THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
ANNUAL REPORT - 1995
TO OUR SHAREHOLDERS:
The bull market stumbled at year-end 1995 as the Administration and
Congress fought over a balanced budget agreement. However, an early Christmas
gift from the Federal Reserve in the form of a 25 basis point drop in the
federal funds rate helped stocks regain some momentum to end the year at
near-record levels. Investors continued to migrate from technology stocks to
consumer non-durables, seeking safety in the form of more predictable earnings
in 1996. Cyclical stocks staged a comeback with the recognition that the economy
still had some "legs".
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
Quarter
-----------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
1995: Net Asset Value $23.84 $25.10 $26.76 $25.75 $25.75
Total Return 7.3% 5.3% 6.6% 3.7% 24.9%
- ----------------------------------------------------------------------------------------------------------
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>
Average Annual Returns - December 31, 1995 (a)
- -----------------------------------------------------
<S> <C>
1 Year 24.9%
5 Year 15.6%
Life of Fund (b) 15.9%
</TABLE>
<TABLE>
<CAPTION>
Dividend History
- -----------------------------------------------------------------------------------
Rate
Payment (ex) Date Per Share Reinvestment Price
- --------------------- --------- ------------------
<S> <C> <C>
December 29, 1995 $2.000 $25.75
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 returns 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.
Broadcast and filmed entertainment stocks retreated as excitement over
mega-mergers waned. As a group, telecommunications stocks continued to suffer
from the failure of Congress to pass a comprehensive telecommunications bill.
[GRAPH - COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE GABELLI
ASSET FUND AND THE S&P 500 INDEX]
<TABLE>
Gabelli Asset Fund vs S&P 500 Index
Growth of $10,000 Investment
<CAPTION>
Gabelli Asset
S&P 500 Index Fund
------------- -------------
<S> <C> <C>
03/03/86 $10,000 $10,000
12/31/86 $10,930 $11,280
12/31/87 $11,487 $13,107
12/31/88 $13,383 $17,184
12/31/89 $17,612 $21,686
12/31/90 $17,066 $20,602
12/31/91 $22,271 $24,331
12/31/92 $23,384 $27,956
12/31/93 $25,746 $34,051
12/31/94 $26,081 $34,017
12/31/95 $35,884 $42,530
</TABLE>
INVESTMENT PERFORMANCE
During the fourth quarter ended December 31, 1995, the Fund's total return
was 3.7%, reflecting the $2.00 per share dividend paid on December 29, 1995. The
Fund's return for the quarter compares to returns of 6.0%, 0.0%, and 2.2% over
the same period for the Standard & Poor's 500 Index (S&P 500), the Value Line
Composite, and Russell 2000 Index, respectively. Each index is an unmanaged
indicator of stock market performance. For the year ended December 31, 1995, the
Fund gained 24.9%, including reinvested dividends, versus 37.6% for the S&P 500,
19.3% for the Value Line Composite, and 28.4% for the Russell 2000 Index.
Since inception on March 3, 1986, through December 31, 1995, the Fund has
achieved a total return of 325.3%, which equates to an average annual return of
15.9%. This compares favorably to a total return of 258.8% for the S&P 500 over
the same period, which is equivalent to an average annual return of 13.9%. As of
December 31, 1995, the Fund's shareholders numbered 48,753 and total net assets
were at $1.1 billion.
[PYRAMID SHAPED GRAPHIC]
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
2
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 (PMV) 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 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.
Once 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
THE GREAT BULL MARKET OF 1995 - A HARD ACT TO FOLLOW
MODEST STRONG LOW DECLINING RISING
ECONOMIC GROWTH + CORPORATE PROFITS + INFLATION + INTEREST RATES = STOCK PRICES
This simple equation drove equity prices to record levels in 1995. Will
the same factors add up to another good year for stocks in 1996? Let's take a
fresh look at all the components of this winning formula.
We are estimating growth in Gross Domestic Product (GDP) of 2.5% to 3%
this year. With lower interest rates in Great Britain, Germany and France as a
stimulant, we see European economies growing at about 2%. As a free market
system continues to evolve in China and the expansion of the middle classes in
more developed Asian countries translates into economic activity, Pacific Rim
economies should regain momentum. In short, we anticipate reasonably good
worldwide economic growth in the year ahead.
On the inflation front, we see little pressure coming from wage increases.
In fact, we are encouraged by the strong stands governments here and abroad are
taking against inflationary wage demands. Even the French, who have
traditionally been at the mercy of public workers unions, are holding the line.
Rising food and fuel prices could, however, result in more inflation than most
investors expect. Lower grain production in the U.S. last year, strong demand
from the Chinese, and crop failures in the former Soviet Union, will push food
prices higher. Regarding energy, we are producing less and consuming more. This
will ultimately lead to higher pricing. The potential of political unrest in
Saudi Arabia may be a short-term catalyst for higher fuel prices. We are
estimating that inflation could run as high as 3.5% in the second half of 1996.
3
If this inflation forcast proves accurate, long-term interest will not
stay at the current 6% level. Herein lies the primary threat to the stock
market. The consensus is that, with a soft economy, low inflation, lower
interest rates in Europe, a balanced budget agreement, and a Federal Reserve
Chairman who is up for reappointment in an election year, interest rates are
bound to come down. At current levels, stock and bond valuations reflect this
consensus. With a soft economy coupled with a flat yield curve, we could see
short-term rates come down without long-term rates following. Be reminded that
price/earnings multiples are a function of earnings growth and longer term
interest rates. If earnings growth slows as we anticipate and long rates remain
flat or possibly trend modestly higher, stock multiples are likely to contract.
Flow of funds into the U.S. stock market should continue to be favorable.
Equity mutual funds still enjoy strong cash inflows. If deal activity matches
that of 1995 ($458 billion in the U.S. and $866 billion worldwide), investors
will end up with a pile of cash. In addition, corporate stock buybacks and
rising dividends will buttress stock prices. Some of that money finds its way
into initial public offerings. More will go into non-U.S. investments,
particularly markets which languished in 1995. But much more will be recycled
into a shrinking supply of stock.
Our conclusion from all this conjecture is a somewhat different formula
for the 1996 stock market:
<TABLE>
<S> <C>
MODEST DECENT LOW SLIGHTLY HIGHER A DECENT, BUT MUCH LESS
ECONOMIC GROWTH + CORPORATE PROFITS + INFLATION + INTEREST RATES = INSPIRING STOCK MARKET
</TABLE>
THE NET
Speculative bubbles are part of the free market system. In the 1960s, it
was the "nifty fifty" growth stocks. In the 1970s, it was oil, gold, silver, and
the Hong Kong stock market. In the 1980s, it was semiconductors, biotechnology,
and Japanese real estate. Today, it is the Internet. These bubbles are always
very exciting and can be profitable for a time. Unfortunately, most people who
invest in these bubbles end up taking a bath. The Internet is showing signs of
becoming a "similar" speculative frenzy.
This is not to say that the Internet will not be a tremendous growth
business. But, how does the value oriented investor participate? One of the
tenets of value investing is to buy what is, as opposed to what will be. We
believe we have found a way, in the terminology of Graham & Dodd, to buy
"net/nets" on the Internet.
The cable television industry currently has more than 60 million
subscribers in the U.S. and is working feverishly to upgrade systems to offer
telephony services. It is estimated that 25 million of those subscribers also
have personal computers and that 10% of those 25 million people will be Internet
users.
