<PAGE> 1
THE GABELLI ASSET FUND
SEMI-ANNUAL REPORT
JUNE 30, 1999
[FOURSTARS]
Morningstar Rated(TM) Gabelli Asset Fund 4 stars overall and for the three-year
period ended 6/30/99 among 3043 domestic equity funds, and for the five and
ten-year periods ended 6/30/99 among 1878 and 748 domestic equity funds,
respectively.
THE GABELLI ASSET FUND WAS RATED "A"
BY BUSINESS WEEK FOR SUPERIOR
RISK-ADJUSTED TOTAL RETURN IN THEIR
1999 MIDYEAR MUTUAL FUND UPDATE.
TO OUR SHAREHOLDERS,
"BUT MANY WHO ARE FIRST WILL BE LAST, AND THE LAST FIRST" (MARK 10:31)
Value stocks excelled in the second quarter of 1999. Cyclical stocks
ignited the rally, with the stronger than anticipated economy bolstering the
earnings outlook for economically sensitive companies. Other value sectors
caught the spark as investors began rotating out of richly valued growth stocks
into more reasonably priced companies in a wide range of industries. The
Internet balloon did not burst, but enough hot air escaped to bring the ".com"
companies closer to earth.
Also, small cap stocks finally emerged from what has been a long and
painful bear market. For the first time in seven quarters, the Russell 2000
outpaced the S&P 500 on its way to posting double digit returns for the quarter.
INVESTMENT PERFORMANCE
For the second quarter ended June 30, 1999, The Gabelli Asset Fund's (the
"Fund") total return was 11.3%. The Standard & Poor's ("S&P") 500, Value Line
Composite and Russell 2000 Indices had total returns of 7.1%, 17.3% and 15.6%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. The Fund was up 18.3% over the trailing twelve-month
period. The S&P 500, Value Line Composite and Russell 2000 rose 22.8%, 10.4% and
1.5%, respectively, over the same twelve-month period.
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of June 30, 1999 and are
subject to change every month. Morningstar ratings are calculated from a 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 a broad
asset class receive five stars, the next 22.5% receive four stars, the next 35%
receive three stars, the next 22.5% receive two stars and the bottom 10% receive
one star. Business Week's 1999 Midyear Mutual Fund Update rated mutual funds
based on five-year performance adjusted for downside volatility as of June 30,
1999. The top 7.5% of these funds earned A's for superior risk-adjusted total
returns. For the 1999 Midyear Update, 111 mutual funds earned A's among 1,480
equity funds with a five-year history, the minimum history required for a
rating.
<PAGE> 2
Average Annual Returns - June 30, 1999 (a)
--------------------------------------------------
1 Year.....................................................................18.3%
5 Year.....................................................................22.4%
10 Year....................................................................15.6%
Life of Fund (b)...........................................................17.9%
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
Quarter
------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C> <C>
1999: Net Asset Value................ $37.18 $41.38 -- -- --
Total Return................... 4.8% 11.3% -- -- --
- -------------------------------------------------------------------------------------------------------
1998: Net Asset Value................ $36.00 $36.41 $31.24 $35.47 $35.47
Total Return................... 13.0% 1.1% (14.2)% 18.2% 15.9%
- -------------------------------------------------------------------------------------------------------
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>
Dividend History
------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
----------------- -------------- ------------------
<S> <C> <C>
December 28, 1998 $1.419 $34.60
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 investment operations
on March 3, 1986.
2
<PAGE> 3
For the ten-year period ended June 30, 1999, the Fund's total return
averaged 15.6% annually versus average annual total returns of 18.8%, 14.0% and
12.4% for the S&P 500, Value Line Composite and Russell 2000, respectively.
Since inception on March 3, 1986 through June 30, 1999, the Fund had a
cumulative total return of 800.2%, which equates to an average annual total
return of 17.9%.
We note that in the July 26, 1999 issue of Business Week, The Gabelli Asset
Fund received an A rating for the Fund's superior risk-adjusted total return
over the last five years. We also note that Morningstar, the prestigious fund
rating service, announced the continued inclusion of the Gabelli Asset Fund in
their own 401(k) retirement plan as an investment option for their professional
staff.
WHAT WE DO
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 [RESEARCH
seen us through both good and bad markets over the PYRAMID
last 13 years at The Gabelli Asset Fund and for over LOGO]
22 years at Gabelli Asset Management Company. In
past reports, we have tried to articulate our
investment philosophy and methodology. The
accompanying 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.
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. equity markets. 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.
3
<PAGE> 4
COMMENTARY
THE ECONOMY: DUELING DATA ON INFLATION
Inflation played "peek-a-boo" with investors in the second quarter of 1999.
A jump in April's Consumer Price Index ("CPI") rattled the bond market and had
equity investors holding their breath. Inflation all but disappeared again in
the May CPI numbers. The bond market stabilized and stocks regained momentum.
Then, citing the emergence of "incipient ingredients" for inflation and the long
lead time of monetary policy, the Federal Reserve decided to hike the Federal
Funds rate by 25 basis points on June 30, in what Chairman Alan Greenspan
characterized as a "preemptive action" against inflation. This sparked a flurry
of observers to question whether this single modest rate hike would be an
effective vaccination against inflation or just the first in a series of shots
that will eventually take the froth out of the economy and financial markets.
We are not optimistic on inflation. The inflationary threat comes partially
from rising commodities prices, (most notably oil), which are recovering from
severely depressed levels following the Asian economic meltdown, and from the
prospect of wage inflation in fully employed America. Thus far, technology
driven productivity gains have offset rising wages. Along with Fed Chairman
Greenspan, we are not sure how much longer this can continue in an America with
help wanted signs in an increasing number of corporate windows.
AMERICAN CONSUMERS: WILL THE ENGINE OF GLOBAL ECONOMIC GROWTH CONTINUE STEAMING
ALONG?
We want to echo again the question we asked in our September 30, 1998
report and repeated in our March 31, 1999 report: Will the American consumer
continue to carry the rest of the world, or will the consumer eventually run low
on confidence and/or the resources required to nourish the global economy? Put
another way, can the U.S. continue to run enormous balance of payment deficits
that provide hope and sustenance for the other economies of the world as they
attempt to emerge from their economic malaise?
Full employment, higher wages, the wealth effect associated with rising
home values and a vibrant stock market have emboldened consumers, who continue
to spend quite liberally. If rising interest rates discourage consumers from
financing their spending spree, or we see a meaningful correction in the stock
market dent consumer confidence, the engine that has been driving global
economic growth may sputter. Equally important, if the U.S. consumer continues
to be the sole driver of global economic activity, the U.S. balance of payments
deficit will exceed even our dire forecast of a $250 billion run rate. The value
of the U.S. dollar is a wild card in the mix of elements that will determine the
direction of the overall U.S. economy and the stock market.
THE MARKET: EARNINGS AND INTEREST RATES
In our first quarter 1999 letter to shareholders, we also opined that
earnings and interest rates would call the market tune for the balance of the
year. In general, first quarter earnings met consensus estimates and second
quarter earnings should be stronger than anticipated, with particularly good
comparisons to 1998's second quarter, when General Motor's strike and the plunge
in energy prices crimped reported results. However, interest rates are higher,
and until we see convincing evidence that inflation is firmly under control,
rates are not likely to trend much lower. With the S&P 500's gains already
approximating 1999 earnings growth forecasts, we see an inadequate "margin of
safety" in the stock
4
<PAGE> 5
market. Money flowing into the markets, particularly from deal activity, is the
fuel powering a market that still favors stocks. However, money is no longer
pouring into equity mutual funds at the rates we have seen in previous years.
All this conjecture leads us to the opinion that stock selectivity remains
crucial over the next twelve months.
VALUE VERSUS GROWTH, SMALL CAP VERSUS LARGE CAP
Growth has outperformed value for five years and large cap stocks have
outperformed small caps for nearly as long. This is not unusual. Style and
capitalization sectors generally take lengthy turns leading the market. Does the
ascent of value and small cap stocks this quarter signify a major change in
market leadership? One quarter of outperformance does not a trend make. However,
fundamentals favor value stocks and small cap equities going forward. Despite
the strong second quarter rally, based on historical measurements, value stocks
remain inexpensive and growth stocks are still overvalued. Small cap stocks
offer the dual advantages of generally better earnings growth prospects than
large caps and materially lower price/earnings and price/cash flow multiples.
The accompanying chart shows the ebbs and flows of growth and value
investing over the last 23 years. The chart tracks large capitalization stocks
but the same performance would hold true for small and mid-cap stocks.
