<PAGE> 1
THE GABELLI ASSET FUND
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
[FIVESTARS]
Morningstar Rated(TM) Gabelli Asset Fund 5 stars for the
three-year period ended 9/30/99 among 3210 domestic equity
funds, and 4 stars overall and for the five and ten-year
periods ended 9/30/99 among 3210, 2010 and 751 domestic
equity funds, respectively.
TO OUR SHAREHOLDERS,
Through most of the third quarter of 1999, stocks were slowly sinking under
the weight of a declining bond market, a tumbling dollar, and the prospect of
more aggressive Federal Reserve monetary policy tightening. Technology
stocks--the last bastion of strength in an otherwise weak market--finally
cracked in the last two weeks of the quarter, sending virtually all market
indices sharply lower.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 1999, The Gabelli Asset Fund's
(the "Fund") net asset value declined 4.49%. The Standard & Poor's ("S&P") 500,
Value Line Composite and Russell 2000 Indices declined 6.24%, 8.18% and 6.32%,
respectively, over the same period. Each index is an unmanaged indicator of
stock market performance. The Fund was up 31.69% over the trailing twelve-month
period. The S&P 500, Value Line Composite and Russell 2000 Indices rose 27.79%,
22.44% and 19.07%, respectively, over the same twelve-month period.
For the ten-year period ended September 30, 1999, the Fund's total return
averaged 14.65% annually versus average annual total returns of 16.80%, 12.26%
and 10.93% for the S&P 500, Value Line Composite and Russell 2000 Indices,
respectively. Since inception on March 3, 1986 through September 30, 1999, the
Fund had a cumulative total return of 759.78%, which equates to an average
annual total return of 17.15%.
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of September 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.
<PAGE> 2
Average Annual Returns - September 30, 1999 (a)
----------------------------------------------------
1 Year....................................................................31.69%
5 Year....................................................................20.06%
10 Year...................................................................14.65%
Life of Fund (b)..........................................................17.15%
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
Quarter
------------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C> <C>
1999: Net Asset Value................ $37.18 $41.38 $39.52 -- --
Total Return................... 4.8% 11.3% (4.5)% -- --
- -----------------------------------------------------------------------------------------------
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
[PYRAMID LOGO]
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
seen us through both good and bad markets over the
last 13 years at The Gabelli Asset Fund and for over
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.
COMMENTARY
TOO MUCH OF A GOOD THING?
In the third quarter of 1999, the U.S. economy continued to barrel along at
a pace that investors feared would lead to higher inflation. Paced by the long
anticipated recovery in Japan, Asian economies are perking up. Coupled with
prospects that European economies are gaining momentum, this has spawned concern
that synchronized global growth would further increase inflationary pressure
here at
3
<PAGE> 4
home. All of this positive global economic news was simply too much of a good
thing for the U.S. bond market, which continued to slide.
Long term, synchronized global growth is a blessing--we should all be
thinking in terms of Gross World Product ("GWP") rather than Gross Domestic
Product ("GDP"). However, in the short term it may put additional pressure on
the Fed to press down on the monetary brakes. Investors should view this as a
dose of cod liver oil--bitter medicine, but a tonic that will improve the long
term health of the economy and the stock market. Unfortunately, "Mr. Market"
often does not like to take his medicine and additional Fed interest rate hikes
and higher bond yields are not likely to improve his mood. So, even though third
quarter corporate earnings are likely to be quite strong, price/earnings ("P/E")
multiples (a function of investor psychology and interest rates) may continue to
contract, sending stocks even lower. The good news in this scenario would be the
return of Ben Graham's "margin of safety" to the market.
If the domestic economy begins to decelerate in the fourth quarter and the
Fed declares a monetary cease-fire, "Mr. Market" may be in a better mood.
Although P/E multiples are not likely to expand, they may stabilize, allowing
earnings to rally stocks. However, with equity valuations still at relatively
lofty levels, advances will engender additional speculative risks.
THE DOLLAR IN LIMBO--HOW LOW CAN IT GO?
As we write, the dollar has hit a four-year low against the yen. This is
another good news/bad news situation. A cheaper dollar benefits U.S. exporters
and ultimately would help reduce trade deficits, which have been running at
extraordinarily high levels. It also bolsters dollar denominated earnings from
the international operations of U.S. companies. However, over the short term, it
actually increases dollar calculated trade deficits. Perhaps most importantly, a
lower dollar is potentially inflationary, because the prices of imported
products that U.S. consumers treasure will move higher. If the American consumer
is willing to pay these higher prices for Toyota cars and trucks, Sony big
screen televisions, and Sega video games, it will soon be reflected in the
Consumer Price Index ("CPI"). This leads us to another important question...
WILL FATIGUE HIT THE AMERICAN CONSUMER?
High employment and the "wealth effect" of a rising housing and stock
market have buoyed consumer confidence. Discretionary income has risen as a
result of depressed energy prices, low mortgage rates, and rising wages. If the
domestic economy does slow down, consumers may become more concerned about job
security. When investors receive third quarter statements from their brokers,
money managers and mutual funds, they will realize that their net worth has been
trimmed. Americans are paying more at the pump for gasoline and their home
heating bills will be significantly higher this winter. Variable rate mortgage
payments will increase and new fixed rate mortgages are higher. So, consumers
will not be able to raise spending money by leveraging real estate assets--no
more "take the home mortgage from $100,000 to $150,000 with the same monthly
payments and pocket the difference". As aforementioned, the prices for imported
goods are increasing. Will all this be enough to cause the
4
<PAGE> 5
American consumer to tighten the purse strings? Or, will a significant tax
cut--the Republicans are running on the "3 Fs" (Faith, Finances, and
Family)--embolden the American consumer and keep the economic wheels moving here
and abroad?
