As filed with the Securities and Exchange Commission on April 28, 2000
Securities Act File No. 002-23727
Investment Company Act File No. 811-01311
UNITED STATES
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. 62 X
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 23
THE GABELLI MATHERS FUND
------------------------
(Exact Name of Registrant as Specified in Charter)
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
-----------------------------------------------
(Address of Principal Executive Office)
Registrant's Telephone Number, including area code: 1-800-422-3554
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1434
(Name and Address of Agent for Service)
Copies To:
James E. McKee, Esq. Richard T. Prins, Esq.
The Gabelli Mathers Fund Skadden, Arps, Slate, Meagher & Flom LLP
One Corporate Center Four Times Square, 30th FloorRye, New York
10580-1434 New York, New York 10036
It is proposed that this filing will be effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b); or
[X] on May 1, 2000 pursuant to paragraph (b); or
[ ] 60 days after filing pursuant to paragraph (a)(1); or
[ ] 75 days after filing pursuant to paragraph (a)(2); or
[ ] on [______] pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE
GABELLI
MATHERS
FUND
CLASS AAA SHARES
PROSPECTUS
MAY 1, 2000
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.
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT AND PERFORMANCE SUMMARY
INVESTMENT OBJECTIVE
The Gabelli Mathers Fund (the "Fund") seeks to achieve capital appreciation over
the long term in various market conditions without excessive risk of capital
loss. Capital is the amount of money you invest in the Fund and capital
appreciation is an increase in the value of your investment.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by using the following principal strategies:
o investing primarily in common stocks, selected for their appreciation
potential
o engaging, within prescribed limits, in short sales of 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
o varying its common stock exposure by hedging, primarily with the purchase
or short sale of Standard & Poor's 500 Index ("S&P 500 Index") futures
contracts
o investing all or a portion of its assets primarily in U.S. Treasury
securities when Gabelli Funds, LLC (the "Adviser") believes the risk of
loss from investing in stocks is high
o investing in certain "event" driven situations such as announced mergers,
acquisitions and reorganizations ("arbitrage")
No minimum or maximum percentage of the Fund's assets is required to be invested
in any type of security or investment strategy.
PRINCIPAL RISKS
The Fund is subject to the risks associated with investing in both stocks and
U.S. Treasury securities. The Fund is also subject to certain additional risks
associated with stock index futures hedging and the higher risk investment
strategy of selling stocks short.
The Fund's share price will fluctuate with changes in the market value of its
portfolio securities. Stocks are subject to market, economic and business risks
that cause their prices to rise and fall. The Fund is also subject to the risks
that the value of its U.S. Treasury securities, stock index futures hedge
position, and stocks sold short will decline. When you sell your Fund shares,
you may receive less than you paid for them. Consequently, you can lose money by
investing in the Fund.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
WHO MAY WANT TO INVEST
The Fund's Class AAA Shares offered herein are offered only to investors who
acquire them directly through Gabelli & Company, Inc., the Fund's distributor
(the "Distributor"), or through a select number of financial intermediaries with
whom the Distributor has entered into selling agreements specifically
authorizing them to offer Class AAA Shares.
The Fund may appeal to you if:
o you seek long-term growth of capital and are skeptical of a fully
invested buy and hold equity investment strategy
o 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
o you seek a portfolio that is flexibly managed to potentially take
advantage of a decline in the U.S. equity markets
You may not want to invest in the Fund if:
o you seek returns that typically move with the S&P 500 Index, in both up
and down markets
o you seek a fully invested equity portfolio
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year (since 1990), and by showing how the Fund's average annual returns for one
year, five years, ten years and the life of the Fund compare to those of two
broad-based securities market indices. As with all mutual funds, the Fund's past
performance does not predict how the Fund will perform in the future. Both the
chart and the table assume reinvestment of dividends and distributions.
THE GABELLI MATHERS FUND
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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)%
1999 5.73%
During the period shown in the bar chart, the highest quarterly return was 4.60%
for the quarter ended June 1990, and the lowest quarterly return was (3.21)% for
the quarter ended December 1998.
<TABLE>
<CAPTION>
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST PAST PAST AUGUST 19,
(FOR THE PERIODS ENDED DECEMBER 31, 1999) ONE YEAR FIVE YEARS TEN YEARS 1965*
- ----------------------------------------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
The Gabelli Mathers Fund 5.73% 2.00% 2.83% 11.36%
S&P 500 Index** 21.04% 28.56% 18.21% 12.53%
<FN>
- ------------------------
* Commencement of operations.
** The S&P 500 Index is an index of 500 stocks, with each stock weighted
according to its total market value. This means that companies having a
larger stock capitalization will have a larger impact on the Index. The
performance of the Index does not reflect expenses or fees.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
FEES AND EXPENSES OF THE FUND:
This table describes the fees and expenses that you may pay if you buy and hold
Class AAA Shares of the Fund.
ANNUAL FUND OPERATING EXPENSES:
(expenses that are deducted from Fund assets):
Management Fees(1) .......................................... 1.00%
Distribution (Rule 12b-1) Fees .............................. 0.25%
Other Expenses(2) ........................................... 0.42%
-----
Total Annual Operating Expenses ............................. 1.67%
-----
Fee Waiver(3) ............................................... (0.25)%
-----
Total Annual Operating Expenses (after the fee waiver) ...... 1.42%
=====
- ------------------------
(1) Effective October 1, 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 October 1, 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 3 below).
(2) "Other Expenses" is an estimated figure reflecting expenses the Fund
expects to incur when it joins the Gabelli family of funds on October 1,
1999.
(3) For a period of two years from October 1,1999, the Adviser has waived a
portion of its advisory fee so that the fee is 0.75% on the first $100
million of the Fund's assets and 1.00% on assets greater than $100 million.
EXPENSE EXAMPLE:
This example is intended to help you compare the cost of investing in shares of
the Fund with the cost of investing in other mutual funds. The example assumes
(1) you invest $10,000 in the Fund for the time periods shown, (2) you redeem
your shares at the end of those periods, (3) your investment has a 5% return and
(4) the Fund's operating expenses remain the same. Although this example is for
comparison only and your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR* 3 YEARS 5 YEARS 10 YEARS
------- ------- ------- --------
$126 $426 $767 $1,732
- ------------------------
* Reflects the advisory fee waiver for years one and two referred to in
footnote 3 above.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT AND RISK INFORMATION
The Fund's investment objective and principal investment strategies are not
fundamental policies and may be changed by a vote of a majority of the Fund's
Board of Trustees at any time without a vote of shareholders. The Fund is
flexibly managed and can use a variety of investment strategies in the pursuit
of its investment objective, with no minimum or maximum percentage of assets
required to be invested in any type of security or investment strategy.
The Adviser selects stocks using traditional fundamental analysis of both value
and growth data, in conjunction with standard technical analysis. Fundamental
analysis involves the use of various data, including but not limited to,
price/earnings, price/revenues, price/book value, and price/dividend ratios, and
various growth rate calculations for earnings, sales and other data. Technical
analysis includes, but is not limited to, the study of rates of change in stock
price movement, volume trends, moving averages, relative strength, and
overbought/oversold indicators.
The Adviser's stock selection process is not limited by the total market value
of a company's stock, so the Fund may select 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 situation
characteristics may decline in value if their unique circumstances do not
develop as anticipated. Special situation factors may include, but are not
limited to, potential and/or announced takeover targets, corporate restructuring
candidates, and companies involved in corporate reorganizations.
The Fund may make short sales of equity securities in amounts of up to 50% of
the value of the Fund's net assets as determined at the time of the 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.
The Fund may vary its equity exposure by hedging through the purchase or short
sale of stock index futures contracts. The Fund will not purchase or sell short
stock index futures contracts if immediately thereafter the aggregate initial
margin required to be deposited would exceed 5% of the value of the Fund's total
assets.
The Fund may invest all or any portion of its assets in U.S. Treasury bills,
notes or bonds when the Adviser believes financial market conditions warrant
such action and/or during periods when the Adviser believes that the risk
associated with owning equity securities is high due to various traditional
stock market valuation benchmarks approaching the upper limits of their long
term historical ranges. 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.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
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 including, but not limited to, financial market conditions, individual
stock and aggregate equity valuation levels, corporate developments, other
investment opportunities, Fund redemptions, tax considerations, including the
Fund's tax loss carryforward (see "Tax Information"), 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
very high, since investments may be held for very short time periods when the
Adviser believes further capital appreciation of those investments is unlikely
or that a loss of capital may occur.
Portfolio turnover may be significantly increased due to the Fund holding a
substantial portion of its assets in U.S. Treasury securities with maturities of
less than one year in conjunction with the purchase and sale of long equity
positions and U.S. Treasury securities with maturities greater than one year.
The Fund may also use the following investment technique:
o DEFENSIVE INVESTMENTS. When adverse market or economic conditions occur,
the Fund may temporarily invest all or a portion of its assets in
defensive investments. Such investments include fixed income securities
or high quality money market instruments. When following a defensive
strategy, the Fund will be less likely to achieve its investment goals.
For instance, during the past 10 years a majority of the Fund's assets
were invested in U.S. Treasury Securities.
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.
Investing in the Fund also involves the following risks:
o EQUITY RISK. 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 and individual stocks, including but not
limited to the following:
o unpredictable price volatility in individual stocks and various
stock indices
o changes in interst rates, inflation and corporate profits,
currency exchange rate volatility, and other economic factors
o individual company and/or industry developments
o national and international political events
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 its original
purchase price.
The Adviser invests the Fund's assets more conservatively than the managers of
most equity funds when the Adviser believes the risk of owning stocks is high.
If the Adviser is incorrect in this judgment, the Fund's total return may
underperform more fully-invested equity funds.
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
o HEDGING RISK. The percentage fluctuation in the value of the Fund's hedge
positions in stock index futures contracts may be greater than those of
the underlying index, and positions in such futures are subject to
certain other risks, including but not limited to the following:
o an imperfect correlation between the change in market value of
the Fund's long stock positions relative to its short stock index
futures hedge position, limiting the effectiveness of the hedge
o possible temporary illiquidity in the markets for stock index
futures which may result in continuing exposure to adverse price
movements
o the fact that the decision to hedge may prove incorrect and, in
that case, the Fund would have been better off not hedging
o INTEREST RATE RISK. To the extent that the Fund's portfolio is invested
in U.S. Treasury securities, it is subject to certain risks which include
a decrease in principal value of the securities as interest rates rise.
Generally, the longer the maturity of a fixed income security, the
greater the gain or loss of principal value for a given change in
interest rates. Additionally, there is the credit risk of the issuer of
the security being unable to make interest or principal payments when
due.
o MANAGEMENT RISK. The Adviser's analysis and judgment regarding individual
stocks, the financial markets, the economy, and many other factors may
prove incorrect, resulting in the Fund's investments losing value.
Additionally, if stock prices increase, the Fund may lose the opportunity
to benefit on that portion of its portfolio invested in fixed income
securities.
