<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Ellsworth Convertible Growth and Income Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--Enter Company Name Here--
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
65 Madison Avenue, Morristown, New Jersey 07960
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 9, 1998
---------------------
To The Shareholders:
The annual meeting of shareholders of Ellsworth Convertible Growth and
Income Fund, Inc. (the "Company") will be held on Friday, January 9, 1998 at
12:30 p.m. local time at the Bonita Bay Club, 26660 Country Club Drive, S.W.,
Bonita Springs, Florida 33923 for the following purposes:
(1) To elect three directors, each of whom will serve until the annual
meeting of shareholders in 2001, or until their successors are elected
and qualified.
(2) To ratify or reject the selection of Coopers & Lybrand L.L.P. as
independent accountants for the fiscal year ending September 30, 1998.
(3) To approve or disapprove an amendment to the Amended and Restated
Articles of Incorporation, as amended, of the Company to give
shareholders the right to tender their shares during the current fiscal
year.
(4) To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on November 26, 1997 are
entitled to vote at the meeting and any adjournments. If you attend the
meeting, you may vote your shares in person. If you do not expect to attend
the meeting, please fill in, date, sign and return the proxy in the enclosed
envelope which requires no postage if mailed in the United States.
It is important that you return your signed proxy promptly so that a quorum
may be assured.
November 26, 1997
Thomas H. Dinsmore
Chairman of the Board of Directors
<PAGE>
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
65 Madison Avenue, Morristown, New Jersey 07960
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 9, 1998
---------------------
The accompanying proxy is solicited by the Board of Directors of Ellsworth
Convertible Growth and Income Fund, Inc. (the "Company"), in connection with
the annual meeting of shareholders of the Company to be held at the Bonita Bay
Club, 26660 Country Club Drive, S.W., Bonita Springs, Florida 33923 at 12:30
p.m. local time on January 9, 1998 (the "Annual Meeting"). A shareholder can
revoke the proxy prior to its use by appearing at the Annual Meeting and
voting in person, by giving written notice of such revocation to the Secretary
of the Company, or by returning a subsequently dated proxy. The cost of
soliciting proxies will be borne by the Company. The officers, directors and
regular employees of the Company may solicit proxies personally. The Company
may also pay persons holding stock in their names, or those of their nominees,
for their expenses in sending proxies and proxy materials to beneficial owners
or principals.
The Board of Directors has named Thomas H. Dinsmore, Chairman and Chief
Executive Officer, Jane D. O'Keeffe, President, and Sigmund Levine, Senior
Vice President and Secretary, of the Company, as proxies. Unless otherwise
directed by the accompanying proxy, the proxies will vote for the election of
the nominees named below under "Election of Directors," will vote to ratify
the selection of Coopers & Lybrand L.L.P. as independent accountants for the
fiscal year ending September 30, 1998 and will vote against the proposal to
amend the Company's Amended and Restated Articles of Incorporation, as amended
(the "Charter"). Abstentions received and broker non-votes with respect to any
proposal will be counted for purposes of determining whether a quorum is
present at the Annual Meeting. Abstentions and broker non-votes do not count
as votes received but have the same effect as casting a vote against proposals
that require the vote of a majority of the shares present at a meeting,
provided a quorum exists.
The Board of Directors currently knows of no other matters to be presented
to the Annual Meeting. If any other matters properly come before the Annual
Meeting, the proxies will vote in accordance with their best judgment. The
proxies may propose one or more adjournments of the meeting to permit further
solicitation of proxies. No adjournment will be for a period ending later than
March 26, 1998. Any such adjournment will require the affirmative vote of a
majority of the shares present in person or by proxy at the session of the
meeting to be adjourned. The proxies will vote in favor of any such
adjournment those proxies which instruct them to vote in favor of any of the
proposals to be considered at the adjourned meeting, and will vote against any
such adjournment those proxies which instruct them to vote against or to
abstain from voting on all of the proposals to be considered at the adjourned
meeting.
<PAGE>
Shareholders of record at the close of business on November 26, 1997 (the
"Record Date") will be entitled to one vote per share on all business of the
meeting. The Company had 7,110,916 shares of its Common Stock outstanding on
the Record Date. It is expected that this proxy statement and the accompanying
proxy will be first sent to shareholders on or about November 26, 1997.
