SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
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14a-12
ELLSWORTH FUND LTD.
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ELLSWORTH FUND LTD.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
FRIDAY, JANUARY 12, 2007
11:00 A.M., EASTERN TIME
AT
65 MADISON AVENUE, SUITE 550, MORRISTOWN, NEW JERSEY 07960
To Shareholders of Ellsworth Fund Ltd.:
We cordially invite you to attend our 2007 Annual Meeting of
Shareholders to vote on:
1. Electing three trustees to three year terms.
2. Ratifying the Audit Committee's appointment of Tait, Weller &
Baker LLP as independent registered public accountants for
fiscal year 2007.
3. Transacting any other business that properly comes before the
meeting or any adjournments or postponements of the meeting.
We are holding the Annual Meeting on Friday January 12, 2007 at 11:00
a.m., Eastern Time, at the Fund's offices located at 65 Madison Avenue,
Morristown, New Jersey 07960.
You may vote on these proposals in person or by proxy. If you cannot
attend the meeting, we ask that you return your proxy promptly so that your vote
is counted. Only shareholders of record on November 15, 2006 will be entitled to
vote at the meeting or any adjournment of the meeting.
Thomas H. Dinsmore
Chairman of the Board of Trustees
November 27, 2006
ELLSWORTH FUND LTD.
65 MADISON AVENUE
MORRISTOWN, NEW JERSEY 07960
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JANUARY 12, 2007
INFORMATION ABOUT THE ANNUAL MEETING
PROXY STATEMENT
We are sending you this Proxy Statement and the enclosed proxy card
because the Board of Trustees of Ellsworth Fund Ltd. (the Trust) is soliciting
your proxy to vote at the 2007 Annual Meeting of Shareholders (the Annual
Meeting). This Proxy Statement summarizes the information you need to know to
cast an informed vote at the Annual Meeting.
This Proxy Statement, the attached Notice of Annual Meeting and the
enclosed proxy card will first be sent on or about November 27, 2006 to all
shareholders entitled to vote. Shareholders who owned the Trust's shares of
beneficial interest on November 15, 2006 are entitled to vote. On this record
date, there were 12,429,083 shares outstanding. Each share of the Trust 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 Trust's 2006
Annual Report, which includes our financial statements. If you have not received
such report or would like to receive an additional copy, please contact Gary I.
Levine at 65 Madison Avenue, Morristown, NJ 07960 or call (973) 631-1177. The
Trust will furnish such report free of charge. This report is also available
online at www.ellsworthfund.com.
TIME AND PLACE OF MEETING
We are holding the Annual Meeting on Friday January 12, 2007 at 11:00
a.m., Eastern Time, at the Trust's offices located at 65 Madison Avenue,
Morristown, New Jersey 07960.
PROPOSAL TABLE
The following table summarizes each proposal to be presented at the
Annual Meeting and the page number of this proxy statement where you may find a
description of the proposal:
PROPOSAL PAGE NUMBER
-------- -----------
1. Electing trustees 2
2. Ratifying the Audit Committee's Appointment of Tait, 12
Weller & Baker LLP as independent registered
public accountants
The Board of Trustees, including all of the independent trustees,
recommend that you vote FOR Proposals 1 and 2.
HOW TO VOTE
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 or use
any of the available alternative proxy voting methods specified in the
instructions that accompany this Proxy Statement.
If you are the record owner of your shares, the available alternative
proxy voting methods are telephone and Internet voting. If your shares are held
by a broker, the alternative proxy voting methods may include telephone,
Internet and any alternative method of voting permitted by your broker. Please
see "Additional Information on Voting" on page 13 below for a further discussion
of how to vote your shares.
BROKER VOTING
Under rules applicable to broker-dealers, if your broker holds your
shares in its name, we expect that the broker will be entitled to vote your
shares on Proposals 1 and 2 even if it has not received instructions from you. A
"broker non-vote" occurs when a broker has not received voting instructions from
a shareholder and is barred from voting the shares without shareholder
instructions because the proposal is considered to be non-routine. Because
Proposals 1 and 2 are considered routine, the Trust does not expect to receive
any broker non-votes.
PROPOSAL 1
ELECTION OF TRUSTEES
STRUCTURE OF THE BOARD OF TRUSTEES
The Board of Trustees (the Board) is divided into three classes for
purposes of election. One class is elected at each annual meeting of
shareholders. Trustees in each class serve for a three-year term. Classifying
the Board for election may be regarded as an "anti-takeover provision" because
it has the effect of maintaining the continuity of the Board and requiring at
least two years to change a majority of the Board.
The Board currently consists of eight persons. Six of the trustees are
"independent," meaning they are not "interested persons" of the Trust within the
meaning of the Investment Company Act of 1940, as amended (the Investment
Company Act). Two of the Trust's trustees are "interested persons" because of
their business and financial relationships with the Trust and Davis-Dinsmore
Management Company (Davis-Dinsmore), the Trust's investment adviser.
At the 2007 Annual Meeting, the terms of three trustees are expiring.
The Governance Committee of the Board nominated the trustees, whose terms are
expiring in 2007, as set forth below, to serve for terms that expire in 2010.
Other trustees are not up for election this year and except for Donald M.
Halsted, Jr. will continue in office for the rest of their terms. Mr. Halsted, a
current trustee whose term is expiring in 2008, is retiring effective as of
December 31, 2006, and therefore will not be running for re-election in 2008.
The trustees appointed Daniel D. Harding as a trustee effective as of January 1,
2007 to fill the vacancy created by Mr. Halsted's retirement. Mr. Harding's term
as a trustee will expire in 2008. In addition, if elected, Mr. Ahalt's term will
expire in 2010. However, pursuant to the Trust's retirement policy, Mr. Ahalt is
expected to retire effective December 31, 2008.
Each of the nominees is willing to serve as a trustee. 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 trustees.
2
NOMINEES FOR TRUSTEES
The Board has approved the nomination of the following individuals to
serve as trustees until the annual meeting of shareholders to be held in 2010.
(As noted above, it is expected that Mr. Ahalt will retire effective as of
December 31, 2008.) The business address of each nominee and/or trustee listed
below is Ellsworth Fund Ltd., 65 Madison Avenue, Suite 550, Morristown, NJ
07960. Because Davis-Dinsmore serves as investment adviser to the Trust and to
another investment company, Bancroft Fund Ltd. (Bancroft Fund), Bancroft Fund
and the Trust make up a "fund complex" (Fund Complex). If re-elected, each
nominee would oversee the two registered investment companies in the Fund
Complex.
NOMINEES WHO ARE INDEPENDENT TRUSTEES
PRINCIPAL OCCUPATION(S)
TRUSTEE DURING PAST 5 YEARS AND OTHER
NAME AND AGE SINCE BUSINESS EXPERIENCE OTHER DIRECTORSHIP(S) HELD
------------ ----- ------------------- --------------------------
Gordon F. Ahalt - 78 1986 Retired. Bancroft Fund; and Helix Energy
Solutions Group, Inc. (energy
Formerly: President of G.F.A. Inc. services company)
(petroleum industry consulting company)
(1982 until 2000); Consultant, W. H.
Reaves & Co., Inc., (an asset management
company) (1987-1998). Mr. Ahalt spent
his career as an analyst of and a
consultant to the petroleum industry, and
previously served as a director or
executive officer of several energy
companies and an oil and gas exploration
company. Mr. Ahalt received a B.S. in
Petroleum Engineering from the University
of Pittsburgh.
Elizabeth C. Bogan, 1986 Senior Lecturer in Economics at Princeton Bancroft Fund
Ph.D. - 62 University (since 1992).
Formerly: Chairman of Economics and
Finance Department, Fairleigh Dickinson
University, and a member of the Executive
Committee for the College of Business
Administration. Dr. Bogan has chaired
numerous administrative and academic
committees. Dr. Bogan received an A.B.
in Economics from Wellesley College, an
M.A. in Quantitative Economics from the
University of New Hampshire, and a Ph.D.
in Economics from Columbia University.
Her writings on finance have been
published in THE FINANCIAL ANALYSTS
JOURNAL and in other journals.
