bancroft_ncsr-103108.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT
INVESTMENT COMPANIES
Investment
Company Act file number: 811-02151
BANCROFT
FUND LTD.
(Exact
name of registrant as specified in charter)
65
Madison Avenue, Morristown, New Jersey 07960-7308
(Address
of principal executive offices) (Zip code)
Thomas H.
Dinsmore
BANCROFT
FUND LTD.
65
Madison Avenue
Morristown,
New Jersey 07960-7308
(Name and
address of agent for service)
Copy
to:
Steven B.
King, Esq.
Ballard
Spahr Andrews & Ingersoll, LLP
1735
Market Street, 51st Floor
Philadelphia,
PA 19103-7599
Registrant’s
telephone number, including area code: (973) 631-1177
Date of
fiscal year end: October 31, 2008
Date of
reporting period: October 31, 2008
ITEM
1. REPORTS TO STOCKHOLDERS.
BANCROFT
FUND
LTD.
2008
Annual Report
October
31, 2008
2008
Annual Report
October
31, 2008
Bancroft
Fund Ltd. 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 Fund considers to be relatively equal, over the long-term, due to the nature
of the securities in which it invests.
Highlights
Performance through
October 31, 2008 with
dividends reinvested
|
|
Calendar
|
|
|
|
|
|
|
Annualized
|
|
10
Year
|
|
|
|
YTD
|
|
|
1
Year
|
|
|
5
Years
|
|
|
10
Years
|
|
Volatility
*
|
|
Bancroft
market price
|
|
|
(39.32 |
)% |
|
|
(38.72 |
)% |
|
|
(4.33 |
)% |
|
|
0.78 |
% |
|
|
17.05 |
% |
|
Bancroft
net asset value
|
|
|
(35.57 |
) |
|
|
(37.50 |
) |
|
|
(2.94 |
) |
|
|
1.33 |
|
|
|
16.50 |
|
|
Merrill
Lynch All Convertibles Index
|
|
|
(35.21 |
) |
|
|
(38.50 |
) |
|
|
(2.39 |
) |
|
|
2.73 |
|
|
|
21.22 |
|
|
S&P
500 Index
|
|
|
(32.84 |
) |
|
|
(36.10 |
) |
|
|
0.26 |
|
|
|
0.40 |
|
|
|
20.71 |
|
|
Lehman
Aggregate Bond Total Return Index
|
|
|
(1.74 |
) |
|
|
0.30 |
|
|
|
3.48 |
|
|
|
5.00 |
|
|
|
4.15 |
|
|
All data
in the table above is from Bloomberg L.P. pricing service, except Lehman
Aggregate Bond Total Return Index, which is from Lipper, Inc. Closed-End Fund Performance
Analysis, dated October 31, 2008.
Bancroft’s
performance in the table above has not been adjusted for the fiscal 2004 rights
offering (net asset value dilution was 2.38%), or the tender offer which expired
earlier this year (the anti-dilutive effect was 0.85%). Performance data
represent past results and do not reflect future performance.
*
Volatility is a measure of risk based on the standard deviation of the return.
The greater the volatility, the greater the chance of a profit or risk of a
loss.
Quarterly
History of NAV and Market Price
|
|
Net
Asset Values
|
|
|
Market Prices (AMEX,
symbol BCV)
|
|
Qtr.
Ended
|
|
High
|
|
|
Low
|
|
|
Close
|
|
|
High
|
|
|
Low
|
|
|
Close
|
|
1/31/08
|
|
$ |
24.17 |
|
|
$ |
19.95 |
|
|
$ |
20.53 |
|
|
$ |
21.52 |
|
|
$ |
18.12 |
|
|
$ |
18.85 |
|
4/30/08
|
|
|
20.72 |
|
|
|
19.41 |
|
|
|
20.69 |
|
|
|
18.98 |
|
|
|
17.64 |
|
|
|
18.48 |
|
7/31/08
|
|
|
21.51 |
|
|
|
19.20 |
|
|
|
19.41 |
|
|
|
19.15 |
|
|
|
16.65 |
|
|
|
16.80 |
|
10/31/08
|
|
|
19.62 |
|
|
|
12.42 |
|
|
|
13.37 |
|
|
|
16.81 |
|
|
|
9.26 |
|
|
|
11.30 |
|
Dividend
Distributions (12 Months)
Record
Date
|
|
|
Payment
Date
|
|
Income
|
|
Capital
Gains
|
|
|
Total
|
|
|
Corporate
Deduction
*
|
|
|
|
|
12/26/07
|
|
$ |
0.166
|
|
$ |
2.009 |
|
|
$ |
2.175 |
|
|
16
|
%
|
|
3/14/08
|
|
|
3/28/08
|
|
|
0.210
|
|
|
— |
|
|
|
0.210 |
|
|
24
|
|
|
6/12/08
|
|
|
6/26/08
|
|
|
0.210
|
|
|
— |
|
|
|
0.210 |
|
|
24
|
|
|
9/11/08
|
|
|
9/25/08
|
|
|
0.210
|
|
|
— |
|
|
|
0.210 |
|
|
24
|
|
|
|
|
|
|
|
$ |
0.796
|
|
$ |
2.009 |
|
|
$ |
2.805 |
|
|
|
|
|
* Percentage of each ordinary
income distribution qualifying for the corporate dividend received tax
deduction.
To
Our Shareholders
December
12, 2008
Much has
happened since our last shareholder letter was written. The cascading bear
market of 2008 is among the worst bear markets of my lifetime and is the worst
of my career. From its high in October 2007 the Standard & Poor’s 500 Index
fell over 50% by November 20, 2008. This decline is similar to the one seen in
the 1973-1974 bear market which was followed by an 80% bull market in 1975-1976.
We do not expect that kind of recovery immediately following the bottom of this
market.
Performance
of all types of securities was hurt in this downturn, but convertible securities
did not perform as expected. According to Merrill Lynch, although convertible
securities usually do outperform their underlying common stocks, convertible
securities as an asset class underperformed the broad equity indices. This
unexpected result appears to be due to excessive hedge fund liquidations of
convertibles and because of the disproportionate presence of financial issuers
in the convertible universe.
Although
recent market events have been volatile and sometimes terrifying, there are some
reasons for optimism. Bancroft does not use leverage so it does not have that
risk added to the current volatility of the market. Convertible securities
appear to be undervalued relative to their underlying shares and by many
historical measures. Merrill Lynch’s convertible valuation model has shown these
securities to be at their cheapest levels since 1995. Because of this apparent
cheapness, we have been able to add convertible securities to the Fund that have
historically high yields with puts or short maturities that we expect will help
protect against further erosion of their prices.
The
economy is likely to see substantial weakness in housing, jobs, and consumption
for much of 2009. Declining economic activity is likely to continue into the
summer, if not longer. Before a bottom can be found, the commercial credit
markets must be stabilized and begin to function reliably again.
Performance
for the Fund’s fiscal year was enhanced by its exposure to the Consumer Goods
and Health Care industries. Performance was hurt by its exposure to the
Financial and the Metals and Mining industries.
continued
on the following page
Page
1
To Our Shareholders (continued)
The
Fund’s net asset value (NAV), with dividends reinvested, after adjustment for
fund expenses (the Index includes no
expenses), and for the Fund’s fiscal 2004 rights offer and the February 2008
tender offer (see Note 3 on page 14), outperformed
the Merrill Lynch All Convertibles Index (the “Index”) over the calendar
year-to-date and one-year periods, and was
in-line for the five- and ten-year periods ended October 31, 2008. For the
calendar year-to-date, one-, five- and ten-year periods,
Bancroft’s market return underperformed the Index. For the ten-year period, the
Fund’s market volatility, as measured by
standard deviation, was lower than that of the Index. Many market professionals
consider the volatility of past returns to be a useful
approximation of the past levels of risk. A higher volatility level equates to a
higher measure of risk. This measure of historic
results may not reflect future performance but we believe it is informative. The
Fund has sought to provide total returns
to shareholders that compare favorably to those provided by the equity markets,
but with less volatility.
At its
November 17, 2008 meeting, the Board of Trustees declared a distribution of
$0.19 per share, consisting of undistributed net investment income. The
distribution is payable on December 29, 2008 to shareholders of record on
November 28, 2008.
The 2009
annual meeting of shareholders will be held on February 13, 2008. Time and
location will be included in the proxy statement, scheduled to be mailed to
shareholders on December 29, 2008. All shareholders are welcome to attend; we
hope to see you there.