MANAGEMENT OF THE FUND
THE ADVISER. As of October 1, 1999, Gabelli Funds, LLC, with principal offices
located at One Corporate Center, Rye, New York 10580-1434, 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 also manages several
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 Group Capital Partners, Inc. (formerly named 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 ("NYSE").
As compensation for its services and the related expenses borne by the Adviser,
the Adviser is entitled to a fee equal to 1.00% of the value of the Fund's
average net assets. The Adviser has agreed to waive a portion of its advisory
fee so that the fee is 0.75% on the first $100 million of the Fund's assets
until October 1, 2001.
Prior to October 1, 1999, Mathers and Company, Inc., 100 Corporate North, Suite
201, Bannockburn, Illinois 60015, served as investment adviser to the Fund.
Under its investment advisory agreement, Mathers and Company, Inc. received a
fee equal to 0.74% of the Fund's average net assets in 1998, before giving
effect to expense reimbursements.
THE PORTFOLIO MANAGER. Mr. Henry Van der Eb, CFA, of Gabelli Funds, LLC, is
primarily responsible for the day to day management of the Fund and has been the
Fund's portfolio manager for more than 20 years. Mr. Van der Eb (55) is
President, Chief Executive Officer, and Trustee of the Fund. He served as
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
President of The Investment Analysts Society of Chicago 1979-1980, and is a
Chartered Financial Analyst (CFA), a Chartered Investment Counselor (CIC), and a
member of the Association for Investment Management and Research (AIMR).
RULE 12B-1 PLAN. The Fund has adopted a plan under Rule 12b-1 (the "Plan") which
authorizes payments by the Fund on an annual basis of 0.25% of the Fund's
average daily net assets attributable to Fund shares to finance distribution of
the Fund's shares. The Fund may make payments under the Plan for the purpose of
financing any activity primarily intended to result in the sale of the Fund's
shares. To the extent any activity is one that the Fund may finance without a
distribution plan, the Fund may also make payments to compensate such activity
outside of the Plan and not be subject to its limitations. 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. Prior to October 1, 1999, the Fund had no
distribution plan under Rule 12b-1 in place.
PURCHASE OF SHARES
You can purchase the Fund's shares on any day the NYSE is open for trading (a
"Business Day"). You may purchase shares directly through the Distributor,
directly from the Fund through the Fund's transfer agent or through registered
broker-dealers that have entered into selling agreements with the Distributor.
o BY MAIL OR IN PERSON. You may open an account by mailing a completed
subscription order form with a check or money order payable to "The
Gabelli Mathers Fund" to:
BY MAIL BY PERSONAL DELIVERY
-------------------- ---------------------
THE GABELLI FUNDS THE GABELLI FUNDS
P.O. BOX 8308 C/O BFDS
BOSTON, MA 02266-8308 66 BROOKS DRIVE
BRAINTREE, MA 02184
You can obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by the
depositor are not acceptable. For additional investments, send a check to the
above address with a note stating your exact name and account number, the name
of the Fund and class of shares you wish to purchase.
o BY BANK WIRE. To open an account using the bank wire transfer system,
first telephone the Fund at 1-800-GABELLI (1-800-422-3554) to obtain a
new account number. Then instruct a Federal Reserve System member bank to
wire funds to:
STATE STREET BANK AND TRUST COMPANY
[ABA #011-0000-28 REF DDA #99046187]
RE: THE GABELLI MATHERS FUND
ACCOUNT #__________
ACCOUNT OF [REGISTERED OWNERS]
225 FRANKLIN STREET, BOSTON, MA 02110
If you are making an initial purchase, you should also complete and mail
a subscription order form to the address shown under "By Mail." Note that
banks may charge fees for wiring funds, although State Street Bank and
Trust Company ("State Street") will not charge you for receiving wire
transfers.
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
SHARE PRICE. The Fund sells its shares at the "net asset value" next determined
after the Fund receives your completed subscription order form and your payment.
See "Pricing of Fund Shares" for a description of the calculation of net asset
value.
MINIMUM INVESTMENTS. Your minimum initial investment must be at least $1,000.
See "Retirement Plans" and "Automatic Investment Plan" regarding minimum
investment amounts applicable to such plans. There is no minimum for subsequent
investments. Broker-dealers may have different minimum investment requirements.
RETIREMENT PLANS. The Fund has available a form of IRA, "Roth" IRA and Education
IRA for investment in Fund shares that may be obtained from the Distributor by
calling 1-800-GABELLI (1-800-422-3554). 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. The Fund
does not currently act as a sponsor to such plans. Fund shares may also 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." The minimum initial investment in all
such retirement plans is $250. There is no minimum subsequent investment
requirement for retirement plans.
AUTOMATIC INVESTMENT PLAN. The Fund offers an automatic monthly investment plan.
There is no minimum initial investment for accounts establishing an automatic
investment plan. Call the Distributor at 1-800-GABELLI (1-800-422-3554) for more
details about the plan.
TELEPHONE INVESTMENT PLAN. You may purchase additional shares of the Fund by
telephone and/or over the Internet if your bank is a member of the Automated
Clearing House ("ACH") system. You must also have a completed, approved
Investment Plan application on file with the Fund's Transfer Agent. There is a
minimum of $100 for each telephone or Internet investment. To initiate an ACH
Purchase, please call 1-800-GABELLI (1-800-422-3554) or 1-800-872-5365 or visit
our website at www.gabelli.com.
GENERAL. State Street will not issue share certificates unless requested by you.
The Fund reserves the right to (i) reject any purchase order if, in the opinion
of the Fund's management, it is in the Fund's best interest to do so, (ii)
suspend the offering of shares for any period of time and (iii) waive the Fund's
minimum purchase requirement.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
REDEMPTION OF SHARES
You can redeem shares of the Fund on any Business Day without a redemption fee.
The Fund may temporarily stop redeeming its shares when the NYSE is closed or
trading on the NYSE is restricted, when an emergency exists and the Fund cannot
sell its shares or accurately determine the value of its assets, or if the
Securities and Exchange Commission orders the Fund to suspend redemptions.
The Fund redeems its shares at the net asset value next determined after the
Fund receives your redemption request. See "Pricing of Fund Shares" below for a
description of the calculation of net asset value.
You may redeem shares through the Distributor or directly from the Fund through
the Fund's transfer agent.
o BY LETTER. You may mail a letter requesting redemption of shares to: THE
GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should
state the name of the Fund and the share class, the dollar amount or
number of shares you wish to redeem and your 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 each signature on your redemption letter. You
can obtain a signature guarantee from financial institutions such as
commercial banks, brokers, dealers and savings associations. A notary
public cannot provide a signature guarantee.
o BY TELEPHONE. You may redeem your shares in an account directly
registered with State Street by calling either 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365 (617-328-5000 from outside the United
States) or visiting our website at www.gabelli.com, subject to a $25,000
limitation. YOU MAY NOT REDEEM SHARES HELD THROUGH AN IRA BY TELEPHONE OR
THE INTERNET. If State Street properly acts on telephone or Internet
instructions and follows reasonable procedures to protect against
unauthorized transactions, neither State Street nor the Fund will be
responsible for any losses due to telephone or Internet transactions. You
may be responsible for any fraudulent telephone or Internet order as long
as State Street or the Fund takes reasonable measures to verify the
order. You may request that redemption proceeds be mailed to you by check
(if your address has not changed in the prior 30 days), forwarded to you
by bank wire or invested in another mutual fund advised by the Adviser
(see "Exchange of Shares").
1. TELEPHONE OR INTERNET REDEMPTION BY CHECK. The Fund will make
checks payable to the name in which the account is registered and
normally will mail the check to the address of record within
seven days.
2. TELEPHONE OR INTERNET REDEMPTION BY BANK WIRE. The Fund accepts
telephone or Internet requests for wire redemption in amounts of
at least $1,000. The Fund will send a wire to either a bank
designated on your subscription order form or on a subsequent
letter with a guaranteed signature. The proceeds are normally
wired on the next Business Day.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
AUTOMATIC CASH WITHDRAWAL PLAN. You may automatically redeem shares on a
monthly, quarterly or annual basis if you have at least $10,000 in your account
and if your account is directly registered with State Street. Call 1-800-GABELLI
(1-800-422-3554) for more information about this plan.
INVOLUNTARY REDEMPTION. The Fund may redeem all shares in your account (other
than an IRA account) if their value falls below $1,000 as a result of
redemptions (but not as a result of a decline in net asset value). You will be
notified in writing if the Fund initiates such action and allowed 30 days to
increase the value of your account to at least $1,000.
REDEMPTION PROCEEDS. A redemption request received by the Fund will be effected
at the net asset value next determined after the Fund receives the request. If
you request redemption proceeds by check, the Fund will normally mail the check
to you within seven days after receipt of your redemption request. If you
purchased your Fund shares by check or through the Automatic Investment Plan,
you may not receive proceeds from your redemptions until the check clears, which
may take up to as many as 15 days following purchase. While the Fund will delay
the processing of the redemption until the check clears, your shares will be
valued at the next determined net asset value after receipt of your redemption
request.
The Fund may pay to you your redemption proceeds wholly or partly in portfolio
securities. Payments would be made in portfolio securities only in the rare
instance that the Fund's Board of Trustees believes that it would be in the
Fund's best interest not to pay redemption proceeds in cash.
EXCHANGE OF SHARES
You may exchange shares of the Fund you hold for shares of the same class of
another fund managed by the Adviser or its affiliates based on their relative
net asset values. To obtain a list of the funds whose shares you may acquire
through an exchange call 1-800-GABELLI (1-800-422-3554). You may also exchange
your shares for shares of a money market fund managed by the Adviser or its
affiliates.
In effecting an exchange:
o you must meet the minimum investment requirements for the fund whose
shares you purchase through exchange
o if you are exchanging to a fund with a higher sales charge, you must pay
the difference at the time of exchange
o you may realize a taxable gain or loss
o you should read the prospectus of the fund whose shares you are
purchasing through exchange [call 1-800-GABELLI (1-800-422-3554) to
obtain the prospectus]
You may exchange shares through the Distributor, directly through the Fund's
transfer agent or through a registered broker-dealer.
o EXCHANGE BY TELEPHONE. You may give exchange instructions by telephone by
calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares by
telephone if you hold share certificates.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
o EXCHANGE BY MAIL. You may send a written request for exchanges to: THE
GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should
state your name, your account number, the dollar amount or number of
shares you wish to exchange, the name and class of the fund whose shares
you wish to exchange, and the name of the funds whose shares you wish to
acquire.
o EXCHANGE THROUGH THE INTERNET. You may also give exchange instructions
via the Internet at www.gabelli.com. You may not exchange shares through
the Internet if you hold share certificates.
We may modify or terminate the exchange privilege at any time. You will be given
notice 60 days prior to any material change in the exchange privilege.
PRICING OF FUND SHARES
The Fund's net asset value per share of the Class AAA Shares is calculated on
each Business Day. 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 Fund's net asset value per share of the Class AAA Shares is determined as of
the close of regular trading on the NYSE, normally 4:00 p.m., Eastern Time. Net
asset value 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 price of Fund shares
for purposes of purchase and redemption will be based upon the next calculation
of net asset value after the purchase or redemption order is received in proper
form.
