CASTLE |
CONVERTIBLE | Meeting the challenge
FUND, | of investing
INC. |
Annual Report
October 31, 1997
Dear Shareholder:
The economic difficulties in Southeast Asia have been reverberating
around the world. Because of the heightened sense of risk, investors have
been reassessing economic conditions in countries around the globe, leading
to intense downward pressure on the currency and financial markets of
countries across Latin America, Asia and Eastern Europe. Our own markets
have not been immune to the turmoil, as the wild swings in the stock market
in recent weeks have amply demonstrated.
The currency devaluations and higher financing costs, together with
the economic and financial reforms required by the International Monetary
Fund (IMF) in return for financial assistance, will slow economic growth in
Thailand, the Philippines, Indonesia and Malaysia. At the present time, we
believe that the retrenchment will largely be confined to these economies
and not spread. We believe, therefore, that the slowdown will have a small
impact on the U.S. economy. These countries are not large markets for U.S.
goods and services. Furthermore, while U.S. exports have been growing
rapidly throughout most of the current economic expansion, total exports
still only account for roughly 11% of U.S. Gross Domestic Product (GDP). We
would also note that the U.S. economy is a service-based economy, with the
service sector accounting for fully 80% of the workforce and 55% of nominal
GDP. The service sector, which is far more stable than the goods-producing
sector, should generate steady growth in the months ahead. The domestic
economic environment, therefore, should remain favorable. We project the
economy will generate a moderate 2.0 to 2.5% rate of growth. Steady growth
in consumer spending will be partially offset by slower inventory building
and weaker export demand. Inflation, in our opinion, should hold steady at a
very low level.
The stock market started to lose ground during Castle's fourth fiscal
quarter. The S&P 500, for example, posted a negative total return of 3.76%
for the 3 months ended October 31. The bond market, however, began to rally
as investors sought safety in Treasury securities. We are pleased to report
that because of its income-orientation, Castle Convertible Fund performed
well in the 3-month period, producing a positive total return of 1.67% on a
NAV basis. The financial markets in the U.S. may remain unsettled in the
near future since new developments in overseas markets may continue to
unnerve investors. However, we believe that Castle Convertible Fund should
hold its ground in the uncertain market conditions we may encounter in
coming months.
Respectfully submitted,
/s/ David D. Alger
David D. Alger
President
November 7, 1997
CASTLE CONVERTIBLE FUND, INC.
SCHEDULE OF INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
Principal Corporate Convertible
Amount Bonds--52.7% Value
- ----------------------------------------------------------------
<C> <S> <C>
AEROSPACE--5.1%
$ 400,000 Atlantic Coast Airlines, Inc., Cv.
Sub. Notes, 7.00%, 7/1/04(a) $ 504,000
300,000 Diagnostic/Retrieval Systems,
Inc., Sr. Sub. Cv. Notes, 9.00%,
10/1/03(a) 455,625
500,000 Kellstrom Industries Inc., Cv. Sub.
Notes, 5.75%, 10/15/02(a) 496,250
2,000,000 Rohr Industries Inc., Cv. Sub.
Deb., 7.00%, 10/1/12 1,970,000
-----------
3,425,875
-----------
BUILDING & CONSTRUCTION--1.6%
1,000,000 Masco Corp., Cv. Sub. Deb.,
5.25%, 2/15/12 1,075,000
-----------
COMPUTER RELATED & BUSINESS
EQUIPMENT--6.4%
1,000,000 Bay Networks Inc., Cv. Sub. Deb.,
5.25%, 5/15/03 1,006,250
500,000 DSC Communications Corp., Cv.
Sub. Notes, 7.00%, 8/1/04(a) 480,000
1,000,000 Quantum Corporation, Cv. Sub.
Notes, 7.00%, 8/1/04 1,047,500
1,400,000 Read-Rite Corporation, Cv. Sub.
Notes, 6.50%, 9/1/04 1,261,750
500,000 Tecnomatix Technologies Ltd., Cv.
