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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-1313
Castle Convertible Fund, Inc.
(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, 2007
ITEM 1. REPORT(S) TO STOCKHOLDERS.
Dear Shareholders,
In our October 31, 2006 report, we likened the new global economy to a "Brave
New World." While we are usually loath to recycle a metaphor so quickly, in
this case, it seems fitting to continue to use it. Nothing that has happened
over the past six months alters our view that we are entering uncharted waters
for both the global economy and for the thousands of companies that are being
reshaped by it.
As with any sweeping change, there are those who embrace it and try to
anticipate the risks and rewards; there are those who deny that there is any
change; and finally those who simply wait to see what everyone else thinks. At
Alger, we fall into the first camp, and, in fact, believe that we are still in
the early stages of a radical shift in how the global economy functions; one
that has already produced new winners and losers, not just in terms of nations,
but of companies that are seizing the opportunities and those that are unable
to. While the story of China and India is familiar, it is hardly limited to
them and now includes such disparate regions as Vietnam, Eastern Europe and
Australia, to name three, all of which are adding additional complexity and
additional fuel to the expanding global economy.
Here then is our six-month postcard from this Brave New World. The themes
include the greening of corporate America and the lessons gleaned from the
swift fall and startling sharp recovery of the equity markets on February 27.
They include the coming of age of private equity as a force that can move and
shape the markets, and the importance of free cash flow as a metric for
measuring the strength of corporate balance sheets. And of course, one other
theme stands out above all - the surprising (at least to most on Wall Street)
strength of corporate earnings at the end of the first quarter.
The Convergence of Business and Green
The beginning of 2007 saw one of the warmest Januaries on record, but instead
of snow, we were treated to a flurry of articles, announcements, conferences,
and high level public speeches that demanded action on the part of countries,
individuals and companies to address the issue of global warming. Appearing
simultaneously but independently, Fortune, The Economist and BusinessWeek all
ran lengthy cover stories describing the shift in corporate America to embrace
socially responsible business practices as a better - and potentially more
profitable - way of doing business. These articles were the most noticeable in
a few weeks' span, but they were hardly a comprehensive list of the hundreds
published about the greening of corporate America, not to mention Europe, Asia,
and the world. By late January, whether or not "greening" was a mere zeitgeist
was debatable. But on February 2, the Intergovernmental Panel on Climate Change
issued their Fourth Assessment Report indicating that global warming was
"unequivocal" - a real and growing danger.
In response, many dynamic, innovative companies are stepping up and looking for
ways to solve the intractable issues of energy and the environment. Case in
point is private equity firms Kohlberg Kravis Roberts and Texas Pacific Group,
which announced plans to acquire one of the largest public utility companies in
the United States, TXU. What made the TXU deal distinctive were the conditions
attached to its approval. Under the proposed terms, KKR and Texas Pacific
agreed to several substantial concessions to environmental groups including
scaling back plans to build new coal-fired power plants while aggressively
working on so-called "clean coal" technologies (i.e. coal gasification) that
lower and potentially eliminate emissions. They also agreed to increase R&D
spending on alternate energy by as much as half a billion dollars. Goldman
Sachs, who brokered the deal, pressured both sides to agree to the
pro-environment change in the initial plans. The result was a deal hailed by
Wall Street and the green lobby in equal measure.
The convergence of vast amounts of private equity cash and environmentalism was
a sign of the cultural, global shift taking place. Clearly, a number of the
major investment banks already saw the long-term value in their companies
"going green," and the rest of the financial world was swiftly joining them.
The Return of Volatility
On February 27 global stock markets saw their most dramatic sell-off in years.
Wall Street pundits were, as usual, divided. Some said it was a long-awaited
correction and a sign of a weakening economy, while others said it was simply
the return of volatility to what has been a fairly stable market.
That said, nothing actually happened to trigger the declines. No sudden change
in the economic forecasts. No critically bad economic or corporate news.
However, there were rumors in Shanghai and Beijing that a government squeeze on
credit and stock-speculation was imminent, and that alone was enough to send
investors fleeing. But even after the sell-off, the Shenzhen market -
Shanghai's smaller sibling - was still up more than 30% year-to-date, and well
over 100% for the past 12 months. Hardly comforting if you bought on Monday
before the sell-off, but not bad for those who had been in those markets for
more than a couple of months.
What happened? In our view this was a market phenomenon, a brief reminder of
volatility after months of stability, and a bout of profit-taking and stepping
aside that had been long overdue. Within days, fears of a "global bear market"
dissipated as continued liquidity and private equity activity bolstered markets
both in the United States and around the world.
Private Equity and Free Cash Flow
For the first half of the fiscal year, private equity activity was truly
impressive, with the purchase of troubled companies such as Chrysler that in
earlier years would have made unlikely buyout targets. While no major company
today - public or private - seems beyond private equity interests, there is one
theme that unites both private equity and mutual fund investors: free cash
flow.
