<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1997
SECURITIES ACT FILE NO. 33-66262
INVESTMENT COMPANY ACT FILE NO. 811-7896
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 8 [X]
(Check appropriate box or boxes)
----------------------
GABELLI GLOBAL SERIES FUNDS, INC.
(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: (800) 422-3554
Bruce N. Alpert
Gabelli Funds, Inc.
One Corporate Center, Rye, New York 10580-1434
(Name and Address of Agent for Service)
----------------------
COPIES TO:
James E. McKee, Esq. Richard T. Prins, Esq.
Gabelli Funds, Inc. Skadden, Arps, Slate, Meagher & Flom
One Corporate Center, 919 Third Avenue
Rye, New York 10580-1434 New York, New York 10022
(212) 735-2000
----------------------
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 1, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a) of Rule 485 If
appropriate, check the following box:
[ ] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
----------------------
REGISTRANT HAS ELECTED TO REGISTER AN INDEFINITE NUMBER OF ITS SHARES OF
BENEFICIAL INTEREST, INCLUDING SHARES OF BENEFICIAL INTEREST IN ITS
TELECOMMUNICATION AND CONVERTIBLE SECURITIES FUNDS PURSUANT TO RULE 24f-2 UNDER
THE INVESTMENT COMPANY ACT OF 1940 AS AMENDED. REGISTRANT'S RULE 24f-2 NOTICE
AND OPINION FOR THE REGISTRANT'S FISCAL YEAR ENDED DECEMBER 31, 1996, WAS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 28, 1997.
<PAGE> 2
CALCULATION OF REGISTRATION FEE UNDER THE
SECURITIES ACT OF 1933(1)
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES BEING BEING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SHARE PRICE FEE
<S> <C> <C> <C> <C>
Telecommunications 1,438,668.00 $11.21 $174,000 $52.73
Convertible Securities 145,111.00 $10.17 $156,000 $47.27
Interactive Couch Potato(R) 0.00
Totals 1,583,779.00 $330,000 $100.00
</TABLE>
(1) Registrant has registered an indefinite number or amount of units of
beneficial interest in its Telecommunications Fund, Entertainment and
Media Fund, Interactive Couch Potato Fund, Convertible Securities Fund,
and Growth Fund, Securities Act of 1933, as amended, pursuant to
Section (a) (1) of Rule 24f-2 under the Investment Company Act of 1940,
as amended. The Rule 24f-2 Notice for Registrant's fiscal year ended
December 31, 1996 was filed on February 28, 1997.
(2) Maximum offering price as of April 17, 1997.
(3) Calculation of the proposed maximum offering price has been made
pursuant to Rule 24e-2. During its fiscal year ended December 31, 1996,
the fund redeemed 4,956,451 shares of common stock. During its current
fiscal year, the fund used 3,403,533 shares it redeemed during its
fiscal year ended December 31, 1996, for a reduction pursuant to Rule
24f-2(c). The fund currently is registering 1,583,779 shares, which is
equal to the remaining 1,552,918 shares redeemed during its fiscal year
ended December 31, 1996, plus 30,861 shares. During its current fiscal
year, the fund filed no other post-effective amendments for the purpose
of the reduction pursuant to Rule 24e-2(a).
<PAGE> 3
GABELLI GLOBAL SERIES FUNDS, INC.
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 481(a))
<TABLE>
<CAPTION>
N-1A ITEM NO.
PART A PROSPECTUS HEADING
- ------------- ------------------
<S> <C>
1. Cover Page........................................... Cover Page
2. Synopsis............................................. Table of Fees and Expenses for each of the Funds
3. Condensed Financial Information...................... Financial Highlights
4. General Description of Registrant.................... Cover Page; Investment Objectives and Policies; Associated Risk
Factors; General Information
5. Management of the Fund............................... Management of the Funds; Investment Objectives and Policies;
General Information
5(a) Management's Discussion of Performance .............. Not Applicable
6. Capital Stock and Other Securities................... Dividends, Distributions and Taxes; General Information
7. Purchase of Securities Being Offered................. Purchase of Shares; Distribution Plan
8. Redemption or Repurchase............................. Redemption of Shares
9. Pending Legal Proceedings............................ Not applicable
</TABLE>
<TABLE>
<CAPTION>
LOCATION IN
PART B STATEMENT OF
ITEM NO. ADDITIONAL INFORMATION
- -------- ----------------------
<S> <C>
10. Cover Page........................................... Cover Page
11. Table of Contents.................................... Cover Page
12. General Information and History...................... Not Applicable
13. Investment Objective and Policies.................... Investments; Investment Restrictions
14. Management of the Fund............................... The Adviser
15. Control Persons and Principal Holders
of Securities........................................ Directors and Officers
16. Investment Advisory and Other Services............... The Adviser; The Distributor
17. Brokerage Allocation and Other Practices............. Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities................... Prospectus - General Information; Determination of Net Asset Value
19. Purchase, Redemption and Pricing of
Securities Being Offered............................. Prospectus - Purchase of Shares; Redemption of Shares
20. Tax Status........................................... Dividends, Distributions and Taxes
21. Underwriters......................................... Prospectus - Purchase of Shares; The Distributor
22. Calculation of Performance Data...................... Investment Performance Information
23. Financial Statements................................. Portfolio of Investments; Statement of Assets and Liabilities;
Statement of Operations; Statement of Changes in Net Assets;
Notes to Financial Statements; Selected Per Share Data and Ratios
</TABLE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE> 4
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Gabelli Global Series Funds, Inc.
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE: 1-800-GABELLI (1-800-422-3554)
HTTP://WWW.GABELLI.COM
================================================================================
PROSPECTUS
MAY 1, 1997
Gabelli Global Series Funds, Inc., a Maryland corporation (the "Corporation") is
currently comprised of five series:
<TABLE>
<S> <C>
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
(the "Global Telecommunications Fund") (the "Global Interactive Couch Potato(R) Fund")
THE GABELLI GLOBAL ENTERTAINMENT AND MEDIA FUND THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
(the "Global Entertainment and Media Fund") (the "Global Convertible Securities Fund")
</TABLE>
THE GABELLI GLOBAL GROWTH FUND
(the "Global Growth Fund")
(collectively, the "Funds")
----------------------
Each Fund is open-end and non-diversified. The Global Telecommunications Fund,
the Global Entertainment and Media Fund, the Global Growth Fund and the Global
Interactive Couch Potato(R) Fund seek capital appreciation as a primary
investment objective and current income as a secondary objective. These Funds
will seek to achieve their investment objectives through investments primarily
in the common stocks and other securities of foreign and domestic companies. The
Global Convertible Securities Fund seeks a high level of total return as its
investment objective. The Global Convertible Securities Fund will seek to
achieve this investment objective through a combination of current income and
capital appreciation by investing in the convertible securities of foreign and
domestic companies. See "Investment Objectives and Policies".
----------------------
Each Fund has a distribution plan which permits it to pay up to .25% per year of
its average daily net assets for marketing and shareholder services and
expenses. The minimum initial investment for each Fund is $1,000. However, the
initial minimum of the funds acquired through intermediary organizations
maintaining omnibus accounts with the Fund may establish their own minimum
investment criteria. Additionally, accounts establishing an Automatic Investment
Plan do not require any minimum initial investment. See "Purchase of Shares."
----------------------
Part B (also known as the Statement of Additional Information) (the "Additional
Statement"), dated May 1, 1997, which may be revised from time to time, provides
a further discussion of certain areas in this Prospectus and other matters which
may be of interest to some investors. It has been filed with the Securities and
Exchange Commission (the "SEC") and is available for reference, along with other
materials on the SEC Internet Web Site (http://www.sec.gov) and is incorporated
herein by reference. For a free copy, write to Gabelli Global Series Funds, Inc.
at One Corporate Center, Rye, New York 10580-1434 or call 1-(800) GABELLI
(1-800-422-3554). Purchase orders and redemption requests may be directed to the
Gabelli Funds at P.O. Box 8308, Boston, Massachusetts 02266-8909.
----------------------
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE> 5
- --------------------------------------------------------------------------------
As each of the Funds is non-diversified, each Fund will have the ability to
invest a larger portion of its assets in a single issuer than would be the case
if it were diversified. As a result of this non-diversified status, each Fund
may experience greater fluctuations in net asset value than investment companies
which invest in a broad range of issuers.
MANY CONVERTIBLE SECURITIES ARE NOT CONSIDERED INVESTMENT GRADE. THE GLOBAL
CONVERTIBLE SECURITIES FUND MAY INVEST WITHOUT LIMIT IN SUCH SECURITIES.
SECURITIES OF THIS TYPE, COMMONLY REFERRED TO AS "JUNK BONDS," ARE SUBJECT TO A
GREATER RISK OF LOSS OF PRINCIPAL AND INTEREST. INVESTORS SHOULD CAREFULLY
ASSESS THESE RISKS BEFORE INVESTING IN THE GLOBAL CONVERTIBLE SECURITIES FUND.
See "Associated Risk Factors."
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF ANY BANK, AND ARE NOT
INSURED OR GUARANTEED BY ANY BANK, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUND
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
TABLE OF FEES AND EXPENSES FOR EACH OF THE FUNDS
<TABLE>
<CAPTION>
GABELLI GLOBAL
ENTERTAINMENT
GABELLI GLOBAL GABELLI GLOBAL AND MEDIA FUND
TELECOM- INTERACTIVE GABELLI GLOBAL AND GABELLI
MUNICATIONS COUCH CONVERTIBLE GLOBAL GROWTH
FUND POTATO(R) FUND SECURITIES FUND FUND
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases or
Reinvested Dividends........................... None None None None
Deferred Sales Load.............................. None None None None
Redemption Fees.................................. None None None None
Exchange Fees.................................... None None None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average daily net assets):
Management Fees (a).............................. 1.00% 1.00% 1.00% 1.00%
12b-1 Expenses (b)............................... .25% .25% .25% .25%
Other Expenses (c)............................... .47% .81% 1.10% 1.25%
----- ----- ----- -----
Total Operating Expenses for each fund..... 1.72% 2.06% 2.35% 2.50%
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return:
Gabelli Global Telecommunications Fund........................................ $ 17 $54 $ 93 $203
Gabelli Global Interactive Couch Potato(R) Fund............................... $ 21 $65 $ 111 $239
Gabelli Global Convertible Securities Fund.................................... $ 24 $73 $ 126 $269
Gabelli Global Entertainment and Media Fund and Gabelli Global Growth Fund.... $ 25 $78 $ 133 $284
</TABLE>
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The amounts listed in examples should not be considered as representative of
future expenses, and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, each Fund's
actual performance will vary and may result in an actual return greater or less
than 5%.
The information contained in the foregoing table relates to each of the Funds
and is provided to assist you in understanding the various direct and indirect
costs and expenses that an investor in any of the Funds would bear.
(a) Subject to potential reduction as a result of the Adviser's expense
reimbursement obligations.
(b) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the rules of the National
Association of Securities Dealers.
(c) Such expenses include custodian and transfer agency fees and other customary
Fund expenses.
- --------------------------------------------------------------------------------
2
<PAGE> 6
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FINANCIAL HIGHLIGHTS
The following table has been audited by Grant Thornton LLP, independent
auditors, whose unqualified report thereon is incorporated by reference in the
Additional Statement. This information should be read in conjunction with the
financial statements and the following selected data for a share of capital
stock outstanding throughout each period:
<TABLE>
<CAPTION>
THE GABELLI THE GABELLI
GLOBAL GLOBAL
CONVERTIBLE INTERACTIVE COUCH
SECURITIES FUND (c) POTATO(R) FUND (d)
------------------------------- -------------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning
of period................. $ 10.79 $ 9.93 $ 10.00 $ 11.72 $ 10.25 $ 10.00
------- ------- ------- ------- ------- -------
Net investment income...... 0.43 0.39 0.16 (0.09) (0.01) (0.01)
Net realized and unrealized
gain (loss) on
securities................ 0.16 0.86 (0.07) 1.56 1.84 0.26
------- ------- ------- ------- ------- -------
Total from investment
operations................ 0.59 1.25 0.09 1.47 1.83 0.25
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from net
investment income....... (0.43) (0.39) (0.16) (1.44) (0.36) --
Distributions from
realized gain on
investments............. (0.77) -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions........ (1.20) (0.39) (0.16) (1.44) (0.36) --
------- ------- ------- ------- ------- -------
Net asset value, end of
period.................... $ 10.18 $ 10.79 $ 9.93 $ 11.75 $ 11.72 $ 10.25
======= ======= ======= ======= ======= =======
Total Return (a)........... 5.5% 12.6% 0.9% 12.5% 17.9% 2.5%
======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............ $13,527 $15,742 $15,574 $37,779 $31,439 $24,831
Ratio of operating
expenses to average net
assets.................. 2.35% 2.41% 2.49% (b) 2.06% 2.47% 2.47%(b)
Ratio of net investment
income to average net
assets.................. 2.00% 2.90% 2.80% (b) (0.70)% (0.07)% (0.13)%(b)
Portfolio turnover rate.... 126% 152% 329% 47% 33% 14%
Average commission rate per
share (f)................. $0.0175 -- -- $0.0226 -- --
<CAPTION>
THE GABELLI
GLOBAL
TELECOMMUNICATIONS FUND (e)
----------------------------------------------
1996 1995 1994 1993
-------- -------- -------- -------
<S> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning
of period................. $ 11.12 $ 9.73 $ 10.20 $ 10.00
-------- -------- -------- -------
Net investment income...... 0.05 0.06 0.07 0.01
Net realized and unrealized
gain (loss) on
securities................ 0.95 1.51 (0.44) 0.29
-------- -------- -------- -------
Total from investment
operations................ 1.00 1.57 (0.37) 0.30
-------- -------- -------- -------
LESS DISTRIBUTIONS:
Distributions from net
investment income....... (0.05) (0.06) (0.07) (0.01)
Distributions from
realized gain on
investments............. (0.79) (0.12) (0.03) (0.09)
-------- -------- -------- -------
Total distributions........ (0.84) (0.18) (0.10) (0.10)
-------- -------- -------- -------
Net asset value, end of
period.................... $ 11.28 $ 11.12 $ 9.73 $ 10.20
======== ======== ======== =======
Total Return (a)........... 9.0% 16.2% (3.7)% 3.0%
======== ======== ======== =======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)............ $108,544 $122,845 $137,731 $45,290
Ratio of operating
expenses to average net
assets.................. 1.72% 1.75% 1.80% 2.54% (b)
Ratio of net investment
income to average net
assets.................. 0.34% 0.53% 0.74% 1.28% (b)
Portfolio turnover rate.... 7% 24% 14% 0%
Average commission rate per
share (f)................. $ 0.0365 -- -- --
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) 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. Total return for the period of less than one year
is not annualized.
(b) Annualized.
(c) Fund commenced operations on February 3, 1994.
(d) Fund commenced operations on February 7, 1994.
(e) Fund commenced operations on November 1, 1993.
(f) For fiscal years beginning on or after September 1, 1995, a fund is required to disclose its average commission rate
paid per share for purchases and sales of investment securities.
</TABLE>
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3
<PAGE> 7
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Management's Discussion and Analysis of each Fund's performance during the
fiscal year ended December 31, 1996 is included in each Fund's Annual Report to
Shareholders dated December 31, 1996. Each Fund's Annual Report to Shareholders
may be obtained upon request and without charge by writing or calling the Fund
at the address or telephone number listed on the Prospectus cover.
INVESTMENT OBJECTIVES AND POLICIES
The Global Telecommunications Fund, Global Entertainment and Media Fund, Global
Growth Fund and Global Interactive Couch Potato(R) Fund each seek capital
appreciation as a primary investment objective and current income as a secondary
objective. These Funds will seek to achieve these objectives through investments
primarily in the common stocks and other securities of the particular types of
foreign and domestic companies described below for each Fund.
The Global Convertible Securities Fund seeks a high level of total return as its
investment objective. The Global Convertible Securities Fund will seek to
achieve this investment objective through a combination of current income and
capital appreciation by investing in the convertible securities of foreign and
domestic companies.
Although these Funds may invest in the securities of any issuer and may use
various special investment techniques, under normal market conditions these
Funds will invest at least 65% of their respective total assets in securities of
the particular types of companies or securities described for that Fund. With
respect to the Global Telecommunications Fund, the Global Entertainment and
Media Fund and the Global Interactive Couch Potato(R) Fund, such companies will
derive at least 50% of either their revenues or earnings from activities in the
particular industry described for each Fund, or will devote at least 50% of
their assets to such activities, based on such companies' most recent fiscal
year for which audited financial information is available.
Under normal circumstances each Fund will invest in securities of issuers
located in at least three countries, which may include the United States. Risks
inherent in each Fund's investment objectives and policies are discussed below.
See "Associated Risk Factors." Each Fund's investment objectives and the
industry concentration policies of the Global Telecommunications Fund, the
Global Entertainment and Media Fund and the Global Interactive Couch Potato(R)
Fund are fundamental and cannot be changed without shareholder approval.
The Adviser believes that at the present time investment by the Funds in the
securities of companies located throughout the world presents great potential
for accomplishing each Fund's respective investment objective. While the Adviser
expects that a substantial portion of each Fund's assets may be invested in the
securities of domestic companies, a significant portion of each Fund's portfolio
may also be comprised of the securities of issuers headquartered outside the
United States.
THE GLOBAL TELECOMMUNICATIONS FUND. Under normal market conditions, the Global
Telecommunications Fund will invest at least 65% of its total assets in the
telecommunications industry. The telecommunications companies in which the
Global Telecommunications Fund may invest are engaged in the following products
and services: regular telephone service throughout the world; wireless
communications services and equipment, including cellular telephone, microwave
and satellite communications, paging, and other emerging wireless technologies;
equipment and services for both data and voice transmission, including computer
hardware and software; electronic components and communications equipment; video
conferencing; electronic mail; local and wide area networking, and
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4
<PAGE> 8
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linkage of data and word processing systems; publishing and information systems;
video text and teletext; emerging technologies combining television, telephone
and computer systems; broadcasting, including television and radio via VHF, UHF,
satellite and microwave transmission and cable television.
Mr. Mario J. Gabelli, President, is primarily responsible for the day-to-day
management of the Global Telecommunications Fund. Mr. Gabelli has been Chairman,
President and Chief Executive Officer of the Adviser since its organization in
1980. He is assisted by a team of Associate Portfolio Managers including Marc J.
Gabelli and Ivan Arteaga.
THE GLOBAL INTERACTIVE COUCH POTATO(R)FUND. Under normal market conditions, the
Global Interactive Couch Potato(R) Fund will invest at least 65% of its total
assets in securities of companies involved with communications, creativity and
copyright. Such companies, which are participating in emerging technological
advances in interactive services and products that are accessible to individuals
in their homes or offices through consumer electronics devices such as
telephones, televisions, radios and personal computers, are typically associated
with the communications, entertainment, media and publishing industries.
The communications companies in which the Global Interactive Couch Potato(R)
Fund may invest are engaged in the development, manufacture or sale of
communications services or equipment throughout the world including the
following products or services: regular telephone service; wireless
communications services and equipment, including cellular telephone, microwave
and satellite communications, paging, and other emerging wireless technologies;
equipment and services for both data and voice transmission, including computer
hardware and software; electronic components and communications equipment; video
conferencing; electronic mail; local and wide area networking, and linkage of
data and word processing systems; publishing and information systems; video text
and teletext; emerging technologies combining television, telephone and computer
systems; broadcasting, including television and radio via VHF, UHF, satellite
and microwave transmission and cable television.
The entertainment, media and publishing companies in which the Global
Interactive Couch Potato(R) Fund may invest are engaged in providing the
following products or services: the creation, packaging, distribution, and
ownership of entertainment programming throughout the world including
pre-recorded music, feature length motion pictures, made for T.V. movies,
television series, documentaries, animation, game shows, sports programming and
news programs; live events such as professional sporting events or concerts,
theatrical exhibitions, television and radio broadcasting via VHF, UHF,
satellite and microwave transmission, cable television systems and programming,
broadcast and cable networks, wireless cable television and other emerging
distribution technologies, home video, interactive and multimedia programming
including home shopping and multiplayer games; publishing, including newspapers,
magazines and books, advertising agencies and niche advertising mediums such as
in-store or direct mail, emerging technologies combining television, telephone
and computer systems, computer hardware and software, and equipment used in the
creation and distribution of entertainment programming such as that required in
the provision of broadcast, cable or telecommunications services.