DEALS, DEALS, DEALS--A VALUE INVESTORS' BEST FRIEND
We have discussed some of the issues likely to impact the economy and the
stock market over the short term. Being investors, not clairvoyants, we have not
come to any rock solid conclusions. One thing we are much more certain about
that is ongoing, and perhaps accelerating, is global consolidation. As economic
borders continue to be eliminated and regulatory barriers fall, bigger is
better. Companies that can extend their franchises and lower their costs will be
the ultimate winners in the global economic village.
Contrary to popular opinion, the future elimination of pooling of interest
accounting in mergers is not going to slow what we have coined "The Third Great
Wave of Takeovers". In fact, it will accelerate the process over the next year
as deals get done ahead of the accounting rules change. Beyond 2001, different
accounting rules will be no match for the powerful economic forces that are
driving global consolidation. Wall Street will learn to value companies based on
free cash flow--earnings before interest, taxes, depreciation, and amortization
(or EBITDA), minus capital expenditures. This method is already the valuation
standard for several of the industries we have followed for years, including
broadcasting and cable television. Free cash flow is what any savvy business
buyer looks at when evaluating an acquisition in any industry. As more deals get
done in a wider range of industries, corporate managements will wean Wall Street
analysts and investors from net earnings oriented valuations (price/earnings
ratios) and lead them to understand that free cash flow is the best barometer of
the value of a business.
THIS QUARTER'S SCORECARD
Wireless stocks performed well this quarter as several deals in the
industry helped surface value. Omnipoint, Nextel, and Vodafone AirTouch made it
to the first page of our performance list. The Federal Communications
Commission's ("FCC") decision to allow broadcasters to own two television
stations in the same market focused investor attention on small group
broadcasters such as Chris-Craft, Granite Broadcasting, and Young Broadcasting,
all of which delivered attractive returns. Gold stocks Barrick Gold, Echo Bay
Mines, Homestake Mining, Newmont Mining, and Placer Dome glittered this quarter
as gold prices moved higher. Gaming industry holdings Park Place Entertainment,
Harrah's, and Aztar also came up winners.
In general, cyclical companies struggled as investors feared that
additional Fed tightening would take the starch out of the economy. Portfolio
disappointments included auto parts manufacturers Modine, Federal-Mogul, and
Borg-Warner, and aerospace component companies BE Aerospace, Crane, Curtiss-
Wright, Fairchild, GenCorp, and Precision Castparts. Based on valuations
relative to earnings power through the economic cycle, we believe these
cyclicals as well as other companies in the portfolio are outstanding values.
5
<PAGE> 6
VIACOM AND CBS--DAN RATHER, MEET THE RUGRATS
We are not likely to see cartoon characters on the CBS Evening News, but
there is a great deal of synergy in the new Viacom/CBS. The combined company
joins Time Warner, News Corp., and Disney in the pantheon of fully integrated
media companies. They have content--Paramount Pictures, CBS' programming assets,
and Simon & Schuster publishing--and distribution--the CBS Television Network,
CBS Radio, Viacom's thriving cable networks (MTV, VH-1, and Nickelodeon), and
CBS' huge outdoor advertising (billboard) business. Any advertiser looking to
reach any demographic consumer segment will not have to go anywhere else. This
"one stop shopping" feature for advertisers, the complete vertical integration
of the company, and the ability to cross-market its own products should enhance
revenues and drive down costs. In addition, CBS' Mel Karmazin is a worthy heir
apparent to Viacom's energetic Chairman Sumner Redstone, thus diluting Wall
Street's concern regarding the management succession question at Viacom. Both
CBS' and Viacom's stock prices moved higher on the announcement of the merger,
an indication that Wall Street understands that one plus one equals more than
two in this combined company.
BROADCAST NEWS
The FCC's August 1999 decision to allow duopolies--ownership of two
television stations in the same market--should accelerate consolidation in the
broadcast industry. Any broadcaster with a station in the top fifty markets will
likely be entertaining overtures from the likes of NBC (owned by General
Electric), ABC (owned by Disney), the new CBS/Viacom, and larger independent
broadcasters, such as Tribune. NBC has already purchased a 32% position in
Paxson Communications. We expect to see portfolio holdings such as Young
Broadcasting, United Television, Granite Broadcasting, and Chris-Craft
Industries receive a lot of attention in the months ahead.
WIRELESS WORKS
About one year ago, AT&T began to set a new standard for the wireless
communications industry. By piecing together a nearly seamless national network,
eliminating roaming charges, and lowering prices to 20 cents per minute for
calls to anywhere in the U.S., AT&T has forced other wireless providers to
follow suit. The push is on for low cost national and even global wireless
services. Prices throughout the industry are dropping and usage is increasing.
New programs such as "calling party pays" and prepaid plans are also making
wireless services more attractive. Finally, laptop computer sales continue to
rise, and more data is moving over wireless systems. This further fuels demand
for wireless spectrum and enhances the value of wireless assets.
Toward the end of this quarter, we celebrated a blessed event. Telephone &
Data Systems, one of our larger holdings, sold its personal communications
services ("PCS") business Aerial Communications to VoiceStream Wireless.
Although we like the investment prospects for PCS, TDS obtained a premium price
for this business, and in the process of eliminating an asset that demanded
considerable capital expenditures, improved its net earnings outlook. TDS stock
made a move upward in the midst of the
6
<PAGE> 7
market declines during the last two weeks of September. In addition, this
transaction should help to surface value in our other wireless communications
holdings.
GAS, ELECTRIC AND WATER . . .
Deregulation and impending competition in the electric and gas utilities
industry has spawned a wave of consolidation. Cost cutting is a must and the
single quickest way to cut costs is by merging with other utility companies,
realizing economies of scale, saving money on plant and equipment, and
eliminating duplicate corporate functions. Due to high costs and increasing
concern over water quality, water companies have also become takeover targets.
