<PAGE>
- --------------------------------------------------------------------------------
The Gabelli Asset Fund
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE: 1-800-GABELLI (1-800-422-3554)
WWW.GABELLI.COM
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS
MAY 1, 1996
The Gabelli Asset Fund (the "Fund") is an open-end, no-load mutual fund, the
primary investment objective of which is growth of capital. Current income is a
secondary investment objective. See "The Fund and its Investment Policies".
----------------------
Shares of the Fund may be purchased without sales load at current per share net
asset value (see "Purchase of Shares"). There is no deferred sales or other
charge on the redemption of shares but the Fund may pay up to 0.25% of its
average net assets in any fiscal year for certain promotional and distribution
expenses and shareholder services (see "Distribution Plan"). For further
information, contact Gabelli & Company, Inc. at the address or telephone number
shown above.
----------------------
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. A Statement of Additional Information,
dated May 1, 1996, containing additional and more complete information about the
Fund (the "Additional Statement") has been filed with the Securities and
Exchange Commission (the "SEC") and is incorporated in its entirety by reference
into this Prospectus. For a free copy, write or call the Fund at the telephone
number or address set forth above.
----------------------
This Prospectus should be retained by investors for future reference.
----------------------
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF FEES AND EXPENSES
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum sales load imposed on purchases or reinvestment of dividends..................................... None
Contingent deferred sales charge upon redemption of investments.......................................... None
Redemption fee........................................................................................... None*
ANNUAL FUND OPERATING EXPENSES:
(Percent of average net assets)
Management Fees.......................................................................................... 1.00%
Distribution (Rule 12b-1) Expenses(a).................................................................... .21%
Other Expenses........................................................................................... .12%
-----
Total Operating Expenses........................................................................... 1.33%
-----
-----
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE:** 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return............................................................... $ 14 $42 $73 $160
</TABLE>
- --------------------------------------------------------------------------------
* Broker-dealers holding a shareholder's shares may charge a fee for
redemptions.
** The amounts listed in this example should not be considered as
representative of past or future expenses and actual expenses may be greater
or less than those indicated. Moreover, while the example assumes a 5%
annual return, the Fund's actual performance will vary and may result in an
actual return greater or less than 5%.
- --------------------------------------------------------------------------------
(a) The purpose of the foregoing table is to assist you in understanding the
various costs and expenses that an investor in the Fund would bear directly
or indirectly. The expenses shown are at the levels incurred during the past
year and anticipated for the current year. The maximum level of distribution
expenses which may be borne by the Fund is 0.25% of its average net assets
(see "Distribution Plan"). As a result, long term shareholders may pay more
than the economic equivalent of the maximum front-end sales charge permitted
by the National Association of Securities Dealers, Inc. ("NASD").
- --------------------------------------------------------------------------------
Management's Discussion and Analysis of the Fund's performance during the fiscal
year ended December 31, 1995 is included in the Fund's Annual Report to
Shareholders dated December 31, 1995. The Fund's Annual Report to Shareholders
may be obtained upon request and without charge by writing or calling the Fund
at the address or telephone number listed on the Prospectus cover.
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Price Waterhouse LLP, independent
accountants, whose unqualified report appears in the Additional Statement. This
table should be read in conjunction with the Financial Statements and related
notes that are included in the Additional Statement.
Per share amounts for a Fund share outstanding throughout each period/year ended
December 31.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of
year......................... $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69
--------- ------- ------- ------- ------- ------- -------
Net investment income(a)...... 0.26 0.26 0.16 0.26 0.39 0.76 0.55
Net realized and unrealized
gain/(loss) on investments... 5.28 (0.30) 4.18 2.41 2.45 (1.62) 3.30
--------- ------- ------- ------- ------- ------- -------
Total from investment
operations................... 5.54 (0.04) 4.34 2.67 2.84 (0.86) 3.85
--------- ------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income........ (0.25) (0.25) (0.16) (0.25) (0.39) (0.77) (0.56)
Distributions in excess of
net investment income...... -- (0.01) -- -- -- -- --
Net realized gains........... (1.75) (0.76) (0.76) (0.50) (0.12) -- (0.72)
Distributions in excess of
net realized gains......... (0.00)(c) (0.03) -- -- -- -- --
--------- ------- ------- ------- ------- ------- -------
Total distributions........... (2.00) (1.05) (0.92) (0.75) (0.51) (0.77) (1.28)
--------- ------- ------- ------- ------- ------- -------
Net asset value, end of
year......................... $ 25.75 $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26
--------- ------- ------- ------- ------- ------- -------
--------- ------- ------- ------- ------- ------- -------
Total return**................ 24.9% (0.1)% 21.8% 14.9% 18.1% (5.0)% 26.2%
--------- ------- ------- ------- ------- ------- -------
--------- ------- ------- ------- ------- ------- -------
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in
000's)....................... $1,091,539 $982,250 $945,408 $632,575 $483,865 $342,710 $359,443
Ratio of net investment
income to average net
assets..................... 0.95% 1.10% 0.82% 1.42% 2.34% 4.51% 4.17%
Ratio of operating expenses
to average net assets(b)... 1.33% 1.28% 1.31% 1.31% 1.30% 1.20% 1.26%
Portfolio turnover rate....... 26.4% 18.7% 16.0% 14.4% 20.1% 55.7% 49.3%
<CAPTION>
1988 1987 1986*
-------- ------- -------
<S> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of
year......................... $ 12.61 $ 11.28 $ 10.00
------- ------ ------
Net investment income(a)...... 0.24 0.14 0.10
Net realized and unrealized
gain/(loss) on investments... 3.45 1.69 1.18
------- ------ ------
Total from investment
operations................... 3.69 1.83 1.28
------- ------ ------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income........ (0.38) (0.09) --
Distributions in excess of
net investment income...... -- -- --
Net realized gains........... (1.23) (0.41) --
Distributions in excess of
net realized gains......... -- -- --
------- ------ ------
Total distributions........... (1.61) (0.50) --
------- ------ ------
Net asset value, end of
year......................... $ 14.69 $ 12.61 $ 11.28
------- ------ ------
------- ------ ------
Total return**................ 31.1% 16.2% 12.8%
------- ------ ------
------- ------ ------
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in
000's)....................... $143,050 $76,810 $48,911
Ratio of net investment
income to average net
assets..................... 2.04% 1.19% 1.87%+
Ratio of operating expenses
to average net assets(b)... 1.31% 1.26% 1.67%+
Portfolio turnover rate....... 47.3% 89.9% 126.6%
</TABLE>
- ------------
<TABLE>
<C> <S>
* The Fund commenced operations on March 3, 1986.
