As filed with the Securities and Exchange Commission on April 26, 1996
Securities Act File No. 33-79180
Investment Company Act File No. 811-8518
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 3 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 4 |X|
(Check appropriate box or boxes)
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GABELLI GOLD FUND, INC.
(Exact Name of Registrant as Specified in Charter)
One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Office)
Registrant's Telephone Number (800) 422-3554
Bruce N. Alpert
Gabelli Funds, Inc.
One Corporate Center, Rye, New York 10580-1434
(Name and Address of Agent for Service)
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Copies to:
James E. McKee, Esq. Daniel Schloendorn, Esq.
Gabelli Funds, Inc. Willkie Farr & Gallagher
One Corporate Center One Citicorp Center
Rye, New York 10580-1434 153 East 53rd Street
New York, New York 10022
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It is proposed that this filing will be effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|X| on May 1, 1996 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a) of Rule 485(a)(2)
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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Pursuant to Rule 24f-2(a)(1) under the Investment Company Act of 1940,
Registrant has previously filed a declaration of registration of an indefinite
number of securities under the Securities Act of 1933. Registrant's 24f-2 Notice
for the fiscal year ended December 31, 1995 was filed on February 29, 1996.
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<PAGE>
GABELLI GOLD FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No. Location in Prospectus
- -------- ----------------------
<S> <C> <C>
Item 1. Cover Page........................................................... Cover Page
Item 2. Synopsis............................................................. Table of Fees and Expenses for the Fund
Item 3. Condensed Financial Information...................................... General Information
Item 4. General Description of Registrant.................................... Cover Page; Investment Objective and Policies;
Additional Investment Policies; General
Information
Item 5. Management of the Fund............................................... Management of the Fund
Item 5(a) Management's Discussion of Fund Performance.......................... Not Applicable
Item 6. Capital Stock and Other Securities................................... Management of the Fund; Dividends, Distributions
and Taxes; General Information
Item 7. Purchase of Securities Being Offered................................. Management of the Fund; Distribution Plan;
Purchase of Shares; Retirement Plans
Item 8. Redemption or Repurchase............................................. Redemption of Shares
Item 9. Pending Legal Proceedings............................................ Not Applicable
Location In
Part B Statement of
Item No. Additional Information
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Item 10. Cover................................................................ Cover Page
Item 11. Table of Contents.................................................... Table of Contents
Item 12. General Information and History...................................... Notes to Financial Statements; See Prospectus--
"General Information"
Item 13. Investment Objective and Policies.................................... Investments; Investment Restrictions; See
Prospectus-- "Investment Objective and
Policies" and "Additional Investment Policies"
Item 14. Management of the Fund............................................... The Adviser; The Distributor; Directors and
Officers; See Prospectus -- "Management of the
Fund"
Item 15. Control Persons and Principal Holders of Securities.................. Management of the Fund; See Prospectus--
"Management of the Fund"
Item 16. Investment Advisory and Other Services .............................. The Adviser; The Distributor; Directors and
Officers; See Prospectus-- "Management of the
Fund"
Item 17. Brokerage Allocation and Other Practices............................. Portfolio Transactions and Brokerage
Item 18. Capital Stock and Other Securities................................... Dividends, Distributions and Taxes; Notes to
Financial Statements; See Prospectus --
"Dividends, Distributions and Taxes" and
"General Information"
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered............................................. Purchase and Redemption of Shares
Item 20. Tax Status........................................................... Dividends, Distributions and Taxes; See
Prospectus -- "Dividends, Distributions and
Taxes"
Item 21. Underwriters......................................................... Purchase and Redemption Information; See
Prospectus -- "Management of the Fund"
Item 22. Condensed Financial Information...................................... Investment Performance Information
Item 23. Financial Statements................................................. Incorporated by reference
</TABLE>
Part C
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Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
<PAGE>
Gabelli Gold Fund, Inc.
One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
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PROSPECTUS
May 1, 1996
Gabelli Gold Fund, Inc. (the "Fund") is a no load, open-end, diversified
management investment company which seeks to provide long-term capital
appreciation. The Fund will seek to achieve its objective by investing primarily
in the equity securities of foreign and domestic issuers engaged in gold-related
activities. See "Investment Objective and Policies". Because the securities in
which the Fund invests may involve risks not associated with more traditional
investments, an investment in the Fund by itself should not be considered a
balanced investment program. See "Risk Factors".
The Fund has a distribution plan which permits it to pay up to .25% per year of
its average daily net assets for marketing and shareholder services and
expenses. Shares of the Fund may be purchased without a sales load at net asset
value. The minimum initial investment in the Fund is currently $1,000. The Fund
will increase its minimum initial investment to $10,000 when it has either
10,000 shareholders or over $100,000,000 of assets under management. See
"Purchase of Shares". For further information, contact Gabelli & Company, Inc.
at the address or telephone number shown above.
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This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information,
dated May 1, 1996 (the "Additional Statement"), containing additional
information about the Fund has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. For a free
copy, write or call the Fund at the telephone number or address set forth above.
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This Prospectus should be retained by investors for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<PAGE>
TABLE OF FEES AND EXPENSES
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)................................ None
Maximum Sales Load Imposed on Reinvested Dividends................... None
Deferred Sales Load.................................................. None
Redemption Fees (a).................................................. None
Exchange Fees........................................................ None
Annual Fund Operating Expenses
(as a percentage of average net asset(s):
Management Fees (b).................................................. 1.00%
12b-1 Expenses (c)................................................... .25%
Other Expenses (d)................................................... 1.00%
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Total Fund Operating Expenses..................................... 2.25%
======
Example 1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following
expenses on a $1,000 investment
assuming a 5% annual return:........ $23.06 $72.70 $127.43 $290.08
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The amounts listed in this example should not be considered as representative of
future expenses, and actual expenses may be greater or less than those
indicated. Other expenses set forth above are based on estimated amounts for the
current fiscal year. Moreover, while the example assumes a 5% annual return, the
Fund's actual performance will vary and may result in an actual return greater
or less than 5%.
- --------------------------------------------------------------------------------
The information contained in the foregoing table is provided to assist you in
understanding the various direct and indirect costs and expenses that an
investor in the Fund would bear.
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(a) Does not include any service fee on wire redemptions that may be imposed by
a shareholder's agent or predesignated bank.
(b) Subject to potential reduction as a result of the expense reimbursement
obligations of the Fund's adviser.
(c) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the Rules of the National
Association of Securities Dealers.
(d) Such expenses include custodian and transfer agency fees and other customary
Fund expenses.
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FINANCIAL HIGHLIGHTS
The following table has been audited by Ernst & Young LLP, the Fund's
independent auditors, whose unqualified report thereon appears in the Additional
Statement. This information should be read in conjunction with the financial
statements of the Fund incorporated by reference in the Additional Statement.
Selected data for a share of capital stock outstanding throughout the period:
<TABLE>
<CAPTION>
From July 11, 1994
(Commencement of
Year Ended Operations) through
December 31, 1995 December 31, 1994
----------------- ----------------
Operating Performance:
<S> <C> <C>
Net asset value, beginning of period ............. $ 11.07 $ 10.00
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Increase from Investment Operations:
Net investment loss .............................. (0.15) 0.00
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Net realized and unrealized gain on securities ... 0.49 1.07(a)
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Total from investment operations ................. 0.34 1.07
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Net asset value, end of period ................... $ 11.41 $ 11.07
========== ==========
Total Return ..................................... 3.07% 10.70%
Ratios/supplemental data:
Net Assets, End of Period (in thousands) ......... $ 14,510 $ 17,634
Ratio of Expenses to Average Net Assets .......... 2.25% 2.04%(b)
Ratio of Net Investment Loss to Average Net Assets (1.12)% (0.26%)(b)
Portfolio Turnover Rate .......................... 38% 12%
</TABLE>
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(a) Includes the effect of realized gains prior to significant increases in
shares outstanding.
(b) Annualized.
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is long-term capital appreciation. The
production of any current income is incidental to this objective. As further
described below, the Fund will seek to achieve its objective by investing
primarily in the equity securities of foreign and domestic issuers principally
engaged in gold-related activities. There can be no assurance that the Fund's
investment objective will be achieved. The Fund's investment objective and
policy regarding concentration described below are fundamental policies which
may not be changed without the approval of a majority of the Fund's outstanding
voting securities.
The Fund intends to provide investors with the opportunity to invest in gold and
gold-related securities. An investment in the Fund may offer better opportunity
for capital growth for the long- term investor willing to accept above-average
risk. Since, historically, gold as a tangible asset has not always moved in
close correlation with financial assets, an investment in the Fund may be used
to diversify an existing portfolio of non- gold-related securities and other
investments.
Under normal circumstances, the Fund will invest at least 65% of its total
assets in equity securities of companies principally engaged in the exploration,
mining, fabrication, processing, distribution or trading of gold or the
financing, managing, controlling or operating companies engaged in such
activities. (Such activities and the activities of such related financing,
managing, controlling or operating companies are referred to herein as
"gold-related" activities.) For these purposes, a company will be considered to
be principally engaged in such activities if it derives more than 50% of its
income or devotes 50% or more of its assets to such activities. The Fund may
also invest in equity securities of companies engaged in similar activities with
respect to silver, platinum or other precious metals or minerals ("precious
metals-related" activities) or of companies in other industries. Equity
securities in which the Fund may invest include common stocks, preferred stocks,
securities convertible into common stock and securities having common stock
characteristics, such as rights and warrants. The Fund will invest more than 25%
of its total assets in securities of companies in the group of industries
involved in gold-related or precious metals-related activities, as described
above. Potential investors in the Fund should consider the possibly greater risk
arising from the concentration of the Fund's investments in such group of
industries.
Because most of the world's gold production is outside of the United States, the
Fund expects that a significant portion of its assets may be invested in
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the
judgment of Gabelli Funds, Inc. (the "Adviser"), which may be based on, among
other things, consideration of the political stability and economic outlook of
these countries or regions.
The Fund expects to invest in the securities of companies located in developed
countries as well as those located in emerging markets. Investing in securities
issued by companies located in emerging markets involves not only the risks
discussed below with respect to investing in foreign securities, but also other
risks, including exposure to economic structures that are generally less diverse
and mature than, and to political systems that can be expected to have less
stability than, those of developed countries. Other characteristics of emerging
countries that may affect investment in their markets include certain national
policies that may restrict investment by foreigners in issuers or industries
deemed sensitive to relevant national interests and the absence of developed
legal structures governing private and foreign investments and private property.
The typically small size of the markets for securities issued by companies
3
<PAGE>
located in emerging countries and the possibility of a low or nonexistent volume
of trading in those securities may also result in a lack of liquidity and in
price volatility of those securities.
The Fund may also invest up to 10% of its total assets in bullion of gold and
other precious metals ("bullion"). Bullion will only be bought and sold through
U.S. and foreign banks, regulated U.S. commodities exchanges, exchanges
affiliated with a regulated U.S. stock exchange and dealers who are members of,
or affiliated with members of, a regulated U.S. commodities exchange, in
accordance with applicable investment laws. Investors should note that bullion
offers the potential for capital appreciation or depreciation, but unlike other
investments does not generate income, and in these transactions the Fund may
encounter higher custody and other costs (including shipping and insurance) than
costs normally associated with ownership of securities. The Fund may attempt to
minimize the costs associated with the actual custody of bullion by the use of
receipts or certificates representing ownership interests in bullion.
Subject to the Fund's policy of investing at least 65% of its total assets in
securities of companies engaged principally in gold-related activities, the Fund
may invest in money market instruments. In cases of abnormal market or economic
conditions, the Fund may invest up to 100% of its assets in money market
instruments for defensive purposes, although the Fund intends to stay invested
in securities satisfying its investment objective to the fullest extent
practicable. Money market instruments include obligations of the U.S. government
and its agencies and instrumentalities, commercial paper including bank
obligations, certificates of deposit (including Eurodollar certificates of
deposit) and repurchase agreements. The Fund intends to invest only in
short-term and medium-term debt securities that the Adviser believes to be of
high quality, i.e., rated in one of the two highest categories by Moody's
Investors Service, Inc. ("Moody's") or Standard & Poor's Rating Group ("S&P")
or, if unrated, determined to be equivalent in credit quality by the Adviser.
For liquidity purposes in meeting redemption requests or paying dividends or
expenses, the Fund may also invest its assets in such instruments.
As a diversified investment company, the Fund is subject to the following
limitations as to 75% of its total assets: (a) the Fund may not invest more than
5% of its total assets in the securities of any one issuer, except obligations
of the U.S. government and its agencies and instrumentalities, and (b) the Fund
may not own more than 10% of the outstanding voting securities of any one
issuer.
For hedging purposes only, the Fund may enter into forward foreign currency
exchange transactions, currency swaps, covered call and put options (listed on a
U.S. securities exchange or written in the over-the-counter market), futures
contracts and options on futures. The Fund may also enter into repurchase
agreements, purchase securities on a when-issued or delayed delivery basis and
lend its portfolio securities. For more information on these practices, see
"Additional Investment Policies" below and "Investments" in the Additional
Statement.
Although the Fund will generally invest for the long term, investment securities
may be sold from time to time without regard to the length of time they have
been held. It is anticipated that the annual turnover rate for the Fund will not
exceed 75% under normal circumstances.
Mr. Caesar Bryan is primarily responsible for the day-to-day management of the
Fund. Mr. Bryan has been a Senior Vice President of GAMCO Investors, Inc., a
majority-owned subsidiary of the Adviser, since May 1994. Mr. Bryan served as
Senior Vice President and Portfolio Manager of Lexington Management Corporation
from 1986 until May 1994.
4
<PAGE>
ADDITIONAL INVESTMENT POLICIES
General. Subject to the Fund's policy of investing at least 65% of its total
assets in securities of companies engaged principally in gold-related
activities, the Fund may invest in common stocks, preferred stocks, convertible
securities, depository receipts, bonds, notes and other debt obligations of any
maturity, warrants, options and futures contracts on securities and securities
indices, and securities of companies in bankruptcy or reorganization. Such
securities may be issued by domestic or foreign corporations or other types of
entities, governments or agencies or instrumentalities of governments or
supranational agencies. There is no minimum rating or credit quality of fixed
income securities in which the Fund may invest. Although up to 25% of the Fund's
assets may be invested in lower quality debt securities, the Fund currently does
not expect to invest in excess of 5% of its assets in fixed income securities
rated, at the time of investment, lower than BBB by S&P or Baa by Moody's or
unrated but determined by the Adviser to be of equivalent quality. Securities
rated BBB by S&P or Baa by Moody's, while considered investment-grade, may have
speculative characteristics. The Fund also does not expect to invest in excess
of 5% of its assets in securities of unseasoned issuers (companies that have
operated less than three years), which, due to their short operating history,
may have less information available and may not be as liquid as other
securities, or of companies in bankruptcy or reorganization. The Fund may also
utilize other investment strategies such as short selling, buying or selling
when-issued securities, entering into forward commitments and engaging in
various hedging strategies such as the use of futures and options and repurchase
agreements, and foreign currency transactions, including currency swaps.
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, investor perceptions and market
liquidity. Preferred stock has a preference over common stock in liquidation
(and generally dividends as well) but is subordinated to the liabilities of the
issuer in all respects. As a general rule the market value of preferred stock
with a fixed dividend rate and no conversion element varies inversely with
interest rates and perceived credit risk, while the market price of convertible
preferred stock generally also reflects some element of conversion value. Bonds,
debentures, notes and money market instruments such as commercial paper and
bankers' acceptances represent obligations of the issuer. Debt securities that
are convertible into or exchangeable for common or preferred stock are
liabilities of the issuer but are generally subordinated to more senior elements
of the issuer's balance sheet. Although such securities also generally reflect
an element of conversion value, their market value also varies with interest
rates and perceived risk. Depository receipts and shares are utilized to make
investing in a particular security (usually foreign) more convenient for
investors.
Investments in Options, Warrants and Investment Companies. The Fund may invest
up to 5% of its assets in options and up to 5% of its assets in warrants to buy
securities, with no more than 2% invested in unlisted warrants. The Fund may
also invest up to 10% of its assets (5% per issuer) in securities issued by
other unaffiliated investment companies, although the Fund may not acquire more
than 3% of the voting securities of any investment company. To the extent the
Fund invests in other investment funds, the Fund's shareholders will incur
certain duplicative fees and expenses, including advisory fees.
5
<PAGE>
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 unexercised but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations.
When-Issued and Delayed Delivery Securities. The Fund may enter into forward
commitments for the purchase or sale of securities, including on a "when-issued"
or "delayed delivery" basis. In such transactions, instruments are bought with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous yield or price at the time of the transaction.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to the
settlement date.
Short Sales. The Fund may make short sales of securities. A short sale is a
transaction in which a Fund sells a security it does not own in anticipation
that the market price of that security will decline. The market value of the
securities sold short of any one issuer will not exceed either 5% of the Fund's
total assets or 5% of such issuer's voting securities. The 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 the Fund's
aggregate short sales of a particular class of securities exceeds 25% of the
outstanding securities of that class. Short sales may only be made in securities
fully listed on a national securities exchange. The Fund may also make short
sales "against the box" without respect to such limitations. In this type of
short sale, at the time of the sale the Fund owns or has the immediate and
unconditional right to acquire at no additional cost the identical security.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
Although the Fund's gain is limited to the price at which it sold the security
short, its potential loss is theoretically unlimited.
Repurchase Agreements. The Fund may invest in repurchase agreements with respect
to any securities it owns. Repurchase agreements are considered loans to the
counterparty, and will be fully collateralized at all times with liquid high
grade debt securities and will only be entered into with financial institutions
approved by the Board of Directors. Repurchase agreements have the risk that
collateral may not be able to be disposed of at a desirable price, delays as a
result of bankruptcy of the counterparty or encumbrances of collateral or
restrictions on its disposition. The term of such agreements is usually from
overnight to one week.
Borrowings. The Fund may borrow from banks for temporary or emergency purposes
or to satisfy redemption requests in amounts not in excess of 15% of the Fund's
total assets, with such borrowing not to exceed 5% of the Fund's total assets
for purposes other than satisfying redemption requests. The Fund will not
purchase securities when borrowings exceed 5%.
Forward Currency Exchange Contracts and Currency Swaps. The Fund may enter into
forward currency exchange contracts and currency swaps to protect against the
effects of fluctuating rates of currency exchange and exchange control
regulations. Forward currency exchange contracts provide for the purchase or
sale of an amount of a specified currency at a
6
<PAGE>
future date. Currency swaps are agreements to exchange cash flows based on
changes in the values of the reference indices. Purposes for which such currency
transactions may be used include protecting against a decline in a foreign
currency against the U.S. dollar between the trade date and the settlement date
when the Fund purchases or sells non-U.S. dollar-denominated securities, locking
in the U.S. dollar value of dividends and interest on securities held by the
Fund and generally protecting the U.S. dollar value of securities held by the
Fund against exchange rate fluctuation. While such forward contracts and
currency swaps may limit losses to the Fund as a result of exchange rate
fluctuation, they will also limit any gains that may otherwise have been
realized. In addition to the hedging risks discussed below, currency
transactions include the risk securities losses could be magnified by changes in
the value of the currency in which a security is denominated relative to the
U.S. dollar.
Precious Metals Futures and Forward Contracts. The Fund may enter into futures
and forward contracts on precious metals as a hedge against changes in the
prices of precious metals held or intended to be acquired by the Fund, but not
for speculation or for achieving leverage. The Fund's hedging activities may
include purchases of futures and forward contracts as an offset against the
effect of anticipated increases in the price of a precious metal which the Fund
intends to acquire or sales of futures and forward contracts as an offset
against the effect of anticipated declines in the price of precious metals which
the Fund owns. Precious metals futures and forward contract prices can be
volatile and are influenced principally by changes in spot market prices, which
in turn are affected by a variety of political and economic factors. While the
correlation between changes in prices of futures and forward contracts and
prices of the precious metals being hedged by such contracts has historically
been very strong, the correlation may at times be imperfect and even a
well-conceived hedge may be unsuccessful to some degree because of market
behavior or unexpected precious metals price trends.
The Fund may also purchase and write covered call or put options on precious
metals futures contracts. Such options would be purchased solely for hedging
purposes. Call options might be purchased to hedge against an increase in the
price of precious metals the Fund intends to acquire, and put options may be
purchased to hedge against a decline in the price of precious metals owned by
the Fund. As is the case with futures contracts, options on precious metals
futures may facilitate the Fund's acquisition of precious metals or permit the
Fund to defer disposition of precious metals for tax or other purposes.
Illiquid and Restricted Securities. The Fund may invest up to 15% of its net
assets in illiquid securities as to which market quotations are not readily
available, including repurchase agreements with more than seven days to
maturity. Within this 15% limitation, the Fund may invest up to 10% of its net
assets in securities with legal or contractual restrictions on resale. Up to 5%
of the Fund's net assets may be invested in the securities of issuers which,
together with any predecessor, have been in continuous operation for less than
three years. Nevertheless, to the extent it can do so consistent with the
foregoing limitations, the Fund may invest in non-publicly traded securities,
including securities that are not registered under the Securities Act of 1933,
as amended, but that can be offered and sold to qualified institutional buyers
under Rule 144A under that Act. The Board of Directors has adopted guidelines
and delegated to the Adviser, subject to the supervision of the Board of
Directors, the daily function of determining and monitoring the liquidity of
Rule 144A securities. Rule 144A securities may become illiquid if qualified
institutional buyers are not interested in acquiring the securities.
7
<PAGE>
Disposition of illiquid securities often takes more time than for more liquid
securities, may result in higher selling expenses and may not be able to be made
at desirable prices.
See the Additional Statement for more information about these securities and
investment practices.
RISK FACTORS
All securities investments are subject to risks. The equity securities in which
the Fund may invest are generally subordinated to the claims of creditors, and
market prices are subject to the performance of the issuer, its financial health
and market perceptions. In addition, as further described below, there are
special risks inherent in the Fund's policies of investing in gold and
gold-related securities. For certain additional risks relating to the Fund's
investment policies, see "Additional Investment Policies" above.
Gold-Related Risks. The Fund intends to invest at least 65% of its total assets
in securities of companies engaged in gold-related activities. As a result of
this policy, which is a fundamental policy of the Fund, the Fund's investments
may be subject to greater risk and market fluctuation than a fund that invests
in securities representing a broader range of investment alternatives.
Historically, stock prices of companies involved in precious metals-related
industries have been volatile. Investments related to gold and other precious
metals and minerals are considered speculative and are affected by a variety of
world-wide economic, financial and political factors. Prices of gold and other
precious metals may fluctuate sharply over short periods of time due to changes
in inflation or expectations regarding inflation in various countries, the
availability of supplies of precious metals, changes in industrial and
commercial demand, metal sales by governments, central banks or international
agencies, investment speculation, monetary and other economic policies of
various governments and government restrictions on private ownership of certain
precious metals and minerals.
Foreign Securities. Investments in foreign securities involve certain risks not
ordinarily associated with investments in securities of domestic issuers,
including fluctuations in foreign exchange rates, future political and economic
developments, and the possible imposition of exchange controls or other foreign
governmental laws or restrictions. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and accounting, auditing and financial reporting standards
and requirements may not be comparable. Securities of many foreign companies are
less liquid and their prices more volatile than securities of comparable U.S.
companies. Transaction costs of investing in non-U.S. securities markets are
generally higher than markets in the U.S. There is generally less government
supervision and regulation of exchanges, brokers and issuers than there is in
the U.S. The Fund might have greater difficulty taking appropriate legal action
in non-U.S. courts. Depository receipts that are not sponsored by the issuer may
be less liquid.
