THE GABELLI ASSET FUND
FIRST QUARTER REPORT
MARCH 31, 2000
[Graphic of 4 stars omitted]
MORNINGSTAR RATED(TM) GABELLI ASSET FUND 4 STARS OVERALL AND FOR THE
THREE-YEAR PERIOD ENDED 03/31/00 AMONG 3571 DOMESTIC EQUITY FUNDS, AND FOR THE
FIVE AND TEN-YEAR PERIODS ENDED 03/31/00 AMONG 2283 AND 786 DOMESTIC EQUITY
FUNDS, RESPECTIVELY.
TO OUR SHAREHOLDERS,
In the first quarter of 2000, we continued to experience a "have and have
not" stock market. Until the last week of the quarter, when we saw a rotation
out of the technology sector and into value sectors, so called "new economy"
stocks flourished, while "old economy" stocks languished or retreated. Despite
the late sell-off, the technology-heavy Nasdaq Composite Index and the small cap
growth-oriented Russell 2000 Index finished with solid gains. However, the
Standard & Poor's 500 Index closed the quarter only modestly higher, while the
Dow Jones Industrial Average declined.
Momentum investing--buying stocks that are rising in price--continued to
be considerably more rewarding than owning stocks representing good fundamental
values. We do not know how much longer this trend will continue. However, we see
exceptional opportunity for selective value investors in a market that has
shunned high quality companies in a wide range of healthy industries.
INVESTMENT PERFORMANCE
For the first quarter ended March 31, 2000, The Gabelli Asset Fund's (the
"Fund") total return was 0.22%. The Standard & Poor's ("S&P") 500 Index, Value
Line Composite and Russell 2000 Indices had total returns of 2.29%, 4.03% and
7.08%, respectively, over the same period. Each index is an unmanaged indicator
of stock market performance. The Fund was up 22.85% over the trailing
twelve-month period. The S&P 500, Value Line Composite and Russell 2000 Indices
rose 17.93%, 19.47% and 37.29%, respectively, over the same twelve-month period.
For the ten-year period ended March 31, 2000, the Fund's total return
averaged 16.98% annually versus average annual returns of 18.82%, 14.34% and
14.44% for the S&P 500, Value Line Composite and Russell 2000 Indices,
respectively. Since inception on March 3, 1986 through March 31, 2000, the Fund
had a cumulative total return of 893.73%, which equates to an average annual
total return of 17.70%.
- --------------------------------------------------------------------------------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Morningstar proprietary
ratings reflect historical risk adjusted performance as of March 31, 2000 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>
INVESTMENT RESULTS (a)
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Quarter
-------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
2000: Net Asset Value... $40.93 -- -- -- --
Total Return...... 0.2% -- -- -- --
- ----------------------------------------------------------------------------
1999: Net Asset Value... $37.18 $41.38 $39.52 $40.84 $40.84
Total Return...... 4.8% 11.3% (4.5)% 15.3% 28.5%
- ----------------------------------------------------------------------------
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)
- ----------------------------------------------------------------------------
- ---------------------------------------------------------
Average Annual Returns - March 31, 2000 (a)
-------------------------------------------
1 Year ..................................... 22.85%
5 Year ..................................... 22.15%
10 Year .................................... 16.98%
Life of Fund (b) ........................... 17.70%
- ---------------------------------------------------------
Dividend History
- -------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 27, 1999 $4.630 $39.92
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
(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
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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 14 years at The
Gabelli Asset Fund and for over 23 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.
[Graphic omitted]
Pyramid text as follows:
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
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
THE PERILS OF PAULINE
In each episode of the old movie serial, "The Perils of Pauline", the
heroine faced certain doom until a hero suddenly appeared to save the day.
Through most of the first quarter of 2000, equities were imperiled by rising
short term interest rates and the perception that Federal Reserve Chairman Alan
Greenspan was determined to restrain the stock market as well as the economy.
With equities dangling from a cliff, a hero in the form of declining market
interest rates (bond yields) rescued stocks from a sharp correction that
appeared ready to turn into a full scale bear market.
3
<PAGE>
Of course, in the old movie shorts, as soon as Pauline escaped from one
life-threatening predicament, she was thrust into another. Over the short term,
we suspect the stock market will also face a series of new dangers. The Federal
Reserve should continue to hike short term interest rates, eventually killing
the nascent bond market rally and putting pressure back on stocks. Valuations in
the technology sector also present a risk to the market. If some of the
technology "bellwethers" fall short of rather grand earnings expectations, we
could see a sharp correction that would drag down the market indices. There is
also the uncertainty of an election year. Will a Bush victory lead to tax cuts
that will help sustain consumer spending or will a Gore triumph dash the hopes
of consumers and investors counting on tax relief?
There are plenty of potential heroes that could once again rescue the
market. Corporate earnings growth is strong and, with synchronized global
growth, may get stronger. If we see evidence of economic deceleration in the
second half of the year, the Fed may release the monetary brakes and market
interest rates could come down further. We should continue to see deals,
particularly in out-of-favor industries where many great companies have become
irresistible business bargains. Deals may finally prop up the value sector of
the market. Finally, investors love happy endings. Over the last several years,
whenever stocks have stumbled investors have rushed in to lift them to safety.
We are always attuned to the economic and stock market melodrama. However,
we try to keep our shareholders out of harm's way by investing in quality
companies trading at a discount to their "real world" economic value. This may
be dull and periodically not particularly productive. However, over the Fund's
history, this approach has produced rewarding returns.
OLD ECONOMY, NEW ECONOMY
The financial press and market observers are adept at developing
simplistic theories to explain market trends. Recently, the pundits have divided
the market into "old economy" and "new economy" stocks. The former are thought
to be worthless and the latter are perceived as almost priceless. A closer look
at the situation reveals the flaws in this current logic.