3
PRINCIPAL OCCUPATION(S)
TRUSTEE DURING PAST 5 YEARS AND OTHER
NAME AND AGE SINCE BUSINESS EXPERIENCE OTHER DIRECTORSHIP(S) HELD
------------ ----- ------------------- --------------------------
Nicolas W. Platt - 53 1997 Managing Director, Rodman & Renshaw, LLC Bancroft Fund
(investment banking firm) (since 2006).
Formerly: President, CNC-US
(international consulting company)
(January 2003 to August 2006); Senior
Partner of Platt & Rickenbach (financial
relations firm) (May 2001 to January
2003); Senior Executive with the WPP
Group, UK and its public relations
subsidiaries, Ogilvy Public Relations,
Burson-Marsteller and Robinson Lehr
Montgomery (January 1995 to April 2001).
Mr. Platt received a B.A. from Skidmore
College and an M.A. in Economics from
Columbia University.
REQUIRED VOTE
Trustees are elected by a plurality vote of shares present at the Annual
Meeting, meaning that the trustee nominee with the most affirmative votes for a
particular slot is elected for that slot. In an uncontested election for
trustees, the plurality requirement is not a factor. Abstentions will not count
as votes cast and will have no effect on the outcome of this proposal. We expect
that brokers will be entitled to vote on this proposal. Any broker non-vote will
have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THESE NOMINEES.
INFORMATION ABOUT THE TRUST'S OTHER TRUSTEES
Information about the Trust's other trustees whose terms continue after
the Annual Meeting is presented below. Each trustee oversees two registered
investment companies in the Fund Complex, the Trust and Bancroft Fund.
4
CONTINUING INDEPENDENT TRUSTEES
PRINCIPAL OCCUPATION(S)
TRUSTEE DURING PAST 5 YEARS AND OTHER
NAME AND AGE SINCE BUSINESS EXPERIENCE OTHER DIRECTORSHIP(S) HELD
------------ ----- ------------------- --------------------------
Duncan O. McKee(1) - 75 1996 Retired. Bancroft Fund
Formerly: Partner at the law firm of
Ballard Spahr Andrews & Ingersoll, LLP
(Ballard Spahr) (1964-1988). During
his career at Ballard Spahr, Mr. McKee
represented publicly owned companies,
including closed-end and open-end
investment companies, in mergers,
acquisitions and securities offerings;
Director Emeritus of the Trust and
Bancroft Fund (1988 to 1996).
Mr. McKee received his undergraduate
degree from the College of Wooster and
his law degree from Duke University
School of Law.
Robert J. McMullan(2) - 52 2004 Chief Executive Officer and Board Bancroft Fund
member of Control Point Solutions,
Inc. (a leading provider of
telecommunications expense management
business process outsourcing services
to enterprise, government and carrier
clients) (2005 - present).
Formerly: Trustee of AmSouth Funds
(2003-2005); Senior Vice President
and Chief Financial Officer of
Conexant Systems, Inc. (formerly,
GlobeSpan Virata, Inc.) (semiconductor
manufacturing company) (1998 to 2004);
and Executive Vice President and Chief
Financial Officer of the BISYS Group,
Inc. (computer services company)
(1989-1998). Mr. McMullan received a
B.A. in Business Administration from
Saint Michael's College.
(1) Term as trustee will expire in 2008.
(2) Term as trustee will expire in 2009.
5
CONTINUING TRUSTEES WHO ARE INTERESTED PERSONS
PRINCIPAL OCCUPATION(S)
TRUSTEE DURING PAST 5 YEARS AND OTHER
NAME AND AGE SINCE BUSINESS EXPERIENCE OTHER TRUSTEESHIP(S) HELD
------------ ----- ------------------ -------------------------
Thomas H. Dinsmore(1)(2) - 53 1986 Chairman and Chief Executive Officer Bancroft Fund
of the Trust, Bancroft Fund and
Davis-Dinsmore (investment adviser to
the Trust and Bancroft Fund) (since
1996).
Mr. Dinsmore is a Chartered Financial
Analyst. Mr. Dinsmore is President of
the Closed-End Fund Association.
Mr. Dinsmore received a B.S. in
Economics from the Wharton School of
Business at the University of
Pennsylvania, and an M.A. in Economics
from Fairleigh Dickinson University.
Jane D. O'Keeffe(1)(3) - 51 1995 President of the Trust, Bancroft Bancroft Fund
Fund and Davis-Dinsmore (registered
investment adviser) (since 1996).
Ms. O'Keeffe received a B.A. from
University of New Hampshire and
attended the Lubin Graduate School of
Pace University.
(1) Mr. Dinsmore and Ms. O'Keeffe are interested persons (within the
meaning of the Investment Company Act) of the Trust and
Davis-Dinsmore because they are officers of the Trust and
officers, directors and holders of more than 5% of the
outstanding shares of voting common stock of Davis-Dinsmore.
(2) Term as trustee will expire in 2008.
(3) Term as trustee will expire in 2009.
OTHER INFORMATION REGARDING TRUSTEES
As discussed above, Donald M. Halsted, Jr. who has served as a trustee
of the Trust and its predecessor since inception, will be retiring as a trustee
effective as of December, 31, 2006. The trustees appointed Daniel D. Harding as
a trustee of the Trust effective as of January 1, 2007 to fill the vacancy
created by Mr. Halsted's retirement. Mr. Harding's term as a trustee will expire
in 2008. Mr. Harding has also been appointed as a trustee of the Bancroft Fund
effective as of January 1, 2007. Currently, Mr. Harding is a Senior Advisor with
Harding Loevner Management LP (investment advisory firm) (since 2003). Formerly,
Mr. Harding was co-founder and Chief Investment Officer at Harding Loevner
Management LP (1989-2003). Mr. Harding received his undergraduate degree from
Colgate University.
CERTAIN RELATIONSHIPS
Thomas H. Dinsmore and Jane D. O'Keeffe are brother and sister.
6
Committees of the Board of Trustees
The Board has three committees: an Audit Committee, a Governance
Committee and a Pricing Committee.
AUDIT COMMITTEE
The Trust has a separately designated Audit Committee as that term is
defined in the Securities Exchange Act of 1934, as amended (the Exchange Act).
The Audit Committee is comprised entirely of independent trustees (Dr. Bogan,
Mr. Halsted and Mr. McMullan, with Dr. Bogan serving as Chairperson). In
addition, all such members are independent as such term is defined by the
American Stock Exchange's Company Guide. Effective January 1, 2007, Mr. Harding
will fill the vacancy on the Audit Committee created by Mr. Halsted's
retirement.
In accordance with its charter, attached as Appendix A to this Proxy
Statement, the Committee oversees the Trust's accounting and financial reporting
policies and practices, as well as the quality and objectivity of the Trust's
financial statements and the independent audit of the financial statements.
Among other duties, the Committee is responsible for: (i) the appointment,
compensation and oversight of any independent registered public accountants
employed by the Trust (including monitoring the independence qualifications and
performance of such accountants and resolution of disagreements between the
Trust's management and the accountants regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing other audit,
review or attest services; (ii) overseeing the accounting and financial
reporting process of the Trust; (iii) monitoring the process and the resulting
financial statements prepared by management to promote accuracy and integrity of
the financial statements and asset valuation; (iv) assisting the Board in its
oversight of the Trust's compliance with legal and regulatory requirements that
related to the Trust's accounting and financial reporting, internal control over
financial reporting and independent audits; (v) pre-approving all permissible
audit and non-audit services provided to the Trust by its independent
accountants, to the extent required by Section 10A of the Exchange Act; (vi)
pre-approving, in accordance with Item 2.01(c)(7)(ii) of Regulation S-X, certain
non-audit services provided by the Trust's independent registered public
accountants to the Trust's investment adviser and certain other affiliated
entities if the Trust's independent registered public accountants are the same
as, or affiliated with, the investment adviser's or affiliated entities'
accountants; and (vii) to the extent required by Regulation 14A under the
Exchange Act, preparing an audit committee report for inclusion in the Trust's
annual proxy statement.
AUDIT COMMITTEE REPORT
The Audit Committee reviewed and discussed the Trust's audited financial
statements with its independent registered public accountants, Tait, Weller &
Baker LLP (Tait Weller). These discussions included the accountant's judgments
about the quality, not just acceptability, of the Trust's accounting principles
as applied in its financial reporting. Tait Weller, the Audit Committee and
management also discussed matters such as the clarity, consistency and
completeness of the accounting policies and disclosures, with a particular focus
on critical accounting policies.