Because the Fund is not open for business every day that its assets trade, the
net asset value of the Fund's shares may change on days when shareholders will
not be able to purchase or redeem the Fund's shares.
DIVIDENDS AND DISTRIBUTIONS
The Fund intends to pay dividends and capital gain distributions, if any, on an
annual basis. You may have dividends or capital gains distributions that are
declared by the Fund automatically reinvested at net asset value in additional
shares of the Fund. You will make an election to receive dividends and
distributions in cash or Fund shares at the time you purchase your shares. You
may change this election 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
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.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
TAX INFORMATION
The Fund expects that its distributions will consist primarily of net investment
income and net realized capital gains. Capital gains may be taxed at different
rates depending on the length of time the Fund holds the asset giving rise to
such gains. Dividends out of net investment income and distributions of net
realized short-term capital gains (i.e. gains from assets held by the Fund for
one year or less) are taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you at long-term capital gain rates. High
portfolio turnover can indicate a high level of short-term capital gains that,
when distributed to shareholders, are taxed as ordinary income rather than at
the lower capital gains tax rate. However, as of the date of this prospectus,
the Fund has a large capital loss carryforward will offset any current or future
realized capital gains. Until this carryforward expires or is offset completely
by realized capital gains, shareholders will not receive taxable distributions
of capital gains. 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, and any gain you
realize on such a transaction may be taxable. Foreign shareholders generally
will be subject to a federal withholding tax.
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.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance for the past five fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund's Class AAA Shares. The full year information for 1995
through 1998 has been audited by Arthur Andersen LLP, independent accountants.
For 1999, the information has been audited by Ernst & Young LLP, independent
accountants, whose report, along with the Fund's financial statements and
related notes, is included in the annual report, which is available upon
request. Per share amounts for the Fund's Class AAA Shares outstanding
throughout each fiscal year ended December 31,
<TABLE>
<CAPTION>
1999(a) 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of year .............. $ 11.73 $ 13.06 $ 13.27 $ 13.75 $ 13.55
-------- -------- -------- -------- --------
Net investment income ........................... 0.46 0.58 0.53 0.40 0.60
Net realized and unrealized
gain/(loss) on investments .................... 0.21 (1.26) (0.13) (0.41) 0.35
-------- -------- -------- -------- --------
Total from investment operations ................ 0.67 (0.68) 0.40 (0.01) 0.95
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ........................... (0.46) (0.65) (0.61) (0.47) (0.72)
Net realized gains .............................. -- -- -- -- (0.03)
-------- -------- -------- -------- --------
Total distributions ............................. (0.46) (0.65) (0.61) (0.47) (0.75)
-------- -------- -------- -------- --------
Net asset value, end of period .................. $ 11.94 $ 11.73 $ 13.06 $ 13.27 $ 13.75
======== ======== ======== ======== ========
Total return+ ................................... 5.73% (5.21)% 3.01% (0.07)% 7.01%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $104,693 $108,548 $138,404 $171,596 $232,303
Ratio of net investment income
to average net assets ......................... 3.50% 4.56% 3.96% 2.96% 4.25%
Ratio of operating expenses to
average net assets(b) ......................... 1.24% 1.16% 1.07% 1.03% 0.98%
Portfolio turnover rate ......................... 922% 67% 50% 38% 58%
<FN>
- ----------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Gabelli Funds, LLC became the investment adviser of the Fund on October 1,
1999.
(b) The Fund incurred dividend expense on securities sold short for the years
ended December 31, 1999 and 1998. If the dividend expense had not been
incurred, the ratios of operating expenses to average net assets would have
been 1.24% and 1.12%, respectively.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
THE GABELLI MATHERS FUND
================================================================================
FOR MORE INFORMATION:
For more information about the Fund, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
The Fund's semi-annual and annual reports to shareholders contain additional
information on the Fund's investments. In the Fund's 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 investment 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 SAI at the Public Reference Room of the
Securities and Exchange Commission. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090. You
can get text-only copies:
o For a fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102, or by calling 1-202-942-8090, or by
electronic request at the following email address: [email protected].
o Free from the Commission's Website at http://www.sec.gov.
(Investment Company Act file no. 811-1311)
- --------------------------------------------------------------------------------
<PAGE>
THE GABELLI MATHERS FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
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.)
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
TABLE OF CONTENTS
-----------------
INVESTMENT AND PERFORMANCE SUMMARY ............ 2-5
INVESTMENT AND RISK INFORMATION ............... 6-8
MANAGEMENT OF THE FUND ........................ 8-9
Purchase of Shares ................... 9
Redemption of Shares ................. 11
Exchange of Shares ................... 12
Pricing of Fund Shares ............... 13
Dividends and Distributions .......... 13
Tax Information ...................... 14
FINANCIAL HIGHLIGHTS .......................... 15
<PAGE>
THE GABELLI MATHERS FUND
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
This Statement of Additional Information (the "SAI"), which is not a prospectus,
describes The Gabelli Mathers Fund (the "Fund"). The SAI should be read in
conjunction with the Fund's Prospectus dated May 1, 2000. For a free copy of the
Prospectus, please contact the Fund at the address, telephone number or Internet
web site printed below.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
TABLE OF CONTENTS
General Information 2
Investment Strategies and Risks 2
Investment Restrictions 6
Trustees and Officers 8
Control Persons and Principal Shareholders 11
Investment Advisory and Other Services 11
Distribution Plan 15
Portfolio Transactions and Brokerage 16
Redemption of Shares 18
Determination of Net Asset Value 18
Dividends and Distributions 19
Taxation 19
Investment Performance Information 21
Description of Shares, Voting Rights and Liabilities 22
Financial Statements 23
<PAGE>
GENERAL INFORMATION
The Fund is a diversified, open-end management investment company organized
under the laws of the state of Delaware on June 17, 1999. The Fund commenced
operations on October 1, 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 October 1, 1999, reflects
the Fund as constituted prior to the commencement of operations as a trust.
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
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
* 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
* additional expenses to the Fund in enforcing its rights
The Fund may, subject to the limitation described in paragraph 8 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
<PAGE>
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 (less
related transaction costs) 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 (less related transaction costs) 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.
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.
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 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 judgment 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.
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
<PAGE>
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
The Fund may, subject to the limitation described in paragraph 6 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.
STOCK INDEX FUTURES CONTRACTS AND OPTIONS ON SUCH CONTRACTS
The Fund may, subject to the limitation described in paragraph 7 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.
<PAGE>
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 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
<PAGE>
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,
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,
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 approval of a majority of the Fund's
shareholders, defined as 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);
<PAGE>
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; or
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. Enter into repurchase agreements, except with authorized banks or dealers
meeting criteria established by the Adviser, or invest over 10% of its assets in
repurchase agreements with maturities of more than seven days;
5. Invest over 10% of its net assets in securities of foreign issuers which are
not publicly traded in the United States;
6. 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;
<PAGE>
7. 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; or
8. (i) Sell any securities short if immediately thereafter the market value of
all securities sold short by the Fund would exceed 50% 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 5% of the Fund's net assets or if
the securities sold short would constitute more than 3% 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, 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).
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
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 executive officers of the Fund, their ages and their principal
occupations during the last five years and their affiliations, if any with the
Adviser, are set forth 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 Investment Company Act of
1940, as amended (the "1940 Act") are indicated by an asterisk.
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND POSITION(S) WITH THE FUND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
--------------------------------------- --------------------------------------------
<S> <C>
Mario J. Gabelli, CFA* Chairman of the Board and Chief Investment Officer of Gabelli
Chairman of the Board and Trustee Asset Management Inc. and Chief Investment Officer of Gabelli
Age: 57 Funds, LLC and GAMCO Investors, Inc.; Chairman of
the Board and Chief Executive Officer of Lynch Corporation
(diversified manufacturing company) and Chairman of the
Board of Lynch Interactive Corporation (multimedia and
services company); Director of Spinnaker Industries, Inc.
(manufacturing company); Director or Trustee of 16
other mutual funds advised by Gabelli Funds, LLC and its
affiliates.
Felix J. Christiana Formerly Senior Vice President of Dry Dock Savings Bank;
Trustee Director or Trustee of ten other mutual funds advised by Gabelli
Age: 75 Funds, LLC and its affiliates.
Anthony J. Colavita President and Attorney at Law in the law firm of Anthony J.
Trustee Colavita, P.C. since 1961; Director or Trustee of 17 other
Age: 64 mutual funds advised by Gabelli Funds, LLC and its affiliates.
Vincent D. Enright Former Senior Vice President and Chief Financial Officer of Key
Trustee Span Energy Corp.; Director or Trustee of six other mutual funds
Age: 56 advised by Gabelli Funds, LLC and its affiliates.
Jon P. Hedrich Private investor; Prior to 1992, President and Partner of
Trustee Steiner Diamond Institutional Services.
Age: 58
Robert E. Kohnen President of Bask Group LLC (investment management firm); Prior
Trustee to 1999, Vice President and Investment Manager of Protection
Age: 65 Mutual Insurance Company.
Karl Otto Pohl*+ Member of the Shareholder Committee of Sal Oppenheim Jr. & Cie
Trustee (private investment bank); Director of Gabelli Asset Management
Age: 70 Inc. (investment management), Zurich Allied (insurance
company), and TrizecHahn Corp. (real estate company); 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 Certified Public Accountant; Professor of Accounting, Pace
Trustee University; Director or Trustee of ten other mutual funds
Age: 74 advised by Gabelli Funds, LLC and its affiliates.
Werner J. Roeder, M.D. Medical Director, Lawrence Hospital and practicing private
Trustee physician; Director or Trustee of ten other mutual funds advised
Age: 59 by Gabelli Funds, LLC and its affiliates.
Henry G. Van der Eb, CFA*++ Prior to October 1999, Chairman and Chief Executive Officer of
Trustee, President and Chief Executive Officer Mathers Fund, Inc. and President, Mathers and Company, Inc.
Age: 55
Anthonie C. van Ekris Managing Director of BALMAC International; Director or Trustee
Trustee of ten other mutual funds advised by Gabelli Funds, LLC and its
Age: 65 affiliates.
Jack O. Vance Managing Director of Management Research, Inc., a management
Trustee consulting firm. Director of International Rectifier Corporation
Age: 74 (semi-conductors), Semtech Inc. and FCG Enterprises, Inc.
(management consulting).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Bruce N. Alpert Executive Vice President and Chief Operating Officer of Gabelli
Executive Vice President and Treasurer Funds, LLC since 1988. President and Director of Gabelli
Age: 48 Advisers, Inc. and an Officer of all mutual funds advised by
Gabelli Funds, LLC and its affiliates.
James E. McKee Secretary of Gabelli Funds, LLC; Vice President, Secretary and
Secretary General Counsel of GAMCO Investors, Inc. since 1993 and Gabelli
Age: 36 Asset Management Inc. since 1999; Secretary of all mutual funds
advised by Gabelli Funds, LLC and Gabelli Advisers, Inc. since
August 1995.
