CASTLE CONVERTIBLE FUND, INC.
75 MAIDEN LANE
NEW YORK, NEW YORK 10038
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS:
The 1998 Annual Meeting of Shareholders of Castle Convertible Fund, Inc.
(the "Fund") will be held in the offices of the Fund, 75 Maiden Lane, New York,
New York 10038, 12th Floor, on December 8, 1998 at 12:30 P.M. for the following
purposes:
1. To elect seven (7) Directors for the ensuing year.
2. To ratify or reject the selection of Arthur Andersen LLP as the
independent public accountants for the Fund for the fiscal year ending
October 31, 1999.
3. To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
Shareholders of record as of the close of business on October 19, 1998 will
be entitled to vote at the meeting. The enclosed proxy is being solicited on
behalf of Management of the Fund.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO ALGER SHAREHOLDER SERVICES,
INC., 30 MONTGOMERY STREET, JERSEY CITY, NEW JERSEY 07302, IN THE POSTPAID
RETURN ENVELOPE ENCLOSED FOR YOUR USE.
By order of the Board of Directors
DAVID D. ALGER
PRESIDENT
Dated: October 22, 1998
New York, New York
<PAGE>
PROXY STATEMENT
FOR
THE 1998 ANNUAL MEETING OF SHAREHOLDERS
OF
CASTLE CONVERTIBLE FUND, INC.
TO BE HELD ON DECEMBER 8, 1998
INTRODUCTION
The accompanying Proxy is being solicited by the Management of Castle
Convertible Fund, Inc. (the "Fund") for use at the Annual Meeting of
Shareholders to be held at 12:30 P.M. on December 8, l998 and at any
adjournments thereof. All costs of solicitation, including printing and mailing
of this Proxy Statement and the accompanying Notice of Meeting and Proxy, the
reimbursement of brokerage firms and others for their expenses in forwarding
solicitation material to the beneficial owners of stock, and supplementary
solicitations to submit proxies, which may be made by mail, telephone, telegraph
and personal interviews by officers of the Fund, will be borne by the Fund. It
is anticipated that the cost of such supplementary solicitation, if any, will be
nominal.
If the enclosed Proxy is properly executed and returned in time to be voted
at the meeting, the full and fractional shares represented thereby (each full
share is entitled to one vote and each fractional share is entitled to
proportionate voting rights) will be voted in accordance with the instructions
marked thereon. Unless instructions to the contrary are marked thereon with
respect to Proposals 1 and 2, the Proxy will be voted FOR the proposals stated
in the accompanying Notice of Meeting. All proxies not voted, including broker
non-votes, will not be counted toward establishing a quorum. Shareholders should
note that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly, votes to
ABSTAIN and votes AGAINST will have the same effect in determining whether the
proposal is approved. On any motion for adjournment of the meeting, even if a
quorum is present, Management will vote all Proxies in its discretion pursuant
to Item 3 thereof. Any shareholder giving a Proxy has the right to attend the
meeting to vote his shares in person (thereby revoking any prior Proxy) and also
the right to revoke the Proxy at any time by written notice received by the Fund
prior to its exercise.
<PAGE>
This Proxy Statement is being mailed to shareholders on or about October
22, 1998. The address of the principal executive office of the Fund is 75 Maiden
Lane, New York, New York 10038.
A COPY OF THE FUND'S MOST RECENT SEMI-ANNUAL AND ANNUAL REPORTS WILL BE
SENT TO YOU WITHOUT CHARGE UPON WRITTEN REQUEST TO THE FUND, 75 MAIDEN LANE, NEW
YORK, NY 10038 OR BY CALLING 800-223-3810 TOLL-FREE.
INFORMATION REGARDING VOTING SECURITIES
The Fund has only one class of shares of which 2,236,003 shares were issued
and outstanding as of the close of business on October 19, 1998, the record date
for determining shareholders entitled to receive notice of, and to vote at the
meeting and all adjournments thereof. Each share is entitled to one vote at the
Annual Meeting.
The following table sets forth those persons known to the Fund to be
beneficial owners of more than 5% of the outstanding voting shares of the Fund
as of October 19, 1998.
