Registration No. 33-86572
811-8866
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 1 /X/
POST-EFFECTIVE AMENDMENT NO. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT /X/
AMENDMENT NO. 1 /X/
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GABELLI INCOME SERIES FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (800) 422-3554
Please Send Copy of Communications to:
BRUCE N. ALPERT RICHARD T. PRINS, ESQ.
One Corporate Center Skadden, Arps, Slate, Meagher & Flom
Rye, New York 10580-1434 919 Third Avenue
(Name and Address of Agent for Service) New York, New York 10022
(212) 735-3000
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date
of this Registration Statement
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Pursuant to the provisions of Rule 24f-2(a)(1) under the Investment Company Act
of 1940, Registrant hereby elects to register an indefinite number of securities
under the Securities Act of 1933. Registrant will file a Rule 24f-2 Notice
within six months after the fiscal year ended December 31, 1994.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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GABELLI INCOME SERIES FUNDS, INC.
CROSS-REFERENCE SHEET
The Gabelli Global Governments Fund
(as required by Rule 4B1)
N-1A Item No. Location
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Part A
Item 1. Cover ........................... Cover Page
Item 2. Synopsis ........................ Table of Fees and Expenses
Item 3. Condensed Financial Information . Not Applicable
Item 4. General Description of Registrant Cover Page; Investment Objective
and Policies; Risk Factors;
General Information
Item 5. Management of the Fund .......... Management of the Fund; General
Information
Item 6. Capital Stock and Other
Securities .................... Dividends, Distributions and Taxes;
General Information
Item 7. Purchase of Securities Being
Offered ....................... Purchase of Shares
Item 8. Redemption or Repurchase ........ Redemption of Shares
Item 9. Pending Legal Proceedings ....... Not Applicable
Part B
Item 10. Cover Page ...................... Cover page
Item 11. Table of Contents Cover page
Item 12. General Information and History . Not Applicable
Item 13. Investment Objectives and
Policies ...................... Investments; Investment
Restrictions
Item 14. Management of the Fund ........... Directors and Officers
Item 15. Control Persons and Principal
Holders of Securities ......... Directors and Officers
Item 16. Investment Advisory and Other
Services ...................... The Adviser; The Sub-Adviser;
The Distributor
Item 17. Brokerage Allocation and Other
Practices ..................... Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other
Securities .................... Prospectus-General Information
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered ... Prospectus-Purchase of Shares;
Prospectus-Redemption of Shares
Item 20. Tax Status ...................... Dividends, Distributions and Taxes
Item 21. Underwriters .................... Prospectus-Purchase of Shares;
The Distributor
Item 22. Calculations of Performance Data Investment Performance Information
Item 23. Financial Statements ............ Not Applicable
Part C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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Subject to Completion -- Dated May __, 1995
The Gabelli Global Governments Fund
One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
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PROSPECTUS
June , 1995
The Gabelli Global Governments Fund (the "Fund") is a series of the Gabelli
Income Series Funds, Inc., a Maryland corporation (the "Corporation"). The Fund
is a newly organized, non-diversified, no-load mutual fund whose investment
objective is to seek a high level of total investment return on its assets. The
Fund seeks to achieve its investment objective through a combination of current
income and capital appreciation by investing primarily in a global portfolio of
high grade income securities issued or guaranteed by the U.S. or foreign
governments or their agencies, central banks, instrumentalities or political
subdivisions or by supranational agencies such as the World Bank or by issuers
that are majority owned by U.S. or foreign governments or supranational
agencies. See "Investment Objective and Policies".
The Fund has a distribution plan which permits it to pay up to .25% per year of
its average daily net assets for marketing and shareholder services and
expenses. The minimum initial investment in the Fund is currently $1,000. The
Fund currently intends to increase its minimum initial investment to $10,000
when it has either 10,000 shareholders or over $100,000,000 of assets under
management. See "Purchase of Shares". As the Fund is non-diversified, the Fund
will have the ability to invest a larger portion of its assets in a single
issuer than would be the case if it were diversified. As a result of this
non-diversified status, the Fund may experience greater fluctuations in net
asset value than investment companies which invest in a broad range of issuers.
For further information, contact Gabelli & Company, Inc. at the address or
telephone number shown above.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information
dated June , 1995 (the "Additional Statement") containing additional
information about the Fund has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus. For a free
copy, write or call the Corporation at the telephone number or address set forth
above.
This Prospectus should be retained by investors for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The
Gabelli
Global
Governments
Fund
PROSPECTUS
June , 1995
GABELLI FUNDS, INC.
Investment Adviser
SAL. OPPENHEIM JR. & CIE. ASSET
MANAGEMENT CORP.
Sub-Adviser
GABELLI & COMPANY, INC.
Distributor
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TABLE OF FEES AND EXPENSES
Shareholder Transaction Expenses:
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) ............................ None
Maximum Sales Load Imposed on Reinvested Dividends ................ None
Deferred Sales Load ............................................... None
Redemption Fees ................................................... None
Exchange Fees ..................................................... None
Annual Fund Operating Expenses for the First Fiscal Year
(as a percentage of average net assets)(a):
Management Fees(b) ................................................ 1.00%
12b-1 Expenses .................................................... .25
Other Expenses(c) ................................................. .50
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Total Operating Expenses ....................................... 1.75%
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Example:
1 year 3 years
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You would pay the following expenses on a $1,000
investment assuming a 5% annual return: 17.50 54.92
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The amounts listed in these examples should not be considered as representative
of future expenses, and actual expenses may be greater or less than those
indicated. Moreover, while the example assumes a 5% annual return, the Fund's
actual performance will vary and may result in an actual return greater or less
than 5%.
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The information contained in the foregoing table is provided to assist you in
understanding the various direct and indirect costs and expenses that an
investor in the Fund would bear.
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(a) Since the Fund has not yet commenced investment operations, the percentages
indicated in the table are estimates and actual expenses may be more or
less than the amounts shown.
(b) Subject to potential reduction as a result of the Adviser's expense
reimbursement obligations.
(c) Such expenses include custodian and transfer agency fees and other
customary Fund expenses.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to seek a high level of total investment
return on its assets. The Fund seeks to achieve its investment objective through
a combination of current income and capital appreciation. Under normal market
conditions, the Fund will invest at least 65% of its total assets in a global
portfolio of high grade Government Income Securities. As used in this
Prospectus, "Government Income Securities" includes bonds, notes, bills or
debentures; in each case issued by the U.S. or foreign governments or their
agencies, central banks, instrumentalities or political subdivisions or by
issuers that are majority owned by the U.S. or foreign governments or issued by
supranational agencies such as The World Bank or their affiliates.
Under normal circumstances, the Fund will invest in Government Income Securities
of issuers located in at least three countries, which may include the United
States. Risks inherent in the Fund's investments are discussed below. See
"Associated Risk Factors". The Fund's investment objective is fundamental and
cannot be changed without shareholder approval. There can be no assurance the
Fund will achieve its investment objective.
Investments in foreign securities may involve certain risks. (See "Associated
Risk Factors"). Also, the expense ratio of the Fund can be expected to be higher
than that of mutual funds investing solely in domestic securities since the
expenses of the Fund, such as the cost of maintaining the custody of foreign
securities and advisory fees, are higher.
Investment Methodology and Policies
While participation in global securities markets was traditionally the domain of
large, experienced investors with direct access to institutionally
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dominated foreign markets, the Fund has been designed to allow investors to
participate in a global portfolio of Government Income Securities denominated in
various currencies. A global portfolio of Government Income Securities gives
investors the opportunity to pursue attractive total returns in a variety of
markets.
The Adviser has engaged Sal. Oppenheim jr. & Cie. Asset Management Corp. (the
"Sub-Adviser") to act as the sub-adviser with respect to the management of the
Fund. The Sub-Adviser seeks to maximize total return through a disciplined
investment approach that focuses on understanding the long-term trends in the
global bond and currency markets. Investment strategy is formulated based on a
continuous top-down assessment of global macroeconomic developments, political
environments, central bank and G-7 policies, and currency and inflationary
trends. The Sub-Adviser's fundamental, top-down assessments are primarily
qualitative in nature.
The Sub-Adviser maintains that global bond managers add value primarily through
their choice of countries and currencies based on "relative" macroeconomic
assessments. The Sub-Adviser believes inefficiencies in the world's capital
markets and the fact that the world's major economies often do not move in
unison provide investment opportunities to seek high total return.
Quantitative analyses are utilized as valuation tools in timing buy and sell
decisions and in taking advantage of interim trading opportunities. The
Sub-Adviser believes that in using quantitative and qualitative techniques, it
is important to maintain flexibility to factor in new events and information.
In selecting Government Income Securities for the Fund's portfolio, the
Sub-Adviser normally will consider the following factors, among others: (i) the
strengths and weaknesses of the currencies in which the securities are
denominated; (ii) expected levels of inflation and interest rates; (iii)
government policies influencing business conditions; (iv) the financial
condition of the issuer; and (v) other pertinent financial, tax, social,
political and national factors.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in high grade Government Income Securities denominated in any currency or
multi-currency units. High grade securities are those rated at the time of
purchase A- or higher by Moody's Investor Services, Inc. or by Standard & Poor's
Ratings Group (or another nationally recognized statistical ratings
organization) or are unrated but deemed by the Sub-Adviser to be of comparable
quality.
The weighted average maturity of the Fund's portfolio securities will vary based
upon an assessment of economic and market conditions, although it is not
currently expected that the average maturity of the Fund's portfolio will exceed
ten years.
Government Income Securities in which the Fund may invest have different kinds
of government support. For example, some U.S. government securities, such as
U.S. Treasury bonds, notes and bills, are supported by the full faith and credit
of the United States, whereas other U.S. government securities issued or
guaranteed by federal agencies or government-sponsored enterprises are not
supported by the full faith and credit of the United States. Similarly,
obligations of foreign governmental entities include obligations issued or
guaranteed by governments with taxing power or by their agencies. Some foreign
government securities are supported by the full faith and credit of a foreign
national government or political subdivision (such as a province of Canada) and
some are not. For example, foreign government securities include securities
issued by corporations which have been charged with a public purpose and a
majority of whose outstanding equity securities are owned by a foreign
government or government agency. Such securities may be supported only by the
credit of the issuing corporation and not by that of the government or agency.
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Supranational income securities are issued by agencies whose member nations make
capital contributions to support the agencies' activities, and include such
entities as the World Bank (International Bank for Reconstruction and
Development), the Asian Development Bank, the European Coal and Steel Community,
the European Investment Bank and the Inter-American Development Bank. These
organizations do not have taxing authority and are dependent upon their members
for payments of interest and principal. Each supranational entity's lending
activities are limited to a percentage of its total capital (including "callable
capital" contributed by members on the entity's call), reserves and net income.
Supranational income securities may be denominated in U.S. dollars or in foreign
currencies.
When the Sub-Adviser believes that abnormal market or economic conditions
warrant, for temporary defensive purposes it may establish and maintain cash
reserves without limitation. Fund reserves may be invested in domestic as well
as foreign money market instruments, including but not limited to government
obligations, certificates of deposit, bankers' acceptances, commercial paper,
short-term corporate debt securities and repurchase agreements.
The Fund may employ certain investment techniques utilizing derivative
instruments in pursuit of its investment objectives. The Fund may purchase put
or call options on foreign securities and foreign currencies. The Fund may write
covered call and put options. The Fund also may enter into forward currency
exchange contracts and financial futures contracts ("hedging transactions") in
order to hedge the Fund's portfolio against changes in interest rates or against
foreign currency exchange rate risks. Finally, the Fund may also purchase
securities on a "when-issued" basis or sell securities for delayed delivery
subject to certain limitations and requirements. The Fund will not purchase or
sell futures contracts or related options if, immediately thereafter, the sum of
the amount of margin deposits on the existing futures and related options
positions and for premiums paid for existing options would exceed 5% of the
market value of the Fund's total assets. The market value of such instruments,
however, is not limited to any specific percentage of the Fund's total assets.
These investment techniques are discussed in more detail below under "Associated
Risk Factors" and in the Additional Statement.
The Fund may invest in repurchase agreements with respect to any securities it
owns. Repurchase agreements are considered loans to the counter party, and will
be fully collateralized at all times with liquid high grade securities and will
only be entered into with financial institutions approved by the Board of
Directors.
The Fund may lend securities to dealers or others if the loans are fully
collateralized and invest the collateral in short-term, liquid, high quality
debt securities. The Fund may borrow money in an amount up to 15% of its total
assets to satisfy redemption requests and may borrow money in an amount up to 5%
of its total assets for temporary or emergency purposes. The Fund does not
currently intend to borrow money for investment purposes. The Fund will not
purchase securities when borrowings exceed 5%.
The Fund may invest up to 5% of its net assets in illiquid securities as to
which market quotations are not readily available.
The Fund may also invest in the secondary market in premium income securities
which bear coupon rates higher than prevailing market rates.
See the Additional Statement for more information about these securities and
investment practices.
RISK FACTORS
Income Securities. Fixed-income securities generally are subject to two types of
risks: credit risk and interest rate risk. Credit risk relates to the ability of
the issuer to meet interest or principal payments or both as they come due.
Interest rate risk refers to the fluctuations in the net asset value of any
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portfolio of fixed-income securities resulting from the inverse relationship
between price and yield of fixed-income securities; that is, when the general
level of interest rates rises, the prices of outstanding fixed-income securities
decline, and when interest rates fall, prices rise. Variable and floating rate
income securities also are subject to credit risk, but generally are less
subject to interest rate risk. Premium income securities are purchased at a
price in excess of par value. Accordingly, the yield earned by the Fund on such
investments may not exceed prevailing market yields. If an issuer were to redeem
premium securities held by the Fund at a price less than the price paid by the
Fund for such securities, the Fund would incur a loss of principal and, after
giving effect to such loss, the above market coupon rate available on the
premium security may not be sufficient to provide the Fund with a rate of return
equal to or greater than the return otherwise available if the Fund had not
invested in such premium income security.
Foreign Securities. Foreign securities in which the Fund may invest include
securities issued by supranational agencies such as the World Bank or their
affiliates. Investments in foreign securities involve certain risks not
ordinarily associated with investments in securities of domestic issuers,
including fluctuations in foreign exchange rates, future political and economic
developments, and the possible imposition of exchange controls or other foreign
governmental laws or restrictions. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries.
There may be less publicly available information about foreign issuers than
about a U.S. issuer, and accounting, auditing and financial reporting standards
and requirements may not be comparable. Securities of many foreign issuers are
less liquid and their prices more volatile than securities of comparable U.S.
issuers. Transaction costs of investing in non-U.S. securities markets are
generally higher than in the U.S. There is generally less government supervision
and regulation of exchanges, brokers and issuers than there is in the U.S. The
Fund might have greater difficulty taking appropriate legal action in non-U.S.
courts. Depository receipts that are not sponsored by the issuer may be less
liquid.
Interest income from non-U.S. securities generally will be subject to
withholding taxes by the country in which the issuer is located and may not be
recoverable by the Fund or the investor.
The Sub-Adviser will attempt to manage these risks so that its strategies and
investments benefit the Fund, but no assurance can be given that they will be
successfully managed.
Non-diversified Status. For purposes of the Investment Company Act of 1940, as
amended (the "Act"), the Fund has registered as a non- diversified investment
company which means the Fund may invest to a greater degree in a relatively
limited number of issuers than may a diversified investment company. However,
for tax purposes, the Fund intends to comply with the diversification
requirements imposed by the Internal Revenue Code of 1986, as amended (the
"Code"). (See "Dividends, Distributions and Taxes" in the Prospectus.) To the
extent the Fund invests in a more limited number of issuers, the Fund is more
susceptible to any single economic, political or regulatory occurrence that
affects such issuers.
Miscellaneous Investment Techniques.
Repurchase agreements have the risk that collateral may not be able to be
disposed of at a desirable price and the Fund may experience delays as a result
of bankruptcy of the counter party or encumbrances of collateral or restrictions
on its disposition. Lending of securities can result in a failure to deliver the
original security by the borrower, and similar risks with respect to disposition
of the collateral. When issued and delayed delivery securities transactions and
forward commitments involve potential loss to the Fund if the counterparty
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to the transaction fails to perform. Hedging transactions also have certain
risks, including imperfect market correlations, dependence on the credit of the
counter party, possible inability to enter into offsetting transactions,
potential losses in excess of the amount invested and market fluctuations that
can result in the Fund being in a worse position than if the hedging had not
occurred. Currency transactions also include the risk securities losses could be
magnified by changes in the value of the currency in which a security is
denominated relative to the U.S. dollar. While the Sub-Adviser may try to hedge
such risks, entering into hedging transactions can result in even greater
losses.
The purchaser of an option risks a total loss of the premium paid for the option
if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
forgoes any capital appreciation in excess of the exercise price in the case of
a call option and may be required to pay a price in excess of current market
value in the case of a put option. Options purchased and sold other than on an
exchange in private transactions also impose on the Fund the credit risk that
the counterparty will fail to honor its obligations.
See the Statement of Additional Information for additional information with
respect to the miscellaneous investment techniques in which the Fund may engage.
MANAGEMENT OF THE FUND
The Corporation's Board of Directors (who, with its officers, are described in
the Additional Statement) has overall responsibility for the management of the
Fund. The Board of Directors decides upon matters of general policy and reviews
the actions of Gabelli & Company, Inc. (the "Distributor"), Gabelli Funds, Inc.
(the "Adviser") and the Sub-Adviser. Pursuant to an Investment Advisory Contract
with the Fund, the Adviser, under the supervision of the Corporation's Board of
Directors, directly or indirectly through sub-advisers, as the case may be,
provides a continuous investment program for the Fund's portfolio; provides
investment research and makes and executes recommendations for the purchase and
sale of securities; provides facilities and personnel, and the exercise of all
voting and other rights appertaining thereto required for the Fund's
administrative management; supervises the performance of administrative and
professional services provided by others including the Sub- Adviser; and pays
the compensation of the Sub-Administrator and all officers and directors of the
Fund who are its affiliates. As compensation for its services and the related
expenses borne by the Adviser, the Fund pays the Adviser a fee, computed daily
and payable monthly, equal, on an annual basis, to 1.00% of the first $500
million of the Fund's average daily net assets, and 0.80% of the Fund's average
daily net assets in excess of $500 million. This fee is higher than most mutual
funds with similar investment objectives. The Adviser is located at One
Corporate Center, Rye, New York 10580-1434.
The Adviser was formed in 1980 and as of March 31, 1995 acts as investment
adviser to the following funds with aggregate assets of $3.7 billion:
Net Assets
3/31/95
Open-end investment companies: (in millions)
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The Gabelli Asset Fund $1,048
The Gabelli Growth Fund 478
The Gabelli Value Fund 463
The Gabelli Small Cap Growth Fund 212
The Gabelli Equity Income Fund 51
The Gabelli ABC Fund 23
The Gabelli Global Telecommunications Fund 132
The Gabelli Global Interactive Couch
Potato(TM)(C) Fund 27
The Gabelli Global Convertible Securities Fund 17
Gabelli Gold Fund, Inc. 16
The Gabelli U.S. Treasury Money Market Fund 264
Closed-end investment companies:
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The Gabelli Convertible Securities Fund, Inc. 90
The Gabelli Equity Trust Inc. 856
The Gabelli Global Multimedia Trust, Inc. 66
Sal. Oppenheim jr. & Cie. Asset Management Corp. acts as Sub-Adviser to the Fund
pursuant to a sub-advisory agreement between the Adviser, the Sub-Adviser
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and the Fund. Under the supervision of the Board of Directors and the Adviser,
the Sub-Adviser provides investment research and makes and executes
recommendations for the purchase and sale of securities. As compensation for the
Sub-Adviser's services and related expenses, the Adviser pays the Sub-Adviser a
monthly fee in an amount equal to one half of all advisory fees it receives from
the Fund, after the payment by the Adviser of administrative and marketing
expenses. Investment decisions made by the Sub-Adviser on behalf of the Fund are
made by a committee, and no person is primarily responsible for making
recommendations to such committee. The Sub-Adviser is located at 450 Park
Avenue, New York, New York 10022.
Gabelli & Company, Inc., the Distributor of each of the Gabelli open-end Funds,
is an indirect majority owned subsidiary of the Adviser. GAMCO Investors, Inc.
("GAMCO"), a majority owned subsidiary of the Adviser, acts as investment
adviser for individuals, pension trusts, profit sharing trusts and endowments.
As of March 31, 1995, GAMCO had aggregate assets in excess of $4.5 billion under
its management. Teton Advisers LLC, an affiliate of the Adviser, acts as
investment sub-adviser of the Westwood Funds with assets under management in
excess of $28 million. Mr. Mario J. Gabelli may be deemed a "controlling person"
of the Adviser and the Distributor on the basis of his ownership of stock of the
Adviser.
Orders for the purchase or sale of portfolio securities may be placed with
affiliates of the Adviser and Sub-Adviser when it appears that such affiliate
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. The Adviser and the Sub-Adviser also may
consider sales of shares of the Fund and any other registered investment
companies managed by the Adviser, the Sub-Adviser or their 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.
In addition to the fee of the Adviser, the Fund is responsible for the payment
of all its other operating expenses, which include, among other things, expenses
for legal and independent auditor services, costs of printing all materials sent
to shareholders, charges of State Street Bank and Trust Company (the
"Custodian", "Transfer Agent" and "Dividend Disbursing Agent"), foreign
sub-custodians and any other persons hired by the Fund, securities registration
fees, fees and expenses of unaffiliated directors, accounting and printing costs
for reports and similar materials sent to shareholders, membership fees in trade
organizations, fidelity bond and liability coverage for the Corporation's
directors, officers and employees, interest, brokerage and other trading costs,
taxes, expenses of qualifying the Fund for sale in various jurisdictions,
expense of its distribution plan adopted under Rule 12b-1, expenses of personnel
performing shareholder servicing functions, litigation and other extraordinary
or non-recurring expenses and other expenses properly payable by the Fund.
The Additional Statement contains further information about the Investment
Advisory Contract and the Sub-Advisory Contract, including a more complete
description of the advisory and expense arrangements and administrative
provisions.
The Adviser has entered into a Sub-Administration Contract with The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation (the
"Sub-Administrator") pursuant to which the Sub-Administrator provides certain
administrative services necessary for the Fund's operations. These services
include, among other things, the preparation and distribution of materials for
meetings of the Corporation's Board of Directors, compliance testing of Fund
activities and assistance in the preparation of proxy statements, reports to
shareholders and other documentation. The Adviser pays the Sub-Administrator
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a monthly fee at the annual rate of .10% of the aggregate daily average net
assets of the mutual funds managed by the Adviser under its administration,
(with a minimum annual fee of $30,000 and subject to reduction to .08% on assets
of the Gabelli Funds under its administration in excess of $1 billion, up to
$1.5 billion and .03% in excess of $1.5 billion up to $3 billion and 0.2% in
excess of $3 billion) which, together with the services to be rendered, are
subject to negotiation between the parties and both parties retain the right
unilaterally to terminate the arrangement on not less than 60 days' notice. The
Sub-Administrator has its principal office at Exchange Place, Boston,
Massachusetts 02109.
DISTRIBUTION PLAN
The Board of Directors of the Corporation has approved on behalf of the Fund as
being in the best interest of the Fund and its shareholders a Distribution Plan
which authorize payments by the Fund in connection with the distribution of its
shares at an annual rate, as determined from time to time by the Board of
Directors, of up to .25% of the Fund's average daily net assets. Payments may be
made in subsequent years for expenses incurred in prior years. The potential for
such subsequent payments is a contingent liability for which no amount is
currently being recorded because the Fund does not have a reasonable basis on
which to conclude that the Board of Directors will approve such payment.
Interest, carrying or other financing charges on unreimbursed amounts could also
be considered a distribution expense if the Board so determined and would in
such event also potentially be subject to carryover to a future year upon
specific approval by the Board.
Payments may be made by the Fund under its Distribution Plan for the purpose of
financing any activity primarily intended to result in the sale of its shares as
determined by the Board of Directors. Such activities typically include
advertising; compensation for sales and sales marketing activities of the
Distributor, banks, broker-dealers and service providers; shareholder account
servicing; production and dissemination of prospectus and sales and marketing
materials; and capital or other expenses of associated equipment, rent,
salaries, bonuses, interest and other overhead. To the extent any activity is
one which the Fund may finance without its Distribution Plan, the Fund may also
make payments to finance such activity outside of the Plan and not be subject to
its limitations.
The Plan is to be implemented by written agreements between the Corporation on
behalf of the Fund and/or the Distributor and each person (including the
Distributor) to which payments may be made. Administration of the Plan is
regulated by Rule 12b-1 under the Act, which includes requirements that the
Board of Directors receive and review at least quarterly reports concerning the
nature and qualification of expenses for which payments are made, that the Board
of Directors approve all agreements implementing the Plan and that the Plan may
be continued from year to year only if the Board of Directors concludes at least
annually that continuation of the Plan is likely to benefit shareholders.
The Board of Directors has initially implemented the Plan by having the
Corporation enter into an agreement with the Distributor authorizing
reimbursement of expenses (including overhead) incurred by the Distributor and
its affiliates up to the .25% rate authorized by the Plan for distribution
activities of the types listed above. To the extent any of these payments are
based on allocations by the Distributor, the Fund may be considered to be
participating in joint distribution activities with other funds distributed by
the Distributor. Any such allocations would be subject to approval by the
Corporation's non-interested Directors and would be based on such factors as the
net assets of the Fund, the number of shareholder inquiries and similar
pertinent criteria.
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PURCHASE OF SHARES
Shares of the Fund are currently offered without a sales load as an investment
vehicle for individuals, institutions, fiduciaries and retirement plans.
