Registration Nos. 33-61254 and 811-7644
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 2
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940
Amendment No. 4
X
GABELLI CAPITAL SERIES FUNDS, 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:
James E. McKee, Esq. Daniel Schloendorn, Esq.
Gabelli Capital Series Funds, Inc. Willkie Farr & Gallagher
One Corporate Center One Citicorp Center
Rye, New York 10580-1434 153 East 53rd Street
New York, New York 10022
It is proposed that this filing will become effective:
__ immediately upon filing pursuant to paragraph (b)
X on May 1, 1996 pursuant to paragraph (b)
__ 60 days after filing pursuant to paragraph (a)(1)
__ on __________ pursuant to paragraph (a)(1)
__ 75 days after filing pursuant to paragraph (a)(2)
__ on __________ pursuant to paragraph (a)(2) of Rule 485
__ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
The Registrant has filed previously a declaration of
indefinite registration of its shares pursuant to Rule 24f-2 under
the Investment Company Act of 1940, as amended (the "1940 Act").
Registrant's Rule 24f-2 Notice for the fiscal period from May 1, 1995
(commencement of operations) through December 31, 1995 was filed on
February 28, 1996.
_______________________________________
GABELLI CAPITAL SERIES FUNDS, INC.
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A
Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial Information Financial Highlights
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
5A. Management's Discussion of Fund Performance Not applicable
6. Capital Stock and Other Securities Dividends, Distributions
and Taxes; General Information
7. Purchase of Securities Being Offered Purchase and
Redemption of Shares
8. Redemption or Repurchase Purchase and Redemption of Shares
9. Pending Legal Proceedings Not applicable
Part B Statement of Additional
Item No. Information Caption
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History The Manager; the 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 Adviser; see Prospectus -- "Management of the Fund"
Part B (continued) Statement of Additional
Item No. Information Caption
15. Control Persons and Principal Holders of Securities Directors
and Officers; The Manager; The Adviser; see Prospectus -- "Purchase
and Redemption of Shares"; "General Information"
16. Investment Advisory and Other Services The Manager; The
Adviser; 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"
19. Purchase, Redemption and Pricing Purchase and Redemption of
Shares,
of Securities Being Offered Determination of Net Asset Value
20. Tax Status Dividends, Distributions and Taxes; see Prospectus
- -- "Dividends, Distribution 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
The information required to be included in Part C is set forth
under the appropriate item, so numbered, in Part C to this Post-
Effective Amendment.
GABELLI CAPITAL SERIES FUNDS, INC.
_______________
PART A
[Logo] The Guardian
----
- -----------
Prospectus for:
Gabelli
Capital
Asset
Fund
----
- -----------
May
1, 1996
[Logo] The Guardian (R) [Logo]
Available through variable insurance products
Issued By:
The Guardian Insurance & Annuity Company, Inc.
Variable Products Administration
P.O. Box 26210
Lehigh Valley, PA 18002-6210
Distributed By:
Guardian Investor Services Corporation(R)
201 Park Avenue South
New York, NY 10003
012131 5/96
<PAGE>
Prospectus
May 1, 1996
GABELLI CAPITAL ASSET FUND
One Corporate Center
Rye, New York 10580-1434
Telephone: 1-800-GABELLI (1-800-422-3554)
http://www.gabelli.com
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 May 1, 1996 (the "Additional Statement") containing additional
information
about the Fund has been filed with the Securities and Exchange
Commission and is
incorporated by ref erence into this Prospectus. For a free copy,
call or write
the Fund at the telephone number or address set forth above.
----------
This Prospectus should be retained
by investors for future reference.
Contents
--------
Section
Page
-------
- ----
Financial Highlights
2
Investment Objectives and Policies
2
Special Investment Methods
5
Management of the Fund
6
Purchase and Redemption of Shares
9
Dividends, Distributions and Taxes
9
General Information
10
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.
1
<PAGE>
FINANCIAL HIGHLIGHTS
The per share data and ratios in the table below have been
audited by Ernst
and Young LLP, independent auditors, whose unqualified
report on this
information appears in the Additional Statement. This table should
be read in
conjunction with the financial statements and related notes that are
included in
the Additional Statement.