<TABLE>
<CAPTION>
AMOUNT OF
TITLE OF NAME AND ADDRESS BENEFICIAL PERCENT OF
CLASS OF BENEFICIAL OWNERS OWNERSHIP CLASS
- ------------------- ------------------------ ---------------- -----------
<S> <C> <C> <C>
Common Stock Alger Associates, Inc. 337,965 Shs.* 15.12%
75 Maiden Lane
New York City, NY 10038
Common Stock All Directors and 347,523 Shs.** 15.54%
Officers as a Group
</TABLE>
- ----------------------------
* Included in this figure are 73,644 shares owned by Fred Alger & Company,
Incorporated, and 309 shares owned by Alger Shareholder Services, Inc.,
wholly-owned subsidiaries of Alger Associates, Inc.
** Included in this figure are 340,665 shares beneficially owned by Fred M.
Alger III, 337,965 shares beneficially owned by David D. Alger, 1,441
shares beneficially owned by Lester L. Colbert, Jr., 5,017 shares
beneficially owned by Arthur M. Dubow, 300 shares beneficially owned by
John T. Sargent and 100 shares beneficially owned by Nathan E. Saint-Amand,
M.D. Included in the shares beneficially owned by Messrs. Alger are the
337,965 shares listed in the table above as being held by Alger Associates,
Inc., which may be deemed to be beneficially owned by Fred M. Alger III and
David D. Alger by virtue of their control of Alger Associates, Inc.
2
<PAGE>
INFORMATION REGARDING THE ADVISER
Fred Alger Management, Inc. (the "Adviser") has served as the investment
adviser to the Fund since February 1974. The Adviser is a wholly-owned
subsidiary of Fred Alger & Company, Incorporated ("Alger"). Alger, which is a
wholly-owned subsidiary of Alger Associates, Inc. ("Alger Associates"), is a
securities broker-dealer and member firm of the New York Stock Exchange, Inc.
The principal place of business of the Adviser and Alger Associates is 75 Maiden
Lane, New York, New York 10038. The principal place of business of Alger is 30
Montgomery Street, Jersey City, New Jersey 07302. Alger Associates and the
Adviser are New York corporations and Alger is a Delaware corporation.
The Adviser has been engaged in the business of rendering investment
advisory services since 1964 and the Adviser had approximately $7.96 billion of
assets, including those of the Fund, under management as of September 30, 1998.
The names and principal occupations of the directors and principal
executive officers of the Adviser are as follows:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATIONS
- ---------------------- -----------------------------------------------------------------------------
<S> <C>
Fred M. Alger III Chairman of the Boards of Alger Associates, the Adviser, Alger, Alger
Age: 63 Properties, Inc. ("Properties"), Alger Shareholder Services, Inc.
("Services"), Alger Life Insurance Agency, Inc. ("Agency"), the Fund, The
Alger Fund, The Alger American Fund, The Alger Retirement Fund, Spectra
Fund, Fred Alger International Advisory S.A. ("International"), The Alger
American Asset Growth Fund ("Asset Growth") and Analysts Resources,
Inc. ("ARI").
David D. Alger President and Director of Alger Associates, the Adviser, Alger, Properties,
Age: 54 Services, Agency, International and the Fund; President and Trustee of The
Alger Fund, The Alger American Fund, The Alger Retirement Fund and
Spectra Fund; Executive Vice President and Director of ARI; Director of
Asset Growth.
Gregory S. Duch Executive Vice President, Treasurer and Director of Alger Associates, the
Age: 47 Adviser and Properties; Executive Vice President and Treasurer of Alger,
Services, Agency and ARI; Treasurer of the Fund, The Alger Fund, The
Alger American Fund, The Alger Retirement Fund and Spectra Fund;
Treasurer and Director of International.
Mary Marsden-Cochran Vice President, General Counsel and Secretary of Alger Associates, the
Age: 45 Adviser, Alger, Properties, Services, Agency and ARI; Secretary of the Fund,
The Alger Fund, The Alger American Fund, The Alger Retirement Fund,
International and Spectra Fund.
