[Photo of Mario J. Gabelli]
THE
GABELLI
ABC
FUND
FIRST QUARTER REPORT
MARCH 31, 1995
<PAGE>
THE GABELLI ABC FUND
One Corporate Center
Rye, New York 10580-1434
FIRST QUARTER-1995
TO OUR SHAREHOLDERS:
Robust corporate profits and investors' growing confidence that the Federal
Reserve will successfully engineer a soft landing for the economy propelled the
stock market to record highs in the first quarter of 1995. Large cap growth
stocks, particularly in the technology and consumer non-durable sectors, led the
market. The Gabelli ABC Fund, which seeks to achieve a positive return in
various market environments, returned 3.9% for the quarter compared to the S&P
500's 9.7% gain.
INVESTMENT RESULTS(a)
- --------------------------------------------------------------------------------
Quarter
-----------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1995: Net Asset Value..... $9.94 --- --- --- ---
Total Return ..... 3.9% --- --- --- ---
- --------------------------------------------------------------------------------
1994: Net Asset Value.... $10.12 $10.11 $10.42 $9.57 $9.57
Total Return .... 0.9% (0.1)% 3.1% 0.6% 4.5%
- --------------------------------------------------------------------------------
1993: Net Asset Value.... --- $10.10 $10.63 $10.03 $10.03
Total Return .... --- 1.0%(b) 5.2% 2.6% 9.1%(b)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average Annual Returns - March 31, 1995 (a)
- -------------------------------------------
1 Year................................... 7.6%
....................................... 5.4%(c)
Life of Fund(b)........................... 18.5%
......................................... 9.4%(c)
- --------------------------------------------------------------------------------
Dividend History
- -----------------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- -------------------
December 31, 1993 $0.88 $10.03
December 28, 1994 $0.91 $9.52
(a) Total return and average annual return reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of the
Fund is reduced on the ex-dividend (payment) date by the amount of the dividend
paid. Of course, returns represent past performance and do not guarantee future
results. Investment returns and the principal value of an investment will
fluctuate. When shares are redeemed they may be worth more or less than their
original cost. (b) From commencement of operations on May 14, 1993. (c) Adjusted
for the maximum 2.0% sales charge applicable to investments not participating in
the Performance Guaranty Program.
Broader market indices such, as the Value Line Composite (+5.2%) and small
cap indices like the Russell 2000 (+4.6%), also performed well on an absolute
return basis, but lagged the more widely followed market yardsticks.
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WHAT WE DO
We do what is described as bottom up research: we read annual reports; we
visit the competition; we talk to customers; we go belly to belly with
management. We structure our portfolio by picking stocks.
In past reports, we have tried to articulate our investment philosophy and
methodology. The following graphic further illustrates the interplay among the
four components of our valuation approach.
[Graphic]
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 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.
When we identify stocks that qualify as fundamental and conceptual
bargains, we then become patient investors. This has been a proven long-term
method for preserving and enhancing wealth in the U.S. equities market. At the
margin, our new investments are focused on businesses that are well managed and
will benefit from sustainable long-term economic dynamics. These include macro
trends, such as globalization of the market in filmed entertainment and
telecommunications, and micro trends, such as increased focus on productivity
enhancing goods and services.
COMMENTARY
The Market
- ----------
We were pleasantly surprised by the market's strength in the first quarter.
Corporate earnings continued to exceed consensus expectations with some signs of
a slowing economy. Federal Reserve Chairman Alan Greenspan hinted that further
short-term rate hikes may not be necessary. Long bonds rallied on the news,
providing an additional tailwind for equities.
With this strong quarter behind us, we look to the future. Our concerns
include an anemic dollar that central bank intervention alone may not be able to
cure. Will Doctor Greenspan, however reluctantly, be forced to administer an
interest rate booster shot to prop up the greenback? We can't ignore the
possibility of more inflation than is currently anticipated. Raw materials
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prices, oil and gold are rising again. Also, all may not be as quiet as it seems
on the labor front. Finally, our distrust of strong consensus opinion makes us
cautious. At current levels, the market may already be fully discounting all the
good news.