Anne E. Morrissy, CFA++ Prior to October 1999, Executive Vice President, Secretary and
Executive Vice President Director, Mathers Fund Inc. and Vice President, Mathers and
Age: 39 Company, Inc.
Lawrence A. Kenyon, CPA++ Prior to October 1999, Senior Vice President and Chief Financial
Senior Vice President Officer, Mathers Fund Inc. and Vice President and Treasurer,
Age:34 Mathers and Company, Inc.
Edith L. Cook++ Prior to October 1999, Vice President and Treasurer, Mathers
Vice President Fund Inc. and Vice President, Mathers and Company, Inc.
Age: 58
Heidi M. Stubner++ Prior to October 1999, Vice President of Mathers Fund Inc.
Vice President
Age: 31
<FN>
- --------------------------------
+ Mr. Pohl is a director of the parent company of the Adviser.
++ Address is 100 Corporate North, Suite 201, Bannockburn, IL 60015.
</FN>
</TABLE>
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.
The Corporation, its investment adviser and principal underwriter have adopted a
code of ethics (the "Code of Ethics") under Rule 17j-1 of the 1940 Act. The Code
of Ethics permits personnel, subject to the Code of Ethics and its restrictive
provisions, to invest in securities, including securities that may be purchased
or held by the Corporation.
No director, officer or employee of the Adviser or any affiliate 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. 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.
The following table sets forth certain information regarding the compensation of
the Fund's Trustees and officers. No executive officer or person affiliated with
the Fund received compensation from the Fund for the fiscal year ended December
31, 1999 in excess of $60,000.
<TABLE>
<CAPTION>
Name of Person Aggregate Compensation Total Compensation from the Fund and Fund
AND POSITION FROM THE FUND COMPLEX PAID TO TRUSTEES*
------------ ------------- -------------------------
<S> <C> <C> <C>
Felix J. Christiana++ $ 1,000 $ 99,250 (11)
<PAGE>
Anthony J. Colavita++ $ 1,000 $ 94,875 (18)
Vincent D. Enright++ $ 1,000 $ 25,500 (7)
Charles G. Freund+ $ 6,000 $ 6,000 (1)
Jon P. Hedrich $ 6,000 $ 6,000 (1)
Robert E. Kohnen $ 6,000 $ 6,000 (1)
Karl Otto Pohl++ $ 0 $7,042 (19)
Anthony R. Pustorino++ $ 1,000 $ 107,250 (11)
Werner J. Roeder++ $ 1,000 $ 34,859 (11)
Anthonie C. van Ekris++ $ 1,000 $ 60,000 (11)
Jack O. Vance $ 6,000 $ 6,000 (1)
<FN>
- -----------------
* Represents the total compensation paid to such persons during the fiscal
year ending December 31, 1999. The parenthetical number represents the
number of investment companies (including the Fund) from which such person
receives compensation which are considered part of the same fund complex as
the Fund because they have a common or affiliated investment adviser.
+ Deceased as of [December 1999].
++ Became Trustees on October 1, 1999.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of April 17, 2000, the following persons owned of record or beneficially more
than 5% of the Fund's outstanding shares:
NATURE OF
NAME AND ADDRESS % OF CLASS OWNERSHIP
- ---------------- ---------- ---------
Edward A. Pauls &
Florence L. Pauls JT WROS 18.41% Beneficial
8227 Top of the World Drive
Salt Lake City, UT 84121-6031
Gabelli Asset Management 5.06% Beneficial
1 Corporate Center
Rye, NY 10580-1442
As of April 1, 2000, the Trustees and officers of the Fund, as a group,
beneficially owned 4,047,130 or 9.27% of the Fund's outstanding shares.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Adviser is a New York limited liability company which also serves as
investment adviser to 13 other open-end investment companies and four closed-end
investment companies with aggregate assets in excess of $10.6 billion as of
December 31, 1999. 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 the ultimate parent company of the Adviser. The Adviser has several
affiliates that provide investment advisory services: GAMCO Investors, Inc.
("GAMCO"), a wholly-owned subsidiary of the Adviser, acts as investment adviser
for individuals, pension trusts, profit-sharing trusts and endowments, and had
assets under management of approximately $9.4 billion under its management as of
December 31, 1999; Gabelli Advisers, Inc. acts as investment adviser to the
Gabelli Westwood Funds with assets under management of approximately $390
million as of December 31, 1999; Gabelli Securities, Inc. acts as investment
adviser to certain alternative investments products, consisting primarily of
risk arbitrage and merchant banking limited partnerships and offshore companies,
with assets under management of approximately $230 million as of December 31,
1999; and Gabelli Fixed Income LLC acts as investment adviser for the three
portfolios of The Treasurer's Fund and separate accounts having assets under
management of approximately $1.4 billion as of December 31, 1999.
An investment advisory agreement (the "Current Agreement") between the Fund and
the Adviser was approved by the shareholders of the Fund on September 24, 1999,
to be effective on October 1, 1999. 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.
<PAGE>
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
<PAGE>
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.
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 assets during the
period prior to October 1, 2001 on the first $100 million of net assets of the
Fund. For the period October 1, 1999 through December 31, 1999, the Fund paid
$197, 652 to the Adviser.
Prior to October 1, 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
monthly net assets 0.625%, of average monthly net assets in excess of
$200,000,000 but not exceeding $500,000,000, and 0.50% of average monthly net
assets in excess of $500,000,000. The fees paid by the Fund to Mathers and
Company for the period from January 1, 1999 to September 30, 1999 and the fiscal
years ended December 31, 1998 and 1997 were $587,061, $865,916 and $1,123,610,
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. For the
period from January 1, 1999 to September 30, 1999, there was no expense
reimbursement from Mathers and Company to the Fund.
<PAGE>
SUB-ADMINISTRATOR
The Adviser has entered into a Sub-Administration Agreement (the
"Sub-Administration Agreement") with PFPC Inc. (the "Sub-Administrator"), a
majority-owned subsidiary of PNC Bank Corp. The Sub-Administrator is located at
101 Federal Street, Boston, Massachusetts 02110. 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 such services and the related expenses borne by the Sub-Administrator, the
Advisor pays the Sub-Administrator on the first business day of each month a fee
for the previous month at the following rates: .0275% on aggregate net assets of
$0-$10 billion, .0125% on aggregate net assets of $10-$15 billion and .0100% on
aggregate net assets over $15 billion, which together with the services
rendered, is subject to re-negotiation if net assets exceed $20 billion. If the
average revenue per fund in the Gabelli complex falls below $80,000 per annum,
and there are more than 17 funds in the Gabelli complex whose annual revenue is
less than $30,000 per annum, a minimum annual fee of $30,000 will be implemented
for every Gabelli fund in excess of 17.
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 , 66 Brooks Drive, Braintree, MA 02184. Neither State Street nor BFDS
assists in or is responsible for investment decisions involving assets of the
Fund.
COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, 30th Floor, New
York, New York 10036, serves as the Fund's legal counsel.
<PAGE>
INDEPENDENT AUDITORS
Ernst & Young LLP has been appointed independent auditors for the Fund and is
located at 787 Seventh Avenue, New York, New York 10019.
DISTRIBUTOR
To implement the Fund's 12b-1 Plan, the Fund has entered into a Distribution
Agreement with Gabelli & Company, Inc. (the "Distributor"), a New York
corporation which is an indirect majority owned subsidiary of Gabelli Asset
Management Inc., having principal offices located at One Corporate Center, Rye,
New York 10580. The Distributor acts as agent of the Fund for the continuous
offering of its shares on a best efforts basis.
DISTRIBUTION PLAN
The Fund has 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 0.25% 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 compensates the Distributor regardless of its 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 is intended to benefit the Fund by increasing
its assets and thereby reducing the Fund's expense ratio.
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.
<PAGE>
During the most recent fiscal year, 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.
During the period October 1, 1999 through December 31, 1999, the Fund incurred
distribution expenses under the Plan of $22,700. Of this amount, $14,400 was
spent on advertising, $2,200 for printing, postage and stationery, $1,100 for
overhead support expenses and $5,000 for salaries of personnel of the
Distributor.
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.
<PAGE>
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. Based on such determinations, the
Adviser has allocated brokerage commissions of $-- on portfolio transactions in
the principal amount of $-- during 1999 to various broker-dealers that have
provided research services to the Adviser.
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. As required by
Rule 17e-1 under the 1940 Act, the Board of Trustees has adopted "Procedures"
which provide that commissions paid to Gabelli & Company on stock exchange
transactions may not exceed that which would have been charged by another
qualified broker or member firm able to effect the same or a comparable
transaction at an equally favorable price. Rule 17e-1 and the Procedures contain
requirements that the Board, including its "independent" Trustees, conduct
periodic compliance reviews of such brokerage allocations.
To obtain the best execution of portfolio trades on the New York Stock Exchange
("NYSE"), Gabelli & Company controls and monitors the execution of such
transactions on the floor of the NYSE through independent "floor brokers" or
through the Designated Order Turnaround System of the NYSE. 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
NYSE.
Fiscal Year Ended Commissions
December 31, Paid
------------ ----
Total Brokerage Commissions 1997 $291,860
1998 $551,077
1999 $163,561
Commissions paid to Gabelli & Company 1997 $ 0
1998 $ 0
1999 $ 57,997
% of Total Brokerage Commissions 1999 35.46%
paid to Gabelli & Company
% of Total Transactions involving Commissions 1999 36.21%
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. During the fiscal year
ended December 31, 1999, the Fund's portfolio turnover rate of 922% was
significantly higher than for the fiscal year ended December 31, 1998 of 67% as
a result of the limited amount of equity securities held in the portfolio and
the use of arbitrage, whereby securities were held for a short period of time
before the corporate merger, tender offer or reorganization was completed.
<PAGE>
REDEMPTION OF SHARES
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 "Determination of Net Asset Value"), or partly in cash and
partly in portfolio securities. However, payments will be made wholly in cash
unless the redemptions by the particular shareholder over the prior three months
exceed $250,000 and the Adviser believes that economic conditions exist which
would make payments in cash 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.
DETERMINATION 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.
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.
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.
<PAGE>
DISTRIBUTIONS AND DIVIDENDS
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 in cash or in additional shares may be
changed by notifying the Fund in writing at any time prior to the record date
for a particular dividend or distribution. No sales charges or other fees are
imposed upon shareholders 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.
TAXATION
GENERAL
Set forth below is a discussion of certain U.S. federal income tax issues
concerning the Fund and the purchase, ownership and disposition of Fund shares.
This discussion is based upon present provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the regulations promulgated thereunder, and
judicial and administrative ruling authorities, all of which are subject to
change and which may be retroactive. This discussion does not purport to be
complete or to deal with all aspects of U.S. federal income taxation that may be
relevant to investors in light of their particular circumstances. Prospective
investors should consult their own tax advisers with regard to the U.S. federal
tax consequences of the purchase, ownership, or disposition of Fund shares, as
well as the tax consequences arising under the laws of any state, foreign
country, or other taxing jurisdiction.
