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<SEC-DOCUMENT>0001145443-03-001407.txt : 20031117
<SEC-HEADER>0001145443-03-001407.hdr.sgml : 20031117
<ACCEPTANCE-DATETIME>20031114192525
ACCESSION NUMBER:		0001145443-03-001407
CONFORMED SUBMISSION TYPE:	N-2/A
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20031117

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BANCROFT CONVERTIBLE FUND INC
		CENTRAL INDEX KEY:			0000009521
		IRS NUMBER:				042476994
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-02151
		FILM NUMBER:		031006451

	BUSINESS ADDRESS:	
		STREET 1:		65 MADISON AVENUE
		STREET 2:		SUITE 550
		CITY:			MORRISTOWN
		STATE:			NJ
		ZIP:			07960
		BUSINESS PHONE:		(973) 631-1177

	MAIL ADDRESS:	
		STREET 1:		65 MADISON AVENUE
		STREET 2:		SUITE 550
		CITY:			MORRISTOWN
		STATE:			NJ
		ZIP:			07960

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BANCROFT CONVERTIBLE FUND INC
		CENTRAL INDEX KEY:			0000009521
		IRS NUMBER:				042476994
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		N-2/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-109243
		FILM NUMBER:		031006452

	BUSINESS ADDRESS:	
		STREET 1:		65 MADISON AVENUE
		STREET 2:		SUITE 550
		CITY:			MORRISTOWN
		STATE:			NJ
		ZIP:			07960
		BUSINESS PHONE:		(973) 631-1177

	MAIL ADDRESS:	
		STREET 1:		65 MADISON AVENUE
		STREET 2:		SUITE 550
		CITY:			MORRISTOWN
		STATE:			NJ
		ZIP:			07960
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-2/A
<SEQUENCE>1
<FILENAME>bancroft_n2a.txt
<TEXT>

    As filed with the Securities and Exchange Commission on November 14, 2003


================================================================================


                                              Securities Act File No. 333-109243
                                        Investment Company Act File No. 811-2151


                          U.S. SECURITIES AND EXCHANGE
                             COMMISSION Washington,
                                   D.C. 20549
                                    Form N-2

                        (Check appropriate box or boxes)


[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] Pre-Effective Amendment No. 1
[_] Post-Effective Amendment No. __


                  and

[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 20

                             ----------------------

                         Bancroft Convertible Fund, Inc.
               (Exact Name of Registrant as Specified in Charter)
                            ------------------------

           65 Madison Avenue, Suite 550, Morristown, New Jersey 07960
 Address of Principal Executive Offices (Number, Street, City, State, Zip Code)
                            ------------------------

                                 (973) 631-1177
              (Registrant's Telephone Number, including Area Code)

                               Thomas H. Dinsmore
                      Chairman and Chief Executive Officer
                         Bancroft Convertible Fund, Inc.
                                65 Madison Avenue
                          Morristown, New Jersey 07960
  Name and Address (Number, Street, City, State, Zip Code) of Agent for Service

                                   Copies to:

                             Martha J. Hays, Esquire
                     Ballard Spahr Andrews & Ingersoll, LLP
                         1735 Market Street, 51st Floor
                           Philadelphia, PA 19103-7599

                  Approximate Date of Proposed Public Offering:
 As soon as practicable after the effective date of this Registration Statement
                            ------------------------

If any of the securities being registered on this form are offered on a delayed
or continuous basis in reliance on Rule 415 under the Securities Act of 1933, as
amended (the "Securities Act"), other than securities offered only in connection
with a dividend reinvestment plan, check the following box. [X]


  It is proposed that this filing will become effective (check appropriate box)

  [X] when declared effective pursuant to section 8(c)

<PAGE>


        CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
<S>                          <C>                   <C>                    <C>                   <C>
  Title of Securities         Amount Being          Proposed Maximum       Proposed Maximum           Amount of
    Being Registered         Registered (1)        Offering Price Per     Aggregate Offering    Registration Fee (2)


                                                        Unit (1)               Price (1)
      Common Stock            10,000 shares              $19.07                $190,700                $15.43
    $ 0.01 par value

- -------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      Estimated solely for the purpose of calculating the registration fee in
         accordance with Rule 457(c) under the Securities Act of 1933. Based on
         the average of the high and low prices reported on the American Stock
         Exchange on November 11, 2003.


(2)      A registration fee of $1,243.48 for 793,938 shares was previously paid
         in connection with the initial filing.


         THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================




<PAGE>


                         Bancroft Convertible Fund, Inc.
                         797,918 Shares of Common Stock
                   Issuable upon Exercise of Non-Transferable
               Rights to Subscribe for such Shares of Common Stock

         Bancroft Convertible Fund, Inc. (the "Fund") is offering to its common
stockholders of record as of November 13, 2003 non-transferable rights
("Rights"). These Rights will allow you to subscribe for one share of the Fund's
Common Stock for each six Rights held (the "Offer"). You will receive one Right
for each whole share of Common Stock that you hold of record as of November 13,
2003, rounded up to the nearest number of Rights evenly divisible by six. The
Rights will not be listed for trading on the American Stock Exchange ("AMEX") or
any other exchange. The subscription price (the "Subscription Price") will be
the lesser of (a) 95% of the net asset value per share of the Fund's Common
Stock on December 17, 2003 (the "Pricing Date"), or (b) 95% of the average of
the volume-weighted average sales prices of a share of the Fund's Common Stock
on the AMEX on the Pricing Date and the four preceding trading days.

         Rights may be exercised at any time prior to 5:00 p.m., Eastern time,
on December 16, 2003 (the "Expiration Date"), unless extended. Since the Offer
closes prior to the Pricing Date, stockholders who exercise their Rights will
not know the Subscription Price at the time they exercise their Rights. Payment
of the estimated Subscription Price of $18.32 per share must be made when a
stockholder exercises the Rights.

         The Fund is a closed-end, diversified management investment company,
whose shares of Common Stock are listed and traded on the AMEX under the symbol
"BCV." The Fund 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 due to the nature of the securities in
which it invests). The Fund will invest, under normal circumstances, at least
80% of the value of its assets (consisting of net assets plus the amount of any
borrowings for investment purposes) in convertible securities. Investing in the
Fund involves certain risks. See "Risk Factors and Special Considerations" on
page 18. The net asset value per share of the Fund's Common Stock at the close
of business on November 13, 2003 was $20.98, and the last reported sales price
of a share of the Fund's Common Stock on the AMEX on that date was $18.85.

         Neither the Securities and Exchange Commission ("SEC") nor any state
securities commission has approved or disapproved of these securities or
determined if this Prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.

                                                               Proceeds, before
                       Estimated                                 expenses, to
                 Subscription Price (1)      Sales Load          the Fund (2)
                 ----------------------      ----------          ------------

Per Share                $18.32                 None                $18.32
                         ------                                     ------
Total                  $14,617,858              None             $14,617,858
                       -----------                               -----------

(1)      Estimated based on an estimated Subscription Price per share of 95% of
         the average of the volume-weighted average sales prices of a share of
         the Fund's Common Stock on the AMEX on November 13, 2003 and the four
         preceding trading days.

(2)      Before deduction of expenses payable by the Fund, estimated at
         $175,492, which will be charged against paid-in capital of the Fund.

                The date of this Prospectus is November 17, 2003.




<PAGE>



         Stockholders who do not fully exercise their Rights should expect that
they will, at the completion of the Offer, own a smaller proportional interest
in the Fund than if they exercised their Rights. As a result of the Offer, you
may experience an immediate dilution of the aggregate net asset value of your
shares, which under certain circumstances, may be substantial. This is because
the Subscription Price per share and the net proceeds to the Fund for each new
share sold will be less than the Fund's net asset value per share on the
Expiration Date. The Fund cannot state precisely the extent of this dilution at
this time because it does not know what the net asset value or market price per
share will be when the Offer expires or what proportion of the Rights will be
exercised. See "Prospectus Summary - Risk Factors and Special Considerations -
Dilution."

         This Prospectus contains information you should know before exercising
your Rights, including information about risks. Please read it before you invest
and keep it for future reference. A Statement of Additional Information, dated
November 17, 2003, containing additional information about the Fund, has been
filed with the SEC and is incorporated by reference in its entirety into this
Prospectus. The table of contents of the Statement of Additional Information
appears on page 31 of this Prospectus, and a copy is available at no charge by
calling the Information Agent at (888) 613-9988 or at the SEC's internet website
(http://www.sec.gov).

         Shares will be ready for delivery on or about January 13, 2004.




<PAGE>



         You should rely only on the information contained in this Prospectus
and the related Statement of Additional Information. We have not authorized any
other person to provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely on it. We are
not making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in
this Prospectus and the related Statement of Additional Information is accurate
only as of the date on the front covers of this Prospectus and the related
Statement of Additional Information. Our business, financial condition, results
of operations and prospects may have changed since that date.

                                 --------------

                                Table of Contents
<TABLE>
<CAPTION>
                                                                                                                      Page
                                                                                                                      -----
<S>                                                                                                                     <C>
Prospectus Summary.....................................................................................................  1
Fund Expenses..........................................................................................................  7
Financial Highlights...................................................................................................  8
Investment Performance................................................................................................. 10
The Offer.............................................................................................................. 11
Risk Factors and Special Considerations................................................................................ 18
Use of Proceeds........................................................................................................ 21
Investment Objectives and Policies..................................................................................... 21
Management of the Fund................................................................................................. 24
Description of Capital Stock........................................................................................... 26
Certain Charter Provisions............................................................................................. 27
Repurchases of Securities.............................................................................................. 28
Dividends, Distributions and Reinvestment Plan......................................................................... 29
Taxation............................................................................................................... 30
Custodian, Transfer Agent and Registrar................................................................................ 31
Experts ............................................................................................................... 31
Additional Information................................................................................................. 31

</TABLE>




<PAGE>
















                      {THIS PAGE INTENTIONALLY LEFT BLANK}






















<PAGE>


                               PROSPECTUS SUMMARY

         You should consider the matters discussed in this summary before
investing in the Fund through the Offer. This summary is qualified in its
entirety by reference to the detailed information included in this Prospectus
and the related Statement of Additional Information.

Purpose of the Offer


         The Board of Directors of the Fund has determined that it would be in
the best interest of the Fund and its stockholders to increase the assets of the
Fund available for investment so that it may be in a better position to take
advantage of investment opportunities that may arise. The Offer seeks to reward
existing stockholders in the Fund by giving them the opportunity to purchase
additional shares at a price below market and/or net asset value and without
incurring any brokerage commissions. See "The Offer -- Purposes of the Offer."


         The Board of Directors believes that a larger asset base may increase
the level of market interest in and visibility of the Fund and improve the
trading liquidity of the Fund's shares on the American Stock Exchange ("AMEX").

Important Terms of the Offer

<TABLE>
<CAPTION>
<S>                                                     <C>
Offer.................................................  The Fund is offering to its stockholders
                                                        non-transferable rights ("Rights") to subscribe for
                                                        shares of the Fund's Common Stock (the "Offer").


Total number of shares available for primary
     subscription...................................... 797,918 Shares of the Fund's Common Stock
                                                        (the "Shares").


Number of Rights you will receive for each
     outstanding share you own on
     November 13, 2003 (the "Record Date")............. One Right for every one share, rounded up to the
                                                        nearest number of Rights evenly divisible by six.

Number of Shares you may purchase with your
     Rights at the Subscription Price per Share........ One Share for every six Rights.


Subscription Price (the "Subscription
     Price")........................................... The lesser of (A) 95% of the net asset value per share
                                                        of the Fund's Common Stock on December 17, 2003 (the
                                                        "Pricing Date") or (B) 95% of the average of the
                                                        volume-weighted average sales prices of a share of the
                                                        Fund's Common Stock on the AMEX on the Pricing Date and
                                                        the four preceding trading days.

</TABLE>


Additional Terms of the Offer

         The Rights will not be listed for trading on the AMEX or any other
exchange. Rights may be exercised at any time from November 18, 2003 through
5:00 p.m., Eastern time, on December 16, 2003 (the "Expiration Date"), unless
extended. Since the Expiration Date is prior to the Pricing Date, stockholders
who exercise their


                                       1
<PAGE>

Rights will not know the Subscription Price at the time they exercise their
Rights. Payment of the estimated Subscription Price of $18.32 per Share must be
made when a stockholder exercises the Rights.

Over-Subscription Privilege

         If you fully exercise all Rights issued to you, you will be entitled to
subscribe for additional Shares that were not subscribed for by other
stockholders. If sufficient Shares are available, all stockholders'
over-subscription requests will be honored in full. If these requests for
additional Shares exceed the Shares available, the available Shares will be
allocated pro rata among stockholders who over-subscribe based on the number of
Rights originally issued to them by the Fund. See "The Offer - Over-Subscription
Privilege."

Method of Exercising Rights

         The Rights will be evidenced by subscription certificates
("Subscription Certificates"). If you are a stockholder of record, your
Subscription Certificate will be sent to you. If your shares are held by a
nominee, such as a bank, broker, trust company or other financial institution
("Nominee"), the Subscription Certificate will be sent to your Nominee.

         Stockholders who are record owners can choose between either option
below to exercise rights. Stockholders whose shares are held by a Nominee must
choose option (2) below to exercise their Rights. You may exercise your Rights
in the following ways:


         (1)     Complete and sign the Subscription Certificate. Mail it in the
envelope provided or deliver it, together with payment of the Estimated
Subscription Price of $18.32 per Share, to American Stock Transfer & Trust
Company (the "Subscription Agent") at the address indicated on the Subscription
Certificate. Your completed and signed Subscription Certificate and payment in
good funds of the Estimated Subscription Price of $18.32 per Share must be
received prior to 5:00 p.m. Eastern time on the Expiration Date. Final payment
of the actual Subscription Price per Share must be received by the Subscription
Agent by January 8, 2004.

         (2)      Contact your Nominee, which can arrange, on your behalf, to
guarantee delivery of payment and delivery of a properly completed and executed
Subscription Certificate pursuant to a notice of guaranteed delivery ("Notice of
Guaranteed Delivery"). A stockholder who is a record owner may also contact a
bank, broker, trust company, New York Stock Exchange member firm or financial
institution, which can arrange for a Notice of Guaranteed Delivery. A fee may be
charged for this service. The Notice of Guaranteed Delivery must be received by
the Expiration Date. A properly completed and executed Subscription Certificate,
together with payment of the Estimated Subscription Price of $18.32 per Share,
must be received by the Subscription Agent by the close of business on the third
business day after the Expiration Date (December 19, 2003, unless the Offer is
extended) or the Subscription Agent will not honor a Notice of Guaranteed
Delivery. Final payment of the actual Subscription Price per share must be
received by the Subscription Agent by January 8, 2004.

         Since the Expiration Date is prior to the Pricing Date, stockholders
who choose to exercise their Rights will not know the Subscription Price at the
time they exercise such Rights. Stockholders will have no right to rescind their
subscription after the Subscription Agent has received their payment for Shares.
See "The Offer - Method of Exercising Rights" and "The Offer - Payment for
Shares." Subscription payments will be held by the Subscription Agent, in a
segregated, interest bearing account, pending completion of the processing of
the subscription. No interest on subscription payments will be paid to
subscribers.



                                       2
<PAGE>

         The Rights are not transferable. Therefore, only the underlying Shares,
and not the Rights, will be admitted for trading on the AMEX. Fractional shares
will not be issued on exercise of Rights.

Obtaining Subscription Information

         Stockholders' inquiries about the Offer should be directed to their
broker, bank or trust company, or to:


                    Georgeson Shareholder Communications Inc.
                                 (888) 613-9988


         You may also call the Fund collect at (973) 631-1177.

Important Dates to Remember

<TABLE>
<CAPTION>

                                 Event                                          Date
<S>                                                                      <C>

Record Date........................................................      November 13, 2003
Subscription Period................................................      November 18, 2003 through
                                                                         December 16, 2003*
Expiration Date (Deadline for delivery of Subscription
         Certificate together with payment of Estimated
         Subscription Price, or for delivery of Notice of
         Guaranteed Delivery)......................................      December 16, 2003*
Pricing Date.......................................................      December 17, 2003*
Nominee Subscription Certificate and Payment of
        Estimated Subscription Price for Shares Due Pursuant
        to Notice of Guaranteed Delivery...........................      December 19, 2003*
Confirmation to Participants.......................................      December 23, 2003*
Final Payment for Shares...........................................      January 8, 2004*

</TABLE>

         *Unless the Offer is extended.

Tax Consequences

         For Federal income tax purposes, neither the receipt nor the exercise
of the Rights will result in taxable income to you. You will not realize a
taxable loss if your Rights expire without being exercised. See "The Offer -
Federal Income Tax Consequences of the Offer."

Information about the Fund

         The Fund is a closed-end, diversified management investment company,
incorporated under the laws of the State of Delaware on September 10, 1970.


         The Fund 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 due to the nature of the
securities in which it invests). These investment objectives may be changed in
the future by the Fund's Board of Directors without the approval of a majority
of the Fund's outstanding voting securities. The Fund will provide stockholders
with at least 60 days prior notice of any change to these investment objectives.



                                       3
<PAGE>


         The Fund expects that a substantial majority of its assets will consist
of convertible securities. The Fund has adopted a non-fundamental investment
policy providing that the Fund will invest, under normal circumstances, at least
80% of the value of its assets (consisting of net assets plus the amount of any
borrowings for investment purposes) in convertible securities. This investment
policy may be changed in the future by the Fund's Board of Directors without the
approval of a majority of the Fund's outstanding voting securities. The Fund
will provide stockholders with at least 60 days prior notice of any change to
this investment policy.

         Convertible securities include debt securities and preferred stocks
which are convertible into, or carry the right to purchase, common stock or
other equity securities. The debt security or preferred stock may itself be
convertible into or exchangeable for equity securities, or the conversion
privilege may be evidenced by warrants attached to the security or acquired as
part of a unit with the security. The convertible security may be structured so
that it is convertible at the option of the holder or of the issuer, or subject
to mandatory conversion. The remainder of the Fund's assets may be invested in
other securities, including non-convertible preferred stocks and investment
grade debt securities, common stock received upon conversion or exchange of
securities, options, warrants, securities of the U.S. Government, its agencies
and instrumentalities, foreign securities, American Depositary Receipts, or
repurchase agreements, or they may be held as cash. The Fund is not required to
sell securities for the purpose of assuring that 80% of its assets are invested
in convertible securities.


         An investment in the Fund is not appropriate for all investors. There
can be no assurance that the Fund's investment objectives will be realized. See
"Investment Objectives and Policies."

Capital Stock


         The Fund's Common Stock is listed and traded on the AMEX under the
symbol "BCV." As of November 13, 2003, the Fund had 4,725,858 shares of Common
Stock issued and outstanding. See "Description of Capital Stock."


Investment Adviser


         Davis-Dinsmore Management Company (the "Adviser") provides investment
advisory services to the Fund. For its services, the Fund pays the Adviser a
monthly advisory fee, computed at an annual rate of 3/4 of 1% of the first
$100,000,000, and 1/2 of 1% of the excess over $100,000,000, of the Fund's net
asset value in such month. For purposes of calculation of the fee, the net asset
value for a month will be the average of the Fund's net asset values at the
close of business on the last business day on which the New York Stock Exchange
is open in each week in the month. See "Management of the Fund."


Risk Factors and Special Considerations

         The following summarizes some of the matters that you should consider
before subscribing for Shares of the Fund through the Offer.


<TABLE>
<CAPTION>
<S>                                     <C>
Dilution...........................     Stockholders who do not fully exercise their Rights should expect that they
                                        will, at the completion of the Offer, own a smaller proportional interest in
                                        the Fund than if they exercised their Rights.  In addition, as a result of
                                        the Offer, you may experience an immediate dilution of the aggregate net
                                        asset value of your shares, which, under certain circumstances, may be
                                        substantial.  This is because the Subscription Price per share and the net
                                        proceeds to the Fund for each new Share sold will be less than the Fund's net
                                        asset value per share on the
</TABLE>



                                        4
<PAGE>

<TABLE>
<CAPTION>
<S>                                     <C>

                                        Expiration Date. It is not possible to state precisely the amount of such
                                        dilution because it is not known at this time how many Shares will be
                                        subscribed for or what the net asset value or market price per share will be
                                        on the Pricing Date. For an example of the potential dilution that may result
                                        from the Offer see "Risk Factors and Special Considerations - Dilution."

