THE GABELLI ABC FUND
THIRD QUARTER REPORT
SEPTEMBER 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
[BOOK GRAPHIC OMITTED]
TO OUR SHAREHOLDERS,
Declining market interest rates (bond yields), a quiescent Federal Reserve,
and reasonable second quarter earnings spawned a late summer rally, temporarily
putting the Standard & Poor's 500 ("S & P") and Nasdaq Composite ("Nasdaq")
Indices into positive performance territory for the year. However, stocks
retreated in September as higher oil prices, the plummeting Euro, and third
quarter earnings jitters eroded investor confidence. The Dow Jones Industrial
Average ("DJIA") managed a slight gain for the third quarter, but the S&P 500
and the Nasdaq Composite Indices closed with losses.
The performance of the ABC Fund's equity holdings was mixed. However, our
risk arbitrage positions proved rewarding and our substantial cash reserves
insulated the portfolio during this volatile market environment.
INVESTMENT PERFORMANCE
For the third quarter ended September 30, 2000, The Gabelli ABC Fund's (the
Fund") total return was 2.83%. The Standard & Poor's ("S&P") 500 Index declined
0.97% while the Lipper U.S. Treasury Money Market Average had a total return of
1.43% over the same period. The S&P 500 Index is an unmanaged indicator of stock
market performance, while the Lipper Average reflects the average performance of
mutual funds classified in this particular category. The Fund was up 10.30% over
the trailing twelve-month period. The S&P 500 Index and Lipper U.S. Treasury
Money Market Average rose 13.27% and 5.20%, respectively, over the same
twelve-month period.
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT RESULTS (a)
QUARTER
-----------------------------------------
1st 2nd 3rd 4th Year
----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
2000: Net Asset Value ........... $9.67 $9.89 $10.17 -- --
Total Return .............. 2.4% 2.3% 2.8% -- --
--------------------------------------------------------------------------------------------
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>
--------------------------------------------------------
AVERAGE ANNUAL RETURNS - SEPTEMBER 30, 2000 (A)
--------------------------------------------------------
1 Year ..................................... 10.30%
3 Year ..................................... 10.47%
Life of Fund (b) ........................... 9.92%
--------------------------------------------------------
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
(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.
--------------------------------------------------------------------------------
[PYRAMID GRAPHIC OMITTED]
Pyramid text as follows:
EPS
PMV
MANAGEMENT
CASH FLOW
RESEARCH
For the five-year period ended September 30, 2000, the Fund's total return
averaged 10.15% annually versus average annual total returns of 21.68% and 4.82%
for the S&P 500 Index and Lipper U.S. Treasury Money Market Average,
respectively. Since inception on May 14, 1993 through September 30, 2000, the
Fund had a cumulative total return of 101.13%, which equates to an average
annual total return of 9.92%.
2
<PAGE>
COMMENTARY
THE FIVE E'S
In the third quarter of 2000, investors focused on the five E's--Energy,
the Euro, the Economy, Earnings, and the Election. We will share our perspective
on the five E's and offer an opinion on how they may impact the market going
forward.
ENERGY
The price of oil hit a ten-year high in the third quarter. Gasoline prices
exceeded $2.00 per gallon in many areas of the country this summer and home
heating costs are expected to rise by 50% this winter. Rising oil prices have
already sparked demonstrations in Europe and energy has become a political issue
in the U.S. as well. Although OPEC has increased production and is publicly
targeting a $25 to $28 per barrel price, global inventories are still tight and
the price of oil remains well over $30 per barrel. The U.S. is attempting to
influence the world energy market by dipping into its strategic oil reserves.
However, this is not likely to have a meaningful near term impact on oil prices.
Treasury Secretary Lawrence Summers recently characterized high oil prices as
the biggest cloud in the relatively blue sky" of a fundamentally sound global
economy. We agree.
We do not anticipate a repeat of the 1973-74 oil shock, which sent the
global economy into recession and sparked the last great bear market in stocks.
After the Gulf War, we doubt Middle East oil producers, particularly the
Saudi's, would risk alienating their protectors. Only in our worst nightmares do
we consider the impact that $50 per barrel of oil would have on today's equity
markets. Our best guess is that oil prices will decline from their peaks, but
remain high enough to keep pressure on global economies.
