ELLSWORTH GROWTH & INCOME FUND LTD

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

Investment Company Act file number            811-04656                    

                           Ellsworth Growth and Income Fund Ltd.                          

(Exact name of registrant as specified in charter)

One Corporate Center

                         Rye, New York 10580-1422                        

(Address of principal executive offices) (Zip code)

James A. Dinsmore

Gabelli Funds, LLC

One Corporate Center

                                     Rye, New York 10580-1422                                     

(Name and address of agent for service)

Registrant’s telephone number, including area code:  1-800-422-3554

Date of fiscal year end: September 30

Date of reporting period: September 30, 2016

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.


Item 1. Reports to Stockholders.

The Report to Shareholders is attached herewith.


Ellsworth Growth and Income Fund Ltd.

Annual Report — September 30, 2016

(Y)our Portfolio Management Team

 

LOGO

To Our Shareholders,

For the year ended September 30, 2016, the net asset value (“NAV”) total return of the Ellsworth Growth and Income Fund Ltd. was 10.6%, compared with total returns of 9.1% and 3.5% for the Bank of America Merrill Lynch U.S. Convertibles Index and the Bloomberg Barclays Balanced U.S. Convertibles Index, respectively. The total return for the Fund’s publicly traded shares was 16.0%. The Fund’s NAV per share was $9.60, while the price of the publicly traded shares closed at $8.19 on the NYSE MKT. See below for additional performance information.

Enclosed are the financial statements, including the schedule of investments, as of September 30, 2016.

Comparative Results

 

Average Annual Returns through September 30, 2016 (a)(b) (Unaudited)                                     
     1 Year     3 Year     5 Year     10 Year      Since
Inception
 (06/30/86) 
       

   Ellsworth Growth and Income Fund Ltd.

             
     NAV Total Return (c)      10.64     6.79     10.80     6.11%         7.86%      
     Investment Total Return (d)      15.98        8.59        10.94        6.55            7.99         

   Bank of America Merrill Lynch U.S. Convertibles Index

     9.08        6.78        11.45        6.74            N/A(e)     

   Bloomberg Barclays Balanced U.S. Convertibles Index

     3.53        0.08        5.11        1.35            N/A(f)     

   Standard & Poor’s (“S&P”) 500 Index

     15.43        11.16        16.37        7.24            9.87         
  (a)

Returns represent past performance and do not guarantee future results. Investment returns and the principal value of an investment will fluctuate. When shares are sold, they may be worth more or less than their original cost. Current performance may be lower or higher than the performance data presented. Visit www.gabelli.com for performance information as of the most recent month end. Returns would have been lower had Gabelli Funds, LLC (the “Adviser”) not reimbursed certain expenses of the Fund. Investors should carefully consider the investment objectives, risks, charges, and expenses of the Fund before investing. The Bank of America Merrill Lynch U.S. Convertibles Index is a market value weighted index of all dollar denominated convertible securities that are exchangeable into U.S. equities and have a market value of more than $50 million. The Bloomberg Barclays Balanced U.S. Convertibles Index is a market value weighted index that tracks the performance of publicly placed, dollar denominated convertible securities that are between 40% and 80% sensitive to movements in their underlying common stocks. The S&P 500 Index is an unmanaged indicator of stock market performance. Dividends and interest income are considered reinvested. You cannot invest directly in an index.

 
  (b)

The Fund’s fiscal year ends on September 30.

 
  (c)

Total returns and average annual returns reflect changes in the NAV per share, reinvestment of distributions at NAV on the ex-dividend date, and are net of expenses. Prior to November 1, 2015, reinvestment of distributions at NAV was on the payable date.

 
  (d)

Total returns and average annual returns reflect changes in closing market values on the NYSE MKT and reinvestment of distributions.

 
  (e)

The Bank of America Merrill Lynch U.S. Convertibles Index inception date is December 31, 1994.

 
  (f)

The Bloomberg Barclays Balanced U.S. Convertibles Index inception date is January 1, 2003.

 

 


Summary of Portfolio Holdings (Unaudited)

The following table presents portfolio holdings as a percent of total investments as of September 30, 2016:

Ellsworth Growth and Income Fund Ltd.

 

Health Care

     22.1

Financial Services

     11.2

Computer Software and Services

     10.3

Energy and Utilities

     9.1

Real Estate Investment Trusts

     7.4

Semiconductors

     7.2

Telecommunications

     6.1

Business Services

     4.6

Diversified Industrial

     3.3

Food and Beverage

     3.0

Communications Equipment

     2.6

Consumer Products

     2.5

Transportation

     2.1

Consumer Services

     1.9

Cable and Satellite

     1.8

Computer Hardware

     1.4

Automotive

     1.0

Wireless Communications

     1.0

Agriculture

     0.8

Entertainment

     0.6
  

 

 

 
         100.0
  

 

 

 
 

 

The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission (the “SEC”) for the first and third quarters of each fiscal year on Form N-Q. Shareholders may obtain this information at www.gabelli.com or by calling the Fund at 800-GABELLI (800-422-3554).The Fund’s Form N-Q is available on the SEC’s website at www.sec.gov and may also be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330.

Proxy Voting

The Fund files Form N-PX with its complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to The Gabelli Funds at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

 

2


Ellsworth Growth and Income Fund Ltd.

Schedule of Investments — September 30, 2016

 

Principal

Amount

         

Cost

   

Market

Value

 
   CONVERTIBLE CORPORATE BONDS — 50.3%   
   Automotive — 0.7%     
$  1,000,000      

Tesla Motors Inc.,
1.250%, 03/01/21

   $     877,277      $ 860,000   
     

 

 

   

 

 

 
   Business Services — 2.9%   
  1,876,000      

Blucora Inc.,
4.250%, 04/01/19

     1,821,373        1,798,615   
  1,500,000      

CSG Systems International Inc.,
4.250%, 03/15/36(a)

     1,560,960        1,643,437   
     

 

 

   

 

 

 
        3,382,333        3,442,052   
     

 

 

   

 

 

 
   Cable and Satellite — 1.8%   
  2,000,000      

DISH Network Corp.,
3.375%, 08/15/26(a)

     2,076,757        2,200,000   
     

 

 

   

 

 

 
   Communications Equipment — 2.6%   
  1,000,000      

Harmonic Inc.,
4.000%, 12/01/20(a)

     1,000,000        1,251,250   
  1,500,000      

InterDigital, Inc./PA,
1.500%, 03/01/20

     1,458,142        1,833,750   
     

 

 

   

 

 

 
        2,458,142        3,085,000   
     

 

 

   

 

 

 
   Computer Hardware — 1.4%   
  1,250,000      

Mentor Graphics Corp.,
4.000%, 04/01/31

     1,264,560        1,671,881   
     

 

 

   

 

 

 
   Computer Software and Services — 9.1%   
  1,250,000      

Bottomline Technologies Inc.,
1.500%, 12/01/17

     1,284,001        1,286,719   
  1,000,000      

EnerNOC Inc.,
2.250%, 08/15/19

     764,148        711,250   
  1,250,000      

MercadoLibre Inc.,
2.250%, 07/01/19

     1,324,714        1,955,469   
  1,250,000      

Proofpoint Inc.,
0.750%, 06/15/20

     1,300,637        1,451,563   
  500,000      

PROS Holdings Inc.,
2.000%, 12/01/19

     502,309        495,000   
  1,500,000      

Synchronoss Technologies Inc.,
0.750%, 08/15/19

     1,525,277        1,590,937   
  1,500,000      

The Priceline Group, Inc.,
1.000%, 03/15/18

     1,596,041        2,381,250   
  1,000,000      

Verint Systems Inc.,
1.500%, 06/01/21

     983,360        952,500   
     

 

 

   

 

 

 
        9,280,487        10,824,688   
     

 

 

   

 

 

 
   Consumer Products — 0.5%   
  617,000      

JAKKS Pacific Inc.,
4.875%, 06/01/20(a)

     663,383        652,863   
     

 

 

   

 

 

 
   Consumer Services — 1.9%   
  1,000,000      

Carriage Services Inc.,
2.750%, 03/15/21

     1,017,076        1,176,875   

Principal

Amount

         

Cost

   

Market

Value

 
$  1,000,000      

Extra Space Storage LP,
3.125%, 10/01/35(a)

   $     1,000,000      $     1,081,875   
     

 

 

   

 

 

 
        2,017,076        2,258,750   
     

 

 

   

 

 

 
       Diversified Industrial — 2.5%  
  750,000      

Kaman Corp.,
3.250%, 11/15/17(a)

     768,773        1,002,656   
  1,300,000      

Knowles Corp.,
3.250%, 11/01/21(a)

     1,338,691        1,379,625   
  500,000      

TimkenSteel Corp.,
6.000%, 06/01/21

     510,786        551,875   
     

 

 

   

 

 

 
        2,618,250        2,934,156   
     

 

 

   

 

 

 
       Energy and Utilities — 3.9%  
  1,500,000      

Cheniere Energy Inc.,
4.250%, 03/15/45

     957,712        959,063   
  1,500,000      

Chesapeake Energy Corp.,
5.500%, 09/15/26

     1,509,937        1,500,000   
  500,000      

Clean Energy Fuels Corp.,
5.250%, 10/01/18(a)

     502,488        438,750   
  258,000      

Goodrich Petroleum Corp.,
5.000%, 10/01/32†(b)

     491,764        697   
  1,500,000      

SunPower Corp.,
4.000%, 01/15/23(a)

     1,127,172        1,149,375   
  500,000      

Weatherford International Ltd.,
5.875%, 07/01/21

     507,687        562,187   
     

 

 

   

 

 

 
        5,096,760        4,610,072   
     

 

 

   

 

 

 
       Financial Services — 1.1%  
  500,000      

Blackhawk Network Holdings Inc.,
1.500%, 01/15/22(a)

     509,083        478,750   
  1,000,000      

Encore Capital Group Inc.,
3.000%, 07/01/20

     808,956        836,250   
     

 

 

   

 

 

 
        1,318,039        1,315,000   
     

 

 

   

 

 

 
       Health Care — 11.4%  
  500,000      

Aceto Corp.,
2.000%, 11/01/20(a)

     500,389        458,437   
  750,000      

ANI Pharmaceuticals Inc.,
3.000%, 12/01/19

     831,498        926,250   
  1,026,000      

Array BioPharma Inc.,
3.000%, 06/01/20

     1,064,312        1,214,527   
  500,000      

Horizon Pharma Investment Ltd.,
2.500%, 03/15/22

     564,234        485,937   
  500,000      

Incyte Corp.,
1.250%, 11/15/20

     621,649        969,687   
  333,000      

Intercept Pharmaceuticals Inc.,
3.250%, 07/01/23

     333,000        374,001   
  1,000,000      

Ironwood Pharmaceuticals Inc.,
2.250%, 06/15/22

     1,188,753        1,196,875   
  710,000      

Jazz Investments I Ltd.,
1.875%, 08/15/21

     805,794        723,313   
 

 

See accompanying notes to financial statements.

 

3


Ellsworth Growth and Income Fund Ltd.