The minimum initial investment in the Fund is currently $1,000. The Fund
currently intends to increase its minimum initial investment to $10,000 when it
has either 10,000 shareholders or over $100,000,000 of assets under management.
There is no minimum for subsequent investments in the Fund. Investments through
an Individual Retirement Account or other retirement plans, and Automatic
Investment Plans, however, have different requirements. Shares of the Fund are
sold at the net asset value per share next determined after receipt of an order
by the Fund's Distributor or transfer agent in proper form with accompanying
check or bank wire or other payment arrangements satisfactory to the Fund.
Although most shareholders elect not to receive stock certificates, certificates
for whole shares only can be obtained on specific written request to the
Transfer Agent.
Shares of the Fund may also be purchased through shareholder agents that are not
affiliated with the Fund or the Distributor. There is no sales or service charge
imposed by the Fund other than as described, but agents who do not receive
distribution payments or sales charges may impose a charge to the investor for
their services. Such fees may vary among agents, and such agents may impose
higher initial or subsequent investment requirements than those established by
the Fund. Services provided by broker-dealers may include allowing the investor
to establish a margin account and to borrow on the value of the Fund's shares in
that account. It is the responsibility of the shareholder's agent to establish
procedures which would assure that upon receipt of an order to purchase shares
of the Fund the order will be transmitted so that it will be received by the
Distributor before the time when the price applicable to the buy order expires.
Prospectuses, sales material and applications may be obtained from the
Distributor. The Fund and its Distributor reserve the right in their sole
discretion (1) to suspend the offerings of the Fund's shares and (2) to reject
purchase orders when, in the judgment of the Fund's management, such rejection
is in the best interest of the Fund.
The net asset value per share of the Fund is determined as of the close of the
regular session of the New York Stock Exchange, which is generally 4:00 p.m.,
New York City time, on each day that trading is conducted on the New York Stock
Exchange, by dividing the value of the Fund's net assets (i.e., the value of its
securities and other assets less its liabilities, including expenses payable or
accrued but excluding capital stock and surplus) by the number of shares
outstanding at the time the determination is made. Foreign securities are valued
as of the close of trading on the primary exchange on which they trade.
Portfolio securities for which market quotations are readily available are
valued at market value as determined by the last quoted sale price prior to the
valuation time on the valuation date in the case of securities traded on
securities exchanges or other markets for which such information is available.
Other readily marketable securities are valued at the average of the latest bid
and asked quotations for such securities prior to the valuation time. Debt
securities with remaining maturities of 60 days or less are valued at amortized
cost, which the Board of Directors believes represents fair value. All other
assets are valued at fair value as determined by or under the supervison of the
Board of Directors. See "Determination of Net Asset Value" in the Additional
Statement.
Mail
To make an initial purchase by mail, send a completed subscription order form
with a check for the amount of the investment payable to the Fund to:
The Gabelli Funds
P.O. Box 8308
Boston, MA 02266-8308
Subsequent purchases do not require a completed application and can be made by
(1) mailing a check to the same address noted above or by (2) bank wire,
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as indicated below. The exact name and number of the shareholder's account
should be clearly indicated.
Checks will be accepted if drawn in U.S. currency on a domestic bank for less
than $100,000. U.S. dollar checks drawn against a non-U.S. bank may be subject
to collection delays and will be accepted only upon actual receipt of funds by
the Transfer Agent. Bank collection fees may apply.
Bank Wire
To initially purchase shares of the Fund using the wire system for transmittal
of money among banks, an investor should first telephone the Fund at
1-800-422-3554 to obtain a new account number. The investor should then instruct
a Federal Reserve System member bank to wire funds to:
State Street Bank and Trust Company
ABA # 011-0000-28 REF DDA # 99046187
Attn: Custody and Shareholder Services
Re: Gabelli Global Governments Fund
A/C #
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Account of (Registered Owner)
----------------------------------------------------------------------
225 Franklin Street, Boston, MA 02110
For initial purchases, the investor should promptly complete and mail the
subscription order form to the address shown above for mail purchases. There may
be a charge by your bank for transmitting the money by bank wire but State
Street Bank and Trust Company does not charge investors in the Fund for the
receipt of wire transfers. If you are planning to wire funds, it is suggested
that you instruct your bank early in the day so the wire transfer can be
accomplished the same day.
Overnight Mail or Personal Delivery
Deliver a check made payable to the Fund along with a completed subscription
order form to:
The Gabelli Funds
The BFDS Building, 6th Floor
Two Heritage Drive
North Quincy, MA 02171
Telephone Investment Plan
You may purchase additional shares of the Fund by telephone through the
Automated Clearinghouse (ACH) system as long as your bank is a member of the ACH
system and you have a completed, approved Investment Plan application on file
with our Transfer Agent. The funding for your purchase will be automatically
deducted from the ACH eligible account you designate on the application. Your
investment will normally be credited to your Fund account on the first business
day following your telephone request. Your request must be received no later
than 4:00 p.m., New York City time. There is a minimum of $100 for each
telephone investment. Any subsequent changes in banking information must be
submitted in writing and accompanied by a sample voided check. To initiate an
ACH purchase, please call 1-800-GABELLI (422-3554) or 1-800-872-5365. Fund
shares purchased through the Telephone or Automatic Investment Plan will not be
available for redemption for up to fifteen (15) days following the purchase
date.
Automatic Investment Plan
The Fund offers an automatic monthly investment plan, details of which can be
obtained from the Distributor. There is no minimum initial investment for
accounts establishing an automatic investment plan. Systematic Withdrawal Plan
The Fund offers a systematic withdrawal program for shareholders whereby they
can authorize an automatic redemption on a monthly, quarterly or annual basis.
Details can be obtained from the Distributor.
Other Investors
No minimum initial investment is required for officers, directors or full-time
employees of the Fund, other investment companies managed by the Adviser, the
Sub-Adviser, the Sub-Administrator, the Transfer Agent, the Distributor or their
affiliates, including members of the "immediate family" of such individuals
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and retirements plans and trusts for their benefit. The term "immediate family"
refers to spouses, children and grandchildren (adopted or natural), parents,
grandparents, siblings, a spouse's siblings, a sibling's spouse and a sibling's
children.
REDEMPTION OF SHARES
Upon receipt by the Distributor or the Transfer Agent of a redemption request in
proper form, shares of the Fund will be redeemed at their next determined net
asset value. Redemption requests received after the time as of which the Fund's
net asset value is determined on a particular day will be redeemed at the net
asset value of the Fund determined on the next day the net asset value is
determined. Checks for redemption proceeds will normally be mailed to the
shareholder's address of record within seven days, but will not be mailed until
all checks in payment for the purchase of the shares to be redeemed have been
honored, which may take up to 15 days. Redemption requests may be made by letter
to the Transfer Agent, specifying the name of the Fund, the dollar amount or
number of shares to be redeemed, and the account number. The letter must be
signed in exactly the same way the account is registered (if there is more than
one owner of the shares, all must sign) and, if any certificates for the shares
to be redeemed are outstanding, presentation of such certificates properly
endorsed is also required. Signatures on a redemption request and/or
certificates must be guaranteed by an "eligible guarantor institution" which
includes certain banks, brokers, dealers, credit unions, securities exchanges
and associations, clearing agencies and savings associations (signature
guarantees by notaries public are not acceptable). Shareholders may also redeem
the Fund's shares through shareholder agents, who have made arrangements with
the Fund permitting them to redeem shares by telephone or facsimile transmission
and who may charge shareholders a fee for this service if they have not received
any payments under the appropriate Distribution Plan. It is the responsibility
of the shareholder's agent to establish procedures which would assure that upon
receipt of a shareholder's order to redeem shares of the Fund the order will be
transmitted so that it will be received by the Fund before the time when the
price applicable to the order expires.
Further documentation, such as copies of corporate resolutions and instruments
of authority, are normally requested from corporations, administrators,
executors, personal representatives, trustees or custodians to evidence the
authority of the person or entity making the redemption request.
The Fund may suspend the right of redemption or postpone the date of payment for
more than seven days during any period when (1) trading on the New York Stock
Exchange is restricted or the Exchange is closed, other than customary weekend
and holiday closings; (2) the Securities and Exchange Commission has by order
permitted such suspension or (3) an emergency, as defined by rules of the
Securities and Exchange Commission, exists making disposal of portfolio
investments or determination of the value of the net assets of the Fund not
reasonably practicable.
To minimize expenses, the Fund reserves the right to redeem, upon not less than
30 days notice, all shares of the Fund in an account (other than an IRA) which
as a result of shareholder redemption has a value below $500 and has reserved
the ability to raise this amount to up to $10,000. However, a shareholder will
be allowed to make additional investments prior to the date fixed for redemption
to avoid liquidation of the account.
Telephone Redemption
By Check
Shareholders automatically are eligible to redeem shares by telephone (subject
to a $25,000 limitation). By calling either 1-800-GABELLI (1-800-422-3554) or
1-800-872-5365, you may request that a check be mailed to the address of record
on the account provided that the address has not changed within thirty (30)
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days prior to your request. The check will be made payable to the account as
registered and mailed within seven (7) days.
By Bank Wire
The Fund accepts telephone requests from any investor for wire redemption in
excess of $1,000 (but subject to a $25,000 limitation) to a predesignated bank
either on the subscription order form or in a subsequent written authorization
with the signature guaranteed. The Fund accepts signature guaranteed written
requests for redemption by bank wire without limitation. The proceeds are
normally wired on the following business day. Your bank must be either a member
of the Federal Reserve System or have a correspondent bank which is a member.
Any change to the banking information made at a later date must be submitted in
writing with a signature guarantee. The Fund will not impose a wire service fee.
A shareholder's agent or the predesignated bank, however, may impose its own
service fee on wire transfers.
Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m., New York City time. If your telephone call is received after this time or
on a day when the New York Stock Exchange is not open, a new request will be
required the following business day. Shares are redeemed at the net asset value
next determined following your request. Any Fund shares purchased by check or
through the automatic purchase plan will not be available for redemption for up
to fifteen (15) days following the purchase. Shares held in certificate form
must be returned to the Transfer Agent for redemption of shares. Telephone
redemption is not available for IRAs. The proceeds of a telephone redemption may
be directed to an account in another mutual fund advised by Gabelli Funds, Inc.,
provided the account is registered in the redeeming shareholder's name. Such
purchase will be made at the respective net asset value plus applicable sales
charge, if any, with credit for any sales charge previously paid to the
Distributor.
The Fund and its transfer agent will not be liable for following telephone
instructions reasonably believed to be genuine. In this regard, the Fund and its
transfer agent require personal identification information before accepting a
telephone redemption. If the Fund or its transfer agent fail to use reasonable
procedures, the Fund might be liable for losses due to fraudulent instructions.
RETIREMENT PLANS
The Fund has available a form of Individual Retirement Account ("IRA") for
investment in shares which may be obtained from the Distributor. The minimum
investment required to open an IRA for investment in shares of the Fund is
$1,000 for an individual, except that both the individual and his or her spouse
may establish separate IRAs if their combined investment is $1,250. There is no
minimum for additional investment in an IRA account.
Investors who are self-employed may purchase shares of the Fund through
tax-deductible contributions to retirement plans for self-employed persons,
known as Keogh or H.R. 10 plans. The Fund does not currently act as sponsors for
such plans. The Fund's shares may also be a suitable investment for other types
of qualified pension or profit-sharing plans which are employer-sponsored,
including deferred compensation or salary reduction plans known as "401(k)
Plans" which give participants the right to defer portions of their compensation
for investment on a tax-deferred basis until distributions are made from the
plans. The minimum initial investment for an individual under such plans is
$1,000 and there is no minimum for additional investments. Under the Internal
Revenue Code of 1986, (the "Code") individuals may make wholly or partly tax
deductible IRA contributions of up to $2,000 annually, depending on whether they
are active participants in an employer-sponsored retirement plan and on their
income level. However, dividends and distributions held in the account are not
taxed until withdrawn in accordance with the provisions of the Code. An
individual with a non-working spouse may establish a separate IRA for the
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spouse under the same conditions and contribute a maximum of $2,250 annually to
either or both IRAs provided that no more than $2,000 may be contributed to the
IRA of either spouse.
Investors should be aware that they may be subject to penalties or additional
tax on contributions or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Code. Persons desiring
information concerning investments through IRA accounts or other retirement
plans should write or telephone the Distributor.
DIVIDENDS, DISTRIBUTIONS AND
TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, unless the shareholder elects otherwise, be paid on
the payment date fixed by the Board of Directors in additional shares of the
Fund having an aggregate net asset value as of the ex-dividend date of such
dividend or distribution equal to the cash amount of such distribution. An
election to receive dividends and distributions may be changed by notifying the
Fund in writing at any time prior to the record date for a particular dividend
or distribution. Dividends and distributions are taxable, as described below,
regardless of whether the shareholder elects to receive them in cash or in
additional shares. There are no sales or other charges in connection with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains. However, the Fund currently intends to
pay dividends from net investment income, if any, on a quarterly basis. Net
realized short-term and long-term capital gains, if any, are expected to be
distributed, to the extent permitted by applicable law, at least annually.
The Fund intends to qualify for tax treatment as a "Regulated Investment
Company" under the Code, and thus will not be subject to Federal income tax on
that part of its net investment income and realized capital gains which it pays
out to its shareholders.
To qualify, the Fund must meet certain relatively complex tests, including the
requirement that less than 30% of its gross income (exclusive of losses) may be
derived from the sale or other disposition of securities held for less than
three months. The loss by the Fund of its status as a Regulated Investment
Company would result in the Fund being subject to Federal income tax on its
taxable income and gains.
Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, such distributions are not expected to be
eligible for the dividends received deduction. Distributions out of long-term
capital gains are taxable to the recipient as long-term capital gains. Dividends
and distributions declared by the Fund may also be subject to state and local
taxes. Prior to investing in shares of the Fund, prospective shareholders may
wish to consult their tax advisers concerning the Federal, state and local tax
consequences of such investment.
If more than 50% of the Fund's total assets consists of securities of foreign
corporations, the Fund will be entitled to elect to "pass-through" to
shareholders the amount of foreign taxes paid by the Fund. If such an election
is made, each shareholder of the Fund will be deemed to have paid directly his
or her pro rata share of the foreign taxes paid by the Fund, and may be entitled
to credit all or a part of such deemed payment against his or her U.S. Federal
income tax liability.
GENERAL INFORMATION
Description of Shares, Voting Rights and
Liabilities
The Fund is a series of Gabelli Income Series Funds, Inc. (the "Corporation"),
which was incorporated in Maryland on November 16, 1994. The Corporation's
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authorized capital stock consists of 1,000,000,000 shares of stock having a par
value of one tenth of one cent ($.001) per share, 200,000,000 shares of which
have been initially classified as shares of the Fund. The Corporation is not
required, and does not intend, to hold regular annual shareholder meetings, but
may hold special meetings for consideration of proposals requiring shareholder
approval, such as changing fundamental policies. The Corporation's Board of
Directors is authorized to classify or reclassify the unissued shares into
separate series of stock, each series representing a separate, additional
portfolio.
There are no conversion or preemptive rights in connection with any shares of
the Fund. All shares, when issued in accordance with the terms of the offering,
will be fully paid and nonassessable. Subject to certain restrictions of
applicable law, shares will be redeemed at net asset value, at the option of the
shareholder. Shares also are redeemable at the option of the Corporation.
The Fund sends semi-annual and annual reports to all respective 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 shares.
Portfolio Turnover
The investment policies of the Fund may lead to frequent changes in investments,
particularly in periods of rapidly fluctuating interest or currency exchange
rates. The portfolio turnover may be higher than that of other investment
companies. While it is impossible to predict with certainty the portfolio
turnover, the Sub-Adviser expects that the annual turnover rate of the Fund will
not exceed 100%.
Portfolio turnover generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other transaction costs on the sale
of securities and reinvestment in other securities. Rapid turnover makes it more
difficult to qualify as a passthrough entity for federal tax purposes in view of
a requirement that the Fund obtain less than 30% of its gross income in any tax
year from gains on the sale of securities held less than three months. Failure
of the Fund to qualify as a passthrough entity would result in federal taxation
of the Fund at the standard corporate rate of up to 35% and may adversely affect
returns to shareholders. The portfolio turnover rate is computed by dividing the
lesser of the amount of the securities purchased or securities sold by the
average monthly value of securities owned during the year (excluding securities
whose maturities at acquisition were one year or less).
Performance Information
The 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. Quotations of "yield" will be based on the
investment income per share earned during a particular 30 day period, less
expenses accrued during the period, with the remainder being divided by the
maximum offering price per share on the last day of the period. The Fund may
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14
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also furnish total return and yield calculations for other periods and/or
based on investments at various sales charge levels or net asset values. Any
performance data which is based on the Fund's net asset value per share would be
reduced if a sales charge were taken into account.
Custodian, Transfer Agent and
Dividend Disbursing Agent
State Street Bank and Trust Company is the Custodian for the Fund's cash and
securities as well as the Transfer and Dividend Disbursing Agent for its shares.
Boston Financial Data Services, Inc., an affiliate of State Street Bank and
Trust Company, performs the shareholder services on behalf of State Street and
is located at The BFDS Building, Two Heritage Drive, North Quincy, MA 02171.
State Street Bank and Trust Company does not assist in and is not responsible
for investment decisions involving assets of the Fund.
Independent Auditors
Price Waterhouse LLP has been appointed independent auditors for the
Corporation, and is located at 1177 Avenue of the Americas, New York, New York
10036.
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).
This Prospectus omits certain information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of the
Registration Statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information included in such Registration Statement may
be obtained without charge from the Fund or the Distributor.
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TABLE OF CONTENTS
Page
---
Table of Fees and Expenses ........................... 2
Investment Objective and Policies .................... 2
Risk Factors ......................................... 4
Management of the Fund ............................... 6
Distribution Plan .................................... 8
Purchase of Shares ................................... 9
Redemption of Shares ................................. 11
Retirement Plans ..................................... 12
Dividends, Distributions and Taxes ................... 13
General Information .................................. 13
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No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, and
if given or made, such information or representation may not be relied upon as
being authorized by the Fund, the Adviser, the Administrator, the Distributor or
any affiliate thereof. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy in any state to any person to whom it is
unlawful to make such offer in such state.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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SUBJECT TO COMPLETION -- DATED MAY , 1995
The Gabelli Global Governments Fund
A Series of Gabelli Income Series Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
STATEMENT OF ADDITIONAL INFORMATION
June , 1995
This Statement of Additional Information ("Additional Statement") relates to The
Gabelli Global Governments Fund (the "Fund"), which is a series of Gabelli
Income Series Funds, Inc., a Maryland corporation (the "Corporation"), and is
not a prospectus and is only authorized for distribution when preceded or
accompanied by the Fund's prospectus dated June , 1995, as supplemented from
time to time (the "Prospectus"). This Additional Statement contains information
in addition to that set forth in the Prospectus into which this document is
incorporated by reference and should be read in conjunction with the Prospectus.
Additional copies of this document may be obtained without charge by writing or
telephoning the Corporation at the address and telephone number set forth above.
TABLE OF CONTENTS
Page
----
Investments ...................................................... B-2
The Adviser ...................................................... B-8
The Sub-Adviser .................................................. B-10
The Distributor .................................................. B-11
Directors and Officers ........................................... B-11
Investment Restrictions .......................................... B-14
Portfolio Transactions and Brokerage ............................. B-15
Purchase and Redemption of Shares ................................ B-16
Dividends, Distributions and Taxes ............................... B-17
Determination of Net Asset Value ................................. B-20
Investment Performance Information ............................... B-20
Independent Auditor's Report ..................................... B-22
Financial Statements ............................................. B-23
Appendix A ....................................................... B-24
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The following Information supplements that in the Prospectus
INVESTMENTS
Subject to the Fund's policy of investing at least 65% of its total assets
in high grade Government Income Securities and Supranational Income Securities,
the Fund may invest in any of the securities described below. The Fund has no
current intention to purchase securities rated below A- (or an equivalent
rating) by a nationally recognized statistical ratings organization or which are
unrated but deemed by the Sub-Adviser to be of comparable quality, in each case
at the time of investment.
Foreign Debt Securities
The Fund may invest in securities issued or guaranteed by any country and
denominated in any currency. The Fund currently expects that it generally will
invest in developed countries including, without limitation, Australia, Canada,
Finland, France, Germany, Japan, Italy, New Zealand, Norway, Spain, Sweden, the
United Kingdom, Austria, Belgium, Denmark, Ireland, the Netherlands, Portugal,
Switzerland and the United States. The obligations of governmental entities have
various kinds of government support and include obligations issued or guaranteed
by governmental entities with taxing power. These obligations may or may not be
supported by the full faith and credit of a government. Debt securities issued
or guaranteed by foreign governmental entities have credit characteristics
similar to those of domestic debt securities but include additional risks. These
additional risks include those resulting from devaluation of currencies, future
adverse political and economic developments and other foreign governmental laws.
Foreign securities in which the Fund may invest also include securities
issued by semi-governmental or supranational agencies such as the Asian
Development Bank, the International Bank for Reconstruction and Development, the
Export-Import Bank and the European Investment Bank. The governmental members,
or "stockholders," usually make initial capital contributions to the
supranational entity and in many cases are committed to make additional capital
contributions if the supranational entity is unable to repay its borrowings.
The Fund may invest in securities denominated in a multi-national currency
unit. An illustration of a multi-national currency unit is the European Currency
Unit (the "ECU"), which is a "basket" consisting of specified amounts of the
currencies of the member states of the European Community, a Western European
economic cooperative organization that includes France, Germany, The
Netherlands, the United Kingdom and other countries. The specific amounts of
currencies comprising the ECU may be adjusted by the Council of Ministers of the
European Community to reflect changes in relative values of the underlying
currencies. Such investments involve credit risks associated with the issuer and
currency risks associated with the currency in which the obligation is
denominated.
The Fund does not intend to invest more than 25% of its total assets in any
one industry (including for this purpose securities issued by any single foreign
government or in supranational entities as a group).
Premium Securities
The Fund may invest in the secondary market in income securities bearing
coupon rates higher than prevailing market rates. Such "premium" securities are
purchased at prices greater than the principal amounts payable on maturity. The
Fund will amortize the premium paid for such securities in calculating its net
investment income. Although such securities bear coupon rates higher than
prevailing market rates, because they are purchased at a price in excess of par
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B-2
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value, the yield earned by the Fund on such investments may not exceed
prevailing market yields. If an issuer were to redeem premium securities held by
the Fund at a price less than the price paid by the Fund for such securities,
the Fund would incur a loss of principal and, after giving effect to such loss,
the above market coupon rate available on the premium security may not be
sufficient to provide the Fund with a rate of return equal to or greater than
the return otherwise available if the Fund had not invested in such premium
income security.
Options
The Fund may purchase options or sell covered options on individual
securities as well as on indices of securities as a means of hedging the value
of its portfolio and not for speculative purposes.
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
or sell options if, as a result, the aggregate cost of all outstanding options
exceeds 5% of the Fund's total assets. To the extent that puts, straddles and
similar investment strategies involve instruments regulated by the Commodity
Futures Trading Commission, the Fund is limited to an investment not in excess
of 5% of its total assets.
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 excess
of customary settlement periods for the type of security involved. In some
cases, a forward commitment may be conditioned upon the occurrence of a
subsequent event, such as approval and consummation of a merger, corporate
reorganization or debt restructuring, i.e., a when, as and if issued security.
When such transactions are negotiated, the price is fixed at the time of the
commitment, with payment and delivery taking place in the future, generally a
month or more after the date of the commitment. While 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
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settlement date. The Fund will segregate with its custodian cash or liquid
high-grade debt securities with the Fund's custodian in an aggregate amount at
least equal to the amount of its outstanding forward commitments.
Restricted and Illiquid Securities
The Fund may invest up to a total of 5% of its net assets in securities
that are subject to restrictions on resale and securities the markets for which
are illiquid. Illiquid securities include most of the securities the disposition
of which is subject to substantial legal or contractual restrictions. The sale
of illiquid securities often requires more time and results in higher brokerage
charges or dealer discounts and other selling expenses than does the sale of
securities eligible for trading on national securities exchanges or in the over-
the-counter markets. Restricted securities may sell at a price lower than
similar securities that are not subject to restrictions on resale. Securities
freely salable among qualified institutional investors under special rules
adopted by the Securities and Exchange Commission or otherwise determined to be
liquid may be treated as liquid if they satisfy liquidity standards established
by the Board of Directors. 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 5% 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.
Unseasoned Companies
The Fund may invest in securities of unseasoned companies. In view of the
limited liquidity, more speculative prospects and price volatility with respect
to such securities, the Fund will not invest more than 5% of the Fund's assets
(at the time of purchase) in securities of companies (including predecessors)
that have operated less than three years.
Repurchase Agreements
The Fund may invest in repurchase agreements, which are agreements pursuant
to which securities are acquired by the Fund from a third party with the
understanding that they will be repurchased by the seller at a fixed price on an
agreed date. These agreements may be made with respect to any of the portfolio
securities in which the Fund is authorized to invest. Repurchase agreements may
be characterized as loans secured by the underlying securities. The Fund may
enter into repurchase agreements with (i) member banks of the Federal Reserve
System having total assets in excess of $500 million and (ii) securities
dealers, provided that such banks or dealers meet the creditworthiness standards
established by the Fund's board of directors ("Qualified Institutions"). The
Adviser will monitor the continued creditworthiness of Qualified Institutions,
subject to the supervision of the Board of Directors. The resale price reflects
the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or date of maturity of the purchased security. The
collateral is marked to market daily. Such agreements permit the Fund to keep
all its assets earning interest while retaining "overnight" flexibility in
pursuit of investments of a longer- term nature.
