WCC CAPITAL GROWTH FUND INC, N-1A EL/A, 1995-03-06

WCC CAPITAL GROWTH FUND INC
N-1A EL/A, 1995-03-06

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<PAGE>1

As filed with the Securities and Exchange Commission
on March 6, 1995

Securities Act File No. 33-61254
Investment Company Act File No. 811-7644

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]

Pre-Effective Amendment No. 1 [x]

Post-Effective Amendment No. ___ [ ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]

Amendment No. 1

(Check appropriate box or boxes)

The WCC Capital Growth Fund Inc.
(Exact Name of Registrant as Specified in Charter)

One Corporate Center
Rye, New York 10580-1434
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including
Area Code: 1-800-422-3554

Bruce N. Alpert
One Corporate Center
Rye, New York 10580-1434
(Name and Address of Agent for Service)

Copies to:

Daniel Schloendorn, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022

<PAGE>2

Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the Registration Statement.

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b), or

[ ] on (date) pursuant to paragraph (b), or

[ ] 60 days after filing pursuant to paragraph (a), or

[ ] on (date) pursuant to paragraph (a) of Rule 485

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

Proposed
Title of Maximum Proposed
Securities Offering Maximum Amount of
Being Amount Being Price Per Aggregate Registra-
Registered Registered Unit Offering tion Fee

Common Indefinite* * Indefinite* $500**
Stock,
$.001 par
value per
share

</TABLE>

* Registrant is registering an indefinite number of shares of Common Stock
by this Registration Statement pursuant to Rule 24f-2 under the Investment
Company Act of 1940.

** Previously paid.

-------------------------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.

<PAGE>3

THE WCC CAPITAL GROWTH FUND INC.

FORM N-1A

CROSS REFERENCE SHEET

PURSUANT TO RULE 495(a)

Part A
Items No. Prospectus Heading

1. Cover Page . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . Not Applicable

3. Condensed Financial
Information . . . . . . . . Not applicable

4. General Description of
Registrant . . . . . . . . Cover Page; Investment Objectives and
Policies; General Information

5. Management of the Fund . . . Management of the Fund; Investment
Objectives and Policies; General
Information; Purchase and Redemption
of Shares

6. Capital Stock and Other
Securities . . . . . . . . Dividends, Distributions and Taxes;
General Information

7. Purchase of Securities
Being Offered . . . . . . . Purchase and Redemption of Shares

8. Redemption or Repurchase . . Purchase and Redemption of Shares

9. Pending Legal Proceedings . Not applicable

Part B Heading in Statement of
Item No. Additional Information

10. Cover Page . . . . . . . . . Cover Page

11. Table of Contents . . . . . Table of Contents

<PAGE>4

12. General Information and
History . . . . . . . . . . The Manager; The Sub-Adviser;
Directors and Officers; see Prospectus
-- "General Information"

13. Investment Objectives and
Policies . . . . . . . . . Investment Policies; Special
Investment Methods; Investment
Objectives;

14. Management of the Fund . . . Directors and Officers; The Manager;
The Sub-Adviser; see Prospectus --
"Management of the Fund"

15. Control Persons and Principal
Holders of Securities . . . Directors and Officers; The Manager;
The Sub-Adviser; see Prospectus --
"Purchase and Redemption of Shares";
"General Information"

16. Investment Advisory and
Other Services . . . . . . The Manager; The Sub-Advisor; The
Distributor; see Prospectus --
"Custodian, Transfer Agent and
Dividend Disbursing Agent";
"Management of the Fund"

17. Brokerage Allocation and
Other Practices . . . . . . Portfolio Transactions and Brokerage

18. Capital Stock and Other
Securities . . . . . . . . Dividends, Distributions and Taxes;
General Information; see Prospectus --
"Dividends, Distributions and Taxes";
"General Information"

<PAGE>5

19. Purchase, Redemption and
Pricing of Securities
Being Offered . . . . . . . Purchase and Redemption of Shares;
Determination of Net Asset Value

20. Tax Status . . . . . . . . . Dividends, Distributions and Taxes;
see Prospectus -- "Dividends,
Distributions and Taxes"

21. Underwriters . . . . . . . . The Distributor; see Prospectus --
"Purchase and Redemption of Shares";
"Management of the Fund"

22. Calculation of
Performance Data . . . . . Investment Performance Information

23. Financial Statements . . . . 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.

<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY
NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.

<PAGE>1

Subject to Completion, Dated March 6, 1995

GABELLI CAPITAL ASSET FUND

One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-Gabelli (1-800-422-3554)

PROSPECTUS
[ , 1995]

Gabelli Capital Asset Fund (the "Fund") is a series of Gabelli
Capital Series Funds, Inc. (the "Company"), an open-end, diversified
management investment company. The primary investment objective of the Fund
is growth of capital, with current income as a secondary objective. See
"Investment Objectives and Policies."

Shares of the Fund are available to the public only through the
purchase of certain variable annuity and variable life insurance contracts
("Contract(s)") issued by The Guardian Insurance & Annuity Company, Inc.
("GIAC").

This Prospectus sets forth concisely the information a prospective
investor should know before investing in the Fund. A Statement of Additional
Information dated [ , 1995] (the "Additional Statement") containing
additional information about the Fund has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus.
For a free copy, write or call the Fund at the telephone number or address set
forth above.
_______________

This Prospectus should be retained
by investors for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

<PAGE>2

INVESTMENT OBJECTIVES AND POLICIES

The primary investment objective of the Fund is growth of capital
and investments will be made based on management's perception of their
potential for capital appreciation. Current income is a secondary objective.
There is no assurance that the Fund will achieve its investment objectives.
The investment objectives of the Fund are fundamental and may not be changed
without shareholder approval. The other investment policies described below
may be changed by the Board of Directors without shareholder approval.

The Fund expects that its assets will be invested primarily in a
diversified portfolio of readily marketable equity securities (including
common stock, preferred stock, securities representing the right to acquire
common stock and securities that are convertible into or exchangeable for
common stock). Gabelli Funds, Inc., the sub-investment adviser to the Fund
(the "Sub-Adviser") will invest in companies that are selling in the public
market at a significant discount to their private market value ("PMV"), that
is, that value the Sub-Adviser believes an informed industrialist would be
willing to pay to acquire companies with similar characteristics. Factors
considered by the Sub-Adviser include price, earnings expectations, earnings
and price histories, balance sheet characteristics and perceived management
skills. Also considered are changes in economic and political outlooks as
well as individual corporate developments. Fund investments which lose their
perceived value relative to other investment alternatives are sold.

When deemed appropriate by the Sub-Adviser, the Fund may without
limit invest temporarily in defensive securities such as high grade debt
securities, obligations of the U.S. Government, its agencies or
instrumentalities, or in short-term (maturing less than one year) money market
instruments, including commercial paper rated A-1 or better by Standard &
Poor's Corporation ("S&P") or P-1 or better by Moody's Investors Services
("Moody's").

It is the Sub-Adviser's expectation that most Fund investments will
be long term in nature and that the annual turnover of the Fund's portfolio
should not exceed 100%. A portfolio turnover rate of 100% would occur if all
the stocks in the portfolio were replaced in a one-year period. High turnover
involves correspondingly greater commission expenses and transaction costs.

<PAGE>3

Corporate Reorganizations

Subject to the diversification requirements of its investment
restrictions, the Fund may invest not more than 35% of its total assets in
securities for which a tender or exchange offer has been made or announced and
in the securities of companies for which a merger, consolidation, liquidation
or similar reorganization proposal has been announced if, in the judgment of
the Sub-Adviser, there is a reasonable prospect of capital appreciation
significantly greater than the added portfolio turnover expenses inherent in
the short-term nature of such transactions. The 35% limitation does not apply
to the securities of companies which may be involved in simply consummating an
approved or agreed upon merger, acquisition, consolidation, liquidation or
reorganization. The principal risk is that such offers or proposals may not
be consummated within the time and under the terms contemplated at the time of
the investment in which case, unless replaced by an equivalent or increased
offer or proposal which is consummated, the Fund may sustain a loss. For
further information on such investments, see "Corporate Reorganizations" in
the Additional Statement.

Convertible Securities

Convertible securities are ordinarily a long-term debt obligation of
the issuer convertible at a stated exchange rate into common stock of the
issuer and may also include short-term debt obligations or preferred stock.
As with all fixed income 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 stock in an issuer's capital
structure and are consequently of higher quality and entail less risk than the
issuer's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security
sells above its value as a fixed income security.

The Fund may invest in convertible securities when it appears to the
Sub-Adviser that it may not be prudent to be fully invested in common stocks.
In evaluating a convertible security,

<PAGE>4

the Sub-Adviser places primary emphasis on the attractiveness of the
underlying common stock and the potential for capital appreciation through
conversion. See "Convertible Securities" in the Additional Statement.

Debt Securities

The Fund will normally purchase only investment grade debt
securities having a rating of, or equivalent to, at least an S&P rating of BBB
(which rating may have speculative characteristics) or, if unrated, judged by
the Sub-Adviser to be of comparable quality. However, the Fund may also
invest up to 25% of its assets in more speculative debt securities which
provided such securities have a rating of, or equivalent to, at least an S&P
rating of B or, if unrated, judged by the Sub-Adviser to be of comparable
quality. Corporate debt obligations having a B rating will likely have some
quality and protective characteristics which, in the judgment of the rating
organization, are outweighed by large uncertainties or major risk exposures to
adverse conditions. Although lower rated debt securities generally have
higher yields, they are also more subject to market price volatility based on
increased sensitivity to changes in interest rates and economic conditions or
the liquidity of their secondary trading market. A description of corporate
debt ratings is contained in the Additional Statement.

The Fund may invest up to 5% of its assets in low rated and unrated
corporate debt securities (often referred to in the financial press as "junk
bonds") which are perceived by the Sub-Adviser to present an opportunity for
significant capital appreciation, if, in the judgment of the Sub-Adviser, the
ability of the issuer to repay principal and interest when due is
underestimated by the market. For purposes of the foregoing limitation,
corporate debt securities are "low rated" if they have a rating of, or
equivalent to, an S&P rating of CCC or lower. See "Debt Securities" in the
Additional Statement.