How will they access the Internet? They can do it through telephone line
modems. Or, in the not-too-distant future, through cable modems that will be
more than 100 times faster, since existing cable lines going into the home will
be able to carry much more digital information than telephone lines. At a recent
investment conference, Comcast Corporation (CMCSA - $17.625 - NASDAQ) staged a
horse race between the most commonly used telephone modem and a cable modem
prototype. It was no contest.
4
The list of telecommunications equipment manufacturers developing cable modems
represents a "Who's Who" of the industry, including: Motorola, Inc. (MOT -
$57.00 - NYSE), Hewlett-Packard Co. (HWP - $83.75 - NYSE), Intel Corporation
(INTC - $56.75 - NASDAQ), Zenith Electronics Corp. (ZE - $6.875 - NYSE), General
Instrument Corporation (GIC - $23.375 - NYSE), and Scientific-Atlanta, Inc. (SFA
- - $15.00 - NYSE). Rollout of these new modems is scheduled for mid-1996. We
believe personal computer manufacturers will respond by adapting their machines
for cable modem use.
The bottom line is that those dull old cable television stocks are good
"back door" plays on the promising future of the Internet. You don't have to pay
nosebleed multiples to participate. Cable stocks are good values today based on
their existing business. If they can tack on incremental revenues of $25 per
month from those subscribers who want to "Surf the Net", they are an even
greater bargain.
LET'S MAKE A DEAL
We were among the first on Wall Street to proclaim the beginning of the
third great wave of takeovers since World War II. Record setting merger and
acquisition activity, highlighted by a big jump in hostile deals this year
further validated our thesis. In 1995, it was the three Bs - banks, broadcasters
and brokers. In 1996, we believe deal activity will spread to bell operating
companies, telephone companies generally, cable television networks and small
and mid-sized industrial franchises. If we get a lower capital gains rate,
smaller companies in which management has significant ownership will have more
incentive to put out the "For Sale" sign. With our portfolio well stocked with
small to mid-sized companies trading at deep discounts to private market value,
we would expect to benefit.
THE WAITING GAME
As little as ten years ago, America had the best telecommunications system
in the world by far. Today, we are already behind Great Britain and France, and
in danger of losing ground to other industrialized countries. It is not as a
result of telecommunications technology, in which we remain a world leader.
Rather, it is our antiquated regulatory system which has restrained competition
and productivity in the industry.
As of this writing, the comprehensive telecommunications bill promised to
us by the Clinton Administration and Congress three years ago remains stalled in
committee. Most of the difficult issues seem to be resolved. Presently, the bill
is being held captive to political posturing over whether broadcasters should be
made to pay for high definition television spectrum or simply be given this
spectrum as the FCC had originally planned. Once this issue is resolved, one
fears another will emerge to further delay this essential legislation. The devil
may be in the details here, however, as Washington must eliminate the artificial
barriers preventing the public from getting what they want: better service and
lower prices -- and telecommunications companies from getting what they need: a
set of rules that will allow them to implement competitive strategies for the
upcoming free market free-for-all.
With this cloud of uncertainty still hanging over the telephone/cable
television/broadcast industries, investors are not fully valuing the bright
future of well managed, financially strong companies in all of these sectors.
5
BREAKING UP'S NOT HARD TO DO
In our last quarter's letter to you, we talked about "Humpty Dumpty"
stocks and the trend toward surfacing value through the sale and/or spin-off of
businesses. Two of the Fund's larger portfolio holdings, AT&T Corp. (T - $64.75
- - NYSE) and ITT Corporation (ITT - $53.00 - NYSE), have performed quite well
since announcing their divestiture plans. We are now getting some financial
details on the new business structures and have concluded, in both instances,
that the parts remain more valuable than the whole.
AT&T will be breaking up into three publicly traded global businesses:
Communication Services (long distance and wireless); Communications Systems
(telecommunications equipment), and Global Information Solutions (the old NCR).
AT&T Capital Corp. (TCC - $38.25 - NYSE), 86% owned by AT&T, will be sold. The
sum of our Private Market Value (PMV) estimates for the three component
companies is $94 per share today, growing to $165 in 5 years. Estimated trading
values per share (about 70% of PMV), are $64 per share today, growing to $115
within 5 years. The divestiture is expected to be completed in 1996.
ITT has already been broken into three separate publicly traded companies:
the "new" ITT holds the hotel and gaming operations: ITT Industries Inc. (IIN -
$24.00 - NYSE) consists of the parent's auto parts, pump and valve, and defense
electronics business; and ITT Hartford Group Inc. (HIG - $48.375 - NYSE) holds
the insurance operations. We value the "new" ITT at $55 today, with that value
growing to the mid-$60s next year. We estimate 20% annual earnings growth over
the next 3 to 5 years. We believe IIN is an even better bargain with a PMV of
$40 per share today and a 13% to 15% growth rate going forward. HIG is a slower
growth, interest rate sensitive business. If we mark HIG to its current $48 per
share market value and add our $55 and $40 PMVs for ITT and IIN, respectively,
we see parts worth $143 per share, compared with the old ITT's $118 collective
trading price for the three components.
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 Brands, Inc. (AMB - $44.625 - NYSE), based in Old Greenwich,
Connecticut, is a holding company for five separate business units:
international tobacco (Gallaher, the leading tobacco company in the U.K.),
distilled spirits (Jim Beam bourbon), hardware and home improvement products
(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 fields. A new management team, led by Thomas Hays, is transforming
American Brands into a focused consumer products company. In that connection,
AMB recently announced plans to acquire Cobra Golf Inc., a leading golf club
manufacturer, for $700 million. The company's shares trade at a 30% discount to
their estimated 1996 PMV of $65 which we expect to increase to $100 per share by
the year 2000.
American Express Company (AXP - $41.375 - 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
6
its American Express card and travel-related services. Its other important
operation is Minneapolis-based American Express Financial Advisors, Inc.
(formerly IDS Financial Services) which sells financial products ranging from
mutual funds to annuities. Harvey Golub, Chairman and CEO, has refocused AXP on
its core charge card and investment management businesses. We believe the
company has been repositioned to enjoy double digit earnings growth over the
balance of the decade generating outstanding capital returns for shareholders in
the process.
AT&T Corp. (T - $64.75 - NYSE), the world's second-largest telephone company, is
a global provider of telecommunications services. AT&T, selling at a modest 7.5
times EBITDA, has announced that it will split into 3 separate companies by
spinning-off its equipment manufacturer and its computer division. This will
reposition the company to participate more dynamically in the growth of the
telecommunications industry. The strategy involves a targeted approach to take
advantage of a strong global franchise, including its brand name, broader
product offerings and an international customer base. The restructuring
represents an impressive commitment by management to enhance shareholder values.
------------------------
Chris-Craft Industries
------------------------
72%
------------------------
BHC Communications
------------------------
56%
------------------------
United Television
------------------------
Chris-Craft Industries, Inc. (CCN - $43.25 - NYSE), through its 72% ownership of
BHC Communications, Inc. is primarily a television broadcaster. BHC owns and
operates independent TV stations in Los Angeles (KCOP) and Portland (KPTV). BHC
also controls over 50% of United Television, Inc., which operates an NBC
affiliate, an ABC affiliate and three independent stations. BHC has entered into
a partnership agreement with Paramount Communications, Inc. to launch a new
fifth television network called United Paramount Television Network (UPN). CCN,
with over $1.5 billion in cash and marketable securities, is strongly positioned
to expand its operations. CCN is the eighth-largest TV station group owner in
the U.S. and covers almost 20% of TV households.
