<PAGE>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
FIRST QUARTER REPORT - 1995
TO OUR SHAREHOLDERS:
Robust corporate profits and investors' growing confidence that the
Federal Reserve will successfully engineer a soft landing for the economy
propelled the stock market to record highs in the first quarter of 1995.
Large cap growth stocks, particularly in the technology and consumer
non-durable sectors, led the market. Broader market indices such as the
Value Line Composite (+5.2%) and small cap indices like the Russell 2000
(+4.6%) also performed well on an absolute return basis, but lagged the more
widely followed market yardsticks.
For the three months ended March 31, 1995, The Gabelli Asset Fund's net
asset value increased 7.3% to $23.84 per share from $22.21 per share on
December 31, 1994. This compares to the 9.7% return in the Standard & Poor's
500 Index, a widely accepted unmanaged index of stock market performance,
over the same period. For the twelve months ended March 31, 1995, the Fund's
total return was 10.4% versus the 15.6% return of the Standard & Poor's 500
Index.
The Asset Fund's total return from inception on March 3, 1986 through
March 31, 1995 is 265.4%, which reflects an average annual total return of
15.3% assuming reinvestment of all dividends and distributions. The five
year total return of the Fund ending on March 31, 1995 is 76.4%, which
equates to a 12.0%average annual total return. On March 31, 1995 our
shareholder base is at 51,686 shareholders and total net assets of the Fund
are $1,047.1 million.
WHAT WE DO
We do what is described as bottom up research: we read annual
reports; we visit the competition; we talk to customers; we go belly to belly
with management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy
and methodology. The following graphic further illustrates the interplay
among the four components of our valuation approach.
Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures
necessary to grow the business. We believe free cash flow is the best
barometer of a business' value. Rising free cash flow often foreshadows net
earnings improvement. We also look at earnings per share trends. Unlike
Wall Street's ubiquitous earnings momentum players, we do not try to forecast
earnings with accounting precision and then trade stocks based on quarterly
expectations and realities. We simply try to position ourselves in front of
long-term earnings uptrends. In addition, we analyze on and off balance
sheet assets and liabilities such as plant and equipment, inventories,
receivables, and legal, environmental and health care issues. We want to
know everything and anything that will add to or detract from our private
market value estimates. Finally, we look for a catalyst; something happening
in the company's industry or indigenous to the company itself that will
surface value. In the case of the independent telephone
<PAGE>
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
QUARTER
-----------------------------------------
1ST 2ND 3RD 4TH
YEAR
--- --- --- --- ----
<S> <C> <C> <C> <C>
<C> <C>
1995: Net Asset Value............... $23.84 --- --- ---
- ---
Total Return.................. 7.3% --- --- ---
- ---
1994: Net Asset Value............... $22.63 $22.36 $23.56
$22.21 $22.21
Total Return.................. (2.9)% (1.2)% 5.4%
(1.2)% (0.1)%
1993: Net Asset Value............... $21.10 $22.10 $23.63
$23.30 $23.30
Total Return.................. 6.1% 4.7% 6.9%
2.5% 21.8%
1992: Net Asset Value............... $19.04 $18.91 $19.02
$19.88 $19.88
Total Return.................. 6.0% (0.7)% 0.6%
8.5% 14.9%
1991: Net Asset Value............... $17.36 $17.36 $17.90
$17.96 $17.96
Total Return.................. 11.1% 0.0% 3.1%
3.2% 18.1%
1990: Net Asset Value............... $16.48 $16.81 $15.21
$15.63 $15.63
Total Return.................. (4.5)% 2.0% (9.5)%
7.8% (5.0)%
1989: Net Asset Value............... $16.46 $18.01 $18.73
$17.26 $17.26
Total Return.................. 12.0% 9.4% 4.0%
(1.0)% 26.2%
1988: Net Asset Value............... $13.49 $14.62 $14.94
$14.69 $14.69
Total Return.................. 14.4% 8.4% 2.2%
3.5% 31.1%
1987: Net Asset Value............... $12.97 $13.93 $14.66
$12.61 $12.61
Total Return.................. 19.6% 7.4% 5.2%
(14.0)% 16.2%
1986: Net Asset Value............... $10.44 $11.21 $11.29
$11.28 $11.28
Total Return.................. 4.4%(b) 7.4% 0.7%
(0.1)% 12.8%(b)
</TABLE>
<TABLE>
<CAPTION>
DIVIDEND HISTORY
- ---------------------------------------------------------
PAYMENT (EX) DATE RATE PER SHARE REINVESTMENT PRICE
- ----------------- -------------- ------------------
<S> <C> <C>
December 30, 1994 $1.056 $22.21
December 31, 1993 $0.921 $23.30
December 31, 1992 $0.755 $19.88
December 31, 1991 $0.505 $17.96
December 31, 1990 $0.770 $15.63
December 29, 1989 $1.278 $17.26
December 30, 1988 $0.775 $14.69
January 4, 1988 $0.834 $12.07
March 9, 1987 $0.505 $12.71
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS - MARCH 31, 1995--(a)
--------------------------------------------
<S> <C>
1 Year................................... 10.4%
5 Year................................... 12.0%
Life of Fund (b)......................... 15.3%
<FN>
(a) Total return and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses.
The net asset value of the Fund is reduced on the ex-dividend (payment) date by the
amount of the dividend paid. Of course, returns
represent past performance and do not guarantee future results. Investment returns and
the principal value of an investment will
fluctuate. When shares are redeemed they may be worth more or less than their
original cost. (b) From commencement of
operations on March 3, 1986.