Risk of Trading Discounts.............. The Fund's shares have generally traded in the market below (a discount from)
                                        net asset value since the commencement of the Fund's operations in September
                                        1970.  The Fund's shares have traded at discounts of as much as 23.33% in the
                                        past 20 years.  The possibility that shares of the Fund will trade at a
                                        discount from net asset value is a risk separate and distinct from the risk
                                        that the Fund's net asset value will decrease.  The risk of purchasing shares
                                        of a closed-end fund, such as the Fund, that might trade at a discount is
                                        more pronounced for investors who wish to sell their shares in a relatively
                                        short period of time because, for those investors, realization of a gain or
                                        loss on their investments is likely to be more dependent upon the existence
                                        of a premium or discount than upon portfolio performance.  See "Risk Factors
                                        and Special Considerations - Risk of Trading Discounts."

                                        For the fiscal year ended October 31, 2003, the Fund's shares traded in the
                                        market at an average daily discount to net asset value of 3.32%. As of
                                        November 13, 2003, the discount to net asset value was 10.15%. There can be no
                                        assurance that the current discount level will not change. See "Description of
                                        Capital Stock - Net Asset Values and Sales Prices."

Risk of Decline in Net Asset Value..... The Fund is subject to market risk - the possibility that the securities it
                                        holds will decline over short or extended periods of time. As a result, the
                                        value of an investment in the Fund's Common Stock will fluctuate with the
                                        market, and you could lose money over short or long periods of time. It is the
                                        Fund's policy to invest at least 80% of its assets in convertible securities.
                                        Although convertible securities do derive part of their value from that of the
                                        securities into which they are convertible, they are not considered derivative
                                        financial instruments. However, certain of the Fund's investments include
                                        features which render them more sensitive to price changes in their underlying
                                        securities. Thus, they expose the Fund to greater downside risk than
                                        traditional convertible securities, but still less than that of the underlying
                                        common stock. See "Investment Objectives and Policies - Discussion of
                                        Convertible Securities."


Credit Risk............................ Credit risk is the risk that an issuer will fail to pay interest or dividends
                                        and principal in a timely manner.  Companies that issue convertible
                                        securities may be small to medium-size, and they often have low credit
                                        ratings.  In addition, the credit rating of a company's convertible
                                        securities is generally lower than that of its conventional debt securities.
                                        Convertible securities are normally considered "junior" securities - that is,
                                        the company usually must pay interest on its conventional debt before it can
                                        make payments on its
</TABLE>


                                        5
<PAGE>

<TABLE>
<CAPTION>
<S>                                     <C>
                                        convertible securities. Credit risk could be high for the Fund, because it
                                        could invest in securities with low credit quality.

Interest Rate Risk..................... Interest rate risk is the possibility that prices of securities will decline
                                        along with overall bond prices, over short or even long periods, because of
                                        rising interest rates.  Convertible securities are particularly sensitive to
                                        interest rate changes when their predetermined conversion price is much
                                        higher than the issuing company's common stock.


Manager Risk.......................     Manager risk is the risk that poor security selection will cause the Fund to
                                        underperform other funds with a similar investment objective.


Anti-Takeover Provisions...........     The Fund has provisions in its governing instruments which could have the
                                        effect of limiting the ability of other entities or persons to acquire
                                        control of the Fund, to cause it to engage in certain transactions or to
                                        modify its structure.  See "Certain Charter Provisions."


Ineligibility of Shares Issued to
Receive Next Dividend..............     Historically, the Fund has paid quarterly dividends to its stockholders.  It
                                        is likely that the Fund's Board of Directors will declare a dividend during
                                        the Subscription Period.  Because the record date for such dividend would be
                                        prior to the Expiration Date, any Shares issued pursuant to the Offer would
                                        not be eligible to receive such dividend.  Additionally, since the
                                        Subscription Price would be determined after the dividend record date, the
                                        Subscription Price would be priced ex-dividend.
</TABLE>

                                        6
<PAGE>

                                  FUND EXPENSES

         The following tables are intended to assist investors in understanding
the various costs and expenses that a stockholder of the Fund will bear,
directly or indirectly.

<TABLE>
<CAPTION>
<S>                                                                                                 <C>
Stockholder Transaction Expenses
      Sales Load......................................................................                None
      Cash Payment Plan Fee...........................................................              $1.25(1)
Annual Expenses (as a percentage of average net assets attributable
    to the Fund's Common Stock)

      Management Fees.................................................................                0.75%
      Other Expenses(2)...............................................................                0.45%
                                                                                                    -------
      Total Annual Expenses...........................................................                1.20%
                                                                                                    =======
</TABLE>

- --------------------

(1)      Represents the bank service charge per transaction for the Cash Payment
         Plan.

(2)      Other Expenses are based on estimated amounts for the current fiscal
         year.

Example


         The following Example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Fund's Common Stock. These amounts are based
upon payment by the Fund of management fees and other expenses at the levels set
forth in the above table.


         An investor would directly or indirectly pay the following expenses on
a $1,000 investment in shares of the Fund's Common Stock, assuming (i) the
market price at the time of investment was equal to the net asset value ("NAV")
per share, (ii) a 5% annual return and (iii) reinvestment of all distributions
at NAV:

<TABLE>
<CAPTION>
           One Year                     Three Years                  Five Years                    Ten Years
<S>          <C>                            <C>                          <C>                         <C>
             $12                            $38                          $66                         $145
</TABLE>

         This Example assumes that the percentage amounts listed under Annual
Expenses remain the same in the years shown. The above tables and the assumption
in the Example of a 5% annual return and reinvestment at NAV are required by
regulation of the SEC and are applicable to all investment companies, and the
assumed 5% annual return is not a prediction of, and does not represent, the
projected performance of the Fund's Common Stock. Actual expenses and annual
rates of return may be more or less than those allowed for purposes of this
Example. In addition, while the Example assumes reinvestment of all
distributions at NAV, the Fund's Automatic Dividend Investment and Cash Payment
Plan contemplates reinvestment of net investment income dividends and capital
gain distributions in shares of the Fund's Common Stock, based on the lower of
the market price or NAV on the valuation date, except that distributions may not
be reinvested for less than 95% of the market price.

         THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.



                                       7
<PAGE>

                              FINANCIAL HIGHLIGHTS

         The financial highlights table is intended to help you understand the
Fund's financial performance for the periods presented and reflects financial
results for a single Fund share. The total returns in the table represent the
rate that an investor would have earned on an investment in the Fund (assuming
reinvestment of all dividends and distributions). The information for the six
months ended April 30, 2003 has not been audited. The information for each of
the ten fiscal years in the period ended October 31, 2002 has been audited by
PricewaterhouseCoopers LLP, independent accountants. The audited financial
statements included in the Annual Report to the Fund's Stockholders for the
fiscal year ended October 31, 2002, together with the report of
PricewaterhouseCoopers LLP thereon, and the unaudited financial statements
included in the Semi-Annual Report to the Fund's Stockholders for the six months
ended April 30, 2003 are incorporated by reference into the Statement of
Additional Information. Further information about the performance of the Fund is
available in the Fund's 2002 Annual Report to Stockholders and the Fund's
Semi-Annual Report to Stockholders dated April 30, 2003. The Statement of
Additional Information, the Fund's 2002 Annual Report to Stockholders and the
Fund's Semi-Annual Report to Stockholders dated April 30, 2003 may be obtained
from the Fund free of charge by calling the Fund collect at (973) 631-1177.

<TABLE>
<CAPTION>
                                          Six Months
                                          Ended April                           Years Ended October 31,
                                           30, 2003       ---------------------------------------------------------------
                                          (unaudited)         2002             2001              2000             1999
                                          -----------     -----------      -----------       -----------      -----------
<S>                                          <C>              <C>               <C>              <C>             <C>
Operating Performance:
Net asset value, beginning of period         $18.55           $20.72            $27.09           $27.35          $26.89
                                          -----------     -----------      -----------       -----------      -----------
Net investment income..............             .27              .79              1.07             1.04             .78
Net realized and unrealized gain
(loss).............................            1.14            (2.02)            (3.23)            2.29            3.40
                                          -----------     -----------      -----------       -----------      -----------
    Total from investment operations           1.41            (1.23)            (2.16)            3.33            4.18
Less Distributions:
Dividends from net investment income           (.41)            (.94)            (1.11)            (.80)           (.78)
Distributions from realized gains..             ---               ---            (3.10)           (2.90)          (2.94)
                                          -----------     -----------      -----------       -----------      -----------
    Total Distributions............            (.41)            (.94)            (4.21)           (3.70)          (3.72)
Capital share repurchases..........             ---               ---              ---              .11              ---
Net asset value, end of period.....          $19.55           $18.55            $20.72           $27.09          $27.35
                                          ===========     ===========      ===========       ===========      ===========
Market value, end of period........          $18.95           $17.54            $18.75           $22.63          $22.25

Total Net Asset Value Return (%)(a)            7.71            (6.29)            (8.68)           13.62           16.36
Total Investment Return (%)(b).....           10.50            (1.82)             1.31            20.63           (2.96)

Ratios/Supplemental Data:
Net assets, end of year ($000's)...         $92,394          $86,904           $95,864         $111,336        $103,791
Ratio of expenses to average net                1.2(c)           1.2               1.1              1.1             1.1
assets (%).........................
Ratio of net investment income to
    average net assets (%).........             2.9(c)           4.0               4.9              3.8             3.0
Portfolio turnover rate (%)........              39               78                83               93              72
</TABLE>

- -----------

(a)      Assumes valuation of the Fund's shares, and reinvestment of dividends,
         at net asset values.
(b)      Assumes valuation of the Fund's shares at market price and reinvestment
         of dividends at actual reinvestment price.
(c)      Annualized.


                                       8
<PAGE>


<TABLE>
<CAPTION>
                                                                       Years Ended October 31,
                                        ---------------------------------------------------------------------------------------
                                            1998          1997           1996           1995          1994           1993
                                        ------------- -------------- -------------- ------------- -------------- --------------
<S>                                          <C>           <C>            <C>            <C>           <C>            <C>
Operating Performance:
Net asset value, beginning of period         $30.48        $28.23         $24.84         $23.11        $25.00         $22.75
                                        ------------- -------------- -------------- ------------- -------------- --------------
Net investment income..............             .87           .94            .96           1.14          1.20           1.26
Net realized and unrealized gain
(loss).............................            (.01)         4.55           4.19           2.30         (1.18)          3.07
                                        ------------- -------------- -------------- ------------- -------------- --------------

    Total from investment operations            .86          5.49           5.15           3.44           .02           4.33
Less Distributions:
Dividends from net investment income           (.88)         (.93)         (1.11)         (1.17)        (1.24)         (1.24)
Distributions from realized gains..           (3.57)        (2.31)          (.65)          (.54)         (.67)          (.84)
                                        ------------- -------------- -------------- ------------- -------------- --------------
    Total Distributions............           (4.45)        (3.24)         (1.76)         (1.71)        (1.91)         (2.08)
Capital share repurchases..........             ---           ---            ---           ---            ---            ---
Net asset value, end of period.....          $26.89        $30.48         $28.23         $24.84        $23.11         $25.00
                                        ============= ============== ============== ============= ============== ==============

Market value, end of period........          $26.75        $26.81         $23.88         $22.25        $20.13         $23.00

Total Net Asset Value Return (%)(a)           (3.16)        21.18          21.55          15.79          0.18          20.12
Total Investment Return (%)(b).....           18.17         28.19          15.65          20.17         (4.88)         22.90

Ratios/Supplemental Data:
Net assets, end of year ($000's)...         $93,433       $96,187        $83,302        $71,425       $64,551        $67,829
Ratio of expenses to average net                1.1           1.2            1.2            1.2           1.2            1.2
assets (%).........................
Ratio of net investment income to
    average net assets (%).........             3.1           3.3            3.9            4.9           5.2            5.4
Portfolio turnover rate (%)........              55            71             70             43            39            102
</TABLE>

- ---------

(a)      Assumes valuation of the Fund's shares, and reinvestment of dividends,
         at net asset values.
(b)      Assumes valuation of the Fund's shares at market price and reinvestment
         of dividends at actual reinvestment price.



                                       9
<PAGE>


                             INVESTMENT PERFORMANCE


         The table below presents average annual total returns of the Fund's
Common Stock on two separate bases. The NAV Return is the compound average
annual rate of return, using NAVs, on an amount invested in the Fund from the
beginning to the end of the stated period and assumes reinvestment of net
investment income dividends and capital gains distributions at NAV. The Market
Value Return presents the same information, but values the Fund at market rather
than NAV and reinvestment of dividends at actual reinvestment price and,
therefore, reflects the actual experience of a stockholder, before commission
costs, who bought and sold shares of the Fund at the beginning and ending dates.


         The record of the Credit Suisse First Boston Convertible Securities
Index (the "CSFB Index") has been included so that the Fund's results may be
compared with an index of convertible securities. The CSFB Index is an unmanaged
index which generally includes 250-300 issues representing convertible issues,
U.S. dollar-denominated debentures and preferred stock which can be converted
into a specified number of shares of common stock. The record of the Standard &
Poor's Composite Stock Price 500 Index (the "S&P 500 Index") has been included
so that the Fund's results may be compared with a widely recognized, unmanaged
benchmark of U.S. stock market performance that is dominated by the stocks of
large U.S. companies. The record of the Russell 2000(R) Index has been included
so that the Fund's results may be compared with an unmanaged index reflecting
the performance of the 2,000 smallest companies in the Russell 3000(R) Index
(which represent the 3,000 largest U.S. companies based on total market
capitalization). The Fund primarily invests in convertible securities. The
figures for each Index assume reinvestment of dividends.

<TABLE>
<CAPTION>

                                                                                                  From April 20,
                           One Year        Three Years                                              1971 (day
                             Ended            Ended        Five Years Ended    Ten Years Ended    trading began)
                          October 31,      October 31,        October 31,        October 31,      to October 31,
                            2003(%)          2003(%)            2003(%)            2003(%)           2003(%)
                          -----------      -----------        -----------        -----------      --------------
<S>                          <C>               <C>               <C>                 <C>                <C>
Fund NAV Return              16.67            -0.05              5.81                8.90               9.80(a)
Fund Market Value
Return                       16.71             5.18              6.16               10.55              10.95(b)
Credit Suisse First
Boston Convertible
Securities Index             30.04            -1.28              8.74                8.68                -- (c)
S&P 500 Index                20.80            -8.33              0.53               10.41              11.07
Russell 2000(R)Index
                             43.40             3.52              8.43                7.37(d)             -- (c)

</TABLE>


(a)      Reflects a stockholders full participation in the 1988 rights offering.
         If a stockholder did not participate in the 1988 rights offering, the
         Fund NAV Return would be 9.49%.

(b)      Reflects a stockholders full participation in the 1988 rights offering.
         If a stockholder did not participate in the 1988 rights offering, the
         Fund Market Value Return would be 10.59%.

(c)      Beginning of stated period pre-dates inception of index.

(d)      Simple appreciation of index.



                                       10
<PAGE>

         It should be noted that the NAV Return for the period from April 20,
1971 through October 31, 2003 is based on the Fund's initial NAV of $23.00 per
share, rather than the initial public offering price of $25.00 per share.
Accordingly, that figure does not reflect underwriting commissions and discounts
or expenses of the offering paid by stockholders who purchased the Fund's shares
in the initial public offering.

         The above results represent past performance and should not be
considered an indication of future performance from an investment in the Fund
today. They are provided only to give an historical perspective of the Fund. The
investment return and net asset and market prices will fluctuate, so that shares
of Common Stock may be worth more or less than their original cost when sold.

                                    THE OFFER

Terms of the Offer


         The Fund is offering to common stockholders of record as of the close
of business on the Record Date, Rights to subscribe for an aggregate of 797,918
Shares of the Common Stock of the Fund.


         Each stockholder is being issued one Right for each whole share of
Common Stock owned on the Record Date rounded up to the nearest number of Rights
evenly divisible by six. The Rights entitle a stockholder to acquire at the
subscription price one Share for each six Rights held. Fractional Shares will
not be issued upon the exercise of Rights. In the case of shares held of record
by a Nominee, the number of Rights issued to such Nominee will be adjusted to
permit rounding up (to the nearest number of Rights evenly divisible by six) of
the Rights to be received by each of the beneficial owners for whom it is the
holder of record only if the Nominee provides to the Fund, on or before the
close of business on December 15, 2003, a written representation of the number
of Rights required for such rounding.

         Rights may be exercised at any time during the subscription period,
which commences on November 18, 2003 and ends as of 5:00 p.m., Eastern time, on
December 16, 2003 (the "Subscription Period") unless extended by the Fund (such
date, as it may be extended, is referred to in this Prospectus as the
"Expiration Date"). A stockholder's right to acquire one additional Share for
each six Rights held during the Subscription Period at the subscription price is
referred to as the "Primary Subscription." The Rights are evidenced by
subscription certificates ("Subscription Certificates"), which will be mailed to
stockholders or their Nominee.


         The subscription price (the "Subscription Price") will be the lesser of
(A) 95% of the net asset value per share of the Fund's Common Stock on December
17, 2003 (the "Pricing Date") or (B) 95% of the average of the volume-weighted
average sales prices of a share of the Fund's Common Stock on the AMEX on the
Pricing Date and the four preceding trading days. Since the time of the close of
the Offer on the Expiration Date is prior to the Pricing Date, holders who
choose to exercise their Rights will not know the Subscription Price at the time
they exercise their Rights.


         In addition, any stockholder who fully exercises all Rights issued to
him or her is entitled to subscribe for additional Shares, which were not
otherwise subscribed for in the Primary Subscription, at the Subscription Price
(the "Over-Subscription Privilege"). Shares acquired pursuant to the
Over-Subscription Privilege are subject to allotment, which is more fully
discussed below under "The Offer - Over-Subscription Privilege."

         The Rights are non-transferable. Therefore, only the underlying Shares,
and not the Rights, will be listed for trading on the AMEX.


                                       11
<PAGE>

Purposes of the Offer


         The Board of Directors of the Fund has determined that (i) it would be
in the best interests of the Fund and its stockholders to increase the assets of
the Fund available for investment so that it may be in a better position to take
advantage of investment opportunities that may arise, and (ii) the potential
benefits of the Offer to the Fund and its stockholders will outweigh the
dilution to stockholders who do not fully exercise their Rights. The proceeds of
the Offer will enable the Fund's portfolio managers to take advantage of
perceived investment opportunities without having to sell existing portfolio
holdings which they otherwise would retain. Increasing the size of the Fund also
might result in lowering the Fund's expenses as a percentage of average net
assets. The Offer seeks to reward investors by giving existing stockholders the
opportunity to purchase additional Shares at a price below market and/or net
asset value and without brokerage commissions.



         The Board of Directors of the Fund believe that a larger asset base may
increase the level of market interest in and visibility of the Fund and improve
the trading liquidity of the Fund's shares on the AMEX.

         Currently, the majority of new convertible offerings are made pursuant
to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act").
In order to participate in these offerings, a buyer must qualify as a Qualified
Institutional Buyer ("QIB"). A QIB generally must invest on a discretionary
basis at least $100 million in securities. Although the assets of the Fund are
less than $100 million, the Fund is able to participate in these offerings
because its investment adviser, Davis-Dinsmore Management Company (the
"Adviser"), is a QIB (it is an investment adviser registered under the
Investment Advisers Act of 1940, as amended, and invests on a discretionary
basis at least $100 million in securities). If the Adviser no longer qualified
as a QIB, the Fund would no longer be able to participate in Rule 144A
offerings. However, if the Offer is successful, the Fund may independently
qualify as a QIB.

         The Adviser will benefit from the Offer because its fees are based on
the average weekly net assets of the Fund. See "Management of the Fund -
Management Fees." It is not possible to state precisely the amount of additional
compensation the Adviser will receive as a result of the Offer because it is not
known how many Shares will be subscribed for and because the net proceeds of the
Offer will be invested in additional portfolio securities that will fluctuate in
value. Two of the Fund's Directors who voted to authorize the Offer are
"interested persons," within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), of the Adviser, and therefore could benefit
indirectly from the Offer. The other seven Directors are not "interested
persons" of the Fund or the Adviser.