The so-called "new economy" stocks are primarily technology companies
developing new ways to distribute information, products, and services. Some are
fine companies with exceptional growth prospects. However, the "new economy"
superstars do not drill for oil, process chemicals, make household goods or food
products, or manufacture automobiles. They do not knit sweaters or make shoes.
They do not build houses. They do not produce motion pictures or television
programs. They are simply building systems that make it possible for "old
economy" companies to provide these essential products and services more
efficiently and cost effectively. Will the best of the "new economy" companies
make money and, over the long term, enrich investors? Yes. Will the "old
economy" companies that harness the power of new technologies prosper and also
reward shareholders? Yes. Presently, investors can pay sky-high valuations for
"new economy" companies or scoop up high quality "old economy" stocks at deep
discounts.
Let me give you an example. General Motors, Ford, and Daimler Chrysler are
developing a business-to-business Internet network to streamline the procurement
of auto parts from original equipment manufacturers. Oracle, E-commerce (20%
owned by GM), and i2 Technologies are building
4
<PAGE>
the network and will help operate it. We imagine they will profit in the
process. But the automobile manufacturers will also benefit substantially. The
auto-makers estimate this new network could shave as much as $2,000 from the
cost of manufacturing a new automobile. This should translate into lower
automobile prices, increased demand, higher volume and better earnings for these
boring "old economy" companies.
Additionally, the auto-makers will own this network. Marked to market
based on valuations currently being given to "B2B" network companies, this could
be an incredibly valuable and still largely unrecognized asset. You can pay
incredible multiples for the stock of Oracle and i2 Technologies and you may
continue to be rewarded, albeit with the escalating risk that accompanies
historically unprecedented valuations. Or, you can buy the stock of GM for ten
times earnings and three times cash flow. We also note that GM has a substantial
investment in General Motors Hughes, a "new economy" company dominating the
satellite broadcasting business through its DirecTV division. If we back out the
value of GM's ownership in GM Hughes, the stock is even less expensive, trading
at an almost absurdly low price to earnings multiple and roughly 2.5 times cash
flow.
GM is just one example of an "old economy" company employing "new economy"
technologies to its advantage. We believe "brick and mortar" retailers will do
well as they further develop "click and mortar" capabilities. Established
financial services companies should also do well as they introduce on-line
services. Once again, you have the option of paying up for the "new economy"
kids on the block or paying discount prices for established, high quality
companies that can and will prosper using new technologies.
THE ENVELOPE PLEASE
This quarter, our performance awards go to telecommunications stocks such
as Sprint Corp. PCS, Cable & Wireless, Telecom Italia, Vodafone AirTouch and
AT&T. Brokerage firms Lehman Brothers and Paine Webber contributed nicely to
returns. We got some mileage from Harley Davidson, enjoyed our stay at Mirage
Resorts (which agreed to be acquired by MGM Grand), and were rewarded for
staying tuned to Rogers Communications.
Our losers list reads like a Who's Who of great industrial companies
including Boeing, Caterpillar, Honeywell and DuPont, in addition to high quality
cyclicals such as Maytag, Trinity Industries and Ingersoll-Rand. Food stocks
also disappointed.
TIME WARNER AND AOL--THE SHAPE OF DEALS TO COME
The impending marriage of Time Warner and America Online combines the old
economy with the new (product with distribution)--a merger trend that we believe
will gain momentum in the years ahead. Wall Street is struggling over how to
value the bride and the groom prior to the wedding. Analysts following AOL were
accustomed to looking primarily at top line revenue growth and making
assumptions regarding future operating margins. Analysts covering Time Warner
(including yours truly) looked primarily at cash flow growth, and now must come
up with a different yardstick to assess value.
5
<PAGE>
As evidenced by the decline in both stocks shortly after the merger was
announced, both camps were disappointed with the deal. AOL loyalists did not
like the fact that the addition of Time Warner would slow revenue growth and
Time Warner enthusiasts saw healthy operating profits being diluted. Both stocks
have rebounded since, and as we write, Time Warner is at a 52-week high.
Backing away from the problem of valuing two very different companies and
taking a longer-term view, the marriage of quality products and terrific
distribution makes economic sense. Sometimes it will take the form of mutually
rewarding joint venture arrangements. But, we also expect to see more deals with
old and new economy companies finding synergistic partners. This trend should
further intensify already strong merger and acquisition activity, providing an
additional tailwind for value investors.
AN APPETITE FOR FOOD STOCKS
There is a degree of economic logic in the recent poor performance of
cyclical industrial companies. The Federal Reserve is committed to slowing the
economy, and if it succeeds, we may be seeing peak earnings for economically
sensitive companies. We are of the opinion that earnings will be better than
anticipated and that the sell-off in cyclical companies is overdone. That is why
we continue to own high quality cyclical stocks.
We see no economic justification for the poor performance of food stocks.
High quality brand name franchises including General Mills, Kellogg, Quaker
Oats, H. J. Heinz, Hershey Foods, Keebler Foods, Pepsico and Sara Lee all
declined this quarter, with some down quite sharply. We doubt that if economic
growth slows from 5.0% to 3.5%, consumers are going to reduce spending on food
or switch from brand name products to cheaper private label goods. "Honey, Gross
Domestic Product ("GDP") growth is now down to 3.5%. We better cut back on the
pickles and coffee cake, and instead of buying Pepsi, let's get that generic
cola."
Historically, food company earnings have not been particularly sensitive
to modestly slower economic growth, and in general, earnings for food companies
have been relatively stable and should stay that way. Food stocks are not down
because of any fundamental change in the business or disappointing earnings. In
our opinion, food stocks are simply a casualty of investors' general disregard
for any industry group lacking the rapid growth potential of technology stocks.
Currently, you can load up on some of the best companies in the food business at
very attractive valuations. Food for thought for value investors.
