As filed with the Securities and Exchange Commission on April 28, 2000
Securities Act File No. 33-79180
Investment Company Act File No. 811-08518
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. 8 X
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 9 X
GABELLI GOLD FUND, INC.
(Exact Name of Registrant as Specified in Charter)
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 1- 800-422-3554
Bruce N. Alpert
Gabelli Funds, LLC
One Corporate Center,
RYE, NEW YORK 10580-1434
(Name and Address of Agent for Service)
Copies to:
James E. McKee, Esq. Daniel Schloendorn, Esq.
Gabelli Gold Fund, Inc. Willkie Farr & Gallagher
One Corporate Center 787 Seventh Avenue
Rye, New York 10580-1434 New York, New York 10019-6099
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b); or
X on May 1, 2000 pursuant to paragraph (b); or
60 days after filing pursuant to paragraph (a)(1); or on
[____] pursuant to paragraph (a)(1); or 75 days after filing
pursuant to paragraph (a)(2); or on [____] pursuant to
paragraph (a)(2) of Rule 485
If appropriate, check the following box:
This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
GABELLI
GOLD
FUND, INC.
CLASS AAA SHARES
PROSPECTUS
MAY 1, 2000
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
SHARES DESCRIBED IN THIS PROSPECTUS OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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INVESTMENT AND PERFORMANCE SUMMARY
INVESTMENT OBJECTIVE:
Gabelli Gold Fund, Inc. (the "Fund") seeks to provide investors with long-term
appreciation of capital.
PRINCIPAL INVESTMENT STRATEGIES:
The Fund invests primarily in equity securities of foreign and domestic issuers
principally engaged in gold-related activities. The Fund seeks to achieve its
objective by focusing on stocks that are undervalued but have favorable
prospects for growth. The Fund concentrates its investments in gold-related
industries.
PRINCIPAL RISKS:
The Fund's share price will fluctuate with changes in the market value of the
Fund's portfolio securities. Stocks are subject to market, economic and business
risks that cause their prices to fluctuate. Securities of companies involved in
gold-related industries are considered speculative and the prices of these
securities may experience greater volatility than companies not involved in this
industry. Because of the concentration in gold-related securities, the Fund may
experience greater volatility than a broader based fund. When you sell Fund
shares, they may be worth less than what you paid for them. Consequently, you
can lose money by investing in the Fund. In addition, foreign securities,
particularly those in emerging markets, are subject to currency, information and
political risks. The Fund is also subject to the risk that the judgment of the
Fund's investment adviser, Gabelli Funds, LLC (the "Adviser"), about the growth
potential of particular stocks is incorrect.
WHO MAY WANT TO INVEST:
The Fund's Class AAA Shares offered herein are offered only to investors who
acquire them directly through Gabelli & Company, Inc., the Fund's distributor
(the "Distributor"), or through a select number of financial intermediaries with
whom the Distributor has entered into selling agreements specifically
authorizing them to offer Class AAA Shares.
Consider investing in the Fund if you:
o are seeking a long-term goal such as retirement
o are looking to add an aggressive growth component to your portfolio
o are willing to accept higher risks of investing in a sector of the stock
market in exchange for long-term returns
The Fund will not be appropriate for anyone:
o seeking monthly income
o pursuing a short-term goal or investing emergency reserves
o seeking safety of principal
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PERFORMANCE
The bar chart and table shown below provide an indication of the risks of
investing in the Fund by showing changes in the Fund's performance from year to
year (since 1995), and by showing how the Fund's average annual returns for one
year, five years and the life of the Fund compare to those of (i) the
Philadelphia Gold 7 Silver Index, a widely recognized unmanaged index composed
of precious metals-related common stocks and (ii) the Lipper Gold Fund Average
which represents an unmanaged index composed of gold-related mutual funds, as
tracked by Lipper, Inc. As with all mutual funds, the Fund's past performance
does not predict how the Fund will perform in the future. Both the chart and the
table assume reinvestment of dividends and distributions.
GABELLI GOLD FUND, INC.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1995 3.1%
1996 8.0%
1997 (51.9)%
1998 (3.6)%
1999 10.1%
During the periods shown in the bar chart, the highest return for a quarter was
22.70% (quarter ended March 31, 1996) and the lowest return for a quarter was
(35.35)% (quarter ended December 31, 1997).
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS SINCE JULY 11,
(FOR THE PERIODS ENDED DECEMBER 31, 1999) PAST ONE YEAR PAST FIVE YEARS 1994*
- ------------------------------------------------ -------------- --------------- -------------
<S> <C> <C> <C>
Gabelli Gold Fund, Inc. ...................... 10.07% (10.69)% (8.11)%
Philadelphia Gold & Silver Index ............. 6.47% (8.10)% (8.12)%
Lipper Gold Fund Average ..................... 3.63% (11.11)% (10.56)&
<FN>
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* Commencement of operations.
</FN>
</TABLE>
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FEES AND EXPENSES OF THE FUND:
This table describes the fees and expenses that you may pay if you buy and hold
Class AAA Shares of the Fund.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets):
Management Fees ................................................ 1.00%
Distribution (Rule 12b-1) Expenses ............................. 0.25%
Other Expenses ................................................. 1.13%
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Total Annual Fund Operating Expenses ........................... 2.38%
====
EXPENSE EXAMPLE:
This example is intended to help you compare the cost of investing in Class AAA
Shares of the Fund with the cost of investing in other mutual funds. The example
assumes (1) you invest $10,000 in the Fund for the time periods shown, (2) you
redeem your shares at the end of those periods, (3) your investment has a 5%
return each year and (4) the Fund's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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$241 $742 $1,270 $2,716
INVESTMENT AND RISK INFORMATION
The Fund seeks long-term capital appreciation. To achieve its investment
objective, the Fund invests primarily in the equity securities of foreign and
domestic issuers principally engaged in gold-related activities.
The Fund provides 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. Because gold (a tangible asset) has not always moved in close correlation
with financial assets, an investment in the Fund would 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 the equity securities of companies principally engaged in the
exploration, mining, fabrication, processing, distribution or trading of gold or
the financing, managing, controlling or operating of companies engaged in
"gold-related" activities. A company is principally engaged in gold-related
activities if it derives more than 50% of its income or devotes 50% or more of
its assets to those 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. Equity securities include common and
preferred stocks, securities convertible into common stocks, and securities such
as rights and warrants that have common stock characteristics.
In selecting investments for the Fund, the Adviser focuses on stocks that are
undervalued, but which appear to have favorable prospects for growth. Factors
considered in this determination include capitalization per ounce of production,
capitalization per ounce of recoverable reserves, quality of management and its
ability to create shareholder wealth.
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, including those located in developed as well as
emerging markets. The percentage of Fund assets invested in particular countries
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or regions will change from time to time based on the Adviser's judgment. Among
other things, the Adviser will consider the economic stability and economic
outlook of these countries and regions.
The Fund may also use the following investment technique:
o DEFENSIVE INVESTMENTS. When adverse market or economic conditions occur,
the Fund may temporarily invest all or a portion of its assets in
defensive investments. Such investments include short-term fixed income
securities or money market instruments. When following a defensive
strategy, the Fund will be less likely to achieve its investment goal.
Investing in the Fund involves the following risks:
o MARKET RISK. The principal risk of investing in the Fund is market risk.
Market risk is the risk that the prices of the securities held by the
Fund will change due to general market and economic conditions,
perceptions regarding the industries in which the companies issuing the
securities participate and the issuer company's particular
circumstances. These fluctuations may cause a security to be worth less
than it was worth at an earlier time.
o FUND AND MANAGEMENT RISK. The Fund invests in stocks issued by companies
believed by the Adviser to be undervalued but which have favorable
prospects for growth. The Fund's share price may decline if the market
favors other types of stocks. If the Adviser is incorrect in its
assessment of the growth prospects of the securities it holds, then the
value of the Fund's shares may decline.
o FOREIGN SECURITIES RISK. A fund that invests outside the U.S. carries
additional risks that include:
o CURRENCY RISK. Fluctuations in exchange rates between the U.S.
dollar and foreign currencies may negatively affect an
investment. Adverse changes in exchange rates may erode or
reverse any gains produced by foreign-currency denominated
investments and may widen any losses. The Fund may, but is not
required to, seek to reduce currency risk by hedging part or all
of its exposure to various foreign currencies.
o INFORMATION RISK. Key information about an issuer, security or
market may be inaccurate or unavailable.
o POLITICAL RISK. Foreign governments may expropriate assets,
impose capital or currency controls, impose punitive taxes or
nationalize a company or industry. Any of these actions could
have a severe effect on security prices and impair the Fund's
ability to bring its capital or income back to the U.S. Other
political risks include economic policy changes, social and
political instability, military action and war.
o ACCESS RISK. The risk that some countries may restrict the
Fund's access to investments or offer terms that are less
advantageous than those for local investors. This could limit
the attractive investment opportunities available to the Fund.
o GOLD RELATED RISKS. The risk that the stock prices of companies involved
in precious metals-related industries will experience greater volatility
than companies not involved in the precious metals industry. Investments
related to gold and other precious metals and minerals are considered
speculative and are affected by a variety of worldwide 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.
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o CONCENTRATION RISKS. Because the Fund will invest more than 25% of its
total assets in securities of companies involved in gold-related or
precious metals-related activities, the Fund may be subject to greater
volatility with respect to its portfolio securities than a fund that is
more broadly diversified.
o EMERGING MARKETS RISK. Investing in emerging (less developed) markets
involves higher levels of risk, including increased currency,
information, liquidity, market, political and valuation risks.
Deficiencies in regulatory oversight, market infrastructure, shareholder
protections and company laws could expose the Fund to operational and
other risks as well. Additionally, emerging markets often face serious
economic problems (such as high external debt, inflation and
unemployment) that could subject the Fund to increased volatility or
substantial declines in value. The typically small size of these markets
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 securities held by the Fund.
MANAGEMENT OF THE FUND
THE ADVISER. Gabelli Funds, LLC, with principal offices located at One Corporate
Center, Rye, New York 10580-1434, serves as investment adviser to the Fund. The
Adviser makes investment decisions for the Fund and continuously reviews and
administers the Fund's investment program under the supervision of the Fund's
Board of Directors. The Adviser also manages several other open-end and
closed-end investment companies in the Gabelli family of funds. The Adviser is a
New York limited liability company organized in 1999 as successor to Gabelli
Group Capital Partners, Inc. (formerly named Gabelli Funds, Inc.), a New York
corporation organized in 1980. The Adviser is a wholly-owned subsidiary of
Gabelli Asset Management Inc. ("GAMI"), a publicly held company listed on the
New York Stock Exchange ("NYSE").
As compensation for its services and the related expenses borne by the Adviser,
the Fund pays the Adviser a fee equal to 1.00% of the value of the Fund's
average daily net assets.
THE PORTFOLIO MANAGER. Mr. Caesar M.P. Bryan is primarily responsible for the
day-to-day management of the Fund. Mr. Bryan has been a Senior Vice President
and Portfolio Manager with GAMCO Investors, Inc., a wholly-owned subsidiary of
GAMI, Portfolio Manager of the Gabelli International Growth Fund, Inc. since
June 1995 and Co-Portfolio Manager of The Gabelli Global Opportunity Fund since
May 1998. Mr. Bryan served as Senior Vice President of Lexington Management
Corporation from 1986 until May 1994.
RULE 12B-1 PLAN. The Fund has adopted a plan under Rule 12b-1 (the "Plan") which
authorizes payments by the Fund on an annual basis of 0.25% of the Fund's
average daily net assets attributable to the Fund's Class AAA Shares to finance
distribution of the Fund's Class AAA Shares. The Fund may make payments under
the Plan for the purpose of financing any activity primarily intended to result
in the sales of Class AAA Shares of the Fund. To the extent any activity is one
that the Fund may finance without a distribution plan, the Fund may also make
payments to compensate such activity outside of the Plan and not be subject to
its limitations. Because payments under the Plan are paid out of the Fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. Due
to the payment of 12b-1 fees, long-term shareholders may indirectly pay more
than the equivalent of the maximum permitted front-end sales charge.
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PURCHASE OF SHARES
You can purchase the Fund's shares on any day the NYSE is open for trading (a
"Business Day"). You may purchase shares directly through the Distributor,
directly from the Fund through the Fund's transfer agent or through registered
broker-dealers that have entered into selling agreements with the Distributor.
o BY MAIL OR IN PERSON. You may open an account by mailing a completed
subscription order form with a check or money order payable to "Gabelli
Gold Fund, Inc." to:
BY MAIL BY PERSONAL DELIVERY
------- --------------------
THE GABELLI FUNDS THE GABELLI FUNDS
P.O. BOX 8308 C/O BFDS
BOSTON, MA 02266-8308 66 BROOKS DRIVE
BRAINTREE, MA 02184
You can obtain a subscription order form by calling 1-800-GABELLI
(1-800-422-3554). Checks made payable to a third party and endorsed by the
depositor are not acceptable. For additional investments, send a check to the
above address with a note stating your exact name and account number, the name
of the Fund and class of shares you wish to purchase.
o BY BANK WIRE. To open an account using the bank wire transfer system,
first telephone the Fund at 1-800-GABELLI (1-800-422-3554) to obtain a
new account number. Then instruct a Federal Reserve System member bank
to wire funds to:
STATE STREET BANK AND TRUST COMPANY
[ABA #011-0000-28 REF DDA #99046187]
RE: GABELLI GOLD FUND, INC.
ACCOUNT #__________
ACCOUNT OF [REGISTERED OWNERS]
225 FRANKLIN STREET, BOSTON, MA 02110
If you are making an initial purchase, you should also complete and mail a
subscription order form to the address shown under "By Mail." Note that
banks may charge fees for wiring funds, although State Street Bank and
Trust Company ("State Street") will not charge you for receiving wire
transfers.
SHARE PRICE. The Fund sells its Class AAA Shares at the net asset value next
determined after the Fund receives your completed subscription order form and
your payment. See "Pricing of Fund Shares" for a description of the calculation
of net asset value.
MINIMUM INVESTMENTS. Your minimum initial investment must be at least $1,000.
