<PAGE> 1
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
ANNUAL REPORT - 1994
TO OUR SHAREHOLDERS:
Following three consecutive years during which The Gabelli Asset Fund
materially exceeded its 10% real rate of return target, our portfolio made
little progress in 1994. True to the scenario we shared with you at the
beginning of the year, equities investing in 1994 was akin to walking through
knee deep mud. At that time, we forecast a down 10% to up 5% overall stock
market. That forecast proved accurate.
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
Quarter
--------------------------------------
1st 2nd 3rd 4th Year
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
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>
Average Annual Returns - December 31, 1994 (a)
- - -----------------------------------------------
1 Year................................ (0.1)%
5 Year................................ 9.4%
Life of Fund (b)...................... 14.9%
<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>
(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.
<PAGE> 2
For the fourth quarter, The Gabelli Asset Fund's net asset value declined
1.2% to an adjusted $23.27 per share on December 31, 1994 (adding back the
$1.056 per share distribution paid on December 30, 1994) from $23.56 per share
on September 30, 1994. During the same time period the Standard & Poor's 500
Index, a widely accepted unmanaged index of stock market performance, was
unchanged. For the twelve months ended December 31, 1994, the Fund's total
return was down 0.1% vs. the 1.3% return in the Standard & Poor's 500 Index over
the same period.
Comparison of Change in Value of
$10,000 Investment in the Gabelli Asset
Fund and the S&P 500 Index
<TABLE>
<CAPTION>
Gabelli
Measurement Period Asset Fund S&P 500 Index
<S> <C> <C>
3/3/86 $10,000 $10,000
12/31/86 $11,280 $10,930
12/31/87 $13,107 $11,487
12/31/88 $17,184 $13,383
12/31/89 $21,686 $17,612
12/31/90 $20,602 $17,066
12/31/91 $24,331 $22,271
12/31/92 $27,956 $23,384
12/31/93 $34,051 $25,746
12/31/94 $34,017* $26,081
</TABLE>
* Past performance is not predictive of the future performance.
Despite this lackluster year, the Asset Fund's total return from inception
on March 3, 1986 through December 31, 1994 remains an enviable 240.4%, which
reflects an average annual total return of 14.9% assuming reinvestment of all
dividends and distributions. The five year total return of the Fund ending on
December 31, 1994 was 56.9%, which equates to a 9.4% average annual total
return. On December 31, 1994 our shareholder base is at 52,623 shareholders and
total net assets of the Fund are at $982.2 million.
WHAT WE DO
We do what is described as bottoms 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 stocks, the catalyst is a regulatory change. In the agricultural
equipment business, it is the increasing worldwide
[RESEARCH ARTWORK]
<PAGE> 3
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.
COMMENTARY
Contracting price/earnings and price/cash flow multiples consistent with
higher interest rates restrained stocks in general. In addition,
telecommunications, cable television and entertainment and information software
stocks - the industries converging to form the interactive media superhighway -
had a bumpy ride as they hit some of the inevitable "potholes" formed by the
reconstruction of our national communications system. Also, despite much better
than expected earnings from industrial cyclicals, the group struggled against
the strong headwind of rising interest rates.
The Fund did benefit from the early stages of what we believe will be the
third great wave of corporate restructurings. Stocks like American Express
Company (AXP - $29.50 - NYSE), American Brands, Inc. (AMB - $37.50 - NYSE) and
Hilton Hotels Corporation (HLT - $67.375 - NYSE) advanced as their respective
corporate managements began reshaping the companies. We expect to see more of
this type of restructuring, accompanied by an increase in corporate takeovers in
1995.
THE YEAR IN REVIEW
At the beginning of the year, we opined that the economy as measured by GNP
would rise 3% and that corporate profits would increase by double digits. In
fact, the economy exceeded our bullish expectations. At the same time, we
expressed our concerns that higher interest rates would result in contracting
price/earnings multiples and a choppy stock market.
Our focus on undervalued assets helped as Hilton (+12%), American Express
(+3%) and American Brands (+13%) all benefitted from actual and proposed
corporate restructurings. Selected industry groups also did well. Cellular
telephone stocks such as AirTouch Communications (ATI - $29.125 - NYSE) (+16%)
and LIN Broadcasting Corporation (LINB - $133.50 - NASDAQ) (+21%) prospered as
subscriber and cash flow growth surged. Broadcasters, such as United
Television, Inc. (UTVI - $54.50 - NASDAQ) (+31%) and Outlet Communications, Inc.
(OCOMA - $16.75 - NASDAQ) (+59%) posted good gains as advertiser-supported media
rebounded with the economy. Selected manufacturing companies like AptarGroup,
Inc. (ATR - $28.75 - NYSE) (+38%), IDEX Corporation (IEX - $42.25 - NYSE)
(+18%), SPS Technologies, Inc. (ST - $25.375 - NYSE) (+39%) and Wynns
International, Inc. (WN - $22.00 - NYSE) (+20%) expanded their international
franchises and the market responded.
There were also disappointments. Cable bashing by the White House and
another round of rate reductions by the regulators crimped our holdings in CATV
companies like Tele-Communications, Inc. (TCOMA - $21.75 - NASDAQ) (-28%).
Profit taking in Time Warner Inc. (TWX - $35.125 - NYSE) (-21%) also took its
toll on our portfolio. Finally, uncertainty over local telephone companies'
ability to contend with impending competition in their markets hurt independent
telco stocks like Telephone and Data
<PAGE> 4
Systems, Inc. (TDS - $46.125 - ASE) (-12%). One particular portfolio culprit,
C-TEC Corporation (CTEX - $19.875 - NASDAQ), plunged nearly 40% from its high as
management destroyed the public value of its security through an ill conceived
rights offering.
WHAT ABOUT 1995?
One of the major factors that will impact the domestic economy going
forward is the rate of inflation. Obviously, Federal Reserve Chairman Alan
Greenspan is determined not to let inflation accelerate on his watch. As we see
it, the elements driving inflation in the months ahead are commodity pricing and
inflation's service and labor components. We are at a stage in the economy
where raw material costs will play a psychological and catalytic role. In 1994,
we witnessed increases in the prices of selected goods such as lumber, coffee
and copper, with intermediate goods rising sharply as the year progressed. The
wild card this year will be oil. In the service component, rising healthcare
costs have been contained. While these costs leaped forward at rates as high as
15% per annum for years, 1994 actually saw costs rise under 5%. Competition
should continue to reign in healthcare costs going forward.
In the critical labor sector, however, the focus of the worker in America's
heartland is shifting from worrying about being laid off to "how many days can I
get away to go hunting?" The implication is that labor costs will rise. The
ability to shift labor intensive manufacturing and services to other parts of
the world has not, however, been lost on all involved - including labor. This
should restrain inflation's labor component.
The statistical conclusion we reach is an inflation rate of 4.5% in 1995.
Given that long-term interest rates are comprised of real return plus premiums
for actual inflation and inflationary expectations, we expect long rates to go
over 8% as we reach a cyclical peak in economic activity. In addition, the
demand for funds by lesser developed countries may also add to nominal interest
rates long-term borrowers receive. Short-term rates should also continue to
rise.
