<PAGE> 1
Bancroft Convertible Fund, Inc.
(LOGO)
1999 Annual Report
October 31, 1999
<PAGE> 2
Bancroft Convertible Fund, Inc. operates as a closed-end,
diversified management investment company and invests primarily in convertible
securities, with the objectives of providing income and the potential for capi-
tal appreciation--which objectives the Company considers to be relatively equal,
over the long-term, due to the nature of the securities in which it invests.
HIGHLIGHTS
Performance thru 10/31/99 (with dividends reinvested)
<TABLE>
<S> <C> <C> <C> <C>
10Months 1 Year 5 Year 10 Year
-------- ------ ------- -------
Bancroft market value............. 0.39% (3.73)% 102.23% 241.22%
Bancroft net asset value *........ 7.19 16.91 106.31 228.87
Closed-end convertible fund average 10.57 15.37 81.72 209.56
S&P 500 +.......................... 12.03 25.66 217.63 414.43
Russell 2000 +..................... 2.76 14.94 68.08# 155.95#
</TABLE>
Performance data represent past results and do not reflect future performance.
* From Lipper, Inc. Closed-End Fund Performance Analysis.
+ From Bloomberg L.P. pricing service.
# Simple appreciation of index.
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarterly History of NAV and Market Price
Net Asset Values Market Prices (AMEX, symbol BCV)
Qtr Ended High Low Close High Low Close
- --------- ------ ------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C> <C>
Dec 1998 $11.39 $10.04 $11.11 $10.63 $8.88 $9.63
Mar 1999 11.50 10.99 11.44 10.00 9.38 9.75
Jun 1999 11.84 11.15 11.69 9.94 9.19 9.63
Sep 1999 12.18 11.18 11.23 10.00 9.06 9.38
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dividend Distributions (12 Months)
Record Payment Capital *Corporate
Date Date Income Gains Total Deduction
- -------- -------- ------ ------- ------ ----------
<S> <C> <C> <C> <C> <C>
12/1/98 12/30/98 $0.183 $2.942 $3.125 45%
3/16/99 3/30/99 0.200 --- 0.200 35
6/15/99 6/29/99 0.200 --- 0.200 35
9/15/99 9/29/99 0.200 --- 0.200 35
------ ------ ------
$0.783 $2.942 $3.725
</TABLE>
* Percentage of each ordinary income distribution qualifying for the dividend
received tax deduction by corporate shareholders.
<PAGE> 3
TO OUR SHAREHOLDERS
We are at the end of the year, the decade and the century. It is a
good time to reflect on the more important events and trends carrying
us forward. The past century saw the continuing decline of
authoritarianism and centralized control. It has seen the beginning
of the ascendancy of the individual.
The Information Age's maturation combined with the largest demographic
segment of our population moving into their most productive years has
tremendously aided productivity. Some of this productivity increase
has occurred in the home and in the underground economy, hence the
Bureau of Labor Statistics does not measure it.
This productivity growth, along with the explosion in investments by
pension money (through 401Ks, IRAs and others), combined further with
the end of the Cold War and the widening of trade with the rest of the
world, has made the stellar stock market returns possible. While it
is likely that a serious bear market will happen at some time in the
future, the above are good solid reasons why the stock market is
behaving as it is. There are fireworks in the NASDAQ, but boring low-
growth stocks are falling as shown by returns in the other averages.
This divergence has created a huge disparity in valuation.
The market is not out of control because there are many investment
opportunities that have been providing above average returns. But we
must ask: are these stocks getting ahead of themselves and
discounting growth that they cannot achieve? The signs are visible of
a frothy top, but the money flowing into the market is quite
substantial and the growth of companies like America Online and
Amazon.com has not disappointed, so far.
In its December 1999 edition of the Principia Pro for Closed-End
Funds, Morningstar* continued to rate Bancroft at four stars (above
average). Shareholders who wish a copy of the Standard & Poor's
December 4th stock report on Bancroft, or a copy of the Morningstar
October 1999 report, should contact us.
At the November meeting the Board of Directors declared a dividend
totaling $3.08 consisting of 18.3 cents per share from undistributed
net investment income, 61.3 cents per share of short-term capital gain
on investments and $2.284 per share of long-term capital gain on
investments realized in fiscal year 1999. This dividend is payable on
December 28, 1999 to shareholders of record November 24, 1999.
The 2000 Annual Meeting of Shareholders will be held in our offices in
Morristown, NJ on February 16, 2000. Particulars will be included in
the proxy statement. All shareholders are welcome to attend and we
hope to see you there. May the New Year bring you continued peace and
prosperity.
/s/ Thomas H. Dinsmore
Chairman of the Board
December 14, 1999
* Morningstar is a mutual fund analysis and statistical reporting service that
reports on and rates most mutual funds.
See Important Factors Regarding Forward-Looking Statements on page 14 of
this report.
<PAGE> 4
LARGEST INVESTMENT HOLDINGS by underlying common stock
<TABLE>
<S> <C> <C> <C>
Principal
Amount Value % Total
or Shares (Note 1) Net Assets
- --------- ---------- ----------
2,015,000 Time Warner, Inc. $3,671,250 3.5%
A media company with operations in entertainment, cable
networks and publishing.
(exchangeable from Houston Industries 7% due 2000 and
Merrill Lynch 0.25% due 2004)
1,000,000 Lucent Technologies, Inc. 3,272,500 3.2
Designer, developer and manufacturer of communications
systems, software and products.
(exchangeable from NatWest Markets 0% due 2003)
3,000,000 Cable and Wireless Communications plc 3,153,750 3.0
An integrated telecommunications company operating
throughout the United Kingdom, as well as a provider of
television and Internet services.
(exchangeable from Bell Atlantic Financial 4 1/4% due 2005)
3,000,000 Telecom Corp. of New Zealand 3,043,125 2.9
The principal supplier of telecommunications in New Zealand.
(exchangeable from Bell Atlantic Financial 5 3/4% due 2003)
2,200,000 General Electric Corp. 2,690,750 2.6
Develops and manufactures products for the utilization of
electricity. GE also offers financial services through GE Capital
Services, Inc. and owns the National Broadcasting Company.
(exchangeable from CS First Boston 21/4% due 2003 and
Exch. Certificate 1 1/4% due 2004)
20,000 BankAmerica Corp. 2,140,000 2.1
Provides retail banking and financial services throughout the
United States.
