Registrant Nos. 33-1719 and 811-4494
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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PRE-EFFECTIVE AMENDMENT No.
POST-EFFECTIVE AMENDMENT No. 15 X
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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AMENDMENT No. 17 X
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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 and 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
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to Rule 485(b); or
X on May 1, 1998 pursuant to paragraph (b); or 60 days after
filing pursuant to Rule 485(a)(1); or on [____] pursuant to
paragraph (a)(1); or 75 days after filing pursuant to Rule
485(a)(2); or on [____] pursuant to paragraph (a)(2)
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a previously
filed post-effective amendment.
The Registrant filed a Rule 24f-2 Notice for its fiscal year ended December
31, 1997 on March 31, 1998.
<PAGE>
THE GABELLI ASSET FUND
CROSS REFERENCE SHEET
(Pursuant to Rule 495(a))
Part A
Item No. Prospectus Captions
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1. Cover Page Cover Page
2. Synopsis Table of Fees and Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Cover page; The Fund and Its Investment
Policies; Special Investment Methods;
General Information
5. Management of the Fund Management of the Fund; Custodian,
Transfer Agent and Dividend Disbursing
Agent
5A. Management's Discussion of Fund Performance Not applicable
6. Capital Stock and Other Securities Dividends, Distributions and Taxes;
General Information
7. Purchase of Securities Being Offered Purchase of Shares; Distribution Plan
8. Redemption or Repurchase Redemption of Shares
9. Pending Legal Proceedings Not applicable
</TABLE>
<PAGE>
Part B Statement of Additional
Item No. Information Caption
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not applicable
13. Investment Objectives and Policies (Prospectus "The Fund and Its Investment
Policies") Investment Policies; Special
Investment Methods; 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; Distributor;
Distribution Plan; Counsel and Independent
Accountants; (Prospectus - "Custodian,
Transfer Agent and Dividend Disbursing
Agent")
17. Brokerage Allocation and Other Practices (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
</TABLE>
<PAGE>
THE GABELLI ASSET FUND
PART A
PROSPECTUS
<PAGE>
THE
GABELLI
ASSET
FUND
PROSPECTUS
May 1, 1998
GABELLI FUNDS, INC.
Investment Adviser
GABELLI & COMPANY, INC.
Distributor
<PAGE>
TABLE OF CONTENTS
Page
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....................................14
Calculation of Investment Performance.................................15
General Information...................................................15
Custodian, Transfer Agent and Dividend Disbursing Agent...............16
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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.
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<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
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PROSPECTUS
May 1, 1998
The Gabelli Asset Fund (the "Fund") is an open-end, no-load mutual fund, the
primary objective of which is growth of capital. Current income is a secondary
investment objective. See "The Fund and its Investment Policies".
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Shares of the Fund may be purchased without a sales load at the next determined
per share net asset value (see "Purchase of Shares"). There is no deferred sales
or other charge on the redemption of shares. The Fund pays 0.25% of its average
net assets in any fiscal year for certain promotional and distribution expenses
and shareholder services (see "Distribution Plan"). The minimum initial
investment is $1,000 except for investments made through the Automatic
Investment Plan (see "Purchase of Shares - Automatic Investment Plan"). For
further information, contact Gabelli & Company, Inc. at the address or telephone
number shown above.
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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, 1998, 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, call or write
the Fund at the telephone number or address set forth above. Also, the
Additional Statement is available for reference, along with other materials, on
the SEC Internet web site (http://www.sec.gov).
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Shares of the Fund are not deposits, obligations of, or guaranteed by any
bank, and are not insured or guaranteed by any bank, the Federal Deposit
Insurance
Corporation, the Federal Reserve Board, or any other agency. An investment in
the
Fund involves investment risks, including the possible loss of principal.
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This Prospectus should be retained by investors for
future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<PAGE>
9
4
TABLE OF FEES AND EXPENSES
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Shareholder Transaction Expenses:
Maximum sales load imposed on purchases or reinvestment of dividends................................. None
Contingent deferred sales load upon redemption of investments........................................ None
Redemption Fees...................................................................................... None*
Exchange Fees........................................................................................ None
Annual Fund Operating Expenses:
(Percent of average net assets)
Management Fees...................................................................................... 1.00%
Distribution (Rule 12b-1) Expenses (a)............................................................... .25%
Other Expenses....................................................................................... .13%
Total Fund Operating Expenses................................................................... 1.38%
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Example: ** 1 year 3 years 5 years 10 years
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You would pay the following expenses on a
$1,000 investment, assuming a 5% annual
return and redemption at the end of each period..........$14 $44 $76 $166
</TABLE>
(a) The foregoing table is to assist you in understanding the various costs and
expenses that an investor in the Fund will bear directly or indirectly. The
expenses shown are the levels incurred during the past fiscal 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").
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* 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%.
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Management's Discussion and Analysis of the Fund's performance during the
fiscal year ended December 31, 1997 is included in the Fund's Annual Report to
Shareholders dated December 31, 1997. 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.
<PAGE>
FINANCIAL HIGHLIGHTS
The following information, insofar as it pertains to each of the five years in
the period ended December 31, 1997, 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 year ended
December 31,
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Operating performance:
Net asset value, beginning of year.. $ 26.42 $ 25.75 $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69 $ 12.61
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net investment income (a)........... .07 0.15 0.26 0.26 0.16 0.26 0.39 0.76 0.55 0.24
Net realized and unrealized gain/(loss)
on investments................. 9.97 3.29 5.28 (0.30) 4.18 2.41 2.45 (1.62) 3.30 3.45
------------- ------- ------- ----- ----- ----- ------- ----- -----
Total from investment operations.... 10.04 3.44 5.54 (0.04) 4.34 2.67 2.84 (0.86) 3.85 3.69
----- --------- ------- ------- ----- ----- ----- ------- ----- -----
Distributions to shareholders from:
Net investment income.......... (0.07) (0.15) (0.25) (0.25) (0.16) (0.25) (0.39) (0.77) (0.56) (0.38)
Distributions in excess of net
investment income.......... (0.00) (c) __ __ (0.01) __ __ __ __ __ __
Net realized gains............. (4.54) (2.61) (1.75) (0.76) (0.76) (0.50) (0.12) __ (0.72) (1.23)
Distributions in excess of net
realized gains............. (0.00) (c) (0.01) (0.00)(c) (0.03) ---- ---- ---- ---- ---- ----
------ ------------- ------- ---- ---- ---- ---- ---- ----
Total distributions................. (4.61) (2.77) (2.00) (1.05) (0.92) (0.75) (0.51) (0.77) (1.28) (1.61)
------ ------ ------- ------- ------ ------- ------- ------- ------- -------
Net asset value, end of year........ $ 31.85 $ 26.42 $ 25.75 $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26$ 14.69
------- ======= ======= ======= ======= ======= ======= ======= ==============
Total return*....................... 38.1% 13.4% 24.9% (0.1%) 21.8% 14.9% 18.1% (5.0%) 26.2% 31.1%
===== ======== ===== ====== ====== ====== ===== ======= ===== ======
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's) $1,335,052 $1,080,639 $1,091,539 $982,250 $945,408 $632,575 $483,865 $342,71 $359,443 $143,050
Ratio of net investment income to
average net assets......... 0.22% 0.52% 0.95% 1.10% 0.82% 1.42% 2.34% 4.51% 4.17% 2.04%
Ratio of operating expenses to
average net assets (b)..... 1.38% 1.34% 1.33% 1.28% 1.31% 1.31% 1.30% 1.20% 1.26% 1.31%
Portfolio turnover rate............. 22.0% 14.9% 26.4% 18.7% 16.0% 14.4% 20.1% 55.7% 49.3% 47.3%
Average commission rate
(per share) (d)............... $ 0.0464 $ 0.0484 N/A N/A N/A N/A N/A N/A N/A N/A
</TABLE>
.........
* 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.
(a) Net investment income before expenses reimbursed by Adviser for the year
ended December 31, 1988 was $0.23. (b) Operating expense ratio before expenses
reimbursed by Adviser for the year ended December 31, 1988 was 1.38%.
(c) Amount represents less than $0.005 per share.
(d) Average commission rate (per share) as required by amended SEC disclosure
requirements effective for fiscal years beginning after September 1, 1995.
<PAGE>
36
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 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 Services, a division of McGraw-Hill Companies, Inc. ("S&P"), or P-1 or
better by Moody's Investors Service, Inc.
("Moody's").
Corporate Reorganizations
The Fund may also, subject to the diversification requirements of its
investment restrictions, 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 "Special Investment Methods Corporate
Reorganizations" in the Additional Statement.
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 "Special Investment Methods - Convertible
Securities" in the Additional Statement.
The Fund will normally purchase only investment grade, convertible debt
securities having a rating of, or equivalent to, an S&P rating of at least "BBB"
(which securities 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 including convertible securities is
contained in Appendix A to 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 "Special Investment Methods - Debt Securities" in the Additional Statement.
Investments in Small, Unseasoned Companies
The Fund may invest in small, less well-known companies which have operated less
than three years (including predecessors). The securities of such companies may
have limited liquidity.
Warrants and Rights
The Fund may invest 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 appropriate by the Adviser for inclusion in the
Fund's portfolio.
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 but 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 invest, in the aggregate, 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 monitors 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 "Special Investment Methods - When
Issued, Delayed Delivery Securities & Forward Commitments" in the Additional
Statement.
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.
<PAGE>
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. The advisory fee paid by the Fund for its fiscal year
ended December 31, 1997 was 1.00% of its average net assets and its total
expenses for the same period were 1.38% of its average net assets.