General Electric Company (GE - $72.00 - NYSE), having an equity market valuation
of $120 billion, is the largest U.S. company, and the third largest industrial
company in the world. Operating segments include aircraft engines, appliances,
broadcasting (NBC), industrial products, plastic materials, power generating
turbines and a hugely successful financial services business. Under Jack Welch's
prodding, GE has recorded a series of impressive earnings gains.
General Motors Corporation (GM - $52.875 - NYSE), the world's largest auto
manufacturer, is materially undervalued. Its North American operations have been
profitable for two years. International profits continue to grow. 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. Peak
earnings power is likely to exceed $10 per share. A reorganization of Ford and
GM along the lines of ITT and AT&T becomes an intriguing possibility assuming
the shares continue to trade at current levels.
Sprint Corporation (FON - $39.875 - NYSE) is the third largest long-distance
carrier and the second largest independent local telephone company in the U.S.
The company has announced a spin-off of its cellular unit, which should take
place in the first quarter of 1996. The estimated trading value of the spin-off
is $9 to $10 per FON share. After the spin-off, the remaining long
distance/local telco shares should
7
trade close to FON's current market price, indicating shareholders are getting
the cellular spin-off for "free". Sprint has positioned itself on a global basis
through a joint venture with France Telecom/Deutsche Telekom, which will
purchase a 20% stake in Sprint (excluding the cellular unit) for $3.5 billion.
Our interest in Sprint stems from its promising national cable/telephony and
PCS/wireless joint venture with three major cable operators:
Tele-Communications, Inc., Comcast Corporation and Cox Communications, Inc. We
consider FON an interesting value with the risks associated with new entrants in
the long distance business offset by the cable/telephony venture.
Tele-Communications, Inc. (TCOMA - $19.875 - NASDAQ), the largest cable TV
operator in the U.S., serving about 14 million subscribers, is guided by Dr.
John C. Malone - one of the most shareholder sensitive managers we have found.
Given that regulation has historically played a major role in the valuation of
cable properties, we believe that proposed telecommunications legislation,
combined with the current deregulatory climate in Congress, could prove a
significant catalyst for cable stocks. Strategically, TCOMA is a well-positioned
industry leader, from its telephony joint-venture with Sprint to its innovative
Internet access business, dubbed @ Home.
Time Warner Inc. (TWX - $37.875 - NYSE), in a bold and brilliant tactic, is
acquiring Turner Broadcasting System, Inc. for $7.5 billion. The acquisition
will make TWX the largest diversified media and publishing company in the world
and will add a wealth of programming to a company already rich in entertainment
content. Time Warner is restructuring into two general areas: copyright and
creativity, which includes publishing, music and filmed entertainment, and
distribution, which is mostly cable. Under the aegis of Gerald M. Levin,
investors can expect significant returns over the rest of the decade.
Viacom Inc. (VIA - $45.875 - ASE; VIA'B - $47.375 - ASE), long a major provider
of entertainment "content", has evolved into one of the world's dominant media
companies. Following its recent acquisitions of Paramount Communications and
Blockbuster Entertainment, the company is now selling non-core assets to reduce
debt and is focusing on the global expansion of its media franchises. Viacom is
well-positioned in music (notably MTV) and cable networks such as Nickelodeon,
USA (50% interest) and the Sci-Fi Channel.
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for both regular and retirement
accounts is $1,000. There are no subsequent investment minimums. 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 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. An investment in The Gabelli U.S. Treasury Money Market Fund is
neither insured nor guaranteed by the U.S. Government. There can be no assurance
that the Fund will maintain a stable $1 per share net asset
8
value. 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
1995 was a terrific year for most equity investors. As is usually the case
during big bull markets, growth stocks delivered better returns than those in
the value sector. Looking forward to a less inspiring market in 1996, we believe
value investors will have the opportunity to excel.
We believe the Fund's portfolio is a diversified collection of solid
businesses trading at material discounts to their "real world" economic values.
In an environment in which individual stock fundamentals are likely to be more
important than market momentum in earnings returns, we are confident the Fund
will reward its shareholders.
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.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1996.
Sincerely,
/s/ MARIO J. GABELLI, CFA
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
January 31, 1996
NOTE: The views expressed in this report reflect those of the portfolio manager,
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
9
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS--96.9%
AGRICULTURE--0.1%
40,000 Archer Daniels Midland
Co......................... $ 654,744 $ 720,000
------------ ------------
AIRLINES--0.8%
125,000 AMR Corporation+............ 7,810,387 9,281,250
------------ ------------
AUTOMOTIVE--1.7%
350,000 General Motors
Corporation................ 12,595,439 18,506,250
24,000 Harley Davidson, Inc........ 236,600 690,000
------------ ------------
12,832,039 19,196,250
------------ ------------
AUTOMOTIVE: PARTS
AND ACCESSORIES--4.8%
33,500 APS Holding Corporation,
Class A+................... 519,250 753,750
30,000 Borg-Warner Automotive,
Inc........................ 732,660 960,000
200,000 Echlin Inc.................. 2,607,499 7,300,000
150,000 Federal-Mogul Corporation... 2,691,210 2,943,750
675,000 GenCorp Inc................. 3,881,263 8,268,750
250,000 Genuine Parts Company....... 8,599,593 10,250,000
201,200 Handy & Harman.............. 2,749,336 3,319,800
110,000 Johnson Controls, Inc....... 2,895,432 7,562,500
135,000 Modine Manufacturing
Company.................... 1,302,844 3,240,000
39,875 Myers Industries, Inc....... 139,536 652,953
26,300 Pep Boys - Manny, Moe &
Jack....................... 554,515 673,938
170,000 Quaker State Corporation.... 2,329,573 2,146,250
50,000 Republic Automotive Parts,
Inc.+...................... 278,125 643,750
115,000 Standard Motor Products,
Inc........................ 1,008,712 1,725,000
13,200 Superior Industries
International, Inc......... 76,515 348,150
71,000 UAP Inc., Class A........... 807,959 780,258
34,000 Wynn's International,
Inc........................ 562,295 1,007,250
------------ ------------
31,736,317 52,576,099
------------ ------------
AVIATION: PARTS
AND SERVICES--1.8%
75,000 Boeing Co................... 4,695,579 5,878,125
100,000 Curtiss-Wright
Corporation................ 2,479,222 5,375,000
85,000 General Motors Corporation,
Class H.................... 3,406,289 4,175,625
70,000 Hi-Shear Industries Inc.+... 945,739 507,500
21,000 Hudson General
Corporation................ 397,275 682,500
72,000 Precision Castparts
Corporation................ 2,754,825 2,862,000
------------ ------------
14,678,929 19,480,750
------------ ------------
BROADCASTING--6.2%
70,100 BHC Communications, Inc.,
Class A.................... 5,089,770 6,624,450
90,000 Capital Cities/ABC, Inc..... 4,583,644 11,103,750
385,637 Chris-Craft Industries,
Inc........................ 8,421,873 16,678,800
63,651 Chris-Craft Industries,
Inc., Class B(a)+.......... 1,132,465 2,752,906
135,000 Citicasters Inc.+........... 1,779,125 3,189,375
280,000 Grupo Televisa S.A., GDR.... 5,705,136 6,300,000
130,000 Havas, Sponsored ADR........ 2,526,965 2,551,250
70,000 Liberty Corporation......... 1,568,082 2,362,500
53,000 LIN Television
Corporation+............... 587,795 1,576,750
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
20,000 Osborn Communications
Corporation+............... $ 153,701 $ 170,000
46,000 Outlet Communications, Inc.,
Class A+................... 355,150 2,173,500
400,000 Television Broadcasting Ltd.
