SPECTRA | Meeting the challenge
FUND | of investing
Semi-Annual Report
April 30, 1997
May 23, 1997
FELLOW SHAREHOLDERS:
A Year-To-Date Review
Last year was a difficult year for growth stock managers, and we were
no exception. Unfortunately, some of the trends which penalized growth
stocks last year continued through the first four months of 1997. While 1996
is ancient history by stock market standards, events which occurred last
year formed the basis for today's concerns about the market and provides the
framework for the discussion which follows.
The most important question, of course, is "What will happen the rest
of this year?" Essentially, the market sentiment has not changed since March
1996 with the overriding concern being that the economy is growing too
quickly and that this will touch off a series of preemptive strikes on
inflation by the Fed.
As we now know, the Fed did take action on March 25, 1997 and raised
the Fed Funds rate by twenty-five basis points. Since then, the market has
been preoccupied with whether rates would be raised again. This caused the
market to fall quite abruptly; the Dow fell from 7085 in mid-March to 6392
on April 11, a drop of 9.8%. More recently, the Fed voted to leave rates
unchanged at the May 20 Federal Open-Market Committee ("FOMC") meeting and
the market has rebounded to new highs as concern about interest rates ebbed.
These extreme fluctuations have confused many but the market does have its
own internal logic. It resembles the classical definition of chaos theory.
What does it portend?
Rarely has an increase in the Fed Funds rate been so long anticipated
as the one on March 25, 1997. Indeed, the market has been anticipating
increases in the Fed Funds rate since March of 1996, when the calm of the
market was shattered by exceptionally strong employment numbers. During this
time, the market has frequently overestimated the degree of strength in the
economy as well as inflationary pressures building up within the system.
For all of 1996, the economy grew 2.4%, slightly less than the Fed's
desired target of 2.5%. In fact, even the fourth quarter, which was
originally thought to be extremely strong at 4.7%, grew only 3.8%. Moreover,
the GDP deflator was at a record low of 1.5%, indicating that inflation was
not a factor at all during the year--despite substantial increases in energy
and grain prices in the early part of the year.
During the first few months of 1997, there was a heightened concern
about interest rates because there were a number of statistics to support
the notion that the economy was growing very rapidly. On April 30, GDP was
announced for the first quarter and it was a blockbuster, soaring 5.6%,
which was higher than anyone expected. Upon analysis, however, 1.7% may have
come purely from inventory buildup. Still, a 4% increase is quite high! I
have maintained, however, that part of the strength in the economy,
especially in January and February, related to the unusually pleasant
weather in the Northeast. This not only had the effect of encouraging real
estate activity and retail sales, but also played havoc with the seasonal
adjustment factors. If my theory was true, we would expect to see a visible
deceleration in economic activity in April and May. Thus far, this seems to
be borne out by the most recent data. This economic deceleration first
became evident when March housing starts fell 6.4%, later revised to a
decrease of 7.7%. Additionally, retail sales weakened in March and April and
auto sales are now down on a year-to-date basis.
Nowhere, however, is the slowing economy more evident than in the
employment numbers, which is interesting because it is the centerpiece of
concern about inflation. On May 2, the April data was announced and, while
the jobless rate fell below 5% to the lowest level since December 1973, job
creation dropped to 142,000, representing the second month of slow
employment growth (March numbers were revised downward to 139,000). These
paltry gains were lost in the sea of publicity surrounding the 4.9%
unemployment number. However, it is clear that the job creation machine is
slowing rapidly. In fact, included in the April number was a drop in
manufacturing and construction jobs.
Given all of this weak economic news, it is hardly surprising that the
Fed refrained from raising rates at its last FOMC meeting on May 20.
Politically, of course, it would have been very poor timing for the Fed to
raise rates after a bipartisan budget deal had been announced. There are, of
course, those who believe that the Fed will definitively act in early July
to increase rates and that the inevitable is merely being postponed for
political reasons.
Clearly, however, there is no actual inflation. On May 14, the PPI for
April was announced and it dropped a surprising .6% (month-over-month).