Schedule of Investments (Continued) — September 30, 2016

 

 

Principal

Amount

         

Cost

   

Market

Value

 
   CONVERTIBLE CORPORATE BONDS (Continued)   
   Health Care (Continued)   
$  1,000,000      

Molina Healthcare Inc.,
1.625%, 08/15/44

   $ 1,165,083      $ 1,188,750   
  750,000      

NuVasive Inc.,
2.250%, 03/15/21(a)

     769,859        952,500   
  200,000      

OPKO Health Inc.,
3.000%, 02/01/33(a)(c)

     203,202        306,500   
  500,000      

Quidel Corp.,
3.250%, 12/15/20

     515,527        503,750   
  666,000      

Repligen Corp.,
2.125%, 06/01/21

     666,000        761,321   
  750,000      

Teligent Inc.,
3.750%, 12/15/19

     756,548        716,250   
  

The Medicines Co,

    
  1,000,000      

    2.500%, 01/15/22

     1,066,686        1,299,375   
  1,000,000      

    2.750%, 07/15/23(a)

     1,054,958        1,023,125   
  500,000      

Trinity Biotech Investment Ltd.,
4.000%, 04/01/45

     500,000        470,313   
     

 

 

   

 

 

 
          12,607,492          13,570,911   
     

 

 

   

 

 

 
   Real Estate Investment Trusts — 0.8%   
  1,000,000      

Colony Capital Inc.,
5.000%, 04/15/23

     1,031,514        996,250   
     

 

 

   

 

 

 
   Semiconductors — 5.9%   
  550,000      

Advanced Micro Devices Inc.,
2.125%, 09/01/26

     566,233        599,500   
  1,500,000      

Cypress Semiconductor Corp.,
4.500%, 01/15/22(a)

     1,646,996        1,703,437   
  1,250,000      

Inphi Corp.,
1.125%, 12/01/20(a)

     1,362,764        1,592,969   
  1,500,000      

Micron Technology Inc.,
3.000%, 11/15/43

     1,391,027        1,340,625   
  1,500,000      

NXP Semiconductors NV,
1.000%, 12/01/19

     1,618,903        1,773,750   
     

 

 

   

 

 

 
        6,585,923        7,010,281   
     

 

 

   

 

 

 
   Telecommunications — 1.7%   
  1,000,000      

Alaska Communications Systems Group Inc.,
6.250%, 05/01/18

     972,822        987,500   
  1,000,000      

Dycom Industries Inc.,
0.750%, 09/15/21

     1,003,626        1,095,000   
     

 

 

   

 

 

 
        1,976,448        2,082,500   
     

 

 

   

 

 

 
   Transportation — 2.1%   
  1,500,000      

Atlas Air Worldwide Holdings Inc.,
2.250%, 06/01/22

     1,480,833        1,461,563   

Principal

Amount

         

Cost

   

Market

Value

 
$  1,125,000      

Echo Global Logistics Inc.,
2.500%, 05/01/20

   $ 1,138,195      $ 1,064,531   
     

 

 

   

 

 

 
        2,619,028        2,526,094   
     

 

 

   

 

 

 
  

TOTAL CONVERTIBLE
CORPORATE BONDS

       55,873,469          60,040,498   
     

 

 

   

 

 

 

Shares

                   
       CONVERTIBLE PREFERRED STOCKS — 5.6%  
   Agriculture — 0.8%   
  10,000      

Bunge Ltd.,
4.875%

     949,905        951,071   
     

 

 

   

 

 

 
   Business Services — 0.6%   
  694,670      

Amerivon Holdings LLC,
4.000%

     1,500,000        733,636   
  272,728      

Amerivon Holdings LLC, common equity units

     0        16,364   
     

 

 

   

 

 

 
        1,500,000        750,000   
     

 

 

   

 

 

 
   Financial Services — 3.1%   
  1,000      

Bank of America Corp.,
7.250%

     872,030        1,220,840   
  1,250      

Huntington Bancshares, Inc.,
8.500%

     1,552,500        1,812,475   
  500      

Wells Fargo & Co.,
7.500%

     437,200        654,300   
     

 

 

   

 

 

 
        2,861,730        3,687,615   
     

 

 

   

 

 

 
   Real Estate Investment Trusts — 1.1%   
  20,000      

Welltower Inc.,
6.500%, Ser. I

     1,142,341        1,331,000   
     

 

 

   

 

 

 
  

TOTAL CONVERTIBLE PREFERRED STOCKS

     6,453,976        6,719,686   
     

 

 

   

 

 

 
 

 

See accompanying notes to financial statements.

 

4


Ellsworth Growth and Income Fund Ltd.

Schedule of Investments (Continued) — September 30, 2016

 

 

Shares

         

Cost

    

Market

Value

 
   MANDATORY CONVERTIBLE SECURITIES (d) — 17.4%   
   Automotive — 0.3%   
  5,000      

Fiat Chrysler Automobiles N.V.,
7.875%, 12/15/16

   $ 340,528       $ 321,563   
     

 

 

    

 

 

 
   Computer Software and Services — 0.5%   
  5,000      

MTS Systems Corp.,
8.750%, 07/01/19

     507,603         544,750   
     

 

 

    

 

 

 
   Energy and Utilities — 4.3%   
  15,000      

Anadarko Petroleum Corp.,
7.500%, 06/07/18

     575,550         624,750   
  20,000      

Dominion Resources Inc.,
6.375%, 07/01/17

     997,000         995,200   
  10,000      

Dominion Resources, Inc.,
6.750%, 08/15/19

     500,000         499,000   
  8,600      

DTE Energy Co.,
6.500%, 10/01/19

     433,800         447,200   
  16,666      

Hess Corp.,
8.000%, 02/01/19

     836,300         1,097,123   
  25,000      

NextEra Energy Inc.,
6.371%, 09/01/18

     1,246,875         1,476,000   
     

 

 

    

 

 

 
            4,589,525             5,139,273   
     

 

 

    

 

 

 
   Financial Services — 3.7%   
  25,000      

Alibaba - Mandatory Exchange Trust,
5.750%, 06/01/19

     2,630,000         3,229,875   
  24,000      

New York Community Capital Trust V,
6.000%, 11/01/51

     1,043,554         1,202,400   
     

 

 

    

 

 

 
        3,673,554         4,432,275   
     

 

 

    

 

 

 
   Food and Beverage — 1.0%   
  15,000      

Tyson Foods Inc.,
4.750%, 07/15/17

     761,210         1,227,900   
     

 

 

    

 

 

 
   Health Care — 5.9%      
  1,550      

Allergan plc,
5.500%, 03/01/18

     1,537,470         1,273,527   
  15,500      

Amsurg Corp.,
5.250%, 07/01/17

     1,708,242         1,946,490   
  30,000      

Anthem Inc.,
5.250%, 05/01/18

     1,514,723         1,304,100   
  15,000      

Stericycle Inc.,
5.250%, 09/15/18

     1,099,873         994,050   

Shares

         

Cost

    

Market

Value

 
  1,900      

Teva Pharmaceutical Industries Ltd.,
7.000%, 12/15/18

   $ 1,715,550       $ 1,545,287   
     

 

 

    

 

 

 
            7,575,858             7,063,454   
     

 

 

    

 

 

 
   Telecommunications — 0.7%   
  10,000      

Frontier Communications Corp.,
11.125%, 06/29/18

     976,045         839,100   
     

 

 

    

 

 

 
   Wireless Communications — 1.0%   
  15,000      

T-Mobile US Inc.,
5.500%, 12/15/17

     823,400         1,171,050   
     

 

 

    

 

 

 
  

TOTAL MANDATORY CONVERTIBLE SECURITIES

     19,247,723         20,739,365   
     

 

 

    

 

 

 
  

COMMON STOCKS — 26.7%

  

  

Business Services — 1.1%

  

  2,500      

Alliance Data Systems Corp.†

     527,119         536,325   
  20,000      

PayPal Holdings Inc.†

     818,351         819,400   
     

 

 

    

 

 

 
        1,345,470         1,355,725   
     

 

 

    

 

 

 
   Computer Software and Services — 0.7%   
  14,300      

Microsoft Corp.

     388,674         823,680   
     

 

 

    

 

 

 
   Consumer Products — 2.0%   
  23,352      

Newell Brands Inc.

     1,038,704         1,229,716   
  24,000      

Unilever NV

     1,015,518         1,106,400   
     

 

 

    

 

 

 
        2,054,222         2,336,116   
     

 

 

    

 

 

 
   Diversified Industrial — 0.8%   
  34,356      

General Electric Co.

     903,733         1,017,625   
     

 

 

    

 

 

 
   Energy and Utilities — 0.9%   
  7,000      

Chevron Corp.

     757,729         720,440   
  8,500      

ConocoPhillips

     470,715         369,495   
     

 

 

    

 

 

 
        1,228,444         1,089,935   
     

 

 

    

 

 

 
   Entertainment — 0.6%   
  7,500      

The Walt Disney Co.

     227,391         696,450   
     

 

 

    

 

 

 
   Financial Services — 3.3%   
  132,068      

BlackRock Capital Investment Corp.

     1,147,541         1,093,523   
  9,546      

Citigroup Inc.

     510,990         450,857   
  73,146      

Maiden Holdings Ltd.

     1,006,250         928,223   
  16,434      

Synchrony Financial

     415,063         460,152   
  22,200      

Wells Fargo & Co.

     1,104,926         983,016   
     

 

 

    

 

 

 
        4,184,770         3,915,771   
     

 

 

    

 

 

 
   Food and Beverage — 2.0%   
  20,000      

B&G Foods Inc.

     580,383         983,600   
  30,000      

ConAgra Foods Inc.

     954,345         1,413,300   
     

 

 

    

 

 

 
        1,534,728         2,396,900   
     

 

 

    

 

 

 
   Health Care — 4.8%   
  15,000      

AbbVie Inc.

     623,329         946,050   
 

 

See accompanying notes to financial statements.

 

5


Ellsworth Growth and Income Fund Ltd.

Schedule of Investments (Continued) — September 30, 2016

 

 

Shares

         

Cost

    

Market

Value

 
   COMMON STOCKS (Continued)   
   Health Care (Continued)   
  15,000      

Eli Lilly & Co.

   $ 800,267       $ 1,203,900   
  10,000      

Gilead Sciences Inc.

     857,944         791,200   
  22,651      

Merck & Co. Inc.

     839,335         1,413,649   
  40,000      

Pfizer Inc.

     923,760         1,354,800   
     

 

 

    

 

 

 
        4,044,635         5,709,599   
     

 

 

    

 

 

 
   Real Estate Investment Trusts — 5.5%   
  15,000      

American Tower Corp.

     1,342,800         1,699,950   
  16,100      

Crown Castle International Corp.

     1,281,573         1,516,781   
  7,000      

Equinix Inc.

     1,828,368         2,521,750   
  58,700      

Invesco Mortgage Capital Inc.

     899,407         894,001   
     

 

 

    

 

 

 
        5,352,148         6,632,482   
     

 

 

    

 

 

 
   Semiconductors — 1.3%   
  40,000      

Intel Corp.

     937,400         1,510,000   
     

 

 

    

 

 

 
   Telecommunications — 3.7%   
  30,000      

AT&T Inc.

     829,600         1,218,300   
  58,030      

Oclaro Inc.†

     117,132         496,157   
  15,000      

SBA Communications Corp., Cl. A†

     1,470,771         1,682,400   
  20,000      

Verizon Communications Inc.

     697,353         1,039,600   
     

 

 

    

 

 

 
        3,114,856         4,436,457   
     

 

 

    

 

 

 
   TOTAL COMMON STOCKS        25,316,471           31,920,740   
     

 

 

    

 

 

 
    

Cost

    

Market

Value

 

TOTAL INVESTMENTS — 100.0%

   $ 106,891,639       $ 119,420,289   
  

 

 

    

Other Assets and Liabilities (Net)

        4,484,715   
     

 

 

 

NET ASSETS
(12,910,353 common shares outstanding)

   

   $ 123,905,004   
     

 

 

 

NET ASSET VALUE PER SHARE
($123,905,004 ÷ 12,910,353 shares outstanding)

   

   $ 9.60   
     

 

 

 

 

(a)

 

Security exempt from registration under Rule 144A of the Securities Act of 1933, as amended. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. At September 30, 2016, the market value of Rule 144A securities amounted to $17,315,549 or 14.50% of total investments.

(b)

 

Security in default.

(c)

 

At September 30, 2016, the Fund held an investment in a restricted and illiquid security amounting to $306,500 or 0.25% of the Fund’s total investments, which was valued under methods approved by the Board of Trustees as follows:

Principal
  Amount  
  

Issuer

   Acquisition
Date
   Acquisition
Cost
   09/30/16
Carrying
Value
Per Bond
 
$200,000   

OPKO Health Inc., 3.000%, 02/01/33

   01/25/13-
06/26/13
   $204,126      $153.25   

(d)

 

Mandatory Convertible Securities are required to be converted on the dates listed; they generally may be converted prior to these dates at the option of the holder.

 

Non-income producing security.

 

 

See accompanying notes to financial statements.

 

6


Ellsworth Growth and Income Fund Ltd.