1995 - THE STOCK MARKET
The likelihood of higher interest rates and further multiple contraction -
the same dynamics that restrained stocks in 1994 - is still in place. Will the
market retreat substantially from current levels? That depends on just how much
inflation we actually experience, how much capital flows out of equity mutual
funds back into money market instruments and whether we experience additional
financial accidents. As previously mentioned, we do see inflationary pressure
on the economy and expect the Fed to react accordingly. We do worry that the
enormous amount of money that flowed into equity mutual funds over the last
several years could reverse. To these reservations, we add a third concern:
that some form of financial meltdown - big loses in derivatives trading such as
the recently exposed difficulties in Orange County, California, or other
currency crises similar to the Mexican peso debacle - could stampede investors.
Our 1994 forecast of an up 5% to down 10% market for the year is still realistic
for 1995.
There is one notable trend we expect to impact our portfolio favorably in
1995. This trend, which we have shared with you on several occasions in the
past, is the increased level of transactions inspired in part by General
Electric's (GE - $51.00 - NYSE) unsolicited bid for Kemper on March 14 of this
past year. In going after Kemper, GE's Jack Welch sounded a resounding GONG
making it acceptable to do hostile transactions to fill a product niche or a
distribution channel. While the deal was never consummated, it signaled another
surge in takeovers, which should increase in kinetic fashion in 1995. Strong
cash flow, a willing banking community, lower long-term capital gains taxes and
a voracious appetite for deals by large, well-heeled buyers, all point to good
opportunities for value investors, particularly in small companies.
<PAGE> 5
Longer term, there are several other trends that should benefit the
American economy, the stock market and your fund. One is consumerism. There
are 3 billion people in China, India and emerging countries such as Indonesia
where the Gross Domestic Products (GDP) are growing at a double digit pace.
This is a boon for coveted American goods and services. In the past four years,
the 900 million people in India have increased their use of satellite dishes
from 400,000 to 10 million! Think of what that implies for American
entertainment software producers like Time Warner and Viacom Inc. (VIA - $41.625
- - - ASE). Another way to quantify the enormous impact of this region is to
consider that a one ounce increase in per capita beef consumption in China
translates into Iowa having the equivalent of the fourth highest GDP in the
world. Think of what this would do for Deere & Company (DE - $66.25 - NYSE).
We also see a trend relating to competition with Japan. Japanese
corporations are increasingly cash flow sensitive and are shifting their focus
from gaining market share to increasing profitability. This spells opportunity
for companies that compete directly with Japan and are capable of accelerating
market share gains. The American automobile industry and General Motors
Corporation (GM - $42.25 - NYSE) are good examples.
Another favorable trend is strong growth in travel related services. A one
percent increase in real disposable income translates into a 1.5% rise in the
consumption of travel related services. Hilton and American Express remain
strong favorites here.
OUR RESPONSE
With our short-term reservations about the broad market on record, we do
see opportunities for stock pickers in 1995.
We remain committed to selected telephone, cable television and
entertainment and information software producers. Regulatory change, new
technology and numerous joint ventures among participants in all three
industries have created confusion for investors who can't see the forest through
the trees. The forest is present in the form of enormous incremental revenues
and earnings for well-managed companies in all three industries. As the
interactive superhighway stretches out before us, quality companies like
Tele-Communications, Inc., Time Warner and Viacom will travel in the fast lane.
We also see smaller entities, like Chris-Craft Industries, Inc. (CCN -
$34.50 - NYSE), C-TEC, International Family Entertainment (FAM - $12.625 - NYSE)
and Media General Inc. (MEG'A - $28.375 - ASE) succeeding on their own or
through strategic alliances or incorporation into larger, more financially
robust entities. A template for this kind of restructuring is the recent Cox
Communications affiliation with the cable partnerships of Times Mirror. This is
just the beginning of a media "mating game" that will continue for the balance
of the decade.
After a bit of a beating in the latter half of 1994, we believe selected
auto and auto parts stocks can do well in the year ahead. General Motors is
making progress on all fronts: cost control, the introduction of competitive new
auto lines and, most importantly, a steady regaining of market share. Echlin
Inc. (ECH - $30.00 - NYSE) and Standard Motor Products, Inc. (SMP - $19.75 -
NYSE) are continuing to extend their dominant market share franchises in engine
components and brake systems.
Finally, we expect the fund to benefit from truly special situations in a
variety of industries. Corporate restructurings and takeovers will be the
catalyst. To repeat an earlier point, General Electric's proposed takeover of
Kemper last March sounded a bell - it made it OK once again to do hostile deals.
When we
<PAGE> 6
look back a few years from now, we will see that as a watershed event:
the beginning of a third great wave of takeovers in the U.S. In the 1960s it
was the conglomeratization of America. In the 1980s it was the leveraged
buyout. In the 1990s it will be strategic acquisitions designed to expand and
extend franchises throughout the global marketplace. Our traditional focus on
dominant market share franchises selling at a deep discount to "real world"
economic value will put us directly in the path of global consolidation on
numerous industry fronts.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our 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 - $29.50 - NYSE) 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 demonstrate his desire to refocus AXP on its core charge card and
travel services businesses by spinning off Lehman Brothers, Inc. This
divestiture places American Express in a strong position to focus on growing its
earnings at a double digit rate over the balance of this decade.
Time Warner Inc. (TWX - $35.125 - 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.
American Brands, Inc. (AMB - $37.50 - NYSE) is an asset rich company with many
different lines of businesses including Titleist and Pinnacle golf balls, Moen
faucets, Jim Beam bourbon and Acco office products. American Brands also owns
Gallaher, the largest tobacco company in the United Kingdom. American Brands
completed the sale of The Franklin Life Insurance company for $1.17 billion in
January 1995 and sold its domestic tobacco business, American Tobacco, to B.A.T.
for $1 billion in December 1994. We believe these sales are symbolic of
management's commitment to surface shareholder value. American Brands is a
strong cash flow generator and currently pays a healthy $2.00 dividend.
AT&T Corporation (T - $50.25 - NYSE ) is the second largest telephone company
in the world. AT&T is attractively valued at 7.5 times EBITDA relative to its
growth potential. It is well positioned to benefit from the above average
long-term growth of the global telecommunications industry. Its strategy
includes taking advantage of its strong global franchise, including brand name,
broad product offering and an international customer base. The company expects
to take advantage of the growing demand for a tailored approach to
telecommunications services. AT&T will satisfy communication needs by packaging
its broad array of products including its global wired and wireless
telecommunications services, telecommunications equipment and financial
services. We expect earnings growth in 1995 to be above 15%, with an EPS
estimate of $3.55.
General Motors Corporation (GM - $42.25 - 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
<PAGE> 7
years and international profits continue to grow. Additionally, under the helm
of Jack Smith, 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.
Pet Incorporated (PT - $19.75 - NYSE), which was spun off from the Whitman
Corporation on April 1, 1991, is a leading niche prepared food company. Old El
Paso Mexican food and Progresso Soups, Pet's fastest growing products, are the
bright stars in the company's product line. Other Pet products include Van de
Kamp's frozen seafood, B&M Baked Beans, Ac'cent Brand flavor enhancer and Pet
Evaporated Milk. Grand Metropolitan recently began a $26 cash tender offer for
Pet.
