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INVESTMENT ADVISORY AGREEMENT
June 27, 1994
Gabelli Funds, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxx, Xxx Xxxx 00000-0000
Dear Sir:
The Gabelli Equity Trust Inc. (the "Trust"), a corporation organized
under the laws of the State of Maryland, confirms its investment advisory
agreement with Gabelli Funds, Inc., (the "Advisor") as follows:
1. Investment Description; Appointment
The Trust desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its Articles of Incorporation, as amended from time to time (the "Articles of
Incorporation"), and in its Registration Statement on Form N-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"), as from time to
time in effect (the "Registration Statement") and in such manner and to such
extent as may from time to time be approved by the Trust's Board of Directors.
Copies of the Articles of Incorporation and the Registration Statement have
been submitted to the Advisor. The Trust desires to employ and hereby appoints
the Advisor to act as its investment advisor and to oversee the administration
of all aspects of the Trust's business and affairs and provide, or arrange for
others whom it believes to be competent to provide, certain services as
specified in subparagraph (b) below. The Advisor accepts the appointment and
agrees to furnish the services set forth below for the compensation set forth
below. Nothing contained herein shall be construed to restrict the Trust's
right to hire its own employees or to contract for administrative services to
be performed by third parties, including but not limited to, the calculation of
the net asset value of the Trust's shares.
2. Services
(a) Investment Advice. Subject to the supervision and direction of
the Trust's Board of Directors, the Advisor will (i) act in strict conformity
with the Articles of Incorporation, the 1940 Act and the Investment Advisers
Act of 1940, as the same may from time to time be amended, (ii) manage the
Trust's assets in accordance with the Trust's investment objective and policies
as stated in the Registration Statement, (iii) make investment decisions for
the
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Trust and (iv) place purchase and sale orders on behalf of the Trust. In
rendering those services, the Advisor will provide investment research and
supervision of the Trust's investments and conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Trust's assets. In addition, the Advisor will furnish the Trust with whatever
statistical information the Trust may reasonably request with respect to the
securities that the Trust may hold or contemplate purchasing.
(b) Administration. The specific services to be provided or
arranged for by the Advisor for the Trust are (i) maintaining the Trust's books
and records, such as journals, ledger accounts and other records in accordance
with applicable laws and regulations to the extent not maintained by the
Trust's custodian, transfer agent or dividend disbursing agent; (ii) initiating
all money transfers to the Trust's custodian and from the Trust's custodian for
the payment of the Trust's expenses, investments, and dividends; (iii)
reconciling account information and balances among the Trust's custodian,
transfer agent, dividend disbursing agent and the Advisor; (iv) providing the
Trust, upon request, with such office space and facilities, utilities and
office equipment as are adequate for the Trust's needs; (v) preparing, but not
paying for, all reports by the Trust to its shareholders and all reports and
filings required to maintain registration and qualification of the Trust's
shares under federal and state law including the updating of the Trust's
Registration Statement, when necessary; (vi) supervising the calculation of net
asset value of the Trust's shares; and (vii) preparing notices and agendas for
meetings of the Trust's shareholders and the Trust's Board of Directors as well
as minutes of such meetings in all matters required by applicable law to be
acted upon by the Board of Directors.
3. Brokerage
In executing transactions for the Trust and selecting brokers or
dealers, the Advisor will use its best efforts to seek the best overall terms
available. In assessing the best overall terms available for any transaction
on behalf of the Trust, the Advisor will consider all factors it deems relevant
including, but not limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution capability of the
broker or dealer and the reasonableness of any commission for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction and in evaluating the best overall terms
available, the Advisor may consider the brokerage and research services
provided to the Trust and/or other accounts over which the Advisor or an
affiliate of the Advisor exercises investment discretion.
4. Information Provided to the Trust
The Advisor will keep the Trust informed of developments materially
affecting the Trust, and will, on its own initiative, furnish the Trust from
time to time with whatever information the Advisor believes is appropriate for
this purpose.
