UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-1743
--------
Spectra Fund
------------
(Exact name of registrant as specified in charter)
111 Fifth Avenue, New York, New York 10003
------------------------------------------
(Address of principal executive offices) (Zip code)
MR. GREGORY S. DUCH
FRED ALGER MANAGEMENT, INC.
111 FIFTH AVENUE
NEW YORK, NY 10003
------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-806-8800
Date of fiscal year end: October 31
Date of reporting period: April 30, 2003
Item 1. REPORTS TO STOCKHOLDERS
SPECTRA FUND
SEMI-ANNUAL REPORT
APRIL 30, 2003
(UNAUDITED)
[Graphic Omitted]
Dear Shareholders,
June 16, 2003
Slow, steady economic growth; reliable consumers; tentative corporations;
and war. That is the short answer to the question: what happened during the six
months ended April 30? The last two months of 2002 saw the equity markets
recover from their lows of October 9, though a significant portion of those
gains were in technology stocks and were then given up in the first weeks of
2003 because the fundamentals had not yet improved.
However, throughout this period, the economy remained in a steady growth
pattern. It was not a dramatic period. Consumer spending accounted for most of
the economic growth. Consumers were aided by historically low interest rates,
already well below 4% on the 10-year note by April and continually decreasing
thereafter. Low rates led to another wave of mortgage refinancing, which put
more money in people's pockets. That refinancing boom, combined with increased
federal spending, tax cuts, and a Federal Reserve that has kept short-term rates
very low, buoyed consumer spending during a time of weak employment, tentative
companies, and tumultuous international affairs.
A cold and snowy February of 2003 combined with rising tension and concern
about Iraq dampened economic activity across the board. Consumers pared back
purchases on certain items, and companies were loathe to undertake capital
expenditures ahead of the war. As a result, the economy grew at an annual rate
of less than 2% for the first quarter of 2003. However, when it became clear in
early March that war was inevitable, the markets rallied. It is often said that
the markets hate uncertainty. The rally that began in March was certainly a
testament to that notion. The markets seesawed during the uncertain first days
of the war, but then resumed their upward movement as Saddam Hussein's regime
crumbled. The result was that from November 1, 2002 through April 30, 2003, the
Dow rose 2.1%, the S&P 500 was up 4.5%, and the NASDAQ gained 10.1%.
Now, for the first time in over two years, Wall Street has begun to look
to the future. Companies that can show healthy balance sheets and an ability to
improve productivity and expand their businesses are becoming attractive to
investors. That is as it should be, but it has not been the case for quite a
while. The markets and the country in general are beginning to emerge from two
years that included a recession, terrorism, war, and corporate scandals.
Sentiment has slowly been shifting away from fear and toward guarded hope. That
shift should lead to support for higher levels for the equity markets. That does
not mean a return to irrational exuberance, but it does mean a more balanced
market where good companies and good stock picking are rewarded.
Respectfully submitted,
/s/ Dan C. Chung
----------------
Dan C. Chung
Chief Investment Officer
SPECTRA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
April 30, 2003
SHARES COMMON STOCKS--99.7% VALUE
-------- -------
BANKS--1.7%
162,200 Mellon Financial Corporation $ 4,290,190
-----------
BIOTECHNOLOGY--7.5%
172,000 Amgen Inc.* 10,545,320
108,300 Genzyme Corp.--General Division* 4,362,324
78,100 Gilead Sciences, Inc. * 3,603,534
-----------
18,511,178
-----------
COMMERCIAL SERVICES & SUPPLIES--1.0%
46,100 Apollo Group, Inc. Cl. A* 2,498,574
-----------
COMMUNICATION EQUIPMENT--4.7%
414,500 CIENA Corporation* 2,018,615
382,400 Cisco Systems, Inc.* 5,751,296
389,500 Juniper Networks, Inc.*+ 3,980,690
-----------
11,750,601
-----------
COMPUTERS & PERIPHERALS--3.6%
584,600 EMC Corporation* 5,314,014
