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FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-01743 |
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The Alger Funds II |
(Exact name of registrant as specified in charter) |
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360 Park Avenue South New York, New York | | 10010 |
(Address of principal executive offices) | | (Zip code) |
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Mr. Hal Liebes Fred Alger Management, Inc. 360 Park Avenue South New York, New York 10010 |
(Name and address of agent for service) |
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Registrant’s telephone number, including area code: | 212-806-8800 | |
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Date of fiscal year end: | October 31 | |
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Date of reporting period: | October 31, 2014 | |
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ITEM 1. REPORTS TO STOCKHOLDERS.
The Alger Funds II |
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ANNUAL REPORT |
October 31, 2014 |
Table of Contents
THE ALGER FUNDS II
Shareholders’ Letter (Unaudited) | 1 |
Fund Highlights (Unaudited) | 15 |
Portfolio Summary (Unaudited) | 22 |
Schedules of Investments | 23 |
Statements of Assets and Liabilities | 57 |
Statements of Operations | 63 |
Statements of Changes in Net Assets | 66 |
Financial Highlights | 71 |
Notes to Financial Statements | 88 |
Report of Independent Registered Public Accounting Firm | 114 |
Additional Information (Unaudited) | 115 |
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Shareholders’ Letter | November 26, 2014 |
Dear Shareholders,
Earnings Growth Drives Equity Gains
Investors who downplay the powerful impact of corporate earnings on equities would be well served to analyze capital markets during the 12-month reporting period ended October 31. Indeed, concerns over equity valuations, global economic growth, geopolitical turmoil, and monetary policy drove considerable market volatility during the period. Yet strong corporate earnings and to a lesser extent U.S. economic growth later in the period supported investor sentiment, resulting in the S&P 500 index generating a 17.27% return and closing the period at a record high of 2018.05. Concerns about weakening global economic growth, meanwhile, resulted in foreign securities trailing the S&P 500. For the reporting period, the MSCI ACWI ex USA Index returned 0.49% and the MSCI Emerging Markets Index returned 0.98%. In this shareholder letter, we highlight how strong corporate earnings in the U.S. supported investor sentiment during the reporting period even as a variety of unfavorable developments caused market volatility.
Growth Scare Creates Buying Opportunity
The reporting period started with the S&P 500 having a forward price-to-earnings capitalization-weighted ratio of 14.94 compared to a 20-year average of 16.17. At Alger, we maintained that the ratio was reasonable considering corporations’ potential to grow earnings as the U.S. economy was expanding. We also held to our belief that the valuations were reasonable from a historical perspective. Yet some investors and various pundits maintained that uneven economic growth would fail to support such valuations. Those fears escalated when severe winter weather appeared to dampen gains in job creation and other economic indicators. By mid-February 2014, skittish investors reached a tipping point and sparked a “growth scare” or the selloff of high-growth stocks that were trading at elevated valuations. To illustrate the magnitude of this reaction, we note that the NYSE Arca Biotechnology Index, which consists of high-growth biotech companies, and the NASDAQ Internet Index, which consists of high-growth Internet companies, both declined substantially. The Arca Biotechnology Index dropped 19.64% from February 25 to April 14 and the NASDAQ Internet Index declined 20.42% from March 6 to May 8. At the same time, investors flocked to defensive names such as Wal-Mart Stores, Inc. and “old” technology names such as Microsoft Corp. and International Business Machines Corp.
At that time, we urged investors to use the selloff as a buying opportunity, which we believe was a timely call.(1) From its April 14, 2014 low to the end of the reporting period, the Arca Biotechnology Index generated a 41.39% return compared to the 12.33% return of the S&P 500. Similarly, the NASDAQ Internet Index generated a 15.28% return from its May 8, 2014 low to the end of the reporting period, compared to the 8.49% return of the S&P 500. In making the call, we reasoned that investors
(1) See Alger Funds II Shareholder letter May 20, 2014, “Fear of Growth Stocks Creates Buying Opportunities.
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would eventually return their focus to the potential for high-growth companies to rapidly increase their earnings.
Even with this bounce-back in stock prices we maintain that valuations are still reasonable among leading high-growth companies, especially when considering that many companies have strong potential for expanding their earnings. In the biotech industry, for example, many companies have potential to benefit from robust product development pipelines and increasing Food and Drug Administration (FDA) approvals. The increase in successful late-stage clinical trials and FDA approvals over the past three years, furthermore, points to an improvement in research and development productivity for the industry. The quality of products being developed has also improved as illustrated by the creation of new drugs that target rare diseases that have had limited treatment options. In addition, some new drugs are major advancements in treating life threatening diseases. As of the end of the reporting period, the large-cap biotech group was trading at a forward price-to-earnings ratio of 19.6 times 2016 earnings versus the 10-year average of 21.4. The average three-year per share revenue growth for the group is estimated to be 22% and the average three-year per share earnings growth is estimated to be 39%.
Global Economic Concerns
During the reporting period, investors also struggled with fears that weakening economic growth in China and disappointing results in Europe would curtail corporations’ revenues abroad and hinder U.S. exports. China’s GDP growth has been slowly moderating and we believe it will eventually reach a sustainable rate, yet many investors have been concerned about the country’s economy. Even with moderating economic growth, we believe the country’s expansion is still occurring at a substantial rate with GDP growing 7.7% in 2013 and the government having set a 7.5% target for this year. We note that the moderation is helping to curtail global inflation as the country’s demand for commodities softens.
Investors also took note of weak conditions in the eurozone. In September, the Organisation for Economic Co-operation and Development lowered its 2014 growth forecast for the region to 0.8% from a forecast of 1.2% that it made in May. An inflation rate of 0.3% in August, which was below the European Central Bank’s (ECB) target of 2%, also underscored economic weakness. In September, the ECB responded by cutting the rate that it charges banks for short-term loans to 0.05% from 0.15%. The 0.15% rate reflected a June rate cut. The ECB also increased the fee that it charges banks to store money to 0.2% from a 0.1% rate that it implemented in June. Shortly after announcing the September rate changes, ECB President Mario Draghi said the bank will implement unconventional monetary policy by purchasing securitized debt and covered bonds to help ease the flow of bank funding within the region. We believe eurozone countries need to implement structural reforms, including changes to labor policies, business regulations, and taxation to promote growth, yet we remain optimistic that conditions will improve. We note that growth this year has been a reversal of contractions experienced in prior years: in 2013 GDP declined 0.4% and in 2012 it dropped 0.6%. We are also optimistic that the eurozone will benefit from a weaker euro and from monetary policy.
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Geopolitical Turmoil Rattles Investors
Russia’s annexation of the Crimea region of Ukraine also generated concerns. The Russian actions provoked strong criticism from the U.S. and the European Union. Russia quickly became subjected to targeted economic sanctions which sparked fears that the country’s economy may weaken further. The actions also sparked fears that Russia would retaliate by curtailing its exports of gas to Europe, which receives more than 30% of its gas from the country. Tensions escalated in July when a Malaysia Airlines jet was shot down in eastern Ukraine. At times, U.S equities retreated in response to Russia increasing its troops along the Ukraine border, and at other times equities rallied when the conflict appeared to be moderating. The conflict continues to simmer with ongoing tension between Ukrainians who want the country to become part of Russia and others who want the country to remain independent.
Also during the reporting period, terrorist organization ISIS, or the Islamic State, launched an insurgency in Iraq, which sparked fears that oil production in the country could be disrupted. With investors already fearful that Russia may curtail its oil and gas exports in response to sanctions, the ISIS actions escalated concerns over the world’s energy supply. The U.S. responded by forming an international coalition that has been launching airstrikes against ISIS. As the reporting period wound down, ISIS remained a considerable threat to political stability, but some observers maintained that its rate of expansion appeared to be slowing, a result of actions by Iraqi ground forces, damage to the organization’s financial base in Syria, unfavorable political demographics, resistance from local communities, and airstrikes.
U.S. Monetary Policy and Economic Growth
During the reporting period, the U.S. Federal Reserve stuck with its proposed October timeframe for ending asset purchases or quantitative easing. Investors, meanwhile, began to anticipate when the central bank will start to raise interest rates from record low levels as economic growth continued. Many observers have speculated that the change will occur next year. Favorable economic news, however, occasionally caused investors to sell equities in response to fears that that the Federal Reserve may raise rates sooner than anticipated. At times, those fears were alleviated by Federal Reserve officials emphasizing that the central bank remains committed to its accommodative policy for the foreseeable future. Throughout the reporting period, we remained unconcerned about the potential for rate increases. Market interest rates remain extremely low and the economy has considerable capacity for growth.
Corporate Earnings Support Equity Markets
Broadly speaking, expectations for continuing fiscal stimulus and economic expansion supported investor sentiment. More importantly, strong corporate earnings also drove equity performance. The last two months of the reporting period, for example, saw a considerable market decline reverse after corporate earnings helped support investor enthusiasm for equities. After reaching a peak on September 19, the S&P 500 declined 9.83% as investors grew weary of weakening global economic growth and geopolitical turmoil. The downward spiral quickly reversed in mid-
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October, however, as corporate America started releasing strong earnings reports and the S&P 500 went on to close the reporting period at a record high. Noteworthy market movers included Caterpillar Inc. and 3M Company, both of which reported stronger-than-expected third-quarter results and raised their guidance for the remainder of 2014. Comcast Corp. and General Motors Co. also supported investor sentiment with per-share earnings that beat expectations. They were not isolated examples—with 360 companies having reported, the S&P 500 was on pace to grow third-quarter earnings 7.5% year over year as of October 31, compared to a 4.5% growth rate that analysts had expected, according to FactSet. Earlier in the reporting period, investor sentiment was supported by second-quarter S&P 500 earnings growing 6% and revenues growing 4.5%. Corporations were also able to grow earnings and revenues 3% during the first quarter despite a decline in GDP for the time period.
Portfolio Management
Rather than quickly responding to market volatility and the frequently changing whims of investors, we continued to follow our disciplined and research-driven investment strategy that seeks companies with strong potential to grow earnings. We continued to seek leading companies with compelling products and services that have potential to benefit from large and quickly evolving trends, such as the growing use of Internet-connected devices, increasing advertising on the web, cloud computing, and medical breakthroughs. We maintain that such companies offer attractive potential for long-term performance because equity prices are typically driven by corporate earnings. We also held to our view that the U.S. economy is stronger than commonly believed.
Going Forward
We continue to believe that equities have potential for generating substantial gains in the foreseeable future as a growing economy provides fertile ground for businesses to grow their earnings. An expanding labor force is strengthening the U.S. consumer, which should help corporations grow revenues and earnings. At the same time, consumers are getting relief from pain at the gasoline pump with the average U.S. price of automobile fuel dropping from approximately $3.27 per gallon in November of 2013 to $3.00 as of the end of the reporting period. Low energy costs resulting from an ongoing U.S. renaissance in oil and gas production, meanwhile, are helping to provide a favorable business environment.
Strong corporate fundamentals should also support equity gains as corporations continue to return capital to shareholders in the form of dividends and stock buybacks. According to Markit, dividend payments from S&P 500 companies are expected to increase 10% this year and are likely to continue growing next year. Stock buybacks have also increased. For the 12-month period ended June 30, S&P 500 companies repurchased $532.9 billion in stocks, which was the highest level since the start of 2008, according to FactSet.
The health of corporations is also illustrated by strong balance sheets. As of the end of the second quarter, S&P 500 non-financial companies held $1.35 trillion in cash
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and marketable securities, according to FactSet. While falling short of the all-time record of $1.36 trillion set at the end of 2013, it still represents a high level and a 6.9% year-over-year increase, reports FactSet. In another indication of strong fundamentals, large capitalization companies excluding financials and utilities had a free-cash flow yield of 4.38% at the end of October while the average from November of 1952 through the end of the reporting period was only 3.67%, according to Empirical Research Partners. We also maintain that valuations are reasonable, with the S&P 500 having a forward capitalization-weighted P/E ratio of 15.08 at the end of the reporting period compared to a 20-year historical average of 16.28.
Portfolio Matters
Alger Spectra Fund
The Alger Spectra Fund returned 16.56% for the fiscal 12-month period ended October 31, 2014, compared to the 16.39% return of the Russell 3000 Growth Index.
During the period, the largest sector weightings were Information Technology and Consumer Discretionary. The largest sector overweight was Health Care and the largest sector underweight was Consumer Staples. Relative outperformance in the Information Technology and Health Care sectors was the most important contributor to performance, while Energy and Industrials were among sectors that detracted from results.
For the reporting period, the Fund’s average portfolio allocation to long positions, which was increased by leverage, was 104.86% of assets. In aggregate, long positions contributed 17.40% to performance. The Fund’s average allocation to short positions was -7.17%. The short positions provided a 0.84% drag on performance.
Among the most important relative contributors were NXP Semiconductors NV; Facebook, Inc., Cl. A; HCA Holdings, Inc.; CVS Caremark Corp.; and Actavis PLC. Shares of social network operator Facebook performed strongly during the reporting period as the company was able to increase revenues from advertisers who are targeting users who access the firm’s website with mobile devices.
Conversely, detracting from overall results on a relative basis were Microsoft Corp.; Oracle Corp.; Allergan, Inc.; and Myriad Genetics, Inc. SoftBank Corp., which is a Japanese telecommunications and Internet company, also detracted from results. Weakness in the company’s telecommunications business and the yen caused the performance of shares of SoftBank to detract from the Fund’s results during the reporting period.
Among short positions, Waddell & Reed Financial, Inc., Cl. A contributed to performance. The company is an asset manager that offers equity and fixed income funds. It has been experiencing redemptions from its funds which has driven the price of Waddell & Reed stock down. Shorting entails borrowing stock and selling it. As the stock price of Waddell & Reed declined, the portfolio’s cost of replacing the
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borrowed shares also declined, resulting in the position having a positive impact on performance.
Short position Oracle Corp. detracted from performance. Shares of Oracle gained in value with noteworthy performance in the final quarter of 2013. The company develops, manufactures, markets, hosts, and supports database and middleware software, hardware systems, and software applications. We believed investors had low expectations for Oracle because of the company’s aging product line, but the company maintained its guidance which supported the performance of the shares.
Alger Green Fund
The Alger Green Fund returned 7.99% for the fiscal 12-month period ended October 31, 2014, compared to the 16.39% return of the Russell 3000 Growth Index.
During the period, the largest sector weightings were Information Technology and Consumer Discretionary. The largest sector overweight was Industrials and the largest sector underweight was Health Care. Relative outperformance in the Utilities and Industrials sectors was the most important contributor to performance, while Health Care and Consumer Staples were among sectors that detracted from results.
Among the most important relative contributors were Facebook, Inc., Cl. A; Acuity Brands, Inc.; Broadcom Corp., Cl. A; NIKE, Inc., Cl. B; and Tesla Motors, Inc. Shares of Facebook performed strongly in response to reasons described in the Alger Spectra Fund discussion.
Conversely, detracting from overall results on a relative basis were Whole Foods Market, Inc.; Cree, Inc.; Microsoft Corp.; GNC Holdings, Inc., Cl. A; and Yingli Green Energy Holding Co. Ltd. Sponsored ADR. Share performance of GNC holdings weakened in the first quarter. The company is a retailer of nutritional supplements and other health and wellness products. Unusually severe winter weather and slower industry sales caused a reduction in sales growth and earnings expectations, which hurt the performance of its stock.
Alger Analyst Fund
The Alger Analyst Fund returned 9.83% for the fiscal 12-month period ended October 31, 2014, compared to the 14.59% return of the Russell Midcap Growth Index.
During the period, the largest sector weightings were Consumer Discretionary and Information Technology. The largest sector overweight was Consumer Discretionary and the largest sector underweight was Industrials. Relative outperformance in the Health Care and Materials sectors was the most important contributor to performance, while Information Technology and Consumer Discretionary were among sectors that detracted from results.
Among the most important relative contributors were HCA Holdings, Inc.; DBV Technologies SA; MGM Resorts International; and ServiceNow, Inc. Gilead Sciences, Inc. also contributed to performance. The company specializes in treatments for
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infectious, cardiovascular, and pulmonary diseases. Its Solvaldi product is used to treat hepatitis C. Gilead shares performed strongly late in the reporting period after the company said sales of Solvaldi had exceeded street expectations.
Conversely, detracting from overall results on a relative basis were Chipotle Mexican Grill, Inc.; Control4 Corp.; CommVault Systems, Inc.; and AcelRx Pharmaceuticals, Inc. The ExOne Co. also detracted from results. The company sells three-dimensional printing machines and printing products. Performance of The ExOne Co. shares weakened after the company reported second-quarter results that missed expectations and lowered its 2014 margin guidance, but reiterated its 2014 revenue guidance. The miss is largely attributable to execution issues and unexpected costs of about $1 million related to a materials contract.
Alger Dynamic Opportunities Fund
The Alger Dynamic Opportunities Fund returned 6.15% for the fiscal 12-month period ended October 31, 2014, compared to the 17.27% return of the Fund’s benchmark, the S&P 500 index.
The Fund uses a strategy that includes long and short positions. The strategy seeks to generate market-like returns over long term periods, generally three to five years, while limiting the impact upon performance of market downturns. During shorter-term periods, such strategies may underperform when markets generate strong gains, perform in-line or modestly outperform when markets are flat and outperform when markets decline.
During the reporting period, the Fund’s long exposure decreased from 69.22% to 66.50% of assets. The Fund’s average long exposure was 72.66%. Long positions, in aggregate, underperformed the Fund’s benchmark and had an approximately 8.67% contribution to absolute performance. Short positions were decreased from -20.81% to -16.30% of assets. The average allocation to short positions was -20.19%. Short positions trailed the performance of the Fund’s benchmark and detracted 2.52% from performance. Average net exposure, which is the difference between long and short exposure, was 52.47%.
During the period, the largest sector weightings were Information Technology and Health Care. Based on the net of long and short positions, no sectors were overweight during the period. The largest sector underweight was Financials. Relative outperformance in the Materials and Telecommunication Services sectors was the most important contributor to performance, while Financials and Industrials detracted from results.
Among the most important relative contributors were NXP Semiconductors NV; HCA Holdings, Inc.; Rockwood Holdings, Inc.; Avago Technologies Ltd.; and Facebook, Inc., Cl. A. Shares of Facebook performed strongly in response to reasons described in the Alger Spectra Fund discussion.
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Conversely, detracting from overall results on a relative basis were Microsoft Corp.; Oracle Corp.; Quiksilver, Inc.; and Apple, Inc. AcelRx Pharmaceuticals, Inc. also detracted from results. The company is developing Zalviso for the in-patient treatment of moderate to severe pain. Performance of AcelRx shares weakened in the third quarter after the FDA announced that it needed additional data on Zalviso. The development was disappointing as it will delay government approval of the product and it hurts management credibility.
Among short positions, Waddell & Reed Financial, Inc., Cl. A contributed to performance and Oracle Corp. detracted from results. Performance of those positions was described in the Spectra Fund discussion.
Alger Emerging Markets Fund
The Alger Emerging Markets Fund returned -1.36% for the fiscal 12-month period ended October 31, 2014, compared to the 0.98% return of its benchmark, the MSCI Emerging Markets Index.
During the reporting period, the largest sector weightings were Financials and Information Technology. The largest sector overweight was Consumer Discretionary and the largest sector underweight was Financials. Relative outperformance in the Financials and Energy sectors was the most important contributor to performance, while Information Technology and Consumer Discretionary detracted from results.
Holdings in India, Mexico, China, and Russia provided the greatest contributions to relative performance while South Korea, Taiwan, South Africa and Brazil were among countries that detracted from results.
Among the most important relative contributors were Infraestructura Energetica Nova SAB de CV; Aurobindo Pharma Ltd; Tata Motors Ltd.; and PT Tower Bersama Infrastructure Tbk. Motherson Sumi Systems Ltd. also contributed to results with strong performance during the third quarter. The company is a global auto parts supplier. It reported fourth-quarter, fiscal year 2014 earnings that were up 57% year over year, which met expectations. The company also made its first acquisition in North America when it agreed to buy the wiring harness business of Stoneridge, Inc. In September, the chairman of Motherson suggested that the company may accelerate building additional manufacturing capacity during the second half of fiscal year 2015, and he provided revenue guidance for the fiscal year that was slightly above Wall Street estimates.
Conversely, detracting from overall results on a relative basis were Taiwan Semiconductor Manufacturing Co., Ltd.; Ginko International Co., Ltd.; Compal Electronics, Inc.; and Yandex NV. South Korea-listed Sapphire Technology Co. Ltd., which is the largest sapphire ingot supplier in the world, also detracted from performance. Sapphire ingot is used in the manufacturing of displays on smart phones. Apple’s iPhone 6 and 6 Plus models were released in the third quarter without having sapphire cover glass and Apple indicated it was looking for sapphire
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in only two out of three versions of its watch screens. This left investors questioning the viability of sapphire cover glass.
As always, we strive to deliver consistently superior investment results to you, our shareholders, and we thank you for your business and continued confidence in Alger.
Sincerely,
Daniel C. Chung, CFA
Chief Investment Officer
Fred Alger Management, Inc.
The following positions represented the noted percentages of Alger assets under management as of October 31, 2014: Caterpillar Inc., 0.00%; 3M Company, 0.00%; Comcast Corp., 1.77%; General Motors Co., 0.01%; Wal-Mart Stores, Inc., 0.00%; Microsoft Corp., 2.04%; International Business Machines Corp., 0.01%; Markit, 0.00%; Empirical Research Partners, 0.00%; and FactSet, 0.00%.
Investors cannot invest directly in an index. Index performance does not reflect the deduction for fees, expenses, or taxes.
This report and the financial statements contained herein are submitted for the general information of shareholders of the funds. This report is not authorized for distribution to prospective investors in the funds unless proceeded or accompanied by an effective prospectus for the funds. Fund performance returns represent the 12-month fiscal period return of Class A shares prior to the deduction of any sales charges and include the reinvestment of any dividends or distributions.
The performance data quoted represents past performance, which is not an indication or guarantee of future results.
Standardized performance results can be found on the following pages. The investment return and principal value of an investment in a fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end, visit us at www.alger.com or call us at (800) 992-3863.
The views and opinions of the funds’ management in this report are as of the date of the Shareholders’ Letter and are subject to change at any time subsequent to this date. There is no guarantee that any of the assumptions that formed the basis for the opinions stated herein are accurate or that they will materialize. Moreover, the information forming the basis for such assumptions is from sources believed to be reliable; however, there is no guarantee that such information is accurate. Any
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securities mentioned, whether owned in a fund or otherwise, are considered in the context of the construction of an overall portfolio of securities and therefore reference to them should not be construed as a recommendation or offer to purchase or sell any such security. Inclusion of such securities in a fund and transactions in such securities, if any, may be for a variety of reasons, including without limitation, in response to cash flows, inclusion in a benchmark, and risk control. The reference to a specific security should also be understood in such context and not viewed as a statement that the security is a significant holding in a fund. Please refer to the Schedule of Investments for each fund which is included in this report for a complete list of fund holdings as of October 31, 2014. Securities mentioned in the Shareholders’ Letter, if not found in the Schedule of Investments, may have been held by the funds during the fiscal period.
A Word about Risk
Growth stocks tend to be more volatile than other stocks as the price of growth stocks tends to be higher in relation to their companies’ earnings and may be more sensitive to market, political and economic developments. Investing in the stock market involves gains and losses and may not be suitable for all investors. Stocks of small- and mid-sized companies are subject to greater risk than stocks of larger, more established companies owing to such factors as limited liquidity, inexperienced management, and limited financial resources. Investing in foreign securities involves additional risk (including currency risk, risks related to political, social or economic conditions, and risks associated with foreign markets, such as increased volatility, limited liquidity, less stringent regulatory and legal system, and lack of industry and country diversification), and may not be suitable for all investors. Special risks associated with investments in emerging country issuers include exposure to currency fluctuations, less liquidity, less developed or less efficient trading markets, lack of comprehensive company information, political instability and different auditing and legal standards.
Foreign currencies are subject to risks caused by inflation, interest rates, budget deficits and low savings rates, political factors and government controls. Some of the countries where a fund can invest may have restrictions that could limit the access to investment opportunities. The securities of issuers located in emerging markets can be more volatile and less liquid than those of issuers in more mature economies. Investing in emerging markets involves higher levels of risk, including increased information, market, and valuation risks, and may not be suitable for all investors. Funds that participate in leveraging are subject to the risk that borrowing money to leverage will exceed the returns for securities purchased or that the securities purchased may actually go down in value; thus, the fund’s net asset value can decrease more quickly than if the fund had not borrowed. The Alger Spectra Fund and the Alger Dynamic Opportunities Fund may engage in short sales, which presents additional risk. To engage in a short sale, a fund arranges with a broker to borrow the security being sold short. In order to close out its short position, a fund will replace the security by purchasing the security at the price prevailing at the time of replacement. The fund will incur a loss if the price of the security sold short has
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increased since the time of the short sale and may experience a gain if the price has decreased since the short sale.
The Alger Green Fund’s environmental focus may limit the investment options available to the Fund and may result in lower returns than returns of funds not subject to such investment considerations. For a more detailed discussion of the risks associated with a fund, please see the prospectus.
Before investing, carefully consider a fund’s investment objective, risks, charges, and expenses.
For a prospectus or a summary prospectus containing this and other information about the Alger Funds II call us at (800) 992-3863 or visit us at www.alger.com. Read it carefully before investing.
Fred Alger & Company, Incorporated, Distributor. Member NYSE Euronext, SIPC.
NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.
Definitions:
· The S&P 500 index is an unmanaged index generally representative of the U.S. stock market without regard to company size.
· The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
· The NYSE Arca Biotechnology Index is an equal dollar-weighted index designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services.
· The NASDAQ Internet Index is a modified market capitalization-weighted index designed to track the performance of the largest and most liquid U.S.-listed companies engaged in internet-related businesses that are listed on the NASDAQ Stock Market, the New York Stock Exchange (NYSE) or NYSE Amex.
· The Organisation for Economic Co-operation and Development is a group of 30 developed countries that discuss and develop economic and social policy.
· The Thomson Reuters/University of Michigan Consumer Sentiment Index measures consumers’ outlook of the economy.
· Empirical Research Partners is a broker-dealer that provides research on a range of topics of interest to institutional investors.
· Markit is a global, diversified provider of financial information.
· The Russell 3000 Growth Index measures the performance of the broad growth segment of the U.S. equity universe. It includes those Russell 3000 Index companies with higher price-to-book ratios and higher forecasted growth values.
· The Russell Midcap Growth Index measures the performance of the mid-cap growth segment of the U.S. equity universe. It includes those Russell Midcap
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Index companies with higher price-to-book ratios and higher forecasted growth values.
· FactSet provides computer-based financial data and analysis for financial professionals, including investment managers, hedge funds and investment bankers.
· The MSCI ACWI ex USA is a market capitalization-weighted index designed to provide a broad measure of equity market performance throughout the world, including both developed and emerging markets, but excluding the United States.
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The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains.
Alger Spectra Fund’s Class A shares performance prior to September 23, 2008 is that of the fund’s Class N shares, adjusted to reflect applicable sales charges and operating expenses.
FUND PERFORMANCE AS OF 9/30/14 (Unaudited)
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | |
Alger Spectra Class A | | 14.48 | % | 15.51 | % | 13.32 | % |
Alger Spectra Class C* | | 18.96 | % | 15.90 | % | 13.11 | % |
Alger Spectra Class I† | | 20.86 | % | 16.84 | % | 14.02 | % |
| | 1 YEAR | | 5 YEARS | | Since
12/29/2010 | |
Alger Spectra Class Z | | 21.28 | % | n/a | | 15.94 | % |
* Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares.
† Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, which has been adjusted to remove the front-end sales charge imposed by Class A shares.
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Alger Green Fund’s Class A shares performance figures prior to January 12, 2007, are those of the Alger Green Institutional Fund and performance prior to October 19, 2006, represents the performance of the Alger Socially Responsible Growth Institutional Fund Class I, the predecessor fund to the Alger Green Institutional Fund. The predecessor fund followed different investment strategies and had a different portfolio manager. As of January 12, 2007, the Alger Green Institutional Fund became the Alger Green Fund.
FUND PERFORMANCE AS OF 9/30/14 (Unaudited)
AVERAGE ANNUAL TOTAL RETURNS
| | 1
YEAR | | 5
YEARS | | 10
YEARS | | SINCE
INCEPTION | |
Alger Green Class A (Inception 12/4/00) | | 4.67 | % | 10.41 | % | 8.42 | % | 1.23 | % |
Alger Green Class C (Inception 9/24/08)* | | 8.53 | % | 10.76 | % | n/a | | 7.81 | % |
Alger Green Class I (Inception 9/24/08)† | | 10.43 | % | 11.61 | % | n/a | | 8.64 | % |
Alger Analyst Class A (Inception 3/30/07) | | 3.16 | % | 12.03 | % | n/a | | 6.06 | % |
Alger Analyst Class C (Inception 9/24/08)* | | 7.07 | % | 12.49 | % | n/a | | 6.06 | % |
Alger Analyst Class I (Inception 9/24/08)† | | 8.84 | % | 13.27 | % | n/a | | 6.81 | % |
Alger Dynamic Opportunities Class A (Inception 11/2/09) | | 1.32 | % | n/a | | n/a | | 5.62 | % |
Alger Dynamic Opportunities Class C (Inception 12/29/10)‡ | | 5.13 | % | n/a | | n/a | | 5.97 | % |
Alger Dynamic Opportunities Class Z (Inception 12/29/10) | | 7.18 | % | n/a | | n/a | | 6.58 | % |
Alger Emerging Markets Class A (Inception 12/29/10) | | (2.09 | )% | n/a | | n/a | | (2.71 | )% |
Alger Emerging Markets Class C (Inception 12/29/10) | | 1.58 | % | n/a | | n/a | | (2.16 | )% |
Alger Emerging Markets Class I (Inception 12/29/10) | | 3.34 | % | n/a | | n/a | | (1.45 | )% |
Alger Emerging Markets Class Z (Inception 2/28/14) | | n/a | | n/a | | n/a | | 0.87 | % |
* | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares. |
† | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, which has been adjusted to remove the front-end sales charge imposed by Class A shares. |
‡ | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to December 29, 2010, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares. |
14
ALGER SPECTRA FUND
Fund Highlights Through October 31, 2014 (Unaudited)
The chart above illustrates the change in value of a hypothetical $10,000 investment made in the Alger Spectra Fund Class A shares, with an initial 5.25% maximum sales charge, and the Russell 3000 Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2014. The figures for the Alger Spectra Fund Class A and the Russell 3000 Growth Index include reinvestment of dividends. Performance for the Alger Spectra Fund Class C, Class I and Class Z shares will vary from the results shown above due to the operating expenses and the current maximum sales charge of each share class. Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.
PERFORMANCE COMPARISON AS OF 10/31/14
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
12/31/1974 | |
Class A (Inception 7/28/69) | | 10.46 | % | 16.70 | % | 13.16 | % | 16.03 | % |
Class C (Inception 9/24/08)* | | 14.69 | % | 17.09 | % | 12.95 | % | 15.32 | % |
Class I (Inception 9/24/08)† | | 16.63 | % | 18.05 | % | 13.85 | % | 16.20 | % |
Russell 3000 Growth Index | | 16.39 | % | 17.52 | % | 9.09 | % | n/a | |
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
12/29/2010 | |
Class Z (Inception 12/29/10) | | 17.01 | % | n/a | | n/a | | 15.86 | % |
Russell 3000 Growth Index | | 16.39 | % | n/a | | n/a | | 15.39 | % |
The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. Class A, C, and I historical performance is calculated from December 31, 1974, the first full calendar year that Fred Alger Management, Inc. was the Fund’s investment advisor. The Fund operated as a closed-end fund from August 23, 1978 to February 12, 1996, during which time the calculation of total return assumes dividends were reinvested at market value. Had dividends not been reinvested, performance would have been lower. The chart 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. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863
* | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares. |
15
† | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, which has been adjusted to remove the front-end sales charge imposed by Class A shares. |
16
ALGER GREEN FUND
Fund Highlights Through October 31, 2014 (Unaudited)
The chart above illustrates the change in value of a hypothetical $10,000 investment made in the Alger Green Fund Class A shares, with an initial 5.25% maximum sales charge, and the Russell 3000 Growth Index (an unmanaged index of common stocks) for the ten years ended October 31, 2014. The figures for the Alger Green Fund Class A and the Russell 3000 Growth Index include reinvestment of dividends. Performance for the Alger Green Fund Class C and Class I shares will vary from the results shown above due to the operating expenses and the current maximum sales charge of each share class. Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.
PERFORMANCE COMPARISON AS OF 10/31/14
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
12/4/2000 | |
Class A (Inception 12/4/00) | | 2.28 | % | 11.42 | % | 8.37 | % | 1.36 | % |
Russell 3000 Growth Index | | 16.39 | % | 17.52 | % | 9.09 | % | 4.01 | % |
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
9/24/2008 | |
Class C (Inception 9/24/08) | | 6.22 | % | 11.72 | % | n/a | | 8.03 | % |
Class I (Inception 9/24/08) | | 7.91 | % | 12.58 | % | n/a | | 8.85 | % |
Russell 3000 Growth Index | | 16.39 | % | 17.52 | % | n/a | | 12.87 | % |
The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. Performance figures prior to January 12, 2007, are those of the Alger Green Institutional Fund and performance prior to October 19, 2006, represents the performance of the Alger Socially Responsible Growth Institutional Fund Class I, the predecessor fund to the Alger Green Institutional Fund. The predecessor fund followed different investment strategies and had a different portfolio manager. As of January 12, 2007, the Alger Green Institutional Fund became the Alger Green Fund. The chart 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. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863.
