THE GABELLI ABC FUND
SEMI-ANNUAL REPORT
JUNE 30, 2000
"GIVE A MAN A FISH AND YOU FEED HIM FOR A DAY.
TEACH HIM HOW TO ARBITRAGE AND YOU FEED HIM FOREVER."
- Warren Buffett
[Graphic omitted of book cover "Deals...Deals...and More Deals]
TO OUR SHAREHOLDERS,
At the end of the first quarter of 2000, long-dormant value stocks were
finally attracting attention. The sharp technology stock correction, which began
in the second week of March, revived the antiquated notion that the severely
depressed stocks of high quality companies in out-of-favor industry groups might
be an attractive alternative to the richly priced technology stocks. This
all-but-forgotten concept gained credence as the previous drivers of the NASDAQ
continued to plummet in April. However, investors quickly lost interest in the
merits of value investing when technology stocks began rebounding in late May.
By the end of the second quarter, all eyes were once again focused on technology
stocks, leaving the rest of the market adrift. The Dow Jones Industrial Average
("DJIA") and Standard & Poor's 500 Index materially outperformed the NASDAQ
Composite Index during the second quarter, but momentum had clearly shifted back
to technology stocks at its close.
While public market speculators remain ambivalent about fundamentally
inexpensive, high quality companies in more prosaic businesses, the true
connoisseurs of value--corporate acquirers and leveraged buyout groups--are
aggressively taking advantage of the attractive merchandise in the market's
discount bin. And, of course, value investors like us call this "our space."
The ABC Fund's conservative portfolio mix of undervalued equities, U.S.
Treasury securities, and risk arbitrage investments helped it to a respectable
2.28% return this quarter and an impressive 4.77% gain for the first six months
of 2000.
<PAGE>
INVESTMENT RESULTS (a)
<TABLE>
<CAPTION>
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Quarter
-----------------------------------------
1st 2nd 3rd 4th Year
--- --- --- --- ----
<S> <C> <C> <C> <C> <C>
2000: Net Asset Value ..................... $9.67 $9.89 -- -- --
Total Return ........................ 2.4% 2.3% -- -- --
--------------------------------------------------------------------------------------------------------------
1999: Net Asset Value ..................... $9.65 $10.20 $10.21 $9.44 $9.44
Total Return ........................ 0.6% 5.7% 0.1% 2.4% 9.0%
--------------------------------------------------------------------------------------------------------------
1998: Net Asset Value ..................... $10.64 $10.68 $10.16 $9.59 $9.59
Total Return ........................ 4.0% 0.4% (4.9)% 11.9% 11.1%
--------------------------------------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------------------------------------
</TABLE>
Dividend History
-------------------------------------------------------
Payment (ex) Date Rate Per Share Reinvestment Price
------------------ -------------- ------------------
December 27, 1999 $1.000 $ 9.32
December 28, 1998 $1.763 $ 9.50
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
--------------------------------------------------------------
Average Annual Returns - June 30, 2000 (a)
------------------------------------------
1 Year ...................................... 7.36%
3 Year ...................................... 10.11%
Life of Fund (b) ............................ 9.86%
--------------------------------------------------------------
(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 May 14, 1993.
--------------------------------------------------------------------------------
INVESTMENT PERFORMANCE
For the second quarter ended June 30, 2000, the Gabelli ABC Fund's (the
"Fund") total return was 2.28%. The Lipper U.S. Treasury Money Market Average
had a total return of 1.33% over the same period. The Lipper Average reflects
the average performance of mutual funds classified in this particular category.
The Fund was up 7.36% over the trailing twelve-month period. The Lipper U.S.
Treasury Money Market Average rose 4.84% over the same twelve-month period.
[Graphic omitted]
Pyramid text as follows:
EPS
PMV
Management
Cash Flow
Research
2
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For the five-year period ended June 30, 2000, the Fund's total return
averaged 10.11% annually versus an average annual return of 4.79% for the Lipper
U.S. Treasury Money Market Average. Since inception on May 14, 1993 through June
30, 2000, the Fund had a cumulative total return of 95.59%, which equates to an
average annual total return of 9.86%.
COMMENTARY
"WHAT, ME WORRY?"
The labor market remains tight and the threat of wage-driven inflation is
quite real. Despite six Federal Reserve interest rate hikes over the last
eighteen months, the economy is still growing at a pace that troubles the
monetary authorities. This is also an election year. While the campaign has been
a relatively quiet one, the rhetoric is sure to heat up as we approach November.
Political posturing on economic issues, principally how to re-allocate the
growing budget surplus, may rattle the financial markets. Finally, while there
are large pockets of attractive fundamental values in the equity markets, the
overall market, as measured by the S&P 500 Index, is still rather richly priced
relative to historic norms.
Of concern to us is the soaring trade deficit. Thus far, the world has
been happy to finance this deficit by buying U.S. stocks and bonds. This has
worked out well for all concerned. However, if we see inflation continue to
trend higher and if the U.S. financial markets sputter, international investors
may seek opportunities elsewhere. Reduced global demand for U.S. financial
assets may have a greater impact on stocks and bonds than the aforementioned
economic, political, and market issues. If international demand dries up, the
favorable supply/demand dynamics the U.S. financial markets have enjoyed over
the last decade may be disrupted. In addition, the Federal Reserve may have to
pump up interest rates even further, and at the wrong time, to defend the
dollar.
That is the dark side. The bright side is that we are finally seeing
evidence of economic deceleration. Housing starts and home sales are down
substantially, and with the exception of oil, commodity prices have stabilized.
