Bancroft Fund Ltd.
Schedule of Investments (Continued) — April 30, 2019 (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Cost
|
|
|
Market
Value
|
|
|
|
|
WARRANTS — 0.0%
|
|
|
|
|
|
|
|
|
|
|
|
Energy and Utilities — 0.0%
|
|
|
1,135
|
|
Goodrich Petroleum Corp., expire 10/12/26†(b)
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal
Amount
|
|
|
|
|
|
|
|
|
|
|
|
U.S. GOVERNMENT OBLIGATIONS — 0.5%
|
|
|
$ 737,000
|
|
U.S. Treasury Bills,
2.348% to 2.388%††,
06/27/19 to 07/11/19
|
|
|
733,963
|
|
|
|
733,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS — 100.0%
|
|
$
|
137,679,177
|
|
|
|
158,894,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Assets and Liabilities (Net)
|
|
|
|
518,273
|
|
|
|
|
|
PREFERRED STOCK
(1,200,000 preferred shares outstanding)
|
|
|
|
(30,000,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSETS — COMMON STOCK
(5,255,255 common shares outstanding)
|
|
|
$
|
129,412,845
|
|
|
|
|
|
|
|
|
|
|
|
|
NET ASSET VALUE PER COMMON SHARE
($129,412,845 ÷ 5,255,255 shares
outstanding)
|
|
|
$
|
24.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be
resold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2019, the market value of Rule 144A securities amounted to $46,915,239 or 29.53% of total investments.
|
|
(b)
|
Security is valued using significant unobservable inputs and is classified as Level 3 in the fair value hierarchy.
|
|
(c)
|
Mandatory convertible 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.
|
|
†
|
Non-income
producing security.
|
|
††
|
Represents annualized yields at dates of purchase.
|
See accompanying notes to financial
statements.
7
Bancroft Fund Ltd.
Statement of Assets and Liabilities
April 30, 2019 (Unaudited)
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
Investments, at value (cost $137,679,177)
|
|
$
|
158,894,572
|
|
|
Cash
|
|
|
35,236
|
|
|
Dividends and interest receivable
|
|
|
774,720
|
|
|
Deferred offering expense
|
|
|
71,161
|
|
|
Prepaid expenses
|
|
|
3,127
|
|
|
|
|
|
|
|
|
Total Assets
|
|
|
159,778,816
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Distributions payable
|
|
|
156,771
|
|
|
Payable for investment advisory fees
|
|
|
92,058
|
|
|
Payable for payroll expenses
|
|
|
30,350
|
|
|
Payable for accounting fees
|
|
|
7,500
|
|
|
Payable for shareholder communications expenses
|
|
|
38,210
|
|
|
Payable for legal and audit fees
|
|
|
25,231
|
|
|
Other accrued expenses
|
|
|
15,851
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
365,971
|
|
|
|
|
|
|
|
|
Preferred Shares:
|
|
|
|
|
|
Series A Cumulative Preferred Shares (5.375%, $25 liquidation value, $0.01 par value, unlimited shares
authorized with 1,200,000 shares issued and outstanding)
|
|
|
30,000,000
|
|
|
|
|
|
|
|
|
Net Assets Attributable to Common Shareholders
|
|
$
|
129,412,845
|
|
|
|
|
|
|
|
|
Net Assets Attributable to Common Shareholders Consist of:
|
|
|
|
|
|
Paid-in
capital
|
|
$
|
105,591,068
|
|
|
Total distributable earnings
|
|
|
23,821,777
|
|
|
|
|
|
|
|
|
Net Assets
|
|
$
|
129,412,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value per Common Share:
|
|
|
|
|
|
($129,412,845 ÷ 5,255,255 shares outstanding
at $0.01 par value; unlimited number of shares
authorized)
|
|
|
$24.63
|
|
|
|
|
|
|
|
Statement of Operations
For the Six Months Ended April 30, 2019 (Unaudited)
|
|
|
|
|
|
|
Investment Income:
|
|
|
|
|
|
Dividends
|
|
$
|
916,390
|
|
|
Interest
|
|
|
941,260
|
|
|
|
|
|
|
|
|
Total Investment Income
|
|
|
1,857,650
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
Investment advisory fees
|
|
|
537,354
|
|
|
Trustees’ fees
|
|
|
60,685
|
|
|
Shareholder communications expenses
|
|
|
41,517
|
|
|
Payroll expenses
|
|
|
27,784
|
|
|
Legal and audit fees
|
|
|
25,436
|
|
|
Accounting fees
|
|
|
22,500
|
|
|
Shareholder services fees
|
|
|
13,171
|
|
|
Custodian fees
|
|
|
7,118
|
|
|
Interest expense
|
|
|
181
|
|
|
Miscellaneous expenses
|
|
|
29,548
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
|
765,294
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Expenses paid indirectly by broker (See Note 3)
|
|
|
(773
|
)
|
|
|
|
|
|
|
|
Net Expenses
|
|
|
764,521
|
|
|
|
|
|
|
|
|
Net Investment Income
|
|
|
1,093,129
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain on Investments:
|
|
|
|
|
|
Net realized gain on investments
|
|
|
4,632,156
|
|
|
|
|
|
|
|
|
Net change in unrealized appreciation on investments
|
|
|
7,756,936
|
|
|
|
|
|
|
|
|
Net Realized and Unrealized Gain on Investments
|
|
|
12,389,092
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Resulting from Operations
|
|
|
13,482,221
|
|
|
|
|
|
|
|
|
Total Distributions to Preferred Shareholders
|
|
|
(801,771
|
)
|
|
|
|
|
|
|
|
Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations
|
|
$
|
12,680,450
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
8
Bancroft Fund Ltd.