 

Statement of Assets and Liabilities

September 30, 2016

 

Assets:

  

Investments, at value (cost $106,891,639)

   $ 119,420,289   

Cash

     7,772,523   

Receivable for investments sold

     431,386   

Dividends and interest receivable

     661,862   

Prepaid expenses

     267   
  

 

 

 

Total Assets

     128,286,327   
  

 

 

 

Liabilities:

  

Payable for Fund shares redeemed

     71,594   

Payable for investments purchased

     4,121,998   

Payable for investment advisory fees

     83,275   

Payable for payroll expenses

     14,921   

Payable for accounting fees

     7,500   

Other accrued expenses

     82,035   
  

 

 

 

Total Liabilities

     4,381,323   
  

 

 

 

Net Assets
(applicable to 12,910,353 shares outstanding)

   $ 123,905,004   
  

 

 

 

Net Assets Consist of:

  

Paid-in capital

   $ 112,904,047   

Distributions in excess of net investment income

     (4,947,093

Accumulated net realized gain on investments

     3,419,400   

Net unrealized appreciation on investments

     12,528,650   
  

 

 

 

Net Assets

   $ 123,905,004   
  

 

 

 

Net Asset Value per Common Share:

  

($123,905,004 ÷ 12,910,353 shares outstanding at $0.001 par value; unlimited number of shares authorized)

     $9.60   

Statement of Operations

For the Year Ended September 30, 2016

 

Investment Income:

  

Dividends (net of foreign withholding taxes of $28,448)

   $ 3,145,106   

Interest

     786,207   
  

 

 

 

Total Investment Income

     3,931,313   
  

 

 

 

Expenses:

  

Investment advisory fees

     891,625   

Trustees’ fees

     110,083   

Legal and audit fees

     70,212   

Shareholder communications expenses

     69,864   

Payroll expenses

     44,759   

Accounting fees

     41,250   

Shareholder services fees

     22,411   

Custodian fees

     15,865   

Tax expense

     1,061   

Miscellaneous expenses

     49,858   
  

 

 

 

Total Expenses

     1,316,988   
  

 

 

 

Less:

  

Expenses paid indirectly by broker
(See Note 3)

     (2,545
  

 

 

 

Net Expenses

     1,314,443   
  

 

 

 

Net Investment Income

     2,616,870   
  

 

 

 

Net Realized and Unrealized Gain on Investments:

  

Net realized gain on investments

     3,547,174   
  

 

 

 

Net change in unrealized appreciation: on investments

     6,263,835   
  

 

 

 

Net Realized and Unrealized Gain on Investments

     9,811,009   
  

 

 

 

Net Increase in Net Assets Resulting from Operations

   $ 12,427,879   
  

 

 

 
 

 

See accompanying notes to financial statements.

 

7


Ellsworth Growth and Income Fund Ltd.

Statement of Changes in Net Assets

 

 

 

    

Year Ended
September 30, 2016

 

Year Ended
September 30, 2015

Operations:

        

Net investment income

     $ 2,616,870       $ 1,812,886  

Net realized gain on investments

       3,547,174         7,675,118  

Net change in unrealized appreciation/depreciation on investments

       6,263,835         (11,920,501 )
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Resulting from Operations

       12,427,879         (2,432,497 )
    

 

 

     

 

 

 

Distributions to Common Shareholders:

        

Net investment income

       (3,340,525 )       (3,208,673 )

Net realized gain

       (6,944,975 )       (5,604,005 )
    

 

 

     

 

 

 

Total Distributions to Common Shareholders

       (10,285,500 )       (8,812,678 )
    

 

 

     

 

 

 

Fund Share Transactions:

        

Net increase in net assets from common shares issued upon reinvestment of distributions

       2,611,488         1,632,409  

Net decrease from repurchase of common shares (includes transaction costs)

       (1,797,002 )       (4,706,210 )
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets from Fund Share Transactions

       814,486         (3,073,801 )
    

 

 

     

 

 

 

Net Increase/(Decrease) in Net Assets Attributable to Common Shareholders

       2,956,865         (14,318,976 )

Net Assets Attributable to Common Shareholders:

        

Beginning of year

       120,948,139         135,267,115  
    

 

 

     

 

 

 

End of year (including undistributed net investment income of $0 and $0, respectively)

     $ 123,905,004       $ 120,948,139  
    

 

 

     

 

 

 

See accompanying notes to financial statements.

 

8


Ellsworth Growth and Income Fund Ltd.

Financial Highlights

 

Selected data for a common share of beneficial interest outstanding throughout each year:

    Year Ended September 30,  
    2016     2015     2014     2013     2012  

Operating Performance:

                                      

Net asset value, beginning of year

     $ 9.45         $ 10.29         $ 9.54         $ 8.48         $ 7.46   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net investment income

       0.20                         0.13           0.14           0.18           0.19   

Net realized and unrealized gain/(loss) on investments

       0.76           (0.35        0.80           1.15           1.08   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total from investment operations

       0.96           (0.22        0.94           1.33           1.27   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Distributions to Common Shareholders:

                                      

Net investment income

       (0.26        (0.25        (0.24        (0.26        (0.25

Net realized gain

       (0.53        (0.43                              
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total distributions to common shareholders

       (0.79        (0.68        (0.24        (0.26        (0.25
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Fund Share Transactions:

                                      

Decrease in net asset value from common shares issued upon reinvestment of distributions

       (0.04        (0.00 )(a)                   (0.01                        

Increase in net asset value from repurchase of common shares (includes transaction costs)

       0.02           0.06           0.05           0.00 (a)           
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Total Fund share transactions

       (0.02        0.06           0.05           (0.01        0.00   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Net Asset Value, End of Year

     $ 9.60         $ 9.45         $ 10.29         $ 9.54         $ 8.48   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

NAV total return†

       10.64        (0.78 )%         10.92        16.45        17.75
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Market value, end of year

     $ 8.19         $ 7.82         $ 8.65         $ 7.87         $ 7.35   
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Investment total return††

       15.98        (2.32 )%         13.03        10.84        18.41
    

 

 

      

 

 

      

 

 

      

 

 

      

 

 

 

Ratios to Average Net Assets and Supplemental Data:

                        

Net assets, end of year (in 000’s)

     $ 123,905         $ 120,948         $ 135,267         $ 128,814         $ 114,154   

Ratio of net investment income to average net assets

       2.19        1.40        1.30        1.90        2.30

Ratio of operating expenses to average net assets before reimbursement

       1.10        1.10        1.10        1.10        1.10

Ratio of operating expenses to average net assets net of reimbursement

       1.10        1.10        1.10        1.10        1.10

Portfolio turnover rate

       38.0        45.0        48.0        48.0        39.0

 

 

For the year ended September 30, 2016, the return was based on net asset value per share, adjusted for reinvestment of distributions at net asset value on the ex-dividend date. For the fiscal years ended on September 30, 2012 through 2015, returns were based on market price on the payable date.

††

Based on market value per share, adjusted for reinvestment of distributions at prices obtained under the Fund’s dividend reinvestment plan.

(a)

Amount represents less than $0.005 per share.

See accompanying notes to financial statements.

 

9


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements

 

1. Organization. Ellsworth Growth and Income Fund Ltd. currently operates as a diversified closed-end management investment company organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). Investment operations commenced in July 1986.

The Fund’s primary investment objective is to provide income and the potential for capital appreciation, which objectives the Fund considers to be relatively equal over the long term due to the nature of the securities in which it invests. The Fund invests primarily in convertible and equity securities.

2. Significant Accounting Policies. As an investment company, the Fund follows the investment company accounting and reporting guidance, which is part of U.S. generally accepted accounting principles (“GAAP”) that may require the use of management estimates and assumptions in the preparation of its financial statements. Actual results could differ from those estimates. The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.

Security Valuation. Portfolio securities listed or traded on a nationally recognized securities exchange or traded in the U.S. over-the-counter market for which market quotations are readily available are valued at the last quoted sale price or a market’s official closing price as of the close of business on the day the securities are being valued. If there were no sales that day, the security is valued at the average of the closing bid and asked prices or, if there were no asked prices quoted on that day, then the security is valued at the closing bid price on that day. If no bid or asked prices are quoted on such day, the security is valued at the most recently available price or, if the Board of Trustees (the “Board”) so determines, by such other method as the Board shall determine in good faith to reflect its fair market value. Portfolio securities traded on more than one national securities exchange or market are valued according to the broadest and most representative market, as determined by Gabelli Funds, LLC (the “Adviser”).

Portfolio securities primarily traded on a foreign market are generally valued at the preceding closing values of such securities on the relevant market, but may be fair valued pursuant to procedures established by the Board if market conditions change significantly after the close of the foreign market, but prior to the close of business on the day the securities are being valued. Debt instruments with remaining maturities of sixty days or less that are not credit impaired are valued at amortized cost, unless the Board determines such amount does not reflect the securities’ fair value, in which case these securities will be fair valued as determined by the Board. Debt instruments having a maturity greater than sixty days for which market quotations are readily available are valued at the average of the latest bid and asked prices. If there were no asked prices quoted on such day, the security is valued using the closing bid price. U.S. government obligations with maturities greater than sixty days are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally using dealer quotations.

Securities and assets for which market quotations are not readily available are fair valued as determined by the Board. Fair valuation methodologies and procedures may include, but are not limited to: analysis and review of available financial and non-financial information about the company; comparisons with the valuation and changes in valuation of similar securities, including a comparison of foreign securities with the equivalent U.S. dollar value American Depositary Receipt securities at the close of the U.S. exchange; and evaluation of any other information that could be indicative of the value of the security.

 

10


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

The inputs and valuation techniques used to measure fair value of the Fund’s investments are summarized into three levels as described in the hierarchy below:

 

   

Level 1 — quoted prices in active markets for identical securities;

 

   

Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.); and

 

   

Level 3 — significant unobservable inputs (including the Board’s determinations as to the fair value of investments).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input both individually and in the aggregate that is significant to the fair value measurement. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of the Fund’s investments in securities and other financial instruments by inputs used to value the Fund’s investments as of September 30, 2016 is as follows:

 

     Valuation Inputs      Total Market Value
at 9/30/16
 
     Level 1
Quoted Prices
     Level 2 Other Significant
Observable Inputs
     Level 3 Significant
Unobservable Inputs
    

INVESTMENTS IN SECURITIES:

           

ASSETS (Market Value):

           

Convertible Corporate Bonds (a)

             $60,040,498                  —                 $  60,040,498     

 

 

Convertible Preferred Stocks:

           

Business Services

             —                  $750,000                 750,000     

Other Industries (a)

     $  5,969,686         —                  —                 5,969,686     

 

 

Total Convertible Preferred Stocks

     5,969,686         —                  750,000                 6,719,686     

 

 

Mandatory Convertible Securities:

           

Automotive

             321,563                  —                 321,563     

Computer Software and Services

             544,750                  —                 544,750     

Other Industries (a)

     19,873,052         —                  —                 19,873,052     

 

 

Total Mandatory Convertible Securities

     19,873,052         866,313                  —                 20,739,365     

 

 

Common Stocks:

           

Other Industries (a)

     31,920,740         —                  —                 31,920,740     

 

 

TOTAL INVESTMENTS IN SECURITIES

     $57,763,478         $60,906,811                  $750,000                 $119,420,289     

 

 

 

 

(a)

Please refer to the Schedule of Investments (“SOI”) for the industry classifications of these portfolio holdings.

The Fund did not have transfers among Level 1, Level 2, and Level 3 during the year ended September 30, 2016.

The Fund’s policy is to recognize transfers among levels as of the beginning of the period.

Additional Information to Evaluate Qualitative Information.

    General. The Fund uses recognized industry pricing services – approved by the Board and unaffiliated with the Adviser – to value most of its securities, and uses broker quotes provided by market makers of securities not valued by these and other recognized pricing sources. Several different pricing feeds are received to value domestic equity securities, international equity securities, preferred equity securities, and fixed income securities. The data within these feeds is ultimately sourced from major stock exchanges and trading systems where these securities trade. The prices supplied by external sources are checked by obtaining quotations or actual transaction prices from market participants. If a price obtained from the pricing source is deemed unreliable, prices will be sought from another pricing service or from a broker/dealer that trades that security or similar securities.

 

11


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

    Fair Valuation. Fair valued securities may be common and preferred equities, warrants, options, rights, and fixed income obligations. Where appropriate, Level 3 securities are those for which market quotations are not available, such as securities not traded for several days, or for which current bids are not available, or which are restricted as to transfer. Among the factors to be considered to fair value a security are recent prices of comparable securities that are publicly traded, reliable prices of securities not publicly traded, the use of valuation models, current analyst reports, valuing the income or cash flow of the issuer, or cost if the preceding factors do not apply. A significant change in the unobservable inputs could result in a lower or higher value in Level 3 securities. The circumstances of Level 3 securities are frequently monitored to determine if fair valuation measures continue to apply.

The Adviser reports quarterly to the Board the results of the application of fair valuation policies and procedures. These may include back testing the prices realized in subsequent trades of these fair valued securities to fair values previously recognized.

Investments in Other Investment Companies. The Fund may invest, from time to time, in shares of other investment companies (or entities that would be considered investment companies but are excluded from the definition pursuant to certain exceptions under the 1940 Act) (the “Acquired Funds”) in accordance with the 1940 Act and related rules. Shareholders in the Fund would bear the pro rata portion of the periodic expenses of the Acquired Funds in addition to the Fund’s expenses. For the year ended September 30, 2016, the Fund’s pro rata portion of the periodic expenses charged by the Acquired Funds was 0.07%.

