<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ellsworth Convertible Growth and Income Fund, Inc.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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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> 2
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
FRIDAY, JANUARY 21, 2000
10 A.M., EASTERN TIME
AT
TRIANON HOTEL
3401 BAY COMMONS DRIVE
BONITA SPRINGS, FLORIDA 34134
To Shareholders of Ellsworth Convertible Growth and Income Fund, Inc.:
We cordially invite you to attend our 2000 Annual Meeting of Shareholders
to:
1. Elect three directors to three-year terms.
2. Ratify the board's appointment of PricewaterhouseCoopers LLP as
independent accountants for fiscal year 2000.
3. Amend certain of the Company's investment restrictions.
4. Vote on an amendment to the Company's Charter to give shareholders
the right to tender their shares during fiscal year 2000.
5. Transact any other business that properly comes before the meeting.
We are holding the Annual Meeting on Friday, January 21, 2000 at 10 a.m.,
Eastern Time, at the Trianon Hotel, 3401 Bay Commons Drive, Bonita Springs,
Florida 34134.
You may vote on these proposals in person or by proxy. If you cannot attend
the meeting, we urge you to complete and return the enclosed proxy promptly in
the enclosed, self-addressed, stamped envelope so that your shares will be
represented and voted at the meeting according to your instructions. Of course,
if you attend the meeting, you may withdraw your proxy and vote your shares.
Only shareholders of record on November 25, 1999 will be entitled to vote at the
meeting or any adjournment of the meeting.
Thomas H. Dinsmore
Chairman of the Board of Directors
November 29, 1999
<PAGE> 3
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 21, 2000
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
PROXY STATEMENT
We are sending you this Proxy Statement and the enclosed proxy card because
the Company's Board of Directors is soliciting your proxy to vote at the 2000
Annual Meeting of Shareholders. This Proxy Statement summarizes the information
you need to know to cast an informed vote at the Annual Meeting. However, you do
not need to attend the Annual Meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card.
We plan to begin sending this Proxy Statement, the attached Notice of
Annual Meeting and the enclosed proxy card on November 29, 1999 to all
shareholders entitled to vote. Shareholders who owned shares of the Company's
common stock on November 25, 1999 are entitled to vote. On this record date,
there were 8,550,786 shares outstanding. We know of no beneficial owner of more
than five percent of those shares. Each share of the Company's common stock that
you own entitles you to one vote. (A fractional share has a fractional vote.)
We are also sending along with this Proxy Statement the Company's 1999
Annual Report, which includes our financial statements.
TIME AND PLACE OF MEETING
We are holding the Annual Meeting on Friday, January 21, 2000 at 10 a.m.,
Eastern Time, at the Trianon Hotel, 3401 Bay Commons Drive, Bonita Springs,
Florida 34134.
VOTING BY PROXY
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board as
follows:
- FOR the election of all three nominees for director.
- FOR ratification of the selection of independent accountants for 2000.
- FOR all five amendments to the Company's investment restrictions.
- AGAINST the amendment to the Company's Charter.
<PAGE> 4
If any other matter is presented, your proxy will vote in accordance with
his or her best judgment. At the time this Proxy Statement went to press, we
knew of no matters that needed to be acted on at the Annual Meeting other than
those discussed in this Proxy Statement.
If you give a proxy, you may revoke it at any time before it is exercised.
You can do this in one of three ways:
- You may send in another proxy with a later date.
- You may notify the Company's secretary in writing before the Annual
Meeting that you have revoked your proxy.
- You may vote in person at the Annual Meeting.
VOTING IN PERSON
If you do attend the Annual Meeting and wish to vote in person, we will
give you a ballot when you arrive. However, if your shares are held in the name
of your broker, bank or other nominee, you must bring a letter from the nominee
indicating that you are the beneficial owner of the shares on November 25, 1999,
the record date for voting, and authorizing you to vote.
QUORUM REQUIREMENT
A quorum of shareholders is necessary to hold a valid meeting. A quorum
will exist if shareholders entitled to vote a majority of all shares outstanding
on the record date are present in person or by proxy.
Under rules applicable to broker-dealers, if your broker holds your shares
in its name, the broker will be entitled to vote your shares on Proposals 1 and
2 even if it has not received instructions from you. However, your broker will
not be entitled to vote on Proposals 3(a) through (e) or Proposal 4 unless it
has received instructions from you. If your broker does not vote your shares on
Proposals 3(a) through (e) or Proposal 4 because it has not received
instructions from you, these shares will be considered "broker non-votes."
Broker non-votes and abstentions will count as present for establishing a
quorum.