Statement of Changes in Net Assets Attributable to Common Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
April 30, 2019
(Unaudited)
|
|
Year Ended
October 31, 2018
|
|
Operations:
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
$
|
1,093,129
|
|
|
|
$
|
1,549,359
|
|
|
Net realized gain on investments
|
|
|
|
4,632,156
|
|
|
|
|
13,969,337
|
|
|
Net change in unrealized appreciation on investments
|
|
|
|
7,756,936
|
|
|
|
|
(8,224,852
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Resulting from Operations
|
|
|
|
13,482,221
|
|
|
|
|
7,293,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Preferred Shareholders
|
|
|
|
(801,771
|
)
|
|
|
|
(1,612,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Asset Attributable to Common Shareholders Resulting from Operations
|
|
|
|
12,680,450
|
|
|
|
|
5,681,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders
|
|
|
|
(9,706,286
|
)
|
|
|
|
(6,091,072
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in net assets from common shares issued upon reinvestment of distributions
|
|
|
|
4,072,227
|
|
|
|
|
1,080,809
|
|
|
Net decrease from repurchase of common shares (includes transaction costs)
|
|
|
|
(1,559,380
|
)
|
|
|
|
(3,999,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets from Fund Share Transactions
|
|
|
|
2,512,847
|
|
|
|
|
(2,918,362
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders
|
|
|
|
5,487,011
|
|
|
|
|
(3,328,090
|
)
|
|
Net Assets Attributable to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year
|
|
|
|
123,925,834
|
|
|
|
|
127,253,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
End of period
|
|
|
$
|
129,412,845
|
|
|
|
$
|
123,925,834
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
9
Bancroft Fund Ltd.
Financial
Highlights
Selected data for a common share of beneficial interest outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
April 30, 2019
|
|
|
Year Ended October 31,
|
|
|
|
|
(Unaudited)
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
Operating Performance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net asset value, beginning of year
|
|
|
|
|
|
|
$24.22
|
|
|
|
|
|
|
$
|
24.24
|
|
|
|
|
|
|
$
|
22.02
|
|
|
|
|
|
|
$
|
23.19
|
|
|
|
|
|
|
$
|
23.59
|
|
|
|
|
|
|
$
|
22.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
0.23
|
|
|
|
|
|
|
|
0.25
|
|
|
|
|
|
|
|
0.51
|
|
|
|
|
|
|
|
0.44
|
|
|
|
|
|
|
|
0.17
|
|
|
|
|
|
|
|
0.19
|
|
|
Net realized and unrealized gain on investments
|
|
|
|
|
|
|
2.20
|
|
|
|
|
|
|
|
1.11
|
|
|
|
|
|
|
|
3.33
|
|
|
|
|
|
|
|
0.50
|
|
|
|
|
|
|
|
0.23
|
|
|
|
|
|
|
|
1.74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total from investment operations
|
|
|
|
|
|
|
2.43
|
|
|
|
|
|
|
|
1.36
|
|
|
|
|
|
|
|
3.84
|
|
|
|
|
|
|
|
0.94
|
|
|
|
|
|
|
|
0.40
|
|
|
|
|
|
|
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Preferred Shareholders: (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
(0.03
|
)*
|
|
|
|
|
|
|
(0.19
|
)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
Net realized gain
|
|
|
|
|
|
|
(0.13
|
)*
|
|
|
|
|
|
|
(0.12
|
)
|
|
|
|
|
|
|
(0.24
|
)
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to preferred shareholders
|
|
|
|
|
|
|
(0.16
|
)
|
|
|
|
|
|
|
(0.31
|
)
|
|
|
|
|
|
|
(0.31
|
)
|
|
|
|
|
|
|
(0.07
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Net Assets Attributable to Common Shareholders Resulting from Operations
|
|
|
|
|
|
|
2.27
|
|
|
|
|
|
|
|
1.05
|
|
|
|
|
|
|
|
3.53
|
|
|
|
|
|
|
|
0.87
|
|
|
|
|
|
|
|
0.40
|
|
|
|
|
|
|
|
1.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income
|
|
|
|
|
|
|
(0.38
|
)*
|
|
|
|
|
|
|
(0.71
|
)
|
|
|
|
|
|
|
(0.29
|
)
|
|
|
|
|
|
|
(0.85
|
)
|
|
|
|
|
|
|
(0.39
|
)
|
|
|
|
|
|
|
(0.56
|
)
|
|
Net realized gain
|
|
|
|
|
|
|
(1.50
|
)*
|
|
|
|
|
|
|
(0.45
|
)
|
|
|
|
|
|
|
(0.98
|
)
|
|
|
|
|
|
|
(0.92
|
)
|
|
|
|
|
|
|
(0.51
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions to common shareholders
|
|
|
|
|
|
|
(1.88
|
)
|
|
|
|
|
|
|
(1.16
|
)
|
|
|
|
|
|
|
(1.27
|
)
|
|
|
|
|
|
|
(1.77
|
)
|
|
|
|
|
|
|
(0.90
|
)
|
|
|
|
|
|
|
(0.56
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fund Share Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in net asset value from repurchase of common shares
