BANCROFT FUND LTD — Proxy Solicitation & Information Statement 1999

Jan 4, 1999

1 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) Bancroft Convertible Fund, INC - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [x] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: - -------------------------------------------------------------------------------- (2) Form, schedule or registration statement no.: - -------------------------------------------------------------------------------- (3) Filing party: - -------------------------------------------------------------------------------- (4) Date filed: - -------------------------------------------------------------------------------- 2 BANCROFT CONVERTIBLE FUND, INC. 65 MADISON AVENUE MORRISTOWN, NEW JERSEY 07960 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MONDAY, FEBRUARY 22, 1999 11 A.M., EASTERN TIME 65 MADISON AVENUE SUITE 550 MORRISTOWN, NEW JERSEY 07960 To Stockholders of Bancroft Convertible Fund, Inc.: We cordially invite you to attend our 1999 Annual Meeting of Stockholders to: 1. Elect three directors to three-year terms. 2. Ratify the board's appointment of PricewaterhouseCoopers LLP as independent accountants for fiscal year 1999. 3. To transact any other business that properly comes before the meeting. You may vote on these proposals in person or by proxy. If you cannot attend the meeting, we urge you to complete and return the enclosed proxy promptly in the enclosed, self-addressed, stamped envelope so that your shares will be represented and voted at the meeting according to your instructions. Of course, if you attend the meeting, you may withdraw your proxy and vote your shares. Only stockholders of record at the close of business on December 29, 1998 will be entitled to vote at the meeting or any adjournment of the meeting. Thomas H. Dinsmore Chairman of the Board of Directors December 30, 1998 3 BANCROFT CONVERTIBLE FUND, INC. 65 MADISON AVENUE MORRISTOWN, NEW JERSEY 07960 ------------------------ PROXY STATEMENT ------------------------ ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FEBRUARY 22, 1999 INFORMATION ABOUT THE ANNUAL MEETING AND VOTING PROXY STATEMENT We are sending you this Proxy Statement and the enclosed proxy card because the Company's Board of Directors is soliciting your proxy to vote at the 1999 Annual Meeting of Stockholders. This Proxy Statement summarizes the information you need to know to cast an informed vote at the Annual Meeting. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card. We plan to begin sending this Proxy Statement, the attached Notice of Annual Meeting and the enclosed proxy card on December 30, 1998 to all stockholders entitled to vote. Stockholders who owned shares of the Company's common stock at the close of business on December 29, 1998 are entitled to vote. On this record date, there were 3,475,291 shares outstanding. We know of no beneficial owner of more than five percent of those shares. Each share of the Company's common stock that you own entitles you to one vote. (A fractional share has a fractional vote.) We are also sending along with this Proxy Statement the Company's 1998 Annual Report, which includes our financial statements. VOTING BY PROXY Whether you plan to attend the Annual Meeting or not, we urge you to complete, sign and date the enclosed proxy card and to return it promptly in the envelope provided. Returning the proxy card will not affect your right to attend the Annual Meeting and vote. If you properly fill in your proxy card and send it to us in time to vote, your "proxy" (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your shares as recommended by the Board as follows: - FOR the election of all three nominees for director. - FOR ratification of the selection of independent accountants for 1999. If any other matter is presented, your proxy will vote in accordance with his or her best judgment. At the time this Proxy Statement went to press, we knew of no matters that needed to be acted on at the Annual Meeting other than those discussed in this Proxy Statement. 1 4 If you give a proxy, you may revoke it at any time before it is exercised. You can do this in one of three ways: - You may send in another proxy with a later date. - You may notify the Company's secretary in writing before the Annual Meeting that you have revoked your proxy. - You may vote in person at the Annual Meeting. VOTING IN PERSON If you do attend the Annual Meeting and wish to vote in person, we will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank or other nominee, you must bring a letter from the nominee indicating that you are the beneficial owner of the shares on December 29, 1998, the record date for voting, and authorizing you to vote. QUORUM REQUIREMENT A quorum of stockholders is necessary to hold a valid meeting. A quorum will exist if stockholders entitled to vote a majority of all shares outstanding on the record date are present in person or by proxy. Under rules applicable to