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: 811-2151
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BANCROFT FUND LTD.
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(Exact name of registrant as specified in charter)
65 Madison Avenue, Morristown, New Jersey 07960-7308
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(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:
Martha J. Hays, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street
Philadelphia, PA 19103-7599
Registrant's telephone number, including area code: (973)631-1177
Date of fiscal year end: October 31
Date of reporting period: April 30, 2006
ITEM 1. REPORTS TO STOCKHOLDERS.
BANCROFT FUND LTD.
[LOGO]
2006 SEMI-ANNUAL REPORT
APRIL 30, 2006
Bancroft Fund Ltd. (successor to Bancroft Convertible Fund, Inc.) operates as
a closed-end, diversified management investment company and invests primarily
in convertible securities, with the objectives of providing income and the
potential for capital appreciation -- which objectives the Fund considers to
be relatively equal, over the long-term, due to the nature of the securities
in which it invests.
HIGHLIGHTS
PERFORMANCE THROUGH APRIL 30, 2006 with dividends reinvested
Calendar Cumulative Cumulative
YTD 1 Year 5 Years 10 Years
---------- --------- ---------- ----------
Bancroft market price (a) ....................... 4.55% 15.01% 12.72% 129.73%
Bancroft net asset value (b) .................... 5.62 15.52 21.08 109.74
Closed-end convertible fund average (b) ......... 5.87 16.05 31.86 104.28
S&P 500 (a) ..................................... 5.61 15.41 14.22 135.36
Merrill Lynch All Convertibles Index (a) ........ 6.21 16.39 30.23 128.33
Lehman Aggregate Bond Total Return Index (b) .... (0.83) 0.71 28.57 84.68
PERFORMANCE DATA REPRESENT PAST RESULTS AND DO NOT REFLECT FUTURE PERFORMANCE.
BANCROFT'S PERFORMANCE IN THE TABLE ABOVE HAS NOT BEEN ADJUSTED FOR THE FISCAL
2004 RIGHTS OFFERING; NET ASSET VALUE DILUTION WAS 2.38%.
(a) From Bloomberg L.P. pricing service.
(b) From Lipper, Inc. Closed-End Fund Performance Analysis, dated April 30,
2006.
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QUARTERLY HISTORY OF NAV AND MARKET PRICE
Net Asset Values Market Prices (AMEX, symbol BCV)
Qtr. Ended High Low Close High Low Close
------------ ------ ------ ------- ------ ------ -------
Jul. 05 $21.26 $19.72 $21.26 $18.25 $16.99 $18.25
Oct. 05 21.75 20.79 21.05 18.55 17.52 17.77
Jan. 06 22.06 20.90 22.06 18.65 17.53 18.62
Apr. 06 22.23 21.69 22.20 18.90 18.41 18.69
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DIVIDEND DISTRIBUTIONS (12 MONTHS)
Record Payment Capital
Date Date Income Gains Income
--------- --------- -------- --------- --------
6/15/05 6/29/05 $0.170 -- $0.170
9/15/05 9/29/05 0.170 -- 0.170
12/02/05 12/27/05 0.243 -- 0.243
3/16/06 3/30/06 0.180 -- 0.180
-------- --------
$0.763 $0.763
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TO OUR SHAREHOLDERS ------------------------------------------------------------
June 12, 2006
This is our first shareholder report since the Fund reorganized as a
Delaware statutory trust, and changed its name to Bancroft Fund Ltd. As a
Delaware statutory trust, the amount of state taxes that the Fund will pay
annually will be reduced, and the Fund will enjoy a higher flexibility in
governance. For example, from time to time, in between scheduled meetings of
the Board, the trustees are asked to approve certain matters affecting the
Fund. Formerly, all board members were required to sign a consent
approving such matters. As a Delaware statutory trust, the trustees are
permitted to act between regular meetings by a consent signed by at least 75%
of the trustees. This will permit the Board to act in a timelier manner if a
trustee is unavailable to approve such action.
The convertible market has undergone many major changes over the thirty-five
years that Bancroft has existed. One of the most significant was the creation
of mandatory conversion securities (a type of convertible that has a required
conversion or redemption feature). These convertibles usually provide a
much higher yield than their underlying common stock, but rather than the
holder having the option of taking the shares or cash at maturity or
redemption, the holder must convert even if conversion value is less than issue
price. Issues of this type became a sizeable portion of the convertible
market starting in the '90s. While these issues (sometimes known as DECS,
PERCS, or ELKS) tend to be more volatile than traditional convertibles, they
have performed well as a group. According to Citigroup, since December 1994
the mandatory portion of the convertible market has provided the best
performance, followed by cash coupon convertible bonds, convertible
preferreds and zero coupon bonds (which also tend to be the least volatile).
The convertible securities market also has undergone substantial changes over
the last two years. According to Citigroup, the average premium-to-conversion
value (the positive difference between the market price of a convertible
security and the value of the underlying common stock) for May 2004 was 42.9%;
by May 2005 it had fallen to 35.2% and this May it was 30.3%. Citigroup also
measured a decline in current yield from 3.9% in 2004 and 2005 to 3.5% in May
2006. Much of this premium compression and current yield decline was due to
rising equity prices. The higher premium and current yield levels in 2004
made for a convertible market that was less equity sensitive and more interest
rate sensitive than it is now. The convertible market also appears to have
ended its decline in total market value over the last three years. New issues
and market appreciation were greater than redemptions as Merrill Lynch
measured a rise in the market value from $263 billion in 2005 to $266 billion
in May 2006.