Gabelli Funds, Inc. acts as Adviser to the Fund. The Adviser was formed in
1980 and as of March 31, 1998 acts as investment adviser to mutual funds with
aggregate assets of $6.6 billion.
<TABLE>
<CAPTION>
<S> <C>
Net Assets
3/31/98
(in millions)
Open-end funds:
Gabelli Asset Fund $1,559
Gabelli Growth Fund 1,401
Gabelli Value Fund Inc. 763
Gabelli Small Cap Growth Fund 348
Gabelli Equity Income Fund 88
Gabelli U.S. Treasury Money Market Fund 308
Gabelli ABC Fund 62
Gabelli Global Telecommunications Fund 150
Gabelli Global Convertible Securities Fund 9
Gabelli Global Interactive Couch Potato(R)Fund 96
Gabelli Gold Fund, Inc. 12
Gabelli Capital Asset Fund 138
Gabelli International Growth Fund, Inc. 29
Gabelli Westwood Funds: Equity 197
Intermediate Bond 6
Balanced 130
Small Cap 13
Realty 2
<PAGE>
The Treasurer's Fund, Inc. Domestic Prime 285
Tax Exempt 175
U.S. Treasury 102
Closed-end funds:
Gabelli Equity Trust Inc. $1,319
Gabelli Convertible Securities Fund, Inc. 125
Gabelli Global Multimedia Trust Inc. 159
</TABLE>
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. GAMCO
Investors, Inc. ("GAMCO"), a wholly-owned subsidiary of the Adviser, acts as
investment adviser for individuals, pension trusts, profit-sharing trusts and
endowments, having aggregate assets in excess of $7.2 billion under its
management as of March 31, 1998. Gabelli Advisers, Inc., an affiliate of the
Adviser, acts as investment adviser to the Gabelli Westwood Funds and, as of
March 31,
1998, had aggregate assets in excess of $349 million.
Gabelli Fixed Income LLC is an affiliated Investment Adviser to The Treasurer's
Fund, Inc. and separate account as of March 31, 1998 had aggregate assets
under management of
$1.2 billion. 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. Mario J. Gabelli, CFA has been designated by the Adviser to be
primarily responsible for the day-to-day management of the Fund. 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. Mr.
Gabelli has been Chairman, Chief Executive Officer and Chief Investment Officer
of the Adviser since its inception in 1980. The Adviser's address is the same as
the Fund as shown on the cover of this Prospectus.
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 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.
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. In addition,
portfolio companies or their officers or directors may be minority shareholders
of the Adviser or its affiliates.
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 Sub-Administrator a monthly 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 One
Exchange Place, Boston, Massachusetts 02109.
DISTRIBUTION PLAN
Pursuant to a Distribution Plan adopted by the Fund pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act"), the Fund
will make payments in connection with the distribution of its shares at an
annual rate of .25% of the Fund's average daily net assets. 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 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 compensate such activity outside of the Plan and not be subject
to its limitations. Payments under the Plan are not solely dependent on
distribution expenses actually incurred by the Distributor.
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 1940
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
reasonable likelihood that the Plan will benefit the Fund and its shareholders.
During the fiscal year ended December 31, 1997, the distribution fees paid to
the Distributor totaled $2,897,476 or 0.25% of the Fund's average daily net
assets.
PURCHASE OF SHARES
Shares of the Fund are offered without a 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 minimum initial investment is $1,000 for all accounts. Accounts establishing
an Automatic Investment Plan require no initial minimum investment (see
"Automatic Investment Plan"). There is no minimum for subsequent investments.
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 obtained 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. Shares so held may be
redeemed or transferred only by arrangement 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 Fund's net asset value per share is calculated on each day, Monday through
Friday, except days on which the New York Stock Exchange ("NYSE") is closed.
The NYSE is currently scheduled to be closed on New Year's Day, Dr. Martin
Luther King, Jr.'s Birthday, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas and on the preceding
Friday or subsequent Monday when a holiday falls on a Saturday or Sunday,
respectively.
The Fund's net asset value per share is determined as of the close of regular
trading on the NYSE, normally 4:00 p.m., New York time and is computed 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 total number of shares outstanding
at the time the determination is made. The Fund uses market quotations in
valuing its portfolio securities. Short-term investments that mature in 60 days
or less are valued at amortized cost. 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.
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 Fund's 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. Checks made payable
to a third party are not acceptable.
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:
<PAGE>
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 the investor's bank for transmitting the money by bank wire. If
the investor is planning to wire funds, it is suggested that the investor
instruct his or her 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 the investor's bank is a
member of the ACH system and the investor has a completed, approved Investment
Plan application on file with the Fund's Transfer Agent. The funding for the
investor's purchase will be automatically deducted from the ACH eligible account
the investor designates on the application. The investor's investment will
normally be credited to his or her mutual fund account on the first business day
following his or her telephone request. The investor's 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, the investor should call 1-800-GABELLI (422-3554) 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 minimum
initial investment 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 or she 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 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; pursuant to 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 uncertificated shares from
shareholders subject to a $25,000 limitation. By calling either 1-800-GABELLI
(442-3554) or 1-800-872-5365, an investor 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 the investor's 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. The investor's 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 the investor's telephone call is received after this time
or on a day when the NYSE is not open, the request will be processed the
following business day. Shares are redeemed at the net asset value next
determined following the investor's 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.
Unless other instructions are given in proper form, a check for the proceeds of
a redemption will be sent to the shareholder's address of record and generally
will be mailed within seven days after receipt of the request.
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 NYSE is restricted or the NYSE 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. The minimum investment required to open an IRA
for investment in shares of the Fund is $1,000. There is no minimum for
additional investment in an IRA account. For tax years beginning after December
31, 1997, investors may be eligible to make contributions to a new type of
individual retirement account (a "Roth IRA"). An investor can open a Roth IRA if
he or she meets certain income limits specified in the Internal Revenue Code of
1986, as amended (the "Code"). Any contributions made by an investor to a Roth
IRA are nondeductible for U.S. Federal income tax purposes. Distributions from a
Roth IRA are not included in the investor's gross income and are not subject to
a 10% penalty for early withdrawal if the distributions are made after the end
of the five-year period beginning with the first tax year in which the investor
made a contribution to the Roth IRA and the distributions meet other criteria
set forth in the Code. The maximum annual aggregate contribution that can be
made to IRAs and Roth IRAs is $2,000. In addition, for tax year beginning after
December 31, 1997, certain low and middle-income investors may open an education
individual retirement account (an "Education IRA"). Eligible individuals are
permitted to contribute up to $500 per year per beneficiary under 18 years old
to an Education IRA. The minimum initial investment for an Education IRA through
the Fund is $250. A distribution from an Education IRA is generally excludable
from gross income to the extent that such distribution does not exceed qualified
higher education expenses incurred by the beneficiary during the year in which
the distribution is made.
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. However, the Fund does not
currently act as sponsor to such plans. Fund shares may be 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 for an individual under such
plans is $1,000 and there is no minimum for additional investments.
Under 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 $4,000 annually
to both IRAs provided that no more than $2,000 may be contributed to the IRA of
either spouse. Other provisions permit additional IRA contributions which are
not tax deductible but the tax on reinvested dividends and distributions is
deferred while held in the account. There are also rules on the amount of tax
deductible contributions which may be made to other retirement plans.
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 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, DISTRIBUTION 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 ex-dividend 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 connection 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 Subchapter M of 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 income and diversification tests, and
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 subject to
proportionate reduction if the aggregate qualifying dividends received by the
Fund from domestic corporations in any year are less than its "gross income" as
defined by the Code. Distributions out of long-term capital gains are taxable to
the recipient as long-term capital gains. Shareholders will be advised as to
what portion of capital gains are to be treated as 28% rate gain or 20% rate
gain with respect to the maximum tax rate for such gains (i.e., the portion
of such capital gains
that relates to assets held for more than 12 months but not more than 18 months
and the portion that relates to assets held more than 18 months). Dividends and
distributions declared by the Fund may also be subject to state and local taxes.
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,
for the past ten years, 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
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, 5-year and 10-year periods ended December 31, 1997
and from inception through December 31, 1997 were 38.1%, 18.9%, 17.6% and 17.4%,
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 331/3% 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.
Year 2000 Update
As the year 2000 approaches, an issue has emerged regarding how existing
application software programs and operating systems can accommodate this date
value. Failure to adequately address this issue could have potentially serious
repercussions. The Adviser is in the process of working with the Fund's service
providers to prepare for the year 2000. Based on information currently
available, the Adviser does not expect that the Fund will incur significant
operating expenses or be required to incur material costs to be year 2000
compliant. Although the Adviser does not anticipate that the year 2000 issue
will have a material impact on the Fund's ability to provide service at current
levels, there can be no assurance that steps taken in preparation for the year
2000 will be sufficient to avoid any adverse impact on the Fund.
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) or visit our web site at
http://www.gabelli.com. The Distributor's address is Gabelli & Company, Inc.,
One Corporate Center, Rye, New York 10580-1435.
Upon request, Gabelli & Company, Inc. 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.
<PAGE>
THE GABELLI ASSET FUND
PART B
STATEMENT OF ADDITIONAL INFORMATION
<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, 1998
This Statement of Additional Information ("Additional Statement") 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, 1998, as
supplemented from time to time (the "Prospectus"). This Additional Statement
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. Also, this Additional
Statement is available for reference, along with other materials, on the
Securities and Exchange Commission ("SEC") Internet web site
(http://www.sec.gov).
