[PHOTO OMITTED]
The
Gabelli
[LOGO]
Fund
FIRST QUARTER REPORT
MARCH 31, 1998
<PAGE>
The Gabelli ABC Fund
One Corporate Center
Rye, New York 10580-1434
First Quarter Report
March 31, 1998
To Our Shareholders,
After a brief retreat in early January, stocks regained their momentum and
indices across the market capitalization spectrum closed the quarter at or near
record highs. The favorable economic backdrop for stocks - low inflation, low
interest rates and solid corporate earnings growth - continued to buoy the
market. However, the greatest driving force for the stock market continues to be
liquidity. Deals, restructurings and share repurchase programs proved to be
powerful factors underneath the market's strength. With the relatively
uninspiring returns available from traditional alternatives to owning stocks,
cash continued to flow into U.S. equity investments.
Investment Performance
For the first quarter ended March 31, 1998, the Gabelli ABC Fund's total
return was 4.0%. The Fund was up 15.6% over the trailing twelve month period.
Since inception on May 14, 1993 through March 31, 1998, the Fund has a total
return of 60.3%, which equates to an average annual return of 10.1%. The Fund
seeks to achieve a positive return in various market environments. We see
ourselves as an "enhanced money market."
[Valuation Approach GRAPHIC OMITTED]
What We Do
The Gabelli ABC Fund and its unique Performance Guaranty Program was
created for conservative investors who had been reluctant to participate in the
equity markets. In other words, it was a vehicle to allow investors to "get
their feet wet" in the stock market without risking loss of capital. Our
approach has been to maintain a diversified portfolio of value oriented
equities, convertible preferred stocks, convertible bonds and U.S. Government
securities. Conceptually, the upside potential of stocks would help produce
greater total return potential than a straight bond or government securities
fund and the risk in the equity portion of the portfolio would be diminished by
the combination of lower risk convertible securities and virtually risk free
U.S. Treasury Bills. To date, this approach has worked quite well. Although we
have indefinitely suspended the Performance Guaranty Program, we believe the
Fund's investment strategy can continue to produce favorable results.
<PAGE>
INVESTMENT RESULTS (a)
- --------------------------------------------------------------------------------
Quarter
---------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
1998: Net Asset Value $10.64 -- -- -- --
Total Return ...... 4.0% -- -- -- --
- --------------------------------------------------------------------------------
1997: Net Asset Value $ 9.98 $10.45 $10.74 $10.23 $10.23
Total Return ...... 1.4% 4.7% 2.8% 3.3% 12.8%
- --------------------------------------------------------------------------------
1996: Net Asset Value $10.10 $10.16 $ 9.77 $ 9.84 $ 9.84
Total Return ...... 4.1% 0.6% 0.8% 2.2% 7.8%
- --------------------------------------------------------------------------------
1995: Net Asset Value $ 9.94 $10.14 $10.41 $ 9.71 $ 9.71
Total Return ...... 3.9% 2.0% 2.7% 2.2% 11.2%
- --------------------------------------------------------------------------------
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, 1998 (a)
-------------------------------------------
1 Year....................... 15.6%
3 Year....................... 10.6%
Life of Fund (b)............. 10.1%
- ----------------------------------------------
Dividend History
- -----------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
- ----------------- -------------- ------------------
December 29, 1997 $0.860 $10.17
December 27, 1996 $0.146 $ 9.83
September 30, 1996 $0.470 $ 9.77
December 28, 1995 $0.930 $ 9.71
December 28, 1994 $0.910 $ 9.52
December 31, 1993 $0.880 $10.03
(a) Total returns and average annual returns reflect changes in share price and
reinvestment of dividends and are net of expenses. The net asset value of the
Fund is reduced on the ex-dividend (payment) date by the amount of the dividend
paid. Of course, returns represent past performance and do not guarantee future
results. Investment returns and the principal value of an investment will
fluctuate. When shares are redeemed they may be worth more or less than their
original cost. (b) From commencement of operations on May 14, 1993.