</TABLE>
3
<PAGE>
With the exception of Ms. Marsden-Cochran, all of the above have been
employed by the Adviser for more than the past five years and where noted, the
individuals have served as officers of the Fund, Spectra Fund (and its
predecessor Spectra Fund, Inc.), The Alger American Fund and The Alger Fund for
at least five years; and as officers of The Alger Retirement Fund since 1993.
The business address of each of the foregoing is 75 Maiden Lane, New York, New
York 10038. Ms. Marsden-Cochran has been Secretary of Alger Associates, the
Adviser, Alger, Properties, Services, Agency, ARI, the Fund, The Alger Fund,
The Alger American Fund, The Alger Retirement Fund, International and Spectra
Fund since February, 1996. She was Associate General Counsel and Vice President
of Smith Barney Inc. from December 1994 through February 1996. From January
1994 through November 1994 she was a Blue Sky Attorney for AMT Capital.
Mr. Fred M. Alger III owns approximately 42.21% of Alger Associates'
outstanding voting securities. Mr. David D. Alger owns approximately 20.88% of
Alger Associates' outstanding voting securities.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
It is proposed to elect as directors the nominees shown below to serve
until the next annual meeting of shareholders and until their successors are
elected and qualified. The nominees have indicated an intention to serve if
elected and have consented to be named in this Proxy Statement.
<TABLE>
<CAPTION>
SHARES OF THE
FUND BENEFICIALLY
OWNED DIRECTLY
NAME, AGE AND BUSINESS DIRECTOR OF OR INDIRECTLY, PERCENT
EXPERIENCE FOR THE THE FUND AS OF OF SHARES
LAST FIVE YEARS SINCE OCTOBER 19, 1998 OUTSTANDING
- ------------------------------------------------------ --------------- ------------------ ------------
<S> <C> <C> <C>
* Fred M. Alger III, 63 February 1974 340,665 Shs.** 15.24%
Chairman of the Boards of Alger Associates, the
Adviser, Alger, Properties, Services, Agency,
ARI, the Fund, The Alger Fund, The Alger
American Fund, The Alger Retirement Fund,
International, Asset Growth and Spectra Fund.
Formerly also President of Alger Associates, the
Adviser, Alger, Properties, Services, Agency, the
Fund, Spectra Fund, Inc., The Alger Fund, The
Alger American Fund and The Alger Retirement
Fund.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES OF THE
FUND BENEFICIALLY
OWNED DIRECTLY
NAME, AGE AND BUSINESS DIRECTOR OF OR INDIRECTLY, PERCENT
EXPERIENCE FOR THE THE FUND AS OF OF SHARES
LAST FIVE YEARS SINCE OCTOBER 19, 1998 OUTSTANDING
- ------------------------------------------------------ ---------------- ------------------ ------------
<S> <C> <C> <C>
* David D. Alger, 54 February 1993 337,965 Shs.** 15.12%
President and Director of Alger Associates, the
Adviser, Alger, Properties, Services, Agency,
International and the Fund; President and Trustee
of The Alger Fund, The Alger American Fund,
The Alger Retirement Fund and Spectra Fund;
Executive Vice President and Director of ARI;
Director of Asset Growth. Formerly Executive
Vice President and Director of Alger Associates,
the Adviser, Alger, Properties, Services and Agency;
Vice President and Director of Spectra Fund, Inc.
and the Fund; Vice President and Trustee of
The Alger Fund, The Alger American Fund and
The Alger Retirement Fund.
Lester L. Colbert, Jr., 64 September 1974 1,441 Shs.** 0.06%
Private investor since 1988. Formerly Chairman
of the Board, President and Chief Executive
Officer of Xidex Corporation.
Arthur M. Dubow, 65 February 1974 5,017 Shs.** 0.22%
Trustee of the Arthur Dubow Foundation;
Director of Coolidge Investment Corporation;
Trustee of The Alger Fund, The Alger American
Fund, The Alger Retirement Fund and Spectra
Fund; private investor since 1985. Formerly
Chairman of the Board of Institutional
Shareholder Services, Inc.; formerly Director of
Spectra Fund, Inc.; formerly President of Fourth
Estate, Inc.