We have seen twenty-one transactions in the utilities industry from June 1 to
September 30. This is not just a domestic phenomenon. Two large British
utilities acquired American electric/gas utilities and the French, who brought
us Perrier and Evian bottled water, are buying municipal water facilities in
America.
The "bigger is better" argument makes sense for utilities. Many electric
utilities own, or are anxious to acquire, gas companies in order to be full
service energy providers. Buying a gas company that overlaps the electric
utility's service territory is particularly attractive to the electric companies
because even more costs can be cut.
Our conclusion is that the once dull utility stocks are becoming much more
exciting. Our strategy is to own shares in fundamentally sound, reasonably
valued mid-cap and small cap utilities and then wait for the buyers to come
calling. Current utility holdings include Eastern Enterprises, Florida Public
Utilities, Niagara Mohawk, and United Water Resources. We will most likely be
adding more utility names to the portfolio in the quarters ahead.
LET'S TALK STOCKS
The following are stock specifics on selected holdings of our Fund.
Favorable earnings prospects do not necessarily translate into higher stock
prices, but they do express a positive trend which we believe will develop over
time.
American Express Co. (AXP - $134.625 - NYSE) and its subsidiaries provide
travel-related services, financial advisory services and international banking
services worldwide. Founded in 1850, the company operates in 160 countries
around the world. Best known for its "green" charge card and its travel-related
services, including travelers checks, American Express also offers financial
planning, brokerage services, mutual funds, insurance and other investment
products. Harvey Golub, Chairman and CEO, has focused AXP on its core charge
card and investment management businesses. The company is expanding the
competitive reach of its credit card operations, which should benefit if the
U.S. Department of Justice prevails in its antitrust suit against the Visa and
MasterCard associations.
Chris-Craft Industries Inc. (CCN - $56.125 - NYSE), through its 80% ownership of
BHC Communications (BHC - $139.50 - AMEX), is primarily a television
broadcaster. BHC owns and operates UPN affiliated stations in New York (WWOR),
Los Angeles (KCOP) and Portland, Oregon (KPTV). BHC also owns
7
<PAGE> 8
59% of United Television (UTVI - $112.75 - Nasdaq), which operates an NBC
affiliate, an ABC affiliate and five UPN affiliates. United Television recently
completed the purchase of WHSW in Baltimore for $80 million. The station's call
letters were changed to WUTB and the station became a UPN affiliate. UTVI also
acquired WRBW, a UPN affiliate in Orlando, for $60 million in July 1998.
Chris-Craft's television stations constitute one of the nation's largest
television station groups, reaching approximately 22% of U.S. households.
Chris-Craft is a major beneficiary of the recent FCC ruling allowing television
duopoly, or ownership of two stations in a market. The Chris-Craft complex is
debt free and strongly positioned to expand its operations, with roughly $1.5
billion in cash and marketable securities.
Ferro Corp. (FOE - $21.3125 - NYSE), based in Cleveland, is a global specialty
chemical manufacturer. The company is a leading producer of frits, powder
coatings, polymer additives and plastic compounds. New CEO Hector Ortino is
positioning Ferro to be a premier specialty chemical provider by focusing on
profitable growth and shareholder value. The company's new strategy of using
mature, cash generating businesses in the portfolio to finance investments in
"springboard" businesses should help to accelerate earnings per share growth.
MediaOne Group Inc. (UMG - $68.3125 - 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. UMG'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 provider recently agreed to be acquired by
AT&T Corp. (T - $43.50 - NYSE) for $54 billion.
USA Networks Inc. (USAI - $38.75 - Nasdaq), through its subsidiaries, engages in
diversified media and electronic commerce businesses that include: electronic
retailing, ticketing operations and television broadcasting. Chairman and CEO
Barry Diller has brought together under one umbrella: the USA Network, the
Sci-Fi Channel, USA Networks Studios, USA Broadcasting, The Home Shopping
Network and the Ticketmaster Group. The plan is to integrate these assets,
leveraging programming, production capabilities and electronic commerce across
this strong distribution platform.
Viacom Inc. (VIA'A - $43.25 - AMEX; VIA'B - $42.25 - AMEX), long a major
provider of entertainment "content", has evolved into one of the world's
dominant media companies. The additions of Paramount Communications, Blockbuster
Entertainment (acquired in 1994), and publisher Simon & Schuster make Viacom one
of the largest entertainment and publishing companies. Non-core assets are being
divested and debt has been reduced to approximately $8 billion. Viacom is
focusing on global expansion of its media franchises. Viacom is particularly
well-positioned in music (notably MTV) and cable networks (such as Nickelodeon).
8
<PAGE> 9
Watts Industries Inc. (WTS - $21.75 - NYSE), based in North Andover,
Massachusetts, makes valves for the plumbing, heating and water quality,
industrial, steam, oil and gas markets. In December 1998, the company announced
plans to spin off its Circor International industrial oil and gas unit to
shareholders. The spin-off was completed on October 6, 1999. Watts shareholders
received one Circor share valued at $10.625 per share for every two Watts
shares. Accordingly, the price of Watts was reduced by $5.3125 per share to
reflect the spin-off. Watts will now focus on its existing plumbing and heating
and water quality businesses.
Wynn's International Inc. (WN - $15.9375 - NYSE), founded in 1939, is a
worldwide supplier of quality automotive and industrial components and specialty
chemical products. The Automotive and Industrial Components Division includes
Wynn's-Precision, a leader in sealing products and technology serving more than
1,000 customers in 14 industrial markets around the world, and Robert Skeels &
Company, a regional wholesale distributor of builders' hardware products. The
Specialty Chemicals Division is comprised of Wynn Oil Company and its
subsidiaries, a worldwide manufacturer and marketer of specialty chemicals,
equipment and related programs for automotive and industrial markets in over 100
countries. Wynn's has agreed to acquire Goshen Rubber Cos., a maker of O-rings,
tetraseals, gaskets and other rubber, plastic and urethane products, for
approximately $85 million.
