- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- ---------------------------------------
[Photo of Mario J. Gabelli, C.F.A, Portfolio Manager]
Q. How did the Fund perform in 1996?
A. For the year ended December 31, 1996, the Gabelli Capital Asset Fund's total
return was 11.0%(1). In comparison, the S&P 500(2) had a return of 23.0% and the
Russell 2000(3) advanced 14.8% for the year. Since its inception on May 1, 1995
through December 31, 1996, the Fund has had an aggregate total return of 20.3%,
which is equal to an average annual total return of 11.7%.
Q. What factors affected the Fund's performance in 1996?
A. In 1995, the stock market clicked on all six cylinders. Moderate economic
growth, low inflation, declining interest rates, soaring corporate profits,
reasonable valuations, and strong cash flows into equity mutual funds all
powered broad-based market momentum. In 1996, three of these six cylinders began
misfiring. Long bond rates rose 100 basis points before subsiding to year-end
1995 levels. Corporate profits were up 10%, a good showing, but well below
1995's 18% gains. Equities valuations, at least for large-cap stocks, became
distinctly rich relative to historic benchmarks. Despite running on only three
cylinders, the market, as represented by the Dow Jones Industrial Average(4) and
the S&P 500, barreled ahead before stalling in December.
Shrinking supply and strong demand for stocks, particularly the blue chips,
were the primary forces driving the popular indices. Merger and acquisition
activity (around $350 billion for 1996) and share repurchase programs (about $30
billion) reduced stock inventories. The flood of money into equity mutual funds
(approximately $220 billion--with the overwhelming majority going into large-cap
growth funds, including S&P 500 Index funds) supercharged demand for a relative
handful of market pacesetters. In addition, the public pressure on fund
portfolio managers to avoid significant holdings of cash or bonds, so as not to
miss the joyride other managers were participating in, inspired many equity fund
managers to run almost all the fundamental red lights.
We motored ahead at a good clip, but with the seat belts fastened and
obeying all the fundamental rules of the road. Our performance was uninspiring
relative to the heavy footed large-cap growth stock funds, but competitive with
small- and mid-cap indices. Most importantly, we believe that we made
substantial progress without risking the kind of collisions that can occur when
excessive equities valuations run headlong into economic reality.
Q. What strategies do you use to manage the Fund and what is your outlook for
1997?
A. Whatever the market has in store for us, we will continue to focus on value.
We are favoring industries and individual companies in the early stages of
sustainable long-term earnings uptrends and on other fundamentally attractive
opportunities that participated only marginally in the 1996 bull market.
Aerospace component manufacturers should post superior earnings gains for the
next three to five years as airlines throughout the world continue to build and
- --------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of dividends
and distributions and the deduction of all Fund expenses. The actual total
returns for owners of the variable annuity contracts or variable life insurance
policies which provide for investment in the Fund will be lower to reflect
separate account and contract/policy charges. Past performance is not a
guarantee of future results. Investment return and principal value will
fluctuate so that the value of your investment, when redeemed, may be worth more
or less than the original cost.
(2) The S&P 500 Index is an unmanaged index of 500 large-cap U.S. stocks that is
generally considered to be representative of U.S. stock market activity. The S&P
500 Index is not available for direct investment and its returns do not reflect
the fees and expenses that have been deducted from the Fund.
(3) The Russell 2000 Index is generally considered to be representative of
small-capitalization issues in the U.S. stock market. The returns for the
Russell 2000 do not reflect expenses which are deducted from the Fund's return.
(4) The Dow Jones Industrial Average (DJIA) is an unmanaged average of 30
industrial stocks listed on the New York Stock Exchange that, like the S&P 500
Index, is generally considered to be representative of U.S. stock market
performance. The DJIA is not available for direct investment and its returns do
not reflect the fees and expenses that have been deducted from the Fund's
return.
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
refurbish their fleets. Auto after-market companies should grow earnings as the
economy and new car sales slow. As Personal Communications Services (PCS)
systems come on line in the year ahead, cellular telephone companies, which have
been under the cloud of future competition from PCS, will have an opportunity to
demonstrate the long-term viability of what we believe will remain a good growth
business. Also, enter tainment software and cable network stocks will get more
favorable reviews from investors in the year ahead.
