<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 30, 1999
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. 10 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 11 [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, LLC
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------------
<TABLE>
COPIES TO:
<S> <C>
JAMES E. MCKEE, ESQ. RICHARD T. PRINS, ESQ.
GABELLI FUNDS, LLC SKADDEN, ARPS, SLATE, MEAGHER, & FLOM LLP
ONE CORPORATE CENTER, 919 THIRD AVENUE
RYE, NEW YORK 10580-1434 NEW YORK, NEW YORK 10022
(212) 735-2000
</TABLE>
----------------------
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on May 3, 1999 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.
----------------------
<PAGE> 2
GABELLI GLOBAL SERIES FUNDS, INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
1-800-422-3554
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(NET ASSET VALUE MAY BE OBTAINED DAILY BY CALLING
1-800-GABELLI AFTER 6:00 P.M.)
BOARD OF DIRECTORS
<TABLE>
<S> <C>
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Asset Management Inc.
Felix J. Christiana Werner J. Roeder, MD
Former Senior Vice President Director of Surgery
Dollar Dry Dock Savings Bank Lawrence Hospital
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
John D Gabelli
Vice President
Gabelli & Company, Inc.
</TABLE>
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
GABELLI GLOBAL SERIES
FUNDS, INC.
A CLASS
B CLASS
C CLASS
PROSPECTUS
MAY 1, 1999
- THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
- THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
- THE GABELLI GLOBAL OPPORTUNITY FUND
- THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SHARES DESCRIBED IN THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 3
GABELLI GLOBAL SERIES FUNDS, INC. TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
RISK/RETURN SUMMARY AND FUND EXPENSES
Carefully review this important 3-10
section, which summarizes the
Funds' investments, risks, past
performance, and fees.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
Review this section for 11-16
information on investment
strategies and their risks.
FUND MANAGEMENT
Review this section for details 17 The Investment Adviser
on the people and organizations 17 The Portfolio Managers
who oversee the Funds. 17 The Distributor
SHAREHOLDER INFORMATION
Review this section and the 18 Pricing of Fund Shares
accompanying Owner's Manual for 18 Purchasing, Selling and Exchanging Shares
details on how shares are 19 Distribution Arrangements/Sales Charges
valued, how to purchase, sell 23 Dividends, Distributions and Taxes
and exchange shares, related 23 Other Shareholder Services
charges and payments of
dividends and distributions.
FINANCIAL HIGHLIGHTS
24
BACK COVER
Where to learn more about this Fund
</TABLE>
2
<PAGE> 4
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
<TABLE>
<S> <C>
RISK/RETURN SUMMARY OF THE: GLOBAL TELECOMMUNICATIONS FUND
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
GLOBAL OPPORTUNITY FUND
Investment Objectives The Funds primarily seek to provide investors with
appreciation of capital. Current income is a secondary
objective of the Funds.
Principal The Funds invest primarily in common stocks of foreign and
Investment Strategy domestic small cap, mid cap and large cap issuers. Each Fund
may invest without limitations in securities of foreign
issuers and each Fund will invest in securities of issuers
located in at least three countries. Each of the Global
Telecommunications Fund, the Global Interactive Couch
Potato(R) Fund and the Global Opportunity Fund will focus
its holdings on companies which the Adviser believes are
likely to have rapid growth in revenues and earnings and
potential for above-average capital appreciation or are
undervalued. The Global Telecommunications Fund will
concentrate on companies in the telecommunications industry
and the Global Interactive Couch Potato(R) Fund will
concentrate on companies in the communications,
entertainment and media and publishing industries.
</TABLE>
<TABLE>
<S> <C>
RISK/RETURN SUMMARY OF THE: GLOBAL CONVERTIBLE SECURITIES FUND
Investment Objective The Fund seeks to provide investors with a high level of
total return through a combination of current income and
appreciation of capital.
Principal The Fund invests primarily in "convertible securities,"
Investment Strategy i.e., securities (bonds, debentures, corporate notes,
preferred stocks and other similar securities) which are
convertible or exchangeable for common stock within a
particular time period at a specified price or formula, of
foreign and domestic companies. The Adviser believes that
certain characteristics of convertible securities make them
appropriate investments for a fund seeking a high level of
total return on its assets. These characteristics include
the potential for capital appreciation if the value of the
underlying common stock increases, the relatively high yield
received from preferred dividend or interest payments as
compared to common stock dividends and the decreased risk of
decline in value relative to common stock due to the fixed
income nature of convertible securities.
PRINCIPAL GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT RISKS GLOBAL INTERACTIVE COUCH POTATO(R) FUND
GLOBAL OPPORTUNITY FUND
GLOBAL CONVERTIBLE SECURITIES FUND
Because the value of the Funds' investments will fluctuate
with market conditions, so will the value of your investment
in the Funds. You could lose money on your investment in the
Funds, or the Funds could underperform other investments.
Some of the Funds' holdings may underperform their other
holdings. The investment policies of the Funds may lead to a
higher portfolio turnover rate and correspondingly higher
expenses which could negatively affect the Funds'
performance. As the Funds are 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, each Fund may experience greater
fluctuation in net asset value than funds which invest in a
broad range of issuers. In addition, the Global
Telecommunications Fund and the Global Interactive Couch
Potato Fund concentrate their investments in specific
industries which are subject to
</TABLE>
3
<PAGE> 5
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
<TABLE>
<S> <C>
governmental regulation and a greater price volatility than
the overall market and sell products and services that may
be subject to rapid obsolescence resulting from changing
consumer tastes, intense competition and strong market
reactions to technological development. The Global
Convertible Securities Fund may invest in lower credit
quality securities which may involve major risk exposures
such as increased sensitivity to interest rate and economic
changes and limited liquidity.
Moreover, each Fund may invest a substantial portion of its
assets in foreign securities which involve risks relating to
political, social and economic developments abroad, as well
as risks resulting from the differences between the
regulations to which U.S. and foreign issuers and markets
are subject. In addition, the costs of buying, selling and
holding foreign securities may be greater than for U.S.
Securities and foreign securities often trade in currencies
other than the U.S. dollar and an increase in the value of
the U.S. dollar relative to a foreign currency may cause the
value of a Fund's investments in securities denominated in
that currency to decline.
GLOBAL TELECOMMUNICATIONS FUND
The telecommunications industry is subject to governmental
regulation, a greater price volatility than the overall
market and the products and services of telecommunications
companies may be subject to rapid obsolescence.
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
The communications, entertainment and media and publishing
industries are subject to governmental regulation, a greater
volatility than the overall market and their products and
services may be subject to rapid obsolescence and change in
taste.
In addition, many countries impose various types of
ownership restrictions 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.
GLOBAL OPPORTUNITY FUND
The Global Opportunity Fund invests generally in a portfolio
of global equity securities. As such, there are no
additional principal risks associated with an investment in
the Fund other than those identified herein as applicable to
all of the Funds.
GLOBAL CONVERTIBLE SECURITIES FUND
The Global Convertible Securities Fund may invest without
limit in securities that are not considered investment
grade. These securities carry a higher risk of failure to
pay principal and interest when due and the market to sell
such securities may be limited. As such, there is a greater
risk of loss of investment.
WHO MAY Consider investing in the Funds if you:
WANT TO INVEST? [ ] ARE SEEKING A LONG-TERM GOAL SUCH AS RETIREMENT
[ ] ARE LOOKING TO ADD A GROWTH COMPONENT TO YOUR PORTFOLIO
[ ] ARE WILLING TO ACCEPT HIGHER RISKS OF INVESTING IN THE
STOCK MARKET IN EXCHANGE FOR LONG TERM RETURNS
[ ] ARE LOOKING TO DIVERSIFY YOUR INVESTMENTS OUTSIDE THE
UNITED STATES
The Funds will not be appropriate for anyone:
[ ] SEEKING MONTHLY INCOME
[ ] PURSUING A SHORT-TERM GOAL OR INVESTING EMERGENCY
RESERVES
[ ] SEEKING SAFETY OF PRINCIPAL
</TABLE>
4
<PAGE> 6
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
These charts show the Funds' annual returns and provides some indication of
the risks of investing in the Funds by showing how their performance has
varied from year to year. The Class A, B, and C shares are new classes of the
Funds, for which performance is not yet available. The Class AAA shares for
the Funds are offered in a separate prospectus. Although the shares are
invested in the same portfolio of securities, the returns for Class A, B and
C shares will differ from Class AAA returns shown in the bar charts because
of differences in expenses and sales charges of each class. Sales charges are
not reflected in the bar chart below. If reflected, the returns would be less
than those shown. The tables that follow compare the Funds' performance over
time to that of their relevant broad-based indices. The Morgan Stanley World
Free Index, the Lipper Global Fund Average and the Lipper Convertible
Securities Fund Average represent unmanaged indices composed of all developed
markets in the world, global equity mutual funds, and convertible securities
mutual funds, respectively, as tracked by Lipper Inc. The Salomon Smith
Barney Global Telecommunications Index is a widely recognized, unmanaged
index composed of global equity securities of companies in the
telecommunications industry; and the Warburg Dillon Read Global Convertible
Index is composed of global convertible securities. Of course, past
performance does not indicate how the Funds will perform in the future. Both
the charts below and the tables on the following page assume reinvestment of
dividends and distributions.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31
GLOBAL TELECOMMUNICATIONS FUND
Best
quarter: 4(th) 1998 23.96 %
Worst
quarter: 3(rd) 1998 (10.73)%
Global Telecommunications GRAPH
<TABLE>
<CAPTION>
'94' -3.7
- ---- ----
<S> <C>
'95' 16.20
'96' 9.00
'97' 31.90
'98' 34.80
</TABLE>
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
Best
quarter: 4(th) 1998 21.36 %
Worst
quarter: 3(rd) 1998 (12.77)%
Global Interactive Couch Potato GRAPH
<TABLE>
<CAPTION>
'95' 17.9
- ---- ----
<S> <C>
'96' 12.50
'97' 41.70
'98' 28.80
</TABLE>
GLOBAL CONVERTIBLE SECURITIES FUND
Best
quarter: 4(th) 1998 12.23 %
Worst
quarter: 3(rd) 1998 (12.26)%
Global Convertible Securities GRAPH
<TABLE>
<CAPTION>
'95' 12.6
- ---- ----
<S> <C>
'96' 5.50
'97' 2.80
'98' 8.60
</TABLE>
THE GLOBAL OPPORTUNITY FUND
The Global Opportunity Fund has less than
one full calendar year of operations,
therefore total return information is not
meaningful.
5
<PAGE> 7
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
AVERAGE ANNUAL TOTAL RETURNS (for the periods ending December 31, 1998)
<TABLE>
<CAPTION>
SINCE INCEPTION
GLOBAL TELECOMMUNICATIONS FUND INCEPTION DATE PAST YEAR PAST 5 YEARS OF FUND
<S> <C> <C> <C> <C>
AAA Class 11/1/93 34.8% 16.7% 16.8%
Salomon Smith Barney Global
Telecommunications Index 43.8% 17.7% 16.6%
Morgan Stanley World Free Index 22.0% 14.8% 14.3%
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
GLOBAL INTERACTIVE COUCH POTATO(R) FUND INCEPTION DATE PAST YEAR OF FUND
<S> <C> <C> <C>
AAA Class 2/7/94 28.9% 20.4%
Morgan Stanley World Free Index 22.0% 13.6%
Lipper Global Fund Average 14.3% 11.2%
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
GLOBAL CONVERTIBLE SECURITIES FUND INCEPTION DATE PAST YEAR OF FUND
<S> <C> <C> <C>
AAA Class 2/3/94 8.6% 6.1%
Warburg Dillon Read Global Convertible
Index 20.6% 7.9%
Lipper Convertible Securities Fund
Average 4.5% 9.9%
</TABLE>
Class A, B and C Shares have no operating history as of the date of this
prospectus.
6
<PAGE> 8
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum sales charge on
purchases (as a % of
offering price) 5.75%(1) None None
Maximum deferred sales
charge(2) None 5.00%(3) 1.00%(3)
Redemption fees None None None
Exchange fees(4) None None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM
FUND ASSETS)
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees .25% 1.00% 1.00%
Other expenses .30% .30% .30%
Total annual Fund operating
expenses(5) 1.55% 2.30% 2.30%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
GABELLI GLOBAL TELECOMMUNICATIONS
FUND
CLASS A SHARES $724 $1,036
CLASS B SHARES
Assuming redemption 733 1,018
Assuming no redemption 233 718
CLASS C SHARES
Assuming redemption 333 718
Assuming no redemption 233 718
</TABLE>
FEES AND EXPENSES
As an investor in the
Funds, you will pay the
following fees and
expenses when you buy and
hold shares. Annual Fund
operating expenses are
paid out of Fund assets,
and are reflected in the
share price.
CONTINGENT DEFERRED SALES
CHARGE
Some Fund share classes
impose a back end sales
charge if you sell your
shares before a certain
period of time has
elapsed. This is called a
Contingent Deferred Sales
Charge ("CDSC").
EXPENSE EXAMPLE
Use the example shown here to
compare fees and expenses
with those of other funds. It
illustrates the amount of
fees and expenses you would
pay, assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period (except as
noted)
- no changes in the Funds'
operating expenses
Because this example is
hypothetical and for
comparison only, your actual
costs may be higher or lower.
(1 )Lower sales charges are available depending upon the amount invested.
(2) The CDSC will be based upon the lower of the value of your shares at time
of purchase or time of redemption.
(3) A CDSC on Class B shares declines over seven years starting with year one
from: 5%, 4%, 3%, 3%, 2%, 1%, 0%. After seven years, Class B shares are
converted to Class A shares, which have a lower 12b-1 fee. A CDSC of 1%
applies to redemptions of Class C shares within the first twenty-four
months.
(4) Exchanges may be made only to the same class of other funds.
(5) Total annual Fund operating expenses have been restated to reflect
current fees, and may differ from information in the Fund's most recent
Annual Report.
7
<PAGE> 9
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum sales charge on
purchases (as a % of
offering price) 5.75%(1) None None
Maximum deferred sales
charge(2) None 5.00%(3) 1.00%(3)
Redemption fees None None None
Exchange fees(4) None None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM
FUND ASSETS)
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees .25% 1.00% 1.00%
Other expenses .39% .39% .39%
Total annual Fund operating
expenses(5) 1.64% 2.39% 2.39%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
GABELLI GLOBAL INTERACTIVE COUCH(R)
POTATO FUND
CLASS A SHARES $732 $1,063
CLASS B SHARES
Assuming redemption 742 1,045
Assuming no redemption 242 745
CLASS C SHARES
Assuming redemption 342 745
Assuming no redemption 242 745
</TABLE>
FEES AND EXPENSES
As an investor in the
Funds, you will pay the
following fees and
expenses when you buy and
hold shares. Annual Fund
operating expenses are
paid out of Fund assets,
and are reflected in the
share price.
CONTINGENT DEFERRED SALES
CHARGE
Some Fund share classes
impose a back end sales
charge if you sell your
shares before a certain
period of time has
elapsed. This is called a
Contingent Deferred Sales
Charge ("CDSC").
EXPENSE EXAMPLE
Use the example shown here to
compare fees and expenses
with those of other funds. It
illustrates the amount of
fees and expenses you would
pay, assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period (except as
noted)
- no changes in the Funds'
operating expenses
Because this example is
hypothetical and for
comparison only, your actual
costs may be higher or lower.
(1 )Lower sales charges are available depending upon the amount invested.
(2) The CDSC will be based upon the lower of the value of your shares at time
of purchase or time of redemption.
(3 )A CDSC on Class B shares declines over seven years starting with year one
from: 5%, 4%, 3%, 3%, 2%, 1%, 0%. After seven years, Class B shares are
converted to Class A shares, which have a lower 12b-1 fee. A CDSC of 1%
applies to redemptions of Class C shares within the first twenty-four
months.
(4) Exchanges may be made only to the same class of other funds.
(5) Total annual Fund operating expenses have been restated to reflect
current fees, and may differ from information in the Fund's most recent
Annual Report.
8
<PAGE> 10
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum sales charge on
purchases (as a % of
offering price) 5.75%(1) None None
Maximum deferred sales
charge(2) None 5.00%(3) 1.00%(3)
Redemption fees None None None
Exchange fees(4) None None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM
FUND ASSETS)
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees .25% 1.00% 1.00%
Other expenses 1.75% 1.75% 1.75%
Total annual Fund operating
expenses(5) 3.00% 3.75% 3.75%
Fee waivers & expense
reimbursements(6) 2.00% 2.75% 2.75%
Net expenses 1.00% 1.00% 1.00%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
GABELLI GLOBAL OPPORTUNITY FUND(7)
CLASS A SHARES $671 $1,283
CLASS B SHARES
Assuming redemption 602 1,214
Assuming no redemption 102 914
CLASS C SHARES
Assuming redemption 202 914
Assuming no redemption 102 914
</TABLE>
GLOBAL OPPORTUNITY FUND
FEES AND EXPENSES
As an investor in the
Funds, you will pay the
following fees and
expenses when you buy and
hold shares. Annual Fund
operating expenses are
paid out of Fund assets,
and are reflected in the
share price.
CONTINGENT DEFERRED SALES
CHARGE
Some Fund share classes
impose a back end sales
charge if you sell your
shares before a certain
period of time has
elapsed. This is called a
Contingent Deferred Sales
Charge ("CDSC").
EXPENSE EXAMPLE
Use the example shown here to
compare fees and expenses
with those of other funds. It
illustrates the amount of
fees and expenses you would
pay, assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period (except as
noted)
- no changes in the Funds'
operating expenses
Because this example is
hypothetical and for
comparison only, your actual
costs may be higher or lower.
(1) Lower sales charges are available depending upon the amount invested.
(2) The CDSC will be based upon the lower of the value of your shares at time
of purchase or time of redemption.
(3) A CDSC on Class B shares declines over seven years starting with year one
from: 5%, 4%, 3%, 3%, 2%, 1%, 0%. After seven years, Class B shares are
converted to Class A shares, which have a lower 12b-1 fee. A CDSC of 1%
applies to redemptions of Class C shares within the first twenty-four
months.
(4) Exchanges may be made only to the same class of other funds.
(5) Total annual Fund operating expenses have been restated to reflect
current fees, and may differ from information in the Fund's most recent
Annual Report.
(6) The Adviser is contractually obligated, for the duration of the Fund's
fiscal year, to waive its investment advisory fees and reimburse expenses
to the extent necessary to maintain total annual Fund operating expenses
at 1.00% for the Global Opportunity Fund.
(7) This example assumes that total Annual Fund Operating Expenses will equal
1.00% until January 1, 2000, and will equal 3.00%, 3.75% and 3.75% for
Class A shares, Class B shares and Class C shares, respectively,
thereafter.
9
<PAGE> 11
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
GLOBAL CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM
YOUR INVESTMENT)
Maximum sales charge on
purchases (as a % of
offering price) 5.75%(1) None None
Maximum deferred sales
charge(2) None 5.00%(3) 1.00%(3)
Redemption fees None None None
Exchange fees(4) None None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT
ARE DEDUCTED FROM
FUND ASSETS)
Management fees 1.00% 1.00% 1.00%
Distribution (12b-1) fees .25% 1.00% 1.00%
Other expenses 1.55% 1.55% 1.55%
Total annual Fund operating
expenses(5) 2.80% 3.55% 3.55%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
GABELLI GLOBAL CONVERTIBLE
SECURITIES FUND
CLASS A SHARES $842 $1,393
CLASS B SHARES
Assuming redemption 858 1,388
Assuming no redemption 358 1,088
CLASS C SHARES
Assuming redemption 458 1,088
Assuming no redemption 358 1,088
</TABLE>
FEES AND EXPENSES
As an investor in the
Funds, you will pay the
following fees and
expenses when you buy and
hold shares. Annual Fund
operating expenses are
paid out of Fund assets,
and are reflected in the
share price.
