<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
BANCROFT CONVERTIBLE FUND, INC.
- -------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursu-
ant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total Fee Paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BANCROFT CONVERTIBLE FUND, INC.
65 MADISON AVENUE, MORRISTOWN, NEW JERSEY 07960
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 15, 1996
---------------------
To The Stockholders:
The annual meeting of stockholders of Bancroft Convertible Fund, Inc. (the
"Company") will be held on Thursday, February 15, 1996 at 11:00 a.m. at The
Governor Morris Hotel, 2 Whippany Road, Morristown, New Jersey 07960 for the
following purposes:
(1) To elect three directors to serve until the annual meeting of stock-
holders in 1999, or until their successors are elected and qualify.
(2) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy regarding the qualitative requirements for investment
by the Company.
(3) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy imposing a history of operations requirement.
(4) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy regarding issuer diversification.
(5) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy regarding illiquid and restricted securities.
(6) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy regarding loans to permit the lending of portfolio
securities.
(7) To approve or disapprove a proposed change to the Company's fundamen-
tal investment policy regarding puts and calls to allow the Company to in-
vest up to 2% of its net assets in put options on common stock or market
indices.
(8) To ratify or reject the selection of Coopers & Lybrand L.L.P. as in-
dependent accountants for the fiscal year ending October 31, 1996.
(9) To transact such other business as may properly come before the meet-
ing.
Stockholders of record at the close of business on December 22, 1995 are en-
titled to vote at the meeting and any adjournments. If you attend the meeting,
you may vote your shares in person. If you do not expect to attend the meet-
ing, please fill in, date, sign and return the proxy in the enclosed envelope
which requires no postage if mailed in the United States.
It is important that you return your signed proxy promptly so that a quorum
may be assured.
December 29, 1995
Ronald E. Dinsmore
Chairman of the Board of Directors
<PAGE>
BANCROFT CONVERTIBLE FUND, INC.
65 MADISON AVENUE, MORRISTOWN, NEW JERSEY 07960
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 15, 1996
---------------------
The accompanying proxy is solicited by the Board of Directors of Bancroft
Convertible Fund, Inc. (the "Company"). A stockholder can revoke the proxy
prior to its use by appearing at the meeting and voting in person, by giving
written notice of such revocation to the Secretary of the Company, or by re-
turning a subsequently dated proxy. The cost of soliciting proxies will be
borne by the Company. The Company may engage Morrow & Co. to solicit proxies
for the Company. If so engaged, it is expected that the expense of such solic-
itation will not exceed $7,500. The officers, directors and regular employees
of the Company may solicit proxies by telephone, telegraph or personal inter-
view. The Company may also pay persons holding stock in their names, or those
of their nominees, for their expenses in sending proxies and proxy materials
to beneficial owners or principals.
The Board of Directors has named Ronald E. Dinsmore, Chairman, Thomas H.
Dinsmore, President, and Sigmund Levine, Executive Vice President and Secre-
tary of the Company, as a proxy committee. The proxy committee will vote as
set forth below with respect to the election of directors. A nominee must re-
ceive favorable votes from a majority of the shares voting at a meeting at
which a quorum is present to be elected. Cumulative voting in the election of
directors is not permitted. Unless otherwise directed by the accompanying
proxy, the proxy committee will vote in favor of each of the proposals to
change certain fundamental investment policies of the Company and to ratify
the selection of Coopers & Lybrand as independent accountants for the fiscal
year ending October 31, 1996. Abstentions and broker non-votes received with
respect to any proposal will be counted for purposes of determining whether a
quorum is present at the annual meeting of shareholders. Abstentions and bro-
ker non-votes do not count as votes received but have the same effect as cast-
ing a vote against proposals that require the vote of a majority or other per-
centage of the shares present at a meeting, provided a quorum exists.
The Board of Directors currently knows of no other matters to be presented
to the meeting. If any other matters properly come before the meeting, the
members of the proxy committee will vote in accordance with their best judg-
ment. The proxy committee may propose to adjourn the meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative
vote of a majority of the shares present in person or by proxy at the meeting.
The proxy committee will vote in favor of adjournment those proxies which in-
struct them to vote in favor of any of the proposals to be considered at the
adjourned meeting, and will vote against adjournment those proxies which in-
struct them to vote against or to abstain from voting on all of the proposals
to be considered at the adjourned meeting. Stockholders will be notified of
any adjournment that is later than March 16, 1996.
<PAGE>
Stockholders of record at the close of business on December 22, 1995 will be
entitled to one vote per share on all business of the meeting. The Company had
2,875,280 shares of its Common Stock outstanding on the record date. It is ex-
pected that the Company's Annual Report and this proxy statement and accompa-
nying proxy will be first sent to stockholders on or about December 29, 1995.
MATTERS TO BE PRESENTED
1. ELECTION OF DIRECTORS
The Company's amended Certificate of Incorporation provides for three clas-
ses of directors to serve staggered terms, with each class as nearly equal in
number as possible. The authorized number of directors is currently fixed at
eight, with two of the three classes having three directors and one of the
classes having two directors. At each annual meeting of stockholders, direc-
tors are elected to succeed those directors whose terms expired and each newly
elected director will serve for a three year term.
For election as directors at the annual meeting of stockholders to be held
on February 15, 1996 (the "Annual Meeting"), the Board of Directors has ap-
proved the nomination of Ronald E. Dinsmore, Thomas H. Dinsmore and Donald M.
Halsted, Jr. to serve as directors until the annual meeting of stockholders to
be held in 1999. All nominees are currently directors of the Company.
The proxy committee will vote for the election of the nominees named below
unless authority to vote for any or all of the nominees is withheld in the
proxy. All nominees have indicated that they are willing to serve as direc-
tors. If any of the nominees should become unavailable for election due to
events not now known or anticipated, the committee will vote for such other
nominee or nominees as the Board of Directors may recommend, unless the Board
reduces the number of directors.