Dividend and interest income from non-U.S. securities will generally be subject
to withholding taxes by the country in which the issuer is located and may not
be recoverable by the Fund or the investor.
Such investments in securities of foreign issuers are frequently denominated in
foreign currencies and because the Fund may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the value of the Fund's assets as
measured in U.S. dollars may be affected favor-
8
<PAGE>
ably or unfavorably by changes in currency rates and exchange control
regulations, and the Fund may incur costs in connection with conversions between
various currencies.
The Adviser will attempt to manage these risks so that such strategies and
investments benefit the Fund, but no assurance can be given that they will be
successfully managed.
Derivative Transactions. As described above, the Fund may invest in options and
warrants, forward foreign currency exchange contracts, currency swaps, precious
metals futures and forward contracts, options on futures and other transactions
using derivative instruments. Derivative transactions have certain risks,
including imperfect market correlations, dependence on the credit of the
counterparty, possible inability to enter into offsetting transactions and
market fluctuations, that can result in the Fund being in a worse position than
if the transaction had not occurred. The loss from the Fund's investing in
futures and other derivative transactions is potentially unlimited.
MANAGEMENT OF THE FUND
The Fund's Board of Directors (who, with its officers, are described in the
Additional Statement) has overall responsibility for the management of the Fund.
The Board of Directors decides upon matters of general policy and reviews the
actions of Gabelli & Company, Inc. (the "Distributor") and the Adviser. Pursuant
to an Investment Advisory Contract with the Fund, the Adviser, under the
supervision of the Fund's Board of Directors, provides a continuous investment
program for the Fund's portfolio; provides investment research and makes and
executes recommendations for the purchase and sale of securities and gold and
other precious metals; provides facilities and personnel, and the exercise of
all voting and other rights appertaining thereto required for the Fund's
administrative management; supervises the performance of administrative and
professional services provided by others; and pays the compensation of the
Administrator and all officers and directors of the Fund who are its affiliates.
As compensation for its services and the related expenses borne by the Adviser,
the Fund pays the Adviser a fee, computed daily and payable monthly, equal, on
an annual basis, to 1.00% of the Fund's average daily net assets, which is
higher than that paid by most mutual funds. The Adviser is located at One
Corporate Center, Rye, New York 10580-1434.
The Adviser was formed in 1980 and as of March 31, 1996 acts as investment
adviser to the following funds with aggregate assets in excess of $4.3 billion:
Net Assets
3/31/96
Open-end funds: (in millions)
-------------
Gabelli Asset Fund $1,130
Gabelli Growth Fund 581
Gabelli Value Fund Inc. 512
Gabelli Small Cap Growth Fund 229
Gabelli Equity Income Fund 57
Gabelli U.S. Treasury Money Market Fund 274
Gabelli ABC Fund 25
Gabelli Global Telecommunications Fund 124
Gabelli Global Interactive Couch Potato(R) Fund 37
Gabelli Global Convertible Securities Fund 16
Gabelli Gold Fund, Inc. 20
Gabelli International Growth Fund, Inc. 4
Gabelli Capital Asset Fund 35
Closed-end funds:
Gabelli Equity Trust Inc. 1,054
Gabelli Global Multimedia Trust Inc. 94
Gabelli Convertible Securities Fund, Inc. 91
Gabelli & Company, Inc., the Distributor of each open-end fund's respective
shares, is an indirect majority owned subsidiary of the Adviser. GAMCO
Investors, Inc. ("GAMCO"), a majority owned subsidiary of the Adviser, acts as
investment adviser for individuals, pension trusts, profit sharing trusts and
endowments. As of March 31, 1996, GAMCO had aggregate assets in excess of $5.1
billion under its management. Teton
9
<PAGE>
Advisers LLC, an affiliate of the Adviser, acts as Investment Adviser of The
Westwood Funds with assets under management in excess of $50 million. Mr. Mario
J. Gabelli may be deemed a "controlling person" of the Adviser and the
Distributor on the basis of his ownership of stock of the Adviser.
In addition to the fee of the Adviser, the Fund is responsible for the payment
of all its other operating expenses, which include, among other things, expenses
for legal and independent auditor services, costs of printing all materials sent
to shareholders, charges of State Street Bank and Trust Company (the
"Custodian", "Transfer Agent" and "Dividend Paying Agent") and any other persons
hired by the Fund, securities registration fees, fees and expenses of
unaffiliated directors, accounting and printing costs for reports and similar
materials sent to shareholders, membership fees in trade organizations, fidelity
bond and liability coverage for the Fund's directors, officers and employees,
interest, brokerage and other trading costs, taxes, expenses of qualifying the
Fund for sale in various jurisdictions, expense of its distribution plan adopted
under Rule 12b-1, expenses of personnel performing shareholder servicing
functions, litigation and other extraordinary or nonrecurring expenses and other
expenses properly payable by the Fund.
The Additional Statement contains further information about the Investment
Advisory Contract, including a more complete description of the advisory and
expense arrangements and administrative provisions.
Affiliates of the Adviser may, in the ordinary course of their business, acquire
for their own account or for the accounts of their advisory clients, significant
(and possibly controlling) positions in the securities of companies that may
also be suitable for investment by the Fund. The securities in which the Fund
might invest may thereby be limited to some extent. However, the Adviser does
not believe that the investment activities of its affiliates will have a
material adverse effect upon the Fund in seeking to achieve its investment
objective.
The Adviser has entered into an Administration Contact with Furman Selz LLC (the
"Administrator") pursuant to which the Administrator provides certain
administrative services necessary for the Fund's operations. These services
include the preparation and distribution of materials for meetings of the Fund's
Board of Directors, compliance testing of Fund activities and assistance in the
preparation of proxy statements, reports to shareholders and other
documentation. The Adviser pays the Administrator a monthly fee at the annual
rate of .10% of the average net assets of the Gabelli funds under its
administration (with a minimum annual fee of $40,000 per portfolio and subject
to reduction to .075% on assets in excess of $350 million and subject to further
reduction to .06% on assets in excess of $600 million) for such services, which,
together with the services to be rendered, are subject to negotiation between
the parties and both parties retain the right unilaterally to terminate the
arrangement on not less than 60 days' notice. The Administrator has its office
at 230 Park Avenue, New York, New York 10169.
DISTRIBUTION PLAN
The Board of Directors of the Fund has approved on behalf of the Fund as being
in the best interests of the Fund and its shareholders have approved a
Distribution Plan which authorizes payments by the Fund in connection with the
distribution of its shares at an annual rate, as determined from time to time by
the Board of Directors, of up to .25% of the Fund's average daily net assets.
Payments may be made in subsequent years for expenses incurred in prior years.
The potential for such subsequent payments is a contingent liability for which
no amount is currently being recorded because the Fund does not have a
reasonable basis on which to conclude that the
10
<PAGE>
Board of Directors will approve such payment. Interest, carrying or other
financing charges on unreimbursed amounts could also be considered a
distribution expense if the Board so determined and would in such event also
potentially be subject to carryover to a future year upon specific approval by
the Board.
Payments may be made by the Fund under its Distribution Plan for the purpose of
financing any activity primarily intended to result in the sale of shares as
determined by the Board of Directors. Such activities typically include
advertising; compensation for sales and sales marketing activities of the
Distributor, banks, broker-dealers and service providers; shareholder account
servicing; production and dissemination of prospectus and sales and marketing
materials; and capital or other expenses of associated equipment, rent,
salaries, bonuses, interest and other overhead. To the extent any activity is
one which the Fund may finance without its Distribution Plan, the Fund may also
make payments to finance such activity outside of the Plan and not subject to
its limitations.
The Plan has been implemented by written agreements between the Fund and/or the
Distributor and each person (including the Distributor) to which payments may be
made. Administration of the Plan is regulated by Rule 12b-1 under the Investment
Company Act of 1940, which includes requirements that the Board of Directors
receive and review, at least quarterly, reports concerning the nature and
qualification of expenses for which payments are made, that the Board of
Directors approve all agreements implementing the Plan and that the Plan may be
continued from year to year only if the Board of Directors concludes at least
annually that continuation of such Plan is likely to benefit shareholders.
The Board of Directors has initially implemented the Plan by having the Fund
enter into an agreement with the Distributor authorizing reimbursement of
expenses (including overhead) incurred by the Distributor and its affiliates up
to the .25% rate authorized by the Plan for distribution activities of the types
listed above. To the extent any of these payments are based on allocations by
the Distributor, the Fund may be considered to be participating in joint
distribution activities with other funds distributed by the Distributor. Any
such allocations would be subject to approval by the Fund's non-interested
Directors and would be based on such factors as the net assets of the Fund, the
number of shareholder inquiries and similar pertinent criteria.
PURCHASE OF SHARES
Shares of the Fund are currently offered without a sales load as an investment
vehicle for individuals, institutions, fiduciaries and retirement plans.
The minimum initial investment in the Fund is currently $1,000. The Fund will
increase its minimum initial investment to $10,000 when it has either 10,000
shareholders or over $100,000,000 of assets under management. There is no
minimum for subsequent investments in the Fund. Investments through an
Individual Retirement Account or other retirement plans, however, have different
requirements (see "Retirement Plans"). Shares of the Fund are sold at the net
asset value per share next determined after receipt of an order by the Fund's
Distributor or transfer agent in proper form with accompanying check or bank
wire or other payment arrangements satisfactory to the Fund. Although most
shareholders elect not to receive stock certificates, certificates for whole
shares only can be obtained on specific written request to the transfer agent.
Shares of the Fund may also be purchased through shareholder agents that are not
affiliated with the Fund or the Distributor. There is no sales or service charge
imposed by the Fund other than as described, but agents who do not receive
distribution payments or sales charges may impose a charge to the investor for
their services. Such fees may vary among agents, and such agents may impose
higher initial or subsequent
11
<PAGE>
investment requirements than those established by the Fund. Services provided by
broker-dealers may include allowing the investor to establish a margin account
and to borrow on the value of the Fund's shares in that account. It is the
responsibility of the shareholder's agent to establish procedures which would
assure that upon receipt of an order to purchase shares of the Fund the order
will be transmitted so that it will be received by the Distributor before the
time when the price applicable to the buy order expires.
Prospectuses, sales material and applications may be obtained from the
Distributor. The Fund and its Distributor reserve the right in their sole
discretion (1) to suspend the offering of the Fund's shares and (2) to reject
purchase orders when, in the judgment of the Fund's management, such rejection
is in the best interests of the Fund.
The net asset value per share of the Fund is determined as of the close of the
regular session of the New York Stock Exchange, which is generally 4:00 p.m.,
New York City time, on each day that trading is conducted on the New York Stock
Exchange, by dividing the value of the Fund's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued but excluding capital stock and surplus) by the number of shares
outstanding at the time the determination is made. Foreign securities are valued
as of the close of trading on the primary exchange on which they trade. Fund
securities for which market quotations are readily available are valued at
market value as determined by the last quoted sale price prior to the valuation
time on the valuation date in the case of securities traded on securities
exchanges or other markets for which such information is available. Other
readily marketable securities are valued at the average of the latest bid and
asked quotations for such securities prior to the valuation time. Debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, which the Board of Directors believes represents fair value. Gold and
other precious metals held by the Fund are valued daily at fair market value,
based upon price quotations in common use, in such manner as the Board of
Directors from time to time determines in good faith to reflect most accurately
their fair marketvalue. All other assets are valued at fair value as determined
by or under the supervision of the Board of Directors. See "Determination of Net
Asset Value" in the Additional Statement.
Mail. To make an initial purchase by mail, send a completed subscription order
form with a check for the amount of the investment payable to the Fund to:
The Gabelli Funds
P.O. Box 8308
Boston, MA 02266-8308
Subsequent purchases do not require a completed application and can be made by
(1) mailing a check to the same address noted above or (2) bank wire, as
indicated below. The exact name and number of the shareholder's account should
be clearly indicated.
Checks will be accepted if drawn in U.S. currency on a domestic bank for less
than $100,000. U.S. dollar checks drawn against a non-U.S. bank may be subject
to collection delays and will be accepted only upon actual receipt of funds by
the Transfer Agent. Bank collection fees may apply.
Bank Wire. To initially purchase shares of the Fund using the wire system for
transmittal of money among banks, an investor should first telephone the Fund at
1-800-422-3554 to obtain a new account number. The investor should then instruct
a Federal Reserve System member bank to wire funds to:
State Street Bank and Trust Company
ABA # 011-0000-28 REF DDA # 99046187
Attn: Shareholder Services
Re: The Gabelli Gold Fund
A/C #_____________________________________________
Account of (Registered Owner)
225 Franklin Street, Boston, MA 02110
12
<PAGE>
For initial purchases, the investor should promptly complete and mail the
subscription order form to the address shown above for mail purchases. There may
be a charge by your bank for transmitting the money by bank wire but State
Street Bank and Trust Company does not charge investors in the Fund for the
receipt of wire transfers. If you are planning to wire funds, it is suggested
that you instruct your bank early in the day so the wire transfer can be
accomplished the same day.
Overnight Mail or Personal Delivery. Deliver a check made payable to the Fund in
which you wish to invest along with a completed subscription order form to:
The Gabelli Funds
The BFDS Building, 6th Floor
Two Heritage Drive
North Quincy, MA 02171
Telephone Investment Plan. You may purchase additional shares of the Fund by
telephone through the Automated Clearing House (ACH) system as long as your bank
is a member of the ACH system and you have a completed, approved Investment Plan
application on file with our Transfer Agent. The funding for your purchase will
be automatically deducted from the ACH eligible account you designate on the
application. Your investment will normally be credited to your Mutual Fund
account on the first business day following your telephone request. Your request
must be received no later than 4:00 p.m. eastern time. There is a minimum of
$100 for each telephone investment. Any subsequent changes in banking
information must be submitted in writing and accompanied by a sample voided
check. To initiate an ACH purchase, please call 1-800-GABELLI (1-800-422-3554)
or 1-800-872-5365. Fund shares purchased through the Telephone or Automatic
Investment Plan will not be available for redemption for up to fifteen (15) days
following the purchase date.
Automatic Investment Plan. The Fund offers an automatic monthly investment plan,
details of which can be obtained from the Distributor. There is no minimum
initial investment for accounts establishing an automatic investment plan.
Systematic Withdrawal Plan. The Fund offers a systematic withdrawal program for
shareholders whereby they can authorize an automatic redemption on a monthly,
quarterly or annual basis. Details can be obtained from the Distributor.
Other Investors. No minimum initial investment is required for officers,
directors or full-time employees of the Fund, other investment companies managed
by the Adviser, the Adviser, the Administrator, the Transfer Agent, the
Distributor or their affiliates, including members of the "immediate family" of
such individuals and retirement plans and trusts for their benefit. The term
"immediate family" refers to spouses, children and grandchildren (adopted or
natural), parents, grandparents, siblings, a spouse's siblings, a sibling's
spouse and a sibling's children.
REDEMPTION OF SHARES
Upon receipt by the Distributor or the Transfer Agent of a redemption request in
proper form, shares of the Fund will be redeemed at their next determined net
asset value. Redemption requests received after the time as of which the Fund's
net asset value is determined on a particular day will be redeemed at the net
asset value of the Fund determined on the next day that net asset value is
determined. Checks for redemption proceeds will normally be mailed to the
shareholder's address of record within seven days, but will not be mailed until
all checks in payment for the purchase of the shares to be redeemed have been
honored, which may take up to 15 days. Redemption requests may be made by letter
to the Transfer Agent, specifying the name of the Fund, the dollar amount or
number of shares to be redeemed and the account
13
<PAGE>
number. The letter must be signed in exactly the sa me way the account is
registered (if there are more than one owner of the shares, all must sign) and,
if any certificates for the shares to be redeemed are outstanding, presentation
of such certificates properly endorsed is also required. Signatures on the
redemption request and/or certificates must be guaranteed by an "eligible
guarantor institution," which includes certain banks, brokers, dealers, credit
unions, securities exchanges and associations, clearing agencies and savings
associations (signature guarantees by notaries public are not acceptable).
Shareholders may also redeem the Fund's shares through shareholder agents, who
have made arrangements with the Fund permitting them to redeem shares by
telephone or facsimile transmission and who may charge shareholders a fee for
this service if they have not received any payments under the appropriate
Distribution Plan. It is the responsibility of the shareholder's agent to
establish procedures which would assure that upon receipt of a shareholder's
order to redeem shares of the Fund the order will be transmitted so that it will
be received by the Fund before the time when the price applicable to the order
expires.
Further documentation, such as copies of corporate resolutions and instruments
of authority, are normally requested from corporations, administrators,
executors, personal representatives, trustees or custodians to evidence the
authority of the person or entity making the redemption request.
The Fund may suspend the right of redemption or postpone the date of payment for
more than seven days during any period when (1) trading on the New York Stock
Exchange is restricted or the Exchange is closed, other than customary weekend
and holiday closings; (2) the Securities and Exchange Commission has by order
permitted such suspension or (3) an emergency, as defined by rules of the
Securities and Exchange Commission, exists, making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.
To minimize expenses, 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. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.
Telephone Redemption By Check. Each Fund accepts telephone requests for
redemption of unissued shares, subject to a $25,000 limitation. By calling
either 1-800-GABELLI (422-3554) or 1-800-872-5365, you may request that a check
be mailed to the address of record on the account, provided that the address has
not changed within thirty (30) days prior to your request. The check will be
made payable to the person in whose name the account is registered and will
normally be mailed within seven (7) days.
By Bank Wire. The Fund accepts telephone requests from any investor for wire
redemption in excess of $1,000 (but subject to a $25,000 limitation) to a
predesignated bank either on the subscription order form or in a subsequent
written authorization with the signature guaranteed. The Fund accepts signature
guaranteed written requests for redemption by bank wire without limitation. The
proceeds are normally wired on the following business day. Your bank must be
either a member of the Federal Reserve System or have a correspondent bank which
is a member. Any change to the banking information made at a later date must be
submitted in writing with a signature guarantee. The Fund will not impose a wire
service fee. A shareholder's agent or the predesignated bank, however, may
impose its own service fee on wire transfers.
Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m. eastern time. If your telephone call is received after
14
<PAGE>
this time or on a day when the New York Stock Exchange is not open, the request
will be entered the following business day. Shares are redeemed at the net asset
value next determined following your request. The Fund's shares purchased by
check or through the automatic purchase plan will not be available for
redemption for up to fifteen (15) days following the purchase. Shares held in
certificate form must be returned to the Transfer Agent for redemption of
shares. Telephone redemption is not available for IRAs.
The proceeds of a telephone redemption may be directed to an account in another
mutual fund advised by the Adviser provided the account is registered in the
redeeming shareholder's name. Such purchase will be made at the respective net
asset value plus any applicable sales charge with credit given for any sales
charge previously paid to the Distributor.
The Fund and its transfer agent will not be liable for following telephone
instructions reasonably believed to be genuine. In this regard, the Fund and its
transfer agent require personal identification information before accepting a
telephone redemption. If the Fund or its transfer agent fail to use reasonable
procedures, the Fund may be liable for losses due to fraudulent instructions. A
shareholder may redeem shares by telephone unless he elects in the subscription
order form not to have such ability.
RETIREMENT PLANS
The Fund has available a form of Individual Retirement Account ("IRA") for
investment in shares which may be obtained from the Distributor. The minimum
investment required to open an IRA for investment in shares of the Fund is
$1,000 for an individual, except that both the individual and his or her spouse
may establish separate IRAs if their combined investment is $1,250. There is no
minimum for additional investment in an IRA.
Investors who are self-employed may purchase shares of the Fund through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or H.R. 10 plans. The Fund does not currently act as a Sponsor
for such plans. The Fund's shares may also be a suitable investment for other
types of qualified pension or salary reduction plans known as "401(k) Plans"
which give participants the right to defer portions of their compensation for
investment on a tax-deferred basis until distributions are made from the plans.
The minimum initial investment for an individual under such plans is $1,000, and
there is no minimum for additional investments.
Under the Internal Revenue Code of 1986 (the "Code"), individuals may make
wholly or partly tax deductible IRA contributions of up to $2,000 annually,
depending on whether they are active participants in an employer-sponsored
retirement plan and on their income level. However, dividends and distributions
held in the account are not taxed until withdrawn in accordance with the
provisions of the Code. An individual with a non-working spouse may establish a
separate IRA for the spouse under the same conditions and contribute a maximum
of $2,250 annually to either or both IRAs, provided that no more than $2,000 may
be contributed to the IRA of either spouse.
Investors should be aware that they may be subject to penalties or additional
tax on contributions to or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Internal Revenue Code.
Persons desiring information concerning investments through IRA accounts or
other retirement plans should write or telephone the Distributor.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by 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
15
<PAGE>
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. However, the Fund currently intends to
pay dividends and capital gains distributions, if any, on an annual basis.
The Fund has qualified and intends to continue to qualify for tax treatment as a
"Regulated Investment Company" under the Code in order to be relieved of federal
income tax on that part of its net investment income and realized capital gains
which it pays out to its shareholders.
To qualify, the Fund must meet certain relatively complex tests, including the
requirement that less than 30% of its gross income (exclusive of losses) must be
derived from the sale or other disposition of securities held for less than
three months. The loss of such status by the Fund would result in the Fund being
subject to Federal income tax on its taxable income and gains.
Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, such distributions are eligible for the
dividends received deduction subject to proportionate reduction if the aggregate
qualifying dividends received by 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.
Dividends and distributions declared by the Fund may also be subject to state
and local taxes. Prior to investing in shares of the Fund, prospective
shareholders may wish to consult their tax advisers concerning the federal,
state and local tax consequences of such investment.
GENERAL INFORMATION
Description of Shares, Voting Rights and Liabilities. The Fund was organized as
a Maryland corporation on May 13, 1994. Its authorized capital stock consists of
1,000,000,000 shares of stock having a par value of one tenth of one cent
($.001) per share. The Fund 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 Fund'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 Fund sends semi-annual and annual reports to all shareholders which include
lists of portfolio securities and other assets and the Fund's financial
statements, which shall be audited annually. Unless it is clear that a
shareholder is a nominee for the account of an unrelated person or a shareholder
otherwise specifically requests in writing, the 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 Fund 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
16
<PAGE>
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 Fund does not issue certificates
evidencing shares.
Portfolio Turnover. The investment policies of the Fund may lead to frequent
changes in investments, particularly in periods of rapidly fluctuating interest
or currency exchange rates. The portfolio turnover may be higher than that of
other investment companies. During the fiscal year ended December 31, 1995, the
portfolio turnover rate was 38%.
Portfolio turnover generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. Rapid turnover makes it more
difficult to qualify as a pass through entity for federal tax purposes in view
of a requirement that the Fund obtain less than 30% of its gross income in any
tax year from gains on the sale of securities held less than three months.
Failure of the Fund to qualify as a pass through entity would result in federal
taxation of the Fund at the standard corporate rate of 34% and may adversely
affect returns to shareholders. The portfolio turnover rate is computed by
dividing the lesser of the amount of the securities and other assets purchased
or securities and other assets sold by the average monthly value of securities
and other assets owned during the year (excluding securities whose maturities at
acquisition were one year or less).