The most recently released employment numbers were relatively benign and there
are indications that consumer confidence has been dented. For the time being,
the Federal Reserve has spared us an additional rate hike. We just may be
returning to a "Goldilocks" economy--not too hot, not too cool, but just
right--that will help propel stocks higher. We have labeled this rosy economic
scenario "Soft Landing Part II". Ideally, we will see a much broader market
advance in which companies in a wider range of industries participate.
A TUG OF WAR
For brief periods during the second quarter, market activity looked like a
tug-of-war between technology and value stocks. When the tech-heavy NASDAQ
Composite was down, the value-oriented Dow Jones was up, and vice-versa. This
raises the question of whether tech stocks must fall before stocks from value
sectors may rise, and if so, what economic and market phenomena may cause such a
reversal in fortune.
Let's examine the economic hypothesis being used to glorify technology
stocks and relegate value stocks to investment purgatory. The NASDAQ Composite
and DJIA began to diverge at the end of the second quarter of 1999, when it
became clear the Federal Reserve was determined to raise short-term interest
rates until the economy slowed. Technology company earnings were thought to be
largely immune
3
<PAGE>
to higher interest rates and a slower economy--an argument that had validity due
to strong secular growth trends in many tech sectors. Earnings for economically
sensitive companies would trend lower as the economy decelerated--also a
reasonable assumption. Despite the Federal Reserve's best efforts, the economy
continued to barrel along and we saw solid earnings gains across the industry
group spectrum. Tech stocks were grandly rewarded for meeting or exceeding
earnings estimates, but better than expected earnings for companies in other
industries were largely ignored. At the close of this reporting period, the
NASDAQ Composite had a trailing price/earnings ("P/E") multiple of 128.1, while
the Dow Jones Industrials had a trailing P/E of 21.8.
P/Es are a function of earnings growth rates and interest rates. A company
growing earnings at 30% per year deserves a higher P/E than a company growing
earnings at 10% annually. However, P/Es are also a reflection of investor
sentiment. Presently, quality tech stocks are priced as if nothing can go wrong
and quality companies in other industries are priced as if nothing can go right.
This challenges economic reality.
Wall Street analysts are paid to look forward, but their forecasts are
generally strongly biased by the past. Over the last several years, leading
technology companies' earnings have beaten consensus projections. Analysts have
responded by raising the earnings bar, at least in part to justify soaring
valuations. If the economy slows, technology spending may moderate as well, and
tech companies' earnings may fall short of what we believe are overly optimistic
forecasts. High valuations leave little room for even modest earnings
disappointments. Just ask the folks at Qualcomm and Lucent Technologies.
As for the rest of the market, if the economy is slowing, earnings for
economically sensitive companies may have peaked, albeit a year later than many
anticipated. Cyclical stocks have received little tribute for better than
expected earnings. In fact, we believe that significantly lower earnings are
already baked into valuations. So, any pleasant surprises should generate
enthusiasm. Other industry groups such as food and drug stocks suffered more
from investor indifference than any present or potential earnings dislocations.
Media stocks, which stalled in 2000 after exceptionally strong performance in
1998-99, may recapture stock market interest as consolidation in the industry
accelerates. In the last year we have seen AOL combine with Time Warner, Viacom
acquire CBS, and the recently announced Vivendi/Canal Plus/Seagram merger. We
think there are many more deals, big and small, on the horizon as content and
distribution are linked to improve media companies' competitive positions on the
world stage. Telecommunications stocks have also taken a well-deserved rest this
year. However, the three forces driving the industry--technology, deregulation,
and consolidation--remain firmly in place.
We are investment realists. Technology is the pre-eminent growth industry
in the world and over the long term discriminating tech investors should receive
generous rewards. However, the current diet of nothing but super rich technology
stocks is dangerous. The addition of some high protein, low calorie items from
some other investment food groups will help promote healthier long-term results.
WHAT IS RISK ARBITRAGE?
Simply stated, risk arbitrage is investing in a merger or acquisition
target after the deal has been announced and pocketing the spread between the
trading price of the target company following the announcement and the deal
price upon closing. This spread is usually relatively narrow, offering a
somewhat modest nominal total return. However, since deals generally close in
much less than a year's time, this modest total return translates into a much
more attractive annualized return.
4
<PAGE>
MERGERS AND ACQUISITIONS
The value of announced mergers and acquisitions in the first half of 2000
increased to $894 billion from $853 billion in the first half of 1999. Merger
activity continues to surge as companies in industries such as banks,
broadcasters, brokers, telecommunications, utilities, defense and health care
combine in response to falling regulatory barriers and increased competition.
A number of themes continued to surface in the first half of the year.
Cross border mergers, minority buyouts, strategic acquisitions and hostile bids
all highlighted a vibrant arbitrage environment. Arbitrage activity should
remain dynamic during the coming months as strategic mergers and acquisitions
continue to be announced in a variety of industries. We plan to capitalize on
those opportunities that fit our investment philosophy.
INVESTMENT SCOREBOARD
Once again, risk arbitrage investments in announced deals provided solid
performance for the Fund. Our utility investments contributed respectable
returns and helped stabilize the portfolio in the midst of a volatile stock
market, while our U.S. Treasury security holdings, approximately 15% of
portfolio assets at the close of the quarter, added slow but steady returns.
Our losers list was dominated by cyclical companies such as Federal Mogul,
WHX, and Carlyle Industries. Our limited telecommunications holdings, including
Shenandoah Telecommunications and Telegroup, also performed poorly.
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.
