As filed with the Securities and Exchange Commission on April 28, 1995.
Registration No. 33-10583
Investment Company File No. 811-4873
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT No. / /
POST-EFFECTIVE AMENDMENT No. 12 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT No. 13 /X/
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THE GABELLI GROWTH 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)
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Copies to:
J. Hamilton Crawford, Jr., Esq. Richard T. Prins, Esq.
Gabelli Funds, Inc. Skadden, Arps, Slate, Meagher & Flom
One Corporate Center 919 Third Avenue
Rye, New York 10580-1434 New York, New York 10022
(212) 735-2000
It is proposed that this filing will become effective (check appropriate box):
/X/ immediately upon filing pursuant to paragraph (b); or
/ / on pursuant to paragraph (b); or
/ / 60 days after filing pursuant to paragraph (a); or
/ / on pursuant to paragraph (a) of Rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
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Registrant has registered an indefinite number of its shares of beneficial
interest pursuant to Rule 24f-2 under the Investment Company Act of 1940, and
has filed a Rule 24f-2 Notice for its most recent fiscal year ended December 31,
1994 on February 28, 1994.
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The Gabelli Growth Fund
One Corporate Center, Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
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PROSPECTUS
May 1, 1995
The Gabelli Growth Fund (the "Fund") is an open-end, no-load mutual fund which
seeks capital appreciation by investing in securities which are perceived by its
management to have favorable, yet undervalued, prospects for earnings growth.
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. There is no deferred sales or other charge on the
redemption of shares but the Fund may pay up to 0.25% of its average net assets
in any fiscal year for certain promotional, distribution expenses and
shareholder services (see "Distribution Plan"). The minimum initial investment
is $1,000 (see "Purchase of Shares") except for investments made through a
spousal IRA account or Automatic Investment Plan (see "Retirement Plans" or
"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, 1995, containing additional and more complete information about the
Fund (the "Additional Statement") has been filed with the Securities and
Exchange Commission and is incorporated in its entirety by reference into this
Prospectus. For a free copy, write or call the Fund at the telephone number or
address set forth above.
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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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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GABELLI GROWTH FUND
CROSS REFERENCE SHEET
(as required by Rule 481(a))
Part A of
Form N-1A
Item No. Prospectus Caption(s)
-------- ---------------------
Item 1. Cover Page ....................................
Item 2. Table of Fees and Expenses ....................
Item 3. Financial Highlights ..........................
Item 4. The Fund and Its Investment Policies, Special
Investment Methods ..........................
Item 5. Management of the Fund ........................
Item 6. General Information ...........................
Item 7. Purchase of Shares ............................
Item 8. Redemption of Shares ..........................
Item 9. * .............................................
Statement of Additional Information
Part B or Prospectus Caption(s)
------ ------------------------
Item 10. Cover Page ....................................
Item 11. Cover Page ....................................
Item 12. * .............................................
Item 13. (Prospectus "The Fund and Its Investment
Policies) Investment Policies; Special
Investment Methods; Special Risks; Investment
Restrictions ................................
Item 14. Trustees and Officers .........................
Item 15. Trustees and Officers .........................
Item 16. (Prospectus-"Management of the Fund");
Investment Adviser ..........................
Item 17. Portfolio Transactions and Brokerage ..........
Item 18. (Prospectus-"General Information"); General
Information .................................
Item 19. (Prospectus-"Purchase of Shares, Redemption of
Shares"); Redemption of Shares; Net Asset
Value .......................................
Item 20. (Prospectus-"Dividends, Distribution and
Taxes") .....................................
Item 21. Distributor ...................................
Item 22. Investment Performance Information ............
Item 23. Report of Independent Accountants; Financial
Statements ....................................
Part C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
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* Not applicable or negative answer.
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The
Gabelli
Growth
Fund
PROSPECTUS
May 1, 1995
GABELLI FUNDS, INC.
Investment Adviser
GABELLI & COMPANY, INC.
Distributor
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TABLE OF FEES AND EXPENSES
Shareholder Transaction Expenses:
Maximum sales load imposed on purchases .............................. None
Contingent deferred sales charge upon redemption of investments ...... None*
Redemption fee ....................................................... None
Maximum sales load on reinvested dividends ........................... None
Management Fees ...................................................... 1.00%
Annual Fund Operating Expenses:
(Percent of average net assets)
Distribution (Rule 12b-1) Expenses ................................... .14%
Other Expenses ....................................................... .21%
----
Total Operating Expenses .................................... 1.35%
====
Example:** 1 year 3 years 5 years 10 years
------ ------- ------- --------
You would pay the following expenses on
a $1,000 investment, assuming a 5%
annual return at the end of each period .. $14 $45 $77 $170
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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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The foregoing table is to assist you in understanding the various costs and
expenses that an investor in the Fund would have borne directly or indirectly.
The maximum level of distribution expenses which may be borne by the Fund is
0.25% of its average net assets (see "Distribution Plan"). The expenses shown
are at the levels incurred during the past year and anticipated for the current
year.
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Management's Discussion and Analysis of the Fund's performance during the fiscal
year ended December 31, 1994 is included in the Fund's Annual Report to
Shareholders dated December 31, 1994. 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.
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout the period)
The following information, insofar as it pertains to each of the five years in
the period ended December 31, 1994, has been audited by Price Waterhouse LLP,
independent accountants, whose report appears in the Statement of Additional
Information. This table should be read in conjunction with the Financial
Statements and related notes that are included in the Additional Statement.
<TABLE>
<CAPTION>
April 10, 1987
Year Ended December 31, (Commencement of
-------------------------------------------------------------------- Operations) to
1994 1993 1992 1991 1990 1989 1988 December 31, 1987
-------- -------- -------- -------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
(for a share of beneficial interest
outstanding throughout the period)
Net asset value, beginning of period ...... $ 23.26 $ 21.59 $ 21.28 $ 16.27 $ 17.07 $ 12.65 $ 9.51 $ 10.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income ................... 0.07 0.06 0.08 0.16 0.37 0.18 0.05 0.15
Net realized and unrealized gain
(loss) on investments ................. (0.86) 2.37 0.88 5.42 (0.71) 4.89 3.62 (0.64)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations ........ (0.79) 2.43 0.96 5.58 (0.34) 5.07 3.67 (0.49)
Less Distributions:
Dividends from net investment income .... (0.08) (0.09) (0.09) (0.15) (0.39) (0.17) (0.20) --
Distributions from net realized gains
on investments ........................ (2.39) (0.67) (0.56) (0.42) (0.07) (0.48) (0.33) --
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions ..................... (2.79) (0.76) (0.65) (0.57) (0.46) (0.65) (0.53) 0.00
Net asset value, end of period .......... $ 19.68 $ 23.26 $ 21.59 $ 21.28 $ 16.27 $ 17.07 $ 12.65 $ 9.51
======== ======== ======== ======== ======== ======== ======== ========
Total Return+ ............................. (3.4%) 11.3% 4.5% 34.3% (2.0%) 40.1% 39.2% (4.9%)
Net assets, end of period (000's omitted) . $482,471 $695,013 $625,050 $422,589 $202,971 $113,187 $ 11,968 $ 3,532
-------- -------- -------- -------- -------- -------- -------- --------
Significant Ratios:
Investment income -- net to average
net assets ............................ 0.31% 0.22% 0.46% 0.97% 2.67% 2.24% 0.72% 2.94%*
Operating expenses -- net to average net
assets ................................ 1.35% 1.41% 1.41% 1.45% 1.50% 1.85% 2.30% 2.00%*
Portfolio turnover ...................... 40.34% 80.72% 45.93% 49.88% 74.69% 47.81% 81.74% 79.97%
</TABLE>
- --------
* Annualized
+ Total return is calculated assuming a purchase of shares at the net asset
value on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.
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2
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FUND AND ITS INVESTMENT POLICIES
The Fund is an open-end, no-load diversified, management investment company
organized as a Massachusetts Business Trust on October 24, 1986. In seeking its
primary objective of capital appreciation, the Fund will emphasize investments
in securities of companies with favorable earnings dynamics and prospects for
significant price appreciation. Current income, to the extent it may affect
potential growth in capital, is a secondary objective. There is no assurance
that the Fund will achieve its investment objectives. The Fund has certain
investment restrictions which, together with its investment objectives and the
percentage restrictions listed below under "Special Investment Methods", 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 common stocks and securities convertible into
similar common stocks which are perceived by Gabelli Funds, Inc. (the "Adviser")
to be undervalued in relation to prevailing market multiples. Investments are
expected to be made largely in companies which are judged to have above-average
or expanding market shares, profit margins and returns on equity. When the
Fund's investments lose their perceived value relative to other similar or
alternative investments, they are sold. When deemed appropriate by the Adviser,
the Fund may without limit, invest temporarily in defensive securities such as
investment grade debt securities; obligations of the U.S. Government, its
agencies or instrumentalities; or commercial paper rated "A-1" or better by
Standard & Poor's Rating Group ("S&P") or "P-1" or better by Moody's Investors
Service, Inc. ("Moody's").
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 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 Risks" in the Additional Statement.
Fundamental security analysis is used to develop earnings forecasts for
companies and to identify investment opportunities. Specific sources of
information employed include general economic and industry data as provided by
the United States Government, various trade associations and other sources and
published corporate financial data such as annual reports, 10-Ks and quarterly
statements as well as direct interviews with company managements. Generally, the
investment decision process begins with looking at individual companies and then
scrutinizing their prospects in the framework of their industries and the
overall economy. Research is directed towards locating pockets of inefficiency
in terms of future earnings potential relative to current market valuations.
It is anticipated that most Fund investments will be long-term in nature and
that the annual turnover of the Fund's portfolio should not exceed 100%. A
portfolio turnover rate of 100% would occur if all the stocks in the portfolio
were replaced in a one year period. As the Fund's portfolio turnover increases,
so will its brokerage and other transaction related expenses. The Fund's
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3
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portfolio turnover rate for its fiscal year ended December 31, 1994 was 40.34%.
SPECIAL INVESTMENT METHODS
The Fund will not in the aggregate, invest more than 10% of its net assets in
small, unseasoned companies, securities which are restricted for public sale,
securities for which market quotations are not readily available, and in
repurchase agreements maturing or terminable in more than seven days. Securities
freely saleable among qualified institutional investors under special rules
adopted by the Securities and Exchange Commission may be treated as liquid if
they satisfy liquidity standards established by the Board of Trustees. The
continued liquidity of such securities is not as well assured as that of
publicly traded securities, and accordingly, the Board of Trustees will monitor
their liquidity. Information regarding the investment restrictions of the Fund
as well as further information on its investment methods and policies of the
Fund are set forth in the Additional Statement.
The Fund may purchase and sell securities on a "when, as and if issued basis"
under which the issuance of the security depends upon the occurrence of a
subsequent event, such as approval of a merger, corporate reorganization or debt
restructuring. For further information, see "When Issued, Delayed Delivery
Securities & Forward Commitments" in the Additional Statement.
Investments in Small,
Unseasoned Companies
The Fund may invest up to 5% of its net assets in small, less well known
companies which (including predecessors) have operated less than three years.
The securities of such companies may have limited liquidity.
Convertible Securities
Convertible securities may include corporate notes or preferred stock but are
ordinarily long-term debt obligations of the issuer convertible at a stated
exchange rate during a specified period into common stock of the issuer. 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.
As with all debt securities, the market value of convertible securities tend to
vary inversely to changes in the prevailing interest rates and when the market
price of the underlying common stock exceeds the conversion price, to reflect
the value of the underlying common stock. Although convertible securities
generally offer lower interest or dividend yields than non-convertible
securities of similar quality, they rank senior to common stocks in the capital
structure of an issuer and are consequently of higher quality and may entail
less risk than its common stock. However, the extent to which such risk is
reduced depends largely on the degree to which the convertible security sells
above its value as a fixed income security. For further information, see
"Convertible Securities" in the Additional Statement.
The Fund will normally purchase only in investment grade, convertible debt
securities having a rating of, or equivalent to, an S&P rating of at least
"BBB", or, if unrated, are judged by the Adviser to be of comparable quality.
