Registration Nos. 33-30139 811-5848 UNITED STATES SECURITIES AND
EXCHANGE COMMISSION Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 11 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 X
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THE GABELLI VALUE FUND INC.
(Exact name of Registrant as Specified in Charter)
One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (914) 921-5107
James E. McKee
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective.
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
X on May 1, 1997 pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)(1)
on ________ pursuant to Rule 485(a)(1)
___ 75 days after filing pursuant to Rule 485(a)(2)
___ on ________ pursuant to Rule 485(a)(2)
___ This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
The Registrant previously has filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended (the "1940 Act"). Registrant's Rule 24f-2 Notice for the fiscal year
ended December 31, 1996 was filed on February 28, 1997.
THE GABELLI VALUE FUND INC.
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
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Part A
Item No. Prospectus Captions
1. Cover Page Cover Page
2. Synopsis Prospectus Summary; The Fund's Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover Page; Prospectus Summary; The Fund
and its Investment Policies; Other
Investments; Special Investment Methods;
General Information
5. Management of the Fund Cover Page; Prospectus Summary; The Fund
and its Investment Policies; Management of
the Fund; Purchase of Shares; General
Information
5A. Management's Discussion of Fund Performance Not applicable
6. Capital Stock and Other Securities Prospectus Summary; Dividends,
Distributions and Taxes; General
Information
7. Purchase of Securities Being Offered Prospectus Summary; Purchase of Shares;
Valuation of Shares; General Information
8. Redemption or Repurchase Prospectus Summary; Redemption of Shares
9. Pending Legal Proceedings Not applicable
Part B Statement of Additional
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Policies; Other Investments;
Special Investment Methods; Investment
Restrictions
14. Management of the Fund Directors and Officers; The Adviser
15. Control Persons and Principal Holders of Securities Directors and Officers
16. Investment Advisory and Other Services The Adviser; Sub-Administrator; Directors
and Officers; Distributor; Distribution
Plan; Custodian, Transfer Agent and
Dividend Disbursing Agent; Experts; see
Prospectus - "Management of the Fund"
17. Brokerage Allocation Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities Dividends, Distributions and Taxes;
General Information
19. Purchase, Redemption and Pricing
of Securities Being Offered Redemption of Shares, Net Asset Value
20. Tax Status Dividends, Distributions and Taxes
21. Underwriters Distributor; Distribution Plan
22. Calculation of Performance Data Calculation of Investment Performance
23. Financial Statements Financial Statements
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THE GABELLI VALUE FUND INC.
PART A
THE GABELLI VALUE FUND INC.
PROSPECTUS
May 1, 1997
GABELLI FUNDS, INC.
Investment Adviser
GABELLI & COMPANY, INC.
Distributor
TABLE OF CONTENTS
Page
Prospectus Summary............................................
The Fund's Expenses...........................................
Financial Highlights..........................................
The Fund and its Investment Policies..........................
Other Investments.............................................
Special Investment Methods....................................
Management of the Fund........................................
Purchase of Shares............................................
Redemption of Shares..........................................
Valuation of Shares...........................................
Retirement Plans..............................................
Dividends, Distributions and Taxes............................
Calculation of Investment Performance.........................
General Information...........................................
- ----------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus, the
Additional Statement and in the Fund's official sales literature in
connection with the offering of the Fund's shares, and if given or made,
such information or representation may not be relied upon as
authorized by the Fund its Investment Adviser, Distributor or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy in any
state in which, or to any person to whom, such offer may not be made
lawfully.
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THE GABELLI VALUE FUND INC.
One Corporate Center, Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
Gabelli Funds, Inc.
Investment Adviser
PROSPECTUS May 1, 1997
The Gabelli Value Fund Inc. (the "Fund") is a non-diversified, open-end
management investment company, the investment objective of which is long-term
capital appreciation. The Fund seeks to achieve its objective by investing
primarily in equity securities of companies that the Fund's investment adviser,
Gabelli Funds, Inc. (the "Adviser"), believes are undervalued and that by virtue
of anticipated developments or catalysts particularly applicable to such
companies may, in the Adviser's judgment, achieve significant capital
appreciation. There is no assurance that the Fund's investment objective will be
attained. See "The Fund and its Investment Policies."
A maximum sales load of 5.50% will be imposed on purchases (5.82% of
the amount invested) of Fund shares. The minimum initial investment is $1,000
except for investments made through the Automatic Investment Plan (see "Purchase
of Shares - Automatic Investment Plan"). There is no minimum requirement for
subsequent purchases, although some brokers or dealers may impose their own
minimum requirements. Investments for Individual Retirement Accounts ("IRAs")
have different requirements. See "Retirement Plans." Shareholders may redeem
shares on any day the Fund calculates its net asset value. See "Purchase of
Shares" and "Redemption of Shares."
This Prospectus sets forth concisely the information about the Fund
that prospective investors should know before making an investment decision.
Investors are encouraged to read this Prospectus carefully and retain it for
future reference. Additional information about the Fund is contained in a
Statement of Additional Information ("Additional Statement"), dated May 1, 1997,
that is available upon request and without charge (i) by calling or writing the
Fund at the telephone number or address set forth above, (ii) in the manner
described under "Purchase of Shares" herein or (iii) by contacting the broker
through whom you purchased shares or Gabelli & Company, Inc. ("Gabelli &
Company"). Also, the Additional Statement is available for reference, along with
other materials, on the Securities and Exchange Commission ("SEC") Internet web
site (http://www.sec.gov). The Additional Statement has been filed with the SEC
and is incorporated by reference into this Prospectus in its entirety.
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by any bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other agency. An
investment in the Fund involves investment risks, including the possible loss of
principal.
------------------------
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
================================================================================
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.
The Fund: The Gabelli Value Fund Inc. is a non-diversified, open-end
management investment company which commenced operations on September 29, 1989.
Investment Objective: The Fund's investment objective is long-term capital
appreciation. The Fund seeks to achieve its objective by investing primarily in
equity securities of companies that the Adviser believes are undervalued and
that by virtue of anticipated developments or catalysts particularly applicable
to such companies may, in the Adviser's judgment, achieve significant capital
appreciation. Investment Characteristics and Risks: The Fund may invest
in, among other things, unregistered convertible securities, securities of
issuers involved in corporate reorganizations, warrants, rights, securities of
foreign issuers and forward commitments for securities purchased on a "when
issued" or "delayed delivery" basis. Convertible securities are not typically
rated within the four highest categories by the rating agencies and are,
therefore, not generally considered investment grade. There is no minimum rating
that is acceptable for investment by the Fund; however, it is the Fund's current
operating policy that not more than 35% of the Fund's portfolio will consist of
debt securities considered by the rating agencies, or, if unrated, judged by the
Adviser to be predominantly speculative and involving major risk exposure to
adverse conditions, including securities of issuers in default. The Fund will,
however, limit its investments in securities of issuers in default, which are
included within the 35% limitation, to not more than 5% of its total assets.
These investments may involve special risks. See "Other Investments" in the
Additional Statement. The Fund may also purchase or sell exchange traded
options, engage in certain short sales of securities, enter into repurchase
agreements, lend its portfolio securities to securities broker-dealers or
financial institutions and borrow money for short-term credits from banks as may
be necessary for the clearance of portfolio transactions and for temporary or
emergency purposes. These techniques may also involve special risks. See
"Special Investment Methods."
Management and Fees: The Adviser serves as the Fund's investment adviser
and is paid a monthly fee at an annual rate of 1.00% of the value of the Fund's
average daily net assets for its services. See "Management of the Fund."
How to Purchase Shares: Shares of the Fund may be purchased through certain
registered broker-dealers and from State Street Bank and Trust Company ("State
Street"), the transfer agent for the Fund, or Boston Financial Data Services,
Inc. ("BFDS"), an affiliate of State Street performing shareholder services for
the Fund, at the net asset value per share next determined after receipt of an
order plus the applicable sales charge. A maximum sales charge of 5.50% will be
imposed on purchases (5.82% of the amount invested), subject to reduction based
on the amount of investment. The minimum initial investment is $1,000 except for
investments made through the Automatic Investment Plan for which there is no
initial minimum investment required. See "Purchase of Shares
- - Automatic Investment Plan." The Fund imposes no minimum for subsequent
investments although some registered broker-dealers may impose their own
minimum. Investments through certain retirement plans, however, have different
requirements. See "Retirement Plans."
Distribution Plan: The Fund has adopted a Distribution Plan pursuant
to Rule 12b-1 under the Investment Company Act of 1940, as amended (the "1940
Act"). Under the Plan, the Fund will make monthly payments to certain registered
broker-dealers who enter into agreements with the Fund calculated at the annual
rate of 0.25% of the value of the average daily net assets of the Fund
attributable to outstanding shares of the Fund sold by those broker-dealers.
How to Sell Shares: Shares of the Fund may be redeemed through certain
registered broker-dealers and the Fund's transfer agent by the shareholder at
any time at the net asset value next computed after the redemption request is
received. See "Redemption of Shares."
Dividends and Reinvestment: Dividends and distributions will be automatically
reinvested for each shareholder's account at net asset value in additional
shares of the Fund, unless the shareholder instructs the Fund to pay all
dividends and distributions in cash and to credit the amounts to his or her
brokerage account or to pay the amounts by check. 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. However, the
Fund currently intends to pay dividends at least annually and capital gains
distributions, if any, on an annual basis. See "Dividends, Distributions and
Taxes."
THE FUND'S EXPENSES
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Shareholder Transaction Expenses:
Maximum sales load (as a percentage of offering price) imposed on purchases.......................... 5.50%
Sales load imposed on reinvested dividends........................................................... None
Deferred sales load.................................................................................. None
Redemption fees...................................................................................... None
Exchange fee......................................................................................... None
Annual Fund Operating Expenses (Percent of average daily net assets):
Management fees...................................................................................... 1.00%
Distribution (Rule 12b-1) expenses*.................................................................. 0.25%
Other expenses....................................................................................... 0.15%
----
Total Operating Expenses............................................................................. 1.40%
====
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* As a result of the payment of sales charges and Rule 12b-1 expenses, long
term shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc. ("NASD").
The foregoing table is to assist you in understanding the various costs
and expenses that an investor in the Fund will bear directly or indirectly. The
expenses shown are the levels incurred during the past fiscal year.
Example**
The following example demonstrates the projected dollar amount of total
cumulative expenses that may be incurred over various periods with respect to a
hypothetical investment in the Fund. These amounts are based upon payment by an
investor of an initial sales load at the maximum 5.50% rate and payment by the
Fund of operating expenses at the levels set forth in the table above, and are
also based upon the following assumptions:
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1 3 5 10
year years years years
A shareholder would pay the following expenses on a $1,000 investment,
assuming a 5% annual return and redemption
at the end of each time period.................................... $68 $97 $127 $214
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** The amounts listed in this example should not be considered as
representative of past or future expenses and actual expenses may be
greater or less than those indicated. Moreover, while the example assumes a
5% annual return, the Fund's actual performance will vary and may result in
an actual return greater or less than 5%.
<PAGE>
FINANCIAL HIGHLIGHTS
The following information, insofar as it pertains to each of the five
years in the period ended December 31, 1996, has been audited by Price
Waterhouse LLP, independent accountants, whose unqualified report on this
information appears in the Additional Statement. This table should be read in
conjunction with the financial statements and related notes that are included in
the Additional Statement. Per share amounts for a Fund share outstanding
throughout each period/year ended December 31,
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1996 1995 1994 1993 1992 1991(a) 1990 1989*
---- ---- ---- ---- ---- ------- ---- ----
Operating performance:
Net asset value, beginning of year.......... $11.61 $ 10.49 $ 12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58 $ 9.45
------ ------- ------- ------- ------ ------ ------ ------
Net investment income (loss)................ (0.02) 0.05 0.09 0.05 0.09 0.13 0.45 0.16
Net realized and unrealized gain/(loss) on
investments............................... 1.04 2.30 (0.09) 3.95 1.11 1.17 (0.98) 0.04
---- ----- ------- ----- ----- ----- ------- -----
Total from investment operations............ 1.02 2.35 0.00 4.00 1.20 1.30 (0.53) 0.20
---- ----- ----- ----- ----- ----- ------- -----
Distributions to shareholders from:
Net investment income..................... --- (0.05) (0.09) (0.01) (0.09) (0.19) (0.54) (0.06)
Distributions in excess of net investment income --- --- (0.00)(b) (0.04) --- ---
Net realized gains........................ (1.10) (1.18) (1.50) (1.99) (0.46) (0.14) --- (0.01)
Distributions in excess of net realized gains --- --- (0.01) --- --- ---
------------- ----- -------- ------- ----- -----
Paid in capital............................. (0.01) --- --- --- --- --- --- ---
Total distributions......................... (1.11) (1.23) (1.60) (2.04) (0.55) (0.33) (0.54) (0.07)
====== ======= ======= ======= ======= ======= ======= ======
Net asset value, end of year................ $11.52 $ 11.61 $ 10.49 $ 12.09 $ 10.13 $ 9.48 $ 8.51 $ 9.58
====== ======= ======= ======= ======= ====== ====== ======
Total return **........................... 8.7% 22.5% 0.0% 39.4% 12.7% 15.3% (5.6)% 2.1%
======== ====== ===== ====== ===== ====== ======= =====
Ratios to average net assets/supplemental data:
Net assets, end of year (in 000's).......... $460,836 $486,144 $436,629 $491,193 $423,381 $574,676 $850,685 $1,126,146
Ratio of net investment income/(loss)
to average net assets............ (0.12)% 0.42% 0.73% 0.38% 0.75% 1.43% 4.45% 6.06%+
Ratio of operating expenses to
average net assets...................... 1.40% 1.50% 1.50% 1.53% 1.52% 1.45% 1.39% 1.48%+
Portfolio turnover rate..................... 37.1% 64.6% 66.6% 21.4% 0.1% 16.2% 58.6% 73.3%
Average commission rate
(per share of security) (c)............... $0.0498 N/A N/A N/A N/A N/A N/A N/A
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* The Fund commenced operations on September 29, 1989.
** 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 and does not reflect any applicable
sales charges. Total return for the period of less than one year is not
annualized.
+ Annualized.
(a) Per share amounts have been calculated using the monthly average share
method for the year ended December 31, 1991.
(b) Amount represents less than $0.005 per share.
(c) Average commission rate (per share of security) as
required by amended SEC disclosure requirements effective for fiscal
years beginning after September 1, 1995.
Management's Discussion and Analysis of the Fund's performance during the fiscal
year ended December 31, 1996 is included in the Fund's Annual Report to
Shareholders dated December 31, 1996. The Fund's Annual Report to Shareholders
may be obtained upon request and without charge by writing or calling the Fund
at the address or telephone number listed on the Prospectus cover.
THE FUND AND ITS INVESTMENT POLICIES
The Fund is an open-end, non-diversified management investment company
organized as a corporation under the laws of the State of Maryland on July 20,
1989. The Fund's investment objective is long-term capital appreciation. The
Fund regards its receipt of income as an incidental consideration. The
investment objective is fundamental and may not be changed without the approval
of the holders of a majority of the Fund's outstanding shares. There is, of
course, no guarantee that the Fund will achieve its investment objective. As a
non-diversified investment company, the Fund is not subject to the provisions of
the 1940 Act that otherwise would limit the proportion of its assets that may be
invested in obligations of a single issuer. Consequently, because the Fund may
hold a relatively high proportion of its assets in a limited number of portfolio
companies, an investment in the Fund may, under certain circumstances, present
greater risk to an investor than an investment in a diversified investment
company. The Fund will, however, comply with the diversification requirements
imposed by the Internal Revenue Code of 1986, as amended (the "Code"). For
further information on the Code's diversification requirements, see "Dividends,
Distributions and Taxes" in this Prospectus and in the Additional Statement.
In pursuing the Fund's investment objective, the Adviser seeks
companies that it believes are undervalued and that by virtue of anticipated
developments or catalysts particularly applicable to such companies may, in the
Adviser's judgment, achieve significant capital appreciation. In identifying
such companies, the Adviser seeks to invest in companies that, in the public
market, are selling at a significant discount to their private market value, the
value the Adviser believes informed industrialists would be willing to pay to
acquire companies with similar characteristics. If investor attention is focused
on the underlying asset values of these companies through an emerging or
anticipated development or other catalyst, an investment opportunity to realize
this private market value may exist. Undervaluation of a company can result from
a variety of factors, such as a lack of investor recognition of (1) the
underlying value of a company's fixed assets, (2) the value of a consumer or
commercial franchise, (3) changes in the economic or financial environment
particularly affecting a company, (4) new, improved or unique products or
services, (5) new or rapidly expanding markets, (6) technological developments
or advancements affecting a company or its products, or (7) changes in
governmental regulations, political climate or competitive conditions. The
actual developments or catalysts particularly applicable to a given company that
may, in the Adviser's judgment, lead to significant appreciation of that
company's securities include: a change in management or management policies; the
acquisition of a significant equity position by an investor or group of
investors acting in concert; a merger, reorganization, sale of a division, or a
third-party or issuer tender offer; the spin-off to shareholders of a
subsidiary, division or other substantial assets; or a recapitalization, an
internal reorganization or the retirement or death of a senior officer or
substantial shareholder. In addition to the foregoing factors, developments and
catalysts, the Adviser, in selecting investments, also considers the market
price of the issuer's securities, its balance sheet characteristics and the
perceived strength of its management.
The Fund seeks to achieve its objective by investing primarily in a
portfolio of common stocks, preferred stocks and other securities convertible
into, or exchangeable for, common stocks. When the Adviser believes that a
defensive investment posture is warranted or when opportunities for capital
appreciation do not appear attractive, the Fund may temporarily invest all or a
portion of its assets in short-term money market instruments, such as
obligations of the U.S. Government and its agencies and instrumentalities,
high-quality commercial paper and bank certificates of deposit and time
deposits, repurchase agreements with respect to such instruments, and money
market mutual funds not affiliated with the Fund, Lehman Brothers Inc. ("Lehman
Brothers") or Gabelli & Company.
Further information about the Fund's investment policies, including a list
of those restrictions on the Fund's investment activities that cannot be changed
without shareholder approval, appears in the Additional Statement.
OTHER INVESTMENTS
Corporate Reorganizations
The Fund, consistent with its investment objective and policies of seeking
long-term capital appreciation from securities of companies that, in the public
market, are selling at a significant discount to their private market value, may
invest up to 50% of its total assets in securities for which a tender or
exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or similar reorganization proposal
has been announced ("reorganization securities"). Frequently, the holders of
securities of companies involved in such transactions will receive new
securities ("substituted securities") in exchange therefor. No more than 30% of
the Fund's total assets, however, may be invested in reorganization securities
where the Adviser anticipates selling the reorganization securities or the
substituted securities within six months or less of the initial purchase of the
reorganization securities, except that this limitation will not apply to
reorganization securities that have been purchased to supplement a position in
such securities held by the Fund for more than six months. The principal risk of
this type of investing is that the anticipated offers or proposals may not be
consummated within the time and under the terms contemplated at the time of the
investment, in which case, unless replaced by an equivalent or increased offer
or proposal that is consummated, the Fund may sustain a loss on its investments.
Convertible and Nonconvertible Corporate Obligations
Corporate obligations include securities such as bonds, debentures,
notes or other similar securities issued by corporations. These obligations can
be further subdivided into convertible and nonconvertible securities. Unlike a
nonconvertible corporate obligation, a convertible corporate may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or different issuer within a particular period of time at a
specified price or formula.
The Fund believes that investing in convertible and nonconvertible
corporate obligations is consistent with the Fund's investment objective of
seeking securities of companies that, in the public market, can provide
significant long-term capital appreciation. Due to a variety of factors, it is
possible that the potential for capital gain on a convertible security may be
less than that of the underlying common stock. Convertible securities, however,
are senior to common stock in an issuer's capital structure and are consequently
of higher quality and entail less risk than the issuer's common stock, although
the extent to which the risk is reduced depends in large measure upon a variety
of factors, including the creditworthiness of the issuer and its overall capital
structure.
The Fund may purchase convertible securities or nonconvertible debt
securities without limitation, except that no more than 35% of the Fund's total
assets may be invested in convertible securities or nonconvertible debt
securities having a rating lower than a Standard & Poor's Ratings Service, a
division of McGraw-Hill Companies, Inc. ("S&P"), rating of "CCC", a Moody's
Investors Service, Inc. ("Moody's") rating of "Caa" or, if unrated, judged by
the Adviser to be of comparable quality. However, as a matter of current
operating policy, the Adviser and Fund have agreed that the Fund will not invest
more than 35% of the Fund's total assets in debt securities rated less than
S&P's BBB or the equivalent by other major rating agencies or, if unrated,
judged by the Adviser to be of comparable quality. These debt securities are
predominantly speculative and involve major risk exposure to adverse conditions,
and are often referred to in the financial press as "junk bonds".
The ratings of Moody's and S&P generally represent the opinions of those
organizations as to the quality of the securities that they rate. Such ratings,
however, are relative and subjective, are not absolute standards of quality and
do not evaluate the market risk of the securities. Although the Adviser uses
these ratings as a criterion for the selection of securities for the Fund, the
Adviser also relies on its independent analysis to evaluate potential
investments for the Fund. See Appendix A - "Description of Corporate Bond
Ratings" in the Additional Statement.
Within the Fund's limitation on the purchase of lower-rated and unrated
securities, the Fund may invest up to 5% of its total assets in securities of
issuers in default.
Warrants and Rights
The Fund may invest up to 5% of its net assets in warrants or rights (other
than those acquired in units or attached to other securities) that entitle the
holder to buy equity securities at a specific price for a specific period of
time but will do so only if the equity securities are deemed appropriate by the
Adviser for inclusion in the Fund's portfolio.
Foreign Securities
The Fund may invest up to 25% of its total assets in foreign
securities. Investing in securities of foreign companies and foreign
governments, which generally are denominated in foreign currencies, may involve
certain risk and opportunity considerations not typically associated with
investing in domestic companies and could cause the Fund to be affected
favorably or unfavorably by changes in currency exchange rates and revaluations
of currencies. In addition, less information may be available about foreign
companies than about domestic companies, and foreign companies and foreign
governments generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to domestic companies. Foreign securities and
their markets may not be as liquid as United States securities and their
markets. Securities of some foreign companies may involve greater market risk
than securities of United States companies. Investment in foreign securities may
result in higher expenses than investment in domestic securities because of the
payment of fixed brokerage commissions on foreign exchanges, which generally are
higher than commissions on United States exchanges, and the imposition of
transfer taxes or transaction charges associated with foreign exchanges.
Investment in foreign securities also may be subject to local economic or
political risks, including instability of some foreign governments, the
possibility of currency blockage or the position of withholding taxes on
dividend or interest payments, and the potential for expropriation,
nationalization or confiscatory taxation and limitations on the use or removal
of funds or other assets.
Among the foreign securities in which the Fund may invest are those
issued by companies located in developing countries, which are countries in the
initial stages of their industrialization cycles. Investing in the equity and
debt markets of developing countries involves exposure to economic structures
that are generally less diverse and less mature, and to political systems that
can be expected to have less stability, than those of developed countries. The
markets of developing countries historically have been more volatile than the
markets of the more mature economies of developed countries, but often have
provided higher rates of return to investors. The Fund may also invest in debt
securities of foreign governments.
The Fund may purchase American Depositary Receipts ("ADRs") or U.S.
dollar-denominated securities of foreign issuers that are not included in the
25% foreign securities limitation. ADRs are receipts issued by U.S. banks or
trust companies with respect to securities of foreign issuers held on deposit
for use in the U.S. securities markets. While ADRs may not necessarily be
denominated in the same currency as the securities into which they may be
converted, many of the risks associated with foreign securities may also apply
to ADRs. See "Other Investments -- Investments in Foreign Securities" in the
Additional Statement.
Short-Term Investments
As noted above, in certain circumstances the Fund may invest in
short-term money market instruments such as obligations of the U.S. Government
and its agencies and instrumentalities, high quality commercial paper (rated
"A-1" or better by S&P or "P-1" or better by Moody's) and bank certificates of
deposit and time deposits, and may engage in repurchase agreement transactions
with respect to those instruments.
In addition, the Fund may invest in money market mutual funds not affiliated
with the Fund, Lehman Brothers or Gabelli & Company. The investment policy with
respect to investment companies generally is set forth below under "Other
Investment Companies." Other Investment Companies
The Fund reserves the right to invest up to 10% of its total assets in
the securities of money market mutual funds, which are open-end investment
companies, and closed-end investment companies, including small business
investment companies, none of which are affiliated with the Fund, Lehman
Brothers or Gabelli & Company. Not more than 5% of the Fund's total assets may
be invested in the securities of any one investment company and the Fund may not
own more than 3% of the securities of any investment company.
Investments in Small, Unseasoned Companies and Other Illiquid Securities
The Fund may invest in small, less well-known companies (including
predecessors) which have operated less than three years. The securities of these
kinds of companies may have limited liquidity.
The Fund will not invest, in the aggregate, more than 10% of its net assets
in small, unseasoned companies, securities that are restricted for public sale,
securities for which market quotations are not readily available, repurchase
agreements maturing or terminable in more than seven days and all other illiquid
securities. Securities freely salable among qualified institutional investors
pursuant to Rule 144A under the Securities Act of 1933, as amended (the "1933
Act"), and as adopted by the SEC, may be treated as liquid if they satisfy
liquidity standards established by the Board of Directors. The continued
liquidity of such securities is not as well assured as that of publicly traded
securities, and accordingly, the Board of Directors will monitor their
liquidity.
Risk Factors
There are a number of issues that an investor should consider in evaluating
the Fund. The Fund may invest a substantial portion of its assets in
securities of companies that are involved or may become involved in
extraordinary transactions, including corporate reorganizations. See
"Corporate Reorganizations" above. Certain affiliates of the Adviser in the
ordinary course of their business may acquire for their own account from
time to time securities (including controlling positions) in companies that
may also be suitable investments for the Fund. However, under certain
circumstances the Fund may be precluded by Section 17(d) of the 1940 Act
and Rule 17d-1 thereunder (which regulate joint transactions between an
investment company and its affiliates) from investing in those securities
absent exemptive relief from the SEC. However, while the securities in
which the Fund may invest might therefore be limited to some extent, the
Adviser does not believe that the investment activities of its affiliates
will have a material adverse effect upon the Fund in seeking to achieve its
investment objective. Many companies in the past several years have adopted
so-called "poison pill" and other defensive measures that may have the
effect of limiting the amount of securities in any one issuer that may be
acquired by the Adviser and its affiliates for the account of the Fund and
other investment management clients, discouraging or hindering
non-negotiated offers for a company or possibly preventing the competition
of any such offer. Moreover, the Fund may invest in lower rated securities,
including securities of issuers that are in default. These securities carry
a higher risk of weakened capacity to pay principal and interest when due
and the market to sell such securities may be limited. See "Special
Investment Methods -- Convertible and Nonconvertible Corporate Obligations"
in the Additional Statement. The Fund is a non-diversified investment
company, and, as such, may invest a substantial portion of its assets in a
limited number of portfolio companies. See "The Fund and its Investment
Policies." The Adviser relies to a considerable extent on the expertise of
Mr. Mario J. Gabelli and there is no assurance that a suitable replacement
could be found for him in the event of his death, disability or
resignation. See "Management of the Fund." See "Redemption of Shares."
For further information on the investment policies of the Fund, see
"Investment Policies" and "Other Investments" in the Additional Statement.
SPECIAL INVESTMENT METHODS Borrowing
The Fund may not borrow money except for (1) short-term credits from
banks as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, that would otherwise require the untimely disposition of
the Fund's portfolio securities. Borrowing for any purposes, including
redemptions, may not, in the aggregate, exceed 15% of the value of the Fund's
total assets, and borrowing for purposes other than meeting redemptions
may notexceed 5% of the value of the Fund's total assets at the time
borrowing is made.The Fund will not borrow (leverage) to make additional
investments when anyborrowing remains unpaid. The Fund will not mortgage,
pledge or hypothecate anyof its assets except that, in connection with the
borrowings described above,not more than 20% of the total assets of the
Fund may be used as collateral.
Repurchase Agreements
The Fund may enter into repurchase agreements with primary government
securities dealers recognized by the Federal Reserve Bank of New York and member
banks of the Federal Reserve System that furnish collateral at least equal in
value or market price to the amount of their repurchase obligation. In a
repurchase agreement, the Fund purchases a debt security from a seller who
undertakes to repurchase the security at a specified resale price on an agreed
future date. Repurchase agreements are generally for one business day and
generally will not have a duration of longer than one week. The SEC has taken
the position that, in economic reality, a repurchase agreement is a loan by the
Fund to the other party to the transaction secured by securities transferred to
the Fund. The resale price generally exceeds the purchase price by an amount
which reflects an agreed upon market interest rate for the term of the
repurchase agreement. The primary risk is that, if the seller defaults, the Fund
might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the Fund are less than the
repurchase price. The Adviser will monitor the creditworthiness of the other
parties to the repurchase agreements.
The Fund may not enter into repurchase agreements which would cause
more than 5% of the value of its total assets to be so invested. This percentage
limitation does not apply to repurchase agreements involving U.S. Government
obligations, or obligations of its agencies or instrumentalities, for a period
of a week or less. The term of each of the Fund's repurchase agreements will
always be less than one year and the Fund will not enter into repurchase
agreements of a duration of more than seven days if, taken together with all
other illiquid securities in the Fund's portfolio, more than 10% of its net
assets would be so invested.
Short Sales Against the Box
The Fund may from time to time make short sales of securities it owns
or has the right to acquire through conversion or exchange of other securities
it owns. A short sale is "against the box" to the extent that the Fund
contemporaneously owns or has the right to obtain, at no added cost, securities
identical to those sold short. In a short sale, the Fund does not immediately
deliver the securities sold or receive the proceeds from the sale. The Fund may
not make short sales or maintain a short position if it would cause more than
25% of the Fund's total assets, taken at market value, to be held as collateral
for the sales.
The Fund may make a short sale in order to hedge against market risks
when it believes that the price of a security may decline, causing a decline in
the value of a security owned by the Fund or security convertible into, or
exchangeable for, the security, or when the Fund does not want to sell the
security it owns, because, among other reasons, it wishes to defer recognition
of gain or loss for U.S. federal income tax purposes.
When Issued, Delayed Delivery Securities and Forward Commitments
The Fund may enter into forward commitments for the purchase of
securities. Such transactions may include purchases on a "when issued" or
"delayed delivery" basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and consummation of
a merger, corporate reorganization of debt restructuring, i.e., a when, as and
if issued security. When such transactions are negotiated, the price is fixed at
the time of the commitment, with payment and delivery taking place in the
future, generally a month or more after the date of the commitment. While the
Fund will only enter into a forward commitment with the intention of actually
acquiring the security, the Fund may sell the security before the settlement
date if it is deemed advisable. Securities purchased under a forward commitment
are subject to market fluctuation, and no interest or dividends accrue to the
Fund prior to the settlement date.
Lending of Portfolio Securities
The Fund may lend securities from its portfolio to brokers, dealers and
other financial organizations. This practice is expected to help the Fund
generate revenue to defray certain operating expenses. Loans by the Fund, if and
when made, (1) will be collateralized in accordance with applicable regulatory
requirements and (2) will be limited so that the value of all loaned securities
does not exceed 33% of the value of the Fund's total assets. The current
intention of the Fund, however, is to limit the value of all loaned securities
to no more than 5% of the Fund's total assets. Under extreme circumstances,
there may be a restriction on the Fund's ability to sell the collateral and the
Fund could suffer a loss. See "Special Investment Methods -- Lending of
Portfolio Securities" in the Additional Statement. Derivative Instruments
Options. The Fund may purchase or sell (that is, write) listed options
on securities as a means of achieving additional return or of hedging the value
of the Fund's portfolio. The Fund may write covered call options on common
stocks that it owns or has an immediate right to acquire through conversion or
exchange of other securities in an amount not to exceed 25% of total assets; or
invest up to 10% of its total assets in the purchase of put options on common
stocks that the Fund owns or may acquire through the conversion or exchange of
other securities that it owns. The Fund may only buy options that are listed on
a national securities exchange.
A call option is a contract that gives the holder of the option the
right to buy from the writer (seller) of the call option, in return for a
premium paid, the security underlying the option at a specified exercise price
at any time during the term of the option. The writer of the call option has the
obligation upon exercise of the option to deliver the underlying security upon
payment of the exercise price during the option period.
A put option is a contract that, in return for the premium, gives the
holder of the option the right to sell to the writer (seller) the underlying
security at a special price during the term of the option. The writer of the
put, who receives the premium, has the obligation to buy the underlying security
upon exercise, at the exercise price during the option period.
If the Fund has written an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing an
option of the same series as the option previously written. There can be no
assurance that a closing purchase transaction can be effected when the Fund so
desires.