Sub. Notes, 5.25%, 8/15/04(a) 496,250
-----------
4,291,750
-----------
ENERGY--7.2%
1,850,000 Consolidated Natural Gas, Cv.
Sub. Deb., 7.25%, 12/15/15 2,035,000
2,000,000 Enserch, (Eurodollar), Cv. Sub.
Deb., 6.375%, 4/1/02 2,040,000
650,000 Parker Drilling Corp., Cv. Sub.
Notes, 5.50%, 8/1/04 780,000
-----------
4,855,000
-----------
HEALTHCARE--9.0%
3,016,000 Beverly Enterprises, Cv. Sub.
Deb., 7.625%, 3/15/03 3,031,080
1,450,000 Centocor, Inc., (Eurodollar), Cv.
Sub. Deb., 6.75%, 10/16/01 1,462,687
500,000 ESC Medical Systems Ltd., Cv.
Sub. Notes, 6.00%, 9/1/02(a) 537,500
400,000 NeXstar Pharmaceuticals, Inc., Cv.
Sub. Deb., 6.25%, 8/1/04(a) 433,000
150,000 Sepracor Inc., Cv. Sub. Deb.,
7.00%, 12/1/02(a) 285,000
250,000 Sunrise Assisted Living, Inc., Cv.
Sub. Notes, 5.50%, 6/15/02(a) 295,000
-----------
6,044,267
-----------
LEISURE & ENTERTAINMENT--1.9%
200,000 Family Golf Centers, Inc., Cv. Sub.
Notes, 5.75%, 10/15/04(a) 191,750
1,100,000 Outboard Marine Corp., Cv. Sub.
Deb., 7.00%, 7/1/02 1,094,500
-----------
1,286,250
-----------
MANUFACTURING--1.9%
1,250,000 Quanex Corp., Cv. Sub. Deb.,
6.88%, 6/30/07 1,289,062
-----------
METALS--2.7%
1,750,000 Inco Limited, Cv. Sub. Deb.,
7.75%, 3/15/16 1,811,250
-----------
<CAPTION>
Principal Corporate Convertible
Amount Bonds--(Continued) Value
- ----------------------------------------------------------------
<C> <S> <C>
PRINTING--2.1%
$1,400,000 World Color Press Inc., Cv. Sub.
Notes, 6.00%, 10/1/07 $ 1,372,000
-----------
REAL ESTATE--1.7%
1,000,000 Developers Diversified Realty Corp.,
Cv. Sub. Deb., 7.00%, 8/15/99 1,165,000
-----------
RESTAURANTS & LODGING--2.4%
1,500,000 Signature Resorts, Inc., Cv. Sub.
Notes, 5.75%, 1/15/07 1,590,000
-----------
RETAILING--4.9%
1,000,000 Men's Wearhouse Inc., Cv. Sub.
Notes, 5.25%, 3/1/03 1,180,000
1,500,000 Michaels Stores Inc., Cv. Sub.
Deb., 6.75%, 1/15/03 1,531,875
700,000 Saks Holdings Inc., Cv. Sub.
Notes, 5.50%, 9/15/06 602,000
-----------
3,313,875
-----------
SEMICONDUCTORS--5.8%
1,400,000 Micron Technology, Inc., Cv. Sub.
Notes, 7.00%, 7/1/04 1,289,750
750,000 National Semiconductor, Cv. Sub.
Notes, 6.50%, 10/1/02(a) 815,625
500,000 Photronics Inc., Cv. Sub. Notes,
6.00%, 6/1/04 527,500
1,250,000 VLSI Technology, Inc., Cv. Sub.
Notes, 8.25%, 10/1/05 1,281,250
-----------
3,914,125
-----------
Total Corporate Convertible Bonds
(Cost $33,026,266) 35,433,454
-----------
<CAPTION>
Convertible Preferred
Shares Securities--16.8%
- ----------
<C> <S> <C>
BROADCASTING--1.5%
20,000 Sinclair Broadcast Group, Inc.,
$3.00 Cv. Pfd., Series D. 997,500
-----------
ENERGY--1.0%
10,000 Hvide Capital Trust, 6.5% Cv.