General Electric Company (GE - $51.00 - 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's controversial unit, Kidder Peabody, has been
sold to PaineWebber. GE declared a 2-for-1 stock split in mid - 1994 and the
dividend was increased by 13.7%. Earnings should hit a record level in 1995 and
the stock should benefit from a recently announced $5 billion share repurchase
plan.
LIN Broadcasting Corp. (LINB - $133.50 - 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 and is
contractually bound to either purchase the rest of LIN or to put all of LIN up
for sale in a process which begins in January 1995. We expect McCaw (AT&T) to
purchase the balance of LIN for a price of between $140 and $150 per share in
1995. The Fund is holding LIN to earn the difference between the current market
and the eventual "take out" price of LIN.
Chris-Craft Industries (CCN - $34.50 - NYSE) is primarily engaged in television
broadcasting through its roughly 70% ownership of BHC Communications (BHC -
$73.50 - ASE). BHC owns and operates independent TV stations in Los Angeles
(KCOP) and Portland, Oregon (KPTV). BHC controls 50% of United Television, Inc.
(UTVI - $54.50 - NASDAQ), an operator of an NBC - affiliated TV station, an ABC
affiliate and three independent outlets. BHC has entered into a partnership
agreement with Paramount Communications, Inc. to form and launch a new, fifth
television network to be called United Paramount Television Network. With about
$1.5 billion in marketable securities and cash, derived from the 1993
disposition of Time Warner securities, CCN is strongly positioned to expand its
operations. CCN is the eighth largest TV station group owner in the U.S.,
covering almost 20% of TV households.
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 checkwriting and exchange privileges. The Fund's expenses are
capped at .30% of average net assets, making it one of the most
<PAGE> 8
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 three very rewarding years, the Asset Fund bided time in 1994. We
acknowledge that there will be a challenging stock market environment in the
first half of 1995. Investing in 1994 was like walking through mud. There is
likely to be more slippery ground ahead. Our job is to find solid footing in
the form of fundamentally undervalued stocks. That is precisely the job we are
committed to.
Looking farther ahead, we believe the Fund is well positioned in industry
groups and individual stocks with great potential for the balance of the decade.
And, as in the past, we continue to focus on niche markets such as domestic
franchises so that we may provide for you double digit returns in a single digit
environment. We remain confident that our annualized 10% real rate of return
objective is achievable. We will continue to leverage our research capabilities
in industries like telecommunications and media to extend our global reach.
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,
/s/ MARIO J. GABELLI
----------------------
MARIO J. GABELLI, CFA
Portfolio Manager and
February 1, 1995 Chief Investment Officer
TOP TEN HOLDINGS
DECEMBER 31, 1994
-----------------
Pet Incorporated AT&T Corporation
American Express Company American Brands, Inc.
Time Warner, Inc. General Motors Corporation
Chris-Craft Industries, Inc. LIN Broadcasting Corporation
Varity Corporation General Electric Company
<PAGE> 9
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS --
87.93%
AIRLINES -- 0.76%
140,000 AMR Corporation*..... $ 8,853,387 $ 7,455,000
------------ ------------
AUTOMOTIVE -- 1.91%
18,000 Chrysler
Corporation........ 725,025 882,000
62,500 Ford Motor Company... 1,493,083 1,750,000
365,000 General Motors
Corporation........ 13,222,875 15,421,250
24,000 Harley-Davidson,
Inc. .............. 236,600 672,000
------------ ------------
15,677,583 18,725,250
------------ ------------
AUTOMOTIVE: PARTS AND
ACCESSORIES --
5.57%
33,500 APS Holding
Corporation*....... 519,250 946,375
25,000 Borg-Warner
Automotive,
Inc. .............. 601,647 628,125
5,000 Detroit Diesel
Corporation*....... 137,465 106,875
340,000 Echlin Inc. ......... 4,718,528 10,200,000
138,000 Federal-Mogul
Corporation........ 2,474,860 2,777,250
680,000 GenCorp Inc. ........ 3,910,013 8,075,000
270,000 Genuine Parts
Company............ 9,107,564 9,720,000
170,000 Handy & Harman....... 2,283,515 2,613,750
120,000 Johnson Controls,
Inc. .............. 3,140,842 5,880,000
145,000 Modine Manufacturing
Company*........... 1,376,219 4,168,750
36,250 Myers Industries,
Inc.*.............. 139,536 507,500
60,000 Pep Boys -- (Manny,
Moe & Jack)*....... 975,775 1,860,000
170,000 Quaker State
Corporation........ 2,329,573 2,380,000
60,000 RB&W Corporation*.... 316,663 480,000
50,000 Republic Automotive
Parts, Inc.*....... 278,125 671,875
15,000 SPX Corporation*..... 292,750 249,375
100,000 Standard Motor
Products, Inc. .... 708,500 1,975,000
13,200 Superior Industries
International,
Inc.*.............. 76,515 348,150
34,500 UAP Inc.*............ 380,566 359,708
34,000 Wynn's International,
Inc. .............. 562,295 748,000
------------ ------------
34,330,201 54,695,733
------------ ------------
AVIATION: PARTS AND
SERVICES -- 0.46%
100,000 Curtiss-Wright
Corporation........ 2,479,222 3,637,500
73,000 Hi-Shear Industries
Inc.*.............. 1,004,317 282,875
21,000 Hudson General
Corporation........ 397,275 330,750
6,000 PS Group, Inc.*...... 76,425 65,250
12,000 Whittaker
Corporation*....... 51,060 243,000
------------ ------------
4,008,299 4,559,375
------------ ------------
BROADCASTING -- 3.97%
45,000 BHC Communications,
Inc. Class A*...... 3,232,072 3,307,500
86,000 Capital Cities/ABC,
Inc. .............. 4,120,694 7,331,500
12,695 CBS Inc. ............ 412,268 702,986
374,405 Chris-Craft
Industries,
Inc. .............. 8,421,876 12,916,972
61,800 Chris-Craft
Industries, Inc.
Class B
Convertible(b)..... 1,132,525 2,132,100
5,000 Grupo Televisa,
S.A................ 164,104 158,750
125,000 Havas, S.A........... 2,446,059 2,437,500
53,000 LIN Television
Corporation*....... 587,796 1,205,750
60,000 Liberty
Corporation........ 1,275,129 1,522,500
24,407 Osborn Communications
Corporation*....... 217,919 183,052
400,000 Television
Broadcasting Ord... 1,816,844 1,597,560
100,000 United Television,
Inc.*.............. 2,880,469 5,450,000
------------ ------------
26,707,755 38,946,170
------------ ------------
BUSINESS SERVICES --
1.40%
9,500 Berlitz
International,
Inc.*.............. 130,475 123,500
150,000 Gerber Scientific,
Inc. .............. 1,448,233 1,950,000
124,000 International
Business Machines
Corporation........ 6,294,720 9,114,000
72,000 Landauer, Inc. ...... 447,792 1,197,000
65,000 Nashua Corporation... 2,187,530 1,332,500
------------ ------------
10,508,750 13,717,000
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 10
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
CABLE -- 3.52%
60,000 BET Holdings, Inc.
Class A*........... $ 1,030,738 $ 907,500
10,000 Cablevision Systems
Corporation Class
A*................. 433,875 505,000
60,000 Comcast Corporation
Class A............ 878,120 922,500
30,000 Comcast Corporation
Special Class A.... 627,204 470,625
111 International
CableTel
Incorporated*...... 465 3,080
165,000 International Family
Entertainment, Inc.