Thomas H. Dinsmore
Chairman of the Board
Major
Portfolio Changes by
underlying common stock
Six
months ended October 31, 2008
ADDITIONS |
REDUCTIONS
|
|
|
Bank of
America |
Archer Daniels
Midland |
|
|
Corning |
Bristol-Myers
Squibb |
|
|
General
Electric |
Church &
Dwight |
|
|
The Great Atlantic
& Pacific Tea Company |
Corning |
|
|
Kinetic
Concepts |
Cypress
Semiconductor |
|
|
Nabors
Industries |
MetLife |
|
|
Prudential Financial
|
Nabors
Industries |
|
|
St. Jude
Medical |
Prudential
Financial |
|
|
Walt
Disney
|
St. Jude
Medical |
|
|
Webster
Financial |
Walt Disney |
Page
2
Largest
Investment Holdings by underlying
common stock
|
|
Value
(Note
1)
|
|
|
%
Total
Net
Assets
|
|
|
|
$ |
2,884,500 |
|
|
|
4.2 |
% |
|
Wyeth
is engaged in the discovery, development, manufacture, distribution and
sale of a line of products in three primary businesses: Pharmaceuticals,
Consumer Healthcare and Animal Health. Pharmaceuticals includes branded
human ethical pharmaceuticals, biotechnology products, vaccines and
nutrition products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
York Community Bancorp
|
|
|
2,307,981
|
|
|
|
3.3 |
|
|
New
York Community Bancorp is a multi-bank holding company that offers a full
range of traditional and non-traditional products and
services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,235,000 |
|
|
|
3.2 |
|
|
LSB
manufactures and sells chemical products for the mining, agricultural and
industrial markets. The company also manufactures and sells commercial and
residential climate control products.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,128,088 |
|
|
|
3.1 |
|
|
Disney,
an entertainment company, has operations that include media networks,
studio entertainment, theme parks and resorts, consumer products, and
Internet and direct marketing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,953,800 |
|
|
|
2.8 |
|
|
Prudential
provides financial services worldwide, offering a variety of products and
services including life insurance, mutual funds, annuities, asset
management and real estate brokerage.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,866,250 |
|
|
|
2.7 |
|
|
With
its subsidiaries, EMC develops, delivers and supports the information
technology (IT) industry’s range of information infrastructure
technologies and solutions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,715,000 |
|
|
|
2.5 |
|
|
With
more than 250 operating companies, Johnson & Johnson is engaged in the
research and development, manufacture and sale of a range of products in
the healthcare field, operating in three segments: Consumer,
Pharmaceutical, and Medical Devices and Diagnostics.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Teva
Pharmaceutical Industries Ltd
|
|
|
1,573,125 |
|
|
|
2.3 |
|
|
Develops,
produces and markets generic drugs covering all major treatment
categories. The company operates 36 pharmaceutical manufacturing sites in
16 countries, 17 generic R&D centers operating mostly within certain
manufacturing sites and 18 API manufacturing sites
globally.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,471,750 |
|
|
|
2.1 |
|
|
A
land drilling contractor, Nabors also performs well-servicing and
workovers. The company conducts oil, gas and geothermal land drilling
operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,416,552 |
|
|
|
2.0 |
|
|
A
producer of oil and natural gas, the company’s operations are focused on
developmental drilling and producing property
acquisitions
in onshore natural gas producing areas of the United States and
Canada.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
19,552,046 |
|
|
|
28.2 |
% |
|
Page
3
Major
Industry Exposure
Diversification
of Assets
|
|
|
|
|
|
Value
|
|
|
|
%
Total Net Assets
October
31,
|
|
|
|
Cost
|
|
|
(Note
1)
|
|
|
|
2008
|
|
|
2007
|
|
Aerospace
and Defense
|
|
$ |
2,021,763 |
|
|
$ |
1,248,525 |
|
|
|
1.8 |
% |
|
|
3.8 |
% |
|
Agriculture
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.4 |
|
|
Banking/Savings
and Loan
|
|
|
7,574,998 |
|
|
|
5,379,481 |
|
|
|
7.8 |
|
|
|
6.1 |
|
|
Chemicals
|
|
|
1,160,525 |
|
|
|
746,000 |
|
|
|
1.1 |
|
|
|
2.8 |
|
|
Computer
Hardware
|
|
|
5,054,133 |
|
|
|
3,885,850 |
|
|
|
5.6 |
|
|
|
5.3 |
|
|
Computer
Software
|
|
|
4,630,285 |
|
|
|
2,135,625 |
|
|
|
3.1 |
|
|
|
3.0 |
|
|
Consumer
Goods
|
|
|
4,337,007 |
|
|
|
3,218,213 |
|
|
|
4.6 |
|
|
|
3.7 |
|
|
Energy
|
|
|
14,032,705 |
|
|
|
9,358,408 |
|
|
|
13.5 |
|
|
|
14.3 |
|
|
Financial
Services
|
|
|
2,514,909 |
|
|
|
1,427,500 |
|
|
|
2.1 |
|
|
|
2.3 |
|
|
Foods
|
|
|
4,591,580 |
|
|
|
2,527,188 |
|
|
|
3.6 |
|
|
|
1.7 |
|
|
Health
Care
|
|
|
6,499,175 |
|
|
|
4,219,375 |
|
|
|
6.1 |
|
|
|
4.2 |
|
|
Insurance
|
|
|
4,707,811 |
|
|
|
3,231,467 |
|
|
|
4.7 |
|
|
|
7.6 |
|
|
Media
and Entertainment
|
|
|
3,496,542 |
|
|
|
2,653,088 |
|
|
|
3.8 |
|
|
|
3.6 |
|
|
Minerals
and Mining
|
|
|
4,686,448 |
|
|
|
2,442,600 |
|
|
|
3.5 |
|
|
|
5.8 |
|
|
Multi-Industry
|
|
|
5,750,130 |
|
|
|
3,798,877 |
|
|
|
5.5 |
|
|
|
2.9 |
|
|
Pharmaceuticals
|
|
|
9,793,524 |
|
|
|
8,221,785 |
|
|
|
11.8 |
|
|
|
10.2 |
|
|
Real
Estate
|
|
|
2,000,622 |
|
|
|
920,000 |
|
|
|
1.3 |
|
|
|
0.8 |
|
|
Retail
|
|
|
2,936,140 |
|
|
|
1,863,750 |
|
|
|
2.7 |
|
|
|
1.9 |
|
|
Semiconductors
|
|
|
4,085,541 |
|
|
|
3,383,863 |
|
|
|
4.9 |
|
|
|
6.5 |
|
|
Telecommunications
|
|
|
7,973,569 |
|
|
|
4,178,407 |
|
|
|
6.0 |
|
|
|
4.6 |
|
|
Transportation
|
|
|
772,885 |
|
|
|
516,000 |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
Travel
and Leisure
|
|
|
1,022,546 |
|
|
|
527,500 |
|
|
|
0.8 |
|
|
|
0.8 |
|
|
Short-Term
Securities
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.7 |
|
|
Total
Investments
|
|
$ |
99,642,838 |
|
|
|
65,883,502 |
|
|
|
95.0 |
|
|
|
98.4 |
|
|
Other
Assets, Net of Liabilities
|
|
|
|
|
|
|
3,520,457 |
|
|
|
5.0 |
|
|
|
1.6 |
|
|
Total
Net Assets
|
|
|
|
|
|
$ |
69,403,959 |
|
|
|
100.0 |
% |
|
|
100.0 |
% |
|
Page
4
Portfolio of Investments
October 31,
2008
|
|
Principal
Amount
|
|
|
Identified
Cost
|
|
|
Value
(Note
1)
|
|
CONVERTIBLE BONDS
AND NOTES — 62.5% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace and Defense —
1.4%
|
|
|
|
|
|
|
|
|
|
Alliant
Techsystems Inc. 2.75%, due 2011 cv. sr. sub. notes
(B1)
|
|
$ |
1,000,000 |
|
|
$ |
1,005,513 |
|
|
$ |
982,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit
Suisse, New York Branch 12.90%, due 2008 equity-linked notes (NR)
(exchangeable
for Corning Inc. common
stock)
|
|
|
2,000,000 |
|
|
|
2,000,000 |
|
|
|
1,284,600 |
|
EMC
Corp. 1.75%, due 2011 cv. sr. notes (A-)
|
|
|
1,000,000 |
|
|
|
1,029,719 |
|
|
|
957,500 |
|
EMC
Corp. 1.75%, due 2013 cv. sr. notes (A-)
|
|
|
1,000,000 |
|
|
|
1,024,414 |
|
|
|
908,750 |
|
Richardson
Electronics, Ltd. 8%, due 2011 cv. sr. sub. notes
(NR)
|
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
735,000 |
|
|
|
|
|
|
|
|
5,054,133 |
|
|
|
3,885,850 |
|
Computer
Software — 3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Blackboard
Inc. 3.25%, due 2027 cv. sr. notes (B+)
|
|
|
2,000,000 |
|
|
|
1,980,461 |
|
|
|
1,310,000 |
|
GSI
Commerce, Inc. 2.5%, due 2027 cv. sr. notes (NR)
|
|
|
1,000,000 |
|
|
|
1,001,538 |
|
|
|
696,250 |
|
Lehman
Brothers Holdings Inc. 1%, due 2009 medium-term notes (B3)
(performance
linked to Microsoft Corp. common stock) (3)
|
|
|
1,500,000 |
|
|
|
1,648,286 |
|
|
|
129,375 |
|
|
|
|
|
|
|
|
4,630,285 |
|
|
|
2,135,625 |
|
Consumer
Goods — 1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Chattem,
Inc. 1.625%, due 2014 cv. sr. notes (NR)
|
|
|
1,000,000 |
|
|
|
1,019,159 |
|
|
|
1,090,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
— 7.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Chesapeake
Energy Corp. 2.75%, due 2035 contingent cv. sr. notes (BB-)(1)
|
|
|
800,000 |
|
|
|
596,000 |
|
|
|
596,000 |
|
Covanta
Holding Corp. 1%, due 2027 sr. cv. deb. (B1) (1)
|
|
|
1,500,000 |
|
|
|
1,695,326 |
|
|
|
1,246,875 |
|
Nabors
Industries, Inc. 0.94%, due 2011 sr. exchangeable notes (BBB+)
|
|
|
1,000,000 |
|
|
|
774,188 |
|
|
|
792,500 |
|
Oil
States International, Inc. 2.375%, due 2025
contingent
cv. sr. notes (NR)
|
|
|
1,325,000 |
|
|
|
1,542,887 |
|
|
|
1,215,688 |
|
SunPower
Corp. 1.25%, due 2027 sr. cv. deb. (NR)
|
|
|
750,000 |
|
|
|
966,149 |
|
|
|
509,063 |
|
Trina
Solar Ltd. 4%, due 2013 cv. sr. notes (NR)
|
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
630,000 |
|
|
|
|
|
|
|
|
6,574,550 |
|
|
|
4,990,126 |
|
Financial
Services — 2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Euronet
Worldwide, Inc. 3.50%, due 2025 cv. deb. (B+) (1)
|
|
|
2,000,000 |
|
|
|
2,514,909 |
|
|
|
1,427,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foods
— 3.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Central
European Distribution Corp. 3%, due 2013 cv. sr. notes
(B-)
|
|
|
500,000 |
|
|
|
349,830 |
|
|
|
293,125 |
|
The
Great Atlantic & Pacific Tea Company, Inc. 5.125%, due
2011
cv.
sr. notes (Caa1)
|
|
|
500,000 |
|
|
|
500,000 |
|
|
|
346,875 |
|
The
Great Atlantic & Pacific Tea Company, Inc. 6.75%, due
2012
cv.
sr. notes (Caa1)
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
1,003,125 |
|
Tyson
Foods, Inc. 3.25%, due 2013 cv. sr. notes
(BB)
|
|
|
1,000,000 |
|
|
|
991,750 |
|
|
|
776,250 |
|
|
|
|
|
|
|
|
3,341,580 |
|
|
|
2,419,375 |
|
Health
Care — 6.1% |
|
|
|
|
|
|
|
|
|
|
|
|
China
Medical Technologies, Inc. 4%, due 2013 cv. sr. sub. notes
(NR)
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
793,125 |
|
Kinetic
Concepts, Inc. 3.25%, due 2015 cv. sr. notes (B+)
(Acquired
04/16/08 and 08/04/08; Cost $1,966,222) (2)
|
|
|
2,000,000 |
|
|
|
1,966,222 |
|
|
|
1,227,500 |
|
Omnicare,
Inc. 3.25%, due 2035 cv. sr. deb. (B3) (1)
|
|
|
900,000 |
|
|
|
1,019,382 |
|
|
|
438,750 |
|
SonoSite
Inc. 3.75%, due 2014 cv. sr. notes (NR)
|
|
|
1,000,000 |
|
|
|
1,013,133 |
|
|
|
770,000 |
|
St.
Jude Medical, Inc. 1.22%, due 2008 cv. sr. deb.
(A-)
|
|
|
1,000,000 |
|
|
|
1,000,438 |
|
|
|
990,000 |
|
|
|
|
|
|
|
|
6,499,175 |
|
|
|
4,219,375 |
|
Insurance
— 2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Prudential
Financial, Inc. floating rate, due 2036 cv. sr. notes
(A3)
|
|
|
2,000,000 |
|
|
|
2,006,308 |
|
|
|
1,953,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Media
and Entertainment — 0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Virgin
Media Inc. 6.5%, due 2016 cv. sr. notes (B-)
(Acquired
04/10/08 and 04/11/08; Cost $995,241) (2)
|
|
|
1,000,000 |
|
|
|
995,241 |
|
|
|
525,000 |
|
Page
5
Portfolio of
Investments October 31, 2008
(continued)
|
|
Principal
Amount
|
|
|
Identified
Cost
|
|
|
Value
(Note
1)
|
|
CONVERTIBLE BONDS AND NOTES —
continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Industry —
3.4% |
|
|
|
|
|
|
|
|
|
Diversa
Corp. 5.5%, due 2027 cv. sr. notes (NR)
(exchangeable
for Verenium Corp. common stock)
|
|
$ |
750,000 |
|
|
$ |
750,000 |
|
|
$ |
143,434 |
|
LSB Industries, Inc.