VOTE NECESSARY TO APPROVE A PROPOSAL
PROPOSAL 1. Directors are elected by a plurality vote of shares present at
the meeting, meaning that the director nominee with the most affirmative votes
for a particular slot is elected for that slot. In an uncontested election for
directors, the plurality requirement is not a factor.
PROPOSAL 2. The affirmative vote of the majority of votes cast is needed
to approve the selection of independent accountants. Abstentions will not count
as votes cast and will have no effect on the outcome of this proposal.
PROPOSALS 3(a)-(e). The affirmative vote of the holders of a "majority of
the outstanding voting securities" of the Company, as determined under the
Investment Company Act of 1940, is needed to change a fundamental investment
restriction. Under that Act, a "majority of the outstanding voting securities"
is the lesser of (1) the vote of holders of 67% or more of the voting shares of
the Company present in person or by proxy, if the holders of more than 50% of
the
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outstanding voting shares of the Company are present in person or by proxy, or
(2) the vote of the holders of more than 50% of the outstanding voting shares of
the Company. Because broker non-votes and abstentions count as present but, will
not count as votes cast, they will have the effect of votes against these
proposals.
PROPOSAL 4. The affirmative vote of two-thirds of all outstanding shares
of the Company, whether or not present at the Annual Meeting, is needed to
approve the amendment of the Company's Charter. Broker non-votes and abstentions
will not count as votes cast and will have the effect of votes against this
proposal.
PROPOSAL 1
ELECTION OF DIRECTORS
STRUCTURE OF THE BOARD OF DIRECTORS
The Company's Board of Directors is divided into three classes for purposes
of election. One class is elected at each annual meeting of shareholders.
Directors in each class serve for a three-year term.
At the 2000 Annual Meeting, the terms of three directors are expiring. The
directors nominated for election at this Annual Meeting would each hold office
for a three-year term expiring in 2003. Other directors are not up for election
this year and will continue in office for the rest of their terms. Each of the
nominees is willing to serve as a director. However, if a nominee becomes
unavailable for election, proxies will vote for another nominee proposed by the
Board or, as an alternative, the Board may keep the position vacant or reduce
the number of directors.
NOMINEES FOR DIRECTORS
The Board has approved the nomination of the following people to serve as
directors until the annual meeting of shareholders to be held in 2003. Each of
the nominees is currently a director of the Company.
NOMINEES WHO ARE INDEPENDENT DIRECTORS
WILLIAM A. BENTON, 66, has been a partner in BE Partners, a small options
market maker, since 1991. From 1991 to November 1999, he was a limited partner
of Gavin, Benton, & Co., a New York Stock Exchange specialist firm. Mr. Benton
has been a director of the Company since 1986 and is also a director of Bancroft
Convertible Fund, Inc. (a closed-end investment company).
GEORGE R. LIEBERMAN, 77, is a retired businessman. Mr. Lieberman has been a
director of the Company since 1990 and is also a director of Bancroft
Convertible Fund, Inc.
NOMINEE WHO IS AN INTERESTED PERSON
JANE D. O'KEEFFE, 44, has been President of the Company, Bancroft
Convertible Fund, Inc. and Davis-Dinsmore Management Company (investment adviser
to the Company and to Bancroft) since August 1996. In 1996, before becoming
President of the Company and Bancraft,
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she was Executive Vice President of the Company and Bancroft. From 1994 to 1996,
Ms. O'Keeffe was Vice President of the Company and Bancroft and Executive Vice
President of Davis-Dinsmore. Ms. O'Keeffe has been a director of the Company
since 1995 and is also a director of Bancroft and Davis-Dinsmore. Ms. O'Keeffe
is an interested person (within the meaning of the Investment Company Act of
1940) of the Company and Davis-Dinsmore Management Company because she is an
officer of the Company and officer, director and holder of more than 5 percent
of the outstanding shares of voting common stock of Davis-Dinsmore.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THESE NOMINEES.
INFORMATION ABOUT THE COMPANY'S OTHER DIRECTORS
Information about the Company's other directors is presented below.
CONTINUING INDEPENDENT DIRECTORS
GORDON F. AHALT, 71, has been President of G.F.A. Inc., a petroleum
industry consulting company, since 1982 and a consultant with W. H. Reaves &
Co., Inc., an asset management company, since 1987. Mr. Ahalt has been a
director of the Company since 1986. He is also a director of Bancroft
Convertible Fund, Inc.; The Harbinger Group, an investment firm; Cal Dive
International, a diving service, and The Houston Exploration Company, an oil and
gas exploration company. Mr. Ahalt's term as director expires in 2001.
ELIZABETH C. BOGAN, PH.D., 55, has been a Senior Lecturer in Economics at
Princeton University since 1992. Dr. Bogan has been a director of the Company
since 1986 and is also a director of Bancroft Convertible Fund, Inc. Dr. Bogan's
term as director expires in 2001.