The use of repurchase agreements involves certain risks. For example, if
the seller of securities under a repurchase agreement defaults on its obligation
to repurchase the underlying securities, as a result of its bankruptcy or
otherwise, the Fund will seek to dispose of such securities, which action could
involve costs or delays. If the seller becomes insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws, the
Fund's ability to dispose of the underlying securities may be restricted.
Finally, it is possible that the Fund may not be able to substantiate its
interest in the underlying securities. To minimize this risk, the securities
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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 5% of its total
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
collaterization continuously at no less than 100% by marking to market daily,
(2) the loan is subject to termination by the Fund at any time, (3) the Fund
receives reasonable interest or fee payments on the loan, (4) the Fund is able
to exercise all voting rights with respect to the loaned securities and (5) the
loan will not cause the value of all loaned securities to exceed 33% of the
value of the Fund's total 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.
Short Sales
Although the fundamental policies of the Fund permit it to make short sales
of securities the Fund has no current intention of engaging in short-sales. This
policy may be changed without shareholder approval.
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.
Short sales may be made 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.
If the Fund were to make a short sale, it would 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 would be secured by
collateral deposited with the broker-dealer, usually cash, U.S. government
securities or other highly liquid securities. The Fund would 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
would 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 would incur a loss; conversely, if the price declines, the
Fund would 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 Fund also could make short sales "against the box" without respect to
such limitations. In this type of short sale, at the time of the sale, the Fund
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would own or have the immediate and unconditional right to acquire at no
additional cost the identical security.
Borrowing
The Fund's fundamental investment restrictions permit the Fund to borrow
money in amounts not in excess of 33 1/3% of its total assets. The Fund may
borrow an additional 5% for temporary or emergency purposes. The Fund currently
intends to borrow money only 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. The Fund currently does not intend (1) for borrowings, in
the aggregate, to exceed 15% of total assets after giving effect to the
borrowing and (2) for borrowings for purposes other than meeting redemptions to
exceed 5% of the value of the Fund's total assets after giving effect to the
borrowing. The Fund will not make additional investments when borrowings exceed
5% of total assets. The Fund may mortgage, pledge or hypothecate assets to
secure such borrowings.
Leverage. Although the Fund has no current intention to borrow money for
investment purposes, the Fund's fundamental investment policies permit it to do
so in an amount up to 33 1/3% of the Fund's total assets. Borrowing money for
investment purposes sometimes is referred to as "leverage." The Fund would
consider reverse repurchase agreements and dollar rolls to be subject to the
foregoing limitation but would not consider such instruments to be senior
securities to the extent that the Fund covers such obligations by establishing
and maintaining a segregated account containing cash, U.S. government securities
or other appropriate high grade obligations. Borrowing by the Fund would create
an opportunity for increased net income but, at the same time, would increase
the risk of the Fund's portfolio. Leveraging by the Fund generally would
increase the volatility of the Fund's net asset value in response to
fluctuations in market interest rates and accordingly may increase the risk of
the Fund's portfolio. Although the principal of such borrowings would be fixed,
the Fund's assets may change in value during the time the borrowing is
outstanding. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund would have to pay, the Fund's net
income would be greater than if borrowing were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of borrowing, the net income of the Fund would be less than if
borrowing were not used, and therefore the amount available for distribution to
stockholders as dividends will be reduced.
Reverse repurchase agreements involve sales by the Fund of portfolio assets
concurrently with an agreement by the Fund to repurchase the same assets at a
later date at a fixed price. During the reverse repurchase agreement period, the
Fund would continue to receive principal and interest payments on these
securities. The Fund could enter into dollar rolls in which the Fund sells
securities for delivery in the current month and simultaneously contracts to
repurchase, typically in 30 or 60 days, substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, the
Fund would forego principal and interest paid on such securities. The Fund would
be compensated by the difference between the current sales price and the forward
price of the future purchase (often referred to as the "drop") as well as by the
interest earned on the cash proceeds of the initial sale. A "covered roll" is a
specific type of dollar roll for which there is an off-setting cash position or
cash equivalent security position which matures on or before the forward
settlement date of the dollar roll transaction.
In the event the Fund utilizes reverse repurchase agreements and dollar
rolls, the Fund will establish a segregated account with its custodian in which
it will maintain cash, U.S. Government securities or other liquid high-grade
debt obligations equal in value to its obligations in respect of reverse
repurchase agreements and dollar rolls; thus the Fund will not treat such
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obligations as senior securities for purposes of the 1940 Act. "Covered rolls"
would not be subject to these segregation requirements. Reverse repurchase
agreements and dollar rolls would involve the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a reverse repurchase agreement or dollar
roll files for bankruptcy or becomes insolvent, the Fund's use of the proceeds
of the agreement could be restricted pending a determination by the other party,
or its trustee or receiver; whether to enforce the Fund's obligation to
repurchase the securities.
Hedging Transactions
Futures Contracts. The Fund may enter into futures contracts only for
certain bona fide hedging and risk management purposes. The Fund may enter into
futures contracts for the purchase or sale of debt securities, debt instruments,
or indices of prices thereof, stock index futures, other financial indices, and
U.S. Government Securities.
A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the securities underlying the
contract at a specified price at a specified future time. A "purchase" of a
futures contract (or a "long" futures position) means the assumption of a
contractual obligation to acquire the securities underlying the contract at a
specified price at a specified future time.
Certain futures contracts are settled on a net cash payment basis rather
than by the sale and delivery of the securities underlying the futures
contracts. U.S. futures contracts have been designed by exchanges that have been
designated as "contract markets" by the Commodity Futures Trading Commission
(the "CFTC"), an agency of the U.S. Government, and must be executed through a
futures commission merchant (i.e., a brokerage firm) which is a member of the
relevant contract market. Futures contracts trade on these contract markets and
the exchange's affiliated clearing organization guarantees performance of the
contracts as between the clearing members of the exchange.
These contracts entail certain risks, including but not limited to the
following: no assurance that futures contracts transactions can be offset at
favorable prices, possible reduction of the Fund's yield due to the use of
hedging, possible reduction in value of both the securities hedged and the
hedging instrument, possible lack of liquidity due to daily limits on price
fluctuation, imperfect correlation between the contracts and the securities
being hedged, and potential losses in excess of the amount invested in the
futures contracts themselves.
Currency Transactions. The Fund may enter into various currency
transactions, including forward foreign currency contracts, 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. 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 will enter into currency transactions only for hedging purposes. The
Fund expects to enter into these currency contracts 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
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anticipates seeking to achieve the same economic result by utilizing from time
to time for such hedging a currency different from the one of the given
portfolio security as long as, in the view of the Adviser, such currency is
essentially correlated to the currency of the relevant portfolio security based
on historic and expected exchange rate patterns.
The Adviser may choose to use such instruments on behalf of the Fund
depending upon market conditions prevailing and the perceived investment needs
of the Fund. Futures contracts and options on securities, indices and futures
contracts and certain currency contracts sold by the Fund generally are subject
to segregation and coverage requirement with the result that, if the Fund does
not hold the security or futures contract underlying the instrument, the Fund
will be required to segregate on an ongoing basis with its custodian, cash, U.S.
government securities, or other high grade liquid debt obligations in an amount
at least equal to the Fund's obligations with respect to such instruments. Such
amounts fluctuate as the obligations increase or decrease. The segregation
requirement can result in the Fund maintaining securities positions it would
otherwise liquidate or segregating assets at a time when it might be
disadvantageous to do so.
The Fund does not consider the options contracts and hedging transactions
described above to be Government Income Securities or Supranational Income
Securities for purposes of its fundamental policy of investing at least 65% of
its total assets in Government Income Securities and Supranational Income
Securities.
THE ADVISER
The Adviser is a New York corporation with principal offices located at One
Corporate Center, Rye, New York 10580-1434. The Adviser also serves as Adviser
to The Gabelli Growth Fund, The Gabelli Value Fund, The Gabelli Convertible
Securities Fund, Inc., The Gabelli Equity Income Fund, The Gabelli U.S. Treasury
Money Market Fund, The Gabelli Small Cap Growth Fund, Inc., The Gabelli ABC
Fund, The Gabelli Global Telecommunications Fund, The Gabelli Global Convertible
Securities Fund, The Gabelli Global Interactive Couch Potato(TM)(C) Fund, and
Gabelli Gold Fund Inc., open-end investment companies, and The Gabelli Equity
Trust, Inc., The Gabelli Convertible Securities Fund, Inc., and The Gabelli
Global Multimedia Trust, Inc., closed-end investment companies.
Pursuant to the Investment Advisory Contract which was approved by the
Fund's shareholders on May 23, 1995 the Adviser furnishes directly or indirectly
through sub-advisers, as the case may be, a continuous investment program for
the Fund's portfolio, makes the day-to-day investment decisions for the Fund,
arranges the portfolio transactions for the Fund and generally manages the
Fund's investments in accordance with the stated policies of the Fund, subject
to the general supervision of the Board of Directors of the Corporation.
Under the Investment Advisory Contract, the Adviser directly, or indirectly
through one or more agents, also (1) provides the Fund with the services of
persons competent to perform such supervisory, administrative, and clerical
functions as are necessary to provide efficient administration of the Fund,
including maintaining certain books and records and overseeing the activities of
the Fund's Custodian and Transfer Agent; (2) oversees the performance of
administrative and professional services provided to the Fund by others,
including the Fund's Sub-Adviser, Sub-Administrator, Custodian, Transfer Agent
and Dividend Disbursing Agent, as well as legal, accounting, auditing and other
services performed for the Fund; (3) provides the Fund, if requested, with
adequate office space and facilities: (4) prepares, but does not pay for,
periodic updating of the Fund's registration statement, Prospectus and
Additional Statement, including the printing of such documents for the purpose
of filings with the Securities and Exchange Commission; (5) supervises the
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calculation of the net asset value of shares of the Fund; (6) prepares, but does
not pay for, all filings under state "Blue Sky" laws of such states or countries
as are designated by the Distributor, which may be required to register or
qualify, or continue the registration or qualification, of the Fund and/or its
shares under such laws; and (7) prepares notices and agendas for meetings of the
Fund's Board of Directors and minutes of such meetings in all matters required
by the Investment Company Act of 1940 (the "Act") to be acted upon by the Board.
The Adviser has entered into a Sub-Administration Contract with The
Shareholder Services Group, Inc., a subsidiary of First Data Corporation (the
"Sub-Administrator") pursuant to which the Sub-Administrator provides certain
administrative services necessary for the Fund's operations but which do not
concern the investment advisory and portfolio management services provided by
the Adviser and the Sub-Adviser. For such services and the related expenses
borne by the Sub-Administrator, the Adviser pays a monthly fee at the annual
rate of .10% of the aggregate average net assets of the Gabelli Funds under its
administration (with a minimum annual fee of $30,000 and subject to reduction to
.08% on assets of the Gabelli Funds under its administration in excess of $1
billion up to $1.5 billion and .03% in excess of $1.5 billion up to $3 billion
and 0.2% in excess of $3 billion) which, together with the services to be
rendered, is subject to negotiation between the parties and both parties retain
the right unilaterally to terminate the arrangement on not less than 60 days'
notice.
The Investment Advisory Contract provides that absent willful misfeasance,
bad faith, gross negligence or reckless disregard of its duty, the Adviser and
its employees, officers, directors and controlling persons are not liable to the
Fund or any of their investors for any act or omission by the Adviser or for any
error of judgment or for losses sustained by the Fund. However, the Contract
provides that the Fund is not waiving any rights it may have with respect to any
violation of law which cannot be waived. The Contract also provides
indemnification for the Adviser and each of these persons for any conduct for
which they are not liable to the Fund. The Investment Advisory Contract in no
way restricts the Adviser from acting as adviser to others. The Fund has agreed
by the terms of its Investment Advisory Contract that the word "Gabelli" in its
name is derived from the name of the Adviser which in turn is derived from the
name of Mario J. Gabelli; that such name is the property of the Adviser for
copyright and/or other purposes; and that therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Fund has further agreed that in the event that for any reason, the Adviser
ceases to be its investment adviser, it will, unless the Adviser otherwise
consents in writing, promptly take all steps necessary to change its name to one
which does not include "Gabelli."
The Investment Advisory Contract is terminable without penalty by the
Corporation on not more than sixty days' written notice when authorized by the
Directors of the Corporation, by the holders of a majority, as defined in the
Act, of the outstanding shares of the Corporation, or by the Adviser. The
Investment Advisory Contract will automatically terminate in the event of its
assignment, as defined in the Act and rules thereunder except to the extent
otherwise provided by order of the Commission or any rule under the Act and
except to the extent the Act no longer provides for automatic termination, in
which case the approval of a majority of the disinterested directors is required
for any "assignment." The Investment Advisory Contract provides in effect, that
unless terminated it will remain in effect until May 23, 1997, and from year to
year thereafter, so long as continuance of the Investment Advisory Contract is
approved annually by the Directors, or the shareholders of the Fund and in
either case, by a majority vote of the Directors who are not parties to the
Investment Advisory Contract or "interested persons" as defined in the Act of
any such person cast in person at a meeting called specifically for the purpose
of voting on the continuance of the Investment Advisory Contract.
The Investment Advisory Contract also provides that the Adviser is
obligated to reimburse to the Fund any amount up to the amount of its advisory
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fee by which its aggregate expenses including advisory fees payable to the
Adviser (but excluding interest, taxes, Rule 12b-1 expenses, brokerage
commissions, extraordinary expenses and any other expenses not subject to any
applicable expense limitation) during the portion of any fiscal year in which
the Investment Advisory Contract is in effect exceed the most restrictive
expense limitation imposed by the securities law of any jurisdiction in which
shares of the Fund are registered or qualified for sale. Such limitation is
currently believed to be 2.5% of the first $30 million of average net assets,
2.0% of the next $70 million of average net assets and 1.5% of average net
assets in excess of $100 million. For purposes of this expense limitation the
Fund's expenses are accrued monthly and the monthly fee otherwise payable to the
Adviser postponed to the extent that the Fund's includable expenses to date
exceed the proportionate amount of such limitation to date.
THE SUB-ADVISER
Sal. Oppenheim jr. & Cie. Asset Management Corp. is the Fund's sub-adviser.
The Sub-Adviser is a New York corporation with its principal office located at
450 Park Avenue, New York, New York 10022. The Sub-Adviser is a wholly owned
subsidiary of Sal. Oppenheim jr. & Cie., a private financial services
partnership headquartered in Cologne, Germany.
Pursuant to the Sub-Advisory Contract which was approved by the Fund's
shareholders on May 13, 1995, the Sub-Adviser performs investment research and
portfolio management, including recommendations with respect to the selection of
portfolio securities for the Fund to purchase, hold or sell and the selection of
brokers through whom the Fund's portfolio transactions are executed, in
accordance with the stated policies of the Fund and subject to the general
supervision of the Board of Directors of the Corporation and the Adviser.
The Sub-Advisory Contract provides that absent willfull misfeasance, bad
faith, gross negligence or reckless disregard of its duty, the Sub-Adviser and
its employees, officers, directors and controlling persons are not liable to the
Adviser, the Fund or any of their investors for any act or omission by the Sub-
Adviser or for any error of judgement 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 Sub-Adviser and each of these persons for
any conduct for which they are not liable to the Fund. The Sub-Advisory Contract
in no way restricts the Sub-Adviser from acting as adviser to others.
The Sub-Advisory Contract is terminable without penalty by the Sub-Adviser
at any time without penalty upon giving the Adviser and the Fund sixty days
written notice (which notice may be waived by such parties) and may be
terminated by the Fund or the Adviser at any time without penalty upon giving
the Sub-Adviser sixty days written notice, which notice may be waived by the
Sub-Adviser, provided that such termination by the Fund shall be directed or
approved by the vote of a majority of the Directors of the Fund or by the vote
of the holders of a "majority of the voting securities" (as defined in the Act)
of the Fund at the time outstanding and entitled to vote. The Sub-Advisory
Contract will automatically terminate in the event of its assignment, as defined
in the Act and rules thereunder except to the extent otherwise provided by order
of the Commission or any rule under the Act and except to the extent the Act no
longer provides for automatic termination, in which case the approval of a
majority of the disinterested directors is required for any "assignment." The
Sub-Advisory Contract provides in effect, that unless terminated it will remain
in effect until May 23, 1997, and from year to year thereafter, so long as
continuance of the Sub-Advisory Contract is approved annually by the Directors,
or the shareholders of the Fund and, in either case, by a majority vote of the
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Directors who are not parties to the Sub-Advisory Contract or "interested
persons" as defined in the Act of any such person cast in person at a meeting
called specifically for the purpose of voting on the continuance of the
Sub-Advisory Contract.
THE DISTRIBUTOR
The Corporation on behalf of the Fund has entered into a Distribution
Agreement with Gabelli & Company, Inc. (the "Distributor"), a New York
corporation which is a subsidiary of Gabelli Funds, Inc., having principal
offices located at One Corporate Center, Rye, New York 10580-1434. The
Distributor acts as agent of the Fund for the continuous offering of their
shares on a best efforts basis.
The Distribution Agreement is terminable by the Distributor or the
Corporation at any time without penalty on not more than 60 nor less than 30
days' written notice, provided, that termination by the Corporation must be
directed or approved by the Board of Directors of the Corporation or by written
consent of a majority of the directors who are not interested persons of the
Corporation or the Distributor. The Distribution Agreement will automatically
terminate in the event of its assignment, as defined in the Act. The
Distribution Agreement provides that, unless terminated, it will remain in
effect until [ ], 1997, and from year to year thereafter, so long as
continuance of the Distribution Agreement is approved annually by the
Corporation's Board of Directors and also by a majority of the Directors who are
not interested persons of the Corporation or the Distributor.
DIRECTORS AND OFFICERS
The Directors and Executive Officers of the Corporation, their principal
business occupations during the last five years and their affiliations, if any,
with the Adviser, the Sub-Adviser or the Sub-Administrator, are shown below.
Directors deemed to be "interested persons" of the Fund for purposes of the
Investment Company Act of 1940 are indicated by an asterisk. Unless otherwise
indicated, the address for each individual is One Corporate Center, Rye, New
York 10580.
Name, Position with Fund and Principal Occupations During Last Five Years;
Address Affiliations with the Adviser or Administrator
- ---------------------------- ----------------------------------------------
Mario J. Gabelli* Chairman, President, Chief Executive Officer
Director and Chairman and a Director of Gabelli Funds, Inc., the
One Corporate Center Adviser and the indirect parent of Gabelli &
Rye, New York 10580 Company, Inc., the Distributor, Chairman,
Age: 52 Chief Executive Officer, Chief Investment
Officer and Director of GAMCO Investors, Inc.;
President and Chairman of The Gabelli Equity
Trust Inc.; President, Chief Investment
Officer and Director of Gabelli Equity Series
Funds, Inc.; The Gabelli Convertible
Securities Fund, Inc., Gabelli Global Series
Funds, Inc. and The Gabelli Value Fund Inc.,
and Trustee of The Gabelli Asset Fund; The
Gabelli Growth Fund and The Gabelli Money
Market Funds; Chairman and Director of Lynch
Corporation; Director and Adviser of Gabelli
International Ltd.; Director of Morgan Group,
Inc.
- -------------------------------------------------------------------------------
B-11
<PAGE>
- -------------------------------------------------------------------------------
Name, Position with Fund and Principal Occupations During Last Five Years;
Address Affiliations with the Adviser or Administrator
- ---------------------------- ----------------------------------------------
Anthony J. Colavita President and Attorney at Law in the law firm
Director of Anthony J. Colavita, P.C. since 1961.
575 White Plains Road Former member of the New York State Thruway
Eastchester, New York 10709 Authority; Former counsel, New York State
Age: 59 Assembly; Director of the Gabelli Value Fund
Inc., Gabelli Global Series Funds, Inc., The
Gabelli Convertible Securities Fund, Inc. and
Gabelli Equity Series Funds, Inc.; Trustee of
the Gabelli Asset Fund, the Gabelli Money
Funds and the Gabelli Growth Fund and the
Westwood Funds.
Karl Otto Pohl* Managing Partner of Sal. Oppenheim jr. & Cie.
Director (private investment bank and parent company of
One Corporate Center the Sub-Adviser); Former President of the
Rye, New York 10580 Deutsche Bundesbank (Germany's Central Bank)
Age: 64 and Chairman of its Central Bank Council
(1980-1991); Currently board member of IBM
World Trade Europe/Middle East/Africa Corp.;
Bertlesmann A.G.; Zurich Versicherungs-
Gesellschaft (insurance); the International
Advisory Board of General Electric Company;
the International Council for JP Morgan & Co.;
the Board of Supervisory Directors of ROBECo/o
Group; and the Supervisory Board of Royal
Dutch (petroleum company); Advisory Director
of Unilever N.V. and Unilever Deutschland;
German Governor, International Monetary Fund
(1980-1991); Board Member, Bank for
International Settlements (1980-1991);
Chairman, European Economic Community Central
Bank Governors (1990-1991); Director/Trustee
of all Funds managed by the Adviser.
Werner J. Roeder, M.D. Director of Surgery, Lawrence Hospital and
Director practicing private physician. Director,
One Corporate Center Gabelli Global Series Funds, Inc. and Gabelli
Rye, New York 10580 Gold Fund, Inc.
Age: 54
Anthonie C. van Ekris Managing Director of Balmac International,
Director Ltd. Formerly Chairman and Chief Officer of
Le Columbia Balfour MacLaine Corporation and Kay
11 Blvd. Princess Grace Corporation (through 1990). Director of Stahel
MC98000 Hardmeyer A.G. (through present); Trustee of
Monaco The Gabelli Asset Fund and The Gabelli Money
Age: 60 Market Funds. Director of The Gabelli Series
Funds, Inc., Gabelli Gold Fund, Inc., Gabelli
Global Series Fund, Inc., and Gabelli Equity
Series Funds, Inc.
- -------------------------------------------------------------------------------
B-12
<PAGE>
- -------------------------------------------------------------------------------
Name, Position with Fund and Principal Occupations During Last Five Years;
Address Affiliations with the Adviser or Administrator
- ---------------------------- ----------------------------------------------
Bruce N. Alpert Vice President, Treasurer and Chief Financial
President and and Administrative Officer of the investment
Treasurer advisory division of the Adviser, President
One Corporate Center and Treasurer of The Gabelli Equity Trust Inc.
Rye, New York 10580 and the Gabelli Global Multimedia Trust, Inc.,
Age: 43 Vice President and Treasurer of Gabelli
Treasurer Convertible Securities Fund, Inc.;
Gabelli Equity Series Funds, Inc.; The Gabelli
Money Market Funds; The Gabelli Value Fund
Inc.; One Corporate Center Gabelli Gold Fund,
Inc., Gabelli Investor Funds, Inc., and
Gabelli Global Series Funds, Inc.; President
and Treasurer of The Rye, New York 10580
Gabelli Asset Fund and The Gabelli Growth
Fund. Vice President of the Westwood Funds and
Manager of Teton Advisers LLC.
J. Hamilton Crawford, Jr Senior Vice President and General Counsel of
Secretary the investment advisory division of the
One Corporate Center Adviser; Secretary of all Funds advised by
Rye, New York 10580 Gabelli Funds, Inc. since 1992, Secretary of
Age: 65 the Westwood Funds. Secretary of Teton
Advisers LLC. Attorney in private practice,
1990-1992. Executive Vice President, and
General Counsel of Prudential Mutual Fund
Management, Inc. from 1988-1990.
George M. Muzinich President of Sal. Oppenheim jr. & Cie. Asset
Vice President Management Corporation. President of Muzinich
450 Park Avenue & Co.
New York, New York 10022
Age: 52
Sunil Purmessur Vice President of Sal. Oppenheim jr. & Cie.
Vice President Asset Management Corporation. Prior to 1993,
31 Adelaid Road Senior Assistant Manager of Investments,
Dublin 2, Ireland Coutts & Co.
Age: 37
The Fund pays each Director who is not an "affiliated person" of the
Corporation, the Adviser or the Sub-Adviser the following amounts for serving as
a Director during a year in which the assets of the Corporation do not exceed
$500,000,000; (i) $1,000 per year; (ii) $250 per meeting including telephonic
meetings in excess of one hour; and (iii) all out-of-pocket expenses of such
members in attending each such meeting.
The Fund pays each Director who is not an "affiliated person" of the
Corporation, the Adviser or the Sub-Adviser the following amounts for serving as
a Director during a year in which the assets of the Corporation exceed
$500,000,000; (i) $3,000 per year; (ii) $250 per meeting including telephonic
meetings in excess of one hour; and (iii) $250 per in-person committee meeting;
and (iv) all out-of-pocket expenses of such members in attending each such
meeting.
The following table sets forth certain information regarding the
compensation of the Fund's directors and officers. No executive officer or
person affiliated with the Fund received compensation from the Fund for the
calendar year ended December 31, 1994 in excess of $60,000.
- -------------------------------------------------------------------------------
B- 13
<PAGE>
- -------------------------------------------------------------------------------
COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name of Person, Aggregate Compensa- Pension or Retirement Estimated Annual Ben- Total Compensation
Position tion From the Fund(1) Benefits Accrued as efits Upon Retirement From The Fund and
Part of Fund Expenses Fund Complex Paid to
Directors(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mario J. Gabelli $ 0 0 N/A $ 0
Chairman of the Board
Anthony J. Colavita $ 0 0 N/A $62,000 (10)
Director
Anthonie C. van Ekris $ 0 0 N/A $41,500 (8)
Director
Karl Otto Pohl $ 0 0 N/A $64,750 (12)
Director
Werner J. Roeder, M.D. $ 0 0 N/A $6,000 (3)
Director
</TABLE>
- -------------------
(1) Aggregate compensation from the Fund to each Director for the past year is
$0.00 because the Fund is a new registrant with no previous operations. The
Fund anticipates paying each independent Director approximately $2,000 in
each calendar year.