Performance Information. The 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 net asset value for the one, five and ten year periods (if
applicable) and the life of the Fund through the most recent calendar quarter,
assuming reinvestment of all dividends and distributions. The Fund may also
furnish total return calculations for other periods based on investments at
various net asset values.
Custodian, Transfer Agent and Dividend Disbursing Agent. State Street Bank and
Trust Company is the Custodian for the Fund's cash and securities and other
assets as well as the Transfer and Dividend Disbursing Agent for its shares.
Boston Financial Data Services, Inc., an affiliate of State Street Bank and
Trust Company, performs the shareholder services on behalf of State Street and
is located at the BFDS Building, Two Heritage Drive, North Quincy, MA 02171.
State Street Bank and Trust Company does not assist in and is not responsible
for investment decisions involving assets of the Fund.
Information for Shareholders. All shareholder inquiries regarding administrative
procedures, including the purchase and redemption of shares, should be directed
to the Distributor, Gabelli & Company, Inc., One Corporate Center, Rye, New York
10580-1434. For assistance, call 1-800-GABELLI (1-800-422-3554).
Upon request, Gabelli & Company, Inc. will provide without charge, a paper copy
of this Prospectus to investors or their representatives who received this
Prospectus in an electronic format.
This Prospectus omits certain information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of the
Registration Statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such Registration Statement may
be obtained without charge from the Fund or its Distributor.
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TABLE OF CONTENTS
Page
----
Table of Fees and Expenses................. 2
Financial Highlights....................... 2
Investment Objective and Policies.......... 3
Additional Investment Policies............. 5
Risk Factors............................... 8
Management of the Fund..................... 9
Distribution Plan.......................... 10
Purchase of Shares......................... 11
Redemption of Shares....................... 13
Retirement Plans........................... 15
Dividends, Distributions and Taxes......... 15
General Information........................ 16
- --------------------------------------------------------------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information or representation may not be relied upon as
being authorized by the Fund, the Adviser, the Administrator, the Distributor or
any affiliate thereof. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy in any state to any person to whom it is
unlawful to make such offer in such state.
- --------------------------------------------------------------------------------
Gabelli
Gold
Fund,
Inc.
PROSPECTUS
May 1, 1996
GABELLI FUNDS, INC.
Investment Adviser
GABELLI & COMPANY, INC.
Distributor
<PAGE>
GABELLI GOLD FUND, INC.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
This Statement of Additional Information ("Additional Statement") relates to
Gabelli Gold Fund, Inc., a Maryland Corporation (the "Fund"), and is not a
prospectus and is only authorized for distribution when preceded or accompanied
by the Fund's prospectus dated May 1, 1996, as supplemented from time to time
(the "Prospectus"). This Statement of Additional Information 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 Fund at the address and telephone number set forth
above.
TABLE OF CONTENTS
Page
----
Investments......................................................... B-2
The Adviser......................................................... B-11
The Distributor..................................................... B-13
Directors and Officers.............................................. B-13
Investment Restrictions............................................. B-16
Portfolio Transactions and Brokerage................................ B-17
Purchase and Redemption of Shares................................... B-18
Dividends, Distributions and Taxes.................................. B-19
Investment Performance Information.................................. B-21
Counsel and Independent Auditors.................................... B-23
Shares of Beneficial Interest....................................... B-23
Appendix-- Description of Ratings................................... B-24
Financial Statements................................................ B-27
<PAGE>
The following Information supplements that in the
Prospectus
INVESTMENTS
Subject to the Fund's policy of investing at least 65% of its assets in
the securities of foreign and domestic companies engaged principally in
gold-related activities, the Fund may invest in any of the securities described
below.
Equity Securities
Because the Fund in seeking to achieve its investment objective may invest
in the common stocks of both domestic and foreign issuers, an investment in the
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 the 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
the 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 the debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither a fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Fund's portfolio thus may be expected to fluctuate.
Preferred stocks are usually entitled to rights on liquidation which are
senior to those of common stocks. For these reasons, preferred stocks generally
entail less risk than common stocks. Such securities may pay cumulative
dividends. Because the dividend rate is pre-established, and they are senior to
common stocks, such securities tend to have less possibility of capital
appreciation.
Some of the securities in the Fund may be in the form of depository
receipts. Depository receipts usually represent common stock or other equity
securities of non-U.S. issuers deposited with a custodian in a depository. The
underlying securities are usually withdrawable at any time by surrendering the
depository receipt. Depository receipts are usually denominated in U.S. dollars
and dividends and other payments from the issuer are converted by the custodian
into U.S. dollars before payment to receipt holders. In other respects
depository receipts for foreign securities have the same characteristics as the
underlying securities. Depository receipts that are not sponsored by the issuer
may be less liquid and there may be less readily available public information
about the issuer.
B-2
<PAGE>
Bullion of Gold and Other Precious Metals
The Fund may also invest up to 10% of its total assets in bullion of gold
and other precious metals ("bullion"). Bullion will only be bought and sold
through U.S. and foreign banks, regulated U.S. commodities exchanges, exchanges
affiliated with a regulated U.S. stock exchange, and dealers who are members of,
or affiliated with members of, a regulated U.S. commodities exchange, in
accordance with applicable investment laws. Investors should note that bullion
offers the potential for capital appreciation or depreciation, but unlike other
investments does not generate income, and in these transactions the Fund may
encounter higher custody and other costs (including shipping and insurance) than
costs normally associated with ownership of securities. The Fund may attempt to
minimize the costs associated with the actual custody of bullion by the use of
receipts or certificates representing ownership interests in bullion.
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 and money market instruments such as commercial paper and bankers
acceptances. There is no minimum credit rating for these securities in which the
Fund may invest. Accordingly, the Fund could invest in securities in default
although the Fund will not invest more than 5% of its assets in such securities.
Up to 25% of the Fund's assets may be invested in lower quality debt
securities although the Fund currently does not expect to invest more than 5% of
its assets in such securities. The market values of lower quality fixed income
securities tend to be less sensitive to changes in prevailing interest rates
than higher-quality securities but more sensitive to individual corporate
developments than higher-quality securities. Such lower-quality securities also
tend to be more sensitive to economic conditions than are higher-quality
securities. Accordingly, these lower-quality securities are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation and will
generally involve more credit risk than securities in the higher-quality
categories. Even securities rated Baa or BBB by Moody's Investors Service, Inc.
("Moody's") and Standard and Poor's Rating Group ("S&P"), respectively, which
ratings are considered investment grade, possess some speculative
characteristics. See "Appendix -- Description of Ratings." There are risks
involved in applying credit ratings as a method of 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 Fund will rely on
the judgment, analysis and experience of its adviser, Gabelli Funds, Inc. (the
"Adviser"), 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.
B-3
<PAGE>
Factors adversely affecting the market value of high yield and other fixed
income securities will adversely affect the Fund's net asset value. In addition,
the Fund may incur additional expenses to the extent that 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 the 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 the Fund to obtain
accurate market quotations for purposes of valuing its portfolio. Market
quotations are generally available on many high yield issuers only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales. During such times, the responsibility of the
Board of Directors to value the securities becomes more difficult and judgment
plays a greater role in valuation because there is less reliable, objective data
available.
Convertible Securities
The 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
unrated but of equivalent credit quality in the judgment of the Adviser.
Some of the convertible securities in the Fund's portfolio may be
"Pay-in-Kind" securities. During a designated period from original issuance, the
issuer or 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
The Fund may invest in securities issued or guaranteed by any country and
denominated in any currency. The Fund expects to invest in the securities of
companies located in developed countries as well as those located in emerging
markets. Developed markets include Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, Netherlands, New
Zealand, Norway, Spain, Sweden, Switzerland, the United Kingdom and the United
States. An emerging country is any country which is generally considered to be
an emerging or developing country by the International Bank for Reconstruction
and Development (more commonly referred to as the World Bank) and the
International Finance Corporation, as well as countries that are classified by
the United Nations or oth-
B-4
<PAGE>
erwise regarded by its authorities as emerging or developing, at the time of the
Fund's investment. 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 Fund may also purchase securities issued by semi-governmental or
supranational agencies such as the Asian Development Bank, the International
Bank for Reconstructional 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. The 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 Currency
Unit (the "ECU"), which is a "basket" consisting of specified amounts of the
currencies of the member states of the European Community, a Western European
economic cooperative organization that includes France, Germany, The
Netherlands, the United Kingdom and other countries. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers of the
European Community to reflect changes in relative values of the underlying
currencies. Such investments involve credit risks associated with the issuer and
currency risks associated with the currency in which the obligation is
denominated.
Securities Subject to Reorganization
The Fund may invest without limit in securities for which a tender or
exchange offer has been made or announced and in securities of companies for
which a merger, consolidation, liquidation or reorganization proposal has been
announced if, in the judgment of the Adviser, there is a reasonable prospect of
capital appreciation significantly greater than the brokerage and other
transaction expenses involved.
In general, securities which are the subject of such an offer or proposal
sell at a premium to their historic market price immediately prior to the
announcement of the offer or may also discount what the stated or appraised
value of the security would be if the contemplated transaction were approved or
consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of the
prospective portfolio company as a result of the contemplated transaction; or
fails adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction but also the financial resources and
business motivation of the offer or and the dynamics and business climate when
the offer or proposal is in process. Since such investments are ordinarily
short-term in nature, they will tend to increase the turnover ratio of the Fund
thereby increasing its brokerage and other transaction expenses as well as make
it more difficult for the Fund to meet the tests for favorable tax treatment as
a "Regulated Investment Company" under the Internal Revenue Code of 1986, as
amended (the "Code") (see "Dividends, Distributions and Taxes" in the
Prospectus). The Adviser intends to select investments of the type described
which, in its view, have a reasonable prospect of capital
B-5
<PAGE>
appreciation which is significant in relation to both risk involved and the
potential of available alternate investments as well as to monitor the effect of
such investments on the tax qualification test of the Code.
Options
The Fund may purchase or sell options on individual securities as well as
on indices of securities as a means of achieving additional return or of hedging
the value of its portfolio.
A call option is a contract that gives the holder of the option the right,
in return for a premium paid, to buy from the seller the security underlying the
option at a specified exercise price at any time during the term of the option
or, in some cases, only at the end of the term of the option. The seller of the
call option has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price. A put option is a
contract that gives the holder of the option the right in return for a premium
to sell to the seller the underlying security at a specified price. The seller
of the put option, on the other hand, has the obligation to buy the underlying
security upon exercise at the exercise price. The Fund's transactions in options
may be subject to specific segregation requirements. See "Hedging Transactions"
below.
If the 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
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of the current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. The Fund will not purchase
options if, as a result, the aggregate cost of all outstanding options exceeds
5% of the Fund's assets. To the extent that puts, straddles and similar
investment strategies involve instruments regulated by the Commodity Futures
Trading Commission, the Fund is limited to investments not in excess of 5% of
the its total assets.
Warrants and Rights
The Fund may invest up to 5% of its total 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. The Fund will not invest more than 2% of its
total assets in warrants or rights which are not listed on the New York or
American Stock Exchanges.
Investments in Investment Companies
The Fund may invest up to 10% of its assets (5% per issuer) in securities
issued by other unaffiliated investment companies, although the Fund may not
acquire more than 3% of the voting securities of any investment company.
When Issued, Delayed Delivery Securities and Forward Commitments
The Fund may enter into forward commitments for the purchase or sale of
securities, including on a "when issued" or "delayed delivery" basis. In such
transactions, instruments are bought with payment and
B-6
<PAGE>
delivery taking place in the future in order to secure what is considered to be
an advantageous yield or price at the time of the transaction. 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 the Fund will only enter into a forward commitment
with the intention of actually acquiring the security, the Fund may sell the
security before the settlement date if it is deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuation, and no interest (or dividends) accrues to the Fund prior to the
settlement date. The Fund will segregate with its custodian cash or liquid
high-grade debt securities with its custodian in an aggregate amount at least
equal to the amount of its outstanding forward commitments.
Short Sales
The Fund may make short sales of securities. A short sale is a transaction
in which the Fund sells a security it does not own in anticipation that the
market price of that security will decline. The Fund expects 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 the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale in
order to satisfy its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.
The 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 highly liquid debt securities. The Fund will also be
required to deposit similar collateral with its Custodian to the extent, if any,
necessary so that the value of both collateral deposits in the aggregate is at
all times equal to the greater of the price at which the security is sold short
or 100% of the current market value of the security sold short. Depending on
arrangements made with the broker-dealer from which it borrowed the security
regarding payment over of any payments received by the Fund on such security,
the 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 the Fund replaces the
borrowed security, the Fund will incur a loss; conversely, if the price
declines, the Fund will realize a capital gain. Any gain will be decreased, and
any loss increased, by the transaction costs described above. Although the
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 the Fund's total assets or 5% of such issuer's voting
securities. The 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 the Fund's aggregate short sales of a particular class of
securities exceeds 25% of the outstanding securities of that class. The Fund may
also make short sales "against the box" without respect to such limitations. In
this type of short sale, at the time of the sale, the Fund owns or has the
immediate and unconditional right to acquire at no additional cost the identical
security.
B-7
<PAGE>
Restricted and Illiquid Securities
The Fund may invest up to a total of 15% of its net assets in securities
that are subject to restrictions on resale and securities the markets for which
are illiquid, including repurchase agreements with more than seven days to
maturity. Within this 15% limitation, the Fund may invest up to 10% of its net
assets in restricted securities and up to 5% of its net assets in the securities
of unseasoned issuers. Illiquid securities include securities the disposition of
which is subject to substantial legal or contractual restrictions. The sale of
illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the
over-the-counter markets. Restricted securities may sell at a price lower than
similar securities that are not subject to restrictions on resale. Unseasoned
issuers are companies (including predecessors) that have operated less than
three years. The continued liquidity of such securities is not as well assured
as that of publicly traded securities, and accordingly the Board of Directors
will monitor their liquidity. The Board will review pertinent factors such as
trading activity, reliability of price information and trading patterns of
comparable securities in determining whether to treat any such security as
liquid for purposes of the foregoing 15% test. To the extent the Board treats
such securities as liquid, temporary impairments to trading patterns of such
securities may adversely affect the Fund's liquidity.
To the extent it can do so consistent with the foregoing limitations, the
Fund may invest in non-publicly traded securities, including securities that are
not registered under the Securities Act of 1933, as amended, but that can be
offered and sold to qualified institutional buyers under Rule 144A under that
Act. The Board of Directors has adopted guidelines and delegated to the Adviser,
subject to the supervision of the Board of Directors, the daily function of
determining and monitoring the liquidity of Rule 144A securities. Rule 144A
securities may become illiquid if qualified institutional buyers are not
interested in acquiring the securities.
Repurchase Agreements
The Fund may invest in repurchase agreements, which are agreements
pursuant to which securities are acquired by the 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 the Fund is authorized to invest. Repurchase
agreements may be characterized as loans secured by the underlying securities.
The Fund may enter into repurchase agreements with (i) member banks of the
Federal Reserve System having total assets in excess of $500 million and (ii)
securities dealers, provided that such banks or dealers meet the
creditworthiness standards established by the Fund's Board of Directors
("Qualified Institutions"). The Adviser will monitor the continued
creditworthiness of Qualified Institutions, subject to the supervision of the
Board of Directors. The resale price reflects the purchase price plus an agreed
upon market rate of interest which is unrelated to the coupon rate or date of
maturity of the purchased security. The collateral is marked to market daily.
Such agreements permit the Fund to keep all its assets earning interest while
retaining "overnight" flexibility in pursuit of investment 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, the 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, the
Fund's ability to dispose of the underlying securities may be restricted.
Finally, it is possible that the 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
B-8
<PAGE>
the Fund's 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, the Fund may suffer a loss to the extent proceeds from the sale of
the underlying securities are less than the repurchase price. The Fund will not
enter into repurchase agreements of a duration of more than seven days if, taken
together with all other illiquid securities in the Fund's portfolio, more than
15% of its net assets would be so invested.
Loans of Portfolio Securities
To increase income, the 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
collateralization continuously at no less than 100% by marking to market daily,
(2) the loan is subject to termination by the Fund at any time, (3) the Fund
receives reasonable interest or fee payments on the loan, (4) the Fund is able
to exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed 33% 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
The Fund may not borrow money except for (1) short-term credits from banks
as may be necessary for the clearance of portfolio transactions, and (2)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing may not, in the aggregate, exceed 15% of
assets after giving effect to the borrowing, and borrowing for purposes other
than meeting redemptions may not exceed 5% of the value of the Fund's assets
after giving effect to the borrowing. The Fund will not make additional
investments when borrowings exceed 5% of assets. The Fund may mortgage, pledge
or hypothecate assets to secure such borrowings.
Hedging Transactions
Futures and Forward Contracts. The Fund may enter into futures and forward
contracts only for certain bona fide hedging, yield enhancement and risk
management purposes. The Fund may enter into futures and forward contracts on
precious metals as a hedge against changes in the prices of precious metals held
or intended to be acquired by the Fund, but not for speculation or for achieving
leverage. The Fund's hedging activities may include purchases of futures and
forward contracts as an offset against the effect of anticipated increases in
the price of a precious metal which the Fund intends to acquire or sales of
futures and forward contracts as an offset against the effect of anticipated
declines in the price of precious metals which the Fund owns. Precious metals
futures and forward contract prices can be volatile and are influenced
principally by changes in spot market prices, which in turn are affected by a
variety of political and economic factors. While the correlation between changes
in prices of futures and forward contracts and prices of the precious metals
being hedged by such contracts has historically been very strong, the
correlation may at times be imperfect and even a well conceived hedge may be
unsuccessful to some degree because of market behavior or unexpected precious
metals price trends. The Fund
B-9
<PAGE>
may also enter into futures and forward 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, an
agency of the U.S. Government, and must be executed through a futures commission
merchant (i.e., a brokerage firm) which is a member of the relevant contract
market. Futures contracts trade on these contract markets and the exchange's
affiliated clearing organization guarantees performance of the contracts as
between the clearing members of the exchange.
The Fund may also purchase and write covered call or put options on
precious metals futures contracts. Such options would be purchased solely for
hedging purposes. Call options might be purchased to hedge against an increase
in the price of precious metals the Fund intends to acquire, and put options may
be purchased to hedge against a decline in the price of precious metals owned by
the Fund. As is the case with futures contracts, options on precious metals
futures may facilitate the Fund's acquisition of precious metals or permit the
Fund to defer disposition of precious metals for tax or other purposes.
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. The 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 day 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. The Fund expects to enter into
these currency contracts and swaps in primarily the following circumstances: to
"lock in" the U.S. dollar equivalent price of a security the Fund is
contemplating to buy or sell that is denominated in a non-U.S. currency; or to
protect against a decline against the U.S. dollar of the currency of a
particular country to which the Fund's portfolio has exposure. The Fund
anticipates seeking to achieve the same economic result by utilizing from time
to time for such hedging a currency different from the one of the given
portfolio security as long as, in the view of the Adviser, such currency is
essentially correlated to the currency of the relevant portfolio security based
on historic and expected exchange rate patterns.
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<PAGE>
The Adviser may choose to use such instruments on behalf of the Fund
depending upon market conditions prevailing and the perceived instrument needs
of the Fund. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively broad and deep as compared to the markets for
similar instruments which are established in the interbank market. In accordance
with the current position of the Securities and Exchange Commission, the Fund
will treat swap transactions as illiquid for purposes of the Fund's policy
regarding illiquid securities. Futures contracts, interest rate swaps, and
options on securities, indices and futures contracts and certain currency
contracts sold by the Fund are generally subject to segregation and coverage
requirements with the result that, if the Fund does not hold the security or
futures contract underlying the instrument, the Fund will be required to
segregate on an ongoing basis with its custodian, cash, U.S. government
securities, or other high grade liquid debt obligations in an amount at least
equal to the Fund's obligations with respect to such instruments. Such amounts
fluctuate as the obligations increase or decrease. The segregation requirement
can result in the Fund maintaining securities positions it would otherwise
liquidate or segregating assets at a time when it might be disadvantageous to do
so.
THE ADVISER
The Adviser is a New York corporation with principal offices located at
One Corporate Center, Rye, New York 10580-1434.
Pursuant to an Investment Advisory Contract, which was approved by the
Fund's sole shareholder on June 15, 1994, the Adviser furnishes a continuous
investment program for the Fund's portfolio, makes the day-to-day investment
decisions for the Fund, arranges the portfolio transactions for the Fund and
generally manages the Fund's investments in accordance with the stated policies
of the Fund, subject to the general supervision of the Board of Directors of the
Fund.
Under the Investment Advisory Contract, the Adviser also (1) provides the
Fund with the services of persons competent to perform such supervisory,
administrative, and clerical functions as are necessary to provide efficient
administration of the Fund, including maintaining certain books and records and
overseeing the activities of the Fund's Custodian and Transfer Agent; (2)
oversees the performance of administrative and professional services provided to
the Fund by others, including the Fund's Custodian, Transfer Agent and Dividend
Disbursing Agent, as well as legal, accounting, auditing and other services
performed for the Fund; (3) provides the Fund, if requested, with adequate
office space and facilities; (4) prepares, but does not pay for, periodic
updating of the Fund's registration statement, Prospectus and Statement of
Additional Information, including the printing of such documents for the purpose
of filings with the Securities and Exchange Commission; (5) supervises the
calculation of the net asset value of shares of the Fund; (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 Fund and/or its
shares under such laws; and (7) prepares notices and agendas for meetings of the
Fund's Board of Directors and minutes of such meetings in all matters required
by the Investment Company Act of 1940 (the "Act") to be acted upon by the Board.
The Adviser has entered into an Administration Contract with Furman Selz
LLC (the "Administrator") pursuant to which the Administrator provides certain
administrative services necessary for the Fund's 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
Administrator, the Adviser pays a monthly fee at the annual rate of .10% of the
average net assets of the Gabelli funds under its
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<PAGE>
administration (with a minimum annual fee of $40,000 per portfolio and subject
to reduction to .075% on assets in excess of $350 million and subject to further
reduction to .06% on assets in excess of $600 mil lion) 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.
The Investment Advisory Contract provides 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
Fund or any of its investors for any act or omission by the Adviser or for any
error of judgment or for losses sustained by the Fund. However, the Contract
provides that the Fund is not waiving any rights it may have with respect to any
violation of law which cannot be waived. The Contract also provides
indemnification for the Adviser and each of these persons for any conduct for
which they are not liable to the Fund. The Investment Advisory Contract in no
way restricts the Adviser from acting as adviser to others. The 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. The
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."
The Investment Advisory Contract is terminable without penalty by the Fund
on not more than sixty days' written notice when authorized by the Directors of
the Fund, by the holders of a majority, as defined in the Act, of the
outstanding shares of the Fund, or by the Adviser. The 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 Securities and Exchange 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." The Investment Advisory Contract provides 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 the 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.
The Investment Advisory Contract also provides that the Adviser is
obligated to reimburse to the Fund any amount up to the amount of its advisory
fee by which its aggregate expenses including advisory fees payable to the
Adviser (but excluding interest, taxes, Rule 12b-1 expenses, brokerage
commissions, extraordinary expenses and any other expenses not subject to any
applicable expense limitation) during the portion of any fiscal year in which
the Contract is in effect exceed the most restrictive expense limitation imposed
by the securities law of any jurisdiction in which shares of the Fund are
registered or qualified for sale. Such limitation is currently believed to be
2.5% of the first $30 million of average net assets, 2.0% of the next $70
million of average net assets and 1.5% of average net assets in excess of $100
million. For purposes of this expense limitation the Fund's expenses are accrued
monthly, and the monthly fee otherwise payable to the Adviser is postponed to
the extent that the Fund's includable expenses to date exceed the proportionate
amount of such limitation to date.