See "Retirement Plans" and "Automatic Investment Plan" regarding minimum
investment amounts applicable to such plans. There is no minimum for subsequent
investments. Broker-dealers may have different minimum investment requirements.
RETIREMENT PLANS. The Fund has available a form of IRA, "Roth" IRA and Education
IRA for investment in Fund shares that may be obtained from the Distributor by
calling 1-800-GABELLI (1-800-422-3554). Self-employed investors may purchase
shares of the Fund through tax-deductible contributions to existing retirement
plans for self-employed persons, known as "Keogh" or "H.R.-10" plans. The Fund
does not currently act as a sponsor to such plans. Fund shares may also be a
suitable investment for other types of qualified pension or profit-sharing plans
which are employer sponsored, including deferred compensation or salary
reduction plans known as "401(k) Plans." The minimum initial investment in all
such retirement plans is $250. There is no minimum subsequent investment
requirement for retirement plans.
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AUTOMATIC INVESTMENT PLAN. The Fund offers an automatic monthly investment plan.
There is no minimum monthly investment for accounts establishing an automatic
investment plan. Call the Distributor at 1-800-GABELLI (1-800-422-3554) for more
details about the plan.
TELEPHONE OR INTERNET INVESTMENT PLAN. You may purchase additional shares of the
Fund by telephone and/or over the Internet if your bank is a member of the
Automated Clearing House ("ACH") system. You must also have a completed,
approved Investment Plan application on file with the Fund's Transfer Agent.
There is a minimum of $100 for each telephone or Internet investment. To
initiate an ACH purchase, please call 1-800-GABELLI (1-800-422-3554) or
1-800-872-5365 or visit our website @ www.gabelli.com.
GENERAL. State Street will not issue share certificates unless requested by you.
The Fund reserves the right to (i) reject any purchase order if, in the opinion
of the Fund's management, it is in the Fund's best interest to do so, (ii)
suspend the offering of shares for any period of time and (iii) waive the Fund's
minimum purchase requirement.
REDEMPTION OF SHARES
You can redeem shares of the Fund on any Business Day without a redemption fee.
The Fund may temporarily stop redeeming its shares when the NYSE is closed or
trading on the NYSE is restricted, when an emergency exists and the Fund cannot
sell its shares or accurately determine the value of its assets, or if the
Securities and Exchange Commission ("SEC") orders the Fund to suspend
redemptions.
The Fund redeems its shares at the net asset value next determined after the
Fund receives your redemption request. See "Pricing of Fund Shares" for a
description of the calculation of net asset value.
You may redeem shares through the Distributor or directly from the Fund through
the Fund's transfer agent.
o BY LETTER. You may mail a letter requesting redemption of shares to: THE
GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should
state the name of the Fund and the share class, the dollar amount or
number of shares you wish to redeem and your account number. You must
sign the letter in exactly the same way the account is registered and if
there is more than one owner of shares, all must sign. A signature
guarantee is required for each signature on your redemption letter. You
can obtain a signature guarantee from financial institutions such as
commercial banks, brokers, dealers and savings associations. A notary
public cannot provide a signature guarantee.
o BY TELEPHONE OR THE INTERNET. You may redeem your shares in an account
directly registered with State Street by calling either 1-800-GABELLI
(1-800-422-3554) or 1-800-872-5365 (617-328-5000 from outside the United
States) or visiting our website at www.gabelli.com, subject to a $25,000
limitation. YOU MAY NOT REDEEM SHARES HELD THROUGH AN IRA BY TELEPHONE
OR THE INTERNET. If State Street properly acts on telephone or Internet
instructions and follows reasonable procedures to protect against
unauthorized transactions, neither State Street nor the Fund will be
responsible for any losses due to telephone or Internet transactions.
You may be responsible for any fraudulent telephone or Internet order as
long as State Street or the Fund takes reasonable measures to verify the
order. You may request that redemption proceeds be mailed to you by
check (if your address has not changed in the prior 30 days), forwarded
to you by bank wire or invested in another mutual fund advised by the
Adviser (see "Exchange of Shares").
1. TELEPHONE OR INTERNET REDEMPTION BY CHECK. The Fund will make
checks payable to the name in which the account is registered and
normally will mail the check to the address of record within
seven days.
2. TELEPHONE OR INTERNET REDEMPTION BY BANK WIRE. The Fund accepts
telephone or Internet requests for wire redemption in amounts of
at least $1,000. The Fund will send a wire to either
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a bank designated on your subscription order form or on a
subsequent letter with a guaranteed signature. The proceeds are
normally wired on the next Business Day.
AUTOMATIC CASH WITHDRAWAL PLAN. You may automatically redeem shares on a
monthly, quarterly or annual basis if you have at least $10,000 in your account
and if your account is directly registered with State Street. Call 1-800-GABELLI
(1-800-422-3554) for more information about this plan.
INVOLUNTARY REDEMPTION. The Fund may redeem all shares in your account (other
than an IRA account) if its value falls below $1,000 as a result of redemptions
(but not as a result of a decline in net asset value). You will be notified in
writing if the Fund initiates such action and allowed 30 days to increase the
value of your account to at least $1,000.
REDEMPTION PROCEEDS. A redemption request received by a Fund will be effected at
the net asset value next determined after the Fund receives the request. If you
request redemption proceeds by check, the Fund will normally mail the check to
you within seven days after receipt of your redemption request. If you purchased
your Fund shares by check or through the Automatic Investment Plan, you may not
receive proceeds from your redemption until the check clears, which may take up
to as many as 15 days following purchase. While the Fund will delay the
processing of the redemption until the check clears, your shares will be valued
at the next determined net asset value after receipt of your redemption request.
EXCHANGE OF SHARES
You can exchange shares of the Fund you hold for shares of the same class of
another fund managed by the Adviser or its affiliates based on their relative
net asset values. To obtain a list of the funds whose shares you may acquire
through an exchange call, 1-800-GABELLI (1-800-422-3554). You may also exchange
your shares for shares of a money market fund managed by the Adviser or its
affiliates.
In effecting an exchange:
o you must meet the minimum investment requirements for the fund
whose shares you purchase through exchange
o if you are exchanging to a fund with a higher sales charge, you
must pay the difference at the time of exchange
o you may realize a taxable gain or loss
o you should read the prospectus of the fund whose shares you are
purchasing through exchange [call 1-800-GABELLI (1-800-422-3554)
to obtain a prospectus].
You may exchange shares through the Distributor, directly through the Fund's
transfer agent or through a registered broker-dealer.
o EXCHANGE BY TELEPHONE. You may give exchange instructions by telephone by
calling 1-800-GABELLI (1-800-422-3554). You may not exchange shares by
telephone if you hold share certificates.
o EXCHANGE BY MAIL. You may send a written request for exchanges to: THE
GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308. Your letter should
state your name, your account number, the dollar amount or number of
shares you wish to exchange, the name and class of the fund whose shares
you wish to exchange, and the name of the fund whose shares you wish to
acquire.
o EXCHANGE THROUGH THE INTERNET. You may also give exchange instructions
via the Internet at www.gabelli.com. You may not exchange shares through
the Internet if you hold share certificates.
We may modify or terminate the exchange privilege at any time. You will be given
notice 60 days prior to any material change in the exchange privilege.
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PRICING OF FUND SHARES
The Fund's net asset value per share of the Class AAA Shares is calculated on
each Business Day. The NYSE is open Monday through Friday, but currently is
scheduled to be closed on New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day and on the preceding Friday or subsequent
Monday when a holiday falls on a Saturday or Sunday, respectively.
The Fund's net asset value per share of the Class AAA Shares is determined as of
the close of regular trading of the NYSE, normally 4:00 p.m., Eastern Time. Net
asset value is computed by dividing the value of the Fund's net assets (i.e. the
value of its securities and other assets less its liabilities, including
expenses payable or accrued but excluding capital stock and surplus) by the
total number of its shares outstanding at the time the determination is made.
The Fund generally uses market quotations in valuing its portfolio securities.
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 market value. All other assets are valued at fair value as determined
by or under the supervision of the Board of Directors. Short-term investments
that mature in 60 days or less are valued at amortized cost, which the Directors
of the Fund believe represents fair value.
If the Fund has portfolio securities that are primarily listed on foreign
exchanges that trade on weekends or other days when the fund does not price
shares, the net asset value of the Fund's shares may change on days when
shareholders will not be able to purchase or redeem the Fund's shares.
DIVIDENDS AND DISTRIBUTIONS
Dividends of net investment income and capital gains, if any, will be paid
annually. You may have dividends or capital gains distributions that are
declared by the Fund automatically reinvested at net asset value in additional
shares of the Fund. You will make an election to receive dividends and
distributions in cash or Fund shares at the time you purchase your shares. You
may change this election by notifying 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 gain
distributions. There is no fixed dividend rate, and there can be no assurance
that the Fund will pay any dividends or realize any capital gains.
TAX INFORMATION
The Fund expects that its distributions will consist primarily of net investment
income and net realized capital gains. Capital gains may be taxed at different
rates depending on the length of time the Fund holds the asset giving rise to
such gains. Dividends out of net investment income and distributions of net
realized short-term capital gains (i.e., gains from assets held by the Fund for
one year or less) are taxable to you as ordinary income. Distributions of net
long-term capital gains are taxable to you at long-term capital gain rates. The
Fund's distributions, whether you receive them in cash or reinvest them in
additional shares of the Fund, generally will be subject to federal, state and
local taxes. An exchange of the Fund's shares for shares of another fund will be
treated for tax purposes as a sale of the Fund's shares, and any gain you
realize on such a transaction generally will be taxable. Foreign shareholders
generally will be subject to a federal withholding tax.
This summary of tax consequences is intended for general information only. You
should consult a tax adviser concerning the tax consequences of your investment
in the Fund.
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FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the financial
performance for the past five fiscal years of the Fund. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund's Class AAA Shares. This information has been audited by
Ernst & Young LLP, independent auditors, whose report along with the Fund's
financial statements and related notes are included in the annual report, which
is available upon request.
GABELLI GOLD FUND, INC.
Per share amounts for the Fund's Class AAA Shares outstanding throughout each
fiscal year ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period .......... $ 5.66 $ 5.87 $ 12.32 $ 11.41 $ 11.07
------- ------- ------- ------- -------
Net investment loss ........................... (0.03) (0.03) (0.26) (0.19)(a) (0.15)(a)
Net realized and unrealized gain (loss)
on investments .............................. 0.60 (0.18) (6.13) 1.10 0.49
------- ------- ------- ------- -------
Total from investment operations ................. 0.57 (0.21) (6.39) 0.91 0.34
------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
In excess of net investment income ............ -- -- (0.06) -- --
------- ------- ------- ------- -------
Total distributions ........................... -- -- (0.06) -- --
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ................ $ 6.23 $ 5.66 $ 5.87 $ 12.32 $ 11.41
======= ======= ======= ======= =======
Total return+ ................................. 10.1% (3.6)% (51.9)% 8.0% 3.1%
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $14,177 $11,276 $ 8,097 $16,963 $14,510
Ratio of net investment loss to
average net assets .......................... (0.85)% (1.82)% (2.60)% (1.41)% (1.12)%
Ratio of operating expenses to
average net assets (b) ...................... 2.38% 2.98% 3.24% 2.17% 2.25%
Portfolio turnover rate ....................... 52% 63% 27% 54% 38%
<FN>
- ------------------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends.
(a) Based on average month-end shares outstanding.
(b) The Fund incurred interest expense during the years ended December 31,
1999, 1998 and 1997. If interest expense had not been incurred, the ratios
of operating expenses to average net assets would have been 2.36%, 2.93%
and 3.10%, respectively. In addition, the ratio for the year ended December
31, 1997 does not include a reduction of expenses for custodian fee
credits. Including such credits, the ratio would have been 3.23%.
</FN>
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
THE GABELLI GOLD FUND, INC.
CLASS AAA SHARES
================================================================================
FOR MORE INFORMATION:
For more information about the Fund, the following documents are available free
upon request:
ANNUAL/SEMI-ANNUAL REPORTS:
The Fund's semi-annual and annual reports to shareholders contain additional
information on the Fund's investments. In the Fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI):
The SAI provides more detailed information about the Fund, including its
operations and investment policies. It is incorporated by reference, and is
legally considered a part of this prospectus.
- --------------------------------------------------------------------------------
You can get free copies of these documents and prospectuses of other funds in
the Gabelli family, or request other information and discuss your questions
about the Fund by contacting:
Gabelli Gold Fund, Inc.
One Corporate Center
Rye, NY 10580
Telephone: 1-800-GABELLI (1-800-422-3554)
www.gabelli.com
- --------------------------------------------------------------------------------
You can review the Fund's reports and SAI at the Public Reference Room of the
Securities and Exchange Commission. Information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090. You
can get text-only copies:
o For a fee, by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102 or by calling 1-202-942-8090, or by
electronic request at the following email address: [email protected].
o Free from the Commission's Website at http://www.sec.gov.
(Investment Company Act file no. 811-8518)
- --------------------------------------------------------------------------------
<PAGE>
GABELLI GOLD FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 p.m.)
QUESTIONS?
Call 1-800-GABELLI
or your investment representative.
TABLE OF CONTENTS
-----------------
INVESTMENT AND PERFORMANCE SUMMARY ............. 2-4
INVESTMENT AND RISK INFORMATION ................ 4-6
MANAGEMENT OF THE FUND ......................... 6
Purchase of Shares .................... 7
Redemption of Shares .................. 8
Exchange of Shares .................... 9
Pricing of Fund Shares ................ 10
Dividends and Distributions ........... 10
Tax Information ....................... 10
FINANCIAL HIGHLIGHTS ........................... 11
<PAGE>
GABELLI GOLD FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
This Statement of Additional Information (the "SAI"), which is not a prospectus,
describes the Gabelli Gold Fund, Inc. (the "Fund"), a Maryland corporation. This
SAI should be read in conjunction with the Fund's Prospectus dated May 1, 2000.