A NEW ERA OF GLOBAL CONSOLIDATION
On the positive side of the ledger, accelerating merger and acquisition
activity in a broad range of industries is once again focusing Wall Street's
attention on value. In our 1994 Annual Report, we discussed the dawning of a new
era of strategic global consolidation. Our thesis is that in an increasingly
competitive global business environment, corporate managements here and abroad
are recognizing that extending product lines and building international
distribution systems are critical to growth, if not survival.
The necessary financial ingredients are in place. The world is full of
willing lenders, equity is a viable currency, and there are still a lot of
attractive franchises that are far cheaper to buy than build. Also, the weak
dollar makes shopping for businesses in the U.S. stock market a real bargain for
European and Japanese companies. Capital gains tax relief in the U.S. would help
further incentivize sellers.
We also opined that General Electric's (GE - $54.125 - NYSE) unsolicited
bid for Kemper Corporation (KEM - $40.375 - NYSE) signalled the re-emergence of
the hostile tender offer. We believe deals are going to be aggressively pursued
regardless of target companies' willingness to politely negotiate. Our opinions
are being validated by a surge in hostile bids. Already in 1995, we have seen
six unsolicited bids for companies totalling more than $20 billion. This
compares to approximately $24 billion in hostile bids for all of 1994.
This dynamic has a powerful impact on investor perception. Ingersoll Rand's
(IR - $32.875 - NYSE) hostile bid for Clark Equipment Company (CKL - NYSE -
$82.50) in late March, almost single handedly sparked a sharp rally in cyclical
stocks. Investors who had been rotating out of industrial companies due to
expectations of decelerating earnings began positively re-assessing this sector
on the basis of cash flow and long-term strategic values.
How does this impact our Fund? As cash flow oriented value investors
focusing on dominant franchise companies, we expect to benefit in two ways from
ongoing global consolidation. Firstly, we think our portfolio represents an
excellent shopping list for corporate bargain hunters. We expect to move more of
our portfolio inventory over the next several years. Secondly, as deal flow
accelerates, investors' focus shifts from net earnings to cash flow, (a much
better barometer of business worth), helping others "discover" our type of
value. This will serve as a rising tide that should lift many of the boats in
our portfolio.
TAKING ADVANTAGE OF THE DOLLAR
While the weak dollar is problematic for certain sectors of the U.S.
economy and the broad stock market, it is a boon for American manufacturers with
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"world class" products and well developed international distribution systems.
Ten years ago, smart investors avoided companies that competed with Japan.
Today, due in part to the cheap dollar versus the yen, those same smart folks
are seeking out efficient U.S. companies that are going head to head against the
Japanese. Auto and auto parts manufacturers, telecommunications equipment makers
and agricultural equipment companies are some of the more direct beneficiaries.
I HAVE JUST ONE WORD FOR YOU, EDGAR: ENTERTAINMENT!
As of this writing, Seagram Company, Ltd. (VO - $31.75 - NYSE) is expected to
announce the sale of its 25% ownership position in E.I. du Pont de Nemours (DD -
$60.50 - NYSE) and the purchase of a majority stake in MCA, the filmed
entertainment producer and distributor currently owned by Japan's Matsushita
Electric (MC - $158.00 - NYSE). We are reminded of the famous line in Mike
Nichols' award winning film The Graduate: " I have just one word for you,
Benjamin: Plastics!" Someone has convinced Seagram's CEO Edgar Bronfman that the
future is in filmed entertainment, not chemicals or plastics. No details on the
proposed transaction have been released and if it does transpire, only time will
tell if it will ultimately be a box office blockbuster for Seagrams'
shareholders. However, as interactive media becomes a reality worldwide, we do
see unparalleled growth potential for entertainment software providers. It
underscores our belief that portfolio companies like Time Warner Inc. (TWX -
$37.75 - NYSE) and Viacom Inc. (VIA - $45.75 - NYSE) are materially undervalued
at current prices.
NEW 5% PERFORMANCE GUARANTY PROGRAM FOR 1995
On January 3, 1995, Gabelli Funds, Inc. launched its third Performance
Guaranty Program, once again guaranteeing your principal investment up to $5,000
plus a return of at least 5% for the one year period through December 31, 1995.
Accounts which participated in the 1994 Performance Guaranty Program are
participating in the new program up to $5,000 if their investment remained in
the Fund on January 3, 1995 and is held through December 31, 1995 and
distributions are reinvested. There was no sales charge for investments covered
by the new program. The portion of any new investment in excess of $5,000 made
on January 3, 1995 and additional investments made subsequent to that date are
subject to a 2% sales charge.