(2) Represents the total compensation paid to such persons during the calendar
year ending December 31, 1994. The parenthetical number represents the
number of investment companies (including the Fund) from which such person
receives compensation that are considered part of the same fund complex as
the Fund, because, among other things, they have a common investment
adviser.
INVESTMENT RESTRICTIONS
The Fund's investment objective and the following investment restrictions
are fundamental and cannot be changed without the approval of the holders of a
majority of the Fund's outstanding voting securities (defined in the 1940 Act as
the lesser of (a) more than 50% of the outstanding shares or (b) 67% or more of
the shares represented at a meeting at which more than 50% of the outstanding
shares are represented). All other investment policies or practices are
considered by the Fund not to be fundamental and accordingly may be changed
without stockholder approval. If a percentage restriction on investment or use
of assets set forth below is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing market values or total
assets of the Fund will not be considered a deviation from policy. The Fund may
not:
(1) issue senior securities, except that the Fund may borrow money,
including on margin if margin securities are owned and enter into reverse
repurchase agreements and dollar rolls 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 or emergency 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. The Fund's obligations under reverse
repurchase agreements, dollar rolls and the foregoing investment strategies
are not treated as senior securities to the extent that the Fund covers
such obligations by establishing and maintaining a segregated account
containing cash, U.S. government securities or other appropriate high grade
debt obligations;
- -------------------------------------------------------------------------------
B-14
<PAGE>
- -------------------------------------------------------------------------------
(2) make loans of money or property to any person, except through
loans of portfolio securities, the purchase of fixed income securities or
the acquisition of securities subject to repurchase agreements;
(3) underwrite the securities of other issuers, except to the extent
that in connection with the disposition of portfolio securities or the sale
of its own shares the Fund may be deemed to be an underwriter;
(4) invest for the purpose of exercising control over management of
any company;
(5) purchase real estate or interests therein, including limited
partnerships that invest primarily in real estate equity interests, other
than mortgage-backed securities, publicly traded real estate investment
trusts and similar instruments; or
(6) purchase or sell commodities or commodity contracts except for
certain bona fide hedging, yield enhancement and risk management purposes
or invest in any oil, gas or mineral interests.
The Fund will provide shareholders with 30 days written notice prior to
engaging in the following investment practices permitted by its fundamental
policies, but in which the Fund has no current intention of engaging: (1)
acquiring income securities rated below A- (or an equivalent rating) at the time
of investment by a nationally recognized statistical rating agency; (ii)
borrowing money for investment purposes, including entering into reverse
repurchase agreements and dollar rolls; and (iii) selling securities short.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Sub-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. 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 Sub-Adviser currently serves as adviser to a number of institutional
clients and may in the future act as adviser to other investment companies.
Affiliates of the Sub-Adviser act as investment adviser to numerous private
accounts. It is the practice of the Sub-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
- -------------------------------------------------------------------------------
B-15
<PAGE>
- -------------------------------------------------------------------------------
obtaining the most favorable prices and efficient execution of transactions. In
seeking to implement the Fund's policies, the Sub-Adviser effects transactions
with those brokers and dealers who the Sub-Adviser believes provide the most
favorable prices and are capable of providing efficient executions. If the
Sub-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 Sub-Adviser of the type described in Section 28(e) of the
Securities Exchange Act of 1934. In doing so, the Fund may also pay higher
commission rates than the lowest available when the Sub-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.
The Sub-Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers, Inc. and an affiliate of the
Adviser and with affiliates of the Sub-Adviser, when it appears that, as an
introducing broker or otherwise, Gabelli or the affiliates of the Sub-Adviser
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. The Sub-Adviser may also consider sales
of shares of the Fund and any other registered investment companies managed by
the Adviser, the Sub-Adviser and their affiliates by brokers and dealers other
than the Distributor as a factor in its selection of brokers and dealers to
execute portfolio transactions for the Fund.
As required by Rule 17e-1 under the Act, the Board of Directors of the Fund
has adopted "Procedures" which provide that the commissions paid to Gabelli and
affiliates of the Sub-Adviser on stock exchange transactions may not exceed that
which would have been charged by another qualified broker or member firm able to
effect the same or a comparable transaction at an equally favorable price. Rule
17e-1 and the Procedures contain requirements that the Boards, including
independent Directors, conduct periodic compliance reviews of such brokerage
allocations and review such schedule at least annually for its continuing
compliance with the foregoing standard. The Adviser, the Sub-Adviser, Gabelli
and affiliates of the Sub-Adviser 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 ("Exchange"), Gabelli controls and monitors the execution of such
transactions on the floor of the Exchange through independent "floor brokers" or
through the Designated Order Turnaround ("DOT") System of the Exchange. Such
transactions are then cleared, confirmed to the Fund for the account of Gabelli,
and settled directly with the Custodian of the Fund by a clearing house member
firm which remits the commission less its clearing charges to Gabelli. Gabelli
and affiliates of the Sub-Adviser may also effect portfolio transactions on
behalf of the Fund in the same manner and pursuant to the same arrangements on
other national securities exchanges which adopt direct access rules similar to
those of the New York Stock Exchange.
PURCHASE AND REDEMPTION OF SHARES
Cancellation of purchase orders for shares of the Fund (as, for example,
when checks submitted to purchase shares are returned unpaid) cause a loss to be
incurred when the net asset value of the Fund's shares on the date of
cancellation is less than on the original date of purchase. The investor is
- -------------------------------------------------------------------------------
B-16
<PAGE>
responsible for such loss, and the Fund may reimburse itself with shares from
any account registered in that shareholder's name, or by seeking other redress.
If the Fund is unable to recover any loss to itself, it is the position of the
SEC that the Distributor will be immediately obligated to make the Fund whole.
In addition to other rights of redemption in favor of the Corporation, to
minimize expenses, the Corporation reserves the right to redeem, upon not less
than 30 days notice, all shares of the Fund in an account (other than an IRA)
which as a result of shareholder redemption has a value below $500 and has
reserved the ability to raise this amount to up to $10,000. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.
DIVIDENDS, DISTRIBUTIONS AND TAXES
General
The Fund intends to qualify as a regulated investment company under
Subchapter M of the Code. If it so qualifies, 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 in which it distributes such income and
capital gains to its shareholders.
The Fund will determine either to distribute or to retain all or part of
any net long-term capital gain in any year for reinvestment. If any such gains
are retained by the Fund, the Fund will be subject to a tax of 35% of such
amount. In that event, the Fund expects that it will designate the retained
amount as undistributed capital gains in a notice to its shareholders, each of
whom (1) will be required to include in income for tax purposes, as long-term
capital gain, its share of undistributed amount, (2) will be entitled to credit
its proportionate share of the tax paid by the Fund against its Federal income
tax liability and to claim refunds to the extent the credit exceeds such
liability, and (3) will increase its basis in its shares of the Fund by an
amount equal to 65% of the amount of undistributed capital gains included in
such shareholder's gross income.
Under the Code, amounts not distributed on a timely basis in accordance
with a calendar year distribution requirement are subject to a nondeductible 4%
excise tax. To avoid the tax, the Fund must distribute during each calendar
year, an amount equal to, at a minimum, the sum of (1) 98% of its ordinary
income (not taking into account any capital gains or losses) for the calendar
year year, (2) 98% of its capital gains in excess of its capital losses for the
twelve-month period ending on October 31 of the calendar year (unless an
election is made by a fund with a November or December year-end to use the
fund's fiscal year) and (3) all ordinary income and net capital gains for
previous years that were not previously distributed. A distribution will be
treated as paid during the calendar year if it is paid during the calendar year
or declared by a Fund in October, November or December of the year, payable to
shareholders of record on a date during such month and paid by the Fund during
January of the following year. Any such distributions paid during January of the
following year will be deemed to be received on December 31 of the year the
distributions are declared, rather than when the distributions are received.
Gains or losses on the sales of securities by the Fund will be long-term
capital gains or losses if the securities have been held by the Fund for more
than twelve months. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses.
Hedging Transactions
Certain options, futures contracts and options on futures contracts are
"section 1256 contracts". Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
- -------------------------------------------------------------------------------
B-17
<PAGE>
- -------------------------------------------------------------------------------
("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.
The 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.
Under the Code, gains or losses attributable to foreign currency contracts,
or to fluctuations in exchange rates between the time the Fund accrues income or
receivables on expenses or other liabilities denominated in a foreign currency
and the time the Fund actually collects such income or pays such liabilities,
are generally treated as ordinary income or ordinary loss. Similarly, gains or
loses on the disposition of debt securities held by the Fund, if any,
denominated in a foreign currency, to the extent attributable to fluctuations in
exchange rates between the acquisition and disposition dates, also are generally
treated as ordinary income or loss. These gains and losses increase or decrease
the amount of the Fund's net investment income available for distribution. Thus,
if such losses exceed other net investment income and net short-term capital
gains during a taxable year, the Fund would not be able to make any ordinary
dividend distributions, and any distributions made during the taxable year would
be trusted as a return of capital to shareholders, rather than as ordinary
income, and would reduce each shareholder's basis in his Fund shares.
The 30% limitation and the diversification requirements applicable to the
Fund 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 gain over net long-term
capital loss) are taxable to a U.S. shareholder as ordinary income, whether paid
in cash or shares. Dividends paid by the Fund are not expected to qualify for
the 70% deduction for dividends received by corporations. Distributions of net
capital gain (which consists of the excess of net long-term capital gain over
net short-term capital loss), if any, are taxable as long-term capital gains,
whether paid in cash or in shares, and are not eligible for the dividends
received deduction. Shareholders receiving distributions in the form of newly
- -------------------------------------------------------------------------------
B-18
<PAGE>
- -------------------------------------------------------------------------------
issued shares will have a basis in such shares of the Fund equal to the fair
market value of such shares on the distribution date. If the net asset value of
shares is reduced below a shareholder's cost as a result of a distribution by
the Fund, such distribution will be taxable even though it represents a return
of invested capital. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution that will nevertheless be taxable to
them.
Sales of Shares
Upon a sale or exchange of his or her shares, a shareholder will realize a
taxable gain or loss depending upon his or her basis in the shares. Such gain or
loss will be treated as a long-term capital gain or loss if the shares have been
held for more than one year. Any loss realized on a sale or exchange will be
disallowed to the extent the shares disposed of are replaced within a 61-day
period beginning 30 days before and ending 30 days after the day on which 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 the Fund's shares held by
the shareholder for six months or less will be treated for tax purposes as a
long-term capital loss to the extent of any distributions of net capital gain
received by the shareholder with respect to such shares.
Backup Withholding
The Corporation may be required to withhold Federal income tax at the rate
of 31% of all taxable distributions payable to shareholders who fail to provide
the Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against a shareholder's Federal income
tax liability.
Foreign Withholding Taxes
Income received by the Fund from sources within foreign countries may be
subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax in
advance since the amount of the Fund's assets to be invested in various
countries is not known. If more than 50% of the Fund's total assets consists of
securities of foreign corporations, the Fund will be entitled to elect to
"pass-through" to shareholders the amount of foreign taxes paid by the Fund. If
such an election is made, each shareholder of the Fund will be deemed to have
paid directly his or her pro rata share of the foreign taxes paid by the Fund,
and may be entitled to credit all or a part of such deemed payment against his
or her U.S. Federal income tax liability. Shareholders are urged to consult
their tax advisers regarding specific questions regarding Federal, state or
local taxes.
The Corporation reserves the right to create and issue a number of series
shares, in which case the shares of each series would participate equally in the
earnings, dividends, and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Directors, principal underwriters and auditors and on any proposed material
amendment to the Corporation's Certificate of Incorporation.
Upon liquidation of the Corporation or any series, shareholders of the
affected series would be entitled to share pro rata in the net assets of their
respective series available for distribution to such shareholders.
- -------------------------------------------------------------------------------
B-19
<PAGE>
- -------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
For purposes of determining the Fund's net asset value per share, domestic
securities will be valued as of 4:00 p.m. New York time on each business day.
Foreign securities are valued as of the close of trading on the primary exchange
on which they are traded. Securities traded on a registered securities exchange
will be valued at the last sale price on the principal exchange for such
security if available; the last sale price reported on the composite tape if
available; or the last sale price on the trading day preceeding the valuation
date if it is within the spread of the last available bid and asked prices on
the principal exchange and, if not, the closing bid or asked price which is
closest to such last reported sale price.
OTC securities for which a last sale price is published by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") will be
valued at such last sale price. All other OTC securities will be valued at the
highest closing bid price either as reported by NASDAQ or obtained from a dealer
which maintains an active market in that security.
Obligations of the U.S. Government, its agencies or instrumentalities and
all other debt instruments having a remaining maturity of sixty days or less
will be valued at cost adjusted by the amortization of discount or premium to
maturity. All other debt instruments will be valued at the latest bid price
obtainable from a dealer which maintains an active market in the security until
the maturity of the instrument is sixty days or less when it will be valued as
if purchased at the valuation established as of the sixty-first day of its
maturity. Listed debt securities which are actively traded on a securities
exchange may also be valued at the last sale price in lieu of the quoted bid
price of a dealer.
Any security for which market value cannot be established in accordance
with the foregoing pricing practices will be valued in good faith by the Fund's
directors.
As indicated in the Prospectus, the net asset value per share of the Fund's
shares will be determined on each day that the New York Stock Exchange is open
for trading. That Exchange annually announces the days on which it will not be
open for trading; the most recent announcement indicates that it will not be
open on the following days: New Year's Day, President's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, that Exchange may close on days not included in that announcement.
INVESTMENT PERFORMANCE INFORMATION
The Fund may furnish data about its investment performance in
advertisements, sales literature and reports to shareholders. "Total return"
represents the annual percentage change in value of $1,000 invested at the
maximum public offering price for the one year period and the life of the Fund
through the most recent calendar quarter, assuming reinvestment of all dividends
and distributions. The Fund may also furnish total return calculations for these
and other periods, based on investments at various sales charge levels or net
asset value. Any performance data which is based on the Fund's net asset value
per share would be reduced if a sales charge were taken into account.
Quotations of yield will be based on the investment income per share earned
during a particular 30 day period, less expenses accrued during the period ("net
investment income") and will be computed by dividing net investment income by
the maximum offering price per share on the last day of the period, according to
the following formula:
YIELD = 2[ ( A-B + 1 )^6 - 1]
---
CD
- -------------------------------------------------------------------------------
B-20
<PAGE>
- -------------------------------------------------------------------------------
where A = dividends and interest earned during the period, B = expenses accrued
for the period (net of any reimbursements), C = the average daily number of
shares outstanding during the period that were entitled to receive dividends,
and D = the maximum offering price per share on the last day of the period.
Quotations of total return will reflect only the performance of a
hypothetical investment in any Fund during the particular time period shown. The
Fund's total return and current yield may vary from time to time depending on
market conditions, the compositions of its portfolio and operating expenses.
These factors and possible differences in the methods used in calculating yield
should be considered when comparing the Fund's current yield to yields published
for other investment companies and other investment vehicles. Total return and
yield should also be considered relative to 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 and yield may be higher or
lower than past total returns and yields and there can be no assurance that any
historical return or yield will continue.
From time to time evaluations of performance are made by independent
sources that may be used in advertisements concerning the Fund. These sources
include: Lipper Analytical Services, Weisenberger Investment Company Service,
Barron's, Business Week, Kiplinger's Personal Finance, Financial World, Forbes,
Fortune, Money, Personal Investor, Sylvia Porter's Personal Finance, Bank Rate
Monitor, Morningstar and The Wall Street Journal.
In connection with communicating its yield or total return to current or
prospective shareholders, the Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs. Quotations of
the Fund's total return will represent the average annual compounded rate of
return of a hypothetical investment in the Fund over periods of 1, 5, and 10
years (up to the life of the Fund), and are calculated pursuant to the following
formula:
T = [(ERV/P)^1/6] - 1
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the redeemable value at the end
of the period of a $1,000 payment made at the beginning of the period). All
total return figures will reflect the deduction of Fund expenses (net of certain
expenses reimbursed by the Adviser) on an annual basis, and will assume that all
dividends and distributions are reinvested and will deduct the maximum sales
charge, if any is imposed.
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B-21
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board
of Directors of Gabelli Income Series Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of The Gabelli
Global Governments Fund (the "Fund"), a separately managed portfolio of Gabelli
Income Series Funds, Inc., at May 15, 1995, in conformity with generally
accepted accounting principles. This financial statement is the responsibility
of the Fund's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit of this financial
statement in accordance with generally accepted auditing standards which require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
May 16, 1995
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B-22
<PAGE>
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THE GABELLI GLOBAL GOVERNMENTS FUND
STATEMENT OF ASSETS AND LIABILITIES
May 15, 1995
ASSETS:
Cash ....................................................... $100,000
Deferred organization expenses (Note 1) .................... 98,000
--------
198,000
LIABILITIES
Accrued organization expenses (Note 1) ...................... 98,000
--------
NET ASSETS, applicable to 10,000 shares of $0.001 par
value shares of common stock issued and outstanding
(allocated and authorized 2,000,000,000 shares) ............. $100,000
========
NET ASSET VALUE PER SHARE ................................... $10.00
========
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
Note 1. Organization
The Gabelli Global Governments Fund (the "Fund") is a series of Gabelli
Income Series Funds, Inc. The Fund was incorporated as a Maryland corporation on
November 16, 1994 and has had no operations to date other than matters relating
to its organization and registration as an open-end, non-diversified, no-load
mutual fund under the Investment Company Act of 1940, as amended, and the sale
and issuance to Gabelli Funds, Inc. (the "Adviser") and its affiliates of 10,000
shares of its common stock for an aggregate purchase price of $100,000.
Organization expenses relating to the Fund, estimated at $98,000, will be
deferred and amortized on a straight-line basis over the period of benefit not
to exceed 60 months beginning at the commencement of operation of the Fund. The
Adviser has agreed that if any of the initial shares are redeemed by any holder
thereof prior to amortization of the organization expenses, the proceeds of such
redemption will be reduced by any unamortized organizational expenses in the
same proportion as the number of initial shares being redeemed bears to the
number of initial shares outstanding at the time of redemption.
Note 2. Investment Advisory and Sub-Investment Advisory Agreement
The Fund has entered into an Investment Advisory Agreement with the
Adviser. The fee payable to the Adviser under the Investment Advisory Agreement
is computed daily and paid monthly, at an annual rate of 1.00% applied to the
average daily net assets. The Fund and the Adviser have entered into an
Investment Sub-Advisory Agreement with Sal Oppenheim Jr. & Cie Asset Management
Corp. (the "Sub-Adviser") whereby the Adviser has agreed to pay to the
Sub-Adviser, to manage the Fund's investment program, a fee computed daily and
payable monthly in an amount equal to 50% of the net revenue to the Adviser. The
Adviser is obligated to perform certain administrative and management services
for the Fund and will provide all of the facilities, equipment, personnel and,
if requested, office space necessary to perform its duties under the Investment
Advisory Agreement.
Note 3. Distribution Plan and Agreement
The Board of Directors of the Fund has approved a Distribution Plan which
authorizes payments by the Fund, in connection with the distribution of its
shares, at an annual rate of up to .25% of the Fund's average daily net assets
to the Distributor.
The Fund has entered into a Distribution Agreement with Gabelli & Company,
Inc., an affiliate of the Adviser.
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B-23
<PAGE>
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Appendix A
APPENDIX TO STATEMENT OF ADDITIONAL INFORMATION
Description of Moody's Investors Service, Inc.'s ("Moody's") Corporate
Bond Ratings
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Aa: Bonds which are rated Aa
are judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which made the long term risks appear
somewhat larger than in Aaa securities. A: Bonds which are rated A possess many
favorable investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
Description of Standard & Poor's Rating Group's ("S&P's") Corporate Debt Ratings
AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity to
pay interest and repay principal is extremely strong. AA: Debt rated AA has a
very strong capacity to pay interest and repay principal and differs from the
highest rated issues only in small 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.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" 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 forseeable 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.
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B-24
<PAGE>
- -------------------------------------------------------------------------------
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.
Plus (+) or Minus (-): The ratings from "AA" to "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
- -------------------------------------------------------------------------------
B-25
<PAGE>
- --------------------------------------------------------------------------------
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
List all financial statements and exhibits as part of the Registration
Statement.
(a) Financial Statements included in Part B:
(a) Report of Independent Accountants
(b) Statement of Assets and Liabilities
Schedules for which provision is made in the applicable accounting regulation of
the Securities and Exchange Commission are omitted because they are not required
under the related instructions, they are inapplicable, or the required
information is presented in the financial statements or notes thereto.
(b) Exhibits:
(1) Form of Amended and Restated Articles of Incorporation*
(2) Form of Amended and Restated By-Laws*
(3) Not Applicable
(4) Form of Stock Certificate*
(5) (a) Form of Investment Advisory Agreement*
(b) Form of Investment Sub-Advisory Agreement*
(6) Form of Distribution Agreement*
(7) Not Applicable
(8) Form of Custodian Agreement*
(9) (a) Form of Transfer Agent Agreement*
(b) Form of Sub-Administration Agreement*
(10) Opinion and Consent of Counsel*
(11) Consent of Independent Auditors*
(12) Not Applicable
(13) Form of Subscription Agreements with Initial Shareholders*
(14) Model IRA Plan*
(15) Form of Distribution Plan*
(16) Not Applicable
(17) Powers of Attorney
- ---------
* Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant.
To the extent the following have substantially identical boards of directors and
trustees they may be deemed with Registrant to be under common control: The
Gabelli Asset Fund, Gabelli Equity Series Funds, Inc., The Gabelli Equity Trust
Inc., The Gabelli Growth Fund, The Gabelli Value Fund, Inc., The Gabelli U.S.
Treasury Money Market Fund, Gabelli Gold Fund, Inc., The Gabelli Global
Multimedia Trust, Inc., Gabelli Investor Funds, Inc., The Gabelli Global Series
Funds, Inc. and The Gabelli Convertible Securities Fund, Inc.
- --------------------------------------------------------------------------------
C-1
<PAGE>
- --------------------------------------------------------------------------------
Item 26. Number of Holders of Securities.
As of May 22, 1995 the approximate number of holders was:
(1) (2)
Number of
Record
Title of Class Holders
-------------- --------
The Gabelli Global Income Fund,
par value $.001 per share ................................... 2
Item 27. Indemnification.
The basic effect of the respective indemnification provisions of the
Registrant's By-Laws, the Investment Advisory Contract with Gabelli Funds, Inc.
and the Sub-Advisory Contract with Sal. Oppenheim jr. & Cie. Asset Management
Corp. for the Fund and Section 2-418 of the Maryland General Corporation Law is
to indemnify each officer and director of both the Registrant and Gabelli Funds,
Inc. and Sal. Oppenheim jr. & Cie. Asset Management Corp. to the full extent
permitted under the General Laws of the State of Maryland, except that such
indemnity shall not protect any such person against any liability to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant and the investment advisor and distributor pursuant to the forgoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a direct officer, or
controlling person of the Registrant and the principal underwriter in connection
with the successful defense of any action, suit or proceeding) is asserted
against the Registrant by such director, officer or controlling person or the
Distributor in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
See "Management of the Fund" in the Prospectus and "Directors and Officers" in
the Statement of Additional Information as well as the Adviser's and
Sub-Adviser's respective current Forms ADV which are incorporated herein by
reference.
Item 29. Principal Underwriters.
(a) The Distributor, Gabelli & Company, Inc., is also the principal underwriter
for The Gabelli Global Telecommunications Fund, The Gabelli Global
Interactive Couch Potato Fund, The Gabelli Global Convertible Securities
Fund, The Gabelli Growth Fund, The Gabelli Asset Fund, The Gabelli Value
- --------------------------------------------------------------------------------
C-2
<PAGE>
- --------------------------------------------------------------------------------
Fund,The Gabelli Small Cap Growth Fund, Gabelli Equity Income Fund, Gabelli
Gold Fund, Inc., The Westwood Funds and The Gabelli Money Market Funds.
(b) For information required with respect to the directors and executive
officers of Gabelli & Company, Inc, reference is made to the Form BD filed
by Gabelli & Company, Inc. under the Securities Exchange Act of 1934.
(c) Not applicable. The Registrant's only principal underwriter is an
affiliated person of an affiliated person of the Registrant.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules thereunder will be
maintained at the offices of the Sub-Administrator, The Shareholder Services
Group, Inc. Exchange Place, Bos 425, 53 State Street, Boston, MA 02109, at the
offices of the Fund's Custodian, State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts, at the offices of the Fund's Transfer
Agent and Dividend Disbursing Agent, State Street Bank & Trust Company, c/o
Boston Financial Data Services, 2 Heritage Drive, North Quincy, MA 02171 or at
the offices of the Adviser, Gabelli Funds, Inc., One Corporate Center, Rye, New
York 10580-1434.
Item 31. Management Services.
The Registrant is not a party to any management-related service contract.
Item 32. Undertakings.
(a) Registrant will file a post-effective amendment containing unaudited
financial statements for each series within four to six months after
effectiveness of Registrant's Registration Statement.
(b) Registrant has undertaken that if it does not hold annual meetings it will
abide by Section 16(c) of the 1940 Act which provides certain rights to
stockholders.
(c) Registrant hereby undertakes to furnish to each person to whom a prospectus
is delivered a copy of Registrant's latest Annual Report to Shareholders
upon request and without charge.
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C-3
<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the registrant has duly caused this Amendment to the
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 23rd day of
May, 1995.
