0000935069-08-003048.txt : 20120807
0000935069-08-003048.hdr.sgml : 20120807
20081219153343
ACCESSION NUMBER: 0000935069-08-003048
CONFORMED SUBMISSION TYPE: N-14
PUBLIC DOCUMENT COUNT: 4
FILED AS OF DATE: 20081219
DATE AS OF CHANGE: 20090123
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: WESTWOOD FUNDS
CENTRAL INDEX KEY: 0000796229
IRS NUMBER: 133625130
STATE OF INCORPORATION: MA
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: N-14
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-156354
FILM NUMBER: 081261007
BUSINESS ADDRESS:
STREET 1: ONE CORPORATE CENTER
CITY: RYE
STATE: NY
ZIP: 10580
BUSINESS PHONE: 8004223554
MAIL ADDRESS:
STREET 1: ONE CORPORATE CENTER
CITY: RYE
STATE: NY
ZIP: 10580
FORMER COMPANY:
FORMER CONFORMED NAME: WESTWOOD FUNDS
DATE OF NAME CHANGE: 20060621
FORMER COMPANY:
FORMER CONFORMED NAME: GABELLI WESTWOOD FUNDS
DATE OF NAME CHANGE: 19980304
FORMER COMPANY:
FORMER CONFORMED NAME: WESTWOOD FUNDS
DATE OF NAME CHANGE: 19920703
CENTRAL INDEX KEY: 0000796229
S000001084
WESTWOOD MIGHTY MITES FUND
C000002928
CLASS AAA
WEMMX
CENTRAL INDEX KEY: 0001026968
S000008954
Bjurman, Barry Micro-Cap Growth Fund
C000024319
Class A
BMCFX
N-14
1
n14.txt
WESTWOOD N14 1208
As filed with the Securities and Exchange Commission on December 19, 2008
Registration No. 333-_____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] PRE-EFFECTIVE AMENDMENT NO.
[ ] POST-EFFECTIVE AMENDMENT NO.
GAMCO WESTWOOD FUNDS
(Exact Name of Registrant as Specified in Charter)
ONE CORPORATE CENTER
RYE, NEW YORK 10580-1422
(Address of Principal Executive Offices)
(800) 422-3554
(Registrant's Telephone Number)
Bruce N. Alpert
GAMCO Westwood Funds
One Corporate Center
Rye, New York 10580-1422
(Name and Address of Agent for Service)
with copies to:
Peter D. Goldstein, Esq. Michael R. Rosella, Esq.
GAMCO Westwood Funds Paul, Hastings, Janofsky & Walker LLP
One Corporate Center 75 East 55th Street
Rye, New York 10580-1422 New York, New York 10022
Phone No.: (914) 921-7732 Phone No.: (212) 318-6800
Fax No.: (914) 921-5384 Fax No.: (212) 319-4090
Approximate Date of Proposed Public Offering: As soon as practicable after
the Registration Statement becomes effective under the Securities Act of 1933.
It is proposed that this filing shall become effective on January 20, 2009,
pursuant to Rule 488 under the Securities Act of 1933, as amended.
No filing fee is due because the Registrant has previously registered an
indefinite number of shares under the Securities Act of 1933 pursuant to Section
24(f) under the Investment Company Act of 1940.
Title of Securities Being
Registered...................... Class AAA Shares of beneficial interest, par
value $.001 per share, of GAMCO Westwood
Mighty Mites(SM) Fund, a series of the
Registrant.
PART A
B.B. MICRO-CAP GROWTH FUND
(formerly, the Bjurman, Barry Micro-Cap Growth Fund)
One Corporate Center
Rye, New York 10580-1422
[January ___], 2009
Dear Shareholder:
The Trustees of the B.B. Micro-Cap Growth Fund (formerly, the Bjurman, Barry
Micro-Cap Growth Fund) (the "B.B. Fund"), a series of The B.B. Funds (the "B.B.
Trust"), have determined that it is in the best interests of the B.B. Fund and
its shareholders to reorganize the B.B. Fund into the GAMCO Westwood Mighty
Mites(SM) Fund (the "Mighty Mites Fund"), a series of the GAMCO Westwood Funds.
Shareholders of the B.B. Fund are being asked to approve the proposed
reorganization of the B.B. Fund into the Mighty Mites Fund (the
"Reorganization") at a special meeting of shareholders to be held on [March
___], 2009, at [10:00 a.m.] (Eastern Standard Time).
Enclosed you will find various materials, including a Combined Proxy
Statement/Prospectus and proxy ballot(s), for this special meeting. The
materials provide you with detailed information about the Reorganization,
including the reasons why the Board of Trustees of the B.B. Trust believes that
the Reorganization is in the best interests of the B.B. Fund and its
shareholders. The Board of Trustees of the B.B. Trust urges you to vote in favor
of this Reorganization.
If the Reorganization is approved by shareholders at the special meeting, at the
closing of the transaction you will receive full and fractional Class AAA Shares
of the Mighty Mites Fund equal in value at the time of the exchange to the value
of your shares of the B.B. Fund.
We believe that this combination will provide substantial benefits to
shareholders of the B.B. Fund. The Reorganization will enable shareholders to
invest in a fund with substantially similar investment strategies. Combining the
two funds' assets will result in the creation of a single fund with a larger
asset base than the assets of the B.B. Fund alone. This greater asset size would
allow shareholders to take advantage of the possible benefits of economies of
scale and spreading fixed costs across a larger asset base. Further, the
Reorganization would be tax-free and would not dilute your investment.
We urge you to vote as soon as possible. Your vote is important, regardless of
the number of shares you own. You can vote easily and quickly by mail, by phone,
by Internet or in person. A self-addressed, postage-paid envelope has been
enclosed for your convenience.
EVERY VOTE COUNTS! Please cast yours as early as possible, so that Teton
Advisors, Inc., the investment adviser of the B.B. Fund, can avoid incurring
additional costs in re-soliciting your vote. Teton Advisors, Inc. will bear the
costs of the Special Meeting, including legal costs and the cost of the
solicitation of proxies. If you have questions, you may contact us, toll free,
at 1-800-GABELLI
(422-3554). If you invest through another financial institution, such as a
brokerage firm, please contact your financial institution should you have any
questions.
Thank you for your continued investment in the B.B. Fund and for your support in
this matter.
Sincerely,
/s/ BRUCE N. ALPERT
----------------------------
Bruce N. Alpert
President
-2-
B.B. MICRO-CAP GROWTH FUND
(formerly, the Bjurman, Barry Micro-Cap Growth Fund)
NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS - [MARCH ___], 2009
One Corporate Center
Rye, New York 10580-1422
1-800-GABELLI (422-3554)
A Special Meeting of shareholders of the B.B. Micro-Cap Growth Fund
(formerly, the Bjurman, Barry Micro-Cap Growth Fund) (the "B.B. Fund"), a series
of The B.B. Funds (formerly, the Bjurman, Barry Funds) (the "B.B. Trust"), will
be held at [10:00 a.m.] (Eastern Standard Time) on [March ___], 2009, at the
offices of the B.B. Trust at One Corporate Center, Rye, New York 10580, for the
following purposes, all of which are more fully described in the accompanying
Combined Proxy Statement/Prospectus dated [January ___], 2009:
1. To approve a proposed Agreement and Plan of Reorganization and
Liquidation between the B.B. Fund and the GAMCO Westwood Mighty Mites(SM) Fund
(the "Mighty Mites Fund"), a series of the GAMCO Westwood Funds, which
contemplates the transfer to the Mighty Mites Fund of all the assets and known
and disclosed liabilities of the B.B. Fund in exchange for Class AAA Shares of
the Mighty Mites Fund and the distribution of such shares to the shareholders of
the B.B. Fund, the liquidation and dissolution of the B.B. Fund, and the
termination of the B.B. Trust's registration under the Investment Company Act of
1940, as amended; and
2. To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on ____________, are
entitled to notice of, and to vote at, the meeting or any postponements or
adjournments thereof.
By Order of the Board of Trustees
/s/ BRUCE N. ALPERT
---------------------------------
Bruce N. Alpert, Secretary
Rye, New York
[January __], 2009
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWNED ON THE RECORD DATE.
ALTHOUGH YOU ARE INVITED TO ATTEND THE SPECIAL MEETING AND VOTE YOUR SHARES IN
PERSON, IF YOU ARE UNABLE TO ATTEND YOU MAY VOTE YOUR SHARES BY MAIL OR
ELECTRONICALLY BY EITHER A TOUCH-TONE TELEPHONE OR THE INTERNET.
IN ORDER TO VOTE BY MAIL, PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE
ENCLOSED PROXY, DATE AND SIGN IT, AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH
IS ADDRESSED FOR YOUR CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU LATER DECIDE TO ATTEND THE SPECIAL MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
IN ORDER TO VOTE ELECTRONICALLY, PLEASE SEE YOUR PROXY CARD FOR MORE INFORMATION
AND THE INSTRUCTIONS. HOWEVER, IF YOU WANT TO CHANGE YOUR VOTE, YOU MAY DO SO BY
USING THE PROXY CARD, TOUCH-TONE TELEPHONE OR INTERNET.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO TETON ADVISORS, INC., THE INVESTMENT
ADVISER OF THE B.B. FUND, OF FURTHER SOLICITATION, WE ASK FOR YOUR COOPERATION
IN MAILING YOUR PROXY PROMPTLY.
COMBINED PROXY STATEMENT/PROSPECTUS
ii
COMBINED PROXY STATEMENT/PROSPECTUS
RELATING TO THE ACQUISITION OF ASSETS OF THE
B.B. MICRO-CAP GROWTH FUND
(formerly, the Bjurman, Barry Micro-Cap Growth Fund)
BY AND IN EXCHANGE FOR CLASS AAA SHARES OF THE
GAMCO WESTWOOD MIGHTY MITES(SM) FUND
a series of the GAMCO WESTWOOD FUNDS
One Corporate Center
Rye, New York 10580-1422
1-800-GABELLI (422-3554)
This Combined Proxy Statement/Prospectus relates to the proposed transfer
to the GAMCO Westwood Mighty Mites(SM) Fund (the "Mighty Mites Fund"), a series
of the GAMCO Westwood Funds, of all of the assets and known and disclosed
liabilities of the B.B. Micro-Cap Growth Fund (formerly, the Bjurman, Barry
Micro-Cap Growth Fund) (the "B.B. Fund"), a series of The B.B. Funds (formerly,
the Bjurman, Barry Funds) (the "B.B. Trust"), in exchange for Class AAA Shares
of the Mighty Mites Fund, to be distributed to the shareholders of the B.B. Fund
in liquidation and dissolution of the B.B. Fund, and the termination of the B.B.
Trust's registration statement under the Investment Company Act of 1940, as
amended (the "Reorganization"). As a result of the Reorganization, each
shareholder of the B.B. Fund would receive full and fractional Class AAA Shares
of the Mighty Mites Fund equal in value at the time of the exchange to the value
of such shareholder's shares of the B.B. Fund (each of the B.B. Fund and the
Mighty Mites Fund is referred to below as a "Fund," and collectively as the
"Funds").
The Boards of Trustees of the Funds both believe that the Reorganization is
in the best interests of the Funds and that the interests of the Funds'
shareholders will not be diluted as a result of the Reorganization. If the
Reorganization is approved, the effective expense ratio of your shares in the
Mighty Mites Fund immediately after the closing of the transaction is expected
to be lower than the effective current expense ratio of your shares in the B.B.
Fund, as described in more detail below.
For federal income tax purposes, the Reorganization is to be structured as
a tax-free transaction for the Funds and their shareholders. The investment
objectives of the Funds are substantially the same. The Mighty Mites Fund seeks
to provide long-term capital appreciation by investing primarily in
micro-capitalization equity securities (which it defines as securities of
companies with market capitalization of $300 million or less at the time of the
Mighty Mites Fund's initial purchase). The B.B. Fund seeks capital appreciation
through investments in the common stocks of companies with market
capitalizations generally between $30 million and $300 million at the time of
investment.
This Combined Proxy Statement/Prospectus sets forth concisely information
about the Mighty Mites Fund that shareholders of the B.B. Fund should know
before investing and should be read and retained by investors for future
reference. Copies of the prospectus for the Mighty Mites Fund, dated January
[____], 2009, and the annual report for the Mighty Mites Fund for the fiscal
year
COMBINED PROXY STATEMENT/PROSPECTUS
ended September 30, 2008, have been filed with the Securities and Exchange
Commission (the "SEC"), are enclosed herewith and incorporated by reference
herein.
A Statement of Additional Information dated [January ___], 2009, relating
to this Combined Proxy Statement/Prospectus, has been filed with the SEC and is
incorporated by reference herein. A Statement of Additional Information for the
Mighty Mites Fund dated January [___], 2009, containing additional and more
detailed information about the Mighty Mites Fund, has been filed with the SEC
and is incorporated by reference herein.
In addition, the prospectus for the B.B. Fund dated August 1, 2008, as
supplemented November 3, 2008, and November 25, 2008, which has been previously
delivered to shareholders, and the Statement of Additional Information for the
B.B. Fund, also dated August 1, 2008, have been filed with the SEC and are
incorporated by reference herein. The annual report for the B.B. Fund for the
fiscal year ended March 31, 2008, and the semi-annual report for the B.B. Fund
for the six months ended September 30, 2008, have been previously mailed to
shareholders and filed with the SEC.
Copies of these documents are available without charge and can be obtained
by writing to Teton Advisors, Inc. at One Corporate Center, Rye, New York 10580,
or by calling, toll free, 1-800-GABELLI (422-3554). In addition, these documents
may be obtained from the EDGAR database on the SEC's Internet site at
www.sec.gov. You may review and copy documents at the SEC Public Reference Room
in Washington, DC (for information on the operation of the Public Reference
Room, call 1-202-942-8090). You may request documents by mail from the SEC, upon
payment of a duplication fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, DC 20549-0102. You may also obtain this
information upon payment of a duplicating fee, by e-mailing the SEC at the
following address: publicinfo@sec.gov.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS COMBINED PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THE FUNDS IS NOT A DEPOSIT OF ANY BANK AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY OTHER
GOVERNMENT AGENCY. AN INVESTMENT IN THE FUNDS INVOLVES INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This Combined Proxy Statement/Prospectus is dated [January ___], 2009.
COMBINED PROXY STATEMENT/PROSPECTUS
ii
TABLE OF CONTENTS
PAGE
----
I. Proposal - To Approve the Agreement and Plan of Reorganization...... 1
A. Overview......................................................... 1
B. Comparison Fee Table and Examples................................ 1
C. Comparison of Performance........................................ 3
D. Summary of Investment Objectives, Strategies, and Risks.......... 4
E. Key Information about the Proposal............................... 8
1. Summary of the Proposed Reorganization....................... 8
2. Description of the Mighty Mites Fund's Class AAA Shares...... 8
3. Reasons for the Reorganization............................... 9
4. Federal Income Tax Consequences.............................. 14
5. Comparison of Shareholder Rights............................. 14
6. Comparison of Valuation Procedures........................... 15
7. Capitalization............................................... 16
8. Investment Adviser and Portfolio Management.................. 17
9. Distribution................................................. 17
10. Purchase and Redemption Procedures........................... 18
11. Service Providers............................................ 21
II. Voting Information.................................................. 22
A. Method and Cost of Solicitation.................................. 24
B. Right of Revocation.............................................. 24
C. Voting Securities and Principal Holders.......................... 24
D. Interest of Certain Persons in the Transaction................... 25
III. Further Information about the B.B. Fund and the Mighty Mites Fund... 25
IV. Miscellaneous Matters............................................... 25
A. Other Business................................................... 25
B. Next Meeting of Shareholders..................................... 25
C. Legal Matters.................................................... 26
D. Independent Registered Public Accounting Firm.................... 26
COMBINED PROXY STATEMENT/PROSPECTUS
iii
I. PROPOSAL - TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION
A. OVERVIEW
At a meeting held on November 11, 2008, the Board of Trustees of the B.B.
Trust (the "B.B. Board"), including all of the Trustees who are not "interested
persons" of the B.B. Trust (the "Independent Trustees"), as that term is defined
in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940
Act"), considered and approved an Agreement and Plan of Reorganization and
Liquidation dated November 28, 2008 (the "Plan of Reorganization"), a copy of
which is attached to this proxy statement as Appendix A. Under the Plan of
Reorganization, the B.B. Fund will assign all of its assets and known and
disclosed liabilities to the Mighty Mites Fund in exchange for a number of Class
AAA Shares of the Mighty Mites Fund equivalent in value to shares of the B.B.
Fund outstanding immediately prior to the Closing Date (as defined below). This
will be followed by a distribution of those shares to B.B. Fund shareholders so
that each B.B. Fund shareholder would receive shares of the Mighty Mites Fund
equivalent to the value of B.B. Fund shares held by such shareholder on the date
of the transaction (the "Closing Date"), currently scheduled on or about [____,
2009], and the subsequent liquidation and dissolution of the B.B. Fund, and the
termination of the B.B. Trust's registration statement under the 1940 Act (this
proposed transaction is referred to as the "Reorganization"). Like the B.B.
Fund, the Mighty Mites Fund is a series of an open-end investment company
registered with the SEC.
If the Reorganization is approved and implemented, shareholders of the B.B.
Fund will become shareholders of the Mighty Mites Fund. The B.B. Fund and the
Mighty Mites Fund have the same investment adviser, Teton Advisors, Inc.
("Teton" or the "Adviser"). The Mighty Mites Fund's investment objective is
substantially identical to the B.B. Fund's investment objective and the Mighty
Mites Fund's principal investment strategies are substantially similar to those
of the B.B. Fund, as discussed in further detail below.
The Board recommends that the shareholders of the B.B. Fund vote "FOR" the
Plan of Reorganization and the resulting Reorganization.
B. COMPARISON FEE TABLE AND EXAMPLES
The following table shows the comparative fees and expenses of the Funds as
of September 30, 2008. The table also reflects the pro forma fees for the Mighty
Mites Fund after giving effect to the Reorganization, also as of September 30,
2008.
MIGHTY MITES PRO FORMA
B.B. FUND FUND COMBINED
--------- ------------ ---------
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchases None None None
(as a percentage of the offering price)
Maximum Deferred Sales Charge (Load) Imposed on Redemptions None None None
(as a percentage of sales price)
Maximum Sales Charge (Load) Imposed on Reinvested None None None
Distributions
Redemption Fee 2.00%(1) 2.00%(3) 2.00%(3)
(as a percentage of amount redeemed)
Exchange Fee 2.00%(1)(2)
COMBINED PROXY STATEMENT/PROSPECTUS
(as a percentage of amount exchanged)
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 1.00% 1.00% 1.00%
Distribution (12b-1) Fees 0.25% 0.25% 0.25%
Other Expenses 0.44% 0.46% 0.24%
Acquired Fund Fees and Expenses(4) 0.05% 0.01%
TOTAL ANNUAL FUND OPERATING EXPENSES 1.69%(5) 1.76% 1.50%
(1) In order to discourage frequent short-term trading in its shares, the B.B.
Fund imposes a 2.00% redemption fee on shares that are redeemed or
exchanged within 60 days of purchase.
(2) As of December 15. 2008, the B.B. Fund is the only series of the B.B. Trust
and therefore the exchange fee is not applicable as the B.B. Fund's
exchange privilege extended only to other series in the B.B. Trust.
(3) In order to discourage frequent short-term trading in its shares, the
Mighty Mites Fund imposes a 2.00% redemption fee (short-term trading fee)
on Class AAA Shares that are redeemed or exchanged within seven days or
less after the date of purchase.
(4) Acquired Fund Fees and Expenses ("AFFE") represent the pro rata expenses
indirectly incurred by the Mighty Mites Fund as a result of investing in
other mutual funds that have their own expenses. AFFE are not used to
calculate the Mighty Mites Fund's net asset value and do not correlate to
the ratio of Expenses to Average Net Assets found in the "Financial
Highlights" section of the Mighty Mites Fund Prospectus.
(5) The B.B. Fund's previous investment adviser, Bjurman, Barry & Associates
("BB&A"), historically waived, on a voluntary basis, all or a portion of
its fee and reimbursed certain expenses of the B.B. Fund necessary to limit
total operating expenses to 1.80% of the B.B. Fund's average net assets.
BB&A reserved the right to terminate or modify the waiver or any
reimbursements at any time in its sole discretion. BB&A informed the B.B.
Board in May 2008 that it would no longer waive its fees in respect of, or
reimburse the B.B. Fund for, certain fees and expenses, including those
related to the Independent Trustees' independent exploration and evaluation
of strategic alternatives regarding the future of the B.B. Fund. In
addition, BB&A terminated all waiver and reimbursements in October 22,
2008. Teton, the B.B. Fund's current investment adviser (since November 28,
2008), has agreed to reduce or waive all or a portion of its investment
advisory fees, and to reimburse expenses of the B.B. Fund, in order to
limit certain operating expenses of the B.B. Fund to 1.80% of the average
annual net assets, excluding extraordinary expenses, for the duration of
the B.B. Fund's interim advisory agreement with Teton.
EXAMPLE
The Example below is intended to help you compare the cost of investing in
the B.B. Fund with the cost of investing in the Mighty Mites Fund. The Example
assumes that you invest $10,000 in the specified Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year, dividends
and distributions are reinvested, and the operating expenses remain the same.
Although your actual costs may be higher or lower, under the assumptions, your
costs would be:
EXAMPLE COSTS B.B. FUND MIGHTY MITES FUND PRO FORMA COMBINED
------------- --------- ----------------- ------------------
One Year $ 172 $ 179 $ 153
Three Years $ 533 $ 554 $ 474
Five Years $ 918 $ 954 $ 818
Ten Years $1,998 $2,073 $1,791
COMBINED PROXY STATEMENT/PROSPECTUS
2
C. COMPARISON OF PERFORMANCE
TOTAL RETURN INFORMATION FOR PERIODS ENDED DECEMBER 31, 2007
MIGHTY MITES FUND
Annual returns of the Mighty Mites Fund as of December 31 were as follows for
each year shown:
[Insert bar chart]
1999 2000 2001 2002 2003 2004 2005 2006 2007
---- ---- ---- ------ ---- ---- ---- ---- ----
36.4% 3.5% 6.2% (0.8)% 25.9% 18.7% 7.2% 19.8% 7.4%
Highest Quarterly Return: 17.87% Quarter ended June 30, 1999
Lowest Quarterly Return: (9.55)% Quarter ended September 30, 2001
Year to date return as of September 30, 2008: (9.21)%
Average Annual Total Returns for the Mighty Mites Fund (for the periods ended
December 31, 2007) were as follows:
Since
1 Year 5 Years 10 Years Inception(1)
------ ------- -------- ------------
Mighty Mites Fund Class AAA Shares
Return Before Taxes 7.36% 15.57% N/A 13.56%
Return After Taxes on Distributions 5.85% 14.02% N/A 11.31%
Return After Taxes on Distributions And Sale of
Fund Shares 6.80% 13.52% N/A 10.96%
Russell 2000 Index(2) (1.57%) 16.25% N/A 6.30%
Russell Microcap(TM) Index(3) (8.00%) 15.87% N/A N/A
----------
(1) The Mighty Mites Fund commenced operations on May 11, 1998.
(2) The Russell 2000 Index is an unmanaged index of the 2000 smallest common
stocks in the Russell 3000 Index, which contains the 3000 largest stocks in
the U.S. based on total market capitalization. The performance of the
Russell 2000 Index does not reflect any deduction for fees, expenses, or
taxes. You cannot invest directly in the Russell 2000 Index.
(3) The Russell Microcap(TM) Index measures the performance of the Microcap
segments, representing less than 3% of the U.S. equity market. You cannot
invest directly in the Russell Microcap(TM) Index. The inception date for
the Russell Microcap(TM) Index is July 1, 2000.
