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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 811-21308
The China-U.S. Growth 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. Frederick A. Blum
Fred Alger Management, Inc.
111 Fifth Avenue
New York, New York 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, 2004
ITEM 1. REPORT(S) TO STOCKHOLDERS.
THE CHINA-U.S.
GROWTH FUND
SEMI-ANNUAL REPORT
APRIL 30, 2004
(UNAUDITED)
[LOGO]
DEAR SHAREHOLDERS, June 10, 2004
Early in 2004, the U.S. economy shifted into high gear. In addition to
some of the strongest economic data in four years, corporate earnings
consistently beat Wall Street's expectations. Consumer spending continued to
fuel various aspects of the economy; industrial production soared; and after a
multi-year drought, companies began to ramp up their spending. Even the
employment situation improved, although job growth lagged the economic recovery
and did not begin to show signs of real strength until March.
The U.S. equity markets, however, had an ambivalent reaction to the
positive economic data. Initially, there was some exuberance, and the markets
rose steadily through February. Then, the difficult situation in Iraq, oil price
increases, and a fear of rising interest rates led to a cooling of investor
sentiment. Even with the pullback in early spring, for the six months ended
April 30, 2004, the Dow rose 5.43%, the S&P 500 was up 6.27%, and the NASDAQ was
down .42%.
The Chinese economy, meanwhile, continued on its rapid growth trajectory,
and its appetite for commodities such as oil, steel, and aluminum significantly
impacted global markets. Growth in China reached such an intense pitch that the
government became concerned about overheating and took steps to slow things
down. While these measures appeared to temper the rate of growth, the Chinese
and Asian equity markets reacted negatively in early spring.
Looking ahead for the United States, as we enter the heart of the 2004
presidential election, politics and international security will dominate the
headlines, along with high-profile events such as the Democratic and Republican
Party conventions, the 2004 Olympic Games in Athens, and the transition of power
in Iraq. It is likely that these events will continue to distract investors, but
we believe that the economy and the markets are on solid footing, with many of
the companies we follow poised to post significant earnings growth in the years
ahead. In China, investors are taking a hard look at whether the efforts to
manage economic growth will succeed. We believe that the government has acted
prudently, and that there is strong likelihood that Chinese officials will
succeed in their efforts to keep the economy from overheating.
Finally, we want to thank you for the confidence you have placed in Alger
Management. It is our goal not only to find the best investments for you, but
also to continue to earn your trust in every aspect of our business.
Respectfully submitted,
/s/ Dan C. Chung
Dan C. Chung
Chief Investment Officer
THE CHINA-U.S. GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED)
April 30, 2004
SHARES COMMON STOCKS--88.6% VALUE
------ -----
UNITED STATES -- 45.9%
AEROSPACE & DEFENSE -- 2.4%
6,200 United Technologies Corporation ................... $ 534,812
-----------
COMMERCIAL BANKS -- 1.5%
8,600 UCBH Holdings, Inc. ............................... 318,372
-----------
COMMUNICATION EQUIPMENT -- 2.6%
92,400 3 Com Corporation* ................................ 569,184
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 2.0%
14,800 Thermo Electron Corporation* ...................... 432,160
-----------
FOOD & BEVERAGES -- 2.7%
15,000 Yum! Brands, Inc.* ................................ 581,850
-----------
HOTELS, RESTAURANTS & LEISURE -- 2.3%
5,718 Ctrip.com International Ltd.* ..................... 165,021
8,500 Wynn Resorts, Limited* ............................ 339,405
-----------
504,426
-----------
INFORMATION TECHNOLOGY SERVICES -- .4%
10,000 Lionbridge Technologies, Inc.* .................... 90,200
-----------
INSURANCE -- 2.2%
6,700 American International Group, Inc. ................ 480,055
-----------
INTERNET SOFTWARE & SERVICES -- 4.5%
23,800 iPass Inc.* ....................................... 252,280
13,379 Netease.com Inc. ADR*# ............................ 548,807
17,450 Tom Online Inc. ADR*# ............................. 191,078
-----------
992,165
-----------
MACHINERY -- 4.1%
5,200 Danaher Corporation ............................... 481,104
10,200 Dover Corporation ................................. 408,306
-----------
889,410
-----------
METALS & MINING -- 2.3%
2,700 Phelps Dodge Corporation .......................... 177,741
12,600 Schnitzer Steel Industries, Inc. Cl. A ............ 331,002
-----------
508,743
-----------
PERSONAL PRODUCTS -- 2.5%
6,500 Avon Products, Inc. ............................... 546,000
-----------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 6.6%
45,900 Axcelis Technologies, Inc.* ....................... 482,409
15,100 Integrated Silicon Solution, Inc.* ................ 207,323