For a free copy of the Prospectus, please contact the Fund at the address,
telephone number or Internet Website printed below.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
HTTP://WWW.GABELLI.COM
TABLE OF CONTENTS
PAGE
General Information..........................................................2
Investment Strategies and Risks..............................................2
Investment Restrictions......................................................10
Directors and Officers.......................................................11
Control Persons and Principal Shareholders...................................13
Investment Advisory and Other Services.......................................14
Distribution Plan............................................................16
Portfolio Transactions and Brokerage.........................................17
Redemption of Shares.........................................................18
Determination of Net Asset Value.............................................19
Dividends, Distributions and Taxes...........................................19
Investment Performance Information...........................................22
Description of Shares, Voting Rights and Liabilities.........................22
Financial Statements.........................................................23
Appendix A...................................................................A-1
<PAGE>
GENERAL INFORMATION
The Fund is a diversified, open-end, management investment company organized
under the laws of the State of Maryland on May 13, 1994. The Fund commenced
operations on July 11, 1994.
INVESTMENT STRATEGIES AND RISKS
INVESTMENTS
Subject to the Fund's policy of investing at least 65% of its total assets in
the equity 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 foreign and domestic 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. The Fund 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.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities, which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither a fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors, including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Fund's portfolio thus may be expected to fluctuate.
Preferred stocks are usually entitled to rights on liquidation which are senior
to those of common stocks. For these reasons, preferred stocks generally entail
less risk than common stocks. Such securities may pay cumulative dividends.
Because the dividend rate and liquidation or redemption value is usually
pre-established, 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. Investments in foreign securities involve certain risks not ordinarily
associated with investments in securities of domestic issuers, including
fluctuations in foreign
<PAGE>
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 favorably or unfavorably by changes in
currency rates and exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies.
Gabelli Funds, LLC (the "Adviser") will attempt to manage these risks so that
strategies and investments such benefit the Fund, but no assurance can be given
that they will be successfully managed.
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.
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, and to a lesser extent, those located
in emerging markets. Developed markets include Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg,
the 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 otherwise 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 have
<PAGE>
limited legal recourse in the event of default. Also, the Fund may have
difficulty disposing of certain sovereign debt obligations because there may be
a limited trading market for such securities.
The Fund may also purchase securities issued by quasi-governmental or
supranational agencies such as the Asian Development Bank, the International
Bank for Reconstruction and Development, the Export-Import Bank and the European
Investment Bank. The governmental members, or "stockholders," usually make
initial capital contributions to the supranational entity and in many cases are
committed to make additional capital contributions if the supranational entity
is unable to repay its borrowings. The Fund will not invest more than 25% of its
assets in the securities of such supranational entities.
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 total 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 Ratings Services ("S&P"), respectively,
which ratings are considered investment grade, possess some speculative
characteristics, and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher-grade bonds. 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 in
evaluating the creditworthiness of an issuer. In this evaluation, the Adviser
will take into consideration, among other things, the issuer's financial
resources and ability to cover its interest and fixed charges, factors relating
to the issuer's industry and its sensitivity to economic conditions and trends,
its operating history, the quality of the issuer's management and regulatory
matters.
The risk of loss due to default by the issuer is significantly greater for the
holders of lower quality securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of lower quality securities may experience financial stress
and may not have sufficient revenues to meet their interest payment obligations.
An issuer's ability to service its debt obligations may also be adversely
affected by specific corporate developments, its inability to meet specific
projected business forecasts, or the unavailability of additional financing.
Factors adversely affecting the market value of high yield and other 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.
<PAGE>
At times, adverse publicity regarding lower-quality securities has depressed
prices for such securities to some extent.
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
(the "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 issues only from a limited
number of dealers and may not necessarily represent firm bids of such dealers or
prices for actual sales. During such times, the responsibility of the Board of
Directors to value the securities becomes more difficult and judgment plays a
greater role in valuation because there is less reliable, objective data
available.
CONVERTIBLE SECURITIES
The Fund may invest up to 25% of its total 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 of
such a security may pay dividends or interest to the holder by issuing
additional fully paid and nonassessable shares or units of the same or another
specified security. While no securities investment is completely without risk,
investments in convertible securities generally entail less risk than common
stock, although the extent to which such risk is reduced depends in large
measure upon the degree to which the convertible security sells above its value
as a fixed-income security.
SECURITIES SUBJECT TO REORGANIZATION
The Fund may invest in securities for which a tender or exchange offer has been
made or announced and in securities of companies for which a merger,
consolidation, liquidation or reorganization proposal has been announced if, in
the judgment of the Adviser, there is a reasonable prospect of 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
<PAGE>
experience on the part of the Adviser, which must appraise not only the value of
the issuer and its component businesses as well as the assets or securities to
be received as a result of the contemplated transaction but also the financial
resources and business motivation of the offeror and the dynamics and business
climate when the offer 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.
The Adviser intends to select investments of the type described which, in its
view, have a reasonable prospect of capital appreciation which is significant in
relation to both risk involved and the potential of available alternate
investments.
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
foregoes any capital appreciation in excess of the exercise price in the case of
a call option, and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations. 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 ("CFTC"), other than for hedging purposes, the aggregate
initial margin and premiums required to establish such positions will not exceed
5% of the Fund's total assets after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into.
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.
Investing in rights and warrants can provide a greater potential for profit or
loss than an equivalent investment in the underlying security, and thus, can be
a speculative investment. The value of a right or warrant may decline because of
a decline in the value of the underlying security, the passage of time, changes
in interest rates or in the dividend or other policies of the Company whose
equity underlies the warrant or a change in the perception as to the future
price of the underlying security, or any combination thereof. Rights and
warrants generally pay no dividends and confer no voting or other rights other
than to purchase the underlying security.
<PAGE>
INVESTMENTS IN INVESTMENT COMPANIES
The Fund may invest up to 10% of its total 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 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
securities in an aggregate amount at least equal to the amount of its
outstanding forward commitments. When the Fund engages in when-issued, delayed
delivery or forward commitment transactions, it relies on the other party to
consummate the trade. Failure of the other party to do so may result in the Fund
incurring a loss or missing an opportunity to obtain a price considered to be
advantageous.
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 liquid 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
<PAGE>
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 regard 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.
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 which are illiquid,
including repurchase agreements with more than seven days to maturity. 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 Adviser ("Qualified Institutions"). The Adviser will
monitor the continued creditworthiness of Qualified Institutions. 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.
<PAGE>
To minimize this risk, the securities underlying the repurchase agreement will
be held by 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 1/3% of the value of the
Fund's assets.
If the borrower fails to maintain the requisite amount of collateral, the loan
automatically terminates and the Fund could use the collateral to replace the
securities while holding the borrower liable for any excess of replacement cost
over the value of the collateral. As with any extension of credit, there are
risks of delay in recovery and in some cases even loss of rights in collateral
should the borrower of the securities fail financially.
BORROWING
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.
MONEY MARKET INSTRUMENTS
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 or 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.
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. Aggregate initial
margin and premiums required to establish positions other than those considered
by the CFTC to be "bona fide hedging" will not exceed 5% of the Fund's net asset
value
<PAGE>
after taking into account unrealized profits and unrealized losses on any such
contracts. 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 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 CFTC, an agency of the U.S. Government, and must be
executed through a futures commission merchant (i.e., a brokerage firm) which is
a member of the relevant contract market. Futures contracts trade on these
contract markets and the 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.
<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 "SEC"), 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.
INVESTMENT RESTRICTIONS
The Fund's investment objective and the following investment restrictions are
fundamental and may not be changed without the approval of a majority of the
Fund's shareholders, defined as the lesser of (a) 67% at a meeting if the
holders of more than 50% of the outstanding shares are present in person or by
proxy, or (b) more than 50% of the Fund's outstanding shares. All other
investment policies or practices are considered by the Fund not to be
fundamental and accordingly may be changed without shareholder approval. If a
percentage restriction on investment or the use of assets set forth below is
adhered to at the time the 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. Under such restrictions, 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;
(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.
<PAGE>
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.
DIRECTORS AND OFFICERS
Under Maryland law, the Fund's Board of Directors is responsible for
establishing the Fund's policies and for overseeing the management of the Fund.
The Board also elects the Fund's officers, who conduct the daily business of the
Fund. The Directors and executive officers of the Fund, their ages and their
principal occupations during the last five years and their affiliations, if any,
with the Adviser are set forth below. Directors deemed to be "interested
persons" of the Fund for purposes of the Investment Company Act of 1940, as
amended (the "1940 Act") are indicated by an asterisk. Unless otherwise
specified, the address of each such person is One Corporate Center, Rye, New
York 10580-1434.
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
NAME, AGE AND POSITION(S) WITH THE FUND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS; AFFILIATIONS
WITH THE ADVISER
- --------------------------------------------------------------------------------------------------------------------
Mario J. Gabelli* Chairman of the Board and Chief Investment Officer of Gabelli
Chairman of the Board Asset Management Inc., and Chief Investment Officer of
Age: 57 Gabelli Funds, LLC and GAMCO Investors, Inc.; Chairman of the
Board and Chief Executive Officer of Lynch Corporation
(diversified manufacturing company) and Chairman of the Board
of Lynch Interactive Corporation (multimedia and services
company); Director of Spinnaker Industries, Inc.
(manufacturing company); Director or Trustee of 16 other
mutual funds advised by Gabelli Funds, LLC and its
affiliates.
- --------------------------------------------------------------------------------------------------------------------
Cesar M.P. Bryan Senior Vice President of and Portfolio manager with GAMCO
President and Portfolio Manager Investors, Inc., wholly owned subsidiary of the Adviser,
Age: 44 since May 1994 and President of Gabelli International Growth
Fund, Inc.; Co-Portfolio Manager of Gabelli Global
Opportunity Fund; Formerly Senior Vice President and
Portfolio Manager of Lexington Management Corporation (until
May 1994).
- --------------------------------------------------------------------------------------------------------------------
E. Val Cerutti Chief Executive Officer of Cerutti Consultants, Inc.; Former
Director President and Chief Operating Officer of Stella D'oro Biscuit
Age: 60 Company (through 1992); Adviser, Iona College School of
Business; Director of Lynch Corporation and Director of 1
other mutual fund advised by Gabelli Funds, LLC and its
affiliates.
- --------------------------------------------------------------------------------------------------------------------
Anthony J. Colavita President and Attorney at Law in the law firm of Anthony J.
Director Colavita, P.C. since 1961; Director or Trustee of 17 other
Age: 64 mutual funds advised by Gabelli Funds, LLC and its
affiliates.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
<S> <C>
Karl Otto Pohl*+ Member of the Shareholder Committee of Sal Oppenheim Jr. &
Director Cie (private investment bank); Director of Gabelli Asset
Age: 70 Management Inc. (investment management), Zurich Allied
(insurance company), and TrizecHahn Corp. (real estate
company); Former President of the Deutsche Bundesbank and
Chairman of its Central Bank Council from 1980 through
1991; Director or Trustee of all other mutual funds
advised by Gabelli Funds, LLC and its affiliates.
- --------------------------------------------------------------------------------------------------------------------
Werner J. Roeder, M.D. Medical Director, Lawrence Hospital and practicing private
Director physician; Director or Trustee of 10 other mutual funds
Age: 59 advised by Gabelli Funds, LLC and its affiliates.
- --------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------- ---------------------------------------------------------------
NAME, ADDRESS, AGE AND POSITION(S) WITH THE FUND PRINCIPAL OCCUPATIONS DURING LAST FIVE YEARS; AFFILIATIONS
WITH THE ADVISER
- --------------------------------------------------------------------------------------------------------------------
Anthonie C. van Ekris Managing Director of Balmac International, Ltd.; Director of
Director Spinnaker Industries, Inc. and Stahel Mardmeyer A.Z.;
Age: 65 Director or Trustee of 10 other mutual funds advised by
Gabelli Funds, LLC and its affiliates.
- --------------------------------------------------------------------------------------------------------------------
Daniel E. Zucchi President of Daniel E. Zucchi Associates. Formerly Senior
Director Vice President and Director of Consumer Marketing of Hearst
Age: 59 Magazines (through 1995).
- --------------------------------------------------------------------------------------------------------------------
Bruce N. Alpert Executive Vice President and Chief Operating Officer of
Vice President and Treasurer Gabelli Funds, LLC since 1988; President and Director of
Age: 48 Gabelli Advisers, Inc. and an Officer of all mutual funds
managed by Gabelli Funds, LLC and its affiliates.
- --------------------------------------------------------------------------------------------------------------------
James E. McKee Secretary of Gabelli Funds, LLC; Vice President, Secretary
Secretary and General Counsel of GAMCO Investors, Inc. since 1993 and
Age: 36 of Gabelli Asset Management, Inc. since 1999; Secretary of
all mutual funds advised by Gabelli Funds, LLC and Gabelli
Advisers, Inc. since August 1995.
- --------------------------------------------------------------------------------------------------------------------
<FN>
- -----------
+ Mr. Pohl is a director of the parent company of the Adviser.
</FN>
</TABLE>
The Fund, its investment adviser and principal underwriter have adopted a code
of ethics (the "Code of Ethics") under Rule 17j-1 of the 1940 Act. The Code of
Ethics permits personnel, subject to the Code of Ethics and its restrictive
provisions, to invest in securities, including securities that may be purchased
or held by the Fund.
No director, officer or employee of the Adviser or any affiliate of the Adviser
receives any compensation from the Fund for serving as an officer or Director of
the Fund. The Fund pays each of its Directors who is not a director, officer or
employee of the Adviser or any of its affiliates, $1,000 per annum plus $250 per
meeting attended in person or by telephone and reimburses each Director for
related travel and other out-of-pocket expenses.
The following table sets forth certain information regarding the compensation of
the Fund's Directors. No executive officer or person affiliated with the Fund
received compensation in excess of $60,000 from the Fund for the fiscal year
ended December 31, 1999.
