their own tax advisers with
respect to the tax consequences of their investment in the Trust.
-68-
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 (70) 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 (43) 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 (44) 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 (73) 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.
-69-
TRUSTEES AND OFFICERS OF THE FUNDS (UNAUDITED) (CONTINUED)
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. (52) 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 (60) 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. (71) 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. (67) 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.
OFFICERS
Frederick A. Blum (51) Executive Vice President and Treasurer of Alger Inc., 1996 N/A
Treasurer Alger Management, Properties, Associates, ARI,
Services and Agency since September 2003 and
Senior Vice President prior thereto; Treasurer 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.
Hal Liebes (41) Executive Vice President, Chief Legal Officer and 2005 N/A
Secretary and Chief Secretary of Alger Inc. and Alger Management,
Compliance Officer Secretary of the other five investment companies
in the Alger Fund Complex-2005. Formerly Global
Chief Compliance Officer 2004, AMVESCAP PLC.;
and Global General Counsel 2002-2004 and,
U.S. General Counsel 1994-2002
Credit Suisse Asset Management.
-70-
TRUSTEES AND OFFICERS OF THE FUNDS (UNAUDITED) (CONTINUED)
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
- -------------------------------------------------------------------------------------------------------------
Michael D. Martins (39) Senior Vice President of Alger Management; 2005 N/A
Assistant Treasurer Assistant Treasurer and Assistant Secretary of
and Assistant the other five investment companies in the
Secretary Alger Fund Complex-2005. Formerly Vice President,
Brown Brothers Harriman & Co. 1997-2004.
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."
The Statement of Additional Information contains additional information
about the Funds' Trustees and is available without charge upon request by
calling (800) 992-3863.
-71-
INVESTMENT MANAGEMENT AGREEMENT RENEWAL
At an in-person meeting held on September 7, 2005, the Trustees of the Trust
considered renewal of the Investment Management Agreements (the "Agreements")
between the Trust in respect of each of its portfolios (each a "Fund") and Fred
Alger Management, Inc. (the "Adviser"). The Trustees who are not "interested
persons" of the Trust (the "Independent Trustees") within the meaning of the
Investment Company Act of 1940 (the "1940 Act") also met separately with their
counsel to consider the Agreements. In evaluating the Agreements, the Trustees
drew on materials that they requested and which were provided to them in advance
of the meeting by the Adviser and by counsel to the Trust. The materials
covered, among other matters, (i) the nature, extent and quality of the services
provided by the Adviser under the Agreements, (ii) the investment performance of
each of the Funds, (iii) the costs to the Adviser of its services and the
profits realized by the Adviser and its affiliates Fred Alger & Company,
Incorporated and Alger Shareholder Services, Inc. from their relationship with
each of the Funds, and (iv) the extent to which economies of scale would be
realized if and as each Fund grows and whether the fee levels in the respective
Agreements reflect these economies of scale. These materials included an
analysis of the Funds and the Adviser's services by Callan Associates Inc.
("Callan"), an independent consulting firm whose specialties include assistance
to fund trustees and directors in their review of advisory contracts pursuant to
Section 15(c) of the 1940 Act. At the meeting, senior Callan personnel provided
a presentation to the Trustees based on the Callan materials.
In deciding whether to renew the Agreement, the Trustees considered various
factors, including those enumerated above. They also considered other direct and
indirect benefits to the Adviser and its affiliates from their relationship with
the Trust.
NATURE, EXTENT AND QUALITY OF SERVICES
In considering the nature, extent and quality of the services provided by the
Adviser, the Trustees relied on their prior experience as Trustees of the Trust,
their familiarity with the personnel and resources of Alger Management and its
affiliates, and the materials provided at the meeting. They noted that under
each of the Agreements the Adviser is responsible for managing the investment
operations of the respective Fund and for providing a full range of
administrative, compliance, reporting and accounting services necessary for the
conduct of the Fund's affairs. The Trustees reviewed the background and
experience of the Adviser's senior investment management personnel, including
those individuals responsible for the investment operations of each Fund. They
also considered the resources, operational structures and practices of the
Adviser in managing the Funds' portfolios and administering the Funds' affairs,
as well as the Adviser's overall investment management business.