ORD........................ 1,816,844 1,425,154
100,000 United Television, Inc...... 2,880,469 9,025,000
80,000 Westinghouse Electric
Corp....................... 1,197,626 1,320,000
------------ ------------
37,798,645 67,253,435
------------ ------------
BUSINESS SERVICES--1.7%
10,000 BBN Corporation+............ 364,906 411,250
50,000 Berlitz International, Inc.,
New+....................... 725,813 825,000
80,000 Honeywell, Inc.............. 3,462,315 3,890,000
120,000 International Business
Machines Corporation....... 6,030,895 11,010,000
72,000 Landauer, Inc............... 447,792 1,566,000
70,000 Nashua Corporation.......... 2,287,655 953,750
------------ ------------
13,319,376 18,656,000
------------ ------------
CABLE--3.5%
60,000 BET Holdings, Inc., Class
A+......................... 1,030,737 1,372,500
61,500 Cablevision Systems
Corporation, Class A+...... 3,334,597 3,336,375
60,000 Comcast Corporation, Class
A.......................... 876,722 1,057,500
30,000 Comcast Corporation, Class A
Special.................... 626,505 545,625
148 International CableTel
Incorporated+.............. 465 3,626
316,800 International Family
Entertainment, Inc., Class
B+......................... 4,768,241 5,187,600
20,000 Shaw Cable Systems Ltd.,
Class B, Conv.............. 119,575 126,350
40,000 Shaw Communications Inc.,
Class B, Conv.............. 363,398 252,701
820,000 Tele-Communications, Inc.,
Class A+................... 13,459,548 16,297,500
287,500 Tele-Communications,
Inc./Liberty Media Group,
Class A+................... 6,382,184 7,726,563
60,000 United International
Holdings, Inc., Class A+... 824,424 885,000
60,000 US WEST Media Group+........ 975,045 1,155,000
------------ ------------
32,761,441 37,946,340
------------ ------------
CLOSED-END FUNDS--0.1%
79,628 Royce Value Trust, Inc...... 888,814 955,536
------------ ------------
CONSUMER PRODUCTS--10.2%
502,000 American Brands, Inc........ 17,482,591 22,401,750
90,000 Brunswick Corporation....... 1,188,813 2,160,000
400,000 Carter-Wallace, Inc......... 6,621,432 4,550,000
200,000 Church & Dwight Co., Inc.... 4,566,436 3,700,000
7,000 Culbro Corporation+......... 254,566 343,875
22,000 Duracell International
Inc........................ 625,711 1,138,500
100,000 Eastman Kodak Company....... 5,497,331 6,700,000
150,000 Fieldcrest Cannon, Inc.+.... 2,136,897 2,493,750
40,000 First Brands Corporation.... 1,058,501 1,905,000
250,000 General Electric Company.... 12,205,213 18,000,000
53,000 Gillette Company............ 1,493,550 2,762,625
20,000 Libbey Inc.................. 258,600 450,000
50,000 Outboard Marine Corp........ 986,698 1,018,750
5,000 Park-Ohio Industries,
Inc.+...................... 57,500 80,625
</TABLE>
See Notes to Financial Statements.
10
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
95,000 Philips Electronics N.V.,
New York................... $ 1,459,709 $ 3,408,125
100,000 Procter & Gamble Company.... 5,509,258 8,300,000
255,000 Ralston Purina Group........ 10,127,321 15,905,625
50,000 Scotts Company, Class A+.... 798,406 987,500
75,000 Syratech Corporation+....... 1,382,505 1,509,375
130,000 Tambrands Inc............... 5,386,648 6,207,500
325,000 Whitman Corporation......... 3,028,098 7,556,250
------------ ------------
82,125,784 111,579,250
------------ ------------
CONSUMER SERVICES--0.4%
180,000 Rollins, Inc................ 2,111,982 3,982,500
------------ ------------
DIVERSIFIED INDUSTRIAL--3.7%
20,000 Anixter International
Inc.+...................... 180,175 372,500
45,000 GATX Corporation............ 1,039,561 2,188,125
100,000 ITT Corporation, New+....... 2,420,804 5,300,000
149,000 ITT Industries Inc.+........ 2,267,811 3,576,000
150,000 Katy Industries, Inc........ 1,357,500 1,387,500
6,500 Kyocera Corporation, ADR.... 448,063 970,125
375,000 Lamson & Sessions Co.+...... 2,011,040 2,906,250
100,000 Lawter International,
Inc........................ 812,500 1,162,500
150,000 Minnesota Mining and
Manufacturing Company...... 7,964,013 9,937,500
80,000 National Service Industries,
Inc........................ 1,867,011 2,590,000
55,000 Tenneco Inc................. 2,191,078 2,729,375
60,000 Thomas Industries Inc....... 920,097 1,410,000
200,000 Trinity Industries, Inc..... 2,724,402 6,300,000
------------ ------------
26,204,055 40,829,875
------------ ------------
ELECTRONICS--0.1%
2,000 Hitachi, Ltd., ADR.......... 221,767 201,000
10,000 Sony Corporation............ 544,303 613,750
------------ ------------
766,070 814,750
------------ ------------
ENERGY--3.6%
55,000 Atlantic Richfield
Company.................... 5,930,401 6,091,250
35,000 British Petroleum Company
plc, ADR................... 1,568,033 3,574,375
135,000 Burlington Resources Inc.... 6,062,137 5,298,750
30,000 Chevron Corporation......... 1,016,500 1,575,000
170,000 Eastern Enterprises......... 4,578,075 5,992,500
60,000 Enron Oil & Gas Company..... 548,976 1,440,000
110,000 Exxon Corporation........... 6,704,069 8,813,750
22,000 Halliburton Company......... 969,840 1,113,750
200,000 Kaneb Services, Inc.+....... 901,607 450,000
50,000 PacifiCorp.................. 971,882 1,062,500
80,000 Southwest Gas Corporation... 1,378,722 1,410,000
30,000 Texaco Inc.................. 1,890,875 2,355,000
------------ ------------
32,521,117 39,176,875
------------ ------------
ENTERTAINMENT--5.1%
55,000 Bay Meadows Operating
Company.................... 908,526 804,375
175,675 Gaylord Entertainment
Company, Class A........... 3,697,099 4,874,981
70,000 GC Companies, Inc.+......... 1,824,822 2,345,000
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
40,000 GTECH Holdings
Corporation+............... $ 755,188 $ 1,040,000
20,000 PolyGram NV................. 574,275 1,050,000
30,000 Santa Anita Realty
Enterprises, Inc........... 484,184 356,250
110,000 THORN EMI plc,
Sponsored ADR.............. 1,609,000 2,585,000
700,000 Time Warner Inc............. 20,499,592 26,512,500
11,528 Todd-AO Corporation, Class
A.......................... 31,440 89,342
120,000 Viacom Inc., Class A+....... 1,750,202 5,505,000
225,000 Viacom Inc., Class B+....... 6,165,035 10,659,375
------------ ------------
38,299,363 55,821,823
------------ ------------
FINANCIAL SERVICES--6.0%
1 Al-Zar Ltd.+(a)............. 0 350
640,000 American Express Company.... 15,593,345 26,480,000
220 Berkshire Hathaway Inc.+.... 874,549 7,062,000
35,000 Commerzbank AG, Sponsored
ADR........................ 1,366,544 1,636,250
140,000 Deutsche Bank AG, Sponsored
ADR+....................... 6,094,375 6,615,000
60,000 H&R Block Inc............... 2,246,243 2,430,000
60,000 ITT Hartford Group Inc.+.... 1,432,749 2,902,500
60,000 KeyCorp..................... 2,171,000 2,175,000
315,000 Lehman Brothers Holdings
Inc........................ 4,871,475 6,693,750
85,000 Midland Company............. 2,658,657 4,175,625
70,000 Salomon Inc................. 2,531,011 2,485,000
25,000 State Street Boston
Corporation................ 717,713 1,125,000
10,000 SunTrust Banks, Inc......... 424,879 685,000
11,941 Transamerica Corporation.... 583,636 870,200
8,000 Value Line, Inc............. 115,500 308,000
------------ ------------
41,681,676 65,643,675
------------ ------------
FOOD AND BEVERAGE--6.3%
62,000 Brown-Forman Corporation,