B.B. FUND
Annual returns for the B.B. Fund as of December 31 were as follows for each year
shown:
[Insert bar chart]
COMBINED PROXY STATEMENT/PROSPECTUS
3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
----- ----- ----- ----- ------- ----- ---- ----- ---- ------
11.89% 53.26% 45.62% 19.56% (17.54)% 66.86% 3.43% 10.78% 4.52% (1.39)%
Highest Quarterly Return: 37.92% Quarter ended December 31, 1999
Lowest Quarterly Return: (23.47)% Quarter ended September 30, 1998
Year to date return as of September 30, 2008: (32.11)%
Average Annual Total Returns for the B.B. Fund (for the periods ended December
31, 2007) were as follows:
Since
1 Year 5 Years 10 Years Inception(1)
------ ------- -------- ------------
B.B. Fund
Return Before Taxes (1.39%) 14.53% 17.11% 20.21%
Return After Taxes on Distribution(2) (4.83%) 11.25% 15.36% 18.54%
Return After Taxes on Distributions And Sale of
Fund Shares(2) 3.85% 12.74% 15.34% 18.39%
Russell 2000 Growth Index(3) 7.05% 16.50% 4.32% 6.29%
Russell Microcap Growth Index(4) (2.68%) 15.18% N/A N/A
----------
(1) The B.B. Fund commenced operations on March 31, 1997.
(2) After-tax returns are calculated using the historical highest individual
federal marginal income tax rates and do not reflect the impact of state
and local taxes. Actual after-tax returns depend on the investor's tax
situation and may differ from those shown above. After-tax returns are not
relevant to investors who hold shares through a tax-deferred account, such
as an individual retirement account or a 401(k) plan.
(3) The Russell 2000 Growth Index measures the performance of those securities
in the Russell 2000 universe that have higher price-to-book ratios and
higher forecasted growth. The Russell 2000 Growth Index is unmanaged and
does not reflect the fees and expenses associated with a mutual fund, such
as investment management and fund accounting fees. Investors cannot invest
directly in an index, although they can invest in the underlying
securities.
(4) The Russell Microcap Growth Index measures the performance of the Microcap
growth segment of the U.S. equity market. It includes those Russell
Microcap Index companies with higher price-to-book ratios and higher
forecasted growth. The Russell Microcap Growth Index is unmanaged and does
not reflect the fees and expenses associated with a mutual fund, such as
investment management and fund accounting fees. Investors cannot invest
directly in an index, although they can invest in the underlying
securities.
D. SUMMARY OF INVESTMENT OBJECTIVES, STRATEGIES, AND RISKS
COMPARISON OF INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
The Mighty Mites Fund has a substantially similar investment objective as
that of the B.B. Fund.
INVESTMENT OBJECTIVE
B.B. FUND MIGHTY MITES FUND
------------------------------------------- ------------------------------------------
INVESTMENT OBJECTIVE Capital appreciation through investments in Long-term capital appreciation by
the common stocks of companies whose total investing primarily in
market capitalizations at the time of micro-capitalization equity securities.
purchase are between $30 million and $300 (defined below in "Principal Investment
million. Strategies")
COMBINED PROXY STATEMENT/PROSPECTUS
4
PRINCIPAL INVESTMENT STRATEGIES
The B.B. Fund and the Mighty Mites Fund each seeks to achieve its
investment objective by using the principal investment strategies discussed
below. The Funds' principal strategies are substantially similar, except as
noted below.
B.B. FUND MIGHTY MITES FUND
------------------------------------------- ------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES Under normal circumstances, invests at Primarily invests in common stocks of
least 80% of its total assets in the smaller companies that have a market
common stocks and equivalents of companies capitalization of $300 million or less at
whose total market capitalization at the the time of the Fund's initial investment.
time of purchase are generally between $30 The Fund focuses on micro-cap companies
million and $300 million, and that, in the which appear to be underpriced relative to
opinion of the Adviser, have superior their private market value, which is the
earnings growth characteristics. value the Adviser believes informed
investors would be willing to pay to
acquire the company.
INVESTMENT SELECTION PROCESS In selecting stocks, the Adviser attempts In selecting stocks, the Adviser attempts
to identify companies that: to identify companies that:
- have above-average sales and - have above-average sales and
earnings growth prospects earnings growth prospects
- have improving balance sheet - have improving balance sheet
fundamentals given the current fundamentals given the current
status of economic and business status of economic and business
cycles cycles
- are undervalued and may - are undervalued and may
significantly appreciate due to significantly appreciate due to
management changes, stock management changes, stock
acquisitions, mergers, acquisitions, mergers,
reorganizations, tender offers, reorganizations, tender offers,
spin-offs or other significant spin-offs or other significant
events events
- have new or unique products, new - have new or unique products, new
or expanding markets, changing or expanding markets, changing
competitive or regulatory competitive or regulatory
climates or undervalued assets or climates or undervalued assets or
franchises. franchises.
COMBINED PROXY STATEMENT/PROSPECTUS
5
The Adviser also considers the stocks' The Adviser also considers the stocks'
prices and the issuers' balance sheet prices and the issuers' balance sheet
characteristics and strength of management. characteristics and strength of management.
Micro-cap companies may also be new or Micro-cap companies may also be new or
unseasoned companies which are in their unseasoned companies which are in their
very early stages of development. very early stages of development.
Micro-cap companies can also be engaged in Micro-cap companies can also be engaged in
new and emerging industries. new and emerging industries.
Micro-cap companies are generally not Micro-cap companies are generally not
well-known to investors and have less of well-known to investors and have less of
an investor following than larger an investor following than larger
companies. The Adviser will attempt to companies. The Adviser will attempt to
capitalize on the lack of analyst capitalize on the lack of analyst
attention to micro-cap stocks and the attention to micro-cap stocks and the
inefficiency of the micro-cap market. inefficiency of the micro-cap market.
INVESTMENT IN FOREIGN SECURITIES May invest in securities of foreign May invest up to 25% of its total assets
issuers, either directly or through in foreign equity securities and in
American Depository Receipts. European Depository Receipts or American
Depository Receipts. May also invest in
foreign debt securities.
INVESTMENT IN IPOS The Fund may invest in initial public The prospectus is silent with respect to
offerings or IPOs. investments in IPOs.
DIVERSIFICATION The Fund is diversified. The Fund is diversified.
PRINCIPAL INVESTMENT RISKS
Because of their similar investment objectives and strategies, the B.B.
Fund and the Mighty Mites Fund have substantially similar risks. A discussion of
the principal risks of investing in the Funds is set forth below. This
discussion is qualified in its entirety by the more extensive discussion of risk
factors set forth in the prospectuses and statements of additional information
of the Funds.
FUND AND MANAGEMENT RISK. If the Adviser's judgment in selecting securities
is incorrect or if the market segment in which the Funds invest falls out of
favor with investors, the Funds could underperform the stock market or their
peers. The Funds could also fail to meet their investment objective. When you
sell the Funds' shares, they may be worth less than what you paid for them.
Therefore, you may lose money by investing in the Funds.
EQUITY RISK. The principal risk of investing in the Funds is equity risk.
Equity risk is the risk that the prices of the securities held by the Funds will
fall due to general market and economic conditions,
COMBINED PROXY STATEMENT/PROSPECTUS
6
perceptions regarding the industries in which the companies issuing the
securities participate, and the issuer company's particular circumstances.
SMALL- AND MICRO-CAP RISK. Although small-cap and micro-cap companies may
offer greater potential for capital appreciation than larger companies,
investing in securities of small-cap and micro-cap companies may involve greater
risks than investing in larger, more established issuers. Small-cap and
micro-cap companies generally have limited product lines, markets, and financial
resources. Their securities may trade less frequently and in more limited volume
than the securities of larger, more established companies. Also, small-cap and
micro-cap companies are typically subject to greater changes in earnings and
business prospects than larger companies. Consequently, small-cap and micro-cap
company stock prices tend to rise and fall in value more than other stocks. The
risks of investing in micro-cap stocks and companies are even greater than those
of investing in small-cap companies.
In addition, while both Funds may invest in foreign securities, the Mighty
Mites Fund has disclosed the following risk in its prospectus:
FOREIGN SECURITIES RISK. The Mighty Mites Fund may invest up to 25% of its
total assets in foreign equity securities and in European Depository Receipts or
American Depository Receipts. The Mighty Mites Fund may also invest in foreign
debt securities. Foreign securities pose additional risks over U.S. based
securities for a number of reasons. Foreign economic, governmental, and
political systems may be less favorable than those of the U.S. Foreign
governments may exercise greater control over their economies, industries, and
citizens' rights. Specific risk factors related to foreign securities include:
inflation, structure and regulation of financial markets, liquidity and
volatility of investments, currency exchange rates and regulations, and
differing accounting standards. Foreign companies may also be subject to
significantly higher levels of taxation than U.S. companies, including
potentially confiscatory levels of taxation, thereby reducing their earnings
potential, and amounts realized on foreign securities may be subject to high
levels of foreign taxation.
Foreign securities may be denominated in foreign currencies. Therefore, the
value of the Mighty Mites Fund's assets and income in U.S. dollars may be
affected by changes in exchange rates and regulations, since exchange rates for
foreign currencies change daily. The combination of currency risk and market
risk tends to make securities traded in foreign markets more volatile than
securities traded exclusively in the U.S. Although the Mighty Mites Fund values
its assets daily in U.S. dollars, it will not convert its holdings of foreign
currencies to U.S. dollars daily. Therefore, the Mighty Mites Fund may be
exposed to currency risks over an extended period of time.
In addition, the B.B. Fund has disclosed the following risks in its
prospectus:
IPO RISK. The B.B. Fund may invest in initial public offerings, or IPOs.
The risks associated with IPOs include short earnings histories, competitive
conditions and reliance on a limited number of product lines and financial
resources. There is also no guarantee that the B.B. Fund will continue to have
access to the types of IPOs that have previously contributed to its performance
or that any IPO will perform as well as previous IPOs.
DIVERSIFICATION RISK. Diversifying a mutual fund's portfolio can reduce the
inherent risks of investing by limiting the portion of your investment in any
one issuer or industry. Less diversified mutual funds may be more sensitive to
changes in the market value of a single issuer or industry. The B.B. Fund may
present greater risk than is usually associated with more widely diversified
mutual funds because the B.B. Fund may invest in as few as 50 issuers.
COMBINED PROXY STATEMENT/PROSPECTUS
7
DISCLOSURE OF PORTFOLIO HOLDINGS
The portfolio holdings policy for the Mighty Mites Fund is identical to
that of the B.B. Fund. A description of the Funds' policies and procedures with
respect to the disclosure of the portfolio securities is available in the
Statement of Additional Information for each of the Funds.
INVESTMENT RESTRICTIONS AND LIMITATIONS
A chart comparing all of the fundamental and non-fundamental investment
restrictions of the Mighty Mites Fund with those of the B.B. Fund is attached as
Appendix B.
E. KEY INFORMATION ABOUT THE PROPOSAL
The following is a summary of key information concerning the proposed
Reorganization. Keep in mind that more detailed information appears in the Plan
of Reorganization, which is attached to this Proxy Statement/Prospectus in
APPENDIX A,.
1. SUMMARY OF THE PROPOSED REORGANIZATION
On November 11, 2008, the Board of the B.B. Trust, on behalf of the B.B.
Fund, approved the Plan of Reorganization, which contemplates the transfer to
the Mighty Mites Fund of all of the assets and known and disclosed liabilities
of the B.B. Fund solely in exchange for Class AAA Shares of beneficial interest
of the Mighty Mites Fund. Following the transfer, Class AAA Shares of the Mighty
Mites Fund will be distributed to shareholders of the B.B. Fund in liquidation
of the B.B. Fund and the B.B. Fund will subsequently be dissolved. In connection
therewith, the B.B. Trust will terminate its registration under the 1940 Act by
filing the appropriate application with the SEC.
Both Funds are equity funds with substantially similar investment
objectives and strategies. Both Funds are managed by Teton. The Funds' Boards
and the Adviser recognize that greater economies of scale and efficiencies can
be attained by combining the assets of the Funds and that since the investment
objectives are substantially identical, such a combination would not materially
alter the nature of the B.B. Fund's shareholders' investment.
As a result of the Reorganization, each shareholder of the B.B. Fund will
receive full and fractional shares of Class AAA Shares of the Mighty Mites Fund
equal in value at the time of the Reorganization to the value of such
shareholder's shares of the B.B. Fund. The B.B. Trust's Board has determined
that the interests of existing shareholders will not be diluted as a result of
the transactions contemplated by the Reorganization. For the reasons set forth
below under "Reasons for the Reorganization," the B.B. Trust's Board, on behalf
of the B.B. Fund, including the Independent Trustees, concluded that the
Reorganization would be in the best interest of the shareholders of the B.B.
Fund and recommends approval of the Plan of Reorganization.
2. DESCRIPTION OF THE MIGHTY MITES FUND'S CLASS AAA SHARES
The Mighty Mites Fund's Class AAA Shares to be issued to the B.B. Fund's
shareholders pursuant to the Reorganization will be duly authorized, validly
issued, fully paid and nonassessable when issued, and will be transferable
without restriction and will have no preemptive or conversion rights. The Mighty
Mites Fund's Class AAA Shares will be sold and redeemed based upon the net asset
value per share ("NAV") of the Mighty Mites Fund Class AAA Shares next
determined after receipt of the purchase or redemption request, as described in
the Mighty Mites Fund's Prospectus.
COMBINED PROXY STATEMENT/PROSPECTUS
8
3. REASONS FOR THE REORGANIZATION
The recommendation of the B.B. Board with respect to the Reorganization of
the B.B. Fund arose from discussions of strategic alternatives for the B.B.
Trust, of which the B.B. Fund is a separate series) over a period of several
years, as described below. As a result of those discussions, the B.B. Board and
BB&A mutually agreed that the previous investment advisory agreement between the
B.B. Trust and BB&A with respect to the B.B. Fund should not be renewed after
the expiration of the term of the agreement on November 28, 2008, and the
Independent Trustees selected Teton as the interim investment adviser to the
B.B. Fund pending shareholder approval of the Reorganization. The B.B. Board
also approved the liquidation of the other two series of the B.B. Trust, the
Bjurman, Barry Mid Cap Growth Fund (the "Mid Cap Fund") and the Bjurman, Barry
Small Cap Growth Fund (the "Small Cap Fund"), which were liquidated on December
15, 2008.
BOARD DISCUSSIONS FROM JUNE 2006 - MARCH 2008
As a result of discussions at meetings of the B.B. Board and its
Committees, in June 2006 the Independent Trustees developed and provided to BB&A
a list of strategic issues of concern related to the future operations of the
B.B. Trust. These concerns included matters such as the impact of increasing
shareholder redemptions from the B.B. Fund on its investment results (the assets
of the B.B. Fund had declined from approximately $822 million in March 2004 to
approximately $505 million in June 2006); BB&A's short-range and long-range
plans for marketing and distribution of the B.B. Fund, the Mid Cap Fund and the
Small Cap Fund; and the long-term viability of the Mid Cap Fund and the Small
Cap Fund (which had assets of only $7.6 million and $26 million respectively as
of June 2006).
The B.B. Board recognized that many of these issues would be resolved by
improved investment performance and that the market environment had not been
favorable for BB&A's growth-oriented investment approach. Accordingly, the B.B.
Board continued to discuss these matters at subsequent meetings of the B.B.
Board and its Committees.
BB&A'S MARCH 2008 REORGANIZATION PROPOSAL
At a special meeting of the B.B. Board on March 27, 2008, BB&A informed the
Independent Trustees that, in response to the Independent Trustees' concerns,
BB&A had concluded that the B.B. Trust and BB&A would benefit if BB&A were able
to identify a suitable strategic partner that would provide the B.B. Trust
greater economic and administrative strength than that of BB&A alone, while
continuing BB&A's management of the B.B. Trust. BB&A informed the Independent
Trustees that it had undertaken efforts beginning in August 2006 to identify
such a partner, and had tentatively agreed on the terms of a transaction with an
experienced investment management firm that was currently managing assets in
excess of $4 billion, including assets of three mutual fund portfolios (the
"Proposed Manager"). The proposed transaction, which was subject to approval by
the Independent Trustees and the shareholders of the B.B. Trust, contemplated
the appointment of the Proposed Manager as the investment adviser to the B.B.
Trust in place of BB&A, and the appointment of BB&A as a sub-adviser to carry
out day-to-day portfolio management of the B.B. Trust, without change in the
aggregate advisory fees paid by the B.B. Trust.
The Independent Trustees carefully considered the proposed transaction.
They received a presentation by executives of the Proposed Manager and by BB&A
with respect to the proposed transaction at the March Board meeting; discussed
the potential advantages of the proposed transaction with BB&A; requested
additional information about the Proposed Manager and the process that had
resulted in selection of the Proposed Manager; and appointed a Special Committee
of two Independent Trustees who visited
COMBINED PROXY STATEMENT/PROSPECTUS
9
with executives of the Proposed Manager and directors of its mutual funds at its
principal offices. The Special Committee also held informal discussions with a
number of consulting firms about other possible alternatives for the B.B. Trust
and the costs of obtaining professional consulting assistance to explore those
alternatives.
After consideration of the proposed transaction, the process which had
resulted in identification of the Proposed Manager, and possible alternatives,
the Independent Trustees informed BB&A at a meeting of the B.B. Board on May 14,
2008, that they were not in a position to approve the proposed transaction with
the Proposed Manager because they believed that it did not appear to provide
significant tangible benefits to the B.B. Trust's shareholders and because the
Independent Trustees did not have a fully informed view about other possible
alternatives.
INDEPENDENT TRUSTEE REVIEW OF ALTERNATIVE TRANSACTIONS
Thereafter, the Independent Trustees met on numerous occasions, with the
assistance of counsel to the B.B. Trust and the Independent Trustees, to discuss
and evaluate strategic alternatives for the B.B. Trust:
- The members of the Special Committee met with management of BB&A
in June 2008 to discuss a variety of matters regarding operation
of the B.B. Trust, including among other things the reasons for
the Independent Trustees' conclusions about the proposed
transaction and various possible methods of improving the
benefits of the transaction to the B.B. Trust's shareholders. At
the Independent Trustees' request, representatives of BB&A
discussed with the Proposed Manager ways of providing additional
benefits to the B.B. Trust's shareholders. However, the Proposed
Manager declined to propose any such additional benefits.
- At a special meeting of the B.B. Board on July 23, 2008, the B.B.
Board considered a written report on the costs and benefits of
alternative strategic transactions for the B.B. Trust prepared by
BB&A at the request of the Independent Trustees. These
alternatives included reorganization of the B.B. Trust with a
fund group managed by a third party adviser, reorganization
pursuant to an arrangement for continuation of BB&A's services to
the B.B. Trust as a sub-adviser, merger of the Small Cap and Mid
Cap Funds, liquidation of the B.B. Trust, and maintenance of the
status quo. At that meeting, BB&A informed the Independent
Trustees that, in view of the small size of the B.B. Trust and
continuing redemptions by shareholders of the B.B. Fund (the
assets of which had declined to approximately $__ million), BB&A
did not believe that the B.B. Trust would be able to compete
effectively in the mutual fund marketplace in the future, and
that maintenance of the status quo was not a viable option. The
Independent Trustees (i) requested that BB&A contact a number of
"multiple series trusts" sponsored by mutual fund administrators
to determine whether reorganization of one or more series of the
B.B. Trust into newly organized series of such a trust, managed
by BB&A, would result in significant expense savings to the
shareholders of the B.B. Trust, and (ii) authorized retention of
Cedarwood Associates, an experienced consulting firm identified
by the Special Committee, to contact a select list of potential
mutual fund managers that might be interested in a transaction
with respect to the B.B. Trust (whether or not BB&A would
continue to manage the B.B. Trust).
- At a meeting of the B.B. Board on August 12, 2008, the B.B. Board
considered management's report on its contacts with various
"multiple series trust" sponsors. The
COMBINED PROXY STATEMENT/PROSPECTUS
10
Independent Trustees concluded that although reorganization of
the B.B. Trust into such a trust might provide some expense
reductions, it would not resolve issues related to distribution
of the B.B. Trust.
- During August and September 2008, under the supervision of the
Independent Trustees, the Special Committee and its consultant
identified 31 potential fund companies not previously contacted
by BB&A, and made inquiries of 19 of those companies identified
as having possible interest in a transaction with respect to the
B.B. Trust. The Special Committee received letters of interest
from eight of those companies. During this period the Independent
Trustees held four meetings with their consultant and with
counsel to review and evaluate the letters of interest.
- At a special meeting of the B.B. Board on October 1, 2008, the
Independent Trustees recommended that management of BB&A contact
three of the fund managers who had expressed interest to obtain
additional information from them. At a special meeting of the
B.B. Board on October 8, 2008, management of BB&A reported that
it had briefly contacted each of the three fund managers
identified by the Independent Trustees and, although a
transaction with any of the managers offered compensation to
BB&A, BB&A did not believe it was in the best interest of the
B.B. Trust or its shareholders to pursue further discussions with
any of them. BB&A also indicated that it had concluded it did not
wish to continue to manage the B.B. Trust after the expiration of
the current term of its advisory agreements on November 28, 2008.
- After further discussion with the Special Committee and its
consultant, the Independent Trustees selected GAMCO Investors,
Inc. ("GAMCO"), the parent company of Teton, and one other
substantial investment adviser, both of which currently managed
successful micro-cap mutual funds, for final evaluation. The
Special Committee requested further information from the two
finalists and on October 21, 2008, all of the Independent
Trustees and counsel met with representatives of each finalist in
person to discuss their investment philosophies, management
capabilities, and other relevant matters.
- As a result of those meetings, the Independent Trustees
unanimously determined that it would be in the best interest of
the B.B. Trust to liquidate the Small Cap Fund and the Mid Cap
Fund and to retain Teton, a subsidiary of GAMCO, as investment
adviser to the B.B. Fund at the end of the current term of the
B.B. Fund's agreement with BB&A. Teton thereafter concluded that
it could best manage the assets of the B.B. Fund if the B.B. Fund
were reorganized into the Mighty Mites Fund. In evaluating this
conclusion, the Independent Trustees met on October 29, 2008, to
consider such a reorganization and to review responses to
information requested on their behalf by counsel with respect to
the Mighty Mites Fund, and also conducted a telephonic interview
with the lead independent director of the Mighty Mites Fund.
BOARD CONSIDERATIONS WITH RESPECT TO THE REORGANIZATION
At a meeting of the B.B. Board on October 31, 2008, the B.B. Board (by
unanimous vote of the four members then serving as Independent Trustees, and
with the two members of the B.B. Board who were affiliated with BB&A abstaining
as they had not participated in the selection process) approved (i) the
liquidation of the Mid Cap and Small Cap Funds, and (ii) a letter of intent with
GAMCO for the
COMBINED PROXY STATEMENT/PROSPECTUS
11
appointment of Teton to act as interim investment adviser to the B.B. Fund
commencing on November 28, 2008, for a period of up to 150 days, as permitted by
SEC rules, and for the proposed Reorganization of the B.B. Fund into the Mighty
Mites Fund by the end of that period, subject to approval of the shareholders of
the B.B. Fund. Thereafter, at a meeting of the B.B. Board on November 12, 2008,
the B.B. Board (with the two members affiliated with BB&A abstaining) approved
an interim investment advisory agreement with Teton and the Plan of
Reorganization with the Mighty Mites Fund.
The Independent Trustees considered a number of factors in determining that
the proposed Reorganization would be in the best interest of the B.B. Fund and
its shareholders, and that the interests of the B.B. Fund's existing
shareholders would not be diluted as a result of the proposed Reorganization,
including the following:
1. The Independent Trustees and BB&A mutually agreed that the previous
investment advisory agreement between the B.B. Fund and BB&A should not be
renewed after the expiration of the term of the agreement on November 28,
2008.
