Registrant No. 33-1719
Investment Company File No. 811-4494
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT No.
POST-EFFECTIVE AMENDMENT No. 13 X
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT No. 15 X
THE GABELLI ASSET FUND
(Exact Name of Registrant as Specified in Charter)
One Corporate Center, Rye, New York 10580-1434
(Address of Principal Executive Office)
Registrant's Telephone Number (800) 422-3554
Bruce N. Alpert
Gabelli Funds, Inc.
One Corporate Center, Rye, New York 10580-1434
(Name Address of Agent for Service)
Copies to:
James E. McKee, Esq. Richard T. Prins, Esq.
Gabelli Funds, Inc. Skadden, Arps, Slate, Meagher & Flom
One Corporate Center 919 Third Avenue
Rye, New York 10580-1434 New York, New York 10022
(212) 735-2000
It is proposed that this filing will become effective (check appropriate
box):
immediately upon filing pursuant to paragraph (b); or
X on May 1, 1996 pursuant to paragraph (b); or
60 days after filing pursuant to paragraph (a); or
on [date] pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed
post-effective amendment.
Registrant has registered an indefinite number of its shares of beneficial
interest pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended and has filed a Rule 24f-2 Notice for its most recent fiscal year
ended December 31, 1995 on February 27, 1996.
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
Proposed Proposed
Maximum Maximum
Offering Aggregate
Title of Securities Amount Being Price Per Offering Amount
of
Being Registered Registered Unit (2) Price (3) Registration
Fee
Shares of Beneficial 1,846,309.94 $27.40 $290,000 $100
Interest par value $.01
per share of
The Gabelli Asset Fund
(1) The shares being registered as set forth in this table are in addition
to the indefinite number of shares of beneficial interest which Registrant has
registered under the Securities Act of 1933, as amended (the "1933 Act"),
pursuant to Rule 24f-2 under the 1940 Act. Registrant's Rule 24f-2 Notice for
its fiscal year ended December 31, 1995, was filed on February 27, 1996.
(2) Based on the Registrant's closing price of $27.40 on April 17, 1996
pursuant to Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the 1940
Act.
(3) In response to Rule 24e-2(b) under the 1940 Act: (1) the calculation of
the maximum aggregate offering price is made pursuant to Rule 24e-2; (2)
10,946,512 shares of beneficial interest were redeemed by the Registrant
during the fiscal year ended December 31, 1995; (3) 9,110,786 shares have been
used for reductions pursuant to Rule 24f-2 during the current year; and (4)
1,835,726 shares are being used for reduction in this amendment pursuant to
Rule 24e-2(a).
THE GABELLI ASSET FUND
CROSS REFERENCE SHEET
(Pursuant to Rule 495(a))
Part A
Item No. Prospectus Captions
1. Cover Page Cover Page
2. Synopsis Table of Fees and Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant The Fund and Its
Investment Policies, Special Investment Methods
5. Management of the Fund Management of the Fund
5A. Management's Discussion of Fund Performance Not applicable
6. Capital Stock and Other Securities General Information
7. Purchase of Securities Being Offered Purchase of Shares
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not applicable
Part B Statement of Additional
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History Not Applicable
13. Investment Objectives and Policies (Prospectus "The Fund and
Its Investment Policies") Investment Policies; Special Investment
Methods; Special Risks; Investment Restrictions
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Holders of Securities Trustees
and Officers
16. Investment Advisory and Other Services (Prospectus-
"Management of the Fund"); Investment Adviser
17. Brokerage Allocation (Prospectus-"Management of the Fund")
Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities (Prospectus-"General
Information"); General Information
19. Purchase, Redemption and Pricing (Prospectus-"Purchase of Shares,
of Securities Being Offered Redemption of Shares");
Redemption of Shares; Net Asset Value
20. Tax Status (Prospectus-"Dividends, Distribution and Taxes")
21. Underwriters Distributor
22. Calculation of Performance Data Investment Performance
Information
23. Financial Statements Report of Independent Accountants;
Financial Statements
Part C
Information required to be included in Part C is set forth under
the appropriate Item, so numbered, in Part C to this Registration
Statement.
THE GABELLI ASSET FUND
PART A
<PAGE>
- --------------------------------------------------------------------------------
The Gabelli Asset Fund
ONE CORPORATE CENTER, RYE, NEW YORK 10580-1434
TELEPHONE: 1-800-GABELLI (1-800-422-3554)
http://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, respective.
<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 since its inception,
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................... 9
Redemption of Shares................. 12
Retirement Plans..................... 13
Dividends, Distributions and Taxes... 13
Calculation of Investment
Performance........................ 14
General Information.................. 14
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. This Prospectus does not constitute an offer to sell or a solicitation
of any offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such offer in such state.
- ------------------------------------------------------
The
Gabelli
Asset
Fund
PROSPECTUS
MAY 1, 1996
GABELLI FUNDS, INC.
INVESTMENT ADVISER
GABELLI & COMPANY, INC.
DISTRIBUTOR
- --------------------------------------------------------------------------------
THE GABELLI ASSET FUND
PART B
<PAGE>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1996
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by The Gabelli Asset
Fund's (the "Fund") prospectus dated May 1, 1996, as supplemented from time to
time (the "Prospectus"). This Statement of Additional Information contains
additional and more detailed information than that set forth in the Prospectus
and should be read in conjunction with the Prospectus, additional copies of
which may be obtained without charge by writing or telephoning the Fund at the
address and telephone number set forth above.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Investment Policies.................................................. 2
Special Investment Methods........................................... 2
Convertible Securities.......................................... 2
Debt Securities................................................. 3
Investments in Warrants and Rights.............................. 3
Investments in Small, Unseasoned Companies...................... 3
Corporate Reorganizations....................................... 3
When Issued, Delayed Delivery Securities & Forward Commitments.. 4
Repurchase Agreements........................................... 5
Investment Restrictions.............................................. 5
Trustees and Officers................................................ 7
Investment Adviser................................................... 11
Distributor.......................................................... 13
Distribution Plan.................................................... 13
Portfolio Transactions and Brokerage............................ 13
Redemption of Shares................................................. 16
Net Asset Value...................................................... 16
Investment Performance Information................................... 17
Counsel and Independent Accountants.................................. 19
General Information.................................................. 19
Financial Statements................................................. 21
Appendix A - Description of Corporate Debt Ratings................... A-1
</TABLE>
<PAGE>
INVESTMENT POLICIES
The Fund expects that, for most periods, a substantial portion, if not
all, of its assets will be invested in a diversified portfolio of common stocks
judged by Gabelli Funds, Inc. (the "Adviser") to have favorable value to price
characteristics. The Fund may also invest in U.S. Government or Government
Agency obligations, investment grade corporate bonds, preferred stocks,
convertible securities, foreign securities, debt securities and/or short term
money market instruments when deemed appropriate by the Adviser.
SPECIAL INVESTMENT METHODS
CONVERTIBLE SECURITIES
The Fund may, as an interim alternative to investment in common stocks,
purchase investment grade convertible debt securities having a rating of, or
equivalent to, at least "BBB" by Standard & Poor's Ratings Service, a division
of McGraw-Hill Companies, Inc. ("Standard & Poor's") or, if unrated, judged by
the Adviser to be of comparable quality. Securities rated less than "A" by
Standard & Poor's may have speculative characteristics. The Fund may also invest
up to 25% of its assets in convertible debt securities which have a lesser
rating or are unrated. However, the Adviser will not purchase securities rated
lower than "B" by Standard & Poor's or "Caa" by Moody's Investors' Services,
Inc. ("Moody's"). Unrated convertible securities which, in the judgment of the
Adviser, have equivalent credit worthiness may also be purchased for the Fund.
Although lower rated bonds generally have higher yields, they are more
speculative and subject to a greater risk of default with respect to the
issuer's capacity to pay interest and repay principal than are higher rated debt
securities.
In selecting convertible securities for the Fund, the Adviser relies
primarily on its own evaluation of the issuer and the potential for capital
appreciation through conversion. It does not rely on the rating of the security
or sell because of a change in rating absent a change in its own evaluation of
the underlying common stock and the ability of the issuer to pay principal and
interest or dividends when due without disrupting its business goals. Interest
or dividend yield is a factor only to the extent it is reasonably consistent
with prevailing rates for securities of similar quality and thereby provides a
support level for the market price of the security. The Fund will purchase the
convertible securities of highly leveraged issuers only when, in the judgment of
the Adviser, the risk of default is outweighed by the potential for capital
appreciation.
The issuers of debt obligations having speculative characteristics may
experience difficulty in paying principal and interest when due in the event of
a downturn in the economy or unanticipated corporate developments. The market
prices of such securities may become increasingly volatile in periods of
economic uncertainty. Moreover, adverse publicity or the perceptions of
investors over which the Adviser has no control, whether or not based on
fundamental analysis, may decrease the market price and liquidity of such
investments. Although the Adviser will attempt to avoid exposing the Fund to
such risks, there is no assurance that it will be successful or that a liquid
secondary market will continue to be available for the disposition of such
securities.
2
<PAGE>
DEBT SECURITIES
Non-convertible corporate debt securities which are either unrated or
have a predominantly speculative rating (often referred to in the financial
press as "junk bonds") may present opportunities for significant long-term
capital appreciation if the ability of the issuer to repay principal and
interest when due is underestimated by the market or the rating organizations.
Because of its perceived credit weakness, the issuer is generally required to
pay a higher interest rate and/or its debt securities may be selling at a
significantly lower market price than the debt securities of issuers actually
having similar strength. When the inherent value of such securities is
recognized, the market value of such securities may appreciate significantly.
The Adviser believes that its research on the credit and balance sheet strength
of certain issuers may enable it to select a limited number of corporate debt
securities, which in certain markets, will better serve the objective of capital
appreciation than alternative investments in common stocks. Of course, there can
be no assurance that the Adviser will be successful. In its evaluation, the
Adviser will not rely on ratings and the receipt of income is only an incidental
consideration.
As in the case of the convertible debt securities discussed above, low
rated and unrated corporate debt securities are generally considered to be more
subject to default and therefore significantly more speculative than those
having an investment grade rating. They also are 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. The Fund
does not intend to purchase debt securities for which a liquid trading market
does not exist but there can be no assurance that such a market will exist for
the sale of such securities.
INVESTMENTS IN WARRANTS AND RIGHTS
Warrants basically are options to purchase equity securities at a
specified price valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. Rights are
similar to warrants, but normally have a short duration and are distributed
directly by the issuer to its shareholders. Rights and warrants have no voting
rights, receive no dividends and have no rights with respect to the assets of
the issuer.
INVESTMENT IN SMALL, UNSEASONED COMPANIES
The securities of small, unseasoned companies may have a limited
trading market, which may adversely affect their disposition and can result in
their being priced lower than might otherwise be the case. If other investment
companies and investors who invest in such issuers trade the same securities
when the Fund attempts to dispose of its holdings, the Fund may receive lower
prices than might otherwise be obtained.
CORPORATE REORGANIZATIONS
The Fund may invest up to 35% of its total assets in securities for
which a tender or exchange offer has been made or announced and in securities of
companies for which a merger,
3
<PAGE>
consolidation, liquidation or reorganization proposal has been announced if, in
the judgment of the Adviser, there is reasonable prospect of capital
appreciation significantly greater than the brokerage and other transaction
expenses involved. 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
primary risk of such investments is that if the contemplated transaction is
abandoned, revised, delayed or becomes subject to unanticipated uncertainties,
the market price of the securities may decline below the purchase price paid by
the Fund.
In general, securities which are the subject of such an offer or
proposal sell at a premium to their historic market price immediately prior to
the announcement of the offer or proposal. However, the increased market price
of such securities may also discount what the stated or appraised value of the
security would be if the contemplated transaction were approved or consummated.
Such investments may be advantageous when the discount significantly overstates
the risk of the contingencies involved; significantly undervalues the
securities, assets or cash to be received by shareholders of the prospective
portfolio company as a result of the contemplated transaction; or fails
adequately to recognize the possibility that the offer or proposal may be
replaced or superseded by an offer or proposal of greater value. The evaluation
of such contingencies requires unusually broad knowledge and experience on the
part of the Adviser which must appraise not only the value of the issuer and its
component businesses as well as the assets or securities to be received as a
result of the contemplated transaction, but also the financial resources and
business motivation of the offerer as well as the dynamic of the business
climate when the offer or proposal is in process.