         The Fund may, in the future, choose to make additional rights offerings
from time to time for a number of shares and on terms that may or may not be
similar to this Offer. Any such future rights offerings will be made in
accordance with the then applicable requirements of the 1940 Act and the
Securities Act.

         There can be no assurance that the Fund or its stockholders will
achieve any of the foregoing objectives or benefits through the Offer.

Over-Subscription Privilege


         If some stockholders do not exercise all of the Rights initially issued
to them, any Shares for which subscriptions have not been received from
stockholders will be offered by means of the Over-Subscription Privilege to
those stockholders who have exercised all of the Rights initially



                                       12
<PAGE>


issued to them and who wish to acquire additional Shares. Stockholders who
exercise all of the Rights initially issued to them should indicate on the
Subscription Certificate how many Shares they are willing to acquire through
this Over-Subscription Privilege. If sufficient Shares remain after completion
of the Primary Subscription, all over-subscription requests will be honored in
full. However, if sufficient Shares are not available to honor all
over-subscription requests, the available Shares will be allocated among those
who over-subscribe based on the number of Rights originally issued to them by
the Fund, so that the number of Shares issued to stockholders who subscribe
through the Over-Subscription Privilege will generally be in proportion to the
number of shares of the Fund owned by them on the Record Date. The percentage of
remaining Shares each over-subscribing Stockholder may acquire may be rounded up
or down to result in delivery of whole Shares. The allocation process may
involve a series of allocations in order to ensure that the total number of
Shares available for over-subscriptions is distributed, as nearly as may be
practicable, on a pro rata basis. The Fund will not offer or sell any Shares
which are not subscribed for through the Primary Subscription or the
Over-Subscription Privilege.


         Thomas H. Dinsmore and Jane D. O'Keeffe (control persons of the
Adviser) and certain other officers and employees of the Adviser may purchase
shares of Common Stock in the Primary Subscription and the Over-Subscription
Privilege. Any such purchases will be made on the same terms applicable to other
stockholders.

Subscription Price


         The Subscription Price for the Shares to be issued pursuant to the
Offer will be the lesser of (A) 95% of the net asset value per share of the
Fund's Common Stock on the Pricing Date or (B) 95% of the average of the
volume-weighted average sales prices of a share on the AMEX on the Pricing Date
and the four preceding trading days.

         The actual Subscription Price will not be determined until the Pricing
Date. Therefore, stockholders wishing to exercise Rights must send to American
Stock Transfer & Trust Company prior to the Expiration Date either: (i) the
Estimated Subscription Price of $18.32 per Share, together with a completed
Subscription Certificate, or (ii) a Notice of Guaranteed Delivery guaranteeing
delivery of a properly completed and executed Subscription Certificate and
payment for the Shares. See "The Offer - Methods of Exercising Rights" and "The
Offer - Payment For Shares" on pages 14 and 15.

         The Fund announced the proposed Offer on July 18, 2003. The NAV per
share of the Fund's Common Stock at the close of business on July 17, 2003 and
November 13, 2003 were $20.00 and $20.98, respectively, and the last reported
sales prices of a share of the Fund's Common Stock on the AMEX on those dates
were $19.05 and $18.85, respectively.

         It is expected that the Fund's Board of Directors will declare a
dividend during the Subscription Period. Any shares issued pursuant to the Offer
would not be eligible to receive such dividend. Since the Subscription Price
would be determined after the dividend record date, the Subscription Price would
be priced ex-dividend.


Expiration of the Offer

         The Expiration Date is 5:00 p.m., Eastern time, on December 16, 2003,
unless extended by the Fund. The Rights will expire on the Expiration Date and
may not be exercised after that date. Since the close of the Offer on the
Expiration Date is prior to the Pricing Date, stockholders who choose to
exercise their Rights will not know the Subscription Price when they decide
whether to acquire Shares on Primary Subscription or through the
Over-Subscription Privilege.


                                       13
<PAGE>

Subscription Agent


         The Subscription Agent for the Offer is American Stock Transfer & Trust
Company ("Subscription Agent"), which will receive, for its administrative,
processing, invoicing and other services as Subscription Agent, an estimated fee
of $25,000 and reimbursement for all out-of-pocket expenses related to the
Offer. The Subscription Agent is also the Fund's Transfer Agent. Signed
Subscription Certificates should be sent to American Stock Transfer & Trust
Company by one of the following methods:


         (1)      BY FIRST CLASS MAIL:
                  American Stock Transfer & Trust Company
                  59 Maiden Lane
                  New York, NY 10038


         (2)      BY EXPRESS MAIL OR OVERNIGHT COURIER:
                  American Stock Transfer & Trust Company
                  59 Maiden Lane
                  New York, NY 10038


         (3)      BY HAND:
                  (9:00 a.m. - 5:00 a.m. New York City Time)
                  59 Maiden Lane
                  Plaza Level
                  New York, NY 10038

                  DELIVERY TO AN ADDRESS OTHER THAN THE ABOVE DOES NOT
                  CONSTITUTE GOOD DELIVERY.

Information Agent


         Any questions or requests for assistance may be directed to Georgeson
Shareholder Communications Inc., Information Agent, at its toll free telephone
number listed below:


                    Georgeson Shareholder Communications Inc.
                                 (888) 613-9988

         Stockholders may also call the Fund collect at (973) 631-1177 or
contact their Nominees, who hold shares for the account of others, for
information with respect to the Offer.

         The Fund will pay a fee of $7,500 to Georgeson Shareholder
Communications Inc. and reimbursement for all out-of-pocket expenses related to
its services as Information Agent.

Method of Exercising Rights

         Stockholders of record may exercise their Rights by filling in and
signing the accompanying Subscription Certificate and mailing it in the envelope
provided or by delivering the completed and signed Subscription Certificate to
the Subscription Agent, together with any required payment for the Shares as
described below under "Payment for Shares." Stockholders of record may also
exercise Rights by contacting a broker, bank, trust company, New York Stock
Exchange member firm, or financial


                                       14
<PAGE>

institution ("Intermediary") which can arrange, on a stockholder's behalf, to
guarantee delivery (using a "Notice of Guaranteed Delivery") of a properly
completed and executed Subscription Certificate and payment for the Shares.

         Rights may also be exercised by a stockholder whose shares are held by
a Nominee, by contacting such Nominee, which can arrange, on the stockholder's
behalf, to guarantee delivery (using a "Notice of Guaranteed Delivery") of a
properly completed and executed Subscription Certificate and payment for the
Shares.


         The Nominee or Intermediary may charge a fee for this service.
Fractional Shares will not be issued. Completed Subscription Certificates must
be received by the Subscription Agent prior to 5:00 p.m., Eastern time, on the
Expiration Date (unless payment is to be effected by means of a Notice of
Guaranteed Delivery (see "Payment for Shares")) at the offices of the
Subscription Agent.


                  Stockholders who are Record Owners. Stockholders who are
                  record owners can choose between either option set forth below
                  under "Payment for Shares." If time is of the essence, option
                  (2) will permit delivery of the Subscription Certificate and
                  payment after the Expiration Date.

                  Investors Whose Shares Are Held Through A Nominee.
                  Stockholders whose shares are held by a Nominee, such as a
                  broker, bank, trust company or financial institution, must
                  contact that Nominee to exercise their Rights. In that case,
                  the Nominee will complete the Subscription Certificate on
                  behalf of the stockholder and arrange for proper payment by
                  one of the methods set forth below under "Payment for Shares."

                  Nominees. Nominees who hold shares for the account of others
                  should notify the respective beneficial owners of such shares
                  as soon as possible to ascertain such beneficial owners'
                  intentions and to obtain instructions with respect to the
                  Rights. If the beneficial owner so instructs, the Nominee
                  should complete the Subscription Certificate and submit it to
                  the Subscription Agent, together with the proper payment
                  described below under "Payment for Shares."

Payment for Shares

         Stockholders who acquire Shares in the Primary Subscription or pursuant
to the Over-Subscription Privilege may choose between the following methods of
payment:


         (1)      A record owner can send payment for the Shares acquired in the
                  Primary Subscription and any additional Shares subscribed for
                  pursuant to the Over-Subscription Privilege, together with the
                  Subscription Certificate, to the Subscription Agent based on
                  the Estimated Subscription Price of $18.32 per Share. To be
                  accepted, such payment, together with the Subscription
                  Certificate, must be received by the Subscription Agent prior
                  to 5:00 p.m., Eastern time, on the Expiration Date (December
                  16, 2003).

         (2)      If your Nominee or Intermediary delivered a Notice of
                  Guaranteed Delivery to the Subscription Agent prior to the
                  Expiration Date, your Nominee or Intermediary must send
                  payment for the Shares acquired in the Primary Subscription
                  and any additional Shares subscribed for pursuant to the
                  Over-Subscription Privilege, together with the Subscription
                  Certificate, to the Subscription Agent based on the Estimated
                  Subscription



                                       15
<PAGE>


                  Price of $18.32 per Share. To be accepted, such payment
                  together with the Subscription Certificate must be received by
                  the Subscription Agent prior to 5:00 pm., Eastern time, on the
                  third business day after the Expiration Date (December 19,
                  2003, unless the Offer is extended).


         If the first method described above is used, payment by money order,
personal check, certified check or bank cashier's check must accompany any
Subscription Certificate for the Subscription Certificate to be accepted.

         Stockholders will have no right to rescind their subscription after
receipt of their payment for shares by the Subscription Agent, except as
provided under "Risk Factors and Special Considerations - Possible Suspension of
the Offer."

         The method of delivery of Subscription Certificates and payment of the
Subscription Price to the Fund will be at the election and risk of the
stockholders, but if sent by mail it is recommended that such Subscription
Certificates and payment be sent by registered mail, properly insured, with
return receipt requested, and that a sufficient number of days be allowed to
ensure delivery to the Fund and clearance of payment prior to 5:00 p.m., Eastern
time, on the Expiration Date. If you pay directly, you have a choice of paying
by money order, personal check, certified check, bank cashier's check, or by
wire transfer. If you choose to pay by personal check, you will need to deliver
your check to the Subscription Agent not less than 5 business days before the
Expiration Date, since your check must clear before the Expiration Date.


         A confirmation will be sent by the Subscription Agent to each
subscribing stockholder (or, if the Fund's Shares on the Record Date are held by
a Nominee, to such Nominee) by December 23, 2003 (the "Confirmation Date"),
showing (i) the number of Shares acquired pursuant to the Primary Subscription;
(ii) the number of Shares, if any, acquired through the Over-Subscription
Privilege; (iii) the per Share and total purchase price for the Shares; and (iv)
any additional amount payable by the stockholder to the Fund or any excess to be
refunded by the Fund to the stockholder, in each case based on the Subscription
Price as determined on the Pricing Date. In the case of any stockholder who
exercises his or her right to acquire Shares pursuant to the Over-Subscription
Privilege, any excess payment which would otherwise be refunded to the
stockholder will be applied by the Fund toward payment for additional Shares
acquired pursuant to exercise of the Over-Subscription Privilege. Any additional
payment required from a stockholder must be received by the Subscription Agent
within ten business days after the Confirmation Date. Any excess payment to be
refunded by the Fund to a stockholder will be mailed by the Subscription Agent
to such stockholder as promptly as possible within ten business days after the
Confirmation Date. All proceeds received by the Subscription Agent in connection
with the Offer will be held by the Subscription Agent, on behalf of the Fund, in
a segregated, interest-bearing account.


         All payments by a stockholder must be made in United States dollars by
money order or check drawn on a bank located in the United States of America and
payable to American Stock Transfer & Trust Company.

         Issuance and delivery of certificates for the Shares purchased are
subject to collection of checks and actual payment through any Notice of
Guaranteed Delivery.

         If a stockholder who acquires Shares pursuant to the Primary
Subscription or Over-Subscription Privilege does not make payment of all amounts
due by the tenth business day after the Confirmation Date, the Fund reserves the
right to (i) find other purchasers for such subscribed and unpaid Shares; (ii)
apply any payment actually received by it toward the purchase of the greatest
number of whole Shares which could be acquired by such stockholder upon exercise
of the Primary Subscription and/or Over-


                                       16
<PAGE>

Subscription Privilege; and/or (iii) exercise any and all other rights and/or
remedies to which it may be entitled, including, without limitation, the right
to set-off against payments actually received by it with respect to such
subscribed Shares.


         The Fund will only reject any purported exercise of Rights in the event
that a deficiency exists concerning the timeliness, validity, form and/or
eligibility of any exercise of Rights. All questions concerning such
deficiencies will be determined by the Fund, whose determinations will be final
and binding. The Fund in its sole discretion may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Rights.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within such time as the Fund determines
in its sole discretion. The Fund will not be under any duty to give notification
of any defect or irregularity in connection with the submission of Subscription
Certificates or incur any liability for failure to give such notification.


Delivery of Share Certificates

         Participants in the Fund's Automatic Dividend Investment and Cash
Payment Plan (the "Plan") will have any Shares acquired in the Primary
Subscription and pursuant to the Over-Subscription Privilege credited to their
accounts in the Plan. Stock certificates will not be issued for Shares credited
to Plan accounts. Stockholders whose Shares are held of record by a Nominee on
their behalf will have any Shares acquired in the Primary Subscription and
pursuant to the Over-Subscription Privilege credited to the account of such
Nominee. For all other stockholders, stock certificates for all Shares acquired
will be mailed promptly after full payment for the subscribed Shares has been
received and cleared.

Federal Income Tax Consequences of the Offer

         Stockholders who receive Rights pursuant to the Offer will not
recognize taxable income for U.S. Federal income tax purposes upon their receipt
of the Rights. If Rights issued to a Stockholder expire without being exercised,
no basis will be allocated to such Rights, and such Stockholder will not
recognize any gain or loss for U.S. Federal income tax purposes upon such
expiration.

         The tax basis of a stockholder's Common Stock will remain unchanged,
and the stockholder's basis in the Rights will be zero. Notwithstanding this
general rule, each stockholder may elect, with respect to all Rights issued to
him, to allocate the tax basis of all shares of Common Stock that he holds on
the Record Date between such shares and the Rights issued to him in proportion
to their fair market values on the Record Date. To be valid, this election must
be made by the stockholder in a statement attached to his timely-filed Federal
income tax return for the taxable year that includes the Record Date and, once
made, is irrevocable. However, if on the Record Date the fair market value of
the Rights is 15% or more of the fair market value of the Common Stock, each
stockholder will be required to allocate the tax basis of his shares of Common
Stock in the manner described above in determining gain or loss on any
subsequent sales of Common Stock. Stockholders should consult their own tax
advisers concerning this basis allocation rule, including the appropriate method
to be used in determining the relative values of the Common Stock and the
Rights. A stockholder who exercises Rights will not recognize any gain or loss
for U.S. Federal income tax purposes upon the exercise. The basis of the newly
acquired Common Stock will equal the Subscription Price paid for the Common
Stock. Upon a sale or exchange of the Common Stock so acquired, the stockholder
will recognize gain or loss measured by the difference between the proceeds of
the sale or exchange and the cost basis of such Common Stock. Assuming the
stockholder holds the Common Stock as a capital asset, any gain or loss realized
upon its sale will generally be treated as a capital gain or loss, which gain or
loss will be short-term or long-term, depending on the length of the
stockholder's holding period for such Common Stock. However, any loss recognized
upon the sale of shares of Common Stock with a tax holding period of 12 months
or less will


                                       17
<PAGE>

be treated as a long-term capital loss to the extent of any capital gain
distribution previously received by the stockholder with respect to such Shares,
and a loss may be disallowed under wash sale rules to the extent that the
stockholder purchases additional Common Stock (including by reinvestment of
distributions) within 30 days before or after the sale date. The holding period
for Common Stock acquired upon the exercise of Rights will begin on the date of
exercise of the Rights.

         The foregoing is a summary of the material U.S. Federal income tax
consequences of the Offer under the provisions of the U.S. Internal Revenue Code
of 1986, as amended (the "Code"), and applicable existing and proposed
regulations thereunder, all as currently in effect and all subject to change at
any time, perhaps with retroactive effect. It does not include any state, local
or foreign tax consequences of the Offer. This summary is generally applicable
to stockholders that are United States persons as defined in the Code. Further,
this summary is not intended to be, nor should it be, construed as legal or tax
advice, and stockholders are urged to consult their own tax advisors to
determine the tax consequences to them of the Offer and their ownership of
Rights and Common Stock.

                    RISK FACTORS AND SPECIAL CONSIDERATIONS

Dilution


         If you do not exercise all of your Rights during the Subscription
Period, when the Offering is over you will own a relatively smaller percentage
of the Fund than if you had exercised all of your Rights. The Fund cannot tell
you precisely how much smaller the percentage of the Fund that you would own
will be because the Fund does not know how many of the Fund's stockholders will
exercise their Rights and how many of their Rights they will exercise.

         All stockholders will experience an immediate dilution of the aggregate
NAV of Shares as a result of the completion of the Offer because (i) the
Subscription Price per Share will be less than the Fund's NAV per Share on the
Expiration Date, (ii) the Fund will incur expenses in connection with the Offer,
and (iii) the number of Shares outstanding after the Offer will increase in a
greater percentage than the increase in the size of the Fund's assets. Such
dilution may, under certain circumstances, be substantial. This dilution also
will affect stockholders to a greater extent if they do not exercise their
Rights in full. It is not possible to state precisely the amount of any
decreases in either NAV or in ownership interests, because it is not known at
this time what the NAV per Share will be at the Expiration Date or what
proportion of the Shares will be subscribed. Finally, there may be a dilution of
earnings per Share due to the increase in the number of Shares outstanding, but
only to the extent that investments of the proceeds of the Offer do not achieve
the same return as current investments held by the Fund.



         The following example shows the dilution in NAV per share of the Fund
as a result of the Offer. The example assumes that all of the Shares are sold at
the Estimated Subscription Price of $18.32 and deducts estimated expenses
related to the issuance of the Shares.


<TABLE>
<CAPTION>
                                 NAV per Share on        Dilution per Share in
                                 November 13, 2003             Dollars                Percentage Dilution
                                 -----------------             -------                -------------------
<S>                                    <C>                      <C>                          <C>


Primary Subscription of
797,918 Shares                         $20.98                   $0.41                        1.95%

</TABLE>



         As of November 13, 2003, the Fund's shares traded at a 10.15% discount
from NAV. If the Fund's Common Stock continues to trade at a discount from NAV,
and such discount increases as of the Pricing Date, such dilution would increase
with the size of the discount, and may, under certain



                                       18
<PAGE>


circumstances, be substantial. See "Prospectus Summary - Risk Factors and
Special Considerations - Dilution" and "Description of Capital Stock - Net Asset
Values and Sales Prices." Except as described in this Prospectus under "Risk
Factors and Special Considerations - Possible Suspension of the Offer," you will
have no right to rescind your subscription requests after receipt of your
payment for Shares by the Subscription Agent.


Risk of Trading Discounts


         Since the commencement of the Fund's operations, the Fund's Shares have
generally traded in the market at a discount to net asset value. This trading
discount is a risk separate and distinct from the risk that the Fund's net asset
value may decrease. The risk of purchasing shares of a closed-end fund that
trades at a discount is more pronounced if you wish to sell your shares in a
relatively short period of time. If you do so, realization of a gain or loss on
your investment is likely to be more dependent upon the existence of a premium
or discount than upon portfolio performance. The Fund's Shares are not subject
to redemption. Investors desiring liquidity may, subject to applicable
securities laws, trade their Shares in the Fund on the AMEX. Stockholders
expecting to sell their Shares during the course of the Offer should be aware
that there is a greater risk that the trading discount referred to above, which
may increase during the Offer, will adversely affect them. This increased risk
is because, among other things, the market price per Share may reflect the
anticipated dilution that will result from this Offer. There can be no assurance
that after the completion of the Offer, the Fund's trading discount will remain
at then current levels or decrease.