Investments in Small, Unseasoned Companies

The Fund may invest up to 5% of its net assets in small, less well
known companies which (including predecessors) have operated less than three
years. The securities of such companies may have limited liquidity.

Options

The Fund may purchase or sell options on individual securities as
well as on indices of securities as a means of achieving additional return or
of hedging the value of its

<PAGE>5

portfolio. The Fund will not purchase options if, as a result, the aggregate
cost of all outstanding options exceeds 5% of the Fund's assets.

Warrants and Rights

The Fund may invest up to 5% of its total assets in warrants or
rights (other than those acquired in units or attached to other securities)
which entitle the holder to buy equity securities at a specific price for a
specific period of time but will do so only if such equity securities are
deemed appropriate by the Sub-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, 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

<PAGE>6

many foreign companies are less liquid and their prices more volatile than
securities of comparable U.S. companies. Transaction costs of investing in
non-U.S. securities markets are generally higher than in the U.S. There is
generally less government supervision and regulation of exchanges, brokers and
issuers than there is in the U.S. The Fund might have greater difficulty
taking appropriate legal action in non-U.S. courts. Non-U.S. markets also
have different clearance and settlement procedures which in some markets have
at times failed to keep pace with the volume of transactions, thereby creating
substantial delays and settlement failures that could adversely affect the
Fund's performance.

Dividend and interest income from non-U.S. securities will generally
be subject to withholding taxes by the country in which the issuer is located
and may not be recoverable by the Fund or the investor.

Other Investment Companies

The Fund does not intend to purchase the shares of other open-end
investment companies and reserves the right to invest up to 10% of its total
assets in the securities of closed-end investment companies including small
business investment companies (not more than 5% of its total assets may be
invested in not more than 3% of the voting securities of any investment
company). To the extent that the Fund invests in the securities of other
investment companies, shareholders in the Fund may be subject to duplicative
advisory and administrative fees.

SPECIAL INVESTMENT METHODS

The Fund will not in the aggregate invest more than 15% of its net
assets in illiquid securities. These securities include securities which are
restricted for public sale, securities for which market quotations are not
readily available, and repurchase agreements maturing or terminable in more
than seven days. Securities freely salable 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 Directors. The continued liquidity of such
securities is not as well assured as that of publicly traded securities, and
accordingly, the Board of Directors will monitor their liquidity. Further
information on the investment methods and policies of the Fund are set forth
in the Additional Statement.

<PAGE>7

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.

Repurchase Agreements

The Fund may enter into repurchase agreements with "primary dealers"
in U.S. Government securities and member banks of the Federal Reserve System
which furnish collateral at least equal in value or market price to the amount
of their repurchase obligation. In a repurchase agreement, an investor (e.g.,
the Fund) purchases a debt security from a seller which undertakes to
repurchase the security at a specified resale price on an agreed future date
(ordinarily a week or less). The resale price generally exceeds the purchase
price by an amount which reflects an agreed-upon market interest rate for the
term of the repurchase agreement. The principal risk is that, if the seller
defaults, the Fund might suffer a loss to the extent that the proceeds from
the sale of the underlying securities and other collateral held by the Fund
are less than the repurchase price. Except for repurchase agreements for a
period of a week or less in respect of 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.

<PAGE>8

Short Sales

The Fund may make short sales of securities. A short sale is a
transaction in which a Fund sells a security it does not own in anticipation
that the market price of that security will decline. The market value of the
securities sold short of any one issuer will not exceed either 5% of the
Fund's total assets or 5% of such issuer's voting securities. The Fund will
not make a short sale if, after giving effect to such sale, the market value
of all securities sold short exceeds 10% of the value of its assets or the
Fund's aggregate short sales of a particular class of securities exceeds 10%
of the outstanding securities of that class. Short sales may only be made in
securities listed on a national securities exchange. The Fund may also make
short sales "against the box" without respect to such limitations. In this
type of short sale, at the time of the sale, the Fund owns or has the
immediate and unconditional right to acquire at no additional cost the
identical security.

If the price of the security sold short increases between the time
of the short sale and the time the Fund replaces the borrowed security, the
Fund will incur a loss; conversely, if the price declines, the Fund will
realize a capital gain. Although the Fund's gain is limited to the price at
which it sold the security short, its potential loss is theoretically
unlimited.

Forward Currency Exchange Contracts

The Fund may enter into forward currency exchange contracts protect
against the effects of fluctuating rates of currency exchange and exchange
control regulations. Forward currency exchange contracts provide for the
purchase or sale of an amount of a specified currency at a future date.
Purposes for which such currency transactions may be used include protecting
against a decline in a foreign currency against the U.S. dollar between the
trade date and settlement date when the Fund purchases or sells non-U.S.
dollar-denominated securities, locking in the U.S. dollar value of dividends
and interest on securities held by the Fund and generally protecting the U.S.
dollar value of securities held by the Fund against exchange rate fluctuation.
While such forward contracts may limit losses to the Fund as a result of
exchange rate fluctuation, they will also limit any gains that may otherwise
have been realized. Currency transactions include the risk securities losses
could be magnified by changes in the value of the currency in which a security
is denominated relative to the U.S. dollar.

<PAGE>9

Derivative Transactions

As described above, the Fund may invest in options and warrants,
forward foreign currency exchange contracts, futures contracts, options on
futures and other transactions using derivative instruments. Derivative
transactions have certain risks, including imperfect market correlations,
dependence on the credit of the counterparty, possible inability to enter into
offsetting transactions and market fluctuations, that can result in the Fund
being in a worse position than if the transaction had not occurred. The loss
from the Fund's investing in futures and other derivative transactions is
potentially unlimited.

MANAGEMENT OF THE FUND

The Company's Board of Directors (the members of which, together
with the Company's officers, are described in the Additional Statement) has
overall responsibility for the management of the Fund. The Board of Directors
decides upon matters of general policy and reviews the actions of Guardian
Investor Services Corporation, the manager of the Fund (the "Manager"), the
Sub-Adviser and Gabelli & Company, Inc. (the "Distributor").

Pursuant to a Management Contract with the Fund, the Manager, under
the supervision of the Board of Directors, conducts and supervises the daily
operations of the Fund and administers the Fund's business affairs. In
addition, the Manager supervises the performance of administrative and
professional services provided by others including the Sub-Adviser and the
Administrator. As compensation for its services and the related expenses
borne by the Manager, the Fund pays the Manager a fee, computed daily and
payable monthly, equal, on an annual basis, to 1.00% of the Fund's average
daily net assets. The management fee paid by the Fund is higher than that
paid by most mutual funds. Pursuant to a Sub-Investment Advisory Contract
among the Fund, the Manager and the Sub-Adviser, the Sub-Adviser, under the
supervision of the Company's Board of Directors and the Manager, provides a
continuous investment program for the Fund's portfolio; provides investment
research and makes and executes recommendations for the purchase and sale of
securities and exercises voting and other rights relating thereto; and
provides facilities and personnel required for the Fund's administrative
needs. The Sub-Adviser may delegate its administrative role and currently
intends to do so, although it will supervise the

<PAGE>10

performance of administrative and professional services provided by others and
pays the compensation of the Administrator and all officers and directors of
the Fund who are its affiliates. As compensation for its services and the
related expenses borne by the Sub-Adviser, the Manager pays the Sub-Adviser a
fee, computed daily and payable monthly, equal, on an annual basis, to .75% of
the Fund's average daily net assets.

Mario J. Gabelli, CFA has been designated by the Sub-Adviser to be
primarily responsible for the day to day management of the Fund. Mr. Gabelli
has been Chairman and Chief Investment Officer of the Sub-Adviser since its
inception in 1980.

The Manager

The Manager is located at 201 Park Avenue South, New York, New York
10003 and as of January 31, 1995 serves as investment adviser to eight funds
with aggregate assets of over $2.5 billion and as co-adviser of a separate
account of GIAC. The Manager is also the underwriter and distributor of all
mutual funds sponsored by The Guardian Life Insurance Company of America
("Guardian Life") and of the variable annuity and variable life insurance
contracts issued by GIAC. The Manager is a wholly owned subsidiary of GIAC,
which is, in turn, a wholly owned subsidiary of Guardian Life, a mutual life
insurance company organized in the State of New York in 1860.

The Sub-Adviser

The Sub-Adviser, which is located at One Corporate Center, Rye, New
York 10580-1435, was formed in 1980 and as of [ ], 1995 acts as
investment adviser to the following funds with aggregate assets in excess of
$[ ] billion:

Open-end funds:
Net Assets
12/31/94
(in millions)

The Gabelli Asset Fund $981
The Gabelli Growth Fund 484
The Gabelli Value Fund 438
The Gabelli Small Cap Growth Fund 196
The Gabelli Convertible
Securities Fund 112
The Gabelli Equity Income Fund 48
The Gabelli U.S. Treasury
Money Market Fund 207
The Gabelli ABC Fund 26

<PAGE>11

The Gabelli Global
Telecommunications Fund 138
The Gabelli Global Interactive
Couch Potato[TM][copyright] Fund 25
The Gabelli Global Convertible
Securities Fund 15
Gabelli Gold Fund 18

Closed-end funds:

The Gabelli Equity Trust Inc. 825
The Gabelli Global Multimedia Trust Inc. 65

Gabelli & Company, the Distributor of the Fund's shares, is an
indirect majority-owned subsidiary of the Sub-Adviser. GAMCO Investors, Inc.
("GAMCO"), a majority-owned subsidiary of the Sub-Adviser, acts as investment
adviser for individuals, pension trusts, profit sharing trusts and endowments.
As of December 31, 1995, GAMCO had aggregate assets in excess of $4.2 billion
under its management. Mr. Mario J. Gabelli may be deemed a "controlling
person" of the Sub-Adviser and the Distributor on the basis of his ownership
of stock of the Sub-Adviser. The Sub-Adviser relies to a considerable extent
on the expertise of Mr. Gabelli, who may be difficult to replace in the event
of his death, disability or resignation.