10,400 Novellus Systems, Inc.* ........................... 301,184
15,000 Semiconductor Manufacturing International
Corporation ADR*# ............................... 175,350
30,400 Taiwan Semiconductor Manufacturing
Company Ltd. ADR*# .............................. 289,712
-----------
1,455,978
-----------
SOFTWARE -- 1.8%
19,000 PalmSource, Inc.* ................................. 395,770
-----------
2
THE CHINA-U.S. GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
April 30, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
------ -----
UNITED STATES -- (CONTINUED)
TEXTILES, APPAREL & LUXURY GOODS -- 8.0%
21,000 Fossil, Inc.* ..................................... $ 514,290
5,000 NIKE, Inc. Cl. B .................................. 359,750
20,000 Quiksilver, Inc.* ................................. 432,600
12,600 Reebok International Ltd. ......................... 458,388
-----------
1,765,028
-----------
Total United States (Cost $10,482,418) ............ 10,064,153
-----------
CHINA -- 37.0%
AUTOMOBILES -- 3.3%
678,000 Brilliance China Automotive Holdings Ltd. ......... 249,913
357,400 Chongqing Changan Automobile Cl. B ................ 372,077
214,000 Denway Motors Ltd. ................................ 102,203
-----------
724,193
-----------
BUILDING PRODUCTS -- 1.1%
812,000 Zhejiang Glass Co. Ltd. ........................... 239,445
-----------
CHEMICALS -- 1.1%
714,000 Sinopec Shanghai Petrochemical Co. Ltd. Cl. H ..... 238,009
-----------
COMMERCIAL SERVICES & SUPPLIES -- 4.0%
4,566,000 China Resources Logic Ltd. ........................ 456,618
1,636,000 HC International Ltd.* ............................ 419,503
-----------
876,121
-----------
CONSTRUCTION MATERIALS -- 1.7%
340,000 Anhui Conch Cement Co. Cl. H ...................... 361,809
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES-- 1.4%
1,048,000 China Telecom Corporation Ltd. .................... 312,397
-----------
ELECTRIC UTILITIES -- 2.2%
612,000 China Resources Power Holdings Co. Ltd.* .......... 327,590
158,000 Huaneng Power International Inc. Cl. H ............ 147,877
-----------
475,467
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 1.8%
435,800 BOE Technology Group Cl. B ........................ 400,057
-----------
FOOD PRODUCTS -- 2.1%
1,082,000 COFCO International Ltd. .......................... 457,787
-----------
HOUSEHOLD DURABLES -- 1.4%
856,000 TCL International Holdings Ltd. ................... 315,525
-----------
MACHINERY -- 3.1%
3,104,000 Shandong Molong Petroleum Cl. H* .................. 274,595
245,000 Weichai Power Co. Ltd.* ........................... 413,061
-----------
687,656
-----------
MARINE -- .8%
320,000 China Shipping Development Cl. H .................. 184,623
-----------
METALS & MINING -- 4.0%
484,000 Aluminum Corporation of China Ltd. ................ 283,896
1,044,000 Angang New Steel Co. Cl. H ........................ 398,208
210,000 Yanzhou Coal Mining Co. Cl. H ..................... 196,546
-----------
878,650
-----------
3
THE CHINA-U.S. GROWTH FUND
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
April 30, 2004
SHARES COMMON STOCKS (CONTINUED) VALUE
------ -----
CHINA -- (CONTINUED)
OIL & GAS -- 3.7%
850,000 China Petroleum & Chemical Cl. H .................. $ 294,242
550,000 CNOOC Ltd. ........................................ 199,206
732,000 PetroChina Co. Ltd. Cl. H ......................... 319,089
-----------
812,537
-----------
REAL ESTATE -- 1.1%
1,048,000 Silver Grant International Industries Ltd. ........ 232,450
-----------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 1.1%
1,050,000 Semiconductor Manufacturing International Corporation* 251,740
-----------
TRANSPORTATION INFRASTRUCTURE -- 1.8%
300,000 Cosco Pacific Ltd. ................................ 384,630
-----------
WIRELESS TELECOMMUNICATION SERVICES -- 1.3%
356,000 China Unicom Ltd. ................................. 276,139
-----------
Total China (Cost $9,471,376) ..................... 8,109,235
-----------
HONG KONG -- 5.7%
COMPUTERS & PERIPHERALS -- 1.4%
478,000 TPV Technology Ltd. ............................... 318,679
-----------
MULTILINE RETAIL -- 1.8%
371,000 Lifestyle International Holdings* ................. 387,662
-----------
SOFTWARE -- 1.4%
870,000 Kingdee International Software Group Co. Ltd. ..... 320,685
-----------
TEXTILES, APPAREL & LUXURY GOODS -- 1.1%
3,580,000 Titan (Holdings) Ltd. ............................. 234,086
-----------
Total Hong Kong (Cost $1,441,426) ................. 1,261,112
-----------
Total Common Stocks (Cost $21,395,220) ............ 19,434,500
-----------
PRINCIPAL
AMOUNT
------
SHORT-TERM INVESTMENTS -- 7.3%
U.S. GOVERNMENT & AGENCY OBLIGATIONS
$1,604,000 Student Loan Marketing Association, 0.93%, 5/3/04
(Cost $1,603,932) ............................... 1,603,932
-----------
Total Investments
(Cost $22,999,152)(a) .............................. 95.9% 21,038,432
Other Assets in Excess of Liabilities ................ 4.1 894,079
------ -----------
Net Assets ........................................... 100.0% $21,932,511
====== ===========
- ----------
* Non-income producing security.
