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SIGNATURE GARY LEVINE
TITLE TREASURER
Item 77C
At Registrant's Special Meeting of Shareholders held on October 25,
1996,a proposal to approve a new Investment Advisory Agreement between
the Registrant and Davis-Dinsmore Management Company, was voted upon
and approved. There were 2,189,786 affirmative votes and 79,317
negative votes cast for this proposal, with 60,094 votes abstaining.
Item 77Q1
BANCROFT CONVERTIBLE FUND, INC.
Interim Investment Advisory Agreement
August 11, 1996
DAVIS-DINSMORE MANAGEMENT COMPANY
65 Madison Avenue
Morristown, New Jersey 07960
Gentlemen:
The undersigned, Bancroft Convertible Fund, Inc., a Delaware
corporation (the "Company"), is an investment company registered under
the Investment Company Act of 1940 (the "Act"). The Company is a
diversified closed-end investment company, and invests and reinvests
its assets. The Company hereby engages you to act as its Investment
Adviser and to supervise certain of its affairs, subject to the terms
and conditions herein set forth.
Section 1. Advisory Services. The Company will from time to
time furnish to you detailed statements of its investments and
resources and information as to its investment needs, and will make
available to you such financial reports, proxy statements, legal and
other information relating to its investments as may be in the
possession of the Company or available to it. You shall, at your
expense, furnish to the Company, at the regular executive offices of
the Company, continuing investment information, advice and
recommendations with respect to the purchase and sale of investments
and the making of commitments with respect thereto. In giving such
advice and making such recommendations, you shall be guided by the
Company's investment policy as delineated by the statements contained
in the various documents filed with the Securities and Exchange
Commission as such documents may from time to time be amended. You
shall place at the disposal of the Company such statistical, research,
analytical and technical services, information and reports as may
reasonably be required. Your advice and recommendations with respect
to the purchase and sale of investments and the making of investment
commitments shall be submitted at the principal office of the Company
to an officer or officers of the Company designated for that purpose by
the Board of Directors of the Company. Such officer or officers shall
have, subject to the control of the Company's Board of Directors, sole
responsibility for investment decisions, and full authority to act upon
your advice and recommendations and to place orders on behalf of the
Company for the purchase and sale of portfolio securities. Reports of
portfolio transactions shall be made monthly to the Board of Directors
of the Company.
Section 2. Independent Contractor. You shall, for all
purposes hereof, be deemed to be an independent contractor and shall
have no authority to act for or represent the Company unless otherwise
provided. No agreement, bid, offer, commitment, contract or other
engagement entered into by you, whether on your behalf or whether
purported to have been entered into on behalf of the Company, shall be
binding upon the Company, and all acts authorized to be done by you
under this contract shall be done by you as an independent contractor
and not as agent.
Section 3. Expenses. To the extent described in this Section
3, you shall provide the Company with office space and facilities, pay
the salaries of its executive officers and furnish clerical,
bookkeeping and statistical services to the Company.
The Company will pay all expenses incurred by it and not
assumed by you including, but not by way of limitation, expenses in
connection with its organization and with the offering of its
securities; fees and expenses of its unaffiliated directors; salaries
of employees other than executive officers; the compensation and
related personnel expenses of the Treasurer of the Company and all
personnel working under the Treasurer's direction and the expenses of
office space, facilities, and equipment used by the Treasurer and such
personnel in performance of their duties to the Company in an aggregate
amount not to exceed $50,000 per year; legal and accounting fees, fees
of custodian, registrar, transfer agents and dividend disbursing
agents; taxes, interest, brokerage commissions; direct costs of
postage, printing, copying and travel expenses attributable to the
conduct of the business of the Company, etc. You shall assume and pay
all expenses incurred by you in performance of this contract.