Affiliates of the Sub-Adviser may, in the ordinary course of their
business, acquire for their own accounts or for the accounts of their advisory
clients, significant (and possibly controlling) positions in the securities of
companies that may also be suitable for investment by the Fund. The
securities in which the Fund might invest may thereby be limited to some
extent. For instance, many companies in the past several years have adopted
so-called "poison pill" or other defensive measures designed to discourage or
prevent the completion of non-negotiated offers for control of the company.
Such defensive measures may have the effect of limiting the shares of the
company which may be available to be acquired by the Fund if the affiliates of
the Sub-Adviser or their advisory accounts have or acquire a significant
position in the same securities. However, the Sub-Adviser does not believe
that the investment programs of its affiliates will have a material adverse
effect upon the Fund in seeking to achieve its investment objectives.
Securities purchased or sold pursuant to contemporaneous orders entered on
behalf of the investment company accounts of the Sub-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

<PAGE>12

over orders entered on behalf of accounts in which the Sub-Adviser or its
affiliates have substantial pecuniary interests.

The Investment Sub-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 Directors, the Sub-Adviser may (1) direct Fund portfolio
brokerage to the Distributor, a broker-dealer affiliate of the Sub-Adviser;
and (2) pay commissions to brokers other than the Distributor which are higher
than might be charged by another qualified broker to obtain brokerage and/or
research services considered by the Sub-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.

Expenses

In addition to the fees of the Manager, the Fund is responsible for
the payment of all its other expenses incurred in the operation of the Fund,
which include, among other things, expenses for legal and independent
auditor's services, charges of State Street Bank and Trust Company (the Fund's
custodian, transfer agent and dividend paying agent) and any persons hired by
the Fund, Securities and Exchange Commission fees, compensation including fees
of the Fund's unaffiliated directors, officers and employees, accounting costs
for reports sent to owners of the Contracts which provide for investment in
the Fund ("Contractowner(s)"), the Fund's pro rata portion of membership fees
in trade organizations, fidelity bond coverage for the Fund's officers and
employees, interest, brokerage and other trading costs, taxes, expenses of
qualifying the Fund for sale in various jurisdictions, litigation and other
extraordinary or non-recurring expenses. However, other typical Fund expenses
such as Contractowner servicing, printing and distribution of reports to
Contractowners and prospectus printing and postage will be borne by GIAC.

Administrator

The Sub-Adviser has entered into an Administration Contract with
[Name of Administrator](the "Administrator") pursuant to which the
Administrator provides certain administrative services necessary for the
Fund's operations. These services include the preparation and distribution of
materials for meetings of the Company's Board of Directors relating to the
Fund, compliance testing of Fund activities and assistance in the preparation
of proxy statements, reports to Contractowners and other documentation.
[Administrator] has its

<PAGE>13

principal office at [address]. [Information regarding Administrator to come.]
The Sub-Adviser will pay the compensation of the Administrator from the fees
which are paid to the Sub-Adviser by the Manager. No additional amount will
be paid by the Fund for services by the Administrator.

Distributor

Gabelli & Company, Inc., located at One Corporate Center, Rye, New
York 10580-1435 serves as distributor of the Fund's shares to separate
accounts of GIAC, for which it receives no separate fee from the Fund.

PURCHASE AND REDEMPTION OF SHARES

Fund shares are continuously offered to GIAC's separate accounts at
the net asset value per share next determined after a proper purchase request
has been received by GIAC. GIAC then offers to its contract owner offers
units in its separate accounts which directly correspond to shares in the
Fund. GIAC submits purchase and redemption orders to the Fund based on
allocation instructions for premium payments, transfer instructions and
surrender or partial withdrawal requests which are furnished to GIAC by such
contractowners. Contractowners can send such instructions and requests to
GIAC at P.O. Box 26210, Lehigh Valley, PA 18002 by first class mail or 3900
Burgess Place, Bethlehem, PA 18017 by overnight or express mail. The net
asset value per share of the Fund is determined as of the close of the regular
session of the New York Stock Exchange, which is currently 4:00 p.m., New York
City time, on each day that trading is conducted on the New York Stock
Exchange 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 for which market quotations are readily available are valued at
market value as determined by the last quoted sale price prior to the
valuation time in the case of securities traded on securities exchanges or
other markets for which such information is available. Other readily
marketable securities are valued at the average of the latest bid and asked
quotations for such securities prior to the valuation time. Debt securities
with remaining maturities of 60 days or less are valued at amortized cost.
All other assets are valued at fair value as determined by or under the
supervision of the Board of Directors of the Fund. See "Determination of Net
Asset Value" in the Additional Statement. Until June 1, 1995 payments for
redeemed shares will ordinarily be made within seven (7) days

<PAGE>14

after the Fund receives a redemption order from GIAC. Thereafter payment will
ordinarily be made within three (3) days. The redemption price will be the
net asset value per share next determined after GIAC receives the
Contractowner's request in proper form.

The Fund may suspend the right of redemption or postpone the date of
payment during any period when trading on the New York Stock Exchange is
restricted, or such Exchange is closed for other than weekends and holidays;
when an emergency makes it not reasonably practicable for the Fund to dispose
of assets or calculate its net asset value; or as permitted by the Securities
and Exchange Commission.

The accompanying prospectus for a GIAC variable annuity or variable
life insurance policy describes the allocation, transfer and withdrawal
provisions of such annuity or policy.

DIVIDENDS, DISTRIBUTIONS AND TAXES

All dividends and capital gains distributions paid by the Fund will
be automatically reinvested, at net asset value, by GIAC's separate accounts
in additional shares of the Fund. There is no fixed dividend rate, and there
can be no assurance that the Fund will pay any dividends or realize any
capital gains. However, the Fund currently intends to pay dividends and
capital gains distributions, if any, on an annual basis and in amounts that
will avoid the imposition on the Fund of a 4% non-deductible excise tax
measured with respect to certain undistributed amounts of net investment
income and capital gains. Contractowners who own units in a separate account
which correspond to shares in the Fund will be notified when distributions are
made.

The Fund will be treated as a separate entity for federal income tax
purposes. The Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"), in order to
be relieved of federal income tax on that part of its net investment income
and realized capital gains which it distributes to GIAC's separate accounts.
To qualify, the Fund must meet certain relatively complex income and
diversification tests, including the requirement that less than 30% of its
gross income (exclusive of losses) may be derived from the sale or other
disposition of securities held for less than three months. The loss of such
status would result in the Fund being subject to federal income tax on its
taxable income and gains.

<PAGE>15

The Code and Treasury Department regulations promulgated thereunder
require that mutual funds that are offered through insurance company separate
accounts must meet certain diversification requirements to preserve the tax-
deferral benefits provided by the variable contracts which are offered in
connection with such separate accounts. The Sub-Adviser intends to diversify
the Fund's investments in accordance with those requirements. The
prospectuses for GIAC's variable annuities and variable life insurance
policies describe the federal income tax treatment of distributions from such
contracts to contractowners.

The foregoing is only a summary of important federal tax law
provisions that can affect the Fund. Other federal, state, or local tax law
provisions may also affect the Fund and its operations. Anyone who is
considering allocating, transferring or withdrawing monies held under a GIAC
variable contract to or from this Fund should consult a qualified tax adviser.

GENERAL INFORMATION

Descriptions of Shares and Voting Rights

The Fund is currently the only series of the Company, which was
incorporated in Maryland on April 8, 1993 and is registered with the
Securities and Exchange Commission as an open-end, diversified investment
company. The Company has authorized capital stock consisting of one billion
shares having a par value of one tenth of one cent ($.001) per share. The
Company is not required, and does not intend, to hold regular annual
shareholder meetings, but may hold special meetings for consideration of
proposals requiring shareholder approval. There are no conversion or
preemptive rights in connection with any shares of the Fund. All shares, when
issued, will be fully paid and nonassessable. Semi-annual and annual reports
will be sent to all Contractowners which include a list of the Fund's
portfolio securities and its financial statements which shall be audited
annually.

Through its separate accounts, GIAC is the Fund's sole stockholder
of record, so, under the 1940 Act, GIAC is deemed to be in control of the
Fund. Nevertheless, when a stockholders' meeting occurs, GIAC solicits and
accepts voting instructions from its contractowners who have allocated or
transferred monies for an investment in the Fund as of the record date of the
meeting. GIAC then votes the Fund's shares that are attributable to its
contactowners' interests in the Fund in accordance with their instructions.
GIAC will vote any shares that it is

<PAGE>16

entitled to vote directly due to amounts it has contributed or accumulated in
its separate accounts in the manner described in the prospectuses for its
variable annuities and variable life insurance policies.

Each share of the Fund is entitled to one vote, and fractional
shares are entitled to fractional votes. Fund shares have non-cumulative
voting rights, so the vote of more than 50% of the shares can elect 100% of
the directors.

The Fund is only available to owners of variable annuities or
variable life insurance policies issued by GIAC through its separate accounts.
The Fund does not currently foresee any disadvantages to the contractowners
arising form offering its shares to variable annuity and variable life
insurance policy separate accounts simultaneously, and the Board of Directors
monitors events for the existence of any material irreconcilable conflict
between or among contractowners. If a material irreconcilable conflict
arises, one or more separate accounts may withdraw their investments in the
Fund. This could possibly force the Fund to sell portfolio securities at
disadvantageous prices. GIAC will bear the expenses of establishing separate
portfolios for variable annuity and variable life insurance separate accounts
if such action becomes necessary; however, ongoing expenses that are
ultimately borne by contractowners will likely increase due to the loss of the
economies of scale benefits that can be provided to mutual funds with
substantial assets.

Performance Information

The Fund may, from time to time, provide performance information in
advertisements, sales literature or other materials furnished to existing or
prospective owners of GIAC's variable contracts. When performance information
is provided in advertisements, it will include the effect of all charges
deducted under the terms of the specified contract, as well as all recurring
and non-recurring charges incurred by the Fund. All performance results are
historical and are not representative of future results.

