<PAGE>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
FIRST QUARTER REPORT
MARCH 31, 1997
TO OUR SHAREHOLDERS,
The stock market roared out of the blocks in January, but quickly lost
momentum as inflation jitters and a slumping bond market muddied the track. In
late March, a rate hike by the Federal Reserve and much stronger than expected
economic data stampeded equities investors, eroding most of the market's earlier
gains. The Dow Jones Industrial Average and Standard & Poor's 500 Index closed
the quarter with modest gains of 1.7% and 2.7%, respectively. Smaller stocks
continued to lag as evidenced by the Russell 2000 Index's 5.2% decline.
INVESTMENT PERFORMANCE
For the first quarter ended March 31, 1997, The Gabelli Asset Fund's total
return was 2.2%. The Value Line Composite and Russell 2000 Indexes had returns
of 0.1% and (5.2)%, respectively over the same period. The S&P 500 was up 2.7%.
Each index is an unmanaged indicator of stock market performance.
For the five-year period ended March 31, 1997, the Fund's return averaged
13.8% annually, versus average annual returns of 14.2%, 12.8% and 16.4% for the
Value Line Composite, the Russell 2000 Index and the S&P 500, respectively.
For the ten years ended March 31, 1997, The Gabelli Asset Fund achieved a
total return of 265.3%, which equates to an average annual return of 13.8%, as
compared to 10.8%, 12.8% and 13.4% average annual returns over the same time
period for the Value Line Composite, Russell 2000 and S&P 500, respectively. We
believe that the future will again witness our ability to attain and exceed our
long-term return goal of ten percent real.
Since its inception on March 3, 1986 through March 31, 1997, the Fund has
had a total return of 392.7%, which equates to an average annual return of
15.5%.
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.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT RESULTS (a)
- ----------------------------------------------------------------------------------------------------
QUARTER
------------------------------------------
1ST 2ND 3RD 4TH YEAR
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C>
1997: Net Asset Value ...... $27.00 - - - -
Total Return ......... 2.2% - - - -
- ----------------------------------------------------------------------------------------------------
1996: Net Asset Value ...... $27.44 $28.09 $27.92 $26.42 $26.42
Total Return ......... 6.6% 2.4% (0.6)% 4.5% 13.4%
- ----------------------------------------------------------------------------------------------------
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)
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Dividend History
- ------------------------------------------- ------------------------------------------------------
AVERAGE ANNUAL RETURNS - MARCH 31, 1997 (a) Payment (ex) Date Rate Per Share Reinvestment Price
- ------------------------------------------- ----------------- -------------- ------------------
<S> <C> <C> <C> <C>
1 Year 8.7% December 31, 1996 $2.770 $26.42
December 29, 1995 $2.000 $25.75
5 Year 13.8% December 30, 1994 $1.056 $22.21
December 31, 1993 $0.921 $23.30
10 Year 13.8% December 31, 1992 $0.755 $19.88
December 31, 1991 $0.505 $17.96
Life of Fund(b) 15.5% 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.
- ------------------------------------------------------------------------------
2
<PAGE>
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 [FIGURE]
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 (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 world-wide 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 ECONOMY AND THE STOCK MARKET: TOO MUCH OF A GOOD THING
Once again, the economy confounded the Wall Street economists by growing
much faster than consensus expectations. Although inflation has not yet shown up
in the Producer Price and Consumer Price indices, Federal Reserve Chairman Alan
Greenspan and bond investors decided to err on the side of caution by taking
short- and long-term interest rates higher.
We applaud Fed Chairman Greenspan's preemptive strike against inflation. We
believe he will continue to take the steps necessary to combat inflation and, in
the process, provide confidence in Soft Landing - Part II. Over the short-term,
this may not be pleasant for equities investors. However, with the elimination
of some of the speculative excesses, the market will be on much better
fundamental footing going forward. We do not believe this is the beginning of a
secular bear market, but rather a healthy correction that is arguably long
overdue.
What can we expect over the balance of this year? We should continue to see
a volatile market as skittish investors wrestle with the latest economic data
trying to determine if inflation is a real threat. While the jury may still be
out on inflation, higher interest rates are a reality and will be problematic
for stocks on several levels. Higher interest rates might trim the economy and
restrain corporate earnings growth putting consensus estimates of 9% to 10%
gains for 1997 in jeopardy. Higher rates also boost the U.S. dollar, further
crimping the U.S. dollar value of international earnings. Whether you are
looking
3
<PAGE>
at stocks on the basis of asset values or using a dividend discount model,
public prices of equities tend to decline as interest rates rise, all else
constant. So, price/cash flow and price/earnings multiples do contract, should
interest rates rise.
The wild card will be how investors react to any sustained decline in stock
prices. A tremendous amount of money has flowed into the equities market in the
last three years. Will it back out at the first sign of serious trouble? It may
not be how the great unwashed public reacts, but rather how the great unwashed
professional investors--those twenty and thirty something mutual fund managers
who have never experienced even a substantial market correction--respond to the
perceived crisis. Will they see the glass half empty or half full? We don't
know.
While we are dwelling on things on our watch list, we should also mention
the strong dollar. Despite the enormous advances in the quality of American made
goods in a wide variety of industries, the strong dollar will restrain exports
and currency translation will have an adverse impact on the earnings of U.S.
based multi-national companies. Longer term, we must also be sensitive to the
fact that the substantial cost reductions and productivity gains in American
industry over the last five years may be close to running their course. In other
words, profit margins are unlikely to advance further.
We don't view a market correction as bad news. In general, we are not
exposed to those sectors and individual companies that have benefited most from
investor euphoria and which are, therefore, most vulnerable to a dramatic change
in investor sentiment. If anything, a market correction should provide a more
level playing field for disciplined investors focusing on the fundamental value
of individual stocks. We are just now emerging from a two year period in which
fundamentals mattered much less than market momentum. We are entering what may
prove to be an extended period in which stock pickers excel.