BESTFOODS INC. (BFO - $69.25 - NYSE) agreed to a sweetened buyout offer from
Unilever (UN - $42.98 - NYSE) of $73 per share in cash, or $24.3 billion
including assumed debt. The merger will create the world's largest food company.
The transaction is conditioned on the approvals of BFO and UN shareholders and
regulatory approvals, including the European Union and United States antitrust
clearance. The deal is not contingent upon financing. It is expected to close in
the fourth quarter of 2000. In May, BFO rejected a $66 per share bid from the
Dutch food giant. Subsequently, BFO opened merger talks with Campbell Soup Co.,
Diageo plc, and H. J. Heinz, putting pressure on UN to raise its bid. The
acquisition adds such well-known brands to UN's portfolio as Entenmann's baked
goods and Hellmann's mayonnaise. It will be accretive to UN's cash earnings per
share in the first full year of operation, resulting in cost savings of about
$750 million annually. The hostile-turned-friendly deal is Unilever's third
notable food acquisition in past months, as it recently acquired SlimFast diet
foods and Ben & Jerry's ice cream.
CENTRAL NEWSPAPERS INC. (ECP - $63.25 - NYSE) has agreed to be acquired by
Gannett Co. (GCI - $58.98 - NYSE), publisher of USA Today, for $2.75 billion. It
is the second largest newspaper deal in U.S. history. GCI will pay $2.6 billion
in cash and assume $150 million in debt. Shareholders of each Class A share will
receive $64 and shareholders of the Class B shares will receive $6.40. GCI has
already commenced a
5
<PAGE>
tender offer that should expire in August. The Eugene C. Pulliam Trust, which
owns approximately 78% of the voting power of ECP, has agreed to tender all of
its stock to GCI in the offer. The trust's affirmative vote is sufficient to
approve the merger. The deal is subject to regulatory approval in the U.S.,
however not that of the FCC. The terms value ECP at about 11.2 times 2000
expected EBITDA (Earnings Before Interest, Taxation, Depreciation and
Amortization) and 9.5 times 2001 expected EBITDA, after synergies. The
transaction should be accretive to Gannett's cash EPS for 2000 and in its first
full year in 2001.
LG&E ENERGY CORP. (LGE - $23.875 - NYSE) will be purchased by the U.K.'s
third-largest power generator, PowerGen plc (PWG.LN - $8.56 - London Stock
Exchange), for about $5.4 billion in cash and assumed debt. Under the terms of
the transaction, PWG will pay LGE shareholders $24.85 per share in cash. The
acquisition is subject to many approvals, including the shareholders of each
company, the U.S. Securities and Exchange Commission, the Federal Energy
Regulatory Commission, the Kentucky Public Service Commission, and the Virginia
State Corporation Commission. The combined company will have assets of nearly
$12 billion and total revenues of $8.7 billion. The deal continues the trend of
U.K. utilities buying their U.S. counterparts as the U.S. market opens for
competition. It also ends PWG's two-year search for a U.S. partner, after it had
held talks with Cinergy, Florida Progress, and Houston Industries.
MCWHORTER TECHNOLOGIES INC. (MWT - $19.5625 - NYSE), a maker of specialty
chemicals, completed a merger with Eastman Chemical Co. (EMN - $47.75 - NYSE) on
July 10 in which EMN bought MWT for $355 million in cash and debt. MWT makes
specialty colorants and resins used in paints and fiberglass. EMN paid $19.70
per MWT share in a cash tender offer, a 42% premium to MWT's closing price on
the day before the deal was announced. The tender was conditioned upon receipt
of a minimum of 50.1% of shares being tendered and customary regulatory
approvals. EMN has said that the deal will be accretive on a cash basis
immediately and should turn accretive on an earnings basis during 2001.
PRIMARK CORP. (PMK - $37.25 - NYSE), a provider of financial data, agreed to be
purchased by Canadian publishing giant The Thompson Corporation (TOC.TO - $34.21
- Toronto Stock Exchange) for $842 million in cash. TOC will also assume
approximately $235 million in PMK debt. Under the merger agreement, PMK
shareholders will receive $38 per share in cash, a 31% premium to PMK's closing
price on the day before the merger announcement. The approval process should
take a few months, with the merger closing in the second half of 2000. The
agreement is subject to 51% or more of PMK shares being tendered and the
expiration of certain regulatory approvals. The acquisition will give TOC
control of the two leading compilers of financial forecasts as IBES
International is added to its existing First Call/Thomson Financial unit. The
purchase will also increase TOC's European revenue from $130 million to almost
$400 million and overall revenue to $2 billion. PMK's international presence was
one of the driving factors behind TOC's interest in the deal.
RELIASTAR FINANCIAL CORP. (RLR - $52.4375 - NYSE), the eighth largest publicly
held life insurance company in the U.S., agreed to be purchased by Dutch ING
Group NV (INTNC.NA - $67.63 - Amsterdam Stock Exchange) for $6.1 billion in
cash. ING will pay $54 for each share of RLR and assume approximately $1 billion
in debt. The offer price is a 75% premium to the price at which RLR traded prior
to the announcement of a deal. The transaction will be financed internally and
be immediately accretive to net profit per share for ING. The deal is subject to
approval from regulatory authorities in the U.S. and other jurisdictions and the
shareholders of RLR. The transaction will take place in the form of a cash
merger and should be completed in September. Post merger, ING's overall market
position in the U.S. will go from nineteenth to eighth in terms of total life
and annuity premiums. Assets under management will almost double from $39
billion to $75 billion.