CONTINGENT DEFERRED SALES
CHARGE
Some Fund share classes
impose a back end sales
charge if you sell your
shares before a certain
period of time has
elapsed. This is called a
Contingent Deferred Sales
Charge ("CDSC").
EXPENSE EXAMPLE
Use the example shown here to
compare fees and expenses
with those of other funds. It
illustrates the amount of
fees and expenses you would
pay, assuming the following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period (except as
noted)
- no changes in the Funds'
operating expenses
Because this example is
hypothetical and for
comparison only, your actual
costs may be higher or lower.
(1) Lower sales charges are available depending upon the amount invested.
(2) The CDSC will be based upon the lower of the value of your shares at time
of purchase or time of redemption.
(3) A CDSC on Class B shares declines over seven years starting with year one
from: 5%, 4%, 3%, 3%, 2%, 1%, 0%. After seven years, Class B shares are
converted to Class A shares, which have a lower 12b-1 fee. A CDSC of 1%
applies to redemptions of Class C shares within the first twenty-four
months.
(4) Exchanges may be made only to the same class of other funds.
(5) Total annual Fund operating expenses have been restated to reflect
current fees, and may differ from information in the Fund's most recent
Annual Report.
10
<PAGE> 12
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
GENERAL
Each Fund invests primarily in common stocks (or, in the case of the Global
Convertible Securities Fund, in securities convertible into common stock) of
companies which the Funds' adviser, Gabelli Funds, LLC (the "Adviser")
believes are likely to have rapid growth in revenues and earnings and the
potential for above average capital appreciation. The Adviser invests in
companies whose stocks are selling at a significant discount to their
"private market value." Private market value is the value the Adviser
believes informed investors would be willing to pay to acquire the entire
company. If investor attention is focused on the underlying asset value of a
company due to expected or actual developments or other catalysts, an
investment opportunity to realize this private market value may exist.
Undervaluation of a company's stock can result from a variety of factors,
such as a lack of investor recognition of
- the underlying value of a company's fixed assets,
- the value of a consumer or commercial franchise,
- changes in the economic or financial environment affecting the company,
- new, improved or unique products or services,
- new or rapidly expanding markets,
- technological developments or advancements affecting the company or its
products, or
- changes in governmental regulations, political climate or competitive
conditions.
The actual events that may lead to a significant increase in the value of a
company's securities include:
- a change in the company's management policies,
- an investor's purchase of a large portion of the company's stock,
- a merger or reorganization or recapitalization of the company,
- a sale of a division of the company,
- a tender offer (an offer to purchase investors' shares),
- the spin-off to shareholders of a subsidiary, division or other
substantial assets, or
- the retirement or death of a senior officer or substantial shareholder
of the company.
In selecting investments, the Adviser also considers the market price of the
issuer's securities, its balance sheet characteristics and the perceived
strength of its management.
GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Telecommunications Fund's primary investment objective is
long-term capital appreciation. Current income is a secondary objective of
the Fund. The Fund's investment objectives may not be changed without
shareholder approval.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Telecommunications Fund will
invest at least 65% of its total assets in common stocks of companies in the
telecommunications industry which the Adviser believes are likely to have
rapid growth in revenues and earnings and potential for above average capital
11
<PAGE> 13
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
appreciation or are undervalued. In selecting investments, the Adviser also
considers the market price of the issuer's securities, its balance sheet
characteristics and the perceived strength of its management.
The telecommunications companies in which the Global Telecommunications Fund
may invest are engaged in the following products or 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
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.
SPECIFIC RISK FACTORS
The telecommunications industry is subject to governmental regulation and a
greater price volatility than the overall market and the products and
services of telecommunications companies may be subject to rapid obsolescence
resulting from changing consumer tastes, intense competition and strong
market reactions to technological developments throughout the industry.
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.
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Interactive Couch Potato(R) Fund primarily seeks to provide
investors with appreciation of capital. Current income is a secondary
objective.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Interactive Couch Potato(R) Fund
will invest at least 65% of its total assets in common stocks of companies
involved with entertainment and media, publishing and communications. Such
companies participate in emerging technological advances in interactive
services and products (i.e., computer software) that are accessible to
individuals in their homes or offices through consumer electronics content
based devices such as telephones, televisions, radios and personal computers.
The Fund will invest in companies which the Adviser believes are likely to
have rapid growth in revenues and earnings and potential for above average
capital appreciation or are undervalued. In selecting investments, the
Adviser also considers the market price of the issuer's securities, its
balance sheet characteristics and the perceived strength of its management.
The 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
12
<PAGE> 14
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
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;
electronic commerce and internet services; 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.
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.
SPECIFIC RISK FACTORS
The communications, entertainment and media and publishing industries are
subject to governmental regulation and a greater price volatility than the
overall market, and the products and services of such companies may be
subject to rapid obsolescence resulting from changing consumer tastes,
intense competition and strong market reactions to technological developments
throughout the industry.
Many countries impose various types of ownership restrictions 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, in the United States, the 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 and limit the
number of such companies in which the Adviser, on behalf of itself and its
clients, may have an "attributable interest." These same broadcast rules
limit the holding of attributable interests in AM and FM radio broadcast
stations and television stations nationally. Similar types of restrictions
apply in other mass media and common carrier industries.
13
<PAGE> 15
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
Government actions around the world, specifically in the area of
pre-marketing clearance of products and prices, can be arbitrary and
unpredictable. Changes in world currency values are also unpredictable and
can have a significant short-term impact on revenues, profits and share
valuations.
Certain of the companies in which the Global Interactive Couch Potato(R) Fund
invests may allocate greater than usual financial resources to research and
product development. The securities of such companies may experience
above-average price movements associated with the perceived prospects of
success of the research and development programs. In addition, companies in
which the Fund invests may be adversely affected by lack of commercial
acceptance of a new product or process or by technological change and
obsolescence.
GLOBAL OPPORTUNITY FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Opportunity Fund primarily seeks to provide investors with capital
appreciation. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Opportunity Fund will invest at
least 65% of its total assets in common stock of companies which the Adviser
believes are likely to have rapid growth in revenues and earnings and
potential for above average capital appreciation or are undervalued.
GLOBAL CONVERTIBLE SECURITIES FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Convertible Securities Fund primarily seeks to provide investors
with a high level of total return through a combination of current income and
appreciation of capital.
PRINCIPAL INVESTMENT STRATEGIES
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 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 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.
14
<PAGE> 16
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
SPECIFIC RISK FACTORS
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 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 Fund's net asset value.
The characteristics of convertible securities make them appropriate
investments for investors who seek a high level of total return with the
addition of 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.
GENERAL RISK FACTORS
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. Portfolio turnover generally
involves some expense to the Funds, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities. As such, a higher portfolio turnover rate
could increase the Funds' expenses which could negatively affect the Funds'
performance.
COMMON STOCKS. Common stocks represent the residual ownership interest in an
issuer and are entitled to the income and increase in the value of the assets
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, investors perceptions of
the issuer and market liquidity. Preferred stock has preference over common
stock in liquidation (and generally dividends as well) but is subordinated to
the liabilities of the issue in all other respects.
15
<PAGE> 17
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
- -
NON-DIVERSIFICATION RISK. Each Fund is a "non-diversified investment company"
which means that it can concentrate its investments in the securities of a
single company to a greater extent than a diversified investment company.
Because each Fund may invest its assets in the securities of a limited number
of companies, a decline in the value of the stock of any one of these issuers
will have a greater impact on the Fund's share price. In addition, many
companies in the past several years have adopted so-called "poison pill" and
other defensive measures. Such measures may limit the amount of securities in
any one issuer that the Funds may buy.
FOREIGN RISK. Investments in foreign securities involve risks relating to
political, social and economic developments abroad, as well as risks
resulting from the differences between the regulations to which U.S. and
foreign issuers and markets are subject:
- These risks may include the seizure by the government of company assets,
excessive taxation, withholding taxes on dividends and interest,
limitations on the use or transfer of portfolio assets and political or
social instability.
- Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.
- Foreign companies may be not subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be
less public information about their operations.
- Foreign markets may be less liquid and more volatile than U.S. markets.
- Foreign securities often trade in currencies other than the U.S. dollar,
and the Funds may directly hold foreign currencies and purchase and sell
foreign currencies. Changes in currency exchange rates will affect the
Fund's net asset value, the value of dividends and interest earned, and
gains and losses realized on the sale of securities. An increase in the
strength of the U.S. dollar relative to these other currencies may cause
the value of the Funds to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity of the Funds'
foreign currency holdings.
- Costs of buying, selling and holding foreign securities, including
brokerage, tax and custody costs, may be higher than those involved in
domestic transactions.
The Funds' investments in the securities of developing countries involves
exposure to economic structures that are generally less diverse and less
mature, and to political systems that can be expected to have less stability,
than those of developed countries. The markets of developing countries
historically have been more volatile than the markets of the more mature
economies of developed countries, but often have provided higher rates of
return to investors.
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<PAGE> 18
FUND MANAGEMENT
- -
THE INVESTMENT ADVISER
Gabelli Funds, LLC (the "Adviser"), One Corporate Center, Rye, NY 10580 is a
limited liability company organized in 1999 after a reorganization of the
predecessor, Gabelli Funds, Inc., which was formed in 1980. As of December
31, 1998, Gabelli Funds, LLC and its affiliates manage more than $16.3
billion in assets. Through its portfolio management team, Gabelli Funds, LLC
makes the day-to-day investment decisions and continuously reviews,
supervises and administers each Fund's investment programs.
For these advisory services, the Adviser earns a fee of 1.00% of average net
assets. Any portion of the total fees received by the Adviser may be used by
the Adviser to provide shareholder and administrative services.
A
THE PORTFOLIO MANAGERS
Mr. Mario J. Gabelli, President, is the team manager 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 Associate Portfolio Manager, Marc J.
Gabelli.
Mr. Marc Gabelli is also primarily responsible for the day-to-day management
of the Global Interactive Couch Potato(R) Fund. Mr. Gabelli is a Portfolio
Manager of the Adviser, and has been an analyst with the Adviser since 1993.
Messrs. Marc Gabelli and Caesar Bryan are primarily responsible for the
day-to-day management of the Global Opportunity Fund. Mr. Bryan is President
and Portfolio Manager of the Gabelli Gold Fund and the Gabelli International
Growth Fund and has been a Senior Vice President of GAMCO Investors, Inc., a
wholly owned subsidiary of Gabelli Asset Management Inc., since May 1994. Mr.
Bryan served as Senior Vice President and Portfolio Manager of Lexington
Management Corporation from 1986 until May 1994.
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.
A
THE DISTRIBUTOR
Gabelli & Company, Inc. is the Funds' distributor. Its address is One
Corporate Center, Rye, NY 10580.
The Statement of Additional Information has more detailed information about
the Adviser and other service providers.
YEAR 2000. As the year 2000 approaches, an issue has emerged regarding how
the software used by the Fund's service providers can accommodate the date
"2000." Failure to adequately address this issue could result in major
systems or process failures which could disrupt the Fund's operations. The
Adviser is in the process of working with the Fund's service providers to
prepare for the year 2000. Based on information currently available, the
Adviser does not expect that the Fund will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
The Fund cannot guarantee, however, that all year 2000 issues will be
identified and corrected by January 1, 2000, and any noncompliant computer
system could hurt key Fund operations, such as shareholder servicing, pricing
and trading. In addition, the Year 2000 problem may adversely affect the
companies in which the Fund invests, particularly companies in foreign
countries. For example, these companies may incur substantial costs to
correct the problem. To the extent that the impact on a Fund holding is
negative, it could seriously affect the Fund's performance.
A
17
<PAGE> 19
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
HOW NAV IS CALCULATED
The NAV is calculated by
adding the total value of
the Fund's investments and
other assets, subtracting
its liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
------------------------------------------------------------------------------
Number of Shares
Outstanding
---------------------------
You can find the Fund's NAV
daily in the Wall Street
Journal and other
newspapers or by calling
1-800-GABELLI
(800-422-3554).
The Funds' net asset value, or NAV, is
determined and its shares are priced
at the close of regular trading on the
New York Stock Exchange, normally at
4:00 p.m., eastern time, on days the
New York Stock Exchange is open. Your
order for purchase, sale or exchange
of shares is priced at the next NAV
calculated after your order is
received by the Fund less any
applicable sales charges as noted in
the section on "Distribution
Arrangements/Sales Charges." This is
what is known as the offering price.
Fund securities are valued as of the
close of trading on the primary
exchange on which they trade. Fund
securities are generally valued at
current market prices. If market
quotations are not available, prices
will be based on the average of the
latest bid and asked quotations for
such securities prior to the valuation
time, or the latest bid prices if
asked prices are not available. Debt
securities with remaining maturities
of 60 days or less will be valued at
amortized cost, which the Board of
Directors believes represents fair
value.
Some Fund securities may be listed on
foreign exchanges that are open on
days (such as U.S. holidays) when the
Funds do not compute their NAV. This
could cause the value of the Funds'
portfolio investments to be affected
on days when you cannot buy or sell
shares.
PURCHASING, SELLING AND EXCHANGING SHARES
Information about purchasing, selling and exchanging your shares is contained
in a separate document called the Owner's Manual. If you have not received
it, please contact your broker or financial consultant or the Fund at the
number listed on the back page of this Prospectus. The Owner's Manual is
considered an integral part of this Prospectus.
18
<PAGE> 20
SHAREHOLDER INFORMATION
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
TYPES OF CHARGES
This section describes the sales charges and fees you will pay as an investor
in different share classes offered by the Funds and ways to qualify for
reduced sales charges.
<TABLE>
<CAPTION>
TYPES OF CHARGES CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Sales Charge (Load) Front-end sales charge; No front-end sales No front-end sales
reduced sales charges charge. A contingent charge, but 1% CDSC may
available. deferred sales charge be imposed on shares
(CDSC) may be imposed redeemed within twenty-
on shares redeemed four months of
within seventy-two purchase; unlike Class
months after purchase; B shares, Class C
shares automatically shares do not convert
convert to Class A to Class A shares.
Shares after
eighty-four months.
Distribution and Subject to annual Subject to annual Subject to annual
Service (12b-1) Fee distribution and distribution and distribution and
shareholder servicing shareholder servicing shareholder servicing
fees of up to .25% of fees of up to 1.00% of fees of up to 1.00% of
the Fund's total the Fund's assets. the Fund's assets.
assets.
Fund Expenses Lower annual expenses Higher annual expenses Higher annual expenses
then Class B or C than Class A shares. than Class A or B
shares. Shares. Class C shares
are similar to Class B
shares, except that the
contingent deferred
sales charge is imposed
only on shares redeemed
within twenty-four
months of purchase,
there is no maximum
investment and Class C
shares do not convert
to Class A shares.
</TABLE>
CALCULATION OF SALES CHARGES
CLASS A SHARES
Class A shares are sold at their public offering price. This price
includes the initial sales charge. Therefore, part of the money you invest
will be used to pay the sales charge. The remainder is invested in Fund
shares. The sales charge decreases with larger purchases. There is no
sales charge on reinvested dividends and distributions and on purchases
greater than $1 million.
19
<PAGE> 21
SHAREHOLDER INFORMATION
- -
The current sales charge rates are as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A % SALES CHARGE AS A % DEALER CONCESSION AS
YOUR INVESTMENT OF OFFERING PRICE(1) OF YOUR INVESTMENT A % OF OFFERING PRICE
<S> <C> <C> <C>
Up to $49,999 5.75% 6.10% 5.00%
$50,000 up to $99,999 4.50% 4.71% 4.00%
$100,000 up to $249,999 3.00% 3.63% 2.50%
$250,000 up to $499,999 2.50% 2.56% 2.00%
$500,000 up to $999,999 2.00% 2.04% 1.50%
$1,000,000 up to $1,999,999 1.00% 1.01% 1.00%
$2,000,000 and above(2) None None 1.00%
</TABLE>
CLASS B AND CLASS C SHARES
Class B and Class C shares are offered at NAV, without any up-front sales
charge. Therefore, all the money you invest is used to purchase Fund
shares. However, if you sell your Class B shares of the Fund before the
seventh anniversary of purchase, you will have to pay a contingent
deferred sales charge at the time of redemption. If you sell your Class C
shares before the second anniversary of purchase, you will pay a 1% CDSC
at the time of redemption. The CDSC will be based upon the lower of the
NAV at the time of purchase or the NAV at the time of redemption according
to the schedule below. There is no CDSC on reinvested dividends or
distributions.
CLASS B SHARES CLASS C SHARES
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
First 5.00%
Second 4.00%
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter None
</TABLE>
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR
MONTHS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C>
Less than 24 months 1.00%
More than 24 months None
</TABLE>
If you sell some but not all of your Class B or Class C shares, certain
shares not subject to the CDSC (i.e., shares purchased with reinvested
dividends) will be redeemed first, followed by shares subject to the
lowest CDSC (typically shares held for the longest time).
(1) The Distributor reserves the right to pay the entire sales charge to
dealers. If that occurs the dealer may be considered an "underwriter"
under federal securities laws.
(2) There is no initial sales charge on purchases of $2 million or more.
However, a contingent deferred sales charge (CDSC) of up to 1.00% of
the purchase price will be charged to the shareholder if shares are
redeemed in the first year after purchase. This charge will be based
on the lower of your cost for the shares or their NAV at the time of
redemption. There will be no CDSC on reinvested dividends and
distributions.
20
<PAGE> 22
SHAREHOLDER INFORMATION
CONVERSION FEATURE -- CLASS B SHARES
- Class B shares automatically convert to Class A shares of the Fund on the
first business day of the eighty-fifth calendar month following the
calendar month in which such shares were issued.
- After conversion, your shares will be subject to the lower distribution
fees charged on Class A shares, which will increase your investment return
compared to the Class B shares.
- You will not pay any sales charge or fees when your shares convert, nor
will the transaction be subject to any tax.
- If you purchased Class B shares of one Fund which you exchanged for Class B
shares of another Fund, your holding period will be calculated from the
time of your original purchase of Class B shares. The dollar value of Class
A shares you receive will equal the dollar value of the Class B shares
converted.
- If you exchange shares into a Gabelli money market fund, your holding
period is suspended.
- The automatic conversion of Class B shares to Class A shares may be
suspended by the Board of Directors at any time it determines such
suspension to be required under applicable law or in the exercise of their
fiduciary duties; provided, however, that if the Board determines that the
suspension is likely to continue for a substantial period of time, the
Board of Directors will seek to create an additional class or additional
classes of shares into which Class B shares are eligible for conversion
under the rules of the Securities and Exchange Commission and other
applicable law.
SALES CHARGE REDUCTIONS
Reduced sales charges for Class A shares are available to shareholders with
investments of $50,000 or more. In addition, you may qualify for reduced
sales charges under the following circumstances:
- Letter of Intent. You inform the Fund in writing that you intend to
purchase enough shares over a 13-month period to qualify for a reduced
sales charge. You must include a minimum of 5% of the total amount you
intend to purchase with your letter of intent.
- Rights of Accumulation. When the value of shares you already own plus the
amount you intend to invest reaches the amount needed to qualify for
reduced sales charges, your added investment will qualify for the reduced
sales charge.
- Combination Privilege. Combine accounts of multiple Funds or accounts of
immediate family household members (spouse and children under 21) to
achieve reduced sales charges.
SALES CHARGE WAIVERS
CLASS A SHARES
The following qualify for waivers of sales charges:
- Reinvestment of distributions from a deferred compensation plan, agency,
trust, or custody account that was maintained by the Adviser, its
affiliates or any NASD member.
- Shares purchased by directors, officers, employees of the Fund, the Adviser
or the Distributor and their affiliates, and members of the immediate
family. 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.
21
<PAGE> 23
SHAREHOLDER INFORMATION
- -
REINSTATEMENT PRIVILEGE
If you have sold Class A shares and decide to reinvest in
the Fund within a 30 day period, you will not be charged
the applicable sales load on amounts up to the value of the
shares you sold. You must provide a written reinstatement
request and payment within 30 days of the date your
instructions to sell were processed.
