As filed with Securities and Exchange Commission on July ____, 1999
1933 Act Registration No. 2-23727
1940 Act Registration No. 811-1311
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. 59 [X]
and/or
REGISTRATION STATEMENT UNDER THEINVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 20
(Check appropriate box or boxes)
MATHERS FUND, INC.(Exact Name of Registrant as Specified in Charter)
100 Corporate NorthBannockburn, Illinois 60015
(Address of Principal Executive Officers) (Zip Code)
Registrant's Telephone Number, including Area Code (847) 295-7400
Andrew H. Shaw
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
(Name and Address of Agent for Service)
Copies to:
Bruce N. Alpert James E. McKee, Esq.
Gabelli Funds, LLC Gabelli Funds, LLC
One Corporate Center One Corporate Center
Rye, New York 10580-1434 Rye, New York 10580-1434
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
on (date) pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)
on (date) pursuant to paragraph (a) of rule 485
PRELIMINARY, SUBJECT TO COMPLETION
DATED JULY ____, 1999
The information in this prospectus is not complete and may be changed. This
prospectus is not an offer to sell these securities and the Fund is not
soliciting an offer to buy these securities in any state where the offer is not
permitted.
<PAGE>
THE GABELLI MATHERS FUND
PROSPECTUS
September , 1999
The Securities and Exchange Commission has not approved or disapproved the
shares described in this prospectus or determined whether this Prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
========================================================================
The Gabelli Mathers Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Trustees
<TABLE>
<CAPTION>
<S> <C>
Mario J. Gabelli, CFA Felix J. Christiana
Chairman and Chief Investment Officer Former Senior Vice President
Gabelli Asset Management Inc. Dollar Dry Dock Savings Bank
Chairman
The Gabelli Mathers Fund
Anthony J. Colavita Vincent D. Enright
Attorney-at-Law Former Senior Vice President and Chief
Anthony J. Colavita, P.C. Financial Officer, KeySpan Energy Corp.
Charles G. Freund Jon P. Hedrich
Former Vice President, Secretary and Treasurer Former President and Partner
MidCon Corp. Steiner Diamond Institutional Services
Robert E. Kohnen Karl Otto Pohl
Former Vice President and Investment Manager Former President
Protection Mutual Insurance Company Deutsche Bundesbank
Anthony R. Pustorino, CPA Werner J. Roeder, M.D
Professor of Accounting, Pace University Practicing Private Physician
Medical Director, Lawrence Hospital
Jack O. Vance Henry G. Van der Eb, CFA
Managing Director President and Chief Executive Officer
Management Research, Inc. The Gabelli Mathers Fund
Anthonie C. van Ekris
Managing Director
BALMAC International
Officers
Mario J. Gabelli, CFA Henry G. Van der Eb, CFA
Chairman President and Chief Executive Officer
Bruce N. Alpert, CPA Anne E. Morrissy, CFA
Executive Vice President and Treasurer Executive Vice President
James E.McKee Lawrence A. Kenyon, CPA
Secretary Senior Vice President
Gus Coutsouros, CPA Edith L. Cook
Assistant Treasurer Vice President
Julie Tedesco Heidi M. Stubner
Assistant Secretary Vice President
</TABLE>
TABLE OF CONTENTS
Page
Investment and Performance Summary....................................
Investment and Risk Information.......................................
Management of the Fund................................................
Purchasing, Selling and Exchanging Shares.............................
Pricing of Fund Shares................................................
Dividends and Distributions...........................................
Tax Information.......................................................
Financial Highlights..................................................
<PAGE>
INVESTMENT AND PERFORMANCE SUMMARY
Investment Objective and Principal Investment Strategies
The investment objective of The Gabelli Mathers Fund is capital appreciation
over the long term. The Fund is flexibly managed and pursues its objective by
using the following principal strategies:
* investing in equity securities, primarily common stocks, selected for their
appreciation potential;
* engaging, within prescribed limits, in short sales of equity securities,
primarily common stocks, whereby the fund borrows and sells a security
it does not own in order to profit from the potential decline in the price
of that security;
* selecting equity securities, both long and short, using fundamental analysis
of both value and growth data, and technical analysis;
* investing all or a portion of its assets in fixed income securities,
primarily U.S. Treasury securities, when the Fund's investment adviser,
Gabelli Funds, LLC (the "Adviser") believes the risk of owning common stocks
is high; and
* varying its common stock exposure by hedging, primarily with the purchase or
short sale of stock index futures contracts.
Principal Risks
The Fund is subject to the risks associated with investing in both equity and
fixed income securities. The Fund is also subject to certain additional risks
associated with stock index futures hedging and the higher risk investment
strategy of short sales of equity securities.
Equity Securities: To the extent that the Fund's portfolio has significant
equity exposure, long and/or short, the Fund is subject to the risks inherent in
the stock market, which include the following:
* unpredictable price volatility in individual stocks and various stock
indices;
* changes in interest rates, inflation and corporate profits, currency
exchange rate volatility, and other economic factors;
* individual company and/or industry developments;
* national and international political events; and
* potential "Year 2000" financial market and economic disruptions.
The Adviser's stock selection process is not limited by the total market value
of a company's stock, so the Fund may be long or short small, medium or large
capitalization issues. Stocks of companies with a relatively small number of
shares available for trading may be more risky because their share prices tend
to be more volatile, and their shares less liquid, than those of companies with
larger amounts of tradeable shares. In general, companies with small revenue
bases may have more limited management and financial resources and may face a
higher risk of business reversal than larger more established companies. As a
result, stocks of smaller companies may be more volatile than stocks of larger
companies. Additionally, stocks of companies with special or unique
characteristics, in which the Fund may invest, may lose value if their unusual
company circumstances do not develop as anticipated.
Short positions in equity securities are generally considered to be more risky
than long positions, since the theoretical potential loss in a short position is
unlimited, while the maximum loss from a long position is equal to the original
purchase price.
<PAGE>
Fixed Income Securities: To the extent that the Fund's portfolio is invested in
U.S. Treasury securities or other fixed income securities, the Fund is subject
to risks which include loss of principal as interest rates rise (as a function
of the maturity date of each issue held), and each issuer's credit quality risk.
Additionally, the Fund may lose the opportunity to benefit on that portion of
its portfolio invested in fixed income securities if stock prices increase.
Hedging: The percentage fluctuation in the value of the Fund's hedging positions
in stock index futures and options may be greater than those of the underlying
index, and positions in such futures and options are subject to certain other
risks, including but not limited to the following: * an imperfect correlation
between the change in market value of the long stock positions in the Fund's
portfolio
relative to its stock index futures or options hedge positions, limiting the
effectiveness of the hedge; * possible temporary illiquidity in the markets for
stock index futures or options which may result in continuing
exposure to adverse price movements; and
* the fact that the decision to hedge may prove incorrect and, in that case,
the Fund would have been better off not hedging.
Other Risk Information: There are market risks inherent in any investment, and
there is no assurance that the objective of the Fund will be realized. Also,
there is no assurance that the Fund's portfolio will not decline in value or
that the portfolio's various investment segments will perform as expected. When
you sell your investment, you may receive more or less money than you originally
invested.
Who May Want to Invest:
The shares offered in this Prospectus are offered only to investors who acquire
the shares directly through the Fund's distributor or through a select number of
financial intermediaries with whom the distributor has entered into selling
agreements specifically authorizing them to offer these shares.
The Fund may appeal to you if:
* you are a contrarian long-term investor or saver,
* you seek long term growth of capital with returns that are
typically uncorrelated with the stock market, or
* you seek a portfolio that generally may be long and/or short
individual stocks, and/or long U.S. Treasury securities and/or may
employ hedging techniques with respect to its common stock
exposure.
You may not want to invest in the Fund if:
* you are seeking a high level of current income,
* you seek returns that typically move with the S&P 500 Index, in up
and down markets, or * you seek a fully invested equity portfolio.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Performance
The return information below illustrates how the Fund's performance can vary and
gives some indication of the risks of investing in the Fund by comparing the
Fund's performance with two broad based stock indices. Please keep in mind that
the Fund's past performance does not represent how it will perform in the
future. The return data includes the reinvestment of all income dividends and
capital gains distributions.
BAR CHART (Graphic Omitted)
<TABLE>
<CAPTION>
<S> <C>
Calendar Year Total Return
1989 10.41%
1990 10.43%
1991 9.45%
1992 3.11%
1993 2.13%
1994 (5.89)%
1995 7.01%
1996 (0.07)%
1997 3.01%
1998 (5.21)%
</TABLE>
During the period shown in the bar chart, the highest quarterly return was
5.19% for the quarter ended March 1989 and the lowest quarterly return was
(3.21)% for the quarter ended December 1998. For the six months ended June
30, 1999, the Fund's total return was 1.62%.
Average Annual Total Returns
(for the periods ended December 31, 1998)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Since Inception
One Year Five Years Ten Years 8-19-65
The Gabelli Mathers Fund (5.21)% (0.35)% 3.28% 11.53%
S&P 500 Index* 28.72% 24.09% 19.21% 12.28%
Value Line Composite** (1.94)% 10.58% 9.32% 7.50%
</TABLE>
* The S&P 500 Index is an index of 500 stocks, with each stock weighted
according to its market value or capitalization. The performance of the
Index does not include expenses or fees.
** The Value Line Composite is an average comprised of approximately 1,617
stocks, with each stock having an equal weighting, regardless of its market
capitalization.
Fees and Expenses of the Fund
Shareholder Fees (fees paid directly from your investment)
The Fund is a no load Fund, so you pay no sales charges (loads) to buy or sell
shares.
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
Annual Fund Operating Expenses (expenses that are deducted from Fund assets): 1
Management Fees 2................................................. 1.00%
Distribution (Rule 12b-1) Fees 3.................................. 0.25
Other Expenses 4..................................................... 0.30
Total Annual Operating Expens..................................... 1.55%
Fee Waiver 5...................................................... (0.20)
Total Annual Operating Expenses (after the fee waiver) ........... 1.35%
- ----------------------
1 Information in this table was calculated using the Fund's average net
assets for the fiscal year ended December
31, 1998 of $122,370,000.
2 Effective September _____ , 1999, Gabelli Funds, LLC became the investment
adviser to the Fund. The expense information above has been restated to
reflect this change in adviser. Under the terms of the investment advisory
agreement dated September ___ , 1999, the Adviser is entitled to receive a
fee for providing advisory and administrative services equal to 1.00% of
the Fund's average daily net assets (before giving effect to the fee waiver
referred to in footnote 5 below).
3 The Fund adopted a Rule 12b-1 Plan on September ___, 1999 to provide
distribution and shareholder services. The annual fee is 0.25% of the
Fund's average daily net assets. The Plan requires that this fee be paid
out of the assets of the Fund. Pursuant to the Plan, long-term shareholders
may indirectly pay more than the equivalent of the maximum permitted
front-end sales charge.
4 "Other expenses" is a pro forma figure reflecting reductions in expenses
(insurance, audit, legal and transfer agent fees) implemented upon the Fund
joining the Gabelli family of funds on September __, 1999. In the fiscal
year ended December 31, 1998, actual "other expenses" were 0.45%.
5 On the first $100 million of the Fund's assets, the Adviser will waive
0.25% of its 1.00% advisory fee for the first two years after the change in
adviser.
Expense Example
This example is intended to help you compare the cost of investing in the Fund,
over various time periods, with the cost of investing in other mutual funds. The
example assumes that you invest an initial $10,000 in the Fund and then redeem
all of your shares at the end of each holding period as indicated below. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
$163 $505 $871 $1,898
</TABLE>
The above example does not take the fee waiver into account. Giving effect to
the fee waiver your costs would be: $142 after one year, $441 after three years,
$761 after five years and $1,669 after ten years.
INVESTMENT AND RISK INFORMATION
The Fund is flexibly managed, with the ability to utilize either long and/or
short equity positions in the pursuit of its investment objective. The policy of
the Fund is generally to effect transactions in securities which the Adviser
believes offer the possibility of increasing the Fund's net asset value per
share. To the extent that the Fund's portfolio has significant equity exposure,
either long or short, its net asset value per share may be subject to greater
volatility than when the portfolio contains a substantial amount of fixed income
securities.
However, no minimum or maximum percentage of the Fund's assets is required to be
invested in any type of security. The Fund may invest all or any portion of its
assets in U.S. Treasury bills, notes or bonds or, subject to certain
limitations, certificates of deposit, prime-rated commercial paper or repurchase
agreements (agreements under which the seller of a security agrees at the time
of sale to repurchase it at an agreed time and price) when the Adviser believes
general conditions warrant such action or during periods when the Adviser
believes that the risks associated with equity securities are high. At such
times, which may continue for extended periods, the Fund's equity exposure may
represent a relatively low percentage of the Fund's assets. For instance, during
most of 1989 through the first six months of 1999, a majority of the Fund's
assets were invested in U.S. Treasury securities. During this period, the equity
securities held in the Fund's portfolio were often hedged to varying extents by
short sales of Standard & Poor's 500 stock index futures contracts for the
purpose of protecting the Fund's assets from potential loss in a declining
market.
Since May 1, 1998, the Fund has had the authority to make short sales of
securities in amounts of up to 30% of the value of the Fund's net assets
(determined at the time of short sale). A short sale is a transaction in which
the Fund sells a security which it does not then own in order to profit from the
potential decline in the market price of that security. To meet its settlement
obligation, the Fund borrows the security sold short for delivery to the buyer.
The Fund then commits to return the borrowed security, typically at an
unspecified future date, by purchasing the security at its market price at the
time of replacement. Such a transaction will be profitable to the Fund if the
price of the security at the time the Fund purchases it is less than its price
at the time the Fund sold it short. Conversely, if the price of the security is
greater at the time of purchase than at the time of the short sale, the
transaction will result in a loss. The Fund must reimburse the lender for any
dividends paid on the borrowed stock while the short position is open and may
have to pay a fee to borrow certain stocks.
The Fund's broker retains the proceeds of the short sale as collateral until
such time that the Fund covers the short position. In general, the Fund must
also pledge additional cash or liquid securities to the broker as collateral for
its obligations. Generally, brokers require initial collateral (including the
short sale proceeds) with a value equal to 150% of the value of the securities
sold short. The amount of collateral is adjusted upward or downward daily to
reflect increases or decreases in the market value of the securities sold short.
In addition, under SEC rules, until the Fund covers its short position, the Fund
must maintain with its custodian a segregated account, containing cash or liquid
debt or equity securities, such that the amount deposited in the segregated
account plus the amount deposited with the broker as collateral, excluding
initial proceeds from the short sale, equals the then current market value of
the security sold short.
The Fund may vary its equity exposure by hedging through the purchase of
exchange-traded put and call options on stock indices and/or the purchase or
short sale of stock index futures contracts and options on such contracts. Stock
index options confer upon the holder the right to receive an amount of cash upon
exercise if the closing level of the underlying stock index is greater than, in
the case of a call, or less than, in the case of a put, the exercise price of
the option. A stock index futures contract provides that a person with an open
position in such a contract has the right to receive, or has the obligation to
pay, cash amounts on a daily basis during the period such position is held based
on the difference between the current price level of such contract and the price
at which the contract is originally made. An option on a stock index futures
contract gives the holder the right, but not the obligation, to acquire either a
long or short position in such futures contract at a specified price.
The total cost of outstanding stock index options (determined as of the time of
purchase) held by the Fund may not exceed 5% of the Fund's net assets, and the
Fund will not enter into stock index futures contracts or options on such
contracts if immediately thereafter the aggregate initial margin and premiums
(less the amount by which any such options are "in-the-money" at the time of
purchase) would exceed 5% of the value of the Fund's total assets after taking
into account any unrealized profits and losses on such instruments.
The Fund may purchase securities of unseasoned companies, where the risks are
considerably greater than with common stock of more established companies, and
securities of foreign issuers, from time to time when the Adviser believes such
investments offer the possibility of capital growth. However, the Fund may not
invest more than 5% of its assets in securities of companies which have a record
of less than three years continuous operation (including the operation of any
predecessor business of a company which came into existence as a result of a
merger, consolidation, reorganization or purchase of substantially all of the
assets of such predecessor business). The Fund may not invest more than 10% of
its assets in securities of foreign issuers which are not publicly traded in the
United States.
The Fund may purchase corporate debentures or notes (without limitation as to
rating) and preferred stocks, particularly those which are convertible into or
carry rights to acquire common stock, and warrants when such investments appear
to offer the possibility of appreciation in value.
While the Fund's objective is to seek capital appreciation over the long term,
the Fund does not necessarily purchase or hold individual securities to qualify
for long-term capital gains treatment. The Adviser may consider a variety of
factors other than the holding period, including but not limited to financial
market conditions, corporate developments, other investment opportunities, fund
redemptions, tax considerations, including the Fund's tax loss carryforward, and
changed expectations, in determining whether to sell a security held in the
portfolio or to buy to cover a short position. As a result, turnover in the
Fund's portfolio may be high since both long and short positions in individual
equity securities, stock index futures and options on stock index futures, as
well as long positions in fixed income securities, may be held for very short
time periods.
The investment objective and the other policies described under this caption are
not fundamental policies and may be changed by a vote of a majority of the Board
of Trustees of the Fund without a vote of shareholders.
MANAGEMENT OF THE FUND
The Adviser. Effective September ___, 1999, Gabelli Funds, LLC, with principal
offices located at One Corporate Center, Rye, New York 10580-1434, (800)
422-3554 entered into a set of strategic initiatives with Mathers and Company
Inc. and now serves as investment adviser to the Fund. The Adviser makes
investment decisions for the Fund and continuously reviews and administers the
Fund's investment program under the supervision of the Fund's Board of Trustees.
The Adviser and its affiliates also manage other open-end and closed-end
investment companies in the Gabelli family of funds. The Adviser is a New York
limited liability company organized in 1999 as successor to Gabelli Funds, Inc.,
a New York corporation organized in 1980. The Adviser is a wholly-owned
subsidiary of Gabelli Asset Management Inc. ("GAMI"), a publicly traded company
listed on the New York Stock Exchange. The Adviser is entitled to receive a
1.00% annual fee to provide investment advisory and administrative services to
the Fund, except that the Adviser will waive 0.25% of its 1.00% advisory fee on
the first $100 million of the Fund's assets until _________, 2001.
Prior to September ___, 1999, Mathers and Company, Inc., 100 Corporate North,
Suite 201, Bannockburn, Illinois 60015, (847) 295-7400, served as investment
adviser to the Fund. Under its investment advisory agreement, Mathers and
Company received a fee equal to 0.74% of the Fund's average net assets, before
giving effect to expense reimbursements, in 1998. Mathers and Company, Inc. was
the investment counseling firm which served as investment adviser to the Fund
from its inception in 1965 and as investment adviser to other clients since
1961. Henry G. Van der Eb, President of Mathers and Company, Inc. and Chairman
and a Director of the Fund, owned all of the outstanding shares and was the
controlling person of Mathers and Company, Inc.
The Portfolio Manager. Henry Van der Eb, CFA, of Gabelli Funds, LLC, has been
primarily responsible for the day-to-day management of the Fund for more than
the last 20 years.
Year 2000. As the year 2000 approaches, concerns regarding the ability of
software used by the Fund's service providers to distinguish between the date
"2000" and the date "1900" have emerged . Failure to adequately address this
issue could result in major systems or process failures which could disrupt the
Fund's operations. The Adviser is working with the Fund's service providers to
prepare for the year 2000. Based on information currently available, the Adviser
does not expect that the Fund will incur significant operating expenses or be
required to incur material costs to be year 2000 compliant. The Fund cannot
guarantee, however, that all year 2000 issues will be identified and corrected
by January 1, 2000 and any non-compliant computer systems could hurt key Fund
operations, such as shareholder servicing, pricing and trading. In addition, the
year 2000 problem may adversely affect the companies in which the Fund invests,
which could lower the value of such companies' securities and negatively affect
the Fund's performance. For example, these companies may incur substantial costs
to correct the year 2000 problem.
Rule 12b-1 Plan. The Fund has adopted a plan under Rule 12b-1 (the "Plan") which
allows the Fund to pay for the sale and distribution of its shares at an annual
rate of 0.25% of the Fund's average daily net assets. The Fund may make payments
under the Plan for the purpose of financing any activity primarily intended to
result in the sale of Fund's shares as determined by the Board of Trustees.
Because payments under the Plan are paid out of the Fund's assets on an on-going
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges. See "Distribution Plan"
in the Statement of Additional Information for more details regarding the Plan
and the expenses payable under the Plan. Prior to September ___, 1999 the Fund
had no distribution plan under Rule 12b-1 in place.
<PAGE>
PURCHASING, SELLING AND EXCHANGING SHARES
Information about purchasing, selling and exchanging your shares is contained in
a separate document called the Owner's Manual, which has been delivered with
this Prospectus. The Owner's Manual is considered an integral part of this
Prospectus. The Owner's Manual also contains information about the Telephone
Investment Plan, Telephone Redemption Plan, Automatic Investment Plan,
Systematic Withdrawal Plan and Retirement Plans.
PRICING OF FUND SHARES
The net asset value per share is calculated on each day on which the New York
Stock Exchange ("NYSE") is open for trading. The NYSE is open Monday through
Friday, but currently is scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day and on the preceding Friday
or subsequent Monday when a holiday falls on a Saturday or Sunday, respectively.
The net asset value per share is determined as of the close of regular trading
on the NYSE, normally 4:00 p.m., Eastern time. It is computed by dividing the
value of the Fund's net assets (i.e. the value of its securities and other
assets less its liabilities, including expenses payable or accrued but excluding
capital stock and surplus) by the total number of its shares outstanding at the
time the determination is made. The Fund uses market quotations in valuing its
portfolio securities. Short-term investments that mature in 60 days or less are
valued at amortized cost, which the Trustees of the Fund believe represents fair
value.
The Fund may from time to time hold securities that are primarily listed on
foreign exchanges. Such securities may trade on days when the Fund does not
price its shares. Therefore, the net asset value of the Fund may change on days
when you are not able to purchase or redeem shares.
DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions will be automatically reinvested for your account at
net asset value in additional shares of the Fund, unless you instruct the Fund
to pay all dividends and distributions in cash. You may change your instructions
by notifying the Fund in writing at any time prior to the record date for a
particular dividend or distribution. Dividends from net investment income and
distributions of net realized capital gains, if any, will be paid at least
annually. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains.
TAX INFORMATION
The Fund expects that its distributions will consist primarily of net investment
income and capital gains, which may be taxable at different rates depending on
the length of time the Fund holds its assets. Dividends out of net investment
income and distributions of realized short-term capital gains are taxable to you
as ordinary income. Distributions of net long-term capital gains are taxable to
you at long-term capital gain rates. The Fund's distributions, whether you
receive them in cash or reinvest them in additional shares of the Fund, may be
subject to federal, state or local taxes. An exchange of the Fund's shares for
shares of another Fund will be treated for tax purposes as a sale of the Fund's
shares; therefore, any gain you realize on such a transaction may be taxable.
Foreign shareholders may be subject to special withholding requirements.
This summary of tax consequences is intended for general information only. You
should consult a tax adviser concerning the tax consequences of your investment
in the Fund.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five fiscal years. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund's shares. The full year information has been audited by
Arthur Andersen LLP, independent accountants, whose report along with the Fund's
financial statements and related notes are included in the Fund's annual report,
which is available upon request.
Per share amounts for shares of the Fund outstanding throughout each period.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
June 30, Full Year Ended December 31
1999 1998 1997 1996 1995 1994
Operating performance:
Net asset value, beginning of year $11.73 $13.06 $13.27 $13.75 $13.55 $15.11
Net investment income/(loss) 0.58 0.53 0.40 0.60 0.56
Net realized and unrealized (1.26) (0.13) (0.41) 0.35 (1.45)
gain/(loss) on
investments
Total from investment operations (0.68) 0.40 (0.01) 0.95 (0.89)
Distributions to shareholders:
Net investment income (0.65) (0.61) (0.47) (0.72) (0.67)
Net realized gains --- --- --- (0.03) ---
Total distributions (0.65) (0.61) (0.47) (0.75) (0.67)
Net asset value, end of period $11.73 $13.06 $13.27 $13.75 $13.55
Total return + (5.21%) 3.01% (0.07%) 7.01% (5.89%)
Ratios to average net assets and
supplemental data:
Net assets, end of period (in 000's) $108,548 $138,404 $171,596 $232,303 $293,285
Ratio of net investment income to 4.56% 3.96% 2.96% 4.25% 3.86%
average net assets
Ratio of total expenses to 1.16% 1.07% 1.03% 0.98% 0.93%
average net assets
Portfolio turnover rate 67% 50% 38% 58% 211%
</TABLE>
+ Total return assumes the reinvestment of all dividends and capital gains.
Effective September ___, 1999, the Fund entered into a new investment
advisory agreement which revised the advisory fee previously payable to the
Adviser, and certain other expenses of the Fund were changed at that time.
See "Investment and Performance Summary - Fees and Expenses of the Fund" and
"Management of the Fund".
[BACK COVER PAGE]
The Gabelli Mathers Fund
For More Information:
For more information about the Fund, the following documents are available free
upon request:
Owner's Manual:
Information about purchasing, selling and exchanging shares of the Fund is
included in a separate document entitled "Owner's Manual." The Owner's Manual is
incorporated by reference into this Prospectus. If you have not received it,
please contact the Fund at the number listed below.
Annual/Semi-Annual Reports:
The Fund's semi-annual and audited annual reports to shareholders contain
detailed information on the Fund's investments. In the annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
Statement of Additional Information (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investments policies. It is incorporated by reference and is
legally considered a part of this prospectus.
You can get free copies of these documents and prospectuses of other funds in
the Gabelli family, or request other information and discuss your questions
about the Fund by contacting:
The Gabelli Mathers Fund
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Fund's reports and SAIs at the Public Reference Room of the
Securities and Exchange Commission. You can get text-only copies:
o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
o Free from the Commission's Website at http://www.sec.gov
(Investment Company Act file no. 811-1311)
<PAGE>
THE GABELLI FAMILY
OF FUNDS
- -------------------------------------------------------------------------
Owner's Manual
- ---------------------------------------------------------------------------
AAA Class -
No-Load Class
Gabelli Global Series Funds, Inc.
Gabelli Gold Fund, Inc.
Gabelli International Growth Fund, Inc.
Gabelli ABC Fund
Gabelli Asset Fund
Gabelli Growth Fund
May 1, 1999
The
information contained in the Owner's Manual is
incorporated by reference into, and is legally
considered part of, the Prospectuses for the
Gabelli family of Funds. The Owner's Manual must
be preceded or accompanied by a Gabelli Funds
Prospectus.
<PAGE>
Owner's Manual
Table of Contents
Purchasing Shares
---------------------------- --------------------------------------
3 Instructions for Opening or Adding to an Account
4 Telephone Investment Plan
4 Automatic Investment Plan
4 Retirement Plans
4 Minimum Investments
5 Dividends and Distributions
Selling Shares
---------------------------- -------------------------------------
5 Instructions for Selling Shares
5 By Bank Wire or Check via Telephone
5 By Bank Wire or Check via Mail
6 General Policies on Selling Shares
6 Signature Guarantees
6 Verifying Telephone Redemptions
6 Redemptions Within 15 Days of Investment
6 Refusal of Redemption Request
6 Closing of Small Accounts
6 Undeliverable Distribution Checks
Exchanging Shares
---------------------------------------------------------------------------
7 Instructions for Exchanging Shares
Pricing of Fund Shares
------ ---------------------------------------------------------------------
7 How NAV is Calculated
<PAGE>
PURCHASING SHARES
Instructions for Opening or Adding to an Account
Purchases through Brokers/Dealers:
If purchasing through your financial advisor or brokerage account, simply tell
your advisor or broker that you wish to purchase shares of the Funds and he or
she will take care of the necessary documentation. Your should state
specifically which class of shares you are buying. For all other purchases
directly with the Fund, follow the instructions below.