Total return and average annual total return reflect the change in value
of an investment in the Fund over a specified period, assuming the
reinvestment of all capital gains distributions and income dividends. Average
annual total returns show the average change in value for each annual period
within a specified period. Total returns, which are not annualized, show the
total percentage or dollar change in value over a specified

<PAGE>17

period. Promotional materials relating to the Fund's performance will always
at least provide average annual total returns for one, five and ten years (if
applicable).

The Fund may also compare its performance to other investment vehicles or
other mutual funds which have similar investment objectives or programs.
Also, the Fund may quote information from securities indices or financial and
industry or general interest publications in its promotional materials.
Additionally, the Fund's promotional materials may contain references to types
and characteristics of certain securities; features of its portfolio;
financial markets; or historical, current or prospective economic trends.
Topics of general interest, such as personal financial planning, may also be
discussed. More information about the Fund's performance is contained in the
Additional Statement.

Custodian, Transfer Agent and Dividend Disbursing Agent

State Street Bank and Trust Company, 1776 Heritage Drive, North
Quincy, Massachusetts 02171, is the Custodian for the Fund's cash and
securities. Foreign securities purchased by the Fund will be maintained in
the custody of either foreign banks or trust companies that are members of
State Street Bank and Trust Company's Global Custody Network, or foreign
depositories used by such members. State Street Bank and Trust Company is the
Transfer Agent for the Fund's shares as well. Boston Financial Data Services,
Inc., an affiliate of State Street Bank and Trust Company, performs the
shareholder services on behalf of State Street and is located at The BFDS
Building, Two Heritage Drive, Boston, MA 02171.

Independent Auditors

[_____________] has been appointed independent auditors for the
Fund, and is located at [______________________________].

<PAGE>18

_________________________________________________________________

No dealer, salesman or other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus, the Additional Statement or the Fund's official sales literature
in connection with the offering of the Fund's shares, and if given or made,
such information or representation may not be relied upon as being authorized
by the Fund, the Adviser, the Administrator, the Distributor or any affiliate
thereof. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy in any state to any person to whom it is
unlawful to make such offer in such state.
_________________________________________________________________

<PAGE>

<PAGE>1

GABELLI CAPITAL ASSET FUND
One Corporate Center
Rye, New York 10580-1434
Telephone 1-800-GABELLI (1-800-422-3554)

STATEMENT OF ADDITIONAL INFORMATION

[ , 1995]

This Statement of Additional Information ("Additional Statement") relates to
Gabelli Capital Asset Fund (the "Fund"), a series of Gabelli Capital Series
Funds, Inc., a Maryland corporation (the "Company"). The Additional Statement
is not a prospectus and is only authorized for distribution when preceded or
accompanied by the Fund's prospectus dated [ , 1995,] as supplemented
from time to time (the "Prospectus"). This Additional Statement contains
additional and more detailed information than that set forth in the Prospectus
and should be read in conjunction with the Prospectus. Additional copies of
the Prospectus and Additional Statement may be obtained without charge by
writing or telephoning the Fund at the address and telephone number set forth
above.

Please retain this document for future reference.

TABLE OF CONTENTS

Page

Investment Policies . . . . . . . . . . B -
Special Investment Methods . . . . . . B -
Investment Restrictions . . . . . . . . B -
The Manager . . . . . . . . . . . . . . B -
The Sub-Adviser . . . . . . . . . . . . B -
The Distributor . . . . . . . . . . . . B -
Directors and Officers . . . . . . . . B -
Portfolio Transactions and Brokerage . B -
Purchase and Redemption of Shares . . . B -
Determination of Net Asset Value . . . B -
Dividends, Distributions and Taxes . . B -
Investment Performance Information . . B -
Bond and Preferred Stock Ratings . . . B -
Financial Statements . . . . . . . . . B -

<PAGE>2

INVESTMENT POLICIES

The Fund expects that, for most periods, a substantial portion, if not
all, of its assets will be invested in a diversified portfolio of common
stocks judged by Gabelli Funds, Inc., the sub-investment adviser to the Fund
(the "Sub-Adviser"), to have favorable value to price characteristics. The
Fund may also invest in U.S. Government or Government Agency obligations,
investment grade corporate bonds, preferred stocks, convertible securities,
foreign securities, debt securities and/or short term money market instruments
when deemed appropriate by the Sub-Adviser.

SPECIAL INVESTMENT METHODS

Convertible Securities

The Fund may, as an interim alternative to investment in common stocks,
purchase investment grade convertible debt securities having a rating of, or
equivalent to, at least "BBB" by Standard & Poor's Corporation ("Standard &
Poor's) or, if unrated, judged by the Sub-Adviser to be of comparable quality.
Securities rated less than "A" by Standard & Poor's may have speculative
characteristics. The Fund may also invest up to 25% of its assets in
convertible debt securities which have a lesser rating or are unrated,
provided, however, that the Fund may only invest up to 5% of its assets in
corporate debt securities with a rating of, or equivalent to, a Standard &
Poor's rating of CCC or lower. Unrated convertible securities which, in the
judgement of the Sub-Adviser, have equivalent credit worthiness may also be
purchased for the Fund. Although lower rated bonds generally have higher
yields, they are more speculative and subject to a greater risk of default
with respect to the issuer's capacity to pay interest and repay principal than
are higher rated debt securities.

In selecting convertible securities for the Fund, the Sub-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 to the issuer to pay
principal and interest or dividends when due without disrupting its business
goals. Interest or dividend yield is a factor only to the extent it is
reasonably consistent with prevailing rates for securities of similar quality
and thereby provides a support level for the market price of the security.
The Fund will purchase the convertible securities of highly leveraged issuers
only when, in the judgment of the Sub-Adviser, the risk of default is
outweighed by the potential for capital appreciation.

<PAGE>3

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 Sub-Adviser has no control, whether or not based on
fundamental analysis, may decrease the market price and liquidity of such
investments. Although the Sub-Adviser will attempt to avoid exposing the Fund
to such risks, there is no assurance that it will be successful or that a
liquid secondary market will continue to be available for the disposition of
such securities.

Debt Securities

Corporate debt securities which are either unrated or have a
predominantly speculative rating (often referred to in the financial press as
"junk bonds") may present opportunities for significant long-term capital
appreciation if the ability of the issuer to repay principal and interest when
due is underestimated by the market or the rating organizations. Because of
its perceived credit weakness, the issuer is generally required to pay a
higher interest rate and/or its debt securities may be selling at a
significantly lower market price than the debt securities of issuers actually
having similar strength. When the inherent value of such securities is
recognized, the market value of such securities may appreciate significantly.
The Sub-Adviser believes that its research on the credit and balance sheet
strength of certain issuers may enable it to select a limited number of
corporate debt securities, which in certain markets, will better serve the
objective of capital appreciation than alternative investments in common
stocks. Of course, there can be no assurance that the Sub-Adviser will be
successful. In its evaluation, the Sub-Adviser will not rely on ratings and
the receipt of income is only an incidental consideration.

As in the case of the convertible debt securities discussed above, low
rated and unrated corporate debt securities are generally considered to be
more subject to default and therefore significantly more speculative than
those having an investment grade rating. They also are more subject to market
price volatility based on increased sensitivity to changes in interest rates
and economic conditions or the liquidity of their secondary trading market.
The Fund does not intend to purchase debt securities for which a liquid
trading market does not exist but there can be no assurance that such a market
will exist for the

<PAGE>4

sale of such securities.

Options

The Fund may purchase or sell options on individual securities as well as
on indices of securities as a means of achieving additional return or of
hedging the value of its portfolio.

A call option is a contract that gives the holder of the option the
right, in return for a premium paid, to buy from the seller the security
underlying the option at a specified exercise price at any time during the
term of the option or, in some cases, only at the end of the term of the
option. The seller of the call option has the obligation upon exercise of the
option to deliver the underlying security upon payment of the exercise price.
A put option is a contract that gives the holder of the option the right in
return for a premium to sell to the seller the underlying security at a
specified price. The seller of the put option, on the other hand, has the
obligation to buy the underlying security upon exercise at the exercise price.
The Fund's transactions in options may be subject to specific segregation
requirements. See "Hedging Transactions" below.

If the Fund has sold an option, it may terminate its obligation by
effecting a closing purchase transaction. This is accomplished by purchasing
an option of the same series as the option previously sold. There can be no
assurance that a closing purchase transaction can be effected when the Fund so
desires.

The purchaser of an option risks a total loss of the premium paid for the
option if the price of the underlying security does not increase or decrease
sufficiently to justify exercise. The seller of an option, on the other hand,
will recognize the premium as income if the option expires unrecognized but
foregoes any capital appreciation in excess of the exercise price in the case
of a call option and may be required to pay a price in excess of current
market value in the case of a put option. Options purchased and sold other
than on an exchange in private transactions also impose on the Fund the credit
risk that the counterparty will fail to honor its obligations. The Fund will
not purchase options if, as a result, the aggregate cost of all outstanding
options exceeds 5% of the Fund's assets. To the extent that puts, straddles
and similar investment strategies involve instruments regulated by the
Commodity Futures Trading Commission, the Fund is limited to investments not
in excess of 5% of its total assets.

<PAGE>5

Investments in Warrants and Rights

Warrants basically are options to purchase equity securities at a
specified price valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities. Rights
are similar to warrants, but normally have a short duration and are
distributed directly by the issuer to its shareholders. Rights and warrants
have no voting rights, receive no dividends and have no rights with respect to
the assets of the issuer.

Investment in Small, Unseasoned Companies

The securities of small, unseasoned companies may have a limited trading
market, which may adversely affect their disposition and can result in their
being priced lower than might otherwise be the case. If other investment
companies and investors who invest in such issuers trade the same securities
when the Fund attempts to dispose of its holdings, the Fund may receive lower
prices than might otherwise be obtained.