The Fund's performance based on industry exposure has changed recently. While
positive returns continue to come from the energy sector, we have also seen
better performance in our aerospace and defense exposure. Underperforming
industries have been health care and pharmaceuticals. We believe these
underperforming industries lagged due to the perception that there will be
greater government involvement in these businesses.
continued on the following page
Page 1
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TO OUR SHAREHOLDERS (continued)-------------------------------------------------
For the ten-year period ended April 30, 2006, Bancroft's net asset value (NAV)
had outperformed the average NAV performance of the closed-end funds included
in the closed-end convertible fund category tracked by Lipper, Inc. and
published in the Lipper Closed-End Performance Analysis. However, for the one-
year, three-years and five-years ended April 30, 2006, the Fund underperformed
the average NAV of the eleven funds in its category.
Visit our website, www.bancroftfund.com, for additional information on the
Fund, such as a monthly portfolio summary which lists the Fund's largest
holdings. Quarterly updates may be found in the Financial Reports section, and
other financial data is often included in press releases.
The results of the 2006 annual meeting of shareholders are shown in the
Miscellaneous Notes section of this report. We thank you for your support. At
its May meeting, the Board of Trustees declared a dividend of $0.18 per share.
The dividend consists of undistributed net investment income and will be
payable on June 29, 2006 to shareholders of record on June 15, 2006.
/s/ Thomas H. Dinsmore
Thomas H. Dinsmore
Chairman of the Board
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MAJOR PORTFOLIO CHANGES by underlying common stock------------------------------
Six months ended April 30, 2006
ADDITIONS REDUCTIONS
DRS Technologies,Inc. Advanced Micro Devices, Inc.
E*TRADE Financial Corp. Best Buy Co., Inc.
Equinix, Inc. Chesapeake Energy Corp.
(EXCHANGEABLE FROM CREDIT SUISSE
FIRST BOSTON (USA), INC.) Community Health Systems, Inc.
Intel Corp. Comverse Technology, Inc.
LSB Industries, Inc. L-3 Communications Holdings, Inc.
Maverick Tube Corp. Lear Corp.
Microsoft Corp. OMI Corp.
(EXCHANGEABLE FROM LEHMAN BROTHERS
HOLDINGS, INC.) Nortel Networks Corp.
St. Jude Medical, Inc. The Williams Companies, Inc.
Texas Industries, Inc. Valero Energy Corp.
(EXCHANGEABLE FROM TXI CAPITAL
TRUST I)
Page 2
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LARGEST INVESTMENT HOLDINGS by underlying common stock -------------------------
Value % Total
(Note 1) Net Assets
------------ ------------
The Walt Disney Company ....................................... $ 4,270,000 3.4%
An entertainment company which conducts operations in
media networks, studio entertainment, theme parks and
resorts, consumer products, and Internet and direct
marketing.
Teva Pharmaceutical Industries Ltd. ........................... 3,236,875 2.6
Develops, manufactures and markets generic and branded
human pharmaceuticals and active pharmaceutical ingredients.
(exchangeable from Ivax Corp., Teva Pharmaceutical Finance
Co. B.V. and Teva Pharmaceutical Finance Co., LLC)
Nuveen Investments, Inc. ...................................... 3,142,478 2.5
The company's principal activities are asset management and
related research, and the development, marketing and
distribution of investment products and services.
(exchangeable from Merrill Lynch & Co., Inc. and Morgan
Stanley, Inc.)
The St. Paul Travelers Companies, Inc. ........................ 3,018,000 2.4
Provides a broad range of insurance products and services
for the commercial and consumer markets.
Washington Mutual, Inc. ....................................... 2,803,500 2.3
A financial services company that provides a diversified
line of products and services to consumers and small- to
mid-sized businesses.
Freeport-McMoRan Copper and Gold, Inc. ........................ 2,794,500 2.2
Is involved in mineral exploration and development, mining,
and milling of copper, gold and silver. The company is also
involved in smelting and refining copper concentrates.
Celanese Corp. ................................................ 2,624,375 2.1
A global industrial chemicals company that processes raw
materials and natural products into chemicals and
chemical-based products.
U.S. Bancorp .................................................. 2,500,000 2.0
A diversified financial services company that provides
lending and depository services, cash management, foreign
exchange, trust and investment management services.
The TJX Companies, Inc. ....................................... 2,482,500 2.0
Retails off-price apparel and home fashions. The company
currently operates T.J. Maxx, Marshalls, HomeGoods, A.J.
Wright, Winners and T.K. Maxx stores.
Genworth Financial, Inc. ...................................... 2,432,250 2.0
Provides life insurance products, long-term care insurance ------------ ------------
and mortgage guarantee insurance coverage on residential
mortgage loans.
(exchangeable from Citigroup Funding, Inc.)