The Audit Committee has received a letter from Tait Weller required by
the Public Company Accounting Oversight Board disclosing all relationships
between Tait Weller and its related entities and the Trust. The Audit Committee
discussed with Tait Weller their independence as the Trust's independent
registered public accountants. In addition, the Audit Committee has considered
whether the provision by Tait Weller of non-audit services to the Trust and to
the Bancroft Fund is compatible with the continuing independence of Tait Weller.
The Audit Committee also reviewed and discussed the Trust's audited financial
statements with management.
7
Based on the review and discussions described above, the Audit Committee
has recommended to the Board that the audited financial statements be included
in the Trust's annual report to shareholders for the fiscal year ended September
30, 2006 for filing with the Securities and Exchange Commission (SEC).
Elizabeth C. Bogan, Ph.D., Chairperson
Donald M. Halsted, Jr.
Robert J. McMullan
GOVERNANCE COMMITTEE
The Governance Committee is comprised entirely of independent trustees
(Mr. Ahalt, Mr. Halsted and Mr. Platt, with Mr. Ahalt serving as Chairman). In
addition, all such members are independent as such term is defined by the
American Stock Exchange's Company Guide.
In accordance with its charter, the Committee, among other duties, is
responsible for: (i) nominating persons for election or appointment: (a) as
additions to the Board, (b) to fill vacancies which, from time to time, may
occur on the Board, and (c) for election by shareholders of the Trust at
meetings called for the election of trustees; (ii) nominating persons for
appointment as members of each committee of the Board, including, without
limitation, the Audit Committee, the Governance Committee, and the Pricing
Committee; (iii) reviewing from time to time the compensation, if any, payable
to the trustees and making recommendations to the Board regarding compensation;
(iv) reviewing and evaluating from time to time the functioning of the Board and
the various committees of the Board; (v) overseeing the selection of independent
legal counsel to the independent trustees; and (vi) monitoring the performance
of independent legal counsel employed by the Trust and the independent trustees.
Prior to a meeting of the shareholders of the Trust called for the
purpose of electing trustees, the Governance Committee will nominate one or more
persons for election as trustees at such meeting. The Governance Committee is
also responsible for nominating trustees to fill vacancies resulting from an
increase in the size of the Board or as a result of the resignation, death or
removal of a trustee. The independent trustees are generally authorized to
appoint nominees to fill such vacancies.
Evaluation by the Governance Committee of a person as a potential
nominee to serve as a trustee, including a person nominated by a shareholder,
should result in the following findings by the Governance Committee: (i) upon
advice of independent legal counsel to the independent trustees, that the person
will qualify as an independent trustee (applicable only to the nomination of
independent trustees), and that the person is otherwise not disqualified under
the Investment Company Act from serving as a trustee of the Trust; (ii) with
respect to the nomination of independent trustees only, that the person is free
of any material relationship with the Trust (other than as a shareholder of the
Trust), that would interfere with the exercise of independent judgment; (iii)
that the person is willing to serve, and willing and able to commit the time
necessary for the performance of the duties of a trustee; (iv) that the person
can make a positive contribution to the Board and the Trust, with consideration
being given to the person's business experience, education and such other
factors as the Governance Committee may consider relevant; (v) that the person
is of good character and high integrity; (vi) that the person has desirable
personality traits including independence, leadership and the ability to work
with the other members of the Board; (vii) that the person is not an American
Stock Exchange employee or floor member; and (viii) that the composition of the
Board is varied as to educational background, business experience and
occupation.
Consistent with the Investment Company Act, the Governance Committee can
consider recommendations from management in its evaluation process.
8
The Governance Committee will consider nominees recommended by a
shareholder to serve as trustee, provided: (i) that such person is a shareholder
of record at the time he or she submits such names and is entitled to vote at
the meeting of shareholders at which trustees will be elected; and (ii) that the
Governance Committee shall make the final determination of persons to be
nominated. The Governance Committee will evaluate nominees recommended by a
shareholder to serve as trustees in the same manner as they evaluate nominees
identified by the Governance Committee.
A shareholder may, at the 2008 annual meeting of shareholders, nominate
an individual for election to the Board at such meeting if the shareholder: (i)
is a shareholder of record at the time of giving notice to the Trust; (ii) is a
shareholder of record at the time of the 2008 Annual Meeting; (iii) is entitled
to vote at the 2008 Annual Meeting; and (iv) has complied with the notice
procedures in the Trust's bylaws. The notice procedures require that a
shareholder submit the nomination in writing to the Secretary of the Trust no
earlier than September 14, 2007 but no later than October 13, 2007. The notice
must contain all information relating to the nominee required for proxy
solicitations by Regulation 14A under the Exchange Act (including the
individual's written consent to being named in the proxy statement as a nominee
and to serving as a trustee if elected). The notice must also contain the
shareholder's name and address as they appear on the Trust's books (and the name
and address of any beneficial owner, on whose behalf the nomination is made) and
the number of shares of beneficial interest owned beneficially and of record by
such shareholder and beneficial owner.
A current copy of the Governance Committee Charter is set forth in
Appendix B.
PRICING COMMITTEE
The Pricing Committee is comprised of three members, two of whom are
independent trustees (Mr. Ahalt and Mr. Platt, with Mr. Ahalt serving as
Chairman) and one of whom is an interested person (Mr. Dinsmore). In accordance
with its charter, the Committee assists the Trust's investment adviser,
Davis-Dinsmore, in its valuation of the Trust's portfolio securities when
pricing anomalies arise and the full Board is not available to assist
Davis-Dinsmore in making a fair value determination.
It is anticipated that the Committee will meet only as pricing anomalies
or other issues arise that cannot be resolved by the entire Board due to time
constraints.
BOARD AND COMMITTEE MEETING ATTENDANCE
During the 2006 fiscal year, the Board met eight times, the Audit
Committee met five times and the Governance Committee met three times. The
Pricing Committee did not meet. All trustees attended at least 75% of all Board
and Committee meetings held during the 2006 fiscal year. The Trust's policy
regarding trustee attendance at annual meetings of shareholders is that trustees
are encouraged but not required to attend such annual meetings. Each of the
Trust's then current trustees attended the Trust's 2006 annual meeting of
shareholders.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF TRUSTEES
The Trust adopted Shareholder Communication Procedures (the Procedures)
that set forth the process by which shareholders of the Trust may send
communications to the Board. If a shareholder sends a recommendation of a
nominee to the Board or to an individual trustee, such communication would be
covered by the Procedures. Shareholder proposals submitted pursuant to Rule
14a-8 under the Exchange Act, and communications made in connection with such
proposals are not subject to the Procedures. The Trust's bylaws also contain
provisions requiring a shareholder to provide advance notice
9
of his or her intention to nominate, at the Trust's annual meeting of
shareholders, an individual for election as trustee.
Pursuant to the Procedures, shareholders should send their
communications to the Trust's Shareholder Relations Group. Communications may be
sent by regular mail or delivery service to the following address: 65 Madison
Avenue, Suite 550, Morristown, NJ 07960. E-mail communications may be sent to:
info@ellsworthfund.com. All shareholder communications that are directed to the
Board or an individual trustee of the Trust in his or her capacity as trustee
and received by the Shareholder Relations Group shall be promptly forwarded to
the individual trustee of the Trust to whom they were addressed or to the full
Board, as applicable. Copies of all such shareholder communications will also be
distributed to the Chairs of the Trust's Audit Committee and Governance
Committee, and to counsel for the Trust and for the independent trustees.
Counsel for the Trust and for the independent trustees, upon receipt of its copy
of a shareholder communication, shall work with such Chairs and counsel for the
independent trustees to determine whether such shareholder communication should
be distributed to any trustees to whom it was not sent and whether and in what
manner the trustees should respond to such shareholder communication. Responses,
if any, to shareholder communications shall be coordinated by counsel for the
Trust and for the independent trustees, working with the Chairs.
TRUSTEES' COMPENSATION
Mr. Dinsmore and Ms. O'Keeffe are the only trustees of the Trust who are
officers of the Trust or Davis-Dinsmore. Each trustee who is not an officer of
the Trust or Davis-Dinsmore currently receives (1) an annual fee of $7,500, (2)
$1,000 plus expenses for each Board meeting attended, (3) $1,000 for each
shareholders' meeting attended, and (4) $500 for each Committee meeting
attended. The chairperson of each Committee receives an additional $2,000 annual
fee.