We thought we would structure this report to you in a Question and Answer
format. Questions that individuals have asked us about The Gabelli ABC Fund
include the following:
QUESTION: WHERE IS THE GUARANTY COMING FROM?
Answer: The Guaranty is from State Street Bank and Trust Company. In addition,
the Gabelli organization has pledged collateral to State Street Bank to make the
investor whole. Simply stated, the Gabelli organization is putting its capital
behind the guaranty.
QUESTION: HOW DO YOU GUARANTEE A RETURN?
Answer: Gabelli Funds has arranged for the Letter of Credit to serve as the
guarantee. Gabelli Funds posts collateral to support the amount of the Letter of
Credit. Fees and expenses associated with developing the Letter of Credit are
assumed by Gabelli Funds.
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QUESTION: ARE OUR PERSONAL HOLDINGS IN THE GABELLI ABC FUND LIQUID?
Answer: As with any mutual fund, you may sell your shares on any day at the
current net asset value. However, to maintain the guaranty you must hold the
shares for the entire guaranty period.
QUESTION: WHAT HAPPENS IF THE GABELLI ORGANIZATION MAKES POOR INVESTMENTS?
Answer: This is a mutual fund and functions like a mutual fund. The assets are
invested by the investment advisor and State Street Bank serves as the
custodian. If the market were to drop sharply, and the investments in the
portfolio were to decline sharply, the shareholders would look to State Street
Bank for the return of their money plus 5%. State Street looks to Gabelli.
QUESTION: HOW HAVE WE DONE SO FAR?
Answer: The first Performance guaranty period was from May 14, 1993 through May
13, 1994 during which period the fund grew by 9.8%. During the second
performance guaranty period (January 3, 1994 through December 31, 1994)
investors earned 4.74% and were paid the shortfall to bring the total return to
5%. We are up 3.9% through March 31, 1995.
QUESTION: HOW DID THE FUND PAY A $0.91 PER SHARE DIVIDEND, BUT ONLY GROW BY 4.5%
FOR THE YEAR?
Answer: We selectively acquired investments in the equity markets that we
believed would generate positive returns. Our focused selections performed well
while our U.S. Treasury securities generated income to meet tax requirements
while it also immunized the portfolio against market declines. But as a mutual
fund we must pay out virtually all of its dividend and interest income, net of
expenses, as well as realized capital gains to avoid paying taxes at the Fund
level. This payout represented 9.1% of your investment on January 3, 1994.
However certain securities held in the portfolio declined in market value. This
"unrealized " depreciation during 1994 reduced our annual return to 4.5% for the
full year.
QUESTION: WHAT IMPACT WILL THIS DIVIDEND HAVE ON THE 5% GUARANTY?
Answer: These dividends which were distributed by the Fund and reinvested by
shareholders are counted as part of the guaranteed return.
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QUESTION: WHAT WERE THE RESULTS FOR 1994?
Answer: On a $5,000 investment on January 3, 1995, shareholders received the
Letter of Credit proceeds of $12.85. If shareholders remained in the Fund, they
automatically participate in the 1995 performance guaranty program up to $5,000.
Shares owned in excess of $5,000 participate in the actual performance of the
Fund. If they choose to redeem their shares before December 31, 1995 they would
do so at the current net asset value.
QUESTION: WHAT ABOUT THE INVESTMENT STRATEGY?
Answer: We are still being somewhat cautious. Last year's results were helped by
opportunistic investments, but rising interest rates dampened returns on our
fixed income investments.
QUESTION: WHAT ARE THE RISKS INVOLVED?
Answer: With the standby Letter of Credit, the Performance Guaranty Program has
been designed to minimize risks. The principle risk is the failure of any party
to fulfill its obligation under the contract. State Street Bank and Trust
Company has a high quality credit rating and a strong reputation.
QUESTION: AS FOR 1995, WON'T THE HIGH EXPENSE RATIO DETER THE POTENTIAL FOR
GAINS GREATER THAN 5%?
Answer: Because of its small size, the Fund's expense ratio is higher than
larger mutual funds. This will have a direct effect on the Fund's net returns to
shareholders. If the fund size increases through additional investments or
appreciation, the effect of fixed expenses is reduced. In any event, your
returns will be no less than the performance guaranty amount on covered
investments.