(exchangeable from Jefferson-Pilot 7 1/4% due 2000)
31,500 Vodafone AirTouch plc 2,109,750 2.0
International provider of mobile telecommunications, cellular
telephone, paging and personal communications services.
(exchangeable from MediaOne Group, Inc. 6 1/4% due 2001
and 7% due 2002)
1,500,000 Clear Channel Communications, Inc. 2,099,063 2.0
A diversified media company with operations in broadcasting
and outdoor advertising.
895,000 AES Corp. 2,047,188 2.0
Owns or has an interest in ninety-four power facilities through-
out the world.
3,500,000 Hewlett-Packard Company 2,016,875 1.9
Designs, manufactures and services products for measurement, ----------- -----------
computation and communications. The Company's products
include computers, workstations and printers.
Total $26,244,251 25.2%
=========== ===========
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
MAJOR INDUSTRY EXPOSURE
% Total
Net Assets
----------
<S> <C>
Technology....................................... 13.27%
Telecommunications............................... 13.27
Energy........................................... 11.31
Entertainment.................................... 9.08
Health Care & Drugs.............................. 8.44
Banking.......................................... 7.10
Retail........................................... 6.84
Financial & Insurance............................ 5.21
Cable............................................ 4.23
Data-Processing Services......................... 2.80
----------
Total............................................ 81.55%
</TABLE>
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
MAJOR PORTFOLIO CHANGES by underlying common stock
Three months ended October 31, 1999
Principal
Amount
or Shares
----------
ADDITIONS
<S> <C>
AES Corp....................................... 20,000
(convertible from AES Trust III)
Amgen, Inc..................................... 196,469
(exchangeable from TARGETS Trust IV)
Cable and Wireless Communications plc.......... 2,000,000
(exchangeable from Bell Atlantic Financial)
Caremark Rx, Inc............................... 20,000
(exchangeable from Caremark Rx Capital Trust)
Chevron Corp................................... 1,000,000
Cox Communications, Inc........................ 20,000
EOG Resources, Inc............................. 70,000
(convertible from Enron Corp.)
Level 3 Communications, Inc.................... 1,500,000
Office Depot, Inc.............................. 2,000,000
Siebel Systems, Inc............................ 1,000,000
STMicroelectronics, N.V........................ 1,200,000
Vodafone AirTouch plc.......................... 20,000
(exchangeable from MediaOne Group, Inc.)
REDUCTIONS
AES Corp....................................... 875,000
Allstate Corp.................................. 1,000,000
(exchangeable from Credit Suisse First Boston
Corp.)
Boeing Company................................. 33,474
Fleetwood Enterprises, Inc..................... 40,000
(convertible from Fleetwood Capital Trust)
HealthSouth Corp............................... 1,250,000
Interstate Bakeries Corp....................... 20,000
(exchangeable from Ralston Purina Company)
Merck & Co., Inc............................... 1,000,000
(exchangeable from Republic National Bank
of NY)
Morgan Stanley Dean Witter technology note..... 1,000,000
(CSCO, EDS, HWP, INTC, MSFT & ORCL)
NTL Communications Corp........................ 1,750,000
Robbins & Myers, Inc........................... 1,160,000
VLSI Technology, Inc........................... 1,250,000
</TABLE>
- ---------------------------------------------------------------
<PAGE> 6
PORTFOLIO OF INVESTMENTS October 31, 1999
<TABLE>
<CAPTION>
Principal
Amount Identified Value
or Shares Cost (Note 1)
- ----------- ----------- -----------
<S> <C> <C> <C>
ADVERTISING--1.4%
$1,500,000 Interpublic Group Cos., Inc. 1.87% 2006 cv. sub. deb. 144A(NR)................. $1,301,480 $1,404,375
----------- -----------
AEROSPACE--1.5%
350,000 Orbital Sciences Corp. 5% 2002 cv. sub. notes 144A (Caa1)...................... 350,000 278,250
125,000 Orbital Sciences Corp. 5% 2002 cv. sub. notes (Caa1)........................... 122,656 99,375
925,000 Simula, Inc. 8% 2004 sr. cv. sub. notes (NR)................................... 936,875 638,250
705,000 SPACEHAB, Inc. 8% 2007 cv. sub. notes 144A (NR)................................ 706,450 521,700
----------- -----------
2,115,981 1,537,575
----------- -----------
AUTOMOTIVE--0.6%
750,000 Standard Motor Products, Inc. 6 3/4% 2009 cv. sub. deb. (B1)................... 750,000 605,625
----------- -----------
BANKING--7.1%
50,000 shs CNB Capital Trust I 6% SPuRS (Baa2)
(exch. for CNB Bancshares, Inc. common stock)................................. 1,253,063 1,725,000
40,000 shs National Australia Bank Ltd. 7 7/8% exch. capital units (A1)................... 1,038,700 1,127,500
40,000 shs WBK Trust 10% STRYPES * (NR)
(exch. for Westpac Banking Corp., Ltd. common stock).......................... 1,163,133 1,200,000
1,665,000 BankAtlantic Bancorp 5 5/8% 2007 cv. sub. deb. (NR)............................ 1,898,313 1,177,988
20,000 Jefferson-Pilot Corp. 7 1/4% 2000 ACES-a * (A1)
(exch. for BankAmerica Corp. common stock).................................... 1,720,850 2,140,000
----------- -----------
7,074,059 7,370,488
----------- -----------
CABLE--4.2%
20,000 shs Cox Communications, Inc. 7% FELINE PRIDES * (Baa2)............................. 1,000,000 1,240,000
1,000,000 Bell Atlantic Financial Services, Inc. 4 1/4% 2005 cv. sub. deb. 144A (A1)
(exch. for cash equiv. of Cable & Wireless Communications plc