Total ......................................................... $29,304,478 23.5%
============ ============
Page 3
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MAJOR INDUSTRY EXPOSURE --------------------------------------------------------
Aerospace and Defense ----------> 4.5%
Banking/Savings and Loan ----------------------> 8.7%
Energy ----------------------> 8.7%
Entertainment -----------> 5.0%
Financial and Insurance ---------------------------------------> 15.1%
Health Care ------> 3.7%
Pharmaceuticals ------------------------> 9.9%
Retail -------> 3.8%
Technology ------------------------------------> 13.7%
Telecommunications ----------> 4.2%
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DIVERSIFICATION OF ASSETS-------------------------------------------------------
% Total Net Assets
----------------------------------
Value Six Months Ended Year Ended
(Note 1) April 30, 2006 October 31,2005
------------ --------------- ---------------
Aerospace and Defense ............ $ 5,618,014 4.5% 2.6%
Automotive ....................... -- -- 2.2
Banking/Savings and Loan ......... 10,893,578 8.7 9.6
Building Products ................ 1,848,945 1.5 --
Chemicals ........................ 4,354,375 3.5 3.4
Consumer Goods ................... 3,061,797 2.5 2.6
Energy ........................... 10,904,250 8.7 13.1
Entertainment .................... 6,252,500 5.0 4.3
Financial and Insurance .......... 18,881,677 15.1 15.4
Financial Services ............... 2,285,000 1.8 0.8
Foods ............................ 2,018,600 1.6 2.6
Health Care ...................... 4,636,250 3.7 3.1
Mining ........................... 2,794,500 2.2 1.9
Multi-Industry ................... 2,448,750 2.0 0.7
Pharmaceuticals .................. 12,325,999 9.9 10.5
Retail ........................... 4,725,625 3.8 6.4
Technology ....................... 17,113,178 13.7 8.4
Telecommunications ............... 5,226,466 4.2 5.2
Utilities ........................ 1,644,375 1.3 1.5
Short-Term Securities ............ 6,507,469 5.2 4.1
------------ -------- --------
TOTAL INVESTMENTS ............. 123,541,348 98.9 98.4
Other Assets, Net of Liabilities . 1,356,745 1.1 1.6
------------ -------- --------
TOTAL NET ASSETS .............. $124,898,093 100.0% 100.0%
============ ======== ========
PAGE 4
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PORTFOLIO OF INVESTMENTS APRIL 30, 2006 (UNAUDITED)-----------------------------
Principal Value
Amount (Note 1)
----------- ----------
CONVERTIBLE BONDS AND NOTES -- 55.7%
AEROSPACE AND DEFENSE -- 3.5%
$1,000,000 AAR Corp. 1.75% 2026 cv. sr. notes (BB-)
(Acquired 01/26/06 - 01/27/06; Cost $1,013,597) (1) .................... $1,086,250
1,000,000 Ceradyne, Inc. 2.875% 2035 sr. sub. cv. notes (NR) (2) ................. 1,162,500
2,000,000 DRS Technologies, Inc. 2% 2026 cv. sr. notes (B2)
(Acquired 01/30/06; Cost $2,026,875) (1,2) ............................. 2,132,500
----------
4,381,250
----------
BANKING/SAVINGS AND LOAN -- 2.0%
2,500,000 U.S. Bancorp floating rate 2035 cv. sr. deb. (Aa2) ..................... 2,500,000
----------
CONSUMER GOODS -- 1.4%
1,375,000 Church & Dwight Co., Inc. 5.25% 2033 cv. sr. deb. (Ba2) ................ 1,777,188
----------
ENERGY -- 4.9%
1,500,000 Maverick Tube Corp. 1.875% 2025 cv. sr. sub. notes (B) ................. 2,214,375
1,500,000 Oil States International, Inc. 2.375% 2025 contingent
cv. sr. notes (NR) ..................................................... 2,173,125
1,500,000 Rentech, Inc. 4% 2013 cv. sr. notes (NR) ............................... 1,792,500
----------
6,180,000
----------
ENTERTAINMENT -- 5.0%
2,000,000 EchoStar Communications Corp. 5.75% 2008 cv. sub. notes (B2) ........... 1,982,500
4,000,000 The Walt Disney Company 2.125% 2023 cv. sr. notes (A3) ................. 4,270,000
----------
6,252,500
----------
FINANCIAL AND INSURANCE -- 1.0%
1,125,000 FTI Consulting, Inc. 3.75% 2012 cv. sr. sub. notes (Ba3) ............... 1,307,813
----------
FINANCIAL SERVICES -- 1.8%
2,000,000 Euronet Worldwide, Inc. 3.50% 2025 cv. deb. (NR) (2) ................... 2,285,000
----------
FOODS -- 0.8%
1,000,000 Lehman Brothers Holdings, Inc. 3% 2012 medium-term notes (A1)
(performance linked to General Mills, Inc. common stock) (2) ........... 963,600
----------
HEALTH CARE -- 3.7%
2,000,000 Manor Care, Inc. 2.125% 2035 cv. sr. notes (Baa3) ...................... 2,165,000
1,000,000 Omnicare, Inc. 3.25% 2035 cv. sr. deb. (B1) (2) ........................ 986,250
1,500,000 St. Jude Medical, Inc. 2.8% 2035 cv. sr. deb. (BBB+) (2) ............... 1,485,000
----------
4,636,250
----------
MULTI-INDUSTRY -- 2.0%
1,500,000 LSB Industries, Inc. 7% 2011 cv. sr. sub. deb. (NR)
(Acquired 03/01/06; Cost $1,500,000) (1) ............................... 1,593,750
1,000,000 Lehman Brothers Holdings, Inc. 1% 2011 medium-term notes (A1)
(performance linked to Cendant Corp. common stock) (2) ................. 855,000
----------
2,448,750
----------
PAGE 5