Information regarding each nominee for director is provided below:
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
NOMINEE AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
--------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
TERMS EXPIRING IN
1999
Ronald E. Dinsmore* 69 (1) Since November 1985, Chairman of December
the Board and Chief Executive Of- 18, 1970
ficer of the Company; Since May
1986, Chairman of the Board and
Chief Executive Officer of Ells-
worth Convertible Growth and In-
come Fund, Inc.; Since August
1988, Chairman of the Davis-Dins-
more Management Company (the "Ad-
viser").
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
Thomas H. Dinsmore* 42 (1) Since November 1985, President of November
the Company; Since May 1986, Pres- 21, 1985
ident of Ellsworth Convertible
Growth and Income Fund, Inc.;
Since April 1994, Director of the
Adviser; Since August 1988, Presi-
dent of the Adviser; Senior Ana-
lyst of the Adviser since February
1983.
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
Donald M. Halsted, 68 (1) Since October 1983, self-employed December
Jr. businessman. 18, 1970
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc. and
Aquarion Company (water company).
</TABLE>
2
<PAGE>
Information regarding the remaining directors of the Company is provided be-
low:
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
DIRECTOR AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
--------------------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
TERMS EXPIRING IN
1998
Gordon F. Ahalt 67 (1) Since January 1982, President, April 19,
G.F.A. Inc. (petroleum industry 1982
consulting); Since 1987, Consul-
tant, W.H. Raves & Co., Inc. (as-
set management).
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc; The
Harbinger Group (investments) and
Cal Dive International (diving
service).
Jane D. O'Keeffe* 40 (1) Since April 1994, Vice President November
of the Company and of Ellsworth 18, 1995
Convertible Growth and Income
Fund, Inc. Since April 21, 1994,
Executive Vice President of the
Adviser. From October 1988 to
March 1994, Vice President, Fidu-
ciary Trust International.
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
TERMS EXPIRING IN
1997
William A. Benton 62 (1) Since January 1991, limited part- February
ner of Gavin, Benton & Co. (New 17, 1994
York Stock Exchange specialist
firm); Since January 1991, Partner
in BE Partners (small options mar-
ket maker); From June 1986 to De-
cember 1990, partner of Benton &
Co. (New York Stock Exchange spe-
cialist firm).
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
Elizabeth C. Bogan, 51 (1) Since September 1992, Senior Lec- April 1,
Ph.D. turer in Economics at Princeton 1990
University; From September 1971 to
July 1992, Professor of Economics
at Fairleigh Dickinson University.
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
George R. Lieberman 73 (1) Retired; Prior to January 1988, July 1,
Chief Executive Officer, Lieber- 1987
man-Appalucci (advertising); and
President, Interspace Airport Ad-
vertising (advertising).
(2) Director of Ellsworth Convertible
Growth and Income Fund, Inc.
</TABLE>
- ------------
* Mr. Ronald Dinsmore is an "interested person" of the Company and its Advis-
er, as defined by the Investment Company Act of 1940, as amended (the "In-
vestment Company Act"), because he is an officer of the Company and an of-
ficer, director and holder of 85% of the issued and outstanding stock of
the Adviser. Mr. Thomas Dinsmore is an interested person of the Company and
its Adviser because he is an officer of the Company and an officer, direc-
tor and holder of 10% of the issued and outstanding stock of the Adviser.
Ms. O'Keeffe is an interested person of the Company and its Adviser because
she is an officer of both such companies and holder of 5% of the issued and
outstanding stock of the Adviser.
Directors of the Company, as well as the Company's Director Emeritus, other
than affiliated persons of the Company, as a group received aggregate compen-
sation of $44,300 from the Company during its fiscal year ended October 31,
1995. Directors of the Company, as well as the Company's Director Emeritus,
other than affiliated persons of the Company, currently receive an annual fee
of $2,000, plus $750 per board meeting attended plus expenses of attending
board meetings and a fee of
3
<PAGE>
$100 per meeting of committees of the Board plus expenses for attending commit-
tee meetings. Directors do not receive pension or retirement benefits from the
Company.
Mr. Duncan O. McKee has served as Director Emeritus of the Company since
1988. Mr. McKee, who is presently retired, was previously a partner in the law
firm of Ballard Spahr Andrews & Ingersoll. For the fiscal year ended October
31, 1995, Mr. Mckee received aggregate compensation from the Company of $6,500
and total compensation from the Company and Ellsworth Convertible Growth and
Income Fund, Inc., which is advised by the Adviser, of $12,250.
Set forth below is information regarding the compensation paid during the
fiscal year ended October 31, 1995 for each director of the Company:
<TABLE>
<CAPTION>
TOTAL COMPENSATION
FROM COMPANY AND
ELLSWORTH CONVERTIBLE
AGGREGATE COMPENSATION GROWTH AND INCOME
FROM COMPANY FUND, INC.+
---------------------- ---------------------
<S> <C> <C>
Ronald E. Dinsmore................. $ -0- $ -0-
Thomas H. Dinsmore................. $ -0- $ -0-
Gordon F. Ahalt.................... $6,500 $12,250
William A. Benton.................. $6,500 $12,350
Elizabeth C. Bogan, Ph.D. ......... $5,850 $10,950
C.O. Chichester, Ph.D.++ .......... $5,750 $11,500
Donald M. Halsted, Jr. ............ $6,600 $12,450
George R. Lieberman................ $6,600 $12,350
Jane D. O'Keeffe+++................ $ -0- $ -0-
</TABLE>
- --------
+ Ellsworth Convertible Growth and Income Fund, Inc. is advised by the Advis-
er.
++ Dr. Chichester, a director of the Company since 1987, passed away on Novem-
ber 12, 1995. At a meeting held on November 18, 1995, the Board of Directors
appointed Ms. O'Keeffe to fill the vacancy on the Board.