Finally, and perhaps most importantly for 1997 return prospects, we believe
that corporate restructurings in the form of mergers and sales and spin-offs of
assets will continue at a feverish pace. There is a strong global appetite for
extending product lines and distribution systems via acquisitions. The world is
awash in liquidity and stock is an increasingly valuable currency. So, the
"let's make a deal" market we have experienced in the last few years will
continue. In response, corporate managements that hope to remain independent are
under pressure to surface the value of their businesses by jettisoning
underperforming divisions, spinning off undervalued assets and repurchasing
shares. We expect deals and corporate events of this nature to trigger some of
the biggest stock advances in 1997.
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund Profile
as of December 31, 1996
- ---------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS(1)
- --------------------------------------------------------------------------------
1 Year................................... 11.00%
Since Inception (5/1/95)................. 11.70%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Growth of a Hypothetical $10,000 Investment(1)
- --------------------------------------------------------------------------------
Gabelli
S&P Capital
500 Asset
Index Fund
----- -------
5/1/95 10000 10000
6/30/95 10639 10200
9/30/95 11486 10570
12/31/95 12171 10836
3/31/96 12825 11615
6/30/96 13409 12061
9/30/96 13821 11899
12/31/96 14982 12029
To give you a comparison, the chart above shows the performance of a $10,000
investment made in the Gabelli Capital Asset Fund and in the S&P 500 Index.(2)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top Ten Holdings
- --------------------------------------------------------------------------------
1. Tele-Communications, Inc./ Liberty Media Group
2. Cablevision Systems Corporation
3. United Television, Inc.
4. Gaylord Entertainment Company
5. Quaker Oats Company
6. Viacom Inc.
7. PepsiCo Inc.
8. General Instrument Corporation
9. GC Companies, Inc.
10. Rollins, Inc.
For a complete list of portfolio holdings, please see the Schedule of
Investments.
- --------------------------------------------------------------------------------
13
<PAGE>
<PAGE>
- ---------------
Gabelli Capital
Asset Fund 5
- ---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- --------------------------
SCHEDULE OF INVESTMENTS
December 31, 1996
- -------------------------
COMMON STOCKS -- 102.5%
- -------------------------
Shares Value
- --------------------------------------------------------------------------------
Aerospace -- 1.7%
8,000 Boeing Co. $ 851,000
----------
Automotive: Parts and Accessories -- 3.5%
10,000 Federal-Mogul Corporation 220,000
40,000 GenCorp Inc. 725,000
11,994 Handy & Harman 209,895
8,000 TransPro Inc. 73,000
18,250 Wynn's International, Inc. 577,156
----------
1,805,051
----------
Aviation: Parts and Services -- 6.9%
13,000 AAR Corp. 393,250
50,000 Coltec Industries Inc.+ 943,750
2,000 Curtiss-Wright Corporation 100,750
10,000 Flightsafety International Inc.+ 500,000
7,500 Hi-Shear Industries Inc. 19,688
20,000 Hudson General Corporation 745,000
10,000 Moog, Inc., Class A+ 233,750
10,000 Precision Castparts Corp. 496,250
6,000 Rohr Inc.+ 135,750
----------
3,568,188
----------
Broadcasting -- 13.5%
62,000 Ackerley Communications Inc. 728,500
8,500 BHC Communications, Inc., Class A+ 861,687
17,905 Chris-Craft Industries, Inc. 749,772
5,000 Gray Communications Systems, Inc. 94,375
50,000 Gray Communications Systems, Inc., Class B 850,000
20,000 Grupo Televisa S.A., GDR+ 512,500
10,000 Liberty Corporation 392,500
10,000 LIN Television Corporation+ 422,500
20,000 Renaissance Communications Corporation+ 715,000
16,000 United Television, Inc. 1,378,000
12,000 Westinghouse Electric Corp. 238,500
----------
6,943,334
----------
Cable -- 11.6%
18,000 BET Holdings, Inc., Class A+ 517,500
50,000 Cablevision Systems Corporation, Class A+ 1,531,250
55,000 International Family Entertainment, Inc.,
Class B+ 852,500