Pfd.(a). 675,000
-----------
FOODS & BEVERAGES--1.4%
18,000 Chiquita Brands International Inc.,
$2.875 Cv. Pfd. A 949,500
-----------
LEISURE & ENTERTAINMENT--1.9%
17,000 Royal Caribbean Cruises Limited,
$3.625 Cv. Pfd. A 1,292,000
-----------
PAPER PACKAGING & FOREST
PRODUCTS--5.1%
60,000 Fort James Corp., Dep. Shares,
Series L $14.00 Cum. Conv.
Exc. Pfd. 3,450,000
-----------
PRINTING--.4%
5,000 Big Flower Trust I, 6.00% Cv.
Pfd.(a) 245,625
-----------
RAW MATERIALS--3.6%
20,000 Bethlehem Steel Corporation,
$5.00 Cum. Pfd. 1,106,250
5,000 Howell Corp., $3.50 Cv. Pfd. 285,000
10,000 TIMET Capital Trust I, 6.625%
Cv. Pfd. (a) 525,000
10,000 TIMET Capital Trust I, 6.625%
Cv. Pfd. 525,000
-----------
2,441,250
-----------
<CAPTION>
Convertible Preferred
Shares Securities--(Continued) Value
- ----------------------------------------------------------------
<C> <S> <C>
REAL ESTATE--1.9%
40,000 Security Capital Industrial Trust,
7.00%, Cv. Pfd. B $ 1,265,000
-----------
Total Convertible Preferred
Securities (Cost $9,340,701) 11,315,875
-----------
Mandatory Convertible
Securities--6.4%
COMMUNICATIONS--1.6%
30,000 AirTouch Communications, Inc.,
6.00% Cv. Pfd., Class B,
8/16/99(c) 1,048,125
-----------
ENERGY--1.4%
30,100 MCN Corporation, 8.75%, Pfd.,
4/30/99(c) 912,405
-----------
FINANCIAL SERVICES--1.8%
45,000 The Money Store Inc., $1.72 Cv.
Pfd., 12/1/99(c) 1,226,250
-----------
FOODS & BEVERAGES--1.6%
17,000 Ralston Purina Co., 7.00%
Exchangeable Notes, 12/1/00(b) 1,071,000
-----------
Total Mandatory Convertible
Securities (Cost $3,925,282) 4,257,780
-----------
Common Stocks--10.7%
UTILITIES
45,000 American Electric Power Co., Inc. 2,126,250
50,000 New Century Energies Inc. 2,087,500
<CAPTION>
Shares Common Stocks--(Continued) Value
- ----------------------------------------------------------------
<C> <S> <C>
38,000 OGE Energy Corp. $ 1,840,625
43,000 Puget Sound Energy Inc. 1,144,875
-----------
Total Common Stocks
(Cost $4,733,197) 7,199,250
-----------
Warrants
REAL ESTATE
2,387 Security Capital Group Wts.,
expire 9/18/98* (Cost $16,423) 11,488
-----------
<CAPTION>
Principal Short-Term Corporate
Amount Notes--12.6%
- ----------
<C> <S> <C>
$2,200,000 Bell Atlantic Network Funding
Corp., 5.60%, 11/14/97 2,195,550
1,400,000 France Telecom., 5.51%, 11/5/97 1,399,143
1,504,000 GTE Funding Inc., 5.56%, 11/6/97 1,502,839
2,200,000 McDonald's Corp., 5.57%, 11/5/97 2,198,638
850,000 Mitsui & Co., 5.51%, 11/6/97 849,350
325,000 USAA Capital Corp., 5.55%,
11/6/97 324,750
-----------
Total Short-Term Corporate Notes
(Cost $8,470,270) 8,470,270
-----------
<S> <C> <C>
Total Investments
(Cost $59,512,139)(d) 99.2% 66,688,117
Other Assets in Excess of Liabilities .8 564,138
----------------------
Total Net Assets 100.0% $67,252,255
======================
<F*> Non-income producing security.
