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Rating:Enterprise Fund Distributors' Last Client Turns Out the Lights Not Rated 0.0 Email Routing List Email & Route  Print Print
Wednesday, July 09, 2008

Enterprise Fund Distributors' Last Client Turns Out the Lights

Reported by Armie Margaret Lee

Enterprise Fund Distributors, which has been around since 1988, appears to be shuttering the last of its operations. The news was circulated as part of a press release from Gabelli, which is an advisor to a fund distributed by Enterprise.

Enterprise Fund Distributors spokesman Sean Nicholason declined to comment to The MFWire, instead referring questions to Gabelli.

Enterprise Fund Distributers had been a unit of the Enterprise Group which was acquired by AXA in September 2004 as part of a $2.3 billion acquisition of the MONY Group. Enterprise was the mutual fund arm of MONY. As part of the deal, the AXA and MONY/Enterprise fund units were combined into the AXA Enterprise Funds in May of 2005.

A press release issued by GAMCO Investors Tuesday afternoon mentioned that Enterprise Fund Distributors is "ceasing operations" and thus, Gabelli & Company will take over as the distributor of the the Enterprise Mergers and Acquisitions Fund effective August 1. The fund, which had $341 million in AUM in end-March, will be rechristened Gabelli Enterprise Mergers and Acquisitions Fund.

Gabelli Funds has served as the fund's investment advisor since March (it has subadvised the fund since its birth in 2001).

Enterprise Fund Distributors has served as underwriting and distributing broker-dealer of mutual fund shares for the Enterprise Group of Funds since 1988, according to its Web site. EFD became a distributor of AXA Enterprise Funds in 2005 and in 2007, became the distributor of the 787 Fund, Inc.

Below is the news release issued by GAMCO on Tuesday:

Company Press Release

RYE, N.Y.--(BUSINESS WIRE)--GAMCO Investors, Inc. (NYSE: GBL - News) today announced that the Board of Directors of the Enterprise Mergers and Acquisitions Fund (the “Fund”), a fund that has been advised by Gabelli Funds, LLC since March 2008 and was previously sub-advised by GAMCO from the fund’s inception on February 28, 2001, approved the name change to Gabelli Enterprise Mergers and Acquisitions Fund, aligning the name under the Gabelli brand. The portfolio management team, which has managed the fund since inception, remains the same. In addition, Gabelli & Company, Inc. will become the distributor of the Fund effective August 1, following the decision of Enterprise Fund Distributors, Inc. to cease operations, including its agreement to serve as distributor of the Fund.

As stated by its name, the Fund specializes in mergers and acquisitions (M&A) investing in companies that are the subject of a deal, such as a merger, takeover or buyout. When these deals are announced, there is an opportunity for “merger arbitrage,” the act of investing in a merger or acquisition target and holding the stock until the deal closes. This strategy aims to capitalize on the spread between the price of the targeted company following the announcement and the deal price upon closing. Investing in a fund that specializes in mergers and acquisitions may offer distinct advantages to investors. One, M&A activity continues to be robust. Two, an M&A fund tends to have a lower correlation to the overall stock market and may be less impacted by bear markets than a typical equity fund. Deal volume is the primary influence on the returns of the arbitrage portion of the fund, and that may rise or fall in recession, as hard times may prompt industry consolidation. Three, merger arbitrage is not a strategy for the do-it-yourself investor. It is the full-time occupation of professional investment managers who specialize in arbitrage. It takes expertise, industry resources for research and analysis, and plenty of time and money, as the road to success lies in the ability to capitalize on many small returns over time. For these reasons, a mutual fund offers investors an excellent avenue to the world of arbitrage.

The Fund focuses its investment strategy in merger and acquisition arbitrage to achieve total returns that are attractive to investors seeking positive returns in various market conditions without excessive risk of capital. The Fund focuses on securities involved in announced mergers and acquisitions in order to achieve a positive return not correlated to the overall market by capturing the spread between the purchase price and the ultimate acquisition price on specific equity investments.  

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