N-CSRS 1 a09-15456_5ncsrs.htm N-CSRS

 

 

 

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UNITED STATES

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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

 

Alger 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. Hal Liebes

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, 2009

 

 



 

ITEM 1.  REPORT(S) TO STOCKHOLDERS.

 


 


 

Alger China-U.S. Growth Fund

 


SEMI-ANNUAL REPORT
April 30, 2009

(Unaudited)

 

 



 

Table of Contents

 

 

 

ALGER CHINA-U.S. GROWTH FUND

 

 

 

Letter to Our Shareholders

1

 

 

Fund Highlights

8

 

 

Portfolio Summary

9

 

 

Schedule of Investments

10

 

 

Statement of Assets and Liabilities

16

 

 

Statement of Operations

17

 

 

Statements of Changes in Net Assets

18

 

 

Financial Highlights

20

 

 

Notes to Financial Statements

22

 

 

Additional Information

30

 

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Dear Shareholders,

 

May 25, 2009

 

We can look at the last six months as the melting away of an illusion; as a time when reality has come painfully back into play. Many philosophers built vast realms of study on the idea that misguided reason can twist reality into something that perhaps suits us in the moment but ultimately only serves to keep us in an illusory state—and, in our current case, wreak havoc on our economy and our confidence.

 

The housing and credit crises and ensuing financial breakdown began with an illusion based on flawed ideas held by many financial lenders and insurers: the latent belief that growth in the housing market would continue unhampered on its upward trajectory. Underlying the assumption of unimpeded growth was the idea that financial derivatives could not only provide the increase in debt necessary to support the financial system but also manage the associated risk. In the mid-2000s, the illusion grew as more and more lenders extended more and more credit to “subprime” borrowers who, if their circumstances declined, were less and less likely to be able to pay the loans back. Although the practice was based on a belief that growth would continue, experience has shown again and again that the upward trend of growth over time is much more jagged than we like to recall.

 

When the illusion disintegrated, not only did the borrowers suffer from foreclosures, but the resulting housing crisis created a massive ripple effect that crippled the U.S.’s major financial firms. Along with the weakening of the financial sector, so went credit availability, consumer spending, jobs, and, ultimately, consumer confidence. By the fourth quarter of 2008, the scale of the crisis had ceased to be solely “subprime”—it had gone global. Into the first quarter of 2009, the volatility continued with the Dow Jones Industrial Average(i) climbing as high as 9,034 points and falling as low as 6,547 points.

 

Toward the end of the first quarter and into the second quarter of the calendar year, economic indicators were struggling to recover. Retail sales fell 1.3% in March and a further 0.4% in April—a larger dip than expected. The Consumer Price Index declined 0.7% on an annual basis in April, only the second year-over-year decline in nearly 54 years following March’s 0.4% drop(ii). Industrial production decreased 0.5% in April after having fallen 1.7% in March(iii). And GDP for the first quarter of 2009 decreased 6.1% compared to the fourth quarter of 2008, which experienced a decline of 6.3%.

 

Europe did not fare much better. GDP fell 2.5% in the first quarter of 2009 versus the last quarter of 2008, which experienced a decline of 1.5%—the figures were for both the 16-country euro currency zone and the broader 27-country European Union bloc(iv). China is anticipated to fare less poorly, and although its export growth is expected to slow, the country is taking measures to focus on innovation rather than outright cost-efficiency.

 

Emerging from the Darkness

 

Plato famously dealt with illusion in what came to be called Plato’s Cave. He described people in a cave whose notion of reality was entirely comprised of shadows projected on a wall. Similarly, one could say that we were in such a cave, deceived by

 

1



 

the shadows of easy credit, with no real idea of the hows or whys of what we were seeing.

 

Now, however, we are beginning to see clearly where things unraveled. Actions are being taken by the Obama administration as well as the housing, financial, and automotive industries to stave off a repetition of the disaster; whether or not those actions will succeed remains to be seen.

 

What we do know is that, as of the date of this writing, some light has begun to shine in growth investing. In the first quarter, growth funds beat their value rivals by the largest margin in nine years. As of April 28, mid-cap growth funds were up 4.3%, small-cap growth funds were up 0.8%, and large-cap growth funds were up 2.6%, according to investment researcher Morningstar Inc.—a sign that investors are beginning to shed their aversion to risk and test the market.

 

Then and Now

 

Much has been made of the similarities between the current downturn and the Great Depression. During the “Roaring Twenties,” people were busy buying automobiles and appliances on credit and eagerly speculating in the stock market, feeding the illusion that the good times would continue to roll.

 

Then, like now, thought—in terms of easy credit and unimpeded growth—was divorced from reality. Back then, however, government policy either declined to intervene or, worse, intervened in ways that exacerbated rather than alleviated the financial crisis, thus allowing the devastation to spread across the U.S. economy. Things today move much more quickly. The current economy has turned downward faster in a shorter period of time than in any prior period, including the Depression. Fortunately, our government has responded with alacrity and, in a broad sense, moved in the right direction both by injecting massive amounts of liquidity into the financial system and by proactively assuring consumers of the safety of their savings and deposit accounts. As a result, we are likely to emerge faster from this crisis, and certainly much faster than in the 1930s. Government cannot be the only driver of recovery. Today, the depth and breadth of investors in markets across the globe is much stronger than ever before, and their actions will likely speed and strengthen the shape of recovery in both equity and debt markets.

 

As we have noted in our Alger Market Commentaries (see www.alger.com), companies were quick to respond to the downturn in the second half of 2008 by moving rapidly to cut expenses. At the end of the first quarter of 2009, as we tracked the corporate earnings results of the companies we follow, we discovered a pattern: Despite the rapidity of the economic downturn, we saw companies reporting free cash flow of both absolute strength and relative resilience. We expect the continued stabilization of the U.S. economy and company fundamentals to support the market’s rally from March lows.

 

We are already seeing signs of a bottoming in the housing market in the earliest-hit and hardest-hit areas of the U.S. where declines in foreclosures and short sales have begun to occur. Looking at Orange County, California, home prices increased 2.5% in March from February; sales jumped 27.5% in March from February and 47.4% from last year, according to the California Association of Realtors. The county had about four months of inventory as of May, a level not seen since April 2006. Inventory was at eight months a year ago and peaked at 11 months in 2007.

 

2



 

As a lagging indicator, the unemployment rate won’t yield for a while as companies are expected to be slow to add new jobs, but the market can rebound long before the level of employment does. The unemployment rate hit a 25-year high in April, but there were signs of hope as the monthly job loss total for April fell to 539,000, down from 699,000 jobs lost in March and the lowest level in six months—since October, when the economy shed 380,000 jobs.

 

The Institute for Supply Management’s manufacturing index, a key measure of manufacturing activity, rose for the fourth straight month in April, suggesting the sector may be stabilizing even though the indicator has been at the contraction level for 15 months in a row. And the Consumer Confidence Index, which had posted a slight increase in March, improved considerably in April. The Index now stands at 39.2 (1985=100), up from 26.9 in March.

 

Apart from the Crowd

 

Looking forward, we are grounded in a more complete picture of reality—for the overall economy and our firm. Danish philosopher Søren Kierkegaard, too, examined illusion in a way, writing that crowds limit and stifle the unique individual. Like any economic bubble, we can, of course, now say in hindsight that the adjoining crises were a result of exactly this kind of crowd mentality. The resulting economic disaster, while painful, has effectively broken up the crowd, razing the illusion and once again opening the investing field up to new and creative opportunities. There is, after all, a stunning amount of cash on the sidelines. The savings rate is up to 5%, meaning that there is about $500 billion currently being held in cash. As consumer confidence repairs itself, the sidelined cash will be invested. While we believe that the economy will technically be in recession for most of 2009, negative GDP figures will gradually become less severe.

 

The stock market, however, is a discounting mechanism; investors look forward toward the potential range of economic, sector, and company-specific outcomes in terms of revenues, margins, profits, and growth to assess the value of equity. At Alger, our investment process includes valuation analysis that considers outcomes that are both highly pessimistic and optimistic. Most of the time, we observe stocks selling within ranges that reflect varying but ultimately balanced views between the divergent possibilities.

 

Occasionally, however, the crowd mentality of the market overwhelms such rational behavior and investors see something entirely different: equities of companies, even the strongest, suddenly priced to fail. We believe the S&P 500 Index(v) lows in March reflected such an event and, thus, we are increasingly confident that those lows will mark the bottom. Because we do not expect the economy—and, in particular, investor sentiment about economic recovery and future growth—to recover in a straight line, we think continued market volatility is likely. The inevitable sell-offs in the stock market that will accompany such uncertain economic progress will offer excellent buying opportunities for patient, long-term investors.