[LARGE CAPITALIZATION STOCK CHART]
<TABLE>
<CAPTION>
DATE SP500 GROWTH VALUE
- ------------------------------------------------------------ ------ ------ ------
<S> <C> <C> <C>
Jan-1975.................................................... 12.72% 9.44% 15.16%
Feb-1975.................................................... 6.38% 10.91% 3.25%
Mar-1975.................................................... 2.54% 2.68% 2.07%
Apr-1975.................................................... 5.10% 5.65% 4.25%
May-1975.................................................... 4.77% 4.50% 5.67%
Jun-1975.................................................... 4.77% 2.55% 6.51%
Jul-1975.................................................... -6.44% -8.83% -4.12%
Aug-1975.................................................... -1.75% -1.96% -0.94%
Sep-1975.................................................... -3.11% -4.15% -2.19%
Oct-1975.................................................... 6.53% 7.92% 5.04%
Nov-1975.................................................... 2.82% 3.54% 2.50%
Dec-1975.................................................... -0.81% -2.49% 0.67%
Jan-1976.................................................... 12.17% 11.94% 11.76%
Feb-1976.................................................... -0.84% -2.18% 1.09%
Mar-1976.................................................... 3.37% 3.28% 3.26%
Apr-1976.................................................... -0.77% -2.62% 0.75%
May-1976.................................................... -1.11% -1.46% -0.16%
Jun-1976.................................................... 4.43% 4.55% 4.10%
Jul-1976.................................................... -0.47% -1.53% 0.21%
Aug-1976.................................................... -0.18% -0.17% 0.49%
Sep-1976.................................................... 2.59% 1.66% 3.23%
Oct-1976.................................................... -1.86% -2.18% -1.76%
Nov-1976.................................................... -0.40% -1.52% 1.47%
Dec-1976.................................................... 5.61% 4.22% 6.59%
Jan-1977.................................................... -4.72% -7.65% -2.80%
Feb-1977.................................................... -1.82% -1.59% -1.44%
Mar-1977.................................................... -1.05% -1.78% -0.66%
Apr-1977.................................................... 0.42% -2.10% 2.28%
May-1977.................................................... -1.96% -2.67% -0.47%
Jun-1977.................................................... 4.94% 6.14% 3.43%
Jul-1977.................................................... -1.24% -1.47% -1.56%
Aug-1977.................................................... -1.72% 0.94% -3.62%
Sep-1977.................................................... 0.16% -0.80% 0.88%
Oct-1977.................................................... -3.89% -4.54% -3.68%
Nov-1977.................................................... 3.16% 3.83% 3.41%
Dec-1977.................................................... 0.75% -0.12% 1.24%
Jan-1978.................................................... -5.74% -6.20% -5.71%
Feb-1978.................................................... -2.02% -2.86% -0.28%
Mar-1978.................................................... 2.94% 1.58% 3.73%
Apr-1978.................................................... 9.02% 11.21% 6.35%
May-1978.................................................... 0.92% 1.51% 1.22%
Jun-1978.................................................... -1.37% -0.99% -2.13%
Jul-1978.................................................... 5.83% 7.02% 4.13%
Aug-1978.................................................... 3.01% 2.74% 4.00%
Sep-1978.................................................... -0.31% -2.09% 1.36%
Oct-1978.................................................... -8.71% -8.46% -9.23%
Nov-1978.................................................... 2.15% 1.94% 3.16%
Dec-1978.................................................... 1.96% 2.75% 0.51%
Jan-1979.................................................... 4.43% 3.15% 5.37%
Feb-1979.................................................... -3.21% -3.55% -2.04%
Mar-1979.................................................... 5.96% 5.55% 5.80%
Apr-1979.................................................... 0.63% 0.25% 0.60%
May-1979.................................................... -2.17% -2.10% -1.70%
Jun-1979.................................................... 4.35% 3.26% 4.82%
Jul-1979.................................................... 1.34% 0.76% 1.54%
Aug-1979.................................................... 5.77% 6.39% 5.78%
Sep-1979.................................................... 0.43% -0.25% 0.78%
Oct-1979.................................................... -6.40% -5.61% -7.48%
Nov-1979.................................................... 4.75% 5.91% 4.33%
Dec-1979.................................................... 2.14% 1.72% 1.89%
Jan-1980.................................................... 6.22% 6.34% 5.71%
Feb-1980.................................................... 0.00% 0.01% 0.68%
Mar-1980.................................................... -9.72% -9.18% -10.53%
Apr-1980.................................................... 4.62% 2.92% 5.77%
May-1980.................................................... 5.15% 5.31% 5.86%
Jun-1980.................................................... 3.16% 3.55% 2.32%
Jul-1980.................................................... 6.96% 7.89% 5.37%
Aug-1980.................................................... 1.01% 1.13% 1.48%
Sep-1980.................................................... 2.94% 4.33% 0.94%
Oct-1980.................................................... 2.03% 3.42% -0.01%
Nov-1980.................................................... 10.65% 14.25% 6.44%
Dec-1980.................................................... -3.01% -4.39% -1.38%
Jan-1981.................................................... -4.18% -6.70% -2.03%
Feb-1981.................................................... 1.74% 2.73% 1.39%
Mar-1981.................................................... 4.00% 3.29% 4.33%
Apr-1981.................................................... -1.93% -4.12% -0.10%
May-1981.................................................... 0.26% 0.23% 0.92%
Jun-1981.................................................... -0.62% -1.54% -0.17%
Jul-1981.................................................... 0.21% 1.68% -1.37%
Aug-1981.................................................... -5.77% -6.35% -4.56%
Sep-1981.................................................... -4.92% -6.14% -3.91%
Oct-1981.................................................... 5.40% 6.70% 3.85%
Nov-1981.................................................... 4.13% 3.92% 4.78%
Dec-1981.................................................... -2.56% -2.85% -2.57%
Jan-1982.................................................... -1.30% -0.01% -1.87%
Feb-1982.................................................... -5.59% -6.71% -3.45%
Mar-1982.................................................... -0.52% -1.57% 0.29%
Apr-1982.................................................... 4.52% 5.50% 2.82%
May-1982.................................................... -3.40% -3.04% -2.45%
Jun-1982.................................................... -1.50% -1.66% -1.78%
Jul-1982.................................................... -1.77% -1.15% -2.97%
Aug-1982.................................................... 12.14% 11.47% 13.62%
Sep-1982.................................................... 1.25% 1.64% 0.50%
Oct-1982.................................................... 11.51% 11.35% 11.21%
Nov-1982.................................................... 4.04% 5.29% 3.55%
Dec-1982.................................................... 1.93% 2.00% 1.34%
Jan-1983.................................................... 3.72% 2.26% 4.69%
Feb-1983.................................................... 2.29% 2.92% 2.16%
Mar-1983.................................................... 3.69% 3.34% 3.91%
Apr-1983.................................................... 7.88% 6.79% 8.29%
May-1983.................................................... -0.87% -1.15% 0.02%
Jun-1983.................................................... 3.89% 5.72% 1.94%
Jul-1983.................................................... -2.95% -4.48% -1.65%
Aug-1983.................................................... 1.50% -0.46% 3.87%
Sep-1983.................................................... 1.38% 1.83% 0.85%
Oct-1983.................................................... -1.15% -2.10% -0.58%
Nov-1983.................................................... 2.11% 2.02% 2.63%
Dec-1983.................................................... -0.52% -0.97% -0.08%
Jan-1984.................................................... -0.55% -3.26% 2.21%
Feb-1984.................................................... -3.51% -4.20% -2.37%
Mar-1984.................................................... 1.73% 2.11% 1.28%
Apr-1984.................................................... 0.95% 0.61% 0.75%
May-1984.................................................... -5.53% -5.10% -5.41%
Jun-1984.................................................... 2.17% 3.06% 1.25%
Jul-1984.................................................... -1.24% -0.63% -2.31%
Aug-1984.................................................... 11.05% 10.22% 12.29%
Sep-1984.................................................... 0.02% -1.46% 1.60%
Oct-1984.................................................... 0.39% 1.04% -0.46%
Nov-1984.................................................... -1.12% -1.75% -0.26%
Dec-1984.................................................... 2.64% 2.57% 2.42%
Jan-1985.................................................... 7.79% 7.97% 7.31%
Feb-1985.................................................... 1.23% 1.51% 1.29%
Mar-1985.................................................... 0.07% -0.24% 0.34%
Apr-1985.................................................... -0.09% -1.49% 0.94%
May-1985.................................................... 5.78% 6.41% 5.49%
Jun-1985.................................................... 1.57% 1.90% 1.16%
Jul-1985.................................................... -0.14% -0.38% -0.23%
Aug-1985.................................................... -0.85% -1.23% -0.90%
Sep-1985.................................................... -3.12% -3.66% -2.84%
Oct-1985.................................................... 4.62% 4.19% 4.81%
Nov-1985.................................................... 6.86% 8.90% 5.36%
Dec-1985.................................................... 4.84% 6.13% 3.21%
Jan-1986.................................................... 0.56% -4.30% 1.33%
Feb-1986.................................................... 7.48% 7.57% 7.58%
Mar-1986.................................................... 5.58% 5.88% 5.06%
Apr-1986.................................................... -1.12% 0.21% -2.79%
May-1986.................................................... 5.32% 5.36% 5.57%
Jun-1986.................................................... 1.69% 1.83% 1.44%
Jul-1986.................................................... -5.59% -6.65% -4.76%
Aug-1986.................................................... 7.42% 4.90% 10.06%
Sep-1986.................................................... -8.26% -10.22% -6.32%
Oct-1986.................................................... 5.77% 6.33% 4.79%
Nov-1986.................................................... 2.43% 2.85% 2.24%
Dec-1986.................................................... -2.55% -2.33% -3.00%
Jan-1987.................................................... 13.47% 13.62% 13.24%
Feb-1987.................................................... 3.95% 6.77% 1.39%
Mar-1987.................................................... 2.89% 2.22% 3.27%
Apr-1987.................................................... -0.88% -1.19% -0.62%
May-1987.................................................... 0.87% 1.14% 0.90%
Jun-1987.................................................... 5.05% 5.06% 4.92%
Jul-1987.................................................... 5.07% 5.51% 4.40%
Aug-1987.................................................... 3.73% 4.15% 3.49%
Sep-1987.................................................... -2.19% -2.59% -1.81%
Oct-1987.................................................... -21.53% 22.71% -20.32%
Nov-1987.................................................... -8.24% -8.86% -7.47%
Dec-1987.................................................... 7.61% 8.48% 6.26%