Foreign Currency Translations. The books and records of the Fund are maintained in U.S. dollars. Foreign currencies, investments, and other assets and liabilities are translated into U.S. dollars at current exchange rates. Purchases and sales of investment securities, income, and expenses are translated at the exchange rate prevailing on the respective dates of such transactions. Unrealized gains and losses that result from changes in foreign exchange rates and/or changes in market prices of securities have been included in unrealized appreciation/depreciation on investments and foreign currency translations. Net realized foreign currency gains and losses resulting from changes in exchange rates include foreign currency gains and losses between trade date and settlement date on investment securities transactions, foreign currency transactions, and the difference between the amounts of interest and dividends recorded on the books of the Fund and the amounts actually received. The portion of foreign currency gains and losses related to fluctuation in exchange rates between the initial purchase trade date and subsequent sale trade date is included in realized gain/(loss) on investments.

Foreign Securities. The Fund may directly purchase securities of foreign issuers. Investing in securities of foreign issuers involves special risks not typically associated with investing in securities of U.S. issuers. The risks include possible revaluation of currencies, the inability to repatriate funds, less complete financial information about companies, and possible future adverse political and economic developments. Moreover, securities of many foreign issuers and their markets may be less liquid and their prices more volatile than securities of comparable U.S. issuers.

Foreign Taxes. The Fund may be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Fund will accrue such taxes and recoveries as applicable, based upon its current interpretation of tax rules and regulations that exist in the markets in which it invests.

 

12


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

Restricted Securities. The Fund may invest up to 15% of its net assets in securities for which the markets are restricted. Restricted securities include securities whose disposition is subject to substantial legal or contractual restrictions. The sale of restricted securities often requires more time and results in higher brokerage charges or dealer discounts and other selling expenses than does the sale of securities eligible for trading on national securities exchanges or in the over-the-counter markets. Restricted securities may sell at a price lower than similar securities that are not subject to restrictions on resale. Securities freely saleable among qualified institutional investors under special rules adopted by the SEC may be treated as liquid if they satisfy liquidity standards established by the Board. The continued liquidity of such securities is not as well assured as that of publicly traded securities, and accordingly the Board will monitor their liquidity. For the restricted securities as of September 30, 2016, please refer to the Schedule of Investments.

Securities Transactions and Investment Income. Securities transactions are accounted for on the trade date with realized gain/(loss) on investments determined by using the identified cost method. Interest income (including amortization of premium and accretion of discount) is recorded on the accrual basis. Premiums and discounts on debt securities are amortized using the effective yield to maturity method. Dividend income is recorded on the ex-dividend date, except for certain dividends from foreign securities that are recorded as soon after the ex-dividend date as the Fund becomes aware of such dividends. For certain securities known as “contingent payment debt instruments,” Federal tax regulations require the Fund to record non-cash, “contingent” interest income in addition to interest income actually received. For the year ended September 30, 2016, the Fund had no contingent interest income.

Custodian Fee Credits. When cash balances are maintained in the custody account, the Fund receives credits which are used to offset custodian fees. The gross expenses paid under the custody arrangement are included in custodian fees in the Statement of Operations with the corresponding expense offset, if any, shown as “Custodian fee credits.

Distributions to Shareholders. Distributions to common shareholders are recorded on the ex-dividend date. Distributions to shareholders are based on income and capital gains as determined in accordance with federal income tax regulations, which may differ from income and capital gains as determined under GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities and foreign currency transactions held by the Fund, timing differences, and differing characterizations of distributions made by the Fund. Distributions from net investment income for federal income tax purposes include net realized gains on foreign currency transactions. These book/tax differences are either temporary or permanent in nature. To the extent these differences are permanent, adjustments are made to the appropriate capital accounts in the period when the differences arise. Permanent differences were primarily due to reclassification of convertible bond premium at disposition. These reclassifications have no impact on the NAV of the Fund. For the year ended September 30, 2016, reclassifications were made to decrease distributions in excess of net investment income by $155,628 and decrease accumulated net realized gain on investments by $155,628.

The Fund declares and pays quarterly distributions from net investment income, capital gains, and paid-in capital. The actual source of the distribution is determined after the end of the year. Distributions during the year may be made in excess of required distributions. To the extent such distributions are made from current earnings and profits, they are considered ordinary income or long term capital gains. The Fund’s current distribution policy may restrict the Fund’s ability to pass through to shareholders all of its net realized long term capital

 

13


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

gains as a Capital Gain Dividend and may cause such gains to be treated as ordinary income. Distributions sourced from paid-in capital should not be considered as dividend yield or the total return from an investment in the Fund. The Board will continue to monitor the Fund’s distribution level, taking into consideration the Fund’s NAV and the financial market environment. The Fund’s distribution policy is subject to modification by the Board at any time.

The tax character of distributions paid during the years ended September 30, 2016 and 2015 was as follows:

 

     Year Ended
September 30, 2016
      Year Ended
September 30, 2015

Distributions paid from:

          

Ordinary income (inclusive of short term capital gains)

     $   3,453,936         $ 3,298,705  

Net long term capital gains

       6,831,564           5,513,973  
    

 

 

       

 

 

 

Total distributions paid

     $ 10,285,500         $ 8,812,678  
    

 

 

       

 

 

 

Provision for Income Taxes. The Fund intends to continue to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). It is the policy of the Fund to comply with the requirements of the Code applicable to regulated investment companies and to distribute substantially all of its net investment company taxable income and net capital gains. Therefore, no provision for federal income taxes is required.

As of September 30, 2016, the components of accumulated earnings on a tax basis were as follows:

 

Net unrealized appreciation on investments and foreign currency translations

   $ 10,100,061   

Undistributed long term capital gains

     900,896   
  

 

 

 

Total

   $ 11,000,957   
  

 

 

 

At September 30, 2016, the temporary differences between book basis and tax basis net unrealized appreciation on investments were primarily due to deferral of losses from wash sales for tax purposes, amortization of bond premiums and discounts, and outstanding prior year and current year partnership adjustments.

The following summarizes the tax cost of investments and the related net unrealized appreciation/depreciation at September 30, 2016:

 

      

        Cost      

      

Gross
Unrealized
Appreciation

      

Gross
Unrealized
Depreciation

      

Net
Unrealized
Appreciation

 

Investments

       $109,320,228           $16,141,341            $(6,041,280)           $10,100,061    

The Fund is required to evaluate tax positions expected to be taken in the course of preparing the Fund’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Income tax and related interest and penalties would be recognized by the Fund as tax expense in the Statement of Operations if the tax positions were deemed not to meet the more-likely-than-not threshold. For the year ended September 30, 2016, the Fund incurred tax expense of $1,061. As of September 30, 2016, the Adviser has reviewed all open tax years and concluded that there was no impact to the Fund’s net assets or results of operations. The Fund’s federal and state tax returns for the prior three fiscal years remain open, subject to examination. On an ongoing basis, the Adviser will monitor the Fund’s tax positions to determine if adjustments to this conclusion are necessary.

 

14


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

3. Agreements and Other Transactions. The Fund has entered into an investment advisory agreement (the “Advisory Agreement”) with the Adviser which provides that the Fund will pay the Adviser a fee, computed daily and paid monthly, equal on an annual basis to 0.80% of the first $100,000,000 of the Fund’s average weekly net assets and 0.55% of the Fund’s average weekly net assets in excess of $100,000,000. In accordance with the Advisory Agreement, the Adviser provides a continuous investment program for the Fund’s portfolio and oversees the administration of all aspects of the Fund’s business and affairs.

During the year ended September 30, 2016, the Fund paid $2,434 in brokerage commissions on security trades to G.research, LLC, Inc., an affiliate of the Adviser.

During the year ended September 30, 2016, the Fund received credits from a designated broker who agreed to pay certain Fund operating expenses. The amount of such expenses paid through this directed brokerage arrangement during this period was $2,545.

Through October 31, 2017, the Adviser has contractually agreed to waive fees or reimburse expenses of the Fund to the extent the total expenses of the Fund (excluding brokers costs, interest, taxes, acquired fund fees and expenses, expenses chargeable to capital, and extraordinary expenses) exceed 1.10% of the weekly average net assets of the Fund.

From October 1 through October 31, 2015, the Fund paid advisory fees to the previous adviser, Dinsmore Capital Management Co., equal to an annual rate of 0.75% on the first $100,000,000 and 0.50% of the excess over $100,000,000 of the Fund’s average weekly net asset value, plus an Administrative Services fee of 0.05% of the Fund’s net asset value.

The cost of calculating the Fund’s NAV per share is a Fund expense pursuant to the Advisory Agreement between the Fund and the Adviser. During the year ended September 30, 2016, the Fund paid or accrued $41,250 to the Adviser in connection with the cost of computing the Fund’s NAV.

The Fund pays each Trustee who is not considered an affiliated person an annual retainer of $8,500 plus $1,000 for each Board meeting attended. Each Trustee is reimbursed by the Fund for any out of pocket expenses incurred in attending meetings. All Board committee members receive $500 per meeting attended. The Lead Independent Trustee receives an annual fee of $1,000 and the Audit and Nominating Committee Chairman each receive an annual fee of $2,000. A Trustee may receive a single meeting fee, allocated among the participating funds, for participation in certain meetings held on behalf of multiple funds. Trustees who are directors or employees of the Adviser or an affiliated company receive no compensation or expense reimbursement from the Fund.

4. Portfolio Securities. Purchases and sales of securities during the year ended September 30, 2016, other than short term securities and U.S. Government obligations, aggregated $44,906,544 and $53,267,365, respectively.

5. Capital. The Fund is authorized to issue an unlimited number of common shares of beneficial interest (par value $0.001). The Board has authorized the repurchase of its shares in the open market when the shares are trading at a discount of 10.0% or more (or such other percentage as the Board may determine from time to time) from the NAV of the shares. During the year ended September 30, 2016, the Fund repurchased and retired 223,600 shares in the open market at a cost of $1,795,502 and an average discount of approximately

 

15


Ellsworth Growth and Income Fund Ltd.

Notes to Financial Statements (Continued)

 

 

14.10% from its NAV. During the year ended September 30, 2015, the Fund repurchased and retired 533,800 shares in the open market at a cost of $4,706,210 and an average discount of approximately 14.85% from its NAV.

Transactions in common shares of beneficial interest for the years ended September 30, 2016 and 2015 were as follows:

 

       Year Ended
September 30, 2016
     Year Ended
September 30, 2015
 
      

Shares

    

Amount

    

Shares

    

Amount

 

Net increase in net assets from common shares issued upon reinvestment of distributions

       335,236       $ 2,611,488         191,825       $ 1,632,411   

Net decrease from repurchase of common shares (includes transaction costs)

       (223,600      (1,797,002      (533,800      (4,706,210
    

 

 

    

 

 

    

 

 

    

 

 

 

Net increase/(decrease) from transactions in Fund shares

       111,636       $ 814,486         (341,975    $ (3,073,799
    

 

 

    

 

 

    

 

 

    

 

 

 

6. Convertible Securities Concentration. It is the Fund’s policy to invest at least 65% of its assets in convertible securities. Although convertible securities do derive part of their value from that of the securities into which they are convertible, they are not considered derivative financial instruments. However, the Fund’s mandatory convertible securities include features which render them more sensitive to price changes of their underlying securities. Thus they expose the Fund to greater downside risk than traditional convertible securities, but generally less than that of the underlying common stock.

7. Indemnifications. The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts. Management has reviewed the Fund’s existing contracts and expects the risk of loss to be remote.

8. Subsequent Events. Management has evaluated the impact on the Fund of all subsequent events occurring through the date the financial statements were issued and has determined that there were no subsequent events requiring recognition or disclosure in the financial statements.

 

16


Ellsworth Growth and Income Fund Ltd.

Report of Independent Registered Public Accounting Firm

 

To the Shareholders and Board of Directors

Ellsworth Growth and Income Fund Ltd.:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments of the Ellsworth Growth and Income Fund as of September 30, 2016, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of September 30, 2016, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers were not received. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Ellsworth Growth and Income Fund as of September 30, 2016, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for each of the five years in the period then ended, presented in conformity with accounting principles generally accepted in the United States of America.

Tait, Weller & Baker LLP

Philadelphia, Pennsylvania

November 22, 2016

 

17


Ellsworth Growth and Income Fund Ltd.

Additional Fund Information (Unaudited)

 

The business and affairs of the Fund are managed under the direction of the Fund’s Board of Trustees. Information pertaining to the Trustees and officers of the Fund is set forth below. The Fund’s Statement of Additional Information includes additional information about the Fund’s Trustees and is available without charge, upon request, by calling 800-GABELLI (800-422-3554) or by writing to Ellsworth Growth and Income Fund Ltd. at One Corporate Center, Rye, NY 10580-1422.