Mr. Marc J. Gabelli is primarily responsible for the day-to-day management of
the Global Interactive Couch Potato(R)Fund. Mr. Gabelli is Managing Director of
the Adviser, and has been an analyst with the Adviser, Gabelli Funds, Inc. since
1993 and Associate Portfolio Manager of The Gabelli Global Interactive Couch
Potato(R)
- --------------------------------------------------------------------------------
5
<PAGE> 9
- --------------------------------------------------------------------------------
Fund since the Fund's inception. Prior to 1993 he worked at Lehman Brothers in
equity research and arbitrage.
THE GLOBAL CONVERTIBLE SECURITIES FUND. Under normal market conditions, the
Global Convertible Securities Fund will invest at least 65% of its total assets
in convertible securities. A convertible security is a bond, debenture,
corporate note, preferred stock or other similar security that may be converted
into or exchanged for a prescribed amount of common stock or other equity
security of the same or a different issuer within or at a particular period of
time at a specified price or formula. Before conversion, convertible securities
have characteristics similar to nonconvertible debt securities in that they
ordinarily provide a stream of income with generally higher yields than those of
common stock of the same or similar issuers. Convertible securities are senior
in rank to common stock in a corporation's capital structure and, therefore,
generally entail less risk than the corporation's common stock, although the
extent to which such risk is reduced depends in large measure upon the credit
quality of the issuer. The Global Convertible Securities Fund may invest without
limit in securities that are not considered investment grade and that
accordingly have greater risk of loss of principal and interest. The
characteristics of convertible securities make them appropriate investments for
investors who seek a high level of total return with additional credit risk.
These characteristics include the potential for capital appreciation if the
value of the underlying common stock increases, the relatively high yield
received from dividend or interest payments as compared to common stock
dividends and decreased risks of decline in value, relative to the underlying
common stock due to their fixed income nature. As a result of the conversion
feature, however, the interest rate or dividend preference on a convertible
security is generally less than would be the case if the securities were not
convertible. During periods of rising interest rates, it is possible that the
potential for capital gain on a convertible security may be less than that of a
common stock equivalent if the yield on the convertible security is at a level
which causes it to sell at a discount. Any common stock or other equity security
received by conversion will not be included in the calculation of the percentage
of total assets invested in convertible securities.
Mr. A. Hartswell Woodson III, Vice-President -- Portfolio Manager, is primarily
responsible for the day-to-day management of the Global Convertible Securities
Fund. Mr. Woodson joined the Adviser as a portfolio manager in 1993. Prior to
that he was employed by ABN Amro Bank N.V. in Amsterdam for more than the
previous five years with responsibility for equity-linked new issue securities
(including convertible securities) in all currencies.
THE GLOBAL ENTERTAINMENT AND MEDIA FUND. Under normal market conditions, the
Global Entertainment and Media Fund will invest at least 65% of its total assets
in the entertainment and media industries. Entertainment and media companies in
which the Global Entertainment and Media Fund may invest are engaged in
providing the following products or services: the creation, packaging,
distribution and ownership of entertainment programming throughout the world
including pre-recorded music, feature length motion pictures, made for T.V.
movies, television series, documentaries, animation, game shows, sports
programming and news programs, live events such as professional sporting events
or concerts; theatrical exhibition, television and radio broadcasting via VHF,
UHF, satellite and microwave transmission, cable television systems and
programming, broadcast and cable networks, wireless cable television and other
emerging distribution technologies, home video, interactive and multimedia
programming including home shopping and multiplayer games; publishing including
newspapers, magazines and books, advertising agencies and niche advertising
mediums such as in-store or direct mail,
- --------------------------------------------------------------------------------
6
<PAGE> 10
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emerging technologies combining television, telephone and computer systems,
computer hardware and software, and equipment used in the creation and
distribution of entertainment programming such as that required in the provision
of broadcast, cable or telecommunications services.
Mr. Mario J. Gabelli, President, will be primarily responsible for the
day-to-day management of the Global Entertainment and Media Fund. Mr. Gabelli
has been Chairman, President and Chief Executive Officer of the Adviser since
its organization in 1980.
THE GLOBAL GROWTH FUND. Under normal market conditions, the Global Growth Fund
will invest at least 65% of its total assets in companies which the Adviser
believes are likely to have rapid growth in revenues and earnings and potential
for above average capital appreciation. Although the Global Growth Fund may also
invest in any type of fixed income instrument and may use various hedging
techniques, under normal market conditions the Global Growth Fund will invest at
least 65% of its total assets in equity securities. Equity securities are common
stock, preferred stock and securities convertible into or exchangeable for
common or preferred stock.
Mr. Mario J. Gabelli, President, will be primarily responsible for the
day-to-day management of the Global Growth Fund. Mr. Gabelli has been Chairman,
President and Chief Executive Officer of the Adviser since its organization in
1980.
INVESTMENT METHODOLOGY AND POLICIES. In selecting securities for each of the
Funds, the Adviser normally will consider the following factors, among others:
(1) the Adviser's own evaluations of the private market value, cash flow,
earnings per share and other fundamental aspects of the underlying assets and
business of the company; (2) the potential for capital appreciation of the
securities; (3) the interest or dividend income generated by the securities; (4)
the prices of the securities relative to other comparable securities; (5)
whether the securities are entitled to the benefits of call protection or other
protective covenants; (6) the existence of any anti-dilution protections or
guarantees of the security; and (7) the diversification of each Fund's portfolio
as to issuers. The Adviser's investment philosophy with respect to equity
securities seeks to identify assets that are selling in the public market at a
discount to their private market value, which the Adviser defines as the value
informed purchasers are willing to pay to acquire assets with similar
characteristics. The Adviser also normally evaluates the issuers' free cash flow
and long-term earnings trends. Finally, the Adviser looks for a
catalyst -- something in the company's industry or indigenous to the company or
country itself that will surface additional value.
Subject to each Fund's policy of investing at least 65% of its total assets in
particular industries or securities, each Fund may invest in common stock,
preferred stock, convertible securities, depository receipts, bonds, notes and
other debt obligations of any maturity, mortgage-backed securities, warrants,
options and futures contracts on securities and securities indices, and
securities of companies in bankruptcy or reorganization. Such securities may be
issued by domestic or foreign corporations or other types of entities,
governments or agencies or instrumentalities of governments or supranational
agencies. There is no minimum rating or credit quality of fixed income
securities in which each Fund may invest. Each Fund may also utilize other
investment strategies such as short selling, buying or selling when-issued
securities, entering into forward commitments, buying securities of unseasoned
companies and engaging in various hedging strategies such as the use of futures
and options and repurchase agreements, and foreign currency transactions.
Common stocks represent the residual ownership interest in an issuer and are
entitled to the income and increase in the value of the assets
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7
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and business of the entity after all of its obligations and preferred stock are
satisfied. Common stocks fluctuate in price in response to many factors
including historical and prospective earnings of the issuer, the value of its
assets, general economic conditions, interest rates, investor perceptions and
market liquidity. Preferred stock has a preference over common stock in
liquidation (and generally dividends as well) but is subordinated to the
liabilities of the issuer in all respects. As a general rule the market value of
preferred stock with a fixed dividend rate and no conversion element varies
inversely with interest rates and perceived credit risk, while the market price
of convertible preferred stock generally also reflects some element of
conversion value. Bonds, debentures, notes, asset and mortgage-backed securities
and money market instruments such as commercial paper and bankers acceptances
represent obligations of the issuer. Debt securities that are convertible into
or exchangeable for preferred or common stock are liabilities of the issuer but
are generally subordinated to more senior elements of the issuer's balance
sheet. Although such securities also generally reflect an element of conversion
value, their market value also varies with the interest rates and perceived
risk. Depository receipts are utilized to make investing in a particular
security (usually foreign) more convenient for investors.
Each of the Funds other than the Global Convertible Securities Fund may invest
up to 25% of its assets in fixed income securities rated, at the time of
investment, lower than BBB by Standard & Poor's Rating Group ("S&P") or Baa by
Moody's Investors Service, Inc. ("Moody's") or unrated but determined by the
investment adviser to be of equivalent quality. These Funds do not expect to
invest in excess of 10% of its assets in such securities. Securities rated below
BBB or Baa are typically referred to as "junk bonds" and have speculative
characteristics that result in a greater risk of loss of principal and interest.
Because many convertible securities are rated below investment grade, the Global
Convertible Securities Fund may invest without limit in securities rated lower
than BBB by S&P and Baa by Moody's. It is expected that not more than 50% of the
Fund's portfolio will consist of securities rated CCC or lower by S&P or Caa or
lower by Moody's or, if unrated, are of comparable quality as determined by the
Adviser. These securities and securities rated BB or lower by S&P or Ba or lower
by Moody's may include securities of issuers in default. Such securities are
considered by the rating agencies to be predominantly speculative and may
involve major risk exposures such as increased sensitivity to interest rate and
economic changes and limited liquidity resulting in the possibility that prices
realized upon the sale of such securities will be less than the prices used in
calculating the Global Convertible Security Fund's net asset value. See
"Associated Risk Factors."
Each Fund's investments in securities of issuers in default will be limited to
not more than 5% of the total assets of the Fund. Further, each Fund will invest
in securities of issuers in default only when the Adviser believes that such
issuers will emerge from bankruptcy and/or the value of such securities will
appreciate. By investing in securities of issuers in default the Funds bear the
risk that such issuers will not emerge from bankruptcy or that the value of such
securities will not appreciate. See Appendix to Prospectus -- Description of
Ratings.
Each Fund may invest in securities for which a tender offer or exchange offer
has been made or announced and in securities of companies for which a merger,
consolidation, liquidation or similar proposal has been announced. Each Fund
also may invest up to 5% of its assets in options and up to 5% of its assets in
warrants to buy securities. Each Fund may invest up to 10% of its assets in
securities issued by real estate investment trusts. Each Fund may also invest up
to 10% of its assets (5% per issuer) in securities
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8
<PAGE> 12
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issued by other unaffiliated investment companies.
Each Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis, in excess
of customary settlement periods for the type of security involved. Securities
purchased under a forward commitment are subject to market fluctuation, and no
interest (or dividends) accrues to the Fund prior to the settlement date.
Each Fund may make short sales of securities. A short sale is a transaction in
which a Fund sells a security it does not own in anticipation that the market
price of that security will decline. The market value of the securities sold
short of any one issuer will not exceed either 5% of any Fund's total assets or
5% of such issuer's voting securities. None of the Funds will make a short sale,
if, after giving effect to such sale, the market value of all securities sold
short exceeds 25% of the value of its assets or that Fund's aggregate short
sales of a particular class of securities exceeds 25% of the outstanding
securities of that class. Each Fund may also make short sales "against the box"
without respect to such limitations. In this type of short sale, at the time of
the sale, the Fund owns or has the immediate and unconditional right to acquire
at no additional cost the identical security.
Each Fund may invest in repurchase agreements with respect to any securities it
owns. Repurchase agreements are considered loans to the counter party, and will
be fully collateralized at all times with liquid high grade securities and will
only be entered into with financial institutions approved by the Board of
Directors.
Each Fund may also lend securities to dealers or others and invest the
collateral in accordance with the Fund's investment objective and policies. Each
Fund may borrow from banks for temporary or emergency purposes or to satisfy
redemptions requests in amounts not in excess of 15% of each Fund's total
assets, with such borrowing not to exceed 5% of each Fund's total assets for
purposes other than satisfying redemption requests. Each Fund will not purchase
securities when borrowings exceed 5%.
Each Fund may invest up to 15% of its net assets in illiquid securities for
which market quotations are not readily available.
See the Additional Statement for more information about these securities and
investment practices.
ASSOCIATED RISK FACTORS
All securities investments are subject to risks. The equity securities in which
each Fund may invest are generally subordinated to the claims of creditors and
market prices are subject to the performance of the issuer, its financial health
and market perceptions. The value of securities of an issuer engaged in a tender
offer, restructuring or exchange offer may decline substantially if the
transaction fails to occur.
INDUSTRY RISKS. Each Fund will invest a significant portion of its assets in
particular types of companies, and, as a result, the value of each Fund's
respective shares will be more susceptible to factors affecting those particular
types of companies. The communications industry is subject to governmental
regulation and the products and services of telecommunications companies may be
subject to rapid obsolescence. Certain companies in the United States, for
example, are subject to both state and federal regulations affecting permitted
rates of return and the kinds of services that may be offered. Such companies
are becoming subject to increasing levels of competition. As a result stocks of
these companies may be subject to greater price volatility.
The risks of investing in the entertainment and media industry and publishing
industry are largely the same as investing in the communications industry,
except that such industries are subject to less federal and state regulation.
Addi-
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9
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tional risks particular to the entertainment and media industry involve a
greater price volatility than the overall market, rapid obsolescence of
entertainment products and services resulting from changing consumer tastes,
intense competition and strong market reactions to technological developments
throughout the industry.
Various types of ownership restrictions are imposed by the Federal
Communications Commission ("FCC") on investments both in mass media companies,
such as broadcasters and cable operators, as well as in common carrier
companies, such as the providers of local telephone service and cellular radio.
For example, the FCC's broadcast multiple ownership rules, which apply to the
radio and television industries, provide that investment advisers are deemed to
have an "attributable" interest whenever the adviser has the right to determine
how more than five percent of the issued and outstanding voting stock of a
broadcast company may be voted. These same broadcast rules limit the holding of
an attributable interest in AM and FM radio broadcast stations and television
stations nationally. Similar types of restrictions apply in the mass media and
common carrier industries.
The attributable interests that result from the role of the Adviser and its
principals vis-a-vis other funds, managed accounts and companies may limit the
investments of the Funds.
SMALLER COMPANIES. While the Funds intend to focus on the securities of
established suppliers of accepted products and services, each Fund may invest in
smaller companies which may benefit from the development of new products and
services. These smaller companies may present greater opportunities for capital
appreciation, and may also involve greater investment risk than large,
established issuers. For example, smaller companies may have limited product
lines, market or financial resources, and their securities may trade less
frequently and in lower volume than the securities of larger, more established
companies. As a result, the prices of the securities of such smaller companies
may fluctuate to a greater degree than the prices of securities of other
issuers.
LOWER RATED SECURITIES. Securities rated below investment grade are subject to
certain risks that may not be present with higher rated securities. The market
prices and market value adjusted yields of fixed income securities generally
increase as interest rates fall and decrease as interest rates rise. However,
the prices and price adjusted yields of lower rated securities have been found
to be less sensitive to interest rate changes than higher-rated investments and
have been more sensitive to broad economic changes, changes in the equity
markets and individual corporate developments. Thus, periods of economic
uncertainty and change can be expected to result in increased volatility in the
market prices and yields of lower rated securities and thus in each Fund's net
asset value. Similarly, a strong economic downturn or a substantial period of
rising interest rates can be expected to severely affect the market for lower
rated securities in that highly leveraged or weak performing companies would
generally be perceived to encounter difficulties meeting profit goals and their
principal and interest payment obligations or obtaining additional financing and
thus a higher incidence of default can be expected. This would affect the value
of such securities and thus each Fund's net asset value.
Many lower-rated securities are typically traded by a small number of
broker-dealers rather than in a broad secondary market. Trades are primarily on
a principal basis without disclosure of markups and prices are not reported in
any organized manner. As a result of these and other factors, many lower-rated
securities are not as liquid as higher-grade securities of the same maturity and
amount outstanding. The Fund's responsibility to value accurately and its
ability to
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sell lower-rated securities at the value placed on them by the Fund will be made
more difficult to the extent that such securities are thinly traded or illiquid.
During such periods, there may be less reliable objective information available
and the judgment of the Corporation's Board of Directors plays a greater role.
Further, adverse publicity about either the economy or a particular issuer may
adversely affect investors' perceptions of the value, and thus liquidity, of a
high yield security, whether or not such perceptions are based on a fundamental
analysis.
The credit ratings issued by credit rating services may not fully reflect the
true risks of an investment. Although the Adviser considers the ratings of
recognized rating services such as Moody's and S&P in determining investments,
the Adviser primarily relies on its own credit analysis, which includes a study
of existing debt, capital structure, ability to service debts and to pay
dividends, the issuer's sensitivity to changes in economic conditions, its
operating history and the current trend of earnings, cash flow and other
factors.
MISCELLANEOUS INVESTMENT TECHNIQUE. Repurchase agreements have the risk that
collateral may not be able to be disposed of at a desirable price, delays as a
result of bankruptcy of the counter party or encumbrances of collateral or
restrictions on its disposition. Mortgage-backed securities have the credit
risks of delinquency and default as well as the risk that prepayments of
principal generally may be made at any time without penalty. Lending of
securities can result in a failure to deliver the original security by the
borrower, and similar risks with respect to disposition of the collateral. When
issued and delayed delivery securities transactions and forward commitments
involve potential loss to a Fund if the counterparty to the transaction fails
to perform. Hedging transactions also have certain risks including imperfect
market correlations, dependence on the credit of the counter party, possible
inability to enter into offsetting transactions and market fluctuations that
can result in a Fund being in a worse position than if the hedging had not
occurred. Currency transactions also include the risk securities losses could
be magnified by changes in the value of the currency in which a security is
denominated relative to the U.S. dollar. While the Adviser may try to hedge
such risks, entering into hedging transactions can result in even greater
losses.
The purchaser of an option risks a total loss of the premium paid for the option
if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. If the price of the
security sold short increases between the time of the short sale and the time a
Fund replaces the borrowed security, the Fund will incur a loss; conversely, if
the price declines, a Fund will realize a capital gain. Although a Fund's gain
is limited to the price at which it sold the security short, its potential loss
is theoretically unlimited.
Disposition of illiquid securities often takes more time than for more liquid
securities, may result in higher selling expenses and may not be able to be made
at desirable prices.
FOREIGN SECURITIES. Investments in foreign securities involve certain risks not
ordinarily associated with investments in securities of domestic issuers,
including fluctuations in foreign
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exchange rates, future political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. In addition, with respect to certain countries, there is the
possibility of expropriation of assets, confiscatory taxation, political or
social instability or diplomatic developments which could adversely affect
investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and accounting, auditing and financial reporting standards
and requirements may not be comparable. Securities of many foreign companies are
less liquid and their prices more volatile than securities of comparable U.S.
companies. Transaction costs of investing in non-U.S. securities markets are
generally higher than in the U.S. There is generally less government supervision
and regulation of exchanges, brokers and issuers than there is in the U.S. The
Fund might have greater difficulty taking appropriate legal action in non-U.S.
courts. Depository receipts that are not sponsored by the issuer may be less
liquid.
Dividend and interest income from non-U.S. securities will generally be subject
to withholding taxes by the country in which the issuer is located and may not
be recoverable by the Fund or the investor.
The Adviser will attempt to manage these risks so that such strategies and
investments benefit each Fund, but no assurance can be given that they will be
successfully managed.
MANAGEMENT OF THE FUNDS
The Corporation's Board of Directors (who, with its officers, are described in
the Additional Statement) has overall responsibility for the management of each
Fund. The Board of Directors decides upon matters of general policy and reviews
the actions of Gabelli & Company, Inc. (the "Distributor") and the Adviser.
Pursuant to separate Investment Advisory Contracts with the Corporation on
behalf of each Fund, the Adviser under the supervision of the Corporation's
Board of Directors, provides a continuous investment program for each Fund's
portfolio; provides investment research and makes and executes recommendations
for the purchase and sale of securities; provides facilities and personnel, and
the exercise of all voting and other rights appertaining thereto required for
each Fund's administrative management; supervises the performance of
administrative and professional services provided by others; and pays the
compensation of the Administrator and all officers and directors of each Fund
who are its affiliates. As compensation for its services and the related
expenses borne by the Adviser, each Fund pays the Adviser a fee, computed daily
and payable monthly, equal, on an annual basis, to 1.00% of each Fund's average
daily net assets, which is higher than that paid by most mutual funds. The
Adviser is located at One Corporate Center, Rye, New York 10580-1434.
The Adviser was formed in 1980 and as of March 31, 1997 acts as investment
adviser to the following funds with aggregate assets in excess of $4.0 billion:
<TABLE>
<CAPTION>
NET ASSETS
3/31/97
(in
OPEN-END FUNDS: millions)
- ------------------------------------------ ----------
<S> <C>
Gabelli Asset Fund $1,027.1
Gabelli Growth Fund 612.5
Gabelli Gold Fund, Inc. 16.9
Gabelli Value Fund Inc. 436.8
Gabelli Small Cap Growth Fund 205.3
Gabelli Equity Income Fund 60.1
Gabelli U.S. Treasury Money Market Fund 237.8
Gabelli ABC Fund 22.7
Gabelli Global Telecommunications Fund 99.3
Gabelli Global Interactive Couch Potato(R)
Fund 29.4
Gabelli Global Convertible Securities Fund 11.4
Gabelli International Growth Fund, Inc. 17.8
Gabelli Capital Asset Fund 52.4
CLOSED-END FUNDS:
- ------------------------------------------
Gabelli Convertible Securities Fund, Inc. 90.1
Gabelli Equity Trust Inc. 1,006.2
Gabelli Global Multimedia Trust Inc. 91.5
</TABLE>
Gabelli & Company, Inc., the Distributor of each open-end Fund's respective
shares, is an indi-
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rect majority owned subsidiary of the Adviser. GAMCO Investors, Inc. ("GAMCO"),
a wholly owned subsidiary of the Adviser, acts as investment adviser for
individuals, pension trusts, profit sharing trusts and endowments. As of March
31, 1997, GAMCO had aggregate assets in excess of $5 billion under its
management. Teton Advisers LLC, an affiliate of the Adviser, acts as Investment
Adviser of the Westwood Funds with assets under management in excess of $125
million. Mr. Mario J. Gabelli may be deemed a "controlling person" of the
Adviser and the Distributor on the basis of his ownership of stock of the
Adviser.