<Fa> Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified
institutional buyers.
<Fb> Exchangeable into common stock of Interstate Bakeries Corporation.
<Fc> These securities are required to be converted on the date listed; they
generally may be converted prior to this date at the option of the
holder.
<Fd> At October 31, 1997, the net unrealized appreciation on investments,
based on cost for federal income tax purposes of $59,512,139, amounted
to $7,175,978, which consisted of aggregate gross unrealized
appreciation of $7,672,351 and aggregate gross unrealized depreciation
of $496,373.
</TABLE>
--------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<S> <C> <C>
ASSETS:
Investments in securities, at value (cost $59,512,139), see accompanying
schedule of investments $66,688,117
Cash 39,020
Dividends and interest receivable 606,423
Prepaid expenses 3,048
-----------
Total Assets 67,336,608
LIABILITIES:
Investment advisory fees payable $43,595
Directors' fees payable 3,370
Accrued expenses 37,388
-------
Total Liabilities 84,353
-----------
NET ASSETS applicable to 2,236,003 outstanding shares of $0.01 par value
(10,000,000 shares authorized) $67,252,255
===========
NET ASSET VALUE PER SHARE $ 30.08
===========
</TABLE>
See Notes to Financial Statements.
CASTLE CONVERTIBLE FUND, INC.
STATEMENT OF OPERATIONS
For the year ended October 31, 1997
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Income:
Interest $2,715,070
Dividends 1,369,476
----------
Total Income 4,084,546
Expenses:
Investment advisory fees--Note 2(a) $ 491,540
Directors' fees 40,000
Custodian and transfer agent fees 35,109
Shareholder reports 22,529
Professional fees 19,060
Bookkeeping fees 18,000
Miscellaneous 24,729
----------
Total Expenses 650,967
----------
NET INVESTMENT INCOME 3,433,579
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 5,386,112
Net change in unrealized depreciation on investments (730,772)
----------
Net realized and unrealized gain (loss) on investments 4,655,340
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $8,088,919
==========
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
October 31, 1997 October 31, 1996
------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment income $ 3,433,579 $ 3,482,804
Net realized gain on investments 5,386,112 3,485,300
Net change in unrealized appreciation (depreciation) on investments (730,772) 747,343
-------------------------------
Net increase in net assets resulting from operations 8,088,919 7,715,447
-------------------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (3,577,609) (3,555,247)
Net realized gains (3,309,288) (1,587,562)
-------------------------------
Total dividends (6,886,897) (5,142,809)
-------------------------------
Net increase in net assets 1,202,022 2,572,638
NET ASSETS:
Beginning of year 66,050,233 63,477,595
-------------------------------
End of year (including undistributed net investment income of $635,644
and $779,674, respectively) $67,252,255 $66,050,233
===============================
</TABLE>
See Notes to Financial Statements.