<PAGE>
COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL COMPENSATION
FROM THE FUND
AGGREGATE COMPENSATION AND FUND COMPLEX
NAME OF PERSON AND POSITION FROM THE FUND PAID TO DIRECTORS*
- --------------------------- ---------------------- ------------------
Mario J. Gabelli, Chariman of the Board $ 0 $ 0 (17)
E. Val Cerutti, Director $ 2,000 $ 10,500 (2)
Anthony J. Colavita, Director $ 2,250 $ 94,875 (18)
Karl Otto Pohl, Director $ 54 $ 7,042 (19)
Werner J. Roeder, M.D., Director $ 2,250 $ 34,859 (11)
Anthony C. van Ekris, Director $ 2,000 $ 60,000 (11)
Daniel E. Zucchi, Director $ 2,000 $ 2,000 (1)
<FN>
- -------------
* Represents the total compensation paid to such persons during the fiscal year
ended December 31, 1999. The parenthetical number represents the number of
investment companies (including the Fund) from which such person receives
compensation which are considered part of the same "fund complex" as the Fund
because they have common or affiliated investment advisers.
</FN>
</TABLE>
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of April 1, 2000, the following persons owned of record or beneficially 5%
or more of the Fund's outstanding shares:
NAME AND ADDRESS OF HOLDER OF RECORD PERCENTAGE OF FUND
Charles Schwab & Co., Inc. 29.36%
Special Custody Acct.
FBO BEN OF CUSTS
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Service Corp. 5.29%
FBO EXCLUSIVE BEN OF CUSTS
150 Essex Street
Milldorn, NJ 07041-1603
Balsa & Co 5.19%
c/o Chase Manhattan Bank
PO Box 1768
Grand Central Station
New York, NY 10163-1768
- -----------
* Beneficial ownership is disclaimed. Beneficial ownership of shares
representing 25% or more of the outstanding shares of each class of the Fund may
be deemed to have control, as that term is defined in the 1940 Act.
As of April 1, 2000, as a group, the Directors and officers of the Fund owned
141,448 or 6.58% of the outstanding shares of the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
THE INVESTMENT ADVISER
The Adviser is a New York limited liability company which also serves as an
investment adviser to 13 other open-end investment companies, and 4 closed-end
investment companies with aggregate assets in excess of $10.6 billion as of
December 31, 1999. The Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. Mr. Mario J. Gabelli may be deemed
a "controlling person" of the Adviser on the basis of his controlling interest
of the ultimate parent company of the Adviser. The Adviser has several
affiliates that provide investment advisory services: GAMCO Investors, Inc.
("GAMCO"), a wholly-owned subsidiary of the Adviser, acts as investment adviser
for individuals, pension trusts, profit-sharing trusts and endowments, and had
assets under management of approximately $9.4 billion under its management as of
December 31, 1999; Gabelli Advisers, Inc. acts as investment adviser to the
Gabelli Westwood Funds with assets under management of approximately $390
million as of December 31, 1999; Gabelli Securities, Inc. acts as investment
adviser to certain alternative investments products, consisting primarily of
risk arbitrage and merchant banking limited partnerships and offshore companies,
with assets under management of approximately $230 million as of December 31,
1999; and Gabelli Fixed Income LLC acts as investment adviser for the five
portfolios of The Treasurer's Fund and separate accounts having assets under
management of approximately $1.4 billion as of December 31, 1999.
Affiliates of the Adviser may, in the ordinary course of their business, acquire
for their own account or for the accounts of their advisory clients, significant
(and possibly controlling) positions in the securities of companies that may
also be suitable for investment by the Fund. The securities in which the Fund
might invest may thereby be limited to some extent. For instance, many companies
in the past several years have adopted so-called "poison pill" or other
defensive measures designed to discourage or prevent the completion of
non-negotiated offers for control of the company. Such defensive measures may
have the effect of limiting the shares of the company which might otherwise be
acquired by the Fund if the affiliates of the Adviser or their advisory accounts
have or acquire a significant position in the same securities. However, the
Adviser does not believe that the investment activities of its affiliates will
have a material adverse effect upon the Fund in seeking to achieve its
investment objectives. Securities purchased or sold pursuant to contemporaneous
orders entered on behalf of the investment company accounts of the Adviser or
the advisory accounts managed by its affiliates for their unaffiliated clients
are allocated pursuant to principles believed to be fair and not disadvantageous
to any such accounts. In addition, all such orders are accorded priority of
execution over orders entered on behalf of accounts in which the Adviser or its
affiliates have a substantial pecuniary interest. The Adviser may on occasion
give advice or take action with respect to other clients that differ from the
actions taken with respect to the Fund. The Fund may invest in the securities of
companies which are investment management clients of GAMCO. In addition,
portfolio companies or their officers or directors may be minority shareholders
of the Adviser or its affiliates.
Pursuant to an Investment Advisory Contract (the "Contract"), which was
initially approved by the Fund's sole shareholder on June 15, 1994, and last
approved by the Board of Directors on May 19, 1999, 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 of the
Fund and generally manages the Fund's investments in accordance with the stated
policies of the Fund, subject to the general supervision
<PAGE>
of the Board of Directors of the Fund. For the services it provides, the Adviser
is paid an annual fee based on the value of the Fund's average daily net assets
of 1.00%. For the fiscal years ended December 31, 1999, 1998, and 1997, the Fund
incurred in investment advisory fees of $132,754, $121,860 and $136,830,
respectively.
Under the Contract, the Adviser also (i) provides the Fund with the services of
persons competent to perform such supervisory, administrative, and clerical
functions as are necessary to provide effective administration of the Fund,
including maintaining certain books and records and overseeing the activities of
the Fund's Custodian and Transfer Agent; (ii) oversees the performance of
administrative and professional services to the Fund by others, including the
Fund's Custodian, Transfer Agent and Dividend Disbursing Agent, as well as
accounting, auditing and other services performed for the Fund; (iii) provides
the Fund with adequate office space and facilities; (iv) prepares, but does not
pay for, the periodic updating of the Fund's registration statement, Prospectus
and SAI, including the printing of such documents for the purpose of filings
with the SEC and state securities administrators, the Fund's tax returns, and
reports to the Fund's shareholders and the SEC; (v) calculates the net asset
value of shares in the Fund; (vi) prepares, but does not pay for, all filings
under the securities or "Blue Sky" laws of such states or countries as are
designated by Gabelli & Company, Inc. (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 (vii) prepares notices and agendas
for meetings of the Fund's Board of Directors and minutes of such meetings in
all matters required by the Act to be acted upon by the Board.
The 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 Contract in no way restricts the
Adviser from acting as adviser to others. The Fund has agreed by the terms of
the 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,
the Fund will, unless the Adviser otherwise consents in writing, promptly take
all steps necessary to change its name to one which does not include "Gabelli."
By its terms, the Contract will remain in effect for a period of two years and
thereafter from year to year, provided each such annual continuance is
specifically approved by the Fund's Board of Directors or by a "majority" (as
defined in the 1940 Act) vote of its shareholders and, in either case, by a
majority vote of the Directors who are not parties to the Contract or interested
persons of any such party, cast in person at a meeting called specifically for
the purpose of voting on the Contract. The Contract is terminable without
penalty by the Fund on sixty days' written notice when authorized either by
majority vote of its outstanding voting shares or by a vote of a majority of its
Board of Directors, or by the Adviser on sixty days' written notice, and will
automatically terminate in the event of its "assignment" as defined by the 1940
Act.
THE SUB-ADMINISTRATOR
The Adviser has entered into a Sub-Administration Agreement (the
"Sub-Administration Agreement") with PFPC Inc. (formerly known as First Data
Investor Services Group, Inc.) (the "Sub-Administrator"), a majority-owned
subsidiary of PNC Bank Corp. Under the Sub-Administration Agreement, the
Sub-Administrator (a) assists in
<PAGE>
supervising all aspects of the Fund's operations except those performed by the
Adviser under its advisory agreement with the Fund; (b) supplies the Fund with
office facilities (which may be in the Sub-Administrator's own offices),
statistical and research data, data processing services, clerical, accounting
and bookkeeping services, including, but not limited to, the calculation of the
net asset value of shares in the Fund, internal auditing and legal services,
internal executive and administrative services, and stationery and office
supplies; (c) prepares and distributes materials for all Fund Board of
Directors' Meetings including the mailing of all Board materials and collates
the same materials into the Board books and assists in the drafting of minutes
of the Board Meetings; (d) prepares reports to Fund shareholders, tax returns
and reports to and filings with the SEC and state "Blue Sky" authorities; (e)
calculates the Fund's net asset value per share, provides any equipment or
services necessary for the purpose of pricing shares or valuing the Fund's
investment portfolio and, when requested, calculates the amounts permitted for
the payment of distribution expenses under any distribution plan adopted by the
Fund; (f) provides compliance testing of all Fund activities against applicable
requirements of the 1940 Act and the rules thereunder, the Code, and the Fund's
investment restrictions; (g) furnishes to the Adviser such statistical and other
factual information and information regarding economic factors and trends as the
Adviser from time to time may require; and (h) generally provides all
administrative services that may be required for the ongoing operation of the
Fund in a manner consistent with the requirements of the 1940 Act.
For the services it provides, the Adviser pays the Sub-Administrator an annual
fee based on the value of the aggregate average daily net assets of all funds
under its administration managed by the Adviser as follows: up to $10 billion -
.0275%; over $10 billion to $15 billion - .0125%; over $15 billion - .01%. The
Sub-Administrator's fee is paid by the Adviser and will result in no additional
expenses to the Fund.
COUNSEL
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York 10019, serves
as the Fund's legal counsel.
INDEPENDENT AUDITORS
Ernst & Young LLP, independent auditors, have been selected to audit the Fund's
annual financial statements, and is located at 787 Seventh Ave., New York, New
York 10019.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company ("State Street"), 225 Franklin Street,
Boston, MA 02110 is the Custodian for the Fund's cash and securities. Boston
Financial Data Services, Inc. ("BFDS"), an affiliate of State Street located at
the BFDS Building, Two Heritage Drive, Quincy, Massachusetts 02171, performs the
services of transfer agent and dividend disbursing agent for the Fund. Neither
BFDS nor State Street assists in or is responsible for investment decisions
involving assets of the Fund.
DISTRIBUTOR
To implement the Fund's 12b-1 Plan, the Fund has entered into an Amended and
Restated Distribution Agreement with Gabelli & Company, Inc., a New York
corporation which is an indirect majority owned subsidiary of GAMI, having
principal offices located at One Corporate Center, Rye, New York 10580-1434. The
Distributor acts as agent of the Fund for the continuous offering of its shares
on a best efforts basis.
DISTRIBUTION PLAN
Pursuant to the distribution and service plan (the "Plan") adopted by the Fund
pursuant to Rule 12b-1 under the Act and the Amended and Restated Distribution
Agreement, the Distributor incurs the expenses of distributing the Fund's
shares. The Plan is intended to benefit the Fund by increasing its assets and
thereby reducing the Fund's expense ratio.
<PAGE>
The Plan continues in effect from year to year, provided that such continuance
is approved at least annually by a vote of the Fund's Board of Directors,
including a majority of the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plan (the "Independent Directors"), cast in person at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated at any time,
without penalty, by the vote of a majority of the Independent Directors, or by
the vote of the holders of a majority of the outstanding shares of the Fund on
not more than 30 days' written notice to any other party to the Plan. The Plan
may not be amended to increase materially the amounts to be spent for the
services described therein without approval by the shareholders and all material
amendments are required to be approved by the Board of Directors in the manner
described above. The Plan will automatically terminate in the event of its
assignment. The Fund will not be contractually obligated to pay expenses
incurred under the Plan if it is terminated or not continued.
Pursuant to the Plan, the Board of Directors will review at least quarterly a
written report of the distribution expenses incurred on behalf of the Fund by
the Distributor. The report includes an itemization of the distribution expenses
and the purposes of such expenditures. In addition, as long as the Plan remains
in effect, the selection and nomination of Independent Directors shall be
committed to the Independent Directors.
Pursuant to the Amended and Restated Distribution Agreement, the Fund has agreed
to indemnify the Distributor to the extent permitted by applicable law against
certain liabilities under the federal securities laws.
During the fiscal year ended December 31, 1999, the Fund incurred distribution
expenses under the Distribution Plan of $44,000. Of this amount $500 was spent
on advertising, $12,000 for printing, postage and stationery, $12,500 for
overhead support expenses, $2,900 for salaries of personnel of the Distributor
and $16,100 to third party brokers. Pursuant to the Distribution Plan, the Fund
paid the Distributor $33,184, or .25% of its average daily net assets. The Plan
compensates the Distributor regardless of its expenses.
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 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.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Contract, 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 the broker can
obtain a more favorable overall price. In general, there may be no stated
commission in the case of securities traded on the over-the-counter markets, but
the prices of those securities may include undisclosed commissions or markups.
Options transactions will usually be effected through a broker and a commission
will be charged.
<PAGE>
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 and adviser to
other investment companies. 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 broker 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 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.
Research services furnished by brokers or dealers through which the Fund effects
securities transactions are used by the Adviser and its advisory affiliates in
carrying out their responsibilities with respect to all of their accounts over
which they exercise investment discretion. Such investment information may be
useful only to one or more of such other accounts. The purpose of this sharing
of research information is to avoid duplicative charges for research provided by
brokers and dealers. Neither the Fund nor the Adviser has any agreement or
legally binding understanding with any broker or dealer regarding any specific
amount of brokerage commissions which will be paid in recognition of such
services. However, in determining the amount of portfolio commissions directed
to such brokers or dealers, the Adviser does consider the level of services
provided. Based on such determinations, the Adviser has allocated brokerage
commissions of $0 on portfolio transactions in the principal amount of $0 during
1999 to various broker-dealers that have provided research services to the
Adviser.
The Adviser may also place orders for the purchase or sale of portfolio
securities with the Distributor when it appears that, as an introducing broker
or otherwise, the Distributor 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. The Fund paid the following
brokerage commissions for the fiscal years ended December 31, 1997, 1998 and
1999 as indicated:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
December 31, 1997 December 31, 1998 December 31, 1999
Total brokerage commissions paid by the $20,298 $73,049 $73,708
Adviser on behalf of the Fund
Total brokerage commissions paid by the $0 $0 $0
Fund to Gabelli & Company, Inc.
% of aggregate brokerage commissions 0.0% 0.0% 0.0%
% of principal amount of transactions ___% ___% ___%
involving commissions effected through
Gabelli & Company, Inc.