PROPOSAL 1--
ELECTION OF DIRECTORS
The Company's Charter provides for three classes of directors to serve
staggered terms, with each class as nearly equal in number as possible. The
authorized number of directors of the Company is currently fixed at nine, with
each class having three directors. At each annual meeting of shareholders,
directors are elected to succeed those directors whose terms expired and each
newly elected director will serve for a three year term.
For election as directors at the Annual Meeting to be held January 9, 1998,
the Board of Directors has approved the nomination of Gordon F. Ahalt,
Elizabeth C. Bogan, Ph.D., and Nicolas W. Platt to serve as directors until
the annual shareholders' meeting to be held in 2001. Each of the nominees is
currently a director of the Company.
The proxies will vote for the election of the nominees named below unless
authority to vote for any or all of the nominees is withheld in the proxy. A
nominee must receive favorable votes from a plurality of the shares voting at
a meeting at which a quorum is present to be elected. Each of the nominees has
indicated that he or she is willing to serve as a director. If any or all of
the nominees should become unavailable for election due to events not now
known or anticipated, the proxies will vote for such other nominee or nominees
as the Board of Directors may recommend, unless the Board reduces the number
of directors.
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
NOMINEE AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
------- --- --------------------------------------------- --------------
<S> <C> <C> <C>
TERMS EXPIRING IN 2001
Gordon F. Ahalt 69 (1) Since January 1982, President, G.F.A. April 30, 1986
Inc. (petroleum industry consulting).
Since 1987, Consultant, W. H. Reaves &
Co., Inc. (asset management).
(2) Director of Bancroft Convertible Fund,
Inc. ("Bancroft"); The Harbinger Group
(investments); Cal Dive International
(diving service); and The Houston Explo-
ration Company (oil and gas exploration).
Elizabeth C. Bogan, 53 (1) Since September 1992, Senior Lecturer April 30, 1986
Ph.D. in Economics at Princeton University.
(2) Director of Bancroft.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
NOMINEE AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
------- --- --------------------------------------------- -----------------
<S> <C> <C> <C>
Nicolas W. Platt 44 (1) Since January 1997, Managing Director of April 28, 1997
the Corporate Practice, Burson Marsteller
(public relations). From August 1995 to
January 1997, Senior Managing Director,
Bozell-Sawyer Miller (public relations).
From August 1993 to August 1995, Executive
Vice-President, Novatel Communications
Ltd. From April 1983 to August 1993, Man-
aging Director and Corporate Vice Presi-
dent, American Stock Exchange.
(2) Director of Bancroft.
Information regarding the remaining directors of the Company is provided
below:
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
DIRECTOR AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
-------- --- --------------------------------------------- -----------------
<S> <C> <C> <C>
TERMS EXPIRING IN 2000
Jane D. O'Keeffe* 42 (1) Since August 1996, President of the Com- November 18, 1995
pany, Bancroft and Davis-Dinsmore Manage-
ment Company ("Davis-Dinsmore"). From Jan-
uary 1996 to August 1996, Executive Vice
President of the Company. From February
1996 to August 1996, Executive Vice Presi-
dent of Bancroft. From April 1994 to Janu-
ary 1996, Vice President of the Company.
From April 1994 to February 1996, Vice
President of Bancroft. Since July 1996,
Director of Davis-Dinsmore. From April
1994 to August 1996, Executive Vice Presi-
dent of Davis-Dinsmore. From October 1988
to March 1994, Vice President, Fiduciary
Trust International.
(2) Director of Bancroft.
William A. Benton 64 (1) Since January 1991, limited partner of June 11, 1986
Gavin, Benton & Co. (New York Stock Ex-
change specialist firm), and Partner in BE
Partners (small options market maker).
(2) Director of Bancroft.
George R. Lieberman 75 (1) Retired. Prior to January 1988, Chief January 11, 1990
Executive Officer, Lieberman-Appalucci
(advertising); and President, Interspace
Airport Advertising (advertising).
(2) Director of Bancroft.
</TABLE>
- --------
* Ms. Jane D. O'Keeffe is an "interested person", as defined by the Investment
Company Act of 1940 (the "Investment Company Act"), of the Company and
Davis-Dinsmore because she is an officer of the Company, and an officer,
director and holder of more than 5% of the issued and outstanding shares of
voting Common Stock of Davis-Dinsmore (the "Class A Stock").