6
<PAGE>
SHARED MEDICAL SYSTEMS CORP. (SMS - $72.9375 - NYSE) was sold to Siemens AG
(SIE.GR - $150.45 - Frankfurt Stock Exchange), a German manufacturer of
industrial and consumer products, for $2.1 billion in cash on July 5. SMS is an
application service provider for the health care industry. SIE launched a cash
tender offer at $73 per share. The deal received the approval of U.S. antitrust
authorities and receipt of approval from the German antitrust authorities.
Because there is a slight product overlap in Germany, the German approval
delayed the close of the tender to early July. The overlap, however, is only a
small portion of the firms' revenues. The acquisition is an effort on the part
of SIE to bolster its presence in the health care IT market. That market is
expected to grow ten percent annually going forward. In early March, SMS'
competitor Eclipsys Corp. launched a hostile offer of $67 per share for SMS.
That bid was dropped in late March when Eclipsys agreed to be purchased by
Neoforma.com Inc.
UNITED WATER RESOURCES INC. (UWR - $33.50 - NYSE) will sell the two-thirds of
the company that Suez Lyonnaise des Eaux SA (LY.FP - $175.29 - Paris Stock
Exchange) does not already own to LY for $1.8 billion in cash and assumed debt.
LY offered $35 per share in cash and will assume $800 million in debt and
preferred stock of UWR, the No. 2 U.S. water company. In 1999, LY purchased
Nalco Chemical, the largest U.S. maker of water-treatment chemicals. LY's
acquisitions in the U.S. water market are part of its effort to keep pace with
its French rival Vivendi, which purchased U.S. Filter, a U.S. water-treatment
company, in April 1999. UWR provides water and sewer treatment services to 7.5
million people in 19 states. It had sales of $356.2 million last year. Upon
completion of the UWR acquisition, LY will have worldwide water and wastewater
revenues of more than $7.4 billion.
VASTAR RESOURCES INC. (VRI - $82.125 - NYSE), an 82%-owned subsidiary of
Atlantic Richfield, has received an offer from BP Amoco (BPA - $56.625 - NYSE)
for $71 per share. BPA purchased Atlantic Richfield on April 18 for $34 billion,
and wants to buy the minority shares of VRI. VRI is an oil and natural gas
exploration and production company. VRI has said that it will refer the matter
to a special committee of independent directors and will provide further comment
in due course. VRI is trading above the offer price from BPA, reflecting
investor sentiment that BPA will have to increase its offer in order to finish
the deal and buy the shares.
VERIO INC. (VRIO - $55.4844 - NASDAQ), a provider of Internet services to small
and mid-sized businesses, agreed to a buyout from its largest shareholder,
Nippon Telegraph & Telephone (9432.JP - $13,273.00 - Tokyo Stock Exchange),
worth $5.5 billion. NTT will pay $60 per share in cash, a 67% premium to the
price at which VRIO closed on the day prior to the announcement of the deal. In
order to complete the merger, the firms need antitrust approval under the Hart
Scott Rodino Act, and U.S. government approval under the Exxon-Florio Act. It is
possible that the timeframe for the second approval could be extended as certain
politicians in Congress have lobbied to require NTT to lower its local Japanese
interconnection fees in return for approval of the deal. NTT, which already owns
11.4% of VRIO, is buying the Web hosting service-company to broaden its control
over Internet services provided by the company. VRIO is the world's largest Web
hosting firm, as ranked by number of domain names.
7
<PAGE>
MINIMUM INITIAL INVESTMENT - $1,000
The Fund's minimum initial investment for regular accounts is $1,000.
There are no subsequent investment minimums. No initial minimum is required for
those establishing an Automatic Investment Plan. Additionally, the Fund and
other Gabelli Funds are available through the no-transaction fee programs at
many major brokerage firms.
WWW.GABELLI.COM
Please visit us on the Internet. Our homepage 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 the second quarter of 2000, extreme market volatility, particularly in
the technology sector, reinforced the benefits of our conservatively managed
portfolio for "safety first" investors. We strive to continue to produce
respectable returns even in troubled markets, satisfying our mandate to
shareholders.
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.
Sincerely,
/S/ SIGNATURE OMITTED
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
August 14, 2000
------------------------------------------------------------------
TOP TEN HOLDINGS
JUNE 30, 2000
-------------
Shared Medical Systems Corp. Bestfoods Inc
Vastar Resources Inc. ReliaStar Financial Corp.
United Water Resources Inc. Central Newspapers Inc.
McWhorter Technologies Inc. Primark Corp.
Verio Inc. LG&E Energy Corp.
------------------------------------------------------------------
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.