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 - $60.75 - AMEX) is one of the nation's leading
communications and entertainment companies, with a portfolio of operations that
spans state-of-the-art, high-speed multimedia delivery, subscription cable
television services, championship professional sports teams and national cable
television networks. Headquartered in Bethpage, N.Y., Cablevision serves more
than
6
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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 owns and operates
New York City's famed Madison Square Garden, which includes the arena complex,
the N.Y. Knicks, the N.Y. Rangers and the MSG network. Cablevision also operates
Radio City Entertainment and holds a long term lease for Radio City Music Hall,
home of the world-famous Rockettes.
CHRIS-CRAFT INDUSTRIES INC. (CCN - $63.6875 - NYSE; CCN'B - $63.50 - NYSE),
through its 80% ownership of BHC Communications (BHC - $156.00 - 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 58% of United Television (UTVI - $132.375 - Nasdaq), which operates an
NBC affiliate, an ABC affiliate and five UPN affiliates. UTVI acquired WRBW, a
UPN affiliate in Orlando, for $60 million in July 1999. 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 single 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.
LIBERTY MEDIA GROUP (LMG'A - $59.25 - NYSE), owned by AT&T Corp. (T - $56.25 -
NYSE), is engaged in businesses which provide programming services, including
production, acquisition and distribution through all media formats, as well as
businesses engaged in electronic retailing, direct marketing and other services.
LMG holds interests in globally-branded entertainment networks such as Discovery
Channel, USA Network, 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.
MEDIAONE GROUP INC. (UMG - $81.00 - NYSE) is one of the nation's leading
broadband services companies. UMG provides approximately five million domestic
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 - $56.25 - NYSE) for $54 billion.
TELEPHONE & DATA SYSTEMS INC. (TDS - $111.00 - AMEX) is a diversified
telecommunications service company with cellular telephone, local telephone and
personal communications services ("PCS") operations. TDS serves 3.7 million
customers in 35 states. TDS conducts the vast majority of its cellular
operations through its 81% owned United States Cellular Corp. (USM - $71.00 -
AMEX) and conducts
7
<PAGE>
its telephone operations through its wholly-owned TDS Telecommunications Corp.
("TDS Telecom") subsidiary, a full-service local exchange carrier. TDS conducts
its broadband PCS operations through 82.3% owned Aerial Communications Inc.
(AERL - $56.8125 - Nasdaq), which provides PCS service in the Minneapolis,
Tampa-St. Petersburg-Orlando, Houston, Pittsburgh, Kansas City and Columbus
Major Trading Areas. On September 20, 1999, VoiceStream Wireless (VSTR -
$128.8125 - Nasdaq) announced the acquisition of Aerial in a $3.3 billion
transaction. Pro-forma for this acquisition, TDS will own over 36 million shares
of VoiceStream.
TIME WARNER INC. (TWX - $100.00 - NYSE), with its 1996 acquisition of Turner
Broadcasting System, became 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. Time Warner controls a host of
powerful brands, such as Warner Brothers, CNN, HBO, Cinemax, Time and People
magazines. Under the terms of a definitive agreement approved by the boards of
both companies, Time Warner and America Online (AOL - $67.25 - NYSE) have agreed
to merge in an all-stock combination valued at $350 billion.
UNITED TELEVISION INC. (UTVI - $132.375 - NASDAQ), headquartered in Beverly
Hills, California, is a television broadcasting group which owns and operates
seven of the stations (one ABC, one NBC and five UPN affiliates) that comprise
Chris-Craft's (CCN - $63.6875 - NYSE) television division. The $60 million
purchase of WRBW, a UPN affiliate in Orlando (the country's 22nd largest and the
fastest growing television market over the past decade), closed on July 7, 1999.
UTVI stations cover approximately nine percent of the U.S. population. UTVI is
58%-owned by BHC Communications (BHC - $156.00 - AMEX). United Television is a
beneficiary of the recent FCC ruling allowing television duopoly, or ownership
of two stations in a single market.
USA NETWORKS INC. (USAI - $22.5625 - 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 - $53.4375 - NYSE), long a major provider of entertainment
"content", has evolved into one of the world's dominant media 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). Viacom is in the process of merging with CBS in a $36 billion
transaction.
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.
8
<PAGE>
INTERNET
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Asset Management Inc.,
the Gabelli Mutual Funds, IRAs, 401(k)s, quarterly reports, closing prices and
other current news. You can send us e-mail at [email protected].
IN CONCLUSION
In a market that loved technology stocks and disdained just about
everything else, the Fund took a small step forward in the first quarter of
2000. We are not anti-technology, but prefer investing in companies with
products and services we understand. We are also risk averse and not inclined to
own stocks with valuations that challenge economic logic. Finally, momentum
investing--buying stocks simply because they are going up--is the antithesis of
our value discipline.
The upside of this narrow market is that we see truly appealing valuations
for some great companies in a wide range of industry groups. We cannot be sure
when investors will gravitate to these great values. However, we are quite
confident that our portfolio should continue to generate attractive long term
returns.
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/ MARIOJ. GABELLI
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
April 14, 2000
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS
MARCH 31, 2000
--------------
Liberty Media Group MediaOne Group Inc.
Telephone & Data Systems Inc. Cablevision Systems Corp.
Time Warner Inc. Chris-Craft Industries Inc.
Viacom Inc. United Television Inc.