THE EURO
[GRAPHIC OMITTED]
EURO VS. U.S. DOLLAR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC AS FOLLOWS:
1999 2000
------ ------
Jan 1.1874 1.0155
1.1761 1.0309
1.1637 1.0335
1.1675 1.0324
1.1556 1.0294
1.1535 1.0252
1.1555 1.0322
1.1698 1.0281
1.1687 1.0270
1.1592 1.0128
1.1603 1.0121
1.1604 1.0115
1.1574 1.0133
1.1578 1.0100
1.1583 1.0019
1.1568 1.0041
1.1575 1.0011
1.1478 0.9890
1.1393 0.9765
1.1374 0.9757
Feb 1.1303 0.9731
1.1328 0.9768
1.1338 0.9887
1.1308 0.9760
1.1283 0.9783
1.1297 0.9862
1.1303 0.9914
1.1330 0.9865
1.1303 0.9847
1.1283 0.9783
1.1247 0.9834
1.1191 0.9842
1.1231 0.9863
1.1223 0.9850
1.1072 1.0060
1.1037 1.0017
1.0994 0.9931
1.0975 0.9763
1.1069 0.9669
1.0993 0.9643
1.0891 0.9700
Mar 1.0929 0.9619
1.0887 0.9618
1.0825 0.9603
1.0843 0.9560
1.0901 0.9576
1.0873 0.9684
1.0961 0.9659
1.0917 0.9648
1.0948 0.9644
1.0930 0.9696
1.0916 0.9710
1.1017 0.9694
1.0993 0.9710
1.0925 0.9703
1.0918 0.9608
1.0919 0.9691
1.0924 0.9724
1.0872 0.9645
1.0745 0.9614
1.0718 0.9524
1.0734 0.9594
1.0809 0.9574
1.0780 0.9560
Apr 1.0707 0.9588
1.0842 0.9647
1.0785 0.9580
1.0842 0.9590
1.0785 0.9588
1.0843 0.9591
1.0780 0.9551
1.0780 0.9524
1.0718 0.9564
1.0690 0.9550
1.0610 0.9477
1.0631 0.9369
1.0614 0.9376
1.0599 0.9379
1.0633 0.9396
1.0590 0.9265
1.0649 0.9217
1.0618 0.9083
1.0597 0.9089
1.0566 0.9120
1.0570 0.9068
1.0594 0.8891
May 1.0725 0.8907
1.0779 0.8953
1.0785 0.8950
1.0790 0.9023
1.0723 0.9097
1.0667 0.9021
1.0624 0.9080
1.0652 0.9138
1.0672 0.9053
1.0672 0.8921
1.0643 0.8952
1.0632 0.8946
1.0575 0.9036
1.0589 0.9032
1.0469 0.9096
1.0439 0.9072
1.0426 0.9310
1.0436 0.9314
1.0446 0.9328
1.0360 0.9307
1.0347 0.9432
1.0330 0.9471
Jun 1.0298 0.9570
1.0442 0.9600
1.0451 0.9548
1.0479 0.9526
1.0519 0.9544
1.0418 0.9619
1.0420 0.9590
1.0303 0.9530
1.0329 0.9648
1.0368 0.9622
1.0324 0.9557
1.0322 0.9455
1.0320 0.9398
1.0371 0.9358
1.0443 0.9382
1.0372 0.9444
1.0339 0.9444
1.0300 0.9515
1.0248 0.9545
1.0224 0.9526
1.0252 0.9548
1.0221 0.9527
Jul 1.0200 0.9484
1.0187 0.9521
1.0138 0.9497
1.0179 0.9401
1.0216 0.9339
1.0221 0.9374
1.0204 0.9351
1.0204 0.9322
1.0418 0.9237
1.0526 0.9292
1.0509 0.9343
1.0501 0.9314
1.0653 0.9391
1.0628 0.9413
1.0645 0.9331
1.0716 0.9246
1.0696 0.9266
1.0680 0.9228
1.0769 0.9137
1.0794 0.9042
1.0771 0.9075
1.0712 0.9105
Aug 1.0752 0.9019
1.0664 0.8991
1.0635 0.9077
1.0570 0.9046
1.0559 0.9037
1.0524 0.9135
1.0508 0.9143
1.0644 0.9152
1.0655 0.9068
1.0553 0.9027
1.0502 0.8965
1.0468 0.8967
1.0440 0.9028
1.0464 0.9024
1.0449 0.9002
1.0581 0.8966
1.0583 0.8924
1.0691 0.8878
1.0607 0.8993
1.0582 0.8876
1.0591 0.8702
1.0541 0.8740
Sep 1.0401 0.8664
1.0401 0.8624
1.0404 0.8596
1.0388 0.8640
1.0417 0.8617
1.0401 0.8572
1.0409 0.8527
1.0462 0.8514
1.0503 0.8463
1.0416 0.8559
1.0469 0.8794
1.0432 0.8738
1.0513 0.8813
1.0616 0.8807
1.0642 0.8830
1.0717 0.8842
1.0704 0.8788
1.0692 0.8745
1.0703 0.8727
1.0722 0.8691
1.0633 0.8686
Oct 1.0737 0.8682
1.0761 0.8716
1.0803 0.8644
1.0888 0.8567
1.0864 0.8491
1.0833 0.8509
1.0764 0.8391
1.0808 0.8412
1.0679 0.8406
1.0668 0.8364
1.0578 0.8365
1.0533 0.8274
1.0519 0.8273
1.0519 0.8408
1.0495 0.8433
1.0507 0.8485
1.0487 0.8588
1.0439 0.8579
1.0402 0.8619
1.0362 0.8585
1.0402 0.8585
Nov 1.0444 0.8554
1.0315 0.8574
1.0316 0.8624
1.0319 0.8574
1.0403 0.8571
1.0306 0.8534
1.0315 0.8517
1.0329 0.8487
1.0262 0.8460
1.0177 0.8424
1.0199 0.8401
1.0138 0.8383
1.0103 0.8503
1.0077 0.8545
1.0068 0.8577
1.0026 0.8694
1.0016 0.8768
Dec 1.0253 0.8876
1.0223 0.8803
1.0262
1.0165
1.0161
1.0122
1.0068
1.0066
1.0169
1.0089
1.0068
1.0097
1.0080
1.0164
1.0132
1.0046
1.0029
1.0064
1.0070
3
<PAGE>
In January 1999, the Euro was introduced with great fanfare. Originally
expected to be a strong international currency, the Euro has declined against
the Japanese yen and plummeted against the U.S. dollar.
