<PAGE> 1
Bancroft Convertible Fund
[logo]
2000 Semi-Annual Report
April 30, 2000
<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 capital 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
<TABLE>
<CAPTION>
Performance thru 4/30/00 with dividends reinvested
4 Months 1 Year 5 Year 10 Year
-------- ------ ------- -------
<S> <C> <C> <C> <C>
Bancroft market value *...................... 4.05% 9.15% 113.24% 281.06%
Bancroft net asset value +................... 6.02 15.79 121.16 275.15
Closed-end convertible fund average +........ 7.93 24.29 106.88 268.67
S&P 500 *.................................... (0.78) 10.13 208.24 458.00
Russell 2000 *............................... 0.65 18.55 103.87 220.23++
Lehman Aggregate Bond Total Return Index +... 1.91 1.26 38.86 117.63
</TABLE>
Performance data represent past results and do not reflect future performance.
* From Bloomberg L.P. pricing service.
+ From Lipper, Inc. Closed-End Fund Performance Analysis.
++ 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>
Jul 99 $28.73 $26.35 $27.55 $24.00 $22.00 $23.75
Oct 99 27.69 25.97 27.35 23.88 20.75 22.25
Jan 00 28.72 24.91 26.04 23.69 19.88 20.81
Apr 00 28.84 25.72 27.42 22.44 20.00 21.00
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Dividend Distributions (12 Months)
Record Payment Capital
Date Date Income Gains Total
-------- -------- ------ ------- ------
<S> <C> <C> <C> <C>
06/15/99 06/29/99 $0.200 $0.000 $0.200
09/15/99 09/29/99 0.200 0.000 0.200
11/24/99 12/28/99 0.183 2.897 3.080
03/16/00 03/30/00 0.200 0.000 0.200
------ ------ ------
$0.783 $2.897 $3.680
====== ====== ======
</TABLE>
<PAGE> 3
TO OUR SHAREHOLDERS
The Internet bubble was pricked during the last few months. The Goldman
Sachs Technology Industry Internet Index fell by over 50% from its high in
March to its low in May. This may be because investors decided that the
prices of internet stocks were too high, or perhaps the tightening of
monetary policy by the Federal Reserve is draining funds from the more
speculative sectors of the stock market. We expect volatility in these
areas to continue to be high but are optimistic about long-term returns now
that some of the excesses in the market have been reduced.
In this volatile environment, convertible securities have provided
performance with greater stability: not moving up as much when the stock
market was rising quickly, not falling as much when the market was falling.
We in management view volatiity that is less than that of the equity market
(as measured by the S&P 500 or the Russel 2000 indices) as one of our
intended goals for the Fund's performance.
I was elected to the executive committee of the Closed-End Fund
Association at its April 2000 Annual meeting. This organization was
created by a group of closed-end funds (CEFs) with the purpose of improving
the visibility of CEFs, as well as improving the availability of information
such as daily net asset values. To this end, the association has created an
extensive website at www.cefa.com as well as a small book on Closed-End
Funds. As a member of the association the Fund has received several free
copies of this book that are available to shareholders. The Association is
also working on projects including corporate governance and independent
analysis of CEFs.
In the June 2000 Mutual Funds Magazine, Bancroft was included in the list
of 5 star (top rated) convertible funds. The magazine ranked all
convertible funds on a risk adjusted basis and the top 20% are given 5
stars. In its most recent edition of its Principia Pro for Closed-End
Funds, Morningstar* continued to rate Bancroft four stars (above average).
Shareholders who wish a copy of Morningstar's March 31, 2000 report or the
most recent report issued by Standard and Poor's should contact us.
Morningstar has a similar report on the Fund on its website.
The Fund has repurchased some of its stock in the open market. While we
may purchase shares again in the future, the Fund is under no obligation to
continue to do so. For more details, see note 3 in the Notes to Financial
Statements.
At its May meeting the Board of Directors declared a dividend of twenty-
one cents per share. This is an increase of one cent per share from the
previous dividend. It will be payable on June 29, 2000 to shareholders of
record June 15, 2000.