Per share amounts for a Fund share outstanding throughout the
period.
Period
Ended
12/31/95*
--
- -------
Operating performance:
Net asset value, beginning of period ........................ $
10.00
--
- ------
Net investment income(a) ....................................
0.03
Net realized and unrealized gain on investments .............
0.80
--
- ------
Total from investment operations ............................
0.83
--
- ------
Distributions to shareholders from:
Net investment income ..................................
(0.03)
Net realized gains .....................................
(0.09)
Distributions in excess of net
realized gains .....................................
(0.01)
--
- ------
Total Distributions .........................................
(0.13)
--
- ------
Net asset value, end of period .............................. $
10.70
========
Total return** ..............................................
8.4%
========
Ratios to average net assets/
supplemental data:
Net assets, end of period (in 000's) ........................ $
26,364
Ratio of net investment income to
average net assets .................................
0.75%+
Ratio of operating expenses to
average net assets (b) .............................
1.78%+
Portfolio turnover rate .....................................
81.4%
- ----------
* The Fund commenced operations on May 1, 1995.
** Total return represents aggregate total return of a
hypothetical $1,000
investment at the beginning of the period and sold at the end of
the period
including reinvestment of dividends. Total return for the
period of less
than one year is not annualized.
+ Annualized.
(a) Net investment income before expenses assumed by the Manager
and Adviser
for the period ended December 31, 1995 was $0.03.
(b) Operating expense ratio before expenses assumed by the Manager
and Adviser
for the period ended December 31, 1995 was 1.92%.
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 investment adviser to the Fund (the
"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 Adviser
believes an informed
2
<PAGE>
industrialist would be willing to pay to acquire companies
with similar
characteristics. Factors considered by the Adviser include
price, earnings
expectations, earnings and price histories, balance sheet
characteristics and
perceived management skills. Also considered are changes in
economic and
political outlooks as well as individual corporate
developments. Fund
investments which lose their perceived value relative to other
investment
alternatives are sold.
When deemed appropriate by the Adviser, the Fund may, without
limit, invest
temporarily in defensive securities such as high grade debt
securities,
obligations of the U.S. Government, its agencies or
instrumentalities, or in
short-term (maturing in less than one year) money market instruments,
including
commercial paper rated A-1 or better by Standard & Poor's Ratings
Service, a
division of McGraw-Hill Companies, Inc. ("S&P") or P-1 or better
by Moody's
Investors Services ("Moody's").
It is the Adviser's expectation that most Fund investments
will be long
term in nature and that the annual turnover of the Fund's portfolio
should not
exceed 100%. A portfolio turnover rate of 100% would occur if all
the stocks in
the portfolio were replaced in a one-year period. High
turnover involves
correspondingly greater commission expenses and transaction costs.
The Fund's
portfolio turnover rate from commencement of operations (May 1,
1995) through
December 31, 1995 was 81.4%.
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
Adviser that it may not be prudent to be fully invested in common
stocks. In
evaluating a convertible security, the Adviser places primary
emphasis on the
attractiveness of the underlying common stock and the potential
for capital
appreciation through conversion. See "Convertible Securities" in the
Additional
Statement.
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 Adviser to be of comparable quality. However, the Fund may also
invest up to
25% of its assets in more speculative debt securities provided,
that, as
described in the following paragraph, no more than 5% of the Fund's
assets may
be invested in corporate debt securities with a rating of, or
equivalent to, a
S&P rating of CCC or lower. 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 Adviser to present an
opportunity for
significant capital appreciation, if, in the judgment of the
Adviser, the
ability of the issuer to repay principal and interest when due is
underestimated
by the market. For purposes of the foregoing limitation,
corporate debt
3
<PAGE>
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 portfolio. The Fund will not purchase
options if, as a
result, the aggregate cost or proceeds of all outstanding options
exceeds 5% of
the Fund's assets.
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
unexercised 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.
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 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 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.
4
<PAGE>
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
("SEC") 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 is set forth in the Additional Statement.