+++ Ms. O'Keeffe, an affiliate of the Company, was not a director of the Com-
pany as of October 31, 1995. As an affiliate of the Company, Ms. O'Keeffe
would not have received compensation from the Company even if she had
served as a director prior to October 31, 1995.
During the fiscal year ended October 31, 1995, the Board of Directors held
six meetings. At present, the only committees of the Board are the audit com-
mittee and the nominating committee. The functions of those committees, their
current members and the number of meetings held during the fiscal year ended
October 31, 1995 are set forth below. All of the incumbent directors attended
more than 75% of meetings of the Board and committee meetings held during such
fiscal year.
Audit Committee. The Board of Directors has an audit committee currently con-
sisting of Messrs. Halsted, Jr. and Lieberman and Dr. Bogan. The audit commit-
tee periodically meets with the Company's independent accountants to review the
scope of audit examinations of the Company, the Company's accounting policies
and procedures and new developments in financial accounting standards applica-
ble to investment companies. The audit committee also reviews the quality and
performance of the Company's accounting and financial staff. During the fiscal
year ended October 31, 1995, the audit committee met once.
4
<PAGE>
Nominating Committee. The Board of Directors has a nominating committee cur-
rently consisting of Messrs. Halsted, Jr. and Lieberman. This committee was
created to recommend individuals for nomination for election at each annual
meeting of stockholders. The nominating committee considers and recommends in-
dividuals for nomination as directors. The names of potential director candi-
dates are drawn from a number of sources, including recommendations from mem-
bers of the Board, management and stockholders. Stockholders wishing to recom-
mend Board nominees should submit their recommendations in writing to the Sec-
retary at the Company's executive offices, with the submitting stockholder's
name and address and pertinent information about the proposed nominee similar
to that set forth in this proxy statement for Board nominees, including cur-
rent principal occupation and employment, principal positions held during the
last five years and a list of all companies for which the individual serves as
a director. During the fiscal year ended October 31, 1995, the nominating com-
mittee met once.
INVESTMENT ADVISER
Davis-Dinsmore Management Company (the "Adviser"), 65 Madison Avenue,
Morristown, New Jersey 07960, serves as the Company's adviser.
Ronald E. Dinsmore, Chief Executive Officer of the Company, is also director
and Chairman of the Adviser. Ronald E. Dinsmore owns 85% of the Adviser's out-
standing common stock. Thomas H. Dinsmore, President of the Company and the
son of Ronald E. Dinsmore, is also director, President of and Senior Analyst
for the Adviser. Thomas H. Dinsmore owns 10% of the Adviser's outstanding com-
mon stock. Jane D. O'Keeffe, Vice President of the Company and Executive Vice
President of the Adviser, is the daughter of Ronald E. Dinsmore and the sister
of Thomas H. Dinsmore. Ms. O'Keeffe owns 5% of the Adviser's outstanding com-
mon stock, which she received as a gift from Ronald E. Dinsmore in December
1994. Sigmund Levine, Executive Vice President and Secretary of the Company,
is also Treasurer and Secretary of the Adviser. H. Tucker Lake, Vice Presi-
dent, Trading of the Company, is the nephew of Ronald E. Dinsmore and the
first cousin of Thomas H. Dinsmore and Jane D. O'Keeffe. Gary Levine, Trea-
surer and Assistant Secretary of the Company, is the son of Sigmund Levine.
BACKGROUND TO CONSIDERATION OF PROPOSALS TO CHANGE
CERTAIN FUNDAMENTAL INVESTMENT POLICIES
The Company invests primarily in convertible securities with the objectives
of providing income and the potential for capital appreciation (which objec-
tives the Company considers to be relatively equal due to the nature of the
securities in which it invests). The markets for and the features of convert-
ible securities have changed dramatically in recent years. In July 1995, in
response to these changes, the Board of Directors of the Company modified the
Company's nonfundamental investment policies. The Company now intends to seek
its objectives by investing at least 80% of the market value of its total as-
sets, excluding cash and government securities, in debt securities and pre-
ferred stocks which are convertible into, or carry the right to purchase, com-
mon stock or other equity securities. The debt security or preferred stock may
itself be convertible into or exchangeable for equity securities, or the con-
version privilege may be evidenced by warrants attached to the security or ac-
quired as part of a unit with the security. The remainder of the Company's to-
tal assets may be invested in other securities, including non-convertible pre-
ferred stocks and investment grade debt securities, common stock received upon
conversion or exchange of securities, options, warrants, securities of the
U.S. Government, its agencies and instrumentalities or repurchase agreements,
or they may be held as cash. The Company is not required to sell securities
for the purpose of assuring that 80% of its total assets are invested in con-
vertible securities. This change in the investment policies of the Company did
not require the approval of the stockholders of the Company.
5
<PAGE>
The Company has adopted certain fundamental investment policies that limit
the investment practices of the Company. Most of these investment policies
have been in effect since the organization of the Company in 1971. Management
of the Company believes that certain of the Company's fundamental investment
policies unduly restrict the types of convertible securities that the Company
may purchase. As a result, the Company may have fewer investment options
available to it and it may be forced to acquire securities that management be-
lieves are less attractive in terms of risk and return than are newer types of
instruments currently offered in the market. Accordingly, on October 26, 1995,
the Board of Directors of the Company unanimously approved the following six
proposals to change certain of the Company's fundamental investment policies
to enable the Company to participate fully in convertible securities being of-
fered in today's markets and to engage in certain trading practices. Each pro-
posal must be approved by the affirmative vote of a majority of the Company's
outstanding shares, which for this purpose means 67% or more of the shares
present at the meeting or more than 50% of all outstanding shares, whichever
is less. Each proposal will become effective immediately upon approval.
The Board of Directors believes that the proposed changes to the Company's
fundamental investment policies are in the best interests of the Company and
its stockholders.