GABELLI INCOME SERIES FUNDS, INC.
/s/ BRUCE N. ALPERT
--------------------------------------
By: Bruce N. Alpert
President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
* Chairman and Director May 23, 1995
- -----------------------------
Mario J. Gabelli
BRUCE N. ALPERT President and Treasurer May 23, 1995
- -----------------------------
Bruce N. Alpert
* Director May 23, 1995
- -----------------------------
Anthonie C. van Ekris
* Director May 23, 1995
- -----------------------------
Anthony J. Colavita
* Director May 23, 1995
- -----------------------------
Karl Otto Pohl
* Director May 23, 1995
- -----------------------------
Werner J. Roeder, M.D.
* By: /s/ BRUCE N. ALPERT
--------------------------------------
Bruce N. Alpert
Attorney-in-fact
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C-4
<PAGE>
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SCHEDULE OF EXHIBITS TO FORM N-1A
Exhibit
Number Exhibit Page Number
- ------- ------- -----------
(1) Amended and Restated Articles of Incorporation*..............
(2) Amended and Restated By-Laws*................................
(3) Not Applicable...............................................
(4) Stock Certificate*...........................................
(5)(a) Investment Advisory Agreement*...............................
(b) Investment Sub-Advisory Agreement*...........................
(6) Distribution Agreement*......................................
(7) Not Applicable...............................................
(8) Custodian Agreement*.........................................
(9)(a) Transfer Agent Agreement*....................................
(b) Sub-Administration Agreement*................................
(10) Opinion and Consent of Counsel*..............................
(11) Consent of Independent Auditors*.............................
(12) Not Applicable...............................................
(13) Form of Subscription Agreements with Initial Shareholders*...
(14) Model IRA Plan*..............................................
(15) Distribution Plan*...........................................
(16) Not Applicable...............................................
Powers of Attorney*..........................................
- ---------
* Filed herewith.
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C-5
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ARTICLES OF INCORPORATION
OF GABELLI INCOME SERIES FUNDS, INC.
Gabelli Income Series Funds, Inc., a Maryland corporation having its
principal office at One Corporate Center, Rye, New York 10580-1431 (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of the State of Maryland (the "Department") that:
The Corporation desires to amend, ratify, confirm and restate its charter
as currently in effect, consisting of Articles of Incorporation filed on
November 16, 1994 with the Department, as hereinafter provided. The provisions
set forth in these Articles of Amendment and Restatement of Articles of
Incorporation (the "Articles of Incorporation" or "Charter") are all of the
provisions of the Charter of the Corporation as currently in effect.
The Articles of Incorporation of the Corporation, filed with the Department
on November 16, 1994, are hereby amended and restated in full as follows:
ARTICLE I
THE UNDERSIGNED, John R. Mentzer, III, whose post office address is 10
Light Street, Baltimore, Maryland 21202, being at least eighteen (18) years of
age, hereby forms a corporation under and by virtue of the Maryland General
Corporation Law.
ARTICLE II
NAME
The name of the Corporation is GABELLI INCOME SERIES FUNDS, INC. (the
"Corporation").
<PAGE>
ARTICLE III
PURPOSES AND POWERS
The purposes for which the Corporation is formed are to act as an
investment company under the federal Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder (the "1940 Act"), and to
exercise and enjoy all of the general powers, rights and privileges granted to,
or conferred upon, corporations by the Maryland General Corporation Law now or
hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is The Corporation Trust Incorporated, a corporation of
the State of Maryland, and the post office address of the resident agent is 32
South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
(1) The total number of shares of stock of all classes which the
Corporation shall have authority to issue is One Billion (1,000,000,000) shares,
all of which stock shall have a par value of one-tenth of one cent ($.001) per
share. The aggregate par value of all authorized shares of stock of the
Corporation is One Million Dollars ($l,000,000). Unless otherwise prohibited by
law, following the registration of the Corporation as an open-end investment
company under the 1940 Act and so long as the Corporation is registered as an
open-end investment company under the 1940 Act, the Board of Directors of the
Corporation shall have the power and authority, without the approval of the
holders of any outstanding shares of capital stock of the Corporation,
2
<PAGE>
to increase or decrease the aggregate number of authorized shares of any class
or series of capital stock of the Corporation now existing or hereafter
authorized and created, but the number of shares of any class or series shall
not be decreased by the Board of Directors to a number below the number of
shares of such class or series then outstanding.
(2) (a) The Board of Directors of the Corporation is authorized to classify
or to reclassify, from time to time, any unissued shares of stock of the
Corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, and qualifications or terms and
conditions of or rights to require redemption of the stock.
(b) Without limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect to each class
or series of the stock of the Corporation, and with respect to each class or
series that hereafter may be authorized and created, shall be in such amount as
may be declared from time to time by the Board of Directors, and such dividends
and distributions may vary from class to class and from series to series to such
extent and for such purposes as the Board of Directors may deem appropriate,
including, but not limited to, the purpose of complying with requirements of
regulatory or legislative authorities.
(c) Without limiting the generality of the foregoing, the Board of
Directors may designate, from time to time, any unissued shares of stock of the
Corporation, whether now or hereafter authorized, as one or more classes or
series or a number of series of preferred or special stock that is excluded from
the definition of "senior security" set forth in section 18(g) of the 1940 Act
(or in any successor statute).
(3) Until such time as the Board of Directors shall provide otherwise
pursuant to the authority granted in section (2) of this Article V, Two Hundred
Million (200,000,000) shares of the authorized shares of the Corporation are
designated as The Gabelli Global Governments Fund Stock ("Governments Stock").
3
<PAGE>
(4) The shares of Governments Stock and the holders thereof, and shares of
any other class or series of the capital stock of the Corporation that may be
authorized from time to time, and the holders thereof, shall be subject to the
provisions set forth in this section (4) of this Article V except as may be
otherwise provided in any Articles Supplementary classifying or reclassifying
any such class or series; provided, however, that if no shares of any class or
series other than the Governments Stock are outstanding, the shares of
Governments Stock, and the holders thereof, shall nevertheless be subject to the
following provisions except to the extent that such provisions are by their
terms applicable only when shares of two or more classes are outstanding:
(a) As more fully set forth hereafter, the assets and liabilities and the
income and expenses of each class or series of the Corporation's capital stock
shall be determined separately and, accordingly, the net asset value, the
distributions payable to holders, and the amounts distributable in the event of
dissolution and liquidation of the Corporation to holders, of shares of the
Corporation's capital stock may vary from class to class or series to series.
Except for these differences and certain other differences hereafter set forth,
each class or series of the Corporation's capital stock shall have the same
preferences, conversion and other rights, voting powers, restrictions,
limitations as to distributions, qualifications and terms and conditions of and
rights to require redemption.
(b) The net asset value of each share of the capital stock of the
Corporation shall be the current net asset value per share as determined in
accordance with the provisions of this Section 4 of Article V and with the
procedures adopted from time to time by the Board of Directors in compliance
with the 1940 Act.
(c) All consideration received by the Corporation for the issuance or sale
of shares of a class or series of the Corporation's stock, together with all
income, earnings, profits, and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may be
(collectively referred to hereinafter as
4
<PAGE>
"assets belonging to" that class or series), shall irrevocably belong to that
class or series for all purposes, subject only to the rights of creditors, and
shall be so recorded upon the books of account of the Corporation. For purposes
of the preceding sentence, the assets of any corporation or business trust
merged with and into the Corporation pursuant to a merger in which the
Corporation is the surviving corporation shall be deemed to be assets belonging
to that class or series of the Corporation's stock the shares of which are
issued by the Corporation pursuant to the merger.
(d) For purposes of determining the net asset value per share of stock of a
class or series, the assets belonging to such class or series of the
Corporation's stock shall be charged with the liabilities of the Corporation
with respect to that class or series and with that class' or series' share of
the liabilities of the Corporation not attributable to any particular class or
series, in the latter case in the proportion that the net asset value of that
class or series (determined without regard to such liabilities) bears to the net
asset value of all classes or series of the Corporation's stock (determined
without regard to such liabilities) as determined in accordance with procedures
adopted by the Board of Directors. The determination of the Board of Directors
shall be conclusive as to the allocation of liabilities, including accrued
expenses and reserves, and assets to a particular class or classes or series.
The liabilities of any corporation or business trust merged with and into the
Corporation pursuant to a merger in which the Corporation is the surviving
corporation shall be charged to that class or series of the Corporation's stock
the shares of which are issued by the Corporation pursuant to the merger.
(e) Subject to any restrictions or limitations on redemptions by the
Corporation hereafter set forth in the Charter of the Corporation, each holder
of stock of the Corporation, upon request to the Corporation (accompanied by
surrender of the appropriate stock certificate or certificates in proper form
for transfer, if any certificates have been issued to represent such shares)
shall be entitled to require the Corporation to redeem, to the extent that the
Corporation may lawfully effect such redemption under the laws of the State of
Maryland and the federal securities laws but subject to
5
<PAGE>
any right of the Corporation to postpone or suspend such right of redemption
pursuant to the federal securities laws, all or any part of the shares of stock
standing in the name of such holder on the books of the Corporation at a price
per share equal to the net asset value per share.
(f) Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation within seven
business days of such surrender out of the funds legally available therefor,
provided that the Corporation may suspend the right of the holders of stock of
the Corporation to redeem shares of stock and may postpone the right of such
holders to receive payment for any shares when permitted or required to do so by
applicable statutes or regulations. Payment of the aggregate price of shares
surrendered for redemption may be made in cash or, at the option of the
Corporation, wholly or partly in such portfolio securities or other assets of
the Corporation as the Corporation shall select.
(g) The right of any holder of stock of the Corporation redeemed by the
Corporation as provided in subsection (e) of this section (4) to receive
dividends thereon and all other rights of such holder with respect to such
shares shall terminate at the time as of which the purchase or redemption price
of such shares is determined, except the right of such holder to receive (i) the
redemption price of such shares from the Corporation or its designated agent and
(ii) any dividend or distribution to which such holder had previously become
entitled as the record holder of such shares on the record date for such
dividend or distribution.
(h) Subject to the applicable laws of the State of Maryland, if authorized
by the Board of Directors of the Corporation, the Corporation shall have the
right, upon thirty (30) days advance written notice to such stockholder, to
redeem from any stockholder any shares of any class or series of the capital
stock of the Corporation at a redemption price determined in accordance with
subsection (e) of this section (4) if at any time the total investment in the
account of such stockholder does not equal or exceed $500 or certain other
minimum values as determined from time to time by resolution of the Board of
Directors in accordance with section
6
<PAGE>
2-105(b) of the Maryland General Corporation Law, as such Section 2-105(b) may
be amended from time to time (the "Minimum Amount"); provided, however, that in
the event the Corporation determines to exercise its power to redeem shares
provided in this subsection (h), the stockholder shall be notified that the
value of his account is less than the Minimum Amount and shall be allowed 30
days to make an appropriate investment in order to prevent such mandatory
redemption.
(i) The Corporation shall be entitled to redeem shares of its stock, to the
extent that the Corporation may lawfully effect such redemption under the laws
of the State of Maryland, upon such terms and conditions and for such
consideration as the Board of Directors shall deem advisable, at a price not
exceeding the net asset value per share.
(j) Until their classification is changed in accordance with section (2) of
this Article V, all shares so redeemed or purchased shall continue to belong to
the same class or series to which they belonged at the time of their redemption
or purchase.
(k) Shares of each class of stock shall be entitled to such dividends or
distributions, in stock or in cash or both, as may be declared from time to time
by the Board of Directors, acting in its sole discretion, with respect to such
class, provided that dividends or distributions shall be paid on shares of a
class of stock only out of lawfully available assets belonging to that class.
(l) In the event of the liquidation and dissolution of the Corporation, or
the liquidation of a particular class or series of the capital stock of the
Corporation, the stockholders of each class or series that has been authorized
and designated and which is being liquidated shall be entitled to receive, as a
class or series, out of the assets of the Corporation available for distribution
to stockholders, the assets belonging to that class or series. The assets so
distributable to the stockholders of a class or series shall be distributed
among such stockholders in proportion to the number of shares of that class or
series held by them and recorded on the books of the Corporation. In the event
of the liquidation and dissolution of the Corporation, to the
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extent that there are any assets available for distribution that are not
attributable to any particular class or series of stock, such assets shall be
allocated to all classes or series in proportion to the net asset values of the
respective classes or series and then distributed to the holders of stock of
each class or series in proportion to the number of shares of that class or
series held by the respective holders.
(m) The liquidation of any particular class or series in which there are
shares then outstanding may be authorized by vote of the majority of the Board
of Directors then in office, subject to the approval of the majority of
outstanding securities of that class or series, as defined in the 1940 Act, and
without the vote of the holders of any other class or series. The liquidation or
dissolution of a particular class or series may be accomplished, in whole or in
part, by the transfer of assets belonging to such class or series to another
class or series or by the exchange of shares of such class or series for the
shares of another class or series.
(n) Unless otherwise provided in the Charter of the Corporation, on each
matter submitted to a vote of the stockholders for approval, each holder of a
share of stock shall be entitled to one vote for each such share standing in his
name on the books of the Corporation irrespective of the class or series
thereof, and all shares of all classes or series shall vote together as a single
class; provided, however, that (i) as to any matter with respect to which a
separate vote of any class or series is required by the 1940 Act, the Maryland
General Corporation Law or the Charter of the Corporation, such class or series
shall vote separately as a class or series with respect to such matter in
addition to the vote of the holders of all classes or series of capital stock of
the Corporation voting together as a single class (unless the 1940 Act, the
Maryland General Corporation Law or the Charter of the Corporation shall provide
that the separate vote of such class or series shall apply in lieu of the vote
of all the holders of all classes or series, in which case, such class or series
shall vote separately as a class or series with respect to such matter and no
vote of any other class or series shall be necessary with respect to such
matter); and (ii) as to any matter which does not affect the
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express contract rights as set forth in the Charter of the Corporation of any
particular class or series, including the liquidation of a particular class or
series as described in subsection (1) above, only the holders of shares of the
one or more affected classes or series shall be entitled to vote thereon.
(o) The Corporation may issue shares of stock in fractional denominations
to the same extent as its whole shares, and shares in fractional denominations
shall be shares of stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including without
limitation, the right to vote, the right to receive dividends and distributions,
and the right to participate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing fractional shares.
(5) All persons who shall acquire stock or other securities of the
Corporation shall acquire the same subject to the provisions of the Charter of
the Corporation.
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be five (5), unless
and until changed pursuant to the By-Laws of the Corporation; provided, however,
that (i) so long as there are three or more stockholders of the Corporation, the
number of directors shall never be less than three and (ii) the number of
directors shall never be more than fifteen. The name of the persons who shall
act as the next directors until the first annual meeting of the stockholders and
until their successors are duly elected and qualify are: Anthony J. Colavita,
Mario J. Gabelli, Karl Otto Pohl, Werner J. Roeder, M.D., and Anthonie C. van
Ekris.
The term of office for a director is until the next annual meeting of
stockholders at which directors are elected or until death, resignation,
retirement or reelection, or until a successor is elected and qualified. In no
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case shall a decrease in the number of directors shorten the term of any
incumbent director. Any vacancy on the Board of Directors that results from an
increase in the number of directors may be filled by a majority of the entire
Board of Directors, provided that a quorum is present, and any other vacancy
occurring in the Board of Directors may be filled by a majority of the directors
then in office, whether or not sufficient to constitute a quorum, or by a sole
remaining director; provided, however, that if the stockholders of any class or
series of the capital stock of the Corporation are entitled separately to elect
one or more directors, a majority of the remaining directors elected by that
class or series or the sole remaining director elected by that class or series
shall fill any vacancy among the number of directors elected by that class or
series. A director elected by the Board of Directors to fill any vacancy in the
Board of Directors shall serve until the next annual meeting of stockholders and
until his successor shall be elected and shall qualify, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
At any meeting of stockholders, stockholders shall be entitled to elect
directors to fill any vacancies in the Board of Directors that have arisen since
the preceding annual meeting of stockholders (whether or not any such vacancy
has been filled by election of a new director by the Board of Directors), and
any director so elected by the stockholders shall hold office until the next
annual meeting of stockholders or until death, resignation or retirement or
until a successor is elected and qualified; provided, however, that if the
stockholders of any class or series of the capital stock of the Corporation are
entitled separately to elect one or more directors, only the stockholders of
that class or series may elect a successor to fill a vacancy on the Board of
Directors which results from the removal of a director elected by that class or
series. A director may be removed by the stockholders for cause or without
cause, and only by action of the stockholders taken by the holders of at least a
majority of the shares of capital stock then entitled to vote on the removal of
such director; provided, however, that if the stockholders of any class or
series are entitled separately to elect one or more directors, the director
elected by a class or series may not be removed without cause except by the
affirmative vote of a majority of all of the votes of that class or series.
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(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in the Charter
or in the By-Laws of the Corporation or in the Maryland General Corporation Law.
(3) Each person who at any time is or was a Director or officer of the
Corporation shall be indemnified by the Corporation to the fullest extent
permitted by the Maryland General Corporation Law as it may be amended or
interpreted from time to time, including the advancing of expenses, subject to
any limitations imposed by the 1940 Act. Furthermore, to the fullest extent
permitted by Maryland law, as it may be amended or interpreted from time to
time, subject to the limitations imposed by the 1940 Act, no Director or officer
of the Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the Charter of the Corporation
or repeal of any of its provisions shall limit or eliminate any of the benefits
provided to any person who at any time is or was a Director or officer of the
Corporation under this Section in respect of any act or omission that occurred
prior to such amendment or repeal.
(4) The Board of Directors of the Corporation shall have the exclusive
authority to make, alter or repeal from time to time any of the By-Laws of the
Corporation except any particular By-Law which is specified as not subject to
alteration or repeal by the Board of Directors, subject to the requirements of
the 1940 Act.
(5) The Board of Directors may designate, from time to time, the location
of the offices of the Corporation.
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No stockholder of the Corporation shall by reason of his holding shares of
capital stock have any preemptive or preferential right to purchase or subscribe
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to any shares of capital stock of the Corporation, now or hereafter authorized,
or any notes, debentures, bonds or other securities convertible into shares of
capital stock, now or hereafter to be authorized, whether or not the issuance of
any such shares of capital stock, or notes, debentures, bonds or other
securities would adversely affect the dividend or voting rights of such
stockholder; and the Board of Directors may issue shares of any class of capital
stock of the Corporation, or any notes, debentures, bonds, other securities
convertible into shares of any class of capital stock of the Corporation, either
whole or in part, to the existing stockholders for such lawful consideration and
on such terms as the Board of Directors, in its sole discretion, may determine.
ARTICLE VIII
MAJORITY VOTES OF STOCKHOLDERS
At all meetings of the stockholders, the holders of a majority of the
shares of stock of the Corporation entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by Maryland General Corporation Law or
the 1940 Act. In the absence of a quorum, no business may be transacted, except
that the holders of a majority of the shares of stock present in person or by
proxy and entitled to vote may adjourn the meeting from time to time, without
notice other than announcement thereat or notice otherwise required by the
By-Laws of the Corporation, until the holders of the requisite amount of shares
of stock shall be so present. At any such adjourned meeting at which a quorum
may be present any business may be transacted which might have been transacted
at the meeting as originally called. The absence from any meeting, in person or
by proxy, of holders of the number of shares of stock of the Corporation in
excess of a majority thereof which may be required by the laws of the State of
Maryland, the 1940 Act, or other applicable statute, the Charter of the
Corporation, or the By-Laws of the Corporation, for action upon any given matter
shall not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting, if there shall be present thereat, in
person or by proxy, holders of the number of shares of stock of the Corporation
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required for action in respect of such other matter or matters. A quorum shall
be present with respect to matters as to which only the holders of one class or
series of stock may vote if a majority of the shares of that class or series are
present at the meeting in person or by proxy, and the absence of holders of a
majority of shares with respect to one class or series shall have no effect with
respect to any other class or series of stock.
Except as otherwise provided in the Charter of the Corporation or as
required under the 1940 Act, and notwithstanding any provision of the Maryland
General Corporation Law requiring approval by the stockholders of any action by
the affirmative vote of a greater proportion than a majority of the votes
entitled to be cast upon the matter, any such action may be taken or authorized
upon the concurrence of a majority of the number of votes entitled to be cast
thereon.
ARTICLE IX
DETERMINATION BINDING
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice, by or pursuant to the
authority or the direction of the Board of Directors, as to the amount of
assets, obligations or liabilities of the Corporation (or the allocation of
assets, obligations or liabilities to a particular class or series of the
capital stock of the Corporation), as to the amount of net income of the
Corporation from dividends and interest for any period (or the allocation of
such income to a particular class or series of the capital stock of the
Corporation), or amounts at any time legally available for the payment of
dividends, as to the amount of any reserves or charges set up and the propriety
thereof (or the allocation of reserves or charges to a particular class or
series of the capital sock of the Corporation), as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which such reserves
or charges shall have been created, shall have been paid or discharged or shall
be then or thereafter required to be paid or discharged), as to the price of any
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security owned by the Corporation or as to any other matters relating to the
issuance, sale, redemption or other acquisition or disposition of securities or
shares of capital stock of the Corporation, and any other reasonable
determination made in good faith by the Board of Directors shall be final and
conclusive, and shall be binding upon the Corporation and all holders of its
capital stock, past, present and future, and all shares of the capital stock of
the Corporation are issued and sold on the condition and understanding,
evidenced by the purchase of shares of capital stock or acceptance of share
certificates, that any and all such determinations shall be binding as
aforesaid. No provision of the Charter of the Corporation shall be effective to
(a) require a waiver of compliance with any provision of the Securities Act of
1933, as amended, or the 1940 Act, or of any valid rule, regulation or order of
the Securities and Exchange Commission thereunder or (b) protect or purport to
protect any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE X
PRIVATE PROPERTY OF STOCKHOLDERS
The private property of stockholders shall not be subject to the payment of
corporate debts to any extent whatsoever.
ARTICLE XI
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
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ARTICLE XII
AMENDMENT
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in the Charter of the Corporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
* * * * *
The Board of Directors of the Corporation at a duly called meeting held on
April 25, 1995, with a quorum present, adopted a resolution approving the
foregoing amendment to and restatement of the Articles of Incorporation,
declaring that said amendment to and restatement of the Articles of
Incorporation was advisable and directing that it be submitted for action
thereon by the stockholders by a unanimous consent in writing in lieu of a
meeting under ss. 2-505 of the Maryland General Corporation Law.
The amendment to and restatement of the Articles of Incorporation of the
Corporation as hereinabove set forth was approved by the unanimous consent in
writing of the stockholders of the Corporation on May 30, 1995.
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IN WITNESS WHEREOF, Gabelli Income Series Funds, Inc. has caused these
presents to be signed in its name and on its behalf by its President and
attested to by its Secretary on May 30, 1995.
ATTEST: GABELLI INCOME SERIES
FUNDS, INC.
By:------------------------------ By:---------------------------------
Name: J. Hamilton Crawford, Jr. Name: Bruce N. Alpert
Title: Secretary Title: President & Treasurer
OFFICER'S CERTIFICATION
I, Bruce N. Alpert, President of Gabelli Income Series Funds, Inc., hereby
acknowledge the foregoing Articles of Amendment and Restatement of Articles of
Incorporation of Gabelli Income Series Funds, Inc. to be the act of Gabelli
Income Series Funds, Inc., and to the best of my knowledge, information and
belief, these matters and facts are true in all material respects, and my
statement is made under penalties of perjury.
Dated: May 30, 1995
----------------------------
Name: Bruce N. Alpert
Title:President & Treasurer
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AMENDED BY-LAWS
OF
GABELLI INCOME SERIES FUNDS, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation shall
be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive office of
the Corporation shall be at The Corporate Center at Rye, 555 Theodore Fremd
Avenue, Rye, New York 10580.
Section 3. Other Offices. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meetings. The Corporation is not required to hold an
annual meeting in any year in which the election of directors is not required to
be acted upon under the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder (the "1940 Act"), but it may hold
annual meetings (whether or not required by the 1940 Act). Any meeting held for
the purpose of electing directors shall be designated the annual meeting of
stockholders for that year. If the Corporation is required to hold a meeting of
stockholders to elect directors pursuant to the 1940 Act, the annual meeting
shall be held no later than 120 days after the occurrence of the event requiring
the meeting. All other annual meetings shall be held on a day in the month of
May selected by the Board of Directors.
<PAGE>
Section 2. Special Meetings. Special meetings of the stockholders, unless
otherwise provided by law or by the Charter of the Corporation (the "Charter")
may be called for any purpose or purposes by a majority of the Board of
Directors, the President, or on the written request of the holders of at least
10% of the outstanding capital stock of the Corporation entitled to vote at such
meeting.
Section 3. Place of Meetings. Annual and special meetings of the
stockholders shall be held at such place within the United States as the Board
of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of the place, date
and time of the holding of each annual and special meeting of the stockholders
and the purpose or purposes of each special meeting shall be given personally or
by mail, not less than ten nor more than ninety days before the date of such
meeting, to each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of the meeting. Notice by mail shall be deemed to
be duly given when deposited in the United States mail addressed to the
stockholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall fix
a new record date for an adjourned meeting, or the adjournment is for more than
one hundred and twenty days after the original record date, notice of such
adjourned meeting need not be given if the time and place to which the meeting
shall be adjourned were announced at the meeting at which the adjournment is
taken.
Section 5. Quorum. At all meetings of the stockholders, a quorum shall be
present with respect to matters as to which stockholders are entitled to vote as
provided for in the Charter of the Corporation.