Section 4. Compensation. As compensation for these services,
the Company will pay to you on the last day of each month a fee for
such month computed at an annual rate of 3/4 of 1% of the first
$100,000,000 and 1/2 of 1% of the excess over $100,000,000 of the
Company's net asset value in such month, subject to reduction as
follows: the annual fee payable shall be reduced to the extent the
Company's ordinary expenses for the year (including your fee but
excluding interest, local, state and Federal taxes on the Company and
extraordinary items) exceed 1.5% of the first $100,000,000 and 1% of
the excess over $100,000,000 of the average of the monthly net asset
values of the Company for the twelve months of such year. You will
promptly refund any amount theretofore paid in excess of the fee
determined to be due for such year. For the purpose of calculation of
the fee, the net asset value for a month will be the average of the
Company's net asset values at the close of business on the last
business day on which the New York Stock Exchange is open in each week
in the month. The determination of what constitutes an "extraordinary
item" rather than an ordinary expense shall be conclusively determined
by the directors of the Company who are not "interested persons" of
either the Company or you, as defined by the Act.
If this contract shall become effective subsequent to the first
day of a month, or shall terminate before the last day of a month, your
compensation for such fraction of the monthly period shall be
determined by applying the foregoing percentage to the net asset value
of the Company during such fraction of a monthly period (which net
asset value shall be determined in such reasonable manner as the Board
of the Company shall deem appropriate) and in the proportion that such
fraction of a monthly period bears to the entire month.
Compensation under this contract will begin to accrue on its
effective date.
Section 5. Approval of Contract; Termination. At a meeting
held on August 1, 1996, the Board of Directors of the Company, including
a majority of the Independent Directors, approved this contract in
accordance with Rule 15a-4 under the Act. This Agreement became
effective as of August 11, 1996, and will continue in force until the
earlier of (i) 120 days after its effective date (or December 9, 1996)
or (ii) shareholder approval of a new advisory agreement. The contract
is terminable without penalty by either party on sixty days' written
notice and will terminate automatically in the event of any assignment.
Except as specified above, this contract may not be amended,
transferred, assigned, sold or in any other manner hypothecated or
pledged; provided, that this limitation shall not prevent any minor
amendments to the contract which may be required by Federal or state
regulatory bodies.
Section 6. Liability. You shall give the Company the benefit
of your best judgment and efforts in rendering the services set forth
herein, and the Company agrees as an inducement to the undertaking of
these services by you that you shall not be liable for any error of
judgment or for any loss suffered by the Company in connection with any
matters to which this contract relates except that nothing herein
contained shall be construed to protect you against any liability by
reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties or by reckless disregard of your obligations
or duties under this contract.
Section 7. Multiple Capacities. Except to the extent
necessary for performance of your obligations hereunder, nothing shall
restrict your right or any of your directors, officers or employees who
may be directors, officers or employees of the Company to engage in any
other business or to devote time and attention to the management or
other aspects of any other business whether of a similar or dissimilar
nature or to render services of any kind to any other corporation,
firm, individual or association.
It is understood and agreed that the directors, officers,
agents, employees and shareholders of the Company may be interested in
your company as directors, officers, shareholders, employees, agents or
otherwise, and the directors, officers, agents, employees and
shareholders of your company may be interested in the Company as a
shareholder or otherwise.
Section 8. Concerning Applicable Provisions of Law, Etc. This
contract shall be subject to all applicable provisions of law,
including, but not limited to, the applicable provisions of the Act;
and, to the extent that any provisions herein contained conflict with
any such applicable provisions of law, the latter shall control.
The laws of the State of New York shall, except to the extent
that any applicable provisions of some other law shall be controlling,
govern the construction, validity and effect of this contract.
The headings preceding the text of the several sections herein
are inserted solely for convenience of reference and shall not affect
the meaning, construction or effect of this contract.
If the contract set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this letter and returning
the same to the undersigned, whereupon this letter
shall constitute a binding contract between the parties hereto, subject
to approval provided for in Section 5.
Yours very truly,
BANCROFT CONVERTIBLE FUND, INC.
