SPECTRA SPECTRA
FUND FUND
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
Charles F. Baird, Jr.
Roger P. Cheever
Lester L. Colbert, Jr.
Stephen E. O'Neil
Nathan E. Saint-Amand
B. Joseph White
---------------------------------------------
INVESTMENT ADVISER
Fred Alger Management, Inc.
1 World Trade Center
Suite 9333 SEMI-ANNUAL REPORT
New York, NY 10048 APRIL 30, 2000
--------------------------------------------- (UNAUDITED)
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.
SREP40
<PAGE>
FELLOW SHAREHOLDERS:
May 15, 2000
As winter turned to spring and temperatures rose, the U.S. economy
continued to sizzle, a fact that remained more a worry than a comfort for
financial markets. Inflation-adjusted GDP growth rose at a much stronger than
expected rate of 7.3% in the fourth quarter of 1999, and was expected to exceed
5% in the first three months of 2000.
Market watchers are wary of such strength because it can stimulate high
inflation and prompt the Federal Reserve to raise interest rates in an effort to
slow economic growth. This concern was a principal cause of the sharp volatility
in stock prices through the first four months of 2000. It also added to the
bearish tone in March when investors decided that the valuations of technology
stocks had become too high and sent the Nasdaq Composite Index tumbling. Federal
Reserve policy, amid signs of higher wage and price inflation, occupied center
stage during April. For example, stronger than expected inflation in the March
Consumer Price Index released on April 14 sent equities tumbling that day. At
the end of April, the Nasdaq Composite stood at 3861, down 24% from its March 10
high of 5049. Other major indexes were also lower, with the Dow Jones Industrial
Average down 6.19% and the S&P 500 down 0.78% from the end of 1999.
That was in contrast to the uptrend in November and December. Although
inflation pressures were on investors' minds as 1999 drew to a close, the stock
market continued to rally with few significant setbacks. Technology and
small-cap stocks surged. The technology-dominated Nasdaq Composite Index posted
a 37.18% gain for November and December and an 85.59% advance for the full year.
The S&P 500 gained 8.04% in the last two months and 21.04% for the year. Many
foreign markets turned in even stronger performances, with the Morgan Stanley
Capital International EAFE Index gaining 25.27% during 1999. Signs that much of
the developed world had entered an expansionary cycle and many emerging nations
were rebounding from the crisis of 1997 and 1998 bolstered international
markets.
Fixed income was one category that produced mostly negative returns for
1999 as the Federal Reserve repeatedly nudged short-term interest rates higher
in an attempt to slow the economy. Continued Federal Reserve pressure lifted the
3-month yield to 5.65% at the end of April 2000. However, the Treasury's bond
repurchase program along with some "flight to quality" from the equity markets
helped longer maturities, with the 30-year Treasury bond yielding 5.96% at the
end of April, down from 6.48% at the end of 1999.
LOOKING AHEAD
Although no one can predict the future, we have been encouraged by the
market's ability to bounce back from sharp declines in recent years. We expect
volatility to remain at historically high levels until it becomes clear that the
Federal Reserve has completed the current round of tightening. An end to Federal
Reserve rate interventions should be positive for the market, leading to reduced
volatility and more bullish sentiment. As a result, buyers should return in
force and send the market higher. A market rebound will be led, we believe, by
the tech sector since it offers great opportunities for future earnings growth.
Because our funds remain heavily invested in this sector, we hope to recover the
losses sustained during the market downdraft of the last three months.