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.
SHAREHOLDER MEETING
We are pleased to report that the shareholders of the Gabelli Asset Fund
overwhelmingly approved the proposal to create additional classes of shares for
the Fund. The creation of new classes of shares provides the Fund with
distribution alternatives that address the needs of various types of investors.
The offering of new classes of shares should also enhance the potential for the
Fund to attract additional investors in a manner that could provide added
benefits for all shareholders of the Fund. The existing class of shares have
been redesignated as Class AAA shares. The offering of new classes of shares
will not diminish the ability of current shareholders to purchase and redeem
shares at net asset value.
9
<PAGE> 10
IN CONCLUSION
The short term outlook for the market is, as always, uncertain. Investor
psychology seems to have reversed itself. Last year, investors shrugged off bad
news--anemic earnings, international economic turmoil, and big losses from
highly leveraged hedge funds. This year, good news--a strong U.S. economy, solid
earnings, and the prospect for synchronized global growth--has investors
worried. "Mr. Market" will eventually sort all of this out. In the interim, we
will continue to focus on strong companies trading at discounted prices. In his
currently glum mood, "Mr. Market" may remain ambivalent to value. This should
only increase the appetite of business buyers aggressively seeking 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,
[MARIO J. GABELLI SIGNATURE]
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
October 25, 1999
TOP TEN HOLDINGS
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Liberty Media Group MediaOne Group Inc.
Telephone & Data Systems Inc. USA Networks Inc.
Time Warner Inc. Chris-Craft Industries Inc.
Cablevision Systems Corp. United Television Inc.
Viacom Inc. American Express Co.
</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.
10
<PAGE> 11
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS--93.1%
AEROSPACE--0.6%
115,000 Boeing Co. ....................... $ 4,901,875
80,000 Northrop Grumman Corp. ........... 5,085,000
--------------
9,986,875
--------------
AGRICULTURE--0.4%
20,000 Agribrands International Inc. .... 992,500
540,000 Archer-Daniels-Midland Co. ...... 6,581,250
--------------
7,573,750
--------------
AUTOMOTIVE--0.5%
150,000 General Motors Corp. ............. 9,440,625
--------------
AUTOMOTIVE: PARTS AND ACCESSORIES--3.3%
100,000 Arvin Industries Inc. ............ 3,093,750
25,000 Borg-Warner Automotive Inc. ...... 1,075,000
220,000 Dana Corp. ....................... 8,167,500
115,000 Federal-Mogul Corp. .............. 3,169,687
620,000 GenCorp Inc. ..................... 11,353,750
265,000 Genuine Parts Co. ................ 7,039,062
110,000 Johnson Controls Inc. ............ 7,294,375
300,000 Modine Manufacturing Co. ......... 6,993,750
210,000 Standard Motor Products Inc. ..... 4,081,875
110,000 Superior Industries International
Inc. ............................ 3,080,000
100,000 TransPro Inc. .................... 493,750
90,000 Wynn's International Inc. ........ 1,434,375
--------------
57,276,874
--------------
AVIATION: PARTS AND SERVICES--0.5%
35,000 Aviall Inc. ...................... 358,750
10,000 BE Aerospace Inc.+................ 119,375
181,000 Curtiss-Wright Corp. ............. 5,837,250
50,000 Fairchild Corp., Cl. A............ 512,500
60,000 Hi-Shear Industries Inc. ......... 154,688
17,900 Kaman Corp. ...................... 228,225
70,000 Precision Castparts Corp. ........ 2,135,000
--------------
9,345,788
--------------
BROADCASTING--4.7%
65,000 CBS Corp. ........................ 3,006,250
460,612 Chris-Craft Industries Inc. ...... 25,851,848
71,637 Chris-Craft Industries Inc., Cl. B
(a).............................. 4,020,626
23,333 Corus Entertainment Inc., Cl. B... 377,010
150,000 Granite Broadcasting Corp. ....... 1,668,750
12,000 Gray Communications Systems
Inc. ............................ 207,000
183,300 Gray Communications Systems Inc.,
Cl. B............................ 2,634,937
140,000 Grupo Televisa SA, GDR+........... 5,591,250
140,000 Liberty Corp. .................... 6,492,500
115,000 Paxson Communications Corp., Cl.
A+............................... 1,408,750
400,000 Television Broadcasting Ltd. ..... 1,709,600
247,500 United Television Inc. ........... 27,905,625
4,000 Young Broadcasting Inc., Cl. A+... 209,500
--------------
81,083,646
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
BUILDING AND CONSTRUCTION--1.2%
290,000 Lone Star Industries Inc. ........ $ 14,463,750
172,000 Nortek Inc.+...................... 5,869,500
4,333 Nortek Inc., Special Common (a)... 147,864
--------------
20,481,114
--------------
BUSINESS SERVICES--1.2%
60,000 Berlitz International Inc.,
New+............................. 1,263,750
92,500 Burns International Services
Corp.+........................... 1,491,563
29,962 Cendant Corp. .................... 531,825
4,000 Dollar Thrifty Automotive Group
Inc.+............................ 82,750
100,000 Ecolab Inc. ...................... 3,412,500
66,500 Landauer Inc. .................... 1,670,812
195,000 Nashua Corp.+..................... 1,730,625
275,000 Nielsen Media Research Inc. ...... 10,226,562
--------------
20,410,387
--------------
CABLE--5.2%
667,000 Cablevision Systems Corp., Cl.