Risk of Decline in Net Asset Value


         As with any investment company that invests in convertible securities,
the Fund is subject to market risk - the possibility that convertible securities
will decline over short or extended periods of time. As a result, the value of
an investment in the Fund's Common Stock will fluctuate with the market, and you
could lose money over short or long periods of time. It is the Fund's policy to
invest at least 80% of its assets in convertible securities. Although
convertible securities do derive part of their value from that of the securities
into which they are convertible, they are not considered derivative financial
instruments. However, certain of the Fund's investments include features which
render them more sensitive to price changes in their underlying securities.
Thus, they expose the Fund to greater downside risk than traditional convertible
securities, but still less than that of the underlying common stock. See
"Investment Objectives and Policies - Discussion of Convertible Securities."

Risk Factors of Convertible Securities

         Convertible debt securities and preferred stocks may depreciate in
value if the market value of the underlying equity security declines or if rates
of interest increase. In addition, although debt securities are liabilities of a
corporation which the corporation is generally obligated to repay at a specified
time, debt securities, particularly convertible debt securities, are often
subordinated to the claims of some or all of the other creditors of the
corporation.


         Mandatory conversion securities (securities that automatically convert
into equity securities at a future date) may limit the potential for capital
appreciation and, in some instances, are subject to complete loss of invested
capital. Other innovative convertibles include "equity-linked" securities, which
are securities or derivatives that may have fixed, variable, or no interest
payments prior to maturity, may convert (at the option of the holder or on a
mandatory basis) into cash or a combination of cash and equity securities, and
may be structured to limit the potential for capital appreciation. Equity-linked
securities may be illiquid and difficult to value and may be subject to greater
credit risk than that of other convertibles. Moreover, mandatory conversion
securities and equity-linked securities have increased the



                                       19
<PAGE>


sensitivity of the convertible securities market to the volatility of the equity
markets and to the special risks of those innovations, which may include risks
different from, and possibly greater than, those associated with traditional
convertible securities.

         Preferred stocks are equity securities in the sense that they do not
represent a liability of the corporation. In the event of liquidation of the
corporation, and after its creditors have been paid or provided for, holders of
preferred stock are generally entitled to a preference as to the assets of the
corporation before any distribution may be made to the holders of common stock.
Debt securities normally do not have voting rights. Preferred stocks may have no
voting rights or may have voting rights only under certain circumstances. For a
more detailed description of preferred stock, see "Risk Factors and Special
Considerations - Other Investments" in the Statement of Additional Information.


Credit Risk

         Credit risk is the risk that an issuer will fail to pay interest or
dividends and principal in a timely manner. Companies that issue convertible
securities may be small to medium-size, and they often have low credit ratings.
In addition, the credit rating of a company's convertible securities is
generally lower than that of its conventional debt securities. Convertible
securities are normally considered "junior" securities - that is, the company
usually must pay interest on its conventional debt before it can make payments
on its convertible securities. Credit risk could be high for the Fund, because
it could invest in securities with low credit quality.

Interest Rate Risk

         Interest rate risk is the possibility that prices of securities will
decline along with overall bond prices, over short or even long periods, because
of rising interest rates. Convertible securities are particularly sensitive to
interest rate changes when their predetermined conversion price is much higher
than the issuing company's common stock.



Manager Risk

         Manager risk is the risk that poor security selection will cause the
Fund to underperform other funds with a similar investment objective.

Ineligibility of Shares Issued to Receive Next Dividend

         Historically, the Fund has paid quarterly dividends to its
stockholders. It is likely that the Fund's Board of Directors will declare a
dividend during the Subscription Period. Because the record date for such
dividend would be prior to the Expiration Date, any Shares issued pursuant to
the Offer would not be eligible to receive such dividend. Additionally, since
the Subscription Price would be determined after the dividend record date, the
Subscription Price would be priced ex-dividend.

Possible Suspension of the Offer


         The Fund has, as required by the Securities and Exchange Commission's
("SEC") registration form, undertaken to suspend the Offer until it amends this
Prospectus if, subsequent to the effective date of the Fund's Registration
Statement, the Fund's net asset value declines more than 10% from its net asset
value as of the effective date of the Fund's Registration Statement. The Fund
will notify stockholders of any such decline and suspension and thereby permit
them to cancel their exercise of Rights.



                                       20
<PAGE>

                                 USE OF PROCEEDS


         The Fund estimates the net proceeds of the Offer to be approximately
$14,442,366. This figure assumes (i) all Rights are exercised in full, (ii) a
Subscription Price of $18.32 and (iii) payment of offering expenses of
approximately $175,492. The Adviser anticipates that investment of the net
proceeds of the Offer in accordance with the Fund's investment objectives and
policies will take up to one month after receipt of such proceeds, depending on
market conditions and the availability of appropriate securities. Pending
investment, the net proceeds of the Offer will be held in the types of
short-term debt securities and instruments in which the Fund may invest. As a
result of this short-term investment of the proceeds, the Fund may realize a
lower yield than if it had immediately invested in convertible securities.


                       INVESTMENT OBJECTIVES AND POLICIES

Investment Objectives


         The Fund 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 due to the nature of the
securities in which it invests). These investment objectives may be changed by
the Fund's Board of Directors without the approval of a majority of the Fund's
outstanding voting securities. The Fund will provide stockholders with at least
60 days prior notice of any change to these investment objectives. There are
market risks inherent in any investment, and there is no assurance that the
Fund's investment objectives will be achieved.


Investment Policies


         The Fund expects that a substantial majority of its assets will consist
of convertible securities. The Fund has adopted a non-fundamental investment
policy providing that the Fund will invest, under normal circumstances, at least
80% of the value of its assets (consisting of net assets plus the amount of any
borrowings for investment purposes) in convertible securities. This investment
policy may be changed in the future by the Fund's Board of Directors without the
approval of a majority of the Fund's outstanding voting securities. The Fund
will provide stockholders with at least 60 days prior notice of any change to
this investment policy.

         Convertible securities include debt securities and preferred stocks
which are convertible into, or carry the right to purchase, common stock or
other equity securities. The debt security or preferred stock may itself be
convertible into or exchangeable for equity securities, or the conversion
privilege may be evidenced by warrants attached to the security or acquired as
part of a unit with the security. The convertible security may be structured so
that it is convertible at the option of the holder or the issuer, or subject to
mandatory conversion. The remainder of the Fund's assets may be invested in
other securities, including non-convertible preferred stocks and investment
grade debt securities, common stock received upon conversion or exchange of
securities, options, warrants, securities of the U.S. Government, its agencies
and instrumentalities, foreign securities, American Depositary Receipts or
repurchase agreements, or they may be held as cash or cash equivalents. The Fund
is not required to sell securities for the purpose of assuring that 80% of its
assets are invested in convertible securities.


         The Fund's investment policies are subject to certain restrictions. For
a complete list of the Fund's investment restrictions, see "Investment
Restrictions" in the Statement of Additional Information.


                                       21
<PAGE>

Discussion of Convertible Securities

         The Fund will invest primarily in convertible securities, including
bonds, debentures, corporate notes, preferred stock or other securities which
may be exchanged or converted into a predetermined number of the issuer's
underlying common stock during a specified time period. Prior to their
conversion, convertible securities have the same overall characteristics as
non-convertible debt securities insofar as they generally provide a stable
stream of income with generally higher yields than those of equity securities of
the same or similar issuers. Convertible securities rank senior to common stock
in an issuer's capital structure. They are of a higher credit quality and entail
less risk than an issuer's common stock, although the extent to which such risk
is reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security.

         The Fund is also permitted to invest in securities with innovative
structures, which have become more common in the convertible securities market.
These include "mandatory conversion" securities, which consist of debt
securities or preferred stocks that convert automatically into equity securities
of the same or a different issuer at a specified date and conversion ratio.

         The market value of a convertible security may be viewed as comprised
of two components: its "investment value," which is its value based on its yield
without regard to its conversion feature; and its "conversion value," which is
its value attributable to the underlying common stock obtainable on conversion.
The investment value of a convertible security is influenced by changes in
interest rates and the yield of similar non-convertible securities, with
investment value declining as interest rates increase and increasing as interest
rates decrease. The conversion value of a convertible security is influenced by
changes in the market price of the underlying common stock. If, because of a low
price of the underlying common stock, the conversion value is low relative to
the investment value, the price of the convertible security is governed
principally by its investment value. To the extent the market price of the
underlying common stock approaches or exceeds the conversion price, the
convertible security will be increasingly influenced by its conversion value,
and the convertible security may sell at a premium over its conversion value to
the extent investors place value on the right to acquire the underlying common
stock while holding a fixed income security.

         Accordingly, convertible securities have unique investment
characteristics because (i) they have relatively high yields as compared to
common stocks, (ii) they have defensive characteristics since they provide a
fixed return even if the market price of the underlying common stock declines,
and (iii) they provide the potential for capital appreciation if the market
price of the underlying common stock increases.

         A convertible security may be subject to redemption at the option of
the issuer at a price established in the charter provision or indenture pursuant
to which the convertible security is issued. If a convertible security held by
the Fund is called for redemption, the Fund will be required to surrender the
security for redemption, convert it into the underlying common stock or sell it
to a third party. Before the Fund purchases a convertible security it will
review carefully the redemption provisions of the security.


         There may be additional types of convertible securities with features
not specifically referred to herein in which the Fund may invest consistent with
its investment objectives and policies. For a discussion of risk factors of
convertible securities, see "Risk Factors and Special Considerations - Risk
Factors of Convertible Securities."



                                       22
<PAGE>

Other Investment Techniques

         Short Sales. Although the Fund does not generally do so, the Fund may
make short sales of securities which it owns or which it has the right to
acquire through conversion or exchange of other securities it owns. In a short
sale, the Fund does not immediately deliver the securities sold and does not
receive the proceeds from the sale. The Fund is said to have a short position in
the securities sold until it delivers the securities sold, at which time it
receives the proceeds of the sale. For a more detailed description of the Fund's
use of short sales see "Risk Factors and Special Considerations - Other
Investment Techniques" in the Statement of Additional Information.


         Lending of Portfolio Securities. Although the Fund does not presently
intend to do so, the Fund may lend securities representing up to 10% of its
total assets, taken at market value, to securities firms and financial
institutions such as banks and trust companies and receive therefor collateral
in cash or securities issued or guaranteed by the United States Government
("Government Securities") which are maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities. For a
more detailed description of portfolio securities lending, see "Risk Factors and
Special Considerations - Other Investment Techniques" in the Statement of
Additional Information.


Other Investments


         Options. Although the Fund does not presently intend to do so, the Fund
may invest up to 2% of its net assets, taken at market value, in: (i) put
options on common stocks owned by the Fund or which it has an immediate right to
acquire through conversion or exchange of other securities; (ii) put options on
one or more broadly based stock market indices; and (iii) the writing of covered
call options. The Fund also may enter into closing transactions with respect to
such options. Except as stated above the Fund may not engage in options
transactions. For a more detailed description of options see "Risk Factors and
Special Considerations - Other Investments" in the Statement of Additional
Information.

         Illiquid Securities. The Fund may invest up to 20% of its net assets in
securities that are illiquid. Illiquid securities include securities that have
no readily available market quotations and cannot be disposed of promptly
(within seven days) in the normal course of business at a price at which they
are valued. Illiquid securities may include securities that are subject to
restrictions on resale ("restricted securities") because they have not been
registered under the Securities Act. For a more detailed description of illiquid
securities see "Risk Factors and Special Considerations - Other Investments" in
the Statement of Additional Information.


         Temporary Investments. The assets of the Fund are normally invested in
convertible securities. However, for temporary defensive purposes (i.e., when
the Adviser determines that market conditions warrant) or when it has
uncommitted cash balances, the Fund may hold cash or cash equivalents or invest
in: (1) Government Securities; (2) certificates of deposit, bankers' acceptances
and interest-bearing savings deposits of banks having total assets of more than
$1 billion and which are members of the Federal Deposit Insurance Corporation;
(3) commercial paper rated Prime 1 or higher by Moody's Investors Service, Inc.
("Moody's") or A-1 or higher by Standard & Poor's Corporation ("S&P") or, if not
rated, issued by companies which have an outstanding debt issue rated Aa or
higher by Moody's or AA or higher by S&P (4) other debt securities rated Baa or
higher by Moody's or BBB or higher by S&P and (5) repurchase agreements as
described below. Accordingly, the composition of the Fund's portfolio may vary
from time to time.


         Repurchase Agreements. Although the Fund does not presently intend to
do so, as part of its strategy for the temporary investment of cash balances,
the Fund may enter into "repurchase agreements" with maturities of not more than
seven days, pertaining to Government Securities with member banks of



                                       23
<PAGE>


the Federal Reserve System or "primary dealers" (as designated by the Federal
Reserve Bank of New York) in such securities. The Fund will not invest more than
5% of its total assets, taken at market value, in repurchase agreements with any
single vendor. For a more detailed description of repurchase agreements see
"Risk Factors and Special Considerations - Other Investments" in the Statement
of Additional Information.

         Foreign Securities. Although the Fund does not frequently do so, the
Fund may invest in securities of foreign issuers. Foreign securities involve
certain additional risks, such as political or economic instability of the
issuer or of the country of issue, fluctuating exchange rates and the
possibility of imposition of exchange controls. For a more detailed description
of foreign securities see "Risk Factors and Special Considerations - Other
Investments" in the Statement of Additional Information.


         American Depositary Receipts. The Fund may invest in American
Depositary Receipts ("ADRs"). Such investment may entail certain risks similar
to foreign securities. ADRs are certificates representing an ownership interest
in a security or a pool of securities issued by a foreign issuer and deposited
with the depository, typically a bank, and held in trust for the investor. For a
more detailed description of ADRs, see "Risk Factors and Special Considerations
- - Other Investments" in the Statement of Additional Information.

         The Fund's investment objectives and policies are subject to certain
restrictions. See "Investment Restrictions" in the Statement of Additional
Information.

                             MANAGEMENT OF THE FUND

Directors and Officers

         The overall management of the business and affairs of the Fund is
vested in the Board of Directors. The Board of Directors approves all
significant agreements between the Fund and persons or companies furnishing
services to the Fund. The day-to-day operations of the Fund are delegated to the
officers of the Fund and to the Adviser, subject always to the objectives,
restrictions and policies of the Fund and to the general supervision of the
Board of Directors. Certain directors and officers of the Fund are affiliated
with the Adviser.

Investment Adviser

         Davis-Dinsmore Management Company, 65 Madison Avenue, Morristown, New
Jersey 07960 (the "Adviser"), serves as the Fund's investment adviser pursuant
to an investment advisory agreement dated February 12, 2001 (the "Advisory
Agreement"). The stockholders of the Fund approved the Advisory Agreement on
February 12, 2001. Most recently, the Advisory Agreement was continued for a
one-year term by the Board of Directors at a meeting held on November 18, 2002,
for the period ending December 31, 2003. The Adviser has served in this capacity
since inception of the Fund's business in 1970. The Adviser is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended. The
Adviser also serves as the investment adviser to Ellsworth Convertible Growth
and Income Fund, Inc. (the "Ellsworth Fund"), a closed-end, management
investment company whose shares have traded on the AMEX since 1986. Thomas H.
Dinsmore and Jane D. O'Keeffe, the Fund's Chairman and President, respectively,
each own more than 25% of the outstanding voting stock of the Adviser and are
deemed to be control persons of the Adviser.


                                       24
<PAGE>

Advisory Agreement

         Pursuant to the Advisory Agreement, the Adviser supervises all aspects
of the Fund's operations, including the investment and reinvestment of cash,
securities or other properties comprising the Fund's assets. In carrying out its
obligations the Adviser: (a) supervises all aspects of the operations of the
Fund; (b) obtains and evaluates pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally or any industry or the Fund
or any issuer of securities held or to be purchased by the Fund; (c) determines
which issuers and securities shall be represented in the Fund's investment
portfolio and regularly reports thereon to the Board of Directors; (d) places
orders for the purchase and sale of securities for the Fund; and (e) takes, on
behalf of the Fund, such other action as may be necessary or appropriate in
connection with the foregoing.

         The Adviser pays for the Fund's office space and facilities and the
salaries of the Fund's executive officers and furnishes clerical, bookkeeping
and statistical services to the Fund. The costs associated with personnel and
certain non-personnel expenses of the office of the Fund's Treasurer, up to a
maximum of $25,000 a year, are reimbursed by the Fund. The Fund pays all of its
expenses not assumed by the Adviser including expenses in connection with the
offering of its securities, fees and expenses of unaffiliated directors,
salaries of employees other than executive officers, taxes, fees and commissions
of all types, fees of its custodian, registrar, transfer agents and dividend
disbursing agents, and interest, brokerage commissions, legal and accounting
expenses and the like. The Fund pays or reimburses the Adviser for the direct
costs of postage, printing, copying and travel expenses attributable to the
conduct of the business of the Fund.

Portfolio Management

         The persons primarily responsible for the day-to-day management of the
Fund's portfolio are Thomas H. Dinsmore and Jane D. O'Keeffe, Chairman and
President, respectively, of the Adviser.

         Mr. Dinsmore has served as the Senior Analyst of the Adviser since
February 1983, and as Chairman and Chief Executive Officer since August 1996. In
addition, Mr. Dinsmore has served as Chairman and Chief Executive Officer of the
Fund and the Ellsworth Fund since August 1996. Mr. Dinsmore is a Chartered
Financial Analyst. Mr. Dinsmore has been a director of the Fund since 1985 and
is also a director of the Ellsworth Fund and the Adviser.

         Ms. O'Keeffe has served as President of the Adviser since August 1996.
Ms. O'Keeffe has also served as President of the Fund and the Ellsworth Fund
since August 1996. Ms. O'Keeffe has been in the investment business since 1980.
Ms. O'Keeffe has been a director of the Fund since 1995 and is also a director
of the Ellsworth Fund and the Adviser.

Management Fees

         As compensation for its services under the Advisory Agreement, the
Adviser receives a monthly advisory fee, computed at an annual rate of 3/4 of 1%
of the first $100,000,000, and 1/2 of 1% of the excess over $100,000,000, of the
Fund's net asset value in such month. For purposes of calculation of the fee,
the net asset value for a month is the average of the Fund's net asset values at
the close of business on the last business day on which the New York Stock
Exchange is open in each week in the month.


         For the fiscal years ended October 31, 2003, 2002 and 2001, the Adviser
received investment advisory fees from the Fund of $681,000, $701,000 and
$747,000, respectively.



                                       25
<PAGE>

Code of Ethics

         The Fund and the Adviser's Board of Directors approved separate Codes
of Ethics under Rule 17j-1 of the 1940 Act for the Fund and the Adviser
(collectively, the "Codes"). The Codes establish procedures for personal
investing and restrict certain transactions. See "Code of Ethics" in the
Statement of Additional Information.

                          DESCRIPTION OF CAPITAL STOCK

Common Stock

         The Fund has authorized capital consisting of 9,000,000 shares of
Common Stock, par value $.01 per share. As of November 13, 2003, 4,725,858
shares were outstanding, none of which was held by the Fund for its account.
Each share of Common Stock has equal dividend, voting and liquidation rights.
The shares of Common Stock are fully paid and non-assessable when issued. The
shares of Common Stock are not redeemable and have no pre-emptive or conversion
rights. There is no sinking fund provision. There are no restrictions on the
repurchase or redemption of the Common Stock. All voting rights for the election
of directors are non-cumulative, which means that the holders of more than 50%
of the shares of Common Stock can elect 100% of the directors then nominated for
election if they choose to do so and, in such event, the holders of the
remaining shares of Common Stock will not be able to elect any directors.


         The following table shows the number of shares of (i) capital stock
authorized and (ii) capital stock outstanding for each class of authorized
securities of the Fund as of November 13, 2003 and as adjusted for the Offer
assuming that all Rights are exercised.

                                                                       Amount
                            Amount              Amount              Outstanding,
 Title of Class           Authorized         Outstanding*           As Adjusted
 --------------           ----------         ------------           -----------
  Common Stock             9,000,000          4,725,858              5,523,776

- -------
*        The Fund does not hold any shares of Common Stock for its own account.



                                       26
<PAGE>



         Net Asset Values and Sales Prices

         The Fund's shares of Common Stock are publicly held and are listed and
traded on the AMEX under the symbol "BCV." The following table sets forth for
the periods indicated the high and low sales prices on the AMEX per share of
Common Stock of the Fund and the NAV per share on the dates of the market highs
and lows.


