SUPPLEMENT dated August 17, 2000 to PROSPECTUS dated August 28, 1999
Gabelli Comstock Funds, Inc.
Gabelli Comstock Strategy Fund
Gabelli Comstock Capital Value Fund
Effective August 3, 2000, the Gabelli Comstock Funds, Inc. (formerly
Comstock Partners Funds, Inc.) changed its name to Comstock Funds, Inc. and
changed the names of each of its series from Gabelli Comstock Strategy Fund and
Gabelli Comstock Capital Value Fund to Comstock Strategy Fund (the "Strategy
Fund") and Comstock Capital Value Fund (the "Capital Value Fund," together with
the Strategy Fund, the "Funds"), respectively. The Funds' investment objectives
remain the same, as do all current contractual arrangements.
On May 22, 2000, Gabelli Funds, LLC (the "Adviser") became the investment
adviser for the Funds. In addition, Gabelli & Company, Inc. became the principal
underwriter for each of the Funds.
This Supplement to the Funds' Prospectus dated August 28, 1999 (the
"Prospectus") explains the changes occurring as a result of the new investment
advisory agreements (the "New Advisory Agreements") approved by shareholders of
each Fund with the Adviser.
The information under the heading Fees and Expenses on pages 9 and 10 of
the Prospectus is replaced by the following information:
Fees and Expenses
The following information shows the fees and expenses that a shareholder of the
Strategy Fund may pay to buy and hold shares of the Strategy Fund:
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Class C
Shareholder Fees (fees paid directly from the shareholder's investment) Maximum
Maximum sales charge (as a percentage of offering price) 4.5% 0%
Maximum deferred sales charge (as a percentage of purchase price) 0.%* 1%
----------------------------------
* 1% applicable only to purchases in excess of $1 million without a sales charge.
</TABLE>
The costs of operating the Strategy Fund are deducted from the Strategy
Fund's assets, which means that Strategy Fund shareholders pay them indirectly.
The expense information shown below is based on year-end net assets of the
Strategy Fund for 1999 of approximately $35 million, adjusted for the new
advisory and administrative arrangements and savings in other expenses
anticipated in connection with the Adviser becoming the Strategy Fund's
investment adviser and administrator.
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Class C
Annual Fund Operating Expenses (expenses that are deductible from Strategy Fund assets)
Management Fees 0.85% 0.85%
Service and Distribution (12b-1) Fees 0.25% 1.00%
Other Expenses 1.14% 1.14%
Total Fund Operating Expenses (before fee waiver)* 2.24% 2.99%
----- -----
Fee Waiver* 0 0
--------- -----
Total Fund Operating Expenses (after fee waiver)* 2.24% 2.99%
===== =====
-----------------------------
* Pursuant to the New Advisory Agreement, the Adviser has agreed to waive a
portion of its management fee for the first two years to the extent
necessary to maintain expense ratios for the Strategy Fund at 1999 levels
(other than extraordinary expenses) with respect to the amount of assets
held by the Strategy Fund at the time the New Advisory Agreement goes into
effect. This waiver will not apply to incremental assets or expense ratio
increases.
** Other Expenses are based on amounts incurred during 1999, with average net
assets of approximately $35 million restated to reflect estimated
reductions in transfer agent, audit, legal and insurance expenses
anticipated to take effect upon the Adviser becoming the investment adviser
and administrator to the Strategy Fund.