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<PAGE>
THE DISTRIBUTOR
The Fund has entered into a Distribution Agreement with Gabelli & Company,
Inc. (the "Distributor"), a New York corporation which is a subsidiary of
Gabelli Funds, Inc., having principal offices located at One Corporate Center,
Rye, New York 10580-1434. The Distributor acts as agent of the Fund for the
continuous offering of its shares on a best efforts basis.
The Distribution Agreement is terminable by the Distributor or the Fund at
any time without penalty on not more than sixty nor less than thirty days'
written notice, provided, that termination by the Fund must be directed or
approved by the Board of Directors of the Fund, by the vote of the holders of a
majority of the outstanding securities of the Fund, or by written consent of a
majority of the directors who are not interested persons of the Fund or the
Distributor. The Distribution Agreement will automatically terminate in the
event of its assignment, as defined in the Act. The Distribution Agreement
provides that, unless terminated, it will remain in effect from year to year, so
long as continuance of the Distribution Agreement is approved annually by the
Fund's Board of Directors or by a majority of the outstanding voting securities
of the Fund, and in either case, also by a majority of the Directors who are not
interested persons of the Fund or the Distributor.
DIRECTORS AND OFFICERS
The Director and Executive Officers of the Fund, 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 the Fund for purposes of the Investment Company Act of
1940 are indicated by an asterisk. Unless otherwise indicated, the address for
each individual is One Corporate Center, Rye, New York 10580.
Principal Occupations During Last Five
Years; Affiliations with the
Name, Position with Fund and Address Adviser or Administrator.
- ------------------------------------ -----------------------------------------
Mario J. Gabelli* Chairman, President, Chief Executive
Chairman of the Board Officer and a Director of Gabelli Funds,
One Corporate Center Inc., the Adviser and the indirect
Rye, New York 10580 parent of Gabelli & Company, Inc., the
Age: 53 Distributor; Chief Investment Officer of
GAMCO Investors, Inc.; President and
Chairman of The Gabelli Equity Trust
Inc.; President, Chief Investment
Officer and Director of Gabelli Equity
Series Funds, Inc., Gabelli Global
Series Funds, Inc., The Gabelli Capital
Series Funds, Inc. and The Gabelli Value
Fund Inc., The Gabelli Convertible
Securities Fund, Inc., and Trustee of
The Gabelli Asset Fund; The Gabelli
Growth Fund and The Gabelli Money Market
Funds; Chairman and Director of Lynch
Corporation and The Gabelli Global
Governments Fund; Director of the Morgan
Group, Inc. and Spinnaker Industries,
Inc.
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<PAGE>
Principal Occupations During Last Five
Years; Affiliations with the
Name, Position with Fund and Address Adviser or Administrator.
- ------------------------------------ -----------------------------------------
Caesar Bryan Senior Vice President of GAMCO
President Investors, Inc., a majority-owned
One Corporate Center subsidiary of the Adviser, since May
Rye, New York 10580 1994. Formerly Senior Vice President and
Age: 41 Portfolio Manager of Lexington
Management Corporation (until May 1994).
E. Val Cerutti Chief Executive Officer of Cerutti
Director Consultants, Inc.; Former President and
227 McLain Street Chief Operating Officer of Stella D'oro
Mount Kisco, New York 10549 Biscuit Company (through 1992); Adviser,
Age: 56 Iona College School of Business;
Director of Lynch Corporation and The
Gabelli Convertible Series Fund, Inc.
Anthony J. Colavita President and Attorney at Law in the law
Director firm of Anthony J. Colavita, P.C. since
575 White Plains Road 1961; Director of The Gabelli Value Fund
Eastchester, New York 10709 Inc., Gabelli Global Series Funds, Inc.,
Age: 60 The Gabelli Convertible Securities Fund,
Inc., The Gabelli Capital Series Funds,
Inc., The Gabelli Global Governments
Fund and Gabelli Equity Series Funds,
Inc.; Trustee of The Gabelli Asset Fund,
The Gabelli Money Market Funds, The
Gabelli Growth Fund and The Westwood
Funds.
Karl Otto Pohl* Partner of Sal Oppenheim Jr. & Cie.
Director (private investment bank); Former
One Corporate Center President of the Deutsche Bundesbank
Rye, New York 10580 (Germany's Central Bank) and Chairman of
Age: 65 its Central Bank Council (1980-1991);
Currently board member of IBM World
Trade Europe/Middle East/Africa Corp.;
Bertlesmann AG; Zurich
Versicherungs-Gesellshaft (insurance);
the International Advisory Board of
General Electric Company; the
International Council for JP Morgan &
Co.; the Board of Supervisory Directors
of ROBECo/o Group; and the Supervisory
Board of Royal Dutch (petroleum
company); Advisory Director of Unilever
N.V. and Unilever Deutschland; German
Governor, International Monetary Fund
(1980-1991); Board Member, Bank for
International Settlements (1980-1991);
Chairman, European Economic Community
Central Bank Governors (1990-1991);
Director/Trustee of all Funds managed by
the Adviser.
Werner Roeder, M.D. Director of Surgery, Lawrence Hospital
Director and practicing private physician.
One Corporate Center Director, Gabelli Global Series Funds,
Rye, New York 10580 Inc., The Gabelli Capial Series Fund,
Age: 55 Inc., The Gabelli Global Governments
Fund, Gabelli Investor Funds, Inc. and
Gabelli International Growth Fund, Inc.
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<PAGE>
Principal Occupations During Last Five
Years; Affiliations with the
Name, Position with Fund and Address Adviser or Administrator.
- ------------------------------------ -----------------------------------------
Anthonie C. van Ekris Managing Director of Balmac
Director International. Formerly Chairman and
Le Columbia Chief Executive Officer of Balfour
11 Blvd. Princess Grace MacLaine Corporation and Kay Corporation
Monaco, MC98000 (through 1990). Director of Stahal
Age: 61 Hardmayer A.Z. (through present).
Director, Gabelli Equity Series Funds,
Inc. and Gabelli Global Series Funds,
Inc.
Daniel E. Zucchi President of Daniel E. Zucchi
Director Associates. Formerly Senior Vice
One Corporate Center President and Director of Consumer
Rye, New York 10580 Marketing of Hearst Magazines (through
Age: 55 1995).
Bruce N. Alpert Vice President, Treasurer and Chief
Vice President and Treasurer Financial Officer of the investment
One Corporate Center advisory division of the Adviser; Vice
Rye, New York 10580 President and Treasurer of The Gabelli
Age: 44 Equity Trust Inc., The Gabelli Global
Multimedia Trust, Inc., The Gabelli
Convertible Securities Fund, Inc.;
Gabelli Equity Series Funds, Inc.;
Gabelli Gold Fund, Inc.; Gabelli Capital
Series Funds; Gabelli Global Series
Funds, Inc., The Gabelli Money Market
Funds; The Gabelli Value Fund Inc.;
President and Treasurer of The Gabelli
Asset Fund and The Gabelli Growth Fund.
Vice President of The Westwood Funds and
Manager of Teton Advisers LLC.
James E. McKee Vice President and General Counsel of
Secretary GAMCO Investors, Inc. since 1993 and of
One Corporate Center Gabelli Funds, Inc. since August 1995;
Rye, New York 10580 Secretary of all Funds advised by
Age: 32 Gabelli Funds, Inc. and Teton Advisers
LLC since August 1995. Branch Chief with
the U.S. Securities and Exchange
Commission in New York 1992 through
1993. Staff attorney with the U.S.
Securities and Exchange Commission in
New York from 1989 through 1992.
The Fund pays each Director who is not an employee of the Adviser or an
affiliated company an annual fee of $1,000 and $250 for each meeting of the
Board of Directors attended by the Director, and reimburses Directors for
certain travel and other out-of-pocket expenses incurred by them in connection
with attending such meetings. Directors and officers of the Fund who are
employed by the Adviser or an affiliated company receive no compensation or
expense reimbursement from the Fund.
The following table sets forth certain information regarding the
compensation of the Fund's directors and officers. Except as disclosed below, no
executive officer or person affiliated with the Fund received compensation from
the Fund for the calendar year ended December 31, 1995 in excess of $60,000.
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<PAGE>
COMPENSATION TABLE
- --------------------------------------------------------------------------------
Name of Person, Aggregate Compensa- Total Compensation
Position tion From the Fund From the Fund and
Fund Complex Paid to
Directors*
- --------------------------------------------------------------------------------
Mario J. Gabelli 0 0
Chairman of the Board
E. Val Cerutti
Director $2,000 $ 7,000(2)
Anthony J. Colavita
Director 2,000 65,753(11)
Karl Otto Pohl
Director 2,000 80,253(15)
Werner Roeder, M.D.
Director 2,000 11,253(4)
Anthonie C. van Ekris
Director 2,000 45,253(10)
Daniel E. Zucchi
Director 1,750 1,750(1)
- -------------
* Represents the total compensation paid to such persons during the calendar
year ended December 31, 1995 . The parenthetical number represents the
number of investment companies (including the Fund) from which such person
receives compensation that are considered part of the same fund complex as
the Fund, because, among other things, they have a common investment
adviser.
INVESTMENT RESTRICTIONS
The 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 the Fund's outstanding voting securities (defined in the 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
the 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
the Fund will not be considered a deviation from policy. The Fund may not:
(1) issue senior securities, except that the Fund may borrow
money from a bank, including on margin if margin securities are
owned, 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 the 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;
B-16
<PAGE>
(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 the 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 publicly traded real estate investment trusts
and publicly traded master limited partnership interests; 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, provided
that the Fund may invest in bullion.
In addition, as a diversified investment company, the Fund is subject to the
following limitations as to 75% of its total assets: (a) the Fund may not invest
more than 5% of its total assets in the securities of any one issuer, except
obligations of the U.S. Government and its agencies and instrumentalities, and
(b) the Fund may not own more than 10% of the outstanding voting securities of
any one issuer.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Adviser is authorized on behalf of the Fund to employ brokers to
effect the purchase or sale of portfolio securities with the objective of
obtaining prompt, efficient and reliable execution and clearance of such
transactions at the most favorable price obtainable ("best execution") at
reasonable expense. Transactions in securities other than those for which a
securities exchange is the principal market are generally done through a
principal market maker. However, such transactions may be effected through a
brokerage firm and a commission paid whenever it appears that a broker can
obtain a more favorable overall price. In general, there may be no stated
commission in the case of securities traded on the over-the-counter markets, but
the prices of those securities may include undisclosed commissions or markups.
Options transaction will usually be effected through a broker and a commission
will be charged. The Fund also expects that securities will be purchased at
times in underwritten offerings where the price includes a fixed amount of
compensation generally referred to as 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 the Fund and others whose assets they manage
in such manner as it deems equitable. In making such allocations among the Fund
and other client accounts, the main factors considered are the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of the Fund and other client accounts.
The policy of the Fund regarding purchases and sales of securities and
options for its portfolio is that primary consideration will be given to
obtaining the most favorable prices and efficient execution of transactions. In
seeking to implement the 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 bro-
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<PAGE>
ker or dealer, it may give consideration to placing portfolio transactions with
those brokers and dealers who also furnish research and other services to the
Fund or the Adviser of the type described in Section 28(e) of the Securities
Exchange Act of 1934. In doing so, the 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. For the period from July 11, 1994 (commencement of
operations) through December 31, 1994 and for the fiscal year ended December 31,
1995, the Adviser paid a total of $53,398 and $58,454, respectively, in
brokerage commissions.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers, Inc. and an affiliate of the
Adviser, when it appears that, as an introducing broker or otherwise, Gabelli
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. The Adviser may also consider sales of
shares of the 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 the Fund.
As required by Rule 17e-1 under the Act, the Board of Directors of the
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. For the period from July 11,
1994 (commencement of operations) through December 31, 1994 and for the fiscal
year ended December 31, 1995, there were no brokerage commissions paid by the
Fund to Gabelli & Company, Inc.
To obtain the best execution of portfolio trades on the New York Stock
Exchange ("Exchange"), Gabelli controls and monitors the execution of such
transactions on the floor of the Exchange through independent "floor brokers" or
through the Designated Order Turnaround ("DOT") System of the Exchange. Such
transactions are then cleared, confirmed to the Fund for the account of Gabelli,
and settled directly with the Custodian of the 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 the Fund in the same manner
and pursuant to the same arrangements on other national securities exchanges
which adopts direct access rules similar to those of the New York Stock
Exchange.
PURCHASE AND REDEMPTION OF SHARES
Cancellation of purchase orders for shares of the 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 the 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 the Fund may redeem shares from any account
registered in that shareholder's name, or by seeking other redress. If the 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 the Fund whole.
To minimize expenses, the Fund reserves the right to redeem, upon not less
than 30 days notice, all
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<PAGE>
shares of the Fund in an account (other than an IRA) which as a result of
shareholder redemption has a value below $500 and has reserved the ability to
raise this amount to up to $10,000. However, a shareholder will be allowed to
make additional investments prior to the date fixed for redemption to avoid
liquidation of the account.
DIVIDENDS, DISTRIBUTIONS AND TAXES
General
The 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, the Fund will be subject to a tax of 35% of such amount. In that
event, the 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 the 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 the Fund by an amount equal to
65% of the amount of undistributed capital gains included in such shareholder's
gross income.
Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To avoid the tax, the 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 the 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 the Fund in October, November or December of the year, payable to
shareholders of record on a date during such month and paid by the Fund during
January of the following year. Any such distributions paid during January of the
following year will be deemed to be 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 the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code. If so qualified, the Fund
will not be subject to Federal income tax on its net investment income and net
short-term capital gains, if any, realized during any fiscal year in which it
distributes such income and capital gains to its shareholders.
Hedging Transactions
Certain options, futures contracts and options on futures contracts are
"section 1256 contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
("60/40"). Also, section 1256 contracts held by the 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 the Fund may result in
"straddles" for U.S.
B-19
<PAGE>
Federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by the Fund. In addition, losses realized by the 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, the 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 a part of a straddle. Because only a
few regulations implementing the straddle rules have been promulgated, the tax
consequences of hedging transactions to the Fund are not entirely clear.
The Fund may make one or more of the elections available under the Code
which are applicable to straddles. If the Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections
accelerate the recognition of gains or losses from the affected straddle
positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, and require the capitalization of
interest expense, the amount which must be distributed to shareholders, and
which will be taxed to shareholders as ordinary income or long-term capital
gain, may be increased or decreased substantially as compared to a fund that did
not engage in such hedging transactions.
The 30% limitation and the diversification requirements applicable to the
Fund's assets may limit the extent to which the Fund will be able to engage in
transactions in options, futures contracts and options on futures contracts.
Distributions
Distributions of investment company taxable income (which includes taxable
interest income and the excess of net short-term capital gains over long-term
capital losses) are taxable to a U.S. shareholder as ordinary income, whether
paid in cash or shares. Dividends paid by the Fund will qualify for the 70%
deduction for dividends received by corporations to the extent the Fund's income
consists of qualified dividends received from U.S. corporations. Distributions
of net capital gains (which consists of the excess of 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 the Fund equal to the fair
market value of such shares on the distribution date. If the net asset value of
shares is reduced below a shareholder's cost as a result of a distribution by
the Fund, such distribution will be taxable even though it represents a return
of invested capital. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which will nevertheless be taxable to
them.
Sales of Shares
Upon a sale or exchange of his or her shares, a shareholder will realize a
taxable gain or loss depending upon his or her basis in the shares. Such gain or
loss will be treated as a long-term capital gain or loss if the shares have been
held for more than one year. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced, including
replacement through reinvestment of dividends and capital gains distributions in
the Fund, 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
B-20
<PAGE>
acquired will be adjusted to reflect the disallowed loss.
Any loss realized by a shareholder on the sale of the Fund's shares held
by the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of net capital gains
received by the shareholder with respect to such shares.
Backup Withholding
The Fund may be required to withhold Federal income tax at the rate of 31%
of all taxable distributions payable to shareholders who fail to provide the
Fund 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 the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. Because the Fund may have more than 50% of its total
assets invested in securities of foreign governments or corporations, the Fund
may be entitled to "pass-through" to shareholders the amount of foreign taxes
paid by the Fund. Shareholders are urged to consult their attorneys or tax
advisers regarding specific questions as to Federal, state or local taxes.
Creation of Additional Series
The Fund reserves the right to create and issue a number of series shares,
in which case the shares of each series would participate equally in the
earnings, dividends, and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Directors, principal underwriters and auditors and on any proposed material
amendment to the Fund's Certificate of Incorporation.
Upon liquidation of the Fund 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 shareholder.
INVESTMENT PERFORMANCE INFORMATION
The 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 the Fund
through the most recent calender quarter, assuming reinvestment of all dividends
and distributions. The 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 the 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,
B-21
<PAGE>
according to the following formula:
YIELD = 2[((A-B)/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 share on the last day of the period. For the
one-month period ended December 31, 1995, the Fund's current yield was (0.463)%.
Quotations of total return will reflect only the performance of a
hypothetical investment in the Fund during the particular time period shown. The
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 the 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 changes in the value of the Fund's
shares and the risks associated with the 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 the Fund. These sources
include: Lipper Analytical Services, Weisenberger Investment Company Service,
Barron's, Business Week, Changing Times, 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, the 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 the Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in the Fund over periods
of 1, 5, and 10 years (up to the life of the Fund), and are calculated pursuant
to the following formula:
T = (ERV)^(1/n) / P - 1
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.
For the year ended December 31, 1995, the Fund's cumulative total return
was 3.1% and since inception it was 14.1%. The average annual return since
inception was 9.3%.
B-22
<PAGE>
COUNSEL AND INDEPENDENT AUDITORS
Willkie Farr & Gallagher, 153 East 53rd Street, New York, New York 10022,
serves as counsel for the Fund.
Ernst & Young LLP, 787 Seventh Avenue, New York, New York 10019, has been
appointed independent auditors for the Fund.
SHARES OF BENEFICIAL INTEREST
As of April 12, 1996, the following persons were 5% or greater
shareholders of the Fund:
Percentage of Shares
Shareholder Outstanding(1)
----------- --------------------
National Financial Services Corporation
200 Liberty Street
New York, New York 14.48%(2)
o o o
Charles Schwab & Co. Inc. (3)
101 Montgomery Street
San Francisco, California 8.39%(2)
o o o
The Bank of Bermuda
BF 413
13 Rue Goethe
L-2014 Luxembourg 5.77%(2)
---------------
(1) Based on 1,418,931 shares outstanding as of April 12, 1996.
(2) Represents shares owned of record only.
(3) Charles Schwab & Co., Inc. disclaims beneficial ownership.
As of the date of this Additional Statement, the officers and directors of
the Fund as a group owned less than 1% of the outstanding shares of the Fund.
B-23
<PAGE>
APPENDIX TO STATEMENT OF ADDITIONAL INFORMATION
Description of Moody's Investors
Service, Inc.'s ("Moody's") Corporate
Bond Ratings
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Aa: Bonds which are rated Aa
are judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which made the long term risks appear
somewhat larger than in Aaa securities. A: Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future. Baa: Bonds which are rated Baa are considered
as medium grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Ba: Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. B: Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. Caa: Bonds which are rated Caa are of
poor standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. Ca: Bonds which are rated Ca
represent obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. C: Bonds which are rated C
are the lowest rated class of bonds and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Description of Standard & Poor's
Rating Group's ("S&P's") Corporate Debt
Ratings
AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity to
pay interest and repay principal is extremely strong. AA: Debt rated AA has a
very strong capacity to pay interest and repay principal and differs from the
highest rated issues only in small degrees. A: Debt rated A has a strong
capacity to pay interest and repay principal although it is somewhat more
susceptible to the adverse effects of
B-24
<PAGE>
changes in circumstances and economic conditions than debt in higher rated
categories. BBB: Debt rated BBB is regarded as having adequate capacity to pay
interest and repay principal. Whereas it normally exhibits protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than for debt in higher rated categories. BB, B, CCC, CC,
C: Debt rated BB, B, CCC, CC and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. CI: The rating CI
is reserved for income bonds on which no interest is being paid. D: Debt rated D
is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's believes that such payments will be made
during such grace period. The D rating also will be used upon the filing of a
bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
Description of Moody's Preferred Stock
Ratings
aaa: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks. aa: An issue
which is rated aa is considered a high-grade preferred stock. This rating
indicates that there is reasonable assurance that earnings and asset protection
will remain relatively well maintained in the foreseeable future. a: An issue
which is rated a is considered to be an upper medium grade preferred stock.
While risks are judged to be somewhat greater than in the aaa and aa
classifications, earnings and asset protection are, nevertheless, expected to be
maintained at adequate levels. baa: An issue which is rated baa is considered to
be medium grade, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time. ba: An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class. b: An
issue which is rated b generally lacks the characteristics of a desirable
investment. Assurance of dividend payments and maintenance of other terms of the
issue over any long period of time may be small. caa: An issue which is rated
caa is likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future state of payment. ca: An issue which is
rated ca is speculative in a high degree and is likely to be in arrears on
dividends with little likelihood of eventual payment. c: This is the lowest
rated class of preferred or preference stock. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
B-25
<PAGE>
Description of S&P's Preferred Stock
Ratings
AAA: This is the highest rating that may be assigned by S&P's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations. AA: A preferred stock issue rated AA also qualifies
as a high-quality fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues rated
AAA. A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effect of changes in circumstances and economic conditions. BBB: An issue rated
BBB is regarded as backed by an adequate capacity to pay the preferred stock
obligations. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make payments for a preferred stock in this category than
for issues in the A category. BB, B, CCC: Preferred stock rated BB, B, and CCC
are regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such
issues will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CC: The rating CC is reserved for a preferred stock in arrears on dividends or
sinking fund payments but that is currently paying. C: A preferred stock rated C
is a non-paying issue. D: A preferred stock rated D is a non-paying issue with
the issuer in default on debt instruments.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
B-26
<PAGE>
Gabelli Gold Fund, Inc.