Respectfully submitted,
/s/ David D. Alger
President
<PAGE>
SPECTRA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
APRIL 30, 2000
SHARES VALUE
--------- COMMON STOCKS-88.4% -----------
ADVERTISING-.6%
61,700 Omnicom Group Inc. + ............................... $ 5,618,555
-----------
BIO-TECHNOLOGY-1.8%
322,600 Amgen Inc.* + ...................................... 18,065,600
-----------
BROADCASTING-3.1%
277,300 Clear Channel
Communications Inc.*+ .............................. 19,965,600
173,300 EchoStar Communications Corp.,
Cl. A* + ........................................... 11,037,043
-----------
31,002,643
-----------
BUSINESS SERVICES-1.5%
208,800 Ariba Inc.* ........................................ 15,490,350
-----------
COMMUNICATION
EQUIPMENT-11.7%
27,500 Brocade Communications
Systems Inc.*+ ..................................... 3,410,000
503,400 Cisco Systems, Inc.* ............................... 34,899,778
60,100 Corning Inc. ....................................... 11,869,750
36,700 Efficient Networks Inc.+ ........................... 2,413,025
50,200 Entrust Technologies Inc.* ......................... 2,466,075
55,100 Ericsson(LM)Telephone Co., ADR ..................... 4,872,906
118,700 Motorola, Inc. ..................................... 14,132,719
88,000 PMC-Sierra Inc.* ................................... 16,885,000
81,600 SDL Inc.* .......................................... 15,912,000
76,500 Verisign Inc.* ..................................... 10,662,188
-----------
117,523,441
-----------
COMMUNICATIONS-13.3%
320,700 America Online Inc.* ............................... 19,181,869
357,000 AT&T Corp. Liberty Media Group,
Cl. A* ............................................. 17,827,688
335,900 Comcast Corp., Cl. A Special ....................... 13,456,994
129,900 Cox Communications Inc., Cl. A* + .................. 5,561,344
247,900 Exodus Communications, Inc.* + ..................... 21,923,656
112,600 MCI Worldcom Inc.* ................................. 5,116,263
312,000 McLeodUSA, Inc., Cl. A* + .......................... 7,800,000
149,000 Nextel Communications Inc., Cl. A* +................ 16,306,187
148,600 Qualcomm Inc.* ..................................... 16,113,812
180,600 Sprint Corp. (PCS Group)* + ........................ 9,933,000
-----------
133,220,813
-----------
COMPUTER RELATED &
BUSINESS EQUIPMENT-4.8%
198,300 Dell Computer Corp.* ............................... 9,939,787
105,000 Hewlett-Packard Company ............................ 14,175,000
262,100 Sun Microsystems Inc.* ............................. 24,096,819
-----------
48,211,606
-----------
COMPUTER SERVICES-9.8%
137,000 Amdocs Limited* ..................................... 9,273,188
272,300 eBay Inc.* + ........................................ 43,346,756
79,600 InfoSpace.com Inc.* + ............................... 5,716,275
21,100 Inktomi Corp.* ...................................... 3,248,081
232,500 Vignette Corp.* ..................................... 11,203,594
196,400 Yahoo Inc.* ......................................... 25,581,100
----------
98,368,994
----------
COMPUTER SOFTWARE-6.7%
85,900 Aspect Development, Inc. *+ ......................... 5,937,838
172,600 Commerce One Inc.* + ................................ 10,539,387
65,700 I2 Technologies, Inc.* + ............................ 8,491,725
286,700 Microsoft Corporation* .............................. 19,997,325
133,900 Oracle Corp.* ....................................... 10,703,631
77,600 Phone.com Inc.* + ................................... 6,518,400
46,800 VERITAS Software Corp.* + ........................... 5,020,031
----------
67,208,337
----------
ENERGY & ENERGY
SERVICES-3.2%
57,400 B.J. Services Company* .............................. 4,032,350
497,500 Halliburton Co. ..................................... 21,983,281
161,000 Nabors Industries Inc.* ............................. 6,349,438
----------
32,365,069
----------
FINANCIAL SERVICES-3.4%
