-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D7irW/X4hY2moDXKa2j5BpEa2LZMsUS3rVfBQnVtCnmXWWDF03jY2H+flasV0beB hNJnd01fzFcSVACMFd54ow== 0000930413-04-003128.txt : 20040701 0000930413-04-003128.hdr.sgml : 20040701 20040701124542 ACCESSION NUMBER: 0000930413-04-003128 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20040430 FILED AS OF DATE: 20040701 EFFECTIVENESS DATE: 20040701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA US GROWTH FUND CENTRAL INDEX KEY: 0001219064 IRS NUMBER: 0 STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-21308 FILM NUMBER: 04894025 BUSINESS ADDRESS: STREET 1: 111 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10003 BUSINESS PHONE: 212-806-8800 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL CHINA GROWTH FUND DATE OF NAME CHANGE: 20030214 N-CSRS 1 c31999_ncsr.txt ------------------------ OMB APPROVAL ------------------------ OMB Number: 3235-0570 Expires: Nov. 30, 2005 Estimated average burden hours per response: 5.0 ------------------------ 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 EX-99.CERT 2 c31999_ex99-cert.txt Rule 30a-2(a) CERTIFICATIONS I, Dan C. Chung, certify that: 1. I have reviewed this report on Form N-CSR of The China-U.S. Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 30, 2004 /s/ Dan C. Chung - ------------------------- Dan C. Chung President Rule 30a-2(a) CERTIFICATIONS I, Frederick A. Blum, certify that: 1. I have reviewed this report on Form N-CSR of The China-U.S. Growth Fund; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: June 30, 2004 /s/ Frederick A. Blum - ---------------------------- Frederick A. Blum Treasurer EX-99.906CERT 3 c31999_ex906-cert.txt Rule 30a-2(b) CERTIFICATIONS Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of The China-U.S. Growth Fund, do hereby certify, to such officer's knowledge, that: (1) The semi-annual report on Form N-CSR of the Registrant for the period ended April 30, 2004 (the "Form N-CSR") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of The China-U.S. Growth Fund. Dated: June 30, 2004 /s/ Dan C. Chung - ------------------------------ Dan C. Chung President The China-U.S. Growth Fund Dated: June 30, 2004 /s/ Frederick A. Blum - ------------------------------ Frederick A. Blum Treasurer The China-U.S. Growth Fund This certification is being furnished solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Report or as a separate disclosure document. -----END PRIVACY-ENHANCED MESSAGE-----