An option may be closed out only on an exchange that provides a secondary
market for an option of the same series. Although the Fund will generally
purchase or write only those options for which there appears to be an active
secondary market, there is not assurance that a liquid secondary market on an
exchange will exist for any particular option. The Fund will not purchase
options if, as a result, the aggregate cost of all outstanding options exceeds
10% of the Fund's total assets. See "Options" in the Additional Statement.
The Fund may write put and call options on stock indexes for the
purposes of increasing its gross income and protecting its portfolio against
declines in the value of the securities it owns or increases in the value of
securities to be acquired. In addition, the Fund may purchase put and call
options on stock indexes in order to hedge its investments against a decline in
value or to attempt to reduce the risk of missing a market or industry segment
advance. Options or stock indexes are similar to options on specific securities.
However, because options on stock indexes do not involve the delivery of an
underlying security, the option represents the holder's right to obtain from the
writer cash in an amount equal to a fixed multiple of the amount by which the
exercise price exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying stock index on the exercise date.
Therefore, while one purpose of writing such options is to generate additional
income for the Fund, the Fund recognizes that it may be required to deliver an
amount of cash in excess of the market value of a stock index at such time as an
option written by the Fund is exercised by the holder. The writing and
purchasing of options is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. The successful use of protective puts for hedging
purposes depends in part on the Adviser's ability to predict future price
fluctuations and the degree of correlation between the options and securities
markets.
Futures Contracts and Options on Futures. Depending upon market
conditions prevailing at such time and its perceived investment needs, the Fund
may enter into futures contracts and options on futures contracts that are
traded on a U.S. exchange or board of trade. These investments, if any, may be
made by the Fund solely for the purpose of hedging against changes in the value
of its portfolio securities and the aggregate initial margins and premiums
thereon would not constitute more than 5% of the Fund's total assets.
Futures and options on futures entail certain risks, including but not
limited to the following: no assurance that futures contracts or options on
futures can be offset at favorable prices, possible reduction of the Fund's
yield due to the use of hedging, possible reduction in value of both the
securities hedged and the hedging instrument, possible lack of liquidity due to
daily limits on price fluctuations, imperfect correlation between the contracts
and the securities being hedged, and potential losses in excess of the amount
invested in the futures contracts themselves.
For further information on the investment policies of the Fund, see
"Investment Policies" and "Special Investment Methods" in the Additional
Statement.
MANAGEMENT OF THE FUND
Overall responsibility for management and supervision of the Fund rests
with the Fund's Board of Directors.
Investment Adviser - Gabelli Funds, Inc.
Gabelli Funds, Inc. was organized in 1980 and serves as investment adviser
to the Fund. Gabelli Funds, Inc. also serves as the investment adviser to The
Gabelli ABC Fund, The Gabelli Small Cap Growth Fund, The Gabelli Equity Income
Fund, The Gabelli Growth Fund, The Gabelli Asset Fund, The Gabelli Global
Telecommunications Fund, The Gabelli Global Interactive Couch Potato Fund, The
Gabelli Global Convertible Securities Fund, The Gabelli U.S. Treasury Money
Market Fund, Gabelli Gold Fund, Inc., Gabelli Capital Asset Fund and Gabelli
International Growth Fund, Inc. which are open-end investment companies; and The
Gabelli Equity Trust Inc., The Gabelli Convertible Securities Fund Inc. and The
Gabelli Global Multimedia Trust Inc., which are closed-end investment companies;
having aggregate assets as of April 1, 1997, in excess of $4.0 billion. GAMCO
Investors, Inc. ("GAMCO"), an investment adviser for individuals, pension
trusts, profit-sharing trusts and endowments, is a subsidiary of the Adviser
with aggregate assets in excess of $4.9 billion under its management as of April
1, 1997. Teton Advisers LLC, a subsidiary of the Adviser, manages the Westwood
Funds with aggregate assets of approximately $123 million as of April 1, 1997.
The current business address of the Adviser is One Corporate Center, Rye, New
York, 10580-1434.
The Adviser and its affiliates act as investment
advisers to other clients that may invest in the same securities. As a result,
clients of the Adviser and its affiliates hold substantial positions in the same
issuers of securities. If a substantial position in an issuer is held, liquidity
and concentration considerations may limit the ability of the Adviser to add to
the position on behalf of the Fund or other clients or to readily dispose of the
position. Although the availability at acceptable prices of such securities may
from time to time be limited, it is the policy of the Adviser and its affiliates
to allocate purchases and sales of such securities in a manner believed by the
Adviser to be equitable to all clients, including the Fund. The Adviser may on
occasion give advice or take action with respect to other clients that differs
from the actions taken with respect to the Fund. The Fund may invest in the
securities of companies which are investment management clients of GAMCO. In
addition, portfolio companies or their officers or directors may be minority
shareholders of the Adviser or its affiliates.
The Adviser manages the portfolio of the Fund in accordance with the
Fund's stated investment objectives and policies, makes investment decisions for
the Fund, places orders to purchase and sell securities on behalf of the Fund,
and oversees the administration of all aspects of the Fund's business and
affairs, all subject to the supervision and direction of the Directors.
As compensation for its services and the related expenses borne by the
Adviser, the Adviser is paid a fee, computed and payable monthly, equal, on an
annual basis, to 1.00% of the value of the Fund's average daily net assets,
which is higher than that paid by most mutual funds. The Additional Statement
contains further information about the Advisor's agreement with the Fund (the
"Advisory Contract"), including a more complete description of the advisory,
administration and expenses arrangements contained therein.
Mr. Mario J. Gabelli, Chairman of the Board, Chief Executive Officer
and Chief Investment Officer of the Adviser and Chairman of the Board, President
and Chief Investment Officer of the Fund, is responsible for managing the
day-to-day investment operations of the Fund, including the making of investment
decisions. Mr. Gabelli also acts as Chairman of the Board, Chief Executive
Officer and Chief Investment Officer of GAMCO and is an officer or director of
various other companies owned or controlled by the Adviser. Accounts under the
management of the Adviser and GAMCO will tend, subject to differences in
investment objectives and authorized investment practices, to hold many of the
same securities because many of the accounts are under the overall direction of
Mr. Gabelli. In addition to his positions with the Adviser and its subsidiaries,
Mr. Gabelli serves as an officer and/or director of various other companies.
Owing to the diverse nature of Mr. Gabelli's responsibilities with respect to
the Adviser, its subsidiaries and other companies with which he is affiliated,
he will devote less than substantially all of his time to the Fund, although
this is not expected to affect adversely the operations or management of the
Fund. There is no contract of employment between Mr. Gabelli and the Adviser or
any of its subsidiaries and there can be no assurance that a suitable
replacement could be found for him in the event of his death, disability or
resignation.
Sub-Administrator - First Data Investor Services Group, Inc.
First Data Investor Services Group, Inc. (the "Sub-Administrator"), a
subsidiary of First Data Corporation, located at Exchange Place, Boston,
Massachusetts 02109, serves as the Fund's Sub-Administrator.
Pursuant to a sub-administration agreement with the Adviser, the
Sub-Administrator calculates the net asset value of the Fund's shares and
generally assists in all aspects of the Fund's administration and operation. The
Adviser pays the Sub-Administrator an annual fee, based on the value of the
aggregate average daily net assets of all funds under its administration managed
by the Adviser, as follows: up to $1 billion - 0.10%; $1 billion to $1.5 billion
- - 0.08%; $1.5 billion to $3 billion - 0.03%; over $3 billion - 0.02%.
Portfolio Transactions
The Advisory Contract contains provisions relating to the selection of
securities brokers to effect the portfolio transactions of the Fund. Under those
provisions, the Adviser may (1) direct Fund portfolio brokerage to Gabelli &
Company, a broker-dealer affiliate of the Adviser; (2) pay commissions to
brokers other than Gabelli & Company 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 for its investment management of the
Fund and/or other advisory accounts under the management of the Adviser and any
investment adviser affiliated with it; and (3) consider the sales of shares of
the Fund by brokers other than Gabelli & Company as a factor in its selection of
brokers for Fund portfolio transactions. For further information on the Fund's
portfolio and brokerage practices, see "Portfolio Transactions and Brokerage" in
the Additional Statement.
PURCHASE OF SHARES
Purchase of Fund shares may be made through brokerage accounts
maintained through Gabelli & Company or through any other firm with whom the
Fund enters into an arrangement for the distribution of its shares on
substantially identical terms as those agreed upon with Gabelli & Company.
Purchases may also be made through any registered broker-dealer with whom
Gabelli & Company enters into a selling agreement ("Soliciting Broker-Dealers").
Payment for the shares must be made directly to the firm through which the order
was placed or to the Fund's transfer agent. Gabelli & Company may enter into
selling or selected broker-dealer agreements with Soliciting Broker-Dealers
pursuant to which Gabelli & Company may reallow a portion of the sales charge to
Soliciting Broker-Dealers in accordance with the schedule set forth below. The
reallowance to Soliciting Broker-Dealers may be changed at any time by Gabelli &
Company.
Purchases by Mail
Direct purchases for new accounts may be made by completing an
application obtained from Gabelli & Company or a Soliciting Broker-Dealer and
mailing the application to BFDS, with a check for the amount of the investment.
The mailing address of the Fund is The Gabelli Funds, P.O. Box 8308, Boston,
Massachusetts, 02266-8308. Subsequent purchases do not require a completed
application and can be made by mailing a check, as indicated above, or by bank
wire or personal delivery.
<PAGE>
Purchase Price
The minimum investment is $1,000 for initial purchases. There is no minimum
requirement for subsequent purchases, although some brokerage firms may impose
their own minimum requirements. Investments through certain retirement plans and
the Automatic Investment Plan, however, have lower minimum requirements. See
"Retirement Plans" and "Automatic Investment Plan." No maintenance fee will be
charged in connection with any Gabelli & Company brokerage account through which
an investor purchases or holds shares. The Fund will not issue certificates
evidencing Fund shares unless specifically requested by an investor who is a
shareholder of record. For those shareholders who hold certificates, additional
steps must be taken by them, which need not be taken by shareholders who do not
hold certificates, before they can redeem their shares. See "Redemption of
Shares." Shares will be sold at the net asset value next determined after a
purchase order is received as discussed below, plus the applicable sales charge
also described below. The public offering price is subject to a sales charge,
which is imposed in accordance with the following schedule:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Sales Charge Sales Charge Reallowance
as % of the as % of to Soliciting
Amount of Investment Offering Price Amount Invested Broker-Dealers
- -------------------- -------------- --------------- --------------
Less than $100,000................................... 5.50% 5.82% 4.50%
$100,000 but under $250,000.......................... 4.50% 4.71% 3.75%
$250,000 but under $500,000.......................... 3.50% 3.63% 3.00%
$500,000 but under $1 million........................ 2.75% 2.83% 2.50%
$1 million or more................................... 2.00% 2.04% 1.75%
</TABLE>
......Purchase orders for shares received prior to the close of regular
trading on the NYSE (currently 4:00 p.m., New York time), on any day that the
Fund calculates its net asset value, are priced according to the net asset value
determined on that day. Purchase orders received after the close of trading on
the NYSE are priced as of the time the net asset value is next determined. If
shares are purchased through a Soliciting Broker-Dealer, the Soliciting
Broker-Dealer must receive the order before the close of the NYSE and transmit
it to Gabelli & Company by 5:00 p.m., New York time, to receive that day's
public offering price. See "Valuation of Shares." Payment for shares purchased
through a brokerage firm is generally due on the third business day after
purchases are effected (each such day being a "Settlement Date") at the
appropriate net asset value plus the applicable sales charge. The Fund and
Gabelli & Company reserve the right in their sole discretion (1) to suspend the
offering of the Fund's shares and (2) to reject purchase orders when, in the
judgment of the Fund's management, such rejection is in the best interest of the
Fund. Reduced Sales Charges
.........Reduced sales charges are available to investors who are eligible to
combine their purchases of Fund shares to receive volume discounts. Investors
eligible to receive volume discounts are individuals and their immediate
families, tax-qualified employee benefit plans and a trustee or other fiduciary
purchasing shares for a single trust estate or single fiduciary account even
though more than one beneficiary is involved. Investors interested in an
explanation of volume discounts should contact their brokerage firm or Gabelli &
Company. Reduced sales charges are also available under a combined right of
accumulation, under which an investor may combine the value of shares already
held in the Fund along with the value of the Fund shares being purchased, to
qualify for a reduced sales charge. For example, if an investor owns shares of
the Fund that have an aggregate value of $100,000, and makes an additional
investment in the Fund of $4,000, the sales charge applicable to the additional
investment would be 4.50%, rather than the 5.50% normally charged on a $4,000
purchase.
.........By initially investing at least $1,000 in the Fund and submitting
a Letter of Intent to Gabelli & Company, a "single purchaser" may make purchases
of shares of the Fund during a 13-month period at the reduced sales charge rates
applicable to the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days before the date of
the Letter.
......Shares of the Fund may be offered without a sales charge to (1)
employees of Gabelli & Company, Boston Safe Deposit and Trust Company ("Boston
Safe"), State Street, BFDS and the Sub-Administrator and Soliciting
Broker-Dealers, employee benefit plans for those employees and the spouses and
minor children of such employees when orders on their behalf are placed by such
employees (the minimum initial investment for such purchases is $500); (2) the
Adviser, GAMCO, officers, directors, trustees, general partners, directors and
employees of other investment companies managed by the Adviser, employee benefit
plans for such persons and their spouses and minor children when orders on their
behalf are placed by such persons (with no required minimum initial investment),
the term "immediate family" for this purpose refers to a person's spouse,
children and grandchildren (adopted or natural), parents, grandparents,
a spouse's siblings, a sibling's spouse and a sibling's children; (3) any other
investment company in connection with the combination of such company with the
Fund by merger, acquisition of assets or otherwise; (4) shareholders who have
redeemed shares in the Fund and who wish to reinvest their redemption proceeds
in the Fund, provided the reinvestment is made within 30 days of the redemption;
(5) tax-exempt organizations enumerated in Section 501(c)(3) of the Code and
private, charitable foundations that in each case make lump-sum purchases of
$100,000 or more; (6) qualified employee benefit plans established pursuant to
Section 457 of the Code that have established omnibus accounts with the Fund;
(7) qualified employee benefit plans having more than one hundred eligible
employees and a minimum of $1 million in plan assets invested in the Fund (plan
sponsors are encouraged to notify the Fund's distributor when they first satisfy
these requirements); (8) any unit investment trusts registered under the 1940
Act which have shares of the Fund as a principal investment; (9) investment
advisory clients of GAMCO participating in its asset allocation program; (10)
employee participants of organizations adopting the 401(k) Plan sponsored by the
Adviser; (11) financial institutions purchasing shares of the Fund for clients
participating in a fee based asset allocation program or wrap fee program which
has been approved by Gabelli & Company; and (12) registered investment advisers
or financial planners who place trades for their own accounts or the accounts of
their clients and who charge a management, consulting or other fee for their
services; and clients of such investment advisers or financial planners who
place trades for their own accounts if the accounts are linked to the master
account of such investment adviser or financial planner on the books and records
of a broker or agent. Investors who qualify under the categories described above
should contact their brokerage firm or Gabelli & Company.
......When payment is made to a brokerage firm by an investor before a
Settlement Date, unless otherwise directed by an investor, the monies may be
held as a free credit balance in the investor's brokerage account and the
brokerage firm may benefit from the temporary use of these monies. The investor
may designate another use for the monies prior to the Settlement Date, such as
investment in a money market fund. If the investor instructs a brokerage firm to
invest the monies in a money market fund, the amount of the investment will be
included as part of the average daily net assets of both the Fund and the money
market fund, and any affiliates of Gabelli & Company which serve the funds in an
investment advisory, administrative or other capacity will benefit from the fact
that they are receiving fees from both investment companies computed on the
basis of their average daily net assets. The Board of Directors of the Fund is
advised of the benefits to Gabelli & Company resulting from three-day settlement
procedures and will take such benefits into consideration when reviewing the
distribution agreement for continuance.
.........Gabelli & Company imposes no restrictions on the transfer of
shares held by it for clients in "street name" in either certificate or
uncertificated form. Gabelli & Company is an indirect majority-owned subsidiary
of the Adviser. The Fund has agreed to indemnify Gabelli & Company against
certain liabilities, including liabilities arising under the 1933 Act.
Distribution Plan
.........Pursuant to a Distribution Plan (the "Plan") adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act, the Fund will make monthly payments
to registered broker-dealers, including Gabelli & Company, who entered into an
agreement with the Fund (each, a "Designated Dealer") calculated at the annual
rate of 0.25% of the value of the average daily net assets of the Fund
attributable to outstanding shares of the Fund sold by the Designated Dealer
(including additional shares acquired by reinvestment of dividends). Gabelli &
Company, may in turn enter into selling agreements with Soliciting
Broker-Dealers whereby all or a portion of the monthly payments paid to Gabelli
& Company, pursuant to the Plan will be paid by Gabelli & Company, to a
Soliciting Broker-Dealer for activities intended to result in the distribution
of Fund shares as described below.
......Payments under the Plan are not tied exclusively to the distribution
expenses actually incurred by Designated Dealers and such payments may exceed
their distribution expenses. Expenses incurred in connection with the offering
and sale of shares may include, but are not limited to, payments to the
Designated Dealer's (or its affiliates') sales personnel for selling shares of
the Fund; costs of printing and distributing the Fund's Prospectus,
Additional
Statement and sales literature; an allocation of overhead and other Designated
Dealer branch office distribution-related expenses; payments to and expenses of
persons who provide support services in connection with the distribution of
shares of the Fund; and financing costs on the amount of the foregoing expenses.
.........The Board of Directors will evaluate the appropriateness of the
Plan and its payment terms on a continuing basis and in doing so will consider
all relevant factors, including expenses borne by Designated Dealers in the
current year and in prior years and amounts received under the Plan.
Automatic Investment Plan
.........The Fund offers an automatic monthly investment plan, details of
which can be obtained from Gabelli & Company. There is no minimum initial
investment for accounts establishing an automatic investment plan.
REDEMPTION OF SHARES
......Shareholders may redeem their shares on any date the Fund
calculates its net asset value. See "Valuation of Shares." Redemption requests
received by a brokerage firm or the Fund's transfer agent, in proper form, prior
to the close of regular trading on the NYSE will be effected at the net asset
value per share determined on that day. Redemption requests received after the
close of trading on the NYSE will be effected at the net asset value per share
as next determined. The Fund normally transmits redemption proceeds with respect
to redemption requests made through a brokerage firm for credit to the
shareholder's account at no charge within seven days after receipt of a
redemption request or by check directly to the shareholder. Generally, these
funds will not be invested for the shareholder's benefit without specific
instruction, and the brokerage firm will benefit from the use of temporarily
uninvested funds. Redemption proceeds with respect to redemption requests made
through Gabelli & Company normally will be transmitted by the Fund's transfer
agent to the shareholder by check within seven days after receipt of a
redemption request or to a shareholder's brokerage account maintained by Gabelli
& Company. A shareholder who pays for Fund shares by personal check will be
credited with the proceeds of the redemption of those shares only after the
purchases check has cleared, which may take up to 15 days. A shareholder
who anticipates the need for more immediate access to his or her investment
should purchase shares with federal funds, bank wire or by a certified or
cashier's check. Shareholders of the Fund may exchange their shares of the Fund
for shares of certain other funds managed by the Adviser. Upon the exchange,
credit will be given for the sales load previously paid in connection with the
purchase of Fund shares. Please contact Gabelli & Company for additional
information.
.........A Fund account (other than an IRA) that is reduced by a
shareholder to a value of $1,000 or less is subject to redemption by the Fund,
but only after the shareholder has been given at least 30 days in which to
increase the account balance to $1,000 or more.
Redemption through Broker-Dealers
.........Redemption requests may be made through a brokerage firm with
which the shareholder maintains a brokerage account. A shareholder desiring to
redeem Fund shares represented by certificates must also present the
certificates to a brokerage firm endorsed for transfer (or accompanied by an
endorsed stock power), signed exactly as the shares are registered. Redemption
requests involving shares represented by certificates will not be deemed
received until the certificates are received by the Fund's transfer agent in
proper form.
.........Redemption requests made through Gabelli & Company with respect to
uncertificated shares must be in writing addressed to the Fund's transfer agent
at the address and in accordance with the signature guarantee procedures
specified below under "Redemption by Mail" in order to be deemed in proper form
or, if a brokerage account is maintained by a shareholder with Gabelli &
Company, in writing, by telephone or in person. Redemption requests made through
brokerage firms other than Gabelli & Company need to be made in accordance with
that brokerage firm's redemption procedures.
Redemption by Mail
.........Shares held directly at the transfer agent in the name of the
shareholder may be redeemed by submitting a signature guaranteed written request
for redemption to: The Gabelli Funds, Post Office Box 8308, Boston,
Massachusetts 02266-8308.
.........A written redemption request to the Fund's transfer agent must (1)
state the number of shares or dollar amount to be redeemed, (2) identify the
shareholder's account number and (3) be signed by each registered owner exactly
as the shares are registered. If the shares to be redeemed were issued in
certificate form the certificate must be endorsed for transfer or accompanied by
an endorsed stock power and must be submitted to the Fund's transfer agent
together with the redemption request. Any signature appearing on a redemption
request, share certificate or stock power must be guaranteed by a domestic bank,
a savings and loan institution, a domestic credit union, a member bank of the
Federal Reserve System or a member firm of a national securities exchange,
pursuant to the Fund's transfer agent's standards and procedures. The Fund's
transfer agent may require additional supporting documents for redemptions made
by corporations, executors, administrators, trustees or guardians. A redemption
request will not be deemed to be properly received until the Fund's transfer
agent receives all required documents in proper form.
<PAGE>
Redemption by Telephone
......The Fund accepts telephone requests from any investor in a direct
registered account for wire redemption in excess of $1,000 (but subject to a
$25,000 limitation) to a bank predesignated either on the subscription order
form or in a subsequent written authorization with the signature guaranteed. The
Fund accepts signature guaranteed written requests for redemption by bank wire
without limitation. The proceeds are normally wired on the following business
day. The investor's bank must be either a member of the Federal Reserve System
or have a correspondent bank which is a member. Any change to the banking
information made at a later date must be submitted in writing with a signature
guarantee. The Fund will not impose a wire service fee. A shareholder's agent or
the predesignated bank, however, may impose its own service fee on wire
transfers.
.........Requests for telephone redemption must be received between 9:00
a.m. and 4:00 p.m. New York time. If your telephone call is received after this
time or on a day when the NYSE is not open, the request will be processed the
following business day. Shares are redeemed at the net asset value next
determined following your request. Fund shares purchased by check or through the
automatic purchase plan will not be available or redeemed for up to fifteen (15)
days following the purchase. Shares held in certificate form must be returned to
the Transfer Agent for redemption of shares. Telephone redemption is not
available for IRAs.
.........The proceeds of a telephone redemption may be directed to an
account in another mutual fund advised by the Adviser, provided the account is
registered in the redeeming shareholder's name. Such purchase will be made at
the respective net asset value plus applicable sales charge, if any, with credit
for any sales charge previously paid to Gabelli & Company.
.........The Fund and its transfer agent will not be liable for following
telephone instructions reasonably believed to be genuine. In this regard the
Fund and its transfer agent require personal identification information before
accepting a telephone redemption. If the Fund or its transfer agent fails to use
reasonable procedures, the Fund might be liable for losses due to fraudulent
instructions.
Automatic Cash Withdrawal Plan
.........The Fund offers shareholders whose accounts are registered
directly with the transfer agent, an automatic cash withdrawal plan, under which
shareholders who own shares of the Fund with a value of at least $10,000 may
elect to receive periodic cash payments monthly, quarterly or annually.
Automatic cash withdrawals deplete the investor's principal and are treated as
redemptions which may be taxable transactions. Investors contemplating
participation in this automatic cash withdrawal plan should consult their tax
advisers. For further information regarding the automatic cash withdrawal plan,
shareholders should contact Gabelli & Company.
VALUATION OF SHARES
......The Fund's net asset value per share is calculated on each day, Monday
through Friday, except days on which the NYSE is closed. The NYSE is currently
scheduled to be closed on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas 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 is
determined as of the close of regular trading on the NYSE, normally 4:00 p.m.,
New York time, and 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. Further information regarding the Fund's valuation policies is contained
in the Additional Statement under "Net Asset Value."
RETIREMENT PLANS
.........The Fund has available a form of IRA for investment in Fund shares
that may be obtained from Gabelli & Company. 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 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" which give participants the right to
defer portions of their compensation for investment on a tax-deferred basis
until distributions are made from the plans. The minimum initial investments for
all such retirement plans is $250. The minimum for all subsequent investments is
$100.
......Under the Code, individuals may make wholly or partly tax deductible
IRA contributions of up to $2,000 annually, depending on whether they are active
participants in an employer-sponsored retirement plan and on their income level.
However, dividends and distributions held in the account are not taxed until
withdrawn in accordance with the provisions of the Code. An individual with a
non-working spouse may establish a separate IRA for the spouse under the same
conditions and contribute a combined maximum $4,000 annually to both IRAs
provided that no more than $2,000 may be contributed to the IRA of either
spouse.
.........Investors should be aware that they may be subject to penalties or
additional tax on contributions to or withdrawals from IRAs or other retirement
plans which are not permitted by the applicable provisions of the Code. Persons
desiring information concerning investments through IRAs or other retirement
plans should write or telephone their brokerage firm or Gabelli & Company.
DIVIDENDS, DISTRIBUTIONS AND TAXES
......Dividends and distributions will be automatically reinvested for each
shareholder's account at net asset value in additional shares of the Fund,
unless the shareholder instructs the Fund to pay all dividends and distributions
in cash and to credit the amounts to his or her brokerage account or to pay the
amounts by check. Cash distributions to brokerage firm clients are created to a
shareholder's brokerage account or mailed to the investor, at the investor's
election, at the same time dividend reinvestments are made; cash distributions
to clients of Gabelli & Company will be mailed at that time. Dividends from net
investment income and distributions of net realized capital gains earned by the
Fund, if any, will be paid annually. The Fund is subject to a 4% nondeductible
excise tax measured with respect to certain undistributed amounts of ordinary
income and capital gains. If necessary to avoid the application of this tax, and
if in the best interest of shareholders, the Fund's Board of Directors will, to
the extent permitted by the SEC, declare and pay an additional distribution for
the Fund's net investment income and net realized capital gains. 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.
......The Fund has qualified and intends to continue to qualify for tax
treatment as a "Regulated Investment Company" under Subchapter M or the Code to
be relieved of federal income tax on that part of its net investment income and
realized capital gains which it pays out to its shareholders. To qualify, the
Fund must meet certain tests, including distributing at least 90% of its
investment company taxable income, as that term is defined in the Code, and
deriving less than 30% of its gross income from the sale or other disposition of
certain investments held for less than three months (the "90% requirement" and
the "30% requirement"). The loss of such status would result in the Fund being
subject to the regular federal corporate income tax on its taxable income and
gains.
......Dividends from net investment income and distributions of
realized short-term capital gains are taxable to the recipient shareholders as
ordinary income. The Fund's dividends, to the extent derived from dividends
attributable to certain types of stock, will qualify for the dividends received
deduction for corporations. Dividends and distributions declared by the Fund may
also be subject to state and local taxes. Distributions out of long-term capital
gains, of which shareholders will be notified, are taxable to the recipient as
long-term capital gains. Prior to investing in shares of the Fund, prospective
shareholders may wish to consult their tax advisers concerning the federal,
state, local and foreign tax consequences of such an investment. For further
information, see "Dividends, Distributions and Taxes" in the Additional
Statement.
CALCULATION OF INVESTMENT PERFORMANCE
Total Return
.........From time to time, the Fund may advertise its "average annual total
return" over various periods of time. Total return figures show the average
percentage change in value of an investment in the Fund from the beginning date
of the measuring period to the end of the measuring period. These figures
reflect changes in the price of the Fund's shares and assume that any income
dividends and/or capital gains distributions made by the Fund during the period
were reinvested in shares of the Fund. Figures will be given for the recent
one-, five- and ten-year periods, or for the life of the Fund to the extent it
has not been in existence for any such periods, and may be given for other
periods as well, such as on a year-by-year basis. When considering "average"
total return figures for periods longer than one year, it is important to note
that the Fund's annual total return for any one year in the period might have
been greater or less than the average for the entire period. The Fund may also
use "aggregate" total return figures for various periods, representing the
cumulative change in value of an investment in the Fund for the specific period
(again reflecting changes in Fund share prices and assuming reinvestment of
dividends and distributions). Aggregate total return may be calculated either
with or without the effect of the maximum 5.5% sales load and may be shown by
means of schedules, charts, or graphs, and may indicate subtotals of the various
components of total return (that is, change in value of initial investment,
income dividends, and capital gains distributions).
......In reports or other communications to shareholders or in advertising
material, the Fund may compare its performance with that of other mutual funds
as listed in the rankings prepared by Lipper Analytical Services, Incorporated
or similar independent services that monitor the performance of mutual funds or
other industry or financial publications. It is important to note that the total
return figures are based on historical earnings and are not intended to indicate
future performance. The Additional Statement, under "Calculation of Investment
Performance," further describes the method used to determine the Fund's
performance. Shareholders may make inquiries regarding the Fund's total return
figures to Gabelli & Company.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities
.........As a Maryland corporation, the Fund is not required, and does not
intend, to hold regular annual shareholder meetings. It will hold an annual
meeting if Directors are required to be elected under the 1940 Act and may hold
special meetings for the consideration of proposals requiring shareholder
approval such as changing fundamental policies. A meeting will be called to
consider replacing the Fund's Directors upon the written request of the holders
of 10% of the Fund's shares. When matters are submitted for shareholder vote,
each shareholder will have one vote for each full share owned and proportionate,
fractional votes for fractional shares held. Shares of the Fund have equal
rights with respect to voting, dividends and distributions upon liquidation. The
Board of Directors has authority, without a vote of shareholders, to increase
the number of shares the Fund is authorized to issue and to authorize and issue
additional classes of stock by reclassifying unissued shares. There are no
conversion of preemptive rights in connection with any shares of the Fund. All
shares, when issued in accordance with the term of the offering, will be fully
paid and non-assessable.
.........The Fund sends quarterly, semi-annual and annual reports to all
its shareholders which include a list of portfolio securities and the Fund's
financial statements which shall be audited annually.
Custodian, Transfer Agent and Dividend Disbursing Agent
......Boston Safe, a wholly-owned subsidiary of Mellon Bank Corporation, is
located at One Boston Place, Boston, Massachusetts 02108, and acts as custodian
of the Fund's cash and securities generally. State Street acts as the Fund's
transfer agent and dividend disbursing agent for its shares. Boston Financial
Data Services, Inc., an affiliate of State Street, will perform shareholder
servicing for the Fund on behalf of State Street and is located at the BFDS
Building, Two Heritage Drive, Quincy, Massachusetts 02171. Information for
Shareholders
.........All shareholder inquiries regarding administrative procedures
including the purchase and redemption of shares should be directed to your
brokerage firm or to Gabelli & Company, One Corporate Center, Rye, New York
10580-1434. For assistance, call 1-800-422-3554 or 1-800-872-5365.
.........Upon request, Gabelli & Company will provide, without charge, a
paper copy of this Prospectus to investors or their representatives who received
this Prospectus in an electronic format.
......This Prospectus omits certain information contained in the Registration
Statement filed with the SEC. Copies of the Registration Statement including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. The Additional Statement included in
such Registration Statement may be obtained without charge from the Fund or
Gabelli & Company.
<PAGE>
THE GABELLI VALUE FUND INC.
PART B
THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
Statement of Additional Information
May 1, 1997
This Statement of Additional Information ("Additional Statement")
is not a prospectus and is only authorized for distribution when preceded or
accompanied by The Gabelli Value Fund Inc.'s (the "Fund") prospectus, as amended
or supplemented from time to time, dated May 1, 1997 (the "Prospectus").
This Additional Statement contains additional and more detailed
information than that set forth in the Prospectus and should be read in
conjunction with the Prospectus, additional copies of which may be obtained
without charge by calling the Fund at 1-800-GABELLI (800 422-3554), by writing
the Fund at the address set forth above or by contacting the broker through whom
you purchased shares or Gabelli & Company, Inc. Also, this Additional
Statement is available, along with other materials, on the Securities and
Exchange Commission ("SEC") Internet web site (http://www.sec.gov).
TABLE OF CONTENTS Page
Investment Policies..........................................................
Other Investments............................................................
Special Investment Methods...................................................
Investment Restrictions......................................................
Directors and Officers.......................................................
The Adviser..................................................................
Sub-Administrator............................................................
Distributor..................................................................
Distribution Plan............................................................
Portfolio Transactions and Brokerage.........................................
Redemption of Shares.........................................................
Net Asset Value..............................................................
Dividends, Distributions and Taxes...........................................
Calculation of Investment Performance........................................
Counsel......................................................................
Experts......................................................................
Custodian, Transfer Agent and Dividend Disbursing Agent......................
General Information..........................................................
Financial Statements........................................................