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PORTFOLIO OF INVESTMENTS APRIL 30, 2006 (CONTINUED)-----------------------------
Principal Value
Amount (Note 1)
----------- -----------
CONVERTIBLE BONDS AND NOTES -- CONTINUED
PHARMACEUTICALS -- 8.0%
$2,000,000 Alza Corp. 0% 2020 cv. sub. deb. (Aa1)
(exch. for Johnson & Johnson common stock) ............................ $ 1,620,000
1,250,000 Amgen, Inc. 0.125% 2011 cv. sr. notes (A2)
(Acquired 02/14/06 - 02/15/06; Cost $1,253,607) (1) ................... 1,196,875
500,000 Amgen, Inc. 0.375% 2013 cv. sr. notes (A2)
(Acquired 02/14/06; Cost $500,000) (1) ................................ 477,500
462,000 BioMarin Pharmaceutical, Inc. 2.5% 2013 cv. sr. sub. notes (NR) ....... 463,733
1,000,000 Bristol-Myers Squibb Co. floating rate 2023 cv. sr. deb. (A1) ......... 1,003,750
1,000,000 Cephalon, Inc. 2% 2015 cv. sr. sub. notes (B-) ........................ 1,511,250
1,000,000 Ivax Corp. 4.5% 2008 cv. sr. sub. notes (NR)
(exch. for Teva Pharmaceutical Industries Ltd. ADR and cash) .......... 1,012,500
1,000,000 Teva Pharmaceutical Finance Co., LLC 0.25% 2026 cv. sr. deb. (Baa2)
(exch. for Teva Pharmaceutical Industries Ltd. ADR) ................... 1,002,500
1,750,000 Teva Pharmaceutical Finance Co. B.V. 1.75% 2026 cv. sr. deb. (Baa2)
(exch. for Teva Pharmaceutical Industries Ltd. ADR) ................... 1,728,125
-----------
10,016,233
-----------
RETAIL -- 3.8%
1,000,000 Amazon.com, Inc. 4.75% 2009 cv. sub. notes (B2) ....................... 952,500
1,250,000 Casual Male Retail Group, Inc. 5% 2024 cv. sr. sub. notes (NR) ........ 1,290,625
3,000,000 The TJX Companies, Inc. 0% 2021 LYONs (Baa1) .......................... 2,482,500
-----------
4,725,625
-----------
TECHNOLOGY -- 12.3%
1,000,000 C&D Technologies, Inc. 5.25% 2025 cv. sr. notes (NR)
(Acquired 11/16/05; Cost $1,000,000) (1) .............................. 1,182,500
2,000,000 Citigroup Funding, Inc. 1% 2010 medium-term notes (Aa1)
(exch. for the cash equivalent of a basket of technology stocks) (2) .. 1,860,400
1,000,000 Coherent, Inc. 2.75% 2011 cv. sub. notes (NR)
(Acquired 03/07/06 - 03/08/06; Cost $1,012,181) (1) ................... 1,161,250
1,000,000 Conexant Systems, Inc. 4% 2026 cv. sub. notes (NR)
(Acquired 03/02/06; Cost $987,838) (1) ................................ 1,047,500
1,500,000 Intel Corp. 2.95% 2035 jr. sub. cv. deb. (A-) (2) ..................... 1,288,125
2,250,000 International Rectifier Corp. 4.25% 2007 cv. sub. notes (B2) .......... 2,202,188
1,500,000 LSI Logic Corp. 4% 2010 cv. sub. notes (B) ............................ 1,610,625
1,500,000 Lehman Brothers Holdings, Inc. 1% 2009 medium-term notes (A1)
(performance linked to Microsoft Corp. common stock) (2) .............. 1,408,275
1,000,000 Richardson Electronics, Ltd. 8% 2011 cv. sr. sub. notes (NR)
(Acquired 11/21/05; Cost $1,000,000) (1) .............................. 980,000
1,500,000 Sybase, Inc. 1.75% 2025 cv. sub. notes (NR) ........................... 1,528,125
1,000,000 Vishay Intertechnology, Inc. 3.625% 2023 cv. sub. notes (B3) .......... 1,037,500
-----------
15,306,488
-----------
TELECOMMUNICATIONS -- 4.2%
750,000 Comverse Technology, Inc. 0% 2023 ZYPS (BB-) (3) ...................... 1,003,125
1,000,000 Lucent Technologies, Inc. 2.75% 2023 series A cv. sr. deb. (B1) ....... 1,021,250
2,000,000 Tekelec, Inc. 2.25% 2008 sr. sub. cv. notes (NR) ...................... 2,027,500
1,057,000 Time Warner Telecom, Inc. 2.375% 2026 cv. sr. deb. (Caal) ............. 1,174,591
-----------
5,226,466
-----------
PAGE 6
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PORTFOLIO OF INVESTMENTS APRIL 30, 2006 (CONTINUED)-----------------------------
Principal Value
Amount (Note 1)
----------- -----------
CONVERTIBLE BONDS AND NOTES -- CONTINUED
UTILITIES -- 1.3%
$1,500,000 CMS Energy Corp. 2.875% 2024 cv. sr. notes (B1) ....................... 1,644,375
-----------
TOTAL CONVERTIBLE BONDS AND NOTES ..................................... $69,651,538
-----------
Shares CONVERTIBLE PREFERRED STOCKS -- 22.8%
-----------
AEROSPACE AND DEFENSE -- 1.0%
40,000 Ionatron, Inc. 6.5% series A redeemable cv. pfd. (NR)
(Acquired 10/27/05; Cost $970,253) (1) ................................ 1,200,000
-----------
BANKING/SAVINGS AND LOAN -- 6.7%
40,000 National Australia Bank Ltd. 7.875% exch. capital units (NR) .......... 1,855,625
45,000 New York Community Bancorp, Inc. 6% BONUSES units (Baa2) .............. 2,115,703
35,000 Sovereign Capital Trust IV 4.375% PIERS (Ba1)
(exch. for Sovereign Bancorp, Inc. common stock) (2) .................. 1,618,750
50,000 Washington Mutual Capital Trust 5.375% PIERS units (BBB)
(exch. for Washington Mutual, Inc. common stock) ...................... 2,803,500
-----------
8,393,578
-----------
BUILDING PRODUCTS -- 1.5%
32,500 TXI Capital Trust I 5.5% SPuRS (B2)
(exch. for Texas Industries, Inc. common stock) ....................... 1,848,945
-----------
CHEMICALS -- 2.1%
85,000 Celanese Corp. 4.25% cv. perp. pfd. (NR) .............................. 2,624,375