Corporate Reorganizations

The Fund may invest up to 35% of its total assets in securities for which
a tender or exchange offer has been made or announced and in securities of
companies for which a merger, consolidation, liquidation or reorganization
proposal has been announced if, in the judgement of the Sub-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 place 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

<PAGE>6

or consummated. Such investments may be advantageous when the discount
significantly overstates the risk of the contingencies involved; significantly
undervalues the securities, assets or cash to be received by shareholders of
the prospective portfolio company as a result of the contemplated transaction;
or fails adequately to recognize the possibility that the offer or proposal
may be replaced or superseded by an offer or proposal of greater value. The
evaluation of such contingencies requires unusually broad knowledge and
experience on the part of the Sub-Adviser which must appraise not only the
value of the issuer and its component businesses as well as the assets or
securities to be received as a result of the contemplated transaction, but
also the financial resources and business motivation of the offerer as well as
the dynamic of the business climate when the offer or proposal is in process.

In making such investments, the Fund will not violate any of its
diversification requirements or investment restrictions (see below,
"Investment Restrictions") including the requirements that, except for the
investment of up to 25% of its assets in any one company or industry, not more
than 5% of its assets may be invested in the securities of any issuer. Since
such investments are ordinarily short term in nature, they will tend to
increase the turnover ratio of the Fund thereby increasing its brokerage and
other transaction expenses as well as make it more difficult for the Fund to
meet the test for favorable tax treatment as a "Regulated Investment Company"
specified by the Internal Revenue Code (see the Prospectus, "Dividends,
Distributions and Taxes"). The Sub-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 Internal Revenue
Code.

When Issued, Delayed Delivery Securities & Forward Commitments

The Fund is authorized to buy and sell when issued securities as an
additional investment strategy in furtherance of its investment objectives.

In utilizing this strategy, the Fund may enter into forward commitments
for the purchase or sale of securities, including on a "when issued" or
"delayed delivery" basis in excess of customary settlement periods for the
type of security involved. In some cases, a forward commitment may be
conditioned upon the occurrence of a subsequent event, such as approval and

<PAGE>7

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.

Short Sales

The Fund may make short sales of securities. A short sale is a
transaction in which the Fund sells a security it does not own in anticipation
that the market price of that security will decline. The Fund expects to make
short sales both to obtain capital gains from anticipated declines in
securities and as a form of hedging to offset potential declines in long
positions in the same or similar securities. The short sale of a security is
considered a speculative investment technique.

When the Fund makes a short sale, it must borrow the security sold short
and deliver it to the broker-dealer through which it made the short sale in
order to satisfy its obligation to deliver the security upon conclusion of the
sale. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.

The Fund's obligation to replace the borrowed security will be secured by
collateral deposited with the broker-dealer, usually cash, U.S. government
securities or other highly liquid debt securities. The Fund will also be
required to deposit similar collateral with its Custodian to the extent, if
any, necessary so that the value of both collateral deposits in the aggregate
is at all times equal to the greater of the price at which the security is
sold short or 100% of the current market value of the security sold short.
Depending on arrangements made with the broker-dealer from which it borrowed
the security regarding payment over of any payments received by the Fund on

<PAGE>8

such security, the Fund may not receive any payments (including interest) on
its collateral deposited with such broker-dealer. If the price of the
security sold short increases between the time of the short sale and the time
the Fund replaces the borrowed security, the Fund will incur a loss;
conversely, if the price declines, the Fund will realize a capital gain. Any
gain will be decreased, and any loss increased, by the transaction costs
described above. Although the Fund's gain is limited to the price at which it
sold the security short, its potential loss is theoretically unlimited.

The market value of the securities sold short of any one issuer will not
exceed either 5% of the Fund's total assets or 5% of such issuer's voting
securities. The Fund will not make a short sale if, after giving effect to
such sale, the market value of all securities sold short exceeds 10% of the
value of its assets or the Fund's aggregate short sales of a particular class
of securities exceeds 10% of the outstanding securities of that class. The
Fund may also make short sales "against the box" without respect to such
limitations. In this type of short sale, at the time of the sale, the Fund
owns or has the immediate and unconditional right to acquire at no additional
cost the identical security.

<PAGE>9

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, as amended (the "Act"), repurchase agreements
are considered loans. Repurchase agreements usually are for short periods,
such as one week or less, but could be longer. The Fund will not enter into
repurchase agreements of a duration of more than seven days if, taken together
with illiquid securities and other securities for which there are no readily
available quotations, more than 15% of its total assets would be so invested.

Hedging Transactions

Futures Contracts. The Fund may enter into futures contracts only for
certain bona fide hedging and risk management purposes. The Fund may enter
into futures contracts for the purchase or sale of debt securities, debt
instruments, or indices of prices thereof, stock index futures, other
financial indices, and U.S. Government Securities.

A "sale" of a futures contract (or a "short" futures position) means the
assumption of a contractual obligation to deliver the securities underlying
the contract at a specified price at a specified future time. A "purchase" of
a futures contract (or a "long" futures position) means the assumption of a
contractual obligation to acquire the securities underlying the

<PAGE>10

contract at a specified price at a specified future time.

Certain futures contracts are settled on a net cash payment basis rather
than by the sale and delivery of the securities underlying the futures
contracts. U.S. futures contracts have been designed by exchanges that have
been designated as "contract markets" by the Commodity Futures Trading
Commission, an agency of the U.S. Government, and must be executed through a
futures commission merchant (i.e., a brokerage firm) which is a member of the
relevant contract market. Futures contracts trade on these contract markets
and the exchange's affiliated clearing organization guarantees performance of
the contracts as between the clearing members of the exchange.

These contracts entail certain risks, including but not limited to the
following: no assurance that futures contracts transactions can be offset at
favorable prices, possible reduction of the Fund's yield due to the use of
hedging, possible reduction in value of both the securities hedged and the
hedging instrument, possible lack of liquidity due to daily limits on price
fluctuation, imperfect correlation between the contracts and the securities
being hedged, and potential losses in excess of the amount invested in the
futures contracts themselves.

Currency Transactions. The Fund may enter into various currency
transactions, including forward foreign currency contracts, foreign currency
or currency index futures contracts and put and call options on such contracts
or on currencies. A forward foreign currency contract involves an obligation
to purchase or sell a specific currency for a set price at a future date.
Forward foreign currency contracts are established in the interbank market
conducted directly between currency traders (usually large commercial banks or
other financial institutions) on behalf of their customers. Futures contracts
are similar to forward contracts except that they are traded on an organized
exchange and the obligations thereunder may be offset by taking an equal but
opposite position to the original contract, with profit or loss determined by
the relative prices between the opening and offsetting positions. The Fund
expects to enter into these currency contracts in primarily the following
circumstances: to "lock in" the U.S. dollar equivalent price of a security
the Fund is contemplating to buy or sell that is denominated in a non-U.S.
currency; or to protect against a decline against the U.S. dollar of the
currency of a particular country to which the Fund's portfolio has exposure.
The Fund anticipates seeking to achieve the same economic result by utilizing
from time to time for such hedging a currency different

<PAGE>11

from the one of the given portfolio security as long as, in the view of the
Sub-Adviser, such currency is essentially correlated to the currency of the
relevant portfolio security based on historic and expected exchange rate
patterns.

The Sub-Adviser may choose to use such instruments on behalf of the Fund
depending upon market conditions prevailing and the perceived investment needs
of the Fund. Futures contracts, interest rate swaps, and options on
securities, indices and futures contracts and certain currency contracts sold
by the Fund are generally subject to segregation and coverage requirements
with the result that, if the Fund does not hold the security or futures
contract underlying the instrument, the Fund will be required to segregate on
an ongoing basis with its custodian, cash, U.S. government securities, or
other high grade liquid debt obligations in an amount at least equal to the
Fund's obligations with respect to such instruments. Such amounts fluctuate
as the obligations increase or decrease. The segregation requirement can
result in the Fund maintaining securities positions it would otherwise
liquidate or segregating assets at a time when it might be disadvantageous to
do so. The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. As a result, the swap
market has become relatively broad and deep as compared to the markets for
similar instruments which are established in the interbank market. In
accordance with the current position of the staff of the Securities and
Exchange Commission (the "Commission"), the Fund will treat swap transactions
as illiquid for purposes of the Fund's policy regarding illiquid securities.

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;

<PAGE>12

2. Invest more than 25% of the value of its total assets in any particular
industry;

3. Purchase securities on margin, but it may obtain such short term credits
from banks as may be necessary for the clearance of purchase and sales of
securities;

4. Make loans of its assets except for the purchase of debt securities;

5. Borrow money except subject to the restrictions set forth in the
prospectus under "Borrowing";

6. Mortgage, pledge or hypothecate any of its assets except (a) 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 and (b) in connection with hedging
transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies;

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 15% 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. Issue senior securities, except insofar as the Fund may be deemed to
have issued a senior security in connection with any permitted borrowing,
hedging transaction, short sale, when-issued or forward commitment
transaction or similar investment strategy;

<PAGE>13

12. Participate on a joint, or a joint and several, basis in any securities
trading account; or

13. Invest in companies for the purpose of exercising control.

THE MANAGER

Guardian Investor Services Corporation, the manager of the Fund (the
"Manager"), has its principal offices at 201 Park Avenue South, New York, New
York 10003.

Pursuant to a Management Contract with the Company, the Manager, subject
to the supervision of the Board of Directors of the Company and in conformity
with the stated policies of the Fund, conducts and supervises the daily
operations of the Fund and administers the Fund's business affairs. In
addition, the Manager supervises the performance of administrative and
professional services provided by others including the Sub-Adviser and the
Administrator. The management services of the Manager to the Fund are not
exclusive under the terms of the Management Contract and the Manager is free
to, and does, render management services to others.

The Manager has authorized any of its directors, officers and employees
who have been elected as Directors or officers of the Company to serve in the
capacities in which they have been elected. Services furnished by the Manager
under the Management Contract may be furnished by any such directors, officers
or employees of the Manager. In connection with the services it renders, the
Manager bears the following expenses: (a) the salaries and expenses of all
personnel of the Company and the Manager, except the fees and expenses of
Directors of the Company who are not affiliated persons of the Manager or the
Sub-Adviser; (b) all expenses incurred by the Manager or by the Fund in
connection with managing the ordinary course of the Fund's business, other
than those assumed by the Fund, as described in the Prospectus; and (c) the
costs and expenses payable to the Sub-Adviser pursuant to the Investment Sub-
Advisory Contract among the Manager, the Sub-Adviser and the Company.