 

Name, Position(s)

Address1

and Age

 

Term of Office

and Length of

Time Served2

 

Number of Funds

in Fund Complex

Overseen by Trustee3

 

Principal Occupation(s)

During Past Five Years

 

Other Directorships

Held by Trustee4

INTERESTED TRUSTEES5:

       

Mario J. Gabelli, CFA

Trustee and Chairman

Age: 74

  Since 2015**   30   Chairman, Chief Executive Officer, and Chief Investment Officer–Value Portfolios of GAMCO Investors, Inc. and Chief Investment Officer–Value Portfolios of Gabelli Funds, LLC and GAMCO Asset Management Inc.; Director/ Trustee or Chief Investment Officer of other registered investment companies within the Gabelli/GAMCO Fund Complex; Chief Executive Officer of GGCP, Inc.; Chief Executive Officer and Chairman of the Board of Associated Capital Group, Inc.   Director of Morgan Group Holdings, Inc. (holding company); Chairman of the Board and Chief Executive Officer of LICT Corp. (multimedia and communication services company); Director of CIBL, Inc. (broadcasting and wireless communications); Director of ICTC Group Inc. (communications); Director of RLJ Acquisition Inc. (blank check company) (2011-2012)

James A. Dinsmore, CFA

Trustee and President

Age: 33

  Since 2015***   1   Portfolio Manager of closed-end funds within the Gabelli/GAMCO Fund Complex; President of the Ellsworth Growth and Income Fund Ltd.; Executive Vice President of the Bancroft Fund Ltd. (2013-2015); Executive Vice President of the Ellsworth Growth and Income Fund Ltd. (January 2013-February 2014); Vice President of the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. (2009 through 2012)  

INDEPENDENT TRUSTEES6:

       

Kinchen C. Bizzell, CFA

Trustee

Age: 62

  Since 2008*   2   Managing Director of CAVU Securities (securities broker-dealer); Investor Relations Managing Director (1998-2013) and Senior Counselor (after 2013) at Burson-Marstellar (global public relations and communications) (2004-2013)  

Elizabeth C. Bogan, PhD

Trustee

Age: 72

  Since 1986***   2   Senior Lecturer in Economics at Princeton University  

James P. Conn

Trustee

Age: 78

  Since 2015*   22   Former Managing Director and Chief Investment Officer of Financial Security Assurance Holdings Ltd. (1992-1998)  

Frank J. Fahrenkopf, Jr.

Trustee

Age: 77

  Since 2015*   10   Co-Chairman of the Commission on Presidential Debates; Former President and Chief Executive Officer of the American Gaming Association (1995-2013); Former Chairman of the Republican National Committee (1983-1989)   Director of First Republic Bank (banking)

 

18


Ellsworth Growth and Income Fund Ltd.

Additional Fund Information (Continued) (Unaudited)

 

 

Name, Position(s)

Address1

and Age

 

Term of Office

and Length of

Time Served2

 

Number of Funds

in Fund Complex

Overseen by Trustee3

 

Principal Occupation(s)

During Past Five Years

 

Other Directorships

Held by Trustee4

Daniel D. Harding, CFA

Trustee

Age: 64

  Since 2007**   3   Managing General Partner of the Global Equity Income Fund (private investment fund); Director of TRC (private asset management); General Partner of Latitude Capital Partners, LLC (private investment); Director of Legg Mason Investment Counsel, LLC and Chair of Investment Committee (2010-2012)   Morristown Medical Center, Atlantic Health Systems, Ocean Reef Community Foundations and Ocean Reef Medical Center Foundation

Michael J. Melarkey

Trustee

Age: 66

  Since 2015*   8   Of Counsel McDonald Carano Wilson LLP; Partner in the law firm of Avansino, Melarkey, Knobel, Mulligan & McKenzie (1976-2015); Owner in Pioneer Crossing Casino Group   Director of Southwest Gas Corporation (natural gas utility)

Kuni Nakamura

Trustee

Age: 48

  Since 2015**   19   President of Advanced Polymer, Inc. (chemical manufacturing company); President of KEN Enterprises, Inc. (real estate)  

Nicholas W. Platt

Trustee

Age: 62

  Since 1997**   2   Private Investor; Member of NYSE MKT LLC Committee on Securities; currently Mayor of Township of Harding, New Jersey; Managing Director of FTI Consulting Inc. (international consulting company) (March 2009-May 2011)  

Anthonie C. van Ekris7

Trustee

Age: 82

  Since 2015***   22   Chairman and Chief Executive Officer of BALMAC International, Inc. (global import/ export company)  

 

Name, Position(s)

Address1

and Age

    

Term of Office

and Length of
Time Served8

    

Principal Occupation(s)

During Past Five Years

OFFICERS:

         

James A. Dinsmore, CFA

President

Age: 33

     Since 2015      Portfolio Manager of closed-end funds within the Gabelli/GAMCO Fund Complex; President of the Ellsworth Growth and Income Fund Ltd.; Executive Vice President of the Bancroft Fund Ltd. (2013-2015); Executive Vice President of the Ellsworth Growth and Income Fund Ltd. (January 2013-February 2014); Vice President of the Bancroft Fund Ltd. and the Ellsworth Growth and Income Fund Ltd. (2009 through 2012)

Agnes Mullady

Treasurer

Age: 58

     Since 2015      President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010; Chief Executive Officer of G.distributors, LLC since 2010; Senior Vice President of GAMCO Investors, Inc. since 2009; Vice President of Gabelli Funds, LLC since 2007; Officer of all of the registered investment companies within the Gabelli/GAMCO Fund Complex

Andrea R. Mango

Vice President

and Secretary

Age: 44

     Since 2015      Vice President of GAMCO Investors, Inc. since 2016; Counsel of Gabelli Funds, LLC since 2013; Secretary of all registered investment companies within the Gabelli/GAMCO Fund Complex since 2013; Vice President of all closed-end funds within the Gabelli/GAMCO Fund Complex since 2014; Corporate Vice President within the Corporate Compliance Department of New York Life Insurance Company, 2011-2013; Vice President and Counsel of Deutsche Bank, 2006-2011

 

19


Ellsworth Growth and Income Fund Ltd.

Additional Fund Information (Continued) (Unaudited)

 

 

Name, Position(s)

Address1

and Age

    

Term of Office

and Length of
Time Served8

    

Principal Occupation(s)

During Past Five Years

Laurissa M. Martire

Vice President and Ombudsman

Age: 40

     Since 2015      Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Vice President of GAMCO Investors, Inc. since 2016

Wayne C. Pinsent

Vice President and Ombudsman

Age: 30

     Since February 2016      Vice President and/or Ombudsman of closed-end funds within the Gabelli/GAMCO Fund Complex; Research Analyst for G.research, LLC since 2010; Marketing for GAMCO Investors Inc. 2008-2010

Richard J. Walz

Chief Compliance Officer

Age: 57

     Since 2015      Chief Compliance Officer of all of the registered investment companies within the Gabelli/ GAMCO Fund Complex since 2013; Chief Compliance Officer of AEGON USA Investment Management, 2011-2013; Chief Compliance Officer of Cutwater Asset Management, 2004-2011

 

1

Address: One Corporate Center, Rye, NY 10580-1422, unless otherwise noted.

2

The Fund’s Board of Trustees is divided into three classes, each class having a term of three years. Each year the term of office of one class expires and the successor or successors elected to such class serve for a three year term. The three year term for each class expires as follows:

  *

— Term expires at the Fund’s 2017 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  **

— Term expires at the Fund’s 2018 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  ***

— Term expires at the Fund’s 2019 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

  

Each officer will hold office for an indefinite term until the date he or she resigns or retires or until his or her successor is elected and qualified.

3

The “Fund Complex” or the “Gabelli/GAMCO Fund Complex” includes all the U.S. registered investment companies that are considered part of the same fund complex as the Fund because they have common or affiliated investment advisers.

4

This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934, as amended, i.e., public companies, or other investment companies registered under the 1940 Act.

5

“Interested person” of the Fund, as defined in the 1940 Act. Messrs. Gabelli and Dinsmore are each considered to be an “interested person” of the Fund because of their affiliation with the Fund’s Adviser.

6

Trustees who are not considered to be “interested persons” of the Fund as defined in the 1940 Act are considered to be “Independent” Trustees.

7

Mr. van Ekris is an independent director of Gabelli International Ltd., Gabelli Fund LDC, Gama Capital Opportunities Master Ltd., and GAMCO International SICAV, which may be deemed to be controlled by Mario J. Gabelli and/or affiliates and, in that event, would be deemed to be under common control with the Fund’s Adviser.

8

Each officer will hold office for an indefinite term until the date he or she resigns and retires or until his or her successor is duly elected and qualifies.

 

20


ELLSWORTH GROWTH AND INCOME FUND LTD.

INCOME TAX INFORMATION (Unaudited)

September 30, 2016

Cash Dividends and Distributions

 

   

Payable

Date

   Record
Date
     Total Amount
Paid
Per Share (a)
     Ordinary
Investment

Income (a)
     Long Term
Capital
Gains (a)
     Dividend
Reinvestment
Price
 

Common Stock

                
 

                     12/11/15

                         11/12/15                             $0.46700                             $0.01700                             $0.45000                             $9.41000   
 

02/25/16

     02/11/16         0.11000         0.08260         0.02740         8.22000   
 

05/23/16

     05/16/16         0.11000         0.08260         0.02740         8.95000   
 

08/24/16

     08/17/16         0.11000         0.08260         0.02740         9.56000   
       

 

 

    

 

 

    

 

 

    
          $0.79700         $0.26480         $0.53220      

Corporate Dividends Received Deduction, Qualified Dividend Income, and U.S. Government Securities Income

For the year ended September 30, 2016, the Fund paid to shareholders, ordinary income distributions (inclusive of short term capital gains) totaling $0.265 per share, and long term capital gains totaling $6,831,564, or the maximum allowable. The distribution of long term capital gains has been designated as a capital gain dividend by the Fund’s Board of Trustees. For the year ended September 30, 2016, 57.88% of the ordinary income distribution qualifies for the dividends received deduction available to corporations. The Fund designates 66.21% of the ordinary income distribution as qualified dividend income pursuant to the Jobs and Growth Tax Relief Reconciliation Act of 2003. The Fund designates 16.89% of the ordinary income distribution as qualified interest income pursuant to the Tax Relief, Unemployment Reauthorization, and Job Creation Act of 2010.

Historical Distribution Summary

 

       Investment
Income (b)
       Short Term
Capital
Gains (b)
       Long Term
Capital
Gains
       Total
Distributions (a)
 

Common Shares

                   

2016

                                   $0.25610                                       $0.00870                                       $0.53220                                       $0.79700   

 

(a) Total amounts may differ due to rounding.

(b) Taxable as ordinary income for Federal tax purposes.

 

All designations are based on financial information available as of the date of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code and the regulations thereunder.

 

21


ELLSWORTH GROWTH AND INCOME FUND LTD.

AND YOUR PERSONAL PRIVACY

Who are we?

The Ellsworth Growth and Income Fund Ltd. (the “Fund”) is a closed-end management investment company registered with the Securities and Exchange Commission under the Investment Company Act of 1940. We are managed by Gabelli Funds, LLC, which is affiliated with GAMCO Investors, Inc. GAMCO Investors, Inc. is a publicly held company that has subsidiaries that provide investment advisory services for a variety of clients.

What kind of non-public information do we collect about you if you become a Fund shareholder?

When you purchase shares of the Fund on the New York Stock Exchange, you have the option of registering directly with our transfer agent in order, for example, to participate in our dividend reinvestment plan.

 

   

Information you give us on your application form. This could include your name, address, telephone number, social security number, bank account number, and other information.

 

 

   

Information about your transactions with us. This would include information about the shares that you buy or sell; it may also include information about whether you sell or exercise rights that we have issued from time to time. If we hire someone else to provide services — like a transfer agent — we will also have information about the transactions that you conduct through them.

 

What information do we disclose and to whom do we disclose it?

We do not disclose any non-public personal information about our customers or former customers to anyone other than our affiliates, our service providers who need to know such information, and as otherwise permitted by law. If you want to find out what the law permits, you can read the privacy rules adopted by the Securities and Exchange Commission. They are in volume 17 of the Code of Federal Regulations, Part 248. The Commission often posts information about its regulations on its website, www.sec.gov.

What do we do to protect your personal information?