CLASS B SHARES
The CDSC will be waived under certain circumstances, including the following:
- Distributions from retirement plans if the distributions are made following
the death or disability of shareholders or plan participants.
- Redemptions from accounts other than retirement accounts following the
death or disability of the shareholder.
- Minimum required distributions made from an IRA or other retirement plan
account after the shareholder reaches age 59 1/2.
- Distributions from tax-deferred retirement plans after the shareholder's
retirement.
- Returns of excess contributions to retirement plans following the death or
disability of the shareholder.
- Distributions of less than 5% of the annual account value under a
Systematic Withdrawal Plan.
- Shares issued in a plan of reorganization sponsored by the Adviser, or
shares redeemed involuntarily in a similar situation.
DISTRIBUTION (12b-1) FEES
The Funds have adopted distribution plans pursuant to Rule 12b-1 under the
1940 Act which authorize payments by the Funds to compensate the Distributor
and other dealers and investment representatives for services and expenses
relating to the sale and distribution of the Funds' shares. Rule 12b-1 fees
are paid from the Funds' assets on an ongoing basis, and increase the cost of
your investment and may cost you more than paying other types of sales
charges.
- The 12b-1 fees vary by share class as follows:
- Class A shares pay a 12b-1 fee of .25% of the average daily net assets of
the Fund.
- Class B and Class C shares pay a 12b-1 fee of 1.00% of the average daily
net assets of the Fund. This will cause expenses for Class B and Class C
shares to be higher and dividends to be lower than for Class A shares.
- The higher 12b-1 fee on Class B and Class C shares, together with the CDSC,
help the Distributor sell Class B and Class C shares without an "up-front"
sales charge. In particular, these fees help to defray the Distributor's
costs of advancing brokerage commissions to investment representatives.
- The Distributor may use up to .25% of the 12b-1 fee for shareholder
servicing and up to .75% for distribution.
Long-term shareholders may pay indirectly more than the equivalent of the
maximum permitted front-end sales charge due to the recurring nature of 12b-1
distribution fees.
22
<PAGE> 24
SHAREHOLDER INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
Any income a Fund receives in the form of interest or dividends is paid out,
less expenses, to its shareholders. The Funds declare and pay dividends from
net investment income and capital gains, if any, on an annual basis.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether you receive them in cash or in additional shares.
The Funds expect that their dividends will primarily consist of net
investment income and, if any, short-term and long-term capital gains. The
determination as to whether a gain to be distributed is short-term or
long-term depends on the amount of time the security is held by a Fund prior
to disposition and not on the amount of time a shareholder has been invested
in such Fund. Distributions from net investment income and short-term capital
gains are taxable as ordinary income. Such distributions are taken into
account for tax purposes in the year in which they are declared, even if they
appear on your account statement the following year. Long-term capital gain
distributions are taxable at long-term capital gain tax rates. The exchange
of the Funds' shares for share of another fund will be treated as a sale of
shares, and any gain on the transaction may be subject to federal income tax.
You will be notified in January each year about the federal tax status of
distributions made by the Funds. Depending on your residence for tax
purposes, distributions also may be subject to state and local taxes,
including withholding taxes.
TAX IDENTIFICATION NUMBER
The Funds are required to withhold 31% of taxable
dividends, capital gains distributions and redemptions
proceeds paid to shareholders who have not provided the
Funds with their Taxpayer Identification Number in
compliance with IRS rules. To avoid this, make sure you
provide your correct Tax Identification Number (Social
Security Number for most investors) on your account
application.
Foreign shareholders may be subject to special withholding requirements.
Consult your tax adviser about the federal, state and local tax consequences
in your particular circumstances.
OTHER SHAREHOLDER SERVICES
As a shareholder of the Funds, you can take advantage of other service
privileges which are described in the Owner's Manual:
- Telephone Investment and Redemption Plan
- Automatic Investment Plan
- Systematic Withdrawal Plan
- Retirement Plans
23
<PAGE> 25
FINANCIAL HIGHLIGHTS
- -
At this time, the Class A Shares, Class B Shares and Class C Shares have not
previously been offered.
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
24
<PAGE> 26
GABELLI GLOBAL SERIES FUNDS, INC.
FOR MORE INFORMATION:
For more information about the Funds, the following documents are available free
upon request:
OWNER'S MANUAL:
Information about purchasing, selling and exchanging shares of the Funds is
included in a separate document entitled "Owner's Manual." The Owner's Manual is
incorporated by reference into the Prospectus. If you have not received it,
please contact the Funds at the number listed below.
ANNUAL/SEMI-ANNUAL REPORTS:
The Funds' semi-annual and audited annual reports to shareholders contain
detailed information on the Funds' investments. In the annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including their
operations and investment policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
You can get free copies of these documents and prospectuses of other Funds
in the Gabelli family, or request other information and discuss your
questions about the Fund by contacting:
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Funds' reports and SAIs at the Public Reference Room of the
Securities and Exchange Commission. You can get text-only copies:
X For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
X Free from the Commission's Website at http://www.sec.gov.
(Investment Company Act file no. 811-07896)
<PAGE> 27
GABELLI FUNDS
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
1-800-422-3554
FAX: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
THE
GABELLI
FAMILY OF
FUNDS
OWNER'S MANUAL
A CLASS
B CLASS
C CLASS
MAY 1, 1999
- GABELLI GLOBAL SERIES FUNDS, INC.
- GABELLI INTERNATIONAL GROWTH FUND, INC.
- GABELLI ASSET FUND
- GABELLI GROWTH FUND
THE INFORMATION CONTAINED IN THE OWNER'S MANUAL IS INCORPORATED BY REFERENCE
INTO, AND IS LEGALLY CONSIDERED PART OF, THE PROSPECTUSES FOR THE GABELLI
FAMILY OF FUNDS. THE OWNER'S MANUAL MUST BE PRECEDED OR ACCOMPANIED BY A
GABELLI FUNDS PROSPECTUS.
<PAGE> 28
OWNER'S MANUAL TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PURCHASING SHARES
3 Instructions for Opening or Adding to an Account
4 Telephone Investment Plan
4 Automatic Investment Plan
4 Retirement Plans
4 Minimum Investments
4 Dividends and Distributions
SELLING SHARES
5 Instructions for Selling Shares
5 By Bank Wire or Check via Telephone
5 By Bank Wire or Check via Mail
6 General Policies on Selling Shares
6 Signature Guarantees
6 Verifying Telephone Redemptions
6 Redemptions Within 15 Days of Investment
6 Refusal of Redemption Request
6 Closing of Small Accounts
6 Undeliverable Distribution Checks
EXCHANGING SHARES
7 Instructions for Exchanging Shares
PRICING OF FUND SHARES
8 How NAV is Calculated
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
9 Types of Charges
9 Calculation of Sales Charge
11 Conversion Feature
11 Sales Charge Reductions
12 Sales Charge Waivers
</TABLE>
2
<PAGE> 29
PURCHASING SHARES
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
PURCHASES THROUGH BROKERS/DEALERS:
If purchasing through your financial advisor or brokerage account, simply
tell your advisor or broker that you wish to purchase shares of the Funds and
he or she will take care of the necessary documentation. For all other
purchases directly with the Fund, follow the instructions below.
PURCHASES DIRECTLY FROM THE FUND:
All investments made by regular mail or personal delivery, whether initial or
subsequent, should be sent to:
<TABLE>
<S> <C>
BY REGULAR MAIL BY OVERNIGHT DELIVERY
The Gabelli Funds The Gabelli Funds
PO Box 8308 c/o BFDS
Boston, MA 02266-8308 66 Brooks Drive
Braintree, MA 02184
</TABLE>
For Initial Investment:
1. Carefully read and complete the application.
2. Make check, bank draft or money order payable to "[name of Fund]."
3. Mail or deliver application and payment to the address above.
For Subsequent Investments:
1. Make check, bank draft or money order payable to "[name of Fund]" or
"Gabelli Funds."
2. Provide the exact name and number of your account.
3. Mail or deliver payment to the address above.
BY WIRE TRANSFER
For Initial Investment:
Call 1-800-GABELLI (1-800-422-3554) to obtain a new account number. Promptly
mail the completed application to the address shown above for regular mail,
and
For Initial and Subsequent Investments:
Instruct your bank to wire transfer your investment to:
STATE STREET BANK AND TRUST COMPANY
ABA #011-0000-28 REF DDA# 9904-6187
ATTN: SHAREHOLDER SERVICES
RE: [FUND NAME]
A/C#
-------------------------------
YOUR NAME
--------------------------
225 FRANKLIN STREET, BOSTON, MA 02110
NOTE: YOUR BANK MAY CHARGE A WIRE TRANSFER FEE.
3
<PAGE> 30
PURCHASING SHARES
- -
You can add to your account by using the convenient options described
below. The Fund reserves the right to change or eliminate these privileges
at any time upon 60 days notice to shareholders.
TELEPHONE INVESTMENT PLAN
You may purchase additional shares of the Funds by telephone as long as your
bank is a member of the Automated Clearing House (ACH) system. You must also
have a completed, approved Investment Plan application on file with the
Fund's Transfer Agent. There is a minimum of $100 for each telephone
investment. To initiate an ACH purchase, please call 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365.
AUTOMATIC INVESTMENT PLAN
You can make automatic monthly investments in the Funds. Details about this
plan can be obtained from the Distributor on a separate application by
calling 1-800-GABELLI (800-422-3554).
RETIREMENT PLANS
You can invest in various types of retirement plans through the Fund. Details
about these plans can be obtained from the Distributor.
<TABLE>
<CAPTION>
MINIMUM
MINIMUM INITIAL SUBSEQUENT
ACCOUNT TYPE INVESTMENT INVESTMENT
<S> <C> <C>
Regular (non-retirement) $1,000 $ 0
Retirement (IRA)
Traditional IRA $1,000 $ 0
Roth IRA $1,000 $ 0
Spousal IRA $ 250 $ 0
Education IRA $ 250 $ 0
Automatic Investment Plan $ 0 $100
Telephone Investment Plan $ 100 $100
</TABLE>
MINIMUM INVESTMENTS
You may purchase Funds
through the Distributor
or participating
organizations, which
may charge additional
fees and may require
higher or lower minimum
investments or impose
other limitations on
buying and selling
shares.
All purchases must be in U.S. dollars. A fee will be
charged for any checks that do not clear.
Third-party checks are not accepted. Your purchase
of shares will be effective on the same business day
if the Fund's Transfer Agent receives your order by
4:00 p.m. (12 noon for a money market fund), and
receives your form of payment by 4:00 p.m., eastern
time. Otherwise, your purchase will be effective on
the next business day. (See "Pricing of Fund
Shares.") Shares are held on account for you unless
you specify in writing that you would like to
receive a stock certificate (certificates are not
available for money market funds). We can only issue
a certificate for whole shares.
The Distributor may reject a purchase order if it
considers it in the best interest of the Fund and
its shareholders. A Fund may waive its minimum
purchase requirement.
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions will be automatically reinvested unless you
request otherwise.
4
<PAGE> 31
SELLING SHARES
If selling your shares through your financial adviser or broker, ask him or
her for redemption procedures. Your adviser and/or broker may have
transaction minimums and/or transaction times which will affect your
redemption. For all other sales transactions, follow the instructions below.
As a mutual fund
shareholder, you are
technically selling shares
when you request a
withdrawal in cash. This
is also known as redeeming
shares.
WITHDRAWING MONEY FROM YOUR INVESTMENT
You may sell your shares at any time. Your
sales price will be the next NAV after your
sell order is received by the Fund, its
transfer agent, or your investment
representative. See section on "General
Policies on Selling Shares" below.
CONTINGENT DEFERRED SALES CHARGE
When you sell Class B or C shares, you will
be charged a fee for any shares that have
not been held for a sufficient length of
time. These fees will be deducted from the
money paid to you. See the section on
"Distribution Arrangements/Sales Charges"
below for details.
SYSTEMATIC WITHDRAWAL PLAN
You can receive automatic payments from your
account on a monthly, quarterly or annual
basis. You can obtain details from the
Distributor.
INSTRUCTIONS FOR SELLING SHARES
The Fund accepts requests for redemptions of unissued shares.
BY BANK WIRE OR CHECK VIA TELEPHONE
1. Call 1-800-GABELLI (1-800-422-3554) with your account number, the amount
of the redemption and instructions as to how you wish to receive your
funds.
2. If you are unable to reach the Fund by telephone, you may telecopy your
redemption request to the Fund at 914-921-5118.
NOTE: If you call by 4:00 p.m., eastern time, your payment will normally be
wired to your bank on the following business day. (For Money Market Funds: If
you call before 12:00 noon, eastern time, your payment will be wired to your
bank on that day). If you call after that time, your payment will be wired to
your bank on the next business day. If you request your wire redemption by
telephone, it must be at least $1,000. Your bank may charge a fee for
incoming wires.
BY BANK WIRE OR CHECK VIA MAIL
Submit a redemption request to the Fund. Redemption requests may be made by
letter to the Transfer Agent. You must specify the name of the Fund, the
dollar amount or number of shares you wish to redeem and the account number.
You must sign the letter in exactly the same way the account is registered,
and if there is more than one owner of shares, all must sign. A signature
guarantee is required for most requests.
5
<PAGE> 32
SELLING SHARES
GENERAL POLICIES ON SELLING SHARES
SIGNATURE GUARANTEES
Signature guarantees are required on redemption requests for the following:
- The check is not being mailed to the address on your account
- The check is not being made payable to the owner of the account
- The redemption proceeds are being transferred to another person's Fund
account.
A signature guarantee can be obtained from most banks and securities dealers.
Notarized signatures are not considered a signature guarantee.
VERIFYING TELEPHONE REDEMPTIONS
The Fund makes every effort to ensure that telephone redemptions are only
made by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity. If
appropriate precautions have not been taken, the Fund may be liable for
losses due to unauthorized transactions.
REDEMPTIONS WITHIN 15 DAYS OF INVESTMENT
When you have made an investment by check or through the automatic investment
plan, your redemption proceeds will not be mailed until the Transfer Agent is
satisfied that the check has cleared (which may require up to 15 days). You
can avoid this delay by purchasing shares with a certified check or federal
funds wire.
REDEMPTION IN KIND
The Fund reserves the right to make a redemption in kind - payment in
portfolio securities rather than cash - for certain large redemption amounts
that could hurt fund operations.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
CLOSING OF SMALL ACCOUNTS
If your account (other than IRA) falls below $500, the Fund may ask you to
increase your balance. If it is still below $500 after 30 days, the Fund may
close your account and send you the proceeds at the current NAV.
UNDELIVERABLE DISTRIBUTION CHECKS
If distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that
remain uncashed for six months will be canceled and the money reinvested in
the Fund at the then current net asset value.
QUESTIONS?
Call 1-800-GABELLI
or your investment
representative.
6
<PAGE> 33
EXCHANGING SHARES
You can exchange your
shares in one Fund for
shares of the same class of
another Fund managed by
Gabelli Funds, LLC or its
affiliates, usually without
paying additional sales
charges (see "Notes on
Exchanges" below).
You must meet the minimum
investment requirements for
the Fund into which you are
exchanging. Exchanges from
one Fund to another are
taxable transactions.
INSTRUCTIONS FOR EXCHANGING SHARES
Exchanges may be made by sending a
written request to The Gabelli
Funds, PO Box 8308, Boston, MA
02266-8308 or by calling
1-800-GABELLI (1-800-422-3554).
Please provide the following
information:
- Your name and telephone number
- The exact name on your account and
account number
- Taxpayer identification number
(usually your Social Security
number)
- Dollar value or number of shares
to be exchanged
- The names of the Funds from/into
which the exchange is to be made
See "Selling Shares" for important
information about telephone
transactions.
NOTES ON EXCHANGES
- There will be no sales charge upon
an exchange when exchanging Class
B and Class C shares for Class B
and Class C shares, respectively,
of any other fund managed by the
Adviser or an affiliate, but a
CDSC may be payable upon redeeming
those shares.
- The registration and tax
identification numbers of the two
accounts must be identical.
- This Exchange Privilege may be
changed or eliminated at any time
upon a 60-day notice to
shareholders.
- Be sure to read the Prospectus
carefully of any Fund into which
you wish to exchange shares.
7
<PAGE> 34
PRICING OF FUND SHARES
HOW NAV IS CALCULATED
The NAV is calculated by
adding the total value of
the Fund's investments and
other assets, subtracting
its liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
--------------------------
Number of Shares
Outstanding
---------------------------
You can find the Fund's NAV
daily in the Wall Street
Journal and other
newspapers, or by calling
1-800-GABELLI
(800-422-3554).
The Fund's net asset value, or NAV, is
determined and its shares are priced
at the close of regular trading on the
New York Stock Exchange, normally at
4:00 p.m., eastern time, on days the
New York Stock Exchange is open. Your
order for purchase, sale or exchange
of shares is priced at the next NAV
calculated after your order is
received by the Fund less any
applicable sales charge as noted in
the section on "Distribution
Arrangements/Sales Charges." This is
what is known as the offering price.
Fund securities are valued as of the
close of trading on the primary
exchange on which they trade. Fund
securities are generally valued at
current market prices. If market
quotations are not available, prices
will be based on the average of the
latest bid and asked quotations for
such securities prior to the valuation
time, or the latest bid price if asked
prices are not available. Debt
securities with remaining maturities
of 60 days or less will be valued at
amortized cost, which the Board of
Directors believes represents fair
value.
Some Fund securities may be listed on
foreign exchanges that are open on
days (such as U.S. holidays) when a
Fund does not compute its NAV. This
could cause the value of a Fund's
portfolio investments to be affected
on days when you cannot buy or sell
shares.
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
8
<PAGE> 35
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
TYPES OF CHARGES
This section describes the sales charges and fees you will pay as an investor
in different share classes offered by the Fund and ways to qualify for
reduced sales charges.
<TABLE>
<CAPTION>
TYPES OF CHARGES CLASS A CLASS B CLASS C
<S> <C> <C> <C>
Sales Charge (Load) Front-end sales charge; No front-end sales No front-end sales
reduced sales charges charge. A contingent charge, but 1% CDSC may
available. deferred sales charge be imposed on shares
(CDSC) may be imposed redeemed within twenty-
on shares redeemed four months of
within seventy-two purchase; unlike Class
months after purchase; B, Class C shares will
shares automatically never convert to
convert to Class A Class A shares.
Shares after
eighty-four months.
Distribution and Subject to annual Subject to annual Subject to annual
Service (12b-1) Fee distribution and distribution and distribution and
shareholder servicing shareholder servicing shareholder servicing
fees of up to .25% of fees of up to 1.00% of fees of up to 1.00% of
the Fund's total the Fund's assets. the Fund's assets.
assets.
Fund Expenses Lower annual expenses Higher annual expenses Higher annual expenses
then Class B or C than Class A shares. than Class A or B
shares. Shares. Class C shares
are similar to Class B
shares, except that the
contingent deferred
sales charge is imposed
only on shares redeemed
within twenty-four
months of purchase,
there is no maximum
investment and Class C
shares do not convert
to Class A shares.
</TABLE>
CALCULATION OF SALES CHARGES
CLASS A SHARES
Class A shares are sold at their public offering price. This price includes
the initial sales charge. Therefore, part of the money you invest will be
used to pay the sales charge. The remainder is invested in Fund shares. The
sales charge decreases with larger purchases. There is no sales charge on
reinvested dividends and distributions and on purchases greater than $1
million.