At Alger, as bottom-up, fundamental investors, one of the key metrics we use is
the ability of companies to generate free cash flow. Why? Because free cash
flow can fund further growth at a company, pay dividends, and allow for the
buy-back of stock in order to return value to shareholders - all of which,
properly done, can contribute to earnings growth and shareholder value. It is a
sign of both a strong business model and disciplined financial management to be
able to grow (at impressive rates) and not require constant infusions of new
capital. We think that private equity firms buying public companies of all
sizes and across many industries is not irrational. It is seizing an
opportunity to acquire solid franchises that are generating strong cash flows
at extraordinary valuations for the long-term investor. And the amount of
private equity activity is another confirmation that globalization, broadly
speaking, benefits U.S. corporate profits.
The Earnings Surprise
At the beginning of 2007, the overwhelming consensus was that after several
years of strong, double-digit earnings growth, the first quarter would show the
companies of the Standard & Poor's 500(i) slowing to an anemic 3-4% growth rate.
That assumption was based on several factors including the woes of the U.S.
housing market, the slowing of the U.S. industrial economy, and the basic
assumption that corporate earnings would have to "revert to the mean" of their
multi-decade average (about 7%) and hence dip significantly. All of these
assumptions proved to be wrong.
When all was said and done at the end of reporting seasons for the first
quarter of 2007, the S&P companies registered earnings growth of about 9%, and
nearly three-quarters of all companies have reported positive "surprises"
relative to expectations. Indeed, at the tail end of May, the S&P broke its own
record, reaching heights last seen seven years ago during the heady days of the
technology boom - and this
- ------------------
i Standard & Poor's 500 Index is an index of the 500 largest and most
profitable companies in the United States.
2
despite another minor overnight sell-off in China. So what happened? It's a
case of our friends back at the Old World struggling to explain New World
geography in terms they're familiar with - even if those terms don't quite fit
anymore.
True, most top-down analysts were correct about their predictions of the
slowdown of the U.S. economy. In fact, first quarter GDP growth was even worse
than had been predicted, registering a paltry 0.6% growth on weak exports and
slower corporate capital expenditures. But the experts also continued to use
the United States and past economic patterns as a proxy for predicting earnings
for U.S.-listed companies. This made perfect sense for the last half of the
20th century, when the United States was the dominant economic power globally
and U.S. corporations reflected that strength. But while the United States
remains far and away the largest economy, it is simply no longer the sole
engine of growth or the fastest. As such, the U.S. economy and economic data
are no longer a good proxy for how companies will do. Instead, they may well
mislead investors and analysts to underestimate the growth of U.S.-listed
companies.
We have said for the past three years - for most of this decade, in fact - that
the U.S. markets have been good markets for "stock pickers" in that they have
not been either notably frothy or notably flighty (occasional junctures
notwithstanding). What is now emerging, we believe, is a global "stock picker"
market, but many people are still playing markets rather than stocks. That
leaves some markets and many stocks, especially U.S.-listed ones and
U.S.-listed growth equities above all, undervalued and less loved than they
should be. And that, of course, represents an opportunity to pick and choose
quality growth companies while the rest of the investing community focuses
their eyes elsewhere.
Portfolio Matters
The U.S. Fixed Income market rallied to the low end, on a yield basis, of its
recent trading range on the heels of continued weakness in housing and a
meltdown in the subprime market. The yield curve remains flat to slightly
positively sloped with the two-year at 4.59% and the ten-year at 4.62%. With
somewhat mixed economic data the Fed seems poised to sit on the sidelines.
Credit premium changes were generally small and mixed in direction as companies
continued to tap the debt markets to fund capex and refinance existing debt.
Corporate bonds led all sectors with respect to performance with the bulk of
excess returns being generated by High Yield followed by U.S. Treasuries and
U.S. Mortgage Backed-Securities.
For the six months ending April 30, 2007 corporate spread premiums remained at
the low end of historical levels and earnings reports came in stronger than
expected as equities recovered from the late February sell-off. On the heels of
this strength, convertibles posted solid returns with large-cap issues easily
outpacing issues of smaller-cap companies. The convertible market has enjoyed a
solid recovery from a low in 2005 as a heavy new issue calendar coupled with
positive performance trends drew new investors and issuers to the sector.
The Castle Convertible Fund posted an NAV return of 7.60% for the six months
ending April 30, 2007 versus the Merrill Lynch All-Convertible Index(ii) return
of 7.39%.
In Summary
Six months ago, we surmised that braving the waters of the new global economy
would provide both challenges and opportunities. Indeed, the first half of the
year bore this out and often rewarded
- ------------------
ii The Merrill Lynch All-Convertible Index is an index of convertible
securities that is commonly used as a general measure of performance for
the convertible securities market.
3
the innovative, dynamic companies and investors that embraced those changes.
Going forward, we expect more of the same as the global, economic landscape
continues to expand and evolve. As the first six months of this fiscal year
come to a close, we would like to thank you for continuing to journey with us
and entrusting us with your investing needs.
Respectfully submitted,
/s/ Daniel C. Chung /s/ Zachary Karabell
Daniel C. Chung Zachary Karabell
Chief Investment Officer Chief Economist
June 8, 2007
Investors can not 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. The performance data
quoted represents past performance, which is not an indication or guarantee of
future results. 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 and the fund holdings described
in this report are as of April 30, 2007 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, 2007.