Class B*........... 2,217,747 2,083,125
390,000 Media General, Inc.
Class A............ 9,926,407 11,066,250
80,000 Multimedia, Inc. .... 1,906,064 2,280,000
152,900 QVC, Inc.*........... 6,672,099 6,440,912
40,000 Shaw Communications
Inc.*.............. 363,399 285,164
400,250 Tele-Communications,
Inc. Class A*...... 8,709,048 8,705,438
50,000 United International
Holdings Class
A*................. 657,213 875,000
------------ ------------
33,422,379 34,544,594
------------ ------------
COMMERCIAL SERVICES
-- 0.53%
250,000 Ecolab, Inc. ........ 3,954,053 5,250,000
------------ ------------
CONSUMER PRODUCTS
AND SERVICES -- 9.97%
460,000 American Brands,
Inc. .............. 15,805,227 17,250,000
60,000 Black & Decker
Corporation........ 1,102,970 1,425,000
195,000 Brunswick
Corporation........ 2,676,275 3,680,625
262,000 Carter-Wallace,
Inc. .............. 4,966,364 3,406,000
180,000 Church & Dwight Co.,
Inc. .............. 4,304,340 3,240,000
25,000 Duracell
International
Inc. .............. 720,736 1,084,375
50,000 Eastman Kodak
Company............ 2,114,199 2,387,500
145,000 Fieldcrest Cannon,
Inc. .............. 2,024,147 3,697,500
43,000 First Brands
Corporation........ 1,130,275 1,505,000
261,000 General Electric
Company............ 12,749,541 13,311,000
26,500 Gillette Company..... 1,493,550 1,980,875
35,000 Libbey Inc. ......... 453,600 612,500
72,500 Outboard Marine
Corp............... 1,416,638 1,422,813
35,000 Phillip Morris
Companies Inc. .... 1,744,024 2,012,500
100,000 Phillips Electronics
N.V................ 1,529,543 2,937,500
185,000 Procter & Gamble
Company............ 10,047,979 11,470,000
245,000 Ralston Purina
Group.............. 9,242,451 10,933,125
180,000 Rollins, Inc. ....... 2,111,982 4,117,500
50,800 Scotts Company Class
A*................. 799,431 806,450
127,500 Tambrands Inc. ...... 5,281,523 4,924,687
330,000 Whitman
Corporation........ 3,085,163 5,692,500
------------ ------------
84,799,958 97,897,450
------------ ------------
COUNTRY/CLOSED-END
FUNDS -- 0.07%
59,972 Royce Value Trust
Inc. .............. 645,985 659,693
------------ ------------
DIVERSIFIED INDUSTRIAL
-- 4.58%
45,000 GATX Corporation..... 1,039,561 1,980,000
10,000 ITEL Corporation*.... 180,175 346,250
100,000 ITT Corporation...... 5,939,166 8,862,500
150,000 Katy Industries,
Inc. .............. 1,357,500 1,275,000
6,500 Kyocera Corporation
ADR................ 448,063 968,500
375,000 Lamson & Sessions
Co.*............... 2,011,040 2,250,000
80,000 Lawter International,
Inc. .............. 564,000 970,000
135,000 Minnesota Mining and
Manufacturing
Company............ 7,092,138 7,205,625
30,000 Morrison Knudsen
Corporation........ 594,997 382,500
62,000 National Service
Industries,
Inc. .............. 1,327,611 1,588,750
145,000 St. Joe Paper
Company............ 4,974,244 7,866,250
85,000 Tenneco Inc. ........ 3,647,390 3,612,500
60,000 Thomas Industries
Inc. .............. 920,097 862,500
215,000 Trinity Industries,
Inc................ 2,935,405 6,772,500
------------ ------------
33,031,387 44,942,875
------------ ------------
ENERGY -- 3.12%
49,500 Atlantic Richfield
Company............ 5,323,951 5,036,625
35,000 British Petroleum
Company plc........ 1,568,032 2,795,625
135,000 Burlington Resources
Inc. .............. 6,062,139 4,725,000
30,000 Chevron
Corporation........ 1,016,500 1,338,750
170,000 Eastern
Enterprises........ 4,578,075 4,462,500
60,000 Enron Oil & Gas
Company*........... 548,976 1,125,000
110,000 Exxon Corporation.... 6,704,069 6,682,500
330,000 Kaneb Services,
Inc.*.............. 1,624,802 701,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 11
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
6,500 McDermott
International,
Inc. .............. $ 162,263 $ 160,875
50,000 PacifiCorp*.......... 971,882 906,250
67,500 Southwest Gas
Corporation........ 1,200,671 953,438
30,000 Texaco Inc. ......... 1,890,875 1,796,250
------------ ------------
31,652,235 30,684,063
------------ ------------
ENTERTAINMENT: GENERAL
-- 3.74%
55,000 Bay Meadows Operating
Company............ 908,525 790,625
15,000 Gaylord Entertainment
Company Class A.... 308,500 341,250
53,000 GC Companies Inc*.... 1,264,497 1,391,250
30,000 GTECH Holdings
Corporation*....... 547,813 611,250
20,000 PolyGram NV.......... 574,275 922,500
20,000 Santa Anita Realty
Enterprises
Inc. .............. 357,975 275,000
7,800 Sony Music
Entertainment
Inc. .............. 334,781 438,774
110,000 THORN EMI plc ADR*... 1,609,000 1,801,250
445,000 Time Warner, Inc. ... 9,709,872 15,630,625
10,480 Todd-AO Corporation
Class A*........... 31,440 49,780
118,000 Viacom Inc. Class
A*................. 1,655,352 4,911,750
236,000 Viacom Inc. Class
B*................. 6,266,717 9,587,500
------------ ------------
23,568,747 36,751,554
------------ ------------
FINANCIAL SERVICES
-- 4.76%
1 Al-Zar Ltd.(b)*...... -0- 350
640,000 American Express
Company............ 15,593,345 18,880,000
220 Berkshire Hathaway
Inc.*.............. 874,549 4,488,000
35,000 Commerzbank AG ADR... 1,366,545 1,483,125
14,000 Deutsche Bank AG
ADR................ 6,094,375 6,482,000
2,000 Financial Security
Assurance.......... 44,100 42,000
3,000 H&R Block, Inc. ..... 104,775 111,375
370,000 Lehman Brothers
Holdings, Inc. .... 4,871,475 5,457,500
15,000 Mellon Bank
Corporation........ 559,141 459,375
82,000 Midland Company...... 2,515,119 3,546,500
58,000 Salomon Inc. ........ 2,064,286 2,175,000
25,000 State Street Boston
Corporation........ 717,713 715,625
10,000 SunTrust Banks,
Inc. .............. 424,879 477,500
11,941 Transamerica
Corporation........ 583,636 594,065
4,000 U.S. Trust
Corporation*....... 189,500 254,000
30,000 Unitrin, Inc. ....... 975,193 1,290,000
9,500 Value Line, Inc. .... 138,000 294,500
------------ ------------
37,116,631 46,750,915
------------ ------------
FOOD AND BEVERAGE --
7.73%
10,000 Brown-Forman
Corporation Class
A.................. 281,475 310,000
15,000 Cadbury Schwepps plc
ADS................ 390,750 405,000
60,000 Campbell Soup
Company............ 1,483,100 2,647,500
72,100 Chock Full o'Nuts
Corporation........ 451,407 414,575
23,000 Coca-Cola Company.... 395,569 1,184,500
200,000 Coca-Cola Enterprises
Inc. .............. 3,334,664 3,575,000
17,000 CPC International
Inc................ 602,088 905,250
47,000 Delchamps, Inc. ..... 1,111,792 716,750
110,000 Dole Food Company,
Inc.*.............. 3,385,250 2,530,000
202,000 Dr. Pepper/Seven-Up
Companies, Inc.*... 3,744,499 5,176,250
2,500 Farmer Brothers
Company............ 200,625 310,000
62,500 General Mills,
Inc.*.............. 1,689,250 3,562,500
15,000 Heinz Co. (H.J.)..... 555,750 551,250
40,000 Hershey Foods
Corporation........ 1,715,563 1,935,000
84,000 Kellogg Company...... 3,173,732 4,882,500
325,000 PepsiCo, Inc. ....... 10,731,153 11,781,250
1,110,000 Pet Incorporated..... 18,242,747 21,922,500
120,000 Quaker Oats
Company............ 3,293,597 3,690,000
69,933 Ralcorp Holdings
Inc.*.............. 1,047,674 1,556,009
88,000 Ralston-Continental
Baking Group*...... 807,887 330,000
25,000 Robert Mondavi Wine
Corporation Class
A*................. 225,237 287,500
150,000 Seagram Company
Ltd................ 3,957,374 4,425,000
58,000 Wrigley (Wm.) Jr.