** Total return represents aggregate total return of a hypothetical $1,000 investment at the beginning of the period and
sold at the end of the period including reinvestment of dividends. Total return for the period of less than one year is
not annualized.
+ Annualized.
(a) Net investment income before expenses reimbursed by Adviser for the years ended December 31, 1988 and 1987 and the
period ended December 31, 1986 was $0.23, $0.11 and $0.09, respectively.
(b) Operating expense ratios before expenses reimbursed by Adviser for the years ended December 31, 1988 and 1987 and the
period ended December 31, 1986 were 1.38%, 1.52% and 1.83%, respectively.
(c) Amount represents less than $0.01 per share.
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
THE FUND AND ITS INVESTMENT POLICIES
The Fund is an open-end, no-load, diversified management investment company
organized as a Massachusetts Business Trust on November 25, 1985. The primary
investment objective of the Fund is to seek growth of capital and investments
will be made based on management's perception of their potential for capital
appreciation. Current income, to the extent it may affect potential growth of
capital, is a secondary objective. There is no assurance that the Fund will
achieve its investment objectives. The investment objectives of the Fund
together with the percentage restrictions set forth below under "Special
Investment Methods" and its investment restrictions which are described in the
Additional Statement, are fundamental and may not be changed without shareholder
approval. Its other investment policies indicated below may be changed by the
Board of Trustees without shareholder approval.
The Fund expects that its assets will be invested primarily in a diversified
portfolio of readily marketable equity securities (including common stock,
preferred stocks and securities representing the right to acquire stocks), at
least 80% of which will be listed on a nationally recognized securities exchange
or traded on the NASDAQ National Market System of the National Association of
Securities Dealers. Gabelli Funds, Inc. (the "Adviser") will invest in companies
that, in the public market, are selling at a significant discount to their
private market value ("PMV") or that value the Adviser believes an informed
industrialist would be willing to pay to acquire companies with similar
characteristics. Factors considered by the Adviser include price, earnings
expectations, earnings and price histories, balance sheet characteristics and
perceived management skills. Also considered are changes in economic and
political outlooks as well as individual corporate developments. Fund
investments which lose their perceived value relative to other investment
alternatives are sold.
When deemed appropriate by the Adviser, the Fund may without limit invest
temporarily in defensive securities such as preferred stocks, high grade debt
securities, obligations of the U.S. Government, its agencies or
instrumentalities, or in short-term (maturing less than one year) money market
instruments, including commercial paper rated A-1 or better by Standard & Poor's
Ratings Service, a division of McGraw-Hill Companies, Inc. ("S&P") or P-1 or
better by Moody's Investors Services, Inc. ("Moody's").
It is the Adviser's expectation that most Fund investments will be long term in
nature and that the annual turnover of the Fund's portfolio should not exceed
100%. A portfolio turnover rate of 100% would occur if all the stocks in the
portfolio were replaced in a one-year period. High turnover involves
correspondingly greater commission expenses and transaction costs.
CORPORATE REORGANIZATIONS
Subject to the diversification requirements of its investment restrictions, the
Fund may invest not more than 35% of its total assets in securities for which a
tender or exchange offer has been made or announced and in the securities of
companies for which a merger, consolidation, liquidation or similar
reorganization proposal has been announced if, in the judgment of the Adviser,
there is a reasonable prospect of capital appreciation significantly greater
than the added portfolio turnover expenses inherent in the short-term nature of
such transactions. The 35% limitation does not apply to the securities of
companies which may be involved in simply consummating an approved or agreed
upon merger, acquisition, consolidation, liquidation or reorganization. The
principal risk is that such offers or proposals may not be consummated within
the time and under the terms contemplated at the time of the investment in which
case, unless replaced by an equivalent or increased offer or proposal which is
consummated, the Fund may sustain a loss. For further information on such
investments, see "Corporate Reorganizations" in the Additional Statement.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
CONVERTIBLE SECURITIES
Convertible securities may include corporate notes or preferred stock but are
ordinarily a long-term debt obligation of the issuer convertible at a stated
exchange rate into common stock of the issuer. As with all debt securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, to increase as interest rates decline. Convertible
securities generally offer lower interest or dividend yields than
non-convertible securities of similar quality. However, when the market price of
the common stock underlying a convertible security exceeds the conversion price,
the price of the convertible security tends to reflect the value of the
underlying common stock. As the market price of the underlying common stock
declines, the convertible security tends to trade increasingly on a yield basis,
and thus may not depreciate to the same extent as the underlying common stock.
