<PAGE>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
ANNUAL REPORT
DECEMBER 31, 1997
* * * * *
MORNINGSTAR RATES THE GABELLI ASSET FUND 5 STARS OVERALL AND FOR THE FIVE AND
TEN YEAR PERIODS ENDED 12/31/97 AMONG 1292 AND 676 DOMESTIC EQUITY FUNDS,
RESPECTIVELY. THE FUND RECEIVED 4 STARS FOR THE THREE YEAR PERIOD
ENDED 12/31/97 AMONG 2332 FUNDS.
TO OUR SHAREHOLDERS,
Driven by low inflation, low interest rates, good corporate earnings gains,
deals, stock repurchase programs and liquidity (the continuing strong flow of
cash into U.S. equity funds), stocks posted strong gains in 1997. Until
correcting in late December, large cap growth stocks continued to lead the
market parade. However, large cap value and mid and small cap indices also
posted solid gains.
In the fourth quarter of 1997, the U.S. stock market suffered repeated
bouts of the Asian Flu. As we write, the patient remains unstable. While the
International Monetary Fund is ministering to ailing Asian economies, the ever
vigilant Dr. Greenspan is carefully monitoring the U.S. economy's vital signs.
As we head into 1998, we will be making our rounds as well. We are relatively
pleased with the patient's condition, but as always, are on the lookout for any
symptoms of a relapse.
INVESTMENT PERFORMANCE
THE GABELLI ASSET FUND'S PORTFOLIO MANAGER, MARIO J. GABELLI, WAS RECENTLY
NAMED THE DOMESTIC EQUITY FUND MANAGER OF THE YEAR FOR 1997 BY MORNINGSTAR.
For the fourth quarter ended December 31, 1997, The Gabelli Asset Fund's
total return was 4.3%. The Standard & Poor's (S&P) 500, Value Line Composite and
Russell 2000 Index had returns of 2.9%, (1.1)% and (3.4)%, respectively, over
the same period. Each index is an unmanaged indicator of stock market
performance. The Fund was up 38.1% for 1997. The S&P 500, Value Line Composite
and Russell 2000 rose 33.4%, 28.5% and 22.4%, respectively, over the same twelve
month period.
For the ten year period ended December 31, 1997, the Fund's return averaged
17.6% annually, versus average annual returns of 18.1%, 15.9% and 15.8% for the
S&P 500, Value Line Composite and Russell 2000, respectively. Since inception on
March 3, 1986 through December 31, 1997, the Fund has a total return of 565.6%,
which equates to an average annual return of 17.4%.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results. Morningstar proprietary
ratings reflect historical risk adjusted performance as of December 31, 1997 and
are subject to change every month. Morningstar ratings are calculated from the
Fund's three, five and ten year average annual returns in excess of 90-day
T-bill returns with appropriate fee adjustments and a risk factor that reflects
fund performance below 90-day T-Bill returns. The top 10% of the funds in an
investment category receive five stars and the next 22.5% receive four stars.
<PAGE>
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
====================================================================================================
QUARTER
---------------------------------------------
1ST 2ND 3RD 4TH YEAR
--- --- --- --- ----
<C> <C> <C> <C> <C> <C>
1997: Net Asset Value ............. $27.00 $31.45 $34.99 $31.85 $31.85
Total Return ................ 2.2% 16.5% 11.3% 4.3% 38.1%
- ----------------------------------------------------------------------------------------------------
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)
====================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===============================================
AVERAGE ANNUAL RETURNS - DECEMBER 31, 1997--(A)
- -----------------------------------------------
<S> <C>
1 Year ....................... 38.1%
5 Year ....................... 18.9%
10 Year ....................... 17.6%
Life of Fund (b) .............. 17.4%
</TABLE>
<TABLE>
<CAPTION>
=========================================================
DIVIDEND HISTORY
- ---------------------------------------------------------
PAYMENT (EX) DATE RATE PER SHARE REINVESTMENT PRICE
- ----------------- -------------- ------------------
<S> <C> <C>
December 30, 1997 $4.610 $31.73
December 31, 1996 $2.770 $26.42
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.
2
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
THE GABELLI ASSET FUND AND THE S&P 500 INDEX
[CHART]
12/97
Gabellli Asset Fund $66,590*
S&P 500 Index $58,857
WHAT WE DO [LOGO]
The success of momentum investing in recent years and investors' desire for
instant gratification have combined to make value investing appear dull. At the
risk of being dull, we will once again describe the "boring" value approach that
has seen us through both good and bad markets over the last 12 years at The
Gabelli Asset Fund and for over 20 years at Gabelli Asset Management Company. In
past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
Our focus is on free cash flow; earnings before interest, taxes,
depreciation and amortization (EBITDA) minus the capital expenditures necessary
to grow the business. We believe free cash flow is the best barometer of a
business' value. Rising free cash flow often foreshadows net earnings
improvement. We also look at earnings per share trends. Unlike Wall Street's
ubiquitous earnings momentum players, we do not try to forecast earnings with
accounting precision and then trade stocks based on quarterly expectations and
realities. We simply try to position ourselves in front of long term earnings
uptrends. In addition, we analyze on and off balance sheet assets and
liabilities such as plant and equipment, inventories, receivables, and legal,
environmental and health care issues. We want to know everything and anything
that will add to or detract from our private market value (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.
3
<PAGE>
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 the globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as an increased focus on productivity
enhancing goods and services.
COMMENTARY
1997 REVISITED
Year ends are always time for reflection. We look back over the last twelve
months and assess what went right and what went wrong. To borrow from Joseph
Heller's classic novel CATCH 22, we tally the "feathers in our cap" and "black
eyes". In 1997, the former vastly outnumber the latter. Heading our "feathers in
the cap" list is deals. During the year, the Fund bid a cheerful farewell to
several portfolio holdings which found new homes under other corporate roofs.
Also prominent on our list are cable television stocks, Cablevision Systems (CVC
- - $95.75 - ASE), Tele-Communications Inc. (TCOMA - $27.9375 - Nasdaq) and
Comcast (CMCSA - $31.875 - Nasdaq), which gained 212.7%, 113.9% and 80.9%,
respectively, over the course of the year, thanks to better than generally
expected cash flow growth and Bill Gates' decision that coaxial cable will be
the most effective digital highway into the home. Cable network stocks, BET
Holdings (BTV - $54.625 - NYSE), Liberty Media Group (LBTYA - $36.25 - Nasdaq),
and Home Shopping Network (HSNI - $51.50 - Nasdaq), also soared as investors
acknowledged the escalating value of these entrenched distribution channels. Our
brokerage stock holdings, Pain e Webber (PWJ - $34.5625 - NYSE) and Lehman
Brothers (LEH - $51.00 - NYSE), were near the top of the charts, as earnings
progress and ongoing consolidation in the financial services industry attracted
increasing investor attention.
Our positions in niche industrial companies also contributed to returns. In
the past, we have often discussed the new competitive strengths of American
industry, the prospects for improving earnings, and the likelihood that smaller
niche players would be targeted by larger competitors. All three factors
combined to help boost our industrial holdings in 1997.