8
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THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
COMMON STOCKS -- 87.4%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.2%
13,000 Federal-Mogul Corp. ........... $ 275,087 $ 124,312
----------- -----------
AVIATION: PARTS AND SERVICES -- 0.6%
25,000 Aviall Inc.+ .................. 371,793 123,437
10,000 Fairchild Corp., Cl. A+ ....... 131,565 48,750
7,000 Hi-Shear Industries Inc. ...... 10,215 17,937
22,000 Kaman Corp., Cl. A ............ 395,473 235,125
----------- -----------
909,046 425,249
----------- -----------
BROADCASTING -- 0.3%
4,000 Liberty Corp. ................. 175,808 168,000
2,000 Salem Communications
Corp., Cl. A+ ................ 27,602 18,562
----------- -----------
203,410 186,562
----------- -----------
BUSINESS SERVICES -- 10.2%
25,000 Cendant Corp.+ ................ 504,579 350,000
2,580 Fisher Scientific
International Inc.+ .......... 24,892 63,855
20,000 National Processing Inc.+ ..... 174,891 250,000
50,000 Primark Corp. ................. 1,871,250 1,862,500
2,580 ProcureNet Inc.+ .............. 0 387
80,000 Verio Inc.+ ................... 4,677,989 4,438,750
----------- -----------
7,253,601 6,965,492
----------- -----------
COMMUNICATIONS EQUIPMENT -- 0.1%
5,000 Dynatech Corp.+ ............... 82,322 90,625
----------- -----------
COMPUTER SOFTWARE AND SERVICES -- 0.1%
1,000 Global Sources Ltd.+ .......... 32,625 25,375
1,000 Policy Management
Systems Corp.+ ............... 10,675 15,375
----------- -----------
43,300 40,750
----------- -----------
CONSUMER PRODUCTS -- 0.3%
28,942 Syratech Corp.+ ............... 911,975 227,918
----------- -----------
DIVERSIFIED INDUSTRIAL -- 0.3%
6,000 Ampco-Pittsburgh Corp. ........ 69,606 66,750
11,000 Katy Industries Inc. .......... 250,300 129,250
4,000 WHX Corp.+ .................... 41,825 22,000
----------- -----------
361,731 218,000
----------- -----------
ENERGY AND UTILITIES: ELECTRIC -- 1.6%
45,000 El Paso Electric Co.+ ......... 370,225 503,437
10,000 Florida Progress Corp. ........ 469,801 468,750
5,000 St. Joseph Light & Power Co. .. 102,750 105,000
----------- -----------
942,776 1,077,187
----------- -----------
ENERGY AND UTILITIES: INTEGRATED -- 3.4%
75,000 LG&E Energy Corp. ............. 1,737,187 1,790,625
25,000 MCN Energy Group Inc. ......... 599,532 534,375
----------- -----------
2,336,719 2,325,000
----------- -----------
MARKET
SHARES COST VALUE
------ ---- ------
ENERGY AND UTILITIES: NATURAL GAS -- 17.3%
22,000 AGL Resources Inc. ............ $ 399,054 $ 350,625
3,500 Berkshire Energy Resources .... 122,679 130,812
20,000 Columbia Energy Group ......... 1,199,125 1,312,500
12,000 Eastern Enterprises ........... 686,100 756,000
12,000 EnergyNorth Inc. .............. 684,300 711,000
7,000 Piedmont Natural
Gas Co. Inc. ................. 203,773 185,938
42,000 Southwest Gas Corp. ........... 1,018,325 735,000
7,000 Valley Resources Inc. ......... 156,213 168,875
90,000 Vastar Resources Inc. ......... 7,319,936 7,391,250
----------- -----------
11,789,505 11,742,000
----------- -----------
ENERGY AND UTILITIES: WATER -- 10.6%
18,000 E'Town Corp. .................. 1,131,500 1,195,875
6,500 SJW Corp. ..................... 763,887 772,688
150,000 United Water Resources Inc. ... 4,986,497 5,231,250
----------- -----------
6,881,884 7,199,813
----------- -----------
ENTERTAINMENT -- 0.6%
5,000 Fisher Companies Inc. ......... 351,853 382,500
----------- -----------
EQUIPMENT AND SUPPLIES -- 0.3%
9,174 Juno Lighting Inc. ............ 142,359 55,044
10,000 UCAR International Inc.+ ...... 165,824 130,625
----------- -----------
308,183 185,669
----------- -----------
FINANCIAL SERVICES -- 4.9%
1,500 Allstate Corp. ................ 39,638 33,375
32,500 Argonaut Group Inc. ........... 1,074,671 556,563
5,000 Leucadia National Corp. ....... 174,181 114,063
562 Markel Corp.+ ................. 73,060 79,593
10,000 Pioneer Group Inc.+ ........... 317,785 423,750
40,000 ReliaStar Financial Corp. ..... 2,052,625 2,097,500
----------- -----------
3,731,960 3,304,844
----------- -----------
FOOD AND BEVERAGE -- 7.6%
35,000 Advantica Restaurant
Group Inc.+ .................. 326,901 33,906
55,000 Bestfoods Inc. ................ 3,817,629 3,808,750
20,000 Nabisco Holdings Corp., Cl. A . 1,055,375 1,050,000
20,000 Whitman Corp. ................. 258,078 247,500
----------- -----------
5,457,983 5,140,156
----------- -----------
HEALTH CARE -- 11.7%
4,500 Life Technologies Inc. ........ 167,906 229,500
105,800 Shared Medical
Systems Corp. ................ 7,566,322 7,716,788
----------- -----------
7,734,228 7,946,288
----------- -----------
HOME FURNISHINGS -- 0.2%
320,000 Carlyle Industries Inc.+ ...... 150,016 165,000
8,000 O'Sullivan Industries
Holdings Inc.+ ............... 4,750 4,000
----------- -----------
154,766 169,000
----------- -----------
See accompanying notes to financial statements.