TAX STATUS OF THE FUND
The Fund has qualified and intends to remain qualified to be taxed as a
regulated investment company under Subchapter M of the Code. Accordingly, the
Fund must, among other things, (a) derive in each taxable year at least 90% of
its gross income from dividends, interest, payments with respect to certain
securities loans, and gains from the sale or other disposition of stock,
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies; and (b) diversify
its holdings so that, at the end of each fiscal quarter (i) at least 50% of the
value of the Fund's total assets is represented by cash and cash items, U.S.
Government securities, the securities of other regulated investment companies
and other securities, with such other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the value of the Fund's total assets
and 10% of the outstanding voting securities of such issuer, and (ii) not more
than 25% of the value of its total assets is invested in the securities (other
than U.S. Government securities and the securities of other regulated investment
companies) of any one issuer or of any two or more issuers that it controls and
that are determined to be engaged in the same or similar trades or businesses or
related trades or businesses.
As a regulated investment company, the Fund generally is not subject to U.S.
federal income tax on income and gains that it distributes to shareholders, if
at least 90% of the Fund's investment company taxable income (which includes,
among other items, dividends, interest and the excess of any net short-term
capital gains over net long-term capital losses) for the taxable year is
distributed. The Fund intends to distribute substantially all of such income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capi tal gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on December 31
of the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid
<PAGE>
application of the excise tax, the fund intends to make distributions in
accordance with the calendar year distribution requirement.
A distribution will be treated as paid on December 31 of a calendar year if it
is declared by the Fund in October, November or December of that year with a
record date in such a month and paid by the Fund during January of the following
year. Such a distribution will be taxable to shareholders in the calendar year
in which the distribution is declared, rather than the calendar year in which it
is received.
DISTRIBUTIONS
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by the Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received by the Fund from U.S. corporations and to the
extent the aggregate amount of such dividends do not exceed the aggregate
dividends received by the Fund for the taxable year, may, subject to
limitations, be eligible for the dividends received deduction. The alternative
minimum tax applicable to corporations, however, may reduce the value of the
dividends received deduction.
Capital gains may be taxed at different rates depending on how long the Fund
held the asset giving rise to such gains. Distributions of the excess of net
long-term capital gains over net short-term capital losses realized, if any,
properly designated by the Fund, whether paid in cash or reinvested in Fund
shares, will generally be taxable to shareholders at the rates applicable to
long-term capital gains, regardless of how long a shareholder has held Fund
shares. Distributions of net capital gains from assets held for one year or less
will be taxable to shareholders at rates applicable to ordinary income.
Shareholders will be notified annually as to the U.S. federal tax status of
distributions, and shareholders receiving distributions in the form of newly
issued shares will receive a report as to the net asset value of the shares
received.
Investors should be careful to consider the tax implications of buying shares of
the Fund just prior to the record date of a distribution (including a capital
gain dividend). The price of shares purchased at such a time will reflect the
amount of the forthcoming distribution, but the distribution will generally be
taxable to the shareholder.
To the extent that the Fund retains any net long-term capital gains, it may
designate them as "deemed distributions" and pay a tax thereon for the benefit
of its shareholders. In that event, the shareholders report their share of the
Fund's retained realized capital gains on their individual tax returns as if it
had been received, and report a credit for the tax paid thereon by the Fund. The
amount of the deemed distribution net of such tax is then added to the
shareholder's cost basis for his shares. Shareholders who are not subject to
U.S. federal income tax or tax on capital gains should be able to file a return
on the appropriate form or a claim for refund that allows them to recover the
tax paid on their behalf.
DISPOSITIONS
Upon a redemption, sale or exchange of shares of the Fund, a shareholder will
realize a taxable gain or loss depending upon his basis in the shares. A gain or
loss will be treated as capital gain or loss if the shares are capital assets in
the shareholder's hands, and, for noncorporate shareholders, the rate of tax
will depend upon the shareholder's holding period for the shares. Any loss
realized on a redemption, sale or exchange will be disallowed to the extent the
shares disposed of are replaced (including through reinvestment of dividends)
within a period of 61 days, beginning 30 days before and ending 30 days after
the shares are disposed of. In such a case, the basis of the shares acquired
will be adjusted to reflect the disallowed loss. If a shareholder holds Fund
shares for six months or less and during that period receives a distribution
taxable to the shareholder as long-term capital gain, any loss realized on the
sale of such shares during such six month period would be a long-term capital
loss to the extent of such distribution.
BACKUP WITHHOLDING
<PAGE>
The Fund generally will be required to withhold U.S. federal income tax at a
rate of 31% ("backup withholding") from dividends paid, capital gain
distributions, and redemption proceeds to shareholders if (1) the shareholder
fails to furnish the Fund with the shareholder's correct taxpayer identification
number or social security number, (2) the IRS notifies the shareholder or the
Fund that the shareholder has failed to report properly certain interest and
dividend income to the IRS and to respond to notices to that effect, or (3) when
required to do so, the shareholder fails to certify that he or she is not
subject to backup withholding. Any amounts withheld may be credited against the
shareholder's U.S. federal income tax liability.
OTHER TAXATION
Distributions may be subject to additional state, local and foreign taxes,
depending on each shareholder's particular situation. Non-U.S. shareholders may
be subject to U.S. tax rules that differ significantly from those summarized
above, including the likelihood that ordinary income dividends distributed to
them will be subject to withholding of U.S. tax at a rate of 30% (or a lower
treaty rate, if applicable). Non-U.S. investors should consult their own tax
advisors regarding federal, state, local and foreign tax considerations.
FUND INVESTMENTS
OPTIONS, FUTURES AND FORWARD CONTRACTS. Any regulated futures contracts and
certain options in which the Fund may invest may be "section 1256 contracts."
Gains (or losses) on these contracts generally are considered to be 60%
long-term and 40% short-term capital gains or losses. Also, section 1256
contracts held by the Fund at the end of each taxable year (and on certain other
dates prescribed in the Code) are "marked to market" with the result that
unrealized gains or losses are treated as though they were realized.
Code section 1092, which applies to certain straddles, may affect the taxation
of the Fund's sales of securities and transactions in financial futures
contracts and related options. Under section 1092, the Fund may be required to
postpone recognition of losses incurred in certain sales of securities and
certain closing transactions in financial futures contracts or related options.
SHORT SALES. 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 U.S. 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 on the date of such short sale substantially identical
securities have been held by the Fund for less than one year or 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. The Fund does not
intend, however, to enter into short sales with respect to securities that it
holds at the time of entering a short sale.
Special Code provisions applicable to Fund investments, discussed above, may
affect characterization of gains and losses realized by the Fund, and may
accelerate recognition of income or defer recognition of losses. The Fund will
monitor these investments and when possible will make appropriate elections in
order to mitigate unfavorable tax treatment.
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.
<PAGE>
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 December 31, 1999, and since inception (August 19, 1965) through
December 31, 1999, were 5.73%, 2.00%, 2.83% and 11.36%, 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 SHARES, VOTING RIGHTS AND LIABILITIES
The Fund 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, 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.
The Fund's Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. Under Delaware law, shareholders of such a trust may not be held
personally liable as partners for a trust's obligations.
<PAGE>
FINANCIAL STATEMENTS
The Fund's Financial Statements for the year ended December 31, 1999, including
the report of Ernst & Young LLP, independent auditors, are incorporated by
reference to the Fund's Annual Report. The Fund's Annual Report is available
upon request and without charge. Ernst & Young LLP provides audit services, tax
return preparation and assistance and consultation in connection with certain
SEC filings.
<PAGE>
PART C
OTHER INFORMATION
Item 23. EXHIBITS
(a)(1) Agreement and Declaration of Trust of the Registrant is
incorporated by reference to Post-Effective Amendment No. 59 to
the Registration Statement as filed with the SEC via EDGAR on July
22, 1999 ("Post-Effective No. 59").
(a)(2) Resolutions Authorizing Initial Series of Shares is incorporated
by reference to Post-Effective Amendment No. 59.
(b) By-Laws of the Registrant are incorporated by reference to
Post-Effective Amendment No. 59.
(c) Not Applicable.
(d) Investment Advisory Agreement between the Registrant and Gabelli
Funds, LLC (the "Adviser") is filed herein.
(e) Distribution Agreement between the Registrant and Gabelli &
Company, Inc, (the "Distributor") is filed herein.
(f) Not Applicable.
(g) Custodian Agreement between the Registrant and State Street Bank
and Trust Company ("State Street") is incorporated by reference to
Post-Effective Amendment No. 61 to the Registration Statement as
filed with the SEC via EDGAR on October 1, 1999 ("Post-Effective
No. 61").
(h) Transfer Agency and Service Agreement between the Registrant and
State Street is incorporated by reference to Post-Effective
Amendment No. 61.
(i) Opinion and Consent of Counsel concerning the legality of the
securities issued is incorporated by reference to Post-Effective
Amendment No. 61.
(j) Consent of Independent Accountants is filed herewith.
(k) Not Applicable.
(l) Not Applicable.
(m) Plan of Distribution pursuant to Rule 12b-1 is incorporated by
reference to Post-Effective Amendment No. 59.
(n) Not Applicable.
(o) Not Applicable.
(p) Code of Ethics for the Registrant, the Adviser and the Distributor
is filed herewith.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None
Item 25. INDEMNIFICATION
<PAGE>
See Article IV of the Registrant'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
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant 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 Registrant of expenses
incurred or paid by a trustee, officer or controlling person of
the Registrant 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
Registrant 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 Registrant 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 THE INVESTMENT ADVISER
The Adviser is a registered investment adviser providing
investment management and administrative services to the
Registrant. The Adviser also provides similar services to other
mutual funds.
The information required by this Item 26 with respect to any other
business, profession, vocation or employment of a substantial
nature engaged in by directors and officers of the Adviser during
the past two years is incorporated by reference to Form ADV filed
by the Adviser pursuant to the Investment Advisers Act of 1940
(SEC File No. 801-37706).
Item 27. PRINCIPAL UNDERWRITERS
(a) Gabelli & Company, Inc. ("Gabelli & Company") currently acts as
distributor for The Gabelli Investor Funds, Inc., The Gabelli
Asset Fund, The Gabelli Blue Chip Value Fund, The Gabelli Capital
Series Funds, Inc., The Gabelli Convertible Securities Fund, Inc.,
The Gabelli Equity Series Funds, Inc., The Gabelli Equity Trust
Inc., The Gabelli Global Series Funds, Inc., The Gabelli Global
Multimedia Trust Inc., Gabelli Gold Fund, Inc., The Gabelli Growth
Fund, Gabelli International Growth Fund, Inc., The Gabelli Mathers
Fund, The Gabelli U.S. Treasury Money Market Funds, The Gabelli
Utilities Fund, The Gabelli Utility Trust, The Gabelli Value Fund,
Inc. and the Gabelli Westwood Funds.
(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
pursuant to the Securities Exchange Act of 1934, as amended (SEC
File No. 8-21373).