2. Based on their review of the alternatives available to the B.B.
Fund and information provided by GAMCO with respect to Teton and the Mighty
Mites Fund, the Independent Trustees unanimously determined that it would
be in the best interests of the B.B. Fund and its shareholders to obtain
the services of Teton as investment adviser to the B.B. Fund while it
solicits shareholder approval with respect to the proposed Reorganization.
In making this determination, the Independent Trustees considered a variety
of factors, including the following:
INVESTMENT OBJECTIVES AND STRATEGIES. As described above, the
Independent Trustees considered that the investment objectives and
strategies of the Mighty Mites Fund were substantially similar to
those of the B.B. Fund, including their mutual focus on seeking
capital appreciation from investing in micro cap stocks.
NATURE, EXTENT AND QUALITY OF SERVICES. The Independent Trustees
considered the depth and quality of Teton's investment management
process, including its extensive research capabilities; the experience
of Teton's senior management and other personnel; the overall
financial strength, size, stability and reputation of GAMCO; the
nature, extent and quality of administrative, compliance and
shareholder services available to the Mighty Mites Fund from Teton and
its affiliates; and the benefits to B.B. Fund shareholders from
investing in a fund that is part of a larger family of funds. The
Independent Trustees concluded that the nature, extent and quality of
the services proposed to be provided by Teton and the Mighty Mites
Fund would benefit the B.B. Fund and its shareholders.
INVESTMENT RESULTS. The Independent Trustees considered the investment
results of the Mighty Mites Fund. They noted that the performance of
the Mighty Mites Fund was substantially better than that of the B.B.
Fund for the one-, three-, and five-year periods ended June 30, 2008,
and slightly better than the B.B. Fund for the ten-year period ended
on that date. They also noted that the performance of the Mighty Mites
Fund was substantially better than the results of the Russell 2000
Index for all these periods and since inception of the Mighty Mites
Fund in May 1998, better than the results of the Russell MicroCap
Index for all such periods since the inception of that Index, and well
above the average of a peer group of funds identified by Lipper Inc.
for such periods; and that the Mighty Mites Fund had a five-star
Morningstar rating. The Independent Trustees concluded that Teton's
record
COMBINED PROXY STATEMENT/PROSPECTUS
12
in managing the Mighty Mites Fund could significantly benefit the
shareholders of the B.B. Fund.
ADVISORY FEES AND TOTAL EXPENSES. The Independent Trustees compared
the advisory fee and total expense ratios of the Mighty Mites Fund to
those of the B.B. Fund and other relevant funds. The Independent
Trustees noted that Teton's advisory fee was the same as that of BB&A.
They noted that on October 22, 2008, BB&A had terminated its voluntary
agreement to waive all or a portion of its fees, and to reimburse
expenses of the B.B. Fund, in order to limit certain operating
expenses of the B.B. Fund to 1.80% of the average annual net assets,
and that the total expenses of the Mighty Mites Fund (as of the date
of their meeting) were less than those of the B.B. Fund. The
Independent Trustees also considered the pro forma expense ratio of
the combined Mighty Mites Fund after the Reorganization, noting that
the total pro forma expense ratio of the combined fund would be less
than that of the B.B. Fund. They noted that based on their review of
data in connection with past renewals of the B.B. Fund's Agreement
with BB&A, the advisory fees and projected expenses of the Mighty
Mites Fund were at or below the medians for comparable funds. The
Independent Trustees further considered that the Mighty Mites Fund's
greater distribution capabilities could potentially increase overall
fund assets thereby enabling B.B. Fund shareholders to benefit from
certain economies of scale after the Reorganization.
The Independent Trustees noted that Teton's advisory fee structure did
not include fee breakpoints. However, they considered that such
breakpoints were of limited value as any potential economies of scale
in the operation of the Mighty Mites Fund were limited by the likely
need to close the Mighty Mites Fund to further investment at some
point in the future given the constraints of any adviser's ability to
manage assets in the micro-cap sector of the stock market. They also
reviewed information regarding the pre-tax operating margins of Teton
with respect to its advisory services to the Mighty Mites Fund. The
Independent Trustees concluded that the Mighty Mites Fund's cost
structure was fair and reasonable in relation to the services provided
by Teton, and that the shareholders of the B.B. Fund would receive
reasonable value in return for the advisory fees paid by the Mighty
Mites Fund.
ANCILLARY BENEFITS. The Independent Trustees considered a variety of
other benefits received by Teton and its affiliates as a result of
Teton's relationship with the Mighty Mites Fund, including
compensation paid to Gabelli & Company, Inc., a broker-dealer
affiliate of Teton which acts as distributor of the Mighty Mites
Fund's shares and executes some portfolio transactions for the Mighty
Mites Fund; the benefits of "soft dollar" research and other services
obtained, if any, by Teton from broker-dealers in return for
allocating Mighty Mites Fund brokerage transactions to such
broker-dealers; and other possible ancillary benefits to Teton and its
affiliates as a result of their relationship to the Mighty Mites Fund.
The Independent Trustees took these ancillary benefits into account in
evaluating the reasonableness of the advisory fees and other amounts
paid to Teton by the Mighty Mites Fund.
OTHER FACTORS. The Independent Trustees considered the terms and
conditions of the Reorganization, including that the Reorganization
would not be a taxable transaction to the shareholders of the B.B.
Fund. They further noted that Teton has agreed to bear the expenses of
the Special Meeting (including legal, proxy and solicitation
expenses), reimburse the B.B. Fund for legal fees incurred over
several weeks (up to a maximum of $10,000) with respect to the
preparation of the letter of intent between the B.B. Trust (on
COMBINED PROXY STATEMENT/PROSPECTUS
13
behalf of the B.B. Fund) and Teton, and bear any expenses payable by
the B.B. Fund in connection with its current accounting,
administration, transfer agency and/or custodian agreements that may
be triggered by the termination of any such agreements in connection
with the proposed Reorganization.
On December 3, 2008, the two members of the B.B. Board affiliated with
BB&A, and one of the Independent Trustees, resigned. For the reasons described
above, the current members of the B.B. Board, all of whom are Independent
Trustees, unanimously recommends a vote IN FAVOR of the proposed Plan of
Reorganization and the resulting Reorganization.
4. FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Paul, Hastings, Janofsky & Walker LLP, the proposed
transaction will qualify as a tax-free reorganization for federal income tax
purposes. As a result, in its opinion, no gain or loss will be recognized by
either the Mighty Mites Fund, the B.B. Fund, or the shareholders of the B.B.
Fund as a result of the reorganization. In addition, in its opinion, the tax
basis of, and the holding period for, the Mighty Mites Fund Class AAA Shares
received by each shareholder of the B.B. Fund in the Reorganization will be the
same as the tax basis of, and the holding period for, the B.B. Fund shares given
up by such shareholder in the Reorganization, provided that, with respect to the
holding period for the Mighty Mites Fund shares received, the B.B. Fund shares
given up were held as capital assets by the shareholder.
The opinion of Paul, Hastings, Janofsky & Walker LLP is based on the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations
promulgated thereunder, administrative pronouncements and judicial
interpretations thereof, in each case as in effect on the date thereof, all of
which are subject to change. An opinion of counsel merely represents counsel's
best judgment with respect to the probable outcome on the merits and is not
binding on the Internal Revenue Service or the courts. Accordingly, there can be
no assurance that the Internal Revenue Service will not take a contrary
position, that the applicable law will not change, or that any such change will
not have retroactive effect.
5. COMPARISON OF SHAREHOLDER RIGHTS
Set forth below is a discussion of the material differences between the
B.B. Fund and the rights of its shareholders, and the Mighty Mites Fund and the
rights of its shareholders.
GOVERNING LAW. The B.B. Fund is a separate series of the B.B. Trust, which
is organized as a Delaware statutory trust. The Mighty Mites Fund is a separate
series of the GAMCO Westwood Funds, which is organized as a Massachusetts
business trust. The B.B. Fund and Mighty Mites Fund are each authorized to issue
an unlimited number of shares of beneficial interest. Each of the B.B. Trust's
and GAMCO Westwood Fund's operations are governed by their respective trust
instruments, as amended, by-laws and applicable state laws.
SHAREHOLDER LIABILITY. Under Delaware law, shareholders of a statutory
trust are generally afforded by statute the same limited liability as their
corporate counterparts and are permitted liberal indemnification rights. The
risk of a shareholder of the B.B. Fund incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance exists and the B.B. Fund itself is unable to meet its obligations.
Under Massachusetts law, shareholders of a Massachusetts business trust, under
certain circumstances, could be held personally liable for the obligations of
the business trust. However, the GAMCO Westwood Funds' Amended and Restated
Trust Agreement provides that in the case any shareholder or former shareholder
is held personally liable solely by reason of his being or having been a
shareholder and not because of his acts or omissions or for some other reason,
the shareholder or
COMBINED PROXY STATEMENT/PROSPECTUS
14
former shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of the GAMCO
Westwood Funds to be held harmless from and indemnified against all losses and
expenses arising from such liability. The Trust Agreement also provides that the
GAMCO Westwood Funds, upon request, will cause its counsel to assume the defense
against any claim which, if successful, would result in an obligation of the
GAMCO Westwood Funds to indemnify the shareholder. Thus, the Mighty Mites Fund
considers the risk of a shareholder incurring financial loss on account of
shareholder liability to be remote because it is limited to circumstances in
which a disclaimer is inoperative or the Mighty Mites Fund itself would be
unable to meet its obligations.
BOARD OF TRUSTEES. The Reorganization will result in a change in the Board
of Trustees because the trustees of the GAMCO Westwood Funds are different than
the trustees of the B.B. Trust. The Board of the B.B. Trust has three
independent trustees. For more information, refer to the Statement of Additional
information dated August 1, 2008, for the B.B. Trust, which is incorporated by
reference into this Combined Proxy Statement/Prospectus. The Board of Trustees
of the GAMCO Westwood Funds has four independent trustees. For more information,
refer to the Statement of Additional Information dated January [__], 2009, for
the Mighty Mites Fund, which is incorporated by reference into this Combined
Proxy Statement/Prospectus.
6. COMPARISON OF VALUATION PROCEDURES
The B.B. Fund and the Mighty Mites Fund have adopted the same pricing
procedures:
The NAV of the Funds' shares is calculated on each day the New York Stock
Exchange (NYSE) is open. The NYSE is open Monday through Friday, but currently
is scheduled to be closed on New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, and Christmas Day and on the preceding Friday or subsequent
Monday when a holiday falls on a Saturday or Sunday, respectively.
Each Fund's NAV is determined as of the close of regular trading on the
NYSE, normally 4:00 p.m., Eastern Time. NAV is computed by dividing the value of
the applicable 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) attributable to its shares by the total number of
shares outstanding at the time the determination is made (with respect to the
Mighty Mites Fund, the net assets and liabilities attributable to the Class AAA
Shares). The price of Fund shares for the purpose of purchase and redemption
orders will be based upon the calculation of NAV next made as of a time after
the time as of which the purchase or redemption order is received in proper
form.
Portfolio securities listed or traded on a nationally recognized securities
exchange or traded in the U.S. over-the-counter market for which market
quotations are readily available are valued at the last quoted sale price or a
market's official closing price as of the close of business on the day the
securities are being valued. If there were no sales that day, the security is
valued at the average of the closing bid and asked prices or, if there were no
asked prices quoted on that day, then the security is valued at the closing bid
price on that day. If no bid or asked prices are quoted on such day, the
security is valued at the most recently available price or, if the Fund's Board
of Trustees so determines, by such other method as the Board of Trustees shall
determine in good faith to reflect its fair market value. Portfolio securities
traded on more than one national securities exchange or market are valued
according to the broadest and most representative market, as determined by the
Adviser.
COMBINED PROXY STATEMENT/PROSPECTUS
15
Portfolio securities primarily traded on a foreign market are generally
valued at the preceding closing values of such securities on the relevant
market, but may be fair valued pursuant to procedures established by the Fund's
Board of Trustees if market conditions change significantly after the close of
the foreign market but prior to the close of business on the day the securities
are being valued. Debt instruments with remaining maturities of 60 days or less
that are not credit impaired are valued at amortized cost, unless the Board of
Trustees determines such amount does not reflect the securities' fair value, in
which case these securities will be fair valued as determined by the Board of
Trustees. Debt instruments having a maturity greater than 60 days for which
market quotations are readily available are valued at the average of the latest
bid and asked prices. If there were no asked prices quoted on such day, the
security is valued using the closing bid price. Futures contracts are valued at
the closing settlement price of the exchange or board of trade on which the
applicable contract is traded.
Securities and assets for which market quotations are not readily available
are fair valued as determined by the Fund's Board of Trustees. Fair valuation
methodologies and procedures may include, but are not limited to: analysis and
review of available financial and non-financial information about the company;
comparisons to the valuation and changes in valuation of similar securities,
including a comparison of foreign securities to the equivalent U.S. dollar value
American Depositary Receipts securities at the close of the U.S. exchange; and
evaluation of any other information that could be indicative of the value of the
security.
7. CAPITALIZATION
The following table sets forth as of September 30, 2008: (1) the unaudited
capitalization of the B.B. Fund and the unaudited capitalization of the Mighty
Mites Fund, and (2) the unaudited pro forma combined capitalization of the
Mighty Mites Fund assuming the Reorganization has been approved and consumated.
If the Reorganization is consummated, the capitalizations are likely to be
different on [March __], 2009, as a result of daily share purchase and
redemption activity in the Funds and changes in NAV per share.
NET ASSETS SHARES OUTSTANDING NET ASSET VALUE PER SHARE
------------ ------------------ -------------------------
B.B. FUND $124,560,295 11,616,238 $10.72
MIGHTY MITES FUND (ALL CLASSES) $ 67,675,229 5,076,761 $13.41
(Class AAA shares only)
MIGHTY MITES FUND
(CLASS AAA SHARES ONLY) $ 55,808,414 4,162,260 $13.41
Adjustment * -- (2,328,184)
PRO FORMA OF MIGHTY MITES FUND $192,235,524 14,364,815 $13.41
(ALL CLASSES) (Class AAA shares only)
PRO FORMA OF MIGHTY MITES FUND $180,368,709 13,450,314 $13.41
(CLASS AAA SHARES ONLY)
* Reflects the decrease in the number of Class AAA Shares of the Mighty Mites
Fund to be issued to B.B. Fund shareholders as a result of the difference
between the NAV of the B.B. Fund and the Class AAA Shares of the Mighty Mites
Fund.
COMBINED PROXY STATEMENT/PROSPECTUS
16
8. INVESTMENT ADVISER AND PORTFOLIO MANAGEMENT
Teton, with its principal offices located at One Corporate Center, Rye, New
York 10580-1422, serves as investment adviser to both Funds. Teton makes
investment decisions for the Funds and continuously reviews and administers the
Funds' investment programs and manages the Funds' operations under the general
supervision of each Fund's Board of Trustees. Teton is a Delaware corporation.
Teton is a subsidiary of GAMCO Investors, Inc. ("GBL"), a publicly held company
listed on the New York Stock Exchange.
As compensation for its services and the related expenses that Teton bears,
Teton is contractually entitled to an advisory fee, computed daily and payable
monthly, at annual rate of 1.00% of each Fund's average daily net assets. The
advisory fee (after waivers/reimbursement of expenses) paid by the Mighty Mites
Fund for the fiscal year ended September 30, 2008, was 1.00% of the Mighty Mites
Fund's average daily net assets. Until November 28, 2008, BB&A was the B.B.
Fund's investment adviser and for the fiscal year ended March 31, 2008, BB&A was
paid an advisory fee of 1.00% of the B.B. Fund's average net assets.
PORTFOLIO MANAGEMENT
Mario J. Gabelli, Walter K. Walsh, and Laura Linehan are primarily
responsible for the day-to-day management of the Funds. Mario J. Gabelli has
been Chairman, Chief Executive Officer, and Chief Investment Officer-Value
Portfolios of GBL and its affiliates since their organization. Walter K. Walsh
was Compliance Officer of Gabelli & Company, Inc. from 1994 through 2003, and
currently is a compliance consultant. Ms. Linehan previously worked in the
Alternative Investment Group of GBL. Prior to that, she was Director of Research
and Portfolio Manager for the Mighty Mites Fund and various other small-cap
portfolios until March 2003.
9. DISTRIBUTION
Foreside Distribution Services, L.P. (the "Distributor") is the exclusive
agent for distribution of shares of the B.B. Fund. The Distributor is obligated
to sell the shares of the B.B. Fund on a best efforts basis only against
purchase orders for the shares. Shares of the B.B. Fund are offered to the
public on a continuous basis at NAV. The Distributor is a registered
broker-dealer and member of the Financial Industry Regulatory Authority
("FINRA"). Under a distribution plan adopted in accordance with Rule 12b-1 under
the 1940 Act, as amended, the B.B. Fund is authorized to reimburse the Adviser,
the Distributor or others for all expenses incurred by such parties in the
promotion and distribution of shares of the B.B. Fund up to 0.25% per year of
the average daily net assets of the B.B. Fund. The B.B. Fund's 12b-1 Plan is a
reimbursement plan, which means that the fees paid by the B.B. Fund under the
plan are intended to reimburse the recipient for services rendered.
Gabelli & Company, Inc. ("Gabelli & Company"), a registered broker-dealer
and member of FINRA, acts as the distributor for the Mighty Mites Fund. As such,
Gabelli & Company is responsible for all purchases, sales, redemptions and other
transfers of shares of the Mighty Mites Fund. As distributor, Gabelli & Company
also provides certain administrative services for the Mighty Mites Fund. Shares
of the Mighty Mites Fund are offered for sale on a continuous basis at NAV.
Under a distribution plan adopted in accordance with Rule 12b-1 under the 1940
Act, as amended, the Mighty Mites Fund is authorized to pay 0.25% per year of
the average daily net assets to finance the distribution of the Mighty Mites
Fund shares. The Mighty Mites Fund's 12b-1 Plan is a compensation plan, which
means that the
COMBINED PROXY STATEMENT/PROSPECTUS
17
fees paid by the Mighty Mites Fund under the plan are intended to compensate for
services rendered, regardless of expenses actually incurred.
10. PURCHASE AND REDEMPTION PROCEDURES
PURCHASE, EXCHANGE, AND REDEMPTION OF SHARES
Procedures for the purchase, exchange and redemption of shares of the B.B.
Fund and the Mighty Mites Fund are substantially similar and the Mighty Mites
Fund procedures will remain in place for the combined fund. Shareholders should
refer to the Mighty Mites Fund Prospectus (a copy of which accompanies this
Combined Prospectus/Proxy Statement) and the B.B. Fund Prospectus for the
specific procedures applicable to purchases, exchanges and redemptions of shares
of each of the Funds. In addition to the policies described therein, certain
fees may be assessed in connection with the exchange and redemption of shares.
See "Comparison Fee Table and Examples" above.
The minimum initial investment for the B.B. Fund and the Mighty Mites Fund
are shown below. Both Funds have the right to waive account minimums if it is
economically feasible and determined to be in the best interests of the Funds'
shareholders. Both Funds have the right to reject any purchase order or limit or
suspend the offering of its shares.
TO OPEN AN MINIMUM
FUND/CLASS ACCOUNT ADDITION MINIMUM BALANCE
---------- ---------- -------- ---------------
B.B. FUND $ 1,000 None $1,000
IRAs $ 1,000 None $1,000
Automatic Investment Plan $ 1,000 $ 100 $1,000
MIGHTY MITES FUND $10,000 None $1,000
IRAs $10,000 None None
Automatic Investment Plan None $ 100 None
REDEMPTION INFORMATION
Differences in the redemption fees that apply to the Funds are as follows:
MIGHTY MITES FUND
You can redeem shares of the Mighty Mites Fund on any day the NYSE is open.
The Mighty Mites Fund may temporarily stop redeeming its shares when the NYSE is
closed or trading on the NYSE is restricted, when an emergency exists and the
Mighty Mites Fund cannot sell its shares or accurately determine the value of
its assets, or if the SEC orders the Mighty Mites Fund to suspend redemptions.
The Mighty Mites Fund redeems its shares based on the NAV next determined
after the time as of which the Mighty Mites Fund receives a redemption
request in proper form. See "Pricing of Fund Shares" in the Mighty Mites Fund
prospectus for a description of the calculation of NAV.
The Mighty Mites Fund is intended for long-term investors and not for those
who wish to trade frequently in Mighty Mites Fund shares. The Mighty Mites Fund
believes that excessive short-term trading of Mighty Mites Fund shares creates
risks for the Mighty Mites Fund and its long-term shareholders,
COMBINED PROXY STATEMENT/PROSPECTUS
18
including interference with efficient portfolio management, increased
administrative and brokerage costs, and potential dilution in the value of
Mighty Mites Fund shares. In addition, because the Mighty Mites Fund may invest
in foreign securities traded primarily on markets that close prior to the time
after the time as of which the Mighty Mites Fund determines its NAV, frequent
trading by some shareholders may, in certain circumstances, dilute the value of
Mighty Mites Fund shares held by other shareholders. This may occur when an
event that affects the value of the foreign security takes place after the close
of the primary foreign market, but before the time that the Mighty Mites Fund
determines its NAV. Certain investors may seek to take advantage of the fact
that there will be a delay in the adjustment of the market price for a security
caused by this event until the foreign market reopens (referred to as price
arbitrage). If this occurs, frequent traders who attempt this type of price
arbitrage may dilute the value of the Mighty Mites Fund shares to the extent
they receive shares or proceeds based upon NAVs that have been calculated using
the closing market prices for foreign securities, if those prices have not been
adjusted to reflect a change in the fair value of the foreign securities. In an
effort to prevent price arbitrage, the Mighty Mites Fund has procedures designed
to adjust closing market prices of foreign securities before it calculates its
NAV when it believes such an event has occurred that will have more than a
minimal effect on the NAV. Prices are adjusted to reflect what the Mighty Mites
Fund believes are the fair values of these foreign securities at the time the
Mighty Mites Fund determines its NAV (called fair value pricing). Fair value
pricing, however, involves judgments that are inherently subjective and inexact,
since it is not possible to always be sure when an event will affect a market
price and to what extent. As a result, there can be no assurance that fair value
pricing will always eliminate the risk of price arbitrage.
In addition, the Mighty Mites Fund invest in small capitalization and
micro-capitalization securities. Such securities are typically less liquid and
more thinly-traded than securities of large capitalization issuers. Developments
affecting issuers of thinly-traded or less liquid securities will not be
reflected in their market price until the security again trades in the
marketplace. Frequent traders may seek to exploit this delay by engaging in
price arbitrage, in this case by buying or selling shares of the Mighty Mites
Fund prior to the time of the adjustment of the market price of securities in
its portfolio. This may result in the dilution in the value of the Mighty Mites
Fund shares.
In order to discourage frequent short-term trading in its shares, the
Mighty Mites Fund imposes a 2.00% redemption fee (short-term trading fee) on
Class AAA Shares that are redeemed or exchanged within seven days or less after
the date of a purchase (the "Redemption Fee"). The Redemption Fee is calculated
based on the shares' aggregate NAV on the date of redemption and deducted from
the redemption proceeds. The Redemption Fee is not a sales charge; it is
retained by the Mighty Mites Fund, and does not benefit the Fund's Adviser or
any other third party. For purposes of computing the Redemption Fee, shares will
be redeemed in reverse order of purchase (the latest shares acquired will be
treated as being redeemed first). Redemptions to which the fee applies include
redemption of shares resulting from an exchange made pursuant to the Mighty
Mites Fund's exchange privilege. The Redemption Fee will not apply to
redemptions of shares where (i) the shares were purchased through automatic
reinvestment of dividends or other distributions, (ii) the redemption is
initiated by the Mighty Mites Fund, (iii) the shares were purchased through
programs that collect the redemption fees at the program level and remit them to
the Mighty Mites Fund, or (iv) the shares were purchased through programs that
the Adviser determines to have appropriate anti-short-term trading policies in
place.