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
|
|
0.11
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
0.04
|
|
|
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
0.11
|
|
|
Decrease in net asset value from common shares issued upon reinvestment of distributions
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
(0.03
|
)
|
|
|
|
|
|
|
(0.10
|
)
|
|
|
|
|
|
|
(0.00
|
)(b)
|
|
|
|
|
|
|
(0.02
|
)
|
|
Offering costs for preferred shares charged to
paid-in
capital
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(0.00
|
)
|
|
|
|
|
|
|
(0.01
|
)
|
|
|
|
|
|
|
(0.21
|
)
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fund share transactions
|
|
|
|
|
|
|
0.02
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
|
|
(0.27
|
)
|
|
|
|
|
|
|
0.10
|
|
|
|
|
|
|
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Asset Value Attributable to Common Shareholders, End of Period
|
|
|
|
|
|
|
$24.63
|
|
|
|
|
|
|
$
|
24.22
|
|
|
|
|
|
|
$
|
24.24
|
|
|
|
|
|
|
$
|
22.02
|
|
|
|
|
|
|
$
|
23.19
|
|
|
|
|
|
|
$
|
23.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAV total return†
|
|
|
|
|
|
|
10.32
|
%
|
|
|
|
|
|
|
4.58
|
%
|
|
|
|
|
|
|
16.29
|
%
|
|
|
|
|
|
|
2.85
|
%
|
|
|
|
|
|
|
2.71
|
%
|
|
|
|
|
|
|
9.71
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market value, end of period
|
|
|
|
|
|
|
$21.67
|
|
|
|
|
|
|
$
|
20.41
|
|
|
|
|
|
|
$
|
21.90
|
|
|
|
|
|
|
$
|
20.81
|
|
|
|
|
|
|
$
|
19.50
|
|
|
|
|
|
|
$
|
20.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment total return††
|
|
|
|
|
|
|
16.91
|
%
|
|
|
|
|
|
|
(1.77
|
)%
|
|
|
|
|
|
|
11.75
|
%
|
|
|
|
|
|
|
17.23
|
%
|
|
|
|
|
|
|
1.42
|
%
|
|
|
|
|
|
|
12.25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial
statements.
10
Bancroft Fund Ltd.
Financial Highlights (Continued)
Selected data for a common share of beneficial interest outstanding throughout each period:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
April 30, 2019
|
|
|
Year Ended October 31,
|
|
|
|
|
(Unaudited)
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
Ratios to Average Net Assets and Supplemental Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets including liquidation value of preferred shares, end of period (in 000’s)
|
|
|
$159,413
|
|
|
|
$153,926
|
|
|
|
$157,254
|
|
|
|
$144,040
|
|
|
|
—
|
|
|
|
—
|
|
|
Net assets attributable to common shares, end of period (in 000’s)
|
|
|
$129,413
|
|
|
|
$123,926
|
|
|
|
$127,254
|
|
|
|
$114,040
|
|
|
|
$118,435
|
|
|
|
$123,667
|
|
|
Ratio of net investment income to average net assets attributable to common shares before preferred
distributions
|
|
|
1.81
|
%(c)
|
|
|
1.17
|
%
|
|
|
2.09
|
%
|
|
|
1.98
|
%
|
|
|
0.80
|
%
|
|
|
1.00
|
%
|
|
Ratio of operating expenses to average net assets attributable to common shares
|
|
|
1.27
|
%(c)(d)(e)
|
|
|
1.22
|
%(d)(e)
|
|
|
1.28
|
%(d)(e)
|
|
|
1.15
|
%(d)(e)
|
|
|
1.10
|
%
|
|
|
1.10
|
%
|
|
Portfolio turnover rate
|
|
|
17.0
|
%
|
|
|
43.0
|
%
|
|
|
33.0
|
%
|
|
|
50.0
|
%
|
|
|
48.0
|
%
|
|
|
43.0
|
%
|
|
Cumulative Preferred Shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.375% Series A Preferred
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation value, end of period (in 000’s)
|
|
|
$ 30,000
|
|
|
|
$ 30,000
|
|
|
|
$ 30,000
|
|
|
|
$ 30,000
|
|
|
|
—
|
|
|
|
—
|
|
|
Total shares outstanding (in 000’s)
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
1,200
|
|
|
|
—
|
|
|
|
—
|
|
|
Liquidation preference per share
|
|
|
$ 25.00
|
|
|
|
$ 25.00
|
|
|
|
$ 25.00
|
|
|
|
$ 25.00
|
|
|
|
—
|
|
|
|
—
|
|
|
Average market value (f)
|
|
|
$ 24.97
|
|
|
|
$ 25.24
|
|
|
|
$ 25.11
|
|
|
|
$ 25.49
|
|
|
|
—
|
|
|
|
—
|
|
|
Asset coverage per share
|
|
|
$ 132.84
|
|
|
|
$ 128.27
|
|
|
|
$ 131.04
|
|
|
|
$ 120.03
|
|
|
|
—
|
|
|
|
—
|
|
|
Asset Coverage
|
|
|
531
|
%
|
|
|
513
|
%
|
|
|
524
|
%
|
|
|
480
|
%
|
|
|
—
|
|
|
|
—
|
|
|
†
|
Based on net asset value per share, adjusted for reinvestment of distributions at prices determined under the
Fund’s dividend reinvestment plan. Total return for a period of less than one year is not annualized. Prior to November 1, 2015, reinvestments of distributions were at market prices on the payable date.