Company*........... 2,366,931 2,863,750
------------ ------------
63,188,114 75,962,084
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 12
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
HEALTH CARE -- 2.38%
10,000 Amgen Inc.*.......... $ 361,229 $ 590,000
10,000 Biogen, Inc.*........ 299,450 417,500
20,000 BioWhittaker,
Inc.*.............. 99,053 127,500
200,000 Johnson & Johnson.... 8,949,835 10,950,000
67,500 Mallinckrodt Group,
Inc. .............. 2,090,282 2,016,562
80,000 Marion Merrell Dow
Inc. .............. 2,763,814 1,630,000
99,999 Merck & Co., Inc. ... 3,387,816 3,812,462
50,000 Pfizer Inc. ......... 3,391,165 3,862,500
------------ ------------
21,342,644 23,406,524
------------ ------------
HOTELS/CASINOS --
2.29%
100,000 Caesars World,
Inc.*.............. 5,024,463 6,675,000
160,000 Hilton Hotels
Corporation........ 7,598,311 10,780,000
140,000 Ladbroke Group plc... 360,373 375,020
112,000 Mirage Resorts
Incorporated*...... 1,151,217 2,296,000
23,500 Promus Companies*.... 300,725 728,500
65,000 United Inns, Inc.*... 249,105 1,608,750
------------ ------------
14,684,194 22,463,270
------------ ------------
INDUSTRIAL EQUIPMENT
AND SUPPLIES --
10.79%
300,000 AMETEK, Inc. ........ 4,074,627 5,062,500
12,000 AMP Incorporated..... 906,350 873,000
25,000 Amphenol Corporation
Class A*........... 286,812 600,000
274,000 AptarGroup, Inc. .... 4,058,733 7,877,500
15,000 CalMat Co. .......... 313,362 260,625
64,000 Caterpillar Inc. .... 1,729,874 3,528,000
65,000 CLARCOR Inc. ........ 1,239,362 1,381,250
130,000 Crane Co. ........... 3,397,840 3,493,750
100,000 CTS Corporation...... 2,084,351 2,775,000
152,500 Deere & Company...... 6,899,735 10,103,125
325,000 Donaldson Company,
Inc. .............. 3,650,551 7,800,000
4,500 Duriron Company,
Inc. .............. 25,600 79,875
8,000 Elcor Corporation*... 53,425 123,000
6,000 Fibreboard
Corporation*....... 172,425 164,250
6,500 Florida Rock
Industries,
Inc. .............. 189,018 177,937
68,000 Greif Brothers
Corporation Class
A.................. 2,427,730 2,941,000
90,000 Guardsman Products,
Inc. .............. 997,358 1,125,000
10,546 Hach Company*........ 116,905 152,917
270,500 IDEX Corporation*.... 4,750,150 11,428,625
201,000 Kollmorgen
Corporation........ 1,875,030 1,155,750
10,000 Lafarge
Corporation........ 182,500 177,500
25,000 Lufkin Industries,
Inc. .............. 455,777 462,500
40,000 M/A-Com, Inc.*....... 197,525 290,000
40,000 Manitowoc Company,
Inc................ 869,205 865,000
270,650 Mark IV Industries,
Inc. .............. 2,176,071 5,345,338
8,200 Martin Marietta
Materials Group.... 182,160 145,550
9,500 Minerals Technologies
Inc. .............. 251,463 277,875
335,000 Navistar
International
Corporation........ 7,520,643 5,066,875
165,000 Nortek, Inc.*........ 659,077 1,959,375
4,333 Nortek, Inc. Special
Convertible*....... 59,049 51,454
10,000 PACCAR Inc.*......... 522,021 442,500
72,000 Pittway
Corporation........ 1,065,236 2,808,000
200,000 Pittway Corporation
Class A............ 2,790,133 8,050,000
44,500 Sequa Corporation
Class A*........... 1,877,670 1,157,000
70,000 Sequa Corporation
Class B*........... 3,685,733 1,863,750
79,200 SPS Technologies,
Inc.*.............. 2,210,879 2,009,700
12,000 Truck Components
Inc.*.............. 120,000 114,000
20,000 Valmont Industries,
Inc. .............. 349,658 340,000
370,000 Varity
Corporation*....... 8,130,425 13,412,500
------------ ------------
72,554,463 105,942,021
------------ ------------
MERCHANDISING: FOOD
-- 0.18%
20,000 Albertson's, Inc. ... 545,500 580,000
50,000 Kroger Co.*.......... 1,156,250 1,206,250
------------ ------------
1,701,750 1,786,250
------------ ------------
MEDICAL EQUIPMENT --
0.03%
15,000 Puritan-Bennett
Corporation........ 288,525 315,000
------------ ------------
MERCHANDISING:
SPECIALTY -- 0.14%
120,000 Burlington Coat
Factory Warehouse
Corporation*....... 1,648,500 1,410,000
------------ ------------
METALS AND MINING
-- 0.58%
34,350 American Barrick
Resources
Corporation........ 733,756 764,288
68 Bucyrus-Erie
Company*........... 3,415 474
30,000 Echo Bay Mines
Ltd................ 411,000 318,750
35,000 Homestake Mining
Company............ 610,562 599,375
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 13
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
100,000 Horsham
Corporation........ $ 1,401,938 $ 1,275,000
28,000 Newmont Gold
Company............ 1,189,303 997,500
90,000 Pegasus Gold Inc..... 1,732,494 1,023,750
17,500 Placer Dome Inc...... 336,400 380,625
100,000 Royal Oak Mines
Inc.*.............. 461,929 325,000
------------ ------------
6,880,797 5,684,762
------------ ------------
PAPER & FOREST
PRODUCTS -- 0.10%
8,000 Plum Creek Timber
Company L.P........ 134,645 160,000
27,500 Rayonier Inc......... 615,664 838,750
------------ ------------
750,309 998,750
------------ ------------
PUBLISHING -- 3.12%
50,000 American Media
Inc................ 820,000 812,500
6,000 Central Newspapers,
Inc................ 152,488 168,750
5,000 E.W. Scripps Company
Class A............ 99,627 151,250
375,000 Harcourt General,
Inc.*.............. 7,892,631 13,218,750
32,000 McClatchy Newspapers,
Inc. Class A....... 640,975 688,000
80,000 McGraw-Hill, Inc..... 4,572,950 5,350,000
164,993 New York Times
Company Class A.... 2,527,863 3,650,470
13,000 News Corporation
Limited ADS........ 207,737 203,125
76,000 Reader's Digest
Association, Inc.