While the Mighty Mites Fund has entered into information sharing agreements
with financial intermediaries which contractually require such financial
intermediaries to provide the Mighty Mites Fund with information relating to its
customers investing in the Mighty Mites Fund through non-disclosed or omnibus
accounts, the Mighty Mites Fund cannot guarantee the accuracy of the information
provided to it from financial intermediaries and may not always be able to track
short-term trading effected through these financial intermediaries. In addition,
because the Mighty Mites Fund is required to rely on information
COMBINED PROXY STATEMENT/PROSPECTUS
19
provided by the financial intermediary as to the applicable redemption fee, the
Mighty Mites Fund cannot guarantee that the financial intermediary is always
imposing such fee on the underlying shareholder in accordance with the Mighty
Mites Fund's policies. Subject to the exclusions discussed above, the Mighty
Mites Fund seeks to apply these policies uniformly.
The Mighty Mites Fund continues to reserve all rights, including the right
to refuse any purchase request (including requests to purchase by exchange) from
any person or group who, in the Mighty Mites Fund's view, is likely to engage in
excessive trading or if such purchase is not in the best interest of the Mighty
Mites Fund and to limit, delay, or impose other conditions on exchanges or
purchases. The Mighty Mites Fund has adopted a policy of seeking to minimize
short-term trading of its shares and monitors purchase and redemption activities
to assist in minimizing short-term trading.
B.B. FUND
The B.B. Fund is intended to be a long-term investment. Excessive purchases
and redemptions, or exchanges, of shares of the B.B. Fund in an effort to take
advantage of short-term market fluctuations, known as "market timing," can
interfere with long-term portfolio management strategies and increase the
expenses of the B.B. Fund, to the detriment of long-term investors. For example,
excessive redemption orders may require us to sell securities in our portfolio
at inopportune times to fund redemption payments. Accordingly, the B.B. Board
has adopted policies and procedures that seek to restrict market timing
activity. If management of the B.B. Fund believes, in its sole discretion, that
an investor is engaged in excessive short-term trading or exchanges or is
otherwise engaged in market timing activity, the B.B. Fund may, with or without
prior notice to the investor, reject, limit, delay or impose conditions on
further purchase or exchange orders from that investor, or the B.B. Fund may
close that investor's account, and the B.B. Fund disclaims responsibility for
any consequent losses that the investor may incur. the B.B. Fund's response to
any particular market timing activity will depend on the facts and circumstances
of each case, such as the extent and duration of the market timing activity and
the investor's trading history in the B.B. Fund.
The B.B. Fund reviews trade and exchange orders for shares of the B.B. Fund
periodically to detect market-timing activity. It is difficult to distinguish
market-timing activity from trading that is not harmful, such as the technique
of dollar cost averaging or periodic rebalancing of portfolios. Consequently,
the B.B. Fund has not established a fixed number of trades or exchanges in a
given time period as a basis for identifying a market timer.
Some investors trade in shares of the B.B. Fund through omnibus accounts of
third parties (such as those of investment advisers and broker-dealers), and, if
the B.B. Fund identifies excessive trading in such an account, it may instruct
the third party to restrict the investor responsible for the excessive trading
from any further trading in the B.B. Fund. However, some omnibus accounts submit
to the B.B. Fund a daily aggregate purchase order and aggregate redemption order
reflecting the trade orders of multiple unidentified investors. Accordingly, the
B.B. Fund cannot identify individual investors engaged in market timing through
such omnibus accounts.
The B.B. Fund applies these policies and procedures to all investors it
believes to be engaged in market timing. It does not have any arrangements to
allow individual investors to trade frequently in shares of the B.B. Fund,
although it permits third party omnibus accounts submitting the aggregated
orders of multiple investors to trade on a daily basis in shares of the B.B.
Fund.
COMBINED PROXY STATEMENT/PROSPECTUS
20
The B.B Fund assesses investors who redeem or exchange shares (other than
shares acquired through reinvestment of dividends or other distributions) held
by the investors for 60 days or less a redemption/exchange fee of 2% of the NAV
of the shares being redeemed or exchanged. The redemption/exchange fee is for
the benefit of the remaining shareholders of the B.B. Fund and is intended to
restrict market timing, encourage long-term investment, facilitate long-term
portfolio management strategies and compensate the B.B. Fund for transaction and
other expenses caused by early redemptions. In determining the holding period of
shares being redeemed or exchanged, the shares held the longest by the investor
will be deemed the first to be redeemed (the so-called first in, first out
method). The redemption/exchange fee will not be assessed on redemptions or
exchanges by (i) omnibus accounts of certain financial institutions or
intermediaries that are unable for administrative reasons to apply the
redemption/exchange fee to underlying shareholders, (ii) accounts in the event
of shareholder death and (iii) certain other accounts in the absolute discretion
of the B.B. Fund when a shareholder can demonstrate hardship. The B.B. Fund
reserves the right to modify or eliminate these waivers at any time.
Additional shareholder account information for the Funds is available in
each of their prospectuses which are incorporated by reference.
11. SERVICE PROVIDERS
Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, serves as the custodian, administrator and accounting services provider
to the B.B. Fund. PNC Global Investment Servicing (U.S.) Inc., P.O. Box 9695,
Providence, Rhode Island 62940, serves as the transfer agent to the B.B. Fund.
The Bank of New York Mellon Corporation, 100 Church Street, New York, New
York 10007, is the custodian for the Mighty Mites Fund's cash and securities.
Boston Financial Data Services, Inc. ("BFDS"), an affiliate of State Street Bank
and Trust Company ("State Street"), located at the BFDS Building, 30 Dan Road,
Canton, Massachusetts 02021-2809, performs the shareholder services on behalf of
State Street and acts as the Mighty Mites Fund's transfer agent and dividend
disbursing agent. Teton also serves as the the Mighty Mites Fund's administrator
under the Advisory Agreement. Teton has delegated its administration duties to a
sub-administrator, PNC Global Investment Servicing (U.S.) Inc., 760 Moore Road,
King of Prussia, Pennsylvania 19406.
COMBINED PROXY STATEMENT/PROSPECTUS
21
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE PROPOSAL.
II. VOTING INFORMATION
This Proxy Statement is being provided in connection with the solicitation
of proxies by the Board of the B.B. Trust to solicit your vote for the proposal
with respect to the Reorganization at a special meeting of shareholders of the
B.B. Fund (the "Special Meeting"). The Special Meeting will be held at the
offices of the B.B. Trust, One Corporate Center, Rye, New York 10580, on [March
__], 2009, at [10:00 a.m.] (Eastern Standard Time).
You may vote in one of four ways:
- complete and sign the enclosed proxy ballot and mail it to us in the
prepaid return envelope (if mailed in the United States);
- vote on the Internet at the website address listed on your proxy ballot;
- call the toll-free number printed on your proxy ballot; or
- attend the Special Meeting in person.
PLEASE NOTE THAT, TO VOTE VIA THE INTERNET OR TELEPHONE, YOU WILL NEED THE
"CONTROL NUMBER" THAT APPEARS ON YOUR PROXY BALLOT.
You may revoke a proxy once it is given. If you desire to revoke a proxy,
you must submit a subsequent proxy or a written notice of revocation to the
Fund. You may also give written notice of revocation in person at the Special
Meeting. All properly executed proxies received in time for the Special Meeting
will be voted as specified in the proxy, or, if no specification is made, FOR
each proposal.
Only shareholders of record on _________ (the "Record Date") are entitled
to receive notice of and to vote at the Special Meeting or at any adjournment
thereof. Each whole share held as of the close of business on the Record Date is
entitled to one vote and each fractional share is entitled to a proportionate
fractional vote.
With respect to the proposal, one-third (1/3) of the shareholders of the
B.B. Fund entitled to vote must be present in person or by proxy to constitute a
quorum. When a quorum is present, the affirmative vote of the lesser of (1) 67%
or more of the shares of the B.B. Fund present or represented by proxy at the
Special Meeting, if holders of more than 50% of the B.B. Fund's outstanding
shares are present or represented by proxy, or (2) more than 50% of the B.B.
Fund's outstanding shares, is required to approve the Reorganization.
If a quorum of shareholders of the B.B. Fund is not present at the Special
Meeting, or if a quorum is present but sufficient votes to approve the proposal
described in this Combined Proxy Statement/Prospectus with respect to the B.B.
Fund are not received, the persons named as proxies may, but are under no
obligation to, propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies. Any business that might have been transacted at
the Special Meeting with respect to the B.B. Fund may be transacted at any such
adjourned session(s) at which a quorum is present. The Special Meeting may be
adjourned from time to time by a majority of the
COMBINED PROXY STATEMENT/PROSPECTUS
22
votes of the B.B. Fund properly cast upon the question of adjourning the
Special Meeting to another date and time, whether or not a quorum is present,
and the Special Meeting may be held as adjourned without further notice. The
persons named in the proxy will vote in favor of such adjournment those shares
that they are entitled to vote if such adjournment is necessary to obtain a
quorum or to obtain a favorable vote on the proposal. The persons named in the
proxy will vote against adjournment those shares that they are entitled to vote
if the shareholder proxies instruct the persons named in the proxy to vote
against the proposal.
All proxies voted, including abstentions and broker non-votes (shares held
by brokers or nominees where the underlying holder has not voted and the broker
does not have discretionary authority to vote the shares), will be counted
toward establishing a quorum. In addition, under the rules of the New York Stock
Exchange, if a broker has not received instructions from beneficial owners or
persons entitled to vote and the proposal to be voted upon may "affect
substantially" a shareholder's rights or privileges, the broker may not vote the
shares as to that proposal even if it has discretionary voting power. As a
result, these shares also will be treated as broker non-votes for purposes of
proposals that may "affect substantially" a shareholder's rights or privileges
(but will not be treated as broker non-votes for other proposals, including
adjournment of the Special Meeting).
Abstentions and broker non-votes will be treated as shares voted against a
proposal. Treating broker non-votes as votes against a proposal can have the
effect of causing shareholders who choose not to participate in the proxy vote
to prevail over shareholders who cast votes or provide voting instructions to
their brokers or nominees. In order to prevent this result, the B.B. Fund may
request that selected brokers or nominees refrain from returning proxies on
behalf of shares for which voting instructions have not been received from
beneficial owners or persons entitled to vote. The B.B. Fund also may request
that selected brokers or nominees return proxies on behalf of shares for which
voting instructions have not been received if doing so is necessary to obtain a
quorum.
Approval of the proposal will occur only if a sufficient number of votes
are cast "FOR" the proposal. If shareholders of the B.B. Fund do not vote to
approve the Reorganization, the Board of the B.B. Fund will consider other
possible courses of action in the best interests of the B.B. Fund's
shareholders. If sufficient votes in favor of the Reorganization are not
received by the time scheduled for the Special Meeting, the persons named as
proxies or any officer present entitled to preside or act as Secretary of such
meeting may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies. In determining whether to adjourn the Special
Meeting, the following factors may be considered: the percentage of votes
actually cast, the percentage of negative votes actually cast, the nature of any
further solicitation and the information to be provided to shareholders with
respect to the reasons for the solicitation. The costs of any additional
solicitation and of any adjourned session will be borne by Teton.
A shareholder of the B.B. Fund who objects to the proposed Reorganization
will not be entitled under either Delaware law or The B.B. Funds' Amended and
Restated Declaration of Trust to demand payment for, or an appraisal of, his or
her shares. Shareholders, however, should be aware that the Reorganization as
proposed is not expected to result in recognition of gain or loss to
shareholders for federal income tax purposes. If the Reorganization is
consummated, shareholders will be free to redeem the shares of the Mighty Mites
Fund that they receive in the transaction at their then current NAV. Shares of
the B.B. Fund may be redeemed at any time prior to the consummation of the
Reorganization. Shareholders of the B.B. Fund may wish to consult their tax
advisors as to any different consequences of redeeming their shares prior to the
Reorganization or exchanging such shares in the Reorganization.
COMBINED PROXY STATEMENT/PROSPECTUS
23
A. METHOD AND COST OF SOLICITATION
This Combined Proxy Statement/Prospectus is being sent to you in connection
with the solicitation of proxies by the Board of the B.B. Fund for use at the
Special Meeting. The B.B. Fund expects that the solicitation of proxies will be
primarily by mail and telephone. The solicitation may also include facsimile,
Internet or oral communications by certain employees of the Adviser, who will
not be paid for these services. In addition, [________] has been engaged to
assist in the solicitation of proxies, at an estimated cost of $[__]. Teton will
bear the costs of the Special Meeting, including legal costs and the cost of the
solicitation of proxies.
B. RIGHT OF REVOCATION
Any shareholder giving a proxy may revoke it before it is exercised at the
Special Meeting, either by providing written notice to the B.B Fund, by
submission of a later-dated, duly executed proxy or by voting in person at the
Special Meeting. A prior proxy can also be revoked by proxy voting again through
the toll-free number listed in the enclosed Voting Instructions. If not so
revoked, the votes will be cast at the Special Meeting, and any postponements or
adjournments thereof. Attendance by a shareholder at the Special Meeting does
not, by itself, revoke a proxy.
C. VOTING SECURITIES AND PRINCIPAL HOLDERS
Shareholders of the B.B. Fund at the close of business on the Record Date
will be entitled to be present and vote at the Special Meeting. As of that date,
there were ________ outstanding shares of the B.B. Fund. Also as of the Record
Date, there were _________ outstanding shares of the Mighty Mites Fund.
As of ________, the B.B. Fund's shareholders of record and/or beneficial
owners (to the B.B. Fund's knowledge) who owned five percent or more of the B.B.
Fund's shares are set forth below:
TYPE OF
NAME AND ADDRESS NO. OF SHARES OWNED % OF SHARES OWNERSHIP
---------------- ------------------- ----------- ---------
As of ___________, the Officers and Trustees of the B.B. Trust, as a group,
owned of record and beneficially [less than 1%] of the outstanding voting
securities of the B.B. Fund.
As of _______________, the Mighty Mites Fund's shareholders of record
and/or beneficial owners (to the Mighty Mites Fund's knowledge) who owned five
percent or more of the Mighty Mites Fund's shares are set forth below:
TYPE OF
NAME AND ADDRESS NO. OF SHARES OWNED % OF SHARES OWNERSHIP
---------------- ------------------- ----------- ---------
COMBINED PROXY STATEMENT/PROSPECTUS
24
As of ___________, the Officers and Trustees of the GAMCO Westwood Funds,
as a group, owned of record and beneficially [less than 1%] of the outstanding
voting securities of the Mighty Mites Fund.
D. INTEREST OF CERTAIN PERSONS IN THE TRANSACTION
A beneficial owner of 25% or more of a voting security of a Fund is
presumed to have "control" of the Fund for purposes of the 1940 Act, absent a
determination to the contrary by the SEC. A person who controls the B.B. Fund or
the Mighty Mites Fund could have effective control over the outcome of matters
submitted to a vote of shareholders of the Funds. Based on the information
provided above, as of ____, [no person] owned a controlling interest in the B.B.
Fund. Based on the information provided above, as of ______, [no person] owned a
controlling interest in the Mighty Mites Fund.
III. FURTHER INFORMATION ABOUT THE B.B. FUND AND THE MIGHTY MITES FUND
Reports, proxy statements, registration statements and other information
filed by the Funds may be inspected without charge and copied at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington, DC
20549, and at the following regional offices of the SEC: Northeast Regional
Office, 3 World Financial Center, Suite 400, New York, New York 10281; Southeast
Regional Office, 801 Brickell Avenue, Suite 1800, Miami, Florida 33131; Midwest
Regional Office, 175 West Jackson Boulevard, Suite 900, Chicago, Illinois 60604;
Central Regional Office, 1801 California Street, Suite 1500, Denver, Colorado
80202; and Pacific Regional Office, 5670 Wilshire Boulevard, Suite 1100, Los
Angeles, California 90036. Copies of such materials may also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, Washington, DC 20549 at prescribed
rates.
IV. MISCELLANEOUS MATTERS
A. OTHER BUSINESS
The Board of the B.B. Trust knows of no other business to be brought before
the Special Meeting. If any other matters come before the Meeting, the Board of
the B.B. Trust intends that proxies that do not contain specific restrictions to
the contrary will be voted on those matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
B. NEXT MEETING OF SHAREHOLDERS
The B.B. Fund is not required and does not intend to hold annual or other
periodic meetings of shareholders except as required by the 1940 Act. By
observing this policy, the B.B. Fund seeks to avoid the expenses customarily
incurred in the preparation of proxy material and the holding of shareholder
meetings, as well as the related expenditure of staff time. If the
Reorganization is not completed, the next meeting of the shareholders of the
B.B. Fund will be held at such time as the Board of Trustees of the B.B. Trust
may determine or at such time as may be legally required. Any shareholder
proposal intended to be presented at such meeting must be received by the B.B.
Trust at its office at a reasonable time before the B.B. Trust begins to print
and mail its proxy, as determined by the Board of Trustees of the B.B. Trust, to
be included in the B.B. Fund's proxy statement and form of proxy relating to
that meeting, and must satisfy all other legal requirements.
COMBINED PROXY STATEMENT/PROSPECTUS
25
C. LEGAL MATTERS
Certain legal matters in connection with the tax consequences of the
Reorganization will be passed upon by Paul, Hastings, Janofsky & Walker LLP.
D. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of the B.B. Fund for the year ended March 31,
2008, contained in the B.B. Trust's 2008 Annual Report to Shareholders, have
been audited by PricewaterhouseCoopers LLP, independent registered public
accounting firm, which are incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given on their authority
as experts in accounting and auditing.
By Order of the Board of Trustees of the B.B. Trust
/s/ Bruce N. Alpert
----------------------------------------
Bruce N. Alpert
Secretary
DATED: [JANUARY __], 2009
COMBINED PROXY STATEMENT/PROSPECTUS
26
FORM OF PROXY CARD
CONTROL NUMBER:
3 EASY WAYS TO VOTE YOUR PROXY
1. Automated Touch Tone Voting: Call toll-free ____________ and use the
control number shown above.
2. On the Internet at www.____________.com and use the control number
shown below.
3. Return this proxy card using the enclosed postage-paid envelope.
B.B. MICRO-CAP GROWTH FUND,
a series of THE B.B. FUNDS
PROXY FOR SPECIAL SHAREHOLDERS MEETING
TO BE HELD [MARCH __], 2009
The undersigned shareholder of the B.B. Micro-Cap Growth Fund (the "B.B. Fund"),
a series of The B.B. Funds (the "B.B. Trust"), revoking previous proxies, hereby
appoints ____________ and ____________, and each of them, as attorneys-in-fact
and proxies of the undersigned, with full power of substitution, to attend the
Special Meeting of Shareholders of the B.B. Fund to be held on [March __], 2009,
at the offices of the B.B. Trust, One Corporate Center, Rye, New York, 10580, at
10:00 a.m., Eastern Standard Time, and at all adjournments thereof, and to vote
the shares held in the name of the undersigned on the record date for said
meeting on the proposal specified on reverse side. As to any other matter, said
attorneys-in-fact shall vote in accordance with their best judgment.
PLEASE MARK YOUR PROXY, DATE AND SIGN IT BELOW AND RETURN IT PROMPTLY IN THE
ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. (WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., PLEASE GIVE YOUR FULL TITLE AS
SUCH. JOINT OWNERS SHOULD EACH SIGN THIS PROXY. IF THE ACCOUNT IS REGISTERED IN
THE NAME OF A CORPORATION, PARTNERSHIP OR OTHER ENTITY, A DULY AUTHORIZED
INDIVIDUAL MUST SIGN ON ITS BEHALF AND GIVE TITLE.)
Date _______________
------------------ -----------------------
Signature(s) and Title(s), if applicable
(SIGN IN THE BOX)
PLEASE FILL IN ONE OF THE BOXES SHOWN USING BLACK OR BLUE INK OR NUMBER 2
PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF THE B.B. FUND.
THE BOARD OF TRUSTEES OF THE B.B. TRUST RECOMMENDS A VOTE FOR THE PROPOSAL
BELOW. THE SHARES REPRESENTED HEREBY WILL BE VOTED AS INDICATED BELOW OR FOR THE
PROPOSAL IF NO CHOICE IS INDICATED.
Vote on Proposal For Against Abstain
---------------- --- ------- -------
To approve a proposed Agreement and Plan of Reorganization
and Liquidation between the B.B. Micro-Cap Growth Fund (the [ ] [ ] [ ]
"B.B. Fund"), a series of The B.B. Funds and the GAMCO
Westwood Mighty Mites(SM) Fund (the "Mighty Mites Fund"), a
series of the GAMCO Westwood Funds, which contemplates the
transfer to the Mighty Mites Fund of all the assets and
known and disclosed liabilities of the B.B. Fund in exchange
for Class AAA Shares of the Mighty Mites Fund and the
distribution of such shares to the shareholders of the B.B.
Fund, the liquidation and dissolution of the B.B. Fund, and
the termination of the B.B. Trust's registration under the
Investment Company Act of 1940, as amended.
In their discretion, the proxies are authorized to vote on such other business
as may properly come before the meeting or any adjournment(s) thereof.
PLEASE SIGN ON REVERSE SIDE
APPENDIX A
EXECUTION VERSION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION
AGREEMENT AND PLAN OF REORGANIZATION AND LIQUIDATION (the "Agreement")
dated this 28th day of November, 2008, by and between the B.B. Micro-Cap Growth
Fund (formerly the Bjurman, Barry Micro-Cap Growth Fund), a series of The B.B.
Funds (formerly The Bjurman, Barry Funds) (the "Acquired Fund"), a Delaware
statutory trust, and the GAMCO Westwood Mighty Mites(SM) Fund, a series of the
GAMCO Westwood Funds (the "Acquiring Fund"), a Massachusetts business trust.
Teton Advisors, Inc. ("Teton"), a Delaware corporation, is a party to this
Agreement with respect to Section 14(b) hereof only.
WITNESSETH:
WHEREAS, the parties are each open-end investment management
companies; and
WHEREAS, the parties hereto desire to provide for the acquisition by
the Acquiring Fund of all of the assets and known and disclosed liabilities of
the Acquired Fund solely in exchange for the Class AAA shares of beneficial
interest (par value $.001) ("Class AAA Shares") of the Acquiring Fund, which
Class AAA Shares of the Acquiring Fund will thereafter be distributed by the
Acquired Fund pro rata to its shareholders in complete liquidation and complete
cancellation of its shares;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. The parties hereto hereby adopt this Agreement, pursuant to section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code") as follows:
the reorganization will be comprised of the acquisition by the Acquiring Fund of
all of the properties, assets and known and disclosed liabilities of the
Acquired Fund, which will be retained by the Acquiring Fund for the benefit of
its shareholders, solely in exchange for Class AAA Shares of the Acquiring Fund,
followed by the distribution of such Acquiring Fund Class AAA Shares to the
shareholders of the Acquired Fund in exchange for their shares of the Acquired
Fund, and the liquidation and dissolution of the Acquired Fund all upon and
subject to the terms of the Agreement hereinafter set forth.
The share transfer books of the Acquired Fund will be permanently
closed on the Valuation Date (as hereinafter defined) and only redemption
requests made by shareholders of the Acquired Fund pursuant to Section 22(e) of
the Investment Company Act of 1940 (the "Act") received in proper form on or
prior to the close of business on the Valuation Date shall be fulfilled by the
Acquired Fund; redemption requests received by the Acquired Fund after that date
shall be treated as requests for the redemption of the Class AAA Shares of the
Acquiring Fund to be distributed to the shareholder in question as provided in
Section 5.
2. On the Closing Date (as hereinafter defined), all of the assets and
known and disclosed liabilities of the Acquired Fund on that date shall be
delivered to the Acquiring Fund; and the number of Class AAA Shares of the
Acquiring Fund having an aggregate net asset value equal to the value of the net
assets of the Acquired Fund will be transferred and delivered to the Acquired
Fund.