By: /s/ Thomas H. Dinsmore
Thomas H. Dinsmore
(President)
(Corporate Seal)
Attest: /s/ Sigmund Levine
Sigmund Levine
(Secretary)
DAVIS-DINSMORE MANAGEMENT
COMPANY
By: /s/ Thomas H. Dinsmore
Thomas H. Dinsmore
(President)
Attest: /s/ Sigmund Levine
Sigmund Levine
(Secretary)
(Corporate Seal)
Item 77Q1
BANCROFT CONVERTIBLE FUND, INC.
Investment Advisory Agreement
August 1, 1996
(Approved October 25, 1996)
DAVIS-DINSMORE MANAGEMENT COMPANY
65 Madison Avenue
Morristown, New Jersey 07960
Gentlemen:
The undersigned, Bancroft Convertible Fund, Inc., a Delaware corporation
(the "Company"), is an investment company registered under
the Investment Company Act of 1940 (the "Act"). The Company is a
diversified closed-end investment company, and invests and reinvests
its assets. The Company hereby engages you to act as its Investment
Adviser and to supervise certain of its affairs, subject to the terms
and conditions herein set forth.
Section 1. Advisory Services. The Company will from time to
time furnish to you detailed statements of its investments and
resources and information as to its investment needs, and will make
available to you such financial reports, proxy statements, legal and
other information relating to its investments as may be in the
possession of the Company or available to it. You shall, at your
expense, furnish to the Company, at the regular executive offices of
the Company, continuing investment information, advice and
recommendations with respect to the purchase and sale of investments
and the making of commitments with respect thereto. In giving such
advice and making such recommendations, you shall be guided by the
Company's investment policy as delineated by the statements contained
in the various documents filed with the Securities and Exchange
Commission as such documents may from time to time be amended. You
shall place at the disposal of the Company such statistical, research,
analytical and technical services, information and reports as may
reasonably be required. Your advice and recommendations with respect
to the purchase and sale of investments and the making of investment
commitments shall be submitted at the principal office of the Company
to an officer or officers of the Company designated for that purpose by
the Board of Directors of the Company. Such officer or officers shall
have, subject to the control of the Company's Board of Directors, sole
responsibility for investment decisions, and full authority to act upon
your advice and recommendations and to place orders on behalf of the
Company for the purchase and sale of portfolio securities. Reports of
portfolio transactions shall be made monthly to the Board of Directors
of the Company.
Section 2. Independent Contractor. You shall, for all
purposes hereof, be deemed to be an independent contractor and shall
have no authority to act for or represent the Company unless otherwise
provided. No agreement, bid, offer, commitment, contract or other
engagement entered into by you, whether on your behalf or whether
purported to have been entered into on behalf of the Company, shall be
binding upon the Company, and all acts authorized to be done by you
under this contract shall be done by you as an independent contractor
and not as agent.
Section 3. Expenses. To the extent described in this Section
3, you shall provide the Company with office space and facilities, pay
the salaries of its executive officers and furnish clerical,
bookkeeping and statistical services to the Company.
The Company will pay all expenses incurred by it and not
assumed by you including, but not by way of limitation, expenses in
connection with its organization and with the offering of its
securities; fees and expenses of its unaffiliated directors; salaries
of employees other than executive officers; the compensation and
related personnel expenses of the Treasurer of the Company and all
personnel working under the Treasurer's direction and the expenses of
office space, facilities, and equipment used by the Treasurer and such
personnel in performance of their duties to the Company in an aggregate
amount not to exceed $50,000 per year; legal and accounting fees, fees
of custodian, registrar, transfer agents and dividend disbursing
agents; taxes, interest, brokerage commissions; direct costs of
postage, printing, copying and travel expenses attributable to the
conduct of the business of the Company, etc. You shall assume and pay
all expenses incurred by you in performance of this contract.