However, the Fund reserves the right to invest up to 15% of its assets in lower
rated convertible debt securities if, in the judgment of the Adviser, such
purchase does not involve the acceptance of overly significant credit risks and
such securities have at least a rating of, or equivalent to, an S&P rating of
"B" or, if unrated, are judged by the Adviser to be of equivalent quality.
Although lower rated debt securities generally have higher yields, they are also
subject to a greater risk of default and 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. Debt securities
having an S&P rating of, or equivalent to, less than "A" may have speculative
characteristics. An S&P rating of, or equivalent to, "B" means that the security
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4
<PAGE>
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will likely have some quality and protective features which, in the judgment of
the rating organization, are outweighed by large uncertainties or major risk
exposures to adverse conditions. A description of corporate debt ratings
including convertible securities is contained in Appendix A to the Additional
Statement.
Warrants and Rights
The Fund may invest up to 5% of its total assets in warrants or rights (other
than those acquired in units or attached to other securities) which entitle the
holder to buy equity securities at a specific 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. The Fund will not invest more than 2% of its total assets
in warrants or rights which are not listed on the New York or American Stock
Exchanges.
Foreign Securities
The Fund may invest up to 25% of its total assets in the securities of non-U.S.
issuers. These investments involve certain risks not ordinarily associated with
investments in securities of domestic issuers. These risks include fluctuations
in foreign exchange rates (which the Fund will not seek to hedge), future
political and economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions. In addition, with
respect to certain countries, there is the possibility of expropriation of
assets, confiscatory taxation, political or social instability or diplomatic
developments which could adversely affect investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to accounting,
auditing and financial reporting standards and requirements comparable to or as
uniform as those of U.S. companies. Non-U.S. securities markets, while growing
in volume, have, for the most part, substantially less volume than U.S. markets,
and securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable U.S. companies. Transaction costs of
investing in non-U.S. securities markets are generally higher than in the U.S.
There is generally less government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. The Fund might have greater
difficulty taking appropriate legal action in non-U.S. courts. Non-U.S. markets
also have different clearance and settlement procedures which in some markets
have at times failed to keep pace with the volume of transactions, thereby
creating substantial delays and settlement failures that could adversely affect
the Fund's performance.
Dividend and interest income from non-U.S. securities will generally be subject
to withholding taxes by the country in which the issuer is located and may not
be recoverable by the Fund or the investor.
Loans of Portfolio Securities
To increase income and pay a portion of its expenses, the Fund may lend its
portfolio securities to securities broker-dealers or financial institutions if
(i) the loan is collateralized in accordance with and otherwise satisfies all
applicable regulatory requirements and (ii) no loan will cause the value of all
loaned securities to exceed 25% of the value of the Fund's net assets. In the
event that a borrower of portfolio securities defaults on its obligation to
return securities to the Fund, the Fund may suffer a loss to the extent that the
value of the collateral held by the Fund is less than the value of the loaned
securities at the time.
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. A
repurchase agreement is an instrument under which 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
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5
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or less). The resale price generally exceeds the purchase price by an amount
which reflects an agreed-upon market interest rate for the term of the
repurchase agreement. The principal risk is that, if the seller defaults, the
Fund might suffer a loss to the extent that the proceeds from the sale of the
underlying securities and other collateral held by the Fund are less than the
repurchase price. Except for repurchase agreements for a period of a week or
less in respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, not more than 5% of the Fund's total assets may
be so invested.
Borrowing
The Fund may not borrow money except for (i) short-term credits from banks as
may be necessary for the clearance of portfolio transactions, and (ii)
borrowings from banks for temporary or emergency purposes, including the meeting
of redemption requests, which would otherwise require the untimely disposition
of its portfolio securities. Borrowing for any purpose including redemptions may
not, in the aggregate, exceed 15%, and borrowing for purposes other than meeting
redemptions may not exceed 5%, of the value of the Fund's total assets at the
time a borrowing is made. The Fund will not make any additional purchases of
portfolio securities at any time its borrowings exceed 5% of its assets. The
Fund will not mortgage, pledge or hypothecate any of its assets except that, in
connection with the foregoing, not more than 20% of the assets of the Fund may
be used as collateral.
Other Investment Companies
The Fund does not invest in the securities 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 one investment company).
MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for the management of
the Fund. Pursuant to an Investment 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 to 1.00% per annum of the Fund's average daily net
assets, which is higher than that paid by most mutual funds. The advisory fee
paid by the fund for its fiscal year ended December 31, 1994 was 1.00% of its
average net assets and its total expenses for the same period were 1.35% of its
average net assets.
Gabelli Fund, Inc. acts as Adviser to the Fund. The Adviser was formed in 1980
and as of March 31, 1995 acts as investment adviser to the following funds with
aggregate assets of $3.7 billion.
Net Assets
03/31/95
Open-end funds: (in millions)
The Gabelli Asset Fund $1,048
The Gabelli Growth Fund 478
The Gabelli Value Fund Inc. 463
The Gabelli Small Cap Growth Fund 212
The Gabelli Equity Income Fund 51
The Gabelli U.S. Treasury Money Market Fund 264
The Gabelli ABC Fund 23
The Gabelli Global Telecommunications Fund 132
The Gabelli Global Convertible Securities Fund 17
The Gabelli Global Interactive Couch Potato(TM)(C) Fund 27
Gabelli Gold Fund, Inc. 16
Closed-end funds:
The Gabelli Equity Trust Inc. 856
The Gabelli Convertible Securities Fund, Inc. 90
The Gabelli Global Multimedia Trust Inc. 66
Gabelli & Company, Inc. the "Distributor" of the Fund for the sale of its
shares, is an indirect majority owned subsidiary of the Adviser. GAMCO
Investors, Inc. ("GAMCO"), a majority owned subsidiary of the Adviser, acts as
investment adviser for individuals, pension trusts, profit-sharing trusts and
endowments, having aggregate assets in excess of $4.5 billion under its
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6
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management. Mr. Mario J. Gabelli may be deemed a "controlling person" of the
Adviser and the Distributor on the basis of his ownership of stock of the
Adviser. The Adviser's address is the same as the Fund as shown on the cover of
this prospectus.
Howard Frank Ward has been designated by the Adviser to be the portfolio manager
primarily responsible for the day-to-day management of the Fund. Prior to
joining the Adviser, Mr. Ward was a Managing Director and Director of the
Quality Growth Equity Management Group of Scudder, Stevens and Clark with which
he had been associated since 1982 and where he also served as a lead portfolio
manager for several of its registered investment companies.
In addition to the fees of the Adviser and the expenses which it agrees to bear
in its Distribution Plan (described below), the Fund is responsible for the
payment of all of its other expenses. The Additional Statement contains further
information on the Advisory Contract including a more complete description of
the advisory and expense arrangements, the exculpatory and brokerage provisions
of that Agreement as well as information on the brokerage practices of the Fund.
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 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. Although such activities may limit
to some extent the ability of the Fund to make such investments, the Adviser
does not believe that any such limitations will have a material adverse effect
on the ability of the Fund 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 has entered into a Sub-Administration Contract with The Shareholder
Services Group, Inc. a subsidiary of First Data Corporation (the
"Administrator") pursuant to which the Administrator provides certain
administrative services necessary for each Fund's operations. These services
include the preparation and distribution of materials for meetings of the
Corporation's Board of Directors, compliance testing of Fund activities and
asssistance in the preparation of proxy statements, reports to shareholders and
other documentation. The Adviser pays the Administrator a monthly 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
Administrator has its principal office at Exchange Place, Boston, Massachusetts
02019.
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7
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DISTRIBUTION PLAN
On May 11, 1992, the shareholders of the Fund approved a Distribution Plan which
authorizes payments by the Fund in connection with the distribution of its
shares at an annual rate, as determined from time to time by the Board of
Trustees, of up to .25% of the Fund's average daily net assets. Although the
Distribution Plan permits payments to be made in subsequent years for expenses
incurred in prior years if the Fund's independent Trustees specifically
authorize such payments; the Distributor has not requested and the Fund does not
anticipate making any such payments.
Payments may be made by the Fund under the Distribution Plan for the purpose of
financing any activity primarily intended to result in the sales of shares of
the Fund as determined by the Board of Trustees. Such activities typically
include advertising; compensation for sales and sales marketing activities of
the Distributor and other banks, broker-dealers and service providers;
shareholder account servicing; production and dissemination of prospectus and
sales and marketing materials; and capital or other expenses of associated
equipment, rent, salaries, bonuses, interest and other overhead. To the extent
any activity is one which the Fund may finance without a Distribution Plan, the
Fund may also make payments to finance such activity outside of the Plan and not
subject to its limitations.
The Plan has been implemented by written agreements between the Fund and/or the
Distributor and each person (including the Distributor) to which payments may be
made. Administration of the Plan is regulated by Rule 12b-1 under the Investment
Company Act of 1940 (the "Act"), which includes requirements that the Board of
Trustees receive and review at least quarterly reports concerning the nature and
qualification of expenses which are made, that the Board of Trustees approve all
agreements implementing the Plan and that the Plan may be continued from year to
year only if the Board of Trustees concludes at least annually that continuation
of the Plan is likely to benefit shareholders.
To the extent that payments under the Plan are based on allocation by the
Distributor, the Fund may be considered to be participating in joint
distribution activities with other funds distributed by the Distributor. Any
such allocations would be subject to approval by the Fund's non-interested
Trustees and would be based on such factors as the net assets of each Fund, the
number of shareholders, inquiries and similar pertinent criteria.
The expenses to be reimbursed must be paid or incurred by the Distributor in
that same fiscal year. In approving the Plan, the Trustees determined, in the
exercise of their business judgement and in light of their fiduciary duties,
that there is a reasonable likelihood that the Plan will benefit the Fund and
its shareholders. During 1994, the distribution fees paid to the Distributor
totaled $778,876 or 0.14% of average net assets.
The Staff of the Securities and Exchange Commission is currently reviewing the
permissibility of various types of distribution plans. In the event such review
results in an amendment of Rule 12b-1, or the interpretation of that Rule, the
Distribution Plan of the Fund may either be discontinued or administered in a
manner consistent with such amendment or interpretation. See the Additional
Statement for additional and more detailed information.
The Glass-Steagall Act and other applicable laws, among other things, prohibit
banks from engaging in the business of underwriting, selling or distributing
securities. Accordingly, the Distributor will enter into agreements with banks
only to provide administrative assistance. However, judicial or administrative
decisions or interpretations of such laws, as well as changes in either Federal
or State statutes or regulations relating to the permissible activities of banks
and their affiliates, could prevent a bank from continuing to act in such
capacity. In that case, its shareholder clients would be permitted to remain
shareholders of the Fund, and alternative means for continuing the servicing of
such shareholders would be sought. It is not expected that shareholders would
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suffer any adverse financial consequences as a result of any of these
occurrences. In addition, state securities laws may differ from Federal law and
may require banks and financial institutions to register as dealers.
PURCHASE OF SHARES
Shares of the Fund are offered without sales load as an investment vehicle for
individuals, institutions, fiduciaries and retirement plans. Prospectuses, sales
material and applications can be obtained from the Distributor. The Fund and the
Distributor are authorized to reject any purchase order.
The minimum initial investment is $1,000 and there is no minimum for subsequent
investments. For special provisions governing investments through an Individual
Retirement Account ("IRA") or other qualified retirement plans, see "Retirement
Plans". Purchase payments accompanied by a purchase order in proper form as
described below will be invested in full and fractional shares at the per share
net asset value of the Fund next determined after receipt thereof by the
Transfer Agent. 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 net asset value per share of the Fund is determined as of the close of the
regular trading session of the New York Stock Exchange currently 4:00 p.m., New
York time, on each day that the New York Stock Exchange is open by dividing the
value of the Fund's net assets (i.e., the value of its securities and other
assets less its liabilities, including expenses payable or accrued but excluding
capital stock and surplus) by the number of shares outstanding at the time the
determination is made. Portfolio securities which are readily marketable are
valued at market value based on reported prices or bid and asked quotations. All
other investments are valued at fair value under procedures established by and
under the general supervision of the Fund's Board of Trustees. See the
Additional Statement for further information.