|
|
††
|
Based on market value per share, adjusted for reinvestment of distributions at prices determined under the Fund’s
dividend reinvestment plan. Total return for a period of less than one year is not annualized.
|
|
*
|
Based on year to date book income. Amounts are subject to change and recharacterization at year end.
|
|
(a)
|
Calculated based on average common shares outstanding on the record dates throughout the years.
|
|
(b)
|
Amount represents less than $0.005 per share.
|
|
(d)
|
Ratios of operating expenses to average net assets including liquidation value of preferred shares for the six months
ended April 30, 2019 and the years ended October 31, 2018, 2017, and 2016 were 1.02%, 0.99%, 1.03%, and 1.08%, respectively.
|
|
(e)
|
The Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. For the six
months ended April 30, 2019 and the years ended October 31, 2018, 2017, and 2016, there was no impact on the expense ratios.
|
|
(f)
|
Based on weekly prices.
|
See accompanying notes to financial
statements.
11
Bancroft Fund Ltd.
Notes to
Financial Statements (Unaudited)
1. Organization.
Bancroft Fund Ltd. currently operates as a diversified
closed-end
management investment
company organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the 1940 Act). Investment operations commenced in April 1971.
The Fund’s primary investment objective is to provide 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. The Fund invests primarily in convertible and equity securities.
2. Significant Accounting Policies.
As an investment company, the Fund follows the investment company accounting and reporting guidance, which is
part of U.S. generally accepted accounting principles (GAAP) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a
summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
New Accounting Pronouncements.
To improve the effectiveness of fair value disclosure requirements, the Financial Accounting Standards Board recently issued Accounting Standard Update (ASU)
2018-13,
Fair Value Measurement Disclosure
Framework – Changes to the Disclosure Requirements for Fair Value Measurement (ASU
2018-13),
which adds, removes, and modifies certain aspects relating to fair value disclosure. ASU
2018-13
is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption of the additions relating to ASU
2018-13
is not required,
even if early adoption is elected for the removals under ASU
2018-13.
Management has early adopted the removals set forth in ASU
2018-13
in these financial statements
and has not early adopted the additions set forth in ASU
2018-13.
Management has early adopted the removals set forth in ASU
2018-13
in these financial statements and
has not early adopted the additions set forth in ASU
2018-13.
Security Valuation.
Portfolio
securities listed or traded on a nationally recognized securities exchange or traded in the U.S.
over-the-counter
market for which market quotations are readily
available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the
closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently
available price or, if the Board of Trustees (the Board) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or
market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the Adviser).
Portfolio securities
primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly
after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt obligations for which market quotations are readily available are valued at the average of the latest bid and asked prices. If
there were no asked prices quoted on such day, the security is valued using the closing bid price, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as
determined by the Board. Certain securities are valued principally using dealer quotations. Futures contracts are valued at the closing settlement price of the exchange or board of trade on which the applicable contract is traded. OTC
12
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
futures and options on futures for which market quotations are readily available will be valued by
quotations received from a pricing service or, if no quotations are available from a pricing service, by quotations obtained from one or more dealers in the instrument in question by the Adviser.
Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and
procedures may include, but are not limited to: analysis and review of available financial and
non-financial
information about the company; comparisons with the valuation and changes in valuation of similar
securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of
the security.
The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as
described in the hierarchy below:
|
|
●
|
|
Level 1 — quoted prices in active markets for identical securities;
|
|
|
●
|
|
Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates,
prepayment speeds, credit risk, etc.); and
|
|
|
●
|
|
Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of
investments).