 

During the last six months, we had limited exposure to the hardest-hit areas of the financial sector, and our performance was largely a result of the market’s broad and indiscriminate decline. Even in the best of times investing is a challenge; however, it is during bad times that an investment firm proves its capability to manage through crisis, focus on improving performance, and not only endure but

 

3



 

also improve upon its strengths. Alger investment professionals have remained focused and disciplined in executing upon our consistent investment philosophy and process. Now in 2009, our 45th year in the business of investing, we have successfully passed through many shadowy times and found new opportunities amidst economic and generational change.

 

Kierkegaard once wrote, “The task must be made difficult, for only the difficult inspires the noble-hearted.” We have perhaps encountered the most difficult task our generation will see, and our firm has come out of it more inspired than ever to deliver exceptional investment results for an exceptional group of individuals and institutions: our clients.

 

Portfolio Matters

 

For the six-month period ending April 30, 2009, the Alger China-U.S. Growth Fund returned 5.98% . During the same period the S&P 500 Index returned -8.49%, and the MSCI Zhong Hua Indexvi returned 26.46% .

 

During the period, compared to the S&P 500 Index, the largest portfolio weightings in the Alger China-U.S. Growth Fund were in the Information Technology and Financials sectors. The largest sector overweight for the period was in Information Technology. The largest sector underweight for the period was in Health Care. Relative outperformance in the Financials and Materials sectors were the most important contributors to performance. Sectors that detracted from the portfolio included Information Technology and Telecommunications Services.

 

During the period, compared to the MSCI Zhong Hua Index, the largest portfolio weightings in the Alger China-U.S. Growth Fund were in the Information Technology and Financials sectors. The largest sector overweight for the period was in Information Technology. The largest sector underweight for the period was in Financials. Relative outperformance in the Materials and Information Technology sectors were the most important contributors to performance. Sectors that detracted from the portfolio included Financials and Energy.

 

Among the most important relative contributors to the portfolio during the six months ended April 30, 2009, were Companhia Vale do Rio Doce (ADS), China National Building Material Co. Ltd., China High Speed Transmission Equipment Group Co. Ltd., China Life Insurance Co. Ltd. (China), and ZTE CORP H. Conversely, detracting from overall results were Autodesk Inc., JA Solar Holdings Co. Ltd. (ADS), China Insurance International Holdings Co. Ltd., SINA Corp., and Agile Property Holdings Ltd.

 

Respectfully submitted,

 

 

Daniel C. Chung

 

Chief Investment Officer

 

 

4



 


(i)           The Dow Jones Industrial Average is an index of common stocks comprised of major industrial companies and assumes reinvestment of dividends. It is frequently used as a general measure of stock market performance.

(ii)        Labor Department

(iii)    Federal Reserve

(iv)    EU statistics office

(v)       Standard & Poor’s 500 Index is an index of the 500 largest and most profitable companies in the United States.

(vi)    The MSCI Zhong Hua Index is an aggregate of the MSCI Hong Kong Index (a capitalization-weighted index that monitors the performance of stocks from Hong Kong) and the MSCI China Free Index (an unmanaged market capitalization-weighted index of Chinese companies available to non-domestic investors).

 

Investors cannot invest directly in an index. Index performance does not reflect the deduction for fees, expenses or taxes.

 

This report and the financial statements contained herein are submitted for the general information of shareholders of the Fund. This report is not authorized for distribution to prospective investors in the Fund unless proceeded or accompanied by an effective prospectus for the Fund.  Fund returns represent the fiscal six month period return of Class A shares prior to the deduction of any sales charges. The performance data quoted represents past performance, which is not an indication or guarantee of future results.

 

Standardized performance results can be found on the following pages. The investment return and principal value of an investment in a fund will fluctuate so that an investor’s shares when redeemed may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the most recent month-end, visit us at www.alger.com, or call us at (800) 992-3863.

 

The views and opinions of the Fund’s management in this report are as of the date of the Shareholders letter and are subject to change at any time subsequent to this date. There is no guarantee that any of the assumptions that formed the basis for the opinions stated herein are accurate or that they will materialize. Moreover, the information forming the basis for such assumptions is from sources believed to be reliable, however, there is no guarantee that such information is accurate. Any securities mentioned, whether owned in a fund or otherwise, are considered in the context of the construction of an overall portfolio of securities and therefore reference to them should not be construed as a recommendation or offer to purchase or sell any such security. Inclusion of such securities in a fund and transactions in such securities, if any, may be for a variety of reasons, including without limitation, in response to cash flows, inclusion in a benchmark, and risk control. The reference to a specific security should also be understood in such context and not viewed as a statement that the security is a significant holding in a portfolio. Please refer to the Schedule of Investments for each fund which is included in this report for a complete list of fund holdings as of April 30, 2009. Securities mentioned in the Shareholders letter, if not found in the Schedule of Investments, may have been held by the Fund during the six-month fiscal period.

 

A Word About Risk

 

Growth stocks tend to be more volatile than other stocks as the price of growth stocks tends to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Investing in the stock market involves gains and losses and may not be suitable for all investors. Stocks of small- and

 

5



 

mid-sized companies are subject to greater risk than stocks of larger, more established companies owing to such factors as limited liquidity, inexperienced management, and limited financial resources. Investing in foreign securities involves additional risk (including currency risk, risks related to political, social, or economic conditions, and risks associated with the Chinese markets, such as increased volatility, limited liquidity, less stringent regulatory and legal system, and lack of industry and country diversification), and may not be suitable for all investors. Funds that participate in leveraging, such as the Alger China-U.S. Growth Fund, are subject to the risk that borrowing money to leverage will exceed the returns for securities purchased or that the securities purchased may actually go down in value; thus, the funds’ net asset value can decrease more quickly than if the fund had not borrowed. For a more detailed discussion of the risks associated with the Fund, please see the Fund’s Prospectus.

 

Before investing, carefully consider a fund’s investment objective, risks, charges, and expenses. For a prospectus containing this and other information about The Alger Funds call us at (800) 992-3863 or visit us at www.alger.com. Read it carefully before investing. Fred Alger & Company, Incorporated, Distributor. Member NYSE Euronext, SIPC.

 

NOT FDIC INSURED. NOT BANK GUARANTEED.  MAY LOSE VALUE.

 

6



 

FUND PERFORMANCE AS OF 3/31/09 (Unaudited) †

 

AVERAGE ANNUAL TOTAL RETURNS

 

 

 

1

 

5

 

10

 

SINCE

 

 

 

YEAR

 

YEARS

 

YEARS

 

INCEPTION

 

Alger China-U.S. Growth Class A

 

 

 

 

 

 

 

 

 

(Inception 11/3/03)

 

(48.29

)%

1.93

%

n/a

 

4.26

%

Alger China-U.S. Growth Class C*

 

 

 

 

 

 

 

 

 

(Inception 3/3/08)

 

(46.32

)%

2.45

%

n/a

 

4.69

%

 

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. The chart and table above do not reflect the deduction of taxes that a shareholder would have paid on fund distributions or on the redemption of fund shares. Investment return and principal will fluctuate and the Fund’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. For performance current to the most recent month end, visit us at www.alger.com or call us at (800) 992-3863.

 


                   Returns reflect maximum sales charges on Class A shares and applicable contingent deferred sales charges on Class C shares.

 

*                 Performance figures prior to 3/3/08, inception of Class C shares, are those of the Fund’s Class A shares. Performance has been adjusted to remove the front-end sales charge imposed by Class A shares. Class C shares do not impose a front-end sales charge but do impose a contingent deferred sales charge of 1% on shares redeemed. If Class A sales charges were reflected, annual returns for the Class C shares would be lower. The performance figures prior to 3/3/08 have also been adjusted to reflect the higher operating expenses and applicable contingent sales charge of Class C Shares.

 

7



 

ALGER CHINA-U.S. GROWTH FUND

Fund Highlights Through April 30, 2009 (Unaudited)

 

HYPOTHETICAL $10,000 INVESTMENT IN CLASS A SHARES

 

 

The chart above illustrates the growth in value of a hypothetical $10,000 investment made in the Alger China-U.S. Growth Fund Class A shares, with an initial maximum sales charge of 5.25%, and the S&P 500 Index and the MSCI Zhong Hau Index (unmanaged indices of common stocks) on November 3, 2003, the inception date of the Alger China-U.S. Growth Fund Class A, through April 30, 2009. The figures for the Alger China-U.S. Growth Fund Class A shares, the S&P 500 Index, and the MSCI Zhong Hau Index include reinvestment of dividends.