<TABLE>
<CAPTION>
                                          Market Price Per Share                          Net Asset Value
                                               and Related                        Per Share on Date of Market High
                                    Discount (-) / Premium (+) (1) (2)                      and Low (3)
                                  --------------------------------------          --------------------------------
Quarter Ended                           High                   Low                     High              Low
                                  ----------------      ----------------          --------------     -------------
<S>                               <C>         <C>       <C>         <C>                <C>               <C>
January 31, 2002                  $20.65     -0.0%      $18.75     -10.1%              $20.66            $20.86
April 30, 2002                     20.14     +0.2        18.60     -10.4                20.10             20.76
July 31, 2002                      19.49     +0.3        16.50     -10.1                19.43             18.35
October 31, 2002                   18.38     +0.3        17.05      -8.2                18.33             18.57
January 31, 2003                   19.02     +1.3        17.53      -6.2                18.78             18.68
April 30, 2003                     19.24     +1.7        17.68      -4.9                18.92             18.59
July 31, 2003                      19.80     -1.1        19.39      -5.6                20.02             20.53
October 31, 2003                   19.70     -5.5        19.05      -4.6                20.84             19.97
</TABLE>



(1)      Highest and lowest market price per share reported on the AMEX.
(2)      "Related Discount (-) / Premium (+)" represents the discount or premium
         from NAV of the shares on the date of the high and low market price for
         the respective quarter.
(3)      Based on the Fund's computations.


         As evidenced by the above table, the Common Stock has generally traded
in the market below NAV. On July 18, 2003, when the proposed Offer was publicly
announced, the NAV per share of Common Stock was $20.16, and the closing price
on the AMEX was $19.45, representing a discount of 3.52% below NAV. On November
13, 2003, such NAV was $20.98, and such closing price was $18.85, representing a
discount of 10.15% below NAV.


         There can be no assurance that the Common Stock will trade in the
future at, above or below NAV.

                           CERTAIN CHARTER PROVISIONS

         The Fund has provisions in its Certificate of Incorporation, as amended
(the "Charter"), which could have the effect of limiting the ability of other
entities or persons to acquire control of the Fund, to cause it to engage in
certain transactions or to modify its structure. The Charter provides for three
classes of directors. Directors in each class serve for a term of three years,
with one class expiring each year. In addition, directors may be removed only
for cause and only by the affirmative vote of at least two-thirds of the
outstanding shares of the Fund's Common Stock. This percentage is greater than
the minimum requirements under Delaware law.

         The Charter provides that the affirmative vote of two-thirds of the
outstanding shares of the Fund is necessary to authorize any of the following
actions: (i) a merger or consolidation with any other company, (ii) the
dissolution of the Fund, (iii) the sale of all or substantially all of the
assets of the Fund, (iv) a change in the classification of the Fund from a
diversified to a non-diversified management investment company as defined under
the 1940 Act, (v) a change in the nature of the business of the Fund


                                       27
<PAGE>

so that it would cease to be an investment company registered under the 1940
Act, and (vi) any amendment to the Charter which makes the Common Stock a
redeemable security (as such term is defined in the 1940 Act) or reduces the
two-thirds vote required to authorize any of the actions in this paragraph.

         The Charter provides that no director of the Fund shall be liable to
the Fund or its stockholders for monetary damages for breach of fiduciary duty
as a director, provided that the foregoing shall not eliminate or limit
liability of a director: (i) for any breach of such director's duty of loyalty
to the Fund or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct, gross negligence or reckless disregard of
the duties involved in the conduct of such director's office, or knowing
violation of law, (iii) any unlawful payment of dividend or unlawful stock
purchase or redemption under Delaware law, or (iv) for any transaction from
which such director derived an improper personal benefit.

                            REPURCHASES OF SECURITIES

General


         The Fund is a closed-end, diversified management investment company
and, as such, its stockholders generally do not, and will not, have the right to
redeem their shares of the Fund. Although the Fund will not offer to repurchase
its shares of Common Stock on a periodic basis, it may repurchase its shares
from time to time at such times, and in such amounts, as may be deemed
advantageous to the Fund, although nothing herein shall be considered a
commitment to repurchase such shares. Any such repurchases shall be subject to
the Delaware General Corporation Law and to limitations imposed by the 1940 Act.
The Fund may incur debt to finance share repurchase transactions.


         Under the 1940 Act, the Fund may repurchase its securities: (i) on a
securities exchange or such other open market designated by the SEC (provided
that the Fund has, in the case of purchases of its stock, informed holders of
the class of stock involved within the preceding six months of its intention to
repurchase such stock), (ii) by a tender offer open to all holders of the class
of securities involved, or (iii) as otherwise permitted by the SEC. Where a
repurchase of shares of the Fund is to be made that is not to be effected on a
securities exchange or an open market or by the making of a tender offer, the
1940 Act provides that certain conditions must be met regarding, among other
things, distribution of net income, identity of the seller, price paid,
brokerage commissions, prior notice to holders of the class of its securities
involved of an intention to purchase such securities and the purchase is not
being made in a manner or on a basis which discriminates unfairly against the
other holders of such class.

         If the Fund repurchases its shares of Common Stock for a price below
their NAV, the NAV of those shares of Common Stock that remain outstanding would
be enhanced, but this does not necessarily mean that the market price of those
outstanding shares would be affected, either positively or negatively.
Repurchases of shares of Common Stock by the Fund would also decrease its total
assets and accordingly may increase its expenses as a percentage of average net
assets.

Open Market Purchases


         The Board of Directors of the Fund has authorized management to engage
in open market purchases from time to time of the Fund's Common Stock, up to a
maximum of 5% of its outstanding shares in any calendar year. Such open market
purchases will be funded through uninvested cash and cash received upon the
maturity, redemption or sale of the Fund's portfolio securities. Management does
not intend to borrow funds to finance open market purchases. Management does not
believe that open market purchases would likely result in an increase in the
Fund's expense ratio or in any material change



                                       28
<PAGE>


to the Fund's portfolio turnover rate or investment objectives because of the
overall limit on the number of shares that may be purchased. Open market
purchases may result in a reduction of the market discount. Management does not
intend to engage in open market purchases if the market price of the Fund's
shares exceeds such shares' net asset value or if the sale of the Fund's
portfolio securities would jeopardize the qualification of the Fund as a
"regulated investment company" under Subchapter M of the Code in any taxable
year.


                 DIVIDENDS, DISTRIBUTIONS AND REINVESTMENT PLAN

         Historically, the Fund has paid quarterly distributions to its
stockholders.


         The Fund has an Automatic Dividend Investment and Cash Payment Plan
(the "Plan"). Any stockholder may elect to join the Plan by sending an
application to American Stock Transfer & Trust Company, P.O. Box 922, Church
Street Station, NY 10269-0560 (the "Plan Agent"). You may also obtain additional
information about the Plan by calling the Plan Agent toll free at (800)
937-5449. If your shares are held by a broker or other nominee, you should
instruct the nominee to join the Plan on your behalf. Some brokers may require
that your shares be taken out of the broker's "street name" and re-registered in
your own name.


         Stockholders may participate in the Plan whereby all dividends and
distributions are automatically invested in additional Fund shares. Depending on
the circumstances, shares may either be issued by the Fund or acquired through
open market purchases at the current market price or net asset value, whichever
is lower (but not less than 95% of market price). When the market price is
lower, the Plan Agent will combine your dividends with those of other Plan
participants and purchase shares in the market, thereby taking advantage of the
lower commissions on larger purchases. There is no other charge for this
service.

         Plan participants may also voluntarily send cash payments of $100 to
$10,000 per month to the Plan Agent, to be combined with other Plan monies, for
purchase of additional Fund shares in the open market. You pay only a bank
service charge of $1.25 per transaction, plus your proportionate share of the
brokerage commission. All shares and fractional shares purchased will be held by
the Plan Agent in your dividend reinvestment account.

         At any time, a Plan participant may instruct the Plan Agent to
liquidate all or any portion of such Plan participant's account. To do so, a
Plan participant must deliver written notice to the Plan Agent prior to the
record date of any dividend or distribution requesting either liquidation or a
stock certificate. The Plan Agent or the Fund may terminate the Plan for any
reason at any time by sending written notice addressed to Plan participant's
address as shown on the Plan Agent's records. Such termination shall be
effective as to all dividends and distributions payable to stockholders of
record on any date more than 30 days after mailing of such notice and shall be
effective 30 days after the mailing of such notice as to cash purchases.
Following the date of termination, the Plan Agent shall send the Plan
participant at such participant's address shown on Plan Agent's records either
the proceeds of liquidation, or a stock certificate or certificates for the full
shares held by Plan Agent in Plan participant's account and a check for the
value of any fractional interest in Plan participant's account based on the
market price of the Fund's Common Stock on that date.

         The Plan Agent will combine all liquidation requests it receives from
Plan participants on a particular day and will then sell shares of the Fund that
are subject to liquidation requests in the open market. The amount of proceeds a
Plan participant will receive shall be determined by the average sales price per
share, after deducting brokerage commissions, of all shares sold by the Plan
Agent for all Plan participants who have given the Plan Agent liquidation
requests.


                                       29
<PAGE>

         You may deposit with the Plan Agent any Fund stock certificates you
hold, for a one-time fee of $7.50.


         A stockholder who participates in the Plan through a broker should
contact the broker to determine whether shares acquired through participation in
the Plan can be transferred to another broker, and thereafter, whether the
stockholder can continue to participate in the Plan.


         Participation in the Plan does not relieve a Plan participant of any
income tax which may be payable by a Plan participant on such dividends and
distributions and on expenses incurred by the Fund on a Plan participant's
behalf.

                                    TAXATION

         The Fund has qualified and intends to continue to qualify as a
regulated investment company under the Code. The Fund currently intends to
distribute all or substantially all its investment company taxable income (all
taxable net investment income and net short-term capital gains) and its net
capital gains each year, thereby avoiding the imposition on the Fund of Federal
income and excise taxes on such distributed income and gain.

         Dividends paid by the Fund from its ordinary income or from an excess
of net short-term capital gains over net long-term capital losses (together
"ordinary income dividends") are taxable to stockholders as ordinary income.
However, certain ordinary income dividends paid to individual and other
noncorporate shareholders and constituting qualified dividend income are taxable
at lower rates. Distributions made from an excess of net long-term gains over
net short-term losses (including gains or losses from certain transactions in
warrants and options) ("capital gain dividends") are taxable to stockholders as
long-term capital gains, regardless of the length of time the stockholder has
owned Fund shares. After the end of each taxable year, the Fund will notify
stockholders of the Federal income tax status of any distributions or deemed
distributions made by the Fund during such year.


         Distributions by the Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or such cash is
reinvested in additional shares of the Fund through open market purchases, or
whether such distributions are paid in newly issued shares of the Fund. Plan
participants receiving distributions in the form of newly issued shares will be
treated as receiving an amount equal to the fair market value of such shares,
determined as of the reinvestment date. Accordingly, a stockholder may incur a
tax liability even though such stockholder has not received a cash distribution
with which to pay the tax.


         Ordinary income dividends paid to stockholders who are nonresident
aliens or foreign entities will be subject to a 30% United States withholding
tax under existing provisions of the Code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Nonresident stockholders are urged to
consult their own tax advisors concerning the applicability of the United States
withholding tax.

         It is anticipated that stockholders that hold shares of the Fund's
Common Stock as capital assets and have such shares repurchased by the Fund will
generally recognize capital gain or loss. Stockholders should, however, consult
with their tax advisers to determine the tax consequences of such share
repurchases in their particular circumstances.

         Any capital gain or loss recognized by a stockholder with respect to a
share repurchase by the Fund will be long-term capital gain or loss if the
shares repurchased have been held for more than one year.


                                       30
<PAGE>

         Under certain Code provisions, some stockholders may be subject to a
backup withholding tax on certain ordinary income dividends and on capital gain
dividends ("backup withholding"). Generally, stockholders subject to backup
withholding are those for whom no certified taxpayer identification number is on
file with the Fund or who, to the Fund's knowledge , have furnished an incorrect
number.

         This section summarizes some of the consequences under current Federal
income tax law of an investment in the Fund. It is not a substitute for personal
tax advice. Fund stockholders are urged to consult their own tax advisors to
determine the Federal income tax as well as state and local tax consequences to
them of the ownership of stock of the Fund. See "Taxation" in the Statement of
Additional Information.

                     CUSTODIAN, TRANSFER AGENT AND REGISTRAR


         The Bank of New York, 100 Church Street, 10th Floor, New York, NY
10286, acts as custodian of the cash and other assets of the Fund. American
Stock Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038, acts as
transfer agent and registrar for the Fund's shares and as Plan Agent under the
Fund's Plan. Stockholder inquiries should be directed to American Stock Transfer
& Trust Company, P.O. Box 922, Church Street Station, New York, NY 10269-0560
(Tel. No. (800) 937-5449).


                                     EXPERTS

         PricewaterhouseCoopers LLP ("PwC") are the independent auditors of the
Fund. The audited financial statements of the Fund and certain of the
information appearing under the caption "Financial Highlights" included in this
Prospectus have been audited by PwC for the periods indicated in their reports
with respect thereto, and are included in reliance upon such reports and upon
the authority of such firms as experts in accounting and auditing. PwC has an
office at 1177 Avenue of the Americas, New York, NY 10036-2798, and also
performs limited tax services for the Fund.

                             ADDITIONAL INFORMATION


         A Statement of Additional Information dated November 17, 2003 has been
filed with the SEC and is incorporated by reference in this Prospectus. The
Table of Contents of the Statement of Additional Information is as follows:

<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>                                                                                                              <C>
Risk Factors and Special Considerations...........................................................................2
Investment Restrictions...........................................................................................7
Portfolio Turnover................................................................................................9
Principal Stockholders............................................................................................9
Directors and Officers............................................................................................9
Code of Ethics...................................................................................................17
Proxy Voting.....................................................................................................17
Taxation.........................................................................................................17
Custodian........................................................................................................19
Independent Accountants..........................................................................................19
Brokerage Allocation and Other Practices.........................................................................19
Net Asset Value..................................................................................................21
Financial Statements.............................................................................................21
</TABLE>





                                       31
<PAGE>



                                797,918 Shares of
                              Common Stock Issuable
                                Upon Exercise of
                             Non-Transferable Rights
                              to Subscribe for such
                             Shares of Common Stock












                         Bancroft Convertible Fund, Inc.











                                 ---------------

                                   PROSPECTUS

                                November 17, 2003

                                 ---------------










<PAGE>


                         Bancroft Convertible Fund, Inc.

                       STATEMENT OF ADDITIONAL INFORMATION



         Bancroft Convertible Fund, Inc. (the "Fund") is a closed-end,
diversified management investment company, whose shares of Common Stock are
listed on the American Stock Exchange under the symbol "BCV." The Fund 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 due to the nature of the securities in which it invests).


This Statement of Additional Information is not a prospectus, but should be read
in conjunction with the Fund's Prospectus dated November 17, 2003. Please retain
this document for future reference. To obtain a copy of the Prospectus, the
Fund's Annual Report to Stockholders for the fiscal year ended October 31, 2002,
Semi-Annual Report to Stockholders for the six months ended April 30, 2003 or
Annual Report to Stockholders for the fiscal year ended October 31, 2003 (which
is expected to be mailed to stockholders and available on the Fund's website
(http://www.bancroftfund.com) on or around December 29, 2003), please call the
Fund collect at (973) 631-1177.



                                TABLE OF CONTENTS
                                                                        Page
                                                                        ----
Risk Factors and Special Considerations...................................2
Investment Restrictions...................................................7
Portfolio Turnover........................................................9
Principal Stockholders....................................................9
Directors and Officers....................................................9
Code of Ethics...........................................................17
Proxy Voting.............................................................17
Taxation.................................................................17
Custodian................................................................19
Independent Accountants..................................................19
Brokerage Allocation and Other Practices.................................19
Net Asset Value..........................................................21
Financial Statements.....................................................21


                                November 17, 2003



<PAGE>


                     RISK FACTORS AND SPECIAL CONSIDERATIONS

Other Investment Techniques


         Although at least 80% of the Fund's assets will normally be invested in
convertible securities, the Fund may from time to time use any of the following
investment techniques to increase income and reduce risk.


         Short Sales

         Although the Fund does not generally do so, the Fund may make short
sales of securities which it owns or which it has the right to acquire through
conversion or exchange of other securities it owns. In a short sale the Fund
does not immediately deliver the securities sold and does not receive the
proceeds from the sale. The Fund is said to have a short position in the
securities sold until it delivers the securities sold, at which time it receives
the proceeds of the sale.

         To secure its obligation to deliver the securities sold short, the Fund
will deposit in escrow in a separate account with its custodian an equal amount
of the securities sold short or securities convertible or exchangeable into such
securities. The Fund will normally close out a short position by purchasing and
delivering an equal amount of the securities sold short, rather than by
delivering securities already held by the Fund. The Fund may, however, close out
any short sale of common stock through the conversion or exchange of securities
or the exercise of warrants or rights it owns, or through the delivery of common
stock already held by the Fund.

         The Fund may make a short sale in order to hedge against market risks
when it believes that the price of a security may decline, causing a decline in
the value of a long position the Fund may have in such security or a security
convertible into or exchangeable for such security, or when, for tax or other
reasons, the Fund does not want to sell the security it owns. In such case, any
future losses in the Fund's long position should be reduced by a gain in the
short position. Conversely, any gain in the long position should be reduced by a
loss in the short position. The extent to which such gains or losses are reduced
will depend upon the amount of the security sold short relative to the amount
the Fund owns, either directly or indirectly, and, in the case where the Fund
owns convertible securities, changes with the conversion premiums.


         Lending of Portfolio Securities

         Although the Fund does not presently intend to do so, the Fund may lend
securities representing up to 10% of its total assets, taken at market value, to
securities firms and financial institutions such as banks and trust companies,
and receive therefor collateral in cash or securities issued or guaranteed by
the United States Government ("Government Securities") which are maintained at
all times in an amount equal to at least 100% of the current market value of the
loaned securities. The purpose of such loans, generally, is to permit the
borrower to use such securities for delivery to purchasers when such borrower
has sold short. If cash collateral is received by the Fund, it is invested in
short-term money market securities, and a portion of the yield received in
respect of such investment is retained by the Fund. Alternatively, if securities
are delivered to the Fund as collateral, the Fund and the borrower negotiate a
rate for the loan premium to be received by the Fund for lending its portfolio
securities. In either event, the total yield on the Fund's portfolio is
increased by loans of its portfolio securities. The Fund intends to retain
record ownership of loaned securities in order to exercise beneficial rights
such as voting rights, subscription rights and rights to dividends, interest or
other distributions. Such loans are terminable at any time. The Fund may pay
reasonable finder's, administrative and custodial fees in connection with such
loans. The risks in lending portfolio securities, as with other extensions of
credit, consist of possible



                                       2
<PAGE>

delay in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. In determining whether the Fund will lend
securities to a particular borrower, the Fund will consider all relevant facts
and circumstances, including the creditworthiness of the borrower.

Other Investments

         In addition to investing in convertible securities and employing the
investment techniques discussed above, the Fund may acquire other securities,
including non-convertible equity and debt securities, Government Securities or
short-term repurchase agreements and other money market instruments. The Fund is
restricted in its ability to invest in some of these securities, which involve
special risks.

         Common Stock

         The Fund may invest in common stock received upon conversion or
exchange of securities. Common stock is issued by companies principally to raise
cash for business purposes and represents a residual interest in the issuing
company. The Fund participates in the success or failure of any company in which
it holds stock. The prices of equity securities change in response to many
factors including the historical and prospective earnings of the issuer, the
value of its assets, general economic conditions, interest rates, investor
perceptions and market liquidity.

         Preferred Stock

         The Fund may invest in preferred stock. Preferred stock, unlike common
stock, often offers a stated dividend rate payable from a corporation's
earnings. If interest rates rise, the fixed dividend on preferred stocks may be
less attractive, causing the price of preferred stocks to decline. Preferred
stock may have mandatory sinking fund provisions, as well as call/redemption
provisions prior to maturity, a negative feature when interest rates decline.
Dividends on some preferred stock may be "cumulative," requiring all or a
portion of prior unpaid dividends to be paid before dividends are paid on the
issuer's common stock. Preferred stock also generally has a preference over
common stock on the distribution of a corporation's assets in the event of
liquidation of the corporation, and may be "participating," which means that it
may be entitled to a dividend exceeding the stated dividend in certain cases. In
some cases an issuer may offer auction rate preferred stock, which means that
the interest to be paid is set by auction and will often be reset at stated
intervals. The rights of preferred stocks on the distribution of a corporation's
assets in the event of a liquidation are generally subordinate to the rights
associated with a corporation's debt securities.