Class A.................... 2,021,599 2,317,250
60,000 Campbell Soup Company....... 1,483,100 3,600,000
74,263 Chock Full o'Nuts
Corporation+............... 451,406 389,881
23,000 Coca-Cola Company........... 395,569 1,707,750
50,000 Coca-Cola Enterprises
Inc........................ 757,290 1,337,500
17,000 CPC International Inc....... 602,088 1,166,625
47,000 Delchamps, Inc.............. 1,111,792 957,625
100,000 Dole Food Company, Inc...... 2,651,826 3,500,000
2,500 Farmer Brothers Company..... 200,625 341,250
62,500 General Mills, Inc.......... 1,396,165 3,609,375
37,500 Heinz Company (H.J.)........ 972,562 1,242,187
35,000 Hershey Foods Corporation... 1,493,437 2,275,000
84,000 Kellogg Company............. 3,173,732 6,489,000
20,000 LVHM Moet Hennessy Louis
Vuitton, Sponsored ADR..... 762,188 837,500
250,000 PepsiCo, Inc................ 8,256,561 13,968,750
200,000 Quaker Oats Company......... 5,960,776 6,900,000
65,000 Ralcorp Holdings, Inc.+..... 974,421 1,576,250
15,000 Rykoff-Sexton, Inc.......... 289,125 262,500
280,000 Seagram Company Ltd......... 8,211,072 9,695,000
35,000 Tootsie Roll Industries,
Inc........................ 1,149,010 1,386,875
110,000 Wrigley (Wm.) Jr. Company... 4,754,112 5,775,000
------------ ------------
47,068,456 69,335,318
------------ ------------
</TABLE>
See Notes to Financial Statements.
11
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTH CARE--3.2%
15,000 Amgen Inc.+................. $ 271,699 $ 890,625
10,000 Biogen, Inc.+............... 299,450 615,000
20,000 BioWhittaker, Inc.+......... 99,053 152,500
12,000 Chiron Corporation+......... 663,895 1,326,000
100,000 Genentech, Inc.+............ 4,804,136 5,300,000
135,000 Johnson & Johnson........... 5,750,027 11,559,375
70,000 Mallinckrodt Group, Inc..... 2,175,407 2,546,250
99,999 Merck & Co., Inc............ 3,387,816 6,574,934
100,000 Pfizer Inc.................. 3,391,165 6,300,000
------------ ------------
20,842,648 35,264,684
------------ ------------
HOTELS/CASINOS--1.7%
35,000 Circus Circus Enterprises,
Inc.+...................... 940,041 975,625
23,500 Harrah's Entertainment
Inc.+...................... 215,831 569,875
200,000 Hilton Hotels Corporation... 10,269,599 12,300,000
200,000 Ladbroke Group plc.......... 522,219 455,029
110,000 Mirage Resorts,
Incorporated+.............. 1,131,077 3,795,000
11,750 Promus Companies+........... 84,894 261,438
------------ ------------
13,163,661 18,356,967
------------ ------------
INDUSTRIAL EQUIPMENT
AND SUPPLIES--13.2%
347,000 AMETEK, Inc................. 4,914,110 6,506,250
50,000 AMP Incorporated............ 1,814,660 1,918,750
25,000 Amphenol Corporation,
Class A+................... 286,812 606,250
250,000 AptarGroup, Inc............. 3,625,405 9,343,750
64,000 Caterpillar Inc............. 1,729,874 3,760,000
65,000 CLARCOR Inc................. 1,239,362 1,324,375
150,000 Crane Co.................... 3,970,482 5,531,250
100,000 CTS Corporation............. 2,084,351 3,775,000
435,000 Deere & Company............. 6,735,298 15,333,750
260,000 Donaldson Company, Inc...... 3,038,347 6,532,500
150,000 Gerber Scientific, Inc...... 1,448,232 2,437,500
140,000 Greif Bros. Corporation,
Class A.................... 2,531,260 3,762,500
132,500 Guardsman Products, Inc..... 1,546,659 1,772,187
12,546 Hach Company................ 148,380 216,418
371,000 IDEX Corporation............ 4,410,332 15,118,250
70,000 Ingersoll-Rand Company...... 2,625,739 2,458,750
200,000 Kollmorgen Corporation...... 1,861,980 2,200,000
95,000 Lufkin Industries, Inc...... 1,718,761 2,149,375
60,000 Manitowoc Company, Inc...... 1,343,957 1,837,500
275,000 Mark IV Industries, Inc..... 2,076,408 5,431,250
275,000 Navistar International
Corporation+............... 5,906,625 2,887,500
165,000 Nortek, Inc.+............... 659,077 1,938,750
4,333 Nortek, Inc., Special
Common+(a)................. 59,049 50,913
10,000 PACCAR Inc.................. 522,020 421,250
80,000 Pittway Corporation......... 1,529,486 5,310,000
195,000 Pittway Corporation, Class
A.......................... 2,703,360 13,211,250
50,000 Sequa Corporation, Class
A+......................... 1,982,449 1,525,000
80,200 Sequa Corporation, Class
B+......................... 3,904,225 3,167,900
80,000 SPS Technologies, Inc.+..... 2,233,594 4,270,000
140,000 St. Joe Paper Company....... 4,804,274 7,700,000
100,000 TransPro Inc................ 784,174 1,062,500
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
20,000 Valmont Industries, Inc..... $ 349,658 $ 495,000
260,000 Varity Corporation, New+.... 5,309,303 9,652,500
------------ ------------
79,897,703 143,708,168
------------ ------------
METALS AND MINING--0.8%
34,350 Barrick Gold Corporation.... 733,755 905,981
75,000 Echo Bay Mines Ltd.......... 844,400 778,125
45,000 Homestake Mining Company.... 776,062 703,125
100,000 Horsham Corporation......... 1,401,937 1,350,000
33,000 Newmont Gold Company........ 1,375,428 1,443,750
160,000 Pegasus Gold Inc.+.......... 2,519,244 2,220,000
17,500 Placer Dome Inc............. 336,400 422,188
150,000 Royal Oak Mines Inc.+....... 630,961 534,375
------------ ------------
8,618,187 8,357,544
------------ ------------
PUBLISHING--3.0%
75,000 American Media Inc.+........ 732,562 318,750
8,000 Central Newspapers, Inc..... 213,588 251,000
5,000 E.W. Scripps Company,
Class A.................... 99,627 196,875
32,000 McClatchy Newspapers, Inc.,
Class A.................... 640,975 732,000
80,000 McGraw-Hill Companies,
Inc........................ 4,572,950 6,970,000
390,000 Media General, Inc., Class
A.......................... 9,839,543 11,846,250
10,000 Meredith Corporation........ 356,044 418,750
159,993 New York Times Company,
Class A.................... 2,461,143 4,739,793
15,000 News Corporation Limited,
ADS........................ 255,587 320,625
84,000 Reader's Digest Association,
Inc., Class B.............. 3,339,359 3,969,000
325,000 Western Publishing Group,
Inc.+...................... 4,715,094 2,559,375
------------ ------------
27,226,472 32,322,418
------------ ------------
REAL ESTATE--0.0%
33,333 Castle & Cooke Inc.+........ 396,474 558,333
------------ ------------
RETAIL--1.9%
20,000 Aaron Rents, Inc., Class
A.......................... 169,609 360,000
13,000 Aaron Rents, Inc., Class
B.......................... 72,755 234,000
150,000 Burlington Coat Factory
Warehouse Corporation+..... 1,977,862 1,537,500
125,000 Earl Scheib, Inc.+.......... 885,924 968,750
50,000 Fingerhut Companies, Inc.... 711,335 693,750
14,232 Jostens, Inc................ 270,870 345,126
35,000 Lillian Vernon
Corporation................ 527,184 468,125
675,000 Neiman Marcus Group,
Inc.+...................... 9,760,037 15,862,500
------------ ------------
14,375,576 20,469,751
------------ ------------
RETAIL: FOOD AND DRUG--0.6%
25,000 Albertson's, Inc............ 718,125 821,875
129,000 American Stores Company..... 3,261,288 3,450,750
50,000 Kroger Co.+................. 1,156,250 1,875,000
------------ ------------
5,135,663 6,147,625
------------ ------------
SPECIALTY CHEMICAL--2.3%
448,100 CBI Industries Inc.......... 14,686,477 14,731,287
50,000 E.I. du Pont de Nemours and
Company.................... 3,122,625 3,493,750
</TABLE>
See Notes to Financial Statements.