</TABLE>
<PAGE>
Example: This example is intended to assist shareholders in comparing the cost
of investing in the Strategy Fund, over various time periods, with the cost of
investing in other mutual funds. The example assumes that a shareholder invests
an initial $10,000 in the Strategy Fund and then redeems all shares at the end
of each holding period as indicated below. The example also assumes that the
shareholder's investment has a 5% return each year and that the Strategy Fund's
operating expenses remain constant. Although a shareholder's actual costs may be
higher or lower, based on these assumptions, these costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $667 $1,119 $1,596 $2,909
Class C shares Without redemption $302 $1,572 $3,308
$924
With redemption $402 $924 $1,572 $3,308
</TABLE>
The information under the heading Fees and Expenses on pages 17 and 18 of
the Prospectus is replaced by the following information:
Fees and Expenses
The following information shows the fees and expenses that a shareholder of the
Capital Value Fund may pay to buy and hold shares of the Fund:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Class B Class C Class R
Shareholder Fees (fees paid directly from the shareholder's investment)
Maximum sales charge (as a percentage of offering price) 4.5% 0% 0% 0%
Maximum deferred sales charge (as a percentage of purchase price) 0%** 4% 1% 0%
---------------------------
** 1% applicable only to purchases in excess of $1 million without a sales charge.
</TABLE>
The costs of operating the Capital Value Fund are deducted from the
Capital Value Fund's assets, which means that Capital Value Fund shareholders
pay them indirectly. The expense information shown below is based on year-end
net assets of the Capital Value Fund for 1999 of approximately $65 million,
adjusted for the new advisory and administrative arrangements and savings in
other expenses anticipated in connection with the Adviser becoming the Capital
Value Fund's investment adviser and administrator:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Class B Class C Class R
Annual Fund Operating Expenses (expenses that are deductible from Fund assets)
Management Fees 1.00% 1.00% 1.00% 1.00%
Service and Distribution (12b-1) Fees 0.25% 1.00% 1.00% 0.00%
Other Expenses 0.57% 0.57% 0.57% 0.57%
Total Fund Operating Expenses (before fee waiver)* 1.82% 2.57% 2.57% 1.57%
----- ----- ----- -----
Fee Waiver* (0.19)% (0.19%) (0.19%) (0.19)%
------- ------- ------- -------
Total Fund Operating Expenses (after fee waiver)* 1.63% 2.38% 2.38% 1.38%
===== ===== ===== =====
--------------------------------
* Pursuant to the New Advisory Agreement, the Adviser will agree to waive a
portion of its management fee for the first two years to the extent
necessary to maintain expense ratios for the Capital Value Fund at 1999
levels (other than extraordinary expenses) with respect to the amount of
assets held by the Capital Value Fund at the time the New Advisory
Agreement goes into effect.
This waiver will not apply to incremental assets or expense ratio
increases.
** Other Expenses are based on amounts incurred during 1999, with an average
net assets of approximately $65 million, restated to reflect estimated
reductions in transfer agent, audit, legal and insurance expenses
anticipated to take effect upon the Adviser becoming the investment adviser
and administrator to the Capital Value Fund.
</TABLE>
<PAGE>
Example: This example is intended to assist shareholders in comparing the cost
of investing in the Capital Value Fund, over various time periods, with the cost
of investing in other mutual funds. The example assumes that a shareholder
invests an initial $10,000 in the Capital Value Fund and then redeems all shares
at the end of each holding period as indicated below. The example also assumes
that the shareholder's investment has a 5% return each year and that the Capital
Value Fund's operating expenses remain constant. Although a shareholder's actual
costs may be higher or lower, based on these assumptions, these costs would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Class A shares $608 $941 $1,297 $2,296
Class B shares Without redemption $241 $742 $1,270 $2,716
With redemption $641 $1,042 $1,470 $2,716
Class C shares Without redemption $241 $742 $1,270 $2,716
With redemption $341 $742 $1,270 $2,716
-----------------------------------------------------------------------------------------------------------
Class R shares First two years $140 $437 $755 $1,657
</TABLE>
Management
Gabelli Advisers, LLC is the investment adviser to the Funds. The
Adviser is the mutual fund advisory subsidiary of Gabelli Asset Management,
Inc., a widely recognized provider of investment advisory and brokerage services
to open-end and closed-end mutual funds, institutional and high net worth
investors and partnerships, primarily in the United States. As of March 31,
2000, it had total assets under management of approximately $12 billion in
mutual funds and $10 billion in other managed accounts. The Class A Common Stock
of Gabelli Asset Management, Inc. is traded on the NYSE under the symbol GBL and
such company and its subsidiaries, including the Adviser, may be deemed to be
indirectly controlled by Mario J. Gabelli. The address of the Adviser is One
Corporate Center, Rye, New York 10580-1434.