 

Investors cannot invest directly in any index. Index performance does not reflect deduction for fees, expenses, or taxes.

 

PERFORMANCE COMPARISON AS OF 4/30/09 †

 

AVERAGE ANNUAL TOTAL RETURNS

 

 

 

 

 

 

 

 

 

SINCE

 

 

 

1 YEAR

 

5 YEARS

 

10 YEARS

 

INCEPTION

 

Class A (Inception 11/3/03)

 

(46.35

)%

6.39

%

n/a

 

6.42

%

S&P 500 Index

 

(35.31

)%

(2.70

)%

n/a

 

(1.67

)%

MSCI Zhong Hau Index

 

(38.49

)%

9.82

%

n/a

 

8.71

%

 

 

 

 

 

 

 

 

 

 

Class C (Inception 3/3/08)*

 

(44.35

)%

6.94

%

n/a

 

6.86

%

S&P 500 Index

 

(35.31

)%

(2.70

)%

n/a

 

(1.67

)%

MSCI Zhong Hau Index

 

(38.49

)%

9.82

%

n/a

 

8.71

%

 

The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The Fund’s average annual total returns include changes in share price and reinvestment of dividends and capital gains. The chart and table above do not reflect the deduction of taxes that a shareholder would have paid on fund distributions or on the redemption of fund shares. Investment return and principal will fluctuate and the Fund’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. For performance current to the most recent month end, visit us at www.alger.com or call us at (800) 992-3863.

 


                   Returns reflect maximum sales charges on Class A shares and applicable contingent deferred sales charges on Class C shares.

 

*                 Performance figures prior to 3/3/08, inception of Class C shares, are those of the Fund’s Class A shares. Performance has been adjusted to remove the front-end sales charge imposed by Class A shares. Class C shares do not impose a front-end sales charge but do impose a contingent deferred sales charge of 1% on shares redeemed. If Class A sales charges were reflected, annual returns for the Class C shares would be lower. The performance figures prior to 3/3/08 have also been adjusted to reflect the higher operating expenses and applicable contingent sales charge of Class C Shares.

 

8



 

PORTFOLIO SUMMARY†

April 30, 2009 (Unaudited)

 

 

 

CHINA-U.S.

 

COUNTRY

 

GROWTH

 

AUSTRALIA

 

2.6

%

BRAZIL

 

2.1

 

CANADA

 

1.5

 

CAYMAN ISLANDS

 

0.8

 

CHINA

 

24.9

 

HONG KONG

 

19.1

 

JAPAN

 

1.5

 

SWITZERLAND

 

1.0

 

TAIWAN

 

11.9

 

UNITED STATES

 

30.4

 

Cash and Net Other Assets

 

4.2

 

 

 

100.0

%

 


                   Based on net assets.

 

9



 

ALGER CHINA-U.S. GROWTH FUND

Schedule of Investments (Unaudited) April 30, 2009

 

 

 

SHARES

 

VALUE

 

COMMON STOCKS—95.6%

 

 

 

 

 

AUSTRALIA—2.6%

 

 

 

 

 

OIL & GAS EXPLORATION & PRODUCTION—2.6%

 

 

 

 

 

Linc Energy Ltd.*
(Cost $840,246)

 

736,600

 

$

1,358,362

 

 

 

 

 

 

 

BRAZIL—2.1%

 

 

 

 

 

DIVERSIFIED METALS & MINING—2.1%

 

 

 

 

 

Cia Vale do Rio Doce#
(Cost $763,634)

 

67,950

 

1,121,855

 

 

 

 

 

 

 

CANADA—1.5%

 

 

 

 

 

COMMUNICATIONS EQUIPMENT—0.8%

 

 

 

 

 

Research In Motion Ltd.*

 

6,350

 

441,325

 

 

 

 

 

 

 

FERTILIZERS & AGRICULTURAL CHEMICALS—0.5%

 

 

 

 

 

Potash Corporation of Saskatchewan Inc.

 

2,750

 

237,848

 

 

 

 

 

 

 

GOLD—0.2%

 

 

 

 

 

Goldcorp Inc.

 

750

 

20,640

 

Yamana Gold Inc.

 

13,200

 

104,412

 

 

 

 

 

125,052

 

TOTAL CANADA
(Cost $709,924)

 

 

 

804,225

 

 

 

 

 

 

 

CAYMAN ISLANDS—0.8%

 

 

 

 

 

APPLICATION SOFTWARE—0.3%

 

 

 

 

 

VanceInfo Technologies Inc.#*

 

18,750

 

149,250

 

 

 

 

 

 

 

EDUCATION SERVICES—0.2%

 

 

 

 

 

New Oriental Education & Technology Group#*

 

2,400

 

127,152

 

 

 

 

 

 

 

INTERNET SOFTWARE & SERVICES—0.3%

 

 

 

 

 

Netease.com#*

 

4,450

 

134,301

 

 

 

 

 

 

 

TOTAL CAYMAN ISLANDS
(Cost $289,620)

 

 

 

410,703

 

 

 

 

 

 

 

CHINA—24.9%

 

 

 

 

 

AUTOMOBILE MANUFACTURERS—0.7%

 

 

 

 

 

Great Wall Motor Co., Ltd.*

 

705,500

 

376,866

 

 

 

 

 

 

 

COMMUNICATIONS EQUIPMENT—0.7%

 

 

 

 

 

ZTE Corp.

 

111,748

 

379,215

 

CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.8%

 

 

 

 

 

China High Speed Transmission Equipment Group Co., Ltd.

 

297,000

 

536,506

 

China National Materials Co., Ltd.

 

533,000

 

409,886

 

 

 

 

 

946,392

 

CONSTRUCTION MATERIALS—1.6%

 

 

 

 

 

China National Building Material Co., Ltd.

 

392,000

 

833,554

 

 

 

 

 

 

 

DIVERSIFIED BANKS—2.6%

 

 

 

 

 

Bank of Communications Co., Ltd.

 

338,000

 

275,628

 

China Construction Bank Corp.

 

872,000

 

509,688

 

Industrial & Commercial Bank of China

 

1,019,000

 

589,036

 

 

 

 

 

1,374,352

 

 

10



 

 

 

SHARES

 

VALUE

 

COMMON STOCKS(CONT.)

 

 

 

 

 

CHINA—(CONT.)

 

 

 

 

 

ELECTRICAL COMPONENTS & EQUIPMENT—2.7%

 

 

 

 

 

Byd Co., Ltd. *

 

77,500

 

$

203,496

 

JA Solar Holdings Co., Ltd. #*

 

111,750

 

392,243

 

Suntech Power Holdings Co., Ltd. #*

 

38,200

 

570,325

 

Yingli Green Energy Holding Co., Ltd. #*

 

34,600

 

241,508

 

 

 

 

 

1,407,572

 

ELECTRONIC COMPONENTS—0.5%

 

 

 

 

 

AAC Acoustic Technologies Holdings Inc.

 

482,000

 

264,318

 

 

 

 

 

 

 

HEALTH CARE EQUIPMENT—1.0%

 

 

 

 

 

China Medical Technologies Inc.#

 

28,650

 

559,821

 

 

 

 

 

 

 

INTEGRATED OIL & GAS—2.0%

 

 

 

 

 

China Petroleum & Chemical Corp.

 

1,062,000

 

833,140

 

PetroChina Co Ltd., CL. H

 

272,000

 

240,408

 

 

 

 

 

1,073,548

 

INTERNET SOFTWARE & SERVICES—2.4%

 

 

 

 

 

Baidu Inc. #*

 

2,700

 

628,830

 

Tencent Holdings Ltd.

 

70,000

 

629,988

 

 

 

 

 

1,258,818

 

LEISURE PRODUCTS—0.6%

 

 

 

 

 

Anta Sports Products Ltd.

 

350,000

 

299,865

 

 

 

 

 

 

 

LIFE & HEALTH INSURANCE—4.3%

 

 

 

 

 

China Life Insurance Co., Ltd.

 

427,000

 

1,515,132

 

Ping An Insurance Group Co., of China Ltd.

 

117,000

 

730,670

 

 

 

 

 

2,245,802

 

PACKAGED FOODS & MEATS—1.0%

 

 

 

 

 

China Yurun Food Group Ltd.

 

228,000

 

271,534

 

Want Want China Holdings Ltd.

 

478,000

 

239,921

 

 

 

 

 

511,455

 

REAL ESTATE MANAGEMENT & DEVELOPMENT—1.5%

 

 

 

 

 

Guangzhou R&F Properties Co., Ltd.

 

115,400

 

188,508

 

Sino-Ocean Land Holdings Ltd.