In making such investments, the Fund will not violate any of its
diversification requirements or investment restrictions (see below, "Investment
Restrictions") including the requirements that, except for the investment of up
to 25% of its assets in any one company or industry, not more than 5% of its
assets may be invested in the securities of any issuer. Since such investments
are ordinarily short term in nature, they will tend to increase the turnover
ratio of the Fund thereby increasing its brokerage and other transaction
expenses as well as make it more difficult for the Fund to meet the test for
favorable tax treatment as a "Registered Investment Company" specified by the
Internal Revenue Code of 1986, as amended (the "Code") (see the Prospectus,
"Dividends, Distributions and Taxes"). The Adviser intends to select investments
of the type described which, in its view, have a reasonable prospect of capital
appreciation which is significant in relation to both the risk involved and the
potential of available alternate investments as well as monitor the effect of
such investments on the tax qualification tests of the Code.
WHEN ISSUED, DELAYED DELIVERY SECURITIES & FORWARD COMMITMENTS
The Fund is authorized to buy and sell when issued securities as an
additional investment strategy in furtherance of its investment objectives.
In utilizing this strategy, the Fund may enter into forward commitments
for the purchase or sale of securities, including on a "when issued" or "delayed
delivery" basis in excess of customary settlement periods for the type of
securities involved. In some cases, a forward
4
<PAGE>
commitment may be conditioned upon the occurrence of a subsequent event, such as
approval and consummation of a merger, corporate reorganization or debt
restructuring, i.e., a when, as and if issued security. When such transactions
are negotiated, the price is fixed at the time of the commitment, with payment
and delivery taking place in the future, generally a month or more after the
date of the commitment. While the Fund will only enter into a forward commitment
with the intention of actually acquiring the security, the Fund may sell the
security before the settlement date if it is deemed advisable.
Securities purchased under a forward commitment are subject to market
fluctuation and no interest (or dividends) accrues to the Fund prior to the
settlement date. The Fund will segregate with its custodian cash or liquid
high-grade debt securities with the Fund's custodian in an aggregate amount at
least equal to the amount of its outstanding forward commitments.
REPURCHASE AGREEMENTS
The Fund may engage in repurchase agreements as set forth in the
Prospectus. A repurchase agreement is an instrument under which the purchaser
(i.e., the Fund) acquires a debt security and the seller agrees, at the time of
the sale, to repurchase the obligation at a mutually agreed upon time and price,
thereby determining the yield during the purchaser's holding period. This
results in a fixed rate of return insulated from market fluctuations during such
period. The underlying securities are ordinarily U.S. Treasury or other
government obligations or high quality money market instruments. The Fund will
require that the value of such underlying securities, together with any other
collateral held by the Fund, always equals or exceeds the amount of the
repurchase obligations of the counter party. While the maturities of the
underlying securities in repurchase agreement transactions may be more than one
year, the term of each repurchase agreement will always be less than one year.
The Fund's risk is primarily that, if the seller defaults, the proceeds from the
disposition of underlying securities and other collateral for the seller's
obligation are less than the repurchase price. If the seller becomes bankrupt,
the Fund might be delayed in selling the collateral. Under the Investment
Company Act of 1940, as amended (the "1940 Act"), repurchase agreements are
considered loans. Repurchase agreements usually are for short periods, such as
one week or less, but could be longer. The Fund will not enter into repurchase
agreements of a duration of more than seven days if, taken together with
illiquid securities and other securities for which there are no readily
available quotations, more than 10% of its total assets would be invested.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which may
not be changed without the approval of the Fund's shareholders. Under such
restrictions, the Fund may not:
(1) Purchase the securities of any one issuer, other than the
United States Government, or any of its agencies or instrumentalities, if
immediately after such purchase more than 5% of the value of its total assets
would be invested in such issuer or the Fund would own more than 10% of the
outstanding voting securities of such issuer, except that up to 25% of the value
of the Fund's total assets may be invested without regard to such 5% and 10%
limitations;
5
<PAGE>
(2) Invest more than 25% of the value of its total assets in any
particular industry;
(3) Purchase securities on margin, but it may obtain such short
term credits from banks as may be necessary for the clearance of purchase and
sales of securities;
(4) Make loans of its assets except for the purchase of debt
securities;
(5) Borrow money except subject to the restrictions set forth in
the prospectus under "Borrowing";
(6) Mortgage, pledge or hypothecate any of its assets except that,
in connection with permissible borrowings mentioned in paragraph 5 above, not
more than 20% of the assets of the Fund (not including amounts borrowed) may be
used as collateral;
(7) Invest more than 5% of its total assets in more than 3% of the
securities of another investment company or invest more than 10% of its total
assets in the securities of other investment companies, nor make any such
investments other than through purchase in the open market where to the best
information of the Fund no commission or profit to a sponsor or dealer (other
than the customary broker's commission) results from such purchase;
(8) Act as an underwriter of securities of other issuers;
(9) Invest, in the aggregate, more than 10% of the value of its
total assets in securities for which market quotations are not readily
available, securities which are restricted for public sale, or in repurchase
agreements maturing or terminable in more than seven days;
(10) Purchase or otherwise acquire interests in real estate, real
estate mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
(11) Sell securities short or invest in puts, calls, straddles,
spreads or combination thereof;
(12) Purchase or acquire commodities or commodity contracts;
(13) Issue senior securities, except insofar as the Fund may be
deemed to have issued a senior security in connection with any permitted
borrowing;
(14) Participate on a joint, or a joint and several, basis in any
securities trading account; or
(15) Invest in companies for the purpose of exercising control.
6
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and principal officers of the Fund, and their principal
occupations for the past five years, are listed below. Unless otherwise
specified, the address of each such person is One Corporate Center, Rye, New
York 10580-1434. Trustees deemed to be "interested persons" of the Fund for
purposes of the 1940 Act are indicated by an asterisk.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION(S) WITH
FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------
<S> <C>
Mario J. Gabelli*, 53 Mr. Gabelli is Chairman of the Board, President,
Trustee and Chief Executive Officer and Chief Investment
Officer of Gabelli Funds, Inc.; Chief Investment
Officer of GAMCO Investors, Inc.; President and
Chairman of The Gabelli Equity Trust Inc. and
The Gabelli Global Multimedia Trust Inc.;
President, Director and Chief Investment Officer
of Gabelli Global Series Funds, Inc., Gabelli
Investor Funds, Inc., The Gabelli Value Fund
Inc., Gabelli Equity Series Funds, Inc. and The
Gabelli Convertible Securities Fund, Inc.;
Chairman of the Board, President and Chief
Investment Officer of Gabelli Capital Series
Funds, Inc.; Trustee of The Gabelli Growth Fund;
Chairman of the Board of Gabelli Gold Fund, Inc.
and Gabelli International Growth Fund, Inc.;
Chairman of the Board and Chief Executive
Officer of Lynch Corporation; Director of The
Morgan Group, Inc. and Spinnaker Industries,
Inc.;
Felix J. Christiana, 70 Formerly Senior Vice President of Dry Dock
Trustee Savings Bank in White Plains, New York.
Director of Gabelli Global Series Funds, Inc.,
The Gabelli Equity Trust Inc., The Gabelli
Global Multimedia Trust Inc., The Gabelli
Convertible Securities Fund, Inc., Gabelli
Equity Series Funds, Inc., The Gabelli Value
Fund Inc. and The Treasurer's Fund, Inc., and
Trustee of The Gabelli Growth Fund.
Anthony J. Colavita, 60 President and Attorney at Law in the law firm of
Trustee Anthony J. Colavita, P.C. since 1961. Director
of Gabelli Global Series Funds, Inc., Gabelli
Investor Funds, Inc., The Gabelli Convertible
Securities Fund, Inc., Gabelli Gold Fund, Inc.,
Gabelli Equity Series Funds, Inc., The Gabelli
Value Fund Inc. and Gabelli Capital Series
Funds, Inc. and a Trustee of The Gabelli Growth
Fund, The Gabelli Money Market Funds and The
Westwood Funds.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND POSITION(S) WITH
FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------
<S> <C>
James P. Conn, 58 Managing Director/Chief Investment Officer of
Trustee Financial Security Assurance, since 1992.
President and Chief Executive Officer of Bay
Meadows Operating Company from 1988 through
1992. Trustee of The Gabelli Growth Fund and The
Westwood Funds and Director of The Gabelli
Equity Trust Inc. and The Gabelli Global
Multimedia Trust Inc.
Anthony C. Pustorino, CPA, 70 Certified Public Accountant. Professor of
Trustee Accounting, Pace University, since 1965.
Director, President and shareholder of Pustorino
Puglisi & Co., P.C., certified public
accountants, 1961 to 1990. Director of The
Gabelli Equity Trust Inc., The Gabelli Global
Multimedia Trust Inc., The Gabelli Convertible
Securities Fund, Inc.; Gabelli Equity Series
Funds, Inc.; The Gabelli Value Fund Inc. , The
Treasurer's Fund, Inc. and Gabelli Capital
Series Funds, Inc. and Trustee of The Gabelli
Growth Fund
Karl Otto Pohl*, 66 Managing Partner of Sal Oppenheim Jr. & Cie,
Trustee since 1991. Former President of the Deutsche
Bundesbank and Chairman of its Central Bank
Council (1980-1991); currently board member of
IBM World Trade Europe/Middle East/Africa Corp.;
Bertlesman AG; Zurich Versicherungs-Gesellschaft
insurance; the International Advisory Board of
General Electric Company; the International
Council for JP Morgan & Co.; the Board of
Supervisory Directors of ROBECo/o Group;
Advisory Director of Unilever N.V. and Unilever
Deutschland; and the Supervisory Board of Royal
Dutch Petroleum Company; German Governor,
International Monetary Fund (1980-1991); Board
Member, Bank for International Settlements
(1980-1991). Director or Trustee of all funds
advised by Gabelli Funds, Inc.
Anthonie C. van Ekris, 61 Managing Director of Balmac International;
Trustee Director of Stahal Hardmeyer A.G. (through
present); Trustee of Gabelli Global Series
Funds, Inc., The Gabelli Growth Fund and The
Gabelli Money Market Funds and Director of The
Gabelli Convertible Securities Fund, Inc.,
Gabelli Equity Series Funds, Inc., Gabelli
Capital Series Funds, Inc., Gabelli
International Growth Fund, Inc. and Gabelli Gold
Fund, Inc.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND POSITION(S) WITH
FUND PRINCIPAL OCCUPATIONS DURING PAST FIVE YEARS
- ------------------------------ ------------------------------------------------
<S> <C>
Salvatore J. Zizza, 50 President and Chief Executive Officer of the
Trustee LeHigh Group, Inc. Director of The Gabelli
Equity Trust Inc., The Gabelli Global Multimedia
Trust Inc., Gabelli Convertible Securities Fund,
Inc. and Debe Computer Systems Corp. and Trustee
of The Gabelli Growth Fund.
Bruce N. Alpert, 44 Vice President, Treasurer and Chief Financial
President and Treasurer and Administrative Officer of the
investment advisory division of the Adviser;
Vice President and Treasurer of The Gabelli
Equity Trust Inc., The Gabelli Global Multimedia
Trust, Inc., The Gabelli Value Fund Inc.,
Gabelli Global Series Funds, Inc., The Gabelli
Investor Funds, Inc., Gabelli Capital Series
Funds, Inc., Gabelli International Growth Fund,
Inc., Gabelli Equity Series Funds, Inc., Gabelli
Convertible Securities Fund, Inc., and Gabelli
Money Market Funds. President and Treasurer of
The Gabelli Growth Fund. Vice President of the
Westwood Funds and Manager of Teton Advisers
LLC.
James E. McKee, 32 Vice President and General Counsel of GAMCO
Secretary Investors, Inc. since 1993 and of Gabelli Funds,
Inc. since August 1995. Secretary of all funds
advised by Gabelli Funds, Inc. and Teton
Advisers LLC since August 1995. Branch Chief
with the U.S. Securities and Exchange Commission
in New York (1992-1993). Staff attorney with the
U.S. Securities and Exchange Commission in New
York (1989-1992).
</TABLE>
No director, officer or employee of Gabelli & Company or the Adviser or
of any affiliate of Gabelli & Company or the Adviser will receive any
compensation from the Fund for serving as an officer or Trustee of the Fund.