QUESTION: WHY ARE YOU DOING THIS?
Answer: Gabelli Funds started this Fund to attract investors wary of the
securities market and individuals unfamiliar with mutual funds. Low interest
rates caused many to look for higher returns without risk. This Fund provides an
answer to all of these concerns. We wanted to offer a unique product which
differentiates our organization from other mutual fund groups. This product is
an introduction to mutual fund investing.
QUESTION: WHAT TYPE OF FUND IS IT?
Answer: It is a Fund that will utilize various investment techniques to generate
positive returns in various market conditions without excessive risk of capital.
This is a flexible portfolio.
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QUESTION: HOW WILL I BE PAID IN THE EVENT THE FUND DOES NOT PERFORM TO THE
GUARANTY?
Answer: If we do not achieve our total return of 5%, State Street Bank and Trust
Company will fund your investment account with the difference. If you elect to
redeem the Fund at the end of the guaranty program, your investment plus
proceeds from the Letter of Credit will be directed to you either by check or
exchanged into The Gabelli U.S. Treasury Money Market Fund. Alternatively, the
proceeds and your original investment may continue to be invested in the Fund.
QUESTION: IS MY PRINCIPAL GUARANTEED?
Answer: Yes, up to $5,000 for 1995. The Letter of Credit issued by State Street
Bank and Trust Company guaranteed your principal plus a minimum 5% return, if
you hold the securities and reinvest your dividends throughout the guaranty
period.
LET'S TALK STOCKS
The following are stock specifics on selected holdings
of our Fund's investments. Favorable EBITDA prospects do not necessarily
translate into higher stock prices, but they do express a positive trend which
we believe will develop over time.
LIN BROADCASTING CORP. (LINB - $121.75 - NASDAQ) is among the largest and most
attractive cellular telephone operators in the U.S. with controlling interests
in the New York, Los Angeles, Dallas and Houston markets. McCaw Cellular
Communications, which was acquired by AT&T in 1994, controls 52% of LIN. McCaw
(AT&T) is scheduled to purchase the 48% balance of LIN for $127.50 in cash. The
Fund is holding LIN to earn the difference between the current market and the
eventual "take out" price of LIN.
MARION MERRELL DOW - (MKC - $24.75- NYSE) announced it is in talks to be
acquired by Hoechst AG for $25.75 a share, or $7.1 billion. Hoechst's board has
approved the proposed acquisition of MKC. The two parties must still execute a
definitive agreement. MKC believes the two sides are close to a deal and that a
definitive agreement might be completed in the upcoming weeks. Hoechst is
pursuing MKC largely to gain a greater presence in the U.S., the world's largest
pharmaceutical market. Hoechst's follows other big European concerns that have
gained entry into the United States through major acquisitions, like
Ciba-Geigy's $2.1 billion investment in Chiron Corporation and Roche Holding's
$5.3 billion merger with Syntex Corporation. The combined company would be the
world's third largest drugmaker, with yearly sales of about $9 billion and
products ranging from Seldane allergy medication to generic Albuterol. We hold a
position in MKC.
CHICAGO AND NORTH WESTERN HOLDING COMPANY - (CNW - $34.75 - NYSE) has agreed to
be acquired by Union Pacific Corporation (UNP - $54.875 - NYSE) through a $35
cash tender offer. UNP already owns 30% of CNW and is buying the 70% of CNW it
doesn't own for $1.2 billion. The Interstate Commerce Commission has given UNP
approval to convert its non-voting stock into voting shares, and further
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approval to merge the two railroads is unnecessary. Freight railroads, which
have been reporting strong earnings from a rising U.S. economy and market-share
gains, have been prowling for mergers as they strive to compete with rival
truckers. The tender was completed on April 24, 1995. We established a large
position.
KATY INDUSTRIES (KT - $9.625 - NYSE ) operates its business through three
principal groups: industrial machinery, industrial components and consumer
products. Katy also has a substantial investment portfolio. The industrial
machinery group manufacturers and sells production machinery for the shoe making
industry, dye-cutting machinery and food packaging machinery. Industrial
components group manufactures and sells components such as specialty metals,
testing and measuring instruments. The consumer products group manufactures and
sells sanitary maintenance supplies and air filter and electronic components.