5.5%, due 2012 cv. sr. sub. deb. (NR) |
|
|
3,000,000 |
|
|
|
3,000,000 |
|
|
|
2,235,000 |
|
|
|
|
|
|
|
|
3,750,000 |
|
|
|
2,378,434 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals —
10.0% |
|
|
|
|
|
|
|
|
|
|
|
|
Alza
Corp. 0%, due 2020 cv. sub. deb. (Aa1)
(exchangeable
for Johnson & Johnson common stock)
|
|
|
2,000,000 |
|
|
|
1,789,300 |
|
|
|
1,715,000 |
|
Mylan
Inc. 3.75%, due 2015 cash cv. notes (B+)
(Acquired
09/16/08; Cost $992,115) (2)
|
|
|
1,000,000 |
|
|
|
992,115 |
|
|
|
768,750 |
|
Teva
Pharmaceutical Finance Co. B.V. 1.75%, due 2026 cv. sr. deb.
(Baa2)
(exchangeable
for Teva Pharmaceutical Industries Ltd.
ADR)
|
|
|
1,500,000 |
|
|
|
1,488,467 |
|
|
|
1,573,125 |
|
Wyeth
floating rate, due 2024 cv. sr. deb. (A3)
|
|
|
3,000,000 |
|
|
|
3,148,642 |
|
|
|
2,884,500 |
|
|
|
|
|
|
|
|
7,418,524 |
|
|
|
6,941,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real Estate —
1.3% |
|
|
|
|
|
|
|
|
|
|
|
|
ProLogis
2.25%, due 2037 cv. sr. notes (BBB+)
(Acquired
03/20/07 - 05/16/08; Cost $ 2,000,622) (2)
|
|
|
2,000,000 |
|
|
|
2,000,622 |
|
|
|
920,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail —
1.5% |
|
|
|
|
|
|
|
|
|
|
|
|
RadioShack
Corp. 2.5%, due 2013 cv. sr. notes (BB)
(Acquired
08/13/08; Cost $1,436,140) (2)
|
|
|
1,500,000 |
|
|
|
1,436,140 |
|
|
|
1,038,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Semiconductors —
4.9% |
|
|
|
|
|
|
|
|
|
|
|
|
Agere
Systems Inc. 6.5%, due 2009 cv. sub. notes (BB)
(exchangeable
for LSI
Corp.)
|
|
|
1,500,000 |
|
|
|
1,526,648 |
|
|
|
1,447,500 |
|
Cypress
Semiconductor Corp. 1%, due 2009 cv. sr. notes (NR)
|
|
|
502,000
|
|
|
|
473,690 |
|
|
|
498,863 |
|
Intel Corp. 2.95%,
due 2035 jr. sub. cv. deb. (A-) (1) |
|
|
2,000,000 |
|
|
|
2,085,203 |
|
|
|
1,437,500 |
|
|
|
|
|
|
|
|
4,085,541 |
|
|
|
3,383,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications —
5.8% |
|
|
|
|
|
|
|
|
|
|
|
|
ADC
Telecommunications Inc. 3.50%, due 2015 cv. sub. notes
(NR) |
|
|
500,000 |
|
|
|
500,000 |
|
|
|
295,000 |
|
ADC
Telecommunications Inc. 3.50%, due 2017 cv. sub. notes
(NR) |
|
|
1,000,000 |
|
|
|
1,000,000 |
|
|
|
562,500 |
|
Anixter
International Inc. 1%, due 2013 sr. cv. notes (BB-) |
|
|
750,000 |
|
|
|
798,063 |
|
|
|
498,750 |
|
Equinix, Inc. 2.5%,
due 2012 cv. sub. notes (B-) |
|
|
2,000,000 |
|
|
|
2,165,269 |
|
|
|
1,432,500 |
|
General Cable Corp.
1%, due 2012 sr. cv. notes (B1) |
|
|
1,500,000 |
|
|
|
1,504,515 |
|
|
|
761,250 |
|
SAVVIS, Inc. 3%, due
2012 cv. sr. notes (NR) |
|
|
1,000,000 |
|
|
|
1,005,722 |
|
|
|
461,250 |
|
|
|
|
|
|
|
|
6,973,569 |
|
|
|
4,011,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transportation —
0.7% |
|
|
|
|
|
|
|
|
|
|
|
|
ExpressJet Holdings,
Inc. 4.25%, due 2023 cv. notes (NR) |
|
|
800,000 |
|
|
|
772,885 |
|
|
|
516,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Travel and Leisure —
0.8% |
|
|
|
|
|
|
|
|
|
|
|
|
Morgans
Hotel Group 2.375%, due 2014 sr. sub. cv. notes (NR)
(Acquired 10/11/07
and 10/12/07; Cost $1,022,546) (2)
|
|
|
1,000,000 |
|
|
|
1,022,546 |
|
|
|
527,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CONVERTIBLE BONDS AND
NOTES |
|
|
|
|
|
$ |
61,100,680 |
|
|
$ |
43,346,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE BONDS AND NOTES —
1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail —
1.2% |
|
|
|
|
|
|
|
|
|
|
|
|
Amerivon
Holdings LLC 4% units containing cv. promissory note
due
2010 and warrants expiring 2010 (NR)
(Acquired
06/01/07; Cost $1,500,000) (2,3,4)
|
|
|
|
|
|
$ |
1,500,000 |
|
|
$ |
825,000 |
|
Page
6
Portfolio of Investments October 31, 2008
(continued)
|
|
Shares
|
|
|
Identified
Cost
|
|
|
Value
(Note 1)
|
|
CONVERTIBLE
PREFERRED STOCKS — 11.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace
and Defense — 0.4%
|
|
|
|
|
|
|
|
|
|
Applied
Energetics, Inc. 6.5% series A redeemable cv. pfd. (NR)
(Acquired
10/27/05; Cost $1,000,000) (2,4)
|
|
|
40,000 |
|
|
$ |
1,000,000 |
|
|
$ |
260,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking/Savings
and Loan — 7.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
of America Corp. 7.25% series L non-cum. perpetual cv. pfd. (A1)
|
|
|
1,500 |
|
|
|
1,691,350 |
|
|
|
1,400,000 |
|
New
York Community Bancorp, Inc. 6% BONUSES units (Baa1)
|
|
|
59,179 |
|
|
|
2,992,817 |
|
|
|
2,307,981 |
|
Sovereign
Capital Trust IV 4.375% PIERS (Baa3)
(exchangeable
for Sovereign Bancorp, Inc. common stock) (1)
|
|
|
14,000 |
|
|
|
890,831 |
|
|
|
224,000 |
|
Webster
Financial Corp. 8.5% perpetual cv. pfd (BB+)
|
|
|
2,000 |
|
|
|
2,000,000 |
|
|
|
1,447,500 |
|
|
|
|
|
|
|
|
7,574,998 |
|
|
|
5,379,481 |
|
Chemicals
— 1.1% |
|
|
|
|
|
|
|
|
|
|
|
|
Celanese
Corp. 4.25% cv. perpetual pfd. (NR)
|
|
|
40,000 |
|
|
|
1,160,525 |
|
|
|
746,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
— 1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Chesapeake
Energy Corp. 4.5% cum. cv. pfd. (B+)
|
|
|
14,850 |
|
|
|
1,503,135 |
|
|
|
920,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minerals
and Mining -- 0.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
Freeport-McMoRan
Copper & Gold Inc. 5.5% cv. perpetual pfd. (BB)
|
|
|
500 |
|
|
|
476,073 |
|
|
|
335,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecommunications
— 0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
Medis
Technologies Ltd. 7.25% series A cum. cv. perpetual pfd.
(NR)
|
|
|
100 |
|
|
|
1,000,000 |
|
|
|
167,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CONVERTIBLE PREFERRED
STOCKS
|
|
|
|
|
|
$ |
12,714,731 |
|
|
$ |
7,808,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANDATORY CONVERTIBLE
SECURITIES — 20.0% (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
Goods — 3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Avery
Dennison Corp. 7.875%, due 11/15/10 mandatory cv. pfd.
(BBB-)
|
|
|
30,000 |
|
|
$ |
1,524,075 |
|
|
$ |
1,020,900 |
|
The
Stanley Works floating rate equity units, due 05/17/12
(A2)
|
|
|
1,750 |
|
|
|
1,793,773 |
|
|
|
1,107,313 |
|
|
|
|
|
|
|
|
3,317,848 |
|
|
|
2,128,213 |
|
Energy
— 5.0% |
|
|
|
|
|
|
|
|
|
|
|
|
Bristow
Group Inc. 5.5%, due 09/15/09 mandatory cv. pfd. (B)
|
|
|
20,000 |
|
|
|
1,027,500 |
|
|
|
650,000 |
|
McMoRan
Exploration Co. 6.75%, due 11/15/10 mandatory cv. pfd. (NR)
|
|
|
10,000 |
|
|
|
1,010,250 |
|
|
|
1,007,500 |
|
Merrill
Lynch & Co., Inc. 5.4%, due 09/27/10 PRIDES (A+)
(linked
to the performance of ConocoPhillips common stock)
|
|
|
2,000 |
|
|
|
2,000,000 |
|
|
|
1,110,980 |
|
NATIXIS
Financial Products Inc. 12.10%, due 04/09/09 mandatory trigger
exchangeable notes (NR)
(exchangeable
for Nabors Industries, Inc. common stock)
(Acquired
07/03/08; Cost $1,917,270) (2)
|
|
|
39,450 |
|
|
|
1,917,270 |
|
|
|
679,250 |
|
|
|
|
|
|
|
|
5,955,020 |
|
|
|
3,447,730 |
|
Foods
— 0.2% |
|
|
|
|
|
|
|
|
|
|
|
|
Lehman
Brothers Holdings Inc. 6%, due 10/12/10 PIES (B3)
(exchangeable
for General Mills, Inc. common stock) (3)
|
|
|
50,000 |
|
|
|
1,250,000 |
|
|
|
107,813 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance
— 1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Alleghany
Corp. 5.75%, due 06/15/09 mandatory cv. pfd. (BB+)
|
|
|
4,000 |
|
|
|
1,058,400 |
|
|
|
998,542 |
|
XL
Capital Ltd. 7%, due 02/15/09 equity security units
(Baa1)
|
|
|
72,500 |
|
|
|
1,643,103 |
|
|
|
279,125 |
|
|
|
|
|
|
|
|
2,701,503 |
|
|
|
1,277,667 |
|
Media
and Entertainment — 3.1% |
|
|
|
|
|
|
|
|
|
|
|
|
Deutsche
Bank AG 4.9%, due 04/28/09 mandatory exchangeable notes (NR)
(exchangeable
for The Walt Disney Company common stock)
(Acquired
04/16/08; Cost $2,501,301) (2)
|
|
|
82,500 |
|
|
|
2,501,301 |
|
|
|
2,128,088 |
|
Page
7
Portfolio of Investments October 31, 2008
(continued)
|
|
Shares
|
|
|
Identified
Cost
|
|
|
Value
(Note
1)
|
|
MANDATORY CONVERTIBLE
SECURITIES — continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minerals
and Mining — 3.0%
|
|
|
|
|
|
|
|
|
|
Freeport-McMoRan
Copper & Gold Inc. 6.75%, due 05/01/10
mandatory
cv. pfd. (BB)
|
|
|
20,000 |
|
|
$ |
2,172,775 |
|
|
$ |
975,600 |
|
Vale
Capital Ltd. 5.5%, due 06/15/10 mandatory convertible notes (BBBH)
(exchangeable
for ADS representing Companhia Vale do Rio Doce
common
stock)
|
|
|
30,000 |
|
|
|
1,534,600 |
|
|
|
847,500 |
|
Vale
Capital Ltd. 5.5%, due 06/15/10 mandatory convertible notes
(BBBH)
(exchangeable
for ADS representing Companhia Vale do Rio Doce
Preference
A Shares)
|
|
|
10,000 |
|
|
|
503,000 |
|
|
|
283,750 |
|
|
|
|
|
|
|
|
4,210,375 |
|
|
|
2,106,850 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-Industry —
3.4% |
|
|
|
|
|
|
|
|
|
|
|
|
NATIXIS
Financial Products Inc. 7.5%, due 09/22/09
mandatory
trigger exchangeable notes (NR)
(exchangeable
for General Electric Company common stock)
(Acquired 08/19/08; Cost $2,000,130) (2)
|
|
|
70,180 |
|
|
|
2,000,130 |
|
|
|
1,420,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pharmaceuticals
— 1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
Schering-Plough
Corp. 6%, due 08/13/10 mandatory cv. pfd. (Baa3) |
|
|
9,500 |
|
|
|
2,375,000 |
|
|
|
1,280,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL MANDATORY CONVERTIBLE
SECURITIES (5) |
|
|
|
|
|
$ |
24,311,177 |
|
|
$ |
13,897,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMON STOCKS —
0.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aerospace and Defense —
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied
Energetics, Inc.