</TABLE>
As required by Rule 17e-1 under the 1940 Act, the Board of Directors has adopted
procedures which provide that the commissions paid to the Distributor 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 its Independent Directors, conduct
periodic compliance reviews of such brokerage allocations. The Adviser and the
Distributor are also required to furnish reports and maintain records in
connection with such reviews.
To obtain the best execution of portfolio trades on the New York Stock Exchange
("NYSE"), Gabelli & Company, Inc. controls and monitors the execution of such
transactions on the floor of the NYSE through independent "floor brokers" or
through the Designated Order Turnaround System of the NYSE. Such transactions
are then cleared, confirmed to the Fund for the account of the Distributor, and
settled directly with the Custodian of the Fund by a clearing house member firm
which remits the commission less its clearing charges to the Distributor. The
Distributor may also effect Fund portfolio transactions in the same manner and
pursuant to the same arrangements on other national securities exchanges which
adopt direct access rules similar to those of the NYSE.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either in cash
or in portfolio securities (selected at the discretion of the Board of Directors
of the Fund and taken at their value used in determining the Fund's net asset
value per share as we described under "Determination of Net Asset Value"), or
partly in cash and partly in portfolio securities. However, payments will be
made wholly in cash unless the Board of Directors believes that economic
conditions exist which would make such a practice detrimental to the best
interest of the Fund. If payment for shares redeemed is made wholly or partly in
portfolio securities, brokerage costs may be incurred by the investor in
converting the securities to cash. The Fund will not distribute in-kind
portfolio securities that are not readily marketable. The Fund has filed a
formal election with the SEC pursuant to which the Fund will only effect a
redemption in portfolio securities where the particular shareholder of record is
redeeming more than $250,000 or 1.00% of the Fund's total net assets, whichever
is less, during any 90-day period. In the opinion of the Fund's management,
however, the amount of a redemption request would have to be significantly
greater than $250,000 before a redemption wholly or partly in portfolio
securities would be made.
Cancellation of purchase orders for Fund shares (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 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 reimburse itself or the Distributor for such loss by
automatically redeeming shares from
<PAGE>
any account registered at any time 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 SEC that the Distributor will be immediately obligated to make
the Fund whole.
DETERMINATION OF NET ASSET VALUE
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on a market subject to governmental
regulation on which trades are reported contemporaneously are valued, except as
indicated below, at the last sale price reflected at the close of the regular
trading session of the principal market for such security on the business day as
of which such value is being determined. If there has been no sale on such day,
the securities are valued at the average of the closing bid and asked prices on
the principal market for such security on such day. If no asked prices are
quoted on such day, then the security is valued at the closing bid price on the
principal market for such security on such day. If no bid or asked prices are
quoted on such day, then the security is valued by such method as the Board of
Directors shall determine in good faith to reflect its fair market value.
Readily marketable securities traded in the over-the-counter market, including
listed securities whose primary market is believed by the Adviser to be
over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Directors deems appropriate to reflect their fair value. If no bid or asked
prices are quoted on such day, then the security is valued by such method as the
Board of Directors shall determine in good faith to reflect its fair market
value.
Portfolio securities traded on more than one national securities exchange or
market are valued according to the broadest and most representative market as
determined by the Adviser. Securities traded primarily on foreign exchanges are
valued at the closing price on such foreign exchange immediately prior to the
close of the NYSE.
United States Government obligations and other debt instruments having 60 days
or less remaining until maturity are stated at amortized cost. Debt instruments
having a greater remaining maturity will be valued at the latest bid price
obtainable from a dealer maintaining an active market in that security or on the
basis of prices obtained from a pricing service approved as reliable by the
Board of Directors. 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 market value. All other investment assets,
including restricted and not readily marketable securities, are valued under
procedures established by and under the general supervision and responsibility
of the Fund's Board of Directors designed to reflect in good faith the fair
value of such securities.
DIVIDENDS, DISTRIBUTIONS AND TAXES
GENERAL
The Fund has qualified and intends to continue to qualify as a regulated
investment company under Subchapter M of the Code. If it so qualified, the Fund
will not be subject to Federal income tax on its net investment income and net
short-term capital gain, if any, realized during any fiscal year to the extent
that it distributes such income and capital gains to its shareholders.
<PAGE>
The Fund will determine either to distribute, or to retain for reinvestment, 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 to 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.
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.
Under the Code, amounts not distributed on a timely basis in accordance with a
calendar year distribution requirement are subject to a 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.
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.
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.
Hedging transactions undertaken by the Fund may result in "straddles" for U.S.
federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by 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
part of a straddle. 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.
<PAGE>
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 in additional Fund shares. Dividends paid by a 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 gain (which consist of the excess of long-term
capital gains over net short-term capital losses), if any, are taxable as
long-term capital gain, 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 may be taxable even though it
represents a return of invested capital. The price of shares purchased at any
time may reflect the amount of a forthcoming distribution. Those purchasing
shares just prior to a distribution will receive a distribution which will be
taxable to them.
SALES OF SHARES
Upon a sale or exchange of shares, a shareholder will realize a taxable gain or
loss depending upon the basis in the shares. Such gain or loss will be
long-term, or short-term, generally depending upon the shareholder's holding
period for the shares. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced within a 61-day
period beginning 30 days before and ending 30 days after the date the shares are
disposed of. In such case, the basis of the shares acquired will be adjusted to
reflect the disallowed loss.
Any loss realized by a shareholder on the sale of Fund shares held by the
shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of net capital gain
received by the shareholder with respect to such shares.
BACKUP WITHHOLDING
The Fund may be required to withhold Federal income tax at a rate of 31% on all
taxable distributions payable to shareholders who fail to provide 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 the 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 treaties between
certain countries and the United States may reduce or eliminate such taxes. It
is impossible to determine the rate of foreign tax in advance since the amount
of the Fund's assets to be invested in various countries is not known. Because
the Fund will not have more than 50% of its total assets invested in securities
of foreign governments or corporations, the Fund will not be entitled to
"pass-through" to shareholders the amount of foreign taxes paid by the Fund.
Shareholder are urged to consult their attorneys or tax advisers regarding
specific questions as to federal, state or local taxes.
FUND MATTERS
The Fund reserves the right to create and issue a number of portfolios, in which
case the shares of each portfolio would participate equally in the earnings,
dividends, and assets of the particular portfolio and would vote separately to
approve management agreements or changes in investment policies, but shares of
all portfolios would vote together in the election or selection of Directors,
principal underwriters and auditors and, generally, on any proposed amendment to
the Fund's Articles of Incorporation.
<PAGE>
Upon liquidation of the Fund or any portfolio, shareholders of the affected
portfolio would be entitled to share pro rata in the net assets of their
respective portfolio available for distribution to such shareholders.
INVESTMENT PERFORMANCE INFORMATION
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, 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. Each Fund may also furnish total return
calculations for these and other periods based on investments at various sales
charge levels or net asset values. 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 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 may vary from time to time depending on market conditions, the
compositions of the its portfolio and operating expenses. Total return and yield
should also be considered relative to change 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 may be higher or lower than past total
returns and there can be no assurance that any historical return 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 INC., WEISENBERGER INVESTMENT COMPANY SERVICE, BARRON'S, BUSINESS WEEK,
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 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:
P(1+T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). Total
return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser) on an annual basis, and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed.
For the fiscal year ended December 31, 1999, the Fund's total return was 10.1%.
The average annual total return since its inception on July 11, 1994 through
December 31, 1999 was (8.1)%.
<PAGE>
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Fund is an open-end management investment company that was organized as a
Maryland corporation on May 13, 1994. Its authorized capital stock consists of
one billion shares of stock having a par value of one tenth of one cent ($.001)
per share. The 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. The Fund's Board of
Directors is authorized to divide the unissued shares into separate portfolios
of stock, each portfolio 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 audited annual reports to all shareholders which
include lists of portfolio securities 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 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 Fund shares. SHAREHOLDER APPROVAL
Other than elections of Directors, which is by plurality, any matter for which
shareholder approval is required by the 1940 Act requires the affirmative vote
of at least a "majority" (as defined by the 1940 Act) of the outstanding voting
securities of the Fund at a meeting called for the purpose of considering such
approval. A majority of the Fund's outstanding securities is the lesser of (1)
67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are present in person or by proxy or (2) more than 50% of the
outstanding shares.
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) or through the internet at
HTTP://WWW.GABELLI.COM.
FINANCIAL STATEMENTS
The Fund's Financial Statements for the year ended December 31, 1999, including
the Report of Ernst & Young LLP, independent auditors, is incorporated herein by
reference to the Fund's Annual Report. The Fund's Annual Report is available
upon request and without charge. Ernst & Young LLP provides audit services, tax
return preparation and assistance and consultation in connection with certain
SEC filings.
<PAGE>
APPENDIX A
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 CORPORATION'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 degree. A: Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. BBB: Debt rated BBB is regarded as having adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher rated categories. BB, B, CCC,
CC, C: Debt rated BB, B, CCC, CC and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. CI: The rating CI
is reserved for income bonds on which no interest is being paid. D: Debt rated D
is in payment default. The D rating category is used when interest payments or
principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's believes that such payments will be made
during
<PAGE>
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 status of payment. ca: An issue which is
rated ca is speculative in a high degree and is likely to be in arrears on
dividends with little likelihood of eventual payment. c: This is the lowest
rated class of preferred or preference stock. Issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF S&P'S PREFERRED STOCK RATINGS
AAA: This is the highest rating that may be assigned by S&P's to a preferred
stock issue and indicates an extremely strong capacity to pay the preferred
stock obligations. AA: A preferred stock issue rated AA also qualifies as a
high-quality fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for issues rated
AAA. A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effect of changes in circumstances and economic conditions. BBB: An issue rated
BBB is regarded as backed by an adequate capacity to pay the preferred stock
obligations. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make payments for a preferred stock in this category than
for issues in the A category. BB, B, CCC: Preferred stock rated BB, B, and CCC
are regarded, on balance, as predominantly speculative with respect to the
issuer's capacity to pay preferred stock obligations. BB indicates the lowest
degree of speculation and CCC the highest degree of speculation. While such
issues will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
CC: The rating CC is reserved for a preferred stock in arrears on dividends or
sinking fund payments but that is currently paying. C: A preferred stock rated C
is a non-paying issue. D: A preferred stock rated D is a non-paying issue with
the issuer in default on debt instruments.
Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
<PAGE>
PART C: OTHER INFORMATION
Item 23. EXHIBITS
(a) Articles of Incorporation of the Registrant are incorporated
by reference to Post-Effective Amendment No. 3 to the
Registration Statement as filed with the SEC via EDGAR on
April 29, 1996 ("Post-Effective Amendment No. 3").
Articles of Amendment are filed herewith.
(b) By-Laws of the Registrant are incorporated by reference to
Post-Effective Amendment No. 3.
(c) Not Applicable.
(d) From of Investment Advisory Agreement between the Registrant
and Gabelli Funds, LLC. is incorporated by reference to
Post-Effective Amendment No. 3.
(e) Amended and Restated Distribution Agreement between the
Registrant and Gabelli & Company, Inc. is filed herewith.
(f) Not Applicable.
(g) Form of Custodian Contract, between the Registrant and State
Street Bank and Trust Company ("State Street") is incorporated
by reference to Post-Effective Amendment No. 5 to the
Registration Statement as filed with the SEC via EDGAR on
April 30, 1998 ("Post-Effective Amendment No. 5").
Form of Subcustodian Agreement (for precious metals) is
incorporated by reference to Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A, as filed on June 24,
1994.
(h) Transfer Agency and Service Agreement between the Registrant
and State Street is incorporated by reference to
Post-Effective Amendment No. 5.
(i) Consent of Willkie Farr & Gallagher is filed herewith.
Opinion of Venable, Baetjer and Howard is filed herewith.
(j) Consent of Independent Accountants is filed herewith.
(k) Not Applicable.
(l) Subscription Agreement with initial shareholder is
incorporated by reference to Post-Effective Amendment No. 3.
(m) Amended and Restated Plan of Distribution pursuant to Rule
12b-1 is filed herewith.
(n) Not Applicable.
(o) Not Applicable.
<PAGE>
(p) Code of Ethics for the Registrant, Gabelli Funds, LLC and
Gabelli & Company, Inc. is filed herewith.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
Item 25. 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, as amended (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.
Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Gabelli Funds, LLC (the "Adviser") is a registered investment
adviser providing investment management and administrative
services to the Registrant. The Adviser also provides similar
services to other mutual funds.
The information required by this Item 26 with respect to any
other business, profession, vocation or employment of a
substantial nature engaged in by directors and officers of the
Adviser during the past two years is incorporated by reference
to Form ADV filed by the Adviser pursuant to the Investment
Advisers Act of 1940 (SEC File No. 801-37706).
<PAGE>
Item 27. PRINCIPAL UNDERWRITERS
(a) Gabelli & Company, Inc. ("Gabelli & Company") currently acts
as distributor for Gabelli Investor Funds, Inc., The Gabelli
Asset Fund, The Gabelli Blue Chip Value Fund, Gabelli Capital
Series Funds, Inc., The Gabelli Convertible Securities Fund,
Inc., Gabelli Equity Series Funds, Inc., The Gabelli Equity
Trust Inc., Gabelli Global Series Funds, Inc., The Gabelli
Global Multimedia Trust Inc., Gabelli Gold Fund, Inc., The
Gabelli Growth Fund, Gabelli International Growth Fund, Inc.,
The Gabelli Mathers Fund, The Gabelli Money Market Funds, The
Gabelli Utilities Fund, The Gabelli Utility Trust, The Gabelli
Value Fund Inc. and The Gabelli Westwood Funds.
(b) The information required by this Item 27 with respect to each
director, officer or partner of Gabelli & Company is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company pursuant to the Securities Exchange Act of
1934, as amended (SEC File No. 8-21373).
(c) Not Applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
All such accounts, books and other documents required by Section 31(a)
of the 1940 Act and Rules 31a-1 through 31a-3 thereunder are maintained at the
offices of Gabelli Funds, LLC, One Corporate Center, Rye, New York 10580-1434,
PFPC Inc., 101 Federal Street, Boston, Massachusetts 02110, State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts, 02110 and Boston
Financial Data Services, Inc., Two Heritage Drive, North Quincy, Massachusetts,
02171.