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. Funds that invest in fixed-income securities are subject to the
fixed-income securities' sensitivity to interest rate movements; their market
values tend to fall when interest rates rise and to rise when interest rates
fall. These funds are also subject to the risk of a decline in the value of the
fund's securities in the event of an issue's falling credit rating or actual
default. For a more detailed discussion of the risks associated with a Fund,
please see the Fund's Prospectus.
Mutual funds are not insured by the FDIC, are not deposits or other obligations
of, or guaranteed by banks, and are subject to investment risks, including
possible loss of principal amount invested.
Before investing, carefully consider the Fund's investment objective, risks and
charges and expenses. The Fund's prospectus contains this and other information
about the Fund, and may be obtained by asking your financial advisor, calling
us at (800) 992-3863, or visiting our website at www.alger.com, or contacting
the Fund's distributor, Fred Alger & Company, Incorporated, 111 Fifth Avenue,
New York 10003. Member NYSE, SIPC Read the prospectus carefully before
investing.
4
CASTLE CONVERTIBLE FUND, INC.
SCHEDULE OF INVESTMENTS (Unaudited)
April 30, 2007
Principal Corporate Convertible
Amount Bonds--50.4% Value
- -------------------------------------------------------------------------------
AUTOMOTIVE--.4%
$ 250,000 Asbury Automotive Group, 3.00%, 9/15/12(a)...... $ 252,500
-----------
AUTO EQUIPMENT & SERVICE--.8%
500,000 ArvinMeritor, Inc., 4.00%, 2/15/27(a)........... 513,750
-----------
BIOTECHNOLOGY--3.8%
1,000,000 CV Therapeutics, Inc., 2.75%, 5/16/12........... 838,750
1,000,000 Mankind Corporation, 3.75%, 12/15/13............ 985,000
500,000 Protein Design Labs, 2.00%, 2/15/12(a)....... 607,500
-----------
2,431,250
-----------
BUSINESS SERVICES--2.2%
1,000,000 Quanta Services Inc., 3.75%, 4/30/26(a)......... 1,390,000
-----------
COMMERCIAL BANKS--.8%
500,000 U.S. Bancorp Series B, 3.61%, 2/6/37(a)......... 496,850
-----------
COMMUNICATIONS EQUIPMENT--.8%
500,000 Nortel Networks Corporation, 1.75%, 4/15/12(a).. 485,000
-----------
COMPUTERS & PERIPHERALS--2.5%
1,000,000 EMC Corporation, 1.75%, 12/1/13................. 1,128,750
500,000 Komag, Incorporated, 2.125%, 4/1/14(a).......... 468,750
-----------
1,597,500
-----------
CONSUMER PRODUCTS--.9%
500,000 Ceradyne, Inc., 2.875%, 12/15/35................ 600,625
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.9%
1,000,000 Level 3 Communication Inc., 3.50%, 6/15/12...... 1,240,000
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS--3.0%
500,000 Anixter International Inc., 1.00% 2/15/13(a).... 624,375
1,000,000 Avnet Inc., 2.00%, 3/15/34...................... 1,302,500
-----------
1,926,875
-----------
ENERGY--4.1%
1,000,000 Helix Energy Solutions, 3.25%, 12/15/25......... 1,420,000
1,000,000 SunPower Corporation CI.A, 1.25%, 2/15/27....... 1,221,250
-----------
2,641,250
-----------
HEALTH CARE--.9%
500,000 Apria Healthcare Group Inc., Cv. Senior Notes,
3.375%, 9/1/33................................. 547,500
-----------
HEALTH CARE EQUIPMENT & SUPPLIES--2.2%
500,000 Illumina, Inc., .63%, 2/15/14(a)................ 474,375
1,000,000 Nektar Therapeutics, 3.25%, 9/28/12(a).......... 951,250
-----------
1,425,625
-----------
HEALTH CARE PROVIDERS & SERVICES--2.4%
250,000 AMERIGROUP Corporation, 2.00%, 5/15/12(a)....... 234,375
500,000 Manor Care, Inc., 2.00%, 6/1/36(a)............. 671,250
250,000 Manor Care, Inc., 2.125%, 8/1/35............... 371,875
250,000 Trizetto Group, 1.125%, 4/15/12(a).............. 259,063
-----------
1,536,563
-----------
HOTELS, RESTAURANTS & LEISURE--.8%
500,000 Host Hotels & Resorts, 2.625%, 4/15/27(a)....... 481,875
-----------
INSURANCE--1.6%
1,000,000 Covanta Holding Corporation, 1.00%, 2/1/27...... 1,035,000
-----------
LEISURE & ENTERTAINMENT--1.0%
500,000 General Cable Corporation, .875%, 11/15/13...... 647,500
-----------
MANUFACTURING--1.7%
1,000,000 Millipore Corporation, 3.75%, 6/1/26(a)......... 1,082,500
-----------
MEDIA--3.6%