|
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both
individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of
the Fund’s investments in securities by inputs used to value the Fund’s investments as of April 30, 2019 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Inputs
|
|
|
|
|
|
Level 1
Quoted Prices
|
|
Level 2 Other Significant
Observable Inputs
|
|
Level 3 Significant
Unobservable Inputs
|
|
Total Market Value
at 4/30/19
|
|
INVESTMENTS IN SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS (Market Value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Corporate Bonds(a)
|
|
|
|
—
|
|
|
|
$
|
121,641,120
|
|
|
|
|
—
|
|
|
|
$
|
121,641,120
|
|
|
Convertible Preferred Stocks:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
$
|
452,373
|
|
|
|
|
452,373
|
|
|
Other Industries (a)
|
|
|
$
|
8,495,480
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
8,495,480
|
|
|
Total Convertible Preferred
Stocks
|
|
|
|
8,495,480
|
|
|
|
|
—
|
|
|
|
|
452,373
|
|
|
|
|
8,947,853
|
|
|
Mandatory Convertible Securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer Software and Services
|
|
|
|
—
|
|
|
|
|
1,119,193
|
|
|
|
|
—
|
|
|
|
|
1,119,193
|
|
|
Financial Services
|
|
|
|
2,711,268
|
|
|
|
|
4,724,775
|
|
|
|
|
—
|
|
|
|
|
7,436,043
|
|
|
Other Industries (a)
|
|
|
|
19,014,600
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
19,014,600
|
|
|
Total Mandatory Convertible
Securities
|
|
|
|
21,725,868
|
|
|
|
|
5,843,968
|
|
|
|
|
—
|
|
|
|
|
27,569,836
|
|
|
Common Stocks (a)
|
|
|
|
1,821
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
1,821
|
|
|
Warrants (a)
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0
|
|
|
|
|
0
|
|
|
U.S. Government Obligations
|
|
|
|
—
|
|
|
|
|
733,942
|
|
|
|
|
—
|
|
|
|
|
733,942
|
|
|
TOTAL INVESTMENTS IN
SECURITIES
|
|
|
$
|
30,223,169
|
|
|
|
$
|
128,219,030
|
|
|
|
$
|
452,373
|
|
|
|
$
|
158,894,572
|
|
|
(a)
|
Please refer to the Schedule of Investments for the industry classifications of these portfolio holdings.
|
During the six months ended April 30, 2019 and the fiscal year ended October 31, 2018, the Fund did not have transfers
into or out of Level 3.
13
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
The following table reconciles Level 3 investments for the Fund for which significant unobservable
inputs were used to determine fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as of
10/31/18
|
|
Accrued
discounts/
(premiums)
|
|
Realized
gain/
(loss)
|
|
Change in
unrealized
appreciation/
depreciation†
|
|
Purchases
|
|
Sales
|
|
Transfers
into
Level 3
|
|
Transfers
out of
Level 3
|
|
Balance
as of
04/30/19
|
|
Net change
in unrealized
appreciation/
depreciation
during the
period on
Level 3
investments
still held
at
04/30/19†
|
|
INVESTMENTS IN SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS (Market Value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Corporate Bonds(a)
|
|
|
|
$ 0
|
|
|
|
|
—
|
|
|
|
|
$578
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
$(578)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Convertible Preferred Stocks(a)
|
|
|
|
450,098
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
$2,275
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
$452,373
|
|
|
|
|
$2,275
|
|
|
Warrants(a)
|
|
|
|
0
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
0
|
|
|
|
|
—
|
|
|
TOTAL INVESTMENTS IN
SECURITIES
|
|
|
|
$450,098
|
|
|
|
|
—
|
|
|
|
|
$578
|
|
|
|
|
$2,275
|
|
|
|
|
—
|
|
|
|
|
$(578)
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
$452,373
|
|
|
|
|
$2,275
|
|
|
†
|
Net change in unrealized appreciation/depreciation on investments is included in the Statement of Operations.
|
|
(a)
|
Please refer to the SOI for the industry classifications of these portfolio holdings.
|
The following tables summarize the valuation techniques used and unobservable inputs utilized to determine the value of certain of the Fund’s
Level 3 investments as of April 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Balance at 04/30/19
|
|
Valuation Technique
|
|
Unobservable Input
|
|
Range
|
|
INVESTMENTS IN SECURITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS (Market Value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible Preferred Stock (a)
|
|
|
|
$452,373
|
|
|
|
|
Acquisition price/cash flow analysis
|
|
|
|
|
Discount Range
|
|
|
|
|
0%
|
|
|
Warrants (a)
|
|
|
|
0
|
|
|
|
|
Bankruptcy
|
|
|
|
|
Discount Range
|
|
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL INVESTMENTS IN LEVEL 3 SECURITIES
|
|
|
|
$452,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Please refer to the SOI for the industry classifications of these portfolio holdings.
|
|
|
|
|
|
|
|
Unobservable Input
|
|
Impact to Value if Input Increases
|
|
Impact to Value if Input Decreases
|
|
Discount Range
|
|
Decrease
|
|
Increase
|
Additional Information to Evaluate Qualitative Information.
General.
The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser –
to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international
equity securities, preferred equity securities, and fixed income securities. The data within these feeds are ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are
checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that
security or similar securities.
Fair Valuation.
Fair valued securities may be common or preferred equities, warrants,
options, rights, or fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not
14
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
available, such as securities not traded for several days, or for which current bids are not available,
or which are restricted as to transfer. When fair valuing a security, factors to consider include recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models,
current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The
circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.
The Adviser reports
quarterly to the Board the results of the application of fair valuation policies and procedures. These may include backtesting the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.
Investments in Other Investment Companies.
The Fund may invest, from time to time, in shares of other investment companies (or entities
that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the Acquired Funds) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro
rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. During the six months ended April 30, 2019, the Fund did not incur periodic expenses charged by the Acquired Funds.
Foreign Currency Translations.
The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other
assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions.
Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized
foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference
between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and
subsequent sale trade date is included in realized gain/(loss) on investments.
Foreign Securities.
The Fund may directly purchase
securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate
funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than
securities of comparable U.S. issuers.
Foreign Taxes.
The Fund may be subject to foreign taxes on income, gains on investments, or
currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.