-----------
ENERGY -- 2.8%
20,000 Chesapeake Energy Corp. 4.5% cum. cv. pfd. (B+) ....................... 1,900,000
9,000 Semco Energy, Inc. 5% series B cv. cum. pfd. (B-) ..................... 1,615,500
-----------
3,515,500
-----------
FINANCIAL AND INSURANCE -- 6.5%
75,000 Citigroup Funding, Inc. variable rate exch. notes (Aa1)
(exch. for Genworth Financial, Inc. common stock) ..................... 2,432,250
15 Fannie Mae 5.375% non-cumulative cv. pfd. (Aa3)
(Acquired 12/30/04 - 01/11/05; Cost $1,578,125) (1) ................... 1,432,003
20,000 Reinsurance Group of America, Inc. 5.75% PIERS (Baa2) ................. 1,212,500
120,000 The St. Paul Travelers Companies, Inc. 4.5% 2032
cv. jr. sub. notes (Baa1) ............................................. 3,018,000
-----------
8,094,753
-----------
MINING -- 2.2%
2,000 Freeport-McMoRan Copper and Gold, Inc. 5.5% cv. perpetual pfd. (B-) ... 2,794,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS .................................... $28,471,651
-----------
PAGE 7
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PORTFOLIO OF INVESTMENTS APRIL 30, 2006 (CONTINUED)-----------------------------
Value
Shares (Note 1)
----------- -----------
MANDATORY CONVERTIBLE SECURITIES -- 14.7% (4)
CHEMICALS -- 1.4%
40,000 Huntsman Corp. 5% mandatory cv. pfd. 02/16/08 (NR) .................... $ 1,730,000
-----------
CONSUMER GOODS -- 1.0%
35,000 Constellation Brands, Inc. dep. shs. representing 5.75%
series A mandatory cv. pfd. 09/01/06 (B) .............................. 1,284,609
-----------
ENERGY -- 1.0%
10,000 Amerada Hess Corp. 7% mandatory cv. pfd. ACES 12/01/06 (Ba3) .......... 1,208,750
-----------
FINANCIAL AND INSURANCE -- 7.2%
25,000 The Chubb Corp. 7% equity units 08/16/06 (A2) (2) ..................... 906,250
43,500 E*TRADE Financial Corp. 6.125% equity units 11/18/08 (B3) ............. 1,402,875
30,000 Merrill Lynch & Co., Inc. 6.75% mandatory exch. securities 10/15/07
(Aa3) (exch. for Nuveen Investments, Inc. common stock) ............... 1,293,090
80,000 MetLife, Inc. 6.375% common equity units 08/15/08 (BBB+) .............. 2,260,000
42,500 Morgan Stanley, Inc. 5.875% mandatory exch. securities 10/15/08 (Aa3)
(exch. for Nuveen Investments, Inc. common stock) ..................... 1,849,388
45,000 XL Capital, Ltd. 6.5% equity security units 05/15/07 (A3) ............. 990,225
10,000 XL Capital, Ltd. 7% equity security units 02/15/09 (A3) ............... 250,200
-----------
8,952,028
-----------
FOODS -- 0.8%
40,000 Lehman Brothers Holdings, Inc. 6.25% PIES 10/15/07 (A1)
(exch. for General Mills, Inc. common stock) .......................... 1,055,000
-----------
PHARMACEUTICALS -- 1.8%
45,000 Schering-Plough Corp. 6% mandatory cv. pfd. 09/14/07 (Baa3) ........... 2,309,766
-----------
TECHNOLOGY -- 1.4%
30,000 Credit Suisse First Boston (USA), Inc. 5.5% SAILS 11/15/08 (Aa3)
(exch. for Equinix, Inc. common stock) ................................ 1,806,690
-----------
TOTAL MANDATORY CONVERTIBLE SECURITIES (4) ............................ $18,346,843
-----------
COMMON STOCKS -- 0.5%
AEROSPACE AND DEFENSE -- 0.0%
2,643 Ionatron, Inc.
(Acquired 04/17/06; Cost $29,747) (1,3) ............................... 36,764
-----------
FINANCIAL AND INSURANCE -- 0.4%
21,185 E*TRADE Financial Corp. (3) ........................................... 527,083
-----------
TOTAL COMMON STOCKS ................................................... $ 563,847
-----------
PAGE 8
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PORTFOLIO OF INVESTMENTS APRIL 30, 2006 (CONTINUED)-----------------------------
Principal Value
Amount (Note 1)
----------- -----------
SHORT-TERM SECURITIES -- 5.2%
COMMERCIAL PAPER -- 5.2%
$6,500,000 American Express Credit Corp. 4.70% 05/01/06 (P1) .................... $ 6,496,606
------------
U.S. GOVERNMENT OBLIGATIONS -- 0.0%
11,000 U.S. Treasury notes 3.625% 04/30/07 (Aaa) (5) ........................ 10,863
------------
TOTAL SHORT-TERM SECURITIES .......................................... 6,507,469
------------
TOTAL CONVERTIBLE BONDS AND NOTES -- 55.7% ........................... 69,651,538
TOTAL CONVERTIBLE PREFERRED STOCKS -- 22.8% .......................... 28,471,651
TOTAL MANDATORY CONVERTIBLE SECURITIES -- 14.7% ...................... 18,346,843
TOTAL COMMON STOCKS -- 0.5% .......................................... 563,847
TOTAL SHORT-TERM SECURITIES -- 5.2% .................................. 6,507,469
------------
TOTAL INVESTMENTS -- 98.9% ........................................... 123,541,348
OTHER ASSETS AND LIABILITIES, NET -- 1.1% ............................ 1,356,745
------------
TOTAL NET ASSETS -- 100.0% ........................................... $124,898,093
============
(1) Security not registered under the Securities Act of 1933, as amended
(e.g., 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 April 30, 2006 was $13,526,892 which represented 10.8%
of the Fund's net assets.