TO INDEX OR NOT INDEX - THE NEW RHETORIC
In 1995 and 1996, the S&P 500 Index proved to be a difficult benchmark for
active managers of all stripes. It has been a particularly tough hurdle for
value investors who have been unwilling to pay sky high price/earnings multiples
for the mega-cap market darlings that have such an enormous impact on S&P 500
returns.
There are several dynamics that have favored the largest S&P 500 stocks
over the last several years. The first is the growth of S&P 500 Index funds
themselves. S&P 500 Index mutual funds have grown at four times the rate of
actively managed mutual funds over the last five years. So, we have seen an
increasing amount of money chasing a finite number of large cap stocks and thus,
on a pure supply/demand basis, indexing has been a self fulfilling prophecy. In
addition, the substantial foreign money coming into the market is largely
devoted to the big cap, household name stocks that dominate the S&P. Finally,
active portfolio managers who have been under increasing pressure to be fully
invested regardless of their concerns over equity valuations have pumped money
into the large liquid stocks that comprise the S&P so that if something does go
wrong, they can get out in a hurry. Finally, stocks like Microsoft, Intel, P&G,
Coca-Cola and General Electric do benefit from faster growth in developing
economies.
4
<PAGE>
With all of these factors favoring S&P 500 indexing, why bother doing
anything else? We offer two answers. The first is that longer term, valuations
do matter. Supply and demand are powerful forces in the market, but at some
stage, economic reality always asserts itself. In the early 1970's the "Nifty
Fifty", a group of terrific large cap growth companies, dominated the market.
The consensus was that these were "one decision" stocks which you simply had to
own and didn't ever have to worry about selling . At the peak, these stocks sold
at ludicrous multiples relative to their economic value. When the fertilizer hit
the market fan in 1973-74, they fell off a cliff. Even after one of the great
long-term bull markets in history, some of these original "nifty-fifty" stocks
still have market capitalizations below their 1972-73 peaks. We have not yet
witnessed that level of speculative excess in today's market favorites, but we
are seeing heady multiples that don't make economic sense. At some point,
investors will come to their senses and realize that even the best (soft drink,
household product, software, semi-conductor, movie companyNpick one or more) is
not worth a price/earnings multiple two to three times its annual earnings
growth rate. Moreover, if earnings do not expand faster than revenues, and
interest rates continue to provide present "real" rates of return, then overall
stocks are unlikely to generate double-digit returns to investors.
Our second response is simply that what has gone up the most is likely to
fall the farthest with a major shift in investor sentiment. If and when we do
see net cash outflows from equities mutual funds, we suspect index funds will
get hit the hardest. Supply and demand is a two way street.
MUST CARRY
In an upset rivaling the University of Arizona's victory over Kentucky in
the 1997 NCAA basketball championship, the Supreme Court voted 5 to 4 to uphold
the "must carry" provision for local broadcast companies. The must carry rule
specified that cable television systems must make one-third of their channel
capacity available free to local broadcasters. Led by Ted Turner, the cable
television industry had challenged the rule on the grounds that it violated
their First Amendment rights. The industry's economic goal was to free up
channel capacity for new cable television networks providing more popular
programming and paying the cable operator for channel space. The consensus of
the lawyers on both sides of the issue was the cable guys would win. However,
the Supreme Court decided that allowing cable operators to exclude local
broadcast channels would create undue economic hardship for many broadcasters
and threaten the survival of weaker independents.
Who are the winners and losers? The broadcasters, particularly those with
extensive UHF properties, get a renewed lease on life as they maintain and in
some cases add to their cable audience. The entrenched cable television
networks, like International Family Entertainment, Inc. (FAM - $20.375 - NYSE),
BET Holdings, Inc. (BTV - $29.625 - NYSE), Gaylord Entertainment Company (GET -
$21.50 - NYSE), HSN, Inc. (HSNI - $25.375 - NASDAQ) and Tele-Communications,
Inc./Liberty Media Group (LBTYA - $19.9375 - NASDAQ), benefit because with cable
channel capacity still restrained, the value of their "slots" with cable
operators increase in value. For example, the prospective value of International
Family Entertainment to a News Corporation Limited (NWS - $18.00 - NYSE), which
is trying to expand distribution of its programming, increases substantially.
The biggest losers are the cable television network wannabes who will have to
wait until cable operators complete upgrades to their systems before channel
space is available.
5
<PAGE>
IN THIS CORNER WEARING THE RED TRUNKS ...
A heavyweight battle is unfolding between Hilton Hotels Corporation (HLT -
$24.25 - NYSE) CEO Stephen Bollenbach and ITT Corporation (ITT - $58.875 - NYSE)
Chairman Rand Araskog. Bollenbach landed the first punch with an unsolicited $56
per share offer for ITT. Araskog responded by selling off non-core assets like
ITT's 50% ownership of MSG (Madison Square Garden, the Knicks, and the Rangers)
to partner Cablevision Systems Corporation (CVC - $29.75 - ASE) and ITT's 6%
stake in French telecommunications giant Alsthom SA (ALA - $23.75 - NYSE). ITT's
Educational Services and Worldwide Yellow Pages businesses are also on the
block. For the time being, Bollenbach is circling the ring waiting for Araskog
to counter-attack. What does this wily veteran of many takeover battles have up
his sleeve? Our guess is that, aside from serving K-rations to corporate staff,
he will further build up his cash reserves for a self tender in the $60 plus per
share range. If this happens, we expect Bollenbach to wade in looking for a
merger. It's still too early in what should be a full fifteen rounder to predict
the winner. We're betting that shareholders of both these firms will benefit
from these corporate heavyweights slugging it out.