1,130,463 Liberty Media Corporation, Senior Exch. Deb.,
3.50%, 1/15/31................................. 1,116,332
725,000 Regal Entertainment Group, Cv. Notes, 3.75%,
5/15/08........................................ 1,216,188
-----------
2,332,520
-----------
MEDICAL DEVICES--.8%
500,000 Advanced Medical Optics, 3.25%, 8/1/26.......... 489,375
-----------
OIL & GAS--1.6%
1,000,000 St. Mary Land & Exploration, 3.50%, 4/1/27(a)... 1,001,250
-----------
PHARMACEUTICALS--1.7%
1,000,000 Wyeth, 5.11%, 1/15/24........................... 1,109,300
-----------
REAL ESTATE--3.1%
500,000 Lexington Master LP, 5.45%, 1/15/27(a).......... 507,500
1,000,000 Macerich Co., 3.25%, 3/15/12.................... 998,750
500,000 Prologis, 2.25%, 4/1/37(a)...................... 493,125
-----------
1,999,375
-----------
5
Principal Corporate Convertible
Amount Bonds--(Continued) Value
- -------------------------------------------------------------------------------
RETAIL--.8%
500,000 Charming Shoppes, Inc., 1.125%, 5/1/14(a)....... $ 498,750
-----------
SEMICONDUCTORS--.9%
500,000 Amkor Technology, Inc., 2.50%, 5/15/11.......... 601,250
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.2%
500,000 Cypress Semiconductor Co., 1.00%, 9/15/09(a).... 551,875
1,000,000 ON Semiconductor Corporation, 2.625%,
12/15/26(a).................................... 1,256,250
250,000 RF Micro Devices, Inc., 1.00%, 4/15/14(a)....... 245,625
-----------
2,053,750
-----------
SOFTWARE--1.2%
500,000 Lawson Software, 2.50%, 4/15/12(a).............. 510,625
250,000 SPSS Inc., 2.50%, 3/15/12....................... 266,837
-----------
777,462
-----------
WIRELESS TELECOMMUNICATION SERVICES--1.7%
1,100,000 Nextel Communications, Inc., Cv. Senior Notes,
5.25%, 1/15/10................................. 1,101,375
-----------
Total Corporate Convertible
Bonds (Cost $29,012,103)....................... 32,296,570
-----------
Corporate Bonds--7.1%
AEROSPACE & DEFENSE--1.7%
1,000,000 L-3 Communications Holdings, 3.00%, 8/1/35...... 1,086,250
-----------
COMMUNICATION TECHNOLOGY--1.9%
1,100,000 Dobson Communications Corporation, 1.50%,
10/1/25(a)..................................... 1,212,750
-----------
ENERGY EQUIPMENT & SERVICES--1.8%
1,000,000 Cameron International Corporation, 2.50%,
6/15/26........................................ 1,157,500
-----------
REAL ESTATE--1.7%
1,000,000 Developers Diversified Realty Corporation,
3.50%, 8/15/20(a).............................. 1,088,750
-----------
Total Corporate Bonds (Cost $4,203,851)......... 4,545,250
-----------
Shares Convertible Preferred Securities--19.6%
- ----------
AUTOMOTIVE--1.7%
30,000 Ford Motor Company, Cap Trust II, Cv. Pfd.,
6.50%.......................................... 1,083,750
-----------
CAPITAL MARKETS--.4%
5,000 Merrill Lynch & Co., Inc., 6.75%, 10/15/07...... 226,563
-----------
DIVERSIFIED FINANCIAL SERVICES--3.9%
40,000 Citigroup Funding, Inc., Variable Rate.......... 1,350,000
40,000 Lehman Brothers Holdings Inc., Conv. Pfd.,
6.25%.......................................... 1,140,000
-----------
2,490,000
-----------
ELECTRIC UTILITIES--.5%
5,000 Entergy Corporation, 7.625%, 2/17/09............ 341,250
-----------
HOUSEHOLD DURABLES--.8%
500 Stanley Work, 5/17/12, Variable rate............ 536,687
-----------
INSURANCE--4.2%
2,000 Alleghany Corporation, 5.75%, 6/15/09........... 678,750
40,000 MetLife Inc., 6.375%............................ 1,325,000
20,000 Platinum Underwriters Holdings Ltd., 6.00%,
2/15/09, Series A.............................. 647,500
-----------
2,651,250
-----------
MEDIA--.8%
20,000 Comcast Corporation, 7.00%, 9/15/55............. 516,000
-----------
METALS & MINING--1.7%
10,000 Freeport-McMoRan Copper, 6.75%.................. 1,083,750
-----------
OIL & GAS--1.7%
10,000 Chesapeake Energy Corporation, 5.00%............ 1,117,500
-----------
REAL ESTATE--.8%
20,000 HRPT Properties Trust, 6.50%, Series D.......... 527,500
-----------
RETAIL--2.1%
20,000 Retail Ventures, Inc., 6.625%, 9/15/11.......... 1,347,500
-----------
THRIFTS & MORTGAGE FINANCE--1.0%
11,700 Washington Mutual, Inc., Capital Trust 2001,