 

780,000

 

582,724

 

 

 

 

 

771,232

 

REAL ESTATE SERVICES—1.0%

 

 

 

 

 

E-House China Holdings Ltd.#*

 

45,850

 

568,082

 

 

 

 

 

 

 

STEEL—0.5%

 

 

 

 

 

Maanshan Iron & Steel*

 

623,123

 

254,872

 

 

 

 

 

 

 

TOTAL CHINA
(Cost $11,605,470)

 

 

 

13,125,764

 

 

 

 

 

 

 

HONG KONG—19.1%

 

 

 

 

 

ELECTRONIC MANUFACTURING SERVICES—0.6%

 

 

 

 

 

Ju Teng International Holdings Ltd.*

 

710,000

 

311,478

 

 

 

 

 

 

 

EXCHANGE TRADED FUNDS—1.6%

 

 

 

 

 

iShares Asia Trust - iShares FTSE/Xinhua A50 China Tracker

 

592,300

 

846,782

 

 

 

 

 

 

 

FERTILIZERS & AGRICULTURAL CHEMICALS—0.5%

 

 

 

 

 

China BlueChemical Ltd.

 

449,000

 

239,848

 

 

11



 

 

 

SHARES

 

VALUE

 

COMMON STOCKS—(CONT.)

 

 

 

 

 

HONG KONG—(CONT.)

 

 

 

 

 

GOLD—0.5%

 

 

 

 

 

Zhaojin Mining Industry Co Ltd.

 

199,000

 

$

 257,796

 

 

 

 

 

 

 

INDUSTRIAL CONGLOMERATES—0.8%

 

 

 

 

 

Hutchison Whampoa Ltd.

 

69,000

 

407,760

 

 

 

 

 

 

 

MARINE—0.4%

 

 

 

 

 

Orient Overseas International Ltd.

 

76,000

 

220,641

 

 

 

 

 

 

 

MULTI-LINE INSURANCE—0.7%

 

 

 

 

 

China Insurance International Holdings Co., Ltd.*

 

204,000

 

342,187

 

 

 

 

 

 

 

OIL & GAS EXPLORATION & PRODUCTION—1.6%

 

 

 

 

 

CNOOC Ltd.

 

739,000

 

827,664

 

 

 

 

 

 

 

PAPER PRODUCTS—0.3%

 

 

 

 

 

Nine Dragons Paper Holdings Ltd.

 

353,685

 

162,007

 

 

 

 

 

 

 

RAILROADS—0.4%

 

 

 

 

 

MTR Corp.*

 

91,203

 

232,063

 

 

 

 

 

 

 

REAL ESTATE MANAGEMENT & DEVELOPMENT—5.4%

 

 

 

 

 

Cheung Kong Holdings Ltd.

 

75,000

 

787,726

 

Cheung Kong Infrastructure Holdings Ltd.

 

47,728

 

185,058

 

China Resources Land Ltd.

 

184,705

 

334,607

 

New World Development Ltd.

 

443,000

 

587,606

 

Shimao Property Holdings Ltd.

 

258,500

 

291,516

 

Sino Land Co.

 

308,000

 

397,412

 

Sun Hung Kai Properties Ltd.

 

26,000

 

270,563

 

 

 

 

 

2,854,488

 

SPECIALIZED FINANCE—3.5%

 

 

 

 

 

Hong Kong Exchanges and Clearing Ltd.

 

160,550

 

1,871,666

 

 

 

 

 

 

 

WIRELESS TELECOMMUNICATION SERVICES—2.8%

 

 

 

 

 

China Mobile Ltd.

 

167,000

 

1,456,643

 

 

 

 

 

 

 

TOTAL HONG KONG
(Cost $8,514,855)

 

 

 

10,031,023

 

 

 

 

 

 

 

JAPAN—1.5%

 

 

 

 

 

HOME ENTERTAINMENT SOFTWARE—1.5%

 

 

 

 

 

Nintendo Co., Ltd.#
(Cost $820,902)

 

22,600

 

760,490

 

 

 

 

 

 

 

SWITZERLAND—1.0%

 

 

 

 

 

OIL & GAS DRILLING—1.0%

 

 

 

 

 

Transocean Ltd.*
(Cost $353,425)

 

7,950

 

536,466

 

 

 

 

 

 

 

TAIWAN—11.9%

 

 

 

 

 

COMPUTER HARDWARE—1.0%

 

 

 

 

 

Acer Inc. *

 

148,495

 

284,207

 

HTC Corp. *

 

21,000

 

284,457

 

 

 

 

 

568,664

 

COMPUTER STORAGE & PERIPHERALS—0.6%

 

 

 

 

 

InnoLux Display Corp.*

 

261,000

 

288,435

 

 

12



 

 

 

SHARES

 

VALUE

 

COMMON STOCKS—(CONT.)

 

 

 

 

 

TAIWAN—(CONT.)

 

 

 

 

 

CONSTRUCTION MATERIALS—0.9%

 

 

 

 

 

Taiwan Cement Corp.

 

476,000

 

$

454,793

 

 

 

 

 

 

 

DISTRIBUTORS—0.8%

 

 

 

 

 

WPG Holdings Co., Ltd.*

 

505,000

 

419,135

 

 

 

 

 

 

 

DIVERSIFIED BANKS—1.2%

 

 

 

 

 

Chinatrust Financial Holding Co., Ltd. *

 

663,000

 

303,701

 

First Financial Holding Co., Ltd. *

 

625,000

 

330,703

 

 

 

 

 

634,404

 

ELECTRICAL COMPONENTS & EQUIPMENT—1.3%

 

 

 

 

 

Cheng Uei Precision Industry Co., Ltd. *

 

281,000

 

392,526

 

Simplo Technology Co., Ltd. *

 

76,480

 

292,522

 

 

 

 

 

685,048

 

ELECTRONIC COMPONENTS—0.5%

 

 

 

 

 

Wintek Corp.*

 

563,000

 

260,447

 

 

 

 

 

 

 

ELECTRONIC MANUFACTURING SERVICES—1.3%

 

 

 

 

 

HON HAI Precision Industry Co., Ltd. *

 

141,000

 

407,565

 

Young Fast Optoelectronics Co Ltd.

 

29,000

 

256,036

 

 

 

 

 

663,601

 

HEALTH CARE EQUIPMENT—0.5%

 

 

 

 

 

Apex Biotechnology Corp.*

 

144,000

 

247,304

 

 

 

 

 

 

 

OTHER DIVERSIFIED FINANCIAL SERVICES—0.6%

 

 

 

 

 

Fubon Financial Holding Co., Ltd.*

 

390,000

 

303,052

 

 

 

 

 

 

 

PACKAGED FOODS & MEATS—0.5%

 

 

 

 

 

Uni-President Enterprises Corp.*

 

263,000

 

264,404

 

 

 

 

 

 

 

REAL ESTATE MANAGEMENT & DEVELOPMENT—0.7%

 

 

 

 

 

Sinyi Realty Co.*

 

276,000

 

349,658

 

 

 

 

 

 

 

SEMICONDUCTORS—2.0%

 

 

 

 

 

Advanced Semiconductor Engineering Inc. *

 

393,000

 

211,511

 

MediaTek Inc. *

 

31,000

 

322,902

 

Pixart Imaging Inc. *

 

40,000

 

243,095

 

Taiwan Semiconductor Manufacturing Co., Ltd. #

 

24,600

 

260,022

 

 

 

 

 

1,037,530

 

TOTAL TAIWAN
(Cost $5,230,689)

 

 

 

6,176,475

 

 

 

 

 

 

 

UNITED STATES—30.2%

 

 

 

 

 

AEROSPACE & DEFENSE—1.9%

 

 

 

 

 

BE Aerospace Inc.*

 

93,800

 

1,012,102

 

 

 

 

 

 

 

AIR FREIGHT & LOGISTICS—2.0%

 

 

 

 

 

United Parcel Service Inc., Cl. B

 

20,100

 

1,052,034

 

 

 

 

 

 

 

BIOTECHNOLOGY—0.7%

 

 

 

 

 

Alexion Pharmaceuticals Inc. *

 

4,900

 

163,758

 

Celgene Corp. *

 

4,600

 

196,512

 

 

 

 

 

360,270

 

CASINOS & GAMING—1.3%

 

 

 

 

 

Las Vegas Sands Corp.*

 

83,850

 

655,707

 

 

13



 

 

 

SHARES

 

VALUE

 

COMMON STOCKS—(CONT.)

 

 

 

 

 

UNITED STATES—(CONT.)