Jan-1988.................................................... 4.21% 2.03% 6.64%
Feb-1988.................................................... 4.66% 4.72% 4.58%
Mar-1988.................................................... -3.08% -0.39% -2.11%
Apr-1988.................................................... 1.11% 0.81% 1.25%
May-1988.................................................... 0.87% 0.30% 1.23%
Jun-1988.................................................... 4.59% 4.94% 4.29%
Jul-1988.................................................... -0.37% -0.65% -0.12%
Aug-1988.................................................... -3.39% -3.77% -2.75%
Sep-1988.................................................... 4.26% 4.54% 3.87%
Oct-1988.................................................... 2.78% 2.35% 3.16%
Nov-1988.................................................... -1.42% 1.85% -0.95%
Dec-1988.................................................... 1.75% 2.35% 1.14%
Jan-1989.................................................... 7.32% 7.18% 7.33%
Feb-1989.................................................... -2.49% -2.67% -2.16%
Mar-1989.................................................... 2.33% 2.08% 2.64%
Apr-1989.................................................... 5.19% 5.42% 4.80%
May-1989.................................................... 4.05% 4.29% 3.79%
Jun-1989.................................................... -0.56% -0.73% -0.36%
Jul-1989.................................................... 9.03% 10.88% 6.90%
Aug-1989.................................................... 1.96% 1.52% 2.20%
Sep-1989.................................................... -0.40% 2.50% -1.07%
Oct-1989.................................................... -2.32% -1.50% -3.23%
Nov-1989.................................................... 2.04% 3.12% 0.89%
Dec-1989.................................................... 2.40% 2.39% 2.32%
Jan-1990.................................................... -6.71% -7.47% -5.87%
Feb-1990.................................................... 1.29% 0.58% 2.03%
Mar-1990.................................................... 2.65% 3.99% 1.19%
Apr-1990.................................................... -2.49% -1.62% -3.40%
May-1990.................................................... 9.75% 11.32% 7.96%
Jun-1990.................................................... -0.67% 0.33% -1.89%
Jul-1990.................................................... -0.32% -0.63% 0.01%
Aug-1990.................................................... -9.03% -9.22% -8.80%
Sep-1990.................................................... -4.86% -5.16% -4.63%
Oct-1990.................................................... -0.42% 0.66% -1.42%
Nov-1990.................................................... 6.46% 6.04% 6.83%
Dec-1990.................................................... 2.79% 3.18% 2.26%
Jan-1991.................................................... 4.36% 4.16% 4.73%
Feb-1991.................................................... 7.15% 7.75% 6.52%
Mar-1991.................................................... 2.42% 3.78% 0.91%
Apr-1991.................................................... 0.24% -0.19% 0.79%
May-1991.................................................... 4.31% 3.78% 4.77%
Jun-1991.................................................... -4.58% -4.18% -4.97%
Jul-1991.................................................... 4.66% 5.35% 3.97%
Aug-1991.................................................... 2.37% 3.22% 1.45%
Sep-1991.................................................... -1.67% -2.19% -1.05%
Oct-1991.................................................... 1.34% 1.22% 1.46%
Nov-1991.................................................... -4.02% -2.55% -5.58%
Dec-1991.................................................... 11.44% 14.09% 8.51%
Jan-1992.................................................... -1.86% -3.35% 0.00%
Feb-1992.................................................... 1.30% 0.59% 2.03%
Mar-1992.................................................... -1.94% -2.32% -1.57%
Apr-1992.................................................... 2.94% 1.06% 4.88%
May-1992.................................................... 0.49% 0.78% 0.28%
Jun-1992.................................................... -1.48% -2.07% -0.82%
Jul-1992.................................................... 4.09% 4.51% 3.61%
Aug-1992.................................................... -2.04% -1.15% -2.90%
Sep-1992.................................................... 1.18% 1.18% 1.10%
Oct-1992.................................................... 0.35% 1.50% -0.80%
Nov-1992.................................................... 3.41% 4.04% 2.71%
Dec-1992.................................................... 1.23% 0.66% 1.81%
Jan-1993.................................................... 0.84% -1.08% 2.76%
Feb-1993.................................................... 1.36% -0.80% 3.44%
Mar-1993.................................................... 2.11% 1.41% 2.76%
Apr-1993.................................................... -2.41% -4.61% -0.40%
May-1993.................................................... 2.68% 3.56% 1.87%
Jun-1993.................................................... 0.29% -0.85% 1.32%
Jul-1993.................................................... -0.40% -2.56% 1.24%
Aug-1993.................................................... 3.79% 3.65% 3.92%
Sep-1993.................................................... -0.76% -1.53% -0.37%
Oct-1993.................................................... 2.07% 3.72% 0.54%
Nov-1993.................................................... -0.95% -0.07% -1.79%
Dec-1993.................................................... 1.21% 0.70% 1.70%
Jan-1994.................................................... 3.40% 2.14% 4.66%
Feb-1994.................................................... -2.71% -1.79% -3.62%
Mar-1994.................................................... -4.36% -4.61% -4.11%
Apr-1994.................................................... 1.28% 0.45% 2.11%
May-1994.................................................... 1.64% 1.63% 1.66%
Jun-1994.................................................... -2.45% -2.13% -2.77%
Jul-1994.................................................... 3.28% 3.19% 3.38%
Aug-1994.................................................... 4.10% 5.34% 2.83%
Sep-1994.................................................... -2.44% -1.42% -3.52%
Oct-1994.................................................... 2.25% 2.33% 2.18%
Nov-1994.................................................... -3.64% -3.28% -4.05%
Dec-1994.................................................... 1.48% 1.73% 1.23%
Jan-1995.................................................... 2.59% 2.48% 2.71%
Feb-1995.................................................... 3.90% 3.90% 3.88%
Mar-1995.................................................... 2.95% 3.14% 2.76%
Apr-1995.................................................... 2.95% 2.60% 3.29%
May-1995.................................................... 4.00% 3.58% 4.45%
Jun-1995.................................................... 2.32% 3.83% 0.76%
Jul-1995.................................................... 3.32% 3.19% 3.45%
Aug-1995.................................................... 0.25% -0.33% 0.85%
Sep-1995.................................................... 4.22% 4.94% 3.48%
Oct-1995.................................................... -0.35% 0.80% -1.56%
Nov-1995.................................................... 4.39% 3.60% 5.24%
Dec-1995.................................................... 1.93% 1.13% 2.77%
Jan-1996.................................................... 3.40% 3.82% 2.99%
Feb-1996.................................................... 0.93% 0.91% 0.94%
Mar-1996.................................................... 0.96% -0.42% 2.34%
Apr-1996.................................................... 1.47% 1.95% 1.02%
May-1996.................................................... 2.58% 3.68% 1.51%
Jun-1996.................................................... 0.38% 1.25% -0.48%
Jul-1996.................................................... -4.41% -4.61% -4.22%
Aug-1996.................................................... 2.11% 1.48% 2.76%
Sep-1996.................................................... 5.63% 6.94% 4.28%
Oct-1996.................................................... 2.76% 2.17% 3.39%
Nov-1996.................................................... 7.56% 7.47% 7.65%
Dec-1996.................................................... -1.98% 2.31% -1.63%
Jan-1997.................................................... 6.25% 7.83% 4.61%
Feb-1997.................................................... 0.78% 0.84% 0.73%
Mar-1997.................................................... -4.10% -4.75% -3.42%
Apr-1997.................................................... 5.97% 8.07% 3.75%
May-1997.................................................... 6.09% 5.92% 6.27%
Jun-1997.................................................... 4.48% 5.07% 3.82%
Jul-1997.................................................... 7.96% 7.91% 8.00%
Aug-1997.................................................... -5.60% -6.65% -4.52%
Sep-1997.................................................... 5.48% 5.10% 5.86%
Oct-1997.................................................... -3.34% 3.01% -3.68%
Nov-1997.................................................... 4.63% 5.43% 3.81%
Dec-1997.................................................... 1.72% 1.23% 2.22%
Jan-1998.................................................... 1.11% 3.36% -1.23%
Feb-1998.................................................... 7.21% 6.95% 7.50%
Mar-1998.................................................... 5.12% 5.17% 5.07%
Apr-1998.................................................... 1.01% 8.38% 1.18%
May-1998.................................................... -1.71% -2.01% -1.41%
Jun-1998.................................................... 4.06% 7.13% 0.76%
Jul-1998.................................................... -1.06% -0.06% -2.17%
Aug-1998.................................................... -14.45% -13.01% -16.08%
Sep-1998.................................................... 6.41% 6.69% 6.08%
Oct-1998.................................................... 8.13% 8.39% 7.83%
Nov-1998.................................................... 6.06% 6.77% 5.21%
Dec-1998.................................................... 5.76% 7.61% 3.51%
Jan-1999.................................................... 4.18% 6.11% 2.02%
Feb-1999.................................................... -3.10% -3.92% -2.15%
Mar-1999.................................................... 4.00% 4.84% 3.03%
Apr-1999.................................................... 3.87% -0.19% 8.62%
May-1999.................................................... -2.36% -2.92% -1.77%
Jun-1999.................................................... 5.55% 7.16% 3.84%
</TABLE>
Source: Standard & Poor's Corp.; BARRA
Despite our own value bias and The Gabelli Asset Fund's focus on smaller
companies, our Fund has performed quite well in a market that has strongly
favored large cap growth stocks over all others. We believe we can do even
better relative to the S&P 500 in a market that tilts toward value and smaller
cap stocks.
5
<PAGE> 6
THIS QUARTER'S SCORECARD
We are particularly proud of our portfolio's batting average this quarter.
Nearly 75% of our portfolio holdings outperformed the S&P 500. That is almost
three hits in every four at bats. Our cyclical holdings were among our most
productive batters. Industrial cyclicals such as Navistar, Mark IV Industries,
Honeywell, GenCorp, Caterpillar and Boeing helped us build a big lead over the
benchmark. Energy and energy service companies such as PennzEnergy, Global
Marine and Enron Oil & Gas also connected at the plate. AT&T Corp.'s Liberty
Media Group is a contender for "Most Valuable Player", as investors applaud its
acquisition of Associated Group. Liberty Media is the tracking stock for the
company being run by former Tele-Communications Inc. Chairman and "Value Creator
Extraordinaire", John Malone.
Some of our previous all-stars, most notably Cablevision, Time Warner and
Viacom, experienced old-fashioned profit taking. After exceptional performance
in 1997-98, momentum investors began purchasing the stocks of these cable and
media sluggers. True to form, the momentum investors abandoned their new
holdings as soon as they fell behind in the count. We believe these dominant
franchises will rebound smartly later this season. We struck out with
pharmaceutical holdings Pfizer, Merck, Glaxo Wellcome and Amgen.
A BROADCAST RECOVERY?