The Management Contract provides that absent willful misfeasance, bad
faith, gross negligence or reckless disregard of its duty, the Manager and its
employees, officers, directors and controlling persons are not liable to the
Fund or any of its direct or indirect investors for any act or omission by the
Manager or for any error of judgment or for losses sustained by

<PAGE>14

the Fund. However, the Management 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 Management Contract also provides indemnification for
the Manager and each of these persons for any conduct for which they are not
liable to the Fund.

The Management Contract is terminable without penalty on not more than
sixty days' written notice by the Manager or by the Fund when authorized by
the Directors of the Company or a majority, as defined in the Act, of the
outstanding shares of the Fund. The Management Contract will automatically
terminate in the event of its assignment, as defined in the Act, and rules
thereunder except to the extent otherwise provided by order of the Commission
or any rule under the Act and except to the extent the Act no longer provides
for automatic termination, in which case the approval of a majority of the
Directors who are not interested persons of the Fund within the meaning of the
Act ("Disinterested Directors") is required for any "assignment." The
Management Contract provides that, unless terminated, it will remain in effect
until [ , 1997] and from year to year thereafter, so long as such
continuance of the Management Contract is approved annually by the Directors
of the Company or a vote by a majority of the outstanding shares of the Fund
and in either case, by a majority vote of the Disinterested Directors cast in
person at a meeting called specifically for the purpose of voting on the
continuance.

The Management Contract also provides that the Manager is obligated
to reimburse to the Fund any amount up to the amount of its management fee, by
which its aggregate expenses including management fees payable to the Manager
(but excluding interest, taxes, brokerage commissions, extraordinary expenses
and any other expenses not subject to the applicable expense limitation),
during the portion of any fiscal year in which the Contract is in effect,
exceed the most restrictive expense limitation imposed by the securities law
of any jurisdiction in which the Contract is offered for sale. Such
limitation is currently believed to be 2.5% of the first $30 million of
average net assets, 2.0% of the next $70 million of average net assets and
1.5% of average net assets in excess of $100 million. For purposes of this
expense limitation, Fund expenses are accrued monthly and the monthly fee
otherwise payable to the Manager is postponed to the extent that the
includable Fund expenses exceed the proportionate amount of such limitation to
date.

<PAGE>15

THE SUB-ADVISER

The Sub-Adviser is a New York corporation with principal offices located
at One Corporate Center, Rye, New York 10580-1434.

Pursuant to an Sub-Investment Advisory Contract the Sub-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 for 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 Directors of the Company.

Under the Investment Sub-Advisory Contract, the Sub-Adviser also (1)
provides the Fund with the services of persons competent to perform such
supervisory, administrative, and clerical functions as are necessary to
provide efficient administration of the Fund, including maintaining certain
books and records and overseeing the activities of the Fund's Custodian and
Transfer Agent; (2) oversees the performance of administrative and
professional services provided to the Fund by others, including the Fund's
Custodian, Transfer Agent and Dividend Disbursing Agent, as well as legal,
accounting, auditing and other services performed for the Fund; (3) provides
the Fund, if requested, with adequate office space and facilities; (4)
prepares, but does not pay for, 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 Commission; (5)
supervises the calculation of the net asset value of shares of the Fund; (6)
prepares, but does not pay for, any filings under state law; and (7) prepares
notices and agendas for meetings of the Fund's Board of Directors and minutes
of such meetings in all matters required by the Act to be acted upon by the
Board.

The Sub-Adviser has entered into an Administration Contract with
[Administrator] [Information to Come]

The Sub-Investment Advisory Contract provides that absent willful
misfeasance, bad faith, gross negligence or reckless disregard of its duty,
the Sub-Adviser and its employees, officers, directors and controlling persons
are not liable to the Fund or the Manager or any of their direct or indirect
investors for any act or omission by the Sub-Adviser or for any error of
judgment or for losses sustained respectively by the Fund or the Manager.
However, the Sub-Investment Advisory Contract provides

<PAGE>16

that the Fund is not waiving any rights it may have with respect to any
violation of law which cannot be waived. The Investment Sub-Advisory Contract
also provides indemnification for the Sub-Adviser and each of these persons
for any conduct for which they are not liable to the Fund. The Sub-Investment
Advisory Contract in no way restricts the Sub-Adviser from acting as adviser
to others.

The Sub-Investment Advisory Contract is terminable without penalty on not
more than sixty days' written notice by the Manager, the Sub-Adviser or, when
authorized by the Directors of the Company, or a majority, as defined in the
Act, of the outstanding shares of the Fund, by the Fund. The Sub-Investment
Advisory Contract will automatically terminate in the event of its assignment,
as defined in the Act, and rules thereunder except to the extent otherwise
provided by order of the Commission or any rule under the Act and except to
the extent the Act no longer provides for automatic termination, in which case
the approval of a majority of the Disinterested Directors is required for any
"assignment." The Sub-Investment Advisory Contract provides that, unless
terminated, it will remain in effect until [ , 1997] and from year to year
thereafter, so long as such continuance of the Sub-Investment Advisory
Contract is approved annually by the Directors of the Company or a vote by a
majority of the outstanding shares of the Fund and in either case, by a
majority vote of the Disinterested Directors cast in person at a meeting
called specifically for the purpose of voting on the continuance.

The Sub-Investment Advisory Contract also provides that the Sub-Adviser
is obligated to reimburse the Manager 75 percent of any amount the Manager is
obligated to reimburse the Fund by reason of any state expense limitation
described above under "The Manager;" provided, however, that Sub-Adviser is in
no event obligated to pay more than the amount of its sub-advisory fee.

THE DISTRIBUTOR

The Fund has entered into a Distribution Agreement with Gabelli &
Company, Inc. (the "Distributor"), a New York corporation which is a
subsidiary of Gabelli Funds, Inc., 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 the Fund's shares to separate accounts
of The Guardian Insurance & Annuity Company, Inc. ("GIAC").

<PAGE>17

The Distribution Agreement is terminable by the Distributor or the Fund
at any time without penalty on not more than sixty nor less than thirty days'
written notice, provided, that termination by the Fund must be directed or
approved by the Board of Directors of the Fund, by the vote of the holders of
a majority of the outstanding securities of the Fund, or by written consent of
a majority of the Disinterested Directors. The Distribution Agreement will
automatically terminate in the event of its assignment, as defined in the Act.
The Distribution Agreement provides that, unless terminated, it will remain in
effect until [ , 1997] and from year to year thereafter, so long as
continuance of the Distribution Agreement is approved annually by the Fund's
Board of Directors or by a majority of the outstanding voting securities of
the Fund, and in either case, also by a majority of the Disinterested
Directors.

<PAGE>18
DIRECTORS AND OFFICERS

The Director and Executive Officers of the Company, their principal
business occupations during the last five years and their affiliations, if
any, with the Manager, the Sub-Adviser or the Administrator, are shown below.
Directors deemed to be "interested persons" of the Fund for purposes of the
Act are indicated by an asterisk.

Name, Position with Company, Principal Occupations During Last Five Years; Affiliations
Address and Age with the Manager, Sub-Adviser or Administrator

<S> <C>

Bruce N. Alpert* Vice President, Treasurer and Chief Financial and
Director, President, Treasurer Administrative Officer of the investment advisory division
and Chairman of the Board of the Sub-Adviser; President and Treasurer of The Gabelli
One Corporate Center Asset Fund, The Gabelli Growth Fund and Gabelli
Rye, New York 10580 International Growth Fund, Inc.; Vice President and
Age: Treasurer of Gabelli Equity Series Funds, Inc., The Gabelli
Equity Trust Inc., The Gabelli Global Multimedia Trust,
Inc., The Gabelli Money Market Funds, The Gabelli Value Fund
Inc., Gabelli Investor Funds, Inc., Gabelli Global Series
Funds, Inc., The Gabelli Series Funds, Inc. and Vice
President of the Westwood Funds and Manager of Teton
Advisers LLC.

<PAGE>19

[Additional Directors to be
added by amendment]

J. Hamilton Crawford, Jr. Senior Vice President and General Counsel of the
Secretary investment advisory division of the Sub-Adviser; Secretary of
One Corporate Center all funds managed by the Sub-Adviser; Attorney in private
Rye, New York 10580 practice, 1990-1992; Executive Vice President and General
Age: Counsel of Prudential Mutual Fund Management, Inc. from
1988-1990.

</TABLE>

The Company pays each Director who is not an employee of the Manager, the
Sub-Adviser or an affiliated company an annual fee of $3,000 and $500 for each
meeting of the Board of Directors attended by the Director, and reimburses
Directors for certain travel and other out-of-pocket expenses incurred by them
in connection with attending such meetings. Directors and officers of the
Company who are employed by the Manager, the Sub-Adviser or an affiliated
company receive no compensation or expense reimbursement from the Company.

The following table sets forth certain information regarding the
compensation of the Company's directors and officers. Except as disclosed
below, the Company does not anticipate that any executive officer or person
affiliated with the Company will receive compensation from the Company for the
calendar year ending December 31, 1995 in excess of $60,000.

<PAGE>20

COMPENSATION TABLE
<TABLE>
<CAPTION>

Name of Person Aggregate Pension or Retirement Estimated Annual Total Compensation
Position Compensation Benefits Accrued As Benefits Upon Retirement From the Fund
From the Fund* Part of Fund Expenses* and Fund Complex
Paid to Directors**
-------------- -------------- ---------------------- ------------------------ -------------------

</TABLE>

* Since the Fund commenced operations on [ ], 1995, the amounts shown
represent those estimated to be paid during a full fiscal year.