USA Networks Inc. Telecom Italia SpA
- --------------------------------------------------------------------------------
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
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THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS -- 95.5%
AEROSPACE -- 1.5%
120,000 Boeing Co. ................. $ 4,552,500
300,000 Cordant Technologies Inc. .. 16,968,750
50,000 Howmet International Inc.+ . 1,009,375
146,000 Northrop Grumman Corp. ..... 7,728,875
--------------
30,259,500
--------------
AGRICULTURE -- 0.3%
20,000 Agribrands International Inc. 786,250
540,000 Archer-Daniels-Midland Co. . 5,602,500
15,000 Delta & Pine Land Co. ...... 296,250
--------------
6,685,000
--------------
AUTOMOTIVE -- 0.7%
163,000 General Motors Corp. ....... 13,498,437
--------------
AUTOMOTIVE: PARTS AND ACCESSORIES -- 2.8%
126,000 Arvin Industries Inc. ...... 2,850,750
30,000 Borg-Warner Automotive Inc. 1,181,250
235,000 Dana Corp. ................. 6,624,062
170,000 Federal-Mogul Corp. ........ 2,836,875
630,000 GenCorp Inc. ............... 4,882,500
500,000 Genuine Parts Co. .......... 11,937,500
110,000 Johnson Controls Inc. ...... 5,946,875
85,000 Midas Inc. ................. 2,040,000
300,000 Modine Manufacturing Co. ... 7,537,500
202,500 Scheib (Earl) Inc.+ ........ 759,375
210,000 Standard Motor Products Inc. 3,123,750
110,000 Superior Industries International
Inc. ...................... 3,485,625
300,000 Tenneco Automotive Inc. .... 2,381,250
100,000 TransPro Inc. .............. 500,000
90,000 Wynn's International Inc. .. 1,243,125
--------------
57,330,437
--------------
AVIATION: PARTS AND SERVICES -- 0.5%
60,000 Aviall Inc.+ ............... 506,250
181,000 Curtiss-Wright Corp. ....... 6,629,125
50,000 Fairchild Corp., Cl. A+ .... 340,625
60,000 Hi-Shear Industries Inc. ... 150,000
20,000 Kaman Corp., Cl. A ......... 195,000
75,000 Precision Castparts Corp. .. 2,737,500
--------------
10,558,500
--------------
BROADCASTING -- 4.8%
13,500 BHC Communications Inc., Cl. A 2,106,000
504,300 Chris-Craft Industries Inc.+ 32,117,629
73,786 Chris-Craft Industries Inc.,
Cl. B+ (a) ................ 4,685,418
23,333 Corus Entertainment Inc., Cl. B+ 610,223
265,000 Granite Broadcasting Corp.+ 1,888,125
15,000 Gray Communications Systems Inc. 178,125
185,000 Gray Communications Systems Inc.,
Cl. B ..................... 2,173,750
MARKET
SHARES VALUE
------ ------
125,000 Grupo Televisa SA, GDR+ .... $ 8,500,000
170,000 Liberty Corp. .............. 6,375,000
115,000 Paxson Communications Corp.,
Cl. A+ .................... 891,250
10,000 Price Communications Corp.+ 230,000
400,000 Television Broadcasting Ltd. 3,557,416
246,700 United Television Inc. ..... 32,656,912
35,000 Young Broadcasting Inc., Cl. A+ 665,000
--------------
96,634,848
--------------
BUILDING AND CONSTRUCTION -- 0.2%
61,111 Huttig Building Products Inc.+ 274,999
175,000 Nortek Inc.+ ............... 3,871,875
4,333 Nortek Inc., Special Common+ (a) 95,868
--------------
4,242,742
--------------
BUSINESS SERVICES -- 1.6%
60,000 Berlitz International Inc.+ 686,250
100,000 Burns International Services Corp. 1,050,000
199,962 Cendant Corp.+ ............. 3,699,297
125,000 Ecolab Inc. ................ 4,585,937
10,000 Imation Corp.+ ............. 266,875
50,000 IMS Health Inc. ............ 846,875
66,500 Landauer Inc. .............. 1,213,625
135,000 Nashua Corp.+ .............. 1,130,625
1 Sabre Holdings Corp.+ ...... 25
750,000 U.S. Foodservice+ .......... 19,312,500
--------------
32,792,009
--------------
CABLE -- 4.3%
635,000 Cablevision Systems Corp., Cl. A+ 38,576,250
40,000 Comcast Corp., Cl. A ....... 1,650,000
40,000 Comcast Corp., Cl. A, Special 1,735,000
480,000 MediaOne Group Inc.+ ....... 38,880,000
60,000 Shaw Communications Inc., Cl. B 1,610,461
80,000 Shaw Communications Inc., Cl. B,
Non-Voting+ ............... 2,155,000
20,000 UnitedGlobalCom Inc., Cl. A+ 1,501,250
--------------
86,107,961
--------------
CLOSED-END FUNDS -- 0.1%
84,000 Royce Value Trust Inc. ..... 1,160,250
--------------
COMMUNICATIONS EQUIPMENT -- 0.5%
305,000 Allen Telecom Inc.+ ........ 4,860,937
40,000 Motorola Inc. .............. 5,695,000
--------------
10,555,937
--------------
COMPUTER HARDWARE -- 0.1%
50,000 Xerox Corp. ................ 1,300,000
--------------
COMPUTER SOFTWARE AND SERVICES -- 0.1%
24,000 Internet.com Corp.+ ........ 1,005,000
--------------
10
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS -- 3.4%
10,000 Avon Products Inc. ......... $ 290,625
660,000 Carter-Wallace Inc. ........ 12,375,000
2,750 Christian Dior SA .......... 636,459
260,000 Church & Dwight Co. Inc. ... 4,468,750
10,000 Clorox Co. ................. 325,000
15,000 Department 56 Inc.+ ........ 222,187