American broadcasters suffered through a dismal 1998. They continued to
lose eyeballs and advertising dollars to cable television operators, and the
Internet captured a larger piece of many companies' advertising budgets.
However, the tide may be turning. Although the national and local spot markets
remain soft, upfront advertising sales are up 13%. Buoyed by spending from
pharmaceutical companies (which are now allowed to market their prescription
products on television), Internet companies that are spending lavishly on
advertising to establish their brand names and big new ad campaigns planned for
the millennium, broadcasters' ad revenues should trend higher. Broadcasters will
get an additional boost in the upcoming election year as politicians open
campaign treasure chests to win the hearts and minds of American voters.
This quarter, our broadcast holdings were mixed. Paxson Communications
posted strong gains and Meredith Corp. tuned in with sound performance. But CBS
and Chris Craft Industries were flat, while Gray Communications declined. We
believe that when investors start focusing on next year's numbers, they will
begin tuning in to our broadcast laggards.
A final wild card for broadcasters is the increasing focus by technology
giants on the ubiquitous nature of television. The "Holy Grail" is to develop a
two way interactive and transaction driven economic model for old fashioned
"POTS" (Plain Old Television Stations).
FREE RANGE RABBIT
The "Energizer Bunny" is running down. Energizer has lost market share to
current industry leader Gillette's Duracell subsidiary and Rayovac is also
gaining ground. Parent company Ralston Purina is about to free the "Energizer
Bunny" in a spin-off. We believe Energizer will be a stronger competitor as an
independent company and that off on its own, it may attract a predator in the
form of a large branded
6
<PAGE> 7
consumer goods company looking for an entry in the battery business. Releasing
Energizer will also help investors more fully appreciate the nutrition in
Ralston Purina's dominant pet food franchise.
Through the years, Ralston Purina management has done an excellent job
building value and enhancing shareholder returns through large share repurchase
programs. We believe Ralston's parts are worth considerably more than the
current market valuation of the whole and that the decision to spin off
Energizer represents another terrific move by this shareholder sensitive
company.
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.
Cablevision Systems Corp. (CVC - $70.00 - AMEX) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
span state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, NY, Cablevision serves more than
3.4 million cable customers primarily in three core markets: New York, Boston
and Cleveland. Cablevision is a leader in delivering cutting-edge technological
innovation, such as Optimum TV, to the home. Through its Rainbow Media Holdings
subsidiary, Cablevision manages and develops internationally recognized content
offerings such as the popular national television networks American Movie
Classics, Bravo and The Independent Film Channel. Cablevision has a controlling
interest in New York City's famed Madison Square Garden which includes the arena
complex, the NY Knicks, the NY Rangers and the MSG network. Cablevision operates
Radio City Entertainment and holds a long term lease for Radio City Music Hall,
home of the world famous Radio City Rockettes.
Liberty Media Group (LMG'A - $36.75 - NYSE) is engaged in businesses which
provide programming services, including production, acquisition and distribution
through all available media formats, and businesses engaged in electronic
retailing, direct marketing and other services. LMG holds interests in
globally-branded entertainment networks such as Discovery Channel, USA, QVC,
Encore and STARZ!. Liberty's assets also include interests in international
video distribution businesses; international telephony and domestic wireless;
plant and equipment manufacturers; and other businesses related to broadband
services. Liberty Media Group Class A and Class B common stock are tracking
stocks of AT&T Corp. (T - $55.8125 - NYSE) and are now traded on the New York
Stock Exchange.
MediaOne Group Inc. (UMG - $74.375 - NYSE) is one of the nation's leading
broadband services companies. UMG provides more than five million subscribers in
17 states with basic and premium cable television services and has recently
introduced high speed Internet access, telephone services and digital television
in some of its service areas. MediaOne was created from the 1996 union of
telecommunications company MediaOne Group (formerly US West Media Group) and
Continental Cablevision. Headquartered in Englewood, Colorado, the company is
conducting a national upgrade of its hybrid fiber optic/coaxial cable ("HFC")
network to broadband technology which improves traditional cable service and
enables next-generation products and services. The Group's investment interests
include 25% of Time Warner Entertainment (which includes Warner Brothers Studio
and Home Box Office), 24% of PCS Prime Co. and almost 27% of TeleWest plc. The
number three U.S. cable television company recently agreed to be acquired by
AT&T Corp. (T - $55.8125 - NYSE) for $54 billion.
7
<PAGE> 8
Telephone & Data Systems Inc. (TDS - $73.0625 - AMEX) is a diversified
telecommunications company with established cellular and local telephone
operations and a developing personal communications services ("PCS") business.
TDS provides high quality telecommunications services to three million customers
in 35 states. TDS owns 81.1% of United States Cellular Corp.
(USM - $53.50 - AMEX), the nation's seventh largest cellular telephone company.
It also owns 82.4% of Aerial Communications Inc. (AERL - $13.50 - Nasdaq), TDS's
PCS subsidiary which owns the licenses to provide PCS service in six major
trading areas ("MTAs") encompassing approximately 27.6 million population
equivalents. On December 8, 1998, TDS announced its intent to spin-off its
Aerial stake to existing TDS shareholders on a tax-free basis and focus on its
core wireline and cellular operations. The transaction is expected to close by
the end of the year.
Time Warner Inc. (TWX - $73.50 - NYSE), with its 1996 acquisition of Turner
Broadcasting System, became entrenched as the global leader in media and
entertainment with interests in filmed entertainment, television production and
broadcasting, recorded music, cable television programming, magazine and book
publishing, direct marketing and cable television systems. The combined
companies have almost $27 billion in revenues and $4.5 billion in EBITDA. Time
Warner controls a host of powerful brands, such as Warner Brothers, CNN, HBO,
Cinemax and Time and People magazines. Under the leadership of Chairman Gerald
Levin and Vice Chairman Ted Turner, the company is focused on reducing its debt
(now approximately $11 billion) and simplifying its capital structure.
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.
PROPOSALS TO SHAREHOLDERS
The Fund's Board of Trustees has asked shareholders to consider a proposal
to amend the Fund's Declaration of Trust to permit the Fund to offer additional
classes of shares, and a proposal to amend the Fund's investment policy with
respect to options on securities that it holds or has the right to obtain. We
believe that all of these proposals would benefit the shareholders, and we urge
you to give them your careful consideration.
For existing shareholders we intend to remain a no-load fund. At the same
time, mutual fund distributors are increasingly employing a variety of different
types and combinations of sales charge arrangements for different classes of
shares that are targeted to the needs of particular types of investors. Your
Board of Trustees believes that the Fund should be able to provide the
distribution alternatives and investment flexibility provided by other similarly
situated funds that offer multiple classes of shares. We believe that approval
of the proposal to permit the Fund to offer additional classes of shares will
enhance the potential for the Fund to attract additional investors in a manner
that could provide additional benefits for all investors in the Fund. Again, to
repeat, approval of this proposal will not diminish the ability of existing and
future shareholders to purchase and redeem shares at net asset value.
The second proposal relates to the use of options. If approved, the Fund
would be allowed to sell "covered" call options and to purchase put options in
securities, currencies or other assets owned by the Fund. Among other benefits,
this should enable the Fund to generate additional premium income which would
serve to enhance the Fund's total return and to protect against any anticipated
declines in the value of its assets.
8
<PAGE> 9
IN CONCLUSION
In the second quarter of 1999, value reasserted itself and small cap stocks
came roaring back. Both of these forces provided a tailwind for our portfolio.
Looking ahead, we have our reservations regarding the stock market, which, based
on fundamentals, appears to be well above intrinsic value. However, we still see
windows of opportunity, particularly in the small and mid-cap value sectors
where we are most active. We will strive to continue to uncover such
opportunities and maintain a diversified portfolio of what we view as long term
fundamental investment bargains.
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
business day for further information.
Sincerely,
/s/ MARIO J. GABELLI
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
July 30, 1999
TOP TEN HOLDINGS
JUNE 30, 1999
<TABLE>
<S> <C>
Liberty Media Group USA Networks Inc.
Time Warner Inc. American Express Co.
Telephone & Data Systems Inc. Viacom Inc.
Cablevision Systems Corp. AT&T Corp
MediaOne Group Inc. United Television Inc.
</TABLE>
NOTE: The views expressed in this report reflect those of the portfolio manager
only through the end of the period stated in this report. The manager's views
are subject to change at any time based on market and other conditions.