Our "black eyes" list was dominated by nine relatively small positions in
gold stocks, which lost their glitter as gold prices collapsed. Auto and auto
parts stocks like General Motors (GM - $60.625 - NYSE), Genuine Parts (GPC -
$33.9375 - NYSE), Johnson Controls (JCI - $47.75 - NYSE) and Echlin (ECH -
$36.1875 - NYSE) also disappointed despite, in our opinion, offering excellent
fundamental value. 1998: WILL IT BE ANOTHER GOOD YEAR?
Despite a roller coaster ride featuring some breathtaking ascents and
declines, equity investors enjoyed themselves in 1997. Will 1998 be equally
thrilling? We expect to continue to experience considerable market volatility as
investors react to economic and market developments overseas and attempt to
assess the impact on the U.S. economy and corporate earnings.
Looking ahead, many of the favorable economic factors that
propelled stocks in recent years will likely remain intact. Asian currency
devaluation will probably diminish inflationary pressure on the U.S. economy and
delay the need for a Federal Reserve interest rate hike. Long interest rates
should remain low and perhaps trend lower. Deals, restructurings and share
repurchase programs should continue to buoy stocks.
4
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
FLOW OF FUNDS
($ Billions)
SOURCES 1993 1994 1995 1996 1997E
- ------- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
U.S. Deals $234 $340 $ 511 $ 652 $ 919
Stock Buybacks 37 46 99 176 179
Equity Mutual Funds Net 130 119 128 222 231
Dividends 204 230 274 309 333
---- ---- ------ ------ ------
SOURCES: 605 735 1,012 1,359 1,662
---- ---- ------ ------ ------
USES
IPOs 103 62 82 115 118
U.S./International Equity Capital Flow
U.S. Purchases of Non-U.S. Equities 309 434 396 514 734
International Purchases of U.S. Equities 246 387 346 457 679
---- ---- ------ ------ ------
Net Flow: 63 47 50 57 55
---- ---- ------ ------ ------
USES: 166 109 132 172 173
---- ---- ------ ------ ------
NET FLOW OF FUNDS: $439 $626 $ 880 $1,187 $1,489
==== ==== ====== ====== ======
Sources: Securities Data Corp, Investment Company Institute, Birinyi Associates.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The wild cards are corporate earnings and investor psychology. In general,
we believe corporate earnings growth from U.S. operations will be relatively
strong--in the 8% to 9% range. However, the non-U.S. portion of earnings is
likely to be as much as 10% lower in 1998. With earnings expectations high
across the board, we suspect we will see more earnings disappointments in the
year ahead. Other issues on our "Bear Watch" include:
o The Asian Flu spreading to Latin American currencies and economies.
o An upswing in wage inflation not offset by productivity gains.
o The emergence of trade barriers that cause a global political
backlash.
o A disruption of oil flow from the Middle East.
o The lame duck administration. Will Greenspan and Rubin retire before
2000 causing a crisis in confidence, if not in the economy?
o Last, but not least, the level of the market -- valuations are high
and the margin of safety relatively low.
How will investors react if any or all of our concerns prove justified? We
will just have to wait and see. Investors have become conditioned to buying on
market dips. That's understandable because it's worked quite well since this
bull market began in 1982. Indeed, we saw the market rebound strongly from the
sharp correction we experienced in late October. However, if the problems in
Asia continue to escalate and we see more widespread earnings disappointments
from U.S. companies, investors may be somewhat more reluctant to view each
market dip as a buying opportunity. Bear in mind, liquidity itself does not
drive markets higher. It is liquidity combined with favorable investor
psychology that fuels a
5
<PAGE>
rising market. In other words, if greed turns to fear, we could see a more
substantial and prolonged market slump than we have become accustomed to.
Our conclusion after all this conjecture is that in 1998, the market will
be up 5% to down 15%. We hope the market surprises on the upside. However, we
believe in the Boy Scout motto: "be prepared". Although value stocks will not
likely be immune to a substantial market correction, we believe they will
perform significantly better than the more fully valued market darlings.
Consequently, we are carefully monitoring the Fund portfolio, trimming or
eliminating holdings that have become more fully priced in this market advance
and adding to positions that offer better fundamental value. We are also being
more patient in re-deploying cash reserves. We doubt the Fund will be able to
duplicate its terrific 1997 returns in what should be a much more challenging
market. However, we believe we can achieve our 10% real rate of return objective
in the year ahead.
DEALS, DEALS, DEALS
There was an estimated $919 billion in domestic mergers and acquisition
activity during 1997. We do not believe a market correction will materially slow
deal activity in the year ahead. While we will probably continue to see some big
companies being taken over, much of the action will likely be in smaller, family
dominated public companies, as owner/managers take advantage of reduced long
term capital gains taxes to monetize their investments.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DEALS - "THIRD WAVE OF TAKEOVERS"
($ Billions)
1993 1994 1995 1996 1997E
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
Worldwide Deals $452 $575 $950 $1,140 $1,600
U.S. Deals 234 340 511 652 919
52% 59% 54% 57% 57%
U.S. Deals $234 $340 $511 $ 652 $ 919
Cash Deals 131 212 254 356 414
56% 62% 50% 55% 45%
Sources: Securities Data Corp, Investment Company Institute, Birinyi Associates.
- --------------------------------------------------------------------------------
</TABLE>
AND THE WINNER IS?
Despite giving up a lot of financial weight and reach to its better known
opponent, little Starwood Lodging (HOT - $57.875 - NYSE) upset Hilton Hotels
(HLT - $29.75 - NYSE) in the battle for ITT (ITT - $82.875 -NYSE). The deal,
which is scheduled to close in February 1998, is for 30% in cash and the balance
in Starwood stock -- about an $83 per share value at year end. We sided with the
heavily favored Hilton, primarily due to the higher cash component of its offer.
However, since the cost per share of the Fund's ITT holdings was approximately
$39 per share, we were hardly distraught over the outcome.
BOTTOMS UP
We believe the biblical adage "those that are last shall be first" may be
prophetic for several of the laggards in the Fund's portfolio. Seagram stock
declined 16.6% in 1997. Investors appear to think
6
<PAGE>
Seagram (VO - $32.3125 - NYSE) will have a tough time competing against the new
Grand Metropolitan/Guiness combination, which will be a global spirits
powerhouse. The fact that 20% of Seagram's spirits sales are from Asia is
another justifiable concern. Problems duly noted, we see a company that is
making some good moves. Seagram bought out partner Viacom's (VIA - $40.875 -
ASE) 50% stake in the USA Network and then repackaged it in a deal with Home
Shopping Network's Barry Diller, a terrific entertainment programmer. We believe
Diller will further energize USA and Seagram will put the $1.2 billion in cash
received in the transaction to good use by making an acquisition to bolster its
spirits business and/or by funding another round of share repurchases. In fiscal
1997 (June 30) the company repurchased 11 million shares and thus far in fiscal
1998, it has brought in another 10 million. Its other businesses are doing
relatively well. Under Frank Biondi's leadership, MCA is rebounding. Tropicana
is generating plenty of cash. Seagram still has 26.8 million shares of Time
Warner (TWX - $62.00 -NYSE) worth approximately $1.65 billion and over 70
million shares of Home Shopping Network N a stock we like. While Seagram's short
term earnings prospects are cloudy, we believe the stock is trading well below
the company's increasing economic value.