The plunging Euro presents a threat to the U.S. economy and stock market.
Europe is by far the largest market for U.S. exports. As the dollar strengthens
against the Euro, our exports become more expensive for European and other
global consumers. Conversely, European imports become cheaper for American
consumers as well as Latin American and Asian purchasers. This is making the
already troublesome balance of trade deficit even more problematic for the U.S.
Eventually, the dollar will have to be contained. While this will help on the
balance of trade front, it may have the adverse affect of reducing foreign
investment in U.S. capital markets. This is a long-term quandary without any
easy solutions.
A secondary effect of the weak Euro--but one with a more immediate impact
on U.S. stocks--is that the earnings for U.S. multi-national companies that do a
significant amount of business in Europe are being penalized significantly as
Euro denominated revenues and profits are translated back into dollars for
reporting purposes. This results in earnings shortfalls for some of the U.S.
market's "bellwether" stocks.
THE ECONOMY
Prior to the rapid increase in oil prices and the collapse of the Euro, the
global economic picture looked relatively bright. Asia had recovered, Europe was
gaining momentum, and after six Federal Reserve interest rate hikes, the U S.
economy appeared headed for a soft landing. Now, this comfortable economic
scenario is threatened. Will we have a "hard landing?"
EARNINGS
The potential for slower economic growth in the U.S. has investors
questioning whether third and fourth quarter corporate 2000 earnings will meet
what may now be optimistic expectations.
Relatively high equity evaluations do not leave much room for earnings
disappointments. The most richly valued sectors of the market (technology in
particular) are well above Benjamin Graham's "safety net". To wit, technology
bellwether Intel lost approximately 20% of its market value in after hours
trading following its announcement that third quarter revenues and earnings
would fall modestly short of consensus Wall Street expectations. After a sharp
decline on the opening bell the next day, stocks rebounded and ended the day
mixed. We question whether stocks will continue to be so resilient if we see
more widespread disappointments during the upcoming 2000 earnings reporting
seasons.
THE ELECTION
After this summer's relatively quiet campaigning, the political rhetoric is
heating up as we approach the November election. There are very clear
differences in the Republicans' and Democrats' positions on a number of economic
issues, in particular, what to do with the growing Federal Government budget
surplus. The Republicans favor large tax cuts. The Democrats are advocating
using the surplus to continue to reduce government debt and plug some holes in
the social safety net. The Republicans tend to view consolidation as an integral
part of global economic evolution. The Democrats are concerned that
consolidation will reduce competition, leaving consumers vulnerable. The
Republicans do not want to
4
<PAGE>
interfere in the energy markets. The Democrats are calling for action. As we
write, it appears the election is up for grabs, creating even more uncertainty
in an already uncertain economic and market environment.
OUR ADVICE
Our stock selection process is based on a "bottoms up" approach. We review
relevant economic and market issues--a list of our current hopes and fears--and
offer carefully considered opinions on their short-term investment implications.
This is a courtesy to shareholders that want to know what we are thinking. It
does not influence our investment strategy. We strive to identify and invest in
undervalued companies with favorable long-term business prospects. Over the
short-term, these stocks will be impacted by broad market trends. Over the long
term, they will be judged on their own individual merit. So, our advice to
shareholders is simply to be patient and have faith that selected businesses
purchased at reasonable prices to intrinsic value will produce long-term
rewards.
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.