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Section 6. Organization. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board), or in the absence of the
Chairman of the Board or his or her inability to act, the President, or in the
absence or inability of the Chairman of the Board and the President, a Vice
President, shall act as chairman of the meeting. The Secretary, or in the
Secretary's absence or inability to act, any person appointed by the chairman of
the meeting, shall act as secretary of the meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Stockholders shall be entitled to vote on matters
submitted to the stockholders as provided in the Charter, and, unless otherwise
provided in the Charter, shall be entitled to one vote on each matter submitted
to the stockholders on which matter such stockholder is entitled to vote for
every share of such stock standing in such stockholder's name on the records of
stockholders of the Corporation as of the record date determined pursuant to
Section 9 of this Article or if such record date shall not have been so fixed,
then at the later of (i) the close of business on the day on which notice of the
meeting is mailed or (ii) the thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and the proxy is coupled with an interest.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute,
the 1940 Act or these By-Laws, or determined by the chairman of the meeting to
be advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed
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by the stockholder voting, or by his proxy, if there be such proxy, and shall
state the number of shares voted.
Section 9. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to notice of or to
vote at any meeting of the stockholders or be alloted other rights. The record
date, which may not be prior to the close of business on the day the record date
is fixed, shall be not more than ninety nor less than ten days before the date
on which the action requiring such determination shall be taken.
Section 10. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspector shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting powers of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the office
of director shall act as inspector of an election of directors. Inspectors need
not be stockholders.
Section 11. Consent of Stockholders in Lieu of Meeting. Except as otherwise
provided by statute, the 1940 Act or the Charter, any action required to be
taken at any annual or special meet-
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ing of stockholders, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if the following are filed with the records of
stockholders meetings: (i) a unanimous written consent which sets forth the
action and is signed by each stockholder entitled to vote on the matter and (ii)
a written waiver of any right to dissent signed by each stockholder entitled to
notice of the meeting but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. All powers of
the Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law or by the Charter
or these By-Laws.
Section 2. Number of Directors. Subject to the provisions of the Charter,
the number of directors shall be fixed from time to time by resolution of the
Board of Directors adopted by a majority of the directors then in office. Any
vacancy created by an increase in the number of Directors may be filled in
accordance with Section 6 of this Article III. Directors need not be
stockholders.
Section 3. Election and Term of Directors. Directors shall be elected by
written ballot at each annual meeting of stockholders held for that purpose
unless otherwise provided by statute or the Charter. The term of office of
directors shall be from the time of their election and qualification until the
next annual meeting of stockholders and until their successors are elected and
qualify.
Section 4. Resignation. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective
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shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. Removal of Directors. Any director of the Corporation may be
removed in accordance with the Charter.
Section 6. Vacancies. Subject to the provisions of the 1940 Act, any
vacancies in the Board, whether arising from death, resignation, removal, an
increase in the number of directors or any other cause, shall be filled by a
vote of the Board of Directors in accordance with the Charter.
Section 7. Place of Meetings. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified in
the notice of such meeting.
Section 8. Regular Meeting. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 9. Special Meetings. Special meetings of the Board may be called by
two or more directors of the Corporation or by the Chairman of the Board or the
President.
Section 10. Post Stockholder Meetings. A meeting of the Board of Directors
shall be held as soon as practicable after each meeting of stockholders at which
directors were elected. No notice of such meeting shall be necessary if held
immediately after the adjournment, and at the site, of the meeting of
stockholders. If not so held, notice shall be given as hereinafter provided for
special meetings of the Board of Directors.
Section 11. Notice of Special Meetings. Notice of each special meeting of
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone
or any standard form of telecommunication, at least twenty-four hours before the
time at which such meeting is to be
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held, or mailed by first-class mail, postage prepaid, addressed to him at his
residence or usual place of business, at least three days before the day on
which such meeting is to be held.
Section 12. Participation in Meetings. The members of the Board of
Directors of the Corporation or any committee of the Board of Directors of the
Corporation established pursuant to Article IV of these By-Laws may participate
in any meeting of the Board of Directors or of any committee thereof by means of
a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
in any meeting by such means constitutes presence in person by such director at
such meeting.
Section 13. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice which is filed with the records of the meeting
or who shall attend such meeting. Except as otherwise specifically required by
these By-Laws, a notice or waiver of notice of any meeting need not state the
purpose of such meeting.
Section 14. Quorum and Voting. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and except as otherwise expressly required by statute, the 1940 Act,
the Charter, these By-Laws, or other applicable statute, the act of a majority
of the directors present at any meeting at which a quorum is present shall be
the act of the Board; provided, however, that the approval of any contract with
an investment adviser or principal underwriter, as such terms are defined in the
1940 Act, which the Corporation enters into or any renewal or amendment thereof,
and the selection of the Corporation's independent public accountants shall each
require the affirmative vote of a majority of the directors who are not
interested persons, as defined in the 1940 Act, of the Corporation cast in
person at such meeting and the approval of the fidelity bond required by the
1940 Act shall require the approval of a majority of such directors. In the
absence of a quorum at any meeting of the Board, a majority of the
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directors present thereat may adjourn such meeting to another time and place
until a quorum shall be present thereat. Notice of the time and place of any
such adjourned meeting shall be given to the directors who were not present at
the time of the adjournment and, unless such time and place were announced at
the meeting at which the adjournment was taken, to the other directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called.
Section 15. Organization. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President or, in his absence
or inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside thereat. The Secretary
(or, in his absence or inability to act, any person appointed by the Chairman)
shall act as secretary of the meeting and keep the minutes thereof.
Section 16. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the 1940 Act any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writings or writing are filed with the
minutes of the proceedings of the Board or committee.
Section 17. Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
ARTICLE IV
Committees
Section 1. Committees of the Board. The Board of Directors may from time to
time, by resolution adopted
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by a majority of the whole Board, designate one or
more committees of the Board, each such committee to consist of two or more
directors and, subject to applicable statute, to have such powers and duties as
the Board of Directors may, by resolution, prescribe.
Section 2. General. One-third, but not less than two, of the members of any
committee shall be present in person at any meeting of such committee in order
to constitute a quorum for the transaction of business at such meeting, and the
act of a majority present shall be the act of such committee. The Board may
designate a chairman of any committee and such chairman or any two members of
any committee may fix the time and place of its meetings unless the Board shall
otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The Board shall
have the power at any time to change the membership of any committee, to fill
all vacancies, to designate alternate members to replace any absent or
disqualified member, or to dissolve any such committee. Nothing herein shall be
deemed to prevent the Board from appointing one or more committees consisting in
whole or in part of persons who are not directors of the Corporation; provided,
however, that no such committee shall have or may exercise any authority or
power of the Board in the management of the business or affairs of the
Corporation.
ARTICLE V
Officers, Agents and Employees
Section 1. Officers. The officers of the Corporation shall be a President,
a Secretary and a Treasurer, each of whom shall be elected by the Board of
Directors. The Board of Directors may elect or appoint one or more Vice
Presidents and may also appoint such other officers, agents and employees as it
may deem necessary or proper. Any two or more offices may be held by the same
person, except the offices of President and
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Vice President, but no officer shall execute, acknowledge or verify any
instrument as an officer in more than one capacity. Such officers shall be
elected by the Board of Directors to serve at the pleasure of the Board, each to
hold office until the next annual meeting of the Board of Directors following
the next succeeding annual meeting of stockholders and until their successors
shall have been duly elected and shall have qualified, or until death,
resignation, or removal, as hereinafter provided in these By-Laws. The Board may
from time to time elect, or delegate to the President the power to appoint, such
officers (including one or more Assistant Vice Presidents, one or more Assistant
Treasurers and one or more Assistant Secretaries) and such agents, as may be
necessary or desirable for the business of the Corporation. Such officers and
agents shall have such duties and shall hold their offices for such terms as may
be prescribed by the Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of resignation to the Board, the Chairman of the
Board, President or the Secretary. Any such resignation shall take effect at the
time specified therein or, if the time when it shall become effective shall not
be specified therein, immediately upon its receipt; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors. Such
removal shall be without prejudice to such person's contract rights, if any, but
the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, either arising from death,
resignation, removal or any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the manner prescribed in
these By-Laws for the regular election or appointment to such office.
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Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.
Section 6. Bonds or Other Security. If required by the Board, any officer,
agent or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
Section 7. President. The President shall be the chief executive officer of
the Corporation and shall have all of the powers and duties incident to the
office of President of a corporation. In the absence of the Chairman of the
Board (or if there be none), he shall preside at all meetings of the
stockholders and of the Board of Directors. He shall have, subject to the
control of the Board of Directors, general charge of the business and affairs of
the Corporation. He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the Board, and he may delegate
these powers.
Section 8. Vice President. Each Vice President shall have such powers and
perform such duties as the Board of Directors or the President may from time to
time prescribe.
Section 9. Treasurer. The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation, except those which the Corporation has
placed in the custody of a bank or trust company or member of a national
securities exchange (as that term is defined in the Securities Exchange Act
of 1934, as amended) pursuant to a written agreement designating such bank
or trust company or member of a national securities exchange as a custodian
or sub-custodian of the property of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
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(c) cause all moneys and other valuables to be deposited to the credit
of the Corporation;
(d) receive, and give receipts for, moneys due and payable, to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment
of its funds as ordered or authorized by the Board, taking proper vouchers
therefor;
(f) provide assistance to the Audit Committee of the Board, if any,
and report to such committee as necessary;
(g) be designated as principal accounting officer for purposes of ss.
32 of the 1940 Act; and
(h) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
by the Board or the President.
Section 10. Secretary. The Secretary shall:
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the
Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation
(unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly
kept and filed; and
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(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board or the President.
Section 11. Delegation of Duties. In case of the absence of any officer of
the Corporation, or for any other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any director.
ARTICLE VI
Indemnification
Each officer and director of the Corporation shall be indemnified by the
Corporation to the full extent permitted under the Maryland General Corporation
Law, except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Absent a court determination that an officer or director seeking
indemnification was not liable on the merits or guilty of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office, the decision by the Corporation to indemnify such person
must be based upon the reasonable determination of independent counsel or
nonparty independent directors, after review of the facts, that such officer or
director is not guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
The Corporation may purchase insurance on behalf of an officer, director,
employee or other agent of the Corporation protecting such person to the full
extent permitted under the Maryland General Corporation Law, from liability
arising from his activities as officer or director of the Corporation. The
Corporation, however, may not purchase insurance on behalf of any officer or
director of the Corporation that protects or
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purports to protect such person from liability to the Corporation or to its
stockholders to which such officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of the
Corporation owned by him, provided, however, that certificates for fractional
shares will not be delivered in any case. The certificates representing shares
of stock shall be signed by or in the name of the Corporation by the President
or a Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and sealed with the seal of the Corporation.
Any or all of the signatures or the seal on the certificate may be a facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate shall be
issued, it may be issued by the Corporation with the same effect as if such
officer, transfer agent or registrar were still in office at the date of issue.
Section 2. Books of Accounts and Record of Stockholders. There shall be
kept at the principal executive office of the Corporation correct and complete
books and records of account of all the business and transactions of the
Corporation. There shall be made available upon request of any stockholder, in
accordance with Maryland law, a record containing the number of shares of stock
issued during a specified period not to exceed twelve months and the
consideration received by the Corporation for each such share.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the
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stock records of the Corporation only by the registered holder thereof, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or with a transfer agent or transfer clerk, and on surrender
of the certificate or certificates, if issued, for such shares properly endorsed
or accompanied by a duly executed stock transfer power and the payment of all
taxes thereon. Except as otherwise provided by law, the Corporation shall be
entitled to recognize the exclusive rights of a person in whose name any share
or shares stand on the record of stockholders as the owner of such share or
shares for all purposes, including, without limitation, the rights to receive
dividends or other distributions, and to vote as such owner, and the Corporation
shall not be bound to recognize any equitable or legal claim to or interest in
any such share or shares on the part of any other person.
Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board, in its abso-
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lute discretion, may refuse to issue any such new certificate, except pursuant
to legal proceedings under the laws of the State of Maryland.
Section 6. Fixing of a Record Date for Dividends and Distributions. The
Board may fix, in advance, a date not more than ninety days preceding the date
fixed for the payment of any dividend or the making of any distribution. Once
the Board of Directors fixes a record date as the record date for the
determination of the stockholders entitled to receive any such dividend or
distribution, in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend or distribution.
Section 7. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its stockholders, annual
statements of its affairs, and voting trust agreements on file at its principal
office.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form and shall bear, in
addition to any other emblem or device approved by the Board of Directors, the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "Maryland". Said seal may be used by causing it or a facsimile thereof
to be impressed or affixed or in any other manner reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of December.
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ARTICLE X
Depositories and Custodians
Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safe keeping of the
securities and investments of the Corporation shall contain provisions complying
with the 1940 Act.
ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or sold, transferred
or otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President or a Vice President or the Treasurer or pursuant
to any procedure approved by the Board of Directors, subject to applicable law.
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ARTICLE XII
Independent Public Accountants
The firm of independent public accountants which shall sign or certify the
financial statements of the Corporation which are filed with the Securities and
Exchange Commission shall be selected annually by the Board of Directors and
ratified by the stockholders to the extent required by the 1940 Act.
ARTICLE XIII
Annual Statement
The books of account of the Corporation shall be examined by an independent
firm of public accountants at the close of each annual period of the Corporation
and at such other times as may be directed by the Board. A report to the
stockholders based upon each such examination shall be mailed to each
stockholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be available at
the annual meeting of stockholders and be placed on file at the Corporation's
principal office in the State of Maryland. Each such report shall show the
assets and liabilities of the Corporation as of the close of the annual or
quarterly period covered by the report and the securities in which the funds of
the Corporation were then invested. Such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or quarterly
period covered by the report and any other information required by the 1940 Act,
and shall set forth such other matters as the Board or such firm of independent
public accountants shall determine.
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ARTICLE XIV
Amendments
The Board of Directors, by affirmative vote of a majority thereof, shall
have the right to amend, alter or repeal these By-Laws at any regular or special
meeting of the Board of Directors, except any particular By-Law which is
specified as not subject to alteration or repeal by the Board of Directors.
COUNTERSIGNED: BOSTON FINANCIAL DATA SERVICES
SERVICING AGENT FOR STATE STREET BANK AND TRUST COMPANY,
P.O. BOX 8308, BOSTON, MA 02206-8308
BY
- ---------------------------------------------
AUTHORIZED OFFICER
GABELLI INCOME SERIES FUNDS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
THIS CERTIFIES that is the owner of
*SEE REVERSE S1DE FOR CERTAIN DEFINITIONS
CUSIP
----------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF STOCK OF THE CLASS DESIGNATED AS THE
GABELLI GLOBAL GOVERNMENTS FUND (the "Corporation"), par value $0.001 per share,
transferable on the books of the Corporation by the bidder hereof, in person or
by a duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned by the Transfer
Agent. Witness the seal of the Corporation and the signatures of its duly
appointed officers.
Dated:
Corporate
Seal
Treasurer President
<PAGE>
PLEASE DETACH AND DISCARD UNLESS CHANGES ARE REQUIRED
Gabelli Global Governments Fund,
a series of Gabelli Income Series Funds, Inc.
Number
KC Shares
Account No Alpha Code Dealer No. Confirm No.
Trade Date Confirm Date Batch I. D. No.
Change Notice if the above information is incorrect or missing.
Please print the correct information below, and return to:
Boston Financial Data Services
Servicing Agent for State Street Bank and Trust Company
P.O. Box 8308
Boston, MA 02206-8308
------------------------------------------------------
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IDENT. OR SOC. SEC. NO.
EXHIBIT 5(a)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated as of May 23, 1995, between Gabelli
Income Series Funds, Inc., a Maryland corporation (the "Corporation"), on behalf
of its series The Gabelli Global Governments Fund (the "Fund"), and Gabelli
Funds, Inc. (the "Adviser"), a Delaware corporation.
In consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, it is agreed by and between the parties hereto as follows:
1. In General
The Adviser agrees, all as more fully set forth herein, to act as
investment adviser to the Fund with respect to the investment of the assets of
the Fund and to supervise and arrange the purchase and sale of assets held in
the investment portfolio of the Fund. The Adviser may delegate any or all of its
responsibilities to one or more sub-advisers or administrators, subject to the
approval of the Board of Directors of the Corporation. Such delegation shall not
relieve the Adviser of its duties and responsibilities hereunder.
2. Duties and Obligations of the Adviser With Respect to Investments of
Assets of the Fund
(a) Subject to the succeeding provisions of this paragraph and subject to
the direction and control of the Corporation's Board of Directors, the Adviser
shall (i) act as investment adviser for and supervise and manage the investment
and reinvestment of the Fund's assets and, in connection therewith, have
complete discretion in purchasing and selling securities and other assets for
the Fund and in voting, exercising consents and exercising all other rights
appertaining to such securities and other assets on behalf of the Fund; (ii)
arrange for the purchase and sale of securities and other assets held in the
investment portfolio of the Fund and (iii) oversee the administration of all
aspects of the Fund's business and affairs and provide, or arrange for others
whom it believes to be competent to provide,
<PAGE>
certain services as specified in subparagraph (b) below. Nothing contained
herein shall be construed to restrict the Corporation's right to hire its own
employees or to contract for administrative services to be performed by third
parties, including but not limited to, the calculation of the net asset value of
the Fund's shares.
(b) The specific services to be provided or arranged for by the Adviser for
the Fund are (i) maintaining the Fund's books and records, such as journals,
ledger accounts and other records in accordance with applicable laws and
regulations to the extent not maintained by the Fund's custodian, transfer agent
and dividend disbursing agent; (ii) transmitting purchase and redemption orders
for the Fund's shares to the extent not transmitted by the Fund's distributor or
others who purchase and redeem shares; (iii) initiating all money transfers to
the Fund's custodian and from the Fund's custodian for the payment of the Fund's
expenses, investments, dividends and share redemptions; (iv) reconciling account
information and balances among the Fund's custodian, transfer agent,
distributor, dividend disbursing agent and the Adviser; (v) providing the Fund,
upon request, with such office space and facilities, utilities and office
equipment as are adequate for the Fund's needs; (vi) preparing, but not paying
for, all reports by the Corporation, on behalf of the Fund, to their
shareholders and all reports and filings required to maintain the registration
and qualification of the Fund's shares under federal and state law including
periodic updating of the Corporation's registration statement and Prospectus
(including its Statement of Additional Information); (vii) supervising the
calculation of the net asset value of the Fund's shares; and (viii) preparing
notices and agendas for meetings of the Fund's shareholders and the
Corporation's Board of Directors as well as minutes of such meetings in all
matters required by applicable law to be acted upon by the Board of Directors.
(c) In the performance of its duties under this Agreement, the Adviser
shall at all times use all reasonable efforts to conform to, and act in
accordance with, any requirements imposed by (i) the provisions of the
Investment Company Act of 1940 (the "Act"), and of any rules or regulations in
force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of the Articles of Incorporation, as amended, and By-Laws
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of the Corporation, as such documents are amended from time to time; (iv) the
investment objectives, policies and restrictions applicable to the Fund as set
forth in the Corporation's Registration Statement on Form N-1A and (v) any
policies and determinations of the Board of Directors of the Corporation with
respect to the Fund.
(d) The Adviser will seek to provide qualified personnel to fulfill its
duties hereunder and will bear all costs and expenses (including any overhead
and personnel costs) incurred in connection with its duties hereunder and shall
bear the costs of any salaries or directors fees of any officers or directors of
the Corporation who are affiliated persons (as defined in the Act) of the
Adviser. If in any fiscal year the Fund's aggregate expenses (excluding
interest, taxes, distribution expenses, brokerage commissions and extraordinary
expenses) exceed the most restrictive expense limitation imposed by the
securities law of any state in which the shares of the Fund are registered or
qualified for sale, the Adviser will reimburse the Fund for the amount of such
excess up to the amount of fees accrued for such fiscal year hereunder. The
amount of such reimbursement shall be calculated monthly and an appropriate
amount shall be held back or released to the Adviser each month so that the
aggregate amount held back at any particular time shall equal the net amount of
the reimbursement on a cumulative year-to-date basis. As of the end of the year
the final amount of the total reimbursement shall be calculated and the
appropriate amount released to the Fund or the Adviser or paid to the Fund by
the Adviser. Subject to the foregoing, the Corporation shall be responsible for
the payment of all the Fund's other expenses, including (i) payment of the fees
payable to the Adviser under paragraph 4 hereof; (ii) organizational expenses;
(iii) brokerage fees and commissions; (iv) taxes; (v) interest charges on
borrowings; (vi) the cost of liability insurance or fidelity bond coverage for
the Corporation officers and employees, and directors' and officers' errors and
omissions insurance coverage; (vii) legal, auditing and accounting fees and
expenses; (viii) charges of the Fund's custodian, transfer agent and dividend
disbursing agent; (ix) the Fund's pro rata portion of dues, fees and charges of
any trade association of which the Corporation is a member; (x) the expenses of
printing, preparing and mailing proxies, stock certificates and reports,
including the Fund's prospectus
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and statement of additional information, and notices to shareholders; (xi)
filing fees for the registration or qualification of the Fund and its shares
under federal or state securities laws; (xii) the fees and expenses involved in
registering and maintaining registration of the Fund's shares with the
Securities and Exchange Commission; (xiii) the expenses of holding shareholder
meetings; (xiv) the compensation, including fees, of any of the Corporation's
directors, officers or employees who are not affiliated persons of the Adviser;
(xv) all expenses of computing the Fund's net asset value per share, including
any equipment or services obtained solely for the purpose of pricing shares or
valuing the Fund's investment portfolio; (xvi) expenses of personnel performing
shareholder servicing functions and all other distribution expenses payable by
the Corporation; and (xvii) litigation and other extraordinary or non-recurring
expenses and other expenses properly payable by the Fund.
(e) The Adviser shall give the Fund the benefit of its best judgment and
effort in rendering services hereunder, but neither the Adviser nor any of its
officers, directors, employees, agents or controlling persons shall be liable
for any act or omission or for any loss sustained by the Fund in connection with
the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement; provided, however, that the foregoing shall not constitute
a waiver of any rights which the Corporation may have which may not be waived
under applicable law.
(f) Nothing in this Agreement shall prevent the Adviser or any director,
officer, employee or other affiliate thereof from acting as investment adviser
for any other person, firm or corporation, or from engaging in any other lawful
activity, and shall not in any way limit or restrict the Adviser or any of its
directors, officers, employees or agents from buying, selling or trading any
securities for its or their own accounts or for the accounts of others for whom
it or they may be acting.
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3. Portfolio Transactions
In the course of the Adviser's execution of portfolio transactions for the
Fund, it is agreed that the Adviser shall employ securities brokers and dealers
which, in its judgment, will be able to satisfy the policy of the Fund to seek
the best execution of its portfolio transactions at reasonable expenses. For
purposes of this agreement, "best execution" shall mean prompt, efficient and
reliable execution at the most favorable price obtainable. Under such conditions
as may be specified by the Corporation's Board of Directors in the interest of
its shareholders and to ensure compliance with applicable law and regulations,
the Adviser may (a) place orders for the purchase or sale of the Fund's
portfolio securities with its affiliate, Gabelli & Company, Inc. or affiliates
of any sub-adviser pursuant to procedures under Rule 17e-1; (b) pay commissions
to brokers other than such affiliates which are higher than might be charged by
another qualified broker to obtain brokerage and/or research services considered
by the Adviser to be useful or desirable in the performance of its duties
hereunder and for the investment management of other advisory accounts over
which it or its affiliates exercise investment discretion; and (c) consider
sales by brokers (other than its affiliate distributor) of shares of the Fund
and any other mutual fund for which it or its affiliates act as investment
adviser, as a factor in its selection of brokers and dealers for the Fund's
portfolio transactions.
4. Compensation of the Adviser
(a) Subject to paragraph 2(b), the Corporation agrees to pay to the Adviser
out of the Fund's assets and the Adviser agrees to accept as full compensation
for all services rendered by or through the Adviser (other than any amounts
payable to the Adviser pursuant to paragraph 4(b)) a fee computed daily and
payable monthly in an amount equal on an annualized basis to 1.00% of the first
$500,000,000 of the Fund's average daily net asset value and 0.80% of the Fund's
average daily net assets in excess of $500,000,000. For any period less than a
month during which this Agreement is in effect, the fee shall be prorated
according to the proportion which such period bears to a full month of 28, 29,
30 or 31 days, as the case may be.
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(b) The Corporation will pay the Adviser or the distributor separately for
any costs and expenses incurred by the Adviser or the distributor in connection
with distribution of the Fund's shares in accordance with the terms (including
proration or nonpayment as a result of allocations of payments) of a Plan of
Distribution (the "Plan") adopted for the Fund pursuant to Rule 12b-1 under the
Act as such Plan may be in effect from time to time; provided, however, that no
payments shall be due or paid to the Adviser hereunder unless and until this
Agreement shall have been approved by Director Approval and Disinterested
Director Approval (as such terms are defined in such Plan). The Corporation
reserves the right to modify or terminate such Plan at any time as specified in
the Plan and Rule 12b-1, and this subparagraph shall thereupon be modified or
terminated to the same extent without further action of the parties. The persons
authorized to direct the payment of the funds pursuant to this Agreement and the
Plan shall provide to the Corporation's Board of Directors, and the Directors
shall review, at least quarterly a written report of the amount so paid and the
purposes for which such expenditures were made.
(c) For purposes of this Agreement, the net assets of the Fund shall be
calculated pursuant to the procedures adopted by resolutions of the Directors of
the Corporation for calculating the net asset value of the Fund's shares.