SNAPPLE, CRACK AND POP
In another ring, Quaker Oats Company (OAT - $36.50 - NYSE) has thrown in
the towel on Snapple, selling it to Triarc Companies Inc. (TRY - $17.50 - NYSE)
for $300 million, $1.4 billion below the $1.7 billion it paid for the company
just three years ago. Despite having egg--or is that iced tea--all over its
face, Quaker Oats has become a much more attractive target for a larger food
company like Nestle SA (NESAF - $1,170.95 - NASDAQ) or RJR Nabisco Holdings
Corporation (RN - $32.25 - NYSE) looking for dominant market share brands
like Quaker Oats' Gatorade and ready-to-eat breakfast cereals. We believe the
company is worth well over $50 a share to the right buyer. Even if nothing
develops on this front, Quaker Oats' earnings should be refreshing as they
discontinue writing off all the goodwill on the ill-advised purchase of
Snapple.
INTERVIEWS WITH MARIO J. GABELLI
We thought we would share with you excerpts from several recent
interviews with our Chief Investment Officer. Discussion of individual
companies is not necessarily reflective of the Fund's entire portfolio.
GABELLI: Thirty years ago, i.e., in the 1960's, you may recall a movie
entitled "The Graduate" that asked - "Where is the future?" The answer was
- "PLASTICS". Fifteen years ago, in the "Dirty Harry" movies, starring
Clint Eastwood, the catch phrase was "Go ahead - Make my day" . Even
President Bill Clinton of the United States recently used this line. Today,
the sound byte that best captures the expectations of the present day is
summarized by a line in another movie called "Jerry Maguire". In that
movie, the main character says "Show me the money." 'Show me the money' has
become a popular saying in the United States. What it stands for is simple
- What are you doing for me? Do not tell me what you are going to do. show
me the bottom line. Part of that bottom line is instant gratification.
The same applies to the investor in the U.S. market. In the last 18-24
months, the U.S. stock market has been driven by a substantial flow of
funds. Now, the question is whether Federal Reserve Chairman Greenspan's
recent action is signaling the end to this flow of funds that has been
driving U.S.
6
<PAGE>
equity prices. So let's put the elements together. We have terrific
earnings in the United States, we have had interest rates that were heading
lower and we have had a massive flow of funds. When we mix that all
together in a brew for the stock market, it created a powerful accelerant.
Q: IS THE PARTY OVER?
GABELLI: Is it over? Is Greenspan's raising of interest rates the beginning
of the end? Is the U.S. stock market in the sunset of a bull market?
Clearly, it is not in the sunrise. I think the market will run into a wall
of volatility. The decline in interest rates, in my judgment, cannot be
assumed to continue. So what we have to do is go from an overall market
that was liquidity driven, to one where the risk adjusted returns will be
made by being sector and stock specific. In other words, we are entering
into a "market of stocks".
Let's give you a baseline. The Standard & Poor's 500 Index is trading
about 15 times the $46 to $47 per share earnings expectation for 1997. I am
in the camp of those that would argue that earnings will be up 7% to 8% in
1998, even with higher interest rates. So the market is currently at 14
times expected 1998 earnings. While the market does not give us a margin of
safety, it is not high, particularly if interest rates stay where they are,
at 7 1/4%, relative to inflation of 3% - 3.5%. So my conclusion - it is
going to be a wonderful time to make money in stock specifics.
The environment that we could be entering may be very similar to the
mid - 1980's, where there were lots of deals and take-overs. Indeed, in
March you saw the first attempt at a hostile bid in Germany when Krupp
Hoesch bid for Thyssen. We had not seen that before. We have already
witnessed companies in the United States, starting with General Electric in
1994, doing hostile transactions. The last time the Federal Reserve raised
interest rates was 1994. At that time, you did not have mergers. Now, you
have a cascade of transactions. You are seeing two, three take-overs a day,
driven by consolidation, buying into an industry. You also are witnessing
spinoffs as companies are looking to shed divisions that do not make sense
any more. Focusing on basic businesses creates substantial opportunities.
We are looking at the globalization of the marketplace. What does the
globalization of the market place mean for Boeing and air travel? What does
it mean for vendors? What does it mean for companies that cater to the
aircraft industry? We try to buy the situation where we find a company,
like Sequa, that is selling at 30 cents on the dollar in relation to its
value, the Chairman is 82 years old and General Electric is likely to knock
on its door. That is what we do in a period that is similar to the
mid-1980's, driven by a different set of dynamics, by corporations buying
each other.
Q: HOW HAS THE FUND PERFORMED IN THIS ENVIRONMENT?
GABELLI: We hit our goal in 1996, but it looks dull because we decided not
to chase technology and other momentum plays. That's not our style. Our big
fund, Gabelli Asset, is designed for the investor who wants to no-load his
way into the best of Graham and Dodd. We try to deliver an annual return of
10% real plus inflation, and we do it. We did a little better than 13% in
1996, and we've had five- and ten-year annualized returns of 14.6% and
15.6%.
Q: DESCRIBE YOUR INVESTMENT STYLE?
GABELLI: We're value investors who stick to our knitting. And our guns. One
reason for our sluggish 1996 performance is that investors decided that
competition, regulation, and who knows what are going
7
<PAGE>
to hurt the cable and telecom companies. We disagree. Time Warner, United
Television, and Chris-Craft - which owns three-quarters of BHC
CommunicationsNare three of our top six holdings. We also own a lot of
telephone companies, which we think are in for another big round of
consolidation. With MCI and British Telecom merging, you know that GTE is
scouting Cable & Wireless or a lookalike, and that BellSouth, Ameritech,
and all the others will be looking to partner up because of the change in
critical mass. Our favorite in the global potpourri is Telefonica de
Espana, which is materially undervalued and a great way to play Latin
America.
Q: TELL US MORE ABOUT WIRELESS.
GABELLI: Dick Tracy got there first, but the rest of us are catching up
fast. It's an area that hasn't been a big profit maker for investors
lately, but one that could generate substantial returns as new competitors
build their systems. We have a big position in the old Commonwealth
Telephone, now known as C-Tec. We're also long Palmer Wireless, Century
Telephone, British Columbia Telephone, and Aerial Communications.