Convertible securities rank senior to common stocks on an issuer's capital
structure and are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which such risk is reduced depends
in large measure upon the degree to which the convertible security sells above
its value as a fixed income security.
The Fund may invest in convertible securities when it appears to the Adviser
that it may not be prudent to be fully invested in common stocks. In evaluating
a convertible security, the Adviser places primary emphasis on the
attractiveness of the underlying common stock and the potential for capital
appreciation through conversion. See "Convertible Securities" in the Additional
Statement.
The Fund will normally purchase only investment grade convertible securities
having a rating of, or equivalent to, at least an S&P rating of BBB (which
rating may have speculative characteristics) or, if unrated, judged by the
Adviser to be of comparable quality. However, the Fund may also invest up to 25%
of its assets in more speculative convertible debt securities which appear to
present an advantageous means of acquiring common stock having potential capital
appreciation provided such securities have a rating of, or equivalent to, at
least an S&P rating of B or, if unrated, judged by the Adviser to be of
comparable quality. Corporate debt obligations having a B rating will likely
have some quality and protective characteristics which, in the judgment of the
rating organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions. Although lower rated debt securities generally
have higher yields, they are also more subject to market price volatility based
on increased sensitivity to changes in interest rates and economic conditions or
the liquidity of their secondary trading market. A description of corporate debt
ratings is contained in the Additional Statement.
DEBT SECURITIES
The Fund may invest up to 5% of its assets in low rated and unrated corporate
debt securities (often referred to in the financial press as "junk bonds") which
are perceived by the Adviser to present an opportunity for significant capital
appreciation, if, in the judgment of the Adviser, the ability of the issuer to
repay principal and interest when due is underestimated by the market. See "Debt
Securities" in the Additional Statement.
INVESTMENTS IN SMALL, UNSEASONED
COMPANIES
The Fund may invest up to 5% of its net assets in small, less well known
companies which (including predecessors) have operated less than three years.
The securities of such companies may have limited liquidity.
WARRANTS AND RIGHTS
The Fund may invest up to 5% of its total assets in warrants or rights (other
than those acquired in units or attached to other securities) which entitle the
holder to buy equity securities at a specific price for a specific period of
time but will do so only if such equity securities are deemed appro-
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
priate by the Adviser for inclusion in the Fund's portfolio. The Fund will not
invest more than 2% of its total assets in warrants or rights which are not
listed on the New York or American Stock Exchanges.
FOREIGN SECURITIES
The Fund may invest up to 25% of its total assets in the securities of non-U.S.
issuers. These investments involve certain risks not ordinarily associated with
investments in securities of domestic issuers. These risks include fluctuations
in foreign exchange rates (which the Fund will not seek to hedge), future
political and economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. In addition, with
respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to or as
uniform as those of U.S. companies. Non-U.S. securities markets, while growing
in volume have, for the most part, substantially less volume than U.S. markets,
and securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable U.S. companies. Transaction costs of
investing in non-U.S. securities markets are generally higher than in the U.S.
There is generally less government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. The Fund might have greater
difficulty taking appropriate legal action in non-U.S. courts. Non-U.S. markets
also have different clearance and settlement procedures which in some markets
have at times failed to keep pace with the volume of transactions, thereby
creating substantial delays and settlement failures that could adversely affect
the Fund's performance.
Dividend and interest income from non-U.S. securities will generally be subject
to withholding taxes by the country in which the issuer is located and may not
be recoverable by the Fund or the investor.
OTHER INVESTMENT COMPANIES
The Fund does not intend to purchase the shares of other open-end investment
companies and reserves the right to invest up to 10% of its total assets in the
securities of closed-end investment companies including small business
investment companies (not more than 5% of its total assets may be invested in
more than 3% of the securities of any investment company). To the extent that
the Fund invests in the securities of other investment companies, shareholders
in the Fund may be subject to duplicative advisory and administrative fees.
SPECIAL INVESTMENT METHODS
The Fund will not, in the aggregate, invest more than 10% of its net assets in
small, unseasoned companies, securities which are restricted for public sale,
securities for which market quotations are not readily available, and in
repurchase agreements maturing or terminable in more than seven days. Securities
freely salable among qualified institutional investors under special rules
adopted by the SEC may be treated as liquid if they satisfy liquidity standards
established by the Board of Trustees. The continued liquidity of such securities
is not as well assured as that of publicly traded securities, and accordingly,
the Board of Trustees will monitor their liquidity. Further information on the
investment methods and policies of the Fund are set forth in the Additional
Statement.
The Fund may purchase and sell securities on a "when, as and if issued basis"
under which the issuance of the security depends upon the occurrence of a
subsequent event, such as approval of a merger, corporate reorganization or debt
restructuring. For further information, see "When Issued, Delayed Delivery
Securities & Forward Commitments" in the Additional Statement.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
The Fund may enter into repurchase agreements with "primary dealers" in U.S.
Government securities and member banks of the Federal Reserve System which
furnish collateral at least equal in value or market price to the amount of
their repurchase obligation. In a repurchase agreement, an investor (e.g., the
Fund) purchases a debt security from a seller which undertakes to repurchase the
security at a specified resale price on an agreed future date (ordinarily a week
or less). The resale price generally exceeds the purchase price by an amount
which reflects an agreed-upon market interest rate for the term of the
repurchase agreement. The principal risk is that, if the seller defaults, the
Fund might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the Fund are less than the
repurchase price. Except for repurchase agreements for a period of a week or
less in respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, not more than 5% of the Fund's total assets may
be so invested.