240,000 Fortune Brands Inc. ........ 6,000,000
330,000 Gallaher Group plc, ADR .... 6,496,875
250,000 General Cigar Holdings Inc.+ 3,781,250
93,356 General Cigar Holdings Inc.,
Cl. B+ (a) ................ 1,406,175
150,000 Gillette Co. ............... 5,653,125
40,000 Harley Davidson Inc. ....... 3,175,000
25,000 Maytag Corp. ............... 828,125
40,000 National Presto Industries Inc. 1,305,000
115,000 Philip Morris Companies Inc. 2,429,375
700,000 Ralston Purina Group ....... 19,162,500
41,000 Syratech Corp.+ ............ 328,000
--------------
68,883,446
--------------
CONSUMER SERVICES -- 0.3%
50,000 Ogden Corp. ................ 596,875
400,000 Rollins Inc. ............... 5,950,000
--------------
6,546,875
--------------
DIVERSIFIED INDUSTRIAL -- 2.6%
5,000 Anixter International Inc.+ 139,375
25,000 Cooper Industries Inc. ..... 875,000
275,000 Crane Co. .................. 6,479,687
65,000 Gardner Denver Machinery Corp.+ 1,222,812
205,000 GATX Corp. ................. 7,790,000
2,000 General Electric Co. ....... 310,375
140,000 GenTek Inc. ................ 1,960,000
65,000 Honeywell Inc. ............. 3,424,687
291,800 ITT Industries Inc.+ ....... 9,064,037
150,000 Katy Industries Inc. ....... 1,378,125
360,000 Lamson & Sessions Co.+ ..... 2,677,500
89,550 Myers Industries Inc. ...... 1,074,600
115,000 National Service Industries Inc. 2,422,187
10,000 Pentair Inc. ............... 370,625
125,000 Reynolds Metals Co. ........ 8,359,375
140,000 Thomas Industries Inc. ..... 2,625,000
15,000 TI Group plc ............... 74,171
80,000 Trinity Industries Inc. .... 1,895,000
20,000 Tyco International Ltd. .... 997,500
--------------
53,140,056
--------------
ELECTRONICS -- 1.3%
10,000 Advanced Micro Devices Inc.+ 570,625
3,000 Hitachi Ltd., ADR .......... 365,625
13,000 Kyocera Corp., ADR ......... 2,158,000
MARKET
SHARES VALUE
------ ------
1,500 Molex Inc., Cl. A .......... $ 66,562
880,000 Oak Technology Inc.+ ....... 16,940,000
20,000 Sony Corp., ADR ............ 5,602,500
25,000 Thomas & Betts Corp. ....... 706,250
--------------
26,409,562
--------------
ENERGY AND UTILITIES -- 5.4%
140,000 AGL Resources Inc. ......... 2,572,500
100,000 Atlantic Richfield Co. ..... 8,500,000
500 Berkshire Energy Resources . 18,078
70,000 BP Amoco plc, ADR .......... 3,714,375
38,000 Brown (Tom) Inc. ........... 698,250
30,000 Chevron Corp. .............. 2,773,125
180,000 Columbia Energy Group ...... 10,665,000
350,000 Conectiv Inc. .............. 6,125,000
68,000 Devon Energy Corp. ......... 3,302,250
39,998 DPL Inc. ................... 887,456
30,000 E'Town Corp. ............... 1,897,500
175,000 Eastern Enterprises ........ 10,478,125
100,000 El Paso Electric Co.+ ...... 1,037,500
30,000 Energy East Corp. .......... 594,375
15,000 EnergyNorth Inc. ........... 875,625
60,000 EOG Resources Inc. ......... 1,271,250
115,000 Exxon Mobil Corp. .......... 8,948,437
100,000 Florida Progress Corp. ..... 4,587,500
16,000 Florida Public Utilities Co. 210,000
25,000 Global Marine Inc.+ ........ 634,375
40,000 Halliburton Co. ............ 1,640,000
125,000 MCN Energy Group Inc. ...... 3,125,000
155,000 Niagara Mohawk Power Corp. . 2,092,500
100,000 Northeast Utilities ........ 2,150,000
50,000 Pennzoil-Quaker State Co.+ . 521,875
10,000 SJW Corp. .................. 1,170,000
325,000 Southwest Gas Corp. ........ 6,195,312
150,000 Texaco Inc. ................ 8,043,750
20,000 TNP Enterprises Inc. ....... 876,250
165,800 United Water Resources Inc. 5,761,550
5,000 Vastar Resources Inc. ...... 371,563
200,000 WICOR Inc. ................. 6,200,000
--------------
107,938,521
--------------
ENTERTAINMENT -- 15.6%
60,000 Disney (Walt) Co. .......... 2,482,500
19,406 EMI Group plc .............. 215,092
100,000 EMI Group plc, ADR ......... 2,137,500
24,000 Fisher Companies Inc. ...... 1,500,000
40,000 Fox Entertainment Group Inc. 1,197,500
185,000 GC Companies Inc.+ ......... 6,428,750
2,200,000 Liberty Media Group, Cl. A+ 130,350,000
10,000 Metro-Goldwyn-Mayer Inc.+ .. 254,375
180,000 Seagram Co. ................ 10,710,000
700,000 Time Warner Inc. ........... 70,000,000
11
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
ENTERTAINMENT (CONTINUED)
11,000 Todd-AO Corp., Cl. A ....... $ 379,500
1,730,000 USA Networks Inc.+ ......... 39,033,125
920,000 Viacom Inc., Cl. A+ ........ 49,162,500
--------------
313,850,842
--------------
ENVIRONMENTAL SERVICES -- 0.3%
77,500 EnviroSource Inc.+ ......... 58,125
200,000 Republic Services Inc.+ .... 2,187,500
350,000 Waste Management Inc. ...... 4,790,625
--------------
7,036,250
--------------
EQUIPMENT AND SUPPLIES -- 6.6%
310,000 AMETEK Inc. ................ 5,967,500
75,000 Amphenol Corp., Cl. A+ ..... 7,668,750
72,000 Caterpillar Inc. ........... 2,839,500
100,000 CIRCOR International Inc.+ . 1,331,250