</TABLE>
stocks, the catalyst is a regulatory change. In the agricultural equipment
business, it is the increasing worldwide demand for American food and feed
crops. In other instances, it may be a change in management, sale or
spin-off of a division or the development of a profitable new business.
When we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
method for preserving and enhancing wealth in the U.S. equities market. At
the margin, our new investments are focused on businesses that are well
managed and will benefit from sustainable long-term economic dynamics. These
include macro trends, such as globalization of the market in filmed
entertainment and telecommunications, and micro trends, such as increased
focus on productivity enhancing goods and services.
2
<PAGE>
COMMENTARY
The Market
- ----------
We were pleasantly surprised by the market's strength in the first
quarter. Corporate earnings continued to exceed consensus expectations with
some signs of a slowing economy. Federal Reserve Chairman Alan Greenspan
hinted that further short-term rate hikes may not be necessary. Long bonds
rallied on the news, providing an additional tailwind for equities.
With this strong quarter behind us, we look to the future. Our
concerns include an anemic dollar that central bank intervention alone may
not be able to cure. Will Doctor Greenspan, however reluctantly, be forced
to administer an interest rate booster shot to prop up the greenback? We
can't ignore the possibility of more inflation than is currently anticipated.
Raw materials prices, oil and gold are rising again. Also, all may not be
as quiet as it seems on the labor front. Finally, our distrust of strong
consensus opinion makes us cautious. At current levels, the market may
already be fully discounting all the good news.
A New Era of Global Consolidation
- ---------------------------------
On the positive side of the ledger, accelerating merger and acquisition
activity in a broad range of industries is once again focusing Wall Street's
attention on value. In our 1994 Annual Report, we discussed the dawning of a
new era of strategic global consolidation. Our thesis is that in an
increasingly competitive global business environment, corporate managements
here and abroad are recognizing that extending product lines and building
international distribution systems are critical to growth, if not survival.
The necessary financial ingredients are in place. The world is full of
willing lenders, equity is a viable currency, and there are still a lot of
attractive franchises that are far cheaper to buy than build. Also, the weak
dollar makes shopping for businesses in the U.S. stock market a real bargain
for European and Japanese companies. Capital gains tax relief in the U.S.
would help further incentivize sellers.
We also opined that General Electric's (GE - $54.125 - NYSE)
unsolicited bid for Kemper Corporation (KEM - $40.375 - NYSE) signalled the
re-emergence of the hostile tender offer. We believe deals are going to be
aggressively pursued regardless of target companies' willingness to politely
negotiate. Our opinions are being validated by a surge in hostile bids.
Already in 1995, we have seen six unsolicited bids for companies totalling
more than $20 billion. This compares to approximately $24 billion in hostile
bids for all of 1994.
This dynamic has a powerful impact on investor perception. Ingersoll
Rand's (IR - $32.875 - NYSE) hostile bid for Clark Equipment Company (CKL -
$82.50 - NYSE) in late March, almost single handedly sparked a sharp rally in
cyclical stocks. Investors who had been rotating out of industrial companies
due to expectations of decelerating earnings began positively re-assessing
this sector on the basis of cash flow and long-term strategic values.
How does this impact our Fund? As cash flow oriented value investors
focusing on dominant franchise companies, we expect to benefit in two ways
from ongoing global consolidation. Firstly, we think our portfolio
represents an excellent shopping list for corporate bargain hunters. We
expect to move more of our portfolio inventory over the next several years.
Secondly, as deal flow accelerates, investors' focus shifts from net earnings
to cash flow (a much better barometer of business worth), helping others
"discover" our type of value. This will serve as a rising tide that should
lift many of the boats in our portfolio.
3
<PAGE>
Taking Advantage of the Dollar
- ------------------------------
While the weak dollar is problematic for certain sectors of the U.S.
economy and the broad stock market, it is a boon for American manufacturers
with "world class" products and well developed international distribution
systems. Ten years ago, smart investors avoided companies that competed with
Japan. Today, due in part to the cheap dollar versus the yen, those same
smart folks are seeking out efficient U.S. companies that are going head to
head against the Japanese. Auto and auto parts manufacturers like General
Motors Corporation (GM - $44.25 - NYSE) and Echlin Inc. (ECH - $38.50 -
NYSE), telecommunications equipment makers like AT&T Corporation (T - $51.75
- - NYSE) and agricultural equipment companies like Deere & Company (DE -
$81.25 - NYSE) are some of the more direct beneficiaries.
I Have Just One Word for You, Edgar: Entertainment!
- ---------------------------------------------------
As of this writing, Seagram Company, Ltd. (VO - $31.75 - NYSE) is
expected to announce the sale of its 25% ownership position in E.I. du Pont
de Nemours (DD - $60.50 - NYSE) and the purchase of a majority stake in MCA,
the filmed entertainment producer and distributor currently owned by Japan's
Matsushita Electric (MC - $158.00 - NYSE). We are reminded of the famous
line in Mike Nichols' award winning film THE GRADUATE: " I have just one word
for you, Benjamin: Plastics!" Someone has convinced Seagram's CEO Edgar
Bronfman that the future is in filmed entertainment, not chemicals or
plastics. No details on the proposed transaction have been released and if
it does transpire, only time will tell if it will ultimately be a box office
blockbuster for Seagrams' shareholders. However, as interactive media
becomes a reality worldwide, we do see unparalleled growth potential for
entertainment software providers. It underscores our belief that portfolio
companies such as Time Warner Inc. (TWX - $37.75 - NYSE) and Viacom Inc. (VIA
- - $45.75 - NYSE) are materially undervalued at their current prices.