common stock)................................................................. 1,024,332 1,051,250
2,000,000 Bell Atlantic Financial Services, Inc. 4 1/4% 2005 euro. cv. sub. deb. (A1)
(exch. for cash equiv. of Cable & Wireless Communications plc
common stock)................................................................. 2,235,080 2,102,500
----------- -----------
4,259,412 4,393,750
----------- -----------
CAPITAL GOODS--2.6%
1,700,000 CS First Boston, Inc. 2 1/4% 2003 sr. medium-term exch. notes (A1)
(exch. for General Electric Corp. common stock)............................... 1,700,000 2,184,500
500,000 Exchangeable Certificate Corp. 1 1/4% 2004 sr. medium-term exch. notes 144A
(AAA)(exch. for General Electric Corp. common stock)......................... 482,242 506,250
----------- -----------
2,182,242 2,690,750
----------- -----------
CONSUMER GOODS--0.7%
17,500 shs Newell Financial Trust I 5 1/4% QUIPS 144A (A3)
(conv. into Newell Rubbermaid, Inc. common stock)............................. 878,750 760,150
----------- -----------
DATA-PROCESSING SERVICES--2.8%
1,100,000 American Express Credit Corp. 1 1/8% 2003 cash exch. notes (Aa3)............... 1,056,759 1,456,125
1,750,000 National Data Corp. 5% 2003 cv. sub. notes (Ba3)............................... 1,746,875 1,454,688
----------- -----------
2,803,634 2,910,813
----------- -----------
ELECTRIC UTILITIES--1.8%
20,000 shs NiSource, Inc. 7 3/4% PIES-b * (Baa1).......................................... 1,000,000 822,500
20,000 shs Texas Utilities Co. 9 1/4% FELINE PRIDES * (Baa2).............................. 1,029,788 1,016,250
----------- -----------
2,029,788 1,838,750
----------- -----------
ENERGY--11.3%
20,000 shs AES Trust III $3.375 trust cv. pfd. securities (Ba3)
(conv. into AES Corp. common stock)........................................... 1,000,000 1,012,500
27,500 shs Apache Corp. $2.015 dep. shs. repstg. series C ACES-b pfd. *(Baa2)............. 906,078 983,125
25,000 shs CMS Energy Corp. 8 3/4% adj. cv. trust securities * (B2)....................... 1,037,500 962,500
40,000 shs The Coastal Corp. 6 5/8% FELINE PRIDES * (Baa2)................................ 1,000,000 1,060,000
</TABLE>
<PAGE> 7
Portfolio of Investments October 31, 1999 (continued)
<TABLE>
<CAPTION>
Principal
Amount Identified Value
or Shares Cost (Note 1)
- ----------- ----------- -----------
<S> <C> <C> <C>
ENERGY--continued
$875,000 AES Corp. 4 1/2% 2005 cv. jr. sub. deb. (B1)................................... $875,000 $1,034,688
1,000,000 Devon Energy Corp. 4.95% 2008 cv. sub. deb. (Baa2)
(conv. into Chevron Corp. common stock)....................................... 995,000 1,013,750
1,450,000 Diamond Offshore Drilling, Inc. 3 3/4% 2007 cv. sub. notes (Baa1).............. 1,489,875 1,482,625
70,000 Enron Corp. 7% 2002 exch. notes * (Baa)
(conv. into EOG Resources, Inc. common stock)................................. 1,546,940 1,505,000
45,000 Kerr-McGee Corp. 5 1/2% 2004 DECS * (Baa1)
(exch. for Devon Energy Corp. common stock)................................... 1,493,438 1,693,125
1,000,000 Swiss Life Financial Ltd. 2% 2005 GEMMS 144A (NR)
(exch. for Royal Dutch Petroleum common stock)................................ 1,024,309 991,250
----------- -----------
11,368,140 11,738,563
----------- -----------
ENTERTAINMENT--9.1%
15,000 shs Houston Industries, Inc. 7% 2000 ACES-a * (Baa1)
(exch. for Time Warner, Inc. common stock).................................... 863,042 1,721,250
20,000 shs UnitedGlobalCom dep. shs. repstg. 7% series C sr. cum. cv. pfd. 144A (NR)...... 1,006,250 1,205,000
500,000 At Home Corp. 0.5246% 2018 cv. sub. deb. 144A (NR)............................. 410,770 294,375
100,000 At Home Corp. 0.5246% 2018 cv. sub. deb. (NR).................................. 65,831 58,875
1,500,000 Clear Channel Communications, Inc. 2 5/8% 2003 sr. cv. notes (Baa3)............ 1,500,000 2,099,063
1,000,000 Imax Corp. 5 3/4% 2003 cv. sub. notes 144A (B1)................................ 1,000,000 1,108,125
2,000,000 Merrill Lynch & Co., Inc. 0.25% 2006 series B medium-term notes
(Aa3) (exch. for Time Warner, Inc. common stock)............................... 2,000,000 1,950,000
20,000 The Seagram Co. Ltd. 7 1/2% 2002 adj. cv.-rate equity security
units * (Ba2).................................................................. 1,002,500 988,750
----------- -----------
7,848,393 9,425,438
----------- -----------
FINANCIAL & INSURANCE--5.2%
13,000 shs American General Delaware, L.L.C. 6% cv. A MIPS (A2)........................... 658,455 1,197,625
20,000 shs Frontier Financing Trust 6 1/4% cv. trust originated pfd. 144A (Ba2)
(conv. into Frontier Insurance Group, Inc. common stock)...................... 1,046,875 630,000
1,000,000 American International Group 2 1/4% 2004 cv. notes (Aaa)....................... 1,163,750 1,512,500
625,000 Penn Treaty American Corp. 6 1/4% 2003 cv. sub. notes (BB+).................... 605,938 540,625
1,375,000 Penn Treaty American Corp. 6 1/4% 2003 cv. sub. notes 144A (BB+)............... 1,406,875 1,189,375
10,730 Southwest Securities Group, Inc. 5% 2004 DARTS * (NR)
(exch. for Knight/Trimark Group, Inc. Class A common stock)................... 608,257 332,630
----------- -----------
5,490,150 5,402,755
----------- -----------
HEALTH CARE & DRUGS--8.4%
378,000 Athena Neurosciences, Inc. 4 3/4% 2004 cv. sub. notes (Baa3)
(exch. for ADR's representing Elan Corp., plc common stock)................... 366,188 372,330
2,000,000 The Bear Stearns Cos., Inc. 1% 2006 medium-term notes (A2)
(conv. into an index comprised of Merck & Co., Inc. and Pfizer, Inc.