9
<PAGE> 36
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
The current sales charge rates are as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A % SALES CHARGE AS A % DEALER CONCESSION AS
YOUR INVESTMENT OF OFFERING PRICE(1) OF YOUR INVESTMENT A % OF OFFERING PRICE
<S> <C> <C> <C>
Up to $49,999 5.75% 6.10% 5.00%
$50,000 up to $99,999 4.50% 4.71% 4.00%
$100,000 up to $249,999 3.00% 3.63% 2.50%
$250,000 up to $499,999 2.50% 2.56% 2.00%
$500,000 up to $999,999 2.00% 2.04% 1.50%
$1,000,000 and above(2) None None 1.00%
</TABLE>
CLASS B AND CLASS C SHARES
Class B and Class C shares are offered at NAV, without any up-front sales
charge. Therefore, all the money you invest is used to purchase Fund
shares. However, if you sell your Class B shares of the Fund before the
seventh anniversary of purchase, you will have to pay a contingent
deferred sales charge at the time of redemption. If you sell your Class C
shares before the second anniversary of purchase, you will pay a 1% CDSC
at the time of redemption. The CDSC will be based upon the lower of the
NAV at the time of purchase or the NAV at the time of redemption according
to the schedule below. There is no CDSC on reinvested dividends or
distributions.
CLASS B SHARES CLASS C SHARES
<TABLE>
<CAPTION>
CDSC AS A % OF DOLLAR CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE MONTHS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
<S> <C> <C> <C>
First 5.00% Less than 24 months 1.00%
Second 4.00% More than 24 months None
Third 3.00%
Fourth 3.00%
Fifth 2.00%
Sixth 1.00%
Seventh and thereafter None
</TABLE>
If you sell some but not all of your Class B or Class C shares, certain
shares not subject to the CDSC (i.e., shares purchased with reinvested
dividends) will be redeemed first, followed by shares subject to the
lowest CDSC (typically shares held for the longest time).
(1) The Distributor reserves the right to pay the entire sales charge to
dealers. If that occurs the dealer may be considered an "underwriter"
under federal securities laws.
(2) There is no initial sales charge on purchases of $1 million or more.
However, a contingent deferred sales charge (CDSC) of up to 1.00% of
the purchase price will be charged to the shareholder if shares are
redeemed in the first year after purchase. This charge will be based
on the lower of your cost for the shares or their NAV at the time of
redemption. There will be no CDSC on reinvested dividends and
distributions.
10
<PAGE> 37
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
CONVERSION FEATURE -- CLASS B SHARES
- Class B shares automatically convert to Class A shares of the same Fund on
the first business day of the eighty-fifth calendar month following the
calendar month in which the shares were purchased.
- After conversion, your shares will be subject to the lower distribution
fees charged on Class A shares, which will increase your investment return
compared to the Class B shares.
- You will not pay any sales charge or fees when your shares convert, nor
will the transaction be subject to any tax.
- If you purchased Class B shares of one Fund which you exchanged for Class B
shares of another Fund, your holding period will be calculated from the
time of your original purchase of Class B shares. The dollar value of Class
A shares you receive will equal the dollar value of the Class B shares
converted.
- If you exchange shares into a Gabelli money market fund, your holding
period will be suspended.
- The automatic conversion of Class B shares to Class A shares may be
suspended by the Board of Directors at any time it determines such
suspension to be required under applicable law or in the exercise of their
fiduciary duties; provided, however, that if the Board determines that the
suspension is likely to continue for a substantial period of time, the
Board of Directors will seek to create an additional class or additional
classes of shares into which Class B shares are eligible for conversion
under the rules of the Securities and Exchange Commission and other
applicable law.
SALES CHARGE REDUCTIONS
Reduced sales charges for Class A shares are available to shareholders with
investments of $50,000 or more. In addition, you may qualify for reduced
sales charges under the following circumstances:
- Letter of Intent. You inform the Fund in writing that you intend to
purchase enough shares over a 13-month period to qualify for a reduced
sales charge. You must include a minimum of 5% of the total amount you
intend to purchase with your letter of intent.
- Rights of Accumulation. When the value of shares you already own plus the
amount you intend to invest reaches the amount needed to qualify for
reduced sales charges, your added investment will qualify for the reduced
sales charge.
- Combination Privilege. Combine accounts of multiple Funds or accounts of
immediate family household members (spouse and children under 21) to
achieve reduced sales charges.
11
<PAGE> 38
DISTRIBUTION ARRANGEMENTS/SALES CHARGES
SALES CHARGE WAIVERS
CLASS A SHARES
The following qualify for waivers of sales charges:
- Reinvestment of distributions from a deferred compensation plan, agency,
trust, or custody account that was maintained by the Adviser, its
affiliates or any NASD member.
- Shares purchased by directors, officers, employees of the Fund, the Adviser
or the Distributor and their affiliates, and members of the immediate
family. 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.
-----------------------------------------------------------
REINSTATEMENT PRIVILEGE
If you have sold Class A shares and decide to reinvest in
the Fund within a 30 day period, you will not be charged
the applicable sales load on amounts up to the value of the
shares you sold. You must provide a written reinstatement
request and payment within 30 days of the date your
instructions to sell were processed.
-----------------------------------------------------------
CLASS B SHARES
The CDSC will be waived under certain circumstances, including the following:
- Distributions from retirement plans if the distributions are made following
the death or disability of shareholders or plan participants.
- Redemptions from accounts other than retirement accounts following the
death or disability of the shareholder.
- Minimum required distributions made from an IRA or other retirement plan
account after the shareholder reaches age 59 1/2.
- Distributions from tax-deferred retirement plans after the shareholder's
retirement.
- Returns of excess contributions to retirement plans following the death or
disability of the shareholder.
- Distributions of less than 5% of the annual account value under a
Systematic Withdrawal Plan.
- Shares issued in a plan of reorganization sponsored by the Adviser, or
shares redeemed involuntarily in a similar situation.
12
<PAGE> 39
GABELLI GLOBAL SERIES FUNDS, INC.
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
1-800-422-3554
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(NET ASSET VALUE MAY BE OBTAINED DAILY BY CALLING
1-800-GABELLI AFTER 6:00 P.M.)
BOARD OF DIRECTORS
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<S> <C>
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Asset Management Inc.
Felix J. Christiana Werner J. Roeder, MD
Former Senior Vice President Director of Surgery
Dollar Dry Dock Savings Bank Lawrence Hospital
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
John D Gabelli
Vice President
Gabelli & Company, Inc.
</TABLE>
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
GABELLI GLOBAL SERIES
FUNDS, INC.
AAA CLASS
PROSPECTUS
MAY 1, 1999
- THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
- THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
- THE GABELLI GLOBAL OPPORTUNITY FUND
- THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SHARES DESCRIBED IN THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE> 40
GABELLI GLOBAL SERIES FUNDS, INC. TABLE OF CONTENTS
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RISK/RETURN SUMMARY AND FUND EXPENSES
Carefully review this important 3-7
section, which summarizes the
Funds' investments, risks, past
performance, and fees.
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
Review this section for 13
information on investment
strategies and their risks.
FUND MANAGEMENT
Review this section for details 14 The Investment Adviser
on the people and organizations 14 The Portfolio Managers
who oversee the Funds. 14 The Distributor
SHAREHOLDER INFORMATION
Review this section and the 15 Pricing of Fund Shares
accompanying Owner's Manual for 15 Purchasing, Selling and Exchanging Shares
details on how shares are 15 Distribution Arrangements
valued, how to purchase, sell 16 Dividends, Distributions and Taxes
and exchange shares, related 16 Other Shareholder Services
charges and payments of
dividends and distributions.
FINANCIAL HIGHLIGHTS
17-19
BACK COVER
Where to learn more about this Fund
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RISK/RETURN SUMMARY AND FUND EXPENSES
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RISK/RETURN SUMMARY OF THE: GLOBAL TELECOMMUNICATIONS FUND
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
GLOBAL OPPORTUNITY FUND
Investment Objectives The Funds primarily seek to provide investors with
appreciation of capital. Current income is a secondary
objective of the Funds.
Principal The Funds invest primarily in common stocks of foreign and
Investment Strategy domestic small cap, mid cap and large cap issuers. Each Fund
may invest without limitations in securities of foreign
issuers and each Fund will invest in securities of issuers
located in at least three countries. Each of the Global
Telecommunications Fund, the Global Interactive Couch
Potato(R) Fund and the Global Opportunity Fund will focus
its holdings on companies which the Adviser believes are
likely to have rapid growth in revenues and earnings and
potential for above-average capital appreciation or are
undervalued. The Global Telecommunications Fund will
concentrate on companies in the telecommunications industry
and the Global Interactive Couch Potato(R) Fund will
concentrate on companies in the communications,
entertainment and media and publishing industries.
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RISK/RETURN SUMMARY OF THE: GLOBAL CONVERTIBLE SECURITIES FUND
Investment Objective The Fund seeks to provide investors with a high level of
total return through a combination of current income and
appreciation of capital.
Principal The Fund invests primarily in "convertible securities,"
Investment Strategy i.e., securities (bonds, debentures, corporate notes,
preferred stocks and other similar securities) which are
convertible or exchangeable for common stock within a
particular time period at a specified price or formula, of
foreign and domestic companies. The Adviser believes that
certain characteristics of convertible securities make them
appropriate investments for a fund seeking a high level of
total return on its assets. These characteristics include
the potential for capital appreciation if the value of the
underlying common stock increases, the relatively high yield
received from preferred dividend or interest payments as
compared to common stock dividends and the decreased risk of
decline in value relative to common stock due to the fixed
income nature of convertible securities.
PRINCIPAL GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT RISKS GLOBAL INTERACTIVE COUCH POTATO(R) FUND
GLOBAL OPPORTUNITY FUND
GLOBAL CONVERTIBLE SECURITIES FUND
Because the value of the Funds' investments will fluctuate
with market conditions, so will the value of your investment
in the Funds. You could lose money on your investment in the
Funds, or the Funds could underperform other investments.
Some of the Funds' holdings may underperform their other
holdings. The investment policies of the Funds may lead to a
higher portfolio turnover rate and correspondingly higher
expenses which could negatively affect the Funds'
performance. As the Funds are 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, each Fund may experience greater
fluctuation in net asset value than funds which invest in a
broad range of issuers. In addition, the Global
Telecommunications Fund and the Global Interactive Couch
Potato Fund concentrate their investments in specific
industries which are subject to
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RISK/RETURN SUMMARY AND FUND EXPENSES
- -
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governmental regulation and a greater price volatility than
the overall market and sell products and services that may
be subject to rapid obsolescence resulting from changing
consumer tastes, intense competition and strong market
reactions to technological development. The Global
Convertible Securities Fund may invest in lower credit
quality securities which may involve major risk exposures
such as increased sensitivity to interest rate and economic
changes and limited liquidity.
Moreover, each Fund may invest a substantial portion of its
assets in foreign securities which involve risks relating to
political, social and economic developments abroad, as well
as risks resulting from the differences between the
regulations to which U.S. and foreign issuers and markets
are subject. In addition, the costs of buying, selling and
holding foreign securities may be greater than for U.S.
Securities and foreign securities often trade in currencies
other than the U.S. dollar and an increase in the value of
the U.S. dollar relative to a foreign currency may cause the
value of a Fund's investments in securities denominated in
that currency to decline.
GLOBAL TELECOMMUNICATIONS FUND
The telecommunications industry is subject to governmental
regulation, a greater price volatility than the overall
market and the products and services of telecommunications
companies may be subject to rapid obsolescence.
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
The communications, entertainment and media and publishing
industries are subject to governmental regulation, a greater
volatility than the overall market and their products and
services may be subject to rapid obsolescence and change in
taste.
In addition, many countries impose various types of
ownership restrictions 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.
GLOBAL OPPORTUNITY FUND
The Global Opportunity Fund invests generally in a portfolio
of global equity securities. As such, there are no
additional principal risks associated with an investment in
the Fund other than those identified herein as applicable to
all of the Funds.
GLOBAL CONVERTIBLE SECURITIES FUND
The Global Convertible Securities Fund may invest without
limit in securities that are not considered investment
grade. These securities carry a higher risk of failure to
pay principal and interest when due and the market to sell
such securities may be limited. As such, there is a greater
risk of loss of investment.
WHO MAY Consider investing in the Funds if you:
WANT TO INVEST? [ ] ARE SEEKING A LONG-TERM GOAL SUCH AS RETIREMENT
[ ] ARE LOOKING TO ADD A GROWTH COMPONENT TO YOUR PORTFOLIO
[ ] ARE WILLING TO ACCEPT HIGHER RISKS OF INVESTING IN THE
STOCK MARKET IN EXCHANGE FOR LONG TERM RETURNS
[ ] ARE LOOKING TO DIVERSIFY YOUR INVESTMENTS OUTSIDE THE
UNITED STATES
The Funds will not be appropriate for anyone:
[ ] SEEKING MONTHLY INCOME
[ ] PURSUING A SHORT-TERM GOAL OR INVESTING EMERGENCY
RESERVES
[ ] SEEKING SAFETY OF PRINCIPAL
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4
<PAGE> 43
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
These charts show the Funds' annual returns and provides some indication of
the risks of investing in the Funds by showing how their performance has
varied from year to year. The tables that follow compare the Funds'
performance over time to that of their relevant broad-based indices. Morgan
Stanley World Free Index, the Lipper Global Fund Average and the Lipper
Convertible Securities Fund Average represent unmanaged indices composed of
all developed markets in the world, global equity mutual funds and
convertible securities mutual funds, respectively, as tracked by Lipper Inc.
The Salomon Smith Barney Global Telecommunications Index is a widely
recognized, unmanaged index composed of global equity securities of companies
in the telecommunications industry; and the Warburg Dillon Read Global
Convertible Index is composed of global convertible securities. Of course,
past performance does not indicate how the Funds will perform in the future.
Both the charts below and the tables on the following page assume
reinvestment of dividends and distributions.
YEAR-BY-YEAR TOTAL RETURNS AS OF 12/31
GLOBAL TELECOMMUNICATIONS FUND
Best
quarter: 4(th) 1998 23.96 %
Worst
quarter: 3(rd) 1998 (10.73)%
Global Telecommunications GRAPH
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'94' -3.7
- ---- ----
<S> <C>
'95' 16.20
'96' 9.00
'97' 31.90
'98' 34.80
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GLOBAL INTERACTIVE COUCH POTATO(R) FUND
Best
quarter: 4(th) 1998 21.36 %
Worst
quarter: 3(rd) 1998 (12.77)%
Global Interactive Couch Potato GRAPH
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<CAPTION>
'95' 17.9
- ---- ----
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'96' 12.50
'97' 41.70
'98' 28.90
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GLOBAL CONVERTIBLE SECURITIES FUND
Best
quarter: 4(th) 1998 12.23 %
Worst
quarter: 3(rd) 1998 (12.26)%
Global Convertible Securities GRAPH
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<CAPTION>
'95' 12.6
- ---- ----
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'96' 5.50
'97' 2.80
'98' 8.60
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THE GLOBAL OPPORTUNITY FUND
The Global Opportunity Fund has less than
one full calendar year of operations,
therefore total return information is not
meaningful.
5
<PAGE> 44
RISK/RETURN SUMMARY AND FUND EXPENSES
AVERAGE ANNUAL TOTAL RETURNS (for the periods ending December 31, 1998)
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<CAPTION>
SINCE INCEPTION
INCEPTION DATE PAST YEAR PAST 5 YEARS OF FUND
<S> <C> <C> <C> <C>
GLOBAL TELECOMMUNICATIONS FUND 11/1/93 34.8% 16.7% 16.8%
Salomon Smith Barney Global
Telecommunications Index 43.8% 17.7% 16.1%
Morgan Stanley World Free Index 22.0% 14.8% 14.3%
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<CAPTION>
SINCE INCEPTION
INCEPTION DATE PAST YEAR OF FUND
<S> <C> <C> <C>
GLOBAL INTERACTIVE COUCH
POTATO(R) FUND 2/7/94 28.9% 20.4%
Morgan Stanley World Free Index 22.0% 13.6%
Lipper Global Fund Average 14.3% 11.2%
</TABLE>
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<CAPTION>
SINCE INCEPTION
INCEPTION DATE PAST YEAR OF FUND
<S> <C> <C> <C>
GLOBAL CONVERTIBLE SECURITIES FUND 2/3/94 8.6% 6.1%
Warburg Dillon Read
Global Convertible Index 20.6% 7.9%
Lipper Convertible Securities
Fund Average 4.5% 9.9%
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6
<PAGE> 45
RISK/RETURN SUMMARY AND FUND EXPENSES
- -
FUND EXPENSES
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<CAPTION>
INTERACTIVE
TELECOM- COUCH
MUNICATIONS POTATO(R) OPPORTUNITY CONVERTIBLE
<S> <C> <C> <C> <C>
SHAREHOLDER FEES
(FEES PAID DIRECTLY
FROM YOUR INVESTMENT) None None None None
ANNUAL FUND OPERATING
EXPENSES (EXPENSES
THAT ARE DEDUCTED FROM
FUND ASSETS)
Management fees 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1)
fees .25% .25% .25% .25%
Other expenses .30% .39% 1.75% 1.55%
Total annual Fund
operating expenses(1) 1.55% 1.64% 3.00% 2.80%
Fee waivers & expense
reimbursements(2) N/A N/A 2.00% N/A
Net expenses 1.55% 1.64% 1.00% 2.80%
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
GLOBAL
TELECOMMUNICATIONS FUND $158 $490 $845 $1,845
GLOBAL INTERACTIVE
COUCH POTATO(R) FUND 167 517 892 1,944
GLOBAL OPPORTUNITY FUND(3) 102 751 N/A N/A
GLOBAL CONVERTIBLE
SECURITIES FUND 283 868 1,479 3,128
</TABLE>
FEES AND EXPENSES
As an investor in the
Funds, you will pay the
following fees and
expenses when you buy and
hold shares. Annual Fund
operating expenses are
paid out of Fund assets,
and are reflected in the
share price.
EXPENSE EXAMPLE
Use the example shown here
to compare fees and
expenses with those of
other funds. It
illustrates the amount of
fees and expenses you
would pay, assuming the
following:
- $10,000 investment
- 5% annual return
- redemption at the end of
each period
- no changes in the Funds
operating expenses
Because this example is
hypothetical and for
comparison only, your
actual costs may be higher
or lower.
(1) Total annual Fund operating expenses have been restated to reflect
current fees, and may differ from information in the Fund's most recent
Annual Report.
(2) The Adviser is contractually obligated, for the duration of the Fund's
fiscal year, to waive its investment advisory fees and reimburse expenses
to the extent necessary to maintain total annual Fund operating expenses
at 1.00% for the Global Opportunity Fund.
(3) This example assumes that Total Annual Fund Operating Expenses will equal
1.00% until January 1, 2000 and will equal 3.00% thereafter.
7
<PAGE> 46
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
GENERAL
Each Fund invests primarily in common stocks (or, in the case of the Global
Convertible Securities Fund, in Securities convertible into common stock) of
companies which the Funds' adviser, Gabelli Funds, LLC (the "Adviser")
believes are likely to have rapid growth in revenues and earnings and the
potential for above average capital appreciation. The Adviser invests in
companies whose stocks are selling at a significant discount to their
"private market value." Private market value is the value the Adviser
believes informed investors would be willing to pay to acquire the entire
company. If investor attention is focused on the underlying asset value of a
company due to expected or actual developments or other catalysts, an
investment opportunity to realize this private market value may exist.
Undervaluation of a company's stock can result from a variety of factors,
such as a lack of investor recognition of
- the underlying value of a company's fixed assets,
- the value of a consumer or commercial franchise,
- changes in the economic or financial environment affecting the company,
- new, improved or unique products or services,
- new or rapidly expanding markets,
- technological developments or advancements affecting the company or its
products, or
- changes in governmental regulations, political climate or competitive
conditions.
The actual events that may lead to a significant increase in the value of a
company's securities include:
- a change in the company's management policies,
- an investor's purchase of a large portion of the company's stock,
- a merger or reorganization or recapitalization of the company,
- a sale of a division of the company,
- a tender offer (an offer to purchase investors' shares),
- the spin-off to shareholders of a subsidiary, division or other
substantial assets, or
- the retirement or death of a senior officer or substantial shareholder
of the company.
In selecting investments, the Adviser also considers the market price of the
issuer's securities, its balance sheet characteristics and the perceived
strength of its management.