The Fund pays each of its Trustees who is not a director, officer or employee of
the Adviser or any of their affiliates, $6,000 per annum plus $500 per meeting
attended and reimburses each Director for related travel and out-of-pocket
expenses. The Fund also pays each Trustee serving as a member of the Audit,
Proxy or Nominating Committees a fee of $500 per committee meeting if held on a
day other than a regularly scheduled board meeting, and the Chairman of each
committee receives $1,000 per annum. For the fiscal year ended December 31,
1995, such fees totalled $66,099.
On April 1, 1996, the outstanding voting securities of the Fund
consisted of 41,198,293 shares of beneficial interest. As a group, the officers
and Trustees of the Fund owned beneficially, directly or indirectly, less than
1% of its outstanding voting shares.
9
<PAGE>
Set forth below is certain information as to persons who owned 5% or
more of the Fund's outstanding shares as of April 1, 1996.
<TABLE>
<CAPTION>
NAME AND ADDRESS % OF FUND NATURE OF OWNERSHIP
- --------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co. Inc. 9% Record (a)
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
(a) Charles Schwab & Co. disclaims beneficial ownership and no one underlying
shareholder owns beneficially more than 5% of the shares of the Fund.
COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS FROM REGISTRANT
COMPENSATION FROM ACCRUED ESTIMATED ANNUAL AND FUND COMPLEX
NAME OF PERSON, REGISTRANT AS PART OF FUND BENEFITS UPON PAID TO TRUSTEES
POSITION FOR FISCAL YEAR EXPENSES RETIREMENT FOR CALENDAR YEAR*
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mario J. Gabelli $ 0 0 0 $ 0
Trustee
Anthony J. Colavita $ 9,000 0 0 $68,253 (11)
Trustee
Felix J. Christiana $ 9,000 0 0 $71,500 (9)
Trustee
James P. Conn $ 8,000 0 0 $35,000 (5)
Trustee
Anthony R. Pustorino $11,000 0 0 $79,381 (10)
Trustee
Karl Otto Pohl $ 8,000 0 0 $80,253 (15)
Trustee
Anthonie C. van Ekris $ 8,000 0 0 $45,253 (10)
Trustee
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Salvatore J. Zizza $ 8,000 0 0 $40,000 (5)
Trustee
</TABLE>
* The total compensation paid to such persons during the calendar year ending
December 31, 1995 by investment companies (including the Fund) from which
such person receives compensation that are part of the same Fund complex as
the Fund, because they have common or affiliated investment advisers. The
number in parentheses represents the number of such investment companies.
INVESTMENT ADVISER
The Adviser is a New York corporation with principal offices located at
One Corporate Center, Rye, New York 10580-1434. The Adviser also serves as
Adviser to The Gabelli Growth Fund, The Gabelli Value Fund Inc., The Gabelli
Convertible Securities Fund, Inc., The Gabelli Equity Income Fund, The Gabelli
U.S. Treasury Money Market Fund, The Gabelli Small Cap Growth Fund, Inc., The
Gabelli ABC Fund, The Gabelli Global Telecommunications Fund, The Gabelli Global
Convertible Securities Fund, The Gabelli Global Interactive Couch Potato (R)
Fund, Gabelli Gold Fund Inc., Gabelli Capital Asset Fund and Gabelli
International Growth Fund, Inc., open-end investment companies, and The Gabelli
Equity Trust Inc., The Gabelli Convertible Securities Fund, Inc., and The
Gabelli Global Multimedia Trust Inc., closed-end investment companies. The
Adviser is a registered investment adviser under the Investment Advisers Act of
1940, as amended.
Pursuant to an Investment Advisory Contract, which was approved by the
shareholders of the Fund at a meeting held on May 11, 1992, the Adviser
furnishes a continuous investment program for the Fund's portfolio, makes the
day-to-day investment decisions for the Fund, arranges the portfolio
transactions of the Fund and generally manages the Fund's investments in
accordance with the stated policies of the Fund, subject to the general
supervision of the Board of Trustees of the Fund.
Under the Investment Advisory Contract, the adviser also (i) provides
the Fund with the services of persons competent to perform such supervisory,
administrative, and clerical functions as are necessary to provide effective
administration of the Fund, including maintaining certain books and records and
overseeing the activities of the Fund's Custodian and Transfer Agent; (ii)
oversees the performance of administrative and professional services to the Fund
by others, including the Fund's Custodian, Transfer Agent and Dividend
Disbursing Agent, as well as accounting, auditing and other services performed
for the Fund; (iii) provides the Fund with adequate office space and facilities;
(iv) prepares, but does not pay for, the periodic updating of the Fund's
registration statement, Prospectus and Statement of Additional Information,
including the printing of such documents for the purpose of filings with the
Securities and Exchange Commission and state securities administrators, the
Fund's tax returns, and reports to the Fund's shareholders and the Securities
and Exchange Commission; (v) calculates the net asset value of shares in the
Fund; (vi) prepares, but does not pay for, all filings under the securities or
"Blue Sky" laws of such states or countries as are designated by the
Distributor, which may be required
11
<PAGE>
to register or qualify, or continue the registration or qualification, of the
Fund and/or its shares under such laws; and (vii) prepares notices and agendas
for meetings of the Fund's Board of Trustees and minutes of such meetings in all
matters required by the Act to be acted upon by the Board.
Pursuant to a contract with the Adviser, First Data Investor Services
Group, Inc. (the "Sub-Administrator"), a subsidiary of First Data Corporation
(which is located at Exchange Place, Boston, Massachusetts 02109) administers on
behalf of the Adviser the operations of the Fund which do not concern the
investment advisory and portfolio management services of the Adviser. For such
services and the related expenses borne by the Sub-Administrator, the Adviser
pays an annual fee based on the aggregate average daily net assets of the Funds
under its administration advised 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%. The Sub-Administrator's fee is paid by the Adviser and
will result in no additional expense to the Fund.
The Investment Advisory Contract provides that absent willful
misfeasance, bad faith, gross negligence or reckless disregard of its duty, the
Adviser and its employees, officers, directors and controlling persons are not
liable to the Fund or any of its investors for any act or omission by the
Adviser or for any error of judgment or for losses sustained by the Fund.
However, the Contract provides that the Fund is not waiving any rights it may
have with respect to any violation of law which cannot be waived. The Contract
also provides indemnification for the Adviser and each of these persons for any
conduct for which they are not liable to the Fund. The Investment Advisory
Contract in no way restricts the Adviser from acting as Adviser to others. The
Fund has agreed by the terms of the Investment Advisory Contract that the word
"Gabelli" in its name is derived from the name of the Adviser which in turn is
derived from the name of Mario J. Gabelli; that such name is the property of the
Adviser for copyright and/or other purposes; and that, therefore, such name may
freely be used by the Adviser for other investment companies, entities or
products. The Fund has further agreed that in the event that for any reason, the
Adviser ceases to be its investment adviser, the Fund will, unless the Adviser
otherwise consents in writing, promptly take all steps necessary to change its
name to one which does not include "Gabelli."
The Investment Advisory Contract is terminable without penalty by the
Fund on sixty days' written notice when authorized either by majority vote of
its outstanding voting shares or by a vote of a majority of its Board of
Trustees, or by the Adviser on sixty days' written notice, and will
automatically terminate in the event of its "assignment" as defined by the Act.
The contract provides that, unless terminated, it will remain in effect from
year to year as long as such continuance is annually approved by the Board of
Trustees or the shareholders of the Fund and, in either case, by a majority vote
of the Trustees who are not parties to the Agreement or "interested persons", as
defined by the 1940 Act, of any such party cast in person at a meeting called
specifically for the purpose of voting on the continuance of the Agreement.
The Investment Advisory Contract also provides the Adviser is obligated
to reimburse to the Fund any amount by which its aggregate expenses including
the advisory fees payable to the Adviser (but excluding interest, taxes, Rule
12b-1 expenses, brokerage commissions, certain
12
<PAGE>
distribution expenses and extraordinary expenses) exceed the most restrictive
expense limitation imposed by the securities law of any state in which shares of
the Fund are registered or qualified for sale. Such limitation is currently
believed to be 2.5% of the first $30 million of average net assets, 2% of the
next $70 million of average net assets, and 1.5% of average net assets in excess
of $100 million. Fund expenses are accrued monthly and the monthly fee otherwise
payable to the Adviser is reduced to the extent that Fund expenses exceed the
amount of such limitation and, to the extent such excess is greater than the
monthly fee of the Adviser, the amount of such excess is reimbursed by the
Adviser. The maximum expenses which may be incurred by the Fund in any fiscal
year pursuant to the Distribution Plan (see "Distribution Plan" below) is .25%
of its average net assets in the same fiscal year.
For the Fund's fiscal years ended December 31, 1993, December 31, 1994
and December 31, 1995 the fee paid to the Adviser was $7,863,803, $9,992,690 and
$10,714,960, respectively.
DISTRIBUTOR
To implement the Fund's 12b-1 Plan, the Fund has entered into a
Distribution Agreement with Gabelli & Company, Inc. (the "Distributor"), a New
York corporation which is an indirect subsidiary of the Adviser, having
principal offices located at One Corporate Center, Rye, New York 10580-1434. The
Distributor acts as agent of the Fund for the continuous offering of its shares
on a best efforts basis.
DISTRIBUTION PLAN
During the fiscal year ended December 31, 1995, the Fund reimbursed
the Distributor for distribution expenses under the Plan in the amount of
$2,211,822. Pursuant to the Plan, the Distributor incurred the following
expenses: $942,890 was spent on advertising, $151,497 on
printing, postage and stationary, $683,002 on overhead support expenses and
$434,433 on salaries of personnel of the Distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreement, the Adviser is authorized on
behalf of the Fund to employ brokers to effect the purchase or sale of portfolio
securities with the objective of obtaining prompt, efficient and reliable
execution and clearance of such transactions at the most favorable price
obtainable ("best execution") at reasonable expense. Transactions in securities
other than those for which a securities exchange is the principal market are
generally done with a brokerage firm and a commission is paid whenever it
appears that the broker can obtain a more favorable overall price. In general,
there may be no stated commission on principal transactions in over-the counter
securities, but the prices of such securities may usually include undisclosed
commissions or markups.
13
<PAGE>
When consistent with the objective of obtaining best execution, Fund
brokerage may be directed to brokers or dealers which furnish brokerage or
research services to the Fund or the Adviser of the type described in Section
28(e) of the Securities Exchange Act of 1934. The commissions charged by a
broker furnishing such brokerage or research services may be greater than that
which another qualified broker might charge if the Adviser determines, in good
faith, that the amount of such greater commission is reasonable in relation to
the value of the additional brokerage or research services provided by the
executing broker, viewed in terms of either the particular transaction or the
overall responsibilities of the Adviser or its advisory affiliates to the
accounts over which they exercise investment discretion. Since it is not
feasible to do so, the Adviser need not attempt to place a specific dollar value
on such services or the portion of the commission which reflects the amount paid
for such services but must be prepared to demonstrate a good faith basis for its
determinations.
Investment research obtained by allocations of Fund brokerage is used
to augment the scope and supplement the internal research and investment
strategy capabilities of the Adviser but does not reduce the overall expenses of
the Adviser to any material extent. Such investment research may be in written
form or through direct contact with individuals and includes information on
particular companies and industries as well as market, economic or institutional
activity areas. Research services furnished by brokers through which the Fund
effects securities transactions are used by the Adviser and its advisory
affiliates in carrying out their responsibilities with respect to all of their
accounts over which they exercise investment discretion. Such investment
information may be useful only to one or more of the other accounts of the
Adviser and its advisory affiliates, and research information received for the
commissions of those particular accounts may be useful both to the Fund and one
or more of such other accounts.
Neither the Fund nor the Adviser has any agreement or legally binding
understanding with any broker regarding any specific amount of brokerage
commissions which will be paid in recognition of such services. However, in
determining the amount of portfolio commissions directed to such brokers, the
Adviser does consider the level of services provided and, based on such
determinations, has allocated brokerage commissions of $438,241 on portfolio
transactions in the principal amounts of $305,408,628 during 1995. The average
commission on these transactions was $0.0453 per share.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli and Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers which is an affiliate of the
Adviser, when it appears that, as an introducing broker or otherwise, Gabelli
can obtain a price and execution which is at least as favorable as that
obtainable by other qualified brokers. As required by Rule 17e-1 under the Act,
the Board of Trustees has adopted "Procedures" which provide that commissions
paid to Gabelli on stock exchange transactions may not exceed that which would
have been charged by another qualified broker or member firm able to effect the
same or a comparable transaction at an equally favorable price and contains a
schedule setting forth maximum commission charges for such transactions designed
to reflect that standard. Rule 17e-1 and the Procedures contain requirements
that the Board, including its "independent" Trustees, conduct periodic
compliance reviews of such brokerage allocations and review such schedule at
least annually for its continuing compliance
14
<PAGE>
with the foregoing standard. The Adviser and Gabelli are also required to
furnish reports and maintain records in connection with such reviews.