MERGERS AND ACQUISITIONS
The value of announced mergers and acquisitions in the U.S. during the
first nine months of 2000 increased to $1.4 trillion from $1.2 trillion in the
first nine months 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 nine months 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 - FEATHERS IN OUR CAP AND BLACK EYES
Utility stocks were our most consistent performers this quarter with AGL
Resources, El Paso Electric, Southwest Gas, and Piedmont Natural Gas posting
solid gains. Insurer Allstate and hospitality group Boca Resorts also rewarded
us. Industrial cyclicals WHX Corp., Hi-Shear, and Carlyle Industries
disappointed.
At quarter end, approximately 20% of the portfolio was in cash reserves,
which helped stabilize the portfolio in this volatile market environment.
5
<PAGE>
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.
ACUSON CORP. (ACN - $22.75 - NYSE), a leader in the diagnostic ultrasound
industry, has agreed to be acquired by Siemens Medical Engineering Group (SIE.GR
- $128.88 - Frankfurt Stock Exchange) in a $23.00 per share cash tender. This
acquisition combines the companies' research and development efforts and global
distribution networks with the potential for better, more cost-effective
products. Siemens continues to transform itself from a large conglomerate into
an advanced technology and communications specialist. The transaction is
expected to close during the fourth quarter of 2000.
BESTFOODS INC. (BFO - $72.75 - NYSE) agreed to a sweetened buyout offer from
Unilever (UN - $48.25 - 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. 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 for $2.6 billion.
DONALDSON, LUFKIN & JENRETTE INC. (DLJ - $89.4375 - NYSE) was acquired by Credit
Suisse Group for $13.4 billion in cash and stock on November 2. DLJ shareholders
received $90 per share. Credit Suisse paid DLJ's parent, French insurer Axa SA,
$8.14 billion in cash and stock. All other shareholders got cash. Credit Suisse
has spent about $12 billion the past three years to expand in insurance, money
management, and securities. A purchase of DLJ, which generates four-fifths of
its profit in the U.S., will strengthen the Credit Suisse First Boston
investment bank's telecommunications and junk-bond businesses.
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, plus a pro
rated $0.33 per share dividend. The acquisition has received most approvals,
including the shareholders of each company, the Federal Energy Regulatory
Commission, the Kentucky Public Service Commission, and the Virginia State
Corporation Commission. The last remaining condition is approval by the U.S.
Securities and Exchange 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.
PHOENIX INVESTMENT PARTNERS LTD. (PXP - $15.50 - NYSE), a Hartford, Connecticut
based investment management company, agreed to be purchased by Phoenix Home Life
Mutual Insurance Co., one of the
6
<PAGE>
nation's largest mutual life insurers, for $15.75 per share. Phoenix Home Life
had previously made a $15.20 offer for PXP but raised their bid to $15.75 when
PXP was sued by a shareholder for selling at too low a price. PXP manages
roughly $66 billion in assets in a range of different disciplines.
PIONEER GROUP INC. (PIOG - $42.375 - Nasdaq) conducts its business through three
strategic units: Pioneer Investment Management, Pioneer International Financial
Services, and Pioneer Global Investments. Pioneer Investment Management includes
the U.S. registered mutual funds, the offshore funds registered in Ireland and
private institutional accounts. Pioneer International Financial Services
includes investment management and financial services operations in different
parts of the world. Pioneer Global Investments includes the company's
diversified strategic businesses of international venture capital management and
investing, real estate management and advisory services, and timber harvesting
and development. UniCredito Italiano SpA (UC.MI - $4.79 - Milan Stock Exchange)
entered into a definitive agreement to acquire Pioneer Group for $43.50 per
share in a transaction valued at about $1.2 billion. The deal closed on October
24. In addition to the $43.50 in cash per share, PIOG shareholders received 0.2
`stubs' of a new company called Harbor Global (HRBG.OB - Nasdaq BB) per each
original PIOG share. Harbor is comprised of the remaining Pioneer businesses
that UniCredito did not want to incorporate into their own operation, including
its Russian financial services operation, its natural resources businesses, and
its interests in venture capital and real estate.
SHAW INDUSTRIES INC. (SHX - $18.50 - NYSE), manufacturer of tufted broadloom
carpet, received an offer from Berkshire Hathaway (BRK - $58,800 - NYSE) to
purchase between 80.1% and 86% of the shares outstanding for $19.00 per share in
cash. The remainder of the shares outstanding will remain with Shaw management
and Shaw family members who will remain after the transaction is completed.
Berkshire Hathaway's Warren Buffet is expecting the world's largest carpet maker
to benefit from growth in home building and construction. The transaction is
expected to close in early 2001.