The Board of Directors recommends that you vote FOR each of the following
six proposals to change certain fundamental investment policies of the Compa-
ny.
2. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S
FUNDAMENTAL INVESTMENT POLICY REGARDING QUALITATIVE REQUIREMENTS
INTRODUCTION. The Board of Directors proposes to change the Company's funda-
mental investment policy which imposes qualitative requirements on the
Company's investments.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
have less than 80% of the market value of its total assets (excluding cash
and government securities) invested in securities of companies which at the
time of purchase (a) had shares of their common stock listed on the New
York Stock Exchange, (b) met the then prevailing earnings requirements for
listing on such Exchange, or (c) had pre-tax earnings of at least
$2,000,000 in three of the five preceding fiscal years. The fact that any
or all of these standards is met is no assurance of investment quality.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment
policy to provide that the Company will not:
have less than 80% of the market value of its total assets (excluding cash
and government securities) invested in (a) securities of companies which at
the time of purchase (i) had shares of their common stock listed on the New
York Stock Exchange, the American Stock Exchange or Nasdaq National Market
-----------------------------------------------------
(each, an "Exchange"), (ii) met the then prevailing earnings requirements
----------------------
for listing on the New York Stock Exchange, or (iii) had pre-tax earnings
of at least $2,000,000 in three of the five preceding fiscal years, and (b)
-------
in American Depositary Receipts that at the time of purchase (i) are listed
---------------------------------------------------------------------------
on an Exchange, or (ii) met the then prevailing earnings requirements for
-------------------------------------------------------------------------
listing on the New York Stock Exchange. The fact that any or all of these
---------------------------------------
standards is met is no assurance of investment quality. (Substantive
changes underlined.)
6
<PAGE>
REASONS FOR PROPOSED CHANGE. There are three major U.S. stock markets: the New
York Stock Exchange ("NYSE"), American Stock Exchange ("AMEX") and Nasdaq Na-
tional Market ("Nasdaq"). To be traded on any one of these stock markets, com-
panies must meet the size, earnings and public distribution requirements for
that market. Typically, a company's shares are traded on only one of the three
major markets. To be listed on the NYSE, a company must have a public float
with a market value of $40 million, net tangible assets of $40 million, and (a)
pretax income of $2.5 million in the most recent fiscal year and pretax income
of $2 million in each of the two preceding fiscal years, (b) $6.5 million in
aggregate pretax income over the last three fiscal years (with each such year
being profitable) and a minimum pretax income of $4.5 million in the most re-
cent fiscal year, or (c) for companies with not less that $500 million in mar-
ket capitalization and $200 million in revenues in the most recent fiscal year,
aggregate net income (adjusted to remove the effects of all items whose cash
effects are investing or financing cash flows) of $25 million for the last
three fiscal years (with each such year reporting a positive amount). To be
listed on AMEX, a company must have either (a) pretax income of $750,000 in the
latest fiscal year or two of the last three fiscal years, a public float with a
market value of at least $3 million, and at least $4 million of stockholders'
equity, or (b) a public float with a market value of at least $15 million, at
least $4 million of stockholders' equity, and an operating history of at least
three years. To be listed on Nasdaq, a company must have either (a) $4 million
in net tangible assets, had net income of $400,000 and pretax income of
$750,000 in the latest fiscal year or two of the last three fiscal years, and a
public float of 500,000 shares with a market value of $3 million, or (b) $12
million in net tangible assets, a public float of one million shares with a
market value of $15 million, and an operating history of at least three years.
To be listed on the NYSE, AMEX or Nasdaq, companies may also have to meet cer-
tain additional minimum thresholds with respect to such matters as number of
shareholders, average daily trading volume and share or bid price.
The size and earnings requirements of the NYSE are higher than those for AMEX
and Nasdaq and allow only larger companies to qualify for listing on such ex-
change. The size and earnings requirements of both AMEX and Nasdaq allow for
mid-sized and smaller growth companies to qualify for listing. The Board of Di-
rectors of the Company believes that the proposed change in the qualitative re-
quirements for investment to include securities of companies listed on AMEX or
Nasdaq broadens investment opportunities for the Company.
Permitting the Company to invest in ADRs listed on the NYSE, AMEX or Nasdaq
or meeting the earnings requirement for listing on the NYSE also would enhance
the investment opportunities of the Company. Many foreign corporations whose
stocks are listed in their home country's exchanges are traded in the U.S. mar-
kets as ADRs. ADRs are certificates representing an ownership interest in a se-
curity or a pool of securities issued by a foreign issuer and deposited with
the depositary, typically a bank, and held in trust for the investor.
Modifying the qualitative requirements for investments may result in greater
volatility in the Company's net asset value. Historically, the stocks of mid-
sized and smaller growth companies have been more volatile in price than larger
company stocks. Among the reasons for the greater price volatility of these se-
curities are the less certain growth prospects of smaller firms, the lower de-
gree of liquidity in the markets for such stocks, and the greater sensitivity
of mid-sized and smaller growth companies to changing economic conditions. Be-
sides exhibiting greater volatility, mid-sized and smaller growth company
stocks may, to a degree, fluctuate independently of larger company stocks. Mid-
sized and smaller growth company stocks may decline in price as large company
stocks rise, or rise in price as large company stocks decline.
7
<PAGE>
The Board of Directors believes that the proposed change to the Company's
qualitative requirements for investment is in the best interests of the Com-
pany and its stockholders.
RECOMMENDATION. The Board of Directors recommends that you vote FOR the
proposal to change the Company's fundamental investment policy regarding the
qualitative requirements for investment by the Company.
3. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S FUNDAMENTAL
INVESTMENT POLICY IMPOSING A HISTORY OF OPERATIONS REQUIREMENT
INTRODUCTION. The Board of Directors proposes to change the Company's funda-
mental investment policy which imposes a history of operations requirement on
investments by the Company to apply such requirement to either the issuer or a
guarantor of securities.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
purchase securities of companies which, with their predecessors, have a
record of less than three years' continuous operations, if such purchase
would cause more than 5% of the market value of the Company's total assets
to be invested in the securities of such companies, or invest in more than
10% of the outstanding voting securities of any one issuer.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment
policy to provide that the Company will not:
(a) purchase securities (i) of companies which, with their predecessors, or
--- --- --
(ii) which are guaranteed by companies which, with their predecessors, have
----------------------------------------------------------------------
a record of less than three years' continuous operations, if such purchase
would cause more than 5% of the market value of the Company's total assets
to be invested in the securities of such companies, or (b) invest in more
---
than 10% of the outstanding voting securities of any one issuer. (Substan-
tive changes underlined.)
REASONS FOR PROPOSED CHANGE. The proposed amendment clarifies that the Company
may look either to the issuer or the guarantor of securities to satisfy the
Company's history of operations requirement. For example, over the past sev-
eral years, many large corporations have formed wholly owned finance subsidi-
aries to fund capital requirements. These subsidiaries often issue convertible
securities which are guaranteed by the parent corporation. In many instances,
the subsidiary has had less than three years of operations at the time it is-
sues its securities. In determining whether to invest in such security, man-
agement of the Company will analyze the creditworthiness of both the issuer
subsidiary and the parent corporation providing the guaranty. The same analy-
sis would apply with respect to securities that are guaranteed by an unrelated
guarantor. The Board of Directors accordingly believes that it would be appro-
priate for management to look either to the issuer or the guarantor to satisfy
the history of operations requirement.
RECOMMENDATION. The Board of Directors recommends that you vote FOR the pro-
posal to change the Company's fundamental investment policy imposing a history
of operations requirement.
8
<PAGE>
4. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S
FUNDAMENTAL INVESTMENT POLICY REGARDING ISSUER DIVERSIFICATION
INTRODUCTION. The Board of Directors proposes to change the Company's fundamen-
tal investment policy regarding issuer diversification to apply the diversifi-
cation requirement to 85% of the Company's total assets.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
invest more than 5% of the market value of its total assets in the securi-
ties of any one issuer (other than the United States government or its
agencies) or purchase additional securities of any one issuer (other than
the United States government or its agencies) if after giving effect to
such purchase the cost of all securities of such issuer then held by it
would exceed 5% of the market value of its total assets.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment pol-
icy to provide that the Company will not:
with respect to 85% of its total assets, invest more than 5% of the market
----------------------------------------
value of its total assets in the securities of any one issuer (other than
the United States government or its agencies) or purchase additional secu-
rities of any one issuer (other than the United States government or its
agencies) if after giving effect to such purchase the cost of all securi-
ties of such issuer then held by it would exceed 5% of the market value of
its total assets. (Substantive changes underlined.)
REASONS FOR THE PROPOSED CHANGE. As a diversified investment company, the In-
vestment Company Act prohibits the Company, with respect to only 75% of its to-
tal assets (taken at market value), from investing more than 5% of its total
assets in the securities of any single issuer. The Company's current 5% limita-
tion on the percentage of assets invested in a single issuer is more restric-
tive than that imposed by the Investment Company Act because it applies to
100%, rather than 75%, of the Company's total assets. The proposed change would
impose the 5% limitation on 85% of the Company's assets, which is still more
restrictive than the Investment Company Act.
The Board of Directors believes that permitting the Company to invest, with
respect to 15% of its assets, more than 5% of its assets in securities of an
issuer will enable management to take advantage of investment opportunities
that appear particularly attractive to it. The Company will still maintain full
compliance with the diversification requirements of the Investment Company Act.
The proposed change to the Company's investment policy will permit the Company
to take a larger position in the securities of a single issuer than under the
current investment policy. To the extent the Company invests more than 5% of
its assets in the securities of a single issuer, the Company will be less
broadly diversified than it currently is. As a result, the Company's net asset
value per share may be more affected by changes in the value of such single is-
suer's securities.
RECOMMENDATION. The Board of Directors recommends that you vote FOR the pro-
posal to change the Company's fundamental investment policy regarding issuer
diversification.
9
<PAGE>
5. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S FUNDAMENTAL INVESTMENT
POLICY REGARDING PURCHASE OF ILLIQUID AND RESTRICTED SECURITIES
INTRODUCTION. The Board of Directors proposes to change the Company's funda-
mental investment policy regarding the purchase of illiquid and restricted se-
curities.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
underwrite securities of other issuers, except that it may acquire convert-
ible securities the subsequent disposition of which (or of the underlying
equity security) would cause the Fund to be deemed an underwriter within
the meaning of the Securities Act of 1933, as amended ("restricted securi-
ties"). Sale of restricted securities may require registration under the
Securities Act of 1933, as amended, in which event a considerable period
may elapse between the time the Fund decides to sell such securities and
the time registration thereof becomes effective and market price and condi-
tions may change during the intervening period. In addition, the Fund's po-
sition in restricted securities may adversely affect their liquidity and
marketability, and accordingly the Fund may not be able to dispose of its
holdings of restricted securities at reasonable price levels. No more than
10% of the market value of the Fund's total assets will be invested in re-
stricted securities.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment
policy to provide that the Company will not:
underwrite securities of other issuers, except that it may acquire convert-
ible securities the subsequent disposition of which (or of the underlying
equity security) would cause the Fund to be deemed an underwriter within
the meaning of the Securities Act of 1933, as amended.
The Company will also have a nonfundamental investment policy which provides
that the Company may not purchase the securities of an issuer if, after giving
effect to such purchase, more than 20% of its net assets would be invested in
illiquid securities.
REASONS FOR PROPOSED CHANGE. Historically, investment companies limited their
purchase of securities that were sold in private placements. Such securities
were not registered under federal and state securities laws and could not be
sold absent registration under the securities laws or an exemption from such
registration or were otherwise subject to restrictions on resale. These secu-
rities are generally referred to as "restricted securities".
