FELLOW SHAREHOLDERS: May 14, 1999
YEAR-TO-DATE REVIEW
The U.S. economy continued to show strong growth in the first quarter
of 1999, bolstering corporate earnings and helping to push the Dow Jones
Industrial Average above the 10,000 mark. The broader stock market saw strong
gains in January, most of which were given back in February. In March, the Dow
broke through the 10,000 mark several times in intraday trading before finally
closing above that milestone at month-end. The S&P 500 saw a total return of 4%
in March and 4.98% in the first quarter of 1999. Mid- and small-capitalization
stocks as a group lost ground in January and February, posting only minor gains
in March. Large-capitalization companies and technology firms continued to lead
the market to record levels in April and into May.
First-quarter GDP rose 4.5%, fueled by increases in consumer spending
and business investment in technology. Consumer spending grew at a 6.7% annual
rate in the first quarter, a significant rise over last year. The rise in
consumer confidence is due in part to employment gains and slowing inflation.
Low interest rates led to a boom in mortgage refinancing. Residential
construction spending also posted strong gains in the first quarter. Business
investments in durable equipment rose, with spending on information technology
up 21% on an annualized basis.
Low interest rates contributed to the stock market's rise. While yields
on long-term U.S. Treasury bonds climbed to 5.625% on March 31 from 5.09% at
year-end 1998, the Federal Reserve took a neutral stance on interest rates at
its regular Federal Open Market Committee meeting. Since February, long-term
interest rates have drifted in the 5.25% to 6.0% range, and concerns that the
Federal Reserve would move toward higher interest rates to forestall potential
inflation have eased. In the wake of Russia's default last fall, lenders raised
restrictions on new loans and money markets began to tighten. To ease the
liquidity crunch, the Federal Reserve cut its Federal Funds target rate three
times to 4.75% from 5.5%. Fears of a widespread credit crisis quickly subsided,
however. The Fed's January Lending Survey showed a clear shift toward more
available funds, and quality spreads between the U.S. Treasuries and high-yield
bonds have begun to narrow again in recent months.
At the same time, inflation remains under 2%, as measured by the
Consumer Price Index. Job growth continues to be strong, and the unemployment
rate-4.2% in March-remains at the lowest point in three decades. Yet tight
labor markets have not resulted in higher inflation. A combination of modest
increases in wages and better-than-expected productivity gains has resulted in
flat or lower unit labor costs.
Internationally, many economies continue to show weakn/s/, which has had
a negative effect on U.S. export growth. Exports rose in the fourth quarter of
last year as Asian markets began showing signs of recovery, but the gains were
not sustained in the first quarter of 1999. The introduction of the euro
currency in January has not yet sparked the hoped-for growth in European
economies many analysts expected. The political issues surrounding the
Serbian-Yugoslav crisis may have contributed to the weakness of the euro.
Looking forward, the U.S. economy remains an engine of global growth,
with domestic consumer demand snapping up imports and taking up some of the
excess capacity in slower-growth economies abroad. Advances in corporate
productivity will likely be key to continued low inflation and opportunities
for growth in the economy and the markets.