Appendix A: Description of Corporate Bond Ratings...........................
INVESTMENT POLICIES
The Fund seeks to achieve its objective by investing primarily in
a portfolio of common stocks, preferred stocks and other securities convertible
into, or exchangeable for, common stocks. In pursuing the Fund's investment
objective, the Fund's investment adviser, Gabelli Funds, Inc. (the "Adviser"),
invests primarily in companies that the Adviser believes are undervalued and
that by virtue of anticipated developments or catalysts particularly applicable
to such companies may, in the Adviser's judgment, achieve significant
appreciation. In identifying such companies, the Adviser seeks to invest in
companies that, in the public market, are selling at a significant discount to
their private market value, the value the Adviser believes informed
industrialists would be willing to pay to acquire companies with similar
characteristics. If investor attention is focused on the underlying asset values
of these companies through an emerging or anticipated development or other
catalyst, an opportunity to realize this private market value may exist. The
Fund may also invest in obligations of the U.S. Government and its agencies and
instrumentalities, corporate bonds, preferred stocks, convertible securities,
foreign securities, corporate reorganizations and/or short-term money market
instruments when deemed appropriate by the Adviser. There is no assurance that
the Fund will achieve its investment objective.
.........The list of restrictions on the Fund's investment activities that
cannot be changed without shareholder approval is set forth below under
"Investment Restrictions."
OTHER INVESTMENTS
Corporate Reorganizations
.........The Fund may invest up to 50% of its total assets in securities for
which a tender or exchange offer has been made or announced and in securities of
companies for which a merger, consolidation, liquidation or reorganization
proposal has been announced. The primary risk of this type of investing is that
if the contemplated transaction is abandoned, revised, delayed or becomes
subject to unanticipated uncertainties, the market price of the securities may
decline below the purchase price paid by the Fund.
.........In general, securities that are the subject of such an offer or
proposal sell at a premium to their historic market price immediately prior to
the announcement of the offer or proposal. The increased market price of these
securities may also discount what the stated or appraised value of the security
would be if the contemplated transaction were approved or consummated. These
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 transactions; 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 these
contingencies requires unusually broad knowledge and experience on the part of
the Adviser that must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offer or as well as the dynamics of the business
climate when the offer or proposal is in progress.
.........Although the Fund limits to 30% of its total assets its investments in
corporate reorganization securities that it expects to hold for less than six
months, such transactions may tend to increase the Fund's portfolio turnover
ratio thereby increasing its brokerage and other transaction expenses as
well as making it more difficult for the Fund to meet the tests for favorable
tax treatment as a "Regulated Investment Company" specified by the Internal
Revenue Code of 1986, as amended (the "Code"). See "Dividends, Distributions and
Taxes." The Adviser intends to select investments of the type described that, in
its view, have a reasonable prospect of capital appreciation that is significant
in relation to both the risk involved and the potential of available alternate
investments. The Adviser will closely monitor the effect of such investments on
the tax qualification tests of the Code.
Convertible Securities
.........A convertible security entitles the holder to exchange the
security for a fixed number of shares of common stock or other equity security,
usually of the same company, at fixed prices within a specified period of time.
A convertible security entitles the holder to receive the fixed income of a bond
or the dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege.
.........A convertible security's position in a company's capital structure
depends upon its particular provisions. In the case of subordinated convertible
debentures, the holders' claims on assets and earnings are subordinated
to the claims of others and are senior to the claims of common shareholders.
.........To the degree that the price of a convertible security rises above its
investment value because of a rise in price of the underlying common stock, it
is influenced more by price fluctuations of the underlying common stock and less
by its investment value. The price of a convertible security that is
supported principally by its conversion value will rise along with any increase
in the price of the common stock, and the price generally will decline along
with any decline in the price of the common stock except that the
convertible security will receive additional support as its price
approaches investment value. A convertible security purchased or held at a time
when its price is influenced by its conversion value will produce a lower yield
than nonconvertible senior securities with comparable investment values.
Convertible securities may be purchased by the Fund at varying price levels
above their investment values and/or their conversion values in keeping with the
Fund's investment objective.
.........Many convertible securities in which the Fund will invest have
call provisions entitling the issuer to redeem the security at a specified time
and at a specified price. This is one of the features of a convertible security
that affects valuation. Calls may vary from absolute calls to provisional calls.
Convertible securities with superior call protection usually trade at a higher
premium. If long-term interest rates decline, the interest rates of new
convertible securities will also decline. Therefore, in a falling interest rate
environment companies may be expected to call convertible securities with high
coupons and the Fund would have to invest the proceeds from such called issues
in securities with lower coupons. Thus, convertible securities with superior
call protection will permit the Fund to maintain a higher yield than issues
without call protection.
Investments in Warrants and Rights
.........Warrants basically are options to purchase equity securities at a
specified price valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. Rights are
similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.
Investments in Foreign Securities
.........The Fund may invest up to 25% of the value of its total assets in
foreign securities (not including American Depositary Receipts ("ADRs")).
Foreign securities investments may be affected by changes in currency rates or
exchange control regulations, changes in governmental administration or economic
or monetary policy (in the United States and abroad) or changed circumstances in
dealings between nations. Dividends paid by foreign issuers may be subject to
withholding and other foreign taxes that may decrease the net return on these
investments as compared to dividends paid to the Fund by domestic corporations.
It should be noted that there may be less publicly available information about
foreign issuers than about domestic issuers, and foreign issuers are not subject
to uniform accounting, auditing and financial reporting standards and
requirements comparable to those of domestic issuers. Securities of some foreign
issuers are less liquid and more volatile than securities of comparable domestic
issuers and foreign brokerage commissions are generally higher than in the
United States. Foreign securities markets may also be less liquid, more volatile
and less subject to government supervision than those in the United States.
Investments in foreign countries could be affected by other factors not present
in the United States, including expropriation, confiscatory taxation and
potential difficulties in enforcing contractual obligations. Securities
purchased on foreign exchanges may be held in custody by a foreign branch of a
domestic bank.
Other Investment Companies
.........The Fund reserves the right to invest up to 10% of its total
assets in the securities of money market mutual funds, which are open-end
investment companies, and closed-end investment companies, including small
business investment companies, none of which are affiliated with the Fund
or Gabelli & Company, Inc. ("Gabelli & Company"). No more than 5% of the
Fund's total assets may be invested in the securities of any one investment
company and the Fund may not own more than 3% of the securities of any
investment company. Money market mutual funds are investment companies that are
regulated under the Investment Company Act of 1940, as amended (the "1940 Act").
As open-end management companies like the Fund, money market mutual funds make
continuous offerings of redeemable shares to the public and stand ready to sell
and redeem these shares daily. Generally speaking, these mutual funds offer
investors the opportunity to invest in a professionally managed diversified
portfolio of short-term debt obligations, including U.S. Treasury bills and
notes and other U.S. Government securities, certificates of deposits, bankers'
acceptances, repurchase agreements and commercial paper. Many of the costs,
including the investment advisory fee, attendant with the operation of money
market mutual funds and other management investment companies are borne by
shareholders; assuming the Fund was a shareholder in a money market mutual fund
(or other management investment company) it, like other shareholders, would bear
its proportionate share of these costs. These costs will be borne indirectly by
shareholders of the Fund resulting in the payment by shareholders of duplicative
fees, including investment advisory fees.
Investments in Small, Unseasoned Companies
.........The securities of small, unseasoned companies may have a limited
trading market, which may adversely affect their disposition and can result in
their being priced lower than what might otherwise be the case. If other
investment companies and investors who invest in these issuers trade the same
securities when the Fund attempts to dispose of its holdings, the Fund may
receive lower prices than what might otherwise be obtained.
SPECIAL INVESTMENT METHODS
Repurchase Agreements
.........The Fund may engage in repurchase agreements as set forth in the
Prospectus. A repurchase agreement is an instrument under which the purchaser
(that is, the Fund) acquires a debt security and the seller agrees, at the time
of the sale, to repurchase the obligation at a mutually agreed upon time and
price, thereby determining the yield during the purchaser's holding period. This
results in a fixed rate of return insulated from market fluctuations during this
period. The underlying securities are ordinarily U.S. Treasury or other
government obligations or high quality money market instruments. The Fund will
require that the value of the underlying securities, together with any other
collateral held by the Fund, always equals or exceeds the amount of the
repurchase obligation of the other party. The Fund's risk is primarily that, if
the seller defaults, the proceeds from the disposition of the underlying
securities and other collateral for the seller's obligation are less than the
repurchase price. If the seller becomes insolvent, the Fund might be delayed in
or prevented from selling the collateral. In the event of a default or
bankruptcy by a seller, the Fund will promptly seek to liquidate the collateral.
To the extent that the proceeds from any sale of the collateral upon a default
in the obligation to repurchase is less than the repurchase price, the Fund will
experience a loss. If the financial institution that is a party to the
repurchase agreement petitions for bankruptcy or becomes subject to the U.S.
Bankruptcy Code, the law regarding the rights of the Fund is unsettled. As a
result, under extreme circumstances, there may be a restriction on the Fund's
ability to sell the collateral and the Fund could suffer a loss.
Convertible and Nonconvertible Corporate Obligations
.........Corporate obligations include securities such as bonds,
debentures, notes or other similar securities issued by corporations. These
obligations can be further subdivided into convertible and nonconvertible
securities. Unlike a nonconvertible corporate obligation, a convertible
corporate obligation may be converted into or exchanged for a prescribed amount
of common stock or other equity security of the same or different issuer within
a particular period of time at a specified price or formula.
.........The Fund believes that investing in convertible and nonconvertible
corporate obligations is consistent with the Fund's investment objective of
seeking securities of companies in the public market that , can provide
significant long-term capital appreciation. For example, an issuer's ability to
repay principal and interest when due may be underestimated by the market; as a
result, that issuer may be required to pay a higher interest rate or its debt
securities may be selling at a lower market price than issuers of similar
strength. When the market recognizes their inherent value, the Fund anticipates
that the price of such securities will appreciate. In the case of convertible
securities, the market's recognition of a company's real value and, in turn, the
market value of its convertible securities, may not occur until some anticipated
development or other catalyst emerges to cause an increase in the market value
of the company's common stock. In the case of any corporate obligation under
evaluation by the Adviser for purchase by the Fund, the receipt of income is an
incidental consideration.
.........The Fund may invest up to 5% of its total assets in securities of
issuers in default. The Fund will invest in securities of issuers in default
only when the Adviser believes that such issuers will honor their obligations or
emerge from bankruptcy protection and the value of these securities will
appreciate. By investing in securities of issuers in default the Fund bears the
risk that such issuers will not continue to honor their obligations nor emerge
from bankruptcy protection or that the value of such securities will not
appreciate.
.........Subsequent to its purchase by the Fund, an issue of securities may
cease to be rated or its ratings may be reduced below the minimum required for
purchase by the Fund. In addition, it is possible that Moody's Investors
Service , Inc. ("Moody's") and Standard & Poor's Ratings Service, a division
of McGraw-Hill Companies, Inc. ("S&P"), might not timely change their ratings of
a particular issue to reflect subsequent events. None of these events will
require the sale of the securities by the Fund, although the Adviser will
consider these events in determining whether the Fund should continue to hold
the securities. To the extent that the ratings given by Moody's or S&P for
securities may change as a result of changes in the ratings systems or due to a
corporate reorganization of Moody's and/or S&P, the Fund will attempt to use
comparable ratings as standards for its investments in accordance with the
investment objectives and policies of the Fund.
.........Low-rated and comparable unrated securities (a) will likely have some
quality and protective characteristics that, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk exposures to
adverse conditions and (b) are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation.
.........While the market values of low-rated and comparable unrated securities
tend to react less to fluctuations in interest rate levels than the market
values of higher-rated securities, the market values of certain low-rated and
comparable unrated securities also tend to be more volatile and sensitive to
individual corporate developments and changes in economic conditions than
higher-rated securities. In addition, low-rated securities and comparable
unrated securities generally present a higher degree of credit risk. Issuers of
low-rated and comparable unrated securities are often highly leveraged and may
not have more traditional methods of financing available to them so that their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. The risk of loss due
to default by such issuers is significantly greater because low-rated and
comparable unrated securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness. The Fund may incur
additional expenses to the extent that it is required to seek recovery upon a
default in the payment of principal or interest on its portfolio holdings. The
existence of limited markets for low-rated and comparable unrated securities may
diminish the Fund's ability to obtain accurate market quotations for purposes of
valuing such securities and calculating its net asset value. Moreover, because
not all dealers maintain markets in all low-rated and comparable unrated
securities, there is no established retail secondary market for many of these
securities and the Fund does not anticipate that those securities could be sold
other than to institutional investors.
.........Fixed-income securities, including low-rated securities and
comparable unrated securities, frequently have call or buy-back features that
permit their issuers to call or repurchase the securities from their holders,
such as the Fund. If an issuer exercises these rights during periods of
declining interest rates, the Fund may have to replace the security with a
lower-yielding security, thus resulting in a decreased return to the Fund.
.........The market for certain low-rated and comparable unrated securities
has experienced a major economic recession. The recession has adversely affected
the value of such securities. Such economic downturn also may affect the ability
of the issuers of such securities to repay principal and pay interest thereon.
Short Sales Against the Box
.........The Fund may sell securities "short against the box." While a short
sale is the sale of a security that the Fund does not own, it is "against the
box" if at all times when the short position is open the Fund owns an equal
amount of securities or securities convertible into, or exchangeable without
further consideration for, securities of the same issue as the securities sold
short.
.........To secure its obligations to deliver the securities sold short, the
Fund will deposit in escrow in a separate account with the Fund's custodian,
Boston Safe Deposit and Trust Company ("Boston Safe"), an amount at least equal
to the securities sold short or securities convertible into, or exchangeable
for, the securities. The Fund may close out a short position by purchasing and
delivering an equal amount of securities sold short, rather than by delivering
securities already held by the Fund, because the Fund may want to continue to
receive interest and dividend payments on securities in its portfolio that are
convertible into the securities sold short.
Options
.........The Fund may, from time to time, purchase or sell (that is, write)
listed call or put options on securities as a means of achieving additional
return or of hedging the value of the Fund's portfolio. A call option is a
contract that, in return for a premium, gives the holder of the option the right
to buy from the writer of the call option the security underlying the option at
a specified exercise price at any time during the term of the option. The writer
of the call option has the obligation, upon exercise of the option, to deliver
the underlying security upon payment of the exercise price during the option
period. A put option is the reverse of a call option, giving the holder the
right to sell the security to the writer and obligating the writer to purchase
the underlying security from the holder.
.........A call option is "covered" if the Fund owns the underlying security
covered by the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if the Fund holds a call on the same security as the call written where
the exercise price of the call held is (1) equal to or less than the exercise
price of the call written or (2) greater than the exercise price of the call
written if the difference is maintained by the Fund in cash, U.S. Government
securities or other high grade short-term obligations in a segregated account
held with its custodian. A put option is "covered" if the Fund maintains cash or
other liquid portfolio securities with a value equal to the exercise
price in a segregated account held with its custodian, or else holds a put on
the same security as the put written where the exercise price of the put held is
equal to or greater than the exercise price of the put written.
.........If the Fund has written an option, it may terminate its obligation
by effecting a closing purchase transaction. This is accomplished by purchasing
an option of the same series as the option previously written. However, once the
Fund has been assigned an exercise notice, the Fund will be unable to effect a
closing purchase transaction. Similarly, if the Fund is the holder of an option
it may liquidate its position by effecting a closing sale transaction. This is
accomplished by selling an option of the same series as the option previously
purchased. There can be no assurance that either a closing purchase or sale
transaction can be effected when the Fund so desires.
.........The Fund will realize a profit from a closing transaction if the price
of the transaction is less than the premium received from writing the option or
is more than the premium paid to purchase the option; the Fund will realize a
loss from a closing transaction if the price of the transaction is more than the
premium received from writing the option or is less than the premium paid to
purchase the option. Since call option prices generally reflect increases in the
price of the underlying security, any loss resulting from the repurchase of a
call option may also be wholly or partially offset by unrealized appreciation of
the underlying security. Other principal factors affecting the market value of a
put or a call option include supply and demand, interest rates, the current
market price and price volatility of the underlying security and the time
remaining until the expiration date.
.........An option position may be closed out only on an exchange which provides
a secondary market for an option of the same series. Although the Fund will
generally purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option. In such event it might not be
possible to effect closing transactions in particular options, so that the Fund
would have to exercise its options in order to realize any profit and would
incur brokerage commissions upon the exercise of call options and upon the
subsequent disposition of underlying securities for the exercise of put options.
If the Fund, as a covered call option writer, is unable to effect a closing
purchase transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise or otherwise covers the position.
.........In addition to options on securities, the Fund may also purchase
and sell call and put options on securities indexes. A stock index reflects in a
single number the market value of many different stocks. Relative values are
assigned to the stocks included in an index and the index fluctuates with
changes in the market values of the stocks. The options give the holder the
right to receive a cash settlement during the term of the option based on the
difference between the exercise price and the value of the index. By writing a
put or call option on a securities index, the Fund is obligated, in return for
the premium received, to make delivery of this amount. The Fund may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.
.........Use of options on securities indexes entails the risk that trading
in the options may be interrupted if trading in certain securities included in
the index is interrupted. The Fund will not purchase these options unless the
Adviser is satisfied with the development, depth and liquidity of the market and
the Adviser believes the options can be closed out.
.........Price movements in the Fund's portfolio may not correlate precisely
with movements in the level of an index and, therefore, the use of options on
indexes cannot serve as a complete hedge and will depend, in part, on the
ability of the Adviser to predict correctly movements in the direction of the
stock market generally or of a particular industry. Because options on
securities indexes require settlement in cash, the Adviser may be forced to
liquidate portfolio securities to meet settlement obligations.
.........The Fund has qualified and intends to continue to qualify as a
"Regulated Investment Company" under the Code. One requirement for such
qualification is that the Fund must derive less than 30% of its gross income
from gains from the sale or other disposition of securities held for less than
three months. Therefore, the Fund may be limited in its ability to engage in
options transactions.
.........Although the Adviser will attempt to take appropriate measures to
minimize the risks relating to the Fund's writing of put and call options, there
can be no assurance that the Fund will succeed in any option-writing program it
undertakes.
Lending of Portfolio Securities
.........Consistent with applicable regulatory requirements, the Fund may lend
its portfolio securities to securities broker-dealers or financial institutions,
provided that the loans are callable at any time by the Fund (subject to the
notice provisions described below), and are at all times secured by cash or cash
equivalents, which are maintained in a segregated account pursuant to applicable
regulations and that are equal to at least the market value, determined daily,
of the loaned securities. The advantage of the loans is that the Fund continues
to receive the income on the loaned securities while at the same time earns
interest on the cash amounts deposited as collateral, which will be invested in
short-term obligations. The Fund will not lend its portfolio securities if the
loans are not permitted by the laws or regulations of any state in which its
shares are qualified for sale and will not lend more than 33% of the value of
its total assets.
.........A loan may generally be terminated by the borrower on one business
day's notice, or by the Fund on five business days' notice. If the borrower
fails to deliver the loaned securities within five days after receipt of notice,
the Fund could use the collateral to replace the securities while holding the
borrower liable for any excess of replacement cost over collateral. As with any
extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities fail
financially. However, loans of portfolio securities will only be made to firms
deemed by the Fund's management to be creditworthy and when the income that can
be earned from the loans justifies the attendant risks. The Board of Directors
will oversee the creditworthiness of the contracting parties on an ongoing
basis. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss in the market price during the loan
period would inure to the Fund. The risks associated with loans of portfolio
securities are substantially similar to those associated with repurchase
agreements. Thus, if the party to whom the loan was made petitions for
bankruptcy or becomes subject to the U.S. Bankruptcy Code, the law regarding the
rights of the Fund is unsettled. As a result, under extreme circumstances, there
may be a restriction on the Fund's ability to sell the collateral and the Fund
could suffer a loss.
.........When voting or consent rights that accompany loaned securities pass to
the borrower, the Fund will follow the policy of calling the loaned securities,
to be delivered within one day after notice, to permit the exercise of such
rights if the matters involved would have a material effect on the Fund's
investment in such loaned securities. The Fund will pay reasonable finder's,
administrative and custodial fees in connection with a loan of its securities.
When Issued, Delayed Delivery Securities and Forward Commitments
.........The commitment for the purchase of a "when, as and if issued
security" will not be recognized in the portfolio of the Fund until the Adviser
determines that issuance of the security is probable. At such time, the Fund
will record the transaction and, in determining its net asset value, will
reflect the value of the security daily. The Fund will also establish at that
time a segregated account with Boston Safe in which it will maintain cash or
liquid portfolio securities at least equal in value to the amount of its
commitments. The Adviser does not believe that the net asset value of the Fund
will be adversely affected by its purchase of securities on this basis.
Futures Contracts and Options on Futures
.........The Fund has authorized the Adviser to enter into futures
contracts that are traded on a U.S. exchange or board of trade, provided,
however, that the Fund will not enter into futures contacts for which the
aggregate initial margins and premiums would exceed 5% of the fair market value
of the Fund's assets. Although the Fund has no current intention of using
options on futures contracts, the Fund may at some future date authorize the
Adviser to enter into options on futures contracts, subject to the limitations
stated in the preceding sentence. These investments will be made by the Fund
solely for the purpose of hedging against changes in the value of its portfolio
securities and in the value of securities it intends to purchase. Such
investments will only be made if they are economically appropriate to the
reduction of risks involved in the management of the Fund. In this regard, the
Fund may enter into futures contracts or options on futures for the purchase or
sale of securities indices or other financial instruments including but not
limited to U.S. Government securities. Futures exchanges and trading in the
United States are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission.
.........A "sale" of a futures contract (or a "short" futures position)
means the assumption of a contractual obligation to deliver the securities
underlying the contract at a specified price at a specified future time. A
"purchase" of a futures contract (or a "long" futures position) means the
assumption of a contractual obligation to acquire the securities underlying the
contract at a specified price at a specified future time. Certain futures
contracts, including stock and bond index futures, are settled on a net cash
payment basis rather than by the sale and delivery of the securities underlying
the futures contracts.
.........No consideration will be paid or received by the Fund upon the
purchase or sale of a futures contract. Initially, the Fund will be required to
deposit with the broker an amount of cash or cash equivalents equal to
approximately 1% to 10% of the contract amount (this amount is subject to change
by the exchange or board of trade on which the contract is traded and brokers or
members of such board of trade may charge a higher amount). This amount is known
as "initial margin" and is in the nature of a performance bond or good faith
deposit on the contract. Subsequent payments, known as "variation margin," to
and from the broker will be made daily as the price of the index or security
underlying the futures contract fluctuates. At any time prior to the expiration
of a futures contract, the portfolio may elect to close the position by taking
an opposite position, which will operate to terminate the Fund's existing
position in the contract.
.........An option on a futures contract gives the purchaser the right, in
return for the premium paid, to assume a position in a futures contract at a
specified exercise price at any time prior to the expiration of the option. Upon
exercise of an option, the delivery of the futures position by the writer of the
option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account attributable to that
contract, which represents the amount by which the market price of the futures
contract exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. The potential loss
related to the purchase of an option on futures contracts is limited to the
premium paid for the option (plus transaction costs). Because the value of the
option purchased is fixed at the point of sale, there are no daily cash payments
by the purchaser to reflect changes in the value of the underlying contract;
however, the value of the option does change daily and that change would be
reflected in the net asset value of the portfolio.
.........As noted above, the Fund may authorize the Adviser to use such
instruments depending upon market conditions prevailing at such time and the
perceived investment needs of the Fund. However, in no event may the Fund enter
into futures contracts or options on futures contracts if, immediately
thereafter, the sum of the amount of margin deposits on the Fund's existing
futures contracts and premiums paid for options would exceed 5% of the value of
the Fund's total assets after taking into account unrealized profits and losses
on any existing contracts. In the event the Fund enters into long futures
contracts or purchases call options, an amount of cash, obligations of the U.S.
Government and its agencies and instrumentalities or other high grade debt
securities equal to the market value of the contract will be deposited and
maintained in a segregated account with the Fund's custodian to collateralize
the positions, thereby insuring that the use of the contract is unleveraged.
INVESTMENT RESTRICTIONS
.........The Fund has adopted the following investment restrictions for the
protection of shareholders that may not be changed without the approval of a
majority of the Fund's shareholders, defined as the lesser of (1) 67% of the
Fund's shares present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (2) more than 50% of
the Fund's outstanding shares. Under these restrictions, the Fund may not:
1. Invest more than 25% of the value of its total assets in any particular
industry (this restriction does not apply to obligations issued or guaranteed by
the U.S. Government or its agencies or instrumentalities);
2. Purchase securities on margin, but it may obtain short-term credits from
banks as may be necessary for the clearance of purchase and sales of portfolio
securities;
3. Make loans of its assets except for: (a) purchasing debt securities, (b)
engaging in repurchase agreements as set forth in the Prospectus, and (c)
lending its portfolio securities consistent with applicable regulatory
requirements and as set forth in the Prospectus;
4. Borrow money except subject to the restrictions set forth in the
Prospectus;
5. Mortgage, pledge or hypothecate any of its assets except that, in
connection with permissible borrowings mentioned in restriction (4) above, not
more than 20% of the assets of the Fund (not including amounts borrowed) may be
used as collateral and that collateral arrangements with respect to the writing
of options or any other hedging activity are not deemed to be pledges of assets
and these arrangements are not deemed to be the issuance of a senior security as
set forth below in restriction (11);
6. Except to the extent permitted by restriction (14) below, invest in any
investment company affiliated with the Fund, Lehman Brothers or Gabelli &
Company, invest more than 5% of its total assets in the securities of any one
investment company, own more than 3% of the securities of any investment company
or invest more than 10% of its total assets in the securities of all other
investment companies;
7. Engage in the underwriting of securities, except insofar as the Fund may
be deemed an underwriter under the Securities Act of 1933, as amended, in
disposing of a portfolio security;
8. Invest, in the aggregate, more than 10% of the value of its net assets
in securities for which market quotations are not readily available, securities
which are restricted for public sale, in repurchase agreements maturing or
terminable in more than seven days and all other illiquid securities;
9. Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
10. Purchase or acquire commodities or commodity contracts except that the
Fund may purchase or sell futures contracts and related options thereon if
thereafter no more than 5% of its total assets are invested in margin and
premiums;
11. Issue senior securities, except insofar as the Fund may be deemed to
have issued a senior security in connection with: (a) borrowing money in
accordance with restriction (4) above, (b) lending portfolio securities, (c)
entering into repurchase agreements, (d) purchasing or selling options
contracts, (e) purchasing or selling futures contracts and related options
thereon, or (f) acquiring when issued or delayed delivery securities and forward
commitments;
12. Sell securities short, except transactions involving selling securities
short "against the box;"
13. Purchase warrants if, thereafter, more than 5% of the value of the
Fund's net assets would consist of such warrants, but warrants attached to other
securities or acquired in units by the Fund are not subject to this restriction;
or
14. Invest in companies for the purpose of exercising control, except
transactions involving investments in investment companies for the purpose of
effecting mergers and other corporate reorganizations involving the Fund and
such other investment companies.
If any percentage limitation is adhered to at the time of an
investment, a later increase or decrease in the percentage of assets resulting
from a change in the values of portfolio securities or in the amount of the
Fund's assets will not constitute a violation of such restriction. In order to
permit the sale of the Fund's shares in certain states, the Fund may make
commitments more restrictive than the investment restrictions described above.
DIRECTORS AND OFFICERS
The Directors and principal officers of the Fund, their ages, and their
principal occupations for the past five years, are listed below. Unless
otherwise specified, the address of each such person is One Corporate Center,
Rye, New York 10580-1434. Directors deemed to be "interested persons" of the
Fund for purposes of the 1940 Act are indicated by an asterisk.
Name, Address, Age and Principal Occupations During Last Five
Position(s) with Fund Years; Affiliations with the Adviser
<TABLE>
<CAPTION>
<S> <C>
Mario J. Gabelli, CFA,* 54 Chairman of the Board, Chief Executive Officer and Chief
Chairman, President and Investment Officer of Gabelli Funds, Inc. and of GAMCO Investors,
Chief Investment Officer Inc.; Chairman of the Board, President and Chief Investment Officer
of Gabelli Capital Series Fund, Inc., The Gabelli Equity Trust Inc.
and The Gabelli Global Multimedia Trust Inc.; President, Director
and Chief Investment Officer of Gabelli Global Series Funds, Inc.,
Gabelli Investor Funds, Inc., Gabelli Equity Series Funds, Inc. and
The Gabelli Convertible Securities Fund, Inc.; Trustee of The
Gabelli Asset Fund and The Gabelli Growth Fund; President and
Trustee of The Gabelli Money Market Funds; Director of Gabelli Gold
Fund, Inc., Gabelli International Growth Fund, Inc. and The
Treasurer's Fund, Inc.; and Chairman and Chief Executive Officer of
Lynch Corporation.
Bill Callaghan, 53 President of Bill Callaghan Associates Ltd., an executive search
Director company. Director of The Gabelli Equity Trust Inc. and The Gabelli
Global Multimedia Trust Inc.
Felix J. Christiana, 71 Formerly Senior Vice President of Dry Dock Savings Bank in White
Director Plains, New York. Director of Gabelli Global Series Funds, Inc.,
The Gabelli Equity Trust Inc., The Gabelli Global Multimedia Trust
Inc., The Gabelli Convertible Securities Fund, Inc., Gabelli Equity
Series Funds, Inc. and The Treasurer's Fund, Inc. and Trustee of The
Gabelli Asset Fund and The Gabelli Growth Fund.
Anthony J. Colavita, 61 President and Attorney at Law in the law firm of Anthony J.
Director Colavita, P.C.; Director of Gabelli Equity Series Funds, Inc.,
Gabelli Global Convertible Securities Fund, Inc., Gabelli
Investor Funds, Inc., The Gabelli Convertible Securities Fund, Inc.,
Gabelli Gold Fund, Inc., Gabelli Capital Series Funds, Inc. and The
Treasurer's Fund, Inc.; and Trustee of The Gabelli Asset Fund,
The Gabelli Growth Fund, The Gabelli Money Market Funds and The
Westwood Funds.
Robert J. Morrissey, 56 Partner in the law firm of Morrissey Hawkins; Former partner in the
Director law firm of Withington Cross Park & Groden. Director of Gabelli
Equity Series Funds, Inc.
Karl Otto Pohl, *+ 67 Managing Partner of Sal Oppenheim Jr. & Cie. (private investment
Director bank); Board Member of IBM World Trade Europe/Middle East/Africa
Corp.; Bertlesman AG; Zurich Versicherungs - Gesellschaft
(insurance); the International Advisory Board of General Electric
Company; the International Advisory Board of JP Morgan & Co.;
Supervisory Board Member of Royal Dutch ROBECo/o Group (petroleum
company); Advisory Director of Unilever N.V. and Unilever
Deutschland; Director or Trustee of all Funds advised by Gabelli
Funds, Inc.; and Director of The Treasurer's Fund, Inc.
Anthony R. Pustorino, CPA, 71 Certified Public Accountant. Professor of Accounting, Pace
Director University; Director of The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Gabelli Convertible Securities
Fund, Inc., Gabelli Equity Series Funds, Inc., Gabelli Capital
Series Funds, Inc. and The Treasurer's Fund, Inc.; and Trustee of
The Gabelli Asset Fund and The Gabelli Growth Fund
Bruce N. Alpert, 45 Vice President, Treasurer and Chief Operating Officer of the
Chief Operating Officer, Investment Advisory Division of the Adviser, Vice President and
Vice President and Treasurer Treasurer of The Gabelli Equity Trust Inc., The Gabelli Convertible
Securities Fund, Inc., Gabelli Equity Series Funds, Inc., Gabelli
Investor Funds, Inc., Gabelli Global Series Funds, Inc., Gabelli
Capital Series Funds, Inc., Gabelli International Growth Fund,
Inc., The Gabelli Money Market Funds and The Gabelli Global
Multimedia Trust Inc.; President and Treasurer of The Gabelli Asset
Fund and The Gabelli Growth Fund; Manager of Teton Advisers LLC; and
Vice President of The Westwood Funds.
James E. McKee, 33 Vice President and General Counsel of GAMCO Investors, Inc. since
Secretary 1993 and of Gabelli Funds, Inc. since August 1995; Secretary of all
Funds advised by Gabelli Funds, Inc. and Teton Advisers LLC since
August 1995; Branch Chief with the SEC in New York (1992-1993); Staff
attorney with the SEC in New York(1989-1992)
</TABLE>
- ---------------------
+ Mr. Pohl receives fees from the Adviser but has no obligation to provide
any services to the Adviser. Although this relationship does not appear to
require designation of Mr. Pohl as an interested person, the Fund is
currently making such designation in order to avoid the possibility that
Mr. Pohl's independence would be questioned.