9
<PAGE> 10
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS--90.8%
AEROSPACE--0.6%
125,000 Boeing Co. ................ $ 4,189,615 $ 5,523,437
80,000 Northrop Grumman Corp. .... 5,667,052 5,305,000
------------ --------------
9,856,667 10,828,437
------------ --------------
AGRICULTURE--0.9%
20,000 Agribrands International
Inc. ..................... 282,787 791,250
500,000 Archer-Daniels-Midland
Co. ...................... 8,729,803 7,718,750
30,000 Monsanto Co. .............. 1,311,188 1,183,125
200,000 Pioneer Hi-Bred
International Inc. ....... 7,466,600 7,787,500
------------ --------------
17,790,378 17,480,625
------------ --------------
AUTOMOTIVE--0.5%
140,000 General Motors Corp. ...... 3,382,365 9,240,000
------------ --------------
AUTOMOTIVE: PARTS AND ACCESSORIES--4.0%
85,000 Arvin Industries Inc. ..... 3,378,248 3,219,375
25,000 Borg-Warner Automotive
Inc. ..................... 883,632 1,375,000
200,000 Dana Corp. ................ 4,945,561 9,212,500
60,000 Delphi Automotive Systems
Corp.+.................... 425,133 1,113,750
120,000 Federal-Mogul Corp. ....... 3,218,063 6,240,000
620,000 GenCorp Inc. .............. 4,065,612 15,655,000
265,000 Genuine Parts Co. ......... 6,522,604 9,275,000
110,000 Johnson Controls Inc. ..... 2,057,822 7,624,375
300,000 Modine Manufacturing
Co. ...................... 7,040,244 9,768,750
210,000 Standard Motor Products
Inc. ..................... 3,040,436 5,145,000
110,000 Superior Industries
International Inc. ....... 2,629,715 3,004,375
100,000 TransPro Inc. ............. 788,321 525,000
90,000 Wynn's International
Inc. ..................... 1,140,063 1,659,375
------------ --------------
40,135,454 73,817,500
------------ --------------
AVIATION: PARTS AND SERVICES--0.8%
10,000 BE Aerospace Inc.+......... 193,625 186,875
200,000 Coltec Industries Inc.+.... 2,827,715 4,337,500
181,000 Curtiss-Wright Corp. ...... 2,275,020 7,036,375
55,000 Fairchild Corp., Cl. A..... 993,116 701,250
60,000 Hi-Shear Industries
Inc. ..................... 510,932 154,687
70,000 Precision Castparts
Corp. .................... 2,647,629 2,975,000
------------ --------------
9,448,037 15,391,687
------------ --------------
BROADCASTING--4.0%
65,000 CBS Corp. ................. 1,596,195 2,823,437
460,612 Chris-Craft Industries
Inc. ..................... 9,923,167 21,706,340
71,637 Chris-Craft Industries
Inc., Cl. B (a)........... 1,132,431 3,371,416
12,000 Gray Communications Systems
Inc. ..................... 231,411 240,000
183,300 Gray Communications Systems
Inc., Cl. B............... 2,380,815 2,589,112
155,000 Grupo Televisa SA, GDR+.... 3,245,691 6,945,938
135,000 Liberty Corp. ............. 4,635,009 7,357,500
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
115,000 Paxson Communications
Corp., Cl. A+............. $ 1,231,309 $ 1,552,500
400,000 Television Broadcasting
Ltd. ..................... 1,815,551 1,876,627
247,500 United Television Inc. .... 15,847,291 25,956,562
------------ --------------
42,038,870 74,419,432
------------ --------------
BUILDING AND CONSTRUCTION--0.3%
175,000 Nortek Inc.+............... 998,767 5,479,687
4,333 Nortek Inc., Special Common
(a)....................... 59,049 135,406
------------ --------------
1,057,816 5,615,093
------------ --------------
BUSINESS SERVICES--1.1%
60,000 Berlitz International Inc.,
New+...................... 959,663 1,102,500
300,000 Cendant Corp. ............. 5,017,897 6,150,000
10,000 Dollar Thrifty Automotive
Group Inc.+............... 143,229 232,500
100,000 Ecolab Inc. ............... 1,571,512 4,362,500
23,046 Hach Co. .................. 186,972 417,709
16,546 Hach Co., Cl. A............ 113,613 291,623
66,500 Landauer Inc. ............. 412,455 1,961,750
200,000 Nashua Corp.+.............. 3,675,056 1,975,000
150,000 Rental Service Corp.+...... 4,295,000 4,293,750
------------ --------------
16,375,397 20,787,332
------------ --------------
CABLE--5.1%
680,000 Cablevision Systems Corp.,
Cl. A+.................... 5,986,365 47,600,000
40,000 Comcast Corp., Cl. A....... 286,651 1,432,500
40,000 Comcast Corp., Cl. A
Special................... 306,462 1,537,500
540,000 MediaOne Group Inc. ....... 11,863,018 40,162,500
30,000 Shaw Communications Inc.,
Cl. B..................... 191,728 1,186,970
40,000 Shaw Communications Inc.,
Cl. B, ADR................ 363,398 1,590,000
10,000 United International
Holdings Inc., Cl. A+..... 144,679 676,250
------------ --------------
19,142,301 94,185,720
------------ --------------
CLOSED-END FUNDS--0.1%
84,000 Royce Value Trust Inc. .... 949,972 1,113,000
------------ --------------
COMMUNICATIONS EQUIPMENT--0.6%
275,000 Allen Telecom Inc.+........ 1,517,859 2,956,250
45,000 Motorola Inc. ............. 591,687 4,263,750
40,000 Nortel Networks Corp. ..... 749,125 3,472,500
------------ --------------
2,858,671 10,692,500
------------ --------------
COMPUTER SOFTWARE AND SERVICES--0.0%
20,000 Internet.com Corp.+........ 257,500 251,250
------------ --------------
CONSUMER PRODUCTS--3.5%
607,000 Carter-Wallace Inc. ....... 9,514,363 11,039,813
2,750 Christian Dior SA.......... 307,335 447,687
180,000 Church & Dwight Co.
Inc. ..................... 3,960,414 7,830,000
15,000 Department 56 Inc.+........ 269,750 403,125
190,000 Fortune Brands Inc. ....... 4,402,600 7,861,250
250,000 Gallaher Group plc, ADR.... 3,316,435 6,109,375
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 11
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
160,000 General Cigar Holdings
Inc. ..................... $ 1,540,005 $ 1,250,000
93,356 General Cigar Holdings
Inc., Cl. B+(a)........... 917,834 729,344
76,000 Gillette Co. .............. 1,101,472 3,116,000
40,000 Harley Davidson Inc. ...... 198,900 2,175,000
30,000 National Presto Industries
Inc. ..................... 1,109,777 1,147,500
150,000 Philip Morris Companies
Inc. ..................... 6,383,577 6,028,125
510,000 Ralston Purina Group....... 6,278,133 15,523,125
41,700 Syratech Corp.+............ 954,711 646,350
------------ --------------
40,255,306 64,306,694
------------ --------------
CONSUMER SERVICES--0.3%
200,000 Loewen Group Inc. ......... 1,768,064 112,500
374,000 Rollins Inc. .............. 5,973,689 5,960,625
------------ --------------
7,741,753 6,073,125
------------ --------------
DIVERSIFIED INDUSTRIAL--3.4%
10,000 Anixter International
Inc.+..................... 90,087 182,500
10,000 Cooper Industries Inc. .... 484,437 520,000
270,000 Crane Co. ................. 3,162,532 8,488,125
205,000 GATX Corp. ................ 4,329,860 7,802,812
10,000 General Electric Co. ...... 246,862 1,130,000
105,000 GenTek Inc.+............... 1,055,181 1,456,875
55,000 Honeywell Inc. ............ 2,926,248 6,373,125
180,000 ITT Industries Inc. ....... 5,683,649 6,862,500
145,000 Katy Industries Inc. ...... 1,312,250 1,885,000
13,000 Kyocera Corp., ADR......... 448,062 779,187
350,000 Lamson & Sessions Co.+..... 1,899,408 2,100,000
46,062 Myers Industries Inc. ..... 172,636 921,240
70,000 National Service Industries
Inc. ..................... 1,668,199 2,520,000
10,000 Pentair Inc. .............. 391,938 457,500
300,000 Tenneco Inc. .............. 9,036,756 7,162,500
40,600 Thermo Power Corp.+........ 473,674 473,244
125,000 Thomas Industries Inc. .... 1,397,900 2,562,500
15,000 TI Group plc............... 96,816 100,486
80,000 Trinity Industries Inc. ... 977,970 2,680,000
90,000 Tyco International Ltd. ... 4,707,225 8,527,500
------------ --------------
40,561,690 62,985,094
------------ --------------
ELECTRONICS--0.4%
15,000 Advanced Micro Devices
Inc. ..................... 284,813 270,938
3,000 Hitachi Ltd., ADR.......... 302,567 283,313
10,000 Imation Corp.+............. 203,344 248,125
900,000 Oak Technology Inc.+....... 3,335,082 3,262,500
10,000 Sony Corp., ADR............ 544,303 1,103,750
125,000 UCAR International Inc. ... 2,690,877 3,156,250
------------ --------------
7,360,986 8,324,876
------------ --------------
ENERGY AND UTILITIES--3.6%
70,000 AGL Resources Inc. ........ 1,295,519 1,290,625
100,000 Atlantic Richfield Co. .... 5,368,509 8,356,250
35,000 BP Amoco plc, ADR.......... 778,306 3,797,500
38,000 Brown (Tom) Inc. .......... 613,895 591,375
30,000 Chevron Corp. ............. 1,016,500 2,855,625
245,000 Citizens Utilities Co., Cl.
B......................... 2,314,159 2,725,625
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
153,000 Eastern Enterprises........ $ 4,306,015 $ 6,081,750
30,000 Energy East Corp. ......... 653,767 780,000
60,000 Enron Oil & Gas Co. ....... 548,976 1,215,000
115,000 Exxon Corp. ............... 3,419,492 8,869,375
9,100 Florida Public Utilities
Co. ...................... 149,505 171,763
25,000 Global Marine Inc. ........ 397,750 385,938
40,000 Halliburton Co. ........... 840,758 1,810,000
3,000 New England Electric
System.................... 151,963 150,375
150,000 Niagara Mohawk Power
Corp. .................... 2,109,625 2,409,375
45,600 Orange & Rockland Utilities
Inc. ..................... 2,651,880 2,664,750
395,000 PennzEnergy Co. ........... 7,981,649 6,591,563
107,500 Pennzoil-Quaker State
Co. ...................... 2,784,413 1,612,500
325,000 Southwest Gas Corp. ....... 5,939,311 9,303,125
55,000 Texaco Inc. ............... 1,741,375 3,437,500
5,000 TNP Enterprises Inc. ...... 184,875 181,250
50,000 Wicor Inc. ................ 1,408,740 1,396,875
------------ --------------
46,656,982 66,678,139
------------ --------------
ENTERTAINMENT--13.9%
230,000 Ascent Entertainment Group
Inc. ..................... 2,214,090 3,248,750
19,406 EMI Group plc.............. 75,408 155,697
100,000 EMI Group plc, ADR......... 1,246,297 1,700,000
19,000 Fisher Companies Inc. ..... 1,237,644 1,197,000
65,000 Florida Panthers Holdings
Inc.+..................... 544,500 694,688
38,000 Fox Entertainment Group
Inc. ..................... 842,438 1,023,625
150,000 GC Companies Inc.+......... 5,073,921 5,362,500
10,000 King World Productions
Inc.+..................... 315,125 348,125
2,330,000 Liberty Media Group, Cl.