 

 

 

 

 

COMMERCIAL PRINTING—0.3%

 

 

 

 

 

Warnaco Group Inc., /The*

 

4,550

 

$

131,222

 

 

 

 

 

 

 

COMMUNICATIONS EQUIPMENT—4.1%

 

 

 

 

 

Cisco Systems Inc. *

 

57,800

 

1,116,695

 

Qualcomm Inc.

 

24,600

 

1,041,072

 

 

 

 

 

2,157,767

 

COMPUTER & ELECTRONICS RETAIL—0.2%

 

 

 

 

 

Best Buy Co., Inc.

 

3,200

 

122,816

 

 

 

 

 

 

 

COMPUTER HARDWARE—0.6%

 

 

 

 

 

Apple Inc.*

 

2,300

 

289,410

 

 

 

 

 

 

 

CONSTRUCTION & FARM MACHINERY & HEAVY TRUCKS—1.9%

 

 

 

 

 

Cummins Inc.

 

9,700

 

329,800

 

Deere & Co.

 

15,450

 

637,467

 

 

 

 

 

967,267

 

DATA PROCESSING & OUTSOURCED SERVICES—0.5%

 

 

 

 

 

Mastercard Inc.

 

1,550

 

284,348

 

 

 

 

 

 

 

ELECTRICAL COMPONENTS & EQUIPMENT—0.6%

 

 

 

 

 

First Solar Inc.*

 

1,700

 

318,393

 

 

 

 

 

 

 

EXCHANGE TRADED FUNDS—1.1%

 

 

 

 

 

iShares MSCI Taiwan Index Fund

 

53,864

 

550,490

 

 

 

 

 

 

 

FERTILIZERS & AGRICULTURAL CHEMICALS—0.5%

 

 

 

 

 

Mosaic Co., /The

 

7,750

 

313,487

 

 

 

 

 

 

 

GENERAL MERCHANDISE STORES—0.6%

 

 

 

 

 

Target Corp.

 

7,850

 

323,891

 

 

 

 

 

 

 

HYPERMARKETS & SUPER CENTERS—1.7%

 

 

 

 

 

Wal-Mart Stores Inc.

 

18,150

 

914,760

 

 

 

 

 

 

 

INDUSTRIAL MACHINERY—0.9%

 

 

 

 

 

SPX Corp.

 

9,900

 

457,083

 

 

 

 

 

 

 

INTERNET RETAIL—0.5%

 

 

 

 

 

Amazon.com Inc.*

 

3,150

 

253,638

 

 

 

 

 

 

 

INTERNET SOFTWARE & SERVICES—1.5%

 

 

 

 

 

Yahoo! Inc.*

 

55,200

 

788,807

 

 

 

 

 

 

 

OIL & GAS EQUIPMENT & SERVICES—1.0%

 

 

 

 

 

Smith International Inc.

 

19,800

 

511,830

 

 

 

 

 

 

 

OTHER DIVERSIFIED FINANCIAL SERVICES—0.2%

 

 

 

 

 

Bank of America Corp.

 

11,600

 

103,588

 

 

 

 

 

 

 

PHARMACEUTICALS—1.8%

 

 

 

 

 

Johnson & Johnson

 

18,000

 

942,480

 

 

 

 

 

 

 

REAL ESTATE SERVICES—0.1%

 

 

 

 

 

Mack-Cali Realty Corp.

 

1,150

 

30,889

 

 

 

 

 

 

 

RESTAURANTS—1.7%

 

 

 

 

 

Burger King Holdings Inc.

 

18,400

 

300,656

 

Yum! Brands Inc.

 

16,700

 

556,945

 

 

 

 

 

857,601

 

 

14



 

 

 

SHARES

 

VALUE

 

COMMON STOCKS—(CONT.)

 

 

 

 

 

UNITED STATES—(CONT.)

 

 

 

 

 

SEMICONDUCTORS—2.1%

 

 

 

 

 

Altera Corp.

 

25,700

 

$

419,167

 

Atheros Communications Inc. *

 

15,250

 

262,605

 

Intel Corp.

 

30,950

 

488,390

 

 

 

 

 

1,170,162

 

SPECIALIZED FINANCE—0.8%

 

 

 

 

 

CME Group Inc.

 

1,800

 

398,430

 

 

 

 

 

 

 

SPECIALIZED REITS—0.1%

 

 

 

 

 

Host Hotels & Resorts Inc.

 

4,100

 

31,529

 

 

 

 

 

 

 

SYSTEMS SOFTWARE—1.5%

 

 

 

 

 

Microsoft Corp.

 

38,150

 

772,919

 

 

 

 

 

 

 

TOTAL UNITED STATES
(Cost $16,843,797)

 

 

 

15,772,920

 

 

 

 

 

 

 

TOTAL COMMON STOCKS
(Cost $45,972,562)

 

 

 

50,098,283

 

 

 

 

PRINCIPAL

 

 

 

 

 

AMOUNT

 

 

 

CORPORATE BONDS—0.2%

 

 

 

 

 

UNITED STATES—0.2%

 

 

 

 

 

CASINOS & GAMING—0.2%

 

 

 

 

 

Wynn Las Vegas LLC / Wynn Las Vegas Capital Corp, 6.25%, 12/1/14
(Cost $82,215)

 

100,000

 

85,000

 

 

 

 

 

 

 

SHORT-TERM INVESTMENTS—5.7%

 

 

 

 

 

TIME DEPOSITS—5.7%

 

 

 

 

 

Citibank London, 0.03%, 5/01/09
(Cost $2,994,409)

 

2,994,409

 

2,994,409

 

 

 

 

 

 

 

Total Investments
(Cost $49,049,186)(a)

 

101.5

%

53,177,692

 

Liabilities in Excess of Other Assets

 

(1.5

)

(793,514

)

NET ASSETS

 

100.0

%

$

52,384,178

 

 


*

 

Non-income producing security.

#

 

American Depositary Receipts.

(a)

 

At April 30, 2009, the net unrealized appreciation on investments, based on cost for federal income tax purposes of $51,942,537 amounted to $1,235,155 which consisted of aggregate gross unrealized appreciation of $6,832,068 and aggregate gross unrealized depreciation of $5,596,913.

 

See Notes to Financial Statements.

 

15



 

ALGER CHINA-U.S. GROWTH FUND

Statement of Assets and Liabilities (Unaudited) April 30, 2009

 

ASSETS:

 

 

 

Investments in securities, at value (Identified cost)*

 

 

 

see accompanying schedules of investments

 

$

53,177,692

 

Foreign Cash**

 

5,508

 

Receivable for investment securities sold

 

629,295

 

Receivable for shares of beneficial interest sold

 

137,717

 

Dividends and interest receivable

 

137,890

 

Prepaid Expenses

 

34,925

 

Total Assets

 

54,123,027

 

LIABILITIES:

 

 

 

Payable for investment securities purchased

 

1,339,360

 

Payable foreign currency contracts

 

16

 

Payable for shares of beneficial interest redeemed

 

221,314

 

Accrued investment advisory fees

 

49,891

 

Accrued transfer agent fees

 

41,022

 

Accrued distribution fees

 

10,586

 

Accrued administrative fees

 

1,135

 

Accrued other expenses

 

75,525

 

Total Liabilities

 

1,738,849

 

NET ASSETS

 

$

52,384,178

 

Net Assets Consist of:

 

 

 

Paid in capital

 

90,384,305

 

Undistributed net investment income (accumulated loss)

 

(260,960

)

Undistributed net realized gain (accumulated loss)

 

(41,867,762

)

Net unrealized appreciation on investments

 

4,128,595

 

NET ASSETS

 

$

52,384,178

 

SHARES OF BENEFICIAL INTEREST OUTSTANDING—NOTE 6

 

 

 

Class A

 

4,873,011

 

Class C

 

45,565

 

Net Asset Value Per Share

 

 

 

Class A

 

$

10.65

 

Class C

 

$

10.59

 

Offering Price Per Share

 

 

 

Class A

 

$

11.24

 

Class C

 

$

10.59

 

 


*Identified Cost

 

$

49,049,186

 

**Cost Foreign Cash

 

$

5,430

 

 

See Notes to Financial Statements.