Those who fear inflation should note that this is the fourth straight month
of PPI deflation and the largest decline in almost four years. Excluding
food and energy, the PPI declined .1%. The CPI for April increased only .1%,
although the core rate did rise .3%, somewhat higher than expected.
Looking Ahead
Against this backdrop, the yield on the 30-year U.S. Treasury bond has
essentially traded in a range from 6-1/4% to 7-1/4% for the entire year.
What this tells me is that despite the tremendous concern about the
inflationary implications of a strong economy, the bond market really hasn't
changed very much. Of course, what has changed is the level of the stock
market. Therefore, I think it's fair to ask the question, "Is the stock
market now overvalued, especially in relation to the bond market and/or
short-term interest rates?"
At Alger, we have three ways of analyzing the valuation level of the
market itself: 1) we compare the market to its historical relationship to
the long bond; 2) we compare the market to its historical relationship to
short-term interest rates; and 3) we compare the current market to its own
history. All three of these models suggest that the market is fairly valued
to slightly undervalued.
In the first instance, our analysis shows that during the last fifteen
years the earnings yield of the S&P Industrial Average has traded between
50% and 90% of the yield on the 30-year U.S. Treasury bond. At 50%, as it
was prior to the crash of '87, it is always a good time to sell. At 90%, it
has always been a good time to buy. The median relationship is 70%, which is
almost exactly where the market is trading at present. Based on this
analysis, the market could appreciate 39% or decline 23% from its present
level.
The second relationship relates the market to short-term interest
rates. Here our model uses the Dow which has been an excellent predictor of
market tops. Based on this model, the Dow could appreciate to 7700 given
present levels of short-term interest rates. Conversely, it could sustain
another 25 basis point increase in rates without becoming overvalued.
Lastly, the Dow at 7300 is trading at roughly 16.6x expected earnings.
While this is in the top half of its traditional multiple range, it is no
where near the high. For example, before the crash in '87, the market sold
in excess of 20x expected earnings and at that time the yield on the long
bond was 9%.
More striking is the relationship between the market and growth
stocks. We have a matrix which comes from our research data base that
relates growth stocks to the market. What we have found is that growth
stocks go through a five year cycle of expansion and compression of their
p/e multiples relative to the market. Presently, we are at the end of such a
cycle, during which time growth stocks have traded between a zero premium
and 1.7x the market. This contrasts with a historical relationship of 1.5 to
2.5x the market multiple. Presently, our model shows that large cap growth
stocks are trading at 1.1x the market and small cap growth stocks are now
trading at a discount (.98x the market), a highly unusual development.
In summary, we believe the following: First, unusual factors, such as
the weather, exacerbated and exaggerated economic strength in the first
quarter raising concern about interest rates. Secondly, the economy is now
showing clear signs of deceleration. Thirdly, the major averages are fairly
valued, but not overvalued. Lastly, growth stocks are dramatically
undervalued compared to the larger market averages. In reviewing the outlook
for the growth stocks we follow, we have concluded that the drop in growth
stock multiples does not reflect deteriorating company fundamentals, but
instead, negative investor psychology. If we are correct in our view that
the economy is not overheating, the fears of accelerating inflation and
future interest rate increases should abate. Market psychology should
improve dramatically once signs of a slowing economy become evident. We
expect that investor confidence will rebuild and premiums for quality growth
stocks will expand.
All of this leads us to continue to be bullish about the market in
general, but especially about growth stocks from now through the end of the
year.