(Acquired
06/05/08; Cost $16,250) (2,4)
|
|
|
7,724 |
|
|
|
16,250 |
|
|
|
6,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Convertible Bonds and Notes — 62.5%
|
|
|
|
|
|
$ |
61,100,680 |
|
|
$ |
43,346,323 |
|
Total
Corporate Bonds and Notes — 1.2%
|
|
|
|
|
|
|
1,500,000 |
|
|
|
825,000 |
|
Total
Convertible Preferred Stocks — 11.3%
|
|
|
|
|
|
|
12,714,731 |
|
|
|
7,808,940 |
|
Total
Mandatory Convertible Securities — 20.0%
|
|
|
|
|
|
|
24,311,177 |
|
|
|
13,897,214 |
|
Total
Common Stocks — 0.0%
|
|
|
|
|
|
|
16,250 |
|
|
|
6,025 |
|
Total Investments —
95.0% |
|
|
|
|
|
$ |
99,642,838 |
|
|
|
65,883,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets and liabilitites, net —
5.0% |
|
|
|
|
|
|
|
|
|
|
3,520,457 |
|
Total Net Assets —
100.0% |
|
|
|
|
|
|
|
|
|
$ |
69,403,959 |
|
Page
8
Portfolio of Investments October 31, 2008
(continued)
(1)
|
Contingent
payment debt instrument which accrues contingent interest. See Note
1(f).
|
(2)
|
Security
not registered under the Securities Act of 1933, as amended (i.e., the
security was purchased in a Rule 144A or a Reg D transaction). The
security may be resold only pursuant to an exemption from registration
under the 1933 Act, typically to qualified institutional buyers. The Fund
generally has no rights to demand registration of these securities. The
aggregate market value of these securities at October 31, 2008 was
$10,326,306 which represented 14.9% of the Fund’s net
assets.
|
(3)
|
Investment
is valued at fair value as determined in good faith in accordance with
procedures adopted by the Board of Trustees. It is possible that the
estimated value may differ significantly from the amount that might
ultimately be realized in the near term, and the difference could be
material. The market value of these securities amounted to $1,062,188 at
October 31, 2008 which represented 1.5% of the Fund’s net
assets.
|
(4)
|
Restricted
securities include securities that have not been registered under the
Securities Act of 1933, as amended, and securities that are subject to
restrictions on resale. The Fund may invest in restricted securities that
are consistent with the Fund’s investment objective and investment
strategies. As of October 31, 2008, the Fund was invested in the following
restricted securities:
|
Security |
|
Acquisition
Date
|
|
Principal
Amount or
Shares
|
|
|
Cost
|
|
|
|
|
|
Value
|
|
|
|
|
Amerivon
Holdings LLC 4% units containing
cv. promissory note and warrants
due 2010
|
|
June
1, 2007
|
|
$ |
1,500,000 |
|
|
$ |
1,500,000 |
|
|
$ |
55.00 |
|
|
$ |
825000 |
|
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied
Energetics, Inc. 6.5% series A
redeemable cv. pfd.
|
|
October
27, 2005
|
|
|
40,000 |
|
|
|
1,000,000 |
|
|
|
6.50 |
|
|
|
260,000 |
|
|
|
0.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Applied
Energetics, Inc.
comon
stock
|
|
June
5, 2008
|
|
|
7,724 |
|
|
|
16,250 |
|
|
|
0.78 |
|
|
|
6,025 |
|
|
|
0.0 |
% |
|
(5)
|
Mandatory
securities are required to be converted on the dates listed; they
generally may be converted prior to these dates at the option of the
holder. See Note 1(i).
|
Investment
Abbreviations
|
Summary of Portfolio Ratings
*
|
|
|
|
|
%
of
|
ADR
|
American
Depositary Receipts.
|
|
Portfolio
|
ADS
|
American
Depositary Shares.
|
Aa
|
3
|
|
BONUSES
|
Bifurcated
Option Note Unit Securities.
|
A
|
19
|
|
PIES
|
Premium
Income Exchangeable Securities.
|
Baa
|
14
|
|
PIERS
|
Preferred
Income Equity Redeemable Securities.
|
Ba
|
12
|
|
PRIDES
|
Preferred
Redeemable Income Dividend Equity Securities.
|
B
|
19
|
|
|
|
Caa
|
2
|
|
|
NR
|
31
|
|
Ratings
in parentheses by Moody’s Investors Service, Inc. or Standard &
Poor’s |
|
|
|
and
are unaudited. NR is used whenever a rating is unavailable. |
*
Excludes equity securities and cash.
|
|
|
See
accompanying notes to financial statements
Page
9
Statement
of Assets and Liabilities
|
|
October 31,
2008
|
|
Assets: |
|
|
|
Investments at value
(cost $99,642,838) (Note 1)
|
|
$ |
65,883,502 |
|
Cash
|
|
|
1,288,636 |
|
Receivable for
securities sold
|
|
|
2,093,735 |
|
Dividends and
interest receivable
|
|
|
803,617 |
|
Other
assets
|
|
|
28,070 |
|
Total
assets
|
|
|
70,097,560 |
|
Liabilities: |
|
|
|
|
Payable for
securities purchased
|
|
|
606,389 |
|
Accrued management
fee (Note 2)
|
|
|
44,747 |
|
Accrued
expenses
|
|
|
29,116 |
|
Other
liabilities
|
|
|
13,349 |
|
Total
liabilities
|
|
|
693,601 |
|
|
|
|
|
|
Net
Assets: |
|
$ |
69,403,959 |
|
|
|
|
|
|
Net Assets consist
of: |
|
|
|
|
Capital shares
(unlimited shares of $0.01 par value authorized) (Note
3)
|
|
$ |
51,899 |
|
Additional paid-in
capital
|
|
|
108,551,705 |
|
Undistributed net
investment income
|
|
|
430,032 |
|
Accumulated net
realized loss from investment transactions
|
|
|
(5,870,341 |
) |
Unrealized
depreciation on investments
|
|
|
(33,759,336 |
) |
Net
Assets |
|
$ |
69,403,959 |
|
Net asset value per
share ($69,403,959 ÷ 5,189,875 outstanding shares) |
|
$ |
13.37 |
|
Statement of Operations
For the Year
Ended October 31, 2008
Investment Income (Note
1): |
|
|
|
Interest
|
|
$ |
2,840,016 |
|
Dividends
|
|
|
2,568,081 |
|
Total
Income
|
|
|
5,408,097 |
|
Expenses (Note
2): |
|
|
|
|
Management
fee
|
|
|
772,377 |
|
Custodian
|
|
|
15,119 |
|
Transfer
agent
|
|
|
30,055 |
|
Audit fees
|
|
|
36,300 |
|
Legal fees
|
|
|
167,573 |
|
Trustees’
fees
|
|
|
112,000 |
|
Reports to
shareholders
|
|
|
61,411 |
|
Administrative
services fees
|
|
|
53,343 |
|
Insurance
|
|
|
25,079 |
|
Other
|
|
|
57,371 |
|
Total
Expenses
|
|
|
1,330,628 |
|
Net Investment
Income |
|
|
4,077,469 |
|
Realized and Unrealized Loss on
Investments: |
|
|
|
|
Net realized loss
from investment transactions
|
|
|
(6,125,438 |
) |
Net change in
unrealized depreciation of investments
|
|
|
(41,589,665 |
) |
Net loss on
investments
|
|
|
(47,715,103 |
) |
Net Decrease in Net Assets
Resulting from Operations |
|
$ |
(43,637,634 |
) |
See accompanying notes to financial
statements
Page
10
Statements of Changes in Net Assets
For
the Years Ended October 31, 2008 and 2007
Change in net assets from
operations: |
|
2008
|
|
|
2007
|
|
Net investment
income
|
|
$ |
4,077,469 |
|
|
$ |
4,596,017 |
|
Net realized gain
(loss) from investment transactions
|
|
|
(6,125,438 |
) |
|
|
11,500,969 |
|
Net change in
unrealized appreciation of investments
|
|
|
(41,589,665 |
) |
|
|
2,263,067 |
|
Net change in net
assets resulting from operations
|
|
|
(43,637,634 |
) |
|
|
18,360,053 |
|
|
|
|
|
|
|
|
|
|
Distributions to shareholders
from: |
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
(4,221,301 |
) |
|
|
(5,102,460 |
) |
Net realized gain on
investments
|
|
|
(11,517,629 |
) |
|
|
(2,621,312 |
) |
Total
distributions
|
|
|
(15,738,930 |
) |
|
|
(7,723,772 |
) |
|
|
|
|
|
|
|
|
|
Capital share transactions
(Note 3) |
|
|
|
|
|
|
|
|
Reinvestment of
distributions |
|
|
6,352,696 |
|
|
|
2,097,228 |
|
Cost of shares
tendered |
|
|
(17,152,389 |
) |
|
|
— |
|
Net increase
(decrease) from capital transactions |
|
|
(10,799,693 |
) |
|
|
2,097,228 |
|
|
|
|
|
|
|
|
|
|
Change in net
assets |
|
|
(70,176,257 |
) |
|
|
12,733,509 |
|
|
|
|
|
|
|
|
|
|
Net assets at
beginning of year |
|
|
139,580,216 |
|
|
|
126,846,707 |
|
|
|
|
|
|
|
|
|
|
Net assets at end of
year |
|
$ |
69,403,959 |
|
|
$ |
139,580,216 |
|
|
|
|
|
|
|
|
|
|
Undistributed net
investment income at end of year
|
|
$ |
430,032 |
|
|
$ |
236,184 |
|
Notes to
Financial Statements
NOTE
1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Organization - Bancroft Fund
Ltd. (the “Fund”), is registered under the Investment Company Act of 1940 as a
diversified, closed-end management investment company.