We restrict access to non-public personal information about you to the people who need to know that information in order to provide services to you or the Fund and to ensure that we are complying with the laws governing the securities business. We maintain physical, electronic, and procedural safeguards to keep your personal information confidential.


Ellsworth Growth and Income Fund Ltd.

One Corporate Center

Rye, NY 10580-1422

Portfolio Management Team Biographies

Thomas H. Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. From 1996 to 2015, Mr. Dinsmore was Chairman and CEO of Dinsmore Capital Management; CEO and Portfolio Manager of Bancroft Fund Ltd; and CEO, Portfolio Manager, and co-founder of Ellsworth Growth and Income Fund Ltd. He received a B.S. in Economics from the Wharton School of Business and an M.A. in Economics from Fairleigh Dickinson University.

Jane D. O’Keeffe joined Gabelli Funds, LLC in 2015. She currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. From 1996 to 2015, Ms. O’Keeffe was President and Director of Dinsmore Capital Management where she was also a Portfolio Manager of Bancroft Fund Ltd. and Ellsworth Growth and Income Fund Ltd. Prior to joining Dinsmore Capital Management, Ms. O’Keeffe held positions of increasing responsibilities at IDS Progressive Fund, Soros Fund Management Company, Simms Capital Management, and Fiduciary Trust International. She earned a B.A. from the University of New Hampshire and attended the Lubin Graduate School of Business at Pace University.

James A. Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. He currently serves as a portfolio manager of Gabelli Funds, LLC and manages several funds within the Gabelli/GAMCO Funds Complex. Mr. Dinsmore received a B.A. in Economics from Cornell University and an M.B.A. degree from Rutgers University.

 

 

We have separated the portfolio managers’ commentary from the financial statements and investment portfolio due to corporate governance regulations stipulated by the Sarbanes-Oxley Act of 2002. We have done this to ensure that the content of the portfolio managers’ commentary is unrestricted. Both the commentary and the financial statements, including the portfolio of investments, will be available on our website at www.gabelli.com.

The Net Asset Value per share appears in the Publicly Traded Funds column, under the heading “Specialized Equity Funds,” in Monday’s The Wall Street Journal. It is also listed in Barron’s Mutual Funds/Closed End Funds section under the heading “Convertible Securities Funds.”

The Net Asset Value per share may be obtained each day by calling (914) 921-5070 or visiting www.gabelli.com.

The NASDAQ symbol for the Net Asset Value is “XECFX.”

 

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Fund may from time to time purchase its common shares in the open market when the Fund’s shares are trading at a discount of 7.5% or more from the net asset value of the shares.


ELLSWORTH GROWTH AND INCOME FUND LTD.

One Corporate Center

Rye, NY 10580-1422

t   800-GABELLI (800-422-3554)

f   914-921-5118

e  info@gabelli.com

    GABELLI.COM

 

 

 

TRUSTEES

Mario J. Gabelli, CFA

Chairman and

Chief Executive Officer,

GAMCO Investors, Inc.

Chairman and

Chief Executive Officer,

Associated Capital Group Inc.

Kinchen C. Bizzell, CFA

Managing Director,

CAVU Securities

Elizabeth C. Bogan, Ph.D

Senior Lecturer, Economics

Princeton University

James P. Conn

Former Managing Director &

Chief Investment Officer,

Financial Security Assurance

Holdings Ltd.

James A. Dinsmore, CFA

Portfolio Manager,

Gabelli Funds LLC

Frank J. Fahrenkopf

Former President &

Chief Executive Officer,

American Gaming Association

Daniel D. Harding, CFA

Managing General Director,

Global Equity Income Fund

Michael J. Melarkey

Of Counsel,

McDonald Carano Wilson LLP

Kuni Nakamura

President,

Advanced Polymer, Inc.

Nicholas W. Platt

Former Managing Director,

FTI Consulting Inc.

Anthonie C. van Ekris

Chairman,

BALMAC International Inc.

OFFICERS

James A. Dinsmore, CFA

President

Agnes Mullady

Treasurer

Andrea R. Mango

Secretary & Vice President

Laurissa M. Martire

Vice President & Ombudsman

Wayne C. Pinsent, CFA

Vice President & Ombudsman

Richard J. Walz

Chief Compliance Officer

INVESTMENT ADVISER

Gabelli Funds, LLC

CUSTODIAN

State Street Bank and Trust

Company

COUNSEL

Skadden, Arps, Slate, Meagher & Flom LLP

TRANSFER AGENT AND

REGISTRAR

American Stock Transfer and

Trust Company

 

 

 

ECF Q3/2016

LOGO

 


Item 2. Code of Ethics.

 

  (a)

The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.

 

  (c)

There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description.

 

  (d)

The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions.

Item 3. Audit Committee Financial Expert.

As of the end of the period covered by the report, the registrant’s Board of Directors has determined that Daniel D. Harding is qualified to serve as an audit committee financial expert serving on its audit committee and that he is “independent,” as defined by Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

Audit Fees

 

  (a)

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $40,000 for 2015 and $40,000 for 2016.


Audit-Related Fees

 

(b)

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item are $0 for 2015 and $0 for 2016.

Tax Fees

 

(c)

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $3,700 for 2015 and $3,700 for 2016.

All Other Fees

 

(d)

 

The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2015 and $0 for 2016.

(e)(1)

 

Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

 

Pre-Approval Policies and Procedures. The Audit Committee (“Committee”) of the registrant is responsible for pre-approving (i) all audit and permissible non-audit services to be provided by the independent registered public accounting firm to the registrant and (ii) all permissible non-audit services to be provided by the independent registered public accounting firm to the Adviser, Gabelli Funds, LLC, and any affiliate of Gabelli Funds, LLC (“Gabelli”) that provides services to the registrant (a “Covered Services Provider”) if the independent registered public accounting firm’s engagement related directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility to pre-approve any such audit and permissible non-audit services to the Chairperson of the Committee, and the Chairperson must report to the Committee, at its next regularly scheduled meeting after the Chairperson’s pre-approval of such services, his or her decision(s). The Committee may also establish detailed pre-approval policies and procedures for pre-approval of such services in accordance with applicable laws, including the delegation of some or all of the Committee’s pre-approval responsibilities to the other persons (other than Gabelli or the registrant’s officers). Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the permissible non-audit services were not recognized by the registrant at the time of the engagement to be non-audit services; and (ii) such services are promptly brought to the attention of the Committee and approved by the Committee or Chairperson prior to the completion of the audit.

(e)(2)

 

The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:

(b) N/A


(c) 100%

(d) N/A

 

  (f)

The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

 

  (g)

The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $3,700 for 2015 and $3,700 for 2016.

 

  (h)

The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.

Item 5. Audit Committee of Listed registrants.

Not applicable.

Item 6. Investments.

 

(a) Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form.

 

(b)

Not applicable.

 

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

The Proxy Voting Policies are attached herewith.


SECTION HH

The Voting of Proxies on Behalf of Clients

Rules 204(4)-2 and 204-2 under the Investment Advisers Act of 1940 and Rule 30b1-4 under the Investment Company Act of 1940 require investment advisers to adopt written policies and procedures governing the voting of proxies on behalf of their clients.

These procedures will be used by GAMCO Asset Management Inc., Gabelli Funds, LLC, Gabelli Securities, Inc., and Teton Advisors, Inc. (collectively, the “Advisers”) to determine how to vote proxies relating to portfolio securities held by their clients, including the procedures that the Advisers use when a vote presents a conflict between the interests of the shareholders of an investment company managed by one of the Advisers, on the one hand, and those of the Advisers; the principal underwriter; or any affiliated person of the investment company, the Advisers, or the principal underwriter. These procedures will not apply where the Advisers do not have voting discretion or where the Advisers have agreed to with a client to vote the client’s proxies in accordance with specific guidelines or procedures supplied by the client (to the extent permitted by ERISA).

 

  I.

Proxy Voting Committee

The Proxy Voting Committee was originally formed in April 1989 for the purpose of formulating guidelines and reviewing proxy statements within the parameters set by the substantive proxy voting guidelines originally published in 1988 and updated periodically, a copy of which are appended as Exhibit A. The Committee will include representatives of Research, Administration, Legal, and the Advisers. Additional or replacement members of the Committee will be nominated by the Chairman and voted upon by the entire Committee.

Meetings are held on an as needed basis to form views on the manner in which the Advisers should vote proxies on behalf of their clients.

In general, the Director of Proxy Voting Services, using the Proxy Guidelines, recommendations of Institutional Shareholder Services Inc. (“ISS”), Glass Lewis & Co., LLC (“Glass Lewis”) other third-party services and the analysts of G.research, Inc., will determine how to vote on each issue. For non-controversial matters, the Director of Proxy Voting Services may vote the proxy if the vote is: (1) consistent with the recommendations of the issuer’s Board of Directors and not contrary to the Proxy Guidelines; (2) consistent with the recommendations of the issuer’s Board of Directors and is a non-controversial issue not covered by the Proxy Guidelines; or (3) the vote is contrary to the recommendations of the Board of Directors but is consistent with the Proxy Guidelines. In those instances, the Director of Proxy Voting Services or the


Chairman of the Committee may sign and date the proxy statement indicating how each issue will be voted.

All matters identified by the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department as controversial, taking into account the recommendations of ISS, Glass Lewis, or other third party services and the analysts of G.research, Inc., will be presented to the Proxy Voting Committee. If the Chairman of the Committee, the Director of Proxy Voting Services or the Legal Department has identified the matter as one that (1) is controversial; (2) would benefit from deliberation by the Proxy Voting Committee; or (3) may give rise to a conflict of interest between the Advisers and their clients, the Chairman of the Committee will initially determine what vote to recommend that the Advisers should cast and the matter will go before the Committee.

 

  A.

Conflicts of Interest.

The Advisers have implemented these proxy voting procedures in order to prevent conflicts of interest from influencing their proxy voting decisions. By following the Proxy Guidelines, as well as the recommendations of ISS, Glass Lewis, other third-party services and the analysts of G.research, the Advisers are able to avoid, wherever possible, the influence of potential conflicts of interest. Nevertheless, circumstances may arise in which one or more of the Advisers are faced with a conflict of interest or the appearance of a conflict of interest in connection with its vote. In general, a conflict of interest may arise when an Adviser knowingly does business with an issuer, and may appear to have a material conflict between its own interests and the interests of the shareholders of an investment company managed by one of the Advisers regarding how the proxy is to be voted. A conflict also may exist when an Adviser has actual knowledge of a material business arrangement between an issuer and an affiliate of the Adviser.

In practical terms, a conflict of interest may arise, for example, when a proxy is voted for a company that is a client of one of the Advisers, such as GAMCO Asset Management Inc. A conflict also may arise when a client of one of the Advisers has made a shareholder proposal in a proxy to be voted upon by one or more of the Advisers. The Director of Proxy Voting Services, together with the Legal Department, will scrutinize all proxies for these or other situations that may give rise to a conflict of interest with respect to the voting of proxies.

 

  B.

Operation of Proxy Voting Committee

For matters submitted to the Committee, each member of the Committee will receive, prior to the meeting, a copy of the proxy statement, any relevant third party research, a summary of any views provided by the


Chief Investment Officer and any recommendations by G.research, Inc. analysts. The Chief Investment Officer or the G.research, Inc. analysts may be invited to present their viewpoints. If the Director of Proxy Voting Services or the Legal Department believe that the matter before the committee is one with respect to which a conflict of interest may exist between the Advisers and their clients, counsel will provide an opinion to the Committee concerning the conflict. If the matter is one in which the interests of the clients of one or more of the Advisers may diverge, counsel will so advise and the Committee may make different recommendations as to different clients. For any matters where the recommendation may trigger appraisal rights, counsel will provide an opinion concerning the likely risks and merits of such an appraisal action.

Each matter submitted to the Committee will be determined by the vote of a majority of the members present at the meeting. Should the vote concerning one or more recommendations be tied in a vote of the Committee, the Chairman of the Committee will cast the deciding vote. The Committee will notify the proxy department of its decisions and the proxies will be voted accordingly.

Although the Proxy Guidelines express the normal preferences for the voting of any shares not covered by a contrary investment guideline provided by the client, the Committee is not bound by the preferences set forth in the Proxy Guidelines and will review each matter on its own merits. The Advisers subscribe to ISS and Glass Lewis which supply current information on companies, matters being voted on, regulations, trends in proxy voting and information on corporate governance issues.

If the vote cast either by the analyst or as a result of the deliberations of the Proxy Voting Committee runs contrary to the recommendation of the Board of Directors of the issuer, the matter will be referred to legal counsel to determine whether an amendment to the most recently filed Schedule 13D is appropriate.