Respectfully submitted,
/s/ David D. Alger
-----------------------------
David D. Alger
President
<PAGE>
SPECTRA FUND
SCHEDULE OF INVESTMENTS
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares COMMON STOCKS-100.4% Value
------ ----------
<S> <C> <C>
ADVERTISING-.5%
84,100 Outdoor Systems, Inc.* .................... $2,118,311
----------
BIO-TECHNOLOGY-2.2%
85,100 Amgen Inc.* ............................... 5,228,374
39,200 Biogen Inc.* .............................. 3,726,470
----------
8,954,844
----------
BROADCASTING-4.7%
95,000 Cablevision Systems Corp. Cl. A.* ......... 7,350,625
74,700 Capstar Broadcasting Corporation Cl. A.* . 1,979,550
46,000 Clear Channel Communications Inc.*......... 3,197,000
37,500 Fox Entertainment Group, Inc. Cl. A.*...... 960,938
64,500 Infinity Broadcasting Corp. Cl. A.* ....... 1,785,876
50,400 Jacor Communications Inc.* ................ 4,044,600
----------
19,318,589
----------
BUSINESS SERVICES-1.8%
242,300 IMS Health Inc. ........................... 7,269,000
----------
COMMUNICATION
EQUIPMENT-4.0%
24,100 Ascend Communications, Inc.* .............. 2,328,663
88,300 Cisco Systems, Inc.* ...................... 10,071,763
51,100 Motorola, Inc. ............................ 4,094,388
----------
16,494,814
----------
COMMUNICATIONS-22.6%
128,200 America Online Inc. ....................... 18,300,550
20,100 At Home Corp. Ser. A* ..................... 2,893,154
118,000 Broadcast.com Inc.* ....................... 15,133,500
197,900 Comcast Corp. Cl. A. Special .............. 12,999,655
64,900 COX Communications Inc. Cl. A.* ........... 5,151,438
71,300 Frontier Corp. ............................ 3,934,904
50,000 Global Telesystems Group Inc.* ............ 3,306,250
105,800 MCI Worldcom Inc.* ........................ 8,695,490
142,000 Nextel Communications Inc. Cl. A.* ........ 5,813,196
52,500 Qwest Communications International
Inc.* ..................................... 4,485,495
21,600 RealNetworks Inc.* ........................ 4,784,400
99,300 Rhythms NetConnections Inc.* .............. 8,192,250
----------
93,690,282
----------
COMPUTER RELATED &
BUSINESS EQUIPMENT-4.1%
59,600 EMC Corp.* ................................ 6,492,705
178,000 Sun Microsystems Inc.* .................... 10,646,714
----------
17,139,419
----------
COMPUTER SERVICES-7.6%
40,900 eBay Inc.* ................................ 8,512,313
<CAPTION>
Shares COMMON STOCKS-100.4% Value
------ ----------
<S> <C> <C>
68,000 Excite Inc.* .............................. 9,928,000
74,800 Yahoo Inc.* ............................... 13,066,662
----------
31,506,975
----------
COMPUTER SOFTWARE-4.4%
205,800 Microsoft Corporation* .................... 16,734,215
75,300 Nvidia Corp.* ............................. 1,374,225
----------
18,108,440
----------
COMPUTER
TECHNOLOGY-.3%
22,900 Rambus Inc.* .............................. 1,376,863
----------
CONGLOMERATE-3.5%
177,782 Tyco International Ltd. ................... 14,444,788
----------
DRUG DISTRIBUTION-1.0%
70,300 Cardinal Health, Inc. ..................... 4,204,853
----------
ENERGY SERVICES-.5%
50,500 Halliburton Co. ........................... 2,152,563
----------
FINANCIAL SERVICES-7.9%
46,200 Bank of America Corp. ..................... 3,326,400
175,200 Citigroup Inc. ............................ 13,183,800
117,400 Morgan Stanley Dean Witter & Co. .......... 11,644,670
56,300 Paine Webber Group Inc. ................... 2,642,609
17,400 Schwab (Charles) Corporation (The) ........ 1,909,650
----------
32,707,129
----------
FOOD CHAINS-2.5%
33,200 Kroger Co.* ............................... 1,803,192
71,600 Fred Meyer, Inc.* ......................... 3,875,350
90,100 Safeway Inc.* ............................. 4,859,814
----------
10,538,356
----------
INSURANCE-1.2%
43,800 American International Group, Inc. ........ 5,143,784
----------
<PAGE>
LEISURE &
ENTERTAINMENT-.2%
24,300 Carnival Corp. ............................ 1,002,375
----------
PHARMACEUTICALS-3.9%
94,300 Pfizer Inc. ............................... 10,850,440
110,000 Schering-Plough Corporation ............... 5,314,430
----------
16,164,870
----------
RETAILING-14.2%
29,000 Abercrombie & Fitch Co., Cl. A.* .......... 2,758,625
93,200 Amazon.com Inc.* .......................... 16,036,272
119,000 Best Buy Company Inc.* .................... 5,682,250
85,400 Costco Companies Inc.* .................... 6,912,105
170,800 Home Depot, Inc. .......................... 10,237,410
152,100 Office Depot Inc.* ........................ 3,346,200
</TABLE>
2
<PAGE>
SPECTRA FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
- --------- COMMON STOCKS (CONTINUED) --------------
<S> <C> <C>
RETAILING (CON'T)
113,150 Staples Inc.* ....................... $ 3,394,500
226,600 Wal-Mart Stores Inc. ................ 10,423,600
------------
58,790,962
------------
SEMICONDUCTORS-9.4%
98,800 Altera Corporation* ................. 7,138,300