In addition to the fee of the Adviser, each Fund is responsible for the payment
of all its other operating expenses, which include, among other things, expenses
for legal and independent auditor services, costs of printing all materials sent
to shareholders, charges of State Street Bank and Trust Company (the
"Custodian", "Transfer Agent" and "Dividend Disbursing Agent") and any other
persons hired by each respective Fund, securities registration fees, fees and
expenses of unaffiliated directors, accounting and printing costs for reports
and similar materials sent to shareholders, membership fees in trade
organizations, fidelity bond and liability coverage for the Corporation's
directors, officers and employees, interest, brokerage and other trading costs,
taxes, expenses of qualifying each Fund for sale in various jurisdictions,
expenses of its distribution plan adopted under Rule 12b-1, expenses of
personnel performing shareholder servicing functions, litigation and other
extraordinary or non-recurring expenses and other expenses properly payable by
each Fund.
The Additional Statement contains further information about the Investment
Advisory Contracts, including a more complete description of the advisory and
expense arrangements and administrative provisions.
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 Funds. The securities in which the Funds
might invest may thereby be limited to some extent. However, the Adviser does
not believe that the investment activities of its affiliates will have a
material adverse effect upon the Funds in seeking to achieve their investment
objectives. The Adviser may on occasion give advice or take action with respect
to other clients that differs from the actions taken with respect to the Funds.
The Adviser has entered into a Sub-Administration Contract with BISYS Fund
Services L.P. (the "Sub-Administrator") pursuant to which the Sub-Administrator
provides certain administrative services necessary for each Fund's operations.
These services include the preparation and distribution of materials for
meetings of the Corporation's Board of Directors, compliance testing of Fund
activities and assistance in the preparation of proxy statements, reports to
shareholders and other documentation. The Adviser pays the Sub-Administrator a
monthly fee at the annual rate of .10% of the average daily net assets of each
Fund, (with a minimum annual fee of $40,000 and subject to reduction to .075% on
average daily net assets of the Gabelli Funds under its administration in excess
of $350 million, up to $600 million and .06% in excess of $600 million) which,
together with the services to be rendered, are subject to negotiation between
the parties and both parties retain the right unilaterally to terminate the
arrangement on not less than 60 days' notice.
The Administrator has its principal office at 3435 Stelzer Road, Columbus, Ohio
43219.
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DISTRIBUTION PLAN
The Board of Directors of the Corporation has approved on behalf of each
respective Fund as being in the best interests of each Fund and its respective
shareholders separate Distribution Plans which authorize payments by each Fund
in connection with the distribution of its shares at an annual rate, as
determined from time to time by the Board of Directors, of up to .25% of each
Fund's average daily net assets. Payments may be made in subsequent years for
expenses incurred in prior years. The potential for such subsequent payments is
a contingent liability for which no amount is currently being recorded because
the Funds do not have a reasonable basis on which to conclude that the Board of
Directors will approve such payment. Interest, carrying or other financing
charges on unreimbursed amounts could also be considered a distribution expense
if the Board of Directors so determined and would in such event also potentially
be subject to carryover to a future year upon specific approval by the Board of
Directors.
Payments may be made by a Fund under its Distribution Plan for the purpose of
financing any activity primarily intended to result in the sale of its
respective shares as determined by the Board of Directors. Such activities
typically include advertising; compensation for sales and marketing activities
of the Distributor, banks, broker-dealers and service providers; shareholder
account servicing; production and dissemination of prospectus and sales and
marketing materials; and capital or other expenses of associated equipment,
rent, salaries, bonuses, interest and other overhead. To the extent any activity
is one which a Fund may finance without its Distribution Plan, such Fund may
also make payments to finance such activity outside of the Plan and not subject
to its limitations.
Each Plan has been implemented by written agreements between the Corporation on
behalf of each Fund and/or the Distributor and each person (including the
Distributor) to which payments may be made. Administration of the Plan is
regulated by Rule 12b-1 under the Investment Company Act of 1940 (the "Act"),
which includes requirements that the Board of Directors receive and review at
least quarterly reports concerning the nature and qualification of expenses for
which payments are made, that the Board of Directors approve all agreements
implementing the Plan and that the Plan may be continued from year to year only
if the Board of Directors concludes at least annually that continuation of each
Plan is likely to benefit shareholders.
The Board of Directors has initially implemented each Plan by having the
Corporation enter into an agreement with the Distributor authorizing
reimbursement of expenses (including overhead) incurred by the Distributor and
its affiliates up to the .25% rate authorized by the Plan for distribution
activities of the types listed above. To the extent any of these payments are
based on allocations by the Distributor, each Fund may be considered to be
participating in joint distribution activities with other funds distributed by
the Distributor. Any such allocations would be subject to approval by the
Corporation's non-interested Directors and would be based on such factors as the
net assets of each Fund, the number of shareholder inquiries and similar
pertinent criteria.
PURCHASE OF SHARES
The minimum initial investment for each Fund is $1,000. However, the initial
minimum of the Funds acquired through intermediary organizations maintaining
omnibus accounts with the Fund may establish their own minimum investment
criteria. There is no minimum for subsequent investments in any Fund.
Investments through an Individual Retirement Account or other retirement plans,
and Automatic Investment Plans, however, have different require-
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ments. Shares of each Fund are sold at the net asset value per share next
determined after receipt of an order by that Fund's Distributor or transfer
agent in proper form with accompanying check or bank wire or other payment
arrangements satisfactory to the applicable Fund. Although most shareholders
elect not to receive stock certificates, certificates for whole shares only can
be obtained on specific written request to the Transfer Agent.
Shares of each Fund may also be purchased through shareholder agents that are
not affiliated with the Funds or the Distributor. There is no sales or service
charge imposed by each Fund, but agents who do not receive distribution payments
or sales charges may impose a charge to the investor for their services. Such
fees may vary among agents, and such agents may impose higher initial or
subsequent investment requirements than those established by the Funds. Services
provided by broker-dealers may include allowing the investor to establish a
margin account and to borrow on the value of each Fund's shares in that account.
It is the responsibility of the shareholder's agent to establish procedures
which would assure that upon receipt of an order to purchase shares of the Fund
the order will be transmitted so that it will be received by the Distributor
before the time when the price applicable to the buy order expires.
Prospectuses, sales material and applications may be obtained from the
Distributor. Each Fund and its Distributor reserve the right in their sole
discretion (1) to suspend the offerings of any Fund's shares and (2) to reject
purchase orders when, in the judgment of a Fund's management, such rejection is
in the best interest of such Fund.
The net asset value per share of each Fund is determined as of the close of the
regular session of the New York Stock Exchange, which is generally 4:00 p.m.,
eastern time, on each day that trading is conducted on the New York Stock
Exchange, by dividing the value of each respective 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
number of shares outstanding at the time the determination is made. Foreign
securities are valued as of the close of trading on the primary exchange on
which they trade. Portfolio securities for which market quotations are readily
available are valued at market value as determined by the last quoted sale price
prior to the valuation time on the valuation date in the case of securities
traded on securities exchanges or other markets for which such information is
available. Other readily marketable securities are valued at the average of the
latest bid and asked quotations for such securities prior to the valuation time.
Debt securities with remaining maturities of 60 days or less are valued at
amortized cost, which the Board of Directors believes represents fair value. All
other assets are valued at fair value as determined by or under the supervision
of the Board of Directors. See "Determination of Net Asset Value" in the
Additional Statement.
MAIL. To make an initial purchase by mail, send a completed subscription order
form with a check for the amount of the investment payable to the particular
fund in which you wish to invest to:
THE GABELLI FUNDS
P.O. BOX 8308
BOSTON, MA 02266-8308
Subsequent purchases do not require a completed application and can be made by
(1) mailing a check to the same address noted above or by (2) bank wire, as
indicated below. The exact name and number of the shareholder's account should
be clearly indicated.
Checks will be accepted if drawn in U.S. currency on a domestic bank for less
than $100,000. U.S. dollar checks drawn against a non-U.S. bank may be subject
to collection delays and will be accepted only upon actual
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15
<PAGE> 19
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receipt of funds by the Transfer Agent. Bank collection fees may apply. The
funds will not accept checks made payable to a third party
BANK WIRE. To initially purchase shares of a Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Fund at
1-800-422-3554 to obtain a new account number. The investor should 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
Attn: Shareholder Services
Re: [Name of Fund]
A/C# (Registered Owner)
- --------------------------------------------------------------------------------
Account of
- --------------------------------------------------------------------------------
225 Franklin Street, Boston, MA 02110
For initial purchases, the investor should promptly complete and mail the
subscription order form to the address shown above for mail purchases. There may
be a charge by your bank for transmitting the money by bank wire but State
Street Bank and Trust Company does not charge investors in the Fund for the
receipt of wire transfers. If you are planning to wire funds, it is suggested
that you instruct your bank early in the day so the wire transfer can be
accomplished the same day.
OVERNIGHT MAIL OR PERSONAL DELIVERY. Deliver a check made payable to the
particular Fund in which you wish to invest along with a completed subscription
order form to:
THE GABELLI FUNDS
THE BFDS BUILDING, 6TH FLOOR
TWO HERITAGE DRIVE
NORTH QUINCY, MA 02171
TELEPHONE INVESTMENT PLAN. You may purchase additional shares of a Fund by
telephone through the Automated Clearinghouse (ACH) system as long as your bank
is a member of the ACH system and you have a completed, approved Investment Plan
application on file with our Transfer Agent. The funding for your purchase will
be automatically deducted from the ACH eligible account you designate on the
application. Your investment will normally be credited to your Mutual Fund
account on the first business day following your telephone request. Your request
must be received no later than 4:00 p.m. eastern time. There is a minimum of
$100 for each telephone investment. Any subsequent changes in banking
information must be submitted in writing and accompanied by a sample voided
check. To initiate an ACH purchase, please call 1-800-GABELLI (422-3554) or
1-800-872-5365. Fund shares purchased through the Telephone or Automatic
Investment Plan will not be available for redemption for up to fifteen (15) days
following the purchase date.
AUTOMATIC INVESTMENT PLAN. The Funds offer an automatic monthly investment
plan, details of which can be obtained from the Distributor. There is no minimum
initial investment for accounts establishing an automatic investment plan.
SYSTEMATIC WITHDRAWAL PLAN. The Funds offer a systematic withdrawal program for
shareholders whereby they can authorize an automatic redemption on a monthly,
quarterly or annual basis. Details can be obtained from the Distributor.
OTHER INVESTORS. No minimum initial investment is required for officers,
directors or full-time employees of the Funds, other investment companies
managed by the Adviser, the Adviser, the Sub-Administrator, the Transfer Agent,
the Distributor or their affiliates, including members of the "immediate family"
of such individuals and retirement plans and trusts for their benefit. The term
"immediate family" refers to spouses, children and grandchildren (adopted or
natural), parents, grandparents, siblings, a spouse's siblings, a sibling's
spouse and a sibling's children.
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REDEMPTION OF SHARES
Upon receipt by the Distributor or the Transfer Agent of a redemption request in
proper form, shares of a Fund will be redeemed at their next determined net
asset value. Redemption requests received after the time as of which that Fund's
net asset value is determined on a particular day will be redeemed at the net
asset value of that Fund determined on the next day that net asset value is
determined. Checks for redemption proceeds will normally be mailed to the
shareholder's address of record within seven days, but will not be mailed until
all checks in payment for the purchase of the shares to be redeemed have been
honored, which may take up to 15 days. Redemption requests may be made by letter
to the Transfer Agent, specifying the name of the particular Fund, the dollar
amount or number of shares to be redeemed, and the account number. The letter
must be signed in exactly the same way the account is registered (if there is
more than one owner of the shares, all must sign) and, if any certificates for
the shares to be redeemed are outstanding, presentation of such certificates
properly endorsed is also required. Signatures on a redemption request and/or
certificates must be guaranteed by an "eligible guarantor institution" which
includes certain banks, brokers, dealers, credit unions, securities exchanges
and associations, clearing agencies and savings associations (signature
guarantees by notaries public are not acceptable). Shareholders may also redeem
a Fund's shares through shareholder agents, who have made arrangements with such
Fund permitting them to redeem shares by telephone or facsimile transmission and
who may charge shareholders a fee for this service if they have not received any
payments under the appropriate Distribution Plan. It is the responsibility of
the shareholder's agent to establish procedures which would assure that upon
receipt of a shareholder's order to redeem shares of a Fund the order will be
transmitted so that it will be received by such Fund before the time when the
price applicable to the order expires.
Further documentation, such as copies of corporate resolutions and instruments
of authority, are normally requested from corporations, administrators,
executors, personal representatives, trustees or custodians to evidence the
authority of the person or entity making the redemption request.
Each Fund may suspend the right of redemption or postpone the date of payment
for more than seven days during any period when (1) trading on the New York
Stock Exchange is restricted or the Exchange is closed, other than customary
weekend and holiday closings; (2) the Securities and Exchange Commission has by
order permitted such suspension or (3) an emergency, as defined by rules of the
Securities and Exchange Commission, exists making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.
To minimize expenses, each Fund reserves the right to redeem, upon not less than
30 days' notice, all shares of a Fund in an account (other than an IRA) which as
a result of shareholder redemption has a value below $500. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.
TELEPHONE REDEMPTION BY CHECK. Each Fund accepts telephone requests for
redemption of unissued shares, subject to a $25,000 limitation. By calling
either 1-800-GABELLI (422-3554) or 1-800-872-5365, you may request that a check
be mailed to the address of record on the account, provided that the address has
not changed within thirty (30) days prior to your request. The check will be
made payable to the person in whose name the account is registered and will
normally be mailed within seven (7) days.
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BY BANK WIRE. Each Fund accepts telephone requests from any investor for wire
redemption in excess of $1,000 (but subject to a $25,000 limitation) to a
predesignated bank either on the subscription order form or in a subsequent
written authorization with the signature guaranteed. Each Fund accepts signature
guaranteed written requests for redemption by bank wire without limitation. The
proceeds are normally wired on the following business day. Your bank must be
either a member of the Federal Reserve System or have a correspondent bank which
is a member. Any change to the banking information made at a later date must be
submitted in writing with a signature guarantee. The Funds will not impose a
wire service fee. A shareholder's agent or the predesignated bank, however, may
impose its own service fee on wire transfers.
Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m. eastern time. If your telephone call is received after this time or on a
day when the New York Stock Exchange is not open, the request will be entered
for the following business day. Shares are redeemed at the net asset value next
determined following your request. Any Fund's shares purchased by check or
through the automatic purchase plan will not be available for redemption for up
to fifteen (15) days following the purchase. Shares held in certificate form
must be returned to the Transfer Agent for redemption of shares. Telephone
redemption is not available for IRAs. The proceeds of a telephone redemption may
be directed to an account in another mutual fund advised by Gabelli Funds, Inc.,
provided the account is registered in the redeeming shareholder's name. Such
purchase will be made at the respective net asset value plus applicable sales
charge, if any, with credit for any sales charge previously paid to the
Distributor.
The Funds and their transfer agent will not be liable for following telephone
instructions reasonably believed to be genuine. In this regard, the Funds and
their transfer agent require personal identification information before
accepting a telephone redemption. If the Funds or their transfer agent fail to
use reasonable procedures, the Funds might be liable for losses due to
fraudulent instructions.
RETIREMENT PLANS
Each Fund has available a form of Individual Retirement Account ("IRA") for
investment in shares which may be obtained from the Distributor. The minimum
investment required to open an IRA for investment in shares of a Fund is $1,000
for an individual except that both the individual and his or her spouse may
establish separate IRAs if their combined investment is $1,250. There is no
minimum for additional investment in an IRA account.
Investors who are self-employed may purchase shares of a Fund through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or H.R. 10 plans. The Funds do not currently act as Sponsors for
such plans. Any Fund's shares may also be a suitable investment for other types
of qualified pension or profit-sharing plans which are employer-sponsored,
including deferred compensation or salary reduction plans known as "401(k)
Plans" which give participants the right to defer portions of their compensation
for investment on a tax-deferred basis until distributions are made from the
plans. The minimum initial investment for an individual under such plans is
$1,000 and there is no minimum for additional investments. Under the Internal
Revenue Code of 1986, (the "Code") individuals may make wholly or partly tax
deductible IRA contributions of up to $2,000 annually, depending on whether they
are active participants in an employer-sponsored retirement plan and on their
income level. However, dividends and distributions held in the account are not
taxed until withdrawn in accordance with the provisions of the Code. An
individual with a non-working spouse may establish a separate IRA for
- --------------------------------------------------------------------------------
18
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the spouse under the same conditions and contribute a maximum of $4,000 annually
provided that no more than $2,000 may be contributed to the IRA of either
spouse.
Investors should be aware that they may be subject to penalties or additional
tax on contributions or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Internal Revenue Code.
Persons desiring information concerning investments through IRA accounts or
other retirement plans should write or telephone the Distributor.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by a Fund on its
outstanding shares will, unless the shareholder elects otherwise, be paid on the
payment date fixed by the Board of Directors in additional shares of such Fund
having an aggregate net asset value as of the ex-dividend date of such dividend
or distribution equal to the cash amount of such distribution. An election to
receive dividends and distributions may be changed by notifying the applicable
Fund in writing at any time prior to the record date for a particular dividend
or distribution. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that any Fund will pay any
dividends or realize any capital gains. However, each Fund currently intends to
pay dividends and capital gains distributions, if any, on an annual basis.
Each Fund intends to qualify for tax treatment as a "Regulated Investment
Company" under the Internal Revenue Code in order to be relieved of Federal
income tax on that part of its net investment income and realized capital gains
which it pays out to its shareholders.
To qualify, each Fund must meet certain relatively complex tests, including the
requirement that less than 30% of its gross income (exclusive of losses) may be
derived from the sale or other disposition of securities held for less than
three months. The loss of such status by a Fund would result in such Fund being
subject to Federal income tax on its taxable income and gains.
Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, such distributions are eligible for the
dividends received deduction subject to proportionate reduction if the aggregate
qualifying dividends received by a Fund from domestic corporations in any year
are less than its "gross income" as defined by the Code. Distributions out of
long-term capital gains are taxable to the recipient as long-term capital gains.
Dividends and distributions declared by the Funds may also be subject to state
and local taxes. Prior to investing in shares of any Fund, prospective
shareholders may wish to consult their tax advisers concerning the Federal,
state and local tax consequences of such investment.
GENERAL INFORMATION
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES. Each Fund is a series of
Gabelli Global Series Funds, Inc. (the "Corporation"), which was incorporated in
Maryland on July 16, 1993. The authorized capital stock consists of one billion
shares of stock having a par value of one tenth of one cent ($.001) per share,
200,000,000 shares of which have been classified as shares for each of the
Funds. The Corporation is not required, and does not intend, to hold regular
annual shareholder meetings, but may hold special meetings for consideration of
proposals requiring shareholder approval, such as changing fundamental policies
or upon the written request of 10% of the Fund's shares to replace its
Directors. The Corporation's Board of Directors is authorized to divide the
unissued shares
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into separate series of stock, each series representing a separate, additional
portfolio.
There are no conversion or preemptive rights in connection with any shares of
the Funds. All shares, when issued in accordance with the terms of the offering,
will be fully paid and nonassessable. Shares will be redeemed at net asset
value, at the option of the shareholder.
Each Fund sends semi-annual and annual reports to all respective shareholders
which include lists of portfolio securities and each Fund's financial statements
which shall be audited annually. Unless it is clear that a shareholder is a
nominee for the account of an unrelated person or a shareholder otherwise
specifically requests in writing, the Funds may send a single copy of
semi-annual, annual and other reports to shareholders to all accounts at the
same address and all accounts of any person at that address.