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
Investment Policies.............................................................................2
Special Investment Methods......................................................................2
Convertible Securities.....................................................................2
Debt Securities............................................................................2
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......................................................................4
Investment Restrictions.........................................................................5
Trustees and Officers...........................................................................6
Investment Adviser.............................................................................11
Distributor....................................................................................12
Distribution Plan..............................................................................12
Portfolio Transactions and Brokerage...........................................................13
Redemption of Shares...........................................................................15
Net Asset Value................................................................................16
Investment Performance Information.............................................................16
Counsel and Independent Accountants............................................................18
General Information............................................................................18
Financial Statements...........................................................................19
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 ("S&P") or, if unrated, judged by the Adviser to be of
comparable quality. Securities rated less than "A" by S&P 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 S&P 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.
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 exclusively 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, 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 offeror as well as the dynamic of the business
climate when the offer or proposal is in progress.
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 Fund's
portfolio turnover ratio thereby increasing its brokerage and other transaction
expenses. 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.
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 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 cash or liquid high-grade debt
securities with its 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
restricted securities and other securities for which there are no readily
available quotations, more than 10% of its total assets would be so 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;
(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 "Special Investment Methods - 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.
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.
Name, Address, Age and Position(s) with Fund Principal Occupations During
Past Five Years
Mario J. Gabelli,* 55 Chairman of the Board, Chief Executive Officer and
Chief Trustee Investment Officer of Gabelli Funds, Inc. and of GAMCO Investors,
Inc.; Chairman of the Board, President and Chief Investment Officer of Gabelli
Capital Series Fund, Inc., The Gabelli Equity Trust Inc., The Gabelli Global
Multimedia Trust Inc. and The Gabelli Value Fund Inc.; President, Director and
Chief Investment Officer of Gabelli Global Series Funds, Inc., Gabelli Investor
Funds, Inc., Gabelli Equity Series Funds, Inc. and The Gabelli Convertible
Securities Fund, Inc.; Trustee of The Gabelli Growth Fund; President & Trustee
of The Gabelli Money Market Funds; Director [Chairman of the Board] of Gabelli
Gold Fund, Inc., Gabelli International Growth Fund, Inc. and The Treasurer's
Fund, Inc.; and Chairman and Chief Executive Officer of Lynch Corporation
(diversified manufacturing and communications services company); Director of
East/West Communications, Inc.; and Governor of the American Stock Exchange.
<PAGE>
Name, Address, Age and Position(s) with Fund Principal Occupations During
Past Five Years
Felix J. Christiana, 72 Formerly Senior Vice President of Dry Dock Savings
Bank; Trustee 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, 63 President and Attorney at Law in the law firm of
Anthony J. Trustee Colavita, P.C.; Director of Gabelli Equity Series Funds,
Inc., Gabelli Global Series Funds, Inc., Gabelli Investor Funds, Inc., The
Gabelli Convertible Securities Fund, Inc., The Gabelli Value Fund Inc., Gabelli
Gold Fund, Inc., Gabelli International Growth Fund, Inc., Gabelli Capital Series
Funds, Inc., and The Treasurer's Fund, Inc.; and Trustee of The Gabelli Growth
Fund, The Gabelli Money Market Funds and the Gabelli Westwood Funds.
James P. Conn, 60 Managing Director/Chief Investment Officer of Financial
Trustee Security Assurance Holdings Ltd. since 1992; Director of Santa Anita
Operating Company since 1995; Director of California Jockey Club since 1983;
Director of Meditrust Corporation and First Republic Bank; Director of The
Gabelli Equity Trust Inc. and The Gabelli Global Multimedia Trust Inc.; and
Trustee of The Gabelli Growth Fund and the Gabelli Westwood Funds.
Karl Otto Pohl,*+ 67 Partner of Sal. Oppenheim Jr. & Cie. (private
investment Trustee bank); Board Member of IBM World Trade Europe/Middle
East/Africa Corp., Bertelsmann AG, Zurich Versicherungs - Gesellschaft
(insurance), the International Council of JP Morgan & Co.; Supervisory Board
Member of Royal Dutch (petroleum company) ROBECo/o Group; Advisory Director of
Unilever N.V. and Unilever Deutschland; Former President of the Deutsche
Bundesbank and Chairman of its Central Bank Council from 1980 through 1991;
Director or Trustee of all Funds advised by Gabelli Funds, Inc. and its
affiliates.
<PAGE>
Name, Address, Age and Position(s) with Fund Principal Occupations During
Past Five Years
Anthony R. Pustorino, CPA, 72 Certified Public Accountant; Professor of
Accounting, Pace Trustee University, since 1965; Trustee of The Gabelli Growth
Fund; and Director of The Gabelli Value Fund Inc., The Gabelli Convertible
Securities Fund, Inc., Gabelli Equity Series Funds, Inc., The Gabelli Equity
Trust Inc., The Gabelli Global Multimedia Trust Inc., Gabelli Capital Series
Funds, Inc. and The Treasurer's Fund, Inc.
Anthonie C. van Ekris, 64 Managing Director of Balmac International;
Director of Trustee Stahel Hardmeyer AG; Trustee of 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 Global Series
Funds, Inc., Gabelli Gold Fund, Inc., Gabelli Capital Series Funds, Inc.,
Gabelli International Growth Fund, Inc. and The Treasurer's Fund, Inc.
Salvatore J. Zizza*+, 52 Executive Vice President of FMG Group (OTC), a
healthcare Trustee provider; Chairman of The Bethlehem Corp. (ASE); Board Member
of Hollis Eden Pharmaceuticals (OTC); Director of The Gabelli Equity Trust Inc.,
The Gabelli Global Multimedia Trust Inc. and Gabelli Convertible Securities
Fund, Inc. Bruce N. Alpert, 46 Vice President, Treasurer and Chief Operating
Officer of President and Treasurer the investment advisory division of the
Adviser; Director of Gabelli Advisers, Inc. and an officer of all funds advised
by Gabelli Funds, Inc. and its affiliates.
<PAGE>
Name, Address, Age and Position(s) with Fund Principal Occupations During
Past Five Years
James E. McKee, 33 Vice President and General Counsel of GAMCO
Investors, Secretary Inc. since 1993 and of Gabelli Funds, Inc. since August
1995; Secretary of all Funds advised by Gabelli Funds, Inc. and Gabelli
Advisers, Inc. since August 1995. Branch Chief with the U.S. Securities and
Exchange Commission in New York (1992-1993).
..................
+ Mr. Pohl receives fees from the Adviser but has no obligation to provide
any services to it. Although this relationship does not appear to require
designation of Mr. Pohl as an "interested person", the Fund is currently making
such designation in order to avoid the possibility that Mr. Pohl's independence
would be questioned. Mr. Zizza may be an "interested person" as a result of his
previous association with Binnings Building Products, Inc., an entity controlled
by GCI, Inc., an affiliate of the Adviser.
No director, officer or employee of Gabelli & Company, Inc.
("Gabelli & Company" or the "Distributor") or the Adviser or of any affiliate of
Gabelli & Company or the Adviser receives 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 in person and $500
per meeting attended via telephone and reimburses each Trustee 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, 1997, such fees totaled $60,500.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
COMPENSATION TABLE
- ----------------------------------------- ----------------------------------
(1) (2) (3)
Total Compensation
Aggregate Compensation from from Registrant and Fund Complex Paid
Registrant for to Trustees
Name of Person, Position Fiscal Year for Calendar Year*
- ----------------------------------------- ----------------------------------
Mario J. Gabelli $ 0 $ 0
Trustee
Anthony J. Colavita $ 9,000 $ 79,190 (14)
Trustee
Felix J. Christiana $ 9,000 $ 85,500 (10)
Trustee
James P. Conn $ 8,000 $ 42,501 (5)
Trustee
Karl Otto Pohl $ 7,500 $ 85,690 (15)
Trustee
Anthony R. Pustorino $ 11,000 $ 95,500 (10)
Trustee
Anthonie C. van Ekris $ 8,000 $ 55,190 (11)
Trustee
Salvatore J. Zizza $ 8,000 $ 47,500 (5)
Trustee
</TABLE>
* The total compensation paid to such persons during the calendar year ending
December 31, 1997 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.
As a group, the officers and Trustees of the Fund owned
beneficially, directly or indirectly, less than 1% of its outstanding voting
shares.
Set forth below is certain information as to persons who owned 5% or
more of the Fund's outstanding shares as of March 31, 1998.
<PAGE>
Name and Address % of Class Nature of Ownership
Charles Schwab & Co. Inc. 10.90% Record (a)
101 Montgomery Street
San Francisco, CA 94104-4122
Suntrust Bank Atlanta 5.07% Record (a)
P.O. Box 105870
Atlanta, GA 30348-5870
- ---------------
(a) Charles Schwab & Co. and Suntrust Bank disclaim beneficial ownership and no
one underlying shareholder owns beneficially more than 5% of the shares of
the Fund.
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
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 Amended and Restated Investment Advisory Contract, which
was approved by the shareholders of the Fund at a meeting held on May 11, 1992
(the "Contract"), 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 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 Sub-Administrator, 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 Additional Statement, including the
printing of such documents for the purpose of filings with the SEC and state
securities administrators, the Fund's tax returns, and reports to the Fund's
shareholders and the SEC; (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 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 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 Contract in no way restricts the
Adviser from acting as Adviser to others. The Fund has agreed by the terms of
the 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."
By its terms, the Contract will remain in effect from year to year,
provided each such annual continuance is specifically approved by the Fund's
Board of Trustees or by a "majority" (as defined in the 1940 Act) vote of its
shareholders and, in either case, by a majority vote of the Trustees who are not
parties to the Contract or interested persons of any such party, cast in person
at a meeting called specifically for the purpose of voting on the Contract. The
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 1940 Act.