Restricted Securities.
The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted
securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges
15
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
or dealer discounts and other selling expenses than the sale of securities eligible for trading on
national securities exchanges or in the
over-the-counter
markets. Restricted securities may sell at a price lower than similar securities that are not subject to
restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. For the restricted securities as of April 30, 2019, please refer to the Schedule of Investments.
Securities Transactions and Investment Income.
Securities transactions are accounted for on the trade date with realized gain/(loss) on
investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on the accrual basis. Premiums and discounts on debt securities are amortized using the effective
yield to maturity method. Dividend income is recorded on the
ex-dividend
date, except for certain dividends from foreign securities that are recorded as soon after the
ex-dividend
date as the Fund becomes aware of such dividends. 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.
Custodian
Fee Credits.
When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement
of Operations with the corresponding expense offset, if any, shown as “Custodian fee credits.”
Distributions to Shareholders.
Distributions to common shareholders are recorded on the
ex-dividend
date. The characterization of distributions to shareholders is based on income and capital gains as determined in accordance with
federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency
transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency
transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. These
reclassifications have no impact on the NAV of the Fund.
Under the Fund’s current common share distribution policy, the Fund declares and pays
quarterly distributions from net investment income, capital gains, and
paid-in
capital. The actual source of the distribution is determined after the end of the year. Pursuant to this policy, distributions
during the year may be made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. The Fund’s current distribution policy
may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital gains as a Capital Gain Dividend and may cause such gains to be treated as ordinary income, subject to the maximum federal income tax
rate. Distributions sourced from
paid-in
capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board will continue to monitor the Fund’s distribution
level, taking into consideration the Fund’s NAV and the financial market environment. The Fund’s distribution policy is subject to modification by the Board at any time.
16
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
Distributions to 5.375% Series A Preferred Shares are recorded on a daily basis and are determined as
described in Note 5.
The tax character of distributions paid during the year ended October 31, 2018 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
October 31, 2018
|
|
|
|
|
Common
|
|
|
Preferred
|
|
|
Distributions paid from:
|
|
|
|
|
|
|
|
|
|
Ordinary income (inclusive of short term capital gains)
|
|
$
|
4,270,313
|
|
|
$
|
1,130,488
|
|
|
Net long term capital gains
|
|
|
1,820,759
|
|
|
|
482,013
|
|
|
|
|
|
|
|
|
|
|
|
|
Total distributions paid
|
|
$
|
6,091,072
|
|
|
$
|
1,612,501
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Income Taxes.
The Fund intends to continue to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net
investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.
The following summarizes the
tax cost of investments and the related net unrealized appreciation at April 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
Gross
Unrealized
Appreciation
|
|
Gross
Unrealized
Depreciation
|
|
Net
Unrealized
Appreciation
|
|
Investments
|
|
$137,685,704
|
|
$24,992,398
|
|
$(3,783,530)
|
|
$21,208,868
|
The Fund is required to evaluate tax positions taken or expected to be taken in the course of preparing the Fund’s
tax returns to determine whether the tax positions are
“more-likely-than-not”
of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by
the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the
more-likely-than-not
threshold. During the six months ended April 30, 2019, the Fund did not incur
any income tax, interest, or penalties. As of April 30, 2019, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax
returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.
3. Investment Advisory Agreement and Other Transactions.
The Fund has entered into an investment advisory agreement (the Advisory Agreement) with
the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, equal on an annual basis to 0.80% of the first $100,000,000 of the Fund’s average weekly net assets and 0.55% of the Fund’s average
weekly net assets in excess of $100,000,000. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio and oversees the administration of all aspects of the Fund’s business and
affairs.
During the six months ended April 30, 2019, the Fund paid $971 in brokerage commissions on security trades to G. research, LLC, an
affiliate of the Adviser.
17
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
During the six months ended April 30, 2019, the Fund received credits from a designated broker who
agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $773.
The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the
six months ended April 30, 2019, the Fund accrued $22,500 in connection with the cost of computing the Fund’s NAV.
As per the approval of
the Board, the Fund compensates officers of the Fund, who are employed by the Fund and are not employed by the Adviser (although the officers may receive incentive based variable compensation from affiliates of the Adviser). During the six months
ended April 30, 2019, the Fund paid or accrued $27,784 in payroll expenses in the Statement of Operations.
The Fund pays each Trustee who is
not considered an affiliated person an annual retainer of $9,000 plus $2,000 for each Board meeting attended. Each Trustee is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive
$1,000 per meeting attended. The Lead Independent Trustee receives an annual fee of $2,000 and the Audit and Nominating Committee Chairmen each receives an annual fee of $3,000. A Trustee may receive a single meeting fee, allocated among the
participating funds, for participation in certain meetings held on behalf of multiple funds. Trustees who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.
4. Portfolio Securities.
Purchases and sales of securities during the six months ended April 30, 2019, other than short term securities and
U.S. Government obligations, aggregated $27,366,695 and $25,587,287, respectively.