The shares of the Funds have noncumulative voting rights which means that the
holders of more than 50% of the shares can elect 100% of the directors if the
holders choose to do so, and, in that event, the holders of the remaining shares
will not be able to elect any person or persons to the Board of Directors.
Unless specifically requested by an investor who is a shareholder of record, the
Funds do not issue certificates evidencing shares.
PORTFOLIO TURNOVER. The investment policies of the Funds may lead to frequent
changes in investments, particularly in periods of rapidly fluctuating interest
or currency exchange rates. The portfolio turnover may be higher than that of
other investment companies. During the year ended December 1996, the Portfolio
turnover rates for The Gabelli Global Telecommunications Fund, The Gabelli
Global Convertible Securities Fund and The Gabelli Global Interactive Couch
Potato(R) Fund were 7%, 126% and 47%, respectively.
Portfolio turnover generally involves some expense to a Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. Rapid turnover makes it more
difficult to qualify as a passthrough entity for Federal tax purposes in view of
a requirement that the Funds obtain less than 30% of their gross income in any
tax year from gains on the sale of securities held less than three months.
Failure of the Funds to qualify as a passthrough entity would result in Federal
taxation of the Funds at the standard corporate rate of 34% and may adversely
affect returns to shareholders. The portfolio turnover rate is computed by
dividing the lesser of the amount of the securities purchased or securities sold
by the average monthly value of securities owned during the year (excluding
securities whose maturities at acquisition were one year or less).
PERFORMANCE INFORMATION. The Funds may furnish data about their investment
performance in advertisements, sales literature and reports to shareholders.
"Total return" represents the annual percentage change in value of $1,000
invested at the maximum public offering price for the one, five and ten year
periods (if applicable) and the life of a Fund through the most recent calendar
quarter, assuming reinvestment of all dividends and distributions. Quotations of
"yield" will be based on the investment income per share earned during a
particular 30 day period, less expenses accrued during the period, with the
remainder being divided by the maximum offering price per share on the last day
of the period. The Funds may also furnish total return and yield calculations
for other periods and/or based on investments at various sales charge levels or
net asset values. Any performance data which is based on a Fund's net asset
value per share would be reduced if a sales charge were taken into account.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT. State Street Bank and
Trust
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Company is the Custodian for each Fund's cash and securities as well as the
Transfer and Dividend Disbursing Agent for its shares. Boston Financial Data
Services, Inc., an affiliate of State Street Bank and Trust Company performs the
shareholder services on behalf of State Street and is located at The BFDS
Building, Two Heritage Drive, North Quincy, MA 02171. State Street Bank and
Trust Company does not assist in and is not responsible for investment decisions
involving assets of the Funds.
INDEPENDENT AUDITORS. Grant Thornton LLP has been appointed independent
auditors for each of the Funds, and is located at 7 Hanover Square, 6th Floor,
New York, New York 10004.
INFORMATION FOR SHAREHOLDERS. All shareholder inquiries regarding
administrative procedures including the purchase and redemption of shares should
be directed to the Distributor, Gabelli & Company, Inc., One Corporate Center,
Rye, New York 10580-1434. For assistance, call 1-800-GABELLI (1-800-422-3554).
Upon request, Gabelli & Company, Inc. will provide without charge, a paper copy
of this Prospectus to investors or their representatives who received this
Prospectus in an electronic format.
This Prospectus omits certain information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of the
Registration Statement including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such Registration Statement may
be obtained without charge from the Funds or their Distributor.
APPENDIX TO PROSPECTUS
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S ("MOODY'S") CORPORATE BOND
RATINGS. Aaa: Bonds which are rated Aaa are judged to be of 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 fluctuation of protective elements
may be of greater amplitude or there may be other elements present which made
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 the 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.
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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
marked 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.
Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S RATING GROUP ("S&P'S") CORPORATE DEBT RATINGS.
AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity to pay
interest and repay principal is extremely strong. AA: Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the highest
rated issues only in small degree. A: Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. BBB: Debt rated BBB is regarded as having adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated categories. BB, B, CCC,
CC, C: Debt rated BB, B, CCC, CC and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. CI: The rating CI
is reserved for income bonds on which no interest is being paid. D: Debt rated D
is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's believes that such payments will be made
during such grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
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.
DESCRIPTION OF MOODY'S PREFERRED STOCK RATINGS. aaa: An issue which is rated
aaa is considered to be a top-quality preferred stock. This rating indicates
good asset protection and the least risk of dividend impairment within the
universe of preferred stocks. aa: An issue which is rated aa is considered a
high-grade preferred stock. This rating indicates that there is reasonable
assurance that earnings and asset protection will remain relatively well
maintained in the foreseeable future. a: An issue which is rated a is considered
to be an upper medium grade preferred stock. While risks are judged to be
somewhat greater than in the aaa and aa classifications, earnings and asset
protection are, nevertheless expected to be maintained at adequate levels. baa:
An issue which is rated baa is considered to be medium grade, neither highly
protected nor poorly secured. Earnings and asset protection appear adequate at
present but may be questionable over any great length of time. ba: An issue
which is rated ba is considered to have speculative elements and its future
cannot be considered well assured. Earnings
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and asset protection may be very moderate and not well safeguarded during
adverse periods. Uncertainty of position characterizes preferred stocks in this
class. b: An issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small. caa: An issue
which is rated caa is likely to be in arrears on dividend payments. This rating
designation does not purport to indicate the future status of payment. ca: An
issue which is rated ca is speculative in a high degree and is likely to be in
arrears on dividends with little likelihood of eventual payment. c: This is the
lowest rated class of preferred or preference stock. Issues so rated can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.
Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF S&P'S PREFERRED STOCK RATINGS. AAA: This is the highest rating
that may be assigned by S&P's to a preferred stock issue and indicates an
extremely strong capacity to pay the preferred stock obligations. AA: A
preferred stock issue rated AA also qualifies as a high-quality fixed income
security.
The capacity to pay preferred stock obligations is very strong, although not as
overwhelming as for issues rated AAA. A: An issue rated A is backed by a sound
capacity to pay the preferred stock obligations, although it is somewhat more
susceptible to the adverse effect of changes in circumstances and economic
conditions. BBB: An issue rated BBB is regarded as backed by an adequate
capacity to pay the preferred stock obligations. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to make payments
for a preferred stock in this category than for issues in the A category. BB, B,
CCC: Preferred stock rated BB, B, and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and CCC the
highest degree of speculation. While such issues will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions. CC: The rating CC is reserved for a
preferred stock in arrears on dividends or sinking fund payments but that is
currently paying. C: A preferred stock rated C is a non-paying issue. D: A
preferred stock rated D is a non-paying issue with the issuer in default on debt
instruments.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Fees and Expenses........... 2
Financial Highlights................. 3
Investment Objective and Policies.... 4
Associated Risk Factors.............. 9
Management of the Funds.............. 12
Distribution Plan.................... 14
Purchase of Shares................... 14
Redemption of Shares................. 17
Retirement Plans..................... 18
Dividends, Distributions and Taxes... 19
General Information.................. 19
Appendix............................. 21
</TABLE>
- ------------------------------------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information or representation may not be relied upon as
being authorized by the Fund, the Adviser, the Administrator, the Distributor or
any affiliate thereof.
- ------------------------------------------------------
Gabelli
Global
Series
Funds, Inc.
PROSPECTUS
MAY 1, 1997
- - THE GABELLI GLOBAL
TELECOMMUNICATIONS FUND
- - THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
- - THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
- - THE GABELLI GLOBAL ENTERTAINMENT AND MEDIA FUND
- - THE GABELLI GLOBAL GROWTH FUND
GABELLI FUNDS, INC.
INVESTMENT ADVISER
GABELLI & COMPANY, INC.
DISTRIBUTOR
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<PAGE> 28
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Gabelli Global Series Funds, Inc.
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE 1-800-GABELLI (1-800-422-3554)
HTTP://WWW.GABELLI.COM
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1997
This Statement of Additional Information ("Additional Statement") relates to The
Gabelli Global Telecommunications Fund (the "Global Telecommunications Fund"),
The Gabelli Global Entertainment and Media Fund (the "Global Entertainment and
Media Fund"), The Gabelli Global Growth Fund (the "Global Growth Fund"), The
Gabelli Global Interactive Couch Potato(R) Fund (the "Global Interactive Couch
Potato(R) Fund") and The Gabelli Global Convertible Securities Fund (the "Global
Convertible Fund") (collectively, the "Funds"), each of which is a series of
Gabelli Global Series Funds, Inc., a Maryland corporation (the "Corporation"),
and is not a prospectus and is only authorized for distribution when preceded or
accompanied by the Funds' prospectus dated May 1, 1997, as supplemented from
time to time (the "Prospectus"). This Additional Statement contains information
in addition to that set forth in the Prospectus into which this document is
incorporated by reference and should be read in conjunction with the Prospectus.
Additional copies of this document may be obtained without charge by writing or
telephoning the Funds at the address and telephone number set forth above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Investments........................................................ B- 2
The Adviser........................................................ B-10
The Distributor.................................................... B-12
Directors and Officers............................................. B-13
Investment Restrictions............................................ B-16
Portfolio Transactions and Brokerage............................... B-16
Purchase and Redemption of Shares.................................. B-19
Dividends, Distributions and Taxes................................. B-19
Determination of Net Asset Value................................... B-21
Investment Performance Information................................. B-22
Counsel and Independent Auditors................................... B-23
Shares of Beneficial Interest...................................... B-24
</TABLE>
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THE FOLLOWING INFORMATION SUPPLEMENTS THAT IN THE PROSPECTUS
INVESTMENTS
Subject to each Fund's policy of investing at least 65% of its assets in the
appropriate securities of foreign and domestic companies, each Fund may invest
in any of the securities described below.
EQUITY SECURITIES
Because each Fund in seeking to achieve its respective investment objective may
invest in the common stocks of both domestic and foreign issuers, an investment
in a Fund should be made with an understanding of the risks inherent in any
investment in common stocks including the risk that the financial condition of
the issuers of each Fund's portfolio securities may become impaired or that the
general condition of the stock market may worsen (both of which may contribute
directly to a decrease in the value of the securities and thus in the value of a
Fund's Shares). Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by, the
issuer.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither a fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Fund's portfolio thus may be expected to fluctuate.
Preferred stocks are usually entitled to rights on liquidation which are senior
to those of common stocks. For these reasons, preferred stocks generally entail
less risk than common stocks. Such securities may pay cumulative dividends.
Because the dividend rate is pre-established, and they are senior to common
stocks, such securities tend to have less possibility of capital appreciation.
Some of the securities in the Funds may be in the form of depository receipts.
Depository receipts usually represent common stock or other equity securities of
non-U.S. issuers deposited with a custodian in a depository. The underlying
securities are usually withdrawable at any time by surrendering the depository
receipt. Depository receipts are usually denominated in U.S. dollars and
dividends and other payments from the issuer are converted by the custodian into
U.S. dollars before payment to receipt holders. In other respects depository
receipts for foreign securities have the same characteristics as the underlying
securities. Depository receipts that are not sponsored by the issuer may be less
liquid and there may be less readily available public information about the
issuer.
NONCONVERTIBLE FIXED INCOME SECURITIES
The category of fixed income securities which are not convertible or
exchangeable for common stock includes preferred stocks, bonds, debentures,
notes, asset and mortgage backed securities and money market instruments such as
commercial paper and bankers acceptances. There is no minimum credit
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rating for these securities in which the Funds may invest. Accordingly, each
Fund could invest in securities in default although no Fund will invest more
than 5% of its assets in such securities.
Up to 25% of each Fund's assets may be invested in lower quality debt securities
although each Fund does not expect to invest more than 10% of its assets in such
securities. The foregoing limitations do not apply to the Global Convertible
Securities Fund, which may invest in lower quality securities without limit. The
market values of lower quality fixed income securities tend to be less sensitive
to changes in prevailing interest rates than higher-quality securities but more
sensitive to individual corporate developments than higher-quality securities.
Such lower-quality securities also tend to be more sensitive to economic
conditions than are higher-quality securities. Accordingly, these lower-quality
securities are considered predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligation and will generally involve more credit risk than securities in the
higher-quality categories. Even securities rated Baa or BBB by Moody's Investor
Services, Inc. ("Moody's") and Standard & Poors Rating Group ("S&P")
respectively, which ratings are considered investment grade, possess some
speculative characteristics. There are risks involved in applying credit ratings
as a method for evaluating high yield obligations in that credit ratings
evaluate the safety of principal and interest payments, not market value risk.
In addition, credit rating agencies may not change credit ratings on a timely
basis to reflect changes in economic or company conditions that affect a
security's market value. The Funds will rely on the Adviser's judgment, analysis
and experience in evaluating the creditworthiness of an issuer. In this
evaluation, the Adviser will take into consideration, among other things, the
issuer's financial resources and ability to cover its interest and fixed
charges, factors relating to the issuer's industry and its sensitivity to
economic conditions and trends, its operating history, the quality of the
issuer's management and regulatory matters.
The risk of loss due to default by the issuer is significantly greater for the
holders of lower quality securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of lower quality securities may experience financial stress
and may not have sufficient revenues to meet their interest payment obligations.
An issuer's ability to service its debt obligations may also be adversely
affected by specific corporate developments, its inability to meet specific
projected business forecasts, or the unavailability of additional financing.
Factors adversely affecting the market value of high yield and other securities
will adversely affect the Funds' net asset value. In addition, each Fund may
incur additional expenses to the extent it is required to seek recovery upon a
default in the payment of principal of or interest on its portfolio holdings.
From time to time, proposals have been discussed regarding new legislation
designed to limit the use of certain high yield debt securities by issuers in
connection with leveraged buy-outs, mergers and acquisitions, or to limit the
deductibility of interest payments on such securities. Such proposals, if
enacted into law, could reduce the market for such debt securities generally,
could negatively affect the financial condition of issuers of high yield
securities by removing or reducing a source of future financing, and could
negatively affect the value of specific high yield issues and the high yield
market in general. For example, under a provision of the Internal Revenue Code
enacted in 1989, a corporate issuer may be limited from deducting all of the
original issue discount on high-yield discount obligations (i.e., certain types
of debt securities issued at a significant discount to their face amount). The
likelihood of passage of any additional legislation or the effect thereof is
uncertain.
The secondary trading market for lower-quality fixed income securities is
generally not as liquid as the secondary market for higher-quality securities
and is very thin for some securities. The relative lack of an active secondary
market may have an adverse impact on market price and each Fund's ability to
dispose of particular issues when necessary to meet liquidity needs or in
response to a specific economic event such as a deterioration in the
creditworthiness of the issuer. The relative lack of an active secondary market
for certain securities may also make it more difficult for each Fund to obtain
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accurate market quotations for purposes of valuing their respective portfolios.
Market quotations are generally available on many high yield issues only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales. During such times, the responsibility of the
Board of Directors to value the securities becomes more difficult and judgment
plays a greater role in valuation because there is less reliable, objective data
available.
CONVERTIBLE SECURITIES
Each of the Global Telecommunications Fund, the Global Entertainment and Media
Fund, the Global Growth Fund and the Global Interactive Couch Potato(R) Fund may
invest up to 25% of its assets in convertible securities rated, at the time of
investment, less than BBB by S&P or Baa by Moody's or are unrated but of
equivalent credit quality in the judgment of the Adviser. The Global Convertible
Securities Fund may invest in such securities without limit.
Some of the convertible securities in each Fund's portfolio may be "Pay-In-Kind"
securities. During a designated period from original issuance, the issuer of
such a security may pay dividends or interest to the holder by issuing
additional fully paid and nonassessable shares or units of the same or another
specified security.
SOVEREIGN DEBT SECURITIES
Each Fund may invest in securities issued or guaranteed by any country and
denominated in any currency. Each Fund (other than the Global Convertible
Securities Fund) expects that it generally will invest in developed countries
including Australia, Canada, Finland, France, Germany, the Netherlands, Japan,
Italy, New Zealand, Norway, Spain, Sweden, the United Kingdom and the United
States. The obligations of governmental entities have various kinds of
government support and include obligations issued or guaranteed by governmental
entities with taxing power. These obligations may or may not be supported by the
full faith and credit of a government. Debt securities issued or guaranteed by
foreign governmental entities have credit characteristics similar to those of
domestic debt securities but include additional risks. These additional risks
include those resulting from devaluation of currencies, future adverse political
and economic developments and other foreign governmental laws. The Global
Convertible Securities Fund may invest in securities issued by undeveloped or
emerging market countries, such as those in Latin America, Eastern Europe and
much of Southeast Asia. These securities are generally not considered investment
grade and have risks similar to those of other debt securities rated less than
investment grade. Such securities are regarded as predominantly speculative with
respect to an issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations and involve risk exposure to
adverse conditions.
Each Fund may also purchase securities issued by semi-governmental or
supranational agencies such as the Asian Development Bank, the International
Bank for Reconstruction and Development, the Export-Import Bank and the European
Investment Bank. The governmental members, or "stockholders," usually make
initial capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational entity
is unable to repay its borrowings. Each Fund will not invest more than 25% of
its assets in the securities of such supranational entities.
Each Fund may invest in securities denominated in a multi-national currency
unit. An illustration of a multi-national currency unit is the European Currency
Unit (the "ECU"), which is a "basket" consisting of specified amounts of the
currencies of the member states of the European Community, a Western European
economic cooperative organization that includes France, Germany, the
Netherlands, the United Kingdom and other countries. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers of the
European Community to reflect changes in relative values of
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the underlying currencies. Such investments involve credit risks associated with
the issuer and currency risks associated with the currency in which the
obligation is denominated.
SECURITIES SUBJECT TO REORGANIZATION
Each Fund may invest without limit 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
if, in the judgement of Gabelli Funds, Inc. (the "Adviser"), there is a
reasonable prospect of high total return significantly greater than the
brokerage and other transaction expenses involved.
In general, securities which 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 may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction but also the financial resources and
business motivation of the offeror and the dynamics and business climate when
the offer of proposal is in process. Since such investments are ordinarily
short-term in nature, they will tend to increase the turnover ratio of the Funds
thereby increasing its brokerage and other transaction expenses as well as make
it more difficult for the Fund to meet the tests for favorable tax treatment as
a "Regulated Investment Company" under the Internal Revenue Code of 1986, as
amended (the "Code") (see "Dividends, Distributions and Taxes" in the
Prospectus). The Adviser intends to select investments of the type described
which, in its view, have a reasonable prospect of capital appreciation which is
significant in relation to both risk involved and the potential of available
alternate investments as well as to monitor the effect of such investments on
the tax qualification test of the Code.
LOWER RATED SECURITIES
Securities which are not investment grade are viewed by rating agencies as being
predominantly speculative in character and are characterized by substantial risk
concerning payments of interest and principal, sensitivity to economic
conditions and changes in interest rates, as well as by market price volatility
and/or relative lack of secondary market trading among other risks and may
involve major risk exposure to adverse conditions or be in default. However,
each Fund does not expect to invest more than 5% of its assets in securities
which are in default at the time of investment and will invest in such
securities only when the Adviser expects that the securities will appreciate in
value. There is no minimum rating of securities in which the Funds may invest.
Securities rated less than BBB by S&P or Baa by Moody's or comparable unrated
securities are typically referred to as "junk bonds."
Lower rated securities are less sensitive to interest rate changes than other
fixed income investments but are more sensitive to broad economic changes and
individual corporate developments. The high yield securities market is
relatively new and periods of economic change can be expected to result in
increased market price volatility. As lower rated securities may be traded by a
smaller number of broker-dealers, it may be more difficult for the Corporation's
Board of Directors to value these securities and the Board's judgment will play
a greater role as less reliable, objective data is available.
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OPTIONS
Each Fund may purchase or sell options on individual securities as well as on
indices of securities as a means of achieving additional return or of hedging
the value of its portfolio.
A call option is a contract that gives the holder of the option the right, in
return for a premium paid, to buy from the seller the security underlying the
option at a specified exercise price at any time during the term of the option
or, in some cases, only at the end of the term of the option. The seller of the
call option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price. A put option is a
contract that gives the holder of the option the right in return for a premium
to sell to the seller the underlying security at a specified price. The seller
of the put option, on the other hand, has the obligation to buy the underlying
security upon exercise at the exercise price. The Fund's transactions in options
may be subject to specific segregation requirements. See "Hedging Transactions"
below.
If a Fund has sold 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 sold. There can be no assurance that a
closing purchase transaction can be effected when the Fund so desires.
The purchaser of an option risks a total loss of the premium paid for the option
if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. A Fund will not purchase
options if, as a result, the aggregate cost of all outstanding options exceeds
5% of such Fund's assets. To the extent that puts, straddles and similar
investment strategies involve instruments regulated by the Commodity Futures
Trading Commission, each Fund is limited to an investment not in excess of 5% of
its total assets.