To obtain the best execution of portfolio transactions on the New York
Stock Exchange, Gabelli controls and monitors the execution of such transactions
on the floor of the Exchange through independent "floor brokers" or through the
Designated Order Turnaround ("DOT") System of the Exchange. Such transactions
are then cleared, confirmed to the Fund for the account of Gabelli, and settled
directly with the Custodian of the Fund by a clearing house member firm which
remits the commission less its clearance charges to Gabelli. Pursuant to an
agreement with the Fund, Gabelli pays all charges incurred for such services and
reports at least quarterly to the Board the amount of such expenses and
commissions. The net compensation realized by Gabelli for its brokerage services
is subject to the approval of the Board and the "independent" Trustees of the
Fund who must approve the continuance of the arrangement at least annually.
Commissions paid by the Fund pursuant to the arrangement may not exceed the
commission level specified by the Procedures described above. Gabelli may also
effect Fund portfolio transactions in the same manner and pursuant to the same
arrangements on other national securities exchanges which adopt direct order
access rules similar to those of the New York Stock Exchange.
The amount of the commissions paid by the Fund in each of the last
three years, the percentage and the amount of such commissions paid to Gabelli,
and the percentage ratio which the aggregate principal amount of such
transactions bears to the aggregate dollar amount of all portfolio transactions
on which commissions were paid are as follows:
<TABLE>
<CAPTION>
GABELLI AND COMPANY, INC.
PERCENTAGE OF PERCENTAGE OF
YEAR ENDED TOTAL COMM. PAID AMOUNT TOTAL COMMISSIONS PRINCIPAL AMOUNT
- ---------- ---------------- ------ ----------------- ----------------
<S> <C> <C> <C> <C>
12/31/93 $357,955 $40,480 11.3% 10.2%
12/31/94 $355,059 $24,043 6.8% 5.5%
12/31/95 $438,241 $93,418 21.3% 21.3%
</TABLE>
The percentage of total Fund commissions paid to Gabelli differs from the
percentage of the principal amounts involved because commissions paid to Gabelli
are computed on a cents per share basis without regard to principal amount.
The Fund also paid brokerage commissions to Keeley Investment Corp.
("Keeley"). A significant shareholder of Keeley is a director of a company that
is an affiliate of the Adviser.
The amount of the commissions paid by the Fund, the percentage and the
amount of such commissions paid to Keeley, and the percentage ratio which the
aggregate principal amount of such transactions bears to the aggregate dollar
amount of all portfolio transactions on which commissions were paid are as
follows:
15
<PAGE>
<TABLE>
<CAPTION>
KEELEY INVESTMENT CORP.
PERCENTAGE OF PERCENTAGE OF
YEAR ENDED TOTAL COMM. PAID AMOUNT TOTAL COMMISSIONS PRINCIPAL AMOUNT
- ---------- ---------------- ------ ----------------- ----------------
<S> <C> <C> <C> <C>
12/31/94 $355,059 $11,650 3.3% 4.3%
12/31/95 $438,241 $ 3,575 0.8% 0.7%
</TABLE>
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either
in cash or in portfolio securities (selected in the discretion of the Board of
Trustees of the Fund and taken at their value used in determining the Fund's net
asset value per share as described under "Net Asset Value"), or partly in cash
and partly in portfolio securities. However, payments will be made wholly in
cash unless the Board of Trustees believes that economic conditions exist which
would make such a practice detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the securities to
cash. The Fund will not distribute in kind portfolio securities that are not
readily marketable. The Fund has filed a formal election with the Securities and
Exchange Commission pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of record is redeeming
more than $250,000 or 1% of the Fund's total net assets, whichever is less,
during any 90 day period. In the opinion of the Fund's management, however, the
amount of a redemption request would have to be significantly greater than
$250,000 before a redemption wholly or partly in portfolio securities would be
made.
Cancellation of purchase orders for Fund shares (as, for example, when
checks submitted to purchase shares are returned unpaid) causes a loss to be
incurred when the net asset value of the Fund shares on the date of cancellation
is less than on the original date of purchase. The investor is responsible for
such loss, and the Fund may reimburse itself or the Distributor for such loss by
automatically redeeming shares from any account registered at any time in that
shareholder's name, or by seeking other redress. In the event shares held in the
account of such shareholder are not sufficient to cover such loss, the
Distributor will promptly reimburse the Fund for the amount of such unrecovered
loss.
NET ASSET VALUE
For purposes of determining the Fund's net asset value per share,
readily marketable portfolio securities listed on the New York Stock Exchange
are valued, except as indicated below, at the last sale price reflected at the
close of the regular trading session of the New York Stock Exchange on the
business day as of which such value is being determined. If there has been no
sale on such day, the securities are valued at the mean of the closing bid and
asked prices on such day. If no bid or asked prices are quoted on such day, then
the security is valued by such method as the Board of Trustees shall determine
in good faith to reflect its fair market value. Readily marketable securities
not listed on The New York Stock Exchange but listed on other national
securities exchanges or admitted to trading on the National Association of
Securities
16
<PAGE>
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued in like
manner. Portfolio securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the Adviser to
be over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Trustees deems appropriate to reflect their fair value.
United States Government obligations and other debt instruments having
sixty days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the highest
bid price obtained from a dealer maintaining an active market in that security
or on the basis of prices obtained from pricing service approved as reliable by
the Board of Trustees. All other investment assets, including restricted and not
readily marketable securities, are valued under procedures established by and
under the general supervision and responsibility of the Fund's Board of Trustees
designed to reflect in good faith the fair value of such securities.
As indicated in the Prospectus, the net asset value per share of the
Fund's shares will be determined as of the close of the regular trading session
of the New York Stock Exchange on each day that the New York Stock Exchange is
open for trading. That Exchange annually announces the days on which it will not
be open for trading; the most recent announcement indicates that it will not be
open on the following days: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, that Exchange may close on days not included in that announcement.
INVESTMENT PERFORMANCE INFORMATION
The investment performance of the Fund quoted in advertising or sales
literature 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 computed by comparing the value of an assumed investment in Fund shares at
the offering price in effect at the beginning of the period shown with the
redemption price of the same investment at the end of the period (including
share(s) accrued thereon by the reinvestment of dividends and distributions).
Performance quotations given as a percentage will be derived by dividing the
amount of such total return by the amount of the assumed investment. When the
period shown is greater than one year, the result is referred to as cumulative
performance or cumulative total return. Performance quotations will ordinarily
be accompanied by the average annual total return of the Fund since its
inception as well as its total return for the past five years and for the twelve
months as of the end of the most recent quarter of operations. Quotations of
average annual total return for periods greater than one year will be the
compounded annual rate of return which equates to the result of the previously
described
17
<PAGE>
calculation of cumulative total return. Computed in the manner described, the
total return of the Fund has been:
<TABLE>
<S> <C>
Period ended 12/31/86 12.8% (a)
Year ended 12/31/87 16.2%
Year ended 12/31/88 31.1%
Year ended 12/31/89 26.2%
Year ended 12/31/90 5.0%
Year ended 12/31/91 18.1%
Year ended 12/31/92 14.9%
Year ended 12/31/93 21.8%
Year ended 12/31/94 (0.1)%
Year ended 12/31/95 24.9%
Average annual rate of total return from inception through year ended 15.9% (a)
December 31, 1995
Average annual return for 5 years through year ended December 31, 1995 15.6%
</TABLE>
(a) From inception on 3/3/86.
The formula for computing the foregoing annual rate of total return is:
T = (The nth root of R divided by P) - 1
P = Investment at the beginning of the period.
T = Compounded annual rate of total return.
n = Number of years.
R = Redemption value of the same investment at the end of the period assuming
the reinvestment of all dividends and distributions.
Investors are cautioned that past results are not necessarily representative of
future results; that investment performance is primarily a function of portfolio
management (which is affected by the economic and market environment as well as
the volatility of portfolio investments) and operating expenses; and that
performance information, such as that described above, may not provide a valid
basis of comparison with investments and investment companies using a difference
method of computing performance data.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New
York 10022, is counsel to the Fund.
18
<PAGE>
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York,
10036, independent accountants, have been selected to audit and express their
opinion on the Fund's annual financial statements.
GENERAL INFORMATION
The Fund's Declaration of Trust provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself is
unable to meet its obligations since the Declaration of Trust provides for
indemnification and reimbursement of expenses out of the property of the Fund to
any shareholder held personally liable for any obligation of the Fund and also
provides that the Fund shall, if requested, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust and satisfy any
judgment recovered thereon.
The Fund reserves the right to create and issue a number of series of
shares, in which case the shares of each series would participate equally in the
earnings, dividends and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Trustees, principal underwriters and accountants and on any proposed material
amendment to the Fund's Declaration of Trust. Upon liquidation of the Fund,
shareholders of each series would be entitled to share pro rata in the net
assets of their respective series available for distribution to shareholders.
Shareholders are entitled to one vote for each share held (and
fractional vote for fractional shares) and may vote on the election of Trustees
and on other matters submitted to meetings of shareholders. It is not
contemplated that regular annual meetings of shareholders will be held. The
Declaration of Trust provides that the Fund's shareholders have the right, upon
the declaration in writing or vote of more than two thirds of its outstanding
shares, to remove a Trustee. The Trustees will call a meeting of shareholders to
vote upon the written request of the shareholders of 33 1/3% of its shares (10%
in the case of removal of a Trustee). In addition, ten shareholders holding the
lesser of $25,000 worth or one percent of Fund shares may advise the Trustees in
writing that they wish to communicate with other shareholders for the purpose of
requesting a meeting to remove a Trustee. The Trustees will then, if requested
by the applicants, mail at the applicants' expense, the applicants'
communication to all other shareholders. Except for a change in the name of the
Trust, no amendment may be made to the Declaration of Trust without the
affirmative vote of the holders of more than 50% of its outstanding shares.
Shareholders have no preemptive or conversion rights. The Fund may be terminated
upon the sale of its assets to another issuer, if such sale is approved by the
vote of the holders of more than 50% of its outstanding shares. If not so
terminated, the Fund will continue indefinitely.
19
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS--96.9%
AGRICULTURE--0.1%
40,000 Archer Daniels Midland
Co......................... $ 654,744 $ 720,000
------------ ------------
AIRLINES--0.8%
125,000 AMR Corporation+............ 7,810,387 9,281,250
------------ ------------
AUTOMOTIVE--1.7%
350,000 General Motors
Corporation................ 12,595,439 18,506,250
24,000 Harley Davidson, Inc........ 236,600 690,000
------------ ------------
12,832,039 19,196,250
------------ ------------
AUTOMOTIVE: PARTS
AND ACCESSORIES--4.8%
33,500 APS Holding Corporation,
Class A+................... 519,250 753,750
30,000 Borg-Warner Automotive,
Inc........................ 732,660 960,000
200,000 Echlin Inc.................. 2,607,499 7,300,000
150,000 Federal-Mogul Corporation... 2,691,210 2,943,750
675,000 GenCorp Inc................. 3,881,263 8,268,750
250,000 Genuine Parts Company....... 8,599,593 10,250,000
201,200 Handy & Harman.............. 2,749,336 3,319,800
110,000 Johnson Controls, Inc....... 2,895,432 7,562,500
135,000 Modine Manufacturing
Company.................... 1,302,844 3,240,000
39,875 Myers Industries, Inc....... 139,536 652,953
26,300 Pep Boys - Manny, Moe &
Jack....................... 554,515 673,938
170,000 Quaker State Corporation.... 2,329,573 2,146,250
50,000 Republic Automotive Parts,
Inc.+...................... 278,125 643,750
115,000 Standard Motor Products,
Inc........................ 1,008,712 1,725,000
13,200 Superior Industries
International, Inc......... 76,515 348,150
71,000 UAP Inc., Class A........... 807,959 780,258
34,000 Wynn's International,
Inc........................ 562,295 1,007,250
------------ ------------
31,736,317 52,576,099
------------ ------------
AVIATION: PARTS
AND SERVICES--1.8%
75,000 Boeing Co................... 4,695,579 5,878,125
100,000 Curtiss-Wright
Corporation................ 2,479,222 5,375,000
85,000 General Motors Corporation,
Class H.................... 3,406,289 4,175,625
70,000 Hi-Shear Industries Inc.+... 945,739 507,500
21,000 Hudson General
Corporation................ 397,275 682,500
72,000 Precision Castparts
Corporation................ 2,754,825 2,862,000
------------ ------------
14,678,929 19,480,750
------------ ------------
BROADCASTING--6.2%
70,100 BHC Communications, Inc.,
Class A.................... 5,089,770 6,624,450
90,000 Capital Cities/ABC, Inc..... 4,583,644 11,103,750
385,637 Chris-Craft Industries,
Inc........................ 8,421,873 16,678,800
63,651 Chris-Craft Industries,
Inc., Class B(a)+.......... 1,132,465 2,752,906
135,000 Citicasters Inc.+........... 1,779,125 3,189,375
280,000 Grupo Televisa S.A., GDR.... 5,705,136 6,300,000
130,000 Havas, Sponsored ADR........ 2,526,965 2,551,250
70,000 Liberty Corporation......... 1,568,082 2,362,500
53,000 LIN Television
Corporation+............... 587,795 1,576,750
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
20,000 Osborn Communications
Corporation+............... $ 153,701 $ 170,000
46,000 Outlet Communications, Inc.,
Class A+................... 355,150 2,173,500
400,000 Television Broadcasting Ltd.