(b) Use of Estimates - 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.
(c) Indemnification - Under the
Fund’s organizational documents, each trustee, officer or other agent of the
Fund (including the Fund’s investment adviser) is indemnified against certain
liabilities that may arise out of performance of their duties to the Fund.
Additionally, in the normal course of business, the Fund enters into contracts
that contain a variety of indemnification clauses. The Fund’s maximum exposure
under these arrangements is unknown as this would involve future claims that may
be made against the Fund that have not yet occurred. The risk of material loss
as a result of such indemnification is considered remote.
(d) Federal Income Taxes - The
Fund’s policy is 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.
On July
13, 2006, The Financial Accounting Standards Board (“FASB”) released FASB
Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”).
FIN 48 provides guidance for how uncertain tax positions should be recognized,
measured, presented and disclosed in the financial statements. FIN 48 requires
the evaluation of tax positions taken or expected to be taken in the course of
preparing the Fund’s tax returns. These positions must meet a
“more-likely-than-not” standard that, based on the technical merits, has a more
than 50% likelihood of being sustained upon examination. In evaluating whether a
tax position has met the recognition threshold, the Fund must presume that the
position will be examined by the appropriate taxing authority that has full
knowledge of all relevant information. Tax positions not deemed to meet the
“more-likely-than-not” threshold are recorded as a tax expense in the current
year. FIN 48 was adopted by the Fund on April 30, 2008.
Page
11
Notes to
Financial Statements (continued)
NOTE
1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
FIN 48
requires the Fund to analyze all open tax years as defined by the relevant
Statute of Limitations for all major jurisdictions. Open tax years are those
that are open for exam by authorities. The major tax authority for the Fund is
the Internal Revenue Service. At October 31, 2008, these previous tax years are
open: October 31, 2005 through October 31, 2008. The Fund has no examinations in
progress. Management of the Fund has reviewed open tax years and concluded that
the adoption of FIN 48 resulted in no effect on the Fund’s financial position or
results of operations. There is no tax liability resulting from unrecognized tax
benefits relating to uncertain income tax positions taken or expected to be
taken on the tax return for the fiscal year-end October 31, 2008. The Fund is
not aware of any tax positions for which it is reasonably likely that the total
amounts of unrecognized tax benefits will significantly change in the next
twelve months.
(e) Security Valuation -
Investments in securities traded on a national securities exchange are
valued at market using the last reported sales price, supplied by an independent
pricing service, as of the close of regular trading. Listed securities, for
which no sales were reported, are valued at the mean between closing reported
bid and asked prices as of the close of regular trading. Unlisted securities
traded in the over-the-counter market are valued using an evaluated quote
provided by the independent pricing service, or, if an evaluated quote is
unavailable, such securities are valued using prices received from dealers,
provided that if the dealer supplies both bid and asked prices, the price to be
used is the mean of the bid and asked prices. The independent pricing service
derives an evaluated quote by obtaining dealer quotes, analyzing the listed
markets, reviewing trade execution data and employing sensitivity analysis.
Evaluated quotes may also reflect appropriate factors such as individual
characteristics of the issue, communications with broker-dealers, and other
market data. Securities for which quotations are not readily available,
restricted securities and other assets are valued at fair value as determined in
good faith pursuant to procedures approved by the Board of Trustees. Short-term
debt securities with original maturities of 60 days or less are valued at
amortized cost.
(f) 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, including accretion of discounts and amortization of non-equity premium.
For certain securities, known as “contingent payment debt instruments,” Federal
tax regulations require the Fund to record non-cash, “contingent” interest
income in addition to interest income actually received. Contingent interest
income amounted to approximately 10 cents per share for the twelve months ended
October 31, 2008. In addition, Federal tax regulations require the Fund to
reclassify realized gains on contingent payment debt instruments to interest
income. At October 31, 2008 there were unrealized losses of approximately 66
cents per share on contingent payment debt instruments.
(g) Change in Method of Accounting -
Effective October 1, 2004, the Fund began amortizing discounts and
premiums on all debt securities. Prior to October 1, 2004, the Fund amortized
discounts on original issue discount debt securities. The new method of
amortization was adopted in accordance with the provisions of the AICPA Audit and Accounting Guide,
Audits of Investment Companies and the financial highlights presented
herein have been restated to reflect the new method and the effect of this
accounting change is included in the financial highlights for the year ended
October 31, 2004.
Page
12
Notes to Financial Statements
(continued)
NOTE 1 - ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES (continued)
(h) Distributions to Shareholders -
Distributions to shareholders from net investment income are recorded by
the Fund on the ex-dividend date. Distributions from capital gains, if any, are
recorded on the ex-dividend date and paid annually. The amount and character of
income and capital gains to be distributed are determined in accordance with
income tax regulations, which may differ from generally accepted accounting
principles. The tax character of distributions paid during the fiscal years
ended October 31, 2008 and 2007 were as follows:
|
|
2008
|
|
|
2007
|
|
Ordinary
income
|
|
$ |
7,145,140 |
|
|
$ |
5,102,460 |
|
Long-term
gain on investments
|
|
|
8,593,791 |
|
|
|
2,621,312 |
|
|
|
$ |
15,738,931 |
|
|
$ |
7,723,772 |
|
At
October 31, 2008, the components of distributable earnings and federal tax cost
were as follows:
Unrealized
appreciation |
|
$ |
197,629 |
|
Unrealized
depreciation |
|
|
(34,175,259 |
) |
Net unrealized
depreciation |
|
|
(33,977,630 |
) |
|
|
|
|
|
Capital loss carry
forward |
|
|
(6,514,406 |
) |
Undistributed
ordinary income |
|
|
1,292,392 |
|
Total distributable
net earnings |
|
$ |
(39,199,644 |
) |
|
|
|
|
|
Cost for federal
income tax purposes |
|
$ |
99,861,132 |
|
The
differences between book-basis and tax-basis unrealized
appreciation/(depreciation) is attributable to differing methods of recognizing
interest and ordinary income on bonds for tax purposes.
At
October 31, 2008, the Fund had net capital loss carryforwards of $6,514,406 for
federal income tax purposes which expire in 2016.
(i) Market Risk - It is the Fund’s
policy to invest at least 65% 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, the Fund’s mandatory convertible securities include
features which render them more sensitive to price changes of their underlying
securities. Thus they expose the Fund to greater downside risk than traditional
convertible securities, but generally less than that of the underlying common
stock. The market value of those securities was $13,897,214 at October 31, 2008,
representing 20.0% of net assets.
(j) Accounting Pronouncements - In
September 2006, the Financial Accounting Standards Board (FASB) issued Statement
on Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements.”
This standard establishes a single authoritative definition of fair value, sets
out a framework for measuring fair value, and requires additional disclosures
about fair value measurements. SFAS No. 157 applies to fair value measurements
already required or permitted by existing standards. SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007 and interim periods within those fiscal years. The changes to current
generally accepted accounting principles from the application of this Statement
relate to the definition of fair value, the methods used to measure fair value,
and the expanded disclosures about fair value measurements. As of October 31,
2008, the Fund does not believe the adoption of SFAS No. 157 will impact the
financial statement amounts, however, additional disclosures may be required
about the inputs used to develop the measurements and the effect of certain of
the measurements on changes in net assets for the period.
Page
13
Notes to Financial Statements (continued)
NOTE 1 - ORGANIZATION AND SIGNIFICANT
ACCOUNTING POLICIES (continued)
In March
2008, Statement of Financial Accounting Standards No. 161, “Disclosures about
Derivative Instruments and Hedging Activities” (“SFAS 161”) was issued and is
effective for fiscal years beginning after November 15, 2008. SFAS 161 is
intended to improve financial reporting for derivative instruments by requiring
enhanced disclosure that enables investors to understand how and why an entity
uses derivatives, how derivatives are accounted for, and how derivative
instruments affect an entity’s results of operation and financial position.
Management is currently evaluating the implications of SFAS 161. The impact on
the Fund’s financial statement disclosures, if any, is currently being
assessed.
(k) Reclassification of Capital
Accounts - Accounting principles generally accepted in the United States
of America require that certain components of net assets relating to permanent
differences be reclassified between financial and tax reporting. These
reclassifications have no effect on net assets or net asset value per share. For
the year ended October 31, 2008, the Fund increased accumulated net investment
income by $337,680 and increased accumulated net realized loss on investments by
$337,680.
NOTE
2 - MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund
has entered into an investment advisory agreement with Dinsmore Capital
Management Co. (“Dinsmore Capital”). Pursuant to the investment advisory
agreement, Dinsmore Capital provides the Fund with investment advice, office
space and facilities. Under the terms of the investment advisory agreement, the
Fund pays Dinsmore Capital on the last day of each month an advisory fee for
such month computed at an annual rate of 0.75% of the first $100,000,000 and
0.50% of the excess over $100,000,000 of the Fund’s net asset value in such
month.
The Fund,
pursuant to an administrative services agreement with Dinsmore Capital, has
agreed to pay Dinsmore Capital for certain accounting and other administrative
services provided to the Fund. Under the administrative services agreement, the
Fund pays Dinsmore Capital on the last day of each month a fee for such month
computed at an annual rate of 0.05% of the Fund’s net asset value in such
month.
Certain
officers and trustees of the Fund are officers and directors of Dinsmore
Capital.
NOTE 3 - PORTFOLIO
ACTIVITY
At
October 31, 2008 there were 5,189,875 shares of beneficial interest outstanding,
with a par value of $0.01 per share. During the twelve months ended October 31,
2008, 337,013 were issued in connection with reinvestment of dividends from net
investment income, resulting in an increase in paid-in capital of
$6,352,696.
In
connection with the Fund’s tender offer which expired on February 29, 2008, the
Fund purchased 880,154 shares of beneficial interest at a total cost of
$17,152,389, including expenses of $109,410.
Purchases
and sales of investments, exclusive of corporate short-term notes, aggregated
$56,984,130 and $76,112,238, respectively, for the twelve months ended October
31, 2008.