DONALD M. HALSTED, Jr., 72, has been a self-employed businessman since
1983. Mr. Halsted has been a director of the Company since 1986 and is also a
director of Bancroft Convertible Fund, Inc. Mr. Halsted's term as director
expires in 2002.
DUNCAN O. MCKEE, 68, retired in 1988 from the practice of law as a partner
at the law firm of Ballard Spahr Andrews & Ingersoll, LLP. Mr. McKee was
Director Emeritus of the Company and Bancroft Convertible Fund, Inc. from 1988
to 1996. He has been a director of the Company since 1996 and is also a director
of Bancroft. Mr. McKee's term as director expires in 2002.
NICOLAS W. PLATT, 46, has been Managing Director of Corporate Practice at
the public relations firm of Burson Marsteller since 1997. From 1995 to 1997, he
was Senior Managing Director at Bozell-Sawyer Miller, a public relations firm;
and from 1993 to 1995, he was Executive Vice President of Novatel Communications
Ltd. He has been a director of the Company since 1997 and is also a director of
Bancroft Convertible Fund, Inc. Mr. Platt's term as director expires in 2001.
CONTINUING DIRECTOR WHO IS AN INTERESTED PERSON
THOMAS H. DINSMORE, 46, has been Chairman and Chief Executive Officer of
the Company, Bancroft Convertible Fund, Inc. and Davis-Dinsmore Management
Company since August 1996. From 1986 to August 1996, Mr. Dinsmore was President
of the Company; from 1985 to 1996, he was President of Bancroft; and from 1988
to 1996, he was President of Davis-Dinsmore.
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Mr. Dinsmore has been a director of the Company since 1986 and is also a
director of Bancroft and Davis-Dinsmore. Mr. 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 percent of the outstanding shares of
voting common stock of Davis-Dinsmore. Mr. Dinsmore's term as director expires
in 2002.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met six times during the 1999 fiscal year.
The Board has two committees: an Audit Committee and a Nominating and
Administration Committee.
The Audit Committee is comprised entirely of independent directors (Mr.
Benton, Dr. Bogan, Mr. Lieberman and Mr. Halsted, with Dr. Bogan serving as
Chairperson). In accordance with its charter, the Committee oversees the
Company's accounting and financial reporting policies and practices, as well as
the quality and objectivity of the Company's financial statements and the
independent audit of the financial statements. Among other duties, the Committee
recommends independent auditors for the Company, evaluates their independence
and meets with them to review the scope and results of the audit. During the
1999 fiscal year, the Audit Committee met once.
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 Company
and nominees for Board committees, reviews Board governance issues, reviews
Board compensation and monitors the performance of legal counsel. During the
1999 fiscal year, the Nominating and Administration Committee met once.
The directors attended at least 75 percent of all Board and Committee
meetings held during the 1999 fiscal year.
DIRECTORS' COMPENSATION
Mr. Dinsmore and Ms. O'Keeffe are the only officers of the Company or
Davis-Dinsmore Management Company who serve on the Board of Directors. Each
director who is not an officer of the Company or Davis-Dinsmore currently
receives (1) an annual fee of $2,500, (2) $1,000 plus expenses for each Board
meeting attended, (3) $1,000 for each shareholders' 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 Company adopted a director deferred compensation arrangement that
allows the directors to defer the receipt of all or a portion of director fees
payable on or after October 31, 1998. The amount of these fees will remain an
asset of the Company. The Company will be obligated to pay these fees, with
interest, to the directors who have elected to defer receipt of their fees on a
future date or dates specified by the directors, or as determined under the
terms of the arrangement.
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Davis-Dinsmore Management Company is the Company's investment adviser and
is also the investment adviser to Bancroft Convertible Fund, Inc. Because of
this connection, Bancroft and the Company make up a "fund complex." The
following table shows the compensation that was paid to the directors solely by
the Company as well as by the fund complex as a whole during the 1999 fiscal
year.
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION TOTAL COMPENSATION
FROM COMPANY FROM FUND COMPLEX
---------------------- ------------------
<S> <C> <C>
Thomas H. Dinsmore.................... $ -0- $ -0-
Jane D. O'Keeffe...................... $ -0- $ -0-
Gordon F. Ahalt....................... $8,500 $18,000
William A. Benton..................... $9,600 $19,000
Elizabeth C. Bogan, Ph.D. ............ $9,600 $19,200
Donald M. Halsted, Jr. ............... $9,600 $19,200
George R. Lieberman................... $9,500 $19,100
Duncan O. McKee....................... $9,500(1) $19,093(2)
Nicolas W. Platt...................... $9,500 $19,000
</TABLE>
- ---------------
(1) Of the amount shown, $2,681 represents deferred directors' fees, including
interest, payable by the Company.
