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SIGNATURE GARY LEVINE
TITLE TREASURER
N-SAR Exhibit 1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Ellsworth Convertible Growth and Income Fund, Inc.
In planning and performing our audit of the financial statements and financial
highlights of Ellsworth Convertible Growth and Income Fund, Inc.(the "Fund")
for the year ended September 30, 1999, we considered its internal control,
including control over safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the financial
statements and financial highlights and to comply with the requirements of
Form N-SAR, not to provide assurance on internal control.
The management of the Fund is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to
the entity's objective of preparing financial statements and financial
highlights for external purposes that are fairly presented in conformity
with generally accepted accounting principles. Those controls include the
safeguarding of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal controls, errors or fraud may
occur and may not be detected. Also, projection of any evaluation of
internal control to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of any specific internal control component does not reduce to
a relatively low level the risk that errors or fraud in amounts that would
be material in relation to the financial statements and financial highlights
being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions.
However, we noted no matters involving internal control, including controls
over safeguarding securities, that we consider to be material weaknesses
as defined above as of September 30, 1999.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
PricewaterhouseCoopers LLP
New York, New York
October 18, 1999
N-SAR Ques. 77Q1A: Exhibit 2
The following replaces Article III of the By-Laws of
Ellsworth Convertible Growth and Income Fund, Inc.
(as amended through July 26, 1999)
Board of Directors
Section 1. General Powers. Except as otherwise provided in
the Charter of the Corporation, the business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. All
powers of the Corporation may be exercised by or under authority of the
Board of Directors except as conferred on or reserved to the stockholders
by law or by the Charter of the Corporation or these By-Laws.
Section 2. Number of Directors. The number of directors shall
be fixed from time to time by resolution of the Board of Directors adopted
by a majority of the Directors then in office; provided, however, that the
number of directors shall in no event be less than three (except for any
period during which shares of the Corporation are held by fewer than three
stockholders). Any vacancy created by an increase in directors may be
filled in accordance with Section 7 of this Article III. No reduction in the
number of directors shall have the effect of removing any director from
office prior to the expiration of his term unless such director is specifically
removed pursuant to Section 6 of this Article III at the time of such
decrease. Until the first annual meeting of stockholders or until successors
are duly elected and qualify, the Board shall consist of the persons named
as such in the Charter of the Corporation. Unless, the Board of Directors
adopts a policy that provides otherwise, Directors need not be
stockholders.
Section 3. First Meeting of Directors. The first meeting of
each newly elected Board of Directors shall be held immediately
following and at the same place as the annual meeting of stockholders and
no notice of such meeting shall be necessary to the newly elected directors
in order legally to constitute the meeting, provided a quorum shall be
present. In the event such meeting is not held at the said time and place,
the meeting may be held at such time and place as shall be specified in a
notice given as hereinafter provided for special meetings of the board of
directors, or as shall be specified in a written waiver signed by all of the
directors.
Section 4. Election and Term of Directors. At the first annual
meeting of stockholders and at each annual meeting thereafter, the
stockholders shall elect directors to hold office. For purposes of this
Article III, a potential director will not be deemed to be qualified to serve
as a director unless, after giving effect to his or her election to the Board
of Directors, at least two-thirds of the Board of Directors would be
Independent Directors, as defined in Section 5 below. The directors shall
be classified, with respect to the time for which they severally hold office,
into three classes, with the directors in each class to hold office until their
successors are elected and qualified, or until their death, or until they shall
have resigned, or have been removed as hereinafter provided in these By-
Laws, or as otherwise provided by statute or the Charter of the
Corporation. At each annual meeting of the stockholders of the
Corporation, the successors to the class of directors whose terms expire at
that meeting shall be elected to hold office for terms expiring at the later
of the annual meeting of stockholders held in the third year following the
year of their election or the election and qualification of the successors to
such class of directors. Directors elected at an annual meeting of
stockholders to fill a vacancy in a class of directors whose terms do not
expire at such annual meeting shall be elected to hold office for terms
expiring at the later of the annual meeting of stockholders as of which the
terms of such class expire or the election and qualification of the
successors to such class of directors.
Section 5. Independent Directors. For purposes of these By-
Laws, a director shall be deemed to be an "Independent Director" if he or
she: (i) is not an "interested person" of the Corporation within the meaning
of the Investment Company Act of 1940, as amended, and the rules and
regulations promulgated thereunder and (ii) is not a former officer or
director of the Corporation's investment adviser or its subsidiary.
Section 6. Resignation. A director of the Corporation may
resign at any time by giving written notice of his resignation to the Board
or the Chairman of the Board or the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time
when it shall become effective shall not be specified therein, immediately
upon its receipt; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 7. Removal of Directors. Any director of the
Corporation may be removed, with or without cause, by the stockholders
by the affirmative vote of a majority of all the votes entitled to be cast for
the election of directors.