A+............................... 48,524,250
40,000 Comcast Corp., Cl. A.............. 1,442,500
40,000 Comcast Corp., Cl. A Special...... 1,595,000
535,000 MediaOne Group Inc. .............. 36,547,187
30,000 Shaw Communications Inc., Cl. B... 824,546
40,000 Shaw Communications Inc., Cl. B,
ADR.............................. 1,102,500
10,000 UnitedGlobalCom Inc., Cl. A+...... 716,250
--------------
90,752,233
--------------
CLOSED-END FUNDS--0.1%
84,000 Royce Value Trust Inc. ........... 1,039,500
--------------
COMMUNICATIONS EQUIPMENT--0.6%
275,500 Allen Telecom Inc.+............... 2,686,125
45,000 Motorola Inc. .................... 3,960,000
78,000 Nortel Networks Corp. ............ 3,978,000
--------------
10,624,125
--------------
COMPUTER SOFTWARE AND SERVICES--0.0%
25,000 Internet.com Corp.+............... 350,000
--------------
CONSUMER PRODUCTS--3.7%
607,000 Carter-Wallace Inc. .............. 10,850,125
2,750 Christian Dior SA................. 447,783
337,000 Church & Dwight Co. Inc. ......... 8,425,000
15,000 Department 56 Inc.+............... 359,063
175,000 Fortune Brands Inc. .............. 5,643,750
330,000 Gallaher Group plc, ADR........... 8,971,875
160,000 General Cigar Holdings Inc. ...... 1,080,000
93,356 General Cigar Holdings Inc., Cl.
B+ (a)........................... 630,153
90,000 Gillette Co. ..................... 3,054,375
40,000 Harley Davidson Inc. ............. 2,002,500
100,000 Imasco Ltd. ...................... 2,612,423
30,000 National Presto Industries
Inc. ............................ 1,158,750
152,000 Philip Morris Companies Inc. ..... 5,196,500
510,000 Ralston Purina Group ............. 14,184,375
41,700 Syratech Corp.+................... 458,700
--------------
65,075,372
--------------
</TABLE>
11
<PAGE> 12
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
CONSUMER SERVICES--0.4%
25,000 Ogden Corp. ...................... $ 250,000
380,000 Rollins Inc. ..................... 5,866,250
--------------
6,116,250
--------------
DIVERSIFIED INDUSTRIAL--3.5%
5,000 Anixter International Inc.+....... 116,250
10,000 Cooper Industries Inc. ........... 467,500
275,000 Crane Co. ........................ 6,170,312
10,000 Gardner Denver Machinery Corp.+... 151,250
205,000 GATX Corp. ....................... 6,367,812
5,000 General Electric Co. ............. 592,813
105,000 GenTek Inc.+...................... 1,194,375
50,000 Honeywell Inc. ................... 5,565,625
190,000 ITT Industries Inc. .............. 6,044,375
150,000 Katy Industries Inc. ............. 1,800,000
13,000 Kyocera Corp., ADR................ 958,750
350,000 Lamson & Sessions Co.+............ 1,815,625
54,868 Myers Industries Inc. ............ 973,907
80,000 National Service Industries
Inc. ............................ 2,520,000
10,000 Pentair Inc. ..................... 401,250
170,000 Reynolds Metals Co. .............. 10,263,750
300,000 Tenneco Inc. ..................... 5,100,000
45,000 Thermo Power Corp.+............... 531,563
127,000 Thomas Industries Inc. ........... 2,373,312
15,000 TI Group plc...................... 109,644
80,000 Trinity Industries Inc. .......... 2,470,000
40,000 Tyco International Ltd. .......... 4,130,000
--------------
60,118,113
--------------
ELECTRONICS--0.6%
15,000 Advanced Micro Devices Inc. ...... 257,813
3,000 Hitachi Ltd., ADR................. 327,375
10,000 Imation Corp.+.................... 310,000
904,700 Oak Technology Inc.+.............. 4,042,878
20,000 Sony Corp., ADR................... 3,001,250
120,000 UCAR International Inc. .......... 2,737,500
--------------
10,676,816
--------------
ENERGY AND UTILITIES--4.1%
125,000 AGL Resources Inc. ............... 2,031,250
100,000 Atlantic Richfield Co. ........... 8,862,500
35,000 BP Amoco plc, ADR................. 3,878,438
38,000 Brown (Tom) Inc. ................. 560,500
30,000 Chevron Corp. .................... 2,662,500
245,000 Citizens Utilities Co., Cl. B..... 2,771,563
130,000 Devon Energy Corp. ............... 5,386,875
165,000 Eastern Enterprises............... 7,662,187
30,000 Energy East Corp. ................ 712,500
60,000 EOG Resources Inc. ............... 1,275,000
115,000 Exxon Corp. ...................... 8,732,812
100,000 Florida Progress Corp. ........... 4,625,000
10,000 Florida Public Utilities Co. ..... 183,750
25,000 Global Marine Inc. ............... 410,937
40,000 Halliburton Co. .................. 1,640,000
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
10,000 New England Electric System....... $ 518,750
150,000 Niagara Mohawk Power Corp. ....... 2,315,625
65,000 Pennzoil-Quaker State Co. ........ 820,625
325,000 Southwest Gas Corp. .............. 8,754,688
65,000 Texaco Inc. ...................... 4,103,125
10,000 TNP Enterprises Inc. ............. 389,375
30,000 United Water Resources Inc. ...... 978,750
60,000 Wicor Inc. ....................... 1,743,750
--------------
71,020,500
--------------
ENTERTAINMENT--13.6%
230,000 Ascent Entertainment Group
Inc. ............................ 3,162,500
100,000 EMI Group plc..................... 1,450,000
19,406 EMI Group plc, ADR................ 141,849
22,000 Fisher Companies Inc. ............ 1,309,000
40,000 Fox Entertainment Group Inc. ..... 845,000
150,000 GC Companies Inc.+................ 4,500,000
10,000 King World Productions Inc.+...... 375,000
2,275,000 Liberty Media Group, Cl. A+....... 84,459,375
950,000 Time Warner Inc. ................. 57,712,500
11,000 Todd-AO Corp., Cl. A.............. 165,000
890,000 USA Networks Inc.+................ 34,487,500