BORROWING
The Fund may not borrow money except for (i) short-term credits from banks as
may be necessary for the clearance of portfolio transactions, and (ii)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing for any purpose including redemptions may
not, in the aggregate, exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of the Fund's total assets at the
time a borrowing is made. The Fund will not make any additional purchases of
portfolio securities at any time its borrowings exceed 5% of its assets. The
Fund will not mortgage, pledge or hypothecate any of its assets except that, in
connection with the foregoing, not more than 20% of the assets of the Fund may
be used as collateral.
MANAGEMENT OF THE FUND
The Fund's Board of Trustees (who, with its officers, are described in the
Additional Statement) has overall responsibility for the management of the Fund.
The Trustees decide upon matters of general policy and review the actions of the
Adviser and Gabelli & Company, Inc., the Fund's distributor (the "Distributor").
Pursuant to an Investment Advisory Contract (the "Advisory Contract") with the
Fund, the Adviser provides a continuous investment program for the Fund's
portfolio; provides all facilities and personnel, including officers, required
for its administrative management; and pays the compensation of all officers and
trustees of the Fund who are its affiliates. As compensation for its services
and the related expenses borne by the Adviser, the Fund pays the Adviser a fee,
computed daily and payable monthly, equal, on an annual basis, to 1.00% of the
Fund's average net assets which is higher than that paid by most mutual funds.
The advisory fee paid by the Fund for its fiscal year ended December 31, 1995
was 1.00% of its average net assets and its total expenses for the same period
were 1.33% of its average net assets.
The Additional Statement contains further information about the Advisory
Contract including a more complete description of the advisory and expense
arrangements, exculpatory and brokerage provisions, as well as information on
the brokerage practices of the Fund.
Gabelli Funds, Inc. acts as Adviser to the Fund. The Adviser was formed in 1980
and as of April 1,
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
1996 acts as investment adviser to the following funds with aggregate assets of
$4.3 billion:
<TABLE>
<CAPTION>
NET ASSETS
04/01/96
(in
OPEN-END FUNDS: millions)
----------
<S> <C>
The Gabelli Asset Fund $1,140
The Gabelli Growth Fund 582
The Gabelli Value Fund Inc. 417
The Gabelli Small Cap Growth Fund 230
The Gabelli Equity Income Fund 58
The Gabelli U.S. Treasury Money Market Fund 282
The Gabelli ABC Fund 25
The Gabelli Global Telecommunications Fund 125
The Gabelli Global Convertible Securities
Fund 16
The Gabelli Global Interactive Couch
Potato(R) Fund 37
Gabelli Gold Fund, Inc. 20
Gabelli Capital Asset Fund 35
Gabelli International Growth Fund, Inc. 4
CLOSED-END FUNDS:
The Gabelli Equity Trust Inc. 1,059
The Gabelli Convertible Securities Fund,
Inc. 91
The Gabelli Global Multimedia Trust Inc. 94
</TABLE>
GAMCO Investors, Inc. ("GAMCO"), a majority owned subsidiary of the Adviser,
acts as investment adviser for individuals, pension trusts, profit-sharing
trusts and endowments having aggregate assets in excess of $5.4 billion as of
April 1, 1996. Teton Advisers LLC, an affiliate of the Adviser, acts as
investment adviser to the Westwood Funds and had aggregate assets in excess of
$50 million as of April 1, 1996. The Distributor which, is the principal
distributor of the Fund for the sale of its shares, is an indirect majority
owned subsidiary of the Adviser. Mr. Mario J. Gabelli may be deemed a
"controlling person" of the Adviser and the Distributor on the basis of his
ownership of stock of the Adviser. The Adviser relies to a considerable extent
on the expertise of Mr. Gabelli who may be difficult to replace in the event of
his death, disability or resignation. The Adviser's address is the same as the
Fund as shown on the cover of this Prospectus.
Mario J. Gabelli, CFA has been designated by the Adviser to be primarily
responsible for the day to day management of the Fund. Mr. Gabelli has been
Chairman and Chief Investment Officer of the Adviser since its inception in
1980.
Affiliates of the Adviser may, in the ordinary course of their business, acquire
for their own account or for the accounts of their advisory clients, significant
(and possibly controlling) positions in the securities of companies that may
also be suitable for investment by the Fund. The securities in which the Fund
might invest may thereby be limited to some extent. For instance, many companies
in the past several years have adopted so-called "poison pill" or other
defensive measures designed to discourage or prevent the completion of
non-negotiated offers for control of the company. Such defensive measures may
have the effect of limiting the shares of the company which might otherwise be
acquired by the Fund if the affiliates of the Adviser or their advisory accounts
have or acquire a significant position in the same securities. However, the
Adviser does not believe that the investment activities of its affiliates will
have a material adverse effect upon the Fund in seeking to achieve its
investment objectives. Securities purchased or sold pursuant to contemporaneous
orders entered on behalf of the investment company accounts of the Adviser or
the advisory accounts managed by its affiliates for their unaffiliated clients
are allocated pursuant to principles believed to be fair and not disadvantageous
to any such accounts. In addition, all such orders are accorded priority of
execution over orders entered on behalf of accounts in which the Adviser or its
affiliates have a substantial pecuniary interest. The Adviser may on occasion
give advice or take action with respect to other clients that differ from the
actions taken with respect to the Fund. The Fund may invest in the securities of
companies which are investment management clients of GAMCO, a subsidiary of the
Adviser. In addition, portfolio companies or their officers or directors may be
minority shareholders of the Adviser or its affiliates.
