As filed with the Securities and Exchange Commission on April 28, 2000.
Securities Act File No. 33-30139
Investment Company Act File No. 811-5848
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No. ___
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Post-Effective Amendment No. 15 X
------ ---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No. 17 X
------ ---
THE GABELLI VALUE FUND INC.
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(Exact Name of Registrant as Specified in Charter)
One Corporate Center, Rye, New York 10580-1434
----------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 1-800-422-3554
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center
Rye, New York 10580-1434
-------------------------------------------
(Name and Address of Agent for Service)
Copies to:
James E. McKee, Esq. Daniel Schloendorn, Esq.
The Gabelli Value Fund Inc. Willkie Farr & Gallagher
One Corporate Center 787 Seventh Avenue
Rye, New York 10580-1434 New York, New York 10019-6099
I
t is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph(b); or X on May 1, 2000 pursuant
to paragraph(b); or 60 days after filing pursuant to paragraph(a)(1); or on
________ pursuant to paragraph(a)(1); or ___ 75 days after filing pursuant to
paragraph(a)(2); or ___ on ________ pursuant to paragraph(a)(2) of Rule 485; or
If appropriate, check the following box;
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
THE
GABELLI
VALUE
FUND INC.
CLASS A SHARES
CLASS B SHARES
CLASS C SHARES
PROSPECTUS
MAY 1, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SHARES DESCRIBED IN THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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INVESTMENT AND PERFORMANCE SUMMARY
INVESTMENT OBJECTIVE:
The Gabelli Value Fund Inc. (the "Fund") seeks to provide long-term capital
appreciation. Capital is the amount of money you invest in the Fund. Capital
appreciation is an increase in the value of your investment.
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests primarily in common stocks. The Fund may also invest in
companies that are involved in corporate reorganizations. Additionally, the Fund
may invest in foreign securities. The Fund focuses on securities of companies
which appear underpriced relative to their "private market value." Private
market value is the value the Fund's adviser believes informed investors would
be willing to pay for a company.
PRINCIPAL RISKS:
The Fund's share price will fluctuate with changes in the market value of the
Fund's portfolio securities. Stocks are subject to market, economic and business
risks that cause their prices to fluctuate. Corporate reorganizations involve
the risk that the anticipated transactions may not be completed at the
anticipated time or upon the expected terms, in which case the Fund may suffer a
loss on its investments. Investments in foreign securities involve risks related
to political, social and economic developments abroad, as well as risks
resulting from the differences between the regulations to which U.S. and foreign
issuers and markets are subject. When you sell Fund shares, they may be worth
less than what you paid for them. Consequently, you can lose money by investing
in the Fund. The Fund is also subject to the risk that the portfolio securities'
private market values may never be realized by the market, or their prices may
go down. The Fund is a "non-diversified investment company" which means that it
can concentrate its investments in the securities of a single company to a
greater extent than a diversified investment company. Because the Fund may
invest its assets in the securities of a limited number of companies, a decline
in the value of the stock of any one of these issuers could have a greater
impact on the Fund's share price.
WHO MAY WANT TO INVEST:
The Fund may appeal to you if:
o you are a long-term investor
o you seek growth of capital
o you believe that the market will favor value over growth stocks over the
long term
o you wish to include a value strategy as a portion of your overall
investments
o you prefer to invest in a more concentrated portfolio.
You may not want to invest in the Fund if:
o you are seeking a high level of current income
o you are conservative in your investment approach
o you seek to maintain the value of your original investment more than
potential growth of capital.
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2
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PERFORMANCE:
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year (since 1990), and by showing how the Fund's average annual returns for one
year, five years, ten years and the life of the Fund compare to those of
relevant index. As with all mutual funds, the Fund's past performance does not
predict how the Fund will perform in the future. Both the chart and the table
assume reinvestment of dividends and distributions.
THE GABELLI VALUE FUND INC.*
(CHART)
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1990 -5.6%
1991 15.3%
1992 12.7%
1993 39.4%
1994 0%
1995 22.5%
1996 8.7%
1997 48.2%
1998 23.2%
1999 31.9%
- ------------------------
* The bar chart above shows the total returns for Class A shares (not including
sales load). The Class B and Class C Shares are new classes of the Fund for
which performance is not yet available. The returns for the Class B and Class
C Shares will be substantially similar to those of the Class A Shares shown
in the chart above because all shares of the Fund are invested in the same
portfolio of securities. The annual returns of the different classes of
shares will differ only to the extent that the expenses of the classes
differ.
Class A, B and C Share sales loads are not reflected in the above chart. If
sales loads were reflected, the Fund's returns would be less than those shown.
During the period shown in the bar chart, the highest return for a quarter was
21.3% (quarter ended June 30, 1997) and the lowest return for a quarter was
(13.2)% (quarter ended September 30, 1998)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS SINCE
(FOR THE PERIODS ENDED DECEMBER 31, 1999) PAST ONE YEAR PAST FIVE YEARS PAST TEN YEARS SEPTEMBER 29, 1989*
- ----------------------------------------- ------------- --------------- -------------- -------------------
<S> <C> <C> <C> <C>
The Gabelli Value Fund Class A shares+ ............. 24.63% 24.84% 17.90% 17.64%
S&P(REGISTRATION MARK) 500 Stock Index** ........... 21.04% 28.54% 18.19% 17.69%
Consumer Price Index +10%*** ....................... 12.70% 12.37% 12.93% 12.95%
<FN>
- ------------------------
* Commencement of operations.
** The S&P(REGISTRATION MARK) 500 Composite Stock Price Index is a widely
recognized, unmanaged index of common stock prices. The performance of the
Index does not include expenses or fees.
***The Consumer Price Index is a widely used cost of living benchmark published
by the Bureau of Labor Statistics on the Department of Labor.
+ Includes the effect of the 5.5% initial sales charge.
</FN>
</TABLE>
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3
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FEES AND EXPENSES OF THE FUND:
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------- ------- -------
<S> <C> <C> <C>
SHAREHOLDER FEES
(fees paid directly from your investment):
Maximum Sales Charge (Load) on Purchases
(as a percentage of offering price) ............................. 5.50%(1) None None
Maximum Deferred Sales Charge (Load)
(as a percentage of redemption price*) .......................... None 5.00%(2) 1.00%(2)
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):
Management Fees ................................................... 1.00% 1.00% 1.00%
Distribution and Service (Rule 12b-1) Expenses .................... 0.25% 1.00% 1.00%
Other Expenses .................................................... 0.13% 0.13% 0.13%
---- ---- ----
Total Annual Operating Expenses ................................... 1.38% 2.13% 2.13%
==== ==== ====
<FN>
- ------------------------
(1) The sales charge declines as the amount invested increases.
(2) The Fund imposes a sales charge upon redemption of Class B Shares within
seventy-two months after purchase. The sales charge declines the longer the
investment remains in the Fund. A maximum sales charge of 1.00% applies to
redemptions of Class C Shares within twenty-four months after purchase.
* "Redemption price" equals the net asset value at the time of investment or
redemption, whichever is lower.
</FN>
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes (1) you
invest $10,000 in the Fund for the time periods shown, (2) you redeem your
shares at the end of those periods, except as noted, (3) your investment has a
5% return each year and (4) the Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Class A Shares ..................... $707 $987 $1,287 $2,137
Class B Shares
- -assuming redemption ............... $716 $967 $1,344 $2,271
- -assuming no redemption ............ $216 $667 $1,144 $2,271
Class C Shares
- -assuming redemption ............... $316 $667 $1,144 $2,462
- -assuming no redemption ............ $216 $667 $1,144 $2,462
</TABLE>
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4
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INVESTMENT AND RISK INFORMATION
The Fund's investment objective is long-term capital appreciation. The Fund's
investment objective may not be changed without shareholder approval.
The Fund invests primarily in equity securities of companies which the Fund's
adviser, Gabelli Funds, LLC (the "Adviser"), believes are undervalued and have
the potential to achieve significant capital appreciation. The Adviser invests
in companies whose stocks are selling at a significant discount to their
"private market value." Private market value is the value the Adviser believes
informed investors would be willing to pay to acquire the entire company. If
investor attention is focused on the underlying asset value of a company due to
expected or actual developments or other catalysts, an investment opportunity to
realize this private market value may exist.
Undervaluation of a company's stock can result from a variety of factors, such
as a lack of investor recognition of:
o the underlying value of a company's fixed assets,
o the value of a consumer or commercial franchise,
o changes in the economic or financial environment affecting the company,
o new, improved or unique products or services,
o new or rapidly expanding markets,
o technological developments or advancements affecting the company or its
products, or
o changes in governmental regulations, political climate or competitive
conditions.
The actual events that may lead to a significant increase in the value of a
company's securities include:
o a change in the company's management or management policies,
o an investor's purchase of a large portion of the company's stock,
o a merger or reorganization or recapitalization of the company,
o a sale of a division of the company,
o a tender offer (an offer to purchase investors' shares),
o the spin-off to shareholders of a subsidiary, division or other
substantial assets, or
o the retirement or death of a senior officer or substantial shareholder
of the company.
In selecting investments, the Adviser also considers the market price of the
issuer's securities, its balance sheet characteristics and the perceived
strength of its management.
The Fund's assets will be invested primarily in common stock. Many of the common
stocks the Fund will buy will not pay dividends; instead, stocks will be bought
for the potential that their prices will increase, providing capital
appreciation for the Fund. The value of equity securities will fluctuate due to
many factors, including the past and predicted earnings of the issuer, the
quality of the issuer's management, general market conditions, the forecasts for
the issuer's industry and the value of the issuer's assets. Holders of equity
securities only have rights to value in the company after all debts have been
paid, and they could lose their entire investment in a company that encounters
financial difficulty. Warrants are rights to purchase securities at a specified
time at a specified price.
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5
<PAGE>
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The Fund may also use the following investment techniques:
o FOREIGN SECURITIES. The Fund may invest up to 25% of its total assets in
the securities of non-U.S. issuers.
o DEFENSIVE INVESTMENTS. When opportunities for capital appreciation do
not appear attractive or when adverse market or economic conditions
occur, the Fund may temporarily invest all or a portion of its assets in
defensive investments. Such investments include obligations of the U.S.
Government and its agencies and instrumentalities and short-term money
market investments. When following a defensive strategy, the Fund will
be less likely to achieve its investment goal of capital appreciation.
o 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 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.
This limitation, however, 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.
o AMERICAN DEPOSITARY RECEIPTS. The Fund may purchase American Depositary
Receipts ("ADRs") or U.S. dollar-denominated securities of foreign
issuers that are not included in the Fund's 25% limitation on foreign
securities. 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.
Investing in the Fund involves the following risks:
o FUND AND MANAGEMENT RISK. The Fund invests in stocks issued by companies
believed by the Adviser to be trading at a discount to their private
market value (value stocks). The Fund's price may decline if the market
favors other stocks or small capitalization stocks over stocks of larger
companies. If the Adviser is incorrect in its assessment of the private
market values of the securities it holds, then the value of the Fund's
shares may decline.
o EQUITY RISK. The principal risk of investing in the Fund is equity risk.
Equity risk is the risk that the prices of the securities held by the
Fund will change due to general market and economic conditions,
perceptions regarding the industries in which the companies issuing the
securities participate and the issuer company's particular
circumstances. These fluctuations may cause a security to be worth less
than it was worth at an earlier time.
o FOREIGN SECURITIES RISK. Prices of the Fund's investments in foreign
securities may decline because of unfavorable foreign government
actions, political instability or the absence of accurate information
about foreign issuers. Also, a decline in the value of foreign
currencies relative to the U.S. dollar will reduce the value of
securities denominated in those currencies. Foreign securities are
sometimes less liquid and harder to value than securities of U.S.
issuers.
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6
<PAGE>
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o RISKS OF FOCUSING ON CORPORATE REORGANIZATIONS. The Fund may invest a
substantial portion of its assets in securities of companies that are
involved or may become involved in corporate transactions such as tender
offers and corporate reorganizations. The principal risk of this type of
investing is that the anticipated transactions may not be completed at
the anticipated time or upon the expected terms, in which case the Fund
may suffer a loss on its investments. In addition, many companies in the
past several years have adopted so-called "poison pill" and other
defensive measures. This may limit tender offers or other non-negotiated
offers for a company and/or prevent competing offers. Such measures may
also limit the amount of securities in any one issuer that the Fund may
buy.
MANAGEMENT OF THE FUND
THE ADVISER. Gabelli Funds, LLC, with principal offices located at One Corporate
Center, Rye, New York 10580-1434, serves as investment adviser to the Fund. The
Adviser makes investment decisions for the Fund and continuously reviews and
administers the Fund's investment program under the supervision of the Fund's
Board of Directors. The Adviser also manages several other open-end and
closed-end investment companies in the Gabelli family of funds. The Adviser is a
New York limited liability company organized in 1999 as successor to Gabelli
Group Capital Partners, Inc. (formerly named Gabelli Funds, Inc.), a New York
corporation organized in 1980. The Adviser is a wholly-owned subsidiary of
Gabelli Asset Management Inc. ("GAMI"), a publicly held company listed on the
New York Stock Exchange ("NYSE").
As compensation for its services and the related expenses borne by the Adviser,
for the fiscal year ended December 31, 1999, the Fund paid the Adviser a fee
equal to 1.00% of the value of the Fund's average daily net assets.
THE PORTFOLIO MANAGER. Mario J. Gabelli, CFA, is responsible for the day-to-day
management of the Fund. Mr. Gabelli has been Chairman, Chief Executive Officer
and Chief Investment Officer of the Adviser and its predecessor since inception
and of its parent company, GAMI. Mr. Gabelli also acts as Chief Executive
Officer and Chief Investment Officer of GAMCO Investors, Inc. ("GAMCO"), a
wholly-owned subsidiary of GAMI, and is an officer or director of various other
companies affiliated with GAMI. The Adviser relies to a considerable extent on
the expertise of Mr. Gabelli, who may be difficult to replace in the event of
his death, disability or resignation.
CLASSES OF SHARES
Three classes of the Fund's shares are offered in this prospectus - Class A
Shares, Class B Shares and Class C Shares. Class B and Class C Shares are newly
offered. The table below summarizes the differences among the classes of shares.
o a "front-end sales load," or sales charge, is a one-time fee charged at
the time of purchase of shares.
o a "contingent deferred sales charge" ("CDSC") is a one-time fee charged
at the time of redemption.
o a "Rule 12b-1 fee" is a recurring annual fee for distributing shares and
servicing shareholder accounts based on the Fund's average daily net
assets attributable to the particular class of shares.
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7
<PAGE>
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES CLASS B SHARES CLASS C SHARES
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Front-End Sales Load? Yes. The percentage No. No.
declines as the amount
invested increases.
- -------------------------------------------------------------------------------------------------------------------------------
Contingent Deferred No. Yes, for shares redeemed Yes, for shares redeemed
Sales Charge? within seventy-two months within
after purchase. Declines over twenty-four months
time. after purchase.
- -------------------------------------------------------------------------------------------------------------------------------
Rule 12b-1 Fee 0.25% 1.00% 1.00%
- -------------------------------------------------------------------------------------------------------------------------------
Convertible to Another No. Yes. Automatically converts No.
Class? to Class A Shares
approximately ninety-six
months after purchase.
