DEF: Ellsworth Fund Sets 2026 Annual Shareholder Meeting

Ellsworth Growth and Income Fund Ltd. announced its Annual Meeting of Shareholders for May 11, 2026, to elect four Trustees and address other corporate matters.

Summary

• Annual Meeting of Shareholders scheduled for May 11, 2026, at 8:15 a.m. ET in Greenwich, Connecticut.
• Shareholders will vote to elect four Trustees: three by common and preferred shareholders voting together, and one by preferred shareholders voting as a separate class.
• The record date for voting eligibility is March 12, 2026.
• Outstanding shares include 13,670,303 Common Shares, 1,103,002 Series A Cumulative Preferred Shares, and 273,000 Series B Cumulative Preferred Shares.
• Key shareholders with 5% or more beneficial ownership include Saba Capital Management, L.P. (11.7% Common), Wells Fargo & Company (6.9% Common), SIT Investment Associates Inc. (6.8% Common), GAMCO Investors, Inc. and affiliates (10.5% Preferred), and Americo Investment Advisors Inc. (8.7% Preferred).
• The Fund's Board consists of eleven Trustees, with nine being independent, and is divided into three classes with three-year terms.
• The Delaware Statutory Trust Act (DSTA) Control Share Statute applies to the Fund, potentially limiting voting rights for certain large acquisitions unless approved by shareholders or exempted by the Board.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive filing. While the governance structure appears robust, the disclosure of delinquent insider reports and the potential negative implications of the DSTA Control Share Statute introduce minor concerns, balanced by the routine nature of the proxy statement.

Positives

• The Board of Trustees has a strong independent majority, with nine out of eleven Trustees being independent, ensuring robust oversight.
• The Fund has established comprehensive corporate governance structures, including Nominating, Audit, and ad hoc Proxy Voting Committees, to facilitate effective management and shareholder representation.
• The Audit Committee, composed entirely of Independent Trustees and including a designated financial expert, actively reviews financial statements, internal controls, and the independent audit process, enhancing financial integrity.
• The Fund's independent registered public accounting firm, Tait Weller & Baker LLP, has not provided any non-audit services to the Adviser or Covered Service Providers, reinforcing auditor independence and objectivity.

Negatives

• Three key individuals, Mario J. Gabelli (Chairman), James A. Dinsmore (President and Trustee), and Vice Admiral Colin J. Kilrain (Trustee), had delinquent Section 16(a) reports, indicating lapses in timely insider trading disclosures.
• The application of the DSTA Control Share Statute could potentially deprive shareholders of opportunities to sell shares at a premium by discouraging control bids, and may increase the likelihood of the Fund's common shares trading at a discount to net asset value.
• Uncertainty exists regarding the general application and enforcement of state control share statutes under the 1940 Act due to recent federal and state court decisions, which could introduce legal complexities.

Risks

• Control Share Acquisitions: The DSTA Control Share Statute, applicable since August 1, 2022, defines 'control shares' at various voting power thresholds (e.g., 10%, 15%) and strips voting rights from such shares unless approved by a two-thirds shareholder vote (excluding interested shares) or exempted by the Board. This could deter potential acquirers and limit shareholder opportunities for premium sales.
• Market Discount to NAV: The DSTA Control Share Statute may reduce market demand for the Fund's common shares, potentially increasing the likelihood that they trade at a discount to net asset value and exacerbating any such discount.
• Regulatory Uncertainty: There is uncertainty surrounding the general application of state control share statutes under the 1940 Act due to recent federal and state court decisions, which could impact the enforceability of these provisions.
• Enforcement Challenges: Uncertainty may exist in enforcing control share restrictions against beneficial owners who hold their shares through financial intermediaries.

Future Outlook

The filing primarily focuses on corporate governance matters for the upcoming Annual Meeting and does not provide specific forward-looking financial guidance or strategic outlook beyond the election of Trustees and the ongoing monitoring of the DSTA Control Share Statute.

Management Comments

• "YOUR VOTE IS IMPORTANT REGARDLESS OF THE SIZE OF YOUR HOLDINGS IN THE FUND. WE ENCOURAGE YOU TO VOTE YOUR PROXY IN ADVANCE OF THE MEETING, EVEN IF YOU PLAN TO ATTEND THE MEETING."
• "The Board believes that each Trustee’s experience, qualifications, attributes or skills on an individual basis and in combination with those of other Trustees lead to the conclusion that each Trustee should serve in such capacity."
• "The Board of Trustees has determined that its leadership structure is appropriate for the Fund because it enables the Board to exercise informed and independent judgment over matters under its purview, allocates responsibility among committees in a manner that fosters effective oversight, and allows the Board to devote appropriate resources to specific issues in a flexible manner as they arise."
• "The Fund should not be viewed as a vehicle for trading purposes. It is designed primarily for risk-tolerant long-term investors."