(2) Contingent payment debt instrument which accrues contingent interest.
See Note 1(f).
(3) Non-income producing security.
(4) These 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.
(5) Collateral for a letter of credit.
INVESTMENT ABBREVIATIONS:
ACES Automatic Convertible Equity Securities.
ADR American Depositary Receipts.
BONUSES Bifurcated Option Note Unit Securities.
LYONs Liquid Yield Option Notes.
PIES Premium Income Exchangeable Securities.
PIERS Preferred Income Equity Redeemable Securities.
SAILS Shared Appreciation Income Linked Securities.
SPuRS Shared Preference Redeemable Securities.
ZYPS Zero Yield Puttable Securities.
Ratings in parentheses by Moody's Investors Service, Inc. or Standard & Poor's.
NR is used whenever a rating is unavailable.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PAGE 9
--------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)---------------------------------
APRIL 30, 2006
---------------
ASSETS:
Investments at value (cost $116,161,711) (Note 1) ........................... $123,541,345
Cash ........................................................................ 75,237
Receivable for securities sold .............................................. 561,107
Dividends and interest receivable ........................................... 748,134
Other assets ................................................................ 47,554
------------
Total assets .............................................................. 124,973,377
------------
LIABILITIES:
Accrued management fee (Note 2) ............................................. 72,590
Other liabilities ........................................................... 2,694
------------
Total liabilities ........................................................... 75,284
------------
NET ASSETS ...................................................................... $124,898,093
============
NET ASSETS CONSIST OF:
Undistributed net investment income ......................................... $ 634,745
Accumulated net realized loss from investment transactions .................. (422,354)
Unrealized appreciation on investments ...................................... 7,379,634
Capital shares (Note 3) ..................................................... 56,251
Additional paid-in capital .................................................. 117,249,817
------------
NET ASSETS ...................................................................... $124,898,093
============
Net asset value per share ($124,898,093 / 5,625,134 outstanding shares) ......... $ 22.20
============
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)---------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 2006
INVESTMENT INCOME (NOTE 1):
Interest ...................................................................... $ 1,733,501
Dividends ..................................................................... 1,251,320
------------
Total Income ................................................................ 2,984,821
------------
EXPENSES (NOTE 2):
Management fee ................................................................ 421,196
Custodian ..................................................................... 8,144
Transfer agent ................................................................ 16,623
Professional fees ............................................................. 45,113
Trustees' fees ................................................................ 66,875
Reports to shareholders ....................................................... 42,500
Administrative services fees .................................................. 12,500
Other ......................................................................... 77,778
------------
Total Expenses .............................................................. 690,729
------------
NET INVESTMENT INCOME ........................................................... 2,294,092
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain from investment transactions ................................ 3,632,940
Net unrealized appreciation of investments .................................... 3,063,957
------------
Net gain on investments ..................................................... 6,696,897
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................ $ 8,990,989
============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
PAGE 10
--------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 2006(a) OCTOBER 31, 2005
----------------- ------------------
CHANGE IN NET ASSETS FROM OPERATIONS:
Net investment income ................................... $ 2,294,092 $ 3,568,764
Net realized gain from investment transactions .......... 3,632,940 414,909
Net gain in appreciation of investments ................ 3,063,957 3,577,352
------------- -------------
Net increase in net assets resulting from operations .. 8,990,989 7,561,025
------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ................................... (2,370,518) (3,894,853)
------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 3) ..................... 655,492 582,476
------------- -------------
CHANGE IN NET ASSETS ...................................... 7,275,963 4,248,648
Net assets at beginning of period ......................... 117,622,130 113,373,482
------------- -------------
NET ASSETS AT END OF PERIOD ................................ $ 124,898,093 $ 117,622,130
============= =============
Undistributed net investment income at end of period ..... $ 634,745 $ 659,011
============= =============
-----------------------
(a) Unaudited.
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)---------------------------------------
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
(a) Organization - Bancroft Fund Ltd. (successor to Bancroft Convertible Fund,
Inc. (established in 1971)) (the "Fund"), is registered under the Investment
Company Act of 1940 as a diversified, closed-end management investment company.
On March 17, 2006, the Fund was reorganized as a Delaware statutory trust from
a Delaware corporation.
(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.
Page 11
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)---------------------------------------
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued)
(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. At October 31, 2005, the Fund had a capital loss
carryforward of $4,596,296 available to the extent allowed by tax law to offset
future net capital gains, if any. To the extent that the carryforward is used,
no capital gains distributions will be made. $4,045,634 of the total
carryforward expires in 2010, $424,570 expires in 2011 and $126,092 expires in
2013.
(e) Security Valuation - Investments in securities traded on a national
securities exchange are valued at market using the last reported sales
price 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 an
independent pricing service. 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 by management 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 6 cents per
share for the six months ended April 30, 2006. In addition, Federal tax
regulations require the Fund to reclassify realized gains on contingent payment
debt instruments to interest income. At April 30, 2006 there were unrealized
gains of approximately 1 cent per share on contingent payment debt instruments.
(g) Change in Method of Accounting - Effective November 1, 2004, the Fund began
amortizing discounts and premiums on all debt securities. Prior to
November 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 and statement of changes in net assets
presented herein have been restated to reflect the new method retroactive to
November 1, 2001. The effect of this accounting change is included in the
financial highlights for the years ended October 31, 2002, 2003 and 2004. The
cumulative effect of this accounting change had no impact on the total net
assets of the Fund or on distributions for tax purposes, but resulted in a
$103,986 increase in the cost of securities held and a corresponding $103,986
reduction in the net unrealized gains based on the securities held on
November 1, 2001. These changes had no effect on previously reported total net
assets or total returns.