Respectfully submitted,
/s/ David D. Alger
David D. Alger
President
SPECTRA FUND
SCHEDULE OF INVESTMENTS
April 30, 1997 (Unaudited)
<TABLE>
<CAPTION>
Shares Common Stocks--93.6% Value
- ---------------------------------------------------------------
<C> <S> <C>
AEROSPACE--6.3%
5,600 Allied Signal Inc. $ 404,600
8,000 Boeing Company (The) 789,000
3,000 Sundstrand Corp. 146,250
6,200 United Technologies Corp. 468,875
5,000 Wyman Gordon Co.* 105,000
-----------
1,913,725
-----------
AGRICULTURE--.9%
3,800 Pioneer Hi-Bred International Inc. 268,375
-----------
APPAREL--1.1%
8,500 Tommy Hilfiger Corporation* 337,875
-----------
APPLIANCES & TOOLS--2.3%
22,000 Sunbeam Corp. 698,500
-----------
CHEMICALS--.8%
5,500 Monsanto Co. 235,125
-----------
COMMUNICATIONS--.5%
6,200 WorldCom Inc.* 148,800
-----------
COMMUNICATIONS
EQUIPMENT--5.4%
6,000 Cisco Systems, Inc.* 310,500
2,000 LM Ericsson Telephone Co. ADR Cl.B 67,250
9,000 Motorola, Inc. 515,250
18,700 Tellabs, Inc.* 745,663
-----------
1,638,663
-----------
COMPUTER RELATED & BUSINESS
EQUIPMENT--3.8%
8,100 Hewlett-Packard Company 425,250
3,900 International Business Machines Corp. 626,925
2,000 Seagate Technology Inc.* 91,750
-----------
1,143,925
-----------
COMPUTER SERVICES--.5%
6,100 Sterling Commerce, Inc.* 157,838
-----------
COMPUTER SOFTWARE--8.8%
12,600 Electronics For Imaging Inc.* 494,550
9,200 Microsoft Corporation* 1,117,800
15,300 Oracle Corp.* 608,175
9,700 Parametric Technology Corporation* 438,925
-----------
2,659,450
-----------
CONGLOMERATE--1.9%
5,300 General Electric Co. 587,637
-----------
CONSUMER PRODUCTS--5.5%
6,100 Colgate Palmolive Co. 677,100
9,400 Gillette Co. 799,000
4,500 Nabisco Holdings Corp. Cl. A 172,688
-----------
1,648,788
-----------
ENERGY & ENERGY SERVICES--4.0%
4,000 Diamond Offshore Drilling Inc.* 257,500
3,500 ENSCO International Inc.* 166,250
12,000 Reading & Bates Corp.* 268,500
4,700 Schlumberger Ltd. 520,525
-----------
1,212,775
-----------
FINANCIAL SERVICES--9.6%
4,700 Chase Manhattan Corp. $ 435,338
8,000 Citicorp 901,000
12,900 E*TRADE Group, Inc.* 193,500
7,700 Money Store Inc. (The) 166,512
9,000 Morgan Stanley Group Inc. 568,125
17,000 Schwab (Charles) Corporation (The) 622,625
-----------
2,887,100
-----------
HEALTHCARE--.5%
2,200 McKesson Corp. 159,225
-----------
HEALTH MAINTENANCE
ORGANIZATION--1.1%
4,800 Oxford Health Plans, Inc.* 316,200
-----------
INSURANCE--3.0%
7,000 American International Group Inc. 899,500
-----------
MEDICAL DEVICES--2.4%
10,000 Becton Dickinson & Co. 460,000
13,000 Hologic, Inc.* 269,750
-----------
729,750
-----------
OIL & GAS--1.8%
10,000 Global Marine Inc.* 201,250
4,000 Halliburton Co. 282,500
1,800 Tidewater Inc. 72,225
-----------
555,975
-----------
PHARMACEUTICALS--9.1%
8,900 Bristol Myers Squibb Co. 582,950
10,600 Eli Lilly & Company 931,475
7,800 Merck & Co., Inc. 705,900
1,400 Pfizer Inc. 134,400
4,100 Warner-Lambert Co. 401,800
-----------
2,756,525
-----------
POLLUTION CONTROL--.9%
8,300 USA Waste Services, Inc.* 271,825
-----------
RETAILING--6.9%
3,700 Gucci Group N.V. 256,687
12,000 Home Depot, Inc. 696,000
17,000 Rite Aid Corp. 782,000
7,100 TJX Companies, Inc. 335,475
-----------
2,070,162
-----------
SEMICONDUCTORS--13.0%
15,200 Adaptec, Inc.* 562,400
10,800 Altera Corporation* 535,280
4,400 Intel Corp. 673,750
12,600 Linear Technology Corporation 633,150
8,200 Maxim Intergrated Products, Inc.* 433,575
3,800 Micron Technology Inc.* 133,950
4,900 Texas Instruments, Incorporated 437,325
10,500 Xilinx, Inc.* 514,500
-----------
3,923,930
-----------
SEMICONDUCTORS CAPITAL
EQUIPMENT--3.3%