3
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR BUSINESS DURING SERVED AS
DIRECTOR AGE PAST FIVE YEARS AND (2) CURRENT DIRECTORSHIPS DIRECTOR SINCE
-------- --- --------------------------------------------- -----------------
<S> <C> <C> <C>
TERMS EXPIRING IN 1999
Thomas H. Dinsmore* 44 (1) Since August 1996, Chairman and Chief April 30, 1986
Executive Officer of the Company,
Bancroft, and Davis-Dinsmore. From May
1986 to August 1996, President of the
Company; From November 1985 to August
1996, President of Bancroft. Since April
1994, Director of Davis-Dinsmore. From
August 1988 to August 1996, President of
Davis-Dinsmore. Since February 1983, Se-
nior Analyst of Davis-Dinsmore.
(2) Director of Bancroft.
Donald M. Halsted, Jr. 70 (1) Since October 1983, self employed busi- April 30, 1986
nessman.
(2) Director of Bancroft and Aquarian Com-
pany (water company).
Duncan O. McKee 66 (1) Retired. From April 1988 to November November 25, 1996
1996, Director Emeritus of the Company
and Bancroft. Prior to 1988, Partner,
Ballard Spahr Andrews & Ingersoll (law
firm).
(2) Director of Bancroft.
</TABLE>
- --------
* Mr. Thomas Dinsmore is an interested person of the Company and Davis-
Dinsmore because he is an officer of the Company and an officer, director
and holder of more than 5% of the issued and outstanding shares of the Class
A Stock of Davis-Dinsmore.
----------------
Directors of the Company, other than affiliated persons of the Company, as
a group received aggregate compensation of $55,850 from the Company during its
fiscal year ended September 30, 1997. Directors of the Company, other than
affiliated persons of the Company, currently receive an annual fee of $2,500,
plus $1,000 per board meeting when such meetings are called and attended plus
expenses of attending board meetings. During the fiscal year ended September
30, 1997, the Directors held six board meetings. The only committee of the
Board is the audit committee. Incumbent directors attended at least 75% of all
Board and committee meetings. Directors do not receive pension or retirement
benefits from the Company.
4
<PAGE>
Set forth below is information regarding the compensation paid during the
fiscal year ended September 30, 1997 for each director of the Company:
<TABLE>
<CAPTION>
TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM COMPANY AND
FROM COMPANY BANCROFT(1)
---------------------- ------------------
<S> <C> <C>
Thomas H. Dinsmore.................... $ -0- $ -0-
Jane D. O'Keeffe...................... $ -0- $ -0-
Gordon F. Ahalt....................... $8,500 $17,000
William A. Benton..................... $8,700 $17,200
Elizabeth C. Bogan, Ph.D. ............ $8,700 $17,400
Donald M. Halsted, Jr................. $8,700 $17,400
George R. Lieberman................... $8,500 $17,200
Duncan O. McKee(2).................... $8,500 $17,000
Nicolas W. Platt(3)................... $4,250 $ 9,500
</TABLE>
- --------
(1) Bancroft is a registered, closed-end investment company that is also
advised by Davis-Dinsmore.
(2) The fees received by Mr. McKee from the Company include $1,000, which he
received for serving as Director Emeritus of the Company until November
25, 1996, and $7,500, which he received for serving as Director of the
Company from November 25, 1996 through September 30, 1997.
(3) Mr. Platt received such fees for serving as Director of the Company and
Bancroft since April 28, 1997.
INVESTMENT ADVISER
Davis-Dinsmore, 65 Madison Avenue, Morristown, New Jersey 07960, serves as
the Company's adviser pursuant to an Investment Advisory Agreement dated as of
August 1, 1996, which became effective on October 25, 1996 (the "Current
Investment Advisory Agreement"). For the Company's fiscal year ended September
30, 1997, pursuant to a predecessor Investment Advisory Agreement in effect
until October 25, 1996 and the Current Investment Advisory Agreement, the
Company paid Davis-Dinsmore $627,050 for advisory fees and reimbursed Davis-
Dinsmore an additional $25,000 for expenses associated with the Treasurer's
office. Davis-Dinsmore also serves as the Company's administrator.
Thomas H. Dinsmore, Chairman and Chief Executive Officer of the Company, is
also Chairman and Chief Executive Officer of and Senior Analyst for Davis-
Dinsmore. Mr. Dinsmore owns 40.6% of Davis-Dinsmore's Class A Stock. Jane D.