WARRANTS AND RIGHTS
Each Fund may invest up to 5% of its 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.
WHEN ISSUED, DELAYED DELIVERY SECURITIES AND FORWARD COMMITMENTS
Each Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis in excess
of customary settlement periods for the type of security involved. 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 or 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 a Fund will only enter
into a forward commitment with the intention of actually acquiring the security,
such 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) accrues to a Fund prior to the
settlement date. The Funds will segregate with its custodian cash or liquid
securities with the Funds' custodian in an aggregate amount at least equal to
the amount of its outstanding forward commitments.
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SHORT SALES
Each Fund may make short sales of securities. A short sale is a transaction in
which a Fund sells a security it does not own in anticipation that the market
price of that security will decline. The Funds expect to make short sales both
to obtain capital gains from anticipated declines in securities and as a form of
hedging to offset potential declines in long positions in the same or similar
securities. The short sale of a security is considered a speculative investment
technique.
When a Fund makes a short sale, it must borrow the security sold short and
deliver it to the broker-dealer through which it made the short sale in order to
satisfy its obligation to deliver the security upon conclusion of the sale. The
Funds may have to pay a fee to borrow particular securities and are often
obligated to pay over any payments received on such borrowed securities.
The Funds' obligation to replace the borrowed security will be secured by
collateral deposited with the broker-dealer, usually cash, U.S. government
securities or other liquid securities. The Funds will also be required to
deposit similar collateral with its Custodian to the extent, if any, necessary
so that the value of both collateral deposits in the aggregate is at all times
equal to the greater of the price at which the security is sold short or 100% of
the current market value of the security sold short. Depending on arrangements
made with the broker-dealer from which it borrowed the security regarding
payment over of any payments received by a Fund on such security, such Fund may
not receive any payments (including interest) on its collateral deposited with
such broker-dealer. If the price of the security sold short increases between
the time of the short sale and the time a Fund replaces the borrowed security,
such Fund will incur a loss; conversely, if the price declines, such Fund will
realize a capital gain. Any gain will be decreased, and any loss increased, by
the transaction costs described above. Although a Fund's gain is limited to the
price at which it sold the security short, its potential loss is theoretically
unlimited.
The market value of the securities sold short of any one issuer will not exceed
either 5% of each Fund's total assets or 5% of such issuer's voting securities.
A Fund will not make a short sale, if, after giving effect to such sale, the
market value of all securities sold short exceeds 25% of the value of its assets
or such Fund's aggregate short sales of a particular class of securities exceeds
25% of the outstanding securities of that class. A Fund may also make short
sales "against the box" without respect to such limitations. In this type of
short sale, at the time of the sale, such Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.
RESTRICTED AND ILLIQUID SECURITIES
Each Fund may invest up to a total of 15% of its net assets in securities that
are subject to restrictions on resale and securities the markets for which are
illiquid. Illiquid securities include most of the securities the disposition of
which is subject to substantial legal or contractual restrictions. The sale of
illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the
over-the-counter markets. Restricted securities may sell at a price lower than
similar securities that are not subject to restrictions on resale. Securities
freely salable among qualified institutional investors under special rules
adopted by the Securities and Exchange Commission or otherwise determined to be
liquid may be treated as liquid if they satisfy liquidity standards established
by the Board of Directors. Unseasoned issuers are companies (including
predecessors) that have operated less than three years. 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. The Board
will review pertinent factors such as trading activity, reliability of price
information and trading patterns of comparable securities in determining whether
to treat any such security as liquid for purposes of the foregoing 15% test. To
the extent the Board treats such securities as liquid, temporary impairments to
trading patterns of such securities may adversely affect the Fund's liquidity.
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REPURCHASE AGREEMENTS
Each Fund may invest in repurchase agreements, which are agreements pursuant to
which securities are acquired by a Fund from a third party with the
understanding that they will be repurchased by the seller at a fixed price on an
agreed date. These agreements may be made with respect to any of the portfolio
securities in which a Fund is authorized to invest. Repurchase agreements may be
characterized as loans secured by the underlying securities. Each Fund may enter
into repurchase agreements with (i) member banks of the Federal Reserve System
having total assets in excess of $500 million and (ii) securities dealers,
provided that such banks or dealers meet the creditworthiness standards
established by the Fund's board of directors ("Qualified Institutions"). The
Adviser will monitor the continued creditworthiness of Qualified Institutions,
subject to the supervision of the Board of Directors. The resale price reflects
the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or date of maturity of the purchased security. The
collateral is marked to market daily. Such agreements permit a Fund to keep all
its assets earning interest while retaining "overnight" flexibility in pursuit
of investments of a longer-term nature.
The use of repurchase agreements involves certain risks. For example, if the
seller of securities under a repurchase agreement defaults on its obligation to
repurchase the underlying securities, as a result of its bankruptcy or
otherwise, a Fund will seek to dispose of such securities, which action could
involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, such
Fund's ability to dispose of the underlying securities may be restricted.
Finally, it is possible that a Fund may not be able to substantiate its interest
in the underlying securities. To minimize this risk, the securities underlying
the repurchase agreement will be held by the Funds' custodian at all times in an
amount at least equal to the repurchase price, including accrued interest. If
the seller fails to repurchase the securities, a Fund may suffer a loss to the
extent proceeds from the sale of the underlying securities are less than the
repurchase price. Each 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 15% of its net assets would be so
invested.
LOANS OF PORTFOLIO SECURITIES
To increase income, each Fund may lend its portfolio securities to securities
broker-dealers or financial institutions if (1) the loan is collateralized in
accordance with applicable regulatory requirements including collaterization
continuously at no less than 100% by marking to market daily, (2) the loan is
subject to termination by the Fund at any time, (3) the Fund receives reasonable
interest or fee payments on the loan, (4) the Fund is able to exercise all
voting rights with respect to the loaned securities and (5) the loan will not
cause the value of all loaned securities to exceed 33 1/3% of the value of the
Fund's assets.
If the borrower fails to maintain the requisite amount of collateral, the loan
automatically terminates and the Fund could use the collateral to replace the
securities while holding the borrower liable for any excess of replacement cost
over the value of the collateral. As with any extension of credit, there are
risks of delay in recovery and in some cases even loss of rights in collateral
should the borrower of the securities fail financially.
BORROWING
Each Fund may not borrow money except for (1) short-term credits from banks as
may be necessary for the clearance of portfolio transactions, and (2) borrowings
from banks for temporary or emergency purposes, including the meeting of
redemption requests, 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 each Fund's assets
after giving effect to the borrowing. Each Fund will not
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make additional investments when borrowings exceed 5% of assets. Each Fund may
mortgage, pledge or hypothecate assets to secure such borrowings.
HEDGING TRANSACTIONS
Futures Contracts. Each Fund may enter into futures contracts only for certain
bona fide hedging, yield enhancement and risk management purposes. Each Fund may
enter into futures contracts for the purchase or sale of debt securities, debt
instruments, or indices of prices thereof, stock index futures, other financial
indices, and U.S. Government Securities.
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 are settled on a net cash payment basis rather than by
the sale and delivery of the securities underlying the futures contracts. U.S.
futures contracts have been designed by exchanges that have been designated as
"contract markets" by the Commodity Futures Trading Commission (the "CFTC"), an
agency of the U.S. Government, and must be executed through a futures commission
merchant (i.e., a brokerage firm) which is a member of the relevant contract
market. Futures contracts trade on these contract markets and the market.
Futures contracts trade on these contract markets and the exchange's affiliated
clearing organization guarantees performance of the contracts as between the
clearing members of the exchange.
These contracts entail certain risks, including but not limited to the
following: no assurance that futures contracts transactions can be offset at
favorable prices, possible reduction of the Fund's yield due to the use of
hedging, possible reduction in value of both the securities hedged and the
hedging instrument, possible lack of liquidity due to daily limits on price
fluctuation, imperfect correlation between the contracts and the securities
being hedged, and potential losses in excess of the amount invested in the
futures contracts themselves.
Currency Transactions. Each Fund may enter into various currency transactions,
including forward foreign currency contracts, currency swaps, foreign currency
or currency index futures contracts and put and call options on such contracts
or on currencies. A forward foreign currency contract involves an obligation to
purchase or sell a specific currency for a set price at a future date. A
currency swap is an arrangement whereby each party exchanges one currency for
another on a particular date and agrees to reverse the exchange on a later date
at a specific exchange rate. Forward foreign currency contracts and currency
swaps are established in the interbank market conducted directly between
currency traders (usually large commercial banks or other financial
institutions) on behalf of their customers. Futures contracts are similar to
forward contracts except that they are traded on an organized exchange and the
obligations thereunder may be offset by taking an equal but opposite position to
the original contract, with profit or loss determined by the relative prices
between the opening and offsetting positions. Each Fund expects to enter into
these currency contracts and swaps in primarily the following circumstances: to
"lock in" the U.S. dollar equivalent price of a security the Fund is
contemplating to buy or sell that is denominated in a non-U.S. currency; or to
protect against a decline against the U.S. dollar of the currency of a
particular country to which the Fund's portfolio has exposure. The Fund
anticipates seeking to achieve the same economic result by utilizing from time
to time for such hedging a currency different from the one of the given
portfolio security as long as, in the view of the Adviser, such currency is
essentially correlated to the currency of the relevant portfolio security based
on historic and expected exchange rate patterns.
The Adviser may choose to use such instruments on behalf of the Funds depending
upon market conditions prevailing and the perceived investment needs of each
Fund. Futures contracts, interest rate
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swaps, and options on securities, indices and futures contracts and certain
currency contracts sold by the Funds are generally subject to segregation and
coverage requirement with the result that, if the Funds do not hold the security
or futures contract underlying the instrument, the Funds will be required to
segregate on an ongoing basis with its custodian, cash, U.S. government
securities, or other liquid securities in an amount at least equal to the Funds'
obligations with respect to such instruments. Such amounts fluctuate as the
obligations increase or decrease. The segregation requirement can result in the
Funds maintaining securities positions it would otherwise liquidate or
segregating assets at a time when it might be disadvantageous to do so.
THE ADVISER
The Adviser is a New York corporation with principal offices located at One
Corporate Center, Rye, New York 10580-1434.
Pursuant to separate Investment Advisory Contracts which were approved by each
respective Fund's sole shareholder on October 1, 1993 with respect to the Global
Telecommunications Fund, the Global Entertainment and Media Fund and the Global
Growth Fund, and on January 3, 1994 with respect to the Global Interactive Couch
Potato(R) Fund and the Global Convertible Securities Fund the Adviser furnishes
a continuous investment program for each Fund's portfolio, makes the day-to-day
investment decisions for the Funds, arranges the portfolio transactions for the
Funds and generally manages each Fund's investments in accordance with the
stated policies of each Fund, subject to the general supervision of the Board of
Directors of the Corporation.
Under the Investment Advisory Contract, the Adviser also (1) provides the Funds
with the services of persons competent to perform such supervisory,
administrative, and clerical functions as are necessary to provide efficient
administration of the Funds, including maintaining certain books and records and
overseeing the activities of the Fund's Custodian and Transfer Agent; (2)
oversees the performance of administrative and professional services provided to
the Funds by others, including the Funds' Custodian, Transfer Agent and Dividend
Disbursing Agent, as well as legal, accounting, auditing and other services
performed for the Funds; (3) provides the Funds, if requested, with adequate
office space and facilities: (4) prepares, but does not pay for, periodic
updating of the Funds' registration statement, Prospectus and Additional
Statement, including the printing of such documents for the purpose of filings
with the Securities and Exchange Commission; (5) supervises the calculation of
the net asset value of shares of the Funds; (6) prepares, but does not pay for,
all filings under state "Blue Sky" laws of such states or countries as are
designated by the Distributor, which may be required to register or qualify, or
continue the registration or qualification, of the Funds and/or its shares under
such laws; and (7) prepares notices and agendas for meetings of the Funds' Board
of Directors and minutes of such meetings in all matters required by the
Investment Company Act of 1940 (the "Act") to be acted upon by the Board.
The Adviser has entered into a Sub-Administration Contract with BISYS Fund
Services L.P. (the "Sub-Administrator") pursuant to which the Sub-Administrator
provides certain administrative services necessary for the Funds' operations but
which do not concern the investment advisory and portfolio management services
provided by the Adviser. For such services and the related expenses borne by the
Sub-Administrator, the Adviser pays a monthly fee at the annual rate of .10% of
the average daily net assets of each Fund (with a minimum annual fee of $40,000
and subject to reduction to .075% on average daily net assets of the Gabelli
Funds under its administration in excess of $350 million up to $600 million and
.06% in excess of $600 million) which, together with the services to be
rendered, is subject to negotiation between the parties and both parties retain
the right unilaterally to terminate the arrangement on not less than 60 days'
notice.
- --------------------------------------------------------------------------------
B-10
<PAGE> 38
- --------------------------------------------------------------------------------
The Investment Advisory Contracts provide that absent willful misfeasance, bad
faith, gross negligence or reckless disregard of its duty, the Adviser and its
employees, officers, directors and controlling persons are not liable to the
Funds or any of their investors for any act or omission by the Adviser or for
any error of judgment or for losses sustained by the Funds. However, the
Contracts provide that the Funds are not waiving any rights it may have with
respect to any violation of law which cannot be waived. The Contracts also
provide indemnification for the Adviser and each of these persons for any
conduct for which they are not liable to the Funds. The Investment Advisory
Contracts in no way restrict the Adviser from acting as adviser to others. Each
Fund has agreed by the terms of its Investment Advisory Contract that the word
"Gabelli" in its name is derived from the name of the Adviser which in turn is
derived from the name of Mario J. Gabelli; that such name is the property of the
Adviser for copyright and/or other purposes; and that therefore, such name may
freely be used by the Adviser for other investment companies, entities or
products. Each Fund has further agreed that in the event that for any reason,
the Adviser ceases to be its investment adviser, it will, unless the Adviser
otherwise consents in writing, promptly take all steps necessary to change its
name to one which does not include "Gabelli."
Each Investment Advisory Contract is terminable without penalty by the
Corporation on not more than sixty days' written notice when authorized by the
Directors of the Corporation, by the holders of a majority, as defined in the
Act, of the outstanding shares of the Corporation, or by the Adviser. Each
Investment Advisory Contract will automatically terminate in the event of its
assignment, as defined in the Act and rules thereunder except to the extent
otherwise provided by order of the Commission or any rule under the Act and
except to the extent the Act no longer provides for automatic termination, in
which case the approval of a majority of the disinterested directors is required
for any "assignment." Each Investment Advisory Contract provides in effect, that
unless terminated it will remain in effect from year to year so long as
continuance of the Investment Advisory Contract is approved annually by the
Directors, or the shareholders of each Fund and in either case, by a majority
vote of the Directors who are not parties to the Investment Advisory Contract or
"interested persons" as defined in the Act of any such person cast in person at
a meeting called specifically for the purpose of voting on the continuance of
the Investment Advisory Contract.
Each Investment Advisory Contract also provides that the Adviser is obligated to
reimburse to each Fund any amount up to the amount of its advisory fee by which
its aggregate expenses including advisory fees payable to the Adviser (but
excluding interest, taxes, Rule 12b-1 expenses, brokerage commissions,
extraordinary expenses and any other expenses not subject to any applicable
expense limitation) during the portion of any fiscal year in which the Contract
is in effect exceed the most restrictive expense limitation imposed by the
securities law of any jurisdiction in which shares of each Fund are registered
or qualified for sale. For purposes of this expense limitation each Fund's
expenses are accrued monthly and the monthly fee otherwise payable to the
Adviser postponed to the extent that each Fund's includable expenses to date
exceed the proportionate amount of such limitation to date.
For the fiscal years ended December 31, 1994, 1995 and 1996, the Adviser
received advisory fees of $1,233,454, $1,285,648 and $1,195,023, respectively,
from The Gabelli Global Telecommunications Fund.
During the period February 7, 1994 (Commencement of Operations) through December
31, 1994 and for the years ended December 31, 1995 and 1996, the Adviser
received advisory fees of $174,399, $289,830 and $349,604, respectively, from
The Gabelli Global Interactive Couch Potato(R) Fund.
During the period February 3, 1994 (Commencement of Operations) through December
31, 1994 and for the years ended December 31, 1995 and 1996, the Adviser
received advisory fees of $86,233, $170,164 and $156,876, respectively, from The
Gabelli Global Convertible Securities Fund.
- --------------------------------------------------------------------------------
B-11
<PAGE> 39
- --------------------------------------------------------------------------------
THE DISTRIBUTOR
The Corporation on behalf of each Fund has entered into a Distribution Agreement
with Gabelli & Company, Inc. (the "Distributor"), a New York corporation which
is a subsidiary of Gabelli Funds, Inc., having principal offices located at One
Corporate Center, Rye, New York 10580-1434. The Distributor acts as agent of
each Fund for the continuous offering of their shares on a best efforts basis.
The Distribution Agreement is terminable by the Distributor or the Corporation
at any time without penalty on not more than sixty nor less than thirty days'
written notice, provided, that termination by the Corporation must be directed
or approved by the Board of Directors of the Corporation, by the vote of the
holders of a majority of the outstanding securities of the Corporation, or by
written consent of a majority of the directors who are not interested persons of
the Corporation or the Distributor. The Distribution Agreement will
automatically terminate in the event of its assignment, as defined in the Act.
The Distribution Agreement provides that, unless terminated, it will remain in
effect from year to year, so long as continuance of the Distribution Agreement
is approved annually by the Corporation's Board of Directors or by a majority of
the outstanding voting securities of the Corporation, and in either case, also
by a majority of the Directors who are not interested persons of the Corporation
or the Distributor with respect to the Global Telecommunications Fund, the
Global Entertainment and Media Fund, the Global Growth Fund, the Global
Interactive Couch Potato(R) Fund and the Global Convertible Securities Fund.
During the fiscal year ended December 31, 1996, The Gabelli Global
Telecommunications Fund paid distribution expenses under the Distribution Plan
of $298,817. Of this amount, $25,200 was spent on printing, postage and
stationery, $163,917 on overhead support expenses and $109,700 on salaries of
personnel of the Distributor.
During the year ended December 31, 1996, The Gabelli Global Interactive Couch
Potato(R) Fund paid distribution expenses under the Distribution Plan of
$87,392. Of this amount, $19,800 was spent on advertising, $18,200 on printing,
postage and stationery, $7,508 on overhead support expenses and $56,900 on
salaries of personnel of the Distributor.
During the year ended December 31, 1996, The Gabelli Global Convertible
Securities Fund paid distribution expenses under the Distribution Plan of
$39,227. Of this amount, $600 was spent on advertising, $11,900 on printing,
postage and stationery, $6,827 on overhead support expenses and $19,900 on
salaries of personnel of the Distributor.
- --------------------------------------------------------------------------------
B-12
<PAGE> 40
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
The Directors and Executive Officers of the Corporation, their principal
business occupations during the last five years and their affiliations, if any,
with the Adviser or the Administrator, are shown below. Directors deemed to be
"interested persons" of any Fund for purposes of the Investment Company Act of
1940 are indicated by an asterisk.
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS;
ADDRESS AFFILIATIONS WITH THE ADVISER OR ADMINISTRATOR.
- --------------------------------- ----------------------------------------------------------
<S> <C>
Mario J. Gabelli *............... Chairman, Chief Executive Officer, Chief Investment
Chairman of the Board Officer and a Director of Gabelli Funds, Inc., the Adviser
One Corporate Center and the indirect parent of Gabelli & Company, Inc., the
Rye, New York 10580 Distributor; Chairman and Chief Investment Officer of
Age: 54 GAMCO Investors, Inc.; President and Chairman of The
Gabelli Equity Trust Inc. and The Gabelli Global
Multimedia Trust Inc.; Director of Gabelli Equity Series
Funds, Inc., Gabelli Investor Funds, Inc., The Gabelli
Capital Series Funds, Inc., The Gabelli Value Fund Inc.,
The Gabelli Convertible Securities Fund, Inc. and The
Treasurer's Fund, Inc.; and Trustee of The Gabelli Asset
Fund, The Gabelli Growth Fund and The Gabelli Money Market
Funds; Chairman and Director of Lynch Corporation.
Felix J. Christiana.............. Formerly Senior Vice President of Dry Dock Savings Bank.
Director Director of Gabelli Equity Series Funds, Inc., The Gabelli
One Corporate Center Value Fund Inc., The Gabelli Convertible Securities Fund,
Rye, New York 10580 Inc., The Gabelli Equity Trust Inc., The Gabelli Global
Age: 72 Multimedia Trust Inc. and The Treasurer's Fund, Inc.; and
a Trustee of The Gabelli Asset Fund and The Gabelli Growth
Fund.