- --------------------------------------------------------------------------------
History of the Fund
The Gabelli ABC Fund was launched on May 14, 1993 with a minimum
guaranteed total return of 6% through May 13, 1994. For 1994, 1995 and 1996, 5%
Performance Guaranty Programs were in place. These programs were unique because
they provided investors the full upside potential of the investment while
guaranteeing a minimum total return. Gabelli Funds, Inc.'s fourth Performance
Guaranty Program concluded on December 31, 1996 and a new program was not in
effect for 1997. Although the Performance Guaranty Program is not being offered
for 1998, the Fund continues striving to achieve the same objectives. In a
market with the S&P 500 gaining over 30%, a minimum return guaranty of 5%
appears dull and unattractive. However, in terms of market volatility, the Fund
has provided comfort to the risk averse.
The Adviser and Board of Directors are exploring several options for 1998.
We are considering a longer term guaranty program in a closed end structure.
This would require shareholder approval and
2
<PAGE>
would be an attractive format for initial investors. The program would be
available to all investors in the Fund as of March 31, 1998.
The Fund will continue to be managed, as it has been over the past five
years, to provide an attractive rate of return without excessive risk of
capital.
COMMENTARY
It Just Keeps Going, Going and Going!
Despite being targeted by evil forces such as the Asian economic meltdown,
high profile earnings disappointments in the technology sector and
off-the-historical chart valuations, the stock market, like the "Energizer
Bunny", just keeps going, going and going. We clearly underestimated the
market's potential. The bad news is that based on almost any valuation
benchmark, stocks are currently in historically unprecedented territory and the
margin of safety is razor thin.
Granted, it would be hard to imagine a better economic scenario for
stocks. Economists are pegging inflation at 2.0% or lower and interest rates are
low. Despite selected earnings dislocations resulting from Asian economic
weakness, domestic corporate profits, on the whole, are meeting consensus
expectations and Wall Street economists are predicting even better earnings
growth in 1999. On the supply and demand front remember that stocks go up in the
short run when there are more buyers than sellers continued strong merger and
acquisition activity and substantial share repurchase programs are shrinking
supply at a time when demand for stocks keeps rising. Put it all together, and
it is understandable that stocks are advancing.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Flow of Funds
($ Billions)
Sources 1993 1994 1995 1996 1997
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
U.S. Deals $ 234 $ 340 $ 511 $ 652 $ 919
Stock Buybacks 37 46 99 176 179
Equity Mutual Funds Net 130 119 128 222 232
Dividends 204 230 274 309 333
------ ------ ------ ------ ------
Sources: 605 735 1,012 1,359 1,663
------ ------ ------ ------ ------
Uses
IPOs 103 62 82 115 118
U.S./International Equity Capital Flow
U.S. Purchases of Non-U.S. Equities 309 434 396 514 762
International Purchases of U.S. Equities 246 387 346 457 723
------ ------ ------ ------ ------
Net Flow: 63 47 50 57 39
------ ------ ------ ------ ------
Uses: 166 109 132 172 157
------ ------ ------ ------ ------
Net Flow of Funds: $ 439 $ 626 $ 880 $1,187 $1,506
====== ====== ====== ====== ======
Sources: Securities Data Corp, Investment Company Institute, Birinyi Associates
- ---------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
Bear Watch
Today, the two questions confronting equity investors are: What could
happen to disrupt this ideal economic environment for stocks? And, even if the
economic news continues to be good, isn't it already more than fully reflected
in stock prices? In our last report to you, we shared a laundry list of our
investment anxieties, which included problems in Asia spilling into Latin
American currencies and economies, wage inflation not matched by productivity
gains, oil prices rising significantly from today's low levels, a prospective
crisis in confidence if Treasury Secretary Rubin leaves and the possibility that
Federal Reserve Board Chairman Greenspan may step down at the end of his current
term, and last, but not least, high equity valuations and a low margin of
safety.
We have many of the same worries today and our concern over equity
valuations has been heightened by the market's sharp rise in the first quarter.
As we have stated many times in the past, we believe valuations do matter and
that ultimately stocks will trade at rational relationships to their economic
value. We have to question whether even the best companies in this "best of all
possible worlds" for stocks should trade at 50+ times earnings and three to four
times annual earnings growth rates. We are sure value investors share this
concern. However, money continues to flow into arguably the most overvalued
sector of the market - the mega-cap growth stocks. It is somewhat of a reverse
panic. Investors are afraid not to own these stocks. Mr. Market remains at work.
It is increasingly difficult for us to find bargains in this environment.