(c) Not Applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents required by Section
31(a) of the 1940 Act and Rules 31a-1 through 31a-3 thereunder are
maintained at the offices of Gabelli Funds, LLC, One Corporate
Center, Rye, New York 10580-1434, PFPC Inc., 101 Federal Street,
Boston, Massachusetts 02110, State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts, 02110 and Boston
Financial Data Services, Inc., Two Heritage Drive, North Quincy,
Massachusetts, 02171 and 100 Corporate North, Suite 201,
Bannockburn, IL 60015.
Item 29. MANAGEMENT SERVICES
Not Applicable.
Item 30. UNDERTAKINGS
The Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant, The Gabelli Mathers
Fund, certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933, as amended, and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Rye, and
State of New York on the 28th day of April, 2000.
THE GABELLI MATHERS FUND
/S/ BRUCE N. ALPERT
By: Bruce N. Alpert
Title: Executive Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 62 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman and Chief Investment Officer, Gabelli April 28, 2000
* Asset Management, Inc.
- -----------------------------------------------
Mario J. Gabelli
/s/ HENRY G. VAN DER EB Trustee and Chief Executive Officer April 28, 2000
- -----------------------------------------------
Henry G. Van der Eb
/s/ BRUCE N. ALPERT Executive Vice President and Treasurer April 28, 2000
- -----------------------------------------------
Bruce N. Alpert
/s/FELIX J. CHRISTIANA Trustee April 28, 2000
- -----------------------------------------------
Felix J. Christiana
/s/ANTHONY J. COLAVITA Trustee April 28, 2000
- -----------------------------------------------
Anthony J. Colavita
/s/VINCENT D. ENRIGHT Trustee April 28, 2000
- -----------------------------------------------
Vincent D. Enright
/s/JON P. HEDRICH Trustee April 28, 2000
- -----------------------------------------------
Jon P. Hedrich
/s/ ROBERT E. KOHNEN Trustee April 28, 2000
- -----------------------------------------------
Robert E. Kohnen
/s/KARL OTTO POHL Trustee April 28, 2000
- -----------------------------------------------
Karl Otto Pohl
/s/ANTHONY R. PUSTORINO Trustee April 28, 2000
- -----------------------------------------------
Anthony R. Pustorino
/s/WERNER J. ROEDER Trustee April 28, 2000
- -----------------------------------------------
Werner J. Roeder
/s/JACK O. VANCE Trustee April 28, 2000
- -----------------------------------------------
Jack O. Vance
/s/ANTHONIE C. VAN EKRIS Trustee April 28, 2000
- -----------------------------------------------
Anthonie C. van Ekris
</TABLE>
*BY: /S/ BRUCE N. ALPERT
Bruce N. Alpert
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
EXHIBIT DOCUMENT
(d) Investment Advisory Agreement
(e) Distribution Agreement
(j) Consent of Independent Auditors
(p) Code of Ethics for the Registrant, the Adviser and the Distributor
EXHIBITS
Exhibit (d)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of October 1, 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
discretion 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.
(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
journals, 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
accordance 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
<PAGE>
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)
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 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 officers, 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 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
<PAGE>
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 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 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 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.
(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
<PAGE>
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 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.
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: /S/ BRUCE N. ALPERT
Name: Bruce N. Alpert
Title: Executive Vice President and Treasurer
GABELLI FUNDS, LLC
By: /S/ GUS COUTSOUROS
Name: Gus Coutsouros
Title: Vice President and Chief Financial Officer
Exhibit (e)
DISTRIBUTION AGREEMENT
FOR
THE GABELLI MATHERS FUND
DISTRIBUTION AGREEMENT, dated October 1, 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 Distributor 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, consolidation 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 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 effectiveness 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
<PAGE>
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
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
Distributor 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 investigation 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 indemnitee with respect to any matter as to which such
indemnitee shall have been adjudicated not to
<PAGE>
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.
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.
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.
<PAGE>
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: /S/ BRUCE N. ALPERT
Name: Bruce N. Alpert
Title: Executive Vice President
GABELLI & COMPANY, INC.
By: /S/ STEPHEN G. BONDI
Name: Stephen G. Bondi
Title: President
Exhibit (j)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Investment Advisory and Other Service" and "Financial Statements"
and to the use of our report dated February 11, 2000, which is incorporated by
reference in this Registration Statement (Form N-1A No. 002-23727)of The Gabelli
Mathers Fund.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
New York, New York
April 26, 2000
Exhibit (p)
SECTION S
CODE OF ETHICS
Gabelli Funds, LLC
GAMCO Investors, Inc.
Gabelli & Company, Inc.
Gabelli Advisers, Inc.
Gabelli Fixed Income LLC
Each Registered Investment Company or series thereof (each of which is
considered to be a Company for this purpose) for which any of the Companies
listed above presently or hereafter provides investment advisory or
principal underwriting services, other than a money market fund or a fund
that does not invest in Securities.
INTRODUCTION
This Code of Ethics establishes rules of conduct for persons who are
associated with the companies named above or with the registered investment
companies for which such companies provide investment advisory or principal
underwriter services. The Code governs their personal investment and other
investment-related activities.
The basic rule is very simple: put the client's interests first. The
rest of the rules elaborate this principle. Some of the rules are imposed
specifically by law. For example, the laws that govern investment advisers
specifically prohibit fraudulent activity, making statements that are not true
or that are misleading or omit something that is significant in the context and
engaging in manipulative practices. These are general words, of course, and over
the years the courts, the regulators and investment advisers have interpreted
these words and established codes of conduct for their employees and others who
have access to their investment decisions and trading activities. Indeed, the
rules obligate investment advisers to adopt written rules that are reasonably
designed to prevent the illegal activities described above and must follow
procedures that will enable them to prevent such activities.
This Code is intended to assist the companies in fulfilling their
obligations under the law. The first part lays out who the Code applies to, the
second part deals with personal investment activities, the third part deals with
other sensitive business practices, and subsequent parts deal with reporting and
administrative procedures.
The Code is very important to the companies and their employees.
Violations can not only cause the companies embarrassment, loss of business,
legal restrictions, fines and other punishments but for employees can lead to
demotion, suspension, firing, ejection from the securities business and very
large fines.
<PAGE>
I. APPLICABILITY
A. The Code applies to each of the following:
1. The Companies named or described at the top of page one of the
Code and all entities that are under common management with these
Companies or otherwise agree to be subject to the Code
("Affiliates"). A listing of the Affiliates, which is
periodically updated, is attached as Exhibit A.
2. Any officer, director or employee of any Company, Affiliate or
Fund Client (as defined below) whose job regularly involves him
in the investment process. This includes the formulation and
making of investment recommendations and decisions, the purchase
and sale of securities for clients and the utilization of
information about investment recommendations, decisions and
trades. Due to the manner in which the Companies and the
Affiliates conduct their business, every employee should assume
that he is subject to the Code unless the Compliance Officer
specifies otherwise.
3. With respect to all of the Companies, Affiliates and Fund Clients
except Gabelli & Company, Inc., any natural person who controls
any of the Companies, Affiliates or Fund Clients and who obtains
information regarding the Companies' or the Affiliates'
investment recommendations or decisions. However, a person whose
control arises only as a result of his official position with
such entity is excluded. Disinterested directors of Fund Clients,
for example, are excluded from coverage under this item.
4. With respect to all of the Companies and Fund Clients except
Gabelli & Company, Inc., any director, officer, general partner
or person performing a similar function even if he has no
knowledge of and is not involved in the investment process.
Disinterested directors of Fund Clients and independent directors
of Affiliates are included in coverage under this item.
5. As an exception, the Code does not apply to any director, officer
or employee of any Fund Client (such as certain of The Gabelli
Westwood Funds) with respect to which the Companies' services do
not involve the formulation or making of investment
recommendations or decisions or the execution of portfolio
transactions if that person is also a director, officer or
employee of any entity that does perform such services (such as
Westwood Management Corp.). These individuals are covered by
codes of ethics adopted by such entities.
B. Definitions
1. ACCESS PERSONS. The Companies and the persons described in items
(A)2 and (A)3 above other than those excluded by item (A)5 above.
2. ACCESS PERSON ACCOUNT. Includes all advisory, brokerage, trust or
other accounts or forms of direct beneficial ownership in which
one or more Access Persons and/or one or more members of an
Access Person's immediate family have a substantial proportionate
economic interest. Immediate family includes an Access Person's
spouse and minor children living with the Access
<PAGE>
Person. A substantial proportionate economic interest will
generally be 10% of the equity in the account in the case of any
single Access Person and 25% of the equity in the account in the
case of all Access Persons in the aggregate, whichever is first
applicable. Investment partnerships and similar indirect means of
ownership other than registered open-end investment companies are
also treated as accounts.
As an exception, accounts in which one or more Access Persons
and/or their immediate family have a substantial proportionate
interest which are maintained with persons who have no
affiliation with the Companies and with respect to which no
Access Person has, in the judgment of the Compliance Officer
after reviewing the terms and circumstances, any direct or
indirect influence or control over the investment or portfolio
execution process are not Access Person Accounts.
As a further exception, subject to the provisions of Article
II(I)7, bona fide market making accounts of Gabelli & Company,
Inc. are not Access Person Accounts.
As a further exception, subject to the provisions of Article
II(I)7, bona fide error accounts of the Companies and the
Affiliates are not Access Person Accounts.
3. ASSOCIATE PORTFOLIO MANAGERS. Access Persons who are engaged in
securities research and analysis for designated Clients or are
responsible for investment recommendations for designated Clients
but who are not principally responsible for investment decisions
with respect to any Client accounts.
4. CLIENTS. Investment advisory accounts maintained with any of the
Companies or Affiliates by any person, other than Access Person
Accounts. However, Fund Clients covered by item (A)(5) above are
considered Client accounts only with respect to employees
specifically identified by the Compliance Officer as having
regular information regarding investment recommendations or
decisions or portfolio transactions for such Fund Clients.
5. COMPANIES. The companies named or described at the top of page
one of the Code.
6. COMPLIANCE OFFICER. The persons designated as the compliance
officers of the Companies.
7. COVERED PERSONS. The Companies, the Access Persons and the
persons described in item (A)4 above.
8. FUND CLIENTS. Clients that are registered investment companies or
series thereof.
9. PORTFOLIO MANAGERS. Access Persons who are principally
responsible for investment decisions with respect to any Client
accounts.
<PAGE>
10. SECURITY. Any financial instrument treated as a security for
investment purposes and any related instrument such as a futures,
forward or swap contract entered into with respect to one or more
securities, a basket of or an index of securities or components
of securities. However, the term security does not include
securities issued by the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements, or shares of registered open-end
investment companies.
II. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. Basic Restriction on Investing Activities
If a purchase or sale order is pending or under active consideration
for any Client account by any Company or Affiliate, neither the same
Security nor any related Security (such as an option, warrant or
convertible security) may be bought or sold for any Access Person
Account.
B. Initial Public Offerings
No Security or related Security may be acquired in an initial public
offering for any Access Person Account.