common stocks)................................................................ 2,000,000 1,760,000
2,250,000 Elan Finance Corp. 0% 2018 LYON 144A (Baa3)
(exch. for ADR's representing Elan Corp., plc common stock)................... 1,218,939 1,122,188
900,000 Merrill Lynch & Co., Inc. 1% 2003 euro medium-term notes (Aa3)
(cv. into Novartis AG common stock)........................................... 898,875 776,250
2,500,000 Roche Holdings, Inc. 0% 2010 LYON 144A (NR).................................... 1,326,581 1,521,875
1,000,000 Sepracor, Inc. 7% 2005 cv. notes 144A (CCC+)................................... 1,000,000 963,750
250,000 Sepracor, Inc. 7% 2005 cv. notes (CCC+)........................................ 228,750 240,938
1,000,000 Swiss Life Financial Ltd. 2% 2003 GEMMS 144A (NR)
(exch. for Glaxo Wellcome plc common stock)................................... 1,038,474 1,006,250
98,469 TARGETS Trust IV 5% exch. notes * (NR)
(exch. for Amgen, Inc. common stock).......................................... 1,002,384 996,999
----------- -----------
9,080,191 8,760,580
----------- -----------
</TABLE>
<PAGE 8>
Portfolio of Investments October 31, 1999 (continued)
<TABLE>
<CAPTION>
Principal
Amount Identified Value
or Shares Cost (Note 1)
- ----------- ----------- -----------
<S> <C> <C> <C>
PAPER & PAPER PRODUCTS--1.3%
$30,000 Georgia-Pacific Corp. 7 1/2% 2002 PEPS * (Baa2)............................... $1,436,750 $1,297,500
----------- -----------
RETAIL--6.8%
32,500 shs Dollar General Trust 8 1/2% STRYPES * (NR)
(conv. into Dollar General Corp. common stock)................................ 1,152,806 1,247,188
12,300 shs Estee Lauder Trust 61/4% TRACES II * (NR)
(conv. into Estee Lauder Companies, Inc. common stock)........................ 1,037,700 1,103,541
21,699 shs The Home Depot, Inc. common stock.............................................. 504,235 1,638,275
500,000 Amazon.com, Inc. 4 3/4% 2009 cv. sub. notes 144A (Caa3)........................ 500,000 532,500
1,000,000 Costco Companies, Inc. 0% 2017 cv. sub. notes 144A (A3)........................ 551,176 950,000
1,000,000 Costco Companies, Inc. 0% 2017 cv. sub. notes (A3)............................. 811,942 950,000
1,000,000 Office Depot, Inc. 0% 2007 LYON (Baa2)......................................... 661,101 675,000
----------- -----------
5,218,960 7,096,504
----------- -----------
STAFFING SERVICES--1.1%
1,500,000 Interim Services, Inc. 4 1/2% 2005 cv. sub. deb. (Ba3)......................... 1,422,500 1,185,000
----------- -----------
TECHNOLOGY--13.3%
7,500 shs PSINet, Inc. 6 3/4% cv. pfd. C (Caa)........................................... 375,000 302,813
1,000,000 Citrix Systems, Inc. 0% 2019 cv. sub. deb. 144A (NR)........................... 367,208 505,000
1,500,000 CS First Boston, Inc. 1% 2006 medium-term exch. notes (A1)
(exch. for Microsoft Corp. common stock)...................................... 1,500,000 1,456,875
3,500,000 Hewlett-Packard Co. 0% 2017 LYON 144A (Aa3).................................... 2,008,135 2,016,875
250,000 Lattice Semiconductor Corp. 4 3/4% 2006 cv. sub. notes. 144A (NR).............. 250,000 270,938
250,000 MindSpring Enterprises, Inc. 5% 2006 cv. sub. notes (B3)....................... 250,000 241,094
1,000,000 NatWest Markets 0% 2003 exch. trust securities 144A + (NR)
(exch. for Lucent Technologies, Inc. common stock)............................ 970,300 3,272,500
1,000,000 Sanmina Corp. 4 1/4% 2004 cv. sub. notes 144A (B+)............................. 1,073,750 1,228,750
1,000,000 Siebel Systems, Inc. 5 1/2% 2006 cv. sub. notes. 144A (NR)..................... 1,002,813 1,380,625
1,200,000 STMicroelectronics, N.V. 0% 2009 LYON (Baa1)................................... 979,710 1,089,000
1,000,000 Tekelec 3 1/4% 2004 cv. sub. discount notes 144A (NR).......................... 853,540 877,500
11,000 Times Mirror Company 4 1/4% 2001 PEPS * (A1)
(exch. for America Online, Inc. common stock)................................. 393,910 1,133,000
----------- -----------
10,024,366 13,774,970
----------- -----------
TELECOMMUNICATIONS--13.3%
20,000 shs Globalstar Communications, Ltd. 8% cv. pfd. 144A (Caa2)........................ 1,000,000 1,060,000
3,000,000 Bell Atlantic Financial Services, Inc. 5 3/4% 2003 sr. exch. notes 144A (A1)
(exch. for cash equiv. Telecom Corp. of New Zealand common stock)............. 3,164,441 3,043,125
500,000 CoreComm, Ltd. 6% 2006 cv. sub. notes 144A (NR)................................ 500,000 568,750
1,000,000 Exchangeable Certificate Corp. 0.25% 2006 medium-term exch. notes 144A (AAA)
(exch. for specific telephone and cable common stocks) ++...................... 1,000,000 1,021,250
1,500,000 Level 3 Communications, Inc. 6% 2009 cv. sr. notes (Caa1)...................... 1,500,000 1,832,813
11,500 MediaOne Group, Inc. 6 1/4% 2001 PIES-a * (BBB)
(exch. for ADR's representing Vodafone AirTouch plc common stock)............. 668,438 1,196,000
20,000 MediaOne Group, Inc. 7% 2001 PIES-a * (BBB)
(exch. for ADR's representing Vodafone AirTouch plc common stock)............. 868,750 913,750
1,000,000 Nextel Communications, Inc. 4 3/4% 2007 cv. sr. notes 144A (B1)................ 1,000,000 1,936,250
1,000,000 Telefonos De Mexico, S.A. 4 1/4% cv. sr. deb. (BB)............................. 1,000,000 1,052,500
1,250,000 UBS AG 1 1/2% 2006 exch. notes (Aa1)
(exch. for AT&T Corp. common stock)........................................... 1,250,000 1,146,875
----------- -----------
11,951,629 13,771,313
----------- -----------
</TABLE>
<PAGE 9>
Portfolio of Investments October 31, 1999 (continued)
<TABLE>
<CAPTION>
Principal Identified Value
Amount Cost (Note 1)
- ----------- ----------- -----------
<S> <C> <C> <C>
$17,000 U.S. TREASURY NOTES--0.0%
4 7/8% 3/31/01 **.............................................................. $16,971 $16,809
----------- -----------
CORPORATE SHORT-TERM NOTES--1.5%
8,600,000 American Express Credit Corp. (P1)
(5.22% maturing 11/1/99)....................................................... 8,596,259 8,596,259
----------- -----------
Total Convertible Bonds and Notes--71.3%....................................... 68,302,021 73,966,491
Total Convertible Preferred Stocks--19.6%...................................... 18,447,140 20,376,942
Total Common Stocks--1.6%...................................................... 504,235 20,376,942
Total Corporate Short-Term Notes--8.3%......................................... 8,596,259 8,596,259
----------- ------------
Total Investments--100.8%......................................................$95,849,655 104,577,967
=========== ------------
Other assets and liabilities, net--(0.8)%...................................... (787,154)
------------
Total Net Assets--100.0%....................................................... $103,790,813
============
</TABLE>
* See Note 1(e)
+ Guaranteed by National Westminster Bank plc
++ Ticker symbols: CSCO, CMCSK, TWX, IBM, LMGa and WCOM
** Collateral for a letter of credit
<TABLE>
<S> <C>
ACES-a Automatic Common Exchange Securities
ACES-b Automatically Convertible Equity Securities
ADR American Depositary Receipts
DARTS Derivative Adjustable Ratio Securities
DECS Debt Exchangeable for Common Stock
FELINE Family of Equity-Linked Income Securities
GEMMS Guaranteed Exchangeable Monetisation of Multiple Shares
LYON Liquid Yield Option Note
MIPS Monthly Income Preferred Securities
PEPS Premium Equity Participating Securities
PIES-a Premium Income Exchangeable Securities
PIES-b Premium Income Equity Securities
PRIDES Preferred Redeemable Increased Dividend Equity Securities
QUIPS Quarterly Income Preferred Securities
SPuRS Shared Preference Redeemable Securities
STRYPES Structured Yield Product Exchangeable for Stock
TARGETS Targeted Growth Enhanced Terms Securities
TRACES Trust Automatic Common Exchange Securities
</TABLE>
Ratings in parentheses by Moody's Investors Service, Inc. or Standard & Poor's,
a division of McGraw-Hill Companies, Inc., have been obtained from sources
believed to be reliable but have not been audited by PricewaterhouseCoopers LLP.