11,800 Applied Materials, Inc.* $ 647,525
12,000 Kulicke & Soffa Industries Inc.* 335,255
-----------
982,780
-----------
MISCELLANEOUS--.2%
2,200 Loewen Group Inc. 63,250
-----------
Total Common Stocks
(Cost $26,331,751) 28,267,698
-----------
Preferred Stock--.9%
COMMUNICATIONS EQUIPMENT
4,300 Nokia Corporation, ADR
(Cost $250,373) 277,888
-----------
Warrants
MANUFACTURING
72 Windmere Corp.,*
expires 1/19/98 (Cost $54) 405
-----------
<CAPTION>
Principal Short-Term Corporate
Amount Notes--7.0% Value
- ---------------------------------------------------------------
<C> <S> <C>
$192,000 Countrywide Funding Corporation,
5.47%, 5/1/97 $ 192,000
480,000 Dynamic Funding Corp.,
5.65%, 5/9/97 479,397
165,000 Fingerhut Owner Trust,
5.45%, 5/2/97 164,975
397,000 Green Tree Financial Corp.,
5.59%, 5/8/97 396,569
392,000 Merrill Lynch & Co., Inc.,
5.42%, 5/6/97 391,705
480,000 Wood Street Funding Corp.,
5.55%, 5/7/97(a) 479,556
-----------
Total Short-Term Corporate Notes
(Cost $2,104,202) 2,104,202
-----------
Total Investments (Cost $28,686,380)(b) 101.5% 30,650,193
Liabilities in Excess of Other Assets (1.5) (460,254)
----------------------
Net Assets 100.0% $30,189,939
======================
- -------------------
<F*> Non-income producing security.
<Fa> Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
<Fb> At April 30, 1997 the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $28,686,380, amounted
to $1,963,813, which consisted of aggregate gross unrealized
appreciation of $2,644,339 and aggregate gross unrealized depreciation
of $680,526.
</TABLE>
SPECTRA FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1997 (Unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $28,686,380), see accompanying
schedule of investments $30,650,193
Receivable for investment securities sold 797,581
Receivable for shares of beneficial interest sold 219,139
Dividends receivable 14,201
Prepaid expenses and other assets 22,776
-----------
Total Assets 31,703,890
-----------
LIABILITIES:
Payable for investment securities purchased $1,322,084
Bank overdraft 87,869
Investment advisory fee payable 38,888
Payable for shares of beneficial interest redeemed 23,938
Shareholder servicing fee payable 6,481
Trustees' fees payable 349
Accrued expenses 34,342
----------
Total Liabilities 1,513,951
-----------
NET ASSETS $30,189,939
===========
NET ASSETS CONSIST OF:
Paid-in capital $29,485,937
Undistributed net investment income (accumulated loss) (966,384)
Undistributed net realized gain (accumulated loss) (293,427)
Net unrealized appreciation 1,963,813
-----------
NET ASSETS $30,189,939
===========
Shares of beneficial interest outstanding--Note 4 2,111,774
===========
NET ASSET VALUE PER SHARE $ 14.30
===========
</TABLE>
See Notes to Financial Statements.
SPECTRA FUND
STATEMENT OF OPERATIONS
For the six months ended April 30, 1997 (Unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends $ 75,440
Interest 47,615
---------
Total Income 123,055
Expenses:
Investment advisory fees--Note 2(a) $ 155,498
Shareholder servicing fees--Note 2(e) 25,916
Registration fees 24,610
Custodian and transfer agent fees 14,210
Professional fees 11,064
Shareholder reports 6,835
Trustees' fees 500
Miscellaneous 2,082
----------
Total Expenses 240,715
---------
NET INVESTMENT LOSS (117,660)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments (375,894)
Net increase in unrealized appreciation of investments 1,023,904
----------
Net realized and unrealized gain (loss) on investments 648,010
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 530,350
=========
</TABLE>
See Notes to Financial Statements.