278,700 Network Appliance, Inc.* 3,701,136
-----------
9,015,150
-----------
DIVERSIFIED FINANCIALS--6.4%
225,600 Citigroup Inc. 8,854,800
123,300 Merrill Lynch & Co., Inc. 5,061,465
16,420 SLM Corporation 1,839,040
-----------
15,755,305
-----------
ENERGY EQUIPMENT & SERVICES--1.8%
202,700 Halliburton Company 4,339,807
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--4.9%
50,400 Alcon, Inc.* 2,220,120
44,700 Boston Scientific Corporation* 1,924,335
87,100 Guidant Corporation* 3,396,029
100,295 Zimmer Holdings, Inc.* 4,703,835
-----------
12,244,319
-----------
HOTELS, RESTAURANTS & LEISURE--.8%
88,100 Starbucks Corporation* 2,069,469
-----------
INDUSTRIAL CONGLOMERATES--4.1%
344,300 General Electric Company 10,139,635
-----------
INSURANCE--2.6%
55,600 AFLAC Incorporated 1,818,676
80,600 American International Group, Inc. 4,670,770
-----------
6,489,446
-----------
INTERNET & CATALOG RETAIL--3.5%
46,100 Amazon.com, Inc.* 1,321,687
79,800 eBay Inc.*+ 7,403,046
-----------
8,724,733
-----------
INTERNET SOFTWARE & SERVICES--1.8%
180,900 Yahoo! Inc.* 4,482,702
-----------
2
SPECTRA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
April 30, 2003
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
INVESTMENT TRUST--3.0%
75,000 iShares Russell 2000 Growth Index Fund $ 3,163,500
75,000 iShares Russell Midcap Growth Index Fund+ 4,158,750
-----------
7,322,250
-----------
MACHINERY--.8%
27,000 Danaher Corporation 1,862,460
-----------
MEDIA--5.7%
310,100 AOL Time Warner Inc.* 4,242,168
106,800 Comcast Corporation Cl. A* 3,407,988
333,500 Liberty Media Corporation Series A* 3,668,500
62,400 Viacom Inc. Cl. B* 2,708,784
-----------
14,027,440
-----------
MULTILINE RETAIL--1.8%
77,855 Wal-Mart Stores, Inc. 4,384,794
-----------
PERSONAL PRODUCTS--1.3%
105,600 Gillette Company 3,215,520
-----------
PHARMACEUTICALS--13.1%
74,800 Allergan, Inc. 5,254,700
89,800 Barr Laboratories, Inc.* 4,992,880
44,800 Johnson & Johnson 2,524,928
134,700 Merck & Co., Inc. 7,836,846
169,880 Pfizer Inc. 5,223,810
76,000 Teva Pharmaceutical Industries Ltd. ADR+ 3,549,200
72,950 Wyeth 3,175,513
-----------
32,557,877
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS--8.3%
143,000 Broadcom Corporation Cl. A* 2,558,270
328,000 Intersil Corporation Cl. A*+ 6,068,000
80,800 KLA-Tencor Corporation*+ 3,312,800
90,400 Maxim Integrated Products, Inc. 3,551,816
185,600 Micron Technology, Inc.* 1,577,600
182,100 National Semiconductor Corporation* 3,410,733
-----------
20,479,219
-----------
SOFTWARE--9.6%
436,600 Microsoft Corporation 11,163,862
801,500 Oracle Corporation* 9,521,820
141,750 VERITAS Software Corporation* 3,119,918
-----------
23,805,600
-----------
SPECIALTY RETAIL--9.1%
256,700 Abercrombie & Fitch Co. Cl. A * 8,440,296
131,900 Best Buy Co., Inc.* 4,561,102
483,700 Gap, Inc. 8,043,931
48,100 Home Depot, Inc. 1,353,053
-----------
22,398,382
-----------
TEXTILES, APPAREL & LUXURY GOODS--1.3%
58,600 NIKE, Inc. Cl. B 3,136,858
-----------
3
SPECTRA FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
April 30, 2003
SHARES COMMON STOCKS (CONTINUED) VALUE
-------- -------
WIRELESS TELECOMMUNICATION SERVICES--1.3%
168,300 Vodafone Group PLC Sponsored ADR+ .................. $ 3,325,608
-----------
Total Common Stocks
(Cost $226,417,110) 246,827,117
-----------
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS--10.1%
----------
U.S. GOVERNMENT & AGENCY OBLIGATIONS--1.0%
$2,600,000 Federal National Mortgage Association, 1.25%, 5/1/03
(Cost $2,600,000) ................................ 2,600,000
-----------
SHARES
--------
OTHER SHORT-TERM INVESTMENTS--9.1%
22,446,362 Security Lending Quality Trust
(Cost $22,446,362)(b) ............................ 22,446,362
-----------
Total Short-Term Investments
(Cost $25,046,362) ............................... 25,046,362
-----------
Total Investments
(Cost $251,463,472)(a) ............................... 109.8% 271,873,479
Liabilities in Excess of Other Assets .................. (9.8) (24,213,398)
----- ------------
Net Assets ............................................. 100.0% $247,660,081
===== ============
- -----------
* Non-income producing security.