Q: HOW ABOUT AUTO PARTS?
GABELLI: Federal-Mogul, which manufactures and distributes engine and
clutch bearings, oil seals, and antifriction bearings for cars, trucks, and
construction vehicles. Probably sounds dull, but last November the board
hired a guy named Richard Snell and named him chairman and CEO. We knew
Snell from Tenneco Automotive, where he boosted top-line growth by taking
Monroe Shocks and Walker Mufflers into the overseas after-market. Now that
he's running Federal-Mogul, we see a globalization of the business, an
improving balance sheet, rising earnings, and a stock we think can double
in three years.
Q: ANY TAKEOVER PLAYS?
GABELLI: Wynn's International, out of Nashville. Jim Carroll, who runs it,
is a great manager, and the company is the dominant name in sealants, which
manufacturers need when they put two parts together and don't want them to
leak. The company has over $50 million in cash and no debt. I've got to
believe any number of companies would love to buy it. Our clients and funds
own close to 30% of the stock.
Q: WHAT'S HAPPENING IN BROADCASTING?
GABELLI: Everything is changing. When I started following the industry in
the late Sixties, the first thing I discovered was that I needed to
understand the cost structure. Programming was an integral part of costs,
which meant I had to understand Hollywood. After the Berlin Wall came down,
I discovered something elseNyou needed to travel far beyond Hollywood if
you wanted to keep understanding broadcasting. There are 3.5 billion people
around the world that have opted for capitalism and are hungry for Madonna,
pizza, MTV, and all the other parts of American pop culture.
Q: WHAT ELSE HAS CHANGED?
GABELLI: Terrestrial broadcasting is wonderful-- free, over the air, no
wires. You can beam it into your home or through DirectTV into your
Winnebago. But you'll soon be able to watch TV on your PC, and Andy Grove
would probably argue that broadcasters are moot.
8
<PAGE>
Q: SHOULD YOU BE DUMPING YOUR BROADCASTERS?
GABELLI: No. Conventional over-the-air broadcasters will continue to
maintain share of market because they deliver big. But the local
broadcasters are another way to go, and multiples are a lot cheaper.
Q: WHICH ONES DO YOU LIKE?
GABELLI: United Television, which owns five TV stations. It's a company
with wonderful management that is using part of its $200 million in cash to
buy back stock. We also hold Ackerley Communications, which owns six TV
stations and three radio stations, and Gray Communications, which dominates
the Bubba BeltNHazard, Kentucky; Panama City, Florida; and Knoxville. These
are niche opportunities that aren't on many institutional radar screens.
Q: WHAT ABOUT CABLEVISION, WHICH MANY OTHER INVESTORS HAVE DUMPED?
GABELLI: We own 3.8 million shares, or $120 million, of Cablevision
Systems. They're leveraged to the teeth and about to pay $650 million they
don't have for the 50% of Madison Square Garden they don't own. But CEO
Chuck Dolan is the ultimate entrepreneur. Wall Street doesn't like the
deal, but the Street had the same problems with Ted Turner when he paid $1
billion-plus for the MGM library. Three years later he was a hero.
I can see the same thing happening here. It's not like Dolan just
parachuted in from Mars. He's been programming the Knicks and Rangers, and
he has rights to the Yankees, Mets, and Islanders, so he understands
packaging. An all-sports cable TV network that carried New York City teams
would probably be an incredible hit.
Q: DO YOU STILL LIKE AMERICAN EXPRESS?
GABELLI: For sure. CEO Harvey Golub had an analyst meeting in February
where he did a good job convincing everyone that while the U.S. card
business may be mature, the 30% of the American Express card business
that's non-U.S. can grow 25% to 30% a year. In other words, their franchise
has a potentially powerful new leg because of globalization. On top of
that, they've repackaged the old IDS into something called American Express
Financial Advisors, which is 8,000 salesmen doing a reasonably good job
flogging mutual funds and insurance. We figure this business will do $1
billion pretax in 1997, which is a nice piece of change that a bank that
wants to get into money management might like.
Q: IS AMERICAN EXPRESS ANOTHER TAKEOVER PLAY?
GABELLI: We're long on the fundamentals, but we wouldn't object if a
takeover occurred.
Q: HOW ABOUT GLOBALIZATION. ARE THERE ANY OTHER "GLOBAL" CONCEPTS YOU LIKE?
GABELLI: Travel. How do all those people in China and Southeast Asia who
are suddenly making money get to see the world? The answer is obvious: by
air. We analyzed travel patterns and concluded the world is going to need
16,000 new planes over the next 20 years. So we own Boeing. We also own a
9
<PAGE>
number of Boeing suppliers, like SPS Technologies, which is the dominant
manufacturer of fasteners for aircraft engines and airframes, and Coltec
Industries, a leading manufacturer of landing gear. We also like Sequa,
which has a division that reconditions and repairs jet engines.
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 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. INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, Inc., the
Gabelli Mutual Funds, quarterly reports, closing prices, IRAs, 401(k)s and other
current news. You can also send us e-mail at [email protected].
IN CONCLUSION
In our year-end 1996 letter to you, we expressed our doubts about the
market's ability to duplicate its substantial gains in 1995 and 1996. After
getting off to a strong start, the market lost momentum and then sputtered badly
at the end of the first quarter of 1997 as strong economic data re-ignited
inflationary fears. As we write, the jury is still out on inflation, but long
interest rates are above 7%, providing sizeable "real" rates of return. Looking
ahead, we anticipate a continually volatile stock market that will have many
investors on the edge of their seats. We rest somewhat more comfortably having
been through such uneasy times before and having faith that our value oriented
discipline will sustain us as it has in the past.
10
<PAGE>
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.
Best wishes for a financially successful 1997!