-72-
The Trustees concluded that the Adviser's experience, resources and strength in
those areas of importance to the Funds are considerable. They noted especially
the Adviser's history of expertise in managing portfolios of "growth" stocks
like those of the Funds. They also took notice of the Balanced Fund's ability to
manage fixed-income instruments across the credit and credit quality spectra.
The Trustees also con sidered the level and depth of the Adviser's ability to
execute portfolio transactions to effect investment decisions. They also noted
the history of extremely favorable reviews of the Adviser's
shareholder-relations representatives by an independent rating concern. Finally,
the Trustees took notice of the enhancements to the control and compliance
environment at the Adviser and within the Trust. On the basis of their review,
the Trustees determined that the nature and extent of the services provided to
each of the Funds by the Adviser (including, in each case, the Fund's
performance, as discussed below) were of high quality and could be expected to
remain so.
INVESTMENT PERFORMANCE OF THE FUNDS
Drawing upon information provided at the meeting by the Adviser as well as
Callan and upon reports provided to the Trustees by the Adviser throughout the
preceding year, the Trustees noted that the performance of each of the Funds
thus far in 2005 had been more than satisfactory. For the year to date at August
31, 2005, each Fund had beaten its benchmark index (in some cases by a
significant margin) and the data available indicated that each had placed well
above the median of its Lipper peer group. For some Funds, this marked a
substantial improvement over 2004; for others, it was a continuation of a longer
period of above-average performance. The Trustees acknowledged that the
Adviser's recent efforts to improve the Funds' performance and, more generally,
the firm's rebuilding of the investment team in response to the devastating
events of September 11, 2001, were bearing fruit. Accordingly, they concluded
that the performance of each of the Funds strongly supported renewal of the
Fund's Agreement.
PROFITABILITY TO THE ADVISER AND ITS AFFILIATES
The Trustees considered the profitability of the advisory arrangement with each
Fund to the Adviser and the Adviser's affiliates and the methodology used by the
Adviser in determining such profitability. The Trustees had been provided with
data on each Fund's profitability to the Adviser and to the Adviser's affiliates
for the Fund's most recent fiscal year. In addition, the Trustees reviewed each
Fund's management fees and expense ratios and compared them with a group of
comparable funds. In order to assist the Trustees in this comparison, Callan
provided the Trustees with comparative information with respect to fees paid,
and expense ratios incurred, by similar funds. That information indicated that,
while two Funds' advisory fees were below the median for the Callan peer group,
the other Funds' fees were above it, and that while the Funds' expense ratios
for one class of shares were near or only somewhat
-73-
above the median, the ratios for the other class were substantially above the
median. The Trustees determined that the information about the advisory fees
should be taken into account in weighing the size of the fee against the nature,
extent and quality of the services provided, and that further inquiry would be
appropriate as to the expense ratios. After discussing with representatives of
the Adviser and Callan the methodologies used in computing the costs that formed
the bases of the profitability calculations, the Trustees turned to the
profitability data provided. After analysis and discussion they concluded that,
in the case of each Fund, the Adviser's profitability was undeniably modest
while the Adviser's affiliates lost money.
ECONOMIES OF SCALE
On the basis of their discussions with management and their analysis of
information provided at the meeting, the Trustees determined that the nature of
the Funds and their operations is such that the Adviser is likely to realize
economies of scale in the management of each Fund at some point as it grows in
size, but that in view of the current levels of profitability of each of the
Funds to the Adviser and its affiliates, such economies had either not yet
emerged or were subsumed in the level of the management fees, and that adoption
of breakpoints in one or more advisory fees, while possibly appropriate at a
later date, could await further analysis of the sources and potential scale of
the economies and the fee structure that would best reflect them. Accordingly,
the Trustees requested that the Adviser address this topic with the Trustees at
future meetings.
OTHER BENEFITS TO THE ADVISER
The Trustees considered whether the Adviser benefits in other ways from its
relationship with the Funds. In that connection, they noted that the Adviser
maintains soft-dollar arrangements in connection with the Funds' brokerage
transactions, data on which is regularly supplied to the Trustees at their
quarterly meetings. The Trustees also noted that the Trust's Distributor, Fred
Alger & Company, Incorporated, provides a substantial portion of the Funds'
equity brokerage and receives shareholder servicing fees from the Funds as well,
and that Alger Shareholder Services, Inc. receives fees from the Funds under a
shareholder services agreement. The Trustees had been provided with information
regarding, and had considered, the brokerage and shareholder servicing fee
benefits in connection with their review of the profitability to the Adviser and
its affiliates of their relationships with the Funds. As to the benefits
received from the soft-dollar arrangements, the Trustees decided that, in light
of the nature and scale of the arrangements, they were not so significant as to
render the Adviser's fees excessive.