72,000 Intel Corp. ......................... 4,405,536
109,400 Linear Technology Corporation ....... 6,222,125
113,400 Texas Instruments, Incorporated ..... 11,580,975
208,200 Xilinx, Inc.*........................ 9,499,125
------------
38,846,061
------------
SEMICONDUCTOR
CAPITAL EQUIPMENT-3.9%
175,400 Applied Materials Inc.* ............. 9,405,826
80,800 ASM Lithography Holding NV* ......... 3,151,200
78,600 Teradyne, Inc.* ..................... 3,708,977
------------
16,266,003
------------
Total Common Stocks
(Cost $314,241,138).................. 416,239,281
------------
PREFERRED STOCK-.9%
COMMUNICATION
EQUIPMENT
49,000 Nokia Corporation, ADR
(Cost $3,135,077).................. 3,635,212
------------
Total Investments (Cost $317,376,215)(a)..... 101.3% 419,874,493
Liabilities in Excess of Other Assets ....... (1.3) (5,234,348)
------- -----------
Net Assets .................................. 100.0% $414,640,145
======= ============
</TABLE>
- --------
* Non-income producing security.
(a) At April 30, 1999, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $317,376,215, amounted to
$102,498,278 which consisted of aggregate gross unrealized appreciation of
$105,840,976 and aggregate gross unrealized depreciation of $3,342,698
See Notes to Financial Statements.
3
<PAGE>
SPECTRA FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $317,376,215), see accompanying
schedule of investments ................................................ $419,874,493
Cash .................................................................... 65,939
Receivable for investment securities sold ............................... 2,196,436
Receivable for shares of beneficial interest sold ....................... 4,472,427
Dividends receivable .................................................... 81,953
Prepaid expenses ........................................................ 21,620
-------------
Total Assets .......................................................... 426,712,868
LIABILITIES:
Payable for investment securities purchased ............................. $4,063,948
Bank loan payable ....................................................... 5,825,000
Investment advisory fees payable ........................................ 517,911
Payable for shares of beneficial interest redeemed ...................... 1,485,386
Shareholder servicing fee payable ....................................... 86,319
Interest payable ........................................................ 14,103
Accrued expenses ........................................................ 80,056
----------
Total Liabilities ..................................................... 12,072,723
-------------
NET ASSETS ............................................................... $414,640,145
=============
NET ASSETS CONSIST OF:
Paid-in capital ......................................................... $290,179,742
Undistributed net investment income (accumulated loss) .................. (5,115,726)
Undistributed net realized gain ......................................... 27,077,851
Net unrealized appreciation ............................................. 102,498,278
-------------
NET ASSETS ............................................................... $414,640,145
=============
Shares of beneficial interest outstanding-Note 5 ......................... 42,685,715
=============
NET ASSET VALUE PER SHARE ................................................ $ 9.71
=============
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
SPECTRA FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Dividends ....................................................... $ 460,353
Interest ........................................................ 272,354
-------------
Total Income ................................................... 732,707
Expenses:
Investment advisory fees-Note 2(a) .............................. $ 2,260,384
Shareholder servicing fees-Note 2(e) ............................ 376,731
Interest on line of credit utilized-Note 4 ...................... 13,846
Custodian and transfer agent fees ............................... 38,357
Registration fees ............................................... 49,114
Shareholder reports ............................................. 16,305
Professional fees ............................................... 21,189
Trustees' fees .................................................. 11,938
Miscellaneous ................................................... 5,189
-----------
Total Expenses ................................................. 2,793,053
-------------
NET INVESTMENT LOSS ............................................... (2,060,346)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .......................... $28,105,949
Net increase in unrealized appreciation of investments ........... 74,097,091
-----------