During the past decade, however, the market for privately placed securities
has evolved dramatically. The primary participants in this market are institu-
tions, including investment companies such as the Company. The evolution of
this market has in part resulted from the adoption by the Securities and Ex-
change Commission of Rule 144A under the Securities Act of 1933, as amended,
which provides a registration exemption to qualified institutional buyers
(such as the Company) upon the resale of privately placed (restricted) securi-
ties, provided the conditions set forth in such rule are satisfied. As a re-
sult of the adoption of such rule, many companies are financing their capital
needs through the issuance of privately placed securities which are eligible
for resale under Rule 144A ("Rule 144A Securities") (many of which are con-
vertible securities) and an institutional trading market has developed for
such securities.
10
<PAGE>
Because of this market evolution, management of the Company believes that
the correct focus by the Company when it seeks to purchase a restricted secu-
rity (including a Rule 144A Security) should be whether the security is liquid
(that is, whether it can be disposed of within seven days at the price at
which it is valued), and not whether it is restricted. The Company's invest-
ment policy currently focuses on whether a security is restricted and does not
take into account liquidity, and therefore prevents the Company from investing
in many convertible securities issues which are being offered in today's mar-
ket.
The Board of Directors believes that the Company should have the ability to
purchase the full range of convertible securities that are available in
today's market. If the stockholders approve the proposed change to the
Company's investment policy, the Company will be able to purchase restricted
securities provided that (1) the Board of Directors has determined that such
securities are liquid, or (2) if such security is illiquid, after giving ef-
fect to such purchase, not more than 20% of the Company's net assets would be
invested in illiquid securities.
The proposed change will not affect the Company's fundamental investment
policy that generally prohibits it from acting as an underwriter of securities
of other issuers. It will make non-fundamental, however, the Company's invest-
ment policy regarding the purchase of illiquid securities and will increase to
20% the value of the Company's net assets that may be invested in illiquid se-
curities. Increasing the percentage of the Company's net assets that may be
invested in illiquid securities may present additional risk to the Company as
it may be more difficult for the Company to dispose of an illiquid security
when management believes it is advantageous to do so. Because this policy is
nonfundamental, it could be changed in the future by the Board of Directors
without stockholder approval in response to regulatory or market developments.
In determining whether a Rule 144A Security or other restricted security
purchased in a private placement is liquid, the Board of Directors is respon-
sible for taking into account such factors as the
frequency of trades and quotes for the security, the number of dealers willing
to purchase or sell the security and the number of other potential purchasers,
dealer undertakings to make a market in the security and the nature of the se-
curity and the nature of the marketplace trades (for example, the time needed
to dispose of the security, the method of soliciting offers and the mechanics
of transfer). The Board of Directors intends to establish guidelines for the
Adviser to follow in determining the liquidity of each Rule 144A Security and
other privately placed securities purchased by the Company, subject to the
oversight and review by the Board of Directors.
RECOMMENDATION. The Board of Directors recommends that you vote FOR the pro-
posal to change the Company's fundamental investment policy regarding illiquid
and restricted securities.
6. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S
FUNDAMENTAL INVESTMENT POLICY REGARDING SECURITIES LENDING
INTRODUCTION. The Board of Directors proposes to change the Company's funda-
mental investment policy pertaining to loans by the Company to permit the Com-
pany to lend securities held by the Company (referred to as "portfolio securi-
ties") to others, so long as portfolio securities subject to such lending do
not exceed 10% of the total assets of the Company.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
11
<PAGE>
make loans to other persons, except that the purchase of debt securities in
accordance with the Company's investment policies shall not be considered
the making of a loan, and provided that the Company may make temporary pur-
chases of securities issued or guaranteed by the United States, its agen-
cies or instrumentalities; bank certificates of deposit; or high-grade com-
mercial paper, which are subject to repurchase agreements.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment pol-
icy to provide that the Company will not:
make loans to other persons, (a) except that (i) the Company may lend its
--- ----------------------------
portfolio securities provided the value of such loaned securities does not
--------------------------------------------------------------------------
exceed 10% of its total assets and (ii) the purchase of debt securities in
---------------------------------------
accordance with the Company's investment policies shall not be considered
the making of a loan, and (b) provided that the Company may make temporary
---
purchases of securities issued or guaranteed by the United States, its
agencies or instrumentalities; bank certificates of deposit; or high-grade
commercial paper, which are subject to repurchase agreements. (Substantive
changes underlined.)
REASONS FOR THE PROPOSED CHANGE. Portfolio lending activities have increased
greatly in recent years. The demand for portfolio loans from longer-term insti-
tutional investors has increased with such activities. In order to take advan-
tage of this demand and thereby generate additional income, the Board of Direc-
tors has determined that the Company should have the flexibility to loan a por-
tion of its portfolio securities.
Loans of portfolio securities by the Company would be subject to certain
guidelines prescribed, and from time to time modified, by the staff of the Com-
mission. Under present guidelines, the borrower would be required to provide
the Company with collateral equal at all times to at least 100% of the value of
the loaned securities. If the market value of the loaned securities increased
beyond the value of the collateral, the borrower would be required to provide
the Company with additional collateral; if the value of the loaned securities
declined, the borrower would be entitled to the return of its collateral to the
extent of the decline. Under present guidelines, the types of collateral per-
mitted are cash, short-term government securities, letters of credit and trust
receipts.
The risks of lending portfolio securities, as with other extensions of se-
cured credit, consist of possible delays in receiving additional collateral or
in the recovery of the loaned securities or the possible loss of rights in the
collateral should the borrower fail financially. Loans of portfolio securities
would be made to firms determined by management of the Company to be of good
credit standing and would not be made unless, in its judgment, the considera-
tion to be earned from such loans would justify the risk. Such loans would only
be made pursuant to written agreements defining each party's rights and obliga-
tions.