The Fund may purchase and sell securities on a "when, as
and if issued
basis" under which the issuance of the security depends upon the
occurrence of a
subsequent event, such as approval of a merger, corporate
reorganization or debt
restructuring. For further information, see "When Issued,
Delayed Delivery
Securities and Forward Commitments" in the Additional Statement.
Corporate Reorganizations. Subject to the diversification
requirements of
its investment restrictions, the Fund may invest not more than 35%
of its total
assets in securities for which a tender or exchange offer has
been made or
announced and in the securities of companies for which a merger,
consolidation,
liquidation or similar reorganization proposal has been announced
if, in the
judgment of the Adviser, there is a reasonable prospect of capital
appreciation
significantly greater than the added portfolio turnover expenses
inherent in the
short-term nature of such transactions. The 35% limitation does not
apply to the
securities of companies which may be involved in simply consummating
an approved
or agreed upon merger, acquisition, consolidation,
liquidation or
reorganization. The principal risk is that such offers or proposals
may not be
consummated within the time and under the terms contemplated at the
time of the
investment in which case, unless replaced by an equivalent or
increased offer or
proposal which is consummated, the Fund may sustain a loss.
For further
information on such investments, see "Corporate
Reorganizations" in the
Additional Statement.
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 with a
duration of seven days or less, 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.
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
5
<PAGE>
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 to 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.
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
Adviser and
Gabelli & Company, Inc., the distributor of the Fund's
shares (the
"Distributor").
Pursuant to a Management Agreement with the Fund, the Manager,
under the
supervision of the Board of Directors, supervises the
performance of
administrative and professional services provided to the Fund
by others
including the Adviser and First Data Investor Services Group,
Inc., the
sub-administrator of the Fund (the "Sub-Administrator"), and pays
the fees of
the Adviser. 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 an Investment Advisory Agreement among
the Fund, the
Manager and the Adviser, the Adviser, under the supervision of
the Company's
Board of Directors and the Manager, manages the Fund's assets in
accordance with
the Fund's investment objectives and policies, makes investment
decisions for
the Fund, places purchase and sale orders on behalf of the
Fund, provides
investment research and provides facilities and personnel
required for the
Fund's administrative needs. The Adviser may delegate its
administrative role
and currently has done so to the Sub-Administrator. The Adviser
supervises the
6
<PAGE>
performance of administrative and professional services provided by
others and
pays the compensation of the Sub-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 Adviser, the Manager pays the
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 Adviser to
be primarily
responsible for the day-to-day management of the Fund. Mr.
Gabelli has been
Chairman and Chief Investment Officer of the Adviser since its
inception in
1980. The Adviser relies to a considerable extent on the
expertise of Mr.
Gabelli, who may be difficult to replace in the event of his death,
disability
or resignation.
The management discussion and analysis of the Fund's performance
during the
fiscal period from the Fund's commencement of operations on May 1,
1995 through
December 31, 1995 is included in the Fund's Annual Report to
Shareholders dated
December 31, 1995. The Fund's Annual Report may be obtained upon
request without
charge by writing or calling the Fund at the address or telephone
number listed
on page one of this Prospectus.
The Company, the Manager, GIAC, the Adviser and the
Distributor have
entered into a Participation Agreement regarding the marketing of
the Fund's
shares as an investment option for variable annuity and variable
life contracts
issued by GIAC.
The Manager. The Manager is located at 201 Park Avenue South,
New York, New
York 10003 and as of April 1, 1996 serves as investment adviser to
eight funds
with aggregate assets of over $3.5 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 Adviser. The Adviser, which is located at One Corporate
Center, Rye,
New York 10580-1435, was formed in 1980 and as of April 1,
1996 acts as
investment adviser to the following funds with aggregate assets of
approximately
$4.3 billion:
Net Assets
Open-end funds:
4/1/96
(in
millions)
The Gabelli Asset Fund .........................................
$1,140
The Gabelli Growth Fund ........................................
582
The Gabelli Value Fund Inc. ....................................
417
The Gabelli Small Cap Growth Fund ..............................