Anthony J. Colavita.............. President and Attorney at law in the law firm of Anthony
Director J. Colavita, P.C. since 1961; Director of The Gabelli
One Corporate Center Value Fund Inc., Gabelli Investor Funds, Inc., The Gabelli
Rye, New York 10580 Convertible Securities Fund, Inc., The Gabelli Capital
Age: 61 Series Funds, Inc., Gabelli International Growth Fund,
Inc., Gabelli Gold Fund, Inc., The Treasurer's Fund, Inc.
and Gabelli Equity Series Funds, Inc.; Trustee of The
Gabelli Asset Fund, The Gabelli Money Market Funds, The
Gabelli Growth Fund and The Westwood Funds.
John D. Gabelli*................. Vice President of Gabelli & Company, Inc. Director of
Director Gabelli Equity Series Funds, Inc. Manager of Teton
One Corporate Center Advisors LLC.
Rye, New York 10580
Age: 52
</TABLE>
- --------------------------------------------------------------------------------
B-13
<PAGE> 41
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS;
ADDRESS AFFILIATIONS WITH THE ADVISER OR ADMINISTRATOR.
- --------------------------------- ----------------------------------------------------------
<S> <C>
Karl Otto Pohl*.................. Partner of Sal Oppenheim Jr. & Cie. (private investment
Director bank); Former President of the Deutsche Bundesbank
One Corporate Center (Germany's Central Bank) and Chairman of its Central Bank
Rye, New York 10580 Council (1980-1991); Currently board member of IBM World
Age: 66 Trade Europe/Middle East/ Africa Corp.; Bertelsmann AG;
Zurich Versicherungs-Gesellshaft (insurance); the
International Advisory Board of General Electric Company;
the International Council for JP Morgan & Co.; the Board
of Supervisory Directors of ROBECo/o Group; and the
Supervisory Board of Royal Dutch (petroleum company);
Advisory Director of Unilever N.V. and Unilever
Deutschland; German Governor, International Monetary Fund
(1980-1991); Board Member, Bank for International
Settlements (1980-1991); Chairman, European Economic
Community Central Bank Governors (1990-1991);
Director/Trustee of all Funds managed by the Adviser and
The Treasurer's Fund, Inc.
Werner Roeder, M.D............... Director of Surgery, Lawrence Hospital and practicing
Director private physician. Director of Gabelli Investor Funds,
One Corporate Center Inc., The Gabelli Capital Series Funds, Inc., Gabelli
Rye, New York 10580 International Growth Fund, Inc., Gabelli Gold Fund, Inc.;
Age: 56 and Trustee of the Westwood Funds.
Anthonie C. van Ekris............ Managing Director of Balmac International Ltd. Director of
Director Stahal Hardmayer A.Z. (through present). Trustee of The
One Corporate Center Gabelli Asset Fund, The Gabelli Growth Fund and The
Rye, New York 10580 Gabelli Money Market Funds. Director of The Gabelli
Age: 62 Convertible Securities Fund, Inc., The Gabelli Capital
Series Funds, Inc., Gabelli International Growth Fund,
Inc., Gabelli Gold Fund, Inc., Gabelli Investor Funds,
Inc., Gabelli Equity Series Funds, Inc. and The
Treasurer's Fund, Inc.
Bruce N. Alpert.................. Vice President and Chief Operating Officer of the
Vice President and Treasurer investment advisory division of the Adviser; Vice
One Corporate Center President and Treasurer of The Gabelli Equity Trust Inc.,
Rye, New York 10580 The Gabelli Global Multimedia Trust Inc., The Gabelli
Age: 45 Convertible Securities Fund, Inc., Gabelli Equity Series
Funds, Inc., Gabelli Gold Fund, Inc., Gabelli Capital
Series Funds, Inc., Gabelli International Growth Fund,
Inc., Gabelli Global Series Funds, Inc., The Gabelli Money
Market Funds, The Gabelli Value Fund Inc.; President and
Treasurer of The Gabelli Asset Fund and The Gabelli Growth
Fund. Vice President of The Westwood Funds and Manager of
Teton Advisers LLC.
Mr. A. Hartswell Woodson III..... Portfolio Manager for the Adviser since 1993. Employed by
Vice President -- Portfolio ABN Ambro Bank N.V. from 1988-1993.
Manager
One Corporate Center
Rye, New York 10580
Age: 39
</TABLE>
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B-14
<PAGE> 42
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME, POSITION WITH FUND AND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS;
ADDRESS AFFILIATIONS WITH THE ADVISER OR ADMINISTRATOR.
- --------------------------------- ----------------------------------------------------------
<S> <C>
James E. McKee................... Vice President and General Counsel of GAMCO Investors,
Secretary Inc. since 1993 and of Gabelli Funds, Inc. since August
One Corporate Center 1995; Secretary of all Funds advised by Gabelli Funds,
Rye, New York 10580 Inc. and Teton Advisers LLC since August 1995. Branch
Age: 33 Chief with the U.S. Securities and Exchange Commission in
New York 1992 through 1993. Staff attorney with the U.S.
Securities and Exchange Commission in New York from 1989
through 1992.
</TABLE>
The Corporation pays each Director who is not an employee of the Adviser or an
affiliated company an annual fee of $1,500 and $500 for each meeting of the
Board of Directors attended by the Director, and reimburses Directors for
certain travel and other out-of-pocket expenses incurred by them in connection
with attending such meetings. Directors and officers of each Fund who are
employed by the Adviser or an affiliated company receive no compensation or
expense reimbursement from the Corporation. The following table sets forth
certain information regarding the compensation of the Fund's directors and
officers. Except as disclosed below, no executive officer or person affiliated
with the Fund received compensation from the Fund for the calendar year ended
December 31, 1996 in excess of $60,000.
COMPENSATION TABLE
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM REGISTRANT
NAME OF PERSON, FROM REGISTRANT AND FUND COMPLEX
POSITION FOR FISCAL YEAR PAID TO DIRECTORS
- ---------------------------------------------------------- --------------- ------------------
<S> <C> <C>
Mario J. Gabelli.......................................... $ 0 $ 0
President, Director and Chief Investment Officer
Felix J. Christiana....................................... $ 3,500 $ 74,000(10)
Director
Anthony J. Colavita....................................... $ 3,500 $ 70,000(14)
Director
John D. Gabelli........................................... $ 0 $ 0
Director
Karl Otto Pohl............................................ $ 3,500 $ 77,750(16)
Director
Werner Roeder, M.D........................................ $ 3,500 $ 14,500(7)
Director
Anthonie C. van Ekris..................................... $ 3,500 $ 49,000(12)
Director
</TABLE>
- ---------------
* Represents the total compensation paid to such persons during the calendar
year ending December 31, 1996 (and, with respect to the Fund Complex). The
parenthetical number represents the number of investment companies (including
the Corporation) from which such person receives compensation that are
considered part of the same fund complex as the Corporation, because, among
other things, they have a common investment adviser.
- --------------------------------------------------------------------------------
B-15
<PAGE> 43
- --------------------------------------------------------------------------------
INVESTMENT RESTRICTIONS
Each Fund's investment objective and the following investment restrictions are
fundamental and cannot be changed without the approval of the holders of a
majority of each Fund's outstanding voting securities (defined in the 1940 Act
as the lesser of (a) more than 50% of the outstanding shares or (b) 67% or more
of the shares represented at a meeting at which more than 50% of the outstanding
shares are represented). All other investment policies or practices are
considered by each Fund not to be fundamental and accordingly may be changed
without stockholder approval. If a percentage restriction on investment or use
of assets set forth below is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing market values or total
assets of each Fund will not be considered a deviation from policy. No Fund may:
(1) issue senior securities, except that each Fund may borrow money,
including on margin if margin securities are owned and enter into
reverse repurchase agreements in an amount up to 33 1/3% of its
total assets (including the amount of such enumerated senior
securities issued but excluding any liabilities and indebtedness
not constituting senior securities) and except that each Fund may
borrow up to an additional 5% of its total assets for temporary
purposes; or pledge its assets other than to secure such issuances
or in connection with hedging transactions, short sales,
when-issued and forward commitment transactions and similar
investment strategies. Each Fund's obligations under reverse
repurchase agreements and the foregoing investment strategies are
not treated as senior securities;
(2) make loans of money or property to any person, except through
loans of portfolio securities, the purchase of fixed income
securities or the acquisition of securities subject to repurchase
agreements;
(3)underwrite the securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities or
the sale of its own shares a Fund may be deemed to be an
underwriter;
(4) invest for the purpose of exercising control over management of
any company;
(5) purchase real estate or interests therein, including limited
partnerships that invest primarily in real estate equity
interests, other than mortgage-backed securities, publicly traded
real estate investment trusts and similar instruments; or
(6) purchase or sell commodities or commodity contracts except for
certain bona fide hedging, yield enhancement and risk management
purposes or invest in any oil, gas or mineral interests.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is authorized on behalf of each Fund to employ brokers to effect the
purchase or sale of portfolio securities with the objective of obtaining prompt,
efficient and reliable execution and clearance of such transactions at the most
favorable price obtainable ("best execution") at reasonable expense.
Transactions in securities other than those for which a securities exchange is
the principal market are generally done through a principal market maker.
However, such transactions may be effected through a brokerage firm and a
commission paid whenever it appears that the broker can obtain a more favorable
overall price. In general, there may be no stated commission in the case of
securities traded on the over-the-counter markets, but the prices of those
securities may include undisclosed commissions or markups. Options transactions
will usually be effected through a broker and a commission will be charged. Each
Fund also expects that securities will be purchased at times in underwritten
offerings where the price includes a fixed amount of compensation generally
referred to as the underwriter's concession or discount.
- --------------------------------------------------------------------------------
B-16
<PAGE> 44
- --------------------------------------------------------------------------------
The Adviser currently serves as Adviser to a number of investment company
clients and may in the future act as adviser to others. Affiliates of the
Adviser act as investment adviser to numerous private accounts. It is the
practice of the Adviser and its affiliates to cause purchase and sale
transactions to be allocated among each Fund and others whose assets they manage
in such manner as it deems equitable. In making such allocations among each 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 each Fund and other client accounts.
The policy of each Fund regarding purchases and sales of securities and options
for its portfolio is that primary consideration will be given to obtaining the
most favorable prices and efficient execution of transactions. In seeking to
implement each Fund's policies, the Adviser effects transactions with those
brokers and dealers who the Adviser believes provide the most favorable prices
and are capable of providing efficient executions. If the Adviser believes such
price and execution are obtainable from more than one broker or dealer, it may
give consideration to placing portfolio transactions with those brokers and
dealers who also furnish research and other services to each Fund or the Adviser
of the type described in Section 28(e) of the Securities Exchange Act of 1934.
In doing so, each Fund may also pay higher commission rates than the lowest
available when the Adviser believes it is reasonable to do so in light of the
value of the brokerage and research services provided by the broker effecting
the transaction. Such services may include, but are not limited to, any one or
more of the following: information as to the availability of securities for
information as to the availability of securities for purchase or sale:
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers, Inc. and an affiliate of the
Adviser, when it appears that, as an introducing broker or otherwise, Gabelli
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. The Adviser may also consider sales of
shares of each Fund and any other registered investment companies managed by the
Adviser and its affiliates by brokers and dealers other than the Distributor as
a factor in its selection of brokers and dealers to execute portfolio
transactions for each Fund.
As required by Rule 17e-1 under the Act, the Board of Directors of each Fund has
adopted "Procedures" which provide that the commissions paid to Gabelli on stock
exchange transactions may not exceed that which would have been charged by
another qualified broker or member firm able to effect the same or a comparable
transaction at an equally favorable price. Rule 17e-1 and the Procedures contain
requirements that the Boards, including independent Directors, conduct periodic
compliance reviews of such brokerage allocations and review such schedule at
least annually for its continuing compliance with the foregoing standard. The
Adviser and Gabelli are also required to furnish reports and maintain records in
connection with such reviews.
- --------------------------------------------------------------------------------
B-17
<PAGE> 45
- --------------------------------------------------------------------------------
The following chart shows brokerage commissions paid by the Adviser on behalf of
each Fund, the amount and percentage of commissions paid by each Fund to Gabelli
& Company, Inc. and the percentage of all transactions involving the payment of
commissions to Gabelli & Company, Inc.
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund......... $ 180,768 $ 105,853 $49,410
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc........ $ 58,812 $ 34,089 $16,320
% of aggregate brokerage commissions.... 32.5% 32.2% 33.0%
% of transactions effected through
Gabelli & Company, Inc................ 47.8% 36.9% 28.0%
</TABLE>
THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
<TABLE>
<CAPTION>
FEBRUARY 7, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
------------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund........ $22,853 $42,378 $67,823
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc....... $ 5,040 $ 2,480 $ 8,486
% of aggregate brokerage commissions... 8.2% 8.0% 12.5%
% of transactions effected through
Gabelli & Company, Inc............... 7.4% 6.3% 12.8%
</TABLE>
THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
FEBRUARY 3, 1994
(COMMENCEMENT OF
OPERATIONS) THROUGH FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1996
------------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund........ $22,853 $42,378 $21,357
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc....... -- $ 670 $ 50
% of aggregate brokerage commissions... -- 2.0% 0.23%
% of transactions effected through
Gabelli & Company, Inc............... -- 1.5% 0.04%
</TABLE>
To obtain the best execution of portfolio trades on the New York Stock Exchange
("Exchange"), Gabelli controls and monitors the execution of such transactions
on the floor of the Exchange through independent "floor brokers" or through the
Designated Order Turnaround ("DOT") System of the Exchange. Such transactions
are then cleared, confirmed to the Fund for the account of Gabelli, and settled
directly with the Custodian of each Fund by a clearing house member firm which
remits the commission less its clearing charges to Gabelli. Gabelli may also
effect portfolio transactions on behalf of each Fund in the
- --------------------------------------------------------------------------------
B-18
<PAGE> 46
- --------------------------------------------------------------------------------
same manner and pursuant to the same arrangements on other national securities
exchanges which adopt direct access rules similar to those of the New York Stock
Exchange.
PURCHASE AND REDEMPTION OF SHARES
Cancellation of purchase orders for shares of any Fund (as, for example, when
checks submitted to purchase shares are returned unpaid) cause a loss to be
incurred when the net asset value of that Fund's shares on the date of
cancellation is less than on the original date of purchase. The investor is
responsible for such loss, and that Fund may reimburse shares from any account
registered in that shareholder's name, or by seeking other redress. If that Fund
is unable to recover any loss to itself, it is the position of the SEC that the
Distributor will be immediately obligated to make that Fund whole.
To minimize expenses, the Fund reserves the right to redeem, upon not less than
30 days' notice, all shares of the Fund in an account (other than an IRA) which
as a result of shareholder redemption has a value below $500 and has reserved
the ability to raise this amount to up to $10,000. However, a shareholder will
be allowed to make additional investments prior to the date fixed for redemption
to avoid liquidation of the account.
DIVIDENDS, DISTRIBUTIONS AND TAXES
GENERAL
Each Fund will determine either to distribute or to retain all or part of any
net long-term capital gains in any year for reinvestment. If any such gains are
retained by any Fund, that Fund will be subject to a tax of 34% of such amount.
In that event, each Fund expects that it will designate the retained amount as
undistributed capital gains in a notice to its shareholders, each of whom (1)
will be required to include in income for tax purposes as long-term capital
gains, its share of undistributed amount, (2) will be entitled to credit its
proportionate share of the tax paid by that Fund against its Federal income tax
liability and to claim refunds to the extent the credit exceeds such liability,
and (3) will increase its basis in its shares of that Fund by an amount equal to
66% of the amount of undistributed capital gains included in such shareholder's
gross income.
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, each Fund must distribute during each calendar year, an
amount equal to, at the minimum, 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, (unless an election is made by a fund
with a November or December year-end to use the Fund's fiscal 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 a Fund in
October, November or December of the year, payable to shareholders of record on
a date during such month and paid by that Fund during January of the following
year. Any such distributions paid during January of the following year will be
deemed to be received on December 31 of the year the distributions are declared,
rather than when the distributions are received.
Gains or losses on the sales of securities by each 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.
Each Fund intends to qualify as a regulated investment company under Subchapter
M of the Code. If so qualified, each Fund will not be subject to Federal income
tax on its net investment income and net
- --------------------------------------------------------------------------------
B-19
<PAGE> 47
- --------------------------------------------------------------------------------
short-term capital gains, if any, realized during any fiscal year in which it
distributes such income and capital gains to its shareholders.
HEDGING TRANSACTIONS
Certain options, futures contracts and options on futures contracts are "section
1256 contracts". Any gains or losses on section 1256 contracts are generally
considered 60% long-term and 40% short-term capital gains or losses ("60/40").
Also, section 1256 contracts held by each Fund at the end of each taxable year
are "marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized and the resulting gain or loss is treated
as 60/40 gain or loss.
Generally, the hedging transactions undertaken by each Fund may result in
"straddles" for U.S. Federal income tax purposes. The straddle rules may affect
the character of gains (or losses) realized by each Fund. In addition, losses
realized by each Fund on positions that are part of a straddle may be deferred
under the straddle rules, rather than being taken into account in calculating
the taxable income for the taxable year in which such losses are realized.
Further, each Fund may be required to capitalize, rather than deduct currently,
any interest expense on indebtedness incurred or continued to purchase or carry
any positions that are part of a straddle. Because only a few regulations
implementing the straddle rules have been promulgated, the tax consequences of
hedging transactions to each Fund are not entirely clear.
Each Fund may make one or more of the elections available under the Code which
are applicable to straddles. If a Fund makes any of the elections, the amount,
character and timing of the recognition of gains or losses from the affected
straddle positions will be determined under rules that vary according to the
election(s) made. The rules applicable under certain of the elections accelerate
the recognition of gains or losses from the affected straddle positions.
Because application of the straddle rules may affect the character of gains or
losses, defer losses and/ or accelerate the recognition of gains or losses from
the affected straddle positions, and require the capitalization of interest
expense, the amount which must be distributed to shareholders, and which will be
taxed to shareholders as ordinary income or long-term capital gain, may be
increased or decreased substantially as compared to a fund that did not engage
in such hedging transactions.
The 30% limitation and the diversification requirements applicable to each
Fund's assets may limit the extent to which each Fund will be able to engage in
transactions in options, futures contracts and options on futures contracts.
DISTRIBUTIONS
Distributions of investment company taxable income (which includes taxable
interest income and the excess of net short-term capital gains over long-term
capital losses) are taxable to a U.S. shareholder as ordinary income, whether
paid in cash or shares. Dividends paid by each Fund will qualify for the 70%
deduction for dividends received by corporations to the extent each Fund's
income consists of qualified dividends received from U.S. corporations.
Distributions of net capital gains (which consists of the excess of 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, 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 each Fund
equal to the fair market value of such shares on the distribution date. If the
net asset value of shares is reduced below a shareholder's cost as a result of a
distribution by a Fund, such distribution will be taxable even though it
represents a return of invested capital. The price of shares purchased at this
time may reflect the amount of the forthcoming distribution. Those purchasing
just prior to a distribution will receive a distribution which will nevertheless
be taxable to them.
- --------------------------------------------------------------------------------
B-20
<PAGE> 48
- --------------------------------------------------------------------------------
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. Such 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 any Fund's shares held by the
shareholder for six months or less will be greater for tax purposes as a
long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
BACKUP WITHHOLDING
The Corporation may be required to withhold Federal income tax at the rate of
31% of all taxable distributions payable to shareholders who fail to provide the
Fund or Funds in which they invest with their correct taxpayer identification
number or to make required certifications, or who have been notified by the
Internal Revenue Service that they are subject to backup withholding. Backup
withholding is not an additional tax. Any amounts withheld may be credited
against a shareholder's Federal income tax liability.
FOREIGN WITHHOLDING TAXES
Income received by each Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of each Fund's assets to be invested in various
countries is not known. Because each Fund may have more than 50% of its total
assets invested in securities of foreign governments or corporations, each Fund
may be entitled to "pass-through" to shareholders the amount of foreign taxes
paid by each Fund. Shareholders are urged to consult their attorneys or tax
advisers regarding specific questions as to Federal, state or local taxes.
The Corporation reserves the right to create and issue a number of series
shares, in which case the shares of each series would participate equally in the
earnings, dividends, and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Directors, principal underwriters and auditors and on any proposed material
amendment to the Corporation's Certificate of Incorporation.
Upon liquidation of the Corporation or any series, shareholders of the affected
series would be entitled to share pro rata in the net assets of their respective
series available for distribution to such shareholders.