- -------------------------------------------------------------------------------------------------------------------------------
Fund Expense Levels Lower annual expenses than Higher annual expenses than Higher annual expenses than
Class B or Class C Shares. Class A Shares. Class A Shares.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
In selecting a class of shares in which to invest, you should consider
o the length of time you plan to hold the shares
o the amount of sales charge and Rule 12b-1 fees, recognizing that your
share of 12b-1 fees as a percentage of your investment increases if the
Fund's assets increase in value and decreases if the Fund's assets
decrease in value
o whether you qualify for a reduction or waiver of the Class A sales
charge
o that Class B Shares convert to Class A Shares approximately ninety-six
months after purchase
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
IF YOU... THEN YOU SHOULD CONSIDER...
- -----------------------------------------------------------------------------------------------------------
<S> <C>>
o do not qualify for a reduced or waived front-end purchasing Class C Shares instead of either
sales load and intend to hold your shares for Class A Shares or Class B Shares
only a few years
- -----------------------------------------------------------------------------------------------------------
o do not qualify for a reduced or waived front-end purchasing Class B Shares instead of either
sales load and intend to hold your shares for Class A Shares or Class C Shares
several years
- -----------------------------------------------------------------------------------------------------------
o do not qualify for a reduced or waived front-end purchasing Class A
shares sales load and intend to hold your shares
indefinitely
- -----------------------------------------------------------------------------------------------------------
</TABLE>
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8
<PAGE>
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SALES CHARGE -- CLASS A SHARES. The sales charge is imposed on Class A shares at
the time of purchase in accordance with the following schedule:
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE REALLOWANCE
AS % OF THE AS % OF TO
AMOUNT OF INVESTMENT OFFERING PRICE* AMOUNT INVESTED BROKER-DEALERS
- -------------------- --------------- --------------- --------------
<S> <C> <C> <C>
Under $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%
<FN>
- ------------
* Includes front-end sales load
</FN>
</TABLE>
SALES CHARGE REDUCTIONS AND WAIVERS -- CLASS A SHARES:
Reduced sales charges are available to (1) investors who are eligible to combine
their purchases of Class A Shares to receive volume discounts and (2) investors
who sign a Letter of Intent agreeing to make purchases over time. Certain types
of investors are eligible for sales charge waivers.
1. 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. You
also may combine the value of Class A Shares you already hold in the Fund and
Class A Shares of other funds advised by the Adviser or its affiliates along
with the value of the Class A Shares being purchased to qualify for a reduced
sales charge. For example, if you own Class A Shares of the Fund that have an
aggregate value of $100,000, and make an additional investment in Class A Shares
of 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. If
you want more information on volume discounts, call your broker.
2. LETTER OF INTENT. If you initially invest at least $1,000 in Class A Shares
of the Fund and submit a Letter of Intent to the Distributor, you may make
purchases of Class A 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. You will have to pay sales charges at the higher
rate if you fail to honor your Letter of Intent. For more information on the
Letter of Intent, call your broker.
3. INVESTORS ELIGIBLE FOR SALES CHARGE WAIVERS. Class A Shares of the Fund may
be offered without a sales charge to: (1) any other investment company in
connection with the combination of such company with the Fund by merger,
acquisition of assets or otherwise; (2) shareholders who have redeemed shares in
the Fund and who wish to reinvest in the Fund, provided the reinvestment is made
within 30 days of the redemption; (3) tax-exempt organizations enumerated in
Section 501(c)(3) of the Internal Revenue Code of 1986 (the "Code") and private,
charitable foundations that in each case make lump-sum purchases of $100,000 or
more; (4) qualified employee benefit plans established pursuant to Section 457
of the Code that have established omnibus accounts with the Fund; (5) 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);
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9
<PAGE>
- --------------------------------------------------------------------------------
(6) any unit investment trusts registered under the Investment Company Act of
1940 (the "1940 Act") which have shares of the Fund as a principal investment;
(7) financial institutions purchasing Class A 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, Inc., the Fund's distributor (the
"Distributor"); and (8) 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 any of the categories described above should contact
their brokerage firm.
CONTINGENT DEFERRED SALES CHARGES.
You will pay a CDSC when you redeem:
o Class B Shares within approximately seventy-two of buying them
o Class C Shares within approximately twenty-four months of buying them
The CDSC payable upon redemption of Class C Shares in the circumstances
described above is 1.00%. The CDSC schedule for Class B Shares is set forth
below. The CDSC is based on the net asset value at the time of your investment
or the net asset value at the time of redemption, whichever is lower.
CLASS B SHARES
YEARS SINCE PURCHASE CDSC
-------------------- --------------
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter 0.00%
The Distributor pays sales commissions of up to 4.00% of the purchase price of
Class B Shares of the Fund to brokers at the time of sale that initiate and are
responsible for purchases of such Class B Shares of the Fund.
The Distributor pays sales commisions of up to 1.00% of the purchase price of
Class C Shares of the Fund to brokers at the time of slae that initiate and are
responsible for purchases of such Class C Shares of the Fund.
You will not pay a CDSC to the extent that the value of the redeemed shares
represents reinvestment of dividends or capital gains distributions or capital
appreciation of shares redeemed. When you redeem shares, we will assume that you
are redeeming first shares representing reinvestment of dividends and capital
gains distributions, then any appreciation on shares redeemed, and then
remaining shares held by you for the longest period of time. We will calculate
the holding period of shares acquired through an exchange of shares of another
fund from the date you acquired the original shares of the other fund. The time
you hold shares in a money market fund advised by the Adviser or its affiliates,
however, will not count for purposes of calculating the applicable CDSC.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
We will waive the CDSC payable upon redemptions of shares for:
o redemptions and distributions from retirement plans made after the death
or disability of a shareholder
o minimum required distributions made from an IRA or other retirement plan
account after you reach age 591/2
o involuntary redemptions made by the Fund
o a distribution from a tax-deferred retirement plan after your retirement
o returns of excess contributions to retirement plans following the
shareholder's death or disability
CONVERSION FEATURE -- CLASS B SHARES:
o Class B Shares automatically convert to Class A Shares of the Fund on
the first business day of the ninety-seventh month following the month
in which you acquired such shares.
o After conversion, your shares will be subject to the lower Rule 12b-1
fees charged on Class A Shares, which will increase your investment
return compared to the Class B shares.
o You will not pay any sales charge or fees when your shares convert, nor
will the transaction be subject to any tax.
o If you exchange Class B Shares of one fund for Class B Shares of another
fund, your holding period will be calculated from the time of your
original purchase of Class B Shares. If you exchange shares into a
Gabelli money market fund, however, your holding period will be
suspended.
o The dollar value of Class A Shares you receive will equal the dollar
value of the Class B Shares converted.
The Board of Directors may suspend the automatic conversion of Class B Shares to
Class A Shares for legal reasons or due to the exercise of its fiduciary duty.
If the Board determines that such suspension is likely to continue for a
substantial period of time, it will create another class of shares into which
Class B Shares are convertible.
RULE 12B-1 PLAN. The Fund has adopted a plan under Rule 12b-1 (the "Plan") for
each of its classes of shares. Under the Plan, the Fund may use its assets to
finance activities relating to the sale of its shares and the provision of
certain shareholder services.
For the classes covered by this Prospectus, the Rule 12b-1 fees vary by class as
follows:
CLASS A CLASS B CLASS C
------- ------- -------
Service Fees ................... None 0.25% 0.25%
Distribution Fees .............. 0.25% 0.75% 0.75%
These are annual rates based on the value of each of these Classes' average
daily net assets. Because the Rule 12b-1 fees are higher for Class B and Class C
Shares than for Class A Shares, Class B and Class C Shares will have higher
annual expenses. Because Rule 12b-1 fees are paid out of the Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges. Due to payments
of Rule 12b-1 fees, long-term shareholders may indirectly pay more than the
equivalent of the maximum permitted front-end sales load.
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
PURCHASE OF SHARES
You can purchase the Fund's shares on any day the NYSE is open for trading (a
"Business Day"). You may purchase shares through registered broker-dealers or
other financial intermediaries that have entered into selling agreements with
the Fund's Distributor.
The broker-dealer or other financial intermediary will transmit a purchase order
and payment to State Street Bank and Trust Company ("State Street") on your
behalf. Broker-dealers or other financial intermediaries may send confirmations
of your transactions and periodic account statements showing your investments in
the Fund.
o BY MAIL OR IN PERSON. Your broker-dealer or financial consultant can
obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by
the depositor are not acceptable. For additional investments, send a
check to the following address with a note stating your exact name and
account number, the name of the Fund and class of shares you wish to
purchase.
BY MAIL BY PERSONAL DELIVERY
------- --------------------
THE GABELLI FUNDS THE GABELLI FUNDS
P.O. BOX 8308 C/O BFDS
BOSTON, MA 02266-8308 66 BROOKS DRIVE
BRAINTREE, MA 02184
o BY BANK WIRE. To open an account using the bank wire transfer system,
first telephone the Fund at 1-800-GABELLI (1-800-422-3554) to obtain a
new account number. Then instruct a Federal Reserve System member bank
to wire funds to:
STATE STREET BANK AND TRUST COMPANY
[ABA #011-0000-28 REF DDA #99046187]
RE: THE GABELLI VALUE FUND INC.
ACCOUNT #__________
ACCOUNT OF [REGISTERED OWNERS]
225 FRANKLIN STREET, BOSTON, MA 02110
If you are making an initial purchase, you should also complete and mail
a subscription order form to the address shown under "By Mail." Note
that banks may charge fees for wiring funds, although State Street will
not charge you for receiving wire transfers.
SHARE PRICE. The Fund sells its shares at the net asset value next determined
after the Fund receives your completed subscription order form and your payment,
subject to a sales charge in he case of Class A Shares as described under
"Classes of Shares -- Sales Charge -- Class A Shares." See "Pricing of Fund
Shares" for a description of the calculation of net asset value as described
under "Classes of Shares -- Sales Charge -- Class A Shares."
MINIMUM INVESTMENTS. Your minimum initial investment must be at least $1,000.
See "Retirement Plans" and "Automatic Investment Plan" regarding minimum
investment amounts applicable to such plans. There is no minimum for subsequent
investments. Broker-dealers may have different minimum investment requirements.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
RETIREMENT PLANS. The Fund has available a form of IRA, "Roth" IRA and Education
IRA for investment in Fund shares that may be obtained from the Distributor by
calling 1-800-GABELLI (1-800-422-3554). Self-employed investors may purchase
shares of the Fund through tax-deductible contributions to existing retirement
plans for self-employed persons, known as "Keogh" or "H.R.-10" plans. The Fund
does not currently act as a sponsor to such plans. Fund shares may also be a
suitable investment for other types of qualified pension or profit-sharing plans
which are employer sponsored, including deferred compensation or salary
reduction plans known as "401(k) Plans." The minimum initial investment in all
such retirement plans is $250. There is no subsequent investment requirement
for retirement plans.
AUTOMATIC INVESTMENT PLAN. The Fund offers an automatic monthly investment plan.
There is no minimum initial investment for accounts establishing an automatic
investment plan. Call the Distributor at 1-800-GABELLI (1-800-422-3554) for more
details about the plan.
GENERAL. State Street will not issue share certificates unless requested by you.
The Fund reserves the right to (i) reject any purchase order if, in the opinion
of the Fund's management, it is in the Fund's best interest to do so, (ii)
suspend the offering of shares for any period of time and (iii) waive the Fund's
minimum purchase requirement.
REDEMPTION OF SHARES
You can redeem shares of the Fund on any Business Day. The Fund may temporarily
stop redeeming its shares when the NYSE is closed or trading on the NYSE is
restricted, when an emergency exists and the Fund cannot sell its shares or
accurately determine the value of its assets, or if the Securities and Exchange
Commission ("SEC") orders the Fund to suspend redemptions.
The Fund redeems its shares at the net asset value next determined after the
Fund receives your redemption request, subject in some cases to a CDSC, as
described under "Classes of Shares - Contingent Deferred Sales Charges." See
"Pricing of Fund Shares" for a description of the calculation of net asset
value.
In the event that you wish to redeem shares and you are unable to contact your
broker-dealer or other financial intermediary, you may redeem shares by mail.
You may redeem shares through a broker-dealer or other financial intermediary
that has entered into a selling agreement with the Distributor. The
broker-dealer or financial intermediary will transmit a redemption order to
State Street on your behalf. The redemption request will be effected at the net
asset value next determined (less any applicable CDSC) after State Street
receives the request. If you hold share certificates, you must present the
certificates endorsed for transfer. A broker-dealer may charge you fees for
effecting redemptions for you.
You may mail a letter requesting redemption of shares to: THE GABELLI FUNDS,
P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should state the name of the
Fund and the share class, the dollar amount or number of shares you wish to
redeem and your account number. If there is more than one owner of shares, all
must sign. A signature guarantee is required for each signature on your
redemption letter. You can obtain a signature guarantee from financial
institutions such as commercial banks, brokers, dealers and savings
associations. A notary public cannot provide a signature guarantee.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
o AUTOMATIC CASH WITHDRAWAL PLAN. You may automatically redeem shares on a
monthly, quarterly or annual basis if you have at least $10,000 in your
account and if your account is directly registered with State Street.
Please call 1-800-GABELLI (1-800-422-3554) for more information about
this plan.
o INVOLUNTARY REDEMPTION. The Fund may redeem all shares in your account
(other than an IRA account) if its value falls below $1,000 as a result
of redemptions (but not as a result of a decline in net asset value).
You will be notified in writing if the Fund initiates such action and
allowed 30 days to increase the value of your account to at least
$1,000.
REDEMPTION PROCEEDS. A redemption request received by the Fund will be effected
at the net asset value next determined after the Fund receives the request. If
you request redemption proceeds by check, the Fund will normally mail the check
to you within seven days after receipt of your redemption request. If you
purchased your Fund shares by check or through the Automatic Investment Plan,
you may not receive proceeds from your redemption until the check clears, which
may take up to 15 days following purchase. While the Fund will delay the
processing of the redemption until the check clears, your shares will be valued
at the next determined net asset value after receipt of your redemption request.
EXCHANGE OF SHARES
You can exchange shares of the Fund you hold for shares of the same class of
another fund managed by the Adviser or its affiliates based on their relative
net asset values. To obtain a list of the funds whose shares you may acquire
through an exchange, call your broker. Class B and Class C Shares will continue
to age from the date of the original purchase of such shares and will assume the
CDSC rate such shares had at the time of exchange. You may also exchange your
shares for shares of a money market fund managed by the Adviser or its
affiliates, without imposition of any CDSC at the time of exchange. Upon
subsequent redemption from such money market funds or the Fund (after
re-exchange into the Fund), such shares will be subject to the CDSC calculated
by excluding the time such shares were held in a money market fund.
In effecting an exchange:
o you must meet the minimum investment requirements for the fund whose
shares you purchase through exchange
o if you are exchanging into a fund with a higher sales charge, you must
pay the difference at the time of exchange
o you may realize a taxable gain or loss
o you should read the prospectus of the fund whose shares you are
purchasing through exchange. Call 1-800-GABELLI (1-800-422-3554) to
obtain the prospectus.
o you should be aware that brokers may charge a fee for handling an
exchange for you
You may exchange shares by telephone, by mail, over the Internet or through a
registered broker-dealer or other financial intermediary.