Net realized and unrealized gain (loss) on investments ......... 102,203,040
-------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ....................................................... $100,142,694
=============
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
SPECTRA FUND
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
Increase (decrease) in cash:
Cash flows from operating activities:
Dividends received .................................................................. $ 439,394
Interest received ................................................................... 272,354
Operating expenses paid ............................................................. (2,444,714)
Purchase of investment securities ................................................... (300,821,496)
Disposition of short-term securities, net ........................................... 2,447,123
Proceeds from disposition of investment securities .................................. 176,176,682
Other ............................................................................... (13,734)
--------------
Net cash used in operating activities ............................................. (123,944,391)
--------------
Cash flows from financing activities:
Dividends paid ...................................................................... (1,341,765)
Proceeds from shares sold and dividends reinvested .................................. 295,101,497
Payments on shares redeemed ......................................................... (174,871,771)
Increase in bank loan payable ....................................................... 5,120,000
--------------
Net cash provided by financing activities ......................................... 124,007,961
--------------
Net increase in cash ................................................................. 63,570
Cash-beginning of period ............................................................. 2,369
--------------
Cash-end of period ................................................................... $ 65,939
==============
Reconciliation of net increase in net assets to net cash used in operating activities:
Net increase in net assets resulting from operations ................................ $ 100,142,694
Increase in investments ............................................................. (133,262,215)
Increase in dividends receivable .................................................... (20,959)
Decrease in receivable for investment securities sold ............................... 9,540,368
Increase in payable for investment securities purchased ............................. 1,524,156
Net realized gain ................................................................... (28,105,949)
Net increase in unrealized appreciation ............................................. (74,097,091)
Increase in accrued expenses and other liabilities .................................. 348,339
Net increase in other assets ........................................................ (13,734)
--------------
Net cash used in operating activities ............................................. $ (123,944,391)
==============
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
SPECTRA FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 30, YEAR ENDED
1999 OCTOBER 31,
(UNAUDITED) 1998
----------------- ----------------
<S> <C> <C>
Net investment loss ......................................................... $ (2,060,346) $ (1,800,513)
Net realized gain (loss) on investments ..................................... 28,105,949 (200,328)
Net increase in unrealized appreciation of investments ...................... 74,097,091 22,382,056
------------ ------------
Net increase in net assets resulting from operations ..................... 100,142,694 20,381,215
Distributions to shareholders:
Net realized gains ......................................................... (1,341,765) (742,430)
Net increase from shares of beneficial interest transactions-Note 5 ......... 122,800,660 88,411,591
------------ ------------
Total increase in net assets ............................................. 221,601,589 108,050,376
Net assets:
Beginning of period ........................................................ 193,038,556 84,988,180
------------ ------------
End of period (including accumulated net investment losses of $5,115,726
and $3,055,380, respectively) ............................................. $414,640,145 $193,038,556
============ ============
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
SPECTRA FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period(i)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30,
----------------
1999(ii)(iii)
----------------
<S> <C>
Net asset value, beginning of period .......... $ 6.65
-----------
Net investment loss ........................... (0.01)
Net realized and unrealized gain on
investments .................................. 3.11