One would think professional investors (ie: mutual fund managers) would be
exhibiting more restraint. Unfortunately, with mutual fund investors
increasingly focused on short term performance, portfolio managers holding cash
in a rising market have the life expectancy of fast dogs that chase cars. Many
are holding their noses, closing their eyes, crossing their fingers and making
investments that are difficult to justify on a fundamental basis. They may
continue to be rewarded for throwing in the valuation towel. But, at some point,
they and their shareholders will receive a painful reminder that the market will
not suffer fools indefinitely.
Consistent with the Fund's capital preservation mandate, approximately 68%
of the portfolio's assets were in virtually risk free U.S. Treasury securities
at the close of the first quarter. Another 2% of the assets were in higher
yielding convertible bonds and preferred stocks. The remaining 30% of the assets
were in a diverse group of equities that we believe are trading at quite
reasonable valuations to economic worth.
Leveraged Stubs
During the heyday of the leveraged buyout (LBO) in the 1980s, individuals
did not have the opportunity to invest alongside leading LBO firms like
Kohlberg, Kravis, Roberts (KKR) & Co. Now, they can and Gabelli ABC Fund
shareholders are participating. To take advantage of current accounting
regulations, LBO firms are no longer taking companies private by retiring all of
a company's publicly held stock. Instead, they are leaving a small percentage
(at least 13%) of equity ownership in public hands. These publicly traded shares
are known as "stubs". This frees the companies from having to amortize goodwill
against reported earnings. When LBO firms eventually unwind their large
positions in these
4
<PAGE>
companies by selling equity back to the public, they may be able to obtain a
better price due to the companies' cleaner earnings records.
We are exploiting this opportunity to "partner" with focused LBO firms by
buying fundamentally attractive "stubs". Current examples in the portfolio
include CommNet Cellular (CELS - $45.625 - Nasdaq), a Colorado-based manager of
rural cellular telephone systems in the mountain and plains states, and Dynatech
(DYT - $48.375 - NYSE), a Massachusetts-based communications equipment company
focused on network technology solutions and industrial computing. We continue to
seek companies such as these that will allow us to participate in the investment
strategies of the leading LBO firms.
Quips on Management
Our Chief Investment Officer, Mario J. Gabelli, was recently interviewed
by a leading investor relations consulting firm to discuss how we, as securities
analysts, evaluate corporate managements. We would like to share with you
excerpts from this interview . . .
"Ideally, we like to own great companies with great management. Our second
choice is great companies with mediocre management. Occasionally, we will take a
chance on mediocre companies with talented new management that we believe can
dramatically improve the business. Our rational is simple - we believe a
princess who kisses a frog is more likely to turn into a frog than the frog is
to turn into a prince.
We don't feel we ask too much from corporate managements. We want them to
have vision as to how the world is changing and a sensible plan to position
their companies to take advantage of change rather than be overwhelmed by it. We
want them to be focused on competitive issues in their industry and be proactive
rather than reactive in meeting challenges from their competitors. We expect
CEOs and CFOs, who in our opinion, should be joined at the hip, to know their
companies intimately. If I or another one of our analysts spots something
unusual in an annual report or 10-K, I expect management to be able to explain
it. We want management to be honest with us. We always ask them to detail their
company's strengths and weaknesses. When we hear a lot about the former and
virtually nothing about the latter, we tend to be a little suspicious. Finally,
and most importantly, we expect them to serve the interest of their companies'
real owners - the shareholders. Managements that build a wall around themselves
and their companies' values are betraying shareholders.
We are not for or against corporate managements. We are for shareholders -
our clients. We don't encourage managements to run their companies to maximize
short term returns and sacrifice long term value. In fact, we respect managers
that are willing to suffer through a few bad quarters for the greater long term
good of their companies. Unlike many Wall Street research teams, we don't ask
management to assess the value of their companies or to forecast future cash
flows and earnings. That's our job. We ask only that they do their jobs--build
the value of their businesses in a manner that benefits long term shareholders."
5
<PAGE>
Let's Talk Stocks
The following are company 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 Bankers Insurance Group Inc. (ABI - $64.50 - NYSE) agreed to be
acquired by Cendant Corp. (CD - $39.75 - NYSE) for $3.1 billion, or $67 per
share, in stock and cash, making it a leading direct-marketer of insurance.