NORTEK (NTK - $10.375 - NYSE) is a diversified manufacturer of residential and
commercial building products, operating within three principal product groups:
Residential Building Products, Air Conditioning and Heating Products and
Plumbing Products. The company is a prime beneficiary of the do-it-yourself and
professional replacement, remodeling and renovation markets. Sales growth of
continuing businesses has been approximately 10% per year over the last few
years; the company returned to profitability in 1994.
CARTER-WALLACE (CAR - $11.875 - NYSE) markets toiletries, pharmaceuticals,
diagnostic specialties, proprietary drugs and pet products. Carter-Wallace
products include such recognized brand names as Arid, Nair and Pearl Drops. The
company's shares have been under a cloud since its drug FELBATOL, a promising
new therapy for patients with epilepsy, has had to be withdrawn from use due to
risk of a rare, fatal effect on bone marrow.
CONTEL CELLULAR (CCXLA - $25.25 - OTC) provides telephone services in
approximately 60 metropolitan areas and over 60 rural areas. The company is 90%
owned by GTE Corporation (GTE - $33.25 - NYSE) which acquired its interest in
CCXLA as part of its merger with Contel Corporation. Over the past 5 years,
annual compounded growth has exceeded 50%, which reflects the companies superior
customer service and innovative distribution and marketing program. In 1994,
Contel Cellular launched a wireless data tracking service, based on a successful
prototype program used by UPS to track parcel deliveries.
GABELLI U.S. TREASURY MONEY MARKET FUND
Many of our shareholders have become acquainted with The Gabelli U.S.
Treasury Money Market Fund. The Fund provides checkwriting and exchange
privileges. The Fund's expenses are capped at .30% of average net assets, making
it one of the most attractive U.S. Treasury-only money market funds. With
dividends that are exempt from state and local income taxes in all states, the
Fund is an excellent vehicle in which to store idle cash. Call us at
1-800-GABELLI (1-800-422-3554) for a prospectus which gives a more complete
description of the Fund, including management fees and expenses. Read it
carefully before you invest or send money.
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IN CONCLUSION
After a modest 1994, we are delighted the Fund has generated strong returns
in the first quarter of 1995. We remain cautious regarding the short-term
prospects for the broad market. With accelerating merger and acquisition
activity worldwide, we do expect investors to focus more intensely on value to
the general advantage of our portfolio.
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 GABCX. Please call us during the
day for further information.
We thank you for your confidence in our investing abilities and wish you a
productive and financially rewarding 1995.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
President and
Chief Investment Officer
May 1, 1995
TOP TEN HOLDINGS
MARCH 31, 1995
--------------
Chicago & North Western Holdings Corporation Pet Incorporated
Contel Cellular, Inc. LIN Broadcasting
Time Warner Inc. Katy Industries, Inc.
Marion Merrill Dow, Inc. Flagstar Companies
Nortek, Inc. Carter-Wallace, Inc.
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The Gabelli ABC Fund
Portfolio of Investments -- March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
Principal
Amount Market
or Shares Cost Value
- ---------- ----------- ----------
COMMON STOCKS--64.11%
AUTOMOTIVE: PARTS AND ACCESSORIES - 0.28%
3,000 Wynn's International, Inc. $ 63,150 $ 64,875
----------- ----------
AVIATION: PARTS AND ACCESSORIES - 0.11%
6,000 Hi-Shear Industries Inc.+ 31,300 25,500
----------- ----------
CABLE - 0.33%
2,000 Multimedia Inc.+ ...... 56,450 75,750
----------- ----------
CONSUMER PRODUCTS - 0.49%
9,500 Carter-Wallace, Inc.... 96,444 112,811
----------- ----------
DIVERSIFIED INDUSTRIAL - 0.84%
20,000 Katy Industries, Inc. . 499,425 192,500
----------- ----------
ENERGY - 0.33%
5,100 Southwest Gas Corporation 83,130 75,225
----------- ----------
FINANCIAL SERVICES - 0.05%
1,000 Duff & Phelps Corporation 12,425 11,250
----------- ----------
FOOD PRODUCTS AND SERVICES - 4.47%
40,000 Pet Incorporated ...... 1,029,500 1,025,000
----------- ----------
HEALTH CARE - 6.31%
58,500 Marion Merrell Dow Inc. 1,432,384 1,447,875
----------- ----------
INDUSTRIAL EQUIPMENT AND SUPPLIES - 0.53%
9,000 Ampco-Pittsburgh
Corporation.......... 62,350 70,875
5,000 Nortek Inc.+........... 54,000 51,875
----------- ----------
116,350 122,750
----------- ----------
TRANSPORTATION - 30.27%
200,000 Chicago & North Western
Holdings Corporation+ 6,932,622 6,950,000
----------- ----------
WIRELESS COMMUNICATIONS - 20.10%
2,000 Cellular Communications
Inc. Cl. A+.......... 92,000 95,500
150,000 Contel Cellular, Inc.+. 3,746,609 3,787,500
6,000 LIN Broadcasting Corporation+ 727,625 730,500
----------- ----------
4,566,234 4,613,500
----------- ----------
TOTAL COMMON STOCKS .. 14,919,414 14,717,036
----------- ----------
CONVERTIBLE CORPORATE BONDS - 9.17%
BUSINESS SERVICES - 0.42% $94,000 Trans-Lux Corporation Sub.