LET'S TALK STOCKS
- -----------------
The following are stock specifics on selected holdings of your Fund's
investments. Favorable EBITDA prospects do not necessarily translate into
higher stock prices, but they do express a positive trend which we believe
will develop over time.
AMERICAN EXPRESS COMPANY (AXP - $34.875 - NYSE), founded in 1850, is a
diversified travel and financial services company operating in 160 countries
around the world. The company is best known for its American Express Card.
Less recognized, however, are its other operations such as Minneapolis-based
American Express Financial Advisors, Inc. (formerly IDS Financial Services),
which sells financial products ranging from mutual funds to annuities. In
1993, American Express completed the sale of The Boston Company, Inc. and the
brokerage and asset management divisions of Shearson Lehman Brothers, Inc.
The former went to Mellon Bank Corporation, while the latter joined
Primerica's Smith Barney unit. In 1994, Harvey Golub, Chairman and CEO,
continued to refocus AXP on its core charge card and travel services
businesses by spinning off Lehman Brothers Holdings Inc. (LEH - $18.00 -
NYSE). This divestiture places American Express in a powerful cash
generating position to focus on growing its earnings at a double digit rate
over the balance of this decade.
TIME WARNER INC. (TWX - $37.75 - NYSE) is one of the largest diversified
media and publishing companies in the world with a market capitalization of
over $15 billion. Warner Brothers Studios, the company's filmed
entertainment subsidiary, was ranked number one at the box office for the
third consecutive year. Time Warner is restructuring its business into
copyright and creativity (notably publishing, music and filmed entertainment)
on one side and distribution (mostly cable) on the other. Under the aegis of
Gerald M. Levin, investors can expect significant returns.
AMERICAN BRANDS, INC. (AMB - $39.25 - NYSE), based in Old Greenwich,
Connecticut, is a holding company for five separate business units:
international tobacco (Gallaher, the largest tobacco company
4
<PAGE>
in the United Kingdom), distilled spirits (Jim Beam bourbon), hardware (Moen
faucets), office products (Acco) and golf products (Titleist and Pinnacle
golf balls). All are strong cash flow generators and are leaders in their
respective industries. A new management team is transforming American Brands
into a focused consumer products company. The company's shares trade at more
than a 30% discount from its estimated 1995 PMV, approaching $100 per share
by the year 2000.
AT&T CORPORATION (T - $51.75 - NYSE) is the second largest telephone company
in the world. AT&T, selling at 7.5 times EBITDA, is attractively valued
relative to its growth potential. The company is well positioned to benefit
from the above average long-term growth of the global telecommunications
industry. Its strategy includes a tailored approach to take advantage of its
strong global franchise, including its brand name, broad product offerings
and an international customer base. AT&T will satisfy communication needs by
packaging a broad array of products, including its global wired and wireless
telecommunications services, telecommunications equipment and financial
services.
GENERAL MOTORS CORPORATION (GM - $44.25 - NYSE) is benefitting from a
sharp
recovery in North American auto sales. In 1994, its North American
operations were profitable for the first time in four years and international
profits continue to grow. Additionally, with Jack Smith at the helm, GM is
improving the style and quality of its cars, rationalizing its production
processes and greatly reducing its costs. With peak earning power of over
$10 per share, GM remains a core holding.
GENERAL ELECTRIC COMPANY (GE - $54.125 - NYSE), with sales expected to
top
$40 billion in 1995, stands among the world's largest industrial concerns.
As a company with a global footprint, GE is a primary beneficiary of a
developing European recovery and continued strength in the developing markets
of Asia and Latin America. GE's varied businesses include financial services
(through General Electric Capital Corporation), broadcasting (through the NBC
Television Network) and jet engines. The company is also a leader in home
appliances and industrial power systems. GE declared a 2-for-1 stock split
in mid-1994 and the dividend was increased by almost 14%. Earnings should
hit a record level in 1995 and the shares should benefit from a recently
announced $5 billion stock repurchase plan.
LIN BROADCASTING CORPORATION (LINB - $121.75 - NASDAQ) is among the
largest
and most attractive cellular telephone operators in the U.S. with controlling
interests in the New York, Los Angeles, Dallas and Houston markets. McCaw
Cellular Communications, which was acquired by AT&T in 1994, controls 52% of
LIN. McCaw (AT&T) is scheduled to purchase the 48% balance of LIN for
$127.50 per share in cash. The Fund is holding LIN to earn the difference
between the current market and the eventual "take out" price of LIN.
TELE-COMMUNICATIONS INC. (TCOMA - $21.00 - NASDAQ) We are bullish on
the
prospects for cable television in 1995 and beyond. TCI remains the largest
cable television multiple system operator (MSO) in the U.S., serving some
11.5 million subscribers. Regulation historically has driven the outlook for
cable stocks. With a newly-elected, deregulation-minded Congress in place,
the outlook is once again improving. Recently proposed legislation which
provides for eliminating rate regulation and cross ownership restrictions of
cable television systems would be a significant catalyst for cable if various
elements fall into place this year. We will be tracking this process
closely. TCI is well positioned for the future. In 1994, in association with
Comcast Corporation (CMCSA - $15.5625 - NASDAQ) and Cox Communications,
TCI
established a joint venture and strategic alliance with Sprint Corporation
(FON - $30.25 - NYSE) to provide both wired and wireless telephone services
in competition with the local telephone industry utilizing TCI's cable infrast
ructure and Sprint's well recognized national brand name. The joint venture
is one of the largest bidders for new PCS spectrum and looks to emerge as one
of the best positioned competitors to the cellular telephone duopoly. TCI has
recently announced various financial restructuring moves which we expect will
benefit the price of the stock this year.