Portfolio of Investments -- December 31, 1995
================================================================================
Market
Shares Cost Value
------ ---- -----
COMMON STOCKS -- 92.34%
METALS AND MINING
AUSTRALIA -- 10.43%
230,000 Climax Mining Ltd.+........ $ 199,678 $ 211,902
250,000 Emperor Mines Ltd.+........ 298,691 399,363
102,000 Mount Edon Gold Mines Ltd.. 233,853 208,412
46,700 Newcrest Mining Limited.... 224,692 196,391
80,000 Ranger Minerals N.L.+...... 235,400 169,404
140,000 Resolute Samantha Ltd...... 279,858 296,457
100,000 Rhodes Mining N.L.+........ 15,897 8,730
36,000 Saint Barbara Mines Ltd.... 39,677 22,201
----------- -----------
1,527,746 1,512,860
----------- -----------
EUROPE -- 1.90%
270,100 Glencar Explorations plc+.. 173,765 276,064
----------- -----------
NORTH AMERICA -- 50.99%
35,000 Colossal Resources
Company+.................. 113,288 192,308
87,000 Dayton Mining Corporation+. 273,319 366,484
150,000 East Rand Proprietary Mines
-- Unsponsored ADR+........ 105,000 75,000
12,800 Euro-Nevada Mining
Corporation............... 328,855 466,520
15,000 FirstMiss Gold Inc.+....... 292,500 333,750
6,750 Franco-Nevada Mining
Corporation............... 371,603 394,368
250,000 Geddes Resources Limited+.. 297,794 238,095
44,800 Goldcorp Inc. Cl. A+....... 232,748 529,231
94,200 Guyanor Resources SA+...... 142,317 234,637
76,000 International Gold Resources
Corporation+.............. 236,653 200,440
35,000 Kinross Gold Corporation+.. 187,760 272,436
40,000 Miramar Mining
Corporation+.............. 177,877 197,802
10,000 Newmont Mining
Corporation............... 372,000 452,500
51,000 North American
Palladium Ltd.+........... 298,995 312,375
40,000 Pegasus Gold Inc.+......... 523,140 556,777
19,200 Pioneer Group, Inc......... 418,779 523,200
16,300 Placer Dome Inc............ 313,015 393,238
44,250 Stillwater Mining Ltd. (a)(b)+ 306,500 851,813
15,000 Stillwater Mining Ltd.+.... 195,000 288,750
64,000 TVXGold, Inc.+............. 413,574 451,282
400,000 Venoro Gold Corp. - A+..... 197,059 67,399
----------- -----------
5,797,776 7,398,405
----------- -----------
SOUTH AFRICA -- 26.76%
180,000 Deelkrall Gold ADR+........ $ 332,548 $ 143,190
27,500 Durban Roodepoort
Deep, Ltd.+............... 298,500 237,589
90,000 Grootvlei Proprietary Mines
Ltd. ..................... 258,252 197,505
20,000 Harmony Gold Mining
Ltd. ADR.................. 160,925 181,048
58,000 Kloof Gold Mining
Company Ltd............... 750,382 547,375
305,000 Lebowa Platinum Mines
Limited+.................. 354,700 253,051
20,000 Leslie Gold Mines Ltd. ADR. 180,475 101,496
80,100 Loraine Gold Mines Ltd. ADR+ 362,363 230,712
367,750 Northam Platinum Limited+.. 452,320 272,333
40,000 Randfontein Estates Gold
Mining Company Ltd. ADR... 357,500 257,856
203,547 Randgold and Exploration
Company Ltd.+............. 585,331 823,455
20,407 Rustenberg Platinum
Holdings Ltd.............. 496,204 335,877
56,700 Saint Helena Gold Mines Ltd. 516,131 301,219
----------- -----------
5,105,631 3,882,706
----------- -----------
SOUTH AMERICA -- 2.26%
50,826 Cia De Minas
Buenaventura SA........... 172,946 328,810
----------- -----------
TOTAL
COMMON STOCKS............. 12,777,864 13,398,845
----------- -----------
PREFERRED STOCKS -- 0.66%
SOUTH AFRICA
11,000 Durban Roodepoort Deep,
Ltd. Pfd.................. 73,519 96,544
----------- -----------
TOTAL PREFERRED STOCKS..... 73,519 96,544
----------- -----------
WARRANTS & OPTIONS
AUSTRALIA -- 0.36%
150,000 Lone Star Exploration+..... 35,149 52,382
----------- -----------
SOUTH AFRICA -- 0.28%
11,000 Durban Roodepoort Deep,
Ltd. Options+............. 16,940 36,630
19,750 Northam Platinum Limited+.. 2,497 3,521
----------- -----------
19,437 40,151
----------- -----------
TOTAL WARRANTS
& OPTIONS ................ 54,586 92,533
----------- -----------
The accompanying notes are an integral part of the financial statements.
B-27
<PAGE>
Gabelli Gold Fund, Inc.
Portfolio of Investments -- December 31, 1995 (Continued)
================================================================================
Market
Shares Cost Value
------ ---- -----
CONVERTIBLE CORPORATE BONDS -- 5.23%
AUSTRALIA -- 2.28%
$350,000 Golden Shamrock Mine
Limited Sub. Deb. Cv.
7.50%, 5/3/00 ............ $ 350,000 $ 330,750
----------- -----------
NORTH AMERICA -- 2.95%
200,000 Atlas Corporation Sub. Deb. Cv.
7.00%, 10/25/00(d)........ 200,000 200,000
200,000 Bema Gold Corporation Sub.
Deb. Cv. 7.50%, 2/28/00(a) 200,000 228,000
----------- -----------
TOTAL CONVERTIBLE
CORPORATE BONDS........... 750,000 758,750
----------- -----------
U.S. GOVERNMENT-
OBLIGATIONS -- 1.38%
200,000 U.S. Treasury Bills, 4.60%,
Due 01/11/96(c)........... 199,741 199,741
----------- -----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS............... 199,741 199,741
----------- -----------
TOTAL
INVESTMENTS-- 100.25%...... $13,855,710 $14,546,413
===========
Liabilities in Excess of
Other Assets -0.25%....... (36,218)
-----------
NET ASSETS-- 100.00% $14,510,195
(1,272,161 shares outstanding) ===========
Net Asset Value and Redemption
Price Per Share........... $ 11.41
===========
- ----------
(a) Security is fair valued pursuant to procedures established by the Board
of Directors
(b) Security restricted as to resale. This investment was acquired on
September 14, 1994 and represents 5.87% of net assets at December 31,
1995.
(c) Interest rate represents annualized yield on date of purchase.
(d) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December
31, 1995, Rule 144A securities amounted to $200,000 or 1.4% of net
assets.
ADR -- American Depositary Receipt
+ -- Non-income producing security
* For Federal income tax purposes:
Aggregate cost.................... $13,855,710
===========
Gross unrealized appreciation..... $ 2,597,828
Gross unrealized depreciation..... (1,907,125)
-----------
Net unrealized appreciation....... $ 690,703
===========
The accompanying notes are an integral part of the financial statements.
B-28
<PAGE>
Gabelli Gold Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
================================================================================
Assets:
Investments in securities, at value
(Cost $13,855,710) ................................... $ 14,546,413
Dividends and interest receivable ...................... 30,846
Other assets ........................................... 26,238
Deferred organizational expenses ....................... 64,843
------------
Total assets ......................................... 14,668,340
------------
Liabilities:
Payable to advisor ..................................... 12,721
Payable for distribution fees .......................... 6,085
Payable for Fund shares redeemed ....................... 110,706
Due to custodian ....................................... 25,738
Other accrued expenses ................................. 2,895
------------
Total liabilities .................................... 158,145
------------
Net assets (applicable to 1,272,161
shares outstanding) ................................ $ 14,510,195
============
Net asset value, offering price and
redemption price per share ......................... $ 11.41
============
Net Assets Consist of:
Capital Stock, at par value ............................ $ 1,272
Additional paid-in capital ............................. 14,127,206
Accumulated net realized loss on investments
and foreign currency transactions .................... (308,885)
Net unrealized appreciation on investments
and other assets and liabilities
denominated in foreign currencies .................... 690,602
------------
Net assets ........................................... $ 14,510,195
============
Statement of Operations for the
Year Ended December 31, 1995
================================================================================
Income:
Dividends (net of foreign taxes of $27,689) .............. $ 147,849
Interest ................................................. 48,457
---------
Total income ........................................... 196,306
---------
Expenses:
Investment advisory fees ................................. 174,090
Legal and audit fees ..................................... 44,807
Distribution expenses .................................... 43,519
Transfer and shareholder servicing agent ................. 40,238
Printing and mailing ..................................... 24,007
Amortization of organization expenses .................... 18,190
Registration fees ........................................ 17,100
Custodian fees and expenses .............................. 14,428
Directors' fees and expenses ............................. 12,000
Miscellaneous ............................................ 3,450
---------
Total expenses ......................................... 391,829
---------
Investment loss - net .................................... (195,523)
---------
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions:
Net realized loss on investments and
foreign currency transactions .............................. (299,054)
Net change in unrealized appreciation on
investments and other assets and liabilities
denominated in foreign currencies ...................... 703,796
---------
Net gain on investments ................................ 404,742
---------
Net increase in net assets resulting from
operations .................................................. $ 209,219
=========
Statement of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
July 11, 1994
(Commencement of
Operations)
Year Ended through
December 31, 1995 December 31, 1994
----------------- -----------------
Increase (decrease) in Net Assets:
<S> <C> <C>
Investment loss - net ............................................................... $ (195,523) $ (9,400)
Net realized loss on investments and foreign currency transactions .................. (299,054) (6,574)
Net change in unrealized appreciation (depreciation) on investments and other assets
and liabilities denominated in foreign currencies ................................. 703,796 (13,193)
------------ ------------
Net increase (decrease) in net assets resulting from operations ................... 209,219 (29,167)
Share transactions-- net .......................................................... (3,333,607) 17,563,750
------------ ------------
Net increase (decrease) in net assets ........................................... (3,124,388) 17,534,583
Net Assets:
Beginning of period ............................................................... 17,634,583 100,000
------------ ------------
End of period ..................................................................... $ 14,510,195 $ 17,634,583
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
B-29
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements
================================================================================
1. Significant Accounting Policies. The Gabelli Gold Fund, Inc. (the "Fund") was
incorporated in Maryland on May 13, 1994. The Fund is a no-load, open-end,
diversified management investment company whose objective is long-term capital
appreciation. Prior to July 11, 1994 (commencement of operations), the Fund had
no operations other than the sale of 10,000 shares of common stock at $10.00 per
share, to Gabelli Funds, Inc., the Fund's advisor, on June 14, 1994. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund.
Security Valuation. Portfolio securities listed or traded on the New York or
American Stock Exchanges, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") or traded on foreign exchanges are
valued at the last sale price on that exchange (if there were no sales that day,
the security is valued at the average of the bid and asked price). All other
portfolio securities for which over-the counter market quotations are readily
available are valued at the latest average of the bid and asked prices. When
market quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established by and
under the general supervision of the Fund's Directors. Short-term debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, unless the Directors determine such does not reflect the securities' fair
value, in which case these securities will be valued at their fair value as
determined by the Directors. Options are valued at the last price on the
exchange on which they are listed, unless no sales of such options have taken
place that day, in which case they will be valued at the mean between their
closing bid and asked prices.
Foreign Currency Transactions. The books and records of the Fund are maintained
in U.S. dollars as follows:
(i) market value of investment securities and other assets and liabilities are
translated at the exchange rate on the valuation date.
(ii) purchases and sales of investment securities, income and expenses are
translated at the exchange rate prevailing on the respective date of such
transactions.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuation
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments. Net
realized and unrealized foreign exchange gains and losses which arise from
changes in exchange rates involving assets and liabilities other than
investments in securities were immaterial for the year ended December 31, 1995.
Forward Foreign Currency Contracts. The Fund may hold currencies to meet
settlement requirements for foreign securities and may engage in currency
exchange transactions to hedge against changes in exchange rates. Forward
foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
currency contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
B-30
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
At December 31, 1995 the Fund had no forward foreign currency contracts
outstanding.
Security Transactions and Investment Income. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates), with
realized gain and loss on investments determined by using specific
identification as the cost method. Interest income (including amortization of
premium and discount) is recorded as earned. Dividend income and dividend and
capital gain distributions to shareholders are recorded on the ex-dividend date.
Federal Income Taxes. The Fund has qualified and intends to continue to qualify
as a "regulated investment company" under Subchapter M of the Internal Revenue
Code of 1986 and distribute all of its taxable income and capital gains, if any,
to its shareholders. Therefore, no Federal income tax provision is required.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging to 30%. Such withholding
taxes may be reduced or eliminated under the terms of applicable U.S. income tax
treaties, and the Fund intends to undertake any procedural steps required to
claim the benefits of such treaties. If more than 50% in value of the Fund's
total assets at the close of any taxable year consists of stocks or securities
of non-U.S. corporations, the Fund is permitted and may elect to treat any
non-U.S. taxes paid by it as paid by its shareholders.
The Fund has a net capital loss carryforward for Federal income tax purposes of
$314,698 at December 31, 1995. This loss carryforward is available to reduce
future distributions of net capital gains to shareholders. $6,761 of the loss
carryforward is available through 2002; $307,937 is available through 2003. The
Fund's net investment loss of $195,523 less $3,257 representing short-term
capital gains attributable to foreign currency transactions was charged against
additional paid-in capital as the loss cannot be carried forward for Federal
income tax purposes.
2. Capital Stock Transactions. The Articles of Incorporation, dated May 13,
1994, permit the Fund to issue 1,000,000,000 shares (par value $0.001) of common
stock. Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
July 11, 1994
(Commencement of Operations)
Year ended December 31, 1995 through December 31, 1994
---------------------------- -------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold 2,241,792 $25,680,073 2,231,306 $25,119,891
Shares redeemed (2,563,349) (29,013,680) (647,588) (7,556,141)
--------- ----------- --------- -----------
Share transactions - net (321,557) $(3,333,607) 1,583,718 $17,563,750
========= =========== ========= ===========
</TABLE>
3. Purchases and Sales of Securities. Purchases and sales of securities for the
year ended December 31, 1995, other than U.S. government obligations and
short-term securities, aggregated $6,285,052 and $8,042,374 respectively.
4. Investment Advisory Contract. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management, and to pay the compensation of all officers and
Directors of the
B-31
<PAGE>
Gabelli Gold Fund, Inc.
Notes to Financial Statements (Continued)
================================================================================
Fund who are affiliated with the Advisor. As compensation for the services
rendered and related expenses borne by the Advisor, the Fund pays the Advisor a
fee, computed and accrued daily and payable monthly, equal to 1.00% per annum of
the Fund's average daily net assets. The Advisor is obligated to reimburse the
Fund in the event the Fund's expenses exceed the most restrictive expense ratio
limitation imposed by any state, currently believed to be 2.5% of the first $30
million, 2% of the next $70 million and 1.5% of the excess over $100 million of
the Fund's average daily net assets (including taxes, interest, distribution
expenses and extraordinary items). No such reimbursement was required during
1995.
5. Organization Expenses. The organization and start-up expenses of the Fund are
being amortized on a straight-line basis over a period of 60 months. The Advisor
has agreed that in the event that any of the initial 10,000 shares it owns are
redeemed during the period of amortization of the Fund's organization and
start-up expenses, the redemption proceeds will be reduced by any such
unamortized organization expenses in the same proportion as the number of shares
redeemed to the number of initial shares outstanding at the time of redemption.
6. Distribution Plan. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder under which the Fund pays Gabelli & Company, Inc., the
distributor and an affiliate of the Advisor, an annual rate of up to 0.25% of
average net assets for the costs and expenses in connection with distributing
the Fund's shares. For the year ended December 31, 1995, the Fund has incurred
distribution costs of $43,519. The Board of Directors has approved that
Distribution costs incurred by Gabelli & Company, Inc., totalling $263,793 which
are in excess of the .25% limitation continue to be carried forward for possible
reimbursement by the Fund in future periods, subject to such limitation.
Financial Highlights
================================================================================
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
July 11, 1994
Year Ended (Commencement of Operations)
December 31, 1995 through December 31, 1994
----------------- ----------------------------
Operating Performance:
<S> <C> <C>
Net Asset Value, Beginning of Period ............... $ 11.07 $ 10.00
Increase from Investment Operations:
Net investment loss .............................. (0.15) 0.00
Net realized and unrealized gain on securities ... 0.49 1.07(a)
------- -------
Total from investment operations ................. 0.34 1.07
------- -------
Net Asset Value, End of Period ..................... $ 11.41 $ 11.07
======= =======
Total Return ..................................... 3.07% 10.70%
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) ......... $14,510 $17,634
Ratio of Expenses to Average Net Assets .......... 2.25% 2.04%(b)
Ratio of Net Investment Loss to Average Net Assets (1.12)% (0.26)%(b)
Portfolio Turnover Rate .......................... 38% 12%
</TABLE>
(a) Includes the effect of realized gains prior to significant increases in
shares outstanding.
(b) Annualized.
B-32
<PAGE>
Gabelli Gold Fund, Inc.
Report of Ernst & Young LLP, Independent Auditors
================================================================================
Shareholders and Board of Directors
Gabelli Gold Fund, Inc.
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Gabelli Gold Fund, Inc. as of December 31,
1995, and the related statement of operations for the year then ended, and the
statement of changes in net assets and the financial highlights for each of the
two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Gabelli Gold Fund, Inc. at December 31, 1995, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
/s/Ernst & Young LLP
January 24, 1996
New York, New York
B-33
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(A) Financial Statements:
(1) Financial Statements included in Part A, the Prospectus:
(a) Financial Highlights for the period from July 11, 1994 (commencement of
operations) through December 31, 1994 and for the fiscal year ended
December 31, 1995.
(2) Financial Statements included in Part B, the Statement of Additional
Information:
(a) Report of Independent Auditors*
(b) Statement of Assets and Liabilities, December 31, 1995*
(c) Portfolio of Investments, December 31, 1995*
(d) Statement of Operations for the fiscal year ended December 31, 1995.*
(e) Statement of Changes in Net Assets for the period from July 11, 1994
(commencement of operations) through December 31, 1994 and for the
fiscal year ended December 31, 1995.*
(f) Financial Highlights for the period from July 11, 1994 (commencement of
operations) through December 31, 1994 and for the fiscal year ended
December 31, 1995.*
(g) Notes to the Financial Statements*
- ----------
* Previously filed with the Fund's Annual Report for the period ended December
31, 1995.
(B) Exhibits:
Exhibit No. Description of Exhibits
1 Articles of Incorporation of Registrant
2 By-Laws of Registrant
3 Not applicable
4 Specimen copies of certificates for shares issued by Registrant*
5 Form of Investment Advisory Agreement
6 Form of Distribution Agreement
7 Not applicable
8(a) Form of Custodian Contract**
8(b) Form of Subcustodian Agreement (for precious metals)*
9 Form of Transfer Agency and Service Agreement*
10(a) Opinion and consent of Willkie Farr & Gallagher
10(b) Consent of Willkie Farr & Gallagher
11 Consent of Independent Auditors
12 Not applicable
13 Subscription Agreement
14 Not applicable
15 Distribution Plan under Rule 12b-1
16 Computation of Performance Quotations
17 Financial Data Schedule
24(a) Power of Attorney
C-1
<PAGE>
24(b) Additional Power of Attorney
24(c) Additional Power of Attorney**
- ----------
* Previously filed as an exhibit to the Pre-Effective Amendment No. 1 to
Registration Statement No. 33-79180 filed on June 24, 1994.
** Previously filed as an exhibit to the Post-Effective Amendment No. 2 to
Registration Statement No. 33-79180 filed on April 28, 1995.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities
As of April 12, 1996, the approximate number of holders of securities of the
registrant were:
Title of Class Number of Record Holders
Common Stock, par value $.001 per share 1,965
Item 27. Indemnification
Under Article V, Section 1, of the registrant's By-Laws, any past or present
director or officer of registrant is indemnified to the fullest extent permitted
by law against liability and all expenses reasonably incurred by him in
connection with any action, suit or proceeding to which he may be a party or
otherwise involved by reason of his being or having been a director or officer
of registrant. This provision does not authorize indemnification when it is
determined, in the manner specified in the By-Laws, that such director or
officer would otherwise be liable to registrant or its shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of his
duties. In addition, Section 1 provides that to the fullest extent permitted by
Maryland General Corporation Law, as amended from time to time, no director or
officer of the Fund shall be personally liable to the Fund or its stockholders
for money damages, except to the extent such exemption from liability or
limitation thereof is not permitted by the Investment Company Act of 1940, as
amended from time to time. Under Article V, Section 2, of the registrant's
By-Laws, expenses may be paid by registrant in advance of the final disposition
of any action, suit or proceeding upon receipt of an undertaking by such
director or officer to repay such expenses to registrant in the event that it is
ultimately determined that indemnification of the advanced expenses is not
authorized under the By-Laws.
Insofar as indemnification for liability arising under the Securities Act of
1933 (the "1933 Act") may be permitted to directors, officers and controlling
persons of registrant 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
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by registrant
of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, 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 1933 Act and will be governed by the
final adjudication of such issue.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Gabelli Funds, Inc. is the investment adviser of the registrant (the "Adviser").
For a list of officers and directors of the Adviser, together with information
as to any other business, profession, vocation or employment of a substantial
nature engaged in by the Adviser or such officers and directors during the past
two years, reference is made to Form ADV filed by it under the Investment
Advisers Act of 1940.
Item 29. Principal Underwriters
(A) The Distributor, Gabelli and Company, Inc., is also the principal
underwriter for The Gabelli ABC Fund, The Gabelli Growth Fund, The Gabelli
Asset Fund, The Gabelli Value Fund, The Gabelli Capital Asset Fund, The
Gabelli Small Cap Growth Fund, Gabelli Equity Income Fund, The Gabelli
Global Series Funds, Inc., The Westwood Funds and The Gabelli U.S. Treasury
Money Market Fund.
(B) For information with respect to each director and officer of Gabelli &
Company, Inc., reference is made to Form BD filed by Gabelli & Company,
Inc. under the Securities Exchange Act of 1934.
(C) Inapplicable.
Item 30. Location of Accounts and Records
All such accounts, books and other documents are maintained at the offices of:
Gabelli Funds, Inc., One Corporate Center, Rye, New York, 10580-1434; Furman
Selz LLC, 230 Park Avenue, New York, New York 10169 and State Street Bank and
Trust Company, 1776 Heritage Drive, North Quincy, Massachusetts 02171.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(A) Registrant hereby undertakes to call a meeting of shareholders to remove
and elect directors at the request of shareholders entitled to cast 10% or
more of the votes entitled to be cast at the meeting.
(B) Registrant hereby undertakes to assist in shareholder communications
pursuant to Section 16(c) of the Investment Company Act of 1940.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement and pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 3 to the 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 26th day of April,
1996.
GABELLI GOLD FUND, INC.
/s/Caesar Bryan
--------------------------------
By: Caesar Bryan
Title: President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 3 to the Registration Statement has been signed below by the
following persons in the capacity and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman of the Board April 26, 1996
- -----------------------
Mario J. Gabelli
/s/ Caesar Bryan President April 26, 1996
- -----------------------
Caesar Bryan
/s/ Bruce N. Alpert Vice President, Treasurer April 26, 1996
- ----------------------- Chief Financial Officer
Bruce N. Alpert
* Director April 26, 1996
- -----------------------
E. Val Cerutti
* Director April 26, 1996
- -----------------------
Anthony Colavita
* Director April 26, 1996
- -----------------------
Karl Otto Pohl
* Director April 26, 1996
- -----------------------
Werner Roeder, M.D.
* Director April 26, 1996
- -----------------------
Anthonie Van Ekris
* Director April 26, 1996
- -----------------------
Daniel E. Zucchi
*By: /s/ Bruce N. Alpert
--------------------------------
Bruce N. Alpert
Attorney-in-Fact
C-4
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibits
- ---------- -----------------------
1 Articles of Incorporation of Registrant
2 By-Laws of Registrant
3 Not applicable
4 Specimen copies of certificates for shares issued by Registrant*
5 Form of Investment Advisory Agreement
6 Form of Distribution Agreement
7 Not applicable
8(a) Form of Custodian Contract*
8(b) Form of Subcustodian Agreement (for precious metals)*
9 Form of Transfer Agency and Service Agreement*
10(a) Opinion and consent of Willkie Farr & Gallagher
10(b) Consent of Willkie, Farr & Gallagher
11 Consent of Independent Auditors
12 Not applicable
13 Subscription Agreement
14 Not applicable
15 Distribution Plan under Rule 12b-1
16 Computation of Performance Quotations
17 Financial Data Schedule
24(a) Power of Attorney
24(b) Additional Power of Attorney
24(c) Additional Power of Attorney***
------------
* Previously filed as an exhibit to the Pre-Effective Amendment No. 1 to
Registration Statement No. 33-79180 filed on June 24, 1994.