Sincerely,
/s/ MARIO J. GABELLI, CFA
------------------------------------
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
May 1, 1997
-----------------------------------------------------------------
TOP TEN HOLDINGS
MARCH 31, 1997
--------------
Time Warner, Inc. American Brands
American Express Company Neiman Marcus Group, Inc.
United Television, Inc. Quaker Oats
Chris-Craft Industries, Inc. Viacom, Inc.
Deere & Company Pittway Corporation
-----------------------------------------------------------------
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.
11
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- -----------
<S> <C> <C>
COMMON STOCKS--98.3%
AEROSPACE--0.5%
75,000 Honeywell, Inc. ...................... $ 5,090,625
-----------
AGRICULTURE--0.2%
110,000 Archer-Daniels-Midland Co. ........... 1,966,250
-----------
AUTOMOTIVE--1.2%
220,000 General Motors Corporation............ 12,182,500
-----------
AUTOMOTIVE: PARTS AND ACCESSORIES--5.7%
30,000 APS Holding Corporation, Class A+..... 256,875
33,000 Borg-Warner Automotive, Inc. ......... 1,406,625
150,000 Echlin Inc. .......................... 5,100,000
200,000 Federal-Mogul Corporation............. 4,925,000
675,000 GenCorp Inc. ......................... 12,825,000
240,000 Genuine Parts Company................. 11,190,000
180,000 Handy & Harman........................ 2,700,000
92,000 Johnson Controls, Inc. ............... 7,406,000
125,000 Modine Manufacturing Company.......... 3,062,500
39,875 Myers Industries, Inc. ............... 662,922
165,000 Quaker State Corporation.............. 2,536,875
10,000 Republic Automotive Parts, Inc.+...... 175,000
115,000 Standard Motor Products, Inc. ........ 1,509,375
13,200 Superior Industries
International, Inc................... 298,650
100,600 TransPro Inc. ........................ 892,825
160,000 UAP Inc., Class A..................... 1,964,963
60,000 Wynn's International, Inc. ........... 1,387,500
-----------
58,300,110
-----------
AVIATION: PARTS AND SERVICES--3.1%
10,000 BE Aerospace Inc.+.................... 245,000
85,000 Boeing Co. ........................... 8,383,125
420,000 Coltec Industries Inc.+............... 7,770,000
101,000 Curtiss-Wright Corporation............ 5,403,500
50,000 General Motors Corporation, Class H... 2,712,500
60,000 Hi-Shear Industries Inc. ............. 142,500
40,000 Hudson General Corporation............ 1,490,000
105,000 Precision Castparts Corp. ............ 5,355,000
-----------
31,501,625
-----------
BROADCASTING--5.8%
409,122 Chris-Craft Industries, Inc. ......... 16,211,466
67,527 Chris-Craft Industries, Inc.,
Class B(a)........................... 2,675,749
115,000 Gray Communications Systems, Inc.,
Class B.............................. 1,955,000
315,000 Grupo Televisa S.A., GDR+............. 7,835,625
76,000 Liberty Corporation................... 3,192,000
53,000 LIN Television Corporation+........... 1,921,250
100,000 Paxson Communications Corporation,
Class A+............................. 1,075,000
420,000 Television Broadcasting Ltd. ORD...... 1,707,383
247,500 United Television, Inc................ 21,687,188
60,000 Westinghouse Electric Corp............ 1,065,000
-----------
59,325,661
-----------
BUSINESS SERVICES--1.7%
42,000 BBN Corporation+...................... 698,250
50,000 Berlitz International, Inc., New+..... 1,118,750
50,000 Ecolab Inc. .......................... 1,900,000
12,546 Hach Company.......................... 222,692
85,000 International Business Machines
Corporation.......................... 11,676,875
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- -----------
<S> <C> <C>
71,000 Landauer, Inc. ....................... $ 1,491,000
72,000 Nashua Corporation.................... 864,000
-----------
17,971,567
-----------
CABLE--4.1%
70,000 BET Holdings, Inc., Class A+.......... 2,073,750
213,000 Cablevision Systems Corporation,
Class A+............................. 6,336,750
40,000 Comcast Corporation, Class A.......... 655,000
30,000 Comcast Corporation, Class A,
Special.............................. 506,250
400,000 International Family Entertainment,
Inc., Class B+....................... 8,150,000
40,000 Shaw Communications Inc., Class B..... 281,741
30,000 Shaw Communications Inc., Class B,
Conv................................. 211,306
100,000 TCI Satellite Entertainment Inc.,
Class A+............................. 775,000
810,000 Tele-Communications, Inc., Class A+... 9,720,000
574,500 Tele-Communications, Inc./Liberty
Media Group, Class A+................ 11,454,094
60,000 United International Holdings, Inc.,
Class A+............................. 570,000
50,000 US WEST Media Group+.................. 931,250
-----------
41,665,141
-----------
CLOSED-END FUNDS--0.1%
85,322 Royce Value Trust, Inc. .............. 1,002,534
-----------
COMMUNICATIONS EQUIPMENT--0.2%
115,000 Allen Telcom Inc. .................... 2,012,500
-----------
CONSUMER PRODUCTS--8.1%
350,000 American Brands, Inc. ................ 17,718,750
475,000 Carter-Wallace, Inc. ................. 6,471,875
220,000 Church & Dwight Co., Inc. ............ 6,325,000
22,000 Culbro Corporation+................... 2,062,500
60,000 Department 56, Inc.+.................. 1,042,500
35,000 Eastman Kodak Company................. 2,655,625
155,000 Fieldcrest Cannon, Inc.+.............. 2,460,625
62,000 First Brands Corporation.............. 1,519,000
130,000 General Electric Company.............. 12,902,500
62,000 Gillette Company...................... 4,502,750
23,000 Harley Davidson, Inc. ................ 779,125
196,000 Ralston Purina Group.................. 15,312,500
80,000 Scotts Company, Class A+.............. 1,840,000