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, 2005 and 2004 were
$3,894,853 and $3,826,570, respectively, both from ordinary income.
NOTE 2 - MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has entered into an investment advisory agreement with Davis-Dinsmore
Management Company ("Davis-Dinsmore"). Pursuant to the investment advisory
agreement, Davis-Dinsmore provides the Fund with investment advice, office
space and facilities. Under the terms of the investment advisory
agreement, the Fund pays Davis-Dinsmore 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 assets
in such month.
The Fund, pursuant to an administrative services agreement with Davis-Dinsmore,
has agreed to pay Davis-Dinsmore for certain accounting and other
administrative services provided to the Fund. Under the administrative
services agreement, the Fund pays Davis-Dinsmore compensation in the amount of
$25,000 per year, payable on a monthly basis.
Certain officers and trustees of the Fund are officers and directors of Davis-
Dinsmore.
NOTE 3 - PORTFOLIO ACTIVITY
At April 30, 2006 there were 5,625,134 shares of beneficial interest
outstanding, with a par value of $0.01 per share. During the six months ended
April 30, 2006, 36,681 shares were issued in connection with reinvestment of
dividends from net investment income, resulting in an increase in paid-in
capital of $655,492.
Purchases and sales of investments, exclusive of corporate short-term notes,
aggregated $37,881,705 and $39,268,807, respectively, for the six months ended
April 30, 2006.
A distribution of $0.18 per share from net investment income was declared on
May 16, 2006, payable June 29, 2006 to shareholders of record at the close of
business June 15, 2006.
At April 30, 2006 unrealized appreciation (depreciation) of investment
securities on a tax basis were as follows:
Unrealized appreciation $ 10,067,850
Unrealized depreciation (2,716,138)
------------
Net unrealized appreciation 7,351,712
Cost for federal income tax purposes $109,693,028
Page 13
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS------------------------------------------------------------
SELECTED DATA FOR A SHARE OF BENEFICIAL INTEREST OUTSTANDING:
SIX MONTHS
ENDED YEARS ENDED OCTOBER 31,
APRIL 30, ------------------------------------------------
2006 (a) 2005 2004 2003 2002 2001
----------------------------------------------------------
OPERATING PERFORMANCE:
Net asset value, beginning of period .. $21.05 $20.40 $20.84 $18.55 $20.72 $27.09
----------------------------------------------------------
Net investment income ................. 0.41 0.64 0.70(b) 0.71(b) 0.79(b) 1.07
Adjustment for change in
amortization policy ................ -- -- (0.02) (0.02) -- --
----------------------------------------------------------
Net investment income, as adjusted 0.41 0.64 0.68 0.69 0.79 1.07
----------------------------------------------------------
Net realized and unrealized gain (loss) 1.16 0.71 0.08(b) 2.31(b) (2.02)(b) (3.23)
Adjustment for change in
amortization policy ................ -- -- 0.02 0.02 -- --
----------------------------------------------------------
Net realized and unrealized
gain (loss), as adjusted ......... 1.16 0.71 0.10 2.33 (2.02) (3.23)
----------------------------------------------------------
Total from investment operations ... 1.57 1.35 0.78 3.02 (1.23) (2.16)
----------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.42) (0.70) (0.72) (0.73) (0.94) (1.11)
Distributions from realized gains ..... -- -- -- -- -- (3.10)
----------------------------------------------------------
Total distributions ................ (0.42) (0.70) (0.72) (0.73) (0.94) (4.21)
----------------------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Effect of rights offering ............. -- -- (0.50) -- -- --
Capital share repurchases ............. -- -- -- -- -- --
----------------------------------------------------------
Total capital share transactions ... -- -- (0.50) -- -- --
----------------------------------------------------------
Net asset value, end of period ........ $22.20 $21.05 $20.40 $20.84 $18.55 $20.72
==========================================================
Market value, end of period ........... $18.69 $17.77 $18.23 $19.70 $17.54 $18.75
Total Net Asset Value Return (%)(c) ... 7.5 6.7 1.3 16.7 (6.3) (8.7)
Total Investment Return (%)(d) ........ 7.6 1.3 (3.8) 16.7 (1.8) 1.3
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands) ....................... $124,898 $117,622 $113,373 $98,486 $86,904 $95,864
Ratio of expenses to
average net assets (%) ............... 1.1 1.2 1.1 1.2 1.2 1.1
Ratio of net investment income to
average net assets (%) ............... 3.8 3.1 3.3(e) 3.6(e) 4.0(e) 4.9
Portfolio turnover rate (%) ........... 33 86 66 87 78 83
-------------------
(a) Unaudited.
(b) As previously reported. See Note 1(g).
(c) Assumes valuation of the Fund's shares, and reinvestment of dividends, at
net asset values.
(d) Assumes valuation of the Fund's shares at market price and reinvestment of
dividends at actual reinvestment price.
(e) Ratios for 2004, 2003 and 2002 reflect ratios adjusted for change in
amortization policy. Ratios previously reported for 2004, 2003 and 2002
were 3.4%, 3.6% and 4.0%, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
Page 14
-------------------------------------------------------------------------------
Miscellaneous Notes-------------------------------------------------------------
Results of the 2006 Annual Shareholders Meeting
The Annual Meeting of Shareholders of the Fund was held on February 13, 2006.