HARCOURT GENERAL (H - $39.00 - NYSE) operates three business segments:
publishing, specialty retailing
5
<PAGE>
and professional services. Publishing operations are worldwide and include a
balanced mix of education, scientific, technical, medical, professional and
trade publications. Specialty retailing now consists of just Neiman Marcus
and Bergdorf Goodman, since the company has arranged to sell its Contempo
Casuals unit. Professional services are represented by Drake Beam Morin, the
leading provider of human resources consulting services to corporations.
Harcourt had almost $15 per share in cash assets at the end of 1994. The
company earlier this year accepted, under terms of its "Dutch Auction"
self-tender offer, 5.4 million shares at $40.50 per share. Subsequently, the
board approved a program to repurchase up to 2.5 million shares of its
roughly 75 million shares outstanding.
ECHLIN INC. (ECH - $38.50 - NYSE) represents one of the few ways to play the
growing demand for automotive replacement parts around the world. Demand for
replacement parts is high and growing rapidly in the developing world and in
the U.S., where the average age of vehicles is eight years. Most of the
parts Echlin supplies to the replacement market - brake and engine parts -
are performance critical. Based on our 15% estimated growth rate, Echlin
remains a core value and a core holding.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment is $1,000. No initial minimum is
required for those establishing an Automatic Investment Plan.
GABELLI U.S. TREASURY MONEY MARKET FUND
Shareholders of any of the Gabelli Funds may invest in The Gabelli
U.S. Treasury Money Market Fund with an initial investment of $3,000 or more.
The Fund provides check writing and exchange privileges. The Fund's expenses
are capped at .30% of average net assets, making it one of the most
attractive U.S. Treasury-only money market funds. With dividends that are
exempt from state and local income taxes in all states, the Fund is an
excellent vehicle in which to store idle cash. Call us at
1-800-GABELLI (1-800-422-3554) for a prospectus which gives a more complete
description of the Fund, including management fees and expenses. Read it
carefully before you invest or send money.
IN CONCLUSION
After a flat 1994, we are delighted the Fund has generated strong
returns in the first quarter of 1995. We remain cautious regarding the
short-term prospects for the broad market. With accelerating merger and
acquisition activity worldwide, we do expect investors to focus more
intensely on value to the general advantage of our portfolio.
The Fund's daily net asset value is available in the financial
press and each evening after 6:00 PM (Eastern Time) by calling 1-800-GABELLI
(1-800-422-3554). The Fund's NASDAQ symbol is GABAX. Please call us during
the day for further information.
In closing, we thank you for the trust you have shown in our
investment capabilities and express our dedication to achieving our shared
financial goal: to increase the value of the assets you have entrusted to us.
Sincerely,
MARIO J. GABELLI, CFA
Portfolio Manager and
May 1, 1995 Chief Investment Officer
6
<PAGE>
<TABLE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
COMMON STOCKS -- 86.69%
AIRLINES -- 0.83%
135,000 AMR Corporation*................. $ 8,741,250
--------------
AUTOMOTIVE -- 1.91%
18,000 Chrysler Corporation............. 753,750
62,500 Ford Motor Company............... 1,687,500
365,000 General Motors Corporation....... 16,151,250
20,000 General Motors Corporation
Class H........................ 825,000
24,000 Harley-Davidson, Inc............. 576,000
--------------
19,993,500
--------------
AUTOMOTIVE: PARTS AND
ACCESSORIES -- 5.66%
33,500 APS Holding Corporation*......... 854,250
25,000 Borg-Warner Automotive, Inc. .... 606,250
5,000 Detroit Diesel Corporation*...... 120,000
340,000 Echlin Inc. ..................... 13,090,000
150,000 Federal-Mogul Corporation........ 2,700,000
675,000 GenCorp Inc. .................... 8,521,875
270,000 Genuine Parts Company............ 10,766,250
170,000 Handy & Harman................... 2,805,000
115,000 Johnson Controls, Inc. .......... 5,850,625
140,000 Modine Manufacturing Company*.... 4,690,000
36,250 Myers Industries, Inc.*.......... 512,031
50,000 Pep Boys -- Manny, Moe & Jack*... 1,550,000
170,000 Quaker State Corporation......... 2,337,500
60,000 RB&W Corporation*................ 487,500
50,000 Republic Automotive Parts,
Inc.*.......................... 750,000
15,000 SPX Corporation*................. 217,500
100,000 Standard Motor Products, Inc. ... 2,012,500
13,200 Superior Industries
International, Inc.*........... 336,600
34,500 UAP Inc.*........................ 370,105
34,000 Wynn's International, Inc. ...... 735,250
--------------
59,313,236
--------------
AVIATION: PARTS AND
SERVICES -- 0.45%
100,000 Curtiss-Wright Corporation....... 3,750,000
73,000 Hi-Shear Industries Inc.*........ 310,250
21,000 Hudson General Corporation....... 333,375
6,000 PS Group, Inc.*.................. 57,750
12,000 Whittaker Corporation*........... 231,000
--------------
4,682,375
--------------
BROADCASTING -- 4.05%
45,000 BHC Communications, Inc.
Class A*....................... 3,318,750
86,000 Capital Cities/ABC, Inc. ........ 7,589,500
12,695 CBS Inc. ........................ 812,480
385,637 Chris-Craft Industries, Inc. .... 12,870,640
63,654 Chris-Craft Industries, Inc.
Class B Convertible............ 2,124,452
47,500 Citicasters Inc. ................ 1,448,750
50,000 Grupo Televisa, S.A.............. 831,250
125,000 Havas............................ 2,367,188
53,000 LIN Television Corporation*...... 1,762,250
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
60,000 Liberty Corporation.............. $ 1,650,000
24,407 Osborn Communications
Corporation*................... 167,798
400,000 Television Broadcasting Ltd.