** Previously filed as an exhibit to the Post-Effective Amendment No. 2 to
Registration Statement No. 33-79180 filed on April 28, 1995.
Exhibit 1
ARTICLES OF INCORPORATION
OF
GABELLI GOLD FUND, INC.
ARTICLE I
THE UNDERSIGNED, Jeffrey S. Hochman, whose post office address is c/o
Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022, being at least 18 years of age, does hereby act as an
incorporator and forms a corporation, under and by virtue of the Maryland
General Corporation Law.
ARTICLE II
NAME
The name of the Corporation is Gabelli Gold Fund, Inc. (the
"Corporation").
ARTICLE III
PURPOSES AND POWERS
The Corporation is formed for the following purposes:
(1) To conduct and carry on the business of an investment company.
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such purposes and for such amount or kind of
consideration as may now or hereafter be permitted by law.
(4) To redeem, purchase or acquire in any other manner, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by these Articles of
Incorporation.
(5) To do any and all additional acts and to exercise any and all
additional powers or rights as may be necessary, incidental, appropriate or
desirable for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law now or hereafter in force, and the enumeration
of the foregoing shall not be deemed to exclude any powers, rights or privileges
so granted or conferred.
<PAGE>
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name and address of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust Incorporated, a
Maryland Corporation, 32 South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of capital stock that the Corporation shall
have authority to issue is one billion (1,000,000,000) shares, of the par value
of one tenth of one cent ($.001) per share and of the aggregate par value of one
million dollars ($1,000,000), all of which one billion (1,000,000,000) shares
are designated Common Stock.
(2) The Corporation may issue fractional shares. Any fractional share
shall carry proportionately the rights of a whole share including, without
limitation, the right to vote and the right to receive dividends. A fractional
share shall not, however, have the right to receive a certificate evidencing it.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of this Charter and the By-Laws of the
Corporation.
(4) No holder of stock of the Corporation by virtue of being such a holder
shall have any right to purchase or subscribe for any shares of the
Corporation's capital stock or any other security that the Corporation may issue
or sell other than a right that the Board of Directors in its discretion may
determine to grant.
(5) The Board of Directors shall have authority by resolution to classify
and reclassify any authorized but unissued shares of capital stock from time to
time by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption of the capital
stock.
(6) Unless otherwise required by law, at a meeting of stockholders the
presence in person or by proxy of stockholders entitled to cast one-third (1/3)
of all the votes entitled to be cast at the meeting constitutes a quorum.
(7) Notwithstanding any provision of law requiring any action to be taken
or authorized by the affirmative vote of a greater proportion of the votes of
all classes or of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of a majority
of the total number of votes entitled to be cast thereon, except as otherwise
provided in this Charter.
ARTICLE VI
REDEMPTION
Each holder of shares of the Corporation's capital stock shall be entitled
to require the Corporation to redeem all or any part of the shares of capital
stock of the Corporation standing in the name of the holder on the books of the
Corporation, and all shares of capital stock issued by the Corporation shall be
<PAGE>
subject to redemption by the Corporation, at the redemption price of the shares
as in effect from time to time as may be determined by or pursuant to the
direction of the Board of Directors of the Corporation in accordance with the
provisions of Article VI, subject to the right of the Board of Directors of the
Corporation to suspend the right of redemption or postpone the date of payment
of the redemption price in accordance with provisions of applicable law. Without
limiting the generality of the foregoing, the Corporation shall, to the extent
permitted by applicable law, have the right at any time to redeem the shares
owned by any holder of capital stock of the Corporation (i) if the redemption
is, in the opinion of the Board of Directors of the Corporation, desirable in
order to prevent the Corporation from being deemed a "personal holding company"
within the meaning of the Internal Revenue Code of 1986 or (ii) if the value of
the shares in the account maintained by the Corporation or its transfer agent
for any class of stock for the stockholder is less than any minimum value of
shares as set forth in the then current prospectus or statement of additional
information of the Corporation and the stockholder has been given written notice
of the redemption and has failed to make additional purchases of shares in an
amount sufficient to bring the value in his account to such minimum or more
before the redemption is effected by the Corporation. Payment of the redemption
price shall be made in cash by the Corporation at the time and in the manner as
may be determined from time to time by the Board of Directors of the Corporation
unless, in the opinion of the Board of Directors, which shall be conclusive,
conditions exist that make payment wholly in cash unwise or undesirable; in such
event the Corporation may make payment wholly or partly by securities or other
property included in the assets belonging or allocable to the class of the
shares redemption of which is being sought, the value of which shall be
determined as provided herein. The Board of Directors may establish procedures
for redemption of shares.
ARTICLE VII
BOARD OF DIRECTORS
(1) The number of directors constituting the Board of Directors initially
shall be one (1) and may in the future be such other number as may be set forth
in the By-Laws or determined by the Board of Directors pursuant to the By-Laws.
The number of Directors shall at no time be less than the minimum number
required under the Maryland General Corporation Law. Bruce N. Alpert is
appointed director of the Corporation to hold office until the first meeting of
stockholders or until his successor is elected and qualified.
(2) In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Maryland, the Board of Directors is expressly authorized:
(i) To make, alter or repeal the By-Laws of the Corporation, except
where such power is reserved by the By-Laws to the stockholders, and except as
otherwise required by the Investment Company Act of 1940, as amended.
(ii) From time to time to determine whether and to what extent and
at what times and places and under what conditions and regulations the books and
accounts of the Corporation, or any of them other than the stock ledger, shall
be open to the inspection of the stockholders. No stockholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by law or authorized by resolution of the Board of Directors or of the
stockholders.
(iii) Without the assent or vote of the stockholders, to authorize
the issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, and securities
<PAGE>
convertible into shares of stock of the Corporation of any class or classes,
whether now or hereafter authorized, for such consideration as the Board of
Directors may deem advisable.
(iv) Without the assent or vote of the stockholders, to authorize
and issue obligations of the Corporation, secured and unsecured, as the Board of
Directors may determine, and to authorize and cause to be executed mortgages and
liens upon the real or personal property of the Corporation.
(v) Notwithstanding anything in this Charter to the contrary, to
establish in its absolute discretion the basis or method for determining the
value of the assets belonging to any class, the amount of the liabilities
belonging to any class and the net asset value of each share of any class of the
Corporation's stock.
(vi) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose; to set apart out of any funds of the
Corporation reserves for such purposes as it shall determine and to abolish the
same; to declare and pay any dividends and distributions in cash, securities or
other property from surplus or any funds legally available therefor, at such
intervals as it shall determine; to declare dividends or distributions by means
of a formula or other method of determination, at meetings held less frequently
than the frequency of the effectiveness of such declarations; and to establish
payment dates for dividends or any other distributions on any basis, including
dates occurring less frequently than the effectiveness of declarations thereof.
(vii) In addition to the powers and authorities granted herein and
by statute expressly conferred upon it, the Board of Directors is authorized to
exercise all powers and do all acts that may be exercised or done by the
Corporation pursuant to the provisions of the laws of the State of Maryland,
this Charter and the By-Laws of the Corporation.
(3) Any determination made in good faith, and in accordance with accepted
accounting practices, if applicable, by or pursuant to the direction of the
Board of Directors, with respect to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any reserves
or charges set up and the propriety thereof, as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which the reserves or
charges have been created has been paid or discharged or is then or thereafter
required to be paid or discharged), as to the value of any security or asset
owned by the Corporation, the determination of the net asset value of shares of
any class of the Corporation's capital stock, or as to any other matters
relating to the issuance, sale or other acquisition or disposition of securities
or shares of capital stock of the Corporation, and any reasonable determination
made in good faith by the Board of Directors whether any transaction constitutes
a purchase of securities on "margin", a sale of securities "short," or an
underwriting of the sale of, or a participation in any underwriting or selling
group in connection with the public distribution of, any securities, shall be
final and conclusive, and shall be binding upon the Corporation and all holders
of its capital stock, past, present and future, and shares of the capital stock
of the Corporation are issued and sold on the condition and understanding,
evidenced by the purchase of shares of capital stock or acceptance of share
certificates, that any and all such determinations shall be binding as
aforesaid. No provision of this Charter of the Corporation shall be effective to
(i) require a waiver of compliance with any provision of the Securities
<PAGE>
Act of 1933, as amended, or the Investment Company Act of 1940, as amended, or
of any valid rule, regulation or order of the Securities and Exchange Commission
under those Acts or (ii) protect or purport to protect any director or officer
of the Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
ARTICLE VIII
EXCULPATION AND INDEMNIFICATION
To the fullest extent permitted by the Maryland General Corporation Law,
as amended from time to time, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money damages,
except to the extent such exemption from liability or limitation thereof is not
permitted by the Investment Company Act of 1940, as amended from time to time.
In addition, any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under the Maryland General Corporation Law, the Securities Act of 1933 and the
Investment Company Act of 1940, as such statutes are now or hereafter in force,
except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
ARTICLE IX
AMENDMENTS
The Corporation reserves the right from time to time to make any
amendment to its Charter, now or hereafter authorized by law, including any
amendment that alters the contract rights, as expressly set forth in its
Charter, of any outstanding stock.
* * *
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby acknowledge that the adoption and signing are my
act.
By: /s/ Jeffrey S. Hochman
----------------------
Jeffrey S. Hochman
Incorporator
Dated the 11th day of May, 1994
CONSENT OF COUNSEL
Gabelli Gold Fund, Inc.
We hereby consent to being named in the Statement of Additional
Information included in Post-Effective Amendment No. 3 (the "Amendment") to the
Registration Statement on Form N-1A (Securities Act File No. 33-79180,
Investment Company Act File No. 811-8518) of Gabelli Gold Fund, Inc. (the
"Fund") under the caption "Counsel and Independent Auditors" and to the Fund's
filing a copy of this Consent as an Exhibit to the Amendment.
/s/ Willkie Farr & Gallager
----------------------------
Willkie Farr & Gallager
New York, New York
April 26, 1996
Exhibit 2
BY-LAWS
OF
GABELLI GOLD FUND, INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the stockholders of the
Corporation shall be held unless required by applicable law or otherwise
determined by the Board of Directors. An annual meeting may be held at any place
within the United States as may be determined by the Board of Directors and as
shall be designated in the notice of the meeting, and at the time specified by
the Board of Directors. Any business of the Corporation may be transacted at an
annual meeting without being specifically designated in the notice unless
otherwise provided by statute, the Corporation's Articles of Incorporation or
these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the
Corporation's Articles of Incorporation, may be held at any place within the
United States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the Secretary at the request in writing of a
majority of the Board of Directors or at the request in writing of stockholders
entitled to cast at least 10 (ten) percent of the votes entitled to be cast at
the meeting upon payment by such stockholders to the Corporation of the
reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such stockholders by the Secretary of
the Corporation). Notwithstanding the foregoing, unless requested by
stockholders entitled to cast a majority of the votes entitled to be cast at the
meeting, a special meeting of the stockholders need not be called at the request
of stockholders to consider any matter which is substantially the same as a
matter voted on at any special meeting of the stockholders held during the
preceding 12 (twelve) months. A written request shall state the purpose or
purposes of the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed notice of the purpose or
purposes and of the time and place of every meeting of the stockholders shall be
given by the Secretary of the Corporation to each stockholder of record entitled
to vote at the meeting, by placing the notice in the mail at least 10 (ten)
days, but not more than 90 (ninety) days, prior to the date designated for the
meeting addressed to each stockholder at his address appearing on the books of
the Corporation or supplied by the stockholder to the Corporation for the
purpose of notice. The notice of any meeting of stockholders may be accompanied
by a form of proxy approved by the Board of Directors in favor of the actions or
persons as the Board of Directors may select. Notice of any meeting of
stockholders shall be deemed waived by any stockholder who attends the meeting
in person or by proxy, or who before or after the meeting submits a signed
waiver of notice that is filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by law or by the
Corporation's Articles of Incorporation, the presence in person or by proxy of
stockholders of the Corporation entitled to cast at least one-third of the votes
to be cast shall constitute a quorum at each meeting of the stockholders and
<PAGE>
all questions shall be decided by a majority of the votes cast at the meeting,
except for the election of directors. A plurality of all the votes cast at a
meeting at which a quorum is present is sufficient to elect a director. In the
absence of a quorum, the stockholders present in person or by proxy, by majority
vote and without notice other than by announcement, may adjourn the meeting from
time to time as provided in Section 5 of this Article I until a quorum shall
attend. The stockholders present at any duly organized meeting may continue to
do business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum. The absence from any meeting in person
or by proxy of holders of the number of shares of stock of the Corporation in
excess of one-third that may be required by the laws of the State of Maryland,
the Investment Company Act of 1940, as amended, or other applicable statute, the
Corporation's Articles of Incorporation or these By-Laws, for action upon any
given matter shall not prevent action at the meeting on any other matter or
matters that may properly come before the meeting, so long as there are present,
in person or by proxy, holders of the number of shares of stock of the
Corporation required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be adjourned
from time to time, without notice other than by announcement at the meeting at
which the adjournment is taken. At any adjourned meeting at which a quorum shall
be present any action may be taken that could have been taken at the meeting
originally called. A meeting of the stockholders may not be adjourned to a date
more than 120 (one hundred twenty) days after the original record date.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, or in his absence or inability to act, the President, or
in his absence or inability to act, a Vice President, or in the absence or
inability to act of the Chairman of the Board, the President and all the Vice
Presidents, a Chairman chosen by the stockholders, shall act as Chairman of the
meeting. The Secretary, or in his absence or inability to act, a person
appointed by the Chairman of the meeting, shall act as secretary of the meeting
and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
Corporation's Articles of Incorporation, each holder of record of shares of
stock of the Corporation having voting power shall be entitled at each meeting
of the stockholders to one vote for every share of stock standing in his name on
the records of the Corporation as of the record date determined pursuant to
Section 9 of this Article I.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by the
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases in which the proxy states that it is
irrevocable and in which an irrevocable proxy is permitted by law.
If a vote shall be taken on any question then unless required by statute
or these By-Laws, or determined by the Chairman of the meeting to be advisable,
any such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, and shall state the number of
shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to vote at any meeting
of the stockholders. The record date for a
<PAGE>
particular meeting shall be not more than 90 (ninety) nor fewer than 10 (ten)
days before the date of the meeting. All persons who were holders of record of
shares as of the record date of a meeting, and no others, shall be entitled to
vote at such meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the meeting or
at any adjournment of the meeting. If the inspectors shall not be so appointed
or if any of them shall fail to appear or act, the chairman of the meeting may
appoint inspectors. Each inspector, before entering upon the discharge of his
duties, shall take and sign an oath to execute faithfully the duties of
inspector at the meeting with strict impartiality and according to the best of
his ability. The inspectors shall determine the number of shares outstanding and
the voting power of each share, the number of shares represented at the meeting,
the existence of a quorum and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do those acts as are
proper to conduct the election or vote with fairness to all stockholders. On
request of the chairman of the meeting or any stockholder entitled to vote at
the meeting, the inspectors shall make a report in writing of any challenge,
request or matter determined by them and shall execute a certificate of any fact
found by them. No Director or candidate for the office of Director shall act as
inspector of an election of Directors. Inspectors need not be stockholders of
the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute, any action required to be taken at any meeting of
stockholders, or any action that may be taken at any meeting of the stockholder,
may be taken without a meeting, without prior notice and without a vote, if the
following are filed with the records of stockholders' meetings: (i) a unanimous
written consent that sets forth the action and is signed by each stockholder
entitled to vote on the matter and (ii) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote at the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the
Corporation's Articles of Incorporation, the business and affairs of the
Corporation shall be managed under the direction of the Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors except as conferred on or reserved to the stockholder by law, by the
Corporation's Articles of Incorporation or by these By-Laws.
SECTION 2. Number of Directors. The number of Directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the entire Board of Directors then in office; provided, however, that the
number of Directors shall in no event be fewer than one nor more than fifteen.
Any vacancy created by an increase in Directors may be filled in accordance with
Section 6 of this Article II. No reduction in the number of Directors shall have
the effect of removing any Director from office prior to the expiration of his
term unless the Director is specifically removed pursuant to Section 5 of this
Article II at the time of the decrease. A Director need not be a stockholder of
the Corporation, a citizen of the United States or a resident of the State of
Maryland.
<PAGE>
SECTION 3. Election and Term of Directors. The term of office of each
director shall be from the time of his election and qualification until his
successor shall have been elected and shall have qualified, or until his death,
or until he shall have resigned or have been removed as provided in these
By-Laws, or as otherwise provided by statute or the Corporation's Articles of
Incorporation.
SECTION 4. Resignation. A Director of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors or
the Chairman of the Board or to the President or the Secretary of the
Corporation. Any resignation shall take effect at the time specified in it or,
should the time when it is to become effective not be specified in it,
immediately upon its receipt. Acceptance of a resignation shall not be necessary
to make it effective unless the resignation states otherwise.
SECTION 5. Removal of Directors. Any Director of the Corporation may be
removed by the stockholders with or without cause at any time by a vote of a
majority of the votes entitled to be cast for the election of Directors.
SECTION 6. Vacancies. Subject to the provisions of the Investment Company
Act of 1940, as amended, any vacancies in the Board of Directors, whether
arising from death, resignation, removal or any other cause except an increase
in the number of Directors, shall be filled by a vote of the majority of the
Board of Directors then in office even though that majority is less than a
quorum, provided that no vacancy or vacancies shall be filled by action of the
remaining Directors if, after the filling of the vacancy or vacancies, fewer
than two-thirds of the Directors then holding office shall have been elected by
the stockholders of the Corporation. A majority of the entire Board then in
office may fill a vacancy which results from an increase in the number of
Directors. In the event that at any time a vacancy exists in any office of a
Director that may not be filled by the remaining Directors, a special meeting of
the stockholders shall be held as promptly as possible and in any event within
60 (sixty) days, for the purpose of filling the vacancy or vacancies. Any
Director elected or appointed to fill a vacancy shall hold office until a
successor has been chosen and qualifies or until his earlier resignation or
removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at any
place that the Board of Directors may from time to time determine or that is
specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at the time and place determined by the Board of
Directors.
SECTION 9. Special Meetings. Special meetings of the Board of Directors
may be called by two or more Directors of the Corporation or by the Chairman of
the Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special meeting of
the Board of Directors shall be given by the Secretary as hereinafter provided.
Each notice shall state the time and place of the meeting and shall be delivered
to each Director, either personally or by telephone or other standard form of
telecommunication, at least 24 (twenty-four) hours before the time at which the
meeting is to be held, or by first-class mail, postage prepaid, addressed to the
Director at his residence or usual place of business, and mailed at least 3
(three) days before the day on which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any Director who shall, either before or after the meeting,
sign a written waiver of notice that is filed with the records of the meeting or
who shall attend the meeting.
<PAGE>
SECTION 12. Quorum and Voting. One-third (but not fewer than 2 (two)) of
the members of the entire Board of Directors shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at the meeting (unless there is only one director, in which case that
one will constitute a quorum for the transaction of business), and except as
otherwise expressly required by statute, the Corporation's Articles of
Incorporation, these By-Laws, the Investment Company Act of 1940, as amended, or
any other applicable statute, the act of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board. In the
absence of a quorum at any meeting of the Board, a majority of the Directors
present may adjourn the meeting to another time and place until a quorum shall
be present. Notice of the time and place of any adjourned meeting shall be given
to all Directors. At any adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting as
originally called.
SECTION 13. Organization. The Board of Directors may designate a Chairman
of the Board, who shall preside at each meeting of the Board. In the absence or
inability of the Chairman of the Board to act, the President, or, in his absence
or inability to act, another Director chosen by a majority of the Directors
present, shall act as chairman of the meeting and preside at the meeting. The
Secretary, or, in his absence or inability to act, any person appointed by the
chairman, shall act as secretary of the meeting and keep the minutes thereof.
SECTION 14. Committees. The Board of Directors may designate one or more
committees of the Board of Directors, each consisting of 2 (two) or more
Directors. To the extent provided in the resolution, and permitted by law, the
committee or committees shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation and
may authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required. The members of a committee present at any
meeting, whether or not they constitute a quorum, may appoint a Director to act
in the place of an absent member.
SECTION 15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee of the Board may be taken without a meeting if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the Board
or committee.
SECTION 16. Telephone Conference. Members of the Board of Directors or any
committee of the Board may participate in any Board or committee meeting by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time. Participation by such means shall constitute presence in person at the
meeting.
SECTION 17. Compensation. Each Director shall be entitled to receive
compensation, if any, as may from time to time be fixed by the Board of
Directors, including a fee for each meeting of the Board or any committee
thereof, regular or special, he attends. Directors may also be reimbursed by the
Corporation for all reasonable expenses incurred in traveling to and from the
place of a Board or committee meeting.
<PAGE>
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the Corporation
shall be a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and amy also appoint any other officers, agents and
employees it deems necessary or proper. Any two or more offices may be held by
the same person, except the offices of President and Vice President, but no
officer shall execute, acknowledge or verify in more than one capacity any
instrument required by law to be executed, acknowledged or verified by more than
one officer. Officers shall be elected by the Board of Directors to hold office
until their successors shall have been duly elected and shall have qualified.
Officers shall serve at the pleasure of the Board of Directors. The Board of
Directors may from time to time elect, or delegate to the President the power to
appoint, such officers (including one or more Assistant Vice President, one or
more Assistant Treasurers and one or more Assistant Secretaries) and such agents
as may be necessary or desirable for the business of the Corporation. Such other
officers and agents shall have such duties and shall hold their offices for such
terms as may be prescribed by the Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors, the
Chairman of the Board, the President or the Secretary. Any resignation shall
take effect at the time specified therein or, if the time when it shall become
effective is not specified therein, immediately upon its receipt. Acceptance of
a resignation shall not be necessary to make it effective unless the resignation
states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate the power of removal as to
agents and employees not elected or appointed by the Board of Directors. Removal
shall be without prejudice to the person's contract rights, if any, but the
appointment of any person as an officer, agent or employee of the Corporation
shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising from death,
resignation, removal or any other cause, may be filled in the manner prescribed
in these By-Laws for the regular election or appointment to the office.
SECTION 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any officer,
agent or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in an amount and with any surety or sureties
as the Board may require.
SECTION 7. President. The President shall be the chief executive officer
of the Corporation. In the absence or inability of the Chairman of the Board (or
if there is none) to act, the President shall preside at all meetings of the
stockholders and of the Board of Directors. The President shall have, subject to
the control of the Board of Directors, general charge of the business and
affairs of the Corporation, and may employ and discharge employees and agents of
the Corporation, except those elected or appointed by the Board, and he may
delegate these powers.
<PAGE>
SECTION 8. Chief Operating Officer. The Chief Operating Officer shall be
the Chief Operating Officer of the Corporation, and shall have responsibility
for the various operational facilities and personnel and related support
services of the Corporation. In general, he shall perform all duties incident to
the office of Chief Operating Officer and such other duties as from time to time
may be assigned to him by the Board of Directors or the President.
SECTION 9. Vice President. Each Vice President shall have the powers and
perform the duties that the Board of Directors or the President may from time to
time prescribe.