Industry Context

StockSavvy.ai notes that proxy statements like this are standard annual disclosures for closed-end funds, focusing on corporate governance and board elections. The detailed breakdown of trustee qualifications and committee structures aligns with best practices for fund oversight. The discussion of the DSTA Control Share Statute highlights a growing area of regulatory complexity for Delaware statutory trusts, as state-level anti-takeover provisions face scrutiny under federal investment company law, a trend observed across the broader investment fund industry.

Comparison to Industry Standards

• The Fund's Board composition, with nine out of eleven Independent Trustees, exceeds the typical independence requirements for investment companies, which often mandate a majority of independent directors. For example, many open-end funds aim for at least 75% independent directors, a standard the Fund closely approaches.
• The Audit Committee's structure, with a designated financial expert (Daniel D. Harding) and a charter requiring pre-approval of audit and non-audit services, aligns with or exceeds the corporate governance standards set by the Sarbanes-Oxley Act and SEC rules for public companies and investment funds.
• The compensation structure for Independent Trustees, involving an annual retainer and per-meeting fees, is a common practice in the closed-end fund industry, comparable to funds managed by BlackRock or PIMCO, ensuring appropriate remuneration for oversight responsibilities.
• The application of the DSTA Control Share Statute, while a specific Delaware provision, reflects a broader industry trend where closed-end funds, particularly those trading at a discount to NAV, implement or are subject to anti-takeover measures. However, the acknowledged 'uncertainty' regarding its application under the 1940 Act places the Fund in a similar position to other funds that have faced legal challenges to such provisions, such as those involving the Massachusetts Control Share Acquisition Statute.

Corporate Governance

Related Party Transactions

• GAMCO Investors, Inc. and affiliates, of which Mario J. Gabelli is Chairman, Co-Chief Executive Officer, and Chief Investment Officer, beneficially own 145,000 Preferred Shares (10.5%). Mr. Gabelli disclaims beneficial ownership of shares owned by entities in excess of his indirect pecuniary interest.
• Mr. Fahrenkopf's daughter, Leslie F. Foley, serves as a director of other funds in the Gabelli Fund Complex.
• Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund LDC, GAMA Capital Opportunities Master Ltd., and GAMCO International SICAV, all of which may be deemed to be controlled by Mario J. Gabelli and/or affiliates.

Stakeholder Impact

• Shareholders: Will participate in the election of Trustees, influencing the Fund's governance. The DSTA Control Share Statute could impact their ability to sell shares at a premium in a control transaction and potentially affect the market price of common shares relative to NAV.
• Management/Board: The election process and ongoing corporate governance structures define their roles and responsibilities. Delinquent Section 16(a) reports highlight a need for improved compliance in insider reporting.
• Adviser (Gabelli Funds, LLC): Continues its role as the Fund's Adviser and Administrator, with its affiliates having significant beneficial ownership in preferred shares.

Next Steps

• Shareholders to vote on the election of four Trustees at the Annual Meeting on May 11, 2026.
• The Board of Trustees will continue to monitor developments relating to the DSTA Control Share Statutes and state control share statutes generally.
• Shareholders interested in submitting proposals for the 2027 Annual Meeting must adhere to specific deadlines: December 2, 2026 (Rule 14a-8 proposals) or between December 13, 2026, and January 11, 2027 (other nominations/proposals).

Key Dates

Recommendation

The filing is a routine proxy statement for an annual meeting, primarily focused on corporate governance and trustee elections. It does not contain new financial performance data or strategic announcements that would significantly alter the investment thesis. While there are minor concerns regarding delinquent insider reports and the potential long-term impact of the DSTA Control Share Statute on share price, these are balanced by a robust independent board and established oversight mechanisms. Therefore, a 'hold' recommendation is appropriate as the filing provides no compelling reason to buy or sell based on new information.

Keywords

Ellsworth Growth and Income Fund, Proxy Statement, Shareholder Meeting, Trustee Election, Corporate Governance, SEC Filing, Closed-End Fund, Investment Company, DSTA Control Share Statute, Preferred Shares, Common Shares, Audit Committee, Gabelli Funds