DETERMINATION OF NET ASSET VALUE
For purposes of determining each Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected at the close
of the regular trading session of the New York Stock Exchange 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 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. Readily marketable securities not
listed on
- --------------------------------------------------------------------------------
B-21
<PAGE> 49
- --------------------------------------------------------------------------------
the New York Stock Exchange but listed on other national securities exchanges or
admitted to trading on the National Association of Securities Dealers Automated
Quotations, Inc. ("NASDAQ") National List are valued in like manner. Portfolio
securities traded on more than one national securities exchange are valued at
the last sale price on the business day as of which such value is being
determined as reflected on the tape at the close of the exchange representing
the principal market for such securities.
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.
United States Government obligations and other debt instruments having sixty
days or less remaining until maturity are stated at amortized cost, which
approximates value. 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 Board of Directors designed to reflect in good faith the
fair value of such securities.
As indicated in the Prospectus, the net asset value per share of each Fund's
shares will be determined on each day that the New York Stock Exchange is open
for trading. That Exchange annually announces the days on which it will not be
open for trading; the most recent announcement indicates that it will not be
open on the following days: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, that Exchange may close on days not included in that announcement.
INVESTMENT PERFORMANCE INFORMATION
Each Fund may furnish data about its investment performance in advertisements,
sales literature and reports to shareholders. "Total return" represents the
annual percentage change in value of $1,000 invested at the maximum public
offering price for the one year period and the life of each Fund through the
most recent calendar quarter, assuming reinvestment of all dividends and
distributions. Each Fund may also furnish total return calculations for these
and other periods, based on investments at various sales charge levels or net
asset value. Any performance data which is based on each Fund's net asset value
per share would be reduced if a sales charge were taken into account.
Quotations of yield will be based on the investment income per share earned
during a particular 30 day period, less expenses accrued during the period ("net
investment income") and will be computed by dividing net investment income by
the maximum offering price per share on the last day of the period, according to
the following formula:
a - b
------
YIELD = 2[(cd - 1)(6) - 1]
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of any reimbursements), c = the average daily number of
shares outstanding during the period that were entitled to receive dividends,
and d = the maximum offering price per share on the last day of the period. With
respect to The Gabelli Global Convertible Securities Fund for the 30-day period
ended December 30, 1996, the Fund's yield was 1.21%. With respect to The Gabelli
Global Telecommunication Fund for the 30-day period ended December 30, 1996, the
Fund's yield was .20%. With respect to The Gabelli Global Interactive Couch
Potato(R) Fund for the 30-day period ended December 30, 1996, the Fund's yield
was (3.18)%.
- --------------------------------------------------------------------------------
B-22
<PAGE> 50
- --------------------------------------------------------------------------------
Quotations of total return will reflect only the performance of a hypothetical
investment in any Fund during the particular time period shown. Each Fund's
total return and current yield may vary from time to time depending on market
conditions, the compositions of its portfolio and operating expenses. These
factors and possible differences in the methods used in calculating yield should
be considered when comparing each Fund's current yield to yields published for
other investment companies and other investment vehicles. Total return and yield
should also be considered relative to change in the value of each Fund's shares
and the risks associated with each Fund's investment objectives and policies. At
any time in the future, total returns and yield may be higher or lower than past
total returns and yields and there can be no assurance that any historical
return or yield will continue.
From time to time evaluations of performance are made by independent sources
that may be used in advertisements concerning each Fund. These sources include:
Lipper Analytical Services, CDA/Weisenberger Investment Company Service,
Barron's, Business Week, Kiplinger's Personal Finance, Financial World, Forbes,
Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance, Bank Rate
Monitor, Morningstar and The Wall Street Journal.
In connection with communicating its yield or total return to current or
prospective shareholders, each Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.
Quotations of each Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in each Fund over periods
of 1, 5, and 10 years (up to the life of each Fund), and are calculated pursuant
to the following formula:
P (1+T)(n) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser) on an annual basis, and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed. The table below displays the total returns for the
year ended December 31, 1996.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
SINCE
FUND TOTAL RETURN INCEPTION
- ---------------------------------------------------------------- ------------ --------------
<S> <C> <C>
Global Telecommunications....................................... 9.0% 7.5%
Global Convertible Securities................................... 5.5% 6.4%
Global Interactive Couch Potato(R).............................. 12.5% 11.2%
</TABLE>
COUNSEL AND INDEPENDENT AUDITORS
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, serves as counsel to the Fund.
Grant Thornton LLP, 7 Hanover Square, New York, New York 10004-2616, have been
appointed independent auditors for the Fund.
- --------------------------------------------------------------------------------
B-23
<PAGE> 51
- --------------------------------------------------------------------------------
SHARES OF BENEFICIAL INTEREST
As of April 2, 1997, the Officers and Directors of the Fund as a group owned
1.5% of the outstanding shares of the Funds.
As of April 2, 1997, the following persons were 5% or greater shareholders of
the Funds:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
FUND/SHAREHOLDER OUTSTANDING
- ----------------------------------------------------------------- -------------------------
<S> <C>
The Gabelli Global Interactive Couch Potato(R) Fund/
Jupiter & Co. 5.40% (1)
c/o Investors Bank & Trust
P.O. Box 1537
Boston, MA 02205-1537
The Gabelli Global Telecommunications Fund/
Charles Schwab & Co., Inc. (2) 5.87% (1)
Reinvest Account
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
- ---------------
(1) Represents shares owned of record only.
(2) Charles Schwab & Co., Inc. disclaims beneficial ownership.
- --------------------------------------------------------------------------------
B-24
<PAGE> 52
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
(1) Financial information included in Part A, the
Prospectus:
Table of Fees and Expenses
Financial Highlights
(2) Financial Statements included in Part B, the Statement
of Additional Information:
Gabelli Global Series Funds, Inc.:
The Gabelli Telecommunications Fund (GGTF)
The Gabelli Global Convertible Securities Fund (GGCSF)
The Gabelli Global Interactive Couch Potato(R) Fund,
Inc. (GGICPF)
-- Portfolio of Investments, year ended December 31,
1996 (all)*
-- Statement of Assets and Liabilities, year ended
December 31, 1996 (all)*
-- Statements of Changes in Net Assets for the fiscal
years ended December 31, 1996 and December 31, 1995
(GGTF); for the fiscal years ended December 31, 1995 and
1996 (GGCSF); for the fiscal years ended December 31,
1995 and 1996 (GGICPF).*
-- Notes to Financial Statements (all)*
-- Financial Highlights for the fiscal years ended
December 31, 1996, December 31, 1995 and December 31,
1994 and for the period November 1, 1993 (Commencement
of Operations) through December 31, 1993 (GGTF);
February 3, 1994 (Commencement of Operations) through
December 31, 1994 and for the fiscal years ended
December 31, 1996 and December 31, 1995 (GGCSF);
February 7, 1994 (Commencement of Operations) through
December 31, 1994 and for the fiscal years ended
December 31, 1996 and December 31, 1995 (GGICPF)*
-- Reports of Grant Thornton LLP Independent Auditors
(all)*
The Gabelli Global Entertainment and Media Fund
The Gabelli Global Growth Fund
--None-- The Gabelli Global Entertainment and Media Fund
and Gabelli Global Growth Fund are currently not
offering shares.
(b) Exhibits:
(1) Articles of Incorporation, as amended, of the Registrant**
(2) Form of By-Laws of the Registrant**
(3) Not Applicable
(4)(a) Specimen Share Certificate for The Gabelli Global
Interactive Couch Potato(R) Fund**
(b) Specimen Share Certificate for The Gabelli Global
Convertible Securities Fund**
(5)(a) Investment Advisory Agreement with Gabelli Funds, Inc.
("Gabelli Funds" or the "Adviser") relating to The
Gabelli Global Telecommunications Fund, The Gabelli
Global Entertainment and Media Fund and The Gabelli
Global Growth Fund**
(b) Investment Advisory Agreement with Gabelli Funds, Inc.
("Gabelli Funds" or the "Adviser") for each of The
Gabelli Global Interactive Couch Potato(R) Fund and The
Gabelli Global Convertible Securities Fund **
(6) (a) Distribution Agreement relating to The Gabelli Global
Telecommunications Fund, The Gabelli Global
Entertainment and Media Fund and The Gabelli Global
Growth Fund**
(b) Distribution Agreement relating to The Gabelli Global
Interactive Couch Potato(R) Fund and The Gabelli Global
Convertible Securities Fund**
(7) Not Applicable
(8) Custodian Agreement between the Registrant and State
Street Bank and Trust Company**
(9) Transfer Agency Agreement between the Registrant and
State Street Bank and Trust Company **
(10) Opinion and consent of counsel for the Registrant**
(11)(a) Consent of Independent Accountants.
(12) Not Applicable
(13)(a) Agreements with Initial Shareholder relating to The
Gabelli Global Telecommunications Fund, The Gabelli
Global Entertainment and Media Fund and The Gabelli
Global Growth Fund**
(b) Agreements with Initial Shareholder relating to The
Gabelli Global Interactive Couch Potato(R) Fund and The
Gabelli Global Convertible Securities Fund**
(14) Model IRA Plan**
(15)(a) Distribution Plan relating to The Gabelli Global
Telecommunications Fund, The Gabelli Global
Entertainment and Media Fund and The Gabelli Global
Growth Fund**
(b) Distribution Plan relating to The Gabelli Global
Interactive Couch Potato(R) Fund and The Gabelli Global
Convertible Securities Fund**
C-1
<PAGE> 53
(16) Schedule of Performance Computation.
(17) Financial Data Schedule
- ------------
* Previously filed with the Fund's Annual Report for the year ended December
31, 1996.
** Previously filed as an exhibit to Post-Effective Amendment No. 2 to
Registration Statement No. 33-66262 on January 5, 1994.
Item 25. Persons Controlled by or Under Common Control with Registrant.
Insofar as the following have substantially identical boards of directors or
trustees they may be deemed with Registrant to be under common control: The
Gabelli ABC Fund, The Gabelli Asset Fund, Gabelli Gold Fund, Inc., The Gabelli
Growth Fund, The Gabelli Value Fund Inc., The Gabelli Capital Asset Fund, The
Gabelli Small Cap Growth Fund, Gabelli Equity Income Fund, The Westwood Funds
and The Gabelli U.S. Treasury Money Market Fund.
Item 26. Number of Holders of Securities.
As of April 2, 1997, the approximate number of record holders were:
<TABLE>
<CAPTION>
(1) (2)
Number of
Record
Title of Class Holders
-------------- -------
<S> <C>
The Gabelli Global Telecommunications Fund Stock,
par value $.001 per share ..................................... 15,912
The Gabelli Global Interactive Couch Potato(R)Fund Stock,
par value $.001 per share...................................... 5,811
The Gabelli Global Convertible Securities Fund Stock,
par value $.001 per share...................................... 2,286
The Gabelli Global Entertainment and Media Fund Stock,
par value $.001 per share...................................... 2
The Gabelli Global Growth Fund Stock,
par value $.001 per share...................................... 2
</TABLE>
Item 27. Indemnification.
The basic effect of the respective indemnification provisions of the
Registrant's By-Laws, the Investment Advisory Agreement with Gabelli Funds, Inc.
for The Gabelli Global Series Funds, Inc., and Section 2-418 of the Maryland
General Corporation Law is to indemnify each officer and director of both the
Registrant and Gabelli Funds, Inc. to the full extent permitted under the
General Laws of the State of Maryland, except that such indemnity shall not
protect any such person against any liability to which such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant and the investment advisor and distributor
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in and
the principal underwriter in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
officer or controlling person or the distributor in connection with the shares
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Advisor.
See "Management of the Funds" in the Prospectus and "Directors and Officers" in
the Statement of Additional Information as well as the Adviser's current Form
ADV which is incorporated herein by reference.
Item 29. Principal Underwriters.
(a) The Distributor, Gabelli & Company, Inc., is also the principal
underwriter for The Gabelli ABC Fund, The Gabelli Growth Fund,
The Gabelli Asset Fund, The Gabelli Value Fund, Inc., The Gabelli
Capital Asset Fund, The Gabelli Small Cap Growth Fund, Gabelli
Equity Income Fund, Gabelli Gold Fund, Inc., The Gabelli
International Growth Fund, Inc., The Westwood Funds and The
Gabelli U.S. Treasury Money Market Fund.
(b) The information required with respect to the directors and
executive officers of the Distributor is set forth under the
heading "Directors and Officers" in the Statement of Additional
Information as well as in Gabelli & Company, Inc.'s current Form
BD, which are each incorporated herein by reference.
(c) Not applicable. The Registrant's only principal underwriter is an
affiliated person of an affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of the Sub-Administrator, BISYS Fund Services
L.P., 3435 Stelzer Rd., Columbus, Ohio 43219, at the offices of the Fund's
Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, at the offices of the Fund's Transfer Agent and Dividend
Disbursing Agent, State Street Bank & Trust Company, c/o Boston Financial Data
Services, Two Heritage Drive, North Quincy, MA 02171 or at the offices of the
Adviser, Gabelli Funds, Inc., One Corporate Center, Rye, New York 10580-1434.
Item 31. Management Services.
The Registrant is not a party to any management-related service contract.
Item 32. Undertakings.
C-2
<PAGE> 54
(c) Registrant hereby undertakes to furnish to each person to whom a
prospectus is delivered a copy of Registrant's latest Annual
Report to Shareholders upon request and without charge.
C-3
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Amendment No. 7 to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rye, and State of New York on the 25th day of April, 1997.
THE GABELLI GLOBAL SERIES FUNDS, INC.
/s/ Bruce N. Alpert
-------------------------------------
By: Bruce N. Alpert
Title: Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 7
to the Registration Statement has been signed below by the following in the
capacity and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* President (Principal April 25, 1997
- ---------------------------- Executive Officer), and Director
Mario J. Gabelli
* Vice President and Treasurer April 25, 1997
- ----------------------------
Bruce N. Alpert
*
- ----------------------------
Felix J. Christiana Director April 25, 1997
*
- ----------------------------
Anthony J. Colavita Director April 25, 1997
*
- ----------------------------
Anthonie C. van Ekris Director April 25, 1997
*
- ----------------------------
Karl Otto Pohl Director April 25, 1997
*
- ----------------------------
John D. Gabelli Director April 25, 1997
*
- ----------------------------
Werner Roeder, M.D.
*By: /s/ Bruce N. Alpert
-----------------------
Bruce N. Alpert
Attorney-in-Fact
</TABLE>
C-4
<PAGE> 56
EXHIBIT INDEX
(b) Exhibits:
(1) Articles of Incorporation, as amended, of the Registrant**
(2) Form of By-Laws of the Registrant**
(3) Not Applicable
(4)(a) Specimen Share Certificate for The Gabelli Global
Interactive Couch Potato(R) Fund**
(b) Specimen Share Certificate for The Gabelli Global
Convertible Securities Fund**
(5)(a) Investment Advisory Agreement with Gabelli Funds, Inc.
("Gabelli Funds" or the "Adviser") relating to The
Gabelli Global Telecommunications Fund, The Gabelli
Global Entertainment and Media Fund and The Gabelli
Global Growth Fund**
(b) Investment Advisory Agreement with Gabelli Funds, Inc.
("Gabelli Funds" or the "Adviser") for each of The
Gabelli Global Interactive Couch Potato(R) Fund and The
Gabelli Global Convertible Securities Fund **
(6)(a) Distribution Agreement relating to The Gabelli Global
Telecommunications Fund, The Gabelli Global
Entertainment and Media Fund and The Gabelli Global
Growth Fund**
(b) Distribution Agreement relating to The Gabelli Global
Interactive Couch Potato(R) Fund and The Gabelli Global
Convertible Securities Fund**
(7) Not Applicable
(8) Custodian Agreement between the Registrant and State
Street Bank and Trust Company**
(9) Transfer Agency Agreement between the Registrant and
State Street Bank and Trust Company **
(9b) Sub-Administration Agreement.
(10) Opinion and consent of counsel for the Registrant**
(11)(a) Consent of Independent Accountants.
(12) Not Applicable
(13)(a) Agreements with Initial Shareholder relating to The
Gabelli Global Telecommunications Fund, The Gabelli
Global Entertainment and Media Fund and The Gabelli
Global Growth Fund**
(b) Agreements with Initial Shareholder relating to The
Gabelli Global Interactive Couch Potato(R) Fund and The
Gabelli Global Convertible Securities Fund**
(14) Model IRA Plan**
(15)(a) Distribution Plan relating to The Gabelli Global
Telecommunications Fund, The Gabelli Global
Entertainment and Media Fund and The Gabelli Global
Growth Fund**
(b) Distribution Plan relating to The Gabelli Global
Interactive Couch Potato(R) Fund and The Gabelli Global
Convertible Securities Fund**
<PAGE> 57
(16) Schedule of Performance Computation.--to be filed in a
Post-Effective Amendment
(17) Financial Data Schedule
- ------------
* Previously filed with the Fund's Annual Report for the year ended December
31, 1996.
** Previously filed as an exhibit to Post-Effective Amendment No. 2 to
Registration Statement No. 33-66262 on January 5, 1994.
<PAGE> 1
Exhibit 9B
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this 1st day of October, 1996, by and
between GABELLI FUNDS, INC. (the "Administrator"), and BISYS FUND SERVICES
LIMITED PARTNERSHIP, d/b/a/ BISYS FUND SERVICES ("BISYS").
WHEREAS, the Administrator is the investment adviser for the registered
investment companies (hereinafter referred to individually as a "Company" and
collectively as the "Companies") set forth in Schedule B attached hereto and is
responsible for the provision of administrative services to such Companies and
each of the Portfolios (hereinafter referred to individually as a "Portfolio"
and collectively as the "Portfolios") of such Companies;
WHEREAS, each Company is a management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator desires to retain BISYS to assist it in
performing administrative services with respect to each Portfolio and BISYS is
willing to perform such services on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Administrator and BISYS hereby agree as follows:
ARTICLE 1. Retention of BISYS: Conversion to the Services. The
Administrator hereby engages BISYS to furnish each Portfolio with the
administrative services as set forth in Article 2 below (collectively, the
"Services"), and, in connection therewith, the Administrator agrees to cause
each Portfolio to convert to BISYS' data processing systems and software (the
"BISYS System") as necessary in order to receive the Services. The
Administrator shall cooperate with BISYS to provide BISYS with all necessary
information and assistance required to successfully convert to the BISYS
System. BISYS shall provide the Administrator with a schedule relating to such
conversion and the parties agree that the conversion may progress in stages.
The date upon which all Services shall have been converted to the BISYS System
shall be referred to herein as the "Conversion Date." The parties hereby agree
that the Conversion Date shall be no later than January 1, 1997. BISYS hereby
accepts such engagement and agrees to perform the Services commencing, with
respect to each individual Service, on the date that the conversion of such
Service to the BISYS System has been completed. BISYS shall determine in
accordance with its normal acceptance procedures when the applicable Services
has been successfully converted.
BISYS shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have
no authority to act for or represent the Administrator or the Companies in any
way.
<PAGE> 2
ARTICLE 2. Administrative Services. BISYS shall perform or supervise
the performance by others of administrative services in connection with the
operations of the Portfolios, and, on behalf of the Companies, will
investigate, assist in the selection of and conduct relations with custodians,
depositories, accountants, legal counsel, underwriters, brokers and dealers,
corporate fiduciaries, insurers, banks and persons in any other capacity deemed
to be necessary or desirable for the Portfolios' operations. BISYS shall
provide the Directors/Trustees (hereafter, the "Directors") of the Companies
with such reports regarding investment performance as they may reasonably
request but shall have no responsibility for supervising the performance by any
investment adviser or sub-adviser of its responsibilities.
BISYS shall provide the Companies with regulatory reporting, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for meetings of shareholders ("Shareholder") and
Directors of the Companies) for handling the affairs of the Portfolios and such
other services as BISYS and the Administrator shall, from time to time,
determine to be necessary to perform BISYS' obligations under this Agreement.
In addition, at the request of the Boards of Directors, BISYS shall make
reports to the Companies' Directors concerning the performance of its
obligations hereunder.