broker-dealers, if your broker holds your shares in its name, the broker will be entitled to vote your shares on Proposal 1 and Proposal 2 even if it has not received instructions from you. Abstentions will count as present for establishing a quorum. VOTE NECESSARY TO APPROVE A PROPOSAL Directors are elected by a plurality vote of shares present at the meeting, meaning that the director nominee with the most affirmative votes for a particular slot is elected for that slot. In an uncontested election for directors, the plurality requirement is not a factor. The affirmative vote of the majority of the shares present at the Annual Meeting is needed to ratify the selection of independent accountants. Abstentions will not count as votes cast and will have the effect of votes against this proposal. PROPOSAL 1 ELECTION OF DIRECTORS STRUCTURE OF THE BOARD OF DIRECTORS The Company's Board of Directors is divided into three classes for purposes of election. One class is elected at each annual meeting of stockholders. Directors in each class serve for a three-year term. At the 1999 Annual Meeting, the terms of three directors are expiring. The directors nominated for election at this Annual Meeting would each hold office for a three-year term expiring in 2002. Other directors are not up for election this year and will continue in office for the 2 5 rest of their terms. Each of the nominees is willing to serve as a director. However, if a nominee becomes unavailable for election, proxies will vote for another nominee proposed by the Board or, as an alternative, the Board may keep the position vacant or reduce the number of directors. NOMINEES FOR DIRECTORS The Board has approved the nomination of the following people to serve as directors until the annual meeting of stockholders to be held in 2002. Each of the nominees is currently a director of the Company. THOMAS H. DINSMORE, 45, has been Chairman and Chief Executive Officer of the Company, Ellsworth Convertible Growth and Income Fund, Inc. (a closed-end investment company) and Davis-Dinsmore Management Company (investment adviser to the Company and to Ellsworth) since 1996. From 1985 to 1996, Mr. Dinsmore was President of the Company; from 1986 to 1996, he was President of Ellsworth; and from 1988 to 1996, he was President of Davis-Dinsmore. Mr. Dinsmore has been a director of the Company since 1985 and is also a director of Ellsworth and Davis-Dinsmore. DONALD M. HALSTED, Jr., 71, has been a self-employed businessman since 1983. Mr. Halsted has been a director of the Company since 1970 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc. and Aquarian Company, which is a water company. DUNCAN O. MCKEE, 67, retired in 1988 from the practice of law as a partner at the law firm of Ballard Spahr Andrews & Ingersoll, LLP. Mr. McKee was Director Emeritus of the Company and Ellsworth Convertible Growth and Income Fund, Inc. from 1988 to 1996. He has been a director of the Company since 1996 and is also a director of Ellsworth. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THESE NOMINEES. INFORMATION ABOUT THE COMPANY'S OTHER DIRECTORS Information about the Company's other directors is presented below. DIRECTORS WITH TERMS EXPIRING IN 2000 WILLIAM A. BENTON, 65, has been a limited partner of Gavin, Benton, & Co., a New York Stock Exchange specialist firm, and a partner in BE Partners, a small options market maker, since 1991. Mr. Benton has been a director of the Company since 1994 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc. ELIZABETH C. BOGAN, Ph.D., 54, has been a Senior Lecturer in Economics at Princeton University since 1992. Dr. Bogan has been a director of the Company since 1990 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc. - --------------- * Mr. Dinsmore is an interested person (within the meaning of the Investment Company Act of 1940) of the Company and Davis-Dinsmore Management Company, the Company's investment adviser, because he is an officer of the Company and an officer, director and holder of more than 5 percent of the outstanding shares of voting common stock of Davis-Dinsmore. 3 6 GEORGE R. LIEBERMAN, 76, retired in 1988 as Chief Executive Officer of Lieberman-Appalucci, an advertising firm. Mr. Lieberman has been a director of the Company since 1987 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc. DIRECTORS WITH TERMS EXPIRING IN 2001 JANE D. O'KEEFFE, 43, has been President of the Company, Ellsworth Convertible Growth and Income Fund, Inc. and Davis-Dinsmore Management Company since 1996. In 1996 she was Executive Vice President of the Company and Ellsworth. From 1994 to 1996, Ms. O'Keeffe was Vice President of the Company and Ellsworth and Executive Vice President of Davis-Dinsmore. From 1988 to 1994, she was Vice President of Fiduciary Trust International. Ms. O'Keeffe has been a director of the Company since 1995 and is also a director of Ellsworth and Davis-Dinsmore. GORDON F. AHALT, 70, has been President of G.F.A. Inc., a petroleum industry