17
ALGER ANALYST FUND
Fund Highlights Through October 31, 2014 (Unaudited)
The chart above illustrates the change in value of a hypothetical $10,000 investment made in the Alger Analyst Fund Class A shares, with an initial 5.25% maximum sales charge, and the Russell Midcap Growth Index (an unmanaged index of common stocks) from March 30, 2007, the inception date of the Alger Analyst Fund Class A, through October 31, 2014. The figures for the Alger Analyst Fund Class A and the Russell Midcap Growth Index include reinvestment of dividends. Performance for the Alger Analyst Fund Class C and Class I shares will vary from the results shown above due to the operating expenses and the current maximum sales charge of each share class. Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.
PERFORMANCE COMPARISON AS OF 10/31/14
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
3/30/2007 | |
Class A (Inception 3/30/07) | | 3.98 | % | 13.73 | % | n/a | | 6.36 | % |
Class C (Inception 9/24/08)* | | 8.03 | % | 14.18 | % | n/a | | 6.36 | % |
Class I (Inception 9/24/08)† | | 9.84 | % | 14.96 | % | n/a | | 7.11 | % |
Russell Midcap Growth Index | | 14.59 | % | 18.73 | % | n/a | | 8.47 | % |
The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. The chart 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. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863.
* | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares. |
† | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to September 24, 2008, inception of the class, is that of the Fund’s Class A shares, which has been adjusted to remove the front-end sales charge imposed by Class A shares. |
18
ALGER DYNAMIC OPPORTUNITIES FUND
Fund Highlights Through October 31, 2014 (Unaudited)
The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Dynamic Opportunities Fund Class A shares, with an initial 5.25% maximum sales charge, and the S&P 500 Index and the Blended S&P 500/3-Month London Interbank Offered Rate (“LIBOR”) (an unmanaged indices of common stocks) from November 2, 2009, the inception date of the Alger Dynamic Opportunities Fund Class A, through October 31, 2014. The figures for the Alger Dynamic Opportunities Fund Class A and the S&P 500 Index and the Blended S&P 500/LIBOR include reinvestment of dividends. Performance for the Alger Dynamic Opportunities Fund Class C and Class Z shares will vary from the results shown above due to the operating expenses and the current maximum sales charge of each share class. Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.
PERFORMANCE COMPARISON AS OF 10/31/14
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
11/2/2009 | |
Class A (Inception 11/2/09) | | 0.61 | % | n/a | | n/a | | 5.67 | % |
Class C (Inception 12/29/10)* | | 4.39 | % | n/a | | n/a | | 6.01 | % |
S&P 500 Index | | 17.27 | % | n/a | | n/a | | 16.56 | % |
Blended S&P 500 / LIBOR | | 8.53 | % | n/a | | n/a | | 8.39 | % |
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
12/29/2010 | |
Class Z (Inception 12/29/10) | | 6.52 | % | n/a | | n/a | | 6.65 | % |
S&P 500 Index | | 17.27 | % | n/a | | n/a | | 15.48 | % |
Blended S&P 500 / LIBOR | | 8.53 | % | n/a | | n/a | | 7.83 | % |
The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. The chart 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. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863.
* | Since inception performance is calculated since the inception of the Class A shares. Historical performance prior to December 29, 2010, inception of the class, is that of the Fund’s Class A shares, reduced to reflect the current maximum sales charge and the higher operating expenses of Class C shares. |
19
ALGER EMERGING MARKETS FUND
Fund Highlights Through October 31, 2014 (Unaudited)
The chart above illustrates the change in value of a hypothetical $10,000 investment made in Alger Emerging Markets Fund Class A shares, with an initial 5.25% maximum sales charge, and the MSCI Emerging Markets Index (an unmanaged index of common stocks) from December 29, 2010, the inception date of the Alger Emerging Markets Fund Class A, through October 31, 2014. The figures for the Alger Emerging Markets Fund Class A and the MSCI Emerging Markets Index include reinvestment of dividends. Performance for the Alger Emerging Markets Fund Class C, Class I and Class Z shares will vary from the results shown above due to differences in expense and sales charges those classes bear. Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.
PERFORMANCE COMPARISON AS OF 10/31/14
AVERAGE ANNUAL TOTAL RETURNS
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
12/29/2010 | |
Class A (Inception 12/29/10) | | (6.53 | )% | n/a | | n/a | | (2.41 | )% |
Class C (Inception 12/29/10) | | (3.00 | )% | n/a | | n/a | | (1.89 | )% |
Class I (Inception 12/29/10) | | (1.37 | )% | n/a | | n/a | | (1.18 | )% |
MSCI Emerging Markets Index | | 0.98 | % | n/a | | n/a | | (0.03 | )% |
| | 1 YEAR | | 5 YEARS | | 10 YEARS | | Since
2/28/2014 | |
Class Z (Inception 2/28/14) | | n/a | | n/a | | n/a | | 1.84 | % |
MSCI Emerging Markets Index | | n/a | | n/a | | n/a | | 7.58 | % |
20
The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. Class A returns reflect the maximum initial sales charge and Class C returns reflect the applicable contingent deferred sales charge. The chart 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. Current performance may be higher or lower than the performance quoted. For updated performance, visit us at www.alger.com or call us at (800) 992-3863.
21
PORTFOLIO SUMMARY†
October 31, 2014 (Unaudited)
SECTORS | | Alger Spectra Fund* | | Alger Green Fund | | Alger Analyst Fund | | Alger Dynamic
Opportunities Fund* | |
Consumer Discretionary | | 17.9 | % | 21.7 | % | 28.0 | % | 8.2 | % |
Consumer Staples | | 5.5 | | 6.7 | | 2.9 | | 1.8 | |
Energy | | 4.0 | | 0.0 | | 6.4 | | 3.8 | |
Financials | | 7.4 | | 1.8 | | 5.9 | | 2.8 | |
Health Care | | 19.6 | | 5.4 | | 14.9 | | 16.6 | |
Industrials | | 7.9 | | 22.5 | | 14.0 | | 2.0 | |
Information Technology | | 32.6 | | 30.4 | | 20.0 | | 15.1 | |
Materials | | 2.4 | | 3.5 | | 4.4 | | 0.0 | |
Telecommunication Services | | 0.5 | | 0.0 | | 2.0 | | 0.0 | |
Utilities | | 0.3 | | 4.4 | | 0.0 | | 0.5 | |
Short-Term Investments and Net Other Assets | | 1.9 | | 3.6 | | 1.5 | | 49.2 | |
| | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
COUNTRY | | Alger Emerging Markets
Fund | |
Brazil | | 9.7 | % |
China | | 17.6 | |
Colombia | | 2.7 | |
Hong Kong | | 2.3 | |
India | | 8.7 | |
Indonesia | | 2.8 | |
Malaysia | | 1.8 | |
Mexico | | 6.1 | |
Peru | | 1.2 | |
Philippines | | 1.7 | |
Poland | | 1.8 | |
Qatar | | 0.6 | |
Russia | | 4.3 | |
South Africa | | 5.9 | |
South Korea | | 13.4 | |
Taiwan | | 10.0 | |
Thailand | | 2.4 | |
Turkey | | 1.4 | |
United Arab Emirates | | 0.5 | |
United Kingdom | | 0.9 | |
Cash and Net Other Assets | | 4.2 | |
| | 100.0 | % |
* Includes short sales as a reduction of sector exposure.
† Based on net assets for each Portfolio.
22
THE ALGER FUNDS II | ALGER SPECTRA FUND
Schedule of Investments October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—100.3% | | | | | |
ADVERTISING—0.3% | | | | | |
Choicestream, Inc.*(a),(b) | | 178,292 | | $ | 101,626 | |
Lamar Advertising Co., Cl. A | | 256,100 | | 13,227,565 | |
| | | | 13,329,191 | |
AEROSPACE & DEFENSE—3.6% | | | | | |
Honeywell International, Inc.+ | | 863,700 | | 83,018,844 | |
Lockheed Martin Corp. | | 115,000 | | 21,915,550 | |
Precision Castparts Corp. | | 148,900 | | 32,862,230 | |
The Boeing Co.+ | | 178,800 | | 22,333,908 | |
| | | | 160,130,532 | |
AIRLINES—0.8% | | | | | |
JetBlue Airways Corp.* | | 213,100 | | 2,459,174 | |
United Continental Holdings, Inc.* | | 597,099 | | 31,532,798 | |
| | | | 33,991,972 | |
ALTERNATIVE CARRIERS—0.5% | | | | | |
Level 3 Communications, Inc.* | | 473,000 | | 22,188,430 | |
| | | | | |
APPAREL ACCESSORIES & LUXURY GOODS—0.9% | | | | | |
Michael Kors Holdings Ltd.* | | 68,730 | | 5,401,491 | |
PVH Corp. | | 38,300 | | 4,379,605 | |
Quiksilver, Inc.* | | 1,621,939 | | 2,838,393 | |
Ralph Lauren Corp. | | 171,540 | | 28,276,654 | |
| | | | 40,896,143 | |
APPAREL RETAIL—0.5% | | | | | |
L Brands, Inc. | | 311,679 | | 22,478,289 | |
| | | | | |
APPLICATION SOFTWARE—2.2% | | | | | |
Adobe Systems, Inc.* | | 155,800 | | 10,924,696 | |
Mobileye NV* | | 57,800 | | 3,006,178 | |
Palantir Technologies, Inc., Cl. A*(c) | | 348,292 | | 2,107,167 | |
salesforce.com, inc.* | | 939,886 | | 60,143,305 | |
SAP SE# | | 341,700 | | 23,280,021 | |
| | | | 99,461,367 | |
ASSET MANAGEMENT & CUSTODY BANKS—0.3% | | | | | |
Affiliated Managers Group, Inc.* | | 56,950 | | 11,378,040 | |
| | | | | |
AUTO PARTS & EQUIPMENT—1.7% | | | | | |
Delphi Automotive PLC. | | 566,900 | | 39,104,762 | |
Lear Corp. | | 170,400 | | 15,762,000 | |
WABCO Holdings, Inc.* | | 232,800 | | 22,670,064 | |
| | | | 77,536,826 | |
AUTOMOBILE MANUFACTURERS—0.2% | | | | | |
Tesla Motors, Inc.* | | 41,900 | | 10,127,230 | |
| | | | | |
BIOTECHNOLOGY—6.5% | | | | | |
Amgen, Inc. | | 237,045 | | 38,443,958 | |
Biogen Idec, Inc.*+ | | 150,780 | | 48,412,442 | |
Celgene Corp.*+ | | 345,500 | | 36,999,595 | |
| | | | | | |
23
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
BIOTECHNOLOGY—(CONT.) | | | | | |
Gilead Sciences, Inc.*+ | | 1,025,950 | | $ | 114,906,400 | |
Intercept Pharmaceuticals, Inc.* | | 18,000 | | 4,651,020 | |
Pharmacyclics, Inc.* | | 212,600 | | 27,780,442 | |
Puma Biotechnology, Inc.* | | 18,970 | | 4,753,882 | |
Vertex Pharmaceuticals, Inc.* | | 112,400 | | 12,660,736 | |
| | | | 288,608,475 | |
BREWERS—0.5% | | | | | |
Anheuser-Busch InBev NV# | | 71,900 | | 7,979,462 | |
Molson Coors Brewing Co., Cl. B | | 206,400 | | 15,352,032 | |
| | | | 23,331,494 | |
BROADCASTING—0.3% | | | | | |
CBS Corp., Cl. B | | 245,838 | | 13,329,336 | |
| | | | | |
BUILDING PRODUCTS—0.6% | | | | | |
Fortune Brands Home & Security, Inc. | | 246,995 | | 10,682,534 | |
Lennox International, Inc. | | 154,600 | | 13,747,032 | |
| | | | 24,429,566 | |
CABLE & SATELLITE—3.1% | | | | | |
Comcast Corporation, Cl. A | | 1,823,140 | | 100,910,799 | |
DISH Network Corp., Cl. A* | | 154,200 | | 9,814,830 | |
Time Warner Cable, Inc. | | 197,500 | | 29,073,975 | |
| | | | 139,799,604 | |
CASINOS & GAMING—0.3% | | | | | |
MGM Resorts International* | | 576,500 | | 13,403,625 | |
| | | | | |
COMMUNICATIONS EQUIPMENT—0.3% | | | | | |
F5 Networks, Inc.* | | 123,267 | | 15,159,376 | |
| | | | | |
COMPUTER STORAGE & PERIPHERALS—0.5% | | | | | |
SanDisk Corp. | | 256,300 | | 24,128,082 | |
| | | | | |
CONSTRUCTION & ENGINEERING—0.2% | | | | | |
Quanta Services, Inc.* | | 262,826 | | 8,957,110 | |
| | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—0.1% | | | | | |
Cummins, Inc. | | 14,400 | | 2,104,992 | |
| | | | | |
CONSTRUCTION MATERIALS—0.3% | | | | | |
Martin Marietta Materials, Inc. | | 129,500 | | 15,141,140 | |
| | | | | |
CONSUMER FINANCE—1.4% | | | | | |
American Express Co.+ | | 459,600 | | 41,341,020 | |
Discover Financial Services | | 353,855 | | 22,568,872 | |
| | | | 63,909,892 | |
DATA PROCESSING & OUTSOURCED SERVICES—4.2% | | | | | |
Alliance Data Systems Corp.* | | 265,515 | | 75,233,675 | |
Fiserv, Inc.* | | 561,500 | | 39,013,020 | |
Visa, Inc., Cl. A+ | | 299,315 | | 72,263,621 | |
| | | | 186,510,316 | |
| | | | | | |
24
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
DEPARTMENT STORES—0.3% | | | | | |
Macy’s, Inc. | | 35,200 | | $ | 2,035,264 | |
Nordstrom, Inc. | | 181,900 | | 13,207,759 | |
| | | | 15,243,023 | |
DIVERSIFIED CHEMICALS—0.1% | | | | | |
The Dow Chemical Co. | | 130,800 | | 6,461,520 | |
| | | | | |
DRUG RETAIL—2.8% | | | | | |
CVS Caremark Corp.+ | | 1,095,600 | | 94,013,436 | |
Walgreen Co. | | 454,950 | | 29,216,889 | |
| | | | 123,230,325 | |
FERTILIZERS & AGRICULTURAL CHEMICALS—0.4% | | | | | |
Monsanto Co. | | 138,500 | | 15,933,040 | |
| | | | | |
FOOD RETAIL—0.6% | | | | | |
The Kroger Co. | | 436,900 | | 24,339,699 | |
| | | | | |
FOOTWEAR—0.8% | | | | | |
NIKE, Inc., Cl. B | | 402,200 | | 37,392,534 | |
| | | | | |
GENERAL MERCHANDISE STORES—0.8% | | | | | |
Dollar General Corp.* | | 533,000 | | 33,403,110 | |
| | | | | |
HEALTH CARE EQUIPMENT—1.5% | | | | | |
Covidien PLC.+ | | 221,712 | | 20,495,057 | |
Insulet Corp.* | | 230,401 | | 9,946,411 | |
St. Jude Medical, Inc. | | 520,500 | | 33,400,485 | |
Zimmer Holdings, Inc. | | 31,400 | | 3,492,936 | |
| | | | 67,334,889 | |
HEALTH CARE FACILITIES—2.7% | | | | | |
HCA Holdings, Inc.*+ | | 1,495,349 | | 104,749,197 | |
Universal Health Services, Inc., Cl. B | | 148,700 | | 15,421,677 | |
| | | | 120,170,874 | |
HOME ENTERTAINMENT SOFTWARE—0.5% | | | | | |
Activision Blizzard, Inc. | | 1,062,600 | | 21,198,870 | |
| | | | | |
HOME IMPROVEMENT RETAIL—3.6% | | | | | |
Lowe’s Companies, Inc. | | 879,800 | | 50,324,560 | |
The Home Depot, Inc.+ | | 1,106,900 | | 107,944,888 | |
| | | | 158,269,448 | |
HOTELS RESORTS & CRUISE LINES—1.9% | | | | | |
Ctrip.com International Ltd.#* | | 236,000 | | 13,758,800 | |
Hilton Worldwide Holdings, Inc.* | | 933,319 | | 23,556,971 | |
Royal Caribbean Cruises Ltd.+ | | 584,812 | | 39,749,672 | |
Starwood Hotels & Resorts Worldwide, Inc. | | 81,400 | | 6,240,124 | |
| | | | 83,305,567 | |
HOUSEHOLD PRODUCTS—0.3% | | | | | |
The Procter & Gamble Co. | | 171,550 | | 14,971,169 | |
| | | | | |
HOUSEWARES & SPECIALTIES—0.3% | | | | | |
Jarden Corp.* | | 143,900 | | 9,366,451 | |
| | | | | | |
25
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
HOUSEWARES & SPECIALTIES—(CONT.) | | | | | |
Samsonite International SA | | 1,641,400 | | $ | 5,449,957 | |
| | | | 14,816,408 | |
INDUSTRIAL CONGLOMERATES—0.8% | | | | | |
Danaher Corp. | | 442,900 | | 35,609,160 | |
| | | | | |
INDUSTRIAL GASES—0.7% | | | | | |
Air Products & Chemicals, Inc. | | 238,100 | | 32,062,546 | |
| | | | | |
INDUSTRIAL MACHINERY—0.3% | | | | | |
Ingersoll-Rand PLC. | | 217,304 | | 13,607,576 | |
| | | | | |
INTERNET RETAIL—1.9% | | | | | |
Amazon.com, Inc.*+ | | 65,600 | | 20,038,176 | |
Expedia, Inc. | | 196,400 | | 16,688,108 | |
Qunar Cayman Islands Ltd.#* | | 721,300 | | 19,402,970 | |
The Priceline Group, Inc.* | | 11,500 | | 13,871,415 | |
TripAdvisor, Inc.* | | 178,803 | | 15,852,674 | |
| | | | 85,853,343 | |
INTERNET SOFTWARE & SERVICES—11.2% | | | | | |
Alibaba Group Holding Ltd.#* | | 71,500 | | 7,049,900 | |
Cornerstone OnDemand, Inc.* | | 256,200 | | 9,292,374 | |
Demandware, Inc.* | | 132,400 | | 7,937,380 | |
Facebook, Inc., Cl. A*+ | | 2,318,915 | | 173,895,436 | |
Google, Inc., Cl. A*+ | | 71,114 | | 40,383,507 | |
Google, Inc., Cl. C*+ | | 244,609 | | 136,755,999 | |
GrubHub, Inc.* | | 239,850 | | 8,720,946 | |
LinkedIn Corp., Cl. A* | | 203,000 | | 46,478,880 | |
Trulia, Inc.* | | 97,600 | | 4,553,040 | |
Yahoo! Inc.* | | 1,422,195 | | 65,492,080 | |
| | | | 500,559,542 | |
INVESTMENT BANKING & BROKERAGE—0.5% | | | | | |
Morgan Stanley+ | | 635,200 | | 22,200,240 | |
| | | | | |
IT CONSULTING & OTHER SERVICES—0.8% | | | | | |
Cognizant Technology Solutions Corp., Cl. A* | | 763,900 | | 37,316,515 | |
| | | | | |
LIFE SCIENCES TOOLS & SERVICES—1.3% | | | | | |
Thermo Fisher Scientific, Inc.+ | | 474,074 | | 55,736,880 | |
| | | | | |
MANAGED HEALTH CARE—1.8% | | | | | |
Aetna, Inc.+ | | 385,500 | | 31,807,605 | |
Cigna Corp. | | 356,200 | | 35,466,834 | |
UnitedHealth Group, Inc. | | 123,300 | | 11,714,733 | |
| | | | 78,989,172 | |
MOVIES & ENTERTAINMENT—0.4% | | | | | |
The Walt Disney Co. | | 195,600 | | 17,873,928 | |
| | | | | |
MULTI-LINE INSURANCE—1.4% | | | | | |
American International Group, Inc. | | 184,700 | | 9,894,379 | |
| | | | | | |
26
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
MULTI-LINE INSURANCE—(CONT.) | | | | | |
Hartford Financial Services Group, Inc. | | 1,328,855 | | $ | 52,596,081 | |
| | | | 62,490,460 | |
MULTI-UTILITIES—0.2% | | | | | |
Sempra Energy | | 85,600 | | 9,416,000 | |
| | | | | |
OIL & GAS EQUIPMENT & SERVICES—1.3% | | | | | |
Halliburton Company | | 285,400 | | 15,736,956 | |
National Oilwell Varco, Inc. | | 173,066 | | 12,571,514 | |
Weatherford International PLC*+ | | 1,850,320 | | 30,382,255 | |
| | | | 58,690,725 | |
OIL & GAS EXPLORATION & PRODUCTION—2.4% | | | | | |
Anadarko Petroleum Corp.+ | | 463,351 | | 42,526,355 | |
Devon Energy Corp. | | 835,700 | | 50,142,000 | |
Pioneer Natural Resources Co. | | 40,300 | | 7,619,118 | |
Whiting Petroleum Corp.* | | 109,800 | | 6,724,152 | |
| | | | 107,011,625 | |
OIL & GAS STORAGE & TRANSPORTATION—0.6% | | | | | |
Cheniere Energy, Inc.* | | 344,600 | | 25,845,000 | |
Cone Midstream Partners LP* | | 41,600 | | 1,258,816 | |
| | | | 27,103,816 | |
OTHER DIVERSIFIED FINANCIAL SERVICES—1.1% | | | | | |
Bank of America Corp. | | 2,319,600 | | 39,804,336 | |
Citigroup, Inc. | | 210,200 | | 11,252,006 | |
| | | | 51,056,342 | |
PHARMACEUTICALS—6.0% | | | | | |
AbbVie, Inc. | | 1,120,100 | | 71,081,546 | |
Actavis PLC.*+ | | 506,509 | | 122,949,994 | |
Allergan, Inc. | | 219,400 | | 41,699,164 | |
Salix Pharmaceuticals Ltd.* | | 79,707 | | 11,465,852 | |
Shire PLC. | | 66,200 | | 4,408,623 | |
Teva Pharmaceutical Industries Ltd.# | | 196,200 | | 11,079,414 | |
Valeant Pharmaceuticals International, Inc.* | | 34,700 | | 4,616,488 | |
| | | | 267,301,081 | |
RAILROADS—1.3% | | | | | |
Canadian National Railway, Co. | | 191,100 | | 13,487,838 | |
Union Pacific Corp. | | 365,900 | | 42,609,055 | |
| | | | 56,096,893 | |
RENEWABLE ELECTRICITY—0.1% | | | | | |
TerraForm Power, Inc., Cl. A* | | 165,400 | | 4,707,284 | |
| | | | | |
RESTAURANTS—0.9% | | | | | |
Starbucks Corp.+ | | 513,030 | | 38,764,547 | |
| | | | | |
SECURITY & ALARM SERVICES—0.6% | | | | | |
Tyco International Ltd. | | 593,721 | | 25,488,443 | |
| | | | | | |
27
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
SEMICONDUCTOR EQUIPMENT—1.2% | | | | | |
Lam Research Corp. | | 311,575 | | $ | 24,259,230 | |
SunEdison, Inc.* | | 1,410,600 | | 27,520,806 | |
| | | | 51,780,036 | |
SEMICONDUCTORS—4.2% | | | | | |
Avago Technologies Ltd. | | 707,800 | | 61,047,750 | |
Micron Technology, Inc.* | | 1,996,745 | | 66,072,292 | |
NXP Semiconductors NV* | | 761,725 | | 52,300,039 | |
Samsung Electronics Co., Ltd. | | 6,000 | | 6,946,842 | |
| | | | 186,366,923 | |
SOFT DRINKS—1.1% | | | | | |
Monster Beverage Corp.* | | 12,900 | | 1,301,352 | |
PepsiCo, Inc.+ | | 479,415 | | 46,105,341 | |
| | | | 47,406,693 | |
SPECIALIZED FINANCE—0.2% | | | | | |
McGraw Hill Financial, Inc. | | 83,700 | | 7,573,176 | |
| | | | | |
SPECIALTY CHEMICALS—1.1% | | | | | |
PolyOne Corp. | | 411,705 | | 15,237,202 | |
PPG Industries, Inc. | | 84,800 | | 17,272,912 | |
Rockwood Holdings, Inc. | | 102,380 | | 7,874,046 | |
The Sherwin-Williams Co. | | 29,200 | | 6,703,152 | |
| | | | 47,087,312 | |
SPECIALTY STORES—0.7% | | | | | |
Signet Jewelers Ltd. | | 270,912 | | 32,512,149 | |
| | | | | |
SYSTEMS SOFTWARE—2.4% | | | | | |
Microsoft Corp.+ | | 2,305,520 | | 108,244,164 | |
| | | | | |
TECHNOLOGY HARDWARE STORAGE & PERIPHERALS—6.9% | | | | | |
Apple, Inc.+ | | 2,746,869 | | 296,661,852 | |
Western Digital Corp. | | 106,060 | | 10,433,122 | |
| | | | 307,094,974 | |
TOBACCO—0.2% | | | | | |
Lorillard, Inc. | | 135,721 | | 8,346,842 | |
| | | | | |
TRADING COMPANIES & DISTRIBUTORS—0.8% | | | | | |
HD Supply Holdings, Inc.* | | 1,028,971 | | 29,675,524 | |
United Rentals, Inc.* | | 64,000 | | 7,043,840 | |
| | | | 36,719,364 | |
TOTAL COMMON STOCKS
(Cost $3,714,700,224) | | | | 4,467,469,255 | |
| | | | | |
PREFERRED STOCKS—0.5% | | | | | |
ADVERTISING—0.1% | | | | | |
Choicestream, Inc., Cl. A*,(b)(d) | | 1,537,428 | | 876,334 | |
Choicestream, Inc., Cl. B*,(b)(e) | | 3,765,639 | | 2,146,414 | |
| | | | 3,022,748 | |
| | | | | | |
28
| | SHARES | | VALUE | |
PREFERRED STOCKS—(CONT.) | | | | | |
APPLICATION SOFTWARE—0.2% | | | | | |
Palantir Technologies, Inc., Cl. B*(f) | | 1,420,438 | | $ | 8,707,285 | |
Palantir Technologies, Inc., Cl. D*(g) | | 185,062 | | 1,138,131 | |
| | | | 9,845,416 | |
PHARMACEUTICALS—0.2% | | | | | |
Intarcia Therapeutics, Inc.*(h) | | 171,099 | | 7,357,257 | |
TOTAL PREFERRED STOCKS
(Cost $19,632,430) | | | | 20,225,421 | |
| | | | | |
MASTER LIMITED PARTNERSHIP—1.3% | | | | | |
ASSET MANAGEMENT & CUSTODY BANKS—1.3% | | | | | |
The Blackstone Group LP. | | 1,269,034 | | 38,223,304 | |
The Carlyle Group LP. | | 742,595 | | 20,614,437 | |
| | | | 58,837,741 | |
TOTAL MASTER LIMITED PARTNERSHIP
(Cost $59,360,359) | | | | 58,837,741 | |
| | | | | |
REAL ESTATE INVESTMENT TRUST—1.5% | | | | | |
RESIDENTIAL—0.6% | | | | | |
American Campus Communities, Inc. | | 221,387 | | 8,693,868 | |
AvalonBay Communities, Inc. | | 132,800 | | 20,695,552 | |
| | | | 29,389,420 | |
SPECIALIZED—0.9% | | | | | |
Crown Castle International Corp. | | 499,700 | | 39,036,564 | |
| | | | | |
TOTAL REAL ESTATE INVESTMENT TRUST
(Cost $70,257,742) | | | | 68,425,984 | |
Total Investments
(Cost $3,863,950,755)(i) | | 103.6 | % | 4,614,958,401 | |
Liabilities in Excess of Other Assets | | (3.6 | )% | (159,137,513 | ) |
NET ASSETS | | 100.0 | % | $ | 4,455,820,888 | |
(a) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $101,626 and an original cost of $51,705 in those securities. |
(b) | Deemed an affiliate of the Alger fund complex during the year for purposes of Section 2(a)(3) of the Investment Company Act of 1940. See Affiliated Securities in Notes to Financial Statements. |
* | Non-income producing security. |
+ | All or a portion of this security is held as collateral for securities sold short. |
(c) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $2,107,167 and an original cost of $2,266,336 in those securities. |
# | American Depositary Receipts. |
(d) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $876,334 and an original cost of $1,229,452 in those securities. |
(e) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $2,146,414 and an original cost of $2,259,383 in those securities. |
(f) | Restricted as to resale. As of the report date, the Fund held 0.2% of its net assets with a current value of $8,707,285 and an original cost of $9,379,767 in those securities. |
29
(g) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $1,138,131 and an original cost of $1,221,931 in those securities. |
(h) | Restricted as to resale. As of the report date, the Fund held 0.2% of its net assets with a current value of $7,357,257 and an original cost of $5,541,897 in those securities. |
(i) | At October 31, 2014, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $3,919,536,423, amounted to $695,421,978 which consisted of aggregate gross unrealized appreciation of $794,559,973 and aggregate gross unrealized depreciation of $99,137,995. |
Industry classifications are unaudited.
See Notes to Financial Statements.
30
THE ALGER FUNDS II | ALGER SPECTRA FUND
Schedule of Investments - Securities Sold Short October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—-5.5% | | | | | |
AGRICULTURAL & FARM MACHINERY—-1.0% | | | | | |
Deere & Co. | | (500,400 | ) | $ | (42,804,216 | ) |
| | | | | |
APPAREL RETAIL—-0.2% | | | | | |
Ross Stores, Inc. | | (109,300 | ) | (8,822,696 | ) |
The Finish Line, Inc., Cl. A | | (40,273 | ) | (1,066,026 | ) |
| | | | (9,888,722 | ) |
ASSET MANAGEMENT & CUSTODY BANKS—-0.3% | | | | | |
Waddell & Reed Financial, Inc., Cl. A | | (291,800 | ) | (13,930,532 | ) |
| | | | | |
AUTO PARTS & EQUIPMENT—-0.1% | | | | | |
Visteon Corp.* | | (69,800 | ) | (6,554,220 | ) |
| | | | | |
AUTOMOTIVE RETAIL—-0.1% | | | | | |
AutoZone, Inc.* | | (8,100 | ) | (4,483,512 | ) |
| | | | | |
BIOTECHNOLOGY—-0.2% | | | | | |
Myriad Genetics, Inc.* | | (235,900 | ) | (9,315,691 | ) |
| | | | | |
COMPUTER STORAGE & PERIPHERALS—0.0% | | | | | |
NetApp, Inc. | | (48,500 | ) | (2,075,800 | ) |
| | | | | |
DATA PROCESSING & OUTSOURCED SERVICES—-0.3% | | | | | |
Jack Henry & Associates, Inc. | | (110,900 | ) | (6,634,038 | ) |
Syntel, Inc.* | | (99,100 | ) | (8,583,051 | ) |
| | | | (15,217,089 | ) |
EXCHANGE TRADED FUNDS—-0.3% | | | | | |
SPDR S&P Oil & Gas Exploration & Production ETF | | (239,924 | ) | (14,604,174 | ) |
| | | | | |
HEALTH CARE SERVICES—-0.4% | | | | | |
Express Scripts, Inc.* | | (227,500 | ) | (17,476,550 | ) |
| | | | | |
HOME IMPROVEMENT RETAIL—-0.2% | | | | | |
Lumber Liquidators Holdings, Inc.* | | (183,700 | ) | (9,877,549 | ) |
| | | | | |
HOTELS RESORTS & CRUISE LINES—-0.2% | | | | | |
Norwegian Cruise Line Holdings Ltd* | | (209,700 | ) | (8,178,300 | ) |
| | | | | |
HOUSEWARES & SPECIALTIES—-0.3% | | | | | |
Tupperware Brands Corp. | | (180,400 | ) | (11,500,500 | ) |
| | | | | |
INDUSTRIAL MACHINERY—-0.1% | | | | | |
Flowserve Corp. | | (33,644 | ) | (2,287,456 | ) |
| | | | | |
IT CONSULTING & OTHER SERVICES—-0.7% | | | | | |
Accenture Ltd. | | (53,200 | ) | (4,315,584 | ) |
Infosys Technologies Ltd.# | | (386,250 | ) | (25,824,675 | ) |
| | | | (30,140,259 | ) |
SEMICONDUCTORS—-0.5% | | | | | |
Linear Technology Corp. | | (447,900 | ) | (19,188,036 | ) |
Taiwan Semiconductor Manufacturing Co., Ltd.# | | (78,200 | ) | (1,721,964 | ) |
Texas Instruments, Inc. | | (107,700 | ) | (5,348,382 | ) |
| | | | (26,258,382 | ) |
SPECIALTY CHEMICALS—-0.2% | | | | | |
Celanese Corp. | | (132,100 | ) | (7,758,233 | ) |
| | | | | |
SYSTEMS SOFTWARE—-0.2% | | | | | |
NetSuite, Inc.* | | (62,400 | ) | (6,780,384 | ) |
| | | | | | |
31
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
TECHNOLOGY HARDWARE STORAGE & PERIPHERALS—-0.1% | | | | | |
Blackberry Ltd.* | | (243,700 | ) | $ | (2,558,850 | ) |
| | | | | |
TRUCKING—-0.1% | | | | | |
Heartland Express, Inc. | | (107,800 | ) | (2,710,092 | ) |
TOTAL (Proceeds $241,133,884) | | | | $ | (244,400,511 | ) |
* Non-income producing security.
# American Depositary Receipts.
Industry classifications are unaudited.
See Notes to Financial Statements.