GLOBAL TELECOMMUNICATIONS FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Telecommunications Fund's primary investment objective is
long-term capital appreciation. Current income is a secondary objective of
the Fund. The Fund's investment objectives may not be changed without
shareholder approval.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Telecommunications Fund will
invest at least 65% of its total assets in common stocks of companies in the
telecommunications industry which the Adviser believes are likely to have
rapid growth in revenues and earnings and potential for above average capital
8
<PAGE> 47
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
- -
appreciation or are undervalued. In selecting investments, the Adviser also
considers the market price of the issuer's securities, its balance sheet
characteristics and the perceived strength of its management.
The telecommunications companies in which the Global Telecommunications Fund
may invest are engaged in the following products or 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
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.
SPECIFIC RISK FACTORS
The telecommunications industry is subject to governmental regulation and a
greater price volatility than the overall market and the products and
services of telecommunications companies may be subject to rapid obsolescence
resulting from changing consumer tastes, intense competition and strong
market reactions to technological developments throughout the industry.
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.
GLOBAL INTERACTIVE COUCH POTATO(R) FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Interactive Couch Potato(R) Fund primarily seeks to provide
investors with appreciation of capital. Current income is a secondary
objective.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Interactive Couch Potato(R) Fund
will invest at least 65% of its total assets in common stocks of companies
involved with entertainment and media, publishing and communications. Such
companies participate in emerging technological advances in interactive
services and products (i.e., computer software) that are accessible to
individuals in their homes or offices through consumer electronics content
based devices such as telephones, televisions, radios and personal computers.
The Fund will invest in companies which the Adviser believes are likely to
have rapid growth in revenues and earnings and potential for above average
capital appreciation or are undervalued. In selecting investments, the
Adviser also considers the market price of the issuer's securities, its
balance sheet characteristics and the perceived strength of its management.
The 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
9
<PAGE> 48
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
- -
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;
electronic commerce and internet services; 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.
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
A cable television.
SPECIFIC RISK FACTORS
The communications, entertainment and media and publishing industries are
subject to governmental regulation and a greater price volatility than the
overall market, and the products and services of such companies may be
subject to rapid obsolescence resulting from changing consumer tastes,
intense competition and strong market reactions to technological developments
throughout the industry.
Many countries impose various types of ownership restrictions 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, in the United States, the 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 and limit the
number of such companies in which the Adviser, on behalf of itself and its
clients, may have an "attributable interest." These same broadcast rules
limit the holding of attributable interests in AM and FM radio broadcast
stations and television stations nationally. Similar types of restrictions
apply in other mass media and common carrier industries.
Government actions around the world, specifically in the area of
pre-marketing clearance of products and prices, can be arbitrary and
unpredictable. Changes in world currency values are also unpredictable and
can have a significant short-term impact on revenues, profits and share
valuations.
A
10
<PAGE> 49
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
Certain of the companies in which the Global Interactive Couch Potato(R) Fund
invests may allocate greater than usual financial resources to research and
product development. The securities of such companies may experience
above-average price movements associated with the perceived prospects of
success of the research and development programs. In addition, companies in
which the Fund invests may be adversely affected by lack of commercial
acceptance of a new product or process or by technological change and
obsolescence.
GLOBAL OPPORTUNITY FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Opportunity Fund primarily seeks to provide investors with capital
appreciation. Current income is a secondary objective.
PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Global Opportunity Fund will invest at
least 65% of its total assets in common stock of companies which the Adviser
believes are likely to have rapid growth in revenues and earnings and
potential for above average capital appreciation or are undervalued.
GLOBAL CONVERTIBLE SECURITIES FUND
INVESTMENT OBJECTIVES AND POLICIES
The Global Convertible Securities Fund primarily seeks to provide investors
with a high level of total return through a combination of current income and
appreciation of capital.
PRINCIPAL INVESTMENT STRATEGIES
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 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 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.
11
<PAGE> 50
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
SPECIFIC RISK FACTORS
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 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 Fund's net asset value.
The characteristics of convertible securities make them appropriate
investments for investors who seek a high level of total return with the
addition of 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.
GENERAL RISK FACTORS
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. Portfolio turnover generally
involves some expense to the Funds, including brokerage commissions or dealer
mark-ups and other transaction costs on the sale of securities and
reinvestment in other securities. As such, a higher portfolio turnover rate
could increase the Funds' expenses which could negatively affect the Funds'
performance.
COMMON STOCKS. Common stocks represent the residual ownership interest in an
issuer and are entitled to the income and increase in the value of the assets
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, investors perceptions of
the issuer and market liquidity. Preferred stock has preference over common
stock in liquidation (and generally dividends as well) but is subordinated to
the liabilities of the issue in all other respects.
NON-DIVERSIFICATION RISK. Each Fund is a "non-diversified investment company"
which means that it can concentrate its investments in the securities of a
single company to a greater extent than a
12
<PAGE> 51
INVESTMENT OBJECTIVES, STRATEGIES AND RISKS
- -
diversified investment company. Because each Fund may invest its assets in
the securities of a limited number of companies, a decline in the value of
the stock of any one of these issuers will have a greater impact on the
Fund's share price. In addition, many companies in the past several years
have adopted so-called "poison pill" and other defensive measures. Such
measures may limit the amount of securities in any one issuer that the Funds
may buy.
FOREIGN RISK. Investments in foreign securities involve risks relating to
political, social and economic developments abroad, as well as risks
resulting from the differences between the regulations to which U.S. and
foreign issuers and markets are subject:
- These risks may include the seizure by the government of company assets,
excessive taxation, withholding taxes on dividends and interest,
limitations on the use or transfer of portfolio assets and political or
social instability.
- Enforcing legal rights may be difficult, costly and slow in foreign
countries, and there may be special problems enforcing claims against
foreign governments.
- Foreign companies may be not subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be
less public information about their operations.
- Foreign markets may be less liquid and more volatile than U.S. markets.
- Foreign securities often trade in currencies other than the U.S. dollar,
and the Funds may directly hold foreign currencies and purchase and sell
foreign currencies. Changes in currency exchange rates will affect the
Fund's net asset value, the value of dividends and interest earned, and
gains and losses realized on the sale of securities. An increase in the
strength of the U.S. dollar relative to these other currencies may cause
the value of the Funds to decline. Certain foreign currencies may be
particularly volatile, and foreign governments may intervene in the
currency markets, causing a decline in value or liquidity of the Funds'
foreign currency holdings.
- Costs of buying, selling and holding foreign securities, including
brokerage, tax and custody costs, may be higher than those involved in
domestic transactions.
The Funds' investments in the securities of developing countries involves
exposure to economic structures that are generally less diverse and less
mature, and to political systems that can be expected to have less stability,
than those of developed countries. The markets of developing countries
historically have been more volatile than the markets of the more mature
economies of developed countries, but often have provided higher rates of
return to investors.
13
<PAGE> 52
FUND MANAGEMENT
THE INVESTMENT ADVISER
Gabelli Funds, LLC (the "Adviser"), One Corporate Center, Rye, NY 10580 is a
limited liability company organized in 1999 after a reorganization of the
predecessor, Gabelli Funds, Inc., which was formed in 1980. As of December
31, 1998, Gabelli Funds, LLC and its affiliates manage more than $16.3
billion in assets. Through its portfolio management team, Gabelli Funds, LLC
makes the day-to-day investment decisions and continuously reviews,
supervises and administers each Fund's investment programs.
For these advisory services, the Adviser earned a fee of 1.00% of average net
assets of each Fund during the fiscal year ended December 31, 1998. Any
portion of the total fees received by the Adviser may be used by the Adviser
to provide shareholder and administrative services.
THE PORTFOLIO MANAGERS
Mr. Mario J. Gabelli, President, is the team manager 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 Associate Portfolio Manager, Marc J.
Gabelli.
Mr. Marc Gabelli is also primarily responsible for the day-to-day management
of the Global Interactive Couch Potato(R) Fund. Mr. Gabelli is a Portfolio
Manager of the Adviser, and has been an analyst with the Adviser since 1993.
Messrs. Marc Gabelli and Caesar Bryan are primarily responsible for the
day-to-day management of the Global Opportunity Fund. Mr. Bryan is President
and Portfolio Manager of the Gabelli Gold Fund and the Gabelli International
Growth Fund and has been a Senior Vice President of GAMCO Investors, Inc., a
wholly owned subsidiary of Gabelli Asset Management Inc., since May 1994. Mr.
Bryan served as Senior Vice President and Portfolio Manager of Lexington
Management Corporation from 1986 until May 1994.
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.
THE DISTRIBUTOR
Gabelli & Company, Inc. is the Funds' distributor. Its address is One
Corporate Center, Rye, NY 10580.
The Statement of Additional Information has more detailed information about
the Adviser and other service providers.
YEAR 2000 As the year 2000 approaches, an issue has emerged regarding how the
software used by the Fund's service providers can accommodate the date
"2000." Failure to adequately address this issue could result in major
systems or process failures which could disrupt the Fund's operations. The
Adviser is in the process of working with the Fund's service providers to
prepare for the year 2000. Based on information currently available, the
Adviser does not expect that the Fund will incur significant operating
expenses or be required to incur material costs to be year 2000 compliant.
The Fund cannot guarantee, however, that all year 2000 issues will be
identified and corrected by January 1, 2000, and any noncompliant computer
system could hurt key Fund operations, such as shareholder servicing, pricing
and trading. In addition, the Year 2000 problem may adversely affect the
companies in which the Fund invests, particularly companies in foreign
countries. For example, these companies may incur substantial costs to
correct the problem. To the extent that the impact on a Fund holding is
negative, it could seriously affect the Fund's performance.
14
<PAGE> 53
SHAREHOLDER INFORMATION
PRICING OF FUND SHARES
HOW NAV IS CALCULATED
The NAV is calculated by
adding the total value of
the Fund's investments and
other assets, subtracting
its liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
----------------------------
Number of Shares
Outstanding
You can find the Fund's NAV
daily in the Wall Street
Journal and other
newspapers or by calling
1-800-GABELLI
(800-422-3554).
The net asset value, or NAV of each
Fund's Class AAA shares, is determined
and such shares are priced at the
close of regular trading on the New
York Stock Exchange, normally at 4:00
p.m., eastern time, on days the New
York Stock Exchange is open. Your
order for purchase, sale or exchange
of shares is priced at the next NAV
calculated after your order is
received by the Funds. This is what is
known as the offering price.
Fund securities are valued as of the
close of trading on the primary
exchange on which they trade. Fund
securities are generally valued at
current market prices. If market
quotations are not available, prices
will be based on the average of the
latest bid and asked quotations, or
the latest bid price if asked prices
are not available for such securities
prior to the valuation time. Debt
securities with remaining maturities
of 60 days or less will be valued at
amortized cost, which the Board of
Directors believes represents fair
value.
Some Fund securities may be listed on
foreign exchanges that are open on
days (such as U.S. holidays) when the
Funds do not compute their NAV. This
could cause the value of the Funds'
portfolio investments to be affected
on days when you cannot buy or sell
shares.
PURCHASING, SELLING AND EXCHANGING SHARES
Information about purchasing, selling and exchanging your shares is contained
in a separate document called the Owner's Manual. If you have not received
it, please contact your broker or financial consultant or the Funds at the
number listed on the back page of this Prospectus. The Owner's Manual is
considered an integral part of this Prospectus.
DISTRIBUTION ARRANGEMENTS
The Funds have adopted distribution plans pursuant to Rule 12b-1 under the
1940 Act which authorize payments by the Funds on Class AAA shares of .25% of
the average daily net assets attributable to Class AAA Shares of the Funds to
compensate the Distributor and other dealers and investment representatives
for services and expenses relating to the sale and distribution of the Funds'
shares. Rule 12b-1 fees are paid from the Funds' assets on an ongoing basis,
and increase the cost of your investment and may cost you more than paying
other types of sales charges.
15
<PAGE> 54
SHAREHOLDER INFORMATION
DIVIDENDS, DISTRIBUTION AND TAXES
Any income the Funds receive in the form of interest or dividends is paid
out, less expenses, to its shareholders. The Funds declare and pay dividends
from net investment income and capital gains, if any, on an annual basis.
Dividends and distributions are treated in the same manner for federal income
tax purposes whether you receive them in cash or in additional shares.
The Funds expect that dividends will primarily consist of net investment
income and, if any, short-term and long-term capital gains. The determination
as to whether a gain to be distributed is short-term or long-term depends on
the amount of time the security is held by a Fund prior to disposition and
not on the amount of time a shareholder has been invested in such Fund.
Distributions from net investment income and short-term capital gains are
taxable as ordinary income. Such distributions are taken into account for tax
purposes in the year in which they are declared, even if they appear on your
account statement the following year. Long-term capital gain distributions
are taxable at long-term capital gain tax rates. The exchange of the Funds'
shares for shares of another fund will be treated as a sale of shares, and
any gain on the transaction may be subject to federal income tax.
You will be notified in January each year about the federal tax status of
distributions made by the Funds. Depending on your residence for tax
purposes, distributions also may be subject to state and local taxes,
including withholding taxes.
TAX IDENTIFICATION NUMBER
The Funds are required to withhold 31% of taxable
dividends, capital gains distributions and redemptions
proceeds paid to shareholders who have not provided the
Funds with their Taxpayer Identification Number in
compliance with IRS rules. To avoid this, make sure you
provide your correct Tax Identification Number (Social
Security Number for most investors) on your account
application.
Foreign shareholders may be subject to special withholding requirements.
Consult your tax adviser about the federal, state and local tax consequences
in your particular circumstances.
OTHER SHAREHOLDER SERVICES
As a shareholder of the Funds, you can take advantage of other service
privileges which are described in the Owner's Manual:
- Telephone Investment and Redemption Plan
- Automatic Investment Plan
- Systematic Withdrawal Plan
- Retirement Plans
16
<PAGE> 55
FINANCIAL HIGHLIGHTS
- -
The financial highlights tables are intended to help you understand the
Funds' financial performance for the past 5 years or since inception of the
Fund, if less than 5 years. Certain information reflects financial results
for a single Fund share. The total returns in the tables represent the rate
that you would have earned or lost on an investment in the Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Grant Thornton LLP, whose report, along with the Fund's financial
statements, are included in the Statement of Additional Information, which is
available upon request.
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.32 $ 11.28 $ 11.12 $ 9.73 $ 10.20
-------- -------- -------- -------- --------
Net investment income 0.01 0.00(a) 0.05 0.06 0.07
Net realized and unrealized gain (loss)
on investments 4.60 3.59 0.95 1.51 (0.44)
-------- -------- -------- -------- --------
Total from investment operations 4.61 3.59 1.00 1.57 (0.37)
-------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (0.01) -- (0.05) (0.06) (0.07)
Net realized gain on investments (1.30) (1.55) (0.79) (0.12) (0.03)
-------- -------- -------- -------- --------
Total distributions (1.31) (1.55) (0.84) (0.18) (0.10)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $ 16.62 $ 13.32 $ 11.28 $ 11.12 $ 9.73
======== ======== ======== ======== ========
Total return+ 34.80% 31.90% 9.00% 16.20% (3.70)%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) $170,063 $117,872 $108,544 $122,845 $137,731
Ratio of net investment income to
average
net assets 0.08% 0.01% 0.34% 0.53% 0.74%
Ratio of operating expenses to average
net assets(b) 1.60% 1.78% 1.72% 1.75% 1.80%
Portfolio turnover rate 20% 9% 7% 24% 14%
</TABLE>
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the
period including reinvestment of dividends.
(a) Amount represents less than $0.005 per share.
(b) The Fund incurred interest expense for the year ended December 31, 1997.
If interest expense had not been incurred, the ratio of operating
expenses to average net assets would have been 1.74%.
17
<PAGE> 56
FINANCIAL HIGHLIGHTS
- -
THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994+
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period $ 14.28 $ 11.75 $ 11.72 $ 10.25 $ 10.00
-------- -------- -------- -------- ---------
Net investment income (loss) 0.11 (0.07) (0.09) (0.01) (0.01)
Net realized and unrealized gain on investments 3.98 4.97 1.56 1.84 0.26
-------- -------- -------- -------- ---------
Total from investment operations 4.09 4.90 1.47 1.83 0.25
-------- -------- -------- -------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (0.11) -- -- -- --
In excess of net investment income -- -- (1.44) (0.36) --
Net realized gain on investments (1.23) (2.37) -- -- --
In excess of net realized gain on investments (0.04) -- -- -- --
-------- -------- -------- -------- ---------
Total distributions (1.38) (2.37) (1.44) (0.36) --
-------- -------- -------- -------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.99 $ 14.28 $ 11.75 $ 11.72 $ 10.25
======== ======== ======== ======== =========
Total return++ 28.90% 41.70% 12.50% 17.90% 2.50%
======== ======== ======== ======== =========
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's) $ 73,999 $ 40,558 $ 37,779 $ 31,439 $ 24,831
Ratio of net investment income (loss) to average
net assets 0.66% (0.61)% (0.70)% (0.07)% (0.13)%(a
Ratio of operating expenses to average net
assets(b) 1.66% 1.78% 2.06% 2.47% 2.47%(a)
Portfolio turnover rate 105% 68% 47% 33% 14%
</TABLE>
+ From commencement of operations on February 7, 1994.
++ 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.
(a) Annualized.
(b) The Fund incurred interest expense for the years ended December 31, 1998
and 1997. If interest expense had not been incurred, the ratios of
operating expenses to average net assets would have been 1.63% and 1.64%,
respectively.
18
<PAGE> 57
FINANCIAL HIGHLIGHTS
- -
THE GABELLI GLOBAL OPPORTUNITY FUND
THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
GABELLI GLOBAL
OPPORTUNITY GABELLI GLOBAL
FUND CONVERTIBLE SECURITIES FUND
-------------- ---------------------------------------------
1998+ 1998 1997 1996 1995 1994++
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.00 $ 9.39 $10.18 $ 10.79 $ 9.93 $ 10.00
------- ------ ------ ------- ------- -------
Net investment income (loss) 0.09 (0.12) 0.11 0.43 0.39 0.16
Net realized and unrealized gain on
investments 0.91 0.93 0.17 0.16 0.86 (0.07)
------- ------ ------ ------- ------- -------
Total from investment operations 1.00 0.81 0.28 0.59 1.25 0.09
------- ------ ------ ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (0.09) -- (0.14) (0.43) (0.39) (0.16)
Net realized gain on investments (0.30) (0.07) (0.90) (0.77) -- --
In excess of net investment income (0.06) (0.01) -- -- -- --
In excess of net realized gain on investments -- -- (0.03) -- -- --
------- ------ ------ ------- ------- -------
Total distributions (0.45) (0.08) (1.07) (1.20) (0.39) (0.16)
------- ------ ------ ------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.55 $10.12 $ 9.39 $ 10.18 $ 10.79 $ 9.93
======= ====== ====== ======= ======= =======
Total return+++ 10.10% 8.60% 2.80% 5.50% 12.60% 0.90%
======= ====== ====== ======= ======= =======
RATIOS TO AVERAGE NET ASSETS AND SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's) $ 5,866 $7,326 $9,375 $13,527 $15,742 $15,574
Ratio of net investment income (loss) to
average
net assets 1.72%(a) (1.00)% 1.17% 2.00% 2.90% 2.80%(a)
Ratio of operating expenses to average net
assets before reimbursement(b) 4.77%(a) -- -- -- -- --
Ratio of operating expenses to average net
assets(c) 1.00%(a) 2.63% 2.48% 2.35% 2.41% 2.49%(a)
Portfolio turnover rate 127% 89% 100% 126% 152% 329%
</TABLE>
<TABLE>
<C> <S>
+ From commencement of operations on May 11, 1998.
++ From commencement of operations on February 3, 1994.
+++ 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.
(a) Annualized.
(b) During the period ended December 31, 1998, the Adviser
voluntarily reimbursed certain expenses of the Opportunity
Fund. If such reimbursement had not occurred, the ratio of
operating expenses to average net assets would have been as
shown.