----------
23,000 Media General, Inc., Class A 695,750
65,000 Tele-Communications, Inc./Liberty Media Group,
Class A+ 1,856,563
25,000 Tele-Communications International, Inc., Class A+ 331,250
15,000 United International Holdings, Inc., Class A+ 183,750
----------
5,968,563
----------
Consumer Products -- 5.7%
20,000 American Brands, Inc. 992,500
14,000 Culbro Corporation+ 908,250
23,000 General Housewares Corp. 224,250
10,000 National Presto Industries Inc. 373,750
6,000 Ralston Purina Group 440,250
----------
2,939,000
----------
Consumer Services -- 3.0%
22,500 HSN, Inc.+ 534,375
50,000 Rollins, Inc. 1,000,000
----------
1,534,375
----------
Diversified Industrial -- 5.7%
7,500 Crane Co. 217,500
20,000 GATX Corporation 970,000
5,000 Honeywell Inc. 328,750
10,000 ITT Industries Inc. 245,000
40,000 Katy Industries, Inc. 580,000
10,000 Thomas Industries Inc. 208,750
10,000 Trinity Industries, Inc. 375,000
----------
2,925,000
----------
Electrical Equipment and Supplies -- 2.1%
50,000 General Instrument Corporation+ 1,081,250
----------
Energy -- 1.2%
3,000 Eastern Enterprises 106,125
160,000 Kaneb Services, Inc.+ 520,000
----------
626,125
----------
Entertainment -- 8.7%
60,000 Gaylord Entertainment Company, Class A 1,372,500
30,000 GC Companies, Inc.+ 1,038,750
22,000 Time Warner Inc. 825,000
18,000 Viacom Inc., Class A+ 621,000
See notes to financial statements.
- --------------------------------------------------------------------------------
56
<PAGE>
---------------
Gabelli Capital
5 Asset Fund
---------------
Shares Value
- --------------------------------------------------------------------------------
18,000 Viacom Inc., Class B (non-voting)+ $ 627,750
----------
4,485,000
----------
Equipment and Supplies -- 9.5%
20,000 AMETEK, Inc. 445,000
10,000 CTS Corporation 427,500
3,000 Dynamics Corporation of America 84,750
12,500 Franklin Electric Company, Inc. 584,375
40,000 Goulds Pumps, Incorporated 917,500
8,000 Ingersoll Rand Co. 356,000
30,000 Navistar International Corporation+ 273,750
7,500 Pittway Corporation 390,938
17,500 Sequa Corporation, Class A+ 686,875
6,500 SPS Technologies, Inc.+ 417,625
8,000 TRINOVA Corporation 291,000
----------
4,875,313
----------
Financial Services -- 2.8%
8,000 American Express Company 452,000
8,000 H&R Block Inc. 232,000
20,000 Midland Company 770,000
----------
1,454,000
----------
Food and Beverage -- 6.2%
8,000 Celestial Seasonings, Inc.+ 158,000
40,000 PepsiCo, Inc. 1,170,000
33,000 Quaker Oats Company 1,258,125
8,000 Seagram Company Ltd. 310,000
7,560 Tootsie Roll Industries, Inc. 299,565
----------
3,195,690
----------
Health Care -- 0.7%
7,000 Genentech Inc.+ 375,375
----------
Hotels/Gaming -- 4.1%
30,000 Aztar Corporation+ 210,000
10,000 Hilton Hotels Corporation 261,250
20,000 ITT Corporation, New+ 867,500
80,000 Jackpot Enterprises Inc. 780,000
----------
2,118,750
----------
Publishing -- 6.2%
15,000 Golden Books Family Entertainment, Inc.+ 166,875
10,000 Houghton Mifflin Company 566,250
15,000 Lee Enterprises, Incorporated 348,750
12,000 Meredith Corporation 633,000
12,000 Providence Journal Company, Class A+ 367,500
14,666 Pulitzer Publishing Company 680,136
30,000 Thomas Nelson Inc. 446,250
----------
3,208,761
----------
Retail -- 3.8%
20,000 Bruno's, Inc.+ 345,000
25,000 Giant Food Inc., Class A 862,500
30,000 Neiman Marcus Group, Inc.+ 765,000
----------
1,972,500
----------
Specialty Chemical -- 0.8%
14,000 Ferro Corporation 397,250
----------
Telecommunications -- 0.8%
13,100 Pacific Telecom, Inc.+ (a) 393,000
----------
Wireless Communications -- 4.0%
30,000 Centennial Cellular Corp., Class A+ 363,750
33,000 COMSAT Corporation, Series 1 812,625
15,000 Rogers Cantel Mobile Communications, Inc.,
Class B+ 290,625
16,000 Telephone and Data Systems, Inc. 580,000
----------
2,047,000
----------
TOTAL COMMON STOCKS
(Cost $49,662,151) 52,764,525
----------
PREFERRED STOCK -- 0.1%
Equipment and Supplies -- 0.1%
1,000 Sequa Corporation, $5.00, Conv. Pfd. 70,000
----------
TOTAL PREFERRED STOCK
(Cost $63,175) 70,000
----------
See notes to financial statements.