Purchases directly from the Fund:
All investments made by regular mail or personal delivery, whether initial or
subsequent, should be sent to:
By Regular Mail By Overnight Delivery
The Gabelli Funds The Gabelli Funds
PO Box 8308 c/o BFDS Building, 6th Floor
Boston, MA 02266-8308 Two Heritage Drive
Quincy, MA 02171
For Initial Investment:
1. Carefully read and complete the application.
2. Make check, bank draft or money order payable to "[name of Fund]." 3. Mail or
deliver application and payment to the address above.
For Subsequent Investments:
1. Make check, bank draft or money order payable to "[name of Fund]." 2. Provide
the exact name and number of your account. 3. Mail or deliver payment to the
address above.
By Wire Transfer
For Initial Investment:
Call 1-800-GABELLI (1-800-422-3554) to obtain a new account number. Promptly
mail the completed application to the
address shown above for regular mail, and
For Initial and Subsequent Investments:
Instruct your bank to wire transfer your investment to:
State Street Bank and Trust Company
ABA #011-0000-28 REF DDA# 9904-6187
Attn: Shareholder Services
Re: [Fund Name]
A/C#___________________________
Your name ______________________
225 Franklin Street, Boston, MA 02110
Note: Your bank may charge a wire transfer fee.
shapeType202fFlipH0fFlipV0lTxid65536hspNext1031Questions?
Call 1-800-GABELLI
or your investment representative.
Questions?
Call 1-800-GABELLI
or your investment representative.
<PAGE>
Purchasing Shares (continued)
You can add to your account by using the convenient options described below. The
Fund reserves the right to change or eliminate these privileges at any time upon
60 days notice to shareholders.
<TABLE>
<CAPTION>
<S> <C>
Telephone Investment Plan Automatic Investment Plan
You may purchase additional shares of the Funds by You can make automatic monthly investments in the Funds. Details
telephone as long as your bank is a member of the about this plan can be obtained from the Distributor on a separate
Automated Clearing House (ACH) system. You must also application by calling 1-800-GABELLI (800-422-3554).
have a completed, approved Investment Plan
application on file with the Fund's Transfer Agent.
There is a minimum of $100 for each telephone
investment. To initiate an ACH purchase, please call
1-800-GABELLI (1-800-422-3554) or 1-800-872-5365.
</TABLE>
Retirement Plans
You can invest in various types of
retirement plans
through the Fund. Details about these
plans can be
obtained from the
Distributor on a
separate application
by calling
1-800-GABELLI
(800-422-3554).
- -
Minimum Investments
You may purchase Funds through the Distributor or participating
organizations, which may charge additional fees and may require higher or
lower minimum investments or impose other limitations on buying and selling
shares.
Minimum
Initial Minimum
Account type Investment Subsequent
................................ ..................... ........................
................................ ..................... ........................
Regular (non-retirement) $ 1,000 $ 0
Retirement (IRA)
Traditional IRA $ 1,000 $ 0
Roth IRA $ 1,000 $ 0
Spousal IRA $ 250 $ 0
Education IRA $ 250 $ 0
................................ ..................... ........................
................................ ..................... ....................
Automatic Investment Plan $ 0 $ 100
................................ ..................... ........................
................................ ..................... ........................
Telephone Investment Plan $ 100 $ 100
................................ ..................... ........................
All purchases must be in U.S. dollars. A fee will be charged for any
checks that do not clear. Third-party checks are not accepted. Your
purchase of shares will be effective on the same business day if the
Fund's transfer agent receives your order by 4:00 p.m. (12 noon for a
money market fund), and receives Federal funds by 4:00 p.m., eastern time.
Otherwise, your purchase will be effective on the next business day. (See
"Pricing of Fund Shares.") Shares are held on account for you unless you
specify in writing that you would like to receive a stock certificate
(certificates are not available for money market funds). We can only issue
a certificate for whole shares.
The Distributor may reject a purchase order if it considers it in the best
interest of the Fund and its shareholders. A Fund may waive its minimum
purchase requirement.
Dividends and Distributions
All dividends and distributions will be automatically reinvested unless you
request otherwise.
SELLING SHARES
As a mutual fund shareholder, you are technically selling shares when you
request a withdrawal in cash. This is also known as redeeming shares.
- -------------------------------------------------------------------------------
Withdrawing Money from Your Investment
- ------------------------------------------------------------------------
You may sell your shares at any time. Your sales price will be the next NAV
after your sell order is received by the Fund, its transfer agent, or your
investment representative. See section on "General Policies on Selling
Shares" below.
Systematic Withdrawal Plan
You can receive automatic payments from your account on a monthly, quarterly
or annual basis. You can obtain details from the Distributor.
- -----------------------------------------------------------------------------
Instructions for Selling Shares
The Fund accepts telephone requests for redemptions of unissued shares.
By Bank Wire or Check via Telephone
1. Call 1-800-GABELLI (1-800-422-3554) with your account number, the amount of
the redemption and instructions as to how you wish to receive your funds.
2. If you are unable to reach the Fund by telephone, you may telecopy your
redemption request to the Fund at 914-921-____.
NOTE: If you call by 4:00 p.m., eastern time, your payment will normally be
wired to your bank on the following business day. (For Money Market Funds: If
you call before 12:00 noon, eastern time, your payment will be wired to your
bank on that day.) If you call after that time, your payment will be wired to
your bank on the next business day. If you request your wire redemption by
telephone, it must be at least $1,000. Your bank may charge a fee for incoming
wires.
By Bank Wire or Check via Mail
Submit a redemption request to the Fund. Redemption requests may be made by
letter to the Transfer Agent. You must specify the name of the Fund, the dollar
amount or number of shares you wish to redeem and the account number. You must
sign the letter in exactly the same way the account is registered, and if there
is more than one owner of shares, all must sign. A signature guarantee is
required for most requests.
Selling Shares (continued)
General Policies on Selling Shares
Signature Guarantees
Signature guarantees are required on redemption requests for the following: o
The check is not being mailed to the address on your account o The check
is not being made payable to the owner of the account o The redemption
proceeds are being transferred to another person's Fund account.
A signature guarantee can be obtained from most banks and securities dealers.
Notarized signatures are not considered a signature guarantee.
Verifying Telephone Redemptions
The Fund makes every effort to ensure that telephone redemptions are only made
by authorized shareholders. All telephone calls are recorded for your protection
and you will be asked for information to verify your identity. If appropriate
precautions have not been taken, the Fund may be liable for losses due to
unauthorized transactions.
Redemptions Within 15 Days of Investment
When you have made an investment by check or through the automatic investment
plan, your redemption proceeds will not be mailed until the Transfer Agent is
satisfied that the check has cleared (which may require up to 15 days). You can
avoid this delay by purchasing shares with a certified check or federal funds
wire.
Redemption In Kind
The Fund reserves the right to make a redemption in kind - payment in portfolio
securities rather than cash - for certain large redemption amounts that could
hurt fund operations.
Refusal of Redemption Request
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
Closing of Small Accounts
If your account (other than an IRA) falls below $500, the Fund may ask you to
increase your balance. If it is still below $500 after 30 days, the Fund may
close your account and send you the proceeds at the current NAV.
Undeliverable Distribution Checks
If distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that remain
uncashed for six months will be canceled and the money reinvested in the Fund at
the then current net asset value.
shapeType202fFlipH0fFlipV0lTxid131072hspNext1032Questions? Call 1-800-GABELLI or
your investment representative. Questions? Call 1-800-GABELLI or your investment
representative.
<PAGE>
EXCHANGING SHARES
You can exchange your shares in one Fund for shares of the same class of another
Fund managed by Gabelli Funds, LLC, or its affiliates, usually without paying
additional sales charges (see "Notes" below).
You must meet the minimum investment requirements for the Fund into which you
are exchanging. Exchanges from one Fund to another are taxable transactions.
Instructions for Exchanging Shares
- ------------------------------------------------------------------------------
Exchanges may be made by sending a written request to The Gabelli Funds,
PO Box 8308, Boston, MA 02266-8308 or by calling 1-800-GABELLI
(1-800-422-3554).
Please provide the following information:
o Your name and telephone number
o The exact name on your account and account number
o Taxpayer identification number (usually your Social Security number)
o Dollar value or number of shares to be exchanged o The names of the
Funds from/into which the exchange is to be made
See "Selling Shares" for important information about telephone
transactions.
Notes on exchanges
o When exchanging from a Fund that
has no sales charge or a lower
sales charge to a Fund with a
higher sales charge, you will pay
the difference. o The registration
and tax identification numbers of
the two accounts must be identical.
o This exchange privilege may be
changed or eliminated at any time
upon a 60-day notice to
shareholders. o Be sure to read the
prospectus carefully of any Fund
into which you wish to exchange
shares.
PRICING OF FUND SHARES
How NAV is Calculated
The NAV is calculated by adding the total value of the Fund's investments and
other assets, subtracting its liabilities and then dividing that figure by the
number of outstanding shares of the Fund:
NAV =
Total Assets - Liabilities
Number of Shares
Outstanding
You can find the Fund's NAV daily in the Wall Street Journal and other
newspapers, or by calling 1-800-GABELLI (800-422-3554).
A Fund's net asset value, or NAV, is determined and its shares are priced
at the close of regular trading on the New York Stock Exchange, normally
at 4:00 p.m., eastern time, on days the New York Stock Exchange is open.
Your order for purchase, sale or exchange of shares is priced at the next
NAV calculated after your order is received by the Fund. This is what is
known as the offering price.
Fund securities are valued as of the close of trading on the primary
exchange on which they trade. Fund securities are generally valued at
current market prices. If market quotations are not available, prices
will be based on the average of the latest bid and asked quotations for
such securities prior to the valuation time, or the latest bid price if
asked prices are not available. Debt securities with remaining maturities
of 60 days or less will be valued at amortized cost, which the Board of
Directors believes represents fair value.
Some Fund securities may be listed on foreign exchanges that are open on
days (such as U.S. holidays) when a Fund does not compute its NAV. This
could cause the value of a Fund's portfolio investments to be affected on
days when you cannot buy or sell shares.
<PAGE>
PRELIMINARY, SUBJECT TO COMPLETION
DATED JULY ____, 1999
The information in this Statement of Additional Information is not
complete and may be changed. This Statement of Additional Information is not an
offer to sell these securities and the Fund is not soliciting an offer to buy
these securities in any state where the offer of sale is not permitted.
THE GABELLI MATHERS FUND
STATEMENT OF ADDITIONAL INFORMATION
September ___ , 1999
This Statement of Additional Information (the "SAI"), which is not a prospectus,
describes the Gabelli Mathers Fund. The SAI should be read in conjunction with
the Fund's Prospectus dated September ___ , 1999. For a free copy of the
Prospectus, please contact the Fund at the address, telephone number or Internet
Web site printed below. The Fund's financial statements for its fiscal year
ended December 31, 1998, included in its 1998 Annual Report to Shareholders, are
incorporated by reference into this statement.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
[NEXT PAGE]
TABLE OF CONTENTS
General Information............................................................
Investment Strategies and Risks...............................................
Investment Restrictions.......................................................
Trustees and Officers..........................................................
Control Persons and Principal Shareholders.....................................
Investment Advisory and Other Services........................................
Distribution Plan..........................................................
Portfolio Transactions and Brokerage........................................
Retirement Programs........................................................
Purchase and Redemption of Fund Shares........................................
Computation of Net Asset Value..............................................
Dividends, Distributions and Taxes.........................................
Investment Performance Information.............................................
Description of the Fund's Shares........................................
Financial Statements.....................................................
<PAGE>
GENERAL INFORMATION
The Gabelli Mathers Fund (the "Fund") was formed as a Delaware business trust
under the laws of the state of Delaware on June 17, 1999 and commenced
operations on _____, 1999 as the successor to Mathers Fund, Inc., a Maryland
corporation incorporated on March 31, 1965 that commenced operations on August
19, 1965. Any reference herein to the Fund, including any financial information
and performance data relating to the period prior to ____, 1999, reflects the
Fund as constituted prior to the commencement of operations as a trust.
The Fund is an open-end, diversified management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). An
investment company combines the investments of its shareholders and purchases
various securities. Through ownership of shares in the investment company,
shareholders participate in the investment performance of such securities. As an
open-end investment company, the Fund has an obligation to redeem the shares of
any shareholder by paying such shareholder the net asset value next computed
after receipt of a request in proper form for a redemption of such shares.
INVESTMENT STRATEGIES AND RISKS
The Fund's investment objective, how the Fund seeks to achieve its investment
objective and the principal investment strategies by which the Fund will pursue
its objective are generally set forth in the Prospectus. This section describes
in more detail certain securities in which the Fund may invest and certain
investment practices and restrictions and is intended to augment the description
found in the Prospectus.
Fixed-Income Securities
As discussed in the Prospectus, the Fund may, subject to the limitation
described in paragraph 3 under "Fundamental Policies" below, invest all or any
portion of its assets in high quality fixed-income securities, which may include
the following: * U.S. Treasury bills, notes or bonds; * banker's acceptances and
certificates of deposit of the 50 largest commercial banks in the United States,
measured by total assets as shown by their most recent annual financial
statements;
* commercial paper rated A-l or A-2 by Standard & Poor's, Inc. ("S&P")
or P-l or P-2 by Moody's Investors Service,
Inc. ("Moody's"), or, if not rated, issued by companies having an
outstanding debt issue rated AA or better by S&P
or Aa or better by Moody's; and
* repurchase agreements with respect to the foregoing.
Repurchase Agreements
The Fund will not invest over 10% of its assets in repurchase agreements with
maturities of over seven days. Underlying securities subject to a repurchase
agreement are held in a segregated account in which the custodian holds assets
on behalf of the Fund and others. If the counterparty fails to repurchase any
such securities, the Fund could experience losses that include * possible
decline in their value while the Fund seeks to enforce its rights, * possible
loss of all or a part of the income or proceeds of the repurchase, * possible
loss of rights in such securities, and * additional expenses to the Fund in
enforcing its rights.
<PAGE>
Short Sales of Securities
As discussed in the Prospectus, the Fund may, subject to the limitation
described in paragraph 10 under "Non-fundamental Policies" below, effect short
sales of securities. A short sale is a transaction in which the Fund sells a
security which it does not then own in order to profit from the potential
decline in the market price of that security. To meet its settlement obligation,
the Fund borrows the security sold short from a broker and delivers that
security to the buyer. The Fund is then obligated to return the borrowed
security to the broker, typically at an unspecified future date. At that time,
the Fund purchases an equivalent number of shares of the same shorted security
at its then current market price in order to cover the short position and effect
the return. The price at such time may be more or less than the price at which
the Fund sold the security short. The transaction will be profitable to the Fund
if the price of the security at the time it is purchased is less than its price
at the time the Fund entered into the short sale. Conversely, if the price of
the security is greater at the time of purchase than at the time of the short
sale, the transaction will result in a loss. The Fund will be obligated to
reimburse the lender for any dividends paid on the borrowed stock during the
period of the open short position and may have to pay a fee to borrow certain
stocks.
The Fund's broker retains the proceeds of the short sale for the purpose of
meeting collateral requirements until such time as the Fund closes out the short
position. In general, the Fund must also pledge additional cash or liquid
securities to the broker as collateral for its obligations. Generally, brokers
require initial collateral (including the short sale proceeds) with a value
equal to 150% of the value of the securities sold short. The amount of
collateral is adjusted daily upward to reflect increases in the market value of
the securities sold short and downward to reflect decreases in the market value
of the securities sold short. In addition, pursuant to rules imposed by the
Securities and Exchange Commission (the "SEC"), until the Fund covers its short
position, the Fund will be required to maintain with its custodian a segregated
account, containing cash or liquid debt or equity securities, such that the
amount deposited in the segregated account plus the amount deposited with the
broker as collateral (excluding initial proceeds from the short sale) equals the
current market value of the security sold short. It is possible that up to 100%
of the Fund's assets will be held in such a segregated account (or a segregated
account as described under "Stock Index Futures Contracts and Options on Such
Contracts" below) or deposited with a broker as collateral as described in the
preceding sentences.
The Fund may sell securities short when it believes that prices of such
securities are likely to decline, thereby giving the Fund the opportunity to
potentially profit from any such decline. The Fund anticipates that its short
sales will generally involve individual equity securities and will generally not
involve short sales "against the box," which is the sale of a security that the
seller contemporaneously owns or has a right to obtain at no added cost. The
asset segregation procedures described in the preceding paragraph need not be
applied to short sales to the extent they are "against the box."
The short sale of securities is generally considered a speculative investment
strategy, and there are risks associated with it, including but not limited to
the following: (i) the decision of whether, when and how to utilize short
selling involves the exercise of skill and judgement and, unless the Fund's
Investment Adviser, Gabelli Funds, LLC (the "Adviser") correctly anticipates the
price movements of securities, it is possible that, for at least certain short
sales, the Fund would have been better off if the short sale had not been made,
(ii) unlike a long purchase, where the investor cannot lose more than the
purchase price, there is no theoretical limit to potential losses on a short
sale; (iii) under certain conditions, short sales of securities could increase
the volatility of the Fund or decrease its liquidity; (iv) possible volatility
or illiquidity in the markets which could result in difficulty in closing out an
existing short position, causing a continuing exposure to adverse price
movements until the position is covered; (v) the lender of a security borrowed
and sold short may call the security back, possibly causing a premature
close-out of the short position; and (vi) the amount of any gain will be
decreased, and the amount of any loss increased, by the amount of dividends or
interest the Fund may be required to pay in connection with a short sale.
<PAGE>
Corporate Reorganizations
In general, securities of companies engaged in reorganization transactions sell
at a premium to their historic market price immediately prior to the
announcement of the tender offer or reorganization proposal. However, the
increased market price of such securities may also discount what the stated or
appraised value of the security would be if the contemplated transaction were
approved or consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offeror as well as the dynamic of the business
climate when the offer or proposal is in progress.
Since such investments are ordinarily short term in nature, they will tend to
increase the Fund's portfolio turnover ratio thereby increasing its brokerage
and other transaction expenses. The Adviser intends to select investments of the
type described which, in its view, have a reasonable prospect of capital
appreciation which is significant in relation to both the risk involved and the
potential of available alternate investments.
Stock Index Options
As discussed in the Prospectus, the Fund may, subject to the limitation
described in paragraph 7 under "Non-fundamental Policies" below, purchase put
and call options on stock indices for hedging purposes in circumstances believed
appropriate by the Adviser. Stock index options are issued by the Options
Clearing Corporation ("OCC"). The Fund will only purchase stock index options
which are traded on a national securities exchange such as the Chicago Board
Options Exchange, Inc. Upon purchase of a stock index option, the Fund will pay
a purchase price (the "premium") and brokerage commissions and fees
(collectively, together with the premium, "transaction costs"). Such options
confer upon the holder the right to receive upon exercise an amount of cash
which is based on the difference between the exercise price of the option and
the closing level of the underlying stock index on the exercise date multiplied
by a specified dollar amount. The right to receive any cash amount depends on
the closing level of the stock index upon which the option is based being
greater than (in the case of a call) or less than (in the case of a put) the
exercise price of the option.
A stock index option may be exercised only during its remaining life and may be
sold prior to expiration. The value of an option will generally vary directly,
in the case of a call, and inversely, in the case of a put, with movements in
the underlying index, and the percentage fluctuations in the value of an option
may be many times greater than those of the underlying index. The Adviser may
purchase call index options as a hedge against an increase in the price of
securities generally in connection with either sales of portfolio securities or
deferrals to a later date of purchases of securities it may desire to purchase.
Put index options may be purchased as a hedge against a decline in the price of
securities generally rather than selling portfolio securities.
Any protection provided by stock index options is effective only against changes
in the level of a stock index and not necessarily against a change in the value
of individual securities. Thus, the effectiveness of the use of stock index
options as a hedge is dependent on the extent to which price movements of
individual securities which are being hedged correlate with price movements in
the underlying stock index. Unless a stock index option can be sold or can be
exercised at a profit prior to expiration, the Fund will forfeit the entire
amount of its transaction costs, often in a relatively short period of time. Any
profit that may be realized from the sale or exercise of stock index options
will be reduced by related transaction costs.
<PAGE>
Stock Index Futures Contracts and Options on Such Contracts
As discussed in the Prospectus, the Fund may, subject to the limitation
described in paragraph 8 under "Non-fundamental Policies" below, purchase or
sell stock index futures contracts and options on such contracts for hedging
purposes in circumstances believed to be appropriate by the Adviser thereby
altering the Fund's equity exposure without actually buying or selling
underlying equity securities. A stock index futures contract provides that a
person with an open position in such a contract has the right to receive, or has
the obligation to pay, cash amounts on a daily basis during the period such
position is open based on the daily changes in the difference between the price
at which the contract is originally made and the current level of the underlying
stock index multiplied by a specified dollar amount. An option on a stock index
futures contract gives the holder (purchaser) the right, but not the obligation,
in return for payment of the premium (option price), to acquire either a long or
a short position (a long position if the option is a call and a short position
if the option is a put) in such futures contract at a specified exercise price
at any time during the option exercise period. The writer of the stock index
futures option has the obligation upon exercise to assume the opposite position
on the stock index futures contract.
The Fund's transactions in stock index futures contracts will be executed on
U.S. boards of trade designated by the Commodity Futures Trading Commission
("CFTC") as contract markets ("contract markets") through a futures commission
merchant (an "FCM") which is a member of the relevant contract market. The
contract markets, through their clearinghouses, effectively guarantee that the
payments due with respect to stock index futures contracts will be made so that
traders need not rely solely on the solvency of individual traders or brokers
for the satisfaction of the obligations under open positions. However, in the
event of a bankruptcy of the Fund's broker, the Fund may be unable to recover
its assets - even assets directly traceable to the Fund - from such broker.
At the time the Fund enters into a stock index futures contract, it is required
to deposit as "initial margin" a specified amount of cash or cash equivalents
per contract. Thereafter, subsequent payments of "variation margin" are made
daily to or from the FCM based upon daily changes in the value of the contract
(a process known as "marking to market"). Initial margin is in the nature of a
performance deposit, which is returned to the Fund unless it defaults in making
variation margin payments. Variation margin is the settlement made each day
between the Fund and the FCM based upon fluctuations in the price level of such
contracts, which under normal market conditions directly reflect fluctuations in
the level of the stock index on which the contract is based. A person with a
long position in a stock index futures contract (purchaser) has the right to
receive payments to the extent that the market price level of such futures
contract increases above the level at which such person acquired the long
position, and will be obligated to make payments to the extent that such market
price level falls below the acquisition price level. The converse is the case
for a person with a short position in a stock index futures contract (seller).
Upon exercise of a stock index futures option, the simultaneous acquisition of
open positions in the underlying stock index futures contract by the person
exercising the option and the writer is accomplished by delivery for the account
of the person exercising the option of the accumulated cash balance in the
writer's futures margin account which represents the amount by which the market
price of the stock index futures contract, at exercise, exceeds (in the case of
a call) or is less than (in the case of a put) the strike price of the stock
index futures option. If the stock index futures option is exercised on the last
trading day for such option, the writer delivers to the holder cash in an amount
equal to the difference between the option strike price and the closing level of
the relevant stock index on the date the option expires.
The Fund will not sell stock index futures contracts if, immediately thereafter,
the aggregate underlying value of all such stock index futures contracts would
exceed the total market value (or, if higher, a volatility-adjusted value) of
the Fund's portfolio of equity securities (although it is possible that the
value of all such futures contracts could exceed such total market value or such
volatility-adjusted value of portfolio equity securities due to subsequent
market movements), and the Fund will not purchase stock index futures contracts
unless it maintains with its custodian in a segregated account cash or liquid
securities in an amount equal to the market value of all such stock index
futures contracts (less the amount of initial margin deposits in respect
thereof).
The Fund has obtained from the CFTC an exclusion from falling within the
definition of a "commodity pool operator" pursuant to the regulations under the
Commodity Exchange Act and thus has not registered as such with the CFTC.
The Fund may purchase and sell stock index futures contracts and options on such
contracts as a hedge against market fluctuations in its portfolio of equity
investments or as a means of quickly and efficiently converting the Fund's cash
into an equity position. For example, the Fund might use stock index futures
contracts to hedge against fluctuations in the general level of stock prices
which might adversely affect either the value of the Fund's portfolio securities
or the price of securities which the Fund intends to purchase. The Fund's
hedging may include sales of stock index futures contracts as an offset against
the effect of expected declines in stock prices and purchases of stock index
futures contracts as an offset against the effect of expected increases in stock
prices.
In its purchase of stock index futures contracts or options on such contracts,
the Fund may not necessarily have the contemporaneous intention of converting
such positions into specific equity securities by means of the purchase of such
securities for the Fund's portfolio, and in its sale of stock index futures
contracts or options on such contracts, the Fund may not necessarily have the
contemporaneous intention of converting such positions into non-equity holdings
by means of the sale of equity securities then held in the Fund's portfolio.
Several risk factors are associated with trading stock index futures contracts
and options on such contracts. These risks include: (i) an imperfect
correlation, limiting the effectiveness of any hedge the Fund may attempt in the
futures markets, between the change in market value of the stocks in the Fund's
portfolio and the prices of stock index futures contracts and options on such
contracts in the Fund's portfolio due to the stocks held by the Fund not fully
replicating the stocks underlying the relevant stock index; (ii) possible
illiquidity in the markets for stock index futures contracts and options on such
contracts which could result in the Fund's inability to close out an existing
position resulting in a continuing exposure to adverse price movements; (iii)
the highly leveraged nature of stock index futures contracts and options on such
contracts, resulting in extreme volatility in the value of such contracts as a
percentage of the Fund's assets committed to such positions in the form of
futures margins or option premiums; (iv) the fact that the decision of whether,
when and how to hedge involves the exercise of skill and judgment, and unless
the Fund's Adviser correctly predicts market movements it is possible that as to
a particular hedge the Fund would have been better off had a decision to hedge
not been made; and (v) the possibility that a stock index futures option
purchased by the Fund may expire worthless, in which case the Fund would lose
the premium paid for it as well as related transaction costs. In addition, in
response to the market turbulence in October 1987, certain contract markets have
adopted rules requiring the cessation of trading for specified periods in the
event of substantial intra-day price changes and overall daily price fluctuation
limits (the maximum amount that the price of a stock index futures contract may
vary up or down from the previous day's settlement price). The Federal Reserve
Board has the authority to oversee the levels of required margin on stock index
futures contracts and options on such contracts. The Federal Reserve Board or
the CFTC, acting pursuant to delegated authority, could require that minimum
margin levels be set at levels which exceed those historically applied by the
contract markets.
The price level of a stock index futures contract should correlate with the
current level of the related stock index, after adjustment to reflect that a
person with a long open futures position will receive interest on the funds such
person otherwise would have had to use to acquire the stocks which comprise such
index but, at the same time, will receive no dividends on the futures position
as would have been the case if such person had actually acquired such stocks. In
turbulent market conditions, however, the price level of stock index futures
contracts can become disassociated from the level of the related stock index
(as, in fact, happened during October 1987), materially impairing the usefulness
of the stock index futures markets for hedging stock positions.
INVESTMENT RESTRICTIONS
Fundamental Policies
The Fund has adopted certain fundamental investment restrictions which may not
be changed without approval of the holders of the lesser of: (i) 67% of the
Fund's shares present or represented at a shareholders meeting at which the
holders of more than 50% of such shares are present or represented, or (ii) more
than 50% of the outstanding shares of the Fund. Under its fundamental investment
restrictions, the Fund may not:
1. Purchase securities on margin (except that the Fund may make margin payments
in connection with transactions in stock index futures contracts and options on
such contracts and in connection with short sales of securities), participate in
a joint-trading account (the bunching of securities transaction orders with
orders of other accounts managed by the Adviser not being considered
participation in a joint-trading account for this purpose), act as an
underwriter or distributor of securities other than shares of the Fund, lend
money (except by purchasing publicly distributed debt securities or entering
into repurchase agreements) or purchase or sell commodities or commodity futures
(except that the Fund may purchase or sell stock index futures contracts and
options on such contracts) or real estate (marketable securities of companies
whose business involves the purchase or sale of real estate, including real
estate investment trusts, not being considered real estate for this purpose).