The following table shows the compensation that was paid to the trustees
solely by the Trust as well as by the Fund Complex as a whole (which consists of
two registered investment companies, the Trust and Bancroft Fund) during the
2006 fiscal year.
AGGREGATE COMPENSATION TOTAL COMPENSATION
FROM TRUST FROM FUND COMPLEX
---------- -----------------
Thomas H. Dinsmore...................... $ -0- $ -0-
Jane D. O'Keeffe........................ $ -0- $ -0-
Gordon F. Ahalt......................... $18,225 $35,325
Elizabeth C. Bogan, Ph.D................ $20,325 $40,025
Donald M. Halsted, Jr................... $20,125 $40,125
Duncan O. McKee......................... $15,625 $30,625
Robert J. McMullan...................... $17,125 $32,875
Nicolas W. Platt........................ $16,625 $32,625
10
SECURITY OWNERSHIP OF MANAGEMENT
The Trust's trustees, nominees for trustee and officers owned the
Trust's shares as shown on the following table as of October 31, 2006 (officers
of the Trust are identified in the "Additional Information - Executive Officers"
section of this proxy).
SHARES OF TRUST
OWNED BENEFICIALLY*
-------------------
Gordon F. Ahalt.................................... 2,400
Elizabeth C. Bogan, Ph.D........................... 25,443
Thomas H. Dinsmore................................. 38,956 (1)
Donald M. Halsted, Jr. ............................ 2,489
Robert J. McMullan................................. 500
Duncan O. McKee.................................... 4,319
Jane D. O'Keeffe................................... 11,171 (2)
Nicolas W. Platt................................... 500
H. Tucker Lake, Jr................................. 14,744 (3)
Gary I. Levine..................................... 2,689 (4)
Germaine M. Ortiz.................................. 1,746 (5)
Mercedes A. Pierre................................. 2,669 (6)
Joshua P. Lake..................................... 483 (7)
* Represents for each trustee and officer less than 1% of the outstanding
shares of the Trust. As of October 31, 2006, trustees and officers of the Trust
beneficially owned in the aggregate 108,109 shares of the Trust, representing
approximately 0.09% of the outstanding shares. Except as otherwise indicated,
each trustee and officer possesses sole investment and voting power with respect
to shares beneficially owned.
(1) Includes (i) 502 shares held in trust for the benefit of Mr. Dinsmore's
minor child, (ii) 4,832 shares which Mr. Dinsmore owned jointly with his wife,
and (iii) 3,388 shares owned solely by his wife, as to which shares Mr. Dinsmore
disclaims beneficial ownership.
(2) Includes (i) 1,480 shares held in trust for the benefit of Ms. O'Keeffe's
minor children, and (ii) 1,386 shares owned jointly with her husband.
(3) Includes 11,767 shares owned by Mr. Lake's spouse.
(4) Includes (i) 349 shares as to which Mr. Levine possesses shared investment
and voting power, (ii) 562 shares held in trust for the benefit of Mr. Levine's
minor children, and (iii) 1,856 shares owned by his wife.
(5) Includes 626 shares as to which Ms. Ortiz possesses shared investment and
voting power.
(6) Includes 430 shares as to which Ms. Pierre possesses shared investment and
voting power.
(7) Includes 97 shares as to which Mr. Lake possesses shared investment and
voting power.
Mr. Harding, who will become a trustee of the Trust effective as of January 1,
2007, did not own any of the Trust's shares as of October 31, 2006.
11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based solely on a review of filings with the SEC, the following table
provides information about those shareholders that beneficially own more than 5%
of the outstanding shares of the Trust.
NAME NUMBER OF SHARES OWNED PERCENT OF OUTSTANDING SHARES
------------------------------------- --------------------------------------- ------------------------------------
Relative Value Partners, LLC 635,548 5.1%
1033 Skokie Boulevard
Suite 150
Northbrook, IL 60062 (1)
-----------
(1) Based upon information disclosed in a Schedule 13G dated July 10, 2006.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Although not required to do so, the Board seeks your ratification of the
Audit Committee's appointment of Tait Weller as the Trust's independent
registered public accountants for the 2007 fiscal year. The Board believes that
the shareholders should have the opportunity to vote on this matter. If the
appointment is not ratified, the Audit Committee will meet to select new
independent registered public accountants for the Trust's 2008 fiscal year. We
do not expect that a representative from Tait Weller will be present at the
Annual Meeting. However, should a Tait Weller representative choose to attend,
he or she will have an opportunity to make a statement and to respond to
appropriate questions.
FEES BILLED BY TAIT WELLER RELATED TO THE TRUST
Set forth in the table below are the aggregate fees billed to the Trust
by Tait Weller for services rendered to the Trust during the Trust's last two
fiscal years ended September 30, 2005 and September 30, 2006.
Fiscal Year Ended
SEPTEMBER 30 AUDIT FEES AUDIT-RELATED FEES(1) TAX FEES (3) ALL OTHER FEES
------------ ---------- ------------------ ----------- --------------
2005 $30,000 $10,000(2) $2,500 $0
2006 $31,000 $ 0 $2,600 $0
(1) All Audit-Related Fees were pre-approved by the Trust's Audit Committee.
No Audit-Related Fees were approved by the Trust's Audit Committee
pursuant to section 2.01(c)(7)(i)(C) of Regulation S-X, which waives the
pre-approval requirement for certain de minimus fees.
(2) Includes fees billed to the Trust by Tait Weller in connection with the
Trust's change of accounting practice related to amortization of
convertible bond premiums and discounts.
(3) "Tax Fees" include those fees billed by Tait Weller in connection with
their review of the Trust's income tax returns for fiscal years 2005 and
2006. All Tax Fees were pre-approved by the Trust's Audit Committee. No
Tax Fees were approved by the Trust's Audit Committee pursuant to
section 2.01(c)(7)(i)(C) of Regulation S-X, which waives the
pre-approval requirement for certain de minimus fees.
12
NON-AUDIT SERVICES
During each of the last two fiscal years ended September 30, 2006 and
September 30, 2005, Tait Weller did not provide any non-audit services to the
Trust or Davis-Dinsmore or its affiliates or otherwise bill the Trust or
Davis-Dinsmore or its affiliates for any non-audit services.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee pre-approves all audit and permissible non-audit
services that are proposed to be provided to the Trust by its independent
registered public accountants before they are provided to the Trust. Such
pre-approval also includes the proposed fees to be charged by the independent
registered public accountants for such services. The Audit Committee may
delegate the pre-approval of audit and permissible non-audit services and
related fees to one or more members of the Audit Committee who are
"independent," as such term is defined in Rule 10A-3(b)(1)(iii) under the
Exchange Act. Any such member's decision to pre-approve audit and/or non-audit
services and related fees shall be presented to the full Audit Committee, solely
for informational purposes, at its next scheduled meeting.
The Audit Committee also pre-approves non-audit services to be provided
by the Trust's independent registered public accountants to the Trust's
investment adviser if the engagement relates directly to the operations and
financial reporting of the Trust and if the Trust's independent registered
public accountants are the same as, or affiliated with, the investment adviser's
registered public accountants.
REQUIRED VOTE
The affirmative vote of the majority of votes cast is needed to approve
the ratification of the Audit Committee's appointment of the independent
registered public accountants. Abstentions will not count as votes cast and will
have no effect on the outcome of this proposal. We expect that brokers will be
entitled to vote on this proposal, but any broker non-vote will have no effect
on the outcome of this proposal.
THE BOARD RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2.
ADDITIONAL INFORMATION ON VOTING
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. If you are the record owner of your shares on the books of
the Trust's transfer agent, then you may also submit your proxy vote by
telephone or via the Internet, by following the instructions accompanying this
Proxy Statement. If your broker holds your shares in its name, you may submit
your proxy vote by any other means specified in the instructions that accompany
this Proxy Statement. Returning the proxy card or using any of the available
alternative proxy voting methods 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 or use any of the available alternative proxy voting methods, 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 or use any of the available
alternative proxy voting methods but do not make specific choices, your proxy
will vote your shares as recommended by the Board as follows and in accordance
with management's recommendation on other matters:
13
o FOR the election of all nominees for trustees.
o FOR ratification of the appointment of independent registered
public accountants for 2007.