consulting company, since 1982 and a consultant with W. H. Reaves & Co., Inc., an asset management company, since 1987. Mr. Ahalt has been a director of the Company since 1982 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc.; The Harbinger Group, an investment firm; Cal Dive International, a diving service; and The Houston Exploration Company, an oil and gas exploration company. NICOLAS W. PLATT, 45, has been Managing Director of Corporate Practice at the public relations firm of Burson Marsteller since 1997. From 1995 to 1997, he was Senior Managing Director at Bozell-Sawyer Miller, a public relations firm; and from 1993 to 1995, he was Executive Vice President of Novatel Communications Ltd. He has been a director of the Company since 1997 and is also a director of Ellsworth Convertible Growth and Income Fund, Inc. BOARD MEETINGS AND COMMITTEES The directors attended at least 75 percent of all Board and committee meetings held during the 1998 fiscal year. The Board of Directors met six times during the 1998 fiscal year. AUDIT COMMITTEE The audit committee was created to review the performance of the Company's accounting and financial staff and to meet with the Company's independent accountants to review the scope of the audits of the Company, the accounting policies and new developments in financial accounting standards applicable to investment companies. Dr. Bogan, Mr. Halsted and Mr. Lieberman serve on the audit committee, which met once during the 1998 fiscal year. NOMINATING COMMITTEE The nominating committee was created to recommend individuals for nomination as directors of the Company. The names of potential director candidates are drawn from a number of sources, including recommendations from members of the Board, management and stockholders. Stockholders wishing to recommend Board nominees should submit their recommendations in writing to - --------------- * Ms. O'Keeffe is an interested person of the Company and Davis-Dinsmore Management Company because she is an officer of the Company and officer, director and holder of more than 5 percent of the outstanding shares of voting common stock of Davis-Dinsmore. 4 7 the Secretary at the Company's executive offices, with the submitting stockholder's name and address and pertinent information about the proposed nominee similar to that set forth in this proxy statement for Board nominees, including current principal occupation and employment, principal positions held during the last five years and a list of all companies for which the individual serves as a director. Messrs. Halsted and Lieberman serve on the nominating committee which met once during the 1998 fiscal year. DIRECTORS' COMPENSATION Mr. Dinsmore and Ms. O'Keeffe are the only officers of the Company or Davis-Dinsmore Management Company who serve on the Board of Directors. Each director who is not an officer of the Company or Davis-Dinsmore currently receives an annual fee of $2,500 and $1,000 plus expenses for each Board meeting attended and a fee of $100 per meeting of committees of the Board plus expenses for each committee meeting attended. Davis-Dinsmore Management Company is the Company's investment adviser and is also the investment adviser to Ellsworth Convertible Growth and Income Fund, Inc. Because of this connection, Ellsworth and the Company make up a "fund complex." The following table shows the compensation that was paid to the directors solely by the Company as well as by the fund complex as a whole during the 1998 fiscal year.

PROPOSAL 2 SELECTION OF INDEPENDENT ACCOUNTANTS The Board of Directors seeks your ratification of the Board's appointment of PricewaterhouseCoopers LLP as the Company's independent accountants for the 1999 fiscal year. We expect that a representative from PricewaterhouseCoopers will be present at the Annual Meeting to respond to appropriate questions from stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2. 5 8 ADDITIONAL INFORMATION ABOUT THE COMPANY INVESTMENT ADVISER Davis-Dinsmore Management Company, 65 Madison Avenue, Morristown, New Jersey 07960, is the Company's investment adviser. EXECUTIVE OFFICERS The Company's executive officers are elected by the Board of Directors and receive no compensation from the Company. Information about these officers is presented below. THOMAS H. DINSMORE is Chairman and Chief Executive Officer of the Company. Mr. Dinsmore is also a director of the Company and has been nominated for reelection at this Annual Meeting. Information about Mr. Dinsmore is presented earlier in this Proxy Statement under "Proposal 1, Election of Directors -- Nominees for Directors." JANE D. O'KEEFFE is President of the Company. Ms. O'Keeffe is also a director of the Company and information about her is presented earlier in this Proxy Statement under "Proposal 1, Election of Directors -- Information About the Company's Other Directors -- Directors with Terms Expiring in 2001." SIGMUND LEVINE, 74, has been Senior Vice President and Secretary of the Company since 