- --------------------------------------------------------------------------------
57
<PAGE>
- ---------------
Gabelli Capital
Asset Fund 5
- ---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- ----------------------------
SCHEDULE OF INVESTMENTS (continued)
December 31, 1996
- -----------------------------
U.S. TREASURY BILLS -- 3.3%
- -----------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
$1,678,000 4.638% to 4.998%++ due
01/16/1997 - 02/13/1997 $ 1,670,620
------------
TOTAL U.S. TREASURY BILLS
(Cost $1,670,620) 1,670,620
------------
TOTAL INVESTMENTS -- 105.9%
(Cost $51,395,946) (b) 54,505,145
------------
OTHER ASSETS AND LIABILITIES
(Net)-- (5.9)% (3,043,614)
------------
NET ASSETS-- 100.0% $ 51,461,531
============
(a) Security fair valued under procedures established by the Board of
Directors.
(b) Aggregate cost for Federal tax purposes was $51,416,889. Net unrealized
appreciation for Federal tax purposes was $3,088,256 (gross unrealized
appreciation was $5,580,222 and gross unrealized depreciation was
$2,491,966).
+ Non-income producing security.
++ Represents annualized yield at date of purchase (unaudited).
GDR -- Global Depositary Receipt
See notes to financial statements.
- --------------------------------------------------------------------------------
58
<PAGE>
- ---------------
Gabelli Capital
Asset Fund 5
- ---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- ----------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
- --------------------------------------
1 -- Significant Accounting Policies
- --------------------------------------
Gabelli Capital Asset Fund (the "Fund"), a series of Gabelli Capital Series
Funds, Inc. (the "Company"), was organized on April 8, 1993 as a Maryland
corporation. The Company is a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), whose primary objective is growth of capital. Shares of the Fund
are available to the public only through the purchase of certain variable
annuity and variable life insurance contracts issued by The Guardian Insurance &
Annuity Company, Inc. The Fund commenced operations on May 1, 1995. On April 26,
1995, the Fund sold a total of 10,000 shares of common stock to Guardian
Insurance & Annuity Company, Inc. and proceeds to the Fund amounted to $100,000.
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 which are traded only on a nationally recognized
securities exchange or are quoted on NASDAQ are valued at the last sale price as
of the close of business on the day the securities are being valued or, lacking
any sales, at the mean between closing bid and asked prices. Other portfolio
securities for which over-the-counter market quotations are readily avail able
are valued at the latest average of the bid and asked price. Portfolio
securities which are traded both in the over-the-counter market and on a stock
exchange are valued according to the broadest and most representative market, as
determined by Gabelli Funds, Inc. (the "Adviser"). Securities and assets for
which market quotations are not readily available are valued at fair value, as
determined in good faith by or under the direction of the Board of Directors of
the Company. Short-term investments that mature in more than 60 days are valued
at the highest bid price obtained from a dealer maintaining an active market in
that security. Short-term investments that mature in 60 days or less are valued
at amortized cost, unless the Board of Directors determines that such valuation
does not constitute fair value.
Repurchase Agreements.
The Fund may engage in repurchase agreement transactions. 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. This arrangement results
in a fixed rate of return that is not subject to market fluctuations during the
Fund's holding period. The value of the collateral is at least equal at all
times to the total amount of the repurchase obligations, including interest. In
the event of counterparty default, the Fund has the right to use the collateral
to offset losses incurred. There is potential loss to the Fund in the event the
Fund is delayed or prevented from exercising its rights to dispose of the
collateral securities, including the risk of a possible decline in the value of
the underlying securities during the period while the Fund seeks to assert its
rights. The Adviser, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers
- --------------------------------------------------------------------------------
56
<PAGE>
---------------
Gabelli Capital
5 Asset Fund
---------------
- --------------------------------------------------------------------------------
with which the Fund enters into repurchase agreements to evaluate potential
risks.
Securities Transactions and Investment Income.