SPECTRA FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended
April 30, Year Ended
1997 October 31,
(Unaudited) 1996
----------------------------
<S> <C> <C>
Net investment loss $ (117,660) $ (108,583)
Net realized loss on investments (375,894) (79,935)
Net change in unrealized appreciation of investments 1,023,904 848,827
---------------------------
Net increase in net assets resulting from operations 530,350 660,309
Dividends to shareholders:
Net realized gains -- (2,133,339)
Net increase from shares of beneficial interest transactions--Note 4 18,174,938 7,583,606
---------------------------
Total increase in net assets 18,705,288 6,110,576
Net assets:
Beginning of period 11,484,651 5,374,075
---------------------------
End of period (including accumulated net investment
losses of $966,384 and $848,724, respectively) $30,189,939 $11,484,651
===========================
</TABLE>
See Notes to Financial Statements.
SPECTRA FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Six Months Year Year Four Months
Ended Ended Ended Ended Year Ended June 30,
April 30, October 31, October 31, October 31, --------------------------------
1997(i)(ii) 1996 1995 1994(ii) 1994 1993 1992
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.61 $ 20.93 $ 18.82 $17.12 $ 19.02 $ 17.93 $19.50
----------------------------------------------------------------------------------
Net investment loss (0.08)(iii) (0.23)(iii) (0.53) (0.10) (0.28) (0.29) (0.22)
Net realized and unrealized gain
on investments 0.77 1.22 7.24 1.80 2.66 3.70 1.65
----------------------------------------------------------------------------------
Total from investment operations 0.69 0.99 6.71 1.70 2.38 3.41 1.43
Distributions from net realized gains -- (8.31) (4.60) -- (4.28) (2.32) (3.00)
----------------------------------------------------------------------------------
Net asset value, end of period $ 14.30 $ 13.61 $ 20.93 $18.82 $ 17.12 $ 19.02 $17.93
==================================================================================
Total Return(iv) 5.07% 12.68% 57.72% 9.93% 17.53% 23.66% 11.65%
==================================================================================
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $30,190 $11,485 $ 5,374 $4,832 $ 4,394 $ 4,884 $4,603
==================================================================================
Ratio of expenses to average net
assets 2.32% 2.55%(v) 3.76%(v) 2.75%(v) 2.59%(v) 2.57%(v) 2.14%(v)
==================================================================================
Decrease reflected in above
expense ratio due to expense
reimbursements made pursuant to
applicable state expense limits -- .69% -- -- -- -- --
==================================================================================
Ratio of net investment loss to
average net assets (1.13)% (1.69)% (3.05)% (1.72)% (1.47)% (1.55)% (1.07)%
==================================================================================
Portfolio Turnover Rate 61.70% 197.04% 207.25% 56.24% 116.61% 100.17% 63.54%
==================================================================================
Average Commission Rate Paid $ .0701 $ .0661
=====================
- -------------------
<Fi> Unaudited.
<Fii> Ratios have been annualized; total return has not been annualized.
<Fiii> Amount was computed based on average shares outstanding during the
period.
<Fiv> Dividends and distributions paid when the Fund operated as a closed-
end fund (i.e. prior to February 12, 1996) have been reflected as
being reinvested at market value.
<Fv> Reflects total expenses, including custody fees offset by earnings
credits resulting from balances left on deposit. The expense ratios
net of earnings credits would have been 2.52% and 3.69% for the years
ended October 31, 1996 and 1995, respectively. Expense ratios for the
periods ended prior to October 31, 1995, have been reduced to reflect
the effect of custody fees offset by earnings credits, if any.
</TABLE>
See Notes to Financial Statements.
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1--Summary of Significant Accounting Policies:
Spectra Fund (the "Fund") is a non-diversified open-end registered
investment company organized as an unincorporated business trust under the
laws of the Commonwealth of Massachusetts.
Prior to February 12, 1996, the Fund operated as a closed-end
investment company and a Massachusetts corporation.