Without limiting the generality of the foregoing, BISYS shall;
(a) calculate contractual Company expenses and provide necessary
instructions for all disbursements for the Companies, and as
appropriate compute each Company's yields, total return, expense
ratios, portfolio turnover rate, average commission rate and, if
required, portfolio average dollar-weighted maturity;
(b) assist Company counsel with the preparation of prospectuses,
statements of additional information, registration statements
and proxy materials;
(c) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register each Company's
Shares with state securities authorities, monitor the sale of
Company Shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for each Company and each
Company's Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective each Company and
its Shares with state securities authorities to enable each
Company to make a continuous offering of its Shares;
(d) develop and prepare, with the assistance of the Administrator,
communications to Shareholders, including the annual report to
Shareholders, coordinate the mailing of prospectuses, notices,
proxy statements, proxies and other reports to Shareholders, and
supervise and facilitate the proxy solicitation process for all
shareholder meetings, including the tabulation of shareholder
votes;
2
<PAGE> 3
(e) administer contracts on behalf of each Company with, among
others, each Company's investment adviser, distributor,
custodian, transfer agent and fund accountant;
(f) supervise the Companies' transfer agent with respect to the
payment of dividends and other distributions to Shareholders;
(g) calculate performance data of the Portfolios for dissemination
to information services covering the investment company
industry;
(h) prepare or cause to be prepared at its expense the filing of
each Company's tax returns;
(i) examine and review the operations and performance of the various
organizations providing services to the Companies or any
Portfolio, including, without limitation, the investment
adviser, distributor, custodian, fund accountant, transfer
agent, outside legal counsel and independent public accountants,
and at the request of a Company's Board of Directors, report to
the Board on the performance of such organizations;
(j) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and printing
of each Company's quarterly, semi-annual, and annual reports to
Shareholders;
(k) assist with the design, development, and operations of the
Portfolios, including new classes, investment objectives,
policies and structure;
(l) provide individuals reasonably acceptable to each Company's
Board of Directors to serve as officers of the Company, who will
be responsible for the management of certain of the Company's
affairs as determined by the Company's Board of Directors;
(m) advise each Company and its Board of Directors on matters
concerning the Company and its affairs;
(n) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for each
Company in accordance with the requirements of Rules 17g-1 and
17d-1(7) under the 1940 Act as such bonds and policies are
approved by the Company's Board of Directors;
(o) monitor and advise each Company and its Portfolios on their
regulated investment company status under the Internal Revenue
Code of 1986; as amended;
3
<PAGE> 4
(p) perform all administrative services and functions of each
Company and each Portfolio to the extent administrative services
and functions are not provided to the Company or such Portfolio
pursuant to the Company's or such Portfolio's administration
agreement, investment advisory agreement, distribution
agreement, custodian agreement, transfer agent agreement and
fund accounting agreement;
(q) furnish advice and recommendations with respect to other aspects
of the business and affairs of the Portfolios as the
Administrator and BISYS shall determine desirable;
(r) prepare and file with the SEC the semi-annual report for each
Company on Form N-SAR and all required notices pursuant to Rule
24f-2.
(s) assist each Company with respect to SEC examinations, including
the furnishing of documents and information, as appropriate, and
responding to SEC examination letters; and
(t) assist each Company in preparing for Board meetings by (i)
coordinating board book production and distribution, (ii)
preparing Board agendas, (iii) preparing the BISYS section of
Board materials, (iv) preparing special Board meeting materials,
including but not limited to, materials relating to annual
contract approvals and 12b-1 plan approvals, as agreed upon by
the parties, and (v) such other Board meeting functions that are
agreed upon by the parties.
BISYS shall perform such other services for each Company that are
mutually agreed upon by the parties from time to time. Such services may
include performing internal audit examinations; mailing the annual reports of
the Portfolios; preparing an annual list of Shareholders; and mailing notices
of Shareholders' meeting, proxies and proxy statements, for all of which the
Administrator will pay or cause to be paid BISYS' reasonable out-of-pocket
expenses.
ARTICLE 3. Allocation of Charges and Expenses.
(A) BISYS. BISYS shall furnish at its own expense the executive,
supervisory and clerical personnel necessary to perform its obligations under
this Agreement. BISYS shall also provide the items which it is obligated to
provide under this Agreement, and shall pay all compensation, if any, of
officers of each Company as well as all Directors of each Company who are
affiliated persons of BISYS or any affiliated company of BISYS; provided,
however, that unless otherwise specifically provided, BISYS shall not be
obligated to pay the compensation of any employee of a Company retained by the
Directors of such Company to perform services on behalf of the Company.
(B) The Administrator. The Administrator hereby represents that
each Company has undertaken to pay or cause to be paid all other expenses of
the Company not otherwise allocated herein, including, without limitation,
organization costs, taxes, expenses for legal and auditing
4
<PAGE> 5
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of
custodial services, the cost of initial and ongoing registration of the Shares
under Federal and state securities laws, fees and out-of-pocket expenses of
Directors who are not affiliated persons of the Administrator or the Investment
Adviser to the Company or any affiliated corporation of the Administrator or
the Investment Adviser, insurance, interest brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers to the Company.
ARTICLE 4. Compensation of BISYS.
(A) Sub-Administration Fee. Commencing on the Conversion Date, for
the services rendered, the facilities and the expenses assumed by BISYS
pursuant to this Agreement, the Administrator shall pay to BISYS compensation at
an annual rate specified in Schedule A attached hereto. Such compensation shall
be calculated and accrued daily, and paid to BISYS monthly.
If the Conversion Date occurs subsequent to the first day of a
month or termination of this Agreement occurs before the last day of a month,
BISYS' compensation for that part of the month in which this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Payment of BISYS' compensation for the preceding month
shall be made promptly.
(B) Survival of Compensation Rights. All rights of compensation
under this Agreement for services performed as of the termination date shall
survive the termination of this Agreement.
ARTICLE 5. Limitation of Liability of BISYS. The duties of BISYS shall
be confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against BISYS hereunder. BISYS shall not be liable
for any error of judgment or mistake of law or for any loss arising out of any
act or omission in carrying out its duties hereunder, except a loss resulting
from willful misfeasance, bad faith or negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "BISYS" shall include partners, officers, employees and other agents of
BISYS as well as BISYS itself.)
So long as BISYS acts in good faith and with due diligence and without
negligence, the Administrator assumes full responsibility and shall indemnify
BISYS and hold it harmless from and against any and all actions, suits and
claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation
expenses) arising directly or indirectly out of BISYS' actions taken or
nonactions with respect to the performance of services hereunder.
5
<PAGE> 6
The indemnity and defense provisions set forth herein shall indefinitely survive
the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provision contained herein shall apply, however, it is
understood that if in any case the Administrator may be asked to indemnify or
hold BISYS harmless, the Administrator shall be fully and promptly advised of
all pertinent facts concerning the situation in question, and it is further
understood that BISYS will use all reasonable care to identify and notify the
Administrator promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification against the
Administrator, but failure to do so in good faith shall not affect the rights
hereunder.
The Administrator shall be entitled to participate at its own expense or,
if it so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Administrator elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Administrator and satisfactory to BISYS, whose approval shall not be
unreasonably withheld. In the event that the Administrator elects to assume the
defense of any suit and retain counsel, BISYS shall bear the fees and expenses
of any additional counsel retained by it. If the Administrator does not elect to
assume the defense of a suit, it will reimburse BISYS for the reasonable fees
and expenses of any counsel retained by BISYS.
BISYS may apply to the Administrator at any time for instructions and may
consult counsel for the Administrator or its own counsel and with accountants
and other experts with respect to any matter arising in connection with BISYS'
duties, and BISYS shall not be liable or accountable for any action taken or
omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts.
Also, BISYS shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. BISYS will not be held to have notice of any change of
authority of any officers, employees or agents of the Administrator until
receipt of written notice thereof from the Administrator.
ARTICLE 6. Activities of BISYS. The services of BISYS rendered hereunder
are not to be deemed to be exclusive. BISYS is free to render such services to
others and to have other businesses and interests. It is understood that
directors, officers, employees and Shareholders are or may be or become
interested in BISYS, as officers, employees or otherwise and that partners,
officers and employees of BISYS and its counsel are or may be or become
similarly interested in the Companies, and that BISYS may be or become
interested in the Companies as a Shareholder or otherwise.
ARTICLE 7. Duration of this Agreement. The Term of this Agreement shall be
as specified in Schedule A hereto.
6
<PAGE> 7
ARTICLE 8. Assignment. This Agreement shall not be assignable by either
party without the written consent of the other party; provided, however, that
BISYS may, with the prior consent of the Administrator, at its expense,
subcontract with any entity or person concerning the provision of the services
contemplated hereunder. BISYS shall not, however, be relieved of any of its
obligations under this Agreement by the appointment of such subcontractor and
provided further, that BISYS shall be responsible, to the extent provided in
Article 5 hereof, for all acts of such subcontractor as if such acts were its
own. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties hereto and their respective successors and permitted assigns.
ARTICLE 9. Amendments. This Agreement may be amended if such amendment is
specifically approved in writing by the parties hereto.
ARTICLE 10. Certain Records. BISYS shall maintain customary records in
connection with its duties as specified in this Agreement. Any records required
to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under the 1940
Act which are prepared or maintained by BISYS on behalf of each Company shall be
prepared and maintained at the expense of BISYS, but shall be the property of
each Company and will be made available to or surrendered promptly to each
Company on request.
In case of any request or demand for the inspection of such records by
another party, BISYS shall notify the Administrator and follow the
Administrator's instructions as to permitting or refusing such inspection;
provided that BISYS may exhibit such records to any person in any case where it
is advised by its counsel that it may be held liable for failure to do so,
unless (in cases involving potential exposure only to civil liability) the
Administrator or the appropriate Company has agreed to indemnify BISYS against
such liability.
ARTICLE 11. Definitions of Certain Terms. The terms "interested person" and
"affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the following address: if to BISYS, to it at 3435 Stelzer Road, Columbus,
Ohio 43219; if to the Administrator, to it at One Corporate Center, Rye, New
York 10580-1434, or at such other address as such party may from time to time
specify in writing to the other party pursuant to this Section.
ARTICLE 13. Confidential Information. Each party acknowledges that it may
acquire knowledge and information relating to the other party and its affiliates
or the Companies including, but not limited to, information pertaining to
business plans, employees, customers and/or suppliers, and that all such
knowledge and information acquired or developed is and shall be confidential and
proprietary information (all such confidential and proprietary information is
herein collectively
7
<PAGE> 8
referred to as the "Confidential Information"). Each party agrees to hold the
Confidential Information in strict confidence, to refrain from directly or
indirectly disclosing it to others or using it in any way except for purposes
of performing services hereunder, and to prevent any unauthorized person access
to it either before or after termination of this Agreement, without the prior
written consent of the other party. Both parties further agree to take all
action reasonable and necessary to protect the confidentiality of the
Confidential Information. The parties shall use their best efforts to have
their directors, officers, employees and agents agree to the terms of this
Section. The obligations of the parties contained in this section shall survive
termination of this Agreement. Neither party's confidentiality obligations
under this provision shall apply to such information that (i) was in the public
domain or available to a third party without restrictions at or prior to the
time such information was made known to such party, (ii) had been independently
known to such party at the time of disclosure from persons who were not subject
to similar confidentiality obligations, or (iii) is required to be disclosed by
law (except that each party will use best efforts to give the other party
written notice prior to any such disclosure).
ARTICLE 14. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of Ohio, or
any of the provisions herein, conflict with the applicable provisions of the
1940 Act, the latter shall control.
ARTICLE 15. Multiple Originals. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
GABELLI FUNDS, INC.
By: /s/ [Signature]
-----------------------------------
Title: VP & CFO Gabelli Funds Division
--------------------------------
BISYS FUND SERVICES LIMITED PARTNERSHIP
By: BISYS Fund Services, Inc.
General Partner
By: /s/ [Signature]
------------------------------------
Title: Executive Vice President
---------------------------------
8
<PAGE> 9
SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
DATED AS OF OCTOBER 1, 1996
BETWEEN GABELLI FUNDS, INC.
AND
BISYS FUND SERVICES LIMITED PARTNERSHIP
Portfolios: This Agreement shall apply to all Portfolios, either now or
hereafter created of the Companies set forth below. The current
Portfolios of such Companies are also set forth below.
GABELLI CONVERTIBLE SECURITIES FUND, INC.
Gabelli Convertible Securities Fund
GABELLI EQUITY SERIES FUNDS, INC.
Gabelli Small Cap Fund
Gabelli Equity Income Fund
GABELLI GLOBAL SERIES FUNDS, INC.
Gabelli Global Telecommunications Fund
Gabelli Global Convertible Securities Fund
Gabelli Global Interactive Couch Potato Fund
Gabelli Global Entertainment & Media Fund
Gabelli Global Growth Fund
GABELLI GOLD FUND, INC.
Gabelli Gold Fund
GABELLI INTERNATIONAL GROWTH FUND, INC.
Gabelli International Growth Fund
GABELLI INVESTOR FUNDS, INC.
Gabelli ABC Fund
Fees: Pursuant to Article 4, in consideration of services rendered and
expenses assumed pursuant to this Agreement, the Administrator
will pay BISYS on the first business day of each month, or at
such time(s) as BISYS shall request and the parties hereto shall
agree, a fee based upon the assets of all registered management
investment companies for which BISYS serves as Subadministrator
that are advised by Gabelli Funds, Inc. or its affiliates
("BISYS-administered Investment Companies"). Such fee shall be
computed daily at the annual rate of:
A-1
<PAGE> 10
Ten one-hundredths of one percent (.10%) of the
BISYS-administered Investment Companies' average daily net
assets up to $350 million.
Seven and one-half one-hundredths of one percent (.075%) of the
BISYS-administered Investment Companies' average daily net
assets in excess of $350 million up to $600 million.
Six one-hundredths of one percent (.06%) of the
BISYS-administered Investment Companies' average daily net
assets in excess of $600 million.
The fees set forth above shall be subject to a minimum annual fee amount
of $40,000 for each Portfolio. Such minimum annual fee amount shall be
payable to BISYS on the first business day of each month or at such
other time(s) as the parties may agree upon.
The fee for the period from the day of the month upon which the
Conversion Date occurs until the end of that month shall be prorated
according to the proportion which such period bears to the full monthly
period. Upon any termination of this Agreement before the end of any
month, the fee for such part of a month shall be prorated according to
the proportion which such period bears to the full monthly period and
shall be payable upon the date of termination of this Agreement.
For purposes of determining the fees payable to BISYS, the value of the
net assets of a particular Portfolio shall be computed in the manner
described in each Company's Articles of Incorporation or in the
Prospectus or Statement of Additional Information respecting that
Portfolio as from time to time is in effect for the computation of the
value of such net assets in connection with the determination of the
liquidating value of the shares of such Portfolio.
The parties hereby confirm that the fees payable hereunder shall be
applied to each Portfolio as a whole, and not to separate classes of
shares within the Portfolios.
Term: The initial term of this Agreement (the "Initial Term") shall be for a
period commencing on the date this Agreement is executed by both parties
and ending on the date that is one year after the Conversion Date. This
Agreement shall be renewed automatically for successive periods of one
year after the Initial Term, unless written notice of nonrenewal is
provided by either party not less than 90 days prior to the end of the
Initial Term or 90 days advance written notice of termination is
provided by either party at any time following the Initial Term. In
the event of any breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of such
breach and upon receipt of such notice, the breaching party shall
A-2
<PAGE> 11
have 45 days to remedy the breach. In the event any material breach is
not remedied within such time period, the nonbreaching party may
immediately terminate this Agreement.
Notwithstanding the foregoing, after such termination for so long as
BISYS, with the written consent of the Administrator, in fact continues
to perform any one or more of the services contemplated by this
Agreement or any schedule or exhibit hereto, the provisions of this
Agreement, including without limitation the provisions dealing with
indemnification, shall continue in full force and effect. Compensation
due BISYS and unpaid by the Administrator upon such termination shall
be immediately due and payable upon and notwithstanding such
termination. BISYS shall be entitled to collect from the Administrator,
in addition to the compensation described in this Schedule A, all costs
reasonably incurred in connection with the Administrator's activities
in effecting such termination, including without limitation, the
delivery to each Company and/or its designees of the Company's property,
records, instruments and documents, or any copies thereof. To the extent
that BISYS may retain in its possession copies of any Company documents
or records subsequent to such termination which copies had not been
requested by or on behalf of a Company in connection with the
termination process described above, BISYS will provide such Company
with reasonable access to such copies; provided, however, that, in
exchange therefor, the Company shall reimburse BISYS for all costs
reasonably incurred in connection therewith.
If, during the Initial Term, as defined above, for any reason other than
a breach of this Agreement, BISYS is replaced as sub-administrator,
then the Administrator shall make a one-time cash payment, as liquidated
damages, to BISYS equal to the balance due BISYS for the remainder of
the Initial Term of this Agreement, assuming for purposes of calculation
of the payment that the asset level of each Company on the date BISYS
is replaced, or a third party is added, will remain constant for the
balance of such term.
A-3
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Gabelli Global Telecommunications Fund,
The Gabelli Global Entertainment and Media Fund,
The Gabelli Global Growth Fund,
The Gabelli Global Interactive Couch Potato Fund,
The Gabelli Global Convertible Securities Fund
each a Series of Gabelli Global Series Funds, Inc.
We hereby consent to the incorporation by reference in Post-Effective Amendment
No. 7 to Registration Statement No. 33-66262 on Form N-1A of our Report of
Independent Auditors dated February 27, 1997, accompanying the financial
statements.
We also consent to the use of our name under the headings "Financial
Highlights" and "Independent Auditors" in the Prospectus, and "Counsel and
Independent Auditors" in the Statement of Additional Information, which is also
part of such Registration Statement.
GRANT THORNTON LLP
New York, New York
April 25, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 92996
<INVESTMENTS-AT-VALUE> 108599
<RECEIVABLES> 580
<ASSETS-OTHER> 170
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 109349
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 805
<TOTAL-LIABILITIES> 805
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93407
<SHARES-COMMON-STOCK> 9624
<SHARES-COMMON-PRIOR> 11047
<ACCUMULATED-NII-CURRENT> 7
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 473
<ACCUM-APPREC-OR-DEPREC> 15603
<NET-ASSETS> 108544
<DIVIDEND-INCOME> 2210
<INTEREST-INCOME> 261
<OTHER-INCOME> 0
<EXPENSES-NET> 2059
<NET-INVESTMENT-INCOME> 412
<REALIZED-GAINS-CURRENT> 7081
<APPREC-INCREASE-CURRENT> 2696
<NET-CHANGE-FROM-OPS> 10189
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 413
<DISTRIBUTIONS-OF-GAINS> 7136
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2413
<NUMBER-OF-SHARES-REDEEMED> 4482
<SHARES-REINVESTED> 646
<NET-CHANGE-IN-ASSETS> (14301)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 418
<OVERDIST-NET-GAINS-PRIOR> 12
<GROSS-ADVISORY-FEES> 1195
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2059
<AVERAGE-NET-ASSETS> 109218
<PER-SHARE-NAV-BEGIN> 11.12
<PER-SHARE-NII> .046
<PER-SHARE-GAIN-APPREC> .954
<PER-SHARE-DIVIDEND> .046
<PER-SHARE-DISTRIBUTIONS> .794
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.28
<EXPENSE-RATIO> .017
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 13064
<INVESTMENTS-AT-VALUE> 13304
<RECEIVABLES> 449
<ASSETS-OTHER> 85
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13838
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 311
<TOTAL-LIABILITIES> 311
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13417
<SHARES-COMMON-STOCK> 1329
<SHARES-COMMON-PRIOR> 1459
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 235
<ACCUMULATED-NET-GAINS> 118
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 227
<NET-ASSETS> 13527
<DIVIDEND-INCOME> 165
<INTEREST-INCOME> 551
<OTHER-INCOME> 0
<EXPENSES-NET> 368
<NET-INVESTMENT-INCOME> 348
<REALIZED-GAINS-CURRENT> 1105
<APPREC-INCREASE-CURRENT> (607)
<NET-CHANGE-FROM-OPS> 846
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 519
<DISTRIBUTIONS-OF-GAINS> 298
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 212
<NUMBER-OF-SHARES-REDEEMED> 474
<SHARES-REINVESTED> 133
<NET-CHANGE-IN-ASSETS> (2215)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (59)
<OVERDISTRIB-NII-PRIOR> 65
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 368
<AVERAGE-NET-ASSETS> 13976
<PER-SHARE-NAV-BEGIN> 10.79
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> .16
<PER-SHARE-DIVIDEND> .43
<PER-SHARE-DISTRIBUTIONS> .77
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.18
<EXPENSE-RATIO> .020
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 03
<NAME> THE GABELLI GLOBAL INTERACTIVE COUCH POTATO FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 26919
<INVESTMENTS-AT-VALUE> 32165
<RECEIVABLES> 553
<ASSETS-OTHER> 42
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32760
<PAYABLE-FOR-SECURITIES> 409
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 572
<TOTAL-LIABILITIES> 981
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26683
<SHARES-COMMON-STOCK> 2704
<SHARES-COMMON-PRIOR> 2682
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<NET-INVESTMENT-INCOME> (247)
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</TABLE>