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
o EXCHANGE BY TELEPHONE. You may give exchange instructions by telephone
by calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares
by telephone if you hold share certificates.
o EXCHANGE BY MAIL. You may send a written request for exchanges to: THE
GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should
state your name, your account number, the dollar amount or number of
shares you wish to exchange, the name and class of the funds whose
shares you wish to exchange, and the name of the fund whose shares you
wish to acquire.
o EXCHANGE THROUGH THE INTERNET. You may also give exchange instructions
via the Internet at www.gabelli.com. You may not exchange shares through
the Internet if you hold share certificates.
We may modify or terminate the exchange privilege at any time. You will be given
notice 60 days prior to any material change in the exchange privilege.
PRICING OF FUND SHARES
The Fund's net asset value is calculated separately for each class of shares on
each Business Day. The NYSE is open Monday through Friday, but currently is
scheduled to be closed on New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on the preceding Friday or subsequent
Monday when a holiday falls on a Saturday or Sunday, respectively.
The Fund's net asset value is calculated separately for each class of shares.
The net asset value is determined as of the close of regular trading on the
NYSE, normally 4:00 p.m., Eastern Time. The net asset value is computed by
dividing the value of the Fund's net assets (i.e. the value of its securities
and other assets less its liabilities, including expenses payable or accrued but
excluding capital stock and surplus) by the total number of its shares
outstanding at the time the determination is made. The Fund uses market
quotations in valuing its portfolio securities. Short-term investments that
mature in 60 days or less are valued at amortized cost, which the Directors of
the Fund believe represent fair value. The price of Fund shares for purchase and
redemption orders will be based upon the next calculation of net asset value
after the purchase or redemption order is received in proper form.
Because the Fund is not open for business everyday that its assets trade, the
net asset value of the Fund's shares may change on days when shareholders will
not be able to purchase or redeem the Fund's shares.
DIVIDENDS AND DISTRIBUTIONS
Dividends of net investment income and distributions of net realized capital
gains, if any, will be paid annually. You may have dividends or capital gains
that are declared by the Fund automatically reinvested at net asset value in
additional shares of the Fund. You will make an election to receive dividends
and distributions in cash or Fund shares at the time you purchase your shares.
You may change this election by notifying your broker the Fund in writing at any
time prior to the record late for a particular dividend or distribution. There
are no sales or other charges in connection with the reinvestment of dividends
and capital gain 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. Dividends and distributions may differ for different classes of shares.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
TAX INFORMATION
The Fund expects that its distributions will consist primarily of net investment
income and net realized capital gains. Capital gains may be taxed at different
rates depending on the length of time the Fund holds the asset giving rise to
such gains. Dividends out of net investment income and distributions of net
realized short-term capital gains (i.e. gains from assets held by the Fund for
one year or less) are taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you at long-term capital gain rates. The
Fund's distributions, whether you receive them in cash or reinvest them in
additional shares of the Fund, generally will be subject to federal, state or
local taxes. An exchange of the Fund's shares for shares of another fund will be
treated for tax purposes as a sale of the Fund's shares; and any gain you
realize on such a transaction generally will be taxable. Foreign shareholders
generally will be subject to a federal withholding tax.
This summary of tax consequences is intended for general information only. You
should consult a tax adviser concerning the tax consequences of your investment
in the Fund.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance for the past five fiscal years of the Fund. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund's Class A Shares. The Class B and Class C Shares have not
previously been offered and therefore do not have a previous financial history.
This information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements and
related notes are included in the annual report, which is available upon
request.
Per share amounts for the Fund's Class A Shares outstanding throughout each year
ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of year $ 16.08 $ 14.30 $ 11.52 $ 11.61 $ 10.49
---------- -------- -------- -------- --------
Net investment income (loss) (0.06) (0.05) (0.05) (0.02) 0.05
Net realized and unrealized gain
on investments 5.15 3.32 5.55 1.04 2.30
---------- -------- -------- -------- --------
Total from investment operations 5.09 3.27 5.50 1.02 2.35
---------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income -- -- -- -- (0.05)
Net realized gain on investments (1.72) (1.49) (2.72) (1.10) (1.18)
Paid-in capital -- -- -- (0.01) --
---------- -------- -------- -------- --------
Total distributions (1.72) (1.49) (2.72) (1.11) (1.23)
---------- -------- -------- -------- --------
NET ASSET VALUE, END OF YEAR $ 19.45 $ 16.08 $ 14.30 $ 11.52 $ 11.61
========== ======== ======== ======== ========
Total return+ 31.9% 23.2% 48.2% 8.7% 22.5%
========== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of year (in 000's) $1,205,320 $798,812 $596,547 $460,836 $486,144
Ratio of net investment income (loss)
to average net assets (0.40)% (0.41)% (0.45)% (0.12)% 0.42%
Ratio of operating expenses to
average net assets 1.38% 1.40% 1.42% 1.40% 1.50%
Portfolio turnover rate 59% 46% 44% 37% 65%
<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.
</FN>
</TABLE>
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16
<PAGE>
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THE GABELLI VALUE FUND INC.
CLASS A, B, C SHARES
================================================================================
FOR MORE INFORMATION:
For more information about the Fund, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
The Fund's semi-annual and annual reports to shareholders contain additional
information on the Fund's investments. In the Fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investment policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
You can get free copies of these documents and prospectuses of
other funds in the Gabelli family, or request other
information and discuss your questions about the Fund by
contacting:
The Gabelli Value Fund Inc.
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Fund's reports and SAI at the Public Reference Room of the
Securities and Exchange Commission. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090.
You can get text-only copies:
o For a fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102 or by calling 1-202-942-8090, or by
electronic request at the following email address: [email protected].
o Free from the Commission's Website at http://www.sec.gov.
(Investment Company Act file no. 811-05848)
- --------------------------------------------------------------------------------
<PAGE>
THE GABELLI VALUE FUND INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
EMAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 p.m.)
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
TABLE OF CONTENTS
-----------------
INVESTMENT AND PERFORMANCE SUMMARY ........................... 2-4
INVESTMENT AND RISK INFORMATION .............................. 5-7
MANAGEMENT OF THE FUND ....................................... 7
Classes of Shares ................................... 7
Purchase of Shares .................................. 12
Redemption of Shares ................................ 13
Exchange of Shares .................................. 14
Pricing of Fund Shares .............................. 15
Dividends and Distributions ......................... 15
Tax Information ..................................... 16
FINANCIAL HIGHLIGHTS ......................................... 16
<PAGE>
THE GABELLI VALUE FUND INC.
Statement of Additional Information
May 1, 2000
This Statement of Additional Information (the "SAI"), which is not a prospectus,
describes The Gabelli Value Fund Inc. (the "Fund"). The SAI should be read in
conjunction with the Fund's Prospectus for Class A, Class B and Class C shares
dated May 1, 2000. For a free copy of the Prospectus, please contact the Fund at
the address, telephone number or Internet web site printed below.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
------------
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION............................................................2
INVESTMENT STRATEGIES AND RISKS................................................2
INVESTMENT RESTRICTIONS.......................................................11
DIRECTORS AND OFFICERS........................................................13
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS....................................15
INVESTMENT ADVISORY AND OTHER SERVICES........................................15
DISTRIBUTION PLANS............................................................18
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................19
PURCHASE OF SHARES............................................................22
REDEMPTION OF SHARES..........................................................22
DETERMINATION OF NET ASSET VALUE..............................................23
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................24
INVESTMENT PERFORMANCE INFORMATION............................................26
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES..........................28
FINANCIAL STATEMENTS..........................................................30
APPENDIX A...................................................................A-1
<PAGE>
GENERAL INFORMATION
The Fund is a non-diversified, open-end, management investment company organized
as a corporation under the laws of the State of Maryland on July 20, 1989. The
Fund commenced operations on September 29, 1989.
INVESTMENT STRATEGIES AND RISKS
The Fund's Prospectus discusses the investment objective of the Fund and the
principal strategies to be employed to achieve that objective. This SAI contains
supplemental information concerning certain types of securities and other
instruments in which the Fund may invest, additional strategies that the Fund
may utilize and certain risks associated with such investments and strategies.
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 Fund's adviser,
Gabelli Funds, LLC (the "Adviser"). The Adviser must appraise not only the value
of the issuer and its component businesses as well as the assets or securities
to be received as a result of the contemplated transaction, but also the
financial resources and business motivation of the offeror as well as the
dynamics of the business climate when the offer or proposal is in progress.
Although the Fund limits 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. 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.
CONVERTIBLE SECURITIES
The Fund may invest up to 35% of its assets in convertible securities having a
rating lower than "CCC" by Standard & Poor's Rating Service ("S&P"), "Caa" by
<PAGE>
Moody's Investors Service, Inc. or, if unrated, judged by the Adviser to be of
comparable quality. 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
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) which entitle the
holder to buy equity securities at a specific price for or at the end of a
specific period of time.
vesting in rights and warrants can provide a greater potential for profit or
loss than an equivalent investment in the underlying security, and, thus, can be
a speculative investment. The value of a right or warrant may decline because of
a decline in the value of the underlying security, the passage of time, changes
in interest rates or in the dividend or other policies of the company whose
equity underlies the warrant or a change in the perception as to the future
price of the underlying security, or any combination thereof. Rights and
warrants have no voting rights, receive no dividends and have no rights with
respect to the assets of the issuer.
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) but will do so only if
the underlying equity securities are deemed appropriate by the Adviser for
inclusion in the Fund's portfolio.
<PAGE>
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). 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. In addition,
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, Lehman
Brothers Inc. ("Lehman Brothers") 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. When the Fund holds shares of a
money market mutual fund (or other management investment company) it, like other
shareholders, will bear its proportionate share of the fund's 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 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 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. These companies may have limited product lines, markets or financial
resources and may lack management depth. In addition, these companies are
typically subject to a greater degree of changes in earnings and business
prospects than are larger, more established companies. Although investing in
securities of these companies offers potential for above-average returns if the
companies are successful, the risk exists that the companies will not succeed
and the prices of the companies' shares could significantly decline in value.
<PAGE>
The Fund will not invest, in the aggregate, more than 10% of its net assets in
securities for which market quotations are not readily available, securities
which are restricted for public sale, 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 Securities and Exchange Commission (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.
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with banks and non-bank dealers of
U.S. Government securities which are listed as reporting dealers of the Federal
Reserve Bank and which 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
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 may be 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.
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.
BORROWING
The Fund may not borrow 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, which would otherwise require the untimely disposition of its
portfolio securities. Borrowing may not, in the aggregate, exceed 15% of assets
after giving effect to the borrowing and borrowing for purposes other than
meeting redemptions may not exceed 5% of the value of the Fund's assets after
giving effect to the borrowing. The Fund will not make additional investments
when borrowings exceed 5% of assets. Not more than 20% of the total assets of
the Fund may be used as collateral in connection with the borrowings described
above.
<PAGE>
CORPORATE DEBT OBLIGATIONS
The Fund may invest up to 35% of its assets in corporate debt obligations having
a rating lower than a S&P rating of "CCC", a Moody's rating of "Caa" or, if
unrated, judged by the Adviser to be of comparable quality. Corporate debt
obligations include securities such as bonds, debentures, notes or other similar
securities issued by corporations.
The Fund believes that investing in corporate debt 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 debt 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 debt 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.
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."
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 and 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
<PAGE>
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.
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.
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 purchase or sell listed call or put 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 in an amount not to exceed
25% of total assets. 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. 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 a contract that gives
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
<PAGE>
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.
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
<PAGE>
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.
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.
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.
LOANS OF PORTFOLIO SECURITIES
The Fund may lend its portfolio securities to broker-dealers or financial
institutions provided that the loans are callable at any time by the Fund. 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 Fund, however, currently intends to limit the value of all loaned
securities to no more than 5% of the Fund's total assets.
The Fund lends its portfolio securities in order to generate revenue to defray
certain operating expenses. The advantage of this practice 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.
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
<PAGE>
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 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.
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.
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.
<PAGE>
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.
The success of hedging depends on the Adviser's ability to predict movements in
the prices of the hedged securities and market fluctuations. The Adviser may not
be able to perfectly correlate changes in the market value of securities and the
prices of the corresponding options or futures. The Adviser may have difficulty
selling or buying futures contracts and options when it chooses and there may be
certain restrictions on trading futures contracts and options. The Fund is not
obligated to pursue any hedging strategy. While hedging can reduce or eliminate
losses, it can also reduce or eliminate gains. In addition, hedging practices
may not be available, may be too costly to be used effectively or may be unable
to be used for other reasons.
INVESTMENT RESTRICTIONS
The Fund's investment objective and the following investment restrictions are
fundamental and 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
SAI, and (c) lending its portfolio securities consistent with
applicable regulatory requirements and as set forth in the SAI;
4. Borrow money except subject to the restrictions set forth in
the SAI;
5. Mortgage, pledge or hypothecate any of its assets except that,
in connection with permissible borrowings mentioned in restriction (4)
<PAGE>
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 1933 Act, 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.
<PAGE>
DIRECTORS AND OFFICERS
Under Maryland law, the Fund's Board of Directors is responsible for
establishing the Fund's policies and for overseeing the management of the Fund.
The Board also elects the Fund's officers who conduct the daily business of the
Fund. The Directors and executive officers of the Fund, their ages, and their
principal occupations during the last five years, are set forth 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.
<TABLE>
<CAPTION>
<S> <C>
NAME, AGE AND
POSITION(S) WITH FUND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
Mario J. Gabelli, CFA* Chairman of the Board, Chief Executive Officer and Chief Investment
Chairman, President and Officer of Gabelli Asset Management Inc. and Gabelli Funds, LLC; Chairman
Chief Investment Officer of the Board and Chief Executive Officer of Lynch Corporation (diversified
Age: 57 manufacturing company) and Chairman of the Board of Lynch Interactive
Corporation (multimedia and services company); Director of Spinnaker
Industries, Inc. (manufacturing company); Director or Trustee and Officer
of various other mutual funds advised by Gabelli Funds, LLC and it
affiliates.
Felix J. Christiana Former Senior Vice President of Dollar Dry Dock Savings Bank; Director or
Director Trustee of 10 other mutual funds advised by Gabelli Funds, LLC and its
Age: 74 affiliates.
Anthony J. Colavita President and Attorney at Law in the law firm of Anthony J. Colavita, P.C.
Director since 1961; Director or Trustee of 17 other mutual funds advised by
Age: 64 Gabelli Funds, LLC and its affiliates.
Robert J. Morrissey Partner in the law firm of Morrissey & Hawkins; Director of one other
Director Director mutual fund advised by Gabelli Funds, LLC.
Age 58
Karl Otto Pohl * + Member of the Shareholder Committee of Sal Oppenheim Jr. & Cie (private
Director investment bank); Board Member of TrizecHahn Corporation (real estate
company) and Zurich Allied (insurance company); Director of Gabelli Asset
Management Inc.; Former President of the Deutsche Bundesbank and Chairman
of its Central Bank Council from 1980 through 1991; Director or Trustee of
all other mutual funds advised by Gabelli Funds, LLC and its
affiliates.
Anthony R. Pustorino, CPA Certified Public Accountant; Professor of Accounting, Pace University
Director since 1965. Director or Trustee of 10 other mutual funds advised by Gabelli
Funds, LLC and its affiliates.
Bruce N. Alpert Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC
Chief Operating Officer, since 1988; Director and President of Gabelli Advisers, Inc. and an
Vice President and Treasurer officer of all funds advised by Gabelli Funds, LLC and its affiliates.