52,000 American Express Company+ ........................... 7,803,250
273,000 Citigroup Inc. ...................................... 16,226,438
136,300 Morgan Stanley Dean Witter & Co. + .................. 10,461,025
----------
34,490,713
----------
MEDICAL SERVICES-1.7%
52,700 PE Corp.-
Celera Genomics Group* .............................. 4,347,750
211,700 PE Corp.-
PE Biosystems Group ................................. 12,702,000
----------
17,049,750
----------
PHARMACEUTICALS-.7%
141,000 Celgene Corp.* + .................................... 6,635,813
----------
RETAILING-3.4%
118,800 Costco Wholesale Corp.* ............................. 6,422,625
317,850 Home Depot, Inc. .................................... 17,819,466
180,700 Wal-Mart Stores Inc. + .............................. 10,006,262
----------
34,248,353
----------
2
<PAGE>
SPECTRA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
APRIL 30, 2000
SHARES VALUE
--------- COMMON STOCKS-(CONTINUED) ------------
SEMICONDUCTOR CAPITAL
EQUIPMENT-6.6%
326,200 Applied Materials Inc.* + ............................ $ 33,211,237
266,900 ASM Lithography Holding NV* + ........................ 10,676,000
203,200 Teradyne, Inc.* ...................................... 22,352,000
------------
66,239,237
------------
SEMICONDUCTORS-16.1%
236,000 Altera Corporation* .................................. 24,131,000
67,200 Broadcom Corp., Cl. A* ............................... 11,583,600
107,500 Conexant Systems Inc.* + ............................. 6,436,563
187,100 Intel Corp. + ........................................ 23,726,619
218,800 Linear Technology Corporation ........................ 12,498,950
491,500 LSI Logic Corp.* + ................................... 30,718,750
206,500 Texas Instruments, Incorporated ...................... 33,633,687
85,600 Vitesse Semiconductor Corp.* ......................... 5,826,150
191,200 Xilinx, Inc.* + ...................................... 14,005,400
------------
162,560,719
------------
Total Common Stocks
(Cost $643,133,536)................................... 888,299,993
PREFERRED STOCK-2.0% ------------
COMMUNICATION
EQUIPMENT
349,600 Nokia Corporation, ADR +
(Cost $13,790,456).................................. 19,883,500
-----------
PRINCIPAL
AMOUNT
------------- SHORT-TERM INVESTMENTS-30.4%
SHORT-TERM
CORPORATE NOTES-7.9%
$30,000,000 Concord Minuteman Capital Co. LLC,
6.03%, 5/10/00 (a) ............................... 29,954,776
30,000,000 Dow Chemical Co., 6.00%, 5/11/00 ................. 29,950,000
20,000,000 GTE Funding Inc., 6.01%, 5/25/00 ................. 19,919,866
----------
Total Short-Term Corporate Notes
(Cost $79,824,642)................................ 79,824,642
----------
SECURITIES HELD UNDER REPURCHASE AGREEMENTS-3.3%
Securities Held Under Repurchase Agreements,
5.77%, 5/1/00, with State Street Bank and Trust,
dtd 4/28/00, repurchase price $33,190,952;
collateralized by Federal Home Loan Bank (par
value $33,755,000 due 11/17/03)................... 33,175,000
----------
SHARES
----------
OTHER SHORT-TERM
INVESTMENTS-19.2%
193,308,161 Securities Lending Quality Trust
(Cost $193,308,161) (c)......................... 193,308,161
-----------
Total Short-Term Investments
(Cost $306,307,803) ............................ 306,307,803
-----------
Total Investments
(Cost $963,231,795) (b)............. 120.8% 1,214,491,296
Liabilities in excess of other assets (20.8) (209,449,282)
----- -------------
Net Assets ........................... 100.0% $1,005,042,014
===== ==============
--------
* Non-income producing security.
+ Securities partially or fully on loan.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these securities
may be sold prior to their maturity only to qualified institutional buyers.
(b) At April 30, 2000, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $963,231,795, amounted to
$251,259,501 which consisted of aggregate gross unrealized appreciation of
$296,977,707 and aggregate gross unrealized depreciation of $45,718,206.