Effective October 31, 1994, the Fund changed its fiscal year end from
June 30 to October 31.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
(a) Investment Valuation--Investments in securities are valued at 4:00 p.m.
Eastern time. Listed and unlisted 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.
Short-term corporate notes are valued at amortized cost which approximates
market value.
(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 basis of the first-in, first-out
method. Dividend income is recognized on the ex-dividend date and interest
income is recognized on the accrual basis.
(c) Dividends to Shareholders--Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Dividends from net investment
income and dividends from net realized gains are declared and paid annually
after the end of the fiscal year in which earned.
(d) Federal Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income, including net
realized capital gains, to its shareholders. Therefore, no Federal income
tax provision is required. As of October 31, 1996, the net capital loss
carryforward of the Fund which may be used to offset future net realized
gains was approximately $51,000 and expires in 2004.
(e) 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 2--Investment Advisory Fees and Other Transactions with Affiliates:
(a) Investment Advisory Fees--The Fund pays its investment adviser, Fred
Alger Management, Inc. ("Alger Management"), a monthly fee at an annual rate
of 1.50% based on the value of the Fund's average daily net assets.
(b) Transfer Agent Fees--Alger Shareholder Services, Inc. ("Alger
Services"), an affiliate of Alger Management, serves as transfer agent for
the Fund. During the six months ended April 30, 1997, the Fund incurred fees
of approximately $5,700 for services provided by Alger Services and reim-
bursed approximately $1,700 for transfer agent related expenses paid by
Alger Services on behalf of the Fund.
(c) Brokerage Commissions--During the six months ended April 30, 1997, the
Fund paid Fred Alger & Company, Incorporated ("Alger Inc."), an affiliate of
Alger Management, $34,553 in connection with securities transactions.
(d) Trustees' Fees--Certain trustees and officers of the Fund are directors
and officers of Alger Management, Alger Inc. and Alger Services. The Fund
pays each trustee who is not affiliated with Alger Management or its
affiliates an annual fee of $250.
(e) Shareholder Servicing Fees--The Fund has entered into a shareholder
servicing agreement with Alger Inc. whereby Alger Inc. provides the Fund
with ongoing servicing of shareholder accounts. As compensation for such
services, the Fund pays Alger Inc. a monthly fee at an annual rate equal to
.25% of the Fund's average daily net assets.
(f) Other Transactions With Affiliates--At April 30, 1997, Alger Management
and its affiliates owned 516,188 shares of the Fund.
NOTE 3--Securities Transactions:
During the six months ended April 30, 1997, purchases and sales of
investment securities, excluding short-term securities, aggregated
$28,488,483 and $11,971,881, respectively.
NOTE 4--Share Capital:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value.
During the six months ended April 30, 1997, transactions of shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
Shares Amount
-------------------------
<S> <C> <C>
Shares sold 1,465,171 $20,883,235
Shares redeemed (196,946) (2,708,297)
-------------------------
Net increase 1,268,225 $18,174,938
=========================
</TABLE>
During the year ended October 31, 1996, transactions of shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
Shares Amount
-------------------------
<S> <C> <C>
Shares sold 740,865 $ 9,572,977
Shares redeemed (154,036) (1,989,371)
------------------------
Net increase 586,829 $ 7,583,606
========================
</TABLE>
SPECTRA | Meeting the challenge
FUND | of investing
Board of Trustees
Fred M. Alger, Chairman
David D. Alger
Arthur M. Dubow
Stephen E. O'Neil
Nathan E. Saint-Amand
John T. Sargent
- --------------------------------------------
Investment Adviser
Fred Alger Management, Inc.
75 Maiden Lane
New York, N.Y. 10038
- --------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Alger Shareholder Services, Inc.
30 Montgomery Street, Box 2001
Jersey City, N.J. 07302-9811
- --------------------------------------------
This report is submitted for the general information of the shareholders of
Spectra Fund. It is not authorized for distribution to prospective investors
unless accompanied by an effective Prospectus for the Fund, which contains
information concerning the Fund's investment policies, fees and expenses as
well as other pertinent information.