3. The net asset value of Class AAA Shares of the Acquiring Fund and
the value of the net assets of the Acquired Fund to be transferred shall in each
case be determined as of the
close of business of the New York Stock Exchange on the Valuation Date. The
computation of the net asset value of the Class AAA Shares of the Acquiring Fund
and the shares of the Acquired Fund shall be done in the manner used by the
Acquiring Fund and the Acquired Fund, respectively, in the computation of such
net asset value per share as set forth in their respective prospectuses. The
methods used by the Acquiring Fund in such computation shall be applied to the
valuation of the assets of the Acquired Fund to be transferred to the Acquiring
Fund.
The Acquired Fund shall declare and pay, immediately prior to the
Valuation Date, a dividend or dividends which, together with all previous such
dividends, shall have the effect of distributing to the Acquired Fund's
shareholders all of the Acquired Fund's investment company taxable income as
defined in Section 852(b) of the Code for taxable years ending on or prior to
the Closing Date (computed without regard to any deduction for dividends paid)
and all of its net capital gain, if any, realized in taxable years ending on or
prior to the Closing Date (after reduction for any capital loss carryforward)
(the "RIC dividend").
4. The closing shall be at the office of Teton at One Corporate
Center, Rye, New York 10580, at 10:00 a.m., Eastern Time on April 24, 2009, or
at such other time, date or place as the parties may designate or as provided
below (the "Closing Date"). The business day preceding the Closing Date is
herein referred to as the "Valuation Date."
In the event that on the Valuation Date either party has, pursuant to
the Act or any rule, regulation or order thereunder, suspended the redemption of
its shares or postponed payment therefor, the Closing Date shall be postponed
until the first business day after the date when both parties have ceased such
suspension or postponement; PROVIDED, HOWEVER, that if such suspension shall
continue for a period of 60 days beyond the Valuation Date, then the other party
to this Agreement shall be permitted to terminate this Agreement without
liability to either party for such termination.
5. As soon as practicable after the Closing Date, the Acquired Fund
shall distribute on a PRO RATA basis to those persons who were shareholders of
the Acquired Fund as of the close of business on the Valuation Date the Class
AAA Shares of the Acquiring Fund received by the Acquired Fund pursuant to the
Agreement in liquidation and cancellation of the outstanding shares of the
Acquired Fund. For the purpose of the distribution by the Acquired Fund of such
Class AAA Shares of the Acquiring Fund to its shareholders, the Acquiring Fund
will promptly cause its transfer agent to: (a) credit an appropriate number of
Class AAA Shares of the Acquiring Fund, on the books of the Acquiring Fund, to
each shareholder of the Acquired Fund, in accordance with a list (the
"Shareholder List") of its shareholders received from the Acquired Fund; and (b)
confirm an appropriate number of Class AAA Shares of the Acquiring Fund to each
shareholder of the Acquired Fund. No certificates for Class AAA Shares of the
Acquiring Fund will be issued in connection with the reorganization contemplated
hereby.
The Shareholder List shall indicate, as of the close of business on
the Valuation Date, the name and address of each shareholder of the Acquired
Fund, indicating his or her share balance. The Acquired Fund agrees to supply
the Shareholder List to the Acquiring Fund not later than the Closing Date.
6. As soon as practicable, and in any event within one year after the
closing, the Acquired Fund shall (a) effect its dissolution with the proper
state authorities, terminate its registration under the Act and file a final
annual report on Form N-SAR with the Securities and Exchange Commission under
that Act; and (b) either pay or make provision for payment of all of its
liabilities not transferred to the Acquiring Fund, if any, and taxes, if any.
2
7. Subsequent to the date of approval by shareholders of the Acquired
Fund of the transactions contemplated by this Agreement and prior to the Closing
Date, there shall be coordination between the parties as to their respective
portfolios so that, after the closing, the Acquiring Fund will be in compliance
with all of its investment policies and restrictions. At the time of delivery of
portfolio securities for examination as provided in Section 8, the Acquired Fund
shall deliver to the Acquiring Fund two copies of a list setting forth the
securities then owned by the Acquired Fund and the respective adjusted federal
income tax basis thereof, including any additional information relevant to the
characterization of such securities or distributions thereon in the hands of the
Acquiring Fund.
8. Portfolio securities or written evidence acceptable to the
Acquiring Fund of record ownership thereof by The Depository Trust Company or
through the Federal Reserve Book Entry System or any other depository approved
by the Acquired Fund pursuant to Rule 17f-4 under the Act shall be presented by
the Acquired Fund to the Acquiring Fund or, at its request, to its custodian,
for examination no later than five business days preceding the Closing Date, and
shall be delivered, or transferred by appropriate transfer or assignment
documents, by the Acquired Fund on the Closing Date to the Acquiring Fund, duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof in accordance with the custom of brokers and shall be
accompanied by all necessary state transfer stamps, if any, or a check for the
appropriate purchase price thereof. The cash delivered, if any, shall be in the
form of certified or bank cashiers checks or by bank wire payable to the order
of the Acquiring Fund. The number of Class AAA Shares (to the nearest whole
share) of the Acquiring Fund being delivered against the securities and cash of
the Acquired Fund, registered in the name of the Acquired Fund, shall be
delivered to the Acquired Fund on the Closing Date. Such Class AAA Shares shall
thereupon be assigned by the Acquired Fund to its shareholders so that the Class
AAA Shares of the Acquiring Fund may be distributed as provided in Section 5.
If, at the Closing Date, the Acquired Fund is unable to make delivery
under this Section 8 to the Acquiring Fund of any of its portfolio securities or
cash for the reason that any of such securities purchased by the Acquired Fund,
or the cash proceeds of a sale of portfolio securities, prior to the Closing
Date have not yet been delivered to it or the Acquired Fund's custodian, then
the delivery requirements of this Section 8 with respect to said undelivered
securities or cash will be waived and the Acquired Fund will deliver to the
Acquiring Fund by or on the Closing Date and with respect to said undelivered
securities or cash executed copies of an agreement or agreements of assignment
in a form reasonably satisfactory to the Acquiring Fund, together with such
other documents, including a due bill or due bills and brokers' confirmation
slips as may reasonably be required by the Acquiring Fund.
9. The Acquired Fund will use its best efforts to discharge all known
liabilities, so far as may be possible, prior to the Closing Date. The Acquiring
Fund shall assume only those liabilities, expenses, costs, charges and reserves
reflected on a Statement of Assets and Liabilities of the Acquired Fund,
prepared on behalf of the Acquired Fund, as of the Valuation Date, in accordance
with generally accepted accounting principles consistently applied from the
prior audit period. The Acquiring Fund shall also assume any known or disclosed
liabilities incurred by or on behalf of the Acquired Fund specifically arising
from or relating to the operations and/or transactions of the Acquired Fund
prior to and including the Valuation Date which are not reflected on the
Statement of Assets and Liability of the Acquired Fund described herein.
10. The obligations of the Acquiring Fund hereunder shall be subject
to the following conditions:
3
A. The Board of Trustees of the Acquired Fund shall have authorized
the execution of this Agreement and the shareholders of the Acquired Fund shall
have approved the transactions contemplated herein, and the Acquired Fund shall
have furnished to the Acquiring Fund copies of resolutions to that effect; such
shareholder approval shall have been by the vote of the holders of a majority of
the outstanding voting securities of the Acquired Fund entitled to vote at a
meeting for which proxies have been solicited by the combined proxy statement
and prospectus, as amended, which shall include any prospectus and/or report to
shareholders of the Acquiring Fund that is included with the materials mailed to
shareholders of the Acquired Fund (the "Combined Proxy Statement/Prospectus").
B. The Acquiring Fund shall have received an opinion from Paul,
Hastings, Janofsky & Walker LLP, dated the Closing Date, to the effect that (i)
the Acquired Fund is a validly existing Delaware statutory trust under the laws
of Delaware with full trust powers to carry on its business as then being
conducted and to enter into and perform this Agreement; and (ii) all trust
action necessary to make this Agreement, according to its terms, valid, binding
and enforceable on the Acquired Fund and to authorize effectively the
transactions contemplated by this Agreement have been taken by the Acquired
Fund. Such counsel shall be entitled to rely on the opinion of special Delaware
counsel with respect to matters of Delaware statutory trust law in rendering
their opinion.
C. The representations and warranties of the Acquired Fund contained
herein shall be true and correct at and as of the Closing Date.
D. On the Closing Date, the Acquired Fund shall have provided to the
Acquiring Fund the amount of the capital loss carry-over, net operating loss,
and net unrealized appreciation or depreciation, if any, with respect to the
Acquired Fund as of the Closing Date.
E. A registration statement filed by the Acquiring Fund solely under
the Securities Act of 1933 on Form N-14 and containing the Combined Proxy
Statement/Prospectus shall have become effective under that Act.
F. The Acquiring Fund shall have received an opinion, dated the
Closing Date, of Paul, Hastings, Janofsky & Walker LLP, to the same effect as
the opinion contemplated by Section 11D of this Agreement.
11. The obligations of the Acquired Fund hereunder shall be subject to
the following conditions:
A. The shareholders of the Acquired Fund shall have approved the
transactions contemplated by this Agreement.
B. The Acquired Fund shall have received an opinion from Paul,
Hastings, Janofsky & Walker LLP, dated the Closing Date, to the effect that (i)
the Acquiring Fund is a validly existing Massachusetts business trust under the
laws of Massachusetts with full corporate powers to carry on its business as
then being conducted and to enter into and perform this Agreement; (ii) all
corporate action necessary to make this Agreement, according to its terms,
valid, binding and enforceable upon the Acquiring Fund and to authorize
effectively the transactions contemplated by this Agreement have been taken by
the Acquiring Fund, and (iii) the Class AAA Shares of the Acquiring Fund to be
issued hereunder are duly authorized and when issued will be validly issued,
fully-paid and non-assessable. Such counsel shall be entitled to rely on the
opinion of special Massachusetts counsel with respect to matters of
Massachusetts business trust law in rendering their opinion.
4
C. The representations and warranties of the Acquiring Fund contained
herein shall be true and correct at and as of the Closing Date, and the Acquired
Fund shall have been furnished with a certificate of the President, Secretary or
Treasurer of the Acquiring Fund to that effect, dated the Closing Date.
D. The Acquired Fund shall have received an opinion from Paul,
Hastings, Janofsky & Walker LLP to the effect that, subject to the
representations of the Acquired Fund herein, to be delivered on the Closing
Date, for federal income tax purposes:
(a) The Acquired Fund's transfer of all of its assets and
liabilities, if any, to the Acquiring Fund solely in exchange for Class AAA
Shares of the Acquiring Fund, followed by the Acquired Fund's distribution of
Class AAA Shares of the Acquiring Fund to the Acquired Fund's shareholders as
part of the liquidation of the Acquired Fund will qualify as a tax-free
"reorganization" within the meaning of Section 368(a)(1)(C) of the Code. The
Acquired Fund and the Acquiring Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by the shareholders
of the Acquired Fund upon the exchange of shares of the Acquired Fund for the
Class AAA Shares of the Acquiring Fund (Section 354(a) of the Code);
(c) The Acquired Fund will not recognize gain or loss under
the provisions of the Code upon the transfer of all of its assets and
liabilities, if any, to the Acquiring Fund solely in exchange for Class AAA
Shares of the Acquiring Fund (Sections 361(a) and 357(a) of the Code);
(d) The Acquiring Fund will not recognize gain or loss upon
its receipt of all of the Acquired Fund's assets and liabilities, if any, solely
in exchange for Class AAA Shares of the Acquiring Fund (Section 1032(a) of the
Code);
(e) The basis of the Class AAA Shares of the Acquiring Fund
received by the shareholders of the Acquired Fund will be the same as the basis
in the shares of the Acquired Fund surrendered in exchange therefor (Section
358(a)(1) of the Code);
(f) The holding period of the Class AAA Shares of the
Acquiring Fund received in exchange for Acquired Fund shares by the shareholders
of the Acquired Fund will include the period that the shareholders of the
Acquired Fund held the Acquired Fund shares surrendered in exchange therefor,
provided that such Acquired Fund shares are held by the shareholders as capital
assets on the date of the exchange (Section 1223(1) of the Code);
(g) The tax basis of the Acquired Fund's assets acquired by
the Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the transaction (Section 362(b) of the Code);
and
(h) The holding period of the assets of the Acquired Fund in
the hands of the Acquiring Fund will include the period during which those
assets were held by the Acquired Fund (Section 1223(2) of the Code).
E. A registration statement filed by the Acquiring Fund under the
Securities Act of 1933 on Form N-14, containing the Combined Proxy
Statement/Prospectus shall have become effective under that Act.
5
12. The Acquired Fund hereby represents and warrants that:
(a) The Board of Trustees of the Acquired Fund shall have
authorized the execution of this Agreement;
(b) The financial statements of the Acquired Fund as of
March 31, 2008, heretofore furnished to the Acquiring Fund, present fairly the
financial position, results of operations, changes in net assets, and total
liabilities of the Acquired Fund as of that date, in conformity with accounting
principles generally accepted in the United States of America applied on a basis
consistent with the preceding year; and that from March 31, 2008, through the
date hereof, there have not been, and through the Closing Date there will not
be, any material adverse change in the business or financial condition of the
Acquired Fund, it being agreed that a decrease in the size of the Acquired Fund
due to a diminution in the value of its portfolio and/or redemption of its
shares shall not be considered a material adverse change;
(c) The prospectus contained in the Acquired Fund's
registration statement under the Act and the Securities Act of 1933, dated
August 1, 2008, as amended and supplemented, is true, correct and complete,
conforms to the requirements of the Act and the Securities Act of 1933 and does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Acquired Fund's registration statement, as amended, was, as
of the date of the filing of the last post-effective amendment, true, correct
and complete, conformed to the requirements of the Act and the Securities Act of
1933 and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) There is no material contingent liability of the
Acquired Fund and no material legal, administrative, or other proceedings or
investigations pending or, to the knowledge of the Acquired Fund, threatened
against the Acquired Fund, not reflected in such prospectus;
(e) There are no material contracts outstanding to which the
Acquired Fund is a party other than those ordinary in the conduct of its
business;
(f) The Acquired Fund is a validly existing Delaware
statutory trust;
(g) All federal and other tax returns and reports of the
Acquired Fund required by law to be filed have been filed, and all federal and
other taxes shown as due on said returns and reports have been paid or provision
shall have been made for the payment thereof and to the best of the knowledge of
the Acquired Fund no such return is currently under audit and no assessment has
been asserted with respect to such returns and to the extent such tax returns
with respect to the taxable year of the Acquired Fund ended March 31, 2009, have
not been filed, such returns will be filed when required and the amount of tax
shown as due thereon shall be paid when due;
(h) The Acquired Fund has elected to be treated as a
regulated investment company beginning with its first taxable year and, for each
fiscal year of its operations, the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification and treatment as a regulated
investment company and the Acquired Fund intends to meet such requirements with
respect to its current taxable year. The Acquired Fund is an investment company
6
within the meaning of Section 368(a)(2)(F)(i) and (iii) of the Code and
satisfies the diversification requirements of Section 368(a)(2)(F)(ii). Not more
than 25 percent of the value of the Acquired Fund's total assets is invested in
the stock and securities of any one issuer, the stock of two or more controlled
issuers in the same or similar trades or businesses or related trades or
businesses, or qualified publicly traded partnerships, and not more than 50
percent of the value of the Acquired Fund's total assets is invested in the
stock and securities of five or fewer issuers;
(i) The Acquired Fund will transfer to the Acquiring Fund
assets representing at least 90 percent of the fair market value of the net
assets and 70 percent of the gross assets held by the Acquired Fund immediately
prior to the transaction. In calculating these percentages, all redemptions and
distributions (other than distributions required pursuant to Section 22(e) of
the Act or to enable the Acquired Fund to qualify as a regulated investment
company) made by the Acquired Fund immediately prior to the transfer and which
are part of the plan of reorganization will be considered as assets held by the
Acquired Fund immediately prior to the transfer;
(j) To the knowledge of the Acquired Fund, there is no plan
or intention by the shareholders of the Acquired Fund who own five percent or
more of the Fund's shares, and, to the best of the knowledge of management of
the Acquired Fund, there is no plan or intention on the part of the remaining
shareholders of the Acquired Fund to sell, exchange, or otherwise dispose of a
number of Class AAA Shares of the Acquiring Fund received in the transaction
that would reduce the Acquired Fund's shareholders' ownership of Class AAA
Shares of the Acquiring Fund to a number of Class AAA Shares having a value as
of the Closing Date of less than 50 percent of the value of all of the formerly
outstanding stock of the Acquired Fund as of the Closing Date. There are no
dissenters' rights in the transaction, and no cash will be exchanged for stock
of the Acquired Fund in lieu of fractional Class AAA Shares of the Acquiring
Fund. Shares of the Acquired Fund and Class AAA Shares of the Acquiring Fund
held by a shareholder of the Acquired Fund and otherwise sold, redeemed, or
disposed of prior or subsequent to the transaction will be considered in making
this representation;
(k) The Acquired Fund will distribute the Class AAA Shares
of the Acquiring Fund and any other property it receives in this transaction,
and its other properties, in pursuance of this Agreement;
(l) The Acquired Fund's liabilities assumed by the Acquiring
Fund and the liabilities to which the transferred assets of the Acquired Fund
are subject were incurred in the ordinary course of its business;
(m) The Acquired Fund is not under the jurisdiction of a
court in a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code;
(n) As soon as practicable, but in no event later than 12
months following the date that all of the assets are transferred to the
Acquiring Fund, the Acquired Fund will be liquidated and dissolved under state
law;
(o) The fair market value of the assets of the Acquired Fund
transferred to the Acquiring Fund will equal or exceed the sum of the
liabilities assumed by the Acquiring Fund plus the amount of liabilities, if
any, to which the transferred assets are subject;
(p) The sum of the liabilities of the Acquired Fund to be
assumed by the Acquiring Fund and the expenses of the transaction do not and
will not exceed twenty percent
7
of the fair market value of the assets of the Acquired Fund on the Valuation
Date or the Closing Date;
13. The Acquiring Fund hereby represents and warrants that:
(a) The Board of Trustees of the Acquiring Fund shall have
authorized the execution of this Agreement and the transactions contemplated
hereby, and shall have furnished to the Acquired Fund copies of resolutions to
that effect;
(b) The financial statements of the Acquiring Fund as of
September 30, 2008, heretofore furnished to the Acquired Fund, present fairly
the financial position, results of operations, and changes in net assets of the
Acquiring Fund, as of that date, in conformity with accounting principles
generally accepted in the United States of America applied on a basis consistent
with the preceding year; and that from September 30, 2008, through the date
hereof, there have not been, and through the Closing Date there will not be, any
material adverse changes in the business or financial condition of the Acquiring
Fund, it being understood that a decrease in the size of the Acquiring Fund due
to a diminution in the value of its portfolio and/or redemption of its Class AAA
Shares shall not be considered a material or adverse change;
(c) The prospectus contained in the Acquiring Fund's
registration statement under the Act and the Securities Act of 1933, dated
January 28, 2008, as amended and supplemented, is true, correct and complete,
conforms to the requirements of the Act and the Securities Act of 1933 and does
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Acquiring Fund's registration statement, as amended, was, as
of the date of the filing of the last post-effective amendment, true, correct
and complete, conformed to the requirements of the Act and the Securities Act of
1933 and did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) There is no material contingent liability of the
Acquiring Fund and no material, legal, administrative, or other proceedings or
investigations pending or, to the knowledge of the Acquiring Fund, threatened
against the Acquiring Fund, not reflected in such prospectus;
(e) There are no material contracts outstanding to which the
Acquiring Fund is a party other than those ordinary in the conduct of its
business and there are no outstanding options or rights to acquire its Class AAA
Shares;
(f) The Acquiring Fund is a validly existing Massachusetts
business trust; has all necessary and material federal, state and local
authorizations to own all its properties and assets and to carry on its business
as now being conducted; the Class AAA Shares of the Acquiring Fund which the
Acquiring Fund issues to the Acquired Fund pursuant to this Agreement will be
duly authorized, validly issued, fully-paid and non-assessable; will conform to
the description thereof contained in the Acquiring Fund's registration
statement, and will be duly registered under the Securities Act of 1933 and the
states where registration is required; and the Acquiring Fund is duly registered
under the Act and such registration has not been revoked or rescinded and is in
full force and effect;
(g) All federal and other tax returns and reports of the
Acquiring Fund required by law to be filed have been filed, and all federal and
other taxes shown due on said
8
returns and reports have been paid or provision shall have been made for the
payment thereof and to the best of the knowledge of the Acquiring Fund no such
return is currently under audit and no assessment has been asserted with respect
to such returns and to the extent such tax returns with respect to the taxable
year of the Acquiring Fund ended September 30, 2008, have not been filed, such
returns will be filed when required and the amount of tax shown as due thereon
shall be paid when due;
(h) The Class AAA Shares of the Acquiring Fund constitute
voting stock for purposes of Sections 368(a)(1)(C) and 368(c) of the Code;
(i) The Acquiring Fund has elected to be treated as a
regulated investment company and, for each fiscal year of its operations, it has
met the requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and it intends to meet such requirements with
respect to its current taxable year. The Acquiring Fund is an investment company
that meets the requirements of a regulated investment company as defined in
Section 368(a)(2)(F)(i) of the Code. Not more than 25 percent of the value of
the Acquiring Fund's total assets is invested in the stock and securities of any
one issuer, and not more than 50 percent of the value of the Acquiring Fund's
total assets is invested in the stock and securities of five or fewer issuers;
(j) The Acquiring Fund has no plan or intention (i) to sell
or dispose of any of the assets transferred by the Acquired Fund, except for
dispositions made in the ordinary course of business or dispositions necessary
to maintain its status as a regulated investment company or (ii) to redeem or
reacquire any of the shares issued by it, except in the ordinary course of
business;
(k) After consummation of the transactions contemplated by
the Agreement, the Acquiring Fund will continue to operate its business in a
substantially unchanged manner;
(l) Following the transaction, the Acquiring Fund will
continue the historic business of the Acquired Fund or use a significant portion
of the Acquired Fund's historic business assets in a business; and
(m) The Acquiring Fund does not own, directly or indirectly,
nor has it owned during the past five years directly or indirectly, any Class
AAA Shares of the Acquiring Fund.
14. Each party hereby represents to the other that no broker or finder
has been employed by it with respect to this Agreement or the transactions
contemplated hereby. Each party also represents and warrants to the other that
the information concerning it in the Combined Proxy Statement/Prospectus will
not, as of its date, contain any untrue statement of a material fact or omit to
state a fact necessary to make the statements concerning it therein not
misleading and that the financial statements concerning it will present the
information shown fairly in accordance with generally accepted accounting
principles consistently applied. Each party also represents and warrants to the
other that this Agreement is valid, binding and enforceable in accordance with
the terms and that the execution, delivery and performance of this Agreement
will not result in any violation of, or be in conflict with, any provision of
any charter, by-laws, contract, agreement, judgment, decree or order to which it
is subject or to which it is a party. The Acquiring Fund hereby represents to
and covenants with the Acquired Fund that, if the reorganization becomes
effective, the Acquiring Fund will treat each shareholder of the Acquired Fund
who received any of the Class AAA Shares of the Acquiring Fund as a result of
the reorganization as having made the minimum initial purchase of Class
9
AAA Shares of the Acquiring Fund received by such shareholder for the purpose of
making additional investments in Class AAA Shares, regardless of the value of
the Class AAA Shares of the Acquiring Fund received. Each party hereby further
represents and warrants that:
(a) The fair market value of the Class AAA Shares of the
Acquiring Fund received by each shareholder of the Acquired Fund will be
approximately equal to the fair market value of the shares of the Acquired Fund
surrendered in the exchange;
(b) Teton, the Acquiring Fund's investment adviser, will (i)
bear the expenses of the Acquired Fund's shareholder meeting with respect to the
reorganization contemplated hereby, including legal, proxy and solicitation
expenses, (ii) reimburse the Acquired Fund for its legal fees incurred from
October 22, 2008, through November 28, 2008, up to a maximum of $10,000, with
respect to the preparation of a letter agreement and retention of Teton as the
interim investment adviser to the Acquired Fund, and (iii) bear any expenses
payable by the Acquired Fund in connection with the Acquired Fund's current
accounting, administration, transfer agency and/or custodian agreements
triggered by the termination of any such agreements in connection with said
reorganization; and
(c) There is no intercorporate indebtedness existing between
the Acquired Fund and the Acquiring Fund that was issued, acquired, or will be
settled at a discount.