9
<PAGE>
THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES COST VALUE
------ ---- ------
HOTELS AND GAMING -- 0.0%
2,500 Boca Resorts Inc., Cl. A+ ..... $ 18,875 $ 24,688
----------- -----------
METALS AND MINING -- 0.0%
10,000 Royal Oak Mines Inc.+ ......... 11,858 50
----------- -----------
PUBLISHING -- 2.8%
30,000 Central Newspapers Inc., Cl. A 1,900,875 1,897,500
----------- -----------
REAL ESTATE -- 3.7%
65,000 Castle & Cooke Inc.+ .......... 1,206,969 1,255,313
70,000 Catellus Development Corp.+ ... 1,175,673 1,050,000
20,000 Griffin Land & Nurseries Inc.+ 322,381 246,250
3,169 HomeFed Corp.+ ................ 567 2,218
----------- -----------
2,705,590 2,553,781
----------- -----------
RETAIL -- 1.8%
120,000 Bruno's Inc.+ ................. 76,300 0
16,000 Hannaford Bros. Co. ........... 1,154,842 1,150,000
8,000 Lillian Vernon Corp. .......... 132,815 84,000
----------- -----------
1,363,957 1,234,000
----------- -----------
SPECIALTY CHEMICALS -- 7.9%
20,000 Lilly Industries Inc., Cl. A .. 606,312 601,250
246,500 McWhorter Technologies Inc.+ .. 4,828,170 4,791,344
----------- -----------
5,434,482 5,392,594
----------- -----------
TELECOMMUNICATIONS -- 0.8%
15,000 Citizens Communications Co. ... 152,183 258,750
9,500 Shenandoah
Telecommunications Co. ....... 214,381 294,500
3,000 Telegroup Inc.+ ............... 32 30
----------- -----------
366,596 553,280
----------- -----------
WIRELESS COMMUNICATIONS -- 0.1%
1,000 American Tower Corp., Cl. A+ .. 15,415 41,688
----------- -----------
TOTAL COMMON STOCKS 61,547,977 59,448,946
----------- -----------
PREFERRED STOCKS -- 0.8%
DIVERSIFIED INDUSTRIAL -- 0.5%
11,500 WHX Corp.,
6.50% Cv. Pfd., Ser. A ....... 535,712 248,688
6,500 WHX Corp.,
$3.75 Cv. Pfd., Ser. B ....... 273,676 112,125
----------- -----------
809,388 360,813
----------- -----------
TELECOMMUNICATIONS -- 0.3%
3,000 Citizens Communications Co.,
5.00% Cv. Pfd. ............... 147,020 202,125
----------- -----------
TOTAL PREFERRED STOCKS 956,408 562,938
----------- -----------
MARKET
SHARES COST VALUE
------ ---- ------
CORPORATE BONDS -- 0.3%
ENVIRONMENTAL SERVICES -- 0.0%
$ 34,000 Waste Management Inc., Sub. Deb. Cv.
4.00%, 02/01/02 .............. $ 31,171 $ 31,535
----------- -----------
HOTELS AND GAMING -- 0.1%
100,000 Hilton Hotels Corp., Sub. Deb. Cv.
5.00%, 05/15/06 .............. 77,018 79,000
----------- -----------
RETAIL -- 0.0%
200,000 RDM Sports Group Inc., Cv.
8.00%, 08/15/03 .............. 49,839 20,500
----------- -----------
TRANSPORTATION -- 0.2%
850,000 Builders Transport Inc., Cv.
6.50%, 05/01/11 .............. 76,540 0
140,000 WorldCorp. Inc.,
Sub. Deb. Cv.
Zero Coupon, 05/15/04 ........ 30,699 84,000
----------- -----------
107,239 84,000
----------- -----------
TOTAL CORPORATE BONDS 265,267 215,035
----------- -----------
SHARES
--------
RIGHTS -- 0.0%
FINANCIAL SERVICES -- 0.0%
562 Markel Corp. Rights+ .......... 5,023 4,092
----------- -----------
PRINCIPAL
AMOUNT
-----------
U.S. GOVERNMENT OBLIGATIONS -- 15.4%
$10,582,000 U.S. Treasury Bills,
5.44% to 5.82%++,
due 07/06/00 to 09/14/00 ..... 10,464,367 10,467,079
----------- -----------
TOTAL
INVESTMENTS -- 103.9% ........ $73,239,042 70,698,090
=========== ===========
OTHER ASSETS AND
LIABILITIES (NET) -- (3.9%) ................. (2,660,697)
-----------
NET ASSETS -- 100.0%
(6,876,101 shares outstanding) .............. $68,037,393
===========
------------------------
For Federal tax purposes:
Aggregate cost ............................... $73,239,042
===========
Gross unrealized appreciation ................ $1,741,392
Gross unrealized depreciation ................ (4,282,344)
-----------
Net unrealized depreciation .................. $(2,540,952)
-----------
------------------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
See accompanying notes to financial statements.