Page
14
Financial Highlights Selected
data for a share of beneficial interest outstanding:
|
|
Year
Ended October 31,
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Operating
Performance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
asset value, beginning of year |
|
$ |
24.35 |
|
|
$ |
22.55 |
|
|
$ |
21.05 |
|
|
$ |
20.40 |
|
|
$ |
20.84 |
|
|
|
|
0.78 |
|
|
|
0.80 |
|
|
|
0.80 |
|
|
|
0.64 |
|
|
|
0.70 |
(a) |
Adjustment
for change in amortization
policy
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
Net
investment income, as adjusted
|
|
|
0.78 |
|
|
|
0.80 |
|
|
|
0.80 |
|
|
|
0.64 |
|
|
|
0.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
realized and unrealized gain (loss) |
|
|
(9.12 |
) |
|
|
2.37 |
|
|
|
1.48 |
|
|
|
0.71 |
|
|
|
0.08 |
(a) |
Adjustment
for change in amortization
policy
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Net
realized and unrealized gain (loss), as adjusted
|
|
|
(9.12 |
) |
|
|
2.37 |
|
|
|
1.48 |
|
|
|
0.71 |
|
|
|
0.10 |
|
Total
from investment operations
|
|
|
(8.34 |
) |
|
|
3.17 |
|
|
|
2.28 |
|
|
|
1.35 |
|
|
|
0.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
Distributions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
from net investment income |
|
|
(0.80 |
) |
|
|
(0.90 |
) |
|
|
(0.78 |
) |
|
|
(0.70 |
) |
|
|
(0.72 |
) |
Distributions
from realized gains |
|
|
(2.01 |
) |
|
|
(0.47 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
distributions
|
|
|
(2.81 |
) |
|
|
(1.37 |
) |
|
|
(0.78 |
) |
|
|
(0.70 |
) |
|
|
(0.72 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Share
Transactions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive
effect of tender offer |
|
|
0.17 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Effect
of rights offering |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.50 |
) |
Capital
share repurchases |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total
capital share transactions
|
|
|
0.17 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.50 |
) |
Net
asset value, end of year |
|
$ |
13.37 |
|
|
$ |
24.35 |
|
|
$ |
22.55 |
|
|
$ |
21.05 |
|
|
$ |
20.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
value, end of year |
|
$ |
11.30 |
|
|
$ |
21.35 |
|
|
$ |
19.30 |
|
|
$ |
17.77 |
|
|
$ |
18.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Net Asset Value Return (%) (b) |
|
|
(37.5 |
) |
|
|
14.5 |
|
|
|
11.1 |
|
|
|
6.7 |
|
|
|
1.3 |
|
Total
Investment Return (%) (c) |
|
|
(38.7 |
) |
|
|
18.3 |
|
|
|
13.3 |
|
|
|
1.3 |
|
|
|
(3.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios/Supplemental
Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
assets, end of period (in thousands) |
|
$ |
69,404 |
|
|
$ |
139,580 |
|
|
$ |
126,847 |
|
|
$ |
117,622 |
|
|
$ |
113,373 |
|
Ratio
of expenses to average net assets (%) |
|
|
1.2 |
|
|
|
1.1 |
|
|
|
1.1 |
|
|
|
1.2 |
|
|
|
1.1 |
|
Ratio
of net investment income to average
net assets (%) |
|
|
3.7 |
|
|
|
3.5 |
|
|
|
3.7 |
|
|
|
3.1 |
|
|
|
3.3 |
(d) |
Portfolio
turnover rate (%) |
|
|
55 |
|
|
|
80 |
|
|
|
58 |
|
|
|
86 |
|
|
|
66 |
|
_____________
(a)
|
As
previously reported.
|
(b)
|
Assumes
valuation of the Fund’s
shares and reinvestment of dividends at net asset
values.
|
(c)
|
Assumes
valuation of the Fund’s
shares at market price and reinvestment of dividends at actual
reinvestment price.
|
(d)
|
Expense
ratio for 2004 reflects
adjustment for change in amortization policy. The ratio previously
reported for 2004 was
3.4%.
|
See
accompanying notes to financial statements
Page 15
Report of
Independent Registered
Public
Accounting Firm
To
the Shareholders and Board of Trustees of
Bancroft
Fund Ltd.
We have
audited the accompanying statement of assets and liabilities, including the
portfolio of investments of Bancroft Fund Ltd. (the “Fund”) as of October 31,
2008, and the related statements of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the four years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund’s management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the year ended October 31, 2004 have been
audited by other auditors, whose report dated November 19, 2004 expressed an
unqualified opinion thereon.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform an audit of the Fund’s
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund’s internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2008, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements and financial highlights referred to above
present fairly, in all material respects, the financial position of Bancroft
Fund Ltd. as of October 31, 2008, 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 its financial highlights for each of the four years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
TAIT,
WELLER & BAKER LLP
Philadelphia,
Pennsylvania
December
18, 2008
Page
16
Miscellaneous
Notes
Automatic
Dividend Investment and Cash Payment Plan
The Fund
has an Automatic Dividend Investment and Cash Payment Plan (the “Plan”). Any
shareholder may elect to join the Plan by sending an application to American
Stock Transfer & Trust Company, P.O. Box 922, Church Street Station, NY
10269-0560 (the “Plan Agent”). You may also obtain additional information about
the Plan as well as the Plan application by calling the Plan Agent toll free at
(800) 937-5449. If your shares are held by a broker or other nominee, you should
instruct the nominee to join the Plan on your behalf. Some brokers may require
that your shares be taken out of the broker’s “street name” and re-registered in
your own name. Shareholders should also contact their broker to determine
whether shares acquired through participation in the Plan can be transferred to
another broker, and thereafter, whether the shareholder can continue to
participate in the Plan.
Under the
Plan, all dividends and distributions are automatically invested in additional
Fund shares. Depending on the circumstances, shares may either be issued by the
Fund or acquired through open market purchases at the current market price or
net asset value, whichever is lower (but not less than 95% of market price). For
the first three fiscal quarter distributions, when the market price is lower,
the Plan Agent will combine your dividends with those of other Plan participants
and purchase shares in the market, thereby taking advantage of the lower
commissions on larger purchases. There is no other charge for this service. For
the fourth quarter distribution when the market price is lower, the Fund will
issue shares at the market price.
All
dividends and distributions made by the Fund (including capital gain dividends
and dividends designated as qualified dividend income, which are eligible for
taxation at lower rates) remain taxable to Plan participants, regardless of
whether such dividends and distributions are reinvested in additional shares of
the Fund through open market purchases or through the issuance of new shares.
Plan participants will be treated as receiving the cash used to purchase shares
on the open market and, in the case of any dividend or distribution made in the
form of newly issued shares, will be treated as receiving an amount equal to the
fair market value of such shares as of the reinvestment date. Accordingly, a
shareholder may incur a tax liability even though such shareholder has not
received a cash distribution with which to pay the tax.
Plan
participants may also voluntarily send cash payments of $100 to $10,000 per
month to the Plan Agent, to be combined with other Plan monies, for purchase of
additional Fund shares in the open market. You pay only a bank service charge of
$1.25 per transaction, plus your proportionate share of the brokerage
commission. All shares and fractional shares purchased will be held by the Plan
Agent in your dividend reinvestment account. You may deposit with the Plan Agent
any Bancroft share certificates you hold, for a one-time fee of
$7.50.
At any
time, a Plan participant may instruct the Plan Agent to liquidate all or any
portion of such Plan participant’s account. To do so, a Plan participant must
deliver written notice to the Plan Agent prior to the record date of any
dividend or distribution requesting either liquidation or a share certificate.
The Plan Agent will combine all liquidation requests it receives from Plan
participants on a particular day and will then sell shares of the Fund that are
subject to liquidation requests in the open market. The amount of proceeds a
Plan participant will receive shall be determined by the average sales price per
share, after deducting brokerage commissions, of all shares sold by the Plan
Agent for all Plan participants who have given the Plan Agent liquidation
requests.
The Plan
Agent or the Fund may terminate the Plan for any reason at any time by sending
written notice addressed to the Plan participant’s address as shown on the Plan
Agent’s records. Following the date of termination, the Plan Agent shall send
the Plan participant either the proceeds of liquidation, or a share certificate
or certificates for the full shares held by the Plan Agent in the Plan
participant’s account. Additionally, a check will be sent for the value of any
fractional interest in the Plan participant’s account based on the market price
of the Fund’s shares on that date.
Page
17
Miscellaneous
Notes (continued)
Notice
of Privacy Policy
The Fund
has adopted a privacy policy in order to protect the confidentiality of
nonpublic personal information that we have about you. We receive personal
information, such as your name, address and account balances, when transactions
occur in Fund shares registered in your name.
We may
disclose this information to companies that perform services for the Fund, such
as the Fund’s transfer agent or proxy solicitors. These companies may only use
this information in connection with the services they provide to the Fund, and
not for any other purpose. We will not otherwise disclose any nonpublic personal
information about our shareholders or former shareholders to anyone else, except
as required by law.
Access to
nonpublic information about you is restricted to our employees and service
providers who need that information in order to provide services to you. We
maintain physical, electronic and procedural safeguards that comply with federal
standards to guard your nonpublic personal information.
For
More Information About Portfolio Holdings
In
addition to the semi-annual and annual reports that Bancroft delivers to
shareholders and makes available through the Fund’s public website, the Fund
files a complete schedule of portfolio holdings with the Securities and Exchange
Commission (SEC) for the Fund’s first and third fiscal quarters on Form N-Q.
Bancroft does not deliver the schedule of portfolio holdings for the first and
third fiscal quarters to shareholders, however the schedule is posted to the
Fund’s public website, www.bancroftfund.com. You may obtain the Form N-Q filings
by accessing the SEC’s website at www.sec.gov. You may also review and copy them
at the SEC’s Public Reference Room in Washington, DC. Information on the
operation of the SEC’s Public Reference Room may be obtained by calling the SEC
at (800) SEC-0330.
Proxy
Voting Policies and Procedures / Proxy Voting Record
The
Fund’s policies and procedures with respect to the voting of proxies relating to
the Fund’s portfolio securities is available without charge, upon request, by
calling (800) 914-1177, or at our website at www.bancroftfund.com. This
information is also available on the SEC’s website at www.sec.gov. In addition,
information on how the Fund voted such proxies relating to portfolio securities
during the most recent twelve-month period ended June 30, is available without
charge at the above sources.
Declared
Distribution
A
distribution of $0.19 per share, derived from net investment income was declared
on November 17, 2008, payable December 29, 2008 to shareholders of record at the
close of business November 28, 2008.
The Fund
is a member of the Closed-End Fund Association, a non-profit national trade
association (www.cefa.com). Thomas H. Dinsmore, Chairman and Chief Executive
Officer of the Fund, is on the executive board and is the president of the
association. The association
is solely responsible for the content of its website.
Pursuant
to Section 23 of the Investment Company Act of 1940, notice is hereby given that
the Fund may in the future purchase its own shares 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
18
Trustees
Each
trustee is also a trustee of Ellsworth Fund Ltd. (Ellsworth) (a closed-end
management investment company). Dinsmore Capital Management Co. (Dinsmore
Capital) is the Fund’s investment adviser and is also the investment adviser to
Ellsworth. Because of this connection, the Fund and Ellsworth make up a Fund
Complex. Therefore, each trustee oversees two investment companies in the Fund
Complex.
Personal |
Principal
Occupation(s) During Past Five Years; Other
|
Information |
Directorship(s)
|
Gordon F.