         U.S. Government Obligations

         The Fund may invest in securities of the U.S. Government, its agencies,
and instrumentalities. Obligations issued or guaranteed by the U.S. Government,
its agencies and instrumentalities include bills, notes and bonds issued by the
U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations
representing future interest or principal payments on U.S. Treasury notes or
bonds. Stripped securities are sold at a discount to their "face value," and may
exhibit greater price volatility than interest-bearing securities since
investors receive no payment until maturity. Obligations of certain agencies and
instrumentalities of the U.S. Government, such as the Government National
Mortgage Association ("GNMA"), are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal National Mortgage
Association ("FNMA"), are supported by the right of the issuer to borrow from
the U.S. Treasury; others, such as those of the Student Loan Marketing
Association ("SLMA"), are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, though issued by
an instrumentality chartered by the U.S. Government, like the Federal Farm


                                       3
<PAGE>

Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality.
The U.S. Government may choose not to provide financial support to U.S.
Government-sponsored agencies or instrumentalities if it is not legally
obligated to do so.

         Investment Grade Debt Securities

         The Fund may also invest in higher rated investment grade
non-convertible debt securities. Such securities include those rated Aaa by
Moody's Investor's Services, Inc. ("Moody's") or AAA by Standard and Poor's
Corporation ("S&P") (which are considered to be of the highest credit quality
and where the capacity to pay interest and repay principal is extremely strong),
those rated Aa by Moody's or AA by S&P (where the capacity to pay interest and
repay principal is considered very strong, although elements may exist that make
risks appear somewhat larger than expected with securities rated Aaa or AAA),
securities rated A by Moody's or A by S&P (which are considered to possess
adequate factors giving security to principal and interest) and securities rated
Baa by Moody's or BBB by S&P (which are considered to have an adequate capacity
to pay interest and repay principal, but may have some speculative
characteristics).

         Unseasoned Issuers

         The Fund may invest in unseasoned issuers (issuers which, with their
predecessors, have less than three years' continuous operations) so long as such
purchase would not cause more than 5% of the market value of the Fund's total
assets to be invested in the securities of such companies. Investments in the
equity securities of unseasoned companies involve more risk than investments in
the securities of more established companies because unseasoned issuers have
only a brief operating history and may have more limited markets and financial
resources. As a result, securities of unseasoned issuers tend to be more
volatile than securities of more established companies.

         Options

         Although the Fund does not presently intend to do so, the Fund may
invest up to 2% of its net assets, taken at market value, in: (i) put options on
common stocks owned by the Fund or which it has an immediate right to acquire
through conversion or exchange of other securities; (ii) put options on one or
more broadly based stock market indices; and (iii) the writing of covered call
options. The Fund also may also enter into closing transactions with respect to
such options.

         Many currently traded convertible securities are convertible into
common stocks against which call options may be written. A call option gives the
purchaser the right to buy, and the writer has the obligation to sell, the
underlying security at the exercise price during the option period. The Fund may
only write "covered" call options, that is, options on common stock which it
holds in its portfolio or which it has an immediate right to acquire through
conversion or exchange of securities currently held in its portfolio.

         The Fund will write covered call options in order to receive additional
income in the form of premiums which it is paid for writing options, and for
hedging purposes in order to protect against possible declines in the market
values of the stocks or convertible securities held in its portfolio. If, for
example, the market price of a common stock underlying a convertible security
held by the Fund declines and the convertible security also declines in value,
such decline will be offset in part (or wholly) by the receipt of the premium
for writing the call options on such stock. However, if the market price of the
underlying common stock increases and the convertible security held by the Fund
also increases in value, such increase will be offset in part (or wholly) by any
loss resulting from the cancellation of the Fund's


                                       4
<PAGE>

position through closing purchase transactions on covered call options written
by the Fund or through the lost opportunity for additional capital appreciation
if the option is exercised.

         The Fund may purchase put options on particular securities in order to
protect against a decline in the market value of the underlying security below
the exercise price less the premium paid for the option. The ability to purchase
put options will allow the Fund to protect the unrealized gain in an appreciated
security in its portfolio without actually selling the security. In addition,
the Fund will continue to receive interest or dividend income on the security.
The Fund may sell a put option which it has previously purchased prior to the
sale of the securities underlying such option. Such sales will result in a net
gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold.

         The Fund may also purchase put options on one or more broadly based
stock market indices when it wishes to protect all or part of its portfolio
securities against a general market decline. The put on the index will increase
in value if the level of the index declines; any such increase in value would
serve to offset in whole or in part any decline in the value of the Fund's
portfolio.

         The Fund's purchase and sale of put options on stock indices will be
subject to the same risks described above with respect to transactions in stock
options on individual stocks. In addition, the distinctive characteristics of
options on indices create certain risks that are not present with stock options.


         The Fund's ability to effectively hedge all or a portion of the
securities in its portfolio in anticipation of or during a market decline
through transactions in put options on stock indices depends on the degree to
which price movements in the underlying index correlate with the price movements
in the Fund's portfolio securities. Since the Fund's portfolio securities will
not duplicate the components of an index, the correlation will not be perfect.
Consequently, the Fund will bear the risk that the prices of its portfolio
securities being hedged will not move in the same amount as the prices of the
Fund's put options on the stock indices. It is also possible that there may be a
negative correlation between the index and the Fund's portfolio securities which
would result in a loss on both such portfolio securities and the put options on
stock indices acquired by the Fund. Successful use by the Fund of put options on
stock indices will be subject to the ability of the Fund's investment adviser,
Davis-Dinsmore Management Company (the "Adviser") to correctly predict movements
in the directions of the stock market. This requires different skills and
techniques than predicting changes in the price of individual securities.


         Warrants

         The Fund may invest in warrants. Warrants are, in effect, longer-term
call options. They give the holder the right to purchase a given number of
shares of a particular company at specified prices within certain periods of
time. The purchaser of a warrant expects that the market price of the security
will exceed the purchase price of the warrant plus the exercise price of the
warrant, thus giving him a profit. Since the market price may never exceed the
exercise price before the expiration date of the warrant, the purchaser of the
warrant risks the loss of the entire purchase price of the warrant. Warrants
generally trade in the open market and may be sold rather than exercised.
Warrants are sometimes sold in unit form with other securities of an issuer.
Units of warrants and common stock may be employed in financing young,
unseasoned companies. The purchase price of a warrant varies with the exercise
price of the warrant, the current market value of the underlying security, the
life of the warrant and various other investment factors.


                                       5
<PAGE>

         Repurchase Agreements

         Although the Fund does not presently intend to do so, as part of its
strategy for the temporary investment of cash balances, the Fund may enter into
"repurchase agreements" with maturities of not more than seven days, pertaining
to Government Securities with member banks of the Federal Reserve System or
"primary dealers" (as designated by the Federal Reserve Bank of New York) in
such securities. A repurchase agreement arises when the Fund purchases a
security and simultaneously agrees to resell it to the vendor at an agreed upon
future date. The resale price is greater than the purchase price, reflecting an
agreed upon market rate of return which is effective for the period of time the
Fund's money is invested in the security and which is not related to the coupon
rate on the purchased security. Such agreements permit the Fund to earn interest
on all of its assets while retaining "overnight" flexibility in pursuit of
investments of a longer term nature. The Fund requires continuous maintenance by
its Custodian for its account in the Federal Reserve/Treasury Book Entry System
of collateral in an amount equal to, or in excess of, the market value of the
securities which are the subject of a repurchase agreement. In the event a
vendor defaults on its repurchase obligation, the Fund could suffer delays,
collection expenses and losses to the extent that the proceeds from the sale of
the collateral are less than the repurchase price. The Fund will not invest more
than 5% of its total assets, taken at market value, in repurchase agreements
with any single vendor. The Fund will consider all relevant facts and
circumstances, including the creditworthiness of the vendor in determining
whether to enter into a repurchase agreement. Under the Investment Company Act
of 1940, as amended (the "1940 Act"), repurchase agreements are considered loans
by the Fund.

         Foreign Securities


         Although the Fund does not frequently do so, the Fund may invest in
securities principally traded in securities markets outside the United States.
Foreign investments may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to those applicable to U.S.
companies. Securities of some foreign companies may be less liquid or more
volatile than securities of U.S. companies, and foreign brokerage commissions
and custodian fees are generally higher than in the United States. Investments
in foreign securities may also be subject to other risks different from those
affecting U.S. investments, including local political or economic developments,
expropriation or nationalization of assets and imposition of withholding taxes
on dividend or interest payments.


         Illiquid Securities


         The Fund may invest up to 20% of its net assets in securities that are
illiquid. Illiquid securities include securities that have no readily available
market quotations and cannot be disposed of promptly (within seven days) in the
normal course of business at a price at which they are valued. Illiquid
securities may include securities that are subject to restrictions on resale
("restricted securities") because they have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"). Restricted securities
may, in certain circumstances, be resold pursuant to Rule 144A of the Securities
Act, and thus may or may not constitute illiquid securities. The Fund's Board of
Directors is generally responsible for determining the liquidity of a restricted
security, although the Adviser has been delegated responsibility for determining
the liquidity of securities that qualify for resale pursuant to Rule 144A.
Limitations on the resale of restricted securities may have an adverse effect on
their marketability, which may prevent the Funds disposing of them promptly at
reasonable prices. The Fund may have to bear the expense of registering such
securities for resale, and bear the risk of substantial delays in effecting such
registrations.


                                       6
<PAGE>


         American Depositary Receipts

         The Fund may invest in American Depositary Receipts ("ADRs"). Such
investment may entail certain risks similar to foreign securities. ADRs are
certificates representing an ownership interest in a security or a pool of
securities issued by a foreign issuer and deposited with the depositary,
typically a bank, and held in trust for the investor. The economies of many of
the countries in which the issuer of a security underlying an ADR principally
engages in business may not be as developed as the United States' economy and
may be subject to significantly different forces. Political or social
instability, expropriation or confiscatory taxation, and limitations on the
removal of funds or other assets could adversely affect the value of the Fund's
investments in such securities. The value of the securities underlying ADRs
could fluctuate as exchange rates change between U.S. dollars and the currency
of the country in which the foreign company is located. In addition, foreign
companies are not registered with the Securities and Exchange Commission ("SEC")
and are generally not subject to the regulatory controls imposed on United
States issuers and, as a consequence, there is generally less publicly available
information about foreign companies than is available about domestic companies.
Foreign companies are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to domestic companies.

                             INVESTMENT RESTRICTIONS

         Fundamental Restrictions and Policies. The Fund has adopted the
following fundamental restrictions and policies which may not be changed without
the approval of the holders of a majority of the Fund's outstanding voting
securities (as defined in the 1940 Act). The Fund will not:

         (1)      have less than 80% of the market value of its total assets
                  (excluding cash and government securities) invested in (a)
                  securities of companies which at the time of purchase (i) had
                  shares of their common stock listed on the New York Stock
                  Exchange, the American Stock Exchange or NASDAQ National
                  Market (each, an "Exchange"), (ii) met the then prevailing
                  earnings requirements for listing on the New York Stock
                  Exchange, or (iii) had pre-tax earnings of at least $2,000,000
                  in three of the five preceding fiscal years, and (b) in
                  American Depositary Receipts that at the time of purchase (i)
                  are listed on an Exchange, or (ii) met the then prevailing
                  earnings requirements for listing on the New York Stock
                  Exchange. The fact that any or all of these standards is met
                  is no assurance of investment quality.

         (2)      invest more than 25% of the market value of its total assets
                  in any one industry.

         (3)      (a) purchase securities (i) of companies which, with their
                  predecessors, or (ii) which are guaranteed by companies which,
                  with their predecessors, have a record of less than three
                  years' continuous operations, if such purchase would cause
                  more than 5% of the market value of the Fund's total assets to
                  be invested in the securities of such companies, or (b) invest
                  in more than 10% of the outstanding voting securities of any
                  one issuer.

         (4)      with respect to 85% of its total assets, invest more than 5%
                  of the market value of its total assets in the securities of
                  any one issuer (other than the United States government or its
                  agencies) or purchase additional securities of any one issuer
                  (other than the United States government or its agencies) if
                  after giving effect to such purchase the cost of all
                  securities of such issuer then held by it would exceed 5% of
                  the market value of its total assets.

         (5)      issue senior securities.


                                       7
<PAGE>

         (6)      borrow money, except for temporary or emergency purposes to
                  the extent of 5% of the market value of its total assets
                  determined at the time of borrowing, or pledge, mortgage or
                  hypothecate its assets to secure such borrowings except
                  securities in an amount taken at market value not exceeding
                  15% of its total assets taken at cost.

         (7)      underwrite securities of other issuers, except that it may
                  acquire convertible securities the subsequent disposition of
                  which (or of the underlying equity security) would cause the
                  Fund to be deemed an underwriter within the meaning of the
                  Securities Act of 1933, as amended.

         (8)      purchase or sell interests in real estate or real estate
                  investment trusts, except that the Fund may purchase and sell
                  securities of corporations which hold interests in real
                  estate.

         (9)      purchase or sell commodities or commodity contracts.

         (10)     make loans to other persons, (a) except that (i) the Fund may
                  lend its portfolio securities provided the value of such
                  loaned securities does not exceed 10% of its total assets and
                  (ii) the purchase of debt securities in accordance with the
                  Fund's investment policies shall not be considered the making
                  of a loan, and (b) provided that the Fund may make temporary
                  purchases of securities issued or guaranteed by the United
                  States, its agencies or instrumentalities; bank certificates
                  of deposit; or high-grade commercial paper, which are subject
                  to repurchase agreements.

         (11)     make short sales of securities unless at the time of sale it
                  owns or has the right to acquire, with or without payment of
                  further consideration through its ownership of convertible or
                  exchangeable securities or warrants or rights, an equal amount
                  of such securities.

         (12)     invest in securities of corporations for the purpose of
                  exercising control or management.

         (13)     purchase securities on margin, except that it may obtain such
                  short-term credits as may be necessary for the clearance of
                  purchases or sales of securities.

         (14)     invest in puts, calls, or combinations thereof; provided that,
                  notwithstanding the foregoing, the Fund may invest up to 2% of
                  its net assets in put options on common stock or market
                  indices and may write covered call options and may purchase
                  call options to close out written covered call options.

         (15)     participate on a joint or a joint-and-several basis in any
                  securities trading account.

         (16)     purchase or hold the securities of a company if, to the Fund's
                  knowledge, one or more officers or directors of the Fund
                  individually own beneficially more than 1/2 of 1% and together
                  own beneficially more than 5% of the securities of such other
                  company.


         The percentage restrictions on investments set forth above apply only
at the time an investment is made. Thus, a later increase or decrease in
percentage resulting from a change in values of portfolio securities or amount
of total assets will not be considered a violation of any of the foregoing
restrictions.


         Non-Fundamental Restrictions and Policies. The Fund has adopted the
following non-fundamental restrictions and policies which may be changed by the
Fund's Board of Directors without the approval of a majority of the Fund's
outstanding voting securities as defined in the 1940 Act. The Fund will:


                                       8
<PAGE>

         (1)      not purchase the securities of an issuer if, after giving
                  effect to such purchase, more than 20% of its net assets would
                  be invested in illiquid securities.

         (2)      engage in short sales of convertible securities as well as
                  common stock, provided that at the time of sale it owns or has
                  the right to acquire, with or without payment of further
                  consideration through its ownership of convertible or
                  exchangeable securities or warrants or rights, an equal amount
                  of such securities. The Fund may close out any short sale of
                  common stock through the conversion or exchange of securities
                  or the exercise of warrants or rights it owns, or through the
                  purchase and delivery of common stock.

         The percentage restrictions on investments set forth above apply only
at the time an investment is made. Thus, a later increase or decrease in
percentage resulting from a change in values of portfolio securities or amount
of total assets will not be considered a violation of any of the foregoing
restrictions.

                               PORTFOLIO TURNOVER


         For the fiscal years ended October 31, 2003 and 2002, the Fund's
portfolio turnover rates were 87% and 78%, respectively.


                             PRINCIPAL STOCKHOLDERS


         As of November 12, 2003, there were 4,725,858 shares of Common Stock of
the Fund outstanding. There are no persons known to the Fund to be control
persons of the Fund. The following persons were known to the Fund to be
beneficial owners or owners of record of 5% or more of its outstanding shares of
Common Stock as of November 12, 2003:

<TABLE>
<CAPTION>
           Name and Address                                           Amount and Nature             Percent of
                of Owner                  Class/Series of Stock          of Ownership              Class/Series
                --------                  ---------------------          ------------              ------------
<S>                                            <C>                 <C>                                 <C>
Cede & Co.*                                    Common Stock        3,891,845 shares                    82%
     Depository Trust Company                                      Held of Record
     P.O. Box #20
     Bowling Green Station
     New York, NY  10028
</TABLE>


- ----------
*        Shares held by brokerage firms, banks and other financial
         intermediaries on behalf of beneficial owners are registered in the
         name of Cede & Co.

                             DIRECTORS AND OFFICERS

Structure of the Board of Directors

         The Fund's Board of Directors is divided into three classes. One class
is elected at each annual meeting of shareholders. Directors in each class serve
for a three year term.

         The Board of Directors currently consists of nine persons. Seven of the
directors are independent, meaning they are not "interested persons" of the
Company within the meaning of the 1940 Act. Two of the Fund's directors are
"interested persons" because of their business and financial relationships with
the Fund and the Adviser.


                                       9
<PAGE>

Directors and Officers


         The business address of each director and officer is 65 Madison Avenue,
Suite 550, Morristown, NJ 07960-7308. Each director is also a director of
Ellsworth Convertible Growth and Income Fund, Inc. (the "Ellsworth Fund") (a
closed-end diversified management investment company). The Adviser is also the
investment adviser to the Ellsworth Fund. Because of this connection, the Fund
and the Ellsworth Fund make up a fund complex (the "Fund Complex"). Therefore,
each director oversees two investment companies in the Fund Complex.


Directors

         Interested Directors. Certain biographical and other information
concerning the Directors who are "interested persons," as defined in the 1940
Act, of the Fund is set forth below.


<TABLE>
<CAPTION>
                                                                                                     Other
                                    Term of Office and Length    Principal Occupation(s)     Directorship(s) Held
         Name and Age                     of Time Served            During Past 5 Years           by Director
         ------------                     --------------            -------------------           -----------
<S>                                  <C>                        <C>                                  <C>
Thomas H. Dinsmore (1) (2) (3)       Term as Director expires       Chairman and Chief               None
             (50)                             2005.              Executive Officer of the
                                       Director since 1985.      Fund, the Ellsworth Fund
                                                                     and the Adviser.

 Jane D. O'Keeffe (1) (2) (3)        Term as Director expires   President of the Fund, the           None
             (48)                             2004.               Ellsworth Fund and the
                                       Director since 1995.              Adviser.
</TABLE>


- ----------
1        Mr. Dinsmore and Ms. O'Keeffe are considered interested persons because
         they are officers and directors of the Adviser.
2        Thomas H. Dinsmore and Jane D. O'Keeffe are brother and sister.
3        H. Tucker Lake, Jr., an officer of the Fund, is the cousin of Thomas H.
         Dinsmore and Jane D. O'Keeffe.


                                       10
<PAGE>

         Independent Directors. Certain biographical and other information
concerning the Fund Directors who are not "interested persons," as defined in
the 1940 Act, of the Fund is set forth below.

<TABLE>
<CAPTION>
                               Term of Office and Length      Principal Occupation(s) During Past     Other Directorship(s)
      Name and Age                   of Time Served                        5 Years                       Held by Director
      ------------                   --------------                        -------                       ----------------
<S>                             <C>                          <C>                                      <C>
     Gordon F. Ahalt            Term as Director expires      Retired. Prior to 2001, President of    CalDive International
          (75)                            2004.                 G.F.A. Inc. (petroleum industry          and The Houston
                                  Director since 1982.        consulting company). Prior to 1999,      Exploration Company
                                                               Consultant with W.H. Reaves & Co.
                                                                  (asset management company).