The Advisory Contract contains provisions relating to the selection of
securities brokers to effect the portfolio transactions of the Fund. Under those
provisions, subject to applicable law and procedures adopted by the Trustees,
the Adviser may (i) direct Fund portfolio brokerage to the Distributor, a
broker-dealer affiliate of the Adviser; (ii) pay commissions to brokers other
than the Distributor which are higher than might
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
be charged by another qualified broker to obtain brokerage and/or research
services considered by the Adviser to be useful or desirable for its investment
management of the Fund and/or other advisory accounts of itself and any
investment adviser affiliated with it; and (iii) consider the sales of shares of
the Fund by brokers other than the Distributor as a factor in its selection of
brokers for Fund portfolio transactions.
The Adviser has entered into a Sub-Administration Agreement with First Data
Investor Services Group, Inc., a subsidiary of First Data Corporation (the
"Sub-Administrator"). Under the Sub-Administration Agreement, the
Sub-Administrator provides certain administrative services necessary for the
Fund's operations including the preparation and distribution of materials for
meetings of the Fund's Board of Trustees, compliance testing of Fund activities
and assistance in the preparation of proxy statements, reports to shareholders
and other documentation. For such services and related expenses borne by the
Sub-Administrator, the Adviser pays the Administrator an annual fee based on the
aggregate average daily net assets of all Funds under its administration managed
by the Adviser as follows: up to $1 billion -- 0.10%; $1 billion to $1.5
billion -- 0.08%; $1.5 billion to $3 billion -- 0.03%; over $3 billion -- 0.02%.
No additional amount will be paid by the Fund for services by the Sub-
Administrator. The Sub-Administrator has its principal office at Exchange Place,
Boston, Massachusetts 02109.
DISTRIBUTION PLAN
On May 11, 1992, the shareholders of the Fund approved a Distribution Plan which
authorizes payments by the Fund in connection with the distribution of its
shares at an annual rate, as determined from time to time by the Board of
Trustees, of up to 0.25% of the Fund's average daily net assets. Although the
Distribution Plan permits payments to be made in subsequent years for expenses
incurred in prior years if the Fund's independent Trustees specifically
authorize such payments, the Distributor has not requested and the Fund does not
anticipate making any such payments.
Payments may be made by the Fund under the Distribution Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Fund as determined by the Board of Trustees. Such activities typically
include advertising; compensation for sales and sales marketing activities of
the Distributor and other banks, broker-dealers and service providers;
shareholder account servicing; production and dissemination of prospectus and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Fund may finance without a Distribution Plan, the
Fund may also make payments to finance such activity outside of the Plan and not
subject to its limitations.
The Plan has been implemented by written agreements between the Fund and/or the
Distributor and each person (including the Distributor) to which payments may be
made. Administration of the Plan is regulated by Rule 12b-1 under the Investment
Company Act of 1940 (the "Act"), which includes requirements that the Board of
Trustees receive and review at least quarterly reports concerning the nature and
qualification of expenses which are made, that the Board of Trustees approve all
agreements implementing the Plan and that the Plan may be continued from year to
year only if the Board of Trustees concludes at least annually that continuation
of the Plan is likely to benefit shareholders.
To the extent that payments under the Plan are based on allocation by the
Distributor, the Fund may be considered to be participating in joint
distribution activities with other funds distributed by the Distributor. Any
such allocations would be subject to approval by the Fund's non-interested
Trustees and would be based on such factors as the net assets of each Fund, the
number of shareholders, inquiries and similar pertinent criteria.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties, that there is a rea-
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
sonable likelihood that the Plan will benefit the Fund and its shareholders.
During the fiscal year ended December 31, 1995, the distribution fees paid to
the Distributor totaled $2,211,822 or 0.21% of average net assets.
PURCHASE OF SHARES
Shares of the Fund are offered without sales load as an investment vehicle for
individuals, institutions, fiduciaries and retirement plans. Prospectuses, sales
material and applications can be obtained from the Distributor. The Fund and the
Distributor are authorized to reject any purchase order.
The initial minimum investment is $1,000 for all accounts. Accounts establishing
an Automatic Investment Plan require no initial minimum investment. There is no
minimum for subsequent investments. Investments through an Individual Retirement
Account ("IRA") or other retirement plans, however, have different requirements
(see "Retirement Plans"). All purchase payments accompanied by a purchase order
in proper form as described below will be effective as of the date received by
the Transfer Agent and will be invested in full and fractional shares at the per
share net asset value of the Fund next determined after such receipt. Although
most shareholders elect not to receive stock certificates, certificates for
whole shares only can be obtain on specific written request to the Transfer
Agent. The Fund may waive or reduce the minimum initial investment for certain
accounts or classes of accounts from time to time.
Shares of the Fund may also be purchased through authorized broker-dealers who
may charge for their services. No such charge is imposed by the Fund or the
Distributor. Such charges may vary among broker-dealers who may impose higher
initial or subsequent minimum investment requirements than those established by
the Fund. Services provided by such broker-dealers may include holding Fund
shares in the name of the broker-dealer for the brokerage accounts of its
customers and allowing investors to borrow on the value of their Fund shares by
establishing a margin account with the broker-dealer. It is the responsibility
of the shareholder's agent to establish procedures which would assure that upon
receipt of an order to purchase shares of the Fund, the order will be
transmitted so that it will be received by the Distributor before the time when
the price applicable to the buy order expires.
The net asset value per share of the Fund is determined as of the close of the
regular trading session of the New York Stock Exchange (currently 4:00 p.m., New
York time) on each day that the New York Stock Exchange is open by dividing the
value of the Fund's net assets (i.e., the value of its securities and other
assets less its liabilities, including expenses payable or accrued by excluding
capital stock and surplus) by the number of shares outstanding at the time the
determination is made. Portfolio securities which are readily marketable are
valued at market value based on reported prices or bid and asked quotations.