(FOOTNOTES ON PAGE 6)
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF THE
FUND BENEFICIALLY
OWNED DIRECTLY
NAME, AGE AND BUSINESS DIRECTOR OF OR INDIRECTLY, PERCENT
EXPERIENCE FOR THE THE FUND AS OF OF SHARES
LAST FIVE YEARS SINCE OCTOBER 19, 1998 OUTSTANDING
- ------------------------------------------------------- ---------------- ------------------ ------------
<S> <C> <C> <C>
Stephen E. O'Neil, 66 January 1973 0 Shs. 0%
Of Counsel to the law firm of Kohler & Barnes;
private investor since 1981; Director of Nova
Care, Inc. and Brown-Forman Corporation;
Trustee of The Alger Fund, The Alger American
Fund, The Alger Retirement Fund and Spectra
Fund. Formerly President and Vice Chairman of
City Investing Company; formerly Director of
Centerre Bancorporation, Spectra Fund, Inc. and
Syntro Corporation.
Nathan Emile Saint-Amand, M.D., 60 September 1986 100 Shs. .01%
Medical doctor in private practice; Trustee of The
Alger Fund, The Alger American Fund, The
Alger Retirement Fund and Spectra Fund.
Formerly Director of Spectra Fund, Inc.
John T. Sargent, 74 May 1986 300 Shs. .01%
Private investor since 1987; Director of Atlantic
Mutual Insurance Co.; Trustee of The Alger
Fund, The Alger American Fund, The Alger
Retirement Fund and Spectra Fund. Formerly
Director of Spectra Fund, Inc. and River Bank
America.
</TABLE>
- ----------------------------
* Fred M. Alger III and David D. Alger may be considered "interested persons"
of the Fund as such term is defined in the Investment Company Act of 1940
because they are "interested persons" of the Adviser and officers of the
Fund. Fred M. Alger III and David D. Alger are brothers.
** Includes 337,965 shares of the Fund beneficially owned by Alger Associates,
Inc. directly or through wholly-owned subsidiaries. Fred M. Alger III and
David D. Alger may be deemed beneficially to own such shares by virtue of
their control of Alger Associates, Inc.
6
<PAGE>
OFFICERS, DIRECTORS AND RELATED MATTERS
No director, officer or employee of Alger Management or its affiliates will
receive any compensation from the Fund for serving as an officer or Director of
the Fund. Each Director of the Fund who is not an "interested person" of the
Fund as defined in the Investment Company Act of 1940 receives from the Fund a
quarterly fee of $2,000 for his services as Director, but such fee is reduced
proportionately for each meeting of the Board of Directors which such Director
does not attend during the quarter. During the fiscal year ended October 31,
l997, all such Directors received an aggregate of $40,000 of such fees. The Fund
has no bonus, profit sharing, pension or retirement plans. The following table
provides compensation amounts paid to Disinterested Directors of the Fund during
the fiscal year ended October 31, 1997.
COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL COMPENSATION PAID TO DIRECTORS FROM
THE ALGER RETIREMENT FUND,
AGGREGATE THE ALGER FUND,
COMPENSATION THE ALGER AMERICAN FUND,
FROM CASTLE CONVERTIBLE FUND, INC. AND
NAME OF PERSON, POSITION CASTLE CONVERTIBLE FUND, INC. SPECTRA FUND.
- ---------------------------------- ------------------------------- ------------------------------------------
<S> <C> <C>
Lester L. Colbert, Jr., Director $8,000 $ 8,000
Arthur M. Dubow, Director $8,000 $28,250
Stephen E. O'Neil, Director $8,000 $28,250
Nathan E. Saint-Amand, Director $8,000 $28,250
John T. Sargent, Director $8,000 $28,250
</TABLE>
Four regular meetings of the Board of Directors were held during the fiscal
year ended October 31, 1997. During that period, with the exception of Fred M.
Alger III, each of the Directors attended at least 75% of the meetings of the
Board.
The Fund's Audit Committee consists of the following independent Directors:
Mr. Sargent, Mr. Dubow and Mr. O'Neil. The Fund's Board of Directors has no
nominating or compensation committee or any committee performing similar
functions.
Management recommends that shareholders vote FOR Proposal No. 1.