Age: 48
<PAGE>
NAME, AGE AND
POSITION(S) WITH FUND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS
James E. McKee Secretary of the Gabelli Funds LLC; Vice President, Secretary and General
Secretary Counsel of GAMCO Investors, Inc. since 1993 and of Gabelli Asset
Age: 36 Management Inc. since 1999; Secretary of all mutual funds advised by
Gabelli Funds, LLC and Gabelli Advisers, Inc. since August 1995.
- ---------------------
<FN>
+ Mr. Pohl is a director of the parent company of the Adviser.
</FN>
</TABLE>
The Fund, its investment adviser and principal underwriter have adopted a code
of ethics (the "Code of Ethics") under Rule 17j-1 of the 1940 Act. The Code of
Ethics permits personnel, subject to the Code of Ethics and its restrictive
provisions, to invest in securities, including securities that may be purchased
or held by the Fund.
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 in
person 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.
Mr. Morrissey is the Chairman and the only member of the Fund's Investment
Committee. The Investment Committee reviews investment related matters as
needed.
The following table sets forth certain information regarding the compensation of
the Fund's Directors. 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, 1999.
<PAGE>
COMPENSATION TABLE
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM THE FROM THE FUND AND
NAME OF PERSON AND POSITION FUND FUND COMPLEX *
- --------------------------------------------------------------------------------
Mario J. Gabelli $ 0 $ 0 (17)
Chairman of the Board
Felix J. Christiana $15,000 $ 99,250 (11)
Director
Anthony J. Colavita $16,500 $ 94,875 (18)
Director
Robert J. Morrissey $16,500 $ 27,000 (2)
Director
Karl Otto Pohl $ 3,500 $ 7,042 (19)
Director
Anthony R. Pustorino $20,000 $107,250 (11)
Director
* Represents the total compensation paid to such persons during the fiscal
year ending December 31, 1999 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.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As Of April 17, 2000, the following persons owned of record or beneficially 5%
or more of the Fund's outstanding Shares:
NAME AND ADDRESS % OF CLASS NATURE OF OWNERSHIP
Stephen Nordholdt, Trustee 10.1% Beneficial
ICMA Retirement Trust
U/A DTD 12-31-83
c/o Nancy Martin
777 North Capital Street, N.E., Ste. 600
Washington, DC 20002-4240
Prudential Securities Inc. 9.36% Record (a)
Special Custody Acct
FBO Customers
Attn Mutual Funds
One New York Plaza
New York, NY 10004-1901
(a) Prudential Securities Inc. disclaims beneficial ownership and no one
underlying shareholder owns beneficially more than 5% of the shares of the
Fund.
As of April 17, 2000, as a group the Directors and officers of the Fund owned
less than 1% of the outstanding shares of common stock of the Fund.
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The Adviser is a New York limited liability company which also serves as an
investment adviser to 13 open-end investment companies and four closed-end
investment companies with aggregate assets in excess of $10.6 billion as of
December 31, 1999. The Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. Mr. Mario J. Gabelli may be deemed
a "controlling person" of the Adviser on the basis of his controlling interest
of the ultimate parent company of the Adviser. The Adviser has several
affiliates that provide investment advisory services: GAMCO Investors, Inc.
("GAMCO") acts as investment adviser for individuals, pension trusts,
profit-sharing trusts and endowments, and had assets under management of
approximately $9.4 billion as of December 31, 1999; Gabelli Advisers, Inc. acts
as investment adviser to The Gabelli Westwood Funds with assets under management
of approximately $390 million as of December 31, 1999; Gabelli Securities, Inc.
acts as investment adviser to certain alternative investments products,
consisting primarily of risk arbitrage and merchant banking limited partnerships
and offshore companies, with assets under management of approximately $230
million as of December 31, 1999; and Gabelli Fixed Income LLC acts as investment
adviser for five portfolios of The Treasurer's Fund, Inc. and separate accounts
having assets under management of approximately $1.4 billion as of December 31,
1999.
Affiliates of the Adviser may, in the ordinary course of their business, acquire
for their own account or for the accounts of their advisory clients, significant
(and possibly controlling) positions in the securities of companies that may
also be suitable for investment by the Fund. The securities in which the Fund
might invest may thereby be limited to some extent. For instance, many companies
in the past several years have adopted so-called "poison pill" or other
defensive measures designed to discourage or prevent the completion of
non-negotiated offers for control of the company. Such defensive measures may
have the effect of limiting the shares of the company which might otherwise be
acquired by the Fund if the affiliates of the Adviser or their advisory accounts
have or acquire a significant position in the same securities. However, 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 objectives. Securities purchased or sold pursuant to contemporaneous
orders entered on behalf of the investment company accounts of the Adviser or
the advisory accounts managed by its affiliates for their unaffiliated clients
are allocated pursuant to principles believed to be fair and not disadvantageous
to any such accounts. In addition, all such orders are accorded priority of
execution over orders entered on behalf of accounts in which the Adviser or its
affiliates have a substantial pecuniary interest. The Adviser may on occasion
give advice or take action with respect to other clients that differ 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 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
<PAGE>
Board Meeting held on February 16, 2000. 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 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 SAI); (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 its 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 60 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
60 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, 1997, December 31, 1998 and December 31, 1999, the Fund paid investment
advisory fees to the Adviser amounting to $5,036,742, $7,237,856 and
$10,010,005, respectively.
<PAGE>
SUB-ADMINISTRATOR
PFPC Inc. (formerly known as First Data Investor Services Group, Inc.) (the
"Sub-Administrator"), a majority-owned subsidiary of PNC Bank Corp., 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 Internal Revenue Code of 1986, as amended (the "Code"),
and the Fund's investment restrictions; (g) furnishes to the Adviser such
statistical and other factual information and information regarding economic
factors and trends as the Adviser from time to time may require; and (h)
generally provides all administrative services that may be required for the
ongoing operation of the Fund in a manner consistent with the requirements of
the 1940 Act.
For the services it provides, the 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 $10 billion -
.0275%; $10 billion to $15 billion - .0125%; over $15 billion - .01%.
COUNSEL
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019, serves
as the Fund's legal counsel.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, New York
10036-2798, independent auditors, have been selected to audit the Fund's annual
financial statements.
<PAGE>
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Boston Safe, an indirect wholly-owned subsidiary of Mellon Bank Corporation,
located at One Boston Place, Boston, Massachusetts 02108, is the Custodian for
the Fund's cash and securities. Boston Financial Data Services, Inc. ("BFDS"),
an affiliate of State Street Bank and Trust Company ("State Street"), located at
the BFDS Building, Two Heritage Drive, Quincy, Massachusetts 02171, performs the
services of transfer agent and dividend disbursing agent for the Fund. Neither
Boston Safe, BFDS nor State Street assists in or is responsible for investment
decisions involving assets of the Fund.
DISTRIBUTOR
To implement the Fund's 12b-1 Plans, the Fund has entered into a Distribution
Agreement with Gabelli & Company, Inc. (the "Distributor"), and may enter into
substantially identical arrangements with other firms. The Distributor is a New
York corporation which is an indirect majority-owned subsidiary of GAMI, having
principal offices located at One Corporate Center, Rye, New York 10580. The
Distributor continuously 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 are paid by the Distributor. The
Distributor may enter into selling agreements with registered broker-dealers
("Soliciting Broker-Dealers") pursuant to which the Distributor may reallow the
sales charge to Soliciting Broker-Dealers in accordance with the schedule set
forth in the Prospectus under "Classes of Shares - Sales Charge - Class A
Shares."
For the fiscal years ended December 31, 1997, December 31, 1998 and December 31,
1999, commissions (sales charges) on sales of the Fund's shares received by
Gabelli & Company were $303,952, $483,819 and $429,606, respectively.
DISTRIBUTION PLANS
The Fund has adopted a Plan of Distribution (a "Plan") pursuant to Rule 12b-1
under the 1940 Act on behalf of each of the Class A Shares, Class B Shares and
Class C Shares. Under the Plans, the Fund will make monthly payments to
registered broker-dealers, including Gabelli & Company, who have entered into an
agreement with the Fund (each, a "Designated Dealer") for activities intended to
result in the distribution of Fund shares as described below.
Payments under each 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, SAI 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 Plans compensate
the Distributor regardless of expense. The Plans are intended to benefit the
Fund by increasing its assets and thereby reducing the Fund's expense ratio.
<PAGE>
The Board of Directors will evaluate the appropriateness of each 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 each Plan.
Under its terms, each 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"). No Plan may 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 any Plan must also be approved by the Directors in the manner
described above. Each 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 each Plan, Designated Dealers will provide the Directors periodic reports
of amounts expended under such Plan and the purpose for which such expenditures
were made. During the fiscal year ended December 31, 1999, the Fund made
aggregate distribution payments of approximately $2,526,933 to Designated
Dealers pursuant to the Plan. Such payments funded expenditures of approximately
$62,869 for support services, $189,059 to sales personnel of Designated Dealers,
$7,289 for advertising expenses and $84,359 for printing and mailing expenses
and also payments of $1,995,559 to selected dealers.
No interested person of the Fund or any independent Director of the Fund had a
direct or indirect financial interest in the operation of any Plan or related
agreements.
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 ("best execution") at
reasonable expense. The Adviser is permitted to (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.
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
<PAGE>
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.
Fiscal Year Ended Commissions
December 31, Paid
Total Brokerage Commissions 1997 $ 611,283
1998 $ 721,108
1999 $1,299,178
Commissions paid to Gabelli & Company 1997 $ 226,899
1998 $ 381,995
1999 $ 839,536
Commissions paid to Keeley Investment Corp. 1997 $ 900
1998 $ 9,755
1999 $ 4,500
% of Total Brokerage Commissions 1999 64.62%
paid to Gabelli & Company
% of Total Brokerage Commissions 1999 0.35%
paid to Keeley Investment Corp.
% of Total Transactions involving Commissions 1999 61.02%
paid to Gabelli & Company
% of Total Transactions involving Commissions 1999 0.28%
paid to Keeley Investment Corp.
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
<PAGE>
reflects the amount paid for such services but must be prepared to demonstrate a
good faith basis for its determinations.
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 $_______ on portfolio
transactions in the principal amounts of $_______ during 1999.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company or other affiliates 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
which provide that 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,
Inc. ("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. Such 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
such 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,
<PAGE>
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.
PURCHASE 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"). When payment is made to a brokerage firm before a Settlement
Date, unless otherwise directed by the 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. The
Fund has agreed to indemnify Gabelli & Company against certain liabilities,
including liabilities arising under the 1933 Act.
REDEMPTION OF SHARES
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 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.
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected at 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 "Computation of Net Asset Value"), or
partly in cash and partly in portfolio securities. However, payments will be
made wholly in cash unless the shareholder has redeemed more than $250,000 over
the preceeding three months and the Adviser believes that economic conditions
exist which would make payment in cash detrimental to the best interests of the
Fund. If payment for shares redeemed is made wholly or partly in portfolio
securities, brokerage costs may be incurred by the investor in converting the
securities to cash. The Fund will not distribute in-kind portfolio securities
that are not readily marketable.
<PAGE>
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 such
loss, and the Fund, to the extent permissible by law, may reimburse itself or
Gabelli & Company for such 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 such shareholder are not
sufficient to cover such loss, Gabelli & Company will promptly reimburse the
Fund for the amount of such unrecovered loss.
DETERMINATION OF NET ASSET VALUE
Net asset value ("NAV") is calculated separately for each class of the Fund. The
NAV of Class B Shares and Class C Shares of the Fund will generally be lower
than the NAV of Class A Shares as a result of the higher distribution-related
fee to which Class B Shares and Class C Shares are subject. It is expected,
however, that the NAV per share of each class will tend to converge immediately
after the recording of dividends, if any, which will differ by approximately the
amount of the distribution and/or service fee expense accrual differential among
the classes.
For purposes of determining the Fund's NAV 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 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 by such method as the Board of
Directors shall determine in good faith to reflect its fair market value.
<PAGE>
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
<PAGE>
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 short sales against the box and 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. 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 engages in short sales against the box or 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.
FOREIGN WITHHOLDING TAXES
Income received by the Fund from investments in foreign securities may be
subject to withholding and other taxes imposed by foreign countries. Tax
treaties 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.
PASSIVE FOREIGN INVESTMENT COMPANIES
If the Fund purchases shares in certain foreign investment entities, called
"passive foreign investment companies" (a "PFIC"), it may be subject to United
States federal income tax on a portion of any "excess distribution" or gain from
the disposition of such shares even if such income is distributed as a taxable
dividend by the Fund to its shareholders. Additional charges in the nature of
interest may be imposed on the Fund in respect of deferred taxes arising from
such distributions or gains. If the Fund were to invest in a PFIC and elected to
treat the PFIC as a "qualified electing fund" under the Code, in lieu of the
foregoing requirements, the Fund might be required to include in income each
year a portion of the ordinary earnings and net capital gains of the qualified
electing fund, even if not distributed to the Fund, and such amounts would be
subject to the 90% and excise tax distribution requirements described above. In
order to make this election, the Fund would be required to obtain certain annual
information from the passive foreign investment companies in which it invests,
which may be difficult or not possible to obtain.
Alternatively, the Fund may make a mark-to-market election that will result in
the Fund being treated as if it had sold and repurchased all of the PFIC stock
at the end of each year. In this case, the Fund would report gains as ordinary
income and would deduct losses as ordinary losses to the extent of previously
recognized gains. The election, once made, would be effective for all subsequent
taxable years of the Fund, unless revoked with the consent of the IRS. By making
the election, the Fund could potentially ameliorate the adverse tax consequences
with respect to its ownership of shares in a PFIC, but in any particular year
may be required to recognize income in excess of the distributions it receives
from PFICs and its proceeds from dispositions of PFIC company stock. The Fund
may have to distribute this "phantom" income and gain to satisfy its
distribution requirement and to avoid imposition of the 4% excise tax. The Fund
will
<PAGE>
make the appropriate tax elections, if possible, and take any additional steps
that are necessary to mitigate the effect of these rules.
DISTRIBUTIONS
Distributions of investment company taxable income (which includes interest and
dividends 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.
The price of shares purchased just prior to a distribution by the Fund may
reflect the amount of the forthcoming distribution. Those purchasing at that
time will receive a distribution that represents a return of investment, but
that 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 a 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.
If a shareholder (i) incurs a sales load charge in acquiring shares in a Fund
and, by reason of incurring such charge or acquiring the shares, acquires the
right to acquire shares of one or more regulated investment companies without
the payment of a load charge or with the payment of a reduced load charge (a
"reinvestment right") and (ii) disposes of the Fund shares before the 91st day
after the date on which the shares were acquired and subsequently acquires
shares in the Fund or in another regulated investment company whereby the
otherwise applicable load charge is reduced by reason of the reinvestment right,
then the original load charge will not be taken into account for purposes of
determining the shareholder's gain or loss on the disposition (to the extent the
original load charge does not exceed the reduction in the subsequent load
charge). To the extent such charge is not taken into account in determining the
amount of gain or loss, the charge will be treated as incurred in connection
with the subsequently acquired shares and will have a corresponding effect on
the shareholder's basis in such shares.
BACKUP WITHHOLDING
<PAGE>
The Fund generally will 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.
Shareholders are urged to consult their attorneys or tax advisers regarding
specific questions as to federal, state, local or foreign taxes.