CASTLE CONVERTIBLE FUND, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Four
Months
Year Ended October 31, Ended Year Ended June 30,
------------------------------------- October 31, ---------------------------
1997 1996 1995 1994(i) 1994 1993
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 29.54 $ 28.39 $ 25.77 $ 25.07 $ 27.29 $ 24.20
-----------------------------------------------------------------------------------
Net investment income 1.54 1.56 1.74 0.52 1.62 1.68
Net realized and unrealized gain
(loss) on investments 2.08 1.89 3.29 0.58 (1.60) 3.23
-----------------------------------------------------------------------------------
Total from investment operations 3.62 3.45 5.03 1.10 0.02 4.91
-----------------------------------------------------------------------------------
Dividends from net investment
income (1.60) (1.59) (1.60) (0.40) (1.67) (1.82)
Distributions from net realized gains (1.48) (0.71) (0.81) -- (0.57) --
-----------------------------------------------------------------------------------
Total Distributions (3.08) (2.30) (2.41) (0.40) (2.24) (1.82)
-----------------------------------------------------------------------------------
Net asset value, end of period $ 30.08 $ 29.54 $ 28.39 $ 25.77 $ 25.07 $ 27.29
===================================================================================
Market value, end of period $ 25.75 $ 25.38 $ 25.63 $ 24.38 $ 22.25 $ 26.50
===================================================================================
Total investment return based on
market value per share 14.01% 8.14% 15.82% 11.28% (8.41%) 34.26%
===================================================================================
Ratios and Supplemental Data:
Net assets, end of period
(000's omitted) $67,252 $66,050 $63,478 $57,207 $55,665 $60,365
===================================================================================
Ratio of expenses to average net
assets 1.00% 1.03%(ii) 1.05%(ii) 1.04%(ii) 1.05%(ii) 1.06%(ii)
===================================================================================
Ratio of net investment income to
average net assets 5.26% 5.44% 6.62% 6.02% 6.02% 6.50%
===================================================================================
Portfolio Turnover Rate 57.58% 63.68% 52.80% 8.65% 29.38% 52.63%
===================================================================================
Average Commission Rate Paid $ .0693 $ .0703
==================
- --------------------
<Fi> Ratios have been annualized; total investment return has not been
annualized.
<Fii> Reflects total expenses, including custody fees offset by earnings
credits resulting from balances left on deposit. The expense ratios
net of earnings credits would have been 1.02% and 1.03% for the years
ended October 31, 1996 and 1995, respectively. Expense ratios for the
periods ended prior to October 31, 1995, have been reduced to reflect
the effect of custody fees offset by earnings credits, if any.
</TABLE>
See Notes to Financial Statements.
CASTLE CONVERTIBLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1--Summary of Significant Accounting Policies:
Castle Convertible Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as a diversified, closed-end management
investment company. The Fund's investment adviser is Fred Alger Management,
Inc. (the "Adviser").
Effective October 31, 1994, the Fund changed its fiscal year end from
June 30 to October 31.
The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements.
(a) Investment Valuation--Investments in securities are valued at 4:00 p.m.
Eastern time. Listed and unlisted securities for which such information is
regularly reported are valued at the last reported sales price or, in the
absence of reported sales, at the mean between the bid and asked price or,
in the absence of a recent bid or asked price, the equivalent as obtained
from one or more of the major market makers for the securities to be valued.
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 Directors. Short-term corporate notes are valued
at amortized cost which approximates market value.
(b) Securities Transactions and Investment Income--Securities transactions
are recorded on a trade date basis. Realized gains and losses from
securities transactions are recorded on the basis of the first-in, first-out
method. Dividend income is recognized on the ex-dividend date and interest
income is recognized on the accrual basis.
(c) Dividends to Shareholders--Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date. Dividends from net investment
income are declared and paid quarterly. Dividends from net realized gains
are declared and paid annually after the end of the fiscal year in which
earned.
(d) 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 taxable income, including net
realized capital gains, to its shareholders. Therefore, no federal income
tax provision is required.
(e) Other--These financial statements have been prepared using estimates and
assumptions that affect the reported amounts therein. Actual results may
differ from those estimates.
NOTE 2--Investment Advisory Fees and Other Transactions with Affiliates:
(a) Investment Advisory Fees--Fees incurred by the Fund, pursuant to the
provisions of an Investment Advisory Contract (the "Contract") with the
Adviser, are payable monthly and computed at an annual rate of .75% based on
the average of the Fund's weekly net asset value.
The Contract further provides that if in any fiscal year the aggregate
expenses of the Fund (excluding interest, brokerage commissions, taxes and
extraordinary expenses) should exceed 1.5% of the first $30 million of
average net assets and 1.0% of the average net assets of the Fund over $30
million, the Adviser will reimburse the Fund for such excess expenses. For
the year ended October 31, 1997, no reimbursement was required pursuant to
the Contract. For the year ended October 31, 1997, the total investment
advisory fee charged to the Fund amounted to $491,540, and the Adviser
received $18,000 for bookkeeping services supplied to the Fund at cost.