(c) Represents investment of cash collateral received for securities on loan.
See Notes to Financial Statements.
3
<PAGE>
SPECTRA FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 2000
ASSETS:
Investments in securities, at value
(cost $963,231,795), see accompanying
schedule of investments ...................... $1,214,491,296
Cash .......................................... 24,994
Receivable for shares of beneficial
interest sold ................................ 5,837,919
Dividends and interest receivable ............. 79,132
Prepaid expenses .............................. 52,943
--------------
Total Assets ................................ 1,220,486,284
LIABILITIES:
Payable for securities loaned ................. $193,308,161
Payable for investment securities purchased ... 19,395,819
Investment advisory fees payable .............. 1,214,747
Payable for shares of beneficial
interest redeemed ............................ 1,148,418
Shareholder servicing fees payable ............ 202,458
Trustees' fees payable ........................ 1,962
Accrued expenses .............................. 172,705
------------
Total Liabilities ........................... 215,444,270
--------------
NET ASSETS ..................................... $1,005,042,014
==============
NET ASSETS CONSIST OF:
Paid-in capital ............................... $ 759,584,213
Undistributed net investment income
(accumulated loss) ........................... (15,407,079)
Undistributed net realized gain ............... 9,605,379
Net unrealized appreciation ................... 251,259,501
--------------
NET ASSETS ..................................... $1,005,042,014
==============
Shares of beneficial interest
outstanding--Note 5 .......................... 79,026,111
==============
NET ASSET VALUE PER SHARE ...................... $ 12.72
==============
See Notes to Financial Statements.
4
<PAGE>
SPECTRA FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2000
INVESTMENT INCOME:
Income:
Dividends ...................................... $ 530,507
Interest ....................................... 869,868
------------
Total Income .................................. 1,400,375
Expenses:
Investment advisory fees--Note 2(a) ............ $ 6,564,314
Shareholder servicing fees--Note 2(e) .......... 1,094,048
Interest on line of credit utilized--Note 4 .... 4,403
Registration fees .............................. 122,546
Custodian and transfer agent fees .............. 104,689
Professional fees .............................. 19,258
Trustees' fees ................................. 10,033
Shareholder reports ............................ 5,110
Miscellaneous .................................. 24,932
-----------
Total Expenses ................................ 7,949,333
------------
NET INVESTMENT LOSS .............................. (6,548,958)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ................ 6,328,304
Net change in unrealized appreciation
(depreciation) of investments .................. 121,434,254
-----------
Net realized and unrealized gain
on investments ............................... 127,762,558
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ...................................... $121,213,600
============
See Notes to Financial Statements.
5
<PAGE>
SPECTRA FUND
STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2000
Increase (decrease) in cash:
Cash flows from operating activities:
Dividends received .......................................... $ 517,110
Interest received ........................................... 853,917
Interest paid ............................................... (884)
Operating expenses paid ..................................... (7,261,431)
Purchase of investment securities ........................... (569,628,392)
Purchase of short-term securities, net ...................... (305,111,032)
Proceeds from disposition of investment securities .......... 344,470,417
Other ....................................................... (15,505)
-------------
Net cash used in operating activities ..................... (536,175,800)
-------------
Cash flows from financing activities:
Distributions paid .......................................... (49,922,048)
Proceeds from shares sold and dividends reinvested .......... 701,936,991
Payments on shares redeemed ................................. (310,445,178)
Increase in cash collateral received on securities loaned ... 193,308,161
-------------
Net cash provided by financing activities ................. 534,877,926
-------------
Net decrease in cash ......................................... (1,297,874)
Cash-beginning of period ..................................... 1,322,868
-------------
Cash-end of period ........................................... $ 24,994
=============
Reconciliation of net increase in net assets to
net cash used in operating activities:
Net increase in net assets resulting from operations ........ $ 121,213,600
Increase in investments ..................................... (547,798,981)
Increase in interest and dividends receivable ............... (29,349)
Decrease in receivable for investment securities sold ....... 8,807,106
Increase in payable for investment securities purchased ..... 8,722,870
Net realized gain ........................................... (6,328,304)
Net increase in unrealized appreciation ..................... (121,434,254)
Increase in accrued expenses and other liabilities .......... 687,017
Net increase in other assets ................................ (15,505)
-------------
Net cash used in operating activities ..................... $(536,175,800)
=============
See Notes to Financial Statements.