(1) Of the amount shown, $2,718 represents deferred directors' fees, including
interest, payable by the Company and Bancroft Convertible Fund, Inc.
PROPOSAL 2
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors seeks your approval or disapproval of the Board's
appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for the 2000 fiscal year. We do not expect that a representative
from PricewaterhouseCoopers will be present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
PROPOSALS 3(a) THROUGH 3(e)
AMENDMENTS TO CERTAIN OF THE COMPANY'S
FUNDAMENTAL INVESTMENT RESTRICTIONS
BACKGROUND
An investment company that is registered under the Investment Company Act
of 1940 must have fundamental investment restrictions covering certain types of
investment practices. These
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policies may be changed only by the company's shareholders. The Board is
proposing that you approve the changes to the Company's fundamental investment
restrictions described below.
PROPOSAL 3(a): LOANS
CURRENT POLICY
The Company currently has two fundamental policies relating to loans. Under
these policies, the Company will not --
- Make loans to other persons (except [as provided in the second policy
stated below]); provided that for purposes of this restriction the
acquisition of a portion of an issue of publicly distributed bonds,
debentures, or other corporate debt securities and investment in
Government Securities, short-term commercial paper, certificates of
deposit, bankers acceptances and repurchase agreements in which the
Company may invest shall not be deemed to be the making of a loan. The
acquisition of bonds, debentures or other corporate debt securities which
are not publicly traded is considered to be the making of a loan for
purposes of this restriction.
- Lend its portfolio securities in excess of 10% of its total assets, taken
at market value.
PROPOSED CHANGE
The Board of Directors proposes replacing these policies with one
fundamental policy that reads in full as follows:
The Company will not make personal loans or loans to persons who control
or are under common control with the Company, or lend its portfolio
securities in excess of 10% of its total assets, taken at market value.
This restriction does not prevent the Company from purchasing debt
obligations, entering into repurchase agreements, or investing in loans,
including assignments and participation interests.
REASON FOR THE CHANGE
The revised policy will make clear that the prohibition on loans applies to
personal loans and loans to persons who control the Company or who are common
control with the Company, not to the convertible debt instruments available
today and in the future. If shareholders approve this proposal, the Company will
have greater flexibility to purchase new types of instruments as they develop.
Approving this change will not affect the Company's non-fundamental policy that
limits the percentage of the Company's net assets that may be invested in
illiquid securities to 20%.
PROPOSAL 3(b): WARRANTS
CURRENT POLICY
Under the Company's current fundamental policy, the Company will not --
Invest more than 5% of its total assets, taken at market value, in
warrants, or more than 2% of its total assets, taken at market value in
warrants not listed on the New York or American Stock Exchanges.
Warrants acquired by the Company in units or attached to other
securities are not subject to this restriction.
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PROPOSED CHANGE
The Board proposes deleting the current fundamental policy.
REASON FOR THE CHANGE
The Company adopted this policy to comply with the securities laws of
certain states when the Company initially sold its shares to the public in 1986.
States no longer substantively regulate the offering of shares by investment
companies that are registered with the SEC so the Company is no longer required
to maintain this policy as a fundamental policy. Although the Company has not
generally purchased warrants, it desires to have more flexibility to do so. The
Company's portfolio managers do not believe that deleting this policy will
materially affect how they manage the Company.
PROPOSAL 3(c): QUALIFICATIONS OF ISSUERS
CURRENT POLICY
Under the Company's current fundamental policy, the Company will not --
(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 Company'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. This restriction does not apply to
Government Securities.
PROPOSED CHANGE
The Board proposes deleting clause (b) of the current policy so that the
revised fundamental policy would read in full as follows:
The Company will not 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 Company's total assets to be invested in the
securities of such companies. This restriction does not apply to
Government Securities.
REASON FOR THE CHANGE
The Company already has a fundamental policy that applies the 10%
limitation described in clause (b) of the current policy to 85% of the Company's
total assets. The Company also has a fundamental policy that, with respect to
85% of the Company's total assets, limits to 10% the percentage of a company's
outstanding securities (voting and nonvoting, debt and equity) that the Company
can own. The Board believes that these other policies provide sufficient
diversification protection for the Company. The Company's portfolio managers do
not believe that deleting this policy will materially affect how they manage the
Company.
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PROPOSAL 3(d): REAL ESTATE
CURRENT POLICY
Under the Company's current fundamental policy, the Company will not --
Purchase or sell real estate, interests in real estate limited
partnerships or securities issued by real estate investment trusts,
provided that the Company may invest in other securities secured by real
estate or issued by companies which invest in real estate or interests
therein.