Mail
To make an initial purchase of shares of the Fund, send a completed subscription
order form with a check for the amount of the investment payable to "The Gabelli
Growth 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
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the Transfer Agent. Bank collection fees may apply. Bank or certified checks for
investments of $100,000 or more will be required unless the investor elects to
invest by bank wire as described below.
Bank Wire
To purchase shares of the Fund using the wire system for transmittal of money
among banks, the investor should instruct a Federal Reserve System member bank
to wire funds to:
State Street Bank and Trust Company
ABA#011-0000-28 REF DDA# 99046187
Attn: Shareholder Services
Re: The Gabelli Growth 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 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
Fund investors for the receipt of wire transfers but there may be a charge by
your bank for transmitting the money by bank wire. If you are planning to wire
funds, it is suggested that you instruct your bank early in the day so the wire
transfer can be accomplished the same day.
Personal Delivery
Deliver a check made payable to "The Gabelli Growth 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
You may purchase additional shares of the Fund by telephone through the
Automated Clearing House ("ACH") system as long as your bank is a member of the
ACH system and you have a completed, approved Investment Plan application on
file with our Transfer Agent. The funding for your purchase will be
automatically deducted from the ACH eligible account you designate on the
application. Your investment will normally be credited to your Mutual Fund
account on the first business day following your telephone request. Your request
must be received no later than 4:00 p.m., Eastern time. There is a minimum of
$100 for each telephone investment. Any subsequent changes in banking
information must be submitted in writing and accompanied by a sample voided
check. To initiate an ACH purchase, please call 1-800-GABELLI (422-3554) 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 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. 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
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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.
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 are 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 unissued shares from
shareholders subject to a $25,000 limitation. By calling either 1-800-GABELLI
(422-3554) or 1-800-872-5365, you may request that a check be mailed to the
address of record on the account provided that the address has not changed
within thirty (30) days prior to your request. The check will be made payable to
the account as registered and mailed within seven (7) days.
By Bank Wire
The Fund accepts telephone requests for wire redemption in excess of $1,000 but
subject to a $25,000 limitation to a predesignated bank either on the
subscription order form or in a subsequent written authorization with the
signature guaranteed. The Fund accepts signature guaranteed written requests for
redemptions by bank wire without limitation. The proceeds are normally wired on
the following business day. Your bank must be either a member of the Federal
Reserve System or have a correspondent bank which is a member. Any change to the
banking information made at a later date must be submitted in writing with a
signature guarantee.
Requests for telephone redemption must be received between 9:00 a.m. and 4:00
p.m., Eastern time. If your telephone call is received after this time or on a
day when the New York Stock Exchange is not open, a new request will be required
the following business day. Shares are redeemed at the net asset value next
determined following your request. Fund shares purchased by check or through the
automatic purchase plan will not be available for redemption for fifteen (15)
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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 New York Stock Exchange is restricted or the Exchange is closed, other
than customary weekend and holiday closings; (ii) the SEC has by order permitted
such suspension or (iii) an emergency, as defined by rules of the SEC, exists
making disposal of portfolio investments or determination of the value of the
net assets of the Fund not reasonably practicable. The Fund may postpone for
more than seven days the date of payment for redemptions during any period the
right to redeem has been suspended.
If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of the Fund to make payment wholly or
partly in cash, the Fund may, in conformity with applicable rules of the SEC,
pay the redemption price in whole or part by a distribution of portfolio
securities selected in the discretion of the Board of Trustees at the values
used in determining the net asset value of the Fund.
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 for an individual, except that
both the individual and his or her spouse may establish separate IRAs if their
combined investment is $1,250. There is no minimum for additional investment in
an IRA account.
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 Internal Revenue Code of 1986, individuals may make wholly or partly
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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. An individual with a non-working spouse may establish a
separate IRA for the spouse under the same conditions and contribute a combined
maximum of $2,250 annually to the two 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 withdrawals from an IRA or other retirement plan
which are considered premature under the applicable provisions of the Internal
Revenue Code and prior to withdrawal, shareholders may be required to certify
their age and awareness of such restrictions in writing. Persons desiring
information concerning investments through IRA accounts or other retirement
plans should write or telephone the Distributor.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each dividend and capital gains distribution, if any, declared by the Fund on
its outstanding shares will, at the election of each shareholder, be paid on the
payment date fixed by the Board of Trustees in additional shares of the Fund
having an aggregate net asset value as of the 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 qualified and intends to continue to qualify for tax treatment as a
"Regulated Investment Company" under the Internal Revenue Code in order to be
relieved of Federal income tax on that part of its net investment income and
realized capital gains which it pays out to its shareholders. To qualify, the
Fund must meet certain relatively complex tests, including the requirement that
less than 30% of its gross income must be derived from gains from the sale or
other disposition of securities held for less than three months. Because of such
requirements, qualification in any given year may not be feasible.
Dividends out of net investment income and distributions of realized short-term
capital gains are taxable to the recipient shareholders as ordinary income. In
the case of corporate shareholders, all or a portion of such distributions may
be eligible for the dividends-received deduction. Dividends of net long-term
capital gains, of which shareholders will be notified, are taxable to the
recipient as long-term capital gains. 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 adviser 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
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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.
In each case, the average annual total return of the Fund since its inception,
for the five-year period and for the twelve-month period thru 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 returns for
the 1 year and 5 year periods ended December 31, 1994 and from inception through
December 31, 1994 were (3.4)%, 8.1% and 13.9%, respectively.
GENERAL INFORMATION
Description of Shares, Voting Rights
and Liabilities
As a Massachusetts Business Trust, the Fund is not required, and does not
intend, to hold regular annual shareholder meetings but may hold special
meetings for the consideration of proposals requiring shareholder approval such
as changing fundamental policies or, upon the written request of the
recordholders of 33 1/3% of outstanding shares (10% in the case of removing one
or more trustees) for any other purpose. The Fund will facilitate shareholder
communications in this regard. Shares of the Fund have equal rights with respect
to voting and each share represents an equal proportionate interest in the Fund
with each other share. The Fund may issue an unlimited number of full and
fractional shares (common stock par value $.01 per share) and the Trustees may
divide or combine the shares into a greater or lesser number of shares without
changing the proportionate beneficial interests in the Fund. When issued, shares
are fully paid and non-assessable (except as described in the Additional
Statement under "General Information") and have no pre-emptive or conversion
rights.
The Fund sends semi-annual unaudited and annual audited reports to all its
shareholders which include a list of portfolio securities. Unless it is clear
that a shareholder holds as nominee for the account of an unrelated person or a
shareholder otherwise specifically requests in writing, the Fund may send a
single copy of semi-annual, annual and other reports to shareholders to all
accounts at the same address and all accounts of any person at that address.
Information for Shareholders
All shareholder inquiries regarding administrative procedures should be directed
to the Distributor, Gabelli & Company, Inc., One Corporate Center, Rye, New York
10580-1435. For assistance, call 1-800-GABELLI (422-3554).
This Prospectus omits certain information contained in the Registration
Statement filed with the Securities and Exchange Commission. Copies of the
Registration Statement, including items omitted herein, may be obtained from the
Commission by paying the charges prescribed under its rules and regulations. The
Statement of Additional Information 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, 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.
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TABLE OF CONTENTS
Page
----
Table of Fees and Expenses ............ 2
Financial Highlights .................. 2
The Fund and Its Investment Policies .. 3
Special Investment Methods ............ 4
Management of the Fund ................ 6
Distribution Plan ..................... 7
Purchase of Shares .................... 8
Redemption of Shares .................. 10
Retirement Plans ...................... 12
Dividends, Distributions and Taxes .... 13
Calculation of Investment
Performance ......................... 13
General Information ................... 14
Custodian, Transfer Agent and
Dividend Disbursing Agent ........... 14
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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, 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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Gabelli Growth Fund
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1995
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Funds'
prospectus dated May 1, 1995, (the "Prospectus"). This Statement of Additional
Information contains additional and more detailed information than that set
forth in the Prospectus and should be read in conjunction with the Prospectus,
additional copies of which may be obtained without charge by writing or
telephoning the Fund at the address and telephone number set forth above.
TABLE OF CONTENTS
Page
----
Investment Policies .................................................. B-2
Special Investment Methods ........................................... B-2
Convertible Securities ............................................. B-2
Repurchase Agreements .............................................. B-3
Investments in Warrants and Rights ................................. B-3
Investments in Small, Unseasoned Companies ......................... B-3
Loans of Portfolio Securities ...................................... B-3
When Issued, Delayed Delivery Securities ........................... B-4
& Forward Commitments
Special Risks ........................................................ B-4
Investment Restrictions .............................................. B-5
Trustees and Officers ................................................ B-6
Investment Adviser ................................................... B-9
Distributor .......................................................... B-11
Distributor Plan ..................................................... B-11
Portfolio Transactions and Brokerage ................................. B-11
Redemption of Shares ................................................. B-13
Net Asset Value ...................................................... B-14
Investment Performance Information ................................... B-14
Counsel and Independent Accountants .................................. B-15
General Information .................................................. B-15
Description of Corporate Debt Ratings ................................ B-17
Financial Statements ................................................. B-19
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INVESTMENT POLICIES
The Gabelli Growth Fund (the "Fund"), expects that, for most periods, 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. Under the circumstances described in the Prospectus, the Fund
may also invest in U.S. Treasury or other government obligations, investment
grade corporate bonds, preferred stocks, convertible securities, foreign
securities and/or short term money market instruments.
SPECIAL INVESTMENT METHODS
Convertible Securities
The Fund may invest in convertible securities as set forth in the Prospectus.
Prior to conversion, convertible securities have the same general
characteristics as non-convertible securities. 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.
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 judgement
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.
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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 vendor. 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, 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 securities which are restricted from public sale or for which
there is no liquid market and other securities for which there are no readily
available quotations, more than 10% of its total assets would be so invested.
Investments in Warrants and Rights
Warrants basically are options to purchase equity securities at a specified
price valid for a specified 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.
Investments 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.
Loans of Portfolio Securities
The Fund may lend its portfolio securities subject to the restrictions stated
in the Prospectus. Under applicable regulatory requirements (which are subject
to change), the loan collateral must be cash, a letter of credit from a U.S.
bank or U.S. government securities and must at all times at least equal the
value of the loaned securities. The Fund must be subject to determination of the
Fund at any time; and the Fund must receive reasonable interest on the loan, any
distributions on the securities and any increase in their market value. The Fund
may also pay reasonable finder's, custodian and administrative fees. The terms
of the Fund's loans must meet applicable tests under the Internal Revenue Code
(the "Code") and permit it to reacquire loaned securities on five days' notice
or in time to vote on any important matter.
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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
security 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 with its custodian cash or liquid
high-grade debt securities with the Fund's custodian in an aggregate amount at
least equal to the amount of its outstanding forward commitments.
SPECIAL RISKS
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 judgement 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 superceded 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 dynamics of the business
climate when the offer or proposal is in process. In making such investments,
the Fund will not violate any of its diversification requirements or investment
restrictions (see below, "Investment Restrictions") including the requirement
that, except for the investment of up to 25% of its assets in any one company or
industry, not more than 5% of its assets may be invested in the securities of
any issuer. Since such investments are ordinarily short term in nature, they
will tend to increase the turnover ratio of the Fund thereby increasing its
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brokerage and other transaction expenses as well as make it more difficult for
the Fund to meet the tests for favorable tax treatment as a "Registered
Investment Company" specified by the Code (see the Prospectus, "Dividends,
Distributions and Taxes"). The Adviser intends to select investments of the type
described which, in its view, have a reasonable prospect of capital appreciation
which is significant in relation to both the risk involved and the potential of
available alternate investments as well as monitor the effect of such
investments on the tax qualification tests of the Code.