10
<PAGE>
THE GABELLI ABC FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $73,239,042) .................... $70,698,090
Cash ........................................................ 4,512
Dividends and interest receivable ........................... 107,405
Receivable for investments sold ............................. 8,105
-----------
TOTAL ASSETS ................................................ 70,818,112
-----------
LIABILITIES:
Payable for investments purchased ........................... 2,587,215
Payable for investment advisory fees ........................ 55,896
Payable for distribution fees ............................... 13,974
Other accrued expenses ...................................... 123,634
-----------
TOTAL LIABILITIES ........................................... 2,780,719
-----------
NET ASSETS applicable to 6,876,101
shares outstanding ........................................ $68,037,393
===========
NET ASSETS CONSIST OF:
Capital stock, at par value ................................. $ 6,876
Additional paid-in capital .................................. 65,783,130
Accumulated net investment income ........................... 390,239
Accumulated net realized gain on investments ................ 4,398,100
Net unrealized depreciation on investments .................. (2,540,952)
-----------
TOTAL NET ASSETS ............................................ $68,037,393
===========
NET ASSET VALUE, offering and redemption
price per share ($68,037,393 / 6,876,101
shares outstanding; 1,000,000,000 shares
authorized of $0.001 par value) ........................... $9.89
=====
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends ................................................... $ 383,124
Interest .................................................... 569,654
----------
TOTAL INVESTMENT INCOME ..................................... 952,778
----------
EXPENSES:
Investment advisory fees .................................... 330,359
Distribution fees ........................................... 82,590
Legal and audit fees ........................................ 32,409
Shareholder services fees ................................... 31,295
Custodian fees .............................................. 26,252
Registration fees ........................................... 22,368
Shareholder communications expenses ......................... 16,031
Directors' fees ............................................. 5,386
Interest expense ............................................ 12,252
Miscellaneous expenses ...................................... 3,597
----------
TOTAL EXPENSES .............................................. 562,539
----------
NET INVESTMENT INCOME ....................................... 390,239
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments
and futures contracts ..................................... 4,410,101
Net change in unrealized depreciation
on investments ............................................ (1,533,140)
----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ............................................ 2,876,961
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................................... $3,267,200
==========
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
------------------ -----------------
<S> <C> <C>
OPERATIONS:
Net investment income ..................................... $ 390,239 $ 985,497
Net realized gain on investments and futures contracts .... 4,410,101 5,778,370
Net change in unrealized depreciation on investments ...... (1,533,140) (903,185)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...... 3,267,200 5,860,682
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ..................................... -- (463,667)
Net realized gain on investments .......................... -- (2,734,053)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ....................... -- (3,197,720)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Net increase in net assets from capital share transactions 21,986,706 762,387
------------ ------------
NET INCREASE IN NET ASSETS ................................ 25,253,906 3,425,349
NET ASSETS:
Beginning of period ....................................... 42,783,487 39,358,138
------------ ------------
End of period ............................................. $68,037,393 $42,783,487
=========== ===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION. The Gabelli ABC Fund (the "Fund"), a series of Gabelli Investor
Funds, Inc. (the "Corporation"), was organized on October 30, 1992 as a Maryland
corporation. The Fund is a non-diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund's primary objective is to achieve total returns that are
attractive to investors in various market conditions without excessive risk of
capital loss. The Fund commenced investment operations on May 14, 1993.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
SECURITY VALUATION. Portfolio securities listed or traded on a nationally
recognized securities exchange, quoted by the National Association of Securities
Dealers Automated Quotations, Inc. ("Nasdaq") or traded on foreign exchanges are
valued at the last sale price on that exchange as of the close of business on
the day the securities are being valued (if there were no sales that day, the
security is valued at the average of the closing bid and asked prices or, if
there were no asked prices quoted on that day, then the security is valued at
the closing bid price on that day, except for open short positions, which are
valued at the last asked price). All other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest average of the bid and asked prices. Portfolio securities traded on more
than one national securities exchange or market are valued according to the
broadest and most representative market, as determined by Gabelli Funds, LLC
(the "Adviser"). Securities and assets for which market quotations are not
readily available are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the Board
of Directors. Short term debt securities with remaining maturities of 60 days or
less are valued at amortized cost, unless the Directors determine such does not
reflect the securities' fair value, in which case these securities will be
valued at their fair value as determined by the Directors. Debt instruments
having a maturity greater than 60 days are valued at the highest bid price
obtained from a dealer maintaining an active market in those securities. Options
are valued at the last sale price on the exchange on which they are listed. If
no sales of such options have taken place that day, they will be valued at the
mean between their closing bid and asked prices.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements with
primary government securities dealers recognized by the Federal Reserve Board,
with member banks of the Federal Reserve System or with other brokers or dealers
that meet credit guidelines established by the Adviser and reviewed by the Board
of Directors. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
The Fund will always receive and maintain securities as collateral whose market
value, including accrued interest, will be at least equal to 100% of the dollar
amount invested by the Fund in each agreement. The Fund will make payment for
such securities only upon physical delivery or upon evidence of book entry
transfer of the collateral to the account of the custodian. To the extent that
any repurchase transaction exceeds one business day, the value of the collateral
is marked-to-market on a daily basis to maintain the adequacy of the
12
<PAGE>
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
collateral. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
FUTURES CONTRACTS. The Fund may engage in futures contracts for the purpose of
hedging against changes in the value of its portfolio securities and in the
value of securities it intends to purchase. Upon entering into a futures
contract, the Fund is required to deposit with the broker an amount of cash or
cash equivalents equal to a certain percentage of the contract amount. This is
known as the "initial margin". Subsequent payments ("variation margin") are made
or received by the Fund each day, depending on the daily fluctuation of the
value of the contract. The daily changes in the contract are included in
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed. At June 30, 2000, there were no open futures contracts.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk that
the Fund may not be able to enter into a closing transaction because of an
illiquid secondary market.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME. Securities transactions are
accounted for on the trade date with realized gain or loss on investments
determined by using the identified cost method. Interest income (including
amortization of premium and accretion of discount) is recorded as earned.
Dividend income is recorded on the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders are recorded on the ex-dividend date. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences, and
differing characterization of distributions made by the Fund.
PROVISION FOR INCOME TAXES. The Fund intends to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. As a result, a Federal income tax provision is not required.