The results of the shareholder vote were:
1. All persons nominated were elected for terms expiring in 2009.
Shares voted for Shares withheld
---------------- ---------------
Elizabeth C. Bogan, Ph.D. 3,773,977 368,086
Robert J. McMullan 3,769,615 372,448
2. The proposal to approve a new Investment Advisory Agreement with Davis-
Dinsmore Management Company passed, as 2,990,015 shares voted for, 461,649
shares voted against, 132,817 shares abstained, and 557,582 shares were
broker non-votes.
3. The proposed Agreement of Merger which provides for the reorganization of
the Fund as a Delaware statutory trust was approved at the reconvened annual
meeting held on March 14, 2006, as 3,738,107 shares voted for, 258,139 shares
voted against, 225,244 shares abstained, and 522,456 shares were broker non-
votes.
5. The Audit Committee's appointment of Tait, Weller & Baker LLP as
independent accountants was ratified, as 3,835,936 shares voted for, 146,035
shares voted against and 160,092 shares abstained.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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 at our website at
www.bancroftfund.com, or without charge, upon request, by calling (973)631-1177.
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.
Page 15
--------------------------------------------------------------------------------
Miscellaneous Notes (continued)-------------------------------------------------
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.
--------------------------------------------------------------------------------
The Fund is a member of the Closed-End Fund Association. Its website address is
www.cefa.com. The association is solely responsible for the content of its
website.
--------------------------------------------------------------------------------
Disclosure of Portfolio Holdings to Broker-Dealers
From time to time, brokers with whom the Fund's Adviser, Davis-Dinsmore
Management Company, has a pre-existing relationship may request that Davis-
Dinsmore disclose Fund portfolio holdings to such broker in advance of the
public disclosure of such portfolio holdings. Davis-Dinsmore may make such
disclosure under the following conditions: (i) the specific purpose of the
disclosure is to assist Davis-Dinsmore in identifying potential investment
opportunities for the Fund; (ii) prior to the receipt of nonpublic portfolio
holdings, the broker, by means of email or other written communication, shall
agree to keep the nonpublic portfolio holdings confidential and not to use the
information for the broker's own benefit, except in connection with the
above described purpose for which it was disclosed; (iii) Davis-
Dinsmore shall keep written records of its agreement with each broker to which
it distributes nonpublic portfolio holdings; and (iv) Davis-Dinsmore will
secure a new agreement with a broker any time the broker directs the nonpublic
portfolio holdings to be sent to a new recipient.
--------------------------------------------------------------------------------
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 16
BOARD OF TRUSTEES INTERNET
GORDON F. AHALT www.bancroftfund.com
ELIZABETH C. BOGAN Ph.D. email: info@bancroftfund.com
THOMAS H. DINSMORE, C.F.A.
DONALD M. HALSTED, JR. INVESTMENT ADVISER
DUNCAN O. MCKEE Davis-Dinsmore Management Company
ROBERT J. MCMULLAN 65 Madison Avenue, Suite 550
JANE D. O'KEEFFE Morristown, NJ 07960
NICOLAS W. PLATT (973) 631-1177
SHAREHOLDER SERVICES AND TRANSFER AGENT
American Stock Transfer & Trust Company
OFFICERS 59 Maiden Lane
THOMAS H. DINSMORE, C.F.A. New York, NY 10038
Chairman of the Board (800) 937-5449
and Chief Executive Officer www.amstock.com
JANE D. O'KEEFFE BENEFICIAL SHARE LISTING
President American Stock Exchange Symbol: BCV
GARY I. LEVINE LEGAL COUNSEL
Executive Vice President, Chief Financial Officer Ballard Spahr Andrews & Ingersoll, LLP
and Secretary
INDEPENDENT ACCOUNTANTS
H. TUCKER LAKE, JR. Tait, Weller & Baker LLP
Vice President
GERMAINE M. ORTIZ
Vice President
MERCEDES A. PIERRE
Vice President and Chief Compliance Officer
JOSHUA P. LAKE, C.T.P.
Treasurer and Assistant Secretary
JESSICA K. LAKE
Assistant Vice President
JOANN VENEZIA
Assistant Vice President and Assistant Secretary
BANCROFT FUND LTD.
65 MADISON AVENUE, SUITE 550
MORRISTOWN, NEW JERSEY 07960
www.bancroftfund.com
[LOGO]
AMERICAN
STOCK EXCHANGE
--------------
LISTED
--------------
BCV(TM)
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
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.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASE 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 Bancroft Fund Ltd. 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 were no changes to the procedures by which shareholders may recommend
nominees to the registrant's board of trustees, after the registrant last
provided disclosure in response to the requirements of this item.
ITEM 11. CONTROLS AND PROCEDURES.
Conclusions of principal officers concerning controls and procedures
(a) As of May 17, 2006 an evaluation was performed under the supervision
and with the participation of the officers of Bancroft Fund Ltd. (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)
under the Investment Company Act of 1940 (the "Act"), as amended. Based on that
evaluation, the Registrant's officers, including the PEO and PFO, concluded
that, as of May 17, 2006, 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) The code of ethics disclosure required by Item 2 is not applicable to
this semi-annual report.
(a)(2) Certifications of the principal executive officer and the principal
financial officer pursuant to Rule 30a-2(a) under the Investment Company Act
of 1940, are attached hereto.
(a)(3) There were no written solicitations to purchase securities under Rule
23c-1 under the Investment Company Act of 1940 during the period covered by the
report.
(b) Certifications of the principal executive officer and the principal
financial officer, as required by Rule 30a-2(b) under the Investment Company Act
of 1940, are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities and 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: June 30, 2006
Pursuant to the requirements of the Securities and 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: June 30, 2006
By: /s/Gary I. Levine
Gary I. Levine
Chief Financial Officer
(Principal Financial Officer)
Date: June 30, 2006