URBAN SHOPPING CENTERS INC. (URB - $47.50 - NYSE), the U.S. regional mall owner
and operator, was acquired by Dutch-based U.S. regional mall property company
Rodamco North America NV on October 31. The all-cash tender of URB shares at
$48.00 values the deal at $3.4 billion including debt. The acquisition will
bring in house many of the functions that Rodamco currently outsources to third
parties. It is estimated that Rodamco paid a premium of approximately 25% of the
value of URB's assets.
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].
7
<PAGE>
IN CONCLUSION
In the third quarter of 2000, ongoing market volatility reinforced the
benefits of our conservatively managed portfolio. We will continue to use a
prudent mix of undervalued equities, risk arbitrage investments, and U.S.
Treasury securities to meet our shared investment objectives.
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/ MARIO J. GABELLI
MARIO J. GABELLI, CFA
Portfolio Manager and
Chief Investment Officer
November 14, 2000
--------------------------------------------------------------------------------
TOP TEN HOLDINGS
SEPTEMBER 30, 2000
------------------
Bestfoods Inc. Pioneer Group Inc.
Southdown Inc. Eastern Enterprises
Beringer Wine Estates Holdings Inc. Acuson Corp.
Shaw Industries Inc. Urban Shopping Centers Inc.
Donaldson, Lufkin & Jenrette 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
<PAGE>
THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS -- SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS -- 97.5%
AUTOMOTIVE: PARTS AND ACCESSORIES -- 0.7%
15,000 Detroit Diesel Corp. ........ $ 342,187
10,000 Federal-Mogul Corp. ......... 54,375
-------------
396,562
-------------
AVIATION: PARTS AND SERVICES -- 0.9%
25,000 Aviall Inc.+ ................ 160,938
10,000 Fairchild Corp., Cl. A+ ..... 63,750
7,000 Hi-Shear Industries Inc. .... 12,250
22,000 Kaman Corp., Cl. A .......... 277,750
-------------
514,688
-------------
BROADCASTING -- 2.3%
7,000 BHC Communications Inc., Cl. A+ 1,101,625
4,000 Liberty Corp. ............... 138,500
2,000 Salem Communications Corp., Cl. A+ 25,375
1,000 United Television Inc. ...... 147,000
-------------
1,412,500
-------------
BUILDING AND CONSTRUCTION -- 11.6%
100,000 Southdown Inc. .............. 7,125,000
-------------
BUSINESS SERVICES -- 0.8%
25,000 Cendant Corp.+ .............. 271,875
17,000 National Processing Inc.+ ... 236,937
2,580 ProcureNet Inc.+ ............ 387
-------------
509,199
-------------
COMPUTER SOFTWARE AND SERVICES -- 0.1%
1,000 Global Sources Ltd.+ ........ 32,125
1,000 Policy Management Systems Corp.+ 13,500
-------------
45,625
-------------
CONSUMER PRODUCTS -- 10.9%
350,000 Shaw Industries Inc. ........ 6,475,000
28,942 Syratech Corp.+ ............. 227,918
-------------
6,702,918
-------------
DIVERSIFIED INDUSTRIAL -- 0.2%
6,000 Ampco-Pittsburgh Corp. ...... 61,500
10,000 Katy Industries Inc. ........ 70,000
-------------
131,500
-------------
ENERGY AND UTILITIES: ELECTRIC -- 5.2%
5,000 Bangor Hydro-Electric Co. ... 120,938
31,000 El Paso Electric Co.+ ....... 426,870
25,000 Florida Progress Corp. ...... 1,323,437
20,000 GPU Inc. .................... 648,750
25,000 Northeast Utilities ......... 542,187
5,000 St. Joseph Light & Power Co. 96,562
-------------
3,158,744
-------------
ENERGY AND UTILITIES: INTEGRATED -- 3.0%
75,000 LG&E Energy Corp. ........... 1,832,812
-------------
MARKET
SHARES VALUE
------ ------
ENERGY AND UTILITIES: NATURAL GAS -- 9.7%
20,000 AGL Resources Inc. .......... $ 401,250
20,000 Columbia Energy Group ....... 1,420,000
35,000 Eastern Enterprises ......... 2,233,438
14,300 EnergyNorth Inc. ............ 867,831
6,000 Piedmont Natural Gas Co. Inc. 183,750
40,000 Southwest Gas Corp. ......... 837,500
-------------
5,943,769
-------------
ENERGY AND UTILITIES: WATER -- 3.3%
19,000 E'Town Corp. ................ 1,270,625