5. Capital.
The Fund is authorized to issue an unlimited
number of common shares of beneficial interest (par value $0.01). The Board has authorized the repurchase of its shares in the open market when the shares are trading at a discount of 10.0% or more (or such other percentage as the Board may
determine from time to time) from the NAV of the shares. During the six months ended April 30, 2019, the Fund repurchased and retired 79,346 shares in the open market at an investment of $1,558,930 and an average discount of approximately
14.15% from its NAV. During the fiscal year ended October 31, 2018, the Fund repurchased and retired 182,873 of its common shares at an investment of $3,999,171 and an average discount of 13.58%, from its net asset value.
18
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
Transactions in common shares of beneficial interest for the six months ended April 30, 2019 and
the year ended October 31, 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
April 30, 2019
(Unaudited)
|
|
|
Year Ended
October 31, 2018
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Net increase in net assets from common shares issued upon reinvestment of distributions
|
|
|
217,767
|
|
|
$
|
4,072,227
|
|
|
|
49,807
|
|
|
$
|
1,080,809
|
|
|
Net decrease from repurchase of common shares
|
|
|
(79,346
|
)
|
|
|
(1,559,380
|
)
|
|
|
(182,873
|
)
|
|
|
(3,999,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) from transactions in Fund shares
|
|
|
138,421
|
|
|
$
|
2,512,847
|
|
|
|
(133,066
|
)
|
|
$
|
(2,918,362
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Fund has an effective shelf registration authorizing the offering of an additional $100 million of common
or preferred shares. As of April 30, 2019, after considering the Series A offering, the Fund has approximately $70 million available for issuance under the current shelf registration.
On August 9, 2016, the Fund issued 1,200,000 shares of 5.375% Series A Cumulative Preferred Shares (Series A Preferred), receiving $28,834,426,
after the deduction of offering expenses of $945,000 and underwriting fees of $220,574. The liquidation value of Series A Preferred is $25 per share. The Series A Preferred has an annual dividend rate of 5.375%. The Series A Preferred is noncallable
before August 9, 2021. At April 30, 2019, 1,200,000 Series A Preferred were outstanding and accrued dividends amounted to $156,771.
The
Fund’s Declaration of Trust, as amended, authorizes the issuance of an unlimited number of Series A Preferred, par value $0.01. The Series A Preferred are senior to the common shares and result in the financial leveraging of the common shares.
Such leveraging tends to magnify both the risks and opportunities to common shareholders. Dividends on the Series A Preferred are cumulative. The Fund is required by the 1940 Act and by the Statement of Preferences to meet certain asset coverage
tests with respect to the Series A Preferred. If the Fund fails to meet these requirements and does not correct such failure, the Fund may be required to redeem, in part or in full, the Series A Preferred at the redemption price of $25 per share
plus an amount equal to the accumulated and unpaid dividends whether or not declared on such shares in order to meet these requirements. Additionally, failure to meet the foregoing asset coverage requirements could restrict the Fund’s ability
to pay dividends to common shareholders and could lead to sales of portfolio securities at inopportune times. The income received on the Fund’s assets may vary in a manner unrelated to the fixed rate, which could have either a beneficial or
detrimental impact on net investment income and gains available to common shareholders.
The holders of Series A Preferred generally are entitled to
one vote per share held on each matter submitted to a vote of shareholders of the Fund and will vote together with holders of common shares as a single class. The holders of Series A Preferred voting together as a single class also currently have
the right to elect two Trustees and under certain circumstances are entitled to elect a majority of the Board of Trustees. In addition, the affirmative vote of a majority of the votes entitled to be cast by holders of all outstanding shares of the
Series A Preferred, voting as a single class, will be required to approve any plan of reorganization adversely affecting the Series A Preferred, and the approval of
two-thirds
of each class, voting separately,
of the Fund’s outstanding voting stock must approve the conversion of the Fund from a
closed-end
to an
open-end
investment company. The approval of a majority (as
defined in the 1940 Act) of the outstanding Series A Preferred and
19
Bancroft Fund Ltd.
Notes to Financial Statements (Unaudited) (Continued)
a majority (as defined in the 1940 Act) of the Fund’s outstanding voting securities are required
to approve certain other actions, including changes in the Fund’s investment objectives or fundamental investment policies.
6. Convertible
Securities Concentration.
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.
7. Indemnifications.
The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has
reviewed the Fund’s existing contracts and expects the risk of loss to be remote.
8. Subsequent Events.
Management has evaluated the
impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.
Shareholder Meeting – May 13, 2019 – Final Results
The Fund’s Annual Meeting of Shareholders was held on May 13, 2019, in Greenwich, Connecticut. At that meeting, common and preferred
shareholders, voting together as a single class,
re-elected
Jane D. O’Keeffe, Elizabeth C. Bogan, and Anthonie C. van Ekris as Trustees of the Fund, with 5,255,767 votes, 5,236,680 votes, and 5,216,390
votes cast in favor of these Trustees, and a total of 257,660 votes, 276,748 votes, and 297,037 votes withheld for these Trustees, respectively.
Mario J. Gabelli, Kinchen C. Bizzell, James P. Conn, Frank J. Fahrenkopf, Jr., Daniel D. Harding, Michael J. Melarkey, Kuni Nakamura, and Nicolas W.
Platt continue to serve in their capacities as Trustees of the Fund.
We thank you for your participation and appreciate your continued support.
20
BANCROFT FUND LTD.