The cost of investments for federal income tax purposes is $95,849,655
resulting in gross unrealized appreciation and depreciation of $13,484,294 and
$4,755,982, respectively, or net unrealized appreciation of $8,728,312 on a tax
cost basis.
See accompanying notes to financial statements
<PAGE> 10
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1999
----------------
<S> <C>
ASSETS:
Investments at value (cost $95,849,655) (Note 1)......... $104,577,967
Cash..................................................... 386,086
Receivable for securities sold........................... 1,177,698
Dividends and interest receivable........................ 619,444
Other assets............................................. 23,116
------------
Total assets............................................. 106,784,311
------------
LIABILITIES:
Payable for securities purchased......................... 2,892,447
Accrued management fee (Note 2).......................... 63,133
Accrued expenses ........................................ 37,918
------------
Total liabilities ....................................... 2,993,498
------------
NET ASSETS ................................................. $103,790,813
============
NET ASSETS CONSIST OF:
Undistributed net investment income ..................... $ 682,203
Undistributed net realized gain from investment
transactions ......................................... 10,980,668
Unrealized appreciation on investments .................. 8,728,312
Capital shares (Note 3).................................. 37,948
Additional paid-in capital .............................. 83,361,682
------------
NET ASSETS ................................................. $103,790,813
============
Net asset value per share
($103,790,813 / 3,794,777 outstanding shares $ 27.35
============
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1999
<S> <C>
INVESTMENT INCOME (NOTE 1):
Interest ................................................ $ 2,764,922
Dividends ............................................... 1,314,681
-----------
Total Income ......................................... 4,079,603
-----------
EXPENSES (NOTE 2):
Management fee .......................................... 749,024
Custodian ............................................... 36,578
Transfer agent .......................................... 52,705
Professional fees ....................................... 66,780
Directors' fees ......................................... 71,550
Reports to shareholders ................................. 34,111
Treasurer's office ...................................... 25,000
Other ................................................... 79,313
-----------
Total Expenses ....................................... 1,115,061
-----------
NET INVESTMENT INCOME ...................................... 2,964,542
-----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions .......... 10,993,709
Net increase in unrealized appreciation of investments .. 2,228,213
-----------
Net gain on investments ................................. 13,221,922
-----------
Net Increase in Net Assets Resulting from Operations .... $16,186,464
===========
</TABLE>
See accompanying notes to financial statements
<PAGE> 11
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
For the Years Ended October 31, 1999 and 1998
1999 1998
------------ ------------
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income ......................................... $ 2,964,542 $ 3,031,193
Net realized gain from investment transactions ................ 10,993,709 10,224,916
Net change in unrealized appreciation of investments .......... 2,228,213 (9,493,576)
------------ ------------
Net change in net assets resulting from operations ......... 16,186,464 3,762,533
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ......................................... (2,912,846) (2,981,861)
Net realized gain on investments .............................. (10,224,306) (11,271,015)
------------ ------------
Total dividends ............................................ (13,137,152) (14,252,876)
------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 3) ............................. 7,308,248 7,736,436
------------ ------------
CHANGE IN NET ASSETS ............................................ 10,357,560 (2,753,907)
Net assets at beginning of year ................................. 93,433,253 96,187,160
------------ ------------
NET ASSETS AT END OF YEAR (including undistributed net investment
income of $682,203 and $630,505, respectively)................... $103,790,813 $ 93,433,253
============ ============
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of common stock outstanding:
YEARS ENDED October 31,
--------------------------------------------------------
Per Share Operating Performance: 1999 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . $26.89 $30.48 $28.23 $24.84 $23.11 $25.00
------ ------ ------ ------ ------ ------
Net investment income 0.78 0.87 0.94 0.96 1.14 1.20
Net realized and unrealized gain (loss) 3.40 (0.01) 4.55 4.19 2.30 (1.18)
------ ------ ------ ------ ------ ------
Total from investment operations ... 4.18 (0.86) 5.49 5.15 3.44 (0.02)
Less Distributions:
Dividends from net investment income . (0.78) (0.88) (0.93) (1.11) (1.17) (1.24)
Distributions from realized gains .... (2.94) (3.57) (2.31) (0.65) (0.54) (0.67)
------ ------ ------ ------ ------ ------
Total distributions ................ (3.72) (4.45) (3.24) (1.76) (1.71) (1.91)
------ ------ ------ ------ ------ ------
Net asset value, end of period ....... $27.35 $26.89 $30.48 $28.23 $24.84 $23.11
====== ====== ====== ====== ====== ======
Market value, end of period ......... $22.25 $26.75 $26.81 $23.88 $22.25 $20.13
Net assets, end of period ($000's) .. 103,791 93,433 96,187 83,302 71,425 64,551
Total Investment Return:
Based on net asset value* ......... 16.36% 3.16% 21.18% 21.55% 15.79% 0.18%
Based on market value+ (2.96)% 18.17% 28.19% 15.65% 20.17% (4.88)%
Ratios/Supplemental Data:
Ratio of expenses to average
net assets ........................ 1.1% 1.1% 1.2% 1.2% 1.2% 1.2%
Ratio of net investment income to
average net assets ................ 3.0% 3.1% 3.3% 3.9% 4.9% 5.2%
Portfolio turnover rate ............. 72% 55% 71% 70% 43% 39%
</TABLE>
* Assumes valuation of the Fund's shares, and reinvestment of dividends,
at net asset values.