Ord............................ 1,365,753
100,000 United Television, Inc.*......... 6,150,000
--------------
42,458,811
--------------
BUSINESS SERVICES -- 1.44%
15,000 Berlitz International, Inc.*..... 221,250
150,000 Gerber Scientific, Inc. ......... 2,156,250
123,000 International Business Machines
Corporation.................... 10,070,625
72,000 Landauer, Inc. .................. 1,314,000
70,000 Nashua Corporation............... 1,356,250
--------------
15,118,375
--------------
CABLE -- 4.04%
60,000 BET Holdings, Inc. Class A*...... 1,042,500
10,000 Cablevision Systems Corporation
Class A*....................... 531,250
60,000 Comcast Corporation Class A...... 933,750
30,000 Comcast Corporation Special
Class A........................ 468,750
111 International CableTel
Incorporated*.................. 3,302
215,500 International Family
Entertainment, Inc. Class B*... 3,313,313
390,000 Media General, Inc. Class A...... 12,577,500
123,750 Multimedia, Inc.*................ 4,687,031
40,000 Shaw Communications Inc.*........ 246,737
840,000 Tele-Communications, Inc.
Class A*....................... 17,640,000
50,000 United International Holdings
Class A*....................... 812,500
--------------
42,256,633
--------------
COMMERCIAL SERVICES -- 0.58%
250,000 Ecolab, Inc. .................... 6,062,500
--------------
CONSUMER PRODUCTS AND
SERVICES -- 9.97%
475,000 American Brands, Inc. ........... 18,643,750
35,000 Black & Decker Corporation....... 1,010,625
190,000 Brunswick Corporation............ 3,823,750
290,000 Carter-Wallace, Inc. ............ 3,443,750
190,000 Church & Dwight Co., Inc. ....... 3,467,500
25,000 Duracell International Inc. ..... 1,118,750
40,000 Eastman Kodak Company............ 2,125,000
145,000 Fieldcrest Cannon, Inc. ......... 3,371,250
43,000 First Brands Corporation......... 1,617,875
261,000 General Electric Company......... 14,126,625
26,500 Gillette Company................. 2,163,063
35,000 Libbey Inc. ..................... 651,875
70,000 Outboard Marine Corp............. 1,470,000
25,000 Philip Morris Companies Inc. .... 1,631,250
100,000 Philips Electronics N.V.......... 3,412,500
180,000 Procter & Gamble Company......... 11,925,000
250,000 Ralston Purina Group............. 11,937,500
180,000 Rollins, Inc. ................... 4,950,000
55,000 Scotts Company Class A*.......... 1,007,187
27,600 Syratech Corporation............. 503,700
</TABLE>
7
<PAGE>
<TABLE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
127,500 Tambrands Inc. .................. $ 5,689,688
330,000 Whitman Corporation.............. 6,311,250
--------------
104,401,888
--------------
COUNTRY/CLOSED-END FUNDS -- 0.07%
59,972 Royce Value Trust Inc. .......... 682,182
--------------
DIVERSIFIED INDUSTRIAL -- 3.90%
45,000 GATX Corporation................. 2,013,750
10,000 ITEL Corporation*................ 383,750
100,000 ITT Corporation.................. 10,262,500
150,000 Katy Industries, Inc. ........... 1,443,750
6,500 Kyocera Corporation ADR.......... 945,750
375,000 Lamson & Sessions Co.*........... 2,156,250
80,000 Lawter International, Inc. ...... 1,050,000
135,000 Minnesota Mining and
Manufacturing Company.......... 7,846,875
62,000 National Service Industries,
Inc. .......................... 1,674,000
85,000 Tenneco Inc. .................... 4,005,625
60,000 Thomas Industries Inc. .......... 982,500
215,000 Trinity Industries, Inc.*........ 8,035,625
--------------
40,800,375
--------------
ENERGY -- 3.22%
49,500 Atlantic Richfield Company....... 5,692,500
35,000 British Petroleum Company plc.... 2,935,625
135,000 Burlington Resources Inc. ....... 5,501,250
30,000 Chevron Corporation.............. 1,440,000
170,000 Eastern Enterprises.............. 4,717,500
60,000 Enron Oil & Gas Company*......... 1,477,500
110,000 Exxon Corporation................ 7,342,500
330,000 Kaneb Services, Inc.*............ 618,750
50,000 PacifiCorp*...................... 968,750
70,000 Southwest Gas Corporation........ 1,032,500
30,000 Texaco Inc. ..................... 1,995,000
--------------
33,721,875
--------------
ENTERTAINMENT -- 4.23%
55,000 Bay Meadows Operating Company.... 907,500
157,000 Gaylord Entertainment Company
Class A........................ 4,121,250
55,000 GC Companies Inc*................ 1,801,250
40,000 GTECH Holdings Corporation*...... 865,000
20,000 PolyGram NV...................... 1,097,500
20,000 Santa Anita Realty Enterprises
Inc. .......................... 310,000
9,000 Sony Music Entertainment Inc. ... 455,184
110,000 THORN EMI plc ADR*............... 1,966,250
450,000 Time Warner Inc. ................ 16,987,500
10,480 Todd-AO Corporation Class A*..... 60,260
118,000 Viacom Inc. Class A*............. 5,398,500
230,000 Viacom Inc. Class B*............. 10,292,500
--------------
44,262,694
--------------
FINANCIAL SERVICES -- 4.81%
1 Al-Zar Ltd.*..................... 350
640,000 American Express Company......... 22,320,000
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
220 Berkshire Hathaway Inc.*......... $ 4,972,000
35,000 Commerzbank AG ADR............... 1,631,875
14,000 Deutsche Bank AG ADR............. 6,594,000
10,000 Financial Security Assurance..... 215,000
3,000 H&R Block, Inc. ................. 130,125
330,000 Lehman Brothers Holdings,
Inc. .......................... 5,940,000
82,000 Midland Company.................. 3,628,500
70,000 Salomon Inc. .................... 2,371,250
25,000 State Street Boston
Corporation.................... 796,875
10,000 SunTrust Banks, Inc. ............ 535,000
11,941 Transamerica Corporation......... 676,159
4,000 U.S. Trust Corporation*.......... 276,250