Methods for buying Shares and Methods for Selling by Mail
Buying or selling by mail
Mail to the applicable Fund at P.O. Box 8308, Boston, MA 02266-8308
instead of the address on pages 24 and 28 of the Prospectus. Overnight
mail should be sent to the applicable Fund at 66 Brooks Drive,
Braintree, MA 02184, attention: Martha Kosonen.
Buying by wire transfer
Wires should be sent to State Street Bank and Trust Company, ABA
#011-000028, referencing DDA #99046187, the Fund name and class of
shares you are purchasing, your account number and your name.
Buying or selling by telephone
Use 1-800-GABELLI rather than the number on page 27 of the Prospectus.
The Teletransfer Privilege and other services for buying and selling shares
described on pages 27 to 29 of the Prospectus are no longer available.
<PAGE>
SUPPLEMENT dated August 17, 2000 to Statement of Additional
Information dated August 28, 1999
Gabelli Comstock Funds, Inc.
Gabelli Comstock Strategy Fund
Gabelli Comstock Capital Value Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
Effective August 3, 2000, the Gabelli Comstock Funds, Inc. (formerly
Comstock Partners Funds, Inc.) changed its name to Comstock Funds, Inc. and
changed the names of each of its series from Gabelli Comstock Strategy Fund and
Gabelli Comstock Capital Value Fund to Comstock Strategy Fund (the "Strategy
Fund") and Comstock Capital Value Fund (the "Capital Value Fund," together with
the Strategy Fund, the "Funds"), respectively. The Funds' investment objectives
remain the same, as do all current contractual arrangements.
On May 22, 2000, Gabelli Funds, LLC (the "Adviser") became the investment
adviser for the Funds. In addition, Gabelli & Company, Inc. became the principal
underwriter for each of the Funds.
The information under the heading "Management Arrangements" is
superseded entirely by the following information:
MANAGEMENT ARRANGEMENTS
DIRECTORS AND OFFICERS
The directors and executive officers of the Company and their principal
occupations during the last five years are set forth below.
<TABLE>
<CAPTION>
<S> <C> <C>
Position Business Experience;
Name with the Company Other Directorships
Henry G. Van der Eb* - Age: 54 Chairman and Director President and Chief Executive Officer of The Gabelli Mathers Fund;
prior to October 1999, Chairman and Chief Executive Officer of
Mathers Fund, Inc. and President of Mathers & Company, Inc. (1)
Charles L. Minter* - Age: 58 Director Director, Chairman of the Board of Directors and Chief Executive
Officer of Comstock Partners, Inc. since November, 1996, and, prior
thereto, Vice Chairman, President and Secretary of Comstock
Partners, Inc.
M. Bruce Adelberg - Age: 62 Director Consultant, MBA Research Group since November 1995; Director,
Oakwood Counselors Inc. (investments); and Director, Southern Sun
Propagation Systems Inc.
Robert M. Smith - Age: 69 Director President and Director, Smith Advisors, Ltd. (investments) since
November 1995; President and Director of Ansbacher (Dublin) Asset
Management Ltd. from January 1983 to November 1995.
Anthony J. Colavita - Age: 64 Director President and Attorney at Law in the law firm of Anthony J.
Colavita, P.C. since 1961.
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (16)
(17) (18) (19)
Vincent D. Enright - Age: 55 Director Former Senior Vice President and Chief Financial Officer of KeySpan
Energy Corp. (6) (7)(8) (9) (10) (11)
Anthony R. Pustorino - Age: 74 Director Certified Public Accountant; Professor of Accounting, Pace
University.