Debt instruments having 60 days or less remaining maturity are valued at cost
adjusted for amortization of premiums and accretions of discounts. All other
investments are valued at fair value under procedures established by and under
the general supervision of the Fund's Board of Trustees. See the Additional
Statement for further information.
MAIL
To make an initial purchase of shares of the Fund, send a completed subscription
order form with a check for the amount of the investment payable to "The Gabelli
Asset Fund" to: THE GABELLI FUNDS, P.O. BOX 8308, BOSTON, MA 02266-8308.
Subsequent purchases do not require a completed application and can be made by
(i) mailing a check to the same address noted above; (ii) bank wire; (iii)
personal delivery; or (iv) by telephone as indicated below. The exact name and
number of the shareholder's account should be clearly indicated.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
Checks will be accepted if drawn in U.S. currency on a domestic bank for less
than $100,000. U.S. dollar checks drawn against a non-U.S. bank may be subject
to collection delays and will be accepted only upon actual receipt of funds by
the Transfer Agent. Bank collection fees may apply. Bank or certified checks for
investments of $100,000 or more will be required unless the investor elects to
invest by bank wire as described below.
BANK WIRE
To purchase shares of the Fund using the wire system for transmittal of money
among banks, the investor should instruct a Federal Reserve System member bank
to wire funds to:
State Street Bank and Trust Company
ABA # 011-0000-28 REF DDA # 9904-6187
Attn: Shareholder Services
Re: The Gabelli Asset Fund
A/C#
- -----------------------------------------------
(Registered Owner)
Account of
- -----------------------------------------
SS# / Tax I.D.#
- ------------------------------------
225 Franklin Street, Boston, MA 02110
For initial purchases, an investor should first telephone the Fund at
1-800-GABELLI (422-3554) to obtain a new account number. The investor should
then mail a completed subscription order form to the Gabelli Funds at the
address shown above for mail purchases. State Street Bank and Trust Company does
not charge investors in the Fund for the receipt of wire transfers but there may
be a charge by your bank for transmitting the money by bank wire. If you are
planning to wire funds, it is suggested that you instruct your bank early in the
day so the wire transfer can be accomplished the same day.
PERSONAL DELIVERY
Deliver a check made payable to "The Gabelli Asset Fund" (with a completed
subscription order form for an initial purchase) to: THE GABELLI FUNDS, THE BFDS
BUILDING, 7TH FLOOR, TWO HERITAGE DRIVE, NORTH QUINCY, MA 02171.
TELEPHONE INVESTMENT PLAN
An investor may purchase additional shares of the Fund by telephone through the
Automated Clearing House ("ACH") system as long as your bank is a member of the
ACH system and you have a completed, approved Investment Plan application on
file with the Fund's Transfer Agent. The funding for your purchase will be
automatically deducted from the ACH eligible account you designate on the
application. Your investment will normally be credited to your mutual fund
account on the first business day following your telephone request. Your request
must be received no later than 4:00 p.m., eastern time. There is a minimum of
$100 for each telephone investment. Any subsequent changes in banking
information must be submitted in writing and accompanied by a sample voided
check. To initiate an ACH purchase, please call 1-800-GABELLI (422-3544) or
1-800-872-5365. Fund shares purchased through the Investment Plan will not be
available for redemption for fifteen (15) days following the purchase date.
AUTOMATIC INVESTMENT PLAN
The Fund offers an automatic monthly investment plan through the ACH system,
details of which can be obtained from the Distributor. There is no initial
investment minimum currently required for accounts establishing an automatic
investment plan.
SYSTEMATIC WITHDRAWAL PLAN
Any shareholder who owns shares of the Fund with an aggregate value of $10,000
or more may establish a Systematic Withdrawal Plan under which he offers to sell
to the Fund at net asset value the number of full and fractional shares which
will produce the monthly, quarterly or annual payments specified. Systematic
withdrawals deplete the investor's principal and are treated as redemptions,
which may be taxable transactions. Investors contemplating participation in this
plan should consult their tax advisers.
Shareholders wishing to utilize this plan may do so by completing an application
which may be
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
obtained by writing or calling the Distributor. No additional charge to the
shareholder is made for this service.
OTHER INVESTORS
No minimum initial investment is required for (i) officers or Trustees of the
Fund; (ii) officers, directors or full-time employees of the Adviser, the
Distributor or their affiliates, including members of the "immediate family" of
such employees. The term "immediate family" refers to spouses, children and
grandchildren adopted or natural, parents, grandparents, siblings, a spouse's
siblings, a sibling's spouse and a sibling's children; (iii) retirement plans
established for such employees; or (iv) investments made through the Fund's
Automatic Investment Plan.
REDEMPTION OF SHARES
Upon receipt by the Transfer Agent of a redemption request in proper form,
shares of the Fund will be redeemed at their next determined net asset value.
Checks for redemption proceeds will normally be mailed to the shareholder's
address of record within seven days, but will not be mailed until all checks in
payment for the purchase of the shares to be redeemed have been honored, which
may take up to 15 days. There is no charge on the redemption of shares
regardless of when purchased. The proceeds of a redemption may be more or less
than the amount invested and, therefore, a redemption may result in gain or loss
for income tax purposes.