781,000 Viacom Inc., Cl. A+............... 33,778,250
315,000 Viacom Inc., Cl. B+............... 13,308,750
--------------
235,694,724
--------------
ENVIRONMENTAL SERVICES--0.2%
77,500 EnviroSource Inc. ................ 45,725
220,000 Waste Management Inc. ............ 4,235,000
--------------
4,280,725
--------------
EQUIPMENT AND SUPPLIES--8.9%
300,000 AMETEK Inc. ...................... 5,943,750
97,000 Amphenol Corp., Cl. A+............ 4,807,563
5,000 Case Corp. ....................... 249,063
72,000 Caterpillar Inc. ................. 3,946,500
110,000 CLARCOR Inc. ..................... 1,849,375
377,500 CTS Corp. ........................ 21,706,250
10,000 Danaher Corp. .................... 526,875
380,000 Deere & Co. ...................... 14,701,250
230,000 Donaldson Co. Inc. ............... 5,333,125
10,000 Fedders Corp. .................... 60,000
122,000 Flowserve Corp. .................. 2,028,250
166,300 Gerber Scientific Inc. ........... 3,720,962
310,000 Hussmann International Inc. ...... 5,270,000
462,000 IDEX Corp. ....................... 13,080,375
10,000 Ingersoll-Rand Co. ............... 549,375
200,000 Kollmorgen Corp. ................. 2,437,500
88,000 Lufkin Industries Inc. ........... 1,342,000
18,000 Manitowoc Co. Inc. ............... 614,250
255,000 Mark IV Industries Inc. .......... 5,036,250
155,000 Material Sciences Corp.+.......... 2,063,437
32,000 Met-Pro Corp. .................... 340,000
330,000 Navistar International Corp.+..... 15,345,000
20,000 PACCAR Inc. ...................... 1,017,500
291,000 Pittway Corp. .................... 8,220,750
</TABLE>
12
<PAGE> 13
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
EQUIPMENT AND SUPPLIES (CONTINUED)
299,000 Pittway Corp., Cl. A.............. $ 9,418,500
97,355 Sequa Corp., Cl. A+............... 6,133,365
96,000 Sequa Corp., Cl. B+............... 6,336,000
180,000 SPS Technologies Inc.+............ 6,828,750
30,000 Valmont Industries Inc. .......... 506,250
160,000 Watts Industries Inc., Cl. A...... 3,480,000
120,000 Weir Group plc.................... 552,169
--------------
153,444,434
--------------
FINANCIAL SERVICES--5.4%
17,150 Aegon NV.......................... 1,483,475
1 Al-Zar Ltd.+ (a) ................. 350
3,500 Alleghany Corp.+ ................. 619,500
205,000 American Express Co. ............. 27,598,125
53,000 Argonaut Group Inc. .............. 1,331,625
220 Berkshire Hathaway Inc.+.......... 12,100,000
135,000 Block (H&R) Inc. ................. 5,864,063
85,000 Commerzbank AG, ADR............... 3,336,250
150,000 Deutsche Bank AG, ADR............. 10,387,500
170,000 Lehman Brothers Holdings Inc. .... 9,913,125
30,000 Leucadia National Corp. .......... 630,000
100,000 Mellon Bank Corp. ................ 3,375,000
31,834 Metris Companies Inc. ............ 937,113
249,000 Midland Co. ...................... 5,229,000
2,000 MONY Group Inc. .................. 57,750
50,000 Paine Webber Group Inc. .......... 1,812,500
31,000 Pioneer Group Inc. ............... 465,000
3,000 Republic New York Corp. .......... 184,312
100,000 St. Paul Companies................ 2,750,000
43,000 State Street Corp. ............... 2,778,875
20,000 SunTrust Banks Inc. .............. 1,315,000
8,000 Value Line Inc. .................. 279,000
30,000 Waddell & Reed Financial Inc., Cl.
A................................ 665,625
--------------
93,113,188
--------------
FOOD AND BEVERAGE--6.1%
55,000 Bestfoods Inc. ................... 2,667,500
100,100 Brown-Forman Corp., Cl. A......... 5,830,825
60,000 Celestial Seasonings Inc.+........ 1,155,000
90,000 Chock Full o'Nuts Corp.+.......... 978,750
45,000 Coca-Cola Co. .................... 2,162,813
75,000 Corn Products International
Inc. ............................ 2,282,812
60,000 Diageo plc, ADR................... 2,486,250
4,500 Farmer Brothers Co. .............. 747,000
120,000 General Mills Inc. ............... 9,735,000
68,000 Heinz (H.J.) Co. ................. 2,924,000
60,000 Hershey Foods Corp. .............. 2,921,250
20,000 Keebler Foods Co.+................ 597,500
240,000 Kellogg Co. ...................... 8,985,000
33,000 LVHM Moet Hennessy Louis Vuitton,
ADR.............................. 1,980,000
380,000 Pepsi Bottling Group Inc. ........ 6,483,750
425,000 PepsiCo Inc. ..................... 12,856,250
195,000 Quaker Oats Co. .................. 12,065,625
70,000 Ralcorp Holdings Inc.+............ 1,238,125
180,000 Seagram Co. ...................... 8,190,000
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
133,490 Tootsie Roll Industries Inc. ..... $ 4,388,484
720,000 Whitman Corp. .................... 10,260,000
70,000 Wrigley (Wm.) Jr. Co. ............ 4,816,875
--------------
105,752,809
--------------
HEALTH CARE--2.1%
65,000 American Home Products Inc. ...... 2,697,500
24,000 Amgen Inc. ....................... 1,956,000
36,000 Biogen Inc.+...................... 2,837,250
40,000 Chiron Corp.+..................... 1,107,500
10,000 Glaxo Wellcome plc................ 520,000
100,000 IVAX Corp. ....................... 1,650,000
65,000 Johnson & Johnson................. 5,971,875
5,000 Life Technologies Inc.+........... 205,000
110,000 Merck & Co. Inc. ................. 7,129,375
265,000 Pfizer Inc. ...................... 9,523,438
25,000 SmithKline Beecham plc............ 1,440,625
150,000 Women First Healthcare Inc.+...... 1,059,375
--------------
36,097,938
--------------
HOTELS AND GAMING--1.8%
13,400 Aztar Corp. ...................... 137,350
65,000 Boca Resorts Inc., Cl. A.......... 682,500
330,000 Gaylord Entertainment Co., Cl.