O'Keeffe, President of the Company and Davis-Dinsmore, is the sister of Thomas
H. Dinsmore. Ms. O'Keeffe owns 35.6% of Davis-Dinsmore's Class A Stock.
Sigmund Levine, Senior Vice President and Secretary of the Company, is also
Senior Vice President and Secretary of Davis-Dinsmore. H. Tucker Lake, Vice
President, Trading, of the Company, is the first cousin of Mr. Dinsmore and
Ms. O'Keeffe. Gary Levine, Treasurer of the Company and of Davis-Dinsmore, is
the son of Sigmund Levine.
5
<PAGE>
PROPOSAL 2--
RATIFICATION OR REJECTION OF SELECTION OF ACCOUNTANTS
The Board of Directors, including a majority of the directors who are not
interested persons of the Company or Davis-Dinsmore, has selected Coopers &
Lybrand L.L.P. as independent accountants to examine and verify the accounts
and securities of the Company for its fiscal year ending September 30, 1998,
and to report thereon to the Board and the shareholders. This selection will
be submitted for ratification or rejection at the Annual Meeting, and requires
the affirmative vote of a majority of the votes cast at the Annual Meeting
provided there is a quorum. A representative of such firm is not expected to
be present at the meeting.
The Board of Directors has an audit committee consisting of Dr. Bogan, Mr.
Halsted and Mr. Benton. The audit committee was created to meet periodically
with the Company's independent accountants to review the scope of audit
examinations of the Company, the Company's accounting policies and procedures
and new developments in financial accounting standards applicable to
investment companies. The audit committee also was created to review the
quality and performance of the Company's accounting and financial staff.
During the fiscal year ended September 30, 1997, the audit committee met
twice.
The Board of Directors recommends that you vote FOR ratification of
selection of the accountants.
PROPOSAL 3--
APPROVAL OR DISAPPROVAL OF
AMENDMENT TO THE COMPANY'S CHARTER
BACKGROUND
Article IX of the Company's Charter provides that in the event that, during
the twelve-week period ended November 15, 1997, the Company's shares of Common
Stock traded on the American Stock Exchange at more than a 5% discount from
net asset value, the Company would submit to its shareholders a proposal, to
the extent consistent with the Investment Company Act, to amend the Company's
Charter to give shareholders the right to tender their shares to the Company
at the end of each of the three remaining quarters of the Company's current
fiscal year.
For the twelve-week period ended November 15, 1997, the Company's shares of
Common Stock traded on the American Stock Exchange at a discount of
approximately 12% from net asset value. As a result, the provisions of Article
IX of the Company's Charter were triggered. The Board of Directors of the
Company thus was required to adopt and submit to shareholders for their
approval an amendment to the Company's Charter, to the extent consistent with
the Investment Company Act, that would give shareholders the right to tender
their shares to the Company at net asset value on March 31, June 30 and
September 30, 1998.
At the Annual Meeting, the following resolution will be submitted to a vote
of shareholders:
RESOLVED, that the Charter of the Company be and it hereby is amended by
adding a new Article XII, which Article shall read in full as follows:
6
<PAGE>
ARTICLE XII
Each holder of shares of common stock of the Corporation
shall have the right to tender all of such shares to the
Corporation for purchase on March 31, 1998, June 30, 1998 and
September 30, 1998 (each, a "Purchase Date") at net asset
value as of the close of business on each such Purchase Date;
provided, however, that the Corporation may suspend such right
(a) for any period (i) during which the New York Stock
Exchange is closed other than customary week-end and holiday
closings or (ii) during which trading on the New York Stock
Exchange is restricted; (b) for any period during which an
emergency exists as a result of which (i) disposal by the
Corporation of securities owned by it is not reasonably
practicable or (ii) it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets;
or (c) for such other periods as the Securities and Exchange
Commission may by order permit for the protection of security
holders of the Corporation.
ADOPTION OF THE PROPOSED CHARTER AMENDMENT WOULD ENABLE SHAREHOLDERS TO
REDEEM THEIR SHARES AT NET ASSET VALUE AND WOULD ELIMINATE THE RISK THAT A
SHAREHOLDER WHO DESIRES TO DISPOSE OF HIS SHARES WOULD OTHERWISE HAVE TO DO SO
AT THE MARKET PRICE, WHICH DURING THE PAST FIVE FISCAL YEARS HAS AVERAGED AN
11.82% DISCOUNT FROM NET ASSET VALUE. ADOPTION OF THE PROPOSED CHARTER
AMENDMENT MAY ALSO RESULT IN A REDUCTION OF THE MARKET DISCOUNT.