2. Borrow money or issue senior securities, except for temporary bank borrowings
(not in excess of 5% of the value of its assets) for emergency or extraordinary
purposes, or pledge any of its assets (collateral arrangements with respect to
margin for stock index futures contracts and options on such contracts and with
respect to short sales of securities not being considered a pledge of assets for
this purpose), except to secure such borrowings and only to an extent not
greater than 10% of the value of the Fund's net assets. The Fund has not,
however, employed the practices of borrowing money, issuing senior securities or
pledging any of its assets nor does it intend to employ such practices in the
absence of unforeseen circumstances.
3. Purchase debt securities other than those which are publicly held (repurchase
agreements not being considered debt securities for this purpose).
4. Purchase securities of other investment companies, except on the open market
where no profit or commission results other than the broker's commission, or as
part of a plan of merger, consolidation or reorganization approved by the
shareholders of the Fund.
5. Make investments for the purpose of exercising control or management of any
company.
6. Purchase securities of any issuer (other than the United States or an
instrumentality of the United States) if, as a result of such purchase, the Fund
would hold more than 10% of the voting securities of any class of such issuer or
more than 5% of the Fund's assets would be invested in securities of such
issuer.
7. Concentrate more than 25% of the value of its assets, exclusive of government
securities, in securities issued by companies primarily engaged in the same
industry.
8. Acquire or retain any security issued by a company, an officer or director of
which is an officer or trustee of the Fund or an officer, director or other
affiliated person of its investment adviser.
Non-fundamental Policies
The Fund has adopted the following non-fundamental policies which may be changed
by the Fund's Board of Trustees without shareholder approval. The Fund will not:
1. Purchase any securities which are restricted from sale to the public without
registration under the Securities Act of 1933.
2. Purchase any interest in any oil, gas or any other mineral exploration or
development program or, except for options on stock indices as set forth in
paragraph 7 below, invest in put and call options.
3. Purchase any security if, as a result of such purchase, the Fund would hold
more than 10% of any class of the securities of an issuer.
4. Acquire or retain any security issued by a company if the trustees or
officers of the Fund or directors, officers or other affiliated persons of its
investment adviser beneficially owning more than 1/2% of such company's
securities together own more than 5% of its securities.
5. Enter into repurchase agreements, except with authorized banks or dealers
meeting criteria established by the Trustees, or invest over 10% of its assets
in repurchase agreements with maturities of more than seven days.
6. Invest over 10% of its net assets in securities of foreign issuers which are
not publicly traded in the United States.
7. Purchase put and call options on stock indices if the total cost (determined
as of the time of purchase) of all such options held by the Fund would exceed 5%
of the value of the Fund's net assets considered each time such an option is
acquired.
8. Enter into stock index futures contracts or options on such contracts if
immediately thereafter the aggregate initial margin and premiums (less the
amount by which any such options are "in-the-money" at the time of purchase)
would exceed 5% of the value of the Fund's total assets after taking into
account any unrealized profits and losses on such instruments.
9. Invest more than 5% of its net assets in warrants (valued at the lower of
cost or market value) or more than 2% of its net assets in warrants not listed
on the New York or American Stock Exchange (warrants acquired by the Fund in
units or attached to securities to be considered without value for these
purposes).
10. (i) Sell any securities short if immediately thereafter the market value of
all securities sold short by the Fund would exceed 30% of the value of the
Fund's net assets, or (ii) sell securities of any single issuer short if
immediately thereafter the market value of the securities of that issuer that
have been sold short by the Fund would exceed 3% of the Fund's net assets or if
the securities sold short would constitute more than 2% of a class of the
issuer's outstanding securities.
General
Any percentage limitations referred to in the above investment restrictions are
determined at the time a purchase or initial investment or short sale is made
and any subsequent change in any applicable percentage resulting from market
fluctuations does not require elimination of any security from or short position
in the Fund's portfolio.
The Fund's fundamental investment restriction as to concentration, described in
paragraph 7 under "Fundamental Policies" above, does not apply to investments in
government securities (e.g., U.S. Treasury securities) since their issuers are
not members of any industry. The Fund includes government securities in
determining the value of all of its assets for purposes of calculating the
percentage of the value of its assets invested in issuers primarily engaged in
an industry.
The Fund may invest, without limitation under the non-fundamental policy
described in paragraph 6 under "Non-fundamental Policies" above, in foreign
securities that are U.S. dollar denominated and are publicly traded in the
United States and in U.S. dollar denominated American Depositary Receipts
(receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer). As of December 31, 1998, 1.2%
of the Fund's net assets were invested in securities of foreign issuers.
Dividends and interest on securities of foreign issuers may be subject to
foreign withholding tax, which would reduce the Fund's income without providing
a tax credit for the Fund's shareholders. Other risks of investing in foreign
securities include political, social or economic instability in the country
where the issuer is domiciled, the difficulty of predicting international trade
patterns, exchange rate fluctuations, and, in certain countries, the possibility
of expropriation or diplomatic developments that could affect investments in
those countries. In addition, less information may be publicly available about a
foreign company than about a domestic company, foreign companies may not be
subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies, and securities of some
foreign companies may be less liquid and more volatile than securities of
comparable U.S.
companies.
The Fund may purchase securities in underwritten prospectus offerings, including
so-called "hot" initial public offerings, but will generally do so on the basis
of fundamental valuation and/or special situation investment considerations, and
not, typically, solely on the basis of supply and demand considerations.
Generally, the Fund will participate only when the Adviser believes the
securities offered are consistent with the Fund's non-prospectus offering
security selections and investment risk profile.
TRUSTEES AND OFFICERS
The Board of Trustees of the Fund consists of thirteen individuals, ten of whom
are not "interested persons" of the Fund as defined in the Investment Company
Act. Under Delaware law, the Fund's Board of Trustees is responsible for
establishing the Fund's policies and for overseeing the management of the Fund.
The Board also elects the Fund's officers who conduct the daily business of the
Fund. The Trustees and principal officers of the Fund, their ages and their
principal occupations for the past five years are listed below. Unless otherwise
specified, the address of each person is One Corporate Center, Rye, New York
10580-1434. Trustees deemed to be "interested persons" of the Fund for purposes
of the 1940 Act are indicated by an asterisk (*).
<TABLE>
<CAPTION>
<S> <C>
Name, Age and Position(s) with Fund Principal Occupations During Past Five Years
Mario J. Gabelli, CFA, 57 * Chairman of the Board, Chief Executive Officer and
Chairman Chief Investment Officer of Gabelli Asset Management
Trustee Inc. (since February 1999) and Gabelli Funds Inc.
=
Director or
Trustee and/or
Officer of
thirteen other
Gabelli funds.
Chairman of the
Board and Chief
Executive Officer
of Lynch
Corporation
(diversified
manufacturing and
communications
services company)
and Director of
East/West
Communications
Inc.
Felix J. Christiana, 73 Formerly Senior Vice President of Dry Dock Savings
Trustee Bank; Director or Trustee of nine other Gabelli funds.
Anthony J. Colavita, 64 President and Attorney at Law in the law firm of
Trustee Anthony J. Colavita, P.C. since 1961; Director or
Trustee of
thirteen other Gabelli funds.
Vincent D. Enright, 55 Former Senior Vice President and Chief Financial
Trustee Officer of KeySpan Energy Corp.; Director or Trustee
of three other Gabelli funds.
Charles G. Freund, 75 Director of Lincoln National Direct Placement Fund,
Trustee Inc. and Lincoln Convertible Securities Fund
(registered
closed-end
investment
companies) and
Success Bancshares
Inc. Prior to his
retirement in
1986, Mr. Freund
was Vice
President,
Secretary and
Treasurer of
MidCon Corp., a
natural gas
pipeline company.
Jon P. Hedrich, 58 Private investor. Prior to 1992, he was President and
Trustee Partner of Steiner Diamond Institutional Services.
Robert E. Kohnen, 65 President of Bask Group LLC (investment management
Trustee firm); prior to 1999, Vice President and Investment
Manager of Protection Mutual Insurance Company.
Karl Otto Pohl, 69 *+ Member of the Shareholder Committee of Sal Oppenheim
Trustee Jr. & Cie (private investment bank). Director of
Gabelli Asset
Management Inc.
(investment
management),
Zurich Allied
(insurance), and
TrizecHahn Corp.
Former President
of the Deutsche
Bundesbank and
Chairman of its
Central Bank
Council from 1980
through 1991.
Director or
Trustee of all
other mutual funds
advised by Gabelli
Funds, LLC and its
affiliates.
Anthony R. Pustorino, CPA, 73 Certified Public Accountant; Professor of Accounting,
Trustee Pace University; Director or Trustee of nine other
Gabelli funds.
Werner J. Roeder, M.D., 58 Medical Director, Lawrence Hospital and practicing
Trustee private physician; Director or Trustee of seven other
Gabelli funds.
Henry G. Van der Eb, CFA, 54 * Prior to
President and Chief Executive Officer September 1999, Chairman and Chief Executive Officer
Trustee ++ of Mathers Fund, Inc. and President, Mathers and
Company, Inc.
Anthonie C. van Ekris, 65 Managing Director of BALMAC International. Director or
Trustee Trustee of ten other Gabelli funds.
Jack O. Vance, 74 Managing Director of Management Research, Inc., a
Trustee management consulting firm. Director of International
Rectifier Corporation (semi-conductors), Semtech Inc.
and FCG Enterprises, Inc. (management consulting)
Bruce N. Alpert, 47 Executive Vice President and Chief Operating Officer
Executive Vice President and Treasurer of the Adviser. President and Director of Gabelli
Advisers, Inc. and an officer of all funds advised by
Gabelli Funds, LLC and its affiliates.
James E. McKee, 36 Vice President and General Counsel of the Adviser.
Secretary Vice President and General Counsel of GAMCO Investors,
Inc. since 1993. Secretary of all funds advised by
Gabelli Funds, LLC and Gabelli Advisers, Inc. since
August 1995. Branch Chief with the U.S. Securities
and Exchange Commission in New York, 1992 through 1993.
Anne E. Morrissy, CFA, 38 Prior to
Executive Vice President ++ September 1999, Executive Vice President, Secretary
and Director, Mathers Fund Inc. and Vice President,
Mathers and Company, Inc.
Lawrence A. Kenyon, CPA, 34 Prior to
Senior Vice President ++ September 1999, Senior Vice President and Chief
Financial Officer, Mathers Fund Inc. and Vice
President and Treasurer, Mathers and Company, Inc.
Edith L. Cook, 58 Prior to
Vice President ++ September 1999, Vice President and Treasurer, Mathers
Fund Inc. and Vice President, Mathers and Company, Inc.
Heidi M. Stubner, 31 Prior to
Vice President ++ September 1999, Vice President, Mathers Fund Inc.
</TABLE>
+ Mr. Pohl is a director of the parent company of the Adviser.
++ Address is 100 Corporate North, Suite 201, Bannockburn, IL 60015.
As of ____, 1999, the Trustees and officers of the Fund, as a group,
beneficially owned ______ or ____% of the Fund's outstanding shares.
The Board of Trustees of the Fund has an audit committee consisting of Messrs.
Christiana and Pustorino. These Trustees are not "interested persons" of the
Fund (as defined in the 1940 Act). The audit committee is responsible for
recommending the selection of the Fund's independent accountants and reviewing
all audit as well as non-audit accounting services performed for the Fund. The
Fund also has a nominating committee consisting of Messrs. Colavita and Roeder.
These persons are not "interested persons" of the Fund (as defined in the 1940
Act). The nominating committee is responsible for recommending qualified
candidates to the Board of Trustees in the event that a position is vacated or
created.
No affiliated person of the Adviser receives any compensation from the Fund for
serving as an officer or Trustee of the Fund. The Fund pays each of its Trustees
who is not an affiliated person of the Adviser, $1,000 per meeting attended in
person and reimburses each Trustee for related travel and out-of-pocket
expenses. Additionally, Messrs. Freund, Hedrich, Kohnen and Vance receive an
annual retainer of $5,000. The Fund also pays each Trustee serving as a member
of the Audit or Nominating Committees a fee of $500 per committee meeting, if
held on a day other than a regularly scheduled board meeting. The Fund does not
maintain any deferred compensation, pension or retirement plans, and no pension
or retirement benefits are accrued as part of Fund expenses. For the fiscal year
ended December 31, 1998, the fees paid by the Fund to its Trustees who are not
"interested persons" of the Fund totaled $51,000 as set forth in the table
below:
<TABLE>
<CAPTION>
<S> <C>
Name of Non-Interested Trustees of the Fund Aggregate Compensation from the Fund
Karl M. Becker $9,000
Tyler R. Cain $9,000
Charles G. Freund $9,000
Jon P. Hedrich $8,000
Robert E. Kohnen $8,000
Jack O. Vance $8,000
</TABLE>
For the fiscal year ended December 31, 1998, none of the Trustees listed in the
table above served as a Director or Trustee of any other mutual fund in the
Gabelli Fund complex.
<PAGE>
The following table sets forth certain information regarding the aggregate
compensation paid to certain persons who became Trustees of the Fund on
September ___, 1999 from mutual funds in the Gabelli fund complex for the fiscal
year ended December 31, 1998 (the number in parentheses represents the number of
such mutual funds):
<TABLE>
<CAPTION>
<S> <C>
Name of Trustees Aggregate Compensation from Gabelli Fund Complex
Felix J. Christiana $88,500 (9)
Anthony J. Colavita $82,000 (13)
Vincent D. Enright $18,000 (3)
Mario J. Gabelli $ 0 (13)
Karl Otto Pohl $102,466 (15)
Anthony R. Pustorino $100,500 (9)
Werner J. Roeder $25,500 (7)
Anthonie C. van Ekris $57,500 (10)
</TABLE>
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of ______, 1999, no person owned of record or was known by the Fund to own
beneficially more than 5% of the Fund's outstanding shares except for Edward
Pauls, who owned of record _____% of the Fund's outstanding shares as of such
date.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisory Agreement
An investment advisory agreement (the "Current Agreement") between the Fund and
Gabelli Funds, LLC was approved by the shareholders of the Fund on September ___
, 1999. The Adviser is a New York limited liability company which also serves as
adviser to fourteen other open-end investment companies and four closed-end
investment companies in the Gabelli fund complex. The principal office of the
Adviser is located at One Corporate Center, Rye, New York, 10580-1434. The
Adviser is a registered investment adviser under the Investment Advisers Act of
1940, as amended. Mr. Mario J. Gabelli may be deemed a "controlling person" of
the Adviser on the basis of his controlling interest of Gabelli Asset Management
Inc. ("Gabelli"), the parent company of the Adviser.
As compensation for its services and related expenses, the Adviser receives a
fee computed daily and payable monthly in an amount equal on an annualized basis
to 1.00% of the Fund's daily average net assets. The Adviser will waive a
portion of such fee equal to 0.25% of the Fund's daily net asset value during
the period prior to ____, 2001 on the first $100 million of net assets of the
Fund.
Prior to September ___ , 1999, under an investment advisory agreement between
the Fund and Mathers and Company, Inc., 100 Corporate North, Suite 201,
Bannockburn, Illinois (the "Prior Agreement"), Mathers and Company furnished
continuous investment advisory services and management to the Fund. Mathers and
Company received an annual fee of 0.75% of the first $200,000,000 of the Fund's
average net asset value, plus 0.625% of such value in excess of $200,000,000 but
not exceeding $500,000,000, plus 0.50% of such value in excess of $500,000,000,
payable monthly and determined by valuations made as of the close of the
previous month. The fees paid by the Fund to Mathers and Company for 1998, 1997
and 1996 were $865,916, $1,123,610 and $1,451,059, respectively. Pursuant to an
expense reimbursement provision contained in the Prior Agreement, the fees paid
by the Fund to Mathers and Company for 1998 were reduced by $41,301. Absent such
expense reimbursement provision, the fees paid by the Fund to Mathers and
Company for 1998 would have been $907,217.
Mr. Henry G. Van der Eb, CFA, President and Chief Executive Officer, Trustee and
portfolio manager of the Fund, was President and a director of Mathers and
Company, Inc. Mr. Van der Eb owned all of the outstanding shares, and was the
controlling person, of Mathers and Company. Mr. Van der Eb has been primarily
responsible for the day-to-day management of the Fund's portfolio for more than
the last twenty years.
The Current Agreement provides that the Adviser will act as investment adviser
to the Fund, supervise and manage the Fund's investment activities on a
discretionary basis and oversee the administration of the Fund's business and
affairs. In this connection, the Adviser is responsible for maintaining certain
of the Fund's books and records and performing other administrative aspects of
the Fund's operations to the extent not performed by the Fund's custodian,
transfer agent and dividend disbursing agent. The Adviser is permitted to
subcontract at its own expense these administrative responsibilities to persons
it believes are qualified to perform such services and expects to subcontract
certain of these administrative responsibilities to First Data Investor Services
Group, Inc. with respect to the Fund pursuant to a Sub-Administration Agreement,
as described below.
The Adviser bears all costs and expenses incurred in connection with its duties
under the Current Agreement, including the fees or salaries of Trustees or
officers of the Fund who are affiliated persons of the Adviser. Subject to the
foregoing, the Fund will be responsible for the payment of all of its other
expenses, including (i) payment of the fees payable to the Adviser under the
agreement; (ii) organizational expenses; (iii) brokerage fees and commissions;
(iv) taxes; (v) interest charges on borrowings; (vi) the cost of liability
insurance or fidelity bond coverage for the Fund's officers and employees, and
trustees' and officers' errors and omissions insurance coverage; (vii) legal,
auditing and accounting fees and expenses; (viii) charges of the Fund's
custodian, transfer agent and dividend disbursing agent; (ix) the Fund's pro
rata portion of dues, fees and charges of any trade association of which the
Fund is a member; (x) the expenses of printing, preparing and mailing proxies,
stock certificates and reports, including the Fund's prospectus and statement of
additional information, and notices to shareholders; (xi) filing fees for the
registration or qualification of the Fund and its shares under federal or state
securities law; (xii) the fees and expenses involved in registering and
maintaining registration of the Fund's shares with the Securities and Exchange
Commission; (xiii) the expenses of holding shareholder meetings; (xiv) the
compensation, including fees, of any of the Fund's Trustees, officers or
employees who are not affiliated persons of the Adviser; (xv) all expenses of
computing the Fund's net asset value per share, including any equipment or
services obtained solely for the purpose of pricing shares or valuing the Fund's
investment portfolio; (xvi) expenses of personnel performing shareholder
servicing functions and all other distribution expenses payable by the Fund; and
(xvii) litigation and other extraordinary or non-recurring expenses and other
expenses properly payable by the Fund.
The Current Agreement provides that in the course of the Adviser's execution of
portfolio transactions for the Fund, the Adviser may, subject to conditions as
may be specified by the Fund's Board of Trustees, (i) place orders for the
purchase or sale of the Fund's portfolio securities with the Adviser's
affiliate, Gabelli & Company, Inc.; (ii) pay commissions to brokers other than
its affiliate which are higher than might be charged by another qualified broker
to obtain brokerage and/or research services considered by the Adviser to be
useful or desirable in the performance of its duties hereunder and for the
investment management of other advisory accounts over which it or its affiliates
exercise investment discretion; and (iii) consider sales by brokers (other than
its affiliate distributor) of shares of the Fund and any other mutual fund for
which it or its affiliates act as investment adviser, as a factor in its
selection of brokers and dealers for Fund portfolio transactions.
The Current Agreement provides that absent willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her position, the Adviser and its employees, officers, directors, employees,
agents or controlling persons will not be liable for any act or omission or for
any loss sustained by the Fund. However, the agreement provides that the Fund is
not waiving any rights that it may have which cannot be waived. The agreement
also provides that the Fund will indemnify the Adviser and each of such persons
against any liabilities and expenses incurred in the defense or disposition of
any action or proceeding arising out of the agreement unless a court finds that
the person seeking indemnification did not act in good faith in the reasonable
belief that his or her action was in the best interest of the Fund (and, in a
criminal case, that the person had no reasonable cause to believe that his or
her action was unlawful). The agreement provides specific procedures and
standards for making advance payments and permits the Board to disallow
indemnification in certain situations.
The Current Agreement expressly permits the Adviser to act as investment adviser
to others and provides that the word "Gabelli" in the Fund's name is derived
from the name of Mario J. Gabelli and that such name may freely be used by the
Adviser for other investment companies, entities or products. The agreement also
provides that in the event that the Adviser ceases to be the Fund's investment
adviser, the Fund will, unless the Adviser otherwise consents in writing,
promptly take all steps necessary to change its name to a new name which does
not include "Gabelli."
The Current Agreement is terminable without penalty by the Fund on not more than
sixty days' written notice when authorized by the Trustees (or, with respect to
the provisions relating to the Fund's Plan of Distribution, by a majority of the
Trustees who are not "interested persons" and who have no direct or indirect
financial interest in the operation of the Plan of Distribution or any related
agreements) by the holders of the same proportion of shares required to
authorize the agreement or by the Adviser. The agreement will automatically
terminate in the event of its assignment, as defined in the 1940 Act and the
rules thereunder. The agreement provides that unless terminated it will remain
in effect for a period of two years, and from year to year thereafter, so long
as continuation of the agreement is approved annually by the Trustees of the
Fund or the shareholders of the Fund and, in either case, by a majority of the
Trustees who are not parties to the agreement or "interested persons" as defined
in the 1940 Act of any such person.
Sub-Administrator
Effective September ___ , 1999, First Data Investor Services Group, Inc. (the
"Sub-Administrator"), a subsidiary of First Data Corporation, serves as
Sub-Administrator to the Fund pursuant to a Sub-Administration Agreement with
the Adviser (the "Sub-Administration Agreement"). Under the Sub-Administration
Agreement, the Sub-Administrator (a) assists in supervising all aspects of the
Fund's operations except those performed by the Adviser under its advisory
agreement with the Fund; (b) supplies the Fund with office facilities (which may
be in the Sub-Administrator's own offices), statistical and research data, data
processing services, clerical, accounting and bookkeeping services, including,
but not limited to, the calculation of the net asset value of shares in the
Fund, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; (c) prepares and
distributes materials for all Fund Board of Trustees' meetings including the
mailing of all Board materials and collates the same materials into the Board
books and assists in the drafting of minutes of the Board Meetings; (d) prepares
reports to Fund shareholders, tax returns and reports to and filings with the
SEC and state "Blue Sky" authorities; (e) calculates the Fund's net asset value
per share, provides any equipment or services necessary for the purpose of
pricing shares or valuing the Fund's investment portfolio and, when requested,
calculates the amounts permitted for the payment of distribution expenses under
any distribution plan adopted by the Fund; (f) provides compliance testing of
all Fund activities against applicable requirements of the 1940 Act and the
rules thereunder, the Internal Revenue Code of 1986, as amended ("the Code"),
and the Fund's investment restrictions; (g) furnishes to the Adviser such
statistical and other factual information and information regarding economic
factors and trends as the Adviser from time to time may require; and (h)
generally provides all administrative services that may be required for the
ongoing operation of the Fund in a manner consistent with the requirements of
the 1940 Act.
For the services it provides, the Adviser pays the Sub-Administrator an annual
fee based on the value of the aggregate average daily net assets of all funds
under its administration managed by the Adviser as follows: up to $10 billion -
0.0275%; $10 billion to $15 billion - 0.0125%; over $15 billion - 0.001%. The
sub-administrator's fee is paid by the Adviser and will result in no additional
expenses to the Fund.
Counsel
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, serves as the Fund's legal counsel.
Independent Accountants
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, independent
accountants, have been selected to audit and express their opinion on the Fund's
annual financial statements.
Custodian, Transfer Agent and Dividend Disbursing Agent
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, Massachusetts 02110, is the Custodian for the Fund's cash and securities
as well as the Transfer and Dividend Disbursing Agent for its shares. Boston
Financial Data Services, Inc. ("BFDS"), an affiliate of State Street, performs
the shareholder services on behalf of State Street and is located at the BFDS
Building, Two Heritage Drive, Quincy, Massachusetts 02171. Neither State Street
nor BFDS assists in or is responsible for investment decisions involving assets
of the Fund.
Distributor
To implement the Fund's 12b-1 Plan (see "Distribution Plan" below), effective
September __, 1999, the Fund entered into a Distribution Agreement with Gabelli
& Company, Inc. (the "Distributor"), a New York corporation which is an
affiliate of Gabelli Asset Management Inc., having principal offices located at
One Corporate Center, Rye, New York 10580-1434. The Distributor acts as agent of
the Fund for the continuous offering of its shares on a best efforts basis.
DISTRIBUTION PLAN
As approved by shareholders and effective September __, 1999, the Fund adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. The
Plan provides that the Fund will pay the Distributor, in consideration of the
services to be provided and the expenses to be incurred by the Distributor,
distribution payments of .25% per year of the average daily net assets of the
Fund. The payments made by the Fund under the Plan of Distribution will be used
by the Distributor for the purpose of financing activities which are primarily
intended to result in the sale of shares of the Fund, including, but not limited
to, advertising the shares or Gabelli's mutual fund activities; compensating
underwriters, dealers, brokers, banks and other selling entities (including the
Distributor and its affiliates), and sales and marketing personnel of any of
them, for sales of shares of the Fund, whether in a lump sum or on a continuous,
periodic, contingent, deferred or other basis; compensating underwriters,
dealers, brokers, banks and other servicing entities and servicing personnel
(including Gabelli and its personnel) for providing services to shareholders of
the Fund relating to their investment in the Fund, including assistance in
connection with inquiries relating to shareholder accounts; the production and
dissemination of prospectuses (including statements of additional information)
of the Fund and the preparation, production and dissemination of sales,
marketing and shareholder servicing materials; the ordinary or capital expenses,
such as equipment, rent, fixtures, salaries, bonuses, reporting and record
keeping and third party consultancy or similar expenses relating to any activity
for which payment is authorized by the Board; and the financing of any activity
for which payment is authorized by the Board. To the extent any activity is one
which the Fund may finance without a Distribution Plan, the Fund may also make
payments to finance such activity outside of the Plan and not be subject to its
limitations.
The Plan does not require the Distributor to perform any specific type or level
of distribution activities or shareholder services or to incur any specific
level of expenses. Accordingly, it is possible that the Distributor could
receive compensation under the Plan that exceeds the Distributor's costs and
related distribution expenses, thus resulting in a profit to the Distributor. On
the other hand, during periods when it believes the Fund's shares will be
attractive to investors, the Distributor may, but is not required to, spend more
on distribution activities than it receives under the Plan.
The Plan contains a number of provisions relating to reporting obligations and
to its continuation, amendment and termination as required by Rule 12b-1. The
Plan will continue in effect for longer than one year only as long as its
continuation is specifically approved at least annually by a majority of the
Board of Trustees, including a majority of the Rule 12b-1 Trustees (Trustees who
are not "interested persons" of the Fund), by a vote cast in person at a meeting
called for the purpose of voting on the Plan. All material amendments to the
Plan must be approved by a majority of the Board of Trustees and the Rule 12b-1
Trustees, and the Plan may not be amended to increase the maximum level of
payments by the Fund without such approvals and, further, the approval of a
majority of the outstanding shares of the Fund. The Plan may be terminated at
any time by a vote of a majority of the Rule 12b-1 Trustees or by a vote of a
majority of the outstanding shares of the Fund. The Plan requires that the Board
of Trustees receive, at least quarterly, a written report of the amounts
expended pursuant to the Plan and the purposes for which such expenditures were
made. As required by the Rule, while the Plan is in effect, the selection and
nomination of those Trustees who are not "interested persons" shall be at the
discretion of the non-interested Trustees then in office.
No interested person of the Fund or any Trustee of the Fund had a direct or
indirect financial interest in the operation of the Plan or related agreements.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser currently serves as adviser to a number of investment company
clients and may in the future act as adviser to others. Affiliates of the
Adviser act as investment adviser to numerous private accounts. It is the
practice of the Adviser and its affiliates to cause purchase and sale
transactions to be allocated among the Fund and others whose assets they manage
in such manner as they deem equitable. In making such allocations among the Fund
and other client accounts, the main factors considered are the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for such investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and other client accounts.