230
The Gabelli Equity Income Fund .................................
58
The Gabelli U.S. Treasury Money Market Fund ....................
282
The Gabelli ABC Fund ...........................................
25
The Gabelli Global Telecommunications Fund .....................
125
The Gabelli Global Interactive Couch Potato(R)Fund .............
37
The Gabelli Global Convertible Securities Fund .................
16
Gabelli Gold Fund, Inc. ........................................
20
Gabelli Capital Asset Fund .....................................
35
Gabelli International Growth Fund, Inc. ........................
4
Closed-end funds:
The Gabelli Equity Trust Inc. ..................................
1,059
The Gabelli Global Multimedia Trust Inc. .......................
94
The Gabelli Convertible Securities Fund, Inc. ..................
91
7
<PAGE>
The Distributor is an indirect majority-owned subsidiary of
the Adviser.
GAMCO Investors, Inc. ("GAMCO"), a majority-owned subsidiary of
the Adviser,
acts as investment adviser for individuals, pension trusts,
profit sharing
trusts and endowments. As of April 1, 1996, GAMCO had aggregate
assets in excess
of $5.4 billion under its management. Teton Advisers LLC, an
affiliate of the
Adviser, acts as adviser to the Westwood Funds with aggregate
assets in excess
of $50 million under its management as of April 1, 1996. Mr. Mario
J. Gabelli
may be deemed a "controlling person" of the Adviser and the
Distributor on the
basis of his ownership of stock of the Adviser.
Affiliates of the 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. Although such
activities
may limit to some extent the ability of the Fund to make such
investments, the
Adviser does not believe that any such limitations will have a
material adverse
effect upon the Fund in seeking to achieve its investment objectives.
Securities
purchased or sold pursuant to contemporaneous orders entered on
behalf of the
investment company accounts of the Adviser or the advisory accounts
managed by
its affiliates for their unaffiliated clients are allocated
pursuant to
principles believed to be fair and not disadvantageous to any such
accounts. In
addition, all such orders are accorded priority of execution over
orders entered
on behalf of accounts in which the Adviser or its affiliates have
substantial
pecuniary interests. The Adviser may on occasion give advice or take
action with
respect to other clients that differs from the actions taken with
respect to the
Fund. The Fund may invest in the securities of companies which are
investment
management clients of GAMCO, a subsidiary of the Adviser. In
addition, portfolio
companies or their officers or directors may be minority
shareholders of the
Adviser or its affiliates.
The Investment Advisory Agreement 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 Adviser may (1) direct Fund portfolio
brokerage to the
Distributor or any other broker-dealer affiliates of the
Adviser; (2) pay
commissions to brokers other than the Distributor which are
higher than what
might be charged by another qualified broker to obtain brokerage
and/or research
services considered by the Adviser to be useful or desirable for its
investment
management of the Fund and/or other advisory accounts of
itself and any
investment adviser affiliated with it; and (3) consider sales of
shares of the
Fund and any other registered investment companies managed by the
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.
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, SEC
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, all expenses of computing the Fund's net asset value
per share,
expenses involved in registering and maintaining the registration of
the Fund's
shares with the SEC and qualifying the Fund for sale in various
jurisdictions
and maintaining such qualification, litigation and other
extraordinary or
non-recurring expenses. However, other typical Fund
expenses such as
Contractowner servicing, distribution of reports to
Contractowners and
prospectus printing and postage will be borne by GIAC.
Sub-Administrator. The Adviser has entered into a Sub-
Administration
Agreement with the Sub-Administrator covering the Fund and certain
other funds
advised by the Adviser. Under the Sub-Administration
Agreement, the
Sub-Administrator provides certain administrative services
necessary for the
Fund's operations, including the preparation and distribution of
materials for
meetings of the Company's Board of Directors relating to the Fund,
compliance
testing of Fund activities and assistance in the preparation
of proxy
statements, reports
8
<PAGE>
to Contractowners and other documentation. The Sub-Administrator,
which is a
subsidiary of First Data Corp., has its principal office at One
Exchange Place,
Boston, Massachusetts 02109. The Adviser pays the
compensation of the
Sub-Administrator from the fees which are paid to the Adviser by the
Manager. No
additional amount will be paid by the Fund for
services by the
Sub-Administrator.