120,000 Syratech Corporation+................. 3,840,000
85,000 Tambrands Inc......................... 3,644,375
-----------
83,077,125
-----------
CONSUMER SERVICES--1.1%
285,000 HSN, Inc.+............................ 7,231,875
205,000 Rollins, Inc. ........................ 3,843,750
50,000 Ticketmaster Group Inc.+.............. 637,500
-----------
11,713,125
-----------
DIVERSIFIED INDUSTRIAL--3.4%
12,000 Anixter International Inc.+........... 148,500
225,000 Crane Co. ............................ 7,059,375
82,000 GATX Corporation...................... 4,007,750
185,000 ITT Industries Inc. .................. 4,139,375
150,000 Katy Industries, Inc. ................ 2,343,750
6,500 Kyocera Corporation, ADR.............. 739,375
345,000 Lamson & Sessions Co.+................ 2,716,875
166,000 Lawter International, Inc. ........... 1,929,750
18,000 Minnesota Mining and Manufacturing
Company.............................. 1,521,000
</TABLE>
12
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- ------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
DIVERSIFIED INDUSTRIAL (CONTINUED)
70,000 National Service Industries, Inc. .... $ 2,738,750
80,000 Thomas Industries Inc. ............... 1,880,000
200,000 Trinity Industries, Inc. ............. 6,075,000
-----------
35,299,500
-----------
ELECTRONICS--0.1%
2,000 Hitachi, Ltd., ADR.................... 175,750
11,000 Imation Corporation+.................. 275,000
10,000 Sony Corporation, ADR................. 691,250
-----------
1,142,000
-----------
ENERGY--3.5%
50,000 Atlantic Richfield Company............ 6,631,250
30,000 British Petroleum Company plc, ADR.... 4,117,500
30,000 Chevron Corporation................... 2,088,750
165,000 Eastern Enterprises................... 5,094,375
60,000 Enron Oil & Gas Company............... 1,245,000
90,000 Exxon Corporation..................... 9,697,500
20,000 Halliburton Company................... 1,355,000
150,000 Southwest Gas Corporation............. 2,606,250
30,000 Texaco Inc. .......................... 3,285,000
-----------
36,120,625
-----------
ENTERTAINMENT--6.0%
110,000 EMI Group plc, Sponsored ADR.......... 1,952,500
260,000 Gaylord Entertainment Company, Class
A.................................... 5,590,000
107,000 GC Companies, Inc.+................... 4,199,750
145,000 Havas, Sponsored ADR.................. 2,610,000
20,000 PolyGram NV........................... 985,000
697,000 Time Warner Inc. ..................... 30,145,250
11,000 Todd-AO Corporation, Class A.......... 107,250
220,000 Viacom Inc., Class A+................. 7,177,500
210,000 Viacom Inc., Class B+................. 6,956,250
20,000 Walt Disney Company................... 1,460,000
-----------
61,183,500
-----------
EQUIPMENT AND SUPPLIES--11.7%
355,000 AMETEK, Inc. ......................... 7,499,375
100,000 AMP Incorporated...................... 3,437,500
28,000 Amphenol Corporation, Class A+........ 700,000
145,000 AptarGroup, Inc. ..................... 5,546,250
60,000 Caterpillar Inc....................... 4,815,000
65,000 CLARCOR Inc........................... 1,503,125
100,000 CTS Corporation....................... 5,100,000
420,000 Deere & Company....................... 18,270,000
222,000 Donaldson Company, Inc................ 7,714,500
5,000 Duriron Company, Inc.................. 110,000
40,000 EG&G Inc.............................. 835,000
163,600 Gerber Scientific, Inc................ 2,535,800
510,000 IDEX Corporation...................... 11,985,000
86,000 Ingersoll-Rand Company................ 3,751,750
200,000 Kollmorgen Corporation................ 2,750,000
90,000 Lufkin Industries, Inc. .............. 1,985,625
55,000 Manitowoc Company, Inc. .............. 1,986,875
229,500 Mark IV Industries, Inc. ............. 5,393,250
450,000 Navistar International Corporation+... 4,218,750
10,000 PACCAR Inc. .......................... 667,500
136,500 Pittway Corporation................... 6,961,500
172,500 Pittway Corporation, Class A.......... 8,366,250
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- ------------
<C> <S> <C>
60,000 Sequa Corporation, Class A+........... $ 2,677,500
86,000 Sequa Corporation, Class B+........... 4,418,250
84,000 SPS Technologies, Inc.+............... 5,670,000
20,000 TRINOVA Corporation................... 670,000
15,000 Valmont Industries, Inc. ............. 585,000
------------
120,153,800
------------
FINANCIAL SERVICES--5.8%
1 Al-Zar Ltd.+(a)....................... 350
400,000 American Express Company.............. 23,950,000
220 Berkshire Hathaway Inc.+.............. 7,964,000
70,000 Commerzbank AG, Sponsored ADR......... 1,946,875
150,000 Deutsche Bank AG, Sponsored ADR....... 8,250,000
90,000 H&R Block Inc. ....................... 2,643,750
215,000 Lehman Brothers Holdings Inc. ........ 6,261,875
86,000 Midland Company....................... 3,440,000
30,000 Salomon Inc. ......................... 1,496,250
25,000 State Street Boston Corporation....... 1,734,375
20,000 SunTrust Banks, Inc. ................. 927,500
11,941 Transamerica Corporation.............. 1,068,719
8,000 Value Line, Inc. ..................... 264,000
------------
59,947,694
------------
FOOD AND BEVERAGE--8.2%
76,300 Brown-Forman Corporation, Class A..... 3,614,712
93,763 Chock Full o'Nuts Corporation......... 550,858
46,000 Coca-Cola Company..................... 2,570,250
17,000 CPC International Inc. ............... 1,394,000
50,000 Delchamps, Inc. ...................... 1,206,250
4,500 Farmer Brothers Company............... 607,500
70,000 General Mills, Inc. .................. 4,348,750
35,000 Heinz Company (H.J.).................. 1,382,500
60,000 Hershey Foods Corporation............. 3,000,000