A......................... 12,568,187 85,627,500
990,000 Time Warner Inc. .......... 13,966,249 72,765,000
11,000 Todd-AO Corp., Cl. A....... 30,000 121,000
900,000 USA Networks Inc.+......... 13,134,802 36,112,500
760,000 Viacom Inc., Cl. A+........ 10,966,175 33,535,000
350,000 Viacom Inc., Cl. B+........ 5,189,698 15,400,000
------------ --------------
67,404,534 257,291,385
------------ --------------
ENVIRONMENTAL SERVICES--0.0%
30,000 EnviroSource Inc. ......... 185,450 63,750
------------ --------------
EQUIPMENT AND SUPPLIES--8.7%
300,000 AMETEK Inc. ............... 3,455,782 6,900,000
97,000 Amphenol Corp., Cl. A+..... 2,556,825 3,855,750
5,000 Case Corp. ................ 245,354 240,625
75,000 Caterpillar Inc. .......... 996,998 4,500,000
110,000 CLARCOR Inc. .............. 1,490,481 2,110,625
250,000 CTS Corp. ................. 1,669,565 17,500,000
400,000 Deere & Co. ............... 6,349,732 15,850,000
224,000 Donaldson Co. Inc. ........ 1,422,221 5,488,000
10,000 Fedders Corp. ............. 59,939 66,875
122,000 Flowserve Corp. ........... 2,798,568 2,310,375
166,300 Gerber Scientific Inc. .... 1,754,645 3,668,994
40,000 Holophane Corp. ........... 1,526,600 1,525,000
310,000 Hussmann International
Inc. ..................... 3,035,130 5,134,375
465,000 IDEX Corp. ................ 4,158,713 15,286,875
10,000 Ingersoll-Rand Co. ........ 286,667 646,250
200,000 Kollmorgen Corp. .......... 1,861,980 3,000,000
88,000 Lufkin Industries Inc. .... 1,591,261 1,760,000
18,000 Manitowoc Co. Inc. ........ 131,305 749,250
248,000 Mark IV Industries Inc. ... 2,506,201 5,239,000
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
EQUIPMENT AND SUPPLIES (CONTINUED)
155,000 Materials Sciences
Corp.+.................... $ 1,360,552 $ 2,325,000
32,000 Met-Pro Corp. ............. 417,881 400,000
330,000 Navistar International
Corp.+.................... 4,208,966 16,500,000
20,000 PACCAR Inc. ............... 522,020 1,067,500
291,000 Pittway Corp. ............. 2,160,298 9,693,937
310,000 Pittway Corp., Cl. A....... 1,067,956 10,598,125
97,355 Sequa Corp., Cl. A+........ 4,394,277 6,814,850
96,000 Sequa Corp., Cl. B+........ 4,869,340 6,864,000
180,000 SPS Technologies Inc.+..... 3,000,975 6,750,000
30,000 Valmont Industries Inc. ... 242,908 510,937
150,000 Watts Industries Inc., Cl.
A......................... 2,085,582 2,878,125
120,000 Weir Group plc............. 504,947 503,139
------------ --------------
62,733,669 160,737,607
------------ --------------
FINANCIAL SERVICES--6.0%
1 Al-Zar Ltd.+(a)............ 0 350
3,500 Alleghany Corp.+........... 676,290 647,500
125,000 American Bankers Insurance
Group Inc. ............... 6,516,348 6,804,687
262,000 American Express Co. ...... 6,122,281 34,092,750
51,500 Argonaut Group Inc. ....... 1,462,206 1,236,000
220 Berkshire Hathaway Inc.+... 874,549 15,158,000
135,000 Block (H&R) Inc. .......... 4,684,627 6,750,000
85,000 Commerzbank AG, ADR........ 1,838,619 2,624,800
150,000 Deutsche Bank AG, ADR...... 6,596,875 9,225,000
172,000 Lehman Brothers Holdings
Inc. ..................... 3,102,575 10,707,000
10,000 Leucadia National Corp. ... 340,862 253,750
100,000 Mellon Bank Corp. ......... 3,432,807 3,637,500
31,834 Metris Companies Inc. ..... 438,360 1,297,236
249,700 Midland Co. ............... 2,637,516 6,336,138
2,000 MONY Group Inc. ........... 57,225 65,250
50,000 Paine Webber Group Inc. ... 1,351,388 2,337,500
31,000 Pioneer Group Inc. ........ 505,000 534,750
98,000 St. Paul Companies......... 3,463,865 3,117,625
43,000 State Street Corp. ........ 638,075 3,671,125
20,000 SunTrust Banks Inc. ....... 424,879 1,388,750
23,882 Transamerica Corp. ........ 583,636 1,791,150
8,000 Value Line Inc. ........... 115,500 312,000
10,400 Waddell & Reed Financial
Inc., Cl. A............... 203,751 285,350
------------ --------------
46,067,234 112,274,211
------------ --------------
FOOD AND BEVERAGE--6.5%
50,000 Bestfoods Inc. ............ 1,329,872 2,475,000
76,300 Brown-Forman Corp., Cl.
A......................... 2,574,752 4,549,387
60,000 Celestial Seasonings
Inc.+..................... 1,035,180 1,290,000
90,000 Chock Full o'Nuts Corp.+... 554,148 939,375
45,000 Coca-Cola Co. ............. 387,203 2,812,500
65,000 Corn Products International
Inc. ..................... 1,971,457 1,978,437
55,000 Diageo plc, ADR............ 2,502,395 2,365,000
4,500 Farmer Brothers Co. ....... 476,380 911,250
120,000 General Mills Inc. ........ 5,539,135 9,645,000
68,000 Heinz (H.J.) Co. .......... 2,807,063 3,408,500
55,000 Hershey Foods Corp. ....... 1,408,625 3,265,625
20,000 Keebler Foods Co.+......... 586,150 607,500
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
240,000 Kellogg Co. ............... $ 6,053,037 $ 7,920,000
33,000 LVHM Moet Hennessy Louis
Vuitton, ADR.............. 1,144,062 1,971,750
325,900 Pepsi Bottling Group
Inc. ..................... 7,030,353 7,516,069
410,000 PepsiCo Inc. .............. 13,030,375 15,861,875
230,000 Quaker Oats Co. ........... 8,185,168 15,266,250
50,000 Ralcorp Holdings Inc.+..... 595,439 803,125
245,000 Seagram Co. ............... 7,295,385 12,341,875
133,490 Tootsie Roll Industries
Inc. ..................... 2,074,904 5,156,051
724,000 Whitman Corp. ............. 8,996,568 13,032,000
73,000 Wrigley (Wm.) Jr. Co. ..... 3,395,106 6,570,000
------------ --------------
78,972,757 120,686,569
------------ --------------
HEALTH CARE--1.9%
24,000 Amgen Inc. ................ 220,320 1,461,000
36,000 Biogen Inc.+............... 270,450 2,315,250
40,000 Chiron Corp.+.............. 550,315 830,000
10,000 Glaxo Wellcome plc......... 549,120 566,250
100,000 IVAX Corp. ................ 884,612 1,412,500
65,000 Johnson & Johnson.......... 1,343,465 6,370,000
110,000 Merck & Co. Inc. .......... 1,853,500 8,140,000
92,000 Pfizer Inc. ............... 1,451,113 10,097,000
25,000 SmithKline Beecham plc..... 1,520,214 1,651,563
180,000 Women First Healthcare
Inc.+..................... 1,980,000 2,385,000
------------ --------------
10,623,109 35,228,563
------------ --------------
HOTELS AND GAMING--1.7%
330,000 Gaylord Entertainment Co.,
Cl. A..................... 8,831,510 9,900,000
20,000 GTECH Holdings Corp.+...... 376,688 471,250
12,000 Harrah's Entertainment
Inc.+..................... 113,002 264,000
550,000 Hilton Hotels Corp. ....... 6,957,689 7,803,125
315,000 Ladbroke Group plc......... 1,038,136 1,249,986
100,000 Mandalay Resort Group+..... 1,626,501 2,112,500
300,000 Mirage Resorts Inc.+....... 2,782,182 5,025,000
350,000 Park Place Entertainment
Corp.+.................... 1,782,701 3,390,625
30,000 Starwood Hotels & Resorts
Worldwide Inc. ........... 1,250,993 916,875
60,000 Trump Hotels & Casino
Resorts Inc.+............. 256,680 273,750
------------ --------------
25,016,082 31,407,111
------------ --------------
METALS AND MINING--0.2%
32,000 Barrick Gold Corp. ........ 658,176 620,000
100,000 Echo Bay Mines Ltd.+....... 754,551 143,750
45,000 Homestake Mining Co. ...... 650,187 368,438
65,000 Newmont Mining Corp. ...... 1,546,169 1,291,875
25,000 Placer Dome Inc. .......... 314,037 295,312
250,000 Royal Oak Mines Inc.+...... 654,847 10,000
200,000 TVX Gold Inc.+............. 246,538 200,000
------------ --------------
4,824,505 2,929,375
------------ --------------
PAPER AND FOREST PRODUCTS--0.7%
184,000 Grief Bros. Corp., Cl. A... 3,743,210 4,692,000
312,000 St. Joe Corp. ............. 3,601,269 8,424,000
------------ --------------
7,344,479 13,116,000
------------ --------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE> 13
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
PUBLISHING--3.5%
8,000 Central Newspapers Inc.,
Cl. A..................... $ 289,413 $ 301,000
40,000 Dow Jones & Co. Inc. ...... 1,894,578 2,122,500
45,000 Harcourt General Inc. ..... 2,107,250 2,320,313
53,600 McClatchy Newspapers Inc.,
Cl. A..................... 1,026,636 1,775,500
140,000 McGraw-Hill Companies
Inc. ..................... 2,390,331 7,551,250
405,000 Media General Inc., Cl.
A......................... 11,894,610 20,655,000
85,000 Meredith Corp. ............ 1,737,591 2,943,125
140,000 New York Times Co., Cl.