    William A. Benton           Term as Director expires     Retired. Prior to 2001, Partner of BE             None
          (70)                            2006.              Partners (small options market maker).
                                  Director since 1994.         Prior to 2000, Limited Partner of
                                                             Gavin, Benton & Co. (NYSE specialist).

Elizabeth C. Bogan, Ph.D.       Term as Director expires        Senior Lecturer in Economics at                None
          (59)                            2006.                      Princeton University.
                                  Director since 1990.

 Donald M. Halsted, Jr.         Term as Director expires          Retired Business Executive.                  None
          (76)                            2005.
                                  Director since 1970.

   George R. Lieberman          Term as Director expires         Retired Advertising Executive.                None
          (81)                            2006.
                                  Director since 1987.

     Duncan O. McKee            Term as Director expires               Retired Attorney.                       None
          (72)                            2005.
                                  Director since 1996.

    Nicolas W. Platt            Term as Director expires        Since January 2003, President of               None
          (50)                            2004.                CNC-US (an international consulting
                                  Director since 1997.          company). Prior to January 2003,
                                                              Senior Partner of Platt & Rickenbach
                                                             (public relations firm). Prior to May
                                                               2001, with WPP Group, UK, as Exec.
                                                             Vice Pres. of Ogilvy Public Relations
                                                             Worldwide and Managing Director of the
                                                                 Corporate Financial Practice at
                                                               Burson-Marsteller (public relations
                                                                             firm).
</TABLE>


                                       11
<PAGE>

Officers

         Certain biographical and other information concerning the officers of
the Fund is set forth below. Officers are elected by and serve at the pleasure
of the Board of Directors. Each officer holds office until the annual meeting to
be held in 2004, and thereafter until his or her respective successor is duly
elected and qualified.

<TABLE>
<CAPTION>
                                                                                     Principal Occupation(s)
      Name and Age              Positions with the Fund      Officer Since             During Past 5 Years
      ------------              -----------------------      -------------             -------------------
<S>                           <C>                                 <C>          <C>
Thomas H. Dinsmore (1)(2)       Director, Chairman and            1983         Chairman and Chief Executive
          (50)                  Chief Executive Officer                        Officer of the Fund, the Ellsworth
                                                                               Fund and the Adviser.

 Jane D. O'Keeffe (1)(2)        Director and President            1994         President of the Fund, the
          (48)                                                                 Ellsworth Fund and the Adviser.

 H. Tucker Lake, Jr.(1)             Vice President                1994         Since 2002, Vice President, and
          (56)                                                                 prior thereto, Vice President,
                                                                               Trading, of the Fund, the Ellsworth
                                                                               Fund and the Adviser.

    Gary I. Levine(3)          Vice President, Treasurer          1993         Since 2002, Vice President,
          (46)                and Chief Financial Officer                      Treasurer and Chief Financial
                                                                               Officer, and prior thereto,
                                                                               Treasurer and Assistant Secretary
                                                                               of the Fund, the Ellsworth Fund and
                                                                               the Adviser.

     Germaine Ortiz                 Vice President                1996         Since 1999, Vice President, and
          (33)                                                                 prior thereto, Assistant Vice
                                                                               President of the Fund, the
                                                                               Ellsworth Fund and the Adviser.

    Sigmund Levine(3)                  Secretary                  1982         Senior Vice President and Secretary
          (79)                                                                 of the Fund, the Ellsworth Fund and
                                                                               the Adviser.
</TABLE>

- ----------
1        H. Tucker Lake, Jr. is the cousin of Thomas H. Dinsmore and Jane D.
         O'Keeffe.

2        Thomas H. Dinsmore and Jane D. O'Keeffe are brother and sister.

3        Sigmund Levine is the father of Gary I. Levine.


                                       12
<PAGE>

Ownership of Securities


         Set forth below is the dollar range of equity securities beneficially
owned in both the Fund and Fund Complex by each director of the Fund as of
December 31, 2002.


<TABLE>
<CAPTION>
                                                                                  Aggregate Dollar Range of Equity
                                                                                          Securities in All
                                                     Dollar Range of Equity       Funds Overseen or to be Overseen
                                                           Securities            by the Director or Nominee in Fund
         Name                                        in the Fund(1)(2)(3)                    Complex(4)
         ----                                        --------------------                    ----------
<S>                                                    <C>                                <C>
Interested Directors
     Thomas H. Dinsmore............................       over $100,000                     over $100,000
     Jane D. O'Keeffe..............................       over $100,000                     over $100,000

Independent Directors
     Gordon F. Ahalt...............................     $10,001 - $50,000                  $10,001-$50,000
     William A. Benton.............................    $50,001 - $100,000                 $50,001-$100,000
     Elizabeth C. Bogan, Ph.D......................     $10,001 - $50,000                 $50,001-$100,000
     Donald M. Halsted, Jr.........................    $50,001 - $100,000                 $50,001-$100,000
     George R. Lieberman...........................    $50,001 - $100,000                   over $100,000
     Duncan O. McKee...............................     $10,001 - $50,000                 $50,001-$100,000
     Nicolas W. Platt..............................       $1 - $10,000                     $10,001-$50,000
</TABLE>

- ----------
1        Beneficial ownership has been determined based upon the director's
         direct or indirect pecuniary interest in the equity securities.

2        The dollar ranges are: None, $1-$10,000, $10,001-$50,000,
         $50,001-$100,000, or over $100,000.

3        The dollar range of equity securities owned in the Fund is based on the
         closing price of $17.69 on December 31, 2002 on the American Stock
         Exchange.

4        The dollar range of equity securities owned in the Fund Complex is
         based on the closing price of $17.69 for the Fund and $7.45 for the
         Ellsworth Fund on December 31, 2002 on the American Stock Exchange.

Committees of the Board of Directors

         The Board of Directors has three committees: an Audit Committee, a
Nominating and Administration Committee and a Pricing Committee.

         Audit Committee

         The Audit Committee is comprised entirely of independent directors (Mr.
Benton, Dr. Bogan, Mr. Halsted and Mr. Lieberman, with Dr. Bogan serving as
Chairperson). All such members are independent as such term is defined by the
American Stock Exchange's listing standards and the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Committee oversees the Fund's
accounting and financial reporting policies and practices, as well as the
quality and objectivity of the Fund's financial statements and the independent
audit of the financial statements. Among other duties, the Committee selects
independent accountants for the Fund, evaluates their independence and meets
with them to review the scope and results of the audit.


                                       13
<PAGE>

         Nominating and Administration Committee

         The Nominating and Administration Committee is also comprised entirely
of independent directors (Mr. Ahalt, Mr. Halsted and Mr. Lieberman, with Mr.
Halsted serving as Chairman). In accordance with its charter, the Committee,
among other duties, recommends nominees as independent directors for the Fund
and nominees for Board committees, reviews Board governance issues and Board
compensation and monitors the performance of legal counsel. In recommending
nominees, the Committee considers the diversity of experience and backgrounds of
nominees and directors. The Nominating and Administration Committee will
consider a stockholder's suggestion for a nominee for director, but the final
decision for all nominees will be made by the Committee.

         A stockholder may nominate an individual for election to the Board of
Directors at the 2004 Annual Meeting of shareholders if the stockholder: (1) is
a stockholder of record at the time of giving notice to the Fund; (2) is a
stockholder of record at the time of the 2004 Annual Meeting; (3) is entitled to
vote at the 2004 Annual Meeting; and (4) has complied with the notice procedures
in the Fund's Bylaws. The notice procedures require that a stockholder submit
the nomination in writing to the Secretary of the Fund no earlier than October
13, 2003 but no later than November 12, 2003. The notice must contain all
information relating to the nominee required for proxy solicitations by
Regulation 14A under the Exchange Act (including the individual's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected). The notice must also contain the stockholder's name and
address as they appear on the Fund's books (and the name and address of any
beneficial owner, on whose behalf the nomination is made) and the number of
shares of stock owned beneficially and of record by such stockholder and
beneficial owner.

         Pricing Committee

         The Pricing Committee is comprised of three members, two of whom are
independent directors (Mr. Ahalt and Mr. Platt, with Mr. Ahalt serving as
Chairman) and one of whom is an interested person (Mr. Dinsmore). In accordance
with its charter, the Committee assists the Adviser in its valuation of the
Fund's portfolio of securities when pricing anomalies arise and the full Board
is not available to assist the Adviser in making a fair value determination.

         It is anticipated that the Committee will meet only as pricing
anomalies or issues arise that cannot be resolved by the entire Board due to
time constraints.

Board and Committee Meetings

         During the 2003 fiscal year, the Board of Directors met eight times,
the Audit Committee met four times and the Nominating and Administration
Committee met four times. The Pricing Committee did not meet.

Directors' Compensation

         Mr. Dinsmore and Ms. O'Keeffe are the only officers of the Fund or the
Adviser who serve on the Board of Directors. Each director who is not an officer
of the Fund or the Adviser currently receives (1) an annual fee of $5,000, (2)
$1,000 plus expenses for each Board meeting attended, (3) $1,000 for each
stockholders' meeting attended, (4) $1,000 plus expenses for each committee
meeting attended that is not held in conjunction with a Board meeting, and (5)
$500 for each committee meeting attended that is held in conjunction with a
Board meeting. The chairperson of each committee receives an additional $200 per
committee meeting.


                                       14
<PAGE>


         The following table shows the compensation that was paid to the
directors solely by the Fund as well as by the Fund Complex as a whole during
the 2003 fiscal year.


<TABLE>
<CAPTION>
                                                         Pension or Retirement                          Total
                                         Aggregate        Benefits Accrued as    Estimated Annual   Compensation
                                        Compensation           Part of             Benefits upon     From Fund
Name of Director                       From the Fund        Fund Expense            Retirement        Complex
- ----------------                       -------------        ------------            ----------        -------
<S>                                       <C>                    <C>                   <C>            <C>
Thomas H. Dinsmore(1)                       None                 None                  None              None

Jane D. O'Keeffe(2)                         None                 None                  None              None

Gordon F. Ahalt                           $15,000                None                  None           $30,000

William A. Benton                         $16,000                None                  None           $31,500

Elizabeth C. Bogan, Ph.D.                 $15,600                None                  None           $30,700

Donald M. Halsted, Jr.                    $18,800                None                  None           $37,100

George R. Lieberman                       $18,000                None                  None           $35,500

Duncan O. McKee                           $14,000                None                  None           $28,000

Nicolas W. Platt                          $14,000                None                  None           $28,000
</TABLE>

- ----------
1        Thomas H. Dinsmore is also Chairman and Chief Executive Officer of the
         Fund. Mr. Dinsmore receives no compensation from the Fund for serving
         in such positions.

2        Jane D. O'Keeffe is also President of the Fund. Ms. O'Keeffe receives
         no compensation from the Fund for serving in such position.


                                       15
<PAGE>

Directors' Consideration of Investment Advisory Agreement


         At a meeting in person held on November 18, 2002, the Board of
Directors, including a majority of the directors who are not "interested
persons" of the Fund, voted to continue the Fund's current Investment Advisory
Agreement for a one-year term ending December 31, 2003. In considering whether
to continue such Agreement, the directors reviewed a wide range of information
provided by the Adviser, including the detailed Statement of Income and Expense
of the Adviser for its most recent fiscal year ended June 30, 2002, as well as
an analysis of the performance and the investment advisory fees of the Fund and
of comparable investment companies, and information regarding the Adviser's
personnel. Prior to approving the continuance of the Investment Advisory
Agreement, the directors considered the following factors:

         o        the nature and extent of the advisory and administrative
                  services provided by the Adviser.

                  Directors considered the fact that the Adviser provides all
                  advisory and administrative services required for the Fund's
                  operations.

         o        the quality of past services rendered by the Adviser.

                  Directors considered the Adviser's adherence to its and the
                  Fund's compliance procedures, as well as the Fund's investment
                  objectives, policies and restrictions. Directors also
                  considered the performance of the Fund relative to its
                  benchmarks, and the fact that the Fund has outperformed its
                  benchmarks both over the short-term and the long-term.

         o        the value of benefits received by the Adviser.

                  Directors considered the fact that the Adviser has not entered
                  into any third party soft dollar arrangements and does not
                  receive benefits from the Fund other than advisory fees.

         o        the profitability and financial condition of the Adviser.

                  Directors considered the financial results of the Adviser and
                  the fact that the Adviser's income is based upon advisory fees
                  that it receives from the Fund and the Ellsworth Fund.

         o        the performance of the Fund, particularly in light of recent
                  market conditions.

                  Directors considered the fact that the Fund outperformed
                  Lipper Inc.'s Closed-end Convertible Fund Average, the
                  Standard & Poor's Composite Stock Price 500 Index and the
                  Russell 2000(R) Index for the ten months, one year, five years
                  and ten years ended October 31, 2002.

         o        the advisory fees paid by the Fund in comparison to other
                  closed-end investment companies with comparable investment
                  objectives and policies.

                  Directors considered the fact that the advisory fee rate for
                  the Fund was comparable to the advisory fee rates of other
                  closed-end convertible funds.



                                       16
<PAGE>


         o        the structure of the Adviser's fee schedule, including its
                  breakpoints.

                  Directors considered the fact that, if the net assets of the
                  Fund exceed $100,000,000, the advisory fee payable by the Fund
                  on net assets in excess of $100,000,000 will be reduced by
                  0.25%.


                                 CODE OF ETHICS

         The Adviser and the Fund have each adopted a separate Code of Ethics
under which directors, officers, employees and other affiliated persons of the
Adviser, and directors, directors emeritus, officers and employees of the Fund
are generally prohibited from personal trading in any security which is then
being purchased or sold or considered for purchase or sale by the Fund
(collectively, the "Codes of Ethics"). The Codes of Ethics permit such persons
to engage in other personal securities transactions if (i) the securities
involved are certain debt securities, money market instruments, shares of
registered open-end investment companies or shares acquired from an issuer in a
rights offering or under an automatic dividend reinvestment, (ii) the
transactions are either non-volitional, or with respect to the Adviser's Code of
Ethics only, are effected in an account over which such person has no direct or
indirect influence or control, or (iii) under certain circumstances, they first
obtain permission to trade from the appropriate Compliance Officer. The Codes of
Ethics contain standards for the granting of such permission, and permission to
trade will usually be granted only in accordance with such standards.

         The Codes of Ethics can be reviewed and copied at the SEC's Public
Reference Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-202-942-8090. In
addition, such Codes of Ethics are available on the EDGAR Database on the SEC's
Internet site at HTTP://WWW.SEC.GOV. Copies of the Codes of Ethics may be
obtained, after paying a duplicating fee, by electronic request at the following
E-mail address: PUBLICINFO@SEC.GOV, or by writing the SEC's Public Reference
Section, Washington, D.C. 20549-0102.

                                  PROXY VOTING

         The Fund's Board of Directors has adopted Proxy Voting Guidelines (the
"Guidelines") in accordance with Rule 30b1-4 under the 1940 Act. The Guidelines
have been designed with the overall goal of maximizing the value of the Fund's
investments. The Guidelines generally assign proxy voting responsibilities for
the Fund to the Adviser. The portfolio managers at the Adviser oversee the
voting policies and decisions for the Fund. If a conflict of interest arises
with respect to a proxy voting matter, the portfolio manager will promptly
notify the Fund's Audit Committee and counsel for the Fund's independent
directors and the proxies will be voted in accordance with the direction
received from the Audit Committee.

         The Guidelines are available without charge, by calling the Fund
collect at (973) 631-1177. The Guidelines are also posted on the Fund's website
at http://www.bancroftfund.com and are available on the SEC's website at
http://www.sec.gov.

                                    TAXATION

         The Fund intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue Code
of 1986, as amended (the "Code"). As long as it so qualifies, the Fund (but not
its stockholders) will not be subject to Federal income tax to the extent that
it distributes its net investment income and net realized capital gains. The
Fund intends to distribute substantially all of such income.


                                       17
<PAGE>

         The Code requires a RIC to pay a nondeductible 4% excise tax to the
extent the RIC does not distribute, during each calendar year, 98% of its
ordinary income, determined on a calendar year basis, and 98% of its capital
gains, determined, in general, on an October 31 year end, plus certain
undistributed amounts from previous years. While the Fund intends to distribute
its income and capital gains in the manner necessary to minimize imposition of
the 4% excise tax, there can be no assurance that sufficient amounts of the
Fund's taxable income and capital gains will be distributed to avoid entirely
the imposition of the tax. In such event, the Fund will be liable for the tax
only on the amount by which it does not meet the foregoing distribution
requirements.


         Dividends paid by the Fund from its ordinary income or from an excess
of net short-term capital gains over net long-term capital losses (together
referred to hereafter as "ordinary income dividends") are taxable to
stockholders as ordinary income. Ordinary income dividends paid to individual
and other noncorporate stockholders will be treated as qualified dividend income
(currently subject to tax at a maximum rate of 15%) to the extent of the
dividends received by the Fund in any taxable year from domestic corporations
and certain qualified foreign corporations. However, if the qualified dividends
received by the Fund are 95% (or more) of the Fund's gross income (exclusive of
any net capital gain) in any taxable year, then all of the ordinary income
dividends paid by the Fund for that taxable year will be treated as qualified
dividend income. A portion of the Fund's ordinary income dividends may be
eligible for the dividends received deduction allowed to corporations under the
Code, if certain requirements are met.


         Distributions made from an excess of net long-term capital gains over
net short-term capital losses (including gains or losses from certain
transactions in warrants and options) ("capital gain dividends") are taxable to
stockholders as long-term capital gains, regardless of the length of time the
stockholder has owned Fund shares. Any loss upon the sale or exchange of Fund
shares held for twelve months or less will be treated as long-term capital loss
to the extent of any capital gain dividends received by the stockholder.
Distributions in excess of the Fund's earnings and profits will first reduce the
adjusted tax basis of a holder's shares and, after such adjusted tax basis is
reduced to zero, will constitute capital gains to such holder (assuming the
shares are held as a capital asset). Certain categories of capital gains are
taxable at different rates.

         Generally not later than 60 days after the close of its taxable year,
the Fund will provide its stockholders with a written notice designating the
amounts of ordinary income dividends constituting qualified dividend income, the
amount of ordinary income dividends eligible for the dividends received
deduction, and the amounts of any capital gain dividends including designation
of any amounts of capital gain dividends in the different categories of capital
gain referred to above. Dividends are taxable to stockholders even though they
are reinvested in additional shares of the Fund.

         A loss realized on a sale or exchange of shares of the Fund will be
disallowed under the wash sale rules if other Fund shares are acquired (whether
through the automatic reinvestment of dividends or otherwise) within a 61-day
period beginning 30 days before and ending 30 days after the date that the
shares are disposed of. In such a case, the basis of the shares acquired will be
adjusted to reflect the disallowed loss.

         Ordinary income dividends paid to stockholders who are non-resident
aliens or foreign entities will be subject to a 30% United States withholding
tax under existing provisions of the Code applicable to foreign individuals and
entities unless a reduced rate of withholding or a withholding exemption is
provided under applicable treaty law. Non-resident stockholders are urged to
consult their own tax advisers concerning the applicability of the United States
withholding tax.


                                       18
<PAGE>

         Under certain provisions of the Code, some stockholders may be subject
to a withholding tax on ordinary income dividends and capital gain dividends
("backup withholding"). Generally, stockholders subject to backup withholding
will be those for whom no certified taxpayer identification number is on file
with the Fund or who, to the Fund's knowledge, have furnished an incorrect
number. When establishing an account, an investor must certify under penalty of
perjury that such number is correct and that such investor is not otherwise
subject to backup withholding.

         Dividends and interest received by the Fund may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes.

         The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative, judicial or administrative
action either prospectively or retroactively.

         Ordinary income and capital gain dividends may also be subject to state
and local taxes.

         Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on United States Government obligations. State
law varies as to whether dividend income attributable to United States
Government obligations is exempt from state income tax.

         Stockholders are urged to consult their own tax advisers regarding
specific questions as to Federal, foreign, state or local taxes. Foreign
investors should consider applicable foreign taxes in their evaluation of an
investment in the Fund.