The Adviser is authorized on behalf of the Fund to employ brokers to effect the
purchase or sale of portfolio securities with the objective of obtaining prompt,
efficient and reliable execution and clearance of such transactions at the most
favorable price obtainable ("best execution") at reasonable expense.
Transactions in securities other than those for which a securities exchange is
the principal market are generally done through a principal market maker.
However, such transactions may be effected through a brokerage firm and a
commission is paid whenever it appears that the broker can obtain a more
favorable overall price. In general, there may be no stated commission in the
case of securities traded on the over-the-counter markets, but the prices of
those securities may include undisclosed commissions or markups. Options
transactions will usually be effected through a broker and a commission will be
charged. The Fund also expects that securities will be purchased at times in
underwritten offerings where the price includes a fixed amount of compensation
generally referred to as the underwriter's concession or discount.
The policy of the Fund regarding purchases and sales of portfolio securities is
that primary consideration will be given to obtaining the most favorable prices
and efficient execution of transactions. In seeking to implement the Fund's
policies, the Adviser effects transactions with those brokers and dealers who
the Adviser believes provide the most favorable prices and are capable of
providing efficient executions. If the Adviser believes such price and execution
are obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Adviser of the type described in
Section 28(e) of the Securities Exchange Act of 1934. In doing so, the Fund may
also pay higher commission rates than the lowest available when the Adviser
believes it is reasonable to do so in light of the value of the brokerage and
research services provided by the broker effecting the transaction. Such
services may include, but are not limited to, any one or more of the following:
information as to the availability of securities for purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities.
Research services furnished by brokers or dealers through which the Fund effects
securities transactions are used by the Adviser and its advisory affiliates in
carrying out their responsibilities with respect to all of the accounts over
which they exercise investment discretion. Such investment information may be
useful only to one or more of the other accounts of the Adviser and its advisory
affiliates, and research information received for the commissions of those
particular accounts may be useful both to the Fund and one or more of such other
accounts. The purpose of this sharing of research information is to avoid
duplicative charges for research provided by brokers and dealers.
Neither the Fund nor the Adviser has any legally binding agreement with any
broker or dealer regarding any specific amount of brokerage commissions which
will be paid in recognition of such services. However, in determining the amount
of portfolio commissions directed to such brokers or dealers, the Adviser does
consider the level of services provided. During 1998, the total amount of Fund
brokerage transactions and related brokerage commissions directed in
consideration of research services provided to Mathers and Company, Inc. (the
"Prior Adviser") were $25,931,777 and $72,997, respectively, exclusive of dealer
concessions from underwritten offerings.
Shortly after _____, 1999 it is anticipated that the Board will consider a
proposal for the Adviser to place orders with Gabelli & Company, Inc. ("Gabelli
& Company"), an affiliate of the Adviser and a broker-dealer member of the
National Association of Securities Dealers, Inc. Assuming the Trustees approve,
the Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company when it appears that, as an introducing broker
or otherwise, Gabelli & Company can obtain a price and execution which is at
least as favorable as that obtainable by other qualified brokers. The Adviser
may also consider sales of shares of the Fund and any other registered
investment companies managed by the Adviser and its affiliates by brokers and
dealers other than the Distributor as a factor in its selection of brokers and
dealers to execute portfolio transactions of the Fund.
To obtain the best execution of portfolio trades on the New York Stock Exchange
("Exchange"), Gabelli & Company controls and monitors the execution of such
transactions on the floor of the Exchange through independent "floor brokers" or
through the Designated Order Turnaround System of the Exchange. Such
transactions are then cleared, confirmed to the Fund for the account of Gabelli
& Company, and settled directly with the Custodian of each fund by a clearing
house member firm which remits the commission less its clearing charges to
Gabelli & Company Gabelli & Company may also effect portfolio transactions on
behalf of the Fund in the same manner and pursuant to the same arrangements on
other national securities exchanges which adopt direct access rules similar to
those of the Exchange.
Under the prior Adviser, during 1998, 1997 and 1996, the Fund paid total
brokerage commissions of $551,077, $291,860 and $532,849, respectively,
virtually all of which was paid to firms providing research as well as brokerage
services. None of the commissions paid by the Fund in 1998, 1997 or 1996 were
paid to Gabelli & Company The Fund's annual portfolio turnover rate is set forth
in the Prospectus under "Financial Highlights". Portfolio turnover may be high
in certain years. Several factors may contribute to this, including (i) the
volatility of the markets, combined with a willingness of the Adviser to respond
to certain market conditions believed by the Adviser to warrant holding a
security for a period shorter than the long-term, and (ii) the Adviser's
willingness to invest in fixed income securities with maturities greater than
one year (which, unlike short-term debt instruments, are included in calculating
portfolio turnover) under the circumstances described in the Prospectus.
<PAGE>
RETIREMENT PROGRAMS
Under the Code, individuals may make wholly or partly tax deductible IRA
contributions of up to $2,000 annually, depending on whether they are active
participants in an employer-sponsored retirement plan and on their income level.
However, dividends and distributions held in the account are not taxed until
withdrawn in accordance with the provisions of the Code. An individual with a
non-working spouse may establish a separate IRA for the spouse under the same
conditions and contribute a combined maximum of $4,000 annually to both IRAs
provided that no more than $2,000 may be contributed to the IRA of either
spouse. Other provisions permit additional IRA contributions which are not tax
deductible but the tax on reinvested dividends and distributions is deferred
while held in the account. There are also rules on the amount of tax deductible
contributions which may be made to other retirement plans.
Investors may be eligible to make contributions to a new type of individual
retirement account (a "Roth IRA"). An investor can open a Roth IRA if he or
she meets certain income limits specified in the Code. Any contributions
made by an investor to a Roth IRA are nondeductible for U.S. Federal income
tax purposes. Distributions from a Roth IRA are not included in the
investor's gross income and are not subject to a 10% penalty for early
withdrawal if the distributions are made after the end of the five-year
period beginning with the first tax year in which the investor made a
contribution to the Roth IRA and the distributions meet other criteria set
forth in the Code. The maximum annual aggregate contribution that can be
made to IRAs and Roth IRAs is $2,000. In addition, certain low and
middle-income investors may open an education individual retirement account
(an "Education IRA"). Eligible individuals are permitted to contribute up
to $500 per year per beneficiary under 18 years old to an Education IRA.
The minimum initial investment for an Education IRA through the Fund is
$250. A distribution from an Education IRA is generally excludable from
gross income to the extent that such distribution does not exceed qualified
higher education expenses incurred by the beneficiary during the year in
which the distribution is made.
Self-employed investors may purchase shares of the Fund through tax-deductible
contributions to existing retirement plans for self-employed persons, known as
Keogh or H.R. 10 plans. However, the Fund does not currently act as sponsor to
such plans. Fund shares may be a suitable investment for other types of
qualified pension or profit-sharing plans which are employer sponsored,
including deferred compensation or salary reduction plans known as "401(k)
Plans" which give participants the right to defer portions of their compensation
for investment on a tax-deferred basis until distributions are made from the
plans. The minimum initial investment for an individual under such plans is
$1,000 and there is no minimum for additional investments.
Investors should be aware that they may be subject to penalties or additional
tax on contributions to or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Code and prior to a
withdrawal, shareholders may be required to certify their age and awareness of
such restrictions in writing. Persons desiring information concerning
investments through IRAs or other retirement plans should write or telephone the
Distributor.
PURCHASE AND REDEMPTION OF FUND SHARES
The Fund issues shares directly through its distributor. The purchase price per
share is the next determined net asset value after acceptance of an application.
See "Computation of Net Asset Value". Information about purchasing, selling and
exchanging shares is contained in a separate document called the Owner's Manual,
which has been delivered with the Prospectus. The Owner's Manual is considered
an integral part of the Prospectus. The Owner's Manual also contains information
about the Telephone Investment Plan, Telephone Redemption Plan, Automatic
Investment Plan, Systematic Withdrawal Plan and Retirement Plans.
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected at the discretion of the Adviser and taken
at the value used in determining the Fund's net asset value per share as
described under "Computation of Net Asset Value"), or partly in cash and partly
in portfolio securities. However, payments will be made wholly in cash unless
the Adviser believes that economic conditions exist which would make such a
practice detrimental to the best interests of the Fund. If payment for shares
redeemed is made wholly or partly in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to cash. The Fund will
not distribute in-kind portfolio securities that are not readily marketable. The
Fund has filed a formal election with the SEC pursuant to which the Fund will
only effect a redemption in portfolio securities where the particular
shareholder of record is redeeming more than $250,000 or 1% of the Fund's total
net assets, whichever is less, during any 90 day period. In the opinion of the
Fund's management, however, the amount of a redemption request would have to be
significantly greater than $250,000 before a redemption wholly or partly in
portfolio securities would be made.
COMPUTATION OF NET ASSET VALUE
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the NYSE are valued, except as
indicated below, at the last sale price reflected at the close of the regular
trading session of the NYSE on the business day such value is being determined.
If there has been no sale on such day, the securities are valued at the average
of the closing bid and asked prices on such day. If no asked prices are quoted
on such day, then the security is valued at the closing bid price on such day.
If no bid or asked prices are quoted on such day, then the security is valued by
such method as the Board of Trustees shall determine in good faith to reflect
its fair market value. Readily marketable securities not listed on the NYSE but
listed on other national securities exchanges or admitted to trading on the
National Association of Securities Dealers Automated Quotations, Inc. ("NASDAQ")
National List are valued in like manner.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Trustees deems appropriate to reflect their fair value. If no asked prices are
quoted on such day, then the security is valued at the closing bid price on such
day. If no bid or asked prices are quoted on such day, then the security is
valued by such method as the Board of Trustees 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 the Adviser. Securities traded primarily on foreign exchanges are
valued at the closing price on such foreign exchange immediately prior to the
close of the NYSE.
United States Government obligations and other short-term debt instruments
having sixty days or less remaining until maturity are stated at amortized cost.
Short-term debt instruments having a greater remaining maturity will be valued
at the highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service approved
as reliable by the Board of Trustees. All other investment assets, including
restricted and not readily marketable securities, are valued under procedures
established by and under the general supervision and responsibility of the
Fund's Board of Trustees designed to reflect in good faith the fair value of
such securities.
Stock index futures contracts held by the Fund are valued at the close of
trading settlement price established each day by the exchange on which they are
traded. Options on stock index futures and options on cash stock indices are
valued at their daily end of trading closing prices on the exchanges on which
they are traded.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund has qualified, and intends to remain qualified, as a "regulated
investment company" under Subchapter M of the Code. In order to remain
qualified, the Fund must, among other things, (i) derive in each taxable year at
least 90% of its gross income from dividends, interest, gains from the sale or
other disposition of stock or securities and certain other income (including,
but not limited to, gains from options and futures contracts) derived with
respect to its business of investing in stocks and securities, and (ii)
diversify its holdings so that, at the end of each quarter of its taxable year,
(a) at least 50% of the value of its assets is represented by cash, cash items,
U.S. Government securities, and other securities limited, in respect of any one
issuer, to a value not greater than 5% of the value of the Fund's total assets
and 10% of the outstanding voting securities of such issuer and (b) not more
than 25% of the value of its assets is invested in the securities of any one
issuer (other than the U.S. Government).
As a regulated investment company, the Fund is generally not subject to federal
income tax on its income and gains distributed to shareholders, provided the
Fund distributes to its shareholders at least 90% of its net investment income
(i.e., net income and gains exclusive of net capital gains) each year. In the
event the Fund does not qualify in any year as a regulated investment company,
its income would be taxed to the Fund whether or not distributed, and
distributions would generally be taxable to shareholders as ordinary dividend
income.
A non-deductible 4% excise tax will be imposed on the Fund to the extent the
Fund does not distribute during each calendar year at least (i) 98% of its
ordinary income for such calendar year, (ii) 98% of its capital gain net income
for such calendar year, and (iii) certain other amounts not distributed in
previous years. The Fund intends to distribute its income and gains in a manner
so as to avoid the imposition of such 4% excise tax.
In connection with short sales by the Fund, the Fund will be subject to certain
rules which may affect the character and timing of gain or loss recognized by
the Fund for federal income tax purposes. Under these rules a short sale remains
open until the Fund (as the short seller), delivers the security to the broker
(as the lender), and closes the transaction. Any gain or loss realized by the
Fund from closing a short sale will be short-term capital gain or loss if the
Fund acquires substantially identical securities after the time the short sale
is entered into but prior to closing such short sale. The Fund expects to close
out all of its short sales with such after-acquired securities. Special rules
may affect the character of any gains or losses, in certain circumstances, if
the Fund were to hold substantially identical securities at the time that it
enters into a short sale. However, the Fund does not intend to enter into short
sales with respect to securities that it holds at the time of entering a short
sale.
Under the "mark-to-market" rules of the Code, most stock index options, stock
index futures contracts and options on such contracts will be treated for
federal income tax purposes as having been sold for their fair market value on
the last business day of the Fund's taxable year. Any gain or loss resulting
from such deemed sales, and from actual sales of such options and futures
contracts, will be treated as 60% long-term capital gain or loss and 40%
short-term capital gain or loss. If the Fund engages in certain hedged
transactions, the Code may treat the transaction as a deemed sale of the
appreciated property, which may accelerate the gain on the hedged transaction.
In general, distributions of net investment income will be taxable as ordinary
income. In addition, distributions of net capital gain (i.e., the Fund's net
long-term capital gains in excess of its net short-term capital losses and
available capital loss carryover), when designated as such by the Fund,
generally are treated as gain recognized from the sale or exchange of a capital
asset held for more than one year, regardless of how long you have held your
Fund shares. In general, among other circumstances, the Fund will generate
capital gain or loss upon liquidating an investment in order to change the
composition of its investment portfolio.
If the net asset value of shares is reduced below your cost by a distribution,
such distribution would be taxable as described in the Prospectus even though it
might be viewed in economic terms as a return of capital. For federal income tax
purposes, the original cost continues as the tax basis and on redemption the
gain or loss is the difference between such basis and the redemption price.
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, unless you have elected otherwise, be paid on the
payment date fixed by the Board of Trustees in additional shares of the Fund
having an aggregate net asset value as of the ex-dividend date of such dividend
or distribution equal to the cash amount of such distribution. An election to
receive dividends and distributions may be changed by notifying the Fund in
writing at any time prior to the record date for a particular dividend or
distribution. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distribution. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains.
In the case of corporate shareholders, such distributions are eligible for the
dividends received deduction only to the extent of the aggregate qualifying
dividends received by the Fund from domestic corporations in any year.
Distributions of long-term capital gains are taxable to the corporate
shareholder as long-term capital gains and are not eligible for the dividends
received deduction.
For purposes of determining your taxable income each year, dividends declared by
the Fund in October, November or December of a year, payable to you as of a
record date in any such month, and paid during the following January, will be
treated for federal income tax purposes as paid by the Fund and received by
shareholders as of December 31 of the calendar year declared.
Income tax withholding at a rate of 20% is applicable to any distribution from a
qualified retirement plan or a tax-sheltered annuity plan where the distribution
is eligible for tax-free rollover treatment but is not transferred directly to a
specified retirement vehicle such as another qualified plan or an IRA. Also, all
qualified plans must provide participants and certain other distributees with an
election to have an eligible rollover distribution transferred directly to
certain specified retirement vehicles. If a shareholder receives a distribution
which is subject to the 20% withholding requirement and wishes to roll the
distribution into another vehicle such as an IRA within 60 days, the shareholder
will have to contribute to the IRA the amount of the distribution (after
withholding) plus an amount equal to the amount withheld. The amount withheld
can be applied to reduce the shareholder's federal income tax liability and may
be refunded to the shareholder upon filing a federal income tax return if it
exceeds such tax liability. If the amount withheld is not rolled over into the
IRA, it will be subject to income taxes and, if the shareholder has not attained
age 59 1/2, an additional 10% penalty tax may apply.
The rules broadly define distributions which qualify for rollover treatment.
Shareholders who expect to receive distributions which may qualify for rollover
treatment and therefore may be subject to 20% withholding should consult their
tax advisers for a complete discussion on the impact of these rules on such
distributions.
The foregoing is only a general summary of the certain provisions of the Code
and current Treasury regulations applicable to the Fund and its shareholders.
The Code and such regulations are subject to change by legislative or
administrative action.
The tax consequences to a foreign shareholder of the Fund may be different from
those described herein. Foreign shareholders are advised to consult their tax
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
Distributions to you may also be subject to state and local taxes. Investors are
urged to consult their tax advisers regarding the application of federal, state
and local tax laws.
INVESTMENT PERFORMANCE INFORMATION
From time to time, the Fund may report its historical performance for various
periods on a total return basis in reports or other communications to
shareholders or in advertising material. Total return combines principal changes
and dividends for the periods shown. Principal changes are the difference
between the beginning and ending net asset values for a given period and assume
reinvestment of dividends. Dividends include income dividends and capital gains
distributions paid during the period. Percentage changes are determined by
subtracting the beginning net asset value from ending net asset value (computed
on a total return basis) and dividing the remainder by the beginning net asset
value.
The Fund's performance will vary from time to time and your shares, when
redeemed, may be worth more or less than their original cost. You should not
consider past results to be representative of future performance. Factors
affecting the Fund's performance include, among other things, general market
conditions, the composition of the Fund's portfolio, and operating expenses. No
adjustment is made in reporting performance for taxes payable by shareholders on
reinvested income dividends and capital gains distributions.
Comparative performance information or rankings may be used from time to time in
reports or other communications to shareholders or in advertising material.
The compound annual rates of return of the Fund for the one, five and ten year
periods ended June 30, 1999, and since inception (August 19, 1965) through June
30, 1999, were -1.10%, 0.94%, 2.82% and 11.40%, respectively, computed in
accordance with the rules for standardized computation of performance as
established by the SEC. Such rules for standardized computation of performance
provide for determining compound annual rates of return by taking the total
return of the Fund over the period in question calculated as described in the
third preceding paragraph and "annualizing" such total return -- i.e., computing
the annual rate of return which, if earned in each year of such period, would
produce the total return actually earned over such period.
Inasmuch as the Fund has no sales load on purchases or reinvested dividends and
no deferred sales load or redemption fee, no adjustments are made for such items
in calculating performance.
DESCRIPTION OF THE FUND'S SHARES
The Fund is a Delaware business trust formed on June 17, 1999. It is authorized
to issue an unlimited number of shares of beneficial interest. Subject to
approval by the Trustees of a plan under Rule 18f-3 of the 1940 Act, the
Trustees of the Fund may, at any time and from time to time, by resolution,
authorize the division of shares into an unlimited number of series and the
division of any series into two or more classes. There is currently a single
series with a single class of shares designated as AAA.
Shareholders are entitled to one vote for each share held (and fractional votes
for fractional shares) and may vote on the election of Trustees and on other
matters submitted to meetings of shareholders. As a Delaware business trust, the
Fund is not required, and does not intend, to hold regular annual shareholder
meetings but may hold special meetings for the consideration of proposals
requiring shareholder approval such as changing fundamental policies. In
addition, if the Trustees have not called an annual meeting of shareholders for
any year by May 31 of that year, the Trustees will call a meeting of
shareholders upon the written request of shareholders holding in excess of 50%
of the affected shares for the purpose of removing one or more Trustees or the
termination of any investment advisory agreement. The Declaration of Trust
provides that the Fund's shareholders have the right, upon the vote of more than
two-thirds of its outstanding shares, to remove a Trustee. Except as may be
required by the 1940 Act or any other applicable law, the Trustees may amend the
Declaration of Trust in any respect without any vote of shareholders to make any
change that does not (i) impair the exemptions from personal liability as
provided therein or (ii) permit assessments on shareholders. Shareholders have
no preemptive or conversion rights except with respect to shares that may be
denominated as being convertible or as otherwise provided by the Trustees or
applicable law. The Fund may be (i) terminated upon the affirmative vote of a
majority of the Trustees or (ii) merged or consolidated with, or sell all or
substantially all of its assets to another issuer, if such transaction is
approved by the vote of two-thirds of the Trustees without any vote of the
shareholders, in each case except as may be required by the 1940 Act or any
other applicable law. If not so terminated, the Fund intends to continue
indefinitely.
FINANCIAL STATEMENTS
The Fund's audited balance sheet and schedule of investments as of December 31,
1998, and the related statement of operations for the year then ended and
statements of changes in net assets for each of the two years in the period
ended December 31, 1998, and the auditors' report of Arthur Andersen LLP, the
Fund's former independent auditor, dated January 15, 1999 relating to such
financial statements, are incorporated herein by reference to the Fund's 1998
Annual Report to Shareholders. No other portion of such Annual Report is
incorporated by reference herein or is a part of the registration statement of
which this Statement of Additional Information is a part. A copy of the Annual
Report to Shareholders referred to above is provided with this Statement of
Additional Information to each person who is not a shareholder of the Fund and
has not otherwise received a copy of such Report. Shareholders of the Fund may
obtain a copy of the Report without charge by writing or telephoning the Fund at
the address and telephone number set forth on the cover page of this Statement
of Additional Information.
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
(a)(1) Agreement and Declaration of Trust of The Gabelli Mathers Fund
(the "Fund")
(a)(2) Resolutions Authorizing Initial Series of Shares of the Fund
(b) By-Laws of the Fund
(c) Not Applicable
(d) Investment Advisory Agreement between the Fund and Gabelli Funds, LLC (the
"Adviser")
(e) Distribution Agreement between the Fund and Gabelli & Company, Inc.
(the "Distributor")
(f) Not Applicable
(g) Custodian Agreement between the Fund and State Street Bank and Trust
Company *
(h)(1) Transfer Agency and Service Agreement between the Fund and State
Street Bank and Trust Company *
(h)(2) Sub-Administration Agreement between the Adviser and First Data
Investor Services Group, Inc.
(h)(3) Amendment No. 2 to Sub-Administration Agreement between the
Adviser and First Data Investor Services
Group, Inc.
(i) Opinion and Consent of counsel concerning the legality of the
securities to be issued by the Fund *
(j) Consent of Independent Accountants *
(k) Not Applicable
(l) Not Applicable
(m) Plan of Distribution pursuant to Rule 12b-1
(n) Financial Data Schedule *
(o) Not Applicable
* To be filed by amendment.
Item 24. Persons Controlled by or under Common Control with the Fund
Insofar as the following have substantially identical or similar
boards of directors or trustees they may be deemed with the Fund to
be under common control: The Gabelli ABC Fund, The Gabelli Asset
Fund, Gabelli Gold Fund, Inc., The Gabelli Growth Fund, The Gabelli
Value Fund Inc., The Gabelli Capital Asset Fund, The Gabelli Small
Cap Growth Fund, Gabelli Equity Income Fund, The Gabelli Westwood
Funds, The Gabelli Global Series Funds, Inc., The Gabelli U.S.
Treasury Money Market Fund, Gabelli Equity Trust Inc., Gabelli Global
Multimedia Trust Inc., Gabelli Convertible Securities Fund, Inc.,
Gabelli Utility Trust, Gabelli International Growth Fund, Inc., The
Treasurers Fund, Inc., Gabelli Utilities Fund and Gabelli Blue Chip
Value Fund.
Item 25. Indemnification
See Article IV of the Fund's Agreement and Declaration of Trust,
filed as Exhibit (a)(1) to this Registration Statement, which
provision is incorporated herein by reference. Insofar as
indemnification of liabilities arising under the 1933 Act may be
permitted to trustees, officers and controlling persons of the Fund
pursuant to the foregoing provisions, or otherwise, the Fund has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in that
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Fund of expenses incurred or paid by a trustee, officer or
controlling person of the Fund in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being
registered, the Fund will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
1933 Act and will be governed by the final adjudication of such
issue.
The Fund hereby undertakes that it will apply the indemnification
provisions of its Declaration of Trust, its By-laws, the Investment
Advisory Agreement, the Sub-Administration Agreement and the
Distribution Agreement in a manner consistent with Release No. 11330
of the Securities and Exchange Commission under the 1940 Act.
Item 26. Business and Other Connections of Investment Adviser
The Adviser is a registered investment adviser providing investment
management and administrative services to the Fund. The Adviser also
provides similar services to other mutual funds.
The information required by this Item 26 of directors, officers or
partners of the Adviser, together with information as to any other
business, profession, vocation or employment of a substantial nature
engaged in by the Adviser or such directors, officers or partners
during the past two years, is incorporated by reference to Form ADV
filed by the Adviser under 1940 Act (SEC File No. 801-37706).
Item 27. Principal Underwriters
(a) The Distributor, Gabelli & Company, Inc., is also the
principal underwriter for The Gabelli ABC Fund, The Gabelli
Growth Fund, The Gabelli Asset Fund, The Gabelli Value Fund,
Inc., The Gabelli Capital Asset Fund, The Gabelli Small Cap
Growth Fund, Gabelli Equity Income Fund, Gabelli Gold Fund,
Inc., The Gabelli International Growth Fund, Inc., The Gabelli
Westwood Funds, The Gabelli Global Series Funds, Inc., The
Gabelli U.S. Treasury Money Market Fund, Gabelli Utilities
Fund and Gabelli Blue Chip Value Fund.
(b) The information required by this Item 27 with respect to each
director, officer or partner of Gabelli & Company is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company under the Securities Exchange Act of 1934,
as amended (SEC File No. 8-21373).
(c) Not applicable. The Registrant's only principal underwriter is
an affiliated person of an affiliated person of the
Registrant.
Item 28. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
thereunder will be maintained at the offices of the
Sub-Administrator, First Data Investor Services Group, 101 Federal
Street, Boston, Massachusetts 02110, at the offices of the Fund's
Custodian, State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts, at the offices of the Fund's Transfer Agent
and Dividend Disbursing Agent, State Street Bank & Trust Company, c/o
Boston Financial Data Services, Two Heritage Drive, North Quincy,
Massachusetts 02171 or at the offices of the Adviser, Gabelli Funds,
LLC, One Corporate Center, Rye, New York 10580-1434 and 100 Corporate
North, Suite 201, Bannockburn, IL 60015.
Item 29. Management Services
Not Applicable
Item 30. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Bannockburn, Illinois, on the ____ day of July,
1999.
MATHERS FUND, INC.
By /s/ Henry G. Van der Eb
Henry G. Van der Eb
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below on July ____, 1999
by the following persons in the capacities indicated:
Signature Capacity
/s/ Henry G. Van der Eb Chairman and Director,
Principal Executive Officer
Henry G. Van der Eb
/s/ Lawrence A. Kenyon Senior Vice President and
Chief Financial Officer
Lawrence A. Kenyon
Director
Tyler R. Cain
* Director
Charles G. Freund
* Director
Jon P. Hedrich
* Director
Robert E. Kohnen
* Director
Anne E. Morrissy
<PAGE>
* Director
Robert J. Reynolds
* Director
Jack O. Vance
By /s/ Henry G. Van der Eb
Henry G. Van der Eb
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description of Document
(a)(1) Agreement and Declaration of Trust of The
Gabelli Mathers Fund (the "Fund")
(a)(2) Resolutions Authorizing Initial Series of
Shares of the Fund
(b) By-Laws of the Fund
(d) Investment Advisory Agreement between the
Fund and Gabelli Funds, LLC (the "Adviser")
(e) Distribution Agreement between the Fund and
Gabelli & Company, Inc. (the "Distributor")
(h)(2) Sub-Administration Agreement between the
Adviser and First Data Investor Services
Group, Inc.
(h)(2) Amendment No. 2 to Sub-Administration
Agreement between the Adviser and First Data
Investor Services Group, Inc.