Your proxy will also have authority to vote and act on your behalf at
any adjournment of the meeting.
If you give a proxy, you may revoke it at any time before it is
exercised. You can do this in one of four ways:
o You may send in another proxy with a later date.
o If you submitted a proxy by telephone, via the Internet or via
an alternative method of voting permitted by your broker, you
may submit another proxy by telephone, via the Internet, or via
such alternative method of voting, or send in another proxy with
a later date.
o You may notify the Trust's Secretary in writing before the
Annual Meeting that you have revoked your proxy.
o 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 15, 2006,
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. Broker non-votes, if any,
and abstentions will count as present for establishing a quorum.
ADJOURNMENTS
If a quorum is not present at the Annual Meeting or a quorum is present
but sufficient votes to approve a proposal are not received, the persons named
as proxies may propose one or more adjournments of the Annual Meeting to permit
further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of the votes cast at the Annual Meeting in person
or by proxy. The persons named as proxies will vote those proxies they are
entitled to vote "for" a proposal in favor of such an adjournment and will vote
those proxies required to be voted "against" such proposal against such an
adjournment. A shareholder vote may be taken on a proposal in this Proxy
Statement prior to any such adjournment if sufficient votes have been received
and it is otherwise appropriate.
14
ADDITIONAL INFORMATION
INVESTMENT ADVISER
Davis-Dinsmore, 65 Madison Avenue, Morristown, New Jersey 07960, is the
Trust's investment adviser.
EXECUTIVE OFFICERS
The Trust's executive officers are elected by the Board, receive no
compensation from the Trust and hold office until the meeting of the Board
following the next annual meeting of shareholders and until his or her successor
shall have been duly elected and qualified, or until his or her earlier death,
resignation or removal. Information about these officers is presented below.
NAME, AGE AND POSITION(S) HELD OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
WITH THE TRUST SINCE AND BUSINESS EXPERIENCE
--------------------------------------- ------- -----------------------------------------------------------
Thomas H. Dinsmore - 53 1986 Information about Mr. Dinsmore is presented earlier in this
Trustee, Chairman and Chief proxy statement under "Proposal 1, Election of Trustees -
Executive Officer Information About the Trust's Other Trustees - Continuing
Trustees Who are Interested Persons."
Jane D. O'Keeffe - 51 1994 Information about Ms. O'Keeffe is presented earlier in this
Trustee and President proxy statement under "Proposal 1, Election of Trustees -
Information About the Trust's Other Trustees - Continuing
Trustees Who are Interested Persons."
H. Tucker Lake, Jr. - 59 1994 Vice President of the Trust, Bancroft Fund (since 2002) and
Vice President Davis-Dinsmore (since 1997)
Formerly: Vice President, Trading of the Trust (1994-2002)
Joshua P. Lake, C.T.P. - 30 2002 Treasurer of the Trust and Bancroft Fund (since April 2004),
Treasurer and Assistant Secretary Assistant Secretary of the Trust and Bancroft Fund (since
February 2002) and Assistant Treasurer and Assistant
Secretary of Davis-Dinsmore (since February 2002)
Gary I. Levine - 49 1986 Executive Vice President and Chief Financial Officer of the
Executive Vice President, Chief Trust, Bancroft Fund and Davis-Dinsmore (since April 2004);
Financial Officer and Secretary Secretary of the Trust, Bancroft Fund and Davis-Dinsmore
(since November 2003); Treasurer of Davis-Dinsmore (since
1997)
Formerly: Vice President of the Trust, Bancroft Fund and
Davis-Dinsmore (January 2002 - April 2004); Treasurer of the
Trust and Bancroft Fund (April 1993 - April 2004)
Germaine M. Ortiz - 37 1996 Vice President of the Trust, Bancroft Fund and Davis-Dinsmore
Vice President (since 1999)
15
NAME, AGE AND POSITION(S) HELD OFFICER PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
WITH THE TRUST SINCE AND BUSINESS EXPERIENCE
--------------------------------------- ------- -----------------------------------------------------------
Mercedes A. Pierre - 45 1998 Vice President of the Trust and Bancroft Fund (since April
Vice President and Chief Compliance 2004); Chief Compliance Officer of the Trust and Bancroft
Officer Fund (since July 2004); Assistant Treasurer of the Trust and
Bancroft Fund (since 1998); and Vice President and Chief
Compliance Officer of Davis-Dinsmore (since 2004)
CERTAIN RELATIONSHIPS
H. Tucker Lake, Jr. is the cousin of Thomas H. Dinsmore and Jane D.
O'Keeffe, and the father of Joshua P. Lake.
DOLLAR RANGE OF SECURITIES HELD BY TRUSTEES AND NOMINEES
Set forth below is the dollar range of equity securities beneficially
owned (1) in both the Trust and Fund Complex by each trustee and each nominee
for election as a trustee of the Trust as of October 31, 2006.(2)
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN
ALL FUNDS OVERSEEN OR TO
DOLLAR RANGE OF BE OVERSEEN BY THE
EQUITY SECURITIES IN TRUSTEE OR NOMINEE
THE TRUST (3) IN FUND COMPLEX (4)
--------------- ---------------------------
Gordon F. Ahalt.................................... $10,001-$50,000 $10,001-$50,000
Elizabeth C. Bogan, Ph.D........................... over $100,000 over $100,000
Thomas H. Dinsmore................................. over $100,000 over $100,000
Donald M. Halsted, Jr. ............................ $10,001-$50,000 $50,001-$100,000
Duncan O. McKee.................................... $10,001-$50,000 $50,001-$100,000
Robert J. McMullan................................. $1-$10,000 $1-$10,000
Jane D. O'Keeffe................................... $50,001-$100,000 over $100,000
Nicolas W. Platt................................... $1-$10,000 $1-$10,000
(1) Beneficial ownership has been determined based upon the trustee's or
nominee's direct or indirect pecuniary interest in the equity
securities.
(2) The dollar ranges are: None, $1-$10,000, $10,001-$50,000,
$50,001-$100,000, or over $100,000.
(3) The dollar range of equity securities owned in the Trust is based on the
closing price of $8.07 on October 31, 2006 on the American Stock
Exchange.
(4) The dollar range of equity securities owned in the Fund Complex is based
on the closing price of $8.07 for the Trust and $19.30 for Bancroft Fund
on October 31, 2006 on the American Stock Exchange.
Mr. Harding, who will become a trustee of the Trust effective as of January 1,
2007, did not own any of the Trust's shares or equity securities in the Fund
Complex as of October 31, 2006.
16
PROXY SOLICITATION
The Trust expects to solicit proxies principally by mail. The Trust will
pay the cost of soliciting proxies and may reimburse third parties for their
expenses in forwarding solicitation materials to the beneficial owners of the
Trust's shares. Officers of the Trust may also solicit proxies by telephone,
facsimile, the Internet or personal interview, and will not receive any
additional compensation for such solicitation.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, Section 30(h) of the Investment
Company Act, and the regulations of the SEC thereunder, require the Trust's
officers and trustees and direct or indirect beneficial owners of more than 10%
of the Trust's shares, as well as Davis-Dinsmore, its directors and officers and
certain of its other affiliated persons (collectively, Reporting Persons), to
file initial reports of ownership and changes in ownership with the SEC.
Reporting Persons are required to furnish the Trust with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it
and written representations, the Trust believes that all filing requirements
applicable to the Reporting Persons have been complied with during the fiscal
year ended September 30, 2006.
SHAREHOLDER PROPOSALS
If you want us to consider including a shareholder proposal in the
Trust's proxy statement for the 2008 annual meeting of shareholders, we must
receive it from you no later than July 30, 2007.