32
THE ALGER FUNDS II | ALGER GREEN FUND
Schedule of Investments October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—96.3% | | | | | |
ADVERTISING—0.0% | | | | | |
Choicestream, Inc.*(a),(b) | | 3,619 | | $ | 2,063 | |
| | | | | |
AEROSPACE & DEFENSE—2.8% | | | | | |
Hexcel Corp.* | | 17,450 | | 730,980 | |
Honeywell International, Inc. | | 15,440 | | 1,484,093 | |
| | | | 2,215,073 | |
AGRICULTURAL & FARM MACHINERY—0.5% | | | | | |
Lindsay Corp. | | 4,690 | | 411,313 | |
| | | | | |
AIR FREIGHT & LOGISTICS—2.6% | | | | | |
FedEx Corp. | | 5,515 | | 923,211 | |
United Parcel Service, Inc., Cl. B | | 10,510 | | 1,102,604 | |
| | | | 2,025,815 | |
APPAREL ACCESSORIES & LUXURY GOODS—0.5% | | | | | |
Ralph Lauren Corp. | | 2,360 | | 389,022 | |
| | | | | |
APPLICATION SOFTWARE—1.6% | | | | | |
EnerNOC, Inc.* | | 37,525 | | 554,244 | |
SAP SE# | | 10,330 | | 703,783 | |
| | | | 1,258,027 | |
AUTO PARTS & EQUIPMENT—3.0% | | | | | |
BorgWarner, Inc. | | 21,140 | | 1,205,403 | |
Johnson Controls, Inc. | | 24,140 | | 1,140,615 | |
| | | | 2,346,018 | |
AUTOMOBILE MANUFACTURERS—2.3% | | | | | |
General Motors Co. | | 11,875 | | 372,875 | |
Tesla Motors, Inc.* | | 5,925 | | 1,432,072 | |
| | | | 1,804,947 | |
COMMODITY CHEMICALS—0.8% | | | | | |
Calgon Carbon Corp.* | | 30,690 | | 645,411 | |
| | | | | |
COMMUNICATIONS EQUIPMENT—1.0% | | | | | |
Cisco Systems, Inc. | | 31,190 | | 763,219 | |
| | | | | |
CONSTRUCTION & ENGINEERING—0.7% | | | | | |
Aecom Technology Corp.* | | 16,870 | | 549,118 | |
| | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.2% | | | | | |
Cummins, Inc. | | 6,265 | | 915,818 | |
| | | | | |
CONSUMER ELECTRONICS—1.3% | | | | | |
Harman International Industries, Inc. | | 9,665 | | 1,037,441 | |
| | | | | |
CONSUMER FINANCE—0.9% | | | | | |
American Express Co. | | 8,275 | | 744,336 | |
| | | | | |
DATA PROCESSING & OUTSOURCED SERVICES—2.4% | | | | | |
Alliance Data Systems Corp.* | | 3,650 | | 1,034,227 | |
Visa, Inc., Cl. A | | 3,625 | | 875,184 | |
| | | | 1,909,411 | |
DISTRIBUTORS—1.5% | | | | | |
LKQ Corp.* | | 42,190 | | 1,205,368 | |
| | | | | | |
33
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
ELECTRIC UTILITIES—2.7% | | | | | |
Duke Energy Corp. | | 11,035 | | $ | 906,525 | |
ITC Holdings Corp. | | 31,380 | | 1,242,962 | |
| | | | 2,149,487 | |
ELECTRICAL COMPONENTS & EQUIPMENT—3.4% | | | | | |
Acuity Brands, Inc. | | 11,235 | | 1,566,496 | |
SolarCity Corp.* | | 19,340 | | 1,144,541 | |
| | | | 2,711,037 | |
ELECTRONIC EQUIPMENT MANUFACTURERS—0.7% | | | | | |
Itron, Inc.* | | 13,815 | | 537,818 | |
| | | | | |
ELECTRONIC MANUFACTURING SERVICES—0.3% | | | | | |
Trimble Navigation Ltd.* | | 10,030 | | 269,406 | |
| | | | | |
ENVIRONMENTAL & FACILITIES SERVICES—4.1% | | | | | |
Clean Harbors, Inc.* | | 10,490 | | 520,619 | |
Covanta Holding Corp. | | 37,680 | | 831,598 | |
Tetra Tech, Inc. | | 34,655 | | 929,100 | |
Waste Management, Inc. | | 19,170 | | 937,221 | |
| | | | 3,218,538 | |
FOOD DISTRIBUTORS—1.2% | | | | | |
United Natural Foods, Inc.* | | 13,760 | | 935,955 | |
| | | | | |
FOOD RETAIL—0.9% | | | | | |
Whole Foods Market, Inc. | | 17,585 | | 691,618 | |
| | | | | |
FOOTWEAR—2.4% | | | | | |
NIKE, Inc., Cl. B | | 19,950 | | 1,854,752 | |
| | | | | |
HOME IMPROVEMENT RETAIL—2.6% | | | | | |
The Home Depot, Inc. | | 21,060 | | 2,053,771 | |
| | | | | |
HOUSEHOLD PRODUCTS—1.7% | | | | | |
The Procter & Gamble Co. | | 15,034 | | 1,312,017 | |
| | | | | |
HYPERMARKETS & SUPER CENTERS—0.4% | | | | | |
Wal-Mart Stores, Inc. | | 4,540 | | 346,266 | |
| | | | | |
INDUSTRIAL CONGLOMERATES—1.5% | | | | | |
General Electric Co. | | 44,755 | | 1,155,127 | |
| | | | | |
INDUSTRIAL GASES—0.9% | | | | | |
Praxair, Inc. | | 5,860 | | 738,301 | |
| | | | | |
INDUSTRIAL MACHINERY—4.7% | | | | | |
Pall Corp. | | 10,040 | | 917,857 | |
Watts Water Technologies, Inc. | | 16,025 | | 971,596 | |
Woodward Governor Co. | | 17,545 | | 898,479 | |
Xylem, Inc. | | 25,755 | | 936,452 | |
| | | | 3,724,384 | |
INTERNET RETAIL—1.7% | | | | | |
Amazon.com, Inc.* | | 4,510 | | 1,377,625 | |
| | | | | |
INTERNET SOFTWARE & SERVICES—8.6% | | | | | |
Alibaba Group Holding Ltd.#* | | 6,525 | | 643,365 | |
| | | | | | |
34
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
INTERNET SOFTWARE & SERVICES—(CONT.) | | | | | |
eBay, Inc.* | | 21,835 | | $ | 1,146,338 | |
Facebook, Inc., Cl. A* | | 28,125 | | 2,109,094 | |
Google, Inc., Cl. A* | | 2,530 | | 1,436,711 | |
Google, Inc., Cl. C* | | 2,530 | | 1,414,472 | |
| | | | 6,749,980 | |
IT CONSULTING & OTHER SERVICES—0.4% | | | | | |
International Business Machines Corp. | | 2,170 | | 356,748 | |
| | | | | |
LIFE & HEALTH INSURANCE—0.9% | | | | | |
Lincoln National Corp. | | 12,950 | | 709,142 | |
| | | | | |
MANAGED HEALTH CARE—1.1% | | | | | |
Aetna, Inc. | | 10,080 | | 831,701 | |
| | | | | |
MOVIES & ENTERTAINMENT—1.4% | | | | | |
The Walt Disney Co. | | 12,090 | | 1,104,784 | |
| | | | | |
PACKAGED FOODS & MEATS—0.8% | | | | | |
The WhiteWave Foods Co.* | | 17,005 | | 633,096 | |
| | | | | |
PHARMACEUTICALS—4.3% | | | | | |
Bristol-Myers Squibb Co. | | 19,910 | | 1,158,563 | |
Johnson & Johnson | | 14,665 | | 1,580,593 | |
Merck & Co., Inc. | | 10,705 | | 620,248 | |
| | | | 3,359,404 | |
RAILROADS—1.0% | | | | | |
Norfolk Southern Corp. | | 7,225 | | 799,374 | |
| | | | | |
RENEWABLE ELECTRICITY—1.7% | | | | | |
TerraForm Power, Inc., Cl. A* | | 47,910 | | 1,363,519 | |
| | | | | |
RESTAURANTS—4.2% | | | | | |
Chipotle Mexican Grill, Inc.* | | 2,375 | | 1,515,250 | |
Starbucks Corp. | | 23,675 | | 1,788,883 | |
| | | | 3,304,133 | |
SEMICONDUCTOR EQUIPMENT—1.5% | | | | | |
SunEdison, Inc.* | | 59,750 | | 1,165,723 | |
| | | | | |
SEMICONDUCTORS—4.7% | | | | | |
Broadcom Corp., Cl. A | | 20,825 | | 872,151 | |
ChipMOS TECHNOLOGIES Bermuda Ltd. | | 22,060 | | 473,849 | |
Cree, Inc.* | | 11,880 | | 373,982 | |
First Solar, Inc.* | | 18,820 | | 1,108,498 | |
Intel Corp. | | 25,545 | | 868,786 | |
| | | | 3,697,266 | |
SOFT DRINKS—1.7% | | | | | |
The Coca-Cola Co. | | 31,660 | | 1,325,921 | |
| | | | | |
SPECIALTY CHEMICALS—1.8% | | | | | |
Chemtura Corp.* | | 22,290 | | 519,134 | |
Rockwood Holdings, Inc. | | 11,670 | | 897,540 | |
| | | | 1,416,674 | |
| | | | | | |
35
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
SPECIALTY STORES—0.7% | | | | | |
Tiffany & Co. | | 6,050 | | $ | 581,526 | |
| | | | | |
SYSTEMS SOFTWARE—2.1% | | | | | |
Microsoft Corp. | | 34,830 | | 1,635,269 | |
| | | | | |
TECHNOLOGY HARDWARE STORAGE & PERIPHERALS—7.1% | | | | | |
Apple, Inc. | | 47,490 | | 5,128,920 | |
EMC Corp. | | 15,480 | | 444,740 | |
| | | | 5,573,660 | |
TOTAL COMMON STOCKS
(Cost $56,326,369) | | | | 75,906,422 | |
| | | | | |
PREFERRED STOCKS—0.1% | | | | | |
ADVERTISING—0.1% | | | | | |
Choicestream, Inc., Cl. A*,(b)(c) | | 31,215 | | 17,792 | |
Choicestream, Inc., Cl. B*,(b)(d) | | 69,819 | | 39,797 | |
| | | | 57,589 | |
TOTAL PREFERRED STOCKS
(Cost $66,853) | | | | 57,589 | |
Total Investments
(Cost $56,393,222)(e) | | 96.4 | % | 75,964,011 | |
Other Assets in Excess of Liabilities | | 3.6 | % | 2,846,537 | |
NET ASSETS | | 100.0 | % | $ | 78,810,548 | |
(a) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $2,063 and an original cost of $1,050 in those securities. |
(b) | Deemed an affiliate of the Alger fund complex during the year for purposes of Section 2(a)(3) of the Investment Company Act of 1940. See Affiliated Securities in Notes to Financial Statements. |
* | Non-income producing security. |
# | American Depositary Receipts. |
(c) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $17,792 and an original cost of $24,962 in those securities. |
(d) | Restricted as to resale. As of the report date, the Fund held 0.1% of its net assets with a current value of $39,797 and an original cost of $41,891 in those securities. |
(e) | At October 31, 2014, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $56,409,535, amounted to $19,554,476 which consisted of aggregate gross unrealized appreciation of $21,062,855 and aggregate gross unrealized depreciation of $1,508,379. |
Industry classifications are unaudited.
See Notes to Financial Statements.
36
THE ALGER FUNDS II | ALGER ANALYST FUND
Schedule of Investments October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—95.8% | | | | | |
ADVERTISING—0.6% | | | | | |
Lamar Advertising Co., Cl. A | | 937 | | $ | 48,396 | |
| | | | | |
AEROSPACE & DEFENSE—3.0% | | | | | |
Honeywell International, Inc. | | 2,025 | | 194,643 | |
Precision Castparts Corp. | | 330 | | 72,831 | |
| | | | 267,474 | |
AIRLINES—1.3% | | | | | |
United Continental Holdings, Inc.* | | 2,133 | | 112,644 | |
| | | | | |
ALTERNATIVE CARRIERS—0.9% | | | | | |
Level 3 Communications, Inc.* | | 1,726 | | 80,967 | |
| | | | | |
APPAREL ACCESSORIES & LUXURY GOODS—2.3% | | | | | |
PVH Corp. | | 431 | | 49,285 | |
Ralph Lauren Corp. | | 954 | | 157,257 | |
| | | | 206,542 | |
APPLICATION SOFTWARE—0.4% | | | | | |
salesforce.com, inc.* | | 486 | | 31,099 | |
| | | | | |
ASSET MANAGEMENT & CUSTODY BANKS—0.4% | | | | | |
Affiliated Managers Group, Inc.* | | 180 | | 35,962 | |
| | | | | |
AUTO PARTS & EQUIPMENT—4.2% | | | | | |
American Axle & Manufacturing Holdings, Inc.* | | 2,051 | | 39,646 | |
BorgWarner, Inc. | | 3,031 | | 172,828 | |
Delphi Automotive PLC. | | 2,296 | | 158,378 | |
| | | | 370,852 | |
BIOTECHNOLOGY—4.5% | | | | | |
Biogen Idec, Inc.* | | 424 | | 136,138 | |
Gilead Sciences, Inc.* | | 1,327 | | 148,624 | |
Pharmacyclics, Inc.* | | 872 | | 113,944 | |
| | | | 398,706 | |
BREWERS—1.2% | | | | | |
The Boston Beer Co., Inc., Cl. A* | | 425 | | 105,825 | |
| | | | | |
BUILDING PRODUCTS—2.4% | | | | | |
Fortune Brands Home & Security, Inc. | | 2,153 | | 93,117 | |
Lennox International, Inc. | | 1,332 | | 118,442 | |
| | | | 211,559 | |
CABLE & SATELLITE—1.3% | | | | | |
Time Warner Cable, Inc. | | 795 | | 117,032 | |
| | | | | |
CASINOS & GAMING—1.1% | | | | | |
MGM Resorts International* | | 4,316 | | 100,347 | |
| | | | | |
COMMUNICATIONS EQUIPMENT—1.9% | | | | | |
CalAmp Corp.* | | 6,272 | | 120,924 | |
CommScope Holding Co., Inc.* | | 2,304 | | 49,628 | |
| | | | 170,552 | |
CONSTRUCTION & ENGINEERING—0.6% | | | | | |
MasTec, Inc.* | | 1,911 | | 54,731 | |
| | | | | | |
37
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.1% | | | | | |
Allison Transmission Holdings, Inc. | | 2,908 | | $ | 94,452 | |
| | | | | |
CONSTRUCTION MATERIALS—1.0% | | | | | |
Eagle Materials, Inc. | | 1,005 | | 87,867 | |
| | | | | |
CONSUMER FINANCE—1.2% | | | | | |
American Express Co. | | 615 | | 55,319 | |
Discover Financial Services | | 806 | | 51,407 | |
| | | | 106,726 | |
DATA PROCESSING & OUTSOURCED SERVICES—3.7% | | | | | |
Alliance Data Systems Corp.* | | 530 | | 150,176 | |
Visa, Inc., Cl. A | | 736 | | 177,692 | |
| | | | 327,868 | |
EDUCATION SERVICES—1.8% | | | | | |
Grand Canyon Education, Inc.* | | 3,362 | | 161,040 | |
| | | | | |
ELECTRONIC EQUIPMENT MANUFACTURERS—1.3% | | | | | |
FEI Co. | | 1,373 | | 115,716 | |
| | | | | |
ELECTRONIC MANUFACTURING SERVICES—0.5% | | | | | |
Trimble Navigation Ltd.* | | 1,760 | | 47,274 | |
| | | | | |
GENERAL MERCHANDISE STORES—0.7% | | | | | |
Dollar General Corp.* | | 914 | | 57,280 | |
| | | | | |
HEALTH CARE EQUIPMENT—3.6% | | | | | |
DBV Technologies SA* | | 2,353 | | 115,887 | |
Insulet Corp.* | | 2,146 | | 92,643 | |
St. Jude Medical, Inc. | | 1,643 | | 105,431 | |
| | | | 313,961 | |
HEALTH CARE FACILITIES—2.6% | | | | | |
HCA Holdings, Inc.* | | 2,139 | | 149,837 | |
Tenet Healthcare Corporation* | | 1,426 | | 79,927 | |
| | | | 229,764 | |
HOME IMPROVEMENT RETAIL—1.1% | | | | | |
The Home Depot, Inc. | | 984 | | 95,960 | |
| | | | | |
HOTELS RESORTS & CRUISE LINES—3.5% | | | | | |
Hilton Worldwide Holdings, Inc.* | | 4,064 | | 102,575 | |
Royal Caribbean Cruises Ltd. | | 3,033 | | 206,153 | |
| | | | 308,728 | |
HOUSEWARES & SPECIALTIES—2.6% | | | | | |
Jarden Corp.* | | 3,476 | | 226,253 | |
| | | | | |
HUMAN RESOURCE & EMPLOYMENT SERVICES—0.7% | | | | | |
Robert Half International, Inc. | | 1,046 | | 57,300 | |
| | | | | |
INDUSTRIAL MACHINERY—1.3% | | | | | |
Ingersoll-Rand PLC. | | 1,755 | | 109,898 | |
| | | | | |
INTERNET RETAIL—0.7% | | | | | |
TripAdvisor, Inc.* | | 700 | | 62,062 | |
| | | | | | |
38
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
INTERNET SOFTWARE & SERVICES—8.3% | | | | | |
Alibaba Group Holding Ltd.#* | | 285 | | $ | 28,101 | |
AOL, Inc.* | | 1,201 | | 52,280 | |
Cornerstone OnDemand, Inc.* | | 3,686 | | 133,691 | |
DealerTrack Holdings, Inc.* | | 1,002 | | 47,144 | |
Demandware, Inc.* | | 2,351 | | 140,942 | |
Facebook, Inc., Cl. A* | | 1,357 | | 101,761 | |
Google, Inc., Cl. C* | | 183 | | 102,312 | |
LinkedIn Corp., Cl. A* | | 407 | | 93,187 | |
Yahoo! Inc.* | | 682 | | 31,406 | |
| | | | 730,824 | |
INVESTMENT BANKING & BROKERAGE—0.6% | | | | | |
Morgan Stanley | | 1,441 | | 50,363 | |
| | | | | |
IT CONSULTING & OTHER SERVICES—1.8% | | | | | |
Cognizant Technology Solutions Corp., Cl. A* | | 1,098 | | 53,638 | |
Unisys Corp.* | | 4,194 | | 107,534 | |
| | | | 161,172 | |
LEISURE PRODUCTS—0.9% | | | | | |
Brunswick Corp. | | 1,640 | | 76,752 | |
| | | | | |
LIFE & HEALTH INSURANCE—0.7% | | | | | |
Lincoln National Corp. | | 1,182 | | 64,726 | |
| | | | | |
MANAGED HEALTH CARE—1.8% | | | | | |
Cigna Corp. | | 1,632 | | 162,498 | |
| | | | | |
MULTI-LINE INSURANCE—0.8% | | | | | |
Hartford Financial Services Group, Inc. | | 1,800 | | 71,244 | |
| | | | | |
OIL & GAS EQUIPMENT & SERVICES—2.1% | | | | | |
Halliburton Company | | 1,278 | | 70,469 | |
National Oilwell Varco, Inc. | | 669 | | 48,596 | |
Weatherford International PLC* | | 4,029 | | 66,156 | |
| | | | 185,221 | |
OIL & GAS EXPLORATION & PRODUCTION—3.1% | | | | | |
Anadarko Petroleum Corp. | | 1,492 | | 136,936 | |
Pioneer Natural Resources Co. | | 699 | | 132,153 | |
| | | | 269,089 | |
PHARMACEUTICALS—2.4% | | | | | |
Actavis PLC.* | | 551 | | 133,750 | |
Jazz Pharmaceuticals PLC.* | | 456 | | 76,991 | |
| | | | 210,741 | |
REGIONAL BANKS—0.7% | | | | | |
ViewPoint Financial Group, Inc. | | 2,233 | | 60,894 | |
| | | | | |
RESEARCH & CONSULTING SERVICES—2.1% | | | | | |
CoStar Group, Inc.* | | 1,151 | | 185,415 | |
| | | | | |
RESTAURANTS—1.3% | | | | | |
Chipotle Mexican Grill, Inc.* | | 110 | | 70,180 | |
| | | | | | |
39
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
RESTAURANTS—(CONT.) | | | | | |
Papa John’s International, Inc. | | 226 | | $ | 10,568 | |
Starbucks Corp. | | 394 | | 29,770 | |
| | | | 110,518 | |
SECURITY & ALARM SERVICES—1.5% | | | | | |
Tyco International Ltd. | | 2,982 | | 128,017 | |
| | | | | |
SOFT DRINKS—1.7% | | | | | |
PepsiCo, Inc. | | 1,554 | | 149,448 | |
| | | | | |
SPECIALTY CHEMICALS—3.4% | | | | | |
Ashland, Inc. | | 928 | | 100,289 | |
The Sherwin-Williams Co. | | 870 | | 199,717 | |
| | | | 300,006 | |
SPECIALTY STORES—5.9% | | | | | |
Cabela’s, Inc.* | | 524 | | 25,163 | |
Signet Jewelers Ltd. | | 1,754 | | 210,498 | |
Tiffany & Co. | | 820 | | 78,818 | |
Tractor Supply Co. | | 1,470 | | 107,633 | |
Ulta Salon, Cosmetics & Fragrance, Inc.* | | 773 | | 93,386 | |
| | | | 515,498 | |
SYSTEMS SOFTWARE—2.1% | | | | | |
ServiceNow, Inc.* | | 2,202 | | 149,582 | |
Tableau Software, Inc., Cl. A* | | 399 | | 32,953 | |
| | | | 182,535 | |
WIRELESS TELECOMMUNICATION SERVICES—1.1% | | | | | |
SBA Communications Corp., Cl. A* | | 881 | | 98,963 | |
TOTAL COMMON STOCKS
(Cost $7,478,382) | | | | 8,428,761 | |
| | | | | |
MASTER LIMITED PARTNERSHIP—2.1% | | | | | |
ASSET MANAGEMENT & CUSTODY BANKS—0.9% | | | | | |
The Carlyle Group LP. | | 2,887 | | 80,143 | |
| | | | | |
OIL & GAS STORAGE & TRANSPORTATION—1.2% | | | | | |
Cheniere Energy Partners LP. | | 3,388 | | 107,129 | |
TOTAL MASTER LIMITED PARTNERSHIP
(Cost $200,662) | | | | 187,272 | |
| | | | | |
REAL ESTATE INVESTMENT TRUST—0.6% | | | | | |
OFFICE—0.6% | | | | | |
Boston Properties, Inc. | | 429 | | 54,376 | |
(Cost $51,156) | | | | 54,376 | |
Total Investments
(Cost $7,730,200)(a) | | 98.5 | % | 8,670,409 | |
Other Assets in Excess of Liabilities | | 1.5 | % | 131,808 | |
NET ASSETS | | 100.0 | % | $ | 8,802,217 | |
40
* | Non-income producing security. |
# | American Depositary Receipts. |
(a) | At October 31, 2014, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $7,797,477, amounted to $872,932 which consisted of aggregate gross unrealized appreciation of $998,617 and aggregate gross unrealized depreciation of $125,685. |
Industry classifications are unaudited.
See Notes to Financial Statements.
41
THE ALGER FUNDS II | ALGER DYNAMIC OPPORTUNITIES FUND
Schedule of Investments October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—62.8% | | | | | |
ADVERTISING—0.5% | | | | | |
Lamar Advertising Co., Cl. A+ | | 8,525 | | $ | 440,316 | |
| | | | | |
AEROSPACE & DEFENSE—0.8% | | | | | |
Honeywell International, Inc. | | 7,365 | | 707,924 | |
| | | | | |
AIRLINES—0.3% | | | | | |
United Continental Holdings, Inc.* | | 4,510 | | 238,173 | |
| | | | | |
APPAREL ACCESSORIES & LUXURY GOODS—0.4% | | | | | |
Under Armour, Inc., Cl. A* | | 5,635 | | 369,543 | |
| | | | | |
APPAREL RETAIL—0.5% | | | | | |
L Brands, Inc. | | 6,280 | | 452,914 | |
| | | | | |
APPLICATION SOFTWARE—1.4% | | | | | |
Adobe Systems, Inc.* | | 13,125 | | 920,325 | |
Informatica Corp.* | | 5,990 | | 213,604 | |
Palantir Technologies, Inc., Cl. A*(a) | | 6,606 | | 39,966 | |
| | | | 1,173,895 | |
AUTO PARTS & EQUIPMENT—1.9% | | | | | |
BorgWarner, Inc. | | 7,840 | | 447,037 | |
Delphi Automotive PLC.+ | | 10,395 | | 717,047 | |
WABCO Holdings, Inc.* | | 4,450 | | 433,341 | |
| | | | 1,597,425 | |
AUTOMOBILE MANUFACTURERS—0.9% | | | | | |
Tesla Motors, Inc.* | | 3,245 | | 784,317 | |
| | | | | |
BIOTECHNOLOGY—5.2% | | | | | |
Biogen Idec, Inc.* | | 2,520 | | 809,122 | |
Celgene Corp.* | | 6,745 | | 722,322 | |
Gilead Sciences, Inc.*+ | | 15,710 | | 1,759,520 | |
Pharmacyclics, Inc.*+ | | 6,450 | | 842,821 | |
Vertex Pharmaceuticals, Inc.* | | 1,870 | | 210,637 | |
| | | | 4,344,422 | |
CABLE & SATELLITE—0.9% | | | | | |
Comcast Corporation, Cl. A+ | | 14,370 | | 795,380 | |
| | | | | |
CONSUMER ELECTRONICS—0.5% | | | | | |
Garmin Ltd. | | 7,670 | | 425,532 | |
| | | | | |
CONSUMER FINANCE—1.2% | | | | | |
American Express Co. | | 7,000 | | 629,650 | |
Discover Financial Services | | 6,030 | | 384,593 | |
| | | | 1,014,243 | |
DATA PROCESSING & OUTSOURCED SERVICES—1.8% | | | | | |
Alliance Data Systems Corp.*+ | | 3,865 | | 1,095,148 | |
Fiserv, Inc.* | | 5,950 | | 413,406 | |
| | | | 1,508,554 | |
DRUG RETAIL—1.0% | | | | | |
CVS Caremark Corp.+ | | 9,990 | | 857,242 | |
| | | | | | |
42
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
GENERAL MERCHANDISE STORES—0.5% | | | | | |
Dollar General Corp.* | | 6,600 | | $ | 413,622 | |
| | | | | |
HEALTH CARE EQUIPMENT—1.6% | | | | | |
Insulet Corp.* | | 10,845 | | 468,179 | |
St. Jude Medical, Inc. | | 13,490 | | 865,653 | |
| | | | 1,333,832 | |
HEALTH CARE FACILITIES—3.4% | | | | | |
HCA Holdings, Inc.*+ | | 23,665 | | 1,657,733 | |
Tenet Healthcare Corporation* | | 21,495 | | 1,204,795 | |
| | | | 2,862,528 | |
HOME ENTERTAINMENT SOFTWARE—0.5% | | | | | |
Activision Blizzard, Inc. | | 21,935 | | 437,603 | |
| | | | | |
HOME FURNISHING RETAIL—0.5% | | | | | |
Williams-Sonoma, Inc. | | 6,060 | | 394,082 | |
| | | | | |
HOME IMPROVEMENT RETAIL—2.1% | | | | | |
The Home Depot, Inc.+ | | 18,120 | | 1,767,062 | |
| | | | | |
HOTELS RESORTS & CRUISE LINES—1.0% | | | | | |
Ctrip.com International Ltd.#* | | 3,780 | | 220,374 | |
Royal Caribbean Cruises Ltd. | | 9,315 | | 633,141 | |
| | | | 853,515 | |
INDUSTRIAL CONGLOMERATES—0.9% | | | | | |
Danaher Corp. | | 8,980 | | 721,992 | |
| | | | | |
INDUSTRIAL MACHINERY—0.6% | | | | | |
Pall Corp. | | 5,460 | | 499,153 | |
| | | | | |
INTERNET RETAIL—1.1% | | | | | |
Qunar Cayman Islands Ltd.#*+ | | 10,040 | | 270,076 | |
TripAdvisor, Inc.* | | 2,455 | | 217,660 | |
Vipshop Holdings Ltd.#* | | 1,855 | | 425,333 | |
| | | | 913,069 | |
INTERNET SOFTWARE & SERVICES—7.5% | | | | | |
DealerTrack Holdings, Inc.* | | 15,045 | | 707,867 | |
Demandware, Inc.* | | 12,620 | | 756,569 | |
Facebook, Inc., Cl. A*+ | | 22,715 | | 1,703,398 | |
Google, Inc., Cl. C*+ | | 3,000 | | 1,677,240 | |
GrubHub, Inc.* | | 9,170 | | 333,421 | |
LinkedIn Corp., Cl. A* | | 2,875 | | 658,260 | |
Tencent Holdings Ltd. | | 26,895 | | 428,639 | |
| | | | 6,265,394 | |
INVESTMENT BANKING & BROKERAGE—0.5% | | | | | |
Morgan Stanley+ | | 12,715 | | 444,389 | |
| | | | | |
IT CONSULTING & OTHER SERVICES—0.9% | | | | | |
Cognizant Technology Solutions Corp., Cl. A* | | 14,635 | | 714,920 | |
| | | | | |
LIFE SCIENCES TOOLS & SERVICES—1.0% | | | | | |
Genfit* | | 4,090 | | 209,636 | |
| | | | | | |
43
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
LIFE SCIENCES TOOLS & SERVICES—(CONT.) | | | | | |
Thermo Fisher Scientific, Inc. | | 5,175 | | $ | 608,425 | |
| | | | 818,061 | |
MANAGED HEALTH CARE—1.7% | | | | | |
Aetna, Inc. | | 10,020 | | 826,750 | |
WellCare Health Plans, Inc.* | | 9,375 | | 636,281 | |
| | | | 1,463,031 | |
MULTI-LINE INSURANCE—0.7% | | | | | |
Hartford Financial Services Group, Inc. | | 15,440 | | 611,115 | |
| | | | | |
MULTI-UTILITIES—0.5% | | | | | |
Sempra Energy | | 3,935 | | 432,850 | |
| | | | | |
OIL & GAS EQUIPMENT & SERVICES—1.2% | | | | | |
Halliburton Company+ | | 11,045 | | 609,021 | |
Weatherford International PLC*+ | | 25,410 | | 417,232 | |
| | | | 1,026,253 | |
OIL & GAS EXPLORATION & PRODUCTION—2.4% | | | | | |
Anadarko Petroleum Corp. | | 13,350 | | 1,225,263 | |
Devon Energy Corp. | | 6,910 | | 414,600 | |
Whiting Petroleum Corp.*+ | | 6,850 | | 419,494 | |
| | | | 2,059,357 | |
OTHER DIVERSIFIED FINANCIAL SERVICES—0.3% | | | | | |
Bank of America Corp. | | 12,775 | | 219,219 | |
| | | | | |
PHARMACEUTICALS—5.0% | | | | | |
AbbVie, Inc. | | 25,590 | | 1,623,941 | |
Actavis PLC.* | | 5,312 | | 1,289,435 | |
Allergan, Inc. | | 2,480 | | 471,349 | |
Salix Pharmaceuticals Ltd.* | | 2,210 | | 317,909 | |
Shire PLC# | | 2,450 | | 489,510 | |
| | | | 4,192,144 | |
REAL ESTATE SERVICES—0.8% | | | | | |
Jones Lang LaSalle, Inc. | | 4,960 | | 670,642 | |
| | | | | |
SECURITY & ALARM SERVICES—0.7% | | | | | |
Tyco International Ltd. | | 13,155 | | 564,744 | |
| | | | | |
SEMICONDUCTOR EQUIPMENT—0.8% | | | | | |
Lam Research Corp. | | 8,120 | | 632,223 | |
| | | | | |
SEMICONDUCTORS—4.4% | | | | | |
Avago Technologies Ltd. | | 13,380 | | 1,154,025 | |
Micron Technology, Inc.*+ | | 50,035 | | 1,655,658 | |
NXP Semiconductors NV*+ | | 12,495 | | 857,907 | |
| | | | 3,667,590 | |
SOFT DRINKS—1.0% | | | | | |
PepsiCo, Inc.+ | | 8,855 | | 851,585 | |
| | | | | |
SPECIALTY CHEMICALS—0.7% | | | | | |
Ecolab, Inc. | | 3,665 | | 407,658 | |
| | | | | | |
44
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
SPECIALTY CHEMICALS—(CONT.) | | | | | |
Senomyx, Inc.* | | 20,890 | | $ | 165,449 | |
| | | | 573,107 | |
TECHNOLOGY HARDWARE STORAGE & PERIPHERALS—2.7% | | | | | |
Apple, Inc.+ | | 16,650 | | 1,798,200 | |
Nimble Storage, Inc.* | | 17,205 | | 470,729 | |
| | | | 2,268,929 | |
TRADING COMPANIES & DISTRIBUTORS—0.5% | | | | | |
HD Supply Holdings, Inc.* | | 14,455 | | 416,882 | |
TOTAL COMMON STOCKS
(Cost $46,707,437) | | | | 52,798,773 | |
| | | | | |
PREFERRED STOCKS—0.8% | | | | | |
APPLICATION SOFTWARE—0.2% | | | | | |
Palantir Technologies, Inc., Cl. B*(b) | | 26,941 | | 165,148 | |
Palantir Technologies, Inc., Cl. D*(c) | | 3,510 | | 21,587 | |
| | | | 186,735 | |
PHARMACEUTICALS—0.6% | | | | | |
Intarcia Therapeutics, Inc.*(d) | | 2,964 | | 127,451 | |
Tolero Pharmaceuticals, Inc.*(e),(f) | | 106,120 | | 320,069 | |
| | | | 447,520 | |
TOTAL PREFERRED STOCKS
(Cost $617,151) | | | | 634,255 | |
| | | | | |
RIGHTS—0.0% | | | | | |
BIOTECHNOLOGY—0.0% | | | | | |
Adolor Corp., CPR *,(g)(h) | | 49,870 | | 25,932 | |
(Cost $—) | | | | 25,932 | |
| | | | | |
MASTER LIMITED PARTNERSHIP—2.5% | | | | | |
ASSET MANAGEMENT & CUSTODY BANKS—1.5% | | | | | |
The Blackstone Group LP.+ | | 41,775 | | 1,258,263 | |
| | | | | |
OIL & GAS STORAGE & TRANSPORTATION—1.0% | | | | | |
Cheniere Energy Partners LP. | | 27,840 | | 880,301 | |
TOTAL MASTER LIMITED PARTNERSHIP
(Cost $2,147,731) | | | | 2,138,564 | |
| | | | | |
Total Investments
(Cost $49,472,319)(i) | | 66.1 | % | 55,597,524 | |
Other Assets in Excess of Liabilities | | 33.9 | % | 28,502,366 | |
NET ASSETS | | 100.0 | % | $ | 84,099,890 | |
45
+ | All or a portion of this security is held as collateral for securities sold short. |
* | Non-income producing security. |
(a) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $39,966 and an original cost of $42,985 in those securities. |
# | American Depositary Receipts. |
(b) | Restricted as to resale. As of the report date, the Fund held 0.2% of its net assets with a current value of $165,148 and an original cost of $177,903 in those securities. |
(c) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $21,587 and an original cost of $23,176 in those securities. |
(d) | Restricted as to resale. As of the report date, the Fund held 0.2% of its net assets with a current value of $127,451 and an original cost of $96,003 in those securities. |
(e) | Restricted as to resale. As of the report date, the Fund held 0.4% of its net assets with a current value of $320,069 and an original cost of $320,069 in those securities. |
(f) | Deemed an affiliate of the Alger fund complex during the year for purposes of Section 2(a)(3) of the Investment Company Act of 1940. See Affiliated Securities in Notes to Financial Statements. |
(g) | Right - Contingent Payment Right granted December 13, 2011 and may not be sold. Right is deemed to be illiquid and represents 0.0% of the net assets of the Fund. |
(h) | Restricted as to resale. As of the report date, the Fund held 0.0% of its net assets with a current value of $25,932 and an original cost of $— in those securities. |
(i) | At October 31, 2014, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $49,816,745, amounted to $5,780,779 which consisted of aggregate gross unrealized appreciation of $7,290,234 and aggregate gross unrealized depreciation of $1,509,455. |
Industry classifications are unaudited.