15. The Acquiring Fund agrees that it will prepare and file a
registration statement under the Securities Act of 1933 on Form N-14 and which
shall contain the Combined Proxy Statement and Prospectus contemplated by Rule
145 under the Securities Act of 1933. Each party agrees that it will use its
best efforts to have such registration statement declared effective and to
supply such information concerning itself for inclusion in the Combined Proxy
Statement/Prospectus as may be necessary or desirable in this connection.
16. The obligations of the parties under this Agreement shall be
subject to the right of either party to abandon and terminate this Agreement
without liability if the other party breaches any material provision of this
Agreement or if any material legal, administrative or other proceeding shall be
instituted or threatened between the date of this Agreement and the Closing Date
(i) seeking to restrain or otherwise prohibit the transactions contemplated
hereby and/or (ii) asserting a material liability of either party not disclosed
on the date hereof, which proceeding has not been terminated or the threat
thereof removed prior to the Closing Date.
17. All prior or contemporaneous agreements and representations
(written or oral) are merged into this Agreement, which constitutes the entire
contract between the parties hereto and may not be changed or terminated orally.
18. This Agreement may be amended, modified or supplemented in writing
at any time by mutual consent of the parties hereto, notwithstanding approval
hereof by the shareholders of the Acquired Fund, provided that no such amendment
shall have a material adverse effect on the interests of such shareholders
without their further approval.
19. At any time prior to the Closing Date, the parties may waive
compliance with any of the provisions made for its benefit contained herein by
executing a written acknowledgement of such waiver.
10
20. Except as specified in the next sentence set forth in this
paragraph 20, the representations, warranties or covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the reorganization. The covenants to be performed after the
Closing Date shall survive the closing.
21. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to principles of
conflicts of laws.
22. Any notice, report, statement or demand required or permitted by
any provision of this Agreement shall be in writing and shall be delivered by
personal delivery, commercial delivery service or registered or certified mail,
return receipt requested, or sent by telefacsimile, and addressed as follows:
11
To the Acquired Fund:
The Bjurman, Barry Funds
c/o Michael D. LeRoy, Chairman of the Board
301 North Lake Avenue
Suite 920
Pasadena, California 91101
(626) 793-3631 (fax)
With a copy to: Michael Glazer
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, California 90071
(213) 996-3207 (fax)
To the Acquiring Fund or Teton:
GAMCO Westwood Funds
OR
Teton Advisors, Inc.
Attention: Jeffrey M. Farber
One Corporate Center
Rye, New York 10580
(914) 921-5384 (fax)
With a copy to: Michael R. Rosella, Esq.
Paul, Hastings, Janofsky & Walker LLP
75 East 55th Street
New York, New York 10022
(212) 319-4090
23. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, but all taken together shall constitute one
Agreement. The rights and obligations of each party pursuant to this Agreement
shall, however, not be assignable.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
12
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed and attested by its officers thereunto duly authorized on the date
first set forth above.
THE B.B. FUNDS
on behalf of the B.B. Micro-Cap
Growth Fund
By: /s/ M. DAVID COTTRELL
------------------------------------
Name: M. David Cottrell
Title: Treasurer
GAMCO WESTWOOD FUNDS
on behalf of the GAMCO Westwood
Mighty Mites(SM) Fund
By: /s/ BRUCE N. ALPERT
------------------------------------
Name: Bruce N. Alpert
Title: President
TETON ADVISORS, INC.
(solely with respect to Section 14(b)
hereof)
By: /s/ JEFFREY F. FARBER
------------------------------------
Name: Jeffrey M. Farber
Title: Chief Financial Officer
13
APPENDIX B
INVESTMENT RESTRICTIONS AND LIMITATIONS
FUNDAMENTAL POLICIES. The following is a comparison of the investment
restrictions and limitations of the B.B. Fund and Mighty Mites Fund. A
fundamental investment restriction is one that cannot be changed without
approval of the majority of outstanding shareholders.
B.B. FUND MIGHTY MITES FUND
------------------------------------------------ -----------------------------------------
INVESTMENT RESTRICTIONS Except as set forth in the Prospectus, the Fund The Fund, except as otherwise indicated,
("*" indicates a fundamental may not: may not:
investment restriction)
* Purchase securities of any one issuer if, as * Purchase the securities of any issuer
a result of the purchase, more than 5% of if such purchase would cause more
the B.B. Fund's total assets would be than 5% of the value of its total
invested in securities of that issuer or the assets to be invested in securities
Fund would own or hold more than 10% of the of such issuer. This restriction
outstanding voting securities of that applies only with respect to 75% of
issuer, except that up to 15% of the B.B. the Mighty Mites Fund's total assets.
Fund's total assets may be invested without For purposes of this restriction,
regard to this limitation, and except that these limitations do not apply with
this limit does not apply to securities respect to securities issued by the
issued or guaranteed by the U.S. government, U.S. government, its agencies, or
its agencies and instrumentalities or to instrumentalities;
securities issued by other investment
companies;
* Purchase the securities of any issuer
if such purchase would cause the Fund
to hold more than 10% of the
outstanding voting securities of such
issuer. This restriction applies only
with respect to 75% of the Mighty
Mites Fund's total assets;
* Purchase or retain the securities of
any issuer if the officers or
Trustees of the Mighty Mites Fund or
the officers or Directors of the
Adviser who individually own
beneficially more than 1/2 of 1% of
the securities of such issuer
together own beneficially more than
5% of the securities of such issuer;
* Purchase any security if, as a result of the
purchase, 15% or more of the B.B. Fund's
total assets would be invested in securities
of issuers having their principal business
activities in the same industry, except that
this limitation does not apply to securities
issued or guaranteed by the U.S. government,
its agencies or
instrumentalities;
* Issue senior securities or borrow money, * Issue senior securities;
except as permitted under the 1940 Act and
then not in excess of one-third of the B.B.
Fund's total assets (including the amount of
the senior securities issued but reduced by
any liabilities not constituting senior
securities) at the time of the issuance or
borrowing, except that the B.B. Fund may
borrow up to an additional 5% of its total
assets (not including the amount borrowed)
for temporary or emergency purposes; the
B.B. Fund will not purchase securities when
borrowings exceed 5% of its total assets;
* Pledge, hypothecate, mortgage or otherwise * Borrow money or pledge, mortgage, or
encumber its assets, except in an amount up hypothecate its assets, except as
to one-third of the value of the B.B. Fund's described in the Statement of
net assets but only to secure borrowing for Additional Information ("SAI") and in
temporary or emergency purposes, such as to connection with entering into futures
effect redemptions; contracts, but the deposit of assets
in escrow in connection with the
writing of covered call options and
the purchase of securities on a
when-issued or delayed-delivery basis
and collateral arrangements with
respect to initial or variation
margins for futures contracts will
not be deemed to be pledges of the
Mighty Mites Fund's assets;
* Engage in the business of underwriting the * Act as an underwriter of securities
securities of others, except to the extent of other issuers;
that the B.B. Fund might be considered an
underwriter under the Federal securities
laws in connection with its disposition of
securities;
* Purchase or sell real estate, except that * Purchase, hold, or deal in real
investments in securities of issuers that estate, or oil and gas interests, but
invest in real estate or other instruments the Mighty Mites Fund may purchase
supported by interests in real estate are and sell securities that are secured
not subject to this limitation, and except by real estate and may purchase and
that the B.B. Fund may exercise rights under sell securities issued by companies
agreements relating to such securities, that invest or deal in real estate;
including the right to enforce security
interests to hold real estate acquired by
reason of such enforcement
2
until that real estate can be liquidated in
an orderly manner;
Invest in oil, gas or mineral exploration or
development programs or leases, except that
direct investment in securities of issuers that
invest in such programs or leases and investments
in asset-backed securities supported by
receivables generated by such programs or leases
are not subject to this prohibition;
Invest in commodities or commodity contracts, * Purchase, hold, or deal in
except that the B.B. Fund may invest in futures commodities or commodity contracts,
contracts; but the Mighty Mites Fund may engage
in transactions involving futures
contracts and related options,
including the futures and related
options transactions as described in
the SAI;
Invest in companies for the purpose of * Invest in the securities of a company
exercising control or management; for the purpose of exercising
management or control, but the Mighty
Mites Fund will vote the securities
it owns in its portfolio as a
shareholder in accordance with its
views;
Purchase securities on margin, except for * Purchase securities on margin, but
short-term credit necessary for clearance of the Mighty Mites Fund may obtain such
portfolio transactions; short-term credit as may be necessary
for the clearance of purchases and
sales of securities and the Mighty
Mites Fund may make margin payments
in connection with transactions in
options and futures;
Engage in uncovered short sales of securities or * The Mighty Mites Fund may not enter
maintain a short position; into repurchase agreements providing
for settlement in more than seven
Purchase securities of other investment days after notice, or purchase
companies except as permitted by the 1940 Act securities which are not readily
and the rules and regulations thereunder; marketable, if, in the aggregate,
more than 15% of the value of the
Mighty Mites Fund's net assets would
Invest more than 5% of their net assets in be so invested. Included in this
warrants, including within that amount no category are
3
more than 2% in warrants that are not listed on "restricted" securities and any other
the New York or American Stock Exchanges, except assets for which an active and
warrants acquired as a result of its holdings of substantial market does not exist at
common stocks. the time of purchase or subsequent
valuation. Restricted securities for
purposes of this limitation do not
include securities eligible for
resale pursuant to Rule 144A of the
Securities Act which have been
determined to be liquid pursuant to
procedures established by the Board
based upon the trading markets for
the securities;
* Enter into time deposits maturing in
more than seven days and time
deposits maturing from two business
days through seven calendar days will
not exceed 10% of the Mighty Mites
Fund's total assets;
* Purchase or sell put and call options
or combinations thereof, except as
set forth in the SAI;
* Invest more than 25% of its assets in
investments in any particular
industry or industries, provided
that, when the Mighty Mites Fund has
adopted a temporary defensive
posture, there shall be no limitation
on the purchase of obligations issued
or guaranteed by the U.S. government,
its agencies, or instrumentalities
and repurchase agreements in respect
of the foregoing.
Except for the Mighty Mites Fund's
limitations on investing in illiquid
securities, if a percentage restriction
is adhered to at the time of investment,
a later increase in percentage resulting
from a change in values or assets will
not constitute a violation of such
restriction.
4
PART B
STATEMENT OF ADDITIONAL INFORMATION
Relating to the acquisition of the assets of the
B.B. MICRO-CAP GROWTH FUND
a series of
THE B.B. FUNDS
by and in exchange for shares of the
GAMCO WESTWOOD MIGHTY MITES(SM) FUND
a series of
GAMCO WESTWOOD FUNDS
One Corporate Center
Rye, New York 10580-1422
1-800-GABELLI (422-3554)
This Statement of Additional Information, relating specifically to the
proposed acquisition of all of the assets of the B.B. Micro-Cap Growth Fund (the
"B.B. Fund"), a series of The B.B. Funds by the GAMCO Westwood Mighty MitesSM
Fund (the "Mighty Mites Fund"), a series of the GAMCO Westwood Funds, consists
of this cover page, pro forma financial statements and the following described
documents, each of which is incorporated by reference herein:
The Statement of Additional Information of the Mighty Mites Fund dated
January [__], 2009;
The Statement of Additional Information of the B.B. Fund dated August 1,
2008;
The Annual Report of the Mighty Mites Fund for the year ended September 30,
2008; and
The Annual Report of the B.B. Fund for the year ended March 31, 2008; and
the Semi-Annual Report of the B.B. Fund for the six months ended September 30,
2008.
This Statement of Additional Information is not a prospectus. A Combined
Proxy Statement/Prospectus dated [January ___], 2009, relating to the
above-referenced transaction has been filed with the Securities and Exchange
Commission and may be obtained, without charge, by writing to Teton Advisors,
Inc. at One Corporate Center, Rye, New York 10580-1422, or by calling toll free
1-800-GABELLI (422-3554). This Statement of Additional Information relates to,
and should be read in conjunction with, such Combined Proxy
Statement/Prospectus, and has been incorporated by reference into the Combined
Proxy Statement/Prospectus.
Shown below are financial statements for both the B.B. Fund and the Mighty
Mites Fund and Pro Forma financial statements for the combined fund at September
30, 2008, as though the proposed reorganization occurred as of that date. The
first table presents Statements of Assets and Liabilities (unaudited) for both
the B.B. Fund and the Mighty Mites Fund and Pro Forma figures for the combined
fund. The second table presents Statements of Operations (unaudited) for both
the B.B. Fund and the Mighty Mites Fund and Pro Forma figures for the combined
fund. The third table presents Portfolio of Investments (unaudited) for both the
B.B. Fund and the Mighty Mites Fund and
Pro Forma figures for the combined fund. The tables are followed by the Notes to
the Pro Forma Financial Statements (unaudited).
The date of this Statement of Additional Information is [January __], 2009.
2
PRO FORMA FINANCIAL STATEMENTS
Statements of Assets and Liabilities as of September 30, 2008 (Unaudited)
MIGHTY
MIGHTY MITES
MITES (PROFORMA)
FUND B.B. FUND ADJUSTMENTS COMBINED
----------- ------------ ----------- ------------
ASSETS:
Investments, at value (cost $67,456,376 and $117,326,962,
respectively) ............................................. $70,523,264 $165,143,920 (42,063,411) $193,603,773
Cash ......................................................... 921,922 1,874,314 2,796,236
Receivable for Fund shares sold .............................. 818,505 14,028 832,533
Receivable for investments sold .............................. 52,331 -- 52,331
Dividends and interest receivable ............................ 165,221 61,996 227,217
Prepaid expenses ............................................. 26,470 53,036 79,506
----------- ------------ ------------
TOTAL ASSETS ................................................. 72,507,713 167,147,294 197,591,596
----------- ------------ ------------
LIABILITIES:
Payable for collateral received on securities loaned ......... -- 42,063,411 (42,063,411) 0
Payable to Custodian ......................................... -- 27,137 27,137
Payable for investments purchased ............................ 4,371,700 -- 4,371,700
Payable for Fund shares redeemed ............................. 305,300 383,774 689,074
Payable for investment advisory fees ......................... 56,744 -- 56,744
Payable for distribution fees ................................ 18,254 27,789 46,043
Payable for accounting fees .................................. 7,501 32,983 40,484
Payable for legal and audit fees ............................. 37,005 -- 37,005
Payable for shareholder communications expenses .............. 13,798 -- 13,798
Payable for shareholder services fees ........................ 12,730 22,975 35,705
Other accrued expenses ....................................... 9,452 28,930 38,382
----------- ------------ ------------
TOTAL LIABILITIES ............................................ 4,832,484 42,586,999 5,356,072
----------- ------------ ------------
NET ASSETS ................................................... $67,675,229 $124,560,295 $192,235,524
=========== ============ ============
NET ASSETS CONSIST OF:
Paid-in capital, at $0.001 par value ......................... $63,178,669 $ 74,053,696 $137,232,365
Accumulated net investment income/(loss) ..................... (1,210) (879,447) (880,657)
Accumulated net realized gain/(loss) on investments and
foreign currency transactions .............................. 1,430,487 3,569,088 4,999,575
Net unrealized appreciation/(depreciation) on investments .... 3,066,888 47,816,958 50,883,846
Net unrealized appreciation on foreign currency
translations ............................................... 395 -- 395
----------- ------------ ------------
NET ASSETS ................................................... $67,675,229 $124,560,295 $192,235,524
=========== ============ ============
SHARES OF BENEFICIAL INTEREST:
CLASS AAA:
Net assets ................................................... $55,808,414 $124,560,295 $180,368,709
=========== ============ ============
Shares of beneficial interest outstanding; unlimited number of
shares authorized ......................................... 4,162,260 11,616,238 (2,328,184) 13,450,314
=========== ============ ============
NET ASSET VALUE, offering, and redemption price per share .... $ 13.41 $ 10.72 $ 13.41
=========== ============ ============
CLASS A:
Net assets ................................................... $ 6,133,856 $ 6,133,856
=========== ============
Shares of beneficial interest outstanding; unlimited number of
shares authorized ......................................... 462,468 462,468
=========== ============
NET ASSET VALUE and redemption price per share ............... $ 13.26 $ 13.26
=========== ============
Maximum offering price per share (NAV/.96, based on maximum
sales charge of 4.00% of the offering price) .............. $ 13.82 $ 13.82
=========== ============
CLASS B:
Net assets ................................................... $ 169,230 $ 169,230
=========== ============
Shares of beneficial interest outstanding; unlimited number of
shares authorized ......................................... 13,397 13,397
=========== ============
NET ASSET VALUE and offering price per share (a) ............. $ 12.63 $ 12.63
=========== ============
CLASS C:
Net assets ................................................... $ 4,671,186 $ 4,671,186
=========== ============
Shares of beneficial interest outstanding; unlimited number of
shares authorized ......................................... 372,231 372,231
=========== ============
NET ASSET VALUE and offering price per share (a) ............. $ 12.55 $ 12.55
=========== ============
CLASS I:
Net assets ................................................... $ 892,543 $ 892,543
=========== ============
Shares of beneficial interest outstanding; unlimited number of
shares authorized ......................................... 66,405 66,405
=========== ============
NET ASSET VALUE, offering, and redemption price per share .... $ 13.44 $ 13.44
=========== ============
(a) Redemption price varies based on the length of time held.
See accompanying Notes to Pro Forma Financial Statements (Unaudited).
Statements of Operations for the Twelve Months Ended September 30, 2008
(Unaudited)
MIGHTY
MIGHTY MITES
MITES (PROFORMA)
FUND B.B. FUND ADJUSTMENTS COMBINED
------------ ------------ ----------- ------------
INVESTMENT INCOME:
Dividends (net of foreign taxes of $4,108 and $0,
respectively) ............................................. $ 652,521 $ 673,719 $ 1,326,240
Interest ..................................................... 362,081 (338) 361,743
Interest from securities loaned .............................. -- 474,900 (474,900) 0
------------ ------------ -------- ------------
TOTAL INVESTMENT INCOME ...................................... 1,014,602 1,148,281 (474,900) 1,687,983
------------ ------------ -------- ------------
EXPENSES:
Investment advisory fees ..................................... 597,093 1,861,776 2,458,869
Distribution fees --Class AAA ................................ 126,255 465,443 591,698
Distribution fees --Class A .................................. 24,938 -- 24,938
Distribution fees --Class B .................................. 2,839 -- 2,839
Distribution fees --Class C .................................. 34,698 -- 34,698
Administration fees .......................................... 0 98,421 (98,421) 0
Accounting fees .............................................. 45,000 108,502 (108,502) 45,000
Custodian fees ............................................... 28,626 18,696 (8,686) 38,636
Interest expense ............................................. 264 -- 264
Legal and audit fees ......................................... 57,054 373,002 (315,000) 115,056
Registration expenses ........................................ 35,577 -- 35,577
Shareholder communications expenses .......................... 33,117 122,925 (61,463) 94,580
Shareholder services fees .................................... 63,882 110,994 (38,848) 136,028
Trustees' fees ............................................... 3,270 113,289 (107,000) 9,559
Miscellaneous expenses ....................................... 11,272 166,177 (100,000) 77,449
------------ ------------ -------- ------------
TOTAL EXPENSES ............................................... 1,063,885 3,439,225 (837,919) 3,665,191
------------ ------------ -------- ------------
LESS:
Expense reimbursements .................................... -- (138,777) (138,777)
Custodian fee credits ..................................... (679) -- (679)
------------ ------------ ------------
TOTAL REIMBURSEMENTS AND CREDITS .......................... (679) (138,777) (139,456)
------------ ------------ ------------
NET EXPENSES ................................................. 1,063,206 3,300,448 3,525,735
------------ ------------ ------------
NET INVESTMENT INCOME/(LOSS) ................................. (48,604) (2,152,167) 363,019 (1,837,752)
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain/(loss) on investments ...................... 1,926,273 17,095,102 19,021,375
Net realized loss on foreign currency transactions ........... (1,153) 0 (1,153)
------------ ------------ ------------
Net realized gain/(loss) on investments and foreign currency
transactions .............................................. 1,925,120 17,095,102 19,020,222
------------ ------------ ------------
Net change in unrealized appreciation/(depreciation) on
investments ............................................... (10,388,184) (62,795,157) (73,183,341)
Net change in unrealized appreciation/(depreciation) on
foreign currency translations ............................. (329) 0 (329)
------------ ------------ ------------
Net change in unrealized appreciation/(depreciation) on
investments and foreign currency translations ............. (10,388,513) (62,795,157) (73,183,670)
------------ ------------ ------------
NET REALIZED AND UNREALIZED (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY ....................... (8,463,393) (45,700,055) (54,163,448)
------------ ------------ ------------
NET (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....... $ (8,511,997) $(47,852,222) $(56,001,200)
============ ============ ============
See accompanying Notes to Pro Forma Financial Statements (Unaudited).