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 pursuant to the conditions set forth
in the Prospectus or for the purchase of debt securities;
(5) Borrow money except subject to the restrictions set forth in the
Prospectus under "Borrowing";
(6) Mortgage, pledge or hypothecate any of its assets except that, in
connection with permissible borrowings mentioned in paragraph 5 above, not
more than 20% of the assets of the Fund ( not including amounts borrowed) may
be used as collateral:
(7) Invest more than 5% of its total assets in more than 3% of the
securities of another investment company or invest more than 10% of its total
assets in the securities of other investment companies, nor make any such
investments other than through purchase in the open market where to the best
information of the Fund no commission or profit to a sponsor or dealer (other
than the customary broker's commission ) results from such purchase;
(8) Act as an underwriter of securities of other issuers;
(9) Invest, in the aggregate, more than 10% of the value of its total
assets in securities for which market quotations are not readily available,
securities which are restricted for public sale, or in repurchase agreements
maturing or terminable in more than seven days;
(10) Purchase or otherwise acquire interests in real estate, real estate
mortgage loans or interests in oil, gas or other mineral exploration or
development programs;
(11) Sell securities short or invest in puts, calls, straddles, spreads or
combinations 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.
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TRUSTEES AND OFFICERS
The Trustees and principal officers of the Fund, and their principal
occupations for the past five years, are listed below. Trustees deemed to be
"interested persons" of the Fund for purposes of the Investment Company Act of
1940 (the "Act") are indicated by an asterisk.
Name, Position(s) with
Fund, Address and Age Principal Occupations During Past Five Years
- --------------------- --------------------------------------------
Mario J. Gabelli* Mr. Gabelli is Chairman of the Board, President,
Trustee and Chief Executive Officer and Chief Investment
One Corporate Center Officer of Gabelli Funds, Inc.; Chairman of the
Rye, New York Board, Chief Executive Officer, and Chief
10580-1434 Investment Officer of GAMCO Investors, Inc.;
Age: 52 President and Chairman of The Gabelli Equity Trust
Inc., The Gabelli Global Multimedia Trust, Inc.;
President, Director and Chief Investment Officer
of Gabelli Global Series Funds, Inc.; Gabelli
Investor Funds, Inc., The Gabelli Value Fund Inc.;
Gabelli Equity Series Funds, Inc.; Trustee of The
Gabelli Asset Fund; Chairman of the Board of
Gabelli Gold Fund, Inc. and Lynch Corporation;
Director of Morgan Group, Inc.; Director and
Adviser of Gabelli International Ltd.
Felix J. Christiana Formerly Senior Vice President of Dry Dock Savings
Trustee Bank in White Plains, New York. Director of
45 Pondfield Parkway Gabelli Global Series Funds, Inc., The Gabelli
Mt. Vernon, New York 10552 Equity Trust Inc., Gabelli Series Funds, Inc.;
Age: 70 Gabelli Equity Series Funds, Inc., The Gabelli
Value Fund Inc. and The Treasurer's Fund, Inc. and
a Trustee of The Gabelli Growth Fund.
Anthony J. Colavita President and Attorney at Law in the law firm of
Trustee Anthony J. Colavita, P.C. since 1961. Director of
575 White Plains Road Gabelli Global Series Funds, Inc., Gabelli
Eastchester, New York 10709 Investor Funds, Inc., The Gabelli Series Funds,
Age: 59 Inc., Gabelli Gold Fund, Inc., Gabelli Equity
Series Funds, Inc., The Gabelli Value Fund Inc.
and a Trustee of The Gabelli Asset Fund and The
Gabelli Money Market Funds.
James P. Conn Managing Director/Chief Investment Officer,
Trustee Financial Security Assurance; since 1992.
949 Chiltern Road President and Chief Executive Officer of Bay
Hillsborough, California Meadows Operating Company from 1988 through 1992.
94010 Trustee of The Gabelli Growth Fund and Director of
Age: 57 The Gabelli Equity Trust Inc. and The Gabelli
Global Multimedia Trust Inc.
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<PAGE>
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Name, Position(s) with
Fund, Address and Age Principal Occupations During Past Five Years
- --------------------- --------------------------------------------
Anthony C. Pustorino, CPA Certified Public Accountant. Professor of
Trustee Accounting, Pace University, since 1965. President
121 Arleigh Road and shareholder of Pustorino Puglisi & Co., P.C.,
Douglaston, New York certified public accountants, 1961 to 1990.
11363 Director, of The Gabelli Equity Trust Inc., The
Age: 69 Gabelli Global Multimedia Trust Inc., Gabelli
Series Funds, Inc.; Gabelli Equity Series Funds,
Inc.; The Gabelli Value Fund Inc.; The Manager's
Fund, Inc. and The Treasurer's Fund, Inc. and a
Trustee of The Gabelli Asset Fund.
Karl Otto Pohl* Managing Partner of Sal Oppenheim Jr. & Cie. since
Trustee 1991; Former President of the Deutsche Bundesbank
c/o Gabelli Funds Inc. and Chairman of its Central Bank Council
One Corporate Center (1980-1991); currently board member of IBM World
Rye, New York Trade Europe/Middle East/Africa Corp.; Bertlesman
10580-1434 AG; Zurich Versicherungs-Gesellschaft; the
Age: 65 International Advisory Board of General Electric
Company; the International Council for JP Morgan &
Co.; the Board of Supervisory Directors of
ROBECo/o Group; and the Supervisory Board of Royal
Dutch; German Governor, International Monetary
Fund (1980-1991); Board Member, Bank for
International Settlements (1980-1991). Director or
Trustee of all funds advised by Gabelli Funds,
Inc.
Dugald A. Fletcher* President, Fletcher & Company, Inc. since 1984;
Trustee Director, President and Chief Executive Officer,
28 Shelter Lane Binnings Building Products, Inc. since 1989;
Locust Valley, New York Member of Advisory Board of Gabelli & Rosenthal
11650 Limited Partners since 1986; Chairman, Keller
Age: 64 Industries, Inc., 1983-1987; Chairman, American
Strategic Investments, Ltd., 1986-1988; Mr.
Fletcher is also a Director of The Gabelli Series
Funds, Inc.
Anthony Torna* Registered Representative with Herzog, Heine &
Trustee Geduld, Inc.
26 Broadway
New York, New York
10005
Age: 69
Anthonie C. van Ekris Managing Director, Balmac International; Chairman
Trustee and Chief Officer of Balfour MacLaine Corporation
Le Columbia and Kay Corporation (through 1990). Director,
11 Avenue Princess Grace Stahel Hardmeyer A.G. (through present); Trustee,
Monaco, MC 98000 Gabelli Global Series Funds, Inc., The Gabelli
Age: 60 Asset Fund and The Gabelli Money Market Funds;
Director, The Gabelli Series Funds, Inc., Gabelli
Equity Series Funds, Inc., The Gabelli Global
Series Fund Inc. and Gabelli Gold Fund, Inc.
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<PAGE>
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Name, Position(s) with
Fund, Address and Age Principal Occupations During Past Five Years
- --------------------- --------------------------------------------
Salvatore J. Zizza President and Chief Executive Officer of the
Trustee LeHigh Group, Inc. A Director of The Gabelli
470 Park Avenue South Equity Trust Inc., The Gabelli Global Multimedia
11th Floor North Wing Trust Inc., Gabelli Series Funds, Inc., Debe
New York, New York 10016 Computer Systems Corp. and a Trustee of The
Age: 49 Gabelli Asset Fund.
Bruce N. Alpert Vice President, Treasurer and Chief Financial
President and Officer and Administrative Officer of the
Treasurer investment advisory division of the Adviser; Vice
One Corporate Center President and Treasurer of The Gabelli Value Fund
Rye, New York Inc., The Gabelli Equity Trust Inc., The Gabelli
10580-1434 Global Multimedia Trust, Inc., Gabelli Global
Age: 43 Series Funds, Inc., The Gabelli Investor Funds,
Inc., President and Treasurer, Gabelli Series
Funds, Inc.; Gabelli Equity Series Funds, Inc.,
and Gabelli Money Market Funds and The Gabelli
Growth Fund. Vice President of the Westwood Funds
and Manager of Teton Advisers LLC.
J. Hamilton Crawford, Jr. Senior Vice President and General Counsel of the
Secretary investment advisory division of the Adviser.
One Corporate Center Secretary of all funds advised by Gabelli Funds,
Rye, New York Inc., Teton Advisers LLC and The Westwood Funds.
10580-1438 Attorney in private practice, 1990-1992; and
Age: 65 Executive Vice President and General Counsel of
Prudential Mutual Fund Management, Inc. from
1988-1990.
As a group, the Trustees of the Fund who are not affiliates of its Adviser
received total fees of $73,500 from the Fund during its fiscal year ended
December 31, 1994.
On March 31, 1995 the outstanding voting securities of the Fund consisted
of 24,514,205 shares of beneficial interest. As a group, the officers and
Trustees of the Fund owned beneficially, directly or indirectly, less than 1% of
its outstanding voting shares.
Set forth below is certain information as to persons who owned 5% or more
of the Fund's outstanding shares as of March 31, 1995:
Name and Address % of Class Nature of Ownership
- ---------------- ---------- -------------------
Charles Schwab & Co. Inc. 10% Record*
101 Montgomery Street
San Francisco, CA 94104-4122
- ----------
* Charles Schwab & Co. disclaims beneficial ownership and no one underlying
shareholder owns beneficially more than 5% of the shares of the Fund.
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<PAGE>
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COMPENSATION TABLE
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Aggregate Pension or Estimated Annual Total
Person, Compensation from Retirement Benefits upon Compensation
Position Registrant for Benefits Accrued Retirement from Registrant
Fiscal Year as Part of Fund and Fund Complex
Expenses Paid to Trustees
for Calendar
Year*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mario J. Gabelli 0 0 0 0
Anthony J. Colavita $8,000 0 0 $62,000 (10)
Trustee
Felix J. Christiana $8,000 0 0 $64,500 (9)
Trustee
James P. Conn $8,000 0 0 $30,000 (4)
Trustee
Anthony R. Pustorino $9,000 0 0 $69,000 (8)
Trustee
Karl Otto Pohl $7,500 0 0 $64,750 (14)
Trustee
Dugald A. Fletcher $8,000 0 0 $13,000 (2)
Trustee
Anthony Torna $8,000 0 0 $8,000 (1)
Trustee
Anthonie C. van Ekris $8,000 0 0 $41,500 (8)
Trustee
Salvatore J. Zizza $8,000 0 0 $35,000 (5)
Trustee
</TABLE>
- ----------
* The total compensation paid to such persons during the calendar year ending
December 31, 1994 (and, with respect to the Fund, estimated to be paid during
the Full Calendar Year). The Parenthetical number represents the number of
Investment Companies (including the Fund) from which such person receives
compensation that are considered part of the same Fund complex as the Fund,
because, among other things, they have a common investment adviser.
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 Asset Fund, The Gabelli Value Fund, The Gabelli Small Cap Growth
Fund, The Gabelli Convertible Securities Fund, Inc., The Gabelli ABC Fund, The
Gabelli Global Telecommunications Fund, The Gabelli Global Convertible
Securities Fund and The Gabelli Global Interactive Couch Potato(TM(C)) Fund, The
Gabelli U.S. Treasury Money Market Fund, The Gabelli Equity Income Fund, and
Gabelli Gold 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.
Pursuant to an Investment Advisory Contact, which was approved by
shareholders of the Fund at a meeting held on May 11, 1992, the Adviser
furnishes a continuous investment program for the Fund's portfolio, makes the
day-to-day investment decisions for the Fund, arranges the portfolio
transactions of the Fund and generally manages the Fund's investments in
accordance with the stated policies of the Fund, subject to the general
supervision of the Board of Trustees of the Fund.