PROPOSED CHANGE
The Board recommends that the current fundamental policy be replaced with a
new fundamental policy that reads in full as follows:
The Company will not purchase real estate or sell real estate unless
acquired as a result of ownership of securities or other instruments.
This restriction does not prevent the Company from investing in issuers
that invest, deal or otherwise engage in transactions in real estate or
interests therein, including without limitation real estate investment
trusts, or investing in securities that are secured by real estate or
interests therein.
REASON FOR THE CHANGE
The revised policy will give the Company additional investment
opportunities and flexibility. While still prohibiting the Company from
investing directly in real estate, it will permit the Company to purchase a
broader range of real estate-related securities, including securities issued by
real estate investment trusts.
PROPOSAL 3(e): OIL, GAS OR OTHER MINERAL
EXPLORATION OR DEVELOPMENT PROGRAM
CURRENT POLICY
Under the Company's current fundamental policy, the Company will not --
Purchase or sell interests in oil, gas or other mineral exploration or
development programs.
PROPOSED CHANGE
The Board proposes deleting the current fundamental policy. If shareholders
approve this policy, the Company will adopt the following non-fundamental
policy:
The Company will not purchase or sell interests in oil, gas or other
mineral exploration or development programs. This policy does not
prevent the Company from investing in issuers that invest, deal or
otherwise engage in transactions involving oil, gas or other mineral
exploration or development programs or interests therein, or investing
in securities that are secured by oil, gas or other mineral exploration
or development programs or interests therein.
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REASON FOR THE CHANGE
The Company adopted this policy to comply with the securities laws of
certain states when the Company initially sold its shares to the public in 1986.
States no longer substantively regulate the offering of shares by investment
companies that are registered with the SEC so the Company is no longer required
to maintain this policy as a fundamental policy. The Board believes that it is
appropriate to continue to have a policy on oil, gas or other mineral
exploration or development programs. By making the policy non-fundamental, the
Board will have the flexibility to change it if investment opportunities occur
without incurring the cost of soliciting shareholder approval for such change.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSALS 3(a)-3(e)
PROPOSAL 4
AMENDMENT OF THE COMPANY'S CHARTER
BACKGROUND
The Company's common stock trades on the American Stock Exchange. For the
12 weeks that ended on November 12, 1999, the average market price for each
share was approximately [16.9] percent less than its net asset value. In this
circumstance, Article IX of the Company's Charter requires the Board to adopt a
proposal to submit a Charter amendment to shareholders that would permit
shareholders to sell their shares back to the Company at their net asset value
on March 31, June 30, and September 29, 2000.
At the Annual Meeting, you will be asked to approve or disapprove the
following resolution:
RESOLVED, that the Company's Charter be and it is hereby amended by
adding a new Article XII to read in full as follows:
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, 2000, June 30, 2000 and September 29, 2000 (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.
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THE BOARD OF DIRECTORS, INCLUDING ALL THE DIRECTORS WHO ARE NOT AFFILIATED
WITH DAVIS-DINSMORE MANAGEMENT COMPANY, RECOMMENDS THAT YOU VOTE AGAINST
PROPOSAL 4.
FACTORS CONSIDERED BY THE BOARD OF DIRECTORS
In opposing the adoption of the proposed amendment to the Company's
Charter, the Board of Directors considered 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 believes that the Company has succeeded in meeting its
objective. The following table illustrates the growth in the net asset value and
market price of the Company's common stock:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
PERCENTAGE INCREASE IN NET ASSET
VALUE WITH DIVIDENDS AND CAPITAL TOTAL INVESTMENT RETURN
PERIOD GAINS REINVESTED AT NET ASSET VALUE BASED ON MARKET PRICE*
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Year ended September 30, 1999 17.31% 10.39%
- ---------------------------------------------------------------------------------------------------------
Five years ended September 30, 1999 106.05% 111.42%
- ---------------------------------------------------------------------------------------------------------
Ten years ended September 30, 1999 213.77% 231.06%
- ---------------------------------------------------------------------------------------------------------
June 1986 (beginning of operations)
through September 30, 1999 292.96% 258.98%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* Assumes reinvestment of dividends and capital gains at prices obtained by the
Company's dividend reinvestment plan.
The Board also looked at the following measurements of the Company's
performance:
- During the 1999 fiscal year, the Company paid distributions of $1.68 per
share from investment income and capital gains. This represented
approximately 14.9 percent of the shares' average weekly net asset value
and approximately 17.4 percent of their average weekly closing market
price.
- In addition, on October 18, 1999, the Company declared a distribution
payable on November 29, 1999 of $1.29 per share from investment income
and capital gains. On the date it was declared, this distribution
represented approximately 13.8 percent of the closing market price of the
Company's shares.