6
<PAGE>
SPECTRA FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED APRIL 30, YEAR ENDED
2000 OCTOBER 31,
(UNAUDITED) 1999
-------------- --------------
Net investment loss ...................... $ (6,548,958) $ (5,802,741)
Net realized gain on investments ......... 6,328,304 54,227,221
Net change in unrealized appreciation
(depreciation) of investments ........... 121,434,254 101,424,060
-------------- --------------
Net increase in net assets resulting
from operations ...................... 121,213,600 149,848,540
Distribution to shareholders:
Net realized gains ...................... (49,922,048) (1,341,765)
Net increase from shares of beneficial
interest transactions-Note 5 ............ 385,094,904 207,110,227
-------------- --------------
Total increase in net assets .......... 456,386,456 355,617,002
Net assets:
Beginning of period ..................... 548,655,558 193,038,556
-------------- --------------
End of period (including accumulated net
investment losses of $15,407,079 and
$8,858,121, respectively) .............. $1,005,042,014 $ 548,655,558
============== ==============
See Notes to Financial Statements.
7
<PAGE>
SPECTRA FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD(I)
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED OCTOBER 31,
APRIL 30, -------------------------------------------------------------------------
2000 (IV) 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 10.76 $ 6.65 $ 5.74 $ 4.54 $ 6.98 $ 6.27
---------------------------------------------------------------------------------------
Net investment loss ..................... (0.02) (0.07) (0.02) (0.06)(ii) (0.08)(ii) (0.17)
Net realized and unrealized gain on
investments ............................ 2.91 4.22 0.98 1.26 0.41 2.41
---------------------------------------------------------------------------------------
Total from investment operations ........ 2.89 4.15 0.96 1.20 0.33 2.24
Distributions from net realized gains ... (0.93) (0.04) (0.05) -- (2.77) (1.53)
---------------------------------------------------------------------------------------
Net asset value, end of period .......... $ 12.72 $ 10.76 $ 6.65 $ 5.74 $ 4.54 $ 6.98
=======================================================================================
Total Return (iii) ...................... 27.09% 62.66% 16.94% 26.45% 12.68% 57.72%
=======================================================================================
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) ....................... $1,005,042 $ 548,656 $ 193,039 $ 84,988 $ 11,485 $ 5,374
=======================================================================================
Ratio of expenses excluding interest
to average net assets ................ 1.82% 1.83% 1.90%
=========================================
Ratio of expenses including interest
to average net assets ................ 1.82% 1.85% 1.96% 2.12% 2.55% 3.76%
=======================================================================================
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 ................... (1.50%) (1.52%) (1.24%) (1.06%) (1.69%) (3.05%)
=======================================================================================
Portfolio Turnover Rate ............... 40.19% 102.54% 190.74% 133.98% 197.04% 207.25%
=======================================================================================
Amount of debt outstanding at end
of period ............................ -- -- $ 705,000
========== =========== ==========
Average amount of debt outstanding
during the period .................... $ 128,434 $ 986,981 $1,044,096
========== =========== ==========
Average daily number of shares
outstanding during the period ........ 64,821,961 40,946,839 22,865,292
========== =========== ==========
Average amount of debt per share
during the period .................... -- $ 0.02 $ 0.05
========== =========== ==========
</TABLE>
(i) Per share data has been adjusted to reflect the effect of a 3 for 1 stock
split which occured April 23, 1999.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) 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.