 

16



 

ALGER CHINA-U.S. GROWTH FUND

Statement of Operations (Unaudited)

For the six months ended April 30, 2009

 

INCOME:

 

 

 

Dividends (net of foreign withholding taxes*)

 

$

360,112

 

Interest (net of foreign withholding taxes*)

 

27

 

Total Income

 

360,139

 

EXPENSES

 

 

 

Advisory fees—Note 3(a)

 

292,980

 

Distribution fees—Note 3(f):

 

 

 

Class A

 

60,635

 

Class C

 

1,608

 

Administrative fees—Note 3(a)

 

6,714

 

Custodian fees

 

49,608

 

Interest expenses

 

1,903

 

Transfer agent fees and expenses—Note 3(b)

 

83,835

 

Prepaid expenses

 

30,195

 

Printing fees

 

21,575

 

Professional fees

 

51,521

 

Registration fees

 

6,696

 

Trustee fees-Note 3(e)

 

6,447

 

Miscellaneous

 

7,382

 

Total Expenses

 

621,099

 

NET INVESTMENT LOSS

 

(260,960

)

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:

 

 

 

Net realized loss on investments

 

(26,611,135

)

Net realized loss on foreign currency transactions

 

(3,286

)

Net change in unrealized appreciation (depreciation) on investments and foreign currency translations

 

27,118,700

 

Net realized and unrealized gain on investments, options and foreign currency

 

504,279

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

 

$

243,319

 

 


*Foreign withholding taxes

 

$

7,382

 

 

See Notes to Financial Statements.

 

17



 

ALGER CHINA-U.S. GROWTH FUND

Statements of Changes in Net Assets

 

 

 

For the

 

 

 

 

 

Six Months Ended

 

For the

 

 

 

April 30, 2009

 

Year Ended

 

 

 

(Unaudited)

 

October 31, 2008

 

Net investment loss

 

$

(260,960

)

$

(636,163

)

Net realized loss on investments and foreign currency transactions

 

(26,614,421

)

(15,006,368

)

Net change in unrealized appreciation (depreciation) on investments, options and foreign currency translations

 

27,118,700

 

(86,405,116

)

Net increase (decrease) in net assets resulting from operations

 

243,319

 

(102,047,647

)

Distributions to shareholders from:

 

 

 

 

 

Net realized gains

 

 

 

 

 

Class A

 

 

(17,061,054

)

Total distributions to shareholders

 

 

(17,061,054

)

Increase (decrease) from shares of beneficial interest transactions:

 

 

 

 

 

Class A

 

(13,183,452

)

(17,917,679

)

Class C

 

120,694

 

606,622

 

Net decrease from shares of beneficial interest transactions—Note 6

 

(13,062,758

)

(17,311,057

)

Total decrease

 

(12,819,439

)

(136,419,758

)

Net Assets:

 

 

 

 

 

Beginning of period

 

65,203,617

 

201,623,375

 

END OF PERIOD

 

$

52,384,178

 

$

65,203,617

 

Undistributed net investment income (accumulated loss)

 

$

(260,960

)

$

 

 

See Notes to Financial Statements.

 

18



 

(This page has been intentionally left blank)

 


 


 

ALGER CHINA-U.S. GROWTH FUND

Financial Highlights for a share outstanding throughout the period

 

 

 

Class A

 

 

 

 

 

 

 

 

 

 

 

 

 

From

 

 

 

 

 

 

 

 

 

 

 

 

 

11/3/2003

 

 

 

 

 

 

 

 

 

 

 

 

 

(commencement

 

 

 

Six months

 

 

 

 

 

 

 

 

 

of

 

 

 

ended

 

Year ended

 

Year ended

 

Year ended

 

Year ended

 

operations) to

 

 

 

4/30/2009(i)

 

10/31/2008

 

10/31/2007

 

10/31/2006

 

10/31/2005

 

10/31/2004(ii)

 

INCOME FROM INVESTMENT OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

Net asset value, beginning of period

 

$

10.18

 

$

25.09

 

$

15.57

 

$

12.99

 

$

11.05

 

$

10.00

 

Net investment loss(iii)

 

(0.05

)

(0.08

)

(0.13

)

(0.04

)

(0.07

)

(0.08

)

Net realized and unrealized gain (loss) on investments

 

0.52

 

(12.79

)

11.67

 

4.03

 

2.01

 

1.13

 

Total from investment operations

 

0.47

 

(12.87

)

11.54

 

3.99

 

1.94

 

1.05

 

Distributions from net realized gains

 

 

(2.04

)

(2.02

)

(1.41

)

 

 

Net asset value, end of period

 

$

10.65

 

$

10.18

 

$

25.09

 

$

15.57

 

$

12.99

 

$

11.05

 

Total return

 

4.5

%

(55.2

)%

83.0

%

33.5

%

17.6

%

10.5

%

RATIOS/SUPPLEMENTAL DATA:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net assets, end of period (000’s omitted)

 

$

51,902

 

$

64,865

 

$

201,623

 

$

73,147

 

$

36,630

 

$

26,290

 

Ratio of gross expenses to average net assets

 

2.55

%

2.15

%

2.17

%

2.36

%

2.77

%

2.87

%

Ratio of expense reimbursements to average net assets

 

0.00

%

(0.25

)%

(0.25

)%

(0.16

)%

(0.51

)%

(0.43

)%

Ratio of net expenses to average net assets

 

2.55

%

1.90

%

1.92

%

2.20

%

2.26

%

2.44

%

Ratio of net investment income to average net assets

 

(1.04

)%

(0.43

)%

(0.71

)%

(0.30

)%

(0.56

)%

(0.81

)%

Portfolio turnover rate

 

111.47

%

190.60

%

107.57

%

192.21

%

288.53

%

267.42

%

 


(i)             Unaudited. Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

(ii)          Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

(iii)       Amount was computed based on average shares outstanding during the period.

 

20



 

 

 

Class C

 

 

 

 

 

From

 

 

 

 

 

3/3/2008

 

 

 

 

 

(commencement

 

 

 

Six months

 

of

 

 

 

ended

 

operations) to

 

 

 

4/30/2009(i)

 

10/31/2008(ii)

 

INCOME FROM INVESTMENT OPERATIONS

 

 

 

 

 

Net asset value, beginning of period

 

$

10.16

 

$

18.20

 

Net investment loss(iii)

 

(0.09

)

(0.05

)

Net realized and unrealized gain (loss) on investments

 

0.52

 

7.99

 

Total from investment operations

 

0.43

 

8.04

 

Net asset value, end of period

 

$

10.59

 

$

10.16

 

Total return

 

4.1

%

(44.2

)%

RATIOS/SUPPLEMENTAL DATA:

 

 

 

 

 

Net assets, end of period (000’s omitted)

 

$

482

 

$

339

 

Ratio of gross expenses to average net assets

 

3.54

%

3.02

%

Ratio of expense reimbursements to average net assets

 

0.00

%

(0.21

)%

Ratio of net expenses to average net assets

 

3.54

%

2.81

%

Ratio of net investment income to average net assets

 

(1.99

)%

(0.52

)%

Portfolio turnover rate

 

111.47

%

190.60

%

 


(i)             Unaudited. Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

(ii)          Ratios have been annualized; total return and portfolio turnover rate have not been annualized.

(iii)       Amount was computed based on average shares outstanding during the period.

 

21



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited)

 

NOTE 1 — General:

 

The Alger China-U.S. Growth Fund (formerly 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 single share class was redesignated as Class A shares effective January 24, 2005, and are generally subject to an initial sales charge. Class C shares were first offered March 3, 2008, and are generally subject to a deferred sales charge.

 

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). Securities for which such information is readily available are valued at the last reported sales price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded. In the absence of reported sales, securities are valued at a price within 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 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. Developments that occur between the close of the foreign markets and the close of the NYSE (normally 4:00 p.m. Eastern time) may result in adjustments to the closing prices to reflect what the investment adviser, pursuant to policies established by the Board of Trustees, believes to be the fair value of these securities as of the close of the NYSE. The Fund may also fair value securities in other situations, for example, when a particular foreign market is closed but the Fund is open.

 

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.

 

Effective November 1, 2008, the Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements (FAS 157). In accordance with FAS 157, fair value is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for

 

22



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

disclosure purposes.  Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability and may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Fund. Unobservable inputs are inputs that reflect the Fund’s own assumptions based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad levels listed below:

 

·                  Level 1 – quoted prices in active markets for identical securities

 

·                  Level 2 – significant other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

·                  Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.  For example, money market securities are valued using amortized cost, in accordance with rules under the Investment Company Act of 1940 (the “1940 Act”).  Generally, amortized cost approximates the current fair value of a security, but since the value is not obtained from a quoted price in an active market, such securities are reflected as level 2.

 

The Fund’s valuation techniques are consistent with the market approach whereby process and other relevant information generated by market transactions involving identical or comparable assets are used to measure fair value.