+ Securities Partially or Fully on Loan.
(a) At April 30, 2003, the net unrealized appreciation on investments, based on
cost for federal income tax purposes of $254,806,795, amounted to
$17,066,684 which consisted of aggregate gross unrealized appreciation of
$23,383,094 and aggregate gross unrealized depreciation of $6,316,410.
(b) Represents investment of cash collateral received for securities on loan.
See Notes to Financial Statements.
4
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5
SPECTRA FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
INCOME FROM
INVESTMENT OPERATIONS
---------------------
NET
REALIZED DISTRIBUTIONS
NET ASSET NET AND UNREALIZED TOTAL FROM
VALUE, INVESTMENT GAIN (LOSS) FROM NET
BEGINNING INCOME ON INVESTMENT REALIZED
OF PERIOD (LOSS) INVESTMENTS OPERATIONS GAINS
--------- ---------- ------------- ---------- ---------
SPECTRA FUND
CLASS A (i)
Six Months Ended
4/30/03 (ii)(iii) .. $ 4.76 $(0.04)(v) $0.28 $ 0.24 $ --
Year ended 10/31/02 6.32 (0.09)(v) (1.47) (1.56) --
Year ended 10/31/01 10.63 (0.08)(v) (3.60) (3.68) (0.63)
Four months ended
10/31/00(iii) ...... 12.28 (0.02) (1.63) (1.65) --
CLASS N (iv)
Six Months Ended
4/30/03(ii)(iii) ... $ 4.76 $(0.03)(v) $0.25 $ 0.22 $ --
Year ended 10/31/02 6.32 (0.09)(v) (1.47) (1.56) --
Year ended 10/31/01 10.63 (0.08)(v) (3.60) (3.68) (0.63)
Year ended 10/31/00 10.76 (0.08) 0.88 0.80 (0.93)
Year ended 10/31/99 6.65 (0.07) 4.22 4.15 (0.04)
Year ended 10/31/98 5.74 (0.02) 0.98 0.96 (0.05)
- -------------
(i) Initially offered July 1, 2000.
(ii) Unaudited.
(iii) Ratios have been annualized; total return has not been annualized.
(iv) Per share data has been adjusted to reflect the effect of a 3 for 1
stock split which occurred April 23, 1999.
(v) Amount was computed based on average shares outstanding during the
period.
(vi) Does not reflect the effect of any sales charge.
See Notes to Financial Statements.
6
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------
NET ASSETS, RATIO OF NET
END OF RATIO OF INVESTMENT
NET ASSET PERIOD EXPENSES INCOME (LOSS)
VALUE, END (000'S TO AVERAGE TO AVERAGE PORTFOLIO
OF PERIOD TOTAL RETURN OMITTED) NET ASSETS NET ASSETS TURNOVER RATE
---------- ------------ -------- ---------- ---------- -------------
$ 5.00 5.04%(vi) $ 9,273 1.99% (1.46)% 98.94%
4.76 (24.68)(vi) 6,722 1.98 (1.52) 172.25
6.32 (36.20)(vi) 12,951 1.88 (1.03) 114.75
10.63 (13.44)(vi) 14,711 1.82 (1.05) 118.82
$ 4.98 4.62% $238,387 2.01% (1.46)% 98.94%
4.76 (24.68) 252,620 1.98 (1.52) 172.25
6.32 (36.20) 423,860 1.88 (0.99) 114.75
10.63 6.21 876,132 1.82 (1.29) 118.82
10.76 62.66 548,656 1.85 (1.52) 102.54
6.65 16.94 193,039 1.96 (1.24) 190.74
7
SPECTRA FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 2003
ASSETS:
Investments in securities, at value (cost $251,463,472), see
accompanying schedule of investments ..................... $271,873,479
Cash ....................................................... 49,233
Receivable for investment securities sold .................. 6,010,650
Receivable for shares of beneficial interest sold .......... 186,514
Dividends receivable ....................................... 38,482
Prepaid expenses ........................................... 50,754
------------
Total Assets ........................................... 278,209,112
LIABILITIES:
Payable for securities loaned .............................. $22,446,362
Payable for investment securities purchased ................ 2,041,068
Payable for shares of beneficial interest redeemed ......... 5,539,691
Investment advisory fees payable ........................... 300,354
Shareholder servicing fees payable ......................... 50,059
Transfer agent fees payable ................................ 65,432
Trustees' fees payable ..................................... 3,297
Accrued expenses ........................................... 102,768
-----------
Total Liabilities ...................................... 30,549,031
------------
NET ASSETS .................................................... $247,660,081
============
NET ASSETS CONSIST OF:
Paid-in capital ............................................ $577,826,641
Undistributed net investment income (accumulated loss) ..... (1,734,824)
Undistributed net realized gain (accumulated loss) ......... (348,841,743)
Net unrealized appreciation (depreciation) of investments .. 20,410,007
------------
NET ASSETS .................................................... $247,660,081
============
Class A
Net Asset Value Per Share .................................. $ 5.00
============
Offering Price Per Share ................................... $ 5.31
============
Class N
Net Asset Value and Offering Price Per Share ............... $ 4.98
============
Shares of beneficial interest outstanding--Note 5
Class A .................................................... 1,853,832
============
Class N .................................................... 47,821,663
============
See Notes to Financial Statements.