A LOADED LAGGARD
Viacom is the portfolio's most prominent loaded laggard. We think the new
management is making progress at Blockbuster Video and can re-invigorate cash
flows from this troubled division. Simon & Schuster and Prentice Hall are
well-positioned in the educational publishing business, but we believe Viacom
will liquefy these assets. Paramount is doing just fine. And, the value of the
MTV, VH1 and Nickelodeon cable networks just keeps growing. Chairman Sumner
Redstone is a proud and competitive man N this is a fellow who survived a hotel
fire by hanging by his finger tips from a balcony. We don't think he will give
up until he gets Viacom stock back up to where it belongs.
PUMPING THE BRAKES
Echlin, a leading auto aftermarket parts manufacturer, is changing its
primary business strategy. New CEO Larry McCurdy, a former Echlin President and
most recently, a senior executive at Cooper Industries, was brought in to beef
up the organizational structure and to fix or sell businesses that are not
providing an adequate return. Echlin is currently looking for a buyer for their
heavy duty brake operations. We think Echlin will become a much more focused
company with better profit margins and more consistent earnings growth. The
stock is currently trading at just thirteen times our fiscal 1998 earnings
projections. We think that's cheap for a company with improving earnings
prospects.
MR. MARKET
Each year, we like to leave our shareholders with something to think about.
This year, we quote verbatim from Professor Benjamin Graham's classic, THE
INTELLIGENT INVESTOR.
"Let us close this section with something in the nature of a parable.
Imagine that in some private business you own a small share which costs you
$1,000. One of your partners, named Mr. Market, is very obliging indeed. Every
day he tells you what he thinks your interest is worth and furthermore offers
either to buy you out or to sell you an additional interest on that basis.
Sometimes his idea of value appears plausible and justified by business
developments and prospects as you know them. Often, on the other hand, Mr.
Market lets his enthusiasm or his fears run away with him, and the value he
proposes seems to you a little short of silly."
7
<PAGE>
At Gabelli Funds, we want to take advantage of "Mr. Market's"
generosity--buying shares of businesses he offers us at prices below our
appraisal of their true worth, and selling back to him (or someone else) when
prices equal or exceed true value. It is this simple philosophy that guides us
in good markets and bad.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
AMERICAN EXPRESS CO. (AXP - $89.25 - NYSE), founded in 1850, is a
diversified travel and financial services company operating in 160 countries
around the world. The company is best known for its American Express charge card
and its travel-related services. Minneapolis-based American Express Financial
Advisors (formerly IDS Financial Services) 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. The company has
significantly expanded the range of merchants who welcome its cards and its
cards in use worldwide grew almost three percent to 42.7 million. Management's
objective is virtual parity with bankcard networks. American Express has joined
forces with Microsoft to start an online corporate travel service. As evidenced
by a 15% increase in per share earnings in 1996 and over 16% in 1997, we believe
that American Express has been repositioned to enjoy double digit earnings
growth over the balance of this decade.
DEERE & CO. (DE - $58.3125 - NYSE) is the world's largest manufacturer of
farm equipment. The company's products include tractors and planting, harvesting
and crop handling equipment. With the U.S. government no longer restricting
plantings, additional acreage is likely to be cultivated by the nation's
farmers. If weather is accommodating, bountiful harvests are likely and farm
incomes should show substantial increases. Global demand for U.S. wheat and
other crops would further increase farm incomes. Long term prospects for farm
equipment manufacturers like Deere are attractive as global incomes, diets and
standards of living improve. Deere also makes industrial equipment used in the
construction and forestry industries and a range of consumer products, including
lawn and garden tractors and outdoor power equipment. Overseas sales account for
roughly one-quarter of Deere's revenues.
TELE-COMMUNICATIONS INC./LIBERTY MEDIA GROUP (LBTYA - $36.25 - NASDAQ) owns
a collection of interests in some of the most powerful programming entities in
the world. Liberty Media is the second largest investor in Time Warner, the
world's largest media company. Liberty Media, News Corp. and Tele-Communications
International Inc. (TINTA - $18.00 - Nasdaq) have created a global sports joint
venture, Fox Sports, that offers an integrated package of sports programming
across network broadcast, national cable, and regional cable channels. Liberty's
49%-owned Discovery Communications is a major advertiser-supported basic cable
network that includes the flagship Discovery Channel, The Learning Channel and
developing businesses such as Discovery Europe and Animal Planet. We consider
Liberty Media to be ideally positioned to benefit from expanding distribution
channels, including direct broadcast satellite ventures like DirecTV and the
Internet.
TIME WARNER INC. (TWX - $62.00 - NYSE), having completed its acquisition of
Turner Broadcasting in the fourth quarter of 1996, is the world's largest
diversified media and publishing company. The combined companies have more than
$23 billion in revenues and over $4.5 billion in EBITDA. Together they control a
host of powerful media brands, such as CNN, Warner Brothers, HBO, Cinemax and
Time and People magazines. Under the leadership of Chairman Gerald Levin and
Vice Chairman Ted Turner, Time Warner is
8
<PAGE>
now focused on reducing its almost $13 billion in debt and simplifying its
capital structure. Cash flow in 1997 is demonstrating a substantial increase as
the companies reap the synergies of their merged activities.
UNITED TELEVISION INC. (UTVI - $103.875 - NASDAQ) is a television
broadcasting company which owns and operates five television stations: one ABC,
one NBC and three UPN affiliates. UTVI has purchased WRBW, a UPN affiliate in
Orlando for approximately $60 million and WHSW in Baltimore for $80 million.
UTVI stations will cover approximately eight percent of the U.S. population.
UTVI is a 59%-owned subsidiary of BHC Communications (BHC - $103.25 - ASE).
Strong advertising demand, prospects for favorable regulatory changes in the
industry and corporate cost controls will increase EBITDA growth going forward.
Our 1997 PMV is estimated at $123 per share, $29 of which is cash. UTVI's PMV is
expected to reach $165 by the year 2000.
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.
IN CONCLUSION
1997 was yet another very good year for equity investors. If earnings
expectations are realized, 1998 may be a reasonably good year as well. We do
have our reservations and are mindful that at current valuations, stocks are
well above the safety net. As always, we are focusing on value--stocks trading
at a material discount to their longer term intrinsic value. We believe this
discipline will effectively preserve and enhance the value of the assets you
have entrusted to us.
Sincerely,
/s/ Mario J. Gabelli
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
February 1, 1998
------------------------------------------------------------
TOP TEN HOLDINGS
DECEMBER 31, 1997
-----------------
Time Warner, Inc. Viacom Inc.
American Express Co. TCI-Liberty Media
United Television Inc. Quaker Oats Co.
Chris-Craft Industries Cablevision Systems Corp.
Deere & Co. Neiman Marcus Group Inc.