ORD........................ 1,816,844 1,425,154
100,000 United Television, Inc...... 2,880,469 9,025,000
80,000 Westinghouse Electric
Corp....................... 1,197,626 1,320,000
------------ ------------
37,798,645 67,253,435
------------ ------------
BUSINESS SERVICES--1.7%
10,000 BBN Corporation+............ 364,906 411,250
50,000 Berlitz International, Inc.,
New+....................... 725,813 825,000
80,000 Honeywell, Inc.............. 3,462,315 3,890,000
120,000 International Business
Machines Corporation....... 6,030,895 11,010,000
72,000 Landauer, Inc............... 447,792 1,566,000
70,000 Nashua Corporation.......... 2,287,655 953,750
------------ ------------
13,319,376 18,656,000
------------ ------------
CABLE--3.5%
60,000 BET Holdings, Inc., Class
A+......................... 1,030,737 1,372,500
61,500 Cablevision Systems
Corporation, Class A+...... 3,334,597 3,336,375
60,000 Comcast Corporation, Class
A.......................... 876,722 1,057,500
30,000 Comcast Corporation, Class A
Special.................... 626,505 545,625
148 International CableTel
Incorporated+.............. 465 3,626
316,800 International Family
Entertainment, Inc., Class
B+......................... 4,768,241 5,187,600
20,000 Shaw Cable Systems Ltd.,
Class B, Conv.............. 119,575 126,350
40,000 Shaw Communications Inc.,
Class B, Conv.............. 363,398 252,701
820,000 Tele-Communications, Inc.,
Class A+................... 13,459,548 16,297,500
287,500 Tele-Communications,
Inc./Liberty Media Group,
Class A+................... 6,382,184 7,726,563
60,000 United International
Holdings, Inc., Class A+... 824,424 885,000
60,000 US WEST Media Group+........ 975,045 1,155,000
------------ ------------
32,761,441 37,946,340
------------ ------------
CLOSED-END FUNDS--0.1%
79,628 Royce Value Trust, Inc...... 888,814 955,536
------------ ------------
CONSUMER PRODUCTS--10.2%
502,000 American Brands, Inc........ 17,482,591 22,401,750
90,000 Brunswick Corporation....... 1,188,813 2,160,000
400,000 Carter-Wallace, Inc......... 6,621,432 4,550,000
200,000 Church & Dwight Co., Inc.... 4,566,436 3,700,000
7,000 Culbro Corporation+......... 254,566 343,875
22,000 Duracell International
Inc........................ 625,711 1,138,500
100,000 Eastman Kodak Company....... 5,497,331 6,700,000
150,000 Fieldcrest Cannon, Inc.+.... 2,136,897 2,493,750
40,000 First Brands Corporation.... 1,058,501 1,905,000
250,000 General Electric Company.... 12,205,213 18,000,000
53,000 Gillette Company............ 1,493,550 2,762,625
20,000 Libbey Inc.................. 258,600 450,000
50,000 Outboard Marine Corp........ 986,698 1,018,750
5,000 Park-Ohio Industries,
Inc.+...................... 57,500 80,625
</TABLE>
See Notes to Financial Statements.
10
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
95,000 Philips Electronics N.V.,
New York................... $ 1,459,709 $ 3,408,125
100,000 Procter & Gamble Company.... 5,509,258 8,300,000
255,000 Ralston Purina Group........ 10,127,321 15,905,625
50,000 Scotts Company, Class A+.... 798,406 987,500
75,000 Syratech Corporation+....... 1,382,505 1,509,375
130,000 Tambrands Inc............... 5,386,648 6,207,500
325,000 Whitman Corporation......... 3,028,098 7,556,250
------------ ------------
82,125,784 111,579,250
------------ ------------
CONSUMER SERVICES--0.4%
180,000 Rollins, Inc................ 2,111,982 3,982,500
------------ ------------
DIVERSIFIED INDUSTRIAL--3.7%
20,000 Anixter International
Inc.+...................... 180,175 372,500
45,000 GATX Corporation............ 1,039,561 2,188,125
100,000 ITT Corporation, New+....... 2,420,804 5,300,000
149,000 ITT Industries Inc.+........ 2,267,811 3,576,000
150,000 Katy Industries, Inc........ 1,357,500 1,387,500
6,500 Kyocera Corporation, ADR.... 448,063 970,125
375,000 Lamson & Sessions Co.+...... 2,011,040 2,906,250
100,000 Lawter International,
Inc........................ 812,500 1,162,500
150,000 Minnesota Mining and
Manufacturing Company...... 7,964,013 9,937,500
80,000 National Service Industries,
Inc........................ 1,867,011 2,590,000
55,000 Tenneco Inc................. 2,191,078 2,729,375
60,000 Thomas Industries Inc....... 920,097 1,410,000
200,000 Trinity Industries, Inc..... 2,724,402 6,300,000
------------ ------------
26,204,055 40,829,875
------------ ------------
ELECTRONICS--0.1%
2,000 Hitachi, Ltd., ADR.......... 221,767 201,000
10,000 Sony Corporation............ 544,303 613,750
------------ ------------
766,070 814,750
------------ ------------
ENERGY--3.6%
55,000 Atlantic Richfield
Company.................... 5,930,401 6,091,250
35,000 British Petroleum Company
plc, ADR................... 1,568,033 3,574,375
135,000 Burlington Resources Inc.... 6,062,137 5,298,750
30,000 Chevron Corporation......... 1,016,500 1,575,000
170,000 Eastern Enterprises......... 4,578,075 5,992,500
60,000 Enron Oil & Gas Company..... 548,976 1,440,000
110,000 Exxon Corporation........... 6,704,069 8,813,750
22,000 Halliburton Company......... 969,840 1,113,750
200,000 Kaneb Services, Inc.+....... 901,607 450,000
50,000 PacifiCorp.................. 971,882 1,062,500
80,000 Southwest Gas Corporation... 1,378,722 1,410,000
30,000 Texaco Inc.................. 1,890,875 2,355,000
------------ ------------
32,521,117 39,176,875
------------ ------------
ENTERTAINMENT--5.1%
55,000 Bay Meadows Operating
Company.................... 908,526 804,375
175,675 Gaylord Entertainment
Company, Class A........... 3,697,099 4,874,981
70,000 GC Companies, Inc.+......... 1,824,822 2,345,000
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
40,000 GTECH Holdings
Corporation+............... $ 755,188 $ 1,040,000
20,000 PolyGram NV................. 574,275 1,050,000
30,000 Santa Anita Realty
Enterprises, Inc........... 484,184 356,250
110,000 THORN EMI plc,
Sponsored ADR.............. 1,609,000 2,585,000
700,000 Time Warner Inc............. 20,499,592 26,512,500
11,528 Todd-AO Corporation, Class
A.......................... 31,440 89,342
120,000 Viacom Inc., Class A+....... 1,750,202 5,505,000
225,000 Viacom Inc., Class B+....... 6,165,035 10,659,375
------------ ------------
38,299,363 55,821,823
------------ ------------
FINANCIAL SERVICES--6.0%
1 Al-Zar Ltd.+(a)............. 0 350
640,000 American Express Company.... 15,593,345 26,480,000
220 Berkshire Hathaway Inc.+.... 874,549 7,062,000
35,000 Commerzbank AG, Sponsored
ADR........................ 1,366,544 1,636,250
140,000 Deutsche Bank AG, Sponsored
ADR+....................... 6,094,375 6,615,000
60,000 H&R Block Inc............... 2,246,243 2,430,000
60,000 ITT Hartford Group Inc.+.... 1,432,749 2,902,500
60,000 KeyCorp..................... 2,171,000 2,175,000
315,000 Lehman Brothers Holdings
Inc........................ 4,871,475 6,693,750
85,000 Midland Company............. 2,658,657 4,175,625
70,000 Salomon Inc................. 2,531,011 2,485,000
25,000 State Street Boston
Corporation................ 717,713 1,125,000
10,000 SunTrust Banks, Inc......... 424,879 685,000
11,941 Transamerica Corporation.... 583,636 870,200
8,000 Value Line, Inc............. 115,500 308,000
------------ ------------
41,681,676 65,643,675
------------ ------------
FOOD AND BEVERAGE--6.3%
62,000 Brown-Forman Corporation,
Class A.................... 2,021,599 2,317,250
60,000 Campbell Soup Company....... 1,483,100 3,600,000
74,263 Chock Full o'Nuts
Corporation+............... 451,406 389,881
23,000 Coca-Cola Company........... 395,569 1,707,750
50,000 Coca-Cola Enterprises
Inc........................ 757,290 1,337,500
17,000 CPC International Inc....... 602,088 1,166,625
47,000 Delchamps, Inc.............. 1,111,792 957,625
100,000 Dole Food Company, Inc...... 2,651,826 3,500,000
2,500 Farmer Brothers Company..... 200,625 341,250
62,500 General Mills, Inc.......... 1,396,165 3,609,375
37,500 Heinz Company (H.J.)........ 972,562 1,242,187
35,000 Hershey Foods Corporation... 1,493,437 2,275,000
84,000 Kellogg Company............. 3,173,732 6,489,000
20,000 LVHM Moet Hennessy Louis
Vuitton, Sponsored ADR..... 762,188 837,500
250,000 PepsiCo, Inc................ 8,256,561 13,968,750
200,000 Quaker Oats Company......... 5,960,776 6,900,000
65,000 Ralcorp Holdings, Inc.+..... 974,421 1,576,250
15,000 Rykoff-Sexton, Inc.......... 289,125 262,500
280,000 Seagram Company Ltd......... 8,211,072 9,695,000
35,000 Tootsie Roll Industries,
Inc........................ 1,149,010 1,386,875
110,000 Wrigley (Wm.) Jr. Company... 4,754,112 5,775,000
------------ ------------
47,068,456 69,335,318
------------ ------------
</TABLE>
See Notes to Financial Statements.