American Bankers had been the object of a bidding war since late January, when
Cendant unveiled a $58 per share, or $2.7 billion, tender offer, topping a $47
per share, or $2.2 billion, bid that American International Group proposed in
December. AIG matched the bid on March 2, after trying to hobble Cendant with
legal and regulatory filings. Cendant retaliated with a $67 per share offer on
March 16. AIG declined to match Cendant's bid but walked away with a $110
million breakup fee. Cendant wants to add credit life insurance to the range of
travel, shopping and other services it sells to millions of consumers. The
agreed $67 per share offer consists of one-half stock and one-half cash. The
cash portion is being paid through a tender offer with the balance to be paid in
Cendant stock. The tender offer and stock swap are conditioned on the companies
receiving several state insurance regulatory approvals and is expected to be
completed by the end of the second quarter.
Argonaut Group Inc. (AGII - $36.125 - Nasdaq) announced the hiring of Credit
Suisse First Boston to examine a possible merger that would allow shareholders
to benefit from the consolidation that is sweeping the insurance industry. Los
Angeles-based Argonaut is primarily engaged in the selling, underwriting and
servicing of workers compensation and other forms of commercial coverage. The
company decided to explore available alternatives in order to enhance
shareholder value. Argonaut reported revenue of $256 million last year and
income from operations were $45 million.
BET Holdings Inc. (BTV - $61.125 - NYSE) is a media and entertainment company
that primarily targets black consumers, a market that was estimated to have
spent over $450 billion in 1997. BTV's core business is Black Entertainment
Television (BET), an advertiser-supported cable television programming service.
Of the 70 million cable households in the U.S., BET reaches over 51 million. BET
on Jazz: The Cable Jazz Channel produced nearly 150 hours of original jazz
programming in 1997. Action Pay-Per-View's subscriber base has grown to over
nine million as the service expands beyond a traditional urban audience. The
company is leveraging its brand identity into markets including pay-per-view
movies, direct merchandising and magazine publishing. The $48 per share offer
from a group led by founder Robert Johnson to take BTV private has been
increased to $63 per share.
Catellus Development Corp. (CDX - $18.5625 - NYSE) is a diversified real estate
operating company that owns, manages and develops real estate for its own
portfolio and others. The company's portfolio includes over 16 million square
feet of income producing properties and 5,300 acres of land leases. Catellus has
837,000 acres of land as well as additional square footage of industrial
buildings under development.
6
<PAGE>
Handy & Harman (HNH - $35.1875 - NYSE) accepted a sweetened offer from WHX Corp.
(WHX - $16.3125 - NYSE) for $645 million in cash and assumed debt, helping WHX
cut its pension liability. WHX, which sweetened its offer after an earlier $30
per share bid was rejected, commenced a cash tender offer for Handy & Harman at
$35.25 per share. WHX already owns nearly 14% of the New York-based precious
metals and auto parts maker and will assume roughly $190 million of debt in the
purchase. The agreement is the third recent attempt by WHX to buy a company.
Cutting its $178 million pension liability would make the ninth largest U.S.
steelmaker a stronger candidate for a takeover or spin-off. The tender offer is
expected to be completed during the second quarter.
Lukens Inc. (LUC - $32.6875 - NYSE) announced that Bethlehem Steel (BS -
$13.5625 - NYSE) won the bidding war for the company, nabbing the specialty
steel-maker for $740 million by persuading rival bidder Allegheny Teledyne to
walk away in exchange for some Lukens assets and other concessions. Bethlehem
Steel, which wants Lukens' profitable steel plate business, will sell some of
Lukens' stainless steel assets to Allegheny for $175 million and find buyers for
the remainder of the stainless business. Bethlehem Steel will pay $740 million
in cash, stock and assumed debt for Lukens. Shareholders will be able to elect
to receive either $30 per share in cash or $30 in BS stock, with a maximum of
68% to be paid in cash. If Bethlehem is trading above $10.42 per share before
the close of the transaction, then Lukens' shareholders will receive a fixed
ratio of 2.878 of Bethlehem shares for each Lukens share. The sweetened offer,
made on January 5, topped Allegheny's bid of $715 million in cash and assumed
debt, or $28 per share. The transaction has received antitrust approval and is
subject to shareholder approval, which is expected to be obtained during the
second quarter.
Nashua Corp. (NSH - $14.5625 - NYSE) markets specialty imaging products and
services to consumers and commercial customers. The company's products include
domestic photofinishing services, imaging supplies and pressure-sensitive
labels. Nashua is attempting to narrow its business focus by selling its
specialty coated products division and its international photo finishing
businesses.