# American Depositary Receipts.
(a) At April 30, 2004, the net unrealized depreciation on investments, based
on cost for federal income tax purposes of $22,999,152 amounted to
$1,960,720 which consisted of aggregate gross unrealized appreciation of
$389,482 and aggregate gross unrealized depreciation of $2,350,202.
See Notes to Financial Statements.
4
THE CHINA-U.S. GROWTH FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
FOR A SHARE OUTSTANDING
THROUGHOUT THE PERIOD
NOVEMBER 3, 2003 (i)
TO
APRIL 30, 2004 (ii)
-------------------
Net asset value, beginning of period ........................ $ 10.00
Net investment loss ......................................... (0.08)
Net realized and unrealized gain (loss) on investments ...... 0.41
----------
Total from investment operations ............................ 0.33
----------
Net assets value, end of period ............................. $ 10.33
==========
Total return ................................................ 3.30%
==========
Ratios and Supplemental Data:
Net assets, end of period (000's omitted) ................ $ 21,933
==========
Ratio of expenses to average net assets .................. 2.66%
==========
Ratio of net investment income (loss) to average net
assets ................................................. (1.51)%
==========
Decrease reflected in above ratios due to expense
reimbursement--Note 3(a) ............................... 0.46%
==========
Portfolio turnover rate .................................. 112.31%
==========
- ----------
(i) Commencement of operations.
(ii) Ratios have been annualized; total return has not been annualized.
See Notes to Financial Statements.
5
THE CHINA-U.S. GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
APRIL 30, 2004
ASSETS:
Investments in securities, at value (cost $22,999,152), see
accompanying schedule of investments .................... $ 21,038,432
Cash ...................................................... 847,505
Receivable for investment securities sold ................. 1,386,553
Receivable for shares of beneficial interest sold ......... 100,323
Dividends receivable ...................................... 54,436
Receivable from Investment Manager--Note 3(a) ............. 18,653
Prepaid expenses .......................................... 2,456
------------
Total Assets .......................................... 23,448,358
LIABILITIES:
Payable for investment securities purchased ............... $1,388,099
Payable for shares of beneficial interest redeemed ........ 34,669
Investment advisory fees payable .......................... 26,559
Shareholder servicing fees payable ........................ 17,297
Transfer agent fees ....................................... 4,409
Trustees' fees payable .................................... 2,638
Accrued expenses .......................................... 42,176
----------
Total Liabilities ..................................... 1,515,847
------------
NET ASSETS ................................................... $ 21,932,511
============
NET ASSETS CONSIST OF:
Paid-in capital ........................................... $ 22,811,187
Undistributed net investment income (accumulated loss) .... (104,540)
Undistributed net realized gain (accumulated loss) ........ 1,186,616
Net unrealized appreciation (depreciation) of investments . (1,960,752)
------------
NET ASSETS ................................................... $ 21,932,511
============
Net Asset Value Per Share ................................. $ 10.33
============
Shares of beneficial interest outstanding--Note 5 ............ 2,122,206
============
See Notes to Financial Statements.