------------------------------------------------------------
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
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS--91.7%
AEROSPACE--0.4%
100,000 Boeing Co. ........................ $ 3,736,547 $ 4,893,750
20,000 Fairchild Corp., Class A........... 424,265 497,500
9,884 Raytheon Co., Class A.............. 258,860 487,422
------------ --------------
4,419,672 5,878,672
------------ --------------
AGRICULTURE--0.4%
150,000 Archer-Daniels-Midland Co. ........ 2,650,565 3,253,125
50,000 Monsanto Co........................ 2,106,435 2,100,000
------------ --------------
4,757,000 5,353,125
------------ --------------
AUTOMOTIVE--0.7%
155,000 General Motors Corp. .............. 4,533,784 9,396,875
------------ --------------
AUTOMOTIVE: PARTS AND ACCESSORIES--5.0%
15,000 Borg-Warner Automotive Inc. ....... 399,908 780,000
135,000 Echlin Inc. ....................... 1,827,188 4,885,312
190,000 Federal-Mogul Corp. ............... 3,543,268 7,695,000
605,000 GenCorp Inc. ...................... 3,713,412 15,125,000
250,000 Genuine Parts Co. ................. 5,867,503 8,484,375
180,000 Handy & Harman..................... 2,759,507 6,210,000
130,000 Johnson Controls Inc. ............. 2,479,813 6,207,500
205,000 Modine Manufacturing Co. .......... 3,976,931 6,995,625
46,062 Myers Industries Inc. ............. 172,636 785,933
160,000 Quaker State Corp. ................ 2,160,107 2,280,000
115,000 Standard Motor Products Inc. ...... 1,008,713 2,594,688
13,200 Superior Industries
International Inc. ............... 76,515 353,925
100,000 TransPro Inc. ..................... 788,321 900,000
200,000 UAP Inc., Class A.................. 2,210,197 2,340,715
60,000 Wynn's International Inc. ......... 1,140,063 1,912,500
------------ --------------
32,124,082 67,550,573
------------ --------------
AVIATION: PARTS AND SERVICES--1.7%
10,000 BE Aerospace Inc.+................. 193,625 267,500
375,000 Coltec Industries Inc.+............ 5,102,871 8,695,312
182,000 Curtiss-Wright Corp. .............. 2,287,271 6,608,875
60,000 Hi-Shear Industries Inc. .......... 510,932 123,750
40,000 Hudson General Corp. .............. 1,121,008 1,920,000
75,000 Precision Castparts Corp. ......... 2,839,799 4,523,438
------------ --------------
12,055,506 22,138,875
------------ --------------
BROADCASTING--5.9%
75,000 CBS Corp. ......................... 1,844,495 2,207,812
403,122 Chris-Craft Industries Inc. ....... 8,323,202 21,088,320
67,526 Chris-Craft Industries Inc., Class
B(a).............................. 1,132,452 3,532,454
120,000 Gray Communications Systems Inc.,
Class B........................... 2,333,656 3,090,000
190,000 Grupo Televisa SA, GDR +........... 3,954,966 7,350,625
80,000 Liberty Corp. ..................... 1,941,685 3,740,000
207,500 LIN Television Corp. +............. 8,566,530 11,308,750
110,000 Paxson Communications Corp., Class
A+................................ 1,185,309 811,250
400,000 Television Broadcasting Ltd.,
ORD............................... 1,815,551 1,140,792
247,500 United Television Inc. ............ 15,847,291 25,709,063
------------ --------------
46,945,137 79,979,066
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
BUILDING AND CONSTRUCTION--0.3%
160,000 Nortek Inc.+....................... $ 613,069 $ 4,250,000
4,333 Nortek Inc., Special
Common+(a)........................ 59,049 115,095
------------ --------------
672,118 4,365,095
------------ --------------
BUSINESS SERVICES--0.5%
50,000 Berlitz International Inc., New+... 725,813 1,331,250
50,000 Ecolab Inc. ....................... 1,571,512 2,771,875
16,546 Hach Co. .......................... 118,347 208,893
16,546 Hach Co., Class A.................. 113,613 155,119
68,000 Landauer Inc. ..................... 422,093 1,904,000
80,000 Nashua Corp.+...................... 2,040,343 940,000
------------ --------------
4,991,721 7,311,137
------------ --------------
CABLE--4.7%
56,125 Cable Michigan Inc. ............... 444,537 1,283,859
210,000 Cablevision Systems Corp., Class
A+................................ 7,959,397 20,107,500
40,000 Comcast Corp., Class A............. 593,113 1,275,000
40,000 Shaw Communications Inc., Class
B................................. 363,398 425,457
30,000 Shaw Communications Inc., Class B,
Conv. ............................ 191,728 319,093
320,000 TCI Ventures Group................. 3,891,947 9,059,999
505,000 Tele-Communications Inc., Class A
New+.............................. 8,686,751 14,108,439
60,000 United International Holdings Inc.,
Class A+.......................... 824,424 690,000
540,000 US WEST Media Group+............... 11,536,299 15,592,500
------------ --------------
34,491,594 62,861,847
------------ --------------
CLOSED-END FUNDS--0.1%
84,000 Royce Value Trust Inc. ............ 949,972 1,265,250
------------ --------------
COMMUNICATIONS EQUIPMENT--0.5%
110,000 Allen Telecom Inc.+................ 687,440 2,028,125
5,000 Dynatech Corp. .................... 234,813 234,375
47,000 Motorola Inc. ..................... 622,493 2,681,937
23,000 Northern Telecom Ltd. ............. 864,775 2,047,000
------------ --------------
2,409,521 6,991,437
------------ --------------
CONSUMER PRODUCTS--4.8%
10,000 Avon Products Inc. ................ 560,500 613,750
550,000 Carter-Wallace Inc. ............... 8,522,027 9,281,250
1,000 Christian Dior SA.................. 125,769 102,492
220,000 Church & Dwight Co. Inc. .......... 4,983,260 6,173,750
44,000 Department 56 Inc.+................ 947,842 1,265,000
30,000 Eastman Kodak Co. ................. 1,747,063 1,824,375
65,000 First Brands Corp. ................ 910,851 1,750,938
290,000 Fortune Brands Inc. ............... 6,551,003 10,748,125
250,000 Gallaher Group plc, ADR+........... 3,094,360 5,343,750
95,356 General Cigar Holdings Inc., Class
B+................................ 963,934 2,062,073
45,000 Gillette Co. ...................... 1,276,334 4,519,687
5,000 Gucci Group NV..................... 166,500 209,375
40,000 Harley Davidson Inc. .............. 198,900 1,095,000
10,000 National Presto Industries Inc. ... 377,937 395,625
35,000 Nine West Group Inc. .............. 1,039,975 907,813
13,104 Pillowtex Corp. ................... 387,396 457,012
170,000 Ralston Purina Group............... 6,151,231 15,799,375
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
41,700 Syratech Corp.+.................... $ 954,711 $ 1,480,350
------------ --------------
38,959,593 64,029,740
------------ --------------
CONSUMER SERVICES--1.7%
280,000 HSN Inc.+.......................... 6,526,580 14,420,000
220,000 Rollins Inc. ...................... 3,030,595 4,468,750
150,000 Ticketmaster Group Inc.+........... 2,929,315 3,450,000
------------ --------------
12,486,490 22,338,750
------------ --------------
DIVERSIFIED INDUSTRIAL--3.9%
10,000 Anixter International Inc.+........ 90,088 165,000
215,000 Crane Co. ......................... 3,799,544 9,325,625
89,500 GATX Corp. ........................ 3,280,216 6,494,344
25,000 General Electric Co. .............. 616,838 1,834,375
110,000 Honeywell Inc. .................... 5,706,141 7,535,000
185,000 ITT Industries Inc. ............... 3,158,961 5,804,375