110,000 CLARCOR Inc. ............... 1,952,500
122,000 CTS Corp. .................. 6,954,000
10,000 Danaher Corp. .............. 510,000
380,000 Deere & Co. ................ 14,440,000
230,000 Donaldson Co. Inc. ......... 5,189,375
60,000 Fedders Corp. .............. 333,750
500,000 Flowserve Corp. ............ 6,437,500
165,000 Gerber Scientific Inc. ..... 3,186,562
310,000 Hussmann International Inc. 3,933,125
462,000 IDEX Corp. ................. 12,589,500
15,000 Ingersoll-Rand Co. ......... 663,750
200,000 Kollmorgen Corp. ........... 2,750,000
90,000 Lufkin Industries Inc. ..... 1,305,000
18,000 Manitowoc Co. Inc. ......... 487,125
523,500 Mark IV Industries Inc. .... 11,549,719
35,000 Met-Pro Corp. .............. 319,375
430,000 Navistar International Corp.+ 17,253,750
20,000 PACCAR Inc. ................ 1,000,000
95,000 Sequa Corp., Cl. A+ ........ 3,764,375
101,000 Sequa Corp., Cl. B+ ........ 4,772,250
205,000 SPS Technologies Inc.+ ..... 6,252,500
300,000 UCAR International Inc.+ ... 3,956,250
30,000 Valmont Industries Inc. .... 517,500
310,000 Watts Industries Inc., Cl. A 3,836,250
120,000 Weir Group plc ............. 369,779
--------------
132,130,935
--------------
FINANCIAL SERVICES -- 6.1%
14,000 Aegon NV, ADR .............. 1,127,875
70,000 Aetna Inc. ................. 3,898,125
1 Al-Zar Ltd.+ (a) ........... 350
4,080 Alleghany Corp. ............ 767,040
115,000 Allstate Corp. ............. 2,738,437
MARKET
SHARES VALUE
------ ------
85,000 American Express Co. ....... $ 12,659,688
55,000 Argonaut Group Inc. ........ 1,103,438
60,000 Bank One Corp. ............. 2,062,500
220 Berkshire Hathaway Inc., Cl. A+ 12,584,000
130,000 Block (H&R) Inc. ........... 5,817,500
110,000 Commerzbank AG, ADR ........ 4,152,500
150,000 Deutsche Bank AG, ADR ...... 9,956,250
25,000 Dresdner Bank AG, ADR ...... 1,029,127
185,000 First Union Corp. .......... 6,891,250
113,500 Lehman Brothers Holdings Inc. 11,009,500
35,000 Leucadia National Corp. .... 831,250
100,000 Mellon Financial Corp. ..... 2,950,000
31,834 Metris Companies Inc. ...... 1,237,547
249,000 Midland Co. ................ 5,851,500
2,000 MONY Group Inc. ............ 64,625
50,000 Paine Webber Group Inc. .... 2,200,000
50,000 Pioneer Group Inc.+ ........ 1,162,500
130,000 St. Paul Companies Inc. .... 4,436,250
43,000 State Street Corp. ......... 4,165,625
20,000 SunTrust Banks Inc. ........ 1,155,000
500,000 Travelers Property Casualty
Corp., Cl. A .............. 20,625,000
8,000 Value Line Inc. ............ 296,000
35,000 Waddell & Reed Financial
Inc., Cl. A ............... 1,480,938
--------------
122,253,815
--------------
FOOD AND BEVERAGE -- 6.0%
150,000 Bestfoods Inc. ............. 7,021,875
195,000 Brown-Forman Corp., Cl. A .. 10,091,250
60,000 Celestial Seasonings Inc.+ . 2,062,500
45,000 Coca-Cola Co. .............. 2,112,188
250,000 Corn Products International Inc. 6,015,625
90,000 Diageo plc, ADR ............ 2,711,250
7,000 Farmer Brothers Co. ........ 1,253,000
390,000 General Mills Inc. ......... 14,113,125
80,000 Heinz (H.J.) Co. ........... 2,790,000
70,000 Hershey Foods Corp. ........ 3,412,500
30,000 Keebler Foods Co.+ ......... 860,625
263,000 Kellogg Co. ................ 6,739,375
33,000 LVMH Moet Hennessy Louis
Vuitton, ADR .............. 2,805,000
400,000 Pepsi Bottling Group Inc. .. 8,000,000
490,000 PepsiCo Inc. ............... 16,935,625
180,000 Quaker Oats Co. ............ 10,912,500
100,000 Ralcorp Holdings Inc.+ ..... 1,450,000
15,000 Sara Lee Corp. ............. 270,000
137,495 Tootsie Roll Industries Inc. 4,331,083
750,000 Whitman Corp. .............. 10,453,125
78,000 Wrigley (Wm.) Jr. Co. ...... 5,991,375
--------------
120,332,021
--------------
12
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
HEALTH CARE -- 2.1%
65,000 American Home Products Corp. $ 3,485,625
48,000 Amgen Inc.+ ................ 2,946,000
36,000 Biogen Inc.+ ............... 2,515,500
43,500 Block Drug Co. Inc., Cl. A . 1,198,969
40,000 Chiron Corp.+ .............. 1,995,000
10,000 Glaxo Wellcome plc, ADR .... 573,125
110,000 IVAX Corp.+ ................ 2,997,500
64,000 Johnson & Johnson .......... 4,484,000
11,100 Life Technologies Inc. ..... 555,000
110,000 Merck & Co. Inc. ........... 6,833,750
270,000 Pfizer Inc. ................ 9,871,875
40,000 SmithKline Beecham plc, ADR 2,642,500
70,000 VISX Inc.+ ................. 1,277,500
120,000 Women First HealthCare Inc.+ 570,000
--------------
41,946,344
--------------
HOTELS AND GAMING -- 1.8%
80,000 Aztar Corp.+ ............... 760,000
65,000 Boca Resorts Inc., Cl. A+ .. 556,563
330,000 Gaylord Entertainment Co. .. 8,951,250
30,000 GTECH Holdings Corp.+ ...... 556,875
12,000 Harrah's Entertainment Inc. 222,750
914,000 Hilton Group plc ........... 4,246,556