BY LETTER
Redemption requests may be made by letter to the Transfer Agent, specifying the
name of the Fund, the dollar amount or number of shares to be redeemed, and the
account number. The letter must be signed in exactly the same way the account is
registered (if there is more than one owner of the shares, all must sign) and,
if any certificates for the shares to be redeemed are outstanding, presentation
of such certificates properly endorsed is also required. Signatures on a
redemption request and/or certificates must be guaranteed by an eligible
guarantor institution which includes a domestic bank, a savings and loan
institution, a domestic credit union, a member bank of the Federal Reserve
System or a member firm of a national securities exchange; in accordance with
the Fund's transfer agent's standards and procedures (signature guarantees by
notaries public are not acceptable). Further documentation, such as copies of
corporate resolutions and instruments of authority, are normally requested from
corporations, administrators, executors, personal representatives, trustees or
custodians to evidence the authority of the person or entity making the
redemption request.
TELEPHONE REDEMPTION
BY CHECK
The Fund accepts telephone requests for redemption of unissued shares from
shareholders subject to a $25,000 limitation. By calling either 1-800-GABELLI
(442-3554) or 1-800-872-5365, you may request that a check be mailed to the
address of record on the account provided that the address has not changed
within thirty (30) days prior to your request. The check will be made payable as
the account is registered and mailed within seven (7) days.
BY BANK WIRE
The Fund accepts telephone requests for wire redemption in excess of $1,000 but
subject to a $25,000 limitation to a predesignated bank either on the
subscription order form or in a subsequent written authorization with the
signature guaranteed. The Fund accepts signature guaranteed written requests for
redemptions by bank wire without limitation. The proceeds are normally wired on
the following business day. Your bank must be either a member of the Federal
Reserve System or have a correspondent bank which is a member. Any change to the
banking information made at a later date must be submitted in writing with a
signature guarantee.
Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m., Eastern time. If your telephone call is received
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
after this time or on a day when the New York Stock Exchange is not open, the
request will be processed the following business day. Shares are processed at
the net asset value next determined following your request. Fund shares
purchased by check or through the automatic purchase plan will not be available
for redemption for fifteen (15) days following the purchase. Shares held in
certificate form must be returned to the transfer agent for redeposit prior to
the redemption of shares. Telephone redemption is not available for Individual
Retirement Accounts. The proceeds of a telephone redemption may be directed to
an existing account in another mutual fund advised by Gabelli Funds, Inc.
provided the registration of such account is the same. Such a purchase will be
made at the respective net asset value plus applicable sales charge, if any.
Shareholders may also redeem Fund shares through registered broker-dealers
holding such shares who have made arrangements with the Fund permitting them to
redeem such shares by telephone or facsimile transmission and who may charge a
fee for this service.
The Fund may suspend the right of redemption during any period when (i) trading
on the New York Stock Exchange is restricted or the Exchange is closed, other
than customary weekend and holiday closings; (ii) the SEC has by order permitted
such suspension or (iii) an emergency, as defined by rules of the SEC, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Fund not reasonably practicable. The Fund may postpone for
more than seven days the date of payment for redemptions during any period the
right to redeem has been suspended.
To minimize expenses, the Fund reserves the right to redeem, upon not less than
30 days' notice, all shares of the Fund in an account (other than an IRA) which
has a value below $500 due to prior shareholder redemptions. However, a
shareholder will be allowed to make additional investments prior to the date
fixed for redemption to avoid liquidation of the account.
The Fund and its transfer agent will not be liable for following telephone
instructions reasonably believed to be genuine. In this regard the Fund and its
transfer agent require personal identification information before accepting a
telephone redemption. If the Fund or its transfer agent fail to use reasonable
procedures, the Fund may be liable for losses due to fraudulent instructions.
RETIREMENT PLANS
The Fund has available a form of IRA for investment in Fund shares which may be
obtained from its Distributor. Self-employed investors may purchase shares of
the Fund through tax-deductible contributions to existing retirement plans for
self-employed persons, known as Keogh or H.R. 10 plans. The Fund does not
currently act as sponsor to such plans. Fund shares are also a suitable
investment for other types of qualified pension or profit-sharing plans which
are employer sponsored, including deferred compensation or salary reduction
plans known as "401(k) Plans" which give participants the right to defer
portions of their compensation for investment on a tax-deferred basis until
distributions are made from the plans.
The minimum initial investment required for all such retirement plans is $1,000
($1,250 for combined spousal IRAs). There is no minimum for all subsequent
investments.
Under the Internal Revenue Code of 1986, as amended (the "Code"), individuals
may make wholly or partly tax deductible IRA contributions of up to $2,000
annually, depending on whether they are active participants in an employer-
sponsored retirement plan and on their income level. However, dividends and
distributions held in the account are not taxed until withdrawn in accordance
with the provisions of the Code. An individual with a non-working spouse may
establish a separate IRA for the spouse under the same conditions and contribute
a combined maximum of $2,250 annually to either or both IRAs provided that no
more than $2,000 may be contributed to the IRA of either spouse.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
Investors should be aware that they may be subject to penalties or additional
tax on contributions to or withdrawals from IRAs or other retirement plans which
are not permitted by the applicable provisions of the Internal Revenue Code and
prior to a withdrawal, shareholders may be required to certify their age and
awareness of such restrictions in writing. Persons desiring information
concerning investments through IRAs or other retirement plans should write or
telephone the Distributor.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid on the
payment date fixed by the Board of Trustees in additional shares of the Fund
having an aggregate net asset value as of the payment date of such dividend or
distribution equal to the cash amount of such dividend or distribution. An
election to receive dividends and distributions in cash or shares is made at the
time shares are subscribed for and may be changed by notifying the Fund in
writing at any time prior to the record date for a particular dividend or
distribution. There are no sales or other charges in connections with the
reinvestment of dividends and capital gains distributions. There is no fixed
dividend rate, and there can be no assurance that the Fund will pay any
dividends or realize any capital gains.