9,500 Value Line, Inc. ................ 308,750
--------------
50,396,134
--------------
FOOD AND BEVERAGE -- 4.94%
10,000 Brown-Forman Corporation Class A. 840,625
15,000 Cadbury Schwepps plc ADS......... 431,250
60,000 Campbell Soup Company............ 2,902,500
72,100 Chock Full o'Nuts Corporation.... 468,650
23,000 Coca-Cola Company................ 1,299,500
165,000 Coca-Cola Enterprises Inc. ...... 3,444,375
17,000 CPC International Inc. .......... 920,125
47,000 Delchamps, Inc. ................. 857,750
110,000 Dole Food Company, Inc.*......... 3,190,000
2,500 Farmer Brothers Company.......... 313,750
62,500 General Mills, Inc.*............. 3,726,563
20,000 Heinz Co. (H.J.)................. 770,000
38,000 Hershey Foods Corporation........ 1,942,750
84,000 Kellogg Company.................. 4,903,500
300,000 PepsiCo, Inc. ................... 11,700,000
130,000 Quaker Oats Company.............. 4,306,250
69,933 Ralcorp Holdings Inc.*........... 1,660,909
100,000 Ralston-Continental Baking
Group*......................... 375,000
25,000 Robert Mondavi Wine Corporation
Class A*....................... 303,125
150,000 Seagram Company Ltd.............. 4,762,500
58,000 Wrigley (Wm.) Jr. Company*....... 2,573,750
--------------
51,692,872
--------------
HEALTH CARE -- 2.50%
10,000 Amgen Inc.*...................... 673,750
10,000 Biogen, Inc.*.................... 397,500
20,000 BioWhittaker, Inc.*.............. 160,000
3,000 Chiron Corporation............... 161,250
200,000 Johnson & Johnson................ 11,900,000
70,000 Mallinckrodt Group, Inc. ........ 2,362,500
80,000 Marion Merrell Dow Inc. ......... 1,980,000
99,999 Merck & Co., Inc. ............... 4,262,457
50,000 Pfizer Inc. ..................... 4,287,500
--------------
26,184,957
--------------
</TABLE>
8
<PAGE>
<TABLE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
HOTELS/CASINOS -- 1.56%
160,000 Hilton Hotels Corporation........ $ 11,860,000
175,000 Ladbroke Group plc............... 480,298
112,000 Mirage Resorts Incorporated*..... 3,136,000
23,500 Promus Companies*................ 881,250
--------------
16,357,548
--------------
INDUSTRIAL EQUIPMENT AND
SUPPLIES -- 11.16%
300,000 AMETEK, Inc. .................... 5,437,500
100,000 AMP Incorporated................. 3,600,000
25,000 Amphenol Corporation Class A*.... 625,000
270,000 AptarGroup, Inc. ................ 7,728,750
20,000 CalMat Co........................ 367,500
64,000 Caterpillar Inc. ................ 3,560,000
65,000 CLARCOR Inc. .................... 1,373,125
150,000 Crane Co......................... 4,556,250
100,000 CTS Corporation.................. 3,150,000
152,500 Deere & Company.................. 12,390,625
315,000 Donaldson Company, Inc. ......... 7,875,000
4,500 Duriron Company, Inc. ........... 92,250
8,000 Elcor Corporation*............... 140,000
6,000 Fibreboard Corporation*.......... 189,000
6,500 Florida Rock Industries, Inc. ... 191,750
69,400 Greif Brothers Corporation
Class A........................ 3,808,325
114,600 Guardsman Products, Inc. ........ 1,432,500
10,546 Hach Company*.................... 166,100
400,100 IDEX Corporation*................ 11,952,987
201,000 Kollmorgen Corporation........... 1,256,250
10,000 Lafarge Corporation.............. 187,500
40,000 Lufkin Industries, Inc. ......... 720,000
40,000 M/A-Com, Inc.*................... 395,000
60,000 Manitowoc Company, Inc. ......... 1,492,500
270,650 Mark IV Industries, Inc. ........ 5,548,325
8,400 Martin Marietta Materials
Group.......................... 161,700
9,500 Minerals Technologies Inc. ...... 306,375
330,000 Navistar International
Corporation.................... 4,207,500
165,000 Nortek, Inc.*.................... 1,711,875
4,333 Nortek, Inc. Special
Convertible*................... 44,955
10,000 PACCAR Inc.*..................... 425,000
74,000 Pittway Corporation.............. 3,367,000
200,000 Pittway Corporation Class A...... 9,275,000
42,500 Sequa Corporation Class A*....... 1,243,125
70,000 Sequa Corporation Class B*....... 2,240,000
80,000 SPS Technologies, Inc.*.......... 2,370,000
12,000 Truck Components Inc.*........... 108,750
20,000 Valmont Industries, Inc. ........ 410,000
335,000 Varity Corporation*.............. 12,730,000
--------------
116,837,517
--------------
MEDICAL EQUIPMENT -- 0.06%
25,000 Puritan-Bennett Corporation...... 584,375
--------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
MERCHANDISING: FOOD -- 0.19%
20,000 Albertson's, Inc. ............... $ 645,000
50,000 Kroger Co.*...................... 1,318,750
--------------
1,963,750
--------------
MERCHANDISING: SPECIALTY -- 0.14%
140,000 Burlington Coat Factory Warehouse
Corporation*................... 1,452,500
--------------
METALS AND MINING -- 0.63%
34,350 Barrick Gold Corporation......... 858,750
40,000 Echo Bay Mines Ltd............... 415,000
35,000 Homestake Mining Company......... 647,500
100,000 Horsham Corporation.............. 1,387,500
28,000 Newmont Gold Company............. 1,158,500
110,000 Pegasus Gold Inc. ............... 1,347,500
17,500 Placer Dome Inc. ................ 426,563
120,000 Royal Oak Mines Inc.*............ 397,500
--------------
6,638,813
--------------
PAPER & FOREST PRODUCTS -- 0.93%
8,000 Plum Creek Timber Company L.P.... 176,000
20,000 Rayonier Inc. ................... 622,500
145,000 St. Joe Paper Company............ 8,971,875
--------------
9,770,375
--------------
PUBLISHING -- 3.06%
60,000 American Media Inc. ............. 427,500
6,000 Central Newspapers, Inc. ........ 156,750
5,000 E.W. Scripps Company Class A..... 161,250
375,000 Harcourt General, Inc.*.......... 14,625,000
32,000 McClatchy Newspapers, Inc.