Securities transactions are accounted for on the trade date with realized
gain or loss on investments determined using specific identification as the 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 dividends 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 has qualified and 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. Permanent
differences incurred during the year ended December 31, 1996 resulting from
different book and tax accounting policies for organization costs, are
reclassified between net investment income and paid-in capital at year end. The
reclassifications for the year ended December 31, 1996 were a decrease to
distributions in excess of net investment income of $91 and a decrease to
additional paid-in capital of $91.
Deferred Organization Expenses.
A total of $100,000 was incurred in connection with the organization of the
Fund. These costs were advanced by the Guardian Insurance & Annuity Company Inc.
and will be reimbursed by the Fund. These costs were deferred and are being
amortized on a straight-line basis over a period of 60 months from the date the
Fund commenced investment operations.
- ------------------------------------------
2. -- Agreements with Affiliated Parties
- ------------------------------------------
Pursuant to a management agreement (the "Management Agreement"), the Fund
will pay Guardian Investor Services Corporation (the "Manager") a fee, computed
daily and paid monthly, at the annual rate of 1.00 percent of the value of the
Fund's average daily net assets. Pursuant to an Investment Advisory Agreement
among the Fund, the Manager and the Adviser, the Adviser, under the supervision
of the Company's Board of Directors and the Manager, manages the Fund's assets
in accordance with the Fund's investment objectives and policies, makes
investment decisions for the Fund, places purchase and sale orders on behalf of
the Fund, provides investment research and provides facilities and personnel
required for the Fund's administrative needs. The Adviser may delegate its
administrative role and currently has done so to First Data Investor Services
Group, Inc., the Fund's sub-administrator (the "Sub-Administrator"). The Adviser
will supervise the performance of administrative and professional services
provided by others and pays the compensation of the Sub-Administrator and all
officers and directors of the Fund who are its affiliates. As compensation for
its services and the related expenses borne by the Adviser, the Manager pays the
Adviser a fee, computed daily and paid monthly, at the annual rate of 0.75
percent of the value of the Fund's average daily net assets.
- --------------------------------------------------------------------------------
57
<PAGE>
- ---------------
Gabelli Capital
Asset Fund 5
- ---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- ----------------------------
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 (Continued)
- -----------------------------
3. -- Portfolio Securities
- -----------------------------
Cost of purchases and proceeds from sales of investment securities for the
year ended December 31, 1996, excluding U.S. government and short-term
investments, aggregated $50,282,417 and $21,199,118, respectively.
- ------------------------------------
4. -- Transactions with Affiliates
- ------------------------------------
During the year ended December 31, 1996, the Fund incurred brokerage
commissions of $66,310 to Gabelli & Company, Inc. and its affiliates.
- ------------------------------
5. -- Shares of Common Stock
- ------------------------------
Common stock transactions were as follows:
<TABLE>
<CAPTION>
Year Ended Period Ended
12/31/96 12/31/95*
----------- ------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares Sold 2,913,475 $33,336,923 2,907,580 $30,237,331
Shares issued upon re-
investment of dividends 131,244 1,511,935 30,769 327,997
Shares Redeemed (1,052,170) (12,000,836) (485,011) (5,136,996)
---------- ----------- --------- -----------
Net increase 1,992,549 $22,848,022 2,453,338 $25,428,332
========== =========== ========= ===========
</TABLE>
- ----------
* The Fund commenced operations on May 1, 1995.
- --------------------------------------------------------------------------------
58
<PAGE>
---------------
Gabelli Capital
5 Asset Fund
---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- --------------------------
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors
Gabelli Capital Asset Fund
(a series of Gabelli Capital Series Funds, Inc.)