8
SPECTRA FUND
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED APRIL 30, 2003
INVESTMENT INCOME:
Income:
Interest ............................................ $ 89,278
Dividends ........................................... 561,614
-----------
Total Income ...................................... 650,892
Expenses:
Investment advisory fees--Note 2(a) ................. $ 1,778,119
Shareholder servicing fees--Note 2(e) ............... 296,353
Transfer agent fees ................................. 147,002
Custodian fees ...................................... 16,621
Registration fees ................................... 20,864
Trustees' fees ...................................... 21,413
Professional fees ................................... 17,018
Miscellaneous ....................................... 88,326
------------
Total Expenses .................................... 2,385,716
-----------
NET INVESTMENT LOSS ...................................... (1,734,824)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND WRITTEN OPTIONS:
Net realized loss on investments and written options ..... (16,156,497)
Net change in unrealized appreciation (depreciation)
on investments and written options .................... 28,297,738
------------
Net realized and unrealized gain on investments
and written options ............................. 12,141,241
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ............................................ $10,406,417
===========
See Notes to Financial Statements.
9
SPECTRA FUND
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS
ENDED APRIL 30, YEAR ENDED
2003 OCTOBER 31,
(UNAUDITED) 2002
------------ ------------
Net investment loss ................................. $ (1,734,824) $ (5,659,925)
Net realized loss on investments and written options (16,156,497) (108,707,361)
Net change in unrealized appreciation (depreciation)
on investments and written options ............... 28,297,738 22,538,754
------------ ------------
Net increase (decrease) in net assets
resulting from operations .................... 10,406,417 (91,828,532)
Increase (decrease) from shares of beneficial
interest transactions:
Class A ........................................... 1,559,618 (3,547,428)
Class N ........................................... (23,648,219) (82,092,519)
------------ ------------
Net decrease from shares of beneficial
interest transactions--Note 5 .................... (22,088,601) (85,639,947)
------------ ------------
Total decrease in net assets .................. (11,682,184) (177,468,479)
Net assets:
Beginning of period ............................... 259,342,265 436,810,744
------------ ------------
End of period (including accumulated net investment
losses of $1,734,824 and $0, respectively) ..... $247,660,081 $259,342,265
============ ============
See Notes to Financial Statements.
10
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Spectra Fund (the "Fund") is a diversified open-end registered investment
company organized as a business trust under the laws of the Commonwealth of
Massachusetts. The Fund's investment objective is capital appreciation. It seeks
to achieve its objective by investing primarily in equity securities.
The Fund offers Class A and Class N shares. Class A shares were first
offered on July 1, 2000 and are generally subject to an initial sales charge.
Each class has identical rights to assets and earnings.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
(a) INVESTMENT VALUATION--Investments in securities are valued each day the New
York Stock Exchange (the "NYSE") is open as of the close of the NYSE (normally
4:00 p.m. Eastern time). Listed and unlisted securities for which such
information is regularly reported are valued at the last reported sales price
or, in the absence of reported sales, at the mean between the bid and asked
price, or in the absence of a recent bid or asked price, the equivalent as
obtained from one or more of the major market makers for the securities to be
valued. Short-term notes are valued at amortized cost which approximates market
value. Shares of mutual funds are valued at the net asset value of the
underlying mutual fund.