7
<PAGE>
PROPOSAL NO. 2: RATIFICATION OF THE SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, including a majority of the Directors who are not
"interested persons" of the Fund or the Adviser, have selected and approved
Arthur Andersen LLP as the independent public accountants to examine the
financial statements of the Fund for the fiscal year ending October 31, 1999.
The Fund has been advised that no member of such firm has a material direct or
indirect interest in the Fund. Pursuant to Section 32(a) of the Investment
Company Act of 1940, such selection is subject to ratification or rejection by
shareholders of the Fund. A representative of Arthur Andersen LLP is expected to
be present at the meeting to answer any questions which the Fund's shareholders
may have. The representative will have an opportunity to make a statement if he
or she so desires.
Management recommends that shareholders vote FOR Proposal No. 2.
LITIGATION
The Fund is not a party to any material litigation.
OTHER MATTERS
Management knows of no other matters to be brought before the meeting;
however, if any other matters come before the meeting, the persons named in the
enclosed Proxy will vote proxies that do not contain specific restrictions in
accordance with their best judgment on such matters.
SHAREHOLDERS' PROPOSALS
A shareholder proposal intended to be presented at the Fund's 1999 Annual
Meeting of Shareholders must be received by the Fund a reasonable time before
the solicitation is made in order to be included in the Fund's proxy statement
and form of proxy relating to that meeting.
75 Maiden Lane
New York, New York
Dated: October 22, 1998
IF YOU CANNOT ATTEND THE MEETING, YOU ARE URGED TO FILL IN, SIGN AND DATE
THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE. AN ADDRESSED ENVELOPE
IS ENCLOSED FOR YOUR CONVENIENCE.
8
<PAGE>
CASTLE CONVERTIBLE FUND, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS DECEMBER 8, 1998
The undersigned shareholder of Castle Convertible Fund, Inc. hereby appoints
David D. Alger, Gregory S. Duch and Stephen E. O'Neil, and each of them, the
attorneys and proxies of the undersigned, with power of substitution, to vote,
as indicated herein, all of the shares of common stock of Castle Convertible
Fund, Inc. standing in the name of the undersigned at the close of business on
October 19, 1998, at the Annual Meeting of Shareholders of the Fund to be held
at the offices of the Fund, 75 Maiden Lane, New York, New York 10038 at 12:30
P.M. on December 8, 1998, and at all adjournments thereof, with all of the
powers the undersigned would possess if then and there personally present and
especially (but without limiting the general authorization and power hereby
given) to vote as indicated on the proposals, as more fully described in the
Proxy Statement of the meeting, and to vote and act on any other matter which
may properly come before the meeting.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS GIVEN BY THE SHAREHOLDERS, BUT IF NO INSTRUCTIONS
ARE GIVEN IT WILL BE VOTED FOR THE PROPOSALS LISTED.
(Continued and to be signed on the reverse side)
<PAGE>
PLEASE MARK BOXES - OR - IN BLUE OR BLACK INK.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below (except WITHHOLD AUTHORITY to vote
as marked to the contrary below) - for all nominees listed below -
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below. Fred M. Alger III, David D.
Alger, Lester L. Colbert, Jr., Arthur M. Dubow, Stephen E. O'Neil, Nathan E.
Saint-Amand, John T. Sargent
2. PROPOSAL TO RATIFY THE SELECTION OF ARTHUR ANDERSEN LLP as independent public
accountants of the Fund.
FOR |_| AGAINST |_| ABSTAIN |_|
3. PROPOSAL TO CONSIDER AND ACT UPON such other matters as may properly come
before the meeting or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY.
Signature(s) should be exactly as name or names appear on this
proxy. If stock is held jointly, each holder should sign. If
signing is by attorney, executor, administrator, trustee or
guardian, please give full title.
--------------------------------------------------------------
Signature(s) Signature(s)
--------------------------------------------------------------
Dated Social Security or Tax Identification Number
THIS PROXY, WHEN DATED AND SIGNED, SHOULD BE MAILED PROMPTLY
TO ALGER SHAREHOLDER SERVICES, INC., 30 MONTGOMERY STREET,
JERSEY CITY, NJ 07302. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES IN THE ENCLOSED ENVELOPE.