At the present time, the Commission's guidelines permit the voting rights as-
sociated with the loaned securities to pass to the borrower, although such
guidelines require that such loans be called so that the securities may be
voted by the Company if a material event affecting the loaned securities is to
occur. The Company will continue to be entitled to receive the dividend, inter-
est or other distributions on the loaned securities.
The Board of Directors believes that the authority to lend portfolio securi-
ties may enhance the Company's earning potential, and is, therefore, in the
best interests of the Company and its stockholders.
12
<PAGE>
RECOMMENDATION. The Board of Directors recommends that you vote FOR the pro-
posal to change the Company's fundamental investment policy regarding loans to
permit the lending of portfolio securities.
7. APPROVAL OR DISAPPROVAL OF A CHANGE TO THE COMPANY'S FUNDAMENTAL INVESTMENT
POLICY REGARDING PUTS AND CALLS
INTRODUCTION. The Board of Directors proposes to change the Company's funda-
mental investment policy regarding investment in puts and calls to permit the
Company to invest, to a limited extent, in put options on common stock or mar-
ket indices.
CURRENT POLICY. The Company's current fundamental investment policy provides
that the Company will not:
invest in puts, calls, or combinations thereof; provided that, notwith-
standing the foregoing, the Company may write covered call options and may
purchase call options to close out written call options.
PROPOSED CHANGE. The Board of Directors proposes to modify this investment
policy to provide that the Company will not:
invest in puts, calls, or combinations thereof; provided that, notwith-
standing the foregoing, the Company may invest up to 2% of its net assets
in put options on common stock or market indices and may write covered call
options and may purchase call options to close out written covered call op-
tions. (Substantive changes underlined.)
REASONS FOR PROPOSED CHANGE. A put option gives the purchaser of the option
the right to sell, and the writer of the option the obligation to buy, the un-
derlying security at any time during the option period. The proposed change
would give the Company the flexibility to purchase put options to protect
against a decline in the market value of the securities in its portfolio. Al-
though the Company will pay a premium when purchasing put options, if price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Company, loss of the premium paid may be off-
set by an increase in the value of the Company's securities.
The investment policy, as amended, would give the Company the ability to in-
vest in put options on common stock or market indices. Put options on indices
are similar to options on securities except that options on an index give the
holder the right to receive, upon exercise of the option, an amount of cash if
the closing level of the underlying index is greater than (or less than, in
the case of puts) the exercise price of the option. This amount of cash is
equal to the difference between the closing price of the index and the exer-
cise price of the option, expressed in dollars multiplied by a specified num-
ber.
Thus, unlike options on individual securities, all settlements are in cash,
and gain or loss depends on price movements in the particular market repre-
sented by the index generally, rather than the price movements in individual
securities. The ability of the Company to terminate an option will depend upon
the existence of a liquid secondary market for such option.
The success of any "hedging strategy" using put options may depend on an
ability to predict movements in the prices of individual securities, fluctua-
tions in markets and movements in interest rates. There may be an imperfect
correlation between the movement in prices of options and the securities un-
derlying them. In addition, there may not be a liquid secondary market for op-
tions.
13
<PAGE>
RECOMMENDATION. The Board of Directors recommends that you vote FOR the pro-
posal to change the Company's fundamental investment policy regarding puts and
calls to allow the Company to invest up to 2% of its net assets in put options
on common stock or market indices.
8. RATIFICATION OR REJECTION OF SELECTION OF ACCOUNTANTS
The Board of Directors, including a majority of the directors who are not
interested persons of the Company or the Adviser, has selected Coopers &
Lybrand L.L.P. as independent accountants to examine and verify the accounts
and securities of the Company for its fiscal year ending October 31, 1996, and
to report thereon to the Board and the stockholders. This selection will be
submitted for ratification or rejection at the Annual Meeting. It is not ex-
pected that a representative of Coopers & Lybrand will be present at the An-
nual Meeting.
The Board of Directors recommends that you vote FOR ratification of selec-
tion of the accountants.
14
<PAGE>
ADDITIONAL INFORMATION
Executive Officers. Executive officers of the Company are elected by the
Board of Directors and serve at the pleasure of the Board. Such officers do not
receive any compensation from the Company for their services. The following ta-
ble sets forth certain information about executive officers of the Company.
<TABLE>
<CAPTION>
OFFICER POSITION WITH BUSINESS EXPERIENCE DURING
NAME AGE SINCE THE COMPANY PAST FIVE YEARS
---- --- ------- ------------- --------------------------
<S> <C> <C> <C> <C>
Ronald E. Dinsmore 69 1970 Chairman and Chief See page 2 of this proxy statement.
Executive Officer
Thomas H. Dinsmore 42 1983 President See page 2 of this proxy statement.
Sigmund Levine 69 1982 Executive Vice Since April 1993, Executive Vice
President and President, and since November
Secretary 1982 Secretary of the Company
and Secretary and Treasurer of
the Adviser. From November 1982
to April 1993, Treasurer of the
Company. Since April 1993, Exec-
utive Vice President, and since
May 1986, Secretary of Ellsworth
Convertible Growth and Income
Fund, Inc. From May 1986 to
April 1993, Treasurer of Ells-
worth Convertible Growth and In-
come Fund, Inc.
H. Tucker Lake 48 1994 Vice President, Since April 1994, Vice Presi-
Trading dent, Trading of the Company and
of Ellsworth Convertible Growth
and Income Fund, Inc. Prior
thereto, Sales Associate, Cold-
well Banker, Schlott Realtors.
Jane D. O'Keeffe 40 1994 Vice President See page 3 of this proxy statement.
Gary Levine 38 1993 Treasurer Since April 1993, Treasurer of
the Company and of Ellsworth
Convertible Growth and Income
Fund, Inc. Since June 1986, As-
sistant Secretary of the Company
and Ellsworth Convertible Growth
and Income Fund, Inc.