145,000 Katy Industries Inc. .............. 1,312,250 2,954,375
6,500 Kyocera Corp., ADR................. 448,063 588,250
345,000 Lamson & Sessions Co.+............. 1,862,283 2,005,312
181,000 Lawter International Inc. ......... 1,779,806 1,968,375
68,000 National Service Industries Inc. .. 1,591,349 3,370,250
120,000 Thomas Industries Inc. ............ 1,298,410 2,370,000
100,000 TriMas Corp. ...................... 3,430,000 3,437,500
82,000 Trinity Industries Inc. ........... 996,472 3,659,250
------------ --------------
29,370,421 51,512,031
------------ --------------
ELECTRONICS--0.1%
2,500 Hitachi Ltd., ADR.................. 266,354 172,969
10,000 Imation Corp.+..................... 203,344 160,000
10,000 Sony Corp., ADR.................... 544,303 907,500
------------ --------------
1,014,001 1,240,469
------------ --------------
ENERGY--4.9%
100,000 Atlantic Richfield Co. ............ 5,368,509 8,012,500
5,000 Barrett Resources Corp. ........... 140,500 151,250
50,000 British Petroleum Co. plc, ADR..... 1,110,595 3,984,375
10,000 Brown (Tom) Inc. .................. 188,745 192,500
30,000 Chevron Corp. ..................... 1,016,500 2,310,000
150,000 Eastern Enterprises................ 4,177,240 6,750,000
60,000 Enron Oil & Gas Co. ............... 548,976 1,271,250
180,000 Exxon Corp. ....................... 5,413,043 11,013,750
15,000 Global Marine Inc.+................ 285,750 367,500
40,000 Halliburton Co. ................... 840,758 2,077,500
120,000 Pennzoil Co. ...................... 8,903,104 8,017,500
300,000 Southwest Gas Corp. ............... 5,472,623 5,606,250
212,000 Tejas Gas Corp. ................... 12,815,651 12,985,000
60,000 Texaco Inc. ....................... 1,890,875 3,262,500
------------ --------------
48,172,869 66,001,875
------------ --------------
ENTERTAINMENT--7.5%
230,000 Ascent Entertainment Group Inc..... 2,214,090 2,386,250
100,000 BET Holdings Inc., Class A+........ 2,654,506 5,462,500
19,406 EMI Group plc, ORD................. 75,408 161,908
100,000 EMI Group plc, Sponsored ADR....... 1,246,297 1,662,500
113,400 GC Companies Inc.+................. 3,401,557 5,372,325
130,000 Havas, Sponsored ADR............... 2,517,531 2,275,000
20,000 PolyGram NV........................ 574,275 953,750
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
ENTERTAINMENT (CONTINUED)
575,000 Tele-Communications Inc./Liberty
Media Group, Class A +............ $ 9,062,411 $ 20,843,750
620,000 Time Warner Inc. .................. 17,273,917 38,440,000
11,000 Todd-AO Corp., Class A............. 30,000 92,125
360,000 Viacom Inc., Class A+.............. 9,106,168 14,715,000
200,000 Viacom Inc., Class B+.............. 5,598,151 8,287,500
------------ --------------
53,754,311 100,652,608
------------ --------------
EQUIPMENT AND SUPPLIES--11.5%
30,000 Aeroquip-Vickers Inc. ............. 931,675 1,471,875
300,000 AMETEK Inc. ....................... 3,455,782 8,100,000
100,000 AMP Inc. .......................... 3,887,794 4,200,000
96,000 Amphenol Corp., Class A+........... 2,488,800 5,346,000
38,000 AptarGroup Inc. ................... 615,698 2,109,000
95,000 Caterpillar Inc. .................. 1,273,555 4,613,437
67,400 CLARCOR Inc. ...................... 1,301,188 1,996,725
295,500 CTS Corp. ......................... 2,046,776 9,437,531
34,650 Culligan Water Technologies
Inc.+............................. 803,754 1,749,825
410,000 Deere & Co. ....................... 6,454,360 23,908,125
115,000 Donaldson Co. Inc. ................ 1,355,729 5,182,188
40,000 EG&G Inc. ......................... 709,125 832,500
5,000 Flowserve Corp. ................... 120,040 139,687
160,000 Gerber Scientific Inc. ............ 1,628,424 3,180,000
445,000 IDEX Corp. ........................ 3,661,463 15,519,375
105,000 Ingersoll-Rand Co. ................ 2,614,238 4,252,500
200,000 Kollmorgen Corp. .................. 1,861,980 3,662,500
90,000 Lufkin Industries Inc. ............ 1,627,761 3,217,500
45,000 Manitowoc Co. Inc. ................ 463,975 1,462,500
160,000 Mark IV Industries Inc. ........... 1,150,386 3,500,000
3,000 Met-Pro Corp. ..................... 41,875 49,500
375,000 Navistar International Corp.+...... 5,193,341 9,304,688
20,000 PACCAR Inc. ....................... 522,021 1,050,000
145,500 Pittway Corp. ..................... 2,849,535 10,030,406
160,000 Pittway Corp., Class A............. 1,471,386 11,140,000
61,000 Sequa Corp., Class A+.............. 2,440,436 3,968,813
90,000 Sequa Corp., Class B+.............. 4,393,591 6,705,000
170,000 SPS Technologies Inc.+............. 2,566,538 7,416,250
30,000 Valmont Industries Inc. ........... 242,908 585,000
------------ --------------
58,174,134 154,130,925
------------ --------------
FINANCIAL SERVICES--6.1%
1 Al-Zar Ltd.+(a).................... 0 350
330,000 American Express Co. .............. 7,645,187 29,452,500
220 Berkshire Hathaway Inc.+........... 874,549 10,120,000
130,000 Block (H&R) Inc. .................. 4,434,737 5,825,625
70,000 Commerzbank AG, Sponsored ADR...... 1,365,494 2,755,900
150,000 Deutsche Bank AG, Sponsored ADR.... 6,596,875 10,528,125
200,000 Lehman Brothers Holdings Inc. ..... 3,607,975 10,200,000
86,000 Midland Co. ....................... 2,706,145 5,418,000
40,500 Paine Webber Group Inc. ........... 1,042,913 1,399,781
43,000 State Street Corp. ................ 638,075 2,502,063
20,000 SunTrust Banks Inc. ............... 424,879 1,427,500
11,941 Transamerica Corp. ................ 583,636 1,271,717
8,000 Value Line Inc. ................... 115,500 316,000
------------ --------------
30,035,965 81,217,561
------------ --------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD AND BEVERAGE--6.5%
76,300 Brown-Forman Corp., Class A........ $ 2,574,752 $ 4,024,825
90,000 Chock Full o'Nuts Corp.+........... 554,148 630,000
45,000 Coca-Cola Co. ..................... 387,203 2,998,125
25,000 CPC International Inc. ............ 1,427,488 2,693,750
4,500 Farmer Brothers Co. ............... 476,380 841,500
75,000 General Mills Inc. ................ 2,152,766 5,371,875
55,000 Heinz (H.J) Co. ................... 2,067,710 2,794,688
48,000 Hershey Foods Corp. ............... 1,016,513 2,973,000
160,000 Kellogg Co. ....................... 2,972,655 7,940,000
25,000 LVHM Moet Hennessy Louis Vuitton,
Sponsored ADR..................... 971,563 828,125
200,000 PepsiCo Inc. ...................... 4,920,065 7,287,500
390,000 Quaker Oats Co. ................... 13,375,414 20,572,500
20,000 Ralcorp Holdings Inc.+............. 98,588 338,750
300,000 Seagram Co. Ltd. .................. 9,018,197 9,693,750
62,914 Tootsie Roll Industries Inc. ...... 2,074,917 3,932,125
290,000 Whitman Corp. ..................... 2,638,965 7,558,125
80,000 Wrigley (Wm.) Jr. Co. ............. 3,673,016 6,365,000
------------ --------------
50,400,340 86,843,638
------------ --------------
HEALTH CARE--2.0%
12,000 Amgen Inc. ........................ 220,320 649,500
18,000 Biogen Inc.+....................... 270,450 654,750
40,000 Chiron Corp.+...................... 550,315 680,000
100,000 Genentech Inc.+.................... 4,804,136 6,062,500
25,000 IVAX Corp. ........................ 184,282 168,750