Class B............ 3,018,597 3,401,000
320,000 Western Publishing
Group, Inc.*....... 4,671,913 3,040,000
------------ ------------
24,604,781 30,683,845
------------ ------------
RETAIL -- 1.03%
14,500 Aaron Rents, Inc.
Class A............ 85,734 184,875
13,000 Aaron Rents, Inc.
Class B............ 72,755 156,000
4,000 Crown Books
Corporation*....... 53,700 62,000
120,800 Earl Schelb, Inc.*... 859,814 709,700
60,000 Jostens, Inc......... 1,148,355 1,117,500
12,700 Lillian Vernon
Corporation........ 137,058 193,675
570,000 Neiman Marcus
Group*............. 8,391,412 7,695,000
------------ ------------
10,748,828 10,118,750
------------ ------------
RETAIL: FOOD & DRUG
-- 0.19%
70,000 American Stores
Company............ 1,766,213 1,881,250
------------ ------------
SPECIALTY CHEMICALS
-- 0.61%
25,000 E.I. Du Pont De
Nemours & Co. ..... 1,485,125 1,406,250
158,000 Ferro Corporation.... 3,102,778 3,772,250
45,000 Pratt & Lambert,
Inc. .............. 647,100 843,750
------------ ------------
5,235,003 6,022,250
------------ ------------
TELECOMMUNICATIONS
-- 9.97%
380,000 AT&T Corporation..... 18,158,661 19,095,000
200,000 BCE Inc. ............ 7,001,325 6,425,000
30,000 BC TELECOM Inc.*..... 537,319 515,969
12,500 BellSouth
Corporation........ 649,466 676,563
9,000 British
Telecommunications
plc ADR............ 577,730 541,125
362,600 C-TEC Corporation
Class A*........... 6,713,350 7,206,675
44,000 C-TEC Corporation
Class B
Convertible(b)*.... 653,144 866,250
60,000 Cable & Wireless plc
ADR................ 1,241,955 1,050,000
3,000 Compania de Telefonos
de Chile S.A.*..... 285,150 236,250
318,000 GTE Corporation...... 6,127,042 9,659,250
30,000 Hong Kong
Telecommunications
Ltd. ADR........... 439,196 573,750
130,000 Lincoln
Telecommunications
Company............ 1,818,824 2,210,000
4,000 MFS Communications
Company, Inc.*..... 108,545 131,000
70,000 Motorola, Inc. ...... 1,001,481 4,051,250
65,000 NYNEX Corporation.... 2,634,717 2,388,750
46,000 Outlet
Communications,
Inc. Class A*...... 355,150 770,500
15,000 Pacific Telesis
Group.............. 502,194 427,500
155,000 Rochester Telephone
Corporation*....... 2,441,625 3,274,375
132,500 Royal PTT Nederland
NV 144A(c)*........ 3,544,203 4,405,625
28,000 Southern New England
Telecommunications
Corporation........ 942,025 899,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 14
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES COST VALUE
- - ---------- ------------ ------------
<C> <S> <C> <C>
100,000 Southwestern Bell
Corporation*....... $ 2,131,081 $ 4,037,500
425,000 Sprint Corporation... 8,922,428 11,740,625
2,500,000 STET-Societa
Finanziaria
Telefonica pa...... 5,705,495 7,367,788
2,200,000 Telecom Italia*...... 4,438,995 5,724,063
42,911 Telecommunicacoes
Brasileiras SA*-
(Telebras) ADR..... 1,378,257 1,925,631
16,000 Telefonica de Espana
SA ADS............. 511,408 562,000
11,000 Telefonos De Mexico,
SA de C.V. ADS..... 505,738 451,000
1,521,945 Telecommunicacoes de
Sao Paulo SA
(Telesp)*.......... 190,267 216,522
15,000 US WEST, Inc.*....... 526,516 534,375
------------ ------------
80,043,287 97,963,836
------------ ------------
TRANSPORTATION --
0.11%
13,500 Florida East Coast
Industries,
Inc. .............. 713,263 891,000
20,000 OMI Corp.*........... 89,994 132,500
500 Stolt Tankers and
Terminals
(Holdings) S.A.*... 5,125 10,313
------------ ------------
808,382 1,033,813
------------ ------------
WIRELESS
COMMUNICATIONS --
4.32%
250,000 AirTouch
Communications
Inc.*.............. 5,767,779 7,281,250
133,000 Allen Group Inc...... 887,158 3,175,375
18,500 Associated
Communications
Corporation Class
A*................. 98,788 434,750
18,500 Associated
Communications
Corporation Class
B*................. 98,787 434,750
667 Cellular
Communications,
Inc. Series A*..... 8,650 35,685
265,000 Century Telephone
Enterprises,
Inc. .............. 4,438,527 7,817,500
120,000 COMSAT Corporation... 2,695,794 2,235,000
106,000 LIN Broadcasting
Corporation........ 6,477,056 14,151,000
22,000 NEXTEL
Communications,
Inc. Class A*...... 334,554 316,250
137,000 Telephone and Data
Systems, Inc. ..... 1,254,666 6,319,125
7,500 Vodafone Group ADR... 171,219 252,187
------------ ------------
22,232,978 42,452,872
------------ ------------
TOTAL COMMON
STOCKS............. 676,756,118 863,704,949
------------ ------------
PREFERRED STOCKS
-- 0.36%
CONSUMER PRODUCTS
-- 0.23%
2,000 Kerr Group, Inc.
Conv. $1.70
Cumulative Conv.
Class B, Series
D.................. 33,975 39,000
45,000 Fieldcrest Cannon,
Inc. 144A(c)*...... 2,486,250 2,250,000
------------ ------------
2,520,225 2,289,000
------------ ------------
INDUSTRIAL EQUIPMENT
& SUPPLIES -- 0.10%
17,500 Sequa Corporation $5
Cumulative
Convertible........ 1,386,708 962,500
------------ ------------
METALS AND MINING
-- 0.02%
10,000 Freeport-McMoRan Inc.
7% Cumulative Conv.
Depositary......... 213,000 207,500
------------ ------------
PUBLISHING -- 0.01%
6,500 News Corporation
Limited Sponsored
ADS................ 87,499 101,563
------------ ------------
TOTAL PREFERRED
STOCKS............. 4,207,432 3,560,563
------------ ------------
COMMON STOCK WARRANTS
AND RIGHTS -- 0.08%
ENTERTAINMENT --
0.08%
Viacom Inc.