(m) Plan of Distribution pursuant to Rule 12b-1
THE GABELLI MATHERS FUND
----------------------------------------------------------
AGREEMENT
AND DECLARATION OF TRUST
------------------------------------------------------------------
June 17, 1999
1
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TABLE OF CONTENTS
ARTICLE I
The Trust
Section 1.1 Name......................................................2
Section 1.2 Definitions..............................................2
Section 1.3 Purpose and Powers of Trust...............................4
ARTICLE II
Trustees
Section 2.1 Number and Qualification.............................4
Section 2.2 Term and Election..........................................4
Section 2.3 Resignation and Removal.....................................5
Section 2.4 Vacancies..................................................5
Section 2.5 Meetings.................................................6
Section 2.6 Officers............................................7
ARTICLE III
Powers and Duties of Trustees
Section 3.1 General....................................................7
Section 3.2 Investments...............................................8
Section 3.3 Legal Title................................................8
Section 3.4 Issuance and Repurchase of Shares..........................8
Section 3.5 Borrow Money or Utilize Leverage............................9
Section 3.6 Delegation; Committees. ..............................9
Section 3.7 Collection and Payment. ...............................9
Section 3.8 Expenses............................................10
Section 3.9 By-Laws...........................................10
Section 3.10 Miscellaneous Powers...................................10
Section 3.11 Further Powers......................................11
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ARTICLE IV
Limitations of Liability
and Indemnification
Section 4.1 No Personal Liability of Shareholders, Trustees, etc.....12
Section 4.2 Mandatory Indemnification...............................12
Section 4.3 No Duty of Investigation; Notice in Trust Instruments, etc..14
Section 4.4 Reliance on Experts, etc..................................14
ARTICLE V
Shares of Beneficial Interest
Section 5.1 Beneficial Interest.....................................15
Section 5.2 Series Designation. .....................................15
Section 5.3 Class Designation. ..................................15
Section 5.4 Description of Shares...............................16
Section 5.5 Rights of Shareholders. .............................18
Section 5.6 Trust Only...............................................19
Section 5.7 Issuance of Shares...................................19
Section 5.8 Register of Shares. .................................19
Section 5.9 Transfer of Shares...................................20
Section 5.10 Notices................................................20
Section 5.11 Net Asset Value...........................................20
Section 5.12 Distributions to Shareholders.............................21
ARTICLE VI
Shareholders
Section 6.1 Meetings of Shareholders.................................21
Section 6.2 Voting....................................................22
Section 6.3 Notice of Meeting, Shareholder Proposals and Record Date..22
Section 6.4 Quorum and Required Vote...............................23
Section 6.5 Proxies, etc............................................23
Section 6.6 Reports...................................................24
Section 6.7 Inspection of Records...................................24
Section 6.8 Shareholder Action by Written Consent.................24
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<PAGE>
ARTICLE VII
Redemption
Section 7.1 Redemptions..........................................25
Section 7.2 Disclosure of Holding.....................................25
Section 7.3 Redemptions of Small Accounts..............................25
ARTICLE VIII
Duration: Termination of Trust;
Amendment; Mergers, Etc.
Section 8.1 Duration...............................................26
Section 8.2 Termination............................................26
Section 8.3 Amendment Procedure.......................................27
Section 8.4 Merger, Consolidation and Sale of Assets..................28
ARTICLE IX
Miscellaneous
Section 9.1 Filing..................................................29
Section 9.2 Resident Agent...........................................29
Section 9.3 Governing Law........................................29
Section 9.4 Counterparts..............................................29
Section 9.5 Reliance by Third Parties..................................30
Section 9.6 Provisions in Conflict with Law or Regulation............30
iii
<PAGE>
THE GABELLI MATHERS FUND
AGREEMENT
AND
DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made as of the 17th day of
June, 1999, by the Trustees hereunder, and by the holders of shares of
beneficial interest issued hereunder as hereinafter provided.
WHEREAS, this Trust has been formed to carry on business as set
forth more particularly hereinafter;
WHEREAS, this Trust is authorized to issue an unlimited number
of its shares of beneficial interest in separate series and classes of each such
series, each separate series to be a sub-trust hereunder, all in accordance with
the provisions hereinafter set forth;
WHEREAS, the Trustees have agreed to manage all property
coming into their hands as Trustees of a Delaware business trust in accordance
with the provisions hereinafter set forth; and
WHEREAS, the parties hereto intend that the Trust created by
this Declaration and the Certificate of Trust filed with the Secretary of State
of the State of Delaware on June 17, 1999 shall constitute a business trust
under the Delaware Business Trust Statute and that this Declaration shall
constitute the governing instrument of such business trust.
NOW, THEREFORE, the Trustees hereby declare that they will
hold all cash, securities, and other assets which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of
the same upon the following terms and conditions for the benefit of the holders
from time to time of shares of beneficial interest in this Trust or sub-trusts
created hereunder as hereinaf ter set forth.
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<PAGE>
ARTICLE I
The Trust
Section 1.1 Name. This Trust shall be known as "The Gabelli
Mathers Fund" and the Trustees shall conduct the business of the Trust under
that name or any other name or names as they may from time to time determine.
Section 1.2 Definitions. As used in this Declaration, the following
terms shall have the following meanings:
"By-Laws" shall mean the By-Laws of the Trust as amended from
time to time by the Trustees.
"Class" shall mean a portion of Shares of a Series of the
Trust established in accordance with Section 5.3 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Declaration" shall mean this Agreement and Declaration of
Trust, as amended or amended and restated from time to time, including by way of
any classifying or reclassifying Shares of any Series or any Class of any such
Series or determining any designations, powers, preferences, voting, conversion
and other rights, limitations, qualifications and terms and conditions thereof.
"Delaware Business Trust Statute" shall mean the provisions of the Delaware
Business Trust Act, 12 Del. C. ss.3801, et. seq., as such Act may be a mended
from time to time.
"Fundamental Policies" shall mean the investment policies and
restrictions set forth from time to time in any Prospectus of the Trust or any
Series that are expressly designated therein as fundamental policies of such
Series.
"Interested Person" shall have the meaning ascribed thereto in the
1940 Act.
2
<PAGE>
"Majority Shareholder Vote" shall mean a vote of a "majority
of the outstanding voting securities" (as such term is defined in the 1940 Act)
of the Trust, any Series of the Trust or any Class thereof, as applicable.
The "1940 Act" refers to the Investment Company Act of 1940
and the rules and regulations promulgated thereunder and applicable exemptions
there from, as amended from time to time.
The "1933 Act" refers to the Securities Act of 1933, and the
rules and regulations promulgated thereunder and applicable exemptions
therefrom, as amended from time to time.
"Person" shall mean and include natural persons, corporations,
partnerships, trusts, limited liability companies, associations, joint ventures
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof.
"Prospectus" shall mean the current Prospectus of the Trust or
of any Series thereof or of any Class of any such Series, as applicable.
"Series" shall mean the separate sub-trusts that may be
established and designated as series pursuant to Section 5.2 hereof or any one
of such sub-trusts, as applicable.
"Shareholders" shall mean as of any particular time the
holders of record of outstanding Shares of the Trust, any Series of the Trust or
any Class of any Series, as applicable, at such time.
"Shares" shall mean the transferable units of beneficial
interest into which the beneficial interest in the Trust or in a Series of the
Trust shall be divided from time to time and includes fractions of Shares as
well as whole Shares, which Shares may be divided into Series and Classes. All
references to Shares shall be deemed to be Shares of any or all Series or
Classes as the context may require.
"Trust" shall mean the trust established by this Declaration,
as amended from time to time, inclusive of each such amendment and every
sub-trust established as a Series hereunder.
"Trustees" shall mean the signatory to this Declaration, so
long as such signatory shall continue in office in accordance with the terms
hereof, and all
3
<PAGE>
other persons who at the time in question have been duly elected or appointed
and have qualified as trustees in accordance with the provisions hereof and are
then in office.
"Trust Property" shall mean as of any particular time any and
all property, real or personal, tangible or intangible, which at such time is
owned or held by or for the account of the Trust or the Trustees in such
capacity.
Section 1.3 Purpose and Powers of Trust. The Trust is
established for the purpose of engaging in any activity not prohibited by
Delaware law and shall have the power to engage in any such activity and in any
activity incidental or related to any such activity.
ARTICLE II
Trustees
Section 2.1 Number and Qualification. Prior to any offering of
Shares, there may be a sole Trustee and thereafter the number of Trustees shall
be such number, not less than three or more than fifteen, as shall be set forth
in a written instrument signed or adopted by a majority of the Trustees then in
office. No reduction in the number of Trustees shall have the effect of removing
any Trustee from office prior to the expiration of his or her term. An
individual nominated as a Trustee shall be at least 21 years of age and not
older than such age as may be set forth in a written instrument signed or
adopted by not less than a majority of the Trustees then in office and shall not
be under legal disability. Trustees need not own Shares and may succeed
themselves in office.
Section 2.2 Term and Election. Except for the Trustees
appointed to fill vacancies pursuant to Section 2.4 hereof, each Trustee shall
be elected to serve until death, resignation, removal, reelection by written
ballot at the annual meeting, if one is held, or at any special meeting. Subject
to Section 2.4 hereof, each Trustee named herein or elected or appointed
pursuant to the terms hereof shall hold office until such Trustee's successor
has been elected at such meetings and has qualified to serve as Trustee.
Election of Trustees at a meeting shall be by the affirmative vote of the
holders of a plurality of the Shares present in person or by proxy. Each individ
ual elected or appointed as a Trustee of the Trust shall, unless otherwise
provided by such election or appointment, by such election or appointment also
thereby be elected or appointed, as the case may be, as a Trustee of each Series
of the Trust then in
4
<PAGE>
existence. The election or appointment of any Trustee (other than an individual
who was serving as a Trustee immediately prior thereto) shall not become
effective unless and until such person shall have in writing accepted his
election and agreed to be bound by the terms of this Declaration.
Section 2.3 Resignation and Removal. Any Trustee may resign
his trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him and delivered or mailed to the Chairman, if any, the
President or the Secretary and such resignation shall be effective upon such
delivery, or at a later date according to the terms of the instrument. Any
Trustee may be removed (provided the aggregate number of Trustees after such
removal shall not be less than the number required by Section 2.1 hereof) for
cause at any time by written instrument, signed by two-thirds of the remaining
Trustees, specifying the date when such removal shall become effective. Any
Trustee may be removed (provided the aggregate number of Trustees after such
removal shall not be less than the minimum number required by Section 2.1
hereof) without cause at any time by a written instrument, signed or adopted by
two-thirds of the remaining Trustees or by vote of Shares having not less than
two-thirds of the aggregate number of Shares entitled to vote in the election of
such Trustee, specifying the date when such removal shall become effective. Upon
the resignation or removal of a Trustee, or such persons otherwise ceasing to be
a Trustee, such persons shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust or
the remaining Trustees any Trust Property held in the name of the resigning or
removed Trustee. Upon the incapacity or death of any Trustee, such Trustee's
legal representative shall execute and deliver on such Trustee's behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
Section 2.4 Vacancies. The term of office of a Trustee shall
termi nate and a vacancy shall occur in the event of the death, resignation,
bankruptcy, adjudicated incompetence or other incapacity to perform the duties
of the office, or removal, of a Trustee. Whenever a vacancy in the Board of
Trustees shall occur, the remaining Trustees may fill such vacancy by appointing
an individual having the qualifications described in this Article by a written
instrument signed or adopted by a majority of the Trustees then in office or by
election by the Shareholders, or may leave such vacancy unfilled or may reduce
the number of Trustees (provided the aggregate number of Trustees after such
reduction shall not be less than the mini mum number required by Section 2.1
hereof). Any vacancy created by an increase in Trustees may be filled by the
appointment of an individual having the qualifications described in this Article
made by a written instrument signed by a majority of the Trustees then in office
or by election by the Shareholders. No vacancy shall operate
5
<PAGE>
to annul this Declaration or to revoke any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided herein, the Trustees in
office, regard less of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration.
Section 2.5 Meetings. Meetings of the Trustees shall be held
from time to time upon the call of the Chairman, if any, the President, the
Secretary or any two Trustees. Regular meetings of the Trustees may be held
without call or notice at a time and place fixed by the By-Laws or by the
Trustees. Notice of any other meeting shall be mailed not less than 48 hours
before the meeting or otherwise actually delivered orally or in writing not less
than 24 hours before the meeting, but may be waived in writing by any Trustee
either before or after such meeting. The attendance of a Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of object ing to the transaction of
any business on the ground that the meeting has not been lawfully called or
convened. The Trustees may act with or without a meeting. A quorum for all
meetings of the Trustees shall be one-third of the Trustees. Unless provided
otherwise in this Declaration of Trust, any action of the Trustees may be taken
at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the Trustees
or such other proportion as shall be specified herein for action at a meeting at
which all Trustees then in office are present.
Any committee of the Trustees, including an executive
committee, if any, may act with or without a meeting. A quorum for all meetings
of any such committee shall be a majority of the members thereof. Unless
provided otherwise in this Declaration, any action of any such committee may be
taken at a meeting by vote of a majority of the members present (a quorum being
present) or without a meeting by written consent of a majority of the members or
such other proportion as shall be specified herein for action at a meeting at
which all committee members are present.
With respect to actions of the Trustees and any committee of
the Trustees, Trustees who are Interested Persons in any action to be taken may
be counted for quorum purposes under this Section and shall be entitled to vote
to the extent not prohibited by the 1940 Act.
All or any one or more Trustees may participate in a meeting
of the Trustees or any committee thereof by means of a conference telephone,
internet connection or similar communications equipment by means of which all
persons
6
<PAGE>
participating in the meeting can hear or otherwise communicate with each other;
participation in a meeting pursuant to any such communications system shall
constitute presence in person at such meeting except as otherwise provided by
the 1940 Act.
Section 2.6 Officers. The Trustees shall elect a President, a
Secre tary and a Treasurer and may elect a Chairman who shall serve at the
pleasure of the Trustees or until their successors are elected. The Trustees may
elect or appoint or may authorize the Chairman, if any, or President to appoint
such other officers or agents with such other titles and powers as the Trustees
may deem to be advisable. A Chairman shall, and the President, Secretary and
Treasurer may, but need not, be a Trustee.
ARTICLE III
Powers and Duties of Trustees
Section 3.1 General. The Trustees shall owe to the Trust and
its Shareholders the same fiduciary duties as owed by directors of corporations
to such corporations and their stockholders under the general corporation law of
the State of Delaware. The Trustees shall have exclusive and absolute control
over the Trust Property and over the business of the Trust or any Series thereof
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with such powers of delegation as may be
permitted by this Declara tion. The Trustees shall have power to engage in any
activity not prohibited by Delaware law. The enumeration of any specific power
herein shall not be construed as limiting the aforesaid power. The Trustees may
perform such acts as in their sole discretion are proper for conducting the
business of the Trust. The powers of the Trustees may be exercised without order
of or resort to any court. No Trustee shall be obligated to give any bond or
other security for the performance of any of his duties or powers hereunder.
Section 3.2 Investments. The Trustees shall have power to:
(a) manage, conduct, operate and carry on the business of an investment company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise acquire, hold,
pledge, sell, assign, transfer, exchange, distribute or otherwise deal in
7
<PAGE>
or dispose of any and all sorts of property, tangible or intangible, including
but not limited to securities of any type whatsoever, whether equity or
non-equity, of any issuer, evidences of indebtedness of any person and any other
rights, interests, instruments or property of any sort and to exercise any and
all rights, powers and privileges of ownership or interest in respect of any and
all such investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto, with
power to designate one or more Persons to exercise any of said rights, powers
and privileges in respect of any of said investments. The Trustees shall not be
limited by any law limiting the investments which may be made by fiduciaries.
Section 3.3 Legal Title. Legal title to all the Trust Property
shall be vested in the Trustees as joint tenants except that the Trustees shall
have power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust, or any Series
thereof, or in the name of any other Person as nominee, custodian or pledgee, on
such terms as the Trustees may determine, provided that the interest of the
Trust or any Series thereof therein is appropriately protected.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each person who may hereafter become a
Trustee upon his due election and qualification. Upon the ceasing of any person
to be a Trustee for any reason, such person shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property shall vest automatically in
the remaining Trustees. Such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered.
Section 3.4 Issuance and Repurchase of Shares. Subject to the
provisions of this Declaration and applicable law, the Trustees shall have the
power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer, and otherwise deal in, Shares, including Shares
in fractional denomina tions, shall have the power to establish from time to
time in accordance with the provisions of Section 5.2 and 5.3 hereof Series and
Classes representing interests in the Trust or a Series thereof and, subject to
the more detailed provisions set forth in Article VII, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the applicable Series of the Trust whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the laws
of the State of Delaware governing business corporations.
8
<PAGE>
Section 3.5 Borrow Money or Utilize Leverage. The Trustees
shall have the power to borrow money or otherwise obtain credit or utilize
leverage in connection with the activities of the Trust to the maximum extent
permitted by law, regulation or order and the Fundamental Policies of any Series
and to secure the same by mortgaging, pledging or otherwise subjecting as
security the assets of the Trust or any Series thereof, including the lending of
portfolio securities, and to endorse, guarantee, or undertake the performance of
any obligation, contract or engagement of any other person, firm, association or
corporation; provided, however, that the assets of any particular Series shall
not be used as security for any credit extended solely to one or more other
Series.
Section 3.6 Delegation; Committees. The Trustees shall have
power, consistent with their continuing exclusive authority over the management
of the Trust and the Trust Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Trustees or otherwise as the Trustees may deem expedient, to at
least the same extent as such delegation is permitted to directors of a Delaware
business corporation and is permitted by the 1940 Act, as well as any further
delegations the Trustees may determine to be desirable, expedient or necessary
in order to effect the purpose hereof. The Trustees may designate one or more
committees which shall have all or such lesser portion of the authority of the
entire Board of Trustees as the Trustees shall determine from time to time
except to the extent action by the entire Board of Trustees or particular
Trustees is required by the 1940 Act.
Section 3.7 Collection and Payment. The Trustees shall have
power to collect all property due to the Trust or any Series of the Trust or any
Class thereof; to pay all claims, including taxes, against the Trust Property,
the Trust or any Series of the Trust or any Class thereof, the Trustees or any
officer, employee or agent of the Trust; to prosecute, defend, compromise or
abandon any claims relating to the Trust Property, the Trust or any Series of
the Trust or any Class thereof, or the Trustees or any officer, employee or
agent of the Trust; to foreclose any security interest securing any obligations,
by virtue of which any property is owed to the Trust or any Series of the Trust
or any Class thereof; and to enter into releases, agreements and other
instruments. Except to the extent required for a Delaware business corporation,
the Shareholders shall have no power to vote as to whether or not a court
action, legal proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders.
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Section 3.8 Expenses. The Trustees shall have power to incur
and pay out of the assets or income of the Trust or any Series of the Trust or
any Class thereof, any expenses which in the opinion of the Trustees are
necessary or appropri ate to carry out any of the purposes of this Declaration,
and the business of the Trust or any Series of the Trust or any Class thereof,
and to pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers, employees and
Trustees. The Trustees may pay themselves such compensation for special
services, including legal, underwriting, syndicating and brokerage services, as
they in good faith may deem reasonable and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series or Class thereof, to pay directly, in
advance or arrears, for charges of distribution, of the custodian or transfer,
shareholder servicing or similar agent of such Series or Class, a pro rata
amount as defined from time to time by the Trustees, by setting off such charges
due from such Shareholder from declared but unpaid dividends or distributions
owed such Shareholder and/or by reducing the number of shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such charges due from such Shareholder.
Section 3.9 By-Laws. The Trustees may adopt and from time to
time amend or repeal By-Laws for the conduct of the business of the Trust. Such
ByLaws shall be binding on the Trust and the Shareholders unless inconsistent
with the provisions of this Declaration. The Shareholders shall not have
authority to adopt or amend By-Laws.
Section 3.10 Miscellaneous Powers. The Trustees shall have the
power to: (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Trust or any Series
thereof, including investment advisors, administrators, custodians, transfer
agents, share holder services providers, accountants, counsel, brokers, dealers
and others; (b) enter into joint ventures, partnerships and any other
combinations or associations; (c) purchase, and pay for out of Trust Property,
insurance policies insuring the Share holders, Trustees, officers, employees,
agents, investment advisors, distributors, selected dealers or independent
contractors of the Trust or any Series thereof against all claims arising by
reason of holding any such position or by reason of any action taken or omitted
by any such Person in such capacity, whether or not constituting negligence, or
whether or not the Trust would have the power to indemnify such Person against
such liability; (d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employ ees
and agents of the Trust; (e) make donations, irrespective of benefit to the
Trust, for charitable, religious, educational, scientific, civic or similar
purposes; (f) to the extent permitted by applicable law, indemnify any Person
with whom the Trust or any Series thereof has dealings, including without
limitation any investment advisor, administrator, manager, transfer agent,
custodian, distributor or selected dealer, or any other person as the Trustees
may see fit to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
fiscal year of the Trust and the method in which its accounts shall be kept; and
(i) adopt a seal for the Trust but the absence of such seal shall not impair the
validity of any instrument executed on behalf of the Trust.
Section 3.11 Further Powers. The Trustees shall have the power
to conduct the business of the Trust or any Series of the Trust or any Class
thereof and carry on its operations in any and all of its branches and maintain
offices both within and without the State of Delaware, in any and all states of
the United States of America, in the District of Columbia, and in any and all
commonwealths, territories, dependencies, colonies, possessions, agencies or
instrumentalities of the United States of America and of foreign governments,
and to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Trust or
any Series of the Trust or any Class thereof although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust or any Series of the Trust or any Class thereof made by the Trustees in
good faith shall be conclusive. In construing the provisions of this
Declaration, the presumption shall be in favor of a grant of power to the
Trustees.
ARTICLE IV
Limitations of Liability
and Indemnification
Section 4.1 No Personal Liability of Shareholders, Trustees,
etc. No Shareholder of the Trust shall be subject in such capacity to any
personal liability whatsoever to any Person in connection with Trust Property or
the acts, obligations or affairs of the Trust. Shareholders shall have the same
limitation of personal liability as is extended to stockholders of a private
corporation for profit incorporated
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under the general corporation law of the State of Delaware. No Trustee, officer,
employee or agent of the Trust or any Series of the Trust shall be subject in
such capacity to any personal liability whatsoever to any Person, other than the
Trust or the respective Series or the Shareholders, in connection with Trust
Property or the affairs of the Trust or the respective Series, save only
liability to the Trust or its Shareholders arising from bad faith, willful
misfeasance, gross negligence or reckless disregard for his duty to such Person;
and, subject to the foregoing exception, all such Persons shall look solely to
the Trust Property for satisfaction of claims of any nature arising in
connection with the affairs of the Trust. If any Shareholder, Trustee or
officer, as such, of the Trust, is made a party to any suit or proceeding to
enforce any such liability, subject to the foregoing exception, he shall not, on
account thereof, be held to any personal liability.
Section 4.2 Mandatory Indemnification. The Trust shall
indemnify the Trustees and officers of the Trust and, with respect to acts or
omissions of the Directors and officers of Mathers Fund, Inc. (the "Fund"), the
Trust's predecesor, occurring prior to the reorganization of the Fund into the
Trust, such Directors and officers (each such person being an "indemnitee")
against any liabilities and ex penses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and reasonable counsel fees
reasonably incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
before any court or administrative or investiga tive body in which he may be or
may have been involved as a party or otherwise (other than, except as authorized
by the Trustees, as the plaintiff or complainant) or with which he may be or may
have been threatened, while acting in any capacity set forth above in this
Section 4.2 by reason of his having acted in any such capacity, except with
respect to any matter as to which he shall not have acted in good faith in the
reasonable belief that his action was in the best interest of the Trust or the
respective Series of the Trust or Class thereof or the Fund, as the case may be
and furthermore, in the case of any criminal proceeding, as to which he shall
have had reasonable cause to believe that the conduct was unlawful, provided,
however, that no indemnitee shall be indemnified hereunder against any liability
to any person or any expense of such indemnitee arising by reason of (i) willful
misfeasance, (ii) bad faith, (iii) gross negligence (negligence in the case of
indemnitees that are affiliates of the Trust or the Fund, as the case may be),
or (iv) reckless disregard of the duties involved in the conduct of his
position. Notwithstanding the foregoing, with respect to any action, suit or
other proceeding voluntarily prosecuted by any indemnitee as plaintiff,
indemnification shall be mandatory only if the prosecution of such action, suit
or other proceeding by such indemnitee was authorized by a majority of the
Trustees.
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(a) Notwithstanding the foregoing, no indemnification shall be made hereunder
unless there has been a determination (1) by a final decision on the merits by a
court or other body of competent jurisdiction before whom the issue of
entitlement to indemnification hereunder was brought that such indemnitee is
entitled to indemnification hereunder or, (2) in the absence of such a decision,
by (i) a majority vote of a quorum of those Trustees who are neither Interested
Persons of the Trust nor parties to the proceeding ("Disinterested Non-Party
Trustees"), that the indemnitee is entitled to indemnification hereunder, or
(ii) if such quorum is not obtainable or even if obtainable, if such majority so
directs, independent legal counsel in a written opinion conclude that the
indemnitee should be entitled to indemnification hereunder. All determinations
to make advance payments in connection with the expense of defending any
proceeding shall be authorized and made in accordance with the immediately
succeeding paragraph (c) below.
(b) The Trust shall make advance payments in connection with the expenses of
defending any action with respect to which indemnification might be sought
hereunder if the Trust receives a written affirmation by the indemnitee of the
indemnitee's good faith belief that the standards of conduct necessary for
indemnification have been met and a written undertaking to reimburse the Trust
unless it is subsequently determined that he is entitled to such indemnification
and if a majority of the Trustees determine that the applicable standards of
conduct necessary for indemnification appear to have been met. In addition, at
least one of the following conditions must be met: (1) the indemnitee shall
provide adequate security for his undertaking, (2) the Trust shall be insured
against losses arising by reason of any lawful advances, or (3) a majority of a
quorum of the Disinterested Non-Party Trustees, or if a majority vote of such
quorum so direct, independent legal counsel in a written opinion, shall
conclude, based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is substantial reason to believe that the
indemnitee ultimately will be found entitled to indemnification.
(c) The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
(d) Notwithstanding the foregoing, subject to any limitations provided by the
1940 Act and this Declaration, the Trust shall have the power and authority to
indemnify Persons providing services to the Trust to the full extent provided by
law as if the Trust were a corporation organized under the Delaware
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General Corporation Law provided that such indemnification has been approved by
a majority of the Trustees.
Section 4.3 No Duty of Investigation; Notice in Trust
Instruments, etc. No purchaser, lender, transfer agent or other person dealing
with the Trustees or with any officer, employee or agent of the Trust or any
Series of the Trust or Class thereof shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee or agent. Every obligation, contract, undertaking,
instrument, certificate, Share, other security of the Trust or any Series of the
Trust or any Class thereof, and every other act or thing whatsoever executed in
connection with the Trust or any Series of the Trust or Class thereof shall be
conclusively taken to have been executed or done by the executors thereof only
in their capacity as Trustees under this Declaration or in their capacity as
officers, employees or agents of the Trust. The Trustees may maintain insurance
for the protection of the Trust Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable or is required by the 1940 Act.
Section 4.4 Reliance on Experts, etc. Each Trustee and officer
or employee of the Trust or any Series of the Trust shall, in the performance of
its duties, be fully and completely justified and protected with regard to any
act or any failure to act resulting from reliance in good faith upon the books
of account or other records of the Trust or any Series of the Trust or Class
thereof, upon an opinion of counsel, or upon reports made to the Trust or any
Series thereof by any of the Trust's officers or employees or by any advisor,
administrator, manager, distributor, selected dealer, accountant, appraiser or
other expert or consultant selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or other
person may also be a Trustee.
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ARTICLE V
Shares of Beneficial Interest
Section 5.1 Beneficial Interest. The interest of the
beneficiaries hereunder shall be divided into an unlimited number of shares of
beneficial interest, par value $.001 per share. All Shares issued in accordance
with the terms hereof, including, without limitation, Shares issued in
connection with a dividend in Shares or a split of Shares, shall be fully paid
and nonassessable when the consideration determined by the Trustees (if any)
therefor shall have been received by the Trust.
Section 5.2 Series Designation. The Trustees, in their
discretion from time to time, may authorize the division of Shares into two or
more Series, each Series relating to a separate portfolio of investments and
each of which Series shall be a separate and distinct subtrust of the Trust.