DIRECTORS' RECOMMENDATION
FOR THE REASONS DISCUSSED BELOW, THE BOARD OF DIRECTORS, INCLUDING ALL
DIRECTORS WHO ARE NOT AFFILIATED WITH DAVIS-DINSMORE, UNANIMOUSLY OPPOSES THE
PROPOSED CHARTER AMENDMENT AND RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST IT
(PROPOSAL 3) ON THE ENCLOSED PROXY.
FACTORS CONSIDERED BY BOARD OF DIRECTORS
In opposing the adoption of the proposed Charter Amendment, the Board of
Directors took into account the following factors.
PAST PERFORMANCE OF THE COMPANY
The Company was established as a vehicle for long-term investment through
participation in a professionally managed portfolio of convertible bonds and
preferred stocks. The Company's investment objective is to seek a high level
of total return on its assets through a combination of current income and
capital appreciation. The Board of Directors believes that the Company has
succeeded in its objective. During the period beginning as of the commencement
of the Company's operations in June 1986 through September 30, 1997, the net
asset value per share of the Company, with dividends and capital gains
reinvested at net asset value, increased by 245.8%. For the one, five and ten
year periods ended September 30, 1997, the Company's net asset value per
share, with dividends and capital gains reinvested at net asset value,
increased 27.8%, 111.4% and 205.6%, respectively. The Company was the top-
performing closed-end convertible fund, as measured by increase in net asset
value per share, of the nine such funds monitored by Lipper Analytical
Services, Inc., an independent statistical rating service, for the one year
ended September 30, 1997.
7
<PAGE>
During fiscal 1997, the Company's shareholders received distributions from
investment income and capital gains of approximately 12.7% based on the
Company's net asset value and approximately 14.1% based on the Company's
market price, both as of November 7, 1997. In addition, on October 20, 1997,
the Company declared a distribution payable November 29, 1997 of $1.55 per
share from investment income and capital gains representing approximately 13%
of the Company's market price as of the date of declaration. Although past
performance, including distributions that have been paid to shareholders, is
no guarantee of future performance, based on the Company's performance, the
Board of Directors believes that the Company will continue to serve as an
appropriate investment vehicle for its shareholders by providing a high level
of total return on its assets through a combination of current income and
capital appreciation.
MARKET DISCOUNTS PROVIDE INVESTMENT OPPORTUNITIES
Shares of closed-end investment companies frequently trade at market prices
which reflect a discount from the shares' underlying net asset value. The
Company included the provisions of Article IX in its Charter in 1986 in
conformity with the common view of underwriters at such time that the
existence of such provisions would minimize the extent to which the Company's
shares traded at a discount from their net asset value and thus would make the
shares a more attractive investment option to investors. The Company believes
that such provision has not reduced the market discount for the Company's
shares. During the past five fiscal years, the market discount has averaged
11.82%.
The Board of Directors believes that since the Company was formed in 1986,
investors in closed-end investment companies have become accustomed to market
discounts and have taken advantage of the opportunities such discounts
present. As noted above, during the past five fiscal years, the Company has
traded at an average discount from net asset value of 11.82%. Based on the
market price of the Company's shares, and reinvestment of dividends at the
market price, the average annual total return for the Company's shares during
the past five fiscal years was 15.85%.
The Board of Directors has concluded that the future of the Company should
not be tied to whether the Company's shares have traded at a discount from net
asset value. Instead, the Company's future should be based on its success in
meeting its investment objective.
TENDERS WOULD ADVERSELY AFFECT THE COMPANY'S OPERATIONS
The Board of Directors currently believes that automatic repurchases by the
Company of its shares through mandatory tender offers ("share repurchases")
are not in the best interests of the Company and its shareholders as a whole.
In reaching this conclusion, the Directors took into account the effect that
share repurchases would have on: the discount of the Common Stock's market
price from net asset value; the continued listing of the Common Stock by the
American Stock Exchange (the Exchange will consider delisting if the aggregate
market value of the Company's outstanding shares is less than $1,000,000, the
number of publicly held shares falls below 200,000 or the number of round-lot
holders falls below 300); the Company's expense ratio, since share repurchases
would result in the allocation of the Company's fixed expenses over a smaller
base of assets; the Company's ability to achieve its investment objective and
the Company's investment performance; and the Company's status as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code").