A shareholder may bring other business before the 2008 Annual Meeting of
shareholders if the shareholder: (1) is a shareholder of record at the time of
giving notice to the Trust; (2) is entitled to vote at the 2008 Annual Meeting;
and (3) has complied with the notice procedures in the Trust's bylaws. The
notice procedures require that a shareholder submit the proposal in writing to
the Secretary of the Trust no earlier than September 14, 2007 but no later than
October 13, 2007. The notice must include a brief description of the business
desired to be brought before the 2008 Annual Meeting, the reasons for conducting
such business at the 2008 Annual Meeting, and any material interest the
shareholder and any beneficial owners on whose behalf the proposal is made may
have in such business. The notice must also include the shareholder's name and
address as they appear on the Trust's books (and the name and address of any
beneficial owner on whose behalf the proposal is made), as well as the number of
shares owned of record and beneficially by such shareholder and beneficial
owner.
By order of the Board of Trustees,
/s/ THOMAS H. DINSMORE
---------------------------------------
Thomas H. Dinsmore
Chairman of the Board of Trustees
November 27, 2006
17
APPENDIX A
BANCROFT FUND LTD.
ELLSWORTH FUND LTD.
(THE "FUNDS")
AMENDED AND RESTATED
AUDIT COMMITTEES CHARTER
(AMENDED EFFECTIVE APRIL 10, 2006)
1. MEMBERSHIP; QUALIFICATIONS.
a. Each Audit Committee shall have at least three members. [Section
121B(2)(a) of the American Stock Exchange ("AMEX") Company Guide.]
b. Each member of the Audit Committees shall be able to read and
understand fundamental financial statements, including a Fund's balance sheet,
income statement, and cash flow statement. [Section 121B(2)(a)(ii) of the AMEX
Company Guide.]
c. At least one member of each Audit Committee must be "financially
sophisticated" in that he or she has past employment experience in finance or
accounting, requisite professional certification in accounting or other
comparable experience or background which results in the individual's financial
sophistication, including but not limited to being or having been a chief
executive officer, chief financial officer, or other senior officer with
financial oversight responsibilities. [Section 121B(2)(a)(ii) of the AMEX
Company Guide.]
d. Each member of the Audit Committees shall be free of any
material relationship with the Funds that, in the opinion of the Boards of
Trustees of the Funds (the "Boards"), would interfere with his or her individual
exercise of independent judgment. [Section 121A of the AMEX Company Guide.]
e. No member of the Audit Committees shall, other than in his or
her capacity as a member of the Audit Committees, the Boards, or any other Board
committee, accept directly or indirectly any consulting, advisory, or other
compensatory fee from the Funds. Compensatory fees do not include the receipt of
fixed amounts of compensation under a retirement plan (including deferred
compensation) for prior service with the Funds (provided that such compensation
is not contingent in any way on continued service). [Rule 10A-3(b)(1)(iii)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")]
f. No member of either of the Audit Committees shall be an
"interested person" of any of the Funds as defined in section 2(a)(19) of the
Investment Company Act of 1940, as amended (the "1940 Act"). [Section 121A(g)
and 121B(2)(a)(i) of the AMEX Company Guide; Rule 10A-3(b)(1)(iii) promulgated
under the Exchange Act]
2. PURPOSES. The purposes of the Audit Committees are:
a. in their capacity as committees of the Boards, to be directly
responsible for the appointment (subject to ratification by a majority of the
Boards who are not "interested persons" of the Funds as defined in the 1940 Act
("disinterested trustees")), compensation, retention and oversight of the work
of any independent auditors employed by the Funds (including resolution of
disagreements between management and the auditor regarding financial reporting)
for the purpose of preparing or issuing an audit report or related work;
A-1
APPENDIX A
b. to oversee the Funds' accounting and financial reporting
policies and processes, its internal controls and, as appropriate, the internal
controls of their investment adviser; [Section 121B(1)(iii) of the AMEX Company
Guide.]
c. to oversee the quality and objectivity of the Funds' financial
statements and the independent audit thereof; [Section 121B(1)(iii) of the AMEX
Company Guide.]
d. to the extent required by Section 10A(h) and (i) of the Exchange
Act, to preapprove all audit and permissible non-audit services that are
provided to the Funds by their independent auditors;
e. to pre-approve, in accordance with Item 2.01(c)(7)(ii) of
Regulation S-X, certain non-audit services provided by the Funds' independent
auditors to the Funds' investment adviser, if the Funds' independent auditors
are the same as, or affiliated with, the investment adviser's auditors;
f. to the extent required by Regulation 14A under the Exchange Act,
to prepare an audit committee report for inclusion in a Fund's annual proxy
statement; and
g. to serve as the Funds' qualified legal compliance committee
("QLCC") within the meaning of Part 205 of the Commission's Rules of Practice -
Standards of Professional Conduct for Attorneys Appearing and Practicing before
the Commission in the Representation of an Issuer (the "Attorney Conduct
Rules").
3. DUTIES AND POWERS. To carry out their purposes, the Audit Committees
shall have the following duties and powers:
a. to be directly responsible for the appointment (subject to
ratification by a majority of the Boards of the Funds who are not interested
persons of the Funds (the "independent trustees")), compensation, retention and
oversight of the work of any independent auditors employed by the Funds,
including reviewing with such auditors the proposed audit plans and meeting with
the auditors after completion of the audit to review the work done in connection
with the audit and to discuss and resolve any disagreements between management
and the auditor regarding financial reporting. All of the foregoing shall be for
the purpose of preparing or issuing an audit report or performing other audit,
review or attest services, and each such independent auditors must report
directly to the Audit Committees; [Section 10A(m)(2) of the Exchange Act, Rule
10A-3(b)(2) adopted thereunder, and Section 121B(4) of the AMEX Company Guide]
b. to evaluate the independence of the Funds' independent auditors,
including whether such auditors provide any consulting services to the Funds'
investment adviser; to receive from such auditors a formal written statement
delineating all relationships between such auditors and the Funds, consistent
with Independent Standards Board Standard 1; and to actively engage in a
dialogue with the independent auditors with respect to any disclosed
relationships or services that may impact the objectivity and independence of
the auditors and for taking, or recommending that the full Boards take,
appropriate action to oversee the independence of the outside independent
auditors; [Section 121B(1)(ii) of the AMEX Company Guide]
c. to oversee the accounting and financial reporting process of the
Funds and the audits of the financial statements of the Funds, and in connection
therewith, to meet with the Funds' independent auditors, including private
meetings, as necessary (i) to review the arrangements for and scope of the
annual audit and any special audits and any audit plans prepared by the
independent auditors for the Funds; (ii) to discuss any matters of concern
relating to the Funds' financial statements, including any adjustments to such
statements recommended by the independent auditors, or other results of said
A-2
APPENDIX A
audit(s); (iii) to consider the independent auditors' comments with respect to
the Funds' financial policies, procedures and internal accounting controls and
management's responses thereto; and (iv) to review the form of opinion the
independent auditors propose to render to the Boards and shareholders; [Section
121B(iii) of the Amex Company Guide.]
d. to receive and review the written disclosures and the letter
from the independent auditors regarding their independence that are required by
Item 306 of Regulation S-K, to discuss with such auditors their independence,
and to consider whether the provision by such auditors of permissible non-audit
services to (i) the Funds, (ii) their advisor or (iii) any person that controls,
is controlled by or is under common control with such advisor that provides
services to the Funds, is compatible with maintaining such auditors'
independence; [Item 7(d)(3)(i) and Item 9(e)(8) of Schedule 14A, and Item 306 of
Regulation S-K]
e. to review and discuss audited financial statements contained in
annual and other periodic reports to shareholders with management and the
independent auditors to determine that such auditors are satisfied with the
disclosure and content of the annual financial statements and the quality of the
Funds' accounting and financial reporting policies, procedures and internal
control over financial reporting (including the Funds' critical accounting
policies and practices), and also to discuss with management and the independent
auditors the clarity, consistency and completeness of accounting policies and
disclosures; [Item 7(d)(3)(i) of Regulation 14A, and Item 306 of Regulation S-K]
f. based upon a review of the items discussed in (d) and (e) above,
to recommend to the Boards that the Funds' audited financial statements be
included in the Funds' annual reports to shareholders; [Item 7(d)(3)(i) of
Regulation 14A and Item 306 of Regulation S-K]
g. the Audit Committees shall prepare the audit committee report
that SEC rules require to be included in the Funds' annual proxy statement.