5. Indemnity
(a) The Corporation hereby agrees to indemnify the Adviser and each of the
Adviser's directors, officers, employees, sub-advisers and agents (including any
individual who serves at the Adviser's request as director, officer, partner,
trustee or the like of another corporation) and controlling persons of each of
them (each such person being an "indemnitee") out of the Fund's assets against
any liabilities and expenses, including amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and counsel fees (all as
provided in accordance with applicable corporate law) reasonably incurred by
such indemnitee in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court or
administrative or investigative body in which he
6
<PAGE>
may be or may have been involved as a party or otherwise or with which he may be
or may have been threatened, while acting in any capacity set forth above in
this paragraph or thereafter by reason of his having acted in any such capacity,
except with respect to any matter as to which he shall have been adjudicated not
to have acted in good faith in the reasonable belief that his action was in the
best interest of the Corporation and furthermore, in the case of any criminal
proceeding, so long as he had no reasonable cause to believe that the conduct
was unlawful, provided, however, that (1) no indemnitee shall be indemnified
hereunder against any liability to the Corporation or its shareholders or any
expense of such indemnitee arising by reason of (i) willful misfeasance, (ii)
bad faith, (iii) gross negligence iv) reckless disregard of the duties involved
in the conduct of his position (the conduct referred to in such clauses (i)
through (v) being sometimes referred to herein as "disabling conduct"), (2) as
to any matter disposed of by settlement or a compromise payment by such
indemnitee, pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless there has
been a determination that such settlement or compromise is in the best interests
of the Fund and that such indemnitee appears to have acted in good faith in the
reasonable belief that his action was in the best interest of the Fund and did
not involve disabling conduct by such indemnitee and (3) with respect to any
action, suit or other proceeding voluntarily prosecuted by any indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such indemnitee was authorized by a majority
of the full Board of the Corporation. Notwithstanding the foregoing, the
Corporation shall not be obligated to provide any such indemnification to the
extent such provision would waive any right which the Corporation cannot
lawfully waive.
(b) The Corporation shall make advance payments out of the assets of the
Fund in connection with the expenses of defending any action with respect to
which indemnification might be sought hereunder if the Corporation 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 Fund unless it is subsequently determined that he is entitled to
such
7
<PAGE>
indemnification and if the Directors of the Corporation 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 Fund shall be insured against losses
arising by reason of any lawful advances, or (C) a majority of a quorum of
directors of the Corporation who are neither "interested persons" of the
Corporation (as defined in Section 2(a)(19) of the Act) nor parties to the
proceeding ("Disinterested Non-Party Directors") or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is reason to believe
that the indemnitee ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall be
made (1) by a final decision on the merits by a court or other body before whom
the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct or, (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-party Directors of the Corporation, or
(ii) if such a quorum is not obtainable or even, if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective upon on the date hereof and shall
continue in effect for a period of two years and thereafter from year to year,
but only so long as such continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Adviser at any time without penalty
upon giving the Corporation sixty days written notice (which notice may be
waived by the Corporation) and may be terminated by the Corporation at any time
without penalty upon giving the Adviser sixty
8
<PAGE>
days notice (which notice may be waived by the Adviser), provided that such
termination by the Corporation shall be directed or approved by the vote of a
majority of the Directors of the Corporation in office at the time or by the
vote of the holders of a "majority of the voting securities" (as defined in the
Act) of the Corporation at the time outstanding and entitled to vote or, with
respect to paragraph 4(b), by a majority of the Directors of the Corporation who
are not "interested persons" of the Corporation and who have no direct or
indirect financial interest in the operation of the Plan or any agreements
related to the Plan. This Agreement shall terminate automatically in the event
of its assignment (as "assignment" is defined in the Act and the rules
thereunder.)
It is understood and hereby agreed that the word "Gabelli" is the property
of the Adviser for copyright and other purposes. The Corporation further agrees
that the word "Gabelli" in its name is derived from the name of Mario J. Gabelli
and such name may freely be used by the Adviser for other investment companies,
entities or products. The Corporation further agrees that, in the event that the
Adviser shall cease to act as investment adviser to the Corporation with respect
to the investment of assets allocated to the Fund, both the Corporation and the
Fund shall promptly take all necessary and appropriate action to change their
names to names which do not include the word "Gabelli"; provided, however, that
the Corporation and the Fund may continue to use the word "Gabelli" if the
Adviser consents in writing to such use.
7. Notices
Any notice under this Agreement shall be in writing to the other party at
such address as the other party may designate from time to time for the receipt
of such notice and shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
8. Governing Law
This Agreement shall be construed in accordance with the laws of the State
of New York for contracts to
9
<PAGE>
be performed entirely therein and in accordance with the applicable provisions
of the Act.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
GABELLI INCOME SERIES FUNDS, INC.
By
---------------------------------
Name: Bruce N. Alpert
Title: President
GABELLI FUNDS, INC.
By
----------------------------------
Name: Stephen G. Bondi
Title: Vice President of Finance
10
INVESTMENT SUB-ADVISORY AGREEMENT
INVESTMENT SUB-ADVISORY AGREEMENT, dated as of May 23, 1995, by and between
Gabelli Funds, Inc., a Delaware corporation (the "Adviser"), Sal Oppenheim Jr. &
Cie. Asset Management Corp., a New York corporation (the "Sub-Adviser"), and
Gabelli Income Series Funds, Inc., a Maryland corporation (the "Corporation"),
on behalf of its series The Gabelli Global Governments Fund (the "Fund").
WHEREAS, the Corporation and the Adviser are parties to an Investment
Advisory Agreement, dated May , 1995 (the "Advisory Agreement") pursuant to
which the Adviser has agreed to furnish investment advisory services to the
Fund; and
WHEREAS, the Adviser desires to retain the Sub-Adviser to provide
investment sub-advisory services to the Fund and the Sub-Adviser desires to
provide such services.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is agreed by and between the parties hereto as
follows:
1. In General.
The Sub-Adviser agrees, all as more fully set forth herein, to act as
investment sub-adviser to the Fund with respect to the investment of the assets
of the Fund and to supervise and arrange the purchase and sale of assets held in
the investment portfolio of the Fund.
2. Duties and Obligations of the
Sub-Adviser With Respect to
Investments of Assets of the Fund.
(a) Subject to the succeeding provisions of this paragraph and subject to
the direction and control of the Corporation's Board of Directors and the
Adviser, the Sub-Adviser shall (i) act as investment sub-adviser for and
supervise and manage the investment and reinvestment of the Fund's assets and,
in connection
<PAGE>
therewith, have complete discretion in purchasing and selling securities and
other assets for the Fund and in voting, exercising consents and exercising all
other rights appertaining to such securities and other assets on behalf of the
Fund, and (ii) arrange for the purchase and sale of securities and other assets
held in the investment portfolio of the Fund. Nothing herein contained shall be
construed to restrict the Corporation's right to hire its own employees or to
contract for administrative services to be performed by third parties,
including, but not limited to, the calculation of the net asset value of the
Fund's shares.
(b) Subject to the direction and control of the Corporation's Board of
Directors and the Adviser, the additional specific services to be provided or
arranged for by the Sub-Adviser for the Fund include (i) maintaining the Fund's
books and records, such as journals, ledger accounts and other records in
accordance with applicable laws and regulations to the extent not maintained by
the Adviser or the Fund's sub-administrator, custodian, transfer agent and
dividend disbursing agent; (ii) initiating money transfers to the Fund's
custodian and from the Fund's custodian for the payment of the Fund's
investments and related expenses; (iii) reconciling account information and
balances among the Fund's custodian, transfer agent, distributor, dividend
disbursing agent and the Adviser; and (iv) assisting in the calculation of the
net asset value of the Fund's shares.
(c) In the performance of its duties under this Agreement, the Sub-Adviser
shall at all times use all reasonable efforts to conform to, and act in
accordance with, any requirements imposed by (i) the provisions of the
Investment Company Act of 1940 (the "Act"), and of any rules or regulations in
force thereunder; (ii) any other applicable provision of law; (iii) the
provisions of the Articles of Incorporation and By-Laws of the Corporation, as
such documents may be amended from time to time; (iv) the investment objectives,
policies and restrictions applicable to the Fund as set forth in the
Corporation's Registration Statement on Form N-1A and (v) any policies and
determinations of the Board of Directors of the Corporation or the Adviser with
respect to the Fund.
2
<PAGE>
(d) The Sub-Adviser will seek to provide qualified personnel to fulfill its
duties hereunder and will bear all costs and expenses (including any overhead
and personnel costs) incurred in connection with its duties hereunder and shall
bear the costs of any salaries or directors' fees of any officers or directors
of the Fund who are affiliated persons (as defined in the Act) of the
Sub-Adviser.
(e) The Sub-Adviser acknowledges the following arrangement between the Fund
and the Adviser: if in any fiscal year the Fund's aggregate expenses (excluding
interest, taxes, distribution expenses, brokerage commissions and extraordinary
expenses) exceed the most restrictive expense limitation imposed by the
securities law of any state in which the shares of the Fund are registered or
qualified for sale, the Adviser will reimburse the Fund for the amount of such
excess up to the amount of fees accrued for such fiscal year hereunder. The
amount of such reimbursement shall be calculated monthly and an appropriate
amount shall be held back or released to the Adviser each month so that the
aggregate amount held back at any particular time shall equal the net amount of
the reimbursement on a cumulative year-to-date basis. As of the end of the year,
the final amount of the total reimbursement shall be calculated and the
appropriate amount released to the Fund or the Adviser or paid to the Fund by
the Adviser.
(f) The Sub-Adviser shall give the Fund and the Adviser the benefit of its
best judgment and effort in rendering services hereunder, but neither the
Sub-Adviser nor any of its officers, directors, employees, agents or controlling
persons shall be liable for any act or omission or for any loss sustained by the
Fund in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement; provided, however, that the
foregoing shall not constitute a waiver of any rights which the Fund may have
which may not be waived under applicable law.
(g) Nothing in this Agreement shall prevent the Sub-Adviser or any
director, officer, employee or other affiliate thereof from acting as investment
adviser
3
<PAGE>
for any other person, firm or corporation, or from engaging in any other
lawful activity, and shall not in any way limit or restrict the Sub-Adviser or
any of its directors, officers, employees or agents from buying, selling or
trading any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting.
3. Portfolio Transactions.
In the course of the Sub-Adviser's execution of portfolio transactions for
the Fund, it is agreed that the Sub-Adviser shall employ securities brokers and
dealers which, in its judgment, will be able to satisfy the policy of the Fund
to seek the best execution of its portfolio transactions at reasonable expenses.
For purposes of this agreement, "best execution" shall mean prompt, efficient
and reliable execution at the most favorable price obtainable. Under such
conditions as may be specified by the Corporation's Board of Directors and the
Adviser in the interest of the Fund's shareholders and to ensure compliance with
applicable law and regulations, the Sub-Adviser may (a) place orders for the
purchase or sale of the Fund's portfolio securities with the Adviser's
affiliate, Gabelli & Company, Inc. or the Sub-Adviser's affiliated entities
pursuant to procedures under Rule 17e-1; (b) pay commissions to brokers other
than such affiliates which are higher than might be charged by another qualified
broker to obtain brokerage and/or research services considered by the
Sub-Adviser to be useful or desirable in the performance of its duties hereunder
and for the investment management of other advisory accounts over which it or
its affiliates exercise investment discretion; and (c) consider sales by brokers
(other than affiliates) of shares of the Fund and any other mutual fund for
which it or its affiliates act as investment adviser, as a factor in its
selection of brokers and dealers for the Fund's portfolio transactions.
4. Compensation of the Sub-Adviser.
(a) Subject to paragraph 2(e), the Adviser agrees to pay to the Sub-Adviser
and the Sub-Adviser agrees to accept as full compensation for all services
rendered by or through the Sub-Adviser a fee computed daily and payable monthly
in an amount equal to 50% of
4
<PAGE>
the net revenues to the Adviser. "Net revenues" shall mean gross revenues
received by the Adviser with respect to the Fund less administrative and
marketing fees at an annual rate of .10% of the Fund's average net assets.
"Gross revenues" shall mean all advisory and administrative fees paid by the
Fund to the Adviser. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case
may be.
(b) For purposes of this Agreement, the net assets of the Fund shall be
calculated pursuant to the procedures adopted by resolutions of the Directors of
the Corporation for calculating the net asset value of the Fund's shares.
5. Indemnity.
(a) The Corporation hereby agrees to indemnify the Sub-Adviser and each of
the Sub-Adviser's directors, officers, employees, and agents (including any
individual who serves at the Sub-Adviser's request as director, officer,
partner, trustee or the like of another corporation) and controlling persons
(each such person being an "indemnitee") out of the Fund's assets against any
liabilities and expenses, including amounts paid in satisfaction of judgments,
in compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable corporate law) reasonably incurred by such indemnitee
in connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
investigative body in which he may be or may have been involved as a party or
otherwise or with which he may be or may have been threatened, while acting in
any capacity set forth above in this paragraph or thereafter by reason of his
having acted in any such capacity, except with respect to any matter as to which
he shall have been adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Fund and furthermore, in
the case of any criminal proceeding, so long as he had no reasonable cause to
believe that the conduct was unlawful, provided, however, that (1) no indemnitee
shall be indemnified hereunder against any liability to the Fund or its
shareholders or any expense of such indemnitee arising by
5
<PAGE>
reason of (i) willful misfeasance, (ii) bad faith, (iii) gross negligence, (iv)
reckless disregard of the duties involved in the conduct of his position (the
conduct referred to in such clauses (i) through (v) being sometimes referred to
herein as "disabling conduct"), (2) as to any matter disposed of by settlement
or a compromise payment by such indemnitee, pursuant to a consent decree or
otherwise, no indemnification either for said payment or for any other expenses
shall be provided unless there has been a determination that such settlement or
compromise is in the best interests of the Fund and that such indemnitee appears
to have acted in good faith in the reasonable belief that his action was in the
best interest of the Fund and did not involve disabling conduct by such
indemnitee and (3) with respect to any action, suit or other proceeding
voluntarily prosecuted by any indemnitee as plaintiff, indemnification shall be
mandatory only if the prosecution of such action, suit or other proceeding by
such indemnitee was authorized by a majority of the full Board of the
Corporation. Notwithstanding the foregoing, the Corporation shall not be
obligated to provide any such indemnification to the extent such provision would
waive any right which the Corporation cannot lawfully waive. The Sub-Adviser and
the Adviser shall each indemnify the other and their respective officers,
trustees, shareholders, partners and controlling persons to the extent such
persons are not indemnified by the Corporation and have not engaged in disabling
conduct with respect to all actions or omissions to act or any matter related to
the activities of such persons hereunder.
(b) The Corporation shall make advance payments out of the assets of the
Fund in connection with the expenses of defending any action with respect to
which indemnification might be sought hereunder if the Corporation 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 Corporation unless it is subsequently determined that he is
entitled to such indemnification and if the Directors of the Corporation
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 Fund shall be
insured against losses arising by reason of
6
<PAGE>
any lawful advances, or (C) a majority of a quorum of directors of the
Corporation who are neither "interested persons" of the Corporation (as defined
in Section 2(a)(19) of the Act) nor parties to the proceeding ("Disinterested
Non-Party Directors") or an independent legal counsel in a written opinion,
shall determine, based on a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the indemnitee
ultimately will be found entitled to indemnification.
(c) All determinations with respect to indemnification hereunder shall be
made (1) by a final decision on the merits by a court or other body before whom
the proceeding was brought that such indemnitee is not liable by reason of
disabling conduct or, (2) in the absence of such a decision, by (i) a majority
vote of a quorum of the Disinterested Non-party Directors of the Corporation, or
(ii) if such a quorum is not obtainable or even, if obtainable, if a majority
vote of such quorum so directs, independent legal counsel in a written opinion.
The rights accruing to any indemnitee under these provisions shall not
exclude any other right to which he may be lawfully entitled.
6. Duration and Termination
This Agreement shall become effective upon the date hereof and shall
continue in effect for a period of two years and thereafter from year to year,
but only so long as such continuation is specifically approved at least annually
in accordance with the requirements of the Act.
This Agreement may be terminated by the Sub-Adviser at any time without
penalty upon giving the Adviser and the Corporation sixty days written notice
(which notice may be waived by such parties) and may be terminated by the
Corporation or the Adviser at any time without penalty upon giving the
Sub-Adviser sixty days written notice, which notice may be waived by the
Sub-Adviser, provided that such termination by the Corporation shall be directed
or approved by the vote of a majority of the Directors of the Corporation in
office at the time or by the vote of the holders of a "majority of
7
<PAGE>
the voting securities" (as defined in the Act) of the Corporation at the time
outstanding and entitled to vote. This Agreement shall terminate automatically
in the event of its assignment (as "assignment" is defined in the Act and the
rules thereunder).
7. Notices.
Any notice under this Agreement shall be in writing to the other party at
such address as the other party may designate from time to time for the receipt
of such notice and shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid.
8. Governing Law.
This Agreement shall be construed in accordance with the laws of the State
of New York for contracts to be performed entirely therein and in accordance
with the applicable provisions of the Act.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers, all as of the day and the year
first above written.
GABELLI INCOME SERIES FUNDS, INC.
By
-----------------------------
Name: Bruce N. Alpert
Title: President
GABELLI FUNDS, INC.
By
-----------------------------
Name: Stephen G. Bondi
Title: Vice President of Finance
SAL OPPENHEIM JR. & CIE. ASSET MANAGE-
MENT CORP.
By
-----------------------------
Name:
Title:
9
DISTRIBUTION AGREEMENT
FOR
THE GABELLI GLOBAL GOVERNMENTS FUND
DISTRIBUTION AGREEMENT, dated ________ __, 1995, between Gabelli Income
Series Funds, 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, as
amended (the "1940 Act"), and an indefinite number of shares (the "Shares") of
The Gabelli Global Governments Fund (the "Fund"), par value $.001 per share (the
"Shares"), have been registered under the Securities Act of 1933, as amended
(the "1933 Act"), to be offered for sale to the public in a continuous public
offering in accordance with terms and conditions set forth in the Prospectus and
Statement of Additional Information (together, the "Prospectus") of the Fund
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.
<PAGE>
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
Fund at any time for any reason the Distributor will suspend such efforts. The
Company may also withdraw the offering of Shares at any time when required by
the provisions of any statute, order, rule or regulation of any governmental
body having jurisdiction. It is understood that the Distributor does not
undertake to sell all or any specific portion of the Shares.
3. The Distributor represents that it is a member in good standing of the
National Association of Dealers, Inc. and agrees that it will use all reasonable
efforts to maintain such status and to abide by the Rules of Fair Practice, the
Constitution and the Bylaws of the National Association of Securities Dealers,
Inc., and all other rules and regulations that are now or may become applicable
to its performance hereunder. The Distributor will undertake and discharge its
obligations hereunder as an independent contractor and it shall have no
authority or power to obligate or bind the Company by its actions, conduct or
contracts except that it is authorized to accept orders for the purchase or
repurchase of Shares as the Company's agent and subject to its approval. The
Company reserves the right to reject any order in whole or in part. The
Distributor may appoint sub-agents or distribute through dealers or otherwise as
it may determine from time to time pursuant to agreements approved by the
Company, but this Agreement shall not be construed as authorizing any dealer or
other person to accept orders for sale or repurchase of Shares on behalf of the
Company or otherwise act as the Company's agent for any purpose. The Distributor
shall not utilize any materials in connection with the sale or offering of
Shares except the then current Prospectus and such other materials as the
Company shall provide or approve in writing.
4. Shares may be sold by the Distributor only at prices and terms described
in the then current Prospectus relating to the Shares and may be sold either
through persons with whom it has selling agreements in a form approved by the
Company's board of directors or directly to prospective purchasers. To
facilitate sales, the Company will furnish the Distributor with the net asset
value of its Shares promptly after each calculation thereof.
2
<PAGE>
5. The Company has delivered to the Distributor a copy of the current
Prospectus for the Fund. 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 the 1933 Act and the 1940 Act. The Company will furnish to the
Distributor, at the Distributor's expense, a reasonable number of copies of the
Prospectus and any amended Prospectus for use in connection with the sale of
Shares.
6. At the Distributor's request, the Company will take such steps at its
own expense as may be necessary and feasible to qualify the 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 Fund.
7. The Distributor agrees that:
(a) It will furnish to the Company any pertinent information required
to be inserted with respect to the Distributor as exclusive sales agent and
distributor within the purview of federal and state securities laws in any
reports or registrations required to be filed with any government
authority;
(b) It will not make any representations inconsistent with the
information contained in the Registration Statement or Prospectus filed
under the 1933 Act, 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 Fund's then current
Prospectus or in such supplemental literature or advertising as may be
authorized in writing by the Company; and
3
<PAGE>
(d) Subject to paragraph 9 below, the Distributor will bear the costs
and expenses of printing and distributing any copies of the Prospectuses
and any annual and interim reports of the Fund (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 Fund to the public.
8. The Company will pay its legal and auditing expenses and the cost of
composition of the Prospectus and any annual or interim reports of the Fund.
9. The Company will pay the Distributor for costs and expenses incurred by
the Distributor in connection with distribution of Shares by the Distributor in
accordance with the terms of a Plan of Distribution (the "Plan") adopted by the
Fund 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 Board 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 such 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 de-
4
<PAGE>
fense or disposition of any action, suit or other proceeding, whether civil or
criminal, in which such indemnitee may be or may have been involved as a party
or otherwise or with which he may be or may have been threatened, while the
Distributor was active in such capacity or by reason of the Distributor having
acted in any such capacity or arising out of or based upon any untrue statement
of a material fact contained in the then-current Prospectus relating to the
Shares or arising out of or based upon any alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such claims, demands, liabilities or expenses
arise out of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing by the Distributor to the Company expressly for
use in any such Prospectus; provided, however, that (1) no indemnitee shall be
indemnified hereunder against any liability to the Company or the shareholders
of the Fund 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 investiga-
5
<PAGE>
tion 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 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 1940 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 the 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
6
<PAGE>
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 Board Approval and 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.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Distribution
Agreement to be executed by their duly authorized officers as of the date first
written above.
GABELLI INCOME SERIES FUNDS, INC.
By:
---------------------------
Name:
Title:
GABELLI & COMPANY, INC.
By:
---------------------------
Name:
Title:
8
EXHIBIT 8
CUSTODIAN CONTRACT
Between
GABELLI INCOME SERIES FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held By It 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 4
2.4 Bank Accounts 5
2.5 Availability of Federal Funds 5
2.6 Collection of Income 5
2.7 Payment of Fund Monies 6
2.8 Liability for Payment in Advance of Receipt
of Securities Purchased 7
2.9 Appointment of Agents 7
2.10 Deposit of Fund Assets in Securities System 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System 8
2.12 Segregated Account 9
2.13 Ownership Certificates for Tax Purposes 10
2.14 Proxies 10
2.15 Communications Relating to Portfolio
Securities 10
2.16 Reports to Fund by Independent Public
Accountants 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States 11
3.1 Appointment of Foreign Sub-Custodians 11
3.2 Assets to be Held 11
3.3 Foreign Securities Systems 11
3.4 Holding Securities 11
3.5 Agreements with Foreign Banking Institutions 12
3.6 Access of Independent Accountants of the Fund 12
3.7 Reports by Custodian 12
3.8 Transactions in Foreign Custody Account 12
3.9 Liability of Foreign Sub-Custodians 13
3.10 Liability of Custodian 13
3.11 Reimbursement for Advances 13
3.12 Monitoring Responsibilities 14
3.13 Branches of U.S. Banks 14
3.14 Tax Law 14
<PAGE>
TABLE OF CONTENTS
Page
----
4. Payments for Sales or Repurchases or Redemptions
of Shares 14
5. Proper Instructions 15
6. Actions Permitted Without Express Authority 15
7. Evidence of Authority 16
8. Duties 0f Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income 16
9. Records 16
10. Opinion of Fund's Independent Accountants 17
11. Reports to Fund by Independent Public Accountants 17
12. Compensation of Custodian 17
13. Responsibility of Custodian 17
14. Effective Period, Termination and Amendment 19
15. Successor Custodian 20
16. Interpretive and Additional Provisions 20
17. Additional Funds 21
18. Massachusetts Law to Apply 21
19. Prior Contracts 21
20. Shareholder Communications Election 21
<PAGE>
CUSTODIAN CONTRACT
This Contract between Gabelli Income Series Funds, Inc., an open-end,
non-diversified registered investment company organized and existing under the
laws of Maryland, having its principal place of business at One Corporate
Center, Rye, New York 10580-1434 (the "Fund"), and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts 02110 (the "Custodian"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, The
Gabelli Global Governments Fund (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with Article 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Fund's articles
of incorporation (the "Articles of Incorporation"). The Fund on behalf of the
Portfolio(s) agrees to deliver to the Custodian all securities and cash of the
Portfolios, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the
Portfolio(s) from time to time, and the cash consideration received by it for
such new or treasury shares of beneficial interest of the Fund representing
interests in the Portfolios ("Shares") as may be issued or sold from time to
time. The Custodian shall not be responsible for any property of a Portfolio
held or received by the Fund on behalf of the Portfolio and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians located in the United States, but only in
accordance with an applicable vote by the board of directors of the Fund (the
"Board of Directors") on behalf of the applicable Portfolio(s) and provided that
the Custodian shall have no more or less responsibility or liability to the Fund
1
<PAGE>
on account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held Bv the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property to be held by it in the
United States, including all domestic securities owned by such Portfolio
other than (a) securities which are maintained pursuant to Section 2.10 in
a clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury and certain
federal agencies (each a "U.S. Securities System") and (b) commercial paper
of an issuer for which State Street Bank and Trust Company acts as issuing
and paying agent("Direct Paper") which is depositedd and/or maintained in
the Custodian's Direct Paper System pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book-entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
2
<PAGE>
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that, in any
such case, the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from the
Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in cormection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
3
<PAGE>
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to tirne in the currently effective prospectus and
statement of additional information of the Fund related to the
Portfolio (the "Prospectus"), in satisfaction of requests by holders
of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize reasonable efforts to (i) timely collect income due the Fund on
such securities and (ii) notify the Fund of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
4
<PAGE>
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for the
account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
Funds held by the Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the banking department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary
or desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
and that each such bank or trust company and the funds to be deposited with
each such bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board of Directors. Such
funds shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to registered domestic securities held hereunder to which each Portfolio
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment by the issuer,
such securities are held by the Custodian or its agent thereof and shall credit
such income, as collected, to such Portfolio's account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for payment
all coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held hereunder.