650,000 Hilton Hotels Corp. ........ 5,037,500
5,000 MGM Grand Inc. ............. 120,000
100,000 Mandalay Resort Group ...... 1,687,500
350,000 Mirage Resorts Inc.+ ....... 6,781,250
220,000 Park Place Entertainment Corp.+ 2,543,750
160,000 Starwood Hotels & Resorts
Worldwide Inc. ............ 4,200,000
60,000 Trump Hotels & Casino
Resorts Inc.+ ............. 191,250
--------------
35,855,244
--------------
METALS AND MINING -- 0.2%
30,000 Barrick Gold Corp. ......... 470,625
250,000 Echo Bay Mines Ltd.+ ....... 328,125
45,000 Homestake Mining Co. ....... 270,000
110,000 Newmont Mining Corp. ....... 2,468,125
25,000 Placer Dome Inc. ........... 203,125
250,000 Royal Oak Mines Inc.+ ...... 2,500
200,000 TVX Gold Inc.+ ............. 150,000
--------------
3,892,500
--------------
PAPER AND FOREST PRODUCTS -- 0.8%
220,000 Greif Bros. Corp., Cl. A ... 7,012,500
312,000 St. Joe Co. ................ 9,028,500
--------------
16,041,000
--------------
PUBLISHING -- 4.2%
20,000 Central Newspapers Inc., Cl. A 672,500
22,000 Dow Jones & Co. Inc. ....... 1,579,875
MARKET
SHARES VALUE
------ ------
115,000 Harcourt General Inc. ...... $ 4,283,750
50,000 Lee Enterprises Inc. ....... 1,306,250
60,000 McClatchy Newspapers Inc., Cl. A 1,965,000
140,000 McGraw-Hill Companies Inc. . 6,370,000
418,000 Media General Inc., Cl. A .. 21,892,750
85,000 Meredith Corp. ............. 2,353,438
132,000 New York Times Co., Cl. A .. 5,667,750
15,000 News Corp. Ltd., ADR ....... 843,750
399,000 Penton Media Inc. .......... 10,374,000
15,000 PRIMEDIA Inc.+ ............. 480,000
116,000 Pulitzer Inc. .............. 4,741,500
140,000 Reader's Digest Association
Inc., Cl. B ............... 4,007,500
6,000 Scripps (E.W.) Co., Cl. A .. 291,000
1,650,000 Seat-Pagine Gialle SpA ..... 8,184,179
115,000 Thomas Nelson Inc. ......... 912,813
100,000 Times Mirror Co., Cl. A .... 9,293,750
10,000 Tribune Co. ................ 365,625
--------------
85,585,430
--------------
REAL ESTATE -- 0.4%
400,000 Catellus Development Corp.+ 5,550,000
48,000 Florida East Coast Industries Inc. 2,328,000
71,000 Griffin Land & Nurseries Inc.+ 781,000
3,961 HomeFed Corp.+ ............. 2,535
--------------
8,661,535
--------------
RETAIL -- 2.6%
41,000 Aaron Rents Inc. ........... 617,563
20,000 Aaron Rents Inc., Cl. A .... 342,500
550,000 Albertson's Inc. ........... 17,050,000
565,000 AutoNation Inc.+ ........... 4,484,688
195,000 Blockbuster Inc., Cl. A .... 1,950,000
175,000 Burlington Coat Factory
Warehouse Corp. ........... 3,007,813
38,000 Coldwater Creek Inc.+ ...... 646,000
130,000 Gerald Stevens Inc.+ ....... 1,040,000
40,000 Hannaford Bros. Co. ........ 2,950,000
140,000 Kroger Co.+ ................ 2,458,750
180,500 Lillian Vernon Corp. ....... 1,714,750
600,000 Neiman Marcus Group Inc., Cl. B+ 16,500,000
--------------
52,762,064
--------------
SATELLITE -- 0.2%
85,000 COMSAT Corp. ............... 1,753,125
95,000 Globalstar Telecommunications
Ltd.+ ..................... 1,318,125
20,000 Loral Space & Communications Ltd.+ 203,750
--------------
3,275,000
--------------
SPECIALTY CHEMICALS -- 1.2%
6,000 Bush Boake Allen Inc.+ ..... 166,875
58,000 Dexter Corp. ............... 3,074,000
3,000 du Pont de Nemours (E.I.) & Co. 158,625
440,000 Ferro Corp. ................ 7,837,500
13
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
SPECIALTY CHEMICALS (CONTINUED)
8,000 Fuller (H.B.) Co. .......... $ 319,500
105,000 General Chemical Group Inc. 223,125
45,000 Great Lakes Chemical Corp. . 1,530,000
155,000 Material Sciences Corp.+ ... 2,092,500
75,000 Monsanto Co. ............... 3,862,500
620,000 Omnova Solutions Inc. ...... 3,487,500
95,000 Sybron Chemicals Inc.+ ..... 1,341,875
--------------
24,094,000
--------------
TELECOMMUNICATIONS -- 10.5%
7,500 Allegiance Telecom Inc.+ ... 604,688
100,000 ALLTEL Corp. ............... 6,306,250
95,000 AT&T Corp. ................. 5,343,750
203,000 BCE Inc. ................... 25,463,813
37,500 BCT.Telus Communications Inc. 1,109,773
21,500 BCT.Telus Communications Inc.,
ADR ....................... 636,270
12,500 BCT.Telus Communications Inc.,
Cl. A ..................... 369,924
22,500 BCT.Telus Communications Inc.,
Cl. A, ADR ............... 665,864
35,000 Bell Atlantic Corp. ........ 2,139,375
40,000 BellSouth Corp. ............ 1,880,000
210,000 Cable & Wireless plc, ADR .. 11,760,000
1,000 Cable & Wireless Communications
plc, ADR .................. 85,000
32,000 Cable & Wireless HKT Ltd., ADR 824,000
545,000 CenturyTel Inc. ............ 20,233,125
420,000 Citizens Utilities Co., Cl. B+ 6,877,500
325,665 Commonwealth Telephone
Enterprises Inc.+ ......... 15,285,901
31,500 Commonwealth Telephone
Enterprises Inc., Cl. B+ .. 1,464,750
60,000 Embratel Participacoes SA, ADR+ 1,537,500