See Notes to Financial Statements.
46
THE ALGER FUNDS II | ALGER DYNAMIC OPPORTUNITIES FUND
Schedule of Investments - Securities Sold Short October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—-16.1% | | | | | |
AGRICULTURAL & FARM MACHINERY—-1.0% | | | | | |
Deere & Co. | | (9,455 | ) | $ | (808,781 | ) |
| | | | | |
APPAREL RETAIL—-0.9% | | | | | |
Ross Stores, Inc. | | (3,070 | ) | (247,810 | ) |
The Gap, Inc. | | (6,570 | ) | (248,937 | ) |
Urban Outfitters, Inc.* | | (7,485 | ) | (227,245 | ) |
| | | | (723,992 | ) |
APPLICATION SOFTWARE—-0.4% | | | | | |
Manhattan Associates, Inc.* | | (8,550 | ) | (342,940 | ) |
| | | | | |
ASSET MANAGEMENT & CUSTODY BANKS—-0.5% | | | | | |
T. Rowe Price Group, Inc. | | (2,070 | ) | (169,926 | ) |
Waddell & Reed Financial, Inc., Cl. A | | (4,635 | ) | (221,275 | ) |
| | | | (391,201 | ) |
AUTOMOTIVE RETAIL—-0.2% | | | | | |
AutoZone, Inc.* | | (230 | ) | (127,310 | ) |
| | | | | |
BIOTECHNOLOGY—-0.3% | | | | | |
Myriad Genetics, Inc.* | | (6,430 | ) | (253,921 | ) |
| | | | | |
BROADCASTING—-0.1% | | | | | |
Discovery Communications, Inc., Series C* | | (3,090 | ) | (108,119 | ) |
| | | | | |
BUILDING PRODUCTS—-0.1% | | | | | |
Masco Corp. | | (5,100 | ) | (112,557 | ) |
| | | | | |
CASINOS & GAMING—-0.3% | | | | | |
Pinnacle Entertainment, Inc.* | | (8,780 | ) | (225,031 | ) |
| | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—-0.2% | | | | | |
PACCAR, Inc. | | (3,235 | ) | (211,310 | ) |
| | | | | |
DATA PROCESSING & OUTSOURCED SERVICES—-0.1% | | | | | |
Jack Henry & Associates, Inc. | | (2,090 | ) | (125,024 | ) |
| | | | | |
DIVERSIFIED BANKS—-0.3% | | | | | |
SPDR S&P Regional Banking ETF | | (5,411 | ) | (216,873 | ) |
| | | | | |
DIVERSIFIED CHEMICALS—-0.2% | | | | | |
FMC Corporation | | (3,620 | ) | (207,607 | ) |
| | | | | |
ELECTRICAL COMPONENTS & EQUIPMENT—-0.2% | | | | | |
Emerson Electric Co. | | (2,615 | ) | (167,517 | ) |
| | | | | |
ELECTRONIC MANUFACTURING SERVICES—-0.1% | | | | | |
Benchmark Electronics, Inc.* | | (4,900 | ) | (116,228 | ) |
| | | | | |
EXCHANGE TRADED FUNDS—-0.8% | | | | | |
iShares Russell 2000 Index Fund | | (2,468 | ) | (287,670 | ) |
SPDR S&P 500 ETF Trust | | (2,073 | ) | (418,041 | ) |
| | | | (705,711 | ) |
FOOD RETAIL—-0.2% | | | | | |
Metro, Inc. | | (2,500 | ) | (175,656 | ) |
| | | | | |
HEALTH CARE EQUIPMENT—-0.9% | | | | | |
Baxter International, Inc. | | (4,480 | ) | (314,227 | ) |
Varian Medical Systems, Inc.* | | (5,185 | ) | (436,162 | ) |
| | | | (750,389 | ) |
| | | | | | |
47
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
HEALTH CARE FACILITIES—-0.3% | | | | | |
Amsurg Corp.* | | (3,980 | ) | $ | (214,960 | ) |
| | | | | |
HEALTH CARE SERVICES—-0.5% | | | | | |
Express Scripts, Inc.* | | (5,730 | ) | (440,179 | ) |
| | | | | |
HEALTH CARE SUPPLIES—-0.1% | | | | | |
DENTSPLY International, Inc. | | (1,805 | ) | (91,640 | ) |
| | | | | |
HOME FURNISHING RETAIL—-0.3% | | | | | |
Bed Bath & Beyond, Inc.* | | (3,865 | ) | (260,269 | ) |
| | | | | |
HOME IMPROVEMENT RETAIL—-0.2% | | | | | |
Lumber Liquidators Holdings, Inc.* | | (3,555 | ) | (191,152 | ) |
| | | | | |
HOUSEWARES & SPECIALTIES—-0.2% | | | | | |
Tupperware Brands Corp. | | (2,815 | ) | (179,456 | ) |
| | | | | |
INTEGRATED OIL & GAS—-0.2% | | | | | |
Statoil ASA# | | (8,775 | ) | (201,386 | ) |
| | | | | |
INTERNET SOFTWARE & SERVICES—-0.3% | | | | | |
Akamai Technologies, Inc.* | | (4,430 | ) | (267,129 | ) |
| | | | | |
IT CONSULTING & OTHER SERVICES—-1.6% | | | | | |
Accenture Ltd. | | (6,615 | ) | (536,609 | ) |
Infosys Technologies Ltd.# | | (12,570 | ) | (840,430 | ) |
| | | | (1,377,039 | ) |
LIFE & HEALTH INSURANCE—-0.3% | | | | | |
MetLife, Inc. | | (4,020 | ) | (218,045 | ) |
| | | | | |
MARKET INDICES—-0.8% | | | | | |
iShares Russell 2000 Growth ETF | | (4,728 | ) | (650,715 | ) |
| | | | | |
METAL & GLASS CONTAINERS—-0.2% | | | | | |
Berry Plastics Group, Inc.* | | (6,855 | ) | (178,367 | ) |
| | | | | |
MOVIES & ENTERTAINMENT—-0.2% | | | | | |
Viacom, Inc., Cl. B | | (2,270 | ) | (164,984 | ) |
| | | | | |
OIL & GAS DRILLING—-0.3% | | | | | |
Ensco PLC | | (5,290 | ) | (214,721 | ) |
| | | | | |
OIL & GAS EQUIPMENT & SERVICES—-0.1% | | | | | |
Seventy Seven Energy, Inc.* | | (6,395 | ) | (83,583 | ) |
| | | | | |
OIL & GAS EXPLORATION & PRODUCTION—-0.3% | | | | | |
Concho Resources, Inc.* | | (820 | ) | (89,405 | ) |
Jones Energy, Inc.* | | (12,350 | ) | (152,646 | ) |
| | | | (242,051 | ) |
REGIONAL BANKS—-0.3% | | | | | |
Hancock Holding Co. | | (6,215 | ) | (218,706 | ) |
| | | | | |
RESTAURANTS—-0.2% | | | | | |
Buffalo Wild Wings, Inc.* | | (1,225 | ) | (182,868 | ) |
| | | | | |
SEMICONDUCTORS—-1.3% | | | | | |
Linear Technology Corp. | | (10,060 | ) | (430,970 | ) |
Taiwan Semiconductor Manufacturing Co., Ltd.# | | (8,770 | ) | (193,115 | ) |
Texas Instruments, Inc. | | (10,215 | ) | (507,277 | ) |
| | | | (1,131,362 | ) |
| | | | | | |
48
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
SPECIALTY CHEMICALS—-0.3% | | | | | |
Celanese Corp. | | (3,975 | ) | $ | (233,452 | ) |
| | | | | |
SYSTEMS SOFTWARE—-1.0% | | | | | |
NetSuite, Inc.* | | (4,345 | ) | (472,128 | ) |
Oracle Corp. | | (7,980 | ) | (311,619 | ) |
| | | | (783,747 | ) |
TRUCKING—-0.3% | | | | | |
Heartland Express, Inc. | | (10,325 | ) | (259,570 | ) |
TOTAL (Proceeds $13,050,321) | | | | $ | (13,555,548 | ) |
* | Non-income producing security. |
# | American Depositary Receipts. |
Industry classifications are unaudited.
See Notes to Financial Statements.
49
THE ALGER FUNDS II | ALGER EMERGING MARKETS FUND
Schedule of Investments October 31, 2014
| | SHARES | | VALUE | |
COMMON STOCKS—95.2% | | | | | |
BRAZIL—9.1% | | | | | |
BREWERS—0.9% | | | | | |
AMBEV SA | | 30,635 | | $ | 202,733 | |
| | | | | |
DIVERSIFIED BANKS—1.5% | | | | | |
Itau Unibanco Holding SA# | | 24,439 | | 360,720 | |
| | | | | |
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES—1.0% | | | | | |
Cielo SA | | 14,900 | | 244,646 | |
| | | | | |
INDUSTRIAL MACHINERY—0.7% | | | | | |
WEG SA | | 13,600 | | 160,410 | |
| | | | | |
MANAGED HEALTH CARE—0.9% | | | | | |
Odontoprev SA | | 62,600 | | 226,079 | |
| | | | | |
MULTI-LINE INSURANCE—1.3% | | | | | |
BB Seguridade Participacoes SA | | 23,700 | | 316,166 | |
| | | | | |
OTHER DIVERSIFIED FINANCIAL SERVICES—1.0% | | | | | |
GAEC Educacao SA | | 19,700 | | 250,403 | |
| | | | | |
PAPER PRODUCTS—1.0% | | | | | |
Suzano Papel e Celulose SA | | 55,900 | | 235,943 | |
| | | | | |
TRUCKING—0.8% | | | | | |
Localiza Rent a Car SA | | 13,500 | | 194,585 | |
TOTAL BRAZIL
(Cost $2,087,410) | | | | 2,191,685 | |
| | | | | |
CHINA—17.6% | | | | | |
AGRICULTURAL PRODUCTS—0.7% | | | | | |
China Modern Dairy Holdings Ltd.* | | 370,000 | | 163,643 | |
| | | | | |
APPAREL RETAIL—0.5% | | | | | |
Trinity Ltd. | | 464,000 | | 111,284 | |
| | | | | |
AUTOMOBILE MANUFACTURERS—1.1% | | | | | |
Brilliance China Automotive Holdings Ltd. | | 154,000 | | 265,692 | |
| | | | | |
CONSTRUCTION & ENGINEERING—1.0% | | | | | |
China State Construction International Holdings Ltd. | | 148,309 | | 229,100 | |
| | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.2% | | | | | |
China South Locomotive and Rolling Stock Corp. | | 283,000 | | 298,279 | |
| | | | | |
CONSUMER ELECTRONICS—0.8% | | | | | |
Haier Electronics Group Co., Ltd. | | 69,000 | | 185,061 | |
| | | | | |
ELECTRONIC EQUIPMENT & INSTRUMENTS—0.8% | | | | | |
PAX Global Technology Ltd.* | | 183,604 | | 196,973 | |
| | | | | |
HEALTH CARE DISTRIBUTORS—1.0% | | | | | |
Phoenix Healthcare Group Co., Ltd. | | 125,413 | | 246,773 | |
| | | | | |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS—1.9% | | | | | |
Huaneng Power International, Inc. | | 180,000 | | 220,726 | |
Huaneng Renewables Corp., Ltd. | | 675,000 | | 242,834 | |
| | | | 463,560 | |
| | | | | | |
50
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
CHINA—(CONT.) | | | | | |
INDUSTRIAL CONGLOMERATES—1.1% | | | | | |
China Everbright International Ltd. | | 195,000 | | $ | 271,053 | |
| | | | | |
INTEGRATED OIL & GAS—0.6% | | | | | |
China Petroleum & Chemical Corp. | | 176,800 | | 153,198 | |
| | | | | |
INTERNET RETAIL—1.3% | | | | | |
Qunar Cayman Islands Ltd.#* | | 2,700 | | 72,630 | |
Vipshop Holdings Ltd.#* | | 1,019 | | 233,647 | |
| | | | 306,277 | |
INTERNET SOFTWARE & SERVICES—2.9% | | | | | |
Alibaba Group Holding Ltd.#* | | 1,633 | | 161,014 | |
Tencent Holdings Ltd. | | 34,400 | | 548,249 | |
| | | | 709,263 | |
LIFE & HEALTH INSURANCE—1.0% | | | | | |
Ping An Insurance Group Co., of China Ltd. | | 29,000 | | 236,890 | |
| | | | | |
REAL ESTATE DEVELOPMENT—0.8% | | | | | |
China Overseas Land & Investment Ltd. | | 69,000 | | 200,186 | |
| | | | | |
WIRELESS TELECOMMUNICATION SERVICES—0.9% | | | | | |
China Mobile Ltd. | | 18,000 | | 224,440 | |
TOTAL CHINA | | | | | |
(Cost $3,802,617) | | | | 4,261,672 | |
| | | | | |
COLOMBIA—2.7% | | | | | |
CONSTRUCTION MATERIALS—1.1% | | | | | |
Cementos Argos SA | | 51,838 | | 255,978 | |
| | | | | |
FOOD RETAIL—0.7% | | | | | |
Almacenes Exito SA | | 12,309 | | 173,612 | |
| | | | | |
INTEGRATED OIL & GAS—0.9% | | | | | |
Pacific Rubiales Energy Corp. | | 14,311 | | 214,091 | |
TOTAL COLOMBIA | | | | | |
(Cost $708,371) | | | | 643,681 | |
| | | | | |
HONG KONG—2.3% | | | | | |
COMPUTER HARDWARE—0.7% | | | | | |
Lenovo Group Ltd. | | 112,000 | | 165,214 | |
| | | | | |
LIFE & HEALTH INSURANCE—1.1% | | | | | |
AIA Group Ltd. | | 50,200 | | 279,957 | |
| | | | | |
SPECIALTY STORES—0.5% | | | | | |
Chow Tai Fook Jewellery Group | | 84,800 | | 117,873 | |
TOTAL HONG KONG
(Cost $461,859) | | | | 563,044 | |
| | | | | |
INDIA—8.7% | | | | | |
APPAREL ACCESSORIES & LUXURY GOODS—1.0% | | | | | |
Titan Co., Ltd. | | 37,509 | | 246,171 | |
| | | | | | |
51
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
INDIA—(CONT.) | | | | | |
AUTO PARTS & EQUIPMENT—1.4% | | | | | |
Motherson Sumi Systems Ltd. | | 48,879 | | $ | 335,160 | |
| | | | | |
CONSTRUCTION & ENGINEERING—0.6% | | | | | |
Voltas Ltd. | | 36,448 | | 148,986 | |
| | | | | |
CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.1% | | | | | |
Tata Motors Ltd.# | | 5,823 | | 274,263 | |
| | | | | |
DIVERSIFIED BANKS—1.8% | | | | | |
HDFC Bank Ltd. | | 16,363 | | 265,144 | |
IndusInd Bank Ltd. | | 13,725 | | 160,708 | |
| | | | 425,852 | |
IT CONSULTING & OTHER SERVICES—1.0% | | | | | |
Tata Consultancy Services Ltd. | | 5,859 | | 249,469 | |
| | | | | |
OIL, GAS & CONSUMABLE FUELS—0.5% | | | | | |
Reliance Industries Ltd. | | 7,880 | | 128,200 | |
| | | | | |
PHARMACEUTICALS—1.3% | | | | | |
Aurobindo Pharma Ltd. | | 19,293 | | 304,720 | |
TOTAL INDIA
(Cost $1,548,287) | | | | 2,112,821 | |
| | | | | |
INDONESIA—2.8% | | | | | |
ALTERNATIVE CARRIERS—1.0% | | | | | |
Tower Bersama Infrastructure Tbk PT | | 343,000 | | 252,602 | |
| | | | | |
GAS UTILITIES—0.8% | | | | | |
Perusahaan Gas Negara Persero Tbk PT | | 369,300 | | 181,823 | |
| | | | | |
INTEGRATED TELECOMMUNICATION SERVICES—1.0% | | | | | |
Telekomunikasi Indonesia Persero Tbk PT | | 1,089,600 | | 247,944 | |
TOTAL INDONESIA
(Cost $576,430) | | | | 682,369 | |
| | | | | |
MALAYSIA—1.8% | | | | | |
DATA PROCESSING & OUTSOURCED SERVICES—0.6% | | | | | |
MOL Global, Inc.#* | | 20,300 | | 152,453 | |
| | | | | |
HEALTH CARE DISTRIBUTORS—0.6% | | | | | |
KPJ Healthcare Bhd. | | 126,600 | | 150,435 | |
| | | | | |
OIL & GAS EQUIPMENT & SERVICES—0.6% | | | | | |
Sapurakencana Petroleum Bhd. | | 125,000 | | 129,539 | |
TOTAL MALAYSIA
(Cost $451,451) | | | | 432,427 | |
| | | | | |
MEXICO—6.1% | | | | | |
COMMODITY CHEMICALS—1.0% | | | | | |
Mexichem SAB de CV | | 59,500 | | 243,358 | |
| | | | | |
CONSTRUCTION MATERIALS—1.0% | | | | | |
Cemex SAB de CV#* | | 20,037 | | 246,455 | |
| | | | | | |
52
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
MEXICO—(CONT.) | | | | | |
CONSUMER FINANCE—0.9% | | | | | |
Compartamos SAB de CV | | 101,900 | | $ | 227,003 | |
| | | | | |
DIVERSIFIED REAL ESTATE ACTIVITIES—1.4% | | | | | |
Corp Inmobiliaria Vesta SAB de CV | | 149,375 | | 328,326 | |
| | | | | |
GAS UTILITIES—0.7% | | | | | |
Infraestructura Energetica Nova SAB de CV | | 29,700 | | 181,198 | |
| | | | | |
INDUSTRIAL CONGLOMERATES—1.1% | | | | | |
Alfa SAB de CV | | 81,200 | | 259,214 | |
TOTAL MEXICO | | | | | |
(Cost $1,300,973) | | | | 1,485,554 | |
| | | | | |
PERU—1.2% | | | | | |
DIVERSIFIED BANKS—1.2% | | | | | |
Credicorp Ltd. | | 1,800 | | 289,800 | |
(Cost $242,274) | | | | | |
| | | | | |
PHILIPPINES—1.7% | | | | | |
INDUSTRIAL CONGLOMERATES—0.6% | | | | | |
DMCI Holdings, Inc. | | 385,750 | | 138,978 | |
| | | | | |
PACKAGED FOODS & MEATS—1.1% | | | | | |
Universal Robina Corp. | | 65,520 | | 271,027 | |
TOTAL PHILIPPINES | | | | | |
(Cost $396,362) | | | | 410,005 | |
| | | | | |
POLAND—1.8% | | | | | |
AIR FREIGHT & LOGISTICS—0.4% | | | | | |
Integer.pl SA* | | 1,864 | | 110,599 | |
| | | | | |
APPAREL ACCESSORIES & LUXURY GOODS—0.5% | | | | | |
LPP SA | | 41 | | 122,292 | |
| | | | | |
DIVERSIFIED BANKS—0.9% | | | | | |
Powszechna Kasa Oszczednosci Bank Polski SA | | 18,745 | | 208,368 | |
TOTAL POLAND | | | | | |
(Cost $512,436) | | | | 441,259 | |
| | | | | |
QATAR—0.6% | | | | | |
DIVERSIFIED BANKS—0.6% | | | | | |
Qatar National Bank SAQ | | 2,577 | | 151,653 | |
(Cost $137,279) | | | | | |
| | | | | |
RUSSIA—4.3% | | | | | |
DATA PROCESSING & OUTSOURCED SERVICES—1.1% | | | | | |
QIWI PLC.# | | 8,130 | | 257,477 | |
| | | | | |
FOOD RETAIL—0.8% | | | | | |
Magnit PJSC(a) | | 2,999 | | 200,933 | |
| | | | | |
INTEGRATED OIL & GAS—0.5% | | | | | |
Lukoil OAO# | | 2,508 | | 123,143 | |
| | | | | | |
53
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
RUSSIA—(CONT.) | | | | | |
INTERNET SOFTWARE & SERVICES—0.6% | | | | | |
Yandex NV* | | 5,100 | | $ | 145,962 | |
| | | | | |
IT CONSULTING & OTHER SERVICES—1.3% | | | | | |
Luxoft Holding, Inc.* | | 7,800 | | 311,922 | |
TOTAL RUSSIA
(Cost $997,079) | | | | 1,039,437 | |
| | | | | |
SOUTH AFRICA—5.9% | | | | | |
CABLE & SATELLITE—1.4% | | | | | |
Naspers Ltd. | | 2,670 | | 332,286 | |
| | | | | |
DIVERSIFIED METALS & MINING—0.5% | | | | | |
Royal Bafokeng Platinum Ltd.* | | 22,345 | | 118,517 | |
| | | | | |
LIFE & HEALTH INSURANCE—0.8% | | | | | |
MMI Holdings Ltd. | | 78,243 | | 199,979 | |
| | | | | |
OTHER DIVERSIFIED FINANCIAL SERVICES—2.0% | | | | | |
Brait SE* | | 25,154 | | 189,017 | |
FirstRand Ltd. | | 67,835 | | 290,295 | |
| | | | 479,312 | |
PHARMACEUTICALS—1.2% | | | | | |
Aspen Pharmacare Holdings Ltd. | | 8,327 | | 297,038 | |
TOTAL SOUTH AFRICA
(Cost $1,165,323) | | | | 1,427,132 | |
| | | | | |
SOUTH KOREA—13.4% | | | | | |
AUTOMOBILE MANUFACTURERS—0.6% | | | | | |
Hyundai Motor Co. | | 883 | | 139,709 | |
| | | | | |
BUILDING PRODUCTS—0.9% | | | | | |
KCC Corp. | | 401 | | 220,944 | |
| | | | | |
COMMODITY CHEMICALS—0.3% | | | | | |
LG Chem Ltd. | | 414 | | 77,063 | |
| | | | | |
DIVERSIFIED BANKS—1.7% | | | | | |
Hana Financial Group, Inc. | | 5,588 | | 192,690 | |
KB Financial Group, Inc. | | 5,347 | | 209,014 | |
| | | | 401,704 | |
DIVERSIFIED METALS & MINING—0.6% | | | | | |
POSCO | | 531 | | 151,228 | |
| | | | | |
ELECTRONIC COMPONENTS—0.9% | | | | | |
LG Display Co., Ltd.* | | 7,722 | | 225,311 | |
| | | | | |
FOOD BEVERAGE & TOBACCO—0.9% | | | | | |
CJ CheilJedang Corp. | | 569 | | 207,064 | |
| | | | | |
HOUSEHOLD PRODUCTS—0.9% | | | | | |
LG Household & Health Care Ltd. | | 386 | | 223,816 | |
| | | | | |
LIFE & HEALTH INSURANCE—1.1% | | | | | |
Samsung Life Insurance Co., Ltd. | | 2,501 | | 271,179 | |
| | | | | | |
54
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
SOUTH KOREA—(CONT.) | | | | | |
MOVIES & ENTERTAINMENT—1.1% | | | | | |
CJ CGV Co., Ltd. | | 5,212 | | $ | 254,186 | |
| | | | | |
SEMICONDUCTORS—3.3% | | | | | |
Samsung Electronics Co., Ltd. | | 685 | | 793,098 | |
| | | | | |
SPECIALTY STORES—0.4% | | | | | |
LOTTE Himart Co., Ltd. | | 1,742 | | 107,168 | |
| | | | | |
SPORTING GOODS—0.7% | | | | | |
Samchuly Bicycle Co., Ltd. | | 7,568 | | 156,369 | |
TOTAL SOUTH KOREA
(Cost $3,240,417) | | | | 3,228,839 | |
| | | | | |
TAIWAN—10.0% | | | | | |
DIVERSIFIED BANKS—2.1% | | | | | |
E.Sun Financial Holding Co., Ltd. | | 418,000 | | 264,131 | |
SinoPac Financial Holdings Co., Ltd. | | 568,000 | | 246,114 | |
| | | | 510,245 | |
ELECTRONIC COMPONENTS—0.8% | | | | | |
Delta Electronics, Inc. | | 32,000 | | 191,177 | |
| | | | | |
ELECTRONIC EQUIPMENT & INSTRUMENTS—0.7% | | | | | |
TPK Holding Co., Ltd. | | 28,000 | | 164,522 | |
| | | | | |
ELECTRONIC EQUIPMENT MANUFACTURERS—1.1% | | | | | |
Chroma ATE, Inc. | | 104,000 | | 258,430 | |
| | | | | |
ELECTRONIC MANUFACTURING SERVICES—1.5% | | | | | |
Hon Hai Precision Industry Co., Ltd. | | 114,360 | | 360,378 | |
| | | | | |
SEMICONDUCTOR EQUIPMENT—1.2% | | | | | |
Hermes Microvision, Inc. | | 6,000 | | 281,644 | |
| | | | | |
SEMICONDUCTORS—0.7% | | | | | |
ASPEED Technology, Inc. | | 22,600 | | 172,482 | |
| | | | | |
TEXTILES—1.2% | | | | | |
Eclat Textile Co., Ltd. | | 31,120 | | 295,223 | |
| | | | | |
WORKSTATION—0.7% | | | | | |
Advantech Co., Ltd. | | 26,000 | | 180,081 | |
TOTAL TAIWAN | | | | | |
(Cost $2,431,785) | | | | 2,414,182 | |
| | | | | |
THAILAND—2.4% | | | | | |
AGRICULTURAL PRODUCTS—1.0% | | | | | |
Charoen Pokphand Foods PCL | | 245,500 | | 235,261 | |
| | | | | |
DIVERSIFIED BANKS—0.5% | | | | | |
The Siam Commercial Bank PCL | | 19,900 | | 108,318 | |
| | | | | |
PASSENGER TRANSPORTATION—0.9% | | | | | |
BTS Group Holdings PCL | | 723,400 | | 228,489 | |
TOTAL THAILAND | | | | | |
(Cost $553,205) | | | | 572,068 | |
| | | | | | |
55
| | SHARES | | VALUE | |
COMMON STOCKS—(CONT.) | | | | | |
TURKEY—1.4% | | | | | |
DIVERSIFIED BANKS—0.5% | | | | | |
Turkiye Garanti Bankasi AS | | 34,100 | | $ | 133,166 | |
| | | | | |
INDUSTRIAL MACHINERY—0.9% | | | | | |
Turk Traktor ve Ziraat Makineleri AS | | 6,714 | | 211,748 | |
TOTAL TURKEY | | | | | |
(Cost $342,120) | | | | 344,914 | |
| | | | | |
UNITED ARAB EMIRATES—0.5% | | | | | |
DIVERSIFIED BANKS—0.5% | | | | | |
Abu Dhabi Commercial Bank PJSC | | 56,973 | | 122,539 | |
(Cost $118,244) | | | | | |
| | | | | |
UNITED KINGDOM—0.9% | | | | | |
BREWERS—0.9% | | | | | |
SABMiller PLC. | | 3,897 | | 219,750 | |
(Cost $196,715) | | | | | |
TOTAL COMMON STOCKS | | | | | |
(Cost $21,270,637) | | | | 23,034,831 | |
| | | | | |
PREFERRED STOCKS—0.6% | | | | | |
BRAZIL—0.6% | | | | | |
INTEGRATED OIL & GAS—0.6% | | | | | |
Petroleo Brasileiro SA | | 23,350 | | 143,971 | |
(Cost $181,499) | | | | | |
Total Investments | | | | | |
(Cost $21,452,136)(b) | | 95.8 | % | 23,178,802 | |
Other Assets in Excess of Liabilities | | 4.2 | % | 1,021,184 | |
NET ASSETS | | 100.0 | % | $ | 24,199,986 | |
# | American Depositary Receipts. |
* | Non-income producing security. |
(a) | Global Depositary Receipts. |
(b) | At October 31, 2014, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $21,547,006, amounted to $1,631,796 which consisted of aggregate gross unrealized appreciation of $2,841,513 and aggregate gross unrealized depreciation of $1,209,717. |
Industry classifications are unaudited.
See Notes to Financial Statements.
56
THE ALGER FUNDS II
Statement of Assets and Liabilities October 31, 2014
| | Alger Spectra Fund | | Alger Green Fund | |
ASSETS: | | | | | |
Investments in securities, at value (Identified cost below)* see accompanying schedules of investments | | $ | 4,611,834,027 | | $ | 75,904,359 | |
Investments in affiliated securities, at value (Identified cost below)** see accompanying schedules of investments | | 3,124,374 | | 59,652 | |
Cash and cash equivalents (a) | | 113,263,993 | | 2,517,336 | |
Receivable for investment securities sold | | 157,822,089 | | 64,497 | |
Receivable for shares of beneficial interest sold | | 16,166,406 | | 443,255 | |
Receivable for interfund loans | | 730,000 | | — | |
Dividends and interest receivable | | 2,283,269 | | 30,296 | |
Prepaid expenses | | 273,881 | | 36,709 | |
Total Assets | | 4,905,498,039 | | 79,056,104 | |
LIABILITIES: | | | | | |
Securities sold short, at value ‡ | | 244,400,511 | | — | |
Payable for investment securities purchased | | 193,306,401 | | — | |
Payable for shares of beneficial interest redeemed | | 5,801,363 | | 114,443 | |
Accrued investment advisory fees | | 2,934,373 | | 45,286 | |
Accrued transfer agent fees | | 929,205 | | 28,557 | |
Accrued distribution fees | | 1,106,031 | | 19,173 | |
Accrued administrative fees | | 98,994 | | 1,754 | |
Accrued shareholder administrative fees | | 49,113 | | 832 | |
Dividends payable | | 717,601 | | — | |
Accrued other expenses | | 333,559 | | 35,511 | |
Total Liabilities | | 449,677,151 | | 245,556 | |
NET ASSETS | | $ | 4,455,820,888 | | $ | 78,810,548 | |
NET ASSETS CONSIST OF: | | | | | |
Paid in capital (par value of $.001 per share) | | 3,200,392,904 | | 57,155,205 | |
Undistributed net investment income (accumulated loss) | | 916,003 | | (36,753 | ) |
Undistributed net realized gain | | 506,772,385 | | 2,121,306 | |
Net unrealized appreciation on investments | | 747,739,596 | | 19,570,790 | |
NET ASSETS | | $ | 4,455,820,888 | | $ | 78,810,548 | |
* Identified cost | | $ | 3,860,410,215 | | $ | 56,325,319 | |
** Identified cost | | $ | 3,540,540 | | $ | 67,903 | |
‡ Proceeds received on short sales | | $ | 241,133,884 | | $ | — | |
(a) Includes restricted cash held as collateral for short sales | | $ | 41,395,395 | | $ | — | |
See Notes to Financial Statements.