6,500 SJW Corp. ................... 771,875
-------------
2,042,500
-------------
ENTERTAINMENT -- 0.6%
5,000 Fisher Companies Inc. ....... 360,000
-------------
EQUIPMENT AND SUPPLIES -- 0.3%
9,674 Juno Lighting Inc. .......... 52,602
10,000 UCAR International Inc.+ .... 126,875
-------------
179,477
-------------
FINANCIAL SERVICES -- 15.6%
1,500 Allstate Corp. .............. 52,125
32,000 Argonaut Group Inc. ......... 560,000
50,000 Donaldson, Lufkin & Jenrette Inc. 4,471,875
5,000 Leucadia National Corp. ..... 133,750
562 Markel Corp.+ ............... 85,284
105,000 Phoenix Investment Partners Ltd. 1,627,500
60,000 Pioneer Group Inc.+ ......... 2,638,125
-------------
9,568,659
-------------
FOOD AND BEVERAGE -- 23.5%
20,000 Advantica Restaurant Group Inc.+ 11,875
125,000 Beringer Wine Estates Holdings
Inc., Cl. B+ .............. 6,945,313
100,000 Bestfoods Inc. .............. 7,275,000
15,000 Whitman Corp. ............... 173,438
-------------
14,405,626
-------------
HEALTH CARE -- 3.1%
84,000 Acuson Corp.+ ............... 1,911,000
-------------
HOME FURNISHINGS -- 0.2%
320,000 Carlyle Industries Inc.+ .... 100,000
8,000 O'Sullivan Industries Holdings
Inc.+ .................... 4,160
-------------
104,160
-------------
HOTELS AND GAMING -- 0.0%
2,500 Boca Resorts Inc., Cl. A+ ... 27,344
-------------
METALS AND MINING -- 0.0%
10,000 Royal Oak Mines Inc.+ ....... 65
-------------
9
<PAGE>
THE GABELLI ABC FUND
PORTFOLIO OF INVESTMENTS (CONTINUED) -- SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
REAL ESTATE -- 3.5%
20,000 Griffin Land & Nurseries Inc.+ $ 252,500
3,169 HomeFed Corp.+ ............... 1,901
40,000 Urban Shopping Centers Inc. .. 1,900,000
------------
2,154,401
------------
RETAIL -- 0.1%
8,000 Lillian Vernon Corp. ......... 78,000
------------
SPECIALTY CHEMICALS -- 1.4%
30,000 Lilly Industries Inc., Cl. A 885,000
------------
TELECOMMUNICATIONS -- 0.5%
65,000 GST Telecommunications Inc.+ 2,210
9,500 Shenandoah Telecommunications Co. 320,625
3,000 Telegroup Inc.+ .............. 23
------------
322,858
------------
TRANSPORTATION -- 0.0%
4,032 World Airways Inc.+ .......... 3,402
------------
WIRELESS COMMUNICATIONS -- 0.0%
500 American Tower Corp., Cl. A+ . 18,844
------------
TOTAL COMMON STOCKS .......... 59,834,653
------------
PREFERRED STOCKS -- 0.5%
DIVERSIFIED INDUSTRIAL -- 0.2%
WHX Corp.,
12,500 6.50% Cv. Pfd., Ser. A ...... 82,031
7,500 $3.75 Cv. Pfd., Ser. B ...... 49,219
------------
131,250
------------
TELECOMMUNICATIONS -- 0.3%
3,000 Citizens Communications Co.,
5.00% Cv. Pfd. ............. 162,750
------------
TOTAL PREFERRED STOCKS ...... 294,000
------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
CORPORATE BONDS -- 0.2%
ENVIRONMENTAL SERVICES -- 0.1%
$ 34,000 Waste Management Inc., Sub. Deb. Cv.
4.00%, 02/01/02 ........... $ 31,748
------------
HOME FURNISHINGS -- 0.0%
50,000 Pillowtex Corp., Sub. Deb. Cv.
6.00%, 03/15/12 ........... 4,500
------------
HOTELS AND GAMING -- 0.1%
100,000 Hilton Hotels Corp., Sub. Deb. Cv.
5.00%, 05/15/06 ........... 84,375
------------
RETAIL -- 0.0%
200,000 RDM Sports Group Inc., Cv.
8.00%, 08/15/03 ........... 20,500
------------
TRANSPORTATION -- 0.0%
850,000 Builders Transport Inc., Cv.
6.50%, 05/01/11 ........... 0
------------
TOTAL CORPORATE BONDS ...... 141,123
------------
SHARES
------
RIGHTS -- 0.0%
FINANCIAL SERVICES -- 0.0%
562 Markel Corp. Rights+ ....... 4,215
------------
PRINCIPAL
AMOUNT
---------
U.S. GOVERNMENT OBLIGATIONS -- 19.7%
$12,221,000 U.S. Treasury Bills,
6.12% to 6.27%++,
due 10/05/00 to 12/14/00 ... 12,117,691
------------
TOTAL INVESTMENTS -- 117.9%
(Cost $74,559,561) ........ 72,391,682
OTHER ASSETS AND
LIABILITIES (NET) -- (17.9%) (11,012,513)
------------
NET ASSETS -- 100.0%
(6,038,091 shares outstanding) $ 61,379,169
============
------------------------
+ Non-income producing security.