Remuneration. No director, officer or employee of Gabelli & Company,
or the Adviser or of any affiliate of Gabelli & Company, or the
Adviser will receive any compensation from the Fund for serving as an officer or
director of the Fund. The Fund pays each of its Directors who is not a director,
officer or employee of the Adviser or any of their affiliates, $10,000 per annum
plus $1,000 per meeting attended and reimburses each Director for related travel
and out-of-pocket expenses. The Fund also pays each Director serving as Chairman
of the Audit, Investment, Proxy or Nominating Committees $2,500 per annum. For
the year ended December 31, 1996 , such fees totaled $90,613 .
Mr. Morrissey (Chairman) and Mr. Callaghan are members of the Fund's
Investment Committee. The Investment Committee reviews investment related
matters as needed.
Each Director serves as a director or trustee of certain other mutual
funds for which Gabelli Funds, Inc. serves as Adviser and Gabelli & Company
serves as Distributor. As of April 1, 1997 , as a group the Directors and
officers of the Fund owned less than 1% of the outstanding shares of common
stock of the Fund.
The following table sets forth certain information regarding the
compensation of the Fund's Directors and officers. Except as disclosed below, no
executive officer or person affiliated with the Fund received compensation in
excess of $60,000 from the Fund for the fiscal year ended December 31,
1996 .
Compensation Table
<TABLE>
<CAPTION>
<S> <C> <C>
Total Compensation
from the Fund and
Aggregate Compensation from the Fund Complex
Name of Person and Position Fund paid to Directors*
Mario J. Gabelli $0 $0
Chairman of the Board
Bill Callaghan $14,000 $34,500 (3)
Director
Felix J. Christiana $14,000 $74,000 (9)
Director
Anthony J. Colavita $16,500 $70,000 (12)
Director
Robert J. Morrissey $15,500 $24,500 (3)
Director
Karl Otto Pohl $13,000 $77,760 (14)
Director
Anthony R. Pustorino $19,000 $84,500 (9)
Director
</TABLE>
- -----------------------------------
* Represents the total compensation paid to such persons during the fiscal
year ending December 31, 1996 by investment companies (including the Fund)
from which such person receives compensation that are part of the same fund
complex as the Fund because they have common or affiliated investment
advisers. The number in parentheses represents the number of such
investment companies.
THE ADVISER
The Adviser is a New York corporation organized in 1980 with principal
offices located at One Corporate Center, Rye, New York 10580-1434. The
Investment Advisory Division of the Adviser also serves as investment adviser
to: The Gabelli Equity Trust Inc., The Gabelli Convertible Securities Fund Inc.
and The Gabelli Global Multimedia Trust Inc., which are closed-end investment
companies; and The Gabelli Growth Fund, The Gabelli Asset Fund, The Gabelli
Small Cap Growth Fund, The Gabelli Equity Income Fund, The Gabelli U.S. Treasury
Money Market Fund, The Gabelli ABC Fund, The Gabelli Global Telecommunications
Fund, The Gabelli Global Interactive Couch Potato(R) Fund, The Gabelli Global
Convertible Securities Fund, Gabelli Gold Fund, Inc., Gabelli Capital Asset Fund
and Gabelli International Growth Fund, which are open-end investment companies.
The Adviser is a registered investment adviser under the Investment Advisers Act
of 1940, as amended.
The Adviser currently serves as investment adviser to the Fund pursuant
to an investment advisory agreement dated March 1, 1994 (the "Advisory
Agreement"), which was most recently approved by the Fund's Board of
Directors, including a majority of the Directors who are not "interested
persons" of the Fund, at a Board Meeting held on February 26, 1997 .
Pursuant to the Advisory Agreement, the Fund employs the Adviser to act as its
investment adviser and to oversee the administration of all aspects of the
Fund's business affairs and to provide, or arrange for others whom it believes
to be competent to provide certain services. The Adviser generally is
responsible for the investment and management of the Fund's assets, subject to
and in accordance with the Fund's investment objective, policies, and
restrictions as stated in the Prospectus and herein. In discharging its
responsibility, the Adviser determines and monitors the investments of the Fund.
In addition, the Adviser has full authority to implement its determinations by
selecting and placing individual transactions on behalf of the Fund.
Under the Advisory Agreement, the Adviser also provides or arranges for
the following services: (i) maintains 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 or dividend disbursing agent; (ii) transmitting purchase and redemption
orders for Fund 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 redemption; (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 Prospectus (including its Additional
Statement ); (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 Directors as well as minutes of such
meetings in all matters required by applicable law to be acted upon by the Board
of Directors.
The Advisory Agreement provides that, absent willful misfeasance, bad
faith, gross negligence or reckless disregard of duty, the Adviser shall not be
liable to the Fund for any error of judgment or mistake of law or for any loss
sustained by the Fund. The Fund has agreed by the terms of the Advisory
Agreement that the word "Gabelli" in its name is derived from the name of the
Adviser that in turn is derived from the name of Mario J. Gabelli; that the name
is the property of the Adviser for copyright and other purposes; and that,
therefore, the name may freely be used by the Adviser for other investment
companies, entities or products. The Fund has further agreed that in the event
that for any reason, the Adviser ceases to be its investment adviser, the Fund
will, unless the Adviser otherwise consents in writing, promptly take all steps
necessary to change its name to one which does not include "Gabelli."
The Advisory Agreement is terminable without penalty by the Fund on
sixty days' written notice when authorized either by majority vote of its
outstanding voting shares or by vote of a majority of its Board of Directors, or
by the Adviser on sixty days' written notice, and will automatically terminate
in the event of its "assignment" as defined by the 1940 Act. The Advisory
Agreement provides that, unless terminated, it will remain in effect from year
to year as long as such continuance is annually approved by the Board of
Directors or by majority vote of its outstanding voting shares and, in either
case, by a majority vote of the Directors who are not parties to the Advisory
Agreement or "interested persons," as defined by the 1940 Act, of any such party
cast in person at a meeting called specially for the purpose of voting on the
continuance of the Advisory Agreement.
As compensation for its services and the related expenses borne by the
Adviser, the Adviser is paid a fee computed and payable monthly, equal, on an
annual basis, to 1.00% of the value of the Fund's average daily net assets,
which is higher than that paid by most mutual funds. For the fiscal years ended
December 31, 1994, December 31, 1995 and December 31, 1996, the Fund paid
investment advisory fees to the Adviser amounting to $4,613,924, $4,750,908 and
$4,983,647 , respectively.
SUB-ADMINISTRATOR
First Data Investor Services Group, Inc. (the "Sub-Administrator"), a
subsidiary of First Data Corporation, serves as Sub-Administrator to the Fund
pursuant to a Sub-Administration Agreement with the Adviser (the
"Sub-Administration Agreement"). Under the Sub-Administration Agreement, the
Sub-Administrator (a) assists in supervising all aspects of the Fund's
operations except those performed by the Adviser under its advisory agreement
with the Fund; (b) supplies the Fund with office facilities (which may be in the
Sub-Administrator's own offices), statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including, but not
limited to, the calculation of the net asset value of shares in the Fund,
internal auditing and legal services, internal executive and administrative
services, and stationery and office supplies; (c) prepares and distributes
materials for all Fund Board of Directors' 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 Code, and the Fund's investment restrictions; (g) furnishes to
the Adviser such statistical and other factual information and information
regarding economic factors and trends as the Adviser from time to time may
require; and (h) generally provides all administrative services that may be
required for the ongoing operation of the Fund in a manner consistent with the
requirements of the 1940 Act.
For the services it provides, the Advisor pays the Sub-Administrator an
annual fee based on the value of the aggregate average daily net assets of all
funds under its administration managed by the Adviser as follows: up to $1
billion - 0.10%; $1 billion to $1.5 billion - 0.08%; $1.5 billion to $3 billion
- - 0.03%; over $3 billion - 0.02%.
DISTRIBUTOR
The Fund has entered into a distribution agreement with Gabelli &
Company and may enter into substantially identical arrangements with other
firms. Gabelli & Company is a New York corporation which is a subsidiary of the
Adviser and has its principal offices at One Corporate Center, Rye, New York
10580). Gabelli & Company solicits offers for the purchase of shares of the Fund
on a best efforts basis. Expenses normally attributable to the sale of Fund
shares which are not paid by the Fund (see "Distribution Plan" and "Management
of the Fund" in the Prospectus) are paid by Gabelli & Company. Gabelli & Company
may enter into selling agreements with registered broker-dealers ("Soliciting
Broker-Dealers") pursuant to which Gabelli & Company may reallow the sales
charge to Soliciting Broker-Dealers in accordance with the schedule set forth in
the Prospectus under "Purchase of Shares."
For the fiscal years ended December 31, 1994, December 31, 1995, and
December 31, 1996, commissions (sales charges) on sales of the Fund's shares
received by Gabelli & Company were $200,857, $336,808, and $227,803,
respectively .
DISTRIBUTION PLAN
The Fund has adopted a plan of distribution (the "Plan") pursuant to
Rule 12b-1 under the 1940 Act. Under its terms, the Plan remains in effect so
long as its continuance is specifically approved at least annually by vote of
the Fund's Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Fund ("Independent Directors"). The Plan may
not be amended to increase materially the amount to be spent for the services
provided by the Designated Dealers thereunder without shareholder approval, and
all material amendments of the Plan must also be approved by the Directors in
the manner described above. The Plan may be terminated at any time, without
penalty, by vote of a majority of the Independent Directors, or by a vote of a
majority of the outstanding voting securities of the Fund (as defined in the
1940 Act). Under the Plan, Designated Dealers will provide the Directors
periodic reports of amounts expended under the Plan and the purpose for which
such expenditures were made. For the fiscal year ended December 31, 1996 ,
the Fund made aggregate distribution payments of approximately $1,245,912
to Designated Dealers pursuant to the Plan. Such payments included payments of
approximately $__________ for support services, $___________ to
sales personnel of Designated Dealers, $___________ for advertising
expenses and $____________ for printing and mailing expenses and also
payments of $_________ to selected dealers. For a more complete
description of the Plan, see "Distribution Plan" in the Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, 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 at reasonable expense ("best execution"). Transactions on U.S. stock
exchanges involve the payment of negotiated brokerage commissions, which may
vary among different brokers. Transactions in securities other than those for
which a securities exchange is the principal market are generally
executed through the principal market maker. However, such transactions
may be effected through a brokerage firm and a commission 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. Option 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 a concession or
discount.
The Adviser and its affiliates currently serve as investment adviser to
a number of investment companies and private account clients and may in the
future act as advisers to others. It is the policy of the Adviser and its
affiliates to allocate investments suitable and appropriate for each such client
in a manner believed by the Adviser to be equitable to each client. 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 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 following table sets forth certain information regarding the Fund's
payment of brokerage commissions to Gabelli & Company and Keeley Investment
Corp. ("Keeley"). A significant shareholder of Keeley is a director of a company
that is an affiliate of the Adviser:
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Year Ended
December 31, Commissions Paid
Total Brokerage Commissions 1994 $622,746
1995 $554,829
1996 $446,848
Commissions paid to Gabelli & Company 1994 $25,912
1995 $118,214
1996 $110,275
Commissions paid to Keeley Investment Corp. 1994 $9,415
1995 $5,800
1996 $5,110
% of Total Brokerage Commissions paid to Gabelli & Company 1996 24.7%
% of Total Brokerage Commissions paid to Keeley Investment Corp. 1996 1.1%
% of Total Transactions involving Commissions paid to 1996 24.8%
Gabelli & Company
% of Total Transactions involving Commissions paid to 1996 1.0%
Keeley Investment Corp.
</TABLE>
.........The policy of the Fund regarding purchases and sales of securities
and options for its portfolio is that primary consideration will be given to
obtaining best execution. The Adviser may also 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, as amended . In doing so,
the Fund may also pay higher commission rates than the lowest available to
obtain brokerage and research services provided by the broker effecting the
transaction for the Fund and for other advisory accounts over which the Adviser
or its affiliates exercise investment discretion. These 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 investments; wire services; and appraisals
or evaluations of portfolio securities. Since it is not feasible to do so, the
Adviser does not attempt to place a specific dollar value on such services or
the portion of the commission which reflects the amount paid for such services
but must be prepared to demonstrate a good faith basis for its determination.
.........Investment research obtained by allocations of Fund brokerage is used
to augment the scope and supplement the internal research and investment
strategy capabilities of the Adviser but does not reduce the overall expenses of
the Adviser to any material extent. Such investment research may be in written
form or through direct contact with individuals and includes information on
particular companies and industries as well as market, economic or institutional
activity areas. Research services furnished by brokers 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 their
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.
.........Neither the Fund nor the Adviser has any agreement or legally
binding understanding with any broker 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, the
Adviser does consider the level of services provided and, based on such
determinations, has allocated brokerage commissions of $446,848 on
portfolio transactions in the principal amounts of $302,528,151 during
1996 . The average commission on these transactions was $0.0498 per
share.
.........The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company or an affiliate of the Adviser, when it
appears that 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 Directors has adopted "Procedures"
that provide that the commissions paid to Gabelli & Company or affiliated
brokers on stock exchange transactions must be consistent with those charged by
such firms in similar transactions to unaffiliated clients that are comparable
to the Fund. Rule 17e-1 under the 1940 Act and the Procedures contain
requirements that the Board, including those directors who are not "interested
persons" of the Fund, conduct periodic compliance reviews of such brokerage
allocations and the Procedures to determine their continuing appropriateness.
The Adviser is also required to furnish reports and maintain records in
connection with the reviews.
.........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 the
Designated Order Turnaround System of the NYSE. These transactions are
then cleared, confirmed to the Fund for the account of Gabelli & Company, and
settled directly with the custodian of the Fund by a clearing house member firm
which remits the commission less its clearing charges to Gabelli & Company.
Pursuant to an agreement with the Fund, Gabelli & Company pays all charges
incurred for these services and reports at least quarterly to the Board of
Directors the amount of the expenses and commissions for its brokerage services,
which is subject to review and approval of the Board of Directors including
those directors who are not "interested persons" of the Fund. Gabelli & Company
may also effect Fund portfolio transactions in the same manner and pursuant to
the same arrangements on other national securities exchanges that adopt direct
access rules similar to those of the NYSE. In addition, Gabelli & Company may
directly execute transactions for the Fund on the floor of any exchange,
provided: (i) the Board of Directors has expressly authorized Gabelli & Company
to effect such transactions; and (ii) Gabelli & Company annually advises the
Fund of the aggregate compensation it earned on such transactions.
......... The Fund's portfolio turnover rate for the fiscal years ended
December 31, 1995 and December 31, 1996 were 64.6% and 37.15%, respectively.
REDEMPTION OF SHARES
.........Payment of the redemption price for shares redeemed may be made either
in cash or in portfolio securities (selected in the discretion of the Board of
Directors of the Fund and taken at their value used in determining the Fund's
net asset value per share as described below under "Net Asset Value"), partly in
cash and partly in portfolio securities. However, payments will be made wholly
in cash unless the Board of Directors believes that economic conditions exist
which would make such a practice detrimental to the best interests of the Fund.
If payment for shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the securities to
cash. The Fund will not distribute in-kind portfolio securities that are not
readily marketable. The Fund has filed a formal election with the SEC pursuant
to which the Fund will only effect a redemption in portfolio securities where
the particular shareholder of record is redeeming more than $250,000 or 1% of
the Fund's total net assets, whichever is less, during any 90 day period. In the
opinion of the Fund's management, however, the amount of a redemption request
would have to be significantly greater than $250,000 or 1% of total net assets
before a redemption wholly or partly in portfolio securities was made.
.........Cancellation of purchase orders for Fund shares (as, for example, when
checks submitted to purchase shares are returned unpaid) causes a loss to be
incurred when the net asset value of the Fund shares on the date of cancellation
is less than on the original date of purchase. The investor is responsible for
the loss, and the Fund, to the extent permissible by law, may reimburse itself
or Gabelli & Company for the loss by automatically redeeming shares from any
account registered at any time in that shareholder's name, or by seeking other
redress. In the event shares held in the account of the shareholder are not
sufficient to cover such loss, Gabelli & Company will promptly reimburse the
Fund for the amount of such unrecovered loss.
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 as of which such
value is being determined. If there has been no sale on such day, the
securities are valued at the mean 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 Directors shall determine in
good faith to reflect its fair market value, although the actual calculation
may be done by others. Options are priced at 4:15 p.m. and are generally valued
at the last sale price or, in the absence of a last sale price, the last offer
price. 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 Directors 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 Directors shall determine in
good faith to reflect its fair market value.
.........Portfolio securities traded on more than one national securities
exchange or market are valued according to the broadest and most representative
market as determined by the Adviser. Securities traded primarily on foreign
exchanges are valued at the closing price on such foreign exchange immediately
prior to the close of the NYSE.
......... United States Government obligations and other debt instruments
having 60 days or less remaining until maturity are stated at amortized
cost. 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 Directors . 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 Directors designed to reflect in good
faith the fair value of such securities.
.........
DIVIDENDS, DISTRIBUTIONS AND TAXES
General
.........Dividends and distributions will be automatically reinvested for
each shareholder's account at net asset value in additional shares of the Fund,
unless the shareholder instructs the Fund to pay all dividends and distributions
in cash and to credit the amounts to his or her brokerage account or to pay the
amounts by check. Fractional shares may be paid in cash. Dividends from net
investment income, if any, and distributions of any net realized capital gains
earned by the Fund will be paid annually.
.........Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To avoid the tax, the Fund must distribute during each calendar
year, at least the sum of (1) 98% of its ordinary income (not taking into
account any capital gains or losses) for the calendar year, (2) 98% of its
capital gains in excess of its capital losses for the twelve-month period ending
on October 31 of the calendar year, or upon election during the calendar year
and (3) all ordinary income and net capital gains for previous years that were
not previously distributed. A distribution will be treated as paid during the
calendar year if it is paid during the calendar year or declared by the Fund in
October, November or December of the year, payable to shareholders of record as
of a specified date in such a month and actually paid by the Fund during January
of the following year. Any such distributions paid during January of the
following year will be deemed to be paid and received on December 31 of the year
the distributions are declared.
.........Gains or losses on the sales of securities by the Fund will be
long-term capital gains or losses if the securities have been held by the Fund
for more than twelve months. Gains or losses on the sale of securities held for
twelve months or less will be short-term capital gains or losses.
.........The Fund has qualified and intends to continue to qualify as a
"Regulated Investment Company" under Subchapter M of the Code. If so qualified,
the Fund will not be subject to federal income tax on its net investment income
and net short-term and long-term capital gains, if any, realized during any
taxable year in which it distributes such income and capital gains to its
shareholders. Although the Fund is non-diversified for purposes of the 1940 Act,
the Fund nevertheless is subject to diversification requirements under
Subchapter M. In general, the Code requires the Fund to diversify its holdings
so that, at the close of each quarter of its taxable year, (1) at least 50% of
the value of its total assets consist of cash, cash items, U.S. Government
securities, securities of other regulated investment companies, and other
securities limited generally with respect to any one issuer to not more than 5%
of the total assets of the Fund and not more than 10% of the outstanding voting
securities of each issuer, and (2) not more than 25% of the value of its assets
is invested in the securities of any issuer (other than U.S.
Government securities or the securities of other regulated investment
companies).
.........If the Fund is the holder of record of any stock on the record date for
any dividends payable with respect to such stock, such dividends shall be
included in the Fund's gross income as of the later of (a) the date such stock
became ex-dividend with respect to such dividends (i.e., the date on which a
buyer of the stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date the Fund acquired such stock. Accordingly, in order
to satisfy its income distribution requirements, the Fund may be required to pay
dividends based on anticipated earnings, and shareholders may receive dividends
in an earlier year than would otherwise be the case.
.........The Fund's transactions in futures contracts and options will be
subject to special provisions of the Code that, among other things, may affect
the character of gains and losses realized by the Fund (i.e., may affect whether
gains or losses are ordinary or capital), may accelerate recognition of income
to the Fund and may defer Fund losses. These rules could therefore affect the
character, amount and timing of distributions to shareholders. These provisions
also (a) will require the Fund to mark-to-market certain types of the positions
in its portfolio (i.e., treat them as if they were closed out), and (b) may
cause the Fund to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy the 90% and 98% distribution
requirements for avoiding income and excise taxes described above and in the
Prospectus. The Fund anticipates that its futures contracts and options
activities will not cause it to violate the 30% requirement described in the
Prospectus. The Fund will monitor its transactions, will make the appropriate
tax elections and will make the appropriate entries in its books and records
when it acquires any futures contract, option or hedged investment in order to
mitigate the effect of these rules and prevent disqualification of the Fund as a
regulated investment company.
Distributions
.........Distributions of investment company taxable income (which includes
interest and the excess of net short-term capital gains over long-term capital
losses, but not the excess of net long-term capital gains over net short-term
capital losses) are taxable to a U.S. shareholder as ordinary income, whether
paid in cash or shares. Dividends paid by the Fund will qualify for the 70%
deduction generally available for dividends received by corporations to the
extent the Fund's income consists of qualified dividends received from U.S.
corporations. Distributions of net capital gains (which consists of the excess
of net long-term capital gains over net short-term capital losses), if any, are
taxable as long-term capital gains, whether paid in cash or in shares,
regardless of how long the shareholder has held the Fund's shares, and are not
eligible for the dividends received deduction. Shareholders receiving
distributions in the form of newly issued shares will have a basis in such
shares of the Fund equal to the fair market value of such shares on the
distribution date. If the net asset value of shares is reduced below a
shareholder's cost as a result of a distribution by the Fund, such distribution
will be taxable even though it represents a return of invested capital. The
price of shares purchased at this time may reflect the amount of the forthcoming
distribution. Those purchasing just prior to a distribution will receive a
distribution which will nevertheless be taxable to them.
Sales of Shares
.........Upon a sale or exchange of his or her shares, a shareholder will
realize a taxable gain or loss depending upon his or her basis in the shares.
The gain or loss will be treated as long-term capital gain or loss if the shares
have been held for more than one year. Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are replaced within a
period of 61 days beginning 30 days before and ending 30 days after the shares
are disposed of. In such case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss. Any loss realized by a shareholder on the sale
of Fund shares held by the shareholder for six months or less will be treated
for tax purposes as a long-term capital loss to the extent of any distributions
of long-term capital gains received by the shareholder with respect to such
shares. However, capital losses are deductible only against capital gains plus,
for individuals, up to $3,000 of ordinary income.
Backup Withholding
.........The Fund may be required to withhold federal income tax at the
rate of 31% with respect to (1) taxable dividends and distributions and (2)
proceeds of any redemptions of Fund shares if a shareholder fails to provide the
Fund with his or her correct taxpayer identification number or to make required
certifications, or who has been notified by the Internal Revenue Service that he
or she is subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against a shareholder's federal income
tax liability.
Foreign Withholding Taxes
.........Income received by the Fund from sources within foreign countries
may be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. Because the Fund will not have more than 50% of its
total assets invested in securities of foreign governments or corporations, the
Fund will not be entitled to "pass-through" to shareholders the amount of
foreign taxes paid by the Fund.
.........Shareholders are urged to consult their attorneys or tax advisers
regarding specific questions as to federal, state, local or foreign taxes.
CALCULATION OF INVESTMENT PERFORMANCE
.........From time to time, the Fund may quote its performance in
advertisements or in reports and other communications to shareholders.
Average Annual Total Return
.........The Fund's "average annual total return" figures, as described in
the Prospectus, are computed according to a formula prescribed by the SEC. The
formula can be expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical
$1,000 investment made at the beginning of a
1-, 5- or 10-year period at the end of a 1-,
5- or 10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.
The following average annual total return figures calculated in
accordance with the above formula assume that the maximum 5.5% sales load has
been deducted from the hypothetical $1,000 initial investment at the time of
purchase.
2.7% for the one year fiscal period from January 1, 1996 through
December 31, 1996 ;
14.6% for the five year period from January 1, 1991 through December 31,
1996
11.5% for the period from the Fund's inception on September 29, 1989
through December 31, 1996
Aggregate Total Return
The Fund's aggregate total return figures, as described in the
Prospectus, represent the cumulative change in the value an investment in the
Fund for the specified period and are computed according to the following
formula:
AGGREGATE TOTAL RETURN = ERV-P
P
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical
$10,000 investment made at the beginning of
a 1-, 5-, or 10-year period (or fractional
portion thereof) at the end of the 1-, 5-,
or 10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.
The Fund's aggregate total return was as follows for the periods
indicated:
8.7% for the one year fiscal period from January 1, 1996 through
December 31, 1996;
92.6% for the five year period from January 1, 1992 through December 31,
1996
132.6% for the period from the Fund's inception on September 29, 1989
through December 31, 1996.
These aggregate total return figures do not assume that the maximum
5.5% sales load has been deducted from the investment at the time of purchase.
If the maximum sales charge had been deducted at the time of purchase, the
Fund's aggregate total returns for the same periods would have been 2.7%,
81.9% and 121.9%, respectively.
The Fund's performance will vary from time to time depending upon
market conditions, the composition of its portfolio and its operating expenses.
Consequently, any given performance quotation should not be considered
representative of the Fund's performance for any specified period in the future.
In addition, because the performance will fluctuate, it may not provide a basis
for comparing an investment in the Fund with certain bank deposits or other
investments that pay a fixed yield for a stated period of time. Investors
comparing the Fund's performance with that of other mutual funds should give
consideration to the quality and maturity of the respective investment
companies' portfolio securities.
COUNSEL
Willkie Farr & Gallagher, 153 E. 53rd Street, New York, New York 10022,
serves as legal counsel for the Fund.
EXPERTS
The financial statements included in this Additional Statement
have been so included in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. Price Waterhouse LLP serves as the Fund's independent
accountants and in that capacity audits the Fund's annual financial statements.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Safe, an indirect wholly owned subsidiary of Mellon Bank
Corporation., is located at One Boston Place, Boston, Massachusetts 02108, and
acts as custodian of the Fund's cash and securities. BFDS, an affiliate of State
Street Bank and Trust Company ("State Street"), is located at the BFDS Building,
Two Heritage Drive, Quincy, Massachusetts 02171 and acts as the Fund's
transfer agent and dividend disbursing agent. Neither Boston Safe, BFDS nor
State Street assists in or is responsible for investment decisions involving
assets of the Fund.
GENERAL INFORMATION
The Fund's Articles of Incorporation provides that to the fullest
extent that limitations on the liability of Directors and officers are permitted
by the Maryland General Corporation Law, the Securities Act of 1933, as amended,
and the 1940 Act, Directors and officers shall be indemnified by the Fund
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses actually incurred in connection with any action, suit or other
proceeding. To the fullest extent permitted by Maryland General Corporation Law,
as amended from time to time, the Fund's Articles of Incorporation also provide
that no Director or officer of the Fund shall be personally liable to the Fund
or its shareholders for money damages, except to the extent such exemption from
liability or limitation thereof is not permitted by the 1940 Act. Nothing in the
Articles of Incorporation protects a Director against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of duty involved in the conduct of his office.
The Fund reserves the right to create and issue a number of series of
shares, in which case the shares of each series would have equal rights with
respect to voting, dividends and distributions upon liquidation, but would vote
separately to approve management agreements or changes in investment policies.
Shares of all series would vote together in the election or selection of
Directors, principal underwriters and accountants. Upon liquidation of the Fund,
shareholders of each series would be entitled to share pro rata in the net
assets of their respective series available for distribution to shareholders.
Shareholders are entitled to one vote for each full share held and
proportionate, fractional votes for fractional shares held and may vote in the
election of Directors and on other matters submitted to meetings of
shareholders. It is not contemplated that regular annual meetings of
shareholders will be held. A meeting will be called to consider replacing the
Fund's Directors upon the written request of the holders of 10% of the Fund's
shares. Shareholders have no preemptive or conversion rights.
The Adviser's investment personnel may invest in securities for their
own account pursuant to a Code of Ethics that establishes procedures for
personal investing and restricts certain transactions.
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1996
================================================================================
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS--99.0%
BROADCASTING--17.1%
86,000 Ackerley Communications,
Inc..................... $ 1,189,500 $ 1,010,500
511,837 Chris-Craft Industries,
Inc..................... 13,819,204 21,433,174
80,000 Gray Communications
Systems, Inc., Class
B....................... 1,545,744 1,360,000
775,000 Grupo Televisa S.A.,
GDR +................... 17,146,149 19,859,375
110,000 Liberty Corporation...... 2,631,819 4,317,500
60,000 LIN Television
Corporation +........... 1,745,322 2,535,000
100,000 New World Communications
Group Incorporated,
Class A +............... 2,207,645 2,525,000
200,000 Paxson Communications
Corporation, Class
A +..................... 1,609,935 1,575,000
136,800 United Television,
Inc..................... 12,000,973 11,781,900
620,000 Westinghouse Electric
Corp.................... 9,452,290 12,322,500
------------ ------------
63,348,581 78,719,949
------------ ------------
PUBLISHING--16.9%
240,000 Golden Books Family
Entertainment, Inc. +... 3,727,751 2,670,000
65,000 McGraw-Hill Companies,
Inc..................... 2,247,736 2,998,125
2,170,000 Media General, Inc.,
Class A................. 47,907,175 65,642,500
120,000 Meredith Corporation..... 4,711,358 6,330,000
20,000 News Corporation Limited,
Sponsored ADR Preference
Shares.................. 331,000 352,500
------------ ------------
58,925,020 77,993,125
------------ ------------
CONSUMER PRODUCTS--9.7%
150,000 American Brands, Inc..... 6,189,153 7,443,750
330,000 Carter-Wallace, Inc...... 4,541,331 5,156,250
77,500 Culbro Corporation +..... 2,160,039 5,027,813
175,000 General Electric
Company................. 8,855,331 17,303,125
87,000 Ralston Purina Group..... 3,949,192 6,383,625
105,000 Syratech Corporation +... 1,881,863 3,307,500
------------ ------------
27,576,909 44,622,063
------------ ------------
CABLE--8.4%
206,500 Cablevision Systems
Corporation, Class
A +..................... 9,136,711 6,324,062
80,000 General Instrument
Corporation +........... 2,140,385 1,730,000
400,000 International Family
Entertainment, Inc.,
Class B +............... 6,274,475 6,200,000
955,000 Tele-Communications,
Inc., Class A +......... 9,476,528 12,474,688
424,000 Tele-Communications,
Inc./Liberty Media
Group, Class A +........ 8,410,527 12,110,500
------------ ------------
35,438,626 38,839,250
------------ ------------
ENTERTAINMENT--6.5%
29,000 GC Companies, Inc. +..... $ 1,046,951 $ 1,004,125
550,000 Time Warner Inc.......... 19,482,981 20,625,000
235,000 Viacom Inc., Class A +... 5,716,210 8,107,500
------------ ------------
26,246,142 29,736,625
------------ ------------
FOOD AND BEVERAGE--6.3%
200,000 PepsiCo, Inc............. 6,309,950 5,850,000
330,000 Quaker Oats Company...... 11,335,758 12,581,250
40,000 Seagram Company Ltd...... 1,090,750 1,550,000
330,000 Whitman Corporation...... 2,667,417 7,548,750
30,000 Wrigley (Wm.) Jr.
Company................. 1,517,512 1,687,500
------------ ------------
22,921,387 29,217,500
------------ ------------
EQUIPMENT AND SUPPLIES--5.7%
65,700 AMP Incorporated......... 2,551,375 2,521,237
50,000 Ampco-Pittsburgh
Corporation............. 250,017 600,000
19,000 Brad Ragan, Inc.+........ 459,325 584,250
42,000 Deere & Company.......... 734,850 1,706,250
140,000 Gerber Scientific,
Inc..................... 1,080,076 2,082,500
9,500 IDEX Corporation......... 287,850 378,812
70,000 Ingersoll-Rand Company... 2,609,908 3,115,000
110,000 Navistar International
Corporation +........... 1,814,337 1,003,750
185,000 Pittway Corporation,
Class A................. 1,191,397 9,897,500
64,000 Sequa Corporation, Class
A +..................... 2,095,534 2,512,000
5,000 Sequa Corporation, Class
B +..................... 189,250 250,000
50,000 TRINOVA Corporation...... 1,460,160 1,818,750
------------ ------------
14,724,079 26,470,049
------------ ------------
WIRELESS COMMUNICATIONS--5.4%
100,000 AirTouch Communications
Inc. +.................. 2,299,273 2,525,000
430,000 Century Telephone
Enterprises, Inc........ 8,640,669 13,276,250
75,000 COMSAT Corporation,
Series 1................ 1,661,787 1,846,875
40,000 Loral Space &
Communications Inc. +... 501,500 735,000
100,000 TCI Satellite
Entertainment Inc.,
Class A +............... 966,556 987,500
500,000 Telecom Italia Mobile
SpA..................... 655,379 1,264,008
115,000 Telephone and Data
Systems, Inc............ 4,731,975 4,168,750
------------ ------------
19,457,139 24,803,383
------------ ------------
HOTELS/GAMING--4.6%
450,000 Aztar Corporation +...... 3,180,597 3,150,000
65,000 Circus Circus
Enterprises, Inc. +..... 1,751,028 2,234,375
100,000 Hilton Hotels
Corporation............. 1,532,500 2,612,500
230,000 ITT Corporation, New +... 10,761,367 9,976,250
150,000 Mirage Resorts,
Incorporated +.......... 1,513,037 3,243,750
------------ ------------
18,738,529 21,216,875
------------ ------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
<TABLE>
THE GABELLI VALUE FUND INC.