(c) The Convertible Securities Fund incurred interest expense
for the year ended December 31, 1997. If interest expense
had not been incurred, the ratio of operating expenses to
average net assets would have been 2.46%. In addition, the
ratio for the year ended December 31, 1997 does not include
a reduction of expenses for custodian fee credits. Including
such credits, the ratio would have been 2.47%.
</TABLE>
19
<PAGE> 58
GABELLI GLOBAL SERIES FUNDS, INC.
FOR MORE INFORMATION:
For more information about the Funds, the following documents are available free
upon request:
OWNER'S MANUAL:
Information about purchasing, selling and exchanging shares of the Funds is
included in a separate document entitled "Owner's Manual." The Owner's Manual is
incorporated by reference into the Prospectus. If you have not received it,
please contact the Funds at the number listed below.
ANNUAL/SEMI-ANNUAL REPORTS:
The Funds' semi-annual and audited annual reports to shareholders contain
detailed information on the Funds' investments. In the annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Funds, including their
operations and investment policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
You can get free copies of these documents and prospectuses of other Funds
in the Gabelli family, or request other information and discuss your
questions about the Fund by contacting:
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
You can review the Funds' reports and SAIs at the Public Reference Room of the
Securities and Exchange Commission. You can get text-only copies:
X For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.
X Free from the Commission's Website at http://www.sec.gov.
(Investment Company Act file no. 811-07896)
<PAGE> 59
GABELLI FUNDS
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
1-800-422-3554
FAX: 1-914-921-5118
http://www.gabelli.com
E-MAIL: [email protected]
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
THE
GABELLI FAMILY OF
FUNDS
OWNER'S MANUAL
AAA CLASS -
NO-LOAD CLASS
MAY 1, 1999
- GABELLI GLOBAL SERIES FUNDS, INC.
- GABELLI GOLD FUND, INC.
- GABELLI INTERNATIONAL GROWTH FUND, INC.
- GABELLI ABC FUND
- GABELLI ASSET FUND
- GABELLI GROWTH FUND
THE INFORMATION CONTAINED IN THE OWNER'S MANUAL IS INCORPORATED BY REFERENCE
INTO, AND IS LEGALLY CONSIDERED PART OF, THE PROSPECTUSES FOR THE GABELLI
FAMILY OF FUNDS. THE OWNER'S MANUAL MUST BE PRECEDED OR ACCOMPANIED BY A
GABELLI FUNDS PROSPECTUS.
<PAGE> 60
OWNER'S MANUAL TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PURCHASING SHARES
3 Instructions for Opening or Adding to an Account
4 Telephone Investment Plan
4 Automatic Investment Plan
4 Retirement Plans
4 Minimum Investments
4 Dividends and Distributions
SELLING SHARES
5 Instructions for Selling Shares
5 By Bank Wire or Check via Telephone
5 By Bank Wire or Check via Mail
5 General Policies on Selling Shares
5 Signature Guarantees
6 Verifying Telephone Redemptions
6 Redemptions Within 15 Days of Investment
6 Redemption in Kind
6 Refusal of Redemption Request
6 Closing of Small Accounts
6 Undeliverable Distribution Checks
EXCHANGING SHARES
7 Instructions for Exchanging Shares
PRICING OF FUND SHARES
8 How NAV is Calculated
</TABLE>
2
<PAGE> 61
PURCHASING SHARES
INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT
PURCHASES THROUGH BROKERS/DEALERS:
If purchasing through your financial advisor or brokerage account, simply
tell your advisor or broker that you wish to purchase shares of the Funds and
he or she will take care of the necessary documentation. You should state
specifically which class of shares you are buying. For all other purchases
directly with the Fund, follow the instructions below.
PURCHASES DIRECTLY FROM THE FUND:
All investments made by regular mail or personal delivery, whether initial or
subsequent, should be sent to:
<TABLE>
BY
REGULAR
MAIL BY OVERNIGHT DELIVERY
<S> <C>
The Gabelli Funds The Gabelli Funds
PO Box 8308 c/o BFDS
Boston, MA 02266-8308 66 Brooks Drive
Braintree, MA 02184
</TABLE>
For Initial Investment:
1. Carefully read and complete the application.
2. Make check, bank draft or money order payable to "[name of Fund]."
3. Mail or deliver application and payment to the address above.
For Subsequent Investments:
1. Make check, bank draft or money order payable to "[name of Fund]" or
"Gabelli Funds."
2. Provide the exact name and number of your account.
3. Mail or deliver payment to the address above.
BY WIRE TRANSFER
For Initial Investment:
Call 1-800-GABELLI (1-800-422-3554) to obtain a new account number. Promptly
mail the completed application to the address shown above for regular mail,
and
For Initial and Subsequent Investments:
Instruct your bank to wire transfer your investment to:
STATE STREET BANK AND TRUST COMPANY
ABA #011-0000-28 REF DDA# 9904-6187
ATTN: SHAREHOLDER SERVICES
RE: [FUND NAME]
A/C#
---------------------------------
YOUR NAME
----------------------------
225 FRANKLIN STREET, BOSTON, MA 02110
NOTE: YOUR BANK MAY CHARGE A WIRE TRANSFER FEE.
3
<PAGE> 62
PURCHASING SHARES
You can add to your account by using the convenient options described
below. The Fund reserves the right to change or eliminate these privileges
at any time upon 60 days notice to shareholders.
TELEPHONE INVESTMENT PLAN
You may purchase additional shares of the Funds by telephone as long as your
bank is a member of the Automated Clearing House (ACH) system. You must also
have a completed, approved Investment Plan application on file with the
Fund's Transfer Agent. There is a minimum of $100 for each telephone
investment. To initiate an ACH purchase, please call 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365.
AUTOMATIC INVESTMENT PLAN
You can make automatic monthly investments in the Funds. Details about this
plan can be obtained from the Distributor on a separate application by
calling 1-800-GABELLI (800-422-3554).
RETIREMENT PLANS
You can invest in various types of retirement plans through the Fund. Details
about these plans can be obtained from the Distributor on a separate
application by calling 1-800-GABELLI (800-422-3554).
<TABLE>
<CAPTION>
MINIMUM
MINIMUM INITIAL SUBSEQUENT
ACCOUNT TYPE INVESTMENT INVESTMENT
<S> <C> <C>
Regular (non-retirement) $1,000 $ 0
Retirement (IRA)
Traditional IRA $1,000 $ 0
Roth IRA $1,000 $ 0
Spousal IRA $ 250 $ 0
Education IRA $ 250 $ 0
Automatic Investment Plan $ 0 $100
Telephone Investment Plan $ 100 $100
</TABLE>
MINIMUM INVESTMENTS
You may purchase Funds
through the Distributor
or participating
organizations, which
may charge additional
fees and may require
higher or lower minimum
investments or impose
other limitations on
buying and selling
shares.
All purchases must be in U.S. dollars. A fee will be
charged for any checks that do not clear.
Third-party checks are not accepted. Your purchase
of shares will be effective on the same business day
if the Fund's Transfer Agent receives your order by
4:00 p.m. (12 noon for a money market fund), and
receives your form of payment by 4:00 p.m., eastern
time. Otherwise, your purchase will be effective on
the next business day. (See "Pricing of Fund
Shares.") Shares are held on account for you unless
you specify in writing that you would like to
receive a stock certificate (certificates are not
available for money market funds). We can only issue
a certificate for whole shares.
The Distributor may reject a purchase order if it
considers it in the best interest of the Fund and
its shareholders. A Fund may waive its minimum
purchase requirement.
DIVIDENDS AND DISTRIBUTIONS
All dividends and distributions will be automatically reinvested unless you
request otherwise.
4
<PAGE> 63
SELLING SHARES
As a mutual fund
shareholder, you are
technically selling shares
when you request a
withdrawal in cash. This
is also known as redeeming
shares.
WITHDRAWING MONEY FROM YOUR INVESTMENT
You may sell your shares at any time. Your
sales price will be the next NAV after your
sell order is received by the Fund, its
transfer agent, or your investment
representative. See section on "General
Policies on Selling Shares" below.
SYSTEMATIC WITHDRAWAL PLAN
You can receive automatic payments from your
account on a monthly, quarterly or annual
basis. You can obtain details from the
Distributor.
INSTRUCTIONS FOR SELLING SHARES
The Fund accepts telephone requests for redemptions of unissued shares.
BY BANK WIRE OR CHECK VIA TELEPHONE
1. Call 1-800-GABELLI (1-800-422-3554) with your account number, the amount
of the redemption and instructions as to how you wish to receive your
funds.
2. If you are unable to reach the Fund by telephone, you may telecopy your
redemption request to the Fund at 914-921-5118.
NOTE: If you call by 4:00 p.m., eastern time, your payment will normally be
wired to your bank on the following business day. (For Money Market Funds: If
you call before 12:00 noon, eastern time, your payment will be wired to your
bank on that day.) If you call after that time, your payment will be wired to
your bank on the next business day. If you request your wire redemption by
telephone, it must be at least $1,000. Your bank may charge a fee for
incoming wires.
BY BANK WIRE OR CHECK VIA MAIL
Submit a redemption request to the Fund. Redemption requests may be made by
letter to the Transfer Agent. You must specify the name of the Fund, the
dollar amount or number of shares you wish to redeem and the account number.
You must sign the letter in exactly the same way the account is registered,
and if there is more than one owner of shares, all must sign. A signature
guarantee is required for most requests.
GENERAL POLICIES ON SELLING SHARES
SIGNATURE GUARANTEES
Signature guarantees are required on redemption requests for the following:
- The check is not being mailed to the address on your account
- The check is not being made payable to the owner of the account
- The redemption proceeds are being transferred to another person's Fund
account.
A signature guarantee can be obtained from most banks and securities dealers.
Notarized signatures are not considered a signature guarantee.
5
<PAGE> 64
SELLING SHARES
VERIFYING TELEPHONE REDEMPTIONS
The Fund makes every effort to ensure that telephone redemptions are only
made by authorized shareholders. All telephone calls are recorded for your
protection and you will be asked for information to verify your identity. If
appropriate precautions have not been taken, the Fund may be liable for
losses due to unauthorized transactions.
REDEMPTIONS WITHIN 15 DAYS OF INVESTMENT
When you have made an investment by check or through the automatic investment
plan, your redemption proceeds will not be mailed until the Transfer Agent is
satisfied that the check has cleared (which may require up to 15 days). You
can avoid this delay by purchasing shares with a certified check or federal
funds wire.
REDEMPTION IN KIND
The Fund reserves the right to make a redemption in kind - payment in
portfolio securities rather than cash - for certain large redemption amounts
that could hurt fund operations.
REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the Securities and Exchange Commission in order to protect
remaining shareholders.
CLOSING OF SMALL ACCOUNTS
If your account (other than an IRA) falls below $500, the Fund may ask you to
increase your balance. If it is still below $500 after 30 days, the Fund may
close your account and send you the proceeds at the current NAV.
UNDELIVERABLE DISTRIBUTION CHECKS
If distribution checks (1) are returned and marked as "undeliverable" or (2)
remain uncashed for six months, your account will be changed automatically so
that all future distributions are reinvested in your account. Checks that
remain uncashed for six months will be canceled and the money reinvested in
the Fund at the then current net asset value.
QUESTIONS?
Call 1-800-GABELLI
or your investment
representative.
6
<PAGE> 65
EXCHANGING SHARES
You can exchange your
shares in one Fund for
shares of the same class of
another Fund managed by
Gabelli Funds, LLC, or its
affiliates, usually without
paying additional sales
charges (see "Notes on
Exchanges" below).
You must meet the minimum
investment requirements for
the Fund into which you are
exchanging. Exchanges from
one Fund to another are
taxable transactions.
INSTRUCTIONS FOR EXCHANGING SHARES
Exchanges may be made by sending a
written request to The Gabelli
Funds, PO Box 8308, Boston, MA
02266-8308 or by calling
1-800-GABELLI (1-800-422-3554).
Please provide the following
information:
- Your name and telephone number
- The exact name on your account and
account number
- Taxpayer identification number
(usually your Social Security
number)
- Dollar value or number of shares
to be exchanged
- The names of the Funds from/into
which the exchange is to be made
See "Selling Shares" for important
information about telephone
transactions.
NOTES ON EXCHANGES
- When exchanging from a Fund that
has no sales charge or a lower
sales charge to a Fund with a
higher sales charge, you will pay
the difference.
- The registration and tax
identification numbers of the two
accounts must be identical.
- This exchange privilege may be
changed or eliminated at any time
upon a 60-day notice to
shareholders.
- Be sure to read the prospectus
carefully of any Fund into which
you wish to exchange shares.
7
<PAGE> 66
PRICING OF FUND SHARES
HOW NAV IS CALCULATED
The NAV is calculated by
adding the total value of
the Fund's investments and
other assets, subtracting
its liabilities and then
dividing that figure by the
number of outstanding
shares of the Fund:
NAV =
Total Assets - Liabilities
----------------------------
Number of Shares
Outstanding
You can find the Fund's NAV
daily in the Wall Street
Journal and other
newspapers, or by calling
1-800-GABELLI
(800-422-3554).
The net asset value, or NAV, of each
Fund's Class AAA shares is determined
and such shares are priced at the
close of regular trading on the New
York Stock Exchange, normally at 4:00
p.m., eastern time, on days the New
York Stock Exchange is open. Your
order for purchase, sale or exchange
of shares is priced at the next NAV
calculated after your order is
received by the Fund. This is what is
known as the offering price.
Fund securities are valued as of the
close of trading on the primary
exchange on which they trade. Fund
securities are generally valued at
current market prices. If market
quotations are not available, prices
will be based on the average of the
latest bid and asked quotations for
such securities prior to the valuation
time, or the latest bid price if asked
prices are not available. Debt
securities with remaining maturities
of 60 days or less will be valued at
amortized cost, which the Board of
Directors believes represents fair
value.
Some Fund securities may be listed on
foreign exchanges that are open on
days (such as U.S. holidays) when a
Fund does not compute its NAV. This
could cause the value of a Fund's
portfolio investments to be affected
on days when you cannot buy or sell
shares.
QUESTIONS?
Call 1-800-GABELLI
or your investment
representative.
8
<PAGE> 67
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, 1999
This Statement of Additional Information ("Additional Statement") relates to
- The Gabelli Global Telecommunications Fund (the "Global Telecommunications
Fund")
- The Gabelli Global Interactive Couch Potato(R) Fund (the "Global Interactive
Couch Potato(R) Fund")
- The Gabelli Global Convertible Securities Fund (the "Global Convertible
Fund")
- The Gabelli Global Opportunity Fund (the "Global Opportunity 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, 1999, 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
PAGE
----
Investment Strategies and Risks......................................... B-02
Directors and Officers.................................................. B-09
Shares of Beneficial Interest........................................... B-11
The Adviser............................................................. B-12
The Distributor......................................................... B-14
The Distribution Plans.................................................. B-14
Investment Restrictions................................................. B-15
Portfolio Transactions and Brokerage.................................... B-16
Purchase and Redemption of Shares....................................... B-19
Exchange Privilege...................................................... B-22
Dividends, Distributions and Taxes...................................... B-23
Determination of Net Asset Value........................................ B-25
Investment Performance Information...................................... B-26
Service Providers....................................................... B-27
Description of Shares, Voting Rights and Liabilities.................... B-28
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<PAGE> 68
THE FOLLOWING INFORMATION SUPPLEMENTS THAT IN THE PROSPECTUS
INVESTMENT STRATEGIES AND RISKS
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 as 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 can be withdrawn 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 rating for
these securities in which the Funds may invest.
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
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<PAGE> 69
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 Gabelli Funds, LLC's (the
"Adviser") 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
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 of the Corporation (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.
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<PAGE> 70
CONVERTIBLE SECURITIES
Each of the Global Telecommunications Fund, the Global Interactive Couch
Potato(R) Fund and the Global Opportunity 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. (See "Nonconvertible Fixed Income Securities.")
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.
The Fund may invest in securities denominated in a multi-national currency unit.
An illustration of a multi-national currency unit is the European Monetary Unit
(the "EUR"), which is a combination of the economic structures of the member
nations of the European Monetary Union into to a single currency. This union
includes France, Germany, the Netherlands, and other countries. The specific
legacy currencies rates comprising the EUR were fixed on December 31, 1998 to
reflect the relative values of the underlying currencies to the newly created
EUR. 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 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 judgment of 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.
B-4
<PAGE> 71
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 offer and the dynamics and business climate when the
offer of the 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. 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.
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 Board of
Directors to value these securities and the Board's judgment will play a greater
role as less reliable, objective data is available.
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. A 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 each 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
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<PAGE> 72
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 in an aggregate amount at least equal to the amount of its
outstanding forward commitments.
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. A
Fund may have to pay a fee to borrow particular securities and are often
obligated to pay over any payments received on such borrowed securities.
A Fund's 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 of any amount 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
B-6
<PAGE> 73
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 the identical security
at no additional cost.
RESTRICTED AND ILLIQUID SECURITIES
Each Fund may invest up to a total of 15% of its net assets in securities that
are subject to legal or contractual restrictions on resale and securities the
markets for which are illiquid. 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 of Directors 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.
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 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 of 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,
B-7
<PAGE> 74
(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 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") 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
B-8
<PAGE> 75
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 buying or selling which 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 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.
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 (the "Act") are indicated by an asterisk (*).
Name, Position With Fund Principal Occupations During Last Five Years;
and Address Affiliations With the Adviser or Administrator.
- ------------------------ -----------------------------------------------
Mario J. Gabelli * Chairman of the Board, Chief Executive Officer
President, Director and Chief and Chief Investment Officer of Gabelli Asset
Investment Officer Management Inc., the Adviser, and GAMCO
One Corporate Center Investors, Inc., Chairman of the Board and
Rye, New York 10580 Chief Executive Officer of Lynch Corporation, a
Age: 56 diversified manufacturing, communications and
services company; Director of East/West
Communications, Inc.; officer and/or Director
or Trustee of 12 other Gabelli funds.
Felix J. Christiana Formerly Senior Vice President of Dry Dock
Director Savings Bank. Director or Trustee of 8 other
One Corporate Center Gabelli funds.
Rye, New York 10580
Age: 73
Anthony J. Colavita President and Attorney at law in the law firm
Director of Anthony J. Colavita, P.C. since 1961;
One Corporate Center Director or Trustee of 12 other Gabelli funds.
Rye, New York 10580
Age: 62
B-9
<PAGE> 76
Name, Position With Fund Principal Occupations During Last Five Years;
and Address Affiliations With the Adviser or Administrator.
- ------------------------ -----------------------------------------------
John D. Gabelli * Vice President of Gabelli & Company, Inc.;
Director Director of Gabelli Advisers, Inc.; Director of
One Corporate Center 1 other Gabelli fund.
Rye, New York 10580
Age: 54
Karl Otto Pohl *+ Member of the Shareholder Committee of Sal
Director Oppenheim Jr. & Cie. (private investment bank);
One Corporate Center Former President of the Deutsche Bundesbank
Rye, New York 10580 (Germany's Central Bank) and Chairman of its
Age: 66 Central Bank Council (1980-1991); Currently
board member of Gabelli Asset Management Inc.;
Zurich Versicherungs-Gesellshaft (insurance);
the International Council for JP Morgan & Co.;
Trizechtahn Corp.; Director or Trustee of 14
other Gabelli Funds.
Werner Roeder, M.D. Director of Surgery, Lawrence Hospital, and
Director practicing private physician. Director or
One Corporate Center Trustee of 6 other Gabelli funds.
Rye, New York 10580
Age: 58
Anthonie C. van Ekris Managing Director of Balmac International Ltd.;
Director Director of Stahal Hardmayer A.Z. and Spinnaker
One Corporate Center Industries, Inc.; Director or Trustee of 9
Rye, New York 10580 other Gabelli funds.
Age: 63
Bruce N. Alpert Executive Vice President, Chief Operating
Vice President and Treasurer Officer of Gabelli Funds, LLC (the "Adviser");
One Corporate Center President and Director of Gabelli Advisers,
Rye, New York 10580 Inc.; officer of each mutual fund managed by
Age: 47 the Adviser or its affiliates.