57
| | Alger Spectra Fund | | Alger Green Fund | |
NET ASSETS BY CLASS: | | | | | |
Class A | | $ | 1,846,479,428 | | $ | 31,662,172 | |
Class C | | $ | 650,438,256 | | $ | 5,260,813 | |
Class I | | $ | 1,030,303,520 | | $ | 41,887,563 | |
Class Z | | $ | 928,599,684 | | $ | — | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING — NOTE 6: | | | | | |
Class A | | 96,510,566 | | 3,465,654 | |
Class C | | 35,441,807 | | 603,985 | |
Class I | | 53,469,993 | | 4,590,664 | |
Class Z | | 48,103,624 | | — | |
NET ASSET VALUE PER SHARE: | | | | | |
Class A — Net Asset Value Per Share | | $ | 19.13 | | $ | 9.14 | |
Class A — Offering Price Per Share (includes a 5.25% sales charge) | | $ | 20.19 | | $ | 9.64 | |
Class C — Net Asset Value Per Share | | $ | 18.35 | | $ | 8.71 | |
Class I — Net Asset Value Per Share | | $ | 19.27 | | $ | 9.12 | |
Class Z — Net Asset Value Per Share | | $ | 19.30 | | $ | — | |
See Notes to Financial Statements.
58
| | Alger Analyst Fund | | Alger Dynamic
Opportunities Fund | |
ASSETS: | | | | | |
Investments in securities, at value (Identified cost below)* see accompanying schedules of investments | | $ | 8,670,409 | | $ | 55,277,455 | |
Investments in affiliated securities, at value (Identified cost below)** see accompanying schedules of investments | | — | | 320,069 | |
Cash and cash equivalents (a) | | 139,784 | | 39,460,125 | |
Receivable for investment securities sold | | 1,240,480 | | 5,327,629 | |
Receivable for shares of beneficial interest sold | | — | | 664,422 | |
Dividends and interest receivable | | 2,936 | | 66,673 | |
Receivable from Investment Manager | | 10,113 | | — | |
Prepaid expenses | | 28,920 | | 36,085 | |
Total Assets | | 10,092,642 | | 101,152,458 | |
LIABILITIES: | | | | | |
Securities sold short, at value ‡ | | — | | 13,555,549 | |
Payable for investment securities purchased | | 1,253,972 | | 3,216,956 | |
Payable for shares of beneficial interest redeemed | | — | | 94,980 | |
Accrued investment advisory fees | | 5,317 | | 83,441 | |
Accrued transfer agent fees | | 996 | | 17,129 | |
Accrued distribution fees | | 1,994 | | 14,697 | |
Accrued administrative fees | | 195 | | 1,912 | |
Accrued shareholder administrative fees | | 107 | | 985 | |
Dividends payable | | — | | 22,604 | |
Accrued other expenses | | 27,844 | | 44,315 | |
Total Liabilities | | 1,290,425 | | 17,052,568 | |
NET ASSETS | | $ | 8,802,217 | | $ | 84,099,890 | |
NET ASSETS CONSIST OF: | | | | | |
Paid in capital (par value of $.001 per share) | | 7,266,256 | | 75,498,303 | |
Undistributed net investment income (accumulated loss) | | (14,195 | ) | (1,036,497 | ) |
Undistributed net realized gain | | 609,951 | | 4,018,106 | |
Net unrealized appreciation on investments | | 940,205 | | 5,619,978 | |
NET ASSETS | | $ | 8,802,217 | | $ | 84,099,890 | |
* Identified cost | | $ | 7,730,200 | | $ | 49,152,250 | |
** Identified cost | | $ | — | | $ | 320,069 | |
‡ Proceeds received on short sales | | $ | — | | $ | 13,050,321 | |
(a) Includes restricted cash held as collateral for short sales | | $ | — | | $ | 17,677,653 | |
See Notes to Financial Statements.
59
| | Alger Analyst Fund | | Alger Dynamic
Opportunities Fund | |
NET ASSETS BY CLASS: | | | | | |
Class A | | $ | 6,459,084 | | $ | 48,464,442 | |
Class C | | $ | 368,136 | | $ | 5,807,704 | |
Class I | | $ | 1,974,997 | | $ | — | |
Class Z | | $ | — | | $ | 29,827,744 | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING — NOTE 6: | | | | | |
Class A | | 470,142 | | 3,767,714 | |
Class C | | 28,130 | | 465,630 | |
Class I | | 143,886 | | — | |
Class Z | | — | | 2,295,972 | |
NET ASSET VALUE PER SHARE: | | | | | |
Class A — Net Asset Value Per Share | | $ | 13.74 | | $ | 12.86 | |
Class A — Offering Price Per Share (includes a 5.25% sales charge) | | $ | 14.50 | | $ | 13.58 | |
Class C — Net Asset Value Per Share | | $ | 13.09 | | $ | 12.47 | |
Class I — Net Asset Value Per Share | | $ | 13.73 | | $ | — | |
Class Z — Net Asset Value Per Share | | $ | — | | $ | 12.99 | |
See Notes to Financial Statements.
60
| | Alger Emerging
Markets Fund | |
ASSETS: | | | |
Investments in securities, at value (Identified cost below)* see accompanying schedules of investments | | $ | 23,178,802 | |
Cash and cash equivalents | | 941,282 | |
Foreign cash † | | 129,372 | |
Receivable for investment securities sold | | 155,953 | |
Receivable for shares of beneficial interest sold | | 59,808 | |
Dividends and interest receivable | | 8,051 | |
Receivable from Investment Manager | | 19,608 | |
Prepaid expenses | | 43,627 | |
Total Assets | | 24,536,503 | |
LIABILITIES: | | | |
Payable for investment securities purchased | | 189,699 | |
Payable for shares of beneficial interest redeemed | | 31,823 | |
Foreign capital gain tax payable | | 24,846 | |
Accrued investment advisory fees | | 21,702 | |
Accrued transfer agent fees | | 5,097 | |
Accrued distribution fees | | 5,505 | |
Accrued administrative fees | | 543 | |
Accrued shareholder administrative fees | | 246 | |
Accrued other expenses | | 57,056 | |
Total Liabilities | | 336,517 | |
NET ASSETS | | $ | 24,199,986 | |
NET ASSETS CONSIST OF: | | | |
Paid in capital (par value of $.001 per share) | | 24,584,478 | |
Undistributed net investment income (accumulated loss) | | (28,202 | ) |
Undistributed net realized gain (accumulated realized loss) | | (2,082,640 | ) |
Net unrealized appreciation on investments | | 1,726,350 | |
NET ASSETS | | $ | 24,199,986 | |
* Identified cost | | $ | 21,452,136 | |
† Cost of foreign cash | | $ | 129,333 | |
See Notes to Financial Statements.
61
| | Alger Emerging
Markets Fund | |
NET ASSETS BY CLASS: | | | |
Class A | | $ | 6,930,597 | |
Class C | | $ | 2,151,147 | |
Class I | | $ | 11,450,800 | |
Class Z | | $ | 3,667,442 | |
SHARES OF BENEFICIAL INTEREST OUTSTANDING — NOTE 6: | | | |
Class A | | 734,031 | |
Class C | | 233,049 | |
Class I | | 1,220,465 | |
Class Z | | 389,733 | |
NET ASSET VALUE PER SHARE: | | | |
Class A — Net Asset Value Per Share | | $ | 9.44 | |
Class A — Offering Price Per Share (includes a 5.25% sales charge) | | $ | 9.96 | |
Class C — Net Asset Value Per Share | | $ | 9.23 | |
Class I — Net Asset Value Per Share | | $ | 9.38 | |
Class Z — Net Asset Value Per Share | | $ | 9.41 | |
See Notes to Financial Statements.
62
THE ALGER FUNDS II
Statement of Operations For the year ended October 31, 2014
| | Alger Spectra Fund | | Alger Green Fund | |
| | | | | |
INCOME: | | | | | |
Dividends (net of foreign withholding taxes*) | | $ | 45,848,718 | | $ | 974,533 | |
Interest | | 80,613 | | 2,319 | |
Total Income | | 45,929,331 | | 976,852 | |
| | | | | |
EXPENSES: | | | | | |
Advisory fees — Note 3(a) | | 32,753,786 | | 542,156 | |
Distribution fees — Note 3(c) | | | | | |
Class A | | 5,007,932 | | 78,939 | |
Class C | | 5,565,468 | | 48,189 | |
Class I | | 2,248,869 | | 99,914 | |
Shareholder administrative fees — Note 3(f) | | 564,560 | | 10,002 | |
Administration fees — Note 3(b) | | 1,094,990 | | 20,998 | |
Dividends on securities sold short | | 3,951,249 | | — | |
Custodian fees | | 292,912 | | 30,855 | |
Interest expenses | | 5,166 | | — | |
Borrowing fees on short sales | | 7,145,730 | | — | |
Transfer agent fees and expenses — Note 3(f) | | 2,470,993 | | 66,685 | |
Printing fees | | 555,871 | | 16,498 | |
Professional fees | | 182,176 | | 29,041 | |
Registration fees | | 272,241 | | 54,266 | |
Trustee fees — Note 3(g) | | 32,018 | | 24,266 | |
Fund accounting fees | | 530,165 | | 12,523 | |
Miscellaneous | | 256,587 | | 7,604 | |
Total Expenses | | 62,930,713 | | 1,041,936 | |
NET INVESTMENT LOSS | | (17,001,382 | ) | (65,084 | ) |
| | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY: | | | | | |
Net realized gain on investments and purchased options | | 578,669,003 | | 2,157,805 | |
Net realized (loss) on foreign currency transactions | | (135,677 | ) | — | |
Net realized (loss) on short sales | | (29,487,216 | ) | — | |
Net change in unrealized appreciation on investments, options and foreign currency | | 64,063,352 | | 3,686,119 | |
Net change in unrealized appreciation on short sales | | 3,000,873 | | — | |
Net realized and unrealized gain on investments, options, and foreign currency | | 616,110,335 | | 5,843,924 | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 599,108,953 | | $ | 5,778,840 | |
* Foreign withholding taxes | | $ | 133,221 | | $ | 2,323 | |
See Notes to Financial Statements.
63
| | Alger Analyst Fund | | Alger Dynamic
Opportunities Fund | |
| | | | | |
INCOME: | | | | | |
Dividends (net of foreign withholding taxes*) | | $ | 71,704 | | $ | 617,299 | |
Interest | | 111 | | 10,396 | |
Total Income | | 71,815 | | 627,695 | |
| | | | | |
EXPENSES: | | | | | |
Advisory fees — Note 3(a) | | 61,749 | | 852,271 | |
Distribution fees — Note 3(c) | | | | | |
Class A | | 14,658 | | 111,426 | |
Class C | | 3,449 | | 34,672 | |
Class I | | 5,062 | | — | |
Shareholder administrative fees — Note 3(f) | | 1,227 | | 10,224 | |
Administration fees — Note 3(b) | | 2,264 | | 19,531 | |
Dividends on securities sold short | | — | | 196,695 | |
Custodian fees | | 32,175 | | 77,355 | |
Borrowing fees on short sales | | — | | 209,700 | |
Transfer agent fees and expenses — Note 3(f) | | 2,904 | | 48,757 | |
Printing fees | | 1,571 | | 13,414 | |
Professional fees | | 25,983 | | 32,990 | |
Registration fees | | 48,396 | | 59,239 | |
Trustee fees — Note 3(g) | | 24,095 | | 24,239 | |
Fund accounting fees | | 3,074 | | 11,882 | |
Miscellaneous | | 3,114 | | 6,987 | |
Total Expenses | | 229,721 | | 1,709,382 | |
Less, expense reimbursements/waivers — Note 3(a) | | (120,449 | ) | — | |
Net Expenses | | 109,272 | | 1,709,382 | |
NET INVESTMENT LOSS | | (37,457 | ) | (1,081,687 | ) |
| | | | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY: | | | | | |
Net realized gain on investments and purchased options | | 632,926 | | 6,396,971 | |
Net realized gain on foreign currency transactions | | 46 | | 493 | |
Net realized (loss) on short sales | | — | | (2,332,736 | ) |
Net change in unrealized appreciation on investments, options and foreign currency | | 91,298 | | 481,831 | |
Net change in unrealized appreciation on short sales | | — | | 634,278 | |
Net realized and unrealized gain on investments, options, and foreign currency | | 724,270 | | 5,180,837 | |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | 686,813 | | $ | 4,099,150 | |
* Foreign withholding taxes | | $ | 561 | | $ | 1,265 | |
See Notes to Financial Statements.
64
| | Alger Emerging
Markets Fund | |
| | | |
INCOME: | | | |
Dividends (net of foreign withholding taxes*) | | $ | 291,827 | |
Interest | | 256 | |
Total Income | | 292,083 | |
| | | |
EXPENSES: | | | |
Advisory fees — Note 3(a) | | 205,802 | |
Distribution fees — Note 3(c) | | | |
Class A | | 15,856 | |
Class C | | 10,443 | |
Class I | | 26,313 | |
Shareholder administrative fees — Note 3(f) | | 2,351 | |
Administration fees — Note 3(b) | | 5,146 | |
Custodian fees | | 130,181 | |
Interest expenses | | 63 | |
Transfer agent fees and expenses — Note 3(f) | | 18,065 | |
Printing fees | | 6,397 | |
Professional fees | | 31,063 | |
Registration fees | | 60,597 | |
Trustee fees — Note 3(g) | | 24,117 | |
Fund accounting fees | | 4,978 | |
Miscellaneous | | 22,176 | |
Total Expenses | | 563,548 | |
Less, expense reimbursements/waivers — Note 3(a) | | (239,323 | ) |
Net Expenses | | 324,225 | |
NET INVESTMENT LOSS | | (32,142 | ) |
| | | |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, OPTIONS AND FOREIGN CURRENCY: | | | |
Net realized (loss) on investments and purchased options | | (851,484 | ) |
Net realized (loss) on foreign currency transactions | | (31,150 | ) |
Net change in unrealized appreciation on investments, options and foreign currency | | 546,176 | |
Net realized and unrealized (loss) on investments, options, and foreign currency | | (336,458 | ) |
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | | $ | (368,600 | ) |
* Foreign withholding taxes | | $ | 31,806 | |
See Notes to Financial Statements.
65
THE ALGER FUNDS II
Statements of Changes in Net Assets
| | Alger Spectra Fund | |
| | For the
Year Ended
October 31, 2014 | | For the
Year Ended
October 31, 2013 | |
| | | | | |
Net investment income (loss) | | $ | (17,001,382 | ) | $ | 7,492,572 | |
Net realized gain on investments, options and foreign currency | | 549,046,110 | | 220,148,607 | |
Net change in unrealized appreciation on investments, options and foreign currency | | 67,064,225 | | 470,836,541 | |
Net increase in net assets resulting from operations | | 599,108,953 | | 698,477,720 | |
| | | | | |
Dividends and distributions to shareholders from: | | | | | |
Net investment income: | | | | | |
Class A | | — | | (7,356,349 | ) |
Class C | | — | | (316,210 | ) |
Class I | | — | | (2,816,255 | ) |
Class Z | | — | | (2,068,209 | ) |
Net realized gains: | | | | | |
Class A | | (109,164,264 | ) | (27,530,579 | ) |
Class C | | (28,224,522 | ) | (6,079,934 | ) |
Class I | | (42,881,976 | ) | (9,915,565 | ) |
Class Z | | (22,142,007 | ) | (5,176,165 | ) |
Total dividends and distributions to shareholders | | (202,412,769 | ) | (61,259,266 | ) |
| | | | | |
Increase (decrease) from shares of beneficial interest transactions: | | | | | |
Class A | | (224,389,370 | ) | 356,042,498 | |
Class C | | 140,106,414 | | 134,065,596 | |
Class I | | 203,149,916 | | 170,499,124 | |
Class Z | | 511,410,776 | | 82,926,424 | |
Net increase from shares of beneficial interest transactions — Note 6(a) | | 630,277,736 | | 743,533,642 | |
| | | | | |
Redemption Fees: | | | | | |
Class A | | 32,095 | | 64,454 | |
Class C | | 3,015 | | 2,464 | |
Total Redemption Fees — Note 6(b) | | 35,110 | | 66,918 | |
Total increase | | 1,027,009,030 | | 1,380,819,014 | |
| | | | | |
Net Assets: | | | | | |
Beginning of period | | 3,428,811,858 | | 2,047,992,844 | |
END OF PERIOD | | $ | 4,455,820,888 | | $ | 3,428,811,858 | |
Undistributed net investment income | | $ | 916,003 | | $ | 1,233,247 | |
See Notes to Financial Statements.
66
| | Alger Green Fund | |
| | For the
Year Ended
October 31, 2014 | | For the
Year Ended
October 31, 2013 | |
| | | | | |
Net investment income (loss) | | $ | (65,084 | ) | $ | 61,022 | |
Net realized gain on investments, options and foreign currency | | 2,157,805 | | 7,894,495 | |
Net change in unrealized appreciation on investments, options and foreign currency | | 3,686,119 | | 7,240,706 | |
Net increase in net assets resulting from operations | | 5,778,840 | | 15,196,223 | |
| | | | | |
Dividends and distributions to shareholders from: | | | | | |
Net investment income: | | | | | |
Class A | | — | | (39,971 | ) |
Class I | | (9,327 | ) | (29,115 | ) |
Net realized gains: | | | | | |
Class A | | (1,150,902 | ) | — | |
Class C | | (163,867 | ) | — | |
Class I | | (1,380,791 | ) | — | |
Total dividends and distributions to shareholders | | (2,704,887 | ) | (69,086 | ) |
| | | | | |
Increase (decrease) from shares of beneficial interest transactions: | | | | | |
Class A | | (198,956 | ) | (3,149,115 | ) |
Class C | | 1,001,925 | | 769,098 | |
Class I | | 5,141,845 | | 8,599,485 | |
Net increase from shares of beneficial interest transactions — Note 6(a) | | 5,944,814 | | 6,219,468 | |
| | | | | |
Redemption Fees: | | | | | |
Class A | | 1,346 | | — | |
Class C | | 3 | | — | |
Total Redemption Fees — Note 6(b) | | 1,349 | | — | |
Total increase | | 9,020,116 | | 21,346,605 | |
| | | | | |
Net Assets: | | | | | |
Beginning of period | | 69,790,432 | | 48,443,827 | |
END OF PERIOD | | $ | 78,810,548 | | $ | 69,790,432 | |
Undistributed net investment income (accumulated loss) | | $ | (36,753 | ) | $ | 25,391 | |
See Notes to Financial Statements.
67
| | Alger Analyst Fund | |
| | For the
Year Ended
October 31, 2014 | | For the
Year Ended
October 31, 2013 | |
| | | | | |
Net investment loss | | $ | (37,457 | ) | $ | (5,027 | ) |
Net realized gain on investments, options and foreign currency | | 632,972 | | 707,101 | |
Net change in unrealized appreciation on investments, options and foreign currency | | 91,298 | | 706,261 | |
Net increase in net assets resulting from operations | | 686,813 | | 1,408,335 | |
| | | | | |
Dividends and distributions to shareholders from: | | | | | |
Net realized gains: | | | | | |
Class A | | (477,809 | ) | (145,387 | ) |
Class C | | (32,608 | ) | (10,840 | ) |
Class I | | (182,876 | ) | (67,804 | ) |
Total dividends and distributions to shareholders | | (693,293 | ) | (224,031 | ) |
| | | | | |
Increase (decrease) from shares of beneficial interest transactions: | | | | | |
Class A | | 1,690,213 | | 1,485,388 | |
Class C | | 90,807 | | 42,219 | |
Class I | | 164,661 | | 262,158 | |
Net increase from shares of beneficial interest transactions — Note 6(a) | | 1,945,681 | | 1,789,765 | |
| | | | | |
Redemption Fees: | | | | | |
Class C | | — | | 68 | |
Total Redemption Fees — Note 6(b) | | — | | 68 | |
Total increase | | 1,939,201 | | 2,974,137 | |
| | | | | |
Net Assets: | | | | | |
Beginning of period | | 6,863,016 | | 3,888,879 | |
END OF PERIOD | | $ | 8,802,217 | | $ | 6,863,016 | |
Undistributed net investment income (accumulated loss) | | $ | (14,195 | ) | $ | 2,878 | |
See Notes to Financial Statements.
68
| | Alger Dynamic Opportunities Fund | |
| | For the
Year Ended
October 31, 2014 | | For the
Year Ended
October 31, 2013 | |
| | | | | |
Net investment loss | | $ | (1,081,687 | ) | $ | (620,747 | ) |
Net realized gain on investments, options and foreign currency | | 4,064,728 | | 4,720,391 | |
Net change in unrealized appreciation on investments, options and foreign currency | | 1,116,109 | | 3,263,271 | |
Net increase in net assets resulting from operations | | 4,099,150 | | 7,362,915 | |
| | | | | |
Dividends and distributions to shareholders from: | | | | | |
Net realized gains: | | | | | |
Class A | | (2,433,734 | ) | — | |
Class C | | (107,762 | ) | — | |
Class Z | | (1,265,284 | ) | — | |
Total dividends and distributions to shareholders | | (3,806,780 | ) | — | |
| | | | | |
Increase (decrease) from shares of beneficial interest transactions: | | | | | |
Class A | | 11,614,091 | | 10,548,682 | |
Class C | | 4,332,175 | | 656,198 | |
Class Z | | 9,233,825 | | 532,501 | |
Net increase from shares of beneficial interest transactions — Note 6(a) | | 25,180,091 | | 11,737,381 | |
| | | | | |
Redemption Fees: | | | | | |
Class A | | 4,651 | | 1,809 | |
Class C | | 155 | | — | |
Total Redemption Fees — Note 6(b) | | 4,806 | | 1,809 | |
Total increase | | 25,477,267 | | 19,102,105 | |
| | | | | |
Net Assets: | | | | | |
Beginning of period | | 58,622,623 | | 39,520,518 | |
END OF PERIOD | | $ | 84,099,890 | | $ | 58,622,623 | |
Undistributed net investment income (accumulated loss) | | $ | (1,036,497 | ) | $ | 19,701 | |
See Notes to Financial Statements.
69
| | Alger Emerging Markets Fund | |
| | For the
Year Ended
October 31, 2014 | | For the
Year Ended
October 31, 2013 | |
| | | | | |
Net investment income (loss) | | $ | (32,142 | ) | $ | 10,200 | |
Net realized gain (loss) on investments, options and foreign currency | | (882,634 | ) | 784,697 | |
Net change in unrealized appreciation on investments, options and foreign currency | | 546,176 | | 836,383 | |
Net increase (decrease) in net assets resulting from operations | | (368,600 | ) | 1,631,280 | |
| | | | | |
Dividends and distributions to shareholders from: | | | | | |
Net investment income: | | | | | |
Class A | | — | | (21,705 | ) |
Class C | | — | | (1,122 | ) |
Class I | | — | | (170,271 | ) |
Total dividends and distributions to shareholders | | — | | (193,098 | ) |
| | | | | |
Increase (decrease) from shares of beneficial interest transactions: | | | | | |
Class A | | 1,718,949 | | 3,758,119 | |
Class C | | 1,715,588 | | 293,590 | |
Class I | | 1,393,804 | | 433,497 | |
Class Z | | 3,778,018 | | — | |
Net increase from shares of beneficial interest transactions — Note 6(a) | | 8,606,359 | | 4,485,206 | |
| | | | | |
Redemption Fees: | | | | | |
Class A | | 625 | | — | |
Class C | | 4 | | — | |
Total Redemption Fees — Note 6(b) | | 629 | | — | |
Total increase | | 8,238,388 | | 5,923,388 | |
| | | | | |
Net Assets: | | | | | |
Beginning of period | | 15,961,598 | | 10,038,210 | |
END OF PERIOD | | $ | 24,199,986 | | $ | 15,961,598 | |
Undistributed net investment income (accumulated loss) | | $ | (28,202 | ) | $ | (1,504 | ) |
See Notes to Financial Statements.
70
THE ALGER FUNDS II
Financial Highlights for a share outstanding throughout the period
Alger Spectra Fund
| | Class A | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 17.37 | | $ | 13.82 | | $ | 12.35 | | $ | 11.33 | | $ | 9.28 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment income (loss)(i) | | (0.06 | ) | 0.05 | | 0.02 | | (0.05 | ) | (0.06 | ) |
Net realized and unrealized gain on investments | | 2.82 | | 3.91 | | 1.66 | | 1.07 | | 2.11 | |
Total from investment operations | | 2.76 | | 3.96 | | 1.68 | | 1.02 | | 2.05 | |
Dividends from net investment income | | — | | (0.09 | ) | — | | — | | — | |
Distributions from net realized gains | | (1.00 | ) | (0.32 | ) | (0.21 | ) | — | | — | |
Net asset value, end of period | | $ | 19.13 | | $ | 17.37 | | $ | 13.82 | | $ | 12.35 | | $ | 11.33 | |
Total return(ii) | | 16.56 | % | 29.29 | % | 14.00 | % | 9.00 | % | 22.00 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 1,846,479 | | $ | 1,866,317 | | $ | 1,158,220 | | $ | 836,857 | | $ | 488,872 | |
Ratio of gross expenses to average net assets | | 1.52 | %(iii) | 1.52 | %(iv) | 1.49 | %(v) | 1.58 | %(vi) | 1.74 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | — | | — | | — | | — | |
Ratio of net expenses to average net assets | | 1.52 | % | 1.52 | % | 1.49 | % | 1.58 | % | 1.74 | % |
Ratio of net investment income (loss) to average net assets | | (0.35 | )% | 0.35 | % | 0.16 | % | (0.38 | )% | (0.57 | )% |
Portfolio turnover rate | | 149.01 | % | 113.69 | % | 139.90 | % | 163.11 | % | 252.68 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
(iii) Includes 0.27% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(iv) Includes 0.22% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(v) Includes 0.12% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vi) Includes 0.18% related to dividend expense on short positions and interest expense for the period ended 10/31/11
(vii) Includes 0.32% related to dividend expense on short positions and interest expense for the period ended 10/31/10
71
| | Class C | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 16.81 | | $ | 13.43 | | $ | 12.09 | | $ | 11.18 | | $ | 9.23 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(i) | | (0.19 | ) | (0.07 | ) | (0.07 | ) | (0.13 | ) | (0.14 | ) |
Net realized and unrealized gain on investments | | 2.73 | | 3.79 | | 1.62 | | 1.04 | | 2.09 | |
Total from investment operations | | 2.54 | | 3.72 | | 1.55 | | 0.91 | | 1.95 | |
Dividends from net investment income | | — | | (0.02 | ) | — | | — | | — | |
Distributions from net realized gains | | (1.00 | ) | (0.32 | ) | (0.21 | ) | — | | — | |
Net asset value, end of period | | $ | 18.35 | | $ | 16.81 | | $ | 13.43 | | $ | 12.09 | | $ | 11.18 | |
Total return(ii) | | 15.69 | % | 28.38 | % | 13.12 | % | 8.20 | % | 21.00 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 650,438 | | $ | 458,750 | | $ | 242,972 | | $ | 134,399 | | $ | 47,351 | |
Ratio of gross expenses to average net assets | | 2.27 | %(iii) | 2.28 | %(iv) | 2.24 | %(v) | 2.32 | %(vi) | 2.52 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | — | | — | | — | | — | |
Ratio of net expenses to average net assets | | 2.27 | % | 2.28 | % | 2.24 | % | 2.32 | % | 2.52 | % |
Ratio of net investment income (loss) to average net assets | | (1.12 | )% | (0.46 | )% | (0.57 | )% | (1.11 | )% | (1.38 | )% |
Portfolio turnover rate | | 149.01 | % | 113.69 | % | 139.90 | % | 163.11 | % | 252.68 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
(iii) Includes 0.28% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(iv) Includes 0.22% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(v) Includes 0.13% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vi) Includes 0.17% related to dividend expense on short positions and interest expense for the period ended 10/31/11
(vii) Includes 0.31% related to dividend expense on short positions and interest expense for the period ended 10/31/10
72
| | Class I | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 17.48 | | $ | 13.92 | | $ | 12.42 | | $ | 11.39 | | $ | 9.32 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment income (loss)(i) | | (0.06 | ) | 0.06 | | 0.03 | | (0.04 | ) | (0.05 | ) |
Net realized and unrealized gain on investments | | 2.85 | | 3.91 | | 1.68 | | 1.07 | | 2.12 | |
Total from investment operations | | 2.79 | | 3.97 | | 1.71 | | 1.03 | | 2.07 | |
Dividends from net investment income | | — | | (0.09 | ) | — | | — | | — | |
Distributions from net realized gains | | (1.00 | ) | (0.32 | ) | (0.21 | ) | — | | — | |
Net asset value, end of period | | $ | 19.27 | | $ | 17.48 | | $ | 13.92 | | $ | 12.42 | | $ | 11.39 | |
Total return(ii) | | 16.63 | % | 29.30 | % | 14.07 | % | 9.10 | % | 22.10 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 1,030,304 | | $ | 736,036 | | $ | 431,557 | | $ | 266,366 | | $ | 116,343 | |
Ratio of gross expenses to average net assets | | 1.50 | %(iii) | 1.50 | %(iv) | 1.43 | %(v) | 1.50 | %(vi) | 1.64 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | — | | — | | — | | (0.01 | )% |
Ratio of net expenses to average net assets | | 1.50 | % | 1.50 | % | 1.43 | % | 1.50 | % | 1.63 | % |
Ratio of net investment income (loss) to average net assets | | (0.35 | )% | 0.36 | % | 0.25 | % | (0.29 | )% | (0.46 | )% |
Portfolio turnover rate | | 149.01 | % | 113.69 | % | 139.90 | % | 163.11 | % | 252.68 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
(iii) Includes 0.28% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(iv) Includes 0.22% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(v) Includes 0.12% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vi) Includes 0.18% related to dividend expense on short positions and interest expense for the period ended 10/31/11
(vii) Includes 0.32% related to dividend expense on short positions and interest expense for the period ended 10/31/10
73
| | Class Z | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From
12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 17.46 | | $ | 13.90 | | $ | 12.38 | | $ | 12.20 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment income (loss)(ii) | | (0.02 | ) | 0.10 | | 0.08 | | — | |
Net realized and unrealized gain on investments | | 2.86 | | 3.91 | | 1.65 | | 0.18 | |
Total from investment operations | | 2.84 | | 4.01 | | 1.73 | | 0.18 | |
Dividends from net investment income | | — | | (0.13 | ) | — | | — | |
Distributions from net realized gains | | (1.00 | ) | (0.32 | ) | (0.21 | ) | — | |
Net asset value, end of period | | $ | 19.30 | | $ | 17.46 | | $ | 13.90 | | $ | 12.38 | |
Total return(iii) | | 17.01 | % | 29.68 | % | 14.28 | % | 1.50 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 928,600 | | $ | 367,709 | | $ | 215,244 | | $ | 3,373 | |
Ratio of gross expenses to average net assets | | 1.23 | %(iv) | 1.20 | %(v) | 1.20 | %(vi) | 2.65 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | — | | — | | (1.41 | )% |
Ratio of net expenses to average net assets | | 1.23 | % | 1.20 | % | 1.20 | % | 1.24 | % |
Ratio of net investment income (loss) to average net assets | | (0.11 | )% | 0.65 | % | 0.60 | % | (0.01 | )% |
Portfolio turnover rate | | 149.01 | % | 113.69 | % | 139.90 | % | 163.11 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
(iv) Includes 0.30% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(v) Includes 0.22% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(vi) Includes 0.17% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vii) Includes 0.14% related to dividend expense on short positions and interest expense for the period ended 10/31/11
74
THE ALGER FUNDS II
Financial Highlights for a share outstanding throughout the period
Alger Green Fund
| | Class A | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 8.78 | | $ | 6.68 | | $ | 6.01 | | $ | 6.03 | | $ | 5.24 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment income (loss)(i) | | — | | 0.01 | | 0.01 | | (0.01 | ) | (0.01 | ) |
Net realized and unrealized gain (loss) on investments | | 0.69 | | 2.10 | | 0.66 | | (0.01 | ) | 0.80 | |
Total from investment operations | | 0.69 | | 2.11 | | 0.67 | | (0.02 | ) | 0.79 | |
Dividends from net investment income | | — | | (0.01 | ) | — | | — | | — | |
Distributions from net realized gains | | (0.33 | ) | — | | — | | — | | — | |
Net asset value, end of period | | $ | 9.14 | | $ | 8.78 | | $ | 6.68 | | $ | 6.01 | | $ | 6.03 | |
Total return(ii) | | 7.99 | % | 31.63 | % | 11.15 | % | (0.30 | )% | 15.10 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 31,662 | | $ | 30,586 | | $ | 26,243 | | $ | 27,018 | | $ | 37,545 | |
Ratio of gross expenses to average net assets | | 1.33 | % | 1.41 | % | 1.49 | % | 1.46 | % | 1.44 | % |
Ratio of expense reimbursements to average net assets | | — | | (0.06 | )% | (0.17 | )% | (0.21 | )% | (0.19 | )% |
Ratio of net expenses to average net assets | | 1.33 | % | 1.35 | % | 1.32 | % | 1.25 | % | 1.25 | % |
Ratio of net investment income (loss) to average net assets | | (0.05 | )% | 0.18 | % | 0.12 | % | (0.14 | )% | (0.21 | )% |
Portfolio turnover rate | | 24.22 | % | 43.35 | % | 21.25 | % | 28.25 | % | 29.44 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
75
| | Class C | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 8.45 | | $ | 6.47 | | $ | 5.88 | | $ | 5.94 | | $ | 5.20 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(i) | | (0.07 | ) | (0.05 | ) | (0.05 | ) | (0.05 | ) | (0.05 | ) |
Net realized and unrealized gain (loss) on investments | | 0.66 | | 2.03 | | 0.64 | | (0.01 | ) | 0.79 | |
Total from investment operations | | 0.59 | | 1.98 | | 0.59 | | (0.06 | ) | 0.74 | |
Distributions from net realized gains | | (0.33 | ) | — | | — | | — | | — | |
Net asset value, end of period | | $ | 8.71 | | $ | 8.45 | | $ | 6.47 | | $ | 5.88 | | $ | 5.94 | |
Total return(ii) | | 7.09 | % | 30.45 | % | 10.03 | % | (1.00 | )% | 14.20 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 5,261 | | $ | 4,096 | | $ | 2,484 | | $ | 2,517 | | $ | 2,436 | |
Ratio of gross expenses to average net assets | | 2.09 | % | 2.16 | % | 2.31 | % | 2.25 | % | 2.26 | % |
Ratio of expense reimbursements to average net assets | | — | | — | | (0.10 | )% | (0.25 | )% | (0.26 | )% |
Ratio of net expenses to average net assets | | 2.09 | % | 2.16 | % | 2.21 | % | 2.00 | % | 2.00 | % |
Ratio of net investment income (loss) to average net assets | | (0.81 | )% | (0.69 | )% | (0.77 | )% | (0.90 | )% | (0.97 | )% |
Portfolio turnover rate | | 24.22 | % | 43.35 | % | 21.25 | % | 28.25 | % | 29.44 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable..