For the Fund's fiscal years ended December 31, 1995, December 31,
1996 and December 31, 1997, the fee paid to the Adviser was $10,714,960,
$11,146,282 and $11,701,148, respectively.
DISTRIBUTOR
To implement the Fund's 12b-1 Plan, the Fund has entered into a
Distribution Agreement with the Distributor, a New York corporation which is an
indirect majority owned 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.
<PAGE>
DISTRIBUTION PLAN
On February 26, 1997, the Fund adopted a Second Amended and Restated
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act.
Under its terms, the Plan remains in effect so long as its continuance is
specifically approved at least annually by vote of the Fund's Board of Trustees,
including a majority of the Trustees who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Fund ("Independent Trustees"). The Plan may not be amended to increase
materially the amount to be spent for services provided by the Distributor
thereunder without shareholder approval, and all material amendments of the Plan
must also be approved by the Trustees in the manner described above. The Plan
may be terminated at any time, without penalty, by vote of a majority of the
Independent Trustees, or by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act). Under the Plan, the
Distributor will provide the Trustees periodic reports of amounts expanded under
the Plan and the purpose for which expenditures were made.
No interested person of the Fund or any Independent Trustee of the Fund
had a direct or indirect financial interest in the operation of the Plan or
related agreements.
During the fiscal year ended December 31, 1997, the Fund made
distribution payments pursuant to the Plan in the amount of $2,897,476. Such
payments included payments of approximately: $433,700 for advertising, $182,600
for printing, postage and stationary, $1,833,976 for overhead support expenses
and $447,200 for salaries of personnel of the Distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Contract, 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 executed through 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.
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, as amended. 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 $700,560 on portfolio
transactions in the principal amounts of $560,294,789 during 1997. The average
commission on these transactions was $0.0464 per share.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli & Company, 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 & Company 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 1940 Act, the
Board of Trustees has adopted "Procedures" which provide that commissions paid
to Gabelli & Company 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 with the foregoing
standard. The Adviser and Gabelli & Company 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 ("NYSE"), Gabelli & Company controls and monitors the execution
of such transactions on the floor of the NYSE through independent "floor
brokers" or through the Designated Order Turnaround System of the NYSE. Such
transactions are then cleared, confirmed to the Fund for the account of Gabelli
& Company, 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 & Company. Pursuant to an agreement with the Fund, Gabelli & Company
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 & Company 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 NYSE.
The following table sets forth certain information regarding the Fund's
payment of brokerage commissions including commissions paid to Gabelli & Company
and Keeley Investment Corp. ("Keeley"). A significant shareholder of Keeley is a
director of a company that is an affiliate of the Adviser.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Year Ended Commissions
December 31, Paid
Total Brokerage Commissions.................................................. 1995 $438,241
1996 $494,944
1997 $700,560
Commissions paid to Gabelli & Company........................................ 1995 $ 93,418
1996 $130,061
1997 $216,768
Commissions paid to Keeley Investment Corp................................... 1995 $3,578
1996 $5,550
1997 $4,025
% of Total Brokerage Commissions paid to Gabelli & Company................... 1997 30.94%
% of Total Brokerage Commissions paid to Keeley Investment Corp.............. 1997 .57%
% of Total Transactions involving Commissions paid to Gabelli & Company 1997 34.20%
% of Total Transactions involving Commissions paid to Keeley Investment Corp. 1997 0.40%
</TABLE>
The Fund's portfolio turnover rate for the fiscal years ended December 31,
1996 and December 31, 1997 were 14.9% and 22.0%, respectively.
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 SEC 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 NYSE are valued, except as
indicated below, at the last sale price reflected at the close of the regular
trading session of the NYSE 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 asked prices are
quoted on such day, then the security is valued at the closing bid price 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
NYSE but listed on other national securities exchanges or admitted to trading on
the National Association of Securities Dealers Automated Quotations, Inc.
("NASDAQ") National List are valued in like manner.
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. If no asked prices are
quoted on such day, then the security is valued at the closing bid price 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.
Portfolio securities traded on more than one national securities
exchange or market are valued according to the broadest and most representative
market as determined by the Adviser. Securities traded primarily on foreign
exchanges are valued at the closing price on such foreign exchange immediately
prior to the close of the NYSE.
United States Government obligations and other debt instruments having
60 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 a 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.
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 for the past ten years as well as its total
return for the past five years and for the twelve months as of the end of the
most recent calendar quarter. 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 calculation of cumulative
total return. Computed in the manner described, the total return of the Fund has
been:
Year ended Total Return
12/31/88 31.1%
12/31/89 26.2%
12/31/90 (5.0)%
12/31/91 18.1%
12/31/92 14.9%
12/31/93 21.8%
12/31/94 (0.1)%
12/31/95 24.9%
12/31/96 13.4%
12/31/97 38.1%
The Fund's average annual total return figures are as follows:
38.1% for the one year period from January 1, 1997 through December 31,
1997
18.9% for the five year period from January 1, 1993 through December
31, 1997
17.6% for the ten year period from January 1, 1988 through December 31,
1997
17.4% for the period from the Fund's inception on March 3, 1986 through
December 31, 1997
The formula for computing the foregoing annual rate of total return is:
P (1 + T) n = ERV
P = Investment at the beginning of the period. T = Compounded annual rate of
total return.
n = Number of years.
ERV = 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 returns and principal value will fluctuate; 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
other investments and investment companies using a different method of computing
performance data.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New
York, New York 10022, is counsel to the Fund.
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 a trust's 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 intends to continue indefinitely.
<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.
<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.
<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 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 repay 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
predominantly speculative with CCC, respect to capacity to pay interest and
repay principal in accordance with the terms of this CC, C: 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 minus sign to show
Or relative standing within the major rating categories. Minus (-) 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.
<PAGE>
FINANCIAL STATEMENTS
THE GABELLI ASSET FUND
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS--91.7%
AEROSPACE--0.4%
100,000 Boeing Co. ........................ $ 3,736,547 $ 4,893,750
20,000 Fairchild Corp., Class A........... 424,265 497,500
9,884 Raytheon Co., Class A.............. 258,860 487,422
------------ --------------
4,419,672 5,878,672
------------ --------------
AGRICULTURE--0.4%
150,000 Archer-Daniels-Midland Co. ........ 2,650,565 3,253,125
50,000 Monsanto Co........................ 2,106,435 2,100,000
------------ --------------
4,757,000 5,353,125
------------ --------------
AUTOMOTIVE--0.7%
155,000 General Motors Corp. .............. 4,533,784 9,396,875
------------ --------------
AUTOMOTIVE: PARTS AND ACCESSORIES--5.0%
15,000 Borg-Warner Automotive Inc. ....... 399,908 780,000
135,000 Echlin Inc. ....................... 1,827,188 4,885,312
190,000 Federal-Mogul Corp. ............... 3,543,268 7,695,000
605,000 GenCorp Inc. ...................... 3,713,412 15,125,000
250,000 Genuine Parts Co. ................. 5,867,503 8,484,375
180,000 Handy & Harman..................... 2,759,507 6,210,000
130,000 Johnson Controls Inc. ............. 2,479,813 6,207,500
205,000 Modine Manufacturing Co. .......... 3,976,931 6,995,625
46,062 Myers Industries Inc. ............. 172,636 785,933
160,000 Quaker State Corp. ................ 2,160,107 2,280,000
115,000 Standard Motor Products Inc. ...... 1,008,713 2,594,688
13,200 Superior Industries
International Inc. ............... 76,515 353,925
100,000 TransPro Inc. ..................... 788,321 900,000
200,000 UAP Inc., Class A.................. 2,210,197 2,340,715