(1) (2) (3) (4) (5) (6) (11) (13) (15) (16) (17)
Gus A. Coutsouros - Age: 37 Vice President and Vice President and Chief Financial Officer of Gabelli Funds, LLC
Assistant Treasurer
Bruce N. Alpert - Age: 48 Executive Vice Executive Vice President and Chief Operating Officer of Gabelli
President and Treasurer Funds, LLC since 1988; President and Director of Gabelli Advisers,
Inc. and an Officer of all mutual funds managed by Gabelli Funds,
LLC and its affiliates.
Carolyn Maitlin - Age: 43 Vice President
James E. McKee - Age: 36 Secretary Secretary of Gabelli Funds, LLC; Vice President, Secretary and
General Counsel of GAMCO Investors, Inc. since 1993 and of Gabelli
Asset Management, Inc. since 1999; Secretary of all mutual funds
advised by Gabelli Funds, LLC and Gabelli Advisers, Inc. since
August 1995.
* These directors are interested persons of the Investment Adviser and of the Company, as defined in the 1940 Act.
(1) Trustee of The Gabelli Mathers Fund (11) Director of Gabelli Capital Series Funds, Inc.
(2) Trustee of The Gabelli Asset Fund (12) Director of Gabelli International Growth Fund, Inc.
(3) Trustee of The Gabelli Growth Fund (13) Director of the Treasurer's Fund, Inc.
(4) Director of The Gabelli Value Fund Inc. (14) Trustee of the Gabelli Westwood Funds
(5) Director of The Gabelli Convertible Securities Fund, (15) Director of The Gabelli Multimedia Trust Inc.
Inc.
(6) Director of Gabelli Equity Series Funds, Inc. (16) Director of The Gabelli Equity Trust Inc.
(7) Trustee of The Gabelli Money Market Funds (17) Trustee of The Gabelli Utility Trust
(8) Director of Gabelli Investor Funds, Inc. (18) Trustee of The Gabelli Blue Chip Value Fund
(9) Director of Gabelli Global Series Funds, Inc. (19) Trustee of The Gabelli Utilities Fund
(10) Director of Gabelli Gold Fund, Inc.
</TABLE>
During the Company's last fiscal year ended April 30, 1999, the Board of
Directors met four times. Each of the directors attended 75% or more of the
meetings of the Board of Directors held during such year.
The Board of Directors of the Company has a standing audit committee
consisting of Messrs. Adelberg, Pustorino and Smith. These Directors are not
"interested persons" of the Company as defined in the 1940 Act. The audit
committee is responsible for recommending the selection of the Company's
independent accountants and reviewing all audit as well as non-audit accounting
services performed for the Company. The Company has a standing nominating
committee consisting of Messrs. Adelberg, Colavita, Enright, Pustorino, Roeder
and Smith. These persons are not "interested persons" of the Company as defined
in the 1940 Act. The nominating committee is responsible for recommending
qualified candidates to the Board of Directors in the event that a position is
vacated or created.
The Board of Directors of the Company directs the overall management of
the Company, including, with respect to each Fund, general oversight and review
of its respective investment policies and activities. The Board of Directors of
the Company elects the officers of the Company. The officers are responsible for
supervising and administering the Company's day-to-day operations.
For so long as the Class A, Class B or Class C Service and Distribution
Plans remain in effect, the Directors of the Company who are not "interested
persons" of the Company, as defined in the 1940 Act, will be selected and
nominated by the Directors who are not "interested persons" of the Company.
Prior to May 22, 2000, the Company paid each Non-Interested Director an
annual retainer of $20,000 (consisting of $10,000 for each Fund). Subsequent to
May 22, 2000, the Company will pay each director that is not an affiliated
person of the Investment Adviser (as defined in the 1940 Act) an annual retainer
of $5,000, plus $1,000 for each Board of Directors meeting actually attended, in
each case together with the Director's actual out-of-pocket expenses relating to
attendance at meetings. All committee members are expected to receive $500 per
meeting for meetings that take place on days when the Board of Directors does
not meet. Directors are reimbursed for any expenses incurred in attending
meetings. Directors of the Company who are "affiliated persons" as defined in
the 1940 Act receive no direct remuneration from the Company. The Company pays a
fee to the Adviser as investment adviser to the Company, and certain of the
directors and officers of the Company are directors, officers and shareholders
of the Adviser's parent company.