A................................ 9,735,000
20,000 GTECH Holdings Corp.+............. 428,750
12,000 Harrah's Entertainment Inc.+...... 333,000
550,000 Hilton Hotels Corp. .............. 5,431,250
914,000 Ladbroke Group plc................ 3,186,239
100,000 Mandalay Resort Group+............ 1,975,000
350,000 Mirage Resorts Inc.+ ............. 4,921,875
270,000 Park Place Entertainment Corp.+... 3,375,000
50,000 Starwood Hotels & Resorts
Worldwide Inc. .................. 1,115,625
60,000 Trump Hotels & Casino Resorts
Inc.+............................ 255,000
--------------
31,576,589
--------------
METALS AND MINING--0.2%
30,000 Barrick Gold Corp. ............... 652,500
250,000 Echo Bay Mines Ltd.+.............. 484,375
45,000 Homestake Mining Co. ............. 413,438
70,000 Newmont Mining Corp. ............. 1,811,250
25,000 Placer Dome Inc. ................. 371,875
250,000 Royal Oak Mines Inc.+............. 10,217
200,000 TVX Gold Inc.+.................... 250,000
--------------
3,993,655
--------------
PAPER AND FOREST PRODUCTS--0.7%
184,700 Greif Bros. Corp., Cl. A.......... 5,217,775
312,000 St. Joe Corp. .................... 6,727,500
--------------
11,945,275
--------------
PUBLISHING--3.6%
8,000 Central Newspapers Inc., Cl. A.... 356,000
32,000 Dow Jones & Co. Inc. ............. 1,708,000
70,000 Harcourt General Inc. ............ 2,913,750
</TABLE>
13
<PAGE> 14
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
PUBLISHING (CONTINUED)
55,000 McClatchy Newspapers Inc., Cl.
A................................ $ 1,966,250
140,000 McGraw-Hill Companies Inc. ....... 6,772,500
420,000 Media General Inc., Cl. A......... 21,525,000
85,000 Meredith Corp. ................... 3,086,563
140,000 New York Times Co., Cl. A......... 5,250,000
15,000 News Corp. Ltd., ADR.............. 426,563
400,000 Penton Media Inc. ................ 6,500,000
75,000 Pulitzer Inc. .................... 3,407,812
140,000 Reader's Digest Association Inc.,
Cl. B............................ 3,692,500
1,650,000 Seat-Pagine Gialle SpA............ 2,409,248
6,000 Scripps (E.W.) Co., Cl. A......... 294,750
115,000 Thomas Nelson Inc. ............... 1,121,250
2,000 Tribune Co. ...................... 99,500
--------------
61,529,686
--------------
REAL ESTATE--0.4%
400,000 Catellus Developement Corp.+...... 4,700,000
48,000 Florida East Coast Industries
Inc. ............................ 1,503,000
71,000 Griffin Land & Nurseries Inc.+.... 767,688
--------------
6,970,688
--------------
RETAIL--2.2%
41,000 Aaron Rents Inc. ................. 707,250
20,000 Aaron Rents Inc., Cl. A........... 295,000
15,000 Albertson's Inc. ................. 593,438
400,000 AutoNation Inc.+.................. 5,025,000
80,000 Blockbuster Inc., Cl. A+.......... 1,020,000
175,000 Burlington Coat Factory Warehouse
Corp. ........................... 3,456,250
40,000 Coldwater Creek Inc.+............. 800,000
180,000 Gerald Stevens Inc.+.............. 2,520,000
32,000 Hannaford Bros. Co. .............. 2,254,000
140,000 Kroger Co.+....................... 3,088,750
180,500 Lillian Vernon Corp. ............. 2,256,250
62,000 Midas Inc. ....................... 1,278,750
580,000 Neiman Marcus Group Inc.+......... 13,557,500
202,500 Scheib (Earl) Inc.+............... 556,875
--------------
37,409,063
--------------
SATELLITE--0.3%
94,731 COMSAT Corp. ..................... 2,806,406
100,000 Globalstar Telecommunications
Ltd. ............................ 2,300,000
--------------
5,106,406
--------------
SPECIALTY CHEMICALS--1.6%
58,000 Dexter Corp. ..................... 2,164,125
5,000 du Pont de Nemours (E.I.) and
Co. ............................. 304,375
425,000 Ferro Corp. ...................... 9,057,813
105,000 General Chemical Group Inc. ...... 360,937
30,000 Monsanto Co. ..................... 1,070,625
260,000 Nalco Chemical Co. ............... 13,130,000
95,000 Sybron Chemicals Inc. ............ 1,448,750
--------------
27,536,625
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
TELECOMMUNICATIONS--9.1%
5,000 Allegiance Telecom Inc. .......... $ 263,125
110,000 Alltel Corp. ..................... 7,741,250
360,000 AT&T Corp. ....................... 15,660,000
250,000 BCE Inc. ......................... 12,453,125
22,500 BCT.Telus Communications Inc. .... 469,165
7,500 BCT.Telus Communications Inc.,
ADR.............................. 154,347
37,500 BCT.Telus Communications Inc., Cl.