+ Assumes valuation of the Fund's shares at market price and reinvestment
of dividends at actual reinvestment price.
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Bancroft Convertible Fund, Inc. (the "Fund") is registered
under the Investment Company Act of 1940 as a diversified, closed-end
management investment company. The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of
its financial statements:
(a) Security Valuation
Investments in securities traded on a national securities exchange are valued
at market using the last reported sales price. Securities traded in the over-
the-counter market and listed securities for which no sales were reported are
valued at the mean between closing reported bid and asked prices. Where no
closing prices are available, value is determined by management, with the
approval of the Board of Directors.
(b) Securities Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to
buy or sell is executed) with gain or loss on the sale of securities being
determined based upon identified cost. Dividend income is recorded on the ex-
dividend date and interest income is recorded on the accrual basis. Interest
of $18,990 was earned on cash balances held by the custodian of the Fund's
assets during the year ended October 31, 1999.
(c) Federal Income Taxes
It is the policy of the Fund to distribute substantially all of its taxable
income within the prescribed time and to otherwise comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies.
Therefore, no provision for federal income or excise taxes is believed
necessary.
(d) Dividends and Distributions to Shareholders
The liability for dividends and distributions payable is recorded on the ex-
dividend date.
(e) Market Risk
It is the Fund's policy to invest the majority of its assets in convertible
securities. Although convertible securities do derive part of their value
from that of the securities into which they are convertible, they are not
considered derivative financial instruments. However, certain of the Fund's
investments include features which render them more sensitive to price
changes in their underlying securities. Thus they expose the Fund to greater
downside risk than traditional convertible securities, but still less than
that of the underlying common stock. The market value of those securities was
$23,553,107 at October 31, 1999, representing 22.7% of net assets.
2. Management Fee and Other Transactions with Affiliates
The management fee is paid to the investment adviser, Davis-Dinsmore
Management Company (the "Adviser"). The contract provides for payment of a
monthly advisory fee, 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 Fund's net
asset value in such month. The annual fee is subject to reduction to the
extent that the ordinary expenses of the Fund (excluding taxes and interest)
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 Fund for the year.
The Adviser furnishes investment advice, office equipment and facilities, and
pays the salaries of all executive officers of the Fund, except that the
costs associated with personnel and certain non-personnel expenses of the
office of the Treasurer up to a maximum of $25,000 a year are reimbursed by
the Fund. Such reimbursements amounted to $25,000 for the year ended
October 31, 1999. The officers of the Fund are also directors, officers or
employees of the Adviser, and are compensated by the Adviser.
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (continued)
The Fund has adopted a Director deferred compensation arrangement, which
allows the Directors to defer the receipt of all or a portion of Director
Fees payable on or after October 31, 1998. The amount of these fees will
remain an asset of the Fund. The Fund will be obligated to pay these fees,
with interest, to the Directors who have elected to defer receipt of their
fees on a future date or dates specified by the Directors, or as determined
under the terms of the arrangement.
3. Portfolio Activity
At October 31, 1999 there were 3,794,777 shares of $.01 par value common
stock outstanding (9,000,000 shares authorized). During the year ended
October 31, 1999, 319,486 shares were issued in connection with reinvestment
of dividends from net investment income and capital gains, resulting in an
increase in paid-in capital of $7,308,248.
Purchases and sales of investments, exclusive of corporate short-term notes,
aggregated $68,711,549 and $66,912,658, respectively, for the year ended
October 31, 1999.
A distribution of $3.080 per share, derived from net investment income of
18.3 cents, short-term realized capital gains on investments of 61.3 cents
and long-term realized capital gains on investments of $2.284, was declared
on November 8, 1999, payable December 28, 1999 to shareholders of record at
the close of business November 24, 1999.
<PAGE> 14
To the Shareholders and Board of Directors of
Bancroft Convertible Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets, and the financial highlights,
present fairly, in all material respects, the financial position of Bancroft
Convertible Growth and Income Fund, Inc. (the "Fund") at October 31, 1999,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for each of the six years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements
and financial highlights (hereafter referred to as "financial statements")
are the responsibility of the Fund's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities owned at October 31,
1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
November 19, 1999
<PAGE> 15
MISCELLANEOUS NOTES
THE YEAR 2000 ISSUE
BACKGROUND. Like other investment companies as well as financial and
business organizations around the world, the Fund could be adversely
affected if the computer systems and embedded technology used by the
Adviser and other service providers do not properly process and
calculate date-related information and data from and after January 1,
2000.
PROGRAMS AND SYSTEMS. The Adviser assessed and tested its internal
computer programs and systems in 1998 to ensure these programs and
systems will be Year 2000 compliant. The computers used for trading and
pricing are Pentium II desktop systems, certified to be Year 2000
compliant by the manufacturer, Dell Computer. The vendors whose
accounting software the Adviser uses, Microsoft Corp. and Advent
Software, have also supplied the Adviser with statements certifying
that their products are now compliant.
In its daily operations, the Adviser relies on electrical power and
telephone service to operate its copier, telefax and telephone systems.
The power and telephone providers have stated, on their respective
websites, that their mission-critical systems were compliant as of mid-
1999. Based on statements made by the Adviser's landlord, it is
expected that access to the Adviser's offices and the use of its
facilities will continue without incident.
SECOND AND THIRD PARTY ISSUES. The Bank of New York, the Fund's
custodian, and ChaseMellon Shareholder Services, transfer agent and
registrar, have publicly announced (in website statements dated
January, 1999), that Year 2000 renovation and testing of mission-
critical systems was completed by December 31, 1998, in compliance with
requirements set forth by the Federal Financial Institutions
Examination Council. In addition, these institutions have programs in
place to monitor the status of third party vendors and service
providers.
Bloomberg, the Adviser's securities pricing service provider, has not
released to the public the audit results of its testing, due to the
proprietary nature of their systems.
The Adviser continues to receive updates from each of these and its
other outside vendors as they become available.
INVESTMENTS. Since the Fund has investments in securities whose issuers
may be materially adversely impacted by the Year 2000 issue, the Fund
could also be adversely affected. For this reason, since 1998 the
Adviser has been reviewing public filings and web page disclosures of
each issuer and assessing each with respect to Year 2000 compliance.
Some of the criteria the Adviser looks at are: costs incurred and
estimates of system repair and replacement, whether or not there is a
contingency plan prepared, and the status of second and third party
issues. The Adviser continues to monitor these disclosures and uses
them concurrently with its other methods of evaluating a security's
value as an investment vehicle.
The Fund has not incurred any costs to date in the matter of the Year
2000 problem, nor do we expect the Fund to have any in the future.
MOST REASONABLY LIKELY WORST CASE YEAR 2000 SCENARIO FOR THE FUND.
Since the Fund has investments in securities whose issuers may be
materially adversely impacted by the Year 2000 issue, the Fund could
also be adversely affected. The failure to correct a material Year 2000
problem is perhaps most likely to occur with respect to The Bank of New
York, the Fund's custodian, or ChaseMellon Shareholder Services, the
Fund's transfer agent and registrar. Although these institutions have
made assurances that mission-critical systems are compliant as of 1998
year-end as stated above, they cannot ensure that all the vendors they
rely upon are also completely compliant. The effects might include
difficulty in the settlement of trades in a timely manner and dividend
distribution delays. There is also the possibility that the Fund's fees
to these institutions might be increased due to their increased cost of
doing business. For the Adviser the problems that might be faced
include the lack of telephone and power service needed to perform daily
pricing and trading.
<PAGE> 16
MISCELLANEOUS NOTES (continued)
THE YEAR 2000 ISSUE (continued)
Such failures and others could materially and adversely affect the Fund's
results of operations, liquidity and financial condition. Due to the
general uncertainty inherent in the Year 2000 problem, resulting in part
from the uncertainty of the Year 2000 readiness of third parties, the Fund
is unable to determine at this time whether the consequences of Year 2000
failures will have a material impact on the Fund's results of operations,
liquidity or financial condition.
CONTINGENCY PLAN. Based on the representations made by The Bank of New
York and ChaseMellon, the Fund has not made any contingency plans relating
to the receipt of services these institutions provide. The staff members
who are responsible for pricing the portfolio and trading own cellular
telephones which would be used as backup to contact brokers if the main
telephone systems and the Bloomberg pricing service were not available.
The Adviser has purchased a laptop computer and a small generator to
charge both the cell phone and laptop computer's batteries. The Adviser
has borne the cost of this equipment and intends to review these plans
periodically and to update them as circumstances change.
- -------------------------------------------------------------------------------
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The letter to Shareholders contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Statements
which reflect the intent, belief or expectations of the Company, its
management, the Adviser and other service providers regarding the anticipated
effect of events, circumstances and trends should be considered forward-looking
statements. These forward-looking statements are not guarantees of future
performance and there are a number of meaningful factors which could cause the
Company's results to vary materially from those indicated by any such
statements. Factors which could cause actual results to differ from
expectations include, among others, a decline in productivity, a decline in
global trading, changes in individuals' savings rates, a decline in
productivity or new products, changes in the Federal Reserve Board's monetary
policy, an increase in interest rates, inflation or taxes, changes to foreign
and domestic markets in general, changes to the market for convertible
securities or the inability of the Company's service providers and the
companies whose securities the Company buys to resolve any Year 2000 issues.
- -------------------------------------------------------------------------------
Additional Services Available to Shareholders of Bancroft
Convertible Fund, Inc.
AUTOMATIC DIVIDEND INVESTMENT PLAN. You may wish to
participate in our Automatic Dividend Investment Plan
whereby all of the dividends and distributions on your
Bancroft shares are automatically invested in additional
shares of the Company's stock at the then current market
price or net asset value, whichever is lower. When the
market price is lower than net asset value, Mellon
Securities Trust Company (the "Bank") will take your
dividends or distributions in cash, combine them with those
of other Plan participants, and purchase shares in the
market and thereby take advantage of the lower commissions
on larger purchases. When the net asset value is lower than
the market price, the participant will receive shares
issued by the Company at net asset value. When the Company
makes dividends and distributions payable in cash or at the
option of all stockholders in common stock, a participant
will receive shares of common stock issued by the Company.
There is no other charge for this service. To join the
Plan, fill out and mail the authorization form on the next
page.
CASH PAYMENT PLAN. Members of the Dividend Investment Plan
may also wish to participate in our Cash Payment Plan which
provides a convenient and economical means to increase your
investment in the Company's shares. The Cash Payment Plan
permits you to send cash payments of between $25 to $5,000
per month to the Bank, which will be aggregated with the
funds of other participants, to purchase additional
Bancroft shares. You pay only a service charge (5% of the
amount to be invested with a maximum of $3.00 per
transaction) plus your proportionate share of the brokerage
commission which is typically at a savings because your
funds are combined with others to take advantage of the
reduced commission on larger purchases.
- --------------------------------------------------------------------
Pursuant to Section 23 of the Investment Company Act of 1940, notice
is hereby given that the Fund may in the future purchase shares of
Bancroft Convertible Fund, Inc. Common Stock from time to time,
at such times, and in such amounts, as may be deemed advantageous
to the Fund. Nothing herein shall be considered a commitment to
purchase such shares.
<PAGE> 17
Bancroft Convertible Fund, Inc.
Automatic Dividend Investment Plan
Authorization Form
c/o ChaseMellon Shareholder Services
Investment Services
P.O. Box 3316,
South Hackensack, NJ 07606
Dear Sirs:
I hold stock certificates, registered in my name, for......................
shares of Common Stock of Bancroft Convertible Fund, Inc. (the "Company").
I wish to invest all the dividends and distributions paid by the Company on
my shares automatically in additional shares from the date hereof until
this arrangement is terminated as stated below.
Authorization
You are authorized to act as my agent as follows:
A. Establish an Account in my name.
B. Take into my Account all dividends and distributions paid by the Company
on all its Common Stock held in my name now or in the future and on all
additional shares of the Company (including fractions) held by you in my
Account.