82,000 Kellogg Company....................... 5,514,500
25,000 LVHM Moet Hennessy Louis Vuitton,
Sponsored ADR........................ 1,193,750
390,000 PepsiCo, Inc. ........................ 12,723,750
465,000 Quaker Oats Company................... 16,972,500
50,000 Ralcorp Holdings, Inc.+............... 512,500
20,000 Rykoff-Sexton, Inc. .................. 352,500
280,000 Seagram Company Ltd. ................. 10,710,000
60,914 Tootsie Roll Industries, Inc. ........ 2,733,525
300,000 Whitman Corporation................... 7,350,000
125,000 Wrigley (Wm.) Jr. Company............. 7,296,875
------------
84,034,720
------------
HEALTH CARE--2.8%
13,000 Amgen Inc.+........................... 726,375
20,000 Biogen, Inc.+......................... 747,500
10,000 BioWhittaker, Inc.+................... 86,250
45,000 Chiron Corporation+................... 838,125
100,000 Genentech, Inc.+...................... 5,712,500
100,000 Johnson & Johnson..................... 5,287,500
70,000 Mallinckrodt Inc. .................... 2,878,750
70,000 Merck & Co., Inc. .................... 5,897,500
81,000 Pfizer Inc. .......................... 6,814,125
------------
28,988,625
------------
HOTELS/GAMING--2.9%
80,000 Circus Circus Enterprises, Inc.+...... 2,080,000
40,000 GTECH Holdings Corporation+........... 1,205,000
12,000 Harrah's Entertainment Inc.+.......... 205,500
</TABLE>
13
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- -----------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HOTELS/GAMING (CONTINUED)
430,000 Hilton Hotels Corporation............. $10,427,500
180,000 ITT Corporation, New+................. 10,597,500
200,000 Ladbroke Group plc.................... 740,340
195,000 Mirage Resorts, Incorporated+......... 4,143,750
25,000 Santa Anita Realty Enterprises, Inc... 681,250
-----------
30,080,840
-----------
HOUSING RELATED--0.3%
165,000 Nortek, Inc.+......................... 3,238,125
4,333 Nortek, Inc., Special Common+(a)...... 67,161
-----------
3,305,286
-----------
METALS AND MINING--0.7%
30,000 Barrick Gold Corporation.............. 712,500
110,000 Echo Bay Mines Ltd.................... 728,750
45,000 Homestake Mining Company.............. 680,625
33,000 Newmont Gold Company.................. 1,324,125
310,000 Pegasus Gold Inc.+.................... 2,518,750
17,500 Placer Dome Inc. ..................... 317,188
200,000 Royal Oak Mines Inc.+................. 637,500
-----------
6,919,438
-----------
PAPER AND FOREST PRODUCTS--1.3%
175,000 Greif Bros. Corporation, Class A...... 4,845,312
112,500 St. Joe Corp.......................... 8,310,937
-----------
13,156,249
-----------
PUBLISHING--3.1%
75,000 American Media Inc., Class A+......... 440,625
10,000 Dow Jones & Company Inc. ............. 406,250
5,000 E.W. Scripps Company, Class A......... 163,125
300,000 Golden Books Family Entertainment,
Inc.+................................ 2,775,000
60,000 Harcout General, Inc. ................ 2,790,000
43,750 McClatchy Newspapers, Inc., Class A... 1,044,531
120,000 McGraw-Hill Companies, Inc. .......... 6,135,000
370,000 Media General, Inc., Class A.......... 10,498,750
90,000 Meredith Corporation.................. 2,081,250
80,000 New York Times Company, Class A....... 3,530,000
15,000 News Corporation Limited, ADS......... 270,000
27,000 Reader's Digest Association, Inc.,
Class B.............................. 729,000
1,650,000 Seat SpA.............................. 573,999
-----------
31,437,530
-----------
REAL ESTATE--0.6%
330,000 Catellus Development Corporation+..... 5,032,500
12,000 Florida East Coast Industries,
Inc. ................................ 1,176,000
-----------
6,208,500
-----------
RETAIL--2.4%
46,000 Aaron Rents, Inc. .................... 529,000
20,000 Aaron Rents, Inc., Class A............ 215,000
160,000 Burlington Coat Factory Warehouse
Corporation+......................... 2,880,000
178,600 Earl Scheib, Inc.+.................... 1,116,250
50,000 Fingerhut Companies, Inc. ............ 700,000
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- -----------
<C> <S> <C>
100,000 Lillian Vernon Corporation............ $ 1,400,000
675,000 Neiman Marcus Group, Inc.+............ 17,381,250
27,500 THORN plc, ADR+....................... 305,938
-----------
24,527,438
-----------
RETAIL: FOOD AND DRUG--0.9
100,000 Albertson's, Inc. .................... 3,400,000
25,000 American Stores Company............... 1,112,500
70,000 Giant Food Inc., Class A.............. 2,240,000
45,000 Kroger Co.+........................... 2,283,750
-----------
9,036,250
-----------
SPECIALTY CHEMICAL--0.7%
250,000 Ferro Corporation..................... 7,500,000
-----------
TELECOMMUNICATIONS--7.6%
120,000 Aliant Communications Inc. ........... 1,980,000
170,000 AT&T Corp. ........................... 5,907,500
100,000 BC TELECOM Inc. ...................... 2,185,299
150,000 BCE Inc............................... 6,900,000
22,500 BellSouth Corporation................. 950,625
100,000 Cable & Wireless plc, Sponsored ADR... 2,375,000
270,000 C-TEC Corporation+.................... 7,627,500
46,500 C-TEC Corporation, Class B+........... 1,365,937
65,000 Frontier Corporation.................. 1,161,875
27,000 Globalstar Telecommunications+........ 1,444,500
190,000 GTE Corporation....................... 8,858,750
35,000 Hong Kong Telecommunications Ltd.,
Sponsored ADR........................ 573,125
55,000 Motorola, Inc. ....................... 3,320,625
25,000 Northern Telecom Limited.............. 1,634,375
175,000 Rogers Communications, Inc., Class
B+................................... 1,094,461
25,000 Koninklijke PTT Nederland NV,