 

  II.

Social Issues and Other Client Guidelines

If a client has provided special instructions relating to the voting of proxies, they should be noted in the client’s account file and forwarded to the proxy department. This is the responsibility of the investment professional or sales assistant for the client. In accordance with Department of Labor guidelines, the Advisers’ policy is to vote on behalf of ERISA accounts in the best interest of the plan participants with regard to social issues that carry an economic impact. Where an account is not governed by ERISA, the Advisers will vote shares held on behalf of the client in a manner consistent with any individual investment/voting guidelines provided by the client. Otherwise the Advisers may abstain with respect to those shares.

Specific to the Gabelli ESG Fund, the Proxy Voting Committee will rely on the advice of the portfolio managers of the Gabelli ESG Fund to provide voting recommendations on the securities held in the portfolio.


  III.

Client Retention of Voting Rights

If a client chooses to retain the right to vote proxies or if there is any change in voting authority, the following should be notified by the investment professional or sales assistant for the client.

- Operations

- Proxy Department

- Investment professional assigned to the account

In the event that the Board of Directors (or a Committee thereof) of one or more of the investment companies managed by one of the Advisers has retained direct voting control over any security, the Proxy Voting Department will provide each Board Member (or Committee member) with a copy of the proxy statement together with any other relevant information including recommendations of ISS or other third-party services.

 

  IV.

Proxies of Certain Non-U.S. Issuers

Proxy voting in certain countries requires “share-blocking.” Shareholders wishing to vote their proxies must deposit their shares shortly before the date of the meeting with a designated depository. During the period in which the shares are held with a depository, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares are returned to the clients’ custodian. Absent a compelling reason to the contrary, the Advisers believe that the benefit to the client of exercising the vote is outweighed by the cost of voting and therefore, the Advisers will not typically vote the securities of non-U.S. issuers that require share-blocking.

In addition, voting proxies of issuers in non-US markets may also give rise to a number of administrative issues to prevent the Advisers from voting such proxies. For example, the Advisers may receive the notices for shareholder meetings without adequate time to consider the proposals in the proxy or after the cut-off date for voting. In these cases the Advisers will look to Glass Lewis or other third party service for recommendations on how to vote. Other markets require the Advisers to provide local agents with power of attorney prior to implementing their respective voting instructions on the proxy. Although it is the Advisers’ policies to vote the proxies for its clients for which they have proxy voting authority, in the case of issuers in non-US markets, we vote client proxies on a best efforts basis.

 

  V.

Voting Records

The Proxy Voting Department will retain a record of matters voted upon by the Advisers for their clients. The Advisers will supply information on how they voted a client’s proxy upon request from the client.


The complete voting records for each registered investment company (the “Fund”) that is managed by the Advisers will be filed on Form N-PX for the twelve months ended June 30th, no later than August 31st of each year. A description of the Fund’s proxy voting policies, procedures, and how the Fund voted proxies relating to portfolio securities is available without charge, upon request, by (i) calling 800-GABELLI (800-422-3554); (ii) writing to Gabelli Funds, LLC at One Corporate Center, Rye, NY 10580-1422; or (iii) visiting the SEC’s website at www.sec.gov.

The Advisers’ proxy voting records will be retained in compliance with Rule 204-2 under the Investment Advisers Act.

 

  VI.

Voting Procedures

1. Custodian banks, outside brokerage firms and clearing firms are responsible for forwarding proxies directly to the Advisers.

Proxies are received in one of two forms:

 

   

Shareholder Vote Instruction Forms (“VIFs”) - Issued by Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge is an outside service contracted by the various institutions to issue proxy materials.

   

Proxy cards which may be voted directly.

2. Upon receipt of the proxy, the number of shares each form represents is logged into the proxy system, electronically or manually, according to security.

3. Upon receipt of instructions from the proxy committee, the votes are cast and recorded for each account.

Records have been maintained on the ProxyEdge system.

ProxyEdge records include:

Security Name and Cusip Number

Date and Type of Meeting (Annual, Special, Contest)

Client Name

Adviser or Fund Account Number

Directors’ Recommendation

How the Adviser voted for the client on item

4. VIFs are kept alphabetically by security. Records for the current proxy season are located in the Proxy Voting Department office. In preparation for the upcoming season, files are transferred to an offsite storage facility during January/February.

5. If a proxy card or VIF is received too late to be voted in the conventional matter, every attempt is made to vote including:


   

When a solicitor has been retained, the solicitor is called. At the solicitor’s direction, the proxy is faxed or sent electronically.

   

In some circumstances VIFs can be faxed or sent electronically to Broadridge up until the time of the meeting.

6. In the case of a proxy contest, records are maintained for each opposing entity.

7. Voting in Person

a) At times it may be necessary to vote the shares in person. In this case, a “legal proxy” is obtained in the following manner:

 

 

Banks and brokerage firms using the services at Broadridge:

Broadridge is notified that we wish to vote in person. Broadridge issues individual legal proxies and sends them back via email or overnight (or the Adviser can pay messenger charges). A lead-time of at least two weeks prior to the meeting is needed to do this. Alternatively, the procedures detailed below for banks not using Broadridge may be implemented.

 

 

Banks and brokerage firms issuing proxies directly:

The bank is called and/or faxed and a legal proxy is requested.

All legal proxies should appoint:

“Representative of [Adviser name] with full power of substitution.”

b) The legal proxies are given to the person attending the meeting along with the limited power of attorney.


Appendix A

Proxy Guidelines

PROXY VOTING GUIDELINES

General Policy Statement

It is the policy of GAMCO Investors, Inc, and its affiliated advisers (collectively “the Advisers”) to vote in the best economic interests of our clients. As we state in our Magna Carta of Shareholders Rights, established in May 1988, we are neither for nor against management. We are for shareholders.

At our first proxy committee meeting in 1989, it was decided that each proxy statement should be evaluated on its own merits within the framework first established by our Magna Carta of Shareholders Rights. The attached guidelines serve to enhance that broad framework.

We do not consider any issue routine. We take into consideration all of our research on the company, its directors, and their short and long-term goals for the company. In cases where issues that we generally do not approve of are combined with other issues, the negative aspects of the issues will be factored into the evaluation of the overall proposals but will not necessitate a vote in opposition to the overall proposals.

Board of Directors

We do not consider the election of the Board of Directors a routine issue. Each slate of directors is evaluated on a case-by-case basis.

Factors taken into consideration include:

 

 

Historical responsiveness to shareholders

This may include such areas as:

-Paying greenmail

-Failure to adopt shareholder resolutions receiving a majority of shareholder votes

 

Qualifications

 

Nominating committee in place

 

Number of outside directors on the board

 

Attendance at meetings

 

Overall performance


Selection of Auditors

In general, we support the Board of Directors’ recommendation for auditors.

Blank Check Preferred Stock

We oppose the issuance of blank check preferred stock.

Blank check preferred stock allows the company to issue stock and establish dividends, voting rights, etc. without further shareholder approval.

Classified Board

A classified board is one where the directors are divided into classes with overlapping terms. A different class is elected at each annual meeting.

While a classified board promotes continuity of directors facilitating long range planning, we feel directors should be accountable to shareholders on an annual basis. We will look at this proposal on a case-by-case basis taking into consideration the board’s historical responsiveness to the rights of shareholders.

Where a classified board is in place we will generally not support attempts to change to an annually elected board.

When an annually elected board is in place, we generally will not support attempts to classify the board.

Increase Authorized Common Stock

The request to increase the amount of outstanding shares is considered on a case-by-case basis.

Factors taken into consideration include:

 

 

Future use of additional shares

-Stock split

-Stock option or other executive compensation plan

-Finance growth of company/strengthen balance sheet

-Aid in restructuring

-Improve credit rating

-Implement a poison pill or other takeover defense


 

Amount of stock currently authorized but not yet issued or reserved for stock option plans

 

Amount of additional stock to be authorized and its dilutive effect

We will support this proposal if a detailed and verifiable plan for the use of the additional shares is contained in the proxy statement.

Confidential Ballot

We support the idea that a shareholder’s identity and vote should be treated with confidentiality.

However, we look at this issue on a case-by-case basis.

In order to promote confidentiality in the voting process, we endorse the use of independent Inspectors of Election.

Cumulative Voting

In general, we support cumulative voting.

Cumulative voting is a process by which a shareholder may multiply the number of directors being elected by the number of shares held on record date and cast the total number for one candidate or allocate the voting among two or more candidates.

Where cumulative voting is in place, we will vote against any proposal to rescind this shareholder right.

Cumulative voting may result in a minority block of stock gaining representation on the board. When a proposal is made to institute cumulative voting, the proposal will be reviewed on a case-by-case basis. While we feel that each board member should represent all shareholders, cumulative voting provides minority shareholders an opportunity to have their views represented.

Director Liability and Indemnification

We support efforts to attract the best possible directors by limiting the liability and increasing the indemnification of directors, except in the case of insider dealing.


Equal Access to the Proxy

The SEC’s rules provide for shareholder resolutions. However, the resolutions are limited in scope and there is a 500 word limit on proponents’ written arguments. Management has no such limitations. While we support equal access to the proxy, we would look at such variables as length of time required to respond, percentage of ownership, etc.

Fair Price Provisions

Charter provisions requiring a bidder to pay all shareholders a fair price are intended to prevent two-tier tender offers that may be abusive. Typically, these provisions do not apply to board-approved transactions.

We support fair price provisions because we feel all shareholders should be entitled to receive the same benefits.

Reviewed on a case-by-case basis.

Golden Parachutes

Golden parachutes are severance payments to top executives who are terminated or demoted after a takeover.

We support any proposal that would assure management of its own welfare so that they may continue to make decisions in the best interest of the company and shareholders even if the decision results in them losing their job. We do not, however, support excessive golden parachutes. Therefore, each proposal will be decided on a case-by- case basis.

Anti-Greenmail Proposals

We do not support greenmail. An offer extended to one shareholder should be extended to all shareholders equally across the board.


Limit Shareholders’ Rights to Call Special Meetings

We support the right of shareholders to call a special meeting.

Reviewed on a case-by-case basis.

Consideration of Nonfinancial Effects of a Merger

This proposal releases the directors from only looking at the financial effects of a merger and allows them the opportunity to consider the merger’s effects on employees, the community, and consumers.

As a fiduciary, we are obligated to vote in the best economic interests of our clients. In general, this proposal does not allow us to do that. Therefore, we generally cannot support this proposal.

Reviewed on a case-by-case basis.

Mergers, Buyouts, Spin-Offs, Restructurings

Each of the above is considered on a case-by-case basis. According to the Department of Labor, we are not required to vote for a proposal simply because the offering price is at a premium to the current market price. We may take into consideration the long term interests of the shareholders.

Military Issues

Shareholder proposals regarding military production must be evaluated on a purely economic set of criteria for our ERISA clients. As such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to the client’s direction when applicable. Where no direction has been given, we will vote in the best economic interests of our clients. It is not our duty to impose our social judgment on others.


Northern Ireland

Shareholder proposals requesting the signing of the MacBride principles for the purpose of countering the discrimination of Catholics in hiring practices must be evaluated on a purely economic set of criteria for our ERISA clients. As such, decisions will be made on a case-by-case basis.

In voting on this proposal for our non-ERISA clients, we will vote according to client direction when applicable. Where no direction has been given, we will vote in the best economic interests of our clients. It is not our duty to impose our social judgment on others.

Opt Out of State Anti-Takeover Law

This shareholder proposal requests that a company opt out of the coverage of the state’s takeover statutes. Example: Delaware law requires that a buyer must acquire at least 85% of the company’s stock before the buyer can exercise control unless the board approves.

We consider this on a case-by-case basis. Our decision will be based on the following:

 

 

State of Incorporation

 

Management history of responsiveness to shareholders

 

Other mitigating factors

Poison Pill

In general, we do not endorse poison pills.

In certain cases where management has a history of being responsive to the needs of shareholders and the stock is very liquid, we will reconsider this position.

Reincorporation

Generally, we support reincorporation for well-defined business reasons. We oppose reincorporation if proposed solely for the purpose of reincorporating in a state with more stringent anti-takeover statutes that may negatively impact the value of the stock.


Stock Incentive Plans

Director and Employee Stock incentive plans are an excellent way to attract, hold and motivate directors and employees. However, each incentive plan must be evaluated on its own merits, taking into consideration the following:

 

 

Dilution of voting power or earnings per share by more than 10%.

 

Kind of stock to be awarded, to whom, when and how much.

 

Method of payment.

 

Amount of stock already authorized but not yet issued under existing stock plans.