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1996
================================================================================
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<S> <C> <C> <C>
COMMON STOCK (CONTINUED)
FINANCIAL SERVICES--3.0%
135,000 American Express
Company................. $ 3,122,010 $ 7,627,500
150,000 Lehman Brothers Holdings
Inc..................... 2,641,250 4,706,250
30,000 Salomon Inc.............. 1,167,750 1,413,750
------------ ------------
6,931,010 13,747,500
------------ ------------
DIVERSIFIED INDUSTRIAL--2.6%
10,000 Brady (W.H.) Co., Class
A....................... 163,069 246,250
32,000 Honeywell, Inc........... 1,389,402 2,104,000
120,000 ITT Industries Inc....... 2,858,725 2,940,000
217,500 Katy Industries, Inc..... 1,818,150 3,153,750
60,000 Lamson & Sessions
Co. +................... 341,438 435,000
20,000 Minnesota Mining and
Manufacturing Company... 1,360,188 1,657,500
30,000 Trinity Industries,
Inc..................... 361,680 1,125,000
178,000 Tyler Corporation +...... 519,950 333,750
------------ ------------
8,812,602 11,995,250
------------ ------------
RETAIL--2.3%
35,000 Burlington Coat Factory
Warehouse
Corporation +........... 433,125 455,000
34,000 Giant Food Inc., Class
A....................... 1,144,387 1,173,000
25,000 Hartmarx Corporation +... 170,000 140,625
100,000 Lillian Vernon
Corporation............. 1,347,359 1,225,000
300,000 Neiman Marcus Group,
Inc. +.................. 5,260,114 7,650,000
------------ ------------
8,354,985 10,643,625
------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES--2.0%
50,000 Echlin Inc............... 1,671,750 1,581,250
140,000 Federal-Mogul
Corporation............. 2,812,442 3,080,000
25,000 GenCorp Inc.............. 376,250 453,125
87,225 Handy & Harman........... 1,342,771 1,526,438
20,000 Johnson Controls, Inc.... 553,343 1,657,500
50,000 Quaker State
Corporation............. 570,157 706,250
------------ ------------
7,326,713 9,004,563
------------ ------------
TELECOMMUNICATIONS--1.9%
25,000 Aliant Communications
Inc..................... 335,337 425,000
59,000 BCE Inc.................. 2,010,525 2,817,250
76,000 C-TEC Corporation +...... 1,270,000 1,843,000
40,000 Northern Telecom
Limited................. 1,517,750 2,475,000
30,000 Southern New England
Telecommunications
Corporation............. 921,603 1,166,250
------------ ------------
6,055,215 8,726,500
------------ ------------
METALS AND MINING--1.4%
55,000 Barrick Gold
Corporation............. $ 1,524,880 $ 1,574,375
152,000 Echo Bay Mines Ltd....... 1,426,656 1,010,313
70,000 Homestake Mining
Company................. 1,323,250 997,500
70,000 Placer Dome Inc.......... 1,728,613 1,522,500
425,000 Royal Oak Mines Inc. +... 1,767,424 1,381,250
------------ ------------
7,770,823 6,485,938
------------ ------------
CONSUMER SERVICES--1.3%
247,500 HSN, Inc.+............... 5,295,948 5,878,125
------------ ------------
AVIATION: PARTS AND SERVICES--1.0%
186,500 Coltec Industries
Inc. +.................. 2,698,152 3,520,187
34,000 Hudson General
Corporation............. 625,007 1,266,500
------------ ------------
3,323,159 4,786,687
------------ ------------
REAL ESTATE--1.0%
400,000 Catellus Development
Corporation +........... 3,336,439 4,550,000
------------ ------------
BUSINESS SERVICES--0.9%
127,000 Berlitz International,
Inc., New +............. 1,892,836 2,651,125
138,000 Nashua Corporation....... 5,428,519 1,656,000
------------ ------------
7,321,355 4,307,125
------------ ------------
SPECIALITY CHEMICAL--0.7%
110,000 Ferro Corporation........ 2,046,238 3,121,250
------------ ------------
ENERGY--0.2%
40,000 Southwest Gas
Corporation............. 702,100 770,000
------------ ------------
COMMUNICATIONS EQUIPMENT--0.1%
30,000 Scientific-Atlanta,
Inc..................... 545,488 450,000
------------ ------------
TOTAL COMMON STOCKS.................... 355,198,487 456,085,382
------------ ------------
PRINCIPAL
AMOUNT
- ------------
CORPORATE BOND--0.1%
ENTERTAINMENT--0.1%
$ 497,000 Viacom Inc., Sub. Deb.,
8.00% due 07/07/2006.... 322,429 481,158
------------ ------------
REPURCHASE AGREEMENT--0.8%
3,865,000 Agreement with Morgan
(J.P.) & Co.,
Incorporated, 6.50% due
01/02/1997(a)........... 3,865,000 3,865,000
------------ ------------
TOTAL INVESTMENTS................ 99.9%
$359,385,916(b) 460,431,540
============
OTHER ASSETS AND LIABILITIES
(NET)............................. 0.1 404,498
------ ------------
NET ASSETS...................... 100.0%
$460,836,038
====== ============
<FN>
- ---------------
(a) Agreement dated 12/31/1996, to be repurchased at $3,866,396 collateralized
by $3,024,000 U.S. Treasury Bond, 9.25% due 02/15/2016 (value $3,942,691).
(b) Aggregate cost for Federal tax purposes was $359,747,501. Net unrealized
appreciation for Federal tax purposes was $100,684,039 (gross unrealized
appreciation was $114,075,633 and gross unrealized depreciation was
$13,391,594).
+ Non-income producing security
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI VALUE FUND INC.
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
===========================================================
<S> <C>
ASSETS:
Investments, at value (Cost
$359,385,916)............................ $460,431,540
Cash....................................... 6,824
Receivable for investments sold............ 1,436,765
Dividends and interest receivable.......... 449,547
Receivable for Fund shares sold............ 81,135
------------
Total Assets............................. 462,405,811
------------
LIABILITIES:
Payable for Fund shares redeemed........... 573,782
Payable for investment advisory fee........ 397,566
Accrued shareholder communications
expense.................................. 247,983
Payable for distribution fees.............. 215,482
Accrued Directors' fees.................... 21,000
Accrued expenses and other payables........ 113,960
------------
Total Liabilities........................ 1,569,773
------------
Net assets applicable to 40,020,118
shares of common stock outstanding... $460,836,038
============
NET ASSETS CONSIST OF:
Shares of common stock at par value........ $ 40,020
Additional paid-in capital................. 360,111,950
Distributions in excess of net realized
gain on investments...................... (361,585)
Net unrealized appreciation of
investments.............................. 101,045,653
------------
Total Net Assets......................... $460,836,038
============
Net Asset Value and redemption price per
share ($460,836,038 / 40,020,118 shares
outstanding; 300,000,000 shares
authorized of $0.001 par value)........ $11.52
======
Maximum offering price per share ($11.52
/ .945, based on maximum sales charge
of 5.5% of the offering price at
December 31, 1996)..................... $12.19
======
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
==========================================================
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign withholding
taxes of $35,097)........................ $ 5,240,919
Interest income............................ 1,128,778
------------
Total Investment Income.................. 6,369,697
------------
EXPENSES:
Investment advisory fee.................... 4,983,647
Distribution fees.......................... 1,245,912
Shareholder services fees.................. 346,796
Directors' fees............................ 90,613
Legal and audit fees....................... 41,748
Other...................................... 277,225
------------
Total Expenses........................... 6,985,941
------------
NET INVESTMENT LOSS.......................... (616,244)
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain on securities sold....... 42,311,374
Net realized loss on futures
transactions............................. (756,644)
Net realized gain on option transactions... 4,705
Net realized gain on foreign currency
transactions............................. 217
------------
Net realized gain on investments......... 41,559,652
------------
Net unrealized appreciation of securities,
foreign currency and other assets and
liabilities:
Beginning of year........................ 98,878,573
End of year.............................. 101,045,653
------------
Change in net unrealized appreciation
of securities, foreign currency and
other assets and liabilities......... 2,167,080
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS................................ 43,726,732
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $ 43,110,488
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/96 12/31/95
------------ ------------
<S> <C> <C>
Net investment income/(loss)............................................... $ (616,244) $ 2,002,360
Net realized gain on investments........................................... 41,559,652 46,633,649
Net change in unrealized appreciation of investments....................... 2,167,080 45,158,696
------------ ------------
Net increase in net assets resulting from operations....................... 43,110,488 93,794,705
Distributions to shareholders from:
Net investment income.................................................... -- (1,998,027)
Net realized gain on investments......................................... (40,850,492) (45,317,754)
Paid-in capital.......................................................... (189,371) --
Net increase/(decrease) in net assets from Fund share transactions......... (27,378,880) 3,036,372
------------ ------------
Net increase/(decrease) in net assets...................................... (25,308,255) 49,515,296
NET ASSETS:
Beginning of year.......................................................... 486,144,293 436,628,997
------------ ------------
End of year................................................................ $460,836,038 $486,144,293
============ ============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI VALUE FUND INC. -- NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Value Fund Inc. (the "Fund")
was organized on July 20, 1989 as a Maryland corporation. The Fund is a
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), whose primary
objective is long-term capital appreciation. The Fund commenced operations on
September 29, 1989. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates. The
following is a summary of significant accounting policies followed by the Fund
in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities which are traded only on a nationally
recognized securities exchange or in the over-the-counter market which are
National Market System Securities are valued at the last sale price as of the
close of business on the day the securities are being valued, or lacking any
sales, at the mean between closing bid and asked prices. Other over-the-counter
securities are valued at the most recent bid prices as obtained from one or more
dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market, as determined by
Gabelli Funds, Inc. (the "Adviser"). Securities and assets for which market
quotations are not readily available are valued at fair value as determined in
good faith by or under the direction of the Board of Directors of the Fund.
Short-term investments that mature in more than 60 days are valued at the
highest bid price obtained from a dealer maintaining an active market in that
security. U.S. government securities and other debt instruments that mature in
60 days or fewer are valued at amortized cost, unless the Board of Directors
determines that such valuation does not constitute fair value. Debt instruments
having a greater maturity are valued at the highest bid price obtained from a
dealer maintaining an active market in those securities or on the basis of
prices obtained from a pricing service approved as reliable by the Board of
Directors.
REPURCHASE AGREEMENTS. The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. In the event of counterparty default, the Fund has the right
to use the collateral to offset losses incurred. There is potential loss to the
Fund in the event the Fund is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the value of the underlying securities during the period while the Fund seeks
to assert its rights. The Adviser, acting under the supervision of the Board of
Directors, reviews the value of the collateral and the creditworthiness of those
banks and dealers with which the Fund enters into repurchase agreements to
evaluate potential risks.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin." Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are recorded as
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
OPTION ACCOUNTING. The Fund may purchase or sell (that is, write) listed
options on securities as a means of achieving additional return or of hedging
the value of the Fund's portfolio. Upon the purchase of a put or call option by
the Fund, the premium paid is recorded as an investment, the value of which is
marked-to-
14
<PAGE>
THE GABELLI VALUE FUND INC. -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
market daily. When a purchased option expires, the Fund will realize a loss in
the amount of the cost of the option. When the Fund enters into a closing sale
transaction, the Fund will realize a gain or loss depending on whether the sales
proceeds from the closing sale transaction are greater or less than the cost of
the option. When the Fund exercises a put option, it will realize a gain or loss
from the sale of the underlying security and the proceeds from such sale will be
decreased by the premium originally paid.
When the Fund exercises a call option, the cost of the security which the Fund
purchases upon exercise will be increased by the premium originally paid. When
the Fund writes an option, an amount equal to the premium received by the Fund
is recorded as a liability the value of which is marked-to-market daily. When a
written option expires, the Fund realizes a gain equal to the amount of the
premium received. When the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or loss if the cost of the closing purchase transaction
exceeds the premium received when the option was sold) without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is eliminated. When a call option is exercised, the Fund realizes a
gain or loss from the sale of the underlying security and the proceeds from such
sale are increased by the premium originally received. When a put option is
exercised, the amount of the premium originally received will reduce the cost of
the security which the Fund purchased upon exercise.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is the Fund may forego the opportunity
of profit if the market price of the underlying security increases and the
option is exercised. The risk in writing a put option is that the Fund may incur
a loss if the market price of the underlying security decreases and the option
is exercised. In addition, there is a risk the Fund may not be able to enter
into a closing transaction because of an illiquid secondary market.
FOREIGN CURRENCY. The books and records of the Fund are maintained in United
States (U.S.) dollars. Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period, and purchases and sales of investment securities, income
and expenses are translated on the respective dates of such transactions.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/depreciation of foreign currency and other assets and liabilities.
Unrealized gains and losses of securities, which result from changes in foreign
exchange rates as well as changes in market prices of securities, have been
included in unrealized appreciation/depreciation of investment securities. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amounts actually received. The portion
of foreign currency gains and losses related to fluctuation in exchange rates
between the initial trade date and subsequent sale trade date is included in
realized gain/(loss) on investments sold.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned. Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investments held by the Fund, timing differences and differing
characterization of distributions made by the Fund. Permanent differences
incurred during the year ended December 31, 1996 resulting from different book
and tax accounting policies for currency gains and losses and a net operating
loss, are reclassified between net investment income and net realized gains at
year end. The reclassifications for the year ended December 31, 1996 were a
decrease to accumulated net investment income of $616,244 and a decrease to
accumulated net realized gain on
15
<PAGE>
THE GABELLI VALUE FUND INC. -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
investments of $616,244. Paid-in capital was reduced by $189,371 due to a return
of capital for tax purposes.
PROVISION FOR INCOME TAXES. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
2. AGREEMENTS WITH AFFILIATED PARTIES. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00 percent of the value of the Fund's average daily net
assets. In accordance with the Advisory Agreement, the Adviser manages the
Fund's portfolio, makes investment decisions for the Fund, places orders to
purchase and sell securities of the Fund, and oversees the administration of all
aspects of the Fund's business and affairs. The Adviser is obligated to
reimburse the Fund in the event the Fund's expenses exceed the most restrictive
expense ratio limitation imposed by any state. No such reimbursement was
required during the year ended December 31, 1996.
3. DISTRIBUTION PLAN. The Fund has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund pays Gabelli
& Company, Inc. ("Gabelli & Company"), an indirect majority-owned subsidiary of
the Adviser, a distribution fee, accrued daily and paid monthly, calculated at
the annual rate of 0.25 percent of the value of the Fund's average daily net
assets, for activities primarily intended to result in the sale of the Fund's
shares of common stock.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities for the year ended December 31, 1996, other than U.S. government and
short-term securities, aggregated $176,593,397 and $223,087,836 respectively.
Option activity for the year ended December 31, 1996 was as follows:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
--------- -------
<S> <C> <C>
Options outstanding at December 31, 1995............. 0 $ 0
Options written...................................... 300 50,236
Options expired...................................... (100) (4,705)
Options exercised.................................... (200) (45,531)
---- --------
Options outstanding at December 31, 1996............. 0 $ 0
==== ========
</TABLE>
5. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1996, the
Fund incurred brokerage commissions of $115,385 to Gabelli & Company and its
affiliates. For the year ended December 31, 1996, Gabelli & Company informed the
Fund that it received $227,803 from investors representing commissions (sales
charges and underwriting fees) on sales of Fund shares.
6. SHARES OF COMMON STOCK. Common stock transactions were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/96 12/31/95
--------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold........................................ 2,702,873 $ 33,238,448 2,510,990 $ 31,004,832
Shares issued upon reinvestment of dividends....... 3,106,012 35,936,555 3,413,613 39,463,662
Shares redeemed.................................... (7,670,956) (96,553,883) (5,667,280) (67,432,122)
---------- ------------ ---------- ------------
Net increase/(decrease)............................ (1,862,071) $(27,378,880) 257,323 $ 3,036,372
========== ============ ========== ============
</TABLE>
16
<PAGE>
<TABLE>
THE GABELLI VALUE FUND INC.
FINANCIAL HIGHLIGHTS
=============================================================================================================================
Per share amounts for a Fund share outstanding throughout each year ended December 31,
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of year............................. $ 11.61 $ 10.49 $ 12.09 $ 10.13 $ 9.48
-------- -------- -------- -------- --------
Net investment income/(loss)................................... (0.02) 0.05 0.09 0.05 0.09
Net realized and unrealized gain/(loss) on investments......... 1.04 2.30 (0.09) 3.95 1.11
-------- -------- -------- -------- --------
Total from investment operations............................... 1.02 2.35 0.00 4.00 1.20
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................................ -- (0.05) (0.09) (0.01) (0.09)
Distributions in excess of net investment income............. -- -- (0.00)(a) (0.04) --
Net realized gains........................................... (1.10) (1.18) (1.50) (1.99) (0.46)
Distributions in excess of net realized gains................ -- -- (0.01) -- --
Paid-in capital.............................................. (0.01) -- -- -- --
-------- -------- -------- -------- --------
Total distributions............................................ (1.11) (1.23) (1.60) (2.04) (0.55)
-------- -------- -------- -------- --------
Net asset value, end of year................................... $ 11.52 $ 11.61 $ 10.49 $ 12.09 $ 10.13
======== ======== ======== ======== ========
Total return*.................................................. 8.7% 22.5% 0.0% 39.4% 12.7%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)............................. $460,836 $486,144 $436,629 $491,193 $423,381
Ratio of net investment income/(loss) to average net
assets..................................................... (0.12)% 0.42% 0.73% 0.38% 0.75%
Ratio of operating expenses to average net assets............ 1.40% 1.50% 1.50% 1.53% 1.52%
Portfolio turnover rate........................................ 37.1% 64.6% 66.6% 21.4% 0.1%
Average commission rate (per share of security)(b)............. $ 0.0498 N/A N/A N/A N/A
<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 and does not reflect any applicable sales charges.
Total return for the period of less than one year is not annualized.
(a) Amount represents less than $0.005 per share.
(b) Average commission rate (per share of security) as required by amended SEC disclosure requirements effective for fiscal
years beginning after September 1, 1995.
</TABLE>
- ------------------------------------------------------------------------
TOP TEN HOLDINGS
DECEMBER 31, 1996
Media General, Inc. Century Telephone Enterprises, Inc.
Chris-Craft Industries, Inc. Quaker Oats Company
Time Warner Inc. Tele-Communications, Inc.
Grupo Televisa S.A Westinghouse Electric Corp.
General Electric Company TCI/Liberty Media Group
- ------------------------------------------------------------------------
17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
================================================================================
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
THE GABELLI VALUE FUND INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Value Fund Inc. (the
"Fund") at December 31, 1996, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 14, 1997
- --------------------------------------------------------------------------------
1996 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the year ended December 31, 1996, the Fund paid to shareholders, on December
27, 1996, ordinary income dividends (comprised of net investment income and
short-term capital gains) totaling $0.124 per share. Additionally, on that date,
the Fund paid $0.986 per share in long-term capital gains. For 1996, 45.13% of
the ordinary income dividend qualifies for the dividend received deduction
available to corporations.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
1996 which was derived from U.S. Treasury securities was 7.20%. Such income may
be exempt from state and local income tax in all states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government securities.
The Gabelli Value Fund Inc. did not meet this strict requirement in 1996. Due to
the diversity in state and local tax law, it is recommended that you consult
your personal tax advisor for the applicability of the information provided as
to your own situation.
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other market
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Unrated: Where no rating has been assigned or where a rating has been
suspended or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated
as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately based, in which case the rating is not published in
Moody's Investors Service, Inc.'s publications.
Suspension or withdrawal may occur if new and material circumstances
arise, the effects of which preclude satisfactory analysis; if there is no
longer available reasonable up-to-date data to permit a judgment to be formed;
if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believe possess the strongest investment attributes are designated by the
symbols Aa-1, A-1, Baa-1, and B-1.
STANDARD & POOR'S RATINGS SERVICE
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P"). Capacity to
pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the higher rated issues only in small degree.
A: Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in the highest rated
categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, they are outweighed by large uncertainties of major risk
exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.
NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
<PAGE>
THE GABELLI VALUE FUND INC.
PART C
FINANCIAL STATEMENTS AND EXHIBITS
<PAGE>
THE GABELLI VALUE FUND INC.
Part C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Part A: Financial Highlights
Part B: Audited financial statements for The Gabelli
Value Fund Inc. for the fiscal year ended December 31,
1996 are included in the Statement of Additional Information:
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Financial Highlights
Report of Independent Accountants
Part C: Consent of Independent Accountants is filed herein.
(b) Exhibits
All references are to the Registrant's registration statement
on Form N-1A as filed with the Securities and Exchange
Commission ("SEC") on July 24, 1989, File Nos. 33-30139 and
811-5848 (the "Registration Statement").
(1)(a) Registrant's Articles of Incorporation dated July 20, 1989
are filed herewith.
(1)(b) Registrant's Articles Supplementary dated September 27, 1989 are
filed herewith.
(2) Registrant's Bylaws dated September 18, 1989 are filed herewith.
(3) Not applicable.
(4) Not applicable.
(5) Investment Advisory Agreement with Gabelli Funds, Inc. dated March 1,
1994 is filed herein.
(6)(a) Distribution Agreement with Gabelli & Company, Inc. dated July 30,
1993 is filed herewith.
(6)(b) Designated Dealer Agreement with Gabelli & Company, Inc. dated
September 18, 1989 is incorporated by reference to Post-Effective Amendment
No. 9 to the Registration Statement as filed with the SEC on May 1, 1995
("Post-Effective Amendment No. 9").
(7) Not applicable.
(8) Custody Agreement with Boston Safe Deposit and Trust Company dated
September 19, 1989 is filed herewith.
(9)(a) Transfer Agency and Service Agreement with State Street Bank and
Trust Company dated November 17, 1993 is filed herewith.
(9)(b) Sub-Administration Agreement with The Shareholder Services Group,
Inc. (now known as First Data Investor Services Group, Inc.) dated May 1, 1995
is filed herewith.
(10) Not applicable.
(11)(a) Consent of Independent Accountants is filed herewith.
(11)(b) Consent of Counsel is filed herewith.
(11)(c) Powers of Attorney are filed herewith.
(12) Not applicable.
(13) Subscription Agreement is incorporated by reference to Pre-Effective
Amendment No. 2.
(14) Plan for Individual Retirement Accounts is incorporated by reference
to Post-Effective Amendment No. 1 to the Registration Statement as filed with
the SEC on March 29, 1990 ("Post-Effective Amendment No. 1").
(15) Distribution Plan dated September 19, 1989 pursuant to Rule 12b-1 is
filed herewith.
(16) Sample Total Return Computation is incorporated by reference to
Post-Effective Amendment No. 1.
(17) Financial Data Schedule is filed herewith.
(18) Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant.
None
<PAGE>
Item 26. Number of Holders of Securities
(1) (2)
Title of Class Number of Record Holders
As of April 25, 1997
Common Stock 31,421
Value $.001 per
Share
Item 27. Indemnification
The response to this Item 27 is incorporated by reference to
Pre-Effective Amendment No. 2.
Item 28. Business and Other Connections of Investment Adviser
Gabelli Funds, Inc. (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 28 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 29. Principal Underwriter
Gabelli & Company Inc. currently acts as distributor for
The Gabelli Asset Fund, The Gabelli Equity Series Funds, Inc.,
The Gabelli Growth Fund, The Gabelli Global Convertible
Securities Fund, The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Gabelli Small Cap Growth
Fund, The Gabelli Equity Income Fund, The Gabelli Gold Fund,
The Gabelli U.S. Treasury Money Market Fund, The Gabelli ABC
Fund, The Gabelli Value Fund Inc., The Gabelli Global
Interactive Couch Potato (R) Fund, The Gabelli International
Growth Fund, Inc., Gabelli Capital Asset Fund, The Gabelli
Global Series Funds, Inc. and the Westwood Funds.
The information required by this Item 29 with respect to each
director, officer or partner of Gabelli & Company, Inc. is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company, Inc. pursuant to the Securities Exchange
Act of 1934, as amended (SEC File No. 8-21373).
Item 30. Location of Accounts and Records
All 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, Inc., One
Corporate Center, Rye, New York, First Data Investor Services
Group, Inc. One Exchange Place, Boston, Massachusetts: Boston
Safe Deposit and Trust Company, One Boston Place, Boston,
Massachusetts; State Street Bank and Trust Company c/o Boston
Financial Data Services, Inc., Two Heritage Drive, Quincy,
Massachusetts.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish to each
person to whom a Prospectus of the Registrant is
delivered a copy of the Registrant's latest annual
report, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Rye and State of New York, on the 29th day of
April, 1996.
THE GABELLI VALUE FUND INC.
(Registrant)
By: Mario J. Gabelli*
Mario J. Gabelli
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature: Title: Date:
Mario J. Gabelli* Chairman of the Board, April 29, 1996
- ------------------------------------
Mario J. Gabelli (President and Chief
Investment Officer)
/s/ Bruce N. Alpert Vice President and Treasurer April 29, 1996
Bruce N. Alpert (Chief Operating Officer)
Bill Callaghan* Director April 29, 1996
Bill Callaghan
Felix J. Christiana* Director April 29, 1996
Felix J. Christiana
Anthony J. Colavita* Director April 29, 1996
Anthony J. Colavita
Robert J. Morrissey* Director April 29, 1996
Robert J. Morrissey
Karl Otto Pohl* Director April 29, 1996
Karl Otto Pohl
Anthony R. Pustorino* Director April 29, 1996
Anthony R. Pustorino
</TABLE>
*By: /s/ Bruce N. Alpert
Bruce N. Alpert
Attorney-in-Fact
Copies of Powers of Attorney are filed herein.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
(1)(a) Articles of Incorporation
(1)(b) Articles Supplementary
(2) By-Laws
(5) Investment Advisory Agreement
(6)(a) Distribution Agreement
(8) Custody Agreement
(9)(a) Transfer Agency and Service Agreement
(9)(b) Sub-Administration Agreement
(11)(a) Consent of Independent Accountants
(11)(b) Consent of Counsel
(11)(c) Powers of Attorney
(15) Plan of Distribution
(17) Financial Data Schedule
ARTICLES OF INCORPORATION
OF
THE GABELLI VALUE FUND INC.
ARTICLE I
THE UNDERSIGNED, Daniel Schloendorn, whose post office address
is c/o Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New
York, New York 10022, being at least 18 years of age, does hereby act as an
incorporator and forms a corporation, under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is The Gabelli Value Fund Inc.
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and
other investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such
amounts and on such terms and conditions and for such purposes and for such
amount or kind of consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner (all
without the vote or consent of the stockholders of the Corporation) shares of
its capital stock, in any manner and to the extent now or hereafter permitted by
law and by these Articles of Incorporation.
(5) To do any and all additional acts and to exercise any and
all additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all
of the powers, rights and privileges granted to, or conferred upon, corporations
by the Maryland General Corporation Law now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
<PAGE>
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the
Corporation in the State of Maryland is c/o The Corporation Trust Company
Incorporated, 32 South Street, Baltimore, Maryland 21201. The name and address
of the resident agent of the Corporation in the State of Maryland is The
Corporation Trust Company Incorporated, a Maryland Corporation, 32 South Street,
Baltimore, Maryland 21201.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock that the
Corporation shall have authority to issue is one hundred and fifty million
(150,000,000) shares, of the par value of one tenth of one cent ($.001) per
share and of the aggregate par value of one hundred and fifty thousand dollars
($150,000.00), all of which one hundred and fifty million (150,000,000) shares
are designated Common Stock.
(2) The Corporation may issue fractional shares. Any
fractional share shall carry proportionately the rights of a whole share
including, without limitation, the right to vote and the right to receive
dividends. A fractional share shall not, however, have the right to receive a
certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of this Charter and the By-Laws
of the Corporation.
(4) No holder of stock of the Corporation by virtue of being
such a holder shall have any right to purchase or subscribe for any shares of
the Corporation's capital stock or any other security that the Corporation may
issue or sell other than a right that the Board of Directors in its discretion
may determine to grant.
(5) The Board of Directors shall have authority by resolution
to classify and reclassify any authorized but unissued shares of capital stock
from time to time by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of redemption
of the capital stock.
(6) Unless otherwise required by law, at a meeting of
stockholders the presence in person or by proxy of stockholders entitled to cast
one-third (1/3) of all the votes entitled to be cast at the meeting constitutes
a quorum.
(7) Notwithstanding any provision of law requiring any action
to be taken or authorized by the affirmative vote of a greater proportion of the
votes of all classes or of any class of stock of the Corporation, such action
shall be effective and valid if taken or authorized by the affirmative vote of a
majority of the total number of votes entitled to be cast thereon, except as
otherwise provided in this Charter.
ARTICLE VI
REDEMPTION
Each holder of shares of the Corporation's capital stock shall
be entitled to require the Corporation to redeem all or any part of the shares
of capital stock of the Corporation standing in the name of the holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the redemption
price of the shares as in effect from time to time as may be determined by or
pursuant to the direction of the Board of Directors of the Corporation in
accordance with the provisions of Article VI, subject to the right of the Board
of Directors of the Corporation to suspend the right of redemption or postpone
the date of payment of the redemption price in accordance with provisions of
applicable law. Without limiting the generality of the foregoing, the
Corporation shall, to the extent permitted by applicable law, have the right at
any time to redeem the shares owned by any holder of capital stock of the
Corporation (i) if the redemption is, in the opinion of the Board of Directors
of the Corporation, desirable in order to prevent the Corporation from being
deemed a "personal holding company" within the meaning of the Internal Revenue
Code of 1986 or (ii) if the value of the shares in the account maintained by the
Corporation or its transfer agent for any class of stock for the stockholder is
$1,000 (one thousand dollars) or less and the stockholder has been given at
least 30 (thirty) days' written notice of the redemption and has failed to make
additional purchases of shares in an amount sufficient to bring the value in his
account to $1,000 (one thousand dollars) or more before the redemption is
effected by the Corporation. Payment of the redemption price shall be made in
cash by the Corporation at the time and in the manner as may be determined from
time to time by the Board of Directors of the Corporation unless, in the opinion
of the Board of Directors, which shall be conclusive, conditions exist that make
payment wholly in cash unwise or undesirable; in such event the Corporation may
make payment wholly or partly by securities or other property included in the
assets belonging or allocable to the class of the shares redemption of which is
being sought, the value of which shall be determined as provided herein. The
Board of Directors may establish procedures for redemption of shares.
ARTICLE VII
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of
Directors initially shall be one (1) and may in the future be such other number
as may be set forth in the By-Laws or determined by the Board of Directors
pursuant to the By-Laws. The number of Directors shall at no time be less than
the minimum number required under the Maryland General Corporation Law. Mario J.
Gabelli is appointed director of the Corporation to hold office until the first
meeting of stockholders or until his successor is elected and qualified.
(2) In furtherance, and not in limitation, of the powers
conferred by the laws of the State of Maryland, the Board of Directors is
expressly authorized:
(i) To make, alter or repeal the By-Laws of the Corporation, except where
such power is reserved by the By-Laws to the stockholders, and except as
otherwise required by the Investment Company Act of 1940, as amended.
(ii) From time to time to determine whether and to what extent and at what
times and places and under what conditions and regulations the books and
accounts of the Corporation, or any of them other than the stock ledger, shall
be open to the inspection of the stockholders. No stockholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by law or authorized by resolution of the Board of Directors.
(iii) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, and securities convertible
into shares of stock of the Corporation of any class or classes, whether now or
hereafter authorized, for such consideration as the Board of Directors may deem
advisable.
(iv) Without the assent or vote of the stockholders, to authorize and issue
obligations of the Corporation, secured and unsecured, as the Board of Directors
may determine, and to authorize and cause to be executed mortgages and liens
upon the real or personal property of the Corporation.
(v) Notwithstanding anything in this Charter to the contrary, to establish
in its absolute discretion the basis or method for determining the value of the
assets belonging to any class, the amount of the liabilities belonging to any
class and the net asset value of each share of any class of the Corporation's
stock.
(vi) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose; to set apart out of any funds of the
Corporation reserves for such purposes as it shall determine and to abolish the
same; to declare and pay any dividends and distributions in cash, securities or
other property from surplus or any funds legally available therefor, at such
intervals as it shall determine; to declare dividends or distributions by means
of a formula or other method of determination, at meetings held less frequently
than the frequency of the effectiveness of such declarations; and to establish
payment dates for dividends or any other distributions on any basis, including
dates occurring less frequently than the effectiveness of declarations thereof.