INVESTMENT PERFORMANCE INFORMATION
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 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's "average annual total return" figures
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 for the Fund's Class A shares,
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.
24.63% for the one year period from January 1, 1999 through December 31, 1999
24.84% for the five year period from January 1, 1995 through December 31, 1999
17.90% for the ten year period from January 1, 1990 through December 31, 1999
<PAGE>
17.64% for the period from the Fund's inception on September 29, 1989 through
December 31, 1999
AGGREGATE TOTAL RETURN
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). The
Fund's aggregate total return figures represent the cumulative change in the
value of 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 for Class A shares was as follows for the
periods indicated:
31.92% for the one year fiscal period from January 1, 1999 through December 31,
1999
220.88% for the five year period from January 1, 1995 through December 31, 1999
449.10% for the ten year period from January 1, 1990 through December 31, 1999
460.60% for the period from the Fund's inception on September 29, 1989 through
December 31, 1999
The above 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 Class A
shares' aggregate total returns for the same periods would have been 24.63%,
203.24%, 418.78% and 429.77%, 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.
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,
Morningstar, Inc. 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
<PAGE>
are based on historical earnings and are not intended to indicate future
performance. Shareholders may make inquiries regarding the Fund's total return
figures to Gabelli and Company.
In its reports, investor communications or advertisements, the Fund may also
include: (i) descriptions and updates concerning its strategies and portfolio
investments; (ii) its goals, risk factors and expenses compared with other
mutual funds; (iii) analysis of its investments by industry, country, credit
quality and other characteristics; (iv) a discussion of the risk/return
continuum relating to different investments; (v) the potential impact of adding
foreign stocks to a domestic portfolio; (vi) the general biography or work
experience of the portfolio manager of the Fund; (vii) portfolio manager
commentary or market updates; (viii) discussion of macroeconomic factors
affecting the Fund and its investments; and (ix) other information of interest
to investors.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
VOTING RIGHTS
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, except as described below with respect to class
voting in certain circumstances. All shareholders of the Fund in each class,
upon liquidation, will participate ratably in the Fund's net assets. 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 or preemptive rights in connection with any shares of the Fund, with
the exception that Class B shares will automatically convert into Class A shares
approximately eighty-four months after purchase. All shares, when issued in
accordance with the terms of the offering, will be fully paid and
non-assessable.
LIABILITIES; SEPARATE CLASSES OF SHARES
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 1933 Act 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.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional votes held. Shareholders will vote in the aggregate except
where otherwise required by law and except that each class will vote separately
on certain matters pertaining to its distribution and shareholder servicing
arrangements.
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
The Fund's Financial Statements for the year ended December 31, 1999, including
the report of PricewaterhouseCoopers LLP, independent accountants, is
incorporated by reference to the Fund's Annual Report. The Fund's Annual Report
is available upon request and without charge. PricewaterhouseCoopers LLP
provides audit services, tax preparation and assistance and consultation in
connection with certain SEC filings.
<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.
<PAGE>
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 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
OTHER INFORMATION
Item 23.
Exhibits
(a) Articles of Incorporation dated July 20, 1989 are incorporated by
reference to Post-Effective Amendment No. 11 to the Registration
Statement as filed with the SEC on April 30, 1997 (Accession No.
0000927405-97-000148) ("Post-Effective Amendment No. 11").
Articles Supplementary dated September 27, 1989 is incorporated by
reference to Post-Effective Amendment No. 11.
Articles of Amendment dated April 20, 1999 is incorporated by
reference to Post-Effective Amendment No. 14 to the Registration
Statement as filed with the SEC on April 30, 1999 Accession No.
0000927405-99-000160
("Post-Effective Amendment No. 14").
Articles Supplementary dated April 20, 1999 is incorporated by
reference to Post-Effective Amendment No. 14.
(b) Registrant's Bylaws dated September 18, 1989 are incorporated by
reference to Post-Effective Amendment No. 11.
(c) Not Applicable.
(d) Investment Advisory Agreement between Registrant and Gabelli Funds,
Inc. dated March 1, 1994 is incorporated by reference to
Post-Effective Amendment No. 11.
Amendment No. 1 to the Investment Advisory Agreement between
Registrant and Gabelli Funds, Inc. (now known as Gabelli Funds,
LLC) dated February 17, 1999, is filed herewith.
(e) Subscription Agreement is incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement as
filed with the SEC on September 20, 1989.
Distribution Agreement between Registrant and Gabelli & Company,
Inc. dated July 30, 1993 is incorporated by reference to
Post-Effective Amendment No. 11.
Designated Dealer Agreement between Registrant and 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 (Accession No.
0000927405-95-000020).
Amended and Restated Distribution Agreement between Registrant and
Gabelli & Company Inc. dated February 17, 1999 is incorporated by
reference to Post-Effective Amendment No. 14.
(f) Not Applicable.
<PAGE>
(g) Custody Agreement between Registrant and Boston Safe Deposit and
Trust Company dated September 19, 1989 is incorporated by reference
to Post-Effective Amendment No. 11.
First Amendment to the Custody Agreement between Registrant and
Boston Safe Deposit and Trust Company is filed herewith.
(h) Transfer Agency and Service Agreement between Registrant and State
Street Bank and Trust Company dated November 17, 1993 is
incorporated by reference to Post-Effective Amendment No. 11.
(i) Consent of Counsel is filed herewith.
(j) Consent of Independent Accountants is filed herewith.
Powers of Attorney for Mario J. Gabelli, Bill Callaghan, Felix J.
Christiana, Anthony J. Colavita, Robert J. Morrissey, Karl Otto
Pohl and Anthony R. Pustorino are incorporated by reference to
Post-Effective Amendment No. 11.
Certified Resolution of Board authorizing signature on behalf of
Registrant pursuant to Power of Attorney is incorporated by
reference to Post-Effective Amendment No. 12 to the Registration
Statement as filed with the SEC on April 30, 1998 (Accession No.
0000927405-98-000143).
Powers of Attorney for Frank J. Fahrenkopf, Jr. and Werner J.
Roeder are filed herewith.
(k) Not Applicable.
(l) Purchase Agreement relating to Class B Series Shares and Class C
Series Shares is incorporated by reference to Post-Effective
Amendment No. 14.
(m) Distribution Plan dated September 19, 1989 pursuant to Rule 12b-1
is incorporated by reference to Post-Effective Amendment No. 11.
Amended and Restated Plan of Distribution pursuant to Rule 12b-1
relating to Class A Series Shares is incorporated by reference to
Post-Effective Amendment No. 13 to the Registration Statement as
filed with the SEC on March 1, 1999 (Accession No.
0000927405-99-00077) ("Post-Effective Amendment No. 13").
Plan of Distribution pursuant to Rule 12b-1 relating to Class B
Series Shares is incorporated by reference to Post-Effective
Amendment No. 13.
Plan of Distribution pursuant to Rule 12b-1 relating to Class C
Series Shares is incorporated by reference to Post-Effective
Amendment No. 13.
(n) Rule 18f-3 Multi-Class Plan is incorporated by reference to
Post-Effective Amendment No. 13.
(o) Not Applicable.
(p) Revised Code of Ethics for the Registrant, Gabelli Funds, LLC and
Gabelli & Company, Inc. is filed herewith.
Item 24. Persons Controlled by or Under Common Control with Registrant
<PAGE>
None.
Item 25. Indemnification
The response to this Item 25 is incorporated by reference to
Pre-Effective Amendment No. 2.
Item 26. Business and Other Connections of the Investment Adviser
Gabelli Funds, LLC (the "Adviser") is a registered investment
adviser providing investment management and administrative services
to the Registrant. The Adviser also provides similar services to
other mutual funds.
The information required by this Item 26 with respect to any other
business, profession, vocation or employment of a substantial
nature engaged in by directors and officers of the Adviser during
the past two years is incorporated by reference to Form ADV filed
by the Adviser pursuant to the Investment Advisers Act of 1940 (SEC
File No. 801-37706).
Item 27. Principal Underwriter
(a) as distributor for The Gabelli Asset Fund, The Gabelli
Growth Fund, The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Gabelli Convertible
Securities Fund, Inc., The Gabelli Blue Chip Value Fund, The
Gabelli Utility Trust, The Gabelli Utilities Fund, The
Gabelli Mathers Fund, Gabelli Equity Series Funds, Inc.,
Gabelli Gold Fund, Inc., The Gabelli Money Market Funds,
Gabelli Investor Funds, Inc., The Gabelli Value Fund Inc.,
Gabelli Global Series Funds, Inc., Gabelli International
Growth Fund, Gabelli Capital Series Funds, Inc. and The
Gabelli Westwood Funds.
(b) each director, officer or partner of Gabelli & Company is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company pursuant to the Securities Exchange Act of
1934, as amended (SEC File No. 8-21373).
(c) Not Applicable.
Item 28. Location of Accounts and Records
All accounts, books and other documents required by Section 31(a)
of the Investment Company Act of 1940, as amended, and Rules 31a-1
through 31a-3 thereunder are maintained at the offices of the
Adviser, Gabelli Funds, LLC, One Corporate Center, Rye, New York
10580-1434; PFPC Inc., 101 Federal Street, Boston, Massachusetts
02110; Boston Safe Deposit and Trust Company, One Boston Place,
Boston, Massachusetts 02108; State Street Bank and Trust Company,
225 Franklin Street, Boston, Massachusetts 02110; and Boston
Financial Data Services, Inc., Two Heritage Drive, North Quincy,
Massachusetts 02171.
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant, THE GABELLI VALUE
FUND INC., certifies that it meets all of the requirements for effectiveness of
this Post-Effective Amendment to its Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933, as amended, and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Rye and State
of New York, on the 28th day of April, 2000.
THE GABELLI VALUE FUND INC.
By: Mario J. Gabelli*
-----------------
Mario J. Gabelli
Chairman of the Board and President
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 15 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
Mario J. Gabelli* Chairman of the Board, April 28, 2000
- ------------------------------------
Mario J. Gabelli (President and Chief Investment
Officer)
/s/ Bruce N. Alpert Vice President and Treasurer April 28, 2000
- ------------------------------------
Bruce N. Alpert (Chief Operating Officer)
Bill Callaghan* Director April 28, 2000
- ------------------------------------
Bill Callaghan
Felix J. Christiana* Director April 28, 2000
- ------------------------------------
Felix J. Christiana
Anthony J. Colavita* Director April 28, 2000
- ------------------------------------
Anthony J. Colavita
Frank J. Fahrenkopf, Jr.* Director April 28, 2000
- ------------------------------------
Frank J. Fahrenkopf, Jr.
Robert J. Morrissey* Director April 28, 2000
- ------------------------------------
Robert J. Morrissey
Karl Otto Pohl* Director April 28, 2000
- ------------------------------------
Karl Otto Pohl
Anthony R. Pustorino* Director April 28, 2000
- ------------------------------------
Anthony R. Pustorino
Werner J. Roeder* Director April 28, 2000
- ------------------------------------
Werner J. Roeder
</TABLE>
<PAGE>
*By: /s/ Bruce N. Alpert
Bruce N. Alpert
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
------------
EXHIBIT NO. DESCRIPTION
----------- -----------
(d) Amendment No. 1 to the Investment Advisory Agreement
between Registrant and Gabelli Funds, LLC.
(g) First Amendment to Custody Agreement between Registrant
and Boston Safe Deposit and Trust Company.
(i) Consent of Counsel.
(j) Consent of Independent Accountants.
Poweres of Attorney for Frank J. Fahrenkopf, Jr. and
Werner J. Roeder.
(p) Revised Code of Ethics for the Registrant, Gabelli
Funds, LLC and Gabelli & Company, Inc.
EXHIBIT (D)
- ----------
AMENDMENT NO. 1
TO THE INVESTMENT ADVISORY AGREEMENT
This Amendment No. 1 dated as of February 17, 1999 is entered into by
Gabelli Funds, LLC (the "Adviser") and The Gabelli Value Fund Inc. (the "Fund").
WHEREAS, the predecessor to the Adviser and the Fund entered into an
Investment Advisory Agreement dated as of March 1, 1994 (the "Investment
Advisory Agreement"); and
WHEREAS, the Adviser and the Fund wish to amend the Investment Advisory
Agreement to reflect the change in the Adviser's name;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The name "Gabelli Funds, Inc." in the Investment Advisory
Agreement is hereby deleted in all places where it appears
and replaced with the name "Gabelli Funds, LLC".
2. The Investment Advisory Agreement shall remain in full force
and effect in all other respects.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 1
as of the date and year first written above.
THE GABELLI VALUE FUND INC. GABELLI FUNDS, LLC
By: /s/ Bruce Alpert By: /s/ Gus Coutsouros
EXHIBIT (G)
- ----------
FIRST AMENDMENT TO
THE GABELLI VALUE FUND INC.
CUSTODY AGREEMENT
This First Amendment, dated as of August 7, 1997, to the Custody
Agreement dated as of September 19, 1989 (the "Custody Agreement"), by and
between BOSTON SAFE DEPOSIT AND TRUST COMPANY, a Massachusetts trust company
(the "Custodian") and THE GABELLI VALUE FUND INC., a Maryland corporation (the
"Fund").
WHEREAS, the Fund has retained the Custodian as the Fund's custodian
pursuant to the Custody Agreement; and
WHEREAS, the Fund and the Custodian desire to amend certain provisions
of the Custody Agreement and to continue the Custody Agreement in the manner
described below.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants
herein contained, the parties agree as follows:
1. A new Section 11(k) is hereby added to the Custody Agreement and
reads as follows:
(k) Overdraft Facility and Security for Payment. In the event
that the Custodian is directed by Written Instruction (or Oral
Instructions confirmed in writing in accordance with Section 11(i)
hereof) to make any payment or transfer of monies on behalf of the Fund
for which there would be, at the close of business on the date of such
payment or transfer, insufficient monies held by the Custodian on
behalf of the Fund, the Custodian may, in its sole discretion, provide
an overdraft (an "Overdraft") to the Fund in an amount sufficient to
allow the completion of such payment or transfer. Any Overdraft
provided hereunder: (a) shall be payable on the next Business Day,
unless otherwise agreed by the Fund and the Custodian; and (b) shall
accrue interest from the date of the Overdraft to the date of payment
in full by the Fund at a rate agreed upon in writing, from time to
time, by the Custodian and the Fund. The Custodian and the Fund
acknowledge that the purpose of such Overdraft is to temporarily
finance the purchase of Securities for prompt delivery in accordance
with the terms hereof, to meet unanticipated or unusual redemptions, to
allow the settlement of foreign exchange contracts or to meet other
emergency expenses not reasonably foreseeable by the Fund. The
Custodian shall promptly notify the Fund in writing (an "Overdraft
Notice") of any Overdraft by facsimile transmission or in such other
manner as the Fund and the Custodian may agree in writing. To secure
payment of any Overdraft, the Fund hereby grants to the Custodian a
continuing security interest in and right of setoff against the
Securities and cash in the Fund's account from time to time in the full
amount of such Overdraft. Should the Fund fail to pay promptly any
amounts owed hereunder, the Custodian shall be entitled to use
available cash in the Fund's account and to liquidate Securities in the
account as is necessary to meet the Fund's obligations under the
Overdraft. In any such case, and without limiting the foregoing, the
Custodian shall be entitled to take such other action(s) or exercise
such other options, powers and rights as the Custodian now or hereafter
has as a secured creditor under the Massachusetts Uniform Commercial
Code or any other applicable law.