<PAGE>
None of the Company's officers, nor any affiliated persons of the
Company, received aggregate compensation in excess of $60,000 from the Company
during the fiscal year ended April 30, 1999. For the fiscal year ended April 30,
1999, the aggregate amount of fees and expenses received by each Director from
the Company were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART ESTIMATED ANNUAL FROM COMPANY PAID
COMPENSATION FROM OF COMPANY BENEFITS UPON TO BOARD
COMPANY* EXPENSES RETIREMENT MEMBER*
NAME OF BOARD MEMBER
Charles L. Minter 0 0 0 0
M. Bruce Adelberg $ 20,000 0 0 $ 20,000
Sven B. Karlen, Jr.** $ 16,230 0 0 $ 16,230
E. W. Kelley** $ 5,000 0 0 $ 5,000
Robert M. Smith $ 20,000 0 0 $ 20,000
--------------------------------------------------------------------------------------------------------
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $1,520 for the Company. ** Messrs.
Karlen and Kelley resigned as Directors of the Company, effective
March 16, 1999 and July 1, 1998, respectively.
</TABLE>
The following table sets forth certain information regarding the
aggregate compensation of those of the Directors who received compensation from
mutual funds in the Gabelli fund complex for the fiscal year ended April 30,
1999:
Aggregate Compensation
Name of Person from Gabelli Fund Complex*
------------------------------------------
Anthony J. Colavita $ 94,875 (18)
Vincent D. Enright $ 25,500 (6)
Anthony R. Pustorino $ 107,250 (18)
Werner J. Roeder $ 32,859 (11)
* Represents the total compensation paid to each such person during the
calendar year ended December 31, 1999 by investment companies from
which such person receives compensation that are expected to be
considered part of the same fund complex as the Company because they
have common or affiliated investment advisers. The number in
parenthesis represents the number of such investment companies or
portfolios thereof.
As of August 26, 1999, the following entities were known by the Capital
Value Fund to own, of record or beneficially, 5% or more of the Capital Value
Fund's outstanding voting securities: Merrill Lynch, Pierce, Fenner & Smith
Incorporated was the record owner of 30.6440%, 20.1190% and 30.5161%,
respectively, of the outstanding Class A, B and C shares of the Capital Value
Fund; and Westcliff Capital Management, USAA Investment Management Co., Key
Trust Co. Trustee FBO David Draper and Freeman Welwood & Co., Inc. FBO William
M. Schwartz, respectively, were the record owners of 46.3361%, 25.0401%,
19.1660% and 7.5770% of the outstanding Class R shares of the Capital Value
Fund.
As of August 16, 1999, the following entities were known by the
Strategy Fund to own, of record or beneficially, 5% or more of the Strategy
Fund's outstanding voting securities: Merrill Lynch, Pierce, Fenner & Smith
Incorporated and NFSC FBO Frida Salvigsen, respectively, were the record holders
of 33.4669% and 5.7757% of the outstanding Class A shares of the Strategy Fund;
Merrill Lynch, Pierce, Fenner & Smith Incorporated and J. C. Bradford & Co.
Custodian FBO David G. Mercer, respectively, were the record owners of 54.0387%
and 25.6013% of the outstanding Class C shares of the Strategy Fund; and Merrill
Lynch, Pierce, Fenner & Smith Incorporated was the record owner of 53.0378% of
the outstanding Class O shares of the Strategy Fund.
The officers and directors of the Company own less than 1% of each
Class of the Funds.
A shareholder who beneficially owns, directly or indirectly, more than
25% of a Fund's voting securities may be deemed a "control person" ( as defined
in the 1940 Act) of the Fund.