Red. Eq. Sec., 5.375%, 5/3/41.................. 646,893
-----------
Total Convertible Preferred
Securities (Cost $11,256,169).................. 12,568,643
-----------
Mandatory Convertible Securities--2.0%
INSURANCE--.9%
20,000 IPC Holdings, Ltd., 7.25%, 11/15/08(b).......... 565,000
-----------
PHARMACEUTICALS--1.1%
10,000 Schering-Plough Corporation Peps, 6.00%,
9/14/07(b)..................................... 723,750
-----------
Total Mandatory Convertible
Securities (Cost $1,025,000)................... 1,288,750
-----------
6
Shares Preferred Securities--4.5% Value
- -------------------------------------------------------------------------------
CAPITAL MARKETS--1.0%
25,000 The Goldman Sachs Group, Inc., 6.20%, Pfd....... $ 641,500
-----------
DIVERSIFIED FINANCIAL SERVICES--1.5%
40,000 Freddie Mac, 5.66%, Pfd......................... 1,000,800
-----------
FINANCE--1.6%
40,000 Santander Finance Pfd., 6.80%, Series(a)........ 1,018,752
-----------
THRIFTS & MORTGAGE FINANCE--.4%
5,000 BankUnited Financial Pfd., 6.75%................ 242,500
-----------
Total Preferred Securities
(Cost $2,875,000).............................. 2,903,552
-----------
Common Stocks--15.4%
CAPITAL MARKETS--.8%
10,000 J.P. Morgan Chase & Co.......................... 521,000
-----------
COMMERCIAL BANKS--1.2%
15,000 Bank of America Corporation..................... 763,500
-----------
DIVERSIFIED FINANCIAL SERVICES--1.5%
17,500 Citigroup Inc................................... 938,350
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.1%
143,637 Level 3 Communication Inc.*..................... 718,759
-----------
ELECTRIC UTILITIES--6.1%
14,000 Entergy Corporation............................. 1,583,960
35,000 TXU Corporation................................. 2,295,300
-----------
3,879,260
-----------
OIL & GAS--2.7%
10,000 ConocoPhillips.................................. 693,500
15,000 Royal Dutch Shell, PLC.......................... 1,040,250
-----------
1,733,750
-----------
PHARMACEUTICALS--1.2%
13,000 GlaxoSmithKline PLC Sponsored ADR#.............. 751,140
-----------
RETAIL--.8%
15,000 Inergy, L.P..................................... 519,000
-----------
Total Common Stocks (Cost $5,467,109)........... 9,824,759
-----------
Principal
Amount Short-Term Investments--.6%
- -------------------------------------------------------------------------------
$ 366,000 Federal Home Loan Banks, 4.93%, 5/1/07
(Cost $366,000)................................ 366,000
-----------
Total Investments (Cost $54,205,232)(c).................. 99.6% 63,793,524
Other Assets in Excess of Liabilities................... 0.4 251,931
------------------
Net Assets............................................... 100.0% $64,045,455
===================
- ------------------
* Non-income producing securities.
# American Depositary Receipts.
(a) Pursuant to Securities and Exchange Commission Rule 144A, these
securities may be sold prior to their maturity only to qualified buyers.
These securities are deemed to be liquid and represent 23.0% of net
assets of the Fund.
(b) 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.
(c) At April 30, 2007, the net unrealized appreciation on investments, based
on cost for federal income tax purposes of $55,176,038, amounted to
$8,617,486 which consisted of aggregate gross unrealized appreciation of
$9,959,432 and aggregate gross unrealized depreciation of $1,387,047.
See Notes to Financial Statements.
7
CASTLE CONVERTIBLE FUND, INC.
PORTFOLIO SUMMARY* (Unaudited)
April 30, 2007
Sectors Value%
------------------------------------------------------
Consumer Discretionary...................... 11.1%
Energy...................................... 9.2
Financials.................................. 25.5
Health Care................................. 15.8
Industrials................................. 5.7
Information Technology...................... 15.2
Materials................................... 3.3
Telecommunication Services.................. 6.7
Utilities................................... 6.6
Cash and Net Other Assets................... 0.9
------
100.0%
======
- ------------------
* Based on Net Assets.