 

The successful steps taken by management to maximize shareholder value.

Supermajority Vote Requirements

Supermajority vote requirements in a company’s charter or bylaws require a level of voting approval in excess of a simple majority of the outstanding shares. In general, we oppose supermajority-voting requirements. Supermajority requirements often exceed the average level of shareholder participation. We support proposals’ approvals by a simple majority of the shares voting.

Reviewed on a case-by-case basis.

Limit Shareholders Right to Act by Written Consent

Written consent allows shareholders to initiate and carry on a shareholder action without having to wait until the next annual meeting or to call a special meeting. It permits action to be taken by the written consent of the same percentage of the shares that would be required to effect proposed action at a shareholder meeting.

Reviewed on a case-by-case basis.

“Say-on-Pay” / “Say-When-on-Pay” / “Say-on-Golden-Parachutes”

Required under the Dodd-Frank Act; these proposals are non-binding advisory votes on executive compensation. We will generally vote with the Board of Directors’ recommendation(s) on advisory votes on executive compensation (“Say-on-Pay”), advisory votes on the frequency of voting on executive compensation (“Say-When-on-Pay”) and advisory votes relating to extraordinary transaction executive compensation (“Say-on-Golden-Parachutes”). In those instances when we believe that it is in our clients’ best interest, we may abstain or vote against executive compensation and/or the frequency of votes on executive compensation and/or extraordinary transaction executive compensation advisory votes.


Proxy Access

We generally believe that proxy access is a useful tool to promote board accountability by requiring that a company’s proxy materials contain not only the names of management nominees, but also any candidates nominated by long-term shareholders holding at least a certain stake in the company. We will review proposals regarding proxy access on a case by case basis taking into account the provisions of the proposal, the company’s current governance structure, the successful steps taken by management to maximize shareholder value, as well as other applicable factors.


Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Portfolio Managers

Ms. Jane O’Keeffe, Mr. Thomas Dinsmore, and Mr. James Dinsmore serve as Portfolio Managers of the Ellsworth Growth and Income Fund.

Portfolio Management

Jane O’Keeffe joined Gabelli Funds, LLC in 2015. Ms. O’Keeffe currently serves as a portfolio manager of the Fund and several funds within the Gabelli/GAMCO Funds complex. From 1996 to 2015, Ms. O’Keeffe was President and Director of Dinsmore Capital. She has a B.A. from the University of New Hampshire and attended the Lubin Graduate School of Business at Pace University.

Thomas Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. Mr. T. Dinsmore currently serves as a portfolio manager of the Fund and several funds within the Gabelli/GAMCO Funds complex. Mr. T. Dinsmore was Chairman and CEO of Dinsmore Capital from 1996 to 2015. He has a B.S. in Economics from the Wharton School of Business, and an M.A. in Economics from Fairleigh Dickinson University.

James Dinsmore, CFA, joined Gabelli Funds, LLC in 2015. Mr. J. Dinsmore currently serves as a portfolio manager of the Fund and several funds within the Gabelli/GAMCO Funds complex. Mr. J. Dinsmore received a BA in Economics from Cornell University and an MBA from Rutgers University.

Ellsworth Growth & Income Fund (As of September 30, 2016)

 


Name of Portfolio Manager
  Type of
  Accounts  
 

Total

No. of
Accounts
  Managed  

   Total
  Assets  
  No. of
Accounts
where
Advisory Fee
is Based on
  Performance  
  Total Assets
in Accounts
where
Advisory Fee
is Based on
  Performance  

1. Jane D. O’Keeffe

  Registered Investment Companies:   2        244.0M       97.1M   1
    Other Pooled     Investment Vehicles:   0    0   0   0
   

Other

Accounts:

  7    5.6M   0   0
              

2. Thomas H. Dinsmore

  Registered Investment Companies:   2    244.0M   97.1M   1
    Other Pooled Investment Vehicles:   0    0   0   0
    Other   5    1.4M   0   0


    Accounts:                                  
             

3. James A. Dinsmore

 

Registered Investment Companies:

    2        244.0M        97.1M        1   
    Other Pooled Investment Vehicles:     0        0        0        0   
   

Other Accounts:

    3        390.5K        0        0   

Potential Conflicts of Interest

As reflected above, the Portfolio Managers manage accounts in addition to the Fund. Actual or apparent conflicts of interest may arise when a Portfolio Manager also has day-to-day management responsibilities with respect to one or more other accounts. These potential conflicts include:

Allocation of Limited Time and Attention. As indicated above, the Portfolio Managers manage multiple accounts. As a result, they will not be able to devote all of their time to the management of the Fund. The Portfolio Managers, therefore, may not be able to formulate as complete a strategy or identify equally attractive investment opportunities for each of those accounts as might be the case if he/she were to devote all of their attention to the management of only the Fund.

Allocation of Limited Investment Opportunities. As indicated above, the Portfolio Managers manage managed accounts with investment strategies and/or policies that are similar to the Fund. In these cases, if the Portfolio Manager identifies an investment opportunity that may be suitable for multiple accounts, a fund may not be able to take full advantage of that opportunity because the opportunity may be allocated among all or many of these accounts or other accounts managed primarily by other Portfolio Managers of the Investment Adviser, and their affiliates. In addition, in the event a Portfolio Manager determines to purchase a security for more than one account in an aggregate amount that may influence the market price of the security, accounts that purchased or sold the security first may receive a more favorable price than accounts that made subsequent transactions.

Pursuit of Differing Strategies. At times, the Portfolio Managers may determine that an investment opportunity may be appropriate for only some of the accounts for which he/she exercises investment responsibility, or may decide that certain of the funds or accounts should take differing positions with respect to a particular security. In these cases, the Portfolio Manager may execute differing or opposite transactions for one or more accounts which may affect the market price of the security or the execution of the transaction, or both, to the detriment of one or more other accounts.

Variation in Compensation. A conflict of interest may arise where the financial or other benefits available to the Portfolio Manager differs among the accounts that he/she manages. If the structure of the Investment Adviser’s management fee or the Portfolio Manager’s


compensation differs among accounts (such as where certain accounts pay higher management fees or performance based management fees), the Portfolio Manager may be motivated to favor certain accounts over others. The Portfolio Manager also may be motivated to favor accounts in which they have an investment interest, or in which the Investment Adviser, or their affiliates have investment interests. Similarly, the desire to maintain assets under management or to enhance a Portfolio Manager’s performance record or to derive other rewards, financial or otherwise, could influence the Portfolio Manager in affording preferential treatment to those accounts that could most significantly benefit the Portfolio Manager. For example, as reflected above, if the Portfolio Manager manages accounts which have performance fee arrangements, certain portions of their compensation will depend on the achievement of performance milestones on those accounts. The Portfolio Manager could be incented to afford preferential treatment to those accounts and thereby be subject to a potential conflict of interest. The Investment Adviser, and the Funds have adopted compliance policies and procedures that are designed to address the various conflicts of interest that may arise for the Investment Adviser and their staff members. However, there is no guarantee that such policies and procedures will be able to detect and prevent every situation in which an actual or potential conflict may arise.

Compensation Structure for the Portfolio Managers The compensation for the Portfolio Managers for the Fund is structured to enable the Investment Adviser to attract and retain highly qualified professionals in a competitive environment. The Portfolio Managers receive a compensation package that includes a minimum draw or base salary and incentive based variable compensation based on a percentage of net revenue received by the Investment Adviser for managing the Fund to the extent that the amount exceeds a minimum level of compensation. Net revenues are determined by deducting from gross investment management fees certain of the firm’s expenses (other than the Portfolio Managers’ compensation) allocable to the Fund (the incentive based variable compensation for managing other accounts is also based on a percentage of net revenues to the investment adviser for managing the account). These methods of compensation are based on the premise that superior long term performance in managing a portfolio should be rewarded with higher compensation as a result of growth of assets through appreciation and net investment activity. The level of incentive based variable compensation is based on an evaluation by the Investment Adviser’s parent, GBL, of quantitative and qualitative performance evaluation criteria.

Ownership of Shares in the Fund

Jane O’Keeffe, Thomas Dinsmore, and James Dinsmore each own $100,001 - $500,000, $500,001 - $1,000,000, and $10,001 - $50,000, respectively, of shares in the Fund as of September 30, 2016.

 

Item 9.

  Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

REGISTRANT PURCHASES OF EQUITY SECURITIES


Period

 

  

(a) Total Number

of Shares (or Units)
Purchased

 

  

(b) Average Price

Paid per Share (or

Unit)

 

  

(c) Total Number of Shares
(or Units) Purchased as
Part of Publicly

Announced Plans or
Programs

 

  

(d) Maximum Number (or

Approximate Dollar Value) of
Shares (or Units) that May Yet

Be Purchased Under the Plans
or Programs

Month #1  

04/01/16

Through

04/30/16

 

  

Common – 16,048

 

Preferred – N/A

  

Common – $7.6964

 

Preferred - N/A

  

Common – 16,048

 

Preferred - N/A

  

Common – 13,110,862 – 16,048 = 13,094,814

 

Preferred - N/A

Month #2

05/01/16

Through

05/31/16

 

  

Common – 5,447

 

Preferred - N/A

  

Common – $7.7343

 

Preferred - N/A

  

Common – 5,447

 

Preferred - N/A

  

Common – 13,094,814 - 5,447 = 13,089,367

 

Preferred - N/A

Month #3

06/01/16

Through

06/30/16

 

  

Common – 45,928

 

Preferred - N/A

  

Common – $7.7714

 

Preferred - N/A

  

Common – 45,928

 

Preferred - N/A

  

Common – 13,089,367 -45,928 = 13,043,439

 

Preferred - N/A

Month #4

07/01/16

Through

07/31/16

 

  

Common – 63,300

 

Preferred - N/A

  

Common – $8.1572

 

Preferred - N/A

  

Common – 63,300

 

Preferred - N/A

  

Common – 13,043,439 - 63,300 = 12,980,139

 

Preferred - N/A

Month #5

08/01/16

Through

08/31/16

 

  

Common – 52,891

 

Preferred - N/A

  

Common – $8.3256

 

Preferred - N/A

  

Common – 52,891

 

Preferred - N/A

  

Common – 12,980,139 – 52,891 = 12,927,248

 

Preferred - N/A

Month #6

09/01/16

Through

09/30/16

 

  

Common – 16,895

 

Preferred - N/A

  

Common – $8.1919

 

Preferred - N/A

  

Common – 16,895

 

Preferred - N/A

  

Common – 12,927,248 – 16,895 = 12,910,353

 

Preferred - N/A

Total

  

Common – 200,509

 

Preferred - N/A

 

  

Common – $7.9991

 

Preferred - N/A

  

Common – 200,509

 

Preferred - N/A

  

N/A

Footnote columns (c) and (d) of the table, by disclosing the following information in the aggregate for all plans or programs publicly announced:

 

  a. The date each plan or program was announced – The notice of the potential repurchase of common and preferred shares occurs quarterly in the Fund’s quarterly report in accordance with Section 23(c) of the Investment Company Act of 1940, as amended.
  b. The dollar amount (or share or unit amount) approved – Any or all common shares outstanding may be repurchased when the Fund’s common shares are trading at a discount of 10% or more from the net asset value of the shares.
  c. The expiration date (if any) of each plan or program – The Fund’s repurchase plans are ongoing.


  d. Each plan or program that has expired during the period covered by the table – The Fund’s repurchase plans are ongoing.
  e. Each plan or program the registrant has determined to terminate prior to expiration, or under which the registrant does not intend to make further purchases. – The Fund’s repurchase plans are ongoing.

Item 10. Submission of Matters to a Vote of Security Holders.

There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

Item 11. Controls and Procedures.

 

  (a)

The registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).

 

  (b)

There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits.

 

 

(a)(1)

 

Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto.

 

(a)(2)

 

Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.

 

(a)(3)

 

Not applicable.

 

(b)

 

Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.


(12.other) Not applicable.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)    Ellsworth Growth and Income Fund Ltd.                                                                                      

By (Signature and Title)*   /s/ James A. Dinsmore                                                                                               

                                                 James A. Dinsmore, Principal Executive Officer            

Date    12/02/2016                                                                                                                                                  

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)*   /s/ James A. Dinsmore                                                                                              

                                                 James A. Dinsmore, Principal Executive Officer        

Date    12/02/2016                                                                                                                                                 

By (Signature and Title)*   /s/ Agnes Mullady                                                                                                     

                                                 Agnes Mullady, Principal Financial Officer and Treasurer        

Date    12/02/2016                                                                                                                                                 

* Print the name and title of each signing officer under his or her signature.