(b) SECURITIES TRANSACTIONS AND INVESTMENT INCOME--Securities transactions are
recorded on a trade date basis. Realized gains and losses from securities
transactions are recorded on the basis of the first-in, first-out method.
Dividend income is recognized on the ex-dividend date and interest income is
recognized on the accrual basis.
(c) REPURCHASE AGREEMENTS--The Fund enters into repurchase agreements with
approved institutions. The repurchase agreements are collateralized by U.S.
Government securities, which are either received and held in physical possession
by the custodian or received by such custodian in book-entry form through the
Federal Reserve book-entry system. The collateral is valued on a daily basis
during the term of the agreement to ensure that its value equals or exceeds the
agreed-upon repurchase price to be repaid to the Fund. Additional collateral is
obtained when necessary. (D) OPTION WRITING: When the 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,
11
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
(e) LENDING OF PORTFOLIO SECURITIES--The Fund lends its 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. The Fund
earns fees on the securities loaned, which are included in interest income in
the accompanying Statement of Operations. In order to protect against the risk
of failure by the borrower to return the securities loaned or any delay in the
delivery of such securities, the loan is collateralized by cash, letters of
credit or U.S. Government securities that are maintained in an amount equal to
at least 100 percent of the current market value of the loaned securities. The
market value of the loaned securities is determined at the close of business of
the Fund and any required additional collateral is delivered to the Fund on the
next business day. At April 30, 2003, the value of securities loaned and
collateral received thereon were $21,402,884 and $22,446,362, respectively.
(f) DIVIDENDS TO SHAREHOLDERS--Dividends and distributions payable to
shareholders are recorded by the Fund on the ex-dividend date. Dividends from
net investment income and distributions from net realized gains are declared and
paid annually after the end of the fiscal year in which earned.
Each class is treated separately in determining the amounts of dividends from
net investment income and distributions from capital gains payable to holders of
its shares. The characterization of distributions to shareholders for financial
reporting purposes is determined in accordance with federal income tax rules.
Therefore, the source of the 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 paid-in capital,
depending on the type of book/tax differences that may exist.
At October 31, 2002, the Fund reclassified $32,532,564 from undistributed net
investment income (accumulated loss) and $6,317,887 from undistributed net
realized gain (accumulated loss) to paid-in capital. Reclassifications result
primarily from the difference in tax treatment of net operating losses. The
reclassification had no impact on the net asset value of the Fund and is
designed to present the Fund's capital accounts on a tax basis.
(g) FEDERAL INCOME TAXES--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
12
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
companies and to distribute all of its investment company taxable income to its
shareholders. Provided the Fund maintains such compliance, no federal income tax
provision is required. At October 31, 2002, the net capital loss carryforward of
the Fund which may be used to offset future net realized gains was approximately
$329,341,924 and expires in 2009 and 2010.
(h) ALLOCATION METHOD--Income, realized and unrealized gains and losses, and
expenses are allocated among the Fund's classes based on relative net assets.
(i) OTHER--These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may differ
from those estimates.
NOTE 2--INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(a) INVESTMENT ADVISORY FEES--The Fund pays its investment adviser, Fred Alger
Management, Inc. ("Alger Management"), a monthly fee at an annual rate of 1.50%
based on the value of the Fund's average daily net assets.
(b) TRANSFER AGENT FEES--Alger Shareholder Services, Inc. ("Alger Services"), an
affiliate of Alger Management, serves as transfer agent for the Fund. During the
six months ended April 30, 2003, the Fund incurred fees of approximately
$141,000 for services provided by Alger Services and reimbursed Alger Services
approximately $6,000 for transfer agent related expenses paid by Alger Services
on behalf of the Fund.
(c) BROKERAGE COMMISSIONS--During the six months ended April 30, 2003, the Fund
paid Fred Alger & Company, Incorporated ("Alger Inc."), an affiliate of Alger
Management, $514,209 in connection with securities transactions.
(d) TRUSTEES' FEES--Certain trustees and officers of the Fund are directors and
officers of Alger Management, Alger Inc. and Alger Services. The Fund pays each
trustee who is not affiliated with Alger Management or its affiliates an annual
fee of $8,000.
(e) SHAREHOLDER SERVICING FEES--The Fund has entered into a shareholder
servicing agreement with Alger Inc. whereby Alger Inc. provides the Fund with
ongoing servicing of shareholder accounts. As compensation for such services,
the Fund pays Alger Inc. a monthly fee at an annual rate equal to .25% of the
value of the Fund's average daily net assets.