INVESTMENT ADVISER
Gabelli Funds, LLC is the Investment Adviser to each Fund and is
responsible for the management of each Fund's investment portfolio. The
Investment Adviser was formed as a New York limited liability company in 1999 as
the successor to the investment management division of Gabelli Group Partners,
Inc., a New York corporation which previously managed the Gabelli mutual fund
operations. The Investment Adviser has served as investment adviser to each of
the Funds since May 22, 2000. The principal business address of the Investment
Adviser is One Corporate Center, Rye, New York 10580-1434.
The Company, on behalf of the Capital Value Fund, and the Strategy
Fund, has engaged the Investment Adviser to provide professional investment
management for each Fund pursuant to separate Investment Advisory Agreements,
dated as of May 22, 2000 between Fund and the Investment Adviser.
The Investment Advisory Agreements provide that the Investment Adviser
will act as investment adviser to each Fund, supervise and manage each Fund's
investment activities on a discretionary basis and oversee the administration of
each Fund's business and affairs. In this connection, the Investment Adviser
will be responsible for maintaining certain of each Fund's books and records and
performing other administrative aspects of each Fund's operations to the extent
not performed by such Fund's custodian, transfer agent and dividend disbursing
agent. The Investment Adviser will be permitted to subcontract at its own
expense these administrative responsibilities to persons it believes are
qualified to perform such services and has subcontracted certain of these
administrative responsibilities to PFPC Inc. (the "Sub-Administrator") pursuant
to a Sub-Administration Agreement (the "Sub-Administration Agreement").
As compensation for the Investment Adviser's services and related
expenses, the Strategy Fund will pay the Investment Adviser a fee computed daily
and payable monthly in an amount equal on an annualized basis to .85% of such
Fund's daily average net assets and the Capital Value Fund will pay the
Investment Adviser a fee computed daily and payable monthly in an amount equal
on an annualized basis to 1.0% of such Fund's daily average net assets. However,
the Investment Adviser agrees in the Investment Advisory Agreement to waive a
portion of each such fee for the first two years to the extent necessary to
maintain expense ratios for the Fund at 1999 levels (other than extraordinary
expenses) with respect to the amount of assets held by the Fund at the time each
Investment Advisory Agreement went into effect, which was $31,205,502 million
for the Strategy Fund and $49,594,859 million for the Capital Value Fund. This
waiver will not apply to (i) assets greater than the amount of assets held by
the Fund at the time the Investment Advisory Agreement goes into effect or (ii)
increases in the Fund's expense ratio attributable to a reduction in assets
after the time the Investment Advisory Agreement goes in effect. As a
consequence, the Fund's expense ratio could increase in certain circumstances
despite the waiver. Based on expense levels for 1999 and current assets as of
December 31, 1999, it is expected that the Investment Adviser would not waive
any fees for the Strategy Fund and would waive 0.19% for the Capital Value Fund.
The Investment Adviser (not the Company or either Fund) will pay the
Sub-Administrator an administration fee based on the aggregate net assets of
each Fund and all other administered funds subject to the Sub-Administration
Agreement of .0275% per annum of net assets up to $10 billion, 0.0125% per annum
of the next $5 billion of net assets, and .01% per annum of net assets above $15
billion.
The Investment Adviser will bear all costs and expenses incurred in
connection with its duties under the Investment Advisory Agreements, including
the fees or salaries of directors or officers of the Company who are affiliated
persons of the Investment Adviser. Subject to the foregoing, each Fund will be
responsible for the payment of all of its expenses including (i) payment of the
fees payable to the Investment Adviser under the Investment Advisory Agreements;
(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 Company's officers and employees, and directors'
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 Company is a member; (x)
the expenses of printing, preparing and mailing proxies, stock certificates and
reports, including the prospectus and statement of additional information, and
notices to shareholders; (xi) filing fees for the registration or qualification
of the Fund as a separate portfolio of an open-end investment company and its
shares under federal or state securities laws; (xii) the fees and expenses
involved in registering and maintaining the 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
Company's directors, officers or employees who are not affiliated persons of the
Investment 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 pursuant to any 12b-1 plan or otherwise legally
payable by the Fund; and (xvii) litigation and other extraordinary or
non-recurring expenses and other expenses properly payable by the Fund.