++ Represents annualized yield at date of purchase.
10
<PAGE>
--------------------------------------------------------------------------------
GABELLI FAMILY OF FUNDS
--------------------------------------------------------------------------------
GABELLI ASSET FUND ________________________
Seeks to invest primarily in a diversified portfolio of common stocks selling at
significant discounts to their private market value. The Fund's primary
objective is growth of capital. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI GROWTH FUND _______________________
Seeks to invest primarily in large cap stocks believed to have favorable, yet
undervalued, prospects for earnings growth. The Fund's primary objective is
capital appreciation. (NO-LOAD)
PORTFOLIO MANAGER: HOWARD F. WARD, CFA
GABELLI WESTWOOD EQUITY FUND _____________
Seeks to invest primarily in the common stock of seasoned companies believed to
have proven records and above average historical earnings growth. The Fund's
primary objective is capital appreciation. (MULTI-CLASS)
PORTFOLIO MANAGER: SUSAN M. BYRNE
GABELLI SMALL CAP GROWTH FUND ____________
Seeks to invest primarily in common stock of smaller companies (market
capitalizations less than $500 million) believed to have rapid revenue and
earnings growth potential. The Fund's primary objective is capital appreciation.
(NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI BLUE CHIP VALUE FUND ______________
Seeks long-term growth of capital through investment primarily in the common
stocks of well-established, high quality companies that have market
capitalizations of greater than $5 billion.
(NO-LOAD) PORTFOLIO MANAGER: BARBARA MARCIN, CFA
GABELLI WESTWOOD SMALLCAP EQUITY FUND ___________
Seeks to invest primarily in smaller capitalization equity securities - market
caps of $1 billion or less. The Fund's primary objective is long-term capital
appreciation. (MULTI-CLASS)
PORTFOLIO MANAGER: LYNDA CALKIN, CFA
GABELLI WESTWOOD INTERMEDIATE BOND FUND __________
Seeks to invest in a diversified portfolio of bonds with various maturities. The
Fund's primary objective is total return. (MULTI-CLASS)
PORTFOLIO MANAGER: PATRICIA FRAZE
GABELLI EQUITY INCOME FUND ________________
Seeks to invest primarily in equity securities with above market average yields.
The Fund pays quarterly dividends and seeks a high level of total return with an
emphasis on income. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI WESTWOOD BALANCED FUND __________
Seeks to invest in a balanced and diversified portfolio of stocks and bonds. The
Fund's primary objective is both capital appreciation and current income.
(MULTI-CLASS)
PORTFOLIO MANAGERS: SUSAN M. BYRNE & PATRICIA FRAZE
GABELLI WESTWOOD MIGHTY MITES[SERVICE MARK} FUND _____
Seeks to invest in micro-cap companies that have market capitalizations of $300
million or less. The Fund's primary objective is long-term capital appreciation.
(MULTI-CLASS)
TEAM MANAGED: MARIO J. GABELLI, CFA,
MARC J. GABELLI, LAURA K. LINEHAN AND
WALTER K. WALSH
GABELLI VALUE FUND ________________________
Seeks to invest in securities of companies believed to be undervalued. The
Fund's primary objective is long-term capital appreciation.
MAX. SALES CHARGE: 51/2% (MULTI-CLASS)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI UTILITIES FUND ______________________
Seeks to provide a high level of total return through a combination of capital
appreciation and current income. (NO-LOAD)
PORTFOLIO MANAGER: TIMOTHY O'BRIEN, CFA
GABELLI ABC FUND _________________________
Seeks to invest in securities with attractive opportunities for appreciation or
investment income. The Fund's primary objective is total return in various
market conditions without excessive risk of capital loss. (NO-LOAD)
PORTFOLIO MANAGER: MARIO J. GABELLI, CFA
GABELLI MATHERS FUND _____________________
Seeks long-term capital appreciation in various market conditions without
excessive risk of capital loss. (NO-LOAD)
PORTFOLIO MANAGER: HENRY VAN DER EB, CFA
GABELLI U.S. TREASURY MONEY MARKET FUND ____________
Seeks to invest 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.
(NO-LOAD) PORTFOLIO MANAGER: JUDITH A. RANERI
GABELLI CASH MANAGEMENT SHARES OF
THE TREASURER'S FUND ______________________
Three money market portfolios designed to generate superior returns without
compromising portfolio safety. U.S. Treasury Money Market seeks to invest in
U.S. Treasury bills, notes and bonds. Tax Exempt Money Market seeks to invest in
municipal securities. Domestic Prime Money Market seeks to invest in prime
quality, domestic money market instruments. (NO-LOAD)
PORTFOLIO MANAGER: JUDITH A. RANERI
AN INVESTMENT IN THE ABOVE MONEY MARKET FUNDS IS NEITHER INSURED NOR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY GOVERNMENT AGENCY. ALTHOUGH
THE FUNDS SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT
IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.