8
CASTLE CONVERTIBLE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
April 30, 2007
ASSETS:
Investments in securities, at value (cost $54,205,232), see
accompanying schedule of investments............................... $63,793,524
Receivable for investment securities sold........................... 1,244,000
Dividends and interest receivable................................... 316,064
Prepaid expenses.................................................... 61,347
-----------
Total Assets.................................................... 65,414,935
LIABILITIES:
Payable for investment securities purchased......................... $1,243,500
Investment advisory fees payable.................................... 40,376
Directors' fees payable............................................. 4,833
Bank overdraft...................................................... 7,596
Accrued expenses.................................................... 73,175
----------
Total Liabilities............................................... 1,369,480
-----------
NET ASSETS............................................................ $64,045,455
===========
Net Asset Value Per Share............................................. $ 28.64
===========
Shares of Beneficial Interest Outstanding............................. 2,236,000
===========
STATEMENT OF OPERATIONS (Unaudited)
For the six months ended April 30, 2007
INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes $2,880)................... $ 624,431
Interest.............................................................. 504,323
----------
Total Income........................................................ 1,128,754
Expenses:
Investment advisory fees--Note 2(a)................................... $ 232,907
Directors' fees....................................................... 5,256
Custodian and transfer agent fees..................................... 24,383
Professional fees..................................................... 31,064
Bookkeeping fees...................................................... 8,927
Miscellaneous......................................................... 49,662
----------
Total Expenses 352,199
----------
NET INVESTMENT INCOME..................................................... 776,555
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments....................................... 1,612,624
Net change in unrealized appreciation (depreciation) on investments..... 2,443,514
----------
Net realized and unrealized gain on investments......................... 4,056,138
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................... $4,832,693
==========
See Notes to Financial Statements.
9
CASTLE CONVERTIBLE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Six
Months Ended For the
April 30, 2007 Year Ended
(Unaudited) October 31, 2006
-----------------------------------
Net investment income................................................. $ 776,555 $ 1,468,800
Net realized gain on investments...................................... 1,612,624 4,236,375
Net change in unrealized appreciation (depreciation) on investments... 2,443,514 747,499
--------------------------------
Net increase in net assets resulting from operations............ 4,832,693 6,452,674
--------------------------------
Dividends and distributions to Shareholders from:
Net investment income............................................... (1,826,812) (2,504,320)
Net realized gains.................................................. (2,533,388) --
-------------------------------
Total dividends and distributions............................... (4,360,200) 2,504,320
-------------------------------
Total increase in net assets.................................... 472,493 3,948,354
Net Assets:
Beginning of period................................................. 63,572,962 59,624,608
-------------------------------
End of period....................................................... $64,045,455 $63,572,962
===============================
See Notes to Financial Statements.
10
CASTLE CONVERTIBLE FUND, INC.
FINANCIAL HIGHLIGHTS
For a share outstanding throughout the period
For the
Six Months Year Ended October 31,
Ended ---------------------------------------------------
April 30, 2007(i) 2006 2005 2004 2003 2002
------------------------------------------------------------------------
Net asset value, beginning of period.................... $28.43 $26.67 $25.73 $24.62 $22.56 $25.77
-------------------------------------------------------------------
Net investment income................................... 0.35 0.66 0.79 0.86 0.81 1.09
Net realized and unrealized gain (loss) on investments.. 1.81 2.22 1.23 1.27 2.12 (3.17)
-------------------------------------------------------------------
Total from investment operations........................ 2.16 2.88 2.02 2.13 2.93 (2.08)
Dividends from net investment income.................... (0.82) (1.12) (1.08) (1.02) (0.87) (1.13)
Distributions from net realized gains................... (1.13) -- -- -- -- --
-------------------------------------------------------------------
Total distributions..................................... (1.95) (1.12) (1.08) (1.02) (0.87) (1.13)
-------------------------------------------------------------------
Net asset value, end of period.......................... $28.64 $28.43 $26.67 $25.73 $24.62 $22.56
===================================================================
Market value, end of period............................. $25.00 $24.83 $22.51 $22.90 $21.75 $20.57
===================================================================
Total investment return based on market value per
share.................................................. 8.57% 15.70% 2.91% 10.06% 9.98% (11.05%)
===================================================================
Ratios and Supplemental Data:
Net assets, end of period (000's omitted)............. $64,045 $63,573 $59,625 $57,542 $55,045 $50,445
===================================================================
Ratio of expenses to average net assets............... 1.14% 1.20% 1.11% 1.11% 1.19% 1.09%
===================================================================
Ratio of net investment income to average net assets.. 2.50% 2.41% 2.99% 3.37% 3.49% 4.30%
===================================================================
Portfolio Turnover Rate............................... 71.17% 96.37% 58.54% 26.29% 156.83% 186.48%
===================================================================
- ------------------
(i) Unaudited. Ratios have been annualized; total investment return has not been annualized.
Total investment return is calculated assuming a purchase of common stock at
the current market price on the first day of each year reported and a sale at
the current market price on the last day of each year reported, and assuming
reinvestment of dividends and other distributions to common shareholders at
prices obtained under the Fund's Dividend Reinvestment Plan. Total investment
return does not reflect brokerage commissions or the deduction of any taxes
that a shareholder would owe on Fund distributions.
See Notes to Financial Statements.
11
CASTLE CONVERTIBLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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").
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. 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 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 policies established by the Board of Directors. Short-term
investments are valued at amortized cost which approximates market value.
In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards No. 157, "Fair Value Measurements"
(FAS 157). This standard clarifies the definition of fair value for financial
reporting, establishes a framework for measuring fair value and requires
additional disclosures about the use of fair value measurements. FAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007 and interim periods within those fiscal years. As of April
30, 2007 the Fund does not believe the adoption of FAS 157 will impact the
amounts reported in the financial statements, however, additional disclosures
will be required about the inputs used to develop the measurements of fair
value and the effect of certain of the measurements reported in the statement
of operations for a fiscal period.