60,000 Wynn's International Inc. ......... 1,140,063 1,912,500
------------ --------------
32,124,082 67,550,573
------------ --------------
AVIATION: PARTS AND SERVICES--1.7%
10,000 BE Aerospace Inc.+................. 193,625 267,500
375,000 Coltec Industries Inc.+............ 5,102,871 8,695,312
182,000 Curtiss-Wright Corp. .............. 2,287,271 6,608,875
60,000 Hi-Shear Industries Inc. .......... 510,932 123,750
40,000 Hudson General Corp. .............. 1,121,008 1,920,000
75,000 Precision Castparts Corp. ......... 2,839,799 4,523,438
------------ --------------
12,055,506 22,138,875
------------ --------------
BROADCASTING--5.9%
75,000 CBS Corp. ......................... 1,844,495 2,207,812
403,122 Chris-Craft Industries Inc. ....... 8,323,202 21,088,320
67,526 Chris-Craft Industries Inc., Class
B(a).............................. 1,132,452 3,532,454
120,000 Gray Communications Systems Inc.,
Class B........................... 2,333,656 3,090,000
190,000 Grupo Televisa SA, GDR +........... 3,954,966 7,350,625
80,000 Liberty Corp. ..................... 1,941,685 3,740,000
207,500 LIN Television Corp. +............. 8,566,530 11,308,750
110,000 Paxson Communications Corp., Class
A+................................ 1,185,309 811,250
400,000 Television Broadcasting Ltd.,
ORD............................... 1,815,551 1,140,792
247,500 United Television Inc. ............ 15,847,291 25,709,063
------------ --------------
46,945,137 79,979,066
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
BUILDING AND CONSTRUCTION--0.3%
160,000 Nortek Inc.+....................... $ 613,069 $ 4,250,000
4,333 Nortek Inc., Special
Common+(a)........................ 59,049 115,095
------------ --------------
672,118 4,365,095
------------ --------------
BUSINESS SERVICES--0.5%
50,000 Berlitz International Inc., New+... 725,813 1,331,250
50,000 Ecolab Inc. ....................... 1,571,512 2,771,875
16,546 Hach Co. .......................... 118,347 208,893
16,546 Hach Co., Class A.................. 113,613 155,119
68,000 Landauer Inc. ..................... 422,093 1,904,000
80,000 Nashua Corp.+...................... 2,040,343 940,000
------------ --------------
4,991,721 7,311,137
------------ --------------
CABLE--4.7%
56,125 Cable Michigan Inc. ............... 444,537 1,283,859
210,000 Cablevision Systems Corp., Class
A+................................ 7,959,397 20,107,500
40,000 Comcast Corp., Class A............. 593,113 1,275,000
40,000 Shaw Communications Inc., Class
B................................. 363,398 425,457
30,000 Shaw Communications Inc., Class B,
Conv. ............................ 191,728 319,093
320,000 TCI Ventures Group................. 3,891,947 9,059,999
505,000 Tele-Communications Inc., Class A
New+.............................. 8,686,751 14,108,439
60,000 United International Holdings Inc.,
Class A+.......................... 824,424 690,000
540,000 US WEST Media Group+............... 11,536,299 15,592,500
------------ --------------
34,491,594 62,861,847
------------ --------------
CLOSED-END FUNDS--0.1%
84,000 Royce Value Trust Inc. ............ 949,972 1,265,250
------------ --------------
COMMUNICATIONS EQUIPMENT--0.5%
110,000 Allen Telecom Inc.+................ 687,440 2,028,125
5,000 Dynatech Corp. .................... 234,813 234,375
47,000 Motorola Inc. ..................... 622,493 2,681,937
23,000 Northern Telecom Ltd. ............. 864,775 2,047,000
------------ --------------
2,409,521 6,991,437
------------ --------------
CONSUMER PRODUCTS--4.8%
10,000 Avon Products Inc. ................ 560,500 613,750
550,000 Carter-Wallace Inc. ............... 8,522,027 9,281,250
1,000 Christian Dior SA.................. 125,769 102,492
220,000 Church & Dwight Co. Inc. .......... 4,983,260 6,173,750
44,000 Department 56 Inc.+................ 947,842 1,265,000
30,000 Eastman Kodak Co. ................. 1,747,063 1,824,375
65,000 First Brands Corp. ................ 910,851 1,750,938
290,000 Fortune Brands Inc. ............... 6,551,003 10,748,125
250,000 Gallaher Group plc, ADR+........... 3,094,360 5,343,750
95,356 General Cigar Holdings Inc., Class
B+................................ 963,934 2,062,073
45,000 Gillette Co. ...................... 1,276,334 4,519,687
5,000 Gucci Group NV..................... 166,500 209,375
40,000 Harley Davidson Inc. .............. 198,900 1,095,000
10,000 National Presto Industries Inc. ... 377,937 395,625
35,000 Nine West Group Inc. .............. 1,039,975 907,813
13,104 Pillowtex Corp. ................... 387,396 457,012
170,000 Ralston Purina Group............... 6,151,231 15,799,375
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
41,700 Syratech Corp.+.................... $ 954,711 $ 1,480,350
------------ --------------
38,959,593 64,029,740
------------ --------------
CONSUMER SERVICES--1.7%
280,000 HSN Inc.+.......................... 6,526,580 14,420,000
220,000 Rollins Inc. ...................... 3,030,595 4,468,750
150,000 Ticketmaster Group Inc.+........... 2,929,315 3,450,000
------------ --------------
12,486,490 22,338,750
------------ --------------
DIVERSIFIED INDUSTRIAL--3.9%
10,000 Anixter International Inc.+........ 90,088 165,000
215,000 Crane Co. ......................... 3,799,544 9,325,625
89,500 GATX Corp. ........................ 3,280,216 6,494,344
25,000 General Electric Co. .............. 616,838 1,834,375
110,000 Honeywell Inc. .................... 5,706,141 7,535,000
185,000 ITT Industries Inc. ............... 3,158,961 5,804,375
145,000 Katy Industries Inc. .............. 1,312,250 2,954,375
6,500 Kyocera Corp., ADR................. 448,063 588,250
345,000 Lamson & Sessions Co.+............. 1,862,283 2,005,312
181,000 Lawter International Inc. ......... 1,779,806 1,968,375
68,000 National Service Industries Inc. .. 1,591,349 3,370,250
120,000 Thomas Industries Inc. ............ 1,298,410 2,370,000
100,000 TriMas Corp. ...................... 3,430,000 3,437,500
82,000 Trinity Industries Inc. ........... 996,472 3,659,250
------------ --------------
29,370,421 51,512,031
------------ --------------
ELECTRONICS--0.1%
2,500 Hitachi Ltd., ADR.................. 266,354 172,969
10,000 Imation Corp.+..................... 203,344 160,000
10,000 Sony Corp., ADR.................... 544,303 907,500
------------ --------------
1,014,001 1,240,469
------------ --------------
ENERGY--4.9%
100,000 Atlantic Richfield Co. ............ 5,368,509 8,012,500
5,000 Barrett Resources Corp. ........... 140,500 151,250
50,000 British Petroleum Co. plc, ADR..... 1,110,595 3,984,375
10,000 Brown (Tom) Inc. .................. 188,745 192,500
30,000 Chevron Corp. ..................... 1,016,500 2,310,000
150,000 Eastern Enterprises................ 4,177,240 6,750,000
60,000 Enron Oil & Gas Co. ............... 548,976 1,271,250
180,000 Exxon Corp. ....................... 5,413,043 11,013,750
15,000 Global Marine Inc.+................ 285,750 367,500
40,000 Halliburton Co. ................... 840,758 2,077,500
120,000 Pennzoil Co. ...................... 8,903,104 8,017,500
300,000 Southwest Gas Corp. ............... 5,472,623 5,606,250
212,000 Tejas Gas Corp. ................... 12,815,651 12,985,000
60,000 Texaco Inc. ....................... 1,890,875 3,262,500
------------ --------------
48,172,869 66,001,875
------------ --------------
ENTERTAINMENT--7.5%
230,000 Ascent Entertainment Group Inc..... 2,214,090 2,386,250
100,000 BET Holdings Inc., Class A+........ 2,654,506 5,462,500
19,406 EMI Group plc, ORD................. 75,408 161,908
100,000 EMI Group plc, Sponsored ADR....... 1,246,297 1,662,500
113,400 GC Companies Inc.+................. 3,401,557 5,372,325
130,000 Havas, Sponsored ADR............... 2,517,531 2,275,000
20,000 PolyGram NV........................ 574,275 953,750
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
ENTERTAINMENT (CONTINUED)
575,000 Tele-Communications Inc./Liberty
Media Group, Class A +............ $ 9,062,411 $ 20,843,750
620,000 Time Warner Inc. .................. 17,273,917 38,440,000
11,000 Todd-AO Corp., Class A............. 30,000 92,125
360,000 Viacom Inc., Class A+.............. 9,106,168 14,715,000
200,000 Viacom Inc., Class B+.............. 5,598,151 8,287,500
------------ --------------
53,754,311 100,652,608
------------ --------------
EQUIPMENT AND SUPPLIES--11.5%
30,000 Aeroquip-Vickers Inc. ............. 931,675 1,471,875
300,000 AMETEK Inc. ....................... 3,455,782 8,100,000
100,000 AMP Inc. .......................... 3,887,794 4,200,000
96,000 Amphenol Corp., Class A+........... 2,488,800 5,346,000
38,000 AptarGroup Inc. ................... 615,698 2,109,000
95,000 Caterpillar Inc. .................. 1,273,555 4,613,437
67,400 CLARCOR Inc. ...................... 1,301,188 1,996,725
295,500 CTS Corp. ......................... 2,046,776 9,437,531
34,650 Culligan Water Technologies
Inc.+............................. 803,754 1,749,825
410,000 Deere & Co. ....................... 6,454,360 23,908,125
115,000 Donaldson Co. Inc. ................ 1,355,729 5,182,188
40,000 EG&G Inc. ......................... 709,125 832,500
5,000 Flowserve Corp. ................... 120,040 139,687
160,000 Gerber Scientific Inc. ............ 1,628,424 3,180,000
445,000 IDEX Corp. ........................ 3,661,463 15,519,375
105,000 Ingersoll-Rand Co. ................ 2,614,238 4,252,500
200,000 Kollmorgen Corp. .................. 1,861,980 3,662,500
90,000 Lufkin Industries Inc. ............ 1,627,761 3,217,500
45,000 Manitowoc Co. Inc. ................ 463,975 1,462,500
160,000 Mark IV Industries Inc. ........... 1,150,386 3,500,000
3,000 Met-Pro Corp. ..................... 41,875 49,500
375,000 Navistar International Corp.+...... 5,193,341 9,304,688
20,000 PACCAR Inc. ....................... 522,021 1,050,000
145,500 Pittway Corp. ..................... 2,849,535 10,030,406
160,000 Pittway Corp., Class A............. 1,471,386 11,140,000