3. INVESTMENT ADVISORY AGREEMENT. The Fund has entered into an investment
advisory agreement (the "Advisory Agreement") with the Adviser which provides
that the Fund will pay the Adviser a fee, computed daily and paid monthly, at
the annual rate of 1.00% of the value of the Fund's average daily net assets. In
accordance with the Advisory Agreement, the Adviser provides a continuous
investment program for the Fund's portfolio, oversees the administration of all
aspects of the Fund's business and affairs and pays the compensation of all
Officers and Directors of the Fund who are its affiliates.
4. DISTRIBUTION PLAN. The Fund's Board of Directors has adopted a distribution
plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. For the six months
ended June 30, 2000, the Fund incurred distribution costs payable to Gabelli &
Company, Inc., an affiliate of the Adviser, of $82,590, or 0.25% of average
daily net assets, the annual limitation under the Plan. Such payments are
accrued daily and paid monthly.
13
<PAGE>
THE GABELLI ABC FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED)
--------------------------------------------------------------------------------
5. PORTFOLIO SECURITIES. Purchases and sales of securities for the six months
ended June 30, 2000, other than short term securities, aggregated $173,508,172
and $146,291,375, respectively.
6. TRANSACTIONS WITH AFFILIATES. During the six months ended June 30, 2000, the
Fund paid brokerage commissions of $200,454 to Gabelli & Company, Inc. and its
affiliates.
7. LINE OF CREDIT. The Fund has access to an unsecured line of credit up to
$25,000,000 from the custodian for temporary borrowing purposes. Borrowings
under this arrangement bear interest at 0.75% above the Federal Funds rate on
outstanding balances. There were no borrowings outstanding at June 30, 2000.
The average daily amount of borrowings outstanding within the six months ended
June 30, 2000 was $145,757, with a related weighted interest rate of 6.77%. The
maximum amount borrowed at any time during the six months ended June 30, 2000
was $5,972,000.
8. CAPITAL STOCK TRANSACTIONS. Transactions in shares of capital stock were as
follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31, 1999
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------------------------- ----------- ------------
<S> <C> <C> <C> <C>
Shares sold ...................................... 6,481,685 $ 61,679,967 8,133,675 $ 79,459,417
Shares issued upon reinvestment of dividends ..... -- -- 331,243 3,087,197
Shares redeemed .................................. (4,138,377) (39,693,261) (8,037,283) (81,784,227)
----------- ------------ ---------- ------------
Net increase ................................. 2,343,308 $ 21,986,706 427,635 $ 762,387
=========== ============ ========== ============
</TABLE>
14
<PAGE>
THE GABELLI ABC FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Selected data for a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 -----------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
---------------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATING PERFORMANCE:
Net asset value, beginning of period . $ 9.44 $ 9.59 $ 10.23 $ 9.84 $ 9.71 $ 9.57
--------- ------- ------- ------- ------- -------
Net investment income ................ 0.06 0.26 0.22 0.08 0.21 0.21
Net realized and unrealized gain
on investments ..................... 0.39 0.59 0.90 1.17 0.54 0.86
--------- ------- ------- ------- ------- -------
Total from investment operations ..... 0.45 0.85 1.12 1.25 0.75 1.07
--------- ------- ------- ------- ------- -------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income ................ -- (0.14) (0.22) (0.08) (0.21) (0.21)
In excess of net investment income ... -- -- (0.00)(a) (0.01) -- --
Net realized gain on investments ..... -- (0.86) (1.54) (0.77) (0.41) (0.72)
In excess of net realized gain
on investments ..................... -- -- (0.00)(a) -- -- --
--------- ------- ------- ------- ------- -------
Total distributions .................. -- (1.00) (1.76) (0.86) (0.62) (0.93)
--------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ....... $ 9.89 $ 9.44 $ 9.59 $ 10.23 $ 9.84 $ 9.71
========= ======= ======= ======= ======= =======
Total return+ ........................ 4.8% 9.0% 11.1% 12.8% 7.8% 11.2%
========= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS AND
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) . $ 68,037 $42,783 $39,358 $35,228 $26,801 $19,862
Ratio of net investment income
to average net assets .............. 1.18%(d) 1.37% 1.00% 0.87% 2.11% 1.83%
Ratio of operating expenses
to average net assets (b) (c) ...... 1.70%(d) 1.47% 1.69% 2.26% 2.09% 2.10%
Portfolio turnover rate .............. 291% 672% 299% 493% 343% 508%
</TABLE>
--------------------------------
+ Total return represents aggregate total return of a hypothetical $1,000
investment at the beginning of the period and sold at the end of the period
including reinvestment of dividends. Total return for the period of less
than one year is not annualized.
(a) Amount represents less than $0.005 per share.
(b) The ratio of operating expenses to average net assets for the years ended
December 31, 1998 and 1997 do not include a reduction of expenses for
custodian fee credits. Including such credits, the ratios would have been
1.68% and 2.25%, respectively.
(c) The Fund incurred interest expense during the six months ended June 30,
2000. If interest expense had not been incurred, the ratio of operating
expenses to average net assets would have been 1.67%.
(d) Annualized.
See accompanying notes to financial statements.
15
<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 ASSET MANAGEMENT INC.
Anthony J. Colavita Werner J. Roeder, MD
ATTORNEY-AT-LAW MEDICAL DIRECTOR
ANTHONY J. COLAVITA, P.C. LAWRENCE HOSPITAL
Vincent D. Enright
FORMER 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 shareholders of The
Gabelli ABC Fund. It is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
--------------------------------------------------------------------------------
GAB408Q200SR
[Photo of Mario J. Gabelli omitted]
THE
GABELLI
ABC
[Graphic of ABC blocks omitted]
FUND
SEMI-ANNUAL REPORT
JUNE 30, 2000