(b) Transfer Agent Fees--Alger Shareholder Services, Inc. ("Alger
Services"), an affiliate of the Adviser, serves as transfer agent for the
Fund. During the year ended October 31, 1997, the Fund incurred fees of
approximately $12,100 for services provided by Alger Services and
reimbursed Alger Services approximately $5,900 for transfer agent related
expenses paid by Alger Services on behalf of the Fund.
(c) Directors' Fees--Certain directors and officers of the Fund are
directors and officers of the Adviser and Alger Services. The Fund pays each
director who is not affiliated with the Adviser or its affiliates an annual
fee of $8,000, payable quarterly, which is reduced proportionately by any
meetings not attended during the quarter.
(d) Other Transactions With Affiliates--At October 31, 1997, the Adviser and
its affiliates owned 308,756 shares of the Fund.
NOTE 3--Securities Transactions:
During the year ended October 31, 1997, purchases and sales of
investment securities, excluding short-term securities, aggregated
$33,109,341 and $41,538,051, respectively.
NOTE 4--Components of Net Assets:
At October 31, 1997, the Fund's net assets consisted of:
<TABLE>
<S> <C>
Paid-in capital $54,012,068
Undistributed net investment income 635,644
Undistributed net realized gain 5,428,565
Net unrealized appreciation 7,175,978
-----------
NET ASSETS $67,252,255
===========
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Castle Convertible Fund, Inc.:
We have audited the accompanying statement of assets and liabilities
of Castle Convertible Fund, Inc. (a Delaware Corporation), including the
schedule of investments, as of October 31, 1997, and the related statement
of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, for the
four months in the period ended October 31, 1994, and for each of the two
years in the period ended June 30, 1994. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1997, by correspondence with the
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of Castle Convertible Fund, Inc. as of October 31, 1997, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended, for the
four months in the period ended October 31, 1994, and for each of the two
years in the period ended June 30, 1994, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
November 19, 1997
CASTLE |
CONVERTIBLE | Meeting the challenge
FUND, | of investing
NC. |
Board of Directors
Fred M. Alger, Chairman
David D. Alger
Lester L. Colbert, Jr.
Arthur M. Dubow
Stephen E. O'Neil
Nathan E. Saint-Amand
John T. Sargent
- -------------------------------------------------------------------------------
Investment Adviser
Fred Alger Management, Inc.
75 Maiden Lane
New York, N.Y. 10038
- -------------------------------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
Alger Shareholder Services, Inc.
30 Montgomery Street, Box 2001
Jersey City, N.J. 07302-9811
- -------------------------------------------------------------------------------
Independent Public Accountants
Arthur Andersen LLP
1345 Avenue of the Americas
New York, N.Y. 10105
- -------------------------------------------------------------------------------
Results of the Annual Meeting of Shareholders
The annual meeting of the shareholders of the Fund was held on December 10,
1996. The following matters were submitted to a shareholder vote and
approved:
(i) the reelection of the following directors of the Fund: Fred M. Alger,
David D. Alger, Lester L. Colbert, Jr., Arthur M. Dubow, Stephen E. O'Neil,
Nathan E. Saint-Amand, and John T. Sargent. Each of the directors reelected
received at least 1,868,898 affirmative votes and no more than 7,647 votes
were withheld for any director.
(ii) the ratification of the selection of Arthur Andersen LLP as the Fund's
independent public accountants for the fiscal year ending October 31, 1997:
For--1,853,804; Against--19,927; Abstain--18,730.
- -------------------------------------------------------------------------------
This report was prepared for distribution to shareholders and to others who
may be interested in current information concerning the Fund. It was not
prepared for use, nor is it circulated in connection with any offer to sell,
or solicitation of any offer to buy, any securities.