61,000 Sequa Corp., Class A+.............. 2,440,436 3,968,813
90,000 Sequa Corp., Class B+.............. 4,393,591 6,705,000
170,000 SPS Technologies Inc.+............. 2,566,538 7,416,250
30,000 Valmont Industries Inc. ........... 242,908 585,000
------------ --------------
58,174,134 154,130,925
------------ --------------
FINANCIAL SERVICES--6.1%
1 Al-Zar Ltd.+(a).................... 0 350
330,000 American Express Co. .............. 7,645,187 29,452,500
220 Berkshire Hathaway Inc.+........... 874,549 10,120,000
130,000 Block (H&R) Inc. .................. 4,434,737 5,825,625
70,000 Commerzbank AG, Sponsored ADR...... 1,365,494 2,755,900
150,000 Deutsche Bank AG, Sponsored ADR.... 6,596,875 10,528,125
200,000 Lehman Brothers Holdings Inc. ..... 3,607,975 10,200,000
86,000 Midland Co. ....................... 2,706,145 5,418,000
40,500 Paine Webber Group Inc. ........... 1,042,913 1,399,781
43,000 State Street Corp. ................ 638,075 2,502,063
20,000 SunTrust Banks Inc. ............... 424,879 1,427,500
11,941 Transamerica Corp. ................ 583,636 1,271,717
8,000 Value Line Inc. ................... 115,500 316,000
------------ --------------
30,035,965 81,217,561
------------ --------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE--6.5%
76,300 Brown-Forman Corp., Class A........ $ 2,574,752 $ 4,024,825
90,000 Chock Full o'Nuts Corp.+........... 554,148 630,000
45,000 Coca-Cola Co. ..................... 387,203 2,998,125
25,000 CPC International Inc. ............ 1,427,488 2,693,750
4,500 Farmer Brothers Co. ............... 476,380 841,500
75,000 General Mills Inc. ................ 2,152,766 5,371,875
55,000 Heinz (H.J) Co. ................... 2,067,710 2,794,688
48,000 Hershey Foods Corp. ............... 1,016,513 2,973,000
160,000 Kellogg Co. ....................... 2,972,655 7,940,000
25,000 LVHM Moet Hennessy Louis Vuitton,
Sponsored ADR..................... 971,563 828,125
200,000 PepsiCo Inc. ...................... 4,920,065 7,287,500
390,000 Quaker Oats Co. ................... 13,375,414 20,572,500
20,000 Ralcorp Holdings Inc.+............. 98,588 338,750
300,000 Seagram Co. Ltd. .................. 9,018,197 9,693,750
62,914 Tootsie Roll Industries Inc. ...... 2,074,917 3,932,125
290,000 Whitman Corp. ..................... 2,638,965 7,558,125
80,000 Wrigley (Wm.) Jr. Co. ............. 3,673,016 6,365,000
------------ --------------
50,400,340 86,843,638
------------ --------------
HEALTH CARE--2.0%
12,000 Amgen Inc. ........................ 220,320 649,500
18,000 Biogen Inc.+....................... 270,450 654,750
40,000 Chiron Corp.+...................... 550,315 680,000
100,000 Genentech Inc.+.................... 4,804,136 6,062,500
25,000 IVAX Corp. ........................ 184,282 168,750
70,000 Johnson & Johnson.................. 1,444,438 4,611,250
55,000 Merck & Co. Inc. .................. 1,853,500 5,843,750
105,000 Pfizer Inc. ....................... 1,677,963 7,829,063
------------ --------------
11,005,404 26,499,563
------------ --------------
HOTELS AND GAMING--3.0%
125,000 Circus Circus Enterprises Inc.+.... 3,449,540 2,562,500
152,000 Gaylord Entertainment Co., Class
A................................. 3,673,030 4,854,500
30,000 GTECH Holdings Corp.+.............. 545,938 958,125
12,000 Harrah's Entertainment Inc.+....... 113,002 226,500
285,000 Hilton Hotels Corp. ............... 4,194,115 8,478,750
210,000 ITT Corp., New+.................... 8,194,807 17,403,750
203,389 Ladbroke Group plc................. 535,440 881,854
185,000 Mirage Resorts Inc.+............... 959,778 4,208,750
------------ --------------
21,665,650 39,574,729
------------ --------------
METALS AND MINING--0.3%
30,000 Barrick Gold Corp. ................ 622,076 558,750
150,000 Echo Bay Mines Ltd. ............... 1,372,801 365,625
50,000 Homestake Mining Co. .............. 747,062 443,750
45,000 Newmont Gold Co. .................. 1,719,322 1,341,563
700,000 Pegasus Gold Inc.+................. 3,997,969 437,500
30,000 Placer Dome Inc. .................. 475,906 380,625
350,000 Royal Oak Mines Inc.+.............. 1,125,437 546,875
40,000 TVX Gold Inc.+..................... 159,689 135,000
------------ --------------
10,220,262 4,209,688
------------ --------------
PAPER AND FOREST PRODUCTS--1.2%
180,000 Greif Bros. Corp., Class A......... 3,637,710 6,030,000
107,000 St. Joe Corp. ..................... 3,704,888 9,683,500
------------ --------------
7,342,598 15,713,500
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
PUBLISHING--2.9%
70,000 American Media Inc., Class A+...... $ 674,812 $ 542,500
66,200 Dow Jones & Co. Inc. .............. 3,074,618 3,554,112
230,000 Golden Books Family Entertainment
Inc.+............................. 2,992,410 2,371,875
40,000 Harcourt General Inc. ............. 1,842,000 2,192,500
42,000 McClatchy Newspapers Inc., Class
A................................. 692,156 1,141,875
75,000 McGraw-Hill Companies Inc. ........ 2,224,925 5,550,000
330,000 Media General Inc., Class A........ 7,621,995 13,798,125
90,000 Meredith Corp. .................... 1,821,494 3,211,875
71,000 New York Times Co., Class A........ 1,161,977 4,694,875
15,000 News Corp. Ltd., ADR............... 255,587 334,688
6,000 Scripps (E.W.) Co., Class A........ 108,669 290,625
1,650,000 Seat SpA+.......................... 343,343 643,584
------------ --------------
22,813,986 38,326,634
------------ --------------
REAL ESTATE--0.7%
330,000 Catellus Development Corp.+........ 2,786,250 6,600,000
12,000 Florida East Coast Industries
Inc. ............................. 631,838 1,153,500
61,000 Griffin Land & Nurseries Inc.+..... 758,331 945,500
1,000 Lennar Corp. ...................... 13,369 21,563
1,000 LNR Property Corp. ................ 21,243 23,625
------------ --------------
4,211,031 8,744,188
------------ --------------
RETAIL--2.0%
41,000 Aaron Rents Inc. .................. 146,083 794,375
20,000 Aaron Rents Inc., Class A.......... 83,263 350,000
170,000 Burlington Coat Factory Warehouse
Corp.+............................ 1,858,279 2,794,375
50,000 Fingerhut Companies Inc. .......... 711,335 1,068,750
130,000 Lillian Vernon Corp. .............. 1,854,859 2,161,250
590,000 Neiman Marcus Group Inc.+.......... 8,288,205 17,847,500
200,000 Scheib (Earl) Inc.+................ 1,432,580 1,600,000
------------ --------------
14,374,604 26,616,250
------------ --------------
RETAIL: FOOD AND DRUG--0.6%
35,000 Albertson's Inc. .................. 1,195,480 1,658,125
5,000 Dominick's Supermarkets Inc. ...... 188,357 182,500
90,000 Giant Food Inc., Class A........... 2,964,894 3,031,875
75,000 Kroger Co.+........................ 874,375 2,770,313
------------ --------------
5,223,106 7,642,813
------------ --------------
SPECIALTY CHEMICAL--0.7%
375,000 Ferro Corp. ....................... 5,437,040 9,117,188
------------ --------------
TELECOMMUNICATIONS--6.8%
112,000 Aliant Communications Inc. ........ 1,622,075 3,514,000
160,000 AT&T Corp. ........................ 5,665,161 9,800,000
80,000 BC Telecom Inc. ................... 1,415,173 2,491,165
205,000 BCE Inc. .......................... 3,282,323 6,829,062
18,000 BellSouth Corp. ................... 455,094 1,013,625
100,000 Cable & Wireless plc, Sponsored
ADR............................... 2,083,454 2,718,750
111,700 Citizens Utilities Co., Class B.... 1,121,123 1,075,112
113,000 C-TEC Corp.+....................... 1,054,259 2,923,875
31,000 C-TEC Corp., Class B+.............. 203,085 813,750
60,000 Frontier Corp. .................... 1,120,617 1,443,750
50,000 Globalstar Telecommunications+..... 423,210 2,456,250
162,000 GTE Corp. ......................... 3,757,020 8,464,500
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
35,000 Hong Kong Telecommunications Ltd.,
Sponsored ADR..................... $ 545,695 $ 721,875
215,000 RCN Corp. ......................... 2,923,218 7,363,750
165,000 Rogers Communications Inc., Class
B+................................ 1,386,290 803,909
8,000 SBC Communications Inc. ........... 203,700 586,000
180,000 Southern New England
Telecommunications Corp. ......... 7,156,088 9,056,250
110,000 Sprint Corp. ...................... 2,135,570 6,448,750
500,000 Telecom Italia SpA, ORD............ 1,046,696 3,193,895
136,000 Telecom Italia SpA, ADS............ 3,004,930 8,704,000
67,500 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR......... 1,979,139 7,859,531
14,000 Telefonica de Espana, Sponsored
ADR............................... 478,215 1,274,875
10,000 Telefonos de Mexico SA,
Class L, ADR...................... 281,828 560,625
------------ --------------
43,343,963 90,117,299
------------ --------------
TRANSPORTATION--0.8%
83,000 AMR Corp.+......................... 5,133,612 10,665,500
------------ --------------
WIRELESS COMMUNICATIONS--3.5%
35,000 AirTouch Communications Inc.+...... 791,589 1,454,687
45,000 Associated Group Inc., Class A+.... 201,448 1,333,125
37,000 Associated Group Inc., Class B+.... 98,787 1,077,625
355,000 Century Telephone Enterprises
Inc. ............................. 8,214,290 17,683,438
195,000 COMSAT Corp. ...................... 3,580,002 4,728,750
55,000 NEXTEL Communications Inc., Class
A+................................ 660,330 1,430,000
130,000 TCI Satellite Entertainment Inc.,
Class A+.......................... 1,571,529 893,750
1,900,000 Telecom Italia Mobile SpA.......... 1,746,901 8,769,644
150,000 Telephone and Data Systems Inc. ... 1,821,004 6,984,375
90,000 360(o) Communications Co.+......... 1,215,244 1,816,875
------------ --------------
19,901,124 46,172,269
------------ --------------
TOTAL COMMON STOCKS.............................. 641,390,611 1,224,459,170
------------ --------------
PREFERRED STOCKS--0.3%
EQUIPMENT AND SUPPLIES--0.1%
19,300 Sequa Corp., $5.00, Cumulative
Conv. Pfd......................... 1,482,798 1,845,563
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc., Depository
Shares, 7.00%, Cumulative Conv.