How the Company has performed in the past is not a guarantee of how it will
perform in the future. However, the Board 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.
11
<PAGE> 14
MARKET DISCOUNTS PROVIDE INVESTMENT OPPORTUNITIES
Shares of closed-end investment companies often trade at market prices that
are lower than their net asset value. The Company included the provisions of
Article IX in its Charter in 1986 because, at that time, underwriters generally
believed that these provisions would decrease the market discount at which the
Company's shares traded and that this would make the Company more attractive to
investors.
The Board of Directors believes that, since that time, investors in
closed-end investment companies have become accustomed to market discounts and
have taken advantage of the opportunities that market discounts present. When an
investor buys shares of a closed-end investment company at a price that is lower
than the shares' net asset value, the investor gets an ownership interest in an
investment portfolio valued at more per share than the investor paid for the
shares. The Board believes that market discounts provide buying opportunities
and thus promote liquidity of shares issued by closed-end investment companies.
The Board of Directors has concluded that the future of the Company should
not be tied to whether its shares have traded at a market discount. Instead, the
Company's future should be based on its success in meeting its investment
objective.
TENDERS WOULD ADVERSELY AFFECT THE COMPANY'S OPERATIONS AND PERFORMANCE
The Board believes that to require the Company to repurchase its shares
would not be in the best interests of the Company and its shareholders as a
whole because of the effect that repurchases would have on --
- The Company's expense ratio. Fewer shareholders would have to bear the
Company's fixed expenses.
- The Company's investment performance and its ability to achieve its
investment objective. The Company might have to sell some of its more
liquid and more desirable portfolio securities to raise the cash it would
need to repurchase its shares. This could leave the Company with less
desirable holdings.
- The Company's status as a regulated investment company under the Internal
Revenue Code of 1986, as amended. In order to maintain its status as a
regulated investment company under the Code, the Company must satisfy
certain quarterly diversification and annual distribution requirements.
The sale of securities to pay the purchase price for the tendered shares
might cause the Company's portfolio to lack sufficient diversification
for purposes of the Code requirement. In addition, payment of the
purchase price for the tendered shares might eliminate cash and other
liquid investments that would otherwise be available to pay dividends in
satisfaction of the distribution requirement of the Code.
- The Company's continued existence. The Board might have to recommend the
liquidation, merger or other reorganization of the Company if the Company
were to become too small to be operated efficiently.
12
<PAGE> 15
VALUE OF THE COMPANY'S PORTFOLIO
The Company would have to sell securities from its portfolio to pay for
shares that it would be required to repurchase. In doing so, the Company would
have to pay transaction costs. In addition, the Company would have less
bargaining power if it had to sell its portfolio securities and might have to
sell them at lower prices than it otherwise would. These transaction costs and
lower prices might reduce the net asset value of the Company's shares and,
therefore, the amounts payable to shareholders who sell their shares back to the
Company at their net asset value.
CONTINUED LISTING ON THE AMERICAN STOCK EXCHANGE
The Company's shares are listed on the American Stock Exchange. The shares
could be delisted if the aggregate market value of the outstanding shares is
less than $1 million, or less than 200,000 shares are publicly traded, or there
are less than 300 round-lot holders of the shares.
FEDERAL INCOME TAX TREATMENT
Generally, shareholders who tender all their shares would recognize a
capital gain (or loss) for federal income tax purposes to the extent the amount
they receive is greater (or less) than the amount they paid for their shares.
This capital gain (or loss) will be taxed as long-term capital gain (or loss) if
shares tendered have been owned for more than one year. A shareholder that is
not a corporation is subject to federal income tax on long-term capital gain at
a maximum rate of 20%. However, amounts received by tendering shareholders could
be taxed at ordinary income tax rates 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.
POTENTIAL ADVANTAGES TO SHAREHOLDERS
The Board recognized two potential advantages for shareholders in adopting
the proposed Charter amendment:
- If shareholders wanted to sell shares, they would be able to do so at
their net asset value instead of at their market price, which has
averaged 12.8 percent less than their net asset value over the past five
fiscal years. By doing this, shareholders would maximize the return on
their investment in the near term.
- The market price for the shares may increase, thereby reducing the market
discount.
However, the effect of the Company's transaction costs and reduced bargaining
power if it had to sell its portfolio securities might decrease the net asset
value of the Company's shares and, therefore, the amounts paid to shareholders
who sell their shares back to the Company.
POTENTIAL CONFLICTS DISCLOSED
Two of the directors who considered this proposal (Mr. Dinsmore and Ms.