NOTE 3--SECURITIES TRANSACTIONS:
(a) During the six months ended April 30, 2003, purchases and sales of
investment securities, excluding short-term securities, aggregated $233,289,512
and $227,854,467, respectively.
13
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
(b) Transactions in options during the six months ended April 30, 2003, were
as follows:
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
-------- ---------
Call options outstanding at October 31, 2002 ........ 750 $ 165,995
Call options written ................................ 250 39,249
Call options expired or exercised ................... (1,000) (205,244)
------ ---------
Call options outstanding at April 30, 2003 .......... -- $ --
====== =========
NOTE 4--LINES OF CREDIT:
The Fund has both committed and uncommitted lines of credit with banks.
All borrowings have variable interest rates and are payable on demand. To the
extent the Fund borrows under these lines, the Fund must pledge securities with
a total value of at least twice the amount borrowed. For the six months ended
April 30, 2003, the Fund had no such borrowings.
NOTE 5--SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value which are presently divided into two separate
classes.
During the six months ended April 30, 2003, transactions of shares of
beneficial interest were as follows:
CLASS A: SHARES AMOUNT
------ ------
Shares sold .................................. 16,160,451 $ 76,226,546
Shares redeemed .............................. (15,719,275) (74,666,928)
----------- ------------
Net increase ................................. 441,176 $ 1,559,618
=========== ============
CLASS N: SHARES AMOUNT
------ ------
Shares sold .................................. 3,891,369 $ 18,360,417
Shares redeemed .............................. (9,113,672) (42,008,636)
----------- ------------
Net decrease ................................. (5,222,303) $(23,648,219)
=========== ============
SPECTRA FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
During the year ended October 31, 2002, transactions of shares of
beneficial interest were as follows:
CLASS A: SHARES AMOUNT
------ ------
Shares sold ................................... 1,935,985 $ 12,909,732
Shares redeemed ............................... (2,572,315) (16,457,160)
----------- ------------
Net decrease .................................. (636,330) $ (3,547,428)
=========== ============
CLASS N: SHARES AMOUNT
------ ------
Shares sold ................................... 16,557,995 $103,432,444
Shares redeemed ............................... (30,560,799) (185,524,963)
----------- ------------
Net decrease .................................. (14,002,804) $(82,092,519)
=========== ============
NOTE 6--DISTRIBUTIONS TO SHAREHOLDERS:
During the six months ended April 30, 2003 and the year ended October 31,
2002, there were no distributions paid.
As of October 31, 2002, the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income ................................... $ --
Undistributed long-term gain .................................... $ --
Capital loss carryforward ....................................... $(329,341,924)
Unrealized appreciation
(depreciation) ................................................ $ (11,231,053)
The difference between book basis and tax-basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
15
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SPECTRA FUND
111 Fifth Avenue
New York, NY 10003
(800) 711-6141
www.alger.com
INVESTMENT MANAGER
Fred Alger Management, Inc.
111 Fifth Avenue
New York, NY 10003
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Alger Shareholder Services, Inc.
30 Montgomery Street
Jersey City, NJ 07302
This report is submitted for the general information of the shareholders of
Spectra Fund. It is not authorized for distribution to prospective investors
unless accompanied by an effective Prospectus for the Fund, which contains
information concerning the Fund's investment policies, fees and expenses as well
as other pertinent information.
----------------
PRESORTED
STANDARD
US POSTAGE
PAID
FARMINGDALE, NY
PERMIT NO. 225
----------------
SAS L2
Item 2. CODE OF ETHICS
Not applicable.
Item 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable.
Item 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable.
Item 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable.
Item 6. Reserved
Item 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable.
Item 8. Reserved
Item 9. 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-2(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) In the last 90 days, there have been no significant changes in the
registrant's internal controls or in other factors that could significantly
affect these controls.
Item 10. EXHIBITS
(a) Not applicable.
(b) Attached hereto
Exhibit 99.CERT Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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.
Spectra Fund
By: /s/Fred M. Alger
Fred M. Alger
Chairman and President
Date: July 8, 2003
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/ Fred M. Alger
Fred M. Alger
Chairman and President
Date: July 8, 2003
By: /s/ Gregory S. Duch
Gregory S. Duch
Treasurer
Date: July 8, 2003