Ahalt |
Retired. Trustee of
Ellsworth and Helix Energy Solutions Group Inc. (an energy services
company). |
65 Madison Avenue,
Suite
550
|
|
Morristown, NJ
07960
|
|
Term expires
2010
|
|
Trustee since 1986 -
Age 80
|
|
|
|
Kinchen
C. Bizzell, C.F.A.
65 Madison Avenue,
Suite
550
Morristown, NJ
07960
Term expires
2009
Trustee since 2008 -
Age 54
|
Senior Counselor
with Burson-Marsteller (global public relations and communications firm)
(since 2004). Prior to 2004, Managing Director in Burson-Marsteller’s
corporate and financial practice; Trustee of Ellsworth.
|
|
|
Elizabeth C. Bogan,
Ph.D. |
Senior Lecturer in
Economics at Princeton University; Trustee of Ellsworth. |
65 Madison Avenue,
Suite
550
|
|
Morristown,
NJ 07960
|
|
Term expires
2010
|
|
Trustee
since 1986 - Age 64
|
|
|
|
Daniel D.
Harding |
Managing partner of
a private investment fund. |
65 Madison Avenue,
Suite
550
|
|
Morristown, NJ
07960
|
Prior to 2008,
Senior Adviser with Harding Loevner Management LP
(an investment advisory firm); Trustee of
Ellsworth. |
Term expires
2011
|
|
Trustee since 2007 -
Age 56
|
|
|
|
Nicolas
W. Platt
65 Madison Avenue, Suite
550
Morristown, NJ
07960
Term expires
2010
Trustee since 1997 - Age
55
|
Since August 2006,
Managing Director, Rodman & Renshaw, LLC (a full-service investment
bank). Prior to August 2006, President of CNC-US (an international
consulting company); Trustee of Ellsworth.
|
|
|
INTERESTED
TRUSTEES |
|
Thomas H. Dinsmore,
C.F.A. (1) |
Chairman and Chief
Executive Officer of the Fund, Ellsworth and Dinsmore Capital; Trustee of
Ellsworth and Director of Dinsmore Capital. |
65 Madison Avenue,
Suite
550
|
|
Morristown, NJ
07960
|
|
Term
expires 2011
|
|
Trustee
since 1985
|
|
Chairman
of the Board
since
1996 - Age 55
|
|
|
|
Jane D. O’Keeffe
(1) |
President of the
Fund, Ellsworth and Dinsmore Capital; Trustee of Ellsworth and Director of
Dinsmore Capital. |
65 Madison Avenue,
Suite
550
|
|
Morristown,
NJ 07960
|
|
Term
expires 2010
|
|
Trustee
since 1995 - Age 53
|
|
|
|
(1) Mr.
Dinsmore and Ms. O’Keeffe
are considered interested persons because they are officers and directors of
Dinsmore Capital. They are brother and sister.
Page
19
Principal
Officers
The
business address of each officer is 65 Madison Avenue, Suite 550, Morristown, NJ
07960. Officers are elected by and serve at the pleasure of the Board of
Trustees. Each officer holds office until the annual meeting to be held in 2009,
and thereafter until his or her respective successor is duly elected and
qualified.
Personal |
|
Information |
Principal
Occupation(s) During Past Five
Years
|
Thomas H. Dinsmore,
C.F.A.(1,2) |
Trustee, Chairman and Chief Executive Officer of
the Fund, Ellsworth and Dinsmore Capital.
|
Trustee, Chairman
and
|
|
Chief Executive
Officer
|
|
Officer since
1984
|
|
Age
55
|
|
|
|
Jane D. O’Keeffe
(1,2) |
Trustee and
President of the Fund, Ellsworth and Dinsmore Capital. |
Trustee and
President
|
|
Officer since
1994
|
|
Age
53
|
|
|
|
Gary I.
Levine (3)
Executive
Vice President,
Chief
Financial Officer
and
Secretary
Officer
since 1986
Age
51
|
Executive
Vice President and Chief Financial Officer of the Fund, Ellsworth and
Dinsmore Capital since 2004. Secretary of the Fund, Ellsworth and Dinsmore
Capital since 2003. Treasurer of Dinsmore Capital since 1997. Vice
President of the Fund, Ellsworth and Dinsmore Capital from 2002 until
2004. Treasurer of the Fund and Ellsworth from 1993 until
2004.
|
|
|
H. Tucker Lake, Jr.
(2) |
Vice President of
the Fund and Ellsworth since 2002, and of Dinsmore Capital since
1997. |
Vice
President
|
|
Officer since
1994
|
|
Age
61
|
|
|
|
Germaine M. Ortiz
(3) |
Vice President of
the Fund, Ellsworth and Dinsmore Capital. |
Vice
President
|
|
Officer since
1996
|
|
Age
39
|
|
|
|
Mercedes
A. Pierre
|
Vice President and
Chief Compliance Officer of the Fund, Ellsworth and Dinsmore Capital since
2004, and Assistant Treasurer from 1998 to 2004.
|
Chief Compliance
|
|
Officer Officer
since 1998
|
|
Age
47
|
|
(1) Mr.
Dinsmore and Ms. O’Keeffe are brother and sister.
(2) Mr. H.
Tucker Lake, Jr. is the first cousin of Mr. Dinsmore and Ms.
O’Keeffe.
(3) Mr.
Levine’s wife is Ms. Ortiz’s first cousin.
Page
20
Board
of Trustees
|
Internet
|
GORDON
F.
AHALT
|
www.bancroftfund.com
|
KINCHEN
C.
BIZZELL, C.F.A.
|
email:
[email protected] |
ELIZABETH
C.
BOGAN, Ph.D.
|
|
THOMAS
H.
DINSMORE, C.F.A.
|
Investment
Adviser
|
DANIEL
D.
HARDING
|
Dinsmore
Capital Management
|
JANE
D.
O’KEEFFE
|
65 Madison Avenue,
Suite 550 |
NICOLAS
W.
PLATT |
Morristown, NJ
07960 |
|
(973)
631-1177 |
|
|
Officers |
Shareholder Services and
Transfer Agent |
|
American
Stock Transfer & Trust Company
|
THOMAS
H.
DINSMORE,
C.F.A.
|
59 Maiden
Lane |
Chairman
of the Board and
Chief Executive Officer
|
New
York, NY 10038
|
|
(800)
937-5449
|
JANE
D.
O’KEEFFE |
www.amstock.com |
President |
|
|
Beneficial Share
Listing |
GARY I.
LEVINE |
American Stock
Exchange Symbol: BCV |
Executive
Vice President, Chief Financial Officer and
Secretary
|
|
|
Legal
Counsel |
H. TUCKER
LAKE,
JR. |
Ballard Spahr
Andrews & Ingersoll, LLP |
Vice
President |
|
|
Independent
Accountants |
GERMAINE
M.
ORTIZ |
Tait, Weller &
Baker LLP |
Vice
President |
|
|
|
MERCEDES A. PIERRE
|
|
Vice President and Chief
Compliance Officer |
|
|
|
JAMES
A. DINSMORE |
|
Assistant Vice
President |
|
|
|
JUDITH
M. DOUGHERTY |
|
Assistant
Secretary |
|
|
|
JOANN VENEZIA |
|
Assistant Vice President and
Assistant Secretary |
|
BANCROFT
FUND LTD.
65
MADISON AVENUE, SUITE 550
MORRISTOWN,
NEW JERSEY 07960
www.bancroftfund.com
ITEM
2. CODE OF
ETHICS.
On April
16, 2007, the Board of Trustees of Bancroft Fund Ltd. (the “Fund”) adopted a
code of ethics that applies to Registrant’s principal executive officer and
principal financial officer. The code of ethics is available on Registrant’s
website at: www.bancroftfund.com. Since the code of ethics was adopted, there
have been no amendments to it nor have any waivers from any of its provisions
been granted.
ITEM
3. AUDIT COMMITTEE
FINANCIAL EXPERT.
The Board
of Trustees of the Fund determined that Trustee Daniel D. Harding, who is
“independent” as such term is used in Form N-CSR, possesses the attributes
required to be considered an audit committee financial expert under applicable
federal securities laws.
ITEM
4. PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
Set forth
in the table below are the aggregate fees billed to the Fund by Tait, Weller
& Baker LLP (“Tait Weller”) for services rendered to the Fund during the
Fund’s last two fiscal years ended October 31, 2008 and 2007.
Fiscal
YE
October
31
|
|
Audit
Fees
|
|
|
Audit-Related
Fees
(1)
|
|
|
Tax
Fees (2)
|
|
|
All
Other
Fees
|
|
2007
|
|
$
|
32,000
|
|
|
$
|
0
|
|
|
$
|
2,700
|
|
|
$
|
0
|
|
2008
|
|
$
|
33,500
|
|
|
$
|
0
|
|
|
$
|
2,800
|
|
|
$
|
0
|
|
|
The
Fund’s Audit Committee pre-approves all Audit-Related Fees, with
exceptions. For the Fund’s last two fiscal years ended October 31, 2008
and 2007, no Audit-Related Fees were approved by the Fund’s Audit
Committee pursuant to section 2.01(c)(7)(i)(C) of Regulation S-X, which
waives the pre-approval requirement for certain de minimus
fees.
|
|
“Tax
Fees” include those fees billed by Tait Weller in connection with their
review of the Fund’s income tax returns for fiscal years 2007 and 2008.
The Fund’s Audit Committee pre-approves all Tax Fees, with exceptions. For
the Fund’s last two fiscal years ended October 31, 2008 and 2007, no Tax
Fees were approved by the Fund’s Audit Committee pursuant to section
2.01(c)(7)(i)(C) of Regulation S-X, which waives the pre-approval
requirement for certain de minimus
fees.
|
Non-Audit
Services
During
each of the last two fiscal years ended October 31, 2007 and October 31, 2008,
Tait Weller did not provide any non-audit services to the Fund, with the
exception of the services for which the Fund paid the Tax Fees noted above. Tait
Weller did not provide any non-audit services to the Fund’s investment adviser,
Dinsmore Capital Management Co. (“Dinsmore Capital”) or its affiliates or
otherwise bill the Fund or Dinsmore Capital or its affiliates for any such
non-audit services.
Audit
Committee Pre-Approval Policies and Procedures
The Audit
Committee pre-approves all audit and permissible non-audit services that are
proposed to be provided to the Fund by its independent registered public
accountants before they are provided to the Fund. Such pre-approval
also includes the proposed fees to be charged by the independent registered
public accountants for such services. The Audit Committee may
delegate the pre-approval of audit and permissible non-audit services and
related fees to one or more members of the Audit Committee who are
“independent,” as such term is used in Form N-CSR. Any such member’s
decision to pre-approve audit and/or non-audit services and related fees shall
be presented to the full Audit Committee, solely for informational purposes, at
their next scheduled meeting.
The Audit
Committee also pre-approves non-audit services to be provided by the Fund’s
independent registered public accountants to the Fund’s investment adviser if
the engagement relates directly to the operations and financial reporting of the
Fund and if the Fund’s independent auditors are the same as, or affiliated with,
the investment adviser’s auditors.
ITEM
5. AUDIT COMMITTEE
OF LISTED REGISTRANTS.
(a) The
Fund has a designated Audit Committee in accordance with Section 3(a)(58)(A) of
the Securities and Exchange Act of 1934 (the “Exchange Act”) and the members of
such committee are:
KINCHEN
C. BIZZELL
ELIZABETH
C. BOGAN, PH.D.
DANIEL D.
HARDING
(b) Not
applicable.
ITEM
6. SCHEDULE OF
INVESTMENTS.