70,000 Johnson & Johnson.................. 1,444,438 4,611,250
55,000 Merck & Co. Inc. .................. 1,853,500 5,843,750
105,000 Pfizer Inc. ....................... 1,677,963 7,829,063
------------ --------------
11,005,404 26,499,563
------------ --------------
HOTELS AND GAMING--3.0%
125,000 Circus Circus Enterprises Inc.+.... 3,449,540 2,562,500
152,000 Gaylord Entertainment Co., Class
A................................. 3,673,030 4,854,500
30,000 GTECH Holdings Corp.+.............. 545,938 958,125
12,000 Harrah's Entertainment Inc.+....... 113,002 226,500
285,000 Hilton Hotels Corp. ............... 4,194,115 8,478,750
210,000 ITT Corp., New+.................... 8,194,807 17,403,750
203,389 Ladbroke Group plc................. 535,440 881,854
185,000 Mirage Resorts Inc.+............... 959,778 4,208,750
------------ --------------
21,665,650 39,574,729
------------ --------------
METALS AND MINING--0.3%
30,000 Barrick Gold Corp. ................ 622,076 558,750
150,000 Echo Bay Mines Ltd. ............... 1,372,801 365,625
50,000 Homestake Mining Co. .............. 747,062 443,750
45,000 Newmont Gold Co. .................. 1,719,322 1,341,563
700,000 Pegasus Gold Inc.+................. 3,997,969 437,500
30,000 Placer Dome Inc. .................. 475,906 380,625
350,000 Royal Oak Mines Inc.+.............. 1,125,437 546,875
40,000 TVX Gold Inc.+..................... 159,689 135,000
------------ --------------
10,220,262 4,209,688
------------ --------------
PAPER AND FOREST PRODUCTS--1.2%
180,000 Greif Bros. Corp., Class A......... 3,637,710 6,030,000
107,000 St. Joe Corp. ..................... 3,704,888 9,683,500
------------ --------------
7,342,598 15,713,500
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
PUBLISHING--2.9%
70,000 American Media Inc., Class A+...... $ 674,812 $ 542,500
66,200 Dow Jones & Co. Inc. .............. 3,074,618 3,554,112
230,000 Golden Books Family Entertainment
Inc.+............................. 2,992,410 2,371,875
40,000 Harcourt General Inc. ............. 1,842,000 2,192,500
42,000 McClatchy Newspapers Inc., Class
A................................. 692,156 1,141,875
75,000 McGraw-Hill Companies Inc. ........ 2,224,925 5,550,000
330,000 Media General Inc., Class A........ 7,621,995 13,798,125
90,000 Meredith Corp. .................... 1,821,494 3,211,875
71,000 New York Times Co., Class A........ 1,161,977 4,694,875
15,000 News Corp. Ltd., ADR............... 255,587 334,688
6,000 Scripps (E.W.) Co., Class A........ 108,669 290,625
1,650,000 Seat SpA+.......................... 343,343 643,584
------------ --------------
22,813,986 38,326,634
------------ --------------
REAL ESTATE--0.7%
330,000 Catellus Development Corp.+........ 2,786,250 6,600,000
12,000 Florida East Coast Industries
Inc. ............................. 631,838 1,153,500
61,000 Griffin Land & Nurseries Inc.+..... 758,331 945,500
1,000 Lennar Corp. ...................... 13,369 21,563
1,000 LNR Property Corp. ................ 21,243 23,625
------------ --------------
4,211,031 8,744,188
------------ --------------
RETAIL--2.0%
41,000 Aaron Rents Inc. .................. 146,083 794,375
20,000 Aaron Rents Inc., Class A.......... 83,263 350,000
170,000 Burlington Coat Factory Warehouse
Corp.+............................ 1,858,279 2,794,375
50,000 Fingerhut Companies Inc. .......... 711,335 1,068,750
130,000 Lillian Vernon Corp. .............. 1,854,859 2,161,250
590,000 Neiman Marcus Group Inc.+.......... 8,288,205 17,847,500
200,000 Scheib (Earl) Inc.+................ 1,432,580 1,600,000
------------ --------------
14,374,604 26,616,250
------------ --------------
RETAIL: FOOD AND DRUG--0.6%
35,000 Albertson's Inc. .................. 1,195,480 1,658,125
5,000 Dominick's Supermarkets Inc. ...... 188,357 182,500
90,000 Giant Food Inc., Class A........... 2,964,894 3,031,875
75,000 Kroger Co.+........................ 874,375 2,770,313
------------ --------------
5,223,106 7,642,813
------------ --------------
SPECIALTY CHEMICAL--0.7%
375,000 Ferro Corp. ....................... 5,437,040 9,117,188
------------ --------------
TELECOMMUNICATIONS--6.8%
112,000 Aliant Communications Inc. ........ 1,622,075 3,514,000
160,000 AT&T Corp. ........................ 5,665,161 9,800,000
80,000 BC Telecom Inc. ................... 1,415,173 2,491,165
205,000 BCE Inc. .......................... 3,282,323 6,829,062
18,000 BellSouth Corp. ................... 455,094 1,013,625
100,000 Cable & Wireless plc, Sponsored
ADR............................... 2,083,454 2,718,750
111,700 Citizens Utilities Co., Class B.... 1,121,123 1,075,112
113,000 C-TEC Corp.+....................... 1,054,259 2,923,875
31,000 C-TEC Corp., Class B+.............. 203,085 813,750
60,000 Frontier Corp. .................... 1,120,617 1,443,750
50,000 Globalstar Telecommunications+..... 423,210 2,456,250
162,000 GTE Corp. ......................... 3,757,020 8,464,500
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS (CONTINUED)
35,000 Hong Kong Telecommunications Ltd.,
Sponsored ADR..................... $ 545,695 $ 721,875
215,000 RCN Corp. ......................... 2,923,218 7,363,750
165,000 Rogers Communications Inc., Class
B+................................ 1,386,290 803,909
8,000 SBC Communications Inc. ........... 203,700 586,000
180,000 Southern New England
Telecommunications Corp. ......... 7,156,088 9,056,250
110,000 Sprint Corp. ...................... 2,135,570 6,448,750
500,000 Telecom Italia SpA, ORD............ 1,046,696 3,193,895
136,000 Telecom Italia SpA, ADS............ 3,004,930 8,704,000
67,500 Telecomunicacoes Brasileiras SA
(Telebras), Sponsored ADR......... 1,979,139 7,859,531
14,000 Telefonica de Espana, Sponsored
ADR............................... 478,215 1,274,875
10,000 Telefonos de Mexico SA,
Class L, ADR...................... 281,828 560,625
------------ --------------
43,343,963 90,117,299
------------ --------------
TRANSPORTATION--0.8%
83,000 AMR Corp.+......................... 5,133,612 10,665,500
------------ --------------
WIRELESS COMMUNICATIONS--3.5%
35,000 AirTouch Communications Inc.+...... 791,589 1,454,687
45,000 Associated Group Inc., Class A+.... 201,448 1,333,125
37,000 Associated Group Inc., Class B+.... 98,787 1,077,625
355,000 Century Telephone Enterprises
Inc. ............................. 8,214,290 17,683,438
195,000 COMSAT Corp. ...................... 3,580,002 4,728,750
55,000 NEXTEL Communications Inc., Class
A+................................ 660,330 1,430,000
130,000 TCI Satellite Entertainment Inc.,
Class A+.......................... 1,571,529 893,750
1,900,000 Telecom Italia Mobile SpA.......... 1,746,901 8,769,644
150,000 Telephone and Data Systems Inc. ... 1,821,004 6,984,375
90,000 360(o) Communications Co.+......... 1,215,244 1,816,875
------------ --------------
19,901,124 46,172,269
------------ --------------
TOTAL COMMON STOCKS.............................. 641,390,611 1,224,459,170
------------ --------------
PREFERRED STOCKS--0.3%
EQUIPMENT AND SUPPLIES--0.1%
19,300 Sequa Corp., $5.00, Cumulative
Conv. Pfd......................... 1,482,798 1,845,563
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc., Depository
Shares, 7.00%, Cumulative Conv.