2. Except as amended hereby and expressly hereinabove provided, the
Custody Agreement shall continue in full force and effect, subject to and in
accordance with the provisions of Section 12 of the Custody Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their officers thereunto duly authorized as of the day and
year first above written.
THE GABELLI VALUE FUND INC.
By: /s/ Bruce Alpert
Title: Vice President
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/ C. Healy
Title:Vice President
EXHIBIT (I)
- ----------
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. 15 (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.
/s/ Willkie Farr & Gallagher
----------------------------
Willkie Farr & Gallagher
April 26, 2000
New York, New York
EXHIBIT (J)(A)
- --------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No.15 to the registration statement on Form N-1A ("Registration
Statement") of our report dated February 11, 2000, relating to the financial
statements and financial highlights which appear in the December 31, 1999 Annual
Report of The Gabelli Value Fund, which is also incorporated by reference into
the Registration Statement. We also consent to the references to us under the
headings "Financial Highlights", "Independent Accountants" and "Financial
Statements" in such Registration Statement.
PRICEWATERHOUSECOOPERS LLP
NEW YORK, NEW YORK
APRIL 27, 2000
EXHIBIT (J)(B)
- --------------
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, as amended, 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, 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
Directors themselves might or could do.
IN WITNESS WHEREOF, the undersigned Directors have hereunto set their
hands this 7th day of April, 2000.
/s/ Frank J. Fahrenkopf, Jr.
----------------------------
Frank J. Fahrenkopf, Jr.
Director
/s/ Werner J. Roeder
----------------------------
Werner J. Roeder
Director
EXHIBIT (P)
- -----------
SECTION S
CODE OF ETHICS
Gabelli Funds, LLC
GAMCO Investors, Inc.
Gabelli & Company, Inc.
Gabelli Advisers, Inc.
Gabelli Fixed Income LLC
Each Registered Investment Company or series thereof (each of which is
considered to be a Company for this purpose) for which any of the
Companies listed above presently or hereafter provides investment advisory
or principal underwriting services, other than a money market fund or a
fund that does not invest in Securities.
INTRODUCTION
This Code of Ethics establishes rules of conduct for persons who are
associated with the companies named above or with the registered investment
companies for which such companies provide investment advisory or principal
underwriter services. The Code governs their personal investment and other
investment-related activities.
The basic rule is very simple: put the client's interests first. The
rest of the rules elaborate this principle. Some of the rules are imposed
specifically by law. For example, the laws that govern investment advisers
specifically prohibit fraudulent activity, making statements that are not true
or that are misleading or omit something that is significant in the context and
engaging in manipulative practices. These are general words, of course, and over
the years the courts, the regulators and investment advisers have interpreted
these words and established codes of conduct for their employees and others who
have access to their investment decisions and trading activities. Indeed, the
rules obligate investment advisers to adopt written rules that are reasonably
designed to prevent the illegal activities described above and must follow
procedures that will enable them to prevent such activities.
This Code is intended to assist the companies in fulfilling their
obligations under the law. The first part lays out who the Code applies to, the
second part deals with personal investment activities, the third part deals with
other sensitive business practices, and subsequent parts deal with reporting and
administrative procedures.
<PAGE>
THE CODE IS VERY IMPORTANT TO THE COMPANIES AND THEIR EMPLOYEES.
VIOLATIONS CAN NOT ONLY CAUSE THE COMPANIES EMBARRASSMENT, LOSS OF
BUSINESS, LEGAL RESTRICTIONS, FINES AND OTHER PUNISHMENTS BUT FOR EMPLOYEES
CAN LEAD TO DEMOTION, SUSPENSION, FIRING,
EJECTION FROM THE SECURITIES BUSINESS AND VERY LARGE FINES.
I. Applicability
A. THE CODE APPLIES TO EACH OF THE FOLLOWING:
1. THE COMPANIES NAMED OR DESCRIBED AT THE TOP OF PAGE ONE OF
THE CODE AND ALL ENTITIES THAT ARE UNDER COMMON MANAGEMENT
WITH THESE COMPANIES OR OTHERWISE AGREE TO BE SUBJECT TO
THE CODE ("AFFILIATES"). A LISTING OF THE AFFILIATES,
WHICH IS PERIODICALLY UPDATED, IS ATTACHED AS EXHIBIT A.
2. ANY OFFICER, DIRECTOR OR EMPLOYEE OF ANY COMPANY,
AFFILIATE OR FUND CLIENT (AS DEFINED BELOW) WHOSE JOB
REGULARLY INVOLVES HIM IN THE INVESTMENT PROCESS. THIS
INCLUDES THE FORMULATION AND MAKING OF INVESTMENT
RECOMMENDATIONS AND DECISIONS, THE PURCHASE AND SALE OF
SECURITIES FOR CLIENTS AND THE UTILIZATION OF INFORMATION
ABOUT INVESTMENT RECOMMENDATIONS, DECISIONS AND TRADES.
DUE TO THE MANNER IN WHICH THE COMPANIES AND THE
AFFILIATES CONDUCT THEIR BUSINESS, EVERY EMPLOYEE SHOULD
ASSUME THAT HE IS SUBJECT TO THE CODE UNLESS THE
COMPLIANCE OFFICER SPECIFIES OTHERWISE.
3. WITH RESPECT TO ALL OF THE COMPANIES, AFFILIATES AND FUND
CLIENTS EXCEPT GABELLI & COMPANY, INC., ANY NATURAL PERSON
WHO CONTROLS ANY OF THE COMPANIES, AFFILIATES OR FUND
CLIENTS AND WHO OBTAINS INFORMATION REGARDING THE
COMPANIES' OR THE AFFILIATES' INVESTMENT RECOMMENDATIONS
OR DECISIONS. HOWEVER, A PERSON WHOSE CONTROL ARISES ONLY
AS A RESULT OF HIS OFFICIAL POSITION WITH SUCH ENTITY IS
EXCLUDED. DISINTERESTED DIRECTORS OF FUND CLIENTS, FOR
EXAMPLE, ARE EXCLUDED FROM COVERAGE UNDER THIS ITEM.
4. WITH RESPECT TO ALL OF THE COMPANIES AND FUND CLIENTS
EXCEPT GABELLI & COMPANY, INC., ANY DIRECTOR, OFFICER,
GENERAL PARTNER OR PERSON PERFORMING A SIMILAR FUNCTION
EVEN IF HE HAS NO KNOWLEDGE OF AND IS NOT INVOLVED IN THE
INVESTMENT PROCESS. DISINTERESTED DIRECTORS OF FUND
CLIENTS AND INDEPENDENT DIRECTORS OF AFFILIATES ARE
INCLUDED IN COVERAGE UNDER THIS ITEM.
<PAGE>
5. AS AN EXCEPTION, THE CODE DOES NOT APPLY TO ANY DIRECTOR,
OFFICER OR EMPLOYEE OF ANY FUND CLIENT (SUCH AS CERTAIN OF
THE GABELLI WESTWOOD FUNDS) WITH RESPECT TO WHICH THE
COMPANIES' SERVICES DO NOT INVOLVE THE FORMULATION OR
MAKING OF INVESTMENT RECOMMENDATIONS OR DECISIONS OR THE
EXECUTION OF PORTFOLIO TRANSACTIONS IF THAT PERSON IS ALSO
A DIRECTOR, OFFICER OR EMPLOYEE OF ANY ENTITY THAT DOES
PERFORM SUCH SERVICES (SUCH AS WESTWOOD MANAGEMENT CORP.).
THESE INDIVIDUALS ARE COVERED BY CODES OF ETHICS ADOPTED
BY SUCH ENTITIES.
B. DEFINITIONS
1. ACCESS PERSONS. THE COMPANIES AND THE PERSONS DESCRIBED IN ITEMS (A)2
AND (A)3 ABOVE OTHER THAN THOSE EXCLUDED BY ITEM (A)5 ABOVE.
2. ACCESS PERSON ACCOUNT. INCLUDES ALL ADVISORY, BROKERAGE, TRUST OR OTHER
ACCOUNTS OR FORMS OF DIRECT BENEFICIAL OWNERSHIP IN WHICH ONE OR MORE
ACCESS PERSONS AND/OR ONE OR MORE MEMBERS OF AN ACCESS PERSON'S
IMMEDIATE FAMILY HAVE A SUBSTANTIAL PROPORTIONATE ECONOMIC INTEREST.
IMMEDIATE FAMILY INCLUDES AN ACCESS PERSON'S SPOUSE AND MINOR CHILDREN
LIVING WITH THE ACCESS PERSON. A SUBSTANTIAL PROPORTIONATE ECONOMIC
INTEREST WILL GENERALLY BE 10% OF THE EQUITY IN THE ACCOUNT IN THE CASE
OF ANY SINGLE ACCESS PERSON AND 25% OF THE EQUITY IN THE ACCOUNT IN THE
CASE OF ALL ACCESS PERSONS IN THE AGGREGATE, WHICHEVER IS FIRST
APPLICABLE. INVESTMENT PARTNERSHIPS AND SIMILAR INDIRECT MEANS OF
OWNERSHIP OTHER THAN REGISTERED OPEN-END INVESTMENT COMPANIES ARE ALSO
TREATED AS ACCOUNTS.
As an exception, accounts in which one or more Access Persons
and/or their immediate family have a substantial proportionate
interest which are maintained with persons who have no affiliation
with the Companies and with respect to which no Access Person has,
in the judgment of the Compliance Officer after reviewing the terms
and circumstances, any direct or indirect influence or control over
the investment or portfolio execution process are not Access Person
Accounts.
As a further exception, subject to the provisions of Article
II(I)7, bona fide market making accounts of Gabelli & Company, Inc.
are not Access Person Accounts.
As a further exception, subject to the provisions of Article
II(I)7, bona fide error accounts of the Companies and the
Affiliates are not Access Person Accounts.
<PAGE>
3. ASSOCIATE PORTFOLIO MANAGERS. ACCESS PERSONS WHO ARE ENGAGED IN
SECURITIES RESEARCH AND ANALYSIS FOR DESIGNATED CLIENTS OR ARE
RESPONSIBLE FOR INVESTMENT RECOMMENDATIONS FOR DESIGNATED CLIENTS BUT
WHO ARE NOT PRINCIPALLY RESPONSIBLE FOR INVESTMENT DECISIONS WITH
RESPECT TO ANY CLIENT ACCOUNTS.
4. CLIENTS. INVESTMENT ADVISORY ACCOUNTS MAINTAINED WITH ANY OF THE
COMPANIES OR AFFILIATES BY ANY PERSON, OTHER THAN ACCESS PERSON
ACCOUNTS. HOWEVER, FUND CLIENTS COVERED BY ITEM (A)(5) ABOVE ARE
CONSIDERED CLIENT ACCOUNTS ONLY WITH RESPECT TO EMPLOYEES SPECIFICALLY
IDENTIFIED BY THE COMPLIANCE OFFICER AS HAVING REGULAR INFORMATION
REGARDING INVESTMENT RECOMMENDATIONS OR DECISIONS OR PORTFOLIO
TRANSACTIONS FOR SUCH FUND CLIENTS.
5. COMPANIES. THE COMPANIES NAMED OR DESCRIBED AT THE TOP OF PAGE ONE OF
THE CODE.
6. COMPLIANCE OFFICER. THE PERSONS DESIGNATED AS THE COMPLIANCE OFFICERS
OF THE COMPANIES.
7. COVERED PERSONS. THE COMPANIES, THE ACCESS PERSONS AND THE PERSONS
DESCRIBED IN ITEM (A)4 ABOVE.
8. FUND CLIENTS. CLIENTS THAT ARE REGISTERED INVESTMENT COMPANIES OR
SERIES THEREOF.
9. PORTFOLIO MANAGERS. ACCESS PERSONS WHO ARE PRINCIPALLY RESPONSIBLE FOR
INVESTMENT DECISIONS WITH RESPECT TO ANY CLIENT ACCOUNTS.
10. SECURITY. ANY FINANCIAL INSTRUMENT TREATED AS A SECURITY FOR INVESTMENT
PURPOSES AND ANY RELATED INSTRUMENT SUCH AS A FUTURES, FORWARD OR SWAP
CONTRACT ENTERED INTO WITH RESPECT TO ONE OR MORE SECURITIES, A BASKET
OF OR AN INDEX OF SECURITIES OR COMPONENTS OF SECURITIES. HOWEVER, THE
TERM SECURITY DOES NOT INCLUDE SECURITIES ISSUED BY THE GOVERNMENT OF
THE UNITED STATES, BANKERS' ACCEPTANCES, BANK CERTIFICATES OF DEPOSIT,
COMMERCIAL PAPER AND HIGH QUALITY SHORT-TERM DEBT INSTRUMENTS,
INCLUDING REPURCHASE AGREEMENTS, OR SHARES OF REGISTERED OPEN-END
INVESTMENT COMPANIES.
II. Restrictions on Personal Investing Activities
<PAGE>
A. BASIC RESTRICTION ON INVESTING ACTIVITIES
If a purchase or sale order is pending or under active
consideration for any Client account by any Company or
Affiliate, neither the same Security nor any related Security
(such as an option, warrant or convertible security) may be
bought or sold for any Access Person Account.
<PAGE>
B. Initial Public Offerings
No Security or related Security may be acquired in an initial
public offering for any Access Person Account.
C. BLACKOUT PERIOD
No Security or related Security may be bought or sold for the
account of any Portfolio Manager or Associate Portfolio
Manager during the period commencing seven (7) days prior to
and ending seven (7) calendar days after the purchase or sale
(or entry of an order for the purchase or sale) of that
Security or any related Security for the account of any Client
with respect to which such person has been designated a
Portfolio Manager or Associate Portfolio Manager, unless the
Client account receives at least as good a price as the
account of the Portfolio Manager or Associate Portfolio
Manager and the Compliance Officer determines under the
circumstances that the Client account has not been adversely
affected (including with respect to the amount of such
Security able to be bought by the Client account) by the
transaction for the account of the Portfolio Manager or
Associate Portfolio Manager.
D. SHORT-TERM TRADING
No Security or related Security may, within a 60 day period,
be bought and sold or sold and bought at a profit for any
Access Person Account if the Security or related Security was
held at any time during that period in any Client account.
E. EXEMPT TRANSACTIONS
Participation on an ongoing basis in an issuer's dividend
reinvestment or stock purchase plan, participation in any
transaction over which no Access Person had any direct or
indirect influence or control and involuntary transactions
(such as mergers, inheritances, gifts, etc.) are exempt from
the restrictions set forth in paragraphs (A) and (C) above
without case by case preclearance under paragraph (G) below.
F. PERMITTED EXCEPTIONS
Purchases and sales of the following Securities for Access
Person Accounts are exempt from the restrictions set forth in
paragraphs A, C and D above if such purchases and sales comply
with the pre-clearance requirements of paragraph (G) below:
<PAGE>
1. NON-CONVERTIBLE FIXED INCOME SECURITIES RATED AT LEAST "A";
2. EQUITY SECURITIES OF A CLASS HAVING A MARKET CAPITALIZATION IN
EXCESS OF $1 BILLION;
3. EQUITY SECURITIES OF A CLASS HAVING A MARKET CAPITALIZATION IN
EXCESS OF $500 MILLION IF THE TRANSACTION IN QUESTION AND THE
AGGREGATE AMOUNT OF SUCH SECURITIES AND ANY RELATED SECURITIES
PURCHASED AND SOLD FOR THE ACCESS PERSON ACCOUNT IN QUESTION
DURING THE PRECEDING 60 DAYS DOES NOT EXCEED 100 SHARES;
4. MUNICIPAL SECURITIES; AND
5. SECURITIES TRANSACTIONS EFFECTED FOR FEDERAL, STATE OR LOCAL
INCOME TAX PURPOSES THAT ARE IDENTIFIED TO THE COMPLIANCE OFFICER
AT THE TIME AS BEING EFFECTED FOR SUCH PURPOSES.