Item 29. Not Applicable.
Item 30. Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant, GABELLI GOLD FUND,
INC., certifies that it meets all the requirements for effectiveness of this
Post-Effective Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933, as amended, and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Rye and State
of New York on the 28th day of April, 2000.
GABELLI GOLD FUND, INC.
By: /S/ BRUCE N. ALPERT
Bruce N. Alpert
Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 8 to its Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.
SIGNATURES TITLE DATE
* Chairman of the Board April 28, 2000
- -----------------------------
Mario J. Gabelli
/S/ CAESAR M.P. BRYAN President April 28, 2000
- ---------------------
Caesar M.P. Bryan
/S/ BRUCE N. ALPERT Vice President, Treasurer April 28, 2000
Bruce N. Alpert and Chief Financial Officer
* Director April 28, 2000
- -----------------------------
E. Val Cerutti
* Director April 28, 2000
- -----------------------------
Anthony J. Colavita
* Director April 28, 2000
- -----------------------------
Karl Otto Pohl
* Director April 28, 2000
- -----------------------------
Werner J. Roeder
* Director April 28, 2000
- -----------------------------
Anthonie C. van Ekris
* Director April 28, 2000
- -----------------------------
Daniel E. Zucchi
*By: /S/ BRUCE N. ALPERT
Bruce N. Alpert
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
(a) Articles of Amendment.
(e) Form of Amended and Restated Distribution
Agreement.
(i) Consent of Willkie Farr & Gallagher.
Opinion of Venable, Baetjer and Howard.
(j) Consent of Independent Auditors.
(m) Form of Amended and Restated Plan of Distribution
pursuant to Rule 12b-1.
(p) Revised Code of Ethics for the Registrant, Gabelli
Funds, LLC and Gabelli & Company, Inc.
EXHIBIT (a)
GABELLI GOLD FUND, INC.
ARTICLES OF AMENDMENT
Gabelli Gold Fund, Inc., a Maryland corporation registered as an
open-end investment company under the Investment Company Act of 1940, as
amended, having its principal office in the State of Maryland in Baltimore City,
Maryland (hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland that:
FIRST: The Charter of the Corporation is amended by redesignating the
existing class of Common Stock of the Corporation as Class AAA Series Shares of
Common Stock.
SECOND: The amendment to the Charter of the Corporation as set forth
above has been approved by at least a majority of the entire Board of Directors
of the Corporation and is limited to changes expressly permitted by Section
2-605 of Subtitle 6 of Title 2 of the Maryland General Corporation Law to be
made without action by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Gabelli Gold Fund, Inc. has caused these
Articles of Amendment to be executed by its Vice President and witnessed by its
Secretary as of the 25th day of April, 2000. The Vice President of the
Corporation who signed these Articles of Amendment acknowledges them to be the
act of the Corporation and states under penalties of perjury that, to the best
of his knowledge, information and belief, the matters and facts set forth herein
relating to authorization and approval hereof are true in all material respects.
WITNESS: GABELLI GOLD FUND, INC.
By: /S/ JAMES E. MCKEE By: /S/ BRUCE N. ALPERT
James E. McKee Bruce N. Alpert
Secretary Vice President
EXHIBIT (e)
FORM OF
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
FOR
GABELLI GOLD FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AGREEMENT, dated, ______ 2000,
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 (the "Shares") of the
Company, par value $.001 per share, 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 Prospectuses and Statement of Additional Information (the "Prospectuses") 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. The
Company acknowledges that the Distributor will enter into sales or servicing
agreements with registered securities brokers and banks and into servicing
agreements with financial institutions and other industry professionals, such as
investment advisers, accountants and estate planning firms. In entering into
such agreements, the Distributor shall act only on its own behalf as principal
underwriter and distributor. The Distributor shall not be responsible for making
any distribution plan or service fee payments pursuant to any plans the Company
may adopt or agreements it may enter into.
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
<PAGE>
Shares except the then current Prospectuses and such other materials as the
Company shall provide or approve in writing.
4. Shares may be sold by the Distributor only at prices and terms
described in the then current Prospectuses 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 each of the
current Prospectuses. 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 Prospectuses 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 Prospectuses
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 Prospectuses 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.
The Company has adopted a separate plan of distribution (collectively,
the "Plan") pursuant to the provisions of Rule 12b-1 of the 1940 Act on
behalf of its Class A, Class B, Class C and Class AAA shares,
respectively, each of which provides for the payment of administrative
and sales related expenses in connection with the distribution of
Company shares and the Distributor agrees to take no action
inconsistent with said Plan.
8. The Company will pay its legal and auditing expenses and the cost of
composition of any prospectuses of annual or interim reports of the Company.
<PAGE>
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 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 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 Prospectuses 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
Prospectuses; provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Company or the shareholders of the
Company 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.
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
<PAGE>
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.
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: Bruce N. Alpert
Title: Vice President
GABELLI & COMPANY, INC.
By:
Name: Bruce N. Alpert
EXHIBIT (i)(a)
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. 8 (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 to the Fund's filing a copy of this
Consent as an exhibit to the Amendment. Further, we hereby consent to the Fund's
reliance on our legal opinion dated June 23, 1994 currently on file with the
Securities and Exchange Commission in connection with the offering of the
existing class of the Fund's shares.
/S/WILLKIE FARR & GALLAGHER
Willkie Farr & Gallagher
April 28, 2000
New York, New York
EXHIBIT (i)(b)
April 28, 2000
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Re: Gabelli Gold Fund, Inc. (the "Fund")
Ladies and Gentlemen:
You may rely on our attached opinion dated June 23, 1994 for
purposes of your proposed consent attached hereto with respect to Post Effective
Amendment No. 8 to the Fund's Registration Statement pertaining to the Fund's
sole existing class of Common Stock on Form N 1A, Securities Act (File No. 33
79180), Investment Company Act (File No. 811 08518) (the "Registration
Statement").
For purposes of this letter, we have 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 a
Certificate of the Assistant Secretary of the Fund, dated as of the date hereof,
with respect to such matters as we have deemed necessary to provide this letter.
Moreover, we have assumed for purposes of this letter that the terms and
consideration with respect to the issuance of shares of the Fund's Common Stock
as set forth in the Registration Statement remain the same as those set forth in
the Registration Statement at the time of our attached opinion in all material
respects.
We consent to the filing of this letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/Venable, Baetjer and Howard, LLP
Venable, Baetjer and Howard, LLP
June 23, 1994
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
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, Securities 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.
Willkie Farr & Gallagher
June 23, 1994
Page 2
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.
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 of "Blue Sky" laws
of Maryland, to federal securities laws or to other laws.
You may rely upon our foregoing opinion in rendering your opinion to
the Fund that 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, LLP
Venable, Baetjer and Howard, LLP
Willkie Farr & Gallagher
EXHIBIT (j)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Investment Advisory and Other Services" and "Financial Statements"
and to the use of our report dated February 11, 2000, which is incorporated by
reference 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, 2000
EXHIBIT (m)
FORM OF
AMENDED AND RESTATED
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
OF
GABELLI GOLD FUND, INC.
WHEREAS, GABELLI GOLD FUND, INC., a Maryland Corporation (the
"Fund"), engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Fund has issued and is authorized to issue shares
of Common Stock ("Shares");
WHEREAS, Gabelli & Company, Inc. (the "Distributor") presently
serves as the principal distributor of the Shares pursuant to the distribution
agreement between the Fund and Distributor, which distribution agreement, as
amended, has been duly approved by the Board of Directors of the Fund (the
"Board"), in accordance with the requirements of the Act (the "Distribution
Agreement");
WHEREAS, the Fund has adopted a plan of distribution pursuant
to Rule 12b-1 under the Act to assist in the distribution of Shares (the
"Plan");
WHEREAS, the Fund has established and plans to offer shares of
its common stock denominated as Class AAA Shares (the "Class AAA Shares"),
pursuant to Rule 18f-3 under the Act that permits the Fund to implement a
multiple distribution system providing investors with the option of purchasing
shares of various classes;
WHEREAS, the Board as a whole, and the Directors who are not
interested persons of the Fund (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to the Plan (the "Disinterested Directors"), have determined, after
review of all information and consideration of all pertinent facts reasonably
necessary to an informed determination, that it would be desirable to amend the
Plan in certain respects and to restate such amended Plan in its entirety and
that, in the exercise of reasonable business judgment and in light of their
fiduciary duties, that there is a reasonable likelihood that a plan of
distribution containing the terms set forth herein will benefit the Fund and the
shareholders of the Class AAA Shares, and have accordingly approved the Plan by
votes cast in person at a meeting called for the purpose of amending and
restating the Plan; and
WHEREAS, this Plan governs the Class AAA Shares and does not
relate to any class of shares which may be offered and sold by the Fund other
than the Class AAA Shares.
NOW, THEREFORE, in consideration of the foregoing, the Fund
hereby amends and restates the Plan in accordance with Rule 12b-1 under the Act
on the following terms and conditions:
1. In consideration of the services to be provided, and the expenses to be
incurred, by the Distributor pursuant to the Distribution Agreement, the Fund
will pay to the Distributor as distribution payments (the "Payments") in
connection with the distribution of Class AAA Shares an aggregate amount at a
rate of 0.25% per year of the average daily net assets of the Class AAA Shares.
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. The
Fund's obligation hereunder shall be limited to the assets of the Class AAA
Shares and shall not constitute an obligation of the Fund except out of such
assets and shall not constitute an obligation of any shareholder of the Fund.
<PAGE>
2. It is understood that the Payments made by the Fund under this Plan will be
used by the Distributor for the purpose of financing or assisting in the
financing of any activity which is primarily intended to result in the sale of
Class AAA Shares. 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 Class AAA Shares: advertising the Class AAA Shares or the
Fund's investment adviser's mutual fund activities; compensating underwriters,
dealers, brokers, banks and other selling entities (including the Distributor
and its affiliates) and sales and marketing personnel of any of them for sales
of Class AAA Shares, 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 Fund's investment adviser and its personnel) of any of them for providing
services to shareholders of the Fund relating to their investment in the Class
AAA Shares, including assistance in connection with inquiries relating to
shareholder accounts; the production and dissemination of prospectuses
(including statements of additional information) of the Fund 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; and profit to the Distributor and its affiliates
arising out of their provision of shareholder services. Notwithstanding the
foregoing, this Plan does not require the Distributor or any of its affiliates
to perform any specific type or level of distribution activities or shareholder
services or to incur any specific level of expenses for activities covered by
this Section 2. In addition, Payments made in a particular year shall not be
refundable whether or not such Payments exceed the expenses incurred for that
year pursuant to this Section 2.
3. The Fund is hereby authorized and directed to enter into appropriate written
agreements with the Distributor and each other person to whom the Fund 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.
4. Each agreement required to be in writing by Section 3 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 Disinterested
Directors ("Disinterested Director Approval"), by vote cast in person at a
meeting called for the purposes of voting on such agreement. All determinations
or authorizations of the Board hereunder shall be made by Board Approval and
Disinterested Director Approval.
5. The officers, investment adviser or Distributor of the Fund, 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.
6. To the extent any activity is covered by Section 2 and is also an activity
which the Fund may pay for on behalf of the Class AAA Shares 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 Fund
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.
7. [This Plan shall not take effect until it has been approved by a vote of at
least a majority of the Class AAA Shares.] 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
<PAGE>
Class AAA Shares. This Plan may continue in effect for longer than one year
after its approval by a majority of the Class AAA Shares only as long as such
continuance is specifically approved at least annually by Board Approval and by
Disinterested Director Approval.
8. This Plan may be terminated at any time by a vote of the Disinterested
Directors, 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 Class AAA Shares.
9. 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 Class AAA Shares" shall mean the vote, at the annual or a
special meeting of the holders of the Class AAA Shares duly called, (a) of 67%
or more of the voting securities present at such meeting, if the holders of more
than 50% of the Class AAA Shares outstanding on the record date for such meeting
are present or represented by proxy or, if less, (b) more than 50% of the Class
AAA Shares outstanding on the record date for such meeting.
Dated: ______, 2000
EXHIBIT (p)
SECTION S
Code of Ethics
Gabelli Funds, LLC
GAMCO Investors, Inc.
Gabelli & Company, Inc.
Gabelli Advisers, Inc.
Gabelli Fixed Income LLC
Each Registered Investment Company or series thereof (each of which is
considered to be a Company for this purpose) for which any of the Companies
listed above presently or hereafter provides investment advisory or principal
underwriting services, other than a money market fund or a fund that does not
invest in Securities.
Introduction
This Code of Ethics establishes rules of conduct for persons who are
associated with the companies named above or with the registered investment
companies for which such companies provide investment advisory or principal
underwriter services. The Code governs their personal investment and other
investment-related activities.
The basic rule is very simple: put the client's interests first. The
rest of the rules elaborate this principle. Some of the rules are imposed
specifically by law. For example, the laws that govern investment advisers
specifically prohibit fraudulent activity, making statements that are not true
or that are misleading or omit something that is significant in the context and
engaging in manipulative practices. These are general words, of course, and over
the years the courts, the regulators and investment advisers have interpreted
these words and established codes of conduct for their employees and others who
have access to their investment decisions and trading activities. Indeed, the
rules obligate investment advisers to adopt written rules that are reasonably
designed to prevent the illegal activities described above and must follow
procedures that will enable them to prevent such activities.
This Code is intended to assist the companies in fulfilling their
obligations under the law. The first part lays out who the Code applies to, the
second part deals with personal investment activities, the third part deals with
other sensitive business practices, and subsequent parts deal with reporting and
administrative procedures.
The Code is very important to the companies and their employees.
Violations can not only cause the companies embarrassment, loss of business,
legal restrictions, fines and other punishments but for employees can lead to
demotion, suspension, firing, ejection from the securities business and very
large fines.
I. Applicability
A. The Code applies to each of the following:
1. The Companies named or described at the top of page
one of the Code and all entities that are under
common management with these Companies or otherwise
agree to be subject to the Code ("Affiliates"). A
listing of the Affiliates, which is periodically
updated, is attached as Exhibit A.