Section 4. Compensation. As compensation for these services,
the Company will pay to you on the last day of each month a fee for
such month computed at an annual rate of 3/4 of 1% of the first
$100,000,000 and 1/2 of 1% of the excess over $100,000,000 of the
Company's net asset value in such month, subject to reduction as
follows: the annual fee payable shall be reduced to the extent the
Company's ordinary expenses for the year (including your fee but
excluding interest, local, state and Federal taxes on the Company and
extraordinary items) exceed 1.5% of the first $100,000,000 and 1% of
the excess over $100,000,000 of the average of the monthly net asset
values of the Company for the twelve months of such year. You will
promptly refund any amount theretofore paid in excess of the fee
determined to be due for such year. For the purpose of calculation of
the fee, the net asset value for a month will be the average of the
Company's net asset values at the close of business on the last
business day on which the New York Stock Exchange is open in each week
in the month. The determination of what constitutes an "extraordinary
item" rather than an ordinary expense shall be conclusively determined
by the directors of the Company who are not "interested persons" of
either the Company or you, as defined by the Act.
If this contract shall become effective subsequent to the first
day of a month, or shall terminate before the last day of a month, your
compensation for such fraction of the monthly period shall be
determined by applying the foregoing percentage to the net asset value
of the Company during such fraction of a monthly period (which net
asset value shall be determined in such reasonable manner as the Board
of the Company shall deem appropriate) and in the proportion that such
fraction of a monthly period bears to the entire month.
Compensation under this contract will begin to accrue on its
effective date.
Section 5. Approval of Contract; Termination. This contract
will be submitted to the Company's shareholders for approval. If
approved by the vote of a majority of the Company's outstanding shares
of common stock as defined in the Act, the contract will be in effect
from the date of approval. Unless terminated by either party, this
contract will continue in force from year to year so long as the
continuance is specifically approved at least annually either (i) by
the Board of Directors of the Company or (ii) by the vote of a majority
of the outstanding voting securities of the Company as defined in the
Act, provided that in either event the contract is also approved by the
vote of a majority of the directors of the Company who are not
interested persons, as defined in the Act, of the Company or of you,
cast in person at a meeting called for the purpose of voting on such
approval. The contract is terminable without penalty by either party
on sixty days' written notice and will terminate automatically in the
event of any assignment.
Except as specified above, this contract may not be amended,
transferred, assigned, sold or in any other manner hypothecated or
pledged; provided, that this limitation shall not prevent any minor
amendments to the contract which may be required by Federal or state
regulatory bodies.
Section 6. Liability. You shall give the Company the benefit
of your best judgment and efforts in rendering the services set forth
herein, and the Company agrees as an inducement to the undertaking of
these services by you that you shall not be liable for any error of
judgment or for any loss suffered by the Company in connection with any
matters to which this contract relates except that nothing herein
contained shall be construed to protect you against any liability by
reason of willful misfeasance, bad faith or gross negligence in the
performance of your duties or by reckless disregard of your obligations
or duties under this contract.
Section 7. Multiple Capacities. Except to the extent
necessary for performance of your obligations hereunder, nothing shall
restrict your right or any of your directors, officers or employees who
may be directors, officers or employees of the Company to engage in any
other business or to devote time and attention to the management or
other aspects of any other business whether of a similar or dissimilar
nature or to render services of any kind to any other corporation,
firm, individual or association.
It is understood and agreed that the directors, officers,
agents, employees and shareholders of the Company may be interested in
your company as directors, officers, shareholders, employees, agents or
otherwise, and the directors, officers, agents, employees and
shareholders of your company may be interested in the Company as a
shareholder or otherwise.
Section 8. Concerning Applicable Provisions of Law, Etc. This
contract shall be subject to all applicable provisions of law,
including, but not limited to, the applicable provisions of the Act;
and, to the extent that any provisions herein contained conflict with
any such applicable provisions of law, the latter shall control.
The laws of the State of New York shall, except to the extent
that any applicable provisions of some other law shall be controlling,
govern the construction, validity and effect of this contract.
The headings preceding the text of the several sections herein
are inserted solely for convenience of reference and shall not affect
the meaning, construction or effect of this contract.
If the contract set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this letter and returning
the same to the undersigned, whereupon this letter
shall constitute a binding contract between the parties hereto, subject
to approval provided for in Section 5.