Pfd............................... $ 213,000 $ 216,875
------------ --------------
TELECOMMUNICATIONS--0.2%
35,000 Sprint Corp., 8.25%, Conv. Pfd..... 1,295,406 1,566,250
1,588,267 Telecomunicacoes de Sao Paulo SA
(Telesp), Preference Shares....... 213,239 422,651
------------ --------------
1,508,645 1,988,901
------------ --------------
TOTAL PREFERRED STOCKS........................... 3,204,443 4,051,339
------------ --------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
---------
<C> <S> <C> <C>
CORPORATE BONDS--0.2%
ENTERTAINMENT--0.2%
FRF 593,750 Havas, Conv. Bonds,
Payment-in-kind,
3.00% due 03/31/98... 158,703 121,195
$ 2,600,000 Viacom Inc., Sub.
Deb., 8.00% due
07/07/06............. 1,824,430 2,635,750
------------ --------------
TOTAL CORPORATE BONDS................ 1,983,133 2,756,945
------------ --------------
U.S. TREASURY BILLS--7.7%
$103,197,000 5.044% to 5.533%++ due
01/08/98--02/26/98.... 102,836,344 102,836,344
------------ --------------
TOTAL INVESTMENTS............. 99.9% $749,414,531(b) 1,334,103,798
============ ==============
OTHER ASSETS AND LIABILITIES
(NET)........................ 0.1 947,980
----- --------------
NET ASSETS (41,918,237 shares
outstanding)................. 100.0% $1,335,051,778
===== ==============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE.... $31.85
======
</TABLE>
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
EXPIRATION UNREALIZED
DATE DEPRECIATION
---------- ------------
<S> <C> <C>
FORWARD FOREIGN EXCHANGE CONTRACTS TO
DELIVER
17,700,000 Hong Kong Dollars in
exchange for U.S.
$2,260,970............. 02/26/98 $ (14,167)
-----------
</TABLE>
- ---------------
(a) Security fair valued by the Board of Trustees.
(b) Aggregate cost for Federal tax purposes was $750,453,246. Net unrealized
appreciation for Federal tax purposes was $583,650,552 (gross unrealized
appreciation was $596,907,461 and gross unrealized depreciation was
$13,256,909).
+ 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
See Notes to Financial Statements.
13
<PAGE>
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost
$749,414,531)........................ $1,334,103,798
Cash and foreign currency (cost
$114,817)............................ 115,277
Receivable for investments sold........ 1,708,593
Dividends and interest receivable...... 1,473,791
Receivable for Fund shares sold........ 2,695,503
--------------
TOTAL ASSETS......................... 1,340,096,962
--------------
LIABILITIES:
Net unrealized depreciation of forward
foreign exchange contracts........... 14,167
Payable for investments purchased...... 981,104
Payable for investment advisory fees... 1,092,377
Payable for Fund shares redeemed....... 2,052,635
Payable for distribution fees.......... 535,004
Other accrued expenses................. 369,897
--------------
TOTAL LIABILITIES.................... 5,045,184
--------------
NET ASSETS applicable to 41,918,237
shares of beneficial interest
outstanding........................ $1,335,051,778
--------------
NET ASSETS CONSIST OF:
Shares of beneficial interest at par
value................................ $ 419,182
Additional paid-in capital............. 750,995,750
Distributions in excess of net realized
gain on investments.................. (1,038,715)
Net unrealized appreciation on
investments.......................... 584,675,561
--------------
TOTAL NET ASSETS..................... $1,335,051,778
==============
NET ASSET VALUE, offering and
redemption price per share
($1,335,051,778 / 41,918,237 shares
outstanding; unlimited number of
shares authorized of $0.01 par
value)............................. $31.85
======
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividend income (net of foreign
withholding taxes of $116,298).......... $ 16,233,559
Interest income........................... 2,487,757
------------
TOTAL INVESTMENT INCOME................. 18,721,316
------------
EXPENSES:
Investment advisory fees.................. 11,701,148
Distribution fees......................... 2,897,476
Shareholder services fees................. 927,270
Trustees' fees............................ 62,349
Legal and audit fees...................... 46,600
Miscellaneous expenses.................... 538,610
------------
TOTAL EXPENSES.......................... 16,173,453
------------
NET INVESTMENT INCOME....................... 2,547,863
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on securities sold...... 166,961,023
Net realized gain on forward foreign
exchange contracts and foreign currency
transactions............................ 2,737
------------
Net realized gain on investments........ 166,963,760
------------
Net unrealized appreciation on
investments:
Beginning of year....................... 377,087,602
End of year............................. 584,675,561
------------
Change in net unrealized appreciation
on investments...................... 207,587,959
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS............................... 374,551,719
------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................ $377,099,582
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/97 12/31/96
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 2,547,863 $ 5,747,905
Net realized gain on investments.......................... 166,963,760 97,358,216
Net change in unrealized appreciation on investments...... 207,587,959 35,910,289
-------------- --------------
Net increase in net assets resulting from operations...... 377,099,582 139,016,410
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income..................................... (2,481,578) (5,681,295)
Distributions in excess of net investment income.......... (93,147) --
Net realized gain on investments.......................... (166,963,945) (97,358,216)
Distributions in excess of net realized gain on
investments............................................. (40,227) (410,434)
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 46,891,821 (46,466,539)
-------------- --------------
Net increase/(decrease) in net assets....................... 254,412,506 (10,900,074)
NET ASSETS:
Beginning of year........................................... 1,080,639,272 1,091,539,346
-------------- --------------
End of year................................................. $1,335,051,778 $1,080,639,272
============== ==============
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
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; if there were no asked
prices quoted on such day, then the security is valued at the closing bid price
on such day. Readily marketable securities traded in the over-the-counter
market, including listed securities whose primary market is believed by Gabelli
Funds, Inc. (the "Adviser") to be over-the-counter but excluding securities
admitted to trading on the Nasdaq National List, are valued at the mean of the
current bid and asked prices as reported by Nasdaq, or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or other
comparable sources as the Board of Trustees deems appropriate to reflect their
fair value. If no asked prices are quoted on such day, then the security is
valued at the closing bid price on such day. If no bid or asked prices are
quoted on such day, then the security is valued under the relevant procedure for
the previous day or by such method as shall be determined by the Adviser or the
Board of Trustees. Portfolio securities traded on more than one national
securities exchange or market are valued according to the broadest and most
representative market, as determined by 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. U.S. government securities and other debt instruments 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.