Distributor. The Distributor, 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 Contractowners 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.
Payments for redeemed shares will ordinarily be made within three (3)
days after
the Fund receives a redemption order from GIAC. 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 SEC.
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. Contractowners who own
units in a
separate account which correspond to shares in the Fund will be
notified when
distributions are made.
The Fund is treated as a separate entity for federal income
tax purposes.
The Fund has qualified and intends to continue to qualify as a
"regulated
investment company" under the Internal Revenue Code of 1986, as
10
<PAGE>
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.
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 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 SEC 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. Of these
authorized
shares, five hundred million are designated as shares of the Fund.
The Company's
Board of Directors has the authority to create additional series
funds without
obtaining stockholder approval. 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 Investment Company Act of 1940, as amended,
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 Contractowners' interests in the Fund in accordance with their
instructions.
GIAC will vote any shares that it is 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 Contractowners arising
from 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
10
<PAGE>
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 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, Quincy,
Massachusetts 02171.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the captions
"Financial Highlights" and "Counsel and Independent Auditors" and to
the use of our report dated February 7, 1996 on the financial
statements of Gabelli Capital Asset Fund in this Registration
Statement (Form N-1A No. 33-61254) of Gabelli Capital Series Funds,
Inc.
Ernst & Young LLP
/s/ Ernst & Young LLP
New York, New York
April 26, 1996
shared/3rdparty/gabcapas/pea/#2/consent
GABELLI CAPITAL ASSET FUND
sample total return computation
Fiscal period from commencement of operations on May 1, 1995 through
December 31, 1995.
i. Assumed investment of $1,000.
ii. Divide assumed investment by initial offering price to
ascertain number of shares:
$1,000 / $10 = 100 shares
iii. Multiply shares by per share dividend/distributions:
.135 x 100 = 13.50
iv. Divide dividend/distribution amount by offering price for
reinvestment:
13.50 / 10.70 = 1.26 shares
v. Shares now total 100 + 1.26 or 101.26 shares
vi. Multiply 12-31-95 per share redemption price by total shares to
find redemption value:
$10.70 x 101.26 = $1,083.48
vii. Subtract initial investment to find total return for period:
$1,083.48 - $1,000 = $83.48
viii. Divide total return by initial investment to find rate of
return for period:
$83.48 / $1,000 = 8.4%
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> GABELLI CAPITAL ASSET FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 25,977,382
<INVESTMENTS-AT-VALUE> 26,828,536
<RECEIVABLES> 96,789
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 87,433
<TOTAL-ASSETS> 27,012,758
<PAYABLE-FOR-SECURITIES> 475,825
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 172,991
<TOTAL-LIABILITIES> 648,816
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,528,332
<SHARES-COMMON-STOCK> 2,463,338
<SHARES-COMMON-PRIOR> 10,000
<ACCUMULATED-NII-CURRENT> 511
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (16,055)
<ACCUM-APPREC-OR-DEPREC> 851,154
<NET-ASSETS> 26,363,942
<DIVIDEND-INCOME> 84,468
<INTEREST-INCOME> 179,568
<OTHER-INCOME> 0
<EXPENSES-NET> 186,063
<NET-INVESTMENT-INCOME> 77,973
<REALIZED-GAINS-CURRENT> 234,480
<APPREC-INCREASE-CURRENT> 851,154
<NET-CHANGE-FROM-OPS> 1,163,607
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (77,462)
<DISTRIBUTIONS-OF-GAINS> (250,535)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,907,580
<NUMBER-OF-SHARES-REDEEMED> (485,011)
<SHARES-REINVESTED> 30,769
<NET-CHANGE-IN-ASSETS> 26,263,942
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 104,276
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 200,440
<AVERAGE-NET-ASSETS> 15,534,949
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.80
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (0.10)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.70
<EXPENSE-RATIO> 1.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