76
| | Class I | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 8.77 | | $ | 6.67 | | $ | 6.01 | | $ | 6.02 | | $ | 5.24 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment income (loss)(i) | | — | (ii) | 0.01 | | 0.01 | | (0.01 | ) | (0.01 | ) |
Net realized and unrealized gain on investments | | 0.68 | | 2.10 | | 0.65 | | — | | 0.79 | |
Total from investment operations | | 0.68 | | 2.11 | | 0.66 | | (0.01 | ) | 0.78 | |
Dividends from net investment income | | — | | (0.01 | ) | — | | — | | — | |
Distributions from net realized gains | | (0.33 | ) | — | | — | | — | | — | |
Net asset value, end of period | | $ | 9.12 | | $ | 8.77 | | $ | 6.67 | | $ | 6.01 | | $ | 6.02 | |
Total return(iii) | | 7.91 | % | 31.68 | % | 11.00 | % | (0.20 | )% | 14.90 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 41,888 | | $ | 35,108 | | $ | 19,717 | | $ | 19,604 | | $ | 13,461 | |
Ratio of gross expenses to average net assets | | 1.30 | % | 1.35 | % | 1.52 | % | 1.63 | % | 1.47 | % |
Ratio of expense reimbursements to average net assets | | — | | — | | (0.20 | )% | (0.38 | )% | (0.22 | )% |
Ratio of net expenses to average net assets | | 1.30 | % | 1.35 | % | 1.32 | % | 1.25 | % | 1.25 | % |
Ratio of net investment income (loss) to average net assets | | (0.03 | )% | 0.14 | % | 0.10 | % | (0.16 | )% | (0.22 | )% |
Portfolio turnover rate | | 24.22 | % | 43.35 | % | 21.25 | % | 28.25 | % | 29.44 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Amount was less than $0.005 per share.
(iii) Does not reflect the effect of sales charges, if applicable.
77
THE ALGER FUNDS II
Financial Highlights for a share outstanding throughout the period
Alger Analyst Fund
| | Class A | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 13.86 | | $ | 10.83 | | $ | 9.85 | | $ | 9.54 | | $ | 8.02 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(i) | | (0.06 | ) | (0.01 | ) | (0.03 | ) | (0.05 | ) | (0.05 | ) |
Net realized and unrealized gain on investments | | 1.33 | | 3.66 | | 1.01 | | 0.36 | | 1.57 | |
Total from investment operations | | 1.27 | | 3.65 | | 0.98 | | 0.31 | | 1.52 | |
Distributions from net realized gains | | (1.39 | ) | (0.62 | ) | — | | — | | — | |
Net asset value, end of period | | $ | 13.74 | | $ | 13.86 | | $ | 10.83 | | $ | 9.85 | | $ | 9.54 | |
Total return(ii) | | 9.83 | % | 35.40 | % | 10.00 | % | 3.20 | % | 19.00 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 6,459 | | $ | 4,766 | | $ | 2,524 | | $ | 2,306 | | $ | 2,236 | |
Ratio of gross expenses to average net assets | | 2.75 | % | 4.07 | % | 4.85 | % | 5.31 | % | 5.68 | % |
Ratio of expense reimbursements to average net assets | | (1.45 | )% | (2.77 | )% | (3.58 | )% | (4.11 | )% | (4.48 | )% |
Ratio of net expenses to average net assets | | 1.30 | % | 1.30 | % | 1.27 | % | 1.20 | % | 1.20 | % |
Ratio of net investment income (loss) to average net assets | | (0.43 | )% | (0.07 | )% | (0.30 | )% | (0.50 | )% | (0.60 | )% |
Portfolio turnover rate | | 170.12 | % | 158.26 | % | 158.39 | % | 141.68 | % | 73.54 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
78
| | Class C | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 13.35 | | $ | 10.51 | | $ | 9.62 | | $ | 9.39 | | $ | 7.95 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(i) | | (0.14 | ) | (0.09 | ) | (0.10 | ) | (0.12 | ) | (0.12 | ) |
Net realized and unrealized gain on investments | | 1.27 | | 3.55 | | 0.99 | | 0.35 | | 1.56 | |
Total from investment operations | | 1.13 | | 3.46 | | 0.89 | | 0.23 | | 1.44 | |
Distributions from net realized gains | | (1.39 | ) | (0.62 | ) | — | | — | | — | |
Net asset value, end of period | | $ | 13.09 | | $ | 13.35 | | $ | 10.51 | | $ | 9.62 | | $ | 9.39 | |
Total return(ii) | | 9.09 | % | 34.63 | % | 9.25 | % | 2.40 | % | 18.10 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 368 | | $ | 282 | | $ | 184 | | $ | 165 | | $ | 166 | |
Ratio of gross expenses to average net assets | | 3.53 | % | 5.49 | % | 6.00 | % | 6.45 | % | 6.54 | % |
Ratio of expense reimbursements to average net assets | | (1.58 | )% | (3.54 | )% | (4.05 | )% | (4.50 | )% | (4.59 | )% |
Ratio of net expenses to average net assets | | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % | 1.95 | % |
Ratio of net investment income (loss) to average net assets | | (1.08 | )% | (0.73 | )% | (0.99 | )% | (1.25 | )% | (1.35 | )% |
Portfolio turnover rate | | 170.12 | % | 158.26 | % | 158.39 | % | 141.68 | % | 73.54 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable..
79
| | Class I | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | Year ended
10/31/2010 | |
Net asset value, beginning of period | | $ | 13.85 | | $ | 10.82 | | $ | 9.84 | | $ | 9.53 | | $ | 8.01 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(i) | | (0.06 | ) | (0.01 | ) | (0.03 | ) | (0.05 | ) | (0.05 | ) |
Net realized and unrealized gain on investments | | 1.33 | | 3.66 | | 1.01 | | 0.36 | | 1.57 | |
Total from investment operations | | 1.27 | | 3.65 | | 0.98 | | 0.31 | | 1.52 | |
Distributions from net realized gains | | (1.39 | ) | (0.62 | ) | — | | — | | — | |
Net asset value, end of period | | $ | 13.73 | | $ | 13.85 | | $ | 10.82 | | $ | 9.84 | | $ | 9.53 | |
Total return(ii) | | 9.84 | % | 35.44 | % | 10.00 | % | 3.30 | % | 19.00 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 1,975 | | $ | 1,815 | | $ | 1,180 | | $ | 776 | | $ | 183 | |
Ratio of gross expenses to average net assets | | 2.79 | % | 4.07 | % | 5.95 | % | 6.91 | % | 14.02 | % |
Ratio of expense reimbursements to average net assets | | (1.49 | )% | (2.77 | )% | (4.68 | )% | (5.71 | )% | (12.82 | )% |
Ratio of net expenses to average net assets | | 1.30 | % | 1.30 | % | 1.27 | % | 1.20 | % | 1.20 | % |
Ratio of net investment income (loss) to average net assets | | (0.41 | )% | (0.08 | )% | (0.33 | )% | (0.50 | )% | (0.60 | )% |
Portfolio turnover rate | | 170.12 | % | 158.26 | % | 158.39 | % | 141.68 | % | 73.54 | % |
See Notes to Financial Statements.
(i) Amount was computed based on average shares outstanding during the period.
(ii) Does not reflect the effect of sales charges, if applicable.
80
THE ALGER FUNDS II
Financial Highlights for a share outstanding throughout the period
Alger Dynamic Opportunities Fund
| | Class A | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | Year ended
10/31/2011 | | From 11/2/2009
(commencement
of operations) to
10/31/2010(i) | |
Net asset value, beginning of period | | $ | 12.90 | | $ | 11.12 | | $ | 10.64 | | $ | 10.55 | | $ | 10.00 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | | | |
Net investment loss(ii) | | (0.20 | ) | (0.16 | ) | (0.14 | ) | (0.21 | ) | (0.20 | ) |
Net realized and unrealized gain on investments | | 0.96 | | 1.94 | | 0.77 | | 0.30 | | 0.75 | |
Total from investment operations | | 0.76 | | 1.78 | | 0.63 | | 0.09 | | 0.55 | |
Distributions from net realized gains | | (0.80 | ) | — | | (0.15 | ) | — | | — | |
Net asset value, end of period | | $ | 12.86 | | $ | 12.90 | | $ | 11.12 | | $ | 10.64 | | $ | 10.55 | |
Total return(iii) | | 6.15 | % | 16.01 | % | 6.07 | % | 0.90 | % | 5.50 | % |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 48,464 | | $ | 36,712 | | $ | 21,741 | | $ | 11,514 | | $ | 14,527 | |
Ratio of gross expenses to average net assets | | 2.46 | %(iv) | 2.61 | %(v) | 2.98 | %(vi) | 3.09 | %(vii) | 3.30 | %(viii) |
Ratio of expense reimbursements to average net assets | | — | | (0.03 | )% | (0.36 | )% | (0.62 | )% | (0.78 | )% |
Ratio of net expenses to average net assets | | 2.46 | % | 2.58 | % | 2.62 | % | 2.47 | % | 2.52 | % |
Ratio of net investment income (loss) to average net assets | | (1.57 | )% | (1.37 | )% | (1.26 | )% | (1.87 | )% | (2.00 | )% |
Portfolio turnover rate | | 205.45 | % | 201.50 | % | 257.74 | % | 430.05 | % | 438.65 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
(iv) Includes 0.57% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(v) Includes 0.58% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(vi) Includes 0.62% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vii) Includes 0.47% related to dividend expense on short positions and interest expense for the period ended 10/31/11
(viii) Includes 0.45% related to dividend expense on short positions and interest expense for the period ended 10/31/10
81
| | Class C | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From
12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 12.62 | | $ | 10.95 | | $ | 10.57 | | $ | 10.96 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment loss(ii) | | (0.29 | ) | (0.25 | ) | (0.22 | ) | (0.23 | ) |
Net realized and unrealized gain (loss) on investments | | 0.94 | | 1.92 | | 0.75 | | (0.16 | ) |
Total from investment operations | | 0.65 | | 1.67 | | 0.53 | | (0.39 | ) |
Distributions from net realized gains | | (0.80 | ) | — | | (0.15 | ) | — | |
Net asset value, end of period | | $ | 12.47 | | $ | 12.62 | | $ | 10.95 | | $ | 10.57 | |
Total return(iii) | | 5.38 | % | 15.15 | % | 5.25 | % | (3.60 | )% |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 5,808 | | $ | 1,407 | | $ | 622 | | $ | 539 | |
Ratio of gross expenses to average net assets | | 3.23 | %(iv) | 3.36 | %(v) | 4.00 | %(vi) | 4.12 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | (0.03 | )% | (0.62 | )% | (0.96 | )% |
Ratio of net expenses to average net assets | | 3.23 | % | 3.33 | % | 3.38 | % | 3.16 | % |
Ratio of net investment income (loss) to average net assets | | (2.36 | )% | (2.13 | )% | (2.05 | )% | 2.56 | % |
Portfolio turnover rate | | 205.45 | % | 201.50 | % | 257.74 | % | 430.05 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
(iv) Includes 0.59% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(v) Includes 0.58% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(vi) Includes 0.63% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vii) Includes 0.41% related to dividend expense on short positions and interest expense for the period ended 10/31/11
82
| | Class Z | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From
12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 12.98 | | $ | 11.16 | | $ | 10.66 | | $ | 10.96 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment loss(ii) | | (0.16 | ) | (0.13 | ) | (0.10 | ) | (0.15 | ) |
Net realized and unrealized gain (loss) on investments | | 0.97 | | 1.95 | | 0.75 | | (0.15 | ) |
Total from investment operations | | 0.81 | | 1.82 | | 0.65 | | (0.30 | ) |
Distributions from net realized gains | | (0.80 | ) | — | | (0.15 | ) | — | |
Net asset value, end of period | | $ | 12.99 | | $ | 12.98 | | $ | 11.16 | | $ | 10.66 | |
Total return(iii) | | 6.52 | % | 16.29 | % | 6.34 | % | (2.70 | )% |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 29,828 | | $ | 20,504 | | $ | 17,158 | | $ | 11,368 | |
Ratio of gross expenses to average net assets | | 2.18 | %(iv) | 2.34 | %(v) | 2.73 | %(vi) | 11.84 | %(vii) |
Ratio of expense reimbursements to average net assets | | — | | — | | (0.35 | )% | (9.30 | )% |
Ratio of net expenses to average net assets | | 2.18 | % | 2.34 | % | 2.38 | % | 2.54 | % |
Ratio of net investment income (loss) to average net assets | | (1.29 | )% | (1.08 | )% | (0.90 | )% | (1.92 | )% |
Portfolio turnover rate | | 205.45 | % | 201.50 | % | 257.74 | % | 430.05 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
(iv) Includes 0.57% related to dividend expense on short positions and interest expense for the period ended 10/31/14
(v) Includes 0.58% related to dividend expense on short positions and interest expense for the period ended 10/31/13
(vi) Includes 0.62% related to dividend expense on short positions and interest expense for the period ended 10/31/12
(vii) Includes 0.79% related to dividend expense on short positions and interest expense for the period ended 10/31/11
83
THE ALGER FUNDS II
Financial Highlights for a share outstanding throughout the period
Alger Emerging Markets Fund
| | Class A | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From 12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 9.57 | | $ | 8.52 | | $ | 8.32 | | $ | 10.00 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment income (loss)(ii) | | (0.01 | ) | 0.02 | | 0.03 | | 0.04 | |
Net realized and unrealized gain (loss) on investments | | (0.12 | ) | 1.19 | | 0.17 | | (1.72 | ) |
Total from investment operations | | (0.13 | ) | 1.21 | | 0.20 | | (1.68 | ) |
Dividends from net investment income | | — | | (0.16 | ) | — | | — | |
Net asset value, end of period | | $ | 9.44 | | $ | 9.57 | | $ | 8.52 | | $ | 8.32 | |
Total return(iii) | | (1.36 | )% | 14.31 | % | 2.40 | % | (16.80 | )% |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 6,931 | | $ | 5,260 | | $ | 1,176 | | $ | 764 | |
Ratio of gross expenses to average net assets | | 2.99 | % | 3.49 | % | 4.43 | % | 4.60 | % |
Ratio of expense reimbursements to average net assets | | (1.29 | )% | (1.79 | )% | (2.73 | )% | (2.90 | )% |
Ratio of net expenses to average net assets | | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % |
Ratio of net investment income (loss) to average net assets | | (0.13 | )% | 0.19 | % | 0.31 | % | 0.51 | % |
Portfolio turnover rate | | 98.25 | % | 103.59 | % | 150.09 | % | 121.91 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
84
| | Class C | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From
12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 9.42 | | $ | 8.37 | | $ | 8.23 | | $ | 10.00 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment loss(ii) | | (0.08 | ) | (0.06 | ) | (0.05 | ) | (0.03 | ) |
Net realized and unrealized gain (loss) on investments | | (0.11 | ) | 1.17 | | 0.19 | | (1.74 | ) |
Total from investment operations | | (0.19 | ) | 1.11 | | 0.14 | | (1.77 | ) |
Dividends from net investment income | | — | | (0.06 | ) | — | | — | |
Net asset value, end of period | | $ | 9.23 | | $ | 9.42 | | $ | 8.37 | | $ | 8.23 | |
Total return(iii) | | (2.02 | )% | 13.34 | % | 1.70 | % | (17.70 | )% |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 2,151 | | $ | 484 | | $ | 151 | | $ | 142 | |
Ratio of gross expenses to average net assets | | 3.79 | % | 4.75 | % | 5.61 | % | 5.99 | % |
Ratio of expense reimbursements to average net assets | | (1.34 | )% | (2.30 | )% | (3.16 | )% | (3.54 | )% |
Ratio of net expenses to average net assets | | 2.45 | % | 2.45 | % | 2.45 | % | 2.45 | % |
Ratio of net investment income (loss) to average net assets | | (0.84 | )% | (0.73 | )% | (0.57 | )% | (0.39 | )% |
Portfolio turnover rate | | 98.25 | % | 103.59 | % | 150.09 | % | 121.91 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
85
| | Class I | |
| | Year ended
10/31/2014 | | Year ended
10/31/2013 | | Year ended
10/31/2012 | | From
12/29/2010
(commencement
of operations) to
10/31/2011(i) | |
Net asset value, beginning of period | | $ | 9.51 | | $ | 8.48 | | $ | 8.28 | | $ | 10.00 | |
INCOME FROM INVESTMENT OPERATIONS: | | | | | | | | | |
Net investment income (loss)(ii) | | (0.02 | ) | 0.01 | | 0.01 | | — | |
Net realized and unrealized gain (loss) on investments | | (0.11 | ) | 1.19 | | 0.19 | | (1.72 | ) |
Total from investment operations | | (0.13 | ) | 1.20 | | 0.20 | | (1.72 | ) |
Dividends from net investment income | | — | | (0.17 | ) | — | | — | |
Net asset value, end of period | | $ | 9.38 | | $ | 9.51 | | $ | 8.48 | | $ | 8.28 | |
Total return(iii) | | (1.37 | )% | 14.26 | % | 2.42 | % | (17.20 | )% |
RATIOS/SUPPLEMENTAL DATA: | | | | | | | | | |
Net assets, end of period (000’s omitted) | | $ | 11,451 | | $ | 10,218 | | $ | 8,712 | | $ | 8,490 | |
Ratio of gross expenses to average net assets | | 2.92 | % | 3.45 | % | 4.28 | % | 4.16 | % |
Ratio of expense reimbursements to average net assets | | (1.22 | )% | (1.75 | )% | (2.58 | )% | (2.46 | )% |
Ratio of net expenses to average net assets | | 1.70 | % | 1.70 | % | 1.70 | % | 1.70 | % |
Ratio of net investment income (loss) to average net assets | | (0.16 | )% | 0.06 | % | 0.15 | % | 0.05 | % |
Portfolio turnover rate | | 98.25 | % | 103.59 | % | 150.09 | % | 121.91 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
86
| | Class Z | |
| | From 2/28/2014
(commencement
of operations) to
10/31/2014(i) | |
Net asset value, beginning of period | | $ | 9.24 | |
INCOME FROM INVESTMENT OPERATIONS: | | | |
Net investment income(ii) | | 0.02 | |
Net realized and unrealized gain on investments | | 0.15 | |
Total from investment operations | | 0.17 | |
Net asset value, end of period | | $ | 9.41 | |
Total return(iii) | | 1.84 | % |
RATIOS/SUPPLEMENTAL DATA: | | | |
Net assets, end of period (000’s omitted) | | $ | 3,667 | |
Ratio of gross expenses to average net assets | | 3.35 | % |
Ratio of expense reimbursements to average net assets | | (2.10 | )% |
Ratio of net expenses to average net assets | | 1.25 | % |
Ratio of net investment income (loss) to average net assets | | 0.29 | % |
Portfolio turnover rate | | 98.25 | % |
See Notes to Financial Statements.
(i) Ratios have been annualized; total return has not been annualized; portfolio turnover is for the twelve months then ended.
(ii) Amount was computed based on average shares outstanding during the period.
(iii) Does not reflect the effect of sales charges, if applicable.
87
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS
NOTE 1 — General:
The Alger Funds II (the “Trust”) is a diversified open-end registered investment company organized as a business trust under the laws of the Commonwealth of Massachusetts. The Fund qualifies as an investment company as defined in the Financial Accounting Standards Board Accounting Standards Codification 946-Financial Services — Investment Companies. The Trust operates as a series company currently issuing an unlimited number of shares of beneficial interest in five funds—Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund and Alger Emerging Markets Fund (collectively, the “Funds” or individually, each a “Fund”). The Funds normally invest primarily in equity securities and each has an investment objective of long-term capital appreciation.
Each Fund offers one or more of the following share classes: Class A shares, Class C shares, Class I shares and Class Z shares. Class A shares are generally subject to an initial sales charge while Class C shares are generally subject to a deferred sales charge. Class I shares and Class Z shares are sold to institutional investors without an initial or deferred sales charge. Each class has identical rights to assets and earnings, except that each share class bears the costs of its plan of distribution, if it maintains one, and transfer agency and sub-transfer agency services.
Alger Emerging Markets Fund started offering Class Z shares on February 28, 2014.
NOTE 2 — Significant Accounting Policies:
(a) Investment Valuation: The Funds value their financial instruments at fair value using independent dealers or pricing services under policies approved by the Board of Trustees. Investments are valued on 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).
Equity securities and option contracts for which valuation information is readily available are valued at the last quoted sales price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the absence of quoted sales, such securities are valued at the bid price or, in the absence of a recent bid price, the equivalent as obtained from one or more of the major market makers for the securities to be valued.
Debt securities generally trade in the over-the-counter market. Debt securities with remaining maturities of more than sixty days at the time of acquisition are valued on the basis of last available bid prices or current market quotations provided by dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrixes, market transactions in comparable investments, various relationships observed in the market between investments and calculated yield measures based on valuation technology commonly employed in the market for such investments. Asset-backed and mortgage-backed securities are valued by independent pricing services using models that consider estimated cash flows of each tranche of the security, establish a benchmark yield and develop an estimated tranche-specific spread to the benchmark yield based on the unique attributes of the tranche. Debt securities with a remaining
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maturity of sixty days or less are valued at amortized cost which approximates market value.
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.
Securities in which the Funds invest may be traded in foreign markets that close before the close of the NYSE. Developments that occur between the close of the foreign markets and the close of the NYSE may result in adjustments to the foreign closing prices to reflect what the investment adviser, pursuant to policies established by the Board of Trustees, believes to be the fair value of these securities as of the close of the NYSE. The Funds may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open.
Financial Accounting Standards Board Accounting Standards Codification 820 — Fair Value Measurements and Disclosures (“ASC 820”) defines fair value as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. ASC 820 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability and may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Funds. Unobservable inputs are inputs that reflect the Funds’ own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
· Level 1 — quoted prices in active markets for identical investments
· Level 2 — significant other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
· Level 3 — significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments)
The Funds’ valuation techniques are generally consistent with either the market or the income approach to fair value. The market approach considers prices and other relevant information generated by market transactions involving identical or comparable assets to measure fair value. The income approach converts future amounts to a current, or discounted, single amount. These fair value measurements are determined on the basis of the value indicated by current market expectations about such future events. Inputs for Level 1 include exchange-listed prices and broker quotes in an active market. Inputs for Level 2 include the last trade price in the case of a halted security, an exchange-listed price which has been adjusted for fair value factors, and prices of closely related securities. Additional Level 2 inputs include an evaluated price which is based upon a compilation of observable market information such as spreads for fixed income and preferred securities. Inputs for Level 3 include revenue multiples, earnings before interest, taxes, depreciation and amortization (“EBITDA”) multiples, discount rates, and the probabilities of success of certain outcomes. Such unobservable market information may be obtained from a
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company’s financial statements and from industry studies, market data, and market indicators such as benchmarks and indices.
Valuation processes are determined by a Valuation Committee (“Committee”) established by the Trust’s Board of Trustees (“Board”) and comprised of representatives of the Trust’s investment advisor. The Committee reports its fair valuation determinations to the Board which is responsible for approving valuation policy and procedures.
While the Committee meets on an as-needed basis, the Committee formally meets quarterly to review and evaluate the effectiveness of the procedures for making fair value determinations. The Committee considers, among other things, the results of quarterly back testing of the fair value model for foreign securities, pricing comparisons between primary and secondary price sources, the outcome of price challenges put to the Funds’ pricing vendor, and variances between transactional prices and previous mark-to-markets.
The Funds will record a change to a security’s fair value level if new inputs are available or it becomes evident that inputs previously considered for leveling have changed or are no longer relevant. Transfers between Levels 1 and 2 are recognized at the end of the reporting period, and transfers into and out of Level 3 are recognized during the reporting period.
(b) Cash and Cash Equivalents: Cash and cash equivalents include U.S. dollars, foreign cash and overnight time deposits.
(c) 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.
(d) Foreign Currency Translations: The books and records of the Funds are maintained in U.S. dollars. Foreign currencies, investments and other assets and liabilities are translated into U.S. dollars at the prevailing rates of exchange on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the prevailing exchange rates on the respective dates of such transactions.
Net realized gains and losses on foreign currency transactions represent net gains and losses from the disposition of foreign currencies, currency gains and losses realized between the trade dates and settlement dates of security transactions, and the difference between the amount of net investment income accrued and the U.S. dollar amount actually received. The effects of changes in foreign currency exchange rates on investments in securities are included in realized and unrealized gain or loss on investments in the Statement of Operations.
(e) Short Sales: Securities sold short represent an obligation to deliver the securities at a future date. A Fund may sell a security it does not own in anticipation of a decline in the value of that security before the delivery date. When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. Dividends paid on securities sold short are disclosed as an expense on the
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Statement of Operations. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized upon the termination of a short sale.
To secure its obligation to deliver to the broker-dealer the securities sold short, the Fund must segregate an amount of cash or liquid securities with its custodian equal to any excess of the current market value of the securities sold short over any cash or liquid securities deposited as collateral with the broker in connection with the short sale (not including the proceeds of the short sale). As a result of that requirement, the Fund will not gain any leverage merely by selling short, except to the extent that it earns interest or other income or gains on the segregated cash or liquid securities while also being subject to gain or loss from the securities sold short.
(f) Option Contracts: When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or, if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option.
The Funds may also purchase put and call options. Each Fund pays a premium which is included in the Fund’s Statement of Assets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying security to determine the realized gain or loss.
(g) 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 the Fund’s total assets, as defined in its prospectuses. The Funds earn fees on the securities loaned, which are included in interest income in the accompanying Statements 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 loan is collateralized by cash or securities that are maintained with the Custodian in an amount equal to at least 102 percent of the current market value of U.S. loaned securities or 105 percent for non-U.S. loaned securities. The market value of the loaned securities is determined at the close of business of the Fund. Any required additional collateral is delivered to the Custodian and any excess collateral is returned to the borrower on the next business day. In the event the borrower fails to return the loaned securities when due, the Funds may take the collateral to replace the securities. If the value of the collateral is less than the purchase cost of replacement securities, the Custodian shall be responsible for any shortfall, but only to the extent that the shortfall is not due to any diminution in collateral value, as
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defined in the securities lending agreement. The Funds are required to maintain the collateral in a segregated account and determine its value each day until the loaned securities are returned. Cash collateral may be invested as determined by the Funds. Collateral is returned to the borrower upon settlement of the loan. There were no securities loaned as of October 31, 2014.
(h) Dividends to Shareholders: Dividends and distributions payable to shareholders are recorded by the Funds 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.
Each class is treated separately in determining the amounts of dividends from 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 a Fund’s 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 financial statements are adjusted for permanent book/tax differences. Reclassifications result primarily from the difference in tax treatment of net operating losses, passive foreign investment companies, and foreign currency transactions. The reclassifications are done annually at fiscal year end and have no impact on the net asset values of the Funds, and are designed to present each Fund’s capital accounts on a tax basis.
(i) Federal Income Taxes: It is each Fund’s policy to comply with the requirements of the Internal Revenue Code Subchapter M applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Provided the Funds maintain such compliance, no federal income tax provision is required. Each Fund is treated as a separate entity for the purpose of determining such compliance.
Financial Accounting Standards Board Accounting Standards Codification 740 — Income Taxes (“ASC 740”) requires the Funds to measure and recognize in their financial statements the benefit of a tax position taken (or expected to be taken) on an income tax return if such position will more likely than not be sustained upon examination based on the technical merits of the position. No tax years are currently under investigation. The Funds file income tax returns in the U.S., as well as New York State and New York City. The statute of limitations on the tax returns for the Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund and Alger Emerging Markets Fund remains open for the tax years 2011-2014. Management does not believe there are any uncertain tax positions that require recognition of a tax liability.
(j) 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
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are allocated among the Fund’s classes based on relative net assets, with the exception of distribution fees, transfer agency fees, and shareholder servicing and related fees.
(k) Estimates: These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which require using estimates and assumptions that affect the reported amounts therein. Actual results may differ from those estimates. All such adjustments are of normal recurring nature.
NOTE 3 — Investment Advisory Fees and Other Transactions with Affiliates:
(a) Advisory: Fees incurred by each Fund, pursuant to the provisions of the Trust’s Investment Advisory Agreement with Fred Alger Management, Inc., (“Alger Management” or the “Manager”), are payable monthly and computed based on the following rates. The actual rate paid as a percentage of average daily net assets, for the year ended October 31, 2014, is set forth below under the heading “Actual Rate.”:
| | Tier 1 | | Tier 2 | | Tier 3 | | Actual Rate | |
Alger Spectra Fund(a) | | 0.900 | % | 0.750 | % | 0.650 | % | 0.830 | % |
Alger Green Fund(b) | | 0.710 | | 0.650 | | — | | 0.710 | |
Alger Analyst Fund(b) | | 0.750 | | 0.700 | | — | | 0.750 | |
Alger Dynamic Opportunities Fund(b) | | 1.200 | | 1.000 | | — | | 1.200 | |
Alger Emerging Markets Fund(c) | | 1.100 | | — | | — | | 1.100 | |
(a) Tier 1 rate is paid on assets up to $2 billion, Tier 2 rate is paid on assets between $2 and $4 billion and Tier 3 rate is paid on assets in excess of $4 billion.
(b) Tier 1 rate is paid on assets up to $1 billion and Tier 2 rate is paid on assets in excess of $1 billion.
(c) Tier 1 rate is paid on all assets.
Alger Management has established expense caps for several share classes, effective through February 28, 2015, whereby it reimburses the share classes if annualized operating expenses (excluding interest, taxes, brokerage, dividend expense and extraordinary expenses) exceed the rates, based on average daily net assets, listed below:
| | CLASS | | FEES WAIVED /
REIMBURSED FOR
THE YEAR ENDED | |
| | A | | C | | I | | Z | | OCTOBER 31, 2014 | |
Alger Green Fund | | 1.35 | % | — | | 1.35 | % | — | | $ | — | |
Alger Analyst Fund | | 1.30 | | 1.95 | % | 1.30 | | — | | 120,449 | |
Alger Dynamic Opportunities Fund | | 2.00 | | 2.75 | | — | | 1.75 | % | — | |
Alger Emerging Markets Fund | | 1.70 | | 2.45 | | 1.70 | | 1.25 | | 204,322 | |
| | | | | | | | | | | | |
Alger Management voluntarily reduced its advisory fee for the Alger Emerging Markets Fund by $35,000 for the year ended October 31, 2014.
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(b) Administration Fees: Fees incurred by each Fund, pursuant to the provisions of the Trust’s Administration Agreement with Fred Alger Management, Inc., are payable monthly and computed based on the average daily net assets of each Fund at the annual rate of 0.0275%.
(c) Distribution Fees: The Trust has adopted a distribution plan pursuant to which Class A shares, Class C shares and Class I shares of each Fund pay Fred Alger & Company, Incorporated, the distributor (the “Distributor” or “Alger Inc.”), a fee at the annual rate listed below of the respective average daily net assets of the share class of the designated Fund to compensate Alger Inc. for its activities and expenses incurred in distributing the share class and shareholder servicing. Fees paid may be more or less than the expenses incurred by Alger Inc.
SHARE CLASS | | FEE
RATE | |
A | | 0.25 | % |
C | | 1.00 | |
I | | 0.25 | |
(d) Sales Charges: Purchases and sales of shares of the Funds may be subject to initial sales charges or contingent deferred sales charges. The contingent deferred sales charges are used by Alger Inc. to offset distribution expenses previously incurred. Sales charges do not represent expenses of the Trust. For the year ended October 31, 2014, the initial sales charges and contingent deferred sales charges imposed, all of which were retained by Alger Inc, were as follows:
| | INITIAL SALES
CHARGES | | CONTINGENT
DEFERRED SALES
CHARGES | |
Alger Spectra Fund | | $ | 12,382 | | $ | 62,055 | |
Alger Green Fund | | 2,395 | | 1,000 | |
Alger Analyst Fund | | — | | 37 | |
Alger Dynamic Opportunities Fund | | — | | 1,140 | |
Alger Emerging Markets Fund | | 30 | | 99 | |
| | | | | | | |
(e) Brokerage Commissions: During the year ended October 31, 2014, Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund and Alger Emerging Markets Fund paid Alger Inc., an affiliate of Alger Management, $2,268,495, $7,129, $9,003, $26,640, and $116, respectively, in connection with securities transactions.
(f) Shareholder Administrative Fees: The Trust has entered into a shareholder administrative services agreement with Alger Management, to compensate Alger Management for its liaison and administrative oversight of Boston Financial Data Services, Inc., the transfer agent, and other related services. The Funds compensate Alger Management at the annual rate of 0.0165% of their respective average daily net assets for the Class A and
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Class C shares and 0.01% of the daily net assets of the Class I shares and Class Z shares for these services.