In addition, the exercise of rights that were received pro rata with
other security holders is exempt if the pre-clearance procedures are
satisfied.
G. PRE-CLEARANCE OF PERSONAL SECURITIES TRANSACTIONS
No Security may be bought or sold for an Access Person Account
unless (i) the Access Person obtains prior approval from the
Compliance Officer or, in the absence of the Compliance
Officer, from the general counsel of Gabelli Asset Management
Inc.; (ii) the approved transaction is completed on the same
day approval is received; and (iii) the Compliance Officer or
the general counsel does not rescind such approval prior to
execution of the transaction (See paragraph I below for
details of the Pre-Clearance Process.)
H. PRIVATE PLACEMENTS
The Compliance Officer will not approve purchases or sale of
Securities that are not publicly traded, unless the Access
Person provides full details of the proposed transaction
(including written certification that the investment
opportunity did not arise by virtue of such person's
activities on behalf of any Client) and the Compliance Officer
concludes, after consultation with one or more of the relevant
Portfolio Managers, that the Companies would have no
foreseeable interest in investing in such Security or any
related Security for the account of any Client.
<PAGE>
I. PRE-CLEARANCE PROCESS
1. NO SECURITIES MAY BE PURCHASED OR SOLD FOR ANY ACCESS
PERSON ACCOUNT UNLESS THE PARTICULAR TRANSACTION HAS
BEEN APPROVED IN WRITING BY THE COMPLIANCE OFFICER
OR, IN HIS ABSENCE, THE GENERAL COUNSEL OF GABELLI
ASSET MANAGEMENT INC. THE COMPLIANCE OFFICER SHALL
REVIEW NOT LESS FREQUENTLY THAN WEEKLY REPORTS FROM
THE TRADING DESK (OR, IF APPLICABLE, CONFIRMATIONS
FROM BROKERS) TO ASSURE THAT ALL TRANSACTIONS
EFFECTED FOR ACCESS PERSON ACCOUNTS ARE EFFECTED IN
COMPLIANCE WITH THIS CODE.
2. NO SECURITIES MAY BE PURCHASED OR SOLD FOR ANY ACCESS
PERSON ACCOUNT OTHER THAN THROUGH THE TRADING DESK OF
GABELLI & COMPANY, INC., UNLESS EXPRESS PERMISSION IS
GRANTED BY THE COMPLIANCE OFFICER. SUCH PERMISSION
MAY BE GRANTED ONLY ON THE CONDITION THAT THE THIRD
PARTY BROKER SUPPLY THE COMPLIANCE OFFICER, ON A
TIMELY BASIS, DUPLICATE COPIES OF CONFIRMATIONS OF
ALL PERSONAL SECURITIES TRANSACTIONS FOR SUCH ACCESS
PERSON IN THE ACCOUNTS MAINTAINED WITH SUCH THIRD
PARTY BROKER AND COPIES OF PERIODIC STATEMENTS FOR
ALL SUCH ACCOUNTS.
3. A TRADING APPROVAL FORM, ATTACHED AS EXHIBIT B, MUST
BE COMPLETED AND SUBMITTED TO THE COMPLIANCE OFFICER
FOR APPROVAL PRIOR TO ENTRY OF AN ORDER.
4. AFTER REVIEWING THE PROPOSED TRADE, THE LEVEL OF
POTENTIAL INVESTMENT INTEREST ON BEHALF OF CLIENTS IN
THE SECURITY IN QUESTION AND THE COMPANIES'
RESTRICTED LISTS, THE COMPLIANCE OFFICER SHALL
APPROVE (OR DISAPPROVE) A TRADING ORDER ON BEHALF OF
AN ACCESS PERSON AS EXPEDITIOUSLY AS POSSIBLE. THE
COMPLIANCE OFFICER WILL GENERALLY APPROVE
TRANSACTIONS DESCRIBED IN PARAGRAPH (F) ABOVE UNLESS
THE SECURITY IN QUESTION OR A RELATED SECURITY IS ON
THE RESTRICTED LIST OR THE COMPLIANCE OFFICER
BELIEVES FOR ANY OTHER REASON THAT THE ACCESS PERSON
ACCOUNT SHOULD NOT TRADE IN SUCH SECURITY AT SUCH
TIME.
5. ONCE AN ACCESS PERSON'S TRADING APPROVAL FORM IS
APPROVED, THE FORM MUST BE FORWARDED TO THE TRADING
DESK (OR, IF A THIRD PARTY BROKER IS PERMITTED, TO
THE COMPLIANCE OFFICER) FOR EXECUTION ON THE SAME
DAY. IF THE ACCESS PERSON'S TRADING ORDER REQUEST IS
NOT APPROVED, OR IS NOT EXECUTED ON THE SAME DAY IT
IS APPROVED, THE CLEARANCE LAPSES ALTHOUGH SUCH
TRADING ORDER REQUEST MAYBE RESUBMITTED AT A LATER
DATE.
<PAGE>
6. IN THE ABSENCE OF THE COMPLIANCE OFFICER, AN ACCESS
PERSON MAY SUBMIT HIS OR HER TRADING APPROVAL FORM TO
THE GENERAL COUNSEL OF GABELLI ASSET MANAGEMENT INC.
TRADING APPROVAL FOR THE COMPLIANCE OFFICER MUST BE
OBTAINED FROM THE GENERAL COUNSEL, AND TRADING
APPROVAL FOR THE GENERAL COUNSEL MUST BE OBTAINED
FROM THE COMPLIANCE OFFICER. IN NO CASE WILL THE
TRADING DESK ACCEPT AN ORDER FOR AN ACCESS PERSON
ACCOUNT UNLESS IT IS ACCOMPANIED BY A SIGNED TRADING
APPROVAL FORM.
7. THE COMPLIANCE OFFICER SHALL REVIEW ALL TRADING
APPROVAL FORMS, ALL INITIAL, QUARTERLY AND ANNUAL
DISCLOSURE CERTIFICATIONS AND THE TRADING ACTIVITIES
ON BEHALF OF ALL CLIENT ACCOUNTS WITH A VIEW TO
ENSURING THAT ALL COVERED PERSONS ARE COMPLYING WITH
THE SPIRIT AS WELL AS THE DETAILED REQUIREMENTS OF
THIS CODE. THE COMPLIANCE OFFICER WILL REVIEW ALL
TRANSACTIONS IN THE MARKET MAKING ACCOUNTS OF GABELLI
& COMPANY, INC. AND THE ERROR ACCOUNTS OF THE
COMPANIES AND THE AFFILIATES IN ORDER TO ENSURE THAT
SUCH TRANSACTIONS ARE BONA FIDE MARKET MAKING OR
ERROR TRANSACTIONS OR ARE CONDUCTED IN ACCORDANCE
WITH THE REQUIREMENTS OF THIS ARTICLE II.
III. Other Investment-Related Restrictions
A. GIFTS
No Access Person shall accept any gift or other item of more
than $100 in value from any person or entity that does
business with or on behalf of any Client.
B. SERVICE AS A DIRECTOR
No Access Person shall commence service on the Board of
Directors of a publicly traded company or any company in which
any Client account has an interest without prior authorization
from the Compliance Committee based upon a determination that
the Board service would not be inconsistent with the interests
of the Clients. The Compliance Committee shall include the
senior Compliance Officer of Gabelli Asset Management Inc.,
the general counsel of Gabelli Asset Management Inc. and at
least two of the senior executives from among the Companies.
IV. Reports and Additional Compliance Procedures
<PAGE>
A. EVERY COVERED PERSON, EXCEPT INDEPENDENT DIRECTORS OF
AFFILIATES OF THE COMPANIES, MUST SUBMIT A REPORT (A FORM OF
WHICH IS APPENDED AS EXHIBIT C) CONTAINING THE INFORMATION SET
FORTH IN PARAGRAPH (B) BELOW WITH RESPECT TO TRANSACTIONS IN
ANY SECURITY IN WHICH SUCH COVERED PERSON HAS OR BY REASON OF
SUCH TRANSACTION ACQUIRES, ANY DIRECT OR INDIRECT BENEFICIAL
OWNERSHIP (AS DEFINED IN EXHIBIT D) IN THE SECURITY, AND WITH
RESPECT TO ANY ACCOUNT ESTABLISHED BY THE COVERED PERSON IN
WHICH ANY SECURITIES WERE HELD FOR THE DIRECT OR INDIRECT
BENEFIT OF THE COVERED PERSON; PROVIDED, HOWEVER, THAT:
1. A COVERED PERSON WHO IS REQUIRED TO MAKE REPORTS ONLY
BECAUSE HE IS A DIRECTOR OF ONE OF THE FUND CLIENTS
AND WHO IS A "DISINTERESTED" DIRECTOR THEREOF NEED
NOT MAKE A REPORT WITH RESPECT TO ANY TRANSACTIONS
OTHER THAN THOSE WHERE HE KNEW OR SHOULD HAVE KNOWN
IN THE COURSE OF HIS DUTIES AS A DIRECTOR THAT ANY
FUND CLIENT OF WHICH HE IS A DIRECTOR HAS MADE OR
MAKES A PURCHASE OR SALE OF THE SAME OR A RELATED
SECURITY WITHIN 15 DAYS BEFORE OR AFTER THE PURCHASE
OR SALE OF SUCH SECURITY OR RELATED SECURITY BY SUCH
DIRECTOR.
2. A COVERED PERSON NEED NOT MAKE A REPORT WITH RESPECT
TO ANY TRANSACTION EFFECTED FOR, AND SECURITIES HEL
IN, ANY ACCOUNT OVER WHICH SUCH PERSON DOES NOT HAVE
ANY DIRECT OR INDIRECT INFLUENCE OR CONTROL; AND
3. A COVERED PERSON WILL BE DEEMED TO HAVE COMPLIED WITH
THE REQUIREMENTS OF THIS ARTICLE IV INSOFAR AS THE
COMPLIANCE OFFICER RECEIVES IN A TIMELY FASHION
DUPLICATE MONTHLY OR QUARTERLY BROKERAGE STATEMENTS
OR TRANSACTION CONFIRMATIONS ON WHICH ALL
TRANSACTIONS REQUIRED TO BE REPORTED HEREUNDER ARE
DESCRIBED.
B. A COVERED PERSON MUST SUBMIT THE REPORT REQUIRED BY THIS
ARTICLE TO THE COMPLIANCE OFFICER NO LATER THAN 10 DAYS AFTER
THE END OF THE CALENDAR QUARTER IN WHICH THE TRANSACTION OR
ACCOUNT TO WHICH THE REPORT RELATES WAS EFFECTED OR
ESTABLISHED, AND THE REPORT MUST CONTAIN THE DATE THAT THE
REPORT IS SUBMITTED.
1. This report must contain the following information
with respect to transactions:
a. THE DATE OF THE TRANSACTION, THE TITLE AND NUMBER
OF SHARES AND THE PRINCIPAL AMOUNT OF EACH
SECURITY INVOLVED;
<PAGE>
b. The nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
c. The price at which the transaction was effected;
and
d. The name of the broker, dealer or bank with or
through whom the transaction was effected.
2. This report must contain the following information
with respect to accounts established:
A. THE NAME OF THE BROKER, DEALER OR BANK WITH WHOM
THE ACCOUNT WAS ESTABLISHED; AND
b. The date the account was established.
C. ANY REPORT SUBMITTED TO COMPLY WITH THE
REQUIREMENTS OF THIS ARTICLE IV MAY
CONTAIN A STATEMENT THAT THE REPORT SHALL NOT BE
CONSTRUED AS AN ADMISSION BY THE PERSON MAKING
SUCH REPORT THAT HE HAS ANY DIRECT OR INDIRECT
BENEFICIAL OWNERSHIP IN THE SECURITY TO WHICH THE
REPORT RELATES. A PERSON NEED NOT MAKE ANY REPORT
UNDER THIS ARTICLE IV WITH RESPECT TO TRANSACTIONS
EFFECTED FOR, AND SECURITIES HELD IN, ANY ACCOUNT
OVER WHICH THE PERSON HAS NO DIRECT OR INDIRECT
INFLUENCE OR CONTROL
D. NO LATER THAN 10 DAYS AFTER BEGINNING EMPLOYMENT
WITH ANY OF THE COMPANIES OR AFFILIATES OR
OTHERWISE BECOMING A COVERED PERSON, EACH COVERED
PERSON (EXCEPT FOR A "DISINTERESTED" DIRECTOR OF
THE FUND CLIENT WHO IS REQUIRED TO SUBMIT REPORTS
SOLELY BY REASON OF BEING SUCH A DIRECTOR) MUST
SUBMIT A REPORT CONTAINING THE FOLLOWING
INFORMATION:
1. THE TITLE, NUMBER OF SHARES AND PRINCIPAL AMOUNT OF
EACH SECURITY IN WHICH THE COVERED PERSON HAD ANY
DIRECT OR INDIRECT BENEFICIAL OWNERSHIP WHEN THE
PERSON BECAME A COVERED PERSON;
2. The name of any broker, dealer or bank with whom the
Covered Person maintained an account in which any
<PAGE>
Securities were held for the direct or indirect
benefit of the Covered Person as of the date the
person became a Covered Person; and
3. The date that the report is submitted.
The form of such report is attached as Exhibit E.
E. ANNUALLY EACH COVERED PERSON MUST CERTIFY THAT HE HAS READ AND
UNDERSTOOD THE CODE AND RECOGNIZES THAT HE IS SUBJECT TO SUCH
CODE. IN ADDITION, ANNUALLY EACH COVERED PERSON MUST CERTIFY
THAT HE HAS DISCLOSED OR REPORTED ALL PERSONAL SECURITIES
TRANSACTIONS REQUIRED TO BE DISCLOSED OR REPORTED UNDER THE
CODE AND THAT HE IS NOT SUBJECT TO ANY REGULATORY DISABILITY
DESCRIBED IN THE ANNUAL CERTIFICATION FORM. FURTHERMORE, EACH
COVERED PERSON (EXCEPT FOR A "DISINTERESTED" DIRECTOR OF THE
FUND CLIENT WHO IS REQUIRED TO SUBMIT REPORTS SOLELY BY REASON
OF BEING SUCH A DIRECTOR) ANNUALLY MUST SUBMIT A REPORT
CONTAINING THE FOLLOWING INFORMATION (WHICH INFORMATION MUST
BE CURRENT AS OF A DATE NO MORE THAN 30 DAYS BEFORE THE REPORT
IS SUBMITTED):
1. THE TITLE, NUMBER OF SHARES AND PRINCIPAL AMOUNT OF
EACH SECURITY IN WHICH THE COVERED PERSON HAD ANY
DIRECT OR INDIRECT BENEFICIAL OWNERSHIP;
2. Covered Person maintains an account in which any
Securities are held for the direct or indirect
benefit of the Covered Person; and
3. The date that the report is submitted.
THE FORM OF SUCH CERTIFICATION AND REPORT IS ATTACHED AS
EXHIBIT F.