Yours very truly,
BANCROFT CONVERTIBLE FUND, INC.
By: /s/ Thomas H. Dinsmore
Thomas H. Dinsmore
(President)
(Corporate Seal)
Attest: /s/ Sigmund Levine
Sigmund Levine
(Secretary)
DAVIS-DINSMORE MANAGEMENT
COMPANY
By: /s/ Thomas H. Dinsmore
Thomas H. Dinsmore
(President)
Attest: /s/ Sigmund Levine
Sigmund Levine
(Secretary)
(Corporate Seal)
Item 77Q2
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, Section 30(f) of the
Investment Company Act, and the regulations of the Securities and Exchange
Commission thereunder require the Company's officers and directors and direct
or indirect beneficial owners of more than 10% of the Company's Common Stock,
as well as Davis-Dinsmore, its directors and officers and certain of its other
affiliated persons (collectively, "Reporting Persons"), to file initial reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the American Stock Exchange. Reporting Persons are required to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it and
written representations, the Company believes that all filing requirements
applicable to the Reporting Persons have been complied with during the fiscal
year ended October 31, 1996, except that (i) Davis-Dinsmore did not file a Form
3 upon commencement of its activities as investment adviser to the Company in
1971 and did not separately report on Form 4 1,000 shares of the Company it
purchased in 1994, as well as additional shares acquired upon reinvestment of
dividends and distributions, until November 19, 1996 when it filed a Form 5
(which was 5 days late), and Mrs. Jean Dinsmore did not file a Form 3 in
January 1982 as a result of her position as a director of Davis-Dinsmore and
did not separately report on Form 4 433 shares of the Company she purchased in
1988, as well as additional shares acquired upon reinvestment of dividends and
distributions, until November 11, 1996 when she filed a Form 3 and November 13,
1996 when she filed a Form 5, although in each case all such shares had
previously been reported on Section 16(a) forms that had been filed by Mr.
Ronald Dinsmore (now deceased), who at such dates was the primary owner of
Davis-Dinsmore and the husband of Mrs. Jean Dinsmore; and (ii) Mrs. Sally
Finnican, who was appointed a director of Davis-Dinsmore on September 26, 1996,
filed a Form 3 one month late.
Form N-SAR
For period ended 10/31/96
File Number 811-2151
This report is signed on behalf of the Registrant in the City of
Morristown and State of New Jersey on the 18th day of December, 1996.
Bancroft Convertible Fund, Inc.
Name of Registrant
By: /s/ Gary I. Levine
Gary I. Levine
Treasurer
Witness:/s/ Thomas H. Dinsmore
Thomas H. Dinsmore
Chairman
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Bancroft Convertible Fund, Inc.:
In planning and performing our audit of the financial statements
and financial highlights of Bancroft Convertible Fund, Inc., for
the year ended October 31, 1996, we considered its internal control
structure, including procedures for safeguarding securities, in order
to determine our auditing procedures for the purpose of expressing
our opinion on the financial statements and financial highlights and
to comply with the requirements of Form N-SAR, not to provide
assurance on the internal control structure.
The management of Bancroft Convertible Fund, Inc. is responsible for
establishing and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by management
are required to assess the expected benefits and related costs of
internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management
with reasonable, but not absolute, assurance that assets are safeguarded
against loss from unauthorized use or disposition and that transactions
are executed in accordance with management's authorization and recorded
properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure,
errors or irregularities may occur and not be detected. Also, projection
of any evaluation of the structure to future periods is subject to the
risk that it may become inadequate because of changes in conditions or
that the effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a condition in
which the design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that errors
or irregularities in amounts that would be material in relation to the
financial statements and financial highlights being audited may occur
and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no
matters involving the internal control structure, including procedures
for safeguarding securities, that we consider to be material weaknesses,
as defined above, as of October 31, 1996.
This report is intended solely for the information and use of management
of Bancroft Convertible Fund, Inc. and the Securities and Exchange
Commission.
COOPERS & LYBRAND L.L.P.
New York, New York
November 19, 1996