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Under the Investment Advisory Contract, the Adviser also (i) provides the
Fund with services of persons competent to perform such supervisory,
administrative, and clerical functions as are necessary to provide effective
administration of the Fund, including maintaining certain books and records and
overseeing the activities of the Fund's Custodian and Transfer Agent; (ii)
oversees the performance of administrative and professional services to the Fund
by others, including the Fund's Custodian, Transfer Agent and Dividend
Disbursing Agent, as well as accounting, auditing and other services
performed for the Fund; (iii) provides the Fund with adequate office space and
facilities; (iv) prepares, but does not pay for, the periodic updating of the
Fund's registration statement, Prospectus and Statement of Additional
Information, including the printing of such documents for the purpose of filings
with the Securities and Exchange Commission and state securities administrators,
the Fund's tax returns, and reports to the Fund's shareholders and the
Securities and Exchange Commission; (v) calculates the net asset value of shares
in the Fund; (vi) prepares, but does not pay for, all filings under the
securities or "Blue Sky" laws of such states or countries as are designated by
the Distributor, which may be required 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, The Shoreholder Services Group,
Inc. ("TSSG") 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 TSSG the Adviser pays it a monthly 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%. which,
together with the services to be rendered, is subject to negotiation between the
parties and both parties retain the right unilaterally to terminate the
arrangement on 60 days notice.
The Investment Advisory Contract provides that absent willful misfeasance,
bad faith, gross negligence or reckless disregard of its duty, the Adviser and
its employees, officers, directors and controlling persons are not liable to the
Fund or any of its investors for any act or omission by the Adviser or for any
error of judgment or for losses sustained by the Fund. However, the Contract
provides that the Fund is not waiving any rights it may have with respect to any
violation of law which cannot be waived. The Contract also provides
indemnification for the Adviser and each of these persons for any conduct for
which they are not liable to the Fund. The Investment Advisory Contract in no
way restricts the Adviser from acting as adviser to others. The Fund has agreed
by the terms of the Investment Advisory Contract that the word "Gabelli" in its
name is derived from the name of the Adviser which in turn is derived from the
name of Mario J. Gabelli; that such name is the property of the Adviser for
copyright and/or other purposes; and that, therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Fund has further agreed that in the event that for any reason, the Adviser
ceases to be its investment adviser, the Fund will, unless the Adviser otherwise
consents in writing, promptly take all steps necessary to change its name to one
which does not include "Gabelli."
The Investment Advisory Contract also provides that the Adviser is
obligated to reimburse to the Fund any amount by which its aggregate expenses
including the advisory fees payable to the Adviser (but excluding interest,
taxes, brokerage commissions, certain distribution expenses and extraordinary
expenses) exceed the most restrictive expense limitation imposed by the
securities law of any state in which shares of the Fund are registered or
qualified for sale. Such limitation is currently believed to be 2.5% of the
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first $30 million of average net assets, and 2% of the next $70 million of
average net assets, and 1.5% of average net assets in excess of $100 million.
Fund expenses are accrued monthly and the monthly fee otherwise payable to the
Adviser is reduced to the extent that Fund expenses exceed the amount of such
limitation and, to the extent such excess is greater than the monthly fee of the
Adviser, the amount of such excess is reimbursed by the Adviser.
For the fiscal years ended December 31, 1992, December 31, 1993 and
December 31, 1994, the Adviser received advisory fees of $5,149,764, $6,751,524
and $5,651,929, respectively.
By its terms, the Investment Advisory Contract will remain in effect until
May 1, 1995 and 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 Act) vote of its shareholders and, in either case, by a majority
vote of the Trustees who are not parties to the Investment Advisory Contract or
interested persons of any such party, cast in person at a meeting called
specifically for the purpose of voting on the Investment Advisory Contract. The
Investment Advisory Contract is terminable without penalty by the Fund on sixty
days' written notice when authorized either by majority vote of its outstanding
voting shares or by a vote of a majority of its Board of Trustees, or by the
Adviser on sixty days' written notice, and will automatically terminate in the
event of its "assignment" as defined by the 1940 Act.
DISTRIBUTOR
To implement the Fund's 12b-1 Plan, the Fund has entered into a
Distribution Agreement with Gabelli & Company, Inc. ( the "Distributor"), a New
York corporation which is an indirect subsidiary of the Adviser, having
principal offices located at One Corporate Center, Rye, New York 10580-1434. The
Distributor acts as agent of the Fund for the continuous offering of its shares
on a best efforts basis
DISTRIBUTION PLAN
During the fiscal year ended December 31, 1994, the Fund paid distribution
expenses under the plan of $778,876. Of this amount paid by the Fund, pursuant
to the Plan, $249,312 was spent on advertising, $60,301 on printing, postage and
stationary, $178,631 on overhead support expenses and $290,632 on salaries of
personnel of the Distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreement, the Adviser is authorized on
behalf of the Fund to employ brokers to effect the purchase or sale of portfolio
securities with the objective of obtaining prompt, efficient and reliable
execution and clearance of such transactions at the most favorable price
obtainable ("best execution") at reasonable expense. Transactions in securities
other than those for which a securities exchange is the principal market are
generally done with a brokerage firm and a commission is paid wherever 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. 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
- --------------------------------------------------------------------------------
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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 $728,490 on portfolio
transactions in the principal amounts of $512,678,341 during 1994. The average
commission on these transactions was $0.05 per share.
The Adviser may also place orders for the purchase or sale of portfolio
securities with Gabelli and Company, Inc. ("Gabelli"), a broker-dealer member of
the National Association of Securities Dealers, which is an affiliate of the
Adviser, when it appears that, as an introducing broker or otherwise, Gabelli
can obtain a price and execution which is at least as favorable as that of other
qualified brokers. As required by Rule 17e-1 under the Act, the Board of
Trustees of the Fund has adopted "Procedures" which provide that commissions
paid to Gabelli on stock exchange transactions may not exceed that which would
have been charged by another qualified broker or member firm able to effect the
same or a comparable transaction at an equally favorable price and contains a
schedule setting forth maximum commission charges for such transactions designed
to reflect that standard. Rule 17e-1 and the Procedures contain requirements
that the Board, including its Independent Trustees, conduct periodic compliance
reviews of such brokerage allocations and review such schedule at least annually
for its continuing compliance with the foregoing standard. The Adviser and
Gabelli are also required to furnish reports and maintain records in connection
with such reviews.
To obtain the best execution of portfolio transactions on the New York
Stock Exchange, Gabelli controls and monitors the execution of such transactions
on the floor of the Exchange through independent "floor brokers" or through the
Designated Order Turnaround ("DOT") System of the Exchange. Such transactions
are then cleared, confirmed to the Fund for the account of Gabelli, and settled
directly with the Custodian of the Fund by a clearing house member firm which
remits the commission less its clearance charges to Gabelli. Pursuant to an
agreement with the Fund, Gabelli pays all charges incurred for such services and
reports at least quarterly to the Board the amount of such expenses and
commissions. The net compensation realized by Gabelli for its brokerage services
is subject to the approval of the Board and the Independent Trustees of the Fund
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B-12
<PAGE>
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who must approve the continuance of the arrangement at least annually.
Commissions paid the Fund pursuant to the arrangement may not exceed the
commission level specified by the Procedures described above. Gabelli may also
effect Fund portfolio transactions in the same manner and pursuant to the same
arrangements on other national securities exchanges which adopt direct order
access rules similar to those of the New York Stock Exchange.
The amount of the brokerage commissions paid by the Fund in each of the
last three years, the percentage and amount of such commissions paid to Gabelli
and the percentage ratio which the aggregate principal amount of such
transactions bears to the aggregate dollar amount of all portfolio transactions
on which commissions were paid are as follows:
Gabelli and Company, Inc. and affiliates
Percentage of Total Percentage of
Year Ended Total Comm. Paid Amount Commissions Principal Amount
- ---------- ---------------- ------ ----------- ----------------
12/31/92 $ 628,727 $0 0.0 0.0
12/31/93 $1,080,946 $0 0.0 0.0
12/31/94 $ 728,490 $39,134 .05 0.13
The percentage of total Fund commissions paid to Gabelli differs from the
percentage of the principal amounts involved because commissions paid to Gabelli
are computed on a cents per share basis without regard to principal amount.
REDEMPTION OF SHARES
Payment of the redemption price for shares redeemed may be made either in
cash or in portfolio securities (selected in the discretion of the Board of
Trustees of the Fund and taken at their value used in determining the Fund's net
asset value per share as described under "Net Asset Value"), or partly in cash
and partly in portfolio securities. However, payments will be made wholly in
cash unless the Board of Trustees believes that economic conditions exist which
would make such a practice detrimental to the best interests of the Fund. If
payment for shares redeemed is made wholly or partly in portfolio securities,
brokerage costs may be incurred by the investor in converting the securities to
cash. The Fund will not distribute in kind portfolio securities that are not
readily marketable. The Fund has filed a formal election with the Securities and
Exchange Commission pursuant to which the Fund will only effect a redemption in
portfolio securities where the particular shareholder of record is redeeming
more than $250,000 or 1% of the Fund's total net assets, whichever is less,
during any 90 day period. In the opinion of the Fund's management, however, the
amount of a redemption request would have to be significantly greater than
$250,000 before a redemption wholly or partly in portfolio securities would be
made.
Cancellation of purchase orders for Fund shares (as, for example , when
checks submitted to purchase shares are returned unpaid) causes a loss to be
incurred when the net asset value of the Fund shares on the date of cancellation
is less than on the original date of purchase. The investor is responsible for
such loss, and the Fund may reimburse itself or the Distributor for such loss by
automatically redeeming shares from any account registered at any time in that
shareholder's name, or by seeking other redress. In the event shares held in the
account of such shareholder are not sufficient to cover such loss, the
Distributor will promptly reimburse the Fund for the amount of such unrecovered
loss.
- --------------------------------------------------------------------------------
B-13
<PAGE>
- --------------------------------------------------------------------------------
NET ASSET VALUE
For purposes of determining the Fund's net asset value per share, readily
marketable portfolio securities listed on the New York Stock Exchange are
valued, except as indicated below, at the last sale price reflected at the close
of the regular trading session of the New York Stock Exchange on the business
day as of which such value is being determined. If there has been no sale on
such day, the securities are valued at the mean of the closing bid and asked
prices on such day. If no bid or asked prices are quoted on such day, then the
security is valued by such method as the Board of Trustees shall determine in
good faith to reflect its fair market value. Readily marketable securities not
listed on the New York Stock Exchange but listed on other national securities
exchanges or admitted to trading on the National Association of Securities
Dealers Automated Quotations, Inc. ("NASDAQ") National List are valued in like
manner. Portfolio securities traded on more than one national securities
exchange are valued at the last sale price on the business day as of which such
value is being determined as reflected on the tape at the close of the exchange
representing the principal market for such securities.
Readily marketable securities traded in the over-the-counter market,
including listed securities whose primary market is believed by the Adviser to
be over-the-counter but excluding securities admitted to trading on the NASDAQ
National List, are valued at the mean of the current bid and asked prices as
reported by NASDAQ or, in the case of securities not quoted by NASDAQ, the
National Quotation Bureau or such other comparable sources as the Board of
Trustees deems appropriate to reflect their fair value.
United States Government obligations and other debt instruments having
sixty days or less remaining until maturity are stated at amortized cost. Debt
instruments having a greater remaining maturity will be valued at the highest
bid price obtained from a dealer maintaining an active market in that security
or on the basis of prices obtained from 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.
As indicated in the Prospectus, the net asset value per share of the Fund's
shares will be determined on each day that the New York Stock Exchange is open
for trading. That Exchange annually announces the days on which it will not be
open for trading; the most recent announcement indicates that it will not be
open on the following days: New Year's Day, President's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
However, that Exchange may close on days not included in that announcement.
INVESTMENT PERFORMANCE INFORMATION
The investment performance of the Fund quoted in advertising or sales
literature for the sale of its shares will be calculated on a total return basis
which assumes the reinvestment of all dividends and distributions. Total return
is computed by comparing the value of an assumed investment in Fund shares at
the offering price in effect at the beginning of the period shown with the
redemption price of the same investment at the end of the period (including
share(s) accrued thereon by the reinvestment of dividends and distributions).
Performance quotations given as a percentage will be derived by dividing the
amount of such total return by the amount of the assumed investment. When the
period shown is greater than one year, the result is referred to as cumulative
performance or total return.