12
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
SPECIALTY CHEMICAL (CONTINUED)
215,000 Ferro Corporation........... $ 4,467,040 $ 4,998,750
45,000 Pratt & Lambert, Inc........ 647,100 1,569,375
------------ ------------
22,923,242 24,793,162
------------ ------------
TELECOMMUNICATIONS--11.0%
280,000 AT&T Corp................... 14,897,967 18,130,000
100,000 BC TELECOM Inc.............. 1,768,699 1,831,166
295,000 BCE Inc..................... 9,904,125 10,177,500
12,500 BellSouth Corporation....... 649,467 1,087,500
9,000 British Telecommunications
plc, Sponsored ADR......... 577,730 508,500
100,000 Cable & Wireless plc,
Sponsored ADR.............. 2,083,454 2,112,500
339,000 C-TEC Corporation+.......... 6,369,917 10,509,000
46,500 C-TEC Corporation, Class
B+......................... 730,744 1,418,250
65,000 Frontier Corporation........ 1,051,047 1,950,000
40,000 Globalstar
Telecommunications+........ 748,250 1,510,000
318,000 GTE Corporation............. 6,127,042 13,992,000
35,000 Hong Kong Telecommunications
Ltd., Sponsored ADR........ 545,695 621,250
65,000 Koninklijke PTT Nederland
(KPN), ADR+................ 1,738,665 2,356,250
130,000 Lincoln Telecommunications
Company.................... 1,818,824 2,746,250
60,000 Motorola, Inc............... 831,606 3,420,000
30,000 Northern Telecom Limited.... 1,134,625 1,290,000
65,000 NYNEX Corporation........... 2,634,717 3,510,000
50,000 Pacific Telesis Group
Inc........................ 1,414,830 1,681,250
100,000 SBC Communications Inc...... 2,131,081 5,750,000
28,000 Southern New England
Telecommunications
Corporation................ 942,025 1,113,000
420,000 Sprint Corporation.......... 9,171,901 16,747,500
250,000 STET -- Societa Finanziaria
Telefonica SpA, Sponsored
ADR........................ 5,717,995 6,968,750
1,500,000 Telecom Italia SpA, ORD..... 1,753,810 2,336,066
112,153 Telecomunicacoes Brasileiras
SA (Telebras), Sponsored
ADR........................ 3,388,738 5,313,248
1,521,945 Telecomunicacoes de Sao
Paulo SA (Telesp)+......... 190,267 223,919
16,000 Telefonica de Espana,
Sponsored ADR.............. 511,408 670,000
20,000 Telefonos De Mexico SA,
Sponsored ADR.............. 704,937 637,500
60,000 US WEST Communications
Group...................... 1,427,970 2,145,000
------------ ------------
80,967,536 120,756,399
------------ ------------
<CAPTION>
MARKET
SHARES COST VALUE
- ------------ ------------ ------------
<C> <S> <C> <C>
TRANSPORTATION--0.1%
13,500 Florida East Coast
Industries,
Inc........................ $ 713,262 $ 921,375
------------ ------------
WIRELESS COMMUNICATIONS--3.0%
250,000 AirTouch Communications
Inc.+...................... 5,767,779 7,062,500
130,000 Allen Group Inc............. 787,843 2,908,750
18,500 Associated Group, Inc.,
Class A+................... 98,788 349,188
18,500 Associated Group, Inc.,
Class B+................... 98,787 351,500
407 Cellular Communications,
Inc., Series A+............ 5,278 19,943
260,000 Century Telephone
Enterprises, Inc........... 4,542,614 8,255,000
140,000 COMSAT Corporation, Series
1.......................... 3,086,794 2,607,500
80,000 NEXTEL Communications, Inc.,
Class A+................... 1,005,002 1,180,000
2,500,000 Telecom Italia Mobile
SpA+....................... 2,256,896 4,405,738
140,000 Telephone and Data Systems,
Inc........................ 1,369,191 5,530,000
5,000 Vodafone Group,
Sponsored ADR.............. 170,625 176,250
------------ ------------
19,189,597 32,846,369
------------ ------------
TOTAL COMMON STOCKS........................ 716,709,216 1,057,752,521
------------ ------------
PREFERRED STOCKS--0.4%
CONSUMER PRODUCTS--0.2%
45,000 Fieldcrest Cannon, Inc.,
Series A, 6.00%, Conv.
Pfd., 144A(c).............. 2,486,250 2,002,500
2,000 Kerr Group, Inc., Class B,
Series D, $1.70, Cumulative
Conv. Pfd.................. 33,975 37,000
------------ ------------
2,520,225 2,039,500
------------ ------------
INDUSTRIAL EQUIPMENT
AND SUPPLIES--0.1%
20,000 Sequa Corporation, $5.00,
Cumulative Conv. Pfd....... 1,538,833 1,160,000
------------ ------------
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc.,
Depository Shares, 7.00%,
Cumulative Conv. Pfd....... 213,000 272,500
------------ ------------
TELECOMMUNICATIONS--0.1%
30,000 Sprint Corporation, 8.25%,
Conv. Pfd.................. 956,250 1,140,000
------------ ------------
TOTAL PREFERRED STOCKS..................... 5,228,308 4,612,000
------------ ------------
</TABLE>
See Notes to Financial Statements.
13
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT COST VALUE
- ------------ ------------ --------------
<C> <S> <C> <C>
CORPORATE BONDS--2.0%
AUTOMOTIVE PARTS
AND ACCESSORIES--0.0%
$ 400,000 GenCorp Inc., Conv. Sub
Deb., 8.00% due
08/01/2002................ $ 395,523 $ 402,000
------------ --------------
BROADCASTING--0.0%
FRF593,750 Havas, Conv. Bond,
Payment-in-kind, 3.00% due
12/31/1997................ 158,703 148,674
------------ --------------
ENTERTAINMENT--2.0%
$ 17,545,950 Time Warner Inc., Conv.