GLOBAL SERIES
GABELLI GLOBAL TELECOMMUNICATIONS FUND
Seeks to invest in telecommunications companies throughout the world -
targeting undervalued companies with strong earnings and cash flow dynamics.
The Fund's primary objective is capital appreciation. (MULTI-CLASS) TEAM
MANAGED
GABELLI GLOBAL CONVERTIBLE SECURITIES FUND
Seeks to invest principally in bonds and preferred stocks which are
convertible into common stock of foreign and domestic companies. The Fund's
primary objective is total return through a combination of current income and
capital appreciation. (MULTI-CLASS) TEAM MANAGED
GABELLI GLOBAL GROWTH FUND
Seeks capital appreciation through a disciplined investment program focusing
on the globalization and interactivity of the world's marketplace. The Fund
invests in companies at the forefront of accelerated growth. The Fund's
primary objective is capital appreciation. (MULTI-CLASS) TEAM MANAGED
GABELLI GLOBAL OPPORTUNITY FUND
Seeks to invest in common stock of companies which have rapid growth in
revenues and earnings and potential for above average capital appreciation or
are undervalued. The Fund's primary objective is capital appreciation.
(MULTI-CLASS) TEAM MANAGED
GABELLI GOLD FUND _________________________
Seeks to invest in a global portfolio of equity securities of gold mining and
related companies. The Fund's objective is long-term capital appreciation.
Investment in gold stocks is considered speculative and is affected by a
variety of world-wide economic, financial and political factors. (NO-LOAD)
PORTFOLIO MANAGER: CAESAR BRYAN
GABELLI INTERNATIONAL GROWTH FUND __________
Seeks to invest in the equity securities of foreign issuers with long-term
capital appreciation potential. The Fund offers investors global
diversification. (MULTI-CLASS) PORTFOLIO MANAGER: CAESAR BRYAN
THE SIX FUNDS ABOVE INVEST IN FOREIGN SECURITIES WHICH INVOLVES RISKS NOT
ORDINARILY ASSOCIATED WITH INVESTMENTS IN DOMESTIC ISSUES, INCLUDING CURRENCY
FLUCTUATION, ECONOMIC AND POLITICAL RISKS. THE FUNDS LISTED ABOVE ARE
DISTRIBUTED BY GABELLI & COMPANY, INC.
--------------------------------------------------------------------------------
TO RECEIVE A PROSPECTUS, CALL 1-800-GABELLI (422-3554). THE
PROSPECTUS GIVES A MORE COMPLETE DESCRIPTION OF THE FUND,
INCLUDING FEES AND EXPENSES. READ THE PROSPECTUS CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
VISIT OUR WEBSITE AT:
www.gabelli.com
OR, CALL:
1-800-GABELLI
1-800-422-3554 [BULLET] 914-921-5100 [BULLET] FAX: 914-921-5118
[BULLET] [email protected]
ONE CORPORATE CENTER, RYE, NEW YORK 10580
<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
HTTP://WWW.GABELLI.COM
E-MAIL: [email protected]
(Net Asset Value may be obtained daily by calling
1-800-GABELLI AFTER 6:00 P.M.)
BOARD OF TRUSTEES
Mario J. Gabelli, CFA Mary E. Hauck
CHAIRMAN AND CHIEF (RETIRED) SENIOR PORTFOLIO MANAGER
INVESTMENT OFFICER GABELLI-O'CONNOR FIXED INCOME
GABELLI ASSET MANAGEMENT INC. MUTUAL FUND MANAGEMENT CO.
Anthony J. Colavita Karl Otto Pohl
ATTORNEY-AT-LAW FORMER PRESIDENT
ANTHONY J. COLAVITA, P.C. DEUTSCHE BUNDESBANK
Vincent D. Enright Werner J. Roeder, MD
FORMER SENIOR VICE PRESIDENT MEDICAL DIRECTOR
AND CHIEF FINANCIAL OFFICER LAWRENCE HOSPITAL
KEYSPAN ENERGY CORP.
OFFICERS
Mario J. Gabelli, CFA Bruce N. Alpert
PRESIDENT AND EXECUTIVE VICE PRESIDENT
CHIEF 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.
--------------------------------------------------------------------------------
GAB408Q300SR
[Photo of Mario Gabelli omitted]
THE
GABELLI
ABC
FUND
THIRD QUARTER REPORT
SEPTEMBER 30, 2000