Alger Management makes payments to intermediaries that provide sub-accounting services to omnibus accounts invested in the Funds. A portion of the fees paid by Alger Management to intermediaries that provide sub-accounting services are charged back to the appropriate Fund, subject to certain limitations, as approved by the Board. For the year ended October 31, 2014, Alger Management charged back to Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund and Alger Emerging Markets Fund $1,038,993, $30,398, $433, $20,049 and $3,422, respectively, for these services, which are included in transfer agent fees and expenses in the Statements of Operations.
(g) Trustees’ Fees: From November 1, 2013 through March 5, 2014, each Fund paid each trustee who is not affiliated with Alger Management or its affiliates $880 for each meeting attended, to a maximum of $3,520 per annum, plus travel expenses incurred for attending the meeting. The Chairman of the Board received an additional annual fee of $22,500 which was paid, pro rata, by all U.S.-registered funds managed by Alger Management. Additionally, each member of a Fund’s audit committee received $75 from the Fund for each audit committee meeting attended, to a maximum of $300 per annum.
Effective March 6, 2014, each Fund pays each trustee who is not affiliated with Alger Management or its affiliates $950 for each meeting attended, to a maximum of $3,800 per annum, plus travel expenses incurred for attending the meeting. The Chairman of the Board receives an additional annual fee of $24,300 which is paid, pro rata, by all U.S.-registered funds managed by Alger Management. Additionally, each member of a Fund’s audit committee receives $81 from the Fund for each audit committee meeting attended, to a maximum of $324 per annum.
(h) Interfund Loans: The Funds, along with other funds advised by Alger Management, may borrow money from and lend money to each other for temporary or emergency purposes. To the extent permitted under its investment restrictions, each fund may lend uninvested cash in an amount up to 15% of its net assets to other funds. If a fund has borrowed from other funds and has aggregate borrowings from all sources that exceed 10% of the fund’s total assets, such fund will secure all of its loans from other funds. The interest rate charged on interfund loans is equal to the average of the overnight time deposit rate and bank loan rate available to the funds. As of October 31, 2014 Alger Spectra Fund loaned $730,044, including interest, to an affiliated Fund at a rate of 1.09%, which was callable within seven calendar days.
During the year ended October 31, 2014, Alger Spectra Fund and Alger Dynamic Opportunities Fund earned interfund loan interest income of $16,987 and $2,473, respectively.
(i) Other Transactions with Affiliates: Certain officers of the Trust are directors and officers of Alger Management and Alger Inc. At October 31, 2014, Alger Management and its affiliates owned the following shares:
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THE ALGER FUNDS II
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| | SHARE CLASS | |
| | A | | C | | I | | Z | |
Alger Spectra Fund | | 1,409,404 | | 12,608 | | 12,628 | | 91 | |
Alger Green Fund | | — | | — | | — | | — | |
Alger Analyst Fund | | 371,579 | | 13,782 | | 119,421 | | — | |
Alger Dynamic Opportunities Fund | | 122,534 | | 99 | | — | | 1,635,980 | |
Alger Emerging Markets Fund | | 115,052 | | 101 | | 1,007,783 | | 10,823 | |
NOTE 4 — Securities Transactions:
The following summarizes the securities transactions by the Trust, other than short-term securities, purchased options and short sales for the year ended October 31, 2014:
| | PURCHASES | | SALES | |
Alger Spectra Fund | | $ | 6,568,809,808 | | $ | 6,254,605,304 | |
Alger Green Fund | | 21,509,645 | | 17,716,828 | |
Alger Analyst Fund | | 14,846,380 | | 13,567,002 | |
Alger Dynamic Opportunities Fund | | 113,542,829 | | 105,002,668 | |
Alger Emerging Markets Fund | | 25,836,229 | | 17,735,912 | |
| | | | | | | |
Transactions in foreign securities may involve certain considerations and risks not typically associated with those of U.S. companies because of, among other factors, the level of governmental supervision and regulation of foreign security markets, and the possibility of political or economic instability. Additional risks associated with investing in the emerging markets include increased volatility, limited liquidity, and less stringent regulatory and legal system.
NOTE 5 — Borrowing:
The Funds may borrow from their custodian on an uncommitted basis. Each Fund pays the custodian a market rate of interest, generally based upon the London Interbank Offered Rate. The Funds may also borrow from other funds advised by Alger Management, as discussed in Note 3(h). For the year ended October 31, 2014, the Funds had the following borrowings:
| | AVERAGE DAILY
BORROWING | | WEIGHTED AVERAGE
INTEREST RATE | |
Alger Spectra Fund | | $ | 234,418 | | 2.20 | % |
Alger Analyst Fund | | 46 | | 2.19 | |
Alger Emerging Markets Fund | | 1,163 | | 5.07 | |
| | | | | | |
The highest amount borrowed during the year ended October 31, 2014 for each Fund was as follows:
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| | HIGHEST BORROWING | |
Alger Spectra Fund | | $ | 27,277,943 | |
Alger Analyst Fund | | 16,039 | |
Alger Emerging Markets Fund | | 55,628 | |
| | | | |
NOTE 6 — Share Capital:
(a) The Trust has an unlimited number of authorized shares of beneficial interest of $.001 par value which are presently divided into five series. Each series is divided into separate classes. The transactions of shares of beneficial interest were as follows:
| | FOR THE YEAR ENDED
OCTOBER 31, 2014 | | FOR THE YEAR ENDED
OCTOBER 31, 2013 | |
| | SHARES | | AMOUNT | | SHARES | | AMOUNT | |
Alger Spectra Fund | | | | | | | | | |
Class A: | | | | | | | | | |
Shares sold | | 32,338,699 | | $ | 579,845,405 | | 45,287,725 | | $ | 683,072,567 | |
Shares converted from Class C | | 22 | | 389 | | 24 | | 353 | |
Dividends reinvested | | 5,854,567 | | 100,640,010 | | 2,252,531 | | 31,129,979 | |
Shares redeemed | | (49,152,547 | ) | (904,843,079 | ) | (23,848,519 | ) | (358,095,947 | ) |
Net increase (decrease) | | (10,959,259 | ) | $ | (224,357,275 | ) | 23,691,761 | | $ | 356,106,952 | |
Class C: | | | | | | | | | |
Shares sold | | 10,495,116 | | $ | 181,342,515 | | 12,612,487 | | $ | 183,657,106 | |
Shares converted to Class A | | (23 | ) | (389 | ) | (25 | ) | (353 | ) |
Dividends reinvested | | 1,307,096 | | 21,684,718 | | 359,274 | | 4,839,416 | |
Shares redeemed | | (3,642,642 | ) | (62,917,415 | ) | (3,779,068 | ) | (54,428,109 | ) |
Net increase | | 8,159,547 | | $ | 140,109,429 | | 9,192,668 | | $ | 134,068,060 | |
Class I: | | | | | | | | | |
Shares sold | | 21,286,862 | | $ | 384,958,874 | | 23,012,002 | | $ | 351,911,818 | |
Dividends reinvested | | 2,350,328 | | 40,684,169 | | 849,067 | | 11,810,520 | |
Shares redeemed | | (12,278,080 | ) | (222,493,127 | ) | (12,763,740 | ) | (193,223,214 | ) |
Net increase | | 11,359,110 | | $ | 203,149,916 | | 11,097,329 | | $ | 170,499,124 | |
Class Z: | | | | | | | | | |
Shares sold | | 37,571,892 | | $ | 703,742,849 | | 11,131,770 | | $ | 169,271,617 | |
Dividends reinvested | | 358,899 | | 6,208,950 | | 127,982 | | 1,773,829 | |
Shares redeemed | | (10,885,301 | ) | (198,541,023 | ) | (5,688,617 | ) | (88,119,022 | ) |
Net increase | | 27,045,490 | | $ | 511,410,776 | | 5,571,135 | | $ | 82,926,424 | |
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THE ALGER FUNDS II
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| | FOR THE YEAR ENDED
OCTOBER 31, 2014 | | FOR THE YEAR ENDED
OCTOBER 31, 2013 | |
| | SHARES | | AMOUNT | | SHARES | | AMOUNT | |
Alger Green Fund | | | | | | | | | |
Class A: | | | | | | | | | |
Shares sold | | 828,187 | | $ | 7,358,641 | | 856,188 | | $ | 6,665,788 | |
Dividends reinvested | | 121,073 | | 1,054,550 | | 5,321 | | 36,929 | |
Shares redeemed | | (968,434 | ) | (8,610,801 | ) | (1,305,192 | ) | (9,851,832 | ) |
Net decrease | | (19,174 | ) | $ | (197,610 | ) | (443,683 | ) | $ | (3,149,115 | ) |
Class C: | | | | | | | | | |
Shares sold | | 185,722 | | $ | 1,571,391 | | 205,125 | | $ | 1,522,536 | |
Dividends reinvested | | 16,476 | | 137,736 | | — | | — | |
Shares redeemed | | (83,282 | ) | (707,199 | ) | (103,848 | ) | (753,438 | ) |
Net increase | | 118,916 | | $ | 1,001,928 | | 101,277 | | $ | 769,098 | |
Class I: | | | | | | | | | |
Shares sold | | 1,645,240 | | $ | 14,568,124 | | 2,225,380 | | $ | 17,715,572 | |
Dividends reinvested | | 157,333 | | 1,368,794 | | 4,165 | | 28,863 | |
Shares redeemed | | (1,216,946 | ) | (10,795,073 | ) | (1,179,827 | ) | (9,144,950 | ) |
Net increase | | 585,627 | | $ | 5,141,845 | | 1,049,718 | | $ | 8,599,485 | |
| | | | | | | | | |
Alger Analyst Fund | | | | | | | | | |
Class A: | | | | | | | | | |
Shares sold | | 113,069 | | $ | 1,535,251 | | 104,504 | | $ | 1,426,161 | |
Dividends reinvested | | 35,523 | | 457,530 | | 13,388 | | 144,587 | |
Shares redeemed | | (22,216 | ) | (302,568 | ) | (7,135 | ) | (85,360 | ) |
Net increase | | 126,376 | | $ | 1,690,213 | | 110,757 | | $ | 1,485,388 | |
Class C: | | | | | | | | | |
Shares sold | | 6,256 | | $ | 83,134 | | 3,250 | | $ | 39,393 | |
Dividends reinvested | | 2,589 | | 31,952 | | 979 | | 10,239 | |
Shares redeemed | | (1,865 | ) | (24,279 | ) | (616 | ) | (7,345 | ) |
Net increase | | 6,980 | | $ | 90,807 | | 3,613 | | $ | 42,287 | |
Class I: | | | | | | | | | |
Shares sold | | 40,453 | | $ | 542,527 | | 34,333 | | $ | 429,117 | |
Dividends reinvested | | 12,461 | | 160,368 | | 6,061 | | 65,396 | |
Shares redeemed | | (40,038 | ) | (538,234 | ) | (18,407 | ) | (232,355 | ) |
Net increase | | 12,876 | | $ | 164,661 | | 21,987 | | $ | 262,158 | |
98
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
| | FOR THE YEAR ENDED
OCTOBER 31, 2014 | | FOR THE YEAR ENDED
OCTOBER 31, 2013 | |
| | SHARES | | AMOUNT | | SHARES | | AMOUNT | |
Alger Dynamic Opportunities Fund | | | | | | | | | |
Class A: | | | | | | | | | |
Shares sold | | 2,969,594 | | $ | 37,388,559 | | 1,766,985 | | $ | 21,021,586 | |
Dividends reinvested | | 196,268 | | 2,425,867 | | — | | — | |
Shares redeemed | | (2,244,716 | ) | (28,195,684 | ) | (876,334 | ) | (10,471,095 | ) |
Net increase | | 921,146 | | $ | 11,618,742 | | 890,651 | | $ | 10,550,491 | |
Class C: | | | | | | | | | |
Shares sold | | 388,509 | | $ | 4,753,942 | | 80,968 | | $ | 959,730 | |
Dividends reinvested | | 8,722 | | 105,191 | | — | | — | |
Shares redeemed | | (43,152 | ) | (526,803 | ) | (26,177 | ) | (303,532 | ) |
Net increase | | 354,079 | | $ | 4,332,330 | | 54,791 | | $ | 656,198 | |
Class Z: | | | | | | | | | |
Shares sold | | 742,459 | | $ | 9,566,861 | | 42,171 | | $ | 532,501 | |
Dividends reinvested | | 101,629 | | 1,265,283 | | — | | — | |
Shares redeemed | | (127,352 | ) | (1,598,319 | ) | — | | — | |
Net increase | | 716,736 | | $ | 9,233,825 | | 42,171 | | $ | 532,501 | |
| | | | | | | | | |
Alger Emerging Markets Fund | | | | | | | | | |
Class A: | | | | | | | | | |
Shares sold | | 650,411 | | $ | 6,150,709 | | 456,558 | | $ | 4,161,014 | |
Dividends reinvested | | — | | — | | 2,372 | | 21,041 | |
Shares redeemed | | (466,138 | ) | (4,431,135 | ) | (47,139 | ) | (423,936 | ) |
Net increase | | 184,273 | | $ | 1,719,574 | | 411,791 | | $ | 3,758,119 | |
Class C: | | | | | | | | | |
Shares sold | | 187,274 | | $ | 1,767,329 | | 35,256 | | $ | 310,339 | |
Dividends reinvested | | — | | — | | 127 | | 1,122 | |
Shares redeemed | | (5,639 | ) | (51,737 | ) | (1,968 | ) | (17,871 | ) |
Net increase | | 181,635 | | $ | 1,715,592 | | 33,415 | | $ | 293,590 | |
Class I: | | | | | | | | | |
Shares sold | | 234,530 | | $ | 2,208,761 | | 36,969 | | $ | 340,089 | |
Dividends reinvested | | — | | — | | 19,290 | | 170,139 | |
Shares redeemed | | (88,851 | ) | (814,957 | ) | (8,879 | ) | (76,731 | ) |
Net increase | | 145,679 | | $ | 1,393,804 | | 47,380 | | $ | 433,497 | |
Class Z: | | | | | | | | | |
Shares sold | | 395,253 | | $ | 3,829,565 | | — | | $ | — | |
Shares redeemed | | (5,520 | ) | (51,547 | ) | — | | — | |
Net increase | | 389,733 | | $ | 3,778,018 | | — | | $ | — | |
(b)Redemption Fee: The Funds may impose a 2.00% redemption fee on Class A and Class C shares redeemed (including shares redeemed by exchange) within 30 days after such shares were acquired. The fees retained by the Funds are included as paid-in capital on the Statement of Assets and Liabilities.
99
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 7 — Income Tax Information:
The tax character of distributions paid during the year ended October 31, 2014 and the year ended October 31, 2013 were as follows:
| | FOR THE YEAR ENDED
OCTOBER 31, 2014 | | FOR THE YEAR ENDED
OCTOBER 31, 2013 | |
Alger Spectra Fund | | | | | |
Distributions paid from: | | | | | |
Ordinary Income | | $ | 69,179,309 | | $ | 29,650,585 | |
Long-term capital gain | | 133,233,459 | | 31,608,681 | |
Total distributions paid | | $ | 202,412,768 | | $ | 61,259,266 | |
| | | | | |
Alger Green Fund | | | | | |
Distributions paid from: | | | | | |
Ordinary Income | | 9,327 | | 69,086 | |
Long-term capital gain | | 2,695,560 | | — | |
Total distributions paid | | $ | 2,704,887 | | $ | 69,086 | |
| | | | | |
Alger Analyst Fund | | | | | |
Distributions paid from: | | | | | |
Ordinary Income | | 440,679 | | 101,252 | |
Long-term capital gain | | 252,615 | | 122,778 | |
Total distributions paid | | $ | 693,294 | | $ | 224,030 | |
| | | | | |
Alger Dynamic Opportunities Fund | | | | | |
Distributions paid from: | | | | | |
Ordinary Income | | 2,424,128 | | — | |
Long-term capital gain | | 1,382,652 | | — | |
Total distributions paid | | $ | 3,806,780 | | — | |
| | | | | |
Alger Emerging Markets Fund | | | | | |
Distributions paid from: | | | | | |
Ordinary Income | | — | | 40,534 | |
Long-term capital gain | | — | | — | |
Return of capital | | — | | 152,564 | |
Total distributions paid | | — | | $ | 193,098 | |
As of October 31, 2014 the components of accumulated gains (losses) on a tax basis were as follows:
100
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Alger Spectra Fund | | | |
Undistributed ordinary income | | $ | 34,698,984 | |
Undistributed long-term gains | | $ | 528,575,072 | |
Net accumulated earnings | | 563,274,056 | |
Capital loss carryforwards | | — | |
Net unrealized appreciation | | 692,153,928 | |
Total accumulated earnings | | $ | 1,255,427,984 | |
| | | |
Alger Green Fund | | | |
Undistributed ordinary income | | — | |
Undistributed long-term gains | | 2,194,731 | |
Net accumulated earnings | | 2,194,731 | |
Capital loss carryforwards | | — | |
Late year ordinary income losses | | (93,865 | ) |
Net unrealized appreciation | | 19,554,476 | |
Total accumulated earnings | | $ | 21,655,342 | |
| | | |
Alger Analyst Fund | | | |
Undistributed ordinary income | | $ | 79,250 | |
Undistributed long-term gains | | 583,783 | |
Net accumulated earnings | | 663,033 | |
Capital loss carryforwards | | — | |
Net unrealized appreciation | | 872,928 | |
Total accumulated earnings | | $ | 1,535,961 | |
| | | |
Alger Dynamic Opportunities Fund | | | |
Undistributed ordinary income | | — | |
Undistributed long-term gains | | 4,407,869 | |
Net accumulated earnings | | 4,407,869 | |
Capital loss carryforwards | | — | |
Late year ordinary income losses | | (1,081,834 | ) |
Net unrealized appreciation | | 5,275,551 | |
Total accumulated earnings | | $ | 8,601,586 | |
| | | |
Alger Emerging Markets Fund | | | |
Undistributed ordinary income | | — | |
Undistributed long-term gains | | — | |
Net accumulated earnings | | — | |
Capital loss carryforwards | | (2,015,972 | ) |
Net unrealized appreciation | | 1,631,479 | |
Total accumulated losses | | $ | (384,493 | ) |
At October 31, 2014, the Alger Emerging Markets Fund, for federal income tax purposes, had capital loss carryforwards as set forth in the table below. These amounts may be applied against future net realized gains.
101
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Expiration Dates | | Alger Emerging
Markets Fund | |
POST ACT | | $ | 2,015,972 | |
Total | | 2,015,972 | |
| | | | |
Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Funds after October 31, 2011 will not be subject to expiration (“POST ACT”). In addition, losses incurred after October 31, 2011 must be utilized prior to the utilization of capital loss carryforwards above. As of October 31, 2014, there were no capital loss carryforwards.
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is determined annually and is attributable primarily to the tax deferral of losses on wash sales, U.S. Internal Revenue Code Section 988 currency transactions, nondeductible expenses on dividends sold short, the tax treatment of partnerships investments, the realization of unrealized appreciation of passive foreign investment companies, and return of capital from real estate investment trust investments.
Permanent differences, primarily from net operating losses and real estate investment trusts and partnership investments sold by the Funds, resulted in the following reclassifications among each Fund’s components of net assets at October 31, 2014:
Alger Spectra Fund | | | |
Accumulated undistributed net investment income (accumulated loss) | | $ | 16,684,139 | |
Accumulated net realized gain (accumulated realized loss) | | $ | (16,684,138 | ) |
Paid-in Capital | | $ | (1 | ) |
| | | |
Alger Green Fund | | | |
Accumulated undistributed net investment income (accumulated loss) | | $ | 12,267 | |
Accumulated net realized gain (accumulated realized loss) | | $ | 5,112 | |
Paid-in Capital | | $ | (17,379 | ) |
| | | |
Alger Analyst Fund | | | |
Accumulated undistributed net investment income (accumulated loss) | | $ | 20,383 | |
Accumulated net realized gain (accumulated realized loss) | | $ | (20,382 | ) |
Paid-in Capital | | $ | (1 | ) |
| | | |
Alger Dynamic Opportunities Fund | | | |
Accumulated undistributed net investment income (accumulated loss) | | $ | 25,489 | |
Accumulated net realized gain (accumulated realized loss) | | $ | 114,392 | |
Paid-in Capital | | $ | (139,881 | ) |
102
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Alger Emerging Markets Fund | | | |
Accumulated undistributed net investment income (accumulated loss) | | $ | 5,444 | |
Accumulated net realized gain (accumulated realized loss) | | $ | 27,708 | |
Paid-in Capital | | $ | (33,152 | ) |
NOTE 8 — Fair Value Measurements:
The following is a summary of the inputs used as of October 31, 2014 in valuing the Funds’ investments carried at fair value on a recurring basis. Based upon the nature, characteristics, and risks associated with their investments, the Funds have determined that presenting them by security type and sector is appropriate.
Alger Spectra Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | $ | 848,334,301 | | $ | 848,232,675 | | — | | $ | 101,626 | |
Consumer Staples | | 241,626,222 | | 241,626,222 | | — | | — | |
Energy | | 192,806,166 | | 192,806,166 | | — | | — | |
Financials | | 218,608,150 | | 218,608,150 | | — | | — | |
Health Care | | 878,141,371 | | 878,141,371 | | — | | — | |
Industrials | | 397,135,608 | | 397,135,608 | | — | | — | |
Information Technology | | 1,537,820,165 | | 1,535,712,998 | | — | | 2,107,167 | |
Materials | | 116,685,558 | | 116,685,558 | | — | | — | |
Telecommunication Services | | 22,188,430 | | 22,188,430 | | — | | — | |
Utilities | | 14,123,284 | | 14,123,284 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 4,467,469,255 | | $ | 4,465,260,462 | | — | | $ | 2,208,793 | |
MASTER LIMITED PARTNERSHIP | | | | | | | | | |
Financials | | 58,837,741 | | 58,837,741 | | — | | — | |
PREFERRED STOCKS | | | | | | | | | |
Consumer Discretionary | | 3,022,748 | | — | | — | | 3,022,748 | |
Health Care | | 7,357,257 | | — | | — | | 7,357,257 | |
Information Technology | | 9,845,416 | | — | | — | | 9,845,416 | |
TOTAL PREFERRED STOCKS | | $ | 20,225,421 | | — | | — | | $ | 20,225,421 | |
REAL ESTATE INVESTMENT TRUST | | | | | | | | | |
Financials | | 68,425,984 | | 68,425,984 | | — | | — | |
TOTAL INVESTMENTS IN SECURITIES | | $ | 4,614,958,401 | | $ | 4,592,524,187 | | — | | $ | 22,434,214 | |
103
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Alger Spectra Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
SECURITIES SOLD SHORT | | | | | | | | | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | $ | 50,482,803 | | $ | 50,482,803 | | — | | — | |
Energy | | 14,604,174 | | 14,604,174 | | — | | — | |
Financials | | 13,930,532 | | 13,930,532 | | — | | — | |
Health Care | | 26,792,241 | | 26,792,241 | | — | | — | |
Industrials | | 47,801,764 | | 47,801,764 | | — | | — | |
Information Technology | | 83,030,764 | | 83,030,764 | | — | | — | |
Materials | | 7,758,233 | | 7,758,233 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 244,400,511 | | $ | 244,400,511 | | — | | — | |
Alger Green Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | 17,061,450 | | 17,059,387 | | — | | 2,063 | |
Consumer Staples | | 5,244,873 | | 5,244,873 | | — | | — | |
Financials | | 1,453,478 | | 1,453,478 | | — | | — | |
Health Care | | 4,191,105 | | 4,191,105 | | — | | — | |
Industrials | | 17,725,597 | | 17,725,597 | | — | | — | |
Information Technology | | 23,916,527 | | 23,916,527 | | — | | — | |
Materials | | 2,800,386 | | 2,800,386 | | — | | — | |
Utilities | | 3,513,006 | | 3,513,006 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 75,906,422 | | $ | 75,904,359 | | — | | $ | 2,063 | |
PREFERRED STOCKS | | | | | | | | | |
Consumer Discretionary | | 57,589 | | — | | — | | 57,589 | |
TOTAL INVESTMENTS IN SECURITIES | | $ | 75,964,011 | | $ | 75,904,359 | | — | | $ | 59,652 | |
Alger Analyst Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | 2,457,260 | | 2,457,260 | | — | | — | |
Consumer Staples | | 255,273 | | 255,273 | | — | | — | |
Energy | | 454,310 | | 454,310 | | — | | — | |
Financials | | 389,915 | | 389,915 | | — | | — | |
Health Care | | 1,315,670 | | 1,315,670 | | — | | — | |
Industrials | | 1,221,490 | | 1,221,490 | | — | | — | |
Information Technology | | 1,767,040 | | 1,767,040 | | — | | — | |
Materials | | 387,873 | | 387,873 | | — | | — | |
Telecommunication Services | | 179,930 | | 179,930 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 8,428,761 | | $ | 8,428,761 | | — | | — | |
MASTER LIMITED PARTNERSHIP | | | | | | | | | |
Energy | | 107,129 | | 107,129 | | — | | — | |
Financials | | 80,143 | | 80,143 | | — | | — | |
TOTAL MASTER LIMITED PARTNERSHIP | | $ | 187,272 | | $ | 187,272 | | — | | — | |
104
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Alger Analyst Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
REAL ESTATE INVESTMENT TRUST | | | | | | | | | |
Financials | | $ | 54,376 | | $ | 54,376 | | — | | — | |
TOTAL INVESTMENTS IN SECURITIES | | $ | 8,670,409 | | $ | 8,670,409 | | — | | — | |
Alger Dynamic Opportunities Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | 9,206,777 | | 9,206,777 | | — | | — | |
Consumer Staples | | 1,708,827 | | 1,708,827 | | — | | — | |
Energy | | 3,085,610 | | 3,085,610 | | — | | — | |
Financials | | 2,959,608 | | 2,959,608 | | — | | — | |
Health Care | | 15,014,018 | | 15,014,018 | | — | | — | |
Industrials | | 3,148,868 | | 3,148,868 | | — | | — | |
Information Technology | | 16,669,108 | | 16,629,142 | | — | | 39,966 | |
Materials | | 573,107 | | 573,107 | | — | | — | |
Utilities | | 432,850 | | 432,850 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 52,798,773 | | $ | 52,758,807 | | — | | $ | 39,966 | |
MASTER LIMITED PARTNERSHIP | | | | | | | | | |
Energy | | 880,301 | | 880,301 | | — | | — | |
Financials | | 1,258,263 | | 1,258,263 | | — | | — | |
TOTAL MASTER LIMITED PARTNERSHIP | | $ | 2,138,564 | | $ | 2,138,564 | | — | | — | |
PREFERRED STOCKS | | | | | | | | | |
Health Care | | 447,520 | | — | | 320,069 | | 127,451 | |
Information Technology | | 186,735 | | — | | — | | 186,735 | |
TOTAL PREFERRED STOCKS | | $ | 634,255 | | — | | $ | 320,069 | | $ | 314,186 | |
RIGHTS | | | | | | | | | |
Health Care | | 25,932 | | — | | — | | 25,932 | |
TOTAL INVESTMENTS IN SECURITIES | | $ | 55,597,524 | | $ | 54,897,371 | | $ | 320,069 | | $ | 380,084 | |
SECURITIES SOLD SHORT | | | | | | | | | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | 2,163,181 | | 2,163,181 | | — | | — | |
Consumer Staples | | 175,656 | | 175,656 | | — | | — | |
Energy | | 741,741 | | 741,741 | | — | | — | |
Financials | | 1,750,536 | | 1,750,536 | | — | | — | |
Health Care | | 1,751,089 | | 1,751,089 | | — | | — | |
Industrials | | 1,559,735 | | 1,559,735 | | — | | — | |
Information Technology | | 4,143,469 | | 4,143,469 | | — | | — | |
Market Indices | | 650,715 | | 650,715 | | — | | — | |
Materials | | 619,426 | | 619,426 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 13,555,548 | | $ | 13,555,548 | | — | | — | |
105
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Alger Emerging Markets Fund | | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
COMMON STOCKS | | | | | | | | | |
Consumer Discretionary | | $ | 3,225,154 | | $ | 3,225,154 | | — | | — | |
Consumer Staples | | 1,897,839 | | 1,897,839 | | — | | — | |
Energy | | 948,150 | | 948,150 | | — | | — | |
Financials | | 5,051,384 | | 5,051,384 | | — | | — | |
Health Care | | 1,225,045 | | 1,225,045 | | — | | — | |
Industrials | | 2,746,648 | | 2,448,369 | | 298,279 | | — | |
Information Technology | | 5,060,502 | | 5,060,502 | | — | | — | |
Materials | | 1,328,542 | | 1,328,542 | | — | | — | |
Telecommunication Services | | 724,986 | | 724,986 | | — | | — | |
Utilities | | 826,581 | | 826,581 | | — | | — | |
TOTAL COMMON STOCKS | | $ | 23,034,831 | | $ | 22,736,552 | | $ | 298,279 | | — | |
PREFERRED STOCKS | | | | | | | | | |
Energy | | 143,971 | | 143,971 | | — | | — | |
TOTAL INVESTMENTS IN SECURITIES | | $ | 23,178,802 | | $ | 22,880,523 | | $ | 298,279 | | — | |
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Spectra Fund | | Common Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | (109,249 | ) |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 2,318,041 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 2,208,793 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | (109,249 | ) |
106
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Spectra Fund | | Preferred Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | 592,991 | |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 19,632,430 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 20,225,421 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | 592,991 | |
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Green Fund | | Common Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | 1,013 | |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 1,050 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 2,063 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | 1,013 | |
107
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Green Fund | | Preferred Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | (9,265 | ) |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 66,854 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 57,589 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | (9,265 | ) |
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Dynamic Opportunities Fund | | Common Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | (3,019 | ) |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 42,985 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 39,966 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | (3,019 | ) |
108
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
| | FAIR VALUE
MEASUREMENTS
USING SIGNIFICANT
UNOBSERVABLE
INPUTS (LEVEL 3) | |
Alger Dynamic Opportunities Fund | | Preferred Stocks | |
Opening balance at November 1, 2013 | | $ | — | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | 17,104 | |
Purchases, issuances, sales, and settlements | | | |
Purchases | | 297,083 | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 314,187 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | 17,104 | |
Alger Dynamic Opportunities Fund | | Rights | |
Opening balance at November 1, 2013 | | $ | 25,932 | |
Transfers into Level 3 | | — | |
Transfers out of Level 3 | | — | |
Total gains or losses | | | |
Included in net realized gain (loss) on investments | | — | |
Included in net unrealized gain (loss) on investments | | — | |
Purchases, issuances, sales, and settlements | | | |
Purchases | | — | |
Issuances | | — | |
Sales | | — | |
Settlements | | — | |
Closing balance at October 31, 2014 | | $ | 25,932 | |
The amount of total gains or losses for the period included in net realized and unrealized gain (loss) attributable to change in unrealized appreciation (depreciation) relating to investments still held at 10/31/2014 | | $ | 0 | |
The following table provides quantitative information about our Level 3 fair value measurements of our investments as of October 31, 2014. In addition to the techniques and inputs noted in the table below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The table below is not intended to be all-inclusive, but rather provides information on the Level 3 inputs as they relate to our fair value measurements.
109
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Financial Asset | | Fair Value as of
October 31, 2014 | | Valuation
Technique | | Unobservable
Input | | Range | |
Alger Spectra Fund | | | | | | | | | |
Common Stocks | | $ | 101,626 | | Market Approach | | Revenue Multiple EBITDA Multiple | | 1.8x to 2.8x 11.7x to 32.1x | |
Common Stocks | | $ | 2,107,166 | | Income Approach | | Discount Rate | | 10% | |
Preferred Stocks | | $ | 3,022,748 | | Market Approach | | Revenue Multiple EBITDA Multiple | | 1.8x to 2.8x 11.7x to 32.1x | |
Preferred Stocks | | $ | 17,202,673 | | Income Approach | | Discount Rate | | 10% | |
Alger Green Fund | | | | | | | | | |
Common Stocks | | $ | 2,063 | | Market Approach | | Revenue Multiple EBITDA Multiple | | 1.8x to 2.8x 11.7x to 32.1x | |
Preferred Stocks | | $ | 57,589 | | Market Approach | | Revenue Multiple EBITDA Multiple | | 1.8x to 2.8x 11.7x to 32.1x | |
Alger Dynamic Opportunities Fund | | | | | | | | | |
Common Stocks | | $ | 39,966 | | Income Approach | | Discount Rate | | 10% | |
Preferred Stocks | | $ | 314,186 | | Income Approach | | Discount Rate | | 10% | |
Rights | | $ | 25,932 | | Transaction Cost | | Probability of Success | | 0% - 44% | |
The significant unobservable inputs used in the fair value measurement of the company’s securities are revenue and EBITDA multiples, discount rates, and the probabilities of success of certain outcomes. Significant increases and decreases in these inputs in isolation and interrelationships between those inputs could result in significantly higher or lower fair value measurements as noted in the table above.
On October 31, 2014, the Alger Emerging Markets Fund transferred $298,279 from Level 1 to Level 2, utilizing fair value adjusted prices rather than exchange listed prices.
Certain of the Fund’s assets and liabilities are held at carrying amount or face value, which approximates fair value for financial statement purposes. As of October 31, 2014, such assets are categorized within the disclosure hierarchy as follows:
110
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
| | TOTAL FUND | | LEVEL 1 | | LEVEL 2 | | LEVEL 3 | |
Cash, Foreign cash and Cash equivalents: | | | | | | | | | |
Alger Spectra Fund | | $ | 113,263,993 | | $ | 113,263,993 | | — | | — | |
Alger Green Fund | | 2,517,336 | | 2,517,336 | | — | | — | |
Alger Analyst Fund | | 139,784 | | 139,784 | | — | | — | |
Alger Dynamic Opportunities Fund | | 39,460,125 | | 39,460,125 | | — | | — | |
Alger Emerging Markets Fund | | 1,070,655 | | 1,070,655 | | — | | — | |
Receivable for interfund loans: | | | | | | | | | |
Alger Spectra Fund | | $ | 730,000 | | $ | — | | $ | 730,000 | | — | |
Total | | $ | 157,181,893 | | $ | 156,451,893 | | $ | 730,000 | | — | |
NOTE 9 — Derivatives:
Financial Accounting Standards Board Accounting Standards Codification 815 — Derivatives and Hedging (“ASC 815”) requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements.