Section 8. Vacancies. The stockholders may elect a successor
to fill a vacancy on the Board of Directors which results from a removal of
a director pursuant to Section 6 of Article III of these By-Laws. A
majority of the remaining directors, whether or not sufficient to constitute
a quorum, may fill a vacancy which results from any cause except an
increase in the number of directors, and a majority of the entire Board of
Directors may fill a vacancy which results from an increase in the number
of directors; provided, that: (i) the Independent Director requirements
specified in Section 4 above are satisfied, and (ii) after the filling of said
vacancy or vacancies, at least two-thirds of the directors then holding
office shall have been elected by the stockholders of the Corporation. In
the event that at any time there is a vacancy in any office of a director
which vacancy may not be filled by the remaining directors, a special
meeting of the stockholders shall be held as promptly as possible and in
any event within sixty days, for the purpose of filling said vacancy or
vacancies. Further, if at any time fewer than two-thirds of the directors
are Independent Directors, the Board of Directors shall, at the next
regularly scheduled meeting or any special meeting, consider appointing
additional Independent Directors to the Board. A director elected by the
Board of Directors to fill a vacancy serves until the next annual meeting of
stockholders and until his successor is elected and qualifies. A director
elected by the stockholders to fill a vacancy which results from the
removal of a director serves for the balance of the term of the removed
director.
Section 9. Regular Meetings. Regular meetings of the Board
may be held without notice at such times and places in or out of the State
of Maryland as shall from time to time be determined by the Board of
Directors.
Section 10. Special Meetings. Special meetings of the Board
may be called by the Chairman of the Board, the President, or by a
majority of the directors either in writing or by vote at a meeting, and may
be held at any place in or out of the State of Maryland as the Board may
from time to time determine.
Section 11. Notice of Special Meetings. Notice of each special
meeting of the Board shall be given by the Secretary as hereinafter
provided, in which notice shall be stated the time and place of the meeting.
Notice of each such meeting shall be delivered to each director, either
personally or by telephone, telegraph, telex, cable or wireless, at least
twenty-four hours before the time at which such meeting is to be held, or
by first-class mail, postage prepaid, addressed to him at his residence or
usual place of business, at least three days before the day on which such
meeting is to be held.
Section 12. Waiver of Notice of Special Meetings. Notice of
any special meeting need not be given to any director who shall, either
before or after the meeting, sign a written waiver of notice which is filed
with the records of the meeting or who shall attend such meeting. Except
as otherwise specifically required by these By-Laws, a notice or waiver of
notice of any meeting need not state the purposes of such meeting.
Section 13. Quorum and Voting. A majority of the entire Board
of Directors shall be present in person at any meeting of the Board in order
to constitute a quorum for the transaction of business at such meeting, and
except as otherwise expressly required by statute, the Charter of the
Corporation, these By-Laws, the Investment Company Act of 1940, as
amended, or other applicable statute, the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board; provided, however, that the approval of any contract with an
investment adviser or principal underwriter, as such terms are defined in
the Investment Company Act of 1940, as amended, which the Corporation
enters into or any renewal or amendment thereof, the approval of the
fidelity bond required by the Investment Company Act of 1940, as
amended, and the selection of the Corporation's independent public
accountants shall each require the affirmative vote of a majority of the
directors who are not interested persons, as defined in the Investment
Company Act of 1940, as amended, of the Corporation. If a quorum shall
not be present at any meeting of directors, the directors present thereat
may by a majority vote adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present. At any adjourned meeting at which a quorum is present, any
business may be transacted which might have been transacted at the
meeting as originally called.
Section 14. Written Consent of Directors in Lieu of a Meeting.
Any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting
if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of the Board or committee.
Section 15. Meeting by Conference Telephone. Members of the
Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.
Participation in a meeting by these means constitutes presence in person at
a meeting, except as otherwise provided by statute
Section 16. Compensation. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors.
A director may be paid a fixed sum for attendance at each meeting of the
Board of Directors or a stated salary as director, or both such fixed sum
and stated salary. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation for attending committee meetings
Section 17. Investment Policies. It shall be the duty of the
Board of Directors to ensure that the purchase, sale, retention and disposal
of portfolio securities and the other investment practices of the
Corporation are at all times consistent with the investment policies and
restrictions with respect to securities investments and otherwise of the
Corporation. The Board, however, may delegate the duty of management
of the assets and the administration of its day-to-day operations to an
individual or corporate management company or investment adviser
pursuant to a written contract or contracts which have obtained the
requisite approvals, including the requisite approvals or renewals thereof,
of the Board of Directors or the stockholders of the Corporation in
accordance with the provisions of the Investment Company Act of 1940,
as amended.