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5. Standard of Care
The Advisor shall exercise its best judgment in rendering the services
described in paragraphs 2 and 3 above. The Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters of which this Agreement relates, provided that
nothing in this paragraph shall be deemed to protect or purport to protect the
Advisor against any liability to the Trust or to its shareholders to which the
Advisor would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence on its part in the performance of its duties or by reason
of the Advisor's reckless disregard of its obligations and duties under this
Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Trust will pay the Advisor on the first business day of each month a fee
for the previous month at the annual rate of 1.00% of the Trust's average
weekly net assets. Upon any termination of this Agreement before the end of a
month, the fee for such part of that month shall be prorated according to the
proportion that such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to the Advisor, the value of the Trust's net assets
shall be computed at the times and in the manner specified in the Registration
Statement.
7. Expenses
The Advisor will bear all expenses in connection with the performance
of its services under this Agreement. The Trust will bear certain other
expenses to be incurred in its operation, including: expenses for legal and
independent accountants' services, costs of printing proxies, stock
certificates and shareholder reports, charges of the custodian, any
sub-custodian and transfer and dividend paying agent, expenses in connection
with the Dividend Reinvestment and Cash Purchase Plan, Securities and Exchange
Commission fees, fees and expenses of unaffiliated directors, accounting and
pricing costs, membership fees in trade associations, fidelity bond coverage
for the Trust's officers and employees, directors' and officers' errors and
omissions insurance coverage, interest, brokerage costs, taxes, stock exchange
listing fees and expenses, all expenses of computing the Trust's net asset
value per share, including any equipment or services obtained solely for the
purpose of pricing shares or valuing the Trust's investment portfolios,
expenses of qualifying the Trust's shares for sale in various states,
litigation and other extraordinary or non-recurring expenses, and other
expenses properly payable by the Trust.
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8. Services to Other Companies or Accounts
The Trust understands that the Advisor now acts and will continue to
act as investment advisor to other investment companies and may act in the
future as investment advisor to other investment companies or portfolios, and
the Trust has no objection to the Advisor so acting, provided that whenever the
Trust and one or more other portfolios of or investment companies advised by
the Advisor have available funds for investment, investments suitable and
appropriate for each will be allocated in a manner believed to be equitable to
each entity. The Trust recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for the Trust. In
addition, the Trust understands that the persons employed by the Advisor to
assist in the performance of the Advisor's duties under this Agreement will not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of the Advisor or any affiliate of the
Advisor to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Use of the Word "Gabelli"
It is understood and agreed that the word "Gabelli" is the Advisor's
property for copyright and other purposes. The Trust further agrees that the
word "Gabelli" in its name is derived from the name of Xxxxx X. Xxxxxxx and
such name may freely be used by the Advisor for other investment companies,
entities or products. The Trust further agrees that, in the event that the
Advisor shall cease to act as an investment advisor to the Trust, the Trust
shall promptly take all necessary and appropriate action to change its name to
one that does not include the word "Gabelli"; provided, however, that the Trust
may continue to use such name if the Advisor consents in writing to such use.
10. Term of Agreement
This Agreement shall become effective on the date hereof and shall
continue in effect for two years and thereafter shall continue for successive
annual periods, provided such continuance is specifically approved at lease
annually by (i) the Trust's Board of Directors or (ii) a vote of a "majority"
(as defined in the 0000 Xxx) of the Trust's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Directors who are not "interested persons" (as defined in the 0000
Xxx) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on 60 days' written notice, by the Trust's Board of Directors,
by vote of holders of a majority of the Trust's shares, or by the Advisor.
This Agreement will also terminate automatically in the event of its assignment
(as defined in the 1940 Act and the rules thereunder).
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If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy.
Very truly yours,
THE GABELLI EQUITY TRUST INC.
By: /s/ Xxxxx Xxxxxx
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Agreed to and Accepted:
GABELLI FUNDS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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