 

The following is a summary of the inputs used as of April 30, 2009 in valuing the Fund’s investments carried at fair value:

 

DESCRIPTION

 

TOTAL FUND

 

LEVEL 1

 

LEVEL 2

 

LEVEL 3

 

Alger China-U.S. Growth Fund

 

 

 

 

 

 

 

 

 

Investments in securities

 

$

53,177,692

 

$

53,092,692

 

$

85,000

 

$

 

Total

 

$

53,177,692

 

$

53,092,692

 

$

85,000

 

$

 

 

(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

 

23



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

between the amount of net investment income accrued and the U.S. dollar amount actually received.  The effects of changes in foreign currency exchange rates on investments in securities are included in realized and unrealized gain or loss on investments in the Statement of Operations.

 

(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.

 

The characterization of distributions to shareholders for financial statement 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 return of capital, depending on the type of book/tax differences that may exist. Capital accounts within the financial statements are adjusted for permanent book/tax differences. Reclassifications result primarily from the differences in tax treatment of net operating losses and foreign currency transactions. The reclassifications have no impact on the net asset value of the Fund and are designed to present the Fund’s capital accounts on a tax basis.

 

(e) Federal Income Taxes: It is the Fund’s policy to comply with the requirements of the Internal Revenue Code Subchapter M applicable to regulated investment companies and to distribute all of its investment company taxable income to its shareholders. Provided the Fund maintains such compliance, no federal income tax provision is required.

 

The Fund has adopted Financial Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (‘FIN 48”). FIN 48 requires the Fund to measure and recognize in its financial statements the benefit of a tax position taken (or expected to be taken) on an income tax return if such position will more likely than not be sustained upon examination based on the technical merits of the position. The Fund files income tax returns in the US Federal jurisdiction, as well as the New York State and New York City jurisdictions. Based upon its review of tax positions for the Fund’s open tax years of 2005-2008 in these jurisdictions, the Fund has determined that FIN 48 did not have a material impact on the Fund’s financial statements for the six months ended April 30, 2009.

 

(f) Indemnification: The Fund enters into contracts that contain a variety of indemnification provisions. The Fund’s maximum exposure under these arrangements is unknown. The Fund does not anticipate recognizing any loss related to these arrangements.

 

(g) Estimates: These financial statements have been prepared in accordance with U.S. generally accepted accounting principles, which require using estimates and assumptions that affect the reported amounts therein. Actual results may differ from those estimates. These unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of results for the interim period presented. All such adjustments are of a normal recurring nature.

 

24



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

NOTE 3 — Investment Advisory Fees and Other Transactions with Affiliates:

 

(a) Investment Advisory and Administration Fees: Fees incurred by the Fund, pursuant to the provisions of its Investment Advisory Agreement and its Administration Agreement with Fred Alger Management, Inc. (Alger Management), are payable monthly and computed based on the value of the average daily net assets of the Fund, at the following rates:

 

Advisory

 

Administration

 

Fee

 

Fee

 

1.20

%

0.0275

%

 

Martin Currie, Inc., a registered investment advisor, acts as sub-advisor to the Fund under a written sub-advisory agreement with Alger Management.

 

(b) Shareholder Administrative Fees: : The Fund has entered into a shareholder administrative services agreement with Alger Management to compensate Alger Management on a per account basis for its liaison and administrative oversight of Boston Financial Data Services, Inc., the transfer agent for the Fund (“BFDS”) and other related services. During the six months ended April 30, 2009, the Fund incurred fees of $10,943 for these services provided by Alger Management.

 

(c) Sales Charges: Purchases of shares of the Fund may be subject to initial sales charges or contingent deferred sales charges. For the six months ended April 30, 2009, the initial sales charges and contingent deferred sales charges retained by Fred Alger & Company (the “Distributor”), were approximately $1,736 and $0, respectively. The contingent deferred sales charges are used by the Distributor to offset distribution expenses previously incurred. Sales charges do not represent expenses of the Fund.

 

(d) Brokerage Commissions: During the six months ended April 30, 2009, the Fund paid Fred Alger & Company, Incorporated (“Alger Inc.”), an affiliate of Alger Management, $34,501 in connection with securities transactions.

 

(e) Trustees’ Fees: The Fund pays each trustee who is not affiliated with Alger Management or its affiliates $500 for each meeting attended, to a maximum of $2,000 per annum. The chairman of the Board of Trustees receives an additional annual fee of $10,000 which is paid, pro rata, by all funds managed by Alger Management. Additionally, each member of the audit committee receives an additional $50 for each audit committee meeting attended, to a maximum of $200 per annum.

 

(f) Distribution/Shareholder Servicing Fees: The Fund has adopted a distribution plan pursuant to which the Fund pays Alger Inc. a fee at the annual rate of .25% of the average daily net assets of the Class A shares and 1.00% of the daily net assets of the Class C shares to compensate Alger Inc. for its activities and expenses incurred in distributing the Fund’s shares and shareholder servicing. Fees charged may be more or less than the expenses incurred by Alger Inc.

 

(g) Other Transactions with Affiliates: Certain trustees and officers of the Fund are directors and officers of Alger Management, the Distributor and Alger Services.

 

25



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

NOTE 4 — Securities Transactions:

 

The following summarizes the securities transactions by the Fund, other than short-term securities, for the six months ended April 30, 2009:

 

 

 

PURCHASES

 

SALES

 

China-U.S. Growth Fund

 

$

45,767,708

 

$

61,196,080

 

 

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 — Borrowings:

 

The Fund may borrow from its custodian on an uncommitted basis. For the six months ended April 30, 2009, the Fund had the following borrowings:

 

 

 

AVERAGE

 

WEIGHTED AVERAGE

 

 

 

BORROWING

 

INTEREST RATE

 

China-U.S. Growth Fund

 

$

169,834

 

3.24

%

 

NOTE 6 — Share Capital:

 

(a) The Fund has an unlimited number of authorized shares of beneficial interest of $.001 par value. Transactions of shares of beneficial interest were as follows:

 

 

 

FOR THE SIX MONTHS ENDED

 

FOR THE YEAR ENDED

 

 

 

APRIL 30, 2009

 

OCTOBER 31, 2008

 

 

 

SHARES

 

AMOUNT

 

SHARES

 

AMOUNT

 

ALGER CHINA-U.S. GROWTH FUND

 

 

 

 

 

 

 

 

 

Class A:

 

 

 

 

 

 

 

 

 

Shares sold

 

328,899

 

$

3,131,615

 

2,119,855

 

$

41,320,905

 

Dividends reinvested

 

 

 

692,401

 

13,695,683

 

Shares redeemed

 

(1,825,031

)

(16,315,067

)

(4,480,405

)

(72,934,267

)

Net decrease

 

(1,496,132

)

$

(13,183,452

)

(1,668,149

)

$

(17,917,679

)

Class C:

 

 

 

 

 

 

 

 

 

Shares sold

 

20,416

 

$

195,010

 

38,183

 

$

662,404

 

Shares redeemed

 

(8,169

)

(74,316

)

(4,865

)

(55,782

)

Net increase

 

12,247

 

$

120,694

 

33,318

 

$

606,622

 

 

(b) Redemption Fee: The Fund may impose a 2.00% redemption fee on Fund shares redeemed (including shares redeemed by exchange) less than 30 days after such shares were acquired. The fees retained by the Fund are included as paid-in capital on the Statement of Assets and Liabilities and were as follows:

 

26



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

For the Six

 

For the

 

Months Ended

 

Year Ended

 

April 30, 2009

 

October 31, 2008

 

$

22,950

 

$

443,981

 

 

NOTE 7 — Tax Character of Distributions to Shareholders:

 

The tax character of distributions paid during the six months ended April 30, 2009 and the year ended October 31, 2008 was as follows:

 

 

 

SIX MONTHS ENDED

 

YEAR ENDED

 

 

 

April 30, 2009

 

October 31, 2008

 

Distributions paid from:

 

 

 

 

 

Ordinary Income

 

 

$

13,376,314

 

Long-term capital gain

 

 

3,684,739

 

Total distributions paid

 

 

$

17,061,053

 

 

As of October 31, 2008, the components of distributable earnings on a tax basis were as follows:

 

CHINA-U.S. GROWTH FUND

 

 

 

Undistributed ordinary income

 

$

 

Undistributed long-term gain

 

 

Unrealized appreciation

 

$

(25,883,456

)

 

The difference between book basis and tax basis unrealized appreciation is determined annually and is attributable primarily to the tax deferral of losses on wash sales.

 

At October 31, 2008, the Fund, for federal income tax purposes, had capital loss carryforward of $12,021,793 which expires in 2016. This amount may be applied against future net realized gains until the earlier of their utilization or expiration.