Pfd............................... $ 213,000 $ 216,875
------------ --------------
TELECOMMUNICATIONS--0.2%
35,000 Sprint Corp., 8.25%, Conv. Pfd..... 1,295,406 1,566,250
1,588,267 Telecomunicacoes de Sao Paulo SA
(Telesp), Preference Shares....... 213,239 422,651
------------ --------------
1,508,645 1,988,901
------------ --------------
TOTAL PREFERRED STOCKS........................... 3,204,443 4,051,339
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C> <C>
CORPORATE BONDS--0.2%
ENTERTAINMENT--0.2%
FRF 593,750 Havas, Conv. Bonds,
Payment-in-kind,
3.00% due 03/31/98... 158,703 121,195
$ 2,600,000 Viacom Inc., Sub.
Deb., 8.00% due
07/07/06............. 1,824,430 2,635,750
------------ --------------
TOTAL CORPORATE BONDS................ 1,983,133 2,756,945
------------ --------------
U.S. TREASURY BILLS--7.7%
$103,197,000 5.044% to 5.533%++ due
01/08/98--02/26/98.... 102,836,344 102,836,344
------------ --------------
TOTAL INVESTMENTS............. 99.9% $749,414,531(b) 1,334,103,798
============ ==============
OTHER ASSETS AND LIABILITIES
(NET)........................ 0.1 947,980
----- --------------
NET ASSETS (41,918,237 shares
outstanding)................. 100.0% $1,335,051,778
===== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE.... $31.85
======
</TABLE>
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
EXPIRATION UNREALIZED
DATE DEPRECIATION
---------- ------------
<S> <C> <C>
FORWARD FOREIGN EXCHANGE CONTRACTS TO
DELIVER
17,700,000 Hong Kong Dollars in
exchange for U.S.
$2,260,970............. 02/26/98 $ (14,167)
-----------
</TABLE>
- ---------------
(a) Security fair valued by the Board of Trustees.
(b) Aggregate cost for Federal tax purposes was $750,453,246. Net unrealized
appreciation for Federal tax purposes was $583,650,552 (gross unrealized
appreciation was $596,907,461 and gross unrealized depreciation was
$13,256,909).
+ 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
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost
$749,414,531)........................ $1,334,103,798
Cash and foreign currency (cost
$114,817)............................ 115,277
Receivable for investments sold........ 1,708,593
Dividends and interest receivable...... 1,473,791
Receivable for Fund shares sold........ 2,695,503
--------------
TOTAL ASSETS......................... 1,340,096,962
--------------
LIABILITIES:
Net unrealized depreciation of forward
foreign exchange contracts........... 14,167
Payable for investments purchased...... 981,104
Payable for investment advisory fees... 1,092,377
Payable for Fund shares redeemed....... 2,052,635
Payable for distribution fees.......... 535,004
Other accrued expenses................. 369,897
--------------
TOTAL LIABILITIES.................... 5,045,184
--------------
NET ASSETS applicable to 41,918,237
shares of beneficial interest
outstanding........................ $1,335,051,778
--------------
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value................................ $ 419,182
Additional paid-in capital............. 750,995,750
Distributions in excess of net realized
gain on investments.................. (1,038,715)
Net unrealized appreciation on
investments.......................... 584,675,561
--------------
TOTAL NET ASSETS..................... $1,335,051,778
==============
NET ASSET VALUE, offering and
redemption price per share
($1,335,051,778 / 41,918,237 shares
outstanding; unlimited number of
shares authorized of $0.01 par
value)............................. $31.85
======
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $116,298).......... $ 16,233,559
Interest income........................... 2,487,757
------------
TOTAL INVESTMENT INCOME................. 18,721,316
------------
EXPENSES:
Investment advisory fees.................. 11,701,148
Distribution fees......................... 2,897,476
Shareholder services fees................. 927,270
Trustees' fees............................ 62,349
Legal and audit fees...................... 46,600
Miscellaneous expenses.................... 538,610
------------
TOTAL EXPENSES.......................... 16,173,453
------------
NET INVESTMENT INCOME....................... 2,547,863
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on securities sold...... 166,961,023
Net realized gain on forward foreign
exchange contracts and foreign currency
transactions............................ 2,737
------------
Net realized gain on investments........ 166,963,760
------------
Net unrealized appreciation on
investments:
Beginning of year....................... 377,087,602
End of year............................. 584,675,561
------------
Change in net unrealized appreciation
on investments...................... 207,587,959
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS............................... 374,551,719
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $377,099,582
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/97 12/31/96
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 2,547,863 $ 5,747,905
Net realized gain on investments.......................... 166,963,760 97,358,216
Net change in unrealized appreciation on investments...... 207,587,959 35,910,289
-------------- --------------
Net increase in net assets resulting from operations...... 377,099,582 139,016,410
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (2,481,578) (5,681,295)
Distributions in excess of net investment income.......... (93,147) --
Net realized gain on investments.......................... (166,963,945) (97,358,216)
Distributions in excess of net realized gain on
investments............................................. (40,227) (410,434)
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 46,891,821 (46,466,539)
-------------- --------------
Net increase/(decrease) in net assets....................... 254,412,506 (10,900,074)
NET ASSETS:
Beginning of year........................................... 1,080,639,272 1,091,539,346
-------------- --------------
End of year................................................. $1,335,051,778 $1,080,639,272
============== ==============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
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; if there were no asked
prices quoted on such day, then the security is valued at the closing bid price
on such day. Readily marketable securities traded in the over-the-counter
market, including listed securities whose primary market is believed by Gabelli
Funds, Inc. (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 other
comparable sources as the Board of Trustees deems appropriate to reflect their
fair value. If no asked prices are quoted on such day, then the security is
valued at the closing bid price on such day. If no bid or asked prices are
quoted on such day, then the security is valued under the relevant procedure for
the previous day or by such method as shall be determined by the Adviser or the
Board of Trustees. Portfolio securities traded on more than one national
securities exchange or market are valued according to the broadest and most
representative market, as determined by the Adviser. 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. U.S. government securities and other debt instruments 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.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
15
<PAGE>
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 on investments. 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 on investments. 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 by the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. 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, 1997 resulting from
different book and tax accounting policies for currency gains and losses and
certain distributions received by the Fund, are reclassified between net
investment income and net realized gains at year end with offsetting adjustments
made to paid-in capital. The reclassifications for the year ended December 31,
1997 were an increase to accumulated net investment income of $26,862, an
increase to distributions in excess of net realized gain on investments of
$106,513 and a decrease to paid in capital of $133,375 for tax purposes.
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, to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including offices, required for its
administrative management and pay the compensation of all officers and Trustees
of the Fund who are its affiliates.
16
<PAGE>
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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
wholly-owned subsidiary of the Adviser, is authorized to purchase advertising,
sales literature and other promotional material and to pay its own salespeople.
The Fund pays Gabelli & Company as distribution payments under this Plan, an
aggregate amount at a rate of 0.25 percent per year of the average daily net
assets of the Fund each fiscal year. Such payments are accrued daily and paid
monthly. Prior to February 26, 1997, the Fund reimbursed the Distributor up to
0.25 percent on an annual basis of the value of the Fund's average daily net
assets based on expenses incurred by the Distributor in connection with the
distribution of shares of the Fund. For the year ended December 31, 1997, the
Fund incurred distribution costs under the Plan of $2,897,476, representing 0.25
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, 1997, other than short-term
securities, aggregated $247,646,583 and $460,221,184, respectively.
5. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1997, the
Fund paid brokerage commissions of $220,794 to Gabelli & Company and its
affiliates.
6. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/97 12/31/96
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................... 13,039,709 $ 421,881,081 6,138,309 $ 168,589,644
Shares issued upon reinvestment of dividends.............. 4,869,910 154,702,133 3,624,998 95,772,441
Shares redeemed........................................... (16,898,747) (529,691,393) (11,251,210) (310,828,624)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... 1,010,872 $ 46,891,821 (1,487,903) $ (46,466,539)
=========== ============= =========== =============
</TABLE>
17
<PAGE>
THE GABELLI ASSET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year
ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of year.................... $ 26.42 $ 25.75 $ 22.21 $ 23.30 $ 19.88
---------- ---------- ---------- -------- --------
Net investment income................................. 0.07 0.15 0.26 0.26 0.16
Net realized and unrealized gain/(loss) on
investments......................................... 9.97 3.29 5.28 (0.30) 4.18
---------- ---------- ---------- -------- --------
Total from investment operations...................... 10.04 3.44 5.54 (0.04) 4.34
---------- ---------- ---------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................. (0.07) (0.15) (0.25) (0.25) (0.16)
Distributions in excess of net investment income...... (0.00)(a) -- -- (0.01) --
Net realized gains.................................... (4.54) (2.61) (1.75) (0.76) (0.76)
Distributions in excess of net realized gains......... (0.00)(a) (0.01) (0.00)(a) (0.03) --
---------- ---------- ---------- -------- --------
Total distributions................................... (4.61) (2.77) (2.00) (1.05) (0.92)
---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF YEAR.......................... $ 31.85 $ 26.42 $ 25.75 $ 22.21 $ 23.30
---------- ---------- ---------- -------- --------
Total return*......................................... 38.1% 13.4% 24.9% (0.1)% 21.8%
========== ========== ========== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)...................... $1,335,052 $1,080,639 $1,091,539 $982,250 $945,408
Ratio of net investment income to average net assets.... 0.22% 0.52% 0.95% 1.10% 0.82%
Ratio of operating expenses to average net assets....... 1.38% 1.34% 1.33% 1.28% 1.31%
Portfolio turnover rate................................. 22.0% 14.9% 26.4% 18.7% 16.0%
Average commission rate per share(b).................... $ 0.0464 $ 0.0484 N/A N/A N/A
</TABLE>
- ---------------
* 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.
(a) Amount represents less than $0.005 per share.
(b) Average commission rate (per share of security) as required by amended SEC
disclosure requirements effective for fiscal years beginning after September
1, 1995.
See Notes to Financial Statements.
18
<PAGE>
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, 1997, the results of its operations for the year then ended and
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 five years in the period then
ended, 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, 1997 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 20, 1998
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Prospectus:
Part A: Financial Highlights
Included in the Statement of Additional Information:
Part B: Audited financial statements for the fiscal year ended December 31,
1997 including: Portfolio of Investments Statement of Assets & Liabilities
Statement of Operations Statement of Changes in Net Assets Notes to Financial
Statements Financial Highlights Report of Independent Accountants
Part C: Consent of Independent Accountants is filed herein.
(b) Exhibits
All references are to the Registrant's registration statement on Form
N-1A as filed with the Securities and Exchange Commission ("SEC") on November
21, 1985, File Nos. 33-1719 and 811-4494 (the "Registration Statement")
(1) Declaration of Trust will be filed by amendment.
(2) Registrant's By-laws are incorporated by reference to Post-Effective
Amendment No. 14 to the Registration Statement as filed with the SEC on April
30, 1997 (Accession No. 0000927405-97-000146) ("Post-Effective Amendment No.
14").
(3) Not applicable.
(4) Not applicable.
(5) Amended and Restated Investment Advisory Agreement with Gabelli Funds,
Inc. dated May 12, 1992 is incorporated by reference to Post-Effective
Amendment No. 14.
(6) Amended and Restated Distribution Agreement dated May 11, 1992 is
incorporated by reference to Post-Effective Amendment No. 14.
(7) Not applicable.
(8) Custody Agreement dated January 11, 1986 is incorporated by
reference to Post-Effective Amendment No. 14.
(8b) Amendment to Custody Agreement dated December 7, 1989 is
incorporated by reference to Post-Effective
Amendment No. 14.
(8c) Amendment to Custody Agreement dated May 13, 1991 is incorporated
by reference to Post-Effective Amendment No. 14.
(9)(a) Transfer Agency Agreement is incorporated by reference to
Post-Effective Amendment No. 14.
(9)(b) Sub-Administration Agreement with The Shareholder Services Group,
Inc. (now known as First Data Investor Services Group, Inc.) dated May 1, 1995
is incorporated by reference to Post-Effective Amendment No. 14.
(10) Not applicable.
(11)(a) Consent of Independent Accountants is filed herewith.
(11)(b) Powers of Attorney for Mario J. Gabelli, Felix J. Christiana,
Anthony J. Colavita, James P. Conn, Karl Otto Pohl, Anthony R. Pustorino,
Anthonie C. van Ekris and Salvatore J. Zizza are incorporated by reference
to Post-Effective Amendment No. 14
(11)(c) Assistant Secretary Certificate is filed herewith.
(12) Not applicable.
(13) Agreement with initial shareholder is incorporated by
reference to Post-Effective Amendment No. 14.
(14) Instructions and Agreement for Individual Retirement Accounts
(IRA) is incorporated by reference to the Registration
Statement on Form N-1A as filed with the SEC.
(15) Amended and Restated Plan of Distribution pursuant to Rule
12b-1 is incorporated by reference to Post-Effective
Amendment No. 14.
(16) Sample Total Return Computation is incorporated by reference to
Post-Effective Amendment No. 10 to the Registration Statement as filed with the
SEC on May 3, 1993.
(17) Financial Data Schedule is filed herewith.
(18) Not applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities
(1)
(2)
Number of Record Holders
Title of Class as of April 22, 1998
-------------- --------------------
Beneficial Interest Value
$.01 per share 55,091
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. (the "Adviser") is a registered investment adviser
providing investment management and administrative services to the Registrant.
The Adviser also provides similar services to other mutual funds.
The information required by this Item 28 of directors,
officers or partners of the Adviser, together with information
as to any other business, profession, vocation or employment
of a substantial nature engaged in by the Adviser or such
directors, officers or partners during the past two years, is
incorporated by reference to Form ADV filed by the Adviser
under 1940 Act (SEC File No. 801-37706).
Item 29. Principal Underwriter
(a) Gabelli & Company, Inc. ("Gabelli & Company") currently acts
as distributor for The Gabelli ABC Fund, The Gabelli Asset
Fund, The Gabelli Capital Asset Fund, The Gabelli Convertible
Securities Fund, Inc., The Gabelli Equity Income Fund, The
Gabelli Equity Trust Inc., The Gabelli Global Convertible
Securities Fund, The Gabelli Global Interactive Couch
Potato(R) Fund, The Gabelli Global Multimedia Trust Inc., The
Gabelli Global TelecommunicationS Fund, Gabelli Gold Fund, The
Gabelli Growth Fund, The Gabelli International Growth Fund,
Inc., The Gabelli Small Cap Growth Fund, The Gabelli U.S.
Treasury Money Market Fund, The Gabelli Value Fund, Inc., The
Treasurer's Fund, Inc. and the Gabelli Westwood Funds.
(b) The information required by this Item 29 with respect to each
director, officer or partner of Gabelli & Company is
incorporated by reference to Schedule A of Form BD filed by
Gabelli & Company under the Securities Exchange Act of 1934,
as amended (SEC File No. 8-21373).
(c) Not applicable.
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., One
Exchange Place, Boston, Massachusetts 02109, State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts,
02110 and Boston Financial Data Services, Inc., 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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, as amended, 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 Rye and State
of New York, on the 30th day of April, 1998.
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
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Mario J. Gabelli* Principal Executive Officer and Trustee 4/30/98
Mario J. Gabelli
/s/ Bruce N. Alpert President and Treasurer 4/30/98
Bruce N. Alpert
/s/ Felix J. Christiana* Trustee 4/30/98
Felix J Christiana
/s/ Anthony J. Colavita* Trustee 4/30/98
Anthony J. Colavita
/s/ James P. Conn* Trustee 4/30/98
James P. Conn
/s/ Karl Otto Pohl* Trustee 4/30/98
Karl Otto Pohl
/s/ Anthony R. Pustorino* Trustee 4/30/98
Anthony R. Pustorino
/s/ Anthonie C. van Ekris* Trustee 4/30/98
Anthonie C. van Ekris
/s/ Salvatore J. Zizza* Trustee 4/30/98
Salvatore J. Zizza
*By: /s/ Bruce N. Alpert
Bruce N. Alpert
Attorney-in-fact
</TABLE>
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER EXHIBIT
(11)(a) Consent of Independent Accountants
(17) Financial Data Schedule
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional
Information constituting part of this Post-Effective Amendment No.
15 to the registration statement on Form N-1A (the
"Registration Statement") of our report dated February 20, 1998,
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 headings "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 10036
April 24, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> GABELLI ASSET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 749,414,531
<INVESTMENTS-AT-VALUE> 1,334,103,798
<RECEIVABLES> 5,877,887
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 115,277
<TOTAL-ASSETS> 1,340,096,962
<PAYABLE-FOR-SECURITIES> 981,104
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,067,080
<TOTAL-LIABILITIES> 5,045,184
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 751,414,932
<SHARES-COMMON-STOCK> 41,918,237
<SHARES-COMMON-PRIOR> 40,907,365
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1,038,715)
<ACCUM-APPREC-OR-DEPREC> 584,675,561
<NET-ASSETS> 1,335,051,778
<DIVIDEND-INCOME> 16,233,559
<INTEREST-INCOME> 2,487,757
<OTHER-INCOME> 0
<EXPENSES-NET> 16,173,453
<NET-INVESTMENT-INCOME> 2,547,863
<REALIZED-GAINS-CURRENT> 166,963,760
<APPREC-INCREASE-CURRENT> 207,587,959
<NET-CHANGE-FROM-OPS> 377,099,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2,574,725)
<DISTRIBUTIONS-OF-GAINS> (167,004,172)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 13,039,709
<NUMBER-OF-SHARES-REDEEMED> (16,898,747)
<SHARES-REINVESTED> 4,869,910
<NET-CHANGE-IN-ASSETS> 254,412,506
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1,104,816)
<GROSS-ADVISORY-FEES> 11,701,148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 16,173,453
<AVERAGE-NET-ASSETS> 1,171,654,335
<PER-SHARE-NAV-BEGIN> 26.42
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 9.97
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (4.54)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 31.85
<EXPENSE-RATIO> 1.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