1996 and 1982, respectively. He has been an officer of the Company since 1982. From 1993 to 1996, he was Executive Vice President of the Company. Mr. Levine has been Senior Vice President and Secretary of Ellsworth Convertible Growth and Income Fund, Inc. since 1996 and 1986, respectively, and was Executive Vice President of Ellsworth from 1993 to 1996. Mr. Levine has been Senior Vice President and Secretary of Davis-Dinsmore Management Company since 1997 and 1982, respectively, and was Treasurer of Davis-Dinsmore from 1982 to 1997. H. TUCKER LAKE, 51, has been Vice President, Trading of the Company since joining the Company in 1994. He has been Vice President, Trading of Ellsworth Convertible Growth and Income Fund, Inc. during the same period. He has been Vice President of Davis-Dinsmore Management Company since 1997. Prior to 1994, Mr. Lake was a Sales Associate with Coldwell Banker, Schlott Realtors. GARY I. LEVINE, 41, has been Treasurer and Assistant Secretary of the Company since 1993 and 1986, respectively. He has been Treasurer and Assistant Secretary of Ellsworth Convertible Growth and Income Fund, Inc. during the same periods. Mr. Levine was Assistant Treasurer of Davis-Dinsmore Management Company from 1994 to 1997 and has been Treasurer and Assistant Secretary of Davis-Dinsmore since 1997 and 1994, respectively. CERTAIN RELATIONSHIPS Thomas H. Dinsmore and Jane D. O'Keeffe are brother and sister. H. Tucker Lake is their cousin. Sigmund Levine is the father of Gary I. Levine. 6 9 SECURITY OWNERSHIP OF MANAGEMENT The Company's directors and officers own the shares of the Company's common stock shown on the following table:

• --------------- * Represents for each director and officer less than 1 percent of the outstanding shares of the Company. As of December 29, 1998, directors and officers of the Company beneficially owned in the aggregate 21,807 shares of the Company representing approximately 0.6 percent of the outstanding shares. Except as otherwise indicated, each director and officer possessed sole investment and voting power with respect to shares beneficially owned. (1) Does not include 500 shares owned by his wife, as to which shares Mr. Ahalt disclaims beneficial ownership. (2) Includes 993 shares as to which Mr. Dinsmore possessed shared investment and voting power; but does not include 1,822 shares owned by his wife, as to which shares Mr. Dinsmore disclaims beneficial ownership. (3) Includes 142 shares as to which Mr. Lake possessed shared investment and voting power. STOCKHOLDER PROPOSALS If there is a proposal that you want stockholders to consider at the annual meeting of stockholders to be held in the year 2000, you must send it to us so that we receive it by September 1, 1999. By order of the Board of Directors, Thomas H. Dinsmore Chairman of the Board of Directors December 30, 1998 7 10 BANCROFT CONVERTIBLE FUND, INC. Annual Meeting to be held February 22, 1999 This Proxy is being solicited on behalf of the Board of Directors The undersigned appoints Thomas H. Dinsmore, Jane D. O'Keeffe and Sigmund Levine, and each of them, attorneys and proxies, with power of substitution in each, to vote and act on behalf of the undersigned at the annual meeting of stockholders of Bancroft Convertible Fund, Inc. (the "Company") at the offices of the Company, 65 Madison Avenue, Suite 550, Morristown, New Jersey 07960 on February 22, 1999 at 11:00 am, and at all adjournments, according to the number of shares of Common Stock which the undersigned could vote if present, upon such subjects as may properly come before the meeting, all as set forth in the notice of the meeting and the proxy statement furnished therewith. UNLESS OTHERWISE MARKED ON THE REVERSE HEREOF, THIS PROXY IS GIVEN WITH AUTHORITY TO VOTE FOR THE DIRECTORS LISTED AND FOR THE PROPOSAL TO RATIFY THE BOARD'S SELECTION OF ACCOUNTANTS. PLEASE FILL IN, DATE AND SIGN THE PROXY ON THE OTHER SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE - FOLD AND DETACH HERE - 11 Please mark your votes as indicated in this example The Board of Directors recommends voting "FOR" Proposal 2. 1. Election as directors of all nominees listed below for the terms specified in the proxy statement. FOR all nominees listed WITHHOLD (except as marked to AUTHORITY the contrary in the to vote space provided) for all nominees [ ] [ ] Board of Directors nominees: Thomas H. Dinsmore, Donald M. Halsted, Jr. and Duncan O. McKee. (INSTRUCTION: To Withhold Authority to vote for any individual nominee, write that nominee's name in the space provided below.) _________ 2. Proposal to ratify selection of accountants. FOR AGAINST ABSTAIN [ ] [ ] [ ] Signature(s)_______ Date______ *NOTE: Please sign as name appears hereon. Joint owners each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. - FOLD AND DETACH HERE - BANCROFT CONVERTIBLE FUND, INC. YOUR VOTE IS IMPORTANT TO US, PLEASE FILL IN, DATE AND SIGN YOUR PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE PROVIDED FOR YOUR CONVENIENCE.