(vii) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is authorized to
exercise all powers and do all acts that may be exercised or done by the
Corporation pursuant to the provisions of the laws of the State of Maryland,
this Charter and by By-Laws of the Corporation.
(3) Any determination made in good faith, and in accordance
with accepted accounting practices, if applicable, by or pursuant to the
direction of the Board of Directors, with respect to the amount of assets,
obligations or liabilities of the Corporation, as to the amount of net income of
the Corporation from dividends and interest for any period or amounts at any
time legally available for the payment of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
the reserves or charges have been created has been paid or discharged or is then
or thereafter required to be paid or discharged), as to the value of any
security owned by the Corporation, the determination of the net asset value of
shares of any class of the Corporation's capital stock, or as to any other
matters relating to the issuance, sale or other acquisition or disposition of
securities or shares of capital stock of the Corporation, and any reasonable
determination made in good faith by the Board of Directors whether any
transaction constitutes a purchase of securities on "margin," a sale of
securities "share," or an underwriting of the sale of, or a participation in any
underwriting or selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its capital stock, past, present and future, and
shares of the capital stock of the Corporation are issued and sold on the
condition and understanding, evidenced by the purchase of shares of capital
stock or acceptance of share certificates, that any and all such determinations
shall be binding as aforesaid. No provision of this Charter of the Corporation
shall be effective to (i) require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Investment Company Act of 1940,
as amended, or of any valid rule, regulation or order of the Securities and
Exchange Commission under those Acts or (ii) protect or purport to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders 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.
ARTICLE VIII
INDEMNIFICATION
To the fullest extent permitted by the Maryland General
Corporation Law, as amended from time to time, no Director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for money damages, except to the extent such exemption from liability or
limitation thereof is not permitted by the Investment Company Act of 1940, as
amended from time to time. In addition, any person who was or is a party or is
threatened to be made a party in any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is a current or former Director or officer
of the Corporation, or is or was serving while a Director or officer of the
Corporation at the request of the Corporation as a Director, officer, partner,
trustee, employee, agent or fiduciary of another corporation, partnership, joint
venture, trust, enterprise or employee benefit plan, shall be indemnified by the
Corporation against judgments, penalties, fines, excise taxes, settlements and
reasonable expense (including attorneys' fees) actually incurred by such person
in connection with such action, suit or proceeding to the full extent
permissible under the Maryland General Corporation Law, the Securities Act of
1933 and the Investment Company Act of 1940, as such statutes are now or
hereafter in force, except that such indemnify shall not protect any such person
against any liability to the Corporation or any stockholder thereof to which
such person 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.
<PAGE>
ARTICLE IX
AMENDMENTS
The Corporation reserves the right from time to time to make
any amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in its
Charter, of any outstanding stock.
* * *
IN WITNESS WHEREOF, I have adopted and signed these Articles
of Incorporation and do hereby acknowledge that the adoption and signing are my
act.
By: DANIEL SCHLOENDORN
Incorporator
Dated the 20th day of July, 1989
EXHIBIT A
THE GABELLI VALUE FUND INC.
ARTICLES SUPPLEMENTARY
THE GABELLI VALUE FUND INC., a Maryland corporation having its
principal office in the City of Baltimore, certifies that:
FIRST: The total number of shares of capital stock that the
Corporation has authority to issue has been increased to 300,000,000 shares of
Common Stock, par value $.001 per share, by the Corporation's Board of Directors
in accordance with Section 2-105(c) of the Maryland General Corporation Law.
SECOND: Immediately before the increase the Corporation was
authorized to issue 150,000,000 shares of Common Stock, par value $.001 per
share, having an aggregate par value of $150,000. As increased, the Corporation
is authorized to issue a total of 300,000,000 shares of Common Stock, par value
$.001 per share, having an aggregate par value of $300,000.
THIRD: The Corporation is registered as an open-end investment company
under the Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, The Gabelli Value Fund Inc. has caused
these Articles Supplementary to be executed by its President and its corporate
seal to be affixed and attested by its Secretary on this 27th day of September,
1989. The President of the Corporation who signed these Articles Supplementary
acknowledges them to be the act of the Corporation and states under the
penalties for perjury that to the best of his knowledge, information and belief
the matters and facts relating to approval hereof are true in all material
respects.
THE GABELLI VALUE FUND INC.
By: ILLEGIBLE
President
[CORPORATE SEAL]
Attest: ILLEGIBLE
Secretary
EXHIBIT B
AMENDED AND RESTATED
BY-LAWS
OF
THE GABELLI VALUE FUND INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the stockholders of the
Corporation shall be held unless required by applicable law or otherwise
determined by the Board of Directors. An annual meeting may be held at any place
within the United States as may be determined by the Board of Directors and as
shall be designated in the notice of the meeting, and at the time specified by
the Board of Directors. Any business of the Corporation may be transacted at an
annual meeting without being specifically designated in the notice unless
otherwise provided by statute, the Corporation's Articles of Incorporation or
these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the Secretary at the request in writing of a
majority of the Board of Directors or at the request in writing of stockholders
entitled to cast at least 10 (ten) percent of the votes entitled to be cast at
the meeting upon payment by such stockholders to the Corporation of the
reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the Secretary of
the Corporation). Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting, a special meeting of the stockholders need not be called at the request
of stockholders to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding 12 (twelve) months. A written request shall state the purpose or
purposes of the proposed meeting.
<PAGE>
SECTION 3. Notice of Meetings. Written or printed notice of the purpose or
purposes and of the time and place of every meeting of the stockholders shall be
given by the secretary of the Corporation to each stockholder of record entitled
to vote at the meeting, by placing the notice in the mail at least 10 (ten)
days, but not more than 90 (ninety) days, prior to the date designated for the
meeting addressed to each stockholder at his address appearing on the books of
the Corporation or supplied by the stockholder to the Corporation for the
purpose of notice. The notice of any meeting of stockholders may be accompanied
by a form of proxy approved by the Board of Directors in favor of the actions or
persons as the Board of Directors may select. Notice of any meeting of
stockholders shall be deemed waived by any stockholder who attends the meeting
in person or by proxy, or who before or after the meeting submits a signed
waiver of notice that is filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by law or by the Corporation's
Articles of Incorporation, the presence in person or by proxy of stockholders of
the Corporation entitled to cast at least one-third of the votes to be cast
shall constitute a quorum at each meeting of the stockholders and all questions
shall be decided by majority vote of the shares so represented in person or by
proxy at the meeting, except for the election of directors, and entitled to
vote. A plurality of all the votes cast at a meeting at which a quorum is
present is sufficient to elect a director. In the absence of a quorum, the
stockholders present in person or by proxy, by majority vote and without notice
other than by announcement, may adjourn the meeting from time to time as
provided in Section 5 of this Article I until a quorum shall attend. The
stockholders present at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of enough stockholders to
leave less than a quorum. The absence from any meeting in person or by proxy of
holders of the number of shares of stock of the Corporation in excess of
one-third that may be required by the laws of the State of Maryland, the
Investment Company Act of 1940, as amended, or other applicable statute, the
Corporation's Articles of Incorporation or these By-Laws, for action upon any
given matter shall not prevent action at the meeting on any other matter or
matters that may properly come before the meeting, so long as there are present,
in person or by proxy, holders of the number of shares of stock of the
Corporation required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be adjourned from
time to time, without notice other than by announcement at the meeting at which
the adjournment is taken. At any adjourned meeting at which a quorum shall be
present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a date
more than 120 (one hundred twenty) days after the original record date.
SECTION 6. Organization. At every meeting of the stockholders, the Chairman of
the Board, or in his absence or inability to act, the President, or in his
absence or inability to act, a Vice President, or in the absence or inability to
act of the Chairman of the Board, the President and all the Vice Presidents, a
Chairman chosen by the stockholders, shall act as Chairman of the meeting. The
Secretary, or in his absence or inability to act, a person appointed by the
Chairman of the meeting, shall act as secretary of the meeting and keep the
minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting/
SECTION 8. Voting. Except as otherwise provided by statute or the Corporation's
Articles of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of stock standing in his name on the
records of the Corporation as of the record date determined pursuant to Section
9 of this Article I.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him by a proxy signed by the stockholder or
his attorney-in-fact. No proxy shall be valid after the expiration of eleven
months from the date thereof, unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the stockholder executing it, except
in those cases in which the proxy states that it is irrevocable and in which an
irrevocable proxy is permitted by law.
If a vote shall be taken on any question then unless required by statute or
these By-Laws, or determined by the Chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, and shall state the number of
shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may set a record date
for the purpose of determining stockholders entitled to vote at any meeting of
the stockholders. The record date for a particular meeting shall be not more
than 90 (ninety) nor fewer than 10 (ten) days before the date of the meeting.
All persons who were holders of record of shares as of the record date of a
meeting, and no others, shall be entitled to vote at such meeting and any
adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting or at any
adjournment of the meeting. If the inspectors shall not be so appointed or if
any of them shall fail to appear or act, the chairman of the meeting may appoint
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at the
meeting with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and the voting power
of each share, the number of shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do those acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote at the meeting, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them. No
Director or candidate for the office of Director shall act as inspector of an
election of Directors. Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as otherwise
provided by statute, any action required to be taken at any meeting of
stockholders, or any action that may be taken at any meeting of the
stockholders, may be taken without a meeting, without prior notice and without a
vote, if the following are filed with the records of stockholders' meetings: (i)
a unanimous written consent that sets forth the action and is signed by each
stockholder entitled to vote on the matter and (ii) a written waiver of any
right to dissent signed by each stockholder entitled to notice of the meeting
but not entitled to vote at the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION l. General Powers. Except as otherwise provided in the Corporation's
Articles of Incorporation, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law, by the
Corporation's Articles of Incorporation or by these By-Laws.
SECTION 2. Number of Directors. The number of Directors shall he fixed from time
to time by resolution of the Board of Directors adopted by a majority of the
entire Board of Directors then in office; provided, however, that the number of
Directors shall in no event be fewer than one nor more than fifteen. Any vacancy
created by an increase in Directors may be filled in accordance with Section 6
of this Article II. No reduction in the number of Directors shall have the
effect of removing any Director from office prior to the expiration of his term
unless the Director is specifically removed pursuant to Section 5 of this
Article II at the time of the decrease. A Director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of the State of
Maryland.
SECTION 3. Election and Term of Directors. The term of office of each director
shall be from the time of his election and qualification until his successor
shall have been elected and shall have qualified, or until his death, or until
he shall have resigned or have been removed as provided in these By-laws, or as
otherwise provided by statute or the Corporation's Articles of Incorporation.
SECTION 4. Resignation. A Director of the Corporation may resign at any time by
giving written notice of his resignation to the Board of Directors or the
Chairman of the Board or to the President or the Secretary of the Corporation.
Any resignation shall take effect at the time specified in it or, should the
time when it is to become effective not be specified in it, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it effective
unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any Director of the Corporation may be removed
by the stockholders with or without cause at any time by a vote of a majority of
the votes entitled to be cast for the election of Directors.
SECTION 6. Vacancies. Subject to the provisions of the Investment Company Act of
1940, as amended, any vacancies in the Board of Directors, whether arising from
death, resignation, removal or any other cause except an increase in the number
of Directors, shall be filled by a vote of the majority of the Board of
Directors then in office even though that majority is less than a quorum,
provided that no vacancy or vacancies shall be filled by action of the remaining
Directors if, after the filling of the vacancy or vacancies, fewer than
two-thirds of the Directors then holding office shall have been elected by the
stockholders of the Corporation. A majority of the entire Board may fill a
vacancy which results from an increase in the number of Directors. In the event
that at any time a vacancy exists in any office of a Director that may not be
filled by the remaining Directors, a special meeting of the stockholders shall
be held as promptly as possible and in any event within 60 (sixty) days, for the
purpose of filling the vacancy or vacancies. Any Director elected or appointed
to fill a vacancy shall hold office until a successor has been chosen and
qualifies or until his earlier resignation or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at any place
that the Board of Directors may from time to time determine or that is specified
in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at the time and place determined by the Board of
Directors.
SECTION 9. Special Meetings. Special meetings of the Board of Directors may
be called by two or more Directors of the Corporation or by the Chairman of the
Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special meeting of the
Board of Directors shall be given by the Secretary as hereinafter provided. Each
notice shall state the time and place of the meeting and shall be delivered to
each Director, either personally or by telephone or other standard form of
telecommunication, at least 24 (twenty-four) hours before the time at which the
meeting is to be held, or by first-class mail, postage prepaid, addressed to the
Director at his residence or usual place of business, and mailed at least 3
(three) days before the day on which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any special meeting need not
be given to any Director who shall, either before or after the meeting, sign a
written waiver of notice that is filed with the records of the meeting or who
shall attend the meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 2 (two)) of the
members of the entire Board of Directors shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at the meeting (unless there is only one director, in which case that
one will constitute a quorum for the transaction of business), and except as
otherwise expressly required by statute, the Corporation's Articles of
Incorporation, these By-Laws, the Investment Company Act of 1940, as amended, or
any other applicable statute, the act of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the Directors
present may adjourn the meeting to another time and place until a quorum shall
be present. Notice of the time and place of any adjourned meeting shall be given
to all Directors. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 13. Organization. The Board of Directors may designate a Chairman of the
Board, who shall preside at each meeting of the Board. In the absence or
inability of the Chairman of the Board to act, the President, or, in his absence
or inability to act, another Director chosen by a majority of the Directors
present, shall act as chairman of the meeting and preside at the meeting. The
Secretary, or, in his absence or inability to act, any person appointed by the
chairman, shall act as secretary of the meeting and keep the minutes thereof.
SECTION 14. Committees. The Board of Directors may designate one or more
committees of the Board of Directors, each consisting of 2 (two) or more
Directors. To the extent provided in the resolution, and permitted by law, the
committee or committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a Director to act
in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting. Subject to the
provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee of the Board may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
SECTION 16. Telephone Conference. Members of the Board of Directors or any
committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.
SECTION 17. Compensation. Each Director shall be entitled to receive
compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the Corporation shall be a
President, a Secretary and a Treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may elect or appoint one or more Vice
Presidents and may also appoint any other officers, agents and employees it
deems necessary or proper. Any two or more offices may be held by the same
person, except the offices of President and Vice President, but no officer shall
execute, acknowledge or verify in more than one capacity any instrument required
by law to be executed, acknowledged or verified by more than one officer.
Officers shall be elected by the Board of Directors to hold office until their
successors shall have been duly elected and shall have qualified. Officers shall
serve at the pleasure of the Board of Directors. The Board of Directors may from
time to time elect, or delegate to the President the power to appoint, such
officers (including one or more Assistant Vice Presidents, one or more Assistant
Treasurers and one or more Assistant Secretaries) and such agents as may be
necessary or desirable for the business of the Corporation. Such other officers
and agents shall have such duties and shall hold their offices for such terms as
may be prescribed by the Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign at any time
by giving written notice of his resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any resignation shall
take effect at the time specified therein, immediately upon its receipt.
Acceptance of a resignation shall not be necessary to make it effective unless
the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or employee
of the Corporation may be removed by the Board of Directors with or without
cause at any time, and the Board may delegate the power of removal as to agents
and employees not elected or appointed by the Board of Directors. Removal shall
be without prejudice to the person's contract rights, if any, but the
appointment of any person as officer, agent or employee of the Corporation shall
not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising from death,
resignation, removal or any other cause, may be filled in the manner prescribed
in these By-Laws for the regular election or appointment to the office.
SECTION 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Board or Other Security. If required by the Board, any officer, agent
or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in an amount and with any surety or sureties
as the Board may require.
SECTION 7. President. The President shall be the chief executive officer of the
Corporation. In the absence or inability of the Chairman of the Board (or if
there is none) to act, the President shall preside at all meetings of the
stockholders and of the Board of Directors. The President shall have, subject to
the control of the Board of Directors, general charge of the business and
affairs of the Corporation, and may employ and discharge employees and agents of
the Corporation, except those elected or appointed by the Board, and he may
delegate these powers.
SECTION 8. Chief Operating Officer. The Chief Operating Officer shall be the
Chief Operating Officer of the Corporation, and shall have responsibility for
the various operational facilities and personnel and related support services of
the Corporation. In general, he shall perform all duties incident to the office
of Chief Operating Officer and such other duties as from time to time may be
assigned to him by the Board of Directors or the President.
SECTION 9. Vice President. Each Vice President shall have the powers and
perform the duties that the Board of Directors or the President may from time to
time prescribe.
SECTION 10. Treasurer. Subject to the provisions of any contract that may be
entered into with any custodian pursuant to authority granted by the Board of
Directors, the Treasurer shall have charge of all receipts and disbursements of
the Corporation and shall have or provide for the custody of the Corporation's
funds and securities; he shall have full authority to receive and give receipts
for all money due and payable to the Corporation, and to endorse checks, drafts
and warrants, in its name and on its behalf and to give full discharge for the
same; he shall deposit all funds of the Corporation, except those that may be
required for current use, in such banks or other places of deposit at the Board
of Directors may from time to time designate; and, in general, he shall perform
all duties incident to the office of Treasurer and such other duties as may from
time to time be assigned to him by the Board of Directors or the President.
SECTION 11. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the purpose, the
minutes of all meetings of the Board of Directors, the committees of the Board
and the stockholders;
(b) see that all notices are duly given in accordance with the provisions
of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix and
attest the seal to all stock certificates of the Corporation (unless the seal of
the Corporation on such certificates shall be a facsimile, as hereinafter
provided) and affix and attest the seal to all other documents to be executed on
behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other documents
and records required by law to be kept and filed are properly kept and filed;
and
(e) in general, perform all the duties incident to the office of Secretary and
such other duties as from time to time may be assigned to him by the Board of
Directors or the President.
SECTION 12. Delegation of Duties. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any Director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the Corporation shall be
entitled upon specific written request to such person as may be designated by
the Corporation to have a certificate or certificates, in a form approved by the
Board, representing the number of shares of stock of the Corporation owned by
him; provided, however, that certificates for fractional shares will not be
delivered in any case. The certificates representing shares of stock shall be
signed by or in the name of the Corporation by the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and sealed with the seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still in office at the date of issue.
SECTION 2. Transfer of Shares. Transfer of shares of stock of the Corporation
shall be made on the stock records of the Corporation only by the registered
holder thereof, or by his attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary or with a transfer agent or transfer
clerk, and on surrender of the certificate or certificates, if issued, for the
shares properly endorsed or accompanied by a duly executed stock transfer power
and the payment of all taxes thereon. Except as otherwise provided by law, the
Corporation shall be entitled to recognize the exclusive right of a person in
whose name any share or shares stand on the record of stockholders as the owner
of the share or shares for all purposes, including, without limitation, the
rights to receive dividends or other distributions and to vote as the owner, and
the Corporation shall not be bound to recognize any equitable or legal claim to
or interest in any such share or shares on the part of any other person.
SECTION 3. Regulations. The Board of Directors may make any additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificate for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents one or more transfer clerks and one or
more registrars and may require all certificates for shares of stock to bear the
signature or signatures of any of them.
SECTION 4. Stolen, Lost, Destroyed or Mutilated Certificates. The holder of any
certificate representing shares of stock of the Corporation shall immediately
notify the Corporation of its theft, loss, destruction or mutilation and the
Corporation may issue a new certificate of stock in the place of any certificate
issued by it that has been alleged to have been stolen, lost or destroyed or
that shall have been mutilated. The Board may, in its discretion, require the
owner (or his legal representative) of a stolen, lost, destroyed or mutilated
certificate to give to the Corporation a bond in a sum, limited or unlimited,
and in a form and with any surety or sureties, as the Board in its absolute
discretion shall determine, to indemnify the Corporation against any claim that
may be made against it on account of the alleged theft, loss or destruction of
any such certificate, or issuance of a new certificate. Anything herein to the
contrary notwithstanding, the Board of Directors, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
SECTION 5. Fixing of Record Date for Dividends, Distributions, etc. The Board
may fix, in advance, a date not more than 90 (ninety) days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of the Corporation, or for the
delivery of evidences of rights or evidences of interests arising out of any
change, conversion or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and in such case
only the stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or interests.
SECTION 6. Information to Stockholders and Others. Any stockholder of the
Corporation or his agency may inspect and copy during the Corporation's usual
business hours the Corporation's By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust agreements on
file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person who was or is a
party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
Director or officer of the Corporation, or is or was serving while a Director or
officer of the Corporation at the request of the Corporation as a Director,
officer, partner, trustee, employee, agent to fiduciary of another corporation,
partnership, joint venture, trust enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933 and the Investment Company Act of 1940, as such statutes
are now or hereafter in force, except that such indemnity shall not protect any
such person against any liability to the Corporation or any stockholder thereof
to which such person 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 ("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the Maryland General Corporation
Law, the Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force; provided however, that the person
seeking indemnification shall provide to the Corporation a written affirmation
of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions is met: (l) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (2) the Corporation is insured against losses arising by reason of
the advance; or (3) a majority of a quorum of Directors of the Corporation who
are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to the proceeding
("disinterested non-party directors"), or independent legal counsel, in a
written opinion, shall determine, based on a review of facts readily available
to the Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
SECTION 3. Procedure. At the request of any current or former Director or
officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of 1933
and the Investment Company Act of 1940, as such statutes are now or hereafter in
force, whether the standards required by this Article V have been met; provided,
however, that indemnification shall be made only following: (1) a final decision
on the merits by a court or other body before whom the proceeding was brought
that the person to be indemnified was not liable by reason of disabling conduct
or (2) in the absence of such a decision, a reasonable determination, based upon
a review of the facts, that the person to be indemnified was not liable by
reason of disabling conduct, by (a) vote of a majority of a quorum of
disinterested non-party Directors or (b) an independent legal counsel in written
opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and agents who are
not officers or Directors of the Corporation may be indemnified, and reasonable
expenses may be advanced to such employees or agents, in accordance with the
procedures set forth in this Article V to the extent permissible under the
Investment Company Act of 1940, the Securities Act of 1933 and the Maryland
General Corporation Law, as such statutes are now or hereafter in force, and to
such further extent, consistent with the foregoing, as may be provided by action
of the Board of Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this Article V shall
not be deemed exclusive of any other right, in respect of indemnification or
otherwise, to which those seeking such indemnification may be entitled under any
insurance or other agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action by a Director or officer of the Corporation in his
official capacity and as to action by such person in another capacity while
holding such office or position, and shall continue as to a person who has
ceased to be a Director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
SECTION 6. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or who, while a Director, officer,
employee or agent of the Corporation, is or was serving at the request of the
Corporation as a Director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
him in any such capacity, or arising out of his status as such.
SECTION 7. Constituent, Resulting or Surviving Corporations. For the purposes of
this Article V, references to the "Corporation" shall include all constituent
corporations absorbed in a consolidation or merger as well the resulting or
surviving corporation so that any person who is or was a Director or officer of
a constituent corporation or is or was serving at the request of a constituent
corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand in the same
position under this Article V with respect to the resulting or surviving
corporation as he would if he had served the resulting or surviving corporation
in the same capacity.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear the name of
the Corporation, the year of its incorporation, the words "Corporate Seal" and
"Maryland" and any emblem or device approved by the Board of Directors. The seal
may be used by causing it or a facsimile to be impressed or affixed or in any
other manner reproduced, or by placing the word "(seal)" adjacent to the
signature of the authorized officer of the Corporation.
<PAGE>
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or replaced by the affirmative vote of a majority
of the Board of Directors at any regular or special meeting of the Board of
Directors, subject to the requirements of the Investment Company Act of 1940, as
amended.
Dated September 18, 1989
<PAGE>
INVESTMENT ADVISORY AGREEMENT
March 1, 1994
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1430
Dear Sirs:
The Gabelli Value Fund Inc., a Maryland corporation (the "Fund"), confirms
its agreement with Gabelli Funds, Inc. (the "Adviser") as set forth below.
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the investment
objective, policies and limitations specified in its Articles of Incorporation
dated July 20, 1989, as amended from time to time (the "Articles"), its By-laws,
as amended from time to time, in the prospectus (the "Prospectus") and the
statement of additional information (the "Statement") filed with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended
(the "1940 Act"), and the Securities Act of 1933, as amended, as part of the
Fund's Registration Statement on Form N-1A, as amended from time to time, and in
the manner and to the extent as may from time to time be approved in the manner
set forth in the Articles. Copies of the Fund's Prospectus, Statement, Articles
and By-laws have been or will be submitted to the Adviser. The Fund desires to
employ and hereby appoints the Adviser to act as its investment adviser and to
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 2(b) below. The Adviser accepts
the appointment and agrees to furnish the services for the compensation set
forth 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.
2. Services
(a) Investment Advice. Subject to the overall supervision and
direction of the Board of Directors of the Fund, the Adviser shall have general
responsibility for the investment and management of the Fund's assets, subject
to and in accordance with the Fund's investment objective, policies and
restrictions as stated in the Prospectus, Statement, Articles and By-Laws. In
discharging its responsibility, the Adviser shall determine and monitor the
investments of the Fund. In addition, the Adviser shall have full authority to
implement its determinations by selecting and placing individual transactions on
behalf of the Fund.
(b) Administration. 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 or dividend disbursing agent; (ii) transmitting
purchase and redemption orders for Fund 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 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
Directors as well as minutes of such meetings in all matters required by
applicable law to be acted upon by the Board of Directors.
3. Brokerage
The Adviser shall employ securities brokers that, in its
judgment, will implement 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. In making this determination, the
Adviser shall take into consideration a number of factors including, but not
limited to, the breadth of the market in the security interest, the price of the
security interest, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. Under such conditions as may be specified
by the Fund's Board of Directors 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 an
affiliate of the Adviser; (b) pay commissions to brokers other than the
Adviser's affiliates that 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 the Adviser's duties hereunder and
for the investment management of other advisory accounts over which the Adviser
or the Adviser's affiliates exercise investment discretion; and (c) consider
sales by brokers (other than an affiliate of the Adviser) of shares of the Fund
and any other mutual fund for which the Adviser or its affiliates act as
investment adviser, as a factor in the Adviser's selection of brokers for Fund
portfolio transactions.
4. Information Provided to the Fund
The Adviser will keep the Fund informed of developments
materially affecting the Fund's portfolio and, in addition to providing the Fund
with whatever statistical or other information the Fund may reasonably request
with respect to its investments, the Adviser will, on its own initiative,
furnish the Fund from time to time with whatever information the Adviser
believes its appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraph 2 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Fund or to holders of the Fund's shares
("Shareholders") to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Adviser's reckless disregard of
its obligations and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser a fee at the annual rate of 1.00% of
the Fund's average daily net assets. This fee shall be computed daily and shall
be payable on the first business day of each month for services performed the
preceding month. Upon any termination of this Agreement before the end of a
month, the fee for such part of that month shall be prorated according to the
proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Adviser, the value of the Fund's net assets
shall be computed at the times and in the manner specified in the Fund's
Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation, including: (a) payment of the
fees payable to the Adviser under paragraph 6 hereof; (b) organization expenses;
(c) brokerage fees and commissions; (d) taxes; (e) interest charges on
borrowings; (f) the costs of liability insurance or fidelity bond coverage for
the Fund's officers and employees, and directors' and officers' errors and
omissions insurance coverage; (g) legal, auditing and accounting fees and
expenses; (h) charges of the Fund's Custodian and Transfer and Dividend
Disbursing Agent; (i) the Fund's pro rata portion of dues, fees and charges of
any trade association of which the Fund is a member; (j) the expenses of
printing, preparing, distributing and mailing proxies, stock certificates and
all reports required by the Securities and Exchange Commission and State
securities administrations, including the Fund's prospectuses, statements of
additional information, and notices to shareholders; (k) filing fees for the
registration or qualification of the Fund and its shares under federal or state
securities laws; (l) the fees and expenses involved in registering and
maintaining registration of the Fund's shares with the Securities and Exchange
Commission and State securities administrations; (m) the expenses of holding
shareholder meetings; (n) the compensation, including fees, of any of the Fund's
unaffiliated directors, officers or employees; (o) 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
portfolios; (p) expenses of personnel performing shareholder servicing
functions; and (q) litigation and other extraordinary or non-recurring expenses
and other expenses properly payable by the Fund.
8. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement, but excluding interest, taxes,
brokerage, distribution fees paid pursuant to the Fund's plan of distribution
and, if permitted by state securities commissions, extraordinary expenses)
exceed the most restrictive expense limitation imposed by the securities law of
any state having jurisdiction over the Fund, the Adviser will reimburse the Fund
for the amount of such excess up to the amount of fees accrued for such fiscal
year hereunder. Such expense reimbursement, if any, will be estimated,
reconciled and paid on a monthly basis.
9. Service to Other Companies or Accounts
The Fund understands that the Adviser and its affiliates may
act as investment adviser to fiduciary and other managed accounts and to one or
more other investment companies, and the Fund has no objection to their so
acting, provided that whenever the Fund and one or more other clients advised by
the Adviser and its affiliates have available funds for investment, investments
suitable and appropriate for each will be allocated in a manner believed by the
Adviser to be equitable to each client. The Fund recognizes that in some cases
this procedure may adversely affect whether a particular security is available
to the Fund, the size of the position obtainable for the Fund or the price at
which that position may be obtained or disposed. In addition, the Fund
understands that the persons employed by the Adviser to assist in the
performance of the Adviser's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of any kind or nature.
10. Term of Agreement
This Agreement shall become effective on the date hereof,
shall continue in effect for two years and thereafter shall continue for
successive annual periods, provided such continuance is specifically approved at
least annually by (i) the Fund's Directors or (ii) a vote of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities (as defined
in the 1940 Act), provided that in either event the continuance is also approved
by a majority of the Directors who are not "interested persons" (as defined in
the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the Fund's Directors
or by vote of holders of a majority of the Fund's outstanding voting securities,
or upon 60 days' written notice, by the Adviser. This Agreement will also
terminate automatically in the event of its assignment (as defined in the 1940
Act).
11. Use of the Word "Gabelli"
It is understood and agreed that the word "Gabelli" is the
Adviser's property 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 an investment adviser to the Fund, the Fund shall
promptly take all necessary and appropriate action to change its name to one
that does not include the word "Gabelli"; provided, however, that the Fund may
continue to use such name if the Adviser consents in writing to such use.
12. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York giving effect to the conflict
of law rules thereof.
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
THE GABELLI VALUE FUND INC.
By: BRUCE ALPERT
AGREED TO AND ACCEPTED:
GABELLI FUNDS, INC.
By: ILLEGIBLE
THE GABELLI VALUE FUND INC.
DISTRIBUTION AGREEMENT
July 30, 1993
Gabelli & Company, Inc.
One Corporate Center
Rye, New York 10580-1435
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, The Gabelli Value Fund Inc., a Maryland corporation
(the "Fund"), has agreed that Gabelli & Company, Inc. (the "Distributor") shall
be, for the period of this Agreement, the distributor of shares of common stock,
par value $.001 per share, issued by the Fund (the "Shares").
1. Services as Distributor
1.1 The Distributor will act as agent for the distribution of the Shares covered
by the registration statement, prospectus and statement of additional
information then in effect for the Fund (the "Registration Statement") under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended (the "1940 Act").
1.2 The Distributor agrees to use its best efforts to solicit orders for the
sale of the Shares at the public offering price, as determined in accordance
with the Registration Statement, and will undertake such advertising and
promotion as it believes is reasonable in connection with such solicitation.
1.3 All activities by the Distributor as distributor of the Shares shall comply
with all applicable laws, rules and regulations, including, without limitation,
all rules and regulations made or adopted by the Securities and Exchange
Commission (the "SEC") or by any securities association registered under the
Securities Exchange Act of 1934. The Distributor is and throughout the term of
this Agreement will remain a member in good standing with the National
Association of Securities Dealers, Inc. ("NASD") and will abide by the NASD's
Rules of Fair Practice.
1.4 The Distributor will provide one or more persons during normal business
hours to respond to telephone questions concerning the Fund.
1.5 The Distributor acknowledges that, whenever in the judgment of the Fund's
officers such action is warranted for any reason, including, without limitation,
market, economic or political conditions, those officers may decline to accept
any orders for, or make any sales of, any Shares until such time as those
officers deem it advisable to accept such orders and to make such sales.
1.6 The Distributor will act only on its own behalf as principal should it
choose to enter into selling agreements with selected dealers or others.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all documents, to
furnish any and all information and to take any other actions that may be
reasonably necessary in connection with the qualification of the Shares for sale
in those states that the Distributor may designate.
2.2 The Fund shall furnish from time to time, for use in connection with the
sale of the Shares, such information reports with respect to the Fund and its
Shares as the Distributor may reasonably request, all of which shall be signed
by one or more of the Fund's duly authorized officers; and the Fund warrants
that the statements contained in any such reports, when so signed by one or more
of the Fund's officers, shall be true and correct. The Fund shall also furnish
the Distributor upon request with: (a) annual audited financial statements
prepared by independent public accountants regularly retained by the Fund; (b)
semiannual unaudited financial statements pertaining to the Fund; (c) any
interim reports prepared by the Fund; (d) a quarterly itemized list of the
securities in the Fund's portfolio; and (e) from time to time such additional
information regarding the Fund's financial condition as the Distributor may
reasonably request.