Deb. Cv. 9.00%, 12/01/05 96,235 95,763
----------- ----------
ENTERTAINMENT - 8.32%
1,900,000 Time Warner Inc. Sub. Deb.
Cv. 8.75%, 01/10/15.. 2,009,712 1,909,500
----------- ----------
FOOD AND BEVERAGE - 0.43%
110,000 Flagstar Companies, Inc.
Sub. Deb. Cv.
10.00%, 11/01/14..... 103,670 79,200
20,000 Ingles Markets, Incorporated
Sub. Deb. Cv. 10.00%,
10/15/08............. 20,940 20,900
----------- ----------
124,610 100,100
----------- ----------
TOTAL CONVERTIBLE
CORPORATE BONDS .... 2,230,557 2,105,363
----------- ----------
CONVERTIBLE PREFERRED STOCKS--0.20%
INDUSTRIAL EQUIPMENT AND SUPPLIES - 0.20%
500 Navistar International
Corporation $6.00 Cv.
Pfd. Ser. G.......... 27,275 26,188
1,500 NYCOR, Inc.
$1.70 Cv. Pfd........ 26,250 19,500
----------- ----------
53,525 45,688
----------- ----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ... 53,525 45,688
----------- ----------
CORPORATE BONDS--5.94%
FOOD AND BEVERAGE - 0.36%
$100,000 Flagstar Companies Inc.
11.25%, 11/01/04 .... 100,804 83,750
----------- ----------
INDUSTRIAL EQUIPMENT AND SUPPLIES - 5.58% 1,400,000 Nortek, Inc.
9.875%, 03/01/04..... 1,389,748 1,281,000
----------- ----------
TOTAL
CORPORATE BONDS .... 1,490,552 1,364,750
----------- ----------
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U.S. GOVERNMENT OBLIGATIONS - 17.81%
4,105,000 U.S. Treasury Bills,
5.415% to 5.68%
Due 04/06/95 to
05/18/95............. 4,089,190 4,089,190
----------- ----------
TOTAL U.S. GOVERNMENT
OBLIGATIONS ......... 4,089,190 4,089,190
----------- ----------
TOTAL
INVESTMENTS - 97.23% $22,783,238 22,322,027
===========
Cash and Other Assets, in
excess of Liabilities -2.77% 634,797
-----------
NET ASSETS - 100.00%
(2,310,533 shares
outstanding) ...... $22,956,824
===========
Net Asset Value and
Redemption Price
Per Share ........... $9.94
=====
MAXIMUM PUBLIC OFFERING PRICE PER SHARE
($9.94 / .980 Based on
a maximum sales
charge of 2.0%) ... $10.14
======
+Non-income producing security
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GABELLI FAMILY OF FUNDS
DISTRIBUTED BY GABELLI & COMPANY, INC.
ONE CORPORATE CENTER, RYE, NY 10580-1435
GABELLI ASSET FUND--------------------------------------------------------------
Invests in a diversified portfolio of companies selling below their private
market value. The Fund's primary objective is to seek growth of capital.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GROWTH FUND-------------------------------------------------------------
Invests in a diversified portfolio of common stocks that have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is to
seek capital appreciation by employing an earnings-driven investment approach.
PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI GLOBAL SERIES
---------------------
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Invests in telecommunications companies throughout the world. Targets
undervalued companies with strong earnings per share and cash flow dynamics.