O'Keeffe) are interested directors because they are directors, officers and
shareholders of Davis-Dinsmore Management Company, the Company's investment
adviser. If the Company repurchased its shares, the Company would become smaller
and this would result in a reduction of the fees that
13
<PAGE> 16
the Company pays to Davis-Dinsmore. The interested directors acknowledged the
effect that the Charter amendment would have on Davis-Dinsmore, but indicated
that, in considering their recommendation, they focused on the long-term
interests of the Company and its shareholders as a whole and believed that the
Charter amendment was not in the best interests of the Company and its
shareholders as a whole.
HOW SHARES WOULD BE TENDERED
If the proposed Charter amendment is adopted, the Company will be able to
suspend your rights to tender your shares during periods --
- In which the New York Stock Exchange is closed (other than customary
weekend and holiday closings) or trading on it is restricted.
- In which, because of an emergency, it is not reasonably practicable for
the Company to sell its portfolio securities or to fairly determine the
net asset value of its shares.
- In which the Securities and Exchange Commission permits the Company to
suspend rights to tender for the protection of its shareholders.
In addition, if the proposed Charter amendment is adopted, the Company intends
to follow a policy (which it may change) of suspending your rights to tender
your shares if, in the Board's judgment --
- Legal action is begun or threatened that challenges the tender of the
Company's shares or otherwise materially adversely affects the Company.
- Federal, state or foreign authorities declare a banking moratorium on
banks in the United States, New York or in foreign countries in which the
Company invests, or any of those banks suspends payment.
- Federal, state or foreign authorities limit the extension of credit by
lending institutions or the exchange of foreign currency and those
limitations affect the Company or the issuers of the Company's portfolio
securities.
- War, armed hostilities or other calamity occurs that directly or
indirectly involves the United States or other countries in which the
Company invests.
If the proposed Charter amendment is adopted, the Company will make a
tender offer to shareholders in accordance with the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of 1940 by
publication or mailing, or both. We will establish procedures to make current
net asset value of the Company's shares publicly available throughout the period
of the tender offer. If you wish to accept the tender offer, you may be required
to tender all your shares (or all shares attributed to you for federal income
tax purposes under Section 318 of the Code). The Company will purchase shares
tendered in accordance with the offer unless it suspends the tender offer as
described above.
If you tender your shares, you will be required to pay a fee directly to
the Company's transfer agent to help to defray processing costs. We anticipate
that the fee will be $25 but it could be higher or lower.
14
<PAGE> 17
The Company will charge against capital, costs incurred by it in connection
with the tender offer. Shares that have been tendered and purchased by the
Company will become authorized but unissued shares.
ADDITIONAL INFORMATION
INVESTMENT ADVISER
Davis-Dinsmore Management Company, 65 Madison Avenue, Morristown, New
Jersey 07960, is the Company's investment adviser.
EXECUTIVE OFFICERS
The Company's executive officers are elected by the Board of Directors and
receive no compensation from the Company. Information about these officers is
presented below.
THOMAS H. DINSMORE is Chairman and Chief Executive Officer of the Company.
Mr. Dinsmore is also a director of the Company and information about him is
presented earlier in this Proxy Statement under "Proposal 1, Election of
Directors -- Information about the Company's Other Directors -- Continuing
Director Who Is an Interested Person."
JANE D. O'KEEFFE is President of the Company. Ms. O'Keeffe is also a
director of the Company and has been nominated for reelection at this Annual
Meeting. Information about Ms. O'Keeffe is presented earlier in this Proxy
Statement under "Proposal 1, Election of Directors -- Nominees for
Directors -- Nominee Who Is an Interested Person."
SIGMUND LEVINE, 75, has been Senior Vice President and Secretary of the
Company since 1996 and 1986, respectively. He has been an officer of the Company
since 1986. From 1993 to 1996, he was Executive Vice President of the Company.
Mr. Levine has been Senior Vice President and Secretary of Bancroft Convertible
Fund, Inc. since 1996 and 1982, respectively, and was Executive Vice President
of Bancroft from 1993 to 1996. Mr. Levine has been Senior Vice President and
Secretary of Davis-Dinsmore Management Company since 1997 and 1982,
respectively, and was Treasurer of Davis-Dinsmore from 1982 to 1997.
H. TUCKER LAKE, 52, has been Vice President, Trading of the Company since
joining the Company in 1994. He has been Vice President, Trading of Bancroft
Convertible Fund, Inc. during the same period. He has been Vice President of
Davis-Dinsmore Management Company since 1997.
GARY I. LEVINE, 42, has been Treasurer and Assistant Secretary of the
Company since 1993 and 1986, respectively. He has been Treasurer and Assistant
Secretary of Bancroft Convertible Fund, Inc. during the same periods. Mr. Levine
has been Treasurer and Assistant Secretary of Davis-Dinsmore since 1997 and
1994, respectively, and was Assistant Treasurer of Davis-Dinsmore Management
Company from 1994 to 1997.