Sprint Corp. (FON - $67.6875 - NYSE) is the third largest long distance carrier
and the second largest independent local telephone company in the U.S. Sprint
has positioned itself globally through a joint venture with France Telecom and
Deutsche Telekom, called Global One, which purchased a 20% stake in Sprint in
1996 for $3.5 billion. Sprint has a promising national PCS and wireless joint
venture with three major cable operators: Tele-Communications Inc., Comcast and
Cox Communications. FON faces risks from prospective new entrants in its long
distance business which may be offset by the PCS venture and its own pursuit of
the $100 billion local telephone market.
Syratech Corp. (SYRA - $35.50 - Nasdaq) was acquired by Boston financier Thomas
H. Lee for approximately $281 million, expanding his portfolio of small to
mid-size growth companies. Lee paid $32 per share for Syratech, a maker of
gifts, silverware and Faberware pots and pans. Leonard Florence, Chairman and
CEO of Syratech, and certain other executive officers of the company retained
equity interests in the surviving entity having an aggregate value of at least
$24 million. There were approximately nine million Syratech shares outstanding,
of which Mr. Florence owned approximately 32%. Shareholders could have elected
to receive $32 per share in cash or retain as much as 32% of their holdings in
the form of the new company created after the merger. The transaction was
completed in April 1997.
7
<PAGE>
Ticketmaster Group Inc. (TKTM - $30.125 - Nasdaq) accepted a sweetened bid from
USA Networks Inc. (USAI - $27.25 - Nasdaq) for almost $400 million, or $29.70
per share, in stock. Following protests by Ticketmaster executives and investors
that the first offer was too low, USA Networks boosted its bid by 17%. In
October 1997, USA Networks offered nearly $340 million, or $25.30 per share, in
an unsolicited bid for the one-half of Ticketmaster that USA Networks did not
already own. Under the new agreement, USA Networks will swap 1.126 shares for
each Ticketmaster share, up from 1.012 shares. USA Networks, which was then
known as HSN Inc., bought the first one-half of Ticketmaster from its chairman,
Paul Allen, for $235 million. USA Networks wants to use Ticketmaster, the
nation's largest seller of tickets to events such as concerts, to boost its
expansion into on-line shopping. The transaction is expected to be completed by
the end of June.
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.
Additionally, The Gabelli ABC Fund and other Gabelli Funds are available through
the no-transaction fee programs at many major discount brokerage firms.
No Load - Effective January 2, 1997
Effective January 2, 1997, the Fund no longer imposes a front end sales
charge. All purchases made after January 1, 1997 are no load, that is, without a
sales charge. New and current shareholders may purchase shares of the Fund at
any time.
The Roth IRA
The Taxpayer Relief Act of 1997 included new tax incentives and more
opportunities to save for retirement and other major expenditures. The Roth IRA
is just one of these new opportunities now available at Gabelli Funds. Our
investor representatives are available at 1-800-GABELLI (1-800-422-3554) to
speak with you about establishing a new Roth IRA and to discuss your investment
choices.
Internet
You can now visit us on the Internet. Our home page at
http://www.gabelli.com contains information about Gabelli Funds, 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].
8
<PAGE>
In Conclusion
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
business day for further information.
After just three months, The Gabelli ABC Fund is well on its way to
achieving its annual total return objective. We are concerned about equity
valuations and doubt the stock market can continue to appreciate at such a
torrid pace. If the market does lose momentum or a catalyst emerges to spark a
significant correction, we believe Fund shareholders will more fully appreciate
our capital preservation-oriented approach. We thank you for your loyalty and as
always, pledge our best efforts on your behalf.
Sincerely,
/s/ Mario J. Gabelli
Mario J. Gabelli, CFA
Portfolio Manager and
Chief Investment Officer
April 30, 1998
- --------------------------------------------------------------------------------
Top Ten Holdings
March 31, 1998
American Bankers Insurance Group Ticketmaster Group Inc.
Nashua Corp. Sprint Corp. 8.25% Cv. Pfd.
Handy & Harman Syratech Corp.
Catellus Development Corp. Argonaut Group Inc.
BET Holdings Inc. Lukens Inc.