Sponsored ADR........................ 906,250
20,000 SBC Communications Inc................ 1,052,500
40,000 Southern New England
Telecommunications Corporation....... 1,435,000
125,000 Sprint Corporation.................... 5,687,500
162,000 STET--Societa Finanziaria Telefonica
SpA, Sponsored ADR................... 7,026,750
1,400,000 Telecom Italia SpA ORD................ 3,501,574
88,000 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR............ 9,009,000
65,224 Telecomunicacoes de Sao Paulo SA
(Telesp)+............................ 16,318
17,500 Telefonica de Espana, Sponsored ADR... 1,255,625
18,000 Telefonos De Mexico SA, Class L,
ADR.................................. 693,000
-----------
77,963,089
-----------
TRANSPORTATION--0.8%
105,000 AMR Corporation+...................... 8,662,500
-----------
WIRELESS COMMUNICATIONS--3.7%
190,000 AirTouch Communications Inc.+......... 4,370,000
22,500 Associated Group, Inc., Class A+...... 849,375
18,500 Associated Group, Inc., Class B+...... 670,625
385,000 Century Telephone Enterprises,
Inc. ................................ 11,357,500
200,000 COMSAT Corporation, Series 1.......... 4,875,000
</TABLE>
14
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(C)
- ---------- --------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
65,000 NEXTEL Communications, Inc.,
Class A+............................. $ 869,375
2,400,000 Telecom Italia Mobile SpA............. 6,909,582
150,000 Telephone and Data Systems, Inc. ..... 5,756,250
110,000 360 degrees Communications Company+... 1,897,500
--------------
37,555,207
--------------
TOTAL COMMON STOCKS................................ 1,009,031,554
--------------
PREFERRED STOCKS--0.3%
CONSUMER PRODUCTS--0.1%
30,000 Fieldcrest Cannon, Inc., Series A,
6.00%, Conv. Pfd., 144A(d)........... 1,260,000
--------------
EQUIPMENT AND SUPPLIES--0.1%
19,000 Sequa Corporation, $5.00, Cumulative
Conv. Pfd. .......................... 1,434,500
--------------
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc., Depository
Shares, 7.00%, Cumulative Conv.
Pfd. ................................ 282,500
--------------
TELECOMMUNICATIONS--0.1%
10,000 Sprint Corporation, 8.25%,
Conv. Pfd............................ 343,750
1,521,945 Telecomunicacoes de Sao Paulo SA
(Telesp), Preference Shares.......... 386,503
--------------
730,253
--------------
TOTAL PREFERRED STOCKS............................. 3,707,253
--------------
COMMON STOCK WARRANTS AND RIGHTS--0.0%
3,068 Globalstar Telecommunications, Rights,
expires 04/30/1997+.................. 82,841
60,000 Jacor Communications Inc., Warrants,
expires 09/18/2001+.................. 105,000
--------------
TOTAL COMMON STOCK WARRANTS AND RIGHTS............. 187,841
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<S> <C> <C> <C>
CORPORATE BONDS--0.3%
AUTOMOTIVE PARTS AND
ACCESSORIES--0.0%
$ 400,000 GenCorp Inc., Conv. Sub. Deb.,
8.00% due 08/01/2002.............. 469,000
--------------
ENTERTAINMENT--0.3%
FRF 593,750 Havas, Conv. Bonds,
Payment-in-kind, 3.00% due
12/31/1997........................ 134,433
$ 2,700,000 Viacom Inc., Sub. Deb., 8.00% due
07/07/2006........................ 2,527,875
--------------
2,662,308
--------------
TOTAL CORPORATE BONDS............................ 3,131,308
--------------
TOTAL INVESTMENTS (Cost $659,907,205)(b)... 98.9% 1,016,057,956
OTHER ASSETS AND LIABILITIES (NET)......... 1.1 11,015,613
----- --------------
NET ASSETS APPLICABLE TO 38,046,372 SHARES
OF BENEFICIAL INTEREST OUTSTANDING........ 100.0% $1,027,073,569
====== ==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE........................... $ 27.00
==============
</TABLE>
- ---------------
(a) Security fair valued by the Board of Trustees.
(b) Aggregate cost for Federal tax purposes was $660,949,738. Net unrealized
appreciation for Federal tax purposes was $355,108,218 (gross unrealized
appreciation was $375,210,537 and gross unrealized depreciation was
$20,102,319).
(c) Securities traded on a national securities exchange are valued at the last
sale price as of the close of business on the day the securities are being
valued. Securities for which no sale was reported on that day and
over-the-counter securities are valued at the mean between the last reported
bid and asked prices. U.S. Government obligations and other debt instruments
with 60 days or less to maturity are valued at amortized cost which
approximates market value. Short-term investments with greater than 60 days
to maturity are valued at the highest independent bid price as quoted by
market makers.
(d) 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
ADR -- American Depositary Receipt ADS -- American Depositary Share
FRF -- French Franc GDR -- Global Depositary Receipt ORD -- Ordinary Share
15
<PAGE>
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.)
<TABLE>
<S> <C> <C>
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Karl Otto Pohl [PHOTOGRAPH]
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Anthony R. Pustorino THE
Former Senior Certified Public Accountant
Vice President Professor, Pace University GABELLI
Dollar Dry Dock Savings Bank
ASSET
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director FUND
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
</TABLE>
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom LLP
- -----------------------------------------
This report is submitted for the general FIRST QUARTER REPORT
information of the shareholders of The MARCH 31, 1997
Gabelli Asset Fund. It is not authorized
for distribution to prospective investors
unless preceded or accompanied by an
effective prospectus.
- -----------------------------------------