Portfolio of Investments as of September 30, 2008 (Unaudited)
MIGHTY MITES FUND B.B. FUND PROFORMA COMBINED
---------------------- ----------------------- -----------------------
COMMON STOCKS - 87.42% Shares Value Shares Value Shares Value
---------------------- ---------- ----------- ---------- ------------ ---------- ------------
AEROSPACE - 1.11%
Ducommun, Inc. $__________ 38,800 $ 926,544 38,800 $ 926,544
Herley Industries Inc.+ 45,500 778,050 45,500 778,050
Innovative Solutions & Support Inc. 500 2,730 500 2,730
Smith & Wesson Holding Corp.* 111,700 417,758 111,700 417,758
----------- ------------ ------------
780,780 1,344,302 2,125,082
----------- ------------ ------------
AGRICULTURE - 3.02%
J.G. Boswell Co. 225 157,500 225 157,500
Limoneira Co. 792 190,080 792 190,080
The Andersons, Inc.* 155,000 5,459,100 155,000 5,459,100
----------- ------------ ------------
347,580 5,459,100 5,806,680
----------- ------------ ------------
AUTOMOTIVE: PARTS AND ACCESSORIES - 2.09%
Amerigon, Inc.* 350,000 2,303,000 350,000 2,303,000
Amerityre Corp.+ 400 408 400 408
Earl Scheib Inc.+ 52,000 114,660 52,000 114,660
Midas Inc.+ 25,500 350,880 25,500 350,880
Proliance International Inc.+ 19,000 14,250 19,000 14,250
Puradyn Filter Technologies Inc. 2,000 640 2,000 640
Standard Motor Products Inc. 197,000 1,225,340 197,000 1,225,340
Strattec Security Corp. 300 7,926 300 7,926
----------- ------------ ------------
1,714,104 2,303,000 4,017,104
----------- ------------ ------------
AUTOMOTIVE: DEALERS - 0.43%
America's Car-Mart, Inc.* 44,700 830,973 44,700 830,973
------------ ------------
AVIATION: PARTS AND SERVICES - 2.97%
Air Methods Corp.* 170,000 4,812,700 170,000 4,812,700
Curtiss-Wright Corp. 800 36,360 800 36,360
Kaman Corp. 6,200 176,576 6,200 176,576
The Fairchild Corp., Cl. A+ 265,410 690,066 265,410 690,066
----------- ------------ ------------
903,002 4,812,700 5,715,702
----------- ------------ ------------
BROADCASTING - 0.52%
Acme Communications Inc.+ 65,000 61,750 65,000 61,750
Beasley Broadcast Group Inc., Cl. A 24,500 41,405 24,500 41,405
Citadel Broadcasting Corp.+ 50,000 39,000 50,000 39,000
Crown Media Holdings Inc., Cl. A+ 45,000 226,350 45,000 226,350
Equity Media Holdings Corp.+ 21,400 11,770 21,400 11,770
Fisher Communications Inc. 14,000 551,600 14,000 551,600
Granite Broadcasting Corp.+ 924 6,468 924 6,468
Gray Television Inc. 25,000 43,000 25,000 43,000
Salem Communications Corp., Cl. A+ 16,000 20,000 16,000 20,000
Young Broadcasting Inc., Cl. A+ 45,000 2,363 45,000 2,363
----------- ------------
1,003,706 1,003,706
----------- ------------
BUILDING AND CONSTRUCTION - 2.68%
Huttig Building Products Inc.+ 4,000 8,360 4,000 8,360
Material Sciences Corp.+ 6,000 34,500 6,000 34,500
Matrix Service Co. 258,700 4,941,170 258,700 4,941,170
The Monarch Cement Co. 6,400 172,800 6,400 172,800
----------- ------------ ------------
215,660 4,941,170 5,156,830
----------- ------------ ------------
BUSINESS SERVICES - 13.55%
AMICAS Inc.+ 250,000 600,000 250,000 600,000
ANC Rental Corp.+ 28,000 3 28,000 3
Ascent Media Corp., Cl. A+ 31,000 756,710 31,000 756,710
Chazak Value Corp.+ (a) 103 0 103 0
CyberSource Corp.* 400,000 6,444,000 400,000 6,444,000
Edgewater Technology Inc.+ 99,000 481,140 99,000 481,140
Healthcare Services Group, Inc.* 370,500 6,776,445 370,500 6,776,445
HMS Holdings Corp.* 260,000 6,229,600 260,000 6,229,600
The Hackett Group, Inc. 49,400 268,736 49,400 268,736
Multi-Color Corp. 165,000 3,941,850 165,000 3,941,850
Nashua Corp.+ 67,500 542,025 67,500 542,025
StarTek Inc.+ 500 3,210 500 3,210
----------- ------------ ------------
2,383,088 23,660,631 26,043,719
----------- ------------ ------------
CABLE - 0.04%
Adelphia Communications Corp., Cl. A+ (a) 90,000 0 90,000 0
Adelphia Communications Corp., Cl. A,
Escrow+ (a) 90,000 0 90,000 0
Adelphia Recovery Trust+ 90,000 180 90,000 180
Outdoor Channel Holdings Inc.+ 7,800 68,640 7,800 68,640
----------- ------------
68,820 68,820
----------- ------------
CLOSED-END BUSINESS DEVELOPMENT
COMPANY - 0.21%
MVC Capital Inc. 27,000 411,750 27,000 411,750
----------- ------------
COMMUNICATIONS EQUIPMENT - 0.11%
Communications Systems Inc. 16,200 172,368 16,200 172,368
Symmetricom Inc.+ 2,000 9,940 2,000 9,940
Technical Communications Corp.+ 4,000 21,800 4,000 21,800
ViewCast.com Inc.+ 40,000 14,400 40,000 14,400
----------- ------------
218,508 218,508
----------- ------------
COMPUTER SOFTWARE AND SERVICES - 2.22%
Actuate Corp. 790,000 2,765,000 790,000 2,765,000
Furmanite Corp.+ 18,000 186,120 65,000 672,100 83,000 858,220
Gemalto NV+ 1,910 67,733 1,910 67,733
INX, Inc. 31,473 213,701 31,473 213,701
Mercury Computer Systems Inc.+ 2,000 17,800 2,000 17,800
Prosoft Learning Corp.+ (a) 834 0 834 0
StorageNetworks, Inc., Escrow+ (a) 850,000 25,500 850,000 25,500
Tier Technologies Inc., Cl. B+ 5,000 37,150 5,000 37,150
Tyler Technologies Inc.+ 2,000 30,340 2,000 30,340
Versant Corp. 12,500 242,000 12,500 242,000
VMetro ASA 2,000 3,932 2,000 3,932
----------- ------------ ------------
368,575 3,892,801 4,261,376
----------- ------------ ------------
CONSUMER PRODUCTS - 0.95%
Adams Golf Inc.+ 18,000 81,540 18,000 81,540
Advanced Battery Technologies* 221,000 713,830 221,000 713,830
Ducati Motor Holding SpA, ADR+ 1,000 23,050 1,000 23,050
Heelys Inc.+ 4,000 17,920 4,000 17,920
Marine Products Corp. 4,500 37,350 4,500 37,350
National Presto Industries Inc. 300 22,350 300 22,350
Schiff Nutrition International Inc.+ 136,400 931,612 136,400 931,612
Syratech Corp.+ 41,530 831 41,530 831
----------- ------------ ------------
1,114,653 713,830 1,828,483
----------- ------------ ------------
CONSUMER SERVICES - 2.78%
Bowlin Travel Centers Inc.+ 7,000 11,550 7,000 11,550
Collectors Universe Inc. 1,000 9,300 1,000 9,300
Key Technology, Inc. 109,900 2,604,630 109,900 2,604,630
Standard Parking Corp. 122,000 2,710,840 122,000 2,710,840
----------- ------------ ------------
20,850 5,315,470 5,336,320
----------- ------------ ------------
DIVERSIFIED INDUSTRIAL - 11.58%
Ampco-Pittsburgh Corp. 6,500 168,350 6,500 168,350
Burnham Holdings Inc., Cl. A 200 2,150 200 2,150
Ceradyne, Inc.* 35,000 1,283,100 35,000 1,283,100
Dynamic Materials Corp.* 140,000 3,249,400 140,000 3,249,400
Haulotte Group 25,000 310,419 25,000 310,419
Hawk Corp., Cl. A+ 54,700 1,101,111 54,700 1,101,111
Industrial Services of America, Inc.* 21,800 223,450 21,800 223,450
Katy Industries Inc.+ 93,000 134,850 93,000 134,850
K-Tron International, Inc.* 47,500 6,119,425 47,500 6,119,425
Landec Corp. 113,500 929,565 113,500 929,565
Magnetek Inc.+ 98,000 396,900 98,000 396,900
National Patent Development Corp.+ 30,000 64,500 30,000 64,500
RWC Inc.+ 10,000 17,500 10,000 17,500
Stamford Industrial Group Inc.+ 431,000 603,400 431,000 603,400
Tech/Ops Sevcon Inc. 40,000 172,000 40,000 172,000
The Middleby Corp.* 120,000 6,517,200 120,000 6,517,200
UFP Technologies, Inc. 78,000 531,180 78,000 531,180
WHX Corp.+ 305,000 427,000 305,000 427,000
----------- ------------ ------------
3,398,180 18,853,320 22,251,500
----------- ------------ ------------
EDUCATIONAL SERVICES - 0.85%
Learning Tree International, Inc. 128,000 1,593,600 128,000 1,593,600
Universal Technical Institute Inc.+ 2,200 37,532 2,200 37,532
----------- ------------ ------------
1,631,132
------------
ELECTRONICS - 5.93%
Alliance Semiconductor Corp. 50,000 37,500 50,000 37,500
Bel Fuse Inc., Cl. A 4,000 110,000 4,000 110,000
BTU International Inc.+ 2,000 17,600 2,000 17,600
California Micro Devices Corp.+ 70,000 209,300 70,000 209,300
CTS Corp. 28,000 357,840 28,000 357,840
Digital Ally, Inc.* 42,900 294,723 42,900 294,723
Diodes, Inc.* 255,000 4,704,750 255,000 4,704,750
GSI Group Inc.+ 2,000 7,060 2,000 7,060
GSI Technology, Inc. 247,200 882,504 247,200 882,504
IntriCon Corp.+ 70,000 275,800 70,000 275,800
Methode Electronics Inc. 5,000 44,700 5,000 44,700
Pericom Semiconductor Corp. 195,100 2,048,550 195,100 2,048,550
Photon Dynamics, Inc. 109,700 1,683,895 109,700 1,683,895
Schmitt Industries Inc.+ 1,000 6,325 1,000 6,325
SIRIT Inc.+ 20,000 3,289 20,000 3,289
Stoneridge Inc.+ 18,000 202,500 18,000 202,500
Tower Semiconductor Ltd. 155,200 82,101 155,200 82,101
2
Trimble Navigation Ltd.+ 178 4,603 178 4,603
Ultra Clean Holdings Inc.+ 2,000 10,080 2,000 10,080
Ultralife Corp.+ 5,000 38,750 5,000 38,750
Video Display Corp. 40,200 342,504 40,200 342,504
Zoran Corp.+ 3,500 28,560 3,500 28,560
----------- ------------ ------------
1,353,907 10,039,027 11,392,934
----------- ------------ ------------
ENERGY AND UTILITIES: ELECTRIC - 0.49%
Great Plains Energy Inc. 2,140 47,551 2,140 47,551
Maine & Maritimes Corp.+ 11,000 362,450 7,600 250,420 18,600 612,870
Unitil Corp. 11,050 288,294 11,050 288,294
----------- ------------ ------------
698,295 250,420 948,715
----------- ------------ ------------
ENERGY AND UTILITIES: INTEGRATED - 0.56%
Florida Public Utilities Co. 49,950 644,355 49,950 644,355
MGE Energy Inc. 6,000 213,300 6,000 213,300
Pardee Resources Co. Inc. 801 182,227 801 182,227
Progress Energy Inc., CVO+ (a) 95,200 31,416 95,200 31,416
ProSep Inc.+ 10,000 2,819 10,000 2,819
----------- ------------
1,074,117 1,074,117
----------- ------------
ENERGY AND UTILITIES: NATURAL GAS - 1.19%
Chesapeake Utilities Corp. 7,400 245,754 7,400 245,754
Corning Natural Gas Corp.+ 31,000 499,100 31,000 499,100
EnergySouth Inc. 8,900 546,727 8,900 546,727
Evergreen Energy Inc.+ 3,000 2,820 3,000 2,820
PetroCorp Escrow Shares+ (a) 31,200 1,872 31,200 1,872
RGC Resources Inc. 16,500 466,785 16,500 466,785
The Meridian Resource Corp. 261,500 481,160 261,500 481,160
U.S. Energy Corp.+ 20,300 52,577 20,300 52,577
----------- ------------ ------------
1,815,635 481,160 2,296,795
----------- ------------ ------------
ENERGY AND UTILITIES: SERVICES - 1.13%
Acergy SA, ADR 9,500 95,570 9,500 95,570
Boots & Coots International Well Control, Inc. 534,400 1,031,392 534,400 1,031,392
Covanta Holding Corp.+ 950 22,743 950 22,743
Mitcham Industries, Inc. 46,090 465,048 46,090 465,048
RPC Inc. 40,000 562,400 40,000 562,400
----------- ------------ ------------
680,713 1,496,440 2,177,153
----------- ------------ ------------
ENERGY AND UTILITIES: WATER - 2.59%
Artesian Resources Cl. A 4,500 76,185 4,500 76,185
California Water Service Group 2,500 96,250 2,500 96,250
Consolidated Water Co. Ltd. 4,000 68,080 4,000 68,080
Fuel Tech, Inc.* 230,000 4,160,700 230,000 4,160,700
Middlesex Water Co. 5,700 99,579 5,700 99,579
Pennichuck Corp. 10,000 230,000 10,000 230,000
SJW Corp. 8,000 239,760 8,000 239,760
----------- ------------ ------------
809,854 4,160,700 4,970,554
----------- ------------ ------------
ENTERTAINMENT - 0.42%
Canterbury Park Holding Corp. 13,500 118,125 13,500 118,125
Chestnut Hill Ventures+ (a) 1,802 50,733 1,802 50,733
Dover Motorsports Inc. 34,000 185,300 34,000 185,300
Jetix Europe NV+ 20,500 460,026 20,500 460,026
LodgeNet Entertainment Corp.+ 800 1,624 800 1,624
Triple Crown Media Inc.+ 40,000 680 40,000 680
----------- ------------
816,488 816,488
----------- ------------
ENVIRONMENTAL CONTROL - 2.41%
BioteQ Environmental Technologies Inc.+ 10,000 20,672 10,000 20,672
Sharps Compliance Corp.+ 500 1,400 500 1,400
Sims Group Ltd, ADR 2,000,000 4,620,000 2,000,000 4,620,000
----------- ------------ ------------
22,072 4,620,000 4,642,072
----------- ------------ ------------
EQUIPMENT AND SUPPLIES - 2.10%
Baldwin Technology Co. Inc., Cl. A+ 130,800 334,848 130,800 334,848
Capstone Turbine Corp.+ 15,000 19,350 15,000 19,350
Cherokee International Corp.+ 20,000 57,000 20,000 57,000
Core Molding Technologies Inc.+ 17,000 102,000 17,000 102,000
Fedders Corp.+ (a) 6,100 0 6,100 0
Genoil Inc.+ 1,000 160 1,000 160
Gerber Scientific Inc.+ 10,000 91,400 10,000 91,400
Gildemeister AG 8,500 141,800 8,500 141,800
GrafTech International Ltd.+ 4,000 60,440 4,000 60,440
L.S. Starrett Co., Cl. A 21,000 387,030 5,000 92,150 26,000 479,180
Maezawa Kyuso Industries Co. Ltd. 20,000 281,134 20,000 281,134
Met-Pro Corp. 14,000 204,260 14,000 204,260
Mine Safety Appliances Co. 9,000 343,080 9,000 343,080
SL Industries Inc.+ 17,600 233,200 17,600 233,200
SRS Labs Inc.+ 1,000 5,510 1,000 5,510
The Eastern Co. 5,000 67,500 5,000 67,500
TransAct Technologies Inc.+ 150,000 1,194,000 37,400 297,704 187,400 1,491,704
3
Vicor Corp. 9,000 79,920 9,000 79,920
WaterFurnace Renewable Energy Inc. 1,000 24,825 1,000 24,825
Watts Water Technologies, Inc., Cl. A 500 13,675 500 13,675
----------- ------------ ------------
3,641,132 389,854 4,030,986
----------- ------------ ------------
FINANCIAL SERVICES - 3.10%
Bank of Florida Corp.+ 2,400 19,776 2,400 19,776
Berkshire Bancorp Inc. 16,100 160,678 16,100 160,678
Burke & Herbert Bank and Trust Co. 75 111,000 75 111,000
Crazy Woman Creek Bancorp Inc. 27,500 579,563 27,500 579,563
Epoch Holding Corp. 179,000 1,888,450 179,000 1,888,450
Farmers & Merchants Bank of Long Beach 14 62,300 14 62,300
Fidelity Southern Corp. 6,000 25,920 6,000 25,920
Flushing Financial Corp. 30,300 530,250 30,300 530,250
Gateway Financial Holdings Inc. 7,400 39,590 7,400 39,590
Guaranty Corp., Cl. A+ 10 161,250 10 161,250
Integrity Mutual Funds Inc.+ 40,000 14,000 40,000 14,000
Nara Bancorp Inc. 7,000 78,400 7,000 78,400
New York Community Bancorp Inc. 11,055 185,613 11,055 185,613
Northrim BanCorp Inc. 5,697 93,431 5,697 93,431
Oritani Financial Corp.+ 7,400 124,690 7,400 124,690
Parish National Corp. (a) 6,500 900,250 6,500 900,250
Patriot National Bancorp Inc. 9,167 107,712 9,167 107,712
Provident New York Bancorp 5,000 66,100 5,000 66,100
Seacoast Banking Corp. of Florida 6,000 64,380 6,000 64,380
Sunwest Bank+ 116 208,800 116 208,800
SWS Group Inc. 19,000 383,040 19,000 383,040
TIB Financial Corp. 1,020 5,743 1,020 5,743
Tree.com Inc.+ 10,000 48,200 10,000 48,200
Wilshire Bancorp Inc. 9,000 109,530 9,000 109,530
----------- ------------
5,968,666 5,968,666
----------- ------------
FOOD AND BEVERAGE - 0.53%
Andrew Peller Ltd., Cl. A 1,000 8,569 1,000 8,569
Boston Beer Co. Inc., Cl. A+ 2,500 118,725 2,500 118,725
Genesee Corp., Cl. A+ (a) 4,000 0 4,000 0
Genesee Corp., Cl. B+ (a) 30,100 0 30,100 0
Hanover Foods Corp., Cl. A+ 1,100 102,025 1,100 102,025
J & J Snack Foods Corp. 2,000 67,820 2,000 67,820
Lifeway Foods Inc.+ 45,000 526,500 45,000 526,500
MGP Ingredients Inc. 14,000 39,760 14,000 39,760
Rock Field Co. Ltd. 7,000 87,405 7,000 87,405
Scheid Vineyards Inc., Cl. A+ 900 28,575 900 28,575
The Inventure Group Inc.+ 1,000 1,700 1,000 1,700
Willamette Valley Vineyards Inc.+ 6,400 30,016 6,400 30,016
----------- ------------
1,011,095 1,011,095
----------- ------------
HEALTH CARE - 9.78%
AFP Imaging Corp.+ 18,000 3,420 18,000 3,420
Allion Healthcare, Inc. 63,700 379,015 63,700 379,015
Alpharma Inc., Cl. A+ 2,000 73,780 2,000 73,780
Bio-Imaging Technologies, Inc. 33,000 254,760 33,000 254,760
BioLase Technology Inc.+ 59,000 111,510 59,000 111,510
Boiron SA 10,000 263,680 10,000 263,680
Bruker Corp.+ 1,000 13,330 1,000 13,330
Cepheid Inc.+ 6,000 82,980 6,000 82,980
Continucare Corp.+ 110,000 293,700 110,000 293,700
CPEX Pharmaceuticals Inc.+ 100 1,875 100 1,875
CryoLife, Inc. 49,900 654,688 49,900 654,688
Del Global Technologies Corp.+ 96,000 124,800 96,000 124,800
DexCom Inc.+ 5,000 30,950 5,000 30,950
Elite Pharmaceuticals Inc., Cl. A+ 1,000 170 1,000 170
Exactech Inc.+ 7,000 155,680 7,000 155,680
Heska Corp.+ 24,000 15,600 24,000 15,600
I-Flow Corp.+ 24,000 223,440 24,000 223,440
ICU Medical Inc.+ 4,000 121,640 4,000 121,640
Inverness Medical Innovations Inc.+ 5,000 150,000 5,000 150,000
Langer Inc.+ 10,000 9,000 10,000 9,000
Life Partners Holdings, Inc.* 85,495 3,075,255 85,495 3,075,255
Matrixx Initiatives Inc.+ 40,000 719,600 40,000 719,600
Mesa Laboratories, Inc. 48,400 1,028,500 48,400 1,028,500
Micrus Endovascular Corp.+ 20,000 279,000 20,000 279,000
Monogram Biosciences Inc.+ 10,000 7,600 10,000 7,600
Neogen Corp.+ 21,000 591,780 89,250 2,515,065 110,250 3,106,845
NMT Medical Inc.+ 2,500 7,800 2,500 7,800
Opko Health Inc.+ 7,000 12,250 7,000 12,250
Orthofix International NV+ 2,000 37,260 2,000 37,260
Pain Therapeutics Inc.+ 10,000 97,700 10,000 97,700
PreMD Inc.+ 10,000 460 10,000 460
Quidel Corp.+ 20,000 328,200 20,000 328,200
RTI Biologics Inc.+* 37,415 349,830 284,260 2,657,831 321,675 3,007,661
Sirona Dental Systems Inc.+ 200 4,656 200 4,656
Sonic Innovations Inc.+ 87,000 220,980 87,000 220,980
Syneron Medical Ltd.+ 15,000 213,750 15,000 213,750
4
Synovis Live Technologies, Inc. 132,000 2,484,240 132,000 2,484,240
ThermoGenesis Corp.+ 1,000 1,250 1,000 1,250
United-Guardian Inc. 16,000 168,800 16,000 168,800
U.S. Physical Therapy, Inc. 56,000 972,160 56,000 972,160
Young Innovations Inc. 3,000 60,540 3,000 60,540
----------- ------------ ------------
4,777,011 14,021,514 18,798,525
----------- ------------ ------------
HOTELS AND GAMING - 0.40%
Dover Downs Gaming & Entertainment Inc. 4,000 31,120 4,000 31,120
Florida Gaming Corp.+ 2,000 8,000 2,000 8,000
Multimedia Games Inc.+ 8,500 36,805 8,500 36,805
Sonesta International Hotels Corp., Cl. A 33,000 686,400 33,000 686,400
----------- ------------
762,325 762,325
----------- ------------
INSURANCE - 3.07%
American Physicans Capital Inc. 139,513 5,905,585 139,513 5,905,585
------------ ------------
MACHINERY - 0.89%
Alamo Group, Inc. 21,100 359,755 21,100 359,755
Gehl Co.+ 45,000 1,324,350 45,000 1,324,350
TurboChef Technologies Inc.+ 5,000 30,750 5,000 30,750
----------- ------------ ------------
1,355,100 359,755 1,714,855
----------- ------------ ------------
MANUFACTURED HOUSING AND RECREATIONAL
VEHICLES - 0.49%
Cavalier Homes Inc.+ 100,000 168,000 100,000 168,000
Cavco Industries Inc.+ 8,800 318,120 8,800 318,120
Coachmen Industries Inc.+ 15,000 24,750 15,000 24,750
Nobility Homes Inc. 9,000 145,800 9,000 145,800
Palm Harbor Homes Inc.+ 15,000 148,650 15,000 148,650
Skyline Corp. 5,000 132,150 5,000 132,150
----------- ------------
937,470 937,470
----------- ------------
METALS AND MINING - 0.00%
Uranium Resources Inc.+ 4,000 6,760 4,000 6,760
----------- ------------
PAPER AND FOREST PRODUCTS - 0.07%
Keweenaw Land Association Ltd. 700 143,500 700 143,500
----------- ------------
PUBLISHING - 0.16%
Journal Communications Inc., Cl. A 54,000 263,520 54,000 263,520
PRIMEDIA Inc. 11,000 26,730 11,000 26,730
The E.W. Scripps Co., Cl. A 3,333 23,564 3,333 23,564
----------- ------------
313,814 313,814
----------- ------------
REAL ESTATE - 0.58%
Bresler & Reiner Inc. 7,300 125,925 7,300 125,925
Capital Properties Inc., Cl. A 6,000 138,600 6,000 138,600
Griffin Land & Nurseries Inc. 11,200 415,296 11,200 415,296
Gyrodyne Co. of America Inc.+ 3,000 114,270 3,000 114,270
Holobeam Inc.+ 1,000 25,655 1,000 25,655
Reading International Inc., Cl. A+ 20,000 137,700 20,000 137,700
Reading International Inc., Cl. B+ 19,000 150,100 19,000 150,100
Royalty LLC+ (a)(b) 2,508 3,985 2,508 3,985
----------- ------------
1,111,531 1,111,531
----------- ------------
RESTAURANTS - 0.27%
Nathan's Famous Inc.+ 26,600 423,206 26,600 423,206
The Steak n Shake Co.+ 10,000 86,800 10,000 86,800
----------- ------------
510,006 510,006
----------- ------------
RETAIL - 0.11%
CoolBrands International Inc.+ 40,000 25,934 40,000 25,934
Movado Group Inc. 4,000 89,400 4,000 89,400
Village Super Market Inc., Cl. A 2,000 95,340 2,000 95,340
----------- ------------
210,674 210,674
----------- ------------
SPECIALTY CHEMICALS - 1.57%
General Chemical Group Inc.+ 267,226 4,676 267,226 4,676
Hawkins Inc. 32,000 560,640 32,000 560,640
KMG Chemicals Inc. 1,000 6,980 1,000 6,980
Omnova Solutions Inc.+ 55,000 109,450 55,000 109,450
Quaker Chemical Corp. 38,700 1,101,402 38,700 1,101,402
Zep Inc. 70,000 1,234,800 70,000 1,234,800
----------- ------------ ------------
1,916,546 1,101,402 3,017,948
----------- ------------ ------------
TECHNOLOGY - 2.94%
Ebix, Inc.* 29,541 2,775,673 29,541 2,775,673
TheStreet.com, Inc.* 480,000 2,875,200 480,000 2,875,200
------------ ------------
5,650,873 5,650,873
------------ ------------
TELECOMMUNICATIONS - 0.98%
Ambient Corp.+ 1,000 29 1,000 29
5
Applied Signal Technology Inc. 1,000 17,380 1,000 17,380
Consolidated Communications Holdings Inc. 175 2,639 175 2,639
D&E Communications Inc. 29,000 218,950 29,000 218,950
Electronic Systems Technology Inc. 2,000 950 2,000 950
Globecomm Systems, Inc. 23,400 204,516 23,400 204,516
HickoryTech Corp. 48,000 278,880 48,000 278,880
Horizon Telecom Inc., Cl. A 80 10,960 80 10,960
Horizon Telecom Inc., Cl. B 350 41,134 350 41,134
Lexcom Inc., Cl. B, Non-Voting+ 1,400 118,055 1,400 118,055
New Ulm Telecom Inc. (a) 36,200 331,230 36,200 331,230
PNV Inc.+ 10,000 18 10,000 18
Preformed Line Products Co. 2,500 145,850 2,500 145,850
Shenandoah Telecommunications Co. 18,000 397,260 18,000 397,260
Sycamore Networks Inc.+ 33,000 106,590 33,000 106,590
Telecorp Escrow Shares (a) 152 0 152 0
Virgin Media Inc. 2,305 18,210 2,305 18,210
----------- ------------ ------------
1,688,135 204,516 1,892,651
----------- ------------ ------------
TRANSPORTATION - 0.54%
L.B. Foster Co., Class A.* 22,300 678,366 22,300 678,366
Providence and Worcester Railroad Co. 21,100 358,700 21,100 358,700
Trailer Bridge Inc.+ 400 2,204 400 2,204
----------- ------------ ------------
360,904 678,366 1,039,270
----------- ------------ ------------
TOTAL COMMON STOCKS 44,972,538 123,080,509 168,053,047
----------- ------------ ------------
OTHER SECURITIES (SECURITY LENDING
COLLATERAL) - 21.88% (d)
Brown Brothers Harriman Sec. Lending Inv. Fund 42,063,411 42,063,411
------------ ------------
PREFERRED STOCKS - 0.14%
AUTOMOTIVE: PARTS AND ACCESSORIES
Jungheinrich AG Pfd. 15,000 259,527 15,000 259,527
----------- ------------
CONVERTIBLE PREFERRED STOCKS - 0.02%
BUSINESS SERVICES
Interep National Radio Sales Inc., 4.000%
Cv. Pfd. Ser. A (a)(b)(c)+ 150 0 150 0
----------- ------------
FOOD AND BEVERAGE
Seneca Foods Corp., Cv. Pfd., Ser. 2003+ 2,400 47,112 2,400 47,112
----------- ------------
TOTAL CONVERTIBLE PREFERRED STOCKS 47,112 47,112
----------- ------------
WARRANTS - 0.02%
BROADCASTING
Granite Broadcasting Corp., Ser. A, expire
06/04/12+ 63 7 63 7
Granite Broadcasting Corp., Ser. B, expire
06/04/12+ 63 16 63 16
----------- ---------- ------------
23 23
----------- ---------- ------------
BUSINESS SERVICES
Avalon Digital Marketing Systems Inc.