The Fund's primary objective is to seek capital appreciation.
TEAM MANAGER: MARIO J. GABELLI, CFA
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Invests primarily in bonds and preferred stocks which are convertible into
common stock of foreign and domestic companies. The Fund's primary objective
is to seek a high level of total return through a combination of current
income and capital appreciation.
PORTFOLIO MANAGER: HART WOODSON
GABELLI GLOBAL INTERACTIVE COUCH POTATO(TM)(C) FUND
Invests in companies involved in communications, creativity and copyright
throughout the world. The Fund will also invest in companies participating in
emerging technological advances in interactive services and products. The
Fund's primary objective is to seek capital appreciation.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GOLD FUND---------------------------------------------------------------
Invests in a global portfolio of equity securities of gold mining and related
companies. The Fund's primary objective is to seek capital appreciation.
Investment in gold stocks is considered speculative and is affected by a variety
of worldwide economic, financial and political factors.
PORTFOLIO MANAGER: CAESAR BRYAN
Investment in foreign securities involves risks not ordinarily associated with
investments in domestic issuers, including currency fluctuation, economic and
political risks.
GABELLI SMALL CAP GROWTH FUND
Invests primarily in equity securities of smaller companies (companies with a
total market capitalization of less than $500 million) which are believed likely
to have rapid growth in revenues and earnings. The Fund's primary objective is
to seek capital appreciation.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 4 1/2%
GABELLI VALUE FUND--------------------------------------------------------------
Invests in a concentrated portfolio of securities of companies which are selling
below their private market value. The Fund's primary objective is long-term
capital appreciation. $250 initial minimum for IRAs.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 5 1/2%
GABELLI EQUITY INCOME FUND------------------------------------------------------
Invests primarily in a portion of income-producing equity securities. Pays
quarterly dividends. The Fund's primary objective is to seek a high level of
total return.
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
MAX. SALES CHARGE: 4 1/2%
GABELLI U.S. TREASURY MONEY MARKET FUND-----------------------------------------
Invests exclusively in short-term U.S. Treasury securities. The Fund's primary
objective is to provide high current income consistent with the preservation of
principal and liquidity. Features low expenses, free checkwriting, telephone
exchange and redemption privileges. $10,000 minimum initial investment. $3,000
minimum for Gabelli Fund shareholders. $1,000 for IRAs and Custodial Accounts.
PORTFOLIO MANAGER: RONALD EAKER
GABELLI'S WESTWOOD FUNDS--------------------------------------------------------
The Westwood Funds consist of three investment portfolios, designed to pursue a
variety of investment objectives: Westwood Equity Fund seeks growth, Westwood
Balanced Fund seeks income and growth, and Westwood Intermediate Bond Fund seeks
current income.
PORTFOLIO MANAGERS: SUSAN BYRNE & PAT FRAZE
To request a prospectus, call
1-800-GABELLI (1-800-422-3554)
Or, visit our Internet homepage at:
HTTP:/ /NETWORTH.GALT.COM/GABELLI
The prospectus(es) contain more complete information, including fees and
expenses, and should be read carefully prior to investing.
<PAGE>
THE GABELLI ABC FUND
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
(Net Asset Value may be obtained daily
by calling 1-800-GABELLI after 6:00 P.M.)
BOARD OF DIRECTORS
Mario J. Gabelli,
CFA Chairman and
Chief Investment Officer
Gabelli Funds, Inc.
Anthony J. Colavita
Attorney-at-Law
Anthony J. Colavita, P.C.
Vincent D. Enright
Senior Vice President
and Chief Financial Officer
The Brooklyn Union Gas Company
Karl Otto Pohl
Former President
Deutsche Bundesbank
Werner J. Roeder, MD
Director of Surgery
Lawrence Hospital
OFFICERS
Mario J. Gabelli, CFA
President and Chief
Investment Officer
J. Hamilton Crawford, Jr.
Secretary
Bruce N. Alpert
Vice President
and Treasurer
DISTRIBUTOR
Gabelli & Company, Inc.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND AGENT
State Street Bank and Trust Company
LEGAL COUNSEL
Skadden, Arps, Slate, Meagher & Flom
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This report is submitted for the general information of the shareholders of The
Gabelli ABC Fund. It is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
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