** Represents the total compensation paid to such persons during the
calendar year ended December 31, 1994 (and, with respect to the Fund,
estimated to be paid during a 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.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Sub-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 through a
principal market maker. However, such transactions may be effected through a
brokerage firm and a commission paid whenever it appears that the broker can
obtain a more favorable overall price. In general, there may be no stated
commission in the case of securities traded on the over-the-counter markets,
but the prices of those securities may include undisclosed commissions or
markups. Options transactions will usually be effected through a broker and a
commission will be charged. The Fund also expects that securities will be
purchased at times in underwritten offerings where the price includes a fixed
amount of compensation generally referred to as the underwriter's concession
or discount.

The Sub-Adviser currently serves as Adviser to a number of investment
company clients and may in the future act as adviser to others. Affiliates of
the Sub-Adviser act as investment adviser to numerous private accounts. It is
the practice of the Sub-Adviser and its affiliates to cause purchase and sale
transactions to be allocated among the Fund and others whose

<PAGE>21

assets they manage in such manner as it deems equitable. In making such
allocations among the Fund and other client accounts, the main factors
considered are the respective investment objectives, the relative size of
portfolio holdings of the same or comparable securities, the availability of
cash for investment, the size of investment commitments generally held and the
opinions of the persons responsible for managing the portfolios of the Fund
and other client accounts.

The policy of the Fund regarding purchases and sales of securities and
options for its portfolio is that primary consideration will be given to
obtaining the most favorable prices and efficient execution of transactions.
In seeking to implement the Fund's policies, the Sub-Adviser effects
transactions with those brokers and dealers who the Sub-Adviser believes
provide the most favorable prices and are capable of providing efficient
executions. If the Sub-Adviser believes such price and execution are
obtainable from more than one broker or dealer, it may give consideration to
placing portfolio transactions with those brokers and dealers who also furnish
research and other services to the Fund or the Sub-Adviser of the type
described in Section 28(e) of the Securities Exchange Act of 1934. In doing
so, the Fund may also pay higher commission rates than the lowest available
when the Sub-Adviser believes it is reasonable to do so in light of the value
of the brokerage and research services provided by the broker effecting the
transaction. Such services may include, but are not limited to, any one or
more of the following: information as to the availability of securities for
purchase or sale; statistical or factual information or opinions pertaining to
investment; wire services; and appraisals or evaluations of portfolio
securities. The Sub-Adviser may also consider sales of shares of the Fund and
any other registered investment companies managed by the Sub-Adviser and its
affiliates by brokers and dealers other than the Distributor as a factor in
its selection of brokers and dealers to execute portfolio transactions for the
Fund.

The Sub-Adviser may also place orders for the purchase or sale of
portfolio securities with the Distributor, a broker-dealer member of the
National Association of Securities Dealers, Inc. and an affiliate of the Sub-
Adviser, when it appears that, as an introducing broker or otherwise, the
Distributor can obtain a price and execution which is at least as favorable as
that obtainable by other qualified brokers.

As required by Rule 17e-1 under the Act, the Board of Directors has
adopted "Procedures" which provide that the

<PAGE>22

commissions paid to the Distributor 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. Rule 17e-1 and the Procedures contain requirements that the
Board, including its Disinterested Directors, conduct periodic compliance
reviews of such brokerage allocations and review the Procedures at least
annually for its continuing compliance with the foregoing standard. The Sub-
Adviser and the Distributor are also required to furnish reports and maintain
records in connection with such reviews.

To obtain the best execution of portfolio trades on the New York Stock
Exchange ("Exchange"), the Distributor 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 the Distributor, and settled directly with the Custodian of the
Fund by a clearing house member firm which remits the commission less its
clearing charges to the Distributor. The Distributor may also effect Fund
portfolio transactions in the same manner and pursuant to the same
arrangements on other national securities exchanges which adopt direct access
rules similar to those of the New York Stock Exchange.

<PAGE>23

PURCHASE AND REDEMPTION OF SHARES

Fund shares are continuously offered to GIAC's separate accounts at
the net asset value per share next determined after a proper purchase request
has been received by GIAC. GIAC then offers to its contract owners units in
its separate accounts which directly correspond to shares in the Fund. GIAC
submits purchase and redemption orders to the Fund based on allocation
instructions for premium payments, transfer instructions and surrender or
partial withdrawal requests which are furnished to GIAC by such
contractowners. Contractowners can send such instructions and requests to
GIAC at P.O. Box 26210, Lehigh Valley, PA 18002 by first class mail or 3900
Burgess Place, Bethlehem, PA 18017 by overnight or express mail. The net
asset value per share of the Fund is determined as of the close of the regular
session of the New York Stock Exchange, which is currently 4:00 p.m., New York
City time, on each day that trading is conducted on the New York Stock
Exchange 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 for which market quotations are readily available are valued at
market value as determined by the last quoted sale price prior to the
valuation time in the case of securities traded on securities exchanges or
other markets for which such information is available. Other readily
marketable securities are valued at the average of the latest bid and asked
quotations for such securities prior to the valuation time. Debt securities
with remaining maturities of 60 days or less are valued at amortized cost.
All other assets are valued at fair value as determined by or under the
supervision of the Board of Directors of the Fund. Until June 1, 1995
payments for redeemed shares will ordinarily be made within seven (7) days
after the Fund receives a redemption order from GIAC. Thereafter payment will
ordinarily be made within three (3) days. The redemption price will be the
net asset value per share next determined after GIAC receives the
contractowner's request in proper form.

<PAGE>24

The prospectus for a GIAC variable annuity or variable life
insurance policy describes the allocation, transfer and withdrawal provisions
of such annuity or policy.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Fund is determined once daily as of
the close of business of the regular trading session of the New York Stock
Exchange, normally 4:00 p.m. New York time, on each day that the Exchange is
open and each other day in which there is a sufficient degree of trading in
the Fund's investments to affect the net asset value, except that the net
asset value may not be computed on a day on which no orders to purchase, or
tenders to sell or redeem, Fund shares have been received, by taking the value
of all assets of the Fund, subtracting its liabilities, dividing by the number
of shares outstanding and adjusting to the nearest cent. The Exchange
currently observes the following holidays: New Year's Day; President's Day;
Good Friday; Memorial Day; Independence Day; Labor Day; Thanksgiving Day; and
Christmas Day.

In the calculation of the Fund's net asset value: (1) a portfolio
security listed or traded on the New York or American Stock Exchanges or
quoted by National Association of Securities Dealers Automated Quotations,
Inc. ("NASDAQ") is valued at its last sale price on that exchange (if there
were no sales that day, the security is valued at the average of the bid and
asked price); (2) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest average of
the bid and asked price; and (3) when market quotations are not readily
available, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general
supervision of the Fund's Directors.

<PAGE>25

DIVIDENDS, DISTRIBUTIONS AND TAXES

All dividends and capital gains distributions paid by the Fund will
be automatically reinvested, at net asset value, by GIAC's separate accounts
in additional shares of the Fund. There is no fixed dividend rate, and there
can be no assurance that the Fund will pay any dividends or realize any
capital gains. However, the Fund currently intends to pay dividends and
capital gains distributions, if any, on an annual basis. Contractowners who
own units in a separate account which correspond to shares in the Fund will be
notified when distributions are made.

The Fund will be treated as a separate entity for federal income tax
purposes. The Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"), in order to
be relieved of federal income tax on that part of its net investment income
and realized capital gains which it distributes to GIAC's separate accounts.
To qualify, the Fund must meet certain relatively complex tests, including the
requirement that less than 30% of its gross income (exclusive of losses) may
be derived from the sale or other disposition of securities held for less than
three months. The loss of such status would result in the Fund being subject
to federal income tax on its taxable income and gains. In addition, the Fund
must distribute at least 90% of its net investment income and 90% of its net
tax-exempt interest income each year.

To comply with regulations under Section 817(h) of the Code, the
Fund will be required to diversify its investments so that on the last day of
each calendar quarter no more than 55% of the value of its assets is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments and no
more than 90% is represented by any four investments. Generally, all
securities of the same issuer are treated as a single investment. For the
purposes of Section 817(h) of the Code, obligations of

<PAGE>26

the U.S. Treasury and each U.S. Government instrumentality are treated as
securities of separate issuers. The Treasury Department has indicated that it
may issue future pronouncements addressing the circumstances in which a
variable annuity contract owner's control of the investments of a separate
account may cause the variable contract owner, rather than the separate
account's sponsoring insurance company, to be treated as the owner of the
assets held by the separate account. If the variable annuity contract owner
is considered the owner of the securities underlying the separate account,
income and gains produced by those securities would be included currently in
the variable annuity contract owner's gross income. It is not known what
standards will be set forth in such pronouncements or when, if at all, these
pronouncements may be issued. In the event that rules or regulations are
adopted,there can be no assurance that the Fund will be able to operate as
described currently in the Prospectus or that the Fund will not have to change
its investment policies or goals.

Hedging Transactions

The Fund's transactions in foreign currencies, forward contracts,
options, futures contracts (including options and futures contracts on foreign
currencies) and warrants will be subject to special provisions of the Code
that, among other things, may affect the character of gains and losses
realized by the Fund (i.e., may affect whether gains or losses are ordinary or
capital), accelerate recognition of income to the Fund and defer Fund losses.
These rules could therefore affect the character, amount and timing of
distributions to shareholders. These provisions also (a) will require the
Fund to mark-to-market certain types of the positions in its portfolio (i.e.,
treat them as if they were closed out) and (b) may cause the Fund to recognize
income without receiving cash with which to pay dividends or make
distributions in amounts necessary to satisfy the 90% distribution requirement
for avoiding income tax. The Fund will monitor its transactions, will make
the appropriate tax elections and will make the appropriate entries in its
books and records when it acquires any foreign currency, forward contract,
option, futures contract, warrant or hedged investment in order to mitigate
the effect of these rules and prevent disqualification of the Fund as a
regulated investment company.

The 30% limitation and the diversification requirements applicable
to the Fund's assets may limit the extent to which the Fund will be able to
engage in transactions in options, futures contracts and options on futures
contracts and in certain other

<PAGE>27

permitted investments.