Each Series so established hereunder shall be deemed to be a separate trust
under the provisions of Delaware law. The Trustees shall have exclusive power
without the requirement of Shareholder approval to establish and designate such
separate and distinct Series and to fix and determine the relative rights and
preferences as between the different Series. The establishment and designation
of any Series shall be effective upon the execution by a majority of the
Trustees of an instrument setting forth the establishment and designation of
such Series. Such instrument shall also set forth any rights and preferences of
such Series which are in addition to the rights and preferences of Shares set
forth in this Declaration. At any time that there are no Shares outstanding of
any particular Series previously established and designated, the Trustees may by
an instrument executed by a majority of their number abolish or alter that
Series and the establishment and designation thereof. Each instrument referred
to in this paragraph shall have the status of an amendment to this Declaration.
Section 5.3 Class Designation. The Trustees, in their
discretion from time to time, may authorize the division of Shares of the Trust
or any Series into two or more Classes of Shares all the assets of which shall
be commingled with the other Classes of such Series. The Trustees shall have
exclusive power without the requirement of Shareholder approval to establish and
designate such separate and distinct Classes and to fix and determine the
relative rights, terms, conditions and expenses applicable to each Class of
Shares to the maximum extent permitted by the 1940 Act. The establishment and
designation of any Class of Shares shall be effective upon the affirmative vote
of a majority of the Trustees of the Trust, including the Trustees who are not
interested persons of the Trust. At any time that there are no Shares
outstanding of any particular Class previously established and
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designated, the Trustees may, by the affirmative vote of a majority of the
Trustees, including a majority of the Trustees who are not interested persons of
the Trust, abolish or alter that Class and the establishment and designation
thereof.
Section 5.4 Description of Shares. If the Trustees shall
create sub-trusts and divide the Shares into one or more Series or create
Classes of Shares, the following provisions shall be applicable:
(a) Number of Shares. The number of Shares of each Series
or Class that may be issued shall be unlimited. The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series or Class into one or more Series or Classes that may be established
and designated from time to time. The Trustees may hold as treasury Shares (of
the same or some other Series or Class), reissue for such consideration and on
such terms as they may determine, or cancel any Shares of any Series or Class
reacquired by the Trust at their discretion from time to time.
(b) Investment of Property. The power of the Trustees to invest and reinvest the
Trust Property of each Series that may be established shall be governed by
Section 3.2 of this Declaration.
(c) Allocation of Assets. All consideration received by the
Trust for the issue or sale of Shares of a particular Series or Class, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payment
derived from any reinvestment of such proceeds in whatever form the same may be,
together with such Series' or Class' share of any assets of the Trust not
otherwise allocated to any particular Series or Class, shall be held by the
Trustees and Trust for the benefit of the Shareholders of such Series and,
subject to the rights of creditors of such Series only, shall irrevocably belong
to that Series for all purposes, and shall be so recorded upon the books of
account of the Trust. In the event that there are any assets, income, earnings,
profits, and proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular Series, the Trustees shall allocate
them among any one or more of the Series established and designated from time to
time in such manner and on such basis as they, in their sole discretion, deem
fair and equitable, and anything so allocated to a Series shall belong to such
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes.
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(d) Allocation of Expenses. The assets belonging to
each
particular Series or attributable to each particular Class shall be charged with
the liabilities of the Trust in respect of that Series or Class and all
expenses, costs, charges and reserves attributable to that Series or Class, and
any general liabilities, expenses, costs, charges or reserves of the Trust which
are not readily identifiable as belonging to any particular Series or
attributable to any particular Class shall be allocated and charged by the
Trustees to and among any one or more of the Series or Classes established and
designated from time to time in such manner and on such basis as the Trustees in
their sole discretion deem fair and equitable; provided that any incremental
expenses allocated to one or more Classes of Shares on a basis other than the
relative net asset values of the respective Classes shall be allocated in a
manner consistent with the 1940 Act. Each allocation of liabilities, expenses,
costs, charges and reserves by the Trustees shall be conclusive and binding upon
the Shareholders of all Series and Classes for all purposes. The Trustees shall
have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital, and
each such determination and allocation shall be conclusive and binding upon the
Shareholders. Under no circumstances shall the assets allocated or belonging to
a particular Series or attributable to a particular Class be charged with any
liabilities attributable to another Series or Class. Any creditor may look only
to the assets of the particular Series with respect to which such person is a
creditor for satisfaction of such creditor's debt.
(e) Dividends. The power of the Trustees to pay dividends and make distributions
with respect to any one or more Series shall be governed by Section 5.12 of this
Trust. Dividends and distributions on Shares of a particular Series may be paid
with such frequency as the Trustees may determine, which may be daily or
otherwise, pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Trustees may determine, to the holders of Shares of
that Series, from such of the income and capital gains, accrued or realized,
from the assets belonging to that Series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that Series. All
dividends and distributions on each Class of a Series shall be distributed pro
rata to the holders of Shares of that Class in proportion to the number of
Shares of that Class held by such holders at the date and time of record
established for the payment of such dividends or distributions, and such
dividends and distributions need not be pro rata with respect to dividends and
distributions paid to Shares of any other Class of such Series. Dividends and
distributions shall be paid with respect to Shares of a given Class only out of
lawfully available assets attributable to such Class.
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Section 5.5 Rights of Shareholders. The Shares shall be
personal property giving only the rights in this Declaration specifically set
forth. The ownership of the Trust Property of every description and the right to
conduct any business herein before described are vested exclusively in the
Trustees, and the Shareholders shall have no interest therein other than the
beneficial interest conferred by their Shares, with respect to a particular
Series of Class and they shall have no right to call for any partition or
division of any property, profits, rights or interests of the Trust nor can they
be called upon to share or assume any losses of the Trust or, subject to the
right of the Trustees to charge certain expenses directly to Shareholders, as
provided in the last sentence of Section 3.8, suffer an assessment of any kind
by virtue of their ownership of Shares. The Shares shall not entitle the holder
to preference, preemptive, appraisal, conversion or exchange rights (except as
specified in this Section 5.5 or in Section 8.4 or as specified by the Trustees
in the designation or redesignation of any Series or Class thereof).
Notwithstanding anything to the contrary contained herein:
(i) Any Class of shares denominated as being
convertible automatically, and without any action or choice on the part
of the holder thereof, or shares denominated as being convertible based
on an election of the holder thereof, into any other Class of Shares
(or fractions thereof) pursuant to such terms, conditions and
restrictions as may be established by the Board of Trustees and set
forth from time to time in the applicable Prospectus with respect to
such Shares shall be convertible on such terms as are described in such
Prospectus.
(ii) The number of Shares into which each such
convertible Share shall convert pursuant to the foregoing paragraph
shall equal the number (including for this purpose fractions of a
Share) obtained by dividing the net asset value per share of the
convertible Shares for purposes of sales and redemptions thereof on the
date of such conversion (the "Conversion Date") by the net asset value
per share of the Class of Shares being converted into for purposes of
sales and redemptions thereof on the Conversion Date.
(iii) On the Conversion Date, those Shares
which are
converted into another Class of Shares shall cease to accrue dividends
and will no longer be deemed outstanding and the rights of the holders
thereof (except the right to receive dividends declared prior to the
Conversion Date but unpaid as of the Conversion Date) will cease.
Certificates representing
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Shares resulting from conversion may be issued pursuant to such terms
and conditions as may be established from time to time by the Board of
Trustees.
Section 5.6 Trust Only. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any form of legal relationship other than a trust.
Nothing in this Declaration shall be construed to make the Shareholders, either
by themselves or with the Trustees, partners or members of a joint stock
association.
Section 5.7 Issuance of Shares. The Trustees, in their
discretion, may from time to time without vote of the Shareholders issue Shares
with respect to any Series that may have been established pursuant to Section
5.2, in addition to the then issued and outstanding Shares and Shares held in
the treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times, and on such
terms as the Trustees may determine, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with the
assumption of, liabilities) and businesses. The Trustees may from time to time
divide or combine the Shares of any Series into a greater or lesser number
without thereby changing the proportionate beneficial interest in such Series of
the Trust. Issuances and redemptions of Shares may be made in whole Shares
and/or l/l,000ths of a Share or multiples thereof as the Trustees may determine
in such fractions thereof.
Section 5.8 Register of Shares. A register shall be kept at
the Trust or any transfer agent duly appointed by the Trustees under the
direction of the Trustees which shall contain the names and addresses of the
Shareholders and the number of Shares held by them respectively and a record of
all transfers thereof. Separate registers shall be established and maintained
for each Series of the Trust and each Class thereof. Each such register shall be
conclusive as to who are the holders of the Shares of the applicable Series and
Classes thereof and who shall be entitled to receive dividends or distributions
or otherwise to exercise or enjoy the rights of Shareholders. No Shareholder
shall be entitled to receive payment of any dividend or distribution, nor to
have notice given to him as herein provided, until he or she has given his or
her address to a transfer agent or such other officer or agent of the Trustees
as shall keep the register for entry thereon. It is not contemplated that
certificates will be issued for the Shares; however, the Trustees, in their
discretion, may authorize the issuance of share certificates and promulgate
appropriate fees therefore and rules and regulations as to their use.
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Section 5.9 Transfer of Shares. Shares shall be transferable
on the records of the Trust only by the record holder thereof or by its agent
thereto duly authorized in writing, upon delivery to the Trustees or a transfer
agent of the Trust of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization and of
other matters as may reasonably be required. Upon such delivery the transfer
shall be recorded on the applicable register of the Trust. Until such record is
made, the Shareholder of record shall be deemed to be the holder of such Shares
for all purposes hereof and neither the Trustees nor any transfer agent or
registrar nor any officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of
the death, bankruptcy, or incompetence of any Shareholder, or otherwise by
operation of law, shall be recorded on the applicable register of Shares as the
holder of such Shares upon production of the proper evidence thereof to the
Trustees or a transfer agent of the Trust, but until such record is made, the
Shareholder of record shall be deemed to be the holder of such for all purposes
hereof, and neither the Trustees nor any transfer agent or registrar nor any
officer or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law.
Section 5.10 Notices. Any and all notices to which any
Shareholder hereunder may be entitled and any and all communications to any
Shareholder shall be deemed duly served or given if mailed, postage prepaid,
addressed to any Shareholder of record at his or her last known address as
recorded on the applicable register of the Trust and may be sent together with
any such notice or other communication to another Shareholder at the same
address.
Section 5.11 Net Asset Value. The value of the assets of the
Trust or any Series thereof, the amount of liabilities of the Trust or any
Series thereof and the net asset value of each outstanding Share of the Trust or
any Series or Class shall be determined at such time or times and on such days
as the Trustees may determine in accordance with the 1940 Act. The method of
determination of net asset value shall be determined by the Trustees. The power
and duty to value the assets and liabilities of the Trust and make net asset
value determinations and calculations may be delegated by the Trustees.
Section 5.12 Distributions to Shareholders.
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(a) The Trustees shall from time to time distribute among the Shares such
proportion of the net profits, surplus (including paid-in surplus), capital, or
assets held by the Trustees as they may deem proper or as may otherwise be
determined in the instrument setting forth the terms of such Shares such Class
or Series of Shares, which need not be ratable with respect to distributions in
respect of Shares of any other class or series thereof of the Trust. Such
distributions may be made in cash or property (including without limitation any
type of obligations of the Trust or any assets thereof) or any combination
thereof.
(b) Distributions may be made to the Shareholders of record entitled to such
distribution at the time such distribution is declared or at such later date as
shall be determined by the Trust prior to the date of payment.
(c) The Trustees may always retain from any source
such
amount as they may deem necessary to pay the debts or expenses of the Trust or
to meet obligations of the Trust, or as they otherwise may deem desirable to use
in the conduct of its affairs or to retain for future requirements or extensions
of the business of the Trust.
ARTICLE VI
Shareholders
Section 6.1 Meetings of Shareholders. The Trust may, but shall
not be required to, hold annual meetings of the holders of any class or series
of Shares. An annual or special meeting of Shareholders may be called at any
time only by the Trustees; provided, however, that if May 31 of any year shall
have passed and the Trustees shall not have called an annual meeting of
Shareholders for such year, the Trustees shall call a meeting for the purpose of
voting on the removal of one or more Trustees or the termination of any
investment advisory agreement, upon written request of holders of Shares of the
Trust or a Series having in the aggregate not less than a majority of the votes
of the outstanding Shares of the Trust entitled to vote on the matter or matters
in question, such request specifying the purpose or purposes for which such
meeting is to be called. Any meeting of Shareholders shall be held within or
without the State of Delaware on such day and at such time as the Trustees shall
designate.
Section 6.2 Voting. Shareholders shall have no power to vote on any matter
except matters on which a vote of Shares is required by applicable law, this
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Declaration or resolution of the Trustees. Any matter required to be submitted
for approval of any of the Shares and affecting one or more Series or Classes
shall require approval by the required vote of Shares of the affected Series or
Class voting together as a single Series or Class and, if such matter affects
one or more Series or Class thereof differently from one or more other Series or
Class, approval by the required vote of Shares of such other Series or Class
voting as a separate Series or Class shall be required in order to be approved
with respect to such other Series or Class; provided, however, that except to
the extent required by the 1940 Act, there shall be no separate class votes on
the election or removal of Trustees or the selection of auditors for the Trust.
Shareholders of a particular Series shall not be entitled to vote on any matter
that affects the rights or interests of only one or more other Series. There
shall be no cumulative voting in the election or removal of Trustees.
Section 6.3 Notice of Meeting, Shareholder Proposals and
Record Date. Notice of all meetings of Shareholders, stating the time, place and
purposes of the meeting, shall be given by the Trustees by mail to each
Shareholder of record entitled to vote thereat at its registered address, mailed
at least 10 days before the meeting or otherwise in compliance with applicable
law. Except with respect to an annual meeting, at which any business required by
the 1940 Act may be conducted, only the business stated in the notice of the
meeting shall be considered at such meeting. Subject to the provisions of
applicable law, any Shareholder wishing to include a proposal to be considered
at an annual meeting must submit such proposal to the Trust at least 30 days in
advance of such meeting. Any adjourned meeting may be held as adjourned one or
more times without further notice not later than 130 days after the record date.
For the purposes of determining the Shareholders who are entitled to notice of
and to vote at any meeting the Trustees may, without closing the transfer books,
fix a date not more than 100 days prior to the date of such meeting of
Shareholders as a record date for the determination of the Persons to be treated
as Shareholders of record for such purposes.
Section 6.4 Quorum and Required Vote.
(a) The holders of one-third of the outstanding Shares of the Trust on the
record date present in person or by proxy shall constitute a quorum at any
meeting of the Shareholders for purposes of conducting business on which a vote
of all Shareholders of the Trust is being taken. The holders of one-third of the
outstanding Shares of one or more Series or one or more Classes on the record
date
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present in person or by proxy shall constitute a quorum at any meeting of the
Shareholders for purposes of conducting business on which a vote of Shareholders
of such Series or Series or Class or Classes is being taken. Shares underlying a
proxy as to which a broker or other intermediary states its absence of authority
to vote with respect to one or more matters shall be treated as present for
purposes of establishing a quorum for taking action on any such matter only to
the extent so determined by the Trustees at or prior to the meeting of
Shareholders at which such matter is to be considered.
(b) Subject to any provision of applicable law, this
Declaration or a resolution of the Trustees specifying or requiring a greater or
lesser vote requirement for the transaction of any matter of business at any
meeting of Shareholders, (i) the affirmative vote of a plurality of the Shares
entitled to vote for the election of any Trustee or Trustees shall be the act of
such Shareholders with respect to the election of such Trustee or Trustees, (ii)
the affirmative vote of a majority of the Shares present in person or
represented by proxy and entitled to vote on any other matter shall be the act
of the Shareholders with respect to such matter, and (iii) where a separate vote
of any Series is required on any matter, the affirmative vote of a majority of
the Shares of such Series present in person or represented by proxy and entitled
to vote on such matter shall be the act of the Shareholders of such Series with
respect to such matter.
Section 6.5 Proxies, etc. At any meeting of Shareholders, any
holder of Shares entitled to vote thereat may vote by proxy, provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Secretary, or with such other officer or agent of the Trust as the
Secretary may direct, for verification prior to the time at which such vote
shall be taken. Pursuant to a resolution of a majority of the Trustees, proxies
may be solicited in the name of one or more Trustees or one or more of the
officers or employees of the Trust. Only Shareholders of record shall be
entitled to vote. Each full Share shall be entitled to one vote and each
fractional Share shall be entitled to a vote equal to its fraction of a full
Share. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be given by or on behalf of a Shareholder of record on the record
date for a meeting shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. If
the holder of any such Share is a minor or a person of unsound mind, and subject
to guardianship or to the legal control of any
22
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other person as regards the charge or management of such Share, he or she may
vote by his or her guardian or such other person appointed or having such
control, and such vote may be given in person or by proxy. The Trustees shall
have the authority to make and modify from time to time regulations regarding
the validity of proxies. In addition to signed proxies, such regulations may
authorize facsimile, telephonic, internet and other methods of appointing a
proxy that are subject to such supervision by or under the direction of the
Trustees as the Trustees shall determine.
Section 6.6 Reports. The Trustees shall cause to be prepared
and sent to Shareholders at least annually and more frequently to the extent and
in the form required by law, regulation or any exchange on which Shares are
listed a report of operations containing financial statements of the Trust
prepared in conformity with generally accepted accounting principles and
applicable law. It is contemplated that separate reports may be prepared for the
various Series. Copies of such reports shall be mailed to all Shareholders of
record of the applicable Series within the time required by the 1940 Act, and in
any event within a reasonable period preceding the meeting of Shareholders.
Section 6.7 Inspection of Records. The records of the Trust
shall be open to inspection by Persons who have been holders of record of at
least $25,000 in net asset value or liquidation preference of Shares for a
continuous period of not less than six months to the same extent and for the
same purposes as is permitted under the Delaware General Business Corporation
Law to shareholders of a Delaware business corporation.
Section 6.8 Shareholder Action by Written Consent. Any action
which may be taken by Shareholders by vote may be taken without a meeting if the
holders of all of the Shares entitled to vote thereon consent to the action in
writing and the written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of Shareholders.
ARTICLE VII
Redemption
Section 7.1 Redemptions. All outstanding Shares of any Series
of the Trust may be redeemed at the option of the holders thereof, upon and
subject to the terms and conditions provided in this Article VII. The Trust
shall, upon application by any Shareholder or pursuant to authorization from any
Shareholder of a particular Series or Class, redeem or repurchase from such
Shareholder outstanding
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Shares of such Series or Class for an amount per share determined by the
application of a formula adopted for such purpose by the Trustees with respect
to such Series (which formula shall be consistent with the 1940 Act); provided
that (a) such amount per share shall not exceed any limitations imposed under
applicable law and (b) if so authorized by the Trustees, the Trust may, at any
time and from time to time, charge fees for effecting such redemption, at such
rates as the Trustees may establish, as and to the extent permitted under the
1940 Act, and may, at any time and from time to time, pursuant to such Act,
suspend such right of redemption. The procedures for effecting redemption shall
be as set forth in the Prospectus with respect to the applicable Series or Class
from time to time. The proceeds of the redemption of Shares shall be paid in
cash or property (tangible of intangible) or any combination thereof in the sole
discretion of the Trust's investment advisor. The proceeds of the redemption of
Shares subject to a contingent deferred sales charge (including fractional
shares) shall be reduced by the amount of any applicable contingent deferred
sales charge payable on such redemption with respect to the respective Class of
such Shares as set forth in the applicable Prospectus (to the extent consistent
with the 1940 Act) or such other charges, fees or expenses as may be applicable
thereto.
Section 7.2 Disclosure of Holding. The holders of Shares or
other securities of the Trust shall upon demand disclose to the Trustees in
writing such information with respect to direct and indirect ownership of Shares
or other securities of the Trust as the Trustees deem necessary to comply with
the provisions of the Code or any other applicable laws.
Section 7.3 Redemptions of Small Accounts. The Trustees shall
have the power to redeem shares of any Series at a redemption price determined
in accordance with Section 7.1 above, (a) if at any time the total investment in
such account does not have a value of at least such minimum amount as may be
specified in the Prospectus for such Series from time to time, (b) as provided
by Section 3.8, or (c) to the extent a Shareholder or other person beneficially
owns Shares equal to or in excess of a percentage of Shares of the Trust or any
Series or Class determined from time to time by the Trustees and specified in
the applicable Prospectus. In the event the Trustees determine to exercise their
power to redeem Shares provided in subsection (a) of this Section 7.3, the
Shareholder shall be notified that the value of his account is less than the
applicable minimum amount and shall be allowed 30 days to make an appropriate
investment before redemption is processed.
ARTICLE VIII
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Duration: Termination of Trust;
Amendment; Mergers, Etc.
Section 8.1 Duration. Subject to termination in accordance
with the provisions of Section 8.2 hereof, the Trust created hereby shall have
perpetual existence.
Section 8.2 Termination.
(a) The Trust or any Series may be dissolved by the
affirmative vote of a majority of the Trustees, and without any vote of the
Shareholders thereof, except as may be required by the 1940 Act. Upon the
dissolution of the Trust or any Series:
(1) The Trust or such Series shall carry on
no business except for the purpose of winding up its affairs.
(2) The Trustees shall proceed to wind
up
the affairs of the Trust or such Series and all of the powers of the
Trustees under this Declaration shall continue until the affairs of the
Trust or such Series shall have been wound up, including the power to
fulfill or discharge the contracts of the Trust or such Series, collect
its assets, sell, convey, assign, exchange, merger where the Trust is
not the survivor, transfer or otherwise dispose of all or any part of
the remaining Trust Property to one or more Persons at public or
private sale for consideration which may consist in whole or in part in
cash, securities or other property of any kind, discharge or pay its
liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange,
merger in which the Trust is not the survivor, transfer or other
disposition of all or substantially all the Trust Property of the Trust
or any Series shall require approval of the principal terms of the
transaction and the nature and amount of the consideration with the
same vote as required for dissolution pursuant to paragraph (a) above.
(3) After paying or adequately providing
for the payment of all liabilities, and upon receipt of such releases,
indemnities and refunding agreements, as they deem necessary for their
protection, the Trustees may distribute the remaining Trust
25
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Property of the Trust or any Series, in cash or in kind or partly each,
among the Shareholders of such Series according to their respective
rights.
(b) After the winding up and termination of the Trust or any
Series and distribution to the Shareholders as herein provided, a majority of
the Trustees shall execute and lodge among the records of the Trust an
instrument in writing setting forth the fact of such termination and shall
execute and file a certificate of cancellation with the Secretary of State of
the State of Delaware. Upon termination of the Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder, and
the rights and interests of all Shareholders shall thereupon cease.
Upon termination of any Series, the Trustees shall thereunder
be discharged from all further liabilities and duties with respect to such
Series, and the rights and interests of all Shareholders of such Series shall
thereupon cease.
Section 8.3 Amendment Procedure.
(a) Subject to Section 8.3(b), this Declaration may be
amended in any respect by the affirmative vote of two-thirds of the Trustees and
without any vote of the Shareholders of the Trust or any Series or Class except
as may be required by the 1940 Act.
(b) Nothing contained in this Declaration shall
permit the
amendment of this Declaration to impair the exemption from personal liability of
the Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments upon Shareholders. Expenses of the Trust charged directly to
Shareholders pursuant to Section 3.8 hereof or fees or sales charges payable
upon or in connection with redemptions of Shares pursuant to Section 7.1 hereof
shall not constitute "assessments" for purposes of this Section 8.3(b).
(c) An amendment duly adopted by the requisite vote
of the
Board of Trustees and, if required, Shareholders as aforesaid, shall become
effective at the time of such adoption or at such other time as may be
designated by the Board of Trustees or Shareholders, as the case may be. A
certification signed by a majority of the Trustees setting forth an amendment
and reciting that it was duly adopted by the Trustees and, if required,
Shareholders as aforesaid, or a copy of the Declaration, as amended, and
executed by a majority of the Trustees, shall be conclusive evidence
26
<PAGE>
of such amendment when lodged among the records of the Trust or at such other
time designated by the Board.
Notwithstanding any other provision hereof, until such time as
Shares are issued and outstanding, this Declaration may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
Section 8.4 Merger, Consolidation and Sale of Assets. The
Trust or any Series may merge or consolidate with any other corporation,
association, trust or other organization or any Series, sub-trust or other
designated portion thereof or may sell, lease or exchange all or substantially
all of the Trust Property or the property of any Series including its good will
or may acquire all or substantially all of the property of any other
corporation, association, trust or other organization or any series, sub-trust
or other designated portion thereof, upon such terms and conditions and for such
consideration when and as authorized by two-thirds of the Trustees and without
any vote by the Shareholders of the Trust or any Series or Class except as may
be required by the 1940 Act, and any such merger, consolidation, sale, lease,
exchange or purchase shall be determined for all purposes to have been
accomplished under and pursuant to the statutes of the State of Delaware.
ARTICLE IX
Miscellaneous
Section 9.1 Filing. This Declaration and any amendment
(including any supplement) hereto shall be filed in such places as may be
required or as the Trustees deem appropriate. Each amendment shall be
accompanied by a certificate signed and acknowledged by a Trustee stating that
such action was duly taken in a manner provided herein, and shall, upon
insertion in the Trust's minute book, be conclusive evidence of all amendments
contained therein. A restated Declaration, containing the original Declaration
and all amendments theretofore made, may be executed from time to time by a
majority of the Trustees and shall, upon insertion in the Trust's minute book,
be conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
Section 9.2 Resident Agent. The Trust shall maintain a resident agent in the
State of Delaware, which agent shall initially be The Corporation Trust
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Company, 1209 Orange Street, Wilmington, Delaware 19801. The Trustees may
designate a successor resident agent, provided, however, that such appointment
shall not become effective until written notice thereof is delivered to the
office of the Secretary of the State.
Section 9.3 Governing Law. This Declaration is executed and
delivered in the State of Delaware and with reference to the laws thereof, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed according to the laws of said State and
reference shall be specifically made to the business corporation law of the
State of Delaware as to the construction of matters not specifically covered
herein or as to which an ambiguity exists, although such law shall not be viewed
as limiting the powers otherwise granted to the Trustees hereunder and any
ambiguity shall be viewed in favor of such powers.
Section 9.4 Counterparts. This Declaration may be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts, together, shall constitute one and the
same instrument, which shall be sufficiently evidenced by any such original
counterpart.
Section 9.5 Reliance by Third Parties. Any certificate
executed by an individual who, according to the records of the Trust, or of any
recording office in which this Declaration may be recorded, appears to be a
Trustee hereunder, certifying to the existence of any fact or facts which in any
manner relate to the affairs of the Trust shall be conclusive evidence as to the
matters so certified in favor of any person dealing with the Trust.
Section 9.6 Provisions in Conflict with Law or Regulation.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration to the extent of such conflict; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be
held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only
28
<PAGE>
to such provision in such jurisdiction and shall not in any manner affect such
provision in any other jurisdiction or any other provision of this Declaration
in any jurisdiction.