A................................ 781,941
12,500 BCT.Telus Communications Inc., Cl.
A, ADR........................... 257,246
35,000 BellSouth Corp. .................. 1,575,000
32,000 Cable & Wireless Optus Ltd. ...... 696,000
215,000 Cable & Wireless plc, ADR......... 7,121,875
545,000 CenturyTel Inc. .................. 22,140,625
325,665 Commonwealth Telephone Enterprises
Inc.+............................ 14,329,260
31,500 Commonwealth Telephone Enterprises
Inc., Cl. B+ .................... 1,368,281
60,000 Embratel Participacoes SA+........ 686,250
155,000 GTE Corp. ........................ 11,915,625
374,500 RCN Corp. ........................ 15,354,500
460,000 Rogers Communications Inc.+....... 7,733,750
10,000 Rogers Communications Inc., Cl. B,
ADR+............................. 169,059
40,000 SBC Communications Inc. .......... 2,042,500
180,000 Sprint Corp. ..................... 9,765,000
67,500 Telebras SA, ADR.................. 2,109
500,000 Telecom Italia SpA................ 4,342,139
120,000 Telecom Italia SpA, ADR........... 10,342,500
45,900 Telefonica SA, ADR................ 2,203,200
10,000 Telefonos de Mexico SA, Cl. L,
ADR.............................. 712,500
67,500 Tele Norte Leste Participacoes
SA+.............................. 1,046,250
67,500 Telesp Participacoes SA........... 1,063,125
100,000 US West Inc. ..................... 5,706,250
--------------
158,095,997
--------------
TRANSPORTATION--0.4%
110,000 AMR Corp.+........................ 5,995,000
8,000 Kansas City Southern Industries
Inc. ............................ 371,500
2,000 Providence & Worcester Railroad
Co. ............................. 21,250
--------------
6,387,750
--------------
WIRELESS COMMUNICATIONS--5.9%
85,000 Associated Group Inc., Cl. A+..... 5,142,500
40,000 Associated Group Inc., Cl. B+..... 2,422,500
20,000 BCE Mobile Communication Inc. .... 793,750
10,000 Leap Wireless International
Inc.+ ........................... 235,000
55,000 NEXTEL Communications Inc., Cl.
A+............................... 3,729,688
50,000 Omnipoint Corp.+.................. 2,793,750
100,000 Rogers Cantel Mobile
Communications Inc.+............. 2,368,750
45,000 Sprint Corp. (PCS Group).......... 3,355,313
6,750 Tele Celular Participacoes SA+.... 127,828
13,500 Tele Celular Sul Participacoes
SA............................... 749,250
22,500 Tele Centro Oeste Celular
Participacoes SA................. 74,531
1,800,000 Telecom Italia Mobile SpA......... 11,187,394
</TABLE>
14
<PAGE> 15
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
WIRELESS COMMUNICATIONS (CONTINUED)
1,350 Tele Leste Celular Participacoes
SA............................... $ 42,694
3,375 Telemig Celular Participacoes
SA+.............................. 99,562
3,375 Tele Nordeste Celular
Participacoes SA+................ 76,781
1,350 Tele Norte Celular Participacoes
SA+.............................. 38,475
740,000 Telephone & Data Systems Inc. .... 65,721,250
27,000 Telesp Celular Participacoes
SA+ ............................. 705,375
13,500 Tele Sudeste Celular Participacoes
SA+.............................. 290,250
7,000 Vodafone AirTouch plc, ADR........ 1,664,250
--------------
101,618,891
--------------
TOTAL COMMON STOCKS............... 1,611,926,411
--------------
PREFERRED STOCKS--0.2%
AUTOMOTIVE: PARTS AND
ACCESSORIES--0.0%
1,000,000 Standard Motor Products Inc.,
6.75% Conv. Pfd. ................ 880,625
--------------
METALS AND MINING--0.0%
10,000 Freeport-McMoRan Inc., 7.00% Conv.
Pfd. ............................ 176,250
--------------
SATELLITE--0.0%
20,000 Loral Space & Communications Ltd.,
6.00% Conv. Pfd.+ ............... 343,750
--------------
TELECOMMUNICATIONS--0.2%
35,000 Sprint Corp., 8.25% Conv. Pfd. ... 2,743,125
1,588,267 Telecomunicacoes de Sao Paulo SA
(Telesp), Preference Shares...... 140,752
--------------
2,883,877
--------------
WIRELESS COMMUNICATIONS--0.0%
1,588,267 Telesp Celular SA, Preference
Shares, Cl. B.................... 82,722
--------------
TOTAL PREFERRED STOCKS............ 4,367,224
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS--6.4%
$111,973,000 U.S. Treasury Bills, 4.57% to
4.81%++, due 10/14/99 to
12/02/99......................... $ 111,255,301
--------------
TOTAL INVESTMENTS--99.7%
(Cost $954,442,018).............. 1,727,548,936
OTHER ASSETS AND
LIABILITIES (NET)--0.3%.......... 4,534,407
--------------
NET ASSETS--100.0%
(43,832,544 shares
outstanding)..................... $1,732,083,343
==============
NET ASSET VALUE,
OFFERING AND REDEMPTION
PRICE PER SHARE.................. $39.52
==============
</TABLE>
<TABLE>
<CAPTION>
SETTLEMENT NET UNREALIZED
DATE DEPRECIATION
---------- --------------
<C> <S> <C> <C>
FORWARD FOREIGN
EXCHANGE CONTRACTS
19,646,294(b) Deliver Hong Kong Dollars
in exchange for
USD 2,494,134........... 08/24/00 $ (13,268)
--------------
</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.
15
<PAGE> 16
[GRAPHIC]
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>
<CAPTION>
BOARD OF TRUSTEES
<S> <C>
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.
- ---------------------------------------
GAB405Q399SR
THE
GABELLI
ASSET
FUND
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