CONCLUSION
After weighing the foregoing factors, the Trustees, including the Independent
Trustees, approved the renewal of each of the Investment Management
-74-
Agreements. They reasoned that, considered in themselves, the services provided
by the Adviser were appropriate for the needs of each Fund and of high quality,
that the recent performance of each Fund had been more than satisfactory, and
that the Adviser could reasonably be expected to provide services of comparable
quality in the future. The Trustees determined that the advisory fees, while
higher in most cases than those charged by a majority of similar funds, were not
so high even in those cases as to be unreasonable when considered in relation to
the nature, extent and high quality of the services currently provided,
including the Funds' recent performance, that in each case the profitability, if
any, of the Fund's relationship with the Adviser and its affiliates was not so
great as to render the fee excessive, that any additional benefits to the
Adviser and/or its affiliates other than those already considered in the
profitability analysis were not of a magnitude materially to affect the
Trustees' deliberations, and that the issue of shar ing economies of scale with
the Funds, while inviting future consideration, was not of major current
importance.
-75-
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
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.
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.
[ALGER LOGO]
SAIF 103105
[ALGER LOGO] The Alger Institutional Funds
Boston Financial Data Services, Inc.
P.O. Box 8480
Boston, MA 02266
SAIF 103105
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 amendments to the Code of Ethics are: The 60-day holding
period for selling securities at gains now applies to Access persons,
before it applied only to Advisory persons; Prohibition on IPO's now
applies to Access persons, before it applied only to Advisory persons;
Approval from Legal/Compliance is now necessary for investments in
Private Placements by Access persons, before, such approval was only
required of Advisory persons.
(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, 2005 $117,600
October 31, 2004 $35,350
b) Audit-Related Fees: NONE
c) Tax Fees for tax advice, tax compliance and tax planning:
October 31, 2005 $24,570
October 31, 2004 $25,300
d) All Other Fees:
October 31, 2005 $10,225
October 31, 2004 $13,500
Other fees include a review and consent for Registrants registration
statement filing and a review of the semi-annual financial statements.
e) 1) Audit Committee Pre-Approval Policies And Procedures:
Audit and non-audit services provided by the Registrant's independent
registered public accounting firm (the "Auditors") on behalf the
Registrant must be pre-approved by the Audit Committee. Non-audit
services provided by the Auditors on behalf of the Registrant's
Investment Adviser or any entity controlling, controlled by, or under
common control with the Investment Adviser must be pre-approved by the
Audit Committee if such non-audit services directly relate to the
operations or financial reporting of the Registrant.
2) All fees in item 4(b) through 4(d) above were approved by the
Registrants' Audit Committee.
f) Not Applicable
g) Non-Audit Fees:
October 31, 2005 $186,831 and 56,050 Euros
October 31, 2004 $157,449 and 82,300 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 11. CONTROLS AND PROCEDURES.
(a) The Registrant's principal executive officer and principal
financial officer have concluded that the Registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended) are effective based on
their evaluation of the disclosure controls and procedures as of a
date within 90 days of the filing date of this document.
(b) No changes in the Registrant's internal control over financial
reporting occurred during the Registrant's second fiscal half-year
that materially affected, or are reasonably likely to materially
affect, the Registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a) (1) Code of Ethics as Exhibit 99.CODE ETH
(a) (2) Certifications of principal executive officer and principal
financial officer as required by rule 30a-2(a) under the Investment
Company Act of 1940 are attached as Exhibit 99.CERT
(b) Certifications of principal executive officer and principal
financial officer as required by rule 30a-2(b) under the Investment
Company Act of 1940 are attached as Exhibit 99.906CERT
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
The Alger Institutional Funds
By: /s/Dan C. Chung
Dan C. Chung
President
Date: January 6, 2006
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 6, 2006
By: /s/Frederick A. Blum
Frederick A. Blum
Treasurer
Date: January 6, 2006