-----------
Total from investment operations .............. 3.10
Distributions from net realized gains ......... (0.04)
-----------
Net asset value, end of period ................ $ 9.71
===========
Total Return (v) .............................. 46.79%
===========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ............................. $ 414,640
===========
Ratio of expenses excluding interest
to average net assets ...................... 1.84%
===========
Ratio of expenses including interest
to average net assets ...................... 1.85%
===========
Decrease reflected in above
expense ratio due to expense
reimbursements made pursuant to
applicable state expense limits ............. -
===========
Ratio of net investment loss to
average net assets ......................... (1.37%)
===========
Portfolio Turnover Rate ..................... 56.76%
===========
Amount of debt outstanding at end
of period .................................. $5,825,000
===========
Average amount of debt outstanding
during the period .......................... $ 499,807
===========
Average daily number of shares
outstanding during the period .............. 34,981,685
===========
Average amount of debt per share
during the period .......................... $ 0.01
===========
<CAPTION>
FOUR MONTHS
ENDED
YEAR ENDED OCTOBER 31, OCTOBER 31,
------------------------------------------------------------------ -------------
1998 1997 1996 1995 1994(iii)
--------------- ------------------ ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .......... $ 5.74 $ 4.54 $ 6.98 $ 6.27 $ 5.71
------------ ---------- ---------- -------- --------
Net investment loss ........................... ( 0.02) ( 0.06)(iv) ( 0.08)(iv) ( 0.17) (0.04)
Net realized and unrealized gain on
investments .................................. 0.98 1.26 0.41 2.41 0.60
------------ ---------- ---------- -------- --------
Total from investment operations .............. 0.96 1.20 0.33 2.24 0.56
Distributions from net realized gains ......... ( 0.05) - ( 2.77) ( 1.53) -
------------ ---------- ---------- -------- --------
Net asset value, end of period ................ $ 6.65 $ 5.74 $ 4.54 $ 6.98 $ 6.27
============ ========== ========== ======== ========
Total Return (v) .............................. 16.94% 26.45% 12.68% 57.72% 9.93%
============ ========== ========== ======== ========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ............................. $ 193,039 $ 84,988 $ 11,485 $ 5,374 $ 4,832
============ ========== ========== ======== ========
Ratio of expenses excluding interest
to average net assets ...................... 1.90%
============
Ratio of expenses including interest
to average net assets ...................... 1.96% 2.12% 2.55% 3.76% 2.75%
============ ========== ========== ======== ========
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 ......................... ( 1.24%) ( 1.06%) ( 1.69%) ( 3.05%) (1.72%)
============ ========== ========== ======== ========
Portfolio Turnover Rate ..................... 190.74% 133.98% 197.04% 207.25% 56.25%
============ ========== ========== ======== ========
Amount of debt outstanding at end
of period .................................. $ 705,000
============
Average amount of debt outstanding
during the period .......................... $1,044,096
============
Average daily number of shares
outstanding during the period .............. 22,865,292
============
Average amount of debt per share
during the period .......................... $ 0.05
============
<CAPTION>
YEAR ENDED
JUNE 30,
-----------
1994
-----------
<S> <C>
Net asset value, beginning of period .......... $ 6.34
--------
Net investment loss ........................... ( 0.09)
Net realized and unrealized gain on
investments .................................. 0.89
--------
Total from investment operations .............. 0.80
Distributions from net realized gains ......... ( 1.43)
--------
Net asset value, end of period ................ $ 5.71
========
Total Return (v) .............................. 17.53%
========
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ............................. $ 4,394
========
Ratio of expenses excluding interest
to average net assets ......................
Ratio of expenses including interest
to average net assets ...................... 2.59%
========
Decrease reflected in above
expense ratio due to expense
reimbursements made pursuant to
applicable state expense limits ............. -
========
Ratio of net investment loss to
average net assets ......................... ( 1.47%)
========
Portfolio Turnover Rate ..................... 116.61%
========
Amount of debt outstanding at end
of period ..................................
Average amount of debt outstanding
during the period ..........................
Average daily number of shares
outstanding during the period ..............