(iv) Unaudited. Ratios have been annualized; total return has not been
annualized.
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.
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) REPURCHASE AGREEMENTS--The Fund enters into repurchase agreements with
approved institutions. The repurchase agreements are collateralized by U.S.
Government securities which are verified by the investment manager as being
either received and held in physical possession by the custodian or as having
been received by such custodian in book-entry form through the Federal Reserve
book-entry system. The investment manager monitors the value of the collateral
at the time the repurchase agreement is entered into and 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 Fund. Additional collateral is
obtained when necessary.
(d) LENDING OF PORTFOLIO SECURITIES--The Fund lends its securities to financial
institutions, provided that the market value of securities loaned will not at
any time exceed one-third of the Fund's total assets, as defined. The Fund earns
fees on the securities loaned which are included in interest income in the
accompanying Statement of Operations. 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 investment manager ensures that the loan is
collateralized by cash, letters of credit or U.S. Government securities that are
maintained at all times in an amount equal to at least 100 percent of the
current market value of the loaned securities. At April 30, 2000, the value of
securities loaned and collateral received were $198,643,484 and $193,308,161,
respectively.
(e) 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.
(f) 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.
(g) OTHER--These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
9
<PAGE>
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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, 2000, the Fund incurred fees of approximately $59,000
for services provided by Alger Services and reimbursed Alger Services
approximately $8,000 for transfer agent related expenses paid by Alger Services
on behalf of the Fund.
(c) BROKERAGE COMMISSIONS--During the six months ended April 30, 2000, the Fund
paid Fred Alger & Company, Incorporated ("Alger Inc."), an affiliate of Alger
Management, $322,695 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. 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
value of the Fund's average daily net assets.
NOTE 3--SECURITIES TRANSACTIONS:
During the six months ended April 30, 2000, purchases and sales of
investment securities, excluding short-term securities, aggregated $578,351,262
and $335,664,975, respectively.
NOTE 4--LINES OF CREDIT:
The Fund has both committed and uncommitted lines of credit with
banks. All borrowings have variable interest rates and are payable on demand. 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. For the six months
ended April 30, 2000, the Fund had borrowings which averaged $128,434 at a
weighted average interest rate of 6.78%.
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, 2000, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
----------- -------------
Shares sold ......................... 46,911,314 $ 648,025,441
Dividend reinvested ................. 3,808,210 47,336,055
Shares redeemed ..................... (22,702,585) (310,266,592)
----------- -------------
Net increase ........................ 28,016,939 $ 385,094,904
=========== =============
During the year ended October 31, 1999, transactions of shares of
beneficial interest were as follows:
SHARES AMOUNT
----------- -------------
Shares sold ......................... 67,279,182 $ 629,131,687
Dividends reinvested ................ 146,798 1,112,731
Shares redeemed ..................... (45,430,801) (423,134,191)
----------- -------------
Net increase ........................ 21,995,179 $ 207,110,227
=========== =============
10
<PAGE>
SPECTRA FUND
RESULTS OF SPECIAL MEETING OF SHAREHOLDERS (UNAUDITED)
A special meeting of shareholders was held on April 28, 2000. The following
matters were submitted to a shareholder vote with the following results:
Proposal 1--the election or reelection of the following as trustees of the Fund:
Fred M. Alger III, David D. Alger, Charles F. Baird, Jr., Roger P.
Cheever, Lester L. Colbert, Jr., Stephen E. O'Neil, Nathan E. Saint-Amand
and B. Joseph White.
Each of the candidates was elected or reelected and received at least 56,839,566
affirmative votes; no more than 941,476 votes were withheld for any candidate.
Proposal 2--the ratification of the selection of Arthur Andersen LLP as the
Fund's independent public accountants for the fiscal year ending October 31,
2000: For--56,358,667; Against--338,742; Abstain--1,083,634.
11