AND
YOUR PERSONAL PRIVACY
Who are we?
The Bancroft Fund Ltd. is a
closed-end
management investment company registered
with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that
provide investment advisory services for a variety of clients.
What kind of
non-public
information do we collect about you if you become a Fund shareholder?
When you purchase shares of the Fund on the NYSE, you have the option of registering directly with our transfer agent in
order, for example, to participate in our dividend reinvestment plan.
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Information you give us on your application form.
This could include your name, address, telephone number, social
security number, bank account number, and other information.
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Information about your transactions with us.
This would include information about the shares that you buy or
sell; it may also include information about whether you sell or exercise rights that we have issued from time to time. If we hire someone else to provide services — like a transfer agent — we will also have information about the
transactions that you conduct through them.
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What information do we disclose and to whom do we disclose it?
We do not disclose any
non-public
personal information about our customers or
former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities
and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www.sec.gov.
What do we do to protect your personal information?
We restrict access to
non-public
personal information about
you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to
keep your personal information confidential.
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Bancroft Fund Ltd.
One Corporate Center
Rye, NY 10580-1422
Portfolio Management Team Biographies
Thomas H. Dinsmore, CFA,
joined Gabelli Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several
funds within the Gabelli/GAMCO Funds Complex. Previously Mr. Dinsmore was Chairman and CEO of Dinsmore Capital Management; CEO and Portfolio Manager of Bancroft Fund Ltd; and CEO, Portfolio Manager, and
co-founder
of Ellsworth Growth and Income Fund Ltd. He received a BS in Economics from the Wharton School of Business and an MA degree in Economics from Fairleigh Dickinson University.
Jane D. O’Keeffe
joined Gabelli Funds, LLC in 2015. She currently serves as a portfolio manager of Gabelli Funds, LLC and manages several
funds within the Gabelli/GAMCO Funds Complex. Previously Ms. O’Keeffe was President and Director of Dinsmore Capital Management where she was also a Portfolio Manager of Bancroft Fund Ltd. and Ellsworth Growth and Income Fund Ltd. Prior to
joining Dinsmore Capital Management, Ms. O’Keeffe held positions of increasing responsibilities at IDS Progressive Fund, Soros Fund Management Company, Simms Capital Management, and Fiduciary Trust International. She earned a BA from the
University of New Hampshire and attended the Lubin Graduate School of Business at Pace University.
James A. Dinsmore, CFA,
joined Gabelli
Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Dinsmore received a BA in Economics from Cornell University and an MBA degree from
Rutgers University.
We have separated the portfolio managers’ commentary from the financial statements and investment
portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. Both the commentary and the financial
statements, including the portfolio of investments, will be available on our website at www.gabelli.com.
The Net Asset Value per share appears
in the Publicly Traded Funds column, under the heading “Convertible Securities Funds,” in Monday’s The Wall Street Journal. It is also listed in Barron’s Mutual Funds/Closed End Funds section under the heading “Convertible
Securities Funds.”
The Net Asset Value per share may be obtained each day by calling (914)
921-5070
or
visiting www.gabelli.com.
The NASDAQ symbol for the Net Asset Value is “XBCVX.”
Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as
amended, that the Fund may from time to time purchase its common shares in the open market when the Fund’s shares are trading at a discount of 10% or more from the net asset value of the shares. The Fund may also, from time to time, purchase
its preferred shares in the open market when the preferred shares are trading at a discount to the liquidation value.
BANCROFT FUND LTD.
One Corporate Center
Rye, NY 10580-1422
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800-GABELLI
(800-422-3554)
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TRUSTEES
Mario J. Gabelli, CFA
Chairman and
Chief Executive Officer,
GAMCO Investors, Inc.
Executive Chairman,
Associated Capital Group Inc.
Kinchen C. Bizzell
Former Managing Director,
CAVU Securities
Elizabeth C. Bogan
Senior Lecturer, Economics
Princeton University
James P. Conn
Former Managing
Director &
Chief Investment Officer,
Financial Security Assurance
Holdings Ltd.
Frank J. Fahrenkopf, Jr.
Former President &
Chief Executive
Officer,
American Gaming Association
Daniel D. Harding
Managing General Director,
Global Equity Income Fund
Michael J. Melarkey
Of Counsel,
McDonald Carano Wilson LLP
Kuni Nakamura
President,
Advanced Polymer, Inc.
Jane D. O’Keeffe
Portfolio Manager,
Gabelli Funds, LLC
Nicolas W. Platt
Former Managing Director,
FTI Consulting Inc.
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Anthonie C. van Ekris
Chairman,
BALMAC International Inc.
OFFICERS
Jane D. O’Keeffe
President
John C. Ball
Treasurer
Agnes Mullady
Vice President
Andrea R. Mango
Secretary & Vice
President
Richard J. Walz
Chief Compliance Officer
Laurissa M. Martire
Vice President &
Ombudsman
Bethany Uhlein
Vice President & Ombudsman
INVESTMENT ADVISER
Gabelli Funds, LLC
CUSTODIAN
State Street Bank and Trust
Company
COUNSEL
Skadden, Arps, Slate, Meagher &
Flom LLP
TRANSFER AGENT AND
REGISTRAR
American Stock Transfer
and
Trust Company
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BCV Q2/2019