[Item 7(d)(3)(i) of Regulation 14A and Item 306 of Regulation S-K]
h. to consider the effect upon the Funds of any changes in
accounting principles or practices proposed by management or the independent
auditors and to review information received from management and such auditors
regarding regulatory changes and new accounting pronouncements that affect net
asset value calculations and financial statement reporting requirements;
i. to the extent that certifications by officers of the Funds (the
"signing officers") as to the Funds' financial statements or other financial
information are required by applicable law to be included with or in the Funds'
periodic reports filed with the Securities and Exchange Commission ("SEC"), to
receive from such officers notifications if such certifications are not included
for any reason;
j. to meet as necessary with counsel to the Funds, counsel to the
disinterested trustees of the Funds and, if applicable, independent counsel or
other advisers to the Audit Committees and to review information provided by all
such persons on legal issues having the possibility of impacting the financial
reporting process, including items of industry-wide importance and internal
issues such as litigation;
k. to the extent required by Section 10A(h) and (i) of the Exchange
Act, to preapprove all audit and permissible non-audit services that are
proposed to be provided to the Funds by their independent auditors before they
are provided to the Funds. Such pre-approval shall also include the proposed
fees to be charged by the independent auditors for such services. The Audit
Committees may delegate the pre-approval of audit and permissible non-audit
services and related fees to one or more members of the Audit Committees who are
"independent," as such term is defined in Rule 10A-3(b)(1)(iii) under the
Exchange Act. Any such member's decision to pre-approve audit and/or non-audit
A-3
APPENDIX A
services and related fees shall be presented to the full Audit Committees,
solely for informational purposes, at their next scheduled meeting; [Section
10A(h) and (i) of the Exchange Act]
l. to pre-approve non-audit services to be provided by the Funds'
independent auditors to the Funds' investment adviser and certain affiliated
entities that provide ongoing services to the Funds if the engagement relates
directly to the operations and financial reporting of any Fund and if the Funds'
independent auditors are the same as, or affiliated with, the investment
adviser's or certain affiliated entities' auditors; [Item 2.01(c)(7)(ii) of
Regulation S-X and Item 9(e)(8) of Schedule 14A]
m. to investigate improprieties or suspected improprieties in fund
operations, including but not limited to receiving and reviewing disclosures by
the Funds' signing officers to the Audit Committees of (i) all significant
deficiencies in the design or operation of internal controls which could
adversely affect the Funds' ability to record, process, summarize, and report
financial data and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Funds' internal
controls;
n. to establish procedures for (i) the receipt, retention and
treatment of complaints received by the Funds regarding accounting, internal
accounting controls or auditing matters and (ii) the confidential, anonymous
submission by employees of the Funds (or the Funds' investment adviser) of
concerns regarding questionable accounting or auditing matters [Section
10A(m)(4) of the Exchange Act, Rule 10A-3(b)(3) adopted thereunder, and Section
121B(4) of the AMEX Company Guide]
o. to receive and review information provided by management and the
independent auditors regarding the Funds' accounting system and controls,
including but not limited to receiving from the Funds' independent auditors
information concerning (i) all critical accounting policies and practices to be
used, (ii) all alternative treatments of financial information within generally
accepted accounting principles that have been discussed with management
officials of the Funds, ramifications of the use of such alternative disclosures
and treatments, and the treatment preferred by such independent auditors, and
(iii) other material written communications between such independent auditors
and the management of the Funds such as the management letter or schedule of
unadjusted differences; [Section 10A(k) of the Exchange Act]
p. to carry out the responsibilities of a QLCC as set forth in the
Attorney Conduct Rules, and in connection therewith: (i) to adopt written
procedures for the confidential receipt, retention and consideration of any
report of evidence of a material violation of an applicable United States
federal or state securities law, a material breach of fiduciary duty arising
under United States federal or state law, or a similar material violation of any
United States federal or state law (a "Material Violation"); (ii) to report to a
Fund's chief executive officer any report of evidence of a Material Violation
(iii) to determine whether an investigation is necessary regarding any report of
evidence of a Material Violation by the Fund, its officers, trustees, employees
or agents and, if it determines an investigation is necessary or appropriate,
to: (A) notify the full Board; (B) initiate an investigation, which may be
conducted by outside attorneys; and (C) retain such additional expert personnel
as the Audit Committee deems necessary; and (iv) at the conclusion of any such
investigation, to: (A) recommend, by majority vote, that the Fund implement an
appropriate response to evidence of a Material Violation; and (B) inform the
chief executive officer and the Board of the results of any such investigation
and the appropriate remedial measures to be adopted; and (v) acting by majority
vote, to take all other appropriate action, including the authority to notify
the Commission in the event that the Fund fails in any material respect to
implement an appropriate response the Audit Committee has recommended the Fund
to take; [Attorney Conduct Rules ss. 205.2(k)]
A-4
APPENDIX A
q. to receive reports of violations and potential violations of the
Funds' Code of Ethics for Principal Financial Officers (the "Code") from the
Funds' Compliance Officer or his/her designee, and determine whether a violation
has occurred;
r. to inform the disinterested trustees of the Funds of any
violation of the Code; and
s. to report their activities to the full Boards on a regular basis
and to make such recommendations and/or decisions with respect to the above and
other matters as the Audit Committees may deem necessary or appropriate.
4. APPOINTMENT OF INDEPENDENT AUDITORS. The Audit Committees shall appoint
the Funds' independent auditors at an in-person meeting. If, at any time, the
approval by the Audit Committees of the Funds' independent auditors constitutes
an approval of such auditors by less than a majority of the disinterested
trustees, such approval shall be ratified by a majority of the Funds'
disinterested trustees at the next regularly scheduled in-person meeting of the
Boards; [Section 32(a)(1) of the Investment Company Act of 1940, as amended]
5. MEETINGS. The Audit Committees shall meet on a regular basis as often as
necessary to fulfill its responsibilities, including at least annually in
connection with the issuance of the Funds' financial statements. The Audit
Committees may meet either on their own or in conjunction with meetings of the
full Boards. Meetings of the Audit Committees may be held in person or by
conference telephone. Where appropriate, the Audit Committees may take action by
unanimous written consent in lieu of a meeting. [Section 121B(3) of the AMEX
Company Guide]
The Audit Committees shall regularly meet with the Treasurer of the
Funds.
6. AUTHORITY; FUNDING.
a. The Audit Committees shall have the resources and authority
appropriate to carry out their duties, including the authority to engage
independent counsel and other advisers, experts or consultants as they deem
necessary to carry out their duties, all at the expense of the appropriate
Fund(s). [Section 10A(m)(5) of the Exchange Act, Rule 10A-3(b)(4) adopted
thereunder, and Section 121B(4) of the AMEX Company Guide]
b. The Funds shall provide for appropriate funding, as determined
by the Audit Committees, in their capacity as committees of the Boards, for
payment of compensation (i) to the independent auditors employed by the Funds
for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Funds and (ii) to any independent
counsel or other advisers employed by the Audit Committees. [Section 10A(m)(6)
of the Exchange Act, Rule 10A-3(b)(5) adopted thereunder, and Section 121B(4) of
the AMEX Company Guide]
7. ANNUAL INTERNAL PERFORMANCE EVALUATION. Each year the Audit Committees
shall conduct an internal evaluation of the performance of the Audit Committees.
8. GOOD FAITH RELIANCE. In performing their duties under this Charter,
members of the Committees shall be entitled to rely in good faith upon the
records of the Funds and upon such information, opinions, reports and statements
presented to the Audit Committees by the officers and employees of the Funds and
of Davis-Dinsmore Management Company, and by the Funds' independent auditors.
9. REVIEW OF CHARTER. The Audit Committees shall review and reassess the
adequacy of this Charter at least annually and recommend any changes to the full
Boards. This Charter may be amended
A-5
APPENDIX A
only by the approval of the Boards, and a majority of the disinterested
trustees. [Section 121B(1) of the AMEX Company Guide]
10. MAINTENANCE OF CHARTER. Each Fund shall maintain and preserve in an
easily accessible place a copy of this Charter and any modification to this
Charter.
A-6
APPENDIX B
BANCROFT FUND LTD.
ELLSWORTH FUND LTD.