Sub. Deb., 8.75% due
01/10/2015................ 18,421,134 18,181,991
2,750,000 Viacom Inc., Ex. Sub. Deb.,
8.00% due 07/07/2006...... 1,836,980 2,805,000
------------ --------------
20,258,114 20,986,991
------------ --------------
TOTAL CORPORATE BONDS..................... 20,812,340 21,537,665
------------ --------------
U.S. TREASURY BILLS--3.0%
$ 32,402,000 4.83% to 5.28%++ due
02/01/1996 -- 03/07/1996... $ 32,167,820 $ 32,190,674
------------ --------------
TOTAL INVESTMENTS.................. 102.3% $774,917,684(b) 1,116,092,860
=============
OTHER ASSETS AND
LIABILITIES (NET)................. (2.3) (24,553,514)
----- --------------
NET ASSETS......................... 100.0% $1,091,539,346
===== ==============
</TABLE>
- ---------------
(a) Security fair valued by the Board of Trustees.
(b) Aggregate cost for Federal tax purposes was $775,657,016. Net unrealized
appreciation for Federal tax purposes was $340,435,844 (gross unrealized
appreciation was $357,880,866 and gross unrealized depreciation was
$17,445,022.
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
+ Non-income producing security
++ Represents annualized yield at date of purchase.
ADR -- American Depositary Receipt
ADS -- American Depositary Share
FRF -- French Franc
GDR -- Global Depositary Receipt
ORD -- Ordinary Share
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
DECEMBER 31, 1995
<TABLE>
<S> <C>
Time Warner Inc. Pittway Corporation
American Express Company General Motors Corporation
American Brands, Inc. AT&T Corp.
Chris-Craft Industries, Inc. General Electric Company
Viacom Inc. Sprint Corporation
</TABLE>
- -
- --------------------------------------------------------------------------------
- -
See Notes to Financial Statements.
14
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value
(Cost $774,917,684)................ $1,116,092,860
Cash................................. 5,785
Dividends and interest receivable.... 2,155,845
Receivable for investments sold...... 2,348,375
Receivable for Fund shares sold...... 2,700,295
--------------
Total Assets....................... 1,123,303,160
--------------
LIABILITIES:
Payable for investments purchased.... 20,634,121
Dividend payable..................... 7,765,160
Payable for investment advisory fee.. 935,547
Payable for distribution fees........ 310,431
Payable for transfer agent fees...... 175,000
Payable for Fund shares redeemed..... 41,608
Accrued expenses and other
payables........................... 1,901,947
--------------
Total Liabilities.................. 31,763,814
--------------
Net assets applicable to 42,395,268
shares of beneficial interest
outstanding...................... $1,091,539,346
=================
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value.............................. $ 423,953
Additional paid-in capital........... 750,699,072
Distributions in excess of net
realized gain on investments....... (759,184)
Distributions in excess of net
investment income earned to date... (1,808)
Net unrealized appreciation of
investments........................ 341,177,313
--------------
Total Net Assets................... $1,091,539,346
=================
Net Asset Value, offering and
redemption price per share
($1,091,539,346 divided by 42,395,268 shares
outstanding; unlimited
number of shares authorized
of $0.01 par value).................. $25.75
=====
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $302,581)...... $ 18,265,037
Interest income....................... 6,240,089
------------
Total Investment Income............. 24,505,126
------------
EXPENSES:
Investment advisory fee............... 10,714,960
Distribution fees..................... 2,211,822
Transfer agent fees................... 731,751
Trustees' fees........................ 66,099
Legal and audit fees.................. 56,489
Other................................. 498,317
------------
Total Expenses...................... 14,279,438
------------
NET INVESTMENT INCOME.................. 10,225,688
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on securities
sold................................ 68,999,048
Net realized gain on foreign currency
transactions........................ 14,558
------------
Net realized gain on investments...... 69,013,606
------------
Net unrealized appreciation of
securities, foreign currency and other
assets and liabilities:
Beginning of year..................... 184,011,589
End of year........................... 341,177,313
------------
Change in net unrealized
appreciation of securities,
foreign currency and other assets
and liabilities................... 157,165,724
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS........................... 226,179,330
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $236,405,018
===============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
12/31/95 12/31/94
-------------- -------------
<S> <C> <C>
Net investment income........................................................................ $ 10,225,688 $ 11,062,756
Net realized gain on investments............................................................. 69,013,606 33,486,441
Net change in unrealized appreciation/depreciation of investments............................ 157,165,724 (46,397,512)
-------------- -------------
Net increase/(decrease) in net assets resulting from operations.............................. 236,405,018 (1,848,315)
Distributions to shareholders from:
Net investment income....................................................................... (10,040,428) (10,988,841)
Distributions in excess of net investment income............................................ -- (110,943)
Net realized gain on investments............................................................ (69,013,606) (32,875,775)
Distributions in excess of net realized gain on investments................................. (94,875) (740,434)
Net increase/(decrease) in net assets from Fund share transactions........................... (47,966,474) 83,405,757
-------------- -------------
Net increase in net assets................................................................... 109,289,635 36,841,449
NET ASSETS:
Beginning of year............................................................................ 982,249,711 945,408,262
-------------- -------------
End of year.................................................................................. $1,091,539,346 $ 982,249,711
================= ===============
</TABLE>
See Notes to Financial Statements.
15
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES. The Gabelli Asset Fund (the "Fund") was
organized on November 25, 1985 as a Massachusetts business trust. The Fund is a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") whose primary
objective is growth of capital. The Fund commenced operations on March 3, 1986.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
SECURITY VALUATION. Portfolio securities which are traded only on a nationally
recognized securities exchange or in the over-the-counter market which are
National Market System Securities are valued at the last sale price as of the
close of business on the day the securities are being valued, or lacking any
sales, at the mean between closing bid and asked prices. Other over-the-counter
securities are valued at the mean between current bid and asked prices as
reported by NASDAQ, the National Quotation Bureau or such other comparable
sources as the Board of Trustees deems appropriate to reflect their fair value.
Portfolio securities which are traded both in the over-the-counter market and on
a stock exchange are valued according to the broadest and most representative
market, as determined by Gabelli Funds, Inc. (the "Adviser"). Securities and
assets for which market quotations are not readily available are valued at fair
value as determined in good faith by or under the direction of the Board of
Trustees of the Fund. Short-term investments that mature in more than 60 days
are valued at the highest bid price obtained from a dealer maintaining an active
market in that security. Short-term investments that mature in 60 days or fewer
are valued at amortized cost, unless the Board of Trustees determines that such
valuation does not constitute fair value. Debt instruments having a greater
maturity are valued at the highest bid price obtained from a dealer maintaining
an active market in those securities or on the basis of prices obtained from a
pricing service approved as reliable by the Board of Trustees.
FOREIGN CURRENCY. The books and records of the Fund are maintained in United
States (U.S.) dollars. Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period, and purchases and sales of investment securities, income
and expenses are translated on the respective dates of such transactions.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/depreciation of foreign currency and other assets and liabilities.
Unrealized gains and losses of securities, which result from changes in foreign
exchange rates as well as changes in market prices of securities, have been
included in unrealized appreciation/depreciation of investment securities. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date on investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of the Fund and the amounts actually received. The portion
of foreign currency gains and losses related to fluctuation in exchange rates
between the initial trade date and subsequent sale trade date is included in
realized gain/(loss) on investments sold.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined using specific identification as the cost method. Interest income
(including amortization of premium and accretion of discount) is recorded as
earned.