Average amount of debt per share
during the period ..........................
</TABLE>
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock
split which occurred April 23, 1999.
(ii) Unaudited.
(iii) Ratios have been annualized; total return has not been annualized.
(iv) Amount was computed based on average shares outstanding during the period.
(v) 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.
See Notes to Financial Statements.
8
<PAGE>
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Spectra Fund (the "Fund") is a diversified open-end registered
investment company organized as a business trust under the laws of the
Commonwealth of Massachusetts. The Fund's investment objective is capital
appreciation. It seeks to achieve its objective by investing primarily in
equity securities.
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 each day the New
York Stock Exchange (the "NYSE") is open as of the close of the NYSE (normally
4:00 p.m. Eastern time). 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 and distributions payable to
shareholders are recorded by the Fund on the ex-dividend date. Dividends from
net investment income and distributions 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.
(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, 1999, the Fund incurred fees of approximately
$13,000 for services provided by Alger Services and reimbursed approximately
$4,200 for transfer agent related expenses paid by Alger Services on behalf of
the Fund.
(c) BROKERAGE COMMISSIONS-During the six months ended April 30, 1999, the Fund
paid Fred Alger & Company, Incorporated ("Alger Inc."), an affiliate of Alger
Management, $256,265 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 $8,000.
(e) SHAREHOLDER SERVICING FEES-The Fund has entered into a shareholder
servicing agreement with Alger Inc.
9
<PAGE>
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
whereby Alger Inc. provides the Fund with ongoingservicing 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 value of Fund's average daily net
assets.
NOTE 3-SECURITIES TRANSACTIONS:
During the six months ended April 30, 1999, purchases and sales of
investment securities, excluding short-term securities, aggregated $302,345,652
and $166,638,156, respectively.
NOTE 4-LINES OF CREDIT:
The Fund has both committed and uncommitted lines of credit with
banks where it may borrow up to 1/3 of the value of its assets, as defined, up
to a maximum of $55,000,000. To the extent the Fund borrows under these lines,
the Fund must pledge securities with a total value of at least twice the amount
borrowed. Such borrowings have variable interest rates and are payable on
demand. For the six months ended April 30, 1999, the Fund had borrowings which
averaged $499,807 at a weighted average interest rate of 5.51%.
NOTE 5-SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value. The transactions of shares of beneficial interest
have been adjusted for the effect of a 3 for 1 stock split which occurred on
April 23, 1999.
During the six months ended April 30, 1999, transactions of shares
of beneficial interest were as follows:
SHARES AMOUNT
------ ------
Shares sold ................. 33,637,800 $297,932,994
Dividend reinvested ......... 146,798 1,112,731
Shares redeemed ............. (20,112,876) (176,245,065)
----------- ------------
Net increase ................ 13,671,722 $122,800,660
=========== ============
During the year ended October 31, 1998, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
------ ------
Shares sold .................. 28,482,297 $181,391,591
Dividends reinvested ......... 107,703 583,746
Shares redeemed .............. (14,394,474) (93,563,746)
----------- ------------
Net Increase ................. 14,195,526 $88,411,591
=========== ============
10
<PAGE>
[GRAPHIC OMITTED]
1 World Trade Center
Suite 9333
New York, NY 10048
(800) 711-6141
www.spectrafund.com
- --------------------------------------------------
BOARD OF TRUSTEES
Fred M. Alger, CHAIRMAN
David D. Alger
Arthur M. Dubow
Stephen E. O'Neil
Nathan E. Saint-Amand
John T. Sargent
B. Joseph White
- --------------------------------------------------
INVESTMENT ADVISER
Fred Alger Management, Inc.
1 World Trade Center
Suite 9333
New York, NY 10048
- --------------------------------------------------
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street, Box 2001
Jersey City, NJ 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.
SREP49
[GRAPHIC OMITTED]
SEMI-ANNUAL REPORT
APRIL 30, 1999
(UNAUDITED)