</TABLE>
15
<PAGE>
Security Ownership of Management. The following table sets forth certain in-
formation regarding the ownership of the Company's shares of Common Stock by
directors and officers of the Company:
<TABLE>
<CAPTION>
SHARES OF
COMPANY OWNED
BENEFICIALLY
DECEMBER 22,
1995*
-------------
<S> <C>
Ronald E. Dinsmore............................................. 26,309(1)
Thomas H. Dinsmore............................................. 3,212(2)
Gordon F. Ahalt................................................ 551
William A. Benton.............................................. 1,132
Elizabeth C. Bogan, Ph.D. ..................................... 1,000
Donald M. Halsted, Jr. ........................................ 1,835(3)
George R. Lieberman............................................ 723
Jane D. O'Keeffe............................................... 1,974
Duncan O. McKee................................................ 1,031
Sigmund Levine................................................. 627
H. Tucker Lake................................................. 106(4)
Gary I. Levine................................................. 433
</TABLE>
- --------
* Represents for each director less than 1% of the outstanding shares of Com-
mon Stock of the Company. As of December 22, 1995, directors and officers
of the Company beneficially owned in the aggregate 38,933 shares of Common
Stock of the Company representing approximately 1.4% of the shares out-
standing. Except as otherwise indicated, each director and officer pos-
sessed sole investment and voting power with respect to shares of Common
Stock beneficially owned.
(1) Mr. Ronald Dinsmore possessed sole investment and voting power with re-
spect to 21,181 shares of Common Stock beneficially owned by him and pos-
sessed shared investment and voting power with respect to 5,128 shares of
Common Stock beneficially owned by him. The number of shares of Common
Stock beneficially owned by Mr. Ronald Dinsmore does not include 701
shares owned by his wife, as to which shares Mr. Ronald Dinsmore disclaims
beneficial ownership.
(2) Mr. Thomas Dinsmore possessed sole investment and voting power with re-
spect to 2,349 shares of Common Stock beneficially owned by him and pos-
sessed shared investment and voting power with respect to 863 shares of
Common Stock beneficially owned by him. The number of shares of Common
Stock of the Company owned by Mr. Thomas Dinsmore does not include 1,323
shares owned by his wife, as to which shares Mr. Thomas Dinsmore disclaims
beneficial ownership.
(3) The number of shares owned by Mr. Halsted does not include 949 shares
owned by his wife, as to which shares Mr. Halsted disclaims beneficial
ownership.
(4) Mr. H. Tucker Lake possessed shared investment power with respect to 106
shares of Common Stock beneficially owned by his wife.
Principal Holders of the Company's Stock. The Company knows of no beneficial
owners of more than 5% of the Company's outstanding Common Stock.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and proxy
for the 1997 annual meeting of stockholders, stockholder proposals must be re-
ceived no later than August 31, 1996.
16
<PAGE>
- --------------------------------------------------------------------------------
BANCROFT CONVERTIBLE FUND, INC.
ANNUAL MEETING, FEBRUARY 15, 1996
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Ronald E. Dinsmore, Thomas H. Dinsmore, and
Sigmund Levine, and each of them, attorneys and proxies, with power of
substitution in each, to vote and act on behalf of the undersigned at the annual
meeting of stockholders of Bancroft Convertible Fund, Inc. (the "Company") at
The Governor Morris Hotel, 2 Whippany Road, Morristown, New Jersey 07960 on
February 15, 1996 at 11:00 a.m., and at all adjournments, according to the
number of shares of Common Stock which the undersigned could vote if present,
upon such subjects as may properly come before the meeting, all as set forth in
the notice of the meeting and the proxy statement furnished therewith. UNLESS
OTHERWISE MARKED ON THE REVERSE HEREOF, THIS PROXY IS GIVEN WITH AUTHORITY TO
VOTE FOR THE DIRECTORS LISTED, FOR EACH OF THE PROPOSALS TO CHANGE CERTAIN
FUNDAMENTAL INVESTMENT POLICIES OF THE COMPANY AND FOR THE PROPOSAL TO RATIFY
THE BOARD'S SELECTION OF ACCOUNTANTS.
Board of Directors nominees: Ronald E. Dinsmore, Thomas H. Dinsmore and
Donald M. Halsted, Jr.
PLEASE FILL IN, DATE AND SIGN THE PROXY ON THE OTHER SIDE
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
1. Election as directors of all nominees listed on the reverse hereof for the
terms specified in the proxy statement.
FOR all nominees WITHHOLD (INSTRUCTION: To Withhold Authority
listed (except as AUTHORITY to vote for any individual nominee,
marked to the contrary to vote for all write that nominee's name in the
in the space provided) nominees space provided below.)
[ ] [ ] --------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" PROPOSALS 2 THROUGH 8.
2. Proposal to change the Company's fundamental investment policy regarding the
qualitative requirements for investment by the Company
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to change the Company's fundamental investment policy imposing a
history of operations requirement
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to change the Company's fundamental investment policy regarding
issuer diversification
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. Proposal to change the Company's fundamental investment policy regarding
illiquid and restricted securities
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
6. Proposal to change the Company's fundamental investment policy regarding
loans to permit the lending of portfolio securities
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
7. Proposal to change the Company's fundamental investment policy regarding puts
and calls to allow the Company to invest up to 2% of its net assets in put
options on common stock or market indices
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
8. Proposal to Ratify selection of accountants
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
IF SHARES ARE HELD JOINTLY, EACH STOCKHOLDER NAMED SHOULD SIGN. LEGAL
REPRESENTATIVES OF STOCKHOLDER SHOULD ADD THEIR TITLES WHEN SIGNING.
Dated: , 19
---------------------------------------------- --
(SEAL)
- ----------------------------------------------------
(SEAL)
- ----------------------------------------------------
Signature of Stockholder
- --------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTES"
- --------------------------------------------
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