<PAGE>
2. Any officer, director or employee of any Company,
Affiliate or Fund Client (as defined below) whose job
regularly involves him in the investment process.
This includes the formulation and making of
investment recommendations and decisions, the
purchase and sale of securities for clients and the
utilization of information about investment
recommendations, decisions and trades. Due to the
manner in which the Companies and the Affiliates
conduct their business, every employee should assume
that he is subject to the Code unless the Compliance
Officer specifies otherwise.
3. With respect to all of the Companies, Affiliates and
Fund Clients except Gabelli & Company, Inc., any
natural person who controls any of the Companies,
Affiliates or Fund Clients and who obtains
information regarding the Companies' or the
Affiliates' investment recommendations or decisions.
However, a person whose control arises only as a
result of his official position with such entity is
excluded. Disinterested directors of Fund Clients,
for example, are excluded from coverage under this
item.
4. With respect to all of the Companies and Fund Clients
except Gabelli & Company, Inc., any director,
officer, general partner or person performing a
similar function even if he has no knowledge of and
is not involved in the investment process.
Disinterested directors of Fund Clients and
independent directors of Affiliates are included in
coverage under this item.
5. As an exception, the Code does not apply to any
director, officer or employee of any Fund Client
(such as certain of The Gabelli Westwood Funds) with
respect to which the Companies' services do not
involve the formulation or making of investment
recommendations or decisions or the execution of
portfolio transactions if that person is also a
director, officer or employee of any entity that does
perform such services (such as Westwood Management
Corp.). These individuals are covered by codes of
ethics adopted by such entities.
B. Definitions
1. ACCESS PERSONS. The Companies and the persons
described in items (A)2 and (A)3 above other than
those excluded by item (A)5 above.
2. ACCESS PERSON ACCOUNT. Includes all advisory,
brokerage, trust or other accounts or forms of direct
beneficial ownership in which one or more Access
Persons and/or one or more members of an Access
Person's immediate family have a substantial
proportionate economic interest. Immediate family
includes an Access Person's spouse and minor children
living with the Access Person. A substantial
proportionate economic interest will generally be 10%
of the equity in the account in the case of any
single Access Person and 25% of the equity in the
account in the case of all Access Persons in the
aggregate, whichever is first applicable. Investment
partnerships and similar indirect means of ownership
other than registered open-end investment companies
are also treated as accounts.
As an exception, accounts in which one or more Access
Persons and/or their immediate family have a
substantial proportionate interest which are
maintained with persons who have no affiliation with
the Companies and with respect to which no Access
Person has, in the judgment of the Compliance Officer
after reviewing the terms and circumstances, any
direct or indirect influence or control over the
investment or portfolio execution process are not
Access Person Accounts.
<PAGE>
As a further exception, subject to the provisions of
Article II(I)7, bona fide market making accounts of
Gabelli & Company, Inc. are not Access Person
Accounts.
As a further exception, subject to the provisions of
Article II(I)7, bona fide error accounts of the
Companies and the Affiliates are not Access Person
Accounts.
3. ASSOCIATE PORTFOLIO MANAGERS. Access Persons who are
engaged in securities research and analysis for
designated Clients or are responsible for investment
recommendations for designated Clients but who are
not principally responsible for investment decisions
with respect to any Client accounts.
4. CLIENTS. Investment advisory accounts maintained with
any of the Companies or Affiliates by any person,
other than Access Person Accounts. However, Fund
Clients covered by item (A)(5) above are considered
Client accounts only with respect to employees
specifically identified by the Compliance Officer as
having regular information regarding investment
recommendations or decisions or portfolio
transactions for such Fund Clients.
5. COMPANIES. The companies named or described at the
top of page one of the Code.
6. COMPLIANCE OFFICER. The persons designated as the
compliance officers of the Companies.
7. COVERED PERSONS. The Companies, the Access Persons
and the persons described in item (A)4 above.
8. FUND CLIENTS. Clients that are registered investment
companies or series thereof.
9. PORTFOLIO MANAGERS. Access Persons who are
principally responsible for investment decisions with
respect to any Client accounts.
10. SECURITY. Any financial instrument treated as a
security for investment purposes and any related
instrument such as a futures, forward or swap
contract entered into with respect to one or more
securities, a basket of or an index of securities or
components of securities. However, the term security
does not include securities issued by the Government
of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper and high
quality short-term debt instruments, including
repurchase agreements, or shares of registered
open-end investment companies.
II. Restrictions on Personal Investing Activities
A. Basic Restriction on Investing Activities
If a purchase or sale order is pending or under active
consideration for any Client account by any Company or
Affiliate, neither the same Security nor any related Security
(such as an option, warrant or convertible security) may be
bought or sold for any Access Person Account.
<PAGE>
B. Initial Public Offerings
No Security or related Security may be acquired in an initial
public offering for any Access Person Account.
C. Blackout Period
No Security or related Security may be bought or sold for the
account of any Portfolio Manager or Associate Portfolio
Manager during the period commencing seven (7) days prior to
and ending seven (7) calendar days after the purchase or sale
(or entry of an order for the purchase or sale) of that
Security or any related Security for the account of any Client
with respect to which such person has been designated a
Portfolio Manager or Associate Portfolio Manager, unless the
Client account receives at least as good a price as the
account of the Portfolio Manager or Associate Portfolio
Manager and the Compliance Officer determines under the
circumstances that the Client account has not been adversely
affected (including with respect to the amount of such
Security able to be bought by the Client account) by the
transaction for the account of the Portfolio Manager or
Associate Portfolio Manager.
D. Short-term Trading
No Security or related Security may, within a 60 day period,
be bought and sold or sold and bought at a profit for any
Access Person Account if the Security or related Security was
held at any time during that period in any Client account.
E. Exempt Transactions
Participation on an ongoing basis in an issuer's dividend
reinvestment or stock purchase plan, participation in any
transaction over which no Access Person had any direct or
indirect influence or control and involuntary transactions
(such as mergers, inheritances, gifts, etc.) are exempt from
the restrictions set forth in paragraphs (A) and (C) above
without case by case preclearance under paragraph (G) below.
F. Permitted Exceptions
Purchases and sales of the following Securities for Access
Person Accounts are exempt from the restrictions set forth in
paragraphs A, C and D above if such purchases and sales comply
with the pre-clearance requirements of paragraph (G) below:
1. Non-convertible fixed income Securities rated at
least "A";
2. Equity Securities of a class having a market
capitalization in excess of $1 billion;
3. Equity Securities of a class having a market
capitalization in excess of $500 million if the
transaction in question and the aggregate amount of
such Securities and any related Securities purchased
and sold for the Access Person Account in question
during the preceding 60 days does not exceed 100
shares;
4. Municipal Securities; and
<PAGE>
5. Securities transactions effected for federal, state
or local income tax purposes that are identified to
the Compliance Officer at the time as being effected
for such purposes.
In addition, the exercise of rights that were received pro
rata with other security holders is exempt if the
pre-clearance procedures are satisfied.
G. Pre-Clearance of Personal Securities Transactions
No Security may be bought or sold for an Access Person Account
unless (i) the Access Person obtains prior approval from the
Compliance Officer or, in the absence of the Compliance
Officer, from the general counsel of Gabelli Asset Management
Inc.; (ii) the approved transaction is completed on the same
day approval is received; and (iii) the Compliance Officer or
the general counsel does not rescind such approval prior to
execution of the transaction (See paragraph I below for
details of the Pre-Clearance Process.)
H. Private Placements
The Compliance Officer will not approve purchases or sale of
Securities that are not publicly traded, unless the Access
Person provides full details of the proposed transaction
(including written certification that the investment
opportunity did not arise by virtue of such person's
activities on behalf of any Client) and the Compliance Officer
concludes, after consultation with one or more of the relevant
Portfolio Managers, that the Companies would have no
foreseeable interest in investing in such Security or any
related Security for the account of any Client.
I. Pre-Clearance Process
1. No Securities may be purchased or sold for any Access
Person Account unless the particular transaction has
been approved in writing by the Compliance Officer
or, in his absence, the general counsel of Gabelli
Asset Management Inc. The Compliance Officer shall
review not less frequently than weekly reports from
the trading desk (or, if applicable, confirmations
from brokers) to assure that all transactions
effected for Access Person Accounts are effected in
compliance with this Code.
2. No Securities may be purchased or sold for any Access
Person Account other than through the trading desk of
Gabelli & Company, Inc., unless express permission is
granted by the Compliance Officer. Such permission
may be granted only on the condition that the third
party broker supply the Compliance Officer, on a
timely basis, duplicate copies of confirmations of
all personal Securities transactions for such Access
Person in the accounts maintained with such third
party broker and copies of periodic statements for
all such accounts.
3. A Trading Approval Form, attached as Exhibit B, must
be completed and submitted to the Compliance Officer
for approval prior to entry of an order.
4. After reviewing the proposed trade, the level of
potential investment interest on behalf of Clients in
the Security in question and the Companies'
restricted lists, the Compliance Officer shall
approve (or disapprove) a trading order on behalf of
an Access Person as expeditiously as possible. The
Compliance Officer will generally approve
transactions described in paragraph (F) above unless
the Security in question or a related security is on
the Restricted List or the
<PAGE>
Compliance Officer believes for any other reason that
the Access Person Account should not trade in such
Security at such time.
5. Once an Access Person's Trading Approval Form is
approved, the form must be forwarded to the trading
desk (or, if a third party broker is permitted, to
the Compliance Officer) for execution on the same
day. If the Access Person's trading order request is
not approved, or is not executed on the same day it
is approved, the clearance lapses although such
trading order request maybe resubmitted at a later
date.
6. In the absence of the Compliance Officer, an Access
Person may submit his or her Trading Approval Form to
the general counsel of Gabelli Asset Management Inc.
Trading approval for the Compliance Officer must be
obtained from the general counsel, and trading
approval for the general counsel must be obtained
from the Compliance Officer. In no case will the
Trading Desk accept an order for an Access Person
Account unless it is accompanied by a signed Trading
Approval Form.
7. The Compliance Officer shall review all Trading
Approval Forms, all initial, quarterly and annual
disclosure certifications and the trading activities
on behalf of all Client accounts with a view to
ensuring that all Covered Persons are complying with
the spirit as well as the detailed requirements of
this Code. The Compliance Officer will review all
transactions in the market making accounts of Gabelli
& Company, Inc. and the error accounts of the
Companies and the Affiliates in order to ensure that
such transactions are bona fide market making or
error transactions or are conducted in accordance
with the requirements of this Article II.
III. Other Investment-Related Restrictions
A. Gifts
No Access Person shall accept any gift or other item of more
than $100 in value from any person or entity that does
business with or on behalf of any Client.
B. Service As a Director
No Access Person shall commence service on the Board of
Directors of a publicly traded company or any company in which
any Client account has an interest without prior authorization
from the Compliance Committee based upon a determination that
the Board service would not be inconsistent with the interests
of the Clients. The Compliance Committee shall include the
senior Compliance Officer of Gabelli Asset Management Inc.,
the general counsel of Gabelli Asset Management Inc. and at
least two of the senior executives from among the Companies.
IV. Reports and Additional Compliance Procedures
<PAGE>
A. Every Covered Person, except independent directors of
Affiliates of the Companies, must submit a report (a form of
which is appended as Exhibit C) containing the information set
forth in paragraph (B) below with respect to transactions in
any Security in which such Covered Person has or by reason of
such transaction acquires, any direct or indirect beneficial
ownership (as defined in Exhibit D) in the Security, and with
respect to any account established by the Covered Person in
which any Securities were held for the direct or indirect
benefit of the Covered Person; PROVIDED, HOWEVER, that:
1. a Covered Person who is required to make reports only
because he is a director of one of the Fund Clients
and who is a "disinterested" director thereof need
not make a report with respect to any transactions
other than those where he knew or should have known
in the course of his duties as a director that any
Fund Client of which he is a director has made or
makes a purchase or sale of the same or a related
Security within 15 days before or after the purchase
or sale of such Security or related Security by such
director.
2. a Covered Person need not make a report with respect
to any transaction effected for, and Securities held
in, any account over which such person does not have
any direct or indirect influence or control; and
3. a Covered Person will be deemed to have complied with
the requirements of this Article IV insofar as the
Compliance Officer receives in a timely fashion
duplicate monthly or quarterly brokerage statements
or transaction confirmations on which all
transactions required to be reported hereunder are
described.
B. A Covered Person must submit the report required by this
Article to the Compliance Officer no later than 10 days after
the end of the calendar quarter in which the transaction or
account to which the report relates was effected or
established, and the report must contain the date that the
report is submitted.
1. This report must contain the following information
with respect to transactions:
a. The date of the transaction, the title and number
of shares and the principal amount of each
Security involved;
b. The nature of the transaction (i.e., purchase,
sale or any other type of acquisition or
disposition);
c. The price at which the transaction was effected;
and
d. The name of the broker, dealer or bank with or
through whom the transaction was effected.
2. This report must contain the following information
with respect to accounts established:
a. The name of the broker, dealer or bank with whom
the account was established; and
b. The date the account was established.
<PAGE>
C. Any report submitted to comply with the requirements of this
Article IV may contain a statement that the report shall not
be construed as an admission by the person making such report
that he has any direct or indirect beneficial ownership in the
Security to which the report relates. A person need not make
any report under this Article IV with respect to transactions
effected for, and Securities held in, any account over which
the person has no direct or indirect influence or control
D. No later than 10 days after beginning employment with any of
the Companies or Affiliates or otherwise becoming a Covered
Person, each Covered Person (except for a "disinterested"
director of the Fund Client who is required to submit reports
solely by reason of being such a director) must submit a
report containing the following information:
1. The title, number of shares and principal amount of
each Security in which the Covered Person had any
direct or indirect beneficial ownership when the
person became a Covered Person;
2. The name of any broker, dealer or bank with whom the
Covered Person maintained an account in which any
Securities were held for the direct or indirect
benefit of the Covered Person as of the date the
person became a Covered Person; and
3. The date that the report is submitted.
The form of such report is attached as Exhibit E.