Class A........................ 752,000
80,000 McGraw-Hill, Inc. ............... 5,740,000
164,993 New York Times Company Class A... 3,815,463
13,000 News Corporation Limited ADS..... 248,625
76,000 Reader's Digest Association, Inc.
Class B........................ 3,391,500
323,000 Western Publishing Group, Inc.*.. 2,745,500
--------------
32,063,588
--------------
RETAIL -- 1.18%
14,500 Aaron Rents, Inc. Class A........ 210,250
13,000 Aaron Rents, Inc. Class B........ 178,750
7,000 Crown Books Corporation*......... 109,375
120,800 Earl Scheib, Inc.*............... 875,800
60,000 Jostens, Inc. ................... 1,192,500
12,700 Lillian Vernon Corporation....... 261,938
670,000 Neiman Marcus Group*............. 9,547,500
--------------
12,376,113
--------------
RETAIL: FOOD & DRUG -- 0.24%
100,000 American Stores Company.......... 2,562,500
--------------
</TABLE>
9
<PAGE>
<TABLE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
SPECIALTY CHEMICALS -- 0.74%
25,000 E.I. Du Pont De Nemours & Co..... $ 1,512,500
208,000 Ferro Corporation................ 5,278,000
45,000 Pratt & Lambert, Inc. ........... 945,000
--------------
7,735,500
--------------
TELECOMMUNICATIONS -- 10.14%
463,500 AT&T Corporation................. 23,986,125
210,000 BCE Inc. ........................ 6,483,750
30,000 BC TELECOM Inc.*................. 514,929
12,500 BellSouth Corporation............ 743,750
9,000 British Telecommunications plc
ADR............................ 569,250
362,600 C-TEC Corporation Class A*....... 7,705,250
44,000 C-TEC Corporation Class B
Convertible*................... 957,000
60,000 Cable & Wireless plc ADR......... 1,132,500
5,000 Compania de Telefonos de Chile
S.A.*.......................... 333,750
140,000 Frontier Corporation............. 3,167,500
52,000 Globalstar Telecommunications.... 819,000
318,000 GTE Corporation.................. 10,573,500
30,000 Hong Kong Telecommunications Ltd.
ADR............................ 581,250
130,000 Lincoln Telecommunications
Company........................ 1,982,500
4,000 MFS Communications Company,
Inc.*.......................... 140,000
60,000 Motorola, Inc. .................. 3,277,500
65,000 NYNEX Corporation................ 2,575,625
46,000 Outlet Communications, Inc. Class
A*............................. 1,357,000
15,000 Pacific Telesis Group............ 453,750
130,000 Royal PTT Nederland NV 144A*..... 4,598,750
28,000 Southern New England
Telecommunications
Corporation.................... 934,500
100,000 Southwestern Bell Corporation*... 4,212,500
425,000 Sprint Corporation............... 12,856,250
2,500,000 STET-Societa Finanziaria
Telefonica pa.................. 6,423,967
2,200,000 Telecom Italia*.................. 5,118,078
109,653 Telecomunicacoes Brasileiras
SA -- (Telebras) ADR........... 2,892,098
16,000 Telefonica de Espana SA ADS...... 600,000
15,000 Telefonos De Mexico, SA de C.V.
ADS............................ 427,500
1,521,945 Telecomunicacoes de Sao Paulo SA
(Telesp)*...................... 157,093
15,000 US WEST, Inc.*................... 600,000
--------------
106,174,665
--------------
TRANSPORTATION -- 0.11%
13,500 Florida East Coast Industries,
Inc. .......................... 995,625
20,000 OMI Corp.*....................... 110,000
--------------
1,105,625
--------------
WIRELESS COMMUNICATIONS -- 3.95%
250,000 AirTouch Communications*......... 6,812,500
133,000 Allen Group Inc. ................ 3,291,750
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
18,500 Associated Communications
Corporation Class A*........... $ 365,375
18,500 Associated Communications
Corporation Class B*........... 351,500
667 Cellular Communications, Inc.
Series A*...................... 31,849
275,000 Century Telephone Enterprises,
Inc............................ 8,353,125
120,000 COMSAT Corporation............... 2,235,000
106,000 LIN Broadcasting Corporation..... 12,905,500
100,000 NEXTEL Communications, Inc.