11
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTH CARE--3.2%
15,000 Amgen Inc.+................. $ 271,699 $ 890,625
10,000 Biogen, Inc.+............... 299,450 615,000
20,000 BioWhittaker, Inc.+......... 99,053 152,500
12,000 Chiron Corporation+......... 663,895 1,326,000
100,000 Genentech, Inc.+............ 4,804,136 5,300,000
135,000 Johnson & Johnson........... 5,750,027 11,559,375
70,000 Mallinckrodt Group, Inc..... 2,175,407 2,546,250
99,999 Merck & Co., Inc............ 3,387,816 6,574,934
100,000 Pfizer Inc.................. 3,391,165 6,300,000
------------ ------------
20,842,648 35,264,684
------------ ------------
HOTELS/CASINOS--1.7%
35,000 Circus Circus Enterprises,
Inc.+...................... 940,041 975,625
23,500 Harrah's Entertainment
Inc.+...................... 215,831 569,875
200,000 Hilton Hotels Corporation... 10,269,599 12,300,000
200,000 Ladbroke Group plc.......... 522,219 455,029
110,000 Mirage Resorts,
Incorporated+.............. 1,131,077 3,795,000
11,750 Promus Companies+........... 84,894 261,438
------------ ------------
13,163,661 18,356,967
------------ ------------
INDUSTRIAL EQUIPMENT
AND SUPPLIES--13.2%
347,000 AMETEK, Inc................. 4,914,110 6,506,250
50,000 AMP Incorporated............ 1,814,660 1,918,750
25,000 Amphenol Corporation,
Class A+................... 286,812 606,250
250,000 AptarGroup, Inc............. 3,625,405 9,343,750
64,000 Caterpillar Inc............. 1,729,874 3,760,000
65,000 CLARCOR Inc................. 1,239,362 1,324,375
150,000 Crane Co.................... 3,970,482 5,531,250
100,000 CTS Corporation............. 2,084,351 3,775,000
435,000 Deere & Company............. 6,735,298 15,333,750
260,000 Donaldson Company, Inc...... 3,038,347 6,532,500
150,000 Gerber Scientific, Inc...... 1,448,232 2,437,500
140,000 Greif Bros. Corporation,
Class A.................... 2,531,260 3,762,500
132,500 Guardsman Products, Inc..... 1,546,659 1,772,187
12,546 Hach Company................ 148,380 216,418
371,000 IDEX Corporation............ 4,410,332 15,118,250
70,000 Ingersoll-Rand Company...... 2,625,739 2,458,750
200,000 Kollmorgen Corporation...... 1,861,980 2,200,000
95,000 Lufkin Industries, Inc...... 1,718,761 2,149,375
60,000 Manitowoc Company, Inc...... 1,343,957 1,837,500
275,000 Mark IV Industries, Inc..... 2,076,408 5,431,250
275,000 Navistar International
Corporation+............... 5,906,625 2,887,500
165,000 Nortek, Inc.+............... 659,077 1,938,750
4,333 Nortek, Inc., Special
Common+(a)................. 59,049 50,913
10,000 PACCAR Inc.................. 522,020 421,250
80,000 Pittway Corporation......... 1,529,486 5,310,000
195,000 Pittway Corporation, Class
A.......................... 2,703,360 13,211,250
50,000 Sequa Corporation, Class
A+......................... 1,982,449 1,525,000
80,200 Sequa Corporation, Class
B+......................... 3,904,225 3,167,900
80,000 SPS Technologies, Inc.+..... 2,233,594 4,270,000
140,000 St. Joe Paper Company....... 4,804,274 7,700,000
100,000 TransPro Inc................ 784,174 1,062,500
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
20,000 Valmont Industries, Inc..... $ 349,658 $ 495,000
260,000 Varity Corporation, New+.... 5,309,303 9,652,500
------------ ------------
79,897,703 143,708,168
------------ ------------
METALS AND MINING--0.8%
34,350 Barrick Gold Corporation.... 733,755 905,981
75,000 Echo Bay Mines Ltd.......... 844,400 778,125
45,000 Homestake Mining Company.... 776,062 703,125
100,000 Horsham Corporation......... 1,401,937 1,350,000
33,000 Newmont Gold Company........ 1,375,428 1,443,750
160,000 Pegasus Gold Inc.+.......... 2,519,244 2,220,000
17,500 Placer Dome Inc............. 336,400 422,188
150,000 Royal Oak Mines Inc.+....... 630,961 534,375
------------ ------------
8,618,187 8,357,544
------------ ------------
PUBLISHING--3.0%
75,000 American Media Inc.+........ 732,562 318,750
8,000 Central Newspapers, Inc..... 213,588 251,000
5,000 E.W. Scripps Company,
Class A.................... 99,627 196,875
32,000 McClatchy Newspapers, Inc.,
Class A.................... 640,975 732,000
80,000 McGraw-Hill Companies,
Inc........................ 4,572,950 6,970,000
390,000 Media General, Inc., Class
A.......................... 9,839,543 11,846,250
10,000 Meredith Corporation........ 356,044 418,750
159,993 New York Times Company,
Class A.................... 2,461,143 4,739,793
15,000 News Corporation Limited,
ADS........................ 255,587 320,625
84,000 Reader's Digest Association,
Inc., Class B.............. 3,339,359 3,969,000
325,000 Western Publishing Group,
Inc.+...................... 4,715,094 2,559,375
------------ ------------
27,226,472 32,322,418
------------ ------------
REAL ESTATE--0.0%
33,333 Castle & Cooke Inc.+........ 396,474 558,333
------------ ------------
RETAIL--1.9%
20,000 Aaron Rents, Inc., Class
A.......................... 169,609 360,000
13,000 Aaron Rents, Inc., Class
B.......................... 72,755 234,000
150,000 Burlington Coat Factory
Warehouse Corporation+..... 1,977,862 1,537,500
125,000 Earl Scheib, Inc.+.......... 885,924 968,750
50,000 Fingerhut Companies, Inc.... 711,335 693,750
14,232 Jostens, Inc................ 270,870 345,126
35,000 Lillian Vernon
Corporation................ 527,184 468,125
675,000 Neiman Marcus Group,
Inc.+...................... 9,760,037 15,862,500
------------ ------------
14,375,576 20,469,751
------------ ------------
RETAIL: FOOD AND DRUG--0.6%
25,000 Albertson's, Inc............ 718,125 821,875
129,000 American Stores Company..... 3,261,288 3,450,750
50,000 Kroger Co.+................. 1,156,250 1,875,000
------------ ------------
5,135,663 6,147,625
------------ ------------
SPECIALTY CHEMICAL--2.3%
448,100 CBI Industries Inc.......... 14,686,477 14,731,287
50,000 E.I. du Pont de Nemours and
Company.................... 3,122,625 3,493,750
</TABLE>
See Notes to Financial Statements.
12
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
SPECIALTY CHEMICAL (CONTINUED)
215,000 Ferro Corporation........... $ 4,467,040 $ 4,998,750
45,000 Pratt & Lambert, Inc........ 647,100 1,569,375
------------ ------------
22,923,242 24,793,162
------------ ------------
TELECOMMUNICATIONS--11.0%
280,000 AT&T Corp................... 14,897,967 18,130,000
100,000 BC TELECOM Inc.............. 1,768,699 1,831,166
295,000 BCE Inc..................... 9,904,125 10,177,500
12,500 BellSouth Corporation....... 649,467 1,087,500
9,000 British Telecommunications
plc, Sponsored ADR......... 577,730 508,500
100,000 Cable & Wireless plc,
Sponsored ADR.............. 2,083,454 2,112,500
339,000 C-TEC Corporation+.......... 6,369,917 10,509,000
46,500 C-TEC Corporation, Class
B+......................... 730,744 1,418,250
65,000 Frontier Corporation........ 1,051,047 1,950,000
40,000 Globalstar
Telecommunications+........ 748,250 1,510,000
318,000 GTE Corporation............. 6,127,042 13,992,000
35,000 Hong Kong Telecommunications
Ltd., Sponsored ADR........ 545,695 621,250
65,000 Koninklijke PTT Nederland
(KPN), ADR+................ 1,738,665 2,356,250
130,000 Lincoln Telecommunications
Company.................... 1,818,824 2,746,250
60,000 Motorola, Inc............... 831,606 3,420,000
30,000 Northern Telecom Limited.... 1,134,625 1,290,000
65,000 NYNEX Corporation........... 2,634,717 3,510,000
50,000 Pacific Telesis Group
Inc........................ 1,414,830 1,681,250
100,000 SBC Communications Inc...... 2,131,081 5,750,000
28,000 Southern New England
Telecommunications
Corporation................ 942,025 1,113,000
420,000 Sprint Corporation.......... 9,171,901 16,747,500
250,000 STET -- Societa Finanziaria
Telefonica SpA, Sponsored
ADR........................ 5,717,995 6,968,750
1,500,000 Telecom Italia SpA, ORD..... 1,753,810 2,336,066
112,153 Telecomunicacoes Brasileiras
SA (Telebras), Sponsored
ADR........................ 3,388,738 5,313,248
1,521,945 Telecomunicacoes de Sao
Paulo SA (Telesp)+......... 190,267 223,919
16,000 Telefonica de Espana,
Sponsored ADR.............. 511,408 670,000
20,000 Telefonos De Mexico SA,
Sponsored ADR.............. 704,937 637,500
60,000 US WEST Communications
Group...................... 1,427,970 2,145,000
------------ ------------
80,967,536 120,756,399
------------ ------------
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
TRANSPORTATION--0.1%
13,500 Florida East Coast
Industries,
Inc........................ $ 713,262 $ 921,375
------------ ------------
WIRELESS COMMUNICATIONS--3.0%
250,000 AirTouch Communications
Inc.+...................... 5,767,779 7,062,500
130,000 Allen Group Inc............. 787,843 2,908,750
18,500 Associated Group, Inc.,
Class A+................... 98,788 349,188
18,500 Associated Group, Inc.,
Class B+................... 98,787 351,500
407 Cellular Communications,
Inc., Series A+............ 5,278 19,943
260,000 Century Telephone
Enterprises, Inc........... 4,542,614 8,255,000
140,000 COMSAT Corporation, Series
1.......................... 3,086,794 2,607,500
80,000 NEXTEL Communications, Inc.,
Class A+................... 1,005,002 1,180,000
2,500,000 Telecom Italia Mobile
SpA+....................... 2,256,896 4,405,738
140,000 Telephone and Data Systems,
Inc........................ 1,369,191 5,530,000
5,000 Vodafone Group,
Sponsored ADR.............. 170,625 176,250
------------ ------------
19,189,597 32,846,369
------------ ------------
TOTAL COMMON STOCKS........................ 716,709,216 1,057,752,521
------------ ------------
PREFERRED STOCKS--0.4%
CONSUMER PRODUCTS--0.2%
45,000 Fieldcrest Cannon, Inc.,
Series A, 6.00%, Conv.
Pfd., 144A(c).............. 2,486,250 2,002,500
2,000 Kerr Group, Inc., Class B,
Series D, $1.70, Cumulative
Conv. Pfd.................. 33,975 37,000
------------ ------------
2,520,225 2,039,500
------------ ------------
INDUSTRIAL EQUIPMENT
AND SUPPLIES--0.1%
20,000 Sequa Corporation, $5.00,
Cumulative Conv. Pfd....... 1,538,833 1,160,000
------------ ------------
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc.,
Depository Shares, 7.00%,
Cumulative Conv. Pfd....... 213,000 272,500
------------ ------------
TELECOMMUNICATIONS--0.1%
30,000 Sprint Corporation, 8.25%,
Conv. Pfd.................. 956,250 1,140,000
------------ ------------
TOTAL PREFERRED STOCKS..................... 5,228,308 4,612,000
------------ ------------
</TABLE>
See Notes to Financial Statements.
13
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
- ------------ ------------ --------------
<C> <S> <C> <C>
CORPORATE BONDS--2.0%
AUTOMOTIVE PARTS
AND ACCESSORIES--0.0%
$ 400,000 GenCorp Inc., Conv. Sub
Deb., 8.00% due
08/01/2002................ $ 395,523 $ 402,000
------------ --------------
BROADCASTING--0.0%
FRF593,750 Havas, Conv. Bond,
Payment-in-kind, 3.00% due
12/31/1997................ 158,703 148,674
------------ --------------
ENTERTAINMENT--2.0%
$ 17,545,950 Time Warner Inc., Conv.
Sub. Deb., 8.75% due
01/10/2015................ 18,421,134 18,181,991
2,750,000 Viacom Inc., Ex. Sub. Deb.,
8.00% due 07/07/2006...... 1,836,980 2,805,000
------------ --------------
20,258,114 20,986,991
------------ --------------
TOTAL CORPORATE BONDS..................... 20,812,340 21,537,665
------------ --------------
U.S. TREASURY BILLS--3.0%
$ 32,402,000 4.83% to 5.28%++ due
02/01/1996 -- 03/07/1996... $ 32,167,820 $ 32,190,674
------------ --------------
TOTAL INVESTMENTS.................. 102.3% $774,917,684(b) 1,116,092,860
=============
OTHER ASSETS AND
LIABILITIES (NET)................. (2.3) (24,553,514)
----- --------------
NET ASSETS......................... 100.0% $1,091,539,346
===== ==============
</TABLE>
- ---------------
(a) Security fair valued by the Board of Trustees.