Collection of income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data in its possession as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
5
<PAGE>
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies
of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act to act as a custodian and has been designated
by the Custodian as its agent for this purpose) registered in the name
of the Portfolio or in the name of a nominee of the Custodian referred
to in Section 2.3 hereof or in proper form for transfer; (b) in the
case of a purchase effected through a U.S. Securities System, in
accordance with the conditions set forth in Section 2.10 hereof; (c)
in the case of a purchase involving the Direct Paper System, in
accordance with the conditions set forth in Section 2.11; (d) in the
case of repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
securities either in certificate form or through an entry crediting
the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing purchase
by the Portfolio of securities owned by the Custodian along with
written evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio; or (e) for transfer to a time deposit
account of the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation from a
broker and/or the applicable bank pursuant to Proper Instructions from
the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management fees, accounting fees,
transfer agent fees, legal fees and operating expenses of the Fund
whether or not such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6
<PAGE>
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be made.
2.8 Liabilitv for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of domestic securities for the account of a
Portfolio is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund on
behalf of such Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same extent as if
the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act to act
as a custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; provided, however,
that the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission (the "SEC"}
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies (collectively referred to
herein as "U.S. Securities System") in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("U.S. Securities System Account") of the Custodian in the
U.S. Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for its customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
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<PAGE>
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the U.S.
Securities System Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Portfolio; the Custodian shall transfer securities sold
for the account of the Portfolio upon receipt of advice from the U.S.
Securities System that payment for such securities has been
transferred to the U.S. Securities System Account and the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of the Portfolio. Copies of all advices from
the U.S. Securities System of transfers of securities for the account
of the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its request.
Upon request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall furnish
to the Fund on behalf of the Portfolio copies of daily transaction
sheets reflecting each day's transactions in the U.S. Securities
System for the account of the Portfolio;
4) The Custodian shall provide the Fund on behalf of the Portfolio(s)
with any report obtained by the Custodian on the U.S. Securities
System's accounting system, internal accounting control and procedures
for safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole for any such
loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper Svstem. The Custodian may
deposit and/or maintain securities owned by a Portfolio in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
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2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account ("Direct
Paper Account") of the Custodian in the Direct Paper System which
shall not include any assets of the Custodian other than assets held
as a fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the Direct Paper System for the account of
the Portfolio; and
6) Upon reasonable request of the Fund, the Custodian shall provide the
Fund with any report on the Direct paper System's system of internal
accounting control which had been prepared as of the time of such
request.
2.12 Segregated Account. The Custodian shall, upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio,
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof: (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the SEC relating to the
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maintenance of segregated accounts by registered investment companies; and
(iv) for other proper corporate purposes, but only, in the case of this
clause (iv), upon receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Fund on behalf of the Portfolio such proxies, all
proxy soliciting materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights in
connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Portfolio shall notify the Custodian at
least three (3) business days prior to the date on which the Custodian is
to take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including domestic
securities deposited and/or maintained in a U.S. Securities System,
relating to the services provided by the Custodian under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there
are no such inadequacies, the reports shall so state.
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3. Duties of the Custodian with Respect to Propertv of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto (the "foreign sub-custodians"). Upon receipt of
"Proper Instructions", as defined in Article 5, together with a certified
resolution of the Board of Directors, the Custodian and the Fund on behalf
of the Portfolio(s) may agree to amend Schedule A hereto from time to time
to designate additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper Instructions,
the Fund may instruct the Custodian to cease the employment of any one or
more such sub-custodians for maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(l) of Rule 17f-5 under
the Investment Company Act and (b) cash and cash equivalents in such
amounts as the Custodian may determine to be reasonably necessary to effect
the Portfolio's foreign securities transactions.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolio(s) shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
the United States (each a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are referred to collectively herein as "Securities
Systems"). Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is to be identified as belonging to
the Custodian for the benefit of its customers; provided, however, that (i)
the records of the Custodian with respect to seeurities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property as belonging to the
Fund and (ii) the Custodian shall require that securities and other
non-cash property of the Fund be held separately from the any assets of the
foreign sub-custodian or others.
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3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall provide that: (a) the assets of each Portfolio
will not be subject to any right, charge, security interest, lien or claim
of any kind in favor of the foreign banking institution or its creditors or
agent, except a claim of payment for their safe custody or administration;
(b) beneficial ownership of the assets of each Portfolio will be freely
transferable without the payment of money or value other than for custody
or administration; (c) adequate records will be maintained by the Custodian
identifying the assets as belonging to the Custodian on behalf of its
customers; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use reasonable efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports bv Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of
Portfolio securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf of its customers
indicating, as to securities acquired for a Portfolio, the identity of the
entity having physical possession of such securities.
3.8 Transactions in Foreign Custodv Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to the foreign securities of
the Portfolio(s) held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing practices
and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser
or dealer) against a receipt with the expectation of receiving later
payment for such securities from such purchaser or dealer.
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<PAGE>
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.
3.9 Liabilitv of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund on behalf of
the Portfolio, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking institution
as a consequence of any such loss, damage, cost, expense, liability or
claim if and to the extent that the Portfolio has not been made whole for
any such loss, damage, cost, expense, liability or claim.
3.10 Liabilitv of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this Section
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to the Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio,
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action, negligent
failure to act or willful misconduct, any property at any time held for the
account of the applicable Portfolio shall be security therefor and should
the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
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3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund (during the month of June) information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar
in kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of any foreign
sub-custodian not the subject of an exemptive order from the SEC is
notified by such foreign sub-custodian that there appears to be a
substantial likelihood that its shareholders' equity will decline below
U.S.$200 million (or the local currency equivalent thereof) or that its
shareholders' equity has declined below such amount (in each case computed
in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of Portfolio assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act meeting
the qualification set forth in Section 26(a) of said Act. The appointment
of any such branch as a sub-custodian shall be governed by Article 1 of
this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction
of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmenal reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio such
payments as are received for Shares of that Portfolio issued or sold from time
to time by the Fund. The Custodian will provide timely notification to the Fund
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on behalf of each Portfolio and the Transfer Agent of any receipt by it of
payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank designated
by the redeeming shareholders. In connection with the redemption or repurchase
of Shares, the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder of Shares,
when presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors
accompanied by a detailed description of procedures approved by the Board of
Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for Portfolio assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. Actions Permitted without Express Authoritv
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
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2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Directors.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board of Directors pursuant to the Articles of Incorporation as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors to keep the books of
account of each Portfolio and/or compute the net asset value per share of the
outstanding shares of each Portfolio or, if directed in writing to do so by the
Fund on behalf of the Portfolio(s), shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio(s) as described in
the Prospectus and shall advise the Fund and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by an officer of
the Fund to do so, shall advise the Transfer Agent periodically of the division
of such net income among its various components. The calculations of the net
asset value per share and the daily income of each Portfolio shall be made at
the time or times described from time to time in the Prospectus.
9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company
Act, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
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thereunder. All such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and employees and
agents of the SEC. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned by each Portfolio and held by the
Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, Form N-SAR or other annual reports to the SEC and with respect to any
other SEC requirements.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
12. Compensation of Ctroodand procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports shall be of
sufficient scope and in sufficient detail, as may reasonably be required by the
Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reporttract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
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futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably take
<PAGE>
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
Fund for any loss, liability,
claim or expense resulting from or caused by: (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities markets, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been
given in accordance with this Contract; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any broker, agent
or intermediary, central bank or other commercially prevalent payment or
clearing system to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance of payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Section 3.10)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by Section 3.13 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may (in the opinion of the Custodian) result in the Custodian or
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<PAGE>
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
the Custodian.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including, but not limited to,
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio, including the purchase or sale of foreign exchange
or of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable hereunder for indirect, special
or consequential damages.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of the date of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the Investment Company Act and that the Custodian shall not
with respect to a Portfolio act under Section 2.11 hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Directors has approved the initial use of the Direct Paper
System by such Portfolio; provided further, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund on behalf of one or more of the Portfolios may
at any time by action of the Board of Directors (i) substitute another bank or
trust company for the Custodian by giving notice as described above to the
Custodian or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
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Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors, the
Custodian shall, upon termination, deliver to such successor custodian at the
offices of the Custodian, duly endorsed and in the form for transfer, all
securities of each applicable Portfolio then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act doing
business in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than U.S.$200,000,000, all securities, funds and other properties
held by the Custodian on behalf of each applicable Portfolio and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract on behalf of each applicable Portfolio and to transfer to an
account of such successor custodian all of the securities of each such Portfolio
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remnin in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
20
<PAGE>
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to The Gabelli Global Governments Fund with respect to which it desires
to have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in writing
to provide such services, such series of Shares shall become a Portfolio
hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
assets of the Portfolio(s).
20. Shareholder Communications Election
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
21
<PAGE>
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
22
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of May [_], 1995.
GABELLI INCOME SERIES FUNDS, INC.
By:
--------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY
By:
--------------------------------
Name: Ronald E. Logue
Title: Executive Vice President
23
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Gabelli Income
Series Funds, Inc. for use as subcustodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
Certified:
- ------------------------------
Fund's Authorized Officer
Date: May [ ], 1995
EXHIBIT 9(a)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
GABELLI INCOME SERIES FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
1 G - Domztic Corp/Series
<PAGE>
TABLE OF CONTENTS
Page
----
1. Terms of Appointment; Duties of the Bank............ l
2. Fees and Expenses................................... 4
3. Representations and Warranties of the Bank.......... 4
4. Representations and Warranties of the Fund.......... 5
5. Data Access and Proprietary Information............. 5
6. Indemnification .................................... 6
7. Standard of Care ................................... 8
8. Covenants of the Fund and the Bank ................. 8
9. Termination of Agreement ........................... 9
10. Additional Funds ................................... 9
11. Assignment ......................................... 9
12. Amendment .......................................... 10
13. Massachusetts Law to Apply ......................... 10
14. Force Majeure ...................................... 10
15. Consequential Damages .............................. 10
16. Merger of Agreement ................................ 10
17. Counterparts ....................................... 10
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the day of , 199 , by and between Gabelli Income
Series Funds, Inc., a Maryland corporation, having its principal office and
place of business at One Corporate Center, Rye, New York, New York 10580-1434
(the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the Gabelli
Global Governments Fund (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment: Duties of the Bank
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolios, hereby employs and appoints the Bank to act
as, and the Bank agrees to act as its transfer agent for the Fund's
authorized and issued shares of its common stock, $ par value,
("Shares"), dividend disbursing agent, custodian of certain retirement
plans and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of each of the respective
Portfolios of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information
("prospectus") of the Fund on behalf of the applicable Portfolio,
including without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
1
<PAGE>
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Articles of Incorporation of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) Issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt by the
Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Fund, and the Bank at its option,
may issue replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of shares of the Fund which are authorized, based upon data
provided to it by the Fund, and issued and outstanding. The
Bank shall also provide the Fund on a regular basis with the
total number of shares which are authorized and issued and
2
<PAGE>
outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the issue or sale
of such shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses
to current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements
of account to Shareholders for all purchases and redemptions of
Shares and other confirmable transactions in Shareholder accounts,
preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system
which will enable the Fund to monitor the total number of Shares sold
in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these
services on the Fund's behalf.
3
<PAGE>
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. Fees and Expenses
2.1 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.2 below may be changed from time to
time subject to mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited to confirmation production, postage,
forms, telephone, microfilm, microfiche, tabulating proxies, records
storage, or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be reimbursed by
the Fund on behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall be advanced
to the Bank by the Fund at least seven (7) days prior to the mailing date
of such materials.
3. Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4
<PAGE>
4. Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.1 It is a corporation duly organized and existing and in good standing under
the laws of .
4.2 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of Incorporation and
ByLaws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end and diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of the Fund being
offered for sale.
5. Data Access and Proprietary Information
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
5
<PAGE>
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under
other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no
claim against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE
BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely
on the validity and authenticity of such instruction without undertaking
any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by the Bank from time to
time.
6. Indemnification
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
6
<PAGE>
applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or
firm on behalf of the Fund including but not limited to any previous
transfer agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the Bank
under this Agreement, and the Bank and its agents or subcontractors shall
not be liable and shall be indemnified by the Fund on behalf of the
applicable Portfolio for any action taken or omitted by it in reliance
upon such instructions or upon the opinion of such counsel. The Bank, its
agents and subcontractors shall be protected and indemnified in acting
upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Fund. The
7
<PAGE>
Bank, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers
of the Fund, and the proper countersignature of any former transfer agent
or former registrar, or of a co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or make any compromise in any case in
which the Fund may be required to indemnify the Bank except with the
Fund's prior written consent.
7. Standard of Care
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct or that of its
employees.
8. Covenants of the Fund and the Bank
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for
the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared
8
<PAGE>
or maintained by the Bank relating to the services to be performed by the
Bank hereunder are the property of the Fund and will be preserved,
maintained and made available in accordance with such Section and Rules,
and will be surrendered promptly to the Fund on and in accordance with its
request.
8.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
9. Termination of Aqreement
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s). Additionally,
the Bank reserves the right to charge for any other reasonable expenses
associated with such termination and/or a charge equivalent to the average
of three (3) months' fees.
10. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to (LIST) with respect to which it desires to
have the Bank render services as transfer agent under the terms hereof, it
shall so notify the Bank in writing, and if the Bank agrees in writing to
provide such services, such series of Shares shall become a Portfolio
hereunder.
11. Assiqnment
11.1 Except as provided in Section 10.3 below, neither this Agreementv nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
9
<PAGE>
parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc.,
a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(l) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(l)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(l) or (iii) a
BFDS affiliate; provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as
it is for its own acts and omissions.
12. Amendment
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Directors of the Fund.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of
Massachusetts.
14. Force Majeure
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to
perform or otherwise from such causes.
15. Consequential Damages
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. Merger of Agreement
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
1O
<PAGE>
17. Counterparts
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
GABELLI INCOME SERIES FUNDS, INC.
BY:
-------------------------------
ATTEST:
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
--------------------------------
Executive Vice President
ATTEST:
- -----------------------------------
12
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase of Shares.
2. Issue Shares and hold Shares in Shareholders
accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above directly with
broker-dealers.
5. Pay over monies to redeeming Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and accurate
control book for each issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current Shareholders.
15. Withhold taxes on U.S. resident and
non-resident alien accounts.
16. Prepare and file U.S. Treasury Department
forms.
17. Prepare and mail account and confirmation
statements for Shareholders.
13
<PAGE>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
18. Provide Shareholder account information.
19. Blue sky reporting.
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
GABELLI INCOME SERIES FUNDS, INC.
BY:
--------------------------------
ATTEST:
- -----------------------------------
STATE STREET BANK AND TRUST COMPANY
BY:
--------------------------------
Executive Vice President
ATTEST:
- ----------------------------------
14
SUB-ADMINISTRATION AGREEMENT
May 1, 1995
The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Dear Ladies and Gentlemen:
Gabelli Funds, Inc., a New York corporation (the "Adviser"), as investment
adviser or manager and administrator to the investment companies set forth on
Exhibit A and incorporated herein (each referred to herein as the "Fund"),
confirms its agreement with The Shareholder Services Group, Inc. ("TSSG") as set
forth below.
1. Investment Description; Appointment; Governing Law
Each Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the objective, policies and
limitations specified in its Articles of Incorporation or Master Trust Agreement
as amended from time to time (the "Charter"), its By- Laws, as amended from time
to time, in its prospectus filed with the Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act") and the
Securities Act of 1933, as amended, as part of the Fund's Registration Statement
(the "Registration Statement"), as amended from time to time, and in the manner
and to the extent as may from time to time be approved as set forth in the
Charter. Copies of the Registration Statement, Charter and By-Laws have been
submitted to TSSG. The Fund employs the Adviser as its investment adviser or
manager and administrator and the Adviser desires to employ and hereby appoints
TSSG to act as its sub-administrator. TSSG accepts this appointment and agrees
to furnish the services as set forth in paragraph 2 of this Agreement for the
compensation set forth below. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of law rules thereof.
2. Services as Sub-Administrator
Subject to the overall supervision and direction of the Adviser, TSSG will
(a) assist in supervising all aspects of each Fund's operations except those
performed by the Adviser under its investment advisory or management agreement
with each Fund; (b) supply the Adviser with office facilities (which may be in
TSSG'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 each Fund ("Shares"),
internal auditing and legal services, internal executive and administrative
services, and stationery and office supplies; (c) prepare and distribute
materials for all Fund Board of Directors/Trustees Meetings, including mailing
of all Board materials, collating the same materials into the Board books and
assisting in the drafting of minutes for the Board meetings; (d) prepare reports
<PAGE>
to holders of Shares ("Shareholders"), tax returns and reports to and filings
with the Securities and Exchange Commission, state Blue Sky authorities and the
applicable stock exchange; (e) provide any equipment or services necessary for
the purpose of pricing Shares or valuing each Fund's investment portfolio and,
when requested, calculate the amount of all applicable "Blue Sky" expense
limitations; (f) provide compliance testing of all Fund activities against
applicable requirements of the 1940 Act and the rules thereunder, the Internal
Revenue Code of 1986, as amended, and the Fund's investment restrictions; (g)
furnish 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, it being understood and acknowledged by the Fund and TSSG that
TSSG shall not provide any services that would cause TSSG to be deemed to be an
"investment adviser", as that term is defined in Section 2(a)(20) of the 1940
Act, including without limitation, services involving the making of
recommendations with regard to purchases or sales by the Fund of securities; (h)
assist in preparing information in connection with regulatory examinations; and
(i) generally provide all administrative services that may be required for the
ongoing operation of each Fund in a manner consistent with the requirements of
the 1940 Act.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Adviser will pay TSSG on the first business day of each month a fee for the
previous month in accordance with the fee schedule set forth on Exhibit B and
incorporated herein. Such fees do not include certain "out-of-pocket"
disbursements for which TSSG shall be entitled to bill separately. Out-of-
pocket disbursements shall include, but shall not be limited to the items
specified on Schedule C and incorporated herein, which schedule may be modified
by TSSG upon not less than 30 days prior written notice to the Adviser. Upon any
termination of this Agreement before the end of any month, the fee for such part
of a month shall be prorated according to the proportion that such period bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. For the purpose of determining fees payable to TSSG, the value
of each Fund's net assets shall be computed at the times and in the manner
specified in the Registration Statement. TSSG will bear all expenses in
connection with the performance of its services under this Agreement with the
exception of costs of printing and mailing stock certificates, prospectuses,
reports and notices, interest on borrowed money, brokerage commissions, taxes
and fees payable to federal, state and other governmental agencies, fees of
Directors or Trustees of each Fund who are not affiliated with TSSG, outside
auditing expenses, outside legal expenses or other expenses not specified in
this Section 3 which may be properly payable by the Adviser or the Fund.
4. Standard of Care
TSSG shall exercise its best judgment in rendering the services listed in
paragraph 2 above. TSSG shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Fund in connection with the matters to
which this Agreement relates, provided that nothing in this Agreement shall be
deemed to protect or purport to protect TSSG against liability to the Fund or to
its Shareholders to which TSSG would otherwise be subject by reason of willful
2
<PAGE>
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or by reason of TSSG's reckless disregard of its obligations and duties
under this Agreement.
5. Service to Other Companies or Accounts
The Adviser understands that TSSG now acts, will continue to act and may
act in the future as administrator, sub-administrator or transfer agent to one
or more other investment companies, and the Adviser has no objection to TSSG's
so acting. In addition, the Adviser understands that the persons employed by
TSSG to assist in the performance of TSSG's duties under this Agreement will not
devote their full time to such service and nothing contained in this Agreement
shall be deemed to limit or restrict the right of TSSG or any affiliate of TSSG
to engage in and devote time and attention to other businesses or to render
services of any kind or nature.
6. Term of Agreement
This Agreement shall become effective as of the date hereof and shall
remain in full force and effect for successive annual periods thereafter unless
terminated automatically in the event of its assignment or by either party,
without penalty, on sixty (60) days' written notice to the other party.
7. Amendment to this Agreement
No provision of this Agreement may be changed, discharged or terminated
orally, but only by an instrument in writing signed by each party to the
Agreement.
8. Miscellaneous
Any notice or other instrument authorized or required by this Agreement to
be given in writing to the Adviser or TSSG should be sufficiently given if
addressed to the party and received by it at its offices set forth below or at
such other place as it may from time to time designate in writing.
To the Adviser:
Gabelli Funds, Inc.
One Corporate Center
Rye, New York 10580-1434
Attn: Bruce N. Alpert
To TSSG:
The Shareholder Services Group, Inc.
Exchange Place -- BOS425
Boston, Massachusetts 02109-2873
Attn: Patricia Bickimer, Esq.
3
<PAGE>
9. Confidentiality
All books, records, information and data pertaining to the business of the
Fund that are exchanged or received pursuant to the performance of TSSG's duties
under this Agreement shall remain confidential and shall not be voluntarily
disclosed to any other person, except as specifically authorized by the Adviser
or as may be required by law.
* * * * * *
If the foregoing is in accordance with your understanding, kindly indicate
your acceptance of this Agreement by signing and returning to us the enclosed
copy of this Agreement.
Very truly yours,
GABELLI FUNDS, INC.
By: /s/ Bruce N. Alpert
---------------------
Title: CFO, Gabelli Funds Division
Agreed to and Accepted as of May 1, 1995:
THE SHAREHOLDER SERVICES GROUP, INC.
By: /s/ Richard W. Ingram
-----------------------
Title: Vice President and
Division Manager
4
<PAGE>
EXHIBIT A
The Gabelli Equity Trust, Inc.
The Gabelli Value Fund Inc.
The Gabelli Growth Fund
The Gabelli Asset Fund
The Gabelli Money Market Funds
-The Gabelli U.S. Treasury Money Market Fund
Gabelli Capital Series Funds, Inc.
-Gabelli Capital Asset Fund
Gabelli Income Series Funds, Inc.
-The Gabelli Global Governments Fund
<PAGE>
EXHIBIT B
Fees for each Fund will be calculated based upon the aggregate average daily net
assets of the Funds listed on Exhibit A of this Agreement in accordance with the
following schedule:
Aggregate Assets Charges
---------------- -------
$0 to $1 billion .10%
$1 billion to $1.5 billion .08%
$1.5 billion to $3 billion .03%
Over $3 billion .02%
Assets attributed to new funds created after January 1, 1995 will be subject to
a minimum fee of $30,000.
This fee rate will be applied to each Fund's average daily net assets.
<PAGE>
EXHIBIT C
Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to the following:
-- Travel to and from Board meetings outside the city of Boston, MA
(subject to prior approval of the Adviser)
-- Any other unusual expenses in association with the services rendered
under this Agreement, such as duplicating charges related to blue sky
filings and Board book production
EXHIBIT 10
[Letterhead of Miles & Stockbridge]
June 2, 1995
Gabelli Income Series Funds, Inc.
One Corporate Center
Rye, New York 10580
Ladies and Gentlemen:
As special Maryland counsel to Gabelli Income Series Funds, Inc., a
Maryland corporation (the "Corporation"), in connection with the registration
under the Securities Act of 1933, as amended, of an indefinite number of shares
of common stock not to exceed 200,000,000 shares, par value $.001 per share, of
The Gabelli Global Governments Fund, the initial series of the Corporation (the
"Shares"), we have examined the Articles of Incorporation of the Corporation
certified by the Maryland State Department of Assessments and Taxation (the
"SDAT") as having been filed with the SDAT on November 16, 1994 and the Articles
of Amendment and Restatement of the Corporation certified by the SDAT as having
been filed with the SDAT on June 2, 1995. We have additionally examined the
Certificate of Corporate Secretary dated May 24, 1995, including the exhibits
attached thereto (the "Certificate"). In rendering our opinion, we are relying
on the Certificate and have made no independent investigations or inquiries as
to the matters set forth therein.
Based on our examination and subject to the assumptions set forth herein,
we advise you that in our opinion the Shares to be issued by the Corporation
have been duly and validly authorized and, when issued upon the terms set forth
in the Registration Statement on Form N-1A of the Corporation filed with the
Securities and Exchange Commission (the "Commission"), will be legally issued,
fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent
<PAGE>
Gabelli Income Series Funds, Inc.
June 1, 1995
Page 2
is required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Commission thereunder.
Very truly yours,
Miles & Stockbridge,
a Professional Corporation
By: /s/ Mark S. Demilio
------------------------
Principal
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 1 in the registration
statement on Form N-1A (the "Registration Statement") of our report dated May
16, 1995, relating to the financial statement of The Gabelli Global Governments
Fund, a separately managed portfolio of Gabelli Income Service Funds, Inc.,
which appears in such Statement of Additional Information, and to the
incorporation by reference of our report into the Prospectus which constitutes
part of this Registration Statement. We also consent to the reference to us
under the heading "Independent Auditors" in such Prospectus.
PRICE WATERHOUSE LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
May 30, 1995