Class A*....................... 1,362,500
137,000 Telephone and Data Systems, Inc.. 5,411,500
7,500 Vodafone Group ADR............... 248,437
--------------
41,369,036
--------------
TOTAL COMMON STOCKS
(Cost $674,088,328)............ 907,761,562
--------------
PREFERRED STOCKS -- 0.51%
CONSUMER PRODUCTS -- 0.21%
2,000 Kerr Group, Inc. Conv. $1.70
Cumulative Conv. Class B,
Series D....................... 39,750
45,000 Fieldcrest Cannon, Inc. 144A*.... 2,143,125
--------------
2,182,875
--------------
INDUSTRIAL EQUIPMENT &
SUPPLIES -- 0.11%
17,900 Sequa Corporation $5 Cumulative
Convertible.................... 1,145,600
--------------
METALS AND MINING -- 0.02%
10,000 Freeport-McMoRan Inc. 7%
Cumulative Conv. Depositary.... 225,000
--------------
PUBLISHING -- 0.01%
6,500 News Corporation Limited
Sponsored ADS.................. 112,125
--------------
TELECOMMUNICATIONS -- 0.16%
50,000 Sprint Corporation............... 1,668,750
--------------
TOTAL PREFERRED STOCKS
(Cost $5,824,203).............. 5,334,350
--------------
COMMON STOCK WARRANTS AND
RIGHTS -- 0.04%
ENTERTAINMENT -- 0.04%
80,000 Viacom Inc. Contingent Value
Rights*........................ 155,000
60,000 Viacom Inc. Warrants Class C*.... 195,000
20,000 Viacom Inc. Warrants Class E*.... 102,500
--------------
452,500
--------------
TOTAL COMMON STOCK WARRANTS AND
RIGHTS (Cost $555,313)......... 452,500
--------------
</TABLE>
10
<PAGE>
<TABLE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1995 (UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
CORPORATE BONDS -- 0.60%
ENTERTAINMENT -- 0.60%
6,500,000 Time Warner Inc.
Redeemable Reset Notes,
due 08/15/2002*................ $ 6,313,125
--------------
TOTAL CORPORATE BONDS
(Cost $5,352,379).............. 6,313,125
--------------
CONVERTIBLE CORPORATE
BONDS -- 3.36%
AUTOMOTIVE PARTS AND
ACCESSORIES -- 0.04%
400,000 GenCorp Inc. 8% Subordinated
Debentures due 08/01/2002...... 396,000
--------------
BROADCASTING -- 0.01%
343,750 Havas, 3% Pik Bond, due
12/31/1997..................... 80,882
--------------
ENTERTAINMENT -- 3.31%
32,000,000 Time Warner Inc. 8.750%
Debentures, due 01/01/2015..... 32,120,000
2,750,000 Viacom Inc. 8%, due
07/07/2006*.................... 2,505,938
--------------
34,625,938
--------------
TOTAL CONVERTIBLE CORPORATE BONDS
(Cost $35,933,068)............. 35,102,820
--------------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
U.S. GOVERNMENT
OBLIGATIONS -- 8.97%
95,400,000 U.S. Treasury Bills, 5.360% to
6.730%, due 04/06/95 to
03/07/96....................... $ 93,886,186
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $93,823,353)............. 93,886,186
--------------
TOTAL INVESTMENTS -- 100.17%
(Cost $815,576,644+)........... 1,048,850,543
LIABILITIES, IN EXCESS OF CASH
AND OTHER ASSETS (-0.17%)...... (1,749,083)
--------------
NET ASSETS -- 100.00%
(43,920,328 shares
outstanding)................... $1,047,101,460
==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE..... $ 23.84
==============
<FN>
* Non-income producing.
+ For Federal income tax purposes aggregate cost is $816,333,794. Net unrealized
appreciation and depreciation are $256,683,850 and $24,167,101 respectively.
</TABLE>
<TABLE>
- ------------------------------------------------------------------------
TOP TEN HOLDINGS
MARCH 31, 1995
<S> <C>
Time Warner Inc. General Motors Corporation
AT&T Corporation Harcourt General
American Express Company General Electric Company
American Brands, Inc. Echlin Inc.
Tele-Communications, Inc. LIN Broadcasting Corporation
- ------------------------------------------------------------------------
</TABLE>
11
<PAGE>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
<TABLE>
BOARD OF DIRECTORS
<S> <C> <C>
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank THE
Gabelli Funds, Inc.
Felix J. Christiana Anthony R. Pustorino
Former Senior Certified Public Accountant
Vice President Professor, Pace University
Dollar Dry Dock Savings Bank GABELLI
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
James P. Conn Salvatore J. Zizza
Managing Director and Chairman, Chief ASSET
Chief Investment Officer Executive Officer
Financial Security Assurance The Lehigh Group, Inc.
OFFICERS AND PORTFOLIO MANAGERS
Mario J. Gabelli, CFA Bruce N. Alpert FUND
Portfolio Manager President and Treasurer
J. Hamilton Crawford, Jr.
Secretary
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
</TABLE>
- -----------------------------------------
This report is submitted for the general
information of the shareholders of The
Gabelli Asset Fund. It is not authorized
for distribution to prospective investors
unless preceded or accompanied by an
effective prospectus. FIRST QUARTER REPORT
- ----------------------------------------- MARCH 31, 1995