(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.
Premiums and discounts on debt securities purchased are amortized or
accreted over the lives of the respective securities.
(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. 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
reporting 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 account within the financial statements are adjusted for
permanent book/tax differences. Reclassifications result primarily from the
difference in tax treatment of certain debt instruments. The reclassifications
have no impact on the net asset value of the Fund and is designed to present
the Fund's capital accounts on a tax basis.
(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.
On July 13, 2006, the Financial Accounting Standards Board (FASB)
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income
Taxes" (FIN 48). FIN 48 provides guidance for how uncertain tax positions
should be recognized, measured, presented and disclosed in the financial
statements. FIN 48 requires the evaluation of tax positions taken or expected
to be taken in the course of preparing the Fund's tax returns to determine
whether the tax positions are "more-likely-than-not" of being sustained by the
applicable tax authority. Tax positions not deemed to meet the
more-likely-than-not threshold would be recorded as a tax benefit or expense in
the current year. Adoption of FIN 48 is required for fiscal years beginning
after December 15, 2006 and is to be applied to all open tax years as of the
effective date. At this time, management is evaluating the implications of FIN
48 and its impact in the financial statements has not yet been determined.
12
CASTLE CONVERTIBLE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 1--Summary of Significant Accounting Policies (continued):
(e) 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.
(f) 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 Fred Alger
Management, Inc. ("Alger Management" or the "Adviser"), are payable monthly and
computed at an annual rate of .75% based on the Fund's average 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 six months
ended April 30, 2007, no reimbursement was required pursuant to the Contract.
For the six months ended April 30, 2007, the total investment advisory fee
charged to the Fund amounted to $232,907, and the Adviser received $9,000 for
bookkeeping services supplied to the Fund at cost.
(b) Shareholder Administrative Servicing Fees--The Fund has entered into a
shareholder administrative services agreement with Alger Shareholder Services,
Inc. ("Alger Services"), to compensate Alger Services on a per account basis
for its liaison and administrative oversight of transfer agent and related
services. During the six months ended April 30, 2007, the Fund incurred fees of
$1,071 for these services provided by Alger Services.
(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 $2,000.
The Chairman of the Board of Directors receives an additional annual fee of
$10,000 which is paid, pro rata, by all funds managed by the Adviser.
Additionally, each member of the audit committee receives an additional annual
fee of $500.
(d) Other Transactions With Affiliates--Certain directors and officers of the
Fund are directors and officers of Alger Management and Alger Services. At
April 30, 2007, the Adviser and its affiliates owned 453,060 shares of the
Fund.
NOTE 3--Securities Transactions:
During the six months ended April 30, 2007, purchases and sales of
investment securities, excluding short-term securities, aggregated $44,189,763
and $49,455,580, respectively.
NOTE 4--Components of Net Assets:
At April 30, 2007, the Fund's net assets consisted of:
Paid-in capital..................... $53,986,469
Undistributed net investment
income (accumulated loss).......... (1,141,558)
Undistributed net realized gain..... 1,612,252
Net unrealized appreciation......... 9,588,292
-----------
NET ASSETS.......................... $64,045,455
===========
NOTE 5--Tax Character of Distributions:
The tax character of distributions paid during the six months ended April
30, 2007 and the year ended October 31, 2006 were as follows:
Six Months
Ended Year Ended
April 30, 2007 October 31, 2006
- ----------------------------------------------------------------
Distributions paid from:
- ----------------------------------------------------------------
Ordinary income $1,826,812 $2,504,320
Long-term capital gain 2,533,388 --
- ----------------------------------------------------------------
Total distributions paid $4,360,200 $2,504,320
- ----------------------------------------------------------------
As of October 31, 2006 the components of distributable earnings on a tax
basis were as follows:
Undistributed ordinary income.......... $ 944,449
Undistributed long-term gain........... 2,427,927
Unrealized appreciation................ 6,214,117
The difference between book basis and tax basis unrealized appreciation
is attributable primarily to the tax deferral of losses on wash sales and tax
treatment of certain debt obligations.
13
NOTE 6--Litigaton:
Alger Management 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, Alger Management, Alger Inc.
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 issued an order implementing
settlements reached with Alger Management and Alger Inc. As part of the
settlements with the Commission and the NYAG, without admitting or denying
liability, the firms paid $30 million to reimburse fund shareholders and a fine
of $10 million; and agreed to certain other remedial measures including a
reduction in management fees of $1 million per year for five years. The entire
$40 million and fee reduction will be available for the benefit of investors.
Alger Management has advised the Funds that the settlement has not adversely
affected the operations of Alger Management, Alger Inc. or their affiliates, or
adversely affect their ability to continue to provide services to the Funds.