A......................... 1,148,435 5,153,750
15,000 News Corp. Ltd., ADR....... 255,587 529,688
400,000 Penton Media Inc. ......... 2,942,303 9,700,000
50,000 Pulitzer Inc. ............. 2,157,819 2,428,125
134,000 Reader's Digest Association
Inc., Cl. B............... 3,434,920 5,025,000
1,650,000 Seat-Pagine Gialle SpA..... 343,343 2,252,603
6,000 Scripps (E.W.) Co., Cl.
A......................... 108,669 285,375
110,000 Thomas Nelson Inc. ........ 1,450,884 1,223,750
------------ --------------
33,182,369 64,266,979
------------ --------------
REAL ESTATE--0.5%
400,000 Catellus Development
Corp.+.................... 3,986,376 6,200,000
48,000 Florida East Coast
Industries Inc. .......... 631,838 2,124,000
71,000 Griffin Land & Nurseries
Inc.+..................... 901,343 843,125
------------ --------------
5,519,557 9,167,125
------------ --------------
RETAIL--2.1%
41,000 Aaron Rents Inc. .......... 146,083 912,250
20,000 Aaron Rents Inc., Cl. A.... 83,263 360,000
400,000 AutoNation Inc.+........... 6,301,929 7,125,000
190,000 Burlington Coat Factory
Warehouse Corp. .......... 2,180,142 3,669,375
42,000 Coldwater Creek Inc.+...... 784,117 819,000
18,000 CVS Corp. ................. 870,713 913,500
200,000 Gerald Stevens Inc.+....... 2,400,000 2,400,000
140,000 Kroger Co.+................ 818,000 3,911,250
180,500 Lillian Vernon Corp. ...... 2,618,022 2,346,500
55,000 Midas Inc. ................ 506,078 1,560,625
580,000 Neiman Marcus Group
Inc.+..................... 8,189,793 14,898,750
202,500 Scheib (Earl) Inc.+........ 1,446,768 961,875
------------ --------------
26,344,908 39,878,125
------------ --------------
SATELLITE--0.5%
220,000 COMSAT Corp. .............. 4,385,037 7,150,000
100,000 Globalstar
Telecommunications
Ltd. ..................... 423,210 2,318,750
------------ --------------
4,808,247 9,468,750
------------ --------------
SHIPBUILDING--0.1%
40,000 Avondale Industries
Inc.+..................... 1,535,302 1,560,000
------------ --------------
SPECIALTY CHEMICALS--1.0%
50,000 Dexter Corp. .............. 1,523,261 2,040,625
10,000 du Pont de Nemours (E.I.)
and Co. .................. 594,500 683,125
425,000 Ferro Corp. ............... 6,673,837 11,687,500
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
105,000 General Chemical Group
Inc. ..................... $ 353,319 $ 328,125
29,500 Nalco Chemical Co. ........ 1,423,600 1,530,312
7,501 Rohm & Haas Co. ........... 350,662 321,597
95,000 Sybron Chemicals Inc. ..... 2,038,204 1,686,250
------------ --------------
12,957,383 18,277,534
------------ --------------
TELECOMMUNICATIONS--9.3%
120,000 Aliant Communications
Inc. ..................... 1,876,781 5,542,500
5,000 Allegiance Telecom Inc. ... 74,063 274,375
22,000 Alltel Corp. .............. 850,292 1,573,000
544,000 AT&T Corp. ................ 9,474,635 30,362,000
215,000 BCE Inc. .................. 3,915,772 10,602,187
37,500 BCT.Telus Communications
Inc. ..................... 658,391 900,916
22,500 BCT.Telus Communications
Inc., ADR................. 402,989 540,550
12,500 BCT Telus Communications
Inc., Cl. A............... 219,464 295,640
7,500 BCT Telus Communications
Inc., Cl. A, ADR.......... 134,330 177,384
35,000 BellSouth Corp. ........... 442,081 1,640,625
200,000 Cable & Wireless plc,
ADR....................... 5,784,625 7,925,000
545,000 CenturyTel Inc. ........... 6,259,566 21,663,750
325,665 Commonwealth Telephone
Enterprises Inc.+......... 5,594,615 13,169,078
31,500 Commonwealth Telephone
Enterprises Inc., Cl.
B+........................ 214,105 1,283,625
60,000 Embratel Participacoes
SA+....................... 1,263,631 832,500
155,000 GTE Corp. ................. 3,595,431 11,741,250
32,000 Hong Kong
Telecommunications Ltd.,
ADR....................... 502,292 862,000
377,500 RCN Corp. ................. 2,676,634 15,713,438
10,000 Rogers Communications Inc.,
Cl. B+.................... 77,553 160,502
440,000 Rogers Communications Inc.,
Cl. B, ADR+............... 4,288,727 7,122,500
45,000 SBC Communications Inc. ... 1,136,240 2,610,000
185,000 Sprint Corp. .............. 1,581,431 9,770,312
13,500 Tele Centro Sul
Participacoes SA+......... 784,466 749,250
500,000 Telecom Italia SpA......... 1,046,696 5,192,964
120,000 Telecom Italia SpA, ADR.... 2,671,351 12,622,500
67,500 Telecomunicacoes
Brasileiras
SA, ADR................... 5,188 4,219
15,300 Telefonica de Espana,
ADR....................... 586,566 2,251,013
10,000 Telefonos de Mexico SA,
Cl. L, ADR................ 281,828 808,125
67,500 Tele Norte Leste
Participacoes SA+......... 1,032,465 1,252,969
67,500 Telesp Participacoes SA.... 2,531,873 1,544,062
50,000 US West Inc. .............. 2,681,510 2,937,500
------------ --------------
62,645,591 172,125,734
------------ --------------
TRANSPORTATION--0.4%
115,000 AMR Corp.+................. 3,509,135 7,848,750
8,000 Kansas City Southern
Industries Inc. .......... 253,715 510,500
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 14
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
<C> <S> <C> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION (CONTINUED)
2,000 Providence & Worcester
Railroad Co. ............. $ 29,069 $ 28,250
------------ --------------
3,791,919 8,387,500
------------ --------------
WIRELESS COMMUNICATIONS--4.6%
85,000 Associated Group Inc., Cl.
A+........................ 1,677,738 5,535,625
40,000 Associated Group Inc., Cl.
B+........................ 233,406 2,607,500
4,000 Leap Wireless International
Inc.+ .................... 48,455 81,000
55,000 NEXTEL Communications Inc.,
Cl. A+.................... 660,330 2,760,313
50,000 Omnipoint Corp.+........... 699,096 1,446,875
75,000 Rogers Cantel Mobile
Communications Inc.+...... 926,425 1,232,812
45,000 Sprint Corp. (PCS Group)... 197,463 2,570,625
6,750 Tele Celular Sul
Participacoes SA.......... 107,916 146,391
22,500 Tele Centro Oeste Celular
Participacoes SA.......... 67,447 88,594
1,800,000 Telecom Italia Mobile
SpA....................... 1,661,796 10,738,308
1,350 Tele Leste Celular
Participacoes SA.......... 36,110 40,162
3,375 Telemig Celular
Participacoes SA+......... 97,539 83,109
3,375 Tele Nordeste Celular
Participacoes SA.......... 49,807 91,125
1,350 Tele Norte Celular
Participacoes SA+......... 20,857 36,534
750,000 Telephone & Data Systems
Inc. ..................... 27,424,011 54,796,875
27,000 Telesp Celular
Participacoes SA+......... 863,327 722,250
13,500 Tele Sudeste Celular
Participacoes SA+......... 427,513 391,500
10,000 Vodafone AirTouch plc,
ADR....................... 1,970,000 1,970,000
------------ --------------
37,169,236 85,339,598
------------ --------------
TOTAL COMMON STOCKS........ 796,996,476 1,684,396,420
------------ --------------
PREFERRED STOCKS--0.2%
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc.,
7.00% Conv. Pfd. ......... 213,000 187,500
------------ --------------
SATELLITE--0.0%
20,000 Loral Space &
Communications Ltd.+...... 367,476 360,000
------------ --------------
TELECOMMUNICATIONS--0.2%
35,000 Sprint Corp., 8.25% Conv.
Pfd. ..................... 1,295,406 3,045,000
1,588,267 Telecomunicacoes de Sao
Paulo SA (Telesp),
Preference
Shares.................... 152,310 188,385
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES COST VALUE
------ ---- ------
1,588,267 Telecomunicacoes de Sao
Paulo SA (Telesp),
Preference Shares, Cl.
B......................... $ 60,929 $ 79,032
------------ --------------
1,508,645 3,312,417
------------ --------------
TOTAL PREFERRED STOCKS..... 2,089,121 3,859,917
------------ --------------
PRINCIPAL
AMOUNT
------------
<C> <S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS--7.6%
$142,652,000 U.S. Treasury Bills,
4.54% to 4.78%++,
due 08/19/99 to
10/07/99.................. 141,090,304 141,080,552
------------ --------------
TOTAL INVESTMENTS--98.6%... $940,175,901 1,829,336,889
============
OTHER ASSETS AND LIABILITIES
(NET)--1.4%............................. 25,651,403
--------------
NET ASSETS--100.0% (44,830,679 shares
outstanding)............................ $1,854,988,292
==============
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE......................... $41.38
----
----
For Federal tax purposes:
Aggregate Cost........................... $ 940,175,901
==============
Gross unrealized appreciation............ $ 907,726,126
Gross unrealized depreciation............ (18,565,138)
--------------
Net unrealized appreciation.............. $ 889,160,988
==============
FORWARD FOREIGN EXCHANGE CONTRACTS
SETTLEMENT NET UNREALIZED
DATE APPRECIATION
------------ --------------
19,646,294(b) Deliver Hong Kong Dollars
in exchange for USD
$2,529,418 08/24/99.... $ 2,582
==============
</TABLE>
- ------------------------------
(a) Security fair valued as determined by the Board of Trustees.
(b) Principal amount denoted in Hong Kong Dollars.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
ADR--American Depositary Receipt.