6
THE CHINA-U.S. GROWTH FUND
STATEMENT OF OPERATIONS (UNAUDITED)
NOVEMBER 3, 2003(i) TO APRIL 30, 2004
INVESTMENT INCOME:
Income:
Dividends ................................................... $ 72,000
Interest .................................................... 7,610
----------
Total Income .............................................. 79,610
Expenses:
Investment advisory fees--Note 3(a) ......................... $ 103,784
Custodian fees .............................................. 31,351
Professional fees ........................................... 22,109
Shareholder servicing fees--Note 3(e) ....................... 17,297
Trustees' fees .............................................. 14,638
Printing .................................................... 11,586
Transfer agent fees--Note 3(b) .............................. 4,409
Registration fees ........................................... 1,927
Miscellaneous ............................................... 8,969
-----------
216,070
Less expense reimbursement--Note 3(a) ......................... (31,920)
----------
Total Expenses ............................................ 184,150
----------
NET INVESTMENT LOSS .............................................. (104,540)
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments ................................. 1,186,616
Net change in unrealized appreciation (depreciation)
on investments ................................................ (1,960,752)
-----------
Net realized and unrealized gain (loss) on investments .... (774,136)
----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS .................................................... $ (878,676)
==========
- ----------
(i) Commencement of operations.
See Notes to Financial Statements.
7
THE CHINA-U.S. GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
NOVEMBER 3, 2003(i)
TO
APRIL 30, 2004
--------------
Net investment loss ................................................... $ (104,540)
Net realized gain on investments ...................................... 1,186,616
Net change in unrealized appreciation (depreciation) on investments ... (1,960,752)
------------
Net decrease in net assets resulting from operations .............. (878,676)
Net increase from shares of beneficial interest transactions--Note 5 .. 22,705,317
Redemption fee-- Note 2(f) ............................................ 5,870
------------
Total increase in net assets .................................... 21,832,511
Net assets:
Beginning of period ................................................. 100,000
------------
End of period (including accumulated net investment loss of $104,540) $ 21,932,511
============
- ----------
(i) Commencement of operations.
See Notes to Financial Statements.
8
THE CHINA-U.S. GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1--GENERAL:
The China-U.S. Growth 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 long-term
capital appreciation. It seeks to achieve its objective by normally investing in
equity securities which are publicly traded in the United States, China, Hong
Kong and Taiwan markets. The Fund commenced operations on November 3, 2003 with
the issuance of 10,000 shares at $10.00 per share to Fred Alger Management, Inc.
("Alger Management"), the Fund's investment manager. The Fund's fiscal year ends
on October 31.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES:
(A) INVESTMENT VALUATION--Investments of the Fund 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). Listed 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. Securities
listed on foreign exchanges are valued at the last reported sales price or, in
the absence of reported sales, at the mean between the bid and asked price.
Securities included within the Nasdaq market shall be valued at the Nasdaq
official closing price ("NOCP") on the day of valuation, or if there be no NOCP
issued, at the last sale price on such day. Securities included within the
Nasdaq market for which there is no NOCP and no last sale price on the day of
valuation shall be valued at the mean between the last bid and asked prices on
such day.
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 Fund invests may be traded in markets that close before
the close of the NYSE. Normally, developments that occur between the close of
the foreign markets and the close of the NYSE (normally 4:00 p.m. Eastern time)
will not be reflected in the Fund's net asset value. However, if it be
determined that such developments are so significant that they will materially
affect the value of the Fund's securities, the Fund may adjust the previous
closing prices to reflect what the Valuation Committee, under the direction of
the Board of Trustees, believes to be the fair value of these securities as of
the close of the NYSE. The Fund may also fair value securities in other
situations, for example, when a particular foreign market is closed but the Fund
is open.
9
THE CHINA-U.S. GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
Short-term securities having a remaining maturity of sixty days or less 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 identified cost. Dividend income is
recognized on the ex-dividend date and interest income is recognized on the
accrual basis. Occasionally, dividends are recorded as soon after the
ex-dividend date as the Fund, using reasonable diligence, becomes aware of such
dividends.
(C) FOREIGN CURRENCY TRANSLATIONS--The books and records of the Fund 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 not segregated
in the Statement of Operations from the effects of changes in market prices of
those securities, but are included in realized and unrealized gain or loss on
investments.
(D) 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.
(E) FEDERAL INCOME TAXES--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its investment company taxable income to its
shareholders. Provided the Fund maintains such compliance, no federal income tax
provision is required.
(F) REDEMPTION FEE--The Fund may impose a 2.00% redemption fee on Fund shares
redeemed (including shares redeemed by exchange) less than one year after such
shares were acquired. The fees retained by the Fund are included as paid-in
capital on the Statement of Assets and Liabilities. During the six months ended
April 30, 2004, redemption fees were $5,870.