F. AT LEAST ANNUALLY (OR QUARTERLY IN THE CASE OF ITEMS 4 AND 5
BELOW), EACH OF THE COMPANIES THAT HAS A FUND CLIENT OR THAT
PROVIDES PRINCIPAL UNDERWRITING SERVICES FOR A FUND CLIENT
SHALL, TOGETHER WITH EACH FUND CLIENT, FURNISH A WRITTEN
REPORT TO THE BOARD OF DIRECTORS OF THE FUND CLIENT THAT:
1. Describes any issues arising under the Code since the
last report.
2. CERTIFIES THAT THE COMPANIES HAVE DEVELOPED
PROCEDURES CONCERNING COVERED PERSONS' PERSONAL
TRADING ACTIVITIES AND REPORTING REQUIREMENTS
RELEVANT TO SUCH FUND CLIENTS THAT ARE REASONABLY
NECESSARY TO PREVENT VIOLATIONS OF THE CODE;
<PAGE>
3. RECOMMENDS CHANGES, IF ANY, TO THE FUND CLIENTS' OR
THE COMPANIES' CODES OF ETHICS OR PROCEDURES;
4. PROVIDES A SUMMARY OF ANY MATERIAL OR SUBSTANTIVE
VIOLATIONS OF THIS CODE BY COVERED PERSONS WITH
RESPECT TO SUCH FUND CLIENTS WHICH OCCURRED DURING
THE PAST QUARTER AND THE NATURE OF ANY REMEDIAL
ACTION TAKEN; AND
5. DESCRIBES ANY MATERIAL OR SIGNIFICANT EXCEPTIONS TO
ANY PROVISIONS OF THIS CODE OF ETHICS AS DETERMINED
UNDER ARTICLE VI BELOW.
G. THE COMPLIANCE OFFICER SHALL NOTIFY EACH EMPLOYEE OF ANY OF
THE COMPANIES OR AFFILIATES AS TO WHETHER SUCH PERSON IS
CONSIDERED TO BE AN ACCESS PERSON OR COVERED PERSON AND SHALL
NOTIFY EACH OTHER PERSON THAT IS CONSIDERED TO BE AN ACCESS
PERSON OR COVERED PERSON.
V. Sanctions
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Directors of the relevant
Company or of the relevant Fund Client, whichever is most appropriate
under the circumstances, may impose on that person whatever sanctions
the Board deems appropriate, including, among other things,
disgorgement of profit, censure, suspension or termination of
employment. Material violations of requirements of this Code by
employees of Covered Persons and any sanctions imposed in connection
therewith shall be reported not less frequently than quarterly to the
Board of Directors of any relevant Company or Fund Client, as
applicable.
VI. Exceptions
The Compliance Committee of the Companies reserves the right to decide,
on a case-by-case basis, exceptions to any provisions under this Code.
Any exceptions made hereunder will be maintained in writing by the
Compliance Committee and presented to the Board of Directors of any
relevant Fund Client at its next scheduled meeting.
VII. Preservation of Documents
This Code, a copy of each report by a Covered Person, any written
report made hereunder by the Companies or the Compliance Officer, lists
<PAGE>
of all persons required to make reports, a list of any exceptions, and
the reasons therefor, with respect to Article II.B, and any records
under Article II.G with respect to purchases pursuant to Article II.H
above, shall be preserved with the records of the relevant Company and
any relevant Fund Client for the period required by Rule 17j-1.
VIII. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving any
Covered Person from acting in accordance with the provision of any
applicable law, rule or regulation or any other statement of policy or
procedure governing the conduct of such person adopted by the
Companies, the Affiliates or the Fund Clients.
IX. Further Information
If any person has any question with regard to the applicability of the
provisions of this Code generally or with regard to any Securities
transaction or transactions, he should consult the Compliance Officer.
<PAGE>
EXHIBIT A
LIST OF AFFILIATES OF THE COMPANIES
ALCE Partners, L.P.
Darien Associates LLC
Gabelli Asset Management Inc.
Gabelli Associates Fund
Gabelli Associates Limited
Gabelli Fixed Income Distributors
Gabelli Fixed Income, Inc.
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli International Gold Fund Limited
Gabelli International Limited
Gabelli International II Limited
Gabelli International Securities Limited
Gabelli Multimedia Partners, L.P.
Gabelli Performance Partnership L.P.
Gabelli Securities, Inc.
Gemini Capital Management Ltd.
GLI, Inc.
Gabelli Group Capital Partners, Inc. and its subsidiaries
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli European Partners, Ltd.
Gabelli Fund, LDC
MJG Associates, Inc.
New Century Capital Partners, L.P.
<PAGE>
EXHIBIT B
PRE-CLEARANCE TRADING APPROVAL FORM
I, ______________________________________ (name), am an Access Person or
authorized officer thereof and seek pre-clearance to engage in the transaction
described below for the benefit of myself or another Access Person:
Acquisition or Disposition (circle one)
- --------------------------
Name of Account:----------------------------------------------------------------
Account Number:-----------------------------------------------------------------
Date of Request:----------------------------------------------------------------
Security:-----------------------------------------------------------------------
Amount or # of Shares:----------------------------------------------------------
Broker:-------------------------------------------------------------------------
If the transaction involves a Security that is not publicly traded, a
description of proposed transaction, source of investment opportunity and any
potential conflicts of interest:
I hereby certify that, to the best of my knowledge, the transaction described
herein is not prohibited by the Code of Ethics and that the opportunity to
engage in the transaction did not arise by virtue of my activities on behalf of
any Client.
Signature: ------------------------------------Print Name:----------------------
Approved or Disapproved(Circle One)
- -----------------------
Date of Approval:----------------------
Signature: ------------------------------------Print Name:----------------------
If approval is granted, please forward this form to the trading desk (or if a
third party broker is permitted, to the Compliance Officer) for immediate
execution.
<PAGE>
EXHIBIT C
TRANSACTION REPORT
Report submitted by:____________________________________________________________
Print Name
This transaction report (the "Report") is submitted pursuant to Section IV (B)
of the Code of Ethics of the Companies and supplies information with respect to
transactions in any Security in which you may be deemed to have, or by reason of
such transaction acquire, any direct or indirect beneficial ownership interest,
and with respect to accounts established by you in which any Securities were
held for your direct or indirect benefit, for the period specified below. If you
were not employed by or affiliated with us during this entire period, amend the
dates specified below to cover your period of employment or affiliation.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable transactions or new accounts, sign and return this
page only. If you have reportable transactions or new accounts, complete, sign
and return Page 2 and any attachments.
I HAD NO REPORTABLE SECURITIES TRANSACTIONS OR ACCOUNTS ESTABLISHED DURING THE
PERIOD _________ THROUGH _____________. I CERTIFY THAT I AM FULLY FAMILIAR WITH
THE CODE OF ETHICS AND THAT, TO THE BEST OF MY KNOWLEDGE, THE INFORMATION
FURNISHED IN THIS REPORT IS TRUE AND CORRECT.
Signature_______________________________________________________________________
Position________________________________________________________________________
<PAGE>
Date____________________________________________________________________________
Page 2
TRANSACTION REPORT
Report submitted by:
Print Name
The following tables supply the information required by Section IV (B) of the
Code of Ethics for the period specified below. Transactions reported on
brokerage statements or duplicate confirmations actually received by the
Compliance Officer do not have to be listed although it is your responsibility
to make sure that such statements or confirmations are complete and have been
received in a timely fashion.
<TABLE>
<CAPTION>
TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Whether Purchase,
Sale, Short Sale or Name of Broker/Dealer
Securities (Name Other Type of with or through Whom Nature of
and Symbol) Date of Disposition or Quantity of Price per Share the Transaction Ownership of
----------- Transaction Acquisition Securities or Other Unit was Effected Securities
----------- ----------- ---------- ------------- ------------ ----------
</TABLE>
<TABLE>
<CAPTION>
NEW ACCOUNTS ESTABLISHED
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Name of Broker, Dealer or Bank Account Number Date Account Established
- ------------------------------ -------------- ------------------------
</TABLE>
* To the extent specified above, I hereby disclaim beneficial ownership of any
securities listed in this Report or brokerage statements or transaction
confirmations provided by me.
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT FOR THE
PERIOD OF _______________ THROUGH _______________________.
<PAGE>
Signature Date
----------------------------------------------------
Position
<PAGE>
EXHIBIT D
BENEFICIAL OWNERSHIP
For purposes of the attached Code of Ethics, "beneficial ownership" shall be
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except the determination of direct or
indirect beneficial ownership shall apply to all securities that a Covered
Person has or acquires. The term "beneficial ownership" of securities would
include not only ownership of securities held be a Covered Person for his own
benefit, whether in bearer form or registered in his name or otherwise, but also
ownership of securities held for his benefit by others (regardless of whether or
how they are registered) such as custodians, brokers, executors, administrators,
or trustees (including trusts in which he has only a remainder interest), and
securities held for his account by pledges, securities owned by a partnership in
which he is a member if he may exercise a controlling influence over the
purchase, sale of voting of such securities, and securities owned by any
corporation or similar entry in which he owns securities if the shareholder is a
control-ling shareholder of the entity and has or shares investment control over
the entity's portfolio.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which a Covered Person is a legatee or beneficiary
unless there is a specified legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as beneficially
owned by a Covered Person where such person enjoys "financial benefits
substantially equivalent to ownership." The Securities and Exchange Commission
has said that, although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining financial benefits
substantially EQUIVALENT TO OWNERSHIP, E.G., application of the income derived
from such securities to maintain a common home, or to meet expenses that such
person otherwise would meet from other sources, or the ability to exercises a
controlling influence over the purchase, sale or voting of such securities.
A Covered Person also may be regarded as the beneficial owner of securities held
in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other agreement, he obtains therefrom financial
benefits substantially equivalent to those of ownership.
A Covered Person also is regarded as the beneficial owner of securities held in
the name of a spouse, minor children or other person, even though he does not
obtain therefrom the aforementioned benefits of ownership, if he can vest or
revest title in himself at once or at some future time.
<PAGE>
EXHIBIT E
INITIAL HOLDINGS REPORT
REPORT SUBMITTED BY:_________________________________________________________
Print Name
This initial holdings report (the "Report") is submitted pursuant to Section IV
(D) of the Code of Ethics of the Companies and supplies information with respect
to any Security in which you may be deemed to have any direct or indirect
beneficial ownership interest and any accounts established by you in which any
Securities were held for your direct or indirect benefit, as of the date you
became subject to the Code of Ethics.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable Securities or accounts, sign and return this page
only. If you have reportable Securities or accounts, complete, sign and return
Page 2 and any attachments.
I HAVE NO REPORTABLE SECURITIES OR ACCOUNTS AS OF . I CERTIFY THAT I AM FULLY
FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MY KNOWLEDGE, THE
INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.
SIGNATURE_________________________________________________________
POSITION _________________________________________________________
DATE _____________________________________________________________
<PAGE>
Page 2
INITIAL HOLDINGS REPORT
REPORT SUBMITTED BY:
Print Name
The following tables supply the information required by Section IV (D) of the
Code of Ethics as of the date you became subject to the Code.
<TABLE>
<CAPTION>
SECURITIES HOLDINGS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership of
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD SECURITIES
</TABLE>
ACCOUNTS
- --------------------------------------------------- -----------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT AS OF
__________________________________.
<PAGE>
SIGNATURE ____________________________________DATE_____________________________
POSITION ____________________________________
<PAGE>
EXHIBIT F
ANNUAL CERTIFICATION OF CODE OF ETHICS
A. I (A COVERED PERSON) HEREBY CERTIFY THAT I HAVE READ AND UNDERSTOOD THE
CODE OF ETHICS DATED FEBRUARY 15, 2000, AND RECOGNIZE THAT I AM SUBJECT
TO ITS PROVISIONS. IN ADDITION, I HEREBY CERTIFY THAT I HAVE DISCLOSED
OR REPORTED ALL PERSONAL SECURITIES TRANSACTIONS REQUIRED TO BE
DISCLOSED OR REPORTED UNDER THE CODE OF ETHICS;
B. WITHIN THE LAST TEN YEARS THERE HAVE BEEN NO COMPLAINTS OR DISCIPLINARY
ACTIONS FILED AGAINST ME BY ANY REGULATED SECURITIES OR COMMODITIES
EXCHANGE, ANY SELF-REGULATORY SECURITIES OR COMMODITIES ORGANIZATION,
ANY ATTORNEY GENERAL, OR ANY GOVERNMENTAL OFFICE OR AGENCY REGULATING
INSURANCE, SECURITIES, COMMODITIES OR FINANCIAL TRANSACTIONS IN THE
UNITED STATES, IN ANY STATE OF THE UNITED STATES, OR IN ANY OTHER
COUNTRY;
C. I HAVE NOT WITHIN THE LAST TEN YEARS BEEN CONVICTED OF OR ACKNOWLEDGED
COMMISSION OF ANY FELONY OR MISDEMEANOR ARISING OUT OF MY CONDUCT AS AN
EMPLOYEE, SALESPERSON, OFFICER, DIRECTOR, INSURANCE AGENT, BROKER,
DEALER, UNDERWRITER, INVESTMENT MANAGER OR INVESTMENT ADVISOR; AND
D. I HAVE NOT BEEN DENIED PERMISSION OR OTHERWISE ENJOINED BY ORDER,
JUDGMENT OR DECREE OF ANY COURT OF COMPETENT JURISDICTION, REGULATED
SECURITIES OR COMMODITIES EXCHANGE, SELF-REGULATORY SECURITIES OR
COMMODITIES ORGANIZATION OR OTHER FEDERAL OR STATE REGULATORY AUTHORITY
FROM ACTING AS AN INVESTMENT ADVISOR, SECURITIES OR COMMODITIES BROKER
OR DEALER, COMMODITY POOL OPERATOR OR TRADING ADVISOR OR AS AN
AFFILIATED PERSON OR EMPLOYEE OF ANY INVESTMENT COMPANY, BANK,
INSURANCE COMPANY OR COMMODITY BROKER, DEALER, POOL OPERATOR OR TRADING
ADVISOR, OR FROM ENGAGING IN OR CONTINUING ANY CONDUCT OR PRACTICE IN
CONNECTION WITH ANY SUCH ACTIVITY OR THE PURCHASE OR SALE OF ANY
SECURITY.
E. Unless I am exempt from filing an Annual Holdings Report (as a
"disinterested" director of a Fund Client or an independent director of
an Affiliate), I have attached a completed Annual Holdings Report which
is accurate as of a date no more than 30 days ago.
PRINT NAME:__________________________________________________________
SIGNATURE:___________________________________________________________
<PAGE>
DATE:________________________________________________________________
Page 2
ANNUAL HOLDINGS REPORT
REPORT SUBMITTED BY:_________________________________________________
Print Name
The following tables supply the information required by Section IV (E) of the
Code of Ethics as of a date no more than 30 days before this report is
submitted. If you have no reportable Securities holdings or accounts, write
"None" in the space provided.
<TABLE>
<CAPTION>
SECURITIES HOLDINGS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD OF SECURITIES
---------------------------- ---------------------- ------------------- -------------
</TABLE>
ACCOUNTS
- -----------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
SIGNATURE________________________________DATE________________________________
POSITION_________________________________