- --------------------------------------------------------------------------------
NOTE: The views expressed in this report reflect those of the portfolio manager,
only through the end of the period of this report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
9
<PAGE>
The Gabelli ABC Fund
Portfolio of Investments -- March 31, 1998 (Unaudited)
================================================================================
Market
Shares Value
------ -----
COMMON STOCKS -- 30.0%
Automotive: Parts and Accessories -- 2.0%
30,000 Handy & Harman ............................. $ 1,055,625
6,000 Modine Manufacturing Co. ................... 208,500
-----------
1,264,125
-----------
Aviation: Parts and Services -- 0.9%
20,000 Fairchild Corp., Cl. A+ .................... 431,250
6,000 Hi-Shear Industries Inc.+ .................. 16,875
2,500 Hudson General Corp. ....................... 118,125
-----------
566,250
-----------
Broadcasting -- 0.2%
2,000 American Radio Systems Corp.+ .............. 126,875
-----------
Business Services -- 3.7%
516 Fisher Scientific International Inc. ....... 39,990
150,000 Nashua Corp.+ .............................. 2,184,375
2,000 Waste Management Inc. ...................... 61,625
-----------
2,285,990
-----------
Cable -- 0.1%
2,000 TCI Ventures Group ......................... 35,125
-----------
Communications Equipment -- 0.5%
6,000 Dynatech Corp.+ ............................ 289,125
-----------
Computer Software and Services -- 0.0%
138 DecisionOne Holdings Corp.+ ................ 2,682
-----------
Consumer Products -- 0.4%
13,000 Carter-Wallace Inc. ........................ 236,438
-----------
Consumer Services -- 1.5%
30,000 Ticketmaster Group Inc. .................... 903,750
-----------
Diversified Industrial -- 2.1%
20,000 Green (A.P.) Industries Inc. ............... 437,500
10,000 Katy Industries Inc. ....................... 190,000
20,000 Lukens Inc. ................................ 653,750
-----------
1,281,250
-----------
Energy -- 1.1%
3,500 Pennzoil Co. ............................... 226,188
16,000 Southwest Gas Corp. ........................ 334,000
2,000 Wicor Inc. ................................. 96,750
-----------
656,938
-----------
Entertainment -- 3.4%
15,000 BET Holdings Inc. .......................... 916,875
1,000 Fisher Companies Inc. ...................... 64,000
10,000 Florida Panthers Holdings Inc. ............. 222,500
35,000 TCI Music Inc., Cl. A ...................... 274,531
10,000 Topps Co. Inc.+ ............................ 25,625
11,000 Viacom Inc., Cl. A+ ........................ 584,375
-----------
2,087,906
-----------
Equipment and Supplies -- 1.6%
6,000 Ampco-Pittsburgh Corp. ..................... 111,000
3,000 Amphenol Corp., Cl. A+ ..................... 173,063
5,000 Navistar International Corp. ............... 175,000
30,000 Portec Inc. ................................ 466,875
2,000 Thermadyne Holdings Corp. .................. 67,750
-----------
993,688
-----------
Financial Services -- 5.5%
40,000 American Bankers Insurance Group Inc. ...... 2,579,999
20,800 Argonaut Group Inc. ........................ 751,400
2,000 Leucadia National Corp. .................... 78,750
2,500 Pioneer Group Inc. ......................... 78,125
-----------
3,488,274
-----------
Food and Beverage -- 0.8%
25,000 Advantica Restaurant Group Inc. ............ 234,375
10,000 Grist Mill Co. ............................. 146,875
5,000 Whitman Corp. .............................. 98,750
-----------
480,000
-----------
Health Care -- 0.7%
6,000 Genentech Inc.+ ............................ 422,625
-----------
Hotels and Gaming -- 0.2%
15,000 Aztar Corp.+ ............................... 129,375
-----------
Metals and Mining -- 0.0%
30,000 Pegasus Gold Inc. .......................... 13,290
10,000 Royal Oak Mines Inc.+ ...................... 11,875
-----------
25,165
-----------
Publishing -- 0.0%
1,000 Reader's Digest Association Inc., Cl. B .... 26,875
-----------
Real Estate -- 2.0%