130,000 Contingent Value
Rights*.............. 666,250 398,125
70,000 Class C*............. 86,406 231,875
35,000 Class E*............. 124,688 188,125
------------ ------------
877,344 818,125
------------ ------------
TOTAL COMMON STOCK
WARRANTS AND
RIGHTS............. 877,344 818,125
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 15
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1994 (CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT COST VALUE
- - ----------- ------------ ------------
<C> <S> <C> <C>
CORPORATE BONDS
-- 0.63%
ENTERTAINMENT
-- 0.63%
$ 6,500,000 Time Warner Inc.,
Reset Note, Zero
Coupon through
08/15/1995 due
08/15/2002........ $ 5,317,730 $ 6,142,500
------------ ------------
TOTAL CORPORATE
BONDS............. 5,317,730 6,142,500
------------ ------------
CONVERTIBLE CORPORATE
BONDS -- 3.38%
AUTOMOTIVE PARTS AND
ACCESSORIES --
0.04%
400,000 GenCorp Inc. 8%
Subordinated
Debentures due
08/01/2002........ 395,039 365,000
------------ ------------
BROADCASTING -- 0.01%
343,750 Havas, S.A. 3% Pik
Bond, due
12/31/1997........ 83,923 73,927
------------ ------------
ENTERTAINMENT --
3.33%
32,231,000 Time Warner Inc.
8.750% Debentures,
due 01/01/2015.... 33,886,106 30,377,718
2,750,000 Viacom Inc. 8%, due
07/07/2006........ 1,799,828 2,371,875
------------ ------------
35,685,934 32,749,593
------------ ------------
TOTAL CONVERTIBLE
CORPORATE BONDS... 36,164,896 33,188,520
------------ ------------
U.S. GOVERNMENT
OBLIGATIONS --
8.29%
82,600,000 U.S. Treasury
Bills, 4.030%
to 6.730%, due
01/01/95 to
12/14/95...... 81,538,336 81,458,788
------------- -------------
TOTAL U.S.
GOVERNMENT
OBLIGATIONS... 81,538,336 81,458,788
------------- -------------
TOTAL
INVESTMENTS --
100.67%(A).... $ 804,861,856 988,873,445
===========
LIABILITIES, IN
EXCESS OF CASH
AND OTHER
ASSETS -- (0.67%)... (6,623,734)
-------------
NET ASSETS --
100.00%
(44,230,994
SHARES
OUTSTANDING)... $ 982,249,711
===========
NET ASSET VALUE,
OFFERING AND
REDEMPTION
PRICE PER
SHARE......... $ 22.21
===========
</TABLE>
* Non-income producing.
a) For Federal income tax purposes aggregate cost is $805,346,843. Gross
unrealized appreciation and depreciation are $214,102,109 and $30,575,507,
respectively, resulting in net unrealized appreciation of $183,526,602.
b) Security fair valued under procedures established by the Board of Trustees.
c) Security exempt from registration under Rule 144A of Securities Act of 1933.
These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers. At December 31, 1994, Rule 144A
Securities amounted to $6,655,625 or 0.68% of net assets.
The accompanying notes are an integral part of the financial statements.
<PAGE> 16
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
- - ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(Cost $804,861,856)................. $988,873,445
Receivable for fund shares sold....... 1,713,567
Receivable for securities sold........ 862,637
Dividends receivable.................. 2,006,448
Accrued interest receivable........... 819,919
------------
Total assets........................ 994,276,016
------------
LIABILITIES:
Payable for investments purchased..... 6,274,786
Payable for fund shares redeemed...... 157,602
Payable for advisory fees............. 825,598
Payable for distribution fees......... 112,053
Dividends and distributions payable... 4,062,970
Other payables and accrued expenses... 593,296
------------
Total liabilities................... 12,026,305
------------
Net assets applicable to 44,230,994
shares of beneficial interest
outstanding....................... $982,249,711
=============
Net asset value, offering and
redemption price per share........ $ 22.21
=============
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value............................... $ 442,310
Additional paid in capital............ 798,647,189
Distributions in excess of net
investment income................... (110,943)
Distributions in excess of net
realized gains...................... (740,434)
Unrealized net appreciation of
investments......................... 184,011,589
------------
Net assets.......................... $982,249,711
=============
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994
- - ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest.............................. $ 8,025,327
Dividends............................. 15,827,907
------------
Total income........................ 23,853,234
------------
EXPENSES:
Investment advisory fee............... 9,992,690
Distribution fees..................... 1,491,152
Transfer and shareholder servicing
agent............................... 464,733
Reports to shareholders............... 490,489
Custodian fees and expenses........... 162,724
Legal and auditing.................... 51,008
Registration fees..................... 59,385
Trustees' fees........................ 58,500
Miscellaneous......................... 19,797
------------
Total expenses...................... 12,790,478
------------
Investment income -- net............ 11,062,756
------------
NET REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss) on
investments......................... 33,486,441
Net change in unrealized
appreciation........................ (46,397,512)
------------
Net loss on investments............. (12,911,071)
------------
Net decrease in net assets resulting
from operations................... $ (1,848,315)
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1994 1993
------------- -------------
<S> <C> <C>
CHANGE IN NET ASSETS:
Investment income -- net............................................... $ 11,062,756 $ 6,473,540
Realized gain on investments -- net.................................... 33,486,441 29,516,817
Change in unrealized appreciation/depreciation -- net.................. (46,397,512) 116,534,146
------------- -------------
Net decrease in net assets resulting from operations................. (1,848,315) 152,524,503
Dividends to shareholders from net investment income................... (10,988,841) (6,467,726)
Dividends to shareholders in excess of net investment income........... (110,943)
Distributions to shareholders from net realized gains.................. (32,875,775) (29,653,789)
Distributions to shareholders in excess of net realized gains.......... (740,434)
Share transactions -- net.............................................. 83,405,757 196,430,233
------------- -------------
Net increase in net assets........................................... 36,841,449 312,833,221
NET ASSETS:
Beginning of year...................................................... 945,408,262 632,575,041
------------- -------------
End of year (including distributions in excess of net investment income
of $110,943 and $0, respectively).................................... $ 982,249,711 $ 945,408,262
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE> 17
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Asset Fund (the "Fund") is an
open-end, diversified management investment company organized as a Massachusetts
business trust and registered under the Investment Company Act of 1940, as
amended. The Fund commenced operations on March 3, 1986. The following is a
summary of significant accounting policies followed by the Fund.
SECURITY VALUATION. Readily marketable securities traded on a national
securities exchange or admitted to trading on the NASDAQ National Market List
are valued at the last reported sales price on the business day as of which such
value is determined. Securities for which no sale was reported on that day and
over-the-counter securities not included in the NASDAQ National Market List are
valued at the mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having 60 days or less
remaining until maturity are stated at amortized cost (which approximates
value). Debt instruments having a remaining maturity of more than 60 days will
be valued at the highest bid price obtained from a dealer maintaining an active
market in that security or on the basis of prices obtained from a pricing
service approved as reliable by the Board of Trustees. All other investment
assets, including restricted and not readily marketable securities, are valued
under procedures established by and under the general supervision and
responsibility of the Fund's Board of Trustees, designed to reflect in good
faith the fair value of such securities.
SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are accounted
for on the dates the securities are purchased or sold (the trade dates) with
realized gain or loss on investments determined by using specific identification
as the cost method. Interest income (including amortization of premium and
discount) is recorded as earned. Dividend income and dividends and distributions
to shareholders are recorded on the ex-dividend date.
Income distributions and capital gain distributions on a Fund level are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund and temporary differences and differing characterization of
distributions made by the Fund as a whole.
FEDERAL INCOME TAXES. The Fund qualifies and intends to continue to qualify as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986 and intends to distribute all of its taxable income to its shareholders.
Therefore, no Federal income tax provision is required.
2. SHARES OF BENEFICIAL INTEREST. The Declaration of Trust, dated November 21,
1985, permits the Fund to issue an unlimited number of shares (par value $0.01).
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold..................................... 13,812,609 319,924,263 14,198,912 314,318,880
Shares issued on reinvestment of dividends and
distributions................................. 1,830,373 40,652,559 1,439,475 33,539,777
Shares redeemed................................. (11,982,003) (277,171,065) (6,887,181) (151,428,424)
------------ ------------- ----------- -------------
Net increase.................................. 3,660,979 83,405,757 8,751,206 196,430,233
========== =========== ========= ===========
</TABLE>
3. PURCHASES AND SALES OF SECURITIES. Purchases and sales of securities, other
than U.S. Government obligations and short-term securities, aggregated
$248,690,376 and $163,130,509, respectively.
<PAGE> 18
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- - --------------------------------------------------------------------------------
4. INVESTMENT ADVISORY CONTRACT. The Fund employs Gabelli Funds, Inc. (the
"Advisor") to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including officers, required for its
administrative management and pay the compensation of all officers and Trustees
of the Fund who are its affiliates. As compensation for the services rendered
and related expenses borne by the Advisor, the Fund pays the Advisor a fee,
computed and accrued daily and payable monthly, equal to 1.00% per annum of the
Fund's average daily net assets. The Advisor is obligated to reimburse the Fund
in the event the Fund's expenses exceed the most restrictive expense ratio
limitation imposed by any state. No such reimbursement was required during 1993
or 1994.
5. DISTRIBUTION PLAN. The Fund's Board of Trustees has adopted a distribution
plan (the "Plan") under Section 12(b) of the Investment Company Act of 1940 and
Rule 12b-1 thereunder. Pursuant to this Plan, Gabelli & Company, Inc. (the
"Distributor") is authorized to purchase advertising, sales literature and other
promotional material and to pay its own salespeople. The Fund will reimburse the
Distributor for these expenditures up to a limit of 0.25% on an annual basis of
the Fund's average daily net assets. In addition, if and to the extent that the
fee that the Fund pays to the Advisor as well as other payments it makes, are
considered as indirectly financing any activity which is primarily intended to
result in the sale of the Fund's shares, such payments are authorized under the
Plan. For the year ended December 31, 1994, the Fund has incurred distribution
costs of $1,491,152, or 0.15% of average net assets under the Plan.
6. TRANSACTIONS WITH AFFILIATES. For the year ended December 31, 1994, the Fund
paid brokerage commissions of $35,693 to Gabelli & Company, Inc. and its
affiliates.
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
(for a share of beneficial interest outstanding
throughout each year)
Net asset value, beginning of year............................... $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26
--------- --------- --------- --------- ---------
Income from investment operations:
Net investment income.......................................... $ 0.26 $ 0.16 $ 0.26 $ 0.39 $ 0.76
Net realized and unrealized gain/(loss) on investments......... (0.30) 4.18 2.41 2.45 (1.62)
--------- --------- --------- --------- ---------
Total from investment operations............................. (0.04) 4.34 2.67 2.84 (0.86)
Less distributions:
Dividends from net investment income........................... (0.25) (0.16) (0.25) (0.39) (0.77)
Distributions in excess of net investment income............... (0.01) -- -- -- --
Distributions from net realized gains on investments........... (0.76) (0.76) (0.50) (0.12) --
Distributions in excess of net realized gains on investments... (0.03) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions.......................................... (1.05) (0.92) (0.75) (0.51) (0.77)
--------- --------- --------- --------- ---------
Net asset value, end of year..................................... $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63
========= ========= ========= ========= =========
Total Return*.................................................... (0.1%) 21.8% 14.9% 18.1% (5.0%)
--------- --------- --------- --------- ---------
Net assets, end of year (000's omitted).......................... $ 982,250 $ 945,408 $ 632,575 $ 483,865 $ 342,710
========= ========= ========= ========= =========
Significant Ratios:
Investment income -- net to average net assets................. 1.10% 0.82% 1.42% 2.34% 4.51%
Operating expenses -- net to average net assets................ 1.28% 1.31% 1.31% 1.30% 1.20%
Portfolio turnover............................................. 18.74% 16.04% 14.39% 20.13% 55.71%
</TABLE>
- - ---------------
* Total return is calculated assuming a purchase of shares at the net asset
value on the first day and a sale on the last day of each year reported and
includes reinvestment of dividends and distributions.
<PAGE> 19
REPORT OF INDEPENDENT ACCOUNTANTS
- - --------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF THE GABELLI ASSET FUND
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Gabelli Asset Fund (the "Fund")
at December 31, 1994, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1994 by
correspondence with the custodian and brokers and the application of alternative
auditing procedures where confirmations from brokers were not received, provide
a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 9, 1995
1994 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
On December 30, 1994, the Fund paid to shareholders an ordinary income
dividend (comprised of net investment income and short-term capital gains) of
$0.446 per share and a distribution from long-term capital gains of $0.610 per
share. For 1994, 84.05% of such ordinary income dividends qualifies for the
dividend received deduction available to corporations. The distribution from
long-term capital gains is designated as a "Capital Gain Dividend" and is
taxable to shareholders as a long-term capital gain.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during 1994
which was derived from U.S. Treasury Securities was 16.01%. Such income is
exempt from state and local income tax in most states. However, many states,
including New York and California, allow a tax exemption for a portion of the
income earned only if a mutual fund has invested at least 50% of its assets at
the end of each quarter of the Fund's fiscal year in U.S. Government Securities.
The Gabelli Asset Fund did not meet this strict requirement in 1994. Due to the
diversity in state and local tax laws it is recommended that you consult your
personal tax adviser for the applicability of the information provided as to
your own situation.
<PAGE> 20
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.)
BOARD OF DIRECTORS
Mario J. Gabelli, CFA Karl Otto Pohl
President and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Anthony R. Pustorino
Former Senior Certified Public Accountant
Vice President Professor, Pace University
Dollar Dry Dock Savings Bank
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
Chief Investment Officer Executive Officer
Financial Security The Lehigh Group, Inc.
Assurance
OFFICERS AND PORTFOLIO MANAGERS
Mario J. Gabelli, CFA Bruce N. Alpert
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
- - -------------------------------------------------------------------------------
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.
- - -------------------------------------------------------------------------------
[MARIO GABELLI'S PHOTO]
THE
GABELLI
ASSET
FUND
ANNUAL REPORT
DECEMBER 31, 1994