29
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
By: /s/ Henry G. Van der Eb
Henry G. Van der Eb
Trustee
Authorization of The Gabelli Mathers Fund Series of Shares (and the AAA Class
within
such Series) of the Trust
RESOLVED, that the trustees hereby authorize, establish and designate
The
Gabelli Mathers Fund Series of the Trust; and
FURTHER RESOLVED, that the investment objectives, policies,
restrictions and limitations of the Services so authorized shall be as
set forth in the Prospectus and Statement of Additional Information
contained in Post-Effective Amendment No. 59 to the Registration
Statement on Form N-1A of the Mathers Fund, Inc. (the "Fund"), which is
expected to be adopted as the Registration Statement of the Trust (the
"Registration Statement"); and
FURTHER RESOLVED, that to the extent that Registration
Statement provides that the investment objectives, policies,
restrictions or limitations set forth with respect to the Fund are
"fundamental" policies of the Fund, such "fundamental" policies with
respect to the Fund are hereby approved and adopted as the
"fundamental" policies of the series of the Trust authorized hereby;
and
FURTHER RESOLVED, that such Series so authorized shall
initially consist of one Class of Shares, to be known as "Class AAA
Shares," or by such other or additional names as the trustees may from
time to time deem appropriate; and
FURTHER RESOLVED, that such authorization of the Series and
the Class shall not be deemed to preclude the trustees from authorizing
additional Classes within such Series from time to time in accordance
with the provisions of the Trust's Agreement and Declaration of Trust
(the "Declaration of Trust"); and
FURTHER RESOLVED, that the number of authorized Shares of such
Series and Class so authorized shall be unlimited; and
FURTHER RESOLVED, that no holder of Shares of the Series and
Class so authorized, as such, shall have any preemptive or other right
to acquire, purchase or subscribe for any Shares or other securities of
the Trust which the Trust may hereafter issue or sell, whether of the
same or of any other Series or Class or otherwise, unless the trustees
shall so provide by Resolution (as defined in the Declaration of
Trust); and
FURTHER RESOLVED, that holders of Shares of the Series and
Class shall have no exchange privileges, and the Shares shall not be
subject to any conversion features, except those that the Trustees may
provide for by Resolution or by express inclusion in the then current
Registration Statement on Form N-1A of the Trust; and
FURTHER RESOLVED, that the Shares of the Series and Class so
authorized shall be subject to redemption at the option of the holder
thereof in accordance with the provisions of Section 7.1 of the
Declaration of Trust, and at the option of the Trust in accordance with
Section 7.3 of the Declaration of Trust; and
FURTHER RESOLVED, that the foregoing resolutions shall be
effective as of the date of execution and delivery of the Agreement and
Plan of Reorganization; and
FURTHER RESOLVED, that the foregoing resolutions be and they
hereby are incorporated by reference into the Declaration of Trust; and
FURTHER RESOLVED, that the officers of the Trust are
authorized and directed to prepare and file with the Securities and
Exchange Commission a post-effective amendment or amendments to the
Trust's registration statement under the Securities Act of 1933 and the
Investment Company Act of 1940 for the purposes of registering shares
of the Series and Class so authorized; and
FURTHER RESOLVED, that the trustees, at any time and from time
to time, may cause the Trust to issue whole and fractional Shares of
the Series and Class so authorized, to such Person (as defined in the
Declaration of Trust) or Persons, for such type and amount of
consideration as is permitted by Section 3802(a) of the Delaware
Business Trust Act (including cash and securities or other property),
or for no consideration, and on such other terms as are not
inconsistent with the foregoing resolutions, as the trustees may deem
appropriate; and
FURTHER RESOLVED, that the ownership and transfer of Shares of
the Series and Class so authorized shall be recorded on the books of
the Trust or of a transfer or similar agent for the Trust, that no
certificates evidencing or certifying the ownership of such Shares
shall be issued except as the trustees may otherwise determine from
time to time in their sole discretion and that such record books shall
be conclusive as to who are the holders of such Shares and as to the
number of Shares of each such Series and Class held form time to time
by each.
BY-LAWS
OF
THE GABELLI MATHERS FUND
TABLE OF CONTENTS
Page
ARTICLE I
Shareholder Meetings.................................................1
1.1 Chairman......................................1
1.2 Proxies; Voting..............................1
1.3 Fixing Record Dates..........................1
1.4 Inspectors of Election........................1
1.5 Records at Shareholder Meetings...........2
ARTICLE II
Trustees..........................................................2
2.1 Annual and Regular Meetings.................2
2.2 Chairman; Records........................3
ARTICLE III
Officers............................................................3
3.1 Officers of the Trust.......................3
3.2 Election and Tenure.........................3
3.3 Removal of Officers.........................3
3.4 Bonds and Surety...........................4
3.5 Chairman, President, and other Officers.....4
3.6 Secretary..................................4
3.7 Treasurer.................................5
3.8 Other Officers and Duties.................5
ARTICLE IV
Miscellaneous.....................................................5
4.1 Signatures.................................5
4.2 Seal.......................................6
ARTICLE V
Amendment of By-Laws...............................................6
i
Page
5.1 Amendment and Repeal of By-Laws.........6
-------------------------------
ii
THE GABELLI MATHERS FUND
BY-LAWS
These By-Laws are made and adopted pursuant to Section 3.9 of
the Declaration of Trust establishing The Gabelli Mathers Fund dated as of
____________, 1999, as from time to time amended (hereinafter called the
"Declara tion"). All words and terms capitalized in these By-Laws shall have the
meaning or meanings set forth for such words or terms in the Declaration.
ARTICLE X.
Shareholder Meetings
A. Chairman. The Chairman, if any, shall act as chairman at all meetings of the
Shareholders; in the Chairman's absence, the Trustee or Trustees present at each
meeting may elect a temporary chairman for the meeting, who may be one of
themselves.
B. Proxies; Voting. Shareholders may vote either in person or
by duly executed proxy and each full share or fraction thereof represented at
the meeting shall have one vote (or such fraction, as the case may be), all as
provided in Article VII of the Declaration.
C. Fixing Record Dates. For the purpose of determining the
Shareholders who are entitled to notice of or to vote or act at any meeting,
including any adjournment thereof, or who are entitled to participate in any
dividends, or for any other proper purpose, the Trustees may from time to time,
without closing the transfer books, fix a record date in the manner provided in
Section 6.3 of the Declaration. If the Trustees do not prior to any meeting of
Shareholders so fix a record date or close the transfer books, then the date of
mailing notice of the meeting or the date upon which the dividend resolution is
adopted, as the case may be, shall be the record date.
D. Inspectors of Election. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the Chairman, if any, of any meeting of Shareholders may, and on the
request of any Shareholder or Shareholder proxy shall, appoint Inspectors of
Election of the meet ing. The number of Inspectors shall be either one or three.
If appointed at the meeting on the request of one or more Shareholders or
proxies, a majority of Shares present shall determine whether one or three
Inspectors are to be appointed, but failure to allow such determination by the
Shareholders shall not affect the validity of the appointment of Inspectors of
Election. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the number of Shares
outstanding, the Shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. If there are
three Inspectors of Election, the decision, act or certificate of a majority is
effective in all respects as the decision, act or certificate of all. On request
of the Chairman, if any, of the meeting, or of any Shareholder or Shareholder
proxy, the Inspectors of Election shall make a report in writing of any
challenge or question or matter determined by them and shall execute a
certificate of any facts found by them.
E. Records at Shareholder Meetings. At each meeting of the
Shareholders, there shall be made available for inspection at a convenient time
and place during normal business hours, if requested by Shareholders, the
minutes of the last previous Annual or Special Meeting of Shareholders of the
Trust and a list of the Shareholders of the Trust, as of the record date of the
meeting or the date of closing of transfer books, as the case may be. Such list
of Shareholders shall contain the name and the address of each Shareholder in
alphabetical order and the number of Shares owned by such Shareholder.
Shareholders shall have such other rights and procedures of inspection of the
books and records of the Trust as are granted to shareholders of a Delaware
business corporation.
ARTICLE XI.
Trustees
A. Annual and Regular Meetings. Meetings of the Trustees shall
be held from time to time upon the call of the Chairman, if any, the President,
the Secretary or any two Trustees. Regular meetings of the Trustees may be held
without call or notice and shall generally be held quarterly on dates
established by the
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Trustees. Notice of any other meeting shall be mailed not less than 48 hours
before the meeting or otherwise actually delivered orally or in writing not less
than 24 hours before the meeting, but may be waived in writing by any Trustee
either before or after such meeting. The attendance of a Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee
attends a meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened. Neither the business to be trans acted at, nor the purpose of, any
meeting of the Board of Trustees need be stated in the notice or waiver of
notice of such meeting.
B. Chairman; Records. The Chairman, if any, shall be elected
by the Trustees from one of their number to serve at the pleasure of the
Trustees. Such Chairman, if any, shall act as chairman at all meetings of the
Trustees; in absence of a chairman, the Trustees present shall elect one of
their number to act as temporary chairman. The results of all actions taken at a
meeting of the Trustees, or by unani mous written consent of the Trustees, shall
be recorded by the person appointed by the Board of Trustees as the meeting
secretary.
ARTICLE XII.
Officers
A. Officers of the Trust. The officers of the Trust shall
consist of a President, a Secretary, a Treasurer and such other officers or
assistant officers as may be elected or authorized by the Trustees. Any two or
more of the offices may be held by the same Person, except that the same person
may not be both President and Secretary.
B. Election and Tenure. At the initial organization meeting,
the Trustees shall elect the President, Secretary, Treasurer and such other
officers as the Trustees shall deem necessary or appropriate in order to carry
out the business of the Trust. Such officers shall serve at the pleasure of the
Trustees or until their succes sors have been duly elected and qualified. The
Trustees may fill any vacancy in office or add any additional officers at any
time.
C. Removal of Officers. Any officer may be removed at any
time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have
2
<PAGE>
as a result of removal in breach of a contract of employment. Any officer may
resign at any time by notice in writing signed by such officer and delivered or
mailed to the Chairman, if any, President, or Secretary, and such resignation
shall take effect immediately upon receipt by the Chairman, if any, President,
or Secretary, or at a later date according to the terms of such notice in
writing.
D. Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of such officer's duties in
such amount and with such sureties as the Trustees may determine.
E. Chairman, President, and other Officers. The Chairman, if
any, shall, if present, preside at all meetings of the Shareholders and of the
Trustees and shall exercise and perform such other powers and duties as may be
from time to time assigned to such person by the Trustees. Subject to such
supervisory powers, if any, as may be given by the Trustees to the Chairman, if
any, the President shall be the chief executive officer of the Trust and,
subject to the control of the Trustees and any agreements entered into by the
Trust with others, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exer cise such general
powers of management as are usually vested in the office of President of a
corporation. Each officer shall have power in the name and on behalf of the
Trust for the benefit of the Trust or any of its Series to execute any and all
loans, documents, contracts, agreements, deeds, mortgages, registration
statements, applications, requests, filings and other instruments in writing,
and to employ and discharge employees and agents of the Trust. Unless otherwise
directed by the Trustees, each officer shall have full authority and power, on
behalf of all of the Trustees, to attend and to act and to vote, on behalf of
the Trust at any meetings of business organizations in which the Trust holds an
interest, or to confer such powers upon any other persons, by executing any
proxies duly authorizing such persons. The President shall have such further
authorities and duties as the Trustees shall from time to time determine. In the
absence or disability of the President, the Vice-Presidents in order of their
rank as fixed by the Trustees or, if more than one and not ranked, the
Vice-President designated by the Trustees, shall perform all of the duties of
the President, and when so acting shall have all the powers of and be subject to
all of the restrictions upon the President.
F. Secretary. The Secretary shall maintain the minutes of all
meetings of, and record all votes of, Shareholders, Trustees and the Executive
Com mittee, if any. The Secretary shall be custodian of the seal of the Trust,
if any, and the Secretary (and any other person so authorized by the Trustees)
shall affix the seal, or if permitted, facsimile thereof, to any instrument
executed by the Trust which
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would be sealed by a Delaware business corporation executing the same or a
similar instrument and shall attest the seal and the signature or signatures of
the officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a Delaware business corporation, and shall have such other authorities and
duties as the Trustees shall from time to time determine.
G. Treasurer. Except as otherwise directed by the Trustees,
the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
Trust, and shall have and exercise under the supervision of the Trustees and of
the President all powers and duties normally incident to the office. The
Treasurer may endorse for deposit or col lection all notes, checks and other
instruments payable to the Trust or to its order. The Treasurer shall deposit
all funds of the Trust in such depositories as the Trustees shall designate. The
Treasurer shall be responsible for such disbursement of the funds of the Trust
as may be ordered by the Trustees or the President. The Treasurer shall keep
accurate account of the books of the Trust's transactions which shall be the
property of the Trust, and which together with all other property of the Trust
in the Treasurer's possession, shall be subject at all times to the inspection
and control of the Trustees. Unless the Trustees shall otherwise determine, the
Treasurer shall be the principal accounting officer of the Trust and shall also
be the principal financial officer of the Trust. The Treasurer shall have such
other duties and authorities as the Trustees shall from time to time determine.
Notwithstanding anything to the contrary herein contained, the Trustees may
authorize any adviser, administrator, manager or transfer agent to maintain bank
accounts and deposit and disburse funds of any Series of the Trust on behalf of
such Series.
H. Other Officers and Duties. The Trustees may elect such
other officers and assistant officers as they shall from time to time determine
to be necessary or desirable in order to conduct the business of the Trust.
Assistant offi cers shall act generally in the absence of the officer whom they
assist and shall assist that officer in the duties of the office. Each officer,
employee and agent of the Trust shall have such other duties and authority as
may be conferred upon such person by the Trustees or delegated to such person by
the President.
ARTICLE XIII.
Miscellaneous
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A. Signatures. All contracts and other instruments shall be
executed on behalf of the Trust by its properly authorized officers, agent or
agents, as provided in the Declaration or By-laws or as the Trustees may from
time to time by resolution provide.
B. Seal. The Trust is not required to have any seal, and the
adoption or use of a seal shall be purely ornamental and be of no legal effect.
The seal, if any, of the Trust, or any Series of the Trust, if any, may be
affixed to any in strument, and the seal and its attestation may be
lithographed, engraved or otherwise printed on any document with the same force
and effect as if it had been imprinted and affixed manually in the same manner
and with the same force and effect as if done by a Delaware business
corporation. The presence or absence of a seal shall have no effect on the
validity, enforceability or binding nature of any document or instrument that is
otherwise duly authorized, executed and delivered.
ARTICLE XIV.
Amendment of By-Laws
A. Amendment and Repeal of By-Laws. In accordance with Sec
tion 3.9 of the Declaration, only the Trustees shall have the power to amend or
repeal the By-Laws or adopt new By-Laws at any time. Action by the Trustees with
respect to the By-Laws shall be taken by an affirmative vote of a majority of
the Trustees. The Trustees shall in no event adopt By-Laws which are in conflict
with the Declaration, and any apparent inconsistency shall be construed in favor
of the related provisions in the Declaration.
FORM OF
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of __, 1999, between
The Gabelli Mathers Fund (the "Fund"), a Delaware business trust, and Gabelli
Funds, LLC (the "Adviser"), a New York limited liability company.
In consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed by and between the parties hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act
as investment adviser to the Fund with respect to the investment of the assets
of the Fund and to supervise and arrange the purchase and sale of assets held in
the investment portfolio of the Fund. The Adviser may delegate any or all of its
responsibilities to one or more sub-advisers or administrators, subject to the
approval of the Board of Trustees of the Fund. Such delegation shall not relieve
the Adviser of its duties and responsibilities hereunder.
2. Duties and obligations of the Adviser with respect to investments of assets
of the Fund
(a) Subject to the succeeding provisions of this paragraph and subject to the
direction and control of the Fund's Board of Trustees, the Adviser shall (i) act
as investment adviser for and supervise and manage the investment and
reinvestment of the Fund's assets and in connection therewith have complete
discre tion in purchasing and selling securities and other assets for the Fund
and in voting, exercising consents and exercising all other rights appertaining
to such securities and other assets on behalf of the Fund; (ii) arrange for the
purchase and sale of securities and other assets held in the investment
portfolio of the Fund and (iii) oversee the administration of all aspects of the
Fund's business and affairs and provide, or arrange for others whom it believes
to be competent to provide, certain services as specified in subparagraph (b)
below. Nothing contained herein shall be construed to restrict the Fund's right
to hire its own employees or to contract for administrative services to be
performed by third parties, including but not limited to, the calculation of the
net asset value of the Fund's shares.
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(b) The specific services to be provided or arranged for by
the Adviser for the Fund are (i) maintaining the Fund's books and records, such
as jour nals, ledger accounts and other records in accordance with applicable
laws and regulations to the extent not maintained by the Fund's custodian,
transfer agent and dividend disbursing agent; (ii) transmitting purchase and
redemption orders for the Fund's shares to the extent not transmitted by the
Fund's distributor or others who purchase and redeem shares; (iii) initiating
all money transfers to the Fund's custodian and from the Fund's custodian for
the payment of the Fund's expenses, investments, dividends and share
redemptions; (iv) reconciling account information and balances among the Fund's
custodian, transfer agent, distributor, dividend disbursing agent and the
Adviser; (v) providing the Fund, upon request, with such office space and
facilities, utilities and office equipment as are adequate for the Fund's needs;
(vi) preparing, but not paying for, all reports by the Fund to its shareholders
and all reports and filings required to maintain the registration and
qualification of the Fund's shares under federal and state law including
periodic updating of the Fund's registration statement and the Fund's Prospectus
(including its Statement of Additional Information); (vii) supervising the
calculation of the net asset value of the Fund's shares; and (viii) preparing
notices and agendas for meetings of the Fund's shareholders and the Fund's Board
of Trustees as well as minutes of such meetings in all matters required by
applicable law to be acted upon by the Board of Trustees.
(c) In the performance of its duties under this Agreement, the
Adviser shall at all times use all reasonable efforts to conform to, and act in
accor dance with, any requirements imposed by (i) the provisions of the
Investment Company Act of 1940, as amended (the "Act"), and of any rules or
regulations in force thereunder; (ii) any other applicable provision of law;
(iii) the provisions of the Declaration of Trust, as amended, and By-Laws of the
Fund, as such documents are amended from time to time; (iv) the investment
objectives, policies and restrictions applicable to the Fund as set forth in the
Fund's Registration Statement on Form N-1A and (v) any policies and
determinations of the Board of Trustees of the Fund.
(d) The Adviser will seek to provide qualified personnel to
fulfill its duties hereunder and will bear all costs and expenses (including any
overhead and personnel costs) incurred in connection with its duties hereunder
and shall bear the costs of any salaries or trustees fees of any officers or
trustees of the Fund who are affiliated persons (as defined in the Act) of the
Adviser. Subject to the foregoing, the Fund shall be responsible for the payment
of all the Fund's other expenses, including (i) payment of the fees payable to
the Adviser under paragraph 4 hereof; (ii) organiza tional expenses; (iii)
brokerage fees and commissions; (iv) taxes; (v) interest charges on borrowings;
(vi) the cost of liability insurance or fidelity bond coverage for the
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Fund officers and employees, and trustees' and officers' errors and omissions
insurance coverage; (vii) legal, auditing and accounting fees and expenses;
(viii) charges of the Fund's custodian, transfer agent and dividend disbursing
agent; (ix) the Fund's pro rata portion of dues, fees and charges of any trade
association of which the Fund is a member; (x) the expenses of printing,
preparing and mailing proxies, stock certificates and reports, including the
Fund's prospectus and statement of additional information, and notices to
shareholders; (xi) filing fees for the registration or qualification of the Fund
and its shares under federal or state securities laws; (xii) the fees and
expenses involved in registering and maintaining registration of the Fund's
shares with the Securities and Exchange Commission; (xiii) the expenses of
holding shareholder meetings; (xiv) the compensation, including fees, of any of
the Fund's trustees, officers or employees who are not affiliated persons of the
Adviser; (xv) all expenses of computing the Fund's net asset value per share,
including any equipment or services obtained solely for the purpose of pricing
shares or valuing the Fund's investment portfolio; (xvi) expenses of personnel
performing shareholder servicing functions and all other distribution expenses
payable by the Fund; and (xvii) litigation and other extraordinary or
non-recurring expenses and other expenses properly payable by the Fund.
(e) The Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder, but neither the Adviser nor
any of its offi cers, directors, employees, agents or controlling persons shall
be liable for any act or omission or for any loss sustained by the Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement; provided, however, that the
foregoing shall not constitute a waiver of any rights which the Fund may have
which may not be waived under applicable law.
(f) Nothing in this Agreement shall prevent the Adviser or any
director, officer, employee or other affiliate thereof from acting as investment
adviser for any other person, firm or corporation, or from engaging in any other
lawful activity, and shall not in any way limit or restrict the Adviser or any
of its directors, officers, employees or agents from buying, selling or trading
any securities for its or their own accounts or for the accounts of others for
whom it or they may be acting.
3. Portfolio Transactions
In the course of the Adviser's execution of portfolio
transactions for the Fund, it is agreed that the Adviser shall employ securities
brokers and dealers
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which, in its judgment, will be able to satisfy the policy of the Fund to seek
the best execution of its portfolio transactions at reasonable expenses. For
purposes of this agreement, "best execution" shall mean prompt, efficient and
reliable execution at the most favorable price obtainable. Under such conditions
as may be specified by the Fund's Board of Trustees in the interest of its
shareholders and to ensure compliance with applicable law and regulations, the
Adviser may (a) place orders for the purchase or sale of the Fund's portfolio
securities with its affiliate, Gabelli & Company, Inc.; (b) pay commissions to
brokers other than its affiliate which are higher than might be charged by
another qualified broker to obtain brokerage and/or research services considered
by the Adviser to be useful or desirable in the performance of its duties
hereunder and for the investment management of other advisory accounts over
which it or its affiliates exercise investment discretion; and (c) consider
sales by brokers (other than its affiliate distributor) of shares of the Fund
and any other mutual fund for which it or its affiliates act as investment
adviser, as a factor in its selection of brokers and dealers for the Fund's
portfolio transactions.
4. Compensation of the Adviser
(a) Subject to paragraph 2(b), the Fund agrees to pay to the Adviser out of the
Fund's assets and the Adviser agrees to accept as full compensation for all
services rendered by or through the Adviser (other than any amounts payable to
the Adviser pursuant to paragraph 4(b)) a fee computed daily and payable monthly
in an amount equal on an annualized basis to 1.0% of the Fund's daily average
net asset value; provided, however, that the Advisor agrees that it will waive a
portion of such fees equal to 0.25% of the Fund's daily net asset value during
the period prior to the second anniversary of the date of this Agreement on net
assets of the Fund of $100 million or less. For any period less than a month
during which this Agreement is in effect, the fee shall be prorated according to
the proportion which such period bears to a full month of 28, 29, 30 or 31 days,
as the case may be.
(b) The Fund will pay the Adviser separately for any
costs
and expenses incurred by the Adviser in connection with distribution of the
Fund's shares in accordance with the terms (including proration or nonpayment as
a result of allocations of payments) of Plans of Distribution (collectively, the
"Plan") adopted by the Fund pursuant to Rule 12b-1 under the Act as such Plan
may be in effect from time to time; provided, however, that no payments shall be
due or paid to the Adviser hereunder unless and until this Agreement shall have
been approved by Board Approval and Disinterested Board Approval (as such terms
are defined in such Plan). The Fund reserves the right to modify or terminate
such Plan at any time as specified in the Plan and Rule 12b-1, and this
subparagraph shall thereupon be modified or
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terminated to the same extent without further action of the parties. The persons
authorized to direct the payment of the funds pursuant to this Agreement and the
Plan shall provide to the Fund's Board of Trustees, and the Trustees shall
review, at least quarterly a written report of the amount so paid and the
purposes for which such expenditures were made.
(c) For purposes of this Agreement, the net assets of the Fund shall be
calculated pursuant to the procedures adopted by resolutions of the Trustees of
the Fund for calculating the net asset value of the Fund's shares.
5. Indemnity.
(a) The Fund hereby agrees to indemnify the Adviser and each of the Adviser's
directors, officers, employees, and agents (including any individual who serves
at the Adviser's request as director, officer, partner, trustee or the like of
another corporation) and controlling persons (each such person being an
"indemnitee) against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and counsel
fees (all as provided in accordance with applicable corporate law) reasonably
incurred by such indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which he may be or may have been
involved as a party or otherwise or with which he may be or may have been
threatened, while acting in any capacity set forth above in this paragraph with
respect to this Agreement or thereafter by reason of his having acted in any
such capacity, except with respect to any matter as to which he shall have been
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Fund and furthermore, in the case of any
criminal proceeding, so long as he had no reasonable cause to believe that the
conduct was unlawful, provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Fund or its shareholders or
any expense of such indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of his position (the conduct referred to in such clauses
(i) through (v) being sometimes referred to herein as "disabling conduct"), (2)
as to any matter disposed of by settlement or a compromise payment by such
indemnitee, pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless there has
been a determination that such settlement or compromise is in the best interests
of the Fund and that such indemnitee appears to have acted in good faith in the
reasonable belief that his action was in the best interest of the Fund and did
not involve disabling conduct by such indemnitee and (3) with
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respect to any action, suit or other proceeding voluntarily prosecuted by any
indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such indemnitee was
authorized by a majority of the full Board of the Fund. Notwithstanding the
foregoing the Fund shall not be obligated to provide any such indemnification to
the extent such provision would waive any right which the Fund cannot lawfully
waive.
(b) The Fund shall make advance payments in
connection
with the expenses of defending any action with respect to which indemnification
might be sought hereunder if the Fund receives a written affirmation of the
indemnitee's good faith belief that the standard of conduct necessary for
indemnifica tion has been met and a written undertaking to reimburse the Fund
unless it is subsequently determined that he is entitled to such indemnification
and if the trustees of the Fund determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the indemnitee shall provide a security for his
undertaking, (B) the Fund shall be insured against losses arising by reason of
any lawful advances, or (C) a majority of a quorum of trustees of the Fund who
are neither "interested persons" of the Fund (as defined in Section 2(a)(19) of
the Act) nor parties to the proceeding ("Disinterested Non-Party Trustees") or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall be made
(1) by a final decision on the merits by a court or other body before whom the
proceeding was brought that such indemnitee is not liable by reason of disabling
conduct or, (2) in the absence of such a decision, by (i) a majority vote of a
quorum of the Disinterested Non-Party Trustees of the Fund, or (ii) if such a
quorum is not obtainable or even, if obtainable, if a majority vote of such
quorum so directs, independent legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions
shall not exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective upon on the date hereof
and shall continue in effect for a period of two years and thereafter from year
to year, but
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only so long as such continuation is specifically approved at least annually in
accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser at any time
without penalty upon giving the Fund sixty days written notice (which notice may
be waived by the Fund) and may be terminated by the Fund at any time without
penalty upon giving the Adviser sixty days notice (which notice may be waived by
the Adviser), provided that such termination by the Fund shall be directed or
approved by the vote of a majority of the Trustees of the Fund in office at the
time or by the vote of the holders of a "majority of the voting securities" (as
defined in the Act) of the Fund at the time outstanding and entitled to vote or,
with respect to paragraph 4(b), by a majority of the Trustees of the Fund who
are not "interested persons" of the Fund and who have no direct or indirect
financial interest in the operation of the Plan or any agreements related to the
Plan. This Agreement shall terminate automatically in the event of its
assignment (as "assignment" is defined in the Act and the rules thereunder.)
It is understood and hereby agreed that the word "Gabelli" is
the property of the Adviser for copyright and other purposes. The Fund further
agrees that the word "Gabelli" in its name is derived from the name of Mario J.
Gabelli and such name may freely be used by the Adviser for other investment
companies, entities or products. The Fund further agrees that, in the event that
the Adviser shall cease to act as investment adviser to the Fund and the Fund
shall promptly take all necessary and appropriate action to change its name to
names which do not include the word "Gabelli"; provided, however, that the Fund
may continue to use the word "Gabelli" if the Adviser consents in writing to
such use.
7. Notices
Any notice under this Agreement shall be in writing to the
other party at such address as the other party may designate from time to time
for the receipt of such notice and shall be deemed to be received on the earlier
of the date actually received or on the fourth day after the postmark if such
notice is mailed first class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance with the laws
of the State of New York for contracts to be performed entirely therein and in
accordance with the applicable provisions of the Act.
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IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to
be executed by their duly authorized officers, all as of the day and the year
first above written.
THE GABELLI MATHERS FUND
By________________________________
Name: Bruce N. Alpert
Title: Vice President and Treasurer
GABELLI FUNDS, LLC
By________________________________
Name: Stephen G. Bondi
Title: Vice President of Finance
FORM OF
DISTRIBUTION AGREEMENT
FOR
THE GABELLI MATHERS FUND
DISTRIBUTION AGREEMENT, dated , 1999, between The Gabelli
Mathers Fund, a Delaware business trust (the "Fund"), and Gabelli & Company,
Inc., a New York corporation (the "Distributor"). The Fund is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and an indefinite number of shares (the "Shares") of the Fund, par
value $.001 per share (the "Shares"), have been registered under the Securities
Act of 1933, as amended (the "1933 Act") to be offered for sale to the public in
a continuous public offering in accordance with terms and conditions set forth
in the Prospectus and Statement of Additional Information (the "Prospectus") of
the Fund included in the Fund's Registration Statement on Form N-1A as such
documents may be amended from time to time.