2.3 The Fund shall pay to the Distributor the proceeds from any sales load
imposed on the purchases of the Shares as specified in the Registration
Statement. The Fund has also agreed to pay the Distributor such amounts as are
set forth in the Fund's Distribution Plan (the "Plan") adopted in accordance
with Rule 12b-1 under the 1940 Act whereby the Fund may pay the Distributor (or
other "Designated Dealers" as defined in the Plan) for certain distribution
expenses incurred in connection with the offering and sales of Fund Shares.
3. Representations and Warranties
The Fund represents to the Distributor that the Registration Statement and all
amendments thereto filed by the Fund with the SEC under the 1933 Act and the
1940 Act with respect to the Shares of the Fund have been carefully prepared in
conformity with the requirements of the 1933 Act, the 1940 Act and the rules and
regulations of the SEC thereunder. As used in this Agreement the term
"Registration Statement", shall mean any registration statement, prospectus and
statement of additional information filed by the Fund with the SEC and any
amendments and supplements thereto which at any time shall have been filed with
the SEC. The Fund represents and warrants to the Distributor that the
Registration Statement, when such Registration Statement becomes effective, will
include all statements required to be contained therein in conformity with the
1933 Act, the 1940 Act and the rules and regulations of the SEC; that all
statements of fact contained in the Registration Statement will be true and
correct when such Registration Statement becomes effective; and that the
Registration Statement when such Registration Statement becomes effective will
not include an untrue statement of a material fact nor omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of the Fund's shares. The Distributor may, but
shall not be obligated to, propose from time to time such amendment or
amendments to the Registration Statement as, in the light of future
developments, may, in the opinion of the Distributor's counsel, be necessary or
advisable. If the Fund shall not propose such amendment or amendments within
fifteen days after receipt by the Fund of a written request from the Distributor
to do so, the Distributor may, at its option, terminate this Agreement. The Fund
shall not file any amendment to the Registration Statement without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit the Fund's right to
file at any time such amendments to the Registration Statement, of whatever
character, as the Fund may deem advisable, such right being in all respects
absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes the Distributor and any dealers with whom the
Distributor has entered into dealer agreements to use any prospectus or
statement of additional information furnished by the Fund from time to time, in
connection with the sale of the Fund's Shares. The Fund agrees to indemnify,
defend and hold the Distributor, its several officers and directors, and any
person who controls the Distributor within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Distributor, its officers and directors, or any such controlling
person, may incur under the 1933 Act, the 1940 Act or common law or otherwise,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, or arising out of or
based upon any omission or alleged omission to state a material fact required to
be stated in the Registration Statement, or necessary to make the statements in
it not misleading; provided, however, that the Fund's agreement to indemnify the
Distributor, its officers or directors, and any such controlling person shall
not be deemed to cover any claims, demands, liabilities or expenses arising out
of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement in reliance upon and in
conformity with written information furnished to the Fund by or on behalf of the
Distributor specifically for inclusion therein; and further provided that the
Fund's agreement to indemnify the Distributor and the Fund's representations and
warranties hereinbefore set forth in paragraph 3 shall not be deemed to cover
any liability to the Fund or its shareholders to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of the Distributor's
reckless disregard of its obligations and duties under this Agreement. The
Fund's agreement to indemnify the Distributor, its officers and directors, and
any such controlling person, as aforesaid, is expressly conditioned upon the
Fund's being notified of any action brought against the Distributor, its
officers or directors, or any such controlling person, such notification to be
given by letter or by telegram addressed to the Fund at its principal office in
Rye, New York and sent to the Fund by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. The failure to so notify the Fund of any such action shall not
relieve the Fund from any liability that the Fund may have to the person against
whom such action is brought by reason of any such untrue or alleged untrue
statement or omission or alleged omission otherwise than on account of the
Fund's indemnity agreement contained in this paragraph 4.1. The Fund's
indemnification agreement contained in this paragraph 4.1 and the Fund's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, its officers and directors, or any controlling person, and
shall survive the delivery of any of the Fund's Shares. This agreement of
indemnity will inure exclusively to the benefit of the Distributor, to the
benefit of its several officers and directors, and their respective estates, and
to the benefit of the Distributor's controlling person and the successors of
such controlling person. The Fund agrees to notify the Distributor promptly of
the commencement of any litigation or proceedings against the Fund or any of its
officers or trustees in connection with the issuance and sale of any of the
Fund's Shares.
4.2 The Distributor agrees to indemnify, defend and hold the Fund, its several
officers and directors, and any person who controls the Fund within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the costs of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) that the Fund, its officers or directors or any such
controlling person may incur under the 1933 Act, the 1940 Act or common law or
otherwise, but only to the extent that such liability or expense incurred by the
Fund, its officers or directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon any untrue or alleged
untrue statement of a material fact contained in the Registration Statement, or
arises out of or be based upon any omission or alleged omission to state a
material fact required to be stated therein, but in each case only to the extent
that the untrue or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Fund by or on behalf of the Distributor specifically for inclusion therein.
The Distributor's agreement to indemnify the Fund, its officers and directors,
and any such controlling person, as aforesaid, is expressly conditioned upon the
Distributor being notified of any action brought against the Fund, its officers
or directors, or any such controlling person, such notification to be given by
letter or telegram addressed to the Distributor at its principal office in Rye,
New York and sent to the Distributor by the person against whom such action is
brought, within ten days after the summons or other first legal process shall
have been served. The failure to so notify the Distributor of any such action
shall not relieve the Distributor from any liability that the Distributor may
have to the Fund, its officers or directors, or to such controlling person by
reason of any such untrue or alleged untrue statement or omission or alleged
omission otherwise than on account of the Distributor's indemnity agreement
contained in this paragraph 4.2. The Distributor agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against the
Distributor or any of its officers or directors in connection with the issuance
and sale of any of the Fund's Shares.
4.3 In case any action shall be brought against any indemnified party under
paragraph 4.1 or 4.2, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish to do so, to assume the defense
thereof with counsel satisfactory to such indemnified party. If the indemnifying
party opts to assume the defense of such action, the indemnifying party will not
be liable to the indemnified party for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof other
than (a) reasonable costs of investigation or the furnishing of documents or
witnesses and (b) all reasonable fees and expenses of separate counsel to such
indemnified party if (i) the indemnifying party and the indemnified party shall
have agreed to the retention of such counsel or (ii) the indemnified party shall
have concluded reasonably that representation of the indemnifying party and the
indemnified party by the same counsel would be inappropriate due to actual or
potential differing interests between them in the conduct of the defense of such
action.
5. Effectiveness of Registration
None of the Shares shall be offered by either the Distributor or the Fund under
any of the provisions of this Agreement and no orders for the purchase or sale
of the Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the Registration Statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 5(b)(2) of
the 1933 Act is not on file with the SEC; provided, however, that nothing
contained in this paragraph 5 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase its Shares from any
shareholder in accordance with the provisions of the Fund's Registration
Statement or articles of incorporation.
6. Notice to the Distributor
The Fund agrees to advise the Distributor immediately in writing:
(a) of any request by the SEC for amendments to the Registration Statement
then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement of a material
fact made in the Registration Statement then in effect or that requires the
making of a change in such Registration Statement in order to make the
statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to the Registration
Statement which may from time to time be filed with the SEC.
7. Term of Agreement
This Agreement shall continue until July 30, 1995 and thereafter shall continue
automatically for successive annual periods ending on July 30 of each year,
provided such continuance is specifically approved at least annually by (a) the
Fund's Board of Directors and (b) a vote of a majority of the Fund's directors
who are not interested persons (as defined in the 1940 Act) of the Fund (the
"Disinterested Directors"), by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable with respect to
the Fund without penalty, (a) on 60 days' written notice, by vote of a majority
of the Disinterested Directors or by vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of the Fund, or (b) on 90 days'
written notice by the Distributor. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act) by
either of the parties to the Agreement or in the event the Distributor ceases to
be a member in good standing of the NASD or upon the occurrence of any event
affecting the Distributor's registration as a broker/dealer under the Securities
Exchange Act of 1934.
Please confirm that the foregoing is in accordance with your understanding by
indicating your acceptance hereof at the place below indicated, whereupon it
shall become a binding agreement between us.
Very truly yours,
THE GABELLI VALUE FUND INC.
By: BRUCE ALPERT
Title:
Accepted:
GABELLI & COMPANY, INC.
By: ILLEGIBLE
Title: Vice President
CUSTODY AGREEMENT
AGREEMENT dated as of September 19, 1989 between THE GABELLI VALUE
FUND, INC. (the "Fund"), a Maryland corporation, having its principal office and
place of business at 655 Third Avenue, New York, New York, and BOSTON SAFE
DEPOSIT AND TRUST COMPANY (the "Custodian"), a Massachusetts trust company with
its principal place of business at One Boston Place, Boston, Massachusetts 02108
W I T N E S S E T H
That for and in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
1. Definitions
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
(a) "Authorized Person" shall be deemed to include the President, and
any Vice President, the Secretary, the Treasurer, or any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Directors of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in the certification annexed
hereto as Appendix A or such other certification as may be received by the
Custodian from time to time.
(b) "Book-Entry System" shall mean the Federal Reserve/Treasury
book-entry system for United States and federal agency Securities, its successor
or successors and its nominee or nominees.
(c) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be given to
the Custodian, which is actually received by the Custodian and signed on behalf
of the Fund by any two Authorized Persons or any two officers thereof.
(d) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Fund dated July 20, 1989 as the same may be amended from
time to time.
(e) "Depository" shall mean The Depository Fund Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, its successor or
successors and its nominee or nominees, in which the Custodian is hereby
specifically authorized to make deposits. The term "Depository" shall further
mean and include any other person to be named in a Certificate authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees.
(f) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and principal
by the Government of the United States or agencies or instrumentalities thereof,
commercial paper, bank certificates of deposit, bankers' acceptances and
short-term corporate obligations, where the purchase or sale of such securities
normally requires settlement in federal funds on the same day as such purchase
or sale, and repurchase and reverse repurchase agreements with respect to any of
the foregoing types of securities.
(g) "Oral Instructions" shall mean verbal instructions actually
received by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person.
(h) "Prospectus" shall mean the Fund's current prospectus and statement
of additional information relating to the registration of the Fund's Shares
under the Securities Act of 1933, as amended.
(i) "Shares" refers to the shares of common stock, $.001 par value per
share of the Fund.
(j) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities and investments from time to time owned by the Fund.
(k) "Transfer Agent" shall mean the person that performs the transfer
agent, dividend disbursing agent and shareholder servicing agent functions for
the Fund.
(1) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the Custodian to
be an Authorized Person by any system whereby the receiver of such communication
is able to verify through codes or otherwise with a reasonable degree of
certainty the authenticity of the sender of such communication.
(m) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as custodian
of all the Securities and moneys at the time owned by or in the possession of
the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian for the
Fund and agrees to perform the duties thereof as hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services rendered
under this Agreement in accordance with the fees set forth in the Fee Schedule
annexed hereto as Schedule A and incorporated herein. Such Fee Schedule does not
include out-of-pocket disbursements of the Custodian for which the Custodian
shall be entitled to bill separately. Out-of-pocket disbursements shall include,
but shall not be limited to, the items specified in the Schedule of
Out-of-Pocket charges annexed hereto as Schedule B and incorporated herein,
which schedule may be modified by the Custodian upon not less than thirty days
prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule A of this Agreement a revised Fee Schedule, dated
and signed by an Authorized Officer of each party hereto.
(c) The Custodian will bill the Fund as soon as practicable after the
end of each calendar month, and said billings will be detailed in accordance
with the Fee Schedule for the Fund. The Fund will promptly pay to the Custodian
the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets. The Fund will deliver or cause to be
delivered to the Custodian all Securities and moneys owned by it at any time
during the period of this Agreement. The Custodian will not be responsible for
such Securities and moneys until actually received by it. The Fund shall
instruct the Custodian from time to time in its sole discretion, by means of a
Certificate, or, in connection with the purchase or sale of Money Market
Securities, by means of Oral Instructions or a Certificate, as to the manner in
which and in what amounts Securities and moneys of the Fund are to be deposited
on behalf of the Fund in the Book-Entry System or the Depository and
specifically allocated on the books of the Custodian to the Fund; provided,
however, that prior to the deposit of Securities of the Fund in the Book-Entry
System or the Depository, including a deposit in connection with the settlement
of a purchase or sale, the Fund shall have received a Certificate specifically
approving such deposits by the Custodian in the Book-Entry System or the
Depository. Securities and moneys of the Fund deposited in the Book-Entry System
or the Depository will be represented in accounts that include only assets held
by the Custodian for customers, including but not limited to accounts in which
the Custodian acts in a fiduciary or representative capacity.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain an account for the Fund and shall credit to the account of the Fund all
moneys received by it for the account of the Fund and shall disburse the same
only:
1. In payment for Securities purchased for the Fund, as provided in Section
5 hereof;
2. In payment of dividends or distributions with respect to the Shares of
the Fund, as provided in Section 7 hereof;
3. In payment of original issue or other taxes with respect to the Shares
of the Fund, as provided in Section 8 hereof;
4. In payment for Shares which have been redeemed by the Fund, as provided
in Section 8 hereof;
5. Pursuant to Certificates, or with respect to Money Market Securities,
Oral Instructions or Certificates, setting forth the name of the Fund, the name
and address of the person to whom the payment is to be made, the amount to be
paid and the purpose for which payment is to be made; or
6. In payment of fees and in reimbursement of the expenses and liabilities
of the Custodian attributable to the Fund, as provided in Section 12(h) hereof.
(c) Confirmation and Statements. Promptly after the close of business
on each day, the Custodian shall furnish the Fund with confirmations and a
summary of all transfers to or from the account of the Fund during said day.
Where securities purchased by the Fund are in a fungible bulk of securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Depository or the Book-Entry System, the
Custodian shall by book entry or otherwise identify the quantity of those
securities belonging to the Fund. At least monthly, the Custodian shall furnish
the Fund with a detailed statement of the Securities and moneys held for the
Fund under this Agreement.
(d) Registration of Securities and Physical Separation. All Securities
held for the Fund that are issued or issuable only in bearer form, except such
Securities as are held in the Book-Entry System, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Fund, in the name of any duly appointed registered nominee of the
Custodian as the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor or successors, or
their nominee or nominees. The Fund reserves the right to instruct the Custodian
as to the method of registration and safekeeping of the Securities of the Fund.
The Fund agrees to furnish to the Custodian appropriate instruments to enable
the Custodian to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the Book-Entry System or
the Depository, any Securities that it may hold for the account of the Fund and
that may from time to time be registered in the name of the Fund. The Custodian
shall hold all such Securities specifically allocated to the Fund that are not
held in the Book-Entry System or the Depository in a separate account for the
Fund in the name of the Fund physically segregated at all times from those of
any other person or persons.
(e) Segregated Accounts. Upon receipt of a Certificate the Custodian
will establish segregated accounts on behalf of the Fund to hold liquid or other
assets as it shall be directed by a Certificate and shall increase or decrease
the assets in such Segregated Account only as it shall be directed by a
subsequent Certificate.
(f) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Certificate, the Custodian by itself,
or through the use of the Book-Entry System or the Depository with respect to
Securities therein deposited, shall with respect to all Securities held for the
Fund in accordance with this Agreement:
1. Collect all income due or payable;
2. Present for payment and collect the amount payable upon all
Securities that may mature or be called, redeemed or
retired, or otherwise become payable. Notwithstanding the
foregoing, the Custodian shall have no responsibility to the
Fund for monitoring or ascertaining any call, redemption or
retirement dates with respect to put bonds that are owned by
the Fund and held by the Custodian or its nominee. Nor shall
the Custodian have any responsibility or liability to the
Fund for any loss to the Fund, for any missed payments or
other defaults resulting therefrom; unless the Custodian
receives timely notification from the Fund specifying the
time, place and manner for the presentment of any such put
bond owned by the Fund and held by the Custodian or its
nominee. The Custodian shall not be responsible and assumes
no liability to the Fund for the accuracy or completeness of
any notification the Custodian may furnish to the Fund with
respect to put bonds;
3. Surrender Securities in temporary form for definitive
Securities;
4. Execute any necessary declarations or certificates of
ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter
in effect; and
5. Hold directly, or through the Book-Entry System or the
Depository with respect to Securities therein deposited, for
the account of the Fund all rights and similar Securities
issued with respect to any Securities held by the Custodian
hereunder for the Fund.
(g) Delivery of Securities and Evidence of Authority. Upon receipt of a
Certificate and not otherwise, except for subparagraphs 5, 6, 7 and 8 which may
be effected by Oral or Written Instructions and confirmed by Certificates, the
Custodian, directly or through the use of the Book-Entry System or the
Depository, shall:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Certificate proxies,
consents, authorizations, and any other instruments whereby the
authority of the Fund as owner of any Securities may be
exercised;
2. Deliver or cause to be delivered any Securities held for
the Fund in exchange for other Securities or cash issued or paid
in connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for
the Fund to any protective committee, reorganization committee or
other person in connection with the reorganization, refinancing,
merger, consolidation or recapitalization or sale of assets o.
any corporation, and receive and hold under the terms of this
Agreement in the Fund's account such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of
Fund assets and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any duly
authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund;
5. Deliver Securities owned by the Fund upon sale of such
Securities for the account of the Fund pursuant to Section
5;
6. Deliver Securities owned by the Fund upon the receipt of
payment in connection with any repurchase agreement related
to such Securities entered into by the Fund;
7. Deliver Securities owned by the Fund to the issuer thereof
or its agent when such Securities are called, redeemed, retired
or otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the
Custodian. Notwithstanding the foregoing, the Custodian shall
have no responsibility to the Fund for monitoring or ascertaining
any call, redemption or retirement dates with respect to put
bonds that are owned by the Fund and held by the Custodian or its
nominee. Nor shall the Custodian have any responsibility or
liability to the Fund for any loss to the Fund, for any missed
payments or other defaults resulting therefrom; unless the
Custodian receives timely notification from the Fund specifying
the time, place and manner for the presentment of any such put
bond owned by the Fund and held by the Custodian or its nominee.
The Custodian shall not be responsible and assumes no liability
to the Fund for the accuracy or completeness of any notification
the Custodian may furnish to the Fund with respect to put bonds;
8. Deliver Securities owned by the Fund for delivery in
connection with any loans of securities made by the Fund but only
against receipt of adequate collateral as agreed upon from time
to time by the Custodian and the Fund that may be in the form of
cash or obligations issued by the United States Government, its
agencies or instrumentalities;
9. Deliver Securities owned by the Fund for delivery as
security in connection with any borrowings by the Fund
requiring a pledge of the Fund assets, but only against
receipt of amounts borrowed;
10. Deliver Securities owned by the Fund upon receipt of
Written Instructions from the Fund for delivery to the Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time in
the Fund's Prospectus, in satisfaction of requests by holders of
Shares for repurchase or redemption; and
11. Deliver Securities owned by the Fund as collateral in
connection with short sales of common stock for which the Fund
owns the stock or owns preferred stocks or debt securities
convertible or exchangeable, without payment of further
consideration, into shares of the common stock sold short:
12. Deliver Securities owned by the Fund for any purpose
expressly permitted by and in accordance with procedures
described in the Fund's Prospectus; and
13. Deliver Securities owned by the Fund for any other proper
business purpose, but only upon receipt of, in addition to
Written Instructions, a certified copy of a resolution of the
Board of Directors signed by an Authorized Person and certified
by the Secretary of the Fund, specifying the Securities to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper business
purpose, and naming the person or persons to whom delivery of
such Securities shall be made.
(h) Endorsement and Collection of Checks, Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders for the
payment of money received by the Custodian for the account of the Fund.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
that are not Money Market Securities, a Certificate, and (ii) with respect to
each purchase of Money Market Securities, either a Certificate or Oral
Instructions, in either case specifying with respect to each purchase: (1) the
name of the Fund; (2) the name of the issuer and the title of the Securities;
(3) the number of shares or the principal amount purchased and accrued interest,
if any; (4) the date of purchase and settlement; (5) the purchase price per
unit; (6) the total amount payable upon such purchase; (7) the name of the
person from whom or the broker through whom the purchase was made, if any; (8)
whether or not such purchase is to be settled through the Book-Entry System or
the Depository; and (9) whether the Securities purchased are to be deposited in
the Book-Entry System or the Depository. The Custodian shall receive all
Securities purchased by or for the Fund and upon receipt of such Securities
shall pay out of the moneys held for the account of the Fund the total amount
payable upon such purchase, provided that the same conforms to the total amount
payable as set forth in such Certificate or Oral Instructions.
(b) Promptly after each sale of Securities of the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities that are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, either a Certificate or Oral Instructions, in either
case specifying with respect to such sale: (1) the name of the Fund; (2) the
name of the issuer and the title of the Securities; (3) the number of shares or
principal amount sold, and accrued interest, if any; (4) the date o sale; (5)
the sale price per unit; (6) the total amount payable to the Fund upon such
sale; (7) the name of the broker through whom or the person to whom the sale was
made; and (8) whether or not such sale is to be settled through the Book-Entry
System or the Depository. The Custodian shall deliver or cause to be delivered
the Securities to the broker or other person designated by the Fund upon receipt
of the total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable to the Fund as set forth in such
Certificate or such Oral Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs prevailing
among dealers in Securities.
6. Lending of Securities.
If the Fund is permitted by the terms of its Articles of Incorporation
and as disclosed in its Prospectus to lend Securities, within 24 hours after
each loan of Securities, the Fund shall deliver to the Custodian Written
Instructions specifying with respect to each such loan: (a) the name of the
Fund; (b) the name of the issuer and the title of the Securities; (c) the number
of shares or the principal amount loaned; (d) the date of loan and delivery; (e)
the total amount to be delivered to the Custodian, and allocated to the Fund
against the loan of the Securities, including the amount of cash collateral and
the premium, if any, separately identified; (f) the name of the broker, dealer
or financial institution to which the loan was made; and (g) whether the
Securities loaned are to be delivered through the Book-Entry System or the
Depository.
Promptly after each termination of a loan of Securities, the Fund shall
deliver to the Custodian Written Instructions specifying with respect to each
such loan termination and return of Securities: (a) the name of the Fund; (b)
the name of the issuer and the title of the Securities to be returned; (c) the
number of shares or the principal amount to be returned; (d) the date of
termination; (e) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Written Instructions); (f) the name of the broker, dealer or
financial institution from which the Securities will be returned; and (g)
whether such return is to be effected through the Book-Entry System or the
Depository. The Custodian shall receive all Securities returned from the broker,
dealer or financial institution to which such Securities were loaned and upon
receipt thereof shall pay the total amount payable upon such return of
Securities as set forth in the Written Instructions. Securities returned to the
Custodian shall be held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian the resolution of the Board
of Directors of the Fund certified by the Secretary (i) authorizing the
declaration of dividends by the Fund on a specified periodic basis and
authorizing the Custodian to rely on Oral or Written Instructions specifying the
date of the declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to payment shall be
determined, the amount payable per share to the shareholders of record as of the
record date and the total amount payable to the Transfer Agent on the payment
date, or (ii) setting forth the date of declaration of any dividend or
distribution by the Fund, the date of payment thereof, the record date as of
which shareholders entitled to payment shall be determined, the amount payable
per share to the shareholders of record as of the record date and the total
amount payable to the Transfer Agent on the payment date.
(b) Upon the payment date specified in such resolution, Oral
Instructions, or Written Instructions, as the case may be, the Custodian shall
pay out the moneys held for the account of the Fund the total amount payable to
the Transfer Agent of the Fund.
8. Sale and Redemption of Shares of the Fund.
(a) Whenever the Fund shall sell any of its Shares, the Fund shall
deliver or cause to be delivered to the Custodian a Certificate duly specifying:
1. The name of the Fund;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that the Certificate may be
furnished subsequent to the purchase of Shares of the Fund and that the
information contained therein will be derived from the sales of Shares of the
Fund's account as reported to the Fund by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the Fund's account.
(c) Upon issuance of any Shares of the Fund in accordance with the
foregoing provisions of this Section 8, the Custodian shall pay, out of the
moneys specifically allocated and held for the account of the Fund, all original
issue or other taxes required to be paid in connection with such issuance upon
the receipt of a Certificate specifying the amount to be paid.
(d) Except as provided hereafter, whenever any Shares of the Fund are
redeemed, the Fund shall cause the Transfer Agent to promptly furnish to the
Custodian Written Instructions, specifying:
1. The name of the Fund.
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
Any such Written Instructions shall be confirmed by a Certificate which
the Custodian understands and agrees may be furnished subsequent to the
redemption of Shares of the Fund. The Custodian further understands that the
information contained in such Certificate will be derived from the redemption of
Shares as reported to the Fund by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of the Fund received by the Transfer agent for redemption and
that such Shares are valid and in good form for redemption, the Custodian shall
make payment to the Transfer Agent out of the moneys held for the account of the
Fund of the total amount specified in the Certificate issued pursuant to
paragraph (d) of this Section 8.
(f) Notwithstanding the above provisions regarding the redemption of
Shares, whenever such Shares are redeemed pursuant to any check redemption
privilege that may from time to time be offered by the Fund, the Custodian,
unless otherwise instructed by a Certificate shall, upon receipt of advice from
the Fund or its agent stating that the redemption is in good form for redemption
in accordance with the check redemption procedure, honor the check presented as
part of such check redemption privilege out of the moneys specifically allocated
to the Fund in such advice for such purpose.
9. Indebtedness.
(a) The Fund will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Fund borrows money for temporary
administrative or emergency purposes using Securities as collateral for such
borrowings, a notice or undertaking in the form currently employed by any such
bank setting forth the amount that such bank will loan to the Fund against
delivery of a stated amount of collateral. The Fund shall promptly deliver to
the Custodian Written or Oral Instructions stating with respect to each such
borrowing: (1) the name of the Fund; (2) the name of the bank; (3) the amount
and terms of the borrowing, which may be set forth by incorporating by reference
an attached promissory note, duly endorsed by the Fund, or other loan agreement;
(4) the time and date, if known, on which the loan is to be entered into (the
"borrowing date"); (5) the date on which the loan becomes due and payable; (6)
the total amount payable to the Fund on the borrowing date; (7) the market value
of Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities; (8) whether the Custodian is to deliver such collateral
through the Book-Entry System or the Depository; and (9) a statement that such
loan is in conformance with the 1940 Act and the Fund's Prospectus.
(b) Upon receipt of the Certificate referred to in subparagraph (a)
above, the Custodian shall deliver on the borrowing date the specified
collateral and the executed promissory note, if any, against delivery by the
lending bank of the total amount of the loan payable, provided that the same
conforms to the total amount payable as set forth in the Written or Oral
Instructions. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver as additional collateral in the manner
directed by the Fund from time to time such Securities as may be specified in
Written or Oral Instructions to collateralize further any transaction described
in this Section 9. The Fund shall cause all Securities released from collateral
status to be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in Written or Oral Instructions all of the
information required by this Section 9, the Custodian shall not be under any
obligation to deliver any Securities. Collateral returned to the Custodian shall
be held hereunder as it was prior to being used as collateral.
10. Persons Having Access to Assets of the Fund.
(a) No Director, officer, employee or agent of the Fund, and no
officer, director, employee or agent of the Adviser, shall have physical access
to the assets of the Fund held by the Custodian or be authorized or permitted to
withdraw any investments of the Fund, nor shall the Custodian deliver any assets
of the Fund to any such person. No officer, director, employee or agent of the
Custodian who holds any similar position with the Fund or the Adviser shall have
access to the assets ~f the Fund.
(b) The individual employees of the Custodian duly authorized by the
Board of Directors of the Custodian to have access to the assets of the Fund are
listed in the certification annexed hereto as Appendix C. The Custodian shall
advise the Fund of any change in the individuals authorized to have access to
the assets of the Fund by written notice to the Fund accompanied by a certified
copy of the authorizing resolution of the Custodian's Board of Directors
approving such change.
(c) Nothing in this Section 10 shall prohibit any officer, employee or
agent of the Fund, or any officer, director, employee or agent of the Adviser,
from giving Oral Instructions or Written Instructions to the Custodian or
executing a Certificate so long as it does not result in delivery of or access
to assets of the Fund prohibited by paragraph (a) of this Section 10.
11. Concerning the Custodian.
(a) Standard of Conduct. Except as otherwise provided herein, neither
the Custodian nor its nominee shall be liable for any loss or damage, including
counsel fees, resulting from its action or omission to act or otherwise, except
for any such loss or damage arising out of its own negligence or willful
misconduct. The Custodian may, with respect to questions of law, apply for and
obtain the advice and opinion of counsel to the Fund or of its own counsel, at
the expense of the Fund, and shall be fully protected with respect to anything
done or omitted by it in good faith in conformity with such advice or opinion.
The Custodian shall be liable to the Fund for any loss or damage resulting from
the use of the Book-Entry System or the Depository arising by reason of any
negligence, misfeasance or misconduct on the part of the Custodian or any of its
employees or agents.
(b) Limit of Duties. Without limiting the generality or the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and shall
not be liable for:
1. The validity of the issue of any Securities purchased by the
Fund, the legality of the purchase thereof, or the propriety
of the amount paid therefor;
2. The legality of the sale of any Securities by the Fund, or
the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be Paid therefor;
5. The legality of the declaration or payment of any dividend
or other distribution of the Fund.
6. The legality of any borrowing for temporary or emergency
administrative purposes.
(c) No Liability Until Receipt. The Custodian shall not be liable for,
or considered to be the Custodian of, any money, whether or not represented by
any check, draft, or other instrument for the payment of money, received by it
on behalf of the Fund until the Custodian actually receives and collects such
money directly or by the final crediting of the account representing the Fund's
interest in the Book-Entry System or the Depository.
(d) Amounts Due from Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any amount due to
the Fund from the Transfer Agent nor to take any action to effect payment or
distribution by the Transfer Agent of any amount paid by the Custodian to the
Transfer Agent in accordance with this Agreement.
(e) Collection Where Payment Refused. The Custodian shall not be under
any duty or obligation to take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default, or if payment is
refused after due demand or presentation, unless and until (a) it shall be
directed to take such action by a Certificate and (b) it shall be assured to its
satisfaction of reimbursement of its costs and expenses in connection with any
such action.
(f) Appointment of Agents and Sub-Custodians. The Custodian may appoint
one or more banking institutions to act as Depository or Depositories or as
Sub-Custodian or as Sub-Custodians of Securities and moneys at any time owned by
the Fund, upon terms and conditions specified in a Certificate.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time delivered
to or held by it for the Fund are such as may properly be held by the Fund under
the provisions of the Articles of Incorporation and the Prospectus.
(h) Compensation of the Custodians. The Custodian shall be entitled to
receive, and the Fund agrees to pay to the Custodian, such compensation as may
be agreed upon from time to time between the Custodian and the Fund. The
Custodian may charge against any moneys of the Fund such compensation and any
expenses incurred by the Custodian in the performance of its duties pursuant to
this Agreement. The Custodian shall also be entitled to charge against any money
held by it for the Fund the amount of any loss, damage, liability or expense
incurred with respect to the Fund, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement.
The expenses that the Custodian may charge against such account
include, but are not limited to, the expenses of Sub-Custodians incurred in
settling transactions outside of Boston, Massachusetts or New York City, New
York involving the purchase and sale of Securities of the Fund.
(i) Reliance on Certificates and Instructions. The Custodian shall be
entitled to rely upon any Certificate, notice or other instrument in writing
received by the Custodian and reasonably believed by the Custodian to be genuine
and to be signed by two officers of the Fund. The Custodian shall be entitled to
rely upon any Written Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this Agreement and reasonably
believed by the Custodian to be genuine and to be given by an Authorized Person.
The Fund agrees to forward to the Custodian Written Instructions from an
Authorized Person confirming such oral Instructions in such manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
telex or otherwise, by the close of business on the same day that such Oral
Instructions are given to the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall in no way affect
the validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from a duly Authorized Person.
(j) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by officers
and auditors employed by the Fund and by the appropriate employees of the
Securities and Exchange Commission.
The Custodian shall provide the Fund with any report obtained by the
Custodian on the system of internal accounting control of the Book-Entry System
or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
12. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as the
parties may mutually agree.
(b) Either of the parties hereto may terminate this Agreement by giving
to the other party a notice in writing specifying the date of such termination,
which shall be not less than 60 days after the date of receipt of such notice.