16
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividend income and dividends and
distributions to shareholders are recorded on the ex-dividend date. Income
distributions and capital gain distributions 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, timing
differences and differing characterization of distributions made by the Fund.
Permanent differences incurred during the year ended December 31, 1995 resulting
from different book and tax accounting policies for currency gains and losses
and capital gain distributions, are reclassified between net investment income
and net realized gains at year end. The reclassifications for the year ended
December 31, 1995 were a decrease in undistributed net investment income of
$76,125 and a decrease in distributions in excess of net realized gain on
investments of $76,125.
PROVISION FOR INCOME TAXES. The Fund has qualified and intends to continue to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. As a result, a Federal income tax provision is
not required.
2. AGREEMENTS WITH AFFILIATED PARTIES. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00 percent of the value of the Fund's average daily net
assets. In accordance with the Advisory Agreement, the Adviser provides a
continuous investment program for the Fund's portfolio, provides all facilities
and personnel, including offices, required for its administrative management,
and pays the compensation of all officers and Trustees of the Fund who are its
affiliates. The Adviser 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 the year ended December 31,
1995.
3. DISTRIBUTION PLAN. The Fund has adopted a plan of distribution (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Pursuant to this Plan, the
Distributor, Gabelli & Company, Inc. ("Gabelli & Company"), an indirect
majority-owned subsidiary of the Adviser, 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 0.25
percent on an annual basis of the value of the Fund's average daily net assets.
In addition, if and to the extent that the fee the Fund pays to the Adviser, as
well as other payments the Fund 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, 1995, the Fund incurred distribution costs under the Plan of $2,211,822,
representing 0.21 percent of the value of the Fund's average daily net assets.
4. PORTFOLIO SECURITIES. Cost of purchases and proceeds from sales of
securities for the year ended December 31, 1995, other than U.S. government and
short-term securities, aggregated $267,318,884 and $317,036,708, respectively.
5. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1995, the
Fund paid brokerage commissions of $96,993 to Gabelli & Company and its
affiliates.
17
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/95 12/31/94
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................... 6,338,311 $ 156,103,869 13,812,609 $ 319,924,263
Shares issued upon reinvestment of dividends.............. 2,772,475 71,391,947 1,830,373 40,652,559
Shares redeemed........................................... (10,946,512) (275,462,290) (11,982,003) (277,171,065)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... (1,835,726) $ (47,966,474) 3,660,979 $ 83,405,757
=========== ============== =========== ==============
</TABLE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Per share amounts for a Fund share outstanding throughout each period/year ended
December 31,
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986*
---------- -------- -------- -------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING
PERFORM-
ANCE:
Net asset
value,
beginning
of
year..... $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69 $ 12.61 $ 11.28 $ 10.00
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Net
investment
income(a).. 0.26 0.26 0.16 0.26 0.39 0.76 0.55 0.24 0.14 0.10
Net
realized
and
unrealized
gain/
(loss)
on
invest-
ments.. 5.28 (0.30) 4.18 2.41 2.45 (1.62) 3.30 3.45 1.69 1.18
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Total from
investment
oper-
ations... 5.54 (0.04) 4.34 2.67 2.84 (0.86) 3.85 3.69 1.83 1.28
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
DISTRIBU-
TIONS
TO
SHARE-
HOLDERS
FROM:
Net
investment
income... (0.25) (0.25) (0.16) (0.25) (0.39) (0.77) (0.56) (0.38) (0.09) --
Distribu-
tions
in excess
of net
investment
income... -- (0.01) -- -- -- -- -- -- -- --
Net
realized
gains... (1.75) (0.76) (0.76) (0.50) (0.12) -- (0.72) (1.23) (0.41) --
Distribu-
tions
in excess
of net
realized
gains... (0.00)(c) (0.03) -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Total
distrib-
utions... (2.00) (1.05) (0.92) (0.75) (0.51) (0.77) (1.28) (1.61) (0.50) --
-------- -------- -------- -------- -------- -------- -------- -------- ------- -------
Net asset
value,
end of
year..... $ 25.75 $ 22.21 $ 23.30 $ 19.88 $ 17.96 $ 15.63 $ 17.26 $ 14.69 $ 12.61 $ 11.28
======== ======== ======== ======== ======== ======== ======== ======== ======= =======
Total
return**... 24.9% (0.1)% 21.8% 14.9% 18.1% (5.0)% 26.2% 31.1% 16.2% 12.8%
======== ======== ======== ======== ======== ======== ======== ======== ======= =======
RATIOS TO
AVERAGE
NET
ASSETS/
SUPPLEMEN-
TAL
DATA:
Net
assets,
end of
year (in
000's)... $1,091,539 $982,250 $945,408 $632,575 $483,865 $342,710 $359,443 $143,050 $76,810 $48,911
Ratio of
net
investment
income
to
average
net
assets... 0.95% 1.10% 0.82% 1.42% 2.34% 4.51% 4.17% 2.04% 1.19% 1.87%+
Ratio of
operating
expenses
to
average
net
assets(b).. 1.33% 1.28% 1.31% 1.31% 1.30% 1.20% 1.26% 1.31% 1.26% 1.67%+
Portfolio
turnover
rate..... 26.4% 18.7% 16.0% 14.4% 20.1% 55.7% 49.3% 47.3% 89.9% 126.6%
</TABLE>
- ---------------
* The Fund commenced operations on March 3, 1986.
** Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends. Total return for the period of less than
one year is not annualized.
+ Annualized.
(a) Net investment income before expenses reimbursed by Adviser for the years
ended December 31, 1988 and 1987 and the period ended December 31, 1986 was
$0.23, $0.11 and $0.09, respectively.
(b) Operating expense ratios before expenses reimbursed by Adviser for the years
ended December 31, 1988 and 1987 and the period ended December 31, 1986 were
1.38%, 1.52% and 1.83%, respectively.
(c) Amount represents less than $0.01 per share.
18
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, 1995, 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 nine years in the period then ended and
for the period from March 3, 1986 (commencement of operations) through December
31, 1986, 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, 1995 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 13, 1996
1995 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the fiscal year ended December 31, 1995, the Fund paid to shareholders, on
December 29, 1995, ordinary income dividends (comprised of net investment income
and short-term capital gains) totaling $.411 per share. Additionally, on that
date, the Fund paid $1.589 per share in long-term capital gains. For fiscal year
1995, 100% of the ordinary income dividend qualifies for the dividend received
deduction available to corporations.
U.S. GOVERNMENT INCOME:
The percentage of the ordinary income dividend paid by the Fund during fiscal
1995 which was derived from U.S. Treasury securities was 6.86%. Such income is
exempt from state and local income tax in all 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 1995. Due to the
diversity in state and local tax law, it is recommended that you consult your
personal tax advisor for the applicability of the information provided as to
your own situation.
19
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
http://www.gabelli.com
e-mail: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF TRUSTEES
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
Vice President Accountant
Dollar Dry Dock Savings Bank Professor, Pace University
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 Assurance The Lehigh Group, Inc.
Holdings Ltd.
OFFICERS AND PORTFOLIO MANAGERS
Mario J. Gabelli, CFA Bruce N. Alpert
Portfolio Manager President and Treasurer
James E. McKee
Secretary
DISTRIBUTOR
GABELLI & COMPANY, INC.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
STATE STREET BANK AND TRUST COMPANY
- -------------------------------------------------------------------------------
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.
- -------------------------------------------------------------------------------
[Photo]
THE
GABELLI
ASSET
FUND
ANNUAL REPORT
DECEMBER 31, 1995