8
<PAGE>
The Company would be required to liquidate portfolio securities to fund any
share repurchases since it has limited ability to borrow. In liquidating
securities, the Company would incur transaction costs. If the Company were
required to liquidate a significant portion of its portfolio, it would have
lesser bargaining power in disposing of its securities. The transaction costs
and the possible lower prices received would likely reduce the net asset value
of the Company's shares, and, therefore, the amounts distributable to
tendering shareholders. In addition, as a result of share repurchases, the
Board of Directors may be required to recommend the liquidation, merger or
other reorganization of the Company.
Generally, shareholders who tender all of their shares would recognize a
capital gain (or loss) for federal income tax purposes to the extent the
amount they receive exceeds (or is less than) the amount they paid for their
shares. Such capital gain (or loss) will be long-term capital gain (or loss)
to the extent the shares tendered have been held for more than one year. Any
long-term capital gain recognized by a noncorporate shareholder will be
subject to federal income tax at a maximum rate of 20% if the shares tendered
have been held for more than 18 months and otherwise will constitute mid-term
gain taxable at a maximum rate of 28%. However, tendering shareholders could
receive dividend income in circumstances where, after application of the
constructive ownership rules of the Code, the purchase of their shares by the
Company did not constitute a complete termination of their interest, a
substantially disproportionate redemption or a distribution that was not
essentially equivalent to a dividend.
If, as a result of share repurchases, the Company did not qualify as a
regulated investment company under the Code, the Company's income would be
taxed at the corporate level and again at the shareholder level when the
Company pays dividends.
POTENTIAL ADVANTAGES TO SHAREHOLDERS
The Directors recognized that a potential advantage to the adoption of the
Charter Amendment is that shareholders would be able to redeem their shares at
net asset value and would not incur the risk that a shareholder who desires to
dispose of his shares would otherwise have to do so at the market price, which
during the past five fiscal years has averaged an 11.82% discount from net
asset value. In such event, shareholders would maximize the return on their
investment in the near term. The Directors also recognized that adoption of
the proposed Charter Amendment may result in a reduction of the market
discount. However, as discussed above, if the Company were required to
liquidate a significant portion of its portfolio to fund such share
repurchases, its reduced bargaining power and the associated transaction costs
would likely reduce the net asset value of the Company's shares and,
therefore, the amounts distributable to tendering shareholders.
POTENTIAL CONFLICTS DISCLOSED
At the time of the Directors' deliberations, two of the Company's Directors
were also officers and directors of Davis-Dinsmore (the "Interested
Directors"). The Interested Directors pointed out to the Board that while they
were aware that a reduction in the size of the Company as a result of
automatic share repurchases would necessarily result in a reduction in the
amount of advisory fees payable to Davis-Dinsmore, they independently focused
upon the long-term interests of the Company and its shareholders as a whole,
and believed that the proposed Charter Amendment was not in the best interests
of the Company and its shareholders as a whole.
9
<PAGE>
After deliberation by all Directors, all seven Directors of the Company who
are not affiliated with Davis-Dinsmore, as well as the entire Board of
Directors, voted affirmatively to recommend that shareholders vote against the
proposed Charter Amendment.
MECHANICS OF TENDERS
The Company may suspend shareholders' right to tender their shares (a) for
any period (i) during which the New York Stock Exchange is closed (other than
customary weekend and holiday closings or (ii) during which trading on the New
York Stock Exchange is restricted); (b) for any period during which an
emergency exists as a result of which (i) disposal by the Company of
securities owned by it is not reasonably practicable or (ii) it is not
reasonably practicable for the Company fairly to determine the value of its
net assets; or (c) for such other periods as the Securities and Exchange
Commission may by order permit for the protection of security holders of the
Company.
In addition, the Board of Directors intends to follow a policy, which it
may change, to suspend shareholders' right to tender if there is, in the
judgment of the Board of Directors, any material (a) legal action or
proceeding instituted or threatened challenging such transaction or otherwise
materially adversely affecting the Company, (b) declaration of a banking
moratorium by Federal, state or foreign authorities or any suspension of
payment by banks in the United States, New York State or foreign countries in
which the Company invests, (c) limitations affecting the Company or the
issuers of its portfolio securities imposed by Federal, State or foreign
authorities on the extension of credit by lending institutions or on the
exchange of foreign currency, or (d) commencement of war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States or other countries in which the Company invests. The Board of
Directors may modify these conditions in light of circumstances existing at
the time.