 

NOTE 8 — Litigation:

 

The Manager has responded to inquiries, document requests and/or subpoenas from various regulatory authorities in connection with their investigations of practices in the mutual fund industry identified as “market timing” and “late trading.” On October 11, 2006, the Manager, the Distributor and Alger Shareholder Services, Inc. executed an Assurance of Discontinuance with the Office of the New York State Attorney General (“NYAG”). On January 18, 2007, the Securities and Exchange Commission (the “SEC”) approved a settlement with the Manager and the Distributor. As part of the settlements with the NYAG and the SEC, without admitting or denying liability, the firms consented to the payment of $30 million to reimburse fund shareholders; a fine of $10 million; and certain other remedial measures including a reduction in management fees of $1 million

 

27



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

per year for five years. The $40 million was paid into an SEC Fair Fund for distribution to investors.

 

On August 31, 2005, the West Virginia Securities Commissioner (the “WVSC”), in an ex parte Summary Order to Cease and Desist and Notice of Right to Hearing, concluded that the Manager and the Distributor had violated the West Virginia Uniform Securities Act (the “WVUSA”), and ordered the Manager and the Distributor to cease and desist from further violations of the WVUSA by engaging in the market-timing-related conduct described in the order. The ex parte order provided notice of their right to a hearing with respect to the violations of law asserted by the WVSC. Other firms unaffiliated with the Manager were served with similar orders. The Manager and the Distributor intend to request a hearing for the purpose of seeking to vacate or modify the order.

 

In addition, in 2003 and 2004 several purported class actions and shareholder derivative suits were filed against various parties in the mutual fund industry, including the Manager, certain mutual funds managed by the Manager (the “Alger Mutual Funds”), and certain current and former Alger Mutual Fund trustees and officers, alleging wrongful conduct related to market-timing and late-trading by mutual fund shareholders. These cases were transferred to the U.S. District Court of Maryland by the Judicial Panel on Multidistrict Litigation for consolidated pre-trial proceedings under the caption number 1:04-MD-15863 (JFM). After a number of the claims were dismissed by the court, the class and derivative suits were settled in principle, but such settlement remains subject to court approval.

 

NOTE 9 — Recent Accounting Pronouncements:

 

In March 2008, the Financial Accounting Standards Board issued the Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging Activities (“FAS 161”).  FAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. FAS 161 requires enhanced disclosures about the Fund’s derivative and hedging activities, including how such activities are accounted for and their effect on the Fund’s financial position, performance and cash flows. Management is currently evaluating the impact the adoption of FAS 161 will have on the Fund’s financial statements and related disclosures.

 

In April 2009, FASB issued a new Staff Position FSP FAS 157-4 which amends FASB Statement No. 157, Fair Value Measurements, and is effective for interim and annual periods ending after June 15, 2009. FSP FAS 157-4 provides additional guidance when the volume and level of activity for the asset or liability measured at fair value has significantly decreased. Additionally, FSP FAS 157-4 expands disclosure by reporting entities with respect to categories of assets and liabilities carried at fair value. Management is currently evaluating the impact the adoption of FSP FAS 157-4 will have on the Funds’ financial statements and related disclosures.

 

In May 2009, FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events (“FAS 165”), which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. Although there is new terminology, the standard is based on

 

28



 

ALGER CHINA-U.S. GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (Unaudited) (Continued)

 

the same principles as those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. Management is currently evaluating the impact the adoption of FAS 165 will have on the Funds’ financial statements and related disclosures.

 

29



 

ALGER CHINA-U.S. GROWTH FUND

ADDITIONAL INFORMATION (Unaudited)

 

Shareholder Expense Example

 

As a shareholder of the Fund, you incur two types of costs: transaction costs, if applicable, including sales charges (loads) and redemption fees; and ongoing costs, including management fees, distribution (12b-1) fees, if applicable, and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example below is based on an investment of $1,000 invested at the beginning of the six-month period starting November 1, 2008 and ending April 30, 2009.

 

Actual Expenses

 

The first line for each class of shares in the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you would have paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

 

The second line for each class of shares in the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratios for each class of shares and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as sales charges (loads) and redemption fees. Therefore, the second line under each class of shares in the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

30



 

 

 

 

 

 

 

 

 

Ratio of

 

 

 

 

 

 

 

 

 

Expenses to

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Expenses

 

Net Assets

 

 

 

Beginning

 

Ending

 

Paid During

 

For the

 

 

 

Account

 

Account

 

the Six Months

 

Six Months

 

 

 

Value

 

Value

 

Ended

 

Ended

 

 

 

November 1, 2008

 

April 30, 2009

 

April 30, 2009(a)

 

April 30, 2009(b)

 

ALGER CHINA-U.S. GROWTH FUND

 

 

 

 

 

 

 

 

 

Class A

Actual

 

$

1,000.00

 

$

1,045.10

 

$

12.93

 

2.55

%

 

Hypothetical(c)

 

1,000.00

 

1,012.15

 

12.72

 

2.55

 

Class C

Actual

 

1,000.00

 

1,041.30

 

17.92

 

3.54

 

 

Hypothetical(c)

 

1,000.00

 

1,007.24

 

17.62

 

3.54

 

 


(a)

Expenses are equal to the annualized expense ratio of the respective share class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period).

(b)

Annualized

(c)

5% annual return before expenses.

 

31



 

Proxy Voting Policies

 

A description of the policies and procedures the Trust uses to determine how to vote proxies relating to portfolio securities and the proxy voting record is available, without charge, by calling (800) 992-3863 or online on the Funds’ website at http://www.alger.com or on the SEC’s website at http://www.sec.gov.

 

Fund Holdings

 

The Funds’ most recent month end portfolio holdings are available approximately sixty days after month end on the Funds’ website at www.alger.com. The Funds also file their complete schedule of portfolio holdings with the SEC for the first and third quarter of each fiscal year on Form N-Q. The Funds’ Forms N-Q is available online on the SEC’s website at http://www.sec.gov or may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A copy of the most recent quarterly holdings may also be obtained from the Funds by calling (800) 992-3863.

 

Change in Independent Registered Public Accounting Firm

 

On May 12, 2009, Deloitte & Touche LLP was selected as the Fund’s independent registered public accounting firm for the 2009 fiscal year. A majority of the Fund’s Board of Trustees, including a majority of the Independent Trustees, approved the appointment of Deloitte & Touche LLP. The predecessor independent registered public accounting firm’s report on the Fund’s financial statements for the year ended October 31, 2008 and the year ended October 31, 2007 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During such fiscal periods and through May 12, 2009, there were no disagreements between the Fund and the predecessor independent registered public accounting firm on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedures, which such disagreements, if not resolved to the satisfaction of the predecessor independent registered public accounting firm, would have caused them to make reference to the subject matter of the disagreement in connection with their reports on the financial statements for such fiscal periods.

 

32



 

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ALGER CHINA-U.S. GROWTH FUND

 

111 Fifth Avenue

New York, NY 10003

(800) 992-3362

www.alger.com

 

Investment Manager

 

Fred Alger Management, Inc.

111 Fifth Avenue

New York, NY 10003

 

Distributor

 

Fred Alger & Company, Incorporated

111 Fifth Avenue

New York, NY 10003

 

Transfer Agent and Dividend Disbursing Agent

 

Boston Financial Data Services, Inc.

P.O. Box 8480

Boston, MA 02266

 

This report is submitted for the general information of the shareholders of The Alger Funds. It is not authorized for distribution to prospective investors unless accompanied by an effective Prospectus for the Trust, which contains information concerning the Trust’s investment policies, fees and expenses as well as other pertinent information.

 

Go Paperless With Alger Electronic Delivery Service

 

Alger is pleased to provide you with the ability to access regulatory materials online. When documents such as prospectuses and annual and semi-annual reports are available, we’ll send you an e-mail notification with a convenient link that will take you directly to the fund information on our website. To sign up for this free service, simply enroll at www.icsdelivery.com/alger.

 



 

 

SAC 043009

 



 

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.  INVESTMENTS.

Not applicable.

 

ITEM 7.  DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

 

ITEM 8.  PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.

 

ITEM 9.  PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.

 

ITEM 10.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.

 

ITEM 11.  CONTROLS AND PROCEDURES.

 

(a) The Registrant’s principal executive officer and principal financial officer have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this document.

 

(b) No changes in the Registrant’s internal control over financial reporting occurred during the Registrant’s second fiscal quarter of the period covered by this report that materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

ITEM 12.  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

 

(a) (3) Not applicable

 

(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.

 

Alger China-U.S. Growth Fund

 

By:

/s/Dan C. Chung

 

 

 

 

Dan C. Chung

 

 

 

President

 

 

Date:  June 30, 2009

 

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, 2009

 

By:

/s/Michael D. Martins

 

 

 

 

Michael D. Martins

 

 

 

Treasurer

 

 

Date:  June 30, 2009