/s/Thomas H. Dinsmore
Chairman of the Board
June 16, 2000
* Morningstar is an analytical and statistical reporting service that
reports on and rates most mutual funds.
See Important Factors Regarding Forward-Looking Statements on page 12 of
this report.
<PAGE> 4
<TABLE>
<CAPTION>
Largest Investment Holdings by underlying common stock
Principal
Amount Value % Total
or Shares (Note 1) Net Assets
---------- ---------- ----------
<S> <C> <C>
3,000,000 Cable and Wireless Communications PLC............................$3,795,000 3.4%
An integrated telecommunications company operating
throughout the United Kingdom, as well as a provider of
television and Internet services.
(exchangeable from Bell Atlantic Financial 41/4% due 2005)
3,000,000 Telecom Corp. of New Zealand..................................... 3,037,500 2.7
The principal supplier of telecommunications in New Zealand.
(exchangeable from Bell Atlantic Financial 5 3/4% due 2003)
2,000,000 Costco Wholesale Corp............................................ 2,493,750 2.2
Operates wholesale membership warehouses in the United
States, Taiwan, Canada, Korea, Japan, and the United
Kingdom.
2,000,000 Time Warner, Inc................................................. 2,380,000 2.1
A media company with operations in entertainment, cable
networks and publishing.
(exchangeable from Merrill Lynch 0.25% due 2004)
2,000,000 The Walt Disney Corp............................................. 2,237,500 2.0
A media company with operations in entertainment, theme
parks and resorts, and consumer products.
(exchangeable from Deutsche Bank Financial 1% due 2007)
30,000 AES Corp......................................................... 2,131,875 1.9
Owns or has an interest in ninety-four power facilities
throughout the world.
1,200,000 STMicroelectronics, N.V.......................................... 2,043,000 1.8
Designs, develops, manufactures, and markets semiconductor
integrated circuits and discrete devices.
45,000 Devon Energy Corp................................................ 2,022,188 1.8
An independent energy company involved in oil and gas
property acquisition, exploration, and production.
(exchangeable from Kerr-McKee Corp. 5 1/2% due 2004)
2,000,000 General Electric Corp............................................ 1,990,000 1.8
Develops and manufactures products for the utilization of
electricity. GE also offers financial services through GE
Capital Services, Inc.
(exchangeable from CS First Boston 2% due 2010 and
Exch. Certificate 1 1/4% due 2004)
1,250,000 Sepracor, Inc.................................................... 1,987,500 1.8
Develops and commercializes potentially improved versions of
widely-prescribed drugs.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Major Industry Exposure
% Total
Net Assets
----------
<S> <C>
Technology................... 15.77%
Entertainment................ 12.42
Telecommunications........... 12.21
Energy....................... 12.12
Health Care & Drugs.......... 6.69
Financial & Insurance........ 6.32
Retail....................... 5.68
Cable........................ 4.37
Capital Goods................ 4.35
Banking...................... 4.30
----------
Total........................ 84.23%
</TABLE>
<TABLE>
<CAPTION>
Principal
Major Portfolio Changes Amount
Three Months Ended April 30, 2000 or Shares
---------
<S> <C>
ADDITIONS
American Express Company (exchangeable from Exch. Certificate Corp.) 2,150,000
General Electric Corp. (exchangeable from CS First Boston, Inc.).... 1,500,000
Sprint Corp. PCS (exchangeable from Liberty Media Group)............ 1,500,000
MetLife, Inc. (exchangeable from MetLife Capital Trust I)........... 30,000