The Fund has qualified and intends to continue to qualify for tax treatment as a
"Regulated Investment Company" under the Code in order to be relieved of Federal
income tax on that part of its net investment income and realized capital gains
which it pays out to its shareholders. To qualify, the Fund must meet certain
relatively complex tests, including the requirement that less than 30% of its
gross income must be derived from gains from the sale or other disposition of
securities held for less than three months. Because of such requirements,
qualification in any given year may not be feasible.
Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, all or a portion of such distributions may
be eligible for the dividends-received deduction. Dividends and distributions
declared by the Fund may also be subject to state and local taxes. Distributions
out of long-term capital gains, of which shareholders will be notified, are
taxable to the recipient as long-term capital gains. The foregoing summary of
Federal income tax consequences is intended for general informational purposes
only. Prior to investing in shares of the Fund, prospective shareholders should
consult their tax advisers concerning the Federal, state and local tax
consequences of such an investment.
CALCULATION OF INVESTMENT PERFORMANCE
The investment performance of the Fund quoted in advertising for the sale of its
shares will be calculated on a "total return" basis which assumes the
reinvestment of all dividends and distributions. Total return is generally
quoted as a percentage calculated by combining the income and principal changes
of an assumed investment in shares of the Fund during the period specified and
dividing by the amount of the assumed initial investment. To illustrate the
components of its overall performance, investment performance may be given on a
cumulative basis (for periods greater than one year); for consecutive annual
periods; for consecutive quarterly or semi-annual periods as well as for the
year including such interim periods; or separately for investment income results
and capital gain or loss. Such performance quotations will reflect all recurrent
charges.
In each case, the average annual total return of the Fund for the past ten years
(or since its inception, if less),
the past five years, and the twelve-month period through the most recent
calendar quarter will also be given. The average annual total return will be
calculated pursuant to a standardized formula to reflect the
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
hypothetical annually compounded rate of return which would have produced the
same cumulative total return. Investors should recognize that an average annual
return tends to smooth out variations in the Fund's performance level and is
therefore not the same as actual year by year results. The Fund's average annual
total return for the 1-year and 5-year periods ended December 31, 1995 and from
inception through December 31, 1995 were 24.9%, 15.6% and 15.9%, respectively.
GENERAL INFORMATION
DESCRIPTION OF SHARES, VOTING RIGHTS
AND LIABILITIES
As a Massachusetts Business Trust, the Fund is not required, and does not
intend, to hold regular annual shareholder meetings but may hold special
meetings for the consideration of proposals requiring shareholder approval such
as changing fundamental policies or, upon the written request of the
recordholders of 33 1/3% of outstanding shares (10% in the case of removing one
or more Trustees) for any other purpose. The Fund will facilitate shareholder
communications in this regard. Shares of the Fund have equal rights with respect
to voting and each share represents an equal proportionate interest in the Fund
with each other share. The Fund may issue an unlimited number of full and
fractional shares of beneficial interest (par value $.01 per share) and the
Trustees may divide or combine the shares into a greater or lesser number of
shares without changing the proportionate beneficial interests in the Fund.
When issued, shares are fully paid and non-assessable (except as described in
the Additional Statement under "General Information") and have no pre-emptive or
conversion rights.
The Fund sends semi-annual unaudited and annual audited reports to all its
shareholders which include a list of portfolio securities. Unless it is clear
that a shareholder holds as nominee for the account of an unrelated person or a
shareholder otherwise specifically requests in writing, the Fund may send a
single copy of semi-annual, annual and other reports to shareholders to all
accounts at the same address and all accounts of any person at that address.
INFORMATION FOR SHAREHOLDERS
All shareholder inquiries regarding administrative procedures including the
purchase and redemption of shares should be directed to the Distributor. For
assistance, call 1-800-GABELLI (422-3554). The address of the Distributor is One
Corporate Center, Rye, New York 10580-1435.
Upon request, Gabelli & Company will provide, without charge, a paper copy of
this Prospectus to investors or their representatives who received this
Prospectus in an electronic format.
This Prospectus omits certain information contained in the Registration
Statement filed with the SEC. Copies of the Registration Statement, including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. The Additional Statement included in
such Registration Statement may be obtained without charge from the Fund or the
Distributor.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company, ("State Street") 225 Franklin Street,
Boston, MA 02110, is the Custodian for the Fund's cash and securities. Boston
Financial Data Services, Inc., located at Two Heritage Drive, North Quincy, MA
02171, an affiliate of State Street, performs the services of Transfer and
Dividend Disbursing Agent for the Fund on behalf of State Street. State Street
does not assist in and is not responsible for investment decisions involving
assets of the Fund.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Table of Fees and Expenses........... 2
Financial Highlights................. 3
The Fund and Its Investment
Policies........................... 4
Special Investment Methods........... 6
Management of the Fund............... 7
Distribution Plan.................... 9
Purchase of Shares................... 10
Redemption of Shares................. 12
Retirement Plans..................... 13
Dividends, Distributions and Taxes... 14
Calculation of Investment
Performance........................ 14
General Information.................. 15
Custodian, Transfer Agent and
Dividend Disbursing Agent.......... 15
</TABLE>
- ------------------------------------------------------
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus, the
Statement of Additional Information and in the Fund's official sales literature,
and if given or made, such information and representation may not be relied upon
as authorized by the Fund, its Investment Adviser, Distributor or any affiliate
thereof.
- ------------------------------------------------------
The
Gabelli
Asset
Fund
PROSPECTUS
MAY 1, 1996
GABELLI FUNDS, INC.
INVESTMENT ADVISER
GABELLI & COMPANY, INC.
DISTRIBUTOR
- --------------------------------------------------------------------------------