(G) INDEMNIFICATION--The Fund enters into contracts that contain a variety of
indemnification provisions. The Fund's maximum exposure under these
10
THE CHINA-U.S. GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
arrangements is unknown. The Fund does not anticipate recognizing any loss
related to these arrangements.
(H) 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 3--INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES:
(A) INVESTMENT ADVISORY FEES--The Fund pays Alger Management a monthly fee at an
annual rate of 1.50% based on the value of the Fund's average daily net assets.
JF International Management Inc. ("JFIM"), a registered investment adviser, acts
as sub-adviser to the Fund under a written sub-advisory agreement with Alger
Management. JFIM's fees and compensation are paid by Alger Management.
Effective December 23, 2004, Alger Management has established an expense cap for
the Fund, whereby it will reimburse the Fund if annualized operating expenses
exceed 2.40% of average daily net assets. For the six months ended April 30,
2004, Alger Management reimbursed the Fund $31,920. Alger Management has
undertaken to reimburse fees exceeding the expense cap thru October 31, 2004.
(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, 2004, the Fund incurred fees of approximately $4,400
for services provided by Alger Services.
(C) BROKERAGE COMMISSIONS--During the six months ended April 30, 2004, the Fund
paid Fred Alger & Company, Incorporated ("Alger Inc."), an affiliate of Alger
Management, $8,128 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 4--SECURITIES TRANSACTIONS:
During the six months ended April 30, 2004, purchases and sales of investment
securities, excluding short-term securities, aggregated $35,186,246 and
$14,981,586, respectively.
11
THE CHINA-U.S. GROWTH FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
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.
NOTE 5--SHARE CAPITAL:
The Fund has an unlimited number of authorized shares of beneficial
interest of $.001 par value. During the six months ended April 30, 2004,
transactions of shares of beneficial interest were as follows:
SHARES AMOUNT
------ ------
Shares sold ...................... 2,164,668 $ 23,290,264
Shares redeemed .................. (52,462) (584,947)
------------ ------------
Net increase ..................... 2,112,206 $ 22,705,317
============ ============
NOTE 6--REGULATORY MATTERS:
The Office of the New York Attorney General, the Attorney General of West
Virginia, the Massachusetts Securities Division of the Office of the Secretary
of the Commonwealth, and the United States Securities and Exchange Commission
("SEC") have contacted Alger Management in connection with their investigation
of practices in the mutual fund industry identified as "market timing" and "late
trading" of mutual fund shares. Alger Management does not believe that the
foregoing investigations, or the outcome of certain related class actions and
derivative suits that have been brought against Alger Management and other
defendants primarily as a result of an October 2003 SECcivil proceeding against
a former vice chairman of Alger Management's immediate parent, will materially
affect its ability to perform its management contracts with any of the funds
that it manages.
12
THE CHINA-U.S. GROWTH FUND
111 Fifth Avenue
New York, NY 10003
(800) 254-3796
www.chinausgrowthfund.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 The
China-U.S. Growth 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.
PROXY VOTING POLICIES
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to fund securities is available, without charge, by
calling (800) 254-3796.
[LOGO]
SAC 61504 L1
Alger Shareholder Services, Inc.
[LOGO] 30 Montgomery Street
Jersey City, NJ 07302
SAC 61504 L2
ITEM 2. CODE OF ETHICS.
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Not applicable
(e) Not applicable
(f) 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. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At a meeting of the Board of Trustees held May 11, 2004, the Board adopted a
policy that it shall decline to consider candidates recommended by shareholders
to fill a vacancy or a likely vacancy on the Board. The Board believes that the
independent Trustees are in the best position to screen and select qualified
candidates for Board membership who will provide the experience, perspective,
skills and other attributes necessary to effectively advance the interests of
registrant's shareholders. Prior to May 11, 2004, the Board did not have a
formal policy with respect to consideration of shareholder nominees for the
Board. In screening and selecting qualified candidates for Board membership, the
independent Trustees may consider candidates recommended by Fred Alger
Management, Inc., and may retain an executive search firm and/or outside legal,
financial or other external counsel that they deem necessary or desirable to
assist in the nominating and/or screening process.
ITEM 10. 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 last fiscal half-year that materially affected,
or are reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 11. EXHIBITS.
(a) (1) Not applicable
(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 China-U.S. Growth Fund
By: /s/ Dan C. Chung
Dan C. Chung
President
Date: June 30, 2004
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/ Dan C. Chung
Dan C. Chung
President
Date: June 30, 2004
By: /s/ Frederick A. Blum
Frederick A. Blum
Treasurer
Date: June 30, 2004