ACE Limited......................................................... 25,000
Juniper Networks, Inc............................................... 1,000,000
Level 3 Communications, Inc......................................... 1,000,000
EMC Corp. (exchangeable from The Goldman Sachs Group, Inc.)......... 1,000,000
Vitesse Semiconductor Corp.......................................... 1,000,000
Intel Corp. (exchangeable from Exch. Certificate Corp.)............. 1,000,000
American Tower Corp................................................. 750,000
REDUCTIONS
Bea Systems, Inc.................................................... 500,000
CoreComm, Ltd....................................................... 500,000
Curagen Corp........................................................ 750,000
General Electric Corp. (exchangeable from CS First Boston, Inc.).... 1,000,000
Human Genome Sciences, Inc.......................................... 875,000
Level 3 Communications, Inc......................................... 1,000,000
Lucent Technologies, Inc. (exchangeable from NatWest Markets)....... 750,000
RSL Communications, Inc............................................. 15,000
Siebel Systems, Inc................................................. 1,210,000
Time Warner, Inc. (exchangeable from Houston Industries, Inc.)...... 10,000
Vitesse Semiconductor Corp.......................................... 1,000,000
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Portfolio of Investments April 30, 2000
Principal
Amount Value
or Shares (Note 1)
--------------- ------------
<S> <C>
ADVERTISING - 2.1%
$1,500,000 Interpublic Group Cos., Inc. 1.87% 2006 cv. sub. deb. 144A (Baa1) $ 1,398,750
1,000,000 Young & Rubicam, Inc. 3% 2005 cv. sub. notes 144A (NR)........... 1,007,500
------------
2,406,250
------------
AEROSPACE - 0.9%
925,000 Simula, Inc. 8% 2004 sr. cv. sub. notes (NR)..................... 511,063
705,000 SPACEHAB, Inc. 8% 2007 cv. sub. notes 144A (NR).................. 521,700
------------
1,032,763
------------
BANKING - 4.3%
50,000 shs CNB Capital Trust I 6% SPuRS (A1)
(exch. for CNB Bancshares, Inc. common stock)................... 1,662,500
40,000 shs National Australia Bank Ltd. 7 7/8% exch. capital units (A1)..... 985,000
25,000 shs Sovereign Capital Trust II 7 1/2% PIERS (B1)
(exch. for Sovereign Bancorp, Inc. common stock)................ 1,173,438
35,000 shs WBK Trust 10% STRYPES * (NR)
(exch. for Westpac Banking Corp., Ltd. common stock)............ 1,050,000
------------
4,870,938
------------
CABLE - 4.4%
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)................................ 1,265,000
1,000,000 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)................................ 2,530,000
20,000 shs Cox Communications, Inc. 7% FELINE PRIDES * (Baa2)............... 1,153,750
------------
4,948,750
------------
CAPITAL GOODS - 4.4%
1,050,000 Advanced Energy Industries, Inc. 5 1/4% 2006 cv. sub. notes (NR). 1,607,813
1,500,000 CS First Boston, Inc. 2% 2010 sr. medium-term exch. notes 144A(A1)
(exch. for General Electric Corp. common stock)................. 1,447,500
500,000 Exchangeable Certificate Corp. 1 1/4% 2004 sr. medium-term exch.
notes 144A (AAA)(exch. for General Electric Corp. common stock). 542,500
15,000 shs Hanover Compressor Capital Trust 7 1/4% cv. pfd. TIDES 144A (B1)
(conv. into Hanover Compressor Company common stock)............ 1,323,750
------------
4,921,563
------------
DATA-PROCESSING SERVICES - 3.1%
2,150,000 Exchangeable Certificate Corp. 0.625% 2005 medium-term exch. notes
144A(AAA)(exch. for American Express Company common stock)...... 1,983,375
1,750,000 National Data Corp. 5% 2003 cv. sub. notes (Ba3)................. 1,477,656
------------