GDR--Global Depositary Receipt.
USD--U.S. Dollars.
See accompanying notes to financial statements.
14
<PAGE> 15
THE GABELLI ASSET FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
- ----------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value
(Cost $940,175,901)................... $1,829,336,889
Cash and foreign currency, at value
(Cost $3,935,829)..................... 4,045,045
Dividends and interest receivable....... 1,358,512
Receivable for investments sold......... 36,958,473
Receivable for Fund shares sold......... 4,613,427
Net unrealized appreciation on forward
foreign exchange contracts............ 2,582
Other assets............................ 86,318
--------------
TOTAL ASSETS............................ 1,876,401,246
--------------
LIABILITIES:
Payable for investments purchased....... 19,536,217
Payable for Fund shares redeemed........ 2,841
Payable for investment advisory fees.... 1,440,425
Payable for distribution fees........... 360,106
Payable for shareholder services fees... 73,365
--------------
TOTAL LIABILITIES....................... 21,412,954
--------------
NET ASSETS applicable to
44,830,679 shares outstanding......... $1,854,988,292
==============
NET ASSETS CONSIST OF:
Shares of beneficial interest, at par
value................................. $ 448,307
Additional paid-in capital.............. 843,184,722
Accumulated net investment loss......... (519,132)
Accumulated net realized gain on
investments and foreign currency
transactions.......................... 122,601,609
Net unrealized appreciation on
investments and foreign currency
transactions.......................... 889,272,786
--------------
TOTAL NET ASSETS........................ $1,854,988,292
==============
NET ASSET VALUE, offering and redemption
price per share ($1,854,988,292 / 44,830,679
shares outstanding; unlimited number
of shares authorized of $0.01 par
value)................................ $41.38
------
------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
- ----------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign taxes of
$68,476)................................ $ 9,235,138
Interest.................................. 1,517,985
------------
TOTAL INVESTMENT INCOME................... 10,753,123
------------
EXPENSES:
Investment advisory fees.................. 8,342,324
Distribution fees......................... 2,085,581
Shareholder services fees................. 419,583
Custodian fees............................ 128,668
Shareholder communications expenses....... 111,602
Legal and audit fees...................... 37,738
Trustees' fees............................ 22,757
Miscellaneous expenses.................... 124,002
------------
TOTAL EXPENSES............................ 11,272,255
------------
NET INVESTMENT LOSS....................... (519,132)
------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS:
Net realized gain on investments and
foreign currency transactions........... 123,539,623
Net change in unrealized appreciation
on investments and foreign currency
transactions............................ 139,635,473
------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS............................ 263,175,096
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS......................... $262,655,964
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
---------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income/(loss)............................ $ (519,132) $ 882,548
Net realized gain on investments and foreign currency
transactions........................................... 123,539,623 59,477,782
Net change in unrealized appreciation on investments and
foreign currency transactions......................... 139,635,473 164,961,752
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... 262,655,964 225,322,082
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income................................... -- (689,228)
Net realized gain on investments........................ -- (59,477,782)
In excess of net realized gain on investments........... -- (92,619)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..................... -- (60,259,629)
-------------- --------------
SHARE TRANSACTIONS:
Net increase in net assets from shares of beneficial
interest transactions.................................. 16,356,423 75,861,674
-------------- --------------
NET INCREASE IN NET ASSETS.............................. 279,012,387 240,924,127
NET ASSETS:
Beginning of period..................................... 1,575,975,905 1,335,051,778
-------------- --------------
End of period........................................... $1,854,988,292 $1,575,975,905
============== ==============
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 16
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION. 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"). The Fund's primary objective is growth of
capital. The Fund commenced investment operations on March 3, 1986.
2. SIGNIFICANT ACCOUNTING POLICIES. 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 listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. 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 Gabelli Funds, LLC
(the successor to Gabelli Funds, Inc. as investment adviser) (the "Adviser").
Securities and assets for which market quotations are not readily available are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Board of Trustees. Short
term debt securities with remaining maturities of 60 days or less are valued at
amortized cost, unless the Trustees determine such does not reflect the
securities' fair value, in which case these securities will be valued at their
fair value as determined by the Trustees. Short term 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 and foreign
currency transactions. 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.
16
<PAGE> 17
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. 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 at the exchange rate prevailing
on the respective dates of such transactions. Unrealized gains and losses, which
result from changes in foreign exchange rates and/or changes in market prices of
securities, have been included in unrealized appreciation/depreciation on
investments and foreign currency transactions. 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.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using 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.
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.
Dividends and interest from non-U.S. sources received by the Fund are generally
subject to non-U.S. withholding taxes at rates ranging up to 30%. Such
withholding taxes may be reduced or eliminated under the terms of applicable
U.S. income tax treaties, and the Fund intends to undertake any procedural steps
required to claim the benefits of such treaties.
3. INVESTMENT ADVISORY AGREEMENT. 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% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Trustees of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. The Fund's Board of Trustees has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 1999, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $2,085,581 or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
17
<PAGE> 18
THE GABELLI ASSET FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
- --------------------------------------------------------------------------------
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months
ended June 30, 1999, other than short term securities, aggregated $247,048,413
and $344,986,583, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 1999, the
Fund paid brokerage commissions of $312,496 to Gabelli & Company, Inc. and its
affiliates.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. There were no borrowings against the line of credit during
the six months ended June 30, 1999.
8. SHARES OF BENEFICIAL INTEREST. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ---------------- ------------ ----------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 44,913,314 $ 1,719,536,017 50,493,058 $ 1,716,293,181
Shares issued upon reinvestment of dividends......... -- -- 1,648,815 57,057,140
Shares redeemed...................................... (44,511,844) (1,703,179,594) (49,630,901) (1,697,488,647)
----------- --------------- ----------- ---------------
Net increase..................................... 401,470 $ 16,356,423 2,510,972 $ 75,861,674
=========== =============== =========== ===============
</TABLE>
9. NEW SHARE CLASSES. On March 9, 1999, the Board of Trustees of the Fund
approved (subject to shareholder approval of Amendments to the Fund's
Declaration of Trust to permit the Fund to offer additional classes of shares) a
Rule 18f-3 Multi-Class Plan relating to the creation of three additional classes
of shares of the Fund - Class A Shares, Class B Shares and Class C Shares (the
"New Share Classes"). The existing class of shares was redesignated as Class AAA
Shares. In addition, the Board has also approved an Amended and Restated
Distribution Agreement, Rule 12b-1 plans for each of the New Share Classes and
an Amended and Restated Plan of Distribution for the existing class of shares
(Class AAA Shares) to be effective upon the commencement of the offering of the
New Share Classes. Currently, shareholder approval is pending.
18
<PAGE> 19
THE GABELLI ASSET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each
period:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 --------------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value,
beginning of period....... $ 35.47 $ 31.85 $ 26.42 $ 25.75 $ 22.21 $ 23.30
---------- ---------- ---------- ---------- ---------- --------
Net investment
income/(loss)............. (0.01) 0.02 0.07 0.15 0.26 0.26
Net realized and unrealized
gain/(loss) on
investments............... 5.92 5.02 9.97 3.29 5.28 (0.30)
---------- ---------- ---------- ---------- ---------- --------
TOTAL FROM INVESTMENT
OPERATIONS................ 5.91 5.04 10.04 3.44 5.54 (0.04)
---------- ---------- ---------- ---------- ---------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income....... -- (0.02) (0.07) (0.15) (0.25) (0.25)
In excess of net investment
income.................... -- -- (0.00)(a) -- -- (0.01)
Net realized gain on
investments............... -- (1.40) (4.54) (2.61) (1.75) (0.76)
In excess of net realized
gain on investments....... -- (0.00)(a) (0.00)(a) (0.01) (0.00)(a) (0.03)
---------- ---------- ---------- ---------- ---------- --------
TOTAL DISTRIBUTIONS......... -- (1.42) (4.61) (2.77) (2.00) (1.05)
---------- ---------- ---------- ---------- ---------- --------
NET ASSET VALUE,
END OF PERIOD............. $ 41.38 $ 35.47 $ 31.85 $ 26.42 $ 25.75 $ 22.21
========== ========== ========== ========== ========== ========
TOTAL RETURN+............... 16.7% 15.9% 38.1% 13.4% 24.9% (0.1)%
========== ========== ========== ========== ========== ========
RATIOS TO AVERAGE NET ASSETS
AND SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's)................ $1,854,988 $1,575,976 $1,335,052 $1,080,639 $1,091,539 $982,250
Ratio of net investment
income to average net
assets.................... (0.06)%(b) 0.06% 0.22% 0.52% 0.95% 1.10%
Ratio of operating expenses
to average net assets..... 1.35%(b) 1.36% 1.38% 1.34% 1.33% 1.28%
Portfolio turnover rate..... 15% 21% 22% 15% 26% 19%
</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. Total return for the period of less
than one year is not annualized.
(a) Amount represents less than $0.005 per share.
(b) Annualized.
See accompanying notes to financial statements.
19
<PAGE> 20
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>
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Asset Management
Inc.
Felix J. Christiana Anthony R. Pustorino
Former Senior Vice President Certified Public
Accountant
Dollar Dry Dock Savings Bank Professor, Pace
University
Anthony J. Colavita Anthonie C. van Ekris
Attorney-at-Law Managing Director
Anthony J. Colavita, P.C. BALMAC International,
Inc.
James P. Conn Salvatore J. Zizza
Former Chief Investment Chairman
Officer
Financial Security Assurance The Bethlehem Corp.
Holdings Ltd.
John D. Gabelli
Senior Vice President
Gabelli & Company, Inc.
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 information of the shareholders
of The Gabelli Asset Fund. It is not
authorized for distribution to
prospective investors unless preceded
or accompanied by an effective
prospectus.
- ---------------------------------------
GAB405Q299SR
[GABELLI PHOTO]
THE
GABELLI
ASSET
FUND
SEMI-ANNUAL REPORT
JUNE 30, 1999