E. Annually each Covered Person must certify that he has read and
understood the Code and recognizes that he is subject to such
Code. In addition, annually each Covered Person must certify
that he has disclosed or reported all personal Securities
transactions required to be disclosed or reported under the
Code and that he is not subject to any regulatory disability
described in the annual certification form. Furthermore, each
Covered Person (except for a "disinterested" director of the
Fund Client who is required to submit reports solely by reason
of being such a director) annually must submit a report
containing the following information (which information must
be current as of a date no more than 30 days before the report
is submitted):
1. The title, number of shares and principal amount of
each Security in which the Covered Person had any
direct or indirect beneficial ownership;
2. The name of any broker, dealer or bank with whom the
Covered Person maintains an account in which any
Securities are held for the direct or indirect
benefit of the Covered Person; and
3. The date that the report is submitted.
The form of such certification and report is attached
as Exhibit F.
F. At least annually (or quarterly in the case of Items 4 and 5
below), each of the Companies that has a Fund Client or that
provides principal underwriting services for a Fund Client
shall, together with each Fund Client, furnish a written
report to the Board of Directors of the Fund Client that:
1. Describes any issues arising under the Code since the
last report.
<PAGE>
2. Certifies that the Companies have developed
procedures concerning Covered Persons' personal
trading activities and reporting requirements
relevant to such Fund Clients that are reasonably
necessary to prevent violations of the Code;
3. Recommends changes, if any, to the Fund Clients' or
the Companies' Codes of Ethics or procedures;
4. Provides a summary of any material or substantive
violations of this Code by Covered Persons with
respect to such Fund Clients which occurred during
the past quarter and the nature of any remedial
action taken; and
5. Describes any material or significant exceptions to
any provisions of this Code of Ethics as determined
under Article VI below.
G. The Compliance Officer shall notify each employee of any of
the Companies or Affiliates as to whether such person is
considered to be an Access Person or Covered Person and shall
notify each other person that is considered to be an Access
Person or Covered Person.
V. Sanctions
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Directors of the relevant
Company or of the relevant Fund Client, whichever is most appropriate
under the circumstances, may impose on that person whatever sanctions
the Board deems appropriate, including, among other things,
disgorgement of profit, censure, suspension or termination of
employment. Material violations of requirements of this Code by
employees of Covered Persons and any sanctions imposed in connection
therewith shall be reported not less frequently than quarterly to the
Board of Directors of any relevant Company or Fund Client, as
applicable.
VI. Exceptions
The Compliance Committee of the Companies reserves the right to decide,
on a case-by-case basis, exceptions to any provisions under this Code.
Any exceptions made hereunder will be maintained in writing by the
Compliance Committee and presented to the Board of Directors of any
relevant Fund Client at its next scheduled meeting.
VII. Preservation of Documents
This Code, a copy of each report by a Covered Person, any written
report made hereunder by the Companies or the Compliance Officer, lists
of all persons required to make reports, a list of any exceptions, and
the reasons therefor, with respect to Article II.B, and any records
under Article II.G with respect to purchases pursuant to Article II.H
above, shall be preserved with the records of the relevant Company and
any relevant Fund Client for the period required by Rule 17j-1.
VIII. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving any
Covered Person from acting in accordance with the provision of any
applicable law, rule or regulation or any other statement of policy or
procedure governing the conduct of such person adopted by the
Companies, the Affiliates or the Fund Clients.
<PAGE>
IX. Further Information
If any person has any question with regard to the applicability of the
provisions of this Code generally or with regard to any Securities
transaction or transactions, he should consult the Compliance Officer.
<PAGE>
EXHIBIT A
LIST OF AFFILIATES OF THE COMPANIES
ALCE Partners, L.P.
Darien Associates LLC
Gabelli Asset Management Inc.
Gabelli Associates Fund
Gabelli Associates Limited
Gabelli Fixed Income Distributors
Gabelli Fixed Income, Inc.
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli International Gold Fund Limited
Gabelli International Limited
Gabelli International II Limited
Gabelli International Securities Limited
Gabelli Multimedia Partners, L.P.
Gabelli Performance Partnership L.P.
Gabelli Securities, Inc.
Gemini Capital Management Ltd.
GLI, Inc.
Gabelli Group Capital Partners, Inc. and its subsidiaries
Gabelli Global Partners, L.P.
Gabelli Global Partners, Ltd.
Gabelli European Partners, Ltd.
Gabelli Fund, LDC
MJG Associates, Inc.
New Century Capital Partners, L.P.
<PAGE>
EXHIBIT B
PRE-CLEARANCE TRADING APPROVAL FORM
I, ______________________________________ (name), am an Access Person or
authorized officer thereof and seek pre-clearance to engage in the transaction
described below for the benefit of myself or another Access Person:
ACQUISITION OR DISPOSITION (circle one)
Name of Account:________________________________________________________________
Account Number:_________________________________________________________________
Date of Request:________________________________________________________________
Security:_______________________________________________________________________
Amount or # of Shares:__________________________________________________________
Broker:_________________________________________________________________________
If the transaction involves a Security that is not publicly traded, a
description of proposed transaction, source of investment opportunity and any
potential conflicts of interest:
I hereby certify that, to the best of my knowledge, the transaction described
herein is not prohibited by the Code of Ethics and that the opportunity to
engage in the transaction did not arise by virtue of my activities on behalf of
any Client.
Signature: Print Name:
APPROVED OR DISAPPROVED(Circle One)
Date of Approval:
Signature: Print Name:
If approval is granted, please forward this form to the trading desk (or if a
third party broker is permitted, to the Compliance Officer) for immediate
execution.
<PAGE>
EXHIBIT C
TRANSACTION REPORT
Report submitted by:____________________________________________________________
Print Name
This transaction report (the "Report") is submitted pursuant to Section IV (B)
of the Code of Ethics of the Companies and supplies information with respect to
transactions in any Security in which you may be deemed to have, or by reason of
such transaction acquire, any direct or indirect beneficial ownership interest,
and with respect to accounts established by you in which any Securities were
held for your direct or indirect benefit, for the period specified below. If you
were not employed by or affiliated with us during this entire period, amend the
dates specified below to cover your period of employment or affiliation.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable transactions or new accounts, sign and return this
page only. If you have reportable transactions or new accounts, complete, sign
and return Page 2 and any attachments.
I HAD NO REPORTABLE SECURITIES TRANSACTIONS OR ACCOUNTS ESTABLISHED DURING THE
PERIOD ___________ THROUGH _________________. I CERTIFY THAT I AM FULLY FAMILIAR
WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MY KNOWLEDGE, THE INFORMATION
FURNISHED IN THIS REPORT IS TRUE AND CORRECT.
Signature_______________________________________________________________________
Position________________________________________________________________________
Date____________________________________________________________________________
Page 2
TRANSACTION REPORT
Report submitted by:____________________________________________________________
Print Name
The following tables supply the information required by Section IV (B) of the
Code of Ethics for the period specified below. Transactions reported on
brokerage statements or duplicate confirmations actually received by the
Compliance Officer do not have to be listed although it is your responsibility
to make sure that such statements or confirmations are complete and have been
received in a timely fashion.
<PAGE>
TRANSACTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
WHETHER PURCHASE, NAME OF BROKER/
SALE, SHORT SALE OR DEALER WITH OR
SECURITIES OTHER TYPE OF THROUGH WHOM NATURE OF
(NAME AND DATE OF DISPOSITION OR QUANTITY OF PRICE PER SHARE THE TRANSACTION OWNERSHIP OF
SYMBOL) TRANSACTION ACQUISITION SECURITIES OR OTHER UNIT WAS EFFECTED SECURITIES
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
NEW ACCOUNTS ESTABLISHED
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER DATE ACCOUNT ESTABLISHED
* To the extent specified above, I hereby disclaim beneficial ownership of any
securities listed in this Report or brokerage statements or transaction
confirmations provided by me.
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT FOR THE
PERIOD OF THROUGH .
Signature____________________________________________________ Date______________
Position________________________________________________________________________
<PAGE>
EXHIBIT D
BENEFICIAL OWNERSHIP
For purposes of the attached Code of Ethics, "beneficial ownership" shall be
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except the determination of direct or
indirect beneficial ownership shall apply to all securities that a Covered
Person has or acquires. The term "beneficial ownership" of securities would
include not only ownership of securities held be a Covered Person for his own
benefit, whether in bearer form or registered in his name or otherwise, but also
ownership of securities held for his benefit by others (regardless of whether or
how they are registered) such as custodians, brokers, executors, administrators,
or trustees (including trusts in which he has only a remainder interest), and
securities held for his account by pledges, securities owned by a partnership in
which he is a member if he may exercise a controlling influence over the
purchase, sale of voting of such securities, and securities owned by any
corporation or similar entry in which he owns securities if the shareholder is a
control-ling shareholder of the entity and has or shares investment control over
the entity's portfolio.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which a Covered Person is a legatee or beneficiary
unless there is a specified legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as beneficially
owned by a Covered Person where such person enjoys "financial benefits
substantially equivalent to ownership." The Securities and Exchange Commission
has said that, although the final determination of beneficial ownership is a
question to be determined in the light of the facts of the particular case,
generally a person is regarded as the beneficial owner of securities held in the
name of his or her spouse and their minor children. Absent special circumstances
such relationship ordinarily results in such person obtaining financial benefits
substantially equivalent to ownership, E.G., application of the income derived
from such securities to maintain a common home, or to meet expenses that such
person otherwise would meet from other sources, or the ability to exercises a
controlling influence over the purchase, sale or voting of such securities.
A Covered Person also may be regarded as the beneficial owner of securities held
in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other agreement, he obtains therefrom financial
benefits substantially equivalent to those of ownership.
A Covered Person also is regarded as the beneficial owner of securities held in
the name of a spouse, minor children or other person, even though he does not
obtain therefrom the aforementioned benefits of ownership, if he can vest or
revest title in himself at once or at some future time.
<PAGE>
EXHIBIT E
INITIAL HOLDINGS REPORT
Report submitted by:____________________________________________________________
Print Name
This initial holdings report (the "Report") is submitted pursuant to Section IV
(D) of the Code of Ethics of the Companies and supplies information with respect
to any Security in which you may be deemed to have any direct or indirect
beneficial ownership interest and any accounts established by you in which any
Securities were held for your direct or indirect benefit, as of the date you
became subject to the Code of Ethics.
Unless the context otherwise requires, all terms used in the Report shall have
the same meaning as set forth in the Code of Ethics.
If you have no reportable Securities or accounts, sign and return this page
only. If you have reportable Securities or accounts, complete, sign and return
Page 2 and any attachments.
I HAVE NO REPORTABLE SECURITIES OR ACCOUNTS AS OF __________________. I CERTIFY
THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST OF MY
KNOWLEDGE, THE INFORMATION FURNISHED IN THIS REPORT IS TRUE AND CORRECT.
Signature_______________________________________________________________________
Position________________________________________________________________________
Date____________________________________________________________________________
Page 2
Initial holdings REPORT
Report submitted by:____________________________________________________________
Print Name
<PAGE>
The following tables supply the information required by Section IV (D) of the
Code of Ethics as of the date you became subject to the Code.
SECURITIES HOLDINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership of
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD SECURITIES
</TABLE>
Accounts
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
I CERTIFY THAT I AM FULLY FAMILIAR WITH THE CODE OF ETHICS AND THAT, TO THE BEST
OF MY KNOWLEDGE, THE INFORMATION IN THIS REPORT IS TRUE AND CORRECT AS OF
__________________________________.
Signature____________________________________________________ Date______________
Position________________________________________________________________________
<PAGE>
EXHIBIT F
ANNUAL CERTIFICATION OF CODE OF ETHICS
A. I (a Covered Person) hereby certify that I have read and understood the
Code of Ethics dated February 15, 2000, and recognize that I am subject
to its provisions. In addition, I hereby certify that I have disclosed
or reported all personal Securities transactions required to be
disclosed or reported under the Code of Ethics;
B. Within the last ten years there have been no complaints or disciplinary
actions filed against me by any regulated securities or commodities
exchange, any self-regulatory securities or commodities organization,
any attorney general, or any governmental office or agency regulating
insurance, securities, commodities or financial transactions in the
United States, in any state of the United States, or in any other
country;
C. I have not within the last ten years been convicted of or acknowledged
commission of any felony or misdemeanor arising out of my conduct as an
employee, salesperson, officer, director, insurance agent, broker,
dealer, underwriter, investment manager or investment advisor; and
D. I have not been denied permission or otherwise enjoined by order,
judgment or decree of any court of competent jurisdiction, regulated
securities or commodities exchange, self-regulatory securities or
commodities organization or other federal or state regulatory authority
from acting as an investment advisor, securities or commodities broker
or dealer, commodity pool operator or trading advisor or as an
affiliated person or employee of any investment company, bank,
insurance company or commodity broker, dealer, pool operator or trading
advisor, or from engaging in or continuing any conduct or practice in
connection with any such activity or the purchase or sale of any
security.
E. Unless I am exempt from filing an Annual Holdings Report (as a
"disinterested" director of a Fund Client or an independent director of
an Affiliate), I have attached a completed Annual Holdings Report which
is accurate as of a date no more than 30 days ago.
Print Name:_____________________________________________________________________
Signature:______________________________________________________________________
Date:___________________________________________________________________________
Page 2
ANNUAL HOLDINGS REPORT
Report submitted by:____________________________________________________________
Print Name
<PAGE>
The following tables supply the information required by Section IV (E) of the
Code of Ethics as of a date no more than 30 days before this report is
submitted. If you have no reportable Securities holdings or accounts, write
"None" in the space provided.
SECURITIES HOLDINGS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name of Broker/Dealer Where Nature of Ownership
SECURITIES (NAME AND SYMBOL) QUANTITY OF SECURITIES SECURITIES ARE HELD OF SECURITIES
---------------------------- ---------------------- ------------------- -------------
</TABLE>
ACCOUNTS
- --------------------------------------------------------------------------------
NAME OF BROKER, DEALER OR BANK ACCOUNT NUMBER
Signature____________________________________________________ Date______________
Position________________________________________________________________________