FORWARD FOREIGN EXCHANGE CONTRACTS. The Fund may engage in forward foreign
exchange contracts for hedging a specific transaction with respect to either the
currency in which the transaction is denominated or another currency as deemed
appropriate by the Adviser. Forward foreign exchange contracts are valued at the
forward rate and are marked-to-market daily. The change in market value is
included in unrealized appreciation/depreciation on investments. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed.
The use of forward foreign exchange contracts does not eliminate fluctuations in
the underlying prices of the Fund's portfolio securities, but it does establish
a rate of exchange that can be achieved in the future. Although forward foreign
exchange contracts limit the risk of loss due to a decline in the value of the
hedged currency, they also limit any potential gain that might result should the
value of the currency increase. In addition, the Fund could be exposed to risks
if the counterparties to the contracts are unable to meet the terms of their
contracts.
15
<PAGE>
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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 on investments. 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 on investments. 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 by the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. 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, 1997 resulting from
different book and tax accounting policies for currency gains and losses and
certain distributions received by the Fund, are reclassified between net
investment income and net realized gains at year end with offsetting adjustments
made to paid-in capital. The reclassifications for the year ended December 31,
1997 were an increase to accumulated net investment income of $26,862, an
increase to distributions in excess of net realized gain on investments of
$106,513 and a decrease to paid in capital of $133,375 for tax purposes.
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, to provide a continuous investment program for the Fund's portfolio,
provide all facilities and personnel, including offices, required for its
administrative management and pay the compensation of all officers and Trustees
of the Fund who are its affiliates.
16
<PAGE>
THE GABELLI ASSET FUND -- NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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
wholly-owned subsidiary of the Adviser, is authorized to purchase advertising,
sales literature and other promotional material and to pay its own salespeople.
The Fund pays Gabelli & Company as distribution payments under this Plan, an
aggregate amount at a rate of 0.25 percent per year of the average daily net
assets of the Fund each fiscal year. Such payments are accrued daily and paid
monthly. Prior to February 26, 1997, the Fund reimbursed the Distributor up to
0.25 percent on an annual basis of the value of the Fund's average daily net
assets based on expenses incurred by the Distributor in connection with the
distribution of shares of the Fund. For the year ended December 31, 1997, the
Fund incurred distribution costs under the Plan of $2,897,476, representing 0.25
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, 1997, other than short-term
securities, aggregated $247,646,583 and $460,221,184, respectively.
5. TRANSACTIONS WITH AFFILIATES. During the year ended December 31, 1997, the
Fund paid brokerage commissions of $220,794 to Gabelli & Company and its
affiliates.
6. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
12/31/97 12/31/96
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold............................................... 13,039,709 $ 421,881,081 6,138,309 $ 168,589,644
Shares issued upon reinvestment of dividends.............. 4,869,910 154,702,133 3,624,998 95,772,441
Shares redeemed........................................... (16,898,747) (529,691,393) (11,251,210) (310,828,624)
----------- ------------- ----------- -------------
Net increase/(decrease)................................... 1,010,872 $ 46,891,821 (1,487,903) $ (46,466,539)
=========== ============= =========== =============
</TABLE>
17
<PAGE>
THE GABELLI ASSET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each year
ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of year.................... $ 26.42 $ 25.75 $ 22.21 $ 23.30 $ 19.88
---------- ---------- ---------- -------- --------
Net investment income................................. 0.07 0.15 0.26 0.26 0.16
Net realized and unrealized gain/(loss) on
investments......................................... 9.97 3.29 5.28 (0.30) 4.18
---------- ---------- ---------- -------- --------
Total from investment operations...................... 10.04 3.44 5.54 (0.04) 4.34
---------- ---------- ---------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................. (0.07) (0.15) (0.25) (0.25) (0.16)
Distributions in excess of net investment income...... (0.00)(a) -- -- (0.01) --
Net realized gains.................................... (4.54) (2.61) (1.75) (0.76) (0.76)
Distributions in excess of net realized gains......... (0.00)(a) (0.01) (0.00)(a) (0.03) --
---------- ---------- ---------- -------- --------
Total distributions................................... (4.61) (2.77) (2.00) (1.05) (0.92)
---------- ---------- ---------- -------- --------
NET ASSET VALUE, END OF YEAR.......................... $ 31.85 $ 26.42 $ 25.75 $ 22.21 $ 23.30
---------- ---------- ---------- -------- --------
Total return*......................................... 38.1% 13.4% 24.9% (0.1)% 21.8%
========== ========== ========== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of year (in 000's)...................... $1,335,052 $1,080,639 $1,091,539 $982,250 $945,408
Ratio of net investment income to average net assets.... 0.22% 0.52% 0.95% 1.10% 0.82%
Ratio of operating expenses to average net assets....... 1.38% 1.34% 1.33% 1.28% 1.31%
Portfolio turnover rate................................. 22.0% 14.9% 26.4% 18.7% 16.0%
Average commission rate per share(b).................... $ 0.0464 $ 0.0484 N/A N/A N/A
</TABLE>
- ---------------
* 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.
(a) Amount represents less than $0.005 per share.
(b) Average commission rate (per share of security) as required by amended SEC
disclosure requirements effective for fiscal years beginning after September
1, 1995.
See Notes to Financial Statements.
18
<PAGE>
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, 1997, the results of its operations for the year then ended and
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the five years in the period then
ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1997 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 20, 1998
1997 TAX NOTICE TO SHAREHOLDERS (UNAUDITED)
For the year ended December 31, 1997, the Fund paid to shareholders, on December
30, 1997, an ordinary income dividend (comprised of net investment income and
short-term capital gains) totaling $0.22 per share. Additionally, on that date,
the Fund paid $4.39 per share in long-term capital gains. For 1997, 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
1997 which was derived from U.S. Treasury securities was 9.11%. Such income may
be 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 1997. Due to the
diversity in state and local tax law, it is recommended that you consult your
personal tax adviser for the applicability of the information provided as to
your specific situation.
19
<PAGE>
<TABLE>
<S> <C>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118 [PHOTO]
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
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Felix J. Christiana Anthony R. Pustorino
Former Senior Vice President Certified Public Accountant THE
Dollar Dry Dock Savings Bank Professor, Pace University GABELLI
ASSET
Anthony J. Colavita Anthonie C. van Ekris FUND
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International, Inc.
James P. Conn Salvatore J. Zizza
Chief Investment Officer Executive Vice President
Financial Security Assurance FMG Group
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
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
LLP
- ---------------------------------------
This report is submitted for the
general information of the shareholders ANNUAL REPORT
of The Gabelli Asset Fund. It is not DECEMBER 31, 1997
authorized for distribution to
prospective investors unless preceded
or accompanied by an effective
prospectus.
- ---------------------------------------
</TABLE>