Forward currency contracts—In connection with portfolio purchases and sales of securities denominated in foreign currencies, the Funds may enter into forward currency contracts. Additionally, each Fund may enter into such contracts to economically hedge certain other foreign currency denominated investments. These contracts are valued at the current cost of covering or offsetting such contracts, and the related realized and unrealized foreign exchange gains and losses are included in the Statement of Operations. In the event that counterparties fail to settle these currency contracts or the related foreign security trades, a Fund could be exposed to foreign currency fluctuations.
Options—The Funds seek to capture the majority of the returns associated with equity market investments. To meet this investment goal, the Funds invest in a broadly diversified portfolio of common stocks, while also buying and selling call and put options on equities and equity indices. The Funds purchase call options to increase their exposure to the stock market and also provide diversification of risk. The Funds purchase put options in order to protect from significant market declines that may occur over a short period of time. The Funds will write covered call and cash secured put options to generate cash flows while reducing the volatility of the Funds’ portfolios. The cash flows may be an important source of the Funds’ returns, although written call options may reduce the Funds’ ability to profit from increases in the value of the underlying security or equity portfolio. The value of a call option generally increases as the price of the underlying stock increases and decreases as the stock decreases in price. Conversely, the value of a put option generally increases as the price of the underlying stock decreases and decreases as the stock increases in price. The combination of the diversified stock portfolio and the purchase and sale of options is intended to provide the Funds with the majority of the returns associated with equity market investments but with reduced volatility and returns that are augmented with the cash flows from the sale of options. During the year ended October 31, 2014, options were used in accordance with these objectives.
111
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
The Funds’ option contracts were not subject to any rights of offset with any counterparty. All of the Portfolios’ options were exchange traded which utilize a clearing house that acts as an intermediary between buyer and seller, receiving initial and maintenance margin from both, and guaranteeing performance of the option contract.
There were no derivative transactions outstanding for the year ended October 31, 2014.
For the year ended October 31, 2014, Alger Dynamic Opportunities Fund had option purchases of $335,455 and option sales of $610,130. The effect of derivative instruments on the Statement of Operations for the year ended October 31, 2014, is as follows:
NET REALIZED GAIN ON INVESTMENTS, OPTIONS
Alger Dynamic Opportunities Fund
Derivatives not accounted for as hedging instruments | | Options | |
Purchased Options | | $ | 274,674 | |
Total | | $ | 274,674 | |
NOTE 10— Affiliated Securities:
The securities listed below are deemed to be affiliate of the Funds because the Funds or affiliates owned 5% or more of the company’s voting securities during all or part of the year ended October 31, 2014. Purchase and sale transactions and dividend income earned during the year were as follows:
Security | | Shares/Par
at
October 31,
2013 | | Purchases/
Conversion | | Sales/
Conversion | | Shares/Par
at
October
31, 2014 | | Dividend
Income | | Realized
Gain
(Loss) | | Value at
October
31, 2014 | |
| | | | | | | | | | | | | | | |
Alger Spectra Fund | | | | | | | | | | | | | | | |
Common Stocks | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 178,292 | | — | | 178,292 | | — | | — | | $ | 101,626 | |
Preferred Stocks | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 5,303,067 | | — | | 5,303,067 | | — | | — | | $ | 3,022,748 | |
Convertible Notes | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 1,178,859 | | (1,178,859 | ) | — | | — | | — | | — | |
| | | | | | | | | | | | | | | |
Alger Green Fund | | | | | | | | | | | | | | | |
Common Stocks | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 3,619 | | — | | 3,619 | | — | | — | | $ | 2,063 | |
Preferred Stocks | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 101,034 | | — | | 101,034 | | — | | — | | $ | 57,589 | |
Convertible Notes | | | | | | | | | | | | | | | |
Choicestream, Inc.* | | — | | 23,935 | | (23,935 | ) | — | | — | | — | | — | |
112
THE ALGER FUNDS II
NOTES TO FINANCIAL STATEMENTS (Continued)
Security | | Shares/Par
at
October 31,
2013 | | Purchases/
Conversion | | Sales/
Conversion | | Shares/Par
at
October
31, 2014 | | Dividend
Income | | Realized
Gain
(Loss) | | Value at
October
31, 2014 | |
| | | | | | | | | | | | | | | |
Alger Dynamic Opportunities Fund | | | | | | | | | | | | | | | |
Common Stocks | | | | | | | | | | | | | | | |
Preferred Stocks | | | | | | | | | | | | | | | |
Tolero Pharmaceuticals, Inc.* | | — | | 106,120 | | — | | 106,120 | | — | | — | | $ | 320,069 | |
| | | | | | | | | | | | | | | | |
* Non-income producing security.
NOTE 11 — Subsequent Events:
Management of each Fund has evaluated events that have occurred subsequent to October 31, 2014 through the issuance date of the Financial Statements. No such events have been identified which require recognition and disclosure.
113
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of the Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund, and Alger Emerging Markets Fund, and the Board of Trustees of The Alger Funds II:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of The Alger Funds II, comprised of the Alger Spectra Fund, Alger Green Fund, Alger Analyst Fund, Alger Dynamic Opportunities Fund, and Alger Emerging Markets Fund (the “Funds”) as of October 31, 2014, 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 periods presented. 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.
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. The Funds are not required to have, nor were we engaged to perform, an audit of their 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, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2014, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the portfolios constituting The Alger Funds II as of October 31, 2014, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
New York, New York
December 23, 2014
114
THE ALGER FUNDS II
ADDITIONAL INFORMATION (Unaudited)
Shareholder Expense Example
As a shareholder of a Fund, you incur two types of costs: transaction costs, if applicable, including sales charges (loads) and redemption fees; 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, 2014 and ending October 31, 2014.
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, such as sales charges (loads) and redemption fees. 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.
115
| | | | Beginning
Account
Value
May 1, 2014 | | Ending
Account
Value
October 31, 2014 | | Expenses
Paid During
the Six Months
Ended
October 31, 2014(a) | | Annualized
Expense Ratio
For the
Six Months
Ended
October 31, 2014(b) | |
Alger Spectra Fund | | | | | | | | | |
Class A | | Actual | | $ | 1,000.00 | | $ | 1,104.50 | | $ | 8.06 | | 1.52 | % |
| | Hypothetical(c) | | 1,000.00 | | 1,017.54 | | 7.73 | | 1.52 | |
Class C | | Actual | | 1,000.00 | | 1,100.12 | | 12.02 | | 2.27 | |
| | Hypothetical(c) | | 1,000.00 | | 1,013.76 | | 11.52 | | 2.27 | |
Class I | | Actual | | 1,000.00 | | 1,104.93 | | 7.96 | | 1.50 | |
| | Hypothetical(c) | | 1,000.00 | | 1,017.64 | | 7.63 | | 1.50 | |
Class Z | | Actual | | 1,000.00 | | 1,106.59 | | 6.53 | | 1.23 | |
| | Hypothetical(c) | | 1,000.00 | | 1,019.00 | | 6.26 | | 1.23 | |
| | | | | | | | | | | |
Alger Green Fund | | | | | | | | | |
Class A | | Actual | | $ | 1,000.00 | | $ | 1,050.57 | | $ | 6.87 | | 1.33 | % |
| | Hypothetical(c) | | 1,000.00 | | 1,018.50 | | 6.77 | | 1.33 | |
Class C | | Actual | | 1,000.00 | | 1,046.87 | | 10.78 | | 2.09 | |
| | Hypothetical(c) | | 1,000.00 | | 1,014.67 | | 10.61 | | 2.09 | |
Class I | | Actual | | 1,000.00 | | 1,050.69 | | 6.72 | | 1.30 | |
| | Hypothetical(c) | | 1,000.00 | | 1,018.65 | | 6.61 | | 1.30 | |
| | | | | | | | | | | |
Alger Analyst Fund | | | | | | | | | |
Class A | | Actual | | $ | 1,000.00 | | $ | 1,075.12 | | $ | 6.80 | | 1.30 | % |
| | Hypothetical(c) | | 1,000.00 | | 1,018.65 | | 6.61 | | 1.30 | |
Class C | | Actual | | 1,000.00 | | 1,072.07 | | 10.18 | | 1.95 | |
| | Hypothetical(c) | | 1,000.00 | | 1,015.38 | | 9.91 | | 1.95 | |
Class I | | Actual | | 1,000.00 | | 1,075.18 | | 6.80 | | 1.30 | |
| | Hypothetical(c) | | 1,000.00 | | 1,018.65 | | 6.61 | | 1.30 | |
| | | | | | | | | | | |
Alger Dynamic Opportunities Fund | | | | | | | | | |
Class A | | Actual | | $ | 1,000.00 | | $ | 1,060.18 | | $ | 12.77 | | 2.46 | % |
| | Hypothetical(c) | | 1,000.00 | | 1,012.80 | | 12.48 | | 2.46 | |
Class C | | Actual | | 1,000.00 | | 1,055.88 | | 16.74 | | 3.23 | |
| | Hypothetical(c) | | 1,000.00 | | 1,008.92 | | 16.36 | | 3.23 | |
Class Z | | Actual | | 1,000.00 | | 1,062.14 | | 11.33 | | 2.18 | |
| | Hypothetical(c) | | 1,000.00 | | 1,014.22 | | 11.07 | | 2.18 | |
116
| | | | Beginning
Account
Value
May 1, 2014 | | Ending
Account
Value
October 31, 2014 | | Expenses
Paid During
the Six Months
Ended
October 31, 2014(a) | | Annualized
Expense Ratio
For the
Six Months
Ended
October 31, 2014(b) | |
Alger Emerging Markets Fund | | | | | | | | | |
Class A | | Actual | | $ | 1,000.00 | | $ | 1,027.20 | | $ | 8.74 | | 1.70 | % |
| | Hypothetical(c) | | 1,000.00 | | 1,016.59 | | 8.69 | | 1.70 | |
Class C | | Actual | | 1,000.00 | | 1,023.28 | | 12.49 | | 2.45 | |
| | Hypothetical(c) | | 1,000.00 | | 1,012.85 | | 12.43 | | 2.45 | |
Class I | | Actual | | 1,000.00 | | 1,027.38 | | 8.74 | | 1.70 | |
| | Hypothetical(c) | | 1,000.00 | | 1,016.59 | | 8.69 | | 1.70 | |
Class Z | | Actual | | 1,000.00 | | 1,029.54 | | 6.39 | | 1.25 | |
| | Hypothetical(c) | | 1,000.00 | | 1,018.90 | | 6.36 | | 1.25 | |
| | | | | | | | | | | | | | |
(a) | Expenses are equal to the annualized expense ratio of the respective share class, multiplied by the average account value over the period, multiple by 184/365 (to reflect the one-half year period). |
(b) | Annualized. |
(c) | 5% annual return before expenses. |
Tax Information
In accordance with subchapter M of the Internal Revenue Code of 1986, as amended, for the year ended October 31, 2014, 45.56 % of the Alger Spectra Fund, 100% of the Alger Green Fund, 8.46% of the Alger Analyst Fund, and 14% of the Alger Dynamic Opportunities Fund’s dividends qualified for the dividends received deduction for corporations. For the year ended October 31, 2014, 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, 48.29% of the Alger Spectra Fund, 100% of the Alger Green Fund, 10.54% of the Alger Analyst Fund, and 16.19% of the Alger Dynamic Opportunities Fund’s dividend may be considered qualified dividend income.
Shareholders should not use the above information to prepare their tax returns. Since the Fund’s fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2014. Such notification, which will reflect the amount to be used by tax payers on their federal income tax returns, will be made in conjunction with Form 1099 DIV and will be mailed in January 2015. Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in the Fund.
Trustees and Officers of the Trust
Information about the trustees and officers of the Trust is set forth below. In the table the term “Alger Fund Complex” refers to the Trust, The Alger Portfolios, The Alger
117
Institutional Funds, Alger Global Growth Fund and The Alger Funds II, 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 360 Park Avenue South, New York, NY 10010.
118
Name, Age, Position with the
Fund | | Principal Occupations | | Trustee
and/or
Officer
Since | | Number of
Funds in
the Alger
Fund
Complex
which are
Overseen
by Trustee |
INTERESTED TRUSTEE | | | | | | |
| | | | | | |
Hilary M. Alger (53) | | Director of Development, Pennsylvania Ballet 2004-2013; Associate Director of Development, College of Arts and Sciences and Graduate School, University of Virginia 1999-2003. | | 2003 | | 25 |
| | | | | | |
NON-INTERESTED TRUSTEE | | | | | | |
| | | | | | |
Charles F. Baird, Jr. (61) | | Managing Partner of North Castle Partners, a private equity securities group; Chairman of Leiner Health Products, Enzymatic Therapy and Caleel & Hayden (skincare business); former Chairman of Elizabeth Arden Day Spas, Naked Juice, Equinox (fitness company) and EAS (manufacturer of nutritional products). Formerly Managing Director of AEA Investors, Inc. | | 2000 | | 25 |
| | | | | | |
Roger P. Cheever (69) | | Associate Vice President for Principal Gifts, and Senior Associate Dean for Development in the Faculty of Arts and Sciences at Harvard University; Formerly Deputy Director of the Harvard College Fund. | | 2000 | | 25 |
| | | | | | |
Lester L. Colbert Jr. (80) | | Private investor since 1988; Formerly Chairman of the Board, President and Chief Executive Officer of Xidex Corporation (manufacturer of computer information media). | | 2000 | | 25 |
| | | | | | |
Stephen E. O’Neil (82) | | Attorney. Private Investor since 1981. Formerly of Counsel to the law firm of Kohler & Barnes. | | 1986 | | 25 |
| | | | | | |
David Rosenberg (52) | | Associate Professor of Law since January 2006 (Assistant Professor 2000-2005), Zicklin School of Business, Baruch College, City University of New York. | | 2007 | | 25 |
| | | | | | |
Nathan E. Saint-Amand M.D. (77) | | Medical doctor in private practice; Member of the Board of the Manhattan Institute (non-profit policy research) since 1988; Formerly Co-Chairman, Special Projects Committee, Memorial Sloan Kettering. | | 1986 | | 25 |
Ms. Alger is an “interested person” (as defined in the Investment Company Act) of the Fund because of her affiliations with Alger Management. No Trustee is a director of any public company except as indicated under “Principal Occupations”.
119
Name, Age, Position with the
Fund | | Principal Occupations | | Trustee
and/or
Officer
Since | | Number of
Funds in
the Alger
Fund
Complex
which are
Overseen
by Trustee |
OFFICERS | | | | | | |
| | | | | | |
Hal Liebes (50) President | | Executive Vice President, Chief Operating Officer, Chief Legal Officer and Secretary of Alger Management and Alger Inc.; Director since 2006 of Alger Management, Alger Inc. and Resources. | | 2005 | | N/A |
| | | | | | |
Lisa A. Moss (49) Secretary | | Senior Vice President since 2009, and Vice President and Assistant General Counsel of Alger Management June 2006. | | 2006 | | N/A |
| | | | | | |
Michael D. Martins (49) Treasurer | | Senior Vice President of Alger Management; Assistant Treasurer since 2004. | | 2005 | | N/A |
| | | | | | |
Anthony S. Caputo (59) Assistant Treasurer | | Employed by Alger Management since 1986, currently serving as Vice President. | | 2007 | | N/A |
| | | | | | |
Sergio M. Pavone (53) Assistant Treasurer | | Employed by Alger Management since 2002, currently serving as Vice President. | | 2007 | | N/A |
| | | | | | |
Patrick J. Murphy (44) Chief Compliance Officer | | Senior Vice President of Alger Management since 2014. | | 2014 | | N/A |
| | | | | | |
Joshua M. Lindauer (27) Assistant Secretary | | Employed by Alger Management since 2014. | | 2014 | | N/A |
The Statement of Additional Information contains additional information about the Fund’s Trustees and is available without charge upon request by calling (800) 992-3863.
120
Investment Management Agreement Renewal
At an in-person meeting held on September 18, 2014, the Trustees, including the Independent Trustees, unanimously approved renewal of the Investment Advisory Agreement (the “Agreement”) between the Trust and Fred Alger Management, Inc. (“Alger Management”). The Independent Trustees were assisted in their review by independent legal counsel and met with such counsel in executive session separate from representatives of Alger Management.
In evaluating the Agreement, the Trustees drew on materials that they had requested and which were provided to them in advance of the meeting by Alger Management and by counsel. The materials covered, among other matters, (i) the nature, extent and quality of the services provided by Alger Management under the Agreement, (ii) the investment performance of each of the Trust’s portfolios (each a “Fund”), (iii) the costs to Alger Management of its services and the profits realized by Alger Management and Fred Alger & Company, Incorporated (“Alger Inc.”), from their relationship with the Trust, and (iv) the extent to which economies of scale would be realized if and as the Funds grow and whether the fee levels in the Agreement reflect such economies of scale. These materials included a presentation and analysis of the Funds and Alger Management’s services by FUSE Research Network LLC (“FUSE”), an independent consulting firm selected by the Trust’s Chief Compliance Officer and having no other material relationship with Alger Management or its affiliates.
In deciding whether to approve renewal of the Agreement, the Trustees considered various factors, including those enumerated above. They also considered other direct and indirect benefits to Alger Management 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 Alger Management pursuant to the Agreement, 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 (derived in part from periodic meetings with and presentations by investment management and Fund distribution personnel), and the materials provided at the meeting. They noted that under the Agreement, Alger Management is responsible for managing the investment operations of the Funds. The Trustees reviewed the background and experience of Alger Management’s senior investment management personnel, including the individuals currently responsible for the investment operations of the Funds. They also considered the resources and practices of Alger Management in managing each Fund’s portfolio, as well as Alger Management’s overall investment management business. They noted especially Alger Management’s established expertise in managing portfolios of “growth” stocks and that, according to an analysis provided by FUSE, the characteristics of each Fund had been consistent with those of a fund that holds itself out to investors as growth-oriented. They further noted that Alger Management’s investment management team includes several individuals with deep and successful backgrounds in international investing, a sector in which the Emerging Markets Fund is active, and that during the year Alger Management had increased the number of experienced investment management personnel providing services to the Funds by almost 30 percent. The Trustees concluded
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that Alger Management’s experience, resources and strength in the areas of importance to the Funds are considerable. The Trustees considered the level and depth of Alger Management’s ability to execute portfolio transactions to effect investment decisions, including those through Alger Inc. They also noted that certain administrative, compliance, reporting and accounting services necessary for the conduct of the Trust’s affairs are provided separately under an Administration Agreement and a Shareholder Administrative Services Agreement with Alger Management. The Trustees also considered the control and compliance environment at Alger Management and within the Trust.
Investment Performance of the Funds. Drawing upon information provided at the meeting by Alger Management as well as FUSE and upon reports provided to the Trustees by Alger Management throughout the preceding year, the Trustees reviewed each Fund’s returns for the year-to-date (at 6/30/14), second-quarter of 2014, 1-, 3- and 5-year and longer periods to the extent available (and its year-by-year returns), together with supplemental performance data through 8/31/14, and compared them with benchmark and peer-group data for the same periods. They noted that the materials showed Spectra Fund had exceeded its peer medians for all reported periods, with only isolated shortfalls in certain periods against its benchmark. The Dynamic Opportunities Fund also achieved strong results against its peer medians in the 2014 second-quarter, year-to-date and one-year periods, with similar success against its benchmark (except as measured in the year to date), thus demonstrating improvement from earlier periods. By contrast, the Green Fund underperformed both peer medians and benchmark for the 2014 second-quarter, year-to-date and 1-year periods (and for 3 and 5 years), as did the Analyst Fund except for a positive 3-year rating against its peers by virtue of good results in 2013 and 2012. The Emerging Markets Fund showed superior performance against peers and benchmark for the 1- and 3-year periods but registered shortfalls against peers and benchmark for the more recent 2014 second quarter and year to date. Representatives of Alger Management discussed with the Trustees the recent performance of each Fund and the measures that the firm was in the process of instituting or had instituted to improve the performance of Funds that had underperformed. On the basis of these discussions and their review, the Trustees determined that the performance of the Funds was acceptable.
Fund Fees and Expense Ratios; Profitability to Alger Management and its Affiliates. The Trustees reviewed each Fund’s management fee and expense ratio and compared them with those of a group of comparable funds. In order to assist the Trustees in this comparison, FUSE had provided the Trustees with comparative information with respect to the advisory fees and expense ratios of relevantly similar funds. That information indicated that the advisory fees for the Green Fund, Analyst Fund and Dynamic Opportunities Fund were at or below the median for their peers while those of the Emerging Markets Fund and Spectra Fund exceeded their medians (but not so far as to place the Fund in the top quartile of peer-fund fees). As to the latter two Funds, the Trustees noted that contractual expense-reimbursement commitments by Alger Management maintained the expense ratios of the Emerging Markets Fund at lower levels than they would otherwise reach, while the level of the Spectra Fund fee had been lowered by operation of an applicable fee breakpoint. Of the 17 expense ratios for the Funds’ various share classes, seven were below or at their peer medians and one more was just above the applicable median; of the remaining nine, only two placed in the top quartile of the applicable reference group, and both of these were for very small Fund
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classes which therefore suffered in comparison with their peers. Of the remaining seven ratios, five were also for comparatively small Fund classes, while two were of comparatively large classes of Spectra Fund; as to the latter two expense ratios, the Trustees noted that the shareholders of Spectra Fund had benefitted from consistently high returns relative to the Fund’s peers. The Trustees determined that this information should be taken into account in weighing the size of the fee against the nature, extent and quality of the services provided.
The Trustees also considered fees paid to Alger Management by four other types of clients, specifically mutual funds for which Alger Management was sub-adviser, separately managed institutional accounts, “wrap programs,” and collective investment trusts. The Trustees determined that in all four cases the fees were of doubtful relevance for purposes of comparison with those of the Funds because of the differences in services provided by Alger Management to those types of clients as opposed to the Funds, but that to the extent that meaningful comparison was practicable, the differences in services adequately explained the differences in the fees. The Trustees then considered the profitability of the Investment Advisory Agreement to Alger Management and its affiliates, and the methodology used by Alger Management in determining such profitability. The Trustees reviewed previously-provided data on each Fund’s profitability to Alger Management and its affiliates for the year ended June 30, 2014. After discussing with representatives of Alger Management and FUSE the expense-allocation practices 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 in each case that, to the extent that Alger Management’s and its affiliates’ relationships with the Fund had been profitable, the profit margin was not unacceptable.
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 Alger Management is likely to realize economies of scale in the management of each Fund at some point as (and if) it grows in size. In that connection, they noted that the advisory fee schedules in the Agreement include fee reductions for each Fund (other than the Alger Emerging Markets Fund) at specified Fund asset levels (“breakpoints”); these have the effect of lowering the Fund’s overall management fee as the Fund grows past a breakpoint, thus sharing with the Fund’s shareholders economies of scale achieved by Alger Management in managing the growing Fund. (The Emerging Markets Fund, with assets at 6/30/14 of less than $22 million and for which Alger Management was waiving some of its management fees, continued to be deemed too small realistically to merit the institution of fee breakpoints.)
Other Benefits to Alger Management. The Trustees considered whether Alger Management benefits in other ways from its relationship with the Trust. They noted that Alger Management maintains soft-dollar arrangements in connection with the Funds’ brokerage transactions, reports on which are regularly supplied to the Trustees at their quarterly meetings and summaries of which, listing soft-dollar commissions by Fund for the twelve months through June 30, 2014, had been included in the materials supplied prior to the meeting. The Trustees also noted that Alger Management receives fees from the Funds under the Administration Agreement and the Shareholder Administrative Services Agreement, and that Alger Inc. provides a considerable portion of the Funds’
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equity brokerage and receives shareholder servicing fees from the Funds as well. The Trustees had been provided with information regarding, and had considered, the administration fee, shareholder administrative services fee, brokerage and shareholder servicing fee benefits in connection with their review of the profitability to Alger Management and its affiliates of their relationships with the Funds. As to other benefits received, the Trustees decided that none were so significant as to render Alger Management’s fees excessive.
Conclusions and Determinations. At the conclusion of these discussions, each of the Independent Trustees expressed the opinion that he had been furnished with sufficient information to make an informed business decision with respect to renewal of the Investment Advisory Agreement. Based on its discussions and considerations as described above, the Board made the following conclusions and determinations in respect of each Fund:
· The Board concluded that the nature, extent and quality of the services provided to the Fund by Alger Management are adequate and appropriate.
· The Board determined that the Fund’s performance was acceptable.
· The Board concluded that the advisory fee paid to Alger Management by the Fund was reasonable in light of comparative performance and expense and advisory fee information, costs of the services provided and profits to be realized and benefits derived or to be derived by Alger Management and its affiliates from the relationship with the Fund. The Trustees noted in the case of certain Funds that Alger Management had voluntarily undertaken to cap Fund expenses through expense reimbursements and fee waivers, thus in effect lowering the fees it actually received from the Fund.
· With respect to each Fund other than the small Alger Emerging Markets Fund, the Board accepted Alger Management’s acknowledgement that economies of scale were likely to be achieved in the management of the Fund and determined that the fee breakpoints in the Agreement provided a means by which Alger Management would share the benefits of such economies with Fund shareholders.
The Board considered these conclusions and determinations and, without any one factor being dispositive, determined with respect to each Fund that renewal of the Investment Advisory Agreement was in the best interests of the Fund and its shareholders.
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Privacy Policy
U.S. Consumer Privacy Notice Rev. 01/2011 | | 3/31/11 |
FACTS | | WHAT DOES ALGER DO WITH YOUR PERSONAL INFORMATION? |
Why? | | Financial companies choose how they share your personal information, which, under Federal law, means personally identifiable information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
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What? | | The types of personal information we collect and share depend on the product or service you have with us. This information can include: · Social Security number · account balances, transaction history and credit information |
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How? | | All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Alger chooses to share; and whether you can limit this sharing. |
Reasons we can share your personal
information | | Does
Alger share? | | Can you limit
this sharing? |
For our everyday business purposes — such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus | | Yes | | No |
| | | | |
For our marketing purposes — with service providers we use to offer our products and services to you | | Yes | | No |
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For joint marketing with other financial companies | | No | | We don’t share |
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For our affiliates’ everyday business purposes—information about your transactions and experiences | | Yes | | No |
| | | | |
For our affiliates’ everyday business purposes—information about your creditworthiness | | No | | We don’t share |
| | | | |
For nonaffiliates to market to you — for all credit card accounts | | No | | We don’t share |
| | | | |
For nonaffiliates to market to you — for accounts and services endorsed by another organization | | No | | We don’t share |
| | | | |
For nonaffiliates to market to you — for accounts other than credit card accounts and Sponsored Accounts, such as insurance, investments, deposit and lending | | No | | We don’t share |
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Who we are | | |
| | |
Who is providing this notice? | | Alger includes Fred Alger Management, Inc. and Fred Alger & Company, Incorporated as well as the following funds: The Alger Funds, The Alger Funds II, The Alger Institutional Funds, The Alger Portfolios, and Alger Global Growth Fund. |
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What we do | | |
| | |
How does Alger protect my personal information? | | To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include computer safeguards and secured files and buildings. For more information visit alger.com. |
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How does Alger collect my personal information? | | We collect your personal information, for example, when you: · open an account or perform transactions · seek advice about your investments We also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
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Why can’t I limit all sharing? | | Federal law gives you the right to limit some but not all sharing related to: · sharing for affiliates’ everyday business purposes — information about your creditworthiness · affiliates from using your information to market to you · sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing. |
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Definitions | | |
| | |
Affiliates | | Companies related by common ownership or control. They can be financial and nonfinancial companies. · Our affiliates include Fred Alger Management, Inc. and Fred Alger & Company, Incorporated as well as the following funds: The Alger Funds, The Alger Funds II, The Alger Institutional Funds, The Alger Portfolios, and Alger Global Growth Fund. |
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Nonaffiliates | | Companies not related by common ownership or control. They can be financial and nonfinancial companies |
| | |
Joint marketing | | A formal agreement between nonaffiliated financial companies that together market financial products or services to you. |
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Proxy Voting Policies
A description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities and information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 are available, without charge, by calling (800) 992-3863 or online on the Funds’ website at www.alger.com or on the SEC’s website at www.sec.gov.
Fund Holdings
The Board of Trustees has adopted policies and procedures relating to disclosure of the Funds’ portfolio securities. These policies and procedures recognize that there may be legitimate business reasons for holdings to be disclosed and seek to balance those interests to protect the proprietary nature of the trading strategies and implementation thereof by the Funds.
Generally, the policies prohibit the release of information concerning portfolio holdings which have not previously been made public to individual investors, institutional investors, intermediaries that distribute the Funds’ shares and other parties which are not employed by the Manager or its affiliates except when the legitimate business purposes for selective disclosure and other conditions (designed to protect the Funds) are acceptable.
The Funds make their full holdings available semi-annually in shareholder reports filed on Form N-CSR and after the first and third fiscal quarters in regulatory filings on Form N-Q. These shareholder reports and regulatory filings are filed with the SEC, as required by federal securities laws, and are generally available within sixty (60) days of the end of the Funds’ fiscal quarter. The Funds’ Forms N-Q are available online on the SEC’s website at www.sec.gov or 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.
In addition, the Funds make publicly available their respective month-end top 10 holdings with a 15 day lag and their month-end full portfolios with a 60 day lag on their website www.alger.com and through other marketing communications (including printed advertising/sales literature and/or shareholder telephone customer service centers). No compensation or other consideration is received for the non-public disclosure of portfolio holdings information.
In accordance with the foregoing, the Funds provide portfolio holdings information to service providers who provide necessary or beneficial services when such service providers need access to this information in the performance of their services and are subject to duties of confidentiality (1) imposed by law, including a duty not to trade on non-public information, and/or (2) pursuant to an agreement that confidential information is not to be disclosed or used (including trading on such information) other than as required by law. From time to time, the Funds will communicate with these service providers to confirm that they understand the Funds’ policies and procedures regarding such disclosure. This agreement must be approved by the Funds’ Chief Compliance Officer, President or Secretary.
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The Board of Trustees periodically reviews a report disclosing the third parties to whom each Fund’s holdings information has been disclosed and the purpose for such disclosure, and it considers whether or not the release of information to such third parties is in the best interest of the Fund and its shareholders.
In addition to material the Funds routinely provide to shareholders, the Manager may, upon request, make additional statistical information available regarding the Funds. Such information will include, but not be limited to, relative weightings and characteristics of a Fund portfolios versus its peers or an index (such as P/E ratio, alpha, beta, capture ratio, standard deviation, EPS forecasts, Sharpe ratio, information ratio, R-squared, and market cap analysis), security specific impact on overall portfolio performance month-end top ten contributors to and detractors from performance, breakdown of High Unit Volume Growth holdings vs. Positive Lifecycle Change holdings, portfolio turnover, and requests of a similar nature. Please contact the Funds at (800) 992-3863 to obtain such information.
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THE ALGER FUNDS II
360 Park Avenue South
New York, NY 10010
(800) 992-3863
www.alger.com
Investment Manager
Fred Alger Management, Inc.
360 Park Avenue South
New York, NY 10010
Distributor
Fred Alger & Company, Incorporated
360 Park Avenue South
New York, NY 10010
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 Funds II. 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, risks, fees and expenses as well as other pertinent information.
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AFIIAR
ITEM 2. CODE OF ETHICS.
(a) The Registrant has adopted a code of ethics (the “Code of Ethics”) that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
(b) Not applicable.
(c) The Registrant has not amended its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(d) The Registrant has not granted a waiver or an implicit waiver from a provision of its Code of Ethics during the period covered by the shareholder report presented in Item 1 hereto.
(e) Not applicable.
(f) The Registrant’s Code of Ethics is attached as an Exhibit hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Trustees of the Registrant determined that Stephen E. O’Neil is an audit committee financial expert (within the meaning of that phrase specified in the instructions to Form N-CSR) on the Registrant’s audit committee. Mr. O’Neil is an “independent” trustee — i.e., he is not an interested person of the Registrant as defined in the Investment Company Act of 1940, nor has he accepted directly or indirectly any consulting, advisory or other compensatory fee from the Registrant, other than in his capacity as Trustee.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
a) Audit Fees:
October 31, 2014 | | $ | 135,500 | |
October 31, 2013 | | $ | 130,000 | |
b) Audit-Related Fees: NONE
c) Tax Fees for tax advice, tax compliance and tax planning:
October 31, 2014 | | $ | 27,250 | |
October 31, 2013 | | $ | 26,500 | |
d) All Other Fees:
October 31, 2014 | | $ | 9,760 | |
October 31, 2013 | | $ | 9,370 | |
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, 2014 | | $201,965, €67,800 | |
October 31, 2013 | | $190,902, €69,272, and £26,800 | |
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. 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 Funds II
By: | /s/Hal Liebes | |
| | |
| Hal Liebes | |
| | |
| President | |
| | |
Date: | December 19, 2014 | |
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/Hal Liebes | |
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| Hal Liebes | |
| | |
| President | |
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Date: | December 19, 2014 | |
| | |
By: | /s/Michael D. Martins | |
| | |
| Michael D. Martins | |
| | |
| Treasurer | |
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Date: | December 19, 2014 | |