In this connection, the Fund desires that the Distributor act
as its exclusive sales agent and distributor for the sale and distribution of
Shares. The Dis tributor has advised the Fund that it is willing to act in such
capacities, and it is accordingly agreed between them as follows:
1. The Fund hereby appoints the Distributor as exclusive sales
agent and distributor for the sale and distribution of Shares pursuant to the
aforesaid continuous public offering of Shares, and the Fund further agrees from
and after the commencement of such continuous public offering that it will not,
without the Distributor's consent, sell or agree to sell any Shares otherwise
than through the Distributor, except the Fund may issue Shares in connection
with a merger, consoli dation or acquisition of assets on such basis as may be
authorized or permitted under the 1940 Act.
2. The Distributor hereby accepts such appointment and agrees
to use its best efforts to sell such Shares; provided, however, that when
requested by the Fund at any time for any reason the Distributor will suspend
such efforts. The Fund may also withdraw the offering of Shares at any time when
required by the provisions of any statute, order, rule or regulation of any
governmental body having jurisdiction. It is understood that the Distributor
does not undertake to sell all or any specific portion of the Shares of the
Fund. The Fund acknowledges that the Distributor will
0249698.02-New YorkS5A
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enter into sales or servicing agreements with registered securities brokers and
banks and into servicing agreements with financial institutions and other
industry professionals, such as investment advisers, accountants and estate
planning firms. In entering into such agreements, the Distributor shall act only
on its own behalf as principal underwriter and distributor. The Distributor
shall not be responsible for making any distribution plan or service fee
payments pursuant to any plans the Fund may adopt or agreements it may enter
into.
3. The Distributor represents that it is a member in good
standing of the National Association of Dealers, Inc. and agrees that it will
use all reasonable efforts to maintain such status and to abide by the Rules of
Fair Practice, the Constitution and the Bylaws of the National Association of
Securities Dealers, Inc., and all other rules and regulations that are now or
may become applicable to its performance hereunder. The Distributor will
undertake and discharge its obligations hereunder as an independent contractor
and it shall have no authority or power to obligate or bind the Fund by its
actions, conduct or contracts except that it is authorized to accept orders for
the purchase or repurchase of Shares as the Fund's agent and subject to its
approval. The Fund reserves the right to reject any order in whole or in part.
The Distributor may appoint sub-agents or distribute through dealers or
otherwise as it may determine from time to time pursuant to agreements approved
by the Fund, but this Agreement shall not be construed as authorizing any dealer
or other person to accept orders for sale or repurchase of Shares on behalf of
the Fund or otherwise act as the Fund's agent for any purpose. The Distributor
shall not utilize any materials in connection with the sale or offering of
Shares except the then current Prospectus and such other materials as the Fund
shall provide or approve in writing.
4. Shares may be sold by the Distributor only at prices and
terms described in the then current Prospectus relating to the Shares and may be
sold either through persons with whom it has selling agreements in a form
approved by the Fund's Board of Trustees or directly to prospective purchasers.
To facilitate sales, the Fund will furnish the Distributor with the net asset
value of its Shares promptly after each calculation thereof.
5. The Fund has delivered to the Distributor a copy of the
current Prospectus for the Fund. It agrees that it will use its best efforts to
continue the effec tiveness of its Registration Statement filed under the 1933
Act and the 1940 Act. The Fund further agrees to prepare and file any amendments
to its Registration Statement as may be necessary and any supplemental data in
order to comply with such Acts. The Fund will furnish the Distributor at the
Distributor's expense with a reasonable
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number of copies of the Prospectus and any amended Prospectus for use in
connection with the sale of Shares.
6. At the Distributor's request, the Fund will take such steps
at its own expense as may be necessary and feasible to qualify Shares for sale
in states, territories or dependencies of the United States of America and in
the District of Columbia in accordance with the laws thereof, and to renew or
extend any such qualification; provided, however, that the Fund shall not be
required to qualify Shares or to maintain the qualification of Shares in any
state, territory, dependency or district where it shall deem such qualification
disadvantageous to the Fund.
7. The Distributor agrees that:
(a) It will furnish to the Fund any pertinent information
required to be inserted with respect to the Distributor as exclusive
sales agent and distributor within the purview of Federal and state
securities laws in any reports or registrations required to be filed
with any government authority;
(b) It will not make any representations inconsistent with the
information contained in the Registration Statement or Prospectus filed
under the Securities Act of 1933, as in effect from time to time;
(c) It will not use or distribute or authorize the use or
distribution of any statements other than those contained in the Fund's
then current Prospectus or in such supplemental literature or
advertising as may be authorized in writing by the Fund; and
(d) Subject to Paragraph 9 below, the Distributor will bear
the costs and expenses of printing and distributing any copies of any
prospectuses and annual and interim reports of the Fund (after such
items have been prepared and set in type) which are used in connection
with the offering of Shares, and the costs and expenses of preparing,
printing and distributing any other literature used by the Distributor
or furnished by the Distributor for use in connection with the offering
of the Shares and the costs and expenses incurred by the Distributor in
advertising, promoting and selling Shares of the Fund to the public.
The Fund has adopted a separate plan of distribution (collectively, the
"Plan") pursuant to the provisions of rule 12b-1 of the 1940 Act which
provides for the payment of administrative and sales related expenses
in connection with the distribution of Fund shares and the Distributor
agrees to take no action inconsistent with said Plan.
8. The Fund will pay its legal and auditing expenses and the
cost of composition of any prospectuses of annual or interim reports of the
Fund.
9. The Fund will pay the Distributor for costs and expenses
incurred by the Distributor in connection with distribution of Shares by the
Distributor in accordance with the terms of a Plan of Distribution (the "Plan")
adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act as such Plan may
be in effect from time to time; provided, however, that no payments shall be due
or paid to the Distributor hereunder unless and until this Agreement shall have
been approved by Board Approval and Disinterested Board Approval (as such terms
are defined in such Plan). The Fund reserves the right to modify or terminate
such Plan at any time as specified in the Plan and Rule 12b-1, and this Section
9 shall thereupon be modified or terminated to the same extent without further
action of the parties. The persons authorized to direct the payment of funds
pursuant to this Agreement and the Plan shall provide to the Fund's Board of
Trustees, and the Trustees shall review, at least quarterly a written report of
the amounts so paid and the purposes for which such expenditures were made.
10. The Fund agrees to indemnify, defend and hold the
Distributor, its officers, directors, employees and agents and any person who
controls the Dis tributor within the meaning of Section 15 of the 1933 Act
(each, an "indemnitee"), free and harmless from any and all liabilities and
expenses, including costs of investi gation or defense (including reasonable
counsel fees) incurred by such indemnitee in connection with the defense or
disposition of any action, suit or other proceeding, whether civil or criminal,
in which such indemnitee may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened, while the
Distributor was active in such capacity or by reason of the Distributor having
acted in any such capacity or arising out of or based upon any untrue statement
of a material fact contained in the then-current Prospectus relating to the
Shares or arising out of or based upon any alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by the Distributor to the Fund expressly for
use in any such Prospectus; provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Fund or the shareholders of
the Fund or any expense of such indemni tee with respect to any matter as to
which such indemnitee shall have been adjudicated not to have acted in good
faith in the reasonable belief that its action was in the best interest of the
Fund or arising by reason of such indemnitee's willful
misfeasance, bad faith, or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations under this Agreement
("disabling conduct"), or (2) as to any matter disposed of by settlement or a
compromise payment by such indemnitee, no indemnification shall be provided
unless there has been a determination that such settlement or compromise is in
the best interests of the Fund and that such indemnitee appears to have acted in
good faith in the reasonable belief that its action was in the best interest of
the Fund and did not involve disabling conduct by such indemnitee.
Notwithstanding the foregoing the Fund shall not be obligated to provide any
such indemnification to the extent such provision would waive any right which
the Fund cannot lawfully waive.
The Distributor agrees to indemnify, defend and hold the Fund,
its Trustees, officers, employees and agents and any person who controls the
Fund within the meaning of Section 15 of the 1933 Act (each, an "indemnitee"),
free and harmless from and against any and all liabilities and expenses,
including costs of investigation or defense (including reasonable counsel fees)
incurred by such indemnitee, but only to the extent that such liability or
expense shall arise out of or be based upon any untrue or alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor of the Fund expressly for use in a Prospectus or any alleged
omission to state a material fact in connection with such information required
to be stated therein or necessary to make such information not misleading or
arising by reason of disabling conduct by such indemnitee or any person selling
Shares pursuant to an agreement with the Distributor.
The Fund shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Fund receives a written affirmation of the indemnitee's
good faith belief that the standard of conduct necessary for indemnification has
been met and a written undertaking to reimburse the Fund unless it is
subsequently determined that he is entitled to such indemnification and if the
trustees of the Fund determine that the facts then known to them would not
preclude indemnification. In addition, at least one of the following conditions
must be met: (A) the indemnitee shall provide a security for his undertaking,
(B) the Fund shall be insured against losses arising by reason of any lawful
advances, or (C) a majority of a quorum of trustees of the Fund who are neither
"interested persons" of the Fund (as defined in Section 2(a)(19) of the Act) nor
parties to the proceeding ("Disinterested Non-Party Trustees") or an independent
legal counsel in a written opinion, shall determine, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the indemnitee ultimately will be found entitled to
indemnification.
18
<PAGE>
All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such indemnitee is not liable by
reason of disabling conduct or, (2) in the absence of such a decision, by (i) a
majority vote of a quorum of the Disinterested Non-Party Trustees of the Fund,
or (ii) if such a quorum is not obtainable or even, if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
11. This Agreement shall become effective on the date first
set forth above and shall remain in effect for up to two years from such date
(one year in the case of Section 9 and thereafter from year to year provided
such continuance is specifically approved at least annually prior to each
anniversary of such date by (a) Board Approval or by vote at a meeting of
shareholders of the Fund of the lesser of (i) 67 per cent of the Shares present
or represented by proxy and (ii) 50 per cent of the outstanding Shares and (b)
by Disinterested Board Approval.
12. This Agreement may be terminated (a) by the Distributor at
any time without penalty by giving sixty (60) days' written notice to the Fund
which notice may be waived by the Fund; or (b) by the Fund at any time without
penalty upon sixty (60) days' written notice to the Distributor (which notice
may be waived by the Distributor); provided, however, that any such termination
by the Fund shall be directed or approved in the same manner as required for
continuance of this Agreement by Section 11(a) (or, in the case of termination
of Section 9, by Section 11(b)).
13. This Agreement may not be amended or changed except in
writing signed by each of the parties hereto and approved in the same manner as
provided for continuance of this Agreement in Section 11(a) (or, in the case of
amendment of Section 9, by Section 11(b)). Any such amendment or change shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors, but this Agreement shall not be assigned by either party
and shall automatically terminate upon assignment (as such term is defined in
the 1940 Act and the rules thereunder).
14. This Agreement shall be construed in accordance with the
laws of the State of New York applicable to agreements to be performed entirely
therein and in accordance with applicable provisions of the 1940 Act.
0249698.02-New YorkS5A
19
<PAGE>
15. If any provision of this Agreement shall be held or made
invalid or unenforceable by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers as of the date first written above.
THE GABELLI MATHERS FUND
By:
Name: Bruce N. Alpert
Title: Vice President
GABELLI & COMPANY, INC.
By:
Name: Bruce N. Alpert
Title:
SUB-ADMINISTRATION AGREEMENT
May 1, 1995
The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Dear Ladies and Gentlemen:
Gabelli Funds, Inc., a New York corporation (the "Adviser"), as
investment adviser or manager and administrator to the investment companies set
forth on Exhibit A and incorporated herein (each referred to herein as the
"Fund"), confirms its agreement with The Shareholder Services Group, Inc.
("TSSG") as set forth below.
1. Investment Description; Appointment; Governing Law
Each Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the objective, policies and
limitations specified in its Articles of Incorporation or Master Trust Agreement
as amended from time to time (the "Charter"), its By-Laws, as amended from time
to time, in its prospectus filed with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act") and the
Securities Act of 1933, as amended, as part of the Fund's Registration Statement
(the "Registration Statement"), as amended from time to time, and in the manner
and to the extent as may from time to time be approved as set forth in the
Charter. Copies of the Registration Statement, Charter and By-Laws have been
submitted to TSSG. The Fund employs the Adviser as its investment adviser or
manager and administrator and the Adviser desires to employ and hereby appoints
TSSG to act as its sub-administrator. TSSG accepts this appointment and agrees
to furnish the services as set forth in paragraph 2 of this Agreement for the
compensation set forth below. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of law rules thereof.
2. Services as Sub-Administrator
Subject to the overall supervision and direction of the Adviser, TSSG
will (a) assist in supervising all aspects of each Fund's operations except
those performed by the Adviser under its investment advisory or management
agreement with each Fund; (b) supply the Adviser with office facilities (which
may be in TSSG's own offices), statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including, but not
limited to, the calculation of the net asset value of shares in each Fund
("Shares"), internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; (c) prepare and
distribute materials for all Fund Board of Directors/Trustees Meetings,
including mailing of all Board materials, collating the same materials into the
Board books and assisting in the drafting of minutes for the Board meetings; (d)
prepare reports to holders of Shares ("Shareholders"), tax returns and reports
to and filings with the Securities and Exchange Commission, state Blue Sky
authorities and the applicable stock exchange; (e) provide any equipment or
services necessary for the purpose of pricing Shares or valuing each Fund's
investment portfolio and, when requested, calculate the amount of all applicable
"Blue Sky" expense limitations; (f) provide compliance testing of all Fund
activities against applicable requirements of the 1940 Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended, and the Fund's
investment restrictions; (g) furnish to the Adviser such statistical and other
factual information and information regarding economic factors and trends as the
Adviser from time to time may require, it being understood and acknowledged by
the Fund and TSSG that TSSG shall not provide any services that would cause TSSG
to be deemed to be an "investment adviser", as that term is defined in Section
2(a)(20) of the 1940 Act, including without limitation, services involving the
making of recommendations with regard to purchases or sales by the Fund of
securities; (h) assist in preparing information in connection with regulatory
examinations; and (i) generally provide all administrative services that may be
required for the ongoing operation of each Fund in a manner consistent with the
requirements of the 1940 Act.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay TSSG on the first business day of each month a fee for the
previous month in accordance with the fee schedule set forth on Exhibit B and
incorporated herein. Such fees do not include certain "out-of-pocket"
disbursements for which TSSG shall be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to the items specified on
Schedule C and incorporated herein, which schedule may be modified by TSSG upon
not less than 30 days prior written notice to the Adviser. Upon any termination
of this Agreement before the end of any month, the fee for such part of a month
shall be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to TSSG, the value of
each Fund's net assets shall be computed at the times and in the manner
specified in the Registration Statement. TSSG will bear all expenses in
connection with the performance of its services under this Agreement with the
exception of costs of printing and mailing stock certificates, prospectuses,
reports and notices, interest on borrowed money, brokerage commissions, taxes
and fees payable to federal, state and other governmental agencies, fees of
Directors or Trustees of each Fund who are not affiliated with TSSG, outside
auditing expenses, outside legal expenses or other expenses not specified in
this Section 3 which may be properly payable by the Adviser or the Fund.
4. Standard of Care
TSSG shall exercise its best judgment in rendering the services listed
in paragraph 2 above. TSSG shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect TSSG against liability to the
Fund or to its Shareholders to which TSSG would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of TSSG's reckless disregard of its
obligations and duties under this Agreement.
5. Service to Other Companies or Accounts
The Adviser understands that TSSG now acts, will continue to act and
may act in the future as administrator, sub-administrator or transfer agent to
one or more other investment companies, and the Adviser has no objection to
TSSG's so acting. In addition, the Adviser understands that the persons employed
by TSSG to assist in the performance of TSSG's duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of TSSG or any
affiliate of TSSG to engage in and devote time and attention to other businesses
or to render services of any kind or nature.
6. Term of Agreement
This Agreement shall become effective as of the date hereof and shall
remain in full force and effect for successive annual periods thereafter unless
terminated automatically in the event of its assignment or by either party,
without penalty, on sixty (60) days' written notice to the other party.
7. Amendment to this Agreement
No provision of this Agreement may be changed, discharged or terminated
orally, but only by an instrument in writing signed by each party to the
Agreement.
8. Miscellaneous
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Adviser or TSSG should be sufficiently given if
addressed to the party and received by it at its offices set forth below or at
such other place as it may from time to time designate in writing.
To the Adviser:
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Attn: Bruce N. Alpert
To TSSG:
The Shareholder Services Group, Inc.
Exchange Place - BOS425
Boston, Massachusetts 02109-2873
Attn: Patricia Bickimer, Esq.
9. Confidentiality
All books, records, information and data pertaining to the business of
the Fund that are exchanged or received pursuant to the performance of TSSG's
duties under this Agreement shall remain confidential and shall not be
voluntarily disclosed to any other person, except as specifically authorized by
the Adviser or as may be required by law.
* * * * * *
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
Very truly yours,
GABELLI FUNDS, INC.
By: BRUCE ALPERT
Title: CFO GABELLI FUNDS
DIVISION
Agreed to and Accepted as of May 1, 1995:
THE SHAREHOLDER SERVICES GROUP, INC.
By: RICHARD INGRAM
Title: VICE PRESIDENT AND DIVISION MANAGER
<PAGE>
EXHIBIT A
Effective May 1, 1996
The Gabelli Equity Trust, Inc.
The Gabelli Value Fund Inc.
The Gabelli Growth Fund
The Gabelli Asset Fund
The Gabelli Money Market Funds
- The Gabelli U.S. Treasury Money Market Fund
Gabelli Capital Series Funds, Inc.
- Gabelli Capital Asset Fund
Gabelli Income Series Funds, Inc.
- The Gabelli Global Governments Fund
The Gabelli Global Multimedia Trust Inc.
GABELLI FUNDS, INC.
By:BRUCE ALPERT
Title: CFO, Gabelli Funds
Division
FIRST DATA INVESTOR SERVICES GROUP INC.
By: RICHARD SILVA
Title: Executive Vice President
<PAGE>
EXHIBIT B
Fees for each Fund will be calculated based upon the aggregate average daily net
assets of the Funds listed on Exhibit A of this Agreement in accordance with the
following schedule:
Aggregate Assets Charges
$0 to $1 billion .10%
$1 billion to $1.5 billion .08%
$1.5 billion to $3 billion .03%
Over $3 billion .02%
Assets attributed to new funds created after January 1, 1995 will be subject to
a minimum fee of $30,000.
This fee rate will be applied to each Fund's average daily net assets.
<PAGE>
EXHIBIT C
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to the following:
- Travel to and from Board meetings outside the city of Boston,
MA (subject to prior approval of the
Adviser)
- Any other unusual expenses in association with the services
rendered under this Agreement, such as duplicating charges related
to blue sky filings and Board book production
FORM OF
AMENDMENT NO. 2 TO
SUB-ADMINISTRATION AGREEMENT
This Amendment dated as of September 20, 1999, is entered into by GABELLI FUNDS,
LLC. (the "Adviser") and FIRST DATA INVESTOR SERVICES GROUP, INC. ("Investor
Services Group") (formerly known as The Shareholder Services Group, Inc.).
WHEREAS, the Adviser and Investor Services Group entered into a
Sub-Administration Agreement dated as of May 1, 1995 (as amended and
supplemented, the "Agreement");
WHEREAS, the Adviser and Investor Services Group wish to amend certain terms of
the Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
I. Exhibit A to the Agreement is hereby deleted in its entirety and replaced
with the attached Exhibit A.
II. Except to the extent amended hereby, the Agreement shall remain
unchanged and in full force and effect and is hereby ratified and confirmed in
all respects as amended hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first written above.
GABELLI FUNDS, LLC.
By: __________________________
FIRST DATA INVESTOR SERVICES
GROUP, INC.
By: __________________________
<PAGE>
EXHIBIT A
The Gabelli Equity Trust Inc.
The Gabelli Value Fund Inc.
The Gabelli Growth Fund
The Gabelli Asset Fund
The Gabelli Money Market Funds
The Gabelli U.S. Treasury Money Market Fund
Gabelli Capital Series Funds, Inc.
Gabelli Capital Asset Fund
Treasurers Fund
Domestic Prime Money Market Portfolio
U.S. Treasury Money market Portfolio
Tax Exempt Money Market Portfolio
Gabelli Global Series Funds, Inc.
Global Telecommunications Fund
Global Interactive Couch Potato Fund
Global Convertible Securities Fund
Global Opportunity Fund
Gabelli/Westwood Funds
Equity Fund
Balanced Fund
Intermediate Bond Fund
Small Cap Equity Fund
Realty Fund
Mighty Mites Fund
Gabelli Equity Series Funds, Inc.
The Gabelli Equity Income Fund
The Gabelli Small Cap Growth Fund
The Gabelli Gold Fund, Inc.
Gabelli International Growth Fund, Inc.
The Gabelli Convertible Securities Fund, Inc.
Gabelli Investors Funds, Inc.
The Gabelli ABC Fund
The Gabelli Utility Trust
The Gabelli Global Multimedia Trust, Inc.
The Gabelli Blue Chip Growth Fund
The Gabelli Utilities Fund
The Gabelli Mathers Fund
FORM OF
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
THE GABELLI MATHERS FUND
WHEREAS, THE GABELLI MATHERS FUND, a Delaware Business Trust
(the "Fund"), engages in business as an open-end management investment company
and is registered as such under the Investment Company Act of 1940, as amended
(the "Act"); and
WHEREAS, the Fund has issued and is authorized to issue shares of common stock
(the "Shares"); and
WHEREAS, Gabelli & Company, Inc. (the "Distributor") will
serve as the principal distributor of the Shares pursuant to the distribution
agreement between the Fund and the Distributor, which distribution agreement,
has been duly approved by the Board of Trustees of the Fund (the "Board"), in
accordance with the require ments of the Act (the "Distribution Agreement"); and
WHEREAS, the Board as a whole, and the trustees who are not
interested persons of the Fund (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to the Plan (the "Disinterested Trustees"), have determined, after
review of all information and consideration of all pertinent facts reasonably
necessary to an informed determi nation, that it would be desirable to adopt a
plan of distribution for the Shares and that, in the exercise of reasonable
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that a plan of distribution containing the terms set forth
herein (the "Plan") will benefit the Fund and its shareholders, and have
accordingly approved the Plan by votes cast in person at a meeting called for
the purpose of voting on the Plan.
NOW, THEREFORE, in consideration of the foregoing, the Fund
hereby adopts the Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. In consideration of the services to be provided, and the expenses to be
incurred, by the Distributor pursuant to the Distribution Agreement, the Fund
will pay to the Distributor as distribution payments (the "Payments") in
connection with the
distribution of the Shares an aggregate amount at a rate of .25% per year of the
average daily net assets of the Fund. Such Payments shall be accrued daily and
paid monthly in arrears or shall be accrued and paid at such other intervals as
the Board shall determine. The Fund's obligation hereunder shall be limited to
the assets of the Fund and shall not constitute an obligation of the Fund except
out of such assets and shall not constitute an obligation of any shareholder of
the Fund.
2. It is understood that the Payments made by the Fund under
this Plan will be used by the Distributor for the purpose of financing or
assisting in the financing of any activity which is primarily intended to result
in the sale of the Shares. The scope of the foregoing shall be interpreted by
the Board, whose decision shall be conclusive except to the extent it
contravenes established legal authority. Without in any way limiting the
discretion of the Board, the following activities are hereby declared to be
primarily intended to result in the sale of the Shares: advertising the Fund or
the Fund's investment adviser's mutual fund activities; compensating
underwriters, dealers, brokers, banks and other selling entities (including the
Distribu tor and its affiliates) and sales and marketing personnel of any of
them for sales of the Shares, whether in a lump sum or on a continuous,
periodic, contingent, deferred or other basis; compensating underwriters,
dealers, brokers, banks and other servicing entities and servicing personnel
(including the Fund's investment adviser and its personnel) of any of them for
providing services to shareholders of the Fund relating to their investment in
the Shares, including assistance in connection with inquiries relating to
shareholder accounts; the production and dissemination of prospectuses
(including statements of additional information) of the Fund and the
preparation, production and dissemination of sales, marketing and shareholder
servicing materials; and the ordinary or capital expenses, such as equipment,
rent, fixtures, salaries, bonuses, reporting and recordkeeping and third party
consultancy or similar expenses relating to any activity for which Payment is
authorized by the Board; and the financing of any activity for which Payment is
authorized by the Board; and profit to the Distributor and its affiliates
arising out of their provision of shareholder services. Notwithstanding the
foregoing, this Plan does not require the Distributor or any of its affiliates
to perform any specific type or level of distribution activities or shareholder
services or to incur any specific level of expenses for activities covered by
this Section 2. In addition, Payments made in a particular year shall not be
refundable whether or not such Payments exceed the expenses incurred for that
year pursuant to this Section 2.
3. The Fund is hereby authorized and directed to enter into
appropriate written agreements with the Distributor and each other person to
whom the Fund intends to make any Payment, and the Distributor is hereby
authorized and
directed to enter into appropriate written agreements with each person to whom
the Distributor intends to make any payments in the nature of a Payment. The
foregoing requirement is not intended to apply to any agreement or arrangement
with respect to which the party to whom Payment is to be made does not have the
purpose set forth in Section 2 above (such as the printer in the case of the
printing of a prospectus or a newspaper in the case of an advertisement) unless
the Board determines that such an agreement or arrangement should be treated as
a "related" agreement for purposes of Rule 12b-1 under the Act.
4. Each agreement required to be in writing by Section 3 must
contain the provisions required by Rule 12b-1 under the Act and must be approved
by a majority of the Board ("Board Approval") and by a majority of the
Disinterested Trustees ("Disinterested Trustee Approval"), by vote cast in
person at a meeting called for the purposes of voting on such agreement. All
determinations or authoriza tions of the Board hereunder shall be made by Board
Approval and Disinterested Trustee Approval.
5. The officers, investment adviser or Distributor of the
Fund, as appropriate, shall provide to the Board and the Board shall review, at
least quarterly, a written report of the amounts expended pursuant to this Plan
and the purposes for which such Payments were made.
6. To the extent any activity is covered by Section 2 and is
also an activity which the Fund may pay for on behalf of the Fund without regard
to the existence or terms and conditions of a plan of distribution under Rule
12b-1 of the Act, this Plan shall not be construed to prevent or restrict the
Fund from paying such amounts outside of this Plan and without limitation hereby
and without such payments being included in calculation of Payments subject to
the limitation set forth in Section 1.
7. This Plan shall not take effect until it has been approved
by a vote of at least a majority of the Shares. This Plan may not be amended in
any material respect without Board Approval and Disinterested Trustee Approval
and may not be amended to increase the maximum level of Payments permitted
hereunder without such approvals and further approval by a vote of at least a
majority of the Shares. This Plan may continue in effect for longer than one
year after its approval by a majority of the Shares only as long as such
continuance is specifically approved at least annually by Board Approval and by
Disinterested Trustee Approval.
3
<PAGE>
8. This Plan may be terminated at any time by a vote of the
Disinterested Trustees, cast in person at a meeting called for the purpose of
voting on such termination, or by a vote of at least a majority of the Shares.
9. For purposes of this Plan the terms "interested person" and
"related agreement" shall have the meanings ascribed to them in the Act and the
rules adopted by the Securities and Exchange Commission thereunder and the term
"vote of a majority of the Shares" shall mean the vote, at the annual or a
special meeting of the holders of the Shares duly called, (a) of 67% or more of
the voting securities present at such meeting, if the holders of more than 50%
of the Shares outstanding on the record date for such meeting are present or
represented by proxy or, if less, (b) more than 50% of the Shares outstanding on
the record date for such meeting.
Dated: ________, 1999
4