Performance quotations will ordinarily be accompanied by the average annual
total return of the Fund since inception, for the past five years and for the
twelve months through the end of the most recent calendar quarter. Quotations of
- --------------------------------------------------------------------------------
B-14
<PAGE>
- --------------------------------------------------------------------------------
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:
Period ended 12/31/87 (4.9%)
Year ended 12/31/88 39.2%
Year ended 12/31/89 40.1%
Year ended 12/31/90 (2.0%)
Year ended 12/31/91 34.3%
Year ended 12/31/92 4.5%
Year ended 12/31/93 11.3%
Year ended 12/31/94 (3.4)%
------------------- -----
Average annual return for 5 years through year ended
December 31, 1994 8.1%
Compound annual rate of total return from inception (4/10/87)
through year ended December 31, 1994 13.9%
The formula for computing the foregoing annual rate of total return is:
T=(R/P)^1/n -1
P = Investment at the beginning of the period.
T = Compounded annual rate of total return.
n = Number of years.
R = Redemption value of the same investment at the end of the period assuming
the reinvestment of all dividends and distributions.
Investors are cautioned that past results are not necessarily representative of
future results; 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, 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 examine 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
- --------------------------------------------------------------------------------
B-15
<PAGE>
- --------------------------------------------------------------------------------
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of this
office. Under Massachusetts law, shareholders of such a trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself is
unable to meet its obligations since the Declaration of Trust provides for
indemnification and reimbursement of expenses out of the property of the Fund to
any shareholder held personally liable for any obligation of the Fund and also
provides that the Fund shall, if requested, assume the defense of any claim made
against any shareholder for any act or obligation of the Trust and satisfy any
judgment recovered thereon.
The Fund reserves the right to create and issue a number of series of
shares, in which case the shares of each series would participate equally in the
earnings, dividends and assets of the particular series and would vote
separately to approve management agreements or changes in investment policies,
but shares of all series would vote together in the election or selection of
Trustees, principal underwriters and accountants and on any proposed material
amendment to the Fund's Declaration of Trust. Upon liquidation of the Fund,
shareholders of each series would be entitled to share pro rata in the net
assets of their respective series available for distribution to shareholders.
Shareholders are entitled to one vote for each share held (and fractional
votes 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 331/[I23% of its shares (10% in the case
of removal of a Trustee). In addition, ten shareholders holding the lesser of
$25,000 worth or one percent of Fund shares may advise the Trustees in writing
that they wish to communicate with other shareholders for the purpose of
requesting a meeting to remove a Trustee. The Trustees will then, if requested
by the applicants, mail at the applicants' expense, the applicants'
communication to all other shareholders. Except for a change in the name of the
Trust, no amendment may be made to the Declaration of Trust without the
affirmative vote of the holders of more than 50% of its outstanding shares.
Shareholders have no preemptive or conversion rights. The Fund may be terminated
upon the sale of its assets to another issuer, if such sale is approved by the
vote of the holders of more than 50% of its outstanding shares. If not so
terminated, the Fund will continue indefinitely.
- --------------------------------------------------------------------------------
B-16
<PAGE>
- --------------------------------------------------------------------------------
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 larger 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.
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.
- --------------------------------------------------------------------------------
B-17
<PAGE>
- --------------------------------------------------------------------------------
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 judgement 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 believe possess
the strongest investment attributes are designated by the symbols Aa-1,
A-1, Baa-1 and B-1.
STANDARD & POOR'S RATING GROUP
AAA: Bonds rated AAA have the highest rating assigned by Standard & Poor's
Corporation ("S&P"). 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.
C1: The rating C1 is reserved for income bonds on which no interest is
being paid.
BB,B CCC, CC, C: Bonds rated BB, B, CCC, CC and C are regarded, on balance,
as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of this obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such bonds will likely have some quality and
protective characteristics, they are outweighed by large uncertainties
of major risk exposures to adverse conditions.
D: Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.
Plus(+) Or Minus (-): The ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
- --------------------------------------------------------------------------------
B-18
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF THE GABELLI GROWTH 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 Growth Fund (the
"Fund") at December 31, 1994, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the 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, 1994 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 9, 1995
1994 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
On December 30, 1994, the Fund paid to shareholders an ordinary income
dividend (comprised of net investment income and short-term capital gains) of
$0.290 per share and a distribution from long-term capital gains of $2.500 per
share. For 1994, 100% of ordinary income dividends qualifies for the dividend
received deduction available to corporations. The distribution from long-term
capital gains is designated as a "Capital Gain Dividend" and is taxable to
shareholders as a long-term capital gain.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during 1994
which was derived from U.S. Treasury Securities was 2.95%. Such income is exempt
from state and local income tax in most states. However, many states, including
New York and California, allow a tax exemption for a portion of the income
earned only if a mutual fund has invested at least 50% of its assets at the end
of each quarter of the Fund's fiscal year in U.S. Government Securities. The
Gabelli Growth Fund did not meet this strict requirement in 1994. Due to the
diversity in state and local tax laws it is recommended that you consult your
personal tax adviser for the applicability of the information provided as to
your own situation.
- --------------------------------------------------------------------------------
B-19
<PAGE>
- --------------------------------------------------------------------------------
THE GABELLI GROWTH FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
<C> <S> <C> <C>
COMMON STOCKS -- 97.63%
AUTOMOTIVE -- 0.49%
56,000 General Motors
Corporation........... $ 2,674,005 $ 2,366,000
------------- -------------
AUTOMOTIVE: PARTS AND
ACCESSORIES -- 0.90%
5,000 China Tire Holdings
Limited............... 74,000 62,500
80,000 Cooper Tire & Rubber
Company............... 1,203,150 1,890,000
60,000 OEA, Inc. .............. 1,014,751 1,470,000
100,000 TBC Corporation*........ 745,750 925,000
------------- -------------
3,037,651 4,347,500
------------- -------------
BROADCASTING -- 0.35%
10,000 Capital Cities/ABC,
Inc. ................. 818,000 852,500
15,000 CBS Inc. ............... 860,125 830,625
------------- -------------
1,678,125 1,683,125
------------- -------------
BUILDING AND
CONSTRUCTION -- 0.34%
38,000 Fluor Corporation....... 1,473,415 1,638,750
------------- -------------
CABLE -- 6.24%
20,000 Century Communications
Corporation Class A... 225,275 150,000
130,000 Comcast Corporation
Special Class A....... 2,701,711 2,039,375
360,000 Home Shopping
Network, Inc.*........ 4,524,283 3,600,000
50,500 International Family
Entertainment*........ 713,214 637,562
140,000 Multimedia, Inc.*....... 4,252,633 3,990,000
111,800 QVC, Inc.*.............. 4,766,292 4,709,575
600,000 Tele-Communications,
Inc. Class A*......... 6,176,943 13,050,000
111,000 United International
Holdings Inc. Class
A*.................... 1,259,940 1,942,500
------------- -------------
24,620,291 30,119,012
------------- -------------
CONSUMER PRODUCTS &
SERVICES -- 12.87%
150,000 American Brands,
Inc. ................. 4,949,725 5,625,000
145,000 American Safety Razor
Company*.............. 1,740,000 1,993,750
50,000 Amway Asia Pacific
Ltd. ................. 1,611,075 1,625,000
15,000 Amway Japan Ltd.,
Spons. ADR............ 270,125 243,750
35,000 Church & Dwight Co.,
Inc. ................. 699,175 630,000
150,000 Colgate-Palmolive
Company............... 6,456,640 9,506,250
80,000 DSG International
Ltd. ................. 1,816,125 1,420,000
280,000 General Electric
Company............... 13,917,562 14,280,000
175,000 Gillette Company........ 7,539,769 13,081,250
90,000 Libbey Inc. ............ 1,170,000 1,575,000
67,000 Procter & Gamble
Company............... $ 3,806,675 $ 4,154,000
100,000 Ralston Purina Group.... 4,090,863 4,462,500
90,000 Tambrands Inc. ......... 3,428,988 3,476,250
------------- -------------
51,496,722 62,072,750
------------- -------------
COUNTRY/CLOSED-END
FUNDS -- 1.66%
40,000 Asia Pacific Fund,
Inc................... 508,442 550,000
68,000 Emerging Markets
Infrastructure
Fund*................. 993,480 697,000
46,000 Emerging Markets
Telecommunications
Fund, Inc.*........... 657,535 810,750
100,000 France Growth Fund,
Inc.*................. 962,506 912,500
100,000 Irish Investment Fund,
Inc................... 886,594 862,500
30,000 Malaysia Fund, Inc...... 404,525 517,500
29,809 Singapore Fund, Inc..... 248,065 443,409
100,000 Swiss Helvetia Fund
Inc................... 1,296,034 1,887,500
60,000 Thai Fund, Inc.......... 1,651,003 1,342,500
------------- -------------
7,608,184 8,023,659
------------- -------------
DIVERSIFIED
INDUSTRIAL -- 1.88%
170,000 Minnesota Mining and
Manufacturing
Company............... 9,146,303 9,073,750
------------- -------------
ENERGY -- 0.51%
32,500 Mitchell Energy &
Development Class A... 713,363 528,125
120,000 Sithe Energies, Inc.*... 1,537,175 1,260,000
35,000 Stone Energy
Corporation*.......... 420,000 673,750
------------- -------------
2,670,538 2,461,875
------------- -------------
ENTERTAINMENT -- 2.46%
20,000 Autotote Corporation --
Class A*.............. 389,144 227,500
140,000 Gaylord Entertainment
Company............... 3,264,795 3,185,000
21,500 National Gaming
Corp. ................ 381,634 258,000
40,000 PolyGram N.V. .......... 1,675,526 1,845,000
160,000 Time Warner Inc. ....... 6,249,650 5,620,000
18,000 Viacom Inc. -- Class
A*.................... 607,725 749,250
------------- -------------
12,568,474 11,884,750
------------- -------------
FINANCIAL
SERVICES -- 6.47%
190,000 American Express
Company............... 5,529,690 5,605,000
48,000 First Data
Corporation........... 1,514,350 2,274,000
100,000 MBIA Inc. .............. 5,068,569 5,612,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
THE GABELLI GROWTH FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
<C> <S> <C> <C>
225,000 Morgan (J.P.) & Co.
Incorporated.......... $ 14,164,100 $ 12,600,000
80,000 Northern Trust
Company............... 2,369,646 2,800,000
100,000 Norwest Corporation..... 1,993,988 2,337,500
------------- -------------
30,640,343 31,229,000
------------- -------------
FOOD AND
BEVERAGE -- 12.52%
50,000 Back Bay Restaurant
Group, Inc.*.......... 571,359 375,000
32,000 Boston Chicken, Inc.*... 608,175 556,000
70,000 Campbell Soup Company... 2,519,750 3,088,750
78,500 Celestial Seasonings*... 1,458,737 1,148,062
125,000 Coca-Cola Company....... 4,842,677 6,437,500
245,000 CPC International
Inc. ................. 9,928,471 13,046,250
175,000 Hershey Foods
Corporation........... 7,243,287 8,465,625
28,000 Midwest Grain Products,
Inc. ................. 714,533 672,000
158,000 Nestle S.A. ADR*........ 4,765,500 7,505,000
12,000 Nestle S.A. ADR
144A(c)*.............. 318,000 570,000
67,500 Panamerican Beverages... 1,797,272 2,134,687
114,000 Pioneer Hi-Bred
International,
Inc. ................. 4,013,858 3,933,000
36,000 Quaker Oats Company..... 1,259,748 1,107,000
60,000 Seagram Company Ltd..... 1,771,750 1,770,000
40,000 Tootsie Roll Industries,
Inc. ................. 2,531,781 2,460,000
160,000 Tyson Foods, Inc.
Class A............... 3,529,361 3,400,000
76,000 Wrigley (Wm.) Jr.
Company............... 2,250,923 3,752,500
------------- -------------
50,125,182 60,421,374
------------- -------------
HEALTH CARE:
BIOTECHNOLOGY -- 4.44%
95,000 Amgen Inc.*............. 3,627,231 5,605,000
337,500 Genentech, Inc.*........ 12,285,598 15,314,063
35,000 Matrix Pharmaceutical,
Inc.*................. 343,125 481,250
------------- -------------
16,255,954 21,400,313
------------- -------------
HEALTH CARE: DRUGS AND
MEDICAL
PRODUCTS -- 3.22%
140,000 Johnson & Johnson....... 5,595,470 7,665,000
125,000 Roche Holding Ltd.