C. Blackout Period
No Security or related Security may be bought or sold for the account
of any Portfolio Manager or Associate Portfolio Manager during the
period commencing seven (7) days prior to and ending seven (7)
calendar days after the purchase or sale (or entry of an order for the
purchase or sale) of that Security or any related Security for the
account of any Client with respect to which such person has been
designated a Portfolio Manager or Associate Portfolio Manager, unless
the Client account receives at least as good a price as the account of
the Portfolio Manager or Associate Portfolio Manager and the
Compliance Officer determines under the circumstances that the Client
account has not been adversely affected (including with respect to the
amount of such Security able to be bought by the Client account) by
the transaction for the account of the Portfolio Manager or Associate
Portfolio Manager.
D. Short-term Trading
No Security or related Security may, within a 60 day period, be bought
and sold or sold and bought at a profit for any Access Person Account
if the Security or related Security was held at any time during that
period in any Client account.
E. Exempt Transactions
Participation on an ongoing basis in an issuer's dividend reinvestment
or stock purchase plan, participation in any transaction over which no
Access Person had any direct or indirect influence or control and
involuntary transactions (such as mergers, inheritances, gifts, etc.)
are exempt from the restrictions set forth in paragraphs (A) and (C)
above without case by case preclearance under paragraph (G) below.
<PAGE>
F. Permitted Exceptions
Purchases and sales of the following Securities for Access Person
Accounts are exempt from the restrictions set forth in paragraphs A, C
and D above if such purchases and sales comply with the pre-clearance
requirements of paragraph (G) below:
1. Non-convertible fixed income Securities rated at least "A";
2. Equity Securities of a class having a market capitalization in
excess of $1 billion;
3. Equity Securities of a class having a market capitalization in
excess of $500 million if the transaction in question and the
aggregate amount of such Securities and any related Securities
purchased and sold for the Access Person Account in question
during the preceding 60 days does not exceed 100 shares;
4. Municipal Securities; and
5. Securities transactions effected for federal, state or local
income tax purposes that are identified to the Compliance Officer
at the time as being effected for such purposes.
In addition, the exercise of rights that were received pro rata with
other security holders is exempt if the pre-clearance procedures are
satisfied.
G. Pre-Clearance of Personal Securities Transactions
No Security may be bought or sold for an Access Person Account unless
(i) the Access Person obtains prior approval from the Compliance
Officer or, in the absence of the Compliance Officer, from the general
counsel of Gabelli Asset Management Inc.; (ii) the approved
transaction is completed on the same day approval is received; and
(iii) the Compliance Officer or the general counsel does not rescind
such approval prior to execution of the transaction (See paragraph I
below for details of the Pre-Clearance Process.)
H. Private Placements
The Compliance Officer will not approve purchases or sale of
Securities that are not publicly traded, unless the Access Person
provides full details of the proposed transaction (including written
certification that the investment opportunity did not arise by virtue
of such person's activities on behalf of any Client) and the
Compliance Officer concludes, after consultation with one or more of
the relevant Portfolio Managers, that the Companies would have no
foreseeable interest in investing in such Security or any related
Security for the account of any Client.
I. Pre-Clearance Process
<PAGE>
1. No Securities may be purchased or sold for any Access Person
Account unless the particular transaction has been approved in
writing by the Compliance Officer or, in his absence, the general
counsel of Gabelli Asset Management Inc. The Compliance Officer
shall review not less frequently than weekly reports from the
trading desk (or, if applicable, confirmations from brokers) to
assure that all transactions effected for Access Person Accounts
are effected in compliance with this Code.
2. No Securities may be purchased or sold for any Access Person
Account other than through the trading desk of Gabelli & Company,
Inc., unless express permission is granted by the Compliance
Officer. Such permission may be granted only on the condition
that the third party broker supply the Compliance Officer, on a
timely basis, duplicate copies of confirmations of all personal
Securities transactions for such Access Person in the accounts
maintained with such third party broker and copies of periodic
statements for all such accounts.
3. A Trading Approval Form, attached as Exhibit B, must be completed
and submitted to the Compliance Officer for approval prior to
entry of an order.
4. After reviewing the proposed trade, the level of potential
investment interest on behalf of Clients in the Security in
question and the Companies' restricted lists, the Compliance
Officer shall approve (or disapprove) a trading order on behalf
of an Access Person as expeditiously as possible. The Compliance
Officer will generally approve transactions described in
paragraph (F) above unless the Security in question or a related
security is on the Restricted List or the Compliance Officer
believes for any other reason that the Access Person Account
should not trade in such Security at such time.
5. Once an Access Person's Trading Approval Form is approved, the
form must be forwarded to the trading desk (or, if a third party
broker is permitted, to the Compliance Officer) for execution on
the same day. If the Access Person's trading order request is not
approved, or is not executed on the same day it is approved, the
clearance lapses although such trading order request maybe
resubmitted at a later date.
6. In the absence of the Compliance Officer, an Access Person may
submit his or her Trading Approval Form to the general counsel of
Gabelli Asset Management Inc. Trading approval for the Compliance
Officer must be obtained from the general counsel, and trading
approval for the general counsel must be obtained from the
Compliance Officer. In no case will the Trading Desk accept an
order for an Access Person Account unless it is accompanied by a
signed Trading Approval Form.
7. The Compliance Officer shall review all Trading Approval Forms,
all initial, quarterly and annual disclosure certifications and
the trading activities on behalf of all Client accounts with a
view to ensuring that all Covered Persons are complying with the
spirit as well as the detailed requirements of this Code. The
Compliance Officer will review all transactions in the market
making accounts of Gabelli & Company, Inc. and the error accounts
of the Companies
<PAGE>
and the Affiliates in order to ensure that such transactions are
bona fide market making or error transactions or are conducted in
accordance with the requirements of this Article II.
III. OTHER INVESTMENT-RELATED RESTRICTIONS
A. Gifts
No Access Person shall accept any gift or other item of more than $100
in value from any person or entity that does business with or on
behalf of any Client.
B. Service As a Director
No Access Person shall commence service on the Board of Directors of a
publicly traded company or any company in which any Client account has
an interest without prior authorization from the Compliance Committee
based upon a determination that the Board service would not be
inconsistent with the interests of the Clients. The Compliance
Committee shall include the senior Compliance Officer of Gabelli Asset
Management Inc., the general counsel of Gabelli Asset Management Inc.
and at least two of the senior executives from among the Companies.
IV. REPORTS AND ADDITIONAL COMPLIANCE PROCEDURES
A. Every Covered Person, except independent directors of Affiliates of
the Companies, must submit a report (a form of which is appended as
Exhibit C) containing the information set forth in paragraph (B) below
with respect to transactions in any Security in which such Covered
Person has or by reason of such transaction acquires, any direct or
indirect beneficial ownership (as defined in Exhibit D) in the
Security, and with respect to any account established by the Covered
Person in which any Securities were held for the direct or indirect
benefit of the Covered Person; PROVIDED, HOWEVER, that:
1. a Covered Person who is required to make reports only because he
is a director of one of the Fund Clients and who is a
"disinterested" director thereof need not make a report with
respect to any transactions other than those where he knew or
should have known in the course of his duties as a director that
any Fund Client of which he is a director has made or makes a
purchase or sale of the same or a related Security within 15 days
before or after the purchase or sale of such Security or related
Security by such director.
2. a Covered Person need not make a report with respect to any
transaction effected for, and Securities held in, any account
over which such person does not have any direct or indirect
influence or control; and
3. a Covered Person will be deemed to have complied with the
requirements of this Article IV insofar as the Compliance Officer
receives in a timely fashion duplicate monthly or quarterly
brokerage statements or transaction confirmations on which all
transactions required to be reported hereunder are described.
<PAGE>
B. A Covered Person must submit the report required by this Article to
the Compliance Officer no later than 10 days after the end of the
calendar quarter in which the transaction or account to which the
report relates was effected or established, and the report must
contain the date that the report is submitted.
1. This report must contain the following information with respect
to transactions:
a. The date of the transaction, the title and number of shares
and the principal amount of each Security involved;
b. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. The price at which the transaction was effected; and
d. The name of the broker, dealer or bank with or through whom
the transaction was effected.
2. This report must contain the following information with respect
to accounts established:
a. The name of the broker, dealer or bank with whom the account
was established; and
b. The date the account was established.
C. Any report submitted to comply with the requirements of this Article
IV may contain a statement that the report shall not be construed as
an admission by the person making such report that he has any direct
or indirect beneficial ownership in the Security to which the report
relates. A person need not make any report under this Article IV with
respect to transactions effected for, and Securities held in, any
account over which the person has no direct or indirect influence or
control
D. No later than 10 days after beginning employment with any of the
Companies or Affiliates or otherwise becoming a Covered Person, each
Covered Person (except for a "disinterested" director of the Fund
Client who is required to submit reports solely by reason of being
such a director) must submit a report containing the following
information:
1. The title, number of shares and principal amount of each Security
in which the Covered Person had any direct or indirect beneficial
ownership when the person became a Covered Person;
2. The name of any broker, dealer or bank with whom the Covered
Person maintained an account in which any Securities were held
for the direct or indirect benefit of the Covered Person as of
the date the person became a Covered Person; and
3. The date that the report is submitted.
<PAGE>
The form of such report is attached as Exhibit E.
E. Annually each Covered Person must certify that he has read and
understood the Code and recognizes that he is subject to such Code. In
addition, annually each Covered Person must certify that he has
disclosed or reported all personal Securities transactions required to
be disclosed or reported under the Code and that he is not subject to
any regulatory disability described in the annual certification form.
Furthermore, each Covered Person (except for a "disinterested"
director of the Fund Client who is required to submit reports solely
by reason of being such a director) annually must submit a report
containing the following information (which information must be
current as of a date no more than 30 days before the report is
submitted):
1. The title, number of shares and principal amount of each Security
in which the Covered Person had any direct or indirect beneficial
ownership;
2. The name of any broker, dealer or bank with whom the Covered
Person maintains an account in which any Securities are held for
the direct or indirect benefit of the Covered Person; and
3. The date that the report is submitted.
The form of such certification and report is attached as Exhibit F.
F. At least annually (or quarterly in the case of Items 4 and 5 below),
each of the Companies that has a Fund Client or that provides
principal underwriting services for a Fund Client shall, together with
each Fund Client, furnish a written report to the Board of Directors
of the Fund Client that:
1. Describes any issues arising under the Code since the last
report.
2. Certifies that the Companies have developed procedures concerning
Covered Persons' personal trading activities and reporting
requirements relevant to such Fund Clients that are reasonably
necessary to prevent violations of the Code;
3. Recommends changes, if any, to the Fund Clients' or the
Companies' Codes of Ethics or procedures;
4. Provides a summary of any material or substantive violations of
this Code by Covered Persons with respect to such Fund Clients
which occurred during the past quarter and the nature of any
remedial action taken; and
5. Describes any material or significant exceptions to any
provisions of this Code of Ethics as determined under Article VI
below.
G. The Compliance Officer shall notify each employee of any of the
Companies or
<PAGE>
Affiliates as to whether such person is considered to be an Access
Person or Covered Person and shall notify each other person that is
considered to be an Access Person or Covered Person.