Any tender offer made by the Company will be made and shareholders notified
in accordance with the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act, either by publication or mailing or both. Each
offering document will contain such information as is prescribed by such laws
and the rules and regulations promulgated thereunder. Throughout any such
tender offer, the Company will establish procedures to make current net asset
value publicly available. A shareholder wishing to accept the offer may be
required to tender all of the shares owned by such shareholder (or attributed
to him for Federal income tax purposes under Section 318 of the Code). The
Company will purchase shares tendered in accordance with the terms of the
offer unless it determines not to proceed with such purchase (based upon one
of the conditions set forth above). Each person tendering shares will pay to
the Company's transfer agent a service charge of $25.00 (which is subject to
change) to help defray certain costs, including the processing of tender
forms, effecting payment, postage and handling. Any such service charge will
be paid directly by the tendering shareholder and will not be deducted from
the proceeds of the purchase. The Company's transfer agent will receive the
fee as an offset to these costs. Costs associated with the tender incurred by
the Company will be charged against capital.
Tendered shares that are accepted and purchased by the Company will
constitute authorized but unissued shares.
REQUIRED APPROVAL
Holders of two-thirds of the shares of Common Stock of the Company that are
issued and outstanding must vote in favor of the Charter Amendment for such
amendment to be adopted.
10
<PAGE>
ADDITIONAL INFORMATION
EXECUTIVE OFFICERS.
Executive officers of the Company are elected by the Board of Directors and
serve at the pleasure of the Board. Such officers do not receive any
compensation from the Company for their services. The following table sets
forth certain information about executive officers of the Company.
<TABLE>
<CAPTION>
OFFICER POSITION WITH BUSINESS EXPERIENCE DURING
NAME AGE SINCE THE COMPANY PAST FIVE YEARS
- ---- --- ------- ------------- --------------------------
<S> <C> <C> <C> <C>
Thomas H. Dinsmore 44 1986 Chairman and Chief See page 4 of this proxy
Executive Officer statement.
Jane D. O'Keeffe 42 1994 President See page 3 of this proxy
statement.
Sigmund Levine 73 1986 Senior Vice President and Since January 1996, Se-
Secretary nior Vice President of
the Company. From April
1993 to January 1996, Ex-
ecutive Vice President,
and since May 1986 Secre-
tary of the Company.
Since February 1996, Se-
nior Vice President, and
from April 1993 to Febru-
ary 1996, Executive Vice
President of Bancroft.
Since November 1982, Sec-
retary of Bancroft and of
Davis-Dinsmore. From No-
vember 1982 to September
1997, Treasurer of Davis-
Dinsmore. Since September
1997, Senior Vice Presi-
dent of Davis-Dinsmore.
From May 1986 to April
1993, Treasurer of the
Company. From November
1982 to April 1993, Trea-
surer of Bancroft.
H. Tucker Lake 50 1994 Vice President, Trading Since April 1994, Vice
President, Trading of the
Company and of Bancroft.
Since September 1997,
Vice President of Davis-
Dinsmore. Prior to April
1994, Sales Associate,
Coldwell Banker, Schlott
Realtors.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
OFFICER POSITION WITH BUSINESS EXPERIENCE DURING
NAME AGE SINCE THE COMPANY PAST FIVE YEARS
- ---- --- ------- ------------- --------------------------
<S> <C> <C> <C> <C>
Gary I. Levine 40 1993 Treasurer Since April 1993, Trea-
surer of the Company and
of Bancroft. Since June
1986, Assistant Secretary
of the Company and of
Bancroft. From April 1994
to September 1997, Assis-
tant Treasurer of Davis-
Dinsmore. Since April
1994, Assistant Secretary
and since September 1997,
Treasurer of Davis-Dins-
more.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT.
The following table sets forth certain information regarding the ownership
of the Company's shares of Common Stock by directors and officers of the
Company.
<TABLE>
<CAPTION>
SHARES OF
COMPANY OWNED
BENEFICIALLY
NOVEMBER 26,
1997*
-------------
<S> <C>
Gordon F. Ahalt.............................................. 1,243
William A. Benton............................................ 2,684
Elizabeth C. Bogan, Ph.D..................................... 5,368
Thomas H. Dinsmore........................................... 11,089(1)
Donald M. Halsted, Jr........................................ 2,298
George R. Lieberman.......................................... 993
Jane D. O'Keeffe............................................. 3,007
Duncan O. McKee.............................................. 2,855
Nicolas W. Platt............................................. 0
Sigmund Levine............................................... 3,170
H. Tucker Lake............................................... 7,162(2)
Gary I. Levine............................................... 261(3)
</TABLE>
- --------
* Represents for each director and officer less than 1% of the outstanding
shares of Common Stock of the Company. As of November 26, 1997, directors
and officers of the Company beneficially owned in the aggregate 40,130
shares of Common Stock of the Company representing approximately 0.6% of
the shares outstanding. Except as otherwise indicated, each director and
officer possessed sole investment and voting power with respect to shares
of Common Stock beneficially owned.