ADR*.................. 3,711,875 5,992,188
42,000 Scherer (R.P.)
Corporation*.......... 1,195,958 1,905,750
------------- -------------
10,503,303 15,562,938
------------- -------------
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
<C> <S> <C> <C>
HEALTH CARE:
SERVICES -- 0.41%
15,000 On Assignment, Inc.*.... $ 166,250 $ 240,000
60,000 WellPoint Health Networks
Inc. Class A *........ 1,692,919 1,747,500
------------- -------------
1,859,169 1,987,500
------------- -------------
HOME/OFFICE
FURNISHINGS -- 0.72%
235,000 Shaw Industries,
Inc. ................. 2,779,380 3,495,625
------------- -------------
HOTELS/CASINOS -- 4.20%
170,000 Circus Circus
Enterprises, Inc.*.... 4,272,519 3,952,500
115,000 Hilton Hotels
Corporation........... 6,594,507 7,748,125
215,000 Hospitality Franchise
Systems, Inc.*........ 4,240,866 5,697,500
140,000 Mirage Resorts,
Incorporated*......... 2,823,475 2,870,000
------------- -------------
17,931,367 20,268,125
------------- -------------
INDUSTRIAL EQUIPMENT AND
SUPPLIES -- 10.75%
105,000 AMP Incorporated........ 6,117,480 7,638,750
135,000 Crane Co. .............. 3,632,083 3,628,125
157,000 Emerson Electric Co. ... 7,489,955 9,812,500
60,000 Hubbell Incorporated
Class B............... 3,145,469 3,195,000
220,000 Illinois Tool Works,
Inc. ................. 6,186,456 9,625,000
260,000 Minerals Technologies
Inc. ................. 4,871,530 7,605,000
50,000 Molex Incorporated...... 1,265,973 1,725,000
51,250 Molex Incorporated Class
A..................... 1,299,250 1,588,750
98,000 Pall Corporation,
Inc. ................. 1,908,596 1,837,500
30,000 Plantronics, Inc.*...... 493,025 900,000
170,000 Roper Industries,
Inc. ................. 2,881,048 4,292,500
------------- -------------
39,290,865 51,848,125
------------- -------------
MERCHANDISING:
DEPARTMENT -- 0.37%
40,000 Penney (J.C.) Company... 1,867,275 1,785,000
------------- -------------
MERCHANDISING:
DRUG STORES -- 1.50%
165,000 Walgreen Co. ........... 5,998,904 7,218,750
------------- -------------
MERCHANDISING:
FOOD -- 2.49%
150,000 Albertson's, Inc. ...... 3,250,450 4,350,000
150,000 American Stores
Company............... 3,810,442 4,031,250
150,000 Kroger Co.*............. 3,110,006 3,618,750
------------- -------------
10,170,898 12,000,000
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
THE GABELLI GROWTH FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
<C> <S> <C> <C>
MERCHANDISING:
SPECIALTY -- 0.96%
130,000 Burlington Coat Factory
Warehouse
Corporation*.......... $ 1,374,037 $ 1,527,500
90,000 Fingerhut Companies,
Inc. ................. 1,617,667 1,395,000
40,000 InaCom Corp. ........... 668,310 280,000
25,000 Talbots, Inc. .......... 626,500 781,250
22,000 Viking Office Products,
Inc.*................. 176,387 673,750
------------- -------------
4,462,901 4,657,500
------------- -------------
METALS & MINING -- 0.63%
55,000 Nucor Corporation....... 2,425,150 3,052,500
------------- -------------
PACKAGING -- 1.05%
90,000 Sealed Air
Corporation*.......... 2,150,586 3,262,500
95,000 U.S. Can Corporation*... 1,130,775 1,805,000
------------- -------------
3,281,361 5,067,500
------------- -------------
PAPER AND FOREST
PRODUCTS -- 0.62%
132,000 Wausau Paper Mills
Company............... 2,416,631 3,003,000
------------- -------------
PUBLISHING -- 1.97%
110,000 Dow Jones & Company
Inc. ................. 3,946,787 3,410,000
35,000 Gannett Co., Inc. ...... 1,860,225 1,863,750
30,000 McGraw-Hill, Inc. ...... 2,180,313 2,006,250
100,000 New York Times Company
(The) Class A......... 2,735,325 2,212,500
------------- -------------
10,722,650 9,492,500
------------- -------------
SPECIALTY
CHEMICALS -- 3.69%
50,000 Ferro Corporation....... 1,233,750 1,193,750
290,000 Lubrizol Corporation.... 8,911,315 9,823,750
30,000 Morton International,
Inc. ................. 728,725 855,000
100,000 Nalco Chemical
Company............... 2,853,520 3,350,000
107,000 OM Group, Inc.*......... 1,507,500 2,568,000
------------- -------------
15,234,810 17,790,500
------------- -------------
<CAPTION>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
<C> <S> <C> <C>
TECHNOLOGY -- 1.67%
37,000 Intel Corporation*...... $ 2,060,059 $ 2,363,375
105,000 Loral Corporation....... 3,008,964 3,976,875
38,000 Thermo Electron
Corporation*.......... 1,462,780 1,705,250
------------- -------------
6,531,803 8,045,500
------------- -------------
TELECOMMUNICATIONS
-- 9.18%
56,000 ALC Communications
Corporation*.......... 1,467,360 1,743,000
90,000 ALLTEL Corporation...... 2,052,556 2,711,250
230,000 AT&T Corporation........ 9,401,750 11,557,500
20,000 BCE Inc. ............... 681,000 642,500
23,400 C-TEC Corporation
-- Class A*........... 578,436 465,075
26,000 C-TEC Corporation
-- Class B
Convertible*(b)....... 736,207 511,875
42,000 Cable & Wireless
plc ADR............... 863,503 735,000
445,752 LDDS Communications,
Inc.*................. 7,008,848 8,664,304
150,000 MCI Communications
Corporation........... 4,224,431 2,756,250
100,000 MFS Communications
Company, Inc.*........ 4,221,289 3,275,000
145,000 Northern Telecom
Limited............... 4,542,446 4,839,375
50,000 Sprint Corporation...... 1,373,125 1,381,250
53,242 Telecomunicacoes
Brasileiras S.A.
(Telebras) ADR*....... 1,851,511 2,389,235
1,000,000 Telecom Italia*......... 2,501,390 2,601,847
------------- -------------
41,503,852 44,273,461
------------- -------------
TEXTILE/APPAREL -- 0.76%
115,000 Authentic Fitness
Corporation*.......... 1,780,118 1,595,625
80,000 Jones Apparel Group,
Inc.*................. 2,429,854 2,060,000
------------- -------------
4,209,972 3,655,625
------------- -------------
TRANSPORTION -- 0.36%
75,000 Overseas Shipholding
Group, Inc. .......... 1,454,362 1,725,000
------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
THE GABELLI GROWTH FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C>
MARKET
SHARES COST VALUE
- ---------- ------------- -------------
WIRELESS
COMMUNICATIONS
-- 1.95%
150,000 AirTouch
Communications..... $ 3,370,531 $ 4,368,750
112,000 Century Telephone
Enterprises,
Inc. .............. 3,224,945 3,304,000
45,000 Comnet Cellular
Inc.*.............. 587,750 1,305,000
25,000 Metrocall, Inc.*..... 436,265 425,000
------------- -------------
7,619,491 9,402,750
------------- -------------
TOTAL COMMON
STOCKS............. 404,259,331 471,053,757
------------- -------------
PREFERRED
STOCKS -- 0.56%
METALS AND
MINING -- 0.56%
130,000 Freeport-McMoRan Inc.
7% Cumulative Conv.
Depositary......... 3,250,000 2,697,500
------------- -------------
TOTAL PREFERRED
STOCKS............. 3,250,000 2,697,500
------------- -------------
PRINCIPAL
AMOUNT
- ----------
CONVERTIBLE
BONDS -- 1.04%
CABLE -- 0.59%
$7,000,000 Comcast Corporation
Step-Up Debentures,
1.125%, due
04/15/2007......... 3,855,337 2,826,250
------------- -------------
RETAIL -- 0.25%
1,000,000 Home Depot, Inc.
Notes 4.500%, due
02/15/1997......... 1,000,000 1,205,000
------------- -------------
PRINCIPAL MARKET
AMOUNT COST VALUE
- ---------- ------------- -------------
TELECOMMUNICATIONS
-- 0.20%
$986,000 IntelCom Group Inc.
Sub. Notes 8.000%,
due 09/17/1998..... $ 985,599 $ 962,940
------------- -------------
TOTAL CONVERTIBLE
BONDS.............. 5,840,936 4,994,190
------------- -------------
U.S. GOVERNMENT
OBLIGATIONS
-- 0.45%
2,200,000 U.S. Treasury Bills,
4.550% to 5.12%,
due 01/12/95 to
02/09/95........... 2,190,847 2,190,847
------------- -------------
TOTAL U.S. GOVERNMENT
OBLIGATIONS........ 2,190,847 2,190,847
------------- -------------
TOTAL INVESTMENTS --
99.68%(A).......... $ 415,541,114 480,936,294
=============
CASH AND OTHER ASSETS
IN EXCESS OF
LIABILITIES -- 0.32%.. 1,534,259
-------------
NET ASSETS--100.00%
(24,514,208 SHARES
OUTSTANDING)....... $ 482,470,553
=============
NET ASSET VALUE,
OFFERING AND
REDEMPTION PRICE
PER SHARE.......... $ 19.68
=============
</TABLE>
* Non-income producing.
(a) For Federal income tax purposes aggregate cost is $416,378,347. Gross
unrealized appreciation and depreciation are $80,134,228 and $15,576,281,
respectively, resulting in net unrealized appreciation of $64,557,947.
(b) Security fair valued under procedures established by the Board of Trustee.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At December 31,
1994, Rule 144A securities amounted to $570,000 or 0.12% of net assets.
The accompanying notes are an integral part of the financial statements.
THE GABELLI GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(Cost $415,541,114)................. $480,936,294
Receivable for investments sold....... 6,020,576
Receivable for fund shares sold....... 552,660
Accrued interest receivable........... 58,784
Dividends receivable.................. 1,476,130
Other receivables..................... 1,514
------------
Total assets........................ 489,045,958
------------
LIABILITIES:
Payable for investments purchased..... 507,500
Payable for fund shares redeemed...... 16,709
Payable for investment advisory
fees................................ 412,036
Payable for distribution fees......... 181,213
Payable to bank....................... 2,382,904
Dividends and distributions payable... 2,823,533
Other payables and accrued expenses... 251,510
------------
Total liabilities................... 6,575,405
------------
Net assets applicable to 24,514,208
shares of beneficial interest
outstanding....................... $482,470,553
=============
Net asset value, offering and
redemption price per share........ $ 19.68
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value............................... $ 245,142
Additional paid in capital............ 417,888,445
Distributions in excess of net
investment income................... (115,383)
Distributions in excess of net
realized gains...................... (942,831)
Unrealized net appreciation on
investments......................... 65,395,180
------------
Net assets.......................... $482,470,553
=============
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................. $ 840,139
Dividends............................. 8,613,831
------------
Total income........................ 9,453,970
------------
EXPENSES:
Investment advisory fee............... 5,651,929
Distribution costs.................... 778,876
Transfer and shareholder servicing
agent............................... 505,711
Printing and mailing.................. 468,120
Custodian fees and expenses........... 115,746
Registration fees..................... 36,674
Legal and auditing.................... 52,067
Trustees' fees........................ 73,500
------------
Total expenses...................... 7,682,623
------------
Investment income -- net............ 1,771,347
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on
investments......................... 59,552,832
Net change in unrealized
appreciation........................ (84,422,105)
------------
Net loss on investments............. (24,869,273)
------------
Net decrease in net assets resulting
from operations................... $(23,097,926)
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- -----------------
<S> <C> <C>
CHANGE IN NET ASSETS:
Investment income -- net.............................................. $ 1,771,347 $ 1,519,349
Realized gain on investments -- net................................... 59,552,832 18,863,638
Change in unrealized appreciation -- net.............................. (84,422,105) 53,608,385
----------------- -----------------
Net decrease in net assets resulting from operations................ (23,097,926) 73,991,372
Dividends to shareholders from net investment income.................. (1,697,277) (1,519,349)
Dividends in excess of net investment income.......................... (167,272)
Distributions to shareholders from net realized gains................. (58,588,684) (19,428,195)
Distributions in excess of net realized gains......................... (27,643) (1,093,830)
Share transactions -- net............................................. (128,963,907) 18,013,247
----------------- -----------------
Net increase in net assets.......................................... (212,542,709) 69,963,245
NET ASSETS:
Beginning of year..................................................... 695,013,262 625,050,017
----------------- -----------------
End of year (including distributions in excess of net investment
income of
$115,383 and $0, respectively)...................................... $ 482,470,553 $ 695,013,262
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
THE GABELLI GROWTH FUND -- NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Growth Fund (the "Fund") is an
open-end, diversified management investment company organized as a Massachusetts
business trust and registered under the Investment Company Act of 1940, as
amended. The Fund commenced operations on April 10, 1987. The following is a
summary of significant accounting policies followed by the Fund.