N-SAR Ques. 77Q1A: Exhibit 3
The following are additions to the Charter of Ellsworth Convertible
Growth and Income Fund, Inc.
NOMINATING AND ADMINISTRATION COMMITTEE
CHARTER
Nominating and Administration Committee Membership
The Nominating and Administration Committee shall be composed
entirely of independent directors.
Board Nominations and Functions
1. The Committee shall make nominations for independent director
membership on the Board of Directors. The Committee shall
evaluate candidates' qualifications for Board membership and their
independence from the Fund's investment adviser and other
principal service providers. Persons selected must be independent
in terms of both the letter and the spirit of the Investment Company
Act of 1940. The Committee shall also consider the effect of any
relationships beyond those delineated in the 1940 Act that might
impair independence, e.g., business, financial or family
relationships with managers or service providers. If members of
the Committee do not unanimously agree to nominate an
incumbent independent director for re-election to the Board of
Directors, the Committee shall submit the issue of nomination of
such person for re-election to the independent directors as a group.
2. The Committee shall periodically review Board governance
procedures and shall recommend any appropriate changes to the
full Board of Directors.
3. The Committee shall periodically review the composition of the
Board of Directors to determine whether it may be appropriate to
add individuals with different backgrounds or skill sets from those
already on the Board.
4. The Committee shall periodically review director compensation
and shall recommend any appropriate changes to the independent
directors as a group.
Committee Nominations and Functions
1. The Committee shall make nominations for membership on all
committees and shall review committee assignments at least
annually.
2. The Committee shall review as necessary the responsibilities of
any committees of the Board, whether there is a continuing need
for each committee, whether there is a need for additional
committees of the Board, and whether committees should be
combined or reorganized. The Committee shall make
recommendations for any such action to the full Board.
Other Powers and Responsibilities
1. The Committee shall monitor the performance of legal counsel
employed by the Funds and the independent directors, and shall be
responsible for the supervision of counsel for the independent
directors.
2. The Committee shall have the resources and authority appropriate
to discharge its responsibilities, including authority to retain
special counsel and other experts or consultants at the expense of
the appropriate Fund(s).
3. The Committee shall review this Charter at least annually and
recommend any changes to the full Board of Directors.
AUDIT COMMITTEE CHARTER
1. The Audit Committee shall be composed entirely of independent
directors.
2. The purposes of the Audit Committee are:
(a) to oversee the Fund's accounting and financial reporting
policies and practices, its internal controls and, as
appropriate, the internal controls of certain service
providers;
(b) to oversee the quality and objectivity of the Fund's
financial statements and the independent audit thereof; and
(c) to act as a liaison between the Fund's independent auditors
and the full Board of Directors.
The function of the Audit Committee is oversight; it is
management's responsibility to maintain appropriate systems for
accounting and internal control, and the auditor's responsibility to
plan and carry out a proper audit.
3. To carry out its purposes, the Audit Committee shall have the
following duties and powers:
(a) to recommend the selection, retention or termination of
auditors and, in connection therewith, to evaluate the
independence of the auditors, including whether the
auditors provide any consulting services to the manager,
and to receive the auditors' specific representations as to
their independence;
(b) to meet with the Fund's independent auditors, including
private meetings, as necessary (i) to review the
arrangements for and scope of the annual audit and any
special audits; (ii) to discuss any matters of concern
relating to the Fund's financial statements, including any
adjustments to such statements recommended by the
auditors, or other results of said audit(s); (iii) to consider
the auditors' comments with respect to the Fund's financial
policies, procedures and internal accounting controls and
management's responses thereto; and (iv) to review the
form of opinion the auditors propose to render to the Board
and shareholders;
(c) to consider the effect upon the Fund of any changes in
accounting principles or practices proposed by management
or the auditors;
(d) to review the fees charged by the auditors for audit and
non-audit services;
(e) to investigate improprieties or suspected improprieties in
fund operations; and
(f) to report its activities to the full Board on a regular basis
and to make such recommendations with respect to the
above and other matters as the Committee may deem
necessary or appropriate.
4. The Committee shall meet on a regular basis and is empowered to
hold special meetings as circumstances require.
5. The Committee shall regularly meet with the Treasurer of the
Fund.
6. The Committee shall have the resources and authority appropriate
to discharge its responsibilities, including the authority to retain
special counsel and other experts or consultants at the expense of
the Fund.
7. The Committee shall review this Charter at least annually and
recommend any changes to the full Board of Directors.