SECTION 10. Treasurer. Subject to the provisions of any contract that may
be entered into with any custodian pursuant to authority granted by the Board of
Directors, the Treasurer shall have charge of all receipts and disbursements of
the Corporation and shall have or provide for the custody of the Corporation's
funds and securities; he shall have full authority to receive and give receipts
for all money due and payable to the Corporation, and to endorse checks, drafts
and warrants, in its name and on its behalf and to give full discharge for the
same; he shall deposit all funds of the Corporation, except those that may be
required for current use, in such banks or other places of deposit as the Board
of Directors may from time to time designate; and, in general, he shall perform
all duties incident to the office of Treasurer and such other duties as may from
time to time be assigned to him by the Board of Directors or the President.
SECTION 11. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the committees
of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the provisions
of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix
and attest the seal to all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him by the Board
of Directors or the President.
SECTION 12. Delegation of Duties. In case of the absence of any officer of
the Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board may confer for the time being the powers or duties, or any
of them, of such officer upon any other officer or upon any Director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the Corporation
shall be entitled upon specific written request to such person as may be
designated by the Corporation to have a certificate or certificates, in a form
approved by the Board, representing the number of shares of stock of the
Corporation
<PAGE>
owned by him; provided, however, that certificates for fractional shares will
not be delivered in any case. The certificates representing shares of stock
shall be signed by or in the name of the Corporation by the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and sealed with the seal of the Corporation. Any or all of
the signatures or the seal on the certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still in the office at the date of issue.
SECTION 2. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for the shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of the share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions and
to vote as the owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.
SECTION 3. Regulations. The Board of Directors may make any additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates for
shares of stock of the Corporation. It may appoint, or authorize any officer or
officers to appoint, one or more transfer agents or one or more transfer clerks
and one or more registrars and may require all certificates for shares of stock
to bear the signature or signatures of any of them.
SECTION 4. Stolen, Lost, Destroyed or Mutilated Certificates. The holder
of any certificate representing shares of stock of the Corporation shall
immediately notify the Corporation of its theft, loss, destruction or mutilation
and the Corporation may issue a new certificate of stock in the place of any
certificate issued by it that has been alleged to have been stolen, lost or
destroyed or that shall have been mutilated. The Board may, in its discretion,
require the owner (or his legal representative) of a stolen, lost, destroyed or
mutilated certificate to give to the Corporation a bond in a sum, limited or
unlimited, and in a form and with any surety or sureties, as the Board in its
absolute discretion shall determine, to indemnify the Corporation against any
claim that may be made against it on account of the alleged theft, loss or
destruction of any such certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board of Directors, in its absolute
discretion, may refuse to issue any such new certificate, except pursuant to
legal proceedings under the laws of the State of Maryland.
SECTION 5. Fixing of Record Date for Dividends, Distributions, etc. The
Board may fix, in advance, a date not more than 90 (ninety) days preceding the
date fixed for the payment of any dividend or the making of any distribution or
the allotment of rights to subscribe for securities of the Corporation, or for
the delivery of evidences of rights or evidences of interests arising out of any
change, conversion or exchange of common stock or other securities entitled to
receive any such dividend, distribution, allotment, rights or interests, and in
such case only the stockholders of record at the time so fixed shall be entitled
to receive such dividend, distribution, allotment, rights or interests.
<PAGE>
SECTION 6. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during the Corporation's usual
business hours the Corporations' By-Laws, minutes of the proceedings of its
stockholders, annual statements of its affairs and voting trust agreements on
file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person who was
or is a party or is threatened to be made a party in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is a current or former
Director or officer of the Corporation, or is or was serving while a Director or
officer of the Corporation at the request of the Corporation as a Director,
officer, partner, trustee, employee, agent or fiduciary of another corporation,
partnership, joint venture, trust, enterprise or employee benefit plan, shall be
indemnified by the Corporation against judgments, penalties, fines, excise
taxes, settlements and reasonable expenses (including attorneys' fees) actually
incurred by such person in connection with such action, suit or proceeding to
the full extent permissible under the Maryland General Corporation Law, the
Securities Act of 1933 and the Investment Company Act of 1940, as such statutes
are now or hereafter in force, except that such indemnity shall not protect any
such person against any liability to the Corporation or any stockholder thereof
to which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer of the
Corporation claiming indemnification within the scope of this Article V shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permissible under the Maryland General Corporation
Law, the Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force; provided, however, that the person
seeking indemnification shall provide to the Corporation a written affirmation
of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions are met: (1) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (2) the Corporation is insured against losses arising by reason of
the advance; or (3) a majority of a quorum of Directors of the Corporation who
are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to the proceeding
("disinterested non-party directors"), or independent legal counsel, in a
written opinion, shall determine, based on a review of facts readily available
to the Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
SECTION 3. Procedure. At the request of any current or former Director or
officer, or any employee or agent whom the Corporation proposes to indemnify,
the Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the Securities Act of 1933
and the Investment Company Act of 1940, as such statutes are now or hereafter in
force, whether
<PAGE>
the standards required by this Article V have been met; provided, however, that
indemnification shall be made only following: (1) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct or (2) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct, by (a) the vote of a majority of a quorum of disinterested
non-party Directors or (b) an independent legal counsel in a written opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and agents
who are not officers or Directors of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or agents, in accordance
with the procedures set forth in this Article V to the extent permissible under
the Investment Company Act of 1940, the Securities Act of 1933 and the Maryland
General Corporation Law, as such statutes are now or hereafter in force, and to
such further extent, consistent with the foregoing, as may be provided by action
of the Board of Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this Article V
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
Directors or otherwise, both as to action by a Director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a Director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
SECTION 6. Insurance. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or who, while a Director, officer,
employee or agent of the Corporation, is or was serving at the request of the
Corporation as a Director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, against any liability asserted against and incurred by
him in any such capacity, or arising out of his status as such.
SECTION 7. Constituent, Resulting or Surviving Corporations. For the
purposes of this Article V, references to the "Corporation" shall include all
constituent corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or was a Director
or officer of a constituent corporation or is or was serving at the request of a
constituent corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise shall stand
in the same position under this Article V with respect to the resulting or
surviving corporation as he would if he had served the resulting or surviving
corporation in the same capacity.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear the
name of the Corporation, the year of its incorporation, the words "Corporate
Seal" and "Maryland" and any emblem or device approved by the Board of
Directors. The seal may be used by causing it or a facsimile to be impressed or
affixed or in any other manner reproduced, or by placing the word "(seal)"
adjacent to the signature of the authorized officer of the Corporation.
<PAGE>
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of the
Board of Directors, subject to the requirements of the Investment Company Act of
1940, as amended.
Dated: May 11, 1994
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated _______ ___, 1994, between Gabelli
Gold Fund, Inc. (the "Company"), a Maryland corporation, and Gabelli Funds, Inc.
(the "Adviser"), a Delaware corporation.
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Company with respect to the investment of the assets
of the Company and to supervise and arrange the purchase and sale of assets held
in the Company's investment portfolio.
2. Duties and obligations of the Adviser with respect to investments of
assets of the Company
(a) Subject to the succeeding provisions of this paragraph and
subject to the direction and control of the Company's Board of Directors, the
Adviser shall (i) act as investment adviser for and supervise and manage the
investment and reinvestment of the Company's assets and in connection therewith
have complete discretion in purchasing and selling securities and other assets
for the Company and in voting, exercising consents and exercising all other
rights appertaining to such securities and other assets on behalf of the
Company; (ii) arrange for the purchase and sale of securities and other assets
held in the investment portfolio of the Company and (iii) oversee the
administration of all aspects of the Company's business and affairs and provide,
or arrange for others whom it believes to be competent to provide, certain
services as specified in subparagraph (b) below. Nothing contained herein shall
be construed to restrict the Company's right to hire its own employees or to
contract for administrative services to be performed by third parties, including
but not limited to, the calculation of the net asset value of the Company's
shares.
(b) The specific services to be provided or arranged for by the
Adviser for the Company are (i) maintaining the Company's books and records,
such as journals, ledger accounts and other records in accordance with
applicable laws and regulations to the extent not maintained by the Company's
custodian, transfer agent and dividend disbursing agent; (ii) transmitting
purchase and redemption orders for the Company's shares to the extent not
transmitted by the Company's distributor or others who purchase and redeem
shares; (iii) initiating all money transfers to the Company's custodian and from
the Company's custodian for the payment of the Company's expenses, investments,
dividends and share redemptions; (iv) reconciling account information and
balances among the Company's custodian, transfer agent, distributor, dividend
disbursing agent and the Adviser; (v) providing the Company, upon request, with
such office space and facilities, utilities and office equipment as are adequate
for the Company's needs; (vi) preparing, but not paying for, all reports by the
Company to its shareholders and all reports and filings required to maintain the
registration and qualification of the Company's shares under federal and state
law including periodic updating of the Company's registration statement and
Prospectus (including its Statement of Additional Information); (vii)
supervising the calculation of the net
<PAGE>
asset value of the Company's shares; and (viii) preparing notices and agendas
for meetings of the Company's shareholders and the Company's Board of Directors
as well as minutes of such meetings in all matters required by applicable law to
be acted upon by the Board of Directors.
(c) In the performance of its duties under this Agreement, the
Adviser shall at all times use all reasonable efforts to conform to, and act in
accordance with, any requirements imposed by (i) the provisions of the
Investment Company Act of 1940 (the "Act"), and of any rules or regulations in
force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of the Articles of Incorporation and By-Laws of the Company, as such
documents are amended from time to time; (iv) the investment objectives,
policies and restrictions applicable to the Company as set forth in the
Company's Registration Statement on Form N-1A and (v) any policies and
determinations of the Board of Directors of the Company.
(d) The Adviser will seek to provide qualified personnel to fulfill
its duties hereunder and will bear all costs and expenses (including any
overhead and personnel costs) incurred in connection with its duties hereunder
and shall bear the costs of any salaries or directors' fees of any officers or
directors of the Company who are affiliated persons (as defined in the Act) of
the Adviser. If in any fiscal year the Company's aggregate expenses (excluding
interest, taxes, distribution expenses, brokerage commissions and extraordinary
expenses) exceed the most restrictive expense limitation imposed by the
securities law of any state in which the shares of the Company are registered or
qualified for sale, the Adviser will reimburse the Company for the amount of
such excess up to the amount of fees accrued for such fiscal year hereunder. The
amount of such reimbursement shall be calculated monthly and an appropriate
amount shall be held back or released to the Adviser each month so that the
aggregate amount held back at any particular time shall equal the net amount of
the reimbursement on a cumulative year-to-date basis. As of the end of the year
the final amount of the total reimbursement shall be calculated and the
appropriate amount released to the Company or the Adviser or paid to the Company
by the Adviser. Subject to the foregoing, the Company shall be responsible for
the payment of all the Company's other expenses, including (i) payment of the
fees payable to the Adviser under paragraph 4 hereof; (ii) organizational
expenses; (iii) brokerage fees and commissions; (iv) taxes; (v) interest charges
on borrowings; (vi) the cost of liability insurance or fidelity bond coverage
for the Company's officers and employees, and directors' and officers' errors
and omissions insurance coverage; (vii) legal, auditing and accounting fees and
expenses; (viii) charges of the Company's custodian, transfer agent and dividend
disbursing agent; (ix) the dues, fees and charges of any trade association of
which the Company is a member; (x) the expenses of printing, preparing and
mailing proxies, stock certificates and reports, including the Company's
prospectuses and statements of additional information, and notices to
shareholders; (xi) filing fees for the registration or qualification of the
Company and its shares under federal or state securities laws; (xii) the fees
and expenses involved in registering and maintaining registration of the
Company's shares with the Securities and Exchange Commission; (xiii) the
expenses of holding shareholder meetings; (xiv) the compensation, including
fees, of any of the Company's directors, officers or employees who are not
affiliated persons of the Adviser; (xv) all expenses of computing the Company's
net asset value per share, including any equipment or services obtained solely
for the purpose of pricing shares or valuing the Company's investment portfolio;
(xvi) expenses of personnel performing shareholder servicing functions and all
other distribution expenses payable by the Company; and (xvii) litigation and
other extraordinary or non-recurring expenses and other expenses properly
payable by the Company.
(e) The Adviser shall give the Company the benefit of its best
judgment and effort in rendering services hereunder, but neither the Adviser nor
any of its officers, directors, employees, agents or
<PAGE>
controlling persons shall be liable for any act or omission or for any loss
sustained by the Company in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement; provided, however,
that the foregoing shall not constitute a waiver of any rights which the Company
may have which may not be waived under applicable law.
(f) Nothing in this Agreement shall prevent the Adviser or any
director, officer, employee or other affiliate thereof from acting as investment
adviser for any other person, firm or corporation, or from engaging in any other
lawful activity, and shall not in any way limit or restrict the Adviser or any
of its directors, officers, employees or agents from buying, selling or trading
any securities for its or their own accounts or for the accounts of others for
whom it or they may be acting.
3. Portfolio Transactions
In the course of the Adviser's execution of portfolio transactions for the
Company, it is agreed that the Adviser shall employ securities brokers and
dealers which, in its judgment, will be able to satisfy the policy of the
Company to seek the best execution of its portfolio transactions at reasonable
expenses. For purposes of this Agreement, "best execution" shall mean prompt,
efficient and reliable execution at the most favorable price obtainable. Under
such conditions as may be specified by the Company's Board of Directors in the
interest of its shareholders and to ensure compliance with applicable law and
regulations, the Adviser may (a) place orders for the purchase or sale of the
Company's portfolio securities with its affiliate, Gabelli & Company, Inc.; (b)
pay commissions to brokers other than its affiliate which are higher than might
be charged by another qualified broker to obtain brokerage and/or research
services considered by the Adviser to be useful or desirable in the performance
of its duties hereunder and for the investment management of other advisory
accounts over which it or its affiliates exercise investment discretion; and (c)
consider sales by brokers (other than its affiliate distributor) of shares of
the Company and any other mutual fund for which it or its affiliates act as
investment adviser, as a factor in its selection of brokers and dealers for the
Company's portfolio transactions.
4. Compensation of the Adviser
(a) Subject to paragraph 2(b), the Company agrees to pay to the
Adviser out of the Company's assets and the Adviser agrees to accept as full
compensation for all services rendered by or through the Adviser (other than any
amounts payable to the Adviser pursuant to paragraph 4(b)) a fee computed daily
and payable monthly in an amount equal on an annualized basis to 1.0% of the
Company's daily average net asset value. For any period less than a month during
which this Agreement is in effect, the fee shall be prorated according to the
proportion which such period bears to a full month of 28, 29, 30 or 31 days, as
the case may be.
(b) The Company will pay the Adviser separately for any costs and
expenses incurred by the Adviser in connection with distribution of the
Company's shares in accordance with the terms (including proration or nonpayment
as a result of allocations of payments) of a Plan of Distribution (the "Plan")
adopted for the Company pursuant to Rule 12b-1 under the Act as such Plan may be
in effect from time to time; provided, however, that no payments shall be due or
paid to the Adviser hereunder unless and until this Agreement shall have been
approved by Director Approval and Disinterested Director Approval (as such terms
are defined in such Plan). The Company reserves the right to modify or terminate
such Plan at any time as specified in the Plan and Rule 12b-1, and this
subparagraph shall thereupon be modified
<PAGE>
or terminated to the same extent without further action of the parties. The
persons authorized to direct the payment of the funds pursuant to this Agreement
and the Plan shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly a written report of the amount so
paid and the purposes for which such expenditures were made.
(c) For purposes of this Agreement, the net asset value of the
Company shall be calculated pursuant to the procedures adopted by resolutions of
the Directors of the Company for calculating the net asset value of the
Company's shares.
5. Indemnity
(a) The Company hereby agrees to indemnify the Adviser and each of
the Adviser's directors, officers, employees, and agents (including any
individual who serves at the Adviser's request as director, officer, partner,
trustee or the like of another corporation) and controlling persons (each such
person being an "indemnitee") against any liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees (all as provided in accordance with applicable
corporate law) reasonably incurred by such indemnitee in connection with the
defense or disposition of any action, suit or other proceeding, whether civil or
criminal, before any court or administrative or investigative body in which he
may be or may have been involved as a party or otherwise or with which he may be
or may have been threatened, while acting in any capacity set forth above in
this paragraph or thereafter by reason of his having acted in any such capacity,
except with respect to any matter as to which he shall have been adjudicated not
to have acted in good faith in the reasonable belief that his action was in the
best interests of the Company and furthermore, in the case of any criminal
proceeding, so long as he had no reasonable cause to believe that the conduct
was unlawful, provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Company or its shareholders or any
expense of such indemnitee arising by reason of (i) willful misfeasance, (ii)
bad faith, (iii) gross negligence or (iv) reckless disregard of the duties
involved in the conduct of his position (the conduct referred to in such clauses
(i) through (iv) being sometimes referred to herein as "disabling conduct"), (2)
as to any matter disposed of by settlement or a compromise payment by such
indemnitee, pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless there has
been a determination that such settlement or compromise is in the best interests
of the Company and that such indemnitee appears to have acted in good faith in
the reasonable belief that his action was in the best interests of the Company
and did not involve disabling conduct by such indemnitee and (3) with respect to
any action, suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such indemnitee was authorized by a majority
of the full Board of the Company. Notwithstanding the foregoing, the Company
shall not be obligated to provide any such indemnification to the extent such
provision would waive any right which the Company cannot lawfully waive.
(b) The Company shall make advance payments in connection with the
expenses of defending any action with respect to which indemnification might be
sought hereunder if the Company receives a written affirmation of the
indemnitee's good faith belief that the standard of conduct necessary for
indemnification has been met and a written undertaking to reimburse the Company
unless it is subsequently determined that he is entitled to such indemnification
and if the directors of the Company determine that the facts then known to them
would not preclude indemnification. In addition, at least one of the following
conditions must be met: (A) the indemnitee shall provide a security for his
undertaking, (B)
<PAGE>
the Company shall be insured against losses arising by reason of any lawful
advances, or (C) a majority of a quorum of directors of the Company who are
neither "interested persons" of the Company (as defined in Section 2(a)(19) of
the Act) nor parties to the proceeding ("Disinterested Non-Party Directors") or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(c) All determinations with respect to indemnification hereunder
shall be made (1) by a final decision on the merits by a court or other body
before whom the proceeding was brought that such indemnitee is not liable by
reason of disabling conduct, or (2) in the absence of such a decision, by (i) a
majority vote of a quorum of the Disinterested Non-Party Directors of the
Company, or (ii) if such a quorum is not obtainable or even, if obtainable, if a
majority vote of such quorum so directs, independent legal counsel in a written
opinion.
The rights accruing to any indemnitee under these provisions shall
not exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective on the date hereof and shall
continue in effect for a period of two years and thereafter from year to year,
but only so long as such continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser at any time without
penalty upon giving the Company sixty days written notice (which notice may be
waived by the Company) and may be terminated by the Company at any time without
penalty upon giving the Adviser sixty days notice (which notice may be waived by
the Adviser), provided that such termination by the Company shall be directed or
approved by the vote of a majority of the Directors of the Company in office at
the time or by the vote of the holders of a "majority of the voting securities"
(as defined in the Act) of the Company at the time outstanding and entitled to
vote or, with respect to paragraph 4(b), by a majority of the Directors of the
Company who are not "interested persons" of the Company and who have no direct
or indirect financial interest in the operation of the Plan or any agreements
related to the Plan. This Agreement shall terminate automatically in the event
of its assignment (as "assignment" is defined in the Act and the rules
thereunder.)
It is understood and hereby agreed that the word "Gabelli" is the property
of the Adviser for copyright and other purposes. The Company further agrees that
the word "Gabelli" in its name is derived from the name of Mario J. Gabelli and
such name may freely be used by the Adviser for other investment companies,
entities or products. The Company further agrees that, in the event that the
Adviser shall cease to act as investment adviser to the Company with respect to
the investment of assets of the Company, the Company shall promptly take all
necessary and appropriate action to change its name to a name which does not
include the word "Gabelli"; provided, however, that the Company may continue to
use the word "Gabelli" if the Adviser consents in writing to such use.
7. Notices
Any notice under this Agreement shall be in writing to the other party at
such address as the other party may designate from time to time for the receipt
of such notice and shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
<PAGE>
8. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York for contracts to be performed entirely therein and in accordance
with the applicable provisions of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, all as of the day
and the year first above written.
GABELLI GOLD FUND, INC.
By______________________________
Name: Bruce N. Alpert
Title: Vice President
GABELLI FUNDS, INC.
By______________________________
Name: Steven G. Bondi
Title: Vice President-Finance
Exhibit 6
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated __________, 1994, between Gabelli Gold Fund,
Inc., a Maryland corporation (the "Company"), and Gabelli & Company, Inc., a New
York corporation (the "Distributor"). The Company is registered as an investment
company under the Investment Company Act of 1940 (the "1940 Act"), and an
indefinite number of shares of the Company, par value $.001 per share (the
"Shares"), have been registered under the Securities Act of 1933 (the "1933
Act") to be offered for sale to the public in a continuous public offering in
accordance with terms and conditions set forth in the Prospectus and Statement
of Additional Information (the "Prospectus") of the Company included in the
Company's Registration Statement on Form N-1A as such documents may be amended
from time to time.
In this connection, the Company desires that the Distributor act as its
exclusive sales agent and distributor for the sale and distribution of Shares.
The Distributor has advised the Company that it is willing to act in such
capacities, and it is accordingly agreed between them as follows:
1. The Company hereby appoints the Distributor as exclusive sales agent
and distributor for the sale and distribution of Shares pursuant to the
aforesaid continuous public offering of Shares, and the Company further agrees
from and after the commencement of such continuous public offering that it will
not, without the Distributor's consent, sell or agree to sell any Shares
otherwise than through the Distributor, except the Company may issue Shares in
connection with a merger, consolidation or acquisition of assets on such basis
as may be authorized or permitted under the 1940 Act.
2. The Distributor hereby accepts such appointment and agrees to use its
best efforts to sell such Shares, provided, however, that when requested by the
Company at any time for any reason the Distributor will suspend such efforts.
The Company may also withdraw the offering of Shares at any time when required
by the provisions of any statute, order, rule or regulation of any governmental
body having jurisdiction. It is understood that the Distributor does not
undertake to sell all or any specific portion of the Shares.
3. The Distributor represents that it is a member in good standing of the
National Association of Securities Dealers, Inc. and agrees that it will use all
reasonable efforts to maintain such status and to abide by the Rules of Fair
Practice, the Constitution and the Bylaws of the National Association of
Securities Dealers, Inc., and all other rules and regulations that are now or
may become applicable to its performance hereunder. The Distributor will
undertake and discharge its obligations hereunder as an independent contractor
and it shall have no authority or power to obligate or bind the Company by its
actions, conduct or contracts except that it is authorized to accept orders for
the purchase or repurchase of Shares as the Company's agent and subject to its
approval. The Company reserves the right to reject any order in whole or in
part. The Distributor may appoint sub-agents or distribute through dealers or
otherwise as it may determine from time to time pursuant to agreements approved
by the Company, but this Agreement shall not be construed as authorizing any
dealer or other person to accept orders for sale or repurchase of Shares on
behalf of the Company or otherwise act as the Company's agent for any purpose.
The Distributor shall not utilize any materials in connection with the sale or
offering of Shares except the then current Prospectus and such other materials
as the Company shall provide or approve in writing.