SECURITY VALUATION. Readily marketable securities traded on a national
securities exchange or admitted to trading on the NASDAQ National Market List
are valued at the last reported sales price on the business day as of which such
value is determined. Securities for which no sale was reported on that date and
over-the-counter securities not included in the NASDAQ National Market List are
valued at the mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having 60 days or less
remaining until maturity are stated at amortized cost (which approximates
value). Debt instruments having a remaining maturity of more than 60 days 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.
SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates) with
realized gain or loss on investments determined by using specific identification
as the cost method. Interest income (including amortization of premium and
discount) is recorded as earned. Dividend income and dividends and distributions
to shareholders are recorded on the ex-dividend date.
Income distributions and capital gain distributions on a Fund level 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 and temporary differences and differing characterization of
distributions made by the Fund as a whole. To reflect reclassifications arising
from permanent book/tax differences for the year ended December 31, 1994,
distributions in excess of net investment income were credited and distributions
in excess of net realized gains were charged for $915,189.
FEDERAL INCOME TAXES. The Fund qualifies and intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986 and intends to distribute all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
2. SHARES OF BENEFICIAL INTEREST. The Declaration of Trust, dated October 24,
1986, permits the Fund to issue an unlimited number of shares (par value $0.01).
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................... 8,826,361 197,041,813 10,855,380 237,315,027
Shares issued on reinvestment of dividends
and distributions............................ 2,929,789 57,657,339 903,408 21,013,281
Shares redeemed................................ (17,122,413) (383,663,059) (10,822,587) (240,315,061)
------------ ------------- ------------ -------------
Net increase................................. (5,366,263) (128,963,907) 936,201 18,013,247
========== =========== ========== ===========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities, other
than U.S. Government obligations and short-term securities, aggregated
$222,708,013 and $388,930,198, respectively.
THE GABELLI GROWTH FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY CONTRACT. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management and pay the compensation of all officers and Trustees
of the Fund who are its affiliates. As compensation for the services rendered
and related expenses borne by the Advisor, the Fund pays the Advisor a fee,
computed and accrued daily and payable monthly, equal to 1.00% per annum of the
Fund's average daily net assets. The Advisor is obligated to reimburse the Fund
in the event the Fund's expenses exceed the most restrictive expense ratio
limitation imposed by any state. No such reimbursement was required during 1993
or 1994.
5. DISTRIBUTION PLAN. The Fund's Board of Trustees has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. Pursuant to this Plan, the Distributor is authorized to
purchase advertising, sales literature and other promotional material and to pay
its own salespeople. The Fund will reimburse the Distributor (Gabelli &
Company), an affiliate of the Advisor, for these expenditures up to a limit of
0.25% on an annual basis of the Fund's average daily net assets. In addition, if
and to the extent that the fee that the Fund pays to the Advisor as well as
other payments it makes, are considered as indirectly financing any activity
which is primarily intended to result in the sale of the Fund's shares, such
payments are authorized under the Plan. For the year ended December 31, 1994,
the Fund has incurred distribution costs of $778,876 or 0.14% of average net
assets under the Plan.
6. TRANSACTIONS WITH AFFILIATES. For the year ended December 31, 1994, the Fund
paid brokerage commissions of $52,519 to Gabelli & Company, Inc. and its
affiliates.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
(for a share of beneficial interest outstanding throughout
each year)
Net asset value, beginning of year............................... $ 23.26 $ 21.59 $ 21.28 $ 16.27 $ 17.07
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income.......................................... $ 0.07 $ 0.06 $ 0.08 $ 0.16 $ 0.37
Net realized and unrealized gain/(loss) on investments......... (0.86) 2.37 0.88 5.42 (0.71)
--------- --------- --------- --------- ---------
Total from investment operations............................. (0.79) 2.43 0.96 5.58 (0.34)
Less distributions:
Dividends from net investment income........................... (0.08) (0.05) (0.09) (0.15) (0.39)
Distributions in excess of net investment income............... (0.01) -- -- -- --
Distributions from net realized gains on investments........... (2.39) (0.67) (0.56) (0.42) (0.07)
Distributions in excess of net realized gains.................. (0.31) (0.04) -- -- --
--------- --------- --------- --------- ---------
Total distributions.......................................... (2.79) (0.76) (0.65) (0.57) (0.46)
--------- --------- --------- --------- ---------
Net asset value, end of year..................................... $ 19.68 $ 23.26 $ 21.59 $ 21.28 $ 16.27
========= ========= ========= ========= =========
Total Return+.................................................... (3.4%) 11.3% 4.5% 34.3% (2.0%)
--------- --------- --------- --------- ---------
Net assets, end of year (000's omitted).......................... $ 482,471 $ 695,013 $ 625,050 $ 422,589 $ 202,971
========= ========= ========= ========= =========
Significant Ratios:
Investment income -- net to average net assets................. 0.31% 0.22% 0.46% 0.97% 2.67%
Operating expenses -- net to average net assets................ 1.36% 1.41% 1.41% 1.45% 1.50%
Portfolio turnover............................................. 40.34% 80.72% 45.93% 49.88% 74.69%
</TABLE>
- ---------------
+ Total return is calculated assuming a purchase of shares at the net asset
value on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.
<PAGE>
- --------------------------------------------------------------------------------
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Prospectus:
Financial Highlights
Included in the Statement of Additional Information
Report of Independent Accountants***
Portfolio of Investments, December 31, 1994***
Statement of Assets & Liabilities, December 31, 1994***
Statement of Operations year ended December 31, 1994 ***
Statement of Changes in Net Assets, years ended December 31,
1993 and December 31, 1994***
Notes to Financial Statements, December 31, 1994***
Financial Highlights***
(b) Exhibits
(1) Declaration of Trust*
(2) By-laws*
(3) Not applicable
(4) Specimen share certificate*
(5) Amended Investment Advisory Contract**
(6) Amended Distribution Agreement**
(7) Not applicable
(8) Custody Agreement*
(9) Transfer Agency Agreement*
(10) Opinion and consent of Counsel*
(11) Consent of Independent Accountants - Exhibit 24 (b)(11)
(12) Not applicable
(13) Agreement with initial shareholder*
(14) Form of Instructions and Agreement for Individual Retirement
Account (IRA)*
(15) Amended Distribution Plan**
(16) Sample Total Return Computation**
(17) Financial Data Schedule-Exhibit 24 (b) 17
- ----------
* Previously filed with Registrant's Registration Statement on Form N-1A, as
amended, and incorporated by reference
** As previously filed with Registrant's Registration Statement on May 3,
1993.
*** Previously filed with the Fund's Annual Report for the year ended December
31, 1994 filed on March 10, 1995.
- --------------------------------------------------------------------------------
C-1
<PAGE>
- --------------------------------------------------------------------------------
ITEM 25. Persons Controlled by or Under Common Control with Registrant
None
ITEM 26. Number of Holders of Securities
As of March 31, 1995, there were 44,479 holders of shares of Registrant.
ITEM 27. Indemnification
Reference is made to Subdivision (c) of Section l2 of Article Seventh of
Registrant's Declaration of Trust.
Insofar as indemnification for liabilities arising under the Securities Act of
l933 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.
- ----------
* Previously filed with Registrant's Registration Statement on Form N-1A, as
amended, and incorporated by reference.
** As previously filed with Registrant's Registration Statement on May 3, 1993.
- --------------------------------------------------------------------------------
C-2
<PAGE>
- --------------------------------------------------------------------------------
ITEM 28. Business and Other Connections of Investment Adviser
Gabelli Funds, Inc. is the investment adviser of the Registrant. For information
as to its business, profession, vocation or employment of a substantial nature,
reference is made to Form ADV filed by it under the Investment Advisers Act of
1940.
ITEM 29. Principal Underwriter
(a) The Distributor, Gabelli & Company, Inc., is also the principal underwriter
for The Gabelli ABC Fund, The Gabelli Asset Fund, The Gabelli Value Fund, The
Gabelli Small Cap Growth Fund, Gabelli Equity Income Fund, Gabelli Gold Fund,
The Westwood Funds, The Gabelli U.S. Treasury Money Market Fund, The Gabelli
Global Telecommunications Fund, The Gabelli Global InLteractive Couch
Potato(TM(c) Fund and The Gabelli Global Convertible Securities Fund.
(b) For information as to such principal underwriter, reference is made to the
Form BD filed by it under the Securities Exchange Act of l934
(c) Not applicable
ITEM 30. Location of Accounts and Records
All such accounts, books and other documents are maintained at the office of The
Shareholder Services Group, Inc., Exchange Place, Boston, Massachusetts 02109,
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts,
02110, BFDS, two Heritage Drive, North Quincy, MA 02171 and at the offices of
the Adviser, Gabelli Funds, Inc., One Corporate Center, Rye, New York
10580-1434.
ITEM 3l. Management Services
Not applicable
ITEM 32. Undertakings
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.
- --------------------------------------------------------------------------------
C-3
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Registration Statement or Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the EE__ day of April, 1995.
THE GABELLI GROWTH FUND
/s/BRUCE N. ALPERT
By: Bruce N. Alpert
Title: Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement or Amendment has been signed below by the following
in the capacity and on the dates indicated.
Signature Title Date
/s/ MARIO J. GABELLI President and Trustee April __, 1995
---------------------------
Mario J. Gabelli
/s/FELIX J. CHRISTIANA Trustee April __, 1995
---------------------------
Felix J. Christiana
/s/ANTHONY J. COLAVITA Trustee April __, 1995
---------------------------
Anthony J. Colavita
/s/ANTHONY R. PUSTORINO Trustee April __, 1995
---------------------------
Anthony R. Pustorino
/s/SALVATORE J. ZIZZA Trustee April __, 1995
---------------------------
Salvatore J. Zizza
/s/ANTHONY TORNA Trustee April __, 1995
---------------------------
Anthony Torna
/s/DUGALD A. FLETCHER Trustee April __, 1995
---------------------------
Dugald A. Fletcher
- --------------------------------------------------------------------------------
C-4
<PAGE>
- --------------------------------------------------------------------------------
SCHEDULE OF EXHIBITS TO FORM N-1A
Exhibit
Number Exhibit Page Number
------ ------- -----------
24(b):
(11) Consent of Independent Accountants
Price Waterhouse LLP
(17) Financial Data Schedule
- --------------------------------------------------------------------------------
C-5
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 12 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
February 9, 1995, relating to the financial statements and financial highlights
of The Gabelli Growth Fund, which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Counsel and Independent
Accountants" in such Statement of Additional Information and to the reference to
us under the heading "Financial Highlights" in such prospectus.
/s/Price Waterhouse LLP
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York
April 25, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<NAME> The Gabelli Growth Fund
<CIK> 806857
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> Dec-31-1994
<PERIOD-END> Dec-31-1994
<INVESTMENTS-AT-COST> 415,541,114
<INVESTMENTS-AT-VALUE> 480,936,294
<RECEIVABLES> 8,109,664
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 489,045,958
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</TABLE>