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 Alger Management and Alger Inc. had violated the West
Virginia Uniform Securities Act (the "WVUSA"), and ordered Alger Management and
Alger Inc. 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 Alger Management were
served with similar orders. Alger Management and Alger Inc. 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 Alger Management, certain mutual funds managed by
Alger Management (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. In September
2004, consolidated amended complaints involving these cases -- a Consolidated
Amended Fund Derivative Complaint (the "Derivative Complaint") and two
substantially identical Consolidated Amended Class Action Complaints (together,
the "Class Action Complaint") -- were filed in the Maryland federal district
court under the caption number 1:04-MD-15863 (JFM). In April 2005, a civil
lawsuit involving similar allegations was filed by the West Virginia Attorney
General and also transferred to the Maryland District Court, but such lawsuit
has since been withdrawn.
The Derivative Complaint alleged (i) violations, by Alger Management and,
depending on the specific offense alleged, by Alger Inc., and/or the fund
trustee defendants, of Sections 36(a), 36(b), 47, and 48 of the Investment
Company Act of 1940, as amended, (the "Investment Company Act") and of Sections
206 and 215 of the Investment Advisers Act of 1940, as amended, breach of
fiduciary duty, and breach of contract, (ii) various offenses by other
third-party defendants, and (iii) unjust enrichment by all the named
defendants. The Class Action Complaint alleged, in addition to the offenses
listed above, (i) violations, by Alger Management, Alger Inc., their
affiliates, the funds named as defendants, including the Funds, and the current
and former fund trustees and officers, of Sections 11, 12(a)(2), and 15 of the
Securities Act of 1933, as amended, Sections 10(b) (and Rule 10b-5 thereunder)
and 20(a) of the Securities Exchange Act of 1934, as amended, (the "1934 Act"),
and Section 34(b) of the Investment Company Act, (ii) breach of contract by the
funds named as defendants, and (iii) unjust enrichment of the defendants.
Motions to dismiss the Class Action Complaint and the Derivative
Complaint were subsequently filed.
As a result of a series of court orders, all claims in the Class
Action Complaint and the Derivative Complaint have been dismissed, other than
claims under the 1934 Act against Alger Management, Alger Inc., Alger
Associates, Inc. and Alger Shareholder Services, Inc., and certain present and
former members of the senior management of Alger Management and/or Alger Inc.,
and claims under Section 36(b) of the Investment Company Act against Alger
Management, Alger Inc., Alger Associates, Inc. and Alger Shareholder Services,
Inc.
14
Proxy Voting Results
The Annual meeting of the fund's shareholders was held on December 31,
2006. The results of votes taken among shareholders on the proposal before them
are reported below. Each vote reported represents one share held on the record
date for the meeting.
Propsal 1--To elect six trustees of the Fund.
# of Votes % of Votes
------------------------
Hilary M. Alger
For.............................................. 1,936,703 95.7%
Withheld......................................... 86,803 4.3%
----------------------
Total........................................ 2,023,506 100.0%
======================
Charles F. Baird, Jr.
For.............................................. 1,939,003 95.8%
Withheld......................................... 84,503 4.2%
----------------------
Total........................................ 2,023,506 100.0%
======================
Roger P. Cheever
For.............................................. 1,948,693 96.3%
Withheld......................................... 74,813 3.7%
----------------------
Total........................................ 2,023,506 100.0%
======================
Lester L. Colbert, Jr.
For.............................................. 1,953,787 96.6%
Withheld......................................... 69,719 3.4%
----------------------
Total........................................ 2,023,506 100.0%
======================
Stephen E. O'Neil
For.............................................. 1,950,993 96.4%
Withheld......................................... 72,513 3.6%
----------------------
Total........................................ 2,023,506 100.0%
======================
Nathan E. Saint-Amand
For.............................................. 1,936,483 95.7%
Withheld......................................... 87,023 4.3%
----------------------
Total........................................ 2,023,506 100.0%
======================
Propsal 2--To approve an Investment Advisory Agreement with Fred Alger
Management, Inc.
# of Votes % of Votes
------------------------
For................................................ 1,303,773 64.4%
Against............................................ 71,115 3.5%
Abstain/Broker No Votes............................ 648,618 4.1%
Total..................................... 2,023,506 100.0%
======================
15
Castle Convertible Fund, Inc.
Investment Adviser
Fred Alger Management, Inc.
111 Fifth Avenue
New York, NY 10003
- -------------------------------------------------------
Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company
c/o Computershare Financial Services
P.O. Box 43010
Providence, RI 02940-3010
- -------------------------------------------------------
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.
- -------------------------------------------------------
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.
Proxy Voting Policies
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to portfolio securities and the proxy voting record is
available, without charge, by calling 1-800-992-3863 or by accessing the SEC's
website at http://www.sec.gov.
Quarterly Fund Holdings
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarter of each fiscal year on Form N-Q. Forms N-Q are
available on the SEC's website at http://www.sec.gov. The Fund's Forms N-Q 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 Fund by calling 1-800-992-3863.
Castle Convertible Fund, Inc.
Semi-Annual Report
April 30, 2007
(Unaudited)
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. SCHEDULE OF 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.
Castle Convertible Fund, Inc.
By: /s/Dan C. Chung
Dan C. Chung
President
Date: June 18, 2007
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 18, 2007
By: /s/Michael D. Martins
Michael D. Martins
Treasurer
Date: June 18, 2007