<PAGE>
4. Shares may be sold by the Distributor only at prices and terms
described in the then current Prospectus relating to the Shares and may be sold
either through persons with whom it has selling agreements in a form approved by
the Company's Board of Directors or directly to prospective purchasers. To
facilitate sales, the Company will furnish the Distributor with the net asset
value of its Shares promptly after each calculation thereof.
5. The Company has delivered to the Distributor a copy of its current
Prospectus. It agrees that it will use its best efforts to continue the
effectiveness of its Registration Statement filed under the 1933 Act and the
1940 Act. The Company further agrees to prepare and file any amendments to its
Registration Statement as may be necessary and any supplemental data in order to
comply with such Acts. The Company will furnish the Distributor at the
Distributor's expense with a reasonable number of copies of the Prospectus and
any amended Prospectus for use in connection with the sale of Shares.
6. At the Distributor's request, the Company will take such steps at its
own expense as may be necessary and feasible to qualify Shares for sale in
states, territories or dependencies of the United States of America and in the
District of Columbia in accordance with the laws thereof, and to renew or extend
any such qualification; provided, however, that the Company shall not be
required to qualify Shares or to maintain the qualification of Shares in any
state, territory, dependency or district where it shall deem such qualification
disadvantageous to the Company.
7. The Distributor agrees that:
(a) It will furnish to the Company any pertinent information
required to be inserted with respect to the Distributor as exclusive sales agent
and distributor within the purview of Federal and state securities laws in any
reports or registrations required to be filed with any government authority;
(b) It will not make any representations inconsistent with the
information contained in the Registration Statement or Prospectus filed under
the Securities Act of 1933, as in effect from time to time;
(c) It will not use or distribute or authorize the use or
distribution of any statements other than those contained in the Company's then
current Prospectus or in such supplemental literature or advertising as may be
authorized in writing by the Company; and
(d) Subject to paragraph 9 below, the Distributor will bear the
costs and expenses of printing and distributing any copies of any prospectuses
and annual and interim reports of the Company (after such items have been
prepared and set in type) which are used in connection with the offering of
Shares, and the costs and expenses of preparing, printing and distributing any
other literature used by the Distributor or furnished by the Distributor for use
in connection with the offering of the Shares and the costs and expenses
incurred by the Distributor in advertising, promoting and selling Shares of the
Company to the public.
8. The Company will pay its legal and auditing expenses and the cost of
composition of any prospectuses and annual or interim reports of the Company.
9. The Company will pay the Distributor for costs and expenses incurred by
the Distributor in connection with distribution of Shares by the Distributor in
accordance with the terms of a Plan of Distribution (the "Plan") adopted by the
Company pursuant to Rule 12b-1 under the 1940 Act as such Plan may be in effect
from time to time; provided, however, that no payments shall be due or paid to
the Distributor hereunder unless and until this Agreement shall have been
approved by Director Approval and
<PAGE>
Disinterested Director Approval (as such terms are defined in such Plan). The
Company reserves the right to modify or terminate such Plan at any time as
specified in the Plan and Rule 12b-1, and this Section 9 shall thereupon be
modified or terminated to the same extent without further action of the parties.
The persons authorized to direct the payment of funds pursuant to this Agreement
and the Plan shall provide to the Company's Board of Directors, and the
Directors shall review, at least quarterly, a written report of the amounts so
paid and the purposes for which such expenditures were made.
10. The Company agrees to indemnify, defend and hold the Distributor, its
officers, directors, employees and agents and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act (each, an
"indemnitee"), free and harmless from any and all liabilities and expenses,
including costs of investigation or defense (including reasonable counsel fees)
incurred by such indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which such
indemnitee may be or may have been involved as a party or otherwise or with
which he may be or may have been threatened, while the Distributor was active in
such capacity or by reason of the Distributor having acted in any such capacity
or arising out of or based upon any untrue statement of a material fact
contained in the then-current Prospectus relating to the Shares or arising out
of or based upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Distributor to the Company expressly for use in any such
Prospectus; provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Company or its shareholders or any
expense of such indemnitee with respect to any matter as to which such
indemnitee shall have been adjudicated not to have acted in good faith in the
reasonable belief that its action was in the best interest of the Company or
arising by reason of such indemnitee's willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement ("disabling conduct"), or (2)
as to any matter disposed of by settlement or a compromise payment by such
indemnitee, no indemnification shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of the
Company and that such indemnitee appears to have acted in good faith in the
reasonable belief that its action was in the best interest of the Company and
did not involve disabling conduct by such indemnitee. Notwithstanding the
foregoing, the Company shall not be obligated to provide any such
indemnification to the extent such provision would waive any right which the
Company cannot lawfully waive.
The Distributor agrees to indemnify, defend and hold the Company, its
Directors, officers, employees and agents and any person who controls the
Company within the meaning of Section 15 of the 1933 Act (each, an
"indemnitee"), free and harmless from and against any and all liabilities and
expenses, including costs of investigation or defense (including reasonable
counsel fees) incurred by such indemnitee, but only to the extent that such
liability or expense shall arise out of or be based upon any untrue or alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor of the Company expressly for use in a Prospectus or
any alleged omission to state a material fact in connection with such
information required to be stated therein or necessary to make such information
not misleading or arising by reason of disabling conduct by such indemnitee or
any person selling Shares pursuant to an agreement with the Distributor.
<PAGE>
The Company shall make advance payments in connection with the expenses of
defending any action with respect to which indemnification might be sought
hereunder if the Company receives a written affirmation of the indemnitee's good
faith belief that the standard of conduct necessary for indemnification has been
met and a written undertaking to reimburse the Company unless it is subsequently
determined that he is entitled to such indemnification and if the directors of
the Company determine that the facts then known to them would not preclude
indemnification. In addition, at least one of the following conditions must be
met: (A) the indemnitee shall provide a security for his undertaking, (B) the
Company shall be insured against losses arising by reason of any lawful
advances, or (C) a majority of a quorum of directors of the Company who are
neither "interested persons" of the Company (as defined in Section 2(a)(19) of
the Act) nor parties to the proceeding ("Disinterested Non-Party Directors") or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
All determinations with respect to indemnification hereunder shall be made
(1) by a final decision on the merits by a court or other body before whom the
proceeding was brought that such indemnitee is not liable by reason of disabling
conduct, or (2) in the absence of such a decision, by (i) a majority vote of a
quorum of the Disinterested Non-Party Directors of the Company, or (ii) if such
a quorum is not obtainable or even, if obtainable, if a majority vote of such
quorum so directs, independent legal counsel in a written opinion.
11. This Agreement shall become effective on the date first set forth
above and shall remain in effect for up to two years from such date (one year in
the case of Section 9) and thereafter from year to year provided such
continuance is specifically approved at least annually prior to each anniversary
of such date by (a) Director Approval or by vote at a meeting of shareholders of
the Company of the lesser of (i) 67 per cent of the Shares present or
represented by proxy and (ii) 50 per cent of the outstanding Shares and (b) by
Disinterested Director Approval.
12. This Agreement may be terminated (a) by the Distributor at any time
without penalty by giving sixty (60) days' written notice to the Company which
notice may be waived by the Company; or (b) by the Company at any time without
penalty upon sixty (60) days' written notice to the Distributor (which notice
may be waived by the Distributor); provided, however, that any such termination
by the Company shall be directed or approved in the same manner as required for
continuance of this Agreement by Section 11(a) (or, in the case of termination
of Section 9, by Section 11(b)).
13. This Agreement may not be amended or changed except in writing signed
by each of the parties hereto and approved in the same manner as provided for
continuance of this Agreement in Section 11(a) (or, in the case of amendment of
Section 9, by Section 11(b)). Any such amendment or change shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors, but this Agreement shall not be assigned by either party and shall
automatically terminate upon assignment (as such term is defined in the 1940 Act
and the rules thereunder).
14. This Agreement shall be construed in accordance with the laws of the
State of New York applicable to agreements to be performed entirely therein and
in accordance with applicable provisions of the 1940 Act.
<PAGE>
15. If any provision of this Agreement shall be held or made invalid or
unenforceable by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
GABELLI GOLD FUND, INC.
By:______________________
Name:
Title:
GABELLI & COMPANY, INC.
By:______________________
Name:
Title:
Exhibit 10(a)
[letterhead of Willkie Farr & Gallagher]
June 23, 1994
Gabelli Gold Fund, Inc.
c/o Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580
Gentlemen:
We have acted as counsel to Gabelli Gold Fund, Inc. (the "Company"), a
corporation organized under the laws of the State of Maryland, in connection
with the preparation of a Registration Statement on Form N-1A (Securities Act
File No. 33-79180 and Investment Company Act File No. 811-8518) (as amended, the
"Registration Statement") relating to the offer and sale of an indefinite number
of shares of common stock of the Company, par value $.001 per share (the
"Shares").
We have examined copies of the Articles of Incorporation (the "Articles")
and Bylaws of the Company, the Registration Statement, all resolutions adopted
by the Company's Board of Directors (the "Board") and stockholder, consents of
the Board and other records and documents that we have deemed necessary for the
purpose of this opinion. We have also examined such other documents, papers,
statutes and authorities as we have deemed necessary to form a basis for the
opinion hereinafter expressed.
In our examination of material, we have assumed the genuineness of all
signatures and the conformity to original documents of all copies submitted to
us. As to various questions of fact material to our opinion, we have relied on
statements and certificates of officers and representatives of the Company and
others. As to matters governed by the laws of the State of Maryland, we have
relied on the opinion of Venable, Baetjer and Howard that is attached to this
opinion.
Based on the foregoing, we are of the opinion that: (1) the Company is
duly organized and validly existing as a corporation in good standing under the
laws of the State of Maryland; and (2) the Shares, up to the number of shares
authorized to be issued in the Articles, when duly sold, issued and paid for in
accordance with the terms of the Prospectus included as part of the Registration
Statement, will be validly and legally issued and will be fully paid and
nonassessable.
We are members of the Bar of the State of New York only and do not opine
as to the laws of any jurisdiction other than the laws of the State of New York
and the laws of the United States, and the opinion set forth above is,
accordingly, limited to the laws of those jurisdictions.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the Prospectus included as
part of the Registration Statement.
Very truly yours,
/s/ Willkie Farr & Gallagher
[letterhead of Venable, Baetjer and Howard]
June 23, 1994
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Re: Gabelli Gold Fund, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Gabelli Gold Fund, Inc., a
Maryland corporation (the "Fund"), in connection with the organization of the
Fund and the issuance of shares of its common stock, par value $.001 per share
(the "Common Stock").
As Maryland counsel for the Fund, we are familiar with its Charter and
Bylaws. We have examined the prospectus included in its Registration Statement
on Form N-1A, Security Act File No. 33-79180 and Investment Company Act File No.
811-8518 (the "Registration Statement"), substantially in the form in which it
is to become effective (the "Prospectus"). We have further examined and relied
upon a certificate of the Maryland State Department of Assessments and Taxation
to the effect that the Fund is duly incorporated and existing under the laws of
the State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records of the Fund
and other documents and certificates with respect to factual matters as we have
deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion and so advise you that:
1. The Fund is duly organized and validly existing as a corporation in
good standing under the laws of the State of Maryland.
2. The 10,000 presently issued and outstanding shares of Common Stock
of the Fund have been validly and legally issued and are fully paid
and nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Prospectus are, to the extent of the number of
shares authorized to be issued by the Fund in its Articles of
Incorporation, duly authorized and, when sold, issued and paid for
as contemplated by the Prospectus, will have been validly and
legally issued and will be fully paid and nonassessable.
<PAGE>
This letter expresses our opinion with respect to the Maryland General
Corporation Law governing matters such as due organization and the authorization
and issuance of stock. It does not extend to the securities or "Blue Sky" laws
of Maryland, to federal securities laws or to other laws.
You may rely on this opinion in rendering your opinion to the Fund which
is to be filed as an exhibit to the Registration Statement. We consent to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the captions "Financial
Highlights" and "Counsel and Independent Auditors" and to the use of our report
date January 24, 1996 in this Registration Statement (Form N-1A No. 33-79180) of
the Gabelli Gold Fund, Inc.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
New York, New York
April 26, 1996
Exhibit 13
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580
June 15, 1994
Gabelli Gold Fund, Inc.
One Corporate Center
Rye, New York 10580
Gentlemen:
Gabelli Funds, Inc. (the "Adviser") hereby offers and aggrees to purchase
10,000 shares (the "Shares") of the common stock, par value $.001 per share, of
Gabelli Gold Fund, Inc. (the "Company") at a price of $10 per share for an
aggregate purchase price of $100,000. The Adviser acknowledges that the Shares
are being purchased for the Adviser's own account and for investment purposes
only and will be sold only pursuant to a registration statement declared
effective under the Securities Act of 1933, as amended, or an exemption
therefrom.
The Adviser further agrees that if any Shares are redeemed by any holder
thereof prior to amortization of the organization costs of the Company, the
proceeds of such redemption will be reduced by any unamortized organizational
costs in the same proportion as the number of Shares being redeemed bears to the
number of Shares outstanding at the time of redemption.
Sincerely,
GABELLI FUNDS, INC.
By /s/Stephen G. Bondi
---------------------------
Stephen G. Bondi,
Vice President - Finance
Gabelli Gold Fund, Inc. hereby accepts the Adviser's offer to purchase the
Shares.
By /s/Bruce N. Alpert
---------------------
Bruce N. Alpert,
Vice President
Exhibit 15
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
FOR
GABELLI GOLD FUND, INC.
Gabelli Gold Fund, Inc. (the "Company") intends to engage in business as
an open-end management investment company registered as such under the
Investment Company Act of 1940 (the "Act"). The Company intends to employ
Gabelli & Company, Inc. and/or others as the principal underwriter and
distributor (the "Distributor") of the shares of the Company pursuant to a
written distribution agreement and desires to adopt a plan of distribution
pursuant to Rule 12b-1 under the Act to assist in the distribution of shares of
the Company.
The Board of Directors (the "Board") of the Company having determined that
a plan of distribution containing the terms set forth herein is reasonably
likely to benefit the Company and its shareholders, the Company hereby adopts a
plan of distribution (the "Plan") pursuant to Rule 12b-1 under the Act on the
following terms and conditions:
1. The Company is hereby authorized to pay as distribution payments
("Payments") in connection with the distribution of shares of the Company an
aggregate amount at a rate determined from time to time by the Board not in
excess of 0.25% per year of the average daily net assets of the Company. Such
Payments shall be accrued daily and paid monthly in arrears or shall be accrued
and paid at such other intervals as the Board shall determine. If qualifying
expenses are submitted in excess of the amount specified above, the Board shall
determine by Disinterested Director Approval (as defined below) the manner in
which Payments shall be prorated or allocated.
2. Payments may be made by the Company under this Plan for the purpose of
financing or assisting in the financing of any activity which is primarily
intended to result in the sale of shares of the Company. The scope of the
foregoing shall be interpreted by the Board, whose decision shall be conclusive
except to the extent it contravenes established legal authority. Without in any
way limiting the discretion of the Board, the following activities are hereby
declared to be primarily intended to result in the sale of shares of the
Company: advertising the Company or the Company's investment advisor's mutual
fund activities; compensating underwriters, dealers, brokers, banks and other
selling entities and sales and marketing personnel of any of them for sales of
shares of the Company, whether in a lump sum or on a continuous, periodic,
contingent, deferred or other basis; compensating underwriters, dealers,
brokers, banks and other servicing entities and servicing personnel (including
the Company's investment advisor and its personnel) of any of them for providing
services to shareholders of the Company relating to their investment in the
Company, including assistance in connection with inquiries relating to
shareholder accounts; the production and dissemination of prospectuses
(including statements of additional information) of the Company and the
preparation, production and dissemination of sales, marketing and shareholder
servicing materials; and the ordinary or capital expenses, such as equipment,
rent, fixtures, salaries, bonuses, reporting and recordkeeping and third party
consultancy or similar expenses relating to any activity for which Payment is
authorized by the Board; and the financing of any activity for which Payment is
authorized by the Board.
3. If the Board so authorizes by Board Approval and Disinterested Director
Approval, the Company may make Payments under and within the limitations of this
Plan in a subsequent year with respect to activities which occurred in a prior
year and for which Payments were not previously made.
<PAGE>
4. The Company is hereby authorized and directed to enter into appropriate
written agreements with the Distributor and each other person to whom the
Company intends to make any Payment, and the Distributor is hereby authorized
and directed to enter into appropriate written agreements with each person to
whom the Distributor intends to make any payments in the nature of a Payment.
The foregoing requirement is not intended to apply to any agreement or
arrangement with respect to which the party to whom Payment is to be made does
not have the purpose set forth in Section 2 above (such as the printer in the
case of the printing of a prospectus or a newspaper in the case of an
advertisement) unless the Board determines that such an agreement or arrangement
should be treated as a "related" agreement for purposes of Rule 12b-1 under the
Act.
5. Each agreement required to be in writing by Section 4 must contain the
provisions required by Rule 12b-1 under the Act and must be approved by a
majority of the Board ("Board Approval") and by a majority of the directors
("Disinterested Director Approval") who are not interested persons of the
Company and have no direct or indirect financial interest in the operation of
the Plan or any such agreement, by vote case in person at a meeting called for
the purposes of voting on such agreement.
6. The officers, investment adviser or distributor of the Company, as
appropriate, shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
the purposes for which such Payments were made.
7. To the extent any activity is covered by Section 2 and is also an
activity which the Company may pay for without regard to the existence or terms
and conditions of a plan of distribution under Rule 12b-1 of the Act, this Plan
shall not be construed to prevent or restrict the Company from paying such
amounts outside of this Plan and without limitation hereby and without such
payments being included in calculation of Payments subject to the limitation set
forth in Section 1.
8. This Plan shall not take effect until it has been approved by a vote of
at least a majority of the outstanding voting securities of the Company. This
Plan may not be amended in any material respect without Board Approval and
Disinterested Director Approval and may not be amended to increase the maximum
level of Payments permitted hereunder without such approvals and further
approval by a vote of at least a majority of the outstanding voting securities
of the Company. This Plan may continue in effect for longer than one year after
its approval by the shareholders of the Company only as long as such continuance
is specifically approved at least annually by Board Approval and by
Disinterested Director Approval.
9. This Plan may be terminated at any time by a vote of the directors who
are not interested persons of the Company and have no direct or indirect
financial interest in the operation of the Plan or any agreement hereunder, cast
in person at a meeting called for the purposes of voting on such termination, or
by a vote of at least a majority of the outstanding voting securities of the
Company.
10. For purposes of this Plan the terms "interested person" and "related
agreement" shall have the meanings ascribed to them in the Act and the rules
adopted by the Securities and Exchange Commission thereunder and the term "vote
of a majority of the outstanding voting securities" of the Company shall mean
the vote, at the annual or a special meeting of the security holders of the
Company duly called, (a) of 67% or more of the voting securities present at such
meeting, if the holders of more than 50% of the outstanding voting securities of
the Company are present or represented by proxy or, if less (b) more than 50% of
the outstanding voting securities of the Company.
Gabelli Gold
------------
T=((ERV)/P)^(1/n)-1x100
T=((1,400/1,000)^(1/(365/629))-1)x100
T=((1.4)^(1/.5803)-1)x100
T=(1.2156-1)x100
T=21.6%
Exhibit 24(a)
POWER OF ATTORNEY
We, the undersigned, hereby severally constitute and appoint Mario J.
Gabelli, Bruce N. Alpert and J. Hamilton Crawford, Jr., and each of them singly,
true and lawful attorneys, with full power to them and each of them, to sign for
us, and in our hands and in the capacities indicated below, any and all
Registration Statements on Form N-1A of Gabelli Gold Fund, Inc., and any and all
amendments thereto, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them acting alone, full authority and power to do and perform each and every act
and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.
WITNESS our hands as of the date set forth below:
Signature Title Date
--------- ----- ----
/s/ Mario J. Gabelli Chairman of the Board June 23, 1994
- ---------------------
Mario J. Gabelli
/s/ Anthony Colavita
- --------------------- Director June 23, 1994
Anthony Colavita
/s/ E. Val Cerutti
- --------------------- Director June 23, 1994
E. Val Cerutti
- --------------------- Director June __, 1994
Karl Otto Pohl
/s/ Werner Roeder
- --------------------- Director June 23, 1994
Werner Roeder
- --------------------- Director June __, 1994
Anthonie Van Ekris
<PAGE>
POWER OF ATTORNEY
We, the undersigned, hereby severally constitute and appoint Mario J.
Gabelli, Bruce N. Alpert and J. Hamilton Crawford, Jr., and each of them singly,
true and lawful attorneys, with full power to them and each of them, to sign for
us, and in our hands and in the capacities indicated below, any and all
Registration Statements on Form N-1A of Gabelli Gold Fund, Inc., and any and all
amendments thereto, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them acting alone, full authority and power to do and perform each and every act
and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.
WITNESS our hands as of the date set forth below:
Signature Title Date
--------- ----- ----
* Chairman of the Board June __, 1994
- ---------------------
Mario J. Gabelli
*
- --------------------- Director June __, 1994
Anthony Colavita
*
- --------------------- Director June 23, 1994
E. Val Cerutti
*
- --------------------- Director June __, 1994
Karl Otto Pohl
*
- --------------------- Director June __, 1994
Werner Roeder
*
- --------------------- Director June __, 1994
Anthonie Van Ekris
Exhibit 24(b)
POWER OF ATTORNEY
We, the undersigned, hereby severally constitute and appoint Mario J.
Gabelli, Bruce N. Alpert and J. Hamilton Crawford, Jr., and each of them singly,
true and lawful attorneys, with full power to them and each of them, to sign for
us, and in our hands and in the capacities indicated below, any and all
Registration Statements on Form N-1A of Gabelli Gold Fund, Inc., and any and all
amendments thereto, and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them acting alone, full authority and power to do and perform each and every act
and thing requisite or necessary to be done in the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys or any of them may lawfully do or cause to be
done by virtue thereof.
WITNESS our hands as of the date set forth below:
Signature Title Date
--------- ----- ----
/s/ Daniel E. Zucchi
- --------------------- Director January 30, 1995
Daniel E. Zucchi
- --------------------- Director __________, 1995
Karl Otto Pohl
- --------------------- Director __________, 1995
Anthonie Van Ekris
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> GABELLI GOLD FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 13856
<INVESTMENTS-AT-VALUE> 14546
<RECEIVABLES> 32
<ASSETS-OTHER> 65
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14643
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 133
<TOTAL-LIABILITIES> 133
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14125
<SHARES-COMMON-STOCK> 1272
<SHARES-COMMON-PRIOR> 1594
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (306)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 691
<NET-ASSETS> 14510
<DIVIDEND-INCOME> 148
<INTEREST-INCOME> 48
<OTHER-INCOME> 0
<EXPENSES-NET> 392
<NET-INVESTMENT-INCOME> (196)
<REALIZED-GAINS-CURRENT> (299)
<APPREC-INCREASE-CURRENT> 704
<NET-CHANGE-FROM-OPS> 209
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2242
<NUMBER-OF-SHARES-REDEEMED> 2563
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3124
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 174
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 392
<AVERAGE-NET-ASSETS> 17399
<PER-SHARE-NAV-BEGIN> 11.07
<PER-SHARE-NII> (.15)
<PER-SHARE-GAIN-APPREC> .49
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.41
<EXPENSE-RATIO> .023
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