(b) Aggregate cost for Federal tax purposes was $775,657,016. Net unrealized
appreciation for Federal tax purposes was $340,435,844 (gross unrealized
appreciation was $357,880,866 and gross unrealized depreciation was
$17,445,022.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Non-income producing security
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt
ADS -- American Depositary Share
FRF -- French Franc
GDR -- Global Depositary Receipt
ORD -- Ordinary Share
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
DECEMBER 31, 1995
<TABLE>
<S> <C>
Time Warner Inc. Pittway Corporation
American Express Company General Motors Corporation
American Brands, Inc. AT&T Corp.
Chris-Craft Industries, Inc. General Electric Company
Viacom Inc. Sprint Corporation
</TABLE>
- -
- --------------------------------------------------------------------------------
- -
See Notes to Financial Statements.
14
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value
(Cost $774,917,684)................ $1,116,092,860
Cash................................. 5,785
Dividends and interest receivable.... 2,155,845
Receivable for investments sold...... 2,348,375
Receivable for Fund shares sold...... 2,700,295
--------------
Total Assets....................... 1,123,303,160
--------------
LIABILITIES:
Payable for investments purchased.... 20,634,121
Dividend payable..................... 7,765,160
Payable for investment advisory fee.. 935,547
Payable for distribution fees........ 310,431
Payable for transfer agent fees...... 175,000
Payable for Fund shares redeemed..... 41,608
Accrued expenses and other
payables........................... 1,901,947
--------------
Total Liabilities.................. 31,763,814
--------------
Net assets applicable to 42,395,268
shares of beneficial interest
outstanding...................... $1,091,539,346
=================
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value.............................. $ 423,953
Additional paid-in capital........... 750,699,072
Distributions in excess of net
realized gain on investments....... (759,184)
Distributions in excess of net
investment income earned to date... (1,808)
Net unrealized appreciation of
investments........................ 341,177,313
--------------
Total Net Assets................... $1,091,539,346
=================
Net Asset Value, offering and
redemption price per share
($1,091,539,346 divided by 42,395,268 shares
outstanding; unlimited
number of shares authorized
of $0.01 par value).................. $25.75
=====
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $302,581)...... $ 18,265,037
Interest income....................... 6,240,089
------------
Total Investment Income............. 24,505,126
------------
EXPENSES:
Investment advisory fee............... 10,714,960
Distribution fees..................... 2,211,822
Transfer agent fees................... 731,751
Trustees' fees........................ 66,099
Legal and audit fees.................. 56,489
Other................................. 498,317
------------
Total Expenses...................... 14,279,438
------------
NET INVESTMENT INCOME.................. 10,225,688
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on securities
sold................................ 68,999,048
Net realized gain on foreign currency
transactions........................ 14,558
------------
Net realized gain on investments...... 69,013,606
------------
Net unrealized appreciation of
securities, foreign currency and other
assets and liabilities:
Beginning of year..................... 184,011,589
End of year........................... 341,177,313
------------
Change in net unrealized
appreciation of securities,
foreign currency and other assets
and liabilities................... 157,165,724
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS........................... 226,179,330
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $236,405,018
===============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------------- -------------
<S> <C> <C>
Net investment income........................................................................ $ 10,225,688 $ 11,062,756
Net realized gain on investments............................................................. 69,013,606 33,486,441
Net change in unrealized appreciation/depreciation of investments............................ 157,165,724 (46,397,512)
-------------- -------------
Net increase/(decrease) in net assets resulting from operations.............................. 236,405,018 (1,848,315)
Distributions to shareholders from:
Net investment income....................................................................... (10,040,428) (10,988,841)
Distributions in excess of net investment income............................................ -- (110,943)
Net realized gain on investments............................................................ (69,013,606) (32,875,775)
Distributions in excess of net realized gain on investments................................. (94,875) (740,434)
Net increase/(decrease) in net assets from Fund share transactions........................... (47,966,474) 83,405,757
-------------- -------------
Net increase in net assets................................................................... 109,289,635 36,841,449
NET ASSETS:
Beginning of year............................................................................ 982,249,711 945,408,262
-------------- -------------
End of year.................................................................................. $1,091,539,346 $ 982,249,711
================= ===============
</TABLE>
See Notes to Financial Statements.
15
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Asset Fund (the "Fund") was
organized on November 25, 1985 as a Massachusetts business trust. The Fund is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") whose primary
objective is growth of capital. The Fund commenced operations on March 3, 1986.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION. Portfolio securities which are traded only on a nationally
recognized securities exchange or in the over-the-counter market which are
National Market System Securities are valued at the last sale price as of the
close of business on the day the securities are being valued, or lacking any
sales, at the mean between closing bid and asked prices. Other over-the-counter
securities are valued at the mean between current bid and asked prices as
reported by NASDAQ, the National Quotation Bureau or such other comparable
sources as the Board of Trustees deems appropriate to reflect their fair value.
Portfolio securities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most representative
market, as determined by Gabelli Funds, Inc. (the "Adviser"). Securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees of the Fund. Short-term investments that mature in more than 60 days
are valued at the highest bid price obtained from a dealer maintaining an active
market in that security. Short-term investments that mature in 60 days or fewer
are valued at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value. Debt instruments having a greater
maturity are valued at the highest bid price obtained from a dealer maintaining
an active market in those securities or on the basis of prices obtained from a
pricing service approved as reliable by the Board of Trustees.
FOREIGN CURRENCY. The books and records of the Fund are maintained in United
States (U.S.) dollars. Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period, and purchases and sales of investment securities, income
and expenses are translated on the respective dates of such transactions.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/depreciation of foreign currency and other assets and liabilities.
Unrealized gains and losses of securities, which result from changes in foreign
exchange rates as well as changes in market prices of securities, have been
included in unrealized appreciation/depreciation of investment securities. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amounts actually received. The portion
of foreign currency gains and losses related to fluctuation in exchange rates
between the initial trade date and subsequent sale trade date is included in
realized gain/(loss) on investments sold.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned.
16
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividend income and dividends and
distributions to shareholders are recorded on the ex-dividend date. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Fund, timing
differences and differing characterization of distributions made by the Fund.
Permanent differences incurred during the year ended December 31, 1995 resulting
from different book and tax accounting policies for currency gains and losses
and capital gain distributions, are reclassified between net investment income
and net realized gains at year end. The reclassifications for the year ended
December 31, 1995 were a decrease in undistributed net investment income of
$76,125 and a decrease in distributions in excess of net realized gain on
investments of $76,125.
PROVISION FOR INCOME TAXES. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
2. AGREEMENTS WITH AFFILIATED PARTIES. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00 percent of the value of the Fund's average daily net
assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, provides all facilities
and personnel, including offices, required for its administrative management,
and pays the compensation of all officers and Trustees of the Fund who are its
affiliates. The Adviser is obligated to reimburse the Fund in the event the
Fund's expenses exceed the most restrictive expense ratio limitation imposed by
any state. No such reimbursement was required during the year ended December 31,
1995.
3. DISTRIBUTION PLAN. The Fund has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Pursuant to this Plan, the
Distributor, Gabelli & Company, Inc. ("Gabelli & Company"), an indirect
majority-owned subsidiary of the Adviser, is authorized to purchase advertising,
sales literature and other promotional material and to pay its own salespeople.
The Fund will reimburse the Distributor for these expenditures up to 0.25
percent on an annual basis of the value of the Fund's average daily net assets.
In addition, if and to the extent that the fee the Fund pays to the Adviser, as
well as other payments the Fund makes, are considered as indirectly financing
any activity which is primarily intended to result in the sale of the Fund's
shares, such payments are authorized under the Plan. For the year ended December
31, 1995, the Fund incurred distribution costs under the Plan of $2,211,822,
representing 0.21 percent of the value of the Fund's average daily net assets.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities for the year ended December 31, 1995, other than U.S. government and
short-term securities, aggregated $267,318,884 and $317,036,708, respectively.
5. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1995, the
Fund paid brokerage commissions of $96,993 to Gabelli & Company and its
affiliates.
17
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................... 6,338,311 $ 156,103,869 13,812,609 $ 319,924,263
Shares issued upon reinvestment of dividends.............. 2,772,475 71,391,947 1,830,373 40,652,559
Shares redeemed........................................... (10,946,512) (275,462,290) (11,982,003) (277,171,065)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (1,835,726) $ (47,966,474) 3,660,979 $ 83,405,757
=========== ============== =========== ==============
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Per share amounts for a Fund share outstanding throughout each period/year ended
December 31,
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
---------- -------- -------- -------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING
PERFORM-
ANCE:
Net asset
value,
beginning
of
year..... $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69 $ 12.61 $ 11.28 $ 10.00
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Net
investment
income(a).. 0.26 0.26 0.16 0.26 0.39 0.76 0.55 0.24 0.14 0.10
Net
realized
and
unrealized
gain/
(loss)
on
invest-
ments.. 5.28 (0.30) 4.18 2.41 2.45 (1.62) 3.30 3.45 1.69 1.18
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Total from
investment
oper-
ations... 5.54 (0.04) 4.34 2.67 2.84 (0.86) 3.85 3.69 1.83 1.28
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
DISTRIBU-
TIONS
TO
SHARE-
HOLDERS
FROM:
Net
investment
income... (0.25) (0.25) (0.16) (0.25) (0.39) (0.77) (0.56) (0.38) (0.09) --
Distribu-
tions
in excess
of net
investment
income... -- (0.01) -- -- -- -- -- -- -- --
Net
realized
gains... (1.75) (0.76) (0.76) (0.50) (0.12) -- (0.72) (1.23) (0.41) --
Distribu-
tions
in excess
of net
realized
gains... (0.00)(c) (0.03) -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Total
distrib-
utions... (2.00) (1.05) (0.92) (0.75) (0.51) (0.77) (1.28) (1.61) (0.50) --
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Net asset
value,
end of
year..... $ 25.75 $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69 $ 12.61 $ 11.28
======== ======== ======== ======== ======== ======== ======== ======== ======= =======
Total
return**... 24.9% (0.1)% 21.8% 14.9% 18.1% (5.0)% 26.2% 31.1% 16.2% 12.8%
======== ======== ======== ======== ======== ======== ======== ======== ======= =======
RATIOS TO
AVERAGE
NET
ASSETS/
SUPPLEMEN-
TAL
DATA:
Net
assets,
end of
year (in
000's)... $1,091,539 $982,250 $945,408 $632,575 $483,865 $342,710 $359,443 $143,050 $76,810 $48,911
Ratio of
net
investment
income
to
average
net
assets... 0.95% 1.10% 0.82% 1.42% 2.34% 4.51% 4.17% 2.04% 1.19% 1.87%+
Ratio of
operating
expenses
to
average
net
assets(b).. 1.33% 1.28% 1.31% 1.31% 1.30% 1.20% 1.26% 1.31% 1.26% 1.67%+
Portfolio
turnover
rate..... 26.4% 18.7% 16.0% 14.4% 20.1% 55.7% 49.3% 47.3% 89.9% 126.6%
</TABLE>
- ---------------
* 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.
18
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
THE GABELLI ASSET FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Asset Fund (the "Fund")
at December 31, 1995, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the nine years in the period then ended and
for the period from March 3, 1986 (commencement of operations) through December
31, 1986, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 13, 1996
1995 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the fiscal year ended December 31, 1995, the Fund paid to shareholders, on
December 29, 1995, ordinary income dividends (comprised of net investment income
and short-term capital gains) totaling $.411 per share. Additionally, on that
date, the Fund paid $1.589 per share in long-term capital gains. For fiscal year
1995, 100% of the ordinary income dividend qualifies for the dividend received
deduction available to corporations.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
1995 which was derived from U.S. Treasury securities was 6.86%. Such income is
exempt from state and local income tax in all states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government securities.
The Gabelli Asset Fund did not meet this strict requirement in 1995. Due to the
diversity in state and local tax law, it is recommended that you consult your
personal tax advisor for the applicability of the information provided as to
your own situation.
<PAGE>
APPENDIX A
DESCRIPTION OF CORPORATE DEBT RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long-term risks appear somewhat large than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate
and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in
this class.
B Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect
to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in high degree. Such issues are often in default or
have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
A-1
<PAGE>
Unrated: Where no rating has been assigned or where a rating has been suspended
or withdrawn, it may be for reasons unrelated to the quality of the
issue.
Should no rating be assigned, the reason may be one of the following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that are not rated
as a matter of policy.
3. There is a lack of essential data pertaining to the issue or issuer.
4. The issue was privately placed, in which case the rating is not
published in Moody's Investors Services, Inc.'s publications.
Suspension or withdrawal may occur if new and material circumstances arise, the
effects of which preclude satisfactory analysis; if there is no longer available
reasonable up-to-date data to permit a judgment to be formed; if a bond is
called for redemption; or for other reasons.
Note: Those bonds in the Aa A, Baa Ba and B groups which Moody's believes
possess the strongest investment attributes are designated by the
symbols Aa-1, A-1, Baa-1 and B-1.
A-2
<PAGE>
STANDARD & POOR'S RATINGS SERVICE,
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
Ratings Service, a division of McGraw Hill Hill Companies, Inc.
Capacity to pay interest and repay principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small
degree.
A: Bonds rated A have a strong capacity to pay interest and replay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in the highest rated categories.
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB, B Bonds rated BB, B, CCC, CC and C are regarded, on balance, as
CCC, predominantly speculative with respect to capacity to pay interest and
CC, C: repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, they are outweighed by large uncertainties
of major risk exposures to adverse conditions.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus (+) The ratings from AA to CCC may be modified by the addition of a plus
Or or minus sign to show relative standing within the major rating
Minus (-) categories.
NR: Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
A-3
THE GABELLI ASSET FUND
PART C
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Prospectus:
Financial Highlights
Included in the Statement of Additional Information:
Audited financial statements for the fiscal year ended
December 31, 1995 including:
Portfolio of Investments, December 31, 1995
Statement of Assets & Liabilities, December 31, 1995
Statement of Operations, year ended December 31, 1995
Statement of Changes in Net Assets, years ended
December 31, 1994
and December 31, 1995
Notes to Financial Statements, December 31, 1995
Financial Highlights
Report of Independent Accountants
(b) Exhibits
(1) Declaration of Trust*
(2) By-laws*
(3) Not applicable
(4) Specimen share certificate*
(5) Amended Investment Advisory Contract**
(6) Amended Distribution Agreement**
(7) Not applicable
(8) Custody Agreement*
(9) Transfer Agency Agreement*
(10) Opinion of Counsel regarding share registration pursuant
to Rule 24e-2 is filed
herewith
(11) Consent of Independent Accountants is filed herewith
(12) Not applicable
(13) Agreement with initial shareholder*
(14) Form of Instructions and Agreement for Individual
Retirement Account (IRA)*
(15) Amended Distribution Plan**
(16) Sample Total Return Computation**
(17) Financial Data Schedule is filed herewith
(18) Not applicable
* Incorporated by reference to the Registrant's Registration
Statement on Form N-1A, as amended, as filed with the Securities and
Exchange Commission ("SEC").
** Incorporated by reference to Post-Effective Amendment No. 10 to
the Registrant's Registration Statement as filed with the SEC on May
3, 1993.
ITEM 25. Persons Controlled by or Under Common Control with
Registrant
None
ITEM 26. Number of Holders of Securities
(2)
(1) Number of Record Holders
Title of Class as of April 15, 1996
Beneficial Interest Value 48,132
$.01 per share
ITEM 27. Indemnification
Reference is made to Subdivision (c) of Section 12 of Article Seventh
of Registrant's Declaration of Trust.
Insofar as indemnification of liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in that Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or
controlling person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
The Registrant hereby undertakes that it will apply the
indemnification provisions of its Declaration of Trust, its By-laws,
the Management Agreement, the Sub-Advisory Agreement, the
Administration Agreement and the Distribution Agreement in a manner
consistent with Release No. 11330 of the Securities and Exchange
Commission under the 1940 Act.
ITEM 28. Business and Other Connections of Investment Adviser
Gabelli Funds, Inc. is the investment adviser of the Registrant. For
information as to its business, profession, vocation or employment of
a substantial nature, reference is made to Form ADV filed by it under
the Investment Advisers Act of 1940. (SEC File No. 801-37706)
ITEM 29. Principal Underwriter
(a) The Distributor, Gabelli & Company, Inc., is also the
principal underwriter for The Gabelli ABC Fund, The Gabelli Growth
Fund, The Gabelli Value Fund, Inc., The Gabelli Small Cap Growth
Fund, Gabelli Equity Income Fund, Gabelli Gold Fund, The Gabelli U.S.
Treasury Money Market Fund, The Gabelli Global Telecommunications
Fund, The Gabelli Global Interactive Couch Potato Fund, The Gabelli
International Growth Fund, Inc., Gabelli Capital Asset Fund, The
Gabelli Global Convertible Securities Fund and The Westwood Funds.
(b) For information as to such principal underwriter, reference is
made to Schedule A of Form BD filed by it under the Securities
Exchange Act of 1934. (SEC File No. 8-21373)
ITEM 30. Location of Accounts and Records
All such accounts, books and other documents required by Section
31(a) of the 1940 Act and Rules 31a-1 through 31a-3 thereunder are
maintained at the offices of the Adviser, Gabelli Funds, Inc., One
Corporate Center, Rye, New York 10580-1434, First Data Investor
Services Group, Inc., Exchange Place, Boston, Massachusetts 02109,
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, 02110 and BFDS, Two Heritage Drive, North Quincy,
Massachusetts, 02171.
ITEM 31. Management Services
Not Applicable.
ITEM 32. Undertakings
(a) Not Applicable
(b) Not Applicable
(c) The Registrant hereby undertakes to furnish to each person to
whom a prospectus is delivered a copy of the Registrant's latest
Annual Report to shareholders upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, as amended, the Registrant, THE
GABELLI ASSET FUND, certifies that it meets the requirements for
effectiveness of this Post-Effective Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933,
and the Registrant has duly caused this Post-Effective Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of New York and
State of New York, on the 29th day of April, 1996.
THE GABELLI ASSET FUND
By: /s/ Bruce N. Alpert
Bruce N. Alpert
President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment to its Registration Statement
has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
/s/ Mario J. Gabelli Trustee
April 29, 1996
Mario J. Gabelli
/s/ Bruce N. Alpert President and Treasurer
April 29, 1996
Bruce N. Alpert
/s/ Felix J. Christiana Trustee
April 29, 1996
Felix J Christiana
/s/ Anthony J. Colavita Trustee
April 29, 1996
Anthony J. Colavita
/s/ James P. Conn Trustee
April 29, 1996
James P. Conn
/s/ Karl Otto Pohl Trustee
April 29, 1996
Karl Otto Pohl
/s/ Anthony R. Pustorino Trustee
April 29, 1996
Anthony R. Pustorino
/s/ Anthonie C. van Ekris Trustee
April 29, 1996
Anthonie C. van Ekris
/s/ Salvatore J. Zizza Trustee
April 29, 1996
Salvatore J. Zizza
SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER EXHIBIT
(10) Opinion of Counsel
(11) Consent of Independent
Accountants
(17) Financial Data Schedule
April 29, 1996
The Gabelli Asset Fund
One Corporate Center
Rye, New York 10580
Re: Filing Pursuant to Rule 24e-2
Gentlemen:
We have acted as special counsel to The Gabelli Asset
Fund (the "Company"), a voluntary association with transferable
shares organized and existing under and by virtue of the laws of the
Commonwealth of Massachusetts (a "Massachusetts Business Trust"), in
connection with a filing pursuant to Rule 24e-2 (the "Filing") with
the Securities and Exchange Commission (the "Commission") making
definite registration of an aggregate of 1,846,309.94 shares of
beneficial interest, par value $.01 per share (the "Fund Shares"),
of the Company.
In connection with the foregoing, we have examined the
originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Declaration of Trust of the Company dated
January 14, 1995 (the "Declaration of Trust"); (ii) the By-Laws of
the Company; (iii) the Registration Statement of the Company on Form
N-1A, File No. 33-1719, as amended effective April 29, 1996 by
Post-Effective Amendment No. 13 under the Securities Act of 1933, as
amended, and Amendment No. 15 under the Investment Company Act of
1940, as amended, and the exhibits contained therein; (iv)
resolutions adopted by the Board of Trustees of the Company and
furnished to us by the Company; and (v) such other agreements,
documents, certificates and other records as we have deemed neces-
sary or appropriate as a basis for the opinions set forth
herein. In such examination we have assumed the legal
capacity of natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to
us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic
copies, and the authenticity of the originals of such
copies. As to any facts material to this opinion which
were not independently established, we have relied on
statements or representations of officers of the Company
or others.
We are admitted to the Bar in the Commonwealth
of Massachusetts, and we express no opinion as to the laws
of any other jurisdiction.
Based upon and subject to the foregoing, we
are of the opinion that the issuance and sale of the Fund
Shares by the Company are validly authorized and, assuming
certificates therefor are duly executed and delivered or
the shareholders' accounts are duly credited and the Fund
Shares represented thereby or so credited are fully paid
for according to the provisions of the prospectus relating
to the Fund Shares, such Fund Shares will be, subject to
the statements set forth below regarding the liability of
a shareholder of a Massachusetts Business Trust, validly
issued, fully paid and nonassessable.
Pursuant to certain decisions of the Supreme
Judicial Court of Massachusetts, shareholders of a
Massachusetts Business Trust may, under certain
circumstances, be held personally liable as partners for
the obligations of the trust. Even if the Company were
held to be a partnership, however, the possibility of the
holders of Fund Shares incurring personal liability for
financial loss appears remote because (i) Article EIGHTH,
Paragraph 2 of the Declaration of Trust contains an
express disclaimer of liability for holders of Fund Shares
for the obligations of the Company and Article SEVENTH,
Paragraph 6(a) requires that in every note, bond, contract
or other undertaking issued by or on behalf of the Company
include a recitation limiting the obligation represented
thereby to the Company and its assets and (ii) Article
EIGHTH, Paragraph 1 provides that the Company shall
indemnify and hold each shareholder of the Company
harmless from and against all loss and expense arising
from liabilities to which such holder may become subject
by reason of being or having been a holder of Fund Shares.
We hereby consent to the filing of this
opinion with the Filing.
Very truly yours,
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM
The Gabelli Asset Fund
April 29, 1996
Page
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment No.
13 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated February 13, 1996, relating to the
financial statements and financial highlights of The Gabelli Asset
Fund, which appears in such Statement of Additional Information, and
to the incorporation by reference of our report into the Prospectus
which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Counsel and
Independent Accountants" in such Statement of Additional Information
and to the reference to us under the heading "Financial Highlights"
in such Prospectus.
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
April 29, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> GABELLI ASSET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 774,917,684
<INVESTMENTS-AT-VALUE> 1,116,092,860
<RECEIVABLES> 7,204,515
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 5,785
<TOTAL-ASSETS> 1,123,303,160
<PAYABLE-FOR-SECURITIES> 20,634,121
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,129,693
<TOTAL-LIABILITIES> 31,763,814
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 751,123,025
<SHARES-COMMON-STOCK> 42,395,268
<SHARES-COMMON-PRIOR> 44,230,994
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1,808)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (759,184)
<ACCUM-APPREC-OR-DEPREC> 341,177,313
<NET-ASSETS> 1,091,539,346
<DIVIDEND-INCOME> 18,265,037
<INTEREST-INCOME> 6,240,089
<OTHER-INCOME> 0
<EXPENSES-NET> 14,279,438
<NET-INVESTMENT-INCOME> 10,225,688
<REALIZED-GAINS-CURRENT> 69,013,606
<APPREC-INCREASE-CURRENT> 157,165,724
<NET-CHANGE-FROM-OPS> 236,405,018
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,040,428)
<DISTRIBUTIONS-OF-GAINS> (69,108,481)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,338,311
<NUMBER-OF-SHARES-REDEEMED> (10,946,512)
<SHARES-REINVESTED> 2,772,475
<NET-CHANGE-IN-ASSETS> 109,289,635
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (110,943)
<OVERDIST-NET-GAINS-PRIOR> (740,434)
<GROSS-ADVISORY-FEES> 10,714,960
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,279,438
<AVERAGE-NET-ASSETS> 1,071,495,996
<PER-SHARE-NAV-BEGIN> 22.21
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 5.28
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> (1.75)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 25.75
<EXPENSE-RATIO> 1.33
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