In the event such notice is given by the Fund, it shall be accompanied by a
certified resolution of the Board of Directors of the Fund, electing to
terminate this Agreement and designating a successcr custodian or custodians,
which shall be a person qualified to so act under the 1940 Act. In the event
such notice is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a certified resolution of the Board
of Directors of the Fund, designating a successor custodian or custodians. In
the absence of such designation by the Fund, the Custodian may designate a
successor custodian, which shall be a person qualified to so act under the 1940
Act. If the Fund fails to designate a successor custodian, the Fund shall upon
the date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry Systems which cannot be delivered to the Fund) and moneys then owned
by the Fund, be deemed to be its own custodian and the Custodian shall thereby
be relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book-Entry System that
cannot be delivered to the Fund.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 12, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by the
successor custodian on that date deliver directly to the successor custodian all
Securities and moneys then held by the Custodian, after deducting all fees,
expenses and other amounts for the payment or reimbursement of which it shall
then be entitled.
13. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification signed by two of
the present officers of the Fund setting forth the names and the signatures of
the present Authorized Persons. The Fund agrees to furnish to the Custodian a
new certification in similar form in the event that any such present Authorized
Person ceases to be such an Authorized Person or in the event that other or
additional Authorized Persons are elected or appointed. Until such new
certification shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
certification.
(b) Annexed hereto as Appendix B is a certification signed by two of
the present officers of the Fund setting forth the names and the signatures of
the present officers of the Fund. The Fund agrees to furnish to the Custodian a
new certification in similar form in the event any such present officer ceases
to be an officer of the Fund or in the event that other or additional officers
are elected or appointed. Until such new certification shall be received, the
Custodian shall be fully protected in acting under the provisions of this
Agreement upon the signature of the officers as set forth in the last delivered
certification.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at One
Boston Place, Boston, Massachusetts 02108 or at such other place as the
Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund, shall be sufficiently given if
addressed to the Fund and mailed or delivered to it at its offices at One Boston
Place, Boston, Massachusetts 02108, or at such other place as the Fund may from
time to time designate in writing.
(e) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality as this
Agreement, (i) authorized and approved by a resolution of the Board of Directors
of the Fund, including a majority of the members of the Board of Directors of
the Fund who are not "interested persons" of the Fund (as defined in the 1940
Act), or (ii) authorized and approved by such other procedures as may be
permitted or required by the 1940 Act.
(f) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund authorized or approved by a resolution of the Board of Directors of the
Fund, and any attempted assignment without such written consent shall be null
and void.
(g) This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
(h) The captions of the Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(i) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunder duly authorized as of the day
and year first above written.
THE GABELLI VALUE FUND INC.
By: BRUCE ALPERT
VICE PRESIDENT
Attest:
ILLEGIBLE
BOSTON SAFE DEPOSIT AND
TRUST COMPANY
By: JEAN C. TEMPEL
Attest:
BRIGID O. BIEBER
APPENDIX A
We, Bruce Alpert, Vice President and Thomas J. LaBarbera, Secretary, of
the Gabelli Value Fund Inc., a Maryland corporation (the "Fund"), do hereby
certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the fund
and the signatures set forth opposite their respective names are their true and
correct signatures.
Name Signature
Roland Caron ROLAND CARON
Louise B. O'Leary LOUISE B. O'LEARY
Doreen L. Rock DOREEN L. ROCK
BRUCE ALPERT
Bruce Alpert, Vice President
THOMAS J. LABARBERA
Thomas J. LaBarbera, Secretary
<PAGE>
APPENDIX B - OFFICERS
I, Bruce Alpert, Vice President and I, Thomas J. LaBarbera, Secretary,
of The Gabelli Value Fund Inc., a Maryland corporation (the "Fund"), do hereby
certify that:
The following individuals serve in the following positions with the
Fund and each individual has been duly elected or appointed to each such
position and qualified therefor in conformity with the Fund's Articles of
Incorporation and the signatures set forth opposite their respective names are
their true and correct signatures:
Name Position Signature
Mario J. Gabelli President and
Chief Invest-
ment Officer MARIO J. GABELLI
Bruce Alpert Chief Operating
Officer, Vice
President and
Treasurer BRUCE ALPERT
Thomas J. LaBarbera Secretary THOMAS J. LABARBERA
Bradley Purcell Vice President-
Research BRADLEY PURCELL
Salvatore Muoio Vice President-
Research SALVATORE MUOIO
BRUCE ALPERT
Bruce Alpert, Vice President
THOMAS J. LABARBERA
Thomas J. LaBarbera, Secretary
<PAGE>
AFFADAVIT OF SIGNATURES
I, Francis J. McNamara, III, Esq., Senior Vice President and General
Counsel of The Boston Company Advisors, Inc. do hereby certify that the
signatures set forth opposite the respective names of Roland Caron, Louise B.
O'Leary and Doreen L. Rock are their true and correct signatures.
Name Signature
Roland Caron ROLAND CARON
Louise B. O'Leary LOUISE B. O'LEARY
Doreen L. Rock DOREEN L. ROCK
ILLEGIBLE FRANCIS J. MCNAMARA, III, ESQ.
Witness Francis J. McNamara, III, Esq.
Date: September 5, 1990 Date: September 5, 1990
------------------------------ ------------------------
<PAGE>
APPENDIX C - INDIVIDUALS WITH ACCESS
I, Lynne E. Larkin, Secretary of Boston Safe Deposit and Trust Company,
a Massachusetts trust company (the "Custodian"), do hereby certify that:
The following nine named individuals have been duly authorized by the
Board of Directors of the Custodian to have access to the assets of The Gabelli
Value Fund Inc., a Maryland Corporation, held by the Custodian in its capacity
as such
Karen D. DeVitto
Peter DiCerbo
Mark B. Hochgesang
Russell G. McAdams, II
Gregg E. Pendergast
Geraldine E. Ryan
Virginia Shea
S. Elizabeth Tindley
Cynthia E. Toomey
LYNNE E. LARKIN
Lynne E. Larkin
<PAGE>
THE GABELLI VALUE FUND INC.
Schedule A
CUSTODY FEES
Annual Fee Rate as a Percentage
General Custody: of Month-End Market Value
- ---------------- ----------------------------
Custodial Services First $100 million .03 %
Next $200 million .025 %
Next $200 million .0175%
Excess .01 %
Custody Transaction Charges
Domestic:
- - Portfolio Trades Depository Eligible $12.00
Non-Depository Eligible $30.00
- - Option charge for each
option written or
closing contract,
per issue, per broker $25.00
Option expiration
charge, per issue,
per broker $10.00
Option exercised
charge, per issue, per
broker $10.00
Securities Lending Charges
- - Deliver securities
against collateral $25.00
Deliver collateral
against receipt of
securities $20.00
Marking-to-market $ 5.00/day
<PAGE>
SCHEDULE A (cont)
Global Safekeeping Fees:
Depository held assets 0.12%
Non-depository held assets 0.15
Transaction Charges
Buys, Sells, Maturities S35
FX trades with Boston Advisors $ 0
FX trades with third parties $20
Out-of-Pocket Expenses
All related expenses
<PAGE>
SCHEDULE B
The Fund will pay to the Custodian as soon as possible after the end of
each month all out-of-pocket expenses reasonably incurred in connection with the
assets of the Fund.
<PAGE>
August 16, 1990
Bruce N. Alpert
Gabelli Funds, Inc.
655 Third Avenue - 14th Floor
New York, New York 10017
Dear Bruce:
We have been evaluating our Global Custody fee schedule recently. In light of
the very limited nature of The Gabelli Value Fund's intended international
activities, we are pleased to be able to provide you the following modified fee
schedule.
Safekeeping Fees
Depository held assets 12 b.p.
Non-depository held assets 15 b.p.
Transaction Charges
Buys, Sells, Maturities $35
FX trades with TBC $ 0
FX trades with third Parties $20
Out-of-Pocket Expenses
All related expenses
This schedule will be used immediately in lieu of the schedule approved by your
Fund's Board of Directors. If you have any questions, please do not hesitate to
call me at (617) 382-4684.
Sincerely,
Vincent J. Molloy
Executive Vice President
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE GABELLI VALUE FUND INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Article 1 Terms of Appointment; Duties of the Bank......................................l
Article 2 Fees and Expenses.............................................................5
Article 3 Representations and Warranties of the Bank....................................6
Article 4 Representations and Warranties of the Fund....................................6
Article 5 Data Access and Proprietary Information.......................................7
Article 6 Indemnification..............................................................10
Article 7 Standards of Care............................................................12
Article 8 Covenants of the Fund and the Bank...........................................12
Article 9 Termination of Agreement.....................................................14
Article 10 Assignment...................................................................14
Article 11 Amendment....................................................................15
Article 12 Massachusetts Law to Apply...................................................15
Article 13 Force Majeure................................................................15
Article 14 Consequential Damages........................................................15
Article 15 Merger of Agreement..........................................................15
Article 16 Limitations of Liability of the Trustees and the Shareholders................16
Article 17 Counterparts.................................................................16
</TABLE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 17th day of November, 1993, by and between THE
GABELLI VALUE FUND INC., a Maryland business trust, having its principal office
and place of business at 555 Theodore Fremd Avenue Corporate Center, Rye, New
York (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent, custodian of certain retirement plans and agent in
connection with certain other activities, and the Bank desires to accept such
appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Terms of Appointment; Duties of the Bank
1.01 Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of its beneficial interest ("Shares"), dividend disbursing agent, custodian of
certain retirement plans and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Fund
("Shareholders") and set out in the currently effective prospectus and statement
of additional information ("prospectus") of the Fund, including without
limitation any periodic investment plan or periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefor to the Custodian of the Fund
authorized pursuant to the Declaration of Trust of
the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold such
Shares in the appropriate Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the
appropriate documentation therefor to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Bank shall execute transactions
directly with broker-dealers authorized by the Fund
who shall thereby be deemed to be acting on behalf of
the Fund;
(v) At the appropriate time as and when it receives
monies paid to it by the Custodian with respect to
any redemption, pay over or cause to be paid over in
the appropriate manner such monies as instructed by
the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered
owners thereof upon receipt of
appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund; (viii) Issue replacement
certificates for those certificates alleged to have been lost,
stolen or destroyed upon receipt by the Bank of
indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its
option, may issue replacement certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the
Fund and its Shareholders as to the
foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. Bank
shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares
or to take cognizance of any laws relating to the issue or
sale of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank
shall: (i) perform the customary services of a transfer
agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plans (including
without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder
meeting lists, mailing proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts, preparing
and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information
and (ii) provide a system which will enable the Fund to
monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall: (i) identify to the Bank in
writing those transactions and assets to be treated as
exempt from blue sky reporting for each State and (ii)
verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the
daily activity for each State. The responsibility of the
Bank for the Fund's blue sky State registration status is
solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting
of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these
services in Article 1 may be established from time to time by agreement between
the Fund and the Bank per the attached service responsibility schedule. The Bank
may at times perform only a portion of these services and the Fund or its agent
may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon
in writing between the Fund and the Bank.
Article 2 Fees and Expenses
2.01 For performance by the Bank pursuant to this Agreement,
the Fund agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the
Fund agrees to reimburse the Bank for out-of-pocket expenses, including but not
limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by the Bank at the request or with the consent of the
Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials. Article 3 Representations
and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01 It is a trust company duly organized and existing and in
good standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its
Charter and By-Laws to enter into and
perform this Agreement.
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the
necessary facilities, equipment and
personnel to perform its duties and obligations under this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing
and in good standing under the laws
of .
4.02 It is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities
Act of 1933, as amended is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
Article 5 Data Access and Proprietary Information
5.01 The Fund acknowledges that the data bases, computer
programs, screen formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of the Fund's
ability to access certain Fund-related data ("Customer Data") maintained by the
Bank on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as may
be provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents:
(a) to access Customer Data solely from locations a
may be designated in writing by the
Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access
to any portion of the Proprietary
Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact
and dispose of such information in accordance with
the Bank's instructions;
(d) to refrain from causing or allowing third-party data
acquired hereunder from being retransmitted to any
other computer facility or other location, except
with the prior written consent of the Bank;
(e) that the Fund shall have access only to those
authorized transactions agreed upon by
the parties;
(f) to honor all reasonable written requests made by the
Bank to protect at the Bank's expense the rights of
the Bank in Proprietary Information at common law,
under federal copyright law and under other federal
or state law.
Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Article 5. The obligations of this Article
shall survive any earlier termination of this Agreement.
5.02 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees to make no claim against the Bank
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Fund include the
ability to originate electronic instructions to the Bank in order to (i) effect
the transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information, then in such event the Bank shall be entitled
to rely on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time. Article 6
Indemnification
6.01 The Bank shall not be responsible for, and the Fund shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agent or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer agent or
registrar.
(d) The reliance on, or the carrying out by the Bank
or its agents or subcontractors of
any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Fund
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 In order that the indemnification provisions contained in
this Article 6 shall apply, upon the assertion of a claim for which the Fund may
be required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all developments
concerning such claim. The Fund shall have the option to participate with the
Bank in the defense of such claim or to defend against said claim in its own
name or in the name of the Bank. The Bank shall in no case confess any claim or
make any compromise in any case in which the Fund may be required to indemnify
the Bank except with the Fund's prior written consent. Article 7 Standard of
Care
7.01 The Bank shall at all times act in good faith and agrees
to use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.
Article 8 Covenants of the Fund and the Bank
8.01 The Fund shall promptly furnish to the Bank the
ollowing:
(a) A certified copy of the resolution of the Board of
Trustees of the Fund authorizing the appointment of the Bank and the execution
and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the
Fund and all amendments thereto.
8.02 The Bank hereby agrees to establish and maintain
facilities and procedures reasonably
acceptable to the Fund for safekeeping of stock certificates, check forms and
facsimile signature imprinting devices, if any; and for the preparation or use,
and for keeping account of, such certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to
be performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.04 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of
the Shareholder records of the Fund, the Bank will endeavor to notify the Fund
and to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 9 Termination of Agreement
9.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
9.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of
records and material will be borne by the Fund.
Additionally, the Bank reserves the right to charge for any
other reasonable expenses associated with such termination
and/or a charge equivalent to the average of three (3)
months' fees.
Article 10 Assignment
10.01 Except as provided in Section 10.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (1) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of
1934 ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as a transfer
agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate; provided,
however, that the Bank shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and omissions.
Article 11 Amendment
11.01 This Agreement may be amended or modified by a
written agreement executed by both
parties and authorized or approved by a resolution of the Trustees of the Fund.
Article 12 Massachusetts Law to Apply
12.01 This Agreement shall be construed and the provisions
thereof interpreted under and in
accordance with the laws of the Commonwealth of Massachusetts.
Article 13 Force Majeure
13.01 In the event either party is unable to perform its
obligations under the terms of this
Agreement because of acts of God, strikes, equipment or transmission
failure or damage reasonably beyond its
control, or other causes reasonably beyond its control, such party shall not
be liable for damages to the other
for any damages resulting from such failure to perform or otherwise from such
causes.
Article 14 Consequential Damages
14.01 Neither party to this Agreement shall be liable to
the other party for consequential
damages under any provision of this Agreement or for any consequential damages
arising out of any act or failure
to act hereunder.
Article 15 Merger of Agreement
15.01 This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
Article 16 Limitations of Liability of the Trustees and Shareholders
16.01 A copy of this Agreement and Declaration of Trust of the
Trust is on file with the Secretary of the Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees or Shareholders
individually but are binding only upon the assets and property of the Fund.
Article 17 Counterparts
17.01 This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
THE GABELLI VALUE FUND INC.
BY: BRUCE ALPERT
Vice President and Treasurer
ATTEST:
ILLEGIBLE
Secretary
STATE STREET BANK AND TRUST COMPANY
BY: ILLEGIBLE
Executive Vice President
ATTEST:
ILLEGIBLE
Assistant Secretary
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
Bank Fund
1. Receives orders for the purchase of Shares. X
2. Issue Shares and hold Shares in X
Shareholder accounts.
3. Receive redemption requests. X
4. Effect transactions 1-3 above directly X X
with broker-dealers.
5. Pay over monies to redeeming Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends and X
distributions.
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and accurate X
control book for each issue of securities.
12. Mail proxies. X X
13. Mail Shareholder reports. X
14. Mail prospectuses to current Shareholders. X X
15. Withhold taxes on U.S. resident and X
non-resident alien accounts.
16. Prepare and file U.S. Treasury Department X
forms.
17. Prepare and mail account and confirmation X
statements for Shareholders.
SUB-ADMINISTRATION AGREEMENT
May 1, 1995
The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Dear Ladies and Gentlemen:
Gabelli Funds, Inc., a New York corporation (the "Adviser"), as
investment adviser or manager and administrator to the investment companies set
forth on Exhibit A and incorporated herein (each referred to herein as the
"Fund"), confirms its agreement with The Shareholder Services Group, Inc.
("TSSG") as set forth below.
1. Investment Description; Appointment; Governing Law
Each Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the objective, policies and
limitations specified in its Articles of Incorporation or Master Trust Agreement
as amended from time to time (the "Charter"), its By-Laws, as amended from time
to time, in its prospectus filed with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act") and the
Securities Act of 1933, as amended, as part of the Fund's Registration Statement
(the "Registration Statement"), as amended from time to time, and in the manner
and to the extent as may from time to time be approved as set forth in the
Charter. Copies of the Registration Statement, Charter and By-Laws have been
submitted to TSSG. The Fund employs the Adviser as its investment adviser or
manager and administrator and the Adviser desires to employ and hereby appoints
TSSG to act as its sub-administrator. TSSG accepts this appointment and agrees
to furnish the services as set forth in paragraph 2 of this Agreement for the
compensation set forth below. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of law rules thereof.
2. Services as Sub-Administrator
Subject to the overall supervision and direction of the Adviser, TSSG
will (a) assist in supervising all aspects of each Fund's operations except
those performed by the Adviser under its investment advisory or management
agreement with each Fund; (b) supply the Adviser with office facilities (which
may be in TSSG's own offices), statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including, but not
limited to, the calculation of the net asset value of shares in each Fund
("Shares"), internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; (c) prepare and
distribute materials for all Fund Board of Directors/Trustees Meetings,
including mailing of all Board materials, collating the same materials into the
Board books and assisting in the drafting of minutes for the Board meetings; (d)
prepare reports to holders of Shares ("Shareholders"), tax returns and reports
to and filings with the Securities and Exchange Commission, state Blue Sky
authorities and the applicable stock exchange; (e) provide any equipment or
services necessary for the purpose of pricing Shares or valuing each Fund's
investment portfolio and, when requested, calculate the amount of all applicable
"Blue Sky" expense limitations; (f) provide compliance testing of all Fund
activities against applicable requirements of the 1940 Act and the rules
thereunder, the Internal Revenue Code of 1986, as amended, and the Fund's
investment restrictions; (g) furnish to the Adviser such statistical and other
factual information and information regarding economic factors and trends as the
Adviser from time to time may require, it being understood and acknowledged by
the Fund and TSSG that TSSG shall not provide any services that would cause TSSG
to be deemed to be an "investment adviser", as that term is defined in Section
2(a)(20) of the 1940 Act, including without limitation, services involving the
making of recommendations with regard to purchases or sales by the Fund of
securities; (h) assist in preparing information in connection with regulatory
examinations; and (i) generally provide all administrative services that may be
required for the ongoing operation of each Fund in a manner consistent with the
requirements of the 1940 Act.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay TSSG on the first business day of each month a fee for the
previous month in accordance with the fee schedule set forth on Exhibit B and
incorporated herein. Such fees do not include certain "out-of-pocket"
disbursements for which TSSG shall be entitled to bill separately. Out-of-pocket
disbursements shall include, but shall not be limited to the items specified on
Schedule C and incorporated herein, which schedule may be modified by TSSG upon
not less than 30 days prior written notice to the Adviser. Upon any termination
of this Agreement before the end of any month, the fee for such part of a month
shall be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to TSSG, the value of
each Fund's net assets shall be computed at the times and in the manner
specified in the Registration Statement. TSSG will bear all expenses in
connection with the performance of its services under this Agreement with the
exception of costs of printing and mailing stock certificates, prospectuses,
reports and notices, interest on borrowed money, brokerage commissions, taxes
and fees payable to federal, state and other governmental agencies, fees of
Directors or Trustees of each Fund who are not affiliated with TSSG, outside
auditing expenses, outside legal expenses or other expenses not specified in
this Section 3 which may be properly payable by the Adviser or the Fund.
4. Standard of Care
TSSG shall exercise its best judgment in rendering the services listed
in paragraph 2 above. TSSG shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect TSSG against liability to the
Fund or to its Shareholders to which TSSG would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of TSSG's reckless disregard of its
obligations and duties under this Agreement.
5. Service to Other Companies or Accounts
The Adviser understands that TSSG now acts, will continue to act and
may act in the future as administrator, sub-administrator or transfer agent to
one or more other investment companies, and the Adviser has no objection to
TSSG's so acting. In addition, the Adviser understands that the persons employed
by TSSG to assist in the performance of TSSG's duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of TSSG or any
affiliate of TSSG to engage in and devote time and attention to other businesses
or to render services of any kind or nature.
6. Term of Agreement
This Agreement shall become effective as of the date hereof and shall
remain in full force and effect for successive annual periods thereafter unless
terminated automatically in the event of its assignment or by either party,
without penalty, on sixty (60) days' written notice to the other party.
7. Amendment to this Agreement
No provision of this Agreement may be changed, discharged or terminated
orally, but only by an instrument in writing signed by each party to the
Agreement.
8. Miscellaneous
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Adviser or TSSG should be sufficiently given if
addressed to the party and received by it at its offices set forth below or at
such other place as it may from time to time designate in writing.
To the Adviser:
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Attn: Bruce N. Alpert
To TSSG:
The Shareholder Services Group, Inc.
Exchange Place - BOS425
Boston, Massachusetts 02109-2873
Attn: Patricia Bickimer, Esq.
9. Confidentiality
All books, records, information and data pertaining to the business of
the Fund that are exchanged or received pursuant to the performance of TSSG's
duties under this Agreement shall remain confidential and shall not be
voluntarily disclosed to any other person, except as specifically authorized by
the Adviser or as may be required by law.
* * * * * *
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
Very truly yours,
GABELLI FUNDS, INC.
By: BRUCE ALPERT
Title: CFO GABELLI FUNDS DIVISION
Agreed to and Accepted as of May 1, 1995:
THE SHAREHOLDER SERVICES GROUP, INC.
By: RICHARD INGRAM
Title: VICE PRESIDENT AND DIVISION MANAGER
<PAGE>
EXHIBIT A
Effective May 1, 1996
The Gabelli Equity Trust, Inc.
The Gabelli Value Fund Inc.
The Gabelli Growth Fund
The Gabelli Asset Fund
The Gabelli Money Market Funds
- The Gabelli U.S. Treasury Money Market Fund
Gabelli Capital Series Funds, Inc.
- Gabelli Capital Asset Fund
Gabelli Income Series Funds, Inc.
- The Gabelli Global Governments Fund
The Gabelli Global Multimedia Trust Inc.
GABELLI FUNDS, INC.
By: BRUCE ALPERT
Title: CFO GABELLI FUNDS DIVISION
FIRST DATA INVESTOR SERVICES GROUP INC.
By: RICHARD SILVER
Title: EXECUTIVE VICE PRESIDENT
<PAGE>
EXHIBIT B
Fees for each Fund will be calculated based upon the aggregate average daily net
assets of the Funds listed on Exhibit A of this Agreement in accordance with the
following schedule:
Aggregate Assets Charges
$0 to $1 billion .10%
$1 billion to $1.5 billion .08%
$1.5 billion to $3 billion .03%
Over $3 billion .02%
Assets attributed to new funds created after January 1, 1995 will be subject to
a minimum fee of $30,000.
This fee rate will be applied to each Fund's average daily net assets.
EXHIBIT C
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to the following:
- Travel to and from Board meetings outside the city of Boston, MA
(subject to prior approval of the Adviser) - Any other unusual expenses
in association with the services rendered under this Agreement, such as
duplicating
charges related to blue sky filings and Board book production
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment No.
11 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated February 14, 1997,
relating to the financial statements and financial highlights of
The Gabelli Value Fund Inc., which appears in such Statement of
Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this
Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Statement of Additional
Information and to the reference to us under the heading
"Financial Highlights" in such Prospectus.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 30, 1997
CONSENT OF COUNSEL
The Gabelli Value Fund, Inc.
We hereby consent to being named in the Statement of Additional
Information included in Post-Effective Amendment No. 11 (the
"Amendment") to the Registration Statement on Form N-1A
(Securities Act File No. 33-30139, Investment Company Act File No.
811-5848) of The Gabelli Value Fund, Inc. (the "Fund") under the
caption "Counsel" and to the Fund's filing a copy of this Consent
as an exhibit to the Amendment.
Willkie Farr & Gallagher
April 28, 1997
New York, New York
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears
below nominates, constitutes and appoints Mario J. Gabelli, Bruce N. Alpert, and
James E. McKee (with full power to each of them to act alone) his true and
lawful attorney-in-fact and agent, for him and on his behalf and in his place
and stead in any and all capacities, to make execute and sign all amendments and
supplements to the Registration Statement on Form N-1A under the Securities Act
of 1933 and the Investment Company Act of 1940 of THE GABELLI VALUE FUND INC.
(the "Fund"), and to file with the Securities and Exchange Commission, and any
other regulatory authority having jurisdiction over the offer and sale of shares
of beneficial interest, par value $.001 per share, of the Fund, and any and all
amendments and supplements to such Registration Statement, and any and all
exhibits and other documents requisite in connection therewith, granting unto
said attorneys and each of them, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises as fully to all intents and purposes as the undersigned officers and
Directors themselves might or could do.
IN WITNESS WHEREOF, the undersigned officers and Directors have
hereunto set their hands this 26th day of February, 1997.
MARIO J. GABELLI
Mario J. Gabelli
Chairman and Director
BRUCE N. ALPERT
Bruce N. Alpert
Vice President and Treasurer
WILLIAM CALLAGHAN
William Callaghan
Director
FELIX J. CHRISTIANA
Felix J. Christiana
Director
ANTHONY J. COLAVITA
Anthony J. Colavita
Director
ROBERT J. MORRISSEY
Robert J. Morrissey
Director
KARL OTTO POHL
Karl Otto Pohl
Director
ANTHONY R. PUSTORINO
Anthony R. Pustorino
Director
DISTRIBUTION PLAN
This Distribution Plan (the "Plan") is adopted in accordance with Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"Act"), by The Gabelli Value Fund Inc., a corporation organized under the laws
of the State of Maryland (the "Fund"), subject to the following terms and
conditions:
Section 1. Annual Fee
The Fund will pay to each broker-dealer who enters into an agreement
hereunder with the Fund (a "Designated Dealer") an annual fee for certain
expenses incurred by the Designated Dealer in connection with the offering and
sale of the Fund's shares. The annual fee paid to a Designated Dealer under the
Plan will be calculated daily and paid monthly thereafter by the Fund at the
annual rate of 0.25% of the average daily net assets of the Fund attributable to
outstanding shares of common stock of the Fund sold by the Designated Dealer
(including additional shares acquired by reinvestment of dividends). Gabelli &
Company, Inc. ("GGI") also will be reimbursed by other Designated Dealers as
soon as practicable following the end of each year during which the Plan is in
effect (prorate based on the amounts paid to such Designated Dealers under the
Plan during such year) for out-of-pocket distribution expenses incurred in
respect of the Fund in an amount equal to the excess, if any, of (i) $150,000
over (ii) the amounts otherwise paid to GCI as a Designated Dealer hereunder
during such year. Each such Designated Dealer, as a condition to receiving any
payments under the Plan, shall enter into a written agreement with GCI in form
and substance reasonably satisfactory to GCI obligating such Designated Dealer
to pay to GCI its prorate share of any reimbursement obligation as contemplated
herein. In no event shall the right of GCI to be reimbursed by other Designated
Dealers increase the amounts payable under the Plan by the Fund to GCI or other
Designated Dealers.
Section 2. Expenses Covered by Plan
(a) The annual fee paid to Designated Dealers under Section 1 of the
Plan may be used by Designated Dealers to cover any expenses primarily intended
to result in the sale of the Fund's shares, including, but not limited to: (i)
payments made to the Designated Dealer's (or its affiliates') sales personnel,
for selling shares of the Fund; (ii) costs of printing and distributing the
Fund's prospectus, statement of additional information and sales literature;
(iii) an allocation of overhead and other Designated Dealer branch office
distribution-related expenses; (iv) payments to and expenses of persons who
provide support services in connection with the distribution of shares of the
Fund; and (v) financing costs on the amount of the foregoing expenses.
(b) Gabelli Funds, Inc., as investment adviser to the Fund (the
"Adviser"), may use its investment advisory fee for purposes that may be deemed
to be directly or indirectly related to the distribution of Fund shares. To the
extent that such uses might be considered to constitute the direct or indirect
financing of activities primarily intended to result in the sale of Fund shares,
such uses are expressly authorized under the Plan.
Section 3. Approval by Shareholders
The Plan will not take effect, and no fee will be payable in accordance
with Section 1 of the Plan, with respect to the Fund, until the Plan has been
approved by a vote of a majority of the outstanding voting securities of the
Fund.
Section 4. Approval by Directors
Neither the Plan nor any related agreements will take effect until
approved by a majority vote of both (a) the full Board of Directors of the Fund
and (b) those Directors who are not interested persons of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Directors"), cast in person at a
meeting called for the purpose of voting on the Plan or the related agreements.
Section 5. Continuance of the Plan
The Plan will continue in effect for so long as its continuance is
specifically approved at lest annually by the Company's Board of Directors in
the manner described in Section 4 above.
Section 6. Termination
The Plan may be terminated at any time by a majority vote of the
Qualified Directors or by vote of a majority of the outstanding voting
securities of the Fund.
Section 7. Amendments
The Plan may not be amended so as to increase materially the amount of
the fee described in Section 1 above, unless the amendment is approved by a vote
of a majority of the outstanding voting securities of the Fund. No material
amendment to the Plan may be made unless approved by the Fund's Board of
Directors in the manner described in Section 4 above.
Section 8. Selection of Certain Directors
While the Plan is in effect, the selection and nomination of the Fund's
Directors who are not interested persons of the Fund will be committed to the
discretion of the Directors then in office who are not interested persons of the
Fund.
Section 9. Written Reports
In each year during which the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement will prepare and furnish to the
Fund's Board of Directors, and the Board will review, at least quarterly,
written reports, complying with the requirements of Rule 12b-1, which set out
the amounts expended under the Plan and the purposes for which those
expenditures were made.
Section 10. Preservation of Materials
The Fund will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 9 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
Section 11. Meaning of Certain Terms
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the Act and the rules and regulations under the Act,
subject to any exception that may be granted to the Fund under the Act by the
Securities and Exchange Commission.
Section 12. Limitation of Liability
The execution of the Plan by the undersigned officer of the Fund has
been duly authorized by both the Fund's Board of Directors, in accordance with
its authority under the Fund's Articles of Incorporation and Bylaws, and the
sole shareholder of the shares of the Fund; and, in undertaking those actions
the officer, the Board of Directors and the sole shareholder have each acted on
behalf of the Fund.
IN WITNESS WHEREOF, the Fund has executed the Plan as of September 19, 1989.
THE GABELLI VALUE FUND INC.
By: /s/ Bruce Alpert
Chief Operating Officer, Vice President and Treasurer
[ARTICLE] 6
[SERIES]
[NUMBER] 001
[NAME] GABELLI VALUE FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 0
[INVESTMENTS-AT-VALUE] 460,431,540
[RECEIVABLES] 1,967,447
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 6,824
[TOTAL-ASSETS] 462,405,811
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,569,773
[TOTAL-LIABILITIES] 1,569,773
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 360,151,970
[SHARES-COMMON-STOCK] 40,020,118
[SHARES-COMMON-PRIOR] 41,882,189
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (361,585)
[ACCUM-APPREC-OR-DEPREC] 101,045,653
[NET-ASSETS] 460,836,038
[DIVIDEND-INCOME] 5,240,919
[INTEREST-INCOME] 1,128,778
[OTHER-INCOME] 0
[EXPENSES-NET] 6,985,941
[NET-INVESTMENT-INCOME] (616,244)
[REALIZED-GAINS-CURRENT] 41,559,652
[APPREC-INCREASE-CURRENT] 2,167,080
[NET-CHANGE-FROM-OPS] 43,110,488
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (40,850,492)
[DISTRIBUTIONS-OTHER] (189,371)
[NUMBER-OF-SHARES-SOLD] 2,702,873
[NUMBER-OF-SHARES-REDEEMED] (7,670,956)
[SHARES-REINVESTED] 3,106,012
[NET-CHANGE-IN-ASSETS] (25,308,255)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] (454,501)
[GROSS-ADVISORY-FEES] 4,983,647
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 6,985,941
[AVERAGE-NET-ASSETS] 498,364,720
[PER-SHARE-NAV-BEGIN] 11.61
[PER-SHARE-NII] (0.02)
[PER-SHARE-GAIN-APPREC] 1.04
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (1.10)
[RETURNS-OF-CAPITAL] (0.01)
[PER-SHARE-NAV-END] 11.52
[EXPENSE-RATIO] 1.40
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