                                    CUSTODIAN

         The Bank of New York ("Custodian"), 100 Church Street, 10th Floor, New
York, NY 10286, is the custodian of the portfolio securities and cash of the
Fund. As such, the Custodian holds the Fund's portfolio securities and cash in
separate accounts on the Fund's behalf and receives and delivers portfolio
securities and cash in connection with portfolio transactions initiated by the
Fund's portfolio managers, collects income due on its portfolio securities and
disburses funds in connection with the payment of distributions and expenses.

                             INDEPENDENT ACCOUNTANTS

         PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, 21st Floor,
New York, NY 10036-2798, are the independent accountants of the Fund. The
independent accountants audit and report on the annual financial statements and
also perform limited tax services for the Fund.

                    BROKERAGE ALLOCATION AND OTHER PRACTICES


         In placing orders for the purchase and sale of securities for the Fund,
the Adviser is guided by the Fund's investment objectives, policies and
limitations as delineated by statements contained in the various documents filed
by the Fund with the SEC, as such documents may, from time to time, be amended.


         The Adviser is obligated, in placing orders for the purchase and sale
of securities for the Fund, to obtain the most favorable price and execution
available under the circumstances and to keep true, accurate


                                       19
<PAGE>

and current books and records containing sufficient detail to demonstrate
compliance with this obligation. In determining the most favorable price and
execution in each transaction the determinative factor is not necessarily the
lowest possible commission cost. The Adviser may consider the full range and
quality of the services of broker-dealers in placing orders including, but not
by way of limitation, the value of research provided as well as execution
capability, commission rate, financial responsibility and responsiveness of the
broker-dealer to the Adviser. Accordingly, to the extent provided by law, in
executing portfolio transactions, the Adviser may pay a broker-dealer which
provides brokerage or research services a commission in excess of that which
another broker-dealer would have charged for the same transaction.

         The Adviser currently places portfolio transactions for the Ellsworth
Fund (together with the Fund, the "Funds"), and may in the future place
portfolio transactions for other investment companies and advised accounts. The
Adviser seeks to allocate portfolio transactions equitably whenever concurrent
decisions are made to purchase or sell securities by the Fund and such other
advisory accounts. In some cases this procedure could have an adverse effect on
the price or amount of securities available to the Fund.

         The Funds have established procedures that are intended to apply
whenever the Funds simultaneously purchase or sell the same securities. The
Adviser may, but is under no obligation to, aggregate securities sold or
purchased in order to obtain the best price and execution. In such event,
allocation of the securities purchased or sold, as well as the expenses incurred
in the transaction, will be made by the Adviser as follows:

         (a) the Funds will pay or receive the average of the prices paid or
received by the Funds;

         (b) the Funds will share pro-rata the transaction costs incurred based
on the dollar amount of each fund's trade.

         (c) if an aggregated order is partially filled, the amount of shares
that the Funds purchase or sell will be allocated pro-rata based on the dollar
amount of each fund's intended trade or, if the aggregated order is subject to a
minimum lot size, as closely as practicable to pro rata.


         (d) the Adviser may allocate an order on a basis different from that
specified above if (i) the Funds are treated fairly and equitably, (ii) neither
of the Funds is given preferential treatment, and (iii) the procedures set forth
in paragraph (b) are followed.


         When entering an aggregated order, the portfolio manager for the Funds
will indicate on the transaction order for each fund how the portfolio manager
intends to allocate the order between the Funds. An aggregated order may be
allocated on a basis different from that set forth in Paragraphs (a)-(d) hereof
only if the portfolio manager includes a written explanation of such deviation
in each fund's transaction order. Each such transaction order shall be submitted
to the chief compliance officer, Chairman or other designated officer for review
no later than one hour after the opening of the applicable market on the trading
day following the day the order was executed.

         In the case of securities that are not traded on a national securities
exchange, purchases and sales are made through firms that regularly make a
market in such securities, unless, in the Fund's opinion, another firm can
obtain the best price and make the best execution of the order. Portfolio
transactions placed through dealers serving as primary market makers are
effected at net prices, without commissions as such, but which include
compensation in the form of mark up or mark down. In certain instances, the Fund
purchases underwritten issues at prices which include underwriting fees.


                                       20
<PAGE>


         Brokerage commissions paid by the Fund during its fiscal years ended
October 31, 2001, 2002 and 2003 were $23,923, $25,233, and $22,315,
respectively.

         During the fiscal year ended October 31, 2003, the Fund purchased
securities issued by Goldman Sachs and Co. and Prudential Securities, Inc., two
of the Fund's regular brokers. The aggregate value of the securities of these
issuers held at October 31, 2003, was $2,341,533 and $0, respectively.


                                 NET ASSET VALUE


         The Net Asset Value (the "NAV") of the Fund's shares of Common Stock is
calculated at the close of regular trading on the New York Stock Exchange
("NYSE") (generally 4:00 p.m. Eastern time) every day that the NYSE is open. The
Fund makes this information available daily via its web site
(http://www.bancroftfund.com) and through electronic distribution for media
publication, including major internet-based financial services web sites and
portals (e.g., bloomberg.com, yahoo.com, cbsmarketwatch.com). Currently, The
Wall Street Journal, The New York Times and Barron's publish NAVs for closed-end
investment companies weekly.


         The NAV per share of the Common Stock is calculated by dividing the
value of the Fund's assets (including interest and dividends accrued but not
collected), less its liabilities (including accrued expenses), by the number of
outstanding shares. Each listed security is valued at the last sale price or the
mean of the reported closing bid and asked prices if there are no sales.
Unlisted securities are valued at the mean of the latest available bid and asked
prices. Securities for which quotations are not readily available, restricted
securities and other assets are valued at fair value as determined in good faith
by the Board of Directors. Notwithstanding the foregoing, short-term debt
securities with maturities of 60 days or less are valued at amortized cost.


         Shares of closed-end investment companies frequently trade at a
discount from net asset value, but in some cases trade at a premium. Since the
market price of the Fund's shares will be determined by factors including
trading volume of such shares, general market and economic conditions and other
factors beyond the control of the Fund, the Fund cannot predict whether its
shares will trade at, below or above net asset value, although historically the
Fund's shares have generally traded at a discount from net asset value.


                              FINANCIAL STATEMENTS


         The audited financial statements included in the Annual Report to the
Fund's Stockholders for the fiscal year ended October 31, 2002, together with
the report of PricewaterhouseCoopers LLP thereon, and the unaudited financial
statements included in the Semi-Annual Report to the Fund's Stockholders for the
six months ended April 30, 2003 are incorporated herein by reference. It is
expected that the audited financial statements included in the Annual Report to
the Fund's Stockholders for the fiscal year ended October 31, 2003, together
with the report of PricewaterhouseCoopers LLP thereon, will be mailed to
stockholders and available on the Fund's website (http://www.bancroftfund.com)
on or around December 29, 2003.



                                       21
<PAGE>

                                     Part C

                                Other Information

Item 24. Financial Statements and Exhibits

1.       (a)      The following audited financial statements of Bancroft
                  Convertible Fund, Inc. (the "Fund") are included in the Fund's
                  Annual Report to Stockholders for the fiscal year ended
                  October 31, 2002, filed with the Securities and Exchange
                  Commission ("SEC") under Section 30(b)(1) of the Investment
                  Company Act of 1940, as amended ("1940 Act"), and are
                  incorporated in Part B hereof by reference:

                  Portfolio of Investments, October 31, 2002;
                  Statement of Assets and Liabilities, October 31, 2002;
                  Statement of Operations for the fiscal year ended October 31,
                  2002;
                  Statement of Changes in Net Assets for the years ended October
                  31, 2002 and 2001;
                  Financial Highlights for the five fiscal years ended October
                  31, 2002;
                  Notes to Financial Statements;
                  Report of Independent Accountants.

         (b)      The following unaudited financial statements of the Fund are
                  included in the Fund's Semi-Annual Report to Stockholders for
                  the six months ended April 30, 2003, filed with the SEC under
                  Section 30(b)(1) of the 1940 Act, and are incorporated in Part
                  B hereof by reference:

                  Portfolio of Investments, April 30, 2003;
                  Statement of Assets and Liabilities, April 30, 2003;
                  Statement of Operations for the six months ended April 30,
                  2003;
                  Statement of Changes in Net Assets for the six months ended
                  April 30, 2003; and for the year ended October 31, 2002;
                  Financial Highlights for the five fiscal years ended October
                  31, 2002 and for the six months ended April 30, 2003;
                  Notes to Financial Statements.

2.       Exhibits


         (a)(1)   Certificate of Incorporation dated September 9, 1970. (1)
            (2)   Certificate of Amendment dated April 7, 1971. (1)
            (3)   Certificate of Amendment dated June 20, 1979. (1)
            (4)   Certificate of Amendment dated June 25, 1980. (1)
            (5)   Certificate of Amendment dated June 25, 1986. (1)
            (6)   Certificate of Amendment dated March 6, 1987. (1)
            (7)   Certificate of Amendment dated July 1, 1987. (1)
         (b)      Third Amended and Restated Bylaws dated August 21, 2002. (1)
         (c)      None
         (d)(1)   Form of Specimen Share Certificate for Common Stock. (1)
            (2)   Form of Subscription Certificate. (1)
            (3)   Form of Notice of Guaranteed Delivery. (1)
         (e)      Automatic Dividend Investment and Cash Payment Plan. (1)

<PAGE>


         (f)      None
         (g)      Investment Advisory Agreement dated February 12, 2001. (1)
         (h)      None
         (i)      None
         (j)(1)   Custodian Agreement with The Bank of New York dated February
                  9, 1990. (1)
            (2)   Amendment to Custodian Agreement dated July 26, 1999. (1)
            (3)   Amendment to Custodian Agreement dated June 1, 2001. (1)
         (k)(1)   Registrar, Transfer Agency and Service Agreement with American
                  Stock Transfer & Trust Company dated December 28, 1999. (1)
            (2)   Form of Subscription Agent Agreement. (1)
            (3)   Form of Information Agent Agreement. (1)
         (l)      Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP.
         (m)      None
         (n)      Consent of PricewaterhouseCoopers LLP.
         (o)      None
         (p)      None
         (q)      None
         (r)(1)   Code of Ethics of the Fund. (1)
            (2)   Code of Ethics of Davis-Dinsmore Management Company. (1)

- ----------
(1)      Incorporated by reference to the Fund's Registration Statement on Form
         N-2, filed with the SEC on September 29, 2003.



                                       2
<PAGE>

Item 25. Marketing Arrangements

         Not applicable.

Item 26. Other Expenses of Issuance and Distribution

         The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:


                                                                     Estimated
Category                                                              Expenses
- --------                                                              --------

Registration fees.............................................        $  1,259
American Stock Exchange listing fees..........................               0
Printing expenses.............................................           6,000
Subscription Agent fees and expenses..........................          33,000
Information Agent fees and expenses...........................          36,279
Accounting fees and expenses..................................           8,000
Legal fees and expenses.......................................          75,000
Miscellaneous.................................................          15,954
                                                                      --------

Total.........................................................         175,492
                                                                      ========


Item 27. Person Controlled by or Under Common Control with Fund

         None.

Item 28. Number of Holders of Securities


         The following information is given as of November 4, 2003:

                                                              Number of
Title of Class                                              Record Holders
- --------------                                              --------------

Common Stock, $0.01 par value.........................           1,775

Item 29. Indemnification


         Reference is made to Section 145 of the Delaware Corporation Law,
Article Twelfth of the Fund's Certificate of Incorporation, as amended, and
Article VIII of the Fund's Third Amended and Restated Bylaws, each of which
provide for indemnification.

         The Fund's Certificate of Incorporation, as amended, contains the
following provision:

         No director of the Fund shall be liable to the Fund or its stockholders
for monetary damages for breach of fiduciary duty as a director, provided that
the foregoing shall not eliminate or limit liability of a director (i) for any
breach of such director's duty of loyalty to the Fund or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct,
gross negligence or reckless


                                       3
<PAGE>

disregard of the duties involved in the conduct of such director's office, or a
knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware
Code, or (iv) for any transaction from which such director derived an improper
personal benefit.

         The Fund's Third Amended and Restated Bylaws provide that the Fund
shall indemnify its officers and directors to the extent permitted by Delaware
law as amended from time to time, provided, however, that no officer or director
of the Fund shall be protected against any liability to the Fund or its
stockholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

         Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Fund pursuant to the foregoing
provisions or otherwise, the Fund has been advised that, in the opinion of the
SEC, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Fund of
expenses incurred or paid by a director, officer or controlling person of the
Fund in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Fund will, unless in the opinion of its counsel the matter
has been settled by controlling precedent or such claim is to be paid under
insurance policies, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

         The Fund has obtained for its directors and officers errors and
omissions insurance in the amount of $2,000,000 with a deductible amount of
$100,000. The effect of such insurance is to insure against liability for any
act, error, omission, misstatement, misleading statement, neglect or certain
breaches of duty by the insureds as directors and/or officers of the Fund.

Item 30. Business and other Connections of Investment Adviser

         The Adviser is also the investment adviser to Ellsworth Convertible
Growth and Income Fund, Inc., a closed-end, management investment company.
During the past two fiscal years, neither the Adviser nor any of its directors
or officers engaged in any other business, profession, vocation or employment of
a substantial nature.

Item 31. Location of Accounts and Records

         Records are located at:

                  1.       Bancroft Convertible Fund, Inc.
                           65 Madison Avenue, Suite 550
                           Morristown, NJ 07960

(Corporate records and records relating to the function of Davis-Dinsmore
Management Company as investment adviser)


                                       4
<PAGE>

                  2.       The Bank of New York
                           100 Church Street
                           10th Floor
                           New York, NY 10286
                           Attention: Bancroft Convertible Fund, Inc.

(Records relating to its functions as Custodian for the Fund)

                  3.       American Stock Transfer & Trust Company
                           59 Maiden Lane
                           New York, NY 10038
                           Attention: Bancroft Convertible Fund, Inc.

(Records relating to its functions as Registrar and Transfer Agent and Dividend
Paying Agent for the Fund)

Item 32. Management Services

         Not applicable.

Item 33. UNDERTAKINGS

(1) The Fund undertakes to suspend the offering of its shares until it amends
its prospectus if (a)subsequent to the effective date of its Registration
Statement, the net asset value of its shares declines more than 10% from its net
asset value as of the effective date of the Registration Statement or (b) the
net asset value of its shares increase to an amount greater than its net
proceeds as stated in the prospectus.

(2) Not applicable.

(3) Not applicable.


(4) The Fund undertakes:

     a. to file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement:

         (1) to include any prospectus required by Section 10(a)(3) of the 1933
Act [15 U.S.C. 77j(a)(3)];

         (2) to reflect in the prospectus any facts or events after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and

         (3) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

     b. that, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of those
securities at that time shall be deemed to be the initial bona fide offering
thereof; and



                                       5
<PAGE>


     c. to remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.


(5) The Fund hereby undertakes that:

     a. for the purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of a
registration statement in reliance on Rule 430A and contained in the form of
prospectus filed by the Registrant under Rule 497(h) under the Securities Act of
1933 shall be deemed to be part of the Registration Statement as of the time it
was declared effective.

     b. for the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering thereof.

(6) The Fund undertakes to send by first class mail or other means designed to
ensure equally prompt delivery, within two business days of receipt of a written
or oral request, any Statement of Additional Information.


                                       6
<PAGE>

                                   SIGNATURES


         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Morristown and State of New Jersey on the 14th day of
November, 2003.


                         BANCROFT CONVERTIBLE FUND, INC.
                                     (Fund)

                                 By: /s/ Thomas H. Dinsmore
                                     ----------------------------------------
                                     Thomas H. Dinsmore, Chief Executive Officer

         Each person whose signature appears below hereby authorizes Jane D.
O'Keeffe, Thomas H. Dinsmore and Gary I. Levine, or any of them, as
attorney-in-fact, to sign on his behalf, individually and in each capacity
stated below, any amendments to this Registration Statement (including
post-effective amendments) and to file the same, with all exhibits thereto, with
the Securities and Exchange Commission.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.


<TABLE>
<CAPTION>
Signature                              Title                                       Date
- ---------                              -----                                       ----
<S>                                    <C>                                         <C>
/s/ Thomas H. Dinsmore                 Chairman, Chief Executive Officer, and      November 14, 2003
- ----------------------------------     Director
Thomas H. Dinsmore                     (Principal Executive Officer)

/s/ Jane D. O'Keeffe                   President and Director                      November 14, 2003
- ----------------------------------
Jane D. O'Keeffe

             *                         Director                                    November 14, 2003
- ----------------------------------
Gordon F. Ahalt

             *                         Director                                    November 14, 2003
- ----------------------------------
William A. Benton

             *                         Director                                    November 14, 2003
- ----------------------------------
Elizabeth C. Bogan

             *                         Director                                    November 14, 2003
- ----------------------------------
Donald M. Halsted, Jr.

             *                         Director                                    November 14, 2003
- ----------------------------------
George R. Lieberman

             *                         Director                                    November 14, 2003
- ----------------------------------
Duncan O. McKee

             *                         Director                                    November 14, 2003
- ----------------------------------
Nicolas W. Platt

/s/ Gary I. Levine                     Vice President and Treasurer                November 14, 2003
- ----------------------------------     (Principal Financial Officer)
Gary I. Levine
</TABLE>

*        By /s/ Thomas H. Dinsmore, pursuant to a Power of Attorney.



                                       7
<PAGE>

                                  Exhibit Index


Exhibit Number    Document

(l)               Opinion and Consent of Ballard Spahr Andrews & Ingersoll, LLP
(n)               Consent of PricewaterhouseCoopers LLP.



                                       8

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(L)
<SEQUENCE>3
<FILENAME>exl.txt
<TEXT>

             [Letterhead of Ballard Spahr Andrews & Ingersoll, LLP]








                                                              November 14, 2003


Bancroft Convertible Fund, Inc.
65 Madison Avenue, Suite 550
Morristown, NJ  07960
                  Re:      Bancroft Convertible Fund, Inc.
                           Registration Statement on Form N-2
                           ----------------------------------

Ladies and Gentlemen:

                  We have acted as counsel to Bancroft Convertible Fund, Inc., a
corporation organized under the laws of the State of Delaware (the "Company")
and registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as a closed-end, management investment company.

                  This opinion is given in connection with the filing by the
Company of Pre-Effective Amendment No. 1 to the Registration Statement on Form
N-2 under the Securities Act of 1933, as amended, and Amendment No. 20 to such
Registration Statement under the 1940 Act (collectively, the "Registration
Statement") relating to the registration and issuance by the Company of up to
797,918 shares of the Company's common stock, par value $.01 per share (the
"Shares"), pursuant to the exercise of rights to purchase Shares to be
distributed to the stockholders of the Company in accordance with the
Registration Statement.

                  In connection with our giving this opinion, we have examined
copies of the Company's Certificate of Incorporation, as amended, and
resolutions of the Board of Directors adopted July 17, 2003 and October 20,
2003, and originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, records and other instruments as we have
deemed necessary or advisable for purposes of this opinion. We have also
examined the prospectus for the Company, which is included in the Registration
Statement, substantially in the form in which it is to become effective (the
"Prospectus"). As to various questions of fact material to our opinion, we have
relied upon information provided by officers of the Company.

                  Based on the foregoing, we are of the opinion that the Shares
to be offered for sale pursuant to the Prospectus are duly authorized and, when
sold, issued and paid for as described in the Prospectus, will be validly
issued, fully paid and nonassessable.

<PAGE>

Bancroft Convertible Fund, Inc.
November 14, 2003
Page 2

                  We express no opinion concerning the laws of any jurisdiction
other than the federal law of the United States of America and the Delaware
General Corporation Law.

                  We consent to the filing of this opinion as an exhibit to the
Registration Statement.

                                      Very truly yours,



                                      /s/ Ballard Spahr Andrews & Ingersoll, LLP


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(N)
<SEQUENCE>4
<FILENAME>exn.txt
<TEXT>
2


                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in this Registration
Statement on Form N-2 of our report dated November 18, 2002, relating to the
financial statements and financial highlights which appears in the October 31,
2002 Annual Report to Shareholders of Bancroft Convertible Fund, Inc., which are
also incorporated by reference into the Registration Statement. We also consent
to the references to us under the headings "Financial Highlights", "Experts",
"Independent Accountants" and "Financial Statements" in such Registration
Statement.


PricewaterhouseCoopers LLP

New York, New York
November 14, 2003


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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