50,000 Catellus Development Corp.+ ................ 928,125
20,000 Griffin Land & Nurseries Inc.+ ............. 300,000
1,000 Property Capital Trust ..................... 688
-----------
1,228,813
-----------
Retail -- 1.8%
18,000 Bruno's Inc.+ .............................. 30,375
6,000 Giant Food Inc., Cl. A ..................... 231,750
5,000 Lillian Vernon Corp. ....................... 87,188
23,630 Syratech Corp.+ ............................ 788,651
-----------
1,137,964
-----------
Telecommunications -- 0.6%
20,150 Citizens Utilities Co., Cl. B+ ............. 212,834
2,000 Southern New England
Telecommunications Corp. ................. 144,625
1,000 Startec Global Communications Corp.+ ....... 25,000
-----------
382,459
-----------
10
<PAGE>
The Gabelli ABC Fund
Portfolio of Investments (Continued) -- March 31, 1998 (Unaudited)
================================================================================
Market
Shares Value
------ -----
Utilities -- 0.3%
10,000 United Water Resources Inc. ................ $ 180,625
-----------
Wireless Communications -- 0.6%
2,219 CommNet Cellular Inc. ...................... 101,242
2,500 TCI Satellite Entertainment Inc., Cl. A+ ... 17,813
5,000 Telephone and Data Systems Inc. ............ 237,499
-----------
356,554
-----------
TOTAL COMMON STOCKS 18,588,871
-----------
CONVERTIBLE PREFERRED STOCKS -- 1.5%
Publishing -- 0.0%
500 Golden Books Family Entertainment Inc.
8.75% Cv. Pfd. (a) ....................... 27,313
-----------
Telecommunications -- 1.5%
1,000 Citizens Utilities Co. 5.00% Cv. Pfd. ...... 49,000
13,500 Sprint Corp. 8.25% Cv. Pfd. ................ 865,687
-----------
914,687
-----------
TOTAL CONVERTIBLE
PREFERRED STOCKS ........................... 942,000
-----------
RIGHTS -- 0.0%
Computer Software and Services -- 0.0%
17,500 Fusion Systems Corp.+ ...................... 3,828
-----------
Principal Market
Amount Value
------ -----
CONVERTIBLE CORPORATE BONDS -- 0.0%
Consumer Products -- 0.0%
$ 17,000 Fieldcrest Cannon Inc. Sub. Deb. Cv.
6.00%, 03/15/12 .......................... $ 15,428
-----------
Retail -- 0.0%
200,000 RDM Sports Group Inc. Cv.
8.00%, 08/15/03 .......................... 12,000
-----------
TOTAL CONVERTIBLE
CORPORATE BONDS ............................ 27,428
-----------
U.S. GOVERNMENT OBLIGATIONS -- 67.9%
42,228,000 U.S. Treasury Bills, 5.27% to 5.43%,
due 04/16/98 to 05/28/98++ ............... 42,094,448
-----------
TOTAL INVESTMENTS -- 99.5%
(Cost $59,981,018) ....................... 61,656,574
Other Assets and
Liabilities (Net) -- 0.5% ................ 299,833
-----------
NET ASSETS -- 100.0%
(5,824,830 shares outstanding) ........... $61,956,407
===========
NET ASSET VALUE, Offering and
Redemption Price Per Share ............... $ 10.64
===========
(a) Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At March
31, 1998, the market value of Rule 144A securities amounted to $27,313 or
0.04% of net assets.
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
11
<PAGE>
The Gabelli ABC Fund
One Corporate Center
Rye, New York 10580-1434
1-800-GABELLI
[1-800-422-3554]
fax: 1-914-921-5118
e-mail: [email protected]
http://www.gabelli.com
(Net Asset Value may be obtained daily by calling
1-800-GABELLI after 6:00 P.M.)
Board of Directors
Mario J. Gabelli, CFA Karl Otto Pohl
Chairman and Chief Former President
Investment Officer Deutsche Bundesbank
Gabelli Funds, Inc.
Werner J. Roeder, MD
Anthony J. Colavita Director of Surgery
Attorney-at-Law Lawrence Hospital
Anthony J. Colavita, P.C.
Vincent D. Enright
Senior Vice President and
Chief Financial Officer
KeySpan Energy Corp.
Officers
Mario J. Gabelli, CFA Bruce N. Alpert
President and Chief Vice President
Investment Officer 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 share holders of The Gabelli ABC Fund. It is not
authorized for distribution to prospective investors
unless preceded or accompanied by an effective
prospectus.
-------------------------------------------------------