The
Schedule of Investments in securities of unaffiliated issuers is included as
part of the report to shareholders, filed under Item 1 of this
Form.
ITEM
7. DISCLOSURE OF
PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT
COMPANIES.
Bancroft
Fund Ltd.
Ellsworth
Fund Ltd.
Dinsmore
Capital Management Co.
Proxy
Voting Guidelines
(Adopted
April 16, 2007)
These
proxy voting guidelines have been adopted by the Boards of Trustees of Bancroft
Fund Ltd. and Ellsworth Fund Ltd. (collectively, the “Funds”), as well as by the
Board of Directors of Davis-Dinsmore Management Company, now known as Dinsmore
Capital Management Co. (“Dinsmore Capital”).
The
Boards of Trustees of the Funds have delegated to Dinsmore Capital
responsibility for voting proxies received by the Funds in their capacities as
shareholders of various companies. The Boards recognize that, due to
the nature of the Funds’ investments, the Funds do not frequently receive
proxies.
Dinsmore
Capital exercises its voting responsibility with the overall goal of maximizing
the value of the Funds’ investments. The portfolio managers at
Dinsmore Capital oversee the voting policies and decisions for the
Funds. In evaluating voting issues, the portfolio managers may
consider information from many sources, including management of a company
presenting a proposal, shareholder groups, research analysts, and independent
proxy research services.
Set forth
below are the proxy voting guidelines:
A. Matters
Related to the Board of Directors
1. The Funds
generally will support the election of nominees recommended by management for
election as directors. In determining whether to support a particular
nominee, Dinsmore Capital will consider whether the election of that nominee
will cause a company to have less than a majority of independent
directors.
2. The Funds
generally will support proposals to de-classify boards of directors if fewer
than 66 2/3% of the directors are independent, and will generally vote against
proposals to classify boards of directors.
3. The Funds
generally will withhold a vote in favor of a director who has served on a
committee which has approved excessive compensation arrangements or proposed
equity-based compensation plans that unduly dilute the ownership interests of
stockholders.
B. Matters
Related to Independent Auditors
1. The Funds
generally will vote in favor of independent accountants approved by the
company. Prior to such vote, however, Dinsmore Capital will take into
consideration whether non-audit fees make up more than 50 to 75% of the total
fees paid by the company to the independent auditors, and the nature of the
non-audit services provided.
C. Corporate
Governance Matters
1. Except as
provided in Section E.1, as a general rule, the Funds will vote against
proposals recommended by management of a company that are being made primarily
to implement anti-takeover measures, and will vote in favor of proposals to
eliminate policies that are primarily intended to act as anti- takeover
measures.
2. Subject to
the other provisions of these guidelines, including without limitation provision
C.1. above, the Funds generally will vote in accordance with management’s
recommendations regarding routine matters, including the following:
a. Fixing number
of directors;
b. Stock splits;
and
c. Change of
state of incorporation for specific corporate purposes.
D. Matters
Related to Equity-Based Compensation Plans
1. The Fund
generally will vote in favor of broad-based stock option plans for executives,
employees or directors which would not increase the aggregate number of shares
of stock available for grant under all currently active plans to over 10% of the
total number of shares outstanding.
2. The Funds
generally will vote in favor of employee stock purchase plans and employee stock
ownership plans permitting purchase of company stock at 85% or more of fair
market value.
E. Contested
Matters
1. Contested
situations will be evaluated on a case by case basis by the portfolio manager or
analyst at Dinsmore Capital principally responsible for the particular portfolio
security.
F. Miscellaneous
Matters
1. The Funds may
in their discretion abstain from voting shares that have been recently
sold.
2. The Funds
generally will abstain from voting on issues relating to social and/or political
responsibility.
3. Proposals
that are not covered by the above-stated guidelines will be evaluated on a case
by case basis by the portfolio manager or analyst at Dinsmore Capital
principally responsible for the particular portfolio security.
G. Material
Conflicts of Interest
1. Conflicts of
interest may arise from time to time between Dinsmore Capital and the
Funds. Examples of conflicts of interests include:
a. Dinsmore
Capital may manage a pension plan, administer employee benefit plans, or provide
services to a company whose management is soliciting proxies;
b. Dinsmore
Capital or its officers or directors may have a business or personal
relationship with corporate directors, candidates for directorships, or
participants in proxy contests;
c. Dinsmore
Capital may hold a position in a security contrary to shareholder
interests.
2. If a conflict
of interest arises with respect to a proxy voting matter, the portfolio manager
will promptly notify the Funds’ Audit Committee and counsel for independent
trustees and the proxies will be voted in accordance with direction received
from the Audit Committee.
H. Amendments
1. Any proposed
material amendment to these Guidelines shall be submitted for review and
approval to:
a. the Funds’
Board of Trustees, including a majority of the disinterested trustees;
and
b. the Adviser’s
Board of Directors.
2. Non-material
amendments to these Guidelines may be made by the Chair of the Funds, upon
consultation with counsel to the Funds and the Funds’ Chief Compliance Officer,
and will be reported to the Funds’ Board of Trustees at their next scheduled
in-person meeting.
ITEM
8. PORTFOLIO
MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a) (1)
Mr. Thomas H. Dinsmore, Chairman and Chief Executive Officer, serves as the
Portfolio Manager of Bancroft Fund Ltd. (the “Registrant”). He has served in
that capacity since 1996. This information is as of January 5,
2009. Mr. Dinsmore usually receives investment recommendations from a
team of research analysts prior to making investment decisions about
transactions in the portfolio.
(2) The
following table provides information relating to other (non-registrant) accounts
where this portfolio manager is primarily responsible for day-to-day management
as of October 31, 2008. The portfolio manager does not manage such accounts or
assets with performance-based advisory fees, or other pooled investment
vehicles.
Portfolio
Manager
|
|
Registered
Investment
Companies
|
|
Other
Pooled
Investment
Vehicles
|
|
Other
Accounts
|
Thomas
H. Dinsmore
|
|
Number:
|
1
|
|
n/a
|
|
n/a
|
|
|
Assets:
|
$86,185,050
|
|
n/a
|
|
n/a
|
Mr.
Dinsmore is the Portfolio Manager of one other account, Ellsworth Fund Ltd.
(“Ellsworth”), a registered investment company with total net assets of $
75,999,016 as of October 31, 2008. Mr. Dinsmore is Chairman and Chief
Executive Officer of Ellsworth. This information is as of October 31, 2008. The
Registrant and Ellsworth have similar investment objectives and strategies. As a
result, material conflicts of interest may arise between the two funds if a
security is not available in a sufficient amount to fill open orders for both
funds. To deal with these situations, the investment adviser for the
Registrant and Bancroft has adopted Trade Allocation Procedures (the “Allocation
Procedures”). The Allocation Procedures set forth a method to
allocate a partially filled order among the funds. Pursuant to the
method, the amount of shares that each fund purchases is allocated pro rata
based on the dollar amount of each fund’s intended trade or, if the order is
subject to a minimum lot size, as closely as possibly to pro rata.
The
Allocation Procedures permit the adviser to allocate an order in a way that is
different from the method set forth above if (i) each fund is treated fairly and
equitably and neither fund is given preferential treatment, and (ii) the
allocation is reviewed by the adviser’s chief compliance officer.
(3) This
information is as of October 31, 2008. The Portfolio Manager is compensated by
Dinsmore Capital through a three-component plan, consisting of a fixed base
salary, annual cash bonus, and benefit retirement plan. His compensation is
reviewed and approved by the Adviser’s Board of Directors annually. His
compensation may be adjusted from year to year based on the perception of the
Adviser’s Board of Directors of the portfolio manager’s overall performance and
his management responsibilities. His compensation is not based on (i) a formula
specifically tied to the performance of the Registrant or Bancroft, including
performance against an index, or (ii) the value of assets held in the
Registrant’s portfolio.
(4) As of
October 31, 2008, Mr. Dinsmore’s beneficial ownership in the Registrant’s shares
was in the range of $100,001-$500,000.
ITEM
9. PURCHASES OF
EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED
PURCHASERS.
During
the period covered by this report, there were no purchases made by or on behalf
of the Registrant or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3)
under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares or other units of
any class of the Registrant’s equity securities that is registered by the
Registrant pursuant to Section 12 of the Exchange Act (15 U.S.C.
781).
ITEM
10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
There
have been no material changes to the procedures by which shareholders may
recommend nominees to the Registrant’s board of trustees since those procedures
were last disclosed in response to the requirements of Item 22(b)(15) of
Schedule 14A (17 CFR 240.14a-101), or this Item 10 of Form N-CSR.
ITEM
11. CONTROLS AND PROCEDURES.
Conclusions
of principal officers concerning controls and procedures:
(a) As of
December 8, 2008, an evaluation was performed under the supervision and with the
participation of the officers of the Registrant, including the Principal
Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), to assess the
effectiveness of the Registrant’s disclosure controls and procedures, as that
term is defined in Rule 30a-3(c) (17 CFR 240.30a-3(c)) under the Investment
Company Act of 1940 (the “Act”), as amended. Based on that evaluation, as
required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and Rules
13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or
240.15d-15(b)), the Registrant’s officers, including the PEO and PFO, concluded
that, as of December 8, 2008, the Registrant’s disclosure controls and
procedures were reasonably designed so as to ensure: (1) that information
required to be disclosed by the Registrant on Form N-CSR is recorded, processed,
summarized and reported within the time periods specified by the rules and forms
of the Securities and Exchange Commission; and (2) that material information
relating to the Registrant is made known to the PEO and PFO as appropriate to
allow timely decisions regarding required disclosure.
(b) There
have been no changes in the Registrant’s internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that
occurred during the second fiscal quarter of the period covered by this report
that has materially affected, or is reasonably likely to materially affect, the
Registrant’s internal control over financial reporting.
ITEM
12. EXHIBITS
(a)(1)
Not applicable. See Registrant’s response to Item 2, above.
(a)(2)
Certifications of the principal executive officer and the principal financial
officer pursuant to Rule 30a-2(a) under the Act (17 CFR 270.30a-2(a)), are
attached hereto.
(a)(3)
There were no written solicitations to purchase securities under Rule 23c-1
under the Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the Registrant to ten or more persons.
(b)
Certifications of the principal executive officer and the principal financial
officer, as required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)), Rule
13a-14(b) or Rule 15d-14(b) under the Exchange Act (17 CFR 240.13a-14(b) or
240.15d-14(b)), and Section 1350 of Chapter 63 of Title 18 of the United States
Code (18 U.S.C. 1350) are attached hereto.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Bancroft
Fund Ltd.
By: /s/
Thomas H. Dinsmore
Thomas H.
Dinsmore
Chairman
of the Board and
Chief
Executive Officer
(Principal
Executive Officer)
Date:
January 5, 2009
Pursuant
to the requirements of the Securities Exchange Act of 1934 and the Investment
Company Act of 1940, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated.
By:
/s/ Thomas H. Dinsmore
Thomas H.
Dinsmore
Chairman
of the Board and
Chief
Executive Officer
(Principal
Executive Officer)
Date:
January 5, 2009
By: /s/
Gary I. Levine
Gary I.
Levine
Chief
Financial Officer
(Principal
Financial Officer)
Date:
January 5, 2009