Mr. A. Hartswell Woodson III Portfolio Manager for the Adviser since 1993.
Vice President -- Employed by ABN Ambro Bank N.V. from 1988-1993.
Portfolio Manager
One Corporate Center
Rye, New York 10580
Age: 40
James E. McKee Vice President and General Counsel of Gabelli
Secretary Asset Management Inc., and of GAMCO Investors,
One Corporate Center Inc. since 1993; Secretary all Funds management
Rye, New York 10580 by the Adviser or its affiliates; Branch Chief
Age: 35 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.
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
- --------------------
+ Mr. Pohl is a director of Gabelli Asset Management Inc.
B-10
<PAGE> 77
with attending such meetings. Directors and officers of the Corporation who are
employed by the Adviser or an affiliated company receive no compensation or
expense reimbursement for serving as a director of the Corporation. The
following table sets forth certain information regarding the compensation of the
Corporation's directors and officers. Except as disclosed below, no executive
officer or person affiliated with the Corporation received compensation from the
Corporation for the calendar year ended December 31, 1998 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 $84,999(9)
Director
Anthony J. Colavita...................... $ 3,500 $82,000(13)
Director
John D. Gabelli.......................... $ 0 $ 0
Director
Karl Otto Pohl........................... $ 3,000 $98,466(15)
Director
Werner Roeder, M.D....................... $ 3,500 $25,500(7)
Director
Anthonie C. van Ekris.................... $ 3,500 $57,500(10)
Director
</TABLE>
- -------------
* Represents the total compensation paid to such persons during the calendar
year ending December 31, 1998 (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.
SHARES OF BENEFICIAL INTEREST
As of April 23, 1999, the Officers and Directors of the Fund as a group owned
2.36% of the outstanding shares of the Gabelli Global Opportunity Fund.
As of April 23, 1999, the following persons were 5% or greater shareholders of
the Funds:
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND/SHAREHOLDER SHARES OUTSTANDING
---------------- ------------------
<S> <C>
The Gabelli Global Telecommunications Fund
Charles Schwab & Co Inc. (2) 10.53%(1)
Special Custody Acct FBO
Exclusive Benefit of Customers
Attn Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Serv Corp 6.11%
for the Exclusive Benefit of
Our Customers
Attn Mutual Funds
150 Essex Street
Millburn, NJ 07041-1603
</TABLE>
B-11
<PAGE> 78
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
FUND/SHAREHOLDER OUTSTANDING
---------------- --------------------
<S> <C>
The Gabelli Global Interactive Couch Potato(R) Fund/
National Financial Serv. Corp. 14.34%(1)
For the Exclusive Benefit of Our Customers
200 Liberty Street
New York, NY 10281-1003
The Gabelli Global Interactive Couch Potato(R) Fund/
Charles Schwab & Co., Inc.(2) 16.53%(1)
Reinvest Account
101 Montgomery Street
San Francisco, CA 94104-4122
The Gabelli Global Interactive Couch Potato(R) Fund/
National Investor Svcs Corp 5.52%(1)
For the Exclusive Benefit of
Our Customers
55 Water Street 32nd Fl
New York, NY 10041-3299
The Gabelli Global Opportunity Fund/
Gabelli Funds Inc 29.67%(1)
Attn John Fodera
One Corporate Center
Rye, NY 10580-1442
Gabelli Asset Management Inc 12.73%(1)
Attn Steve Bondi
One Corporate Center
Rye, NY 10580-1442
Pamela Equities Corp 7.12%(1)
John Munocherian VP
3 New York Plaza Fl 19
New York, NY 10004-2442
The Gabelli Global Convertible Securities Fund/
Charles Schwab & Co., Inc.(2) 5.01%(1)
Special Custody Acct FBO
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
- --------------
(1) Represents shares owned of record only.
(2) Charles Schwab & Co., Inc. disclaims beneficial ownership.
THE ADVISER
The Adviser is a New York limited liability company with principal offices
located at One Corporate Center, Rye, New York 10580-1434.
B-12
<PAGE> 79
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 and the Global Opportunity Fund (formerly 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, and most
recently at a meeting of the Board of Directors held on February 17, 1999, 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.
Under the Investment Advisory Contracts, 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 Funds' 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 (the "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 Act to be acted upon by the Board.
The Adviser has entered into a Sub-Administration Contract with BISYS Fund
Services L.P. ("BISYS" or 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 prorated monthly fee
at the annual rate of .0625% of the average net assets of the Fund (minimum
annual fee of $30,000 per portfolio) on the first $350 million of all of the
funds advised by the Adviser and its affiliates and administered by BISYS and
.0425% of any net assets above $350 million, and .0225% of any assets above $700
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.
For the Adviser's investment advisory services, and for related expenses borne
by the Adviser, each Fund pays the Adviser an annual fee equal to 1.00% of each
Fund's average daily net assets. The fee is payable monthly in arrears. 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
Investment Advisory Contracts provide that the Funds are not waiving any rights
they may have with respect to any violation of law which cannot be waived. The
Investment Advisory 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
Board of Directors, by the holders of a majority, as
B-13
<PAGE> 80
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
Investment Advisory 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.
ADVISORY FEES PAID BY THE FUNDS
FOR THE YEAR ENDED DECEMBER 31,
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1996 1997 1998
---- ---- ----
Class AAA Shares Earned Waived Earned Waived Earned Waived
- ---------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Global Telecommunications $1,195,023 $0 $1,080,470 $0 $1,456,869 $0
Fund
- ---------------------------------------------------------------------------------------------------------
Global Interactive Couch $349,604 $0 $324,399 $0 $696,977 $0
Potato(R) Fund
- ---------------------------------------------------------------------------------------------------------
Global Convertible $156,876 $0 $111,722 $0 $81,333 $0
Securities Fund
- ---------------------------------------------------------------------------------------------------------
Global Opportunity Fund* N/A N/A N/A N/A $27,976 $27,976
- ---------------------------------------------------------------------------------------------------------
</TABLE>
* The Adviser has voluntarily agreed to reimburse the Global Opportunity Fund's
Class AAA expenses and/or waive its management fee to maintain total annual
expenses at 1.00% of average net assets until further notice.
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 the Adviser, 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.
DISTRIBUTION PLANS
Pursuant to separate distribution and service plans (the Class A Plan, the
Class B Plan, the Class C Plan and the Class AAA Plan, collectively, the
"Plans") adopted by each of the Funds pursuant to Rule 12b-1 under
B-14
<PAGE> 81
the Act and the Distribution Agreement, the Distributor incurs expenses of
distributing the Funds' Class A, Class B, Class C and Class AAA shares. In
addition, the Distributor receives the proceeds of contingent deferred sales
charges paid by investors upon certain redemptions of Class B and Class C
shares.
The Plans continue in effect from year to year, provided that each such
continuance is approved at least annually by a vote of the Board of Directors,
including a majority vote of the Directors who are not interested persons of the
Corporation and who have no direct or indirect financial interest in the
operation of the Plans (the "Independent Directors"), cast in person at a
meeting called for the purpose of voting on such continuance. The Plans may each
be terminated at any time, without penalty, by the vote of a majority of the
Independent Directors, or by the vote of the holders of a majority of the
outstanding shares of the applicable class of the Funds on not more than 30
days' written notice to any other party to the Plans. The Plans may not be
amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the applicable class
(by both Class A and Class B shareholders, voting separately, in the case of
material amendments to the Class A Plan), and all material amendments must be
approved by the Board of Directors in the manner described above. Each Plan will
automatically terminate in the event of its assignment. The Funds will not be
contractually obligated to pay expenses incurred under any Plan if it is
terminated or not continued.
Pursuant to each Plan, the Board of Directors will review at least quarterly a
written report of the distribution expenses incurred on behalf of each class of
shares of the Funds by the Distributor. The report includes an itemization of
the distribution expenses and the purposes of such expenditures. In addition, as
long as the Plans remain in effect, the selection and nomination of Independent
Directors shall be committed to the Independent Directors.
Pursuant to the Distribution Agreement, the Corporation has agreed to indemnify
the Distributor to the extent permitted by applicable law against certain
liabilities under the federal securities laws.
Pursuant to rules of the NASD, the Distributor is required to limit aggregate
initial sales charges, deferred sales charges and asset-based sales charges to
6.25% of total gross sales of each class of shares. Interest charges on
unreimbursed distribution expenses equal to the prime rate plus one percent per
annum may be added to the 6.25% limitation. Additional shares resulting from the
reinvestment of dividends and distributions are not included in the calculation
of the 6.25% limitation. The annual asset-based sales charge on shares of the
Funds may not exceed .75 of 1% per class. The 6.25% limitation applies to each
class of the Fund rather than on a per shareholder basis. If aggregate sales
charges were to exceed 6.25% of total gross sales of any class, all sales
charges on shares of the class would be suspended.
During the fiscal year ended December 31, 1998, The Distributor incurred
expenses for the Class AAA of the Gabelli Global Telecommunications Fund under
the Distribution Plan of $223,000. Of this amount $37,200 was spent on printing,
postage and stationery, $50,400 on overhead support expenses, $92,400 on
salaries of personnel of the Distributor and $43,000 on third party brokers.
Pursuant to the Distribution Plan, the Fund paid the Distributor $364,400, or
.25% of its average daily net assets.
During the fiscal year ended December 31, 1998, The Distributor incurred
expenses for the Class AAA of the Gabelli Global Interactive Couch Potato Fund
under the Distribution Plan of $487,100. Of this amount $72,000 was spent on
printing, postage and stationery, $241,100 on overhead support expenses,
$109,600 on salaries of personnel of the Distributor and $64,400 on third party
brokers. Pursuant to the Distribution Plan, the Fund paid the Distributor
$174,300, or .25% of its average daily net assets.
During the fiscal year ended December 31, 1998, The Distributor incurred
expenses for the Class AAA of the Gabelli Global Opportunity Fund under the
Distribution Plan of $59,300. Of this amount $22,400 was spent on printing,
postage and stationery, $15,500 on overhead support expenses, $21,000 on
salaries of personnel of the Distributor and $400 on third party brokers.
Pursuant to the Distribution Plan, the Fund paid the Distributor $7,000, or .25%
of its average daily net assets.
B-15
<PAGE> 82
During the fiscal year ended December 31, 1998, The Distributor incurred
expenses for the Class AAA of the Gabelli Global Convertible Securities Fund
under the Distribution Plan of $26,700. Of this amount $7,700 was spent on
printing, postage and stationery, $6,500 on overhead support expenses, $9,700 on
salaries of personnel of the Distributor and $2,800 on third party brokers.
Pursuant to the Distribution Plan, the Fund paid the Distributor $20,300, or
.25% of its average daily net assets.
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 a reasonable expense.
Transactions in securities other than those for which a securities exchange is
the principal market are generally done through a principal market maker.
However, such transactions may be effected through a brokerage firm and a
commission is paid whenever it appears that the broker can obtain a more
favorable
B-16
<PAGE> 83
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.
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 they deem 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 such 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 portfolio securities 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 purchase or sale;
statistical or factual information or opinions pertaining to investment; wire
services; and appraisals or evaluations of portfolio securities.
Research services furnished by brokers or dealers through which the Fund effects
securities transactions are used by the Adviser and its advisory affiliates in
carrying out their responsibilities with respect to all of their accounts over
which they exercise investment discretion. Such investment information may be
useful only to one or more of the other accounts of the Adviser and its advisory
affiliates, and research information received for the commissions of those
particular accounts may be useful both to the Fund and one or more of such other
accounts. The purpose of this sharing of research information is to avoid
duplicative charges for research provided by brokers and dealers.
Neither the Fund nor the Adviser has any legally binding agreement with any
broker or dealer regarding any specific amount of brokerage commissions which
will be paid in recognition of such services. However, in determining the amount
of portfolio commissions directed to such brokers or dealers, the Adviser does
consider the level of services provided. Based on such determinations, the
Adviser has allocated brokerage commissions of $282,147 on portfolio
transactions in the principal amount of $127,430,250 during 1998, to various
broker-dealers that have provided research services to the Adviser.
The following charts show 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., an affiliate of the Adviser ("Gabelli"), and the percentage of
all transactions involving the payment of commissions to Gabelli.
THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund.................. $49,410 $61,219 $96,749
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc................. $16,320 $7,785 $38,999
% of aggregate brokerage commissions............... 33.0% 12.7% 40.3%
% of transactions effected through
Gabelli & Company, Inc......................... 28.0% 20.6% 36.8%
</TABLE>
B-17
<PAGE> 84
THE GABELLI GLOBAL INTERACTIVE COUCH POTATO(R) FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund.................. $67,823 $106,631 $280,436
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc................. $8,486 $15,255 $14,345
% of aggregate brokerage commissions............... 12.5% 14.3% 5.1%
% of transactions effected through
Gabelli & Company, Inc......................... 12.8% 12.0% 5.8%
</TABLE>
THE GABELLI GLOBAL OPPORTUNITY FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund.................. N/A N/A $17,929
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc................. N/A N/A $14,345
% of aggregate brokerage commissions............... N/A N/A 7.89%
% of transactions effected through
Gabelli & Company, Inc......................... N/A N/A 10.4%
</TABLE>
THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
Total brokerage commissions paid by the
Adviser on behalf of the Fund.................. $21,357 $9,993 $6,606
Total brokerage commissions paid by the
Fund to Gabelli & Company, Inc................. $50 $0 $1,415
% of aggregate brokerage commissions............... .23% 0.0% 7.89%
% of transactions effected through
Gabelli & Company, Inc......................... .04% 0.0% 5.1%
</TABLE>
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli, a broker-dealer member of the National Association of
Securities Dealers, Inc. 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 Board, 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-18
<PAGE> 85
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 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 same manner and pursuant to
the same arrangements on other national securities exchanges which adopt direct
access rules similar to those of the Exchange.
PURCHASE AND REDEMPTION OF SHARES
The implementation of the multi-class structure described herein is subject to
approval by the Fund's shareholders of certain technical amendments to the
Corporation's Articles of Incorporation at a Special Meeting of Shareholders
called by the Board of Directors. The Corporation will not offer Class A, Class
B or Class C shares until such approval has been received.
PURCHASE OF SHARES
Shares of Class A, Class B and Class C of the Funds may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the investor, may be imposed either (i) at the time or
purchase (Class A shares) or (ii) on a deferred basis (Class B or Class C
shares.) Class AAA shares of the Funds are offered exclusively to investors
acquiring shares directly from the Distributor, the Funds or through any
financial intermediary that makes Class AAA shares available.
Each class of shares represents an interest in the same assets of each Fund and
is identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service fees (except for Class AAA shares,
which are not subject to any sales charges), which will affect performance
differently, (ii) each class has exclusive voting rights with respect to any
matter submitted to shareholders that relates solely to its arrangement and has
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class, (iii) each
class has a different exchange privilege, (iv) only Class B shares have a
conversion feature, and (v) Class AAA shares are offered exclusively to
investors acquiring shares directly from the Distributor or from a financial
intermediary with whom the Distributor has entered into an agreement expressly
authorizing the sale by such intermediary of Class AAA shares.
Under the current distribution arrangement between each Class of shares and the
Distributor, Class A shares are sold at a maximum sales charge of 5.75% and
Class B*, Class C* and Class AAA shares are sold at net asset value.
Class B shares automatically convert to Class A shares of the Fund on the first
business day of the eighty-fifth calendar month following the calendar month in
which such shares were issued. The automatic conversion of Class B shares to
Class A shares may be suspended by the Board of Directors at any time it
determines such suspension to be required under applicable law or in the
exercise of their fiduciary duties; provided, however, that if the Board
determines that the suspension is likely to continue for a substantial period of
time, the Board of Directors will seek to create an additional class or
additional classes of shares into which Class B shares are eligible for
conversion under the rules of the Securities and Exchange Commission and other
applicable law.
If an investor or eligible group of related investors purchases Class A shares
of the Funds concurrently with Class A shares of other Gabelli funds, the
purchases may be combined to take advantage of the reduced sales charges
applicable to larger purchases.
- --------------------------
*Class B and Class C shares are subject to a contingent deferred sales charge on
certain redemptions.
B-19
<PAGE> 86
An eligible group of related Fund investors includes any combination of the
following:
- - an individual;
- - the individual's spouse, their children and their parents;
- - the individual's and spouse's Individual Retirement Accounts (IRA);
- - any company controlled by the individual (a person, entity or group that
holds 25% or more of the outstanding voting securities of a company will be
deemed to control the company, and a partnership will be deemed to be
controlled by each of its general partners.);
- - a trust created by the individual, the beneficiaries of which are the
individual, his or her spouse, parents and/or children;
- - a Uniform Gift to Minors Act/Uniform Transfers to Minors Act account
created by the individual or the individual's spouse; and
- - one or more employee benefit plans of a company controlled by an
individual.
In addition, an eligible group of related Fund investors may include an employer
(or group of related employers) and one or more retirement or group plans of
such employer or employers (an employer controlling, controlled by or under
common control with another employer is deemed related to that employer.)
The Distributor must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charge will be granted
subject to confirmation of the investor's holdings.
RIGHTS OF ACCUMULATION. Reduced sales charges are also available through rights
of accumulation, by which an investor or an eligible group of related investors,
as described above, may aggregate the value of their existing holdings of shares
of the Funds and shares of other funds managed by the Adviser or an affiliate
(excluding money market funds other than those acquired pursuant to the exchange
privilege) to determine the reduced sales charge. The value of existing holdings
for purposes of determining the reduced sales charges is calculated using the
maximum offering price (net asset value plus maximum sales charge) as of the
previous business day.
LETTERS OF INTENT. Reduced sales charges are also available to investors (or an
eligible group of related investors), including retirement and group plans, who
enter into a written letter of intent (a "Letter of Intent") providing for the
purchase, within a thirteen-month period, of shares of the Funds and shares of
other funds managed by the Adviser or an affiliate (an "Investment Letter of
Intent"). Retirement and group plans may also qualify to purchase Class A shares
at net asset value by entering into a Letter of Intent whereby they agree to
enroll, within a thirteen-month period, a specified number of eligible employees
or participants (a "Participant Letter of Intent.").
For purposes of the Investment Letter of Intent, all shares of the Funds and
shares of other Gabelli funds (excluding money market funds other than those
acquired pursuant to the exchange privilege) which were previously purchased and
are still owned are also included in determining the applicable reduction.
A Letter of Intent permits a purchaser, in the case of an Investment Letter of
Intent, to establish a total investment goal to be achieved by any number of
investments over a thirteen-month period and, in case of a Participant Letter of
Intent, to establish a minimum eligible employee or participant enrollment goal
over a thirteen-month period. Each investment made during the period, in the
case of an Investment Letter of Intent, will receive the reduced sales charge
applicable to the amount represented by the goal, as if it were a single
investment. In the case of a Participant Letter of Intent, each investment made
during the period will be made at net asset value. Escrowed Class A shares
totaling 5% of the dollar amount of the Letter of
B-20
<PAGE> 87
Intent will be held by the Transfer Agent in the name of the purchaser, except
in the case of retirement and group plans where the employer or plan sponsor
will be responsible for paying any applicable sales charge. The effective date
of an Investment Letter of Intent (except in the case of retirement and group
plans) may be back-dated up to 90 days, in order that any investments made
during this 90-day period, valued at the purchaser's cost, can be applied to the
fulfillment of the Letter of Intent goal.
The Investment Letter of Intent does not obligate the investor to purchase, nor
the Funds to sell, the indicated amount. Similarly, the Participant Letter of
Intent does not obligate the retirement or group plan to enroll the indicated
number of eligible employees or participants. In the event the Letter of Intent
goal is not achieved within the thirteen-month period, the purchaser (or the
employer or plan sponsor, in case of any retirement or group plan) is required
to pay the difference between the sales charge otherwise applicable to the
purchases actually made during this period and sales charges actually paid. Such
payment may be made directly to the Distributor or, if not paid, the Distributor
will liquidate sufficient escrowed shares to obtain such difference. Investors
electing to purchase Class A shares of the Funds pursuant to a Letter of Intent
should carefully read such Letter of Intent.