V. SANCTIONS
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Directors of the relevant
Company or of the relevant Fund Client, whichever is most appropriate
under the circumstances, may impose on that person whatever sanctions
the Board deems appropriate, including, among other things,
disgorgement of profit, censure, suspension or termination of
employment. Material violations of requirements of this Code by
employees of Covered Persons and any sanctions imposed in connection
therewith shall be reported not less frequently than quarterly to the
Board of Directors of any relevant Company or Fund Client, as
applicable.
VI. EXCEPTIONS
The Compliance Committee of the Companies reserves the right to decide,
on a case-by-case basis, exceptions to any provisions under this Code.
Any exceptions made hereunder will be maintained in writing by the
Compliance Committee and presented to the Board of Directors of any
relevant Fund Client at its next scheduled meeting.
VII. PRESERVATION OF DOCUMENTS
This Code, a copy of each report by a Covered Person, any written
report made hereunder by the Companies or the Compliance Officer, lists
of all persons required to make reports, a list of any exceptions, and
the reasons therefor, with respect to Article II.B, and any records
under Article II.G with respect to purchases pursuant to Article II.H
above, shall be preserved with the records of the relevant Company and
any relevant Fund Client for the period required by Rule 17j-1.
VIII. OTHER LAWS, RULES AND STATEMENTS OF POLICY
Nothing contained in this Code shall be interpreted as relieving any
Covered Person from acting in accordance with the provision of any
applicable law, rule or regulation or any other statement of policy or
procedure governing the conduct of such person adopted by the
Companies, the Affiliates or the Fund Clients.
IX. FURTHER INFORMATION
If any person has any question with regard to the applicability of the
provisions of this Code generally or with regard to any Securities
transaction or transactions, he should consult the Compliance Officer.
<PAGE>
EXHIBIT A
LIST OF AFFILIATES OF THE COMPANIES
ALCE Partners, L.P.
Darien Associates LLC
Gabelli Asset Management Inc.
Gabelli Associates Fund
Gabelli Associates Limited
Gabelli Fixed Income Distributors
Gabelli Fixed Income, Inc.
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli International Gold Fund Limited
Gabelli International Limited
Gabelli International II Limited
Gabelli International Securities Limited
Gabelli Multimedia Partners, L.P.
Gabelli Performance Partnership L.P.
Gabelli Securities, Inc.
Gemini Capital Management Ltd.
GLI, Inc.
Gabelli Group Capital Partners, Inc. and its subsidiaries
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli European Partners, Ltd.
Gabelli Fund, LDC
MJG Associates, Inc.
New Century Capital Partners, L.P.
<PAGE>
EXHIBIT B
PRE-CLEARANCE TRADING APPROVAL FORM
I, ______________________________________ (name), am an Access Person or
authorized officer thereof and seek pre-clearance to engage in the transaction
described below for the benefit of myself or another Access Person:
ACQUISITION OR DISPOSITION (circle one)
Name of Account:________________________________________________________________
Account Number:_________________________________________________________________
Date of Request:________________________________________________________________
Security:_______________________________________________________________________
Amount or # of Shares:__________________________________________________________
Broker:_________________________________________________________________________
If the transaction involves a Security that is not publicly traded, a
description of proposed transaction, source of investment opportunity and any
potential conflicts of interest:
I hereby certify that, to the best of my knowledge, the transaction described
herein is not prohibited by the Code of Ethics and that the opportunity to
engage in the transaction did not arise by virtue of my activities on behalf of
any Client.
Signature: ____________________________ Print Name: __________________________
APPROVED OR DISAPPROVED(Circle One)
Date of Approval:______________________
Signature: ____________________________ Print Name: __________________________
If approval is granted, please forward this form to the trading desk (or if a
third party broker is permitted, to the Compliance Officer) for immediate
execution.
<PAGE>
EXHIBIT C
TRANSACTION REPORT
Report submitted by:____________________________________________________
Print Name
This transaction report (the "Report") is submitted pursuant to Section IV (B)
of the Code of Ethics of the Companies and supplies information with respect to
transactions in any Security in which you may be deemed to have, or by reason of
such transaction acquire, any direct or indirect beneficial ownership interest,
and with respect to accounts established by you in which any Securities were
held for your direct or indirect benefit, for the period specified below. If you
were not employed by or affiliated with us during this entire period, amend the
dates specified below to cover your period of employment or affiliation.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable transactions or new accounts, sign and return this
page only. If you have reportable transactions or new accounts, complete, sign
and return Page 2 and any attachments.
I HAD NO REPORTABLE SECURITIES TRANSACTIONS OR ACCOUNTS ESTABLISHED DURING THE
PERIOD THROUGH . I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND
THAT, TO THE BEST OF MY KNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS
TRUE AND CORRECT.
Signature___________________________________________________
Position____________________________________________________
Date________________________________________________________
<PAGE>
Page 2
TRANSACTION REPORT
Report submitted by:____________________________________________________
Print Name
The following tables supply the information required by Section IV (B) of the
Code of Ethics for the period specified below. Transactions reported on
brokerage statements or duplicate confirmations actually received by the
Compliance Officer do not have to be listed although it is your responsibility
to make sure that such statements or confirmations are complete and have been
received in a timely fashion.
<TABLE>
<CAPTION>
TRANSACTIONS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Whether Purchase,
Sale, Short Sale or Name of Broker/Dealer
Securities Other Type of with or through Whom Nature of
(Name and) Date of Disposition or Quantity of Price per Share the Transaction Ownership of
SYMBOL TRANSACTION ACQUISITION SECURITIES OR OTHER UNIT WAS EFFECTED SECURITIES
</TABLE>
NEW ACCOUNTS ESTABLISHED
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER DATE ACCOUNT ESTABLISHED
* To the extent specified above, I hereby disclaim beneficial ownership of any
securities listed in this Report or brokerage statements or transaction
confirmations provided by me.
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT FOR THE
PERIOD OF _____________________ THROUGH _____________________.
Signature_________________________________________ Date_______________________
Position_________________________________________
<PAGE>
EXHIBIT D
BENEFICIAL OWNERSHIP
For purposes of the attached Code of Ethics, "beneficial ownership" shall be
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except the determination of direct or
indirect beneficial ownership shall apply to all securities that a Covered
Person has or acquires. The term "beneficial ownership" of securities would
include not only ownership of securities held be a Covered Person for his own
benefit, whether in bearer form or registered in his name or otherwise, but also
ownership of securities held for his benefit by others (regardless of whether or
how they are registered) such as custodians, brokers, executors, administrators,
or trustees (including trusts in which he has only a remainder interest), and
securities held for his account by pledges, securities owned by a partnership in
which he is a member if he may exercise a controlling influence over the
purchase, sale of voting of such securities, and securities owned by any
corporation or similar entry in which he owns securities if the shareholder is a
control-ling shareholder of the entity and has or shares investment control over
the entity's portfolio.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which a Covered Person is a legatee or beneficiary
unless there is a specified legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as beneficially
owned by a Covered Person where such person enjoys "financial benefits
substantially equivalent to ownership." The Securities and Exchange Commission
has said that, although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining financial benefits
substantially equivalent to ownership, E.G., application of the income derived
from such securities to maintain a common home, or to meet expenses that such
person otherwise would meet from other sources, or the ability to exercises a
controlling influence over the purchase, sale or voting of such securities.
A Covered Person also may be regarded as the beneficial owner of securities held
in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other agreement, he obtains therefrom financial
benefits substantially equivalent to those of ownership.
A Covered Person also is regarded as the beneficial owner of securities held in
the name of a spouse, minor children or other person, even though he does not
obtain therefrom the aforementioned benefits of ownership, if he can vest or
revest title in himself at once or at some future time.
<PAGE>
EXHIBIT E
INITIAL HOLDINGS REPORT
Report submitted by:_______________________________________________________
Print Name
This initial holdings report (the "Report") is submitted pursuant to Section IV
(D) of the Code of Ethics of the Companies and supplies information with respect
to any Security in which you may be deemed to have any direct or indirect
beneficial ownership interest and any accounts established by you in which any
Securities were held for your direct or indirect benefit, as of the date you
became subject to the Code of Ethics.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable Securities or accounts, sign and return this page
only. If you have reportable Securities or accounts, complete, sign and return
Page 2 and any attachments.
I HAVE NO REPORTABLE SECURITIES OR ACCOUNTS AS OF _________________________. I
CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.
Signature__________________________________________________
Position___________________________________________________
Date_______________________________________________________
<PAGE>
Page 2
INITIAL HOLDINGS REPORT
Report submitted by:_________________________________________________________
Print Name
The following tables supply the information required by Section IV (D) of the
Code of Ethics as of the date you became subject to the Code.
<TABLE>
<CAPTION>
SECURITIES HOLDINGS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership of
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD SECURITIES
</TABLE>
ACCOUNTS
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT AS OF
__________________________________.
Signature ________________________________________________ Date ______________
Position ________________________________________________
<PAGE>
EXHIBIT F
ANNUAL CERTIFICATION OF CODE OF ETHICS
A. I (a Covered Person) hereby certify that I have read and understood the
Code of Ethics dated February 15, 2000, and recognize that I am subject
to its provisions. In addition, I hereby certify that I have disclosed
or reported all personal Securities transactions required to be
disclosed or reported under the Code of Ethics;
B. Within the last ten years there have been no complaints or disciplinary
actions filed against me by any regulated securities or commodities
exchange, any self-regulatory securities or commodities organization,
any attorney general, or any governmental office or agency regulating
insurance, securities, commodities or financial transactions in the
United States, in any state of the United States, or in any other
country;
C. I have not within the last ten years been convicted of or acknowledged
commission of any felony or misdemeanor arising out of my conduct as an
employee, salesperson, officer, director, insurance agent, broker,
dealer, underwriter, investment manager or investment advisor; and
D. I have not been denied permission or otherwise enjoined by order,
judgment or decree of any court of competent jurisdiction, regulated
securities or commodities exchange, self-regulatory securities or
commodities organization or other federal or state regulatory authority
from acting as an investment advisor, securities or commodities broker
or dealer, commodity pool operator or trading advisor or as an
affiliated person or employee of any investment company, bank,
insurance company or commodity broker, dealer, pool operator or trading
advisor, or from engaging in or continuing any conduct or practice in
connection with any such activity or the purchase or sale of any
security.
E. Unless I am exempt from filing an Annual Holdings Report (as a
"disinterested" director of a Fund Client or an independent director of
an Affiliate), I have attached a completed Annual Holdings Report which
is accurate as of a date no more than 30 days ago.
Print Name:________________________________________________
Signature:_________________________________________________
Date:______________________________________________________
<PAGE>
Page 2
ANNUAL HOLDINGS REPORT
Report submitted by: _________________________________________________________
Print Name
The following tables supply the information required by Section IV (E) of the
Code of Ethics as of a date no more than 30 days before this report is
submitted. If you have no reportable Securities holdings or accounts, write
"None" in the space provided.
<TABLE>
<CAPTION>
SECURITIES HOLDINGS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD OF SECURITIES
---------------------------- ---------------------- ------------------- -------------
</TABLE>
ACCOUNTS
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
Signature________________________________________________ Date _________________
Position________________________________________________