3,461,031
------------
ELECTRIC UTILITIES - 0.7%
20,000 shs Texas Utilities Co. 9 1/4% FELINE PRIDES * (Baa3)................ 842,500
------------
ENERGY - 12.1%
30,000 shs AES Trust III trust cv. pfd. securities (Ba3)
(conv. into AES Corp. common stock)............................. 2,131,875
40,800 shs Apache Corp. $2.015 dep. shs. representing series C ACES pfd. *.. 1,741,650
59,250 shs The Coastal Corp. 6 5/8% FELINE PRIDES * (Baa2).................. 1,725,656
1,000,000 Devon Energy Corp. 4.95% 2008 cv. sub. deb. (Baa2)
(conv. into Chevron Corp. common stock).......................... 961,875
1,450,000 Diamond Offshore Drilling, Inc. 3 3/4% 2007 cv. sub. notes (Baa1) 1,656,625
70,000 Enron Corp. 7% 2002 exch. notes * (Baa1)
(conv. into EOG Resources, Inc. common stock)................... 1,693,125
750,000 Kerr-McGee Corp. 5 1/4% 2010 cv. sub. deb. (Baa2)................ 812,344
45,000 Kerr-McGee Corp. 5 1/2% 2004 DECS * (Baa1)
(exch. for Devon Energy Corp. common stock)..................... 2,022,188
1,000,000 Swiss Life Financial Ltd. 2% 2005 GEMMS 144A (NR)
(exch. for Royal Dutch Petroleum common stock)................... 973,750
------------
13,719,088
------------
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Portfolio of Investments April 30, 2000 (continued)
Principal
Amount Value
or Shares (Note 1)
--------------- ------------
<S> <C>
ENTERTAINMENT - 12.4%
$2,750,000 America Online, Inc. 0% 2019 cv. sub. deb. (Ba3)..................$ 1,450,625
2,000,000 Clear Channel Communications, Inc. 1 1/2% 2002 sr. cv. notes (Baa) 1,926,250
2,000,000 Deutsche Bank Financial, Inc. 1% 2007 sr. medium-term exch. notes.
(Aa3)(exch. for cash value of The Walt Disney Corp. common stock) 2,237,500
1,000,000 EchoStar Communications Corp. 47/8% 2007 cv. sub. notes 144A (NR). 1,530,000
1,000,000 Imax Corp. 5 3/4% 2003 cv. sub. notes 144A (B1)................... 1,160,000
2,000,000 Merrill Lynch & Co., Inc. 0.25% 2006 series B medium-term notes
(Aa3)(exch. for Time Warner, Inc. common stock).................. 2,380,000
1,000,000 NTL, Inc. 5 3/4% 2009 cv. sub. notes 144A (Caa1).................. 905,000
20,000 The Seagram Co. Ltd. 7 1/2% 2002 adj. cv.-rate equity security
units * (Ba2).................................................... 1,011,250
29,000 shs UnitedGlobalCom dep. shs. representing 7% series D sr. cum. cv.
pfd. (NR)........................................................ 1,451,813
------------
14,052,438
------------
FINANCIAL & INSURANCE - 6.3%
25,000 shs ACE Limited 8 1/4% FELINE PRIDES (BBB)............................ 1,350,000
13,000 shs American General Delaware, L.L.C. 6% cv. A MIPS (A2).............. 897,813
1,000,000 American International Group 2 1/4% 2004 cv. notes (Aaa).......... 1,562,500
30,000 MetLife Capital Trust I 8% equity security units (BBB+)
(exch. for MetLife, Inc. common stock)........................... 1,674,375
625,000 Penn Treaty American Corp. 6 1/4% 2003 cv. sub. notes (BB+)....... 445,313
1,175,000 Penn Treaty American Corp. 6 1/4% 2003 cv. sub. notes 144A (BB+).. 837,188
10,730 Southwest Securities Group, Inc. 5% 2004 DARTS * (NR)
(exch. for Knight/Trimark Group, Inc. Class A common stock)...... 391,645
------------
7,158,834
------------
HEALTH CARE & DRUGS - 6.7%
250,000 Alkermes, Inc. 3 3/4% 2007 cv. sub. notes 144A (NR)............... 147,188
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)...................................... 1,680,000
250,000 CV Therapeutics 4 3/4% 2007 cv. sub. notes 144A (NR).............. 185,938
500,000 Cor Therapeutics 5% 2007 cv. sub. notes 144A (NR)................. 629,688
2,000,000 Elan Finance Corp. 0% 2018 LYON 144A (Baa3)