(THE "FUNDS")
AMENDED AND RESTATED
GOVERNANCE COMMITTEES CHARTER
(AMENDED EFFECTIVE APRIL 10, 2006)
1. MEMBERSHIP; QUALIFICATIONS.
a. Each member of the Governance Committees (the "Committees")
shall be free of any material relationship with the Funds that,
in the opinion of the Boards of Trustees of the Funds (the
"Boards"), would interfere with his or her individual exercise
of independent judgment.
b. No member of the Committees shall, other than in his or her
capacity as a member of the Committees, the Boards, or any other
Board committee, accept directly or indirectly any consulting,
advisory, or other compensatory fee from the Funds or any
subsidiary of the Funds, provided that, unless the rules of the
American Stock Exchange ("AMEX") provide otherwise, compensatory
fees do not include the receipt of fixed amounts of compensation
under a retirement plan (including deferred compensation) for
prior service with the Funds (provided that such compensation is
not contingent in any way on continued service).
c. No member of either of the Committees shall be an "interested
person" of any of the Funds as defined in section 2(a)(19) of
the Investment Company Act of 1940, as amended (the "1940 Act").
2. PURPOSES. The purposes of the Committees are:
a. to nominate persons for election or appointment as trustees (i)
to fill vacancies which, from time to time, may occur in the
Boards and (ii) for election by shareholders of Funds at
meetings called for the election of trustees;
b. to nominate persons for appointment as members of each committee
of the Boards, including without limitation the Committees, the
Audit Committees, and the Pricing Committees;
c. to review from time to time, the compensation, if any, payable
to the trustees of the Funds and to make recommendations to the
Boards with respect thereto;
d. to review and evaluate from time to time the functioning of the
Boards and the various committees of the Boards and to make
recommendations to the Boards with respect thereto;
e. to oversee the selection of independent legal counsel to the
independent trustees; and
f. to monitor the performance of independent legal counsel employed
by the Funds and the independent trustees.
B-1
APPENDIX B
3. DUTIES AND POWERS. To carry out their purposes, the Committees shall
have the following duties and powers:
a. to nominate persons to serve on the Boards.
i. The Committees shall make nominations for trustee
membership on the Boards. If members of the Committees
do not unanimously agree to nominate an incumbent
trustee for re-election to the Boards, the Committees
shall submit the issue of nomination of such person for
re-election to the independent trustees as a group.
ii. Evaluation by the Committees of a person as a potential
nominee to serve as a trustee, including a person
nominated by a shareholder, should result in the
following findings by the Committees:
A. upon advice of independent legal counsel to the
independent trustees, that the person will
qualify as a trustee who is not an "interested
person" of the Funds (an "independent
trustee")(applicable only to the nomination of
independent trustees ), and that the person is
otherwise qualified under the 1940 Act to serve
as a trustee of the Funds;
B. with respect to the nomination of independent
trustees only, that the person is free of any
material relationship with the Funds (other than
as a shareholder of the Funds), that would
interfere with the exercise of independent
judgment;
C. that the person is willing to serve, and willing
and able to commit the time necessary for the
performance of the duties of a trustee;
D. that the person can make a positive contribution
to the Boards and the Funds, with consideration
being given to the person's business experience,
education and such other factors as the
Committees may consider relevant;
E. that the person is of good character and high
integrity;
F. that the person has desirable personality traits
including independence, leadership and the
ability to work with the other members of the
Boards;
G. that the person is not an AMEX employee or floor
member; and
H. that the composition of the Boards is varied as
to educational background, business experience
and occupation.
iii. The Committees shall consider nominees recommended by a
shareholder to serve as trustee, provided: (i) that such
person is a shareholder of record both at the time he or
she submits such names and at the time of the meeting of
shareholders at which trustees will be elected; (ii)
that such person is entitled to vote at such meeting;
and (iii) that the Committees shall make the final
determination of persons to be nominated. The Committees
shall evaluate nominees recommended by a shareholder to
serve as trustee in the same manner as they
B-2
APPENDIX B
evaluate nominees identified by the Committees.
Shareholders should provide the Committees with
information regarding the recommended nominee sufficient
for the Committees to make the findings set forth in
Section 3.a.ii.
b. to nominate trustees to serve on the Funds' committees.
i. The Committees shall make nominations for membership on
all committees and shall review and recommend committee
assignments at least annually.
ii. Evaluation by the Committees of a person as a potential
committee member shall include the factors set forth
above under Section 3.a.ii. to the extent that such
factors are applicable or relevant, as well as any
qualifications as may be set forth in the charter of the
applicable committee.
c. to review as necessary the responsibilities of any committees of
the Board, whether there is a continuing need for each
committee, whether there is a need for additional committees of
the Board, and whether committees should be combined or
reorganized. The Committees shall make recommendations for any
such action to the full Board. Any proposed changes shall be
approved by the full Board as well as a majority of the
independent trustees.
d. to periodically review the composition of the Boards to
determine whether it may be appropriate to add individuals with
different backgrounds or skill sets from those already on the
Boards.
e. to periodically review trustee compensation and recommend any
appropriate changes to the independent trustees as a group.
f. to consider and oversee the selection of independent legal
counsel to the independent trustees and recommend such counsel
to the independent trustees. In making such selection the
Committees shall examine and monitor such legal counsel's client
relationships in order to ascertain continued independence.
g. to monitor the performance of independent legal counsel employed
by the Funds and the independent trustees, and supervise counsel
for the independent trustees.
B-3
APPENDIX B
4. MEETINGS. The Committees may meet either on their own or in
conjunction with meetings of the full Boards. Meetings of the Committees may be
held in person or by conference telephone. Where appropriate, the Committees may
take action by unanimous written consent in lieu of a meeting.
5. ATTENDANCE AT ANNUAL MEETINGS OF SHAREHOLDERS. Trustees are encouraged
but not required to attend annual meetings of shareholders.
6. AUTHORITY; FUNDING. The Committees shall have the resources and
authority appropriate to discharge their responsibilities, including authority
to retain special counsel and other experts or consultants at the expense of the
appropriate Fund(s).
7. ANNUAL INTERNAL PERFORMANCE EVALUATION. Each year the Committees shall
conduct an internal evaluation of the performance of the Committees.
8. GOOD FAITH RELIANCE. In performing their duties under this Charter,
members of the Committees shall be entitled to rely in good faith upon the
records of the Funds and upon such information, opinions, reports and statements
presented to the Committees by the officers and employees of the Funds and of
Davis-Dinsmore Management Company.
9. REVIEW OF CHARTER. The Committees shall review this Charter at least
annually and recommend any changes to the full Boards. This Charter may be
amended only by approval of the full Boards, and a majority of the independent
trustees.
10. MAINTENANCE OF CHARTER. Each Fund shall maintain and preserve in an
easily accessible place a copy of this Charter and any modification to this
Charter.
B-4
ELLSWORTH FUND LTD.
ANNUAL MEETING TO BE HELD JANUARY 12, 2007
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
The undersigned hereby appoints Thomas H. Dinsmore, Gary I. Levine, and
Jane D. O'Keeffe, and any one of them separately, 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 Fund Ltd. (the "Trust") at the
offices of the Trust, 65 Madison Avenue, Suite 550, Morristown, New Jersey 07960
on January 12, 2007 at 11:00 a.m., and at all adjournments or postponements
thereof, according to the number of beneficial shares 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 THE TRUSTEES LISTED, AND FOR THE PROPOSAL TO
RATIFY THE AUDIT COMMITTEE'S SELECTION OF ACCOUNTANTS.
PLEASE FILL IN, DATE AND SIGN THE PROXY ON THE OTHER SIDE
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE /X/
1. Election as trustees of all nominees listed below for the terms specified in
the proxy statement.
NOMINEES:
/ / FOR ALL NOMINEES / / Gordon F. Ahalt
/ / Elizabeth C. Bogan, Ph.D.
/ / Nicolas W. Platt
/ / WITHHOLD AUTHORITY FOR ALL NOMINEES
/ / FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you
wish to withhold, as shown here: /X/
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FOR AGAINST ABSTAIN
2. Proposal to ratify selection of accountants. / / / / / /
YOUR VOTE IS IMPORTANT TO US. PLEASE FILL IN, DATE AND SIGN YOUR PROXY AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE PROVIDED FOR YOUR CONVENIENCE.
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that / /
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature of Shareholder Date
--------------------------------- ------------------
Signature of Shareholder Date
--------------------------------- ------------------
NOTE: Please sign as name appears hereon. Joint owners each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such.