Foreign Withholding Taxes

Income received by the Fund from sources within foreign countries
may be subject to withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. It is impossible to determine the rate of foreign tax
in advance since the amount of the Fund's assets to be invested in various
countries can vary.

Shareholders are urged to consult their attorneys or tax advisers
regarding specific questions as to Federal, state or local taxes.

INVESTMENT PERFORMANCE INFORMATION

<PAGE>28

features of its portfolio; financial markets; or historical, current or
prospective economic trends. Topics of general interest, such as personal
financial planning, may also be discussed.

Quotations of yield will be based on the investment income per share
earned during a particular 30 day period, less expenses accrued during the
period ("net investment income") and will be computed by dividing net
investment income by the maximum offering price per share on the last day of
the period, according to the following formula:

YIELD = 2[(A-B + 1)[raised to the 6th power] - 1]
CD

where A = dividends and interest earned during the period, B = expenses
accrued for the period (net of any reimbursements), C = the average daily
number of shares outstanding during the period that were entitled to receive
dividends, and D = the maximum offering price per share on the last day of the
period.

Quotations of total return will reflect only the performance of a
hypothetical investment in the Fund during the particular time period shown.
The Fund's total return and current yield may vary from time to time depending
on market conditions, the compositions of the Fund's portfolio and operating
expenses. These factors and possible differences in the methods used in
calculating yield should be considered when comparing the Fund's current yield
to yields published for other investment companies and other investment
vehicles. Total return and yield should also be considered relative to
changes in the value of the Fund's shares and the risks associated with the
Fund's investment objectives and policies. At any time in the future, total
returns and yield may be higher or lower than past total returns and yields
and there can be no assurance that any historical return or yield will
continue.

In connection with communicating its yield or total return to current or
prospective shareholders, the Fund may also compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but
generally do not reflect deductions for administrative and management costs.

Quotations of the Fund's total return will represent the average annual
compounded rate of return of a hypothetical investment in the Fund over
periods of 1, 5, and 10 years (up to

<PAGE>29

the life of the Fund), and are calculated pursuant to the following formula:

T = n ERV/P - 1

(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the redeemable value at the
end of the period of a $1,000 payment made at the beginning of the period).
Total return figures will reflect the deduction of Fund expenses (net of
certain expenses reimbursed by the Manager or the Sub-Adviser) on an annual
basis, and will assume that all dividends and distributions are reinvested and
will deduct the maximum sales charge, if any is imposed. The Fund may also
state the total return figures without a sales charge along with such figures.

<PAGE>30

BOND AND PREFERRED STOCK RATINGS

Description of Moody's Investors Service, Inc.'s ("Moody's) Corporate Bond
Ratings

Aaa: Bonds which are rated Aaa are judged to be of 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 made 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 as 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 the 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 a high
degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

<PAGE>31

Note: Moody's may apply numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category;' the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

Description of Standard & Poor's Corporation's ("S&P") Corporate Debt Ratings

AAA: Debt rated AAA has the highest rating assigned by S&P's. Capacity
to pay interest and repay principal is extremely strong. AA: Debt rated AA
has a very strong capacity to pay interest and repay principal and differs
from the highest rated issues only in small degree. A: Debt rated A has a
strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and
economic conditions than debt in higher rated categories. BBB: Debt rated
BBB is regarded as having adequate capacity to pay interest and repay
principal. Whereas it normally exhibits protection parameters, adverse
economic conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in this
category than for debt in higher rated categories. BB, B, CCC, CC, C: Debt
rated BB, B, CCC, CC and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions. C1:
The rating C1 is reserved for income bonds on which no interest is being paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P's believes that such
payments will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

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.

<PAGE>32

r: The "r" symbol is attached to derivative, hybrid and certain other
obligations that S&P believes may experience high volatility or high
variability in expected returns due to non-credit risks created by the terms
of the obligation.

Description of Moody's Preferred Stock Ratings

aaa: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least
risk of dividend impairment within the universe of preferred stocks. aa: An
issue which is rated aa is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
a: An issue which is rated a is considered to be an upper medium grade
preferred stock. While risks are judged to be somewhat greater than in the
aaa and aa classifications, earnings and asset protection are, nevertheless
expected to be maintained at adequate levels. baa: An issue which is rated
baa is considered to be medium grade, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present buy may be
questionable over any great length of time. ba: An issue which is rated ba
is considered to have speculative elements and its future cannot be considered
well assured. Earnings and asset protection may be very moderate and not well
safeguarded during adverse periods. Uncertainty of position characterizes
preferred stocks in this class. b: An issue which is rated b generally lacks
the characteristics of a desirable investment. Assurance of dividend payments
and maintenance of other terms of the issue over any long period of time may
be small. caa: An issue which is rated caa is likely to be in arrears on
dividend payments. This rating designation does not purport to indicate the
future status of payment. c: This is the lowest rated class of preferred or
preference stock. Issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system.
The modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and the
modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

<PAGE>33

Description of S&P's Preferred Stock Ratings

AAA: This is the highest rating that may be assigned by S&P's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations. AA: A preferred stock issue rated AA also
qualifies as a high-quality fixed income security. The capacity to pay
preferred stock obligations is very strong, although not as overwhelming as
for issues rated AAA. A: An issue rated A is backed by a sound capacity to
pay the preferred stock obligations, although it is somewhat more susceptible
to the adverse effect of changes in circumstances and economic conditions.
BBB: An issue rated BBB is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to make payments for a
preferred stock in this category than for issues in the A category. BBB, B,
CCC: Preferred stock rated BB, B, and CCC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
preferred stock obligations. BB indicates the lowest degree of speculation
and CCC the highest degree of speculation. While such issues will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. CC: The rating
CC is reserved for a preferred stock in arrears on dividends or sinking fund
payments but that is currently paying. C: A preferred stock rated C is a
non-paying issue. D: A preferred stock rated D is a non-paying issue with
the issuer in default on debt instruments.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.

FINANCIAL STATEMENTS

[to be filed by Amendment]

91140279

<PAGE>1

PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements included in Part B:

(1) Report of Independent Accountants*

(2) Statement of Assets and Liabilities*

(b) Exhibits:

Exhibit No. Description of Exhibits

1 Articles of Incorporation of Registrant**

2 By-Laws of Registrant**

3 Not applicable

4 Specimen copies of certificates for shares issued by
Registrant*

5(a) Form of Investment Management Contract*

5(b) Form of Sub-Investment Advisory Contract*

6 Form of Distribution Agreement*

7 Not applicable

8 Form of Custody Agreement*

9 Form of Transfer Agency Agreement*

10 Opinion and consent of Willkie Farr & Gallagher*

11 Consent of Independent Accountants*

12 Not applicable

13 Subscription Agreement*

14 Not applicable

15 Not applicable

16 Not applicable

__________________________

* To be filed by amendment

** Previously filed

<PAGE>2

Item 25. Persons Controlled by or Under Common Control
with Registrant

None

Item 26. Number of Holders of Securities

It is anticipated that there will be one record holder of
registrant's shares of common stock, par value $.001 per share, on the date
the registrant's registration statement becomes effective.

Item 27. Indemnification

Under Article V, Section 1, of the registrant's By-Laws, any past or
present director or officer of registrant is indemnified to the fullest extent
permitted by law against liability and all expenses reasonably incurred by him
in connection with any action, suit or proceeding to which he may be a party
or otherwise involved by reason of his being or having been a director or
officer of registrant. This provision does not authorize indemnification when
it is determined, in the manner specified in the By-Laws, that such director
or officer would otherwise be liable to registrant or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of his duties. In addition, Section 1 provides that to the fullest
extent permitted by Maryland General Corporation Law, as amended from time to
time, no director or officer of the Fund shall be personally liable to the
Fund or its stockholders for money damages, except to the extent such
exemption from liability or limitation thereof is not permitted by the
Investment Company Act of 1940, as amended from time to time. Under Article
V, Section 2, of the registrant's By-Laws, expenses may be paid by registrant
in advance of the final disposition of any action, suit or proceeding upon
receipt of an undertaking by such director or officer to repay such expenses
to registrant in the event that it is ultimately determined that
indemnification of the advanced expenses is not authorized under the By-Laws.

Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 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 director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or

<PAGE>3

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 whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.

Item 28. Business and Other Connections of
Investment Adviser

Guardian Investor Services Corporation is the manager of the
registrant (the "Manager"). For a list of officers and directors of the
Manager, together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by the Manager or
such officers and directors during the past two years, reference is made to
Form ADV filed by it under the Investment Advisers Act of 1940.

Gabelli Funds, Inc. is the sub-investment adviser of the registrant
(the "Adviser"). For a list of officers and directors of the Adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by the Adviser or such officers
and directors during the past two years, reference is made to Form ADV filed
by it under the Investment Advisers Act of 1940.

Item 29. Principal Underwriters

(a) Gabelli & Company, Inc. is registrant's proposed principal
underwriter.

(b) For information with respect to each director and officer of
Gabelli & Company, Inc., reference is made to Form BD filed by Gabelli &
Company, Inc. under the Securities Exchange Act of 1934.

Item 30. Location of Accounts and Records

All such accounts, books and other documents are maintained at the
offices of: Gabelli Funds, Inc., One Corporate Center, Rye, New York, 10580-
1434; and State Street Bank and Trust Company, 1776 Heritage Drive, North
Quincy, Massachusetts 02171.

Item 31. Management Services

Not applicable.

<PAGE>4

Item 32. Undertakings

(a) Registrant hereby undertakes to file a post-effective
amendment, using financial statements that need not be certified, within four
to six months from the effective date of registrant's 1933 Act registration
statement.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
registration statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Rye and State of New York on the 3rd day of
March, 1995.

THE WCC CAPITAL GROWTH FUND INC.

By: /s/ Bruce N. Alpert
Bruce N. Alpert
President, Treasurer and
Sole Director

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.

SIGNATURE DATE

/s/ Bruce N. Alpert March 3, 1995
Bruce N. Alpert
President,
Treasurer and
Sole Director

91140288