(1) Includes 1,888 shares of Common Stock as to which Mr. Dinsmore possessed
shared investment and voting power and 163 shares of Common Stock as to
which he possessed shared investment power. The number of shares of Common
Stock of the Company owned by Mr. Dinsmore does not include 562 shares
owned by his wife, as to which shares Mr. Dinsmore disclaims beneficial
ownership.
12
<PAGE>
(2) Includes 5,980 shares of Common Stock as to which Mr. Lake possessed
shared investment and voting power.
(3) Includes 126 shares of Common Stock as to which Mr. Levine possessed
shared investment and voting power. The number of shares of Common Stock
of the Company owned by Mr. Levine does not include 667 shares owned by
his wife, as to which shares Mr. Levine disclaims beneficial ownership.
PRINCIPAL HOLDERS OF THE COMPANY'S STOCK.
The Company knows of no beneficial owners of more than 5% of the Company's
outstanding Common Stock.
CERTAIN TRANSACTIONS.
Peter Finnican is the brother-in-law of both Thomas H. Dinsmore, Chairman
and Chief Executive Officer of each of the Company, Bancroft, and Davis-
Dinsmore, and Jane D. O'Keeffe, President of each of the Company, Bancroft,
and Davis-Dinsmore. Mr. Finnican was a partner of Forum Capital Markets, L.P.
(the "Forum Group") a broker/dealer located at 53 Forest Avenue, Old
Greenwich, Connecticut until July 1997. While Mr. Finnican was a partner, his
ownership interest in the Forum Group equaled approximately 6%.
During fiscal 1997, the Company acquired $1,750,000 of securities from the
Forum Group in transactions in which the Forum Group acted as principal.
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and proxy
for the 1999 annual meeting of shareholders, shareholder proposals must be
received no later than July 28, 1998.
OTHER BUSINESS
The management knows of no business to be presented to the meeting other
than the matters set forth in this proxy statement.
By order of the Board of Directors,
Thomas H. Dinsmore
Chairman of the Board of Directors
November 26, 1997.
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. Election as directors of all nominees listed below FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
for the terms specified in the proxy statement. listed below. [ ] for all nominees listed below [ ] [ ]
Board of Directors nominees: Gordon F. Ahalt, Elizabeth C. Bogan, Ph.D. and Nicolas W. Platt.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name
in the space provided below.)
*Exceptions
----------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends voting "FOR" Proposal 2 and "AGAINST" Proposal 3.
2. Proposal to ratify the selection of accountants. 3. Proposal to amend Company's Charter.
FOR [ ] AGAINST [ ] ABSTAIN [ ] FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
If shares are held jointly each shareholder named should
sign. Legal representatives of shareholders should add their
titles when signing.
Dated: 19
----------------------------------------- --
----------------------------------------------------
Signature
----------------------------------------------------
Signature, if held jointly
Votes MUST be indicated
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. (X) in Black or Blue ink. [ ]
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
Annual Meeting To Be Held January 9, 1998
This Proxy is being solicited on behalf of the Board of Directors
The undersigned appoints Thomas H. Dinsmore, Jane D. O' Keeffe and Sigmund Levine, and each of them, attorneys and proxies,
with power of substitution in each, to vote and act on behalf of the undersigned at the annual meeting of shareholders of Ellsworth
Convertible Growth and Income Fund, Inc. (the "Company") at the Bonita Bay Club, 26660 Country Club Drive, S.W., Bonita Springs,
Florida 33923 on January 9, 1998, at 12:30 p.m., and at all adjournments, according to the number of shares of Common Stock which
the undersigned could vote if present, upon such subjects as may properly come before the meeting, all as set forth in the notice of
the meeting and the proxy statement furnished therewith.
Unless otherwise marked on the reverse hereof, this proxy is given WITH authority to vote FOR directors listed on the
reverse hereof, FOR the proposal to ratify the Board's selection of accountants, and AGAINST the proposal to amend the Company's
Charter.
(Continued, and to be signed and dated, on the reverse side.)
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND INC.
P.O. BOX 11118
NEW YORK, N.Y. 10203-0118
</TABLE>