The Distributor must be notified at the time of purchase that the investor is
entitled to a reduced sales charge. The reduced sales charge will, in the case
of an Investment Letter of Intent, be granted subject to confirmation of the
number of eligible employees or participants in the retirement or group plan.
Letters of Intent are not available to individual participants in any retirement
or group plans.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE - CLASS B SHARES. The contingent
deferred sales charge is waived under the circumstances described in the Funds'
Prospectuses. In connection with these waivers, the Transfer Agent will require
the shareholder to submit the supporting documentation set forth below.
<TABLE>
<CAPTION>
CATEGORY OF WAIVER REQUIRED DOCUMENTATION
<S> <C>
Death A copy of the shareholder's death certificate or,
in the case of a trust, a copy of the grantor's
death certificate, plus a copy of the trust
agreement identifying the grantor.
Disability - An individual will be considered A copy of the Social Security Administration
disabled if he or she is unable to engage in any award letter or a letter from a physician on
substantial gainful activity by reason of any the physician's letterhead stating that the
medically determinable physical or mental shareholder (or, in the case of a trust, the
impairment which can be expected to result in grantor) is permanently disabled. The letter
death or to be of long-continued and indefinite must also indicate the date of disability.
duration.
Distribution from an IRA or 403 (b) Custodial A copy of the distribution form from the
Account custodial firm indicating (i) the date of birth of
the shareholder and (ii) that the shareholder is
over age 59 1/2 and is taking a normal distribution
- signed by the shareholder.
Distribution from Retirement Plan A letter signed by the plan administrator/trustee
indicating the reason for the distribution.
Excess Contribution A letter from the shareholder (for an IRA) or the
plan administrator/trustee on company letterhead
indicating the amount of the excess and whether
or not taxes have been paid.
</TABLE>
B-21
<PAGE> 88
The Transfer Agent reserves the right to request such additional documents as it
may deem appropriate.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected at the discretion of the Board of Directors
and taken at their value used in determining the Funds' net asset value per
share as we described under "Net Asset Value"), or partly in cash and partly in
portfolio securities. However, payments will be made wholly in cash unless the
Board of Directors believes that economic conditions exist which would make such
a practice detrimental to the best interest of the Funds. If payment for shares
redeemed is made wholly or partly in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to cash. The Funds will
not distribute in-kind portfolio securities that are not readily marketable. The
Corporation has filed a formal election with the Commission pursuant to which
the Corporation will only effect a redemption in portfolio securities where the
particular shareholder of record is redeeming more than $250,000 or 1.00% of the
Fund's total net assets, whichever is less, during any 90-day period. In the
opinion of the Corporation's management, however, the amount of a redemption
request would have to be significantly greater than $250,000 before a redemption
wholly or partly in portfolio securities would be made.
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 Commission
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.
EXCHANGE PRIVILEGE
The Funds make available to their shareholders the privilege of exchanging their
shares for shares of certain other funds managed by the Adviser or an affiliate,
including one or more specified money market funds, subject in each case to the
minimum investment requirements of each fund (the "Exchange Privilege"). Shares
of such other Gabelli funds may also be exchanged for shares of the Corporation.
All exchanges are made on the basis of the relative NAV next determined after
receipt of an order in proper form. An exchange will be treated as a redemption
and purchase for tax purposes. Shares may be exchanged for shares of another
fund only if shares of such fund may legally be sold under applicable state
laws. For retirement and group plans having a limited menu of Gabelli funds, the
Exchange Privilege is available for those funds eligible for investment in the
particular program.
CLASS A SHARES
Shareholders of the Funds may exchange their Class A shares for Class A shares
of any other fund managed by the Adviser or an affiliate that offers Class A
shares and for shares of any money market fund managed by the Adviser or an
affiliate on the basis of relative NAV. No fee or sales load will be imposed
upon the exchange. Shareholders of money market funds who acquired such shares
upon exchange of Class A shares may use the Exchange Privilege only to acquire
Class A shares of the Gabelli funds participating in the Exchange Privilege [as
identified by the Distributor from time to time.]
CLASS B AND CLASS C SHARES
Shareholders of the Funds may exchange their Class B and Class C shares for
Class B and Class C shares, respectively, of any other fund managed by the
Adviser or an affiliate that offers Class B or Class C shares on the basis of
relative NAV. No CDSC will be payable upon such exchange, but a CDSC may be
payable
B-22
<PAGE> 89
upon the redemption of the Class B and Class C shares acquired as a result of an
exchange. The applicable sales charge will be that imposed by the fund in which
shares were initially purchased and the purchase date will be deemed to be the
first day of the month after the initial purchase, rather than the date of the
exchange.
At any time after acquiring shares of other funds participating in the Class B
or Class C Exchange Privilege, a shareholder may again exchange those shares
(and any reinvested dividends and distributions) for Class B and Class C shares
of the Fund, respectively, without subjecting such shares to any CDSC upon the
exchange. Shares of any fund participating in the Class B or Class C exchange
privilege that were acquired through reinvestment of dividends or distributions
may be exchanged for Class B or Class C shares, respectively, of other funds
without being subject to any CDSC.
CLASS AAA SHARES
Class AAA shares may be exchanged for Class AAA shares of any other funds
managed by the Adviser or an affiliate of the Adviser that offers Class AAA
shares or any other shares not subject to a front-end sales load or contingent
deferred sales charge.
Additional details about the Exchange Privilege and prospectuses for each of the
funds managed by the Adviser or an affiliate are available from the
Corporation's Distributor or Transfer Agent. The Exchange Privilege may be
modified, terminated or suspended on sixty days' notice, and any fund, including
either class, or the Distributor, has the right to reject any exchange
application relating to such fund's shares.
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 Internal Revenue Code of 1986, as amended, 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 short-
B-23
<PAGE> 90
term capital gains, if any, realized during any fiscal year in which it
distributes such income and capital gains to its shareholders.
Each dividend and capital gains distribution, if any, declared by the 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 the
Fund having an aggregate net asset value as of the ex-dividend date of such
dividend or distribution equal to the cash amount of such distribution. An
election to receive dividends and distributions may be changed by notifying the
Fund in writing at any time prior to the record date for a particular dividend
or distribution. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains.
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 the 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.
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.
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
B-24
<PAGE> 91
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.
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 long-term or short-term, generally depending upon the shareholder's
holding period for the shares. 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
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 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
Net asset value is calculated separately for each class of the Corporation. The
net asset value of Class B and Class C shares of the Funds will generally be
lower than the net asset value of Class A or Class AAA shares as a result of the
larger distribution-related fee to which Class B and Class C shares are subject.
It is expected, however, that the net asset value per share of each class will
tend to converge immediately after the recording of dividends, if any, which
will differ by approximately the amount of the distribution and/or service fee
expense accrual differential among the classes.
B-25
<PAGE> 92
For purposes of determining each of the Fund's net asset value per share,
readily marketable portfolio securities listed on the NYSE are valued, except as
indicated below, at the last sale price reflected at the close of the regular
trading session of the NYSE on the business day as of which such value is being
determined. If there has been no sale on such day, the securities are valued at
the mean of the closing bid and asked prices on such day. If no asked prices are
quoted on such day, then the security is valued at the closing bid price on such
day. If no bid or asked prices are quoted on such day, then the security is
valued by such method as the Board of Directors shall determine in good faith to
reflect its fair market value. Readily marketable securities not listed on the
NYSE but listed on other national securities exchanges or admitted to trading on
the National Association of Securities Dealers Automated Quotations, Inc.
("NASDAQ") National List are valued in like manner.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair value. If no bid or asked
prices are quoted on such day, then the security is valued by such method as the
Board of Directors shall determine in good faith to reflect its fair market
value.
Portfolio securities traded on more than one national securities exchange or
market are valued according to the broadest and most representative market as
determined by the Adviser. Securities traded primarily on foreign exchanges are
valued at the closing price on such foreign exchange immediately prior to the
close of the NYSE.
United States Government obligations and other debt instruments having sixty
days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the highest
bid price obtained from a dealer maintaining an active market in that security
or on the basis of prices obtained from a pricing service approved as reliable
by the Board of Directors. All other investment assets, including restricted and
not readily marketable securities, are valued under procedures established by
and under the general supervision and responsibility of the Corporation's Board
of Directors designed to reflect in good faith the fair value of such
securities.
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 Telecommunications Fund for the 30-day period
ended December 31, 1998, the
B-26
<PAGE> 93
Fund's yield was (0.84)%. With respect to The Gabelli Global Interactive Couch
Potato(R) Fund for the 30-day period ended December 31, 1998, the Fund's yield
was (1.25) %. With respect to The Gabelli Global Opportunity Fund for the 30-day
period ended December 31, 1998, the Fund's yield was 1.49%. With respect to The
Gabelli Global Convertible Securities Fund for the 30-day period ended December
31, 1998, the Fund's yield was (3.87)%.
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 (or for the periods of each Fund's operations), 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 $1,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser) on an annual basis, and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed. The table below displays the total returns for the
year ended December 31, 1998 and average annual returns since inception.
<TABLE>
<CAPTION>
Average Annual
5 Year Average Total Return
1998 Annual Total Since
Total Return Return Inception
------------ -------------- --------------
<S> <C> <C> <C>
Global Telecommunications 34.8% 16.7% 16.8%
Global Interactive Couch Potato(R) 28.9% N/A 20.4%
Global Opportunity N/A N/A N/A
Global Convertible Securities 8.6% N/A 6.1%
</TABLE>
SERVICE PROVIDERS
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New York
10022, serves as counsel to the Corporation.
Grant Thornton LLP, 7 Hanover Square, New York, New York 10004-2616, have been
appointed independent auditor for the Corporation.
B-27
<PAGE> 94
State Street Bank and Trust Company ("State Street") is the Custodian for the
Fund's cash and securities as well as the Transfer and Dividend Disbursing Agent
for its shares. Boston Financial Data Services, Inc., an affiliate of State
Street, performs the shareholder services on behalf of State Street and is
located at the BFDS Building, 2 Heritage Drive, North Quincy, Massachusetts
07171.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Corporation was organized as a Maryland corporation on July 16, 1993. Its
authorized capital stock consists of one billion shares of stock having a par
value of one tenth of one cent ($.001) per share. 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 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 Fund. 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.
The Corporation sends semi-annual and audited annual reports to all shareholders
which include lists of portfolio securities and the Funds' 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 Fund 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.
B-28
<PAGE> 95
PART C: OTHER INFORMATION
Item 23. 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 and incorporated by reference
to the Fund's Annual Reports dated December 31, 1998:
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
(GGICPF)
The Gabelli Global Opportunity Fund (GGOF)
-- Portfolio of Investments, year ended December 31,
1998 (all)*
-- Statement of Assets and Liabilities, year ended
December 31, 1998 (all)*
-- Statements of Changes in Net Assets for the fiscal
years ended December 31, 1998 and December 31,
1997 (all)*
-- Notes to Financial Statements (all)*
-- Financial Highlights for the fiscal years ended
December 31, 1998, 1997, 1996, 1995 and 1994 (GGTF);
for the fiscal years ended December 31, 1998, 1997,
1996 and 1995 and for the period February 3, 1994
(Commencement of Operations) through December 31, 1994
(GGCSF); for the fiscal years ended December 31, 1998,
1997, 1996 and 1995 and for the period February 7, 1994
(Commencement of Operations) through December 31, 1994
(GGICPF); for the period May 11, 1998 through December
31, 1998 (GGOF)*
-- Reports of Grant Thornton LLP Independent Auditors
(all)*
(b) Exhibits:
(1) Articles of Incorporation, as amended, of the
Registrant***
(2) 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) Opportunity
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***
1
<PAGE> 96
(c) Investment Advisory Agreement with Gabelli Funds,
Inc. ("Gabelli Funds" or the "Adviser") for The
Gabelli Global Convertible Securities Fund***
(6) (a) Distribution Agreement with Gabelli and Company,
Inc. relating to The Gabelli Global
Telecommunications Fund***
(b) Distribution Agreement with Gabelli and Company,
Inc. relating to The Gabelli Global Opportunity
Fund***
(c) Distribution Agreement with Gabelli and Company,
Inc. relating to The Gabelli Global Interactive
Couch Potato(R) Fund***
(d) Distribution Agreement with Gabelli and Company,
Inc. relating to The Gabelli Global Convertible
Securities Fund***
(7) Not Applicable
(8) Custodian Agreement between the Registrant and State
Street Bank and Trust Company***
(9.1) Sub-Administration Agreement between the Gabelli
Funds, Inc. and BISYS Fund Services, Inc.***
(9.2) Transfer Agency Agreement between the Registrant and
State Street Bank and Trust Company ***
(10) (a) Opinion and Consent of counsel for the
Registrant**
(b) 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 Opportunity 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) Form of Amended and Restated Plan of
Distribution relating to the Class AAA Shares****
(b) Form of Amended and Restated Plan of
Distribution relating to the Class A Shares****
(c) Form of Amended and Restated Plan of Distribution
relating to the Class B Shares****
(d) Form of Amended and Restated Plan of
Distribution relating to the Class C Shares****
(16) N/A
(17) Financial Data Schedule*****
(18) (a) Form of Rule 18f-3 Plan relating to the Gabelli
Global Telecommunications Fund****
(b) Form of Rule 18f-3 Plan relating to the Gabelli
Global Opportunity Fund****
(c) Form of Rule 18f-3 Plan relating to the Gabelli
Global Interactive Couch Potato Fund****
2
<PAGE> 97
(d) Form of Rule 18f-3 Plan relating to the Gabelli
Global Convertible Securities Fund****
* Previously filed with the Fund's Annual Report for the year ended
December 31, 1998 and incorporated by reference herein.
** Previously filed as an exhibit to Post-Effective Amendment No. 2 to
Registration Statement No. 33-66262 on January 5, 1994 and incorporated
by reference herein.
*** Previously filed as an exhibit to Post-Effective Amendment No. 8 to
Registration Statement No. 33-66262 on April 15, 1998 and incorporated
by reference herein.
**** Previously filed as an exhibit to Post-Effective Amendment No. 9 to
Registration Statement No. 33-66262 on March 1, 1999 and incorporated by
reference herein.
***** Filed herewith.
ITEM 24. 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 Gabelli Westwood
Funds and The Gabelli U.S. Treasury Money Market Fund.
ITEM 25. 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 26. 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 27. 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 Gabelli Westwood Funds and The Gabelli U.S. Treasury Money
Market Fund.
3
<PAGE> 98
(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 28. 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,
LLC, One Corporate Center, Rye, New York 10580-1434.
ITEM 29. MANAGEMENT SERVICES.
The Registrant is not a party to any management-related service contract.
ITEM 30. UNDERTAKINGS.
(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.
<PAGE> 99
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, 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, as amended, and has duly caused this Amendment No. 10 to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rye, and State of New York on the 28th day of
April, 1999.
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, as amended, this
Amendment No. 10 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 28, 1999
- ------------------------------- Executive Officer), and Director
Mario J. Gabelli
* Vice President and Treasurer April 28, 1999
- -----------------------------
Bruce N. Alpert
* Director April 28, 1999
- -----------------------------
Felix J. Christiana
* Director April 28, 1999
- -----------------------------
Anthony J. Colavita
* Director April 28, 1999
- -----------------------------
Anthonie C. van Ekris
* Director April 28, 1999
- -----------------------------
Karl Otto Pohl
* Director April 28, 1999
- -----------------------------
John D. Gabelli
* Director April 28, 1999
- -----------------------------
Werner Roeder, M.D.
*By: /s/ Bruce N. Alpert
- ------------------------------
Bruce N. Alpert
Attorney-in-Fact
</TABLE>
<PAGE> 1
May 3, 1999
Gabelli Global Series Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Ladies and Gentlemen:
As special Maryland counsel to Gabelli Global Series Funds, Inc., a Maryland
corporation (the "Corporation"), in connection with Post-Effective Amendment
No. 10 to the Corporation's Registration Statement on Form N-1A (Registration
Nos. 33-66262 and 811-7895) filed with the Securities and Exchange
Commission (the "Commission") on the date hereof, we hereby consent to the
use of the opinion letter dated October 4, 1993 (the "Opinion Letter")
previously filed with the Commission ("the Commission"). In giving our consent,
we do not thereby admit that we are in the category of persons whose consent
is required under Section 7 of the Securities Act of 1933 or the rules and
regulations of the Commission thereunder. This consent relates solely to the
opinions expressed in the Opinion Letter as of the date of the Opinion Letter,
and the opinions expressed therein shall continue to be expressed solely as of
that date and relate solely to the shares which were the subject of the
Registration Statement on the date our opinion was originally filed with the
Commission. We understand that an additional opinion will be later filed with
respect to the additional or different shares which are the subject of
Post-Effective Amendment No. 10 to the Corporation's Registration Statement,
and, accordingly, no other opinion should be inferred beyond the matters
expressly stated in the Opinion Letter.
Very truly yours,
/s/ MILES & STOCKBRIDGE P.C.
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Gabelli Global Telecommunications Fund,
The Gabelli Global Opportunity Fund,
The Gabelli Global Interactive Couch Potato(R) Fund,
The Gabelli Global Convertible Securities Fund,
each a Series of Gabelli Global Series Fund, Inc.
We hereby consent to the incorporation by reference in Post-Effective Amendment
No. 10 to Registration Statement No. 33-66262 on Form N-1A of our Report of
Independent Auditors dated February 19, 1999, 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.
/s/ GRANT THORNTON LLP
----------------------
New York, New York
April 28, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000909504
<NAME> GABELLI GLOBAL SERIES FUNDS, INC.
<SERIES>
<NUMBER> 01
<NAME> THE GABELLI GLOBAL TELECOMMUNICATIONS FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 107175754
<INVESTMENTS-AT-VALUE> 170189168
<RECEIVABLES> 488527
<ASSETS-OTHER> 454844
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171132539
<PAYABLE-FOR-SECURITIES> 417466
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 652343
<TOTAL-LIABILITIES> 1069809
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 106898322
<SHARES-COMMON-STOCK> 10233972
<SHARES-COMMON-PRIOR> 8850438
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 169588
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 62994820
<NET-ASSETS> 170062730
<DIVIDEND-INCOME> 1615419
<INTEREST-INCOME> 836619
<OTHER-INCOME> 0
<EXPENSES-NET> 2333354
<NET-INVESTMENT-INCOME> 118684
<REALIZED-GAINS-CURRENT> 12504671
<APPREC-INCREASE-CURRENT> 29961404
<NET-CHANGE-FROM-OPS> 42584759
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 106321
<DISTRIBUTIONS-OF-GAINS> 12347446
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9903141
<NUMBER-OF-SHARES-REDEEMED> 9252964
<SHARES-REINVESTED> 733357
<NET-CHANGE-IN-ASSETS> 52191107
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 69
<OVERDIST-NET-GAINS-PRIOR> 18565
<GROSS-ADVISORY-FEES> 1456869
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2333354
<AVERAGE-NET-ASSETS> 145829702
<PER-SHARE-NAV-BEGIN> 13.32
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 4.60
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 1.30
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.62
<EXPENSE-RATIO> 1.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000909504
<NAME> GABELLI GLOBAL SERIES FUNDS, INC.
<SERIES>
<NUMBER> 02
<NAME> THE GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 6850335
<INVESTMENTS-AT-VALUE> 7289653
<RECEIVABLES> 203331
<ASSETS-OTHER> 38075
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7531059
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 204937
<TOTAL-LIABILITIES> 204937
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6896569
<SHARES-COMMON-STOCK> 723919
<SHARES-COMMON-PRIOR> 998148
<ACCUMULATED-NII-CURRENT> 19612
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 7815
<ACCUM-APPREC-OR-DEPREC> 417756
<NET-ASSETS> 7326122
<DIVIDEND-INCOME> 114346
<INTEREST-INCOME> 18138
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