CERTAIN RELATIONSHIPS
Thomas H. Dinsmore and Jane D. O'Keeffe are brother and sister. H. Tucker
Lake is their cousin. Sigmund Levine is the father of Gary I. Levine.
15
<PAGE> 18
SECURITY OWNERSHIP OF MANAGEMENT
The Company's directors and officers own the shares of the Company's common
stock shown on the following table:
<TABLE>
<CAPTION>
SHARES OWNED BENEFICIALLY
NOVEMBER 25, 1998*
-------------------------
<S> <C>
Gordon F. Ahalt............................... 1,000(1)
William A. Benton............................. 3,741
Elizabeth C. Bogan, Ph.D. .................... 7,482
Thomas H. Dinsmore............................ 15,939(2)
Donald M. Halsted, Jr. ....................... 2,298
George R. Lieberman........................... 2,717(3)
Duncan O. McKee............................... 3,270
Jane D. O'Keeffe.............................. 4,060
Nicolas W. Platt.............................. 100
Sigmund Levine................................ 4,407
H. Tucker Lake................................ 9,758(4)
Gary I. Levine................................ 359(5)
</TABLE>
- ---------------
* Represents for each director and officer less than 1 percent of the
outstanding shares of the Company. As of November 25, 1999, directors and
officers of the Company beneficially owned in the aggregate 55,131 shares of
the Company representing approximately 0.6 percent of the outstanding
shares. Except as otherwise indicated, each director and officer possessed
sole investment and voting power with respect to shares beneficially owned.
(1) Does not include 1,000 shares as to which Mr. Ahalt possessed shared
investment and voting power.
(2) Includes 2,162 shares as to which Mr. Dinsmore possessed shared investment
and voting power; but does not include 782 shares owned by his wife, as to
which shares Mr. Dinsmore disclaims beneficial ownership.
(3) Includes 509 shares as to which Mr. Lieberman possessed shares investment
and voting power.
(4) Includes 7,826 shares as to which Mr. Lake possessed shared investment and
voting power.
(5) Includes 174 shares as to which Mr. Levine possessed shared investment and
voting power; but does not include 928 shares owned by his wife, as to which
shares Mr. Levine disclaims beneficial ownership.
PROXY SOLICITATION
The Company will pay the cost of soliciting proxies in the accompanying
form. We do not expect to pay any fees for the solicitation of proxies, but may
pay brokers, nominees, fiduciaries and other custodians their reasonable fees
and expenses for sending proxy materials to beneficial owners and obtaining
their instructions. In addition to solicitation by mail, proxies may be
solicited in person, or by telephone, facsimile transmission or other means of
electronic communications, by directors, officers and other employees of the
Company.
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<PAGE> 19
SHAREHOLDER PROPOSALS
If there is a proposal that you want shareholders to consider at the annual
meeting of shareholders to be held in the year 2001, you must send it to us so
that we receive it by August 1, 2000.
By order of the Board of
Directors,
THOMAS H. DINSMORE
Chairman of the Board of Directors
November 29, 1999
17
<PAGE> 20
ELLSWORTH CONVERTIBLE GROWTH AND INCOME FUND, INC.
ANNUAL MEETING TO BE HELD JANUARY 21, 2000
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 Trianon Hotel, 3401 Bay Commons Drive, Bonita Springs,
Florida 34134 on January 21, 2000, at 10:00 a.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, FOR THE PROPOSALS TO AMEND
CERTAIN FUNDAMENTAL INVESTMENT RESTRICTIONS, 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
<PAGE> 21
[ ]
1. Election as directors FOR all nominees WITHHOLD AUTHORITY *EXCEPTIONS
of all nominees listed listed below to vote for all [ ] [ ]
below for the terms nominees listed
specified in the proxy below.
statement.
Board of Directors nominees: Jane D. O'Keefe, William A. Benton and George R.
Lieberman.
(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, "FOR" Proposals 3(a)
through 3(e) and "AGAINST" Proposal 4.
2. Proposal to ratify the selection of accountants.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to amend certain of the Company's fundamental investment
restrictions.
FOR all proposals [ ] AGAINST all proposals [ ] FOR all proposals [ ]
listed below listed below listed below except
___________________
ABSTAIN [ ]
(a) Loans
(b) Warrants
(c) Qualifications of Issuers
(d) Real Estate
(e) Oil, Gas and Other Mineral Exploration or Development Program
4. Proposal to amend Company's Charter.
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 (X) IN BLACK OR BLUE INK. [X]
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