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Gabelli Capital Asset Fund (a series
of Gabelli Capital Series Funds, Inc.) as of December 31, 1996, and the related
statement of operations for the year then ended, and the statement of changes in
net assets and the financial highlights for the year then ended and for the
period from May 1, 1995 (commencement of operations) through December 31, 1995.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1996 by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Gabelli Capital Asset Fund at December 31, 1996, and the results of its
operations for the year then ended, and the changes in its net assets and the
financial highlights for the year then ended and for the period from May 1, 1995
to December 31, 1995, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
February 7, 1997
- --------------------------------------------------------------------------------
59
<PAGE>
---------------
Gabelli Capital
5 Asset Fund
---------------
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1996
Assets:
Investments, at value
(Cost $51,395,946) $ 54,505,145
Unamortized organization costs 66,576
Dividends receivable 43,478
Receivable for investments sold 31,224
Other assets 26,200
------------
Total Assets 54,672,623
------------
Liabilities:
Due to custodian 3,000,001
Organization costs payable 99,905
Management fee payable 45,727
Accrued Directors' fees 6,250
Accrued expenses and other payables 59,209
------------
Total Liabilities 3,211,092
------------
Net assets applicable to 4,455,887 shares of
common stock outstanding $ 51,461,531
============
NET ASSETS consist of:
Shares of common stock at par value $ 4,456
Additional paid-in capital 48,371,807
Distributions in excess of net realized
gain on investments (20,943)
Distributions in excess of
net investment income (2,988)
Net unrealized appreciation of investments 3,109,199
------------
Total Net Assets $ 51,461,531
============
Net Asset Value, offering and redemption
price per share ($51,461,531/4,455,887
shares outstanding; 500,000,000 shares
authorized of $0.001 par value) $ 11.55
============
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
Investment Income:
Dividend income (net of foreign
withholding taxes of $738) $ 443,344
Interest income 214,850
------------
Total Investment Income 658,194
------------
Expenses:
Management fee 433,279
Legal and audit fees 39,886
Directors' fees 29,648
Custodian fees 22,275
Amortization of organization costs 20,000
Shareholder services fees 11,410
Other 9,563
------------
Total expenses 566,061
------------
Net Investment Income 92,133
------------
Net Realized and Unrealized Gain on
Investments:
Net realized gain on investments sold 1,411,324
Change in net unrealized appreciation of
investments during the year 2,258,045
------------
Net realized and unrealized gain on investments 3,669,369
------------
Net increase in net assets resulting from
operations $ 3,761,502
============
See notes to financial statements.
- --------------------------------------------------------------------------------
59
<PAGE>
- ---------------
Gabelli Capital
Asset Fund 5
- ---------------
- --------------------------------------------------------------------------------
Gabelli Capital Asset Fund
- ----------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Period
Ended Ended
12/31/96 12/31/95*
------------ ------------
<S> <C> <C>
Net investment income $ 92,133 $ 77,973
Net realized gain on investments 1,411,324 234,480
Net change in unrealized appreciation of investments 2,258,045 851,154
----------- -----------
Net increase in net assets resulting from operations 3,761,502 1,163,607
Distribution to shareholders from:
Net investment income (95,723) (77,462)
Net realized gain on investments (1,416,212) (234,480)
Distributions in excess of net realized gain
on investments -- (16,055)
Net increase in net assets from Fund share
transactions 22,848,022 25,428,332
----------- -----------
Net increase in net assets 25,097,589 26,263,942
NET ASSETS:
Beginning of period 26,363,942 100,000
----------- -----------
End of period (including undistributed net
investment income of $511 at December 31, 1995) $51,461,531 $26,363,942
=========== ===========
</TABLE>
- --------
*The Fund commenced operations on May 1, 1995.
See notes to financial statements.
- --------------------------------------------------------------------------------
60
<PAGE>
---------------
Gabelli Capital
5 Asset Fund
---------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Per share amounts for a Fund share outstanding throughout each period/year ended
December 31,
1996 1995*
------- -------
Operating performance:
Net asset value, beginning of period $10.70 $10.00
------- -------
Net investment income 0.02 0.03(a)
Net realized and unrealized gain on investments 1.16 0.80
------- -------
Total from investment operations 1.18 0.83
------- -------
Distributions to shareholders from:
Net investment income (0.02) (0.03)
Net realized gains (0.31) (0.09)
Distributions in excess of net realized gains -- (0.01)
------- -------
Total Distributions (0.33) (0.13)
------- -------
Net asset value, end of period $11.55 $10.70
------- -------
Total return** 11.0% 8.4%
------- -------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $51,462 $26,364
Ratio of net investment income to average
net assets 0.21% 0.75%+
Ratio of operating expenses to average
net assets 1.31% 1.78%+(b)
Portfolio turnover rate 53.2% 81.4%
Average commission rate (per share of security) $0.0496 N/A
- ----------
* The Fund commenced operations on May 1, 1995.
** 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.
+ Annualized.
(a) Net investment income before expenses assumed by the Manager and Adviser
was $0.03.
(b) Operating expense ratio before expenses assumed by the Manager and Adviser
was 1.92%.
See notes to financial statements.
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