The Investment Advisory Agreements provide that in the course of the
Investment Adviser's execution of portfolio transactions for the Funds, the
Investment Adviser may, subject to conditions as may be specified by the
Company's Board of Directors, (i) place orders for the purchase or sale of the
Funds' portfolio securities with the Investment 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 Investment Adviser to be useful or
desirable in the performance of its duties thereunder 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 Company 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 Investment Advisory Agreements provide that absent willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under such agreements, the Investment Adviser and its
employees, officers, directors, agents or controlling persons will not be liable
for any act or omission or for any loss sustained by the Company with respect to
either Fund. However, the Investment Advisory Agreements provide that the
Company is not waiving any rights that it may not waive under applicable law.
The Investment Advisory Agreements also provide that the Company, on behalf of
each Fund, will indemnify the Investment 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 New Advisory Agreements 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
applicable Fund (and, in a criminal case, that the person had no reasonable
cause to believe that his or her conduct was unlawful). The Investment Advisory
Agreements provide specific procedures and standards for making advance payments
relating to indemnification and permit the Board of Directors to disallow
indemnification in certain situations.
The Investment Advisory Agreements expressly permit the Investment
Adviser to act as investment adviser to others and provides that the word
"Gabelli" in the Company's and each Fund's name is derived from the name of
Mario J. Gabelli and that such name may freely be used by the Investment Adviser
for other investment companies, entities or products. The New Advisory
Agreements also provide that in the event that the Investment Adviser ceases to
be the Company's investment adviser with respect to the Funds, the Company and
each Fund will, unless the Investment Adviser otherwise consents in writing,
promptly take all steps necessary to change its name to a new name which does
not include "Gabelli."
The New Advisory Agreements are terminable without penalty by the
Company on not more than 60 days' written notice when authorized by the
directors or by the holders of the same proportion of shares required to
authorize the New Advisory Agreements, or by the Investment Adviser on not more
than 60 days' written notice. The New Advisory Agreements will automatically
terminate in the event of their assignment, as defined in the 1940 Act and the
rules thereunder. The New Advisory Agreements provide that unless terminated
they will remain in effect for a period of two years, and from year to year
thereafter, so long as continuation of the New Advisory Agreements is approved
annually by the directors of the Company or the shareholders of the Company and,
in either case, by a majority of the directors who are not parties to the New
Advisory Agreements or "interested persons" as defined in the 1940 Act of any
such person. The New Advisory Agreements also provide that, without the consent
of shareholders, nonmaterial terms of the New Advisory Agreements may be
modified with the approval of a majority of the directors who are not interested
persons of the Company or the Investment Adviser.
TRANSFER AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02108, is the transfer and dividend disbursing agent for each
Fund. Its affiliate, Boston Financial Data Service, Inc. is each Fund's
shareholder servicing agent.
THE DISTRIBUTOR
Gabelli & Company, Inc. (the "Distributor"), One Corporate Center, Rye,
New York 10580-1434, serves as each Fund's distributor pursuant to an agreement
that is renewable annually. The Distributor's ultimate parent is Gabelli Group
Capital Partners Inc., which is controlled by Mario Gabelli. The Distributor
also acts as distributor for other funds in the Gabelli family of funds.
PURCHASE OF FUND SHARES
The Teletransfer Privilege is no longer available. The address and
phone numbers for purchases, sales and other shareholder services are as set
forth in the Supplement dated August 17, 2000 to the Prospectus dated August 28,
1999.
The Automatic asset builder, government direct deposit, payroll savings
and dividend sweep programs are no longer available.
GENERAL INFORMATION
TRANSFER AGENT
State Street Bank and Trust is each Fund's transfer agent.