C. Whenever the Company declares a dividend or distribution payable in cash
or, at the option of all its shareholders, in Common Stock of the Company
at market price or net asset value, whichever is lower, take the dividend
or distribution in Common Stock.
D. Whenever the Company declares a dividend or distribution payable in cash
or, at the option of the shareholders for whom you act as agent under the
Plan, in the Company's Common Stock at net asset value, take the dividend
or distribution in Common Stock if the net asset value as determined by the
Company as of the close of business on the last trading day preceding the
date of payment is lower then (1) the asked price of the Company's Common
Stock in the over-the-counter market, as reported by the National Quotation
Bureau, if the Common Stock is not listed on a national securities
exchange, or (2) the closing market price of the Common Stock on a national
securities exchange, on that trading day, plus brokerage commissions, if
the Company's Common Stock is listed on such exchange. If the market price
is lower, take the dividend or distribution in cash and add it to my
Account.
E. As soon as practicable after each cash payment is made to my Account,
use the funds in my Account to buy in the over-the-counter market or on a
national securities exchange, as the case may be, as many additional full
shares of the Company's Common Stock as possible, plus a fractional
interest in one share computed to four decimal places.
F. You may mingle the cash in my Account with similar funds of other
shareholders of the Company for whom you act as agent under the Plan. The
cost of the shares and fractional interest you buy for my Account in
connection with a particular dividend or distribution shall be determined
by the average cost per share, including brokerage commission, of all
shares bought by you for all shareholders for whom you act under the Plan
in connection with that dividend or distribution.
G. Whenever you receive or purchase shares or fractional interests for my
Account, you will send me confirmation of the transaction as soon as
practicable. You will hold such shares and fractional interests as my agent
in your name or the name of your nominee. Do not send me stock certificates
for full shares until I so request in writing or until my Account is
terminated as stated below. You will vote any shares so held for me in
accordance with any proxy returned to the Company by me in respect of the
shares of which I am a record owner.
H. I understand that there is presently no service charge for your serving
as my agent and maintaining my Account. You may, however, charge me for
extra services performed at my request. I further understand that the
Company reserves the right to amend the Plan in the future to impose a
service charge. You will be liable only for willful misconduct or gross
negligence in acting as my agent under the Plan.
(over)
<PAGE> 18
Name and Address
My name as shown on my Common Stock certificate or certificates
(including all names if more than one) and my address, are as follows:
Please Print:
NAME OR NAMES.........................................................
NUMBER AND STREET.....................................................
CITY, STATE AND ZIP CODE..............................................
Stock Certificates
I understand that if I hold more than one Common Stock certificate
registered in similar but not identical names or if more than one
address is shown for me on the Company's Common Stock records, all my
shares of Common Stock must be put into the same name and address
prior to signing this authorization if all of them are to be covered
by one Account. I understand that additional shares subsequently
acquired by me otherwise than through the Plan will be covered by my
Account if and when they are registered in the same name and address
as the shares in my Account.
Income Tax
I understand that participation in the Plan for automatic investment
of dividends and distributions does not relieve me of any income tax
which may be payable by me on such dividends and distributions.
Amendments and Change of Agent.
I understand that the Company may amend the terms of the Plan and
reserves the right to change the agent which acts for all participants
in the Plan at any time by giving written notice thereof to each
participant at his address as shown on your records. Any such change
shall be effective as to all dividends and distributions payable to
shareholders of record on any date more than 30 days after mailing of
such notice. Further, I understand that the Company in connection with
any dividend or distribution will change the price at which shares of
its Common Stock are issued to participants in the Plan if the net
asset value of the shares is less than 95% of the fair market value of
such shares on the last trading day preceding the payment date of any
distribution of net investment income or net capital gain, unless the
Board obtains a legal opinion from independent counsel that the
purchase of shares at net asset value under these circumstances will
not have a material adverse effect upon the federal income tax
liability of the Company. The Board may not authorize issuance of
shares offered to Plan participants only, if such issuance is at a
price less than net asset value, without the prior specific approval
of the Company's stockholders or of the Securities and Exchange
Commission.
Termination
I may terminate this authorization and my Account at any time by
delivering written notice to you, such termination to be effective as
to all dividends and distributions payable to shareholders of record
on any date more than 15 days after receipt of such notice by you. I
understand that you or the Company may terminate all authorizations
for any reason at any time by sending written notice addressed to
participants at their addresses as shown on your records, such
termination to be effective as to all dividends and distributions
payable to shareholders of record on any date more than 30 days after
mailing of such notice. I understand you will terminate my Account if
you are informed of the transfer of all shares of the Company's Common
Stock registered in my name. Following the date of termination, you
shall send me at my address shown on your records a stock certificate
or certificates for the full shares held by you in my Account and a
check for the value of any fractional interest in my Account based on
the market price of the Company's Common Stock on that date.
Signature(s)..................................... Date................
.....................................
Note: If shares are in more than one name, all must sign.
(over)
<PAGE> 19
BOARD OF DIRECTORS
GORDON F. AHALT Petroleum Consultant
WILLIAM A. BENTON Retired Stock Exchange Specialist
ELIZABETH C. BOGAN Senior Lecturer in Economics at
Princeton University
THOMAS H. DINSMORE, C.F.A. Chairman of the Board of Bancroft
DONALD M. HALSTED, JR. Investor
GEORGE R. LIEBERMAN Retired Advertising Executive
DUNCAN O. MCKEE Retired Attorney
JANE D. O'KEEFFE President of Bancroft
NICOLAS W. PLATT Public Relations Executive
OFFICERS
THOMAS H. DINSMORE Chairman of the Board
JANE D. O'KEEFFE President
SIGMUND LEVINE Senior Vice President and Secretary
H. TUCKER LAKE Vice President, Trading
GERMAINE M. ORTIZ Assistant Vice President
GARY I. LEVINE Treasurer and Assistant Secretary
MERCEDES A. PIERRE Assistant Treasurer
- --------------------------------------------------------------------
Investment Advisor
Davis-Dinsmore Management Company
65 Madison Avenue, Morristown, NJ 07960-7308
(973) 631-1177
http://www.bcvecf.com
email: [email protected]
Shareholder Services and Transfer Agent
ChaseMellon Shareholder Services, L.L.C.
85 Challenger Road, Ridgefield Park, NJ 07660
(800) 851-9677
http://www.cmssonline.com
Common Stock Listing
American Stock Exchange Symbol: BCV
Bancroft Convertible Fund, Inc.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
[LOGO] Printed on recycled paper