116,000 Esat Telecom Group plc, ADR+ 11,585,500
170,000 GTE Corp. .................. 12,070,000
295,000 RCN Corp.+ ................. 15,893,125
10,000 Rogers Communications Inc.,
Cl. B+ .................... 295,939
470,000 Rogers Communications Inc.,
Cl. B, ADR+ ............... 14,011,875
182,376 SBC Communications Inc. .... 7,659,792
180,000 Sprint Corp. ............... 11,340,000
13,500 Tele Centro Sul Participacoes
SA, ADR ................... 1,093,500
67,500 Tele Norte Leste Participacoes
SA, ADR ................... 1,797,188
500,000 Telecom Italia SpA ......... 7,468,889
119,000 Telecom Italia SpA, ADR .... 18,088,000
67,500 Telecomunicacoes de Sao Paulo
SA (Telesp), ADR .......... 2,003,906
46,818 Telefonica SA, ADR ......... 3,493,793
20,000 Telefonos de Mexico SA,
Cl. L, ADR ................ 1,340,000
20,000 US West Inc. ............... 1,452,500
--------------
212,181,490
--------------
MARKET
SHARES VALUE
------ ------
TRANSPORTATION -- 0.2%
95,000 AMR Corp.+ ................. $ 3,028,125
8,000 Kansas City Southern Industries
Inc. ...................... 687,500
2,000 Providence & Worcester
Railroad Co. .............. 14,750
5,000 Ryder System Inc. .......... 113,438
--------------
3,843,813
--------------
WIRELESS COMMUNICATIONS -- 6.2%
10,000 Leap Wireless International Inc.+ 986,875
42,000 Nextel Communications Inc., Cl. A+ 6,226,500
8,000 PNV.net Inc. ............... 36,000
120,000 Rogers Cantel Mobile
Communications Inc., Cl. B+ 4,852,500
90,000 Sprint Corp. (PCS Group)+ .. 5,878,125
6,750 Tele Celular Sul Participacoes
SA, ADR ................... 337,500
22,500 Tele Centro Oeste Celular
Participacoes SA, ADR .. 261,563
1,350 Tele Leste Celular Participacoes
SA, ADR ................... 81,000
3,375 Tele Nordeste Celular Participacoes
SA, ADR ................... 242,156
1,350 Tele Norte Celular Participacoes
SA, ADR ................... 83,700
13,500 Tele Sudeste Celular Participacoes
SA, ADR ................... 674,156
1,800,000 Telecom Italia Mobile SpA .. 22,096,421
3,375 Telemig Celular Participacoes
SA, ADR ................... 298,898
698,000 Telephone & Data Systems Inc. 77,478,000
27,000 Telesp Celular Participacoes
SA, ADR ................... 1,530,563
25,000 Vodafone AirTouch plc, ADR . 1,389,063
15,000 VoiceStream Wireless Corp.+ 1,932,188
--------------
124,385,208
--------------
TOTAL COMMON STOCKS ........ 1,923,176,572
--------------
PREFERRED STOCKS -- 0.1%
METALS AND MINING -- 0.0%
10,000 Freeport-McMoRan Copper & Gold Inc.,
7.00% Cv. Pfd. ............ 148,125
--------------
TELECOMMUNICATIONS -- 0.1%
13,000 Citizens Utilities Co.,
5.00% Cv. Pfd. ............ 812,500
8,604,119 Telecomunicacoes de Sao Paulo
SA (Telesp), Pfd. ......... 252,961
--------------
1,065,461
--------------
WIRELESS COMMUNICATIONS -- 0.0%
7,686,100 Telesp Celular Participacoes
SA, Pfd.+ ................. 174,333
--------------
TOTAL PREFERRED STOCKS ..... 1,387,919
--------------
14
<PAGE>
THE GABELLI ASSET FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- MARCH 31, 2000 (UNAUDITED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------ ------
CORPORATE BONDS -- 0.0%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.0%
$ 1,000,000 Standard Motor Products Inc.,
Sub. Deb. Cv.
6.75%, 07/15/09 ........... $ 718,750
--------------
U.S. GOVERNMENT OBLIGATIONS -- 4.3%
87,579,000 U.S. Treasury Bills,
5.37% to 5.93%++,
due 04/06/00 to 05/18/00 .. 87,217,069
--------------
TOTAL INVESTMENTS -- 99.9%
(Cost $1,131,239,157) .... 2,012,500,310
OTHER ASSETS AND
LIABILITIES (NET) -- 0.1% 2,419,909
--------------
NETASSETS -- 100.0%
(49,223,558 shares
outstanding) ............. $2,014,920,219
==============
NUMBER OF PREMIUM EXPIRATION STRIKE MARKET
CONTRACTS RECEIVED DATE PRICE VALUE
--------- -------- ---------- ------ ------
CALL OPTIONS WRITTEN
80,000 Reynolds Metals
$(202,600) 04/22/00 $70.00 $(210,000)
=========
PRINCIPAL SETTLEMENT NET UNREALIZED
AMOUNT DATE APPRECIATION
--------- ---------- --------------
FORWARD FOREIGN EXCHANGE CONTRACTS
19,646,294(b) Deliver Hong Kong Dollars
in exchange for
USD 2,494,134 08/24/00 $(29,050)
========
----------------
- ------------------------
(a) Security fair valued under procedures established 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>
THE GABELLI ASSET FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
FAX: 1-914-921-5118
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Karl Otto Pohl
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 OFFICER CHAIRMAN
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
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.
- --------------------------------------------------------------------------------
GAB405Q100SR
[Photo of Mario J. Gabelli omitted]
THE
GABELLI
ASSET
FUND
FIRST QUARTER REPORT
MARCH 31, 2000