expire 11/11/11+ (a)(b) 1,666 0 1,666 0
----------- ---------- ------------
ENERGY AND UTILITIES: ELECTRIC
British Energy Group plc, expire 01/17/10+ 1,680 19,190 1,680 19,190
Corning Natural Gas Corp., expire 08/17/11+ 15,000 23,250 15,000 23,250
----------- ------------
42,440 42,440
----------- ------------
TOTAL WARRANTS 42,463 42,463
----------- ------------
U.S. GOVERNMENT OBLIGATIONS - 13.11%
U.S. TREASURY BILLS
U.S. Treasury Bills, 0.284% to 1.924%++,
10/02/08 to 01/29/09 16,064,000 16,048,595 16,064,000 16,048,595
----------- ------------
U.S. TREASURY NOTES
4.500%, 04/30/09 3,070,000 3,120,609 3,070,000 3,120,609
4.750%, 12/31/08 5,975,000 6,032,420 5,975,000 6,032,420
----------- ------------
9,153,029 9,153,029
----------- ------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 25,201,624 25,201,624
----------- ------------
TOTAL INVESTMENTS - 122.59% 70,523,264 165,143,920 193,603,773
----------- ------------ ------------
Other Assets and Liabilities (Net) - (22.59%) (d) (2,848,035) (40,583,625) (1,368,249)
NET ASSETS - 100% $67,675,229 124,560,295 $192,235,524
=========== ============ ============
6
(a) Security fair valued under procedures established by the Board of Trustees.
The procedures may include reviewing available financial information about
the company and reviewing the valuation of comparable securities and other
factors on a regular basis. At September 30, 2008, the market value of fair
valued securities amounted to $1,345,002 or 1.99% of net assets.
(b) At September 30, 2008, the Fund held investments in restricted and illiquid
securities amounting to $3,985 or 0.01% of net assets, which were valued
under methods approved by the Board of Trustees, as follows:
9/30/2008
Carrying
Acquisition Acquisition Acquisition Value Per
Shares Issuer Date Cost Unit
----------- --------------------------------------------------------------- ----------- ----------- ---------
1,666 Avalon Digital Marketing Systems Inc., Warrants expire 11/11/11 04/03/00 -- $ 0.00
150 Interep National Radio Sales Inc., 4.000%, Cv. Pfd., Ser. A 05/03/02 $13,849 0
2,508 Royalty LLC 09/09/03 -- 1.5889
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2008, the market value of the Rule 144A security amounted to $0 or 0.00% of
net assets.
(d) Pro forma Adjustment.
+ Non-income producing security.
* A portion or all of this security was out on loan as of September 30, 2008.
++ Represents annualized yield at date of purchase.
ADR American Depositary Receipt
CVO Contingent Value Obligation
See accompanying Notes to Pro Forma Financial Statements (Unaudited).
7
Notes to Pro forma Financial Statements September 30, 2008 (unaudited)
1. BASIS OF COMBINATION
The Proforma Statement of Combined Assets and Liabilities, including the
Schedule of Investments as of September 30, 2008 and the related Statement of
Combined Operations for the twelve months ended September 30, 2008 ("Proforma
Statements") reflect the accounts of GAMCO Westwood Mighty MitesSM Fund ("Mighty
Mites Fund"), a multiclass series of The GAMCO Westwood Funds and the B.B.
Micro-Cap Fund (the "B.B. Fund"), a series of The B.B. Funds. The Proforma
Statement of Combined Assets and Liabilities has been restated to reflect a tax
free exchange of B.B. Fund shares for Mighty Mites Fund's no-load Class AAA
Shares as of the close of business on September 30, 2008 and to give effect to
the proposed transfer of all assets and liabilities of the B.B. Fund in exchange
for Class AAA Shares of the Mighty Mites Fund. The Mighty Mites Fund is the
surviving fund.
The Mighty Mites Fund's adviser, Teton Advisors, Inc. ("Teton"), will pay all
the costs of the Special Meeting associated with the reorganization, including
legal, proxy and solicitation expenses.
The Proforma Statements should be read in conjunction with the historical
financial statements of the Mighty Mites Fund and the B.B. Fund included in
their respective Statements of Additional Information.
2. SECURITY VALUATION
Portfolio securities listed or traded on a nationally recognized securities
exchange or traded in the U.S. over-the-counter market for which market
quotations are readily available are valued at the last quoted sale price or a
market's official closing price as of the close of business on the day the
securities are being valued. If there were no sales that day, the security is
valued at the average of the closing bid and asked prices or, if there were no
asked prices quoted on that day, then the security is valued at the closing bid
price on that day. If no bid or asked prices are quoted on such day, the
security is valued at the most recently available price or, if the Board of
Trustees (the "Board") so determines, by such other method as the Board shall
determine in good faith to reflect its fair market value. Portfolio securities
traded on more than one national securities exchange or market are valued
according to the broadest and most representative market, as determined by
Teton.
Portfolio securities primarily traded on a foreign market are generally valued
at the preceding closing values of such securities on the relevant market, but
may be fair valued pursuant to procedures established by the Board if market
conditions change significantly after the close of the foreign market but prior
to the close of business on the day the securities are being valued. Debt
instruments with remaining maturities of 60 days or less that are not credit
impaired are valued at amortized cost, unless the Board determines such amount
does not reflect the securities' fair value, in which case these securities will
be fair valued as determined by the Board. Debt instruments having a maturity
greater than 60 days for which market quotations are readily available are
valued at the average of the latest bid and asked prices. If there were no asked
prices quoted on such day, the security is valued using the closing bid price.
Futures contracts are valued at the closing settlement price of the exchange or
board of trade on which the applicable contract is traded.
Securities and assets for which market quotations are not readily available are
fair valued as determined by the Board.
3. CAPITAL SHARES
The Pro Forma Combined net asset value per share assumes the issuance of
additional shares of the Mighty Mites Fund which would have been issued at
September 30, 2008, in connection with the proposed reorganization. The amount
of additional Class AAA Shares assumed to be issued was calculated based on the
September 30, 2008, net asset value per share of the Mighty Mites Fund ($13.41).
The Pro Forma number of shares outstanding are determined as follows:
Class AAA Shares of
the Mighty Mites Fund 4,162,260
Additional Class AAA Shares to
be issued to the B.B. Fund: 9,288,054
Pro Forma Shares
Outstanding: 13,450,314
The Pro Forma Statements assume that all shares of the B.B. Fund
outstanding on September 30, 2008, were exchanged, tax free, for Class AAA
Shares of the Mighty Mites Fund.
4. PRO FORMA OPERATING EXPENSES.
[The Pro Forma Statement of Operations assumes expense adjustments based on [the
agreements of the Mighty Mites Fund], the surviving entity. Certain accounts
have been adjusted to reflect the expense of the combined entity more closely.
Pro Forma operating expenses include the expenses of the Mighty Mites Fund and
the B.B. Fund combined, adjusted for certain items which are factually
supportable. All fees other than trustee fees and expenses have been charged to
the combined entity based upon the contracts in effect for the Mighty Mites Fund
at the level of assets of the combined fund for the stated period.]
2
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION
The statement as to the general effect of any contract, arrangement or
statute under which a trustee, officer, underwriter or affiliated person of the
Registrant is indemnified is incorporated by reference to Item 27 of Part C of
Pre-Effective Amendment No. 1.
ITEM 16. EXHIBITS
(1)(a) Registrant's Amended and Restated Declaration of Trust, dated June 12,
1986, and Amendments thereto are incorporated by reference to
Pre-Effective Amendment No. 1 to the Registration Statement as filed
with the SEC on December 22, 1986 ("Pre-Effective Amendment No. 1").
(1)(b) Amendment to Registrant's Declaration of Trust, dated December 29,
2004, is incorporated by reference to Post-Effective Amendment No. 28
to the Registrant's Registration Statement as filed with the SEC via
EDGAR on January 31, 2005 (Accession No. 0000935069-05-000151)
("Post-Effective Amendment No. 28").
(2) Registrant's By-Laws, dated November 24, 1986, are incorporated by
reference to Pre-Effective Amendment No. 1.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization and Liquidation dated November 28,
2008, is filed herewith.
(5) Instruments Defining Rights of Security Holders are herein incorporated
by reference from the Trust's Declaration of Trust and Bylaws.
(6)(a) Investment Advisory Agreement between the Registrant, on behalf of the
Equity Fund, the Cash Management Fund, the Intermediate Bond Fund and
the Balanced Fund, and Teton Advisers, LLC (now known as Teton
Advisors, Inc.), dated October 6, 1994, is incorporated by reference to
Post-Effective Amendment No. 22 to the Registration Statement as filed
with the SEC via EDGAR on January 31, 2000 (Accession No.
0000927405-00-000035) ("Post-Effective Amendment No. 22").
(6)(b) Investment Advisory Agreement between the Registrant, on behalf of
Westwood SmallCap Equity Fund and Westwood Realty Fund and Teton
Advisers, LLC (now known as Teton Advisors, Inc.), dated February 25,
1997, is incorporated by reference to Post-Effective Amendment No. 22.
(6)(c) Investment Advisory Agreement between the Registrant, on behalf of the
Westwood Mighty Mites(SM) Fund, and Gabelli Advisers, Inc. (now known
as Teton Advisors, Inc.), dated May 11, 1998, is incorporated by
reference to Post-Effective Amendment No. 22.
3
(6)(d) Investment Sub-Advisory Agreement between the Registrant, on behalf of
the Equity Fund, the Cash Management Fund, the Intermediate Bond Fund
and the Balanced Fund, and Teton Advisers, LLC (now known as Teton
Advisors, Inc.) and Westwood Management Corporation, dated October 6,
1994, is incorporated by reference to Post-Effective Amendment No. 22.
(6)(e) Interim Investment Advisory Agreement between the B.B. Funds, on behalf
of the B.B. Micro-Cap Growth Fund and Teton Advisors, Inc., dated
November 28, 2008, is filed herewith.
(6)(f) Contractual Advisory Fee Waiver and Expense Reimbursement Agreement
between the Registrant and Gabelli Advisers, Inc., (now known as Teton
Advisors, Inc.) dated October 1, 2006, is incorporated by reference to
Post-Effective Amendment No. 34.
(6)(g) Contractual Advisory Fee Waiver and Expense Reimbursement Agreement
between the Registrant and Gabelli Advisers, Inc. (now known as Teton
Advisors, Inc.), dated October 1, 2007, incorporated by reference to
Post-Effective Amendment No. 34.
(7) Amended and Restated Distribution Agreement between the Registrant and
Gabelli & Company, Inc., dated November 16, 1999, is incorporated by
reference to Post-Effective Amendment No. 26 to the Registration
Statement as filed with the SEC via EDGAR on February 2, 2004
(Accession No. 0000935069-04-000157) ("Post-Effective Amendment No.
26").
(8) Not Applicable.
(9)(a) Custody Agreement between the Registrant and The Bank of New York,
dated January 22, 2004, is incorporated by reference to Post-Effective
Amendment No. 26.
(9)(b) Foreign Custody Manager Agreement between the Registrant and The Bank
of New York, dated January 22, 2004, is incorporated by reference to
Post-Effective Amendment No. 26.
(10)(a) Amended and Restated Plan of Distribution pursuant to Rule 12b-1
relating to Class AAA Series Shares, dated November 16, 1999, is
incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement as filed with the SEC via EDGAR on December 1,
1999 (Accession No. 0000927405-99-000364) ("Post-Effective Amendment
No. 21").
(10)(b) Amended and Restated Plan of Distribution pursuant to Rule 12b-1
relating to Class A Series Shares, dated November 16, 1999, is
incorporated by reference to Post-Effective Amendment No. 21.
(10(c) Plan of Distribution pursuant to Rule 12b-1 relating to Class A Series
Shares, dated November 16, 1999, is incorporated by reference to
Post-Effective Amendment No. 21.
(10)(d) Plan of Distribution pursuant to Rule 12b-1 relating to Class B Series
Shares, dated November 16, 1999, is incorporated by reference to
Post-Effective Amendment No. 21.
(10)(e) Plan of Distribution pursuant to Rule 12b-1 relating to Class C Series
Shares, dated November 16, 1999, is incorporated by reference to
Post-Effective Amendment No. 21.
4
(10)(f) Amended and Restated Rule 18f-3 Multi-Class Plan, dated November 19,
2003, is incorporated by reference to Post-Effective Amendment No. 28.
(11) Opinion and consent of Paul, Hastings, Janofsky and Walker LLP, Trust
counsel, to be filed by amendment.
(12) Opinion and consent of Paul, Hastings, Janofsky & Walker LLP, on
certain tax matters, to be filed by amendment.
(13)(a) Transfer Agency and Service Agreement between the GAMCO Westwood Funds
and State Street Bank & Trust Company, dated October 12, 1994, will be
filed by amendment.
(14)(a) Consent of PricewaterhouseCoopers LLP (New York, NY), Independent
Registered Public Accounting Firm, is filed herewith.
(14)(b) Consent of PricewaterhouseCoopers LLP (Los Angeles, CA), Independent
Registered Public Accounting Firm, is filed herewith.
(15) Not Applicable.
(16)(a) Power of Attorney for Susan M. Byrne, Anthony J. Colavita, James P.
Conn, Werner J. Roeder, M.D. and Karl Otto Pohl, dated May 15, 2001, is
incorporated by reference to Post-Effective Amendment No. 24 to the
Registration Statement as filed with the SEC via EDGAR on January 29,
2002 (Accession No. 0000935069-02-000044).
(16)(b) Power of Attorney for Salvatore J. Zizza, dated March 11, 2005, is
incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement as filed with the SEC via EDGAR on December 2,
2005 (Accession No. 00009350-09-05-003307).
(17)(a) Form of Proxy Ballot, is filed herewith.
(17)(b) Prospectus for the GAMCO Westwood Funds dated January 28, 2008, is
incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A as filed with the SEC via EDGAR on
January 28, 2008 (Accession No. 000935069-08-000-172).
(17)(c) Statement of Additional Information for GAMCO Westwood Funds dated
January 28, 2008, is incorporated by reference to Post-Effective
Amendment No. 34 to the Registration Statement on Form N-1A as filed
with the SEC via EDGAR on January 28, 2008 (Accession No.
000935069-08-000-172).
(17)(d) Prospectus for the Bjurman, Barry Funds dated August 1, 2008, is
incorporated by reference to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A as filed with the SEC via EDGAR on
July 29, 2008 (Accession No. 0000950-152-08-005730).
(17)(e) Statement of Additional Information for the Bjurman, Barry Funds dated
August 1, 2008, is incorporated by reference to Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A as filed
with the SEC via EDGAR on July 29, 2008 (Accession No.
0000950-152-08-005730).
5
(17)(f) Annual Report to Shareholders of the GAMCO Westwood Funds for the
fiscal year ended September 30, 2008, is incorporated by reference to
Form N-CSR as filed with the SEC via EDGAR on December 4, 2008
(Accession No. 0000935069-08-002903).
(17)(g) Annual Report to Shareholders of the Bjurman, Barry Funds for the
fiscal year ended March 31, 2008, is incorporated by reference to Form
N-CSR as filed with the SEC via EDGAR on June 6, 2008 (Accession No.
0000950152-08-004475).
(17)(h) Semi-Annual Report to Shareholders of the Bjurman, Barry Funds for the
six months ended September 30, 2008, is incorporated by reference to
form N-CSR as filed with the SEC via EDGAR on December 8, 2008
(Accession No. 0000950152-08-010069).
(17)(i) Revised Code of Ethics for the Registrant, Gabelli Funds, LLC, GAMCO
Investors, Inc., Gabelli & Company Inc., Gabelli Advisers, Inc. (now
known as Teton Advisors, Inc.) and Gabelli Fixed Income LLC is
incorporated by reference to Post-Effective Amendment No. 31 to the
Registration Statement as filed with the SEC via EDGAR on January 30,
2007 (Accession No. 0000935069-07-000193).
(17)(i) Revised Code of Ethics for the Registrant, Westwood Management
Corporation, Westwood Trust and Westwood Holdings Group, Inc.
incorporated by reference to Post-Effective Amendment No. 34.
6
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act of 1933 [17
CFR 230.145c], the reoffering prospectus will contain the information called for
by the applicable registration form for the reofferings by persons who may be
deemed underwriters, in addition to the information called for by the other
items of the applicable form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to the be initial bona fide offering of
them.
7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement on Form N-14 to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of Rye, and State of
New York, on the 19th day of December, 2008.
GAMCO WESTWOOD FUNDS
By: /s/ BRUCE N. ALPERT
------------------------------------
Name: Bruce N. Alpert
Title: President and Principal Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement on Form N-14 has been signed by the following persons in the
capacities and on the dates indicated below.
/s/ BRUCE N. ALPERT President and December 19, 2008
---------------------------- Principal Executive Officer
Bruce N. Alpert
/s/ AGNES MULLADY Principal Financial Officer and December 19, 2008
---------------------------- Treasurer
Agnes Mullady
/s/ * Trustee
-----------------------------
Anthony J. Colavita
/s/ * Trustee
-----------------------------
James P. Conn
/s/ * Trustee
-----------------------------
Werner J. Roeder, M.D.
/s/ * Trustee
-----------------------------
Salvatore J. Zizza
*By /s/ BRUCE N. ALPERT December 19, 2008
-------------------------
Bruce N. Alpert
Attorney-in-Fact
* Powers of attorney are incorporated by reference herein as Exhibits 16(a)
and 16(b).
8
EX-99.14
2
consentwwn14a.txt
CONSENT, EXHIBIT 14(A)
Exhibit 14(a)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-14 of our report dated November 26, 2008, relating to the
financial statements and financial highlights which appears in the September 30,
2008 Annual Report to Shareholders of GAMCO Westwood Funds, which are also
incorporated by reference into the Registration Statement. We also consent to
the incorporation by reference in this Registration Statement on Form N-14 of
our report dated November 27, 2007, relating to the financial statements and
financial highlights which appears in the September 30, 2007 Annual Report to
Shareholders of GAMCO Westwood Funds, which are incorporated by reference in the
Post-Effective Amendment No. 34 to the Registration Statement on Form N-1A of
GAMCO Westwood Funds, which is also incorporated by reference into this
Registration Statement.
/s/ PricewaterhouseCoopers LLP
New York, New York
December 19, 2008
EX-99.14
3
consentbbn14.txt
CONSENT, EXHIBIT 14(B)
Exhibit 14(b)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration
Statement of GAMCO Westwood Funds on Form N-14 of our report dated May 27, 2008,
relating to the financial statements and financial highlights which appears in
the March 31, 2008 Annual Report to Shareholders of the Bjurman, Barry Micro-Cap
Growth Fund, which is also incorporated by reference into the Registration
Statement. We also consent to the reference to us under the heading "Independent
Registered Public Accounting Firm" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
December 19, 2008
COVER
4
filename4.txt
[PAUL, HASTINGS, JANOFSKY & WALKER LLP LETTERHEAD]
[GRAPHIC OMITTED][GRAPHIC OMITTED]
(212) 318-6275
rachaelschwartz@paulhastings.com
December 19, 2008 33428.00001
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: The GAMCO Westwood Funds (the "Trust") (033-06790)
Ladies and Gentlemen:
Transmitted herewith for filing is a Registration Statement on Form N-14 for the
above referenced Trust, on behalf of the GAMCO Westwood Mighty MitesSM Fund, a
series thereof (the Mighty Mites Fund"). As indicated on the facing page, the
Trust proposes that the filing become effective on or before January 20, 2009,
pursuant to Rule 488(a) under the Securities Act of 1933. This Registration
Statement is being filed in connection with the proposed reorganization of the
B.B. Micro-Cap Growth Fund, a series of The B.B. Funds, into the Trust's Mighty
Mites Fund.
Please call the undersigned at (212) 318-6275 with any questions or comments you
may have regarding the filing. Thank you.
Very truly yours,
/s/ Rachael L. Schwartz
Rachael L. Schwartz
for PAUL, HASTINGS, JANOFSKY & WALKER LLP