(exch. for ADR's representing Elan Corp., PLC common stock)...... 1,352,500
500,000 Human Genome Sciences, Inc. 5% 2007 cv. sub. notes 144A (NR)...... 432,500
1,250,000 Roche Holdings, Inc. 0% 2010 LYON 144A (NR)....................... 692,188
625,000 Roche Holdings, Inc. 0% 2015 LYON 144A (NR)
(exch. for Genentech, Inc. common stock)......................... 468,750
1,000,000 Sepracor, Inc. 7% 2005 cv. notes 144A (CCC+)...................... 1,590,000
250,000 Sepracor, Inc. 7% 2005 cv. notes (CCC+)........................... 397,500
------------
7,576,252
------------
PAPER & PAPER PRODUCTS - 1.1%
30,000 Georgia-Pacific Corp. 7 1/2% 2002 PEPS * (Baa2).................. 1,209,375
------------
RETAIL - 5.7%
1,000,000 Costco Companies, Inc. 0% 2017 cv. sub. notes 144A (A3)........... 1,246,875
1,000,000 Costco Companies, Inc. 0% 2017 cv. sub. notes (A3)................ 1,246,875
15,200 shs CVS Auto. Common Exch. Security Trust $4.23 TRACES * (NR)
(exch. for CVS Corp. common stock)............................... 1,157,100
32,500 shs Dollar General Trust 8 1/2% STRYPES * (NR)
(conv. into Dollar General Corp. common stock)................... 1,078,594
12,300 shs Estee Lauder Trust 6 1/4% TRACES II * (NR)
(conv. into Estee Lauder Companies, Inc. common stock)........... 1,021,669
1,000,000 Office Depot, Inc. 0% 2007 LYON (Baa2)............................ 673,750
------------
6,424,863
------------
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Portfolio of Investments April 30, 2000 (continued)
Principal
Amount Value
or Shares (Note 1)
--------------- ------------
<S> <C>
STAFFING SERVICES - 1.0%
$1,500,000 Interim Services, Inc. 4 1/2% 2005 cv. sub. deb. (Ba3)............$ 1,171,875
------------
TECHNOLOGY - 15.8%
1,000,000 CS First Boston, Inc. 2% 2010 medium-term exch. notes (A1)
(exch. for Cisco Systems, Inc. common stock)..................... 1,217,500
1,500,000 CS First Boston, Inc. 1% 2006 medium-term exch. notes (A1)
(exch. for Microsoft Corp. common stock)......................... 1,278,750
1,000,000 CS First Boston, Inc. 1% 2010 medium-term exch. notes (A1)
(exch. for Sun Microsystems, Inc. common stock).................. 1,052,500
1,000,000 Exchangeable Certificate Corp. 0.25% 2005 medium-term exch.
notes 144A (AAA)(exch. for Intel Corp. common stock)............. 882,500
750,000 Exodus Communications, Inc. 4 3/4% 2008 cv. sub. notes 144A (NR).. 1,043,438
1,000,000 The Goldman Sachs Group, Inc. 0% 2003 medium-term notes, series
(linked to the GSTI Internet Index).............................. 923,300
1,000,000 The Goldman Sachs Group, Inc. 0.25% 2007 medium-term notes (A1)
(exch. for EMC common stock)..................................... 1,076,350
2,000,000 Hewlett-Packard Co. 0% 2017 LYON (Aa3)............................ 1,522,500
500,000 Internet Capital Group, Inc. 51/2% 2004 cv. sub. notes 144A (NR).. 328,438
1,000,000 Juniper Networks, Inc. 4 3/4% 2007 cv. sub. notes (NR)............ 909,375
1,500,000 Merrill Lynch & Co., Inc. 0.50% 2005 notes (Aa3)
(exch. for specific technology common stocks +).................. 1,659,375
500,000 Rational Software 5% 2007 cv. sub. notes 144A (NR)................ 666,250
1,000,000 Sanmina Corp. 4 1/4% 2004 cv. sub. notes (B+)..................... 1,485,000
500,000 Sci Systems, Inc. 3% 2007 cv. sub. notes (Ba1).................... 585,000
429,000 Siebel Systems, Inc. 5 1/2% 2006 cv. sub. notes. 144A (NR)........ 1,174,119
1,200,000 STMicroelectronics, N.V. 0% 2009 LYON (Baa1)...................... 2,043,000
------------
17,847,395
------------
TELECOMMUNICATIONS - 12.2%
750,000 American Tower Corp. 5% 2010 cv. sub. deb. 144A (NR).............. 813,750
3,000,000 Bell Atlantic Financial Services, Inc. 5 3/4% 2003 cv. sub. deb.
(exch. for cash equiv. Telecom Corp. of New Zealand common stock) 3,037,500
800,000 CS First Boston, Inc. 1% 2008 medium-term exch. notes (A1)
(exch. for Motorola common stock)................................ 726,000
1,000,000 Exchangeable Certificate Corp. 0.25% 2006 medium-term exch. note
(AAA)(exch. for specific telephone and cable common stocks **)... 1,141,250
1,000,000 Level 3 Communications, Inc. 6% 2010 cv. sub. notes (Caa1)........ 908,125
1,500,000 Liberty Media Group 3 3/4% 2030 sr. exch. deb. 144A (Baa3)
(exch. for Sprint Corporation PCS common stock).................. 1,556,250
25,000 MediaOne Group, Inc. 7% 2002 PIES * (Baa3)
(exch. for ADR's representing Vodafone AirTouch plc common stock) 1,135,938
1,750,000 Nextel Communications, Inc. 5 1/4% 2010 cv. sr. notes 144A (B1)... 1,715,000
700,000 Tekelec 31/4% 2004 cv. sub. discount notes 144A (NR).............. 1,424,500
1,000,000 Telefonos De Mexico, S.A. 4 1/4% cv. sr. deb. (BB+)............... 1,362,500
------------
13,820,813
------------
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
Portfolio of Investments April 30, 2000 (continued)
Principal
Amount Value
or Shares (Note 1)
--------------- ------------
<S> <C>
U.S. TREASURY NOTES - 0.0%
$ 17,000 4 7/8% 3/31/01 ++.................................................$ 16,750
------------
CORPORATE SHORT-TERM NOTES - 6.2%
7,000,000 American Express Credit Corp. (P1)
(5.88% maturing 5/1/00)........................................... 6,995,427
------------
Total Convertible Bonds and Notes - 74.9%......................... 84,734,363
Total Convertible Preferred Stocks - 18.3%........................ 20,747,108
Total Corporate Short-Term Notes - 6.2%........................... 6,995,427
------------
Total Investments - 99.4%.........................................$112,476,898
------------
Other assets and liabilities, net - 0.6%.......................... 709,847
------------
Total Net Assets - 100.0%.........................................$113,186,745
============
</TABLE>
* See Note 1(e)
+ Ticker symbols: LU, NT & TXN
** Ticker symbols: CSCO, CMCSK, TWX, IBM, LMGa, & WCOM
++ Collateral for a letter of credit
ACES 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
PIERS Preferred Income Equity Redeemable Securities
PIES Premium Income Exchangeable Securities
PRIDES Preferred Redeemable Increased Dividend Equity Securities
SPuRS Shared Preference Redeemable Securities
STRYPES Structured Yield Product Exchangeable for Stock
TIDES Term Income Deferrable Equity Securities
TRACES Trust Automatic Common Exchange Securities
Ratings in parentheses by Moody's Investors Service, Inc. or Standard & Poor's,
a division of McGraw-Hill Companies, Inc.
The cost of investments for federal income tax purposes is $103,094,154
resulting in gross unrealized appreciation and depreciation of $14,116,622 and
$4,733,878, respectively, or net unrealized appreciation of $9,382,744 on a tax
cost basis.
See accompanying notes to financial statements
<PAGE> 10
<TABLE>
<CAPTION>
Statement of Assets and Liabilities (unaudited)
April 30, 2000
-------------
<S> <C>
Assets:
Investments at value (cost $103,094,154) (Note 1)..............$ 112,476,898
Cash........................................................... 72,616
Receivable for securities sold................................. 1,547,600
Dividends and interest receivable.............................. 716,634
Prepaid Insurance.............................................. 14,357
Deposits....................................................... 15,701
-------------
Total assets........................................... 114,843,806
-------------
Liabilities:
Payable for securities purchased............................... 1,541,850
Accrued management fees........................................ 67,371
Accrued expenses............................................... 47,840
-------------
Total liabilities...................................... 1,657,061
-------------
Net Assets.............................................................$ 113,186,745
=============
Net assets consist of:
Undistributed net investment income............................$ 1,053,610
Undistributed net realized gain from investment transactions... 12,625,566
Unrealized appreciation on investments......................... 9,382,744
Capital shares (Note 3)........................................ 41,277
Additional paid-in capital..................................... 90,083,548
-------------
Net Assets.............................................................$ 113,186,745
=============
Net asset value per share ($113,186,745 / 4,127,692 outstanding shares)$ 27.42
=============
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations (unaudited)
Six Months Ended April 30, 2000
Investment Income (Note 1):
<S> <C>
Interest...................................................... $ 1,718,938
Dividends..................................................... 788,981
-------------
Total Income.......................................... 2,507,919
-------------
Expenses (Note 2):
Management fee................................................ 397,522
Custodian..................................................... 14,222
Directors' fees............................................... 46,375
Transfer agent................................................ 35,750
Professional fees............................................. 30,440
Reports to shareholders....................................... 25,439
Treasurer's office............................................ 12,500
Other......................................................... 51,122
-------------
Total Expenses........................................ 613,370
-------------
Net Investment Income................................................. 1,894,549
-------------
Realized and Unrealized Gain on Investments:
Net realized gain from investment transactions................ 12,638,367
Net increase in unrealized appreciation of investments........ 654,432
-------------
Net gain on investments....................................... 13,292,799
-------------
Net Increase in Net Assets Resulting from Operations.......... $ 15,187,348
=============
</TABLE>
See accompanying notes to financial statements
<PAGE> 11
<TABLE>
<CAPTION>
Statement of Changes in Net Assets
Six Months Ended Year Ended
April 30, 2000* October 31, 1999
---------------- ----------------
<S> <C> <C>
Increase in net assets from operations:
Net investment income............................................. $ 1,894,549 $ 2,964,542
Net realized gain from investment transactions.................... 12,638,367 10,993,709
Net change in unrealized appreciation of investments.............. 654,432 2,228,213
---------------- ----------------
Net change in net assets resulting from operations............. 15,187,348 16,186,464
---------------- ----------------
Dividends to shareholders from:
Net investment income............................................. (1,523,143) (2,912,846)
Net realized gain on investments.................................. (10,993,469) (10,224,306)
---------------- ----------------
Total dividends................................................ (12,516,612) (13,137,152)
---------------- ----------------
Capital share transactions (Note 3)
Value of shares issued on reinvestment of distributions........... 7,930,327 7,308,248
Cost of shares purchased.......................................... (1,205,131) ---
---------------- ----------------
Change in net assets resulting from capital share transactions 6,725,196 7,308,248
---------------- ----------------
Increase in net assets................................................ 9,395,932 10,357,560
---------------- ----------------
Net assets at beginning of period..................................... 103,790,813 93,433,253
---------------- ----------------
Net assets at end of period (including undistributed net investment
income of $1,053,610 and $682,203, respectively)...................... $ 113,186,745 $ 103,790,813
================ ================
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights
Selected data for a share of common stock outstanding:
Six Months
Ended Years Ended October 31, 1999
Per Share Operating Performance: April 30, 2000* 1999 1998 1997 1996 1995
--------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $27.35 $26.89 $30.48 $28.23 $24.84 $23.11
Net investment income................... .46 .78 .87 .94 .96 1.14
Net realized and unrealized gain........ 2.89 3.40 (.01) 4.55 4.19 2.30
--------------- ------- ------- ------- ------- -------
Total from investment operations...... 3.35 4.18 .86 5.49 5.15 3.44
--------------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income.... (.38) (0.78) (0.88) (0.93) (1.11) (1.17)
Distributions from realized gains....... (2.90) (2.94) (3.57) (2.31) (.65) (.54)
--------------- ------- ------- ------- ------- -------
Total distributions................... (3.28) (3.72) (4.45) (3.24) (1.76) (1.71)
--------------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $27.42 $27.35 $26.89 $30.48 $28.23 $24.84
=============== ======= ======= ======= ======= =======
Market value, end of period............. $21.00 $22.25 $26.75 $26.81 $23.88 $22.25
Net assets, end of period ($000's)...... 113,187 103,791 93,433 96,187 83,302 71,425
Total Investment Return:
Based on net asset value**.......... 12.82% 16.36% 3.16% 21.18% 21.55% 15.79%
Based on market value+.............. 10.58% (2.96)% 18.17% 28.19% 15.65% 20.17%
Ratios/Supplemental Data:
Ratio of expenses to average net assets 1.1%++ 1.1% 1.1% 1.2% 1.2% 1.2%
Ratio of net investment income to
average net assets.................... 3.5%++ 3.0% 3.1% 3.3% 3.9% 4.9%
Portfolio turnover rate................. 57% 72% 55% 71% 70% 43%
</TABLE>
* Unaudited
** 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.
++ Annualized
See accompanying notes to financial statements
<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 $12,341 was earned on cash balances held by the custodian of the
Fund's assets during the six months ended April 30, 2000.
(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 $17,234,440 at April 30, 2000, representing 15.2% 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 $12,500 for the six months ended
April 30, 2000. The officers of the Fund are also directors, officers or
employees of the Adviser, and are compensated by the Adviser.
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.
<PAGE> 13
Notes to Financial Statements (continued)
3. Portfolio Activity
At April 30, 2000 there were 4,127,692 shares of $.01 par value common stock
outstanding, exclusive of 57,500 shares held in Treasury (9,000,000 shares
authorized). During the six months ended April 30, 2000, 390,415 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
$7,930,327. Also, 57,500 shares of Bancroft common stock were purchased for
$1,205,131. The amount paid was 21% less than the net asset value of the
shares.
Purchases and sales of investments, exclusive of corporate short-term notes,
aggregated $58,941,380 and $63,110,764, respectively, for the six months
ended April 30, 2000.
A distribution of $0.21 per share from net investment income was declared on
May 17, 2000, payable June 29, 2000 to shareholders of record at the close
of business June 15, 2000.
<PAGE> 14
Miscellaneous Notes
Results of the 2000 Annual Shareholders Meeting
The results of the shareholder vote at the Annual Meeting of Shareholders
held on February 16, 2000, were:
<TABLE>
<CAPTION>
1. All directors nominated by management were elected for terms expiring in 2003.
Shares Voted for Shares withheld
---------------- ---------------
<S> <C> <C>
William A. Benton 2,979,815 57,608
Elizabeth B. Bogan 2,980,026 57,397
George R. Lieberman 2,966,162 71,261
</TABLE>
2. The selection of PricewaterhouseCoopers LLP as independent accountants
was ratified with 2,979,436 shares voted for, 16,688 shares voted against
and 41,299 shares abstaining.
------------------------------------------------------------------------------
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 and the Adviser 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, increased volatility of securities in general as well
as those purchased by the Company, a decline in economic activity, 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 or changes to the market for convertible securities.
------------------------------------------------------------------------------
Internet
Visit us on the Internet at www.bcvecf.com. The site provides information
about the Fund including daily NAV's, historical dividends and press
releases, as well as information about Davis-Dinsmore Management Company,
the Fund advisor. In addition you can email us at [email protected].
------------------------------------------------------------------------------
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.
------------------------------------------------------------------------------
The Company is a member of the Closed-End Fund Association (CEFA) website:
www.cefa.com
<PAGE> 15
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 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
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, NY 10005
(800) 937-5449
www.amstock.com
Common Stock Listing
American Stock Exchange Symbol: BCV
<PAGE> 16
BANCROFT CONVERTIBLE